Download pdf - THE annual report smile survey - Sri Lanka Hotels€¦ · ASIAN Hotels AND properties pLC ANNuAL rEporT 2013/14 THE annual ... we conducted the annual report smile survey ... of the

ASIAN Hotels AND properties pLCANNuAL rEporT 2013/14

THEannual report smile survey

ASIAN H

otels AN

D pro

perties pLC | An

nual repo

rt 2013/14

ASIAN Hotels AND properties pLCNo. 77 , Galle road, Colombo 03,Sri Lanka.T : 0094 -11 2437437F : 0094 -11 5547555

HAPPINESS IS INDISPENSABLE IN THE HOSPITALITY INDUSTRY. IT IS WHAT FORMS PERCEPTIONS, CREATES MEMORIES AND KEEPS PEOPLE COMING BACK FOR MORE. FOR US, IT IS AN EMOTION THAT HAS PERMEATED INTO EVERY ASPECT OF THE BUSINESS; FROM WHAT WE DELIVER TO THE GUESTS, TO HOW WE DO THINGS, EVERY DAY. IT’S WHAT MOTIVATES US, WHAT INSPIRES US AND WHAT MAKES US THE BEST IN THE INDUSTRY. THE HAPPINESS OF OUR PATRONS, OUR TEAM AND OUR SURROUNDINGS IS A REFLECTION OF THE QUALITY THAT WE OFFER AND A TESTIMONY TO OUR MANY YEARS OF EXPERIENCE. WE MAKE EVERY MOMENT WORTHWHILE… WE MAKE EVERY SMILE COUNT.

AuditorsKPMGChartered Accountants32A, Sir Mohamed Macan Marker Mawatha,Colombo 03.

BankersCitibank N.A - ColomboDeutsche Bank AG - ColomboSeylan Bank Ltd - Millennium Branch, ColomboHongkong & Shanghai Banking Corp. Ltd. - ColomboNations Trust Bank PLC - Union Place, ColomboDFCC Vardhana Bank Ltd. - W.A.D. Ramanayake Mw,ColomboBank of Ceylon - Colombo

Name of CompanyAsian Hotels and Properties PLC

Legal FormA Public Limited Liability Company incorporated in Sri Lanka in 1993 and registered with the Board of Investment of Sri Lanka under Section 17 of the Board of Investment Law No. 4 of 1978. The Company was re-registered as per the New Companies Act No. 7 of 2007 on 15th June 2007.

Stock Exchange ListingThe issued Ordinary Shares of the Company are listed on the Main Board of the Colombo Stock Exchange of Sri Lanka.

Company Registration No.PQ 2

Board of DirectorsMr. Susantha Chaminda Ratnayake - ChairmanMr. Ajit Damon Gunewardene - Managing DirectorMr. James Ronnie Felitus PeirisMr. Rohan Jebashanthan KarunarajahMr. Suresh RajendraMr. Sanjiva Kanishka Gamini SenanayakeMs. Shirani Anoja JayasekaraMr. Cholmondeley John Lloyd Pinto

Company SecretariesKeells Consultants (Private) Limited117, Sir Chittamplalam A. Gardiner Mawatha, Colombo 2.

Registered OfficeNo. 77, Galle Road, Colombo 03Tel : 0094 -11 2437437Fax : 0094 -11 5547555E-mail : [email protected]

corporate information

EverySmile

Design & Concept by: Optima Designs (Pvt) Ltd.Printed by: Gunaratne Offset Ltd

Contents

Group Financial Highlights of 2013/14 4Chairman's Statement 26Management Discussion and Analysis 30Board of Directors 38Annual Report of the Board of Directors 40Risk Management 46Corporate Governance 50Sustainability Report 76Financial Calendar 138Report of the Audit Committee 140Statement of Directors' Responsibility 142Independent Auditors' Report 143Income Statement 144Statement of Comprehensive Income 145Statement of Financial Position 146Statement of Cash Flow 147Statement of Changes in Equity 148Notes to the Financial Statements 150Consolidated Value Added Statement 186Information to Share Holders and Investors 187Five Year Financial Summary Group 189Five Year Financial Summary Property Development 189Five Year Financial Summary Cinnamon Grand 190Notice of Meeting 191Form of Proxy 195Corporate Information Back Inner Cover

ASIAN HOTELS AND PROPERTIES PLCAnnual Report 2013/14

2 3

In order to understand the varying moods of Asian Hotels and properties pLC, we conducted the annual report smile survey with the following icons. The results from guests and staff have been collated in the following pages...



3

To generate long-term, sustainable, shareholder wealth by developing the capacity to add value to land, buildings and related investments and combine them uniquely so that they complement and reinforce each other.

To provide a return on investment above the risk free investment rate to shareholders. To increase productivity of the workforce and provide training in order to improve their knowledge, skills and attitudes and to optimise the use of available resources. To adhere to the highest levels of integrity, transparency and ethical conduct.

Corporate Mission

business values


4 5

Group financial highlights of 2013/14

2014 2013 (Rs.'000) (Rs.'000)

Revenue 8,256,149 7,890,978Gross Profit 5,025,073 4,823,417Profit After Tax 2,818,511 3,097,386Shareholders Funds 22,338,036 21,697,467Market Capitalisation 26,035,188 30,994,271Earnings Per Share (Rs.) 5.42 5.63Market Value Per Share (Rs.) 58.80 70.00Current Ratio (Times) 3.54 3.53Dividend Per Share (Rs.) 4.00 4.00Net Assets Per Share (Rs.) 50 49Dividend Payout Ratio (Percentage) 74% 71%

Earnings Per Share

2010

2013

2012

2011

2014

Rs.

6.0

5.0

4.0

3.0

2.0

1.0

0

Dividend Per Share 20

10

2013

2012

2011

2014

Rs.

4.50

4.00

3.50

3.00

2.00

1.00

2.50

1.50

0.50

0


5

Rs. 5.3Bn company revenue

Rs. 2.3Bn company profit after tax

Rs. 4.00 DiviDenD per Share

Rs. 8.2Bn Group revenue

Rs. 2.8Bn Group profit after tax

Rs. 5.42 earninGS per Share

Net Assets Per Share

2010

2013

2012

2011

2014

Rs.

60

50

40

30

20

10

0

Current Ratio 20

10

2013

2012

2011

2014

Times

4.00

3.50

3.00

2.00

1.00

2.50

1.50

0.50

0


6 7

The Executive Lounge, on the 9th floor of the hotel offers a panoramic view of the city whilst providing our guests a host of comforts and conveniences. It is the ideal place for industry professionals to convene for work as well as to relax.


7

What did we do to make you smile? Corporate Guest

commentS : The Executive Lounge at the Cinnamon Grand is not only luxurious but also offers everything that a professional like me would require in conducting our business activities.

Ibrahim AwlearMD of global outlets pvt. ltd. Lebanon



8 9

The Coffee Stop at the Cinnamon Grand lobby is always a popular stop for the young and old. It offers a delectable range of delights; from mouth-watering sandwiches to decadent cakes.


9


commentS : AbeEr - I love the food and the Coffee Shop is always amazing! Sulimanin - Every stay is a beautiful experience with sunny skies and lovely seafood dishes. JEremy - The staff are always welcoming and the Crescat boulevard has some great places to shop.

Abeer gnadialy a.l. sulimanin Jeremy vista

flight attendants india, saudi arabia, phillipines

What did we do to make you smile? AIrLINE CrEW


10 11

Under summer skies, the pool is the best place to soak up some sun. The refreshing blue waters are sure to refresh and revitalise.


11

commentS : My family and I love to visit this hotel . We love the atmosphere and the staff who go out of their way to make our holiday a wonderful one, whenever we visit.

What did we do to make you smile? LEISurE TrAvELErS

jonathan Downer sales manager singapore



12 13

Sri Lanka’s finest open market seafood restaurant, The Lagoon offers the widest selection of seafood, with an opportunity to select your own produce, fresh from the catch-of-the day and have it served a la´ minute.


13

commentS : Wow! Such a good and fresh selection of seafood and so many preparations! Wish I could try them all!

freddie flynt


What did we do to make you smile? Restaurant Guest


14 15

Whatever you may require for your business dealings, whether it’s a functional and stylish meeting room or the best of amenities, you can find it at our Executive Lounge.


15

commentS : The Executive Lounge is a wonderful place for me to relax and conduct my business. It is always wonderfully comfortable and a definite office away from office.

THEannual report smile surveyjacob bermanconsultant usa

What did we do to make you smile? Corporate Guest


16 17

When it comes to events large and small, we provide the perfect venue and the best packages in order to make your meeting or celebration a success.


17

commentS : The Cinnamon Grand banquet staff are most co-operative and always willing to go the extra mile . My work is made much easier, thanks to them.

THEannual report smile surveyfelicia adihetty managing director of bconnected pvt. ltd.

What did we do to make you smile? Event organiser


18 19

London Grill, the sophisticated restaurant offers the best of Fine Dining, with a menu that allows for a truly delightful gastronomic experience.


19

commentS : This is the best place that anyone could work for. The recognition that I have received for my service here truly makes me proud to be a part of a wonderful hotel .

THEannual report smile surveyasanka wijekoonsenior chef, tao

What did we do to make you smile? aSSoCIATE


20 21

Our luxurious suites are well equipped with the best in modern technology, combined with classic luxury.


21

commentS : I enjoy being a part of this hotel and being able to work under experienced managers who encourage me to be better everyday.

THEannual report smile surveykaveesha fernando housekeeping

What did we do to make you smile? aSSoCIATE


22 23

Cheers Pub is a typically British styled pub and is the best place in town for pub grub or catching some sporting action on a big screen while enjoying a drink with friends.


23

THEannual report smile surveyNamal jayalath beverage manager

commentS : My job makes me smile everyday, even amidst the challenges. I am honoured to be a part of a team that truly understands hospitality and what it takes to be leaders in this industry.

What did we do to make you smile? associate

here are the survey

results

97%room GueSt ServiceS

98%reStaurant & bar ServiceS


26 27

Cinnamon city hotels continuedto maintain its brand presencethroughout the year enjoying a

51 per cent market share amongColombo five star city hotels. The

Group recorded overall year-on-year revenue of Rs. 8.2 billion

reflecting a growth of 5 per centover the previous year.

During the financial year ended 31st March 2014, Asian Hotels and Properties PLC continued to reaffirm its leadership position among the high end city hotels and property brands in the country. It is on this encouraging note, that I table the Annual Report and Financial Statements of your Company and Group for the financial year ended 31st March 2014.

Tourism Industry in 2013The global economy witnessed a steady recovery in the year 2013 resulting in improving prospects for sustained growth and lower levels of unemployment in the advanced economies. According to initial estimates released by the UNWTO, world tourism reached a record of 1,087 million international tourist arrivals in the calendar year 2013, corresponding to a growth of 5 per cent over the preceding year. The growth in international tourist arrivals was driven by Asia Pacific, led by South East Asia, Africa and Europe, demonstrating the continuous change in demographics. Tourism receipts are projected to post double-digit growth while the outlook for world tourism in the year 2014 is anticipated to be positive.

Sri Lanka tourism is well positioned in the post-conflict setting to be amongst the most sought after destinations in the world. Arrivals to Sri Lanka grew 27 per cent to reach 1.2 million tourists for the calendar year 2013 with Western Europe and South Asia continuing to be the dominant generating markets. While all key markets demonstrated appreciable growth, Eastern Europe, South Asia and East Asia, in particular, grew at a rapid pace. Tourism receipts were recorded at USD 1.7 billion.

A buoyant outlook is projected for the future of tourism in Sri Lanka. The recent infrastructure development projects implemented by the government, particularly the expressway to the main international airport, and other expressway networks, will provide the necessary impetus in strengthening Sri Lanka’s position as a leading tourism destination.

Group Performance Cinnamon city hotels continued to maintain its brand presence throughout the year enjoying a 51 per cent market share among Colombo five star city hotels. The Group recorded overall year-on-year revenue of Rs. 8.2 billion reflecting a growth of 5 per cent over the previous year. Group profits for the year amounted to Rs. 3,046 million against the Rs. 3,336 million recorded in the preceding year which included fair valuation gains on investment property of Rs. 268 million and Rs. 517 million respectively.

Accordingly, Group Earnings per Share (EPS) amounted to Rs. 5.42 during the year, marginally lower than the EPS of Rs. 5.63 in the preceding year.

Cinnamon Grand ColomboCinnamon Grand adhered to its core business model, placing greater emphasis on attracting corporate clientele from both local and regional markets. The hotel maintained its market dominance, retaining a market share of 33 per cent. Corporate room nights, which was the key revenue segment, reflected a year-on-year growth of 17 per cent. The Commonwealth Heads of Government Meeting (CHOGM) 2013 summit held in

Chairman's STATEMENT


27

November 2013 was the major MICE event hosted during the year. Cinnamon Grand was chosen as the venue for the CHOGM Business Forum which positively impacted its operational reputation. By leveraging on its unique value proposition, Cinnamon Grand increased its year-round average occupancy to 76 per cent from 72 per cent, achieving total revenue of Rs. 4,897 million which was a 6 per cent increase over the revenue of Rs. 4,622 million in the preceding year. The increase in operating costs during the year eroded revenue gains. However, prudent management of working capital resulted in a PBT of Rs. 1,732 million, a marginal increase from the Rs. 1,720 million reported in the previous year.

Cinnamon Lakeside ColomboDuring the year under review, a focused operational and marketing strategy enabled the hotel to record occupancy of 61 per cent, against the city occupancy of 53 per cent, while achieving an average room rate of USD 138. Room revenue grew by 3 per cent year-on-year while food and beverage revenue posted growth of 2 per cent, which amounted to Rs. 1.4 billion and Rs. 1.3 billion respectively.

Consolidated net revenue increased to Rs. 2,939 million from Rs. 2,840 million in the previous year. However, this modest revenue gain was eroded by the increase in operational expenses. This led to profit from operations declining to Rs. 816 million from Rs. 857 million last year. The recurring net profit declined to Rs. 743 million against a comparable figure of Rs. 777 million last year which is after excluding the investment property valuation gain of Rs. 289 million.

Property DevelopmentTotal revenue for the year amounted to Rs. 419 million, a slight decline from the Rs. 428 million recorded last year.

However, effective controls on direct costs improved the gross profit margin to 44 per cent during the year. With a growing number of high-end foreign brands displaying a keen interest in tapping into the Sri Lankan consumer market, the Property Division leveraged on its core brand value to conduct a series of promotional campaigns in a bid to increase the foot traffic to the mall. Consequently Rs. 18.6 million was generated by way of income on account of these promotional efforts. The PBT of Rs. 442 million in the current year included a fair valuation gain of Rs. 268 million against the PBT of Rs. 405 million in the previous year which included a corresponding gain of Rs. 228 million.

Awards and AccoladesOur pursuit of continuous excellence has led to a sustainable business model that delivers coherent value to all stakeholders associated with our business. Deeply entrenched in our value culture, the concept of sustainability permeates through all aspects of our business, playing a critical role in our strategic development agenda. Over the last decade, our commitment to sustainability has become a hallmark of our brand promise which has been recognised with several awards and accolades. I am indeed proud of the results achieved, which are comprehensively captured in the Sustainability Report.

Future OutlookDuring the ensuing year, the Leisure industry group will consolidate its overall branding strategy where all resorts will be brought under the “Cinnamon” brand resulting in Cinnamon Hotels and Resorts having 14 hotel properties and over 2,400 rooms under its umbrella. The Group is also conscious of the need to further inculcate the desired ‘lifestyle’

service culture within our staff through the re-invention of our standard operating procedures and processes.

In conjunction with the above, and in keeping with the evolving trends and technology, the hotels, as part of the John Keells Leisure Group, have embarked on a comprehensive Online and Social Media Strategy. This will enable “Cinnamon” to launch a new and revamped website, establishing its presence across all social media platforms.

The above initiatives will be augmented with the implementation of a new property management system across all hotels, improving the availability of guest information and enhancing the ability to improve satisfaction which should augur well for the future.

AppreciationsI wish to extend my sincere gratitude to my colleagues on the Board for the support and guidance extended to me at all times. I would like to thank all the respective teams at Cinnamon Grand, Cinnamon Lakeside and the Property Division for their focus, dedication and commitment. I also take this opportunity to thank our valued clientele for their continued patronage. To conclude, I extend my sincere gratitude to all stakeholders and business partners for their long standing support.

Susantha RatnayakeChairmanAsian Hotels and Properties PLC28th May 2014

Management Discussion & Analysis


30 31

Management Discussion and Analysis

Global Economy The global economy grew at a slower pace during the year, regardless of the strong economic signals emanating from advanced economies in the latter part of the year. Registering a growth of 1.3 per cent for 2013, marginally lower than the growth of 1.4 per cent recorded in 2012, advanced economies appeared to be on the rebound. Meanwhile, growth in some emerging market economies slowed due to weaker than expected domestic demand despite improved growth prospects for their exports. Thus the global growth aggregate settled at 3 per cent at the close of the year, marginally less than the 3.1 per cent recorded in 2012. Inflation remained subdued in advanced economies in 2013, raising concerns of deflationary pressures in some countries, particularly in the Euro area, while emerging markets and developing economies faced no great challenge with regard to inflation, except for certain countries such as Brazil and India.

Global Tourism Industry Overview International tourist arrivals reached a record 1.087 billion in 2013, up 5 per cent from the 1.035 billion tourist arrivals reported in 2012. This year, Europe led growth in absolute volume with an additional 29 million arrivals in 2013. A total of 563 million international tourists arrived in Europe during 2013.

However, Asia and the Pacific experienced the greatest relative growth with 14 million additional arrivals, up 6 per cent from 2012. A total of 248 million international tourists travelled in and through the region last year. The Middle East is the only region that did not report a change in tourist arrivals between 2012 and 2013.

The global tourism sector has shown a remarkable capacity to adjust to the changing market conditions, fuelling growth and job creation around the world despite the lingering economic and geopolitical challenges. Indeed, tourism has been among the few

sectors generating positive news for many economies. The positive results of 2013 together with the projected global economic improvement in 2014, are expected to set the scene for another good year for international tourism in 2014.

Regional prospects are strongest for Asia and the Pacific (+5% to +6%) and Africa (+4% to +6%), followed by Europe and the Americas (both +3% to +4%). In the Middle East (0% to +5%), prospects are positive but remain volatile.

Macro-economic Performance – Sri LankaThe Sri Lankan economy rebounded strongly in 2013 with an annual real GDP growth of 7.3 per cent, while inflation remained at single-digit levels for the fifth consecutive year. In spite of significant upward adjustment to domestic energy prices, prudent monetary management and improved domestic food supply resulted in a gradual decline in inflation throughout the year. GDP in nominal

Global Tourist Arrivals 2013

EU

RO

PE

AFR

ICA

AM

ER

ICA

S

AS

IA &

PA

CIF

IC

MID

DLE

EA

ST

Mn

600

500

400

300

200

100

0

Source: UNWTO

Tourist Arrivals to Sri Lanka

Jan JunApr Sep NovMar AugFeb JulMay Oct Dec

No. of Arrivals 180,000

120,000

80,000

40,000

20,000

60,000

100,000

160,000

140,000

0

2012 2013

Source: Sri Lanka Tourism Development Authority


31

terms grew by 14.5 per cent to Rs. 8,674 billion or US dollars 67 billion, raising GDP per capita to US dollars 3,280 in 2013. Meanwhile, improved Balance of Payments and international reserve position enabled the rupee to remain relatively stable during the year, with only a 3 per cent annual depreciation against the US dollar.

Organisation’s (UNWTO) tourist growth estimate of 6 per cent for the Asia Pacific region and the 5 per cent growth for the entire world. In tandem with this pattern, the hotels and restaurants sub sector too continued its high growth trajectory by achieving 22.3 per cent growth during 2013 compared to the 20.2 per cent growth recorded in 2012. Attracting over 1.27 million tourists during the year, the sub sector performed commendably to demonstrate year-on-year growth for the second consecutive year. Thus a 26.7 per cent year-on-year growth increased the earnings from tourism to US dollars 1.7 billion.

Sector Overview (City Hotels)With the enhancement of the island-wide tourism infrastructure and exposure to online travel information and booking channels, Colombo is rapidly transforming in to a popular travel destination in Asia. Consequently, the demand for city hotels grew by 2 per cent compared to last year, further compounded by the lack

The year also saw the Government of Sri Lanka step up efforts to improve economic and social infrastructure across the country, which forms a key part of the strategy to achieve sustained economic growth in the longer term. Among the high priority areas undertaken were Colombo city beautification and countrywide township development projects. Aimed at enhancing the wellbeing of the population, the projects are also expected to convey a number of socio-economic benefits to the country, including enhancing the country profile as a more desirable tourist destination.

Overview of Sri Lanka’s Tourism Industry Sri Lanka managed to retain the customary arrival matrix, with India, UK, Germany, Maldives and France being the top five sources of tourist arrivals in 2013, accounting for 40 per cent of the growth in tourist arrivals for the period. Meanwhile, total arrivals to the country also exceeded the United Nations World Tourism

Per Capita GDP at Market Prices

2009 201220112010 2013

USD

3,400

3,200

3,000

2,800

2,600

2,400

2,200

2,000

1,800

Source: Central Bank of Sri Lanka Annual Report 2013

Country Wise Tourist Arrivals to Sri Lanka

%

220,000

180,000

200,000

120,000

60,000

100,000

140,000

160,000

80,000

40,000

20,000

2012 2013 YoY Growth %

120

100

80

60

40

20

0

Indi

a

UK

Ger

man

y

Mal

dive

s

Fran

ce

Chi

na

Aus

tral

ia

Rus

sia

No. of Arrivals

Source: Sri Lanka Tourism Development Authority

Annual Average Exchange Rate

2009 201220112010 2013

Rs./USD

135

130

125

120

115

110

105

100



32 33

Management Discussion and Analysis contd.

of continuous MICE events during the year. The MICE (Meetings, Incentives, Conferences and Exhibitions) room nights dropped by 25 per cent industry-wide, given that the only major MICE event scheduled was the CHOGM summit as opposed to the World T20 and the SLPL championships that took place in 2012. The crew segment also fell by 18 per cent in 2013. The steep decline in both these markets largely overshadowed the 8 per cent growth in the corporate segment and the 9 per cent growth in the leisure segment during the year. Increases in electricity tariffs, imposition of a cess on certain imported food items, followed by the decrease in interest rates for short term investments had an adverse impact on the bottom line of all city hotels during 2013. Meanwhile, competition among city hotels in Colombo also continued to intensify, with new properties emerging in the market alongside a growing volume of upscale restaurants and bars opening up across Colombo. Amidst this increasingly competitive environment another notable trend observed during the year was the rapid growth in the number of online reservations. Undoubtedly a positive influence on the entire hospitality industry,

this development is likely revolutionise Sri Lanka’s city hotel landscape in the years ahead.

Group Performance Overview

Market ShareDespite the slow growth witnessed in the sector, the “Cinnamon” brand continued to retain its market leadership among city hotels. Symbolising the top-end of the city hotel market, the brand holds a market share of 51 per cent among the Colombo city hotels, well above its fair share of 38.7%. Capitalising on existing brand value, a highly focused brand building agenda was deployed to further enrich and strengthen the “Cinnamon” brand identity.

Group Revenue and ProfitabilityThe Group revenue increased by 5 per cent year-on-year from Rs. 7.89 billion in 2012/13, to Rs. 8.26 billion during the current year. Notably, the upward trend in Group revenue seen since 2008/09 showed signs of tapering off with effect from 2011/12 as all apartment sales at the Emperor residencies were concluded by the end of that year. Consequently, in the absence of apartment sales, Group revenue registered a decline in 2012/13, but continued to show encouraging signs of an uptake in the year under review.

Although the Property Division was a major contributor to the Group revenue in the past, the completion of all apartment sales by end 2012 meant the division has since relied mainly on the rent income earned from the Crescat mall. The Group hotels are now the core contributors to the Group revenue, with only a marginal contribution coming from the Property Division. Of the total group revenue, the Cinnamon Grand Colombo accounted for 59 per cent,

49%

18%

33%

Cinnamon GrandCinnamon LakesideOther City Hotels

Market Share of Cinnamon City Hotels while a further 36 per cent came from the Cinnamon Lakeside Colombo. In the hotel segments, cumulative Room Revenue and F&B Revenue at both properties have demonstrated good results, denoted by a steady year-on-year increase for the past few years. This is indeed a commendable achievement, given the high degree of market competition and challenging industry landscape experienced in the recent past.

The electricity tariff hike in early 2013, on the back of consumption resulting from expanding business volumes, continued to be a major concern for the Group. In the face of escalating energy bills, a stringent group-wide energy management policy has been initiated to control usage and contain costs within acceptable levels.

Meanwhile, as the group-wide, prudent cost management strategies implemented during the year began to materialise, an overall reduction was seen in all other cost formats across all group entities. Group expenses were increased only by 7 per cent compared to the last year. Cost of sales which represents 55 per cent of the total group expenses grew by 5 per cent. In the meantime administration expenses which were 30 per cent of the total group expenses grew by 7 per cent compared to the last year.

The Group Net Profit after Tax was Rs. 2.81 billion for the year, compared to the Rs. 3.09 billion recorded in the preceding year. It has declined by 8 per cent year-on- year, largely due to last year’s profits being boosted by the change in fair value of the investment property at Cinnamon Lakeside by Rs. 288.7 million. Consequently, Earnings Per Share also declined marginally from Rs. 5.63 in the previous year to Rs. 5.42 for the year under review. The commitment to deliver consistent value to shareholders


33

2012/13 2013/14

% Change

Growth of Business Segments

Room Nights %

450,000

400,000

350,000 5

300,000 0

250,000

200,000

150,000

100,000

50,000 -25

-15

-20

-10

10

15

-5

0 -30

Cor

pora

te

Leis

ure

MIC

E

Cre

w

Tota

l

has prompted the group to maintain the Dividend per Share on par with the previous year.

Cinnamon Grand ColomboBeing a five star city hotel with international standards, Cinnamon Grand has always been designated as the preferred destination in Colombo for the global traveller. Consisting of 501 luxury rooms, Cinnamon Grand’s average occupancy levels reached 76 per cent for the year under review, with February 2014 setting an all-time occupancy record of 88 per cent. Strengthened by the 4 per cent year-on-year increase in overall occupancy levels, Cinnamon Grand managed to increase its share of the city hotel market, to end the year with a 33 per cent market share. It is an achievement, given the intensity of market competition that prevailed throughout the year. Keenly aware that customer satisfaction remains a key driver of success, the spotlight for 2013 was to improve performance in every possible area to provide a superior service to customers. Gauging the pulse of the customer, via customer feedback received from online booking sites, a customised strategic marketing and branding blueprint was formulated to feature Cinnamon Grand’s own unique selling proposition.

Cinnamon Grand’s key focus in the latter half of the year was the Commonwealth Heads of Government Meeting (CHOGM) held in November 2013, for which the property was the chosen venue to host the Business Forum for the summit. A series of strategies were employed to further enhance facilities in preparation for the prestigious event, particularly given the large foreign contingent expected to attend the event, with the hotel gearing up in readiness to provide exclusive accommodation, banqueting and dinning facilities for summit participants and State VIPs.

Cinnamon Grand's revenue increased by 6 per cent year-on-year from Rs.4.62 billion in 2012/13, to Rs.4.89 billion during the current year. Cinnamon Grand’s Profit after tax for the year was Rs. 2 billion which grew by 2% compared to the preceding year.

The overall ARR for the year remained more or less the same, with only a marginal increase over the previous year due to competitive pressure. Revenue per available room (RevPAR) also saw a significant upward shift from Rs. 13,454 in 2012/13 to Rs. 14,163 in the year under review. Cinnamon Grand successfully grew room revenue from the previous year, demonstrating a 5 per cent growth from Rs. 2.46 billion in the preceding year, to Rs.2.58 billion in the year under review.

Despite Colombo’s restaurant market being inundated with new restaurants and bars, customers have continued to patronise the Cinnamon Grand’s iconic restaurant offerings. In the face of stiff competition, steps were taken to improve the versatility of all F&B outlets vis-à-vis effective management and promotion of the unique restaurant brands. Moreover, menu selections were revamped, introducing diverse international and fusion cuisine together with a wider range of gastronomic delights to appeal to a broader customer demographic. Due in large part to these timely efforts, restaurant revenue grew year-on-year by 7 per cent from Rs. 1.15 billion in the previous year to Rs. 1.23 billion as at the end of the current year.

Banquet facilities at Cinnamon Grand continued to be the most sought after in Colombo with the hotel being designated as the premium wedding venue in Colombo, notwithstanding the multitude of new locations across the city. While

Group Revenue & Profitability

2010 2011 2012 2013 2014

Rs. Mn

9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

Revenue Profit After Tax


34 35


building on existing brand value, in 2013 the hotel focused on addressing key market gaps in a bid to manage costs and tactically maximise revenue of the banquet function.

These efforts proved to be a tremendous success with banquet revenue demonstrating admirable year-on-year increase of 10 per cent from Rs. 771 million in the previous year to Rs. 848 million for the year under review.

Cinnamon Grand was the host hotel for a number of international conferences and workshops during the year including the 06th South Asia Economic Summit, JCB India Annual Dealer Conference, Commonwealth Business Forum, World Bank Financing Agriculture Forum and the Asian Paints Annual Dealer Conference.

Total expenses of Cinnamon Grand grew by 10 per cent compared to the last year. Cost of sales represented 55 per cent of the Cinnamon Grand’s cost

Group Expenses

Cinnamon Grand

GroupCinnamon Lakeside

%

60

50

40

30

20

10

0

Cost of Sales

Distribution Expenses

Administrative ExpensesOther Operating Expenses

structure which was increased by 8 per cent compared to the previous year. Administrative expenses were 30 per cent of the total expenses which showed a year-on-year increase of 9 per cent.

Meanwhile, continuous improvement in managing major costs was also a key focus area during the year. Continuous improvements on energy management practices and procedures were also enacted in order to trigger suitable long term changes to the business model. These efforts proved to be successful in reducing the pace of incremental costs. Moreover cash flow management and effective working capital control initiatives helped the company to realise 21 per cent increase in interest income for the year under review.

Maximising the earnings potential of employees through the payment of above-average service charge, Cinnamon Grand continued to retain its position as an employer of choice in the industry. Recording the highest ever service charge

2010 2011 2012 2013 2014

4,500

4,000

3,500

3,000

2,500

1,500

2,000

1,000

500

0

Room Revenue F&B Revenue Apartment Sales Rental Income Other

Group Revenue Composition

Rs. Mn

Cinnamon Grand Profitability

2010 2011 2012 2013 2014

Rs. Mn

5,500

4,500

4,000

5,000

3,500

3,000

2,500

2,000

1,500

1,000

500

0

Total Revenue Profit After Tax


35

in the history of the hotel in December 2013, Cinnamon Grand paid out Rs. 45,113 per employee, which was the highest paid among Colombo city hotels during that month. Moreover, during 2013/14, the annual average service charge per employee was Rs. 35,195, a 4 per cent year-on-year increase. Even more significantly, this average has grown by a phenomenal 86 per cent in past five years.

Cinnamon Lakeside ColomboCinnamon Lakeside continued to be ranked among the top city hotels in Colombo. Recording occupancy levels in excess of the city average, Cinnamon Lakeside’s occupancy levels for the year stood at 61 per cent, while the average room rate remained strong at US dollars 138. Room revenue for the year was Rs. 1,399 million, a 3 per cent increase compared to the preceding year. Contribution from Food and Beverage also saw a 2 per cent increase to reach Rs. 1,265 million.

Net revenue for the year was Rs. 2,939 million, up 3 per cent from Rs. 2,840 million recorded in the previous year. Denoted by a tight cost management

Future Challenges and OpportunitiesWith the medium term global economic outlook signalling a definite path towards revival, global growth is expected to exceed 3.7 per cent in 2014 and 3.9 per cent in 2015. The US economy too is expected to expand at a similar pace, and the ending of the protracted recession in the Euro Zone, GDP growth for the region as a whole is estimated to reach a positive aggregate in 2014 itself. Meanwhile, emerging markets and developing economies are also expected to grow steadily for the next two years; with China’s growth quotient projected towards a more moderate format. Economic activity in Sri Lanka too is expected to pick up in the forthcoming year, with a further acceleration projected in the medium term. Steadied by 7.3 per cent growth in 2013, the economy is expected to grow by 7.8 per cent in 2014, before moving to a higher growth trajectory in excess of over 8 per cent in the medium term. With the favourable developments in the economy, per capita income is expected to surpass US dollars 4,000 in 2015. Moreover, further relaxation of exchange control regulations are expected to bolster investments over the medium

Cinnamon Grand Occupancy

2010 201320122011 2014

%

78

74

70

62

66

58

programme instituted at all levels of the business, Cinnamon Lakeside was able to restrain annual operational costs to a large extent with only a 7 per cent overall increase in costs due mainly to the increase in electricity tariffs and also the cess imposed on imported food items. Consequently, Cinnamon Lakeside was able to record a sizeable operational profit of Rs. 816 million for the year. However, as there was no property revaluation gain in this financial year as was seen in the previous year, the operating profit fell short of the figure recorded in the previous financial year by 30 per cent.

Property Division Being the only upscale shopping center in Sri Lanka, the Crescat Boulevard Mall continued to dominate the retail shopping arena in Colombo. With an even occupancy level of 99 per cent throughout the year, the mall continued to uphold international standards of quality and service. Total income for the year, inclusive of service charge stood at Rs. 288 million, while net rent income recorded for the year was Rs. 197 million, with healthy contributions coming from the car park and promotional events.

Cinnamon Grand Room Revenue

2010 201320122011 2014

RS. Mn

3,000

2,500

2,000

1,500

500

1,000

0

Cinnamon Grand F&B Revenue

2010 201320122011 2014

Rs. Mn

2,500

2,000

1,500

500

1,000

0


36 37


term while improvements in infrastructure facilities will certainly improve the ease of doing business in the years ahead. The Government’s strategy to leverage on the country’s strategic location and stable geopolitical presence to develop Sri Lanka as a commercial hub would underpin the service sector growth in the next few years, while the tourism sector would undoubtedly be a key enabler of this growth. Despite rapid growth in the post-war era, Sri Lanka’s tourism industry continues to face a great many challenges, key among them being the need for trained staff, improved service standards, increased room capacity and aggressive promotional efforts to tap into non-traditional markets. At present, as the lack of adequately trained staff continues to curtail the prospects of the industry, the urgent need to establish new training schools is thrown into sharp focus, while overseas training exposure also remains critical in augmenting the local service platform and conforming to international standards. In terms of increased capacity,

Cinnamon Grand Interest Income

2010 201320122011 2014

Rs. Mn.

200

180

140

100

40

160

120

80

60

20

0

Cinnamon Grand ARR

2010 201320122011 2014

Rs.

20,000

16,000

12,000

4,000

8,000

0

the ongoing mega projects in the hotel sector are expected to raise the capacity in the industry to meet requirements of the targeted tourist arrivals, while timely completion of these projects would certainly boost the prospects of the industry in the years ahead.

From a promotional angle, it is imperative that the country capitalises on the rising per capita income of the middle class populace in India and China to promote Sri Lanka as a potential regional travel destination in these markets.

Even though the industry possesses a strong potential within the country, continued growth is also heavily dependent on the ability to cater to the emerging trends in the tourism industry. By harnessing the rich natural and cultural diversity of the country, Sri Lanka could be further promoted as a niche destination for ecotourism, thereby encouraging greater local participation and favouring a more sustainable business model for the entire

Repurchase Rate (Overnight)

Treasury Bill Yields (91 Days)

Commercial Banks’ (AWFDR)

20.00

17.50

15.00

12.50

10.00

7.50

5.00

2.50

0.00

Interest Rates (Per cent Per Annum at Year End)

%

2008 2009 2010 2011 2012 2013



37

Cinnamon Grand Average Service Charge

2010 201320122011 2014

Rs.

40,000

35,000

30,000

20,000

10,000

25,000

15,000

5,000

0

industry as opposed to the traditional mass tourism model of the past. Thus, a clear, market-driven strategy would be the catalyst in driving the growth of the local tourism industry to achieve its target of 2.5 million tourist arrivals by 2016.

For our part, we would continue to consolidate both the hotels business as well as the property division and leverage on our brand value to further strengthen all aspects of these businesses in the years ahead. In the hotel arm, the corporate segment would remain the key channel to pursue revenue growth and realising this potential would compel the company to fully harness all online booking platforms available in the market.

Moreover, online media would also play a pivotal role in helping us outline our strategic customer focus in the years ahead. By revisiting our parameters in this manner, we remain committed to enrich quality of our service standards. Underscored by the uniqueness of the Cinnamon brand promise, we will pursue a highly customer-centric agenda that will deliver world-class indulgence for all our patrons. We will thus endeavour to differentiate ourselves from our competitors and stay a step ahead, while making timely investments to strengthen our brand presence and fulfill the aspirations of all stakeholders, in the years ahead.


38 39

Board of Directors

Susantha RatnayakeChairmanMr. Ratnayake was appointed as a Director of Asian Hotels and Properties PLC in September 2003 and Chairman and CEO of John Keells Holdings PLC in January 2006 and has served on the JKH Board since 1992/93.

He is the Chairman of Ceylon Tobacco Company PLC, Vice Chairman of the Employers Federation of Ceylon and serves as a member of several clusters of the National Council of Economic Development. A past Chairman of the Sri Lanka Tea Board and immediate past Chairman of the Ceylon Chamber of Commerce, he also serves on the Board of the national carrier SriLankan Airlines.

Ajit GunewardeneDirectorMr. Ajit Gunewardene is the Deputy Chairman of John Keells Holdings PLC and has been a member of the Board for over 20 years. He is a Director of many companies in the John Keells Group and is the Chairman of Union Assurance PLC. He is a member of the Board of SLINTEC, a company established for the development of nanotechnology in Sri Lanka under the auspices of the Ministry of Science and Technology. He is also an Advisory Committee Member of COSTI, the Coordinating Secretariat for Science Technology and Innovation under the purview of the Minister (Senior) of Scientific Affairs. He has also served as the Chairman of the Colombo Stock Exchange. Mr. Gunewardene has a Degree in Economics and brings over 31 years of management experience.

Ronnie PeirisDirectorMr. Peiris was appointed as a Director of Asian Hotels and Properties PLC in 2003. As the Group Finance Director of John Keells Holdings PLC, Mr. Peiris has overall responsibility for the Group’s Finance and Accounting, Taxation, Corporate Finance, Treasury, Group Initiatives and the Information Technology functions. He is also a Director of several companies in the John Keells Group. He was previously the Managing Director of Anglo American Corporation (Central Africa) Limited in Zambia.

He has over 40 years of finance and general management experience in Sri Lanka and abroad. He is a Fellow of the Chartered Institute of Management Accountants, UK, Association of Chartered Certified Accountants, UK, and the Society of Certified Management Accountants, Sri Lanka and holds an MBA from the University of Cape Town, South Africa. He is a member of the Committee of the Ceylon Chamber of Commerce, and serves on its Economic, Fiscal and Policy Planning Sub Committee.

Cholmondeley Pinto Director Mr. Pinto was appointed as a Non-Executive Director and as the Chairman of the Board Audit Committee of Asian Hotels and Properties PLC in July 2011. He is a Fellow of the Institute of Chartered Accountants of Sri Lanka with 40 years of post-qualifying experience in the profession and in industry. Before returning to Sri Lanka in 2006 after spell of 32 years abroad, he worked for SAB Miller PLC for 23 years, the world’s second largest multinational breweries group, holding CFO positions in its listed subsidiaries in several countries. He currently works as a beverage industry consultant and is semi-retired. He is also a Non-Executive Director of Trans Asia Hotels PLC.


39

Sanjiva SenanayakeDirector Mr. Senanayake was appointed to the Board of Asian Hotels and Properties PLC as an Independent Director in September 2009. He has served in several key positions in national and international organisations.

Mr. Senanayake joined the International Finance Corp (IFC), the World Bank’s private sector financing arm in June 1998 and held the position of Country Manager for Sri Lanka and Maldives until April 2006 when he was appointed as the Head of Financial Markets Investments – West Africa. He held this position until his retirement in April 2009. Prior to joining IFC he served as the Assistant General Manager, Treasury and Investment Banking at National Development Bank of Sri Lanka and as Consultant, Treasury and Business Development at Commercial Bank of Ceylon.

Prior to that he held several key positions in the Citibank Group in Sri Lanka and overseas. Mr. Senanayake holds a BSc degree in Electronic and Electrical Engineering from King’s College, University of London and an MSc in Communication Engineering from the Imperial College of Science and Technology, University of London. He is also a Director of Sampath Bank PLC, Hemas Power PLC, and Hemas Pharmaceuticals Ltd.

Shirani JayasekaraDirectorMrs. Jayasekara was appointed as a Director in September 2009. She has over 30 years experience combining Finance, IT, Audit and Risk Management in Sri Lanka, Zambia and Bahrain. She has been selected to serve on various committees of the Institute of Chartered Accountants of Sri Lanka such as the Annual Report Awards Committee (Sustainability Reporting) and Audit Committee of the Institute. She is also an external Independent Director at LB Finance. She is a Fellow of the Institute of Chartered Accountants of Sri Lanka and a Fellow of the Chartered Institute of Management Accountants UK.

Rohan KarunarajahDirectorMr. Karunarajah joined the John Keells Group in 2003 as General Manager for The Colombo Plaza, and was appointed a Director in March 2005. A career hotelier counting over three decades in the international hospitality industry, he currently holds the position of General Manager Cinnamon Grand and Senior Vice President John Keells Holdings PLC; having served as General Manager for the Bristol Marriott and the Marriott Marble Arch, London. He read for his Masters in Hospitality and Business Studies from the Thames Valley University, London.

Suresh RajendraDirectorMr. Suresh Rajendra is the President Property Group of John Keells Holdings PLC. He also serves as a Director in many companies of the John Keells Group. He has over 21 years of experience in the fields of finance, travel and tourism and business development acquired both in Sri Lanka and overseas. Prior to joining the Group, he was the Head of Commercial and Business Development for NRMA Motoring and Services in Sydney, Australia and Director/General Manager of Aitken Spence Hotel Managements (Pvt) Ltd, Sri Lanka. Suresh is a Fellow of the Chartered Institute of Management Accountants, UK.


40 41

Annual report of the Board of DirectorsThe Board of Directors take pleasure in presenting the Annual Report together with the Audited Financial Statements for the year ended 31st March 2014 to be presented at the 20th Annual General Meeting of the Company.

Principal ActivitiesThe Company is engaged in Hoteliering and Property Development/Management. Trans Asia Hotels PLC (Cinnamon Lakeside) is a subsidiary of the Company and its principal activity is Hoteliering. There has been no material change in the activities of the Company or of the subsidiary during the period under review.

Review of Business and Future DevelopmentsThe financial and operational performance, during the year ended 31st March 2014 and future business development of the Company and Group is provided in the Chairman’s Statement, the Management Discussion and Analysis in this Annual Report. These reports, which form an integral part of the Directors’ Report together with the Audited Financial Statements, reflect the state of affairs of the Company and Group for the financial year 2013/2014.

Financial Statements and Auditors’ ReportThe Financial Statements, duly signed by the Directors, is provided from pages 144 to 185 and the Auditors’ Report on the Financial Statements is provided on page 143 of this Annual Report.

Segment ReportingSegment-wise contribution to Group revenue, results, assets and liabilities are provided in Note 37 to the Financial Statements.

RevenueRevenue generated by the Company amounted to Rs. 5,317 million (Rs. 5,051 million in 2013 ), whilst Group revenue amounted to Rs. 8,256 million (Rs. 7,891 million in 2013).Contribution to Group revenue, from the different business segments are provided in Note 37 to the Financial Statements.

Results and Appropriations The Profit After Tax of the Company was Rs. 2,379 million (Rs. 2,292 million in 2013) whilst the Group profit attributable to the equity holders of the Parent Company for the year was Rs. 2,398 million (Rs. 2,494 million in 2013). A detailed description of the Group results and appropriations are given below.

2013/14 2012/13

Rs. ‘000 Rs.‘000

Net Profit for the year after providing for expenses including depreciation on Property, Plant and Equipment was:

3,046,463 3,336,251

From which Income Tax has been deducted of: (227,952) (238,865)

Leaving thereafter a Net Profit After Tax of: 2,818,511 3,097,386

The amount attributable to Minority Interest which has been deducted is:

(420,565) (603,090)

Leaving a Profit Available to the Group of: 2,397,946 2,494,296

The Brought Forward Profit is: 7,242,060 6,490,690

Transferred to Revenue Reserve of: 15,407 28,175

Other Comprehensive Income: (4,242) -

Final Dividend paid: (1,328,326) (1,328,326)

Interim Dividend paid: (442,775) (442,775)

Leaving an un-appropriated balance to be Carried Forward of:

7,880,070 7,242,060

Accounting PoliciesThe Financial Statements which comprise the Income Statement, Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity and the Statement of Cash Flow, together with the accounting policies and notes ('The Financial Statements') have been prepared in accordance with Sri Lanka Accounting Standards (SLFRS/LKAS) as issued by the Institute of Chartered Accountants of Sri Lanka (ICASL) and the requirement of the Companies Act No. 7 of 2007. The changes to accounting policies have been applied consistently to all financial periods presented in these Financial Statements, unless otherwise indicated. The accounting policies adopted in preparation of the Financial Statements are given from page 150 to 185 of this Report.

DividendsA Final Dividend of Rs. 3/- per share for the financial year ended 31st March 2013, was paid during the current financial year on 14th June 2013 to those shareholders in the register as of 4th June 2013, resulting in a total cash pay out amounting to Rs. 1,328 million.


41

An Interim Dividend of Rs. 1/- per share for the year ended 31st March 2014, amounting to Rs. 442 million was paid on 10th January 2014.

The Board of Directors, has declared a Final Dividend of Rs. 3/- per share for the financial year ended 31st March 2014. The Final Dividend will be paid on 18th June 2014 to those shareholders on the register as at 6th June 2014.

As required by Section 56 (2) of the Companies Act No. 7 of 2007, the Board of Directors has confirmed that the Company satisfies the Solvency Test in accordance with Section 57 of the Companies Act No. 7 of 2007 and has obtained a certificate from the Auditors, prior to declaring the above dividends. Property, Plant and Equipment The book value of Property, Plant and Equipment as at the balance sheet date amounted to Rs. 15,053 million (2013 – Rs. 15,029 million) and Rs. 18,511 million ( 2013 – Rs.18,309 million) for the Company and Group respectively.

Capital expenditure for the Company and Group amounted to Rs. 301 million (2013 – Rs. 283 million ) and Rs. 673 million (2013 – Rs. 489 million) respectively.

Total Freehold Land available − Asian Hotels and Properties PLC A8 . R00. P05.08 Total Leasehold Land available − Trans Asia Hotels PLC A05. R02. P34.28.

Details of Land and Buildings with net book values including details of Property, Plant and Equipment of the Group and their movements are given in Note 14 to the Financial Statements on page 161.

Market Value of PropertiesAll buildings owned by the Company were last revalued as at 31st March 2013. Valuation was carried out by M/s

P.B. Kalugalagedara and Associates, a professional valuer.

All properties classified as investment property under the Company was revalued as at 31st March 2014 in accordance with the requirements of LKAS 40. This valuation too was carried out by M/s P.B. Kalugalagedara and Associates.

M/s P.B. Kalugalagedara and Associates have also confirmed that the current value of the building as well as investment property of the Company is at market value.

Investment PropertiesIn accordance with SLAS 40-Investment Property (2005), the net book value of properties held to earn rental income, and properties held for capital appreciation have been classified as Investment Properties. The details of Investment Properties are explained in Note 16 to the Financial Statements on page 164.

Investment in Subsidiary

Company No. of Shares

% Holding

Trans Asia Hotels PLC (Quoted)

86,823,028 43.41

Stated CapitalThe Stated Capital of the Company as at 31st March 2014 is Rs. 3,345 million (2013 – Rs.3,345 million) comprising of 442,775,300 Ordinary Shares.

Share InformationThe market value of an Ordinary Share of the Company as at 31st March 2014 was Rs. 58.80 (31st March 2013 – Rs. 70.00).

The distribution and composition of shareholders and the information relating to earnings, dividend, net assets, and

market value per share is given in the Share Information and Five (5) Year Financial Review section of the Annual Report.

The Company has made every endeavor to ensure the equitable treatment of all shareholders and has adopted adequate measures to prevent information asymmetry.

Major ShareholdersDetails of the twenty largest shareholders of the Company and the percentage shareholding held by the public are disclosed in the Share Information section of the Annual Report from page 187 and 188.

ReservesTotal reserves as at 31st March 2014 for the Company and Group amounted to Rs. 17,003 million (2013 – Rs. 16,384 million) and Rs. 18,993 million (2013 – Rs. 18,352 million), respectively.

The movements and composition of the Capital Reserves and Revenue Reserves during the year are disclosed in the Statement of Changes in Equity.

DirectorsThe Board of Directors of the Company as at 31st March 2014 and brief profiles of each Director are given in the Board of Directors section of the Annual Report.

The Directors of the Company who held office during the year under review are set out below.

Mr. S.C. Ratnayake - ChairmanMr. A.D. Gunewardene Mr. J.R.F. PeirisMr. R.J. KarunarajahMr. S. RajendraMr. C.J.L. PintoMr. S.K.G. SenanayakeMrs. S.A. Jayasekara


42 43

Annual report of the Board of Directors contd.

Mr. R.J. Karunarajah and Mr. Rajendra retire by rotation in terms of Article 84 of the Articles of Association of the Company and being eligible for re-election are recommended by the Board for re-election. Brief profiles of Mr. R.J. Karunarajah and Mr. Rajendra are found on page 39.

The Directors of Trans Asia Hotels PLC [Subsidiary] who held office during the year under review are set out below:

Mr. S.C. Ratnayake - ChairmanMr. A.D. GunewardeneMr. J.R.F. Peiris Mr. N.L. GooneratneMr. C.J.L. PintoMr. E.H. WijenaikeMrs. J.C. Ponniah*

* Appointed to the Board with effect from 2nd October 2013.

Responsibility of the BoardDetails of responsibilities of the Board and the manner in which those responsibilities were discharged during the year are disclosed in the Corporate Governance section of the Annual Report.

Board CommitteesBoard Audit CommitteeThe following members serve on the Board Audit Committee

Mr. C.J.L. Pinto - ChairmanMr. S.K.G. SenanayakeMrs. S.A. Jayasekara

The Report of the Audit Committee is given on page 140 of this Report.

Human Resources and Compensation Committee As permitted by the listing rules of the Colombo Stock Exchange, the Human Resources and Compensation Committee

of the Parent Company, John Keells Holdings PLC (JKH), functions as the Human Resources and Compensation Committee of the Company.

The following members serve on the Human Resources and Compensation Committee:

Mr. E.F.G. Amerasinghe – ChairmanDr. I. CoomaraswamyMr. A.R. GunasekaraMr. M.A. Omar*Mr. N.A. Fonseka**Mrs. S. Tiruchelvam***

* Appointed with effect from 28th May 2013.

** Appointed with effect from 7th November 2013.

*** Resigned with effect from 9th September 2013.

The Report of the Human Resources and Compensation Committee and the remuneration policy is given in the Corporate Governance section of the Annual Report.

Nominations CommitteeThe Nomination Committee of the Parent Company John Keells Holdings PLC (JKH) functions as the Nomination Committee of the Company.

The Nominations Committee comprises four Independent Directors and one Non Independent Director as at 31st March 2014:

Mr. T. Das – Chairman Mr. S.C. Ratnayake (Non-Independent)Mr. M.A. Omar*Mr. E.F.G. Amerasinghe*Mr. D.A. Cabraal *Mrs. S. Tiruchelvam**

* Appointed with effect from 7th November 2013.

** Resigned with effect from 9th September 2013.

The Report of the Nominations Committee is given in the Corporate Governance section of the Annual Report.

Interests RegisterThe Company has maintained an Interests Register as contemplated by the Companies Act No. 7 of 2007. In compliance with the requirements of the Companies Act No. 7 of 2007, this Annual Report contains particulars of entries made in the Interests Register as well as the particulars of the entries made in the Interests Register of the Subsidiary which is a Public Limited Company.

Directors' Interests in ContractsThe Directors of the Company have made general declarations as required by Section 192 (2) of the Companies Act No. 7 of 2007 and no additional interests have been disclosed by any Director.

Directors' RemunerationDirectors’ remuneration is established within a framework approved by the Human Resources and Compensation Committee. The Directors are of the opinion that the framework assures appropriateness of remuneration and fairness for the Company.

Details of the remuneration and other benefits received by the Directors of the Company and the Group are set out in Note 10 of the Financial Statements.

Indemnities and RemunerationThe Board approved the payment of remuneration to the Executive Directors of the Company, namely, Mr. R.J. Karunarajah and Mr. S. Rajendra, for the period 1st April 2013 to 31st March 2014 comprising:


43

�� An increment from 1st July 2013 based on the individual performance rating obtained by the Executive Directors in terms of the Performance Management System of the John Keells Group; and

�� Short term variable incentive based on individual performance, organisation performance and role responsibility based on the results of the financial year 2012/2013, paid in July 2013.

The Remuneration Committee of John Keells Holdings PLC (being the holding company of Asian Hotels and Properties PLC) has not recommended an increment in fees to the Non-Executive Directors of the Company. The fees payable to Non-Executive nominees of John Keells Holdings PLC are paid to the Company and not to individual Directors.

Particulars of Entries in the Interests Register of the SubsidiaryTrans Asia Hotels PLC.

Indemnities and RemunerationThere have been no changes to the remuneration of the Directors of Trans Asia Hotels PLC for the financial year ended 31st March 2014.

Further to the appointment of Mrs. J. C. Ponniah as a Non-Executive Director of Trans Asia Hotels PLC with effect from 2nd October 2013, the Board approved the payment to Mrs. J.C. Ponniah of the standard Non-Executive fees approved by the Board for Non-Executive Directors which fees are commensurate with the market complexities of the Company.

Directors’ ShareholdingsThe shares held by Directors’ and their spouses in the Company as at 31st March 2014 are as follows;

Director Shareholding as at 31.03.2014

Shareholding as at 31.03.2013

Mr. S.C. Ratnayake 20,000 20,000

Mr. A.D. Gunewardene NIL NIL

Mr. J.R.F. Peiris NIL NIL

Mr. R.J. Karunarajah 200 200

Mr. S. Rajendra NIL NIL

Mr. S.K.G. Senanayake NIL NIL

Mrs. S.A. Jayasekara NIL NIL

Mr. C.J.L. Pinto(Joint account with Mrs. M.R.C. Pinto)

7,800 7,800

Corporate Governance

Directors’ Declarations

The Directors declare that;a) The Company has complied with all applicable laws and regulations in conducting its

business.

b) They have declared all material interests in contracts involving the Company and refrained from voting on matters in which they were materially interested.

c) The Company has made all endeavours to ensure the equitable treatment of shareholders.

d) The business is a going concern with supporting assumptions or qualification as necessary.

e) A review of internal controls covering financial, operational and compliance controls and risk management have been conducted and that the Directors have obtained reasonable assurances of their effectiveness and successful adherence herewith.

f) The Company being listed on the Colombo Stock Exchange (CSE), is compliant with the rules on Corporate Governance under the Listing Rules of the CSE with regard to the composition of the Board and its Sub-Committees.

g) The Company is in compliance with the Code of Best Practice on Corporate Governance jointly issued by the Securities and Exchange Commission of Sri Lanka (SEC) and the Institute of Chartered Accountants of Sri Lanka (ICASL).

A comprehensive report on Corporate Governance practices and principles with respect to the management and operations of the Company are set out from pages 50 to 73 of this Report.


44 45

SustainabilityThe Company is conscious of the need to preserve the environment and its natural resources and has taken specific steps, particularly in ensuring the conservation of its natural resources and environment as well as addressing material issues highlighted by its stakeholders. Every endeavour has been made to minimise adverse effects on the environment to ensure sustainable continuity of natural resources. The Company’s sustainable practices are detailed from pages 76 to 137.

EmploymentThe Company has an equal opportunity policy in respect of employment and these principles are enshrined in specific selection, training, development and promotion policies, ensuring that all decisions are based on merit. The Company, in line with the Group policy, practices equality of opportunity for all employees irrespective of ethnic origin, religion, political opinion, gender, marital status or physical disability.

Details of the Group’s human resource initiatives are detailed in the employees’ section of the Sustainability Report.

The number of persons employed by the Company and Group as at 31st March 2014 was 1,234 (1,225 in 2013) and 2,089 (2,067 in 2013), respectively.

There have been no material issues pertaining to employees and industrial relations of the Company and the Group during the Financial Year.

Supplier PolicyThe Company, in line with the Group’s policies, applies an overall policy of agreeing and clearly communicating terms of payment as part of the commercial

agreements negotiated with suppliers and endeavours to pay for all items properly charged in accordance with these agreed terms. As at 31st March 2014, the trade and other payables of the Company and Group amounted to Rs. 514 million (2013 – Rs. 466 million) and Rs. 736 million (2013 – Rs. 654 million), respectively.

Environmental ProtectionThe Company is in compliance with the relevant environmental laws, regulations and endeavours to comply with best practices applicable in the country. A summary of selected Group activities in the above area is contained in the Sustainability Report. The Company has not engaged in any activity that is harmful to the environment.

Statutory PaymentsThe Directors confirm that to the best of their knowledge, all taxes, duties and levies payable by the Company and its Subsidiary, all contributions, levies and taxes payable on behalf of, and in respect of the employees of the Company and its Subsidiary, and all other known statutory dues that were due and payable by the Company and its Subsidiary as at the Balance Sheet date have been paid or, where relevant provided for, except as specified in Note 38 to the Financial Statements, covering Contingent Liabilities.

Risk ManagementThe Board confirms that there is an ongoing process of identifying, evaluating and managing any significant risks faced by the Company, where annual risk reviews are carried out by the Enterprise Risk Management Division and the risks are further reviewed each quarter by each business unit. The headline risks are presented to the Board Audit Committee for review by the business unit.

The details of the Risk Report and Risk Management Process are set out from pages 46 to 49 of this Report.

Internal ControlThe Board, through the involvement of the Group Business Process Review (Group BPR) Division, takes steps to gain assurance on the effectiveness of control systems in place. The Audit Committee receives regular reports on the adequacy and effectiveness of internal controls in the Company. These include compliance with laws, regulations and established policies and procedures of the Company.

The Head of Group Business Process Review Division has direct access to the Chairman of the Audit Committee. Reports of the outsourced internal auditors are also reviewed by the Committee on matters pertaining to the Company.

The Directors acknowledge their responsibility for the Company’s systems of internal controls. The statements of Corporate Governance from pages 50 to 73 sets out in detail the Company’s system of internal controls.

Related Party TransactionsThere were no related party transactions which exceeded 10 per cent of the equity or 5 per cent of the total assets required to be disclosed under the Listing Rules of the CSE other than as disclosed under Note 34 to the Financial Statements.

Employee Share Option Plan (ESOP)Employees of the Company receive remuneration in the form of share-based payment transactions, whereby employees render services as consideration for equity instruments (equity-settled transactions). The cost of the employee services received in respect of the shares or share options granted

Annual report of the Board of Directors contd.


45

is recognised in the Income Statement over the period that employees provide services, from the time when the award is granted up to the vesting date of the options. The overall cost of the award is calculated using the number of share options expected to vest and the fair value of the options at the date of grant.

The employee remuneration expense resulting from the Group’s share option scheme to the employees of Asian Hotels and Properties PLC is recognised in the Income Statement of the Company. This transaction does not result in a cash outflow to the Company and expense recognised is met with a corresponding equity reserve increase, thus having no impact on the Statement of Financial Position (SOFP). The fair value of the options granted is determined by the Group using an option model and the relevant details are communicated by the Group to all applicable subsidiary Companies.

DonationsTotal donations made by the Company during the year amounted to Rs. 13.98 million and donations made by the Group amounted to Rs. 21.08 million (31st March 2013 – Company Rs. 6.9 million/Group Rs. 10.9 million).

Events Subsequent to the Balance Sheet DateExcept for the matters disclosed in Note 40 to the Financial Statements on page 185 there are no material events which require adjustments or disclosure in the Financial Statements.

Going ConcernThe Board of Directors, after considering the financial position, operating conditions, regulatory and other factors, and such matters required to be addressed in the Code of Best Practice on Corporate

Governance issued jointly by the Securities and Exchange Commission and the Institute of Chartered Accountants of Sri Lanka, have a reasonable expectation that the Company and its Subsidiary possess adequate resources to continue in operation for the foreseeable future. For this reason, they continue to adopt the Going Concern basis in preparing the Financial Statements.

AuditorsThe retiring Auditors Messrs. KPMG, Chartered Accountants, have expressed their willingness to continue in office. The Audit Committee at a meeting held on 19th May 2014 recommended that they be re-appointed as Auditors. A Resolution to re-appoint them as auditors and authorising the Directors to determine their remuneration will be proposed at the Annual General Meeting.

The Independent Auditors’ Report to the shareholders on the Financial Statements is given on page 143.

The Audit Committee reviews the appointment of the Auditor, its effectiveness, independence and its relationship with the Company, including the level of audit and non–audit fees paid to the Auditor.

Based on the declaration of Messrs KPMG and as far as the Directors are aware, the Auditors do not have any relationship [other than that of an Auditor] or interest in the Company or its Subsidiary.

Annual ReportThe Board of Directors approved the Consolidated Financial Statements on 28th May 2014. The appropriate number of copies of this Report will be submitted to the Colombo Stock Exchange and to the Sri Lanka Accounting and Auditing

Standards Monitoring Board on 4th June 2014.

Annual General MeetingThe 20th Annual General Meeting of the Company will be held at the Ceylon Chamber of Commerce, at No. 50, Navam Mawatha, Colombo 2, on 27th June 2014 at 11.45am. The Notice of Annual General Meeting appears on page 191 of the Annual Report.

This Annual Report is signed for and on behalf of the Board of Directors by;

Director Director

By Order of the Board

KEELLS CONSULTANTS (PRIVATE) LIMITEDSecretaries

Colombo28th May 2014


46 47

risk ManagementIn the context of constantly changing guest preference, a competitive industry environment and covering local and global regulatory requirements, Asian Hotels and Properties PLC, continued its risk management system during the year under review. The Risk Management Process is designed to analyse the exposure on various risks, by identifying vulnerability and the probability of occurrence along with its impact to the business operation. Through this process we have developed a better understanding of key risks, encouraged and facilitated the sharing of best practices across the individual Business Units and reduced the overall cost of risk by continuously improving our risk management approaches. Thereafter, action that should be taken to mitigate the impact and likelihood of such risks to the business are discussed at various levels of the Company and corrective measures are implemented promptly.

The Company has recognised the Risk Management Process as an essential component of both the investment management process, ensuring safe and high quality products as well as in our approach to maintain sustainable business operations for all our stakeholders. Enhancements are continuously made to the Risk Management framework throughout 2013/14 based on the guiding principles of the Enterprise Risk Management (ERM) process recommended by the John Keells Group Sustainability and Enterprise Risk Management Division. The Enterprise Risk Management cycle begins during the second quarter with an annual risk review by the John Keells Group’s Enterprise Risk Management division which assists heads of business units and their respective Heads of Departments to comprehensively assess, rate and set

mitigation plans for any structural, operational, financial and strategic risks relevant to each company, based on past information and horizon scanning.

The Group Management Committee of the Hotel and Property Divisions along with the Audit Committee work closely with the Board of Directors, who are in turn responsible for:�� Establishing core standards for the management, measurement and reporting of risk.�� Identifying, assessing, communicating and monitoring risks on a Company wide

basis.�� Engaging with senior management on a frequent basis regarding material matters

with respect to risk-taking activities in the businesses and related Risk Management Processes.

Risk Management ProcessThe Risk Management Process is carried out in order to identify risk events and rank each risk by assigning a risk rating. This is assessed by the likelihood of occurrence [Probability], the level of impact to the Company and the velocity of risk is also a factor when assessing risks. The Management Committee of each business unit was apprised of the high level risks and core sustainability risks that emerged during the risk review process, and risk mitigation action plans were presented for review by the Audit Committee. Risk reviews are carried out on a quarterly basis to monitor and manage the status of risks mitigation activities. The process is reviewed by the Group Management Committee and the Group Executive Committee of John Keells Holdings PLC. The Audit Committee oversees the process on behalf of the Board.

The risk exposure and profile of the Group did not change significantly during the last year. A review of the key risks that could materially affect the Asian Hotels and Properties PLC along with control measures and action plans implemented to mitigate them are set out on the next page.

Audit Committee

Hotel/ Property Risk Management Team

Risk Champions

Board

Likelihood of Occurrence

Business Impact

Velocity

Ult

ra H

igh

Insi

gn

ifica

nt

Risk Grid


47

Risk Category and Description Control Measures and Action Plans to Mitigate Risks

Strategic Risks

Business Risk �� The performance of the Company could be adversely

affected due to intense competition, unfavourable economic conditions and new entrants.

�� The Company closely monitors competitors activities and strategies. This process includes the reviewing of competitors market share and performance. Where necessary, new strategies are formulated or existing strategies are revised to counter the actions of competitors.

�� Ongoing and timely investments to upgrade properties and facilities.

�� Exceeding customer expectations by careful analysis of guest feedback and tailoring appropriate and prompt responses to identified issues.

�� Providing value for money by enhancing services, improving service delivery and focusing on consistent quality.

�� Growing web-generated business.

Operational Risks

Commercial Relationship Risk �� Both business units of Asian Hotels and Properties PLC, the

Property Division and the Hotel Division benefits from close commercial relationships with a number of key customers and suppliers. The disruption of this can have negative consequences.

�� The Company devotes significant resources to carry out regular training programmes to upgrade its levels of care in supporting these relationships.

�� The Company undertakes regular surveys of customer satisfaction which are reviewed on a continuous basis.

Human Resource Risk�� The Company’s Human Resources are the backbone of the

business, holding the Company together. The growth of the Company is heavily dependent on the talents and efforts of the highly skilled individuals that the Company is able to attract and retain. The recruitment and retention of employees is a constant challenge.

�� As part of the performance appraisal process carried out in the Company, a clear vision has been set out on career development and succession plans, enabling the Company to retain its employees.

�� Regular training both locally and overseas is carried out in order to infuse motivation, commitment and empowerment among the staff.

�� Recruitment of high calibre staff, effective induction to the Group's corporate culture, transparency in management actions and effective communication lines are developed in the Company’s culture to foster good employee relationships.

�� Developing a spirit of unity by organising associate gatherings to celebrate staff birthdays, outings, sports activities, family get-togethers and religious activities.


48 49


Brand Image and Reputation Risk �� The Company’s success depends on the continued strength

and recognition of the brand on a local and regional basis.

�� The “Cinnamon” name is primary to its business as well as to the implementation of its strategy for expanding its businesses. This will depend largely on the success of its ability to provide high-quality products and services to all its clients.

Although some factors are beyond its control, the group adopts the following approaches to mitigate this risk:

�� Regular Brand Audits of the “Cinnamon” brand are carried out.

�� Both the Hotel Division and the Property Division ensure that they secure the most sought after and qualified staff to hold high Managerial positions (in the different hierarchies.

�� Continuous attention is focused on the environment and health and safety concerns by complying with HACCP and other quality certifications.

�� The brand of “Cinnamon” with emphasis on maintaining Minimum Quality Standards and Standards of Performance carries out ongoing reviews of guest comments in order to exceed customer expectations.

�� Encouraging and nurturing responsible corporate citizenship through CSR initiatives.

�� Continuous monitoring and reviewing of online customer reviews and rating.

Liquidity and Credit Risk �� The economic instability, high inflation rates, adverse foreign

currency fluctuations and the global monetary crisis could affect the Company in recovering the cash from clients of the hotel and tenants of the mall.

�� Exposure and losses due to default of settlement by debtors.

�� Regular review mechanisms are in place to monitor the performance of the Company against approved budget targets to achieve a balance between liquidity and profitability.

�� The Company actively carries out trade debtor balance reviews with review meetings held on a consistent and continuous basis.

�� Credit policy and stringent controls are in place to mitigate the impact of default.

Interest Rate Risk �� Drop in interest rates will lead to a lower interest income as

a result of which, the Company would have an impact on its Other Income.

�� The Company has taken measures to maximise the interest income with the assistance and guidance of the JKH Group Treasury Department.

risk Management contd.


49


Technology and Data Protection Risk�� Failure to keep pace with developments in the technology

sphere could impair our competitive position and operation.

Reservation, property management, material management and financial information systems were upgraded for greater alignment with business needs, making it easier to respond to change in business strategy.

�� The IT division of the sector and the John Keells Group have implemented procedures to safeguard the computer installations of the Company to ensure continuity of operations.

�� Commissioning an audit of all websites by an IT Governance, Risk and Compliance professional to safeguard against cyber-attacks.

�� While the Group’s operations are reliant on Information Technology stringent security measures, disaster recovery procedures and business continuity plans are implemented, there are group-wide measures to ensure the mitigation of significant information technology risks.

�� Clearly defined IT policy, which is communicated to all associates.

Fraud Risk�� The risk posed by corruption and employees abusing

entrusted power for private gain, as well as misappropriation of assets, which will also negatively impact the Company’s reputation.

�� All major procurement decisions are taken on a collective basis inclusive of Consultants/Project Managers and the Management.

�� Internal auditors are appointed to conduct regular reviews of the areas which are susceptible to misappropriation and fraud.

�� Authority limits and segregation of responsibilities and duties have been implemented for the critical functions of the Company.

�� The Company has taken insurance covers in order to mitigate this risk factor.

The Board confirms that a process for identifying, evaluating and managing significant risks that endanger the achievement of the strategic objectives of Asian Hotels and Properties PLC has been in place throughout the year in accordance with the guidelines set out by the Institute of Chartered Accountants of Sri Lanka and industry best practices. The Audit Committee has reviewed the Business Risk Management process adopted by the Company and has noted that the risk management exercises had been conducted.


50 51

Corporate GovernanceCORPORATE GOVERNANCE COMMENTARY

IntroductionA culture of performance, entrenched within a framework of compliance, conformance and sustainable development dominates the governance policy of Asian Hotels and Properties PLC in line with the JKH Group’s corporate governance philosophy which has been institutionalised at all levels through a strong set of corporate values, a written code of conduct and a proven performance management and values monitoring systems. The Board of Directors, Senior Management and employees are expected to strictly adhere to the precepts of this culture and follow them in performing official duties, whilst ensuring that the Group image remains positive and pragmatic at all times.

The Company has strived to maintain the highest levels of transparency when reporting on both financial and non-financial information which has enabled it to enhance the trust that stakeholders have in the Company.

The Company holds itself accountable to the highest standards of Corporate Governance and transparency which makes information about our Company accessible to the public. Effective Corporate Governance in line with the highest international standards is an important part of our identity. Our system of Corporate Governance lays the basis for responsible performance-oriented management and control which is geared towards sustainable value creation. Most importantly, our efforts go hand in hand with an unwavering commitment to the accurate, clear communication of our performance and the facts of our business.

We are pleased to present this report which sets out the corporate governance philosophy that is practiced by the Company. We are in compliance with the following statutes, rules and regulations and where necessary, any deviations permitted by same, have been duly explained.

�� Companies Act No. 7 of 2007 – Mandatory compliance�� The Listing Rules of the Colombo Stock Exchange (CSE) – Mandatory compliance�� The Code of Best Practice on Governance issued jointly by the Securities and Exchange Commission of Sri Lanka and the Institute

of Chartered Accountants of Sri Lanka to the extent that they are practicable – Voluntary compliance�� Recommendations of the UK Corporate Governance Code as practicable in the context of the nature of businesses and risk

profiles - Voluntary compliance

Corporate Governance System with a Sustainability Development Framework assurance mechanisms regulatory benchmarksinternal Governance Structure

Companies Act No. 07 of 2007

Listing Rules of the Colombo Stock Exchange

The Code of Best Practices on Corporate Governance

issued jointly by SEC & ICASL

Recommendations of the UK Corporate Governance Code as practicable in the context

of the nature of businesses and risk profiles

audit committee

Employee Empowerment

Management Team

President/General Manager

human resources & compensation committee

chairman & the board of Directors

nominations committee

related party transaction

review committee

Risk Management

IT Governance

Stakeholder Management

People & Talent Management

Employees Performance Governance

Effective & Transparent Management

Board Committees

Internal Control

JKH Code of Conduct

External Audit

Employee Participation


51

The Corporate Governance framework is founded on the following principles:

(i) Allegiance to John Keells Holdings PLC (JKH) and the John Keells Group, and upholding of Group values.

(ii) Compliance with the laws and Company Rules and Regulations applying to the territories that the John Keells Group operates in.

(iii) Conduct of business in an ethical manner at all times, in line with acceptable business practices.

(iv) Exercise of professionalism and integrity in all business and “public” personal transactions.

(v) Ensure that no one person has unfettered powers of decision making.

(vi) Opting for the early adoption of accounting standards and best practices in governance regulation when practical.

(vii) Encourage proactive discussions with the relevant regulatory bodies to facilitate the implementation of matters of governance and other business reforms in Sri Lanka.

(viii) Make business decisions and resource allocations, in an efficient and timely manner, within a framework that ensures transparent and ethical dealings which adhere to the laws of the country and the standards of governance that stakeholders expect from the Company.

The key components of the corporate governance framework of the Company comprising the internal Governance structure, the external regulatory

framework, accountability and assurance of compliance are discussed in detail in this report.

Internal Governance Structure This comprises a committees which formulate, execute and monitor Company related strategies, initiatives, processes and procedures which support are weaved into the fabric of these committees, enabling them to perform their roles effectively.

Assurance Mechanisms This comprises ‘bodies and mechanisms’ which are employed in enabling regular review of progress against objectives with a view to highlight deviations, provide quick redress and assurance that actual outcomes are in-line with expectations.

Regulatory Benchmarks This comprises regulations which govern, in the main, all our corporate activities from the Companies Act to Listing Rules of the CSE, Rules of the SEC and the benchmarks we have set for ourselves in working towards local and global best practices.

What follows is a more detailed account of including where relevant and applicable components of the Company’s Corporate Governance System.

Internal Governance StructureThe Internal Governance Structure encompasses;

�� The Board of Directors� Board Sub-committees� Senior Management Committees

Strengthened and complemented by internal policies, processes and procedures, the key components being:

�� Strategy formulation and decision making

�� Human resource governance �� Integrated risk management�� IT governance and�� Stakeholder management and

effective communication

The components of the internal governance structure are designed in such a way that the executive authority is well devolved and delegated through a committee structure ensuring that the Chairman, Presidents, Sector/Functional Head and Profit Centre/Function Managers are accountable for the total Company functions and sub-functions respectively. Clear definitions of authority limits, responsibilities and accountabilities are set and agreed upon in advance to achieve greater operating efficiency, expediency, healthy debate and freedom of decision making.

Chairman and his RoleThe Chairman conducts Board Meetings and ensures that the participation and contribution of Executive and Non-Executive Directors are encouraged and their views on matters under consideration are determined. The Chairman maintains contact with all Directors and has informal discussions with the Non- Executive Directors as necessary.

As Chairman, he is responsible for:�� Ensuring that the principles and

processes of the Board are maintained, including the provision of accurate, timely and clear information

�� Encouraging debate and constructive criticism

�� Setting agendas for meetings of the Board, in conjunction with the Senior Managers and Group Company Secretary, that focus on the strategic direction and performance of our business


52 53

Corporate Governance contd.

�� Leading the Board and individual Director Performance assessments�� Speaking and acting for the Board and representing the Board to shareholders�� Presenting shareholders’ views to the Board�� Facilitating the relationship between the Board and the Management

The Board considers that none of the Chairman’s other commitments interfere with the discharge of his responsibilities to the Company. The Board is satisfied that he makes sufficient time available to serve the Company effectively.

Board of DirectorsThe Board of Directors is the ultimate governing body of the Company. It is responsible for the ultimate supervision of the Company. In all actions taken by the Board, the Directors are expected to exercise their business judgment in what they reasonably believe to be the best interests of the Company. In discharging that obligation, Directors may rely on the honesty and integrity of the Company’s senior executives and its outside advisors and auditors.

Composition of the Board and Directors’ Independence

As at 31st March 2014, the Board consisted of 8 Directors comprising:�� 2 Executive Directors (ED) �� 3 Non-Executive Non-Independent Directors (NED/NID) �� 3 Non-Executive Independent Directors (NED/ID)

Independence of the Directors have been determined in accordance with the Continuing Listing Rules of the Colombo Stock Exchange and all three Independent, Non-Executive Board members have submitted signed confirmations of their independence.

The Board members have a wide range of expertise as well as significant experience in diverse fields enabling them to discharge their governance duties in an effective manner.

Name of Director/Capacity Share Holding (1) Material Business Relationship (2)

Employee of Company (3)

Family Member a Director or CEO (4)

Continuous service for nine years (5)

Non-Executive ,Non-Independent Directors (NED/NID)Mr. S.C. Ratnayake Yes No No No Yes

Mr. A.D. Gunewardene No No No No Yes

Mr. J.R.F. Peiris No No No No Yes

Executive ,Non-Independent Directors (ED/NID)Mr. R.J. Karunarajah Yes No No No Yes

Mr. S. Rajendra No No No No No

Non-Executive, Independent Directors (NED/ID) Mr. C.J.L. Pinto Yes No No No No

Mr. S.K.G. Senanayake No No No No No

Mrs. S.A. Jayasekara No No No No No

Definitions 1. Have shares in the Company.

2. Income/Non cash benefits derived from the Company equivalent to 20 per cent of the Directors annual income.

3. Director was employed by the company two years immediately preceding appointment.

4. Close family member who is a Director or CEO.

5. Has served on the Board continuously for a period exceeding nine years.


53

The Board is of the view that its present composition ensures a right balance between executive expediency and independent judgment.

Directors that made up the Company Board participate in defining goals, vision, strategies and business targets. All Directors are able to and willingly add value and independent opinion on the decision making process, which is of immense benefit to the effective functioning of the Board. The details of the current Board of Directors along with a brief resume of each Director is found from pages 38 to 39 of the Report.

Transactions or events that have a material bearing on the Company are disclosed by way of circulars to shareholders, announcements to the Colombo Stock Exchange and media/press releases. The Board is ready to answer questions raised by shareholders at general meetings and maintains an appropriate dialogue with them.

The presence of Independent Directors ensures the equal benefits of all shareholders with independent views and opinions. Directors will update the Board with any new information in relation to interests or relationships relevant to independence.

The Board has developed a policy that it uses to determine the independence of its Directors. This determination is carried out annually or at any other time where the circumstances of a Director change such as to warrant reconsideration.

The Board is aware of the other commitments of its Directors and is satisfied that these do not conflict with their duties as Directors of the Company.

All Non Executive Directors are required to notify the Chairman of changes in their outside Board appointments and the Chairman carries out a review of all such appointments in consultation with the other Directors where necessary to ascertain any possible conflicts of interest.

Board Responsibilities and Decision RightsAt Asian Hotels and Properties PLC, the businesses are conducted by its employees, managers and officers, under the direction of the Executive Directors and the oversight of the Board, to enhance the long-term value of the Company for its shareholders.

The Board aims to fulfill its responsibilities by creating value for all stakeholders that is sustainable and beneficial. Stakeholders include shareholders, employees, customers, the community and the environment. Without limiting the Board’s function, its specific responsibilities include:

�� Approving objectives, strategies and financial plans and monitoring the Company’s performance against these plans

�� Monitoring compliance with the regulatory requirements and ensuring all Company employees act with integrity and diligence in the interests of the Company and stakeholders

�� Reviewing and approving all significant policies and procedures

�� Exercise objective judgment on all corporate matters independent from the Executive Management

�� Formulating short and long term strategies as a basis for the operational plans of the Company

�� Determining and recommending interim and final dividends for the approval of shareholders

�� Identifying the principal risks of the business and periodically reviewing the risk management systems in place

�� Preparation and presentation of financial statements, together with a statement by the Auditors pertaining to their reporting responsibilities

Delegation of AuthorityThe Board has delegated some of its functions to the Audit Committee while retaining the final right to accept the recommendations made by the Committee. The Audit Committee is chaired by an Independent Director appointed by the Board.

Conflicts of Interest and IndependenceEach Director holds continuous responsibility to determine whether he or she has a potential or actual conflict of interest arising from external associations, interests or personal relationships in material matters which are considered by the Board from time to time.

In order to mitigate any potential or actual conflict of interest or independence of Directors throughout the term of their membership on the Board, the Company has adopted the following processes:


54 55


Details of companies in which Board members hold Board or Board Committee membership is available with the company for inspection by shareholders on request.

Board Meetings, Agenda and AttendanceFor the financial year 2013/2014 there was a total of four (4) Board meetings. During the meetings, the Chairman of the Board appropriately allocated time for Directors to carefully review and discuss all relative information. There were also written minutes that were made available for verification and approved by the Board. All Directors have access to Keells Consultants [Private] Limited who act as Company Secretaries for advice on relevant matters.

The Board met on key matters of importance to the Company, including; �� Confirmation of previous minutes �� Matters arising from the previous minutes �� Board subcommittee reports and other matters exclusive to the Board �� Circular resolutions �� Status updates of major projects �� Review of performance – in summary and in detail, including high level commentary on actuals and outlook�� Summation of strategic issues discussed at pre-Board meetings �� Approval of Quarterly and Annual Financial Statements �� Ratification of capital expenditure and donations �� Ratification of the use of the company seal and share certificates issued �� New resolutions �� Report on corporate social responsibility �� Review of Group risks, sustainability, HR practices/updates�� Any other business

Nominees are requested to disclose their various interests that could potentially conflict with the interest of the Company.

Directors who are appointed are expected to inform the Board and obtain Board clearance prior to accepting any position or engaging in any transaction that could create a potential conflict of interest.

All NEDs are required to notify the Chairman of changes in their current board representations.

Prior to Appointment

Once Appointed

Directors who have disclosed an interest in a matter under discussion have, �� Excused themselves from deliberations on the subject matter.�� Refrained from voting on the subject matter (Such abstentions from Board decisions are duly

recorded).

During Board Meetings


55

The Board of Asian Hotels and Properties PLC met once every quarter and the Directors’ attendance is shown in the table given below:

Attendance at Board Meetings

Name of Director 30-04-2013 30-07-2013 29-10-2013 24-01-2014 Meetings Attended

Mr. S.C. Ratnayake √ √ √ - 3/4

Mr. A.D. Gunewardene √ √ √ √ 4/4

Mr. J.R.F. Peiris √ - √ √ 3/4

Mr. R.J. Karunarajah √ √ √ √ 4/4

Mr. S. Rajendra √ √ √ √ 4/4

Mr. C.J.L. Pinto √ √ - √ 3/4

Mr. S.K.G. Senanayake √ √ √ - 3/4

Mrs. S.A. Jayasekara √ - - √ 2/4

Financial GuidanceThe Board of Directors consists of four senior qualified Accountants with significant experience in the corporate sector, who posses the necessary knowledge to offer the Board guidance on matters of finance. These Directors add substantial value and independent judgment on the decision making of the Board on matters concerning finance and investments.

Timely Supply of InformationAll Directors are fully briefed on important developments in the various business activities of the Company. The Directors have access to; �� External and Internal Auditors �� Experts and other external professional advisory services�� Senior managers under a structured arrangement�� Information as is necessary to carry out their duties and responsibilities effectively

and efficiently�� Periodic performance reports�� Information updates from management on topical matters, new regulations and best

practices as relevant to the Company's businesses�� The services of the Company Secretary

Tenure, Retirement and Re-Election of DirectorsAs prescribed by the Company’s Articles, one third of the Directors of the Company except the Chairman and Managing Director retire by rotation. A Director retiring by rotation is eligible for re-election.

The tenure of office for Non independent Directors is limited by their prescribed Company retirement age.

Independent Directors, on the other hand, can be appointed to office for three consecutive terms of three years, which however, is subjected to the age limit set by

statute at the time of re-appointment following the end of a term.

The proposal for the re-appointment of Directors is set out in the Directors Report as well as the Notice of Meeting on page 191 of this Report.

Nominations Committee and Board Appointments The Nomination Committee of the Parent Company, John Keells Holdings PLC functions as the nomination committee of the Company and its Subsidiary. The Nomination Committee holds responsibility to identify and propose suitable candidates for appointment as Non-Executive Directors to the Board of the Company, in keeping with the target Board composition and skill requirements. The Board of the Company after due consideration of such recommendations, determines and appoints the new Director.

All newly appointed Directors shall hold office until the next Annual General Meeting and shall be eligible for re-election by the Shareholders of the Company, as provided by Article 91 of the Articles of Association of the Company. The Nominations Committee of John Keells Holdings PLC comprises four Independent Directors and one Non Independent Director namely as at 31st March 2014:

Mr. T. Das - Chairman Mrs. S. Tiruchelvam* Mr. S.C. Ratnayake - (Non Independent)Mr. M.A. Omar** Mr. E.F.G. Amerasinghe**Mr. D.A. Cabraal**

* Resigned with effect from 9th September 2013.

** Appointed with effect from 7th November 2013.


56 57


Human Resources and Compensation Committee As permitted by the Listing Rules of the Colombo Stock Exchange, the Human Resources and Compensation Committee of John Keells Holdings PLC the Parent Company of Asian Hotels and Properties PLC function as the Human Resources and Compensation Committee of the Company and its Subsidiary. The Human Resources and Compensation Committee of the John Keells Holdings PLC comprise of Five Non Executive Independent Directors.

Mr. E.F.G. Amerasinghe - Chairman Mrs. S. Tiruchelvam* Dr. I. CoomaraswamyMr. A.R. Gunasekara Mr. M.A. Omar** Mr. N.A. Fonseka***

* Resigned with effect from 9th September 2013

** Appointed with effect from 28th May 2013.

*** Appointed with effect from 7th November 2013.

The remuneration policy adopted by the Company as recommended by the Human Resources and Compensation Committee of its Parent Company, John Keells Holdings PLC is formulated to attract and retain high caliber executives and motivate them to develop and implement the business strategy in order to optimise long term shareholder value creation. The customised “pay for performance scheme” continues to apply for all group employees based on the pillars of individual performance and organisational performance. The remuneration package for all employees at Assistant Manager level and above is based on organisational performance and individual performance. However, in

respect of the Executive level and below, the employees scheme operates purely on the basis of individual performance.

Related Party Transactions Review CommitteeAs intimated by the Securities and Exchange Commission of Sri Lanka under its Code of Best Practice for Listed Companies, the Related Party Transactions Review Committee was voluntarily operationalised by the Group at the John Keells Holdings PLC from 1st April 2014. This Parent Level Committee will act on behalf of the whole Group including the Company.

In very broad terms, the scope of this sub-committee is:

(i) Developing, and recommending for adoption by the Board of Directors of JKH PLC and its listed subsidiaries, a Related Party Transaction Policy consistent with that proposed by the SEC and is in synchronisation with the Operating Model and the delegated Decision Rights of the Group.

(ii) Updating the Board of Directors on the related party transaction of each of the listed companies of the Group on a quarterly basis.

This committee of John Keells Holdings PLC comprises three Non-Executive Independent Directors and two Non-Executive Non Independent Directors. The Head of Group Business Process Review will operate as the secretary to this committee.

Mr. N. Fonseka - Chairman Mr. E.F.G. Amerasinghe Mr. D.A. Cabraal Mr. S.C. Ratnayake Mr. J.R.F. Peiris

Board Remuneration

Remuneration for Non-Executive, Non-Independent DirectorsCompensation for Non Executive Directors, Non-Independent Directors [NED/NIDs] is determined by reference to fees paid to other NED/NIDs of comparable companies. Director fees applicable to Non Executive Directors nominated by John Keells Holdings PLC are paid directly to the Company and not to individuals.

Remuneration for Non-Executive, Independent DirectorsCompensation for Non-executive, Independent Directors (NED/IDs) is determined by reference to fees paid to other NED/IDs of comparable companies. NED/IDs receive a fee for devoting time and expertise for the benefit of the Company. Nevertheless, NED/IDs fees are not time bound or defined by a maximum/minimum number of hours committed to the Group per annum and hence is not subject to additional/lower fees for additional/lower time devoted. NED/IDs do not receive any performance/incentive payments.

The Company does not have an employee share option scheme.

Total aggregate of Non- Executive Director Remuneration for the year was Rs. 1,440,000.

Remuneration for Executive and Non-Independent DirectorsThe remuneration of the Executive Directors is determined as per the remuneration principles of the Group. The Human Resources and Compensation Committee conducted a market survey of Executive Director remuneration with a view to assessing the appropriateness of


57

compensation with market benchmarks. Having taken into account the complexities associated with the Group, it was established that the compensation is in-line with the market.

The Executive Directors, like other eligible employees, have received employee shares option based on role responsibility and actual performance. Accordingly the number of options so awarded was recommended to the Board by Human Resources and Compensation Committee.

Total aggregate Executive Director Remuneration for the year was Rs. 55,327,000.

Accountability and Assurance

System of Internal ControlsThe Board has overall responsibility for the system of internal control. A sound system of internal control is designed to manage rather than eliminate the risk of failure to achieve business objectives. The Company continues to stress on the importance of strong internal control throughout the organisation. Written responsibilities, authority delegation and management controls have been adopted to create transparency for utilisation of the Company’s resources and to distinguish the duties of staff and controllers in order to ensure that proper verification and monitoring processes are in place.

The Company further maintains a system of internal controls, which is designed to safeguard its assets from identified risks, while ensuring that all transactions are duly authorised, recorded and reported. Key systems and rules relating to delegation of authority are formalised and documented.

As a member of the John Keells Group, the Company is now part of a comprehensive planning and monitoring process. The Annual Plans and Budgets are developed by the Company along with a reforecast after six months. Strategic priorities and key drivers are pre-identified and tracked on a monthly basis.

During the financial year under review following tasks were performed by the Group Business Process Review Division and outsourced Internal Auditors to ensuring the existence of effective internal controls;

�� Group-wide initiative to strengthen the existing Business Continuity Plans (BCP) and Disaster Recovery Plans (DRP). All Heads of Department were encouraged to re-visit their BCPs in confirming that such plans were up-to-date and relevant to the current working environment.

�� New methods of data analytics were carried out using sophisticated tools where the entire data population was analysed (as opposed to analysing a sample) in identifying exceptions and irregularities.

�� Implemented across the Group, process improvements stemming from the findings of internal audits.

�� The existing SAP SOX processes

were reviewed and updated to ensure compliance with Sarbanes Oxley Act of 2002 – Sec 404.

�� Strengthened the management reporting on internal controls to facilitate better decision making.

�� Carried out frequent surprise cash counts across the Group.

Risk Review The Board is responsible for the formulation of the appropriate systems of internal controls for the Group and ensuring its effectiveness. The Board is fully conscious that any internal control system contains inherent limitations and no system of internal control could provide absolute assurance against the occurrence of material errors, poor judgment in decision making, human errors, losses, fraud or other irregularities. The Board has therefore taken appropriate action to minimise such situations.

There is a continuous process for identifying, evaluating and managing the significant risks faced by the Company which has been in place during the financial year and up to the date of approval of the Annual Report and Accounts. The Board regularly reviews this process.

Certain aspects of its business operation may expose the Company to both internal and external risks. The Company recognises the importance of controlling these risks and minimising the possibility of any negative impact to the Company. The Company is using the Business Risk Management [BRM] process which is established by JKH to identify both financial and operational risks. It endeavours to ensure the control systems designed to safeguard the Company’s assets and maintain proper accounting records that facilitate the production and availability of reliable information are in place and are functioning as planned.


58 59


Investment Appraisal Process and Investment DecisionsOver the years, the Company has refined the process of investment appraisal which ensures the involvement of the relevant persons when capital investment decisions are made. In this manner, several views, opinions and advices are obtained prior to the investment decision being made. Experience has proven that a holistic and well debated view of the commercial viability and potential of proposed projects including operational, financial, funding, risk and tax implications has most of the time culminated a good result. All investment decisions are routed through a committee structure which safeguards against one individual having unfettered decision making powers in such decisions.

Operations, Planning, Monitoring and Decision RightsThe responsibility for monitoring plans has been entrusted to the Managing Agents. The achievement of annual plans as well as ensuring compliance with Group policies and guidelines rests with the President, General Manager and functional department heads of the respective business units to whom appropriate decision rights have been granted in order to execute operational and financial decisions within their purview.

Monitoring of Financial and Operational Data�� Financial results and key operational

performance indicators are evaluated against the Annual Plan and subsequent reforecast on a monthly basis at all levels of management.

�� The Board reviews the financial results on a quarterly basis.

�� The IT systems in place facilitate the online display of information relevant to the needs of hotel managers and

functional heads pertinent to their areas of responsibility.

Information Technology GovernanceThe Company Information Technology (IT) Governance Policy has evolved in line with the Group's IT Governance Policy in the last year to deliver and embrace new technologies which have aligned with the overall business objective of the Group. This evolution occurred as the Company discerned the competitive advantage gained and the enhancement of business value which came about through the skillful alignment of IT with its business objectives and the prudent management of it’s IT resources. The Company has always been a step ahead in embracing emerging technologies and systems, consistently investing in developing its IT infrastructure. Continuous focus on cutting-edge technology has ensured greater reliability of IT systems and has shortened information delivery times to both internal and external stakeholders.

The IT governance system, in particular, was closely reviewed during the year towards ensuring the following:

�� Leverage IT as a strategic asset�� Ensure agility, in view of the fast

changing technology�� Establish the right balance between

business needs and IT enablement�� Ensure that all IT investments have a

quantifiable (or visible) business return�� Ensure a strong IT governance and

regulatory framework through a coherent set of policies, processes and adoption of best practices in line with world class organisations, but always keeping in mind business returns.

�� Ensure that e-enabled platforms are regularly reviewed for 'internal control effectiveness' through SOX methodology of process flow analysis.

Human Resource Governance (Performance Management)The Performance Management System (PMS) continued to evolve positively in catering to, and fashioning, employee empowerment in meeting current and emerging needs.

Following linkages of PMS were further strengthened:

�� Learning and development�� Career development�� Succession planning�� Talent management�� Reward and recognition�� Compensation and benefits

Audit Committee

Role of the CommitteeThe role of the Audit Committee is to assist the Board in fulfilling its oversight responsibilities for the integrity of the Financial Statements of the Company, the internal control and risk management systems of the Company and its compliance with legal and regulatory requirements, the External Auditors’ performance, qualifications and independence, and the adequacy and performance of the Internal Audit function, which at the parent company (John Keells Holdings PLC) is termed Group Business Process Review Division (Group BPR). This is detailed in the terms of reference of the Committee which has been approved by the Board and is reviewed annually.

The effectiveness of the Committee is evaluated annually by each member of the Committee and the results are communicated to the Board.


59

Composition of the Committee and MeetingsThe Audit Committee comprises of three Independent Non-Executive Directors. As prescribed in the Listing Rules of Colombo Stock Exchange. The Chairman of the Audit Committee is a Fellow member of the Institute of Chartered Accountants of Sri Lanka with several years of experience in financial auditing and accounting.

Four (4) meetings were held during the year. The Executive Directors and Senior Management of Cinnamon Grand Colombo and Crescat Property Division attend the Audit Committee meetings by invitation. Further the representatives of the Internal Auditors (Messrs. Pricewaterhouse Coopers (Private) Limited), John Keells Group Business Process Review Division and the External Auditors KPMG, Chartered Accountants attend by invitation. The Audit Committee performs an important monitoring function in the overall governance of the Company.

The Committee reviews the following; �� Procedures for identifying business

risks and controlling their financial impact on the Group and the operational effectiveness of the policies and procedures related to risk and control

�� The appointment, remuneration, qualifications, independence and performance of the External Auditor and the integrity of the audit process as a whole

�� Budgeting and forecasting systems, financial reporting systems and controls

�� Procedures for ensuring compliance with relevant regulatory and legal requirements

�� Arrangements for protecting intellectual property and other non-physical assets

�� Overseeing the adequacy of the internal controls and allocation of responsibilities for monitoring internal financial controls

�� Policies, information systems and procedures for preparation and dissemination of information to shareholders, stock exchanges and the financial community.

Audit Committee attendance during the subject period was;

Attendance at Board Audit Committee Meetings

Name of Director 17-05-2013 26-07-2013 24-10-2013 23-01-2014 Meetings Attended

Mr. C.J.L. Pinto √ √ √ √ 4/4

Mr. S.K.G. Senanayake √ √ √ √ 4/4

Mrs. S.A. Jayasekara √ - √ √ 3/4

Management Committee The Hotel and Property divisions of Asian Hotels and Properties PLC have two separate Management Committees consisting of General Manager of the Hotel, President of the Property Division and other key managers of divisions in order to discuss matters pertaining to strategy and operations.

Strategic risks and opportunities arising from changes in our business environment are regularly reviewed by the Group Management Committee (GMC) of the Hotel and Property divisions at the meetings held monthly. The role of the GMC is to provide the necessary guidance and direction to the Company on matters that are strategic and long-term in nature or have the potential to significantly impact the division’s performance and reputation and to make decisions on key business-wide policies, including operational policies, internal controls, the Human Resources Strategy and the Risk Management Policy.

Internal AuditorsQuarterly Audits are conducted by the Company’s Internal Auditors, Messrs PricewaterhouseCoopers (Private) Limited, a firm of Chartered Accountants. The role of the internal audit team is to determine whether risk management, control and governance processes are adequate and functioning. The Internal Audit function is independent of the External Auditor.

The reports arising out of such audits are, in the first instance, considered and discussed at the business/functional unit levels and after review by the respective President/CEO of the Company and the Subsidiary are forwarded to the Audit Committee on a regular basis. Further, the Audit Committee also assesses the effectiveness of the risk review process and systems of internal control on a regular basis. Follow-ups on internal audits are done on a structured basis.

Relevant risks and vulnerabilities of the Company are identified and promptly brought to the attention of the Management, facilitating corrective and preventive measures to be taken in a timely manner.


60 61


Additionally, a technically strong Management Audit function aligned with the Company’s strategies adds value in a variety of ways, including –�� Providing an independent opinion on

the integrity, reliability and relevance of management information

�� Assessing the adequacy of controls over the protection of assets and management of liabilities

�� Reviewing compliance with corporate policies and external regulations

�� Reducing the risk of fraud

Going Concern and Financial ReportingThe Directors are satisfied that the Company has sufficient resources to continue in operation for the foreseeable future. In the unlikely event that the net assets of the Company fall below a half of shareholders funds, shareholders would be notified and an extraordinary resolution passed on the proposed way forward.

The going concern principle has been adopted in preparing the Financial Statements. All statutory and material declarations are highlighted in the Annual Report of the Board of Directors. Financial Statements are prepared in accordance with the Sri Lanka Accounting Standards (SLAS), including all the new standards introduced during the financial year and comply with the requirements of the Companies Act No. 07 of 2007.

Information in the Financial Statements of the Annual Report are supplemented by a detailed ‘Management Discussion and Analysis’ from pages 30 to 37 which explains to shareholders the strategic, operational, investment and risk related aspects of the Company that have translated into the reported financial performance and are likely to influence future results.

The Statement of Directors' Responsibilities in relation to financial reporting is given on page 142 of the Annual Report. The Directors' interests in contracts of the Company are addressed on page 42 of the Annual Report.

The Directors have taken all reasonable steps in ensuring the accuracy and timeliness of published information and in presenting an honest and balanced assessment of results in the quarterly and annual Financial Statements. Price sensitive information has been disclosed to the Colombo Stock Exchange, shareholders and the press in a timely manner and in keeping with the regulations.

Sri Lanka Financial Reporting Standards (SLFRS)Living by the Company’s philosophy of good governance and reporting the Financial Statements for year 2013/14 have been prepared and presented in accordance with Sri Lanka Accounting Standards (SLFRS/LKAS) which have materially converged with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

Compliance with Legal Requirements Compliance with legal requirements and Group-internal rules are significant elements of Corporate Governance for the management of Asian Hotels and Properties PLC. The Board of Directors, to the best of their knowledge and belief are satisfied that the Company has not engaged in any activity which contravenes laws and regulations and all financial obligations due to the Government and to the employees have been either duly paid or adequately provided for in the Financial Statements.

Securities Trading PolicyJKH’s securities trading policy prohibits all employees and agents engaged by Asian Hotels and Properties PLC who are aware of unpublished price sensitive information from trading in Asian Hotels and Properties PLC shares or the shares of other companies in which the Company presently has business interests.

External AuditKPMG serves as the external auditors of the Company.

The audit fees paid by the Company and Group to KPMG are separately classified on page 159 in the Notes to the Financial Statements of the Annual Report.

The Auditors' report on the Financial Statements of the Company for the year under review is found on page 143 of the Annual Report.

The Company has attempted always to separate the internal auditors from the external auditors in order to maintain external auditor independence.

The appointment/re-appointment of these auditors were recommended by the Audit Committees to the Boards of Directors.

Employee Participation in AssuranceThe following meetings, interviews, evaluations and surveys were conducted during the year:

�� Skip Level meetings�� Exit interviews�� Young Forum meetings�� 360 degree evaluation�� Great Place to Work survey�� Voice of Employee survey


61

Whistle Blower PolicyThrough a communication link named ‘Chairman Direct’, concerns about unethical behaviour and any violation of Group values could be reported by any employee to the Chairman of JKH. Employees reporting such incidents are guaranteed complete confidentiality and such complaints are investigated and addressed via a select committee under the direction of the Chairman.

OmbudspersonIn order to deal with a situation in which an employee or group of employees feel that an alleged violation has not been addressed satisfactorily using the available/existing procedures and processes, an Ombudsperson has been appointed by JKH being the ultimate Parent Company to entertain such concerns.

The Ombudsperson’s duty ceases upon the confidential written communication of the findings of the Ombudsperson and recommendations to the Chairman or the Senior Independent Director as the case may be.

The Chairman or the Senior Independent Director, as applicable, will place before the Board, �� The decision and the

recommendations of the Ombudsperson

�� The action taken based on the recommendations

�� The areas of disagreement and the reasons adduced in instances where the Chairman or the Senior Independent Director disagrees with any or all of the findings and/or recommendations. In such cases, the Board shall consider the areas of disagreement and determine the way forward.

The Chairman or the Senior Independent Director is expected to take such steps as are necessary to ensure that the complainant is not victimised for having invoked this process.

These open door policies facilitate constant dialogue, communication, transparency and ultimately employee confidence, which would help retain existing talent whilst attracting new.

The Code of ConductThe written Code of Conduct to which all employees at all levels and the Board of Directors are bound by, engraves the desired behaviour of JKH staff at executive level and above. This is being constantly and rigorously monitored. The objectives of the Code of Conduct were further affirmed by a strong set of corporate values which were well institutionalised at all levels within the Group and thus the Company through structured communication. The degree of employee conformance with corporate values and their degree of adherence to the JKH Code of Conduct were the key elements of reward and recognition schemes.

�� Allegiance to the Company and the Group

�� Compliance with rules and regulations applying in the territories that the group operates in

�� Conduct of business in an ethical manner at all times and in keeping with acceptable business practices

Code of Conduct

�� Exercise of professionalism and integrity in all business and ‘public’ personal transactions

The Chairman of the Board affirms that there have not been any material violations of any of the provisions of the Code of Conduct. In the instances where violations did take place, or were alleged to have taken place, they were investigated and handled through the Company’s established procedures.

Shareholder RelationsThe Company shareholders exercise their rights at the Annual General Meeting. Each resolution brought before the shareholders at the Annual General Meeting is voted on separately by the shareholders.

The notice of the Annual General Meeting and the relevant documents required are published and sent to the shareholders within the statutory periods. The Company circulates the agenda for the meeting and shareholders vote on each issue separately.


62 63


All shareholders are invited and encouraged to be present, actively participate and vote at the Annual General Meeting. The Annual General Meeting provides an opportunity for Shareholders to seek and obtain clarifications and information on the performance of the Company and to informally meet the Directors after the Annual General Meeting. The External Auditors and the Company’s lawyers are invited too and are present at the Annual General Meeting to render any professional assistance that may be requested. Shareholders who are not in a position to attend the Annual General Meeting in person are entitled to have their voting rights exercised by a proxy of their own choice.

Four times each year, the Company reports to its shareholders regarding its business development, financial position and earnings. An ordinary Annual Shareholders’ Meeting normally takes place within the first four months of each financial year. The AGM is the main forum where the Company communicates with its shareholders the objectives, strategies and the way forward for the Company, for the new financial year.

Roles of StakeholdersThe Company realises the importance of ensuring that all stakeholders’ rights are properly observed. Pertinent procedures are carried out in line with the rules and regulations of the Stock Exchange of Sri Lanka, as well as the related laws.

Shareholders: The Company is committed to create long-term growth and returns to the shareholders and to conduct its business in a transparent manner.

Customers: The Company is committed to continuously develop better quality of

goods and services for the benefit and satisfaction of its customers.

Partners: The Company treats all partners fairly in order to achieve mutual benefits.

Creditors: The Company observes all of its obligations to creditors.

Competitors: The Company abides by the framework of fair competition and will not destroy the reputation of competitors through false accusations.

Employees: The Company considers its employees, valuable assets and treats them fairly in regard to work opportunities, remuneration and quality of working environment. The Company also provides all its employees professional and career development training.

Society and environment: The Company is committed to conduct businesses that benefits the economy, society and quality of environment. The Parent Company of Asian Hotels and Properties PLC has established the Corporate Social Responsibility (CSR) Department to promote to the Company’s staff the importance of the CSR objectives to achieve balanced benefits relating to society, the environment and all stakeholders in harmony with the Company’s sustainable growth objectives.

Major TransactionsThe Directors ensure that any corporate transaction that would materially affect the net asset base of the Company are communicated to shareholders. There were no major transactions as defined under Section 185 by the Companies Act No. 07 of 2007 during the year under review.

Going ForwardThe Board is committed to the highest standards of corporate governance in order that the Company shall achieve its long term sustainable growth objectives. The Board is accountable to the Company’s shareholders for good governance in its management of the affairs of the Company. The Board confirms that the Company was fully compliant throughout the year ended 31st March 2014 with all the principles and provisions of the good Corporate Governance and the Code of Business Conduct and Ethics.

The Company’s approach to Corporate Governance enables it to understand the expectations of stakeholders, forecast trends in social, environmental and ethical requirements and to manage the Company’s performance in an appropriate manner.

While the Board is satisfied with its level of compliance with the governance requirements, it recognises that practices and procedures can always be improved, and there is merit in continuously reviewing its own standards. The Board’s programme of review will continue throughout the year ahead.


63

Statement of Compliance Under Section 7.10 of the Rules of the Colombo Stock Exchange (CSE) on Corporate Governance(Implemented on 1st April 2009 and includes amendments to date)

Compliant Non Compliant CSE Rule No.

Subject Compliance Requirement Compliance Status

Applicable Section in the Annual Report

7.10(a-c)

Compliance �� The Group is in compliance with the Corporate Governance Rules and any deviations are explained where applicable


7.10.1(a-c)

Non-Executive Directors �� Two or at least one third of the total number of Directors should be Non-Executive Directors, whichever is higher


7.10.2(a) Independent Directors �� Two or one third of Non-Executive Directors, whichever is higher, should be independent


7.10.2(b) Independent Directors �� Each Non-Executive Director should submit a declaration of independence/non-independence in the prescribed format

Available with the Secretaries for review

7.10.3(a) Disclosure relating to Directors

�� The Board shall annually determine the independence or otherwise of the Non-Executive Directors

�� Names of the Independent Directors should be disclosed in the Annual Report


7.10.3(b) Disclosure relating to Directors

�� The basis for the Board's determination of Independent Director, if criteria specified for Independence is not met


7.10.3(c) Disclosure relating to Directors

�� A brief resumé of each Director should be included in the Annual Report and should include the Directors areas of expertise

Board of Directors (profile) section in the Annual Report

7.10.3(d) Disclosure relating to Directors

�� Provide a brief resumé of new Directors appointed to the Board with details specified in 7.10.3(a), (b) and (c) to the Colombo Stock Exchange


7.10.4 (a-h)

Criteria for defining Independence

�� Requirements for meeting criteria to be Independent



64 65


CSE Rule No.



7.10.5 Human Resources and Compensation Committee

�� A listed Company shall have a Remuneration Committee. The Remuneration Committee of the listed Parent Company may function as the Remuneration Committee


7.10.5(a) Composition of Human Resources and Compensation Committee

�� Shall comprise of Non–Executive Directors, a majority of whom will be Independent


7.10.5.(b) Functions of Human Resources and Compensation Committee

�� The Human Resources and Compensation Committee shall recommend the remuneration of the Chief Executive Officer and Executive Directors


7.10.5.(c) Disclosure in the Annual Report relating to Human Resources and Compensation Committee

�� Names of Directors comprising the Human Resources and Compensation Committee

�� Statement of Remuneration Policy Aggregated remuneration paid to Executive and Non–Executive Directors

Corporate Governance and the Board of Directors Reports

7.10.6 Audit Committee �� The Company shall have an Audit Committee


7.10.6(a) Composition of Audit Committee

�� Shall comprise of Non–Executive Directors a majority of whom will be Independent

�� A Non–Executive Director shall be appointed as the Chairman of the Committee

�� General Manager, President and Financial Controller should attend Audit Committee Meetings

�� The Chairman of the Audit Committee or one member should be a member of a professional accounting body



65

CSE Rule No.



7.10.6(b) Audit Committee Functions Overseeing of the �� Preparation, presentation and

adequacy of disclosures in the Financial Statements in accordance with Sri Lanka Accounting Standards(SLFRS/LKAS)

�� Compliance with financial reporting requirements, information requirements of the Companies Act and other relevant financial reporting related regulations and requirements

�� Processes to ensure that the internal controls and risk management are adequate to meet the requirements of the Sri Lanka Auditing Standards

�� Assessment of the independence and performance of the external auditors

�� Make recommendations to the Board pertaining to appointment, re-appointment and removal of external auditors, and approve the remuneration and terms of engagement of the external auditor


7.10.6(c) Disclosure in Annual Report relating to Audit Committee

�� Names of Directors comprising the Audit Committee

�� The Audit Committee shall make a determination of the independence of the Auditors and disclose the basis for such determination

�� The Annual Report shall contain a Report of the Audit Committee setting out of the manner of compliance with their functions

Corporate Governance and the Audit Committee Report


66 67


Code of Best Practice of Corporate Governance Jointly Issued by the Securities and Exchange Commission of Sri Lanka (SEC) and Institute of Chartered Accountants of Sri Lanka (ICASL)(Issued on 1st July 2008 and includes amendments to date)

Compliant Non Compliant Code Ref. Subject Applicable Requirement Status Compliance Applicable Section in

the Annual Report

A. Directors

A.1 The Board

A.1 The Board �� Company to be headed by an effective Board to direct and control the Company


A.1.1 Frequency of Board Meetings

�� Board should meet regularly, at least once every quarter

Corporate Governance/Annual Report of the Board of Directors

A.1.2 Responsibilities of the Board �� Formulation and implementation of strategy

�� Skill adequacy of management and succession

�� Integrity of information, internal controls and risk management

�� Compliance with laws, regulations and ethical standards

�� Code of conduct�� Adoption of appropriate accounting

policies


A.1.3 Access to professional advice

�� Procedure to obtain Independent professional advice when deemed necessary


A.1.4 Company Secretary �� Ensure adherence to Board procedures and applicable rules and regulations

�� Procedure for Directors to access services of Company Secretary


A.1.5 Independent Judgment �� Directors should exercise independent judgment on issues of strategy, resources, performance and standards of business judgment


A.1.6 Dedication of adequate time and effort by Directors

�� Directors should devote adequate time and effort to discharge their responsibilities to the Company satisfactorily


A.1.7 Board and training �� Directors should receive appropriate induction, training, hone skills and expand knowledge to more effectively perform duties



67

Code Ref. Subject Applicable Requirement Status Compliance Applicable Section in the Annual Report

A.2 Chairman and Chief Executive Officer

A.2.1 Justification for combining the roles of the Chairman and the CEO

�� A balance of power and authority to be maintained by separating responsibility for conducting Board business from that of executive decision making


A.3 Chairman’s Role

A.3.1 Ensure good corporate governance

�� Chairman to preserve order and facilitate effective discharge of Board functions by proper conduct of Board meetings


A.4 Financial Acumen

A.4.1 Possession of adequate financial acumen

�� Board to ensure adequacy of financial acumen and knowledge within the Board


A.5 Board Balance

A.5.1 Composition of Board �� The Board should include a sufficient number of Non-Executive Independent Directors


A.5.2 Proportion of Independent Directors

�� Two or one third of the Non-Executive Directors should be independent


A.5.3 Test of Independence �� Independent Directors should be independent of management and free of any business or other relationship that could materially interfere with the exercise of unfettered and independent judgment


A.5.4 Declaration of Independence

�� Non-Executive Directors should submit a signed and dated declaration of their independence/non-independence

Corporate Governance /Annual Report of the Board of Directors

A.5.5 Annual determination of criteria of independence/non-independence and declaration of same by Board

�� The Board should annually determine and disclose the names of Directors deemed to be Independent


A.5.6 Appointment of an alternate Director

�� If an alternate Director is appointed by a Non-Executive Director, such alternate Director should not be an executive of the company

N/A

A.5.7 Appointment of Senior Independent Director (SID)

�� If the roles of Chairman/CEO are combined, a Non-Executive Director should be appointed as a Senior Independent Director

N/A

A.5.8 Availability of Senior Independent Director to other Directors

�� If warranted, the SID should be available to the other Directors for confidential discussions

N/A


68 69



A.5.9 Interaction between Chairman and Non-Executive, Independent Directors

�� The Chairman should meet the Non-Executive Independent Directors at least once a year


A.5.10 Directors concerns to be recorded

�� When matters are not unanimously resolved, Directors to ensure their concerns are recorded in Board minutes

N/A

A.6 Supply of Information

A.6.1 Provision of adequate information to Board

�� Management to ensure the Board is provided with timely and appropriate information


A.6.2 Adequacy of notice and formal agenda to be discussed at Board meetings

�� Board minutes, agenda and papers should be circulated at least seven days before the Board meeting


A.7 Appointment to the Board

A.7 Appointments to the Board �� Formal and transparent procedure for Board appointments


A.7.1 Nomination Committee �� Nomination committee of the ultimate Parent Company may function as such for the Company and make recommendations to the Board on new Board appointments


A.7.2 Annual assessment of Board composition

�� Nomination committee of Board should annually assess the composition of Board


A.7.3 Disclosure of new Board appointments

�� Profiles of new Board appointments to be communicated to Shareholders

Corporate Governance/ Notice of Meeting

A.8 Re-election

A.8.1 Appointment of Non-Executive Directors

�� Appointment of Non-Executive Directors should be for specified terms and re-election should not be automatic

Corporate Governance /Annual Report of the Board of Directors

A.8.2 Shareholders approval of appointment of all Directors

�� The appointment of all Directors should be subject to election by Shareholders at the first opportunity

Corporate Governance /Annual Report of the Board of Directors/ Notice of Meeting

A.9 Appraisal of Board Performance

A.9.1 Annual appraisal of Board performance

�� The Board should annually appraise how effectively it has discharged its key responsibilities



69


A.9.2 Self evaluation of Board and Board Committee

�� The Board should evaluate its performance and that of its committees annually

Corporate Governance/Audit Committee Report

A.9.3 Declaration of basis of performance evaluation

�� The Board should disclose how performance evaluations have been carried out


A.10 Disclosure of Information in respect of Directors

A.10.1 Profiles of the Board of Directors

�� Annual Report should disclose the biographical details of Directors

Board of Directors profiles section

A.11 Appraisal of Chief Executive Officer

A.11.1 Short, medium and long term, financial and non-financial objectives to be set

�� The Board should set out the short, medium and long-term financial and non-financial objectives at the commencement of each year


A.11.2 Evaluation of CEO performance

�� The performance of the CEO should be evaluated by the Board at the end of the year


B. Directors Remuneration

B.1 Remuneration Procedure

B.1.1 Appointment of Remuneration Committee

�� Remuneration Committee of Parent may function as such for the Company to make recommendations on Director's remuneration


B.1.2 Composition of Remuneration Committee

�� Remuneration Committee should consist exclusively of Non-Executive Directors


B.1.3 Disclosure of members of Remuneration Committee

�� The Annual Report should disclose the Chairman and Directors who serve on the Remuneration Committee


B.1.4 Remuneration of Non-Executive Directors

�� Board to determine the level of remuneration of Non-Executive Directors


B.1.5 Access to professional advice

�� Remuneration Committee should have access to professional advice in order to determine appropriate remuneration for Executive Directors



70 71



B.2 Level and Make up of Remuneration

B.2.1 to B.2.4

Performance related elements in pay structure and alignment to industry practices

�� Packages should be structured to attract, retain and motivate Executive Directors

�� Packages should be comparable and relative to that of other companies as well as the relative performance of the company

�� When determining annual increases remuneration committee should be sensitive to that of other Group companies

�� Performance related elements of remuneration should be aligned with interests of Company


B.2.5 Share options �� Executive share options should not be offered at a discount


B.2.9 Remuneration packages for Non-Executive Directors

�� Should reflect time, commitment and responsibilities of role and in line with existing market practice


B.3 Disclosure of Remuneration

B.3.1 Disclosure of details of remuneration

�� The Annual Report should disclose the remuneration paid to Directors

Financial Statements

C. Relations with Shareholders

C.1 Constructive Use and Conduct of Annual General Meeting

C.1.1 Proxy votes to be counted �� The company should count and indicate the level of proxies lodged for and against in respect of each resolution


C.1.2 Separate resolutions �� Separate resolutions should be proposed for substantially separate issues

Corporate Governance/ Notice of Meeting

C.1.3 Availability of Committee Chairman at AGM

�� The Chairman of Board Committee should be available to answer any queries at AGM


C.1.4 Notice of AGM �� 15 working days notice to be given to shareholders

Notice of Meeting

C.1.5 Procedure for voting at meetings

�� Company to circulate the procedure for voting with Notice of Meeting

Notice of Meeting

C.2 Communication with Shareholders

C.2.1 Chanel of Communication �� Channel to reach all shareholders to disseminate timely information


C.2.2 – C.2.7

Policy and Methodology of Communication

�� Policy and Methodology of communication with shareholders and implementation



71


C.3 Major and Material Transactions

C.3.1 Disclosure of Major Transactions

�� Disclosure for all material facts involving all material transactions including related party transactions

Notes to the Financial Statements

D. Accountability and Audit

D.1 Financial Reporting

D.1.1 Presentation of Public Reports

�� Should be balanced, understandable and comply with statutory and regulatory requirements

Corporate Governance/ Risk Management/Financial Statements

D.1.2 Directors' Report The Directors' Report should be included in the Annual Report and confirm that :�� The Company has not contravened

laws or regulations in conducting its activities

�� Material interests in contracts have been declared by Directors

�� The Company has endeavoured to ensure equitable treatment of shareholders

�� That there is reasonable assurance of the effectiveness of the existing business systems following a review of the internal controls covering financial, operational and compliance

�� That the business is a “going concern”

Annual Report of the Board of DirectorsAudit Committee Report

Annual Report of the Board of DirectorsCorporate Governance

Audit Committee Report/Risk Management

Annual Report of the Board of Directors

D.1.3 Respective responsibilities of Directors and Auditors

�� The Annual Report should contain separate statements setting out the responsibilities of the Directors for the preparation and presentation of the Financial Statements and the reporting responsibilities of the Auditors

Respective responsibilities of the Directors and Auditors

D.1.4 Management Discussion and Analysis

�� Annual report to include section on Management Discussion and Analysis

Management Discussion

D.1.5 Going Concern �� Directors to substantiate and report that the business is a going concern or qualify accordingly

Annual Report of the Board of Directors

D.1.6 Serious Loss of Capital �� Directors to summon an Extraordinary General Meeting in the event that the net assets of the Company falls below 50% of the value of Shareholders Funds

N/A

D.1.7 Related Party Transactions �� Disclosure of Related Party Transactions

Notes to the Financial Statements


72 73



D.2 Internal Control

D.2.1 Effectiveness of system of internal controls

�� Directors to annually conduct a review of the effectiveness of the system of internal controls. This responsibility may be delegated to the Audit Committee

Audit Committee Report/ Risk Management

D.2.2 Internal Audit Function �� The internal audit function in Group companies is not outsourced to the external auditor of that company in a further attempt to ensure external auditor independence


D.2.3-D.2.4

Continuity of Internal control �� Maintaining a sound system of internal control


D.3 Audit Committee

D.3.1 Chairman and Composition of Audit Committee

�� Should comprise a minimum of two independent, Non-Executive Directors

�� Audit Committee Chairman should be appointed by the Board

Audit Committee Report

D.3.2 Duties of Audit Committee Should include�� Review of scope and results of audit

and its effectiveness�� Independence and objectivity of the

Auditors


D.3.3 Terms of Reference / Charter

�� The Audit Committee should have a written Terms of Reference which define the purpose of the Committee and its duties and responsibilities


D.3.4 Disclosure �� The Annual Report should disclose the names of Directors serving on the Audit Committee

�� The Audit Committee should determine the independence of the Auditors and disclose the basis of such determination

�� The Annual Report should contain a report by the Audit Committee setting out the manner of the compliance of the Company during the period to which the Report relates

Corporate Governance/ Audit Committee Report


Audit Committee

D.4 Code of Business Conduct and Ethics

D.4.1 Adoption of Code of Business Conduct and Ethics

�� The Company must adopt a Code of Business Conduct and Ethics for Directors and members of the senior management team and promptly disclose any violation of the Code



73


D.4.2 Chairman’s affirmation �� The Annual Report must include an affirmation by the Chairman that he is not aware of any violation of the provision of the Code of Conduct

Chairman’s Statement/Director's Report

D.5 Corporate Governance Disclosures

D.5.1 Corporate Governance Report

�� The Annual Report should include a report setting out the manner and extent to which the Company has adopted the principals and provisions of the Code of Best Practice on Corporate Governance


E. Institutional Investors

E.1 Structured Dialogue

E.1.1 Structured Dialogue with Shareholders

�� A regular and structured dialogue should be conducted with shareholders and the outcome of such dialogue should be communicated to the Board by the Chairman


E.2 Evaluation of Governance Disclosure by Institutional Investors

�� Institutional investors should be encouraged to consider the relevant factors drawn to their attention with regard to Board structure and composition


F. Other Investors

F.1 Individual Investors �� Individual shareholders should be encouraged to carry out adequate analysis and seek professional advice when making their investment/divestment decisions


F.2 Shareholder Voting �� Individual shareholders should be encouraged to participate in General Meetings of companies and exercise their voting rights.

Corporate Governance/Form of Proxy

G. Sustainability Reporting

G.1-G.1.7 Sustainability Reporting �� Disclosure on adherence to sustainability principles

Annual Report-Sustainability Report

sustainability report


76 77

Sustainability reportReporting Principles and Guidelines: Global Reporting Initiatives (GRI)This sustainability report has been compiled in accordance with Global Reporting Initiatives (GRI) for sustainable reporting. By adhering to these globally accepted parameters, Asian Hotels and Properties PLC (AHPPLC), aims to conform to the disclosure requirements for economic, social and environmental criteria that are impacted by the company’s commercial operations.

Report Boundary and ScopeThis report has been compiled in conformity with GRI G3.1 level B compliance criteria. The report covers the company’s activities for the period beginning from 01st April 2013 to 31st March 2014 and includes aspects covered at Cinnamon Grand Colombo, AHPPLC’s flagship brand. In captioning the information, every effort has been made towards achieving completeness of the report as much as possible in accordance with the GRI guidelines.

MaterialityMateriality is an important aspect of the GRI reporting guidelines. Accordingly, this report attempts to quantify the material impact of the company’s activities on social, environmental and economic aspects and qualify its influence on various organisational stakeholders. Listed below, in order of priority, are the key GRI indicators that are relevant for the company.

Rel

evan

ce t

o t

he C

om

pan

y

Relevance to stakeholders and the environment

High Materiality

Medium Materiality

EN3, EN4, EN5, EN11, EN12, EN16, EN22, EN28, PR3, PR6, PR9, SO2, EC1, EC3, EC6

La10, en8, So1, hr6, La12, La13,

LA1, LA2, LA7, LA

8

EN

23, EC8


77

OPERATING STRUCTURE OF THE ORGANISATION

Director Rooms Division

Manager Marketing

Communications & Sustainability

Executive Chef

Deputy Executive Housekeeper

Front Office Manager

Director Security Chief AccountantPurchasing Manager

Human Resources Manager

Manager F&B (Banquets)

Manager Restaurant & Bars

Chief Engineer

Director Finance Director SalesDirector Human

Resources

Assistant Director Sales

General Manager

Executive Housekeeper


78 79

Sustainability report contd.

AHPPLC

Annual Report AwardThe AHPPLC Annual Report won Silver at the Annual Report Awards 2013 organised by the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) for Diversified Holdings with up to Five Subsidiaries.

CINNAMON LAKESIDE COLOMBO 2013/14

Awards �� Awarded 'A+' Grade at the Hotel

Hygiene Classification Audit 2013 conducted by the Colombo Municipal Council.

�� Received 5 Crowns out of 5 at the Indexpo Crowns for Food Hygiene Awards Ceremony 2013.

�� Winner (Classic Category) - Colombo Region Marie Brizard Cocktail Competition 2013.

�� Winner and Runner up (Flair Category) − Colombo Region Marie Brizard Cocktail Competition 2013.

�� Winner (Classic Category) – Midori Cocktail Competition 2013.

�� Merit award at the EU Switch-Asia Greening Sri Lankan Hotels Awards 2013.

�� Certificate of Excellence 2013 by TripAdvisor LLC.

�� Bronze Award – Hotel Companies Category at the Annual Report Awards 2013 conducted by CA Sri Lanka.

�� Awarded A+ Grade Kitchen at the City Food Safety High Achievers Awards Ceremony organised by the Colombo Municipal Council.

CINNAMON GRAND COLOMBO 2013/14

Awards

�� Sri Lanka National Energy Efficiency Award

Cinnamon Grand Colombo once again was awarded a Merit Award at this year’s National Energy Efficiency Awards 2013. This is the second year in succession for the hotel to be awarded this prestigious award. Notably, Cinnamon Grand was the only city hotel to receive such an award in the large-scale hotel sector category. The awards, organised by the Sri Lanka National Energy Efficiency Awards (SLNEEA) recognise commitment towards energy efficiency and management.

�� Merit Award at The EU-SWITCH – Asia Greening Hotels Award

On the 14th of October 2013, the Cinnamon Grand was conferred the Merit Award at the EU Switch Asia Greening Hotel Awards 2013. This is a significant achievement in light that Cinnamon Grand is a city hotel operating in the middle of a concrete jungle as well as being one of only three city hotels to be bestowed with this award. We are proud to say that this is the second consecutive year that we have received this award.

�� John Keells Chairman’s Award for Sustainability

The Annual Award for Sustainability presented at the JK Chairman’s Awards for 2012/13 on 8th November 2013 was awarded to Cinnamon Grand in recognition of the hotel’s outstanding efforts in the sphere of sustainability.

�� Certification and appointment of Chief Engineer of Cinnamon Grand Panduka Wijeyawardena as ‘Energy Manager’ for Cinnamon Grand property by the Sri Lanka Sustainable Energy Authority.

Recertifications

�� Green Globe RecertificationGreen Globe Certification (by Green Globe Certification, Los Angeles) Cinnamon Grand has been conferred with the Green Globe re-certification following a two day audit by Green Globe auditors. The hotel was audited and measured on relevant compliance indicators for the Green Globe Certification with key indicators on energy usage, water and waste management, employee training to implementation of customer satisfaction measures, community support and awareness initiatives. Green Globe Certification is the worldwide sustainability system based on internationally-accepted criteria for sustainable operation and management of travel and tourism businesses. Operating under a worldwide licence, Green Globe is based in California, USA and is represented in 83 countries. The Green Globe brand represents the best in sustainable practice within the travel and tourism sector and provides certification, training and marketing services.

�� ISO Recertification for OHSAS 18001, ISO 14001 and ISO 22000

(Swiss accreditation by SGS Lanka (Pvt) Ltd) – the Cinnamon Grand is the first 5 -star city hotel in Sri Lanka to receive and maintain uninterrupted ISO certification for the past 8 years.

AWARDS AND ACCOLADES


79

�� Carbon Neutral Recertification for Nuga Gama

Recertification of Nuga Gama Carbon Neutral Certificate by Carbon Consulting Company.

Nuga Gama is the first venue in Asia to receive an accolade of this nature. The certification was handed over by world renowned physicist and climatologist as well as Vice Chairman of the Intergovernmental Panel on Climate Change and 2007 Nobel Laureate Professor Mohan Munasinghe.

�� TripAdvisor Certificate of Excellence

Certificate of Excellence 2013 by TripAdvisor LLC.

Audits

�� Central Environmental audit for National Green Awards 2013.

�� Sustainable Energy Authority audit for Sri Lanka National Energy Efficiency Awards 2012.

�� Assessment done by Carbon Consultant Company for Nuga Gama Carbon Neutral Certification.

�� ISO Surveillance Audit for the year 2013 held in August 2013.

�� Awarded 'A+' Grade at the Hotel Hygiene Classification Audit 2013 conducted by the Colombo Municipal Council.

Culinary Awards

�� 15th Culinary Art CompetitionReceived 5 Crowns out of 5 at the Indexpo Crowns for Food Hygiene Awards Ceremony 2013. Cinnamon Grand’s Chefs’ team brought home 13 Gold, 12 Silver and 18 Bronze medals and won the titles as the ‘Best City Hotel’ and was place second runner up ‘Best Hotel Team’ at the 15th Culinary Art Competition 2013, organised by Chefs’ Guild Colombo.

�� Absolut Bartender Cocktail Challenge

F&B Team Supervisor A.M.D. Sampath was placed second runner up at Absolut Bartender Cocktail Challenge 2013- classic category.

�� Rockland and Midori Bartender Challenge

Dinithi Siriwardena from F&B was the first runner up at the Rockland and Midori Bartender Challenge 2013, Cocktail Competition.

�� City Food Safety High Achievers Awards

Awarded A+ Grade Kitchen at the City Food Safety High Achievers Awards Ceremony organised by the Colombo Municipal Council.

Sports Awards

�� Mercantile Basketball Championship

Cinnamon Grand’s associate Lakshan Samarasinghe part of the Sales and Marketing Team brought the hotel pride by captaining the John Keells Group Basketball team at the Mercantile Basketball Championship 2013 and leading the team to victory. He was also recognised as the ‘Best Player of the Twournament’.

�� John Keells Inter Company Rugby 7s

Runner up at the John Keells Inter Company Rugby 7s 2013.

�� John Keells Inter Company Swimming Championship

Third place at the John Keells Inter Company Swimming Championship 2013. �� Travel Trade Soccer 7s

Semi-finalist at the Travel Trade Soccer 7s 2013.

�� JKH Inter Company Soccer 7sRunners up at the JKH Inter Company Soccer 7s 2013.

�� Mercantile Athletic ChampionshipTwo Gold medals and one Silver medal at the Mercantile Athletic Championship 2013.

�� Sri Lanka Rugby Squad Mekalanka Promoda of Cinnamon Grand was chosen to the Sri Lanka Rugby Squad in September 2013.

Membership in Industry Associations

�� Sri Lanka Conventions Bureau �� La Chaine des Rotisseur: Echo, the

Italian restaurant and The London Grill, the hotels Fine Dining restaurant are certified members.

�� Tourist Hotel Association of Sri Lanka.�� Ceylon Chamber of Commerce.�� Pacific Asia Travel Association (PATA).�� Indo-Lanka Chamber of Commerce.�� AMCHAM.�� SKAL International (International

Association of Travel and Tourism Professionals).

�� Sri Lanka-British Business Council.�� Sri Lanka-Japan Business Council.�� Sri Lanka-New Zealand Business

Council.�� Sri Lanka-Malaysia Business Council.�� Field Ornithology Group of Sri Lanka.


80 81

Accolades John Keells Chairman’s Award for Sustainability – General Manager Rohan Karr, Manager Marketing Communications and Sustainability Tharika Goonathilake and Chief Engineer Panduka Wijewardena• Cinnamon Grand Director Finance Shanaka Silva receiving the Silver at the Annual Report Awards 2013 for the AHPPLC

Annual Report organised by the Institute of Charted Accountants of Sri Lanka for Diversified Holdings with up to Five Subsidiaries.

• Cinnamon Grand Engineering Team at the Energy Efficiency Awards 2013 winning the merit award• Merit award at the EU Switch Asia Greening Hotel Award – Compliance, Health and Safety Manager Rajitha Amarasinghe,

Chief Engineer Panduka Wijewardena and Assistant Chief Engineer Sudarman Perera



81

Accolades (f&b) Team that brought home the title of ‘Best City Hotel Team’ and second runner up 'Best Hotel Team' at 15th Culinary Art Competition 2013, organised by Chefs Guild of Colombo• Dinithi Siriwardena from F&B was the first runner up at Rockland and Midori Bartender Challenge 2013 Cocktail Competition • Chef Sujith Ariyarathne with his Gold medal for ‘Live Cooking Five Course Meal’ at the Culinary Art Competition 2013• F&B Team Supervisor A.M.D. Sampath with his second runner up award at 2013 Absolut Bartender Cocktail Challenge in the

classic category


82 83


Precautionary Principle

AHPPLC is influenced by the precautionary principle in its endeavour to preserve the environment and contain the impact of its operations on the local communities. The precautionary principle is highlighted by the continuous success of our initiatives in improving our environment, reducing our energy consumption and Carbon Footprint and embedding our social responsibility in all employees. Through our risk management processes and internal control systems, we have adhered to the precautionary principle. We have incorporated the triple bottom line principles in our practices and performance. We have also obtained ISO 14001, ISO 22000, OHSAS 18001, and Green Globe, Earthcheck benchmarking and Carbon Neutral certifications. From a corporate governance perspective, we ensure that we meet the regulatory requirements and are compliant with external rules and codes that include the listing rules of the Colombo Stock Exchange and all provisions of the Code of Governance of the Institute of Chartered Accountants of Sri Lanka.

Data Measurement TechniquesIn all areas of operation, data measurement and data collation is a daily process; and the point of data entry is in the form of logbooks and log sheets while recordings are carried out on a daily basis. Data is collated on a monthly basis for reporting purposes, which are analysed monthly, after which a quarterly report is prepared.

Strategy and FocusOur sustainability ethos demands that we act as value creators to the community by facilitating enduring social change across a wide stratum of society. In pursuance of these goals, we have witnessed our sustainability philosophy evolving into a meticulous code of ethics that now pervades into all spheres of our business on a day-to-day-basis.

Core Competencies

VisionWe will always be the Hospitality Trendsetter

Primary Business FocusTo be the best Sustainable Five Star City Hotel by 2015

Sustainability PledgeI will be Green

Commitment to Excellence

I CAN MAKE A DIFFERENCE

Superior Brand Value

JKH Group Synergies

Market Leadership

Dynamic, Innovative

Culture

Employer of Choice in the

Industry

I will be careful in the way I use

energy

I will be careful in the way I use

water

I will reduce food waste

I will not to pollute

I will reduce,reuse, recycle


83

Sustainability Stewardship

Led by the General Manager, Cinnamon Grand Colombo follows a top-down approach to sustainability stewardship, where a fully integrated sustainability policy promotes a positive attitude and a dynamic approach strengthened by a traditional organisational value culture. Aligned with the overall vision of the JK Leisure Sector, the Cinnamon Grand is guided by the vision 'To be the Best Sustainable Five Star City Hotel by 2015'. Moreover, a dedicated sustainability team drives all sustainability initiatives at Cinnamon Grand supported by a special Green Team, comprising of members from cross functional disciplines. The Green Team maps areas pertinent to all aspects of the business.

Cinnamon Grand Vision

Green Team

To be ranked as the Best Five Star Sustainable City Hotel in Sri Lanka by 2015

Electricity Conservation

Team

Water Management

Team

Recycling Team

Food Waste Reduction

Communication & Awareness

Team

Special Community

Projects Team

Head of Sustainability

Target

To Reduce the Carbon Footprint of the Hotel by 5% by March 2014

To promote a 5% year-on-year reduction in the hotel’s electricity

consumption

To promote 10% year-on-year

reduction in the hotels water consumption

To generate a 20% reduction in food waste at the

hotel

To create awareness and a green mind-set amongst associates

and assist in reduction targets

Identify and implement

community projects that have a positive impact on social,

environmental and economic aspects as per stakeholder

feedback

To increase the amount of recycling items and weightage

by 20% (products used

by the hotel) and reduce landfill


84 85


IDENTIFYING RISKS AND OPPORTUNITIES

In achieving sustainability goals the company strives to understand the risks and opportunities that arise from each Triple Bottom Line (TBL) indicator. The detailed blueprint outlined below aims to pre-empt potential impacts and thereby help trigger policy level activations that support sustainability initiatives to fuel meaningful change for the future.

Key Impacts, Risks and Opportunities

Triple Bottom Line

Challenges(Potential Impact)

Risks/ Opportunities

Engagement Approach Process Undertaken

Social Social Development

Risk: Under-developed human capitalOpportunity: Empower human capital through skills development Risk: Social alienationOpportunity: Greater social engagement to promote wealth creation

�� Training and development for enhancement of skills

�� Promote social inclusiveness through the hotel’s product and service offering as well as sustainability initiatives

�� Provide increased financial access for rural communities

�� Youth empowerment and women's empowerment

�� Industrial training for chefs through tourism hospitality management

�� Donation to social groups�� Community development projects�� Develop creativity and skills workshops for

children

Environmental �� Global Warming

�� Biodiversity and Eco Systems

�� Environmental Degradation

Risk : Change in weather patterns that pose a threat to livelihoodsRisk: Depletion of biodiversity and loss of eco systems that are a danger to national and global welfareOpportunity: The growing need for green hotelsOpportunity: Reduced carbon footprint to become a ‘green hospitality institution’ Opportunity: Promote green practices to lower long-term energy and overhead costs

�� Seek alternative energy sources and minimise usage

�� Protection of biodiversity in partnership with the Field Ornithology Group of Sri Lanka

�� Construction of ‘green buildings’ to minimise impact of the operations to the environment

�� Green procurement policy

�� Implementation of the Green Policy �� Implementation of audits to minimise the

waste at the hotel �� Adoption of the 3R concept (Reduce,

Reuse and Recycle)�� Promote green buildings. Eg: Nuga Gama�� Education and awareness for suppliers to

encourage them to adopt green practices�� Collaboration with the Field Ornithology

Group of Sri Lanka to protect biodiversity�� Conduct awareness and education

programmes for hotel associates through seminars, posters, social media, environmental videos and hotel green corridor

�� Improve customer awareness through print and social media

�� Promote green practices among children through cultural tours and cultural educational workshops at Nuga Gama

�� Investigating alternative energy sources at the preliminary testing stage

�� Initiatives to promote energy and water conservation together with effective waste management practices


85

Triple Bottom Line

Challenges(Potential Impact)

Risks/ Opportunities

Engagement Approach Process Undertaken

Economic �� Community Empowerment

�� National Wealth Creation

�� Inculcating Behavioural Changes and Instilling Values

Risk: City-centric employment Opportunity: Integration of rural economy through local employment Risk: Inward looking business modelOpportunity: Customer-centric approachOpportunity: Act as a catalyst in changing values and behavioursOpportunity: Capacity building for micro and SME suppliers in line with a forward-looking strategy

�� A comprehensive employment policy to ensure adequate skills development for the preservation and development of the hospitality/tourism industry

�� Business strategy that has the bandwidth to evolve with national tourism development

�� Specific customer development programmes aimed at nurturing relationships

�� Product development�� Programmes aimed

at instilling values vital for sustainable production of goods and services

�� Island-wide recruitment drive�� Ensuring all products and services are

aligned to the tourism industry priorities�� SME focused product development

workshops in line with National Cleaner Production Center guidelines


86 87


Stakeholder Mapping and Engagement Process

The aim of engineering a sustainable business platform has led to the understanding that this cannot be achieved in isolation. The company believes a holistic approach is the key to ensuring its sustainability ethos, which is deposited across the value chain encircling all business partners and stakeholders. Through an extensive stakeholder mapping exercise the company has devised a suitable engagement curriculum to inculcate the company’s unique value proposition to all corporate stakeholder groups as outlined below.

Addressing of Material Issues (By the Sustainability Department and Green Team)

Setting Goals and Objectives to Redress Identified Issues (By General Manager)

Implementation and Monitoring (By the Head of Sustainability and Green Team Project Champions)

Stakeholder Engagement

Identification of Issues

Categorisation of Issues

Customers Associates Community Suppliers GovernmentSociety Pressure Groups/Media


87

Stakeholder Stakeholder Sub-Category Current Level of Engagement and Frequency Materiality of Stakeholder Issues

Customers Adults Level of Engagement:Awareness campaigns through press releases, posters, social media, fundraising for the Field Ornithology Group and Cancer Hospital, donations for social groups, participation of international environmental/tourism events, end-user surveys, booker surveys.

Frequency of Engagement:�� Face-to-face feedback�� Guest Comment Cards on a daily basis in rooms

and restaurants �� Feedback and reviews on TripAdvisor �� Duty Manager's Log�� Restaurant log books�� Bi-annual personal meetings�� Weekly awareness through press releases,

posters, social media�� Annually: Fundraising for Cancer Hospital,

participation in international environmental events�� Annual Secretaries’ Party �� Media nights�� Daily sales visits�� Entertainment of clients and patrons

1. Rate fixing2. Ethical products3. Carbon Footprint 4. Ethical marketing 5. Corporate community engagement6. Health and safety

Children Level of Engagement:�� Awareness and education through print media and

cultural education through site visits, children’s workshops according to the environmental calendar, road shows and trade fairs for kids.

Frequency of Engagement:�� Monthly cultural and educational visits to Nuga

Gama�� Children’s workshops according to an

environmental calendar�� Annual road shows and trade fairs for kids�� Kiddies events feedback form �� Weekly newsletter


88 89



Associates Managers, Executives and Non-Executives

Level of Engagement:Participation in the green corridor campaigns, green forum, direct reporting, open door policy, annual events, training and development activities, sustainability awareness seminars, celebrations of international environmental calendar dates, employee satisfaction surveys, intranet communication, competitions and quarterly associate meeting.

Frequency of Engagement:�� Weekly meetings, updates on sustainability notice

board, green corridor and internet�� Monthly poster campaigns, initiative awareness

and educational sessions�� Monthly management meetings�� Staff quarterly meetings �� Mid-year review�� Annual performance review �� Annual gatherings, parties and sports events�� Green idea box �� Custom made training programmes and

development activities according to sustainability guidelines.

�� Voice of Employee survey�� Great Place To Work survey-GPTW�� ‘Tell GM’ box where associates can directly

communicate with the General Manager on issues they face while working

7. Accommodation 8. Basic salary9. Employee awareness

and training 10. Employee rewards and

remuneration 11. Occupational health and

safety12. Emissions, effluences

and waste 13. Mutually beneficial

relationship with supplier 14. Gender related society

discriminations

Business Partners

Hotel School, Inbound/ Destination travels agents

Level of Engagement:Questionnaires and surveys, one-on-one meetings, e-mail correspondence, circulars, membership in industry associations.

Frequency of Engagement:�� Annual contract renegotiations on-going through

conference calls, e-mails and circulars�� Business travel�� Trade shows �� Experiential tours �� Daily sales visits

15. Health and safety 16. Product diversity17. Adhering to international

standards18. Best practices19. Community engagement

and Carbon Footprint 20. Confidentiality


89


Community Local Communities (schools, monasteries, pre-schools, hospitality related educational institutions, home for elders and conservation groups)

Level of Engagement:Awareness through posters, paintings, environmental videos and education programmes, donations and community development projects.

Frequency of Engagement:Engagement with the community is done prior to initiating projects in the respective areas of focus: �� Monthly awareness and education sessions for

schools �� Bi-annual discussions for community development

projects �� Special on-going school projects with monthly

meetings�� Annual supplier sustainability awareness sessions�� Awareness campaigns in key areas where

suppliers congregate �� Annual donations to the Field Ornithology Group �� Sponsorships of educational and social events�� Arts and cultural activities�� Familiarisation visits, training programmes and

specific hospitality career related training

21. Infrastructure development

22. Creating awareness for youth

Suppliers Level of Engagement:One-on-one meetings, group meetings, awareness sessions and collateral, environmental videos and education programmes, donations and community development projects, ethical purchasing policy, flexibility of credit period, review of pricing, child labour remediation policy, membership in industry associations.

Frequency of Engagement:�� Promoting responsible tourism/products through

community related awareness activities that we organise and in which we participate

�� Monthly review meetings�� Awareness session on quality �� Monthly price review meeting �� Annually through contract renegotiations

23. Environmentally friendly packaging

24. Resources scarcity25. Awareness on

environmental issues 26. Ethical production27. Child labour remediation

policy


90 91



Government Sri Lanka Tourist Board, Sri Lanka Institute of Tourism and Hotel Management, Central Environmental Authority, National Cleaner Production Centre, Ceylon Electricity Board, National Water Supply and Drainage Board, National Ozone Unit, National Institute for Occupational Safety and Health, National Cancer Hospital, National Cancer Control Programme, Colombo Municipal Council, Labour Department and Sustainable Energy Authority

Level of Engagement:Meetings, discussions, phone calls, presentations and briefings, advisory meetings, membership on the Sri Lanka Tourist Board, membership in the Sri Lanka Hotel school training programme, awareness workshops on tourism/sustainability related issues are on-going processes with tourism related government agencies.

Frequency of Engagement:�� Engagement with these government bodies is an

on-going process through monthly newsletters, e-mails, circulars, quarterly briefings, websites, etc

�� Senior Management is on the advisory board of the Sri Lanka Institute of Tourism and Hotel Management and visiting lecturers on a quarterly basis

28. Compliances/regulatory restrictions

Society Pressure Groups/Media

NGO, Media, Opinion Leaders, Conservation Organisations, Trade Associations, Tourism Associations, National Cancer Control Programme

Level of Engagement:Websites, press releases, media briefings, correspondence, discussions, participation at NGO forums

Frequency of Engagement:Engagement with these stakeholders is carried out on an on-going basis through correspondence, websites, media briefings and press releases (at least monthly)

29. Ethical business practices


91

STAKEHOLDER GROUP:

Children

Children’s Holiday Workshops The Cinnamon Grand’s Nuga Gama was the venue for the first session of the Kids Holiday Workshop held in August 2013. Designed for children aged between 6 to 9 years, the full day session included a host of fun, games, cookery, creativity and learning. The workshop presented children with an opportunity to understand and appreciate traditional village life in a safe and enjoyable manner. Encouraging the youngsters to put away their high-tech gadgetry for the day, the programme also included a reality challenge game that simulated a series of real life challenges, which could be overcome only with the right attitude and team spirit.

The 44 children who attended the first workshop spent a pleasant day of enjoyment, entertainment and education learning about the many varieties of indigenous flora found in rural Sri Lanka. Moreover, a cookery demonstration was conducted by Nuga Gama’s Chef Sujith, who showed the children how to make their own lotus shaped sweet roti as well as a rambutan milkshake. A drama workshop was also conducted by leading theatre director Vinodh Senadheera to encourage these youngsters to appreciate theatre and the arts, while a range of fun games and making of aesthetic crafts using recyclable items were also part of the day's activities. The session concluded with food and drink, and a calming yoga session.

Forming a part of the hotel’s Marketing Communications and Sustainability initiatives, the entertaining and enriching holiday workshop was aimed at inculcating in today’s children, an appreciation for nature, culture and heritage of traditional Sri Lankan village life.

Following the success of the first session, a second programme was held towards end August 2013; this time for 44 children aged between 10 and 12 years. Following a similar theme as the first workshop, this programme also included a session on ‘Music, Song, Rhythm and Movement’ conducted by Soundarie David and the acclaimed Soul Sounds Academy. Meanwhile, the participants were also provided an insight into the close links between Sri Lanka’s wildlife and village life. Offering a different career perspective, the programme also had a session on 'How to be a radio DJ' by Jimmy Deen.

Santa’s Workshop During the Christmas season, the Cinnamon Grand conducted its fifth consecutive Santa’s workshop where 220 lucky children were able to discover the magic inside Santa’s Workshop and be a part of the magic and mystery of Santa’s home and all the work that goes on the night before Christmas. Starting off their adventure in the elves’ costumes closet, the children made themselves at home thereafter with Santa’s family while engaging in handcrafts and cookery with the big man in the red suit, his wife Mrs. Clause and the elves from Santa’s toyshop, mailroom and kitchen.

STAKEHOLDER INITIATIVES FOR THE YEAR


92 93


Kids Workshop at Nuga Gama Kids and the Grand team posing at the end of a successful Kids Holiday Workshop at Nuga Gama• Showing off his recycled windmill made out of toilet paper rolls• Nuga Gama Manager and Village Headsman Gamini Silva all smiles with kids at cookery demonstration for kids • Introducing toys used in villages to city kids – a ‘kurumbatti’ machine


93

Santa's workshop – a green Christmas Cinnamon Grand team recreates Christmas Magic of Santa’s Home in the North Pole for the fifth consecutive year• Kids learning the importance of recycling through craft• At Santa’s Costume Closet • All smiles with a Santa’s helper


94 95


STAKEHOLDER GROUP:

Suppliers

Food Safety and HygieneThe Sustainability Division and Compliance, Health and Safety Division of Cinnamon Grand organised a seminar on the importance of food safety and hygiene, while also stressing on other critical areas that support the hotel's commitment to being a sustainable corporate entity. Among the key aspects addressed were the delivery standards, water conservation and the role of suppliers in producing sustainable goods and services for all stakeholders.Attended by over 50 stakeholders associated with the business, the session focused on improving capabilities of the stores, and the purchasing and receiving department.

The participants, mainly suppliers were encouraged to work parallel to the hotel’s sustainability goals to embrace a more environmentally conscious operational model for their business. The programme was also aligned to the theme for World Tourism Day 2013, being ‘Tourism and Water’. While highlighting the importance of understanding the water footprint of a business, speakers also focused on creating awareness on the critical role played by suppliers in ensuring overall hygiene and safety standards of the Cinnamon Grand’s products and services.

Water ConservationAwareness was created on water conservation for suppliers by displaying posters at the loading bay.

STAKEHOLDER GROUP:

Associates

Developing Sustainable IndividualsCinnamon Grand’s Sustainability Department launched an initiative to educate and create awareness amongst the hotel’s associates regarding areas critical towards maintaining the sustainability of the hotel. Entitled ‘Sustainability Short Takes’, a series of policies and procedures were formulated to ensure all associates strive to promote sustainability as much as possible. A simple, accessible and easy to understand mechanism, these 'Short Takes' cover topics relating to the hotel’s projects and initiatives, while outlining general sustainability information and personal steps that can be taken to be a more ‘green’ person. Each department was, presented with a ‘sustainability short take folder, which highlights the hotel’s weekly short take focus. Further, a weekly A/V was introduced at the Grand Café every Monday, which corresponds to and complements that week’s sustainability short take.

Organic Vegetable OfferingCinnamon Grand made available to their associates the first harvest of the Cinnamon Grand's Organic Garden at D.S Senanayake College through a sale at the Grand Café. This offered associates the opportunity to purchase fresh vegetables that were 100 per cent organic.

Commemorating Health and Safety Week at Cinnamon Grand ColomboUnder the ageism of the Cinnamon Grand’s Department of Health, Safety and Compliance in collaboration with the Ministry of Labour and Labour Relations, a programme was conducted to create awareness on safety at the work place.

The awareness campaign coincided with the Health and Safety Week, declared by the Ministry of Labour and Labour Relations from the 3rd to the 12th of October 2013.

Parallel to this initiative, a poster campaign was also launched during the month, following a series of special 'Short Takes' on health and safety conducted for all departmental staff at the hotel.

Improved FacilitiesEndeavouring to improve hygienic conditions for its associates, a new sink was fixed in the hotel’s garbage room so as to enable cleaners and workers to wash hands properly.

Awareness on Carbon Neutral CertificationAn educational session on Carbon Neutral Certification was held for the associates of Cinnamon Grand by the Sri Lankan arm of the Carbon Consultancy Company, so as to be fully knowledgeable on the facts pertaining to this certification.

Further Initiatives A Delicious Waste Chefs Competition and Energy Saving Seminar and a Waste Management Seminar described in detail later in the report were also conducted.

Developing Proactive Sustainability Tools for Effective Governance

Focus on Enriching the Green TeamA learning forum was launched during the year to instil in our members the impor-tance of sustainability initiatives as well as future strategies that will require the sup-port of the Green Team members in differ-ent departments. Riding on the success of the inaugural Monthly Learning Forum in creating awareness on sustainability related issues among members of the


95

Green Team, it has been decided to hold these informative and knowledge sharing sessions fortnightly. The first of these programmes enlightened members on the methods of reducing water and electricity consumption. A team of representatives of the Engineering Department presented to the selected audience, general energy facts in order to differentiate units (Cubic Meter, KWh) consumed in electricity and water in a household in contrast to its us-age at the hotel. The agenda also covered techniques of optimising the KW usage of 8 household items, i.e. refrigerator, TV, heater, ceiling fan, rice cooker, microwave, 100W bulb and PC. The programme also emphasised the importance of water purification and its impact on the hotel and the wider environment.

Gifting the Book ‘Sustainable Development and Climate Change Made Easy’ to Green Team members25 copies of the book titled 'Sustainable Development and Climate Change Made Easy' co-authored by Sria Munasinghe, Vice President of MIND (Munasighe Institute for Development) and wife of Professor Mohan Munasinghe (2007 Nobel Laureate, world-renowned physicist and climatologist and Vice Chairman of the Intergovernmental Panel on Climate Change) were gifted to the Cinnamon Grand Green Team by General Manager Rohan Karr.

Special Green Team Members were Presented with ‘Green Champions’ Badge at the Associates Quarterly MeetingCinnamon Grand’s associates who went beyond their call of duty were recognise at the Associates Quarterly Meeting. The highlight of the event was the presenting of the ‘Green Champions’ badge to members of the hotel’s Green Team who proactively championed

projects which made a tangible difference to the company, the society and the world we live in. Rajitha Amarasinghe, Rushani Jayakody, Sisira Katukurunda, Amaranath Chandrasiri, D.P. Kumarasiri, Liana Keragala, Gamini Silva, Deepika Satyapala, Mahinda Wijeratne and Anthony Lonappan were the recipients of this recognition. The event was also a platform where associates were briefed on the company's progress and future initiatives.


96 97


Creating a greener mindsetOur attentive Chefs at the Energy Saving Awareness Seminar • Senior Public Relations Officer from National Water Supply and Drainage Board Sarathchandra Muthubanda addressing our staff• Director National Cleaner Production Centre Sena Peiris during a seminar• Director Renewable Energy Sustainable Energy Authority Sanath Kithsiri speaking at the Green Forum


97

First harvest Organic Garden Project Champion Sisira Katukurunda and Chef Sujith Ariyarathne receiving the first harvest of School Organic Garden Project from D.S. Senanayake College• Organic Garden Project members Chef Sujith Ariyarathne, Sisira Katukurunda and Amaranath Chandrasiri handing over the harvest to

General Manager Rohan Karr• D.S. Senanyake College Teacher-in-Charge of Agriculture Tamara Dissanyake with our project members• Hotel associates purchasing organic harvest


98 99

Creating a green mindset at cinnamon grandGreen Team Member from Engineering Sudarman Perera sharing his knowledge on water and electricity conservation with Green Team Members at the Learning Forum• General Manager Rohan Karr handing over a book on ‘Sustainable Development and Climate Change Made Easy’ to Green Team

members• Green Team on a food waste survey at the Grand Café • General Manager Rohan Karr handing over a Green Champions Badge to D.P. Kumarisiri of Engineering at the Associates Quarterly

Meeting



99

STAKEHOLDER GROUP:

Guests

Offering Guilt-Free DiningAt Nuga Gama, the village in the city, which pays tribute to Sri Lanka’s indigenous culinary heritage, guests can enjoy an authentic dining experience, knowing that their indulgence will have a minimum toll on the environment.

Banners to Bags (B2b) Initiative Celebrates 4th Successive Year A year’s worth of promotional banners were recycled into durable, colourful and trendy bags, in different sizes, for different purposes as hotel’s B2b initiative continued for its fourth successive year. The immensely popular B2b products were offered at a sale held on the 05th of June at the hotel premises. The sale was among the activities held by the hotel to commemorate World Environment Day. Proceeds from these sales amounting to Rs. 22,530/- were directed to the Children’s Ward of the Maharagama Cancer Hospital.

Awareness Campaign on Green TravelAn awareness campaign was held for guests on green travel and reducing their water footprint.

Sustainability Awareness The hotel’s Marketing Communications and Sustainability Department developed a flyer on sustainability and the hotel's sustainability initiatives to keep their guests informed and educated on the hotels vision for sustainability. These flyers were placed in all hotel rooms and distributed to guests visiting the hotel and to associated travel agents.

Further to convey the importance of saving and recycling paper, Cinnamon Grand launched an ambient message communicated through the tissue dispenser at the wash room at Cinnamon Grand's Nuga Gama, Asia's first Carbon Neutral® venue. The images indicate the link between trees and the production of paper through a pictorial reduction of green in the island each time a tissue is pulled out. This aims to create awareness on the correlation between paper and trees while encouraging responsible use of paper.

Earth Hour TributeA unique and creative musical tribute was designed to celebrate Earth Hour 2014. The tribute highlighted the need to champion causes that strive to save the planet, and power individuals that are capable to influence that change. The video clip titled `Be an Earth Champion' was conceptualised by the hotel's Sustainability and Green Teams to create awareness, whilst pledging support to making Earth Hour go beyond an hour and a day. The musical video was inspired by the internationally acclaimed emotive hit, `Hall Of Fame' sung by The Scripts. Lyrics for the track were conceptualised by Manager Marketing Communications and Sustainability Tharika Goonathilake with the vocals by talented trio Shehan Wanigasekara (Sales and Marketing), Rushani Jayakody (Marketing Communications and Sustainability) and Shehan Mendis (Marketing Communications and Sustainability). The clip is available on the hotel's YouTube Channel http://goo.gl/2FHz6X.

Stakeholder Group: Guests,Suppliers and Associates

World Tourism Day at the Cinnamon GrandCelebrating World Tourism Day 2013, the hotel’s Marketing Communications and Sustainability Department rolled out a unique awareness campaign for its stakeholders, including guests, suppliers and associates. 'Tourism and Water’ being the theme for the year; the aim of this campaign was to create awareness on the importance of water conservation at all times. As part of the campaign, a striking message was displayed at water canisters, washing bays and public taps around the hotel regarding the importance of saving water.


100 101

Grand's Green Gestures Be an Earth Champion – a musical tribute in honour of Earth Day (http://goo.gl/pBgxiM) • Environmental wisdom cards that are for sale at Cinnamon Grand• A handicraft at Nuga Gama kadé (shop)• A happy customer at Banners to Bags (B2b) sale 2013 held for the fourth consecutive year



101

Defined Contribution Plan ObligationsAll Cinnamon Grand employees are eligible for Employee’ Provident Fund (EPF) contribution, as per the terms of the Employees’ Provident Fund Act No. 15 of 1958 and its subsequent amendments in addition to the stipulations of the Employees’ Trust Fund (ETF) Act No. 46 of 1980 and its subsequent amendments. The Company contributes the relevant percentages of the eligible gross emoluments of employees to the respective EPF and ETF.

Policy Level Commitments Execution Strategy

�� A policy of employment from every point of the Hotel’s presence thus developing the skill base for the preservation and development of the hospitality/tourism industry

�� Business strategy that has the bandwidth to evolve with national tourism development

�� Specific customer development programmes around the year, aimed at building capacity and market linkages

�� Product development − new and existing

�� Programmes aimed at instilling values vital for sustainable production of goods and services

�� Island-wide recruitment�� Products and services that meet

the tourism industry priorities, SME focused product development workshops according to the National Cleaner Production Center guidelines

Defined Benefit Plan Obligation (Payment of Gratuity)All employees are entitled to retirement gratuity, payable under the Payment of Gratuity Act No. 12 of 1983 and an employee with more than 5 years of service will receive half a month's salary for every year of service on retirement or termination of service.

ECONOMIC

Management Approach

Focusing on the fundamental tenets of profit, people and environment, the ultimate objective is to make significant profits without compromising on people and environment. Therefore, we consciously make an effort to reduce our Carbon Footprint, which we believe will have a positive impact on our economic growth. Our growth strategy focuses on creating employment opportunities, providing competitive salaries and benefits, and ensuring the development of employees, which has an impact on our productivity and revenue. Our internal economic policies are aligned to the national growth agenda.

At all times keeping an ROI in mind, pricing decisions and financial/economic strategies are formulated and based on in-depth analyses on the industry risk profile that would impact our business.


102 103

Venue RecognitionCinnamon Grand Colombo takes pride in being chosen as the preferred partner in many international conferences and workshops during the year including the 06th South Asia Economic Summit, JCB India Annual Dealer Conference, Commonwealth Business Forum, World Bank Financing Agriculture Forum and Asian Paints Annual Dealer Conference. We are also instrumental in setting high standards for five-star hospitality with our superior quality principles, through our Cinnamon Hotels and Resorts branding standards and our customer profiling of the hotel. As a city hotel, we have the highest service charge in the city, which is equally distributed to all associates.

Cinnamon Grand still prevails as the only city hotel to be in the Sri Lanka Tourism Hall of Fame since 2009. Cinnamon Grand has 14 unique restaurants, which is the largest number of F&B options under one roof in the country catering to varied palates.

Our signature restaurants include Tao for fusion fare, Lagoon for seafood, Echo for Italian cuisine, Chutneys for South Indian and London Grill for Fine Dining. We have set a high standard in the industry with our innovative F&B features encouraging others in the industry to raise their bars.

Our ethos of affordable indulgence for all ages caters to a wide range of customers without compromising on quality. While offering the highest number of buffet options, our most noteworthy outlet, Taprobane is famous for its international buffets and Sunday brunches, which are the best in the city.

Nuga Gama, Sri Lanka’s only 'village in the city;, won a cultural award from the TouristBoard and is being used as a case study highlighting a growing indigenous brand. We are the only city hotel that holds an entire rural village within its premises. The typical local rural ambiance at Nuga Gama is used for case studies, thesis and research work by undergraduate students at different universities, Department of Archaeology and the Architect Association.



103

cinnamon grand colombo, the preferred venue Cinnamon Grand was the host hotel for the high-profile Commonwealth Heads of Government Meeting (CHOGM) in November. The opening ceremony saw the presence of President Mahinda Rajapaksa and Commonwealth Business Council Chairman Dr. Mohan Kaul among other dignitaries and diplomats.• Cinnamon Grand General Manager Rohan Karr welcoming South Korean Prime Minister Jung Hong-Won to the hotel on his first

official visit to Sri Lanka• Indian External Affairs Minister Salman Khurshid being welcomed at the hotel • Indian Film Director Karan Johar enjoying a cup of coffee at Coffee Stop


104 105


Defined Contribution Plan Obligation (EPF & ETF) in Rs. ’000 2014 2013 2012 2011

CG CL Property Total CG CL Property Total CG CL Property Total CG CL Property Total

EPF 59,468 33,745 2,412 95,625 52,983 31,400 2,193 86,576 46,000 26,400 10,603 83,002 37,749 24,567 8,602 70,918

ETF 11,847 8,500 362 20,709 10,601 7,800 330 18,731 9,233 6,600 2,195 18,029 8,037 6,297 1,747 16,081

Defined Benefit Plan Obligations (Payment of Gratuity) in Rs. ’000 2014 2013 2012 2011

CG CL Property Total CG CL Property Total CG CL Property Total CG CL Property Total Employee benefit liability as at 31 March

109,936 106,570 4,728 221,234 92,284 98,027 3,787 194,098 86,926 99,100 22,625 208,651 67,441 89,300 18,708 175,449

Payments during the financial year

7,344 11,072 - 18,416 13,832 11,137 175 24,794 4,145 7,700 347 11,498 9,709 7,600 880 16,429

To Employees as RemunerationTo The Government as TaxesAs Interest on LoansAs Minority InterestTo Shareholders as DividendsAs DepreciationAs Reserves

2013 / 2014

17%

32%

6%

23% 6%

0%

16%

To Employees as RemunerationTo The Government as TaxesAs Interest on LoansAs Minority InterestTo Shareholders as DividendsAs DepreciationAs Reserves

2012 / 2013

16%

33%

5%

23%

8%

0%

15%

Value Added by the Group


105

Environmental Policy

Grand Indulgence: Not a guilty pleasureAt Cinnamon Grand, every day we make hundreds of choices that in some way impacts the environment and the communities within which we operate. Our environmental strategies aim to better understand these choices and ensure that we consider a range of options and impacts when we make corporate decisions. We believe that this mechanism better enables our Company to make more responsible environmental choices and contributes to the safety and sustainability of the resources of our planet.

We have strived to adopt an environmentally sustainable approach that is interwoven into the heart of our organisation though our employees, business partners and our entire supply chain.

We are committed to continuous improvements in our environmental performance by reducing our ecological footprint. Corporate Social Responsibility and sustainability have long been the driving force behind our comprehensive products and services package that promises affordable indulgence for all ages.

The hotel’s Green Agenda embraces four key areas − waste management and recycling, energy and water management, conservation and community awareness. Within each of these areas, specific measurable strategies are identified to help reduce the impact the company’s activities bring to bear upon the environment.

We have strived to embed and inculcate a culture of environmental awareness within our organisation through earth-friendly initiatives. These initiatives serve to create a sense of responsibility and cooperation amongst our

associates, guests and business partners, on the need for greater environmental stewardship and true commitment towards caring for our planet.

To encourage both customers and employees to actively engage in environmental stewardship, the 'We Dream in Green' campaign has been designed to communicate greener initiatives, create a greener mindset and encourage activities that support sustainable lifestyles and decision making.

The hotel’s Management, Green Team and staff participated in defining the company’s Environmental Policy and the creation of the Environmental Action Plan for the entire property.

A quarterly and annual review is conducted and presented to the staff and all our stakeholders with an aim to secure consistent and continuous improvement of our sustainable performance.

We comply with all legal and environmental procedures in our commitment to operate our business responsibly.

Our ultimate goal is to enhance the `Grand Guest Experience’ through comfort and luxury that takes a minimum toll on the world around us.

The next time you decide to visit Cinnamon Grand, rest assured that sustainability is at the heart of everything we do. So you can have the luxury of Grand indulgence without any guilt.

Rohan Karr - General ManagerCinnamon Grand

First Sri Lankan Hotelin uninterrupted

ISO implementationsince March 2006

ENVIRONMENT


106 107

Policy Level Commitments Execution Strategy

�� Alternative energy usage and reduction

�� Protection of biodiversity in partnership with the Field Ornithology Group of Sri Lanka

�� Construction of ‘Green Buildings’ to minimise impact of the operations to environment

�� Green procurement policy

�� Implementation of Green policies�� Implementation of audits to minimise

the hotel waste �� Adoption of an environmental policy�� Construction and operations of a fully

sustainable and carbon neutral village - Nuga Gama

�� Suppliers educated and motivated to adopt green practices

�� Collaboration with the Field Ornithology Group of Sri Lanka to protect biodiversity

�� Awareness and education to hotel associates through seminars, posters, social media, environmental videos and the green corridor in the hotel

�� Awareness and education through print and social media to customers

�� Children: Cultural tours at Nuga Gama and workshops according to an environmental calendar

�� Alternative energy use in the preliminary testing stage

�� Energy, water and waste saving and recycling initiatives


Cinnamon Grand Green VisionTo be ranked as the Best Five Star Sustainable City Hotel in Sri Lanka by 2015

Cinnamon Grand Goal5% reduction in the Carbon Footprint of the Hotel by March 2015

Management Approach

We have endeavoured to adopt an environmentally sustainable approach that is imbued into the very fabric of our organisation and embraces all stakeholders including employees, business partners and our entire supply chain. Our enduring commitment underscores the need for continuous improvement in our environmental policies and performance by reducing our ecological footprint.

The hotel’s Green Agenda, embraces four key areas: waste management and recycling, energy and water management, conservation and community awareness. Specific measurable strategies are identified within each of these areas to help reduce the impact of the Company’s activities upon the environment.


107

Energy and Water ManagementAs a core area of focus for the hotel, energy and water management plays a crucial role in conveying sustainable business performance for the hotel. Hence both aspects are integrated into all areas of the business, where every effort is made to ensure the efficient management and control of energy and water usage which is practised on an ongoing basis.

Cinnamon Grand’s Energy and Water Consumption Statistics

Adding to the many jewels in our crown, the Cinnamon Grand Colombo was applauded as the first hotel in the country and in Asia to be certified with all three ISO standard certifications, i.e. ISO 14001, ISO 22000, and OHSAS 18001, in recognition of our unrelenting efforts towards environmental excellence. The concept of Environmental, Health and Safety is deeply ingrained in Cinnamon Grand’s operational fabric, and is reflected in all our tasks. The ‘Care Programme’, which focuses predominantly on environmental preservation and conservation further emphasises hotel’s endeavour to be an environmentally friendly organisation. Moreover, being a city hotel in a concrete jungle, it also ensures that all construction and property development standards conform to guidelines laid down by the environmental regulators.

The principles and guidelines delineated by the certifications and the Care Programme are woven into the day-to-day operations at the hotel and permeated throughout the entire organisation by enlisting the commitment of all Cinnamon Grand associates as follows:�� Care for the Environment which we live

in (ISO 14001)�� Care for the associates who dedicate

the best part of their lives working at the Hotel (OHSAS 18001)

�� Care for our most valued customers. (ISO 22000)

Water Consumption

2014

2013

2012

2011

M3230,000 240,000 250,000 260,000 270,000 280,000 290,000 300,000

Electricity Consumption

2014

2013

2012

2011

kWh12,500 13,000 13,500 14,000 14,500 15,000 15,500 16,000

IN PURSUIT OF ENVIRONMENTAL ExCELLENCE


108 109


Energy Savings Activations for the Year

Description Electricity Saving (KWH Per Annum)

Installation of Variable Frequency Drives for the ground water pump 8,760

Installation of LED fluorescent lights in main kitchen and car parks 65,700

Installation of LED lights in lobby fillers 16,556.40

Installation of Variable Frequency Drives for the chilled water pumps 30,660

Installation of motion sensor lights in the ground floor car park 4,415.04

Installation of fluorescent lights were installed for Premium Wing and Courtyard building stairways 3,083.52

Installation of LED lights for Premium Wing guest corridors (room entrance.) 60,829.44

Reformatting switch panels in the engineering room 3,547.80

Installation of LED lights for service lift landing at Courtyard Wing 4,079.97

Managing Cinnamon Grand’s Carbon Footprint

Earth Hour CelebrationsCinnamon Grand joined in the worldwide Earth Hour Celebrations, by switching off lights in the hotel's 501 rooms, 14 restaurants, gardens, fish ponds and swimming pools from 8.30 p.m. to 9.30 p.m. on Saturday March 29th. In house guests and restaurant patrons in the hotel's 14 dining outlets, joined the Grand team in this symbolic gesture to mark their commitment to Earth Hour 2014 by switching off lights in their rooms and participating at the ceremonies held at the hotel's lobby and Nuga Gama.

This year’s Earth Hour signage slogan was constructed by the hotel’s engineering team creating the Earth 60+ logo through solar power.

Earth Hour Savings

Date Time Consumption (KWH) Consumption (Rs.)

29th March 2014 8.30 pm to 9.30 pm 720 16,560

Promoting Energy SavingCinnamon Grand’s Sustainability Department organised a seminar which was the first session on how to save energy, for the hotel’s kitchen staff on domestic appliances. This is part of an ongoing effort by the hotel to educate associates on being energy efficient while encouraging sustainability practices. The key speaker at the event was Mr. Sanath Kithsiri, Head of Energy Management, from the Sustainable Energy Authority, who elaborated on not only how to save energy, but more importantly, why it should be done.

The second session on how to save energy when using the hotel’s kitchen appliances was conducted at the Cedar Room, especially for the hotel’s kitchen staff. The key speaker at the event was

Mr. Sanath Kithsiri, Head of energy management, from the Sustainable Energy Authority. Over 60 associates attended this seminar.


109

As Colombo’s largest five star property, with 501 rooms and 14 restaurants, the Cinnamon Grand remains committed to minimising food waste, and has made food waste management an integral part of the hotel’s day-to-day functions. With this in mind, the Grand’s Marketing Communications and Sustainability Department in collaboration with the hotel’s team of chefs presented the ‘Delicious Waste’ initiative, so as to encourage and inspire the hotels associates as well as other stakeholders to play a proactive role in reducing food waste.

Waste Management Initiatives

2013/14 2012/13 Reduction

Hotel Food Waste Kg’s 701,773 825,448 18%

WASTE MANAGEMENT

Delicious Waste Chefs Competition

Marking the World Environment Day under the ageis of the United Nations Environment Programme (UNEP) and the Food and Agricultural Organisation (FAO), our sustainability department together with the marketing communications and the talented team of chefs organised ‘The Delicious Waste Chefs’ Competition’ on 5th September 2013.

This competition, well attuned with this year’s Environment Day theme ‘Think.Eat.Save: Reduce Your Foodprint’ advocated to be creative in cuisine whilst reducing food waste. Introducing this novel concept - first-of-its-kind in the hospitality industry of Sri Lanka, the hotel’s chefs presented delicious and creative dishes in the Breakfast, Lunch, Dinner, Snack and Dessert categories with ingredients otherwise considered as ‘non-appetising’. This competition was judged by a distinguished panel - Hemalallindre Ranawake (famously known as Koluu), Sri Lanka’s celebrity chef; Felicia Sorensen, internationally acclaimed Queen of Curries and Savithri Rodrigo, renowned travel writer. We saw 41 of our senior and junior chefs presenting 73 dishes and the most talented were awarded with cash prizes, medals and certificates.

As Colombo’s largest five-star property, we remain committed to food waste management; an integral part of the hotel’s day to day functions. This initiative was ideal to encourage and inspire our associates as well as other stakeholders to join in our efforts and complement our target of reducing the hotel’s ‘foodprint’ by 25 per cent each year.

Breakfast Category1st - V. Krishna

2nd - Asanka Wijekoon

3rd - N. Sattiyaseelan

Lunch Category1st - Sujith Ariyarathne

2nd - Rasika Weerarathne

3rd - Sujith Ariyarathne

Dinner Category1st - D.C. Dissanayake

2nd - G. Margaret

3rd - Suresh Senaratne

Snack Category1st - G. Margaret

2nd - N. Sathiyaseelan

3rd - Ananda Rakitha

Dessert Category1st - Ranuka de Silva

2nd - Sirilak Suksamran

3rd - P.K. Kumara


110 111

Sustainability report contd.Sustainability report contd.

cinnamon grand's Delicious waste competition Delicious waste competition winners with Cinnamon Grand General Manager Rohan Karr• Lagoon Chef preparing her creative, delicious waste dessert• The array of creative dishes on display• Judges: Celebrity Chef Hemalalindre Ranawaka (Koluu), internationally acclaimed Queen of Curries Felicia Sorensen and

renowned travel writer Savithri Rodrigo


111

Cinnamon Grand launched an ambient message conveying the importance of saving and recycling paper, by highlighting the toll that paper production and consumption takes on trees and, in turn, negatively impacting the environment. The message is communicated through the tissue dispenser at the wash room at Cinnamon Grand's Nuga Gama, Asia's first CarbonNeutral® venue. The images indicates the link between trees and the production of paper through a pictorial reduction of green in the island each time a tissue is pulled out. This aims to create awareness on the correlation between paper and trees while encouraging responsible use of paper. This communiqué is part of Cinnamon Grand's commitment to creatively conveying the importance of being environmentally conscious and embracing sustainable practices.

Banners to Bags (B2b):

A unique, innovative recycling initiative introduced by Cinnamon Grand with the aim of converting used promotional flex banners of the hotel and suppliers into practical, durable and waterproof bags. Flex material is a petroleum by-product discarding these banners without a sustainable recycling plan was not an option. The hotel collected these banners for a year to avoid health and environmental hazards until an environmentally friendly plan was formulated which resulted in B2b.

B2b emphasises the importance of infusing the triple bottom line concept into the hotel’s daily operations and is inspired by the 3R initiative of Reduce, Reuse and Recycle. Cinnamon Grand Colombo worked on reducing waste that could arise from discarding the banners and reusing the discarded product by recycling it for more productive use in the form of trendy, useful and long-lasting bags.

The B2b process was researched through the Sustainable Development Triangle Model developed by MIND (Munasinghe Institute for Development) and was studied thoroughly by MIND prior to the endorsement of Nobel Peace Prize 2007 Co-Laureate Professor Mohan Munasinghe.

The B2b project has led to remarkable benefits and advantages in the areas of environment, economy and society as indicated below.

Environmental Advantages�� A sustainable environmentally friendly recycling initiative of a product that causes immense land degradation and air pollution.�� Landfills will no longer have the non-bio degradable flex banners disposed into it.�� The need for incineration of the flex banners as yet another method of disposal and the ensuing noxious fumes will no longer

be a cause for environmental concern.

Economic Advantages�� The production of the bags creates a sustainable income-generating avenue for unemployed tailors, with the dual advantage

of adding to family incomes and giving them a sense of self worth and dignity.

Social Benefits�� Proceeds from the sale being channelled towards the hotel’s primary CSR initiative, the children’s ward of the Maharagama

Cancer Hospital assists in maintaining a sustainable fund for the continuing work of this project. �� The fashionable, hip and trendy bags create added hype and awareness among society, not only of its environmentally

friendly features but also of the dual social commitment. This further leads to a ‘feel good’ factor permeating through to the owners of the B2b bags.

ECO-FRIENDLY WASTE MANAGEMENT PRACTICES


112 113


Waste Management Efforts for the Year

Item (KGs) Description Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total

Wet garbage Collected by three piggery farms to feed the pigs

188,098.10 185,781.72 184,627.37 203,435.43 761,942.62

Kitchen used oil Fire the boilers of the hotel 1,624.50 2,834.10 3,177.90 3,735.90 11,372.40

Plastic and polythene Given to Central Environmental Authority listed collectors for recycling

3,823.66 3,972.40 4,305.00 4,898.60 16,999.66

Paper Given to Central Environmental Authority listed collectors for recycling

6,924.49 5,364.50 7,208.50 8,293.20 27,790.69

Glass bottles Given to Piramal Glass Company for recycling

1,315.10 3,671.50 3,926.00 5,320.90 14,233.50

Hazardous waste (E-waste and CFL and tube bulbs)

All E-waste is collected by Think Green and all CFL and tube bulbs are collected by Orange. Both companies are registered with the Central Environmental Authority

94.60 85.20 76.27 95.02 351.09

Metal tins and cans Given for recycling to the same collector as plastic and polythene

369.60 619.24 381.00 819.20 2,189.04

Composting Composting is processed in the hotel and used for the garden areas

11,608.00 11,744.00 9,322.00 10,043.00 42,717.00

Landfill waste Given to the Colombo Municipal Council for dumping

10,909.00 10,909.00 10,909.00 10,909.00 43,636.00

Coconut shells Collected by one of our garbage collectors and given to a company which uses it to fire their boiler

0.00 0.00 0.00 568.00 568.00

Total Waste

921,800.00

Waste Disposal and RecyclingIn order to create awareness on proper waste disposal and recycling, garbage disposal cubicles were painted in CEA (Central Environmental Authority) recommended colours which assisted associates to recognise the different types of waste disposal bins/areas and remind them of the importance of categorising when disposing.

24 hour CCTV cameras were also fixed to monitor whether correct disposing of garbage was taking place.


113

Cinnamon Grand Colombo believes and supports conservation of biodiversity. The 200-year-old Nuga Tree in the hotel premises stands as a testament to our commitment to nature. Our ethos was to provide visitors an experience based on the ambience of rural life without leaving the city and hence, the ‘village in the city’ emerged. The very fact that Nuga Gama which has infused the true village concept into its entirety demonstrates our commitment to environmental sustainability. The rural village of Cinnamon Grand was built on an environmentally sustainable platform, where eco-friendly practices were inculcated throughout the entire village.

The lifestyle restaurant is set within the picturesque location of a farmland with thatched mud huts, cattle and poultry, and other paddy harvesting features. The environmentally friendly concepts practiced within the village are manifested in all aspects of the milieu. The floors, roofs and walls of the huts, community hall, the kadé (shop) are built with eco-friendly substances such as mud, Iluk, and coir rope.

Carbon Neutral Venue at Nuga Gama:

One of our objectives was to create a Carbon Neutral Venue to encourage Carbon Neutral events, meetings and conferences. Nuga Gama has now been certified as South Asia’s first Carbon Neutral Venue by the Carbon Consultancy Company, according to World renowned physicist and climatologist as well as Vice Chairman of the Intergovernmental Panel on Climate Change and 2007 Nobel Laureate Professor Mohan Munasinghe. Cinnamon Grand Colombo with its passion to excel will take it one step further and plans are under way with our innovative chef creating a typical village style menu where sourcing, transport and preparation has a minimal impact on the environment.

The farming practices established are organic and devoid of artificial fertilisers which are harmful to the environment. Drinks served are from local seasonal fruits, hence no preservatives; while the cuisine, cooked on a firewood hearth in earthenware pots is primarily organic, using local spices, fruit, vegetables, meat, fish sourced from village suppliers or from the Nuga Gama garden. The Nuga Gama garden is enriched with about 45 varieties of plant species including indigenous medicinal herbs, leafy greens, fruit trees and spices. We also have a number of endemic floras such as the Honey Tree or Mee, of which bark and seed-oil are used to treat various ailments. We have created habitats for small birds, insects and all plants in the Nuga garden and they have been categorised and recorded. Plans are under way to categorise birds and butterflies.

We do believe that having infused the best practices prevalent in a true Sri Lankan rural village, environmental sustainability becomes a natural phenomenon rather than one that has to be consciously put in place.

CONSERVATION OF BIODIVERSITY


114 115

rich biodiversity amidst the bustling city The lotus pond at Nuga Gama which sets the tone of a diverse nature from the moment you step in to the village in the city• A common kingfisher post-pruning session enjoys the view atop a lamp• Beautiful butterflies are a common sight at the village• A monitor lizard scanning the area



115

Events at Nuga Gama - asia's 1st carbon neutral® venueNuga Gama decorated for a green wedding• The dashing bridesmaids clad in traditional attire • Guilt-free dining at Nuga Gama• Interactive Sri Lankan cooking classes for guests


116 117


Policy Level Commitments Strategy Execution

�� Skills enhancement and development of the resource pool

�� Improving workplace health and safety standards

�� Creating a suitable work-life balance for all employees

�� Highly focused recruitment agenda to ensure the right candidates are selected

�� Extensive training and education to improve knowledge and expertise

�� Ensuring compliance with all mandatory safety regulations

�� Conducting regular training to enhance safety standards

�� Promoting greater social interaction and inculcating the required psychological and attitudinal behaviour patterns among employees

Goal: To be the Employer of Choice among all Five Star Hotels in the Country

Embracing a non-discrimination policy, the Cinnamon Grand continues to affirm its commitment as an equal opportunity employer. We do not discriminate based on race, religion, gender, age, nationality, social origin, disability, political affiliation, opinion or any other status protected by law. Also as per the JKH Group policy we do not condone child labour, forced or compulsory. So much so that while infusing a deep sense of belonging among our associates, the multi-cultural and multi-ethnic environment has in fact been the cornerstone of Cinnamon Grand’s enduring success. Moreover, we have actively promoted within our team, differently-abled individuals that work alongside their colleagues, integrating themselves into regular society and enabling them a secure livelihood.

Employee Gender Analysis as at 31st March 2014

Type Male Female Total Head Count

AVP and Above 5 5

Manager 4 1 5

Assistant Manager 5 3 8

Executive 102 26 128

Non-Executive 1001 86 1087

Leveraging on the hotel’s commercial success, we offer all our associates a competitive remuneration package, consisting of a range of benefits in addition to the basic salary and stipulated industry perks.

SOCIAL

Enriching the Workforce - Management Approach

At Cinnamon Grand we strive to develop an atmosphere in which employees are inspired to discover their full potential. Our endeavour is to create a dynamic, loyal workforce with a positive mind set. Underpinned by this premise, we remain committed to nurture an empowered team that will play a pivotal role in enacting the future aspirations of the hotel.


117

Standard Benefits Package�� Annual bonus�� Night transport for female associates�� Emergency loans �� Uniforms �� Dormitory and locker facilities �� On-duty meals �� Discounted pastry and bakery items �� Annual medical check-ups

Additional Welfare Benefits All associates are entitled to the Cinnamon Grand welfare benefit plan. The monthly contribution of Rs. 50/- per employee is matched by an additional Rs. 100/- contributed by the company to the hotel's welfare benefit fund. All associates are entitled to the following benefits from the welfare benefit fund:

�� Distress loan to be recovered from the associate’s salary in 10 monthly installments at an interest rate of 2.5 %

�� Donation to meet funeral expenses in the event of the death of an associate or a member of their immediate family including parents and parents-in-law

�� A wedding gift for newly married associates

�� Christmas gifts for associate’s children below the age of 12

�� As a birthday treat, associates are offered a special overnight stay package on a full board basis

�� Donation for associates undergoing operations for critical illnesses

�� A service gratuity is paid to associates who leave the hotel after a continuous service period of more than 15 years

�� A savings account is opened at a preferred bank for a new born baby of an associate

�� A retirement gratuity is given to associates who retire after serving the hotel more than 5 years

�� Festival advances are paid during seasonal periods and is recoverable from the associates’ salary

EMPLOYEE ENGAGEMENT

With the objective of creating a dynamic resource pool, the Cinnamon Grand adopts an open-door management policy that promotes a communicative employment culture within the organisation. A comprehensive agenda facilitates greater interactions between employees and key management through regular meetings and conferences. Taking the form of consultative discussions, these forums are a meeting of minds that stimulate the exchange of mutually beneficial ideas. These regular interactions also help nurture employee goal congruence and engender workforce loyalty towards the organisation. Further efforts to address employee concerns has prompted the introduction of a communication box entitled ‘Tell GM’, which serves to deliver written grievances, opinions and suggestions of associates. Once collated and addressed by the General Manager, solutions are posted on a board next to the box.

Moreover, the hotel maintains relationships with three unions namely the Sri Lanka Nidahas Sevaka Sangamaya (SLNSS), the Jathika Sevaka Sangamaya (JSS) and the Inter Company Employee’s Union (ICEU) with JSS and ICEU together representing less than 10% of our workforce. Even in the absence of any collective agreement with these unions, the management continues to maintain a healthy relationship with them.

REWARDS AND RECOGNITION SCHEMES

Associate Quarterly Awards: Associates are recognised on a quarterly basis for outstanding achievements in terms of commitment, productivity and

contribution to the common goal of making Cinnamon Grand Colombo the Best Hotel in the City and are nominated by their respective departments. They are rewarded at the staff meeting held every quarter. Categories of award winners include: Associate of the Quarter, Associate of the Year and GM’s Special Award. The nominees as well as the winners are awarded with a cash reward.

Long Service Awards: The Service Awards Ceremony is held every year to reward associates that have served the hotel for a long period of time. Associates are given gold sovereigns in proportion to their years of service (up to 35 years). This awards ceremony is held in a grand manner in recognition and appreciation of their long service and dedication.

Creating a Healthy Work-Life BalanceA firm belief that a healthy, motivated workforce is an unparalleled resource has led us to adopt a holistic approach towards creating a meaningful work-life balance for all our employees. We provide a mentoring role in supporting employees to meet the challenge of their work while ensuring they remain committed to the long term objectives of the company. Recognising and rewarding both personal and professional achievements form a key part of our endeavour to encourage employees to tap into their potential talents and develop leadership abilities that would underpin their success.

Encouraging National Sportsmen/Women�� Shaminda Eranga, an associate of

Cinnamon Grand, also represents the Sri Lanka National Cricket Team. A brisk fast-medium bowler, Shaminda Eranga made a spectacular debut in the cricketing world with his first


118 119


ODI against Australia in 2011. Having performed exceptionally well since his first encounter, Shaminda is considered to be an invaluable asset to the National Team.

�� Ishan Jayaratne, also one of hotel’s associates represented the Sri Lanka 'A' Team as a right-arm seam bowler.

�� Cinnamon Grand’s associate Lakshan Samarasinghe part of the Sales and Marketing Team brought the hotel pride by captaining the John Keells Group Basketball team at the Mercantile Basketball championships 2013 and leading the team to victory. He was also recognised as the ‘Best Player of the tournament’.

KEY 'WORK-LIFE' INITIATIVES FOR THE YEAR

Inter Department Cricket 6sThe annual Inter Department Cricket 6s, a highly anticipated inter-departmental sporting event was concluded at the Burgher Recreation Club (BRC) Grounds on 27th October 2013, with Team Front Office emerging as winners in the male category while Team Sales emerged as winners in the female category.

Inter Departmental Soccer 7s Annual Inter Department Soccer 7s, another inter-departmental sporting battle, was successfully concluded at the Malay Grounds on the 9th of February 2014, with Team Angsana taking the top spot in the male category while Team F&B were awarded the Winners Trophy in the female category.

Cinnamon Grand Sports Meet The Cinnamon Grand Inter-house Sports Meet, a much looked forward to event in the hotel’s sports calendar was held on 29th September 2013. A challenge between the Tangerine, Celery, Olive,

Blueberry, Rhubarb, and Grape houses, the event comprised a number of track and field events and culminated with a March Past. Held at the Burgher Recreation Club (BRC) Grounds, the event concluded successfully with the Tangerine house winning the overall championship trophy.

Improving Employee Wellness Facilities available to improve employee wellness include;

�� Annual medical checks for all associates over 40

�� Senior Executives annual medical check-ups

�� Special annual medical checks for food-handlers

�� Eye clinic �� 24 in-house clinic and doctor visits

twice a day �� First aid trainers �� Breast cancer awareness

programmes

Breast Cancer Awareness Seminar Cinnamon Grand conducted a Breast Cancer Awareness seminar for its female associates, with 53 participants from departments across the hotel attending, in commemoration of Breast Cancer month. Chaired by a panel of imminent speakers, the session focused on creating awareness on prevention and early detection. Elaborating on the importance of early detection, the speakers also explained self-examination techniques that are critical towards prevention and early detection. Control and treatment measures were also discussed.

The seminar was organised by the hotel’s Sustainability Division and supported by Green Team champion Deepika Satyapala, who handed over the funds collected through the sale of pink ribbons, to the Mithuruwela fund.

Drink Wise CampaignThe first phase of the ‘Don’t Drink and Drive’ campaign was launched by the hotel in November 2013 in partnership with the British multinational alcoholic beverages company DIAGEO, the world's largest producer of spirits and a major producer of beer and wine. The slogan for the campaign being ‘Responsible Drinking’, was aimed at creating awareness among F&B managers and supervisors about the dangers of driving under the influence of alcohol.


119

Staff events Cinnamon Grand Sports Meet• Cinnamon Grand Team all dressed up for Octoberfest in keeping with the hotel’s German theme at the JKH Inter-Company

Rugby 7s• Associates Quarterly Meeting• Service Award 2013 (staff with a service of over 20 years and above)


120 121

Grand SportsmanshipChampions at the 9th annual ‘Battle of the Spices’ cricket encounter between Cinnamon Grand and Cinnamon Lakeside• John Keells Group Basketball Team Captain Lakshan Samarasinghe with the Mercantile Basketball Championships Trophy 2013• Cinnamon Grand Colombo’s A Team emerged Runner Up in the soccer encounter of John Keells Inter-Company Goal and Ring 7s• Inaugural Travel Trade Beach Rugby Tournament Winners – Cinnamon Grand Colombo B Team



121

DEVELOPING A DYNAMIC TRAINING CURRICULUM

Efforts to enrich our people have always been underscored by the need to create a dynamic training blueprint that would caption the current needs of our workforce. By collating the results of a series of formal and informal indicators, we are able to develop a comprehensive Training Needs Analysis (TNA) that forms the basis of the annual training curriculum at Cinnamon Grand.

The Importance of In-house Training Given the highly competitive nature of our business, where service differentiation remains the key to success, in-house training plays a critical role in manifesting the desired level of service clarity and professionalism to pursue Cinnamon Grand’s unique selling proposition. Conducted by the learning and development team together with the support of our departmental trainers (Train, Assess and Develop or TAD trainers), our in-house training framework follows a dynamic approach to enhance and improve knowledge and skills, while instilling the right attitudes to help associates absorb the hotel's unique value culture.

In-house Training Programmes Programme Description Staff Per Session

Cinnamon Grand induction A three-day comprehensive program to introduce new recruits into Cinnamon Grand’s operational code and provide an introduction into the value culture of a star class resort, while also stressing on the importance of being part of the JKH group.

350

SOP Workshops (Standard Operating Procedures)

This is a training initiative for Associates to ensure departmental staff is kept abreast of the standard operating procedures in use in their respective departments. The SOP sessions also include training sessions conducted by TAD trainers from other departments.

97

On-the-job training at Front Office and Food and Beverage Departments

Trainers work on a roster basis at these departments to identify and analyse the training requirements as well as to conduct on-the-job training within each department

189

City Tour for Concierge and Butler associates

City tours to explain the attractions that Colombo has to offer which in turn could be used in day-to-day operations by the staff of concierge and butlers. The programme was implemented this year to increase the knowledge of the associates for them to better manage the needs of guests

23

Motivation (Level 1) A motivational workshop conducted to identify the issues faced by associates at the workplace and how they can in turn realise these issues and turn them into positivity at the workplace.

605

Training Needs Analysis (TNA)

Annual Performance Review

Voice of the Employee Surveys

Guest ReviewsFeedback from

Managers

Training Audits


122 123


Motivation (Level 2) A continuation of level 1, this session examines the areas that were identified in the previous training and looked at ways and means of turning de-motivating factors into motivators

742

PMS Training Focusing on educating associates on the procedures of Cinnamon Grand’s Performance Management System to enable them to navigate the system and use it as a tool to improve their own performance, and convey greater benefit to the day-to-day operations of the hotel

68

Cinnamon Magic A programme aimed at instilling the right mind-set among new recruits, the sessions are conducted by a team of Cinnamon Magic trainers comprising staff from different departments to provide a wealth of experience and knowledge

124

TAD Trainer Programme Conducted by the Learning and Development trainers, the programme is designed to nurture potential TAD trainers from among hotel’s associates. Upon completion of the programme, all successful TAD trainers are then certified as such at the Associate Quarterly Meeting (AQM). All certified TAD trainers would then be responsible for delivering high intensity departmental SOP trainings within Cinnamon Grand in addition to playing a lead role at SOP workshops for their respective departments.

42

Exam Revision Revision sessions to prepare associates for exams. The subject matter used is based on management decisions, TripAdvisor comments and data gathered via customer feedback

400

Associate Quarterly Exams Introduced with the aim of testing competency levels, all associates in the categories of junior executives and below are tested. The subject matter for the questionnaires are derived from the TNA as well as information provided to the L&D team by the management

325

Soft Skills for Telephone Operators A programme designed to improve the conversational skills and telephone etiquette of hotel’s telephone operators

5

Soft Skills for Security This tailor-made soft skills program addresses the critical role played by the security staff to ensure Cinnamon Grand continues to maintain its star class standards

15

Customer Service 101 A programme that extensively covers the basics of customer handling and service

976

Cinnamon Grand Competency Training

Covering the standard competency model for all Cinnamon Hotels and Resorts, these sessions aim to create awareness on how best to emulate the model

1,019

Food and Beverage Module This training package offers comprehensive training on F&B for associates working at hotel and covers most areas that are vital for daily operations. All participants are awarded a certificate following successful completion of training

356

English for Cinnamon Grand Associates

A programme initiated to enhance the degree of spoken English at different levels

82

Staff Facilities and Locker Etiquette To maintain the standards of the facilities and lockers that are provided by the hotel, in-depth training is conducted to instruct associates on how staff facilities should be utilised and maintained with due care

647



123


First Aid Training Basic training for staff to understand the fundamentals of First Aid. The programme was conducted in-house by the Red Cross First Aid team of Sri Lanka

37

Preparing for CHOGM A special one-time training programme was designed and implemented for all staff operating in guest areas to improve their guest servicing skills to cater to the event

1055

Awareness Programme on HR Practices

While promoting transparent HR practices, this training session informs all associates on Human Resources practices and the HR offers available to the staff of the hotel

907

Guest Service (Level 01) Conducted for all staff at Level 01 (junior executive and below). The programme delivers the key competencies that are required in the leisure sector. This workshop is an in-depth, customer focused session that targets all areas of customer handling

198

Finance for Non-Finance Staff Conducted by Mr. Sunil Peiris, Sector Financial Controller at Keells Hotels and Resorts, the session allowed Cinnamon Grand staff to take a closer look at the world of hospitality finance

26

External Training Statistics for the Year

Category Q1 Q2 Q3 Q4 Total Hours

No: Staff Average Hours

Number of hours of training: AVP and above 16 36 48 6 106 5 21.2

Number of hours of training: Manager 24 80 64 12 180 5 36.0

Number of hours of training: Assistant Managers 140 105 40 18 303 8 37.9

Number of hours of training: Executives 224 944 854 313 2,335 128 18.2

Number of hours of training: Non-Executives 12,051 18,382 11,397 16,188 58,018 1,087 53.4

Number of hours of training for male employees by category: AVP and above

16 36 48 6 106 5 21.2

Number of hours of training for male employees by category: Manager

21 72 64 6 163 4 40.8

Number of hours of training for male employees by category: Assistant Manager

129 95 8 12 244 5 48.8

Number of hours of training for male employees by category: Executives

179 850 769 282 2,080 102 20.4

Number of hours of training for male employees by category: Non-Executives

10,870 16,544 10,257 14,569 52,240 1,001 52.2

Number of hours of training for female employees by category: Manager

3 8 0 6 17 1 17.0

Number of hours of training for female employees by category: Assistant Manager

11 10 32 6 59 3 19.7

Number of hours of training for female employees by category: Executives

45 94 85 31 255 26 9.8

Number of hours of training for female employees by category: Non-Executives

1,181 1,838 1,140 1,619 5,778 86 67.2


124 125


Associate training Learning and Development Manager Shashi Jayawardena training the associates• Housekeeping golden rules explained by Departmental TAD trainers • Cinnamon Magic Mind Set Training for associates • Staff Motivation program


125

WORKPLACE HEALTH AND SAFETY

As always health and safety of the workforce remains a primary concern for Cinnamon Grand as we strive to uphold international hospitality standards at all times. A sound set of principles and practices form the basis of our safety policy, which is comprehensively captured in the hotel’s safety manual. The hotel’s Department of Compliance, Health and Safety is the apex body within the organisation, in charge of all safety aspects. Further the Accident Committee and the Evaluation and Prevention Committee which come under the supervision of the Health and Safety Department, also offer proactive support in maintaining safety standards. The department is tasked with monitoring, reviewing and reporting on the day-to-day adherence of safety standards and procedures. The company’s safety procedures are further strengthened by OHSAS 18001 certification obtained from SGS Lanka, the accredited body for OHSAS certifications in Sri Lanka. The certification confirms that Cinnamon Grand’s systems and processes are fully compliant with OHSAS 18001 international standards for occupational health and management systems.

Occupational Health and Safety PolicyAsian Hotels and Properties PLC (AHPPLC) was awarded with the OHSAS 18001 Certification in May 2012 for maintenance, housekeeping and security of the Crescat Boulevard shopping mall, food outlets and premises. AHPPLC is committed to protecting the health and safety of all persons in the shopping mall, food court and other relevant areas and workplace including employees,

contractors, customers and other visitors. AHPPLC employees, contractors, customers and visitors have a duty of care including the responsibility to work safely, to take all reasonable care for their own health and safety, and to consider the health and safety of other people who may be affected by their actions. AHPPLC will take all reasonable and practical steps to improve work safety conditions and will strive to uphold its core values of safety, knowledge, integrity and leadership in order to achieve its goal of zero harm.

Asian Hotels and Properties PLC is committed to:

�� Complying with all applicable health and safety laws, regulations and standards.

�� Providing safe plant and equipment for controlled work.

�� Implementing risk and hazard management systems which are relevant and suitable for the organisation's risk exposure as well as identify, promote and continuously improve health and safety performance.

�� Ensuring all managers remain directly responsible and accountable for the health, safety and welfare of their employees and provide adequate resources to assist managers in this cause.

�� Provision of appropriate Health and Safety Training to all relevant persons.

�� Maintaining relevant policies, procedures, systems, information, training, recognition programs, and organisational structures to support and communicate effective health and safety practices throughout the organisation.

�� Utilising appropriate internal and/or external expertise when required in all related activities.

�� Establishing clear targets and objectives to continuously improve health and safety in the workplace.

�� Maintaining a positive safety culture through encouraging active participation, consultation and cooperation of all employees, contractors, customers and visitors in promoting and developing measures to improve health and safety at work.

AHPPLC will implement and maintain these systems, inclusive of standards, policies and procedures. These standards will be monitored regularly to ensure their integrity and effectiveness to facilitate continuous improvement.

Injury RateIn the Financial year under review, a total of 24 associates of Cinnamon Grand were affected by occupational injuries, a decrease of 55% compared to last year.

Lost Day Rate

2013/14 2012/13

Total no: of man days in the period 325,512 323,136

Total no: of man days lost (TMDL) 199 514

TMDL as a % of total man days in the period 0.06% 0.16%


126 127


Being at the crux of our operations, products and services we offer have a profound impact not only on the hotel’s economic performance, but also on the community and the environment. Aligned to the group policy, the Cinnamon Grand’s product responsibility ethos strives to conform to all industry benchmarks for best practices and compliance with both local and international statutory and regulatory requirements, that would

validate the quality and integrity of our products and services. Ensuring product diversity and reasonable pricing allows us to cater to diverse market segments without compromising on the quality of our products and services.

Product and service responsibility initiatives undertaken by the hotel in conformity with the product responsibility guidelines are as follows:

�� All meat products are purchased from Halal certified suppliers, in order to meet the requirements of our guests which include special care in the preparation of food.

�� Adherence to the supply chain policies of Cinnamon Grand and the JKH Group help us tap into additional suppliers in conformity with the group policy for ethical sourcing. This not only allows for a guaranteed supply at a fair price, but also ensures that child labour is not utilised in the process. Further, we adhere to the AIS standards of advertising and have a high percentage of suppliers from the SME sector.

�� In keeping with our promise of guilt-free indulgence, a Diabetic Menu was launched in response to a growing demand for such options given the recent escalation of diabetes. The menu is available at the hotel’s restaurants and consists of 30 dishes. We are now in the process of developing an organic menu for Nuga Gama, which is Carbon Neutral Certified. We also offer vegetarian options in all our restaurants and a special healthy menu option for kids. Nuga Gama’s organic garden produce is used daily in at least one dish, thus providing guests with alternative organic options for food.

�� Improving services is considered high priority, as the hotel strives to provide guests with an unforgettable

experience. Customer feedback is frequently gathered to gauge satisfaction levels and identify ways to enhance our products and services. Guest comment cards in rooms and restaurants are collected and analysed daily. The Rooms Division, which comprises of housekeeping, laundry, recreation, reception and front office, interacts with at least 30 guests daily and their feedback is passed onto to the Head of the Department, who shares it at the morning meeting. Customer feedback is also monitored through TripAdvisor and Facebook.

�� Customer complaints are received through guest comment cards. All complaints are logged into the system and categorised broadly as F&B and front office. Complaints are dealt with at the Heads of Department morning meetings and a response to the customer is provided within 24 hours.

�� Bi-annual brand audits are carried out with the audit team experiencing and observing the services at the hotel. F&B conducts self-audits monthly as well as reviews by ‘Mystery Guests’ sourced by the General Manager.

�� Food safety is paramount in our organisation and we have been certified with ISO 22000 for Food Safety Management systems in addition to the Five Crowns certification.

Introducing Organic Wines Making available organic wines to its beverage list so that patrons can have the choice of enjoying organic options when ordering drinks stands as statement to the hotel's environmentally-conscious commitment to future generations. The wines are made from organically grown grapes with no interference to the natural ripening process.

PRODUCT RESPONSIBILITY

Management Approach

We strive to continually increase the sustainability of our product offering, keeping in mind its toll on the ecology and economy, while continuously creating products and services that deliver on our brand promise of affordable indulgence for all ages. As Sri Lanka’s largest hotel property offering a diversity of luxurious products and services, we understand the need to assess the sustainability of our processes and products across their entire life cycles, to ensure the highest health and safety standards, resource efficiency and cleaner production strategies.

Our purchasing policies underpin the importance of eco-friendly products that take into consideration the complete product life cycle from production, to product use, to disposal and reuse. We work in collaboration with our wide network of suppliers to develop new sustainable products with values ascertained on the basis of environmental, business and social sustainable indicators. This extends to our attitude towards customer care and focus, which is of the highest quality.


127

product responsibility at cinnamon grandOrganic produce cultivated at our own backyard at Nuga Gama• Tasty yet healthy menu option for kids • Guilt-free indulgences at Grand – diabetic menu for our diners• Organic wines are part of our beverage list


128 129


Industrial Training for StudentsKey efforts in this regard saw Cinnamon Grand host a group of 90 students from the University of Jaffna for a one-day session including a comprehensive briefing on the hospitality industry. The session was carried out by the hotel’s Heads of Departments and the Training and Development Team and also included a tour of the hotel. The highlight of the day was the presentation made by General Manager Rohan Karr, describing his long and challenging journey to the top, in an inspiring and motivating sharing of personal experiences. To conclude the day’s events, each student was gifted a motivational book as a token, in hope that it will in some way inspire them as they prepare to enter the working world. The visit was part of a project organised by the JKH CSR division, to sponsor 100 students from the Faculty of Management Studies and Commerce of the University of Jaffna, on a week-long industrial tour of its business units in Colombo.

Vocational Training ProgrammeAs a key CSR initiative in collaboration with the John Keells Foundation, we commenced our vocational training programme targeting school leavers, primarily from the neighbouring schools. As the first step, the internship opportunities were provided to school leavers from neighbouring schools with a view to providing them the foundation needed to jump start their careers after having completed their O/Ls.

Other Tours Conducted by the Learning and Development Team During the Year:

Category Scope of the tour

Navy Supply and Secretariat School a part of the Naval and Maritime Academy of Trincomalee

Key F&B, Kitchen and Banqueting information, tour of the hotel and a session on adopting five-star service standards

Maldivian school students Insights on the hotel industry and tour of the hotel

Bamunugama Maliyadeva Vidyalaya-Home Science students

F&B Kitchen basics, food carving demonstration, tour of the hotel

Home Science students of Ladies College, Colombo

F&B Kitchen basics, food carving demonstration, tour of the hotel

Students from School for the Deaf, Ratmalana

Tour of the hotel

CORPORATE SOCIAL RESPONSIBILITY

Management Approach

Cinnamon Grand’s CSR proclamation has been developed in cognisance with the national endeavour to uplift the social standards and living conditions of less developed and vulnerable communities in the country. Hence, driven by a deep rooted social conscience, we have continued to work towards the betterment of society in general. In particular, our endeavours towards uplifting social standards concentrated on youth empowerment and knowledge sharing as means of capacity building for underprivileged youth in the country.


129

Corporate social responsibilityStudents from Jaffna received the Grand experience both in the hotel and the city for the very first time• Cinnamon Grand’s Green Team, Breast Cancer Awareness Fundraising Project Champion Deepika Sathyapala handing over a donation

raised by the sale of pink ribbons in commemoration of Breast Cancer month to Prof. Riyana Raheem, Mithuruwela Cancer Support Network

• Spreading a little sunshine to the children at the CCC Transit Home-Maharagama Cancer Hospital• Kids from Deaf and Blind School in Ratmalana visit Grand


130 131


PROMOTING LOCAL HERITAGE AND CULTURE

From the inception we have supported the traditional Sri Lankan handicraft industry in a bid to offer our guests an insight into our rich culture. We have also consistently supported local cultural performers by providing them a platform to showcase their talents and skills to our guests. These efforts are now intrinsically linked with the Cinnamon Grand’s brand identity and form a key part of our endeavour to manifest meaningful societal change in the long term.

Promoting Local Craft:The traditional ‘Kadé’ or village shop, located at the Nuga Gama affords skilled rural craftsmen the opportunity to display and sell their products. Guests are encouraged to purchase these unique products and enable these talented craftsmen to generate a sustainable livelihood. The supplier network for the Nuga Gama kadé spans different parts of Sri Lanka including Matara, Habaraduwa, Ambalangoda, Dankotuwa, Galle, Kandy, Balapitiya, Jaffna and Panadura.

Promoting Traditional Sri Lanka’s Dance Rituals:The Nuga Gama regularly hosts entertaining dance segments that portray the intricacies of daily village life. Led by generations of professional dancers, the performances are done by the highly accomplished Shilpa Ranga Cultural Dance Troupe that performs a wide range of informative dance rituals based on traditional Sri Lankan folklore.

Women’s Empowerment:The traditional ‘Kussiya’ or kitchen at Nuga Gama, employs traditional village women chosen from less developed village communities. Using their considerable culinary skills these women produce authentic Sri Lankan dishes that are made available at the Nuga Gama. While recognising the skills these women possess, this initiative also facilitates a sustainable income for their families.

Promoting Sri Lankan Crafts and Produce:The hotel also promotes batik items, Cinnamon branded bookmarks, locally manufactured children’s sling pouches, recycled paper note pads and wooden handicrafts, all manufactured by Sri Lankan craftsmen. Moreover, VIP guests are offered an array of traditional Sri Lankan sweet meats and confectionery in addition to a complementary basket of fresh Sri Lankan fruits in all guest rooms.


131

OTHER CSR INITIATIVES

Uplifting Disadvantaged Senior Citizens

The hotel provided a monthly requirement of dry rations and medical items to the Dias Elders Home in Wellampitiya, as these senior citizens do not have the means or financial support or care from their families. Continuing to support the home linen including towels, mats and bed sheets were also donated to the 23 elders at the Dias Home. Bath towels, wash cloths, duvet covers, table cloths, pillow cases, etc were also donated later in the year.

Supporting the Differently-abled

Donation to the Sri Lanka National Organisation of the Deaf �� A stock of towels and bed sheets

was donated to the Sri Lanka National Organisation of the Deaf Sports Club. The contribution was made during the organisation’s ‘Bak Maha Ulela’ (Avurudhu festival), held at the Nittambuwa Municipal Grounds in April 2013.

�� Supporting Meth Mihira School for the differently abled

The Inter Faith Society of Asian International School

�� The school hosted a Christmas Party for the students of Meth Mihira School for Special Children in Ratmalana. The Cinnamon Grand stepped in to sponsor the snack packs and drink packs for these differently-abled children attending the party.

'Spreading Some Sunshine' to Under Privileged Children

Donation of Avurudhu Lunch Packets to The Salvation Army Boys' Home The hotel provided a lunch time treat for 20 boys from the Salvation Army Boys’ Home in Rajagiriya during ‘Avurudhu’ (Sinhalese and Tamil New Year) season in April 2013. The Salvation Army Boys' Home is a shelter for destitute boys between the ages of 5 and 17 years, who are unable to return to their homes due to unavoidable domestic or legal circumstances. Although some of the children do return to their relatives during the season, in some unfortunate cases a few of the children have no place to return to and hence remain at the home. The lunch donation was to show support to these children for the New Year.

Visits of Students from the School for the Deaf, Ratmalana The hotel’s training department and the associates gave the students of the Ratmalana School for the Deaf a ‘Grand Tour’ of the hotel with a special chocolate making experience that had the children entranced. A sumptuous lunch, entertainment and gifts completed the experience in keeping with the Grand’s endeavour of spreading a little sunshine.

A Grand Day for Don Bosco BoysCinnamon Grand continued with tradition and hosted the annual Christmas treat for the Don Bosco boy’s home, on the 09th December 2013. This year, 58 boys had a fun and eventful day with a twist to the usual programme, with the morning starting off with a 3D movie at the Majestic Cinema. Thereafter they had an outdoor picnic at a waterside site where they enjoyed boat rides on the Diyawanna Oya, played outdoor games and enjoyed a McDonald’s and KFC lunch! Mid-day consisted of a Colombo city tour on an

open Double Decker bus, after which they came to Cinnamon Grand for the usual swim time in the hotel pool and the dinner at the Atrium and Christmas party at the Cedar Room. The party with a grand dinner buffet, DJ music, dancing, magic show, a special visit by Santa and Christmas gifts from General Manager Rohan Karr was a grand end to a grand day. A thank you to all volunteers who gave their time to ensure the kids had a memorable day.

Community Schools Development Programme

La-Salian Montessori Project at ModaraThe La-Salian Montessori has 145 students between 3-5 years and 6 teachers. The 'little school' is an attempt by La-Salian Foundation to give under privileged pre-schoolers an opportunity to learn and shine. However, due to the lack of adequate financial support, their personal progress is severely hindered. Efforts to uplift their learning environment prompted the hotel to improve the facilities. Having commenced in 2012, the project is an ongoing endeavour, with a five-year commitment window that would see Cinnamon Grand actively participate in the development of the school, in the years ahead as well.

A team of volunteers from the Cinnamon Grand put aside their suits, coats and uniforms for a day to instead drape an apron, pick up a paint brush and play their part in adding a little colour to an otherwise bleak situation. The La-Salian Montessori, situated in a dismal nook for Modhara is school to 145 children between the ages of 3 and 5. These kids hail from the lowest of low income families, surviving amidst rampant crime and drug addiction in the area. The Montessori is their only escape from reality and their only chance at an education.


132 133


Cinnamon Grand embraced the challenge of making this Montessori a brighter place for the children, providing for a cheerful environment for them to learn in.With aerated sea creatures swimming around a whirly blue ocean, looming giraffes quizzically observing mocking monkeys swinging on tall trees, buzzing bees and breezy butterflies flying around lanky grass weeds, colourful flowers blossoming beautifully and letters of the alphabet dancing musingly, each wall was a carefully crafted masterpiece.

The team also donated a sink for the children to wash their hands in the classroom as well as a fully tiled pantry counter, a bag and bottle rack and a linen donation. A gift of a variety of plants was made for the ‘ape wattha’ area, which was constructed as a flowering garden for the kids to appreciate.

Cinnamon Grand carried out a three-month reconstruction of the Montessori leading up to the painting day. The Grand works with developing the La Salian Montessori as part of its ‘spread a little sunshine’ CSR initiative, intended at striving to uplift the underprivileged communities in the country.

The Cinnamon Grand also donated linen including shirts, blouses, sarees, bed sheets, aprons, ties, jackets and table covers to the La-Salian Community and Education Service Centre (Modara).

Donation to the Peter Weerasekara Children's HomeThe Cinnamon Grand donated old linen including discarded stewarding shirts, white shirts, blouses, saree blouses, ladies suits, aprons, trousers etc to the Peter Weerasekara Children's Home in Buthpitiya. This facility houses 82 children who have been orphaned or abandoned by their families.

Lending a Hand

Donation to the Family of a Deceased Team MemberIn memory of the Chef Lalith Bandara funds were collected voluntarily by means of a donation form circulated amongst all management and other staff and was handed over to the family of late Chef Lalith Bandara. Chef Bandara, who passed away unexpectedly, will be remembered as a valued member of our team having served as a COMMI 2 at Cinnamon Grand’s kitchen.

Donation of a Hand-rail to AssociateAssociate Chandana Krishanth, lost control over the movement of his right leg, due to sudden paralysis. Cinnamon Grand recognised his plight and donated a hand-rail, at a cost of Rs. 20,000, to be fitted to the stairway in his residence so as to make his ascent to his bedroom not only easier, but much safer. Until that time, Mr. Krishanth had to make his way upstairs aided by his wife, posing a risk to both parties. Cinnamon Grand saw his need, and came to his assistance to avert this potential peril with this much needed and greatly appreciated donation.

Cancer Awareness Drive

Donation to Mithuruwela Charity During Breast Cancer month in October pink ribbons were sold to associates and guests as a fund raising initiative. All proceeds raised through the sale of ribbons among hotel associates and the guests was donated to the Mithuruwela Charity for cancer support.

Established by a group of cancer survivors in 2005, the Mithuruwela charity aims to provide awareness and a better understanding of cancer through the dissemination of information in print and other media and to facilitate activities that would help cancer patients

and caregivers, in particular those from disadvantaged and marginalised communities.

CCC Cancer Transit HomeDuring the festive season, games and toys, stationary, books, batteries and seasonal toys were gifted to the children at the CCC House (Courage, Compassion and Commitment), which is a transit home for children suffering from cancer. Cinnamon Grand also provided dinner to 40 children and their parents at the CCC House.

Donation of Breast Cancer Awareness Booklets Cinnamon Grand donated 75 Breast Cancer Awareness booklets to the La Salian Community and Education Service Centre (Modara). The booklets were developed by the hotel Marketing and Communications Department together with the National Cancer Programme.

OTHER COMMUNITY SUPPORT INITIATIVES

Annual Lanka Alzheimer’s Foundation Memory Walk Cinnamon Grand continued with the annual sponsorship to the Lanka Alzheimer’s Foundation Memory Walk at the Angsana City Club and Spa complex with breakfast refreshments provided for all participants.

Ceylon Bible Society SaleThe Cinnamon Grand supported the Ceylon Bible Society’s annual charity fair, which was held at the Christian Reformed Church of Wellawatte. We donated four kilos of fruit cake for the event’s refreshment stall in our endeavour to support the cause of the bible society, of raising funds in order to uplift the lives of under privileged communities.


133

Don Bosco Boys Home annual Christmas treat 58 boys from Don Bosco enjoying their annual Christmas indulgence at the Cinnamon Grand pool• Happy faces post the Diyawanna Lake boat experience• Singing along to the music; party at the Grand • The boys at the movies


134 135


The La-Salian Montessori project Enthusiastic volunteers of the Cinnamon Grand team after a full day of work recreating beautiful spaces for the kids• High poverty conditions the children live in, in Modara• Children enjoying the enhanced facilities and walls depicting sceneries of nature• The montessori before painting


135

CINNAMON LAKESIDE COLOMBO

Cinnamon Lakeside Colombo marked many renowned accomplishments in the year 2013 and maintained certifications from recognised bodies, demonstrating the commitment towards sustainable and responsible business practices. The following are the awards and certifications received endorsing our hotel’s product responsibility initiatives.

�� ISO CertificationThe hotel was recertified for ISO 22000:2005 Food Safety Management System Standard for the third consecutive time in year 2013. This certification covers the hotel’s entire food manufacturing operations including materials, purchasing, stores, kitchens, stewarding, restaurants, bars, human resources, maintenance and waste disposal.

�� OHSAS 18001Our proactive measures to ensure health and safety in our workplace were recognised and we received certification for standards prescribed by OHSAS 18001, an international occupational health and safety management system.

�� Crescentrating Singapore We have certification in place from Crescentrating Singapore, an international rating standard for Halal friendly travel services, upholding our responsibility towards meeting faith based needs of our guests.

�� Green GlobeThis is a well acclaimed international certification programme for sustainable tourism, entailing 41 standard criteria and 137 compliance indicators. The certification programme lays emphasis on conserving energy and water resources, reducing operational costs, positively contributing to local communities and the environment. Having obtained the initial certification in 2010, our hotel continued to be compliant in the year to the mandatory standards and sought to better the score to be eligible for re-certification. After an on-line audit by Green Globe including a detailed evaluation of the submissions of our sustainability initiatives and measures adopted, our hotel was granted re-certification for the fourth year in succession, in effect, as the only Sri Lankan hotel thus far to do so.

�� TripAdvisor LLCCinnamon Lakeside was recognised by TripAdvisor, the world renowned internet based travel site with a Certificate of Excellence 2013 which is based on customers’ perspective, recognition reviews and feedback on the site. The hotel was ranked amongst the top ten island-wide in the TripAdvisor Travellers Choice Award.

�� EU Switch-AsiaOur initiatives and measures in energy, water and waste management were well recognised with a Merit Award at the EU Switch-Asia Greening Sri Lankan Hotels Awards 2013, implemented by the Ceylon Chamber of Commerce and supported by the European Union.

�� Reporting StandardsCinnamon Lakeside was adjudged the ‘Bronze’ winner of the Hotel Sector Category at the Annual Report Awards 2013 conducted by the Institute of Chartered Accountants of Sri Lanka, signifying the excellence in presentation and disclosure of high quality, relevant, reliable and objective financial statements in accordance with the framework stipulated by the International Accounting Standards Board (IASB).

�� City Naturalist SponsorshipCinnamon Lakeside Colombo also supported Cinnamon Nature Trails to launch an edutainment programme for children - ‘City Naturalist Award’ in May 2013. This award designed to inspire children on studying and conserving biodiversity in the city of Colombo was conducted by leading experts in the field of ecotourism. The programme encompassed a three pronged approach - lessons in flora and fauna found in the city, study of birds and butterflies and assessed nature walks. Participants received a City Naturalist Award and Badge along with immense exposure to enhance skills in team work, leadership, creativity, photography, public speaking and communication skills. 25 children participated in this programme which spanned 3 days.


136 137

CINNAMON LAKESIDE COLOMBO

World Environment DayCinnamon Lakeside Colombo commemorated World Environment Day by dedicating the month to sustainable initiatives. In this vein, an awareness programme on ‘Protecting the Environment for the Future Generations’ was organised on 11th June 2013. The programme was facilitated by Dr. Waruna Fernando, a world renowned expert on environmental management systems which disseminated information and long term solutions on common waste related issues. This was attended by 350 students from five neighbouring schools: T.B. Jaya Maha Vidyalaya, Saripuththa Maha Vidyalaya, Al Iqbal Balika Maha Vidyalaya, Holy Rosary Sinhala School and Holy Rosary Tamil School together with 100 students from the Sri Lanka Institute of Tourism and Hotel Management.

Uplifting the Community

Vocational Training ProgrammeAs a key CSR initiative in collaboration with the John Keells Foundation, we commenced our vocational training programme targeting school leavers, primarily from the neighbouring schools. As the first step, the internship opportunities were provided to five school leavers from neighbouring schools with a view to providing them the foundation needed to jump-start their careers after having completed their O/Ls. The two interns who completed the internship successfully are currently serving the Hotel under the purview of the Engineering Department.

Children's DayAs part of this project and celebrating the Children’s Day in Sri Lanka on 1st October 2013, our CSR team led by the General Manager invited 60 students from multi-ethnic and religious backgrounds from the neighbouring schools for a workshop organised at the hotel; Al Iqbal Balika Vidyalaya, T.B. Jayah Maha Vidyalaya and Sri-Sariputhra Maha Vidyalaya. The objective of this initiative was to give the students an exposure to the hospitality industry, inculcate career planning and motivate them to be responsible and respectful future leaders.



137

Cinnamon Lakeside projectsCSR project for Balagolla Maha Vidyalaya in Mahiyangana• Children’s Day programme for neighborhood schools • Receiving the award at EU Switch Asia Greening Sri Lanka Hotels• Awareness programme for school children on World Environment Day, conducted by Dr. Waruna Fernando

Financial Calender 2013/14

Interim Reports 1st Quarter - 30th July 20132nd Quarter - 29th October 20133rd Quarter - 24th January 2014

Annual Reports 2012/13 - 23rd May 20132013/14 - 28th May 2014

Meetings 19th Annual General Meeting - 24th June 201320th Annual General Meeting - 27th June 2014

Dividends Final Dividend of Rs. 3/- per Share for the year 2012/13 was paid on 14th June 2013

Interim Dividend of Rs. 1/- per Share for the year 2013/14 was paid on 10th January 2014

Financial statements


140

report of the Audit CommitteeRole of the CommitteeThe role of the Audit Committee is to assist the Board in fulfilling its oversight responsibilities for the integrity of the Financial Statements of the Company, the internal control and risk management systems of the Company and its compliance with legal and regulatory requirements, the external auditors’ performance and independence and the adequacy and performance of the internal audit function, which at John Keells is termed Group Business Process Review Division (Group BPR). This is detailed in the terms of reference of the Committee which has been approved by the Board and is reviewed annually.

Composition of the Committee and Meetings The Audit Committee comprised of three Non-Executive Independent Directors. The Chairman of the Audit Committee and another member of the Committee are Chartered Accountants while the other member of the Committee has a specialist financial background. All Non-Executive Directors satisfy the criteria for independence as specified in the Standards on Corporate Governance for listed Companies issued by the Securities and Exchange Commission of Sri Lanka. The Audit Committee reports directly to the Board. The individual and collective financial and hotel industry specific knowledge, business experience and independence of members are brought to bear on all matters, which fall within the committee’s purview. The Director Finance of the Hotel sector served as the Secretary to the Audit Committee.

The President of the Property Group of John Keells Holdings, General Manager of Cinnamon Grand, Sector Financial Controllers of Property and Hotels Sectors

together with the Head of Group Business Process Review of John Keells Holdings PLC, attend Audit Committee meetings by invitation. Outsourced Internal Auditors, PricewaterhouseCoopers (Pvt) Ltd., and Independent External Auditors KPMG are required to attend meetings on a regular basis.

The Audit Committee held four (4) meetings during the financial year. Information on the attendance at these meetings is given under Corporate Governance on page 59. In addition, the Chairman of the Committee met the Internal and External Auditors and in house personnel, as necessary, to strengthen guidance and oversight related to Audit Committee matters.

The effectiveness of the Committee is evaluated annually by each member of the Committee and the results are communicated to the Board.

The activities and views of the Committee have been communicated to the Board of Directors quarterly through verbal briefings and by tabling the minutes of the Committee’s meeting. Financial ReportingThe Audit Committee has reviewed and discussed the Company’s quarterly and annual Financial Statements prior to publication with the management and external auditors, including the extent of compliance with International Financial Reporting Standards(IFRS) adopted locally as Sri Lanka Financial Reporting Standards(SLFRS), LKAS the adequacy of disclosures required by other applicable laws, rules and guidelines. The Committee has also regularly discussed the operations of the Company and its future prospects with management and

is satisfied that all relevant matters have been taken into account in the preparation of the Financial Statements.

Internal Audit, Risks and ControlsPricewaterhouseCoopers (Pvt) Ltd continued to serve as the Outsourced Internal Auditors of the Company, and the audit plans and scope of work were formulated in consultation with the John Keells Group Business Process Review (Group BPR) Division and approved by the Committee.

The main focus of the Internal Audit was to provide independent assurance on the overall system of internal controls, risk management and governance, by evaluating the adequacy and effectiveness of internal controls, and compliance with laws and regulations and established policies and procedures of the company.

During the year, reports were received by the Committee from the Outsourced Internal Auditors, which were reviewed and discussed with management, the Outsourced Internal Auditors and the John Keells Group BPR Division. The recommendations of the Internal Auditors have been followed up and are being implemented.

The Audit Committee has also reviewed the processes for the identification, evaluation and management of all significant operational risks faced by the Company. The most significant operational risks and the remedial measures taken to mitigate them have been reviewed with the management and the John Keells Group Sustainability and Enterprise Risk Management division.

Formal confirmations and assurances have been received from senior


141

management on a quarterly basis regarding the efficacy and status of the internal control systems and risk management systems, and compliance with applicable laws and regulations. The Committee reviewed the whistleblowing arrangements for the Company which is in line with the group arrangements.

External AuditThe External Auditors’ letter of engagement, including the scope of the audit, was reviewed and discussed by the Committee with the external auditors and management prior to the commencement of the audit.

The External Auditors kept the Committee advised on an on-going basis regarding any unresolved matters of significance. Before the conclusion of the audit, the Committee met with the External Auditors to discuss all audit issues and agree on their treatment. The Committee also met the External Auditors, without the management being present, prior to the finalisation of the Financial Statements.

The Audit Committee is satisfied that the independence of the External Auditors has not been impaired by any event or service that gives rise to a conflict of interest. Due consideration has been given to the level of audit and non-audit fees received by the External Auditors from the John Keells Group and confirmation has been received from the External Auditors of their compliance with the independence criteria given in the Code of Ethics of the Institute of Chartered Accountants of Sri Lanka.

The performance of the External Auditors has been evaluated and discussed with the senior management of the Company, and the Committee has recommended to the Board that KPMG be re-appointed as the External Auditors of Asian Hotels

and Properties PLC for the financial year ending 31st March 2015, subject to approval by the shareholders at the Annual General Meeting.

ConclusionBased on the reports submitted by the External Auditors and the Outsourced Internal Auditors of the Company, the assurances and certifications provided by the senior management, and the discussions with management and the auditors both at formal meetings and informally, the Committee is of the view that the control environment within the Company is satisfactory and provides reasonable assurance that the financial position of the Company is adequately monitored and its assets are safeguarded.

C.J.L. PintoChairman of the Audit Committee

28th May 2014


142

Statement of Directors' responsibilityThe responsibility of the Directors in relation to the Financial Statements is set out in the following statement and should be read in conjunction with the Report of the Auditors. The responsibility of the Auditors, in relation to the Financial Statements prepared in accordance with the provisions of the Companies Act No. 7 of 2007, is set out in the Report of the Auditors.

As per the provisions of the Companies Act No. 7 of 2007, the Directors are required to prepare for each financial year and place before a general meeting, Financial Statements which comprise of:

• The Income Statement and Statement of Comprehensive Income of the Company and of the Group, which present a true and fair view of the profit and loss of the Company and of the Group for the respective financial year;

• A Statement of the Financial Position, which presents a true and fair view of the state of affairs of the Company and of the Group as at the end of the financial year.

The Directors confirm that the Financial Statements:

• have been prepared using appropriate accounting policies which have been selected and applied in a consistent manner, and material departures, if any, have been disclosed and explained; and

• have been presented in accordance with the Sri Lanka Accounting Standards (SLFRS/LKAS) and that reasonable and prudent judgments and estimates have been made so that the form and substance of transactions are properly reflected; and

• Provide the information required by and otherwise comply with the Companies Act and the Listing Rules of the Colombo Stock Exchange.

The Directors are of the view that the Company has adequate resources to continue in operation to justify applying the going concern basis in preparing these Financial Statements.

Furthermore, the Directors have a responsibility to ensure that the Company maintains sufficient accounting records to disclose, with reasonable accuracy, the financial position of the Company and of the Group.

The Directors have also taken all reasonable steps to safeguard the assets of the Company and of the Group and in this regard to give proper consideration to the establishment of appropriate internal control systems with a view to preventing and detecting fraud and other irregularities.

The Directors are required to prepare the Financial Statements and to provide the Auditors with every opportunity to undertake whatever steps and inspections that may be considered as appropriate to enable them to give their audit opinion. The Directors are of the view that they have discharged their responsibilities in this regard.

Compliance ReportThe Directors confirm that, to the best of their knowledge, all taxes, duties and levies payable by the Company all contributions, levies and taxes payable on behalf of and in respect of the employees of the Company and all other known statutory dues as were due and payable by the Company as at the Balance Sheet date have been paid or provided for, except as specified in Note 38 to the

Financial Statements covering Contingent Liabilities.

Moreover, as required by Section 56 (2) of the Companies Act No. 7 of 2007, the Board of Directors have confirmed that the Company, satisfies the Solvency Test immediately after the distribution, in accordance with Section 57 of the Companies Act No. 7 of 2007, and have obtained a certificate from the Auditors, prior to declaring a Final Dividend of Rs. 3/- per share for the year ended 31st March 2014, to be paid on 18th June 2014.

By Order of the Board

Keells Consultants (Private) LimitedSecretaries

28th May 2014


143

Independent auditors' report

TO THE SHAREHOLDERS OF ASIAN HOTELS AND PROPERTIES PLC

Report on the Financial StatementsWe have audited the accompanying financial statements of Asian Hotels and Properties PLC (“the Company”) and the consolidated financial statements of the Company and its subsidiary (“the Group”), which comprise the statement of financial position as at March 31, 2014, the statements of income, comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information set out from pages 150 to 185 of the annual report.

Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance with Sri Lanka Accounting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Scope of Audit and Basis of OpinionOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Sri Lanka Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting policies used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. We therefore believe that our audit provides a reasonable basis for our opinion.

OpinionIn our opinion, so far as appears from our examination, the Company maintained proper accounting records for the year ended March 31, 2014, and the financial statements give a true and fair view of the financial position of the Company as

at March 31, 2014, and of its financial performance and its cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Company and its subsidiary dealt with thereby as at March 31, 2014, and of its financial performance and its cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.

Report on Other Legal and Regulatory RequirementsThese financial statements also comply with the requirements of Sections 153(2) to 153(7) of the Companies Act No. 07 of 2007.

Chartered AccountantsColombo

28th May 2014


144

Income Statement Group companyFor the year ended 31st March 2014 2013 2014 2013 Page No. Note Rs.’000 Rs.’000 Rs.’000 Rs.’000

Revenue 158 5 8,256,149 7,890,978 5,316,686 5,050,755Cost of Sales (3,231,076) (3,067,561) (2,087,622) (1,986,177)

Gross Profit 5,025,073 4,823,417 3,229,064 3,064,578

Dividend Income 158 6 - - 273,493 234,422Other Operating Income 158 7 75,546 71,308 62,261 59,074Distribution Expenses (207,964) (176,620) (118,633) (96,826)Administrative Expenses (1,776,265) (1,644,638) (1,126,839) (1,042,943)Other Operating Expenses (640,246) (565,991) (386,207) (334,173)

Results from operating activities 2,476,144 2,507,476 1,933,139 1,884,132

Finance Cost 158 8 (3,287) (455) (3,249) (359)Finance Income 158 9 305,042 312,020 249,783 247,187Net Finance Income 301,755 311,565 246,534 246,828Change in Fair Value of Investment Property 164 16 268,564 517,210 268,564 228,500

Profit Before Tax 159 10 3,046,463 3,336,251 2,448,237 2,359,460Income Tax Expenses 159 11 (227,952) (238,865) (69,025) (67,323)Profit for the Year 2,818,511 3,097,386 2,379,212 2,292,137

Attributable to:Equity Holders of the Parent 2,397,946 2,494,296 2,379,212 2,292,137Non-controlling Interest 420,565 603,090 - - 2,818,511 3,097,386 2,379,212 2,292,137

Rs. Rs. Rs. Rs.

Earnings Per Share 160 12 5.42 5.63 5.37 5.18Dividend Per Share 161 13 4.00 4.00 4.00 4.00

Figures in brackets indicate deductions.The accounting policies and notes as set out in pages 150 to 185 form an integral part of these Financial Statements.


145

Statement of Comprehensive Income Group companyFor the year ended 31st March 2014 2013 2014 2013 Rs.’000 Rs.’000 Rs.’000 Rs.’000

Profit for the Year 2,818,511 3,097,386 2,379,212 2,292,137

Other comprehensive incomeRevaluation of land and buildings - 6,242,265 - 5,842,595Re-measurement gain/(loss) on defined benefit Plans (4,860) - (3,768) -Deferred Tax effect on Revaluation - (47,960) - - Other comprehensive income for the year, net of tax (4,860) 6,194,305 (3,768) 5,842,595Total comprehensive income for the year, net of tax 2,813,651 9,291,691 2,375,444 8,134,732

Attributable to:Equity holders of the parent 2,393,704 8,489,568Non-controlling interests 419,947 802,123 2,813,651 9,291,691



146

Statement of Financial position Group companyAs at 31st March 2014 2013 2014 2013 Page No. Note Rs.’000 Rs.’000 Rs.’000 Rs.’000

ASSETSNon Current AssetsProperty, Plant and Equipment 161 14 18,511,385 18,308,983 15,053,598 15,029,139Lease Hold Property 163 15 818,664 831,068 - -Investment Property 164 16 3,904,514 3,618,750 2,146,264 1,860,500Intangible Assets 165 17 5,265 8,517 1,002 1,062Investment in Subsidiary 165 18 - - 660,045 660,045Other Non Current Financial Assets 166 20 17,027 19,215 11,391 12,339Other Non Current Assets 167 21 4,786 3,357 3,264 2,953Total Non current Assets 23,261,641 22,789,890 17,875,564 17,566,038

Current AssetsInventories 167 22 121,019 135,186 85,146 102,154Trade and Other Receivables 167 24 476,374 523,956 241,925 290,696Amounts Due from Related Parties 173 34.1 48,863 34,659 34,717 20,136Other Current Assets 168 25 88,232 169,489 47,482 92,914Short Term Investments 168 26 3,134,194 2,715,798 2,647,269 2,155,924Cash In Hand and at Bank 430,541 407,409 289,804 307,569Total Current Assets 4,299,223 3,986,497 3,346,343 2,969,393Total Assets 27,560,864 26,776,387 21,221,907 20,535,431

EQUITY & LIABILITIESEquity attributable to equity holders of the parentStated Capital 168 27 3,345,117 3,345,117 3,345,117 3,345,117Revenue Reserves 7,880,070 7,242,060 6,391,287 5,782,448Other Components of Equity 168 28 11,112,849 11,110,290 10,612,101 10,602,127Equity attributable to equity holders 22,338,036 21,697,467 20,348,505 19,729,692

Non-controlling Interest 3,449,509 3,425,692 - -Total Equity 25,787,545 25,123,159 20,348,505 19,729,692

Non Current LiabilitiesDeferred Tax Liabilities 170 29 337,411 329,313 - -Employee Benefit Liabilities 171 30 221,234 194,097 114,664 96,071Other Non Current Liabilities 172 31 - 1,416 - -Total Non Current Liabilities 558,645 524,826 114,664 96,071

Current LiabilitiesTrade and Other Payables 173 32 736,713 654,530 513,915 466,393Amounts Due to Related Parties 173 34.2 87,341 87,643 60,904 58,377Income Tax Liabilities 58,318 65,252 - - Other Current Liabilities 173 33 202,222 158,294 107,803 61,793Bank Overdrafts 130,080 162,683 76,116 123,105Total Current Liabilities 1,214,674 1,128,402 758,738 709,668Total Liabilities 1,773,319 1,653,228 873,402 805,739Total Equity and Liabilities 27,560,864 26,776,387 21,221,907 20,535,431

I certify that the Financial Statements comply with the requirements of the Companies Act No. 7 of 2007.

Sunil PeirisSector Financial Controller

The Board of Directors is responsible for the preparation and presentation of these Financial Statements.

A.D. Gunewardene J.R.F. PeirisDirector Director

The accounting policies and notes as set out in pages 150 to 185 form an integral part of these Financial Statements.

28th May 2014


147

Statement of Cash Flow Group companyFor the Year Ended 31st March 2014 2013 2014 2013 Note Rs.’000 Rs.’000 Rs.’000 Rs.’000

CASH FLOWS FROM OPERATING ACTIVITIESOperating Profit before Working Capital Changes A 3,019,811 3,054,049 1,971,040 1,995,201

(Increase)/Decrease in Inventories 14,158 (26,508) 17,009 (28,583)Decrease in Trade and Other Receivables 39,169 67,010 47,509 47,511(Increase)/Decrease in Amounts Due from Related Parties (14,203) 11,970 (14,581) 8,091Decrease in Other Current Assets 81,257 3,573 45,433 38,714Increase/(Decrease) in Trade and Other Payables 82,182 (201,497) 47,522 (149,325)Increase/(Decrease) in Amounts Due to Related Parties (302) 3,329 2,526 1,685Increase in Other Current Liabilities 43,948 34,456 46,012 6,903

Cash Generated from Operations 3,266,020 2,946,382 2,162,470 1,920,197Finance Income Received 305,042 312,020 249,783 247,187Finance Cost Paid (3,287) (455) (3,249) (359)Dividend Received - - 273,493 234,422Tax Paid (226,787) (217,449) (69,025) (67,323)Gratuity Paid (18,415) (44,062) (7,344) (32,924)Net Cash Flow from Operating Activities 3,322,573 2,996,436 2,606,128 2,301,200

CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIESPurchase/Transfers and Construction of Property, Plant and Equipment (673,031) (489,098) (300,645) (283,257)Addition to Work-in-Progress - (3,897) - (3,897)Addition/Transfers to Investment Property (17,200) - (17,200) -Addition/Transfers to Intangible Assets (622) (1,586) (299) (274)Proceeds from Sale of Property, Plant & Equipment 10,319 15,296 3,049 7,105Proceeds from/(Repayment of) Other Assets (Net) 759 22,561 637 (2,033)Net Cash Flow Used in Investing Activities (679,775) (456,724) (314,458) (282,356)

CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIESDividend Paid to Equity Holders of Parent (1,771,101) (2,213,876) (1,771,101) (2,213,876)Dividend paid to shareholders with non-controlling interest (396,130) (339,540) - -Repayment of Long Term Borrowings (1,436) (1,436) - -Net Cash Flow Used in Financing Activities (2,168,667) (2,554,852) (1,771,101) (2,213,876)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 474,131 (15,140) 520,569 (195,032)CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 2,960,524 2,975,664 2,340,388 2,535,420CASH AND CASH EQUIVALENTS AT THE END 3,434,655 2,960,524 2,860,957 2,340,388

ANALYSIS OF CASH AND CASH EQUIVALENTSFavorable Balances Cash and Bank 430,541 407,409 289,804 307,569 Short Term Investments 3,134,194 2,715,798 2,647,269 2,155,924

Unfavorable Balances Bank Overdrafts (130,080) (162,683) (76,116) (123,105) TOTAL CASH AND CASH EQUIVALENTS 3,434,655 2,960,524 2,860,957 2,340,388

A. Operating Profit before Working Capital ChangesProfit before Tax 3,046,463 3,336,251 2,448,237 2,359,460

Adjustments for: Finance Income (305,042) (312,020) (249,783) (247,187) Dividend Income - - (273,493) (234,422) Finance Cost 3,287 455 3,249 359 Change in Fair Value of Investment Property (268,564) (517,210) (268,564) (228,500) Depreciation of Property, Plant and Equipment 455,964 412,314 266,153 244,784 (Profit)/Loss on Disposal of Property, Plant & Equipment 4,346 (191) 6,982 4,865 Amortisation of Leasehold Properties 12,404 12,404 - - Amortisation of Intangible Assets 3,874 5,259 359 585 Provision for Doubtful Debts 8,413 7,935 1,261 7,524 Gratuity Charge and Related Costs 40,692 29,463 22,169 19,444 Project Costs - 68,289 - 68,289 Share Based Payment Expenses 17,966 - 14,470 - Provision made on slow moving inventory 8 7,174 - - Insurance Claim Receivables - 3,926 - - 3,019,811 3,054,049 1,971,040 1,995,201



148

attributable to equity holders of the parent Other Non Stated Revaluation Capital Retained controlling Total Capital Reserve Reserve Earnings Total interest Equity GROUP Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000

As at 1st April 2012 3,345,117 5,143,193 - 6,490,690 14,979,000 2,963,109 17,942,109

Profit for the year - - - 2,494,296 2,494,296 603,090 3,097,386

Other Comprehensive Income - 5,995,272 - - 5,995,272 199,033 6,194,305

Total Comprehensive Income - 5,995,272 - 2,494,296 8,489,568 802,123 9,291,691

Transferred to Revenue Reserve (Note a) - (13,418) - 13,418 - - -

Transferred to Revenue Reserve (Note b) - (14,757) - 14,757 - - -

Final Dividend Paid - 2011/2012 - - - (1,328,326) (1,328,326) - (1,328,326)

Interim Dividend Paid - 2012/2013 - - - (442,775) (442,775) - (442,775)

Subsidiary dividend to

Minority Shareholders - 2011/2012 (226,360) (226,360)


Minority Shareholders - 2012/2013 - - - - - (113,180) (113,180)

As at 31st March, 2013 3,345,117 11,110,290 - 7,242,060 21,697,467 3,425,692 25,123,159

As at 1st April 2013 3,345,117 11,110,290 - 7,242,060 21,697,467 3,425,692 25,123,159

Profit for the year - - - 2,397,946 2,397,946 420,565 2,818,511

Other Comprehensive Income - - - (4,242) (4,242) (618) (4,860)

Total Comprehensive Income - - - 2,393,704 2,393,704 419,947 2,813,651

Transferred to Revenue Reserve Note (a) - (4,496) - 4,496 - - -

Transferred to Revenue Reserve (Note b) - (10,911) - 10,911 - - -

Share Based Payments (Note 28.4) - - 17,966 - 17,966 - 17,966

Final Dividend Paid - 2012/2013 - - - (1,328,326) (1,328,326) - (1,328,326)

Interim Dividend Paid - 2013/2014 - - - (442,775) (442,775) - (442,775)





As at 31st March 2014 3,345,117 11,094,883 17,966 7,880,070 22,338,036 3,449,509 25,787,545

Note (a) According to the Sri Lanka Accounting Standard - 16 "Property, Plant and Equipment", the Revaluation Surplus included in the Equity can

be transferred to Retained Earnings when the surplus is realised. Accordingly, the surplus realised amounting to Rs. 4.49 Mn (Rs. 13.41 Mn in

2013) has been transferred directly to Retained Earnings as at the reporting date.

Note (b) According to the Sri Lanka Accounting Standard - 16 "Property, Plant and Equipment", when the revalued asset is used by an entity,

the difference between depreciation based on the revalued carrying amount of the asset and depreciation based on the asset's original cost is

transferred from revaluation surplus to retained earnings amounting to Rs.10.91 Mn. (Rs.14.75 Mn in 2013).

Figures in brackets indicate deductions.


Statement of Changes In Equity


149

Other Stated Revaluation Capital Retained Total Capital Reserve Reserve Earnings Equity COMPANY Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000

As at 1st April, 2012 3,345,117 4,772,950 - 5,247,994 13,366,061

Profit for the year - - - 2,292,137 2,292,137

Other Comprehensive Income - 5,842,595 - - 5,842,595

Total Comprehensive Income - 5,842,595 - 2,292,137 8,134,732

Transferred to Revenue Reserve Note (a) - (13,418) - 13,418 -

Final Dividend Paid - 2011/2012 - - - (1,328,326) (1,328,326)

Interim Dividend Paid - 2012/2013 - - - (442,775) (442,775)

As at 31st March, 2013 3,345,117 10,602,127 - 5,782,448 19,729,692

As at 1st April, 2013 3,345,117 10,602,127 - 5,782,448 19,729,692

Profit for the year 2013/2014 - - - 2,379,212 2,379,212

Other Comprehensive Income - - - (3,768) (3,768)

Total Comprehensive Income - - - 2,375,444 2,375,444

Transferred to Revenue Reserve Note (a) - (4,496) - 4,496 -

Share Based Payments (Note 28.5) - - 14,470 - 14,470

Final Dividend Paid - 2012/2013 - - - (1,328,326) (1,328,326)

Interim Dividend Paid - 2013/2014 - - - (442,775) (442,775)

As at 31st March, 2014 3,345,117 10,597,631 14,470 6,391,287 20,348,505

Note (a) According to the Sri Lanka Accounting Standard - 16 “Property, Plant and Equipment”, the Revaluation surplus included in the Equity can

be transferred to Retained Earnings when the surplus is realised. Accordingly, the surplus realised amounting to Rs. 4.49 Mn (Rs. 13.41 Mn in

2013) has been transferred directly to Retained Earnings as at the reporting date (Refer Note No 28 on page 168 for details).

Figures in brackets indicate deductions.



150

1. REPORTING ENTITYAsian Hotels and Properties PLC is a public limited liability Company incorporated and domiciled in Sri Lanka and listed on the Colombo Stock Exchange. The registered office and principal place of business of the company is located at No.77, Galle Road, Colombo 03. The consolidated financial statements of the Company as at and for the year ended 31st March 2014 comprise the financial information of the Company and its subsidiary; Trans Asia Hotels PLC (together referred to as the ‘Group’ and individually as ‘Group entities’).

The principal activities of the Company and the Group during the year were hoteliering and property development. There were no significant changes in the nature of the principal activities of the Company and the Group during the financial year under review.

The Group had 2,089 (2,067 in 2013) employees and the Company had 1,234 (1,225 in 2013) employees as at the Balance Sheet date.

2. BASIS OF PREPARATION(a) Statement of complianceThe Financial Statements of the Company and the Group comprise the statements of financial position, income, comprehensive income, changes in equity and cash flows together with the notes to the Financial Statements. The consolidated Financial Statements have been prepared in accordance with Sri Lanka Accounting Standards (LKAS/SLFRS) laid down by the Institute of Chartered Accountants of Sri Lanka and the requirements of Companies Act No. 7 of 2007.

The Consolidated Financial Statements were authorised for issue by the Board of Directors on 28th May 2014.

(b) Bases of MeasurementThe Financial Statements have been prepared on an accrual basis and under the historical cost convention except for followings.

• Freehold Land and Buildings which are measured at cost, at the time of acquisition are subsequently recognised at revalued amounts, less accumulated depreciation and impairment cost if any.

• Investment properties are stated at fair values.

• Defined benefit obligations are measured at its present value, based on an actuarial valuation as explained in Note 30.

• Staff loans are stated at amortised cost.

(c) Presentation and Functional Currency The Consolidated Financial Statements are presented in Sri Lankan Rupees. Each entity in the Group uses the currency of the primary economic environment in which they operate as their functional currency. All values are rounded to the nearest rupees thousand (Rs.’000) except when otherwise indicated.

(d) Use of estimates and judgmentsThe preparation of the consolidated financial statements in conformity with LKAS/SLFRS requires management to make judgments, Estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected

Judgments made by management in the application of LKAS/SLFRs that

have a significant effect on the Financial Statements are mentioned below.

• Valuation of Property, Plant and Equipment-Note (d)

• Valuation of investment property- Note (f)

• Deferred taxation - Note (s) (ii)• Defined Benefit Plans- Note (k) (ii)

3. COMPARATIVE INFORMATIONThe presentation and classification of the financial statements of the previous years have been amended, where relevant for better presentation and to be comparable with those of the current year.

4. ACCOUNTING POLICIESThe Accounting Policies set out below have been applied consistently to all periods presented in the financial statements of the Company and the Group unless otherwise indicated.

(a) Basis of consolidation

(i) Business combinationsBusiness combinations are accounted for using the acquisition method as at the acquisition date - i.e. when control is transferred to the Group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that are currently exercisable.

(ii) Non-controlling interestsFor each business combination, the Group elects to measure any non-controlling interests in the acquiree either:

• At fair value; or• At their proportionate share of the

acquiree’s identifiable net assets, which are generally at fair value.

Notes To The Financial Statements


151

Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as transactions with owners in their capacity as owners. Adjustments to non-controlling interests are based on a proportionate amount of the net assets of the subsidiary.

(iii) SubsidiariesSubsidiaries are those enterprises controlled by the parent. Control exists when the parent has the power, directly or indirectly to govern the financial and operating policies of an enterprise. Subsidiaries are controlled from the date the parent obtains control until the date that control ceases. Asian Hotels and Properties PLC has the power to directly govern the financial and operating policies of Trans Asia Hotels PLC, accordingly the entity is considered as a subsidiary of Asian Hotels and Properties PLC. The total profits and losses for the year, of the Company and of its Subsidiaries included in consolidation and all assets and liabilities of the Company and of its Subsidiaries included in consolidation are shown in the consolidated statements of Income, other comprehensive income and financial position respectively. Minority interests which represents the portion of profit or loss and net assets not held by the Group, are presented separately in the consolidated income statement and within equity in the consolidated Statement of financial position, separately from parent shareholders’ equity. The consolidated cash flow statement includes the cash flows of the Company and its Subsidiaries.

(iv) Loss of controlOn the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured

at fair value at the date that control is lost. Subsequently that retained interest is accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained.

(v) Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the Consolidated Financial Statements.

(b) Foreign currency transactionsTransactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date.

The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the year, adjusted for effective interest and payments during the year, and the amortised cost in foreign currency translated at the exchange rate at the end of the year. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Foreign currency differences arising on retranslation are recognised in profit or loss.

(c) Financial instruments (i) Financial assets

Initial recognition and measurementFinancial assets within the scope of LKAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Company and the Group determine the classification of its financial assets at initial recognition. All financial assets are recognised initially at fair value plus, in the case of assets not at fair value through profit or loss, directly attributable transaction costs. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e., the date that the Company and the Group commit to purchase or sell the asset. Financial Assets could be categorised into four categories, namely

• Fair value through profit and loss• Available for sale• Held to maturity• Loans and receivables

However, as at each reporting date, the Company and the Group hold on only the financial assets categorised as ‘loans and receivables’.

The Company and the Group initially recognise such loans and receivables on the date that they are originated.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when the Company and the Group have a legal right to offset the amounts and intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.


152

Subsequent measurementThe subsequent measurement of financial assets depends on their classification and the Company and the Group only hold financial assets categorised as loans & receivables.

Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortised cost using the Effective Interest Rate method (EIR), less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the income statement. The losses arising from impairment are recognised in the income statement in finance costs.

De-recognitionA financial asset is de-recognised when:

• The rights to receive cash flows from the asset have expired

• The Company and the Group have transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass through’ arrangement; and either

a) The Company and the Group have transferred substantially all the risks and rewards of the asset, or

(b) The Company and the Group have neither transferred nor retained sub-stantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Company and the Group have transferred its rights to receive cash flows from an asset or has entered into a pass through arrangement, and has neither transferred nor retained substantially all of the risks and rewards of the asset nor transferred control of it, the asset is recognised to the extent of the Company and the Group’s continuing involvement in it. In that case, the Company and the Group also recognise an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company and the Group have retained

(ii) Financial liabilitiesInitial recognition and measurementFinancial liabilities within the scope of LKAS 39 are classified as financial liabilities at fair value through profit or loss, other financial liabilities, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Company and the Group determine the classification of its financial liabilities at initial recognition.

When a financial liability is recognised initially, an entity shall measure it at its fair value plus, in the case of a financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of financial liability. The Company and the Group classify financial liabilities into the other financial liabilities category. Such financial liabilities are recognised initially at fair value less any directly attributable transaction costs.

Subsequent measurementThe measurement of financial liabilities depends on their classification and the Company and the Group only hold financial liabilities categorised as other financial liabilities.

Other liabilitiesAfter initial recognition, other liabilities are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in the income statement when the liabilities are derecognised as well as through the effective interest rate method (EIR) amortisation process.Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs in the income statement.

De-recognitionA financial liability is de-recognised when the obligation under the liability is discharged or canceled or expires.When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the income statement.

(iii) Fair value measurementThe management assessed that cash at bank and short-term deposits, trade receivables, trade payables, bank overdrafts and other current financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

(d) Property, Plant, and EquipmentBasis of RecognitionProperty, plant and equipment are recognised if it is probable that future economic benefits associated with

Notes To The Financial Statements contd.


153

the asset will flow to the company and the cost of the asset can be reliably measured.

Basis of measurementAll items of Property, Plant and Equipment are initially recorded at cost. Where items of property, plant and equipment are subsequently revalued, the entire class of such assets is revalued at fair value. The Group applies cost model to property, plant and equipment except for land and buildings and records at cost of purchase or construction together with any incidental expenses thereon less accumulated depreciation and any accumulated impairment losses. The carrying values of Property Plant and Equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

The Group applies the re-valuation model to land and buildings. The Group has adopted a policy of revaluing assets every five years.

If an asset's carrying amount is increased as a result of a revaluation, the increase shall be recognised in other comprehensive income and accumulated in equity under the heading of revaluation surplus. However, the increase shall be recognised in profit or loss to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss.

If an asset's carrying amount is decreased as a result of a revaluation, the decrease shall be recognised in profit or loss.

However, the decrease shall be recognised in other comprehensive income to the extent of any credit balance existing in the revaluation surplus in respect of that asset. The decrease recognised in other comprehensive

income reduces the amount accumulated in equity under the heading of revaluation surplus.

The revaluation surplus included in equity in respect of an item of property, plant and equipment may be transferred directly to retained earnings when the asset is derecognised.

De-recognitionAn item of property, plant and equipment are de-recognised upon replacement, disposal or when no future economic benefits are expected from its use.

Any gain or loss arising on de-recognition of the asset is included in the income statement in the year the asset is de-recognised.

DepreciationDepreciation is calculated by using a straight-line method on the cost or valuation of all property, plant and equipment, other than freehold land, in order to write off such amounts over the estimated useful economic life of such assets. The estimated useful life of assets is as follows:

Asset Class Years

Buildings 75Plant and Machinery 10-20Motor Vehicles 4-10Floating Restaurant 18Furniture, Fittings and Equipment 5-15Computers 5Base Stock/Circulating Assets 3-10

The asset’s residual values and useful lives are reviewed, and adjusted if appropriate, at each financial year end.

Buildings of the subsidiary are depreciated using reducing balance method in order to depreciate over the balance lease period of 66 years.

Depreciation of an assets ceases at the earlier of the date that the asset is classified as held for sale and the date that asset is de-recognised.

(e) Leasehold propertyPrepaid lease rentals paid to acquire land use rights are amortised over the lease term in accordance with the pattern of benefits provided. Leasehold property comprising of land use rights and stated at valuation, are amortised on a straight line basis over the remaining lease term.

Trans Asia Hotels PLC - The leasehold land is for 99 years commencing 7th August 1981 and is being amortised over a period of 94 years commencing from 1st April 1986.

(f) Investment properties Basis of RecognitionInvestment properties are initially recognised at cost. Subsequent to initial recognition the Investment Properties are stated at fair value, which reflects market conditions at the Statement of Financial Position date.

Basis of MeasurementInvestment properties are revalued where necessary to ensure that the carrying amount does not differ materially from fair values at the Balance Sheet date, and are revalued at least once in three years. Gains or losses arising from changes in fair value are included in the profit or loss in the year in which they arise. Investment Properties are de-recognised when disposed of, or permanently withdrawn from use because no future economic benefits are expected.

Any gains or losses on retirement or disposal are recognised in profit or loss in the year of retirement or disposal. Transfers are made to and from Investment Property only when there is a change in use in accordance with the criteria listed in Sri Lanka Accounting Standard 40 “Investment Property” (LKAS 40).


154

(g) Intangible assetsAn intangible asset is an identifiable non monitory asset without physical substance held for use in the production or supply goods or other services, rental to others or for administrative purposes. An intangible asset is initially recognised at cost, if it is probable that future economic benefit will flow to the enterprise, and the cost of the asset can be measured reliably. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses.

(i) Computer softwareAll computer software costs incurred, licensed for use by the Group, which are not integrally related to associated hardware, which can be clearly identified, reliably measured and it’s probable that they will lead to future economic benefits, are included in the Financial Position under the category intangible assets and carried at cost less accumulated amortisation and any accumulated impairment losses.

(ii) AmortisationIntangible assets with finite lives are amortised over the estimated useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. Intangible assets are amortised on a straight line basis in the Income Statement from the date on which the asset was available for use, over the best estimate of its useful life. The estimated useful life of software is 5 years. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year-end.

Amortisation shall cease at the earlier of the date that the asset is classified as held for sale or the date that asset is derecognised.

(iii) De-recognitionAn intangible asset is de-recognised on disposal or when no future economic benefits are expected from its use and subsequent disposal.

(h) InventoriesInventories are valued at the lower of cost and net realisable value. Net realisable value is the estimated selling price less estimated costs of completion and the estimated costs necessary to make the sale.

(i) Cash and Cash EquivalentsCash and short-term deposits in the statement of financial position comprise cash at banks and on hand and short-term deposits with a maturity of three months or less. For the purpose of the cash flow statement, cash and cash equivalents consist of cash and short-term deposits as defined above, net of outstanding bank overdrafts.

(j) ImpairmentThe recoverable amount of an asset or Cash Generating Unit (CGU) is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. or impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated to reduce the carrying amounts of the other assets in the CGU (group of CGUs) on pro-rata basis.

For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed

the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

(i) Financial assetsFinancial assets are assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset, and that loss event(s) had an impact on the estimated future cash flows of that asset that can be estimated reliably.

Objective evidence that financial assets are impaired includes default or delinquency by a debtor, restructuring of an amount due to the Company on terms that the Company and the Group would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, adverse changes in the payment status of borrowers or issuers, economic conditions that correlate with defaults or the disappearance of an active market for a security.

The Company and the Group consider evidence of impairment for financial assets measured at amortised cost (loans and receivables) at specific asset level. All individually significant assets are assessed for specific impairment.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account against loans and receivables or held-to maturity investment securities. Interest on the impaired asset continues to be recognised. When an event occurring



155

after the impairment was recognised causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

(ii) Non-financial assetsThe carrying amounts of the Company and the Group non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. An impairment loss is recognised if the carrying amount of an asset exceeds its recoverable amount.

(k) Employee Benefits

(i) Defined contribution plansEmployees’ Provident Fund and Employees’ Trust Fund (EPF & ETF) are recognised as incurred.

Employees are eligible for Employees’ Provident Fund contributions and Employees’ Trust Fund contributions in line with respective statutes and regulations.

The Company and the Group contribute 15% and 3% of gross emoluments of employees to Employees’ Provident Fund and Employees’ Trust Fund respectively.

(ii) Defined benefit plansA defined benefit plan is a post-employment benefit plan other than a defined contribution plan.

The Company and the Group are liable to pay retirement benefits under the Payment of Gratuity Act, No. 12 of 1983.

The liability recognised in the statement of financial position is the present value of the defined benefit obligation at the reporting date.

The defined benefit obligation is calculated by a qualified actuary as at the reporting date using the Projected Unit Credit

(PUC) method as recommended by LKAS 19 - ‘Employee Benefits’. Such actuarial valuations will be carried out every year.

The liability is not externally funded. All Actuarial gains or losses are recognised immediately in the other comprehensive income. Under the Payment of Gratuity Act No. 12 of 1983, the liability to an employee arises only on completion of 5 years of continued service.

(l) Provisions Provisions are recognised when the Company and the Group have a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Company and the Group expect some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

(m) Contingent Assets and Contingent LiabilitiesAll contingent liabilities are disclosed as a note to the financial statements unless the outflow of resources is remote. A contingent liability recognised in a business combination is initially measured at its fair value. Subsequently, it is measured at the higher of:

• The amount that would be recog-nised in accordance with the gen-eral guidance for provisions above (LKAS 37) or

• The amount initially recognised less, when appropriate, cumulative amortisation recognised in accord-ance with the guidance for revenue recognition (LKAS 18)

Contingent assets are disclosed, where inflow of economic benefit is probable but not virtually certain.

(n) Revenue recognitionRevenue is recognised to the extent that it is probable that the economic benefits will flow to the Group, and the revenue and associated costs incurred or to be incurred can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable, net of trade discounts and value added taxes, after eliminating sales within the Group. The following specific criteria are used for recognition of revenue:

(i) Sale of Apartments Revenue has been recognised on apartment sales of ‘The Emperor’ up to the maximum of percentage completion or cash paid by the buyer whichever is lower.

(ii) Income from Hotel/Restaurants Revenue is recognised on the rooms occupied on daily basis and food and beverages and hotel related sales are accounted for at the time of sale.

(iii) Interest IncomeInterest income is recognised on an accrual basis.

(iv) Rental IncomeRental income is recognised on an accrual basis.

(v) Dividend IncomeDividend income is recognised on a cash basis.


156

(vi) Other Gains and LossesNet gains and losses of a revenue nature arising from the disposal of property,plant and equipment and other noncurrent assets, including investments, are accounted for in the income statement, after deducting from the proceeds on disposal, the carrying amount of such assets and the related selling expenses.

(vii) Other IncomeOther income is recognised on an accrual basis. Net gains and losses of a revenue nature arising from the disposal of property, land and equipment and other non current assets, including investments, are accounted for in the income statement, after deducting from the proceeds on disposal, the carrying amount of such assets and the related selling expenses. Gains and losses arising from activities incidental to the main revenue generating activities and those arising from a Group of similar transactions, which are not material are aggregated, reported and presented on a net basis. Any losses arising from guaranteed rentals are accounted for in the year of incurring the same. A provision is recognised if the projection indicates a loss.

(o) Expenditure recognitionExpenses are recognised in the income statement on the basis of a direct association between the cost incurred and the earning of specific items of income. All expenditure incurred in the running of the business and in maintaining the property,plant and equipment in a state of efficiency has been charged to the income statement. For the purpose of presentation of the income statement, the “function of expenses” method has been adopted, on the basis that it presents fairly the elements of the Company and Group’s performance.

(p) Borrowing costsBorrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that the Group incurs in connection with the borrowing of funds.

(q) Guaranteed RentalLosses if any, of guaranteed rentals will be accounted for in the year in which they occur. A provision is recognised if the best estimate indicates a loss.

(r) Segment ReportingA segment is a distinguishable component of the Company that is engaged either in providing products or services which are subject to risks and rewards that are different from those of other segments. The rental income generated from the Commercial Centre which is categorised as Investment Property is shown separately.

(s) Income Tax ExpensesIncome tax expenses comprise of current and deferred tax.

(i) Current TaxationThe subsidiary company is liable for taxation at a rate of 12% in terms of Section 46(1) of the Inland Revenue Act No.10 of 2006 amendments thereto, on its profits derived from “promotion of tourism”.

The Group is liable for Income Tax on any other income at 28%.

In accordance with BOI agreement dated 11th March 1994 the profits and income of the company were exempt from taxation until year 2014. The Board of Directors of the company resolved to compute the

income tax payable at 2% of the turnover of the company with effective from 1st April 2014.

(ii) Deferred TaxationDeferred taxation is provided using the Statement of Financial Position liability method providing for temporary difference between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities using tax rates enacted or substantively enacted by the reporting date. Deferred tax assets including those related to tax effects of income tax losses and credits available to be carried forward, are recognised only to the extent that it is probable that future taxable profit will be available against which the asset can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that is no longer probable that the related tax benefit will be realised.

(t) Events after the Reporting PeriodAll material events after the reporting date has been considered and appropriate adjustments or disclosures have been made in the respective Notes to the Financial Statements.

(u) Cash Flow StatementThe Cash Flow Statement has been prepared using the “Indirect Method” of preparing Cash Flows in accordance with the Sri Lanka Accounting Standard LKAS 7. The cash and cash equivalent include cash in-hand, balances with banks and money at call and short notice.

(v) Directors’ ResponsibilityThe Board of Directors is responsible for the preparation and presentation of the financial statements. This is more fully described under the relevant clause in the Directors’ Report.



157

(w) Share based paymentIn accounting for employee remuneration in the form of shares, SLFRS 2- Share Based Payments, is effective for the Company’s Parent entity John Keells Holdings PLC, from the financial year beginning 2013/14.

Employees of the Company receive remuneration in the form of share-based payment transactions, whereby employees render services as consideration for equity instruments of the Parent entity John Keells Holdings PLC (equity-settled transactions). The cost of the employee services received in respect of the shares or share options granted is recognised in the Income statement over the period that employees provide services, from the time when the award is granted up to the vesting date of the options. The overall cost of the award is calculated using the number of share options expected to vest and the fair value of the options at the date of grant.

The employee remuneration expense resulting from the Group’s share option scheme to the employees of Asian Hotels and Properties PLC is recognised in the income statement of the company. This transaction does not result in a cash outflow to the company and expense recognised is met with a corresponding equity reserve increase, thus having no impact on the Statement of financial Position (SOFP). The fair value of the options granted is determined by the Group using an option model and the relevant details are communicated by the Group to all applicable subsidiary companies.

(x) New Accounting Standards Not Effective at the Reporting Date The Institute of Chartered Accountants of Sri Lanka has issued the following new Sri Lanka Accounting Standards which will become applicable for financial periods

beginning on or after 1st January 2014/ 2015.Accordingly, these Standards have not been applied in preparing these Financial Statements.

Sri Lanka Accounting Standard - SLFRS 13, “Fair Value Measurement” This SLFRS defines fair value, sets out in a single SLFRS a framework for measuring fair value; and requires disclosures about fair value measurements. This SLFRS will become effective from 01st January 2014.This SLFRS shall be applied prospectively as of the beginning of the annual period in which it is initially applied. The disclosure requirements of this SLFRS need not be applied in comparative information provided for periods before initial application of this SLFRS.The Company has started the process of evaluating the potential effect of this. Although many of the IFRS 13 disclosure requirements regarding financial assets and financial liabilities are already required, the adoption of IFRS 13 will require the Company to provide additional disclosures. Given the nature of the Company’s operations, this standard is not expected to have a pervasive impact on the Company’s financial statements.

Sri Lanka Accounting Standard – SLFRS 9 “Financial Instruments”The objective of this SLFRS is to establish principles for the financial reporting of financial assets and financial liabilities that will present relevant and useful information to users of financial statements for their assessment of the amounts, timing and uncertainty of an entity’s future cash flows.

An entity shall apply this SLFRS to all items within the scope of LKAS 39 Financial Instruments: Recognition and Measurement.

The effective date of this Standard has been deferred.


158


Group companyFor the year ended 31st March 2014 2013 2014 2013 Rs.’000 Rs.’000 Rs.’000 Rs.’000

5. REVENUEGross Revenue 9,301,184 8,875,761 5,976,629 5,669,197Value Added Tax (1,045,035) (984,783) (659,943) (618,442)Net Revenue 8,256,149 7,890,978 5,316,686 5,050,755

6. DIVIDEND INCOMEDividend from Subsidiary (Trans Asia Hotels PLC) - - 273,493 234,422 - - 273,493 234,422

7. OTHER OPERATING INCOMEExchange Gain 19,172 11,782 12,989 8,642Profit/(Loss) on Disposal of Property, Plant & Equipment (4,347) 191 (6,983) (4,864)Car Park Income 16,944 16,463 16,944 16,463Promotional Income 18,658 18,970 18,658 18,970Taxi Line Commission 11,397 9,593 11,397 9,593Sundry Income 13,722 14,309 9,256 10,270 75,546 71,308 62,261 59,074

8. FINANCE COSTFinance cost on other financial instruments 3,287 455 3,249 359 3,287 455 3,249 359

9. FINANCE INCOMEInterest income on loans to employees 2,197 2,172 2,197 2,172Income from short term investments 302,845 309,848 247,586 245,015 305,042 312,020 249,783 247,187


159


10. PROFIT BEFORE TAxProfit Before Tax is stated after charging all expenses including the followingRemuneration to Executive Directors 55,327 51,512 55,327 51,512Remuneration to Non Executive Directors 6,000 5,880 2,880 2,880

Remuneration to Auditors Audit service fee 1,500 1,413 960 913 Audit related service fee 465 662 335 462

Defined benefit plan cost 39,732 37,683 21,208 20,679Defined contribution plan cost - EPF and ETF 116,334 105,307 74,089 66,107Staff Expenses 1,174,055 1,110,442 700,534 610,360Depreciation of Property, Plant and Equipment 455,964 412,314 266,153 244,784Amortisation Lease Hold Property 12,404 12,404 - - Donations 21,087 10,948 13,983 6,852Amortisation of Intangible Assets 3,912 5,259 397 585Impairment losses on Trade and other receivables 8,480 7,935 1,328 7,524Impairment losses on Insurance Claim Receivable - 3,926 - -

11. INCOME TAx ExPENSECurrent tax charge (Note 11.1) 189,466 187,259 69,025 67,323Provision for Deferred tax (Note 11.2) 8,098 25,559 - - 10% Withholding tax on inter company dividends 30,388 26,047 - - 227,952 238,865 69,025 67,323

The Profits of Trans Asia Hotels PLC, being involved in the promotion of tourism has been taxed on its adjusted profit at 12% in terms of the Inland Revenue Act Number 10 of 2006 and the amendment thereto. Income Tax on other income has been provided at the normal tax rate of 28% (28% in 2013).

Income tax of Asian Hotels and Properties PLC (Company) on other income has been provided at the normal tax rate of 28%(28% in 2013).


160



11.1 Reconciliation between Income Tax Expense and the Product of Accounting ProfitProfit Before Tax 3,046,463 3,328,031 2,448,237 2,358,225Exempt Profits (2,202,644) (2,121,474) (2,201,718) (2,119,995)Accounting profit chargeable to income taxes 843,819 1,206,557 246,519 238,230

Tax effect on chargeable profits 190,583 226,026 69,025 66,704Tax effect on disallowable Expenses 5,298 (25,194) - -Qualifying Payment Relief (170) (172) - -Tax effect on adjustment to opening Deferred tax liability (20) 14,055 - -Under/(Over) provision for previous years 1,873 (1,897) - 619Tax on inter company dividend 30,388 26,047 - - 227,952 238,865 69,025 67,323

Income Tax charged atStandard rate 28% - CSE Listed Companies (2013 - 28%) 98,885 91,215 69,025 66,704Concessionary rate of 12% - (2013 - 12%) 88,708 97,941 - - Under provision for previous years 1,873 (1,897) - 619Charge for the year 189,466 187,259 69,025 67,323

11.2 Provision for Deferred TaxDeferred Tax arising fromAccelerated Depreciation for tax purposes 9,123 25,425 - - Post-Employment Medical Benefits (1,025) 134 - - Total Deferred Tax Charge 8,098 25,559 - -

12. EARNINGS PER SHAREThe Basic Earnings per Share is based on the profit attributable to equity holders' of Asian Hotels & Properties PLC.

Net Profit for the Year 2,397,946 2,490,029 2,379,212 2,290,902Number of Ordinary Shares 442,775 442,775 442,775 442,775Basic Earnings per Share (Rs.) 5.42 5.63 5.37 5.18


161


13. DIVIDEND PER SHAREFinal Dividend Paid - 2011/2012 - 1,328,326 - 1,328,326Interim Dividend Paid - 2012/2013 - 442,775 - 442,775Final Dividend Paid - 2012/2013 1,328,326 - 1,328,326 - Interim Dividend Paid - 2013/2014 442,775 - 442,775 -Total Dividends 1,771,101 1,771,101 1,771,101 1,771,101

Dividend Per Share (Rs.) 4.00 4.00 4.00 4.00

14. PROPERTY, PLANT AND EQUIPMENT

14.1 Group Outdoor Base Furniture, Capital

Freehold Car Park Plant & Stock & Fittings & Motor Work In Total Total

Land Buildings Development Machinery Circulating Equipment Vehicles Progress 2014 2013

As at 31st March Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000

Cost or Valuation

At the Beginning of the Year 10,018,325 6,209,514 11,783 1,191,495 1,202,187 1,642,306 79,582 72,649 20,427,841 14,266,890

Additions - 160,562 - 118,453 176,557 191,776 210 25,958 673,517 489,098

Disposals - - - (31,309) (42,017) (22,888) (175) - (96,390) (56,770)

Revaluation Gain - - - - - - - - - 6,242,265

Depreciation adjustment on Revaluation - - - - - - - - - (513,642)

Transfers to investment property/others - 71,080 - (485) 2,336 12,202 - (85,619) (486)

At the end of the Year 10,018,325 6,441,156 11,783 1,278,154 1,339,063 1,823,396 79,617 12,988 21,004,483 20,427,841

Accumulated Depreciation

At the Beginning of the Year - - 3,145 694,753 654,348 749,009 17,603 - 2,118,858 2,261,853

Charge for the Year - 122,792 1,178 46,013 162,082 116,776 7,122 - 455,964 412,314

Disposals - - - (27,818) (34,555) (19,177) (176) - (81,726) (41,667)

Transfers to cost - - - - - - - - - (513,642)

At the end of the Year - 122,792 4,323 712,948 781,875 846,608 24,549 - 2,493,096 2,118,858

Carrying Value

As at 31st March 2014 10,018,325 6,318,364 7,460 565,206 557,188 976,788 55,066 12,988 18,511,385

As at 31st March 2013 10,018,325 6,209,514 8,638 496,742 547,839 893,297 61,979 72,649 18,308,983

(Note-14.1a) Freehold Land and Buildings of the Group were valued by M/s. P.B. Kalugalagedara & Associates, an independent Chartered Valuer as at 31st March 2013,

and the book values were written up to correspond with the valuation. Valuation Method used is Direct Capital Comparison Method.

Had the revalued Buildings of the Group been included at cost, the carrying value of the said asset would amount to Rs. 4,524 Mn. (Rs. 4,389 Mn in 2013) Had the revalued

Land of Group been included at cost, the carrying value of the said asset would amount to Rs. 470 Mn. (Rs. 470 Mn in 2013).


162


(Note-14.1b)Details of Groups' Land and Building stated at valuation are indicated below:

Property Land /Building Extent Location

Freehold Land and Building

Company Land 1 A08 - R0- P05.08 No 77, Galle Road, Colombo 03

Building - Stage(1) 348,818 Sq Ft No 77, Galle Road, Colombo 03

Building - Stage (11) & (111) 299,975 Sq Ft No 77, Galle Road, Colombo 03

Investment Properties

Company Building 1 145,196 Sq Ft No 89, Galle Road, Colombo 03

Subsidiary Building 1 55,548 Sq Ft No. 117, Sir Chittampalam A. Gardiner Mawatha, Colombo 02.

Land A01 - R02- P30.0 No. 117, Sir Chittampalam A. Gardiner Mawatha, Colombo 02.

Leasehold Properties

Subsidiary Building 1 316,067 Sq Ft No. 115, Sir Chittampalam A. Gardiner Mawatha, Colombo 02.

Land A05 - R02- P34.28 No. 115, Sir Chittampalam A. Gardiner Mawatha, Colombo 02.

(Note-14.1c) The Vessel of floating restaurant of the Subsidiary has been classified under Motor Vehicles.

(Note-14.1d) The cost of the fully depreciated assets which are still in use of the Group amounting Rs. 1,021.07 Mn. (Rs. 737.71 Mn in 2013).

(Note-14.1e) There are no assets pledged that required to disclose in the Group.

14.2 Company Outdoor Base Furniture, Capital

Freehold Car Park Plant & Stock & Fittings & Motor Work In Total Total

Land Buildings Development Machinery Circulating Equipment Vehicles Progress 2014 2013

As at 31st March Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000

PROPERTY, PLANT AND EQUIPMENT

Cost or Valuation

At the Beginning of the Year 10,018,325 3,901,771 11,783 720,179 481,373 1,002,668 14,643 11,395 16,162,137 10,468,217

Additions - 7,167 - 76,968 130,234 64,639 210 21,912 301,131 283,257

Disposals - - - (16,090) (35,679) (10,176) (97) - (62,042) (45,497)

Revaluation Gain - - - - - - - - - 5,842,595

Depreciation adjustment on Revaluation - - - - - - - - - (386,435)

Transfers to investment property / others - 14,328 - (485) 2,506 12,032 - (28,866) (486) -

At the end of the Year 10,018,325 3,923,265 11,783 780,572 578,434 1,069,163 14,757 4,441 16,400,741 16,162,137

Accumulated Depreciation

At the Beginning of the Year - - 3,145 459,977 236,885 427,400 5,591 - 1,132,998 1,308,178

Charge for the Year - 79,962 1,178 26,785 77,878 77,409 2,940 - 266,153 244,784

Disposals - - - (16,093) (28,517) (7,302) (97) - (52,009) (33,529)

Transfers to revaluation - - - - - - - - - (386,435)

At the end of the Year - 79,962 4,323 470,669 286,246 497,507 8,434 - 1,347,142 1,132,998

Carrying Value

As at 31st March 2014 10,018,325 3,843,303 7,460 309,903 292,188 571,656 6,322 4,441 15,053,598

As at 31st March 2013 10,018,325 3,901,771 8,638 260,202 244,488 575,268 9,052 11,395 15,029,139


163

(Note-14.2a) Had the revalued Buildings of the company been included at cost, the carrying value of the said asset would amount to Rs. 3,170 Mn. (Rs. 3,196 Mn in 2013)

Had the revalued Land been included at cost, the carrying value of the said asset would amount to Rs. 470 Mn. (Rs. 470 Mn in 2013).

(Note-14.2b) The cost of the fully depreciated assets which are still in use of the Company amounting Rs. 666.17 Mn. (in 2013 Rs. 390.58 Mn).

(Note-14.2c) There are no assets pledged that required to disclose in the Company.

14.3 Details of Group’s land, building and other properties stated at valuation are indicated below;

Method of Effective date Property valuation of valuation valuer

Building on leasehold land of Direct capital 31st March 2013 P.B. Kalugalagedara,Trans Asia Hotels PLC. comparison method Chartered Valuation Surveyor

Land and building of Direct capital 31st March 2013 P.B. Kalugalagedara,Asian Hotels and Properties PLC. comparison method Chartered Valuation Surveyor

GroupAs at 31st March 2014 2013 Rs.’000 Rs.’000

15. LEASEHOLD PROPERTYAt the beginning of the year 831,068 843,472Amortisation for the year (12,404) (12,404)At the end of the year 818,664 831,068

The leasehold property is amortised on a straight line basis over 74 years. The remaining period of Lease as at 31st March 2014 was 66 years.

15.1 Details of leasehold Property amount Land extent Lease 2014 2013 Property (in acres) period Rs.’000 Rs.’000

Trans Asia Hotels PLC, Colombo 7.65 99 years from 07-08-1981 818,664 831,068 818,664 831,068


164


Group companyAs at 31st March 2014 2013 2014 2013 Rs.’000 Rs.’000 Rs.’000 Rs.’000

16. INVESTMENT PROPERTYAt the beginning of the year 3,618,750 3,101,540 1,860,500 1,632,000Additions 16,714 - 16,714 - Transfers 486 - 486 - Change in fair value during the year 268,564 517,210 268,564 228,500At the end of the year 3,904,514 3,618,750 2,146,264 1,860,500

16.1 Valuation details of investment propertyInvestment properties of the Group were valued by a qualified professional valuer as at 31st March 2014, details of which are as follows;

In order to adopt the Fair Value model on Investment Property, as per Sri Lanka Accounting Standard 40 “Investment Property” the Land & Building classified as Investment Property of Asian Hotels and Properties PLC which includes Crescat Boulevard was valued by Mr. P.B. Kalugalagedera, a Chartered Valuation Surveyor using investment method of valuation on 01st of April 2005 (date of adoption of the Standard), 31st March 2006, 31st March 2007, 31st March 2009, 31st March 2011, 31st March 2012,31st March 2013 and 31st March 2014 respectively.

The Commercial Centre of Trans Asia Hotels PLC was valued by Messrs. A.Y. Daniel and Sons, a Professional Valuer using accredited contractor (cost) method of valuation on 1st April 2005, 31st March 2006 and 31st March 2009 respectively. The Commercial Centre of Trans Asia Hotels PLC was valued by Mr. P.B. Kalugalagedera, a Chartered Valuation Surveyor using the Market Value Method on 31st March 2011, 31st March 2012 and 31st March 2013 respectively.

The valuation of the Investment property of the Trans Asia Hotels PLC has been obtained and confirmed that there is no change in value of property as at 31st March 2014.

Rental Income earned from Investment Property by the Company and Group amounted to Rs. 288 Mn (Rs. 258 Mn in 2013) and Rs. 349 Mn (Rs.292 Mn in 2013) respectively. Direct Operating Expenses incurred by the Company and Group amounted to Rs. 79 Mn (Rs.75 Mn in 2013) and Rs. 86 Mn (Rs. 81 Mn in 2013) respectively.

Rental income earned from investment property by the Group amounts to Rs. 349 Mn (2013 - Rs. 301 Mn) and direct operating expenses incurred by the Group amounted to Rs. 86 Mn (2013 - Rs. 81 Mn).


165


17. INTANGIBLE ASSETSComputer SoftwareCostAt the Beginning of the Year 32,804 31,218 8,710 8,436Additions 1,020 1,586 697 274Transfers (398) - (398) -At the End of the Year 33,426 32,804 9,009 8,710

Accumulated AmortisationAt the Beginning of the Year 24,287 19,028 7,648 7,063Amortisation 3,912 5,259 397 585Transfers (38) - (38) -At the End of the Year 28,161 24,287 8,007 7,648

Carrying valueAs at 31st March 5,265 8,517 1,002 1,062

companyAs at 31st March 2014 2013 Rs.’000 Rs.’000

18. INVESTMENTS IN SUBSIDIARIESCarrying valueInvestments in subsidiaries-Quoted 660,045 660,045 660,045 660,045


166


companyAs at 31st March Number of Effective 2014 2013 shares holding % Rs.’000 Rs.’000

CostCompany's quoted investments"Trans Asia Hotels PLC at Cost (Quoted)” 86,823,028 43.41% 660,045 660,045 660,045 660,045

companyAs at 31st March 2014 2013 Rs.’000 Rs.’000

Market ValueCompany's quoted investmentsTrans Asia Hotels PLC at market value 86,823,028 43.41% 6,937,160 6,112,341 6,937,160 6,112,341


19. LONG TERM INVESTMENTSSri Lanka Hotel & Tourism 100 100 100 100Less: Fall in value of the Investment (100) (100) (100) (100) - - - -

The Company has fully provided for the above investment during the year 2009/2010, due to the non recoverability of the same. This balance was written off during the year against the provision.


20. OTHER NON CURRENT FINANCIAL ASSETS20.1 Loans to executivesAt the beginning of the year 26,651 43,659 18,041 35,689Loans granted/(transfers) 7,486 (5,719) 3,286 (10,152)Recoveries (11,680) (11,289) (5,710) (7,496)At the end of the year 22,457 26,651 15,617 18,041

20.2 Insurance Claim Receivable At the beginning of the year 28,926 - - - Impairment during the year (3,926) - - - Payment received during the year (25,000) - - - - - - -

Receivable within one year 5,430 7,436 4,226 5,702Receivable between one to five years 17,027 19,215 11,391 12,339 22,457 26,651 15,617 18,041


167

Group companyAs at 31st March 2014 2013 2014 2013 Rs.’000 Rs.’000 Rs.’000 Rs.’000 21. PREPAID STAFF LOAN 4,786 3,357 3,264 2,953


22. INVENTORIESFood & Beverage 78,866 72,296 51,271 46,786General 11,684 10,836 8,898 8,561Diesel/ Furnace/Gas Stock 13,197 13,292 8,477 9,471Engineering Stock 24,454 24,806 16,500 16,206Apartment Inventory - 21,130 - 21,130Inventory Slow moving Provision (7,182) (7,174) - -Amount at the End of the Year 121,019 135,186 85,146 102,154


23. WORK-IN-PROGRESS - APARTMENTS - CURRENT ASSETSAt the Beginning of the Year - 64,392 - 64,392Incurred During the Year - 3,897 - 3,897Transferred to Cost of Sales - (47,159) - (47,159)Transferred to Apartment Inventory - (21,130) - (21,130)Transferred from Non-Current Assets - - - -

Last year the Company completed its Apartment project and accordingly there was no WIP - Apartments as at reporting date.


24. TRADE AND OTHER RECEIVABLESTrade receivables 373,487 440,168 158,362 239,932Other receivables 128,419 100,907 99,977 65,917Less: Impairment (25,532) (17,119) (16,414) (15,153) 476,374 523,956 241,925 290,696

ImpairmentAt the beginning of the year 17,119 10,698 15,153 9,143Provision for the year 8,480 7,935 1,328 7,524Written off during the year (67) (1,514) (67) (1,514)At the end of the year 25,532 17,119 16,414 15,153


168



25. OTHER CURRENT ASSETSPrepayments and non cash receivables 56,490 54,446 25,198 22,330WHT Recoverables 7,031 13,715 2,102 10,727ESC Recoverables - 2,862 - - Advance to Creditors 24,711 92,885 20,182 54,275Refundable Deposits - 5,581 - 5,582 88,232 169,489 47,482 92,914

26. SHORT TERM INVESTMENTSFixed & Call deposits 3,134,194 2,715,798 2,647,269 2,155,924 3,134,194 2,715,798 2,647,269 2,155,924

27. STATED CAPITAL Group company 2014 2013 2014 2013 Number of Value of Number of Value of Number of Value of Number of Value of shares shares shares shares shares shares shares shares As at 31st March Rs.’000 Rs.’000 Rs.’000 Rs.’000

442,775 3,345,117 442,775 3,345,117 442,775 3,345,117 442,775 3,345,117


28. OTHER COMPONENTS OF EQUITYRevaluation reserve 28.1 11,094,883 11,110,290 10,597,631 10,602,127Share-based Payments 28.2 17,966 - 14,470 - 11,112,849 11,110,290 10,612,101 10,602,127

28.1 Revaluation reservesAt the Beginning of the Year 11,110,290 5,143,193 10,602,127 4,772,950Transferred to Revenue Reserves (4,496) (13,418) (4,496) (13,418)Transferred to Revenue Reserves (10,911) (14,757) - -Transferred from Deferred Tax - (47,960) - -Revaluation gain on Freehold Land & Buildings - 6,043,232 - 5,842,595At the End of the Year 11,094,883 11,110,290 10,597,631 10,602,127


169

28.2 Share-based Payment PlansUnder the John Keells Group’s Employees Share Option Scheme (ESOP), share options of the parent are granted to senior executives of the Group with more than 12 months of service. The exercise price of the share options is equal to the 30 day volume weighted average market price of the underlying shares on the date of grant. The share options vest over a period of four years and is dependent on a performance criteria and a service criteria. The performance criteria being a minimum performance achievement of "Met Expectations" and service criteria being that the employee has to be in employment at the time the share options vest. The fair value of the share options is estimated at the grant date using a binomial option pricing model, taking into account the terms and conditions upon which the share options were granted.

Fair value of the share option and assumptionsThe fair value of the share options is estimated at the grant date using a binomial option pricing model, taking into account the terms and conditions upon which the share options were granted.

The valuation takes into account factors such as stock price, expected time to maturity, exercise price, expected volatility of share price, expected dividend yield and risk free interest rate.

Employee Share Option Scheme - GroupThe expense recognised for employee services received during the year is shown in the following table:

2014 2013 Rs.’000 Rs.’000

Expense arising from equity-settled share-based payment transactions 17,966 -Total expense arising from share-based payment transactions 17,966 -

Movements in the yearThe following table illustrates the number (No.) and Weighted Average Exercise Prices (WAEP) of, and movements in, share options during the year: 2014 2014 No. WAEP

Outstanding as at 1st April - - Granted during the year 615,692 253.16Forfeited during the year (17,307) 253.16Exercised during the year - 253.16Expired during the year - - Outstanding as at 31st March 598,385 253.16Exercisable as at 31st March - -


170


28.3 Share-based Payment Plans Employee Share Option Scheme - Company

The expense recognised for employee services received during the year is shown in the following table: 2014 2013 Rs.’000 Rs.’000

Expense arising from equity-settled share-based payment transactions 14,470 -Total expense arising from share-based payment transactions 14,470 -

Movements in the yearThe following table illustrates the number (No.) and Weighted Average Exercise Prices (WAEP) of, and movements in, share options during the year: 2014 2014 No. WAEP

Outstanding as at 1st April - -Granted during the year 495,466 253.16Forfeited during the year - 253.16Exercised during the year - 253.16Expired during the year - -Outstanding as at 31st March 495,466 253.16Exercisable as at 31st March -


29. DEFERRED TAxATIONAt the Beginning of the Year 329,313 255,793Charge for the year 8,098 25,560Deferred Tax effect on revaluation of Buildings - 47,960At the End of the year 337,411 329,313


171

The closing Deferred Tax liability relates to the followings,

Group As at 31st March 2014 2013 Rs.’000 Rs.’000

Revaluation of buildings - 47,960Accelerated Depreciation for tax purposes 350,199 293,116Employee Benefit Liability (12,788) (11,763) 337,411 329,313

In accordance with the BOI agreement dated 11th March 1994 the profits and income of the Company were exempt from taxation till year 2014, and at the expiry of said period the following options were available for the Company.

(a) Income tax payable for the year of assessment shall be computed at 2% of the Turnover of the Company or;(b) The provisions of the Inland Revenue Laws for the time being imposed shall apply.

Since Company elected option (a) no Deferred Tax liability will arise even after the expiry of the tax exemption period.


30. EMPLOYEE BENEFIT LIABILITIESAt the beginning of the year 194,097 208,696 96,071 109,551Current service cost 22,384 16,814 11,601 9,724Interest cost on benefit obligation 18,308 20,869 10,568 10,955Payments (17,049) (23,828) (5,977) (12,690)(Gain)/Loss arising from changes in assumptions or due to 4,860 (8,220) 3,768 (1,235)Transfers (1,366) (20,234) (1,367) (20,234)At the end of the year 221,234 194,097 114,664 96,071

The employee benefit liability of the Company and Group is based on the actuarial valuations carried out as at 31st March 2014 by Mr. M. Poopalanathan, AIA, Messers. Actuarial & Management Consultant (Pvt) Ltd; a firm of professional actuaries.


172


The principal assumptions used in determining the cost of employee benefits were:

2014 2013

Discount rate 11% 11%Future salary increases 10% 10%

30.1 Sensitivity of assumptions usedIf a one percentage point change in the assumed discount rate would have the following effects:

Discount rate Salary increment 2014 2014 Group Company Group Company Rs.’000 Rs.’000 Rs.’000 Rs.’000

Increase by one percentage (9,640) (4,630) 11,721 5,917 Decrease by one percentage 11,022 5,500 (10,450) (5,100)

30.2 Maturity analysis of the paymentsThe following payments are expected on employee benefit liabilities in future years. 2014 Group Company Rs.’000 Rs.’000

Within the next 12 months 30,752 15,805 Between 1-2years 57,756 32,355 Between 2-5years 58,835 29,508 Between 5-10 years 51,825 29,136 Beyond 10 years 22,066 7,860 Total 221,234 114,664


31. OTHER NON CURRENT LIABILITIES31.1 MovementAt the beginning of the year 2,852 4,289Additions - -Repayments (1,436) (1,437)At the end of the year 1,416 2,852

Repayable within one year 1,416 1,436

Repayable after one yearRepayable between one to five years - 1,416Repayable after five years - - - 1,416 1,416 2,852


173


32. TRADE AND OTHER PAYABLESTrade Payables 177,073 160,945 111,271 105,706Payable to Contractors 2,744 1,704 2,744 1,704Retention on Construction 21,561 18,442 21,560 18,442Accrued Expenses 139,274 111,724 51,007 47,082Other Creditors 396,061 361,715 327,333 293,459 736,713 654,530 513,915 466,393

33. OTHER CURRENT LIABILITIESRefundable Deposits 4,008 3,651 4,008 3,650Other Tax Payables 20,758 22,359 - -Banquet Advances 156,796 107,713 89,973 44,264Other Advances 20,660 24,571 13,822 13,879 202,222 158,294 107,803 61,793

34. RELATED PARTY DISCLOSESThe Company carries out transactions in the ordinary course of its business with parties who are defined as related parties in LKAS 24 Related Party Disclosure, the details of which are reported below. The pricing applicable to such transactions is based on the assessment of risk and pricing model of the Company and comparable with what is applied to transactions between the Company and its unrelated customers.


34.1 Amounts due from related partiesParent-John Keells Holdings PLC 1,591 3,303 1,129 799Subsidiary-Trans Asia Hotels PLC - - 15 68Associates of JKH PLC 36 - 36 - Companies under common control of JKH PLC 47,236 31,356 33,537 19,269 48,863 34,659 34,717 20,136

34.2 Amounts due to related partiesParent-John Keells Holdings PLC 5,106 3,683 2,742 3,341Subsidiary-Trans Asia Hotels PLC - - 263 233Companies under common control of JKH PLC 82,235 83,960 57,899 54,803 87,341 87,643 60,904 58,377


174


Group companyFor the year ended 31st March 2014 2013 2014 2013 Note Rs.’000 Rs.’000 Rs.’000 Rs.’000

34.3 Transactions with related partiesTransactions with Parent CompanyThe Company's parent is John Keells Holdings PLCRendering/(Receiving) of services (43,713) (44,645) (23,578) (21,360)Rent Received 37,529 29,755 - -

Subsidiaries(Receiving)/Rendering of services - - (1,135) 1,442Rent received/(paid) - - 1,014 -

Transaction with companies under common control of JKH PLCSales/(Purchases) of goods (18,761) (49,933) (6,148) (28,209)Rendering /(Receiving) of services (486,596) (356,896) (291,670) (183,675)Sales/(Purchases) of Property Plant & Equipment (3,117) (4,056) (3,117) (4,056)

34.4 Transaction with Key ManagementPersonnel (KMP) of the CompanyAccording to LKAS 24 Related Party Disclosure “Key Management Personnel” are those having authority and responsibility for planning and controlling activities of the entity. Accordingly, the Directors of the Company (including Executives and Non-Executive Directors) and their immediate family members have been classified as KMP of the Company.

As the John Keells Holding PLC is the Parent of the Company and the Board of Directors of the Parent Company have the authority and responsibility of planning, directing and controlling the activities of the Company, the Directors of the parent Company and their immediate family member have also been identified as Key Management Personnel of the Company. Immediate family member is defined as spouse or dependent. A dependent is defined as anyone who depends on the respective director for more than 50% of his/her financial needs.


Short-term employee benefits 61,327 57,392 58,207 54,392Contribution to provident fund 4,028 4,037 3,574 3,596Share base payment 10,914 - 10,914 -

Remuneration paid to Directors is disclosed in the Note No. 10 to these Financial Statements.


175

35. FINANCIAL INSTRUMENTS35.1 Fair value of Financial InstrumentThe management assessed that the fair value of the financial instruments, with includes cash at bank, short term deposits, other non current assets, amounts due from - due to related parties, trade receivables, trade payables, bank over drafts and other current financial liabilities, approximate their carrying amounts largely due to the short term maturities of these instruments.

The Group does not designate any of its Financial Assets/Liabilities at fair value, hence a classification between fair value hierarchy do not apply.

35.2 FINANCIAL ASSETS AND LIABILITIES BY CATEGORIES -GROUP financial assets by categories Loans and receivablesAs at 31st March 2014 2013 Rs.’000 Rs.’000

Financial instruments in non-current assetsOther non-current financial assets 17,027 19,215Other non-current assets 4,786 3,357

Financial instruments in current assetsTrade and other receivables 476,374 523,956Amounts due from related parties 48,863 34,659Short term investments 3,134,194 2,715,798Cash in hand and at bank 430,541 407,409 Total 4,111,785 3,704,394

The fair value of loans and receivables is not significantly different from the value based on amortised cost methodology.

financial liabilities by categories financial liabilities measured at amortised costAs at 31st March 2014 2013 Rs.’000 Rs.’000

Financial instruments in non-current liabilitiesOther non current liabilities - 1,416

Financial instruments in current liabilitiesTrade and other payables 736,713 654,530Amounts due to related parties 87,341 87,643Other current liabilities 202,222 158,294Bank overdrafts 130,080 162,683Total 1,156,356 1,064,566

The fair value of financial liabilities is not significantly different from the value based on amortised cost methodology.


176


35.3 Financial Assets and Liabilities by Categories - CompanyFinancial assets and liabilities in the tables below are split into categories in accordance with LKAS 39. financial assets by categories Loans and receivablesAs at 31st March 2014 2013 Rs.’000 Rs.’000

Financial instruments in non-current assetsOther non-current financial assets 11,391 12,339Other non-current assets 3,264 2,953

Financial instruments in current assetsTrade and other receivables 241,925 290,696Amounts due from related parties 34,717 20,136Short term investments 2,647,269 2,155,924Cash in hand and at bank 289,804 307,569Total 3,228,370 2,789,617

The Fair value of loans and receivables is not significantly different from the value based on amortised cost methodology of the Company.

financial liabilities by categories financial liabilities measured at amortised costAs at 31st March 2014 2013 Rs.’000 Rs.’000

Financial instruments in non-current liabilities

Financial instruments in current liabilitiesTrade and other payables 513,915 466,393Amounts due to related parties 60,904 58,377Other current liabilities 107,803 61,793Bank overdrafts 76,116 123,105Total 758,738 709,668

The fair value of financial liabilities is not significantly different from the value based on amortised cost methodology of the Company.


177

36. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIESFinancial instruments held by the Group, principally comprise of cash at bank, short-term deposits, other non current assets, amounts due from/due to related parties, trade receivables, trade payables, bank overdrafts and other current financial liabilities. The main purpose of these financial instruments is to manage the operating, investing and financing activities of the Group.

Financial risk management of the Group is carried out based on guidelines established by its parent company’s central treasury department (Group Treasury) which comes under the purview of the Group Executive Committee (GEC) of the parent company.

Group Treasury identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units. The parent company provides guidelines for overall risk management, as well, covering specific areas such as credit risk, investment of excess liquidity, interest rate risk and foreign currency risk.

The Group has established guidelines for risk controlling procedures and for the use of financial instruments, including a clear segregation of duties with regard to financial activities, settlement, accounting and related controlling. The guidelines upon which the Group’s risk management processes are based are designed to identify and analyse these risks throughout the Group, to set appropriate risk limits and controls and to monitor the risks by means of reliable and up-to-date administrative and information systems. The guidelines and systems are regularly reviewed and adjusted to changes in markets and products. The Group manages and monitors these risks primarily through its operating and financing activities.

The Audit Committee of John Keells Holdings PLC, the parent company,oversees how management monitors compliance with the Group’s risk management policies and procedures,and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.

36.1 Credit riskCredit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.

The Group trades only with recognised, creditworthy third parties. It is the Group’s policy that all clients who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.

With respect to credit risk arising from the other financial assets of the Group, such as cash and cash equivalents, available-for-sale financial investments, investments, and certain derivative instruments, the Group’s exposure to credit risk arises from default of the counterparty. The Group manages its operations to avoid any excessive concentration of counterparty risk and the Group takes all reasonable steps to ensure the counterparties fulfil their obligations.

36.1.1 Risk exposureCredit risk is the risk of financial loss to the Group,if a customer or counter party to a financial instrument fails to meet its contractual obligations, and arises principally from the group's receivables from customers and placements in deposits with banking institutions and in government securities.

The maximum risk positions of financial assets which are generally subject to credit risk are equal to their carrying amounts (without consideration of collateral, if available). Following table shows the maximum risk positions.


178


36.1.1 Risk exposureCredit risk is the risk of financial loss to the Group,if a customer or counter party to a financial instrument fails to meet its contractual obligations, and arises principally from the group’s receivables from customers and placements in deposits with banking institutions and in government securities.

The maximum risk positions of financial assets which are generally subject to credit risk are equal to their carrying amounts (without consideration of collateral, if available).Following table shows the maximum risk positions.

2014 2013Risk exposure Group Notes Other non Cash in Trade Short Amounts Total % of Other non Cash in Trade Short Amounts Total % of current hand and term due allocation current hand and and other term due allocation financial and other investments from financial at bank receivables investments from assets at bank receivables related assets related parties parties

Deposits with bank 36.1.2 - - - 3,134,194 - 3,134,194 76% - - - 2,715,798 - 2,715,798 73%

Loans to executives 36.1.3 17,027 - 5,431 - - 22,458 1% 19,215 - 7,437 - - 26,652 1%

Trade and other receivables 36.1.4 - - 470,943 - - 470,943 12% - - 516,519 - - 516,519 14%

Amounts due from related parties 36.1.5 - - - - 48,863 48,863 1% - - - - 34,659 34,659 1%

Cash in hand and at bank 36.1.6 - 430,541 - - - 430,541 10% - 407,409 - - - 407,409 11%

Total credit risk exposure 17,027 430,541 476,374 3,134,194 48,863 4,106,999 100% 19,215 407,409 523,956 2,715,798 34,659 3,701,037 100%

2014 2013Risk exposure Company Notes Other non Cash in Trade Short Amounts Total % of Other non Cash in Trade Short Amounts Total % of current hand and term due allocation current hand and and other term due allocation financial and other investments from financial at bank receivables investments from assets at bank receivables related assets related parties parties

Deposits with bank 36.1.2 - - 2,647,269 - 2,647,269 82% - - - 2,155,924 - 2,155,924 77%


Loans to life policy holders 36.1.6 - - - - - - - - - - - - - -






179

2014 2013Risk exposure Group Notes Other non Cash in Trade Short Amounts Total % of Other non Cash in Trade Short Amounts Total % of current hand and term due allocation current hand and and other term due allocation financial and other investments from financial at bank receivables investments from assets at bank receivables related assets related parties parties

Deposits with bank 36.1.2 - - - 3,134,194 - 3,134,194 76% - - - 2,715,798 - 2,715,798 73%






2014 2013Risk exposure Company Notes Other non Cash in Trade Short Amounts Total % of Other non Cash in Trade Short Amounts Total % of current hand and term due allocation current hand and and other term due allocation financial and other investments from financial at bank receivables investments from assets at bank receivables related assets related parties parties

Deposits with bank 36.1.2 - - 2,647,269 - 2,647,269 82% - - - 2,155,924 - 2,155,924 77%


Loans to life policy holders 36.1.6 - - - - - - - - - - - - - -






180

36.1.2 Deposits with bankDeposits with bank mainly consist of fixed and call deposits.As at 31st March 2014, fixed and call deposits comprise 90% (2013- 61%) and 93% (2013- 70%) for the group and company respectively were rated “A+” or better. Group companyAs at 31 March 2014 2013 2014 2013Fitch ratings Rating % Rating % Rating % Rating % Rs.’000 of total In Rs.’000 of total In Rs.’000 of total In Rs.’000 of total

AA+ 659,103 21% 1,531,166 56% 659,103 25% 1,531,167 71%

AA 359,968 11% 559,875 21% - - - -

AA- 672,298 22% 624,757 23% 672,298 25% 624,757 29%

A 1,442,825 46% - - 1,315,868 50% - -

Total 3,134,194 100% 2,715,798 100% 2,647,269 100% 2,155,924 100%

* Rating agencies

36.1.3 Loans to executivesLoans to executive portfolio is largely made up of vehicle loans which are given to staff at assistant manager level and above. The respective business units have obtained the necessary Power of Attorney/promissory notes as collateral for the loans granted.

36.1.4 Trade and other receivables Group company 2014 2013 2014 2013 Rs.’000 Rs.’000 Rs.’000 Rs.’000

Neither past due nor impaired 225,008 189,693 29,409 20,773

Past due but not impaired 0-30 days 163,339 220,211 128,601 173,006 31–60 days 51,863 60,775 44,320 54,127 61–90 days 9,839 15,536 7,838 10,118 91–120 days 5,078 8,453 2,657 4,841 121–180 days 5,413 3,233 4,751 2,710 > 181 days 41,011 40,288 40,408 39,353Impaired 355 2,886 355 921Gross carrying value 501,906 541,075 258,339 305,849

Less: impairment provisionIndividually assessed impairment provision (9,118) (1,966) - - Collectively assessed impairment provision (16,414) (15,153) (16,414) (15,153)Total 476,374 523,956 241,925 290,696



181

The Group has obtained customer deposit from major customers by reviewing their past performance and credit worthiness, as collateral.

The requirement for an impairment is analysed at each reporting date on an individual basis for major customers. Additionally, a large number of minor receivables are grouped into homogeneous groups and assessed for impairment collectively. The calculation is based on actual incurred historical data.

36.1.5 Amounts due from related partiesThe Group's amounts due from related party mainly consists of balances from affiliate Companies and parent.

36.1.6 Credit risk relating to cash and cash equivalentsIn order to mitigate the concentration, settlement and operational risks related to cash and cash equivalents, the Group consciously manages the exposure to a single counterparty taking into consideration, where relevant, the rating or financial standing of the counterparty, where the position is reviewed as and when required, the duration of the exposure in managing such exposures and the nature of the transaction and agreement governing the exposure.

36.2 Liquidity RiskThe Group’s policy is to hold cash and undrawn committed facilities at a level sufficient to ensure that the Group has available funds to meet its short and medium term capital and funding obligations, including organic growth and acquisition activities, and to meet any unforeseen obligations and opportunities. The Group holds cash and undrawn committed facilities to enable the Group to manage its liquidity risk.

The Group monitors its risk to a shortage of funds using a daily cash management process. This process considers the maturity of both the Group’s financial investments and financial assets (e.g. accounts receivable, other financial assets) and projected cash flows from operations.

The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of multiple sources of funding including debentures, bank loans, loan notes, overdrafts and finance leases over a broad spread of maturities.

36.2.1 Net debt Group company 2014 2013 2014 2013 Rs.’000 Rs.’000 Rs.’000 Rs.’000

Short term investments 3,134,194 2,715,798 2,647,269 2,155,924Cash in hand and at bank 430,541 407,409 289,804 307,569Total liquid assets 3,564,735 3,123,207 2,937,073 2,463,493

Other Non Current Liabilities - (1,416) - - Other Current Liabilities (1,416) (1,436) - - Bank overdrafts (130,080) (162,683) (76,116) (123,105)Total liabilities (131,496) (165,535) (76,116) (123,105)Net debt 3,433,239 2,957,672 2,860,957 2,340,388


182

36.2.2 Liquidity risk managementThe mixed approach combines elements of the cash flow matching approach and the liquid assets approach. The business units attempt to match cash outflows in each time budget against a combination of contractual cash inflows plus other inflows that can be generated through the sale of assets, repurchase agreement or other secured borrowings.

Maturity analysisThe table below summarises the maturity profile of the Group’s financial liabilities as at 31st March 2014 based on contractual undiscounted payments.

Group Within 1 Between 1-2 Between 2-3 Between 3-4 Between 4-5 More than 5 Total In Rs. '000 year years years years years years

Trade and other payables 736,713 - - - - - 736,713

Amounts due to related parties 87,341 - - - - - 87,341

Other current liabilities 202,222 - - - - - 202,222

Bank overdrafts 130,080 - - - - - 130,080

1,156,356 - - - - - 1,156,356

The table below summarises the maturity profile of the Group’s financial liabilities as at 31st March 2013 based on contractual undiscounted payments.

Group Within 1 Between 1-2 Between 2-3 Between 3-4 Between 4-5 More than 5 Total In Rs. '000 year years years years years years

Other Non Current Liabilities - 1,416 - - - - 1,416



Other current liabilities 158,294 - - - - - 158,294

Bank overdrafts 162,683 - - - - - 162,683

1,063,150 1,416 - - - - 1,064,556

Maturity analysisThe table below summarises the maturity profile of the Company financial liabilities as at 31st March 2014 based on contractual undiscounted payments.

Company Within 1 Between 1-2 Between 2-3 Between 3-4 Between 4-5 More than 5 Total In Rs. '000 year years years years years years



Other current liabilities 107,803 107,803

Bank overdrafts 76,116 - - - - - 76,116 758,738 - - - - - 758,738



183

The table below summarises the maturity profile of the Company financial liabilities as at 31st March 2013 based on contractual undiscounted payments.

Company Within 1 Between 1-2 Between 2-3 Between 3-4 Between 4-5 More than 5 Total In Rs. '000 year years years years years years



Other current liabilities 61,791 61,793

Bank overdrafts 123,105 - - - - - 123,105

709,666 - - - - - 709,668

36.3 Market riskMarket risk is the risk that the Fair value of future cash flows of a financial instrument will fluctuate because of the changes in market prices.

Market prices comprise four types of risk:• Interest rate risk• Currency risk• Commodity price risk• Equity price risk

The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

36.3.1 Interest rate riskInterest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of the changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s long-term debt obligations with floating interest rates.

Most lenders grant loans under floating interest rates. To manage this, based on the market condition and outlook of the interest rate, the Group takes mitigating action such as interest rate swaps, caps, etc.


184

36.4 Capital managementThe primary objective of the Group’s capital management is to ensure that it maintains a strong financial position and healthy capital ratios in order to support its business and maximise shareholder value.

The Group manages its capital structure and makes adjustments to it, in the light of changes in economic conditions. To maintain or adjust the capital structure, the Group may issue new shares, have a rights issue or buy back of shares.

Group company 2014 2013 2014 2013

Debt / Equity 0.5% 0.7% 0.4% 0.6%

37. OPERATING SEGMENT INFORMATION

revenue hoteLS property Group totalFor the year ended 31st March 2014 2013 2014 2013 2014 2013 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000

External Revenue 7,775,954 7,428,633 480,194 462,345 8,256,149 7,890,978Inter segment RevenueTotal Segment Revenue 7,775,954 7,428,633 480,194 462,345 8,256,149 7,890,978Segment Operating Profits before Finance Expenses 2,826,850 2,840,613 227,828 205,085 3,054,678 3,045,698Inter Company Dividends (273,493) (234,422) - - (273,493) (234,422)Finance Expenses (3,287) (96) - (359) (3,287) (455)

Change in Fair Value of Investment Properties Company - - 268,564 228,500 268,564 228,500 Commercial Centre of Subsidiary - - - 288,710 - 288,710Profit before Taxation 2,550,071 2,606,095 496,392 721,936 3,046,463 3,328,031Income Tax Expense (181,084) (188,888) (16,480) (23,930) (197,564) (212,818)Eliminations (30,388) (26,047) - - (30,388) (26,047)Profit after Taxation 2,338,599 2,391,160 479,912 698,006 2,818,511 3,089,166Minority Interest - - - - (420,565) (599,137)Net Profit for the Year 2,338,599 2,391,160 479,912 698,006 2,397,946 2,490,029

AssetsSegment Assets 21,200,382 20,682,030 7,971,918 8,408,660 29,172,300 29,090,690Eliminations 1,611,436 (2,314,302)Total Assets 21,200,382 20,682,030 7,971,918 8,408,660 27,560,864 26,776,388

LiabilitiesSegment Liabilities 2,526,651 3,121,386 198,043 186,100 2,724,710 3,307,486Eliminations/Adjustments - - - - (951,391) (1,654,257)Total Liabilities 2,526,651 3,121,386 198,043 186,100 1,773,319 1,653,229



185

38. CONTINGENT LIABILITIESThere were no material contingent liabilities existing as at reporting date.

39. CAPITAL COMMITMENTSThe Asian Hotels & Properties PLC Group had Capital Expenditure contracted for Rs. 47.4 Mn as at 31st March 2014, which were not provided for in the consolidated Financial Statements.

40. EVENTS SUBSEQUENT TO THE REPORTING DATEOther than the contingent liabilities and commitments referred to in Note 38 & 39 to the Financial Statements, there have been no events subsequent to the reporting date which would have any material effect on the Company or on the Group.

The Board of Directors of the Company has declared a Final Dividend of Rs. 3/- per share for the financial year ended 31st March 2014.

As required by Section 56 (2) of the Companies Act No. 7 of 2007, the Board of Directors have confirmed that the Company satisfies theSolvency test in accordance with Section 57 of the Companies Act No. 7 of 2007, and have obtained a certificate from Auditors, prior todeclaring a Final Dividend.

In accordance with Sri Lanka Accounting Standard (LKAS) 10, Events after Balance Sheet date, the proposed final Dividend has not beenrecognised as a liability in the Financial Statements as at 31st March 2014.

41. DIRECTORS' RESPONSIBILITY STATEMENTThe Board of Directors is responsible for the preparation and presentation of these Financial Statements. Please refer to the page 142 for the Statement of Directors' Responsibility for Financial Reporting.


186

2014 2013 Rs.’000 Rs.’000

Revenue 8,256,149 7,890,978

Adjustment for Change in Fair Value of Investment Property 268,564 517,210Adjustment for Finance Income 305,042 312,020Adjustment for Other Income 75,546 71,308 8,905,301 8,791,516

Less: Cost of Materials & ServicesPurchased from external sources 1,319,224 1,165,019 Value Added 7,586,077 7,626,497

2014 % 2013 % Distributed as follows: Rs.’000 Rs.’000

To the Employees as Remuneration 1,330,120 18 1,242,906 16To the Government as Taxes 1,211,336 16 1,106,309 15To the Providers of CapitalAs Interest on Loans 3,287 0 455 0As Minority Interest 420,565 6 599,137 8To the Shareholders as Dividends 1,771,101 23 1,771,101 23Retained within the businessAs Depreciation 455,964 6 412,314 5As Reserves 2,393,704 31 2,494,275 33 7,586,077 100 7,626,497 100

Consolidated value ADDED STATEMENT


187

information to share holders and investorsSTOCK ExCHANGE LISTINGThe Issued Ordinary Shares of Asian Hotels and Properties PLC are listed with the Colombo Stock Exchange of Sri Lanka. The Audited Financial Statements of the Company and the Consolidated Financial Statements for the year ended 31st March 2014 have been submitted to the Colombo Stock Exchange.

DISTRIBUTION OF SHAREHOLDINGS 31.03.2014 31.03.2013From To Number of Total Percentage Number of Total Percentage Share Share of Share Share Share of Share Holders Holdings Holdings Holders Holdings Holdings

1 - 1,000 2,218 641,523 0.1 2,195 655,015 0.11,001 - 10,000 799 2,867,237 0.7 786 2,807,146 0.710,001 - 100,000 177 4,941,326 1.1 176 5,015,402 1.1100,001 - 1,000,000 24 5,989,598 1.4 31 7,871,001 1.81,000,001 and above 12 428,335,616 96.7 15 426,426,736 96.3 3,230 442,775,300 100.0 3,203 442,775,300 100.0

ANALYSIS OF SHAREHOLDERS

categories of Shareholders 31.03.2014 31.03.2013 Holdings Holdings Number % Number %

Individual 13,694,105 3.09 13,893,764 3.14Institutions 429,081,195 96.91 428,881,536 96.86 442,775,300 100.00 442,775,300 100.00

Resident 432,649,633 97.71 415,494,111 93.84Non Resident 10,125,667 2.29 27,281,189 6.16 442,775,300 100.00 442,775,300 100.00

Public 94,646,347 21.38 94,643,809 21.38Non Public* 348,128,953 78.62 348,131,491 78.62 442,775,300 100.00 442,775,300 100.00

*Includes shareholdings of Inter Company, Directors & Spouses.


188

information to share holders & investors contd.

TOP TWENTY SHAREHOLDERS as at as at 31.03.2014 31.03.2013 Share Percentage Share Percentage Holdings Holdings John Keells Holdings PLC 347,824,192 78.56 347,824,192 78.56Employees Provident Fund 42,477,714 9.59 24,209,022 5.47Sri Lanka Insurance Corporation Ltd-Life Fund 10,055,900 2.27 10,055,900 2.27Bank of Ceylon A/C Ceybank Unit Trust 9,285,390 2.10 9,190,407 2.08HSBC International Nominees Limited-MSNY-Bay Pond Partners L.P. 3,580,000 0.81 3,580,000 0.81Dr. S. Yaddehige 3,415,200 0.77 3,415,200 0.77Bank of Ceylon-No. 2 A/C 2,583,400 0.58 2,583,400 0.58Bank of Ceylon-No. 1 Account 2,232,400 0.50 2,232,400 0.50Mr. M.J. Fernando 2,018,000 0.46 2,018,000 0.46AIA Insurance Lanka PLC A/C No.07 1,966,528 0.44 1,903,439 0.43HSBC International Nominees Limited-MSNY-Bay Pond Investors (Bermuda) L.P 1,724,200 0.39 1,724,200 0.39Bank of Ceylon A/C Ceybank Century Growth Fund 1,172,692 0.26 1,144,564 0.26Employee Trust Fund Board 767,478 0.17 767,478 0.17Mr. M. Mannawarajan 650,016 0.15 650,016 0.15Richard Pieris & Co Ltd - Account No. 01 639,400 0.14 639,400 0.14National Savings Bank 441,000 0.10 441,000 0.10Rockport Limited 386,000 0.09 386,000 0.09Union Assurance PLC/Account No. 05 (Unit-linked Life Insurance Fund-Equity Tracker Fund) 276,761 0.06 279,299 0.06Elgin Investments Limited 225,000 0.05 175,000 0.04Merrill J Fernando & Sons (Pvt) Limited 220,000 0.05 220,000 0.05 431,941,271 97.55 413,438,917 93.37

For the Year Ended 31st March 2014 2013 Rs. Rs.

Market Value Highest Market Price Per Share 79.00 90.00 Lowest Market Price Per Share 57.00 65.00 Last Traded Market Price Per Share 58.80 70.00

Dividend Payments Interim Dividend Per Share 1.00 1.00 Final Dividend Per Share 3.00 3.00


189

Five Year Financial Summary Group 2013/14 2012/13 2011/12 2010/11 2009/10 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000

Revenue 8,256,149 7,890,978 8,855,241 7,457,325 4,899,671

Profit After Taxation 2,818,511 3,097,386 2,502,458 2,147,886 688,806

Share Capital & ReservesStated Capital 3,345,117 3,345,117 3,345,117 3,345,117 3,345,117Other Components of Equity 11,112,849 11,110,290 5,143,193 5,179,592 5,233,818Retained Profit 7,880,070 7,242,060 6,490,690 5,194,517 3,585,332Shareholders’ Funds 22,338,036 21,697,467 14,979,000 13,719,226 12,164,267

Minority Interest 3,449,509 3,425,692 2,963,109 2,783,930 2,464,777 25,787,545 25,123,159 17,942,109 16,503,156 14,629,044

Assets & (Liabilities)Current Assets 4,299,223 3,986,497 4,038,373 2,705,026 1,766,283Current Liabilities (1,214,674) (1,128,402) (1,640,220) (1,219,974) (1,582,940)Net Current Assets 3,084,549 2,858,095 2,398,153 1,485,052 183,343Non Current Assets 23,261,641 22,789,890 16,011,297 15,446,194 15,397,524Non Current Liabilities (558,645) (524,826) (467,341) (428,090) (951,823) 25,787,545 25,123,159 17,942,109 16,503,156 14,629,044

Ratio AnalysisEarnings Per share (Rs.)* 5.42 5.63 4.85 4.01 1.42Net Assets Per share (Rs.) 50.45 49.00 33.83 30.98 27.47Current Ratio (Times) 3.54 3.53 2.46 2.22 1.12After Tax Return on Net Assets 10.73% 11.50% 14.35% 12.93% 5.18%Dividend Per Share* (Rs.) 4.00 4.00 2.00 0.50 1.00P/E Ratio (Times) 10.85 12.43 16.07 23.44 46.22

* The increased number of ordinary shares of 442,775,300 has been considered for the previous year’s comparative figures.

five year financial summary property development division 2013/14 2012/13 2011/12 2010/11 2009/10 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000

Revenue 419,119 428,062 2,675,625 2,468,699 1,586,995Cost of Sales 234,571 265,101 2,066,140 1,779,735 1,189,314Gross Profit 184,548 162,961 609,485 688,964 397,681

Administration & Other Overheads 117,702 121,012 205,362 163,898 151,518Other Income 106,759 134,559 111,903 62,638 43,001Change in Fair Value of Investment Property 268,564 228,500 206,971 215,088 -Net Profit Before Tax 442,170 405,008 722,997 802,792 289,164


190

five year financial summary cinnamon grand hotel 2013/14 2012/13 2011/12 2010/11 2009/10 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000

RevenueRooms 2,589,915 2,460,356 1,921,952 1,425,573 947,949Food 1,779,373 1,638,767 1,405,859 1,220,522 1,007,744Beverage 298,787 284,989 249,572 216,899 169,933Food & Beverage Others 16,467 19,488 20,264 15,638 13,574Telephone 4,827 4,914 5,349 6,451 7,746Rental Income 16,668 15,289 12,510 11,419 11,395Other Operating Income 191,530 198,890 188,631 120,268 87,822Total Revenue 4,897,567 4,622,693 3,804,137 3,016,770 2,246,163

ExpensesRoom 343,617 301,195 255,945 210,295 156,643Food Cost 696,668 658,271 561,902 497,769 392,579Beverage Cost 90,929 87,993 79,662 74,734 58,673Food & Beverage 548,926 511,554 454,770 372,665 308,877Telephone 5,289 5,021 4,987 4,453 4,144Other 167,622 157,042 133,371 84,625 58,951Total Expenses 1,853,051 1,721,076 1,490,637 1,244,541 979,867

Gross Operating Income 3,044,516 2,901,617 2,313,500 1,772,229 1,266,296

ExpensesAdministration & General 262,603 241,574 199,685 180,941 155,318Advertising & Sales Promotion 111,808 86,428 72,363 86,139 76,840Heat, Light & Power 376,177 324,795 285,126 261,680 201,549Repair & Maintenance 173,579 138,856 140,729 121,717 97,960Total Deductions 924,167 794,133 697,903 650,477 531,667

Gross Operating Profit 2,120,349 2,108,719 1,615,597 1,121,752 734,629Interest Income 188,746 153,787 37,403 6,391 16,816Dividend Income 273,493 234,422 117,211 39,070 19,535Sundry Income 16,538 17,915 12,067 14,832 2,176 2,599,127 2,514,843 1,782,278 1,182,045 773,156

Insurance 13,436 17,897 16,098 15,335 16,003Interest Expenses 3,249 - 84 39,829 105,880Rates 11,796 11,660 10,516 10,135 10,135Management/ Marketing Fee 304,917 294,239 232,340 178,499 128,093Depreciation 259,662 237,830 218,036 203,297 188,231 593,060 561,626 477,074 447,095 448,342

Net Profit Before Tax 2,006,067 1,954,452 1,305,204 734,950 324,814


191

Notice of MEETINGNOTICE IS HEREBY GIVEN that the Twentieth Annual General Meeting of Asian Hotels and Properties PLC will be held at the Auditorium of the Ceylon Chamber of Commerce, No. 50, Navam Mawatha, Colombo 2, on 27th June 2014 at 11.45 a.m. for the following purposes:

1. To read the notice convening the meeting.

2. To receive and consider the Annual Report and Audited Financial Statements of the Company for the year ended 31st March 2014 together with the Report of the Auditors thereon.

3. To re-elect as a Director Mr. R.J. Karunarajah who retires by rotation in terms of Article 84 of the Articles of Association of the Company. A brief profile of Mr. R.J. Karunarajah is contained in Section /Page 39 of the Annual Report.

4. To re-elect as a Director Mr. S. Rajendra who retires by rotation in terms of Article 84 of the Articles of Association of the Company. A brief profile of Mr. S. Rajendra is contained in Section /Page 39 of the Annual Report.

5. To re-appoint the retiring Auditors, KPMG, Chartered Accountants, and to authorise the Directors to determine their remuneration.

6. To consider any other business of which due notice has been given in terms of the relevant laws and regulations.

BY ORDER OF THE BOARDASIAN HOTELS AND PROPERTIES PLC

KEELLS CONSULTANTS (PRIVATE) LIMITEDSECRETARIES

Colombo, 30th May 2014

Note:i. A member unable to attend is entitled to appoint a Proxy to attend and vote in his/her place.ii. A Proxy need not be a member of the Company.iii. A member wishing to vote by Proxy at the Meeting may use the Proxy Form enclosed.iv. In order to be valid, the completed Proxy Form must be lodged at the Registered Office of the Company not later than 48 hours

before the meeting.v. If a poll is demanded, a vote can be taken on a show of hand or by a poll. Each share is entitled to one vote. Votes can be cast

in person, by proxy or corporate representatives. In the event an individual shareholder and his proxy holder are both present at the meeting, only the shareholder’s vote is counted. If the proxy holder’s appointor has indicated the manner of voting, only the appointors indication of the manner to vote will be used.


192

Notes.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................


193

Notes.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................


194

Notes.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................

.........................................................................................................................................................................................................................................................


195

Form of proxy

I/We .................................................................................................................................................................................................................................................

of ......................................................................................................................................................................................................................................................

being a *member/members of Asian Hotels and Properties PLC hereby appoint

...................................................................................................................................................................................................................................................... of

.......................................................................................................................................................................................................................................... or failing him/her

Mr. S.C. Ratnayake of Colombo, failing whomMr. A.D. Gunewardene of Colombo, failing whomMr. J.R.F. Peiris of Colombo, failing whomMr. R.J. Karunarajah of Colombo, failing whomMr. S. Rajendra of Colombo, failing whomMr. C.J.L. Pinto of Colombo, failing whomMr. S.K.G. Senanayake of Colombo, failing whomMrs. S.A. Jayasekera of Colombo

as *my/our proxy to represent *me/us and to vote on *my/our behalf at the Annual General Meeting of the Company, to be held on the 27th day of June 2014 and at any adjournment thereof, and at any poll which may be taken in consequence thereof. *I/We the undersigned hereby authorise *my/our proxy to vote on *my/our behalf in accordance with the preferences indicated below:

FOR AGAINST1. To re-elect as a Director Mr. R.J. Karunarajah who retires in terms of Article 84 of the Articles of Association.

2. To re-elect as a Director Mr. S. Rajendra who retires in terms of 84 Article of the Articles of Association.

3. To re-appoint the retiring Auditors, KPMG, Chartered Accountants, and to Authorise the Directors to determine their remuneration.

Signed this .......................................... day of .................................. Two Thousand and Fourteen ...................................................

Signature of Shareholder

Notes:(a) *Strike out whichever is not desired.(b) Instructions to completion of the Form of Proxy are set out on the reverse hereof. (c) A proxy need not be a Member of the Company.(d) Please indicate an “X” in the cage provided how your Proxy should vote on each Resolution. If no indication is given, or if there is,

in the view of the Proxy holder, any doubt (by reason of the manner in which the instructions contained in the Proxy have been completed) as to the way in which the Proxy holder should vote, the Proxy holder in his/her discretion may vote as he/she thinks fit.


196

INSTRUCTIONS FOR COMPLETION

1. Please perfect the Form of Proxy by filling in legibly your full name and address, signing in the space provided and filling in the date of signature.

2. The completed Form of Proxy should be deposited at the Registered Office of the Company at No. 77, Galle Road, Colombo 3, not later than 48 hours before the time appointed for the holding of the Meeting.

3. If the Form of Proxy is signed by an Attorney, the relevant Power of Attorney should accompany the completed Form of Proxy for registration, if such Power of Attorney has not already been registered with the Company.

4. If the appointer is a company or corporation, the Form of Proxy should be executed under its Common Seal or by a duly authorised officer of the Company or Corporation in accordance with its Articles of Association or Constitution.

5. If this Form of Proxy is returned without any indication of how the person appointed as Proxy shall vote, then the Proxy shall exercise his/her discretion as to how he/she votes or, whether or not he/she abstains from voting.

Please fill in the following details:

Name : …………………………………………………………………………………

Address : …………………………………………………………………………………

.………………………………………………………………………………….

.....……………………………………………………………………………….

Jointly with : …………………………………………………………………………………

Share Folio No. : …………………………………………………………………………………

Form of proxy contd.

HAPPINESS IS INDISPENSABLE IN THE HOSPITALITY INDUSTRY. IT IS WHAT FORMS PERCEPTIONS, CREATES MEMORIES AND KEEPS PEOPLE COMING BACK FOR MORE. FOR US, IT IS AN EMOTION THAT HAS PERMEATED INTO EVERY ASPECT OF THE BUSINESS; FROM WHAT WE DELIVER TO THE GUESTS, TO HOW WE DO THINGS, EVERY DAY. IT’S WHAT MOTIVATES US, WHAT INSPIRES US AND WHAT MAKES US THE BEST IN THE INDUSTRY. THE HAPPINESS OF OUR PATRONS, OUR TEAM AND OUR SURROUNDINGS IS A REFLECTION OF THE QUALITY THAT WE OFFER AND A TESTIMONY TO OUR MANY YEARS OF EXPERIENCE. WE MAKE EVERY MOMENT WORTHWHILE… WE MAKE EVERY SMILE COUNT.

AuditorsKPMGChartered Accountants32A, Sir Mohamed Macan Marker Mawatha,Colombo 03.

BankersCitibank N.A - ColomboDeutsche Bank AG - ColomboSeylan Bank Ltd - Millennium Branch, ColomboHongkong & Shanghai Banking Corp. Ltd. - ColomboNations Trust Bank PLC - Union Place, ColomboDFCC Vardhana Bank Ltd. - W.A.D. Ramanayake Mw,ColomboBank of Ceylon - Colombo

Name of CompanyAsian Hotels and Properties PLC

Legal FormA Public Limited Liability Company incorporated in Sri Lanka in 1993 and registered with the Board of Investment of Sri Lanka under Section 17 of the Board of Investment Law No. 4 of 1978. The Company was re-registered as per the New Companies Act No. 7 of 2007 on 15th June 2007.

Stock Exchange ListingThe issued Ordinary Shares of the Company are listed on the Main Board of the Colombo Stock Exchange of Sri Lanka.

Company Registration No.PQ 2

Board of DirectorsMr. Susantha Chaminda Ratnayake - ChairmanMr. Ajit Damon Gunewardene - Managing DirectorMr. James Ronnie Felitus PeirisMr. Rohan Jebashanthan KarunarajahMr. Suresh RajendraMr. Sanjiva Kanishka Gamini SenanayakeMs. Shirani Anoja JayasekaraMr. Cholmondeley John Lloyd Pinto

Company SecretariesKeells Consultants (Private) Limited117, Sir Chittamplalam A. Gardiner Mawatha, Colombo 2.

Registered OfficeNo. 77, Galle Road, Colombo 03Tel : 0094 -11 2437437Fax : 0094 -11 5547555E-mail : [email protected]

corporate information

EverySmile

Design & Concept by: Optima Designs (Pvt) Ltd.Printed by: Gunaratne Offset Ltd

ASIAN Hotels AND properties pLCANNuAL rEporT 2013/14


ASIAN H

otels AN

D pro

perties pLC | An

nual repo

rt 2013/14

ASIAN Hotels AND properties pLCNo. 77 , Galle road, Colombo 03,Sri Lanka.T : 0094 -11 2437437F : 0094 -11 5547555