navigatingcare complexity with JOHN KEELLS HOTELS PLC - ANNUAL REPORT 2020/21 Scan To View https://www.cinnamonhotels.com/ media-accolades care As the tourism industry arrived at a standstill, carthe complexities the pandemic unravellede were many, and in order to survive and navigate through a multitude of challenges including travel restrictions, evolving customer needs and unprecedented uncertainty— John Keells Hotels preserved the remarkable reputation of care and hospitality we have been renowned with for years. The pages you hold are a testament to the unwavering care reflected in the new approaches we followed to navigate through complexity to welcome a future of hope and opportunity. 1 JOHN KEELLS HOTELS PLC ANNUAL REPORT 2020/21 CONTENTS GROUP HIGHLIGHTS Group Structure .................................................6 Performance Scorecard ................................8 About our Group ...........................................10 Year at a Glance ..............................................13 Group Financial and Operational Highlights ...............................15 Chairman’s Review ........................................16 GOVERNANCE MANAGEMENT Board of Directors..........................................22 DISCUSSION & ANALYSIS Corporate Governance ..............................25 All About Strategy .........................................46 Audit Committee Report ..........................39 Operating Environment ............................54 Report of the Human Resources and Cluster Review .................................................57 Compensation Committee .....................41 Risk Management .........................................61 Report of the Nominations Committee ..........................42 Investor Information ....................................66 Report of the Related Party Transactions Review Committee .........43 Report of the Project Risk Assessment Committee.........................................................44 2 care FINANCIAL INFORMATION Financial Calendar .........................................70 Index to the Financial Information .....71 Annual Report of the Board of Directors..........................................72 Statement of Directors’ Responsibility .............................79 Independent Auditors’ Report ...............80 Income Statement ........................................83 SUPPLEMENTARY Statement of INFORMATION Comprehensive Income ............................84 Quarterly Information ..............................158 Statement of Financial Position ............85 Indicative US Dollar Statement of Changes in Equity ..........86 Financial Statements ................................159 Statement of Cash Flows ..........................87 Decade at a Glance ...................................162 Notes to the Financial Statements ....89 Group Real Estate Portfolio ...................166 Consolidated Economic Value Added Statement .........................167 Glossary of Financial Terms ...................168 Group Directory ...........................................170 Corporate Information ............................177 3 JOHN KEELLS HOTELS PLC ANNUAL REPORT 2020/21 care About our Report John Keells Hotels PLC (Company) and STATEMENT BY THE BOARD its subsidiaries (hereinafter referred to as The Board acknowledges its responsibility to ensure the integrity of the Annual Report “Hotels Group”) is proud to present to you, and is of the opinion that the Report addresses all material issues that it believes to our 6th Integrated Annual Report. The have a bearing on the Company’s capacity to create value over the short, medium and report is a balanced review of the Hotels long-term. Group’s financial, social, and environmental performance during the year. Scope and Boundary Feedback REPORTING PRINCIPLES AND This Report covers the Sri Lankan and We value your feedback as it enables us to QUALITY ASSURANCE Maldivian operations of the Hotels Group continuously improve our reporting and • Sri Lanka Accounting Standards for the period 1 April 2020 to 31 March encourage your comments to be sent to: (SLFRS/LKAS) issued by the Institute 2021 and builds on the Group’s previous of Chartered Accountants of Sri Lanka Ms. Vindya Cooray, annual reporting cycle for the period (CA Sri Lanka) ending 31 March 2020. The financial and Vice President, Finance – Cinnamon Hotels non-financial information presented & Resorts, • Companies Act No. 7 of 2007 herein represents consolidated figures for 117, Sir Chittampalam A Gardiner the Company and its subsidiaries unless Mawatha, Colombo 02. • Listing Requirements of the Colombo otherwise stated. We have adopted the E-mail: [email protected] Stock Exchange concept of materiality throughout the report by focusing on aspects that are • Gender Parity Reporting Framework deemed to be material and relevant to the published by CA Sri Lanka Hotels Group’s operations and to our key stakeholders. The process for determining • Assurance on the Financial materiality is described on page 46 of this Statements by Messrs. Ernst and Report. Young, Chartered Accountants In addition to the information presented • Independent assurance on herein, a supplementary Sustainability sustainability reporting, by Messrs. Report that sets out in detail how we Ernst and Young, Chartered employed our key capitals during the Accountants year, is available on our website (https:// www.cinnamonhotels.com/cinnamon- csr-sustainability). The supplementary Sustainability Report is in line with the Global Reporting Initiative (GRI) Standards: Scan to view the supplementary Sustainability Report Core option. Visit https://www.cinnamonhotels.com/cinnamon-csr-sustainability Forward looking statements Our Report includes forward-looking statements, which discuss the possible future financial position and results of the Group’s operations. These statements, however, involve an element of risk and uncertainty. We do not undertake to update or revise these statements publicly in the event of a change of circumstances. 5 JOHN KEELLS HOTELS PLC ANNUAL REPORT 2020/21 Group Structure JOHN KEELLS HOLDINGS PLC (Ultimate Parent Company) John Keells Hotels PLC 80.32% Kandy Yala Village Habarana Habarana Trinco Ceylon Nuwara Rajawella Walk Inn (Pvt) Limited Lodge Walk Inn Holiday Holiday Eliya Holiday Hotels Co Limited Limited Limited Resorts (Pvt) Resorts Resorts (Pvt) Limited Limited Limited Limited 98.39% 93.78% 98.35% 98.77% 100% 99.39% 100% 100% Cinnamon Cinnamon Cinnamon Habarana Citadel Kandy Wild Yala Lodge Village by Trinco Blu by Cinnamon 2.66 acres of Habarana Cinnamon Cinnamon Bentota Beach land in Nuwara Eliya Hikkaduwa Holiday Resorts (Pvt) Limited 100% Hikka Tranz by Cinnamon Resort Hotels Limited 100% 41.73 acres of land in Nilaveli 6 care International Wirawila Walk Trinco Walk Ahungalla Indra Hotels Sentinel Cinnamon John Keells Tourists & Inn Limited Inn Limited Holiday & Resorts Realty (Pvt) Holidays (Pvt) Maldivian Hoteliers Resorts (Pvt) Kandy (Pvt) Limited Limited Resorts (Pte) Limited 100% 100% Limited Limited Limited 50% 100% 25.15 acres of 14.64 acres 40% 99.33% 100% Joint venture 100% land in Wirawila of land in Associate Inbound & Trincomalee 6.51 acres outbound tour Cinnamon Red 33.69 acres of of land in operator Kandy land in Vaakarai Ahungalla (under construction) & Kallarawa Travel Club (Pte) Limited Beruwala 100% Holiday Resorts (Pvt) Ellaidhoo Limited Maldives by Cinnamon 100% Cinnamon Bey Fantasea Beruwala World Investments (Pte) Limited 100% Cinnamon Hakuraa Huraa Maldives Tranquility (Pte) Limited 100% Cinnamon Dhonveli Maldives Cinnamon Velifushi Maldives 7 JOHN KEELLS HOTELS PLC ANNUAL REPORT 2020/21 Performance Scorecard Indicator 2020/2021 2019/2020 Change YOY Profitability Revenue Rs. Million 3,661 9,712 (62%) TrevPAR Rs. 8,242 21,443 (62%) Operating profit / (loss) Rs. Million (4,777) (764) (525%) Profit / (Loss) for the year Rs. Million (5,120) (1,201) (326%) Earnings / (Loss) per share Rs. (3.50) (0.82) (324%) Financial Position Total Assets Rs. Million 62,475 60,576 3% Total Equity Rs. Million 24,431 28,872 (15%) Financial Capital Financial Total Debt Rs. Million 35,327 28,609 23% Market and Shareholder Information Net assets per share Rs. 16.71 19.74 (15%) Share Price Rs. 9.50 6.70 42% Market Capitalisation Rs. Million 13,833 9,756 42% Asset Light Expansion Property, plant and equipment Rs. Million 27,109 26,692 2% Room inventory No. of rooms 1,476 1,476 0% Capital Capital Expenditure Rs. Million 1,400 9,580 (85%) Manufactured Develop People Capability Total Employees No. 2,062 2,533 (19%) Payment to Employees Rs. Million 2,068 2,325 (11%) No of promotions No. 22 125 (82%) Attrition rate % 13 18 (28%) Female representation % 10 11 (9%) Investment in training Rs. Million 16 95 (83%) Human Capital Total training hours Hours 80,791 288,437 (72%) New recruits No. 285 989 (71%) Average training hours/employee Hours 39 118 (67%) Workplace injuries No. 15 25 (40%) 8 care Indicator 2020/2021 2019/2020 Change YOY Build a Recognisable Brand Occupancy rate - Sri Lanka % 16 61 (74%) Occupancy rate - Maldives % 27 56 (52%) Customer satisfaction rate % 93 91 2% Social Media Presence - Facebook likes No. 215,003 206,267 4% - Twitter followers No. 4,625 4,338 7% - Instagram followers No. 33,545 20,132 67% - LinkedIn followers No. 33,039 20,598 60% - YouTube subscribers No. 3,333 2,310 44% Commitment: Creating Value Across Our Supply Chain Social Capital and Relationship Total suppliers No. 992 1,380 (28%) Payment to suppliers Rs.