More than a Monument Annual Report 2014/15 Contents 01 - 41 Overview Our Vision, Our Mission and Our Values 02 Our Company 04 Milestones 12 Highlights of the Year 20 Company at a Glance 26 Key Figures in 2015 28 Financial Highlights - Group 30 Chairman’s Message 34 Managing Director’s Review 36 45 - 175 Integrated Management Discussion Our Reporting Principles 45 The Statement of the Board of Directors on the 2014/15 Integrated Report 46 Our Economy 47 Our Industry 48 Our Business Model 50 Our Material Issues 56 Our Strategic Priorities 60 Our Stakeholders 62 How We Preformed 64 Our Value Added Statement 65 Operational Review 66 The Financial Review 72 Sustainability Report 84 179 - 229 Stewardship Our First City Hotel 179 Who Governs Us 180 Who Leads Us 184 Corporate Governance 188 Risk Management 210 Audit Committee Report 217 Remuneration Committee Report 220 Nomination Committee Report 221 Related Party Transactions Review Committee Report 222 Annual Report of the Board of Directors 223 Statement of Directors’ Responsibilities 229 233 - 276 Financial Report Independent Auditors’ Report 233 Income Statement 234 Statement of Profit or Loss and Other Comprehensive Income235 Statement of Financial Position 236 Statement of Changes in Equity 237 Cash Flow Statement 240 Notes to the Financial Statements 242 278 - 302 Supplementary Information Our Group Structure 278 Organisation Structure - Head Office279 Organisation Structure - Hotel 280 Our Accolades 282 Quarterly Income Statement 286 Real Estate Portfolio 288 Indicative Statement of Total Comprehensive Income US $ 289 Indicative Statement of Financial Position US $ 290 Indicative Statement of Changes in Equity US $ 291 Indicative Statement of Changes in Equity US $ 292 Shareholders Information 293 Decade at a Glance 297 Glossary of Financial Terms 298 Notice of Meeting 300 Form of Proxy 301 Investor Feedback Form 303 Corporate Information Inner Back Cover More than a Monument Respect… Chic grandeur… A legacy of uncompromised quality… These are things that are achieved with dedication, conviction and a deep embosomed passion for excellence. Since our inception in 1891 and a genesis of favored repute, the Grand has endured decades to rise to the epitome of the hotel industry as a true monument with colonial splendor. The Grand which originated as the palatial residence of Sir Edward Barnes, Governor of Sri Lanka now stands as a permanent fixture in the country with mesmerizing architecture, evocative lush surroundings of environmental delight and fully fledged, immaculately facilitated enterprise that combines the best of the traditional world and the contemporary. The Grand has evolved into more than a hallowed sanctuary through the ages, building an impenetrable reputation for its penchant to maintain the highest standards, breathtaking enhancements and a truly unrivalled service ascertaining absolute customer satisfaction augmenting value at every step, at every turn. The latest additions of our Coffee Bar along with our brilliant Thai Restaurant further depicts our goal to expand prepared to offer patrons an uncanny experience: something classic, something eclectic and something monumental. As these things go our reputation may precede us and we stand proud of our heritage. We thank you for your faith in our propensity to retain our reputation as one of the world’s cherished hospitality wonders. More than a legacy…. More than a Monument. The Nuwara Eliya Hotels Co. PLC Annual Report 2014/15 01 Our Vision Our Mission “To be the best Hotel in the hill country, “To achieve our vision, to provide maintaining the beauty and tranquility an excellent service and quality by of Nuwara Eliya” treating every customer as a VIP Guest in the Hotel” Our Values To maintain the traditions of Grand Hotel and preserve its old world charm. To provide services to our Guests with a passion for excellence. Reward the providers of capital with adequate return. Empower the staff to take more decisions and to achieve superior customer service. To nurture and nourish the environment and encourage people to be more ecologically responsible. Overview Our Company In the Ceylon Almanac of 1843, the assistant staff surgeon at Nuwara Eliya, George Stewart Beatson, wrote: “In addition to the military buildings there are several private residences, as well as a rest house.” It was this Proud history, rest house, built in 1828, which pioneered facilities for visitors and caused Frederic Mouat to comment in his Rough Notes published in 1852: “the rest house……….. is excellent and contains quarters for ladies, a portion bright future of the creation for whom little provision is usually made in the island.” The bungalow that Sir Edward Barnes built was known as Barnes Hall, The Nuwara Eliya Hotels Company and Its Iconic Brand it being his private, not a government, residence. He entertained lavishly The Grand Hotel there, believing that good living; even away from Government House in Our Company, Nuwara Eliya Hotels Company PLC (“the Company”) owns Colombo was essential. With claret at £3.15 for a dozen bottles, “riotous the Grand Hotel (“the Grand”) which is the Company’s iconic brand in folly” as one guest described his parties, was frequent and Barnes’ business. With a history spanning nearly over a century and a quarter, enthusiasm did much to popularise Nuwara Eliya. and with an equally long trail of performance, growth, stability and a proven value addition process, the Company although has been constantly Barnes was 55 when he left Ceylon in 1831, leaving behind his beloved overshadowed by its brand (“the Grand”), presents itself in the hospitality Barnes Hall and, according to a letter written in 1836 by James Stewart industry as a giant which is unmatched by its peers. who was looking after the Hall, “a remarkably fine child…… he is so like him.” The ‘Grand’ History It was one hundred and twenty four years ago, in the year 1891 that the Barnes Hall was rented to his successor as Governor, Sir Robert Nuwara Eliya Hotels Company Limited was formed to own and operate the Wilmot Horton. The terms of the lease led to dispute and Barnes’ agent Grand Hotel. But it was in the year 1819 and not 1891, that two significant commented that “Sir Edward………… will not stand any of his dirty events occurred which led to the hotel’s foundation. shabby work and had rather burn the house and let it go to rack and ruin rather than submit to it – such nonsense, as if tubs in the upper rooms In 1819, Dr. John Davey became the first Briton to visit Nuwara Eliya prevent water coming through, but he wishes to deprecate the house in describing it as “beautiful………… quite deserted by man…… the order to get it for a mere song.” dominion entirely of wild animals”. While the area may have been deserted then, Mr. H C P Bell, the archaeological commissioner proved, in 1890, that An account published in the journal Amicus in 1915 stated: “Probably Nuwara Eliya was inhabited in the 10th Century. The Kings of Kandy are one of the most modern and conclusive proofs of Nuwara Eliya’s recent also believed to have made strategic retreats there in times of invasion. development, is the Grand Hotel. It will be remembered as one of the early landmarks of the place, a small huddled up building, used by former In 1819, too there arrived in what was then Ceylon, a man who was to Governors and Government Agents, later as a Club, and finally as a Hotel. change the country, laying the foundations for the modern Sri Lanka, Mr. Lindsay White was the first Managing Director and after the hotel was as well as for the Grand Hotel. Sir Edward Barnes, who was one of made into a company, Mr. O T McDermott succeeded to this position, with the adjutants to the Duke of Wellington at Waterloo, came in 1819 as several others prior to him.” Commander in Chief of the forces. By the time he took over as Lieutenant Governor in 1820, he had already made a tour of the island and decided, Barnes Hall actually became a hotel before it was taken over by the Nuwara what Ceylon needed was “first roads, second roads and third, roads.” Eliya Hotels Company. A map of 1862 shows a hotel on the same site. In the complaints book of the neighboring Hill Club, Mr. A N Lloyd wrote on It was during his main terms as Governor, from 1824 to 1831, that he 18th October 1887, “Ordered tea and toast at 4.00 p.m. and waited till became enchanted with Nuwara Eliya and built a bungalow there at his 4.40 and then had to go to the Grand Hotel for it.” own expense at a cost of £8,000. It was this that eventually became the Grand Hotel. The Times of Ceylon commenting on the death on 5 December 1888 of Reginald Beauchamp Downall said: “The present Grand Hotel grew out of Nuwara Eliya, at 6200 feet above sea level, once it had road access under what was once known as Barnes Hall……… In the course of time, Barnes Barnes’ direction, became a sanatorium for enervated, and convalescing, Hall changed hands and went to Mr. R.B. Downall, a wealthy man.” British soldiers, as well as the residence of Britons who turned to hunting and horticulture, growing English vegetables and fruits. The Nuwara Eliya Hotels Co. PLC 04 Annual Report 2014/15 In its issue of 1 April 1889, The Times of Ceylon states: “One of the latest The transfer of ownership in the Grand Hotel to the Nuwara Eliya Hotels innovations and improvements in Nuwara Eliya is the connection of Mr. Company Limited took place on 12 April 1892. William Milsom, owner of White’s coach office with the (Hill) Club and Grand Hotel by telephone.