TRANS ASIA HOTELS PLC | Annual Report 2012/13
Contents
Financial and Operational Highlights 4 Chairman’s Statement 6 Profiles of the Board of Directors 10
Compliance Reports
Corporate Governance Report 12
Management Discussion & Analysis
Management Discussion and Analysis 36 Financial Review 48 Information to Shareholders & Investors 53 Risk Management 55
Sustainability Report
Sustainability Report 58
Financial Reports
Annual Report of the Board of Directors 104 Statement of Directors’ Responsibilities 110 Audit Committee Report 111 Independent Auditors’ Report 113 Statement of Comprehensive Income 114 Statement of Financial Position 115 Statement of Changes in Equity 116 Cash Flow Statement 117 Notes to The Financial Statements 118
Supplementary Information
Quarterly Financial Data 147 Five Year Financial Summary & Key Indicators 148 Glossary of Financial Terms 150 Notice of Meeting 152 Form of Proxy 155 TRANS ASIA HOTELS PLC | Annual Report 2012/13
The ability to provide a stay to remember is our vision and here at Cinnamon Lakeside, we have refined it down to an art. An art that has been recognised, making us the best luxury hotel in Sri Lanka. Well known for creating unforgettable experiences along with luxury and class, we provide the holiday of a lifetime. We have been foremost in creating a space in which elegance and style blend seamlessly along with comfort and opulence, all in the heart of a bustling city that never slows down. With our inimitable brand of luxury we have mastered sophistication ensured excellence. 2 3 Vision “We will always be the hospitality trendsetter”
Our pledges I will get it right the first time all the time I will care I will stand out wherever I am I will empower I will be green
8° ON THE LAKE Invite your guests to a breathtaking experience aboard Colombo’s only floating venue. 8° on the lake gives you a refreshingly new perspective of the city of Colombo. With a capacity of one hundred guests across an open upper and air conditioned lower deck, the venue is the perfect combination of indulgence and chic. Ideal for high profile events, this unique venue lends itself as effortlessly to corporate events as it does to wedding ceremonies, engagement, birthday or anniversary parties and even candlelit dinners.
2 3 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Financial and Operational Room Occupancy 2012/13 60% Highlights 2011/12 55% 2010/11 62% Year Ended 31st March 2012 2013 Changes % 2009/10 41%
Operational Highlights Occupancy % 55 60 5 2008/09 46% Room Nights Number 69,616 76,199 9 Average Room Rate Rs. 14,964 17,794 19 Profitability And Return Return on Capital Employed % 15 21 7 Return on Equity % 12 19 7 Revenue Rs.Mn 2,375 2,840 20 Total Revenue Gross profit Margin % 63 64 1 Profit from Operating Activities Rs.Mn 628 858 37 Profit before Tax Rs.Mn 743 1,211 63 Profit after Tax Rs.Mn 625 1,066 71 2012/13 Rs.2,840 Mn
Investors Ratios 2011/12 Rs. 2,375 Mn Earning Based Earnings per Share Rs. 3.12 5.33 71 2010/11 Rs. 1,972Mn Price Earnings Ratio ( PE) Times 21.4 13.2 38 Return on Assets % 11 16 6 Rs. 1,067 Mn Total Shareholder Return % (29.6) 9.7 39 2009/10
Dividend Based 2008/09 Rs. 1,151 Mn Dividend per Share Rs. 2.00 3.00 50 Dividend Cover Times 1.56 1.78 14 Dividend Yield % 2.99 4.26 1 Dividend Payout Ratio % 64 56 (8) Position and Liquidity ended 31st March Current Ratio Times 1.88 2.43 29 Gross Profit Quick Asset Ratio Times 1.78 2.35 32 Total Assets Rs.Mn 6,036 6,901 14 Total Equity Rs.Mn 5,236 6,054 16 2012/13 Rs.1,819 Mn Net Asset Value per Share Rs. 26 30 16 No of Shares in issue Mn 200 200 - 2011/12 Rs. 1,503 Mn Interest cover Times 32,305 12,618 (61) Rs. 1,187 Mn Wealth Distribution 2010/11 Total value added Rs.Mn 1,621 2,263 40 To the employee Rs.Mn 446 500 12 2009/10 Rs. 537 Mn To the government Rs.Mn 382 512 34 To the providers of capitals Rs.Mn 300 600 100 2008/09 Rs. 654 Mn To others Rs.Mn 493 650 32
Wealth Creation Market value added Rs.Mn 8,144 8,026 (1) Market capitalisation Rs.Mn 13,380 14,080 5 Economic value added Rs.Mn 83 276 233 Market Price of Share as at 31st March Rs. 66.9 70.40 5 Return on Capital Employed
2012/13 21.5% Financial Calendar 2011/12 14.6% Interim Financial Statements 1st Quarter Ended 30th June 2012 released on 25th July 2012 2010/11 14.9% 2nd Quarter Ended 30th September 2012 released on 31st October 2012 3rd Quarter Ended 31st December 2012 released on 29th January 2013 2009/10 2.2% 4th Quarter Ended 31st March 2013 released on 29th May 2013 2008/09 3.1%
Meeting 32nd Annual General Meeting 27th June 2013 4 5 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Occupancy Revenue 60% Rs. 2 . 8 Bn 2011/12 : Rs. 2.4 Bn 2011/12 : 55%
Profit Before Tax Cash from Operating Rs. 1. 2 Bn Activities 2011/12 : Rs. 0.74 Bn Rs. 1.1 Bn 2011/12 : Rs. 0.85 Bn Earnings per Share Return on Assets Rs. 5. 33 16% 2011/12 : Rs. 3.12 2011/12 : 11%
Return on Assets Earnings Per Share Vs Price Net Asset Value Per Share Vs Market Earnings Ratio Price Per Share *Market Price Net Asset per Share EPS PE per Share
2012/13 16% 2012/13 Rs. 5.33 13 Times 2012/13 Rs. 70.4 Rs. 30
2011/12 11% 2011/12 Rs. 3.12 21 Times 2011/12 Rs. 66.9 Rs. 26
2010/11 12% 2010/11 Rs. 3.30 30 Times 2010/11 Rs. 97.9 Rs. 25
2009/10 2% 2009/10 Rs. 0.52 85 Times 2009/10 Rs. 44.1 Rs. 22
2008/09 3% 2008/09 Rs. 0.81 29 Times 2008/09 Rs. 23.1 Rs. 22
*Adjusted for the sub division of shares
4 5 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Chairman’s Statement
The year under review can be best defined as a luxurious year for the hotel. Whilst the hotel was “crowned as the ‘Best “ Luxury Hotel, Sri Lanka’, the hotel also maintained its position as the ‘Best City Five Star Hotel’ for the second consecutive year at the Sri Lanka Tourism Awards.
For the first time in its history, the Profit Before Tax (PBT) of the hotel 1.2 billion crossed the rupees one billion mark. Profit Before Tax
The profit attributable to shareholders increased significantly by 71 per cent 1.1 billion compared to previous year. Profit Attributable to Shareholders
6 7 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Dear Stakeholders, Performance overview The profit attributable to shareholders It is with pleasure that I present to you the The hotel achieved commendable results increased significantly to Rs. 1.1Bn as against Annual Report and Financial Statements of in the financial year under review. For the the Rs. 625 Mn in the previous year, an Trans Asia Hotels PLC for the financial year first time in its history, the Profit Before increase of 71 per cent. Earnings per Share ended 31st March 2013. Tax (PBT) of the hotel crossed the rupees (EPS) increased from Rs 3.12 to Rs. 5.33, a one billion mark. The financial statements growth of 69 per cent. Net assets per share Notwithstanding the varied challenges for the financial year ended 2012/13 are grew by 15 per cent from Rs. 26.18 to Rs. posed by the global economy, the global in compliance with Sri Lanka International 30.27, reflecting the increase in the asset tourism industry continued to show Financial Reporting Standards (SLFRS) and base of the hotel which grew by 14 per cent resilience with arrivals growing by 4 percent adopted for the first time. to reach Rs. 6.9 Bn at the end of the financial in the calendar year 2012. As per the year. UNWTO’s Panel of Tourism Experts Forecast, The hotel recorded a total turnover of Rs. a similar growth is expected to continue 2.8 Bn during the financial year, a growth Accolades and Achievements during 2013 as well. of 20 per cent in comparison to the Rs. In terms of accolades, the year under review 2.4 Bn achieved in the previous year. The can be best defined as a luxurious year for The number of tourist arrivals to Sri Lanka main contributor towards the growth in the hotel. Whilst the hotel was crowned as surpassed the one million milestone in turnover was the Room Revenue of Rs. 1.4 the ‘Best Luxury Hotel, Sri Lanka’, the hotel 2012, while earnings from the tourism Bn, representing a commendable growth also maintained its position as the ‘Best City industry surpassed USD one billion. Despite of 30 per cent. Food and Beverage revenue Five Star Hotel’ for the second consecutive several challenges faced by the industry, contributed Rs. 1.2 Bn, achieving a growth year at the Sri Lanka Tourism Awards. the Government spearheaded several of 15 per cent. The average daily room rate infrastructure projects to place Sri Lanka of the hotel improved to USD135 from the The hotel’s steadfast belief in continuous as “the place to be”. Many prestigious USD130 achieved in the previous year whilst improvement and process-driven magazines such as “Lonely Planet” have average year round occupancy was 60 per performance was reconfirmed with its ISO featured Sri Lanka as “Best in Travel” and it is cent compared with 55 per cent in the 22000 recertification during the year. The essential that Sri Lanka’s tourism authorities previous year. hotel was awarded a ‘A+’ Grade certificate leverage on this publicity with a focused at the hotel hygiene classification audit marketing campaign to ensure that the With revised marketing strategies and conducted by the Colombo Municipal country’s long-term strategy of attracting 2.5 effective cost control measures, the hotel Council. million tourists by 2016 is achieved. recorded a Gross profit of Rs. 1.8 Bn, an increase of 21 per cent over the previous Keeping in line with our pledge ‘I will be Cinnamon Lakeside Colombo was awarded year. This also had a cascading effect on the Green’, a number of environmentally-friendly the prestigious ‘Best Luxury Hotel, Sri Lanka’ Profit from Operating Activities which grew initiatives were continued and new initiatives at the Business Destination Travel Awards by an impressive 37 per cent to Rs. 858 Mn implemented during the year. The hotel was 2012. Timeless luxury is a way of life at from Rs. 628 Mn in the previous year. PBT was re-certified for the Green Globe Standard, Cinnamon Lakeside and this appropriately Rs. 1.2 Bn, a 63 per cent increase compared making it the first hotel in Sri Lanka to be forms the theme of this year’s Annual Report. to the Rs. 743 Mn achieved during the certified for the third consecutive year. previous financial year. Profitability benefited A project is currently underway to build from a gain of Rs. 288 Mn whilst the net asset a water recycling plant, whilst the hotel base of the hotel benefited from a gain of Rs. also replaced all lights in its rooms to LED 352 Mn due to the requirement of reflecting lights with a view to reducing energy the fair value of the hotel’s buildings in consumption. keeping with the new accounting standards. 6 7 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Chairman’s Statement Contd...
The hotel has continued to integrate Conclusion sustainability with its financial performance. I extend my sincere appreciation to the The monitoring and reduction of its carbon Board of Directors for their guidance and footprint, recycling of waste water and the support. I also take this opportunity to diversified social responsibility activities welcome Mr. Eranjit Wijenaike to the Board of reflect the hotel’s commitment sustainability. Directors and record my appreciation to Mrs. Rohini Nanayakkara and Mr. Daya Pelpola, Future Outlook who retired from the Board of Directors The tourism industry is an important and during the year under review. integral driver in the country’s development plans. The Tourism Development Authority I thank the management and staff at all has a target of attracting 2.5 million visitors, levels for their commitment and dedication. generating foreign exchange earnings I also thank you, our shareholders, for of USD 2.75 Bn and increasing direct supporting our endeavours at all times. employment from the industry to 500,000 by 2016. John Keells Holdings Leisure Group, which is in the forefront of the Sri Lankan tourism industry, is geared to shoulder its responsibility in achieving this objective. Susantha Ratnayake The group is conscious of the continuing Chairman shift in global economic wealth. During the 29th May 2013 financial year under review, 40 per cent of our rooms were occupied by guests from emerging markets - a marked increase from the previous year’s composition of 30 per cent. While we are mindful of the competition posed by the entry of many international brands to Sri Lanka and the availability of alternate accommodation such as luxury apartments, we are confident that the excellent service associated with the Cinnamon brand and the positioning of the hotel will enable it to overcome these challenges.
8 9 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Cinnamon Lakeside Colombo was awarded the prestigious“ ‘Best Luxury Hotel, Sri Lanka’ at the Business
Destination Travel Awards 2012.
Timeless luxury is a way of life at Cinnamon Lakeside and this “ appropriately forms the theme of this year’s Annual Report.
8 9 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Directors’ Profiles
Susantha Ratnayake Chairman
Mr. Ratnayake was appointed as Chairman of Trans Asia Hotels PLC and has been a member of the Board since September 2003. Mr. Ratnayake is also the Chairman and CEO of John Keells Holdings PLC. He is the Vice Chairman of the Employers’ Federation of Ceylon, serves on various clusters of the National Council of Economic Development (NCED) and is the Chairman of the Ceylon Chamber of Commerce. He has over 35 years of management experience, all of which is within the John Keells group.
Ajit Gunewardene Director
Mr. Gunewardene was appointed to the Board of Directors of Trans Asia Hotels PLC in September 2003. He is also the Deputy Chairman of John Keells Holdings PLC and has been a member of their Board for over 20 years. He is a Director of many companies in the John Keells Group and is the Chairman of Union Assurance PLC. He is a member of the board of SLINTEC (Pvt) Ltd, a Company established for the development of nanotechnology in Sri Lanka under the auspices of the Ministry of Science and Technology. He has also served as the Chairman of the Colombo Stock Exchange & Nations Trust Bank PLC. Mr. Gunewardene has a degree in Economics and brings over 31 years of management experience.
Ronnie Peiris Director
Mr. Peiris was appointed as a Director of Trans Asia Hotels PLC in September 2003. Appointed to the John Keells Holdings PLC Board during 2002/03, Mr. Peiris has overall responsibility for Group Finance, including Taxation, Corporate Finance, Treasury, Group Initiatives and the Information Technology functions at the centre. He was previously the Managing Director of Anglo American Corporation (Central Africa) Limited in Zambia.
He has over 40 years finance and general management experience in Sri Lanka and abroad. He is a Fellow of the Chartered Institute of Management Accountants, UK, Association of Chartered Certified Accountants, UK, and the Society of Certified Management Accountants, Sri Lanka and holds an MBA from the University of Cape Town, South Africa. He is a member of the Committee of the Ceylon Chamber of Commerce, Chairman of its Taxation Sub Committee and also serves on its Economic, Fiscal and Policy Planning Sub Committee. He is a Director of several companies in the John Keells Group.
10 11 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Navin Gooneratne Director*
Mr. Gooneratne has been a member of the Trans Asia Hotels PLC Board as a Non-Executive Director since 1984 from its inception. He holds a Bachelors of Science Degree in Engineering and is a Member of the Institute of Engineering Sri Lanka. He is the chairman of 1:2:4 Designs Ltd, Radiance Film International (Pvt) Ltd and Trans Asia Films (Pvt) Ltd. He is the Honorary Chairman of SAMA International trust, Help Sri Lanka Consortium Trust, Swarajya Foundation and the Light of Asia Foundation. He is also the Patron of the Mahatma Gandhi Centre in Colombo.
Cholmondeley Pinto Director*
Mr. Pinto was appointed as a Non-Executive Director and as the chairman of the Board Audit Committee of Trans Asia Hotels PLC in July 2011. He is a Fellow of the Institute of Chartered Accountants of Sri Lanka with 41 years of post qualifying experience, in the profession and in industry. Before returning to Sri Lanka in 2006 after spell of 32 years abroad, he worked for SABMiller Plc for 23 years, the world’s second largest multinational breweries group, holding CFO positions in its listed subsidiaries in several countries. He currently works as a beverage industry consultant and is semi-retired. He is also a Non-Executive Director of Asian Hotels and Properties PLC.
Eranjith Wijenaike Director *
Mr. Wijenaike has been appointed to the Board of Trans Asia Hotels PLC since June 2012. He is the Managing Director of Central Finance Company PLC, a leading non-banking Financial Institution in the country. Mr Wijenaike is a Director of several other quoted companies within and outside the Central Finance Group and counts over 29 years of management experience. He holds a Bachelor’s Degree in Commerce and a Post Graduate Diploma in Finance and Banking.
* Independent director
10 11 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Corporate Governance Report
Trans Asia Hotels PLC (‘the Company’) has of Conduct which the, staff at all levels, assurance to its investors that they have been structured and controlled internally management and the Board of Directors discharged their duties responsibly through a process of continuous review are required to observe in performance through the governance processes in place. in facilitating the observance of the key of their official duties. As a subsidiary of The framework is confirmed to be in full principles of corporate governance. The John Keells Holdings PLC - the ultimate compliance with all applicable regulations Company has strived to maintain the highest Parent Company, the Company displays stated below whilst any permitted deviations levels of transparency when reporting on these values and policies in its day-to-day have been explained in detail. both financial and non financial information activities as a fundamental requirement at which has enabled it to enhance the trust all times, following the best practices of the In identifying that good governance also that stakeholders have in the Company. Parent Company. The staff of the Company entails the long term sustainability of the Whilst the Company is governed by an is expected to live out these values, which Company; a detailed Sustainability Report internal process which ensures integrity are reinforced through recognition schemes is included on page 58 outlining the and professionalism in all its activities and of the Parent Company which insist, as a Company’s activities with society at large. relationships, the ethical values are also lived minimum, that all nominees have modelled The reporting of financial and non financial through every day in a constant effort to the values. performance measures have been integrated set high standards of social responsibility. along the line of the Global Reporting This philosophy has been ingrained through In this report, the corporate governance Initiative ( GRI) and displays our commitment the Company by means of a strong set framework of the Company is outlined to governance, ethical, social, environmental of corporate values and a formal Code enabling the Board of Directors to provide and sustainability issues.
COMPANSATION COMMITTEE
HUMAN RESOURCE &
Regulatory Assurance Frame Work NOMINATION COMMITTEECHAIRMAN AND BOARD CODE OF BEST PRACTICES ON AUDIT EMPLOYEE PARTICIPATION COMMITTEE CORPORATE GOVERNANCE ISSUED JOINTLY BY SEC AND ICASL
INTERNAL CONTROL GENERAL MANAGER CORPORATE GOVERNANCE RULES STAKEHOLDER PUBLISHED BY THE CSE MANAGEMENT SENIOR MANAGEMENT TEAM JKH CODE OF CONDUCT
COMPANIES ACT NO.07 OF 2007 EMPLOYEES EXTERNAL AUDIT
Internal External
12 13 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Internal Governance Structure The Chairman also sets the tone for the yy Opting for the early adoption of The Internal Governance Structure governance and ethical framework of the accounting standards and best practices encompasses the Board of Directors, Board Company, facilitates and solicits the views in governance regulations, when Committees, General Manager and the of all Directors and by keeping in touch with practical. Senior Management Team, complemented local and global industry developments, yy Resolving to maintain strong by internal governance systems which act as ensures that the Board is alert to its governance practices which result in the enablers and drivers of the Company’s obligations to the Company’s shareholders strengthened stakeholder confidence, business strategy. These mechanisms within and other stakeholders. particularly that of both institutional the internal governance structure ensure and individual investors the upholding of the Company’s Corporate The Board of Directors Governance framework. The Board of Trans Asia Hotels PLC holds The Board of Trans Asia Hotels PLC has, responsibility to shareholders of the subject to pre-defined limits, delegated Chairman & The Board of Company to discharge its stewardship its executive authority to the President Directors obligations, in the best interests of the of the Leisure Industry Group for the Role of The Chairman Company and its stakeholders. This is implementation of strategies approved The Chairman is a Non Executive, Non achieved by, by the Board and developing and Independent Director whose main recommending to the Board the business responsibility is to lead and manage the yy Maximising shareholder wealth- plans and budgets in keeping with group Board and its Committees so that they creation on a sustainable basis while strategy can function effectively. He represents the safeguarding the rights of multiple Company externally and is the focal point stakeholders Board Responsibilities of contact for shareholders on all aspects of yy Building and enhancing stakeholder The Board of Directors are accountable corporate governance. relationships which are considered an yy to shareholders for the governance of integral aspect of Board effectiveness the Company. While leading the Board, effectively and a responsible approach to business yy for sharing responsibility in ensuring executing his duties towards all stakeholders, yy Ensuring that one person does not have the highest standards of disclosure, the Chairman, with the assistance of the unfettered powers of decision making reporting, ethics and integrity of the Board Secretaries, Keells Consultants yy Ensuring that the methods employed Company. (Private) Limited, ensures that: to achieve goals are as important as the yy for the proper stewardship of the goals themselves Company’s resources and the yy Board procedures and duties are yy Making business decisions and effectiveness of the Company’s systems followed resource allocations in an efficient and of internal control and the management yy The Agenda for the Board meeting, timely manner, within a framework of risk reports and papers for discussion are that ensures transparent and ethical yy for compliance with laws and dispatched at least one week in advance dealings which are compliant with the regulations of the country so that the Directors are in a position to laws of the country yy for the formulation and approval of study the material and arrive at sound yy Actively participating in discussions the Company’s medium and long-term decisions with the relevant regulatory bodies in strategy, annual investment budgets, yy Directors receive timely, accurate and the formation and implementation of significant financial and operational clear information and updates on governance regulations, accounting policies matters arising between meetings standards, and economic reforms yy A proper record of all proceedings of Board meetings is maintained
12 13 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Corporate Governance Report Contd...
Board Composition The Board has determined that although between executive expediency and At the last Annual General Meeting (AGM) Mr. N.L. Gooneratne has been a member independent judgment. This is based on the of Trans Asia Hotels PLC, held on 26th June of the Board for more than 9 years, he following:- 2012, the Board consisted of seven Directors is in the opinion of the Board, given all comprising of; the circumstances, in fact, Independent, yy Collectively, the Non-Executive Directors especially as he does satisfy the other possess proven business experience yy Four Non-Executive, Non-Independent qualifying criteria in terms of independence. and expertise in their respective fields. Directors, (NED/NID) including the yy The present composition of the Board Chairman The Board has also determined that despite represents an appropriate mix of skills yy Three Non-Executive, Independent the fact that Mr. C.J. L. Pinto is a Director in and experience. Directors (NED/ID) Asian Hotels and Properties PLC in which yy The Independent Directors possess a majority of the other Directors of the strong financial acumen and by virtue Company are also Directors, he is, in the As at 31st March 2013, the Board of their membership on external Boards, opinion of the Board, independent, given Composition is given below consequent are able to assess the integrity of the all the circumstances. The Board in reaching to the resignation of, Mr. Daya Pelpola and group’s financial reporting systems this determination also took into account Mrs. Rohini Nanayakkara from the Board of and internal controls, continually the fact that Mr. C. J. L. Pinto is regarded as Directors with effect from 26th June 2012 review, critique and suggest changes in an independent Director of Asian Hotels and and the appointment of Mr. E. H. Wijenaike to keeping with best practice. the Board from 27th June 2012. Properties PLC. yy The Board is also conscious of the need to progressively refresh its composition yy Three Non-executive, Non-independent The Board having considered the over time and notes the qualitative directors, (NED/NID) including the declarations made by the Directors and all other factors, is of the holistic view that Mr. contribution of the Independent Chairman N. L Gooneratne, Mr. C. J. Pinto and Mr. E. H. Directors to the governance of the yy Three Non-executive, independent Wijenaike are Independent. Hotels. directors (NED/ID)
Non Executive/Independent Directors In accordance with the criteria for “Independence” specified by section and Board Balance 7.10.4 of the listing rules of the Colombo The Board is of the view that its present Stock Exchange and as identified by the composition ensures a healthy balance Code of Best Practice, the Board affirms that the aforesaid three Non-Executive Independent Directors satisfy the criteria for independence as required under clause 7.10.2 (b).
14 15 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Material Employee Family Continuous Share Management/ Business of Member service for Name of Director/Capacity Holding ( i) Director (ii) Relationship Company a Director nine years (iii) (iv) or GM (v) (vi) Non Executive , Non Independent Director (NED/NID)
Mr. S. C. Ratnayake Yes Yes No No No Yes * Mr. A. D. Gunewardene Yes Yes No No No Yes* Mr. J. R. F. Peiris Yes Yes No No No Yes* Non Executive, Independent Director (NED/ID) Mr. N. L. Gooneratne Yes No No No No Yes** Mr. C. J. L. Pinto Yes Yes No No No No*** Mr. E. H. Wijenaike No No No No No No****
Definitions i. Share holding in the Company ii. Director of a listed Company in which they are employed, or having a significant share holding or have a material business relationship iii. Income/Non cash benefits derived from the Company is equivalent to 20% of the director's annual income iv. Director is employed by the Company two years immediately preceding appointment v. Immediate family member who is a director or General Manager vi. Has served the Board for a continuous period exceeding 9 years * Has been appointed to the Board in September 2003 and has served the Board continuously since then ** Appointed to the Board in October 1984 *** Appointed to the Board in July 2011 **** Appointed to the Board in June 2012
Conflicts of interest and independence Each Director holds continuous Prior to Nominees are requested to disclose their various interests that could potentially conflict responsibility to determine whether he with the interest of the Company Appointment or she has a potential or actual conflict of interest arising from external associations, interests or personal relationships in Directors who are appointed are expected to inform the Board and obtain Board clearance prior to accepting any position or engaging in any transaction that could create a potential material matters which are considered by Once conflict of interest the Board from time to time. Appointed All NEDs are required to notify the Chairman of changes in their current Board representations In order to mitigate any potential or actual Directors who have disclosed an interest in a matter under discussion have conflict of interest or independence of • Excused themselves from deliberations on the subject matter Directors throughout the term of their During Board Meetings • Refrained from voting on the subject matter (Such abstentions from Board decisions membership on the Board, the Company has are duly recorded) adopted the following processes.
Details of companies in which Board members hold Board or Board Committee membership is available with the Company for inspection by shareholders on request. 14 15 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Corporate Governance Report Contd...
Delegation of authority yy Senior Management in a structured The Board has, subject to pre-defined limits, delegated its executive authority to the Audit setting Committee and the President of the Leisure Group to formulate and propose to the Board, the yy Industry experts and other external business strategies, budgets and implementation of the same, once approved by the Board. professional advisory services yy The Legal, Tax and Finance Divisions of Board meetings, agenda and attendance the John Keells Group The Board of Trans Asia Hotels PLC met once every quarter and the director’s attendance is as yy The services of the Company Secretary tabulated below. Non Executive Directors have the Attendance at Meetings opportunity of gaining further insight into the Company s’ business by visiting the Hotel.
Director Name of Meetings Attended 30.04.2012 25.07.2012 31.10.2012 29.01.2013 The Directors devote sufficient time Mr. S.C. Ratnayake NED/NID 4/4 and make every effort to ensure that in proportion with their knowledge Mr. A.D.Gunewardene NED/NID 4/4 and experience, they discharge their Mr. J.R.F. Peiris NED/NID 4/4 responsibilities to the Company. This is Mr. N.L. Gooneratne NED/ID 2/4 achieved by reviewing Board papers, business visits to understand risk exposures Mr. D.S.J. Pelpola * NED/ID N/A N/A N/A 1/1 and operating conditions, attending Mrs. R.L. Nanayakkara * NED/ID N/A N/A N/A 0/1 Board meetings and participating in Mr. C.J.L. Pinto NED/ID 3/4 discussions with the Senior Management of the Company. Senior Management of Mr. E.H. Wijenaike** NED/ID N/A 3/3 the Company on invitation attend Board * resigned from the Board on 26th June 2012 meetings updating performance of the ** appointed to the Board on 27th June 2012 Company.
Supply of information and Board induction Board and General Manager’s Newly appointed Non-Executive Directors are apprised of performance appraisal yy The operations of the Company and it’s strategies The Chairman evaluates the performance yy The operating model of the Company of the Board while the Independent, Non Executive Chairman of the Audit Committee yy Company values and culture evaluates the effectiveness of the Audit yy Company policies, governance framework and processes Committee based on feedback from yy Their responsibilities as Directors in terms of prevailing legislation committee members and regular invitees to yy The Code of Conduct expected by the Company the Committee, which includes the General Manager, Finance Director of the hotel, The updating of all Directors’ skills and knowledge is progressive and ongoing. This is achieved Chief Financial officer of the Leisure Group, by keeping them fully informed on significant developments in the business activities of the Sector Financial Controller, Head of Group Company and by providing them access to Business Process Review, and the Internal & yy External and Internal Auditors, External Auditors. The annual appraisal of yy Periodic reports on performance the General Manager is carried out at parent yy Updates on topics that range from proposed/new regulations to industry best practices company level and is based on pre-agreed performance criteria. 16 17 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Nominations Committee and Board Independent Directors, on the other Having conducted market surveys, obtained appointments hand, can be appointed to office for three expert opinion and having considered the The Nomination Committee of the ultimate consecutive terms of three years, which management complexities of the Company, Parent Company John Keells Holding PLC however, is subject to the age limit set on the recommendation of the Human (JKH) functions as the nomination committee by statute at the time of re-appointment Resource & Compensation Committee, of the Company. The Nomination Committee following the end of a term. the Company has adopted the following holds responsibility to identify and propose remuneration policy designed to provide suitable candidates for appointment as The proposal for the re-appointment of an appropriate balance between fixed Non-Executive Directors to the Board of Directors is set out in the Directors Report as remuneration and variable ‘risk’ reward the Company in keeping with the target well as the Notice of Meeting on page 152 of which includes, Board composition and skill requirements. this Report. The Board of the Company after due yy a fixed element; consideration of such recommendations, Remuneration yy a variable element in the form of a determines and appoints the new director. Human Resources & Compensation short term incentive which is based Committee on both individual performance and Shareholders must formally approve all new The Human Resource & Compensation an organisational performance metric appointments at the first opportunity after Committee of the Ultimate Parent Company which covers revenues and PAT; and their appointment, as provided by Article John Keells Holdings PLC functions as yy a long term incentive in the form of 90 of the Articles of Association of the the Human Resource & Compensation employee share options at John Keells Company. committee of the Company, as permitted Holdings PLC for applicable senior by the listing rules of the Colombo Stock executives The Nominations Committee of John Keells Exchange. Holdings PLC comprises two Independent A customised “pay for performance” scheme Directors and one Non Independent Director The Human Resources and Compensation based on individual and organisational namely: committee of John Keells Holdings PLC performance ratings is carried out for comprises four Independent Directors. employees at Assistant Manager level and Mr. T. Das – Chairman above, while only individual performance Mr. S. C. Ratnayake Mr. E. F. G. Amerasinghe – Chairman ratings govern remuneration at Executive Mrs. S. Tiruchelvam Mrs. S. Tiruchelvam level and below. The rationale for excluding Mr. S. Enderby* Dr. I. Coomaraswamy the organisational performance rating at Mr. A. R. Gunasekara the lower levels is that individuals at this *resigned with effect from 8th March 2013 level have little direct impact on the bottom The remuneration policy adopted by the line of the business unit. These varied Tenure, retirement and re-election Company as recommended by the Human performance measures have contributed One third of the Directors except the Resources & Compensation Committee of its towards generating a more robust alignment Chairman, retire by rotation on the basis ultimate parent, JKH is formulated to attract between reward and performance. prescribed in the Articles. A Director retiring and retain high calibre executives where by rotation is eligible for re-election. motivating and grooming them to develop Board Remuneration and implement the business strategy helps Remuneration for Non-Executive, Non- The tenure of office for Non Independent optimise long term Shareholder value Independent Directors Directors is limited by their prescribed creation. The Committee also recommends Compensation for Non-Executive, Non Company retirement age. the remuneration of the General Manager of Independent Directors (NED/NID’s) is the hotel. determined by reference to fees paid to other NED/NID’s of comparable companies.
16 17 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Corporate Governance Report Contd...
Director Fees applicable to Non-Executive view of the financial reporting process, internal controls, risk review and the audit function. Directors nominated by JKH are paid directly It is governed by a Charter that encompasses the review and monitoring of internal control, to the Company and not to individuals. operational and business risks, adequacy and fairness of disclosures, procedures relating to statutory, regulatory and related compliances as well as the working of the Committee. The Remuneration for Non-Executive, Committee is responsible for the consideration and recommendation of the External Auditors. Independent Directors Compensation for Non-Executive, The Audit Committee met on four occasions during the year, attendance was as Independent Directors (NED/IDs) is follows:- determined by reference to fees paid to other NED/ID’s of comparable companies. Attendance at Meetings NED/ID’s receive a fee for devoting time and expertise for the benefit of the Company. Nevertheless, NED/ID’s fees are not time Director Name of Meetings bound or defined by a maximum/minimum Attended 10.05.2012 24.07.2012 24.10.2012 28.01.2013 number of hours committed to the group per annum and hence is not subject to Mr. C.J.L. Pinto NED/ID 4/4 additional/lower fees for additional/lower (Chairman) time devoted. NED/ID’s do not receive any Mr. D.S.J. Pelpola* NED/ID N/A N/A N/A 1/1 performance/incentive payments. Mrs. R.L. Nanayakkara * NED/ID N/A N/A N/A 0/1 The Company does not have an employee Mr. E.H. Wijenaike** NED/ID N/A 3/3 share option scheme. Mr. J.R.F. Peiris*** NED/NID N/A N/A 1/2 * resigned from the Audit Committee on 26th June 2012 The aggregate remuneration paid to ** appointed to the Audit Committee on 1st July 2012 Directors is disclosed on page 135 of this ** *appointed to the Audit Committee on 25th July 2012 report.
Audit Committee Chief Financial Officer of the Leisure Group - JKH, Sector Financial Controller - JKH, General The Audit Committee comprises of a majority Manager & Director Finance of Trans Asia Hotels PLC, the Head of Business Process Review - of Independent and Non Executive Directors. JKH, the External and Internal Auditors are regular invitees of the Audit Committee. As prescribed in the Listing Rules of the Colombo Stock Exchange, the Chairman The Director Finance of Trans Asia Hotels PLC is required to confirm compliance with financial of the Audit Committee is a member of a standards and regulations by means of a quarterly self certification programme. The managers professional accounting body - a fellow of of the Company are required to confirm operational compliance with statutory and other the Institute of Chartered Accountants of regulations, risk management and other key control procedures. Sri Lanka with several years of experience in financial auditing and accounting. In order to ensure effectiveness and best corporate governance the Company implemented an ‘Audit Committee effectiveness evaluation’ system from April 2011. This process collates The Audit Committee focuses principally feedback from all participants to the Audit Committee including the Chairman of the in assisting the Board to fulfil its duties by Committee who is expected to convey his independent opinion on the functionality and any providing an independent and objective potential areas for improvements. All these views and opinions are collated by the Group’s Business Process Review Division and are used to further enhance the effectiveness of the Audit Committee.
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The detailed Audit Committee report future plans, while at the same time giving Employee Participation including the areas reviewed during the the Directors the opportunity to understand The Human Resource unit is designed in a financial year 2012/13 is found on page 111 the issues and concerns of shareholders. The manner that enables high accessibility by of the Annual Report. content of this Annual Report will enable any employee to every level of management. existing and prospective stakeholders to Structured ‘skip level’ meetings are held General Manager make better informed decisions in their where employees are given the opportunity The General Manager of the Hotel serves dealings with the Company. to discuss matters of concern with superiors as the head of the business unit and is who are at a level higher than their own responsible to the Board for the attainment All necessary steps are taken to facilitate immediate supervisor in an open, but of the Company’s overall objectives and protection of shareholder rights at the AGM, confidential environment. Through the formulation of strategy. The General which include the receipt of the notice of participation of 360 Degree surveys and Manager coordinates and guides the the AGM and related documents within the Voice of Employee ( VOE) surveys, which are different functional heads of the Company to specified time period, voting for the election conducted annually, employees are able to streamline the different functional units and of new Directors, new long term incentive voice their opinion about the Company and achieve goal congruence. schemes or any other issue of materiality their respective superiors. that requires a shareholder resolution. Senior Management Team Whistleblower Policy The Senior Management team consists of Other stakeholders: Corporate Social Through a communication link named the Heads of the different functional units Responsibility and Sustainability ‘Chairman Direct’, concerns about unethical of the Company and holds responsibility The Company recognises that emphasis behaviour and any violation of group values to the General Manager for the attainment should not only be on maximising long could be reported by any employee to the of functional objectives through effective term shareholder value, but it should Chairman of JKH. Employees reporting utilisation of resources and competencies. also look after the rights and appropriate such incidents are guaranteed complete claims of many non-shareholder groups confidentiality and such complaints are Stakeholder Management such as employees, consumers, clients, investigated and addressed via a select The Company underlines effective suppliers, lenders, environmentalists, host committee under the direction of the management of different stakeholder communities and the Government. Chairman. groups as a vital aspect in safeguarding A detailed description of the Company’s CSR the Company’s corporate governance activities can be found on the ‘Sustainability’ Ombudsperson philosophy. Therefore, numerous section of this Annual Report, laid down on In order to deal with a situation in which mechanisms are in place, including those pages 58 to 101. an employee or group of employees feel that have cascaded down from the holding that an alleged violation has not been Company, to enhance the relationship Assurance addressed satisfactorily using the available/ between the Company and different The ‘Assurance’ element is the supervisory existing procedures and processes, an stakeholders. module of the Company’s Corporate Ombudsperson has been appointed by Governance Framework, where a range JKH being the ultimate Parent Company to Shareholder relations of mechanisms such as monitoring, entertain such concerns. Shareholders have the opportunity at the benchmarking and effectiveness tests are Annual General Meeting(AGM), to put carried out in order to ensure continued The Ombudsperson’s duty ceases upon forward questions to the Board to gain a accuracy and to implement corrective action the confidential written communication better understanding of the Company’s where necessary. of the findings of the Ombudsperson and business and operational workings and recommendations to the Chairman or the Senior Independent Director of JKH, as the case may be.
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Corporate Governance Report Contd...
The Chairman or the Senior Independent yy The IT systems in place facilitate the recorded and that material errors and Director, as the case may be, will place before online display of information relevant irregularities are either prevented or the Board; to the needs of Company Managers detected in a timely manner. Key elements of yy the decision and the recommendations and Functional Heads pertinent to their such procedures are as follows: of the Ombudsperson areas of responsibility. yy Formal policies and procedures yy the action taken based on the are defined which include the recommendations Investment appraisal process and documentation of key systems and yy the areas of disagreement and the investment decisions rules relating to delegation of financial reasons adduced in instances where the Over the years, the Company has refined authority. This restricts the unauthorised Chairman or the Senior Independent the process of investment appraisal which use of the Company’s assets and Director disagrees with any or all of the ensures the involvement of the relevant ensures the monitoring of controls. findings and/or recommendations. In persons when investment decisions such cases, the Board shall consider the are made. In this manner, several views, yy The annual budgets are approved by areas of disagreement and determine opinions and advice are obtained prior to the Board after detailed management the way forward. the investment decision. Experience has review. There is a detailed budgeting The Chairman or the Senior Independent proven that a holistic and well debated view process for the Company. Budgets are Director is expected to take such steps as are of the commercial viability and potential of prepared in a manner that facilitates necessary to ensure that the complainant proposed projects including operational, management to monitor the key is not victimised for having invoked this financial, funding, risk and tax implications business and financial activities. Results process. has most of the time culminated a good are regularly reviewed against budget result. All investment decisions are routed and revised forecasts for the year are through a committee structure which These open door policies facilitate constant prepared on a half yearly basis. dialogue, communication, transparency safeguards against one individual having unfettered decision making powers in such and ultimately employee confidence, which yy The Enterprise resource planning decisions. would help retain existing talent whilst system; SAP has ensured that monthly attracting new. management accounts are prepared Integrity of systems & processes promptly providing relevant, reliable The Board has taken necessary steps to Internal Control and up-to-date financial and other Monitoring of financial data: ensure the integrity of the Company’s information. yy Financial results are evaluated against accounting and financial reporting systems, internal control systems and also reviews the Annual Plan and subsequent yy Capital Expenditure is subject to formal and monitors such systems on a periodic reforecast on a monthly basis at all authorisation procedures. management levels. basis. Systems and processes covering risk management, financial and operational y control, ethical conduct, compliance with y Experienced and suitably qualified yy The Board reviews the financial results legal and regulatory requirements and staff takes responsibility for important on a quarterly basis. corporate social responsibility are described business functions. Annual appraisal below. procedures have been established to yy The Chairman and Group Finance maintain standards of performance. Director are able to view key financial Internal control information of the Company on a real The Company’s systems are designed to yy To further strengthen internal control time basis via the group wide ERP provide the Directors with reasonable and have independent assurance, the system. assurance that assets are safeguarded, Company has enlisted the services of transactions are authorised and properly Messrs. PwC (formerly Pricewaterhouse
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Coopers (Pvt Ltd) an internationally Risk Management The going concern principle has been reputed firm of Chartered Accountants, The Board has adopted a Company-wide adopted in preparing the financial to monitor and report on the adequacy risk management programme to identify, statements. All statutory and material of the financial and operational systems. evaluate and manage significant risks while declarations are highlighted in the Annual The scope included: stress-testing for various risk scenarios. This Report of the Board of Directors in the programme ensures that a multitude of Annual Report. Financial statements are yy Assessment of the adequacy of risks, arising as a result of the Company’s prepared in accordance with the Sri Lanka accounting and operational control operations, are effectively managed in Accounting Standards commonly known as systems in terms of economy, efficiency creating and preserving shareholder and SLFRSs and comply with the requirements of and effectiveness. other stakeholder wealth. The detailed the Companies Act 07 of 2007. Risk Management report on page 55 of the Information in the financial statements of yy Examination of compliance with Annual Report describes the process of risk management as adopted by the group and the Annual Report are supplemented by statutory requirements, management the key risks impacting the achievement of a detailed ‘Management Discussion and policies and procedures. the group’s strategic business objectives. Analysis’ on page 36 which explains to shareholders the strategic, operational, yy Review and monitor operational and IT Governance investment and risk related aspects of the financial controls in order to ascertain The hotel’s IT Governance policy has evolved Company that have translated into the adherence to such controls. in the last year to deliver and embrace new reported financial performance and are likely technologies which have aligned with the to influence future results. The internal audit reports are firstly discussed overall business objectives of the hotel. The by the externally appointed internal auditor efforts of IT governance in the hotel , is to The Statement of Directors’ Responsibilities with the management of the Company. improve the efficiency and effectiveness of in relation to financial reporting is given on The Group Risk and Control Division attend delivering reliable information to all of its page 110 of the Annual Report. The Directors’ these meeting as the moderator. After valuable stakeholders .The IT division has interests in contracts of the Company are which these reports are forwarded to the been successful in improving the service addressed on page 107 of the Annual Report. Audit Committee. Internal Audit reports are quality, and mitigating IT risks through structured in a manner that facilitates the internally developed IT policy guidelines The Directors have taken all reasonable steps resolution of the concerns highlighted and as well as going through stringent internal in ensuring the accuracy and timeliness of follow up action is monitored by the Board and external audits and compliance published information and in presenting on an ongoing basis. requirements which are conducted yearly an honest and balanced assessment of based on the group’s information security results in the quarterly and annual financial Internal Auditors management guidelines . statements. Price sensitive information The internal audit function of the has been disclosed to the Colombo Stock Company is outsourced to PwC (formerly Going concern and financial reporting Exchange, shareholders and the press in Pricewaterhouse Coopers (Pvt) Ltd.)., The Directors are satisfied that the Company a timely manner and in keeping with the Chartered Accountants. The role of the has sufficient resources to continue in regulations. internal audit has transformed into a value operation for the foreseeable future. In the adding function instead of merely a ‘warning’ unlikely event that the net assets of the Adaptation of International Financial function, where audit findings are regarded Company fall below a half of shareholders Accounting Standard a valuable contribution in modifying and funds, shareholders would be notified and Living by the Company’s philosophy of good strengthening our internal processes. an extraordinary resolution passed on the governance and reporting the Financial proposed way forward. Statements for year 2012/13 have been prepared and presented in accordance
20 21 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Corporate Governance Report Contd...
with Sri Lanka Accounting Standards (SLFRS/LKAS) which have materially converged with the External Audit International Financial Reporting Standards (IFRS) as issued by the International Accounting KPMG (formerly known as KPMG Ford, Standards Board (IASB). Hence this is the first year reporting under the new IFRS guidelines and Rhodes, Thornton & Company) serve as the thus the previous year’s financials have been restated for comparative purposes. The report also external auditors of the Company. covers the key policy changes as required for first time adoption. It is also noteworthy to state The audit fees paid by the Company to KPMG that the established business model of Trans Asia Hotels PLC did not need any radical changes are separately classified on page 125 in the to comply with new requirements. The effect of the transition from SLASs to SLFRSs has also Notes to the Financial Statements of the been presented in the reconciliation statements and accompanying Notes to the reconciliation Annual Report. on page 143 of the Annual Report. The Auditors’ report on the financial Jkh Code Of Conduct statements of the company for the year The written Code of Conduct, to which employees at all levels and the Board of Directors are under review is found on page 113 of the bound by, engraves the desired behaviour of JKH staff at executive level and above. This is Annual Report. being constantly and rigorously monitored. Regulatory Framework The Board of Directors have taken reasonable measures in ensuring that all financial JKH Code of Conduct statements are prepared in accordance with the Sri Lanka Accounting Standards and the requirements of the Colombo Stock yy Allegiance to the Company and the Group Exchange and other applicable authorities.
This Report has been prepared as per yy Compliance with rules and regulations the rules and regulations stipulated by applying in the territories that the Group the Corporate Governance Listing Rules published by the Colombo Stock Exchange operates in (as revised) and also by the Companies Act no. 07 of 2007.
yy Exercise of professionalism and integrity The Company has also adhered to the Code in all business and ‘public’ personal of Best Practice on Corporate Governance Reporting guidelines jointly set out by transactions the Institute of Chartered Accountants of Sri Lanka and the Securities & Exchange Commission in preparation of this Corporate yy Conduct of business in an ethical manner Governance Report, and where necessary at all times and in keeping with acceptable deviations have been explained as provided within the rules and regulations. business practices The Company’s governance framework is confirmed to be in full compliance with,
The Chairman of the Board affirms that there have not been any material violations of any yy Companies Act No. 7 of 2007 of the provisions of the Code of Conduct. In the instances where violations did take place, or yy Mandatory Compliance were alleged to have taken place, they were investigated and handled through the Company’s yy The Continuing Listing Rules of the established procedures. Colombo Stock Exchange (CSE) (as Revised) - Mandatory Compliance
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yy The Code of Best Practice on Governance published by the Securities and Exchange Conclusion Commission of Sri Lanka and the Institute of Chartered Accountants of Sri Lanka – The hotels robust and sound governance Voluntary Compliance helps it to create and maintain trust with employees, investors, governments, business Major transactions partners, guests and other stakeholders. Within this framework, the hotels goal is to The Directors ensure that any corporate transaction that would materially affect the net asset run its business sustainably, engaging with base of the Company is communicated to the shareholders. There were no major transactions society in a way that leads to the creation of as defined under Section 185 by the Companies Act 07 of 2007 during the year under review. shared value over the long term. A detailed report on the extent of our adherence to best practices with appropriate reference is given below;
Statement of Compliance under Section 7.10of the rules of the Colombo Stock Exchange (CSE) on Corporate Governance Compliance Non Compliance
Compliance Applicable Section in the Rule No. Subject Applicable requirement Status Annual Report 7.10.1(a) Non-Executive Directors (NED) 2 or at least 1/3 of the total number of Corporate Governance Directors should be NEDs 7.10.2(a) Independent Directors (ID) 2 or1/3 of NEDs, whichever is higher, Corporate Governance should be independent 7.10.2(b) Independent Directors Each NED should submit a declaration of Available with the Secretaries independence for review 7.10.3(a) Disclosure relating to Directors yy The Board shall annually determine Corporate Governance the independence or otherwise of the NEDs yy Names of IDs should be disclosed in the Annual Report (AR) 7.10.3(b) Disclosure relating to Directors The basis for the Board’s determination of Corporate Governance ID, if criteria specified for independence is not met 7.10.3(c) Disclosure relating to Directors A brief resume of each Director should be Board of Directors (profile) included in the AR including the Director’s section in the Annual Report areas of expertise 7.10.3(d) Disclosure relating to Directors Provide a brief resume of new Directors Corporate Governance appointed to the Board with details specified in 7.10.3(a), (b) and (c) to the CSE 7.10.4 Determination of Requirements for meeting criteria Corporate Governance (a-h) Independence 7.10.5 Remuneration Committee (RC) The RC of the listed Parent Company may Corporate Governance function as the RC
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Corporate Governance Report Contd...
Compliance Applicable Section in the Rule No. Subject Applicable requirement Status Annual Report 7.10.5(a) Composition of Human Shall comprise of NEDs, a majority of whom Corporate Governance Resources and Compensation will be independent Committee 7.10.5.(b) Functions of Human The RC shall recommend the remuneration Corporate Governance Resources and Compensation of the General Manager (GM) and NEDs Committee 7.10.5.(c) Disclosure in the Annual yy Names of Directors comprising the RC Report relating to Human yy Statement of Remuneration Policy Corporate Governance, Resources and Compensation yy Aggregated remuneration paid to Corporate Governance of Committee NED/NIDs and NED/IDs Holding Company and Notes to the Financials. 7.10.6 Audit Committee (AC) The Company shall have an AC Corporate Governance 7.10.6(a) Composition of Audit yy Shall comprise of NEDs a majority of Committee whom will be Independent Corporate Governance and yy A NED shall be appointed as the the Board Committee Reports Chairman of the Committee yy GM and Director Finance TAH should attend AC meetings yy The Chairman of the AC or one member should be a member of a professional accounting body 7.10.6(b) Audit Committee Functions yy Overseeing of the – yy Preparation, presentation and adequacy of disclosures in the Corporate Governance and financial statements in accordance the Board Committee Reports with Sri Lanka Accounting Standards yy Compliance with financial reporting requirements, information requirements of the Companies Act and other relevant financial reporting related regulations and requirements
24 25 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Compliance Applicable Section in the Rule No. Subject Applicable requirement Status Annual Report yy Processes to ensure that the internal controls and risk management are adequate to meet the requirements of the Sri Lanka Auditing Standards yy Assessment of the independence and performance of the external auditors yy Make recommendations to the Board pertaining to appointment, re-appointment and removal of external auditors, and approve the remuneration and terms of engagement of the external auditor
7.10.6(c) Disclosure in Annual Report yy Names of Directors comprising the AC Corporate Governance and relating to Audit Committee yy The AC shall make a determination the Board Committee Reports (AC) of the independence of the Auditors and disclose the basis for such determination yy The AR shall contain a Report of the AC setting out the manner of compliance with their functions
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Corporate Governance Report Contd...
Statement of Compliance of the Principles under the Code of Best Practice of Corporate Governance jointly issued by the Securities and Exchange Commission of Sri Lanka (SEC) and the Ins titute of Chartered Accountants of Sri Lanka.
Compliance Non Compliance
Adoption Applicable Section in the Code Ref. Subject Applicable requirement Status Annual Report A. 1 DIRECTORS – Board
A.1.1 Frequency of Board Meetings yy Board should meet regularly, art least once Corporate Governance / every quarter Annual Report of the Board of Directors A.1.2 Responsibilities of the Board yy Formulation and implementation of Corporate Governance strategy, yy Skill adequacy of management and succession, yy Integrity of information, internal controls and risk management yy Compliance with laws, regulations and ethical standards yy Code of conduct yy Adoption of appropriate accounting policies A.1.3 Access to professional advice yy Procedures to obtain independent Corporate Governance professional advice A.1.4 Company Secretary yy Ensure adherence to Board procedures and Corporate Governance applicable rules and regulations yy Procedure for Directors to access services of Company Secretary A.1.5 Independent judgement yy Directors should exercise independent Corporate Governance judgement on issues of strategy, resources, performance and standards of business judgement A.1.6 Dedication of adequate time yy Directors should devote adequate time and Corporate Governance and effort by Directors effort to discharge their responsibilities to the Company satisfactorily A.1.7 Training for Directors yy Directors should receive appropriate Corporate Governance training, hone skills and expand knowledge to more effectively perform duties
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Adoption Applicable Section in the Code Ref. Subject Applicable requirement Status Annual Report A. 2 DIRECTORS - Chairman & Chief Executive Officer
A.2. Division of responsibilities yy A balance of power and authority to be Corporate Governance to ensure no individual maintained by separating responsibility has unfettered powers of for conducting Board business from that of decision executive decision making A. 3 DIRECTORS - Role of Chairman
A.3 Ensure good corporate yy Chairman to preserve order and facilitate Corporate Governance governance effective discharge of Board functions by proper conduct of Board meetings A. 4 DIRECTORS - Financial Acumen
A.4 Possession of adequate yy Board to ensure adequacy of financial Corporate Governance financial acumen acumen and knowledge within Board A. 5 DIRECTORS – Board Balance
A.5.1 Composition of Board yy The Board should include a sufficient Corporate Governance number of Non-Executive, Independent Directors A.5.2 Proportion of Independent yy Two or one third of the Non-Executive Corporate Governance Directors Directors should be independent
A.5.3 Test of independence yy Independent Directors should be Corporate Governance independent of management and free of any business or other relationship that could materially interfere with the exercise of unfettered and independent judgement A.5.4 Declaration of independence yy Non-Executive Directors should submit Corporate Governance / a signed and dated declaration of their Annual Report of the Board of independence / non-independence Directors A.5.5 Annual determination of yy The Board should annually determine and Corporate Governance criteria of independence disclose the names of Directors deemed to / non-independence and be independent declaration of same by Board A.5.6 Appointment of Senior yy If the roles of Chairman / CEO are Independent Director (SID) combined, a Non-Executive director should N/A be appointed as a Senior Independent Director
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Adoption Applicable Section in the Code Ref. Subject Applicable requirement Status Annual Report A.5.7 Availability of Senior yy If warranted, the SID should be available Independent Director to to the other Directors for confidential N/A other Directors discussions. A.5.8 Interaction between yy The Chairman should meet the Non- Corporate Governance Chairman and Non- Executive, Independent Directors at least Executive, Independent once a year Directors A.5.9 Directors concerns to be yy When matters are not unanimously recorded resolved, Directors to ensure their concerns N/A are recorded in Board minutes A. 6 DIRECTORS - Supply of Information
A.6.1 Provision of adequate yy Management to ensure the Board is Corporate Governance information to Board provided with timely and appropriate information A.6.2 Adequacy of Notice and yy Board minutes, agenda and papers should Corporate Governance formal agenda to be be circulated at least seven days before the discussed at Board meetings Board meeting A. 7 DIRECTORS - Appointments to the Board
A.7.1 Nomination Committee yy Nomination committee of parent may Corporate Governance function as such for the Company and make recommendations to the Board on new Board appointments A.7.2 Annual assessment of Board yy Nomination committee or Board should Corporate Governance composition annually assess the composition of Board
A.7.3 Disclosure of new Board Profiles of new Board appointments to be Corporate Governance Notice appointments communicated to Shareholders of Meeting A. 8 DIRECTORS – Re-election A.8.1 Appointment of Non- yy Appointment of Non-Executive Directors Corporate Governance / Executive Directors should be for specified terms and re- Annual Report of the Board of election should not be automatic Directors A.8.2 Shareholder approval of yy The appointment of all Directors should be Corporate Governance / appointment of all Directors subject to election by shareholders at the Annual Report of the Board of first opportunity Directors/Notice of Meeting
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Adoption Applicable Section in the Code Ref. Subject Applicable requirement Status Annual Report A. 9 DIRECTORS - Appraisal of Board Performance A.9.1 Annual appraisal of Board yy The Board should annually appraise Corporate Governance performance how effectively it has discharged its key responsibilities A.9.2 Self evaluation of Board and yy The Board should evaluate its performance Corporate Governance / Audit Board Committees and that of its committees annually Committee Report A.9.3 Declaration of basis of yy The Board should disclose how performance Corporate Governance performance evaluation evaluations have been carried out A. 10 DIRECTORS - Disclosure of information in respect of Directors
A.10.1 Biographical profiles and yy Annual Report should disclose the Board of Directors Profile relevant details of Directors biographical details of Directors and section / Corporate to be disclosed attendance at Board/committee meetings Governance / Audit Committee Report A. 11 DIRECTORS - Appraisal of Chief Executive Officer
A.11.1 Short, medium and long yy The Board should set out the short, Corporate Governance term objectives, financial and medium and long term objectives, financial non-financial objectives to and non-financial objectives at the be set commencement of each year A.11.2 Evaluation of CEO yy The performance of the CEO should be Corporate Governance performance evaluated by the Board at the end of the year B. 1 DIRECTORS REMUNERATION - Remuneration Procedure
B.1.1 Appointment of yy Remuneration Committee of parent Corporate Governance Remuneration Committee may function as such for the Company to make recommendations on Directors remuneration B.1.2 Composition of yy Board to appoint only Non-Executive Corporate Governance Remuneration Committee Directors to serve on Remuneration Committee B.1.3 Disclosure of members of yy The Annual Report should disclose the Corporate Governance Remuneration Committee Chairman and Directors who serve on the Remuneration Committee B.1.4 Remuneration of Non- yy Board to determine the level of Corporate Governance Executive Directors remuneration of Non-Executive Directors B.1.5 Access to professional advice yy Remuneration Committee should have Corporate Governance access to professional advice in order to determine appropriate remuneration for Executive Directors
28 29 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Corporate Governance Report Contd...
Adoption Applicable Section in the Code Ref. Subject Applicable requirement Status Annual Report B. 2 DIRECTORS REMUNERATION - Level and Make up of Remuneration B.2.1 Remuneration packages for yy Packages should be structured to attract, Corporate Governance Executive Directors retain and motivate executive Directors B.2.2 Remuneration packages to yy Packages should be comparable and Corporate Governance be appropriately positioned relative to that of other companies as well as the relative performance of the Company B.2.3 Appropriateness of yy When determining annual increases Corporate Governance remuneration and conditions remuneration committee should be in relation to other Group sensitive to that of other Group companies companies B.2.4 Performance related yy Performance related elements of Corporate Governance elements of remuneration remuneration should be aligned with interests of Company B.2.5 Share options yy Executive share options should not be Corporate Governance offered at a discount B.2.9 Remuneration packages for yy Should reflect time commitment and Corporate Governance non-executive Directors responsibilities of role and in line with existing market practice B. 3 DIRECTORS REMUNERATION - Disclosure of Remuneration B.3.1 Disclosure of details of yy The Annual Report should disclose the Financial Statements - Note remuneration remuneration paid to Directors 32.3 on page 135 C. 1 RELATIONS WITH SHAREOLDERS – Constructive use and conduct of Annual General Meeting C.1.1 Proxy votes to be counted yy The Company should count and indicate Corporate Governance the level of proxies lodged for and against in respect of each resolution C.1.2 Separate resolutions yy Separate resolutions should be proposed Corporate Governance for substantially separate issues Notice of Meeting C.1.3 Availability of Committee yy The chairmen of Board committees should Corporate Governance chairmen at AGM be available to answer any queries at AGM C.1.4 Notice of AGM yy 15 working days notice to be given to Notice of Meeting shareholders C.1.5 Procedure for voting at Company to circulate the procedure for voting Notice of Meeting meetings with Notice of Meeting
30 31 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Adoption Applicable Section in the Code Ref. Subject Applicable requirement Status Annual Report C. 2 MAJOR TRANSACTIONS C.2.1 Disclosure of Major yy Transactions that have a value which are Corporate Governance/ Transactions greater than half of the net assets of the Annual Report of the Board Company should be disclosed of Directors D.1 ACCOUNTABILITY AND AUDIT - Financial Reporting
D.1.1 Presentation of public reports yy Should be balanced, understandable and Management Discussion, comply with statutory and regulatory Corporate Governance requirements Risk Management Financial Statements D.1.2 Directors Report yy The Director’s Report should be included in Annual Report of the Board the Annual Report and confirm that of Directors yy the Company has not contravened laws or Audit Committee Report regulations in conducting its activities yy Material interests in contracts have been Annual Report of the Board declared by Directors of Directors/ yy the Company has endeavoured to ensure Financial Statements equitable treatment of shareholders Corporate Governance yy that the business is a “going concern” yy that there is reasonable assurance of the Annual Report of the Board effectiveness of the existing business of Directors systems following a review of the internal Audit Committee Report controls covering financial, operational and compliance Risk Management D.1.3 Respective responsibilities of yy The Annual Report should contain separate Directors and Auditors statements setting out the responsibilities Respective responsibilities of of the Directors for the preparation and Directors and Auditors presentation of the financial statements and the reporting responsibilities of the Auditors D.1.4 Management Discussion and yy Annual Report to include section on Management Discussion and Analysis Management Discussion and Analysis analysis D.1.5 Going Concern yy Directors to substantiate and report that Annual Report of the Board the business is a going concern or qualify of Directors accordingly D.1.6 Serious Loss of Capital yy Directors to summon an Extraordinary General Meeting in the event that the net N/A assets of the Company falls below 50% of the value of Shareholders Funds
30 31 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Corporate Governance Report Contd...
Adoption Applicable Section in the Code Ref. Subject Applicable requirement Status Annual Report D.2 ACCOUNTABILITY AND AUDIT - Internal Control D.2.1 Effectiveness of system of yy Directors to annually conduct a review Audit Committee Report internal controls of the effectiveness of the system of Risk Management internal controls. This responsibility may be delegated to the Audit Committee D.3 AUDIT COMMITTEE
D.3.1 Chairman and Composition of yy Should comprise of a minimum of two Audit Committee Report Audit Committee Independent, Non-Executive Directors yy Audit Committee Chairman should be appointed by the Board D.3.2 Duties of Audit Committee Should include Corporate Governance yy Review of scope and results of audit and its effectiveness yy Independence and objectivity of the Auditors D.3.3 Terms of Reference / Charter yy The Audit Committee should have a Corporate Governance written Term of Reference which define the purpose of the Committee and its duties and responsibilities D.3.4 Disclosures yy The Annual Report should disclose the Corporate Governance names of Directors serving on the Audit Audit Committee Report Committee yy The Audit Committee should determine the independence of the Auditors and disclose Corporate Governance the basis of such determination yy The Annual Report should contain a report by the Audit Committee setting out the manner of the compliance of the Company Audit Committee Report during the period to which the Report relates D.4 CODE OF BUSINESS CONDUCT AND ETHICS
D.4.1 Adoption of Code of Business yy The Company must adopt a Code of Corporate Governance Conduct and Ethics Business Conduct and Ethics for Directors and members of the senior management team and promptly disclose any violation of the Code
32 33 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Adoption Applicable Section in the Code Ref. Subject Applicable requirement Status Annual Report D.4.2 Chairman’s affirmation yy The Annual Report must include an Chairman’s Statement / affirmation by the Chairman that he is Director’s Report not aware of any violation of the Code of Business Conduct and Ethics D.5 CORPORATE GOVERNANCE DISCLOSURES
D.5.1 Corporate Governance Report yy The Annual Report should include a report Corporate Governance setting out the manner and extent to which the Company has adopted the principles and provisions of the Code of Best Practice on Corporate Governance E. INSTITUTIONAL INVESTORS – Structured Dialogue
E.1 Structured Dialogue with yy A regular and structured dialogue should Corporate Governance Shareholders be conducted with shareholders and the outcome of such dialogue should be communicated to the Board by the Chairman E.2 Evaluation of Governance yy Institutional investors should be Corporate Governance Disclosures by Institutional encouraged to consider the relevant factors Investors drawn to their attention with regard to Board structure and composition F. OTHER INVESTORS – Investment/Divestment decisions
F.1. Individual Investors yy Individual shareholders should be Corporate Governance encouraged to carry out adequate analysis and seek professional advice when making their investment/divestment decisions F.2 Shareholder Voting yy Individual shareholders should be Corporate Governance / encouraged to participate and exercise Form of Proxy their voting rights
32 33 34 35 ROYAL THAI Thai cuisine combines the best of gastronomic exoticism and culinary pleasure and the best place in which to indulge in it is at the Royal Thai. Overlooking a paved terrace, Royal Thai delights guests with authentic Thai food prepared by Thai master chefs, in a peaceful and serene ambience. The restaurant also has an elegantly furnished private dining room, which could be reserved for private gatherings.
34 35 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Management Discussion & Analysis
Trans Asia Hotels PLC completed a year of International tourist arrivals to Europe, the strong performance for the period ended most visited region in the world grew by International Tourist Arrivals 31st March 2013. To place the hotel’s 3% with total arrivals reaching 535 Mn. performance in context, a brief overview of Central and Eastern Europe destinations as 2012/13 1,035 Mn the global and local tourism industry would a sub-region, experienced the best results be pertinent. growing by 8%, followed by Western Europe 2011/12 996 Mn which grew by 3%. Destinations in Southern Global Tourism Trends Mediterranean Europe consolidated their 2010/11 952 Mn Global tourism increased by 4% surpassing excellent performance of 2011 and returned the much awaited milestone of one billion in 2012 to normalisation with a growth 2009/10 894 Mn travellers to reach 1.035 billion in 2012 rate of only 2%. Arrivals to Americas saw an according to the latest UNWTO World increase 4% with arrivals reaching 162 Mn. Source : WTO Tourism Barometer. This was despite the Leading the growth were destinations in difficult political and continued economic Central America which grew by 6%. South International tourist arrival by world volatility around the globe, particularly in the with 2013 Projection region America though growing by 4%, showed Euro Zone. Emerging economies growing 2012 Arrival 2013 Increase by 4.1% regained the lead over advanced some slowdown as compared to the double-digit growth of 2010 and 2011. The Middle East 53 Mn 3 Mn economies which grew by 3.6%, with Asia +0% to +5% growth Caribbean growing by 4% performed above and the Pacific showing the strongest Europe 535 Mn 16 Mn results. Asia and Pacific emerged the best the previous two years, while North America +2% to +3% growth performing region growing by 7 %, with with a growth of 3% consolidated its growth. Asia and the 233 Mn 14 Mn Pacific +5% to +6% growth arrivals surpassing 233 Mn. The growth of Americas 162 Mn 6 Mn 15 Mn international tourists compared to Asia and the Pacific grew by 7% with +3% to +4% growth arrivals in 2012 reaching a total of 233 Mn Africa 52 Mn 3 Mn the previous year was partly due to tourists +4% to +6% growth international tourists. Leading contributor in shifting away from the Middle East. Source : WTO International Tourist Arrival by World Region
Europe 535 Mn America +3.4% 162 Mn + 4% growth Middle east growth 51% of total 53 Mn 16% of total arrivals -5% growth arrivals Asia and 5% of total the pacific arrivals 233 Mn + Africa 7% growth 23% of to- 52 Mn + 6% Source : WTO growth tal arrivals 5% of total arrivals
Source : WTO 36 37 TRANS ASIA HOTELS PLC | Annual Report 2012/13
this region was South East Asia. Growth was In year-on-year measurements, the region’s International Tourist Arrivals to Sri also strong in North-East Asia as Japanese occupancy was constant at 68.3 %, average Lanka By World Region inbound and outbound tourism recovered daily rate increased to US $129.26 and 2011 2012 with a growth rate of 6%, while it was revenue per available room was up by 1.4 % comparatively weaker in South Asia and in to US$ 88.25. Asia and the 438,065 Pacific 380,308 Oceania which grew by only 4%. Africa with a Middle East 56,169 impressive growth of 6% recovered well from With an impressive growth of 9%, South- 56,330 Africa 5,045 its setback in 2011 when arrivals declined East Asia was the best performing sub- 3,614 by 1% largely to the negative results of region within Asia and Pacific, due to the Europe 445,464 North Africa. Results in the Middle East was implementation of policies that foster 365,630 intraregional cooperation and coordination Americas 60,862 a decline of 5%, and improved performance 50,093 compared to a negative 7% contraction in in tourism. However it is pertinent to also Source : WTO 2011. The region recorded an estimated 3 note the bounce back of Japan from the million international tourist arrivals less in significant drop suffered in its tourism 2012, in spite of the clear recovery in Egypt. industry after the earthquake that ravaged Country Arrivals By Month -SRI LANKA Honshu’s northeastern coast. In 2012, Following the positive trend in tourism, international arrivals grew by 6 % from the 2011/12 2012/13
international tourism receipts exceeded year before, a clearly hopeful sign that the March 91,102 98,155 US$ 1.4 trillion during 2012, up from US$ nation is slowly but surely bouncing back February 83,549 93,232 January 85,874 97,411 1 trillion in 2011. Europe held the largest from the triple-disaster two years ago. December 97,517 122,252 share of tourism receipts in absolute November 90,889 109,202 October 69,563 80,379 numbers reaching US$ 477 billion in 2012. According to Pacific Asia Travel Association September 60,219 71,111 This accounted for 44% of the total tourism (PATA), Asia and the Pacific continued to August 72,463 79,456 July 83,786 90,338 receipts. Asia and the Pacific followed in the add substantially to the global international June 53,636 65,245 second place with a 29 % share amounting arrivals count whilst continuing in terms of May 48,943 57,506 April 63,835 69,591 to US$ 309 billion. Americas secured a 20 % generating and receiving markets across the Source : WTO share while the Middle East retained a 4 % region with substantial gains in both the share. Africa held the least share of 3 %. volume and the value of these movements. Following the surge in tourism, receipts Tourism in Asia Tourism in Sri Lanka from tourism surpassed the USD one billion Asia and Pacific recorded the highest growth Sri Lankan tourism industry witnessed millstone to reach US $ 1,003 billion, an in inbound tourism arrivals in 2012 with an a sizeable growth in 2012. Breaking all impressive growth of 25%. The average impressive growth rate of 7%. It was also records, arrivals surpassed the milestone one spend by a tourist increased from US$ 97 to the second highest region in comparison million mark with the number of arrivals to US$ 103 in 2012. With a growth rate of 18.4% with other regions across the globe for the the country recording 1,005,605 by end of Western Europe brought in the highest number of international tourist visited, with the year with a growth rate of 17.6 %. The number of tourists, totaling to 373,063, the number surpassing 230,000 visitors highest number of arrivals was recorded despite the slow recovery from the economic during 2012. Following the surge in tourism, in December 2012 with the number of volatility in the region. Visitors from South all three key performance metrics recorded arrivals to the country surpassing 122,250 Asia followed suit with a total of 247,559 positive results in March 2013. tourists. Attracting a number of international arrivals, contributed largely by tourist from events such as T20 World cup 2012,English India. With an impressive growth of 38%, cricket series, Indian cricket series, Pakistan number of arrivals from East Asia amounted cricket series, inaugural Sri Lanka Premier to 132,730. The main contributors in this League Cricket tournament, Commonwealth region were China, Indonesia, Malaysia and Parliament Conference added momentum to Philippines. the local tourism industry in 2012. 36 37 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Management Discussion & Analysis Contd...
A comprehensive development framework was established by the government in 2011 to position tourism as a key driver in the nation’s economic advancement. Promoting Sri Lanka as an exotic tourist destination, the government has earmarked to attract 2.5 million tourists. It has also targeted US $ 5 billion foreign direct investments while generating 500,000 tourism related employment opportunities by 2016.
Several developmental and promotional initiatives were launched by the government to achieve this target. Introduction of the minimum room rate structure for city hotels, development of infrastructure including the General Manager receiving the Best Five Star City Hotel award at Sri Lanka Tourism Awards held on 31 August 2012 construction of the new international airport, port, highway, IT hubs and power plants coupled with the promotion of Sri Lanka as Best Luxury Hotel the ‘best place to be’ bear testament to this In Sri Lanka strategy. Operation of sea planes within the Best Five Star City Hotel (Sri Lanka Tourism Awards) island added impetus to the local tourism industry, facilitating faster mobility. With the target increase in arrivals, additional hotel rooms are required to cater to this need. The Preferred Brands Talented People Best-in-class Delivery industry saw many resort and city hotels undertaking numerous refurbishment and capacity enhancement initiatives to address this need and improve the product offering. Accordingly, tourist hotels in operation saw an Invest in growth increase from 14,653 rooms in 2011 to 15,510 being available as at year ended 2012. The Grow market share Sustainable margin growth conducive government policies coupled with the potential identified in post war Sri Lanka, The hotel announced many renowned accomplishments in the Year 2012. In being recognised the industry also saw many international as the “Best Luxury Hotel in Sri Lanka” at the Business Destinations 2012 Travel Awards in the chains entering the local market. United Kingdom, Cinnamon Lakeside proved its contribution to the development of the Sri Lankan hospitality industry. As the winner of the ‘Best Luxury Hotel Sri Lanka”, Cinnamon Cinnamon Lakeside Colombo – Lakeside Colombo was recognised for achieving overall excellence in innovativeness, unparalleled standards in product and service, corporate values and sustainable practices. Operational Review The Hotel was also awarded the Best Five Star City Hotel, Sri Lanka for the second consecutive Cinnamon Lakeside Colombo had a strong year at the Sri Lanka Tourism Awards 2011 held on 31st August 2012. The hotel has excelled year of performance during the financial year in innovation and sustainability amongst other categories to receive this coveted award. The ended 31st March 2013. Its commitment main contributor being the innovation with the launch of “80 on the Lake”, the first mobile to working towards satisfying the key floating venue in Colombo by a Five Star Hotel. Also, carrying out continuous green initiatives stakeholders was visible with Profit Before towards a greener environment and the immense contribution to the society by participating Tax (PBT) for the year surpassing the Rupees in a range of multi religious activities were given due consideration in the evaluation process. One Billion mark for the first time in history. Going hand in hand with this the hotel business partner, Azmaara Spa was also adjudged the ‘Best Host Hotel Spa’ for the second consecutive year. 38 39 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Royale Suite Executive Floor Room
In its latest publication of Sri Lanka’s Performance, Products & Services our guests accommodated on the Executive Leading Brands, Brands Finance, a leading Delivering timeless luxury to our valued Floor. Located on the upper-most floor, the independent consultancy founded in the UK. customers, Cinnamon Lakeside Colombo lounge boasts a panoramic view of the city listed Cinnamon Lakeside Colombo as the takes pride in its newly refurbished rooms and lake, a defining experience designed Highest Valued Hospitality Brand in Sri Lanka. and suites. Post refurbishment, the hotel to delight the discerning traveller. The The annual review has been published for has three hundred and forty six elegant complimentary services offered include an eight consecutive years by Brand Finance. rooms and suites on offer that are designed American breakfast, all day tea and coffee The review assesses the health of leading to pre-empt every need and indulge every service and cocktails during ‘Happy Hour’. brands in Sri Lanka by using available mood of guests. A view of the metropolitan The 20 exquisite suites of the hotel portray published data supplemented with skyline is framed to perfection from a class of their own. All suites open onto a independent market research to analyse each of our 164 superior rooms. Our 133 spacious terraced balcony. Express check-in performance. premium rooms have been designed with and check-out facilities from the comfort of the discerning business traveller’s leisure the room are available for the convenience Cinnamon Lakeside Colombo has also been needs in mind. The exquisite view of the of our Executive floor and suite guests awarded a Certificate of Excellence in 2012 Beira Lake complements the sophistication together with tempting platters of the by Trip Advisor, the world’s largest travel of these rooms. Convenience and express finest handmade chocolates and delicious site which enables travellers to plan and service are the principles upon which the tropical fruit. The Presidential Suite of the have the perfect trip. The accolade, which 29 Executive Rooms are presented on the hotel is a tribute to the spirit of luxury. A honours hospitality excellence, is given only highest floor. With black, gold and white master bedroom with a personal Jacuzzi to establishments that consistently achieve tones, inspiring visual perspectives and and wall mounted plasma TV for sheer bliss. outstanding traveller reviews on Trip Advisor, subtle textures, its design and décor are A state-of-the-art entertainment space and is extended to qualifying businesses a testament to simple sophistication. A graces the living room alongside the grand worldwide. 24-hour butler service and access to the piano. The stately dining room is eloquently Executive Lounge is available exclusively to complemented by the personal bar and well equipped kitchen.
38 39 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Management Discussion & Analysis Contd...
Welcoming Turkish Airline Crew North Western Blacks Rugby Team
SCALE BRAND MEMBERSHIP REWARDS WEB 346 Rooms 126,290 Room nights Affordable indulgence 576 Library memberships 5 Language sites
REVENUE FOOD & BEVERAGE MANAGEMENT 60% Occupancy Rs. 1.3 BN ROOM REVENUE 30% GROWTH 11 outlets and banquet Strong internal controls facilities Rs. 1.2 BN F & B REVENUE WITH 15% GROWTH Effective cost controlling
RESERVATIONS SYSTEMS CAPITAL EXPENDITURE SALES FORCE PROMOTIONAL
24 Hour call center Rs. 207 Mn in capital Proactive & customer centric Rs. 80 Mn promotional spend expenditure to generate demand
T20 World Cup Welcoming Brian Lara 40 41 TRANS ASIA HOTELS PLC | Annual Report 2012/13
The demand for luxury at Cinnamon to the discontinuation of business operation 130 to USD 135 during the financial year. The Lakeside Colombo is further testament by by Gulf Air and reduced flight schedules by rate parity sales strategy followed by the two the occupancy level of each of our room Oman Air. On a positive note on the Crew city Cinnamon hotels enabled this above categories. The occupancy level of Superior segment, the hotel was able to secure the minimum market rate ARR achievement. rooms remained constant at 65%,whilst business of Turkish Airlines crew during the the occupancy of Premium rooms and latter part of the financial year. Contribution Room Type Occupancy suites grew from 45% to 55% and 44% to to the total room revenue of the Hotel by 58% respectively. The impressive growth in Crew segment has reduced from 6% last year Superior 65 % +1% growth occupancy of the executive floor rooms from to 4% this year. (Graph of Mix) 59% during last financial year to 72% during Executive 72 % +13% the current financial year is commendable. In awareness of the shift in the global Floor Rooms growth economic fortunes in the recent past, a Suites 58% +14% growth Room revenue of the hotel witnessed a number of new market strategies such as change in customer mix as well during the aggressive participation in Travel Trade Premium 55 % +5% growth financial year 2012/13. Strong performance Fairs in India and focusing on business in the business segment continued this from China. As a result, the contribution to year contributing to 61% of the total total room nights from emerging markets room revenue, whilst the leisure segment has increased from 37% to 40% during the too saw a significant shift contributing financial year 2012/13. The hotel’s strategy Room Revenue Composition 24% in comparison to 11% during the to capture business by way of web based 4% previous financial year. The marketing and bookings has also been aggressive during management strategies implemented during the year. Being awarded with a Certificate of 11% 2012/13
the year to strengthen the room revenue Excellence by Trip Advisor during the year 11% generated from the leisure segment paid bears testament to this strategy. The number 12% 2011/12 dividends with the hotel achieving a growth of room nights generated via web based 58% 24% 19% 61% of 176% from Rs. 119 million to Rs. 328 million. bookings have increased to 7,036 this year Cinnamon Lakeside was the proud host hotel from 5,347 room nights last year, recording a for the match officials and three teams at commendable growth of 32%. the T20 World Cup 2012. Accommodation was also provided for three inaugural Sri The product, service and the right strategies Business / Corporate MICE Lanka Premier League teams and “North adopted by the hotel enabled it to generate Leisure Crew Western Blacks” rugby team which ranked a room revenue of Rs. 1.352 million during on top of the Carlton 7’s table at the Carlton the financial year, being a applaudable 7’s Rugby Tournament held in Colombo. growth of 30% compared to Rs. 1,043 Room Revenue Vs Occupancy However, there was a drop in room revenue million during the previous financial year. contributed by the MICE segment by 28% Room revenue contributed 47% to the total Room Revenue Occupancy from Rs. 206 million to Rs. 148 million due revenue of the hotel making it one of the to reduction of the total number of events main revenue lines. The hotel was also able 2012/13 Rs. 1,352 Mn 60% held during the year in comparison to the to maintain an occupancy level of 60%, a 3% 2011/12 Rs. 1,043 Mn 55 % previous year. Contribution from MICE higher than the city five star hotel occupancy segment to the total room revenue of the level of 57%. The average room rate (ARR ) 2010/11 Rs. 800 Mn 62% hotel amounts to 11%. The Crew segment of the hotel improved by USD 5, from USD 2009/10 Rs. 393 Mn 41% also saw a drop of 18% during the year due 2008/09 Rs. 390 Mn 46 %
40 41 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Management Discussion & Analysis Contd...
Royal Thai 80 on the Lake
Food & Beverage produced yet another winner competing Every Sunday, the guests were offered a With the recruitment of two industry against all the hotels at the Colombo different Lunch with an international cuisine veterans with experience in leading hotels Region Bartender Challenge Competition. that includes a carvery with a choice of free across the globe, Mr. Martin Becquart, a These wins showcased the wealth of talent flow of Larger or Bubbly. The promotions French national as the Executive Chef and Cinnamon Lakeside Colombo possesses; had a variety of different authentic food Mr. Duan Qin as the Chinese Chef, our being just one of the ingredients that from different countries prepared by guest F&B team did us proud by winning several contributed to the impressive Food and chefs beside the A’la Carte menu available on awards during the year. To name a few, the Beverage ( F & B) revenue of the hotel. request. Every Friday and Saturday, the Night Mystery Box Competition 2012 organised by Owl buffet was the best place to indulge in the Chefs’ Guild of Sri Lanka and the World Competing with many new stand alone for a late night snack. With the variety in the Spice Food Festival 2012 organised by Sri F & B dining options available to the variety product offering coupled with the service Lanka Tourism. At the latter, the Hotel won seeking customers the hotel continued to quality the “Dining Room” generated Rs. three awards out of six to continue their be innovative with its product offerings and 215 million contributing 34% to the total F successful run at winning awards grabbing services, embodying the brand promise & B outlet revenue. All aspects of financial the awards for best stall, best mocktail and of affordable indulgence for all ages by performance of the outlet far exceeded best ‘kottu’. At the Spice Festival, the Hotel providing a range of diverse experiences to in comparison to the previous year. The showcased the Vietnamese cuisine specially the guests. revenue grew by 24% while the average created by guest Head Chef Luong Duc Dang check and number of covers grew by 12% from Vietnam which was followed by a Food Every month, various types of promotions and 10% respectively. Promotion at Dining Room with a variety of from signature dishes, promotional buffets, dishes infused with authentic Vietnamese BBQs to Sunday Specials were held at our “70 North” is a one-of-a-kind restaurant spices. Also, at the 21st National Bartenders’ signature restaurants. and bar offering a chic indoor bar and a Cocktail and Flaring Competition, Cinnamon stylishly casual al fresco dining experience Lakeside, being the only Hotel in Sri Lanka “The Dining Room”, a melting pot of by the waters of the Beira Lake. Latin BBQ, to win two awards in the same competition, cosmopolitan culinary extravagance offers guests a different concept inspired emerged victorious with winners both in continued to offer its guests an ambience from South American & Caribbean food flaring and spot-in the classic categories, of fine dining at breakfast, lunch and dinner that includes mixed vegetable shooters per driving the Hotel to success. The Hotel and even that special midnight craving. table and free flow of lagers and coolers.
42 43 TRANS ASIA HOTELS PLC | Annual Report 2012/13
While allowing guests to relax and unwind acclaimed by the guests. The venue which “High Tea” at “The Lounge” continued to be in an atmosphere with a stunning view of was largely used as an up market banquet extremely popular as it offers the perfect the Beira Lake and sounds of the tranquil venue generated over Rs. 54 million during occasion to gather family, friends and waters of a crystal blue swimming pool, its first year of operation. colleagues alike over an exquisite selection great cocktails are served with different live of treats, indulge in heavenly chocolate band every night. With the introduction of As always, our signature restaurants, Royal treats with the rich High Tea spread explosive Indian delicacies, the ambience Thai and Long Feng were the perfect way for which includes a delightful assortment at 70 North continued to provide a perfect businessmen to treat themselves to a quick, of sweet and savoury goodies. This ever location on the deck at one of Colombo’s value for money authentic Executive Lunch popular colonial High Tea at the Lounge trendiest bars whilst enjoying the music served on weekdays. With the diverse range has established a reputation for fine food, and relaxing in the alfresco area by the lake. of Chinese cuisine presented for the culinary beverages and service in keeping with Affected largely by the adverse weather delight of the discerning palate, the Dim the Hotel’s exemplary standards. Keeping patterns the financial performance of this Sum menu was another creative light lunch the excitement alive, the hotel will feature outlet was similar to the performance in our guests experience at Long Feng. Every special editions of the High Tea every month 2011/12. month Royal Thai and Long Feng promoted a from 3 pm to 6 pm. To top off the afternoon, “chef’ special dish” for an affordable price for the hotel offers its plush ambiance with “80 on the Lake”, the first mobile floating the diners to experience a different dish from intermittent views of the pool and lake and venue in Colombo by a Five Star Hotel was the menu. An elegantly designed private light piano music. launched in December 2011 endorsing the dining room is available on request at both John Keells leisure sector vision to “always restaurants. Generating a revenue of Rs. 140 The Sushi Bar located at the Lounge offers be the hospitality trendsetter”. With this, million, the two restaurants contributed the best from the land of the rising sun. the guests were provided an opportunity to 22% to the total F & B outlet revenue. A Sushi, Sashimi, Tempura and Miso Soup, a have their product launches, conferences, growth in the revenue by 15% and 14% tempting array of healthy Japanese dishes weddings, private parties to Sunday bubbly respectively from Royal Thai and Long Feng are served in double quick time, providing an brunch with a free flow of bubbly on the in comparison to the performance of the ideal place for a quick lunch, an evening bite lake. This new experience was highly two restaurants the previous year was a note or a quiet chat with a friend. worthy achievement .
F & B Revenue Composition Rs.77 Mn Rs.77 Rs. 6 Mn Rs. Rs. 64 Mn Rs. 31 Mn Rs. 34 Mn Rs. 93 Mn Rs. 36 Mn Rs. 66 Mn Rs. 14 Mn Rs. Rs. 215Mn Rs. 2012/13 561 Mn Rs.
2011/12 Rs. 175 Mn Rs. 56 Mn Rs. 68 Mn Rs. 26 Mn Rs. 34 Mn Rs. 481 Mn Rs. 95 Mn Rs. 32 Mn Rs. 53 Mn Rs. 15 Mn Rs. 5 Mn Rs.
The Dinning Room Library 70 North Pool Bar Long Feng Room Service The Lounge Mini Bar Royal Thai Banquets Goodies
42 43 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Management Discussion & Analysis Contd...
The Pool Bar was another ideal place to relax These exciting initiatives implemented posed by new dining options to customers. while hosting promotions like Lakeside BBQ during the year had an overwhelming Growing by 15% F&B revenue reached Rs. twice month, dining under the stars with a response from appreciative guests proving 1,198 million with Restaurants contributing variation of surf and turf food. the hotel’s reputation as “the place to be”. Rs. 680 million, 52% to the total F&B revenue. Banquets accounted for the balance 48% The hotel’s patisserie, ”Goodies” continued Luxurious, cosy or professional, our banquet with its impressive 18% growth in revenue. to host monthly promotions spotlighting spaces make weddings, conferences or Total F & B having a share of 42% of the the different cakes for guest to experience. The meetings nothing short of perfect. The hotels total revenue of the hotel became the the candies are our latest addition to the outlet banquet venues have become the most second largest contributor. where any age group can enjoy the craziest sought after in the city. Cinnamon Lakeside candies in town. This has become a popular is proud to be a part of 370 weddings during The hotel’s product offerings, marketing venue to grab a quick breakfast, take a break the current financial year, an increase of strategies and accolades did not get limited for lunch, hang out after work, rejuvenate 31% from 277 weddings held at the hotel to rooms and F & B operations. The Open after a workout at the gymnasium or to simply during 2011/12. The total Banquet events of Ranking Tennis Championship hosted by treat oneself. Correctly branded as a hidden the hotel grew by 18% in 2012/13 to 1,980 Cinnamon Lakeside annually also took star of the hotel “The Goodies” generated a from 1,510 in 2011/12. This had a cascading place with over 400 players participating revenue of Rs. 66 million during the year an effect to the total revenue generated from including all national level players of all impressive growth of 25% compared to the banquet operation which also grew by 18% age groups in November & December previous year. contributing Rs. 561 million to the F & B 2012. The tournament was conducted in revenue of the hotel. accordance with the Code of Conduct of the “The Library”, the executive club while being International Tennis Federation along with a quiet lounge, hosted several promotions Apart from the differentiated product and the Sri Lanka Tennis Association (SLTA) and encouraging more guests to patronise the service offerings the hotel also uses social is well recognised by the Sri Lankan tennis venue. Transforming it into a night club with media such as facebook, twitter and linkedin community and is featured on the Sri Lanka DJ music and live band on certain nights, to promote Lakeside as a preferred dining Tennis Association’s yearly calendar of events the Library offered its members and resident option. All these strategies are testament to guests an indulging experience with a the growth in the total F & B revenue during Selection of the Hotel’s Poolside by an difference. the financial year despite stiff competition international film crew, the National Geographic Television Channel (Nat Geo) for their first ever photography based reality 44 45 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Open Ranking Tennis Tournament Nat Geo Film Crew
show and having it judged by celebrity The main contributor to the other revenue, investment property the hotel surpassed the judges was another achievement during the the hotel’s external Laundry generated a Rs. 1 billion mark in Profit Before Tax during year. This proved that Cinnamon Lakeside revenue of Rs. 72 million a 10% growth from the financial year 2012/13. Colombo is internationally known for its the previous year revenue of Rs. 66 million. share of nature in the form of bird life owing The Spa generated a revenue of Rs. 18 Future Plans and Expectations to its location directly adjacent to the Beira million. this is an impressive growth of 43% The tourism sector is identified as a key Lake. With the high viewing audience of the in comparison to the previous year’s revenue economic driver in the country. Surpassing Nat Geo Channel, Sri Lanka received a high of Rs. 12 million. Investment property rental one million arrivals in 2012, Sri Lanka has level of exposure from an international TV for the year was adversely affected due to the become one of the most sought after Channel, portraying Sri Lanka as an ideal transition period from one tenant to another. destinations in the region. UNTWO forecasts tourist destination. Other revenue was also adversely affected by 18.8 million tourists being attracted to the drop in the internet income during the South Asia by 2020, of which Sri Lanka is In addition to the above product mix, Power year. As part of a long term strategy as well expected to get a share of 3 million. A shift Drome, our Health Club was upgraded as keeping in line with the changing global in the number of tourists from traditional during the year to offer an invigorating trend, the hotel offered free internet to its markets to emerging markets such as India experience for the mind and body. The room guests from October 2012. This strategy, is also visible. The hotel is aware of this gymnasium is now fully equipped with, even though if had a positive impact on the shift and understands the importance of upgraded machines, changing rooms, sauna room revenue resulted in a drop of internet creating strategy to cater to this new Asia. and steam room. It also has a space for revenue from Rs. 14 million to Rs. 9 million Competition posed by entry of international Aerobics, Squash courts and Tennis courts during the year. Other revenue contributed hotel chains such as Shangri-La, Hyatt, with floodlit facilities for evening games. 10% to the total revenue of the hotel. Sheraton, Movenpick and by alternate accommodation such as city apartments are Revenue clustered as “Other Revenue” Luxury and enhanced service standards as also being born in mind when formulating along with Revenue generated from Hotel the key ingredient, the hotel generated an and implementing strategy of the hotel. external Laundry, Spa and rental income impressive Rs. 858 million as profit from from investment property generated Rs. operating activities. Cascading from the 289 million during the year. This can be strong operating profit and the benefit considered marginally less than the Rs. derived by way of the revaluation of the 290 million generated in the previous year. 44 45 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Management Discussion & Analysis Contd...
Power Drome Azmaara Spa
WHERE WE COMPETE HOW WE WIN Relevant customer segments Preferred brand Talented people Most attractive markets Best in class delivery Appropriate business model Responsible business
ANNUAL PERFORMANCE PLAN LONG TERM INCENTIVE PLAN Measures provide focus on periodic Measures balance of quality for performance sustainable growth
HEARTBEAT ACTUAL MARKET SHARE Increase guest satisfaction as an BRANDS Supports our business model, indicator of the strength of our segment and market strategies to brand grow system size
ENGAGEMENT RELATIVE REV PAR GROWTH Increase the engagement of our PEOPLE Reflects the sustainable power of people who bring our brand to life our brand. Scale and experience and engaged workforce focusses growth EBIT on quality rooms in key markets Provides annual focus on earnings growth driven by core operating DELIVERY RELATIVE EPS inputs namely rooms growth, rev par Provides alignment with shareholder & margins returns
RESPONSIBLE BUSINESS
46 47 TRANS ASIA HOTELS PLC | Annual Report 2012/13
In this back drop, the hotel alongside John has invested substantially on training and treated water for flushing purposes and to Keells Holdings Leisure group is in the development programmed coupled with the water the foliage in the hotel. The treatment process of evolving our current brand to new lifestyle brand framework. This ensures plant will also enable the sewerage of the meet the new shift in the tourism industry that the hotel will always have a flow of hotel to be converted to natural fertiliser and emanating from the Asian region. Over the talent and skilled professionals ready and be used for organic cultivation of vegetables. last two years many refurbishment projects able to fill key positions as we progress. The were implemented at Cinnamon Lakeside Human Resource Complex, construction Looking forward, “luxury” and the to align to this group strategy. All the rooms of which was started during 2012 with an differentiated product offering will be a way of the hotel were refurbished to provide investment of Rs. 215 million is scheduled of life in the leisure industry of Sri lanka, and timeless luxury to our most deserving to be completed in October 2013 , another the hotel is confident that it has the brand, customers. The hotel also introduced the investment by the hotel in its efforts of being strategy, people and resources to continue to floating restaurant 08 on the lake to the city the preferred employer. A detailed reporting deliver high growth in the years ahead and five star patronages in January 2012. of the training programmes implemented on satisfy the aspiration of all key stakeholders. A luxurious experience to the variety seeking our human capital is further outlined in the customer both as a banquet venue and a Sustainability Report. Sunday family dining option. Further plans are to unfold during the next financial Believing in the philosophy of sustainability, year by the hotel to upgrade many of its F we have not forgotten our part of being & B offerings. A budget of Rs. 35 million is a socially responsible citizen. With this in allocated to upgrade the hotels pool side, mind, a Rs. 90 million project is budgeted banquet operation and popular night venue to construct a water recycling plant during 70 North. the coming year with a view to maintaining the waste water level of the hotel within the With the brand transformation the hotel is COD (Chemical Oxygen Demand) and BOD also aware that best of strategies can remain (Biological Oxygen Demand) levels specified on the drawing board, if not for the agility by legislation. Ambitious plans are also and the passion of our people. The hotel worked out around this project to use the continued to invest in skills development across the hotel. Despite one of the best in infrastructure and product portfolio the luxury in our service will only be as good as the people who make it happen. The hotel
46 47 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Financial Review
Overview was 411,085, a 2% increase from the previous whilst growth in the F & B revenue due to The year under review marked many years value of 403,420. The average room the festive season contributed to quarter milestones in the tourism industry. Total rate saw a significant increase from previous three performance. However the slow down tourist arrivals to the country surpassed the year to close at USD 135 in comparison historical one million mark ending with 1.005 to the previous year value of USD 127. Mn in 2012 a growth of 17.6% in comparison However quarterly analysis of the city rooms Quarterly Revenue & Profitability to Year 2011. International tourism also performance reveals that the 4th quarter or surpassed the one billion mile stone during the period from January to March 2013 has Turnover PBT the year with international tourist arrivals slowed down in terms of performance in Expenses PAT reaching 1.035 Bn in 2012 a growth of comparison to the first three quarters of the Q 4 Rs.624 Mn Rs. 446 Mn Rs. 489 Mn Rs. 442 Mn 4%. Emerging economies grew +4.1% by year. Food and Beverage (F & B) business regaining the lead over advance economies in the city five star properties also enjoyed a Q 3 Rs. 819 Mn Rs. 548 Mn Rs. 289 Mn Rs. 249 Mn which grew by +3.6% with Asia and the significant growth. The total F & B Revenue Pacific showing the strongest results. for the year grew by 15% from Rs. 5,205 Mn Q 2 Rs. 755 Mn Rs. 517 Mn Rs. 250 Mn Rs. 216 Mn to Rs. 6,011 Mn. Q 1 Rs. 643 Mn Rs. 471 Mn Rs. 183 Mn Rs. 158 Mn The growth in demand resulted in the Sri Lanka tourism industry experiencing This overall favorable performance of the increased occupancy and better average industry had positive effects flowing to prices. In 2012 the Sri Lankan industry the hotel which ended the financial year experienced in the market cascaded to witnessed an increase in per capita spending 31st March 2013 with a strong financial the hotel as well slowing down the growth by a tourist from US$ 97 to US$ 103. This performance surpassing the one billion during the fourth quarter. augurs well for the industry as it reflects the milestones in terms of Profit Before tax for potential to increase revenue by offering the first time in the history. Revenue from room sales accounted for varied and quality products. Earnings from 48% of the total revenue. The Rs. 1,352 Mn tourism surpassed the USD one billion mark Revenue room revenue generated for the year was a during the year. Trans Asia Hotels PLC enjoyed a revenue of significant 30% increase from the previous Rs. 2,840 Mn during the financial year. This yearly performance of Rs. 1,043 Mn. The The city Five Star properties enjoyed a is a significant growth of 20% compared hotel’s occupancy for the year was 60%. This growth of 24% in terms of Rooms Revenue to previous year revenue of Rs. 2,375 Mn. is a significant achievement compared to during the financial year 2012/13. The Impressive performance from room revenue the previous year occupancy of 55% and the number of room nights occupied in the city and growth witnessed in the F & B segment total city five star hotel occupancy of 57%. contributed to this strong growth despite a The hotel also enjoyed a increase average marginal drop from the revenue clustered as City Five Star Occupied Rooms Night room rate (ARR) for the year. The average others. room rate increased by USD 5 to USD 135 2012/13 2011/12 compared to the previous year ARR of USD The hotel experienced steady growth in Q 4 93,641 83,984 130. A revision in prices of all categories the first three quarters of the year. Revenue of rooms as well as up selling of rooms to growth was impressive in quarter one, two Q 4 110,847 100,794 executive floor rooms and suites enabled the and three with a revenue of Rs. 643 Mn , hotel to command this favorable position. Rs. 755 Mn and Rs. 818 Mn respectively. Q 4 110,113 104,738 this was a growth of 37%, 31% and 25% The strong performance in the business in comparison of the corresponding Q 4 96,484 113,904 segment continued this year as well period in the pervious year. Growth in contributing to 61% of the total room the room revenue largely contributed to revenue. The total room revenue generated the performance of quarter one and two from the business segment grew by 26% 48 49 TRANS ASIA HOTELS PLC | Annual Report 2012/13
amounting to Rs. 824 Mn. The strategy to This growth was as a result of increase in line with the changing global trend the hotel increase the awareness of the hotel among patronage of the venues by corporate as offered free internet to its room guest from leisure travelers also bore fruit during the well as the family segment. Further revenue October 2012. This strategy even though year with the leisure segment contributing was augmented by an increase in capacity had a positive impact on the room revenue Rs. 328 Mn to the total room revenue, an by way of a new venue “8 Degrees on the resulted in a drop of internet revenue increase of 161% compared to the previous Lake”, in December 2011. This two storied from Rs. 14 Mn to Rs. 9 Mn during the year. year. MICE and Crew segments contributed catamaran which provided an up market Other revenue contributed 10% to the total Rs. 148 Mn and Rs .52 Mn respectively. banquet venue for many corporate events revenue of the hotel. The change in mix aligns with the markets also served as a family dining option during strategy of the hotel. Sundays. Income Distribution
Composition of Total Revenue F & B revenue benefited from increase in Restaurant revenues which contributed 53% to the total F & B revenue. With the entry of 2012/13 9% our new Executive Chef Mr. Martin Bacquet 25% 35% 32% 2012/13 during the year, the hotel offers quality 2011/12 12% and varied experience to our patrons at the 33% 5% 10% 22% 44% 2011/12 right price. The increase in patronage of the 3% 43% 44% 48% restaurants is reflective in both our revenue 5% numbers as well as the number of covers. 9% 19% 2% Restaurant and revenue from promotions Cost of Sales grew by 14% to Rs. 629 Mn in comparison Administrative Expenses to Rs. 555 Mn the previous year. The number Sales & Marketing Expenses Rooms Other of covers increased by 3% to 425,120 covers Other Operating Expenses Food & Beverages from 411,920 covers in year 2011/12. Income Tax Expense Revenue clustered as “Other Revenue” along Profit for the Year with rental income from investment property Food and Beverage ( F & B) revenue generated Rs. 289 Mn during the year. This is reached Rs. 1,199 Mn, an increase of 15% in a marginal drop of 3% in comparison to the Profitability comparison to the last year revenue of Rs. Rs. 290 Mn generated in the previous year. Gross Profit (GP) increased by 21% to Rs. 1,042 Mn .The growth in F & B revenue can The main contributor to the other revenue, 1,819 Mn from Rs. 1,503 Mn in the previous be considered commendable despite new the hotel’s external Laundry generated a year. GP margin increased to 64% from stand alone dining options being available revenue of Rs. 72 Mn a 10% growth from the previous year’s 63%. The positive impact on for the variety seeking customer. Growth of previous year revenue of Rs. 66 Mn. The Spa the gross profit margin can be attributed to city five star hotels F & B revenue was only generated a revenue of Rs. 18 Mn. This is an the revised pricing as well as the up selling of 15% and, was impacted by variety of dining impressive growth of 43% in comparison room strategy. Starting from October 2012, options available in the market. This led to to the previous year revenue of Rs. 12 Mn. keeping in line with the brand promise the composition of F & B revenue to the total Rental income from investment property two Cinnamon city hotels started offering hotels revenue dropping from 44% in year dropped to Rs. 34 Mn from Rs. 56 Mn the parity rates to its corporate client. This 2011/12 to 42% during the year. previous year due to the transition period enabled both hotels to command an even from one tenant to another. Other revenue better ARR than the government regulated Banquets revenue contributed to 47% of was also adversely effected by the drop in minimum rate. New product offerings the F& B revenue. It grew by a steady 18% the internet income during the year. As part in the F & B segment and effective cost from Rs. 476 Mn in 2011/12 to Rs. 560 Mn. of a long term strategy as well keeping in control measures also contributed positively 48 49 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Financial Review Contd...
2011/12. The Investment property of the The hotel was able to maintain a debtors Expense Analysis hotel was revalued during this financial days of 22 an achievement compared to the 2012/13 2011/12 year as well, to reflect the fair value of previous years debtors collection period it’s investment property. Revaluation of 25 days. It was also able to control its Other Rs.292 Mn surplus enjoyed as a result was Rs. inventory turnaround days to an impressive Operating Rs.263 Mn 288 Mn a significant increase from 10 days for Food, 25 days for general store the previous year value of Rs 100 Mn. items and 89 days for beverages. Coupled Sales & Rs.80 Mn Services of Messers P. B Kalugalgedara with the bargaining power of the group Marketing Rs.71 Mn and Associates, a Chartered valuation treasury the hotel achieved an interest surveyor was used by the hotel for this income of Rs. 64.6 Mn. This is a threefold Administrative Rs.602 Mn Rs.551 Mn purpose. increase of 344% from the previous year’s value of Rs. 14.5 Mn. Capital expenditure The Profit Before Tax ( PBT) for the spent by the hotel during the year was financial year surpassed the one billion fully funded by internally generated cash. mark, a land mark achievement for the The Hotel in keeping with the group policy hotel. The PBT for the year grew by 63% primarily invested in interest bearing Revenue, Net Profit Before Tax Vs from Rs. 743 Mn to Rs. 1,211 Mn during instruments. After Tax the year. The Profit After Tax (PAT) also 2012/13 Rs.2,840 Mn Rs.1,211 Mn Rs.1,066 Mn enjoyed a significant growth of 71% Cash Flow from Rs. 625 Mn to Rs. 1,065 Mn during The net movement in cash and cash 2011/12 Rs.2,375 Mn Rs.743 Mn Rs.625 Mn the year. The percentage increase in equivalents for the year ended 31st 2010/11 Rs.1,972 Mn Rs.686 Mn Rs.660 Mn PAT was proportionately higher than March 2013 was an inflow of Rs. 180 Mn. the percentage increase in PBT due to 2009/10 Rs.1,067 Mn Rs.128 Mn Rs.104 Mn Cash generated from operating activities higher rental income from investment amounted to Rs. 1,084 Mn as against Rs. 854 Rs.1,151 Mn Rs.174 Mn Rs.162 Mn 2008/09 property in the last financial year Mn in the previous year. This was achieved attracting more tax at the standard rate. through the impressive performance of Total Revenue the hotel and prudent management of
Net Profit Before Tax Due to factors stated above Earnings working capital. Change in the exchange per Share (EPS) grew significantly to Rs. control legislation during the year granted Net Profit After Tax 5.33 from Rs. 3.12 the previous year. the Hotel the ability to hold its travel agent remittances in USD. The Hotel had adopted Finance Expenses internal risk mitigation policies such as towards this goal . The bargaining power The Hotel enjoyed a surplus in cash matching receipts and payments, leading gained through the central procurement flow during the year contributed by and lagging payments to successfully unit of John Keells Hotels was also a notable funds generated from its operations, minimise its risk exposure due to currency contributing factor. These measures ensured efficient working capital management fluctuations. Cinnamon Lakeside invested that the incremental increase in cost of sales and conducive exchange rate .The Rs. 207 Mn in property plant and equipment was maintained at 17% whilst incremental average exchange rate applicable for during the year .This is a decrease compared revenue grew by 20%. Profits from the year saw a significant increase from to previous year due to the fact the Operations has grown to Rs. 857 Mn from Rs. 114.80 during previous year to Rs. refurbishment of the rooms occurred during Rs. 628 Mn, an impressive 37% growth from 131.80 during current financial year. the last financial year.
50 51 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Cash from Operating Activities Dividend Per Share Vs Earning Per Share Rs. 5.33
Rs.1,084 Mn
Rs.854 Mn Rs. 3.3 Rs. 3.12
Rs.629 Mn Rs. 3 Rs. 3 Rs. 2 Rs. 2
Rs.311 Mn Rs.301 Mn Rs. 1
Rs. 0.81 Rs. 0.52 2008/09 2009/10 2010/11 2011/12 2012/13 2008/09 2009/10 2010/11 2011/12 2012/13
EPS *Adjusted for the sub division of shares DPS
the International Accounting Standards The cash used for financing activities Dividend Board (IASB). This being the first year of amounted to Rs. 600 Mn. This was due to Due to the increased profitability enjoyed by reporting under the new IFRS guidelines, the increase in dividend payment from the hotel during first two quarter of the year the previous year’s financials have therefore Rs. 300 Mn to Rs. 600 Mn in the current directors recommended and paid out an been restated, for comparative purposes. The financial year. During the year a final interim dividend of Rs 1.00 per share on the report also covers the key policy changes dividend of Rs. 400 Mn for the financial 05th of December 2012. The Directors also as required for first time adoption. It is also year 2011/12 and an interim dividend of Rs. recommended a final dividend of Rs. 2.00 per noteworthy to state that the established 200 Mn for the financial year 2012/13 was share payable on 17th June 2013. (2011/12 business model of Trans Asia Hotels PLC did paid out by the hotel. Trans Asia Hotels PLC Rs. 2.00 per share) not need any radical changes to comply ended the year on a high note with net cash with new requirements. The effect of and cash equivalents increasing by 41% the transition from SLASs to SLFRSs has to Rs. 620 Mn compared to Rs. 440 Mn the Adaptation of International Financial also been presented in the reconciliation previous year. Reporting Standard statements and accompanying notes to the Living by the company’s philosophy of good reconciliation. Statement of Change in Equity governance and reporting, the financial Shareholders’ funds as at 31st March 2013 statements for year 2012/13 have been stood at Rs. 6,053 Mn, a significant 16% prepared and presented in accordance growth as against Rs. 5,236 Mn as at 31st with Sri Lanka Accounting Standards March 2012. However, it is also pertinent (SLFRS/LKAS) which have materially to state that Sharesolder’s funds benefitted converged with the International Financial by Rs. 352 Mn due to the gain from the Reporting Standards (IFRS) as issued by increase in fair value of the hotel building. The revaluation was done according to the requirement of Sri Lanka Accounting Standard (SLFRS).
50 51 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Financial Review Contd...
Value Based Management EVA is a measure that indicates the wealth that has been created by a business to its shareholders. EVA takes in to account economic cost of the sums invested as equity in to the business. Cinnamon Lakeside’s wealth creation in the current year was a staggering 233% increase over the last year.
The following table illustrates our computation of EVA in 2012/13, we have created Rs. 276 Mn (Rs. 83 Mn in 2011/12) of wealth.
Economic Value Added (EVA)
As at 31st March 2012/13 2011/12 Change% Rs.000 Total Capital Supplied Equity at the beginning of the year 5,236,098 4,918,621 6% Long-term Interest Bearing Loans & Borrowings - - - Total Capital Employed at the beginning of the year 5,236,098 4,918,621 6%
Earnings Profit After Tax 1,065,717 624,812 71% Add: Interest on Long-term Borrowings - - - Adjusted Earnings 1,065,717 624,812 4% Weighted Average Cost of Capital (%) 15.07 11.02 37% Economic Charge 789,229 541,796 46% Economic Value Added 276,489 83,016 233%
Source Average Risk Free Rate Central Bank Central Bank 12.34 8.20 51% Beta Factor (Annualised) CSE 1.37 1.41 (3)% Risk Premium Assumed 2 2 0% Cost of Equity (Based on CAPM) Computed 15.07 11.02 4%
* Bank overdraft represent unpresented cheques
Economic Value Added
2011/12 Rs.625 Rs.83 Rs.4,919 Rs.542 Total Capital Employed at the Beginning of the Year 2012/13 Profit After Tax Rs.789 Rs.276 Rs.5,236 Rs.1,066 Economic Charge Economic Value Added
52 53 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Information to Shareholders & Investors
As at As at 31.03.2013 31.03.2012 1 Directors’ Shareholding
Mr. S. C. Ratnayake - Chairman 400 400 Mr. A. D. Gunewardene 400 400 Mr. J. R. F. Peiris 400 400 Mr. D. S. J. Pelpola-(Resigned on 26.06.2012) N/A 400 Mr. N. L. Gooneratne 662,604 662,604 Mrs. R. L. Nanayakkara(Resigned on 26/06/2012) N/A 400 Mr. C.J.L. Pinto ( Joint account with Mrs. M.R.C.PINTO ) 7,400 7,400 Mr.E.H. Wijenaike (Appointed on 27/06/2012) Nil N/A
2 tHE Company’s Issued Ordinary Share Capital of 200,000,000 shares were held by 1,494 shareholders as At 31st March 2013 (1,567 Shareholders as at 31st March 2012)
2.1 Share Distribution Schedule as at 31.03.2013
Number of Shareholders Percentage of Shareholding total Share
Less than or equal to 1000 1,194 0.13 262,648 1,000 to 10,000 240 0.44 881,047 10,001 to 100,000 44 0.55 1,107,620 100,001 to 1,000,000 11 2.16 4,325,142 Over 1,000,001 5 96.71 193,423,543 Grand Total 1,494 100% 200,000,000
TAH Share Price vs Market Indices Points Rs. 7,000 100 80 6,000 70 5,000 60 4,000 50
3,000 40 30 2,000 20 1,000 10 0 0 ov J ul J an Oct J un Apr Feb Sep Dec Mar N Aug May
Hotels & Travels Index ASPI Index TAH Price
52 53 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Information to Shareholders & Investors Contd...
2.2 the Twenty Largest Shareholders
Shareholding % Shareholding % As at 31.03.2013 31.03.2012
1 John Keells Holdings PLC 97,284,256 48.64 97,284,256 48.64 2 Asian Hotels And Properties PLC 86,823,028 43.41 86,823,028 43.41 3 Bank of Ceylon A/C Ceybank Unit Trust 5,020,059 2.51 4,802,197 2.40 4 Employees Provident Fund 4,296,200 2.15 4,285,800 2.14 5 Mr. N. L. Gooneratne 662,604 0.33 662,604 0.33 6 Employees Trust Fund Board 610,400 0.31 620,400 0.31 7 Prof. D. N. L. Alwis 588,028 0.29 588,028 0.29 8 Mr. A. N. G. Wijeyekoon 572,960 0.29 572,960 0.29 9 Bank of Ceylon A/C Ceybank Century Growth Fund 498,006 0.25 445,700 0.22 10 Bank of Ceylon No. 1 Account 477,200 0.24 477,200 0.24 11 Ellawala Exports (Pvt) Ltd 358,400 0.18 358,400 0.18 12 Mr. G. L. A. Ondaatjie 250,400 0.13 250,400 0.13 13 Mr. D. Gonsalkorale 161,200 0.08 161,200 0.08 14 Mrs. B. J. E. Severin 72,800 0.04 72,800 0.04 15 A.s. Chatoor (Tea) (Pvt) Ltd 60,000 0.03 60,000 0.03 16 Mr. T. Rodrigo 54,600 0.03 54,600 0.03 17 Mr. R. D. Ranatunga 50,112 0.03 50,112 0.03 18 Mr. N. P. Tippala Gamage 49,872 0.02 49,872 0.02 19 Mr. G. G. P .Gunawardane 48,468 0.02 48,468 0.02 20 Mrs. M. I. Wijeyekoon 40,000 0.02 40,000 0.02 197,978,593 98.99 197,708,025 98.85
2.3 Composition of Shareholders As at 31 March 2013 2012 Number of number of % number of number of % Shareholders Shares Shareholders Shares Directors and Spouses 5 671,204 0.34 7 672,004 0.34 Public non-resident Institutions 0 0.00% 1 8,400 0 Individuals 16 99,457 0.05 14 98,160 0.05 Public resident Institutions 58 11,649,814 5.82 61 11,421,791 5.71 Individuals 1,413 3,472,241 1.74 1482 3,692,361 1.85 Shareholders holding more than 10% 2 184,107,284 92.05 2 184,107,284 92.05 1,494 200,000,000 100 1567 200,000,000 100
3 Market Value 2013 2012 Rs. Rs. Highest Market Value per Share 80.00 72.50 Lowest Market Value per Share 67.20 50.00 Market Value Per Share 70.40 66.90
54 55 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Risk Management
Being an operator in a dynamic industry that is subjected to frequent gathering, quality audits, safety audits, internal audits and means changes, Trans Asia Hotels PLC has identified the importance of such as customer feedback and incidents. These identified risks are an effective Risk Management framework in order to strive as a then assessed in terms of business impact, likelihood of occurrence business entity whilst enhancing stakeholder value. Therefore Risk and velocity. The product of these risk rankings are tabulated in a Management is intertwined with the Hotel’s strategic planning risk grid that rates the risks in scale of ‘Ultra High’ to ‘Insignificant’, process and also considered an integral component of Trans Asia which enables the company to prioritise the risks and to plan out risk Hotel’s Corporate Governance Framework. Hence risk identification, mitigation strategies under the classification of preventive, detective analysis; evaluation and management are woven into the fabric of and corrective action plans. the Company’s strategy creating an improved, stable risk profile.
Audit Committee Board
Crisis & Security Incident Cinnamon Lakeside Risk Management Teem
Fire Leisure Safety Safe Safety Hotel
Guest Risk Policy & Safety Food Standards Business Impact Safety Profile Staff Safety Review Ways of & Manage Working Reports Risk Risk Grid Likelihood of Occurrence
Risk Training
Financing High Ultra Insignificant Operate & Control Velocity
The responsibility of maintaining and effective system of internal control and risk management lies with The Board. The Audit Committee on behalf of the Board reviews the risk management Risk Champions process adopted by the Company. The Risk Management Team of the hotel reviews the identified risks Risk Management Framework on a quarterly basis; the assigned risk owners are responsible for the The Company’s risk management team, headed by the General implementation of any mitigating action. Team members at the end Manager carries out the risk management process in accordance to of each quarter signs off a compliance statement .The consolidated the framework established by the Sustainability and Enterprise Risk financial and operational compliance report is received by the Audit Management Division of John Keells Holdings PLC. Functional heads Committee from the President of the Leisure Group. The Audit of the hotel together with the General Manager compose the Risk Committee has also included the Risk Review on the agenda of Audit Management Team of the hotel. The risk management team takes Committee meetings. the crucial responsibility for the early identification of potential risks. Risks are identified through various means including intelligence
54 55 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Risk Management Contd...
For the financial year ending 2012/13, below are some of the key items included in the risk register of Trans Asia Hotels PLC along with the status and action plan for each;
Risk Category & Description Control Measures and Action Plans to Mitigate Risks
Operational Risks Competitive Risk Strict adherence to service standards to ensure superior quality in service delivery and Reduction in market share, failure to be value for money competitive resulting in lower occupancy and Ample investments in upgrading and enhancing facilities and services. room rates. Reviewing and monitoring adherence to Brand standards and Standard Operational Procedures. (SOP) Anticipate competitor strategies and new entrants to market and formulate strategies accordingly Constant creativity and innovation in products and services Continuous review of guest feedback and prompt response to issues in order to create customer delight.
Brand Image & Reputational Risk Any event or action that may cause material Conduct regular brand audits and mystery audits for guests’ feedback covering both damage to the brand and reputation of the facilities and services company Compliance with environmental, health & safety best practices by obtaining HACCP and other quality certification standards
Benchmark industry best practices in terms of both product and service Ensuring key managerial positions are held by suitably qualified and trained staff with sufficient experience in the hotel industry Innovative service delivery in keeping with the brand promise Responsible corporate citizenship through CSR initiatives
Human Resource Risk Risk of losing key personnel and skilled staff, Structured training programs, cross exposure training opportunities arising from the inappropriate labour action performance appraisal process Emphasis on good employer-employee relationships, employee welfare and an effective and open communication with the labour union to achieve a ‘win-win’ outcome. Fostering a spirit of unity and self belonging through organisation of associate gatherings, outings, family get-togethers and religious events.
Risk of injuries / health hazards due to employees Strict adherence to laid down safety standards and procedures. being exposed to hazardous work conditions / chemicals
56 57 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Risk Category & Description Control Measures and Action Plans to Mitigate Risks
Technology & Information Risk Risk of failure of electronic systems and inadequacy Implementation of a fully integrated, property management, material management and of information systems a financial information systems, ensuring a seamless flow of information and operational efficiencies Existence and continuous improvement of a Disaster Recovery Plan in the event of a disruption or failure to the system
The IT Division of the company and John Keells Group have implemented controls to safeguard the computer installations of the hotel to reduce downtime and ensure continuity of operation Continuous review of network protection process is carried out to ensure information security and integrity
Internal Process & Procedures The risk of financial loss and disruption to business Clearly defined systems & procedures are in place to ensure compliance with internal due to breakdown in Internal Controls controls which are periodically reviewed for their continued effectiveness An externally sourced independent internal audit firm carries out regular review and report on the adequacy and effectiveness of these systems and level of compliance.
Natural or man-made disasters Adequacy of insurance covers are reviewed regularly and updated when necessary. Loss of property and equipment resulting in Crisis management and business recovery plans have been adopted to safeguard the significant losses assets and speedy recovery. These are being reviewed periodically.
Credit Risk Credit policy and stringent controls are in place to mitigate the impact of default. Exposure and losses due to default of settlement Credit limits are reviewed on a regular basis. by debtors Constant monitoring and review of debtor balances with collection targets and adapt progressive action
Liquidity Risk Regular review mechanisms in place to monitor the performance of the company against Inability to meet financial commitments on due approved budget targets to achieve a balance between liquidity and profitability. dates Capital investments are planned so as not to adversely impact on Cash Flows and gearing of the Company
The Board confirms that a process for identifying, evaluating and managing significant risks that endanger the achievement of the strategic objectives of Trans Asia Hotels PLC has been in place throughout the year in accordance with the guidelines set out by the Institute of Chartered Accountants of Sri Lanka and industry best practice. Potential Financial Risk in compliance with the Sri Lanka Accounting Standards (SLFRS) are disclosed on page 137 under notes to the Financial Statements. The Audit Committee has reviewed the Business Risk Management process adopted by the Company and has noted the risk management exercises had been conducted.
56 57 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Sustainability Report
CHIEF EXECUTIVE OFFICER’S STATEMENT
Dear Stakeholders, environmental aspects. Extending our three-year project to take this concept responsibility to the community, a to another level, whereby three projects Sustainability is fundamental for the future number of seminars were conducted on will be allocated to each of the carefully generations and the corporate world. We being green, care and hygiene to various selected four villages. The initial stage is consider sustainability a major priority and schools in the neighbourhood. In addition, to encourage kids to attend school by we have gained recognition as one of the by adhering to Best Practices, we have supplementing them with uniforms and best in the industry with our continuous obtained ISO 22000 certification for food food. The second stage of the project is to efforts and initiatives. This is Trans Asia safety and OHSAS 18001 for Health & sponsor children of higher-level education Hotels PLC’s initial sustainability report Safety of the customers and staff. of the same schools to better ones. The based on GRI reporting framework and third stage is to support the parents being part of John Keells Group of diverse Cinnamon Lakeside’s future outlook in their livelihood with their produce units, healthy competition is established is continuity of its Corporate Social being bought back by the hotel, thereby being comparable within John Keells Responsibility (CSR) projects, best practice guaranteeing a substantial income. Leisure Sector. and work to the full potential with the assistance of an external assessment. The global trend in tourism is that Cinnamon Lakeside Colombo’s We intend to develop interaction with people visit countries that are truly more fundamental value to be Green indicated the communities making them aware sustainable. As a part of John Keells Group, tremendous results. Green Globe of hygiene, basic green habits, water we intend to be trendsetters leading all Certification Inc., U.S.A with their stringent, preservation and diseases. Thus, uplifting our stakeholders, industry and the country comprehensive and efficient guidelines the quality of life in the community towards a more sustainable place to visit, facilitated the hotel to achieve its goals. through staff voluntary system and thus promoting our beautiful Island in the Cinnamon Lakeside Colombo is the only the involvement of our suppliers in the future. city hotel to be recertified consecutively provision of hygiene and necessities to the for the third year by Green Globe, a community. prestigious achievement for the hotel. This is just the beginning of numerous projects Last year, we embarked on “one creed in store in our odyssey to be Green. The for all creed for one “ concept where we four categories covered by Green Globe covered CSR projects on all religions, certification are sustainable management, details of which are given in this report. Denis Gruhier social/economic, cultural heritage and Looking ahead, the hotel has planned a General Manager
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Company Profile Trans Asia Hotels PLC is a Public Quoted Company with Limited Liability incorporated and domiciled in Sri Lanka on 17th July 1981 operating under the name Cinnamon Lakeside Colombo and quoted on the Colombo Stock Exchange. Principal shareholders of the Company are John Keells Holdings PLC and Asian Hotels and Properties PLC with a holding of 48.64% and 43.41% respectively. John Keells Holdings is the largest listed conglomerate in Sri Lanka with its shares listed on the Colombo Stock Exchange and the first Sri Lankan Company to be listed internationally with Global Depository Receipt (GDR) issued on the Luxemburg Stock Exchange. Asian Hotels and Properties operate primarily in the areas of leisure, real estate development and retail and condominium development industries in Sri Lanka. The registered office and the principal place of business of the Company are located at No.115, Sir Chittampalam A. Gardiner Mawatha, Colombo 2.
ORGANISATIONAL STRUCTURE
GENERAL MANAGER
Director Finance Director Rooms Executive Asst. Chief Engineer Director of Sales & F&B Manager Director Human Executive Division Manager Marketing Resources Committee
Banaquet Finance Manager Purchasing Front Office Executive Executive Marketing & Banaquet Training & Dev. Human Resources Heads of Comm. Manager Operations Manager Departments Manager Manager Housekeeper C hef Manager Manager Manager
Awards and Accolades of yy Second runner up spot in the classic category – 21st National Bartender’s Cocktail and Cinnamon Lakeside 2012/13 Flaring Competition yy The Best Five Star City Hotel 2011 at Sri yy Best EGB Mocktail at the World Spice Food Festival 2012 Lanka Tourism Awards 2012 yy Best Stall at the World Spice Food Festival 2012 yy The Best Luxury Hotel, Sri Lanka – yy Best Prawn Dish at the World Spice Food Festival 2012 Business Destinations Travel Awards yy Awarded “A+” Grade at the Hotel Hygiene Classification Audit conducted by the Colombo 2012 Municipal Council yy A Certificate of Compliance – Hotel Sector- at the Annual Report Awards Certification in 2012/13 2012 conducted by the Institute of yy ISO 22000 certification for Food Safety Chartered Accountants of Sri Lanka yy OHSAS 18001 certification for Health and Safety yy All island first runner up in the flaring yy Green Globe certification for sustainable operations and management category - 21st National Bartender’s yy Switch Asia - Greening Sri Lankan Hotels Project implemented by the Ceylon Chamber of Cocktail and Flaring Competition Commerce and funded by the European Union yy Star Crescent
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Sustainability Report Contd...
Receiving the Award for Hotel Hygiene Audit by CMC Receiving the Recognition of Compliance at the Annual Report Awards
Memberships maintained by Cinnamon yy Sri Lanka Russia Business Council our GRI performance indicators, which Lakeside in 1012/13 yy Sri Lanka Pakistan Business Council are aligned with the hotel’s triple bottom yy The Tourist Hotel Association of Sri yy Sri Lanka Vietnam Business Council line concept. Cinnamon Lakeside defines Lanka materiality as one that balances stakeholder yy Pacific Asia Travel Association (Sri Lanka) Report Content interest and other external factors, with organisational strategies and objectives. Chapter (PATA) The Sustainability Report of Cinnamon The impact on stakeholder groups and the yy Sri Lanka Africa and Middle East Lakeside Colombo provides information on issues paramount to these groups influence Business Council the sustainability performance for the period materiality. yy Sri Lanka Canada Business Council 1st April 2012 to 31st March 2013 which was prepared according to the Global yy Sri Lanka Maldives Bilateral Business Reporting Initiative (GRI) standards. The Precautionary Principle Addressed Council report demonstrates our commitment and Cinnamon Lakeside Colombo acknowledges yy Sri Lanka Malaysian business Council progress in economic, environment and the precautionary approach in the success yy Sri Lanka China Business Council social performance. of the initiatives implemented to reduce yy The Council for Business with Britain the energy consumption and emissions. yy Sri Lanka Netherland Business Council Report Boundary and Scope The precautionary principle is incorporated yy Sri Lanka Australia New Zealand In the financial year under review, Cinnamon through the risk management processes and Business Council Lakeside Colombo is reporting for the internal control systems. As a sustainable yy Sri Lanka Japan Business Council first time at the GRI Application Level “B”. organisation, we support the triple bottom y y Sri Lanka Poland Business Council The Company endeavours to comply with line principles that are incorporated in our yy Sri Lanka France Business Council specific reporting principles, reporting practices and performance. The Company yy Sri Lanka Singapore Business Council guidelines set out by GRI guidelines and follows the GRI reporting framework on our yy Sri Lanka Italy Business Council indicator protocols for economic, product sustainability performance. Furthermore, the yy Sri Lanka Germany Business Council responsibility, human rights, labour, hotel has obtained ISO 22000 certification for yy Indo Lanka Chamber of Commerce & environment and social performance. Food Safety, OHSAS 18001 certification for Industry (C/o Chamber of Commerce Sri Materiality has been the basis on selecting Health and Safety, Green Globe certification Lanka) and Switch Asia for sustainable operations
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and management The hotel ensures that it meets the regulatory Data Measurement Techniques requirements and is compliant with the Continuing Listing Rules Cinnamon Lakeside has a daily consistent process with regard to data of the Colombo Stock Exchange, the Code of Best Practice on measurement and collation. Daily documentation of sustainability Governance published by the Securities and Exchange Commission of activities of the hotel are carried out for specific processes which are Sri Lanka and the Institute of Chartered Accountants of Sri Lanka and entered into the system by the relevant department heads including the Companies Act No. 7 of 2007. human resource, purchasing, PR, Accounts, Engineering and training. On completion of data entry into the system, it is approved by the Sustainability Responsibility relevant Heads of Departments, General Manager and finally to John Cinnamon Lakeside’s Sustainability Task Force was established based Keells Head Office for report generation. Data is collated and analysed on the five pledges and the vision cascaded by the John Keells Leisure on a monthly and quarterly basis for reporting purposes. Sector. The sustainability team headed by the General Manager conveys the vision to the task force that looks into the key areas in the The material impacts on stakeholder were identified based on vision. A member from each department represents the Task Force findings of the stakeholder engagement within the areas of economic that meets on a monthly basis covering the following criteria: performance, environment and social impact. Thus, 30 GRI indicators were selected for reporting that has a significant impact on key yy Conserve waste electricity and water for the future sustainability areas. The hotel’s performance is monitored against yy Target to save waste energy and water by 5% every month the 30 GRI indicators to minimise risk and capitalise on opportunities yy Benchmark the previous month actual consumption in the short term. The hotel also assess the impacts, risks and yy Identifying the areas to save energy, water and waste opportunities that may arise as a result of medium and long term plans and strategies within the areas of economy, environment and social. The table below illustrates the key impacts, risks and opportunities to the hotel from an economic, environmental and social perspective.
Sustainability Structure
John Keells Holdings Group Level Cinnamon Lakeside Sustainability Structure
HEADS OF DEPARTMENTS
JKH BUSINESS PROCESS REVIEW GENERAL MANAGER DIVISION
SUSTAINABILITY CHAMPION
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Key Challenges, Risks and Opportunities
Triple Bottom Line Challenges Opportunities Risk
Economic yy Economic recession in certain yy Economic recessions in certain yy Increasing cost structure parts of the world (source of countries leading to guest wanting to yy Changes in the minimum guest) visit/invest in SL rate policy of the yy Government and local yy Business Development in SL government authorities introducing new yy Commonwealth Government Leaders yy Reduction in the room tax laws from time to time. meeting and business environment nights due to the increase yy Depreciation of the USD. from same. in the city rooms. yy Country relationship with key markets yy Infrastructure development. Environment yy Increasing legislation on yy Leveraging on accreditation bodies yy Increased risk of environment protection. such as Green Globe, ISO to enhance environmental yy Customers being more global business opportunities degradation due to the aware and wanting business yy Alternate energy usage. increased consumption of partners also to adhere to energy and greater waste environmental factors. emission.
Social yy Increasing competition in the yy Being part of a big group allows better yy Treat to local culture, and city with international chains career potential enabling the hotel to societal risk stemming opening doors to Sri Lanka: attach above average employees. from same. yy Difficulties to find skilled yy Relationship with the local labour community and career guidance yy Societies outlook towards and development plan to the local employment in the industry. community. yy Increase in cost of living loosing skilled labour to overseas opportunities.
Stakeholder Engagement groups and their specific interest and relationships, build mutual trust and Stakeholders are persons or groups that have determine the issues that are predominantly understanding including accountability an interest in the organisation. They also material to the hotel from an economic, to our stakeholders that are affected by have the ability to influence its outcome or environmental and social sustainability or impact our operations. The hotel has be substantially impacted by the operations perspective. identified its stakeholders as customers, of the organisation. Cinnamon Lakeside employees, the Government, Legal believes that continuous interaction and Formal and informal interaction with our and Regulatory Bodies, investors and dialog with stakeholders is paramount to stakeholder have given Cinnamon Lakeside communities. The table below portrays the the success of its business operation. The Colombo the opportunity to enhance current level of engagement and frequency hotel identifies the significant stakeholder with our key stakeholder group.
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Stakeholder Stakeholder Sub Category Current Level of Engagement & Frequency
Customer Corporate and Individuals Being in the trade of hospitality providing a service above the expectation of our customers is our target. In doing so, we continuously maintain dialog with our customers to understand the degree of satisfaction.
Methods of Engagement yy Customer feedback /comments forms yy Road show, travel and trade fairs. yy Social Media (Facebook/Twitter/Linkedin) yy Paper advertisements, articles and reviews yy Cinnamon Lakeside promotional booklet-“Grapevine” yy Hotel website yy Comments via web based sites such as “Trip advisor” Employee Senior Management/Executive With the competition to attract and retaining the human capital becoming a increasingly and Non Executive challenging task, we at Cinnamon Lakeside believes in continuous dialog with our employees in keeping with our Group Policy “ More than just a work place” and the preferred employer among city hotels.
Methods of Engagement yy Company magazine yy Quarterly employee awareness meetings yy Monthly birthday celebration yy Voice of Employee survey yy Great Place to Work Survey yy 360 Degree employee feedback system yy Skip level meetings yy Focus group meetings yy Welfare meetings yy Union Meetings Government, Government of Sri Lanka, Methods of Engagement Legal and Government Departments and yy Through phone calls, meetings, letters etc. Regulatory institutions such as Securities and yy Participation is relevant associations Bodies Exchange Commission, Colombo yy Periodic disclosures Stock Exchange & Sri Lanka Tourism Development Authority Investors Shareholder Corporate and We maintain periodic disclosures to our investors. John Keells Holdings PLC and Asian Hotels Individuals and Properties PLC, our biggest corporate investors and other corporate and individuals.
Methods of Engagement yy Management accounts yy Quarterly accounts yy Annual Reports yy Communication through investor relation arm of Holding Company. Community Neighbours’, Local community and With the focus on triple bottom line we believe in our responsibility to society around us. around us Community Leaders Methods of Engagement yy Involvement in neighborhood school activities and development yy Organising programmes for skill development for the community around us. yy Involvement in the community for certain hotel events example; involvement of school children when celebrating Earth hour. yy Sponsorships
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Sustainability Report Contd...
BUSINESS DESTINATIONS TRAVEL AWARDS 2012
This is to certify that Cinnamon Lakeside, Colombo
has been awarded Best Luxury Hotel, Sri Lanka
Signed on behalf of Business Destinations’ panel of judges by Clifford St. John, Publisher of Business Destinations
64 65 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Economic Performance Cinnamon Lakeside Colombo is committed to delivering Value Distribution sustainable economic performance and growth to all its 2013 2012 diverse stakeholders. The Company continued to adhere Retained within the business Rs.650 Mn Rs.493 Mn to its long-term goal of achieving sustainable growth in total shareholder return and enhance the quality of To the providers of capital Rs.600 Mn Rs.300 Mn the earning through sound risk management whilst
conducting the business in a sustainable and socially To the Government Rs.512 Mn Rs.382 Mn responsible manner. To employees Rs.500 Mn Rs.446 Mn
Statement of Value Added “The Trans Asia Hotels is committed to delivering sustainable economic performance and growth to all its diverse stakeholders.”
For year ended 31st March 2013 % 2012 %
Revenue 2,840,223 2,375,479 Change in Fair Value of Investment Property 288,710 99,848 Other operating income 77,067 25,063 Total 3,206,000 2,500,390 Less : Cost of materials and services (943,255) (879,328) Value added 2,262,745 1,621,062
Distributed as follows : To employees as salaries and other benefits 500,082 22 445,695 27 To the government as taxes 512,239 23 382,260 24
To the providers of capital Interest on OD 96 0 23 0 Dividend 600,000 27 300,000 19
Retained within the business As depreciation 184,610 8 168,273 10 As reserves 465,718 21 324,812 20 Total 2,262,745 100 1,621,062 100
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Sustainability Report Contd...
Defined contribution plan obligations Cinnamon Lakeside was the proud host hotel Employees are eligible for Employee’ Provident Fund (EPF) contribution according to the terms for the match officials and three teams at of the Employees’ Provident Fund Act No. 15 of 1958 and its subsequent amendments and the T20 World Cup 2012. Accommodation for Employees’ Trust Funds (ETF) Act No. 46 of 1980 and its subsequent amendments. The was also provided for three inaugural Sri Company contributes the relevant percentages of the eligible gross emoluments of employees Lanka Premier League teams and “North to the respective EPF and ETF. Western Blacks” rugby team which ranked on top of the Carlton 7’s table at the Carlton Defined Contribution Plan Obligation (EPF & ETF) 7’s Rugby Tournament held in Colombo. The hotel was honored to be part of the World 2013 2012 2011 2010 Spice Festival organised by the Sri Lanka EPF - Rs. 51,710,350 42,203,209 39,379,315 33,931,072 Tourism Development Authority. At the Contribution 12% Spice Festival, Hotel showcased Vietnamese ETF - Rs. 7,813,546 6,665,667 6,302,305 5,348,938 cuisine specially created by a guest Chef Contribution 3% from Vietnam, which was followed by a Food Promotion at “ Dining Room” with a variety of dishes infused with authentic Vietnamese Defined Benefit Plan Obligation spices. The hotel also had the honor of Employees are entitled to retirement gratuity, payable under the Payment of Gratuity Act No. having Peter Kuruvita featured on Master 12 of 1983 and an employee with more than 5 years of service will receive half a months’ salary Chef Australia with his World Expedition Tour for every year of service on retirement or termination of service. team.
Defined Benefit Plan Obligations (payment of gratuity) Adding a feather to our cap, the hotel 2013 2012 2011 2010 hosted The National Geographic Television channel that had selected Sri Lanka as the Employee benefit liability 17,003,700 17,576,351 22,596,648 13,818,747 location for their first ever photography as at 31st March - Rs. based reality show. The filming of the Payments during the 11,137,613 7,730,004 6,189,475 6,459,120 “National Geographic Mission Cover Shot” financial year - Rs. reality show began at locations across the Cinnamon Chain of Hotels and Resorts Cinnamon Lakeside Colombo’s Impact on and contribution to the and made its way to Cinnamon Lakeside Industry and Economy Colombo. The crew chose the hotel’s Cinnamon Lakeside Colombo has been adjudged as the Best Five Star City Hotel 2011 at Sri poolside terrace for their shoot in Colombo. Lanka Tourism Awards 2012. The hotel has been actively contributing to the Sri Lankan leisure The composition of the pool and Beira Lake industry and economy being one of the principal employers amongst the city hotels. The view created a stunning natural backdrop hotel holds 18% of the market in terms of room share from amongst the five star city hotels, for the elimination round that was shot. a revenue share of 18% and an impressive Average Room Rate (ARR) of USD 135, a clear Leading the way as the trendsetter in the indication of the hotel’s economic and competitive strength in the market. hospitality industry, Cinnamon Hotels and Resorts takes pride in lending its locations The hotel contributed a significant amount in terms of taxation of which Rs. 366.3 Mn was to an international film crew. As the key Value Added Tax (VAT), Rs. 145.5 Mn was Income Tax and Nation Building Tax (NBT) at Rs. 60.0 hospitality partner, the hotel chain was Mn. In addition, a considerable amount of Rs. 27.4 Mn was paid towards Tourist Development instrumental in portraying Sri Lanka as an Levy, which contributes to the hospitality industry. Cinnamon Lakeside Colombo employs a ideal tourist destination. With the high total of 842 associates of which 253 are below the age of 30 years, thus contributing to the generation of youth employment in the country. The service charge of the hotel is one of the highest in the industry, which is paid to all associates equally.
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viewership of the Nat Geo channel, the island manner. This philosophy is enhanced in our will receive the highest level of exposure following environmental policy; it has received from an international TV Channel. Environmental Policy Using local suppliers and eco-friendly The Hotel has placed great emphasis on products wherever possible and committing The Hotels’ contribution to the industry complying with legal requirements and to sustainable environmentally friendly was not limited to accommodation and commits to a gradual and consistent effort to measures. F & B with Cinnamon Lakeside Colombo GO Green. hosted the Annual Open Ranking Tennis Creating a deep understanding of the Championship in collaboration with The hotel is committed to the philosophy environment and its conservation among the Sri Lanka Tennis Association (SLTA). preventive maintenance and seeking new associates and the surrounding community. Joining hands with the Lanka Power Boat ways to ensure energy efficiency, thereby Association, F1H2O Grand Prix launch was reducing the carbon footprint. Cinnamon Lakeside Colombo, in its hosted at the hotel on the Beira Lake to endeavour to be sustainable in all areas promote future large-scale events thereby The hotel identifies and carries out measures of its operation, monitors its process portraying Sri Lanka as a tourist destination. to optimise the usage of water and energy with key performance indicators. The key without affecting the quality of service performance indicators include, Carbon Cinnamon Lakeside Colombo contributes to offered. footprint per guest night, Kwh per guest industrial training and knowledge to a vast night, water per guest night, waste per segments of society including: Identifying measures to minimise waste guest night, occupational injuries and yy Cooking demonstration for school and facilitate the recycling of paper, glass, training hours per employee. The following students and home science teachers. bottles, cardboard and plastic. diagram depicts the remarkable reduction yy Table Set up & Etiquette training for Air and savings achieved in the hotel’s key Force personnel. operational areas. yy Exposure on Front Office Operation & hotel visit for students from Sri Lanka Institute of Tourism & Hotel Management - Kandy School. Carbon Electricity Water(L)/ Waste Kg/ Occupational Training Footprint/ Kwh/guest guest night guest night Injuries Hrs/employee The Company imparts knowledge and guest night night experience within the John Keells Group including the best practices hence learning and complementing each other. Likewise, the hotel participates in a couple of 55.91 66.66 1,319 7.87 8 18.33 forums and seminars pertaining to tourist development.
Environmental Performance Cinnamon Lakeside Colombo believes, 63.36 75.37 1,352 4.4 5 20.5 in its duty to preserve and conserve the environment it lives and operate, through the establishments of policies and practices that enable the hotel to conduct its operations in an environmentally sound
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Sustainability Report Contd...
The Company complies with local yy Implementation of energy saving bulbs. The hotel is in the process of changing CFL lights environment laws, standards and to LED in all its guest rooms. regulations. Collection of data is streamlined yy Design and construction to reduce heating, cooling, lighting and water consumption in terms of energy and water usage and through both passive design appropriate to local conditions and active technology. material waste in operational areas in yy Building with an emphasis on visual compatibility with the natural environment. relation to Green Globe Certification criteria. yy A motion sensor timer controls outdoor and parking lot lights.
Green Globe Certification Cinnamon Lakeside Colombo Energy Usage Cinnamon Lakeside Colombo is reputed Cinnamon Lakeside Colombo’s energy consumption for the year 2012/13 with comparative for its environmental policies in keeping figures for the years 2011/12 and 2010/11 is represented in the following table: with the John Keells Leisure Sector pledge ‘I will be Green’. Green Globe is the global Unit of Energy Usage Consumption in GJ tourism industry certification programme Description measure for sustainable tourism. It is a collection 2010/11 2011/12 2012/13 2010/11 2011/12 2012/13 of 337 compliance indicators applied to Direct Energy 41 individual sustainability criteria. The - Electricity Kwh 7,690,440 7,716,253 7,734,526 27,686 27,779 27,844 hotel’s initial certification in 2010 was on Fossil Fuel 248 standards with a score of more than - Furnace Oil L 349,025 338,371 349,487 14,895 10,718 11,070 50%, which was achieved and became the first City Hotel in Sri Lanka to be Green - LPG Kg 84,022 91,779 95,510 4,148 4,035 4,199 Globe certified. In 2011, Green Globe had - Diesel L 2,456 7,720 17,442 108 234 529 increased the number of standards to 336 - Petrol L 238 8,204 7,201 2 225 198 and there were 4 main categories as well as Total Energy GJ 46,839 46,520 48,020 39 sub categories. The main categories were Sustainable management, Social/Economic, Cultural heritage and Environmental. Energy in Gj Guest Room Succeeding all 39 categories, Cinnamon 0.57 Lakeside is the first Sri Lankan hotel to be Green Globe re-certified. In 2012, the hotel accomplished the requirements of 5% 0.55 growth in comparison to the previous year as well as all mandatory standards. Thus, the Company was honored to be the only Sri Lankan hotel to successfully attain Green Globe recertification for the third time in 0.51 succession.
Energy Conservation 2010/11 2011/12 2012/13 Efficient energy usage and conservation Energy in GJ per Guest room to renewable energy is paramount and inculcated in the hotel’s sustainable energy Cinnamon Lakeside Colombo total energy consumption has been constant over the last three management practices. In this continuous years. However, the above graph indicates a rising tend in the hotel’s energy consumption per effort to improve technology and adhere to guest night during the period 2010/11. This is followed by a decrease to a level of 0.55GJ/Guest best practices, the hotel has carried out the room in 2012/13 from 0.57GJ/Guest room in 2011/2012. The hotel’s energy efficient measures following initiatives quite diligently. undertaken during refurbishment held in 2011, energy conservation initiatives incorporated by the engineering department as well as continuous associate awareness programmes has 68 contributed to the above decreasing trend. 69 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Recycle, Reuse and Reduce of Cinnamon Lakeside Colombo Tangible Resources The saving achieved from energy initiatives for the year under review is portrayed in the following table:
Saving achieved/ Initiative Description Category month Cooking oil usage Cooking oil is used for the boiler through the furnace oil tank Furnace oil 2,880L
LED for staff lockers Installation of LED bulbs for all the staff lockers Electricity 2,146kWh Induction Lamps for flood Metal halide flood lights were replaced with induction lamps Electricity 19,179kWh lights Long Feng air conditioning Time scheduling of Long Feng air conditioner to match the Electricity 51,912kWh schedule operation of the restaurant Reducing the runtime of Loading and turning on the bottle coolers 1hour prior to the Electricity 4,024kWh 8 DOTL bottle coolers function
Carbon Footprint Cinnamon Lakeside Colombo’s carbon emission is measured using Greenhouse Gas Protocol governed by World Resource Institute (WRI) and the World Business Council for Sustainable Development (WBCSD). The hotel’s boundary for the emission measurement has been governed by scope 1 and scope 2. GHG emission occurring directly from the source that are owned or controlled by the Company is Scope 1 and indirect emission generated in the production of electricity consumed etc. is being governed by Scope 2. The following table illustrates the Company’s Carbon Footprint segregated into Scope 1 & 2.
Cinnamon Lakeside Colombo Carbon Footprint Carbon Footprint for the year 2012/2013 Emission Factor 2011/12 2012/13 is at 6,453 MT CO2eq. This comprises of 1,181 MT of Scope 1 direct emission and Diesel GJ->TJ->MT 74,100 17 39 5,272 MT of Indirect emissions. The hotel CO2 has focused on its energy initiatives with Petrol GJ->TJ->MT 69,300 16 14 periodic monitoring of its improvements CO3 efforts to optimise emission generated from Furnace oil GJ->TJ->MT 78,000 836 863 operations. As a result, there has only been a CO4 marginal increase in carbon footprint in the Liquid Petroleum Gas (LPG) GJ->TJ->MT 63,100 255 265 year under review. CO5 Electricity sourced from the main grid is Electricity GJ->TJ->MT 1 5,259 5,272 the main component of carbon emission CO6 contributing to 82% of the carbon footprint. CO2 Footprint - Direct energy MT 1,124 1,181 Constant results from the previous year through primary Sources (Scope 1) showcase the various energy initiatives CO2 Footprint - Indirect energy MT 5,259 5,272 implemented including the installation of through primary Sources (Scope 2) sensor lights, replacing of CFL lights with LED and monitoring of high usage areas in the Total CO2 Footprint MT 6,383 6,453 hotel.
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“Earth Hour” performance by students of T.B. Jayah Maha Vidyalaya
Earth Hour Solid waste Management Cinnamon Lakeside Colombo observed Cinnamon Lakeside Colombo has incorporated sustainable waste management practices and Earth Hour with the theme “ Small actions processes with proper waste categorisation, measurement and disposal or recycled initiatives. lead to big changes” on 23rd March from Used oil of the hotel is reused to fire the boilers, 70% of the food waste is recovered by way of 20:30 hrs. to 21:30 hrs. saving 20% of supplies to the neighborhood piggeries and 30% of food waste goes to Colombo Municipal electricity consumption within this specific Council (CMC) and is considered as land fill. The hotel also recycles most of its glass bottles, period. The hotel commemorated Earth plastic bottles and paper. The following table depicts the hotel’s efforts in recycle and disposal Hour by reducing the lighting in the hotel of solid waste. by 50% in public areas and increasing the temperature of the air conditioning by Waste & method of Disposal Q1 Q2 Q3 Q4 3° in public areas. In addition, a special (Kgs) documentary “Home” was shown on the Hazardous Waste- E waste (Kgs) - - 142 158 hotel’s promotional TV channel from 8.30pm to 9.30 pm educating guests on the impact Non Hazardous Waste- used cooking oil (Kgs) 1,825 1,156 891 1,449 of human activities on earth, pollution and Reused its impact towards human kind. With the Non Hazardous 4,076 3,180 5,092 4,367 lights dimmed down, diners were treated Plastic, Glass bottles and papers (Kgs) Recycled to a candlelit dinner at all of the hotel’s Non Hazardous 126,355 86,921 101,812 69,944 restaurants. A special note addressing the Food waste (Kgs) Recovered 70% given to importance of Earth Hour was placed on piggeries tables requesting the guests to join the hotel Non Hazardous 54,152 37,252 43,634 29,976 in commemorating the important occasion. Land Filled Students from T.B. Jayah Maha Vidyalaya Food waste (Kgs) 30% goes to CMC were invited to make the event extra Total Non Hazardous waste (Kgs) 186,408 128,509 151,429 105,736 special. The students performed a specially choreographed dance act with ‘pahan’ traditional Sri Lankan lamps, to illuminate their movements. 70 71 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Staff participating at the World Environment Day Quiz
Cinnamon Lakeside Colombo’s initiatives for yy Guest awareness is established by Conservation of Biodiversity solid waste are as follows: placing a framed picture with eco- Cinnamon Lakeside Colombo intends to friendly slogans in all guest rooms. preserve and protect on-site local flora yy Waste cooking oil is utilised, with a yy In our efforts to save water, irrigation and fauna and the wider regions on which proper ratio, in filer boilers thereby, takes place in the early mornings or the property impacts. The hotel operates reducing the use of furnace oil. evenings (before 10am and after 5pm) within the statutory framework governing the protection of fauna and flora. Wherever Experiments are in progress for the use yy Garden refuse is collected and possible, native vegetation has been of Thermol (an agent) to reduce the film composed in the backyard and reused selected as these species adapt to the thickness of furnace oil, which assists in for plants and the gardens in the hotel. geography, hydrology and climate of the quick ignition of fire and reduction in yy An active system is in place to detect region, requiring little or no irrigation, carbon dioxide. and repair leaking toilets, faucets and minimal maintenance and no fertilizers, yy VOC and lead free paints are used in showerheads in guest rooms. pesticides or herbicides. In addition, the keeping with the pledge “ I will be yy Rainwater harvesting is carried out for border of the Beira Lake is cleaned on a Green” in all areas of the hotel. gardening purposes. daily basis. yy Guests and visitors are encouraged to yy Reuse of coat hangers from employee support environmental and energy uniforms and guest dry cleaning. Cinnamon Lakeside Colombo saving efforts by placing a notice in the yy The hotel has also obtained a solid commemorated the World Environment guest rooms that linen and towels well waste management plan from the Day by dedicating the month to sustainable be changed only upon request. Colombo Municipal Council. initiatives. The hotel continued its efforts yy In an effort to encourage and support yy E-waste for recycling is collected by to be green by educating associates on the the environment, the management the Engineering Department. The importance of caring for the environment. team is provided with laundry bag hotel works closely with Green Links As a result a film on the ‘Preservation of our made out of used linen in order to use Lanka to dispose of this E-waste in an Planet’ was shown at the staff cafeteria along the laundry facilities. ethical manner. with a quiz encouraging associates to get involved and learn about the importance
70 71 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Dubai Training
“Make a Difference” (MAD) Training Programme Training at the Emirates Academy of Hospitality Management in Dubai ,U.A.E of caring for the environment. Additionally, In the next financial year, the Company Vision: a seminar was scheduled where an expert plans to focus on three strategies: employee We Will Always Be The Hospitality Trendsetter guest speaker addressed employees and engagement, employee productivity and answered environment related questions. employee training & development. The three Pledges: The entire hotel had been involved in strategies will be implemented to address yy I Will Get It Right The First Time All The the issue of competition and retention of commemorating World Environment Day, Time talent. Employee engagement is the key to with staff creating an eco friendly banner yy I Will Care retention of talent thus inducing improved that was displayed outside the premises yy I Will Empower to highlight the significance of the day, performance and motivation. Employee productivity will be enhanced by linking yy I Will Be Green encouraging passersby to join in the mission Company strategies and objectives to yy I Will Standout Wherever I Am on their Facebook page (www.facebook. individuals. Associates will be provided with com/cinnamonlakeside) to share tips on technology and training in order to maximise Cinnamon Lakeside staff strength as at 31st being greener. productivity. The training and development March 2013 was 842 and the analysis of our strategy will reinforce productivity and staff strength is depicted below: People qualitative improvements. The Company is in Retaining a skilled labour force is the process of establishing and maintaining Employee Male Female Total momentous and a challenge to the a talent pool to improve the motivational hospitality industry. Personalised service level of associates. In addition, the hotel Number by Head is the hallmark of the travel and tourism plans to make use of Cinnamon Lakeside’s Count industry and is a component of the graduate programme to build a strong AVP & Above 2 2 4 hotel’s success that cannot be automated and competent second and third line staff Manager 3 3 or outsourced. Cinnamon Lakeside members. Asst. Mgr. 10 1 11 purposefully invests in its associates, providing them with opportunities for John Keells Leisure Sector’s Vision and its five Executive 57 13 70 personal and professional growth. pledges are embraced and not compromised Non by Cinnamon Lakeside Colombo, creating Executive 700 54 754 motivation in all associates and becoming 772 70 842 the Trendsetter in Hospitality in Sri Lanka.
72 73 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Employee Population Analysis Gender Analysis Attrition-Gender Analysis Age wise analysis indicates that 40% of the
employees fall under the category of 41-55 9% 9% and 31% of the employee falls into the less than 30 years category. Cinnamon Lakeside 2012/13 2012/13 8% has focused on creating youth employment 6% by encouraging school leavers to join the 2011/12 2011/12 industry as well. Gender analysis indicates 92% 94% a more male dominated environment but Cinnamon Lakeside is focusing on encouraging increase female population. 91% 91% The graph indicates that there has been a 1% Male Male increase in the female population. Female Female
Age Analysis Type Analysis Attrition-Age Analysis
2% 16% 24% 2012/13 2012/13 2012/13 3% 1% 31% 19% 25% 31% 2011/12 34% 2011/12 2011/12 39% 41% 40% 76% 66% 27% 39% 27%
27% 32%
18-20 41-55 Contract 20-30 41-55 21-30 over 55 Permanent 31-40 over 55 31-40
Employee Attrition Analysis In an industry where by employee attrition is high due to mobility for skilled staff, Cinnamon Lakeside boasts of an attrition rate of 6.98%. This is a decrease of 5.39% compared to the attrition rate of 12.37% last financial year.
72 73 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Sustainability Report Contd...
Employee Survey regulations issued by the EFSL. Despite The Company’s continuous efforts to ensure the absence of a collective bargaining that Cinnamon Lakeside Colombo as “More agreement with the trade union, the than Just a Work Place”, The Great Place to Company has succeeded in maintaining (Hours) (Hours) 2012/13 2011/12 Work (GPW) employee survey is conducted cordial relations with the associates once in two years. This survey, which based on a strong foundation of mutual AVP 80 220 was last conducted in 2011 at Cinnamon understanding and continuous dialogue. Manager 135 339 Lakeside, is a comprehensive and structured intervention across the orgarnisation Training and Development Assistant Manager 756 729 to understand and measure employee Trans Asia Hotels PLC in its endeavour to Executive 4,216 3,270 thinking. Based on the rating, Focused Group sustain ‘Timeless Luxury’ has continuously Non-Executive 53,356 50,058 Discussions with various categories of staff invested and focused on people Total 58,543 54,616 was conducted and action plans developed development initiatives with the objective in collaboration with department heads. The of achieving superior performance. The Training and Development Initiatives of developed action plans were implemented hotel’s training and development comprises Cinnamon Lakeside and continuously monitored to further of capability building, focused training, Training programmes are conducted based enhance the working environment of our development interventions and induction. on the Associates competencies. Training people. Three levels are considered taking into on specific subjects that cannot be handled account of the training need analysis of the internally will be trained externally. External The Voice of Employee (VOE) survey, which organisation: training is conducted locally and overseas is a dipstick survey, is conducted annually with various training institutes. Overseas to gather the pulse in the organisation. Individual level: Catering for the individual training is mainly conducted in collaboration The score of 86% indicates that the action needs of the Associates. with the Emirates Academy of Hospitality taken by the hotel to enhance employee Management in Dubai, U.A.E. satisfaction has paid dividend. Department level: Training needs of the Training hours conducted locally, overseas department as a whole. and in house are depicted in the graph To give a holistic perspective, staff that are Organisation level: The training needs of below. assistant manager level and above, take part the staff of Cinnamon Lakeside Colombo as in a 360-degree feedback process. a whole regarding technical and product Types of Training A questionnaire is passed on to the knowledge. Various training programmes employee, his/her peers, subordinates and are developed based on the three levels to 4% 2% superior, which is then rated and tabulated. cater to each and every training requirement considering the four aspects, technical, 2012/13 All of above surveys are used as a people confidence, mindset and behavioural 5% 1% index which are shared with the staff, development. 2011/12 consolidated at the leisure group level and 94% finally at John Keells group level to measure Cinnamon Lakeside has spent a total of the level of employee engagement and 58,543 hours on training this year, which satisfaction with the organisation. is a 7% increase in comparison to previous 94% year training hours as indicated in the table Governance and Collective Bargaining below. Majority of the training is conducted In house Trans Asia Hotels PLC is a member of the in house (94%), some being conducted Local Employers’ Federation of Sri Lanka (EFSL) locally (4%) and overseas training being 2%. Overseas and is governed within the framework of
74 75 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Balance Score Card Concept: The John E- Learning: Cinnamon Lakeside shares TAD (Train, Asses and Develop) process: Keells Holdings set objectives for the next the Group Leisure Portal available to TAD is a technical training programmes financial year which are passed on to the executive level and above .There are two designed to train trainers from different General Manager, cascading it down to all kiosks in the staff cafeteria, “The Link,” departments in addition to their core job. Heads of Departments and finally to the for staff to log-in and check the E portal With a total of 45 department trainers, the executives. The objectives are installed in postings. All executives and above have TAD trainers train their department on MQS the system which are evaluated mid year access to E-learning material, programmes and SOPs. and at the financial year-end. The evaluation and courses for self-study. Eight people is linked to the employee performance participated in the 11 E-learning modules Individual Training: After the appraisal of and is rated. Performance is evaluated on this financial year. associates, training needs are determined objectives and competencies. Competencies and it is the responsibility of the training are laid down for different levels. The External recruitment for training: With department to address individual training Employees carry out a self-evaluation, increasing competition for recruitment from requirements of the associate where which are in turn evaluated by the General the Ceylon Hotel School, the Company has applicable. Manager and passed on to the career spread to other areas including international committee for discussion and then finalise school leavers, where free management Training Calendar: Training prospectus with a feedback given to the employee. training programmes with hands on are created monthly, unique to Cinnamon This process is only applicable to executives training in all departments is provided. On Lakeside Colombo, which contains the entire and above. For Non-Executive’s a manual completion in 18 months, the hotel absorbs training programme that will be conducted process is carried out with self-evaluation some school leavers while the others join for different levels of staff. The training forms filled which are passed on to the various establishments in the industry. calendar specifies the training programmes immediate supervisor, department head and available within that month, the content the final rating is established. A mini career Development Centres: This is initiated by place conducted, time and date. committee makes the final decision. John Keells for Managers, Assistant Managers and Executives of the hotel. The Development Soft Skills: Soft Skills are conducted in Competency Framework: This is developed Centre assists in the development of the house, locally and overseas. Internal training to support the new vision and pledges. The potential employees to achieve their career programmes include customer service, competencies were developed with the goals. On completion of the assessments, the motivational, communication, etiquette, help of the Emirates Academy of Hospitality assessor along with the supervisor draft a hygiene etc. where it is carried out externally Management. The framework will focus on Personal Development Plan. in the event of non-availability of local all levels of employees. programmes. Revamp of Minimum Quality Standards Talent Management: Talent identification (MQS), Standard Operating Procedures Induction & Orientation: A three-day is carried out at the career committee (SOP) and Development of Lesson Plans: comprehensive programme is conducted for level. Group talent is identified where A set of MQS applicable to every Cinnamon all new recruits before commencement of the employee has potential which can be Hotel across the Leisure Group of John work, which includes detailed information contributed to the Group, thus creating Keells including SOP were designed by the about the operation of the hotel including growth. Training is provided according to the branding team and reviewed by the Emirates a tour of the hotel, number of rooms, employee potential for further development Academy. Cinnamon Lakeside Colombo was categories of rooms, management levels, and they are absorbed first in the event of also involved in the reviews. MSQ specifies health & safety, diseases, fire safety and the vacancies. Cinnamon Lakeside has taken the the handling of the technical areas. In Cinnamon culture. The total number of hours initiative to identify talent at supervisory and designing training programmes, a trainer spent for the induction programme by the Non-Executive levels and retain them on a guide is designed and documented, which Learning & Development Department during yearly basis. is the development of lesson plans with the the year under review was 2,616. objective of use in the future.
74 75 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Sustainability Report Contd...
Chauffeur Training: The hotel conducts training programmes for chauffeurs that are Speed of Trust: This one-day training outsourced from Walker Tours. It includes training on customer service and SOPs as they programme facilitated by GM was conducted represent the hotel and usually the first point of contact with the customer. for executives. Discussions were carried out as to building trust mutually amongst all Emirates Academy of Hospitality Management: John Keells Leisure Group tied up with levels and the impact of building this trust on the Emirates Academy Of Hospitality Management (EAHM) of the Jumeriah Group, which is an the financial growth of the hotel, customer academic affiliation with Ecole Hoteliere De Lausanne (EHL), Switzerland. Cinnamon Lakeside service, learning and growth of people Colombo has sent people for different courses over the years. The programme provides including internal processes. technical knowledge development and motivation due to the vast exposure from different brands of hotels. The table below illustrates the type of training programmes in which the Make a Difference (MAD) for all associates participated during the financial year. associates: A trainer from Malaysia conducted the initial three-day programme for the management team of the hotel Programme Duration No. Participated covering attitudes and perception of people. Pastry Chef’s Programme 4 days 2 Based on the feedback, it was customised Sous Chef’s Programme 5 days 1 and conducted for all associates. JKH Summer Course F&B 7 days 4 JKH Summer Course Housekeeping 7 days 4 My Way Forward (Career Guidance): An important role that the training JKH Summer Course Front Office August 3 department plays is advocating career JKH Management Exposure with Wine September 1 guidance. All associated are given the & Spirit opportunity to discuss with the training Kitchen & Restaurant Management September 5 department their issues, grievances; concerns of their future, their aspirations and English Class for Associates: English is a major challenge in the Hospitality Industry. guided accordingly. Cinnamon Lakeside Colombo has a permanent English trainer who conducts programmes for associates in the same level in order to enhance their fluency. The trainer observes spoken English in each department and the difficult encounters they have to handle. The hotel also conducts a“ Mr. Speaker” programme encouraging the staff to take part in conversations in English, prepared speeches, presentations, translation challenges, word power challenge, debate and dramas.
Kadda Polish: Weekly a new word and a sentence is displayed on the notice board on A3 size sentences in English and its pronunciation and meaning in Sinhala. There are two segments covered namely sentence power and word power.
F&B Quiz: The training department sets a paper for F&B to gauge their knowledge on the product, menu, health & safety, food safety and general product. Based on the results of the tests, training needs are organised. Awards are given to the highest score at V SPARC.
CMC Food Handlers Certification Programme:A major concern in the city is the health and safety of food. In addition to internal training programmes for food safety, Cinnamon Lakeside invited CMC Institute of Food Safety to conduct a certified programme. It was conducted for a cross section of 36 food handlers in F&B, Kitchen department and Kitchen Stewarding who are expected in turn to train their department colleagues. The hotel is one of the first to certify its food handlers. 76 77 TRANS ASIA HOTELS PLC | Annual Report 2012/13
First Aid Training Wine Training
Basic computer literacy for all Associates: Awareness on grooming standards: Internal Awards and Recognition Cinnamon Lakeside Colombo has a vision Grooming standards consist of two training Initiatives for all its associates to be computer literate. programmes. One is conducted internally Quarterly Awards: Heads of Departments An internal friendly two-day programme concerning grooming and etiquette. The nominate employees who have gone the was conducted in batches twice a month external trainer carries out two programmes, extra mile to serve the hotel. Nominees successfully, motivating associates to utilise one is for the management team and are presented at the quarterly awareness the computers in the kiosks for their use. the other for the Frontline Associates on meeting and the winners are selected at the personal hygiene, grooming and personality individual and team level. Commendation First Aid Training: A one-day First Aid development. letters are given in recognition of excellent programme was conducted four times service where it cannot be quantified. Leadership Guide (leadership skills during the financial year for a cross-section for supervisors/executives): This was V SPARC Award: This is initiated by John of the hotel in conjunction with St. Johns a one-day programme conducted by an Keells Group, enabling supervisors to Ambulance. We plan to have additional external trainer covering all leadership recognise and reward associates who go the programmes in the future in order to have aspects thereby developing the leadership extra mile to provide an exceptional service professional First Aiders within the organis skills of associates. In addition, an external to the customers. During the year under ation. trainer held a supervisor’s guide five- review, 116 associates were rewarded with day programme. All the supervisors and V-Sparc awards. Earth Song: This was half a day programme potential supervisors were nominated was conducted quarterly with the objective to participate, which covered all the Continuous Improvement scheme: of making the associates aware of the impact supervisory aspects. The associates are encouraged to suggest of their activities towards the environment, improvements to the infrastructure, product pollution, energy saving and natural Essence of Mixology: This was an eight-day and services, their working conditions or resources. programme covering beverage and menu any other area of operation. Implementation knowledge including ways of mixing liquors of suggestions from selected associates is Wine Training: There are two training and making different cocktails followed rewarded at the quarterly meeting. programmes, one with the Emirates by tours to a winery, cigar company and Academy and the other conducted locally. breweries.
76 77 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Sustainability Report Contd...
Cosmo In House Competition Absolute Bartender Challenge Winner
Product Knowledge Competition: A set Work Life Balance yy Annual Staff Party for Associates and of questions are drawn up by the training Cinnamon Lakeside strongly believes and families is held for two days either in the department with regard to basic knowledge advocates a work life balance that sustains hotel or out of Colombo including gifts, in internal hotel operation such as room mix, quality performance and productivity in games and meals. room rates, F&B signature outlets of the hotel a 24x7 operation. We provide plenty of and the type of food served in each outlet opportunities for the staff to enjoy their work yy Twice a year, the hotel sponsored etc. All staff, department wise participate in place and socialise with colleagues and their medical tests for all Food Handlers, which the competition and the selected winner is families. is a requirement from the Tourist Board. awarded. Facilities and Benefits for staff yy Special meals are provided for staff on Cosmo In House Competition: As a part yy The hotel is in the process of upgrading festive days including Ramadan and of people development, the hotel identifies the recreational facilities for its staff break fast meals with a prayer room talent by conducting a generic cocktail with the construction of a four-storey facility. competition, the Flaring category and state-of-the-art Human Resources the Classic category. The objective of this complex being the only hotel to yy John Keells university scholarship competition is to identify and groom people provide such facilities for the staff. The programme is also cascaded to the for national as well as external competitions, complex will include a fully fledged hotel associate’s children. In addition, which are held annually. hi-tech HR department, training centre, the children are also provided external recreational facilities and locker rooms. English courses. Bed Making Competition: Mainly for Housekeeping associates and for interested yy In appreciation for the years of service yy On completion of 10 years of service, participants from other departments. and commitment, Long Service staff get a complimentary overnight Other open competitions such as “Florists in Associate Awards for staff is given in the overstay with their family for their action” and debates are also conducted by categories of 5, 10, 15, 20 and 25 years birthday. the hotel of service. A certificate and a sovereign are given to the staff in recognition. yy Twice a year gift vouchers from a leading bookshop are presented to children of the staff. 78 79 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Annual Staff Party Long Service Associate Awards 2012
yy An annual poster competition is conducted for the associate’s children yy Provide doorstep transport for female staff working late hours. during December. yy Sleeping accommodation provided for the staff. yy Monthly birthday celebrations for associates including a complimentary yy A clinic is provided which includes a nurse and two visiting doctors sponsored by the hotel cake and a card from the Management. for associate consultation with a limited number of medications.
yy Twice a year medical tests for all Food yy All staff is given the opportunity to purchase food items from ‘Goodies’ at less than half the Handlers and anti- typhoid vaccine and price. Discarded items from the hotel are auctioned at a nominal price for the staff. annual worm treatment. yy We also organise religious services for all religions annually. yy Annual medical tests for all staff at Executive level and above including Cinnamon Lakeside has one of the best welfare societies among the Five Star Hotels in the city. medical for all new recruits. The Welfare society is a healthy revenue generating society that provides a plethora of facilities for the associates. These include donations in the event of a death in the family, loan facility yy JKH Group Christmas party for with a 12-month settlement period, monthly disability payment, terminal benefit scheme on associates and families. termination of employment, welfare shop facility at concessionary prices, assistance in case of natural disaster, easy payment scheme for promotional goods, assistance from Blood Bank on requirement, wedding gifts, facility to purchase newspapers & magazines at nominal rates, yy Gifts provided for staff on retirement emergency loans, medical claims, payment for spectacles, contribution to departmental trips after 10 or more years of service. and cash rewards for winners and runners up at district/ all island levels of any competition.
yy Annual religious activities for the hotel Health and Safety anniversary. Policy on Health and Safety Being in the forefront of the leisure management industry, Cinnamon Lakeside is committed yy A staff cafeteria provided with buffet to conduct all its operations in a work environment where it affirms safety and health of our style meals. associates, guests and even contract employees. In an industry where human touch creates a strategic competitive edge, it is of paramount importance of the physical and psychological 78 79 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Sustainability Report Contd...
day after the injury takes place and entails calendar days. The total Man Days Lost for Cinnamon Lakeside for the year under review was 184 as illustrated in the table below.
2012/2013 2011/2012
Total number of man 198,896 213,840 days in the period Total man days lost 164 222 (TMDL) Life Saving Programme TMDL as a % of total 0.08% 0.10% man days in the well being of all our associates. period Our commitment in adhering to legal Injury Rate requirements and continual improvement GRI guidelines defines injury rate as the enhances both employee performance frequency of injuries relative to the total Awareness Programmes conducted for and would motivate them to pursue time worked by the total workforce in the Associates their goals with a higher willingness and year under review. During the financial year, yy HIV/AIDS Awareness Programme: To this will eventually lead to a higher level a total of 20 staff members were affected by commemorate World AIDS day, an awareness programme was conducted of productivity. This will be achieved by occupational injuries, which was a reduction for the associates. They participated inculcating a health and safety conscious in comparison to the previous year as in the ribbon campaign including the culture among staff associates of all tiers. depicted in the following table. re launch of the HIV/ AIDS work place At Cinnamon Lakeside Colombo, active policy, a video on HIV/AIDS at the LINK participation and contribution of employees Restaurant and a quiz competition. to the health and safety system as well as consultation with employees on yy Life Saving Programme: The Manager of consequences due to failures in the OHS 2012/2013 2011/2012 Power Drome conducted a life saving system shall ensure the highest standards in No. of staff affected 20 28 session. The objective was to educate associates on how to respond to a health and safety. The hotel has developed by occupational drowning incident, rescue processes, a health and safety system to ensure that Injuries. drowning scenarios and other all employees participate, all contractors, Total number of man 198,896 213,840 procedures in case of an emergency. visitors and other interested parties will days in the period SOP’s for pool attendants were carried be consulted on occupational health and out as well. safety matters. To maintain the standards in Lost Day Rate the hotel, we have a health and safety team GRI defines Lost Day Rate as the impact yy Earth Song: An awareness programme representing various departments of the of occupational accidents and diseases as was conducted for the associates on hotel. The team meets regularly to discuss reflected in time off work by the affected the protection and preservation of issues and the areas for improvement in workers. ‘Lost Days’ commences from the the environment. It touched on the terms of occupational health and safety. 80 81 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Company swimming team celebrating victory Inter Company Rugger Tournament
effective and efficient utilisation of Learning & Development Department Badminton: The women’s badminton natural resources including energy was conducted by Prof. Ravindra team clinched first place and one of saving, water usage, paper usage, Fernando on Prevention of Dengue & the team members were adjudged the food wastage etc. and preserving the Best Practices for Safety. most outstanding player for the second environment for our future generations. consecutive year at the Travel Trade The programme is conducted once in yy Food Safety: Institute for Food Safety tournament. every three months to refresh the minds held a comprehensive programme of the associates. on handling food safety for 35 Rugby: Our team emerged runners-up in food handlers. Upon the successful the Bowl segment at the inter company yy First Aid: Cinnamon Lakeside Colombo completion of the session, the tournament. conducted a comprehensive First Aid associates were awarded a certificate training programme for the associates and a Food Handlers card. In addition, Cinnamon Lakeside Colombo covering all aspects of First Aid. A total lends its players to the Group Cricket, Soccer, of 5 programmes were held in this Sports Achievements of Associates Swimming, Badminton, Basketball and financial year. Cinnamon Lakeside Colombo encourages Rugby teams. its associates to participate and compete yy Health and Safety Awareness in healthy competitions. The Associates All associates fall into one of the four houses Programme: The hotel conducted participated in a number of events this year created by the Company using the function a comprehensive training for all as follows. room names, namely Dukes, Earls, Emperors associates to ensure their safety as and Kings. Annual inter house tournaments well as the safety of the customer. The Soccer: Cinnamon Lakeside Colombo soccer are held in Cricket, Soccer, Carrom, programme covered: proper utilization team emerged champions at the inter Badminton and Volleyball. Inter house of tools and equipment, work related company tournament with our goalkeeper competitions encourages camaraderie stress, good housekeeping practices, adjudged “ The Best Player”. among associates. The associates also looks 5 S system and best health and safety forward to the annual cricket match, “ Battle practices. Swimming: Cinnamon Lakeside Colombo of the Cinnamons”, played against Cinnamon emerged champions at the John Keells inter Grand Hotel. yy Dengue Awareness Programme: A company swimming meet and to add another Dengue Awareness Programme was feather to our cap our swimming team were organised for all associates by the the runners-up at the Travel Trade meet. 80 81 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Sustainability Report Contd...
Policy on equal opportunity statutory and regulatory requirements. All disposal. The hotel has the honour The John Keells Group is an equal products and services will seek to identify and of being recertified for the second opportunity employer. Accordingly, the assess any environmental and social impact consecutive year. Group is committed to hiring, developing and through their communications, services, promoting individuals who best meet the operations and supply chain. yy In keeping with Green Globe and ISO requirements of available positions, possess 22000 certifications, the hotel gives the required competencies, experience and Cinnamon Lakeside Colombo’s product preferences to suppliers that have the qualifications to carry out assigned tasks responsibilities are set out as follows: food safety certificate. and have the potential for growth within the organisation; and has put in processes and yy Cinnamon Lakeside Colombo from a yy Cinnamon Lakeside Colombo was the systems that ensure the same. marketing aspect, portray accurate first hotel to have Food Handlers certified image of the products and services on by the CMC. Cascading from the groups equal opportunity offer to the customer. policy, Cinnamon Lakeside Colombo believes yy The organisation monitors it’s ranking in providing opportunity to all, based on yy Enhancing our products and services on www.tripadvisor.com and was ranked talent and ability. The hotel is also committed and gauging the satisfaction level of the third from our previous position of to maintaining an environment free of customers is testament to the superior seventh place. The reviews are read and harassment and discrimination based on race, service the hotel offers the customer. A responses carried out daily. religion, gender and social background. customer feedback survey is carried out by giving the customer a questionnaire yy Cinnamon Lakeside Colombo carries Policy on Child Labour & Forced or to fill in at every restaurant and in the out biannual brand audits with the audit Compulsory Labour rooms. Guest feedback is collated, team, which covers the entire systems Cinnamon Lakeside does not engage children processed and analysed on a monthly and operation of the hotel. In selected in employment and as a general practice basis. The comments on the customer areas of concern, the brand audit team do not employ any person below the age feedback cards are read on a daily basis makes random visits. of 18 (eighteen) years at the workplace. in the following morning meeting and Furthermore, no employee of the Company is issues addressed. Customer complaints yy Standards are maintained with analysis made to work against his/her will, or subject are dealt with daily at the morning of other hotels in the city and the hotel to corporal punishment or coercion of any meeting in the presence of heads of benchmarks against international counter type related to work. The hotel has also departments and its rectification is parts with the international exposure institutionalised a process by which sexual followed at the subsequent meetings. experienced by our specialised staff. harassment of any form could be brought to the notice of the management of the hotel or yy Cinnamon Lakeside Colombo has been yy The organisation was listed by Brand to the independent committee set up at John recertified for ISO 22000:2005 Food Finance in its latest publication of Sri Keells Group level for redress. Safety Management System Standard. Lanka’s leading brands as the Highest ISO 22000 is a standard developed Valued Hospitality Brand in Sri Lanka. Product Responsibility by the International Organisation for Brand Finance, a leading independent Cinnamon Lakeside Colombo’s relentless Standardisation dealing with food consultancy founded in the UK, has effort in providing ‘Timeless Luxury’ considers safety. The food safety management published the annual review for eight products and services of paramount system of the hotel covers the entire consecutive years. The review assesses importance. Cinnamon Lakeside Colombo food manufacturing operations starting the health of leading brands in Sri strive to maintain products and services at the from receiving of incoming materials, Lanka by using available published data highest standard through embracing industry purchasing, stores, kitchens, kitchen supplemented by independent market and corporate best practice and compliance stewarding, restaurants, bars, human research to analyse performance. The with all relevant local and international resources, maintenance and garbage hotel’s brand was valued at Rs. 559
82 83 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Million with a brand rating of AA. Brand yy Relationship building with our customers yy The hotel provides special dietary menus Ratings are based on strength, risk and is carried out on a regular basis. The sales on request for special functions and all future potential of a brand in relation to team constantly meets and makes sales our buffets have more vegetarian dishes its competitors. calls including one on one invitations due to popular demand. Recently, a Halal to the hotel to existing and potential kitchen was created to cater for Amana yy Training sessions at the Emirates customers. Tour operators are entertain Takaful and successfully met the client’s Academy Managements as well as the at our unique 8 Degrees restaurant requirements. exposure gained by training and working reinforcing and strengthening our within renowned hotels in Dubai has partnership. yy A nurse and doctor on call are available enabled the hotel to be a notch above in the event of an emergency. the rest in terms of standards and yy Cinnamon Lakeside Colombo also services. hosted a number of VIP guests including yy The hotel has a number of expatriate celebrity Indian Actress Sneha and Peter associates that assists in translations yy Cinnamon Lakeside Colombo’s relentless Kurivita who was featured on Master of different language needs of the efforts to be one step ahead in terms Chef Australia. customer including Cantonese, Spanish, of standards saw the hotel obtaining a German, Thai, French and Hindi. number of benchmarks and certifications yy The Company also makes its presence on including Green Globe recertification, online booking sites including booking. yy Foreign travel companies including ISO 22000/HACCP: 2005 Food Safety com and Agoda. John Keels Group Virgin Holiday UK, Dertour, Thomas Cook, Management Systems certification, installed a social media-monitoring tool and Kouni audit Cinnamon Lakeside OHSAS 18001 certification, Switch Asia called Reinate, which assists the hotel to Colombo mainly on the health and safety and Star Crescent. study its performance in terms of social aspect of the hotel. media, review sites and analyse the yy Comprehensive training for all Associates trends. Community in all Minimum Quality Standards (MQS) Cinnamon Lakeside Colombo understands and Standard operating Procedures yy In terms of menus and food, the hotel the impact on the environment, whilst (SOP). has raised its platform with revised enhancing the lives of our guests, our menus and standards in F&B and employees and the community in which yy Cinnamon Lakeside Colombo has an Kitchens Chefs with international we operate. The organisation is committed active and healthy social media with exposure and experience. to living by the John Keells Group’s constant engagement with the guest pledge “ I Will Care” by interacting with through Facebook (16000 fans), twitter, yy 8 Degrees on the Beira Lake is the the communities, building long-term Cinnamon Lakeside website (revamped hotel’s custom built floating restaurant relationships and uplifting the communities. this financial year), media advertising, with banquet facilities and due to The hotel has focused on a number of CSR eflyers, posters, JKH group Intranet, popular demand a bubbly brunch was projects, in which the associates actively Google Plus, You Tube and Linkedin. The introduced every Sunday as well as high participate creating a sense of responsibility hotel also maintains Cinnamon Lakeside profile events and functions. among them. Cinnamon Lakeside has career page on facebook. The Company embarked on numerous innovative social participates in a number of international yy Cinnamon Lakeside Colombo has two responsibility initiatives in a relentless effort trade fairs ITB, ATM and WTM as well rooms equipped to cater for the special to make a positive change in multiple fronts. as China Travel Mart. Walkers Tours needs of the physically challenged organised a road show in 38 cities in guests with well-trained staff to China and represented Cinnamon understand and handle the needs of the Lakeside. guests.
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Religious CSR Projects
Samadhi Buddha Statue cleaning project The hotel gathered a team of 120 associates from various departments to carry out the task in Monaragala Piriven Viharaya, Kurunagala. The largest crowd of volunteers gathered thus far, travelling in three busses for two and a half hours and 114 kilometers to the Monaragala Piriven Viharaya, in their journey of cultural restoration. The Samadhi Buddha statue is estimated to be the country’s largest granite statue to date. The Associates carried out their work around the 67.5 foot granite Buddha statue, which is still under construction, clearing the area of rubble and soil and cleaning the surrounding areas of the temple.
Ayeshwariya Lakshmi Kovil cleaning project in Wellawatta Over hundred associates volunteered their services for the ongoing renovations. The team worked tirelessly for many hours clearing and tidying the rubble at the four-storey structure culminating a true team spirit, which was felt throughout the project.
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Galloluwa Jumma Mosque cleaning project in Minwangoda Members of staff from all departments of the hotel consisting of 85 members made an hour-long journey to the Golloluwa Jumma Mosque in Minuwangoda to carry out a renovation and restoration project. In the main structure of the Mosque, the volunteers white washed the front of the mosque, cleaned the existing algae, painted the front gate and side-wall. The team also cleared the overgrown garden, which stretched over four acres.
The hotel is proud of completing the full circle of restoring religious institutions in a year. The Cinnamon Lakeside Colombo team worked together representing all creeds to complete CSR projects throughout the year, strengthening their team spirit and unity throughout the hotel.
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Educational CSR Projects Pitipana Village: In collaboration with the Department of Probation and Child Care Services, Cinnamon Lakeside Colombo lent a helping hand in their Nena Diriya Education Aid Programme. Cinnamon Lakeside’s objective is to support the primary school children’s education and in the next financial year to assist the children in higher education including recruitment of some of them to our organisation as well as other business units in the group.
Field training for Trainee Nurses: 30 trainee nursing students from the Colombo Nursing Training School undergoing field training in “ Public Health” at the Public Health Department of the Colombo Municipal council were provided training on Food Receiving Bay, Food & Beverages Stores, Kitchen Stewarding and general kitchen. The exposure gain from this exercise gave them added knowledge to their field of study.
Training for Home Science Teachers: A demonstration on vegetable carving, decorating cakes, chocolate making & setting up of tables were done for 35 Home Science teachers from Colombo Zone at the hotel’s Learning & Development Center.
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Training for School Students: Learning & Development initiated and conducted a programme on ice carving, bed making, decorating a cake, making bread, pastry, chocolates and table arrangements for 20 students including 5 teachers from the New Model School Makuludoowa, Piliyandala.
Students of Sri Lanka Institute of Tourism & Hotel Management – Kandy: 20 students from Sri Lanka Institute of Tourism & Hotel Management - Kandy School were given exposure on Front Office Operation and a tour of the hotel.
Training for Air Force Personnel: Cinnamon Lakeside Learning & Development conducted Table Set up & Etiquette training for 25 Air Force personnel. The areas covered are: Different table set ups for different culinary purposes & for different menus, related etiquette for occasional usage and the skills required to deliver customised service depending on the situation.
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On going CSR Initiatives for schools in the vicinity Sariputta Maha Vidyalaya, Colombo Cinnamon Lakeside Colombo purchased furniture including a glass cover for Buddha statue, doors for the Home Science room, aluminum racks for the Science Lab and provided timber for 150 chairs and desks for the Sariputta Maya Vidyalaya. In addition, 331 monitor exercise books were handed over to the school. The hotel also assisted in a revision programme for the year 5 scholarship students of the three schools in the neighbourhood namely Al Iqbal Maha Vidyalaya, Sariputta Maha Vidyalaya and TB Jayah Maha Vidyalaya.
Al Iqbal Maha Vidyalaya The Hotel, assisted by JKH foundation, carried out renovations to a building for a Home Science class and installed pantry cupboards and sink for the Al Iqbal Maha Vidyalaya in the vicinity with the objective of uplifting the facilities in the school.
TB Jayah Maha Vidyalaya TB Jayah Maha Vidyalaya was provided with 40 new desks and 20 chairs for the school children in an attempt to uplift the learning facilities.
Other CSR Initiatives Cinnamon Lakeside celebrated a milestone of 27 years in the hospitality industry with a multitude of activities. In commemoration of this event, an annual blood donation drive was organised which saw the participation of 110 associates. Adding to the celebration activities, the hotel joined forces with the International Eye Bank to encourage associates to pledge to donate their eyes and human tissue. The hotel also held religious ceremonies from all creeds in celebration of its 27th anniversary with a Hindu ceremony celebrated by the Tamil priest Ramachandra from the Wellawatta Temple followed by an Islamic ceremony conducted by Maulavi Anas from the Slave Island Mosque. Whilst the Buddist sermon was conducted by Ven. Olande Ananda Thera and the Catholic Mass was celebrated by the Auxiliary Bishop of Colombo, Rt. Rev. Dr. Emmanuel Fernando of Archbishop’s House, Borella. The participation of the entire hotel inculcated the importance of unity and team spirit amongst the associates in working towards sustaining five star standards.
Donation of Exercise books More than 1000 exercise books (120 pages) were donated for the needy children in rural Bibila, Madatugama, which was organised by “ Lahiru Scholarship Foundation”.
Cinnamon Lakeside Colombo hosted a Poson Dansala near the Gangarama Temple, Colombo. The team comprising of approximately 90-100 associates from all departments gathered on the Poya Day to assist with the preparation and distribution of 4000 meal packets.
The hotel investigates and gives preference to suppliers that help the community in terms of CSR, thereby assisting the community indirectly by purchasing from these suppliers.
88 89 TRANS ASIA HOTELS PLC | Annual Report 2012/13
27th Anniversary Celebrations with Multi Religious Activities
Buddhist Sermon Catholic Mass
Hindu Ceremony Islamic Ceremony
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27th Anniversary Celebrations with Other Activities
Blood Donation Campaign Campaign with Eye Bank
Poson Dansela
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Profile Disclosure Description Reported Cross Reference
1. Strategy and analysis 1.1 Statement from the most senior decision-maker of the organisation. Fully 7 1.2 Description of key impacts, risks, and opportunities. Fully 62 2. Organizational profile 2.1 Name of the organisation. Fully 59 2.2 Primary brands, products, and/or services. Fully 59 2.3 Operational structure of the organisation, including main divisions, operating Fully 59 companies, subsidiaries, and joint ventures.
2.4 Location of organisation’s headquarters. Fully 59 2.5 Number of countries where the organisation operates, and names of Fully 59 countries with either major operations or that are specifically relevant to the sustainability issues covered in the report. 2.6 Nature of ownership and legal form. Fully 59 2.7 Markets served (including geographic breakdown, sectors served, and types Fully 59 of customers/beneficiaries).
2.8 Scale of the reporting organisation. Fully 59 2.9 Significant changes during the reporting period regarding size, structure, or N/A N/A ownership. 2.10 Awards received in the reporting period. Fully 59 3. Report parameters 3.1 Reporting period (e.g., fiscal/calendar year) for information provided. Fully 60 3.2 Date of most recent previous report (if any). Fully N/A 3.3 Reporting cycle (annual, biennial, etc.) Fully 60 3.4 Contact point for questions regarding the report or its contents. Fully Inner Back Cover 3.5 Process for defining report content. Fully 60 3.6 Boundary of the report (e.g., countries, divisions, subsidiaries, leased facilities, Fully 60 joint ventures, suppliers).
3.7 State any specific limitations on the scope or boundary of the report. Fully 60 3.8 Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced Fully 60 operations, and other entities that can significantly affect comparability from period to period and/or between organisations.
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3.9 Data measurement techniques and the bases of calculations, including Fully 61 assumptions and techniques underlying estimations applied to the compilation of the Indicators and other information in the report.
3.10 Explanation of the effect of any re-statements of information provided Fully 60 in earlier reports, and the reasons for such re-statement (e.g., mergers/ acquisitions, change of base years/periods, nature of business, measurement methods). 3.11 Significant changes from previous reporting periods in the scope, boundary, Fully 60 or measurement methods applied in the report.
3.12 Table identifying the location of the Standard Disclosures in the report. Fully 91-101 3.13 Policy and current practice with regard to seeking external assurance for the N/A N/A report. 4.Governance, commitments and engagement 4.1 Governance structure of the organisation, including committees under Fully 12 the highest governance body responsible for specific tasks, such as setting strategy or organisational oversight. 4.2 Indicate whether the Chair of the highest governance body is also an Fully 13 executive officer. 4.3 For organisations that have a unitary board structure, state the number and Fully 15 gender of members of the highest governance body that are independent and/or Non-Executive members. 4.4 Mechanisms for shareholders and employees to provide recommendations Fully 19 or direction to the highest governance body.
4.5 Linkage between compensation for members of the highest governance Fully 12 body, senior managers, and executives (including departure arrangements), and the organisation’s performance 4.6 Processes in place for the highest governance body to ensure conflicts of Fully 15 interest are avoided. 4.7 Process for determining the composition, qualifications, and expertise of the Fully 14 members of the highest governance body and its committees, including any consideration of gender and other indicators of diversity.
4.8 Internally developed statements of mission or values, codes of conduct, and Fully 12 - 22 principles relevant to economic, environmental, and social performance and the status of their implementation.
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4.9 Procedures of the highest governance body for overseeing the organisation’s Fully 12 - 33 identification and management of economic, environmental, and social performance, including opportunities, and adherence or compliance relevant risks and with internationally agreed standards, codes of conduct, and principles. 4.10 Processes for evaluating the highest governance body’s own performance, Fully 12 - 33 particularly with respect to economic, environmental, and social performance. 4.11 Explanation of whether and how the precautionary approach or principle is Fully 60-61 addressed by the organisation.
4.12 Externally developed economic, environmental, and social charters, Fully 60-61 principles, or other initiatives to which the organisation subscribes or endorses. 4.13 Memberships in associations (such as industry associations) and/or national/ Fully 60 international advocacy organisations.
4.14 List of stakeholder groups engaged by the organisation. Fully 62-63 4.15 Basis for identification and selection of stakeholders with whom to engage. Fully 62-63 4.16 Approaches to stakeholder engagement, including frequency of Fully 62-63 engagement by type and by stakeholder group.
4.17 Key topics and concerns that have been raised through stakeholder Partially 12 - 22 engagement, and how the organisation has responded to those key topics and concerns, including through its reporting. STANDARD DISCLOSURES PART II: Disclosures on Management Approach (DMAs) DMA EC Disclosure on Management Approach EC Fully 65 Economic performance Fully 65-67 Aspects Market presence Indirect economic impacts DMA EN Disclosure on Management Approach EN Fully 67 Materials Energy Fully 67-69 Water Aspects Biodiversity Fully 71 Emissions, effluents and waste Fully 69 Products and services N/A N/A 92 93 TRANS ASIA HOTELS PLC | Annual Report 2012/13
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Profile Disclosure Description Reported Cross Reference
Compliance N/A N/A Transport N/A N/A Overall Partially 69 - 71 DMA LA Disclosure on Management Approach LA Fully 72 Employment Fully 72 - 73 Labour/management relations Fully 74 Aspects Occupational health and safety Fully 79 - 80 Training and education Fully 74 - 77 Diversity and equal opportunity Fully 82 DMA HR Disclosure on Management Approach HR Fully 72 Investment and procurement practices N/A N/A Non-discrimination N/A N/A Freedom of association and collective bargaining N/A N/A Aspects Child labour Fully 82 Forced and compulsory labour Fully 82 Security practices N/A N/A Indigenous rights N/A N/A DMA SO Disclosure on Management Approach SO Fully 83 Community Fully 84 - 90 Corruption N/A N/A Aspects Public policy N/A N/A Anti-competitive behavior N/A N/A Compliance N/A N/A DMA PR Disclosure on Management Approach PR Fully 82 Customer health and safety N/A N/A Product and service labelling N/A N/A Aspects Marketing communications Fully 82-83 Customer privacy Compliance
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STANDARD DISCLOSURES PART III: Performance Indicators Economic Economic Performance EC1 Direct economic value generated and distributed, including Fully 65 revenue,operating costs,employee compensation,donations and other community investments, retained earnings, and payments to capital providers and governments. EC2 Financial implications and other risks and opportunities for the organisation’s N/A N/A activities due to climate change.
EC3 Coverage of the organisation’s defined benefit plan obligations. Fully 66 EC4 Significant financial assistance received from government. N/A N/A Market Presence EC5 Range of ratios of standard entry level wage by gender compared to local N/A N/A minimum wage at significant locations of operation.
EC6 Policy, practices, and proportion of spending on locally-based suppliers at N/A N/A significant locations of operation.
EC7 Procedures for local hiring and proportion of senior management hired from N/A N/A the local community at locations of significant operation.
Indirect economic impacts EC8 Development and impact of infrastructure investments and services Fully 84-90 provided primarily for public benefit through commercial, in- kind, or pro bono engagement. EC9 Understanding and describing significant indirect economic impacts, N/A N/A including the extent of impacts. Environmental Materials EN1 Materials used by weight or volume. N/A N/A EN2 Percentage of materials used that are recycled input materials. N/A N/A Energy EN3 Direct energy consumption by primary energy source. Fully 68 EN4 Indirect energy consumption by primary source. Fully 68
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EN5 Energy saved due to conservation and efficiency improvements. Fully 69 EN6 Initiatives to provide energy-efficient or renewable energy based products N/A N/A and services, and reductions in energy requirements as a result of these initiatives. EN7 Initiatives to reduce indirect energy consumption and reductions achieved. Fully 69 Water EN8 Total water withdrawal by source. N/A N/A EN9 Water sources significantly affected by withdrawal of water. N/A N/A EN10 Percentage and total volume of water recycled and reused. N/A N/A Biodiversity EN11 Location and size of land owned, leased, managed in, or adjacent to, N/A N/A protected areas and areas of high biodiversity value outside protected areas.
EN12 Description of significant impacts of activities, products, and services on Partially 71-72 biodiversity in protected areas and areas of high biodiversity value outside protected areas. EN13 Habitats protected or restored. N/A N/A EN14 Strategies, current actions, and future plans for managing impacts on N/A N/A biodiversity. EN15 Number of IUCN Red List species and national conservation list species with habitats in areas affected by operations, by level of extinction risk.
Emissions, effluents and waste EN16 Total direct and indirect greenhouse gas emissions by weight. Fully 69 EN17 Other relevant indirect greenhouse gas emissions by weight. N/A N/A EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved. N/A N/A EN19 Emissions of ozone-depleting substances by weight. N/A N/A EN20 NO, SO, and other significant air emissions by type and weight. N/A N/A EN21 Total water discharge by quality and destination. N/A N/A EN22 Total weight of waste by type and disposal method. Fully 70-71 EN23 Total number and volume of significant spills. N/A N/A EN24 Weight of transported, imported, exported, or treated waste deemed N/A N/A hazardous under the terms of the Basel Convention Annex I, II, III, and VIII, and percentage of transported waste shipped internationally.
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EN25 Identity, size, protected status, and biodiversity value of water bodies N/A N/A and related habitats significantly affected by the reporting organisation’s discharges of water and runoff. Products and services EN26 Initiatives to mitigate environmental impacts of products and services, and N/A N/A extent of impact mitigation.
EN27 Percentage of products sold and their packaging materials that are N/A N/A reclaimed by category. Compliance EN28 Monetary value of significant fines and total number of non-monetary Fully 68 sanctions for non- compliance with environmental laws and regulations.
Transport EN29 Significant environmental impacts of transporting products and other N/A N/A goods and materials used for the organisation’s operations, and transporting members of the workforce. Overall EN30 Total environmental protection expenditures and investments by type. N/A N/A Social: Labour Practices and Decent Work Employment LA1 Total workforce by employment type, employment contract, and region, Fully 72 broken down by gender. LA2 Total number and rate of new employee hires and employee turnover by age Fully 73 group, gender, and region.
LA3 Benefits provided to full-time employees that are not provided to temporary Partially 78-79 or part- time employees, by significant locations of operation.
Labour/management relations LA4 Percentage of employees covered by collective bargaining agreements. N/A N/A LA5 Minimum notice period(s) regarding operational changes, including whether N/A N/A it is specified in collective agreements.
Occupational health and safety LA6 Percentage of total workforce represented in formal joint management– N/A N/A worker health and safety committees that help monitor and advise on occupational health and safety programs.
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LA7 Rates of injury, occupational diseases, lost days, and absenteeism, and total Fully 80 number of work-related fatalities, by region and by gender.
LA8 Education, training, counseling, prevention, and risk-control programs in Fully 80-89 place to assist workforce members, their families, or community members regarding serious diseases. LA9 Health and safety topics covered in formal agreements with trade unions. N/A N/A Training and education LA10 Average hours of training per year per employee by gender, and by Fully 74 employee category. LA11 Programs for skills management and lifelong learning that support the N/A N/A continued employability of employees and assist them in managing career endings. LA12 Percentage of employees receiving regular performance and career Fully 74-77 development reviews, by gender. Diversity and equal opportunity LA13 Composition of governance bodies and breakdown of employees per N/A N/A employee category according to gender, age group, minority group membership, and other indicators of diversity. LA14 Ratio of basic salary and remuneration of women to men by employee N/A N/A category, by significant locations of operation.
Social: Human Rights Investement and procurement practices HR1 Percentage and total number of significant investment agreements and N/A N/A contracts that include clauses incorporating human rights concerns, or that have undergone human rights screening. HR2 Percentage of significant suppliers, contractors, and other business partners N/A N/A that have undergone human rights screening, and actions taken.
HR3 Total hours of employee training on policies and procedures concerning N/A N/A aspects of human rights that are relevant to operations, including the percentage of employees trained. Non-discrimination HR4 Total number of incidents of discrimination and corrective actions taken. N/A N/A
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Freedom of association and collective bargaining HR5 Operations and significant suppliers identified in which the right to exercise N/A N/A freedom of association and collective bargaining may be violated or at significant risk, and actions taken to support these rights.
Child labour HR6 Operations and significant suppliers identified as having significant risk for Fully 82 incidents of child labor, and measures taken to contribute to the effective abolition of child labor. Forced and complusory labour HR7 Operations and significant suppliers identified as having significant risk for Fully 82 incidents of forced or compulsory labor, and measures to contribute to the elimination of all forms of forced or compulsory labor.
Security practice HR8 Percentage of security personnel trained in the organisation’s policies N/A N/A or procedures concerning aspects of human rights that are relevant to operations. Indigenous rights HR9 Total number of incidents of violations involving rights of indigenous people N/A N/A and actions taken. Social: Society Local communities SO1 Percentage of operations with implemented local community engagement, Fully 83-90 impact assessments, and development programs.
Corruption SO2 Percentage and total number of business units analysed for risks related to N/A N/A corruption. SO3 Percentage of employees trained in organisation’s anti-corruption policies N/A N/A and procedures. SO4 Actions taken in response to incidents of corruption. N/A N/A Public policy SO5 Public policy positions and participation in public policy development and N/A N/A lobbying.
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Profile Disclosure Description Reported Cross Reference
SO6 Total value of financial and in-kind contributions to political parties, N/A N/A politicians, and related institutions by country.
Anti-competitive behaviour SO7 Total number of legal actions for anti- competitive behavior, anti-trust, and N/A N/A monopoly practices and their outcomes.
Compliance SO8 Monetary value of significant fines and total number of non-monetary N/A N/A sanctions for non- compliance with laws and regulations.
Social:Product Responsibility Customer health and safety PR1 Life cycle stages in which health and safety impacts of products and services N/A N/A are assessed for improvement, and percentage of significant products and services categories subject to such procedures.
PR2 Total number of incidents of non-compliance with regulations and voluntary N/A N/A codes concerning health and safety impacts of products and services during their life cycle, by type of outcomes. Product and service labelling PR3 Type of product and service information required by procedures, and Fully 82-83 percentage of significant products and services subject to such information requirements. PR4 Total number of incidents of non-compliance with regulations and voluntary N/A N/A codes concerning product and service information and labeling, by type of outcomes. PR5 Practices related to customer satisfaction, including results of surveys N/A N/A measuring customer satisfaction.
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Marketing communications PR6 Programs for adherence to laws, standards, and voluntary codes related N/A N/A to marketing communications, including advertising, promotion, and sponsorship. PR7 Total number of incidents of non-compliance with regulations and voluntary N/A N/A codes concerning marketing communications, including advertising, promotion, and sponsorship by type of outcomes. Customer privacy PR8 Total number of substantiated complaints regarding breaches of customer N/A N/A privacy and losses of customer data.
Compliance PR9 Monetary value of significant fines for non- compliance with laws and N/A N/A regulations concerning the provision and use of products and services.
100 101
Cilantro Suite Offering comfort at its finest with the Cilantro Suite, this luxurious room overlooks the Beira Lake ensconced by a large private terraced balcony and equipped with the best amenities to satisfy the desires of any guest. Starting off with express check-ins and check-outs at the suite, the rooms offer the best in technology through satellite television and internet access and the chance to truly relax in a marbled bathroom with a deep soaking tub. Guests are sure to delight at the level of quality and elegance in these suites where every detail has been checked and provided to create an unforgettable experience. TRANS ASIA HOTELS PLC | Annual Report 2012/13
Annual Report of the Board of Directors
The Directors have pleasure in presenting Financial Statements and Audit Committee. The Board, through the the Annual Report of your Company Auditor’s Report involvement of the ultimate Parent Company together with the Audited Financial The Financial Statements of the Company John Keells Holdings PLC, Group Business Statements of Trans Asia Hotels PLC for the duly signed by the Directors and the Process Review Division takes steps to year ended 31st March 2013. Auditor’s Report on the Financial Statements gain assurance on the effectiveness of are provided on pages 113 to 146. control systems in place. The Head of the General Group Business Process Review Division has The Company was incorporated on 17th July Corporate Governance direct access to the Chairman of the Audit 1981 as a public limited company. The shares The Corporate Governance principles and Committee. Foreseeable risks that may of the Company are listed on the Colombo practices of the Company are described from materially impact business are disclosed in Stock Exchange since 17th July 1981. The pages 12 to 33 of this report. The Directors the Risk Management Statement on Page Company was re-registered as required confirm that the Company is in compliance 55 of this Report and notes to the financial under the provisions of the Companies Act with the continuing listing rules of the statements on page 137. No 7 of 2007 on 15th June 2007. Colombo Stock Exchange and has adopted the relevant Rules on Corporate Governance Going concern Principal Activity issued by the Securities & Exchange The Board of Directors after considering The principal activity of the Company which Commission of Sri Lanka and the Institute of the financial position, operating conditions, is hoteliering remained unchanged. The Chartered Accountants of Sri Lanka. regulatory and other factors and such Company owns Cinnamon Lakeside Hotel, matters required to be addressed in the Code a Five-Star Hotel situated in Colombo. The System of Internal Control and of Best Practice on Corporate Governance Company also derives rental income from the Risk Management issued jointly by the Securities & Exchange Investment property adjoining the Hotel. The Board has implemented an effective and Commission and the Institute of Chartered comprehensive system of internal controls Accountants of Sri Lanka have reasonable Review of the Business and future which provide reasonable but not absolute expectation that the Company possess developments assurance that assets are safeguarded and adequate resources to continue in operation The financial and operational performance that the financial reporting system may for the foreseeable future. For this reason, during the year ended 31st March 2013 be relied upon in the preparation of the they continue to adopt the Going Concern and future business developments of the Financial Statements. The Audit Committee basis in preparing the Financial Statements. Company are provided in the Chairman’s receives and acts upon reports on the results Statement on pages 7 to 8 the Management of internal control reviews carried out by Accounting Policies Discussion and Analysis appearing on independent external auditors. The Board The Company prepared their Financial pages 36 to 47 the Sustainability Report confirms that there is an ongoing process for Statements for the period up to 31st on page 58 to 101 and Financial Review identifying, evaluating and managing any March 2012 in accordance with Sri Lanka as shown on page 48 to 52. These reports significant risks faced by the Company and Accounting Standards which were in effect which form an integral part of the Directors’ that financial, operational and compliance up to that date. Following the convergence Report together with the audited financial controls have been reviewed. Risk of Sri Lanka Accounting Standards with statements reflect the state of affairs of the assessment and evaluation for the Company International Financial Reporting Standards Company. takes place as an integral part of the business (IFRSs),all existing /new Sri Lanka Accounting and the principal risks and mitigating actions Standards were prefixed as SLFRS and LKAS in place are reviewed regularly by the Board to present Sri Lanka Accounting Standards
104 105 TRANS ASIA HOTELS PLC | Annual Report 2012/13
corresponding to International Financial Reporting Standards and Sri Lanka Accounting Standards corresponding to International Accounting Standards (IASs), respectively. According the Company adopted these new Sri Lanka Accounting Standards commonly known as SLFRSs applicable for the financial year commencing 1st April 2012. These Financial statements for the year ending 31st March 2013 of the Company are the first prepared in accordance with SLFRS and Sri Lanka Accounting Standard SLFRS 1 on “First time adoption of Sri Lanka Accounting Standards”. The accounting policies adopted in preparation of the Financial Statements are given on page 118 to 124 of this report.
Respective Responsibilities of Directors and Auditors for the Financial Statements The Directors are responsible for the preparation of the Financial Statements so that they present a true and fair view of the state of affairs of the Company. The Directors are of the view that these Financial Statements have been prepared in conformity with the requirements of the Companies Act No.7 of 2007, the Sri Lanka Accounting and Auditing Standards Act No.15 of 1995 and the Continuing Listing Rules of the Colombo Stock Exchange.
Revenue Revenue generated by the Company amounted to Rs. 2,840 Million (2012 – Rs. 2,375 Million).
Results & Appropriations The profit after tax of the Company and the profit attributable to the equity holders for the year was Rs. 1,066 Million (2012 – Rs. 625Milion). The synopsis of the Company’s performance is presented in the following table:-
For the year ended 31st March 2013 2013 2012 In Rs. 000’s After providing for all known liabilities bad & doubtful debts and depreciation on property, plant and equipment, the profit earned before interest was 857,765 628,042 Interest paid during the year was (96) (23) Interest earned during the year was 64,833 15,117 Changing fair value of Investment Property 288,710 99,848 Profit before tax was 1,211,212 742,984 From which was deducted the Provision for taxation including deferred taxation of (145,495) (118,712) Leaving a net Profit after tax of 1,065,717 624812 The amount transferred from Revaluation Reserve was 33,994 33,994 When the balance brought forward from the previous year was added 2,356,945 2,098,139 The amount available for appropriation was 3,456,656 2,756,945 Interim dividend of Rs. 1.00 per share (200,000) - Final dividend to be paid of Rs. 2.00 per share * (400,000) (400,000) Leaving a balance to be carried forward next year of 2,856,656 2,356,945
* The final dividend recommended for this financial year has not been recognised as at the balance sheet date in compliance with LKAS 10– Events after reporting period.
104 105 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Annual Report of the Board of Directors Contd...
Dividends Market Value of Properties Reserves A final dividend of Rs. 2.00 per share for All buildings owned by the Company were Total reserves as at 31st March 2013 for the the Financial Year ended 31st March 2012 revalued as at 31st March 2013. Valuation company amounted to Rs. 4,941 Million was paid during the current Financial Year was carried out by M/s Kalugalagedara (2012 – Rs. 4,123 Million). The movement of on 15th June 2012. An interim dividend of and Associates ,a chartered valuer and a reserves during the year is disclosed in the Rs. 1.00 per share for the six months ended revaluation surplus of Rs. 351.7 Million was statement of changes in equity on page 116. 30th September 2012 was also paid on the credited to the revaluation reserve. 5th December 2012 resulting in a total cash Segment Reporting payout for the Financial Year 31st March 2013 All properties classified as investment Segment wise contribution to company amounting to Rs. 600 Million (Rs. 300 Million property were valued as at 31st March 2013 revenue, results, assets and liabilities is paid in 2011/2012) in accordance with the requirements of provided in Note of the financial statements. LKAS 40. The carrying value of investment The Board of Directors recommended a property of the Company amounted to Rs. Contingent Liabilities & Capital final dividend of Rs. 2.00 per share for the 1,758.2 Million (2012- Rs. 1,469.5 Million) Commitments financial year ended 31st March 2013 which The Directors have decided to retain the fair Commitments made for Capital Expenditure will be paid on 17th June 2013 to those value of the investment property recognised as at 31st March 2013 and the contingent shareholders on the register as on 5th June as at 31st March 2013. Liabilities as at that date are given in Note 35 2013. to the Financial Statements on page 141. Details of the valuation of property ,plant As required by Section 56 (2) of the and equipment and investment property are Events subsequent to the Companies Act No 7 of 2007, the Board provided in notes 13.1 and 15 of the notes to reporting Date of Directors confirmed that the Company Financial Statements on pages 128 and 130 There have been no events subsequent to satisfied the solvency test in accordance respectively of this report. the Reporting date, which would have any with Section 57 of the Companies Act No.7 material effect on the Company other than of 2007, and have obtained a certificate Investment Properties those disclosed in Note 36 to the Financial from the Auditors, prior to declaring the In accordance with LKAS 40 , Investment Statements on page 142. final dividend of Rs. 2.00 per share for the Property the net book value of properties financial year ended 31st March 2013. held to earn rental income and properties Share Information & held for capital appreciation have been Shareholding Property, Plant & Equipment classified as investment properties. The The market value of an ordinary share of The book value of property, plant & details of the investment properties are the Company as at 31st March 2013 was equipment as at 31st March 2013 amounted explained in note of the Notes to Financial Rs. 70.40 (31st March 2012 – Rs. 66.90). The to Rs. 3,280 Million (2012 Rs. 2,845 Million) Statements on page 130. number of shareholders as at 31st March for the Company. 2013 was 1,494 (31st March 2012 – 1,567). Stated Capital An analysis of shareholders based on Capital expenditure for the year amounted The total stated capital of the Company as at shares held, percentage of public holding, to Rs. 207.1 Million (2012 – Rs 365.9 Million). 31st March 2013 was Rs. 1,113 Million (2012 the distribution of ownership and details – Rs. 1,113 Million). The Stated Capital of the of share transactions during the year are Details of property, plant and equipment Company comprises of 200 Million Ordinary provided on pages 53 & 54 of this report. and their movements are given in Note 13 to Shares fully paid up. The list of the Top Twenty Shareholders of the financial statements on page 128 of this the Company as at 31st March 2013 is also report. provided on page 54 of this report.
106 107 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Directors Mr. D. S. J. Pelpola Interests Register The Board of Directors of the Company as at Resigned on 26th June 2012 The Company has maintained an Interests 31st March 2013 and their brief profiles are Register as contemplated by the Companies given on pages 10 to 11 of this report. Mrs. R. L. Nanayakkara Act, No. 7 of 2007. Resigned on 26th June 2012 Mr. D. S. J. Pelpola resigned from the Board of a) Interests in Contracts Directors with effect from 26th June 2012. Mr. E. H. Wijenaike The Directors have all made a General Appointed to the Committee on 1st July Disclosure to the Board of Directors as Mrs. R. L. Nanayakkara resigned from the 2012 provided for by Section 192(2) of the Board of Directors with effect from 26th June Companies Act No. 7 of 2007 and no 2012 Mr. J. R. F. Peiris additional interests have been disclosed by Appointed to the Committee on 25th July any Director. Mr. E. H. Wijenaike was appointed to the 2012 Board of Directors of the Company with b) Indemnities and Remuneration effect from 27th June 2012. The Audit Committee reviewed the type and The Remuneration Committee of John Keells quantum of non-audit services provided by Holdings PLC (being the holding company of In accordance with Article 83 of the Articles the external auditors to the Group to ensure Trans Asia Hotels PLC) has not recommended of Association of the Company, Mr. C. J. L that their independence as auditors has not an increment in fees to the Non-Executive Pinto retires by rotation and being eligible, been impaired. Directors of the Trans Asia Hotels PLC during offers himself for re-election. the year. The fees payable to Non-Executive The report of the Audit Committee is given nominees of John Keells Holdings PLC are Mr E. H. Wijenaike retires in terms of the on page 111 of this report. paid to John Keells Holdings PLC and not to Article 90 of the of the Article of Association individual directors. of the Company and being eligible is Human Resources and recommended by the Board for re – election. Compensation Committee Directors Shareholding in the Company As permitted by the listing rules of the The shareholdings of the Directors and their The Company has also received notice of a Colombo Stock Exchange, the Human spouses in the Company are set out below:- resolution to propose the re-election Mr. N.L. Resources and Compensation Committee 2013 2012 Gooneratne who is 70 years old and retires in of John Keells Holdings PLC, the ultimate Mr. S. C. Ratnayake 400 400 terms of Section 210 of the Companies Act Parent company of Trans Asia Hotels PLC Mr. A. D. Gunewardene 400 400 No 7 of 2007. The resolution proposes that functions as the Remuneration Committee Mr. J. R. F. Peiris 400 400 the age limit stipulated in Section 210 of the of the Company. The Human Resources and Mr. N. L. Gooneratne 662,604 662,604 Companies Act shall not apply to Mr. N.L. Compensation Committee of John Keells Mr. D. S. J. Pelpola Gooneratne who is 70 years old and that he Holdings PLC comprises of four independent (Resigned on 26.06.2012) N/A 400 be re-elected a Director of the Company. Directors:- Mrs. R. L. Nanayakkara (Resigned on (26/06/2012) N/A 400 Board Committees Mr. E. F. G. Amerasinghe – Chairman Mr. C. J. L. Pinto (Joint account with Mrs. M. R. C. Pinto) 7,400 7,400 Board Audit Committee Mrs. S. S. Tiruchelvam Mr. E. H. Wijenaike The following members serve on the Board Dr. I. Coomaraswamy Mr. A. R.Gunasekara (Appointed on 27/06/2012) Nil Nil Audit Committee:
Mr. C. J. L. Pinto - Chairman
106 107 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Annual Report of the Board of Directors Contd...
Directors’ Remuneration Supplier Policy of the group’s CSR initiatives and activities. Details of the remuneration and other The Company applies an overall policy of The Foundation manages a range of benefits received by the Directors are set out agreeing and clearly communicating terms programmes that underpin its key principle in page 135 of the Financial Statements. of payment as part of the commercial of acting responsibly in all areas of business agreements negotiated with suppliers, to bring about sustainable development. Employment and endeavors to pay for all items properly The CSR initiatives, including completed The Company has an equal opportunity charged in accordance with these agreed and on-going projects, are detailed in the policy and these principles are enshrined terms. As at 31st March 2013, the trade and Sustainability Report on page 58. in specific selection, training, development other payables of the Company amounted to and promotion policies, ensuring that all Rs. 179.4 Million (2012 – Rs. 231.5 Million) In quantifying the Company’s contribution decisions are based on merit. The group to charities no account has been taken of ‘in- practices equality of opportunity for all Sustainability Reporting house’ costs or management time. employees irrespective of ethnic origin, The Company is conscious of the impact, religion, political opinion, gender, marital direct and indirect, on the environment due Auditors status or physical disability. to its business activities. Every endeavour The Audit Committee reviews the is made to minimise the adverse effects appointment of the Auditor, their effectiveness, Details of the Company’s Human Resource on the environment to ensure sustainable independence and relationship with the initiatives are detailed on pages 72 to 83 continuity of our natural resources. The Company, including the level of audit. The number of persons employed by the activities undertaken by the Company Company as at 31st March 2013 was 842 in recognition of its responsibility as a Messrs. KPMG, Chartered Accountants have (2012 -838) corporate citizen are disclosed more fully on indicated their willingness to continue as pages 83 to 90 of this Report. Auditors of the Company, and a resolution There were no material issues pertaining to proposing their reappointment as auditors employees and industrial relations during Related Party Transactions will be tabled at the Annual General Meeting. the Financial Year. There were no related party transactions required to be disclosed under the Listing Details of the Audit Fees paid to the Auditors Statutory Payments Rules of the Colombo Stock Exchange other are set out in page 125 of the Financial The Directors to the best of their knowledge than as disclosed under Note 32 of the Statements. are satisfied that all statutory payments in Financial Statements. relation to the Government, other regulatory Further details on the work of the Auditor institutions and the employees have been Donations and the Audit Committee are set out in the either duly paid or appropriately provided Total donations made by the Company Audit Committee Report on page 111. for in the Financial Statements. The tax during the year amounted to Rs. 4 Million position of the Company is disclosed in Note (2012 – Rs 3.7 Million) on account of Annual Report 10 of the Financial Statements. Corporate Social Responsibility (CSR) The Board of Directors approved the initiatives. The John Keells Foundation, which audited Financial Statements for issue on operates with funds contributed by each of 29th May 2013. The appropriate number of the companies in the group, handles most copies of this report will be submitted to the Colombo Stock Exchange and to the Sri Lanka Accounting and Auditing Standards Monitoring Board on 5th June 2013 .
108 109 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Annual General Meeting The Annual General Meeting will be held at the Auditorium of the Ceylon Chamber of Commerce, No 50, Navam Mawatha, Colombo 02 at 3.00 pm on Thursday, 27th June 2013. The Notice of the Annual General Meeting appears on page 152.
This Annual Report is signed for and on behalf of the Board of Directors by
Director
Director
Keells Consultants (Private) Limited Secretaries
29th May 2013
108 109 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Statement of Directors’ Responsibilities
Directors’ Responsibilities for The Directors are of the view that adequate As required by Section 56 (2) of the Companies the Preparation of the Financial funds and other resources are available within Act No. 7 of 2007, the Board of Directors the Company for it to continue in operation for Statements have confirmed that the Company satisfies the foreseeable future. the Solvency test immediately after the This Statement of Directors’ responsibilities is distribution, in accordance with Section 57 of to be read in conjunction with the Report of The Directors have taken all reasonable steps the Companies Act No. 7 of 2007, and have the Auditors and is made to distinguish the expected of them to safeguard the assets of the obtained a certificate from the Auditors, prior to respective responsibilities of the Directors Company and to establish appropriate systems declaring the final dividend of Rs. 2.00 per share and of the Auditors in relation to the Financial of internal controls in order to prevent, deter for this financial year. Statements contained in this Annual Report. and detect any fraud, misappropriation or other irregularities. The Directors of your Company are required by the Companies Act No. 7 of 2007 to prepare The Directors have also taken all reasonable Financial Statements which give a true and steps to ensure that the Company maintains fair view of the state of affairs of the Company adequate and accurate accounting books By Order of the Board as at the end of the financial year, and of the of record which reflect the transparency of Statement of Comprehensive Income and of Keells Consultants (Private) Limited transactions and provide an accurate disclosure the Cash flows of the Company for the financial Secretaries of the Company’s financial position. year. Colombo
The Directors are required to provide the As per the provisions of the Companies Act No.7 Auditors with every opportunity to take of 2007, the Board of the Company shall cause 29th May 2013 whatever steps and undertake whatever the Annual General Meeting report to be sent inspection they consider appropriate for the to every shareholder of the company not less purpose of enabling them to give their Audit than fifteen working days before the date fixed Report. The Directors are of the view that they for holding the Annual General Meeting. have discharged their responsibilities in this regard. The Directors confirm that the Financial Statements for the year ended 31st March 2013, prepared and presented in this Annual Report Compliance Report have been prepared based on the new Sri Lanka The Directors confirm that, to the best of their Accounting Standards ( SLFRS) which came into knowledge, all taxes and levies payable by effect from 1st January 2012, the Companies the Company and all contributions, levies and Act No 7 of 2007,Sri Lanka Accounting and taxes payable on behalf of the employees of Auditing Standards Act No 15 of 1995,the Listing the Company, and all other known statutory Rules of the Colombo Stock Exchange and the obligations as at the Reporting date have been Best Practice on Corporate Governance issued paid or provided for in the Financial Statements. jointly by The Institute of Chartered Accountants of Sri Lanka and the Securities and Exchange Commission of Sri Lanka.
110 111 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Audit Committee Report
Introduction The Audit Committee held four meetings Reporting Standards (SLFRS) and LKAS. The This report focuses on the activities of the Audit during the financial year 2012/2013. The external auditors KPMG were partnered to carry Committee for the year under review. attendance of the Committee members at these out a special purpose audit in November 2012. A more general description of the Committee’s meetings was as follows: This ensured smooth convergence to the new functions is given under Corporate Governance accounting standard by Trans Asia Hotels PLC. on page 18 and 19. Name of Attendance Eligibility Director to attend Internal Audit, Risks and Composition of the Committee Controls and Meetings Mr. C. J. L. Pinto 4 4 During the year under review, the Audit The Audit Committee comprised of two Mr. D. S. J. Pelpola * 1 1 Committee Charter was reviewed and the Self Independent / Non- Executive Directors and Mrs. R. L. Nanayakkara** 1 1 Evaluation of Audit Committee Effectiveness one Non-Independent / Non-Executive Director Mr. E. H. Wijenaike *** 3 3 was carried out. until June 2012. Mr. D. S. J. Pelpola and Mrs. R. Mr. J. R. .F Peiris**** 1 2 L. Nanayakkara, the two Independent / Non- The audit plans and scope of work were Executive Directors ceased to be members of * Resigned on 26th June 2012 formulated in consultation with the internal the Audit Committee from June 2012 since ** Resigned on 26th June 2012 audit function, which at John Keells is termed both of them have resigned from the Board of *** Appointed to the Committee on 1st July 2012 Group Business Process Review (Group BPR) Directors of Trans Asia Hotels PLC on 26th June **** Appointed to the Committee on 25th July 2012 Division and the Outsourced Internal Auditors 2012. Following their resignations, Mr. E. H. and approved by the Committee. Wijenaike, a Director of Tea Smallholders and The activities and views of the Committee have Mr. J. R. F. Peiris, Group Director Finance of been communicated to the Board of Directors The main focus of the Internal Audit was to JKH were appointed to the Committee as by tabling the minutes of the Committee’s provide independent assurance on the overall members from 1st July 2012 and 25th July meetings at Board Meetings and verbally at system of internal controls, risk management 2012 respectively. With these appointments, Board meetings when necessary. and governance, by evaluating the adequacy the Audit Committee comprised of two Non and effectiveness of internal controls, and Independent/Non Executive Directors and one Financial Reporting compliance with laws and regulations and Independent/Non Executive Director as from The Audit Committee has reviewed and established policies and procedures of the the said dates. Whilst the Chairman and a discussed the Company’s quarterly and annual company. member of the Audit Committee are Chartered financial statements prior to publication Accountants, the other holds a Bachelor’s with management and the external auditors, During the year, reports were received Degree in Commerce and a Post Graduate including the extent of compliance with by the Committee from the Outsourced Diploma in Finance & Banking. The Director International Financial Reporting Standards Internal Auditors, which were reviewed and Finance of the company served as the Secretary (IFRS) adopted locally as Sri Lanka Financial discussed with management, the Outsourced to the Audit Committee. Reporting Standards (SLFRS), LKAS, the Internal Auditors, PwC (formerly known as adequacy of disclosures required by other Pricewaterhouse Coopers (Pvt) Ltd) and Group The General Manager of Trans Asia Hotels PLC, applicable laws, rules, and guidelines. The BPR Division. The recommendations of the Chief Financial Officer, Leisure Group, John Committee has also regularly discussed the Internal Auditors have been followed up and Keells Holdings PLC, Sector Financial Controller, operations of the Company and its future implemented. Sri Lankan Hotels, John Keells Holdings PLC and prospects with management and is satisfied Head of Group Business Process Review (Group that all relevant matters have been taken into The Audit Committee has also reviewed the BPR) , John Keells Holdings PLC attended the account in the preparation of the financial processes for the identification, evaluation and meetings of the Audit Committee by invitation. statements. management of all significant operational risks Other officials were invited to attend on a faced by the Company. The most significant needs basis. The External Auditors and the The Committee also discussed and reviewed operational risks and the remedial measures Outsourced Internal Auditors also attended the convergence of the Sri Lanka Accounting taken to mitigate them have been reviewed meetings on a regular basis. Standards (SLAS) to be in line with International with management and the John Keells Group Financial Reporting Standards (IFRS) adopted Sustainability and Enterprise Risk Management locally from January 2012 as Sri Lanka Financial Division.
110 111 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Audit Committee Report Contd...
Formal confirmations and assurances have been for the financial year ending 31st March 2014, received from senior management quarterly subject to approval by the shareholders at the regarding the efficacy and status of the internal Annual General Meeting. control systems and risk management systems, and compliance with applicable laws and Conclusion regulations. Based on the reports submitted by the External Auditors and the Outsourced Internal External Audit Auditors of the Company, the assurances The External Auditors’ letter of engagement, and certifications provided by the senior including the scope of the audit, was reviewed management, and the discussions with and discussed by the Committee with the management and the auditors both at formal external auditors and management prior to the meetings and informally, the Committee is of commencement of the audit. the view that the control environment within the Company is satisfactory and provides The External Auditors kept the Committee reasonable assurance that the financial position advised on an on-going basis regarding any of the Company is adequately monitored and unresolved matters of significance. Before its assets are safeguarded. the conclusion of the audit, the Committee met with the external auditors to discuss all audit issues and agree on their treatment. The Committee also met the External Auditors, without management present, prior to the finalization of the financial statements. The C. J. L. Pinto External Auditors’ management letter for the Chairman of the Audit Committee year 2011/12, together with management’s responses was discussed with management 29th May 2013 and the auditors.
The Audit Committee is satisfied that the Members: independence of the External Auditors has E.H Wijenaike not been impaired by any event or service J.R.F Peiris that gives rise to a conflict of interest. Due consideration has been given to the level of audit and non-audit fees received by the external auditors from the John Keells Group and confirmation has been received from the external auditors of their compliance with the independence criteria given in the Code of Ethics of the Institute of Chartered Accountants of Sri Lanka.
The performance of the External Auditors has been evaluated and discussed with the senior management of the Company, and the Committee has recommended to the Board that KPMG (formerly known as KPMG Ford, Rhodes, Thornton & Company) be re-appointed as the External Auditors of Trans Asia Hotels PLC
112 113 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Independent Auditors’ Report
TO THE SHAREHOLDERS OF TRANS ASIA Scope of Audit and Basis of Opinion the financial position of the Company HOTELS PLC Our responsibility is to express an opinion as at March 31, 2013 and of its financial on these financial statements based on our performance and its cash flows for the year Report on the Financial Statements audit. We conducted our audit in accordance then ended in accordance with Sri Lanka We have audited the accompanying financial with Sri Lanka Auditing Standards. Those Accounting Standards. statements of Trans Asia Hotels PLC (the standards require that we plan and perform “Company”), which comprise the statement the audit to obtain reasonable assurance Report on Other Legal and Regulatory of financial position as at March 31, 2013, whether the financial statements are free Requirements and the statements of comprehensive from material misstatement. These financial statements also comply with income, changes in equity and cash flow the requirements of Section 151(2) of the for the year then ended, and a summary of An audit includes examining, on a test basis, Companies Act No. 07 of 2007. significant accounting policies and other evidence supporting the amounts and explanatory notes as set out on pages 118 to disclosures in the financial statements. An 146 of the Annual Report. audit also includes assessing the accounting policies used and significant estimates made Management’s Responsibility for the Financial by management, as well as evaluating the CHARTERED ACCOUNTANTS overall financial statement presentation. 29th May 2013 Statements Colombo Management is responsible for the We have obtained all the information and preparation and fair presentation of explanations which to the best of our these financial statements in accordance knowledge and belief were necessary for the with Sri Lanka Accounting Standards. purposes of our audit. We therefore believe This responsibility includes: designing, that our audit provides a reasonable basis for implementing and maintaining internal our opinion. control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether Opinion due to fraud or error; selecting and applying In our opinion, so far as appears from our appropriate accounting policies; and making examination, the Company maintained accounting estimates that are reasonable in proper accounting records for the year the circumstances. ended March 31, 2013 and the financial statements give a true and fair view of
112 113 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Statement of Comprehensive Income
All values are in Rupees ‘000s, unless otherwise stated.
For the year ended 31st March Note 2013 2012 Change %
Revenue 5 2,840,223 2,375,479 20 Cost of sales (1,021,348) (872,455) 17 Gross profit 1,818,875 1,503,024 21 Other operating income 6 12,233 9,947 23 Administrative expenses (601,695) (551,481) 9 Sales and marketing expenses (79,794) (70,740) 13 Other operating expenses 7 (291,854) (262,708) 11 Profit from operations 8 857,765 628,042 37 Finance expenses (96) (23) 317 Finance income 64,833 15,117 329 Net finance income 9 64,737 15,094 329 Change in Fair Value of Investment Property 15 288,710 99,848
Profit before taxation 1,211,212 742,984 63 Income Tax expense 10 (145,495) (118,172) 23 Profit for the year 1,065,717 624,812 71
Other comprehensive income Revaluation of buildings 399,670 - Deferred tax effect on revaluation of buildings (47,960) - De-recognition of refurbished assets - (7,335) Income tax on other comprehensive income Other comprehensive income for the year, net of tax 351,710 (7,335) Total comprehensive income for the year, net of tax 1,417,427 617,477 130
Rs. Rs.
Earnings per share 11 5.33 3.12
Dividend per share 12 3.00 3.00
The notes to the financial statements form an integral part of these financial statements Figures in brackets indicate deductions.
114 115 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Statement of Financial Position
All values are in Rupees ‘000s, unless otherwise stated.
31st March 31st March 1st April As at notes 2013 2012 2011
ASSETS Non-current assets Property, plant and equipment 13 3,279,844 2,844,998 2,661,580 Leasehold Property 14 831,068 843,472 855,876 Investment property 15 1,758,250 1,469,540 1,369,692 Intangible Assets 16 7,455 10,818 14,864 Other Receivables 17 - 28,926 35,000 Other Financial assets 6,876 6,455 6,436 Other non-current assets 404 420 358 Total non current assets 5,883,897 5,204,629 4,943,806
Current assets Inventories 18 33,032 42,281 43,286 Trade and other receivables 19 233,269 253,180 184,740 Other current assets 20 76,575 41,434 88,879 Amounts due from related parties 21 14,822 18,608 17,864 Short term investments 22 559,873 352,000 275,000 Cash in hand and at bank 99,841 124,150 60,638 Total current assets 1,017,412 831,653 670,407 Total assets 6,901,309 6,036,282 5,614,213
EQUITY AND LIABILITIES Stated capital 23 1,112,880 1,112,880 1,112,880 Revaluation reserve 24 1,683,989 1,366,273 1,407,602 Revenue reserve 3,256,656 2,756,945 2,398,139 Total equity 6,053,525 5,236,098 4,918,621
Non-current liabilities Other non current liability 25 1,416 2,853 4,288 Employee benefits 26 98,027 99,145 89,299 Deferred tax liability 27 329,313 255,793 248,354 Total non-current liabilities 428,756 357,791 341,941
Current liabilities Trade and other payables 28 179,357 231,538 202,003 Other current liabilities 29 105,276 77,723 51,086 Amounts due to related parties 30 29,565 27,829 18,142 Current tax liability 31 65,252 69,397 79,155 Bank overdrafts 39,578 35,906 3,265 Total current liabilities 419,028 442,393 353,651 Total Liabilities 847,784 800,184 695,592 Total equity and liabilities 6,901,309 6,036,282 5,614,213
Rs. Rs. Rs. Net assets per share 30.27 26.18 24.59
I certify that the financial statements are in compliance with the requirements of the Companies Act No.7 of 2007.
P A P Perera Director Finance
The Board of Directors is responsible for the preparation and presentation of these financial statements. Approved and Signed for and on behalf of the Board;
A D Gunewardene J R F Peiris Director Director 29th May 2013
The notes to the financial statements form an integral part of these financial statements. Figures in brackets indicate deductions. 114 115 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Statement of Changes in Equity
All values are in Rupees ‘000s, unless otherwise stated.
Stated Revaluation Revenue total capital reserve reserve Equity
Balance As at 1 April 2011 1,112,880 1,407,602 2,398,139 4,918,621 Total comprehensive Income for the year Profit for the year - - 624,812 624,812
Other comprehensive income - De-recognition of refurbished asset - (7,335) - (7,335) Total comprehensive income for the year - (7,335) 624,812 617,477
Transferred to accumulated profit (Note a) - (33,994) 33,994 -
Transaction with owners of the company, recognised directly in equity Final dividend paid -2010/2011 - - (300,000) (300,000) Balance As at 31st March 2012 1,112,880 1,366,273 2,756,945 5,236,098
Balance as at 1st April 2012 1,112,880 1,366,273 2,756,945 5,236,098
Total comprehensive Income for the year Profit for the year (Note b) - - 1,065,717 1,065,717
Other comprehensive income for the year - Revaluation of buildings 351,710 - 351,710 Total comprehensive income - 351,710 1,065,717 1,417,427
Transferred to accumulated profit (Note a) - (33,994) 33,994 -
Transaction with owners of the company, recognised directly in equity Final Dividend paid - 2011/2012 - - (400,000) (400,000)
Interim Dividend Paid - 2012/2013 - - (200,000) (200,000)
Balance as at 31st March 2013 1,112,880 1,683,989 3,256,656 6,053,525
Note ( a ) As per Sri Lanka Accounting Standard (LKAS 16) on “Property Plant and Equipment” when the revalued asset is used by an entity the difference between depreciation based on the revalued carrying amount of the asset and depreciation based on the assets original cost is transferred from revaluation surplus to retained earnings. This transfer relates to buildings which is revalued in 2008.
Note ( b ) As explained in Note no 15 profit for the year includes Rs.288.7 Mn (Rs.99.9Mn - 2012) resulting from the changes in fair value of the investment property.
The notes to the financial statements form an integral part of these financial statements Figures in brackets indicate deductions.
116 117 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Cash Flow Statement
All values are in Rupees ‘000s, unless otherwise stated.
For the year Ended 31st March 2013 2012
CASH FLOWS FROM OPERATING ACTIVITIES Profitbefore taxation 1,211,212 742,984 Adjustments for: Finance income (64,833) (15,117) Finance expenses 96 23 Depreciation of Property, plant and equipment 167,530 151,323 Profit on disposal of property, plant and equipment (5,055) (7,013) Amortisation of Leasehold Properties 12,404 12,404 Amortisation of Intangible Assets 4,674 4,544 De - recognition of property, plant and equipment - 18,152 Gratuity provision and related costs 10,019 17,576 Change in fair value of investment property (288,710) (99,848) Provision made on slow moving inventory 7,174 - Provision for impairment of Trade and Non Trade Receivables 5,532 6,343 Operating Profit before working capital changes 1,060,043 831,371
Decrease in inventories 9,249 1,005 Decrease/(Increase) in trade and other receivables 46,310 (42,906) (Decrease)/Increase in creditors, accruals and Other Payables (31,228) 64,348
Cash generated from operations 1,084,374 853,818 Finance expenses paid (96) (23) Tax paid (124,245) (99,598) Gratuity paid (11,137) (7,730) Net cash generated from operating activities 948,896 746,467
CASH FLOWS FROM INVESTING ACTIVITIES Finance income received 29,959 15,117 Purchase and construction of property, plant and equipment (205,841) (365,420) Purchases of intangible assets (1,311) (499) Proceeds from disposal of Property, plant and equipment 8,189 12,206 Net cash used in investing activities (169,004) (338,596)
CASH FLOWS FROM FINANCING ACTIVITIES Dividend paid (600,000) (300,000) Net cash used financing activities (600,000) (300,000)
NET INCREASE IN CASH AND CASH EQUIVALENTS 179,892 107,871
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 440,244 332,373 CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 620,136 440,244
ANALYSIS OF CASH and CASH EQUIVALENTS Short term investments 559,873 352,000 Cash in hand and at bank 99,841 124,150 Bank overdrafts (39,578) (35,906) 620,136 440,244
The notes to the financial statements form an integral part of these financial statements Figures in brackets indicate deductions. 116 117 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Notes to The Financial Statements
1. REPORTING ENTITY adopted these new Sri Lanka Accounting Each material class of similar items is presented Trans Asia Hotels PLC (the Company). is a Standards (which are commonly known separately in the Financial Statements. Items public limited liability company incorporated as SLFRSs) applicable for financial periods of dissimilar nature or function are presented and domiciled in Sri Lanka and listed on the commencing from April 1, 2012. separately unless they are immaterial as Colombo Stock Exchange. The registered office permitted by the Sri Lanka Accounting and principal place of business of the company These are the Company’s first financial Standard-LKAS 1 on ‘Presentation of Financial is located at 115, Sir Chittampalam A. Gardinar statements prepared in accordance with LKAS/ Statements’. Mawatha, Colombo 2. SLFRS and SLFRS1 First time adoption of Sri Lanka Accounting Standard has been applied. (d) Use of Estimates and Judgments Principal shareholders of the Company are The preparation of the financial statements in John Keells Holdings PLC and Asian Hotels & The explanation how the transition to LKAS/ conformity with LKAS/SLFRS requires Properties PLC who hold 48.64% and 43.41% SLFRS has affected the reported financial management to make judgments, estimates respectively. position, financial performance and cash flows and assumptions that affect the application of of the Company is provided in note 38. accounting policies and the reported amounts The principal activity of the Company is of assets, liabilities, income and expenses. hoteliering. The Company also derives rental The financial statements were authorised for income from the commercial property. issue by the Board of Directors on 29th May Actual results may differ from these estimates. 2013. The estimates and underlying assumptions The number of persons employed by the are based on historical experience and various Company as at 31st March 2013 was 842 (b) Basis of Measurement other factors that are believed to be reasonable (2011/2012 - 838) The financial statements have been prepared under the circumstances, the results of which on the historical cost basis and applied form the basis of making the judgments about 2. BASIS OF PREPARATION consistently with no adjustments being made the carrying amount of assets and liabilities that (a) Statement of Compliance for inflationary factors affecting the financial are not readily apparent from other sources. The financial statements have been prepared statements, except for the following material in accordance with Sri Lanka Accounting items in the statement of financial position: The estimates and underlying assumptions Standards (LKAS/SLFRS) laid down by the are reviewed on an ongoing basis. Revisions Institute of Chartered Accountants of Sri Buildings are measured at cost at the time to accounting estimates are recognised in the Lanka (CA Sri Lanka) and the requirements of of acquisition and subsequently recognised period in which the estimates are revised and in Companies Act No. 7 of 2007. at revalued amounts which are fair values any future periods affected. at the date of revaluation less accumulated For all periods up to and including the year depreciation and impairment losses if any, Judgments made by management in the ended March 31, 2012, the Company prepared application of LKAS/SLFRs that have a their financial statements in accordance Investment properties are stated at fair values. significant effect on the financial statements are with Sri Lanka Accounting Standards which Defined benefit obligations are measured at its mentioned below. were in effect up to that date. Following present value, based on an actuarial valuation the convergence of Sri Lanka Accounting as explained in note 26. yy Valuation of property, plant and Standards with the International Financial equipment-Note(e) Reporting Standards (IFRSs), all existing/ new (c) Presentation and Functional Currency Sri Lanka Accounting Standards were prefixed The Company financial statements are yy Valuation of investment property- Note(g) as SLFRS and LKAS (referred to as “SLFRS” in presented in Sri Lankan Rupees, the Company’s these financial statements) to represent Sri functional and presentation currency, which is yy Deferred taxation- Note(r) ii Lanka Accounting Standards corresponding to the primary economic environment in which International Financial Reporting Standards and the Company operates. yy Defined Benefit Plans- Note(l) ii Sri Lanka Accounting Standards corresponding to International Accounting Standards (IASs), respectively. Accordingly, the Company
118 119 TRANS ASIA HOTELS PLC | Annual Report 2012/13
3. COMPARATIVE INFORMATION (b) Financial instruments — initial Financial assets and liabilities are offset and The presentation and classification of the recognition and subsequent the net amount presented in the statement financial statements of the previous years measurement of financial position when, and only when the have been amended, where relevant for better Company has a legal right to offset the amounts presentation and to be comparable with those and intends either to settle them on a net basis (i) Financial assets of the current year. or to realise the asset and settle the liability Initial recognition and measurement simultaneously. Financial assets within the scope of LKAS 39 4. SIGNIFICANT ACCOUNTING are classified as financial assets at fair value Subsequent measurement POLICIES through profit or loss, loans and receivables, The subsequent measurement of financial The Accounting Policies set out below have held-to-maturity investments, available-for-sale assets depends on their classification been applied consistently to all periods financial assets, or as derivatives designated and Company only holds financial assets presented in the financial statements of the as hedging instruments in an effective hedge, categorized as loans and receivables. Company in preparing the opening SLFRS as appropriate. The Company determines the Statement of Financial Position at April 1, 2011 classification of its financial assets at initial for the purposes of the transition to SLFRSs, recognition. Loans and receivables unless otherwise indicated. Loans and receivables are non-derivative All financial assets are recognised initially at financial assets with fixed or determinable (a) Foreign Currency fair value plus, in the case of assets not at fair payments that are not quoted in an active market. After initial measurement, such (i) Foreign Currency Transactions value through profit or loss, directly attributable financial assets are subsequently measured Transactions in foreign currencies are translated transaction costs. Purchases or sales of financial at amortised cost using the effective interest to the respective functional currencies of the assets that require delivery of assets within rate method (EIR), less impairment. Amortised Company at exchange rates at the dates of the a time frame established by regulation or cost is calculated by taking into account any transactions. Monetary assets and liabilities convention in the marketplace (regular way discount or premium on acquisition and fees or denominated in foreign currencies at the trades) are recognised on the trade date, i.e., the costs that are an integral part of the EIR. The EIR reporting date are retranslated to the functional date that the Company commits to purchase or amortisation is included in finance income in currency at the exchange rate at that date. sell the asset. the Statement of Comprehensive Income. The The foreign currency gain or loss on monetary losses arising from impairment are recognised items is the difference between amortised cost However, as at each reporting date, the in the Statement of Comprehensive Income in in the functional currency at the beginning Company holds on only the financial assets finance costs. of the year, adjusted for effective interest and categorized as ‘loans and receivables’. payments during the year, and the amortised The Company initially recognises such loans cost in foreign currency translated at the and receivables on the date that they are De-recognition exchange rate at the end of the year. originated. A financial asset is derecognised when: Non-monetary assets and liabilities that are yy The rights to receive cash flows from the measured at fair value in a foreign currency are The Company derecognises a financial asset asset have expired retranslated to the functional currency at the when the contractual rights to the cash flows yy The Company has transferred its rights exchange rate at the date that the fair value from the asset expire, or it transfers the rights to receive cash flows from the asset or was determined. Non-monetary items that are to receive the contractual cash flows in a has assumed an obligation to pay the measured based on historical cost in a foreign transaction in which substantially all the risks received cash flows in full without material currency are translated using the exchange rate and rewards of ownership of the financial asset delay to a third party under a ‘pass- at the date of the transaction. are transferred. Any interest in such transferred through’ arrangement; and either (a) the financial assets that is created or retained by Company has transferred substantially Foreign currency differences arising on the Company is recognised as a separate asset all the risks and rewards of the asset, or retranslation are recognised in profit or loss. or liability. (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
118 119 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Notes to The Financial Statements Contd...
When the Company has transferred its rights to Loans and borrowings years to ensure that their carrying amounts do receive cash flows from an asset or has entered After initial recognition, interest bearing loans not defer materially from their fair values at the into a pass-through arrangement, and has and borrowings are subsequently measured reporting date. neither transferred nor retained substantially at amortised cost using the effective interest all of the risks and rewards of the asset nor rate method. Gains and losses are recognised When an asset is revalued, any increase in transferred control of it, the asset is recognised in the Statement of Comprehensive Income carrying amount is credited directly to a to the extent of the Company’s continuing when the liabilities are derecognised as well as revaluation surplus unless it reverses a previous involvement in it. In that case, the Company through the effective interest rate method (EIR) revaluation decrease relating to the same also recognises an associated liability. The amortisation process. asset, which was previously recognised as an transferred asset and the associated liability are expense. In these circumstances the increase measured on a basis that reflects the rights and Amortised cost is calculated by taking is recognised as income to the extent of the obligations that the Company has retained. into account any discount or premium on previous write down. acquisition and fees or costs that are an Continuing involvement that takes the form integral part of the EIR. The EIR amortisation is When an asset’s carrying amount is decreased of a guarantee over the transferred asset is included in finance costs in the Statement of as a result of revaluation, the decrease is measured at the lower of the original carrying Comprehensive Income. recognised as an expense unless it reverses amount of the asset and the maximum amount a previous surplus relating to that asset, in of consideration that the Company could be De-recognition which case it is charged against any related required to repay. A financial liability is derecognised when the revaluation surplus, to the extent that the obligation under the liability is discharged or decrease does not exceed the amount held in ii) Financial liabilities cancelled or expires. the revaluation surplus in respect of that same Initial recognition and measurement asset. Any balance remaining in the revaluation Financial liabilities within the scope of LKAS When an existing financial liability is surplus in respect of an asset, is transferred 39 are classified as financial liabilities at replaced by another from the same lender on directly to retained earnings on retirement or fair value through profit or loss, loans and substantially different terms, or the terms of disposal of the asset. borrowings, or as derivatives designated as an existing liability are substantially modified, hedging instruments in an effective hedge, such an exchange or modification is treated The Company applies cost model for other as appropriate. The Company determines the as a derecognition of the original liability and Property Plant & Equipment which are stated classification of its financial liabilities at initial the recognition of a new liability, and the at historical cost, less deprecation less any recognition. difference in the respective carrying amounts is accumulated impairment losses. recognised in the Statement of Comprehensive All financial liabilities are recognised initially Income. (ii) Subsequent measurement at fair value and, in the case of loans and The cost of replacing a part of an item of borrowings, carried at amortised cost. This (e) Property, Plant and Equipment Property Plant and Equipment is recognised in includes directly attributable transaction costs. the carrying amount of the item if it is probable (i) Basis of Recognition that the future economic benefits embodied Property, Plant and Equipment are stated at The Company classifies financial liabilities into with the part will flow to the Company and its cost of purchase or valuation less accumulated the other financial liabilities category. Such cost can be measured reliably. The carrying depreciation, and any accumulated impairment financial liabilities are recognised initially at fair amount of the replaced part is de-recognised. losses. The cost of an item of Property, Plant & value less any directly attributable transaction The costs of the day-to-day servicing of Equipment comprises its purchase price and costs. Property, Plant and Equipment are recognised any directly attributable cost of bringing the in profit or loss. asset to working condition for its intended use. Subsequent measurement (iii) De-recognition The measurement of financial liabilities The Company applies the revaluation model An item of property, plant and equipment are depends on their classification and Company for buildings. Such properties are carried at a derecognised upon replacement, disposal only holds financial liabilities categorised as revalued amount, being its fair value at the date or when no future economic benefits are loans and borrowings. of revaluation less any subsequent accumulated expected from its use. Any gain or loss arising depreciation and any subsequent impairment on derecognition of the asset is included in the losses. Revaluations are made once in every five Statement of Comprehensive Income in the year the asset is derecognised. 120 121 TRANS ASIA HOTELS PLC | Annual Report 2012/13
(iv) Depreciation (g) Investment Property Computer Software Depreciation is calculated by using a straight- (i) Basis of Recognition All computer software costs incurred. Licensed line method on the cost or valuation of all Investment properties are initially recognised for use by the Group, which are not integrally property, plant and equipment, other than at cost. Subsequent to initial recognition related to associated hardware, which can be freehold land, in order to write off such the Investment Properties are stated at fair clearly identified, reliably measured and it’s amounts over the estimated useful economic value, which reflects market conditions at the probably that they will lead to future economic life of such assets. Statement of Financial Position date. benefits, are included in the Statement of Financial Position under the category intangible Depreciation of an asset ceases at the earlier of Investment properties are revalued where assets and carried at cost less accumulated the date that the asset is classified as held for necessary to ensure that the carrying amount amortisation and any accumulated impairment sale and the date that asset is derecognised. does not differ materially from fair values at the losses. Balance Sheet date, and are revalued at least The estimated useful life of assets is as follows: once in three years. (ii) Amortisation Intangible assets with finite lives are amortised Assets Years Gains or losses arising from changes in fair over the estimated useful economic life and Plant and machinery 20 value are included in the profit or loss in the assessed for impairment whenever there is an Computer Equipment 5 year in which they arise. Investment Properties indication that the intangible asset may be Kitchen and laundry Equipment 15 are derecognised when disposed of, or impaired. Intangible assets are amortised on Motor Vehicles 5 permanently withdrawn from use because no a straight line basis in profit or loss from the Motor Vehicles- Floating Restaurant 18 future economic benefits are expected. date on which the asset was available for use, Base Stock 10 over the best estimate of its useful life. The Circulating Assets 3 Any gains or losses on retirement or disposal estimated useful life of software is five years. Furniture and fittings 15 are recognised in profit or loss in the year of The amortisation period and the amortisation retirement or disposal. Transfers are made method for an intangible asset with a finite Buildings are depreciated using reducing to and from Investment Property only when useful life is reviewed at least at each financial balance method in order to depreciate over the there is a change in use in accordance with the year-end. balance lease period of 67 years. criteria listed in Sri Lanka Accounting Standard LKAS 40-“Investment Property”. (iii) De-recognition The asset’s residual values and useful lives are An intangible asset is de-recognised on reviewed, and adjusted if appropriate, at each (h) Intangible assets disposal or when no future economic benefits financial year end. (i) Recognition and Measurement are expected from its use and subsequent An intangible asset is an identifiable non- disposal. (f) Leasehold Property monetary asset without physical substance (i) Basis of Recognition held for use in the production or supply of (i) Inventories Leasehold property comprises of land use rights goods or other services, rental to others or for Inventories are valued at the lower of cost and and is amortised on a straight line basis over administrative purpose. net realisable value. Net realisable value is the the period of the lease. Leasehold property is estimated selling price less estimated costs of tested for impairment annually and is written An intangible asset is initially recognised at completion and the estimated costs necessary down where applicable. cost, if it is probable that future economic to make the sale. benefits will follow to the enterprise, and (ii) Amortisation the cost of assets can be measured reliably. (j) Cash and Cash Equivalents The lease period is for 99 years commencing Following initial recognition, intangible assets Cash and short-term deposits in the statement 7th August 1981 and the leasehold land is are carried at cost less any accumulated of financial position comprise cash at banks being amortised over a period of 94 years amortisation and any accumulated impairment and on hand and short-term deposits with a which commenced from 1st April 1986. losses maturity of three months or less. The impairment loss if any is recognised in the Statement of Comprehensive Income.
120 121 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Notes to The Financial Statements Contd...
For the purpose of the cash flow statement, Interest on the impaired asset continues to be (l) Employee Benefits cash and cash equivalents consist of cash and recognised. When an event occurring after the (i) Defined contribution plans short-term deposits as defined above, net of impairment was recognised causes the amount A defined contribution plan is a post- outstanding bank overdrafts. of impairment loss to decrease, the decrease employment benefit plan under which an entity in impairment loss is reversed through profit pays fixed contributions into a separate entity (k) Impairment or loss. and has no legal or constructive obligation (i) Financial assets to pay further amounts. Obligations for Financial assets are assessed at each reporting (ii) Non-financial assets contributions to defined contribution plans are date to determine whether there is objective The carrying amounts of the Company non- recognised as an employee benefit expense evidence that it is impaired. A financial asset financial assets, other than inventories and in profit or loss in the periods during which is impaired if there is objective evidence of deferred tax assets, are reviewed at each related services are rendered by employees. impairment as a result of one or more events reporting date to determine whether there Prepaid contributions are recognised as an that occurred after the initial recognition of the is any indication of impairment. If any such asset to the extent that a cash refund or asset, and that loss event(s) had an impact on indication exists, then the asset’s recoverable reduction in future payments is available. the estimated future cash flows of that asset amount is estimated. An impairment loss is that can be estimated reliably. recognised if the carrying amount of an asset Employees are eligible for Employees’ Provident exceeds its recoverable amount. Fund contributions and Employees’ Trust Fund Objective evidence that financial assets are contributions in line with respective statutes impaired includes default or delinquency by a The recoverable amount of an asset or Cash and regulations. The Company contributes 12% debtor, restructuring of an amount due to the Generating Unit (CGU) is the greater of its and 3% of gross emoluments of employees Company on terms that the Company would value in use and its fair value less costs to sell. to Employees’ Provident Fund and Employees’ not consider otherwise, indications that a In assessing value in use, the estimated future Trust Fund respectively. debtor or issuer will enter bankruptcy, adverse cash flows are discounted to their present changes in the payment status of borrowers value using a pre-tax discount rate that reflects (ii) Defined benefit plans or issuers, economic conditions that correlate current market assessments of the time value A defined benefit plan is a post-employment with defaults or the disappearance of an active of money and the risks specific to the asset benefit plan other than a defined contribution market for a security. or CGU. For impairment testing, assets are plan. grouped together into the smallest group Financial assets measured at amortised cost of assets that generates cash inflows from The Company is liable to pay retirement The Company considers evidence of continuing use that are largely independent of benefits under the Payment of Gratuity Act, impairment for financial assets measured the cash inflows of other assets or CGUs. No. 12 of 1983. The liability recognised in the at amortised cost (loans and receivables) at financial statements in respect of defined specific asset level. All individually significant Impairment losses are recognised in profit or benefit plans is the present value of the defined assets are assessed for specific impairment. loss. Impairment losses recognised in respect benefit obligation as at the reporting date. The of CGUs are allocated to reduce the carrying defined benefit obligation is calculated by a An impairment loss in respect of a financial amounts of the other assets in the CGU (group qualified actuary as at the reporting date using asset measured at amortised cost is calculated of CGUs) on a pro rata basis. the Projected Unit Credit (PUC) method as as the difference between its carrying amount recommended by LKAS 19 - ‘Employee Benefits’. and the present value of the estimated future For other assets, an impairment loss is reversed Such actuarial valuations will be carried out cash flows discounted at the asset’s original only to the extent that the asset’s carrying every year. The liability is not externally funded. effective interest rate. Losses are recognised amount does not exceed the carrying amount All Actuarial gains or losses are recognised in profit or loss and reflected in an allowance that would have been determined, net of immediately in profit or loss applying the faster account against loans and receivables or depreciation or amortisation, if no impairment recognistion approach. held-to-maturity investment securities. loss had been recognised. Under the Payment of Gratuity Act No. 12 of 1983, the liability to an employee arises only on completion of 5 years of continued service.
122 123 TRANS ASIA HOTELS PLC | Annual Report 2012/13
(m) Provisions (o) Revenue the Statement of Comprehensive Income, after Provisions are recognised when the Company Revenue is recognised to the extent that it deducting from the proceeds on disposal, the has a present obligation (legal or constructive) is probable that the economic benefits will carrying amount of such assets and the related as a result of a past event, it is probable that flow to the Company, and the revenue and selling expenses. an outflow of resources embodying economic associated costs incurred or to be incurred can benefits will be required to settle the obligation be reliably measured. Revenue is measured On the disposal of any revalued Property, Plant and a reliable estimate can be made of the at the fair value of the consideration received and Equipment, the amount remaining in the amount of the obligation. Where the Company or receivable, net of trade discounts and sales Revaluation reserve, relating to that particular expects some or all of a provision to be taxes. asset is transferred directly to retained earnings. reimbursed, for example under an insurance contract, the reimbursement is recognised The following specific criteria are used for Gains and losses arising from activities as a separate asset but only when the recognition of revenue: incidental to the main revenue generating reimbursement is virtually certain. The expense activities and those arising from a group of relating to any provision is presented in the (i) Income from Hotel similar transactions, which are not material are Statement of Comprehensive Income net of any Revenue is recognised on the rooms occupied aggregated, reported and presented on a net reimbursement. on a daily basis and food & beverages and hotel basis. related sales are accounted for at the time of If the effect of the time value of money is sale. (vi) Other income material, provisions are discounted using (ii) Turnover Based Taxes Other income is recognised on an accrual basis. a current pre-tax rate that reflects, where Turnover based taxes include Value Added Tax appropriate, the risks specific to the liability. (VAT) and Tourism Development Levy payable (p)Expenditure Recognition Where discounting is used, the increase in to the Ceylon Tourist Board by all Companies Expenses are recognised in the Statement the provision due to the passage of time is licensed by the Board. of Comprehensive Income on the basis of a recognised as a finance cost. direct association between the cost incurred (iii) Rental Income and the earning of specific items of income. (n) Contingent Assets and Rental income is recognised on an accrual basis. All expenditure incurred in the running of the Contingent Liabilities business and in maintaining the property, plant and equipment in a state of efficiency has been All contingent liabilities are disclosed as a note (iv) Finance income charged to the Statement of Comprehensive to the financial statements unless the outflow Finance income comprises interest income Income. of resources is remote. A contingent liability derived on funds invested as Treasury bill and recognised in a business combination is initially repos. measured at its fair value. Subsequently, it is For the purpose of presentation of the Statement of Comprehensive Income, the measured at the higher of: Interest income or expense is recorded as it “function of expenses” method has been accrues using the effective interest rate (EIR), y adopted, on the basis that it presents fairly the y The amount that would be recognised in which is the rate that exactly discounts the elements of the Company performance. accordance with the general guidance for estimated future cash payments or receipts provisions above (LKAS 37) or through the expected life of the financial instrument or a shorter period, where (i) Borrowing Cost y y The amount initially recognised less, when appropriate, to the net carrying amount of the Borrowing costs are recognised as an expense appropriate, cumulative amortisation financial asset or liability. Interest income is in the period in which they are incurred, recognised in accordance with the included in finance income in the Statement of except to the extent the borrowing costs that guidance for revenue recognition (LKAS Comprehensive Income. are directly attributable to the acquisition or 18) construction of an asset that takes a substantial period of time to get ready for its intended use, (v) Gains and losses Contingent assets are disclosed, where inflow of and are capitalised as part of that asset. Net gains and losses of a revenue nature economic benefit is probable but not virtually arising from the disposal of property, plant certain. and equipment and other non-current assets, (ii) Finance Costs including investments, are accounted for in Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions. 122 123 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Notes to The Financial Statements Contd...
(q) Segment Reporting Deferred tax assets including those related A segment is a distinguishable component to tax effects of income tax losses and credits of the Company that is engaged either in available to be carried forward, are recognised providing products or services which are only to the extent that it is probable that subject to risks and rewards that are different future taxable profit will be available against from those of other segments. The rental which the asset can be utilised. Deferred tax income generated from the Commercial Centre assets are reviewed at each reporting date and which is categorised as Investment Property is are reduced to the extent that is no longer shown separately. probable that the related tax benefit will be realised. (r) Income Tax Expense Income tax expenses comprise of Income tax (s) Events after the Reporting and deferred tax. Period All material events after the reporting date have (i) Current Taxation been considered and appropriate adjustments The Company is liable for taxation at a rate or disclosures have been made in the respective of 12% in terms of Section 46(1) of the Inland Notes to the Financial Statements. Revenue Act No.10 of 2006 and amendments thereto, on its profits derived from “promotion (t) Cash Flow Statement of tourism”. Income Tax for any other income is The Cash Flow Statement has been prepared computed at 28%. using the “Indirect Method” of preparing Cash Flows in accordance with the Sri Lanka (ii) Deferred Taxation Accounting Standard-LKAS 7. The cash and cash Deferred taxation is provided using the equivalent include cash in-hand, balances with Statement of Financial Position liability method banks and money at call and short notice. providing for temporary difference between the carrying amount of assets and liabilities for (u) Directors’ Responsibility financial reporting purposes and the amounts The Board of Directors is responsible for the used for taxation purposes. The amount of preparation and presentation of the financial deferred tax provided is based on the expected statements. This is more fully described under manner of realisation or settlement of the the relevant clause in the Directors’ Report. carrying amount of assets and liabilities using tax rates enacted or substantively enacted by the reporting date.
124 125 TRANS ASIA HOTELS PLC | Annual Report 2012/13
All values are in Rupees ‘000s, unless otherwise stated.
For the year ended 31st March 2013 2012
5 REVENUE Room 1,352,432 1,043,277 Food 1,034,971 892,287 Beverage 163,607 149,344 Food and Beverage - Other 38,618 38,244 Power Drome Revenue 27,839 21,474 Rental Income from Investment Property 34,283 55,755 Others 188,473 175,098 Net Revenue 2,840,223 2,375,479
Tourism Development Levy 27,359 22,805 Value Added Tax 366,341 308,968 Gross Revenue 3,233,923 2,707,252
6 OTHER OPERATING INCOME Profit on Disposal of Property, Plant and Equipment 5,055 7,013 Gain on Exchange 3,140 1,152 Sundry Income 3,794 1,571 Unclaimed Dividend Income Written back 244 211 12,233 9,947
7 OTHER OPERATING EXPENSES Repairs and Maintenance expenses 57,848 54,225 Heat, Light and Power Expenses 173,232 141,137 De - recognition of assets on refurbishment - 18,152 Bank Charges 738 765 Debit Tax - 195 Nation Building Tax 60,036 48,234 291,854 262,708
8 PROFIT FROM OPERATING ACTIVITIES
Profit from operating activities is stated after charging all expenses including the following Directors fees 3,000 3,080 Audit Services 500 440 Audit related Services 200 155 Donations 4,096 3,704 Depreciation/Amortisation of Property, Plant and Equipment 184,610 168,272 Provision for impairment-Trade Receivables 1,607 269 Impairment - Non Trade 3,926 6,074 Legal fees 1,625 2,271 Management fees 160,689 130,102 Foreign Exchange Gain (3,140) (1,152) Staff Cost (Includes the following) 500,082 445,695 Defined Benefit Plan Costs - Employees Benefit 10,019 17,576 Defined Contribution Plan Costs - EPF and ETF 39,146 33,022 De-Recognition of assets on refurbishment - 18,152
124 125 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Notes to The Financial Statements Contd...
All values are in Rupees ‘000s, unless otherwise stated.
For the year ended 31st March 2013 2012
9 nEt Finance Income Finance Income Interest income on short term investments 64,833 15,117 64,833 15,117 Finance Expenses Interest Expenses on Bank Over Draft (96) (23) (96) (23)
64,737 15,094
10 tAX EXPENSE Current Tax Charge 122,451 110,733 Under or Over provision Income tax for previous year (2,516) - Deferred Tax Charge 25,559 7,439 145,495 118,172
10.1 Reconciliation between Tax Expense and the Product of Accounting Profit ProfitBefore Tax 1,211,212 742,984 Profits not liable for tax (243) (211) Accounting Profit chargeable to income taxes 1,210,969 742,773
Income Tax on Accounting Profit at Applicable Rates 159,322 127,099 Tax effect on disallowable expenses 4,434 4,078 Tax effect on aggregate Allowable expenses (29,628) (11,982) Qualifying Payment Relief (172) (172) Tax effect of revaluation on Buildings De-recognised - (847) Under or Over provision on Income Tax previous year (2,516) - Tax effect on adjustment to opening Deferred tax liability 14,055 (4) Total Income Tax Expense 145,495 118,172
Figures in brackets indicate deductions.
126 127 TRANS ASIA HOTELS PLC | Annual Report 2012/13
All values are in Rupees ‘000s, unless otherwise stated.
2013 2012
Income Tax charged at Standard Rate - 28% 24,511 44,333 Concessionary Rate of 12% 97,941 66,400 122,452 110,733 For the year ended 31st March Under or Over provision on Income Tax previous year (2,516) - Deferred Tax Charge 25,559 7,439 Total Income Tax Expense 145,495 118,172
Deferred Tax Expense Deferred Tax expense arising from Accelerated Depreciation for tax purposes 25,425 8,621 Employee BenefitLiability 134 (1,182) Total Deferred Tax Charge 25,559 7,439
Deferred Tax Liability have been computed taking into consideration the tax rate of 12% applicable for the Tourism Industry.
11 EARNINGS PER SHARE Earnings per share is calculated on the profit attributable to the shareholders of the Company over the weighted average number of ordinary shares in issue during the year, as required by Sri Lanka Accounting Standard (LKAS 33) “Earnings per share”.
Profit attributable to Ordinary Shareholders of the Company (Rs. ‘000) 1,065,717 624,812 Weighted average number of Ordinary Shares (No.s) 200,000 200,000 Earnings per share (Rs.) 5.33 3.12
12 DIVIDENDS PER SHARE Final Dividend paid 2010/2011 300,000 Final Dividend per share 2010 / 11 (Rs.) 3.00 Final Dividend paid 2011/2012 400,000 Final Dividend per share 2011 / 12 (Rs.) 2.00 Interim Dividend Paid 2012 / 13 200,000 Interim Dividend per share 2012 / 13 (Rs.) 1.00
Dividend per share has been calculated, for all periods, based on the number of shares in issue at the time of dividend payout.
Figures in brackets indicate deductions.
126 127 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Notes to The Financial Statements Contd...
All values are in Rupees ‘000s, unless otherwise stated.
Property, Plant and Equipment 13 Property, Plant and Equipment Plant and Computer Furniture kitchen and Hotel Motor Soft Circulating Work in Total Total Total Buildings Machinery Equipment Fixtures and Laundry Equipment vehicles Furnishing Assets Progress 31.03.2013 31.03.2012 01.04.2011 Fittings Equipment Base Stock Cost / Valuation Balance as at 01.04.2012 2,014,002 415,679 87,871 303,624 185,403 32,126 59,891 569,359 126,126 4,743 3,798,824 3,580,610 3,438,711
Additions During the Year 21,457 56,053 5,011 3,317 17,182 6,065 6,957 10,203 23,085 56,511 205,841 365,420 227,869
Adjustments ------588 -
Depreciation Adjustment on Revaluation (127,382) ------(127,382) - -
Disposals - (416) (45) (944) - - (1,909) (1,014) (6,945) - (11,273) (120,838) (67,895)
Revaluation 399,670 ------399,670 - -
De - recognition and Write - offof assets ------(26,956) (18,075)
Balance as at 31/03/13 2,307,747 471,316 92,837 305,997 202,585 38,191 64,939 578,548 142,266 61,254 4,265,680 3,798,824 3,580,610
Accumulated Depreciation Balance as at 01.04.2012 96,785 218,391 71,540 115,897 97,138 2,033 7,786 264,969 79,287 - 953,826 919,030 837,227
Charge for the year 30,597 16,659 5,775 15,692 12,241 2,280 4,620 53,938 25,728 - 167,530 151,323 135,204
Charge On Disposals - (275) (45) (944) - - (394) (462) (6,018) - (8,138) (115,905) (52,137)
Adjustments ------588 -
Transferred to Revaluation (127,382) ------(127,382) - -
De - recognition and Write - offof assets ------(1,210) (1,264)
Balance as at 31/03/13 - 234,775 77,270 130,645 109,379 4,313 12,012 318,445 98,997 - 985,836 953,826 919,030
Carrying Amount As at 31/03/2013 2,307,747 236,541 15,567 175,352 93,206 33,878 52,927 260,103 43,269 61,254 3,279,844 2,844,998 2,661,580
As at 31/03/2012 1,917,217 197,288 16,331 187,727 88,265 30,093 52,105 304,390 46,839 4,743 2,844,998 - -
As at 31/03/2011 1,832,823 189,963 13,123 149,261 86,177 - 2,598 334,836 32,107 20,692 2,661,580 - -
13.1 The Buildings of the Company were valued at market value by P.B. Kalugalagedara, a Chartered Valuation Surveyor as at 31.03.2013 based on depreciated current cost approch and the book value was written up to correspond with the valuation. Had the assets been carried at cost less depreciation, the written down value of the building would have been Rs. 1,193 Mn (2012 - Rs.1,185 Mn). The building is situated on leasehold land A5 - R02- P34.28 in extent at No. 115, Sri Chittampalam A, Gardiner Mawatha, Colombo 02.
13.2 The cost of the fully depreciated assets which are still in the use of Company amounts to Rs. 322.1 Mn (2012 - Rs. 347.1Mn).
Figures in brackets indicate deductions.
128 129 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Property, Plant and Equipment 13 Property, Plant and Equipment Plant and Computer Furniture kitchen and Hotel Motor Soft Circulating Work in Total Total Total Buildings Machinery Equipment Fixtures and Laundry Equipment vehicles Furnishing Assets Progress 31.03.2013 31.03.2012 01.04.2011 Fittings Equipment Base Stock Cost / Valuation Balance as at 01.04.2012 2,014,002 415,679 87,871 303,624 185,403 32,126 59,891 569,359 126,126 4,743 3,798,824 3,580,610 3,438,711
Additions During the Year 21,457 56,053 5,011 3,317 17,182 6,065 6,957 10,203 23,085 56,511 205,841 365,420 227,869
Adjustments ------588 -
Depreciation Adjustment on Revaluation (127,382) ------(127,382) - -
Disposals - (416) (45) (944) - - (1,909) (1,014) (6,945) - (11,273) (120,838) (67,895)
Revaluation 399,670 ------399,670 - -
De - recognition and Write - offof assets ------(26,956) (18,075)
Balance as at 31/03/13 2,307,747 471,316 92,837 305,997 202,585 38,191 64,939 578,548 142,266 61,254 4,265,680 3,798,824 3,580,610
Accumulated Depreciation Balance as at 01.04.2012 96,785 218,391 71,540 115,897 97,138 2,033 7,786 264,969 79,287 - 953,826 919,030 837,227
Charge for the year 30,597 16,659 5,775 15,692 12,241 2,280 4,620 53,938 25,728 - 167,530 151,323 135,204
Charge On Disposals - (275) (45) (944) - - (394) (462) (6,018) - (8,138) (115,905) (52,137)
Adjustments ------588 -
Transferred to Revaluation (127,382) ------(127,382) - -
De - recognition and Write - offof assets ------(1,210) (1,264)
Balance as at 31/03/13 - 234,775 77,270 130,645 109,379 4,313 12,012 318,445 98,997 - 985,836 953,826 919,030
Carrying Amount As at 31/03/2013 2,307,747 236,541 15,567 175,352 93,206 33,878 52,927 260,103 43,269 61,254 3,279,844 2,844,998 2,661,580
As at 31/03/2012 1,917,217 197,288 16,331 187,727 88,265 30,093 52,105 304,390 46,839 4,743 2,844,998 - -
As at 31/03/2011 1,832,823 189,963 13,123 149,261 86,177 - 2,598 334,836 32,107 20,692 2,661,580 - -
128 129 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Notes to The Financial Statements Contd...
All values are in Rupees ‘000s, unless otherwise stated.
As at 31.03.2013 31.03.2012 01.04.2011
14 Leasehold Property
Cost/Valuation Balance at the beginning of the year 945,161 945,161 945,161
Balance at the end of the year 945,161 945,161 945,161
Accumulated Amortisation
Balance at the beginning of the year 101,689 89,285 76,881 Charge for the Year 12,404 12,404 12,404 Balance at the end of the year 114,093 101,689 89,285
Carrying Amount 831,068 843,472 855,876
The leasehold property is amortised on a straight line basis over 74 years.
15 Investment Property Balance at the beginning of the year 1,469,540 1,369,692 1,140,016 Change in Fair Value during the Year 288,710 99,848 229,676 Balance at the end of the year 1,758,250 1,469,540 1,369,692
In accordance with the Sri Lanka Accounting Standard - 40 “Investment Property” (LKAS 40) the Commercial Center of the Company was reclassified as Investment Property during the year ended 31st March 2006.
In accordance with application of fair value model for investment property , the Land and Building related to Investment Property situated at No. 117, Sir Chittampalam A Gardiner Mawatha, Colombo 02 on leasehold land in extent A 01 - R02 - P30.0 was revalued by P.B. Kalugalagedara, a Chartered Valuation Surveyor, on 31st March 2013 using the Market Value method.
The valuation obtained confirmed that there has been a substantial increase in value of property as at 31st March 2013 and hence the value of the asset has been increased to reflect the market value of Rs. 1,758,250,000,/-
Rental Income earned from Investment Property by the Company amounted to Rs. 34,282,595/- (2012 - Rs. 55,755,001/-) and Direct Operating Expenses incurred by the Company amounted to Rs. 6,064,611/- ( 2012 - Rs. 6,054,331/-).
16 Intangible Assets Computer Software Cost Balance at the beginning of the year 22,784 22,285 14,839 Additions 1,311 499 7,446 Balance at the end of the year 24,095 22,784 22,285 Figures in brackets indicate deductions. 130 131 TRANS ASIA HOTELS PLC | Annual Report 2012/13
All values are in Rupees ‘000s, unless otherwise stated.
As at 31.03.2013 31.03.2012 01.04.2011
Accumulated Amortisation Balance at the beginning of the year 11,966 7,421 3,320 Amortisation for the year 4,674 4,545 4,101 Balance at the end of the year 16,640 11,966 7,421 Carrying Amount 7,455 10,818 14,864
17 Other Receivables
Insurance Claim Receivable Amount Re-classified from trade and other Receivables 28,926 35,000 35,000 Impaired during the year (3,926) (6,074) - Payments received during the year (25,000) - - Balance at the end of the year - 28,926 35,000
18 Inventories Food 11,092 12,820 10,763 Beverage 14,418 9,419 12,536 Engineering Spares 8,600 13,029 11,746 Guest Supplies 2,275 3,055 4,773 Others 3,821 3,958 3,468 Inventory Slow Moving Provision (7,174) - - 33,032 42,281 43,286
19 tRADE and Other Receivables Trade Receivables 198,337 224,390 138,114 Provision for impairment (Refer 19.1) (1,965) (1,555) (1,286) 196,372 222,835 136,828
Advances and Deposits 35,163 28,831 34,111 Tax Refund 12,103 Staff loans recoverable within one year 1,734 1,514 1,698 36,897 30,345 47,912
233,269 253,180 184,740
19.1 Provision for Impairment of Trade Receivables Balance at the beginning of the year 1,554 1,286 164 Provision Charged during the year 411 269 1,122 Balance at the end of the year 1,965 1,555 1,286
Figures in brackets indicate deductions.
130 131 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Notes to The Financial Statements Contd...
All values are in Rupees ‘000s, unless otherwise stated.
As at 31.03.2013 31.03.2012 01.04.2011
20 Other Current Assets Advances to Other Creditors 38,610 6,686 42,868 Prepayments 32,116 28,584 30,938 WHT Recoverable 2,988 1,525 5,428 ESC Recoverable 2,861 4,639 9,645 76,575 41,434 88,879
21 Amounts due from Related Parties Ultimate parent - John Keells Holdings PLC 2,504 211 181 Parent - Asian Hotels and Properties PLC 231 205 - Companies under Common Control 12,087 18,192 17,683 14,822 18,608 17,864
22 Short Term Investment Fixed and Call Deposits 559,873 352,000 275,000 559,873 352,000 275,000
23 STATED CAPITAL 200,000,000 Ordinary Shares 1,112,880 1,112,880 1,112,880 1,112,880 1,112,880 1,112,880
24 Revaluation Reserve Balance at the beginning of the year 1,366,273 1,407,602 1,434,082 Transferred to retained earnings (33,994) (33,994) (30,683) Revaluation on Buildings 399,670 - - De - recognition of refurbished assets - (7,335) (4,635) Transferred from Deferred Tax - - 8,838 Tax effect on Revaluation -Buildings (47,960) - - Balance at the end of the year 1,683,989 1,366,273 1,407,602
25 Other Non Current Liabilities Urban Development Authority Balance at the beginning of the year 4,288 5,725 7,161 Payment during the year (1,436) (1,436) (1,436) Balance at the end of the year 2,852 4,289 5,725
Payable within one year - (Note 25.1) 1,436 14,363 14,363 Payable after one year - (Note 25.2) 1,416 2,853 42,883
Balance at the end of the year 2,852 17,216 57,246 Figures in brackets indicate deductions. 132 133 TRANS ASIA HOTELS PLC | Annual Report 2012/13
All values are in Rupees ‘000s, unless otherwise stated.
As at 31.03.2013 31.03.2012 01.04.2011
25.1 Installments Payable within one year Urban Development Authority 1,436 1,436 1,436 1,436 1,436 1,436
25.2 Installments Payable after one year Payable 1 to 5 Years Urban Development Authority 1,416 2,853 4,288 1,416 2,853 4,288
25.3 urban Development Authority A sum of Rs. 47,400,000/- of the rent due to the Urban Development Authority is to be settled over 33 years from 7th August 1981. The expended cost of Rs. 11,200,000/= on the alternate accommodation constructed by the Company for the Sri Lanka Air Force, was recovered by setting off against the rent installments due during the first eight years of the agreement signed with the Urban Development Authority dated 31st October 1983. The balance is being paid in 24 installments until expiration of the obligation and the remaining period as at reporting date is 02 years.
26 EMPLOYEE BENEFITS Balance at the beginning of the year 99,145 89,299 74,372 Current Service Cost 7,089 7,677 7,145 Interest Cost 9,914 8,930 7,437 Payments made during the year (11,137) (7,730) (6,189) Transfer Out - - (1,444) Actuarial again/loss arising from changes in the assumptions in the previous years (6,984) 969 7,978 Balance at the end of the year 98,027 99,145 89,299
The employee benefit liability of the Company is based on the actuarial valuation carried out by Mr. M. Poopalanathan, AIA, Messrs. Actuarial and Management Consultants (Pvt) Ltd, a firm of professional actuaries on 31st March 2013. The principal assumptions used in determining the cost of employee benefits were:
Discount Rate 11% 10% Future Salary Increases 10% 10%
Figures in brackets indicate deductions.
132 133 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Notes to The Financial Statements Contd...
All values are in Rupees ‘000s, unless otherwise stated.
As at 31st March 2013 2012 01.04.2011
27 DEFERRED TAX LIABILITY
Balance at the beginning of the year 255,793 248,354 302,848 Charge / (Reversal) for the year 25,560 7,439 (45,656) Deferred Tax effect on revaluation of buildings 47,960 - - Adjustment on revaluation - - (8,838) Balance at the end of the year 329,313 255,793 248,354
The closing Deferred Tax liability relates to the following Revaluation of buildings 47,960 - - Accelerated Depreciation for tax purposes 293,116 267,691 259,070 Employee Benefit Liability (11,763) (11,898) (10,716) 329,313 255,793 248,354
28 tRADE and Other Payables Trade Payables 55,238 49,643 62,232 Advances and Deposits Received 7,320 22,859 22,972 Accruals and Other Payables 88,340 117,137 85,700 Other Taxes Payable 22,360 38,184 24,845 StaffPayables 6,099 3,715 6,254 179,357 231,538 202,003
29 Other Current Liabilities Banquet Advanced 63,449 58,743 43,146 Advanced Received 13,352 11,116 5,686 Performance Bond - 1,082 1,404 Deferred Revenue 28,475 6,782 850 105,276 77,723 51,086
30 Amounts due to Related Parties Ultimate parent - John Keells Holdings PLC 342 2,683 2,098 Parent-Asian Hotels and Properties PLC 66 1 58 Companies under the Common Control of John Keells Holdings PLC 29,157 25,145 15,986 29,565 27,829 18,142
31 Current Tax Liability Balance at the beginning of the year 69,397 79,155 7,016 Charge for the year 120,100 110,733 70,413 Payments, set-off against tax credits and adjustments (124,245) (120,491) 1,726 Balance at the end of the year 65,252 69,397 79,155
Figures in brackets indicate deductions.
134 135 TRANS ASIA HOTELS PLC | Annual Report 2012/13
All values are in Rupees ‘000s, unless otherwise stated.
As at 31st March 2013 2012
32 Related Party Transactions The Company carries out transactions in the ordinary course of business with parties who are defined as Related Parties in “Sri Lanka Accounting Standards (LKAS 24)” Related Party Disclosures, the details of which are reported below. The pricing applicable to such transactions is based on the assessment of risk and pricing model of the Company and is comparable with what is applied to transactions between the Company and its unrelated customers.
32.1 transactions with Related Companies The Company’s immediate Parent is Asian Hotels and Properties PLC and Ultimate Parent is John Keells Holdings PLC.
Ultimate Parent John Keells Holding PLC Rendering /(Receiving) of services 6,470 (13,367)
Parent - Asian Hotels and Properties PLC Rendering /(Receiving) of services (914) (15,632)
32.2 transactions with Companies under Common Control of John Keells Holdings PLC. (Purchase) / Sale of Goods (21,724) (23,790) Rendering /(Receiving) of services (173,221) (109,276)
32.3 Transaction with Key Management Personnel (KMP) According to “Sri Lanka Accounting Standards (LKAS 24)” Related Party Disclosure, Key Management Personnel are those having authority and responsibility for planning and controlling activities of the entity. Accordingly, the Directors of the Company (including Executive and Non Executive Directors) and their Immediate family members have been classified as KMP of the Company.
Immediate family member is defined as spouse or dependent. Dependent is defined as anyone who depends on respective Director for more than 50% of his/her financial needs.
Compensation of Key Management Personnel Short term employee benefits 3,000 3,080
Key management personnel Rendering of services 233 208
Post employment benefit plan Contributions to the provident fund 441 1,014
Figures in brackets indicate deductions.
134 135 TRANS ASIA HOTELS PLC | Annual Report 2012/13
All values are in Rupees ‘000s, unless otherwise stated.
33 FINANCIAL INSTRUMENTS 33.1 Financial Assets and Liabilities by Categories
Financial assets and liabilities in the tables below are split into categories in accordance with LKAS 39.
Financial assets by categories Loans and receivables Financial assets at fair value Available-for-sale Held-to- maturity through profit and loss financial assets investments
As at 1 April As at 1 April As at 1 April As at 1 April As at 31st March 2013 2012 2011 2013 2012 2011 2013 2012 2011 2013 2012 2011
Financial instruments in non-current assets Other non-current financial assets 404 420 358 ------
Financial instruments in current assets Trade and other receivables 233,269 253,180 184,740 ------Amounts due from related parties 14,822 18,608 17,864 ------Short term investments 559,873 352,000 275,000 ------Cash in hand and at bank 99,841 124,150 60,638 ------
Total 908,209 748,358 538,600 ------
The fair value of loans and receivables amounts to Rs. 908.2 Mn (2012 - Rs. 748.4 Mn, As at 1 April 2011 - Rs. 538.6 Mn)
Financial liabilities by categories Financial liabilities Financial liabilities at fair value through measured at profit and loss amortised cost As at 1 April As at 1 April As at 31st March 2013 2012 2011 2013 2012 2011
Financial instruments in non-current liabilities Borrowings ------
Financial instruments in current liabilities Trade and other payables 156,997 193,354 177,158
Amounts due to related parties - - - 29,565 27,829 18,142 Current portion of borrowings ------Bank overdrafts - - - 39,578 35,906 3,265
Total - - - 226,140 257,089 198,565
The Company has not designated any financial assets or liabilities upon initial recognition, as fair value through profit or loss.
Figures in brackets indicate deductions.
136 137 TRANS ASIA HOTELS PLC | Annual Report 2012/13
All values are in Rupees ‘000s, unless otherwise stated.
33.2 Financial risk management objectives and policies Overview Financial instruments held by the Company, principally comprise of cash, loans and other receivables, trade and other receivables, trade and other payables and loans & borrowings. The main purpose of these financial instruments is to manage the operating, investing and financing activities of the Company.
Financial risk management of the Group is carried out based on guidelines established by its parent company’s central treasury department (Group Treasury) which comes under the purview of the Group Executive Committee (GEC) of the parent company. Group Treasury identifies, evaluates and hedges financial risks in close co-operation with the Hotel’s operating unit. The parent company provides guidelines for overall risk management, as well, covering specific areas such as credit risk, investment of excess liquidity, interest rate risk and foreign currency risk.
The Company has established guidelines for risk controlling procedures and for the use of financial instruments, including a clear segregation of duties with regard to financial activities, settlement, accounting and related controlling. The guidelines upon which the Company’s risk management processes are based and designed to identify and analyse these risks throughout the Company, to set appropriate risk limits and controls and to monitor the risks by means of reliable and up-to-date administrative and information systems. The guidelines and systems are regularly reviewed and adjusted to changes in markets and products. The Company manages and monitors these risks primarily through its operating and financing activities.
The Audit Committee of the Company monitors how management compliance with the Company’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.
33.2.1 Credit risk Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.
The Company trades only with recognised, creditworthy third parties. It is the Company’s policy that all clients who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Company’s exposure to bad debts is not significant.
With respect to credit risk arising from the other financial assets of the Company, such as cash and cash equivalents, the Company’s exposure to credit risk arises from default of the counterparty. The Company manages its operations to avoid any excessive concentration of counterparty risks and the Company takes all reasonable steps to ensure that the counterparties fulfill their obligations.
33.2.2 Credit risk exposure The maximum risk positions of financial assets which are generally subject to credit risk are equal to their carrying amounts (without consideration of collateral, if available).Following table shows the maximum risk positions.
2013
Notes Other non Cash in hand trade and Other Amounts due total % of current and other Investments from Allocation financial Cash at Bank receivables Related Party assets Deposits with bank 33.2.3 - - - 559,874 - 559,874 61% Loans to executives 33.2.4 7,281 - 1,734 - - 9,015 1% Trade and other receivables 33.2.5 - - 233,269 - - 233,269 25% Amounts due from related parties 33.2.6 - - - - 14,822 14,822 2% Cash in hand and at bank 33.2.7 - 99,841 - - - 99,841 11% Total credit risk exposure 7,281 99,841 235,003 559,874 14,822 916,821 100%
Figures in brackets indicate deductions.
136 137 TRANS ASIA HOTELS PLC | Annual Report 2012/13
All values are in Rupees ‘000s, unless otherwise stated.
2012
Notes Other non Cash in hand trade and Other Amounts due total % of current and other Investments from Allocation financial Cash at Bank receivables Related Party assets Deposits with bank 33.2.3 - - - 352,000 - 352,000 47% Loans to executives 33.2.4 6,875 - 1,515 - - 8,390 1% Trade and other receivables 33.2.5 - - 253,180 - - 253,180 33% Amounts due from related parties 33.2.6 - - - - 18,608 18,608 2% Cash in hand and at bank 33.2.7 - 124,150 - - - 124,150 16% Total credit risk exposure 6,875 124,150 254,695 352,000 18,608 756,328 100%
33.2.3 Deposits with bank Fixed and call deposits comprise 100% (2012-100%) with banks rated “AA” (Fitch Rating).
33.2.4 Loans to executives Loans to executive portfolio is made up of vehicle loans which are given to staff at manager level and above. Company have obtained the necessary Power of Attorney/promissory notes as collateral for the loans granted.
33.2.5 trade and other receivables Age analysis of trade and other receivables and the carrying value net of impairment losses is given below : 2013 2012
Neither past due nor impaired 36,897 30,345
Past due but not impaired < 30 days 76,288 96,347 31 - 60 days 104,686 84,168 61– 90 days 9,482 21,493 91 – 120 days 4,847 12,215 121 – 180 days 587 6,066 > 181 days 2,447 4,101
Impaired - - Gross carrying value 235,234 254,735 Less: impairment provision Individually assessed impairment provision (1,965) (1,555) Total 233,269 253,180
The Company has obtained customer deposit from major customers by reviewing their past performance and credit worthiness, as collateral. The requirement for an impairment is analysed at each reporting date on an individual basis for all customers.
33.2.6 Amounts due from related parties The Company’s amounts due from related party mainly consists balances from affiliate companies.
Figures in brackets indicate deductions.
138 139 TRANS ASIA HOTELS PLC | Annual Report 2012/13
All values are in Rupees ‘000s, unless otherwise stated.
33.2.7 Credit risk relating to cash and cash equivalents In order to mitigate settlement and operational risks related to cash and cash equivalents, the Company uses several banks with acceptable ratings for its deposits. The Company held cash and cash equivalents of Rs. 620.1 Mn as at 31st March 2013 (2012 - Rs. 440.2 Mn)
33.3 Liquidity risk Liquidity risk is the risk that will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to Company’s reputation.
Company monitors the level of expected cash inflows on trade and other receivables together with expected cash outflows on trade and other payables. At 31 March 2013, the expected cash flows from trade and other receivables maturing within two months were Rs. 73.6 million (2012 - Rs. 96.3 million). This excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.
Company has approved and unused overdraft facility amounting to Rs. 50 mn as at 31 March 2013.
33.3.1 The following are the remaining contractual maturities at the end of the reporting period of financial liabilities, including estimated interest payments and excluding the impact of netting agreements:
Contractual cash flows Carrying total 2 Months 2 - 12 Months 1 - 2 Year 2 - 5 Years More than . Amount or less 5 Years
Non - derivative financial instruments Trade Payables 55,238 55,238 55,238 Other Payables 101,759 101,759 101,759 Amount due to related parties 29,565 29,565 29,565
33.3.2 Management of liquidity risk The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to ‘s reputation.
Company maintains a portion of its assets in highly liquid form (Short term fixed deposits and government securities) in order to meet its contractual obligations during the normal course of its operations. As at the reporting date ‘Cash and cash equivalents’ amounted to Rs. 620.1 mn.
Company monitors the level of expected cash inflows on trade and other receivables together with expected cash outflows on trade and other payables and it expected a significant portion of the Trade receivables as at the reporting date would mature within a shorter period of time, given the historical trends, which would enable to meet its contractual obligations.
33.4 Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect ‘s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.
Figures in brackets indicate deductions.
138 139 TRANS ASIA HOTELS PLC | Annual Report 2012/13
All values are in Rupees ‘000s, unless otherwise stated.
33.4.1 Currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate, due to changes in foreign exchange rates. Company as at the reporting date, do not hold significant ‘Financial instruments’ denominated in currencies other than its functional / reporting currency, hence do not get significantly exposed to currency risk arising from translation of such balances in to the functional / reporting currency, which is Sri Lankan Rupees.
However, Company engages in transactions associated with foreign currencies in its ordinary course of operations, hence exposed to ‘Currency risk’.
Across the industry, the hotel rates targeting the foreign tourists are quoted in US Dollar terms. However a fluctuation in the exchange rate will not have a significant impact since majority of the quotes are converted to local currency at the point of invoicing. The Company monitors fluctuations in foreign exchange rates and takes precautionary measures to revise its exchange rates on a regular basis, in an attempt to mitigate the exposure to currency risk arising from its transactions.
33.4.2 Interest rate risk Interest rate risk mainly arises as a result of Company having interest sensitive assets and liabilities which are directly impacted by changes in the interest rates. Management monitors the sensitivities on regular basis and ensure such risks are managed on a timely manner.
33.5 Accounting classifications and fair values The Company does not designate any of its financial assets / liabilities at fair value, hence a classification between fair value hierarchy do not apply.
33.6 Fair values vs. carrying amounts
Trading Held to Loans and Available Other financial total carrying Fair Value 31st March 2013 maturity receivables for sale liabilities amount
Cash and cash equivalents - - 620,136 - - 620,136 620,136 Trade and other receivables - - 233,269 - - 233,269 233,269 - - 853,405 - - 853,405 853,405
Trade and other payables - - - - 179,357 179,357 179,357 - - - - 179,357 179,357 179,357
Figures in brackets indicate deductions.
140 141 TRANS ASIA HOTELS PLC | Annual Report 2012/13
All values are in Rupees ‘000s, unless otherwise stated.
Trading Held to Loans and Available Other financial total carrying Fair Value 31st March 2013 maturity receivables for sale liabilities amount
31st March 2012 Cash and cash equivalents - - 440,244 - - 440,244 440,244 Trade and other receivables - 253,180 - - 253,180 253,180 - - 693,424 - - 693,424 693,424
Trade and other payables - - - - 231,538 231,538 231,538 - - - - 231,538 231,538 231,538
1st April 2011 Cash and cash equivalents - - 332,373 332,373 332,373 Trade and other receivables 184,740 184,740 184,740 - - 517,113 - - 517,113 517,113
Trade and other payables - - - - 202,003 202,003 202,003 - - - 202,003 202,003 202,003
34 Segmental Information
Hotel Investment Property Total For the year ended 31st March 2013 2012 2013 2012 2013 2012
Total Revenue 2,805,940 2,319,724 34,283 55,755 2,840,223 2,375,479 Expenses (1,911,656) (1,726,289) (6,065) (6,054) (1,917,721) (1,732,343)
Change in Fair Value of Investment Property - - 288,710 99,848 288,710 99,848 Profit before Taxation 894,284 593,435 316,928 149,549 1,211,212 742,984 Segment Assets 5,141,040 4,565,213 1,760,269 1,471,069 6,901,309 6,036,282 Segment Liabilities 847,784 783,328 - 16,856 847,784 800,184
35 CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES As at 31st March 2013, the Company had capital commitments of Rs. 346.5 Mn (31st March 2012 - Rs. 8.6 Mn). A portion of this significant portion of this Capital Commitment relates to the human resource building which is under construction as at the year end.
Figures in brackets indicate deductions.
140 141 TRANS ASIA HOTELS PLC | Annual Report 2012/13
All values are in Rupees ‘000s, unless otherwise stated.
36 Events Occurring after the Reporting Date Subsequent to the date of the Statement of Financial Position, no circumstances have arisen which would require adjustments to or disclosure in the financial statements except for the following.
The Board of Directors of the Company have recommended the payment of a final dividend of Rs. 2.00 per share for the year ended 31st March 2013.
As required by Section 56(2) of the Companies Act No. 7 of 2007, the Board of Directors have confirmed that the Company satisfies the Solvency test in accordance with Section 57 of the Companies Act No. 7 of 2007, and have obtained a certificate from the auditors, prior to recommending the final dividend of Rs. 2.00 per share for this year.
In accordance with “Sri Lanka Accounting Standards (LKAS 10)” Events after the Reporting Period, the proposed final dividend has not been recognised as a liability in the Financial Statements as at 31st March 2013
37 DIRECTORS’ RESPONSIBILITY STATEMENT The Board of Directors is responsible for the preparation and presentation of these Financial Statements. Please refer to the page 110 for the statement of Directors’ Responsibility for Financial Reporting.
142 143 TRANS ASIA HOTELS PLC | Annual Report 2012/13
All values are in Rupees ‘000s, unless otherwise stated.
38 First time adaptation of SLFRS / LKAS As stated in note 2(a) these are the Company’s first Financial Statements prepared in accordance with new SLASs. The accounting policies set out in note 2 have been applied in preparing the Financial Statements for the year ended 31st March 2013, comparative information presented in these Financial Statements for the year ended 31st March 2012 and in the preparation of an opening SLAS statement of financial position at 1st April 2011.
In preparing the opening SLAS statement of financial position, the Company should adjust amounts reported previously in Financial Statements prepared in accordance with previous SLASs. An explanation of how the transition from previous SLASs has affected the Company’s financial position and financial performance is set out in the following tables and notes that accompany the tables.
38.1 Reconciliation of statement of Comprehensive and other comprehensive income
For the Year Ended 31st March 2012
As per As per notes SLAS Remeasurements SLFRS/LKAS
Revenue 38.3.1 2,381,411 (5,932) 2,375,479 Cost of sales (872,455) - (872,455) Gross profit 1,508,956 (5,932) 1,503,024 Other operating income 38.3.3 24,797 (14,850) 9,947 Administrative expenses 38.3.2 (551,408) (73) (551,481) Sales and Marketing expenses (70,740) - (70,740) Other operating expenses (262,708) - (262,708) Finance costs (23) - (23) Finance income 38.3.3 / 38.3.2 - 15,117 15,117 Change in Fair Value of Investment Property 99,848 - 99,848 Profit before taxation 748,722 (5,738) 742,984 Income tax expense (118,172) - (118,172) Profit for the year 630,550 (5,738) 624,812 Other comprehensive income De-recognition of refurbished assets - (7,335) (7,335) Other comprehensive income for the year, net of tax - (7,335) (7,335) Total comprehensive income for the year, net of tax - (13,073) 617,477
Figures in brackets indicate deductions.
142 143 TRANS ASIA HOTELS PLC | Annual Report 2012/13
All values are in Rupees ‘000s, unless otherwise stated.
38.2 Reconciliation of Statement of Financial Position
Equity as at 31st March 2012 Equity as at 1st April 2011
As per As per As per Notes SLAS Remeasurements SLFRS/LKAS SLAS Remeasurements SLFRS/LKAS
ASSETS Non-current assets Property, plant and equipment 2,844,998 - 2,844,998 2,661,580 - 2,661,580 Leasehold Property 843,472 - 843,472 855,876 - 855,876 Investment property 1,469,540 - 1,469,540 1,369,692 - 1,369,692 Intangible Assets 10,818 - 10,818 14,864 - 14,864 Other Receivables 28,926 - 28,926 35,000 - 35,000 Other non-current assets 6,455 - 6,455 6,436 - 6,436 Other Financial assets 38.3.2 - 420 420 358 - 358 Total non current assets 5,204,209 420 5,204,629 4,943,806 - 4,943,806 Current assets Inventories 42,281 - 42,281 43,286 - 43,286 Trade and other receivables 38.3.1 253,406 (226) 253,180 184,740 - 184,740 Other current assets 41,434 - 41,434 88,879 - 88,879 Amounts due from related parties 18,608 - 18,608 17,864 - 17,864 Short term investments 352,000 - 352,000 275,000 - 275,000 Cash in hand and at bank 124,150 - 124,150 60,638 - 60,638 Total current assets 831,879 (226) 831,653 670,407 - 670,407 Total assets 6,036,088 194 6,036,282 5,614,213 - 5,614,213
EQUITY AND LIABILITIES Stated capital 1,112,880 - 1,112,880 1,112,880 - 1,112,880 Revaluation reserve 1,366,273 - 1,366,273 1,407,602 - 1,407,602 Revenue reserve 38.3.4 2,763,533 (6,588) 2,756,945 2,398,989 (850) 2,398,139 Total equity 5,242,686 (6,588) 5,236,098 4,919,471 (850) 4,918,621
Non-current liabilities Other non current liability 2,853 - 2,853 4,288 - 4,288 Employee benefits 99,145 - 99,145 89,299 - 89,299 Deferred tax liability 255,793 - 255,793 248,354 - 248,354 Total non-current liabilities 357,791 - 357,791 341,941 - 341,941 Current liabilities Trade and other payables 231,538 - 231,538 202,003 - 202,003 Other current liabilities 38.3.1 70,941 6,782 77,723 50,236 850 51,086 Amounts due to related parties 27,829 - 27,829 18,142 - 18,142 Current tax liability 69,397 - 69,397 79,155 - 79,155 Bank overdrafts 35,906 - 35,906 3,265 - 3,265 Total current liabilities 435,611 6,782 442,393 352,801 850 353,651 Total equity and liabilities 6,036,088 194 6,036,282 5,614,213 - 5,614,213
Figures in brackets indicate deductions.
144 145 TRANS ASIA HOTELS PLC | Annual Report 2012/13
All values are in Rupees ‘000s, unless otherwise stated.
38.3 notes to the reconciliations
38.3.1 Deferred revenue recognition Under previous accounting standards the revenue was not allocated free vouchers and complimentary rooms and hence was not differed. Under new accounting standards the revenue is allocated to free vouchers and complimentary rooms are recognised as revenue when they are utilised by the customers. Until such time free vouchers and complimentary rooms are differed. The impact arising from the above is summarised as follows:
Statement of comprehensive income For the year ended 31st March 2012
Revenue (5,932) (5,932)
Statement of financial position As at 31st March 2012 1st April 2011
Revenue reserve (6,588) (850) Other current liabilities 6,782 850 194 -
38.3.2 Other Income recognition on staff vehicle loans Under previous accounting standards the staff vehicle loans were stated at the amounts that they were estimated to realize. Under new accounting standards staff vehicle loans at initial recognition are measured at fair value plus directly attributable transaction costs. As staff vehicle loans were given at below market rates, these loans were fair valued and the difference on fair value measurements was recognised as prepaid staff cost and amortised over the term of the loan and the impact on the financial statements are given below:
Statement of comprehensive income For the year ended 31st March 2012
Finance income 267 Administrative expenses (73) Net effect on retained earnings at the end of the period 194
Statement of financial position As at 31st March 2012
Other Financial assets 420 Trade and other receivables (226) Net effect on retained earnings at the end of the period 194
Figures in brackets indicate deductions.
144 145 TRANS ASIA HOTELS PLC | Annual Report 2012/13
All values are in Rupees ‘000s, unless otherwise stated.
38.3.3 Reclassification of financial income The Company classified the interest income in to ‘financial income’, which was previously classified in to “other income”. The impact arising from the above is summarised as follows:
Statement of comprehensive income For the year ended 31st March 2012
Other Income (14,850) Finance Income 14,850 Net effect on earnings -
38.3.4 Impact on earnings / retained earnings The above changes increased / (decreased) the earnings for the periods as follows:
Statement of comprehensive income For the year ended 31st March 2012 Revenue (5,932) Administrative expenses (73) Finance income 267 Net effect on earnings for the period (5,738)
Figures in brackets indicate deductions.
The above changes increased / (decreased) the shareholders equity for the periods as follows:
Statement of financial position As at 31st March 2012 As at 1st April 2011
Other Financial assets 420 Trade and other receivables (226) Other current liabilities (6,782) (850) Net effect on retained earnings at the end of the period (6,588) (850)
38.4 Cash flow statement No material impact to the Cash flow statements of the Company arises from the transition from SLAS to SLFRS/LKAS.
Figures in brackets indicate deductions.
146 147 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Quarterly Financial Data for the Financial Year Ended 31 St March 2013 All values are in Rupees ‘000s, unless otherwise stated. Statement of Comprehensive Income For the Quarter ended 30 Jun ‘12 30 Sep’12 31 Dec ‘12 31 Mar ‘13 total for the Year Turnover 642,934 755,072 818,622 623,595 2,840,223 Cost of Sales (236,477) (264,709) (286,983) (233,179) (1,021,348) 406,457 490,362 531,639 390,417 1,818,875 Other Operating Income 240 957 1,598 9,438 12,233 Administrative Expenses (142,226) (156,901) (157,226) (145,342) (601,695) Sales and Marketing Expenses (23,291) (21,737) (24,955) (9,812) (79,794) Other Operating Expenses (69,659) (74,968) (80,595) (66,632) (291,854) Profit from Operating Activities 171,521 237,713 270,461 178,070 857,765 Finance Cost (17) (12) (13) (54) (96) Finance Income 11,891 12,414 18,689 21,839 64,833 Change in Fair Value of Investment Property - - - 288,710 288,710 Profit beforeT axation 183,395 250,115 289,137 488,565 1,211,212 Income Tax expense (25,251) (33,728) (40,346) (46,170) (145,495) Profit afterT axation 158,144 216,386 248,791 442,396 1,065,717
Earning Per Share for the period 0.79 1.08 1.24 2.21 5.33
BALANCE SHEET As at 30 Jun ‘12 30 Sep’12 31 Dec ‘12 31 Mar ‘13
Net Assets Property, Plant and Equipment 2,828,409 2,828,229 2,819,511 3,279,844 Other Non Current Assets 2,349,772 2,317,445 2,321,268 2,604,053 Net Current Assets 174,617 426,125 484,102 598,384 5,352,798 5,571,799 5,624,881 6,482,281 Less : Non Current Liabilities (358,556) (361,170) (365,461) (428,756) 4,994,242 5,210,629 5,259,420 6,053,525 Shareholders’ Funds Capital Reserves 2,470,654 2,462,156 2,453,657 2,796,869 Revenue Reserves 2,523,588 2,748,473 2,805,763 3,256,656 4,994,242 5,210,629 5,259,420 6,053,525
Net Assets Per Share 24.97 26.05 26.30 30.27
Figures in brackets indicate deductions.
Shareholders Funds Market Capitalisation
2012/13 Rs.6,054 Mn Rs. 19,580,000 2011/12 Rs.5,236 Mn Rs. 14,080,000
2010/11 Rs.4,919 Mn Rs. 13,380,000
2009/10 Rs.4,355 Mn Rs.8,812,500
Rs.4,400,000 2008/09 Rs.4,315Mn
2008/09 2009/10 2010/11 2011/12 2012/13
146 147 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Five Year Financial Summary & Key Indicators
08/09 09/10 10/11 11/12 12/13 Rs. ’000 Rs. ’000 Rs. ’000 Rs.’ 000 Rs. ’000
OPERATING RESULTS Total Revenue 1,151,138 1,066,514 1,971,856 2,375,479 2,840,223 Sales Growth (2.48) (7.35) 84.89 20.47 19.56 Gross Operating Profit 286,829 127,733 626,736 833,517 1,061,475 Rates Insurance, Depreciation & Amortisation 190,531 179,967 178,236 197,269 215,943 Finance Expenses 17,417 11,034 99 23 96 Net Profit Before Taxation 173,502 127,638 685,583 742,984 1,211,212
SHAREHOLDER’S FUNDS Stated Capital 1,112,880 1,112,880 1,112,880 1,112,880 1,112,880 Revaluation Reserve 1,478,472 1,434,082 1,407,602 1,366,273 1,683,989 Retained Earnings 1,723,628 1,808,534 2,398,139 2,756,945 3,256,656 4,314,980 4,355,496 4,918,621 5,236,098 6,053,525
ASSETS EMPLOYED Property ,Plant and Equipment 2,300,588 2,613,003 2,661,580 2,844,998 3,279,844 Leasehold Property 880,684 868,280 855,876 843,472 831,068 Investment Property 1,140,016 1,140,016 1,369,692 1,469,540 1,758,250 Other Non Current Assets - - 56,658 46,619 14,735 Net Current Assets 369,420 117,142 316,756 389,260 598,384 4,690,708 4,738,441 5,260,562 5,593,889 6,482,281
Long Term Liabilities 7,161 5,725 4,288 2,853 1,416 Employee Benefits 59,777 74,372 89,299 99,145 98,027 Deferred Taxation 288,387 302,848 248,354 255,793 329,313 Term Loan 20,403 - - - - 4,314,980 4,355,496 4,918,621 5,236,098 6,053,525
KEY INDICATORS Current Ratio Times 2.78 1.40 2.02 1.88 2.43 Net Asset per Share (Rs.) 21.57 21.78 24.60 26.18 30.27 Market Price per Share (Rs.) 92.4 176.3 195.8 66.9 70.4 Earnings per Share (Rs.) 0.81 0.52 3.30 3.12 5.33
Statistical Summary Occupancy % 46 41 62 55 60 No. of Rooms Occupied 57,064 51,226 76,882 69,616 76,199 Average Daily Rate (Rs.) 6,840 7,675 10,408 14,964 17,794 Food Cost % 37 38 38 37 38 Beverage Cost % 31 34 34 28 28 Net ProfitBefore Tax (%) 15 12 35 31 43
148 149 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Five Year Financial Summary & Key Indicators
08/09 09/10 10/11 11/12 12/13 Rs. ‘ 000 Rs. ‘ 000 Rs. ‘ 000 Rs. ‘ 000 Rs. ‘ 000
Revenue Rooms 390,318 393,172 800,168 1,043,277 1,352,432 Food 496,500 408,191 792,411 892,287 1,034,971 Beverages 73,021 85,898 137,845 149,344 163,607 Food & Beverage Others 28,315 24,534 37,667 38,244 38,618 Telephone 5,546 4,364 5,312 3,987 2,764 Investment Property Income 55,755 57,335 57,010 55,755 34,283 Other Operating Income 101,683 93,019 141,443 192,585 213,549
Total Revenue 1,151,138 1,066,514 1,971,856 2,375,479 2,840,223
EXPENSES Rooms 69,345 91,187 131,952 151,636 191,799 Food Cost 185,251 157,048 298,799 330,682 395,510 Beverage Cost 22,485 29,106 47,084 41,213 46,248 Food & Beverage Others 185,919 213,196 267,030 299,127 343,149 Telephone 2,632 3,661 4,001 4,042 3,764 Investment Property Income 346 275 138 316 179 Others 31,615 36,722 49,650 93,675 100,737 Total Cost of Sales 497,595 531,195 798,654 920,690 1,081,384
Gross Operating Income 653,543 535,319 1,173,202 1,454,790 1,758,839
Expenses Administration & General 118,465 136,487 163,400 188,317 185,208 Advertising & Sales 38,892 47,119 63,154 60,110 66,185 Heat, Light & Power 111,071 81,226 126,957 141,136 173,232 Repairs & Maintenance 61,699 70,568 78,048 90,976 98,441 Management Fees 36,587 56,413 106,687 130,102 160,689 Marketing Fee - 3,777 8,223 10,630 13,609 Branding Expenses - 11,996 - - -
Total Deductions 366,713 407,586 546,469 621,272 697,364
Gross Operating Profit 286,829 127,733 626,736 833,517 1,061,475 Other Income 85,360 214,700 19,349 25,063 77,067 Assets Write-off - (23,794) (11,840) (18,151) Change in fair value of investment properties 9,261 - 229,676 99,848 288,710 381,451 318,639 863,921 940,277 1,427,252
Finance Expenses 17,418 11,034 99 23 96
Insurance & Rates 23,579 25,225 26,526 28,998 31,333 Depreciation & Amortisation 166,952 154,741 151,710 168,272 184,610 207,949 191,000 178,335 197,292 216,039 Net Profit BeforeT axation 173,502 127,638 685,583 742,984 1,211,212
148 149 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Glossary of financial terms
Accounting policies Corporate Governance Fair value The specific principles, bases, conventions, The process by which corporate entities are Fair value is the amount for which an asset rules and practices adopted by an enterprise in governed. It is concerned with the way in which could be exchanged between a knowledgeable, preparing and presenting Financial Statements. power is exercised over the management and willing buyer and a knowledgeable willing direction of entity, the supervision of executive seller in an arm’s length transaction. actions and accountability to owners and Accrual basis others. Recognising the effects of transactions and Impairment other events when they occur without waiting This occurs when recoverable amount of an for receipt or payment of cash or its equivalent. Debt/Equity ratio asset is less than its carrying amount. Debt as a percentage of shareholders’ funds.
Amortisation Intangible Asset The systematic allocation of the depreciable Deferred tax An intangible asset is an identifiable non- amount of an intangible asset over its useful life. Sum set aside in the financial statements for monetary asset without physical substance. taxation that may become payable in a financial year other than the current financial year. Capital employed Interest cover Share holders’ funds plus debt. Profit before interest and tax over finance Dividend Yield expenses. Dividend earned per share as a percentage of Cash Equivalents its market value. Short term highly liquid investments that are Key Management Personnel readily convertible to known amounts of cash Key management personnel are those and which are subject to an insignificant risk of Earnings per share (EPS) persons having authority and responsibility changes in value. Profit attributable to equity holders divided for planning, directing and controlling the by the weighted average number of ordinary activities of the entity,directly or indirectly, shares in issue during the period. including any Director (whether Executive or Contingencies otherwise) of that entity. A condition or situation existing at Balance Sheet date where the outcome will be EBIT confirmed only by occurrence or non- Earnings before interest and tax (includes other Materiality occurrence of one or more future events. operating income). The relative significance of a transaction or an event, the omission or misstatement of which could influence the economic decisions of users Current ratio EBITDA of Financial Statements. Current assets divided by current liabilities. Earnings before interest, tax, depreciation and amortisation Capital reserves Market value per share Reserves identified for specific purposes and The price at which an Ordinary share can be considered not available for distribution. Effective Tax Rate purchased in the stock market. Provision for taxation for the year divided by the profit before tax. Capital expenditure Market capitalisation The total additions to property, plant and Number of shares in issue at the end of period equipment. EPS growth multiplied by the market price at end of period. Percentage increase in the EPS over the previous year.
150 151 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Net assets Return on Average Assets (ROA) Total assets minus current liabilities minus long Profit after tax divided by the average assets. term liabilities. Shareholders’ funds Stated capital plus capital and revenue reserves. Net assets per share Shareholders’ funds divided by the weighted average number of Ordinary shares in shares. Total debt Long term loans plus short term loans and overdrafts. Operational Risk This refers to the risk of loss resulting from inadequate or failed internal processes, people Total value added and systems or from external events. The difference between net revenue (including other income) and expenses, cost of materials & services purchased from external sources. Pre-Tax Return on capital employed Profit before interest and tax as a percentage of Dividend payout ratio average capital employed at year end. The percentage of earnings paid to a shareholder as dividends.
Price earnings ratio Market price per share over Earnings per Share. Return on Assets Profit after tax as a percentage of average total assets. Prudence Inclusion of a degree of caution in the exercise of judgement needed in making the estimates required under conditions of uncertainty, such that assets or income are not overstated and liabilities or expenses are not understated.
Related Parties Parties where one party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions, directly or indirectly.
Return on equity Profit attributable to shareholders as a percentage of average shareholders’ funds.
150 151 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Notice of Meeting
NOTICE IS HEREBY GIVEN that the Thirty Second Annual General Meeting of Trans Asia Hotels PLC will be held at the Auditorium of The Ceylon Chamber of Commerce, No. 50, Nawam Mawatha, Colombo 02 on 27th June 2013 at 3.00 pm for the following purposes:
1. To read the notice convening the meeting.
2. To receive and consider the Annual Report and Audited Financial Statements of the Company for the year ended 31st March 2013 together with the Report of the Auditors thereon.
3. To re-elect as a Director Mr. N. L. Gooneratne who retires in terms of Section 210 of the Companies Act No. 7 of 2007, for which notice of the following ordinary resolution has been given by a member:
THAT the age limit stipulated in Section 210 of the Companies Act No. 7 of 2007 shall not apply to Mr. N. L. Gooneratne, who is 70 years and that he be re-elected a Director of the Company.”
4. To re-elect as a Director Mr. E. H. Wijenaike who retires in terms of Article 90 of the Articles of Association of the Company.
5. To re-elect as a Director Mr. C. J. L. Pinto who retires by rotation in terms of Article 83 of the Articles of Association of the Company.
6. To re-appoint the retiring Auditors, KPMG (formerly known as KPMG Ford Rhodes, Thornton & Company), Chartered Accountants, and to authorise the Directors to determine their remuneration.
7. To consider any other business of which due notice has been given in terms of the relevent laws and regulations.
BY ORDER OF THE BOARD
KEELLS CONSULTANTS (PRIVATE) LIMITED SECRETARIES
Colombo, 5th June 2013
Note: (i) A member entitled to attend and vote at the Meeting is entitled to appoint a Proxy to attend and vote instead of him/her. A Form of Proxy accompanies this Notice. (ii) A Proxy need not be a member of the Company. A Proxy (who is not a member) may vote on a show of hands. (iii) To be valid the completed Form of Proxy should be deposited at the Registered office of the Company not later than 48 hours before the time appointed for the holding of the Meeting.
152 153 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Notes
152 153 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Notes
154 155 TRANS ASIA HOTELS PLC | Annual Report 2012/13
Form of Proxy
I/We......
of......
being a *member/members of Trans Asia Hotels PLC hereby appoint
...... of
...... or failing him/her
Mr. S. C. Ratnayake of Colombo, failing whom Mr. A. D. Gunewardene of Colombo, failing whom Mr. J. R. F. Peiris of Colombo, failing whom Mr. N. L. Gooneratne of Colombo, failing whom Mr. C. J. L. Pinto of Colombo, falling whom Mr. E. H. Wijenaike of Colombo
as *my/our proxy to represent *me/us and to vote on *my/our behalf at the Thirty Second Annual General Meeting of the Company, to be held on 27th June 2013 and at any adjournment thereof, and at any poll which may be taken in consequence thereof. *I/We the undersigned hereby authorize *my/our proxy to vote on *my/our behalf in accordance with the preferences indicated below:
FOR AGAINST 1. To re – elect as a Director Mr. N. L. Gooneratne who retires in terms of Section 210 of the Companies Act No. 7 of 2007. . 2. To re-elect as a Director Mr. E. H. Wijenaike who retires in terms of Article 90 of the Articles of Association of the Company.
3. To re-elect as a Director Mr. C. J. L. Pinto who retires in terms of Article 83 of the Articles of Association of the Company.
4. To re-appoint the retiring Auditors, KPMG (formerly known as KPMG Ford, Rhodes, Thornton & Co.,), Chartered Accountants, and to Authorise the Directors to determine their remuneration.
Signed this ………… day of …………………… Two Thousand and Thirteen
…………………………. Signature of Shareholder Notes: (a) *Strike out whichever is not desired. (b) Instructions to completion of the Form of Proxy are set out on the reverse hereof. (c) A proxy need not be a Member of the Company. (d) Please indicate an “X” in the cage provided how your Proxy should vote on each Resolution. If no indication is given, or if there is, in the view of the Proxy holder, any doubt (by reason of the manner in which the instructions contained in the Proxy have been completed) as to the way in which the Proxy holder should vote, the Proxy holder in his/her discretion may vote as he/she thinks fit.
154 155 TRANS ASIA HOTELS PLC | Annual Report 2012/13
INSTRUCTIONS FOR COMPLETION
1. Kindly complete the Form of Proxy by filling in legibly your full name and address and that of the Proxy holder. Please sign in the space provided and fill in the date of signature.
2. The instrument appointing a Proxy shall, in the case of an individual, be signed by the appointer or by his Attorney and in the case of a Corporation must be executed under the Common Seal or in such other manner prescribed by its Articles of Association or other Constitutional documents.
3. If the Proxy Form is signed by an Attorney the relevant Power of Attorney or a notarially certified copy thereof, should also accompany the completed Form of Proxy if it has not already been registered with the Company.
4. To be valid, the completed Form of Proxy should be deposited at the Registered Office of the Company at No. 115, Sir Chittampalam A Gardiner Mawatha, Colombo 2 not later than 48 hours before the time appointed for the holding of the Meeting.
156 PB TRANS ASIA HOTELS PLC | Annual Report 2012/13
Corporate Information
NAME OF THE COMPANY TRANS ASIA HOTELS PLC
LEGAL FORM A Public Limited Liability Company incorporated in Sri Lanka on 17th July, 1981 and quoted on the Colombo Stock Exchange.
COMPANY REGISTRATION NUMBER PQ 5
REGISTERED OFFICE No.115, Sir Chittampalam A. Gardiner Mawatha, Colombo 2 Tel: 2491000 Fax: 2449184 E-mail: [email protected] Website: http://www.cinnamonhotels.com/cinnamonlakeside.com
BOARD OF DIRECTORS Mr. Susantha Chaminda Ratnayake - Chairman Mr. Ajit Damon Gunewardene Mr. James Ronnie Felitus Peiris Mr. Navindra Lal Gooneratne Mrs. Rohini Letitia Nanayakkara (Resigned with effect from 26/06/2012) Mr. Daya Srikantha John Pelpola (Resigned with effect from 26/06/2012) Mr. Cholmondeley John Lloyd Pinto Mr. Eranjit Harendra Wijenaike
AUDIT COMMITTEE Mr. C. J. L. Pinto (Chairman) Mr. J. R. F. Peiris Mr. E. H. Wijenaike
COMPANY SECRETARIES Keells Consultants (Private) Limited 130 Glennie Street Colombo 02
REGISTRAR Keells Consultants (Private) Limited 130 Glennie Street Colombo 02
AUDITORS KPMG Chartered Accountants 32A, Sir Mohamed Macan Markar Mawatha, Colombo 03
BANKERS Citibank NA Deutsche Bank AG Sampath Bank PLC The Hongkong and Shanghai Banking Corporation Ltd Nations Trust Bank PLC People’s Bank PLC Cinnamon Lakeside Colombo (Owned by Trans Asia Hotels PLC) 115, Sir C. A. Gardiner Mawatha, Colombo 02, Sri Lanka, T: +94 11 2491000 E: [email protected]