TRANS ASIA HOTELS PLC ANNUAL REPORT 2020 | 2021 CONTENTS Overview About Us 2 Performance Highlights 3 Operational Highlights 4 Stewardship Chairman’s Message 6 Board of Directors 9 Risk Management 11 Corporate Governance 15 Management Reports Management Discussion & Analysis 35 Financial Performance 38 Shareholder Disclosure Share Information and Shareholding 41 Financial Reports Annual Report of the Board of Directors 46 Statement of Directors’ Responsibility 51 Audit Committee Report 52 Independent Auditors’ Report 55 Statement of Profit or Loss and other Comprehensive Income 59 Statement of Financial Position 60 Statement of Changes in Equity 61 Statement of Cash Flows 62 Index to the Notes 63 Notes to the Financial Statements 64 Supplementary Reports Quarterly Financial Data for the Financial Year Ended 31st March 2021 100 Five Year Financial Summary & Key Indicators 101 Glossary of Financial Terms 103 Corporate Information IBC Trans Asia Hotels PLC The period under review has seen us remain not just resolute but resilient too. With our foundation of quality, excellent service and value system centred on quality without compromise, we remain undeterred. In anticipating our discerning clients’ requisites and aiming to give them a better experience, our recently launched ColomBar - a reinvention of our renowned 7 Degrees North has since taken the city by storm and has been a sought after and iconic venue amongst the city’s nightlife circles. This is to the credit of a loyal team and unwavering focus on being the best at all we do. Today, we remain Sri Lanka’s hallmark of luxury hospitality, having not simply raised the bar for what excellence in service is, but instead, tenaciously defined it. An ampersand is an indication of the future, an expectation for something more to occur. It could represent the ending of a difficult period and the continuation on to a brighter path. Annual Report 2020 | 2021 1 ABOUT US Cinnamon Lakeside, Colombo is one of Sri Lanka’s leading 5-star Colombo hotels, and an urban resort offering a unique blend of luxury and serenity in the heart of Colombo. Catering to both leisure and business travellers through 346 rooms designed for luxury and comfort, Cinnamon Lakeside offers international service standards and delectable cuisine through its 8 award-winning, speciality restaurants. The hotel is part of the Cinnamon Hotels & Resorts chain, Sri Lanka’s premier hospitality provider offering 2,566 rooms across 15 properties in Sri Lanka and the Maldives; Cinnamon Hotels is in turn owned and operated by John Keells Holdings PLC, one of Sri Lanka’s leading diversified conglomerates and among the most valuable listed entities on the Colombo Stock Exchange. FINANCIAL CAPITAL Rs. 7.17 Billion Total Assets ACCOMMODATION OTHER AMENITIES Rs. 5.84 Billion 346 FIVE STAR LARGEST POOL Net Assets ROOMS IN COLOMBO 0.08 Times Debt/Equity Ratio Including: TENNIS & SQUASH 20 SUITES COURTS 29 EXECUTIVE ROOMS 106 PREMIUM ROOMS GYMNASIUM 191 SUPERIOR ROOMS OUR STAFF RESTAURANTS & BARS 524 8 SPECIALITY Employees RESTAURANTS Dining Room - The all day dining restaurant which serves an international buffet CUSTOMER RATINGS Royal Thai - Among the best Thai restaurants in Colombo • Second highest rated city Long Feng - Serving traditional hotel in Colombo - ReviewPro Chinese cuisine • Booking.com - Traveler review Library - Exclusive members only bar Award 2020 ColomBar - Unique bar and • Agoda Customer Review restaurant experience showcasing Award 2020 the vibrancy of Colombo • Tripadvisor Travelers’ Choice Goodies - The Cafe at Cinnamon Lakeside Award 2020 Pool Bar - The lounge by the pool The Lounge - Lounge and Sushi bar 2 Trans Asia Hotels PLC PERFORMANCE HIGHLIGHTS Financial and Operational Highlights 2021 2020 2019 2018 2017 Key Financial Ratios-Statement of Profit and Loss and Other Comprehensive Income Net revenue Rs.000 810,968 2,328,597 2,825,425 3,198,851 3,251,041 Gross profit margin % 18% 51% 59% 58% 61% EBIT (Earnings Before Interest and Tax) Rs.000 (921,809) 329,587 582,185 1,015,971 1,045,069 EBIT % -114% 14% 21% 32% 32% Profit/(Loss) for the year (PAT) Rs.000 (818,746) 275,220 471,424 883,189 907,765 EPS/LPS [Earnings/(loss) Per Share] Rs. (4.09) 1.38 2.36 4.42 4.54 ROE (Return on Equity) % -13% 4% 7% 14% 16% ROCE (Return on Capital Employed) % -14% 5% 9% 15% 17% Interest cover Times (38) 13 10 39 36 Key Financial Ratios- Statement of Financial Position Total assets Rs.000 7,172,289 7,886,933 7,813,703 7,677,470 7,494,800 Net assets Rs.000 5,844,147 6,628,070 6,444,171 6,183,120 6,007,640 Interest bearing loans Rs.000 217,527 186,573 165,479 292,312 370,256 Debt/equity ratio Times 0.08 0.04 0.04 0.05 0.06 Equity asset ratio % 81% 84% 82% 81% 80% Net assets per share Rs. 29.22 33.14 32.22 30.92 30.04 Current ratio Times 0.26 1.01 0.92 0.81 1.19 Quick asset ratio Times 0.22 0.96 0.87 0.76 1.14 No. of shares in issue No. 000’s 200,000 200,000 200,000 200,000 200,000 Market/Shareholder information Market value per share Rs. 55.90 56.30 76.40 95.00 75.10 Market Capitalisation Rs.000 11,180,000 11,260,000 15,280,000 19,000,000 15,020,000 Dividend per share Rs. - 0.50 1.00 3.50 3.00 Price earnings ratio Times (14) 41 32 22 17 Dividend cover Times - 2.75 2.36 1.26 1.51 Dividend yield % - 0.9% 1.3% 3.7% 4.0% Dividend payout ratio % - 36% 42% 79% 66% Economic performance Value generated by the Company Rs.000 734,821 1,388,201 1,887,310 2,263,000 2,039,548 Value distributed to: Employees as wages and benefits Rs.000 501,067 669,731 673,721 657,784 589,626 Payment to government Rs.000 22,338 216,339 477,354 487,000 485,406 Community investments Rs.000 19 518 3,131 1,728 8,265 Providers of funds Rs.000 24,210 125,555 257,864 726,000 629,000 Value retained within the business Rs.000 187,187 376,058 475,240 390,000 327,000 Annual Report 2020 | 2021 3 OPERATIONAL HIGHLIGHTS OPERATIONAL PERFORMANCE OUR TEAM OUR PARTNERSHIPS 65% RECOVERY RATE 2021: 524 664 SUPPLIERS in F&B outlet revenue from pre COVID-19 levels 2020: 612 Our business partners Employees 66% Rs. 501 Million Proportion of payments made to Payments to employees local suppliers, out of total purchases 2021: Rs. 13.9 Million Investment in ensuring employee safety 2021: 40 Hours 2020: 43 Hours Annual Training hours (per employee) OUR ENVIRONMENT MAINTAINING OUR PROPERTY COMMITMENT TO SAFETY & QUALITY 9% REDUCTION Rs. 16.5 Million Occupational health and safety: in energy consumption Capital expenditure ISO 45001:2018 208 MT REDUCTION Food safety management: in emissions (carbon footprint) ISO 22000:2018 COMMITMENT TO ELIMINATE Environmental safety: SINGLE-USE PLASTICS ISO 14001:2015 Safe and Secure Certificate: Sri Lanka Tourism Development Authority 4 Trans Asia Hotels PLC CHAIRMAN’S MESSAGE Ensuring the safety of our employees and guests remains a key priority. We continue to take proactive action to mitigate the risk of a spread of the COVID-19 virus, in compliance with the guidelines and regulations stipulated by the health authorities, whilst continuing to rollout additional voluntary and precautionary measures. Dear Stakeholder, demand for leisure travel, which is evident five-year Global Communication I am pleased to present to you, on when looking at travel destinations Campaign (GCC) is expected to positively behalf of the Board, the highlights of the such as the Maldives, which augurs well contribute to the recovery of the industry Annual Report and Financial Statements for a “V” shaped recovery once travel in the medium to long term. of Trans Asia Hotels PLC for the year restrictions ease out. ended 31st March 2021. The Company Financial Performance remains resilient despite a year that was In Sri Lanka, the Government imposed The Company’s performance for the year extremely challenging for the entire travel restrictions with a full closure reflects the unprecedented challenges tourism industry. As we were compelled of the airport and termination of all faced by the industry during this period. to hibernate the hotel’s operations for passenger flights from mid-March 2020. Revenue declined by 65% to Rs. 811 several weeks during the year, FY2020/21 As a result, total tourist arrivals during Million as occupancy levels dropped has been defined by our ability to remain the period January to December 2020 sharply, and banquet and F&B revenues agile while maintaining excellence in amounted to 507,704, a decline of 73% were subdued due to social distancing service delivery and ensuring strict compared to the tourist arrivals in 2019. and guests’ heightened safety concerns. adherence to health and safety protocols While Sri Lanka reopened its borders to In this environment, managing costs and for the benefit of our employees, guests international tourists on 21st January preserving cashflows, through driving and all other stakeholders. 2021, arrivals during the first quarter of operating efficiencies, managing working 2021 remained subdued reflecting the capital and optimising use of resources Operating Environment lower demand globally for international became a key area of focus. This resulted travel. The emergence of a third wave in Following the outbreak of the COVID-19 in the Company being able to reduce its the country due to the sharp increase in pandemic in March 2020, the global sales and marketing, and other operating COVID-19 positive cases from late April tourism industry witnessed its sharpest expenses by 62% and 43% respectively.