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Pegasus Hotels of Ceylon PLC A Carson Cumberbatch Company Annual Report 2018/ 2019
Delight
$W3HJDVXV+RWHOVZHPDNHHYHU\HRUWWR delight your senses from the moment you walk in through our doors. Our hospitality and XQLTXHRHULQJVFRPELQHWRFUHDWHMR\RXV PRPHQWVIRU\RXȂIURPRXUFRPIRUDEOH DFFRPPRGDWLRQUHOD[LQJVXUURXQGLQJV PRXWKZDWHULQJGLVKHVDQGH[FHSWLRQDOVHUYLFH WRWKHSHUIHFWDPELHQFHWKDWFDWHUVWRDQ\ RFFDVLRQ7KHVHVHUYHDVWKHSHUIHFWEDODQFHRI HOHPHQWVWKDWLQGXFHKDSSLQHVVDQGODXJKWHU KHOSLQJ\RXWRFHOHEUDWHHYHQWKHVLPSOHU things in life.
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2 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19
Contents Financial Highlights - Group | 4 Chairman’s Statement | 6 Management Discussion & Analysis | 12 'LUHFWRUV3URȴOHV| 22 Risk Management | 24 Annual Report of the Board of Directors on the $DLUVRIWKH&RPSDQ\ | 29 Related Party Transactions Review Committee Report | 39 Audit Committee Report | 40 Financial Calendar | 44 6WDWHPHQWRI3URȴWRU/RVVDQG2WKHU Comprehensive Income | 48 Statement of Financial Position | 49 Statement of Changes in Equity | 50 Statement of Cash Flow | 51 Notes to the Financial Statements | 52 Five Year Summary | 96 Statement of Value Added | 97 Information to Shareholders and Investors | 98 Notice of Meeting | 100 Note | 101 Form of Proxy | 103
3 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19
Financial Highlights - Group
$OOȴJXUHVLQ6UL/DQNDQ5XSHHVWKRXVDQGV 2019 2018
Revenue 677,550 684,841 *URVV3URȴW 256,399 275,743 3URȴWIURPRSHUDWLRQV 44,058 81,240 /RVV SURȴWEHIRUHWD[DWLRQ 108,942 /RVV SURȴWIRUWKH\HDU 84,328 (DUQLQJV ORVV SHUVKDUH 5V 'LYLGHQGSHUVKDUH 5V Total assets 2,395,526 2,408,791 Shareholders' Equity 1,925,318 2,034,167 1HWDVVHWVSHUVKDUH 5V Financial ratios *URVVSURȴW 38 40 1HW ORVV SURȴW 12 5HWXUQRQHTXLW\ 4 &XUUHQWUDWLR WLPHV 0DUNHWSULFHSHUVKDUH 5V
5V 677 mn 5V 2,395 mn 5V 44 mn Revenue *URXS7RWDO$VVHWV 2SHUDWLQJ3URȴW
4 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19
5 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19
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“We have seen a rise in patrons at Pegasus Reef, which can be predominantly attributed to the improvement of the hotel property and service standards through regular investments”
WKHEDFNGURS2XUPDLQPDUNHWVΖQGLD grew moderately during 2018, whilst &KLQDGHFOLQHGPDUJLQDOO\+RZHYHULW ZDVLQYLJRUDWLQJWRREVHUYHWKHXSWXUQ LQ(XURSHDQDUULYDOVVXEVHTXHQWWRWKH LQGXVWU\DXWKRULWLHVȇWDUJHWHGHRUWVDQG promotional campaigns towards these NH\PDUNHWV$OOLQDOOLWLVFRPPHQGDEOH that for the calendar year 2018, RɝFLDOWRXULVWUHFHLSWVWRRXUFRXQWU\ LQFUHDVHGE\WR86'PQ More importantly, the tourism industry DLGHGDLQFUHDVHLQFRXQWU\ȇVGLUHFW and indirect employment, trickling its EHQHȴWVGRZQWRWKHHQWLUHHFRQRPLF DFWLYLWLHVRIWKHFRXQWU\
+RZHYHULQHYLWDEO\WKHVHSRVLWLYH demand factors led to the stimulation RIIDUJUHDWHUFRPSHWLWLRQΖWUXVWWKDW at present, the room count in the Dear Shareholder, /DQNDQKRVSLWDOLW\GUHDPDWWKLVSRLQW graded accommodation continues A warm welcome to the 53rd Annual EXWZRXOGGHIHUWRUHYLHZWKHSUHYLRXV WRULVHDOEHLWDWDVORZHUSDFHLQ General Meeting of Pegasus Reef Hotels \HDUWKDWXQIROGHG comparison to the unregulated and RI&H\ORQ3/&ΖWLVP\SOHDVXUHDQG XQUHJLVWHUHGJXHVWKRXVHVEXQJDORZV SULYLOHJHWRSUHVHQWWR\RXRQEHKDOI /RRNLQJEDFNDWWKHFRQFOXGHGȴQDQFLDO XQFODVVLȴHGKRWHOVDQGUHQWHGKRPHV of the Board of Directors, the annual \HDUΖEHOLHYHWKHFRPSHWLWLYHQHVVDQG DQGDSDUWPHQWV0RUHVSHFLȴFDOO\ UHSRUWDQGȴQDQFLDOVWDWHPHQWVIRUWKH the price war in the hospitality industry even with a steady average tourist \HDUHQGHGVW0DUFK $VΖUHȵHFW will continue to intensify regardless of VWD\RIDSSUR[LPDWHO\QLJKWVEHLQJ RQWKHSDVWȴQDQFLDO\HDUΖDPSURXGRI our country’s heightened prominence maintained over the recent years, what we have achieved considering the and attractiveness as a tourist hotspot LWVSRVLWLYHLPSDFWKDVUHJUHWWDEO\ challenging hotel industry dynamics in LQWKHΖQGLDQ2FHDQ7RXULVWDUULYDOV leaked out to these unregulated WKHFRXQWU\ PDGHSURJUHVVDWDUHDVRQDEOHSDFH DFFRPPRGDWLRQ7KLVFRQFHSWRI RIJURZWK\HWZHVDZXQFHUWDLQW\ LQIRUPDODFFRPPRGDWLRQKDVEHHQ I will not dwell upon the shocking events creeping in towards the second half of swirling high up in terms of popularity, of Easter Sunday, which upended the Sri the year with political dilemmas marring PRVWO\GULYHQE\WKHRQOLQHSODWIRUPV
6 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19
“Growing competition RIOHVVWKDQKRXUV7KLVLVDOVRLQ hotels and emerging standalone halls WKHEDFNGURSRIWKHWUHQGWKDWEXGJHW alike, necessitated an investment into from other hotels and travelers especially, are increasingly PRGHUQLVLQJWKHEDQTXHWKDOOIDFLOLWLHVLQ emerging standalone circumventing the transit hotels due order to ensure that “Pegasus remains halls alike, necessitated to easy expressway access and other WKHIDYRXULWHȋDPRQJRXUJXHVWV7KXVZH transportation facilities to inner KDYHFRPPLWWHGRYHU5V PQWRZDUGV an investment into cities, allowing for relatively shorter WKHUHIXUELVKPHQWRIWKHPDLQEDQTXHW modernising the banquet VWD\VZLWKLQWKHFLW\OLPLWVLIDWDOO KDOO$OVRWKHFORVXUHRIWKH3HJDVXV Nevertheless, we have seen a rise in 5HHIȇVEDQTXHWKDOOIRUPRQWKVRIWKH hall facilities” patrons at Pegasus Reef, which can GLVFXVVHG\HDUGXHWRWKHUHIXUELVKPHQW EHSUHGRPLQDQWO\DWWULEXWHGWRWKH KLJKOLJKWHGDERYHIXUWKHULPSDFWHGWKH DQGSURPRWLRQV7KHUHIRUHΖIHHOLWȇV improvement of the hotel property JURXS0Ζ&(UHYHQXH*RLQJIRUZDUG\RXU WKHRSSRUWXQHWLPHWRLQWURGXFHȴUP and service standards through regular KRWHOZLOOEHXQLTXHO\SRVLWLRQHGWRGHOLYHU regulations to license the informal LQYHVWPHQWV JXHVWQHHGVZLWKDPRGHUQEDQTXHWKDOO VHFWRUZKLFKZRXOGSRVVLEO\XSOLIW an adequately spaced out garden and a overall industry standards whilst 8SRQREVHUYLQJWKHSULFLQJG\QDPLFV UHOD[LQJEHDFKDOOZLWKLQWKHKXVWOHDQG regulating the quality, price and more in the year under review, in spite of EXVWOHRIWKHFLW\ LPSRUWDQWO\WKHJXHVWVDIHW\6XFK WKHVXEVWDQWLDO/.5GHSUHFLDWLRQWKH regulations would further serve to Average Room Rate did not display a Meanwhile, during the concluded year, strengthen the monitoring mechanisms corresponding strong show across the 21 rooms, of the 40 room scenic Giritale of the industry, where I trust that LQGXVWU\7KLVZDVHVVHQWLDOO\GXHWR KRWHOSURSHUW\HPEUDFHGDPRGHUQ LQIRUPDOVHFWRUVKRXOGDOVREHPRQHWDU\ the frequent heavy price undercutting appearance to its rooms opening out to FRQWULEXWRUVWRWKHGHYHORSPHQWRIWKH VWUDWHJLHVXQGHUWDNHQE\RSHUDWRUV WKHEHDXWLIXOODQGVFDSHRIWKH*LULWDOH industry infrastructure in some form, LQRUGHUWREULGJHWKHXQIDLUO\FKHDS 7DQN$VZHKDYHSUHYLRXVO\HPSKDVLVHG ideally through payment of taxes, which UDWHVRHUHGE\WKHVPDOOWRPHGLXP during this exercise, the shutting down would in return advance the growth of VFDOHORGJHVLQWKHFLW\ 7 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 &KDLUPDQȇV6WDWHPHQW “Your hotels continue the recent past for all hotels, which has RI6UL/DQNDQWRXULVPZKLFKFHUWDLQO\ XQDYRLGDEO\GULYHQXSWKHVWDFRVWV calls for the government, and other to operate in rapidly Furthermore, continuous cost increases authorities to more seriously consider challenging industry DQGWKH6UL/DQNDQUXSHHGHSUHFLDWLRQ UHYLWDOLVLQJWKHFRXQWU\ȇVVHFXULW\+HQFH conditions with margin KDYHEHFRPHPDMRUFRQFHUQVLQ the country should invest in safety and VXVWDLQLQJSURȴWDELOLW\(YHULQFUHDVLQJ modern surveillance systems without squeezing arising from construction cost continue to pressurise further hesitation, in the interest of the competition amongst FDVKȵRZVDXJPHQWHGE\GHSUHFLDWLRQ ensuring and safeguarding the utmost DQGUHSDLUDQGPDLQWHQDQFHFKDUJHV security of the people in order to restore the uphill battle towards In addition, supportive infrastructure WKHFRQȴGHQFHLQRXUWUDYHOHUVDQG survival” such as uninterrupted power and water ERXQFHEDFN supply is required in order to eliminate unnecessary operational hindrances and 'LYLGHQGVDQG&$3(; additional costs on top of the already In terms of the dividends declared for KHIW\FRVWEDVH the concluded year, our consistent KDYHEHHQDZDUGHGDFRPSHQVDWLRQ GLYLGHQGSD\RXWDSSURDFKKDVEHHQ RI5VPQLQFRQWUDVWWRRXUFODLP -XVWDVZHHQWHUHGWKHQHZȴQDQFLDO maintained, wherein an interim dividend RI5V PQ7KHUHIRUHRQSUXGHQF\ \HDUΖDPGHHSO\SHUWXUEHGE\WKH RI5VSHUVKDUHZDVGHFODUHGDQG EDVLVZHKDYHSURYLGHGDQLPSDLUPHQW KHDUWOHVVWHUURULVWDWWDFNVIDFHGE\ SDLGΖQVSLWHRIWKHH[WHQVLYHFDSLWDO RI5VPQIRUWKHEDODQFHODQG the country and I wish to express my commitments, your dividend payout extent, where the compensation will extreme sadness and solidarity towards EDVHGRQWKHDGMXVWHGQHWSURȴWRIWKH EHDZDUGHGRQO\XSRQFRPSOHWLRQRI all our men, women and children who Company for the impairment provision WKHODQGFDVHȴOHGLQWKH'LVWULFW&RXUW ZHUHDHFWHG:KLOHWKLVW\SHRIDFWLYLW\ ZDVDW7KLVȵRZRIGLYLGHQGLV RI1HJRPERZKLFKLVFXUUHQWO\DWWKH LVQRWDFFHSWDEOHLQDQ\IRUPWRWKH maintained whilst conducting necessary KHDULQJVWDJH7KHVDLGLPSDLUPHQW HFRQRP\DQGVSHFLȴFDOO\WKHRYHUDOO improvements to the property with DGMXVWPHQWFRPSOHWHO\GLVWRUWVWKH hospitality industry, the tourism market the delivery of consistent quality to the ȴQDQFLDOSHUIRUPDQFHIRUWKHȴQDQFLDO has already shown signs of deterioration JXHVWVLQPLQG$VWKH\HDUVXQIROGZH \HDUHQGHGVW0DUFK +RZHYHU ZLWKVXEVWDQWLDOFDQFHOODWLRQVZKHUH would need to invest in more capital ZHH[SHFWDEHWWHUFRPSHQVDWLRQ the short to medium term outlook SURMHFWVDWERWKKRWHOV0HDQZKLOHWKH DZDUGIRUWKHEDODQFHODQGDFTXLUHG remains uncertain and challenging JURXSȴQDQFHH[SHQVHVDZDQLQFUHDVH VLQFHVXEVWDQWLDOFRPSRQHQWRIWKHVDLG for the graded hotels which have SULPDULO\GXHWRURRPUHIXUELVKPHQWDW EDODQFHODQGZDVQRWHQWLUHO\PDQJURYH DOUHDG\IDFHGPDQ\FKDOOHQJHV7KLVLV *LULWDOH3DUWLFXODUO\WKH*LULWDOH+RWHO ODQG unfortunate at a time when the country KDGWRIDFWRULQFRQVLGHUDEOHGHEW was gradually emerging as a welcoming for its hotel improvements, which will ΖQGXVWU\&KDOOHQJHV tourist destination following decades EHFKDOOHQJLQJWRVHUYLFHJLYHQWKDW It is my view that the hospitality of civil war, with world renowned travel we should always stay low geared to industry requires further groundwork JXLGHERRNSXEOLVKHUVVXFKDVȊ/RQHO\ IDFHSRVVLEOHWXUEXOHQFHVDPLGVWRXU in terms of grooming professional Planet” preeminently recognising Sri LQGXVWU\ȇVJUHDWVHQVLWLYLW\WRJOREDODQG DQGWHFKQLFDOO\VNLOOHGVWDLQRUGHU /DQNDDVWKHEHVWFRXQWU\LQWKHZRUOG local security concerns and economic to deliver the right service and quality WRYLVLWLQ 8 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 )XWXUH/DQGVFDSH across from our valued shareholders, $WWKLVMXQFWXUH\RXUKRWHOVFRQWLQXHWR clients, suppliers, general community operate in rapidly challenging industry DQGDOORXUVWDNHKROGHUV$ELJWKDQN conditions with margin squeezing arising \RXWRDOOP\IHOORZ%RDUGPHPEHUV from the competition amongst the uphill WKHPHPEHUVRIWKH$XGLW&RPPLWWHH EDWWOHWRZDUGVVXUYLYDO$WSUHVHQWLWLV Remuneration Committee, Nomination GLɝFXOWWRFRPPHQWRQZKHQZHFDQ Committee and the Related Party H[SHFWDSRVVLEOHUHERXQGLQWRXULVP Transactions Review Committee for )LUVWO\DVΖHPSKDVLVHGDERYHLQRUGHU WKHLUYDOXDEOHLQVLJKWV)LQDOO\\HW to diminish the mounting concern over PRVWLPSRUWDQWO\ΖDPJUDWLȴHGE\RXU the terrorism and security matters which HPSOR\HHVDWERWKKRWHOVZKRZRUN UHVXOWVLQDQHJDWLYHULSSOHHHFWWRRXU hard day and night to deliver a delightful industry, all the necessary action plans KRWHOH[SHULHQFH QHHGWREHSURPSWO\LPSOHPHQWHGLQ RUGHUWRDVFHUWDLQDVRXQGEXVLQHVV environment for the hospitality market LQWKHFRXQWU\0HDQZKLOHZHDLPWR 6JG LPSURYHWKHȵRZRIUHYHQXHWR\RXU '&5*XQDZDUGHQD KRWHOVE\WDSSLQJLQWRGLHUHQWPDUNHW Chairman VHJPHQWVZLWKQHZDWWUDFWLYHRHULQJV &RORPER We would continue to safeguard 08th May 2019 VKDUHKROGHUYDOXHE\FRQWLQXRXVO\ LPSURYLQJ\RXUEXVLQHVVSURSHUWLHV and facilities into the coming years while ensuring safety, service and other TXDOLW\VWDQGDUGV:HDUHFRPPLWWHG to delighting our guests at all times, RHULQJYDOXHDGGLQJGLHUHQWLDO H[SHULHQFHVLQRXUORQJWHUPMRXUQH\ RIEHFRPLQJVXVWDLQDEOHYDOXHDGGLQJ KRWHOV I wish to thank and appreciate the continued support, loyalty and the FRQȴGHQFHDQGWUXVWZHKDYHUHFHLYHG 9 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 10 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 Management 'LVFXVVLRQ $QDO\VLV 11 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 Management 'LVFXVVLRQ $QDO\VLV “ As an emerging WRXULVPKRWVSRWZH VKRXOGDWWHPSWWR boost our tourism E\SURPLVLQJDQG GHOLYHULQJH[HPSODU\ TXDOLW\DQGVHUYLFH FRQVLVWHQWO\OHDYLQJ WKHWUDYHOHUVZLWK SOHDVDQWH[SHULHQFHV DQGODVWLQJPHPRULHV RIWKHLUVWD\Vȋ Region-wise Tourist Arrivals - +DYLQJFURVVHGPQWRXULVWDUULYDOV 6UL/DQNDDQG$XVWUDOLDKDVDOVR 2017 vs. 2018 LQFDOHQGDU\HDUWKH6UL/DQNDQ IDFLOLWDWHGPRUH$XVWUDOLDQWRXULVWWUDɝF Hospitality industry recorded a fair WRWKHFRXQWU\$VVXFKZLWKQXPHURXV 900,000 performance during the concluded GHVWLQDWLRQVSHFLȴFPDUNHWLQJHRUWV 800,000 year amid concerns of economic we started noticing a rise in high 700,000 VORZGRZQLQPDMRUWRXULVWPDUNHWV spending tourist destinations during the 600,000 VXFKDV&KLQDΖQGLDRXUPDMRUWRXULVW FRQFOXGHGSHULRG:LWKRYHURIWKH 500,000 400,000 PDUNHWFRQWULEXWRUH[KLELWHGDUHODWLYHO\ tourists who visited the country during 300,000 PRGHUDWHJURZWKUDWHRIFRPSDUHG WKHSDVW\HDUVEHLQJOHLVXUHWUDYHOHUV 200,000 WRQHZHPHUJLQJPDUNHWV([SOLFLWO\ ERWKDYHUDJHVWD\DQGDYHUDJHVSHQG 100,000 European and Australasian markets SHUWRXULVWKDYHIROORZHGDVWDEOHWUHQG 0 were at the forefront with promising mainly over the past 05-year period, with GRXEOHGLJLWJURZWKVXSSRUWHGE\ D&$*5RI WDUJHWHGFRXQWU\IRFXVVHGDQGZHE East Asia South Asia EDVHGSURPRWLRQVFRQGXFWHGE\WKH6UL Australasia Other Regions North America Eastern Europe /DQND7RXULVP3URPRWLRQ%XUHDXDV Western Europe per the Tourism Strategic Plan 2017- 2017 2018 ΖQFUHDVHGGLUHFWȵLJKWVEHWZHHQ Source: Based on the data extracted from Sri Lanka Tourism Development Authority and Central Bank of Sri Lanka 12 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 7RXULVW$UULYDOVE\&RXQWU\ UHGXFHGWRE\)XUWKHUPRUH 2017 2018 YoY change % of Total % of Total GXULQJWKHSHULRGIURP1RYHPEHU Arrivals in Arrivals in 'HFHPEHU6UL/DQND7RXULVP 2017 2018 'HYHORSPHQW$XWKRULW\KDVJUDQWHGȴQDO approval for 18,760 rooms in totality, India 384,628 424,887 out of which 6,815 rooms are still under China 268,952 265,965 construction, which will further stretch 8. 201,879 254,176 the competition in the industry in the Germany 130,227 156,888 Australia 81,281 110,928 XSFRPLQJGD\V France 97,282 106,449 Maldives 79,371 76,108 86$ 57,479 75,308 Graded and Non-Graded Room supply Russia 59,191 64,497 vs. Graded room Occupancy Netherlands 51,148 57,160 Canada 46,896 52,681 Japan 44,988 49,450 5 year CAGR - 5% Source: Based on the data extracted from Sri Lanka Tourism Development Authority and 25,000 75 Central Bank of Sri Lanka 20,000 5 year CAGR - 5% 74 Average Stay vs. Tourist Receips 15,000 73 12 200 10,000 72 10 5000 71 8 150 6 0 70 2014 2015 2016 2017 2018 4 100 Graded room count Supplementary room count 2 Occupancy of Graded rooms 0 50 Source: Based on the data extracted from Sri 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Lanka Tourism Development Authority Average duration in nights Receipt per Tourist per day USD Source: Based on the data extracted from Sri Lanka Tourism Development Authority As an emerging tourism hotspot, we and Central Bank of Sri Lanka VKRXOGDWWHPSWWRERRVWRXUWRXULVP E\SURPLVLQJDQGGHOLYHULQJH[HPSODU\ 'UDZLQJIURPSXEOLVKHGVWDWLVWLFVZLWKLQ RI'HFHPEHUZKLFKLVWKHKLJKHVW quality and service consistently, leaving WKHSDVWȴYH\HDUVWKHFRXQWU\ȇVJUDGHG compared to any other district, as per the travelers with pleasant experiences accommodation and supplementary WKHGDWDIURPWKH6UL/DQND7RXULVP and lasting memories of their stays, DFFRPPRGDWLRQKDYHERWKH[SDQGHG 'HYHORSPHQW$XWKRULW\6XFKDQLQȵX[ WKXVHQVXULQJUHSHDWHGYLVLWV7UXHWKDW ZLWKD&$*5RIPXOWLSO\LQJWKH of new rooms in turn has negated peer-to-peer accommodation networks FRPSHWLWLRQLQWKHKRWHOPDUNHWVSDFH occupancy growth across graded KDYHIDFLOLWDWHGPRUHWRXULVWWUDɝFWR 7KH&RORPERGLVWULFWVKRZFDVHGDURRP rooms over the recent years, where the country, yet initiatives for formalising inventory of more than 7,000 rooms as DQQXDORFFXSDQF\RIKDV WKHLQIRUPDOVHFWRULVQHFHVVDU\(YHU\ 13 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 Management 'LVFXVVLRQ $QDO\VLV Ȋ:LWKWKH&RORPERVN\OLQHEHFRPLQJPRUH G\QDPLFZLWKPRGHUQQHZKRWHOVJDLQLQJ IRRWKROGDVDJUDGHGKRWHOLWLVHVVHQWLDOIRU \RXU&RPSDQ\WRUHVHUYHDFHUWDLQOHYHORIIXQGV IRUFDSLWDOFRPPLWPHQWVȋ SRVVLEOHWD[HYDVLRQIURPDQ\W\SHRI RIERWKIRUPDODQGLQIRUPDOKRVSLWDOLW\ LQIRUPDOHVWDEOLVKPHQWVDQGHQDEOH DFFRPPRGDWLRQDOVRQHHGVWREH VXFKFROOHFWHGIXQGVWREHPHDQLQJIXOO\ addressed systematically and carefully utilised for the industry’s infrastructure with minimal hindrance to the guests, GHYHORSPHQWLQWKHIXWXUH VLQFHVDIHW\KDVEHFRPHDPXVWZLQ EDWWOHDFURVVWKHLQGXVWU\LQH[SHGLWLQJ 2QDQH[WUHPHO\VDGQRWHLWZDVWUDJLF LWVIRUZDUGPRPHQW:KLOVWDSHDFHIXO to witness a series of devastating travelling environment should co-exist terrorist attacks in the country, at the WRHQMR\WKHVSOHQGRXUDQGH[SHULHQFHV RQVHWRIWKHQHZȴQDQFLDO\HDUDHFWLQJ WKHFRXQWU\DRUGVWKHTXDOLW\DQG WKHORFDODQGWRXULVWFRPPXQLWLHVDOLNH service of overall tourism related 7KLVLQFLGHQWEURXJKWDERXWXQH[SHFWHG infrastructure in the country and other LQVWDELOLW\WRWKHHFRQRP\DQGWRZDUGV support services should simultaneously accommodation in the industry should the country’s hospitality industry, which improve in order to notch up our EHIDLUO\H[SRVHGWRWKHVFUXWLQ\RI was excitedly gaining gradual popularity RHULQJVWREHLQOLQHZLWKRWKHUUHJLRQDO the tax and regulatory authorities, in DFURVVWKHZRUOG$VDUHVXOWDODUJH SHHUV RUGHUWRFUHDWHDOHYHOSOD\LQJȴHOGIRU QXPEHURIKRWHOERRNLQJFDQFHOODWLRQV FRPSHWLWLRQ7KLVLVVSHFLȴFDOO\LQWKH and travel advisories issued against 2SHUDWLRQDODQG)LQDQFLDO3URJUHVV view that genuine tax payers who greatly 6UL/DQNDE\FHUWDLQFRXQWULHVKDYH 3HJDVXV5HHI+RWHO FRQWULEXWHWRZDUGVERRVWLQJWRXULVP DOUHDG\OHGWRDFRQVLGHUDEOHGRZQWXUQ :LWKWKH&RORPERVN\OLQHEHFRPLQJ through high quality investments are LQKRWHORFFXSDQFLHV7KLVZRXOG more dynamic with modern new ultimately left at a disadvantage over the likely continue into the upcoming hotels gaining foothold, as a graded more informal stays who escape the tax PRQWKVRIWKHRQJRLQJȴQDQFLDO\HDU hotel, it is essential for your Company QHW(YHQLQWKH0Ζ&(FDWHJRU\3HJDVXV In this case, Government’s prompt to reserve a certain level of funds for Reef as a genuine tax registered entity action within a short span is required FDSLWDOFRPPLWPHQWVRQDUHJXODUEDVLV ȴQGVLWVHOILQDGHVSDLULQJVLWXDWLRQ to extend recovery support to the in order to enhance the overall guest when faced with the challenge of the WUDYHODQGWRXULVPVHFWRU+RZHYHUD experience, service standards, and VLJQLȴFDQWO\ORZHUUDWHVRHUHGE\VRPH country’s safety and security should RSHUDWLRQDOȵH[LELOLW\+HQFHLQWKH RIWKHVWDQGDORQHEDQTXHWRSHUDWRUV EHRIWKHXWPRVWSULRULW\DQGQHHGV recent years, from FY14 - FY19, the hotel Therefore, the government together WREHSUHVHUYHGDWDQ\FRVW6HFXULW\ KDVVSHQWRYHU5VPQDVFDSLWDO with industry authorities should implement measures to eliminate 14 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 LQYHVWPHQWVIXQGHGYLDRUJDQLFFDVKȵRZVRIWKH&RPSDQ\6XFKORQJWHUPVSHQGLQJ Ȋ7KHJURXSȇVVWUDWHJ\ ZDVDOORFDWHGIRUWKHGHYHORSPHQWRIWKHSURSHUW\ZKLOVWPDLQWDLQLQJVWDEOHGLYLGHQGV DWDUHDVRQDEOHSD\RXWDQGLPSRUWDQWO\PDLQWDLQLQJD]HURJHDULQJOHYHO7KLVVWUDWHJ\ RIUHPDLQLQJORZ VKRXOGIDFLOLWDWHȵH[LELOLW\DPLGFKDOOHQJLQJRSHUDWLRQDOHQYLURQPHQWVZKLOVWEHLQJ JHDUHGE\UHWDLQLQJ SURȴWDEOHLQWKHVKRUWWHUPDQGHQKDQFLQJWKHVKDUHKROGHUYDOXHLQWKHORQJWHUP)RU WKH\HDUXQGHUFRQVLGHUDWLRQGLYLGHQGSD\RXWEDVHGRQWKHDGMXVWHGQHWSURȴWIRU FDVKYLDIXQG DQ\QRQFDVKLPSDLUPHQWFKDUJHVVWRRGDWDUHDVRQDEOH placements for future 3HJDVXV5HHI+RWHO'LYLGHQG3D\RXW &DSLWDO([SHQGLWXUH H[SDQVLRQSODQV Financial Year 1HW3URȴW 'LYLGHQG3D\RXW Capital UHPDLQVH[WUHPHO\ $GMXVWHG ([SHQGLWXUH YDOLGFRQVLGHULQJ 5VȆ 5VȆ the current onerous FY14 70,468 60,092 FY15 98,732 24,717 LQGXVWU\FRQGLWLRQVȋ FY16 110,509 66,329 FY17 31,147 258,017 FY18 80,864 45,837 $PLGWKHFKDOOHQJHVDQGFRPSHWLWLYHRSHUDWLRQDOG\QDPLFVGLVFXVVHGDERYHIRU DVGLVFXVVHGEHORZGXULQJWKHȴQDO the twelve months ended 31st March 2019, Pegasus Reef managed to secure PRQWKVRIWKHȴQDQFLDO\HDUDHFWHGWKH RFFXSDQF\VDWLVIDFWRULO\XSIURPWKHREVHUYHGLQWKHSUHFHGLQJ\HDU UHYHQXHȵRZIURPWKH0Ζ&(EXVLQHVVWR SUHGRPLQDQWO\PDUNHGE\LQFUHDVHGYLVLWRUQXPEHUVIURPWKHWRXURSHUDWRUVDQG WKHKRWHO WKHEORVVRPLQJRQOLQHVHJPHQW7KLVZDVPDGHSRVVLEOHWKURXJKDFWLYHPDUNHWLQJ With the recent growth in MICE HRUWVERWKORFDODQGRYHUVHDV2SWLPLVDWLRQRIWKHRQOLQHEXVLQHVVVHJPHQWHQDEOHG EXVLQHVVDQGLQFUHDVHGJODPRXUDQG PRUHUHYHQXHWRWKHKRWHOZKLFKKDVEHHQRQHRIRXUWRSSULRULW\DUHDVRYHUWKH VRSKLVWLFDWLRQEHLQJVRXJKWDIWHUWKH SDVWIHZ\HDUV3ULPDULO\VXSSRUWHGE\VXEVWDQWLDOFXUUHQF\GHSUHFLDWLRQWKHKRWHOȇV MICE market has fast-tracked in terms $YHUDJH5RRP5DWHVDZDQLPSURYHPHQWRI 15 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 Management 'LVFXVVLRQ $QDO\VLV Ȋ:HDUHQRZSUHSDULQJ WRZHOFRPHRXU enthusiastic guests, ZKRVHHNRXWWKH QDWXUHDQGWUDQTXLOLW\ RYHUORRNLQJWKHVFHQLF *LULWDOH7DQNȋ DIRUHPHQWLRQHGVWDQGDORQHEDQTXHW RSHUDWRUVVHHPWREHLQFUHDVLQJO\ ZDQWLQJDQLEEOHRIPDUNHWVKDUH ΖQWKLVPDUNHWEDFNGURSZHKDYH recognised the importance of enhancing our MICE facilities to strengthen our RHULQJOHYHUDJLQJRQ3HJDVXV5HHIȇV VWURQJEUDQGQDPHLQWKHEDQTXHW PDUNHW+HQFHZLWKWKHODSVHRIȴYH WRPDLQWDLQTXDOLW\VWDQGDUGVE\ LVDPDQJURYHODQGDGMRLQLQJWKH 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KDUERXUSURMHFWDQGWKHUHIRUHFDOOHGIRU RQDVWDQGDORQHEDVLVIRUWKH\HDU the total depreciation expense going a claim of compensation in response to LQFUHDVHGE\ 17 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 Management 'LVFXVVLRQ $QDO\VLV for impairment provision, the hotel’s QHWSURȴWVWDQGVDW5VPQZKLFK LVD Giritale Hotel As previously mentioned, with the URRPUHIXUELVKPHQWDW*LULWDOH Hotel, which was carried out for over 6 months during the year under review, WKHVXEVLGLDU\ȇVȴQDQFLDOSHUIRUPDQFH for the year was negatively impacted due to the necessitated closure of a total of 32 rooms to facilitate the room UHIXUELVKPHQWZLWKRXWGLVWXUELQJ WKHJXHVWV:HDUHQRZSUHSDULQJWR welcome our enthusiastic guests, who seek out the nature and tranquility RYHUORRNLQJWKHVFHQLF*LULWDOH7DQN *URXS3HUIRUPDQFH due to increased costs as discussed )RUWKHȴQDQFLDO\HDUHQGHGVW0DUFK DERYH*URXSRSHUDWLQJSURȴWVWRRGDW Going forward the hotel plans to model 2019, consolidated group revenue was 5VPQZKLFKLVD 18 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 (%Ζ7YV(%Ζ7'$ hospitality industry through thoughtfully drafted regulations remain important to Group &RPSDQ\ HQVXUHDKHLJKWHQHGTXDOLW\RHULQJIRU 5V (%Ζ7 Depreciation (%Ζ7'$ (%Ζ7 Depreciation (%Ζ7'$ RXUYLVLWRUV FY2019 44,058 62,826 106,885 70,474 58,118 128,592 FY2018 81,240 64,085 145,325 75,414 59,238 134,652 :KLOHH[SHFWLQJDJUDGXDOUHERXQG FY2017 16,722 45,318 62,040 6,494 41,233 47,727 in the present strenuous industry FY2016 109,177 43,450 152,627 94,917 39,179 134,096 conditions, with a long-term focus our FY2015 92,365 39,415 131,780 88,900 35,642 124,542 hotels would continue to grow, vigilantly Finance cost of the group increased We foresee that the upcoming months targeting emerging clientele segments IURP5VPQWR5VPQDJDLQVW ZRXOGEHFKDOOHQJLQJIRURXUKRWHOV and their needs, strengthening our WKHEDFNGURSRIWKHIDFLOLWDWLRQRI ZLWKWKHGLVWXUEHGPDUNHWFRQGLWLRQV RQOLQHEXVLQHVVZKLOHRUGHUO\LPSURYLQJ LQFUHDVHGERUURZLQJVIRUWKHURRP 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IXQGDPHQWDOVQHHGWREHH[DPLQHG WHUPGHEWRI5VPQDQGDEDQN and further strengthened through RYHUGUDIWRI5V PQDVRIVW0DUFK opening up of new tourism avenues and JLYHQWKHLQDGHTXDF\RIFDVKȵRZ RHULQJVLQWKHFRXQWU\6WUHQJWKHQLQJ generation at Giritale Hotel to fund such the transport and related infrastructure FDSLWDOSURMHFWV systems and verifying the overall service DQGTXDOLW\VWDQGDUGVRIWKH6UL/DQNDQ 19 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 20 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 21 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 'LUHFWRUV3URȴOHV 05'&5*81$:$5'(1$ 0$+(1'5$'$<$1$1'$ 68-(1'5$0$7+(5 Chandima Gunawardena serves as Mahendra Dayananda is an Independent 6XMHQGUD5DQMDQDQ0DWKHULVFXUUHQWO\ a Non-Independent, Non-Executive Non-Executive Director of Pegasus Co-Head of Investment Banking at Director of most of the Carsons Group +RWHOVRI&H\ORQ3/&%XNLW'DUDK3/& $VLD6HFXULWLHV$GYLVRUV3YW/WG+H &RPSDQLHVLQ6UL/DQNDDQGRYHUVHDV DQG1HVWOH/DQND3/&DQGZDVDIRUPHU has had over 15 years of International +HLVDOVRD'LUHFWRURI%XNLW'DUDK3/& Non - Executive Director of Delmege Investment Banking and Corporate /WGDQG&KDLUPDQRI/HZLV%URZQ Finance experience working with Since assuming Non- Executive status &RPSDQ\/WG$QH[SHUWRQWKH7HD +RXOLKDQ/RNH\+RZDUG =XNLQ 86 in the Group, he serves as an advisor Industry and economic issues, he was -RKQ.HHOOV+ROGLQJV3/& 6UL/DQND to the Group’s Strategic Planning and until recently the Chairman of the Sri <63$GYLVRUV 6UL/DQND DQG'HORLWWH 0DQDJHPHQWIRUXPVLQ6UL/DQNDDQG /DQND%XVLQHVV'HYHORSPHQW&HQWUH 7RXFKH&RUSRUDWH)LQDQFH 6LQJDSRUH serves on Board Committees, including the Audit Committees of the Group Former Chairman of the Ceylon He has successfully managed and lead LQ6UL/DQNDDQGRYHUVHDVFRYHULQJDOO &KDPEHURI&RPPHUFHKHFKDLUHGWKH VHYHUDOELOOLRQGROODUVRI0HUJHUV RSHUDWLQJVHFWRUVRIWKH*URXS Monetary Policy Consultative Committee Acquisitions, Fund Raising, Restructuring &HQWUDO%DQNRI6UL/DQNDDQG and Strategic Advisory transactions 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industry, hotel rates targeting foreign tourists, are TXRWHGLQ86'ROODUWHUPV and contracted in advance ZLWKWRXURSHUDWRUV7KLV FRQVWLWXWHVDVLJQLȴFDQW YROXPHRIEXVLQHVVWRWKH *URXS Interest Interest rate risk is the risk /RZ $VDWWKHUHSRUWLQJGDWHȴQDQFLDODVVHWVOLDELOLWLHVWKDWZHUH Rate arising due to the volatility H[SRVHGWRYDULDEOHUDWHVRILQWHUHVWDUHQRWVLJQLȴFDQWKHQFH Risk of the interest rates in the the Group exposure to interest rate risk is not material as at the PDUNHWVDHFWLQJWKHIXWXUH UHSRUWLQJGDWH FDVKȵRZV Systems The risk of direct or indirect /RZ f Maintains detailed procedure manuals and provides training and losses due to inadequate or DQGJXLGHOLQHVIRUQHZUHFUXLWV Process failed internal processes and f The Group Internal Audit carries out regular reviews on internal risks V\VWHPV control systems and processes and recommends process LPSURYHPHQWVLIVKRUWFRPLQJVDUHQRWHG Human Attracting, developing and /RZ 7KHIROORZLQJLQLWLDWLYHVKDYHEHHQLPSOHPHQWHGE\WKH*URXS Resource retaining talented employees f Ensure recruitments are carried out to hire employees with Risk are essential to deliver the UHTXLUHGTXDOLȴFDWLRQVNQRZOHGJHDQGH[SHULHQFH *URXSȇVREMHFWLYHV)DLOXUHWR determine the appropriate f $YDLODELOLW\RIGHWDLOHGMREGHVFULSWLRQVDQGUROHSURȴOHVIRUHDFK mix of skills required to MRE implement Group strategies f HR policies are focused on encouraging continuous training and and failure to retain or development and ensuring appropriate compensation as per GHYHORSWKHULJKWQXPEHURI PDUNHWUDWHVWRUHWDLQDQGGHYHORSHPSOR\HHV DSSURSULDWHO\TXDOLȴHGVWD FRXOGDHFWWKHDFKLHYHPHQW RIWKH*URXSȇVREMHFWLYHV 27 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 5LVN0DQDJHPHQW 5LVN Impact 5LVNUDWLQJ 5LVNUHVSRQVH VWUDWHJLHV /HJDO Failure to comply with /RZ The management together with the Carsons Group legal division Regulatory the regulatory and legal proactively identify and set up appropriate systems and processes Compliance IUDPHZRUNDSSOLFDEOHWRWKH for legal regulatory compliance with respect to the Group’s Risk *URXS RSHUDWLRQV f Arrange training programmes and circulate updates for key HPSOR\HHVRQQHZUHYLVHGODZVDQGUHJXODWLRQVRQDQHHG EDVLV f Provide comments on draft laws to government and regulatory DXWKRULWLHV f 2EWDLQFRPPHQWVDQGLQWHUSUHWDWLRQVIURPH[WHUQDOOHJDO FRQVXOWDQWVRQDUHDVWKDWUHTXLUHFODULW\ f 2EWDLQFRPSOLDQFHFHUWLȴFDWHVIURPPDQDJHPHQWRQDTXDUWHUO\ EDVLVRQFRPSOLDQFHZLWKUHOHYDQWODZVDQGUHJXODWLRQV 5LVNVDULVLQJIURPXQIRUHVHHQHYHQWVVXFKDVQDWXUDOGLVDVWHUVULRWVDFWRIWHUURULVPDQGFLYLOFRPPRWLRQVDUHFRYHUHGE\REWDLQLQJ DSSURSULDWHLQVXUDQFHFRYHUV 28 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 $QQXDO5HSRUWRIWKH%RDUGRI'LUHFWRUVRQWKH $DLUVRIWKH&RPSDQ\ The Board of Directors of Pegasus 5(9Ζ(:2)23(5$7Ζ216$1' and the Group for the year ended 31st +RWHOVRI&H\ORQ3/&KDYHSOHDVXUH )8785('(9(/230(176 March 2019 are set out on pages 48 in presenting to the shareholders The Chairman’s Statement and the WR 7KHVHȴQDQFLDOVWDWHPHQWVGR their Report together with the Audited Management Discussion & Analysis comply with the requirements of the Financial Statements for the year ended provide an overall assessment of &RPSDQLHV$FW1RRI VW0DUFK WKHEXVLQHVVSHUIRUPDQFHRIWKH Company and the Group and its future 5HYHQXH The details set out herein provide the GHYHORSPHQWV The Company and the Group generated SHUWLQHQWLQIRUPDWLRQUHTXLUHGE\WKH UHYHQXHRI5VPQDQG &RPSDQLHV$FW1RRI/LVWLQJ These reports together with the audited 5VPQ 5VPQDQG 5XOHVRIWKH&RORPER6WRFN([FKDQJH FRQVROLGDWHGȴQDQFLDOVWDWHPHQWVUHȵHFW 5VPQ $GHWDLOHGDQDO\VLVRIWKH DQGDUHJXLGHGE\UHFRPPHQGHGEHVW WKHVWDWHRIDDLUVRIWKH&RPSDQ\DQG revenue for the period is given in $FFRXQWLQJ3UDFWLFHV WKH*URXS QRWHWRWKHȴQDQFLDOVWDWHPHQWV 7KH$QQXDO5HSRUWZDVDSSURYHGE\WKH )Ζ1$1&Ζ$/67$7(0(176 )LQDQFLDOUHVXOWVDQG appropriations %RDUGRI'LUHFWRUVRQWK0D\ 7KHFRQVROLGDWHGȴQDQFLDOVWDWHPHQWV which comprise of the Statement of $QDEULGJHPHQWRIWKHȴQDQFLDO *(1(5$/ 3URȴWRU/RVVDQG2WKHU&RPSUHKHQVLYH performance of the Company and the 3HJDVXV+RWHOVRI&H\ORQ3/& WKH Income, Statement of Financial Position, *URXSLVSUHVHQWHGLQWKHWDEOHEHORZ Ȋ&RPSDQ\ȋ LVDSXEOLFTXRWHG&RPSDQ\ Statement of Cash Flow, Statement of ZLWKOLPLWHGOLDELOLW\LQFRUSRUDWHGLQ6UL Changes in Equity and Notes to the /DQNDLQ Financial Statements of the Company 35Ζ1&Ζ3$/$&7Ζ9Ζ7Ζ(62)7+( &203$1<$1'Ζ7668%6Ζ'Ζ$5< ΖQ5XSHHVWKRXVDQGV Group &RPSDQ\ The principal activities of the Company )RUWKH\HDUHQGHGVW DQGLWVVXEVLGLDU\DUHWRHQJDJHLQ March 2019 2018 2019 2018 KRWHOLHULQJDQGOHLVXUHUHODWHGDFWLYLWLHV 3URȴW /RVV IRUWKH\HDU 84,328 80,864 7KHUHZHUHQRVLJQLȴFDQWFKDQJHVLQWKH 2WKHUFRPSUHKHQVLYHLQFRPH nature of the principal activities of the H[SHQVH IRUWKH\HDU 155 340 294 &RPSDQ\DQGLWVVXEVLGLDU\GXULQJWKH 7RWDOFRPSUHKHQVLYHLQFRPH ȴQDQFLDO\HDUXQGHUUHYLHZ H[SHQVH IRUWKH\HDU 84,668 81,158 Retained earnings as at the EHJLQQLQJRIWKH\HDU 458,219 405,405 404,859 355,555 5HWDLQHGHDUQLQJVEHIRUH appropriations 366,085 490,073 332,729 436,713 Forfeited dividends - 57 - 57 Dividends Retained earnings as at the end of the year 349,370 458,219 316,014 404,859 29 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 $QQXDO5HSRUWRIWKH%RDUGRI'LUHFWRUVRQWKH $DLUVRIWKH&RPSDQ\ 6LJQLȴFDQWDFFRXQWLQJSROLFLHV $FFRUGLQJWRWKH&RPSDQLHV$FW1R 7KHVLJQLȴFDQWDFFRXQWLQJSROLFLHVDGRSWHGLQWKHSUHSDUDWLRQRIWKHVHȴQDQFLDO RIDQGWKH6UL/DQND$FFRXQWLQJ VWDWHPHQWVDUHJLYHQRQSDJHVWR'XULQJWKH\HDUWKH&RPSDQ\DGRSWHG6/)56 DQG$XGLWLQJ6WDQGDUGV$FW1RRI 6/)56 DQGWKHUHTXLUHGGLVFORVXUHVDUHJLYHQLQQRWHVWRWKHȴQDQFLDOVWDWHPHQWV 1995, the Directors are required to SUHSDUHȴQDQFLDOVWDWHPHQWVIRUHDFK 3URSHUW\SODQWDQGHTXLSPHQW ȴQDQFLDO\HDUJLYLQJDWUXHDQGIDLUYLHZ 'HWDLOVRISURSHUW\SODQWDQGHTXLSPHQWDUHJLYHQLQQRWHWRWKHȴQDQFLDO RIWKHVWDWHRIDDLUVRIWKH&RPSDQ\ VWDWHPHQWV and the Group as at the end of the ȴQDQFLDO\HDUDQGRIWKHSHUIRUPDQFH 4.4.1. Market value of freehold properties IRUWKHVDLGSHULRG The Company and the Group has recognized the carrying value of its land and EXLOGLQJLQWKH6WDWHPHQWVRI)LQDQFLDO3RVLWLRQDWUHYDOXHGDPRXQWVLQDFFRUGDQFH 7KHȴQDQFLDOVWDWHPHQWVFRPSULVHRI ZLWK6UL/DQND$FFRXQWLQJ6WDQGDUG /.$6 Ȇ3URSHUW\3ODQWDQG(TXLSPHQWȇ inter alia y Statement of Financial Position, 'XULQJWKHȴQDQFLDO\HDUHQGHGVW0DUFKDUHYDOXDWLRQJDLQZDVUHFRJQL]HG which presents a true and fair RQIUHHKROGODQGWRWKHYDOXHRI5VPQEDVHGRQDSURIHVVLRQDOYDOXDWLRQ YLHZRIWKHVWDWHRIDDLUVRIWKH SHUIRUPHGE\DQLQGHSHQGHQWSURIHVVLRQDOYDOXHU0U66LYDVNDQWKD)Ζ9 6UL/DQND Company and the Group as at end RI3HUHUD6LYDVNDQWKD &RPSDQ\ΖQFRUSRUDWHGYDOXHUV RIWKHȴQDQFLDO\HDU &DSLWDOH[SHQGLWXUH y $6WDWHPHQWRI3URȴWRU/RVVDQG 7KHGHWDLOVRIFDSLWDOH[SHQGLWXUHRIWKH&RPSDQ\DQGWKH*URXSDUHDVIROORZV 2WKHU&RPSUHKHQVLYHΖQFRPHRI the Company, which presents a ΖQ5XSHHVWKRXVDQGV Group &RPSDQ\ WUXHDQGIDLUYLHZRIWKHȴQDQFLDO )RUWKH\HDUHQGHGVW 2019 2018 2019 2018 performance of the Company and March WKH*URXSIRUWKHȴQDQFLDO\HDU ΖQSUHSDULQJWKHVHȴQDQFLDOVWDWHPHQWV Property, plant and equipment 188,999 49,300 77,576 45,837 the Directors are required to ensure 5HVHUYHV WKDW $VDWVW0DUFK WKH*URXSȇVWRWDOUHVHUYHVVWRRGDW5VPQ 5V y Appropriate accounting policies PQ FRPSULVLQJFDSLWDOUHVHUYHVRI5VPQ PQ DQG KDYHEHHQVHOHFWHGDQGDSSOLHG UHYHQXHUHVHUYHVRI5V PQ PQ consistently, while material GHSDUWXUHVLIDQ\KDYHEHHQ 7KHWRWDOUHVHUYHVRIWKH&RPSDQ\DVDWVW0DUFK VWRRGDW5V PQ disclosed and explained, PQ FRPSULVLQJ&DSLWDO5HVHUYHVRI5V PQ 5V PQ DQG5HYHQXH5HVHUYHVRI5VPQ 5VPQ 'HWDLOVDUHVKRZQLQWKH y $OODSSOLFDEOH$FFRXQWLQJ6WDQGDUGV 6WDWHPHQWRI&KDQJHVLQ(TXLW\RQSDJH KDYHEHHQFRPSOLHGZLWK y 5HDVRQDEOHDQGSUXGHQWMXGJPHQWV 67$7(0(172)'Ζ5(&72565(63216Ζ%Ζ/Ζ7Ζ(6 DQGHVWLPDWHVKDYHEHHQPDGHDQG 7KHUHVSRQVLELOLWLHVRIWKH'LUHFWRUVLQUHODWLRQWRWKHȴQDQFLDOVWDWHPHQWVDUHGHWDLOHG LQWKHIROORZLQJSDUDJUDSKVZKLOVWWKHUHVSRQVLELOLWLHVRIWKH$XGLWRUVDUHVHWRXWLQ WKHΖQGHSHQGHQW$XGLWRUVȇ5HSRUW 30 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 y provides the information required Ζ17(5(6765(*Ζ67(5 'Ζ5(&7256 E\DQGRWKHUZLVHFRPSO\ZLWKWKH The Company maintains the Interests The names of the Directors who &RPSDQLHV$FW1RRIDQG Register conforming to the provisions of served during the year are given under WKH/LVWLQJ5XOHVRIWKH&RORPER WKH&RPSDQLHV$FW1RRI Corporate Information provided in the 6WRFN([FKDQJH LQQHUEDFNFRYHURIWKH$QQXDO5HSRUW All Directors have made declarations 7KH'LUHFWRUVDUHUHVSRQVLEOHIRU 7.1. Changes in the Directorate ensuring that the Company and the DVSURYLGHGIRULQ6HFWLRQ RIWKH &RPSDQLHV$FWDIRUHVDLG 0U61DJHQGUD1RQ([HFXWLYH *URXSPDLQWDLQVXɝFLHQWDFFRXQWLQJ Independent Director stepped down UHFRUGVWRGLVFORVHZLWKUHDVRQDEOH 7KHUHOHYDQWGHWDLOVDVUHTXLUHGE\WKH from the Board at the conclusion of the DFFXUDF\WKHȴQDQFLDOSRVLWLRQRIWKH &RPSDQLHV$FW1RRIKDYH Annual General Meeting held on 14th Company and the Group in order to EHHQHQWHUHGLQWKHΖQWHUHVWV5HJLVWHU -XQHLQWHUPVRI$UWLFOH H RIWKH HQVXUHWKDWLWVȴQDQFLDOVWDWHPHQWV GXULQJWKH\HDUXQGHUUHYLHZ $UWLFOHVRI$VVRFLDWLRQRIWKH&RPSDQ\ KDYHEHHQSUHSDUHGDQGSUHVHQWHG LQDFFRUGDQFHZLWKWKH6UL/DQND 7KHΖQWHUHVWV5HJLVWHULVDYDLODEOH 'LUHFWRUWRUHWLUHE\URWDWLRQ Accounting and Auditing standards for inspection as required under the In terms of Articles 72, 73 and 74 of the $FW1RRI DQGPHHWZLWKWKH &RPSDQLHV$FW Articles of Association of the Company, requirements of the Companies Act, 0U650DWKHUUHWLUHVE\URWDWLRQDQG 1RRI 5HPXQHUDWLRQRI'LUHFWRUV EHLQJHOLJLEOHRHUVKLPVHOIIRUUH 'LUHFWRUVȇUHPXQHUDWLRQIRUWKHȴQDQFLDO HOHFWLRQ 7KH\DUHDOVRUHVSRQVLEOHIRUWDNLQJ year ended 31st March 2019 is given in UHDVRQDEOHPHDVXUHVWRVDIHJXDUG QRWHWRWKHȴQDQFLDOVWDWHPHQWVRQ $SSRLQWPHQWRI'LUHFWRUZKRLV the assets of the Company and the SDJH RYHU\HDUVRIDJH Group and in this regard to give proper 8SRQWKHUHFRPPHQGDWLRQRIWKH FRQVLGHUDWLRQWRWKHHVWDEOLVKPHQW 6.2. Directors’ interest in contracts Nomination Committee of the Company DQGVKDUHV DQGHHFWLYHRSHUDWLRQRIDSSURSULDWH and the Board, it is recommended that systems of internal control with a view Directors’ interests in contracts of the 0U0'D\DQDQGDZKRLVRYHU\HDUV to prevent, detect and rectify frauds and Company are disclosed in note 34 to RIDJHEHUHDSSRLQWHGDVD'LUHFWRU RWKHULUUHJXODULWLHV WKHVHȴQDQFLDOVWDWHPHQWVDQGKDYH of the Company for a further period EHHQGHFODUHGDWPHHWLQJVRIWKH of one year from the conclusion of the 7KHVHȴQDQFLDOVWDWHPHQWVKDYHEHHQ 'LUHFWRUV7KH'LUHFWRUVKDYHKDGQR Annual General Meeting and that the SUHSDUHGRQDJRLQJFRQFHUQEDVLVVLQFH direct or indirect interest in any other age limit stipulated in Section 210 of the the Directors are of the view that the contracts or proposed contracts in &RPSDQLHV$FW1RRIVKDOOQRW Company has adequate resources to UHODWLRQWRWKHEXVLQHVVRIWKH&RPSDQ\ EHDSSOLFDEOHWRKLP FRQWLQXHLQRSHUDWLRQLQWKHIRUHVHHDEOH other than those disclosed in note 34 future from the date of approving these and the Directors of the Company did &25325$7(*29(51$1&( ȴQDQFLDOVWDWHPHQWV not have any interests in ordinary shares The Board has ensured that the of the Company during the period from Company has complied with the The Directors are also of the view VW$SULOWRVW0DUFK Corporate Governance Rules as per that they have discharged their WKH/LVWLQJ5XOHVRIWKH&RORPER6WRFN UHVSRQVLELOLWLHVDVVHWRXWLQWKLV ([FKDQJH &6( VWDWHPHQW 31 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 $QQXDO5HSRUWRIWKH%RDUGRI'LUHFWRUVRQWKH $DLUVRIWKH&RPSDQ\ %RDUGRI'LUHFWRUV 5HPXQHUDWLRQ&RPPLWWHH 7KHIROORZLQJ'LUHFWRUVKHOGRɝFHGXULQJWKHSHULRGXQGHUUHYLHZDQGWKHLUEULHI $VSHUWKH5XOHRIWKH/LVWLQJ SURȴOHVDUHJLYHQRQSDJHVWRRIWKH$QQXDO5HSRUW 5XOHVRIWKH&RORPER6WRFN([FKDQJH the Remuneration Committee of Directors ([HFXWLYH1RQ([HFXWLYH &DUVRQ&XPEHUEDWFK3/& &&3/& ΖQGHSHQGHQW the Parent Company, functions as the Remuneration Committee of the 0U'&5*XQDZDUGHQD &KDLUPDQ Non-Executive Company and comprises of the following 0U0'D\DQDQGD 1RQ([HFXWLYHΖQGHSHQGHQW PHPEHUV 0U.6HOYDQDWKDQ Executive 0U650DWKHU 1RQ([HFXWLYHΖQGHSHQGHQW 5HPXQHUDWLRQ ([HFXWLYH 0U95:LMHVLQJKH Executive 0U61DJHQGUD 6WHSSHGGRZQIURPWKH 1RQ([HFXWLYHΖQGHSHQGHQW Committee 1RQ([HFXWLYH %RDUGZHIWK-XQH Members ΖQGHSHQGHQW (DFKRIWKH1RQ([HFXWLYH'LUHFWRUVRIWKH&RPSDQ\KDYHVXEPLWWHGDVLJQHG 0U7GH=R\VD 1RQ([HFXWLYH GHFODUDWLRQRQΖQGHSHQGHQFH1RQΖQGHSHQGHQFHDVSHU5XOH E RIWKH/LVWLQJ &KDLUPDQ Independent 5XOHVRIWKH&RORPER6WRFN([FKDQJH &6( 7KHVDLGGHFODUDWLRQVZHUHWDEOHGDW Director of a Board Meeting of the Board of Directors of the Company held on 8th May 2019, &&3/& LQRUGHUWRHQDEOHWKH%RDUGRI'LUHFWRUVWRGHWHUPLQHWKHΖQGHSHQGHQFH1RQ 0U'&5 Non-Executive ΖQGHSHQGHQFHRIHDFKRIWKH1RQ([HFXWLYH'LUHFWRUVLQWHUPVRI5XOH D RI Gunawardena Director of WKH/LVWLQJ5XOHVRIWKH&6( &&3/& 0U57KHDJDUDMDK 1RQ([HFXWLYH 7KH%RDUGKDVGHWHUPLQHGWKDW0U0'D\DQDQGDLVDQΖQGHSHQGHQW1RQ([HFXWLYH Independent 'LUHFWRULQVSLWHRIEHLQJRQWKH%RDUGRI%XNLW'DUDK3/& 7KHXOWLPDWHSDUHQW Director of &RPSDQ\RI3HJDVXV+RWHOVRI&H\ORQ3/& VLQFHKHLVQRWGLUHFWO\LQYROYHGLQWKH &&3/& 0U:056'LDV 1RQ([HFXWLYH PDQDJHPHQWRIWKH&RPSDQ\ Independent 'LUHFWRUVȇ0HHWLQJVDWWHQGDQFH Director of &&3/& 'XULQJWKHȴQDQFLDO\HDUWKH%RDUGRI'LUHFWRUVKDGIRXU %RDUG0HHWLQJVDQGWKH attendance of the Directors were as follows; 6FRSHDQGREMHFWLYH 7KHSULPDU\REMHFWLYHRIWKH %RDUG0HPEHUV 0HHWLQJV$WWHQGHG RXWRIIRXU Remuneration Committee is to lead WRHVWDEOLVKDIRUPDODQGWUDQVSDUHQW 0U'&5*XQDZDUGHQD &KDLUPDQ procedure for the development 0U0'D\DQDQGD 0U.6HOYDQDWKDQ of a remuneration policy and the 0U650DWKHU HVWDEOLVKPHQWRIDUHPXQHUDWLRQ 0U95:LMHVLQJKH VWUXFWXUH 0U61DJHQGUD 6WHSSHGGRZQIURPWKH %RDUGZHIWK-XQH $UHPXQHUDWLRQSROLF\KDVEHHQ IRUPXODWHGEDVHGRQPDUNHWDQG industry factors and individual SHUIRUPDQFHIRUDOO*URXS&RPSDQLHV 32 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 )XQFWLRQVDQG3URFHHGLQJV 5HSRUWLQJDQG5HVSRQVLELOLWLHV The Remuneration Committee The Committee Chairman reports to the Board on its proceedings on all matters recommends to the Board the ZLWKLQLWVGXWLHVDQGUHVSRQVLELOLWLHV7KH&RPPLWWHHPDNHVUHFRPPHQGDWLRQV UHPXQHUDWLRQWREHSDLGWRWKH1RQ to the Board as deemed appropriate on any area within its limit where action or ([HFXWLYH'LUHFWRUV%DVHGRQWKH LPSURYHPHQWVDUHQHHGHG recommendation of the Remuneration Committee, the Board approves Aggregated remuneration paid to the Non-Executive Directors of the Company is remuneration to the respective GLVFORVHGLQQRWHRQSDJH RIWKH$QQXDO5HSRUW([HFXWLYH'LUHFWRUVDUHQRW 'LUHFWRUV FRPSHQVDWHGIRUWKHLUUROHRQWKH%RDUG $XGLW&RPPLWWHH 7KHPHPEHUVRIVHQLRUPDQDJHPHQW PD\EHLQYLWHGWRDWWHQGPHHWLQJV $VSHUWKH5XOHRIWKH/LVWLQJ5XOHVRIWKH&RORPER6WRFN([FKDQJHWKH$XGLW to discuss the performance of the &RPPLWWHHRI&DUVRQ&XPEHUEDWFK3/& &&3/& WKH3DUHQW&RPSDQ\IXQFWLRQVDV Executive Directors and make proposals WKH$XGLW&RPPLWWHHRIWKH&RPSDQ\DQGFRPSULVHVRIWKHIROORZLQJPHPEHUV DVQHFHVVDU\1HLWKHU([HFXWLYHQRU Non-Executive Directors are involved $XGLW&RPPLWWHH0HPEHUV ([HFXWLYH1RQ([HFXWLYH in Remuneration Committee meetings ΖQGHSHQGHQW when determinations are made in relation to the remuneration of the 0U930DODODVHNHUD &KDLUPDQ 1RQ([HFXWLYHΖQGHSHQGHQW'LUHFWRURI UHVSHFWLYH'LUHFWRUV &&3/& 0U)0RKLGHHQ 1RQ([HFXWLYHΖQGHSHQGHQW'LUHFWRURI 7KH&RPPLWWHHLVDXWKRUL]HGE\WKH &&3/& 0U'&5*XQDZDUGHQD 1RQ([HFXWLYH'LUHFWRURI&&3/& Board to seek appropriate professional 0U$6$PDUDWXQJD $SSRLQWHGZHI 1RQ([HFXWLYHΖQGHSHQGHQW'LUHFWRURI advice internally and externally as and IURPWK-DQXDU\ &&3/& ZKHQLWFRQVLGHUVWKLVQHFHVVDU\ 7KH$XGLW&RPPLWWHH5HSRUWLVJLYHQRQSDJHWRRIWKLV$QQXDO5HSRUW The Remuneration Committee meets DWOHDVWWZLFHD\HDU'XULQJWKHSHULRG 8.5. Nomination Committee under review, the committee had 02 7KH1RPLQDWLRQ&RPPLWWHHRIWKH&RPSDQ\FRPSULVHVRIWKHIROORZLQJPHPEHUV PHHWLQJV Nomination Committee Members ([HFXWLYH1RQ([HFXWLYH 5HPXQHUDWLRQ Meetings ΖQGHSHQGHQW Committee Members $WWHQGHG RXWRIWZR 0U0'D\DQDQGD $SSRLQWHGDV0HPEHU 1RQ([HFXWLYHΖQGHSHQGHQW'LUHFWRU DQG&KDLUPDQZHI 0U7GH=R\VD - 0U'&5*XQDZDUGHQD Non-Executive Director &KDLUPDQ 0U61DJHQGUD 6WHSSHGGRZQIURPWKH 1RQ([HFXWLYHΖQGHSHQGHQW'LUHFWRU 0U'&5*XQDZDUGHQD Board and Nomination Committee on 0U57KHDJDUDMDK 0U:056'LDV 33 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 $QQXDO5HSRUWRIWKH%RDUGRI'LUHFWRUVRQWKH $DLUVRIWKH&RPSDQ\ 6FRSHDQGREMHFWLYH &RPPLWWHHRI&&3/&IXQFWLRQVDVWKH5HODWHG3DUW\7UDQVDFWLRQV5HYLHZ&RPPLWWHH 7KHSULPDU\REMHFWLYHRIWKH1RPLQDWLRQ RIWKH&RPSDQ\ Committee is to lead the process for Board appointments of new Directors 5HODWHG3DUW\7UDQVDFWLRQV5HYLHZ ([HFXWLYH1RQ([HFXWLYH to the Board and the nominations of Committee Members ΖQGHSHQGHQW PHPEHUVWRUHSUHVHQWWKH&RPSDQ\LQ *URXSFRPSDQLHVLQYHVWHHFRPSDQLHV 0U930DODODVHNHUD &KDLUPDQ 1RQ([HFXWLYHΖQGHSHQGHQW'LUHFWRURI &&3/& )XQFWLRQVDQG3URFHHGLQJV 0U)0RKLGHHQ 1RQ([HFXWLYHΖQGHSHQGHQW'LUHFWRURI &&3/& The Nomination Committee 0U'&5*XQDZDUGHQD 1RQ([HFXWLYH'LUHFWRURI&&3/& recommends new appointments to the 0U+6HOYDQDWKDQ ([HFXWLYH'LUHFWRURI&&3/& %RDUG%DVHGRQWKHUHFRPPHQGDWLRQ 0U06HOYDQDWKDQ ([HFXWLYH'LUHFWRURI&&3/& RIWKH1RPLQDWLRQ&RPPLWWHHWKHERDUG 0U6.6KDK ([HFXWLYH'LUHFWRURI&&3/& approves the new appointments of Declaration Executive and Non-Executive Directors WRWKH%RDUG The Directors have made self-declarations for the purpose of identifying parties UHODWHGWRWKHP7KHVDLGGHFODUDWLRQVZHUHQRWHGDWWKH5HODWHG3DUW\7UDQVDFWLRQV Any Director of the Board and other 5HYLHZ&RPPLWWHH0HHWLQJV PHPEHUVRIVHQLRUPDQDJHPHQWPD\ EHLQYLWHGWRDWWHQG0HHWLQJVRIWKH 7KH&RPSDQ\LVLQFRPSOLDQFHZLWK5XOH RIWKH/LVWLQJ5XOHVRIWKH&RORPER6WRFN 1RPLQDWLRQ&RPPLWWHH7KH&RPPLWWHH ([FKDQJHSHUWDLQLQJWR5HODWHG3DUW\7UDQVDFWLRQVGXULQJWKHȴQDQFLDO\HDU may also invite appointed external 5HODWHG3DUW\7UDQVDFWLRQVH[FHHGLQJRIWKHHTXLW\RURIWKHWRWDODVVHWV consultants to aid the Committee in the RIWKH&RPSDQ\ GLVFKDUJHRILWVGXWLHV 7KH'LUHFWRUVGHFODUHLQWHUPVRIWKHUHTXLUHPHQWVRIWKH/LVWLQJ5XOHVRIWKH 7KH&RPPLWWHHLVDXWKRULVHGE\WKH &RORPER6WRFN([FKDQJHWKDWWKHWUDQVDFWLRQVFDUULHGRXWE\WKH&RPSDQ\ZLWKLWV Board to seek appropriate professional 5HODWHG3DUWLHVGXULQJWKH\HDUHQGHGVW0DUFK GLGQRWH[FHHGRI(TXLW\ advice internally and externally as and RURIWKH7RWDO$VVHWVRIWKH&RPSDQ\DVDWVW0DUFK ZKHQFRQVLGHUHGQHFHVVDU\ The details of the Related Party Transactions are given in note 34 on pages 93 to 95 The Nomination Committee meets at RIWKH)LQDQFLDO6WDWHPHQWV OHDVWWZLFHD\HDU y Non-Recurrent Related Party Transactions During the period under review the 7KHUHZHUHQR1RQ5HFXUUHQW5HODWHG3DUW\WUDQVDFWLRQVHQWHUHGLQWRE\WKH Committee had two meetings with all Company, where the aggregate value of the Non-Recurrent Related Party PHPEHUVLQDWWHQGDQFH 7UDQVDFWLRQVH[FHHGVRIWKH6KDUHKROGHUVȇHTXLW\RURIWKHWRWDODVVHWV 5HODWHG3DUW\7UDQVDFWLRQV ZKLFKHYHULVORZHURIWKH&RPSDQ\DVDWVW0DUFK 5HYLHZ&RPPLWWHH y Recurrent Related Party Transactions $VSHUWKH5XOH RIWKH/LVWLQJ 5XOHVRIWKH&RORPER6WRFN([FKDQJH 7KHUHZHUHQR5HFXUUHQW5HODWHG3DUW\7UDQVDFWLRQVHQWHUHGLQWRE\WKH the Related Party Transactions Review Company, where the aggregate value of the recurrent Related Party Transactions 34 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 H[FHHGVRIWKH*URVV5HYHQXH ZHUHSDLG5VDQG5V WKH%RDUGRI'LUHFWRUV7KHLQWHQVLW\ Income of the Company, as at 31st 5VDQG5V depth and the tolerance limits for each 0DUFK as professional fees for audit related component of the internal control services for the Company and the Group V\VWHPZRXOGEHEDVHGRQWKHZHLJKW %RDUG(YDOXDWLRQ UHVSHFWLYHO\)XUWKHUQRSD\PHQWVZHUH of the element of risk imposed on the 7KHȆ%RDUG(YDOXDWLRQ)RUPȇRIWKH PDGHE\WKH&RPSDQ\DQGWKH*URXS VXVWHQDQFHRIWKHEXVLQHVVE\WKH Company focusses on the following GXULQJWKH\HDURQQRQDXGLWVHUYLFHV UHVSHFWLYHDUHDRIRSHUDWLRQ:KLOVW areas; Ȃ1LO a strong internal control system would mitigate the crystallization of y &RUH%RDUG5HVSRQVLELOLWLHV The retiring auditors have expressed risk elements to a greater extent, y Board Meetings WKHLUZLOOLQJQHVVWRFRQWLQXHLQRɝFH employment of external support A resolution to re-appoint them as y &RPPLWWHH0HHWLQJV DQ\DOO VWUXFWXUHVZRXOGDOVREHQHFHVVDU\ Independent Auditors of the Company VXEFRPPLWWHHV EDVHGRQWKHULVNDVVHVVPHQWVPDGH DQGDXWKRUL]LQJWKH'LUHFWRUVWRȴ[WKHLU WKHUHRQ y Relationship with Management UHPXQHUDWLRQZLOOEHSURSRVHGDWWKH y Individual self-assessment IRUWKFRPLQJ$QQXDO*HQHUDO0HHWLQJ (HFWLYHPDLQWHQDQFHRILQWHUQDO FRQWUROVULVNLGHQWLȴFDWLRQDQG y Stakeholder and Shareholder The Audit Committee reviewed the mitigation is handed down to the FRPPXQLFDWLRQUHODWLRQVKLS appointment of the Auditors, its UHVSHFWLYHPHPEHUVRIVHQLRU y 6XJJHVWLRQVFRPPHQWV HHFWLYHQHVVDQGWKHLUUHODWLRQVKLS management within the guidelines of ZLWKWKH&RPSDQ\DQGWKHVXEVLGLDU\ EHQFKPDUNSROLFLHVSURFHGXUHVDQG 7KHFRPPHQWVPDGHE\WKH'LUHFWRUV including the level of audit and non- DXWKRULW\OLPLWVFOHDUO\ODLGGRZQ in the Board Evaluation Forms are DXGLWIHHVSDLGWRWKH$XGLWRUV FROODWHGE\WKH1RPLQDWLRQ&RPPLWWHH Group Internal Audit, whose scope of $XGLWRUVȇ5HODWLRQVKLSRUDQ\ of the Company and the results and VFUXWLQ\LVHQWLUHO\GULYHQE\WKHJUDGLQJ LQWHUHVWZLWKWKH&RPSDQ\ proposed actions are reported to the RIWKHULVNLQYROYHGZLOOEHPRQLWRULQJ 7KH'LUHFWRUVDUHVDWLVȴHGWKDWEDVHG %RDUGRI'LUHFWRUV7KHVXJJHVWLRQV DQGSURYLGLQJWKHIHHGEDFNWRWKH RQZULWWHQUHSUHVHQWDWLRQVPDGHE\WKH DQGUHFRPPHQGDWLRQVPDGHE\WKH management and to the respective Independent Auditors to the Board, the 'LUHFWRUVDUHEHLQJUHYLHZHGDQG $XGLW&RPPLWWHH5HJXODUVXEPLVVLRQ Auditors do not have any interest with LPSOHPHQWHGE\WKH&RPSDQ\ of compliance and internal solvency WKH&RPSDQ\DQGLWV6XEVLGLDU\WKDW FHUWLȴFDWHVYRXFKHGE\WKH+HDGVRI Ζ1'(3(1'(17$8'Ζ7256 ZRXOGLPSDLUWKHLULQGHSHQGHQFH the respective divisions as a mandatory The Company’s and the Group’s auditors ΖQGHSHQGHQW$XGLWRUVȇ5HSRUW DJHQGDLWHPNHHSVWKH'LUHFWRUVDEUHDVW during the year under review were of the position of the Company’s and the The Independent Auditors’ Report on 0HVVUV.30*&KDUWHUHG$FFRXQWDQWV *URXSȇVUHVRXUFHEDVHDQGJRYHUQDQFH WKHȴQDQFLDOVWDWHPHQWVLVJLYHQRQ UHTXLUHPHQWV $VXPRI5VDQG5V SDJHVWRRIWKLV5HSRUW 5VDQG5V This allows the Board to have total Ζ17(51$/&21752/$1'5Ζ6. ZHUHSDLGWRWKHPE\WKH&RPSDQ\DQG 0$1$*(0(17 FRQWURORIWKHIXOȴOOPHQWRIJRYHUQDQFH the Group respectively as audit fees 7KHXOWLPDWHUHVSRQVLELOLW\WRHVWDEOLVK UHTXLUHPHQWVE\SURYLGLQJRSSRUWXQLW\ IRUWKH\HDUHQGHGVW0DUFK monitor and review a group-wide to take timely preventive action in case ΖQDGGLWLRQWRWKHDERYHWKHDXGLWRUV internal control system rests with RISRWHQWLDOGHWHULRUDWLRQRIVWDWXVTXR 35 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 $QQXDO5HSRUWRIWKH%RDUGRI'LUHFWRUVRQWKH $DLUVRIWKH&RPSDQ\ More detailed description of the risk Company, had provided a Corporate (19Ζ5210(17$/3527(&7Ζ21 management strategies of the Company Guarantee to Commercial Bank of The Company and the Group is sensitive and the Group are given on pages 24 &H\ORQ3/&LQLQVHFXULQJEDQN to the needs of the environment and WR ERUURZLQJIDFLOLWLHVH[WHQGHGXQGHU makes every endeavour to comply WKHȆ7VXQDPLIXQGLQJVFKHPHȇDW with the relevant environmental laws, 6Ζ*1Ζ)Ζ&$17(9(176'85Ζ1*7+( FRQFHVVLRQDU\UDWHV )Ζ1$1&Ζ$/<($5 UHJXODWLRQVDQGEHVWSUDFWLFHVDSSOLFDEOH LQWKHFRXQWU\$IWHUPDNLQJDGHTXDWH 7KHUHZHUHQRVLJQLȴFDQWHYHQWVGXULQJ 6UL/DQND$FFRXQWLQJ6WDQGDUGV inquiries from the management, the WKH\HDU /.$6 Ȋ)LQDQFLDOΖQVWUXPHQWV 'LUHFWRUVDUHVDWLVȴHGWKDWWKH&RPSDQ\ Measurement and Recognition” require 'Ζ9Ζ'(1' DQGLWVVXEVLGLDU\RSHUDWHVLQDPDQQHU Ȇ)LQDQFLDO*XDUDQWHHFRQWUDFWVȇRIWKLV The Company paid a First Interim WKDWPLQLPL]HVWKHGHWULPHQWDOHHFWV QDWXUHWREHUHFRJQL]HGDWWKHLUIDLU Dividend of cents 55 per ordinary share on the environment and provides YDOXHLQWKHȴQDQFLDOVWDWHPHQWVDQG for the year ended 31st March 2019 VHUYLFHVWKDWKDYHDEHQHȴFLDOHHFWRQ DFFRUGLQJO\DQDPRXQWRI5V the customers and the communities DPRXQWLQJWR5V RQ was included in the “Stated Capital”, within which the Company and its WK0DUFK EHLQJȆ'HHPHGFDSLWDOFRQWULEXWLRQȇ VXEVLGLDU\RSHUDWH arising from the said transaction at each 62/9(1&<7(67 RIWKHUHSRUWLQJGDWHV7KLVORDQZDV +80$15(6285&(6 Taking in to account the said IXOO\VHWWOHGE\WKH&RPSDQ\LQ The Company and the Group continue GLVWULEXWLRQWKH'LUHFWRUVZHUHVDWLVȴHG to invest in human capital development that the Company would meet the 67$78725<3$<0(176 Solvency Test requirement under DQGLPSOHPHQWHHFWLYHKXPDQ 7KH'LUHFWRUVWRWKHEHVWRIWKHLU resource practices and policies to 6HFWLRQ RIWKH&RPSDQLHV$FW1R NQRZOHGJHDQGEHOLHIDUHVDWLVȴHGWKDW 07 of 2007 immediately after the said GHYHORSDQGEXLOGDQHɝFLHQWDQG DOOVWDWXWRU\SD\PHQWVKDYHEHHQSDLG GLVWULEXWLRQ7KH&RPSDQ\ȇV$XGLWRUV HHFWLYHZRUNIRUFHDOLJQHGDURXQGLWV XSWRGDWHRUKDYHEHHQSURYLGHGIRULQ 0V.30*&KDUWHUHG$FFRXQWDQWVKDV EXVLQHVVSULRULWLHVDQGWRHQVXUHWKDWLWV WKHVHȴQDQFLDOVWDWHPHQWV employees are developing the skills and LVVXHGD&HUWLȴFDWHRI6ROYHQF\IRUWKH knowledge required for future success 'LYLGHQGPHQWLRQHGDERYHFRQȴUPLQJ *2Ζ1*&21&(51 RIWKH&RPSDQ\DQGWKH*URXS VDPH 7KH%RDUGRI'LUHFWRUVLVVDWLVȴHGWKDW WKH&RPSDQ\DQGLWVVXEVLGLDU\KDYH 67$7('&$3Ζ7$/ 7KHQXPEHURISHUVRQVHPSOR\HGE\ adequate resources to continue their The Stated Capital of the Company as at the Company and the Group as at 31st RSHUDWLRQVLQWKHIRUHVHHDEOHIXWXUH March 2019 were 206 and 270 (2018 - VW0DUFK ZDV5V $FFRUGLQJO\WKHVHȴQDQFLDOVWDWHPHQWV FRQVLVWLQJRI 2UGLQDU\ DQG UHVSHFWLYHO\ DUHSUHSDUHGEDVHGRQWKH*RLQJ 6KDUHV &RQFHUQ&RQFHSW Management support services are SURYLGHGE\&DUVRQV0DQDJHPHQW There was no change in the Stated '21$7Ζ216 6HUYLFHV 3ULYDWH /LPLWHG &06/ &DSLWDORIWKH&RPSDQ\GXULQJWKH\HDU There were no donations made during the year ended 31st March 2019 (2018 '((0('&$3Ζ7$/&2175Ζ%87Ζ21 1LO The Parent Company, Carson &XPEHUEDWFK3/&RQEHKDOIRIWKH 36 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 0$7(5Ζ$/Ζ668(63(57$Ζ1Ζ1* 2019 2018 72(03/2<((6$1'Ζ1'8675Ζ$/ 5(/$7Ζ216 7ZHQW\0DMRU6KDUHKROGHUV No. of % No. of % as at 31st March shares shares There were no material issues relating to employees and industrial relations 1 &DUVRQ&XPEHUEDWFK3/&$& GXULQJWKH\HDUHQGHGVW0DUFK 1R 27,347,485 27,347,485 2 0U0&&.5RGULJR 363,661 313,800 28767$1'Ζ1*/Ζ7Ζ*$7Ζ216 3 0U.&9LJQDUDMDK 183,998 183,858 The outstanding litigations related to 4 0UV95-D\DVLQJKH 128,003 128,003 5 0U.&-D\DZDUGHQH WKH&RPSDQ\DUHVKRZQLQQRWHWR 122,630 57,599 6 0U')*'DOSHWKDGR 120,825 109,997 WKHVHȴQDQFLDOVWDWHPHQWV 7 0U+$9DQ6WDUUH[ 100,000 100,000 8 %DQVHL6HFXULWLHV&DSLWDO 3YW (48Ζ7$%/(75($70(1772 /WG5&-*RRQHZDUGHQD 75,022 - 6+$5(+2/'(56 9 0UV1$(GLULZHHUD 75,000 82,429 The Company endeavours at all times 10 0U+$3LHULV 70,000 70,000 11 -%&RFRVKHOO 3YW /WG WRHQVXUHHTXLWDEOHWUHDWPHQWWRDOO 60,000 60,000 12 0U$0:HHUDVLQJKH 57,500 57,500 VKDUHKROGHUV 13 3HRSOH V/HDVLQJ )LQDQFH 3OF/3+DSDQJDPD 57,157 57,157 (9(176$)7(57+(5(3257Ζ1* 14 0UVΖ*Z\Q 55,000 55,000 '$7( 15 0U+$60DGDQD\DNH 50,000 50,000 6XEVHTXHQWWRWKHUHSRUWLQJGDWHQR 16 &RGH*HQΖQWHUQDWLRQDO 3YW /WG 50,000 50,000 circumstances have arisen, which would 17 0U36RPDGDVD 43,410 43,807 UHTXLUHDGMXVWPHQWVWRRUGLVFORVXUHV 18 0UV&$'6:RRGZDUG 42,679 42,679 LQWKHȴQDQFLDOVWDWHPHQWVRWKHU 19 Nanayakkara Management than those disclosed in note 37 to the 6HUYLFHV 3ULYDWH /LPLWHG 31,361 1,570 20 0U0)-0DFDQ0DUNDU 30,100 15,474 ȴQDQFLDOVWDWHPHQWV $118$/5(3257 7KHDSSURSULDWHQXPEHURIFRSLHVRI &217Ζ1*(17/Ζ$%Ζ/Ζ7Ζ(6$1' &$3Ζ7$/&200Ζ70(176 The information provided herein is in WKH$QQXDO5HSRUWZRXOGEHVXEPLWWHG pursuance of the requirements of the WRWKH&RORPER6WRFN([FKDQJHWKH6UL 7KHFRQWLQJHQWOLDELOLWLHVDQG &RPSDQLHV$FW1RRIDQG commitments as at 31st March 2019 /DQND$FFRXQWLQJDQG$XGLWLQJ6WDQGDUG WKH/LVWLQJ5XOHVRIWKH&RORPER6WRFN Monitoring Board and the Registrar of DUHJLYHQLQQRWHWRWKHȴQDQFLDO ([FKDQJH &RPSDQLHVZLWKLQWKHDSSOLFDEOHWLPH VWDWHPHQWV IUDPHV 6+$5(Ζ1)250$7Ζ21 The Board of Directors have approved the Financial Statements of the Information relating to share trading are Company together with the reviews JLYHQRQSDJHV DQG RIWKLV5HSRUW which forms part of the Annual Report 7:(17<0$-256+$5(+2/'(56 RQWK0D\ :Ζ7+&203$5$7Ζ9(6 The Parent Company, Carson &XPEHUEDWFK3/&KROGV RIWKH WRWDO2UGLQDU\6KDUHVLQLVVXHRIWKH &RPSDQ\DVDWVW0DUFK 37 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 $QQXDO5HSRUWRIWKH%RDUGRI'LUHFWRUVRQWKH $DLUVRIWKH&RPSDQ\ $118$/*(1(5$/0((7Ζ1* The 53rd Annual General Meeting of the Company ZLOOEHKHOGRQ7KXUVGD\WK-XQH DW SPDW3HJDVXV5HHI+RWHO6DQWKD0DULD0DZDWKD +HQGDOD:DWWDOD The notice of the Annual General Meeting is on page RIWKH$QQXDO5HSRUW 6LJQHGRQEHKDOIRIWKH%RDUG 6JG 6JG '&5*XQDZDUGHQD 0'D\DQDQGD Chairman Director 6JG .''H6LOYD 0UV 'LUHFWRU&DUVRQV0DQDJHPHQW6HUYLFHV 3ULYDWH /LPLWHG Secretaries 8th May 2019 38 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 5HODWHG3DUW\7UDQVDFWLRQV5HYLHZ &RPPLWWHH5HSRUW $VSURYLGHGE\WKH&RORPER6WRFN 385326(2)7+(&200Ζ77(( REWDLQHGIRUWKHSXUSRVHRILGHQWLI\LQJ ([FKDQJH/LVWLQJ5XOHVWKH5HODWHG3DUW\ 7KHREMHFWLYHRIWKH5375&LVWRUHYLHZ SDUWLHVUHODWHGWRWKHP)XUWKHUWKH 7UDQVDFWLRQV5HYLHZ&RPPLWWHH 5375& DOO5HODWHG3DUW\7UDQVDFWLRQV 537V RI guidelines which senior management RI&DUVRQ&XPEHUEDWFK3/& &&3/& WKH WKH/LVWHG&RPSDQLHVRIWKH&DUVRQV must follow in routing Related Party Parent Company functions as the RPTRC Group, other than those exempted Transactions to the relevant forum, RIWKH&RPSDQ\ E\WKHȆ5HODWHG3DUW\7UDQVDFWLRQV including transaction threshold values &RPSOLDQFH&RGHȇ 537&RGH SULRUWR DQGSULFLQJZKHUHDSSOLFDEOHKDYHEHHQ &20326Ζ7Ζ212)7+(&200Ζ77(( WKHWUDQVDFWLRQEHLQJHQWHUHGLQWRRU documented even in the case of once 7KH0HPEHUVRIWKH5375&DUHDV LIWKHWUDQVDFWLRQLVH[SUHVVHGWREH approved recurrent transactions which IROORZV conditional on such review, prior to the are of operational nature, which as per WKH537&RGHQHHGQRWEHUHSHDWHGO\ 0U930DODODVHNHUD &KDLUPDQ FRPSOHWLRQRIWKHWUDQVDFWLRQ DSSURYHGLIZLWKLQWKHEURDGWKUHVKROGV 1RQ([HFXWLYHΖQGHSHQGHQW'LUHFWRU 32/Ζ&Ζ(6$1'352&('85(6 RI&&3/& y The RPTRC reviews the relevant The RPTRC in discharging its function 0U)0RKLGHHQ1RQ([HFXWLYH Related Party Transactions of the HQGHDYRXUVWRHQVXUHWKDW ΖQGHSHQGHQW'LUHFWRURI&&3/& /LVWHG&RPSDQLHVRIWKH&DUVRQV y there is compliance with the Code; Group and where the Committee 0U'&5*XQDZDUGHQD1RQ y shareholder interests are protected; decides that the approval of the ([HFXWLYH'LUHFWRURI&&3/& and Board of Directors of the respective 0U+6HOYDQDWKDQ([HFXWLYH Companies are necessary to approve y fairness and transparency are 'LUHFWRURI&&3/& a Related Party Transaction, such PDLQWDLQHG 0U06HOYDQDWKDQ([HFXWLYH %RDUGDSSURYDOLVREWDLQHGSULRUWR The Committee has a criteria for 'LUHFWRURI&&3/& entering into the relevant Related 3DUW\7UDQVDFWLRQ GHVLJQDWLQJ&DUVRQV*URXS.H\ 0U6.6KDK([HFXWLYH'LUHFWRURI 0DQDJHPHQW3HUVRQQHO .03 DQG y When reviewing a transaction, the &&3/& TXDUWHUO\GLVFORVXUHVDUHPDGHE\.03V RPTRC would decide whether the VRGHVLJQDWHGDVUHOHYDQW 0((7Ζ1*62)7+(5(/$7('3$57< proposed transaction is carried out 75$16$&7Ζ2165(9Ζ(:&200Ζ77(( RQDQDUPȇVOHQJWKEDVLVLUUHVSHFWLYH The Related Party Transactions of the of whether it is recurrent or non- &&3/&5375&KHOG)RXU 0HHWLQJV Company for the period 1st April 2018 UHFXUUHQWLQQDWXUH GXULQJWKHȴQDQFLDO\HDUWRGLVFXVV WRVW0DUFK KDYHEHHQUHYLHZHG matters relating to the Company and y 5HYLHZLQJDQGDSSURYDOZRXOGEH E\WKH0HPEHUVRIWKH5375&DQGWKH where necessary the approval of HLWKHUE\PHHWLQJRIPHPEHUV FRPPHQWVDQGREVHUYDWLRQVRIWKH WKH0HPEHUVZHUHDOVRVRXJKWYLD VXEMHFWWRTXRUXPEHLQJSUHVHQW RU &RPPLWWHHKDYHEHHQFRPPXQLFDWHGWR FLUFXODWLRQRISDSHUV E\FLUFXODWLRQ WKH%RDUGRI'LUHFWRUVRIWKH&RPSDQ\ 7KHDWWHQGDQFHRIWKH0HPEHUVRIWKH y ΖQGHWHUPLQLQJZKHWKHUWRREWDLQWKH &RPPLWWHHZHUHDVIROORZV approval of the Board of Directors for a Related Party Transaction, the 6JG 0HHWLQJVDWWHQGHG RXWRIIRXU RPTRC will take into account, among 930DODODVHNHUD other factors it deems appropriate, 0U930DODODVHNHUD Chairman – Related Party Transactions 0U)0RKLGHHQ whether the proposed RPTs pose a Review Committee 0U'&5*XQDZDUGHQD FRQȵLFWRILQWHUHVWWRWKH'LUHFWRUV &DUVRQ&XPEHUEDWFK3/& 0U+6HOYDQDWKDQ 0U06HOYDQDWKDQ The self-declarations from the Directors &RORPER 0U6.6KDK DQG.H\0DQDJHPHQW3HUVRQQHODUH 8th May 2019 39 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 $XGLW&RPPLWWHH5HSRUW $VSURYLGHGE\WKH&RORPER6WRFN([FKDQJH/LVWLQJ5XOHVWKH$XGLW&RPPLWWHH The audit aspects of Pegasus Hotels of RI&DUVRQ&XPEHUEDWFK3/& &&3/& WKH3DUHQW&RPSDQ\IXQFWLRQVDVWKH$XGLW &H\ORQ3/&DUHFRQGXFWHGZLWKLQWKH &RPPLWWHHRIWKH&RPSDQ\ $JHQGDRI&&3/&$XGLW&RPPLWWHH 'XULQJWKH\HDU0U$6$PDUDWXQJDD1RQ([HFXWLYHΖQGHSHQGHQW'LUHFWRURI&&3/& &&3/&$XGLW&RPPLWWHHKHOGȴYH was appointed to the Audit Committee and the Committee consists of the following 0HHWLQJVGXULQJWKHȴQDQFLDO\HDUWR 0HPEHUV discuss matters relating to the Company DQGWKHDWWHQGDQFHRIWKH0HPEHUVRI $XGLW&RPPLWWHH0HPEHUV ([HFXWLYH1RQ([HFXWLYHΖQGHSHQGHQW WKH$XGLW&RPPLWWHHZHUHDVIROORZV 0U930DODODVHNHUD 1RQ([HFXWLYHΖQGHSHQGHQW &&3/& 0U'&5*XQDZDUGHQD 1RQ([HFXWLYH &&3/& 0HHWLQJVDWWHQGHG RXWRI)LYH 0U)0RKLGHHQ 1RQ([HFXWLYHΖQGHSHQGHQW &&3/& 0U930DODODVHNHUD 0U$6$PDUDWXQJD 1RQ([HFXWLYHΖQGHSHQGHQW &&3/& &KDLUPDQ DSSRLQWHGZHIWK-DQXDU\ 0U'&5*XQDZDUGHQD 0U)0RKLGHHQ 0U9LMD\D0DODODVHNHUDLVD1RQ([HFXWLYHΖQGHSHQGHQW'LUHFWRURI&&3/&DQGD 0U$6$PDUDWXQJD IRUPHU'LUHFWRURI&H\ORQ7REDFFR&RPSDQ\3/& DSSRLQWHGZHIWK -DQXDU\ 0U&KDQGLPD*XQDZDUGHQDLVD1RQ([HFXWLYH'LUHFWRURI&&3/&DQGLQPRVWRI LWV*URXS&RPSDQLHV+HLVD)HOORZRIWKH&KDUWHUHGΖQVWLWXWHRI0DQDJHPHQW Director-Finance, Carsons Management $FFRXQWDQWV8. 6HUYLFHV 3ULYDWH /LPLWHG0DQDJHUV internal auditors and senior 0U)DL]0RKLGHHQD1RQ([HFXWLYHΖQGHSHQGHQW'LUHFWRURI&&3/&ZDVDIRUPHU PDQDJHPHQWVWDPHPEHUVRIWKH Deputy Secretary to the Treasury and a former Director of Bank of Ceylon and /HLVXUH6HFWRUDOVRDWWHQGHGWKH$XGLW 6HFXULWLHVDQG([FKDQJH&RPPLVVLRQRI6UL/DQND &RPPLWWHH0HHWLQJVE\LQYLWDWLRQ 0U6DNWKD$PDUDWXQJDD1RQ([HFXWLYHΖQGHSHQGHQW'LUHFWRURI&&3/&LVDOVRD The Audit Committee met the External 'LUHFWRURI+HPDV+ROGLQJV3/&&KDLUPDQRI+HPDV+ROGLQJV3/&$XGLW&RPPLWWHH $XGLWRUV0HVVUV.30*WZLFHGXULQJ DQGD&RPPLVVLRQHURI37$JURΖQGRPDVΖQGRQHVLDDVXEVLGLDU\RI&DUVRQ the year to discuss the audit scope and &XPEHUEDWFK*URXS WRGHOLEHUDWHWKHGUDIW)LQDQFLDO5HSRUW DQG$FFRXQWV7KH&RPPLWWHHDOVR 7KHSXUSRVHRIWKH$XGLW&RPPLWWHHRI&&3/&LVDVIROORZV discussed the draft Financial Report and 7RDVVLVWWKH%RDUGRI'LUHFWRUVLQIXOȴOOLQJLWVRYHUVLJKWUHVSRQVLELOLWLHVIRUWKH Accounts, with the External Auditors, ȴQDQFLDOUHSRUWLQJSURFHVVWKHV\VWHPRILQWHUQDOFRQWURORYHUȴQDQFLDOUHSRUWLQJ ZLWKRXWWKHPDQDJHPHQWEHLQJSUHVHQW the audit process and the Company’s process for monitoring compliance with laws WRIRVWHUDQXQELDVHGLQGHSHQGHQW DQGUHJXODWLRQV&RPSDQ\SROLFLHVDQGSURFHGXUHVDQGWKHFRGHRIFRQGXFW GLDORJXH To ensure that the internal audit activity is well managed, so that it adds value to WKHRUJDQL]DWLRQE\EHLQJREMHFWLYHLQSURYLGLQJUHOHYDQWDVVXUDQFHFRQWULEXWLQJ WRWKHHHFWLYHQHVVDQGHɝFLHQF\RIJRYHUQDQFHULVNPDQDJHPHQWDQGFRQWURO SURFHVVHV 40 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 The Audit Committee approved the audit E\0HVVUV.30*IRUUHSRUWLQJLQWKH Chartered Accountants, as Auditors SODQIRUWKHȴQDQFLDO\HDU audit report, at the audit planning and IRUWKHȴQDQFLDO\HDUHQGLQJVW DQGWKH*URXSΖQWHUQDO$XGLW *Ζ$ FRPSOHWLRQVWDJHV 0DUFKVXEMHFWWRWKHDSSURYDO FDUULHGRXWDXGLWVRQWKH/HLVXUH6HFWRU of the shareholders of Pegasus Hotels FRPSDQLHVEDVHGRQWKHSODQ 7KHGUDIWȴQDQFLDOVWDWHPHQWVRI RI&H\ORQ3/&DWWKH$QQXDO*HQHUDO 3HJDVXV+RWHOVRI&H\ORQ3/&IRUWKH 0HHWLQJ 7KHȴQGLQJVDQGFRQWHQWVRIWKH year ended 31st March 2019 were Group Internal Audit reports have reviewed at a Meeting of the Audit EHHQGLVFXVVHGZLWKWKHUHOHYDQW Committee, together with the External PDQDJHPHQWVWDDQGVXEVHTXHQWO\ $XGLWRUV0HVVUV.30*SULRUWR 6JG the audit reports were circulated to release of same to the Regulatory 930DODODVHNHUD the Audit Committee and to the senior $XWKRULWLHVDQGWRWKHVKDUHKROGHUV Chairman – Audit Committee PDQDJHPHQW The Audit Committee was provided &DUVRQ&XPEHUEDWFK3/& ZLWKFRQȴUPDWLRQVDQGGHFODUDWLRQV 7KHREMHFWLYHVRIWKH*Ζ$ZRUNZDV DVUHTXLUHGE\WKH0DQDJHUV&DUVRQV &RORPER to have an independent review of 0DQDJHPHQW6HUYLFHV 3ULYDWH /LPLWHG 8th May 2019 the system of internal controls as WKDWWKHVDLGȴQDQFLDOVWDWHPHQWVZHUH HVWDEOLVKHGE\WKHPDQDJHPHQW prepared in accordance with the Sri its adequacy and integrity vis-à-vis /DQND$FFRXQWLQJ6WDQGDUGVDQGWKH REMHFWLYHVVHUYHGDQGWRGHWHUPLQHWKH LQIRUPDWLRQUHTXLUHGE\WKH&RPSDQLHV H[WHQWRIDGKHUHQFHWRWKHFRQWUROVE\ $FW1RRIWKHUHLQDQGSUHVHQWHG VWDUHVSRQVLEOHIRUWKHIXQFWLRQDQGWR a true and fair view of the Company’s WDNHFRUUHFWLYHSUHYHQWLYHDFWLRQZKHUH VWDWHRIDDLUVDVDWWKDWGDWHDQGWKH QHFHVVDU\ Company’s activities during the year XQGHUUHYLHZ 7KHLQWHULPȴQDQFLDOVWDWHPHQWVRI 3HJDVXV+RWHOVRI&H\ORQ3/&KDYH The Audit Committee has determined EHHQUHYLHZHGE\WKH$XGLW&RPPLWWHH WKDW0HVVUV.30*&KDUWHUHG 0HPEHUVDW$XGLW&RPPLWWHH Accountants, Auditors were independent Meetings, prior to release of same to RQWKHEDVLVWKDWWKH\GLGQRWFDUU\RXW the Regulatory Authorities and to the any management related functions of VKDUHKROGHUV WKH&RPSDQ\ Resulting from the introduction of the The Audit Committee has concurred to new audit report requirements last recommend to the Board of Directors year, the Audit Committee continued WKHUHDSSRLQWPHQWRI0HVVUV.30* the process to discuss the areas which DUHLGHQWLȴHGDV.H\$XGLW0DWWHUV 41 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 )LQDQFLDO6WDWHPHQWV 42 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 43 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 )LQDQFLDO&DOHQGDU Financial Year end 31st March 2019 53rd Annual General Meeting to be held on 13th June 2019 ANNOUNCEMENT OF RESULTS Interim Financial Statements published In terms of the Listing Rules of the Colombo Stock Exchange First Quarter ended 30th June 2018 14th August 2018 Second Quarter ended 30th September 2018 14th November 2018 Third Quarter ended 31st December 2018 14th February 2019 DIVIDEND First Interim Dividend for the year ended 31st March 2019 Paid on 26th March 2019 44 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 ΖQGHSHQGHQW$XGLWRUVȇ5HSRUW Ζ1'(3(1'(17$8'Ζ725ȇ65(3257 Audit of the Financial Statements section Key Audit Matters To the Shareholders of Pegasus Hotels RIRXUUHSRUW:HDUHLQGHSHQGHQWRI .H\DXGLWPDWWHUVDUHWKRVHPDWWHUV RI&H\ORQ3/& the Group in accordance with the Code WKDWLQRXUSURIHVVLRQDOMXGJPHQWZHUH RI(WKLFVLVVXHGE\&$6UL/DQND &RGHRI RIPRVWVLJQLȴFDQFHLQRXUDXGLWRIWKH 5HSRUWRQWKH$XGLWRIWKH)LQDQFLDO (WKLFV DQGZHKDYHIXOȴOOHGRXURWKHU FRPSDQ\ȴQDQFLDOVWDWHPHQWVDQGWKH 6WDWHPHQWV HWKLFDOUHVSRQVLELOLWLHVLQDFFRUGDQFH FRQVROLGDWHGȴQDQFLDOVWDWHPHQWVRI ZLWKWKH&RGHRI(WKLFV:HEHOLHYHWKDW Opinion WKHFXUUHQWSHULRG7KHVHPDWWHUVZHUH WKHDXGLWHYLGHQFHZHKDYHREWDLQHGLV addressed in the context of our audit of :HKDYHDXGLWHGWKHȴQDQFLDO VXɝFLHQWDQGDSSURSULDWHWRSURYLGHD WKHFRPSDQ\ȴQDQFLDOVWDWHPHQWVDQG statements of Pegasus Hotels of EDVLVIRURXURSLQLRQ WKHFRQVROLGDWHGȴQDQFLDOVWDWHPHQWV &H\ORQ3/& ȊWKH&RPSDQ\Ȋ DQGWKH as a whole, and in forming our opinion FRQVROLGDWHGȴQDQFLDOVWDWHPHQWVRI thereon, and we do not provide a WKH&RPSDQ\DQGLWVVXEVLGLDU\ ȊWKH VHSDUDWHRSLQLRQRQWKHVHPDWWHUV *URXSȋ ZKLFKFRPSULVHWKHVWDWHPHQW RIȴQDQFLDOSRVLWLRQDVDWVW0DUFK 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adequacy of RI5V PQSHUWDLQLQJWRWKHODQGH[WHQWRI RIWKHȴQDQFLDOSRVLWLRQRIWKH&RPSDQ\ impairment SHUFKHV7KHFRPSHQVDWLRQFODLPIRUWKHODQGH[WHQW and the Group as at 31st March 2019, provision made DQGRIWKHLUȴQDQFLDOSHUIRUPDQFHDQG SHUFKHVLV\HWWREHDQQRXQFHG+RZHYHURQWKHPDWWHU in relation to the FDVKȵRZVIRUWKH\HDUWKHQHQGHGLQ of prudence the Company made a provision amounting compensation DFFRUGDQFHZLWK6UL/DQND$FFRXQWLQJ WR5VPQRQWKHFRPSHQVDWLRQUHFHLYDEOHIRUWKH UHFHLYDEOH 6WDQGDUGV \HDUHQGHGVW0DUFK EDVHGRQWKHFRPSHQVDWLRQ DZDUGHGIRUWKHDIRUHPHQWLRQHG SHUFKHV • Assessing the Basis for Opinion adequacy of the $VVHVVLQJWKHUHFRYHUDEOHDPRXQWDQGWKHWLPLQJRI We conducted our audit in accordance ȴQDQFLDOVWDWHPHQW WKHFDVKSURFHHGVUHTXLUHVVLJQLȴFDQWMXGJPHQWVDQG ZLWK6UL/DQND$XGLWLQJ6WDQGDUGV disclosures, DVVXPSWLRQVWKHUHIRUHZHFRQVLGHUHGWKLVWREHDNH\ 6/$X6V 2XUUHVSRQVLELOLWLHVXQGHU including disclosures DXGLWPDWWHU WKRVHVWDQGDUGVDUHIXUWKHUGHVFULEHG of key assumptions LQWKH$XGLWRUȇV5HVSRQVLELOLWLHVIRUWKH DQGMXGJPHQWV 45 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 ΖQGHSHQGHQW$XGLWRUVȇ5HSRUW Other Information statements that are free from material As part of an audit in accordance 0DQDJHPHQWLVUHVSRQVLEOHIRUWKH misstatement, whether due to fraud or ZLWK6/$X6VZHH[HUFLVHSURIHVVLRQDO RWKHULQIRUPDWLRQ7KHRWKHULQIRUPDWLRQ HUURU MXGJPHQWDQGPDLQWDLQSURIHVVLRQDO comprises the information included VNHSWLFLVPWKURXJKRXWWKHDXGLW:H ΖQSUHSDULQJWKHȴQDQFLDOVWDWHPHQWV LQWKHDQQXDOUHSRUWEXWGRHVQRW DOVR PDQDJHPHQWLVUHVSRQVLEOHIRU LQFOXGHWKHȴQDQFLDOVWDWHPHQWVDQGRXU DVVHVVLQJWKH*URXSȇVDELOLW\WRFRQWLQXH Identify and assess the risks of $XGLWRUȇVUHSRUWWKHUHRQ as a going concern, disclosing, as material misstatement of the 2XURSLQLRQRQWKHȴQDQFLDOVWDWHPHQWV DSSOLFDEOHPDWWHUVUHODWHGWRJRLQJ ȴQDQFLDOVWDWHPHQWVZKHWKHUGXHWR does not cover the other information concern and using the going concern fraud or error, design and perform and we do not express any form of EDVLVRIDFFRXQWLQJXQOHVVPDQDJHPHQW audit procedures responsive DVVXUDQFHFRQFOXVLRQWKHUHRQ either intends to liquidate the Group or WRWKRVHULVNVDQGREWDLQDXGLW to cease operations, or has no realistic HYLGHQFHWKDWLVVXɝFLHQWDQG In connection with our audit of the DOWHUQDWLYHEXWWRGRVR DSSURSULDWHWRSURYLGHDEDVLV ȴQDQFLDOVWDWHPHQWVRXUUHVSRQVLELOLW\ IRURXURSLQLRQ7KHULVNRIQRW is to read the other information and, in Those charged with governance detecting a material misstatement doing so, consider whether the other DUHUHVSRQVLEOHIRURYHUVHHLQJWKH resulting from fraud is higher information is materially inconsistent &RPSDQ\ȇVDQGWKH*URXSȇVȴQDQFLDO than for one resulting from error, ZLWKWKHȴQDQFLDOVWDWHPHQWVRURXU UHSRUWLQJSURFHVV as fraud may involve collusion, NQRZOHGJHREWDLQHGLQWKHDXGLWRU forgery, intentional omissions, $XGLWRUȇV5HVSRQVLELOLWLHVIRUWKH$XGLW RWKHUZLVHDSSHDUVWREHPDWHULDOO\ misrepresentations, or the override RIWKH)LQDQFLDO6WDWHPHQWV PLVVWDWHG RILQWHUQDOFRQWURO 2XUREMHFWLYHVDUHWRREWDLQUHDVRQDEOH ΖIEDVHGRQWKHZRUNZHKDYH DVVXUDQFHDERXWZKHWKHUWKHȴQDQFLDO 2EWDLQDQXQGHUVWDQGLQJRI performed, we conclude that there is statements as a whole are free from internal control relevant to the a material misstatement of this other material misstatement, whether due to audit in order to design audit information, we are required to report fraud or error, and to issue an auditor’s procedures that are appropriate in WKDWIDFW:HKDYHQRWKLQJWRUHSRUWLQ UHSRUWWKDWLQFOXGHVRXURSLQLRQ WKHFLUFXPVWDQFHVEXWQRWIRUWKH WKLVUHJDUG 5HDVRQDEOHDVVXUDQFHLVDKLJKOHYHO purpose of expressing an opinion RIDVVXUDQFHEXWLVQRWDJXDUDQWHH RQWKHHHFWLYHQHVVRIWKH&RPSDQ\ 5HVSRQVLELOLWLHVRI0DQDJHPHQWDQG that an audit conducted in accordance DQGWKH*URXSȇVLQWHUQDOFRQWURO 7KRVH&KDUJHGZLWK*RYHUQDQFHIRU ZLWK6/$X6VZLOODOZD\VGHWHFWD WKH)LQDQFLDO6WDWHPHQWV PDWHULDOPLVVWDWHPHQWZKHQLWH[LVWV Evaluate the appropriateness of accounting policies used and the 0DQDJHPHQWLVUHVSRQVLEOHIRUWKH Misstatements can arise from fraud SUHSDUDWLRQRIȴQDQFLDOVWDWHPHQWVWKDW or error and are considered material UHDVRQDEOHQHVVRIDFFRXQWLQJ give a true and fair view in accordance if, individually or in the aggregate, estimates and related is closures ZLWK6UL/DQND$FFRXQWLQJ6WDQGDUGV WKH\FRXOGUHDVRQDEO\EHH[SHFWHG PDGHE\PDQDJHPHQW and for such internal control as WRLQȵXHQFHWKHHFRQRPLFGHFLVLRQV management determines is necessary RIXVHUVWDNHQRQWKHEDVLVRIWKHVH WRHQDEOHWKHSUHSDUDWLRQRIȴQDQFLDO ȴQDQFLDOVWDWHPHQWV 46 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 Conclude on the appropriateness EXVLQHVVDFWLYLWLHVZLWKLQWKH in our auditor’s report unless law or of management’s use of the going Group to express an opinion UHJXODWLRQSUHFOXGHVSXEOLFGLVFORVXUH FRQFHUQEDVLVRIDFFRXQWLQJDQG RQWKHFRQVROLGDWHGȴQDQFLDO DERXWWKHPDWWHURUZKHQLQH[WUHPHO\ EDVHGRQWKHDXGLWHYLGHQFH VWDWHPHQWV:HDUHUHVSRQVLEOH rare circumstances, we determine that REWDLQHGZKHWKHUDPDWHULDO for the direction, supervision and DPDWWHUVKRXOGQRWEHFRPPXQLFDWHG uncertainty exists related to SHUIRUPDQFHRIWKHJURXSDXGLW LQRXUUHSRUWEHFDXVHWKHDGYHUVH events or conditions that may cast :HUHPDLQVROHO\UHVSRQVLEOHIRU consequences of doing so would VLJQLȴFDQWGRXEWRQWKH*URXSȇV RXUDXGLWRSLQLRQ UHDVRQDEO\EHH[SHFWHGWRRXWZHLJK DELOLW\WRFRQWLQXHDVDJRLQJ WKHSXEOLFLQWHUHVWEHQHȴWVRIVXFK FRQFHUQΖIZHFRQFOXGHWKDWD We communicate with those charged FRPPXQLFDWLRQ material uncertainty exists, we with governance regarding, among are required to draw attention other matters, the planned scope Report on Other Legal and Regulatory in our auditor’s report to the DQGWLPLQJRIWKHDXGLWDQGVLJQLȴFDQW Requirements UHODWHGGLVFORVXUHVLQWKHȴQDQFLDO DXGLWȴQGLQJVLQFOXGLQJDQ\VLJQLȴFDQW $VUHTXLUHGE\VHFWLRQ RIWKH statements or, if such disclosures GHȴFLHQFLHVLQLQWHUQDOFRQWUROWKDW &RPSDQLHV$FW1RRIZH are inadequate, to modify our ZHLGHQWLI\GXULQJRXUDXGLW KDYHREWDLQHGDOOWKHLQIRUPDWLRQDQG RSLQLRQ2XUFRQFOXVLRQVDUHEDVHG explanations that were required for the We also provide those charged with RQWKHDXGLWHYLGHQFHREWDLQHG audit and, as far as appears from our governance with a statement that we up to the date of our auditor’s examination, proper accounting records have complied with ethical requirements UHSRUW+RZHYHUIXWXUHHYHQWVRU KDYHEHHQNHSWE\WKH&RPSDQ\ conditions may cause the Group in accordance with the Code of Ethics to cease to continue as a going regarding independence, and to &$6UL/DQNDPHPEHUVKLSQXPEHURI FRQFHUQ communicate with them all relationships WKHHQJDJHPHQWSDUWQHUUHVSRQVLEOHIRU and other matters that may signing this independent auditor’s report Evaluate the overall presentation, UHDVRQDEO\EHWKRXJKWWREHDURQRXU LV structure and content of the LQGHSHQGHQFHDQGZKHUHDSSOLFDEOH ȴQDQFLDOVWDWHPHQWVLQFOXGLQJ UHODWHGVDIHJXDUGV the disclosures, and whether the ȴQDQFLDOVWDWHPHQWVUHSUHVHQWWKH From the matters communicated with underlying transactions and events those charged with governance, we in a manner that achieves fair determine those matters that were of &+$57(5('$&&2817$176 SUHVHQWDWLRQ PRVWVLJQLȴFDQFHLQWKHDXGLWRIWKH &RORPER6UL/DQND ȴQDQFLDOVWDWHPHQWVRIWKHFXUUHQW 08th May 2019 2EWDLQVXɝFLHQWDSSURSULDWHDXGLW period and are therefore the key audit HYLGHQFHUHJDUGLQJWKHȴQDQFLDO PDWWHUV:HGHVFULEHWKHVHPDWWHUV information of the entities or 47 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 6WDWHPHQWRI3URȴWRU/RVVDQG2WKHU Comprehensive Income $OOȴJXUHVLQ6UL/DQNDQ5XSHHVWKRXVDQGV Group &RPSDQ\ )RUWKH\HDUHQGHGVW0DUFK Note 2019 2018 2019 2018 Revenue 11 677,550 684,841 631,266 586,665 Direct costs *URVVSURȴW 256,399 275,743 258,718 239,010 2WKHULQFRPHH[SHQVHV 12 11,000 10,475 6,220 7,457 Selling and promotional expenses Administrative expenses 3URȴWIURPRSHUDWLRQV 13 44,058 81,240 70,474 75,414 ΖPSDLUPHQWRQFRPSHQVDWLRQUHFHLYDEOH 20 - - Finance income 19,604 28,969 16,453 25,903 Finance costs 1HWȴQDQFHLQFRPH 14 17,374 27,702 15,748 25,902 /RVV SURȴWEHIRUHWD[DWLRQ 108,942 101,316 Income tax expenses 1,331 - Deferred taxation /RVV SURȴWIRUWKH\HDU 84,328 80,864 Other comprehensive income $FWXDULDOJDLQ ORVV IURPYDOXDWLRQRIHPSOR\HHEHQHȴWV 180 395 342 Related tax 6 2WKHUFRPSUHKHQVLYHLQFRPH H[SHQVH IRUWKH\HDU 155 7RWDOFRPSUHKHQVLYHH[SHQVHIRUWKH\HDU (DUQLQJV ORVV SHUVKDUH 5V 16 7KH1RWHVIURPSDJHVWR IRUPDQLQWHJUDOSDUWRIWKHVH)LQDQFLDO6WDWHPHQWV )LJXUHVLQEUDFNHWVLQGLFDWHGHGXFWLRQV 48 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 6WDWHPHQWRI)LQDQFLDO3RVLWLRQ $OOȴJXUHVLQ6UL/DQNDQ5XSHHVWKRXVDQGV Group &RPSDQ\ As at 31st March Note 2019 2018 2019 2018 $66(76 Non-current assets Property, plant and equipment 17 2,007,609 1,887,516 1,772,236 1,758,858 ΖQWDQJLEOHDVVHWV 18 115,287 115,287 - - ΖQYHVWPHQWLQVXEVLGLDU\ 19 - - 110,223 110,223 ΖQYHVWPHQWLQȴ[HGGHSRVLWV 20,575 - 20,575 - &RPSHQVDWLRQUHFHLYDEOH 20 24,759 169,966 24,759 169,966 Total non-current assets 2,168,230 2,172,769 1,927,793 2,039,047 Current assets Inventories 21 17,181 18,368 13,402 14,682 ΖQYHVWPHQWLQȴ[HGGHSRVLWV 93,631 126,012 93,631 69,172 )DLUYDOXHWKURXJKSURȴWRUORVVȴQDQFLDODVVHWV 22 29,482 - 29,482 - 7UDGHDQGRWKHUUHFHLYDEOHV 23 78,132 69,224 69,716 59,529 Cash and cash equivalents 24 8,870 22,418 8,254 9,721 Total current assets 227,296 236,022 214,485 153,104 Total assets 2,395,526 2,408,791 2,142,278 2,192,151 (48Ζ7<$1'/Ζ$%Ζ/Ζ7Ζ(6 (TXLW\ Stated capital 25 515,170 515,170 515,170 515,170 Capital reserves 26 1,060,602 1,060,602 973,052 973,052 Revenue reserves 27 349,546 458,395 316,190 405,035 7RWDOHTXLW\ 1,925,318 2,034,167 1,804,412 1,893,257 Non-current liabilities 'HIHUUHGWD[OLDELOLW\ 28 206,644 196,774 194,520 181,415 (PSOR\HHEHQHȴWV 29 19,950 17,250 13,776 11,356 /RDQVDQGERUURZLQJV 30 57,312 26,503 - - 7RWDOQRQFXUUHQWOLDELOLWLHV 283,906 240,527 208,296 192,771 Current liabilities 7UDGHDQGRWKHUSD\DEOHV 31 132,151 119,931 101,447 101,406 &XUUHQWWD[OLDELOLWLHV 2,828 5,690 3,915 4,700 /RDQVDQGERUURZLQJV 30 31,872 5,047 24,000 - Bank overdraft 24 19,451 3,429 208 17 Total current liabilities 186,302 134,097 129,570 106,123 Total liabilities 470,208 374,624 337,866 298,894 7RWDOHTXLW\DQGOLDELOLWLHV 2,395,526 2,408,791 2,142,278 2,192,151 1HWDVVHWVSHUVKDUH 5V 7KH1RWHVIURPSDJHVWR IRUPDQLQWHJUDOSDUWRIWKHVHȴQDQFLDOVWDWHPHQWV ΖFHUWLI\WKDWWKHVHȴQDQFLDOVWDWHPHQWVDUHLQFRPSOLDQFHZLWKWKHUHTXLUHPHQWVRI&RPSDQLHV$FW1RRI (Sgd.) 95:LMHVLQJKH Director-Finance &DUVRQV0DQDJHPHQW6HUYLFHV 3ULYDWH /LPLWHG 7KH%RDUGRI'LUHFWRUVLVUHVSRQVLEOHIRUWKHSUHSDUDWLRQDQGSUHVHQWDWLRQRIWKHVHȴQDQFLDOVWDWHPHQWV7KHVHȴQDQFLDOVWDWHPHQWVZHUHDSSURYHG E\WKH%RDUGRQWK0D\ $SSURYHGDQGVLJQHGRQEHKDOIRIWKH0DQDJHUV $SSURYHGDQGVLJQHGRQEHKDOIRIWKH%RDUG (Sgd.) 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(Sgd.) $3:HHUDWXQJH '&5*XQDZDUGHQD 0'D\DQDQGD Director Chairman Director &DUVRQV0DQDJHPHQW6HUYLFHV 3ULYDWH /LPLWHG 08th May 2019 49 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 6WDWHPHQWRI&KDQJHVLQ(TXLW\ $OOȴJXUHVLQ6UL/DQNDQ5XSHHVWKRXVDQGV Capital reserves 5HYHQXHUHVHUYHV 7RWDOHTXLW\ attributable 6WDWHG 5HYDOXDWLRQ Capital General 5HWDLQHG capital reserve accretion reserve earning WRHTXLW\ reserve KROGHUVRI the parent FRPSDQ\ Group Balance as at 1st April 2017 515,170 1,264,327 15,144 176 405,405 2,200,222 3URȴWIRUWKH\HDU - - - - 84,328 84,328 2WKHUFRPSUHKHQVLYHLQFRPHIRUWKH\HDU - - - 340 Total comprehensive income for the year - - - 84,668 $GMXVWPHQWRQODQGDFTXLVLWLRQ 1RWH - - - - Forfeited dividends - - - - 57 57 )LUVW ȴQDOGLYLGHQG - - - - )LUVWLQWHULPGLYLGHQG - - - - Balance as at 31st March 2018 515,170 1,045,458 15,144 176 458,219 2,034,167 Balance as at 1st April 2018 515,170 1,045,458 15,144 176 458,219 2,034,167 /RVVIRUWKH\HDU - - - - 2WKHUFRPSUHKHQVLYHLQFRPHIRUWKH\HDU - - - - 155 155 Total comprehensive expense for the year - - - - )LUVWLQWHULPGLYLGHQG - - - - Balance as at 31st March 2019 515,170 1,045,458 15,144 176 349,370 1,925,318 &RPSDQ\ Balance as at 1st April 2017 515,170 1,176,777 15,144 176 355,555 2,062,822 3URȴWIRUWKH\HDU - - - - 80,864 80,864 2WKHUFRPSUHKHQVLYHLQFRPHIRUWKH\HDU - - - 294 Total comprehensive income for the year - - - 81,158 $GMXVWPHQWRQODQGDFTXLVLWLRQ 1RWH - - - - Forfeited dividends - - - - 57 57 )LUVW ȴQDOGLYLGHQG - - - - )LUVWLQWHULPGLYLGHQG - - - - Balance as at 31st March 2018 515,170 957,908 15,144 176 404,859 1,893,257 Balance as at 1st April 2018 515,170 957,908 15,144 176 404,859 1,893,257 /RVVIRUWKH\HDU - - - - 2WKHUFRPSUHKHQVLYHH[SHQVHIRUWKH\HDU - - - - Total comprehensive expense for the year - - - - )LUVWLQWHULPGLYLGHQG - - - - Balance as at 31st March 2019 515,170 957,908 15,144 176 316,014 1,804,412 7KH1RWHVIURPSDJHVWR IRUPDQLQWHJUDOSDUWRIWKHVH)LQDQFLDO6WDWHPHQWV )LJXUHVLQEUDFNHWVLQGLFDWHGHGXFWLRQV 50 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 6WDWHPHQWRI&DVK)ORZ $OOȴJXUHVLQ6UL/DQNDQ5XSHHVWKRXVDQGV Group &RPSDQ\ )RUWKH\HDUHQGHGVW0DUFK Note 2019 2018 2019 2018 &DVKȵRZVIURPRSHUDWLQJDFWLYLWLHV /RVV SURȴWEHIRUHWD[DWLRQ 108,942 101,316 $GMXVWPHQWVIRU ΖQWHUHVWLQFRPHRQSODFHPHQWZLWKEDQNVDQGJRYHUQPHQW securities 14 1HWFKDQJHLQIDLUYDOXHRIIDLUYDOXHWKURXJKSURȴWRUORVV ȴQDQFLDODVVHWVXQLWWUXVW 14 Dividend income 14 - - - 8QZLQGLQJRIGLVFRXQWRQFRPSHQVDWLRQUHFHLYDEOH 14 - - ΖQWHUHVWH[SHQVHVRQEDQNERUURZLQJV 14 2,230 1,267 705 1 Depreciation on property, plant and equipment 17 62,826 64,085 58,118 59,238 3URȴW ORVVRQGLVSRVDORISURSHUW\SODQWDQGHTXLSPHQW 58 3URSHUW\SODQWDQGHTXLSPHQWZULWWHQR 4,899 - 4,899 - 3URYLVLRQIRUHPSOR\HHEHQHȴWV 4,119 3,878 3,024 2,796 ΖPSDLUPHQWRQFRPSHQVDWLRQUHFHLYDEOH 20 145,207 - 145,207 - 3URYLVLRQPDGH UHYHUVDORISURYLVLRQ IRULPSDLUPHQWRIWUDGH UHFHLYDEOHV 4,327 4,327 - 3URȴWEHIRUHZRUNLQJFDSLWDOFKDQJHV 119,116 148,336 141,380 136,612 'HFUHDVH LQFUHDVH LQLQYHQWRULHV 1,187 3,639 1,280 3,758 ΖQFUHDVH GHFUHDVHLQWUDGHDQGRWKHUUHFHLYDEOHV 15,802 16,823 ΖQFUHDVH GHFUHDVH LQWUDGHDQGRWKHUSD\DEOHV 11,975 &DVKJHQHUDWHGIURPRSHUDWLRQV 119,043 152,537 127,942 142,916 (PSOR\HHEHQHȴWVSDLG 29 Income tax paid 1HWFDVKJHQHUDWHGIURPRSHUDWLQJDFWLYLWLHV 116,273 146,800 126,513 140,260 &DVKȵRZVIURPLQYHVWLQJDFWLYLWLHV Purchase of property, plant and equipment 17 Proceeds from disposal of property, plant and equipment 2,789 3,061 1,123 3,060 ΖQYHVWPHQWLQȴ[HGGHSRVLWV 11,806 ΖQYHVWPHQWLQ GLVSRVDORIIDLUYDOXHWKURXJKSURȴWRUORVV ȴQDQFLDODVVHWV 1,648 1,648 Interest received 17,407 9,398 14,271 5,167 Dividend received - - - 1,203 1HWFDVKXVHGLQLQYHVWLQJDFWLYLWLHV &DVKȵRZVIURPȴQDQFLQJDFWLYLWLHV Dividend paid /RDQVDQGERUURZLQJVREWDLQHGGXULQJWKH\HDU 57,634 25,000 24,000 - ΖQWHUHVWSDLGRQEDQNERUURZLQJV 1HWFDVKJHQHUDWHGIURPXVHGLQȴQDQFLQJDFWLYLWLHV 36,027 6,825 1HW GHFUHDVH LQFUHDVHLQFDVKDQGFDVKHTXLYDOHQWV 4,535 &DVKDQGFDVKHTXLYDOHQWVDWWKHEHJLQQLQJRIWKH\HDU 18,989 41,454 9,704 5,169 &DVKDQGFDVKHTXLYDOHQWVDWWKHHQGRIWKH\HDU 24 18,989 8,046 9,704 7KH1RWHVIURPSDJHVWR IRUPDQLQWHJUDOSDUWRIWKHVH)LQDQFLDO6WDWHPHQWV )LJXUHVLQEUDFNHWVLQGLFDWHGHGXFWLRQV 51 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 1RWHVWRWKH)LQDQFLDO6WDWHPHQWV $OOȴJXUHVLQ6UL/DQNDQ5XSHHVWKRXVDQGV &25325$7(Ζ1)250$7Ζ21 G 3DUHQWHQWHUSULVHDQGXOWLPDWH %$6Ζ62)35(3$5$7Ζ21 D 5HSRUWLQJHQWLW\ parent enterprise D 6WDWHPHQWRIFRPSOLDQFH 3HJDVXV+RWHOVRI&H\ORQ3/& The Company’s Parent undertaking 7KHFRQVROLGDWHGȴQDQFLDO WKHȆ&RPSDQ\ȇ LVDOLPLWHGOLDELOLW\ as at 31 March 2019 is Carson statements of the Group and the Company incorporated and &XPEHUEDWFK3/& VHSDUDWHȴQDQFLDOVWDWHPHQWVRI GRPLFLOHGLQ6UL/DQNDDQGOLVWHGRQ the Company which comprise the 7KH&RPSDQ\ȇV8OWLPDWH3DUHQW WKH&RORPER6WRFN([FKDQJH VWDWHPHQWRIȴQDQFLDOSRVLWLRQWKH undertaking and controlling party is VWDWHPHQWRISURȴWRUORVVDQGRWKHU The address of the Company’s %XNLW'DUDK3/& comprehensive income, statement UHJLVWHUHGRɝFHLV1R of changes in equity and statement H 1XPEHURIHPSOR\HHV -DQDGKLSDWKL0DZDWKD&RORPER RIFDVKȵRZWRJHWKHUZLWKWKHQRWHV 7KHQXPEHURIHPSOR\HHVRIWKH WRWKHȴQDQFLDOVWDWHPHQWV 7KH3ULQFLSDOSODFHRIEXVLQHVVRI Group at the end of the year was DQG&RPSDQ\ the Company is situated at Santa 7KHȴQDQFLDOVWDWHPHQWVKDYH 0DULD0DZDWKD+HQGDOD:DWWDOD EHHQSUHSDUHGLQDFFRUGDQFHZLWK I 5HVSRQVLELOLWLHVIRUȴQDQFLDO 6UL/DQND$FFRXQWLQJ6WDQGDUGV 7KHVHFRQVROLGDWHGȴQDQFLDO VWDWHPHQWVDQGDSSURYDORI SUHȴ[HGERWK6/)56 FRUUHVSRQGLQJ statements for the year ended 31 ȴQDQFLDOVWDWHPHQWV WRΖ)56 DQG/.$6 FRUUHVSRQGLQJWR March 2019 comprise the Company 7KHERDUGRIGLUHFWRUVLV Ζ$6 SURPXOJDWHGE\7KHΖQVWLWXWHRI DQGLWVVXEVLGLDU\ WRJHWKHUUHIHUUHG UHVSRQVLEOHIRUSUHSDUDWLRQDQG &KDUWHUHG$FFRXQWDQWVRI6UL/DQND WRDVWKHȆ*URXSȇDQGLQGLYLGXDOO\DV SUHVHQWDWLRQRIWKHȴQDQFLDO &$6UL/DQND DQGFRPSOLHVZLWKWKH Ȇ*URXSHQWLWLHVȇ statements of the Company as requirements of the Companies Act 1RRI E 6XEVLGLDU\(TXLW\+RWHOV/LPLWHG per the provision of Companies $FW1RRIDQG6UL/DQND $IXOO\RZQHG6XEVLGLDU\(TXLW\ E %DVLVRIPHDVXUHPHQW $FFRXQWLQJ6WDQGDUGV7KH +RWHOV/LPLWHGZDVLQFRUSRUDWHGRQ GLUHFWRUVȇUHVSRQVLELOLW\RYHU 7KHFRQVROLGDWHGȴQDQFLDO XQGHUWKH&RPSDQLHV$FW1R ȴQDQFLDOVWDWHPHQWVIRUWKH\HDU VWDWHPHQWVKDYHEHHQSUHSDUHG RI ended 31 March 2019 is set out in RQDQDFFUXDOEDVLVDQGXQGHUWKH KLVWRULFDOFRVWEDVLVDQGDSSOLHG F 3ULQFLSDODFWLYLWLHVDQGQDWXUHRI detail in the statement of directors’ operations. 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IROORZLQJREVHUYDEOHGDWD LQWRWUDQVDFWLRQVZKHUHE\WKH\ 1RQGHULYDWLYHȴQDQFLDODVVHWV transfer assets recognized in its y 6LJQLȴFDQWȴQDQFLDOGLɝFXOW\RIWKH )LQDQFLDOΖQVWUXPHQWV VWDWHPHQWRIȴQDQFLDOSRVLWLRQEXW ERUURZHURULVVXHU UHWDLQHLWKHUDOORUVXEVWDQWLDOO\ The group and company recognise all of the risks and rewards of the ORVVDOORZDQFHVIRU(&/VRQȴQDQFLDO y DEUHDFKRIFRQWUDFWVXFKDVD WUDQVIHUUHGDVVHWVΖQWKHVHFDVHV DVVHWVPHDVXUHGDWDPRUWLVHGFRVW GHIDXOWRUEHLQJPRUHWKDQ GD\V the transferred assets are not past due; GHUHFRJQL]HG The group and company measure loss allowances at an amount equal y The restructuring of a loan or )LQDQFLDOOLDELOLWLHV WROLIHWLPH(&/V/RVVDOORZDQFHV DGYDQFHE\WKHJURXSDQGFRPSDQ\ The group and company IRUWUDGHUHFHLYDEOHVDUHDOZD\V on terms that the group and measured at an amount equal to GHUHFRJQL]HDȴQDQFLDOOLDELOLW\ company would not consider ZKHQLWVFRQWUDFWXDOREOLJDWLRQ OLIHWLPH(&/V otherwise; are discharged or cancelled, or When determining whether the H[SLUH7KHJURXSDQGFRPSDQ\ y LWLVSUREDEOHWKDWWKHERUURZHUZLOO FUHGLWULVNRIDȴQDQFLDODVVHW GHUHFRJQL]HDȴQDQFLDOOLDELOLW\ZKHQ HQWHUEDQNUXSWF\RURWKHUȴQDQFLDO KDVLQFUHDVHGVLJQLȴFDQWO\VLQFH LWVWHUPVDUHPRGLȴHGDQGWKHFDVK UHRUJDQLVDWLRQ initial recognition and when ȵRZVRIWKHPRGLȴHGOLDELOLW\DUH HVWLPDWLQJ(&/VWKHJURXSDQG 3UHVHQWDWLRQRIDOORZDQFHIRU(&/LQ VXEVWDQWLDOO\GLHUHQWLQZKLFKFDVH FRPSDQ\FRQVLGHUUHDVRQDEOH WKHVWDWHPHQWRIȴQDQFLDOSRVLWLRQ DQHZȴQDQFLDOOLDELOLW\EDVHGRQWKH DQGVXSSRUWDEOHLQIRUPDWLRQWKDW PRGLȴHGWHUPVLVUHFRJQL]HGDWIDLU LVUHOHYDQWDQGDYDLODEOHZLWKRXW /RVVDOORZDQFHVIRUȴQDQFLDODVVHWV YDOXH XQGXHFRVWRUHRUW7KLVLQFOXGHV measured at amortised cost are deducted from the gross carrying 2QGHUHFRJQLWLRQRIDȴQDQFLDO ERWKTXDQWLWDWLYHDQGTXDOLWDWLYH DPRXQWRIWKHDVVHWV OLDELOLW\WKHGLHUHQFHEHWZHHQWKH LQIRUPDWLRQDQGDQDO\VLVEDVHGRQ carrying amount extinguished and the group and company’s historical the consideration paid (including experience and informed credit any non-cash assets transferred or assessment and including forward- 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y restructuring of an amount due after the initial recognition of the ORVVHVDUHOLNHO\WREHJUHDWHURU to the Company and the Group OHVVHUWKDQVXJJHVWHGE\KLVWRULFDO DVVHWDQGWKDWORVVHYHQW V KDG on terms that the Company and an impact on the estimated future WUHQGV the Group would not consider FDVKȵRZVRIWKDWDVVHWWKDWFDQEH otherwise; An impairment loss is calculated as HVWLPDWHGUHOLDEO\ y LQGLFDWLRQVWKDWDGHEWRURULVVXHU WKHGLHUHQFHEHWZHHQDQDVVHWȇV carrying amount and the present 2EMHFWLYHHYLGHQFHWKDWȴQDQFLDO ZLOOHQWHUEDQNUXSWF\ assets are impaired includes value of the estimated future cash y adverse changes in the payment GHIDXOWRUGHOLQTXHQF\E\DGHEWRU ȵRZVGLVFRXQWHGDWWKHDVVHWȇV VWDWXVRIERUURZHUVRULVVXHUV restructuring of an amount due to RULJLQDOHHFWLYHLQWHUHVWUDWH the group and company on terms y the disappearance of an active /RVVHVDUHUHFRJQL]HGLQSURȴWRU that the group and company would PDUNHWIRUDVHFXULW\EHFDXVHRI ORVVDQGUHȵHFWHGLQDQDOORZDQFH not consider otherwise, indications ȴQDQFLDOGLɝFXOWLHV DFFRXQW:KHQWKH*URXSFRQVLGHUV that there are no realistic prospects WKDWDGHEWRURULVVXHUZLOOHQWHU y REVHUYDEOHGDWDLQGLFDWLQJWKDW of recovery of the asset, the EDQNUXSWF\RUWKHGLVDSSHDUDQFH WKHUHLVDPHDVXUDEOHGHFUHDVH UHOHYDQWDPRXQWVDUHZULWWHQR RIDQDFWLYHPDUNHWIRUDVHFXULW\ LQWKHH[SHFWHGFDVKȵRZVIURPD If the amount of impairment loss In addition, for an investment in JURXSRIȴQDQFLDODVVHWV DQHTXLW\VHFXULW\DVLJQLȴFDQWRU VXEVHTXHQWO\GHFUHDVHVDQGWKH GHFUHDVHFDQEHUHODWHGREMHFWLYHO\ prolonged decline in its fair value )LQDQFLDODVVHWVPHDVXUHGDW to an event occurring after the EHORZLWVFRVWLVREMHFWLYHHYLGHQFH DPRUWL]HGFRVW impairment was recognized, RILPSDLUPHQW The Group considers evidence of then the previously recognized LPSDLUPHQWIRUWKHVHDVVHWVDWERWK 1RQGHULYDWLYHȴQDQFLDODVVHWV impairment loss is reversed through an individual asset and a collective SURȴWRUORVV $ȴQDQFLDODVVHWQRWFODVVLȴHGDV OHYHO$OOLQGLYLGXDOO\VLJQLȴFDQW DWIDLUYDOXHWKURXJKSURȴWRUORVV assets are individually 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has date to determine whether there UHFRJQL]HGLQUHVSHFWRI&*8VDUH GLHUHQWXVHIXOOLYHVWKHQWKH\DUH LVDQ\LQGLFDWLRQRILPSDLUPHQWΖI DOORFDWHGȴUVWWRUHGXFHWKHFDUU\LQJ accounted for as separate items any such indication exists, or when amount of any goodwill allocated to PDMRUFRPSRQHQWV RISURSHUW\ annual impairment testing for an WKH&*8 JURXSRI&*8V DQGWKHQ SODQWDQGHTXLSPHQW asset is required, then the asset’s to reduce the carrying amounts of UHFRYHUDEOHDPRXQWLVHVWLPDWHG WKHRWKHUDVVHWVLQWKH&*8 JURXS Any gain or loss on disposal of Goodwill is tested annually for RI&*8V RQDSURUDWDEDVLV an item of property, plant and LPSDLUPHQW HTXLSPHQWLVUHFRJQL]HGLQSURȴWRU An impairment loss in respect ORVV For impairment testing, assets are RIJRRGZLOOLVQRWUHYHUVHG)RU grouped together into the smallest other assets, an impairment loss Cost Model group of assets that generates cash is reversed only to the extent that The Group applies the cost model LQȵRZVIURPFRQWLQXLQJXVHWKDW the asset’s carrying amount does to property, plant and equipment are largely independent of the cash not exceed the carrying amount except for freehold land and LQȵRZVRIRWKHUDVVHWVRU&*8V WKDWZRXOGKDYHEHHQGHWHUPLQHG EXLOGLQJV An impairment loss is recognized net of depreciation or amortization, if the carrying amount of an asset LIQRLPSDLUPHQWORVVKDGEHHQ Revaluation of freehold properties RUFDVKJHQHUDWLQJXQLW &*8 UHFRJQL]HG The Group applies the revaluation H[FHHGVLWVUHFRYHUDEOHDPRXQW model to the entire class of freehold YLL 6WDWHGFDSLWDO *RRGZLOODULVLQJIURPDEXVLQHVV ODQGDQGEXLOGLQJV$UHYDOXDWLRQLV FRPELQDWLRQLVDOORFDWHGWR&*8VRU Ordinary shares FDUULHGRXWDWOHDVWRQFHLQWKUHH JURXSVRI&*8VWKDWDUHH[SHFWHG 2UGLQDU\VKDUHVDUHFODVVLȴHG WRȴYH \HDUVLQRUGHUWRHQVXUH WREHQHȴWIURPWKHV\QHUJLHVRIWKH DVHTXLW\ΖQFUHPHQWDO&RVWV WKDWWKHERRNYDOXHUHȵHFWVWKH FRPELQDWLRQ DWWULEXWDEOHWRWKHLVVXHRIRUGLQDU\ UHDOL]DEOHYDOXHRIVXFKDVVHWVDQG shares are recognized as an such values are depreciated over 7KHUHFRYHUDEOHDPRXQWRIDQDVVHW H[SHQVH the remaining useful lives of such RU&*8LVWKHJUHDWHURILWVYDOXHLQ DVVHWVZKHUHYHUDSSOLFDEOH use and its fair value less costs to G 3URSHUW\SODQWDQGHTXLSPHQW VHOOΖQDVVHVVLQJYDOXHLQXVHWKH Increases in the carrying amount L 5HFRJQLWLRQDQGPHDVXUHPHQW HVWLPDWHGIXWXUHFDVKȵRZVDUH on revaluation is recognized in Property, Plant, and Equipment discounted to their present value other comprehensive income DUHUHFRJQL]HGLILWLVSUREDEOHWKDW using a pre-tax discount rate that and accumulated in equity in IXWXUHHFRQRPLFEHQHȴWVDVVRFLDWHG UHȵHFWVFXUUHQWPDUNHWDVVHVVPHQWV the revaluation reserve unless it ZLWKWKHDVVHWZLOOȵRZWRWKH of the time value of money and the reverses a previous revaluation *URXSDQGWKHFRVWFDQEHUHOLDEO\ ULVNVVSHFLȴFWRWKHDVVHWRU&*8 decrease relating to the same asset, PHDVXUHGΖWHPVRISURSHUW\SODQW which was previously recognized as An impairment loss is recognized and equipment are measured at DQH[SHQVHΖQWKHVHFLUFXPVWDQFHV if the carrying amount of an asset FRVWIDLUYDOXHOHVVDFFXPXODWHG the increase is recognized as depreciation and any accumulated RU&*8H[FHHGVLWVHVWLPDWHG income to the extent of the previous UHFRYHUDEOHDPRXQW LPSDLUPHQWORVVHVLIDQ\ ZULWHGRZQ 61 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 1RWHVWRWKH)LQDQFLDO6WDWHPHQWV $OOȴJXUHVLQ6UL/DQNDQ5XSHHVWKRXVDQGV Decreases in the carrying amount The estimated useful lives for the plant and equipment and are RQUHYDOXDWLRQWKDWRVHWSUHYLRXV current and comparative years of UHFRJQL]HGQHWZLWKLQȆRWKHULQFRPHȇ increases of the same individual VLJQLȴFDQWLWHPVRISURSHUW\SODQW LQWKH6WDWHPHQWRISURȴWRUORVV assets are charged against and equipment are as follows; When revalued assets are sold, the revaluation reserve directly in amounts included in the revaluation No of Years HTXLW\$OORWKHUGHFUHDVHVDUH reserve are transferred to retained UHFRJQL]HGLQSURȴWRUORVV Buildings – freehold 3-75 HDUQLQJV Plant and machinery 3-27 $Q\EDODQFHUHPDLQLQJLQWKH Motor vehicles 4-5 v. Capital work-in-progress 2ɝFHHTXLSPHQW 5-16 revaluation surplus in respect of )XUQLWXUHȴWWLQJV 5-16 Capital work-in-progress represents an asset, is transferred directly to Computer equipment’s 3-5 the accumulated cost of materials DFFXPXODWHGSURȴWVRQUHWLUHPHQW Cutlery, crockery and 5 and other costs directly related to RUGLVSRVDORIWKHDVVHW glassware WKHFRQVWUXFWLRQRIDQDVVHW&DSLWDO work-in- progress is transferred to LL 6XEVHTXHQWFRVW 'HSUHFLDWLRQRIDQDVVHWEHJLQV the respective asset accounts at the 6XEVHTXHQWFRVWLVFDSLWDOL]HG ZKHQLWLVDYDLODEOHIRUXVHRULQ WLPHLWLVVXEVWDQWLDOO\FRPSOHWHG RQO\LILVSUREDEOHWKDWWKHIXWXUH respect of self-constructed assets, DQGUHDG\IRULWVLQWHQGHGXVH HFRQRPLFEHQHȴWVDVVRFLDWHGZLWK from the date that the asset is WKHH[SHQGLWXUHZLOOȵRZWRWKH FRPSOHWHGDQGUHDG\IRUXVH YL %RUURZLQJFRVW *URXS7KHFRVWVRIGD\WRGD\ Borrowing costs are recognized Depreciation of an asset ceases at servicing of property, plant and as an expense in the period in the earlier of the date that the asset HTXLSPHQWLVUHFRJQL]HGLQSURȴWRU which they are incurred, except to LVFODVVLȴHGDVKHOGIRUVDOHDQGWKH ORVVDVLQFXUUHG WKHH[WHQWZKHUHERUURZLQJFRVWV GDWHWKDWWKHDVVHWLVGHUHFRJQL]HG WKDWDUHGLUHFWO\DWWULEXWDEOHWR LLL 'HSUHFLDWLRQ the acquisition, construction, or Depreciation methods, useful lives Depreciation is calculated to write production of a qualifying asset, and residual values are reviewed at RWKHFRVWRILWHPVRISURSHUW\ ZKLFKWDNHVDVXEVWDQWLDOSHULRGRI HDFKUHSRUWLQJGDWHDQGDGMXVWHGLI plant and equipment less their time to get ready for its intended DSSURSULDWH estimated residual values using use or sale, are capitalized as part WKHVWUDLJKWOLQHEDVLVRYHUWKHLU RIWKHVSHFLȴFDVVHW LY 'HUHFRJQLWLRQ estimated useful lives, and is JHQHUDOO\UHFRJQL]HGLQSURȴW An item of property, plant and 7KHDPRXQWRIERUURZLQJFRVWV or loss, unless the amount is equipment is derecognized upon ZKLFKDUHHOLJLEOHIRUFDSLWDOL]DWLRQ included in the carrying amount of disposal of or when no future is determined in accordance with DQRWKHUDVVHW/HDVHGDVVHWVDUH HFRQRPLFEHQHȴWVDUHH[SHFWHG /.$6Ȋ%RUURZLQJ&RVWVȋ depreciated over the shorter of the IURPLWVXVHRUGLVSRVDO7KHJDLQV lease term and their useful lives or losses arising on derecognition Borrowing costs incurred in respect XQOHVVLWLVUHDVRQDEO\FHUWDLQWKDW GLVSRVDORUUHWLUHPHQW RIDQLWHP RIVSHFLȴFORDQVWKDWDUHXWLOL]HGIRU WKH*URXSZLOOREWDLQRZQHUVKLSE\ of property, plant and equipment UHQRYDWLRQSURMHFWRIWKHEXLOGLQJV WKHHQGRIWKHOHDVHWHUP/DQGLV DUHGHWHUPLQHGE\FRPSDULQJWKH KDYHEHHQFDSLWDOL]HGDVDSDUW QRWGHSUHFLDWHG proceeds from disposal with the RIWKHFRVWRIWKH%XLOGLQJV7KH carrying amount of the property, capitalisation will cease when the EXLOGLQJLVUHDG\IRUXVH 62 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 The amounts so capitalised and the iii. Amortization proceeds and the carrying amount capitalisation rates are disclosed Amortization is calculated to write of the assets and are recognized in the notes to the Financial RWKHFRVWRILQWDQJLEOHDVVHWV LQSURȴWRUORVVZKHQWKHDVVHWLV 6WDWHPHQWV less their estimated residual values GHUHFRJQL]HG using the straight-line method over H ΖQWDQJLEOHDVVHWVDQGJRRGZLOO their estimated useful lives, and is I ΖQYHQWRULHV L 5HFRJQLWLRQDQGPHDVXUHPHQW JHQHUDOO\UHFRJQL]HGLQSURȴWRU Inventories are measured at the Goodwill ORVV*RRGZLOOLVQRWDPRUWL]HG ORZHURIFRVWDQGQHWUHDOL]DEOH YDOXH7KHFRVWRILQYHQWRULHVDUH Goodwill has arisen on the The estimated useful lives for the determined on a weighted average DFTXLVLWLRQRIWKHVXEVLGLDU\ current and comparative years are EDVLVIRUIRRGLWHPVZKLFKDUH Goodwill is measured at cost less as follows; DVFHUWDLQHGRQȴUVWLQȴUVWRXW DFFXPXODWHGLPSDLUPHQWORVVHV EDVLV7KHFRVWVDUHGHULYHGRQWKH Software No of Years IROORZLQJEDVHV All computer software costs Software licenses 3-10 LQFXUUHGOLFHQVHGIRUXVHE\WKH /LQHQVWRFN In the year of purchase Company and the Group, which are Amortization methods, useful lives at cost of purchase and not integrally related to associated and residual values are reviewed at in the second year in KDUGZDUHZKLFKFDQEHFOHDUO\ HDFKUHSRUWLQJGDWHDQGDGMXVWHGLI XVHDWRIWKHFRVW LGHQWLȴHGUHOLDEO\PHDVXUHGDQGLWȇV DSSURSULDWH RISXUFKDVH SUREDEOHWKDWWKH\ZLOOOHDGWRIXWXUH Food items :HLJKWHGDYHUDJHEDVLV HFRQRPLFEHQHȴWVDUHLQFOXGHG iv. 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annually to determine FRPPLWPHQWV capitalized only when it increase the whether the useful life assessment FRQWLQXHVWREHVXSSRUWDEOH IXWXUHHFRQRPLFEHQHȴWVHPERGLHG K (PSOR\HHEHQHȴWV LQWKHVSHFLȴFDVVHWWRZKLFKLW L 6KRUWWHUPHPSOR\HHEHQHȴWV UHODWH$OORWKHUH[SHQGLWXUH Y 'HUHFRJQLWRQ including expenditure on internally Gains or losses arising from 6KRUWWHUPHPSOR\HHEHQHȴW JHQHUDWHGJRRGZLOODQGEUDQGV GHUHFRJQLWLRQRIDQLQWDQJLEOH REOLJDWLRQVDUHPHDVXUHGRQ DUHUHFRJQL]HGLQSURȴWRUORVVDV assets are measured as the DQXQGLVFRXQWHGEDVLVDQGDUH LQFXUUHG GLHUHQFHEHWZHHQWKHQHWGLVSRVDO expensed as the related service is 63 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 1RWHVWRWKH)LQDQFLDO6WDWHPHQWV $OOȴJXUHVLQ6UL/DQNDQ5XSHHVWKRXVDQGV SURYLGHG$OLDELOLW\LVUHFRJQL]HG PHDVXUHPHQWRIWKHQHWGHȴQHG L 3URYLVLRQV IRUWKHDPRXQWH[SHFWHGWREH EHQHȴWOLDELOLW\ZKLFKFRPSULVH A provision is recognized if, as a paid if the Company and the Group of actuarial gains and losses are result of a past event, the Group has a present legal or constructive UHFRJQL]HGLPPHGLDWHO\LQ2&Ζ7KH has a present legal or constructive REOLJDWLRQWRSD\WKLVDPRXQWDVD Group determines the net interest REOLJDWLRQWKDWFDQEHHVWLPDWHG UHVXOWRISDVWVHUYLFHSURYLGHGE\ H[SHQVHRQWKHQHWGHȴQHGEHQHȴW UHOLDEO\DQGLWLVSUREDEOHWKDWDQ WKHHPSOR\HHDQGWKHREOLJDWLRQ OLDELOLW\IRUWKHSHULRGE\DSSO\LQJ RXWȵRZRIHFRQRPLFEHQHȴWVZLOO FDQEHHVWLPDWHGUHOLDEO\ the discount rate used to measure EHUHTXLUHGWRVHWWOHWKHREOLJDWLRQ WKHGHȴQHGEHQHȴWREOLJDWLRQDWWKH 3URYLVLRQVDUHGHWHUPLQHGE\ LL 'HȴQHGFRQWULEXWLRQSODQV EHJLQQLQJRIWKHDQQXDOSHULRGWR discounting the expected future HPSOR\HHVȇ3URYLGHQWIXQGDQG WKHWKHQQHWGHȴQHGOLDELOLW\WDNLQJ FDVKȵRZVDWDSUHWD[UDWHWKDW HPSOR\HHVȇWUXVWIXQG in to account any changes in the net UHȵHFWVFXUUHQWPDUNHWDVVHVVPHQWV $GHȴQHGFRQWULEXWLRQSODQLVD GHȴQHGEHQHȴWOLDELOLW\GXULQJWKH of the time value of money and SRVWHPSOR\PHQWEHQHȴWSODQ SHULRGDVDUHVXOWRIFRQWULEXWLRQV WKHULVNVVSHFLȴFWRWKHOLDELOLW\ XQGHUZKLFKDQHQWLW\SD\Vȴ[HG DQGEHQHȴWSD\PHQWV1HWLQWHUHVW The unwinding of the discount is FRQWULEXWLRQVLQWRDVHSDUDWH expense and other expenses UHFRJQL]HGDVȴQDQFHFRVW entity and will have no legal or UHODWHGWRGHȴQHGEHQHȴWSODQVDUH FRQVWUXFWLYHREOLJDWLRQWRSD\ UHFRJQL]HGLQSURȴWRUORVV M &RQWLQJHQWOLDELOLWLHVDQG IXUWKHUDPRXQWV(PSOR\HHVDUH contingent assets 7KHOLDELOLW\LVQRWH[WHUQDOO\IXQGHG HOLJLEOHIRU(PSOR\HHVȇ3URYLGHQW $FRQWLQJHQWOLDELOLW\LVDSRVVLEOH )XQGFRQWULEXWLRQVDQG(PSOR\HHVȇ REOLJDWLRQWKDWDULVHVIURPSDVW LY 7HUPLQDWLRQEHQHȴWV 7UXVW)XQGFRQWULEXWLRQVLQOLQHZLWK HYHQWVZKRVHH[LVWHQFHZLOOEH UHVSHFWLYHVWDWXWHVDQGUHJXODWLRQV 7HUPLQDWLRQEHQHȴWVDUHUHFRJQL]HG FRQȴUPHGE\WKHRFFXUUHQFHRU 7KH*URXSFRQWULEXWHVDQG as an expense when the Company non-occurrence of one or more of gross emoluments of employees DQGWKH*URXSLVGHPRQVWUDEO\ XQFHUWDLQIXWXUHHYHQWVEH\RQG to Employees’ Provident Fund and committed, without a realistic the control of the Company and Employees’ Trust Fund respectively SRVVLELOLW\RIZLWKGUDZDOWRDIRUPDO WKH*URXSRUDSUHVHQWREOLJDWLRQ and is recognized as an expense in detailed plan to either terminate WKDWLVQRWUHFRJQL]HGEHFDXVHLW SURȴWDQGORVVLQWKHSHULRGVGXULQJ HPSOR\PHQWEHIRUHWKHQRUPDO LVQRWSUREDEOHWKDWDQRXWȵRZRI ZKLFKVHUYLFHVDUHUHQGHUHGE\ retirement date, or to provide UHVRXUFHVZLOOEHUHTXLUHGWRVHWWOH HPSOR\HHV WHUPLQDWLRQEHQHȴWVDVDUHVXOW WKHREOLJDWLRQ RIDQRHUPDGHWRHQFRXUDJH LLL 'HȴQHGEHQHȴWSODQV YROXQWDU\UHGXQGDQF\7HUPLQDWLRQ $FRQWLQJHQWOLDELOLW\DOVRDULVHV 7KH*URXSQHWREOLJDWLRQLQUHVSHFW EHQHȴWVIRUYROXQWDU\UHGXQGDQFLHV in extremely rare cases where RIGHȴQHGEHQHȴWSODQLVFDOFXODWHG are recognized as an expense if the WKHUHLVDOLDELOLW\WKDWFDQQRWEH E\HVWLPDWLQJWKHDPRXQWRIIXWXUH Company and the Group has made UHFRJQL]HGEHFDXVHLWFDQQRWEH EHQHȴWVWKDWHPSOR\HHVKDYH DQRHURIYROXQWDU\UHGXQGDQF\ PHDVXUHGUHOLDEO\7KH&RPSDQ\ earned in current and prior periods LWLVSUREDEOHWKDWWKHRHUZLOO and the Group does not recognize DQGGLVFRXQWLQJWKDWDPRXQW EHDFFHSWHGDQGWKHQXPEHURI DFRQWLQJHQWOLDELOLW\EXWGLVFORVHV DFFHSWDQFHVFDQEHHVWLPDWHG 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Room revenue *URXS7KH&RPSDQ\DQGWKH*URXS DVȴQDQFHOHDVHV7KHOHDVHG 5RRPUHYHQXHLVUHFRJQL]HGEDVHG does not recognize contingent assets are measured initially at an RQWKHQXPEHURIURRPVRFFXSLHG DVVHWVEXWGLVFORVHVLWVH[LVWHQFH amount equals to the lower of their ZKHUHLQȵRZVRIHFRQRPLFEHQHȴWV fair value and the present value LL )RRGDQGEHYHUDJHUHYHQXH DUHSUREDEOHEXWQRWYLUWXDOO\ RIWKHPLQLPXPOHDVHSD\PHQWV 5HYHQXHIURPIRRGDQGEHYHUDJHLV FHUWDLQΖQWKHDFTXLVLWLRQRI 6XEVHTXHQWWRLQLWLDOUHFRJQLWLRQ UHFRJQL]HGDWWKHWLPHRIWKHVDOH VXEVLGLDULHVE\WKHJURXSXQGHU the assets are accounted for in EXVLQHVVFRPELQDWLRQVFRQWLQJHQW accordance with the accounting LLL 2WKHULQFRPH OLDELOLWLHVDVVXPHGDUHPHDVXUHG SROLF\DSSOLFDEOHWRWKHDVVHW 2WKHULQFRPHLQFOXGLQJODXQGU\DQG initially at their fair value at the games are recognized on an accrual acquisition date, irrespective of the Assets held under other leases are EDVLV H[WHQWRIDQ\PLQRULW\LQWHUHVW FODVVLȴHGDVRSHUDWLQJOHDVHVDQG are not recognized in the Group’s LY 'LYLGHQGLQFRPH N /HDVHV VWDWHPHQWRIȴQDQFLDOSRVLWLRQ Dividend income is recognized Determining whether an agreement LQSURȴWRUORVVRQWKHGDWHWKH contains a lease However, the Company has only entities right to receive dividend is operating leases as at the reporting HVWDEOLVKHG At inception of an arrangement, SHULRG the Group determines whether the P ([SHQGLWXUHUHFRJQLWLRQ DUUDQJHPHQWLVRUFRQWDLQVDOHDVH Lease payments All expenditures incurred in the Payments made under operating UXQQLQJRIWKHEXVLQHVVDQGLQ At inception or on reassessment OHDVHVDUHUHFRJQL]HGLQSURȴW maintaining the property, plant & of an arrangement that contains RUORVVRQDVWUDLJKWOLQHEDVLV HTXLSPHQWLQDVWDWHRIHɝFLHQF\ a lease, the Group separates RYHUWKHWHUPRIWKHOHDVH/HDVH KDVEHHQFKDUJHGWRLQFRPHLQ payments and other consideration incentives received are recognized DUULYLQJDWWKHSURȴWRUORVVIRUWKH UHTXLUHGE\WKHDUUDQJHPHQWLQWR as an integral part of the total lease \HDU those for the lease and those for H[SHQVHRYHUWKHWHUPRIWKHOHDVH RWKHUHOHPHQWVRQWKHEDVLVRIWKHLU Q )LQDQFHLQFRPHDQGȴQDQFHFRVWV UHODWLYHIDLUYDOXHVΖIWKH*URXS ΖQFRPH6WDWHPHQW FRQFOXGHVIRUDȴQDQFHOHDVHWKDW Finance income comprises O 5HYHQXH LWLVLPSUDFWLFDEOHWRVHSDUDWHWKH interest income on funds invested Revenue is recognized to the SD\PHQWVUHOLDEO\WKHQDQDVVHW and unwinding of discount on H[WHQWWKDWLWLVSUREDEOHWKDWWKH DQGDOLDELOLW\DUHUHFRJQL]HGDWDQ FRPSHQVDWLRQUHFHLYDEOHΖQWHUHVW amount equal to the fair value of HFRQRPLFEHQHȴWVZLOOȵRZWR income is recognized as it accrues the Group, and the revenue and WKHXQGHUO\LQJDVVHW VXEVHTXHQWO\ LQSURȴWRUORVVXVLQJWKHHHFWLYH WKHOLDELOLW\LVUHGXFHGDVSD\PHQWV DVVRFLDWHGFRVWVLQFXUUHGRUWREH interest method gains on the DUHPDGHDQGDQLPSXWHGȴQDQFH LQFXUUHGFDQEHUHOLDEO\PHDVXUHG re-measurement to fair value of Revenue is measured at the fair FRVWRQWKHOLDELOLW\LVUHFRJQL]HG any pre-existing interest in an value of the consideration received using the Group’s incremental DFTXLUHLQDEXVLQHVVFRPELQDWLRQ ERUURZLQJUDWH RUUHFHLYDEOHQHWRIWUDGHGLVFRXQWV 65 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 1RWHVWRWKH)LQDQFLDO6WDWHPHQWV $OOȴJXUHVLQ6UL/DQNDQ5XSHHVWKRXVDQGV gains on hedging instruments that L &XUUHQWWD[DWLRQ y WD[DEOHWHPSRUDU\GLHUHQFHV DUHUHFRJQL]HGLQSURȴWRUORVV Current tax comprises the expected arising on the initial recognition of DQGUHFODVVLȴFDWLRQVRIQHWJDLQV WD[SD\DEOHRUUHFHLYDEOHRQWKH JRRGZLOO previously recognized in other WD[DEOHLQFRPHRUORVVIRUWKH\HDU FRPSUHKHQVLYHLQFRPHΖQWHUHVW DQGDQ\DGMXVWPHQWWRWKHWD[ Deferred tax assets are recognized income is recognized as it accrues SD\DEOHRUUHFHLYDEOHLQUHVSHFW for unused tax losses, unused tax LQSURȴWRUORVVXVLQJWKHHHFWLYH RISUHYLRXV\HDUV7KHDPRXQWRI FUHGLWVDQGGHGXFWLEOHWHPSRUDU\ LQWHUHVWPHWKRG FXUUHQWWD[SD\DEOHRUUHFHLYDEOH GLHUHQFHVWRWKHH[WHQWWKDWLW LVWKHEHVWHVWLPDWHRIWKHWD[ LVSUREDEOHWKDWIXWXUHWD[DEOH Finance costs comprise interest DPRXQWH[SHFWHGWREHSDLGRU SURȴWVZLOOEHDYDLODEOHDJDLQVW H[SHQVHRQERUURZLQJVXQZLQGLQJ UHFHLYHGWKDWUHȵHFWVXQFHUWDLQW\ ZKLFKWKH\FDQEHXVHG)XWXUH of the discount on provisions and UHODWHGWRLQFRPHWD[HVLIDQ\ΖWLV WD[DEOHSURȴWVDUHGHWHUPLQHG corporate guarantee charges, measured using tax rates enacted EDVHGRQWKHUHYHUVDORIUHOHYDQW deferred consideration, dividends RUVXEVWDQWLYHO\HQDFWHGDWWKH WD[DEOHWHPSRUDU\GLHUHQFHVΖI RQSUHIHUHQFHVKDUHVFODVVLȴHGDV UHSRUWLQJGDWH&XUUHQWWD[SD\DEOH WKHDPRXQWRIWD[DEOHWHPSRUDU\ OLDELOLWLHVFRQWLQJHQWFRQVLGHUDWLRQ DOVRLQFOXGHVDQ\WD[OLDELOLW\DULVLQJ GLHUHQFHVLVLQVXɝFLHQWWR losses on hedging instruments IURPWKHGHFODUDWLRQRIGLYLGHQGV recognize a deferred tax asset in WKDWDUHUHFRJQL]HGLQSURȴWRUORVV IXOOWKHQIXWXUHWD[DEOHSURȴWV DQGUHFODVVLȴFDWLRQVRIQHWORVVHV LL 'HIHUUHGWD[DWLRQ DGMXVWHGIRUUHYHUVDOVRIH[LVWLQJ previously recognized in other WHPSRUDU\GLHUHQFHVDUH Deferred tax is recognized in FRPSUHKHQVLYHLQFRPH FRQVLGHUHGEDVHGRQWKHEXVLQHVV UHVSHFWRIWHPSRUDU\GLHUHQFHV SODQVIRULQGLYLGXDOVXEVLGLDULHVLQ EHWZHHQWKHFDUU\LQJDPRXQW Borrowing costs that are not directly WKH*URXS'HIHUUHGWD[DVVHWVDUH RIDVVHWVDQGOLDELOLWLHVIRU DWWULEXWDEOHWRWKHDFTXLVLWLRQ reviewed at each reporting date and ȴQDQFLDOUHSRUWLQJSXUSRVHVDQG construction or production of a are reduced to the extent that it is the amounts used for taxation qualifying asset are recognized in QRORQJHUSUREDEOHWKDWWKHUHODWHG SXUSRVHV'HIHUUHGWD[LVQRW SURȴWRUORVVXVLQJWKHHHFWLYH WD[EHQHȴWZLOOEHUHDOL]HG VXFK UHFRJQL]HGIRU LQWHUHVWPHWKRG reductions are reversed when the SUREDELOLW\RIIXWXUHWD[DEOHSURȴWV y WHPSRUDU\GLHUHQFHVRQWKHLQLWLDO Foreign currency gains and losses LPSURYHV UHFRJQLWLRQRIDVVHWVRUOLDELOLWLHVLQ RQȴQDQFLDODVVHWVDQGȴQDQFLDO DWUDQVDFWLRQWKDWLVQRWDEXVLQHVV OLDELOLWLHVDUHUHSRUWHGRQDQHWEDVLV Deferred tax is measured at the FRPELQDWLRQDQGWKDWDHFWVQHLWKHU DVHLWKHUȴQDQFHLQFRPHRUȴQDQFH WD[UDWHVWKDWDUHH[SHFWHGWREH DFFRXQWLQJQRUWD[DEOHSURȴWRU cost depending on whether foreign DSSOLHGWRWHPSRUDU\GLHUHQFHV loss; currency movements are in a net when they reverse, using tax rates JDLQRUQHWORVVSRVLWLRQ HQDFWHGRUVXEVWDQWLYHO\HQDFWHGDW y WHPSRUDU\GLHUHQFHVUHODWHG WKHUHSRUWLQJGDWH WRLQYHVWPHQWVLQVXEVLGLDULHV R ΖQFRPHWD[H[SHQVH DVVRFLDWHVDQGMRLQWDUUDQJHPHQWV The measurement of deferred tax Income tax expense comprises WRWKHH[WHQWWKDWWKH*URXSLVDEOH UHȵHFWVWKHWD[FRQVHTXHQFHVWKDW FXUUHQWDQGGHIHUUHGWD[ΖWLV to control the timing of the reversal would follow from the manner in UHFRJQL]HGLQSURȴWRUORVVH[FHSW RIWKHWHPSRUDU\GLHUHQFHVDQGLW which the Group expects, at the to the extent that it relates to items LVSUREDEOHWKDWWKH\ZLOOQRWUHYHUVH reporting date, to recover or settle recognized directly in equity or in LQWKHIRUHVHHDEOHIXWXUH RWKHUFRPSUHKHQVLYHLQFRPH the carrying amount of its assets DQGOLDELOLWLHV 66 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 'HIHUUHGWD[DVVHWVDQGOLDELOLWLHV ($51Ζ1*63(56+$5( hence, no separate disclosure is DUHRVHWRQO\LIFHUWDLQFULWHULDDUH 7KH*URXSSUHVHQWVEDVLF JLYHQIRUWKHRSHUDWLQJVHJPHQW PHW HDUQLQJVSHUVKDUH (36 GDWDIRU 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adapt these standards when they FKDQJHLWVMXGJPHQWUHJDUGLQJWKH GLVFORVHGLQQRWHVWRWKHȴQDQFLDO EHFRPHHHFWLYH DGHTXDF\RIH[LVWLQJWD[OLDELOLWLHV VWDWHPHQWV VXFKFKDQJHVWRWD[OLDELOLWLHVZLOO 6/)56/HDVHV impact the tax expense in the 'Ζ9Ζ'(1'62125'Ζ1$5< 6XPPDU\RIWKH5HTXLUHPHQW period that such a determination is 6+$5(6 6/)56HOLPLQDWHVWKHFXUUHQW PDGH Dividends on ordinary shares dual accounting model for leases DUHUHFRJQL]HGDVDOLDELOLW\DQG ZKLFKGLVWLQJXLVKHVEHWZHHQ2Q 5(/$7('3$57<75$16$&7Ζ216 deducted from equity when they %DODQFH6KHHWȴQDQFHOHDVHVDQG 'LVFORVXUHKDVEHHQPDGHLQ DUHDSSURYHGE\WKH&RPSDQ\ȇV 2%DODQFH6KHHWRSHUDWLQJOHDVHV respect of the transactions in which VKDUHKROGHUVΖQWHULPGLYLGHQGVDUH ΖQVWHDGWKHUHZLOOEHDVLQJOH2Q RQHSDUW\KDVWKHDELOLW\WRFRQWURO deducted from equity when they are Balance Sheet accounting model RUH[HUFLVHVLJQLȴFDQWLQȵXHQFHRYHU declared and are no longer at the WKDWLVVLPLODUWRFXUUHQWȴQDQFH WKHȴQDQFLDODQGRSHUDWLQJSROLFLHV GLVFUHWLRQRIWKH&RPSDQ\ OHDVHDFFRXQWLQJ decisions of the other, irrespective RIZKHWKHUDSULFHLVFKDUJHG 6(*0(175(3257Ζ1* 6/)56LVHHFWLYHIRUUHSRUWLQJ An operating segment is a SHULRGVEHJLQQLQJRQRUDIWHU &$6+)/2: component within the Group that -DQXDU\ Interest paid and dividend paid are HQJDJHVLQEXVLQHVVDFWLYLWLHV FODVVLȴHGDVȴQDQFLQJFDVKȵRZV for which it may earn distinguish 3RVVLEOHLPSDFWRQFRQVROLGDWHG while interest received and dividend revenue and expenses for such ȴQDQFLDOVWDWHPHQWV UHFHLYHGDUHFODVVLȴHGDVLQYHVWLQJ VHJPHQW7KHRSHUDWLQJUHVXOWV The Group is assessing the potential FDVKȵRZVIRUWKHSXUSRVH DULVLQJIRUKRWHOLHULQJEXVLQHVVRI impact on its Financial Statements of presentation of Cash Flow the Group as a whole is reviewed resulting from the application of 6WDWHPHQWZKLFKKDVEHHQSUHSDUHG UHJXODUO\E\WKH*URXSȇV&KLHI 6/)567KLVVWDQGDUGLVQRW XVLQJWKHȊΖQGLUHFW0HWKRGȋ 2SHUDWLQJ'HFLVLRQ0DNHUWR H[SHFWHGWRKDYHDVLJQLȴFDQW PDNHGHFLVLRQVDERXWUHVRXUFH LPSDFWRQWKHȴQDQFLDOVWDWHPHQWV WREHDOORFDWHGDQGWRDVVHVV RIWKH*URXS LWVSHUIRUPDQFH7KHUHIRUHWKH Company has only one segment 67 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 1RWHVWRWKH)LQDQFLDO6WDWHPHQWV $OOȴJXUHVLQ6UL/DQNDQ5XSHHVWKRXVDQGV Group &RPSDQ\ )RUWKH\HDUHQGHGVW0DUFK 2019 2018 2019 2018 11 5(9(18( 5HYHQXHDQDO\VLV QHW Room revenue 320,681 321,413 292,660 260,436 )RRGDQGEHYHUDJHUHYHQXH 340,981 348,912 323,070 312,313 2WKHUUHYHQXH 15,888 14,516 15,536 13,916 677,550 684,841 631,266 586,665 12 27+(5Ζ1&20((;3(16(6 Rent income 4,191 5,304 2,065 3,003 &OXEPHPEHUVKLSLQFRPH 2,052 2,824 2,052 2,824 3URȴW ORVV RQGLVSRVDORISURSHUW\SODQWDQGHTXLSPHQW 1,608 1,195 1,195 Sundry income 3,149 1,152 2,161 435 11,000 10,475 6,220 7,457 13 352)Ζ7)52023(5$7Ζ216 3URȴWIURPRSHUDWLRQVLVVWDWHGDIWHUFKDUJLQJDOOH[SHQVHVLQFOXGLQJ WKHIROORZLQJ Auditors’ remuneration - Audit services 635 590 371 345 - Audit related services 60 195 60 135 - Non-audit services - - - - 'HSUHFLDWLRQ QRWH 62,826 64,085 58,118 59,238 :ULWHRRIproperty, plant and equipment 4,899 - 4,899 - 3URYLVLRQPDGH UHYHUVDORISURYLVLRQ IRULPSDLUPHQWRIWUDGH UHFHLYDEOHV 4,327 4,327 - 3URIHVVLRQDOVHUYLFHFRVWV QRWH 1,901 2,457 1,573 2,161 Nomination committee fees 50 50 50 50 3HUVRQQHOFRVWV QRWH 185,940 178,364 154,797 143,390 2SHUDWLQJOHDVHH[SHQVHV 494 494 - - Support service fees 8,112 8,585 7,951 7,333 13.1 Depreciation 'HSUHFLDWLRQLVLQFOXGHGLQWKHVWDWHPHQWRISURȴWRUORVVXQGHUWKH IROORZLQJKHDGLQJV Direct costs 48,478 50,397 44,581 46,402 Administrative expenses 14,348 13,688 13,537 12,836 62,826 64,085 58,118 59,238 68 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 Group &RPSDQ\ )RUWKH\HDUHQGHGVW0DUFK 2019 2018 2019 2018 13.2 3URIHVVLRQDOVHUYLFHFRVWV /HJDOVHUYLFHV 691 703 554 555 Valuation services 67 173 67 173 2WKHUVHUYLFHV 1,143 1,581 952 1,433 1,901 2,457 1,573 2,161 13.3 3HUVRQQHOFRVWV Salaries, wages and other related expenses 165,082 159,674 137,781 128,685 'HȴQHGEHQHȴWVSODQFRVWHPSOR\HHEHQHȴWV 4,119 3,878 3,024 2,796 'HȴQHGFRQWULEXWLRQSODQFRVW(3)DQG(7) 16,739 14,812 13,992 11,909 185,940 178,364 154,797 143,390 7KHDERYHLQFOXGH Non executive directors' fees 500 800 500 800 Directors’ emoluments - - - - 500 800 500 800 14 1(7)Ζ1$1&(Ζ1&20( 14.1 Finance income ΖQWHUHVWLQFRPHRQSODFHPHQWZLWKEDQNVDQGJRYHUQPHQWVHFXULWLHV 17,407 9,398 14,271 5,167 1HWFKDQJHLQIDLUYDOXHRIIDLUYDOXHWKURXJKSURȴWRUORVVȴQDQFLDO assets - unit trust investments 1,702 1,648 1,702 1,648 Dividend income - - - 1,203 8QZLQGLQJRIGLVFRXQWLQJRQFRPSHQVDWLRQUHFHLYDEOH QRWH - 17,526 - 17,526 Gain on foreign exchange transactions 495 397 480 359 19,604 28,969 16,453 25,903 14.2 Finance cost ΖQWHUHVWH[SHQVHVRQORDQVDQGERUURZLQJV 2QEDQNERUURZLQJV 5,137 1,267 705 1 5,137 1,267 705 1 /HVV Interest capitalised into property, plant and equipment - - - 2,230 1,267 705 1 1HWȴQDQFHLQFRPH 17,374 27,702 15,748 25,902 8QZLQGLQJRIGLVFRXQWLQJRQFRPSHQVDWLRQUHFHLYDEOH 8QZLQGLQJRIGLVFRXQWLQJRQFRPSHQVDWLRQUHFHLYDEOHUHFRJQL]HGXQGHUȆȴQDQFHLQFRPHȇUHSUHVHQWVWKH\HDURQ\HDU 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SURȴWDWWULEXWDEOHWRWKHRUGLQDU\HTXLW\KROGHUVRIWKHSDUHQW company 84,328 80,864 $PRXQWXVHGDVWKHGHQRPLQDWRU :HLJKWHGDYHUDJHQXPEHURIRUGLQDU\VKDUHVRXWVWDQGLQJDWWKH EHJLQQLQJRIWKH\HDU ΖQWKRXVDQGV 30,392 30,392 30,392 30,392 /RVV HDUQLQJVSHUVKDUH 5V 71 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 1RWHVWRWKH)LQDQFLDO6WDWHPHQWV $OOȴJXUHVLQ6UL/DQNDQ5XSHHVWKRXVDQGV 2018 2018 Total as at Total as at Total as at 31st March 31st March 31st March ------2019 2019 Total as at Total as at Total as at 31st March 31st March 31st March ------ in progress in progress in progress &DSLWDOZRUN &DSLWDOZRUN &XWOHU\ &XWOHU\ JODVVZDUH JODVVZDUH FURFNHU\DQG FURFNHU\DQG ------ Motor Motor Motor vehicle 9HKLFOH (TXLSPHQW (TXLSPHQW Computer Computer Computer equipment equipment Furniture Furniture Furniture DQGȴWWLQJV DQGȴWWLQJV 3ODQWDQG 3ODQWDQG PDFKLQHU\ PDFKLQHU\ EXLOGLQJ EXLOGLQJ )UHHKROG )UHHKROG - - - 7,361 13 3,757 537 - 686 - 13,195 - - - 1,004 51,036 - 77,576 45,837 - - - 21,466 7,278 14,830 1,455 12,083 - 1,006 - 58,118 59,238 - - - 103,969 1,280 3,757 13,425 - 686 - 17,009 - - 1,162 - 48,991 188,999 49,300 - - 24,036 7,896 15,402 1,455 12,893 - 1,144 - 62,826 64,085 ODQG ODQG )UHHKROG )UHHKROG &RPSDQ\ &RVWYDOXDWLRQ %DODQFHDVDWWKHEHJLQQLQJ of the yearAdditions during the year Transfers during the year 828,215 791,940 108,452 142,597 13,471 81,594 4,569 5,650 1,753 1,978,241 2,044,942 'LVSRVDOZULWHRGXULQJ the year Balance as at the end of the yearDepreciation %DODQFHDVDWWKHEHJLQQLQJ of the yearCharge for the year 'LVSRVDOZULWHRGXULQJ the year 828,215 - 798,537 107,906 130,351 - 20,078 14,040 - 73,961 93,493 74,685 4,569 10,789 5,176 33,198 52,776 2,035,063 4,569 1,978,241 2,103 - 219,383 164,918 Balance as at the end of Balance as at the end of the year1HWERRNYDOXHDVDWWKH end of the year 828,215 757,016 - 30,912 41,521 49,465 76,994 80,886 1,913 12,127 49,243 44,250 - 4,569 2,696 2,480 52,776 1,772,236 - 1,758,858 262,827 219,383 Group &RVWYDOXDWLRQ %DODQFHDVDWWKHEHJLQQLQJ of the yearAdditions during the year 828,215 912,797 123,376 156,638 13,796 92,996 4,569 6,617 5,065 2,144,069 2,207,367 Transfers during the year 'LVSRVDOZULWHRGXULQJ the year Balance as at the end of the yearDepreciation %DODQFHDVDWWKHEHJLQQLQJ of the yearCharge for the year 'LVSRVDOZULWHRGXULQJ the year 828,215 - 1,017,269 122,830 157,280 - 14,365 22,585 108,709 - 86,036 4,569 86,270 10,789 6,301 43,264 52,776 2,312,314 4,569 2,144,069 3,040 - 256,553 197,300 Balance at the end of Balance at the end of the year1HWERRNYDOXHDVDWWKH end of the year 828,215 970,671 - 33,143 46,598 64,237 89,687 93,043 2,238 12,127 53,583 55,126 - 4,569 2,746 3,555 52,776 2,007,609 - 1,887,516 304,705 256,553 17.2 3523(57<3/$17$1'(48Ζ30(17 17.1 72 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 17.3 )UHHKROGODQGDQGIUHHKROGEXLOGLQJRIWKH&RPSDQ\DQGWKH*URXSZHUHODVWUHYDOXHGE\DQLQGHSHQGHQWSURIHVVLRQDO YDOXHU0U66LYDVNDQWKD)Ζ9 6UL/DQND RI3HUHUD6LYDVNDQWKD &RPSDQ\ΖQFRUSRUDWHGYDOXHUVRQWKHEDVLVRI0DUNHW $SSURDFKDVDWVW0DUFK7KHGHWDLOVRIFDUU\LQJYDOXHVRIWKHUHYDOXHGDVVHWVDQGWKHFDUU\LQJYDOXHLIVXFKDVVHWV were carried at historical cost less depreciation are as follows; 3URSHUW\DQGORFDWLRQ $VVHWFDWHJRU\ 0HWKRGRI &DUU\LQJYDOXHRIUHYDOXHG &DUU\LQJYDOXHRI &DUU\LQJYDOXHRI valuation DVVHWVLIFDUULHGDW UHYDOXHGDVVHWV UHYDOXHGDVVHWV historical cost 2019 2018 Pegasus Reef Hotel, Freehold land Market approach :DWWDOD 20,977 828,215 828,215 Building Market approach 527,203 757,016 771,862 (TXLW\+RWHOV/LPLWHG Building Market approach Giritale 110,064 213,655 118,350 $QDO\VLVRI&DSLWDOZRUNLQSURJUHVV Group &RPSDQ\ As at 31st March 2019 2018 2019 2018 )UHHKROGEXLOGLQJ 16,215 5,065 16,215 1,753 )XUQLWXUHDQGȴWWLQJV 32,188 - 32,188 - Equipment 3,793 - 3,793 - Plant and machinery 580 580 52,776 5,065 52,776 1,753 17.5 7KHODQGZKHUHWKH(TXLW\+RWHOV/LPLWHGLVORFDWHGLQGiritale, Polonnaruwa, is on a 30 year lease from 01st January 1997 WRVW'HFHPEHUZLWKWKHRSWLRQIRUUHQHZDO'XULQJWKHOHDVHSHULRGWKH&RPSDQ\KDVWKHULJKWWRXVHWKHODQGWR FRQVWUXFWDQGRSHUDWHDWRXULVWKRWHODSSURYHGDQGFDWHJRUL]HGE\WKH6UL/DQND7RXULVW%RDUG 'HWDLOVRIIXOO\GHSUHFLDWHGDVVHWVLQSURSHUW\SODQWDQGHTXLSPHQW Group &RPSDQ\ As at 31st March 2019 2018 2019 2018 Plant and machinery 25,292 23,809 16,587 15,136 (TXLSPHQWIXUQLWXUHDQGȴWWLQJV 63,534 51,939 49,317 39,002 Computer equipment 10,042 8,401 9,944 8,376 Motor vehicle 4,569 4,569 4,569 4,569 103,437 88,718 80,417 67,083 &DSLWDOL]DWLRQRIERUURZLQJFRVWVLQWRSURSHUW\SODQWDQGHTXLSPHQW Group &RPSDQ\ As at 31st March 2019 2018 2019 2018 Borrowing costs capitalized 2,907 - - - 7KHDPRXQWRIERUURZLQJFRVWFDSLWDOL]HGRQO\WRWKHH[WHQWRIIXQGVERUURZHGVSHFLȴFDOO\IRUWKHFRQVWUXFWLRQRIWKH TXDOLI\LQJDVVHW 73 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 1RWHVWRWKH)LQDQFLDO6WDWHPHQWV $OOȴJXUHVLQ6UL/DQNDQ5XSHHVWKRXVDQGV 5HVWULFWLRQVRQWLWOHRISURSHUW\SODQWDQGHTXLSPHQW 7KHUHDUHQRUHVWULFWLRQVRQWLWOHRIWKHSURSHUW\SODQWDQGHTXLSPHQWKHOGE\WKH&RPSDQ\DQGWKH*URXSH[FHSWIRUWKH GLVFORVXUHLQQRWH 3URSHUW\SODQWDQGHTXLSPHQWSOHGJHGDVVHFXULW\IRUOLDELOLWLHV 7KHUHDUHQRLWHPVRISURSHUW\SODQWDQGHTXLSPHQWSOHGJHGDVVHFXULW\IRUOLDELOLWLHVDVDWWKHUHSRUWLQJGDWHRIWKH &RPSDQ\RUWKH*URXS Group &RPSDQ\ As at 31st March 2019 2018 2019 2018 18 Ζ17$1*Ζ%/($66(76 18.1 *RRGZLOORQFRQVROLGDWLRQ %DODQFHDVDWWKHEHJLQQLQJRIWKH\HDU 115,287 115,287 - - Acquisition during the year - - - - Impairment - - - - %DODQFHDVDWWKHHQGRIWKH\HDU 115,287 115,287 - - 18.2 *RRGZLOOLVDOORFDWHGWR(TXLW\+RWHOV/LPLWHGDFDVKJHQHUDWLQJXQLW &*8 RSHUDWLQJZLWKLQWKH*URXS:KHQWHVWLQJIRU LPSDLUPHQWRQJRRGZLOOWKHUHFRYHUDEOHDPRXQWRIDFDVKJHQHUDWLQJXQLWLVGHWHUPLQHGRQWKHEDVLVRIIDLUYDOXHOHVVFRVW WRVHOODQGYDOXHLQXVHZKLFKHYHULVKLJKHU 7KHIDLUYDOXHOHVVFRVWWRVHOOLVFRPSXWHGEDVHGRQHDUQLQJVPXOWLSOHVUHYHQXHPXOWLSOHVRIFRPSDUDEOHFRPSDQLHV OLVWHG DGMXVWHGWRUHȵHFWWKHOLTXLGLW\9DOXHLQXVHFDOFXODWLRQVDUHFDVKȵRZSURMHFWLRQVEDVHGRQȴQDQFLDOEXGJHWVZKLFK DUHDSSURYHGE\WKHPDQDJHPHQWW\SLFDOO\FRYHULQJDȴYH\HDUSHULRG)XUWKHUWKHQHWDVVHWVRIWKH&*8DOVRXVHGWR LGHQWLI\DQ\LQGLFDWLRQRIDQLPSDLUPHQW $FFRUGLQJO\LPSDLUPHQWWHVWGLGQRWLQGLFDWHDQLPSDLUPHQWRQJRRGZLOORQDFTXLVLWLRQRI(TXLW\+RWHOV/LPLWHGDVDWVW 0DUFK 18.3 $FFRXQWLQJVRIWZDUHLQFOXGHGXQGHULQWDQJLEOHDVVHWVLVIXOO\DPRUWL]HGDVDWVW0DUFK 1LO Ζ19(670(17Ζ168%6Ζ'Ζ$5< Group &RPSDQ\ As at 31st March 2019 2018 2019 2018 ΖQYHVWPHQWLQVXEVLGLDU\ QRWH - - 110,223 110,223 - - 110,223 110,223 74 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 'HWDLOVRILQYHVWPHQWLQVXEVLGLDU\ No. of Cost as at No. of Cost as at shares 31st March shares 31st March 2019 2018 (TXLW\+RWHOV/LPLWHG 685,469 110,223 685,469 110,223 7RWDOLQYHVWPHQWLQVXEVLGLDU\ 110,223 110,223 7KH&RPSDQ\RZQV RIWKH6WDWHG&DSLWDORI(TXLW\+RWHOV/LPLWHGDFFRUGLQJO\WKHUHLVQRȊ1RQ&RQWUROOLQJΖQWHUHVWȋ 1&Ζ LQWKH&RQVROLGDWHG)LQDQFLDO6WDWHPHQWV &203(16$7Ζ215(&(Ζ9$%/( Group &RPSDQ\ As at 31st March 2019 2018 2019 2018 %DODQFHDVDWWKHEHJLQQLQJRIWKH\HDU 169,966 152,396 169,966 152,396 $GMXVWPHQWRQODQGDFTXLVLWLRQ 1RWH - 44 - 44 8QZLQGLQJRIGLVFRXQWRQFRPSHQVDWLRQUHFHLYDEOH - 17,526 - 17,526 3URYLVLRQIRULPSDLUPHQWRQFRPSHQVDWLRQUHFHLYDEOH - - Balance as at the end of the year 24,759 169,966 24,759 169,966 $FTXLVLWLRQRIODQGE\WKHJRYHUQPHQWRI6UL/DQNDDQGFRPSHQVDWLRQUHFHLYDEOH 7KH*RYHUQPHQWRI6UL/DQNDDFTXLUHGDSSUR[LPDWHO\SHUFKHVRIODQGRZQHGE\WKH&RPSDQ\XQGHUVHFWLRQ SURYLVLRQ D RIWKH/DQG$FTXLVLWLRQ$FW1RRI E\*D]HWWHQRWLȴFDWLRQGDWHGWK0D\IRUWKHSXEOLFSXUSRVH RIEXLOGLQJDȴVKHULHVKDUERU $FFRUGLQJO\LQWKHȴQDQFLDO\HDU WKH&RPSDQ\VXEPLWWHGDFODLPRIFRPSHQVDWLRQDPRXQWLQJWR5VPQIRU SHUFKHVRIWKHDFTXLUHGODQGZLWKWKHH[SHFWDWLRQWKDWWKHEDODQFH SHUFKHVRIODQGZKLFKFRQVLVWVODUJHO\RI PDQJURYHODQGZLOOEHGLYHVWHGEDFNWRWKH&RPSDQ\DVSHU6XSUHPH&RXUWRUGHULQ1RYHPEHUDVGLVFXVVHGEHORZ 7KHVDLGFODLPRI5VPQZDVPDGHWDNLQJLQWRDFFRXQWWKHPDUNHWYDOXHRIWKHSURSHUW\SRWHQWLDOHFRQRPLFYDOXH ORVWIRUKRWHOH[SDQVLRQDQGDYDOXHIRUQXLVDQFHWKDWZLOOEHFUHDWHGIRUKRWHORSHUDWLRQE\WKHVDLGSURMHFW7KH&RPSDQ\ UHFRUGHGWKHFDUU\LQJYDOXHRI5V 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EDVLVDVSHUWKHSHUFKHVRIODQG+RZHYHUDVDPDWWHURISUXGHQFHWKH&RPSDQ\DFFRXQWHGRQO\5VDV WKHFRPSHQVDWLRQUHFHLYDEOHLQWKHȴQDQFLDOVWDWHPHQWVEDVHGRQWKHKLVWRULFDOSXUFKDVHFRVW$FFRUGLQJO\WKHFDUU\LQJ YDOXHRIVDLG SHUFKHVRIODQGDPRXQWLQJWR5V KDVDOVREHHQUHPRYHGIURPWKHSURSHUW\SODQWDQG HTXLSPHQWGXULQJWKHȴQDQFLDO\HDU 6XEVHTXHQWWRWKH%DODQFH6KHHWGDWHZHUHFHLYHGDQRɝFLDOQRWLȴ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ȴUPDWLRQIURPWKH'LYLVLRQDO6HFUHWDU\RQWKH YDOXHGHWHUPLQDWLRQRIWKHVDLGFODLPPDGHRQSHUFKHVRIODQGSHQGLQJWKHȴQDOGHWHUPLQDWLRQRIWKHFRXUWFDVH GHVFULEHGLQQRWHΖQWKHRSLQLRQRIWKHODZ\HUVȇWKHVDLGFRXUWFDVHPD\WDNHIXUWKHU\HDURUPRUHWRUHDFKDȴQDOLW\ ΖIDUXOLQJLVPDGHDW'LVWULFW&RXUWZLWKLQVXFKWLPHHVWLPDWLRQDQGWKHUXOLQJLVDFFHSWHGE\WKHORVLQJSDUW\WKHQWKHYDOXH GHWHUPLQDWLRQRIWKHFODLPZRXOGWDNHSODFHKHQFHIRUWK+RZHYHUIXUWKHUWZRDSSHDORSWLRQVDUHDYDLODEOHIRUERWKSDUWLHV at Provincial Civil Appellate Court and to the Supreme Court, if either party decided to contest the verdict of the District &RXUW8QGHUWKHVHFLUFXPVWDQFHVHYHQLIDYDOXDWLRQLVGHWHUPLQHGE\WKH*RYHUQPHQWVXFKYDOXHZLOOQRWEHGLVFORVHGWLOO WKHFRXUWFDVHVKDYHFRPHWRDȴQDOLW\ 7KHIXOOFRPSHQVDWLRQFODLPIRUWKHWRWDOODQGDFTXLUHGRISHUFKHVVWRRG5VPQDVRIWKHUHSRUWLQJGDWHZKLOVW WKHFDUU\LQJYDOXHRIWKHFRPSHQVDWLRQUHFHLYDEOHVWRRGDW5VPQVXEVHTXHQWWRWKHSURYLVLRQLQJPHQWLRQHGDERYH Ζ19(1725Ζ(6 Group &RPSDQ\ As at 31st March 2019 2018 2019 2018 Food 4,128 4,677 3,297 3,710 Beverage 3,765 3,012 3,119 2,228 Engineering spares 2,774 2,863 2,673 2,660 /LQHQ 3,030 2,899 1,227 1,546 2WKHUV 3,484 4,917 3,086 4,538 17,181 18,368 13,402 14,682 76 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 )$Ζ59$/8(7+528*+352)Ζ725/266)Ζ1$1&Ζ$/$66(76 Group &RPSDQ\ As at 31st March 2019 2018 2019 2018 Investment in unit trusts - unquoted 29,482 - 29,482 - 29,482 - 29,482 - *URXS&RPSDQ\ As at 31st March 2019 2018 No. of Cost Fair No. of Cost Fair units value units value 22.1 ΖQYHVWPHQWLQXQLWWUXVWVXQTXRWHG Guardian Acuity Money Market Fund 1,676,342 28,620 29,482 - - - 28,620 29,482 - - 9DOXDWLRQRILQYHVWPHQWVLQXQLWWUXVWVDUHEDVHGRQWKHXQLWSULFHVSXEOLVKHGE\WKHΖQYHVWPHQW0DQDJHUVDVDWVW0DUFK 75$'($1'27+(55(&(Ζ9$%/(6 Group &RPSDQ\ As at 31st March 2019 2018 2019 2018 Financial 7UDGHUHFHLYDEOHV QRWH 66,793 60,909 59,327 52,170 2WKHUUHFHLYDEOHV 2,629 2,992 2,211 2,670 /RDQVJLYHQWR&RPSDQ\RɝFHUV QRWH 386 248 386 248 69,808 64,149 61,924 55,088 1RQȴQDQFLDO Advances and prepaid expenses 8,324 5,075 7,792 4,441 8,324 5,075 7,792 4,441 78,132 69,224 69,716 59,529 23.1 7UDGHUHFHLYDEOHV 7UDGHGHEWRUV 71,380 61,169 63,654 52,170 /HVV 3URYLVLRQIRULPSDLUPHQWRIWUDGHUHFHLYDEOHV - 66,793 60,909 59,327 52,170 23.2 /RDQVJLYHQWRFRPSDQ\6WD %DODQFHDVDWWKHEHJLQQLQJRIWKH\HDU 248 195 248 149 /RDQVJUDQWHGGXULQJWKH\HDU 1,354 1,138 822 1,138 Settlements during the year Balance as at the end of the year 386 248 386 248 77 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 1RWHVWRWKH)LQDQFLDO6WDWHPHQWV $OOȴJXUHVLQ6UL/DQNDQ5XSHHVWKRXVDQGV &$6+$1'&$6+(48Ζ9$/(176 Group &RPSDQ\ As at 31st March 2019 2018 2019 2018 &DVKDWEDQNDQGLQKDQG 8,870 12,043 8,254 9,721 Investment in securities purchased under resale agreement - 10,375 - - Total cash and cash equivalents 8,870 22,418 8,254 9,721 Bank overdraft 1HWFDVKDQGFDVKHTXLYDOHQWVIRUWKHFDVKȵRZVWDWHPHQWSXUSRVH 18,989 8,046 9,704 67$7('&$3Ζ7$/ Group &RPSDQ\ As at 31st March 2019 2018 2019 2018 Issued and fully paid $WWKHEHJLQQLQJRIWKH\HDU 2UGLQDU\VKDUHV 515,170 515,170 515,170 515,170 $WWKHHQGRIWKH\HDU 2UGLQDU\VKDUHV 515,170 515,170 515,170 515,170 &$3Ζ7$/5(6(59(6 Group &RPSDQ\ As at 31st March 2019 2018 2019 2018 Revaluation reserve 1,045,458 1,045,458 957,908 957,908 Capital accretion reserve 15,144 15,144 15,144 15,144 1,060,602 1,060,602 973,052 973,052 5HYDOXDWLRQUHVHUYH 7KHUHYDOXDWLRQUHVHUYHUHSUHVHQWVWKHVXUSOXVDULVLQJIURPWKHUHYDOXDWLRQRIIUHHKROGODQGDQGEXLOGLQJRIWKH&RPSDQ\ DQGWKH*URXSQHWRIUHODWHGGHIHUUHGWD[HV$VXEVHTXHQWGHFOLQHLQWKHFDUU\LQJDPRXQWRIDQDVVHWZLOOEHRVHWDJDLQVW WKHSUHYLRXVO\LQFUHDVHGDPRXQWRIWKHVDPHDVVHWZKLFKZDVFUHGLWHGWRWKHUHYDOXDWLRQUHVHUYH$GHFUHDVHDULVLQJIURPD YDOXDWLRQRIDQDVVHWRYHUDQGDERYHWKHUHYDOXDWLRQVXUSOXVLVUHFRJQL]HGDVDQH[SHQVHLQWKH6WDWHPHQWRI3URȴWRU/RVV $FFRUGLQJO\DVXEVHTXHQWLQFUHDVHRIUHYDOXDWLRQRIDQDVVHWUHODWLQJWRDSUHYLRXVGHFUHDVHLQFDUU\LQJDPRXQWUHFRJQL]HG DVDQH[SHQVHLVFUHGLWHGDVDQLQFRPHWRWKHH[WHQWLWRVHWVWKHSUHYLRXVO\UHFRUGHGH[SHQVHLQWKH6WDWHPHQWRI3URȴW RU/RVV 26.2 Capital accretion reserve &DSLWDODFFUHWLRQUHVHUYHUHSUHVHQWVWKHDPRXQWVHWDVLGHE\WKH'LUHFWRUVWRPHHWDQ\FRQWLQJHQFLHV 78 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 5(9(18(5(6(59(6 Group &RPSDQ\ As at 31st March 2019 2018 2019 2018 General reserve 176 176 176 176 Retained earnings 349,370 458,219 316,014 404,859 349,546 458,395 316,190 405,035 27.1 General reserves *HQHUDOUHVHUYHUHSUHVHQWVWKHDPRXQWVHWDVLGHE\WKHGLUHFWRUVWRPHHWDQ\FRQWLQJHQFLHV Group &RPSDQ\ As at 31st March 2019 2018 2019 2018 28 '()(55('7$;/Ζ$%Ζ/Ζ7< %DODQFHDVDWWKHEHJLQQLQJRIWKH\HDU 196,774 66,979 181,415 53,526 &KDUJHIRUWKH\HDU QRWH 9,870 129,795 13,105 127,889 Balance as at the end of the year 206,644 196,774 194,520 181,415 28.1 &KDUJHIRUWKH\HDU 7KHDPRXQWVUHFRJQL]HGLQWKHVWDWHPHQWRISURȴWRUORVVDUHDV IROORZV Property, plant and equipment 1,878 18,188 1,230 16,122 (PSOR\HHEHQHȴWV Tax losses 8,370 12,214 9,845 16,727 13,111 14,828 7KHDPRXQWVUHFRJQL]HGLQWKHVWDWHPHQWRIRWKHU FRPSUHKHQVLYHLQFRPHDUHDVIROORZV (PSOR\HHEHQHȴWV 25 55 48 5HYDOXDWLRQRISURSHUW\SODQWDQGHTXLSPHQW QRWH - 113,013 - 113,013 25 113,068 113,061 Charge for the year 9,870 129,795 13,105 127,889 28.2 'HIHUUHGWD[DVVHWV 7D[HHFWRQHPSOR\HHEHQHȴWV 2,793 2,415 1,929 1,590 7D[HHFWRQWD[ORVVHV 14,495 22,865 10,651 22,865 Total deferred tax assets 17,288 25,280 12,580 24,455 28.3 'HIHUUHGWD[OLDELOLW\ 7D[HHFWRQSURSHUW\SODQWDQGHTXLSPHQW 223,932 222,054 207,100 205,870 7RWDOGHIHUUHGWD[OLDELOLW\ 223,932 222,054 207,100 205,870 1HWGHIHUUHGWD[OLDELOLW\ 206,644 196,774 194,520 181,415 79 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 1RWHVWRWKH)LQDQFLDO6WDWHPHQWV $OOȴJXUHVLQ6UL/DQNDQ5XSHHVWKRXVDQGV 7D[RQODQG9DOXDWLRQ $VSHUWKHΖ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Ζ76 7KHPRYHPHQWRIWKHOLDELOLW\UHFRJQL]HGLQWKH6WDWHPHQWRI)LQDQFLDO3RVLWLRQLVDVIROORZV Group &RPSDQ\ As at 31st March 2019 2018 2019 2018 %DODQFHDVDWWKHEHJLQQLQJRIWKH\HDU 17,250 16,021 11,356 10,483 3URYLVLRQIRUWKH\HDU QRWH 3,939 3,483 3,064 2,454 Payments made during the year Balance as at the end of the year 19,950 17,250 13,776 11,356 29.2 3URYLVLRQIRUWKH\HDU 7KHDPRXQWVUHFRJQL]HGLQWKHVWDWHPHQWRISURȴWRUORVVDUHDV IROORZV Current service cost 2,302 2,036 1,832 1,590 Interest cost 1,817 1,842 1,192 1,206 4,119 3,878 3,024 2,796 7KHDPRXQWUHFRJQLVHGLQWKHVWDWHPHQWRIRWKHUFRPSUHKHQVLYH LQFRPHLVDVIROORZV $FWXDULDO JDLQV ORVVHV 40 40 Provision for the year 3,939 3,483 3,064 2,454 80 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 Ȋ7KH(PSOR\HHEHQHȴWVȋDVDWVW0DUFK DPRXQWLQJWR5VDQG5V 5V DQG5V IRUWKH&RPSDQ\DQGWKH*URXSUHVSHFWLYHO\DUHHVWLPDWHGEDVHGRQDQDFWXDULDOYDOXDWLRQFDUULHG RXWE\0U03RRSDODQDWKDQRI0HVVUV$FWXDULDODQG0DQDJHPHQW&RQVXOWDQWV 3YW /WG$VUHFRPPHQGHGE\6UL/DQND $FFRXQWLQJ6WDQGDUGV /.$6 Ȋ(PSOR\HHEHQHȴWVȋWKHȊ3URMHFWHG8QLW&UHGLWȊ 38& 0HWKRGKDVEHHQXVHGLQWKLV YDOXDWLRQ 7KHSULQFLSDODVVXPSWLRQVXVHGDUH 5DWHRIGLVFRXQW SD SD 5DWHRISD\LQFUHDVH SD SD - Retirement age 55 years 0RUWDOLW\ $PRUWDOLW\WDEOHLVVXHGE\WKHΖQVWLWXWHRI$FWXDULHV/RQGRQZDVXVHG :LWKGUDZDOUDWH IRUDJHXSWR DQG]HURWKHUHDIWHU 7KH&RPSDQ\LVDJRLQJFRQFHUQ 6HQVLWLYLW\DQDO\VLV 5HDVRQDEO\SRVVLEOHFKDQJHVDWWKHUHSRUWLQJGDWHWRRQHRIWKHUHOHYDQWDFWXDULDODVVXPSWLRQVKROGLQJRWKHUDVVXPSWLRQV FRQVWDQWZRXOGKDYHDHFWHGWKHGHȴQHGEHQHȴWVREOLJDWLRQE\WKHDPRXQWVVKRZQEHORZ Group &RPSDQ\ As at 31st March 2019 2018 2019 2018 LQFUHDVHLQGLVFRXQWUDWH GHFUHDVHLQGLVFRXQWUDWH 1,382 1,293 971 842 LQFUHDVHLQVDODU\HVFDODWLRQUDWH 1,480 1,371 1,037 892 GHFUHDVHLQVDODU\HVFDODWLRQUDWH /2$16$1'%2552:Ζ1*6 Group &RPSDQ\ As at 31st March 2019 2018 2019 2018 30.1 Non-current liabilities %DQNERUURZLQJV 57,312 26,503 - - Current liabilities %DQNERUURZLQJV 31,872 5,047 24,000 - 89,184 31,550 24,000 - 81 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 1RWHVWRWKH)LQDQFLDO6WDWHPHQWV $OOȴJXUHVLQ6UL/DQNDQ5XSHHVWKRXVDQGV &XUUHQF\ Interest rate Year of 2019 2018 PDWXULW\ Face value &DUU\LQJ Face value &DUU\LQJ amount amount 30.2 'HWDLOVRIORQJWHUPERUURZLQJV Group 6DPSDWK%DQN QRWHD /.5 2025 6,550 4,804 6,550 6,550 6DPSDWK%DQN QRWHE /.5 2022 25,000 20,380 25,000 25,000 &RPPHUFLDO%DQN3/& QRWHF /.5 $:3/5 2026 40,000 40,000 - - &RPPHUFLDO%DQN3/& QRWHG /.5 Money market rate 1$ 24,000 24,000 - - 95,550 89,184 31,550 31,550 &RPSDQ\ &RPPHUFLDO%DQN3/& QRWHG /.5 Money market rate 1$ 24,000 24,000 - - 24,000 24,000 - - D (TXLW\+RWHOV/LPLWHGVHFXUHGDORQJWHUPORDQDPRXQWLQJWR5VPQIURP6DPSDWK%DQN3/&DWDUDWHRILQWHUHVWRI XQGHUDVFKHPHRIIXQGLQJSURYLGHGE\Ȋ$'% 60( FUHGLWOLQHWRSDUWȴQDQFHWKHUHIXUELVKPHQWDQGSXUFKDVHRI IXUQLWXUHDQGRWKHUHTXLSPHQWIRU*LULWDOH+RWHOLQ3RORQQDUXZD 7KH/RDQLVWREHUHSDLGLQHTXDOPRQWKO\LQVWDOPHQWVRI5V DQGDȴQDOLQVWDOPHQWRI5VWRJHWKHU ZLWKLQWHUHVWDIWHUDJUDFHSHULRGRIPRQWKVIURPWKHGDWHRIWKHȴUVWGLVEXUVHPHQW $VDWVW0DUFK (TXLW\+RWHOV/LPLWHGKDVGUDZQ5VPQIURPWKHDERYHORDQ E (TXLW\+RWHOV/LPLWHGVHFXUHGDORQJWHUPORDQDPRXQWLQJWR5VPQIURP6DPSDWK%DQN3/&DWDUDWHRILQWHUHVWRI XQGHUD6DXEKDJ\D3URVSHULW\/RDQVFKHPHWRSDUWȴQDQFHWKHUHIXUELVKPHQWDQGSXUFKDVHRIIXUQLWXUHDQGRWKHU HTXLSPHQWIRU*LULWDOH+RWHOLQ3RORQQDUXZD 7KH/RDQLVWREHUHSDLGLQHTXDOPRQWKO\LQVWDOPHQWVRI5VDQGDȴQDOLQVWDOPHQWRI5VWRJHWKHU ZLWKLQWHUHVWDIWHUDJUDFHSHULRGRIPRQWKVIURPWKHGDWHRIWKHȴUVWGLVEXUVHPHQW F (TXLW\+RWHOV/LPLWHGVHFXUHGDORQJWHUPORDQGXULQJWKH\HDUDPRXQWLQJWR5VPQIURP&RPPHUFLDO%DQN3/&DWD UDWHRILQWHUHVWRI$:3/5WRSDUWȴQDQFHWKHUHIXUELVKPHQWDQGSXUFKDVHRIIXUQLWXUHDQGRWKHUHTXLSPHQWIRU *LULWDOH+RWHO$:3/5ZLOOEHUHYLHZHGPRQWKO\DQGȴ[HGRQWKHȴUVWZRUNLQJGD\RIHDFKPRQWK 7KH/RDQLVWREHUHSDLGLQ HTXDOPRQWKO\LQVWDOPHQWVRI5VDQGDȴQDOLQVWDOPHQWRI5VWRJHWKHU ZLWKLQWHUHVWDIWHUDJUDFHSHULRGRIPRQWKVIURPWKHGDWHRIWKHȴUVWGLVEXUVHPHQW G 7KH&RPSDQ\KDVREWDLQHGDVKRUWWHUPORDQRI5VPQIURP&RPPHUFLDO%DQN3/&ZKLFKLVSOD\DEOHRQGHPDQG 82 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 75$'($1'27+(53$<$%/(6 Group &RPSDQ\ As at 31st March 2019 2018 2019 2018 Financial 7UDGHSD\DEOHV 54,463 48,188 47,356 41,133 2WKHUSD\DEOHV 28,572 18,330 11,613 11,853 83,035 66,518 58,969 52,986 1RQȴQDQFLDO Deposits and advances 11,633 18,210 9,231 16,970 Provisions and accrued expenses 37,483 35,203 33,247 31,450 49,116 53,413 42,478 48,420 132,151 119,931 101,447 101,406 )Ζ1$1&Ζ$/Ζ167580(176 Financial risk management - overview 7KH*URXSKDVH[SRVXUHWRWKHIROORZLQJULVNVDULVLQJIURPȴQDQFLDOLQVWUXPHQWV - Credit risk - Market risk /LTXLGLW\ULVN 7KLVQRWHSUHVHQWVLQIRUPDWLRQDERXWWKH*URXSȇVH[SRVXUHWRHDFKRIWKHDERYHULVNVWKH*URXSȇVVXSHUYLVLRQSROLFLHV DQGSURFHVVHVIRUPHDVXULQJDQGPDQDJLQJULVNDQGWKH*URXSȇVPDQDJHPHQWRIFDSLWDO 5LVNPDQDJHPHQWIUDPHZRUN 7KH&RPSDQ\ȇV%RDUGRI'LUHFWRUVKDVWKHRYHUDOOUHVSRQVLELOLW\IRUWKHHVWDEOLVKPHQWDQGPRQLWRULQJRIWKH&RPSDQ\ȇV ULVNPDQDJHPHQWIUDPHZRUN7KH%RDUGRI'LUHFWRUVKDVGHOHJDWHGWKLVIXQFWLRQWR&DUVRQV0DQDJHPHQW6HUYLFHV 3ULYDWH /LPLWHGWKH0DQDJHUV ZKRDUHUHVSRQVLEOHIRUGHYHORSLQJDQGPRQLWRULQJWKH&RPSDQ\ȇVULVNPDQDJHPHQW SROLFLHVDQGUHSRUWVUHJXODUO\WRWKH%RDUGRI'LUHFWRUVRQLWVDFWLYLWLHV 7KH*URXSȇVULVNPDQDJHPHQWSROLFLHVDUHHVWDEOLVKHGWRLGHQWLI\DQGDQDO\VHWKHULVNVIDFHGE\WKH*URXSWRVHW DSSURSULDWHULVNOLPLWVDQGFRQWUROVDQGWRPRQLWRUULVNVDQGDGKHUHQFHWRULVNOLPLWV5LVNPDQDJHPHQWSROLFLHVDQG V\VWHPVDUHUHYLHZHGUHJXODUO\WRUHȵHFWFKDQJHVLQPDUNHWFRQGLWLRQVDQGWKH*URXSȇVDFWLYLWLHV7KH*URXSWKURXJKLWV training and management of policies and procedures, aims to develop a disciplined and constructive control environment LQZKLFKDOOHPSOR\HHVXQGHUVWDQGWKHLUUROHVDQGREOLJDWLRQV 7KH$XGLW&RPPLWWHHRI&DUVRQ&XPEHUEDWFK3/&WKHSDUHQWFRPSDQ\RYHUVHHVKRZPDQDJHPHQWPRQLWRUVFRPSOLDQFH with the Group’s risk management policies and procedures, and reviews the adequacy of the risk management framework LQUHODWLRQWRWKHULVNVIDFHGE\WKH*URXS7KH$XGLW&RPPLWWHHLVDVVLVWHGLQLWVVXSHUYLVLRQUROHE\ΖQWHUQDO$XGLW7KH ΖQWHUQDO$XGLWXQGHUWDNHVERWKUHJXODUDQGDGKRFUHYLHZVRIULVNPDQDJHPHQWFRQWUROVDQGSURFHGXUHVWKHUHVXOWVRI ZKLFKDUHUHSRUWHGWRWKH$XGLW&RPPLWWHH 83 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 1RWHVWRWKH)LQDQFLDO6WDWHPHQWV $OOȴJXUHVLQ6UL/DQNDQ5XSHHVWKRXVDQGV &UHGLWULVN &UHGLWULVNLVWKHULVNRIȴQDQFLDOORVVWRWKH*URXSLIDFXVWRPHURUFRXQWHUSDUW\WRDȴQDQFLDOLQVWUXPHQWIDLOVWRPHHWWKHLU FRQWUDFWXDOREOLJDWLRQVDQGDULVHVSULQFLSDOO\IURPWKH*URXSȇVUHFHLYDEOHVIURPFXVWRPHUVSODFHPHQWVLQGHSRVLWVZLWK EDQNLQJLQVWLWXWLRQVLQYHVWPHQWVLQXQLWWUXVWVDQGLQJRYHUQPHQWVHFXULWLHV ([SRVXUHWRFUHGLWULVN 7KHFDUU\LQJDPRXQWRIȴQDQFLDODVVHWVUHSUHVHQWVWKHPD[LPXPFUHGLWH[SRVXUH7KHPD[LPXPH[SRVXUHWRFUHGLWULVNDW WKHHQGRIWKHUHSRUWLQJSHULRGZDVDVIROORZV Group As at 31st March 2019 2018 &RPSHQVDWLRQUHFHLYDEOH QRWH 24,759 169,966 ΖQYHVWPHQWLQȴ[HGGHSRVLWV 114,206 126,012 )DLUYDOXHWKURXJKSURȴWRUORVVȴQDQFLDODVVHWV QRWH 29,482 - 7UDGHDQGRWKHUUHFHLYDEOHV QRWH 69,808 64,149 &DVKDQGFDVKHTXLYDOHQWV QRWH 8,870 22,418 247,125 382,545 32.1.1 a. Compensation receivable 7KH&RPSHQVDWLRQUHFHLYDEOHLVGXHWRWKH&RPSDQ\IURPWKH*RYHUQPHQWRI6UL/DQNDRQWKHSHUFKHVRIODQG DFTXLUHGWRFRQVWUXFWDȴVKHULHVKDUERXU7KHFRPSHQVDWLRQUHFHLYDEOHLVUHFRUGHGLQWKHȴQDQFLDOVWDWHPHQWVDWFDUU\LQJ DPRXQWOHVVSURYLVLRQIRULPSDLUPHQW+RZHYHUWKHWLPLQJRIWKHUHFHLSWZLOOEHVXEMHFWWRWKHȴQDOLW\RIWKHODQGFDVH FXUUHQWO\DWKHDULQJVWDJHDWWKH'LVWULFW&RXUWRI1HJRPERDVPHQWLRQHGQRWHDQGDQGWKHSURSRVHGDSSHDOWR WKH/DQG$FTXLVLWLRQ%RDUGDQG5HYLHZΖ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ȴWRUORVVȴQDQFLDODVVHWVLQYHVWPHQWLQXQLWWUXVWV 7KH&RPSDQ\KDVLQYHVWHGLQ8QLW7UXVWV*XDUGLDQ$FXLW\)L[HGΖQFRPH)XQGDQGLQ*XDUGLDQ$FXLW\)L[HGΖQFRPH*LOW )XQG 7KHVHLQYHVWPHQWVZHUHFDUULHGDWWKHLUIDLUYDOXHV EHLQJWKHQHWDVVHWYDOXHRIWKHIXQGV7KHIXQGVFRPSULVHȴ[HGLQFRPH HDUQLQJLQVWUXPHQWVDWDJLYHQSRLQWLQWLPHZLWKGXHFRQVLGHUDWLRQIRUOLTXLGLW\ZKLFKZLOOHQDEOHWRUHDOLVHLWVFDUU\LQJ YDOXHVZLWKDPLQLPXPORVVLQYDOXH)XUWKHUWKHVHIXQGVDUHUHJXODWHGLQVXFKDZD\WKDWWKHIXQGFDUU\DGHTXDWHDVVHWVLQ KLJKO\OLTXLGIRUPJHQHUDOO\RIWKHQHWDVVHWVYDOXHZKLFKZLOOHQVXUHFXVWRPHUZLWKGUDZDOVDUHVHWWOHGSURPSWO\ $GXHHYDOXDWLRQSURFHVVKDVEHHQFDUULHGRXWE\WKH&RPSDQ\SULRUWRWKHVHLQYHVWPHQWVWRDVVHVVWKHLUDELOLW\WRUHSD\ LQWKHHYHQWWKH&RPSDQ\ZLVKHVWRZLWKGUDZZLWKLQWKHH[LVWLQJUHJXODWRU\IUDPHZRUN 84 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 F7UDGHDQGRWKHUUHFHLYDEOHV 7KH*URXSȇVH[SRVXUHWRFUHGLWULVNLVLQȵXHQFHGPDLQO\E\WKHLQGLYLGXDOFKDUDFWHULVWLFVRIHDFKFXVWRPHU+RZHYHUWKH PDQDJHPHQWDOVRFRQVLGHUVWKHGHPRJUDSKLFVRIWKH*URXSȇVFXVWRPHUEDVHLQFOXGLQJWKHGHIDXOWULVNRIWKHLQGXVWU\LQ ZKLFKFXVWRPHUVRSHUDWHDVWKHVHIDFWRUVPD\KDYHDQLQȵXHQFHRQFUHGLWULVN 7KH*URXSKDVHVWDEOLVKHGDFUHGLWSROLF\XQGHUZKLFKHDFKQHZFXVWRPHULVDQDO\VHGLQGLYLGXDOO\IRUFUHGLWZRUWKLQHVV EHIRUHWKH*URXSȇVVWDQGDUGSD\PHQWGHOLYHU\WHUPVDQGFRQGLWLRQVDUHRHUHG&UHGLWOLPLWVDUHHVWDEOLVKHGIRUHDFK FXVWRPHUZKLFKUHSUHVHQWVWKHPD[LPXPRSHQDPRXQWWKDWFDQEHRHUHGZLWKRXWUHTXLULQJVSHFLȴFDSSURYDO7KHVH OLPLWVDUHUHYLHZHGDQQXDOO\ In monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are an individual or a legal entity, whether they are a corporate customer or tour operator, and also evaluate to identify WKHH[LVWHQFHRISUHYLRXVȴQDQFLDOGLɝFXOWLHV7UDGHDQGRWKHUUHFHLYDEOHVUHODWHPDLQO\WRWKH*URXSȇVFRUSRUDWHDQGWRXU RSHUDWRUVHJPHQWV&XVWRPHUVWKDWDUHJUDGHGDVȆKLJKULVNȇDUHSODFHGRQDUHVWULFWHGFXVWRPHUOLVWPRQLWRUHGDQGIXWXUH VDOHVDUHPDGHRQSUHSD\PHQWEDVLV 7KH*URXSHVWDEOLVKHVDQDOORZDQFHIRULPSDLUPHQWWKDWUHSUHVHQWLWVHVWLPDWHRILQFXUUHGORVVHVLQUHVSHFWRIWUDGHDQG RWKHUUHFHLYDEOHVEHLQJDVSHFLȴFORVVFRPSRQHQW 7KHPD[LPXPH[SRVXUHWRFUHGLWULVNIRUWUDGHUHFHLYDEOHVDWWKHHQGRIWKHUHSRUWLQJSHULRGE\W\SHRIVHJPHQWZDVDV IROORZV Group As at 31st March 2019 2018 Corporate customers 9,754 5,704 Tour operators 55,100 46,555 2WKHUV 6,526 8,910 71,380 61,169 ΖPSDLUPHQWRIWUDGHUHFHLYDEOHV 7KHDJLQJRIWUDGHUHFHLYDEOHVDWWKHHQGRIWKHUHSRUWLQJSHULRGZDVDVIROORZV Group As at 31st March 2019 2018 1–30 days 30,007 31,181 31–90 days 30,273 18,793 91–120 days 2,899 1,997 GD\VDERYH 8,201 9,198 71,380 61,169 85 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 1RWHVWRWKH)LQDQFLDO6WDWHPHQWV $OOȴJXUHVLQ6UL/DQNDQ5XSHHVWKRXVDQGV $SURYLVLRQRI5VPQKDVEHHQPDGHDVLPSDLUPHQWLQUHVSHFWRIWUDGHUHFHLYDEOHVDVDWWKH\HDUHQG PQ 7KH*URXSEHOLHYHVWKDWWKHXQLPSDLUHGDPRXQWVWKDWDUHSDVWGXHE\PRUHWKDQ GD\VDUHVWLOOFROOHFWLEOHLQIXOOEDVHG RQKLVWRULFSD\PHQWEHKDYLRXUDQGH[WHQVLYHDQDO\VLVRIFXVWRPHUV G &DVKDQGFDVKHTXLYDOHQWV 7KH*URXSKHOGFDVKDQGFDVKHTXLYDOHQWVRI5V PQDVDW0DUFK 5VPQ ZKLFKUHSUHVHQWVLWV PD[LPXPFUHGLWH[SRVXUHRQWKHVHDVVHWV7KHFDVKDQGFDVKHTXLYDOHQWVDUHKHOGZLWKEDQNDQGȴQDQFLDOLQVWLWXWLRQ FRXQWHUSDUWLHVZKLFKDUHUDWHG$$$ OND WR$$ȫ OND EDVHGRQ)LWFK5DWLQJV Placements in government securities primarily comprise of short term Securities Purchased under Re sale agreement LQYHVWPHQWVH[WHQGLQJWRDSHULRGOHVVWKDQPRQWKV /LTXLGLW\ULVN /LTXLGLW\ULVNLVWKHULVNWKDWWKH*URXSZLOOHQFRXQWHUGLɝFXOW\LQPHHWLQJWKHREOLJDWLRQVDVVRFLDWHGZLWKLWVȴQDQFLDO OLDELOLWLHVWKDWDUHWREHVHWWOHGE\GHOLYHULQJFDVKRUDQRWKHUȴQDQFLDODVVHW7KH*URXSȇVDSSURDFKWRPDQDJLQJOLTXLGLW\LV WRHQVXUHDVIDUDVSRVVLEOHWKDWLWZLOODOZD\VKDYHVXɝFLHQWOLTXLGLW\WRPHHWLWVOLDELOLWLHVZKHQGXHXQGHUERWKQRUPDO DQGVWUHVVHGFRQGLWLRQVZLWKRXWLQFXUULQJXQDFFHSWDEOHORVVHVRUULVNLQJGDPDJHWRWKH*URXSȇVUHSXWDWLRQ 86 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 7KHIROORZLQJDUHWKHUHPDLQLQJFRQWUDFWXDOPDWXULWLHVRIȴQDQFLDOOLDELOLWLHVDWWKHHQGRIWKHUHSRUWLQJSHULRG &RQWUDFWXDOFDVKȵRZV 31st March 2019 &DUU\LQJ Total 2 months 2-12 \HDUV \HDUV More than amount or less months \HDUV 1RQGHULYDWLYHȴQDQFLDO liabilities 7UDGHSD\DEOHV 54,463 54,463 54,463 - - - - 2WKHUSD\DEOHV 28,572 28,572 28,572 - - - - /RDQVDQGERUURZLQJV 89,184 89,184 1,312 30,560 9,870 40,252 7,190 Bank overdraft 19,451 19,451 19,451 - - - - 191,670 191,670 103,798 30,560 9,870 40,252 7,190 &RQWUDFWXDOFDVKȵRZV 31st March 2018 &DUU\LQJ Total 2 months 2-12 \HDUV \HDUV More than amount or less months \HDUV 1RQGHULYDWLYHȴQDQFLDO liabilities 7UDGHSD\DEOHV 48,188 48,188 48,188 - - - - 2WKHUSD\DEOHV 18,330 18,330 18,330 - - - - /RDQVDQGERUURZLQJV 31,550 31,550 - 5,047 6,049 18,793 1,661 Bank overdraft 3,429 3,429 3,429 - - - - 101,497 101,497 69,947 5,047 6,049 18,793 1,661 7KHJURVVLQȵRZV RXWȵRZV GLVFORVHGLQWKHDERYHWDEOHUHSUHVHQWWKHFRQWUDFWXDOXQGLVFRXQWHGFDVKȵRZVUHODWLQJWRQRQ GHULYDWLYHȴQDQFLDOOLDELOLWLHVZKLFKDUHXVXDOO\QRWFORVHGRXWEHIRUHFRQWUDFWXDOPDWXULW\ 0DQDJHPHQWRIOLTXLGLW\ULVN 7KH*URXSȇVDSSURDFKWRPDQDJLQJOLTXLGLW\LVWRHQVXUHDVIDUDVSRVVLEOHWKDWLWZLOODOZD\VKDYHVXɝFLHQWOLTXLGLW\WR PHHWLWVOLDELOLWLHVZKHQGXHXQGHUERWKQRUPDODQGVWUHVVHGFRQGLWLRQVZLWKRXWLQFXUULQJXQDFFHSWDEOHORVVHVRUULVNLQJ GDPDJHWRWKH*URXSȇVUHSXWDWLRQ The Group maintains a portion of its assets in highly liquid form; placements with Banking institutions and in Government VHFXULWLHVLQRUGHUWRPHHWLWVFRQWUDFWXDOREOLJDWLRQVGXULQJWKHQRUPDOFRXUVHRILWVRSHUDWLRQV$VDWWKHUHSRUWLQJGDWH WKH*URXSȆV&DVKDQGFDVKHTXLYDOHQWVDPRXQWHGWR5V PQ 5VPQ DQG*URXSȇVVKRUWWHUPGHSRVLWV DPRXQWHGWR5V PQ PQ 7KH*URXSPRQLWRUVWKHOHYHORIH[SHFWHGFDVKLQȵRZVRQWUDGHDQGRWKHUUHFHLYDEOHVWRJHWKHUZLWKH[SHFWHGFDVKRXWȵRZV RQWUDGHDQGRWKHUSD\DEOHV7KLVH[FOXGHVWKHSRWHQWLDOLPSDFWRIH[WUHPHFLUFXPVWDQFHVWKDWFDQQRWUHDVRQDEO\EH SUHGLFWHGVXFKDVQDWXUDOGLVDVWHUV 7KH*URXSKDVDSSURYHGDQGXQXVHGRYHUGUDIWIDFLOLW\DPRXQWLQJWR5VPQDVDWVW0DUFK 87 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 1RWHVWRWKH)LQDQFLDO6WDWHPHQWV $OOȴJXUHVLQ6UL/DQNDQ5XSHHVWKRXVDQGV ΖQDGGLWLRQWKH*URXSKDYHDFFHVVWRVKRUWWHUPȴQDQFLQJIDFLOLWLHVH[WHQGHGIURPWKHSDUHQWFRPSDQ\&DUVRQ &XPEHUEDWFK3/&LIUHTXLUHG 0DUNHWULVN 0DUNHWULVNLVWKHULVNWKDWFKDQJHVLQPDUNHWSULFHVVXFKDVIRUHLJQH[FKDQJHUDWHVDQGLQWHUHVWUDWHVZKLFKZLOODHFWWKH *URXSȇVLQFRPHRUWKHYDOXHRILWVȴQDQFLDOLQVWUXPHQWV7KHREMHFWLYHRIPDUNHWULVNPDQDJHPHQWLVWRPDQDJHDQGFRQWURO PDUNHWULVNH[SRVXUHVZLWKLQDFFHSWDEOHSDUDPHWHUVZKLOHRSWLPLVLQJWKHUHWXUQ &XUUHQF\ULVN )RUHLJQFXUUHQF\ULVNLVWKHULVNWKDWWKHIDLUYDOXHRUIXWXUHFDVKȵRZVRIDȴQDQFLDOLQVWUXPHQWZLOOȵXFWXDWHGXHWR FKDQJHVLQIRUHLJQH[FKDQJHUDWHV7KH*URXSDVDWWKHUHSRUWLQJGDWHGRQRWKROGȆ)LQDQFLDOLQVWUXPHQWVȇGHQRPLQDWHGLQ FXUUHQFLHVRWKHUWKDQLWVIXQFWLRQDOUHSRUWLQJFXUUHQF\KHQFHGRQRWH[SRVHGWRFXUUHQF\ULVNDULVLQJIURPWUDQVODWLRQRI VXFKEDODQFHVLQWRWKHIXQFWLRQDOUHSRUWLQJFXUUHQF\ZKLFKLV6UL/DQNDQ5XSHHV However, the Group engages in transactions associated with foreign currencies in its ordinary course of operations, hence H[SRVHGWRȆFXUUHQF\ULVNȇ $FURVVWKHLQGXVWU\WKHKRWHOUDWHVWDUJHWLQJWKHIRUHLJQWRXULVWVDUHTXRWHGLQ86'ROODUWHUPVDQGFRQWUDFWHGLQDGYDQFH ZLWKWKHWRXURSHUDWRUVZKLFKFRQVWLWXWHDVLJQLȴFDQWYROXPHRIEXVLQHVVRIWKH*URXS$ȵXFWXDWLRQLQWKHH[FKDQJHUDWHV ZLOOKDYHDQLPSDFWRYHUWKHDPRXQWVUHDOL]HGLQWKHORFDOFXUUHQF\2SHUDWLRQVFRQFHUQHGZLWKWKHORFDOFRXQWHUSDUWLHV &RUSRUDWHVDQGRWKHUV GRQRWFDUU\DFXUUHQF\ULVNH[SRVXUHRQWKHEDVLVWKDWWKRVHDUHWUDQVDFWHGLQ6UL/DQND5XSHH WHUPV 7KH*URXSUHYLHZVȵXFWXDWLRQVLQIRUHLJQH[FKDQJHUDWHVDQGWDNHVSUHFDXWLRQDU\PHDVXUHVWRUHYLVHLWVUDWHTXRWHVRQ DUHJXODUEDVLVLQDQDWWHPSWWRPLWLJDWHWKHH[SRVXUHWRFXUUHQF\ULVNDULVLQJIURPLWVWUDQVDFWLRQVZLWKWRXURSHUDWRU VHJPHQWLIUHTXLUHG ΖQWHUHVWUDWHULVN $VDWWKHUHSRUWLQJGDWHWKHȴQDQFLDODVVHWVOLDELOLWLHVDUHH[SRVHGWRLQWHUHVWUDWHULVNV 3URȴOH $WWKHHQGRIWKHUHSRUWLQJSHULRGWKHLQWHUHVWUDWHSURȴOHRIWKH*URXSȇVLQWHUHVWEHDULQJȴQDQFLDOLQVWUXPHQWVDVUHSRUWHG WRWKH0DQDJHPHQWRIWKH*URXSZDVDVIROORZV 88 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 Group As at 31st March 2019 2018 9DULDEOHUDWHLQVWUXPHQWV )LQDQFLDOOLDELOLWLHV %DQNRYHUGUDIW /RDQVDQGERUURZLQJV - )L[HGUDWHLQVWUXPHQWV )LQDQFLDODVVHWV ΖQYHVWPHQWLQȴ[HGGHSRVLWV 114,206 126,012 )DLUYDOXHWKURXJKSURȴWRUORVVȴQDQFLDODVVHWV 29,482 - ΖQYHVWPHQWLQ5(32 - 10,375 )LQDQFLDOOLDELOLWLHV/RDQVDQGERUURZLQJV 35,053 101,408 &DVKȵRZVHQVLWLYLW\DQDO\VLVIRUYDULDEOHUDWHLQVWUXPHQWV $FKDQJHRILQLQWHUHVWUDWHVDWWKHHQGRIWKHUHSRUWLQJSHULRGZRXOGKDYHLQFUHDVHG GHFUHDVHG HTXLW\DQGSURȴWRU ORVVE\WKHDPRXQWVVKRZQEHORZ7KLVDQDO\VLVDVVXPHVWKDWDOORWKHUYDULDEOHVUHPDLQHGFRQVWDQW 3URȴW ORVV ΖQFUHDVHE\ Decrease E\ As at 31st March 1% 1% 31st March 2019 9DULDEOHUDWHLQVWUXPHQWV 835 31st March 2018 9DULDEOHUDWHLQVWUXPHQWV 34 89 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 1RWHVWRWKH)LQDQFLDO6WDWHPHQWV $OOȴJXUHVLQ6UL/DQNDQ5XSHHVWKRXVDQGV $FFRXQWLQJFODVVLȴFDWLRQVDQGIDLUYDOXHV )LQDQFLDOLQVWUXPHQWVDUHPHDVXUHGHLWKHUDWIDLUYDOXHRUDPRUWLVHGFRVW7KH$FFRXQWLQJ3ROLFLHVLQQRWHVWRWKHȴQDQFLDO VWDWHPHQWVGHVFULEHVKRZWKHFODVVHVRIȴQDQFLDOLQVWUXPHQWVDUHPHDVXUHGDQGKRZWKHUHOHYDQWLQFRPHDQGH[SHQVHV LQFOXGLQJIDLUYDOXHJDLQVDQGORVVHVDUHUHFRJQL]HG7KHIROORZLQJWDEOHDQDO\VHVWKHIDLUYDOXHRIȴQDQFLDOLQVWUXPHQWV WRJHWKHUZLWKWKHFDUU\LQJDPRXQWVVKRZQLQWKHVWDWHPHQWRIȴQDQFLDOSRVLWLRQ )DLUYDOXHYVFDUU\LQJDPRXQWV As at 31st March 2019 0DQGDWRU\ Fair value Financial Assets at Other Total Fair value )973/DQG KHGJH assets at fair value ȴQDQFLDO FDUU\LQJ other instruments DPRUWLVHG through other liabilities amount cost comprehensive income &RPSHQVDWLRQUHFHLYDEOH - - 24,759 - - 24,759 24,759 ΖQYHVWPHQWLQȴ[HGGHSRVLWV - - 114,206 - - 114,206 114,206 )DLUYDOXHWKURXJKSURȴWRU ORVVȴQDQFLDODVVHWVXQLW trust 29,482 - - - - 29,482 29,482 7UDGHDQGRWKHUUHFHLYDEOHV - - 69,808 - - 69,808 69,808 Cash and cash equivalents - - 8,870 - - 8,870 8,870 29,482 - 217,643 - - 247,125 247,125 7UDGHDQGRWKHUSD\DEOHV - - - - 83,035 83,035 83,035 - - - - 83,035 83,035 83,035 31st March 2018 2ULJLQDOFODVVLȴFDWLRQ 1HZFODVVLȴFDWLRQ Original 1HZ XQGHU/.$6 DVSHU6/)56 FDUU\LQJ FDUU\LQJ amount amount XQGHU XQGHU /.$6 6/)56 Financial assets &RPSHQVDWLRQUHFHLYDEOH /RDQVDQGUHFHLYDEOHV Amortised cost 169,966 169,966 ΖQYHVWPHQWLQȴ[HGGHSRVLWV /RDQVDQGUHFHLYDEOHV Amortised cost 126,012 126,012 7UDGHDQGRWKHUUHFHLYDEOHV /RDQVDQGUHFHLYDEOHV Amortised cost 64,149 64,149 Cash and cash equivalents /RDQVDQGUHFHLYDEOHV Amortised cost 22,418 22,418 382,545 382,545 Financial liabilities 7UDGHDQGRWKHUSD\DEOHV 2WKHUȴQDQFLDOOLDELOLWLHV )LQDQFLDOOLDELOLWLHVDW amortised cost 66,518 66,518 66,518 66,518 90 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 )DLUYDOXHKLHUDUFK\ 7KHWDEOHEHORZDQDO\VHVȴQDQFLDOLQVWUXPHQWVFDUULHGDWIDLUYDOXHE\WKHOHYHOVLQWKHIDLUYDOXHKLHUDUFK\7KHGLHUHQW OHYHOVKDYHEHHQGHȴQHGDVIROORZV /HYHO $YDLODELOLW\RITXRWHGSULFHV XQDGMXVWHG LQDFWLYHPDUNHWVIRULGHQWLFDODVVHWVRUOLDELOLWLHV /HYHO 8VHRILQSXWVRWKHUWKDQTXRWHGSULFHVWKDWDUHREVHUYDEOHIRUWKHDVVHWRUOLDELOLW\HLWKHUGLUHFWO\ LHDVSULFHV RULQGLUHFWO\ LHGHULYHGIURPSULFHV /HYHO 8VHRILQSXWVIRUWKHDVVHWRUOLDELOLW\WKDWDUHQRWEDVHGRQREVHUYDEOHPDUNHWGDWD XQREVHUYDEOHLQSXWV /HYHO /HYHO /HYHO Total As at 31st March 2019 )DLUYDOXHWKURXJKSURȴWRUORVVȴQDQFLDODVVHWV - 29,482 - 29,482 3URSHUW\SODQWDQGHTXLSPHQW/DQGDQG%XLOGLQJV - - 1,798,886 1,798,886 - 29,482 1,798,886 1,828,368 As at 31st March 2018 3URSHUW\SODQWDQGHTXLSPHQW/DQGDQG%XLOGLQJV - - 1,718,427 1,718,427 - 126,012 1,718,427 1,718,427 7KHUHZHUHQRWUDQVIHUVLQEHWZHHQ/HYHO/HYHODQG/HYHOGXULQJWKHȴQDQFLDOSHULRGXQGHUUHYLHZ 1LO 9DOXDWLRQWHFKQLTXHVDQGVLJQLȴFDQWXQREVHUYDEOHLQSXWV 7KHIROORZLQJWDEOHGHSLFWVWKHYDOXDWLRQWHFKQLTXHVXVHGLQPHDVXULQJOHYHOIDLUYDOXHVDVZHOODVWKHVLJQLȴFDQW XQREVHUYDEOHLQSXWVXVHG 7KHIDLUYDOXHRISURSHUW\ZDVGHWHUPLQHGE\DQH[WHUQDOLQGHSHQGHQWSURSHUW\YDOXHUZLWKDSSURSULDWHDQGUHFRJQLVHG SURIHVVLRQDOTXDOLȴFDWLRQVDQGUHFHQWH[SHULHQFHLQWKHORFDWLRQDQGFDWHJRU\RIWKHSURSHUWLHVEHLQJYDOXHG 7KHIDLUYDOXHPHDVXUHPHQWVRIDOOWKHSURSHUWLHVKDYHEHHQFDWHJRULVHGDV/HYHOIDLUYDOXHEDVHGRQWKHLQSXWWRWKH YDOXDWLRQWHFKQLTXHXVHG 91 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 1RWHVWRWKH)LQDQFLDO6WDWHPHQWV $OOȴJXUHVLQ6UL/DQNDQ5XSHHVWKRXVDQGV &RPSDQ\ /RFDWLRQ 9DOXDWLRQWHFKQLTXH 6LJQLȴFDQW8QREVHUYDEOH ΖQWHUUHODWLRQVKLSEHWZHHQ Inputs .H\8QREVHUYDEOH ΖQSXWVDQG)DLU9DOXH Measurements The estimated fair value ZRXOGLQFUHDVH GHFUHDVH if – Pegasus Reef Hotel Wattala Market approach Market value of land (Price Market value per perch was /DQG SHU3HUFK KLJKHU ORZHU Valuer has used a range of prices for respective lands EDVHGRQWKHLUUHFHQWO\ WUDQVDFWHGYDOXHV Current market conditions DQGWKHFRPSDUDEOH SURSHUW\SULFHVKDYHEHHQ XVHGIRUWKHYDOXDWLRQ Buildings Pegasus Reef Hotel Wattala &RQWUDFWRUȇV0HWKRG Construction cost per Cost per square feet was The contractor’s method VTXDUHIHHWRIDEXLOGLQJ KLJKHU ORZHU ZRUNVRQWKHEDVLVWKDW (TXLW\+RWHOV/LPLWHG Giritale DSURSHUW\ȇVYDOXHFDQEH Depreciation rate for the Depreciation rate for usage HTXDWHGWRLWVFRVW9DOXHU XVDJHRIDVVHWV ORZHU KLJKHU assess the cost of the EXLOGLQJLILWZRXOGKDYH constructed in current year, and deduct margin for XVDJHRIWKHSURSHUW\EDVHG on the respective year of FRQVWUXFWLRQ 92 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 &200Ζ70(176$1'&217Ζ1*(1&Ζ(6 Group &RPSDQ\ As at 31st March 2019 2018 2019 2018 33.1 Capital commitments Approved and contracted 89,424 85,323 89,424 - 33.2 Financial commitments 7KH&RPSDQ\DQGWKH*URXSGRQRWKDYHVLJQLȴFDQWȴQDQFLDOFRPPLWPHQWVDVDWWKHUHSRUWLQJGDWH 33.3 Contingent liabilities $FDVHKDVEHHQȴOHGDJDLQVWWKH&RPSDQ\E\DQLQGLYLGXDOLQWKH'LVWULFW&RXUWRI1HJRPERVHHNLQJDGHFODUDWRU\WLWOH IURPFRXUWVWDWLQJWKDWKHLVFRRZQHURISHUFKHVRIWKHODQGWKDWEHORQJHGWRWKH&RPSDQ\7KHRXWFRPHRIWKH FRXUWSURFHVVLVVWLOOSHQGLQJ+RZHYHUWKH&RPSDQ\LVFRQȴGHQWWKDWLWFDQHVWDEOLVKWLWOHWRWKHVDLGODQGΖQDQ\FDVHWKH FODLPHGODQGH[WHQWIDOOVZLWKLQWKHSHUFKHVRIODQGDFTXLUHGE\WKH*RYHUQPHQWIRUWKHȴVKHULHVKDUERXUSURMHFW DQGGHWDLOHGXQGHUQRWH6LQFHWKHFU\VWDOOL]DWLRQRIWKHFRQWLQJHQWOLDELOLW\LVVXEMHFWWRWKHUXOLQJRIWKH'LVWULFW&RXUW FDVHIROORZHGE\WKHDYDLODEOHDSSHDOSURFHVVWKHUHDIWHUDQGWKHVXEVHTXHQWYDOXHGHWHUPLQDWLRQRIWKHFODLPE\WKH *RYHUQPHQWYDOXHUVDLGFRQWLQJHQWOLDELOLW\FDQQRWEHTXDQWLȴHG 5(/$7('3$57<75$16$&7Ζ216 7KH&RPSDQ\FDUULHVRXWWUDQVDFWLRQVLQWKHRUGLQDU\FRXUVHRILWVEXVLQHVVRQDQDUPȇVOHQJWKEDVLVZLWKSDUWLHVZKRDUH GHȴQHGDVUHODWHGSDUWLHVLQ6UL/DQND$FFRXQWLQJ6WDQGDUG /.$6 Ȋ5HODWHGSDUW\GLVFORVXUHVȋWKHGHWDLOVRIZKLFKDUH UHSRUWHGEHORZ 3DUHQWDQGXOWLPDWHFRQWUROOLQJHQWLW\ ΖQWKHRSLQLRQRIWKH'LUHFWRUV&DUVRQ&XPEHUEDWFK3/&LVWKHSDUHQWFRPSDQ\RI3HJDVXV+RWHOVRI&H\ORQ3/&DQG%XNLW 'DUDK3/&LVWKHXOWLPDWHSDUHQWDQGFRQWUROOLQJHQWLW\RI3HJDVXV+RWHOVRI&H\ORQ3/& 7UDQVDFWLRQVZLWK.H\0DQDJHPHQW3HUVRQQHO .03 $FFRUGLQJWR6UL/DQND$FFRXQWLQJ6WDQGDUG /.$6 Ȋ5HODWHGSDUW\GLVFORVXUHVȋ.H\0DQDJHPHQW3HUVRQQHO .03 DUHWKRVHKDYLQJDXWKRULW\DQGUHVSRQVLELOLW\IRUSODQQLQJDQGFRQWUROOLQJWKHDFWLYLWLHVRIWKHHQWLW\GLUHFWO\RULQGLUHFWO\ $FFRUGLQJO\WKH'LUHFWRUVRIWKH&RPSDQ\ LQFOXGLQJH[HFXWLYHDQGQRQH[HFXWLYHGLUHFWRUV KDYHEHHQFODVVLȴHGDV.H\ 0DQDJHPHQWSHUVRQQHORIWKH&RPSDQ\ 93 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 1RWHVWRWKH)LQDQFLDO6WDWHPHQWV $OOȴJXUHVLQ6UL/DQNDQ5XSHHVWKRXVDQGV Group &RPSDQ\ )RUWKH\HDUHQGHGVW0DUFK 2019 2018 2019 2018 34.2.1 .H\PDQDJHPHQWSHUVRQQHOFRPSHQVDWLRQ 6KRUWWHUPHPSOR\HHEHQHȴWV 500 800 500 800 3RVWHPSOR\PHQWEHQHȴWV - - - - 7HUPLQDWLRQEHQHȴWV - - - - 1RQFDVKEHQHȴWV - - - - 2WKHUORQJWHUPEHQHȴWV - - - - 500 800 500 800 1RRWKHUWUDQVDFWLRQVKDYHWDNHQSODFHGXULQJWKH\HDUH[FHSWDVGLVFORVHGDERYHEHWZHHQWKH&RPSDQ\*URXSDQGLWV .03 34.3 Group entities HTXLW\LQWHUHVW 1DPHRIWKH6XEVLGLDU\ 2019 2018 (TXLW\+RWHOV/LPLWHG 7UDQVDFWLRQVZLWK5HODWHG&RPSDQLHV 9DOXHRIWKHWUDQVDFWLRQ 1DPHDQGWKHQDWXUHRIWKH 1DPHVRIWKH Nature of transactions Group &RPSDQ\ relationship FRPPRQ'LUHFWRUV 2019 2018 2019 2018 3DUHQWHQWLW\ &DUVRQ&XPEHUEDWFK3/& '&5*XQDZDUGHQD Providing hotel services - 1,477 - 1,477 6XEVLGLDU\ (TXLW\+RWHOV/LPLWHG '&5*XQDZDUGHQD 5HLPEXUVHPHQWRI 95:LMHVLQJKH expenses - - 938 1,336 Dividend received - - - 1,203 )HOORZVXEVLGLDULHV Carsons Management services .6HOYDQDWKDQ 5HLPEXUVHPHQWRI 3ULYDWH /LPLWHG &06/ 95:LMHVLQJKH expenses - 3,295 - 2,712 Computer charges 150 150 150 150 Secretarial fees 561 556 444 444 Support service fee 8,112 8,585 7,951 7,333 Internal audit services fee - 2,051 - 2,051 $JUR+DUSDQ/HVWDUL 3YW /WG Providing hotel services - 112 - 112 /LRQ%UHZHU\ &H\ORQ 3/& Providing hotel services 552 1,458 552 1,458 5HODWHGFRPSDQ\OHQGLQJ LQFOXGLQJVKRUWWHUPDGYDQFHV KDYHEHHQFKDUJHGLQWHUHVWDW$:3/5LIDQ\ 6XSSRUWVHUYLFHIHHDQGRWKHUH[SHQVHVFKDUJHGDUHEDVHGRQWKHUHVSHFWLYHVHUYLFHVSURYLGHGE\&06/DVSHUWKHVHUYLFH DJUHHPHQWVVLJQHGEHWZHHQWKHFRPSDQLHV 94 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 7KH&RPSDQ\KDVSURYLGHGDFRUSRUDWHJXDUDQWHHWRLWVVXEVLGLDU\DVGHWDLOHGEHORZ &RPSDQ\ 3XUSRVH 2XWVWDQGLQJEDODQFH as at 31st March 2019 2018 (TXLW\+RWHOV/LPLWHG /RQJWHUPORDQIDFLOLW\IURP&RPPHUFLDO%DQNRI&H\ORQ3/& 40,000 - 'Ζ9Ζ'(1'3(56+$5( &RPSDQ\ As at 31st March 2019 2018 'LYLGHQGVSDLGGXULQJWKH\HDU )LQDOLQWHULPGLYLGHQG 16,715 31,911 'LYLGHQGSHUVKDUH 5V Dividends proposed during the year First interim dividend Total dividend 16,715 16,715 'LYLGHQGSHUVKDUH 5V &203$5$7Ζ9()Ζ*85(6 3UHYLRXVSHULRGȇVȴJXUHVDQGSKUDVHVKDYHEHHQUHDUUDQJHGZKHUHYHUQHFHVVDU\WRFRQIRUPWRWKHFXUUHQWSHULRGȇV SUHVHQWDWLRQ (9(176$)7(57+(5(3257Ζ1*'$7( 6XEVHTXHQWWRWKH%DODQFH6KHHWGDWHRQWK0D\ WKH&RPSDQ\UHFHLYHGDQRɝFLDOQRWLȴFDWLRQSHUWDLQLQJWRLWV FODLPRIFRPSHQVDWLRQLQUHVSHFWRIODQGH[WHQWRI SHUFKHVDZDUGLQJ5V LQUHODWLRQWRRXUFODLPRI 5V IRUWKHVDLGODQGPRUHIXOO\GHVFULEHGLQWRWKH)LQDQFLDO6WDWHPHQWV7KH&RPSDQ\LVWDNLQJVWHSVWR DSSHDODJDLQVWWKHVDLGDZDUGRIFRPSHQVDWLRQ 5V WRWKH/DQG$FTXLVLWLRQ%RDUGRI5HYLHZ 6XEVHTXHQWWRWKHUHSRUWLQJSHULRGQRFLUFXPVWDQFHVKDYHDULVHQZKLFKZRXOGUHTXLUHDGMXVWPHQWVWRRUGLVFORVXUHVLQWKH ȴQDQFLDOVWDWHPHQWVRWKHUWKDQGLVFORVHGDERYH 'Ζ5(&7256ȇ5(63216Ζ%Ζ/Ζ7< 7KH%RDUGRI'LUHFWRUVLVUHVSRQVLEOHIRUWKHSUHSDUDWLRQDQGSUHVHQWDWLRQRIWKHȴQDQFLDOVWDWHPHQWV7KLVLVPRUHIXOO\ GHVFULEHGXQGHUWKHUHOHYDQWFODXVHLQWKH'LUHFWRUVȇ5HSRUW 95 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 )LYH Group )RUWKH\HDUHQGHG$VDWVW0DUFK 2019 2018 2017 2016 2015 7UDGLQJ5HVXOWV Revenue 677,550 684,841 543,200 582,209 510,255 3URȴWIURPRSHUDWLRQV 44,058 81,240 16,722 109,177 92,365 1HWȴQDQFHLQFRPH FRVW 17,374 27,702 27,276 24,520 17,961 /RVV SURȴWEHIRUHWD[DWLRQ 108,942 43,998 133,697 110,326 Income taxation /RVV SURȴWIRUWKH\HDU 84,328 41,543 120,675 95,868 2WKHUFRPSUHKHQVLYHLQFRPH H[SHQVH IRUWKH\HDU 155 605,622 7RWDOFRPSUHKHQVLYH H[SHQVH LQFRPHIRUWKH\HDU 647,165 119,368 94,793 Shareholders’ Funds Stated capital 515,170 515,170 515,170 515,170 515,170 Reserves 1,410,148 1,518,997 1,685,052 1,053,083 957,251 Shareholders’ funds 1,925,318 2,034,167 2,200,222 1,568,253 1,472,421 Assets Employed Property, plant and equipment 2,007,609 1,887,516 2,010,067 1,186,133 1,157,858 ΖQWDQJLEOHDVVHWV 115,287 115,287 115,287 115,287 115,287 ΖQYHVWPHQWLQȴ[HGGHSRVLW 20,575 - - - - &RPSHQVDWLRQ5HFHLYDEOH 24,759 169,966 152,396 136,678 122,545 Non current assets 2,168,230 2,172,769 2,277,750 1,438,098 1,395,690 Current assets 227,296 236,022 148,473 284,266 194,243 &XUUHQWOLDELOLWLHV Working capital 40,994 101,925 12,022 186,119 123,785 Assets employed 2,209,224 2,274,694 2,289,772 1,624,217 1,519,475 1RQFXUUHQWOLDELOLWLHV /RDQVDQGERUURZLQJV - - 'HIHUUHGWD[OLDELOLW\ (PSOR\HHEHQHȴWV 7RWDOQRQFXUUHQWOLDELOLWLHV Net assets 1,925,318 2,034,167 2,200,222 1,568,253 1,472,421 Capital expenditure 188,999 49,300 261,024 76,356 26,206 3URȴWDELOLW\5DWLRV 1HW /RVV SURȴWPDUJLQ 12 8 21 19 5HWXUQRQVKDUHKROGHUVȇIXQGV 4287 /LTXLGLW\UDWLRV &XUUHQWUDWLR WLPHV 'HEWHTXLW\ - - ΖQYHVWRU5DWLRV (DUQLQJV ORVV SHUVKDUH 5V 'LYLGHQGSHUVKDUH 5V 1HWDVVHWVSHUVKDUH 5V 0DUNHWSULFHSHUVKDUH 5V 'LYLGHQG\LHOG 'LYLGHQGSD\RXW 1$ Hotel operations 2FFXSDQF\ &DOFXODWHGEDVHGRQWKHURRPDYDLODEOHWRVHOO 65 62 47 60 49 Notes 3URȴWDWWULEXWDEOHWRVKDUHKROGHUVRIWKH&RPSDQ\GLYLGHGE\VKDUHKROGHUVȇIXQGV 3URȴWDWWULEXWDEOHWRVKDUHKROGHUVRIWKH&RPSDQ\GLYLGHGE\WKHZHLJKWHGDYHUDJHQXPEHURIRUGLQDU\VKDUHVRXWVWDQGLQJ 96 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 6WDWHPHQWRI9DOXH$GGHG )RUWKH\HDUHQGHGVW0DUFK 2019 2018 Revenue 677,550 684,841 2WKHULQFRPHLQFOXGLQJȴQDQFHLQFRPH 30,604 39,444 &RVWRIPDWHULDOVDQGVHUYLFHVERXJKWIURPRXWVLGH 312,923 370,581 'LVWULEXWHGDVIROORZV 7RHPSOR\HHV as remuneration 185,940 59 178,364 48 To government DVWD[DWLRQ - 7,887 2 7RSURYLGHUVRIFDSLWDO as dividend 16,715 5 16,715 5 as interest and other charges 2,230 1 1,267 - 5HWDLQHGLQWKHEXVLQHVV as deferred taxation 9,845 3 16,727 5 DVQRWLRQDODGMXVWPHQWVRQ/.$66/)56 495 - 17,923 5 as depreciation 62,826 21 64,085 17 DVSURYLVLRQIRULPSDLUPHQWRQFRPSHQVDWLRQUHFHLYDEOH 145,207 46 - - DVSURȴWIRUWKH\HDU DGMXVWHGIRUGLYLGHQGV 67,613 18 312,923 100 370,581 100 7KH6WDWHPHQWRIYDOXHDGGHGVKRZVWKHTXDQWXPRIZHDOWKJHQHUDWHGE\WKHDFWLYLWLHVRIWKH*URXSDQGLWVDSSOLFDWLRQV ([FOXGLQJ9DOXH$GGHG7D[ 97 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 ΖQIRUPDWLRQWR6KDUHKROGHUVDQGΖQYHVWRUV 1. Stock Exchange Listing 3HJDVXV+RWHOVRI&H\ORQ3/&LVDSXEOLFTXRWHG&RPSDQ\WKH2UGLQDU\6KDUHVRIZKLFKDUHOLVWHGRQWKH'LUL6DYL%RDUGRI WKH&RORPER6WRFN([FKDQJHRI6UL/DQND 7KH6WRFN([FKDQJHFRGHIRU3HJDVXV+RWHOVRI&H\ORQ3/&VKDUHVLVȊ3(*ȋ 2. Ordinary Shareholders As at 31 st March 2019 2018 1XPEHURI6KDUHKROGHUV 2,967 2,858 7KHQXPEHURIVKDUHVKHOGE\1RQ5HVLGHQWVDVDWVW0DUFK ZDV ZKLFKDPRXQWVWR RIWKHWRWDOQXPEHURI2UGLQDU\6KDUHV Distribution of 5HVLGHQWV 1RQ5HVLGHQWV Total 6KDUHV No. of No. of % No. of No. of % No. of No. of % VKDUHKROGHUV 6KDUHV VKDUHKROGHUV 6KDUHV VKDUHKROGHUV 6KDUHV 1 - 1,000 2,717 315,694 20 4,781 2,737 320,475 1001 - 10,000 183 582,917 3 13,238 186 596,155 10,001 - 100,000 36 1,110,627 2 97,679 38 1,208,306 100,001 - 1,000,000 5 919,117 - - - 5 919,117 $ERYH 1 27,347,485 - - - 1 27,347,485 Total 2,942 30,275,840 25 115,698 2,967 30,391,538 As at 31st March 2019 &DWHJRULHVRI6KDUHKROGHUV 1RRI6KDUHKROGHUV 1RRI6KDUHV % Individuals 2,894 2,576,857 Institutions 73 27,814,681 Total 2,967 30,391,538 98 PEGASUS HOTELS OF CEYLON PLC | Annual Report 2018/19 3. Market performance - Ordinary shares As at 31 st March 2019 2018 6KDUHSULFHDVDWVW0DUFK 5V +LJKHVW 5V /RZHVW 5V Value of shares traded 10,653,948 12,570,267 1RRIVKDUHVWUDGHG 461,096 427,008 9ROXPHRIWUDQVDFWLRQV 1RV 929 1,195 4 Market Capitalisation 0DUNHWFDSLWDOLVDWLRQRIWKH&RPSDQ\ZKLFKLVWKHQXPEHURIRUGLQDU\VKDUHVLQLVVXHPXOWLSOLHGE\WKHPDUNHWYDOXHRIDQ RUGLQDU\VKDUHZDV5V DVDWVW0DUFK 5V 5. Public Holding 7KH&RPSDQ\LVLQFRPSOLDQFHZLWKWKH0LQLPXP3XEOLF+ROGLQJUHTXLUHPHQWIRU&RPSDQLHVOLVWHGRQWKH'LUL6DYL%RDUG DVSHU5XOH E RIWKH/LVWLQJ5XOHVRIWKH&RORPER6WRFN([FKDQJHXQGHU2SWLRQLH)ORDW$GMXVWHG0DUNHW &DSLWDOL]DWLRQRIOHVVWKDQ5V%LOOLRQZLWK3XEOLF6KDUHKROGHUVDQGD3XEOLF+ROGLQJSHUFHQWDJHRI 7KH&RPSDQ\ȇV3XEOLF+ROGLQJDVDWVW0DUFK 0DUNHW&DSLWDOL]DWLRQRIWKH3XEOLF+ROGLQJ 5V0LOOLRQ 3HUFHQWDJHRI2UGLQDU\6KDUHVKHOGE\WKH3XEOLF 5V 1XPEHURI3XEOLF6KDUHKROGHUV 6. Dividend A First Interim Dividend of Cents 55 per ordinary share for the year ended 31st March 2019, amounting to 5V ZDVSDLGRQWK0DUFK 7. Value of the Properties – Land and Building /RFDWLRQ ([WHQW 2019 Number of 0DUNHWYDOXH Date of LQKHFWDUHV %XLOGLQJV 5Vȇ professional valuation Pegasus Reef Hotel, Wattala 5.45 1 1,585,231 31st March 2017 Equity Hotels Limited, Polonnaruwa (Building) 6.03 1 213,655 31st March 2017 8. 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Jayasinghe Sampath Bank PLC K. Gunathilake COMPANY REGISTRATION NO Deutsche Bank A.G. D. Fernando PQ 40 Hatton National Bank M. Munasinghe LEGAL FORM P. Fernando AUDITORS P. Samarakoon A Public Quoted Company with limited Messrs. KPMG liability (Incorporated in Sri Lanka in M. Sanjeewa Chartered Accountants 1966) No 32A, Sir Mohamed Macan Marker N. Abeyratne PARENT COMPANY AND Mawatha, C. Kamburugamuwa CONTROLLING ENTITY Colombo 03, Sri Lanka. EQUITY HOTELS LIMITED In the opinion of the Directors, T. Ganeshan Carson Cumberbatch PLC is the MANAGERS & SECRETARIES Parent Company of Pegasus Hotels of S. Ekanayake Carsons Management Services (Private) Ceylon PLC and Bukit Darah PLC is the H. Nandasena Limited Ultimate Parent and Controlling Entity No. 61, Janadhipathi Mawatha, M. Tennekoon of Pegasus Hotels of Ceylon PLC. Colombo 01. HOTEL WEBSITE DIRECTORS Telephone No: +94-11- 2039200 Fax No: +94-11- 2039300 www.pegasusreefhotel.com Chandima Gunawardena (Chairman) Mahendra Dayananda REGISTERED OFFICE CORPORATE WEBSITE Krishna Selvanathan No. 61, Janadhipathi Mawatha, www.carsoncumberbatch.com Sujendra Mather Vibath Wijesinghe Colombo 01, Sega Nagendra Sri Lanka. (stepped down w.e.f 14.06.2018) Telephone No: +94-11-2039200 Fax No: +94-11-2039300 PLACE OF BUSINESS Santha Maria Mawatha, Wattala. Designed & produced by Printed by Printage (Pvt) Ltd www.pegasusreefhotel.com