Serendib Hotel AR 2014-15

SERENDIB HOTELS PLCAnnual Report 2014/15

Pursuing

We are what we repeatedly do. Excellence, then, is not an act, but a habit.

excellence

Contents

About Serendib Hotels Group

From the golden sands of Bentota and Waikkal, to the beauty of the Kalutara peninsula and the exotic jungle retreat of Sigiriya - Serendib Leisure’s portfolio of four unique hotels – AVANI Bentota Resort and Spa, AVANI Kalutara Resort, Club Hotel Dolphin and Hotel Sigiriya capture the essence of Sri Lankan hospitality.

For more information go to www.serendibleisure.com

Vision / 4

Mission / 5

Group Financial Highlights / 6

Serendib Leisure Properties / 8

Chairman’s Message / 12

Managing Director’s Review / 16

The Board of Directors / 20

Senior Management / 25

Management Discussion and Analysis / 30

Hotel Management / 42

Sustainability Report / 44

Risk Management / 50

Corporate Governance / 53

Remuneration Committee Report / 65

Annual Report of the Board of Directors /66

Directors' Interest in Contracts with the Company /70

Report of the Audit Committee / 72

Financial ReportsStatement of Directors’ Responsibility In Relation To Preparing Financial Statements / 76

Independent Auditor’s Report / 77

Statement of Financial Position / 78

Statement of Profit or Loss / 79

Statement of Comprehensive Income / 80

Statement of Changes in Equity (Group) / 81

Statement of Changes in Equity (Company) / 82

Statement of Cash Flows / 83

Notes to The Financial Statements / 84

Supplementary InformationInvestor Information / 128

Ten Year Group Financial Review / 130

Notice of Meeting / 131

Form of Proxy (Voting Shareholders) / 133

Form of Proxy (Non -Voting Shareholders) / 135

Corporate Information / IBC

Pursuing excellenceExcellence is doing ordinary things extraordinarily well.John W. Gardner

Serendib Hotels PLC owns and operates a truly unique portfolio of hotels including Club Hotel Dolphin, Hotel Sigiriya, AVANI Bentota Resort & Spa and AVANI Kalutara Resort. Beautifully located on the perfect beaches of the western seaboard and near the spectacular ‘palace in the sky’ that is Sigiriya. Each of these hotels are reputed for fine dining, exceptional quality accommodation and the friendly warmth of real Sri Lankan hospitality.

The year under review was a positive one where we achieved several important milestones in our journey, as we continue to pursue the qualities of excellence that inspire all that we undertake to do.

Our properties are designed in harmony with their surroundings and aim to give our guests not just a holiday, but a treasured experience they will carry with them for life

Destination experiences that include beach, jungle and lagoon.

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To be one of the top three contributors to the development of the hospitality industry in Sri Lanka and be the benchmark for guest service, F&B standards and management of human capital

Vision

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Mission

Stakeholder Mission

Our Guests

Create experiences to write home about by exceeding the expectations of our guests at all times

Our Customers

To be the most trusted hotel partner, delivering consistently superior value at all times

Our People

To create an environment that will inspire our people to work with pride, happiness and passion which will reflect in service excellence thus delighting our guests

Our Community

To develop our community and protect our environment by adopting and implementing sustainable tourism initiatives

Our shareholders To deliver superior returns to our shareholders through sustained performance excellence


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Delivering good results Group Financial Highlights

Year ended 31st March 2015 2014

Revenue Rs.000's 1,575,999 1,278,216 Profit before Interest, Tax, Depreciation & Amortization (EBITDA) Rs.000's 514,811 406,919 Profit before Tax Rs.000's 328,739 236,979 Profit /(Loss) after Tax Rs.000's 279,472 201,707 Profit /(Loss) Attributable to Equity Holders of the Parent Rs.000's 201,356 151,835 Earnings /(Loss) per Share Rs. 1.81 1.36 Cash Earnings per Share Rs 3.10 3.42 Interest Cover Times 10 6Return on Equity (ROE) % 10 8Return on Capital Employed (ROCE) % 10 8

Balance Sheet Highlights and RatiosTotal Assets Rs.000's 3,917,383 4,149,403 Total Shareholders' Funds Rs.000's 2,838,454 2,424,755 No. of Shares in Issue 000's 111,526 111,526 Net Assets per Share Rs. 25.45 21.74Debt / Total Equity % 20 47Debt / Total Assets % 14 27

Market/ Shareholder InformationMarket Price per Share as at 31st March Rs. 28.00 28.00Market Capitalization Rs.000's 3,122,722 3,122,722 Price Earnings Ratio Times 15.5 20.6Dividends per Share Rs. - - Dividends pay out % - -

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2014: 215Mn Operating Profit

2014: 237Mn Profit Before Tax

329Mn

10/11 11/12 12/13 13/14 14/15

Earnings Per Share(Rs.)

0

0.75

1.50

2.25

3.00

10/11 11/12 12/13 13/14 14/15

Market Price per Share(Rs.)

0

10

20

30

40

10/11 11/12 12/13 13/14 14/15

Net Assets per Share(Rs.)

0

10

20

30

40

386Mn2014: 1,278Mn Revenue

1,576Mn


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Serendib Leisure Properties

AVANI Bentota Resort & SpaInspired by 18th Century Dutch architecture, the property was designed by world-renowned architect Geoffrey Bawa. Located along the pristine beaches of the southern coast, AVANI Bentota Resort and Spa captures the essence of world class-luxury in a home-away-from-home setting.

AVANI Kalutara ResortThe AVANI Kalutara is a perfect blend between old world charm and cosmopolitan elegance. Nestled between the Indian Ocean and the Kalu Ganga, the hotel’s unique location and contemporary design makes it one of the most sought after properties in the region.

Hotel SigiriyaNestled at the foot of the majestic Sigiriya Rock Fortress, Hotel Sigiriya has been providing guests with truly unforgettable holidays for the past three decades. Always in tune with nature, the hotel’s unique experiences cater to both the avid nature lover as well as the cultural tourist, while the premium service has seen many a guest return year after year.

Club Hotel DolphinThe perfect destination for an unforgettable beach holiday, Club Hotel Dolphin is the ideal family-friendly hotel. A short 30 minute drive from the international airport, Club Hotel Dolphin is a veritable oasis that offers a gamut of modern facilities, entertainment and cuisine choices to suit every member of the family. The hotels’ unique ‘pause and play’ concept, allows for uninterrupted fun, adventure and relaxation for the entire family.

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Among the top hospitality chains in the country, Serendib Leisure stands apart for its unique, portfolio of offerings. While each property retains its own unique characteristics, it is definitely the pursuit of excellence that has been the common denominator of success for all group hotels.

World class hospitality delivered with the unique Serendib touch...Each of our properties are unique in their own sense and together they uphold the Serendib promise of premium hospitality that is truly a class apart

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The passion for excellencecontinues to be our mantra

Chairman’s Message

Scan this QR Code to read the Chairman’s Statement online

Sri Lanka is now a much sought-after global travel destination. Having emerged as a frontline industry in the recent past, tourism continues to attract more and more foreign direct investments into the country

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In what is widely seen as a good year for global tourism, record numbers were seen travelling the world in 2014. Moreover, the remarkable resilience and uninterrupted growth since 2009, has led to the tourism industry being labelled as a catalyst of global growth. What is more encouraging though, is the commitment shown by many countries to develop tourism as a key driver of economic growth. This will no doubt set the pace for sustained growth in the years to come.

As I recap the highlights for the year, I am happy to note that as one of the key players in Sri Lanka’s tourism milieu, Serendib Hotels PLC too has played its part in putting Sri Lanka on the world tourism map. It is thus with a deep sense of accomplishment that I present to you, the annual report and financial statements for the year ended 31st March 2015.

Global Tourism industry – a snapshot

For the fifth consecutive year international tourist arrivals expanded to reach 1,139 million by end 2014, a YoY increase of 4.7%. In terms of numbers, this translates into 51 million more overnight visitors globally, compared to the previous year. Notably all regions registered growth, with the Asia-Pacific region expanding by 5%, second only to the Americas which grew by 7% in 2014.

International tourist receipts also mirrored this trend, crossing the USD 1.4 billion mark in 2014.

Sri Lanka’s Tourism Industry

The country’s tourism industry continued to perform well throughout 2014, surpassing the arrival target of 1.5 million set for the year. The country recorded 1,527,153 arrivals for 2014, a robust YoY increase of 19.8%, with Western Europe accounting for the bulk of this growth. Interestingly however, the overall percentage share of arrivals from source markets in Western Europe declined in 2014, mainly due to a notable increase in arrivals from emerging source markets in Asia.

For the third consecutive year, India remained the largest source market, bringing in 242,734 visitors to the country, closely followed by the UK, China and Germany, with the Maldives rounding up the top five, together accounting for over 46% of the total arrivals. Moreover, a coordinated effort by industry stakeholders to boost the country’s profile and attract travellers from China, Indonesia and Japan resulted in a remarkable increase in inbound tourists from these countries, signalling a definite shift in Sri Lanka’s tourism demographics.

However, the increase in arrivals did not necessarily translate into the arrival logs at hotels. Foreign guest nights at resort hotels would be a possible indicator of the real growth in the country’s tourist industry for the year.

The steady growth of online travel agents has led to the informal sector receiving more visibility with wider reach to the end customer, resulting in more room nights generated to this sector.

Meanwhile, a notable pick up in expenditure from traditional source markets helped make up for the slowdown of the large emerging markets seen in 2014. According to UNWTO data, China still remained the largest outbound market for 2014, despite growing at a slower pace than in the recent past. The USA, the second largest outbound market grew by 6%, while key European markets were seen rebounding strongly, with France and Italy recording 11% and 6% growth respectively. The UK rounded up the top five, registering 4% growth in outbound travel expenditure for 2014.

Russia, another one of the world’s largest outbound markets was hit by a wave of trouble due to economic sanctions and the fall in global oil prices. The rapid deceleration of demand for outbound travel that followed, resulted in a 6% de-growth in outbound travel expenditure from the Russia.

I am happy to note that as one of the key player in Sri Lanka’s tourism milieu, Serendib Hotels PLC too has played its part in putting Sri Lanka on world tourism map.


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Advocating a sustainable tourism proposition.

Sri Lanka is now a much sought-after global travel destination. Having emerged as a frontline industry in the recent past, tourism continues to attract more and more foreign direct investments into the country.

However, it is important to bear in mind that with the promise of growth comes myriad challenges that, if not dealt with in a cohesive manner, could undermine whatever progress has been made so far. Therefore it is imperative that all stakeholders of the industry come together to work out a structured agenda that would underpin the progress of the industry, in the years ahead.

This calls for a unified marketing strategy that would reflect the country’s vision for tourism. I believe that destination branding should be the nucleus of this long term branding model and am glad to note that SLTPB and the SLTDA are taking necessary action in this regard. To do this, the country would need to make extensive investments to develop, nurture and sustain a globally competitive brand. The challenge is to bring out a dynamic value proposition that personifies the unique characteristics of our island nation in a manner that would differentiate our offering from that of regional peers.

This can only be done through a broader strategic vision that leverages on the country’s vast untapped resources. For instance, Sri Lanka is blessed with resplendent waterways, wherein lies a possible opportunity to develop the country’s numerous bays and harbours to serve as a regional marina, capable of attracting luxury yachts, cruise ships and other leisure lines. In addition, the country’s magnificent bird life and endemic flora and fauna, represent abundant opportunities that could also be harnessed.

Given Sri Lanka’s cultural diversity, experiential tourism is yet another concept that offers great promise. Experiential travel is likely to be the next big thing that will reshape the prospects of global tourism in the coming years. Here too, what is needed is a sustainable long term manifesto that combines suitable regulations to help cultivate an experiential travel model that is uniquely Sri Lankan.

It is important to remember that any or all of these opportunities should be managed systematically, by first strengthening necessary infrastructure, while establishing clear guidelines to ensure effective administration and regulations are enforced.

Once again, I cannot overemphasize the importance of stricter controls to preserve the country’s resources and protect what is rightfully our legacy. At present, the overuse of our resources has become a critical issue. To quote a few examples, vehicular overcrowding in many of the country’s wild life parks, including national parks in Yala and Wilpattu among others, have already caused untold damage to the wild life who inhabit these parks. The deployment of boats without adequate safety measures and overcrowded waters with unregulated vessels significantly increase the risk to visitors and marine life alike.

We urge the government to introduce suitable regulations to limit the damage to our natural resources. It is equally important that measures be taken to preserve and protect our cultural heritage sites.

Our focus

For our part, we continue to work cognizant to the challenges and opportunities that are currently reshaping the local tourism industry, where the passion for excellence continues to be our mantra. Hence our focus for the year was centered on three key pillars namely, food and beverage quality, service quality and human capital development. As part of the development process, we looked at

Chairman’s Message

We urge the government to introduce suitable regulations to limit the damage to our natural resources. It is equally important that measures be taken to preserve and protect our cultural heritage sites.

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strengthening each aspect individually, while at the same time creating a cohesive platform that would spearhead future growth. I feel this is a step in the right direction which will be the cornerstone in our journey towards sustainable tourism.

Our Performance

The Group performed commendably well during the year after refurbishment of Club Hotel Dolphin and Hotel Sigiriya and posted strong earnings in a challenging environment.

Turnover Rs. 1,576MnOperating Profit Rs. 386MnProfit Before Tax Rs. 329Mn

Appreciations

I take this opportunity to thank my colleagues on the Board of Directors for the invaluable support extended to me during the year under review.

I also wish to thank our Managing Director Mr. Ranil De Silva, and the Board of Management, who have lead from the front to deliver the consistent results.

My heartfelt appreciation goes to each and every member of the Serendib Hotels team for their commitment towards achieving corporate goals. I rely on their passion and professionalism to realize the future aspirations of the company and all its stakeholders.

In conclusion, I wish to thank our shareholders for the trust and confidence placed in the company and seek their continued patronage in the years ahead.

A.N. EsufallyChairman

26th May 2015


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Setting benchmarks...

Managing Director’s Review

The outlook for Sri Lanka’s tourism industry remains positive, particularly as Sri Lanka attempts to rebrand itself as a destination of choice for the global traveller. I feel this calls for a much bigger role for the private sector as key stakeholders of the country’s leisure industry.

The financial year 2014/15, was a challenging one for all in the tourism industry. For our part, we took these challenges in our stride and went ahead with planned investments to develop our properties. We kicked off the second phase of the Hotel Sigiriya refurbishment in May 2014. We also carried out a major upgrade of our Restaurants at AVANI Bentota in keeping with our promise to improve the dining experience at our properties. Further, we also engaged in many other campaigns to improve our portfolio of offerings and reconfirm our commitment to the development of the Tourism Industry in Sri Lanka.

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Not only are these awards a testament to our outstanding brand value, they also signify our commitment to excellence in all aspects of the business.

These awards are a testament to our outstanding service quality and signify our commitment to excellence in all aspects of the business.

Operating EnvironmentWith the country surpassing the 1.5 million tourist arrival target set for the 2014 calendar year, guest arrivals for the same period also grew by 19.8% YoY, boosted by strong growth in the first nine months of the year. However, from about September 2014, multiple factors resulted in a slow start to the crucial winter season. Key among them was the Russian Ruble crisis and the Ukraine war which led to a dramatic reduction in the arrivals from this key source market. In addition, many tour operators in the crisis ridden region were seen declaring bankruptcy, which meant a further loss of captive business for the winter season. In the wake of this instability, many hotels reduced their room rates, purely to maintain decent occupancy levels. Meanwhile, in the lead up to Sri Lanka’s Presidential Election in January 2015, many Western European nations, especially the United Kingdom issued travel advisories for Sri Lanka. The ensuing dip in arrivals from the region during January 2015 thankfully was short-lived, with a notable upswing in arrivals in February and March 2015.

Meanwhile, Sri Lanka continues to struggle to attract tourists during the off peak season, given its perceived reputation as a high cost destination compared to other Asian countries. To overcome this challenge, the industry has become accustomed to relying on the local market to boost occupancy levels, vis-à-vis attractive off-season rates. Although this strategy has

proven to be fairly successful in terms of maintaining occupancy levels, the discounted rates offered mean that, most hotels had to once again, contend with a much lower Revenue per available room (RevPAR).

Group Operational HighlightsIn terms of guest arrivals, our properties more or less mirrored the industry movements. Interestingly though, we were able to record healthy arrivals from all source markets in the first two quarters, save for a temporary dip in arrivals from the Middle-East market following the civil unrest in Aluthgama in June 2014. However, we did see a revival of the Middle-East market from about September 2014.

Overall occupancy levels of the Group for the year improved by two percentage points, with all hotels performing well, notwithstanding the challenges encountered during the peak season. AVANI Bentota, and AVANI Kalutara recorded annual average occupancy levels of 69% and 70% respectively, while Club Hotel Dolphin and Hotel Sigiriya registered 84% and 74% respectively.

All group hotels experienced a 17% increase in revenue from online bookings. Notably, Hotel Sigiriya registered the highest percentage of online bookings among all our properties.

We have continued to pursue key strategic partnerships with Online Travel Agents (OTAs), which has allowed us to benefit from the better yield offered via this channel. We have also harnessed the power of the online booking platform as a barometer to gauge customer pulse. This has proved

I am proud to announce that, this year too, all our hotels were the recipients of a number of highly acclaimed travel awards. At the World Luxury Hotel Awards, AVANI Bentota Resort & Spa claimed the top spot as the Best Luxury Beach Resort in the Indian Ocean for 2014. Widely considered to be the pinnacle of recognition, the property remains a strong contender for the award in 2015 as well, being nominated for the third consecutive time. Meanwhile, both Hotel Sigiriya and Club Hotel Dolphin were among the TripAdvisor Certificate of Excellence, "Hall of Fame" inductees for 2015, having secured the TripAdvisor Certificate of Excellence award, for five consecutive years. Among the other notable accolades, Club Hotel Dolphin was recognized by leading online travel agents, claiming both The “Holiday Check Award–2015 for Beach Holidays” and also the “TripAdvisor : Travellers Choice –Top 25 Hotels in Sri Lanka” award.


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to be a highly effective, providing insights on customer perceptions and helping us manage customer feedback.

New Market developmentThe group invested heavily to gain more traction in what are seen as new emerging global travel markets. A series of road shows were held throughout the year, specifically to tap into markets in the Middle-East, Japan and China. While showcasing the versatility of our portfolio, the road shows were also used as a platform to interact with key leisure industry stakeholders and to study market behaviour patterns in these countries. We also leveraged on the Partner GSA’s (Global Sales Agents) aligned to the Minor Hotels Group, in each of these countries to strengthen our presence in those markets. I am happy to note that these measures appear to have yielded positive results within the year itself, but are most likely to bear fruit only in the forthcoming financial year.

Financial ReviewSupported by the growth of emerging markets and online bookings, Group Revenue reached Rs. 1,576 million as at 31st March 2015, a YoY increase of 23%

from the Rs. 1,278 million recorded in the previous financial year.

Bolstered by the increase in revenue, operating profits for the year grew by 79%. Part of the increase was due to a one-off provisional write-back that took place during the year.

Our bottom line grew steadily throughout the year, which translated into a group PBT of Rs. 329 Mn as at 31st March 2015, a 39% improvement over the corresponding period in 2014. Nevertheless, we could have registered a much better result, had we not accounted for the Rs. 52 million exchange loss arising from the revaluation of foreign currency Deposits and Receivables as at the Balance Sheet date, in keeping with Accounting Standards.

Staying AheadAs we continued to grapple with key market challenges, we had to also contend with competition from the country’s burgeoning hotel sector, particularly from the larger home-grown hotel chains. In response, our fundamental strategy was aimed at differentiating each of our brands from the mainstream offerings of our

competitors. We have identified our target markets and put in place precise offerings to cater to the demand.

Admittedly, we do have the added advantage of leveraging on the internationally recognized AVANI brand power to differentiate high-end offerings. Our own home-grown brands also have their inimitable qualities. Club Hotel Dolphin, is perhaps the only full-fledged, resort in Sri Lanka that offers all-inclusive club concept holidays coupled with a unique “pause and play” offering. Undeniably, Hotel Sigiriya epitomizes the concept of affordable luxury. Whatever the offering, we have always sought to deliver on our brand promise. The pursuit of excellence continues to be the nucleus of our brand DNA.

In 2014/15, we once again worked with the underlying theme of “Excellence”, to bring out the uniqueness of each of our properties and to reinforce our value proposition. Our goal was to present guests with the unexpected and create a three-dimensional “wow” factor as the highlight of the overall guest experience. I believe this will act as a key differentiator to keep guests coming back year after year. The three key areas that we specifically looked into were food and beverage, service excellence and human capital development, in keeping with our vision to be Sri Lanka’s most outstanding hospitality group.

We recognize that Food and Beverage (F & B) is an integral part of the overall guest experience and it is also the most likely element to be remembered by guests. During the year, we introduced a dynamic new F & B agenda to feature the individuality of each property. At AVANI Bentota, among other things,

Our goal was to present guests with the unexpected and create a three-dimensional “wow” factor as the highlight of the overall guest experience. I believe this will act as a key differentiator to keep guests coming back year after year.

Managing Director’s Review

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we introduced “The Loft”, a new concept that allows guests to relax amidst the calm serenity of the early evening sunset. In addition, we also re-conceptualized the Frangipani Restaurant as a specialty Asian dining option. At AVANI Kalutara, the newly introduced Seafood Market has proved to be hugely popular, while “The Mango Tree”, a restaurant serving traditional Sri Lankan village cuisine was introduced at Club Hotel Dolphin. At Hotel Sigiriya, we introduced “Breakfast by the Rock”, a novel concept, where guests are served their breakfast against the backdrop of the majestic Sigiriya rock fortress. These were but a few, of the numerous value additions that were done at all properties during the year.

Much work was also done to improve the guest services at all properties. At the AVANI hotels, we used standards of our associate partners, the Minor Hotels Group as a benchmark for improvement, while ongoing training ensured the service levels at both Club Dolphin and Hotel Sigiriya matched up to our regional peers. The steps taken to improve service levels also served as part of our human capital development initiatives aimed at enhancing the sustainability of our people, vis-à-vis proficiency mapping and skills development.

Future OutlookAs far as our core markets are concerned, no dramatic improvements are likely to take place in the near future. With the Euro expected to depreciate even further in the coming months, we are likely to experience a dip in realized room rates, although it is unlikely to have a material impact on volumes from Germany and other

Eurozone markets. Nevertheless, by restructuring our proposition accordingly, I am confident that we can grow our revenue from this key source market. The deepening political tensions in Russia and Eastern Europe are likely to continue for some time, casting a doubt on recovery prospects of this key market in the near future.

On the positive side, the exponential growth in tourist arrivals from China and India appears encouraging. On the whole, I believe the outlook for Sri Lanka’s tourism industry remains positive, particularly as Sri Lanka attempts to rebrand itself as a destination of choice for the global traveller. I feel this calls for a much bigger role for the private sector as key stakeholders of the country’s leisure industry.

Moreover, the renewed focus by the Sri Lanka Tourism Promotions Bureau on developing traditional European markets is definitely a good sign which is likely to herald a new era for tourism in Sri Lanka. For our part, I am confident that the Serendib Hotels group is ideally placed to complement this strategy with its already established strong presence in this market even as we plan to expand our island-wide footprint in the coming years.

AppreciationsI take this opportunity to thank our customers and make a special mention of our guests who have embraced our hotels as their home-away-from-home year after year.

I also express my gratitude and appreciation for the visionary guidance and support of the Chairman and the Board of Directors of Serendib Hotels

PLC and its subsidiaries, and the strong commitment of the corporate management and hotel teams. It is their collective effort that has made it possible to achieve success, despite the many challenges.

I would also like to thank our partners, The Minor Hotels Group, for their long and fruitful association with the Serendib Hotels Group. We have benefitted immensely from their knowledge and expertise, which has inspired our pursuit of excellence.

In conclusion, I wish to thank our shareholders for the trust and confidence placed in the company. I seek your continued to patronage in the years ahead as well.

Ranil De SilvaManaging Director

26th May 2015


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Effective LeadershipThe Board of Directors

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1. A N Esufally

Chairman

Non Executive Director

2. D T R De Silva

Managing Director

3. W M De F Arsakularatne


4. Deshamanya J C L De Mel

Independent Director

5. Professor L D K B Gamage


6. E J D Rajakarier


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7. M A Jafferjee


8. S M Enderby


9. Dr. R N A Athukorala


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The Board of Directors

1. A N Esufally Chairman Non-Executive Director

Mr. Abbas Esufally was appointed to the Board in 1994 and was elected as Chairman of the Company in 2003. With over 35 years’ experience in the tourism industry, Mr. Esufally has played a pivotal role in expanding the Groups’ Leisure interest. He serves as a Group Director of Hemas Holdings PLC and also serves as Chairman of Dolphin Hotels PLC, Hotel Sigiriya PLC and Diethelm Travel Lanka (Private) Limited. He serves on several other listed and unlisted company boards as well.

He has taken an active part in the growth and development of the tourism industry. Mr. Esufally serves as the Chairman of the Mercantile Service Provident Society of the Ceylon Chamber of Commerce and is a Member of the Advisory Committee of the Tourist Hotels Association of Sri Lanka (THASL).

Mr. Esufally is a Fellow Member of both the Institute of Chartered Accountants of England & Wales and the Institute of Chartered Accountants of Sri Lanka. He is an All Island Justice of Peace and serves as the Honorary Consul of Bhutan in Sri Lanka.

2. D T R De Silva Managing Director

Mr. Ranil De Silva was appointed as the Managing Director of the Company in 2010. He also serves as an Executive Director of Dolphin Hotels PLC and Hotel Sigiriya PLC. He is a Fellow Member of the Chartered Institute of Management Accountants UK, Associate Member of the Institute of Chartered Accountants of Sri Lanka and a Member of the Chartered Institute of Marketing UK. He began his career at Ernst & Young and has worked overseas with a Multi-National for 10 years. Mr. De Silva has wide experience locally in diverse industries having previously held the position of Group CEO of the DCSL Group. He is also an Independent Director of Singer Sri Lanka PLC, Singer Industries PLC and Regnis Lanka PLC.

3. W M De F Arsakularatne Non-Executive Director

Mr. Malinga Arsakularatne was appointed to the Board in 2007. He serves as a Board Director and Chief Financial Officer of Hemas Holdings PLC, and is also a member of the Board of Management of the Group. He has been part of the Hemas Group since 2004. Mr. Arsakularatne has nineteen years of experience spread across investment management, corporate finance and business strategy. He also serves on the Boards of Dolphin Hotels PLC and Hotel Sigiriya PLC and in several more unlisted subsidiary companies within the Hemas Group in the capacity of Non-Executive Director and also serves as a Non-Executive Director of NDB Capital Holdings PLC.

Mr. Arsakularatne is a CFA Charter Holder and a Past President of CFA Sri Lanka. He is also a Fellow Member of the Chartered Institute of Management Accountants (CIMA), UK and a Past Board Member of the CIMA Sri Lanka Division. He holds a BSc in Computer Science & Engineering from the University of Moratuwa, Sri Lanka, an MSc in Investment Management from Cass Business School, UK, and an Executive MBA from INSEAD, France| Singapore| UAE.

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4. Deshamanya J C L de Mel Independent Director

Deshamanya Lalith De Mel was appointed to the Board in 2002. He counts over 40 years of Board experience as a Director in several companies abroad and in Sri Lanka. He spent most of his career at Reckitt Benckiser PLC UK and served on its Board of Directors. He was also a Director of CDC PLC in the UK. He served as Chairman, Hemas Holdings PLC, Chairman Sri Lanka Telecom PLC, Chairman Reckitt Benckiser Sri Lanka PLC and as Chairman of the Board of Investment. He has also served as a Senior Advisor to the Ministry of Finance and as a Director of the Peoples Bank, Chairman of First Capital PLC and as a Director of several other companies.

He holds a Master of Arts Degree from the University of Cambridge UK and the AMP Harvard Business School USA.

5. Professor L D K B Gamage Independent Director

Prof. Lalith Gamage was appointed to the Board in March 2008. He serves as the President and Chief Executive Officer of the Sri Lanka Institute of Information Technology. He is also an Adjunct Professor of the University of British Columbia, Canada and of the Curtin University, Australia. Prof. Gamage serves as Chairman, Lanka Software Foundation (LSF) and as an Advisory Board Member of Sri Lanka Association of Software and Service Companies. He has also served as Chairman, Arthur C. Clarke Institute for Modern Technologies , Chairman of the ICT Cluster, Executive Director, Sri Lanka Export Development Board and Chairman of the IT Task Force, Ministry of Enterprise Development. An Electronic and Telecommunication Engineering graduate from the University of Moratuwa. Prof. Gamage holds a Masters’ Degree in Information Technology from the De Montfort University, UK and an PhD in Artificial Intelligence and Computer Vision from the University of British Columbia, Vancouver, Canada.

6. E J D Rajakarier Non Executive Director

Mr. Dillipraj Rajakarier was appointed to the Board in 2010. He is the Chief Operating Officer of Minor International Public Company Limited and the Chief Executive Officer of the Minor Hotels Group. He has also served as the Deputy Chief Financial Officer of Orient-Express Hotels, Trains & Cruises and as the Group Financial Controller of Easi Solutions PLC.

Mr. Rajakarier has a Masters’ Degree in Business Administration, from the UK and is also a Member of UK Institute of Management Information Systems. He is also an Associate Member of the British Association of Hotel Accountants, a Member of the Association of Computer Professionals, a Member of the Association of Business & Administrative Computing, UK, and a Member of the Institute of Directors .


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7. M A Jafferjee Independent Director

Mr. Murtaza Jafferjee was appointed to the Board in 2010 He is the Chief Executive Officer of JB Securities Limited with over 20 years’ of industry experience in the stock market in Sri Lanka. He serves on the Board of Nations Trust Bank PLC as an Independent Director and on the board of So Others May See (SOMS) – a not for profit organization. He is the current Advocacy Chair for CFA Sri Lanka, the local member society of the CFA Institute. He has also served on the Board of the Colombo Stock Exchange from August 2007 to July 2009.

Mr. Jafferjee holds a Bachelors’ Degree in Mechanical Engineering and Computer Science from the University of New South Wales, Australia and a Masters’ Degree in Financial Economics from the University of Colombo. He is a Chartered Financial Analyst (CFA).

8. S M Enderby Non Executive Director

Mr. Steven Enderby was appointed to the Board in March 2014. He has had a successful track record in the private equity space with Actis, a leading global emerging markets fund until his retirement in 2011 as an Actis Partner. Some of the most successful private equity transactions he led include South Asia Gateway Terminal, Ceylon Oxygen and Millennium Information Technologies in Sri Lanka. He has served on the Boards of leading companies in Sri Lanka and India such as John Keells Holdings, Lion Brewery and Punjab Tractors.

He joined Hemas Holdings PLC to head the group's efforts in Mergers and Acquisitions. He took up the office of Deputy CEO and Director of Hemas Holdings PLC in November 2013 and was appointed as the Chief Executive Officer of Hemas Holdings PLC on 1st April 2014.

He is a Fellow Member of the Chartered Institute of Management Accountants UK. He holds a Degree in Economics and Accounting from the Queens University Belfast, and a Masters’ Degree in Development Studies from the University of Melbourne.

Mr. Enderby also serves on the board of J L Morison Son & Jones (Ceylon) PLC and multiple subsidiary boards of the Hemas Group as well as on the boards of CIC Holdings PLC and Paints and General Exports Limited.

9. Dr. R N A Athukorala Independent Director

Dr. Rohantha Athukorala was appointed to the Board in 2010. In a fifteen year career with global multinationals Unilever, Reckitt Benckiser and Johnsons, Dr. Athukorala has twice won the “Best Marketer” Award in Sri Lanka and has gone on to win a Global Award for Brand Building. He was head-hunted by the United Nations where, he won the 'merit’ performance award twice in the UN system and thereafter secured the ‘Best Global Award” for a lead project in Sri Lanka.

In the public sector, Dr. Athukorala was the 7th Chairman of the Sri Lanka Export Development Board and served the EDB for a six years during which Sri Lanka's export revenues grew from $5 to $11Billion. He has presently been appointed Chairman of the Sri Lanka Tourism Promotions Bureau. He also serves on the Sri Lanka Tea Board - Marketing Committee and was recently appointed by the Cabinet of Ministers as the Commissioner General for Sri Lanka for World Expo 2015.

In 2013, Dr. Athukorala was appointed by the Central Bank Monetary Board, as an Independent Director to the Board of The Finance Company PLC to re-structure and turnaround the 75-year old financial institution, on which he continues serve to this date.

Dr. Athukorala is an alumni of Harvard University, DBA, MBA and holds a double degree in marketing from the University of Sri Jayewardenepura and the Chartered Institute of Marketing (UK).

The Board of Directors

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Our winning team!Senior Management

1

65

3

4

2

1 Ranil De Silva Managing Director

2 Sanjiv Wijayasinghe Director - Human Resources

3 Shantha Kurumbalapitiya Director – Commercial

4 Sanjika Perera Director – Business Development and Projects

5 Suranjith De Fonseka Director – Sales and Marketing

6 Dayan Gunasekera Director – Finance


26

Ranil De Silva Managing Director

Refer to the Board of Directors Profile on page 22

Sanjiv Wijayasinghe Director - Human Resources

Sanjiv has to his credit 35 years of experience in the field of Human Resource Management of which 30 years in Senior Managerial positions. He is a Fellow Member of the Institute of Personnel Management Sri Lanka where he has also served as its president. And he is also a Member of the Chartered Management Institute UK and a Member of the Institute of Professional Managers UK.

Sanjika Perera Director – Business Development and Projects

He possesses extensive Branding, Marketing and General Management experience in diverse sectors such as FMCG, Retail, B2B and Service Sectors in South Asia and Western Europe during a career spanning over 20 years. He last served as the Director – UK and Ireland for Sri Lanka Tourism. He read for his MBA at The Postgraduate Institute of Management, University of Jayewardenepura. He is a Fellow of the Chartered Institute of Marketing and a Chartered Marketer. He is a Board Member of CIM – Sri Lanka Regional Office where he currently serves as the Chairman of the CIM Sri Lanka Regional Board.

Shantha Kurumbalapitiya Director – Commercial

He has over 20 years experience in the areas of Accounting & Finance, Business Restructure, Production Management, International Marketing, Construction and Project Management, Human Resource Management, Business Process Re-engineering and General Management, including CEO responsibilities. Prior to joining Serendib Leisure, he was the Group CFO of Rockland Distilleries (Private) Limited. He is a Fellow Member of the Institute of Chartered Accountants Sri Lanka and a Fellow Member of the Chartered Institute of Management Accountants UK. He currently serves on the Council of the Institute of Chartered Accountants of Sri Lanka.

Senior Management

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Suranjith De Fonseka Director – Sales and Marketing

He joined the management team of Serendib Leisure Hotels in September 2007 and has gathered over 12 years’ experience in the tourism industry. He holds a B.A. (Hons) degree in Business Administration from Nottingham Trent University – UK, is a Sri Lanka prize winner of the Chartered Institute of Marketing – UK, and is a Chartered Marketer. He also holds an MBA from the Postgraduate Institute of Management of the University of Sri Jayewardenepura, and has participated in executive education programs conducted by the Indian School of Business (ISB) and the Cornell Nanyang Institute of Hospitality Management in Singapore. In addition, he is a committee member of the Marketing sub-committee of the Tourist Hotels Association of Sri Lanka (THASL), and is also the Vice President of the Travel Trade Sports Club.

Dayan Gunasekera Director – Finance

Dayan has spent the majority of his career at the Hemas group; initially with the FMCG Sector and then with the Transportation Sector prior to his appointment to the management team of Serendib Leisure. He is an Associate Member of the Chartered Institute of Management Accountants (UK) and a Diplomate of the Chartered Institute of Marketing (UK). He holds an honours degree in Accounting and Financial Management from the University of Sri Jayewardenepura and a MBA from the Postgraduate Institute of Management of the same university.


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Unmatchedservicestandards thattake care ofyour every need...We know that little things make a big difference. It is why our staff don’t need to be told, they are trained to anticipate. Whether it is a pot of freshly brewed coffee at your doorstep every morning or a crisp set of sheets at bed time, our people will ensure you continue to bask in the lap of luxury

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Management Discussion and AnalysisOver the past six decades, tourism has experienced continued expansion and diversification, becoming one of the largest and fastest-growing economic sectors in the world. Despite occasional shocks, international tourist arrivals have shown virtually uninterrupted growth since the 1950s.

More recently, an ever increasing number of destinations worldwide have also opened up to and invested in tourism, for the most part eroding the captive share enjoyed by traditional tourist destinations. Case in point, the market share of emerging economies increased from 30% in 1980 to nearly 50% in 2014. This has propelled tourism as a key driver of global socio-economic progress vis-à-vis export revenues, the creation of jobs and enterprises, and infrastructure development.

Global Highlights for 2014International tourism as an industry expanded in 2014 as the number of international tourists grew by 4.7% or 51 million more than in 2013, to reach a new record total of 1,139 million. This was the fifth consecutive year of growth since the global economic crisis of 2009, reflective of the sector´s strong and consistent performance in spite of the global challenges faced in 2014.

Long term Outlook for Global TourismInternational tourist arrivals

worldwide are expected to increase by 3.3% a year from 2010 to 2030 to reach 1.8 billion by 2030,

Between 2010 and 2030, arrivals in emerging destinations (+4.4% a year) are expected to increase at twice the rate of those in advanced economies (+2.2% a year)

The market share of emerging economies are expected to reach 57% by 2030, equivalent to over 1 billion international tourist arrivals

Notably, all key source markets showed an improvement, with arrivals from Western Europe and North America recording steady YoY growth of 13.8% and 10.7% respectively as at 31st December 2014. Meanwhile, the Middle-East market experienced a dip, following the civil unrest on the southern coast in mid-2014, but nevertheless, arrivals from the region did pick up in the latter part of the year, leading to a 10.5% growth.

Arrivals from Eastern European markets remained strong in the first six months of the year, but were severely affected during the 2nd half of the year on account of the political and economic downturn in Russia and Ukraine which have been key source markets in the recent past.

In contrast, East Asia demonstrated the largest growth percentage, recording a 53.2% growth in arrivals for 2014. Notably, China was the largest

contributor to this equation, with the number of arrivals registering a remarkable 136% YoY growth owing to the increase in government to government ties and improved air links between the countries. Arrivals from South Asia also increased by 13.4% for the year. For the second consecutive year, the largest number of visitors to Sri Lanka were from India.

Room occupancy rates in graded hotel establishments approved by the Sri Lanka Tourism Development Authority (SLTDA) increased to 74.3% in 2014,

Sri Lanka Tourism updateThe country surpassed the 1.5 million tourist arrival target for 2014, with 1,527,153 arrivals recorded for the calendar year. The 19.8% growth over the previous was on top of the 26.7% growth achieved in 2013.

Despite the deceleration last year, Sri Lanka’s tourism sector growth for 2014 is well above the global and regional growth statistics released by the UNWTO for 2014.

Source: UNWTO, 2014

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All group properties were able to sustain satisfactory occupancy levels throughout the year, despite a number of low-occupancy pockets in the first and final quarters of the year. The group’s annual average occupancy rate stood at 78%, up by 2pp from the 76% average registered in the previous year.

up slightly from 71.7% in the previous year. Meanwhile, earnings from tourism surpassed the US Dollars two billion mark to reach Rs 2.4 billion by the end of the year, registering an annual growth of 41.7 % for 2014.

Our PerformanceFinancial ReviewThe Serendib Hotels Group revenue grew by 23% to Rs. 1.58 Bn. during the year, assisted by an increase in available room inventory at Club Hotel Dolphin, Hotel Sigiriya and higher yields in some market segments. The loss in


32

arrivals from Russia and Ukraine was further compounded by a significant depreciation of the Euro by over 20% during the peak tourist season. Group operating profit stood at Rs 386 Mn, recording a growth of 79% over the previous year.

Group finance costs declined due to loan repayments and lower interest rates, while lower market interest rates together with the utilization of excess funds to prepay the loans resulted in a sharp decline in finance income during the year.

The Group recorded an exchange loss of Rs. 52 Mn due to the fall in value

Source Markets to Sri Lanka2014

Western EuropeNorth AmericaEastern EuropeMiddle East

33%

5%10%6%

18%

24%

4%

East AsiaSouth AsiaAustralia

of Forex assets. The Group’s share in its associate company, JADA Resort & Spa (Pvt) Ltd and its subsidiaries declined from last year mainly due to non-capitalized expenses of the hotel under construction being accounted for. Nevertheless its hotel operations grew despite market challenges.

Accordingly, Group Profit before Tax of Rs. 329 Mn was a 39% growth over the previous year.

Having reviewed the movement in the ForEx markets and strategic investments for the next year, Dolphin Hotels PLC prepaid a project loan using surplus funds. As disclosed in last year’s

AMERICA

+7%

EUROPE

+2%

AFRICA

+2%

EUROPE

+7%

WORLD

International Tourist Arrivals 2014

+5%EUROPE

+2%

Management Discussion and Analysis

Source: UNWTO, 2014

Source: SLTDA, 2014

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report, the Group implemented Hedge Accounting to mitigate the exchange rate risk arising due to fluctuations between currencies. Accordingly, an exchange gain of Rs. 58 Mn was transferred to the Hedge Reserve as a result of the prepayment of the loan. This amount will be written back to the Income Statement over a period of seven years starting from December 2015 as per Sri Lanka Accounting Standards.

The Group improved its gearing from 47% to 20% as of the year end.

OccupancyAll group properties were able to sustain satisfactory occupancy levels throughout the year, despite a number of low-occupancy pockets in the first and final quarters of the year. The group’s annual average occupancy rate stood at 78%, up by 2pp from the 76% average registered in the previous year.

Notably, average occupancy levels at the AVANI Bentota and AVANI Kalutara stood at 69% and 70% respectively for the 2014/15 period in the face of strong regional competition. This was also the first full year of operation for Hotel Sigiriya and Club Hotel Dolphin, following an extensive year-long

refurbishment, which led to an increase in the available room inventory at both properties. For the year under review, the annual average occupancy at Hotel Sigiriya stood at 74%, while Club Hotel Dolphin registered 84% average occupancy for the same period.

Bookings from traditional source markets in Western Europe, including Germany, remained intact throughout the year, except for a slight decline in January 2015, following the Euro currency depreciation against the US Dollar. Encouragingly though, the German market recovered quickly with all group properties registering a significant increase in bookings from Germany in the months of February and March 2015.

In contrast, the Russian and Eastern European markets failed to make any significant contributions to the group occupancy levels for 2014/15. Hit by the wave of political turmoil in Ukraine alongside the crash of the Russian Ruble, forward bookings from the region dropped sharply ahead of the peak winter season.

Middle-East markets continued to demonstrate positive growth for the most part, but fell short of expectations

in the wake of the civil unrest that erupted in Aluthgama and Beruwela. This mainly affected our coastal properties which experienced a slow-down in Middle-East bookings during the months of June and July. This also coincided with what is considered to be the off-peak season for the coastal properties. However, to help boost occupancy levels and tide over the slow period, a series of promotional discounts were offered to stimulate local travel and MICE markets.

Marketing A notable increase was observed in the volume of online bookings during the year, particularly from new emerging markets in East Asia. Interestingly, among all group properties, Hotel Sigiriya experienced the largest online booking volume for the 2014/15 period. The group stepped up measures to further develop the online market, vis-à-vis improvements to the web-based monitoring and online feedback mechanism.

Conventional business channels continued to bring in bookings from traditional markets, with international travel promoters being the most significant source of volumes.

Apr 012014

May 012014

Jun 012014

Jul 012014

Aug 012014

Sep 012014

Oct 012014

Nov 012014

Dec 012014

Jan 012015

Feb 012015

Mar 012015

USD

/ E

UR

: LK

R

EU

R:U

SD

Currency Coversion Rates

120

140

160

180

200

USD:LKREUR:LKR

0.9

1.0

1.1

1.2

1.3

1.4

1.5

EUR:USD

2011 2012 2013 2014 2015

Occupancy

0

20

40

60

80

100

GroupHotel


34

2011 2012 2013 2014 2015

Equity / Debt

0

600

1200

1800

2400

3000

EquityDebt

Gearing

0

20

40

60

80

100

2011 2012 2013 2014 2015

Gross Operating Profit / Cash Generated from Operations

0

200

400

600

800

1000

Gross Operating ProfitCash Generated From Operations

In recognition of the shifts now underway in global tourism, the Group initiated an integrated marketing campaign to tap into the lucrative Middle-East and Far-East Asian travel markets. Spearheaded by a series of road shows, the itinerary was a collective effort to showcase the versatility of the Serendib Leisure portfolio in catering to both mainstream and niche travel markets. The promotional campaign also sought to develop key stakeholder partnerships in these regions to help the group establish a firmer foothold in these markets.

Operational ImprovementsThe group operational focus for the year was underpinned by the pursuit of excellence, which was deployed across the group under three themes, namely; Food and Beverage (F & B), service excellence and human capital development. The entire process was aimed at accentuating the uniqueness of each property, while enhancing the overall standards at each hotel.

Key deployments on F & B saw a number of innovative changes being introduced at all properties, including a wider range of dining options, new restaurants, revamped menu selections and themed nights, among others.

Meanwhile, efforts to further refine service standards at all Serendib Hotels properties were aimed at raising the bar for skilled hospitality services among graded hotels in Sri Lanka. The measures taken to develop human capital also stem from the goal of achieving service excellence. As part of the initiatives for the year, the group apprenticeship programme was expanded by increasing the intake of trainees at all properties. The possibility of tying up with an internationally accredited hospitality training school was also looked into.

In addition, more focused, needs-based efforts were initiated to address possible service gaps at each property. Selected members of the AVANI team were provided with overseas training

opportunities, arranged in collaboration with the groups’ overseas partners, Minor Hotels in Thailand. Meanwhile, cross functional teams were deployed to allow Hotel Sigiriya and Club Hotel Dolphin employees to gain a broader perspective of the hospitality business, especially during the refurbishment period.

Awards and Accolades

The properties belonging the Group received recognition from multiple sources during the year:

AVANI Bentota – World Luxury Hotel Awards 2014 - winner Luxury Beach Resort - Indian Ocean. Winners are adjudged annually, and is based purely on service excellence and effective management. Awardees are decided on the votes received by international tour operators and hotel guests.

Management Discussion and Analysis

2011 2012 2013 2014 2015

Revenue / Profit Before Tax

0

400

800

1200

1600

2000

RevenueProfit Before Tax

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AVANI Kalutara - Booking.com 2014 Award of Excellence, TripAdvisor Certificate of Excellence - 2014, Switch Asia Green Award - Merit Award 2014.

Hotel Sigiriya – TripAdvisor Certificate of Excellence Hall of Fame 2015, Hall of fame inductees are those that have secured the “Certificate of Excellence Award” for five consecutive years.

Club Hotel Dolphin – TripAdvisor Travellers’ Choice Award 2015, the hotel is ranked among the top 25 hotels in Sri Lanka

HolidayCheck Award 2015, awarded in recognition of the “Beach Holidays” and “Pool Paradises” categories.

Tripadvisor Certificate of Excellence Hall of Fame 2015.


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First class, customized services for a truly exceptional stayGuest Service

Guests are made to feel welcome from the moment they step in to any Serendib Group Hotel. Sri Lankan hospitality and warm smiles set the scene for an extraordinary hotel experience with unrivalled personalized services. From day-to-day necessities to attentively tailored services, each hotel in the chain prides itself on providing guests with everything they need for a truly perfect stay.

Personalised serviceWith skillful, attentive staff and a range of services tailored to your needs, every moment is a pleasure.

To ensure that we maintain our exceptional standards throughout the range of hotels, our hotel managers on call 24/7 providing easy access to our guests in case of need, ensuring that we live up to our brand promise.

Hotel Facilities• Spa

• Gymnasium

• Watersports Centre

• Kids Club

• Housekeeping at your convenience

• Dry Cleaning and Laundry Service

• Luggage Storage at lobby level for easy access

• Business Centre facilities

• Parking with 24 hour valet service

Bell Services• In-room dining for your

convenience• Concierge service

Amenities for convenienceA range of luxury amenities to satisfy even the highest of expectations.

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Food & Beverage Standards

World-class food and beverage is the hallmark of every Serendib Hotels Group property and is exemplified by distinguished dining establishments. From fine dining to family favourites, trust our chefs to bring you only the best. Guests are invited to discover something delicious every single day, at our themed buffet specials or splendidly prepared À la carte dishes.

Dining Experiences• In-Room Dining• Fine Dining • Seafood Market• Beach BBQ• Chef ’s Dining

In-Room DiningOur In-room dining service offers the privacy and comfort of dining in your own room for a special occasion or simply because the idea appeals to the romantic in you!


38

Fine Dining Break with tradition and try out fine dining at one of the exotic locations we offer. It will surely be an unforgettable experience you will encounter in Sri Lanka. The aroma of a gourmet meal, impeccable service and the taste of a perfectly prepared cocktail are the ingredients for a magical evening.

Seafood MarketOur Seafood market offers guests a fine selection of fresh seafood each day. Guests are invited to select their favourite seafood for the evening and then it’s over to our chef to prepare every dish to perfection.

Beach BBQThe idea of beach BBQs never fail to surprise and delight our guests. Our in-house BBQ experts get our guests in the mood with sizzling meats and delectable accompaniments.

Chef ’s DiningEver wondered where all this gourmet cuisine is whipped into shape? Or imagined what the inside of a hotel kitchen looks like? Guests are invited to find out at the Chef ’s Dining special, roll up their sleeves and get ready for some serious eating when our chefs make a personal presentation of their masterpieces.

Food & Beverage Standards

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Human Capital

Great guest experiences begin with team members who feel appreciated, valued and respected. That’s what you can expect at every hotel in our chain. We have created a culture of excellence, continuous improvement and innovation that helps team members reach their full potential.

There are more than 850 team members in the Serendib Hotels Group. We work hard to attract and select the right talent. Our goal is to hire people who share our passion for hospitality and want to further their careers while remaining committed to our Vision, Mission and Values.

Career Development

The Serendib Hotels Group believes that it is critical that our leaders and team members have the necessary knowledge and skills to do their jobs effectively and have the ability to grow and develop personally and professionally. Our training programs encompass a mix of classroom learning, on the job and overseas assignments tailored to bring out the best in our team to deliver superior guest service.


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We take pride in our heritage and inimitable Sri Lankan values. Our legendary hospitality draws inspiration from centuries old traditions to invoke a mesmerizing sense of well-being among our guests

Experience the warmth of authentic Sri Lankan hospitality

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42

Hotel Management

Standing - from left:Hasantha Sooriyaarachchi – HR Manager, Indika De Silva - Maintenance Engineer, Pradeep Krishantha - Executive Chef, Jayamith Wickramasinghe - Executive Housekeeper, Sahan Moratuwage – F & B Manager

Seated - from left:Tissa De Zoysa – Community Development & Sales Promotion Manager, Kumara Adikari – Front Office Manager, Thomas Barguil – General Manager, Sarath Samarasinghe – Financial Controller

Standing - from left:M. Srilal J. Fernando - Chief Engineer, Don Chandika Jayakody - Training Manager, W. A. I. Sampath De Silva - Front Office Manager, W. M. B. Chitra Fernando - Manager Internal Audit, Fathi Boughanmi - Chief Animator, J. K. Niroshan Jayakody - Food & Beverage Manager

Seated - from left:A. D. G. Athula Jayawardena - Human Resources Manager, T. M. Saman Kumara - Financial Controller, Daniel Ludwig - General Manager, T.D. Prasanna S. De Alwis - Resident Manager

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Standing - from left:Jayantha Gunawardena - Assistant Front Office Manager, Namal Padmakantha - F & B Manager, Andrew Bartholomeusz - T & D Manager, Sunil Wikramage - Chief Engineer, Suranga Wewegedara - HR Manager

Seated - from left: Pradeep Paranamanna - Executive Chef, Jude Silva - Resident Manager, Chrisanthus Cooray - Finance Controller, Eric Fernando - Executive Housekeeper

Standing - from left :Ananda Karunaratne - Maintenance Engineer, W.P.D.M. De Silva - Naturalist, Sugath Wijesinghe - Executive Housekeeper, E.G.G.N. Ekanayake - Pastry Chef, A. H. C. A. Dias - F & B Manager, H. N. P. Kumarage - HR Manager

Seated - from left:J. A. D. Jayampathi - Executive Chef, Laksitha Wegodapola - General Manager, T. M. S. Kumara - Financial Controller, E. W. P. C. Samarakoon - Front Office Manager


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Sustainability Report

Sustainability has always been considered part and parcel of our business and is the fundamental premise that drives our operations. Our philosophy is, “To be Sri Lanka’s most responsible hospitality brand, capable of driving positive change for the benefit of the environment, people and communities impacted by our work”.

In tribute to this philosophy we have always pursued a sustainable business model that will support a scalable platform for triple bottom line growth. Accordingly, we adopt an integrated approach that aligns our sustainability initiatives with our corporate goals. It is how we are able to deliver consistent financial results, while at the same time, transmit greater value to all

other stakeholders associated with the business.

Serendib Leisure Group Sustainability Policy Statement

All properties under the Serendib Leisure PLC umbrella are required to maintain high standards of performance and advocate socially and environmentally sustainable business practices. Our aim is to bring a positive benefit to the societies in which we operate through high quality services, economic growth, environmental protection, community involvement and employment.

Environmental Sustainability

The group remains committed to minimize the impact on the environment resulting from the operation of all properties under Serendib Leisure PLC. Our aim is to go beyond the basic legal and regulatory obligations to fulfil a broader environmental agenda, where concern for the environment influences all our actions. In our search for environmental–friendly business practices, we have established sound environmental objectives and targets together with an integrated review process to highlight possible cause and effect.

Reduce, Reuse, Recycle

Energy Reduction

Core PrinciplesKey initiatives Focus Areas Strategic Imperatives

Water Conservation

Waste Control

Bio-diversity preservation

Reduce the use of plastic by 5% year-

on-year

Reduce water consumption by 5%

Reduce electricity consumption by 5% annually electricity

Energy efficient lighting

Energy efficient equipment

Improve operational efficiencies

Improve efficiency of the self-contained

sewerage plant

Rain water harvesting

Waste Segregation

Composting

Increase volume of recycled water by

10% annually

Invest in protecting coastal properties

and marine life

Increase employee awareness

En

cour

age

gues

t pa

rtic

ipat

ion

Pro

mot

e co

mm

unit

y in

volv

emen

t

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Highlights for 2014

IndicatorHotel Sigiriya AVANI Bentota AVANI Kalutara Club Hotel Dolphin

2013/14 2014/15 2013/14 2014/15 2013/14 2014/15 2013/14 2014/15

Direct energy consumption (kwh). **

531,570 553,606 683,610 1,500,490 807,121 2,179,435 953,271 2,809,546

Energy saved due to conservation (kwh)

869 2100 275 1,937 371,262 167,259 258,128 2,428

Investment to introduce energy efficient systems (Rs)

395,000 355,500 52,000 135,470 208,209 71,435 - 647,500

Water withdrawal (Units or ltr )**

18,000 31,482 17,916 35,020 27,856 38,579 32,241 83,614

Water recycled and reused (Ltr)

14,000 27,386 - - 2,160 6,955 22,788 36,983

Waste generate (MT) 7.50 v6.60 4.1 63.0 1.97 3.17 0.4 19.2

Liquid waste (ltr) 2,160 4,240 2,350 5,360 340 1,150 1,114 11,099

% of liquid waste treated (ltr) 14 260 1 4

Moreover, our transparent reporting framework is used to communicate with stakeholders and create environmental awareness among our employees, guests and the community at large. We also use this as a benchmark to work towards improving our environmental performance on an ongoing basis.

Underpinned by our pursuit of excellence, we strive to provide a premier F & B offering, service excellence and the ultimate in guest comfort at all our properties. We remain committed at all times to protect and preserve the authenticity of nature.

Employee awareness programmes Community involvement Guest participation initiatives


46

Human Capital Development

We entrust our human capital to operate our properties and we expect them to convey our brand promise to our guests. Further, we see it as their duty to ensure that our guests experience world-class hospitality that we promise to provide. Therefore, for our part, it is critical that we develop the best and brightest talent in the industry to help us in our pursuit of excellence.

To achieve this, we have in place a comprehensive Human Resources infrastructure, deployed at every property across all hotels in the Serendib Leisure Group. It is how we have succeeded in moulding our workforce to overcome the day-to-day challenges encountered in the hospitality industry. It also the underlying premise used to identify our human capital development strategies needed to give us a competitive advantage. To help us accomplish our leadership goals, we specifically focus on the following areas:

Travellife Gold certificate recipients - Serendib Leisure Group

Remuneration and benefits

All Serendib Hotels Group employees are entitled to fair and equitable remuneration in line with industry standards. We also have in place a systematic performance-based incentive scheme for executive and associate employee categories.

We also provide all employees with on-location accommodation facilities

Health and Safety of Employees

All our properties have adopted fire safety standards which require them to be equipped with fire detection, alarm and emergency communication systems, fire suppression systems and fire training. Fire drills are conducted at least twice yearly and the evaluation of fire-readiness is monitored continuously under supervision of the Group Engineer. All our staff have been trained on fire prevention and evacuation procedures which are subjected to review periodically.

Learning and Development

Our aim is to inculcate a vibrant learning and development culture, where learning is viewed as more

Our philosophy:

To hire and retain talented people who embody the Serendib Leisure core values and reflect our character as a responsible hospitality company. Accordingly, we will create a compelling work culture that help us become an employer of choice and allows us to grow in a positive and sustainable manner.

Recruitment and Retention

As an equal opportunity employer, the group does not discriminate against any status protected by law. This is strictly applied both in the case of new recruits as well in consideration of internal promotions.

Our aim is to cultivate 80% of our management team from within the group and in doing so all employees are subject to an annual performance evaluation to assess their readiness to take on bigger responsibilities. This talent assessment module is used as the basis for internal promotions and career mapping which allow employees to access both vertical and lateral growth opportunities within the group.

Meanwhile, in order to encourage a healthy flow of diverse ideas and perspectives, we seek to acquire 20% of our management talent from outside our current team, vis-à-vis new recruits who are able to envision their personal goals congruent to our own corporate ambitions. Many of these are trainee apprentices who can adapt to the changing environment of work life.

Our recruitment policy specifies that all new recruitments will be hired purely on their ability to perform the tasks assigned to them in accordance with the Serendib Leisure employee code of conduct. As part of the group’s strategic social development initiatives 61% of the workforce at each property are hired from the local area.


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Workforce statistics 2014/15

Property Total Workforce

(No.)

Gender distribution

(% of total workforce)

Age Distribution (% of total workforce)

Workforce Mobility

M F <30 30 - 50

>50 New recruits

(No.)

Internal Promotions

(No.)

Attritions (No.)

AVANI Bentota

188 169 19 68 99 21 45 5 43

AVANI Kalutara

203 188 15 80 111 12 31 9 29

Hotel Sigiriya

128 120 8 66 56 6 31 8 20

Club Hotel Dolphin

294 273 21 101 178 15 66 9 84

of experiential growth process, rather than as a part of the enforced protocol. As such, all learning activities ultimately focus on improving the guest experience.

Ongoing investments in a multi-layered training agenda has ensured the creation of a dynamic learning culture at all our properties. Moreover, it has helped instil our inimitable value culture as part of the common work ethic.

However, despite the overriding focus on improving service levels, our training itinerary also seeks to boost the long term employability of workforce vis-à-vis skills development initiatives that improve employee sustainability. The following programmes undertaken during the year, achieve the dual objectives of enhancing the guest experience as well as providing employees with a bankable long term skill.

State of the art staff accommodation

German Food Training – A training program for Chefs of all Serendib Leisure Hotels, which was conducted in-house by experienced Chefs.

Menu Engineering & Food Costing – A programme aimed at aspiring F&B Managers and Chefs with a view to driving value through our F&B effort to provide an unparalleled culinary experience

Bakery & Pastry Demonstration – A training programme for all Bakery and Pastry chefs on different types of Desserts, Cookies, sweets & toffees, Croissant and Danish bread varieties.

Toress Wine Training and Champagne & Cognac Training – A Training on Champagne & Cognac Training for F&B Staff

Best Cuppa Tea Brewing Training – A training programme on how to Brew the ideal cup of tea conducted by Sri Lanka Tea Board

Microsoft Excel-Intermediate Level – A Basic training programme that covers all the fundamentals of MS Excel which is focused for those of less or no knowledge In MS Excel.

Employee Engagement

As a business built on relationships, we understand the importance of maintaining a healthy dialogue with our employees. In essence the “eyes and ears” of our hotels, we realize that our employees function as an instantaneous feedback mechanism for guests.

Hence, we have always encouraged greater employee engagement by opening up a number of formal and informal channels, including regular networking forums that promote greater knowledge sharing. These mediums have proved to be successful not only in conflict resolution, but also as a hot bed for new ideas that can be used for the betterment of business.


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Service Excellence

Service excellence has and always will be the ultimate goal of our human capital development model. In striving to provide our guests with a premium experience, we continue to deploy both general training as well as area-specific content that is deemed by the management to be timely and relevant in addressing possible service gaps at each property.

Key initiatives for 2014/15;

Customer Service and Upselling A program conducted to focus on the development of Customer Service skills, Upselling and Good Speaking skills in English for Front office, Restaurant and Pool Staff

Lifeguard Training A training programme conducted for all pool attendants on life saving by the Lifeguard Association of Sri Lanka

Our Training KPI's

Hotel Sigiriya

Investment on training: Rs. 7778,199/-

Training hours:2,236

Hotel Club Dolphin

Investment on training: Rs. 2,040,806/-

Training hours: 5,576

AVANI Bentota

Investment on training Rs. 2,147,707/-


AVANI Kalutara

Investment on training Rs. 1,722,203/-


Health & safety of products and services:Ensuring the health and safety of our products and services, is among our key priorities in providing a superior guest experience. All properties under the group remain aligned to the internationally accredited best practices set out under the HACCP food safety management guidelines.

Further we have also initiated a “Group Mystery Audit” as the basis of ensuring that all on-location products and services meet with specific safety parameters spelt out as per the group operational mandate. As part of the learning drive, we conducted “Chemical Training” – A training programme for Kitchen and Housekeeping staff on the proper usage of chemicals, impact on using detergents and sanitizers, handling & storage and safety measures to avoid accidents.

Meanwhile, to ensure the general safety of on-location equipment we conduct

regular training to educate staff on the following aspects;

First aid, evacuation, firefighting, legionella, food hygiene

Swimming pool safety, general hotel safety

Gas safety, beach & water sports safety, children’s safety

Accidents, incidents, illness and transport safety

Guest feedback mechanism

All properties are equipped with Guest Satisfaction Survey (GSS) software to manage guest feedback. Online review sites such as TripAdvisor are monitored on a regular basis and our General Managers are encouraged to respond to compliments and complaints alike. The General Manager of each property hosts the guests for cocktails each week providing an opportunity for the hotel’s management team to interact with guests whilst on their stay and look into ways of enhancing their in-house experience.

Supply Chain Management

As a group-wide policy, at each property, we aim to source at least 30% of our fresh produce from local farmers

Serendib Leisure Awards - Pinnacle Award Winner


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49

and growers who have adopted ethically responsible farming and growing practices. Most of our fresh fruits, vegetables and seafood is procured in this manner. We believe in paying a fair market price for the produce that we buy from these suppliers, some of whom have been supplying to us for over a decade. While ensuring a degree of backward integration, these practices also tie in with the group’s social development goals.

Our philosophy:

To promote local sourcing, wherever possible and practical so as to ensure a sustainable source of produce at any time

Local sourcing:

AVANI Bentota - 26%

AVANI Kalutara - 40%

Hotel Sigiriya - 17%

Hotel Club Dolphin - 74%

Community Service

We have always been mindful of our impact on the communities in and

around our properties. As such we have always tried to integrate these social concerns as part of our day-to-day operations, as much as possible. The ties we have fostered in the process have helped to make a positive impact on these communities and resulted in greater economic progress for the area.

Key Initiatives for 2014/15;

Our philosophy:

To interact with the communities impacted by our work and make a positive socio-economic change for the betterment of the community and the nation as a whole.

“The village lunch” excursion promoted by the hotel helps local families in the village of Diyakepilla, providing the community with an additional source of income

Ongoing “Vishwa Wahara” English classes conducted for the youth community in Bentota and Kalutara

Staff Family Day AVANI Bentota Resort & Spa

Staff Family Day Club Hotel Dolphin Avurudu Celebrations Serendib Leisure Management


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Serendib Hotel PLC believes that our dynamic approach to risk management ensures that key risks are proactively identified, assessed and responded to. Our ongoing assessment process takes into account the likelihood of an event, its potential impact on the business and the need for mitigation.

We have adopted the ISO 31000 standard of risk management illustrated below. It elaborates on risk identification, risk assessment, risk response and risk reporting methodologies.

The Company’s risk policyOur policy for risk management is to proactively manage risk to ensure continued growth of our business and to protect our people, assets and reputation. This implies that we will:

• Implementaneffectiveandintegrated risk management system while maintaining business flexibility.

• Identifyandassessmaterialrisksassociated with our business, monitor, manage and mitigate risks.

Internal Control And Risk ManagementThe group reviews and assess significant risks on a regular basis and has implemented an oversight programme to ensure that there is a system of information gathering, awareness and action to mitigate exposure to identified risks.

The Group Risk Management Committee (GRMC) of Hemas Holdings PLC, the ultimate parent of Serendib Hotel PLC overlooks the risk management process of the Serendib Hotels group . The GRMC reviews the company’s risk profile and provides guidance on required risk responses on a quarterly basis.

The Audit Committee of the Serendib Hotels PLC reviews and monitors internal controls. The internal audit scope is approved by the Audit Committee at the start of the year and one internal audit per hotel is done by an external party and one by the Hemas internal audit team. The audit reports, risk reports and compliance reports are reviewed by the Audit Committee on a quarterly basis.

As a part of the Risk Management process, the Board reviews its strategies, processes, procedures and guidelines on a continuous basis to effectively identify, assess and respond to risks.

The group wide risk management programme is facilitated by the Risk and Control division with the inputs from Business Strategy, Corporate Finance, Group Treasury and Group Human Resource divisions.

Risk facilitation is exercised through risk workshops, risk reviews, essential control checklists and risk reporting.

Risk Management

ESTABLISH THE CONTEXTAnalyse business environment and set objectives

IDENTIFY THE RISKSDeviation from achieved expected results

ANALYSE THE RISKSAnalyse the likelihood and impact

EVALUATE THE RISKSPrioritise the issue

TREAT THE RISKSImplement a suitable risk treatment plan

MO

NIT

OR

& R

EV

IEW

CO

MM

UN

ICA

TIO

N A

ND

CO

NSU

LT

AT

ION

ISO 31000 Risk Management Framework.

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Risk Risk exposure Mitigating actions

Market Adverse impact on yields and occupancies Fluctuation in demand

• Closelymonitorthesocio-economicenvironmentofthetraditional markets and targeting new emerging markets

• Analyseresourcesandcapabilitiestoidentifycorecompetenciesand differentiate through brand and service levels

• Sourcingnewmarketsanddevelopingnewchannels• Participateintradefairsbothlocalandforeigninorderto

promote the properties and to attract new tour operators. • Usingthecorporatewebsitetoimproverevenuethroughdirect

bookings and marketing the hotel by partnering with popular online travel agents to push web based sales

Human Resource Risk

Risk of losing skilled and trained human capital and recruitment of staff for new hotel developments.Trade union activities resulting in work disruptions.

• Establishcareerdevelopmentprogramsandsuccessionplansinorder to retain and motivate the talent pool of the company

• Providefocusedandstructuredtrainingforstaffatalllevelstoaid personal and professional development

• Developastrongemployerbrandtoattractstaffoftherightquality

Foreign Exchange Rate Risk

Depreciation of the Rupee and loss on exchange in conversion of loans denominated in foreign currency

• Exchangeratemovementsaretakenintoconsiderationwhenentering into contracts with travel agents

• StructureForexborrowingsinproportiontotherevenuecurrency mix

Interest Rate Risk

Rising interest rates will increase borrowing cost

• Borrowingsinforeigncurrencytoenjoylowerratescomparedtolocally sourced borrowings.

Operational Process Risk

Internal process failures, fraud, pilferage and breakdown of internal controls.

• Providefocusedandstructuredtrainingtostaffatalllevelstofamiliarize processes and procedures

• Systemsandproceduresareinplacetoensurecompliancewithinternal controls, which are monitored and reviewed for their continued efficiency and effectiveness

• Actionistakenimmediatelyasperemploymentpoliciesonanystaff involved to fraud / pilferage

• OutsourceinternalauditstoreputedAuditFirmstoreviewandreport on the adequacy of the financial and operational controls

Credit Risk Risk arising due to default by customers. Impact on liquidity and profitability

• Creditisallowedonlytoapprovedcustomerswhichisreviewedannually

• Monitorandreviewthedebtorbalancesmonthly.• Obtainbookingadvances.• CompliancetolaiddowncreditSOPsoncreditcontrol.

Key Risks and Action Plans

The following framework depicts the specific and most relevant risks faced by the company and management actions to mitigate them.


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Risk Risk exposure Mitigating actions

Political Risk Changes to government policy could adversely impact the operating environment

• Compliancewithexistingregulationsandstatutes.

• Activelyparticipateinindustryassociationstolobbyforpolicychanges to grow and develop the tourism industry.

• MaintaingoodrelationshipswithStateagenciesandministries.

Fire and Natural Disaster

Fire or natural disaster can halt or cease operations

• Insuranceistakentocoverallaspectsoffireandnaturaldisaster

• FiresafetydrillsandtrainingisprovidedtothestaffattheHotel.

Health and Safety Risk

Risk of litigation due to non-adherence to laid down health and safety regulations. This could be due to, but not restricted to food poisoning, personal or accidental harm to guests or employees.

• Insurancetakentocoverbothemployeeandguestinjuries.Further,regular maintenance of the property and equipments is done to ensure all operating equipment are of good operating condition

• Thehoteltakesallprecautionsfromsourcingthesuppliertostorageand preparation of food to ensure contamination is avoided

• Touroperatorsafetystandardsarecompliedwithandnecessaryaction is taken immediately on any concern area related to health and safety based on audit inspections done by tour operators

• Thecompanysourcesitsproductsandservicesfromapprovedsuppliers

Reputation Risk Adverse impact on the corporate image and brand equity which is likely to diminish shareholder value.

• Properadherencetothestatutory,health&safetyconcernsbyobtaining appropriate quality certification standards including HACCAP and environmental regulations

• Continuousreviewofguestcommentsinordertoexceedcustomerexpectations and ensure quality standards are adhered and improved upon

• Reputationmanagementsoftware(Brand-Gain)isusedtomonitor,report and respond to the on-line reviews in the public domain/review sites (eg. Trip advisor, HolidayCheck, etc)

• Maintenanceofhighestethicalstandardsatalltimesinallbusinessactivities

• ConductingmeaningfulCSRinitiativesinthelocaleofthehotel

In conclusion, Serendib Hotel PLC's transparent risk management system engages risks posed to the company on a broad front. Our risk management process is entrenched in the core values of the company and the senior management demonstrates leadership in championing the company’s risk management initiatives, thereby ensuring the company’s competitiveness and sustainability in the long term.

Risk Management

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SECTION 1 : THE COMPANY

A. DIRECTORS

The Board

Corporate Governance Principle

SEC & ICASL

Code Reference

Level of Compliance

Board Meetings A 1.1 Four regular Board Meetings are scheduled during a year to review the strategic direction of the operational units, annual budgets and progress towards achieving those budgets and key business risks and other matters. Ad hoc meetings are also held when necessary.

Apart from taking decisions at Meetings, the Board also takes decisions via Circular Resolutions. These resolutions are required to be signed by all the Directors.

Responsibilities of the Board

A 1.2 The Directors are responsible for;

• Formulating,implementingandmonitoringoverallbusinesspolicyandstrategy.• Ensuringeffectivesystemsareinplacetosecureintegrityofinformation,internal

controls and risk management.• Ensuringcompliancewithrelevantlaws,statutesandregulations.• Ensuringallstakeholderinterestsareconsideredincorporatedecisions.• PromotionofopenandpropercommunicationbetweentheCompanyandits

stakeholders.

Compliance with the law and independent professional advice

A 1.3 The Board collectively and the Directors individually act in accordance with the laws and regulations applicable to the business enterprise.

In discharging their duties, Directors may seek independent professional advice from external parties when necessary at the expense of the Company.

Corporate Governance

IntroductionCorporate Governance involves a set of relationships between a Company’s management, its Board, its shareholders and other stakeholders. Corporate Governance also provides the structure through which the objectives of the Company are set, and the means of attaining those objectives and monitoring performance are determined.

Company’s Philosophy on Corporate GovernanceSerendib Hotels PLC is fully aware and committed to implementing governance standards that conform to

best practices. As part of the corporate culture, it engages and interacts with all the stakeholders in a way that promotes mutual trust, better understanding and good faith.

The main scope of Serendib’s Corporate Governance policies encompass; clear description of duties and responsibilities among the Board of Directors, checks and balances, clear business roles and strategies within the Company, ethical business conduct, engagements with stakeholders through risk mitigation, upholding corporate social responsibility in sustaining good corporate citizenship as well as

disclosure of material information in a timely and accurate manner.

Set out below is the extent to which the Company complies with the Code of Best Practice on Corporate Governance issued jointly by the Securities & Exchange Commission of Sri Lanka and the Institute of Chartered Accountants of Sri Lanka:-


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SEC & ICASL

Code Reference

Level of Compliance

Company Secretary A1.4 All Directors have access to the advice and services of the Company Secretary who is responsible to the Board in ensuring that proper Board procedures are followed and applicable rules and regulations are complied with.

The appointment and removal of the Company Secretary is a decision taken by the Board as a whole.

Independent judgment

A1.5 The Directors exercise independent judgment on matters pertaining to strategy, performance, resource allocation and standards of business conduct and act free from any undue influence and bias from other parties.

Dedication of adequate time and effort by the Directors

A1.6 The Members of the Board dedicate adequate time and effort in discharging their duties and responsibilities towards the Company.

The Board met on four occasions during the year under review and the attendance at these meetings are given below:

Name of Director Capacity No. of meetings attended

Mr. A N Esufally Chairman/Non-Executive Director

4/4

Mr. D T R De Silva Managing Director 4/4Deshamanya J C L De Mel

Independent Director 4/4

Mr. W M De F Arsakularatne

Non-Executive Director 4/4

Prof. L D K B Gamage Independent Director 4/4Mr. E J D Rajakarier Non-Executive Director 1/4Mr. M A Jafferjee Independent Director 4/4Dr. R N A Athukorala Independent Director 4/4

Mr. S M Enderby Non-Executive Director 4/4

Mr. E J D Rajakarier, CEO of Minor Hotel Group has been able to attend only one Board Meeting during the financial year. However, his observations on the Discussion Papers are sent to the Chairman prior to the Board Meetings in order that his views may be discussed and recorded. He has also had several discussion with the Chairman and Managing Director on matters of the Company which require Board guidance during his visits to Sri Lanka.

The Board has delegated some of its functions to its Sub-Committees, while retaining the rights for final decision pertaining to matters under the purview of the Committees. The composition and the functions of these Sub–Committees are discussed in detail under the relevant sections of this Report.

The management of the hotel owned by the Company has been delegated to Serendib Leisure Management Limited, Managing Agents through a formal Management Agreement. The Managing Agent operates the hotel within the policy framework outlined by the Board and is assessed periodically by way of Management Reports and presentations.


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SEC & ICASL

Code Reference

Level of Compliance

Induction and Training for Directors

A1.7 An Induction programme is in place which includes the provision of key corporate documents, facilitation of visits to hotels and meetings with the Managing Director and the Senior Management Team.

In addition, the Directors are also encouraged to participate in continuous professional and self-development activities.

Chairman and Managing Director


SEC & ICASL

Code Reference

Level of Compliance

Separation of the role of Chairman & MD

A.2.1. The role of the Chairman and Managing Director is distinct, ensuring the balance of power and authority within the organization.

Chairman’s Role


SEC & ICASL

Code Reference

Level of Compliance

Role of Chairman in conducting meetings

A 3.1 The Chairman encourages the participation of all the Directors in decision making, seeks and ascertains the views of the Directors and thereby ensures that the Board functions in an efficient manner which is beneficial to the stakeholders and the Company.

Financial Acumen


SEC & ICASL

Code Reference

Level of Compliance

Availability of those with sufficient financial knowledge

A.4 The Board comprises of several professional accountants who posses the necessary knowledge and competence to guide the Board on matters pertaining to finance.

Board Balance


SEC & ICASL

Code Reference

Level of Compliance

Non Executive Directors

A.5.1 All the Directors except the Managing Director are Non-Executive Directors.

Independent Directors

A.5.2

A.5.3

Four out of the eight Non Executive Directors are considered independent.

These Directors are independent of management and free of any business or other relationship that could materially interfere with or could reasonably be perceived to materially interfere with the exercise of their unfettered and independent judgement.

Annual Declaration A.5.4 The Independent Directors have submitted written Declarations of their independence as required by section 7.10.2(b) of the Listing rules.


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SEC & ICASL

Code Reference

Level of Compliance

Determination of independence

A.5.5 The Board annually determines the independence of each Non-Executive Director based on the Declarations submitted by them.

The Board believes that the independence of Deshamanya J C L De Mel is not compromised by him serving on the Board continually for a period exceeding nine years from the date of his first appointment.

Therefore, the following Directors are considered Independent in terms of the Listing Rules.

Deshamanya J C L De Mel

Prof. L D K B Gamage

Mr. M A Jafferjee

Dr. R N A Athukorala

Alternate Directors A.5.6 The Alternate Directors appointed by the Non-Executive Directors are not Executives of the Company.

The Independent Directors have not appointed Alternate Directors

Senior Independent Director

A.5.7

A.5.8

A Senior Independent Director has not been appointed since the Chairman and the Managing Director are not the same person.

Chairman’s meetings with NEDs

A.5.9 Chairman meets with the NEDs, with the Executive Director not being present, whenever necessary.

Recording of concerns in Board Minutes

A.5.10 Concerns raised by the Directors on matters of the Company which cannot be unanimously resolved are recorded in the Board Minutes.

Supply of Information


SEC & ICASL

Code Reference

Level of Compliance

Management’s obligation to provide appropriate and timely information

A.6.1

A.6.2

The Board is provided with appropriate and timely information to discharge its duties. The Directors are also entitled to request for additional information where they consider such information necessary to make informed decisions.

The Agenda for the Board Meetings and connected discussion papers are circulated to the Directors at least seven days in advance to facilitate the effective conduct of the Meeting.


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Appointments to the Board


SEC & ICASL

Code Reference

Level of Compliance

Nominations Committee

A 7.1 The Board has not established a Nominations Committee to make recommendation on Board appointments; instead appointments to the Board are made collectively and with the consent of all the Directors.

Assessment of Board composition

A.7.2 The Board assesses its composition to ascertain whether the combined knowledge and experience of the Board matches the strategic demands facing the Company and takes this it into account when new Board appointments are considered.

Disclosure of required details of new Directors

A.7.3 On appointment of a new Director, the Company communicates to the Colombo Stock Exchange a brief resume of the Director which includes;

(a) the nature of his experience in the relevant functional area

(b) other Directorships or Memberships in Board Sub-Committees; and

(c) whether the Director is considered an Independent, Non-Executive or Executive Director

Re – election


SEC & ICASL

Code Reference

Level of Compliance

Re-election of Directors

A.8.1

A.8.2

The Company’s Articles require a Director appointed by the Board to hold office until the next Annual General Meeting and seek re-appointment by the shareholders at that Meeting.

One third of the Directors including the Chairman retire by rotation at each Annual General Meeting in conformity with the Articles of Association of the Company. Directors who retire are those who have served for the longest period after their re-appointment/ re-election.

In addition, a Director who has reached 70 years of age vacates office at the conclusion of the Annual General Meeting commencing next after he attains the age of seventy years or if he is re-appointed as a Director after attaining the age of 70 years at the Annual General Meeting following that re-appointment.

Appraisal of Board Performance


SEC & ICASL

Code Reference

Level of Compliance

Appraisal of the Board and Sub-committees

A.9.1 The Board undertakes an annual evaluation of its own performance and its Committees in the discharge of its key responsibilities. .


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Disclosure of Information in Respect of Directors


SEC & ICASL

Code Reference

Level of Compliance

Information in respect of Directors

A.10.1 The Biographical details of the Directors, nature of his/her expertise in the relevant functional areas, membership in Board Sub–Committees, attendance at Board and Sub-Committee Meetings, other directorships and Directors Interest in Contracts are disclosed under the relevant sections in the Annual Report.

Appraisal of the Managing Director


SEC & ICASL

Code Reference

Level of Compliance

Setting of annual targets & appraisal of performance

A.11.1

A.11.2

At the commencement of each financial year, the Board in consultation with the Managing Director sets reasonable financial and non-financial goals based on the short, medium and long term objectives of the Company.

The Annual Appraisal of the Managing Director is carried out by the Board against pre-agreed performance targets.

B. DIRECTORS REMUNERATIONRemuneration Procedure


SEC & ICASL

Code Reference

Level of Compliance

Establishment of a Remuneration Committee

B.1.1 The Board has delegated its powers to the Remuneration Committee of its Parent Company, Hemas Holdings PLC to make recommendations to the Board on remuneration policy and practice that is consistent with the objectives of the Company.

Composition B.1.2

B.1.3

The Remuneration Committee of the Parent Company consists of two Independent Non-Executive Directors.

The Chairman of the Committee is an Independent Director appointed by the Parent Company Board.

The names of the Chairman and members of the Committee are indicated in the Annual Report of the Board of Directors.

Determination of remuneration

B.1.4 In terms of the Articles of Association of the Company, the Board determines the fees payable to the Independent Directors.

Consultation of the Chairman and access to professional advice

B.1.5 The Committee consults the Chairman on proposals relating to the remuneration of the Executive Director and has access to professional advice in discharging their duties.

The Level and make up of Remuneration


SEC & ICASL

Code Reference

Level of Compliance

Executive Directors Remuneration package

B.2.1. The Committee structures remuneration packages to attract, retain and motivate the Executive Director and Senior Management of the required quality.


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SEC & ICASL

Code Reference

Level of Compliance

Comparison of remuneration with other companies and group

B.2.2

B.2.3

The Committee ensures that the remuneration of executives at each level of management is competitive and in line with their performance. Surveys are conducted as and when necessary to ensure that the remuneration is competitive with those of comparative companies.

It also takes into consideration data concerning executive pay among the Group Companies.

Performance related element of remuneration

B.2.4. Performance based incentives have been determined by the Remuneration Committee to ensure that the total earnings of the Executive Director is aligned with the achievement of objectives and budgets of the Group Companies.

Disclosure of Remuneration


SEC & ICASL

Code Reference

Level of Compliance

Disclosures B.3.1. The Remuneration Policy supports a strong performance-oriented culture and ensures that individual rewards and incentives relate directly to the performance of the individual, the operations and functions for which they are responsible for and the Group as a whole.

The aggregate remuneration paid to the Executive and Independent Directors are disclosed in Note 32 of the Financial Statements.

C. RELATIONS WITH SHAREHOLDERSConstructive use of the Annual General meeting and conduct of General Meetings


SEC & ICASL

Code Reference

Level of Compliance

Proxy votes C.1.1 The Company counts all proxies lodged on each Resolution.

Separate resolutions C.1.2 A separate Resolution is proposed for each issue at the Annual General Meeting.

Availability of Board sub committee Chairpersons

C.1.3 The Chairpersons of the Board Sub-Committees are present at the Annual General Meeting to answer any questions raised by the shareholders if so requested by the Chairman.

Adequate notice of AGM

C.1.4 The Notice of Meeting of the Annual General Meeting and the relevant documents are published and dispatched to the shareholders 15 working days prior to the Meeting as required by the Companies Act No. 7 of 2007.

Procedure of voting at General meetings

C.1.5 The procedure for voting at the Meeting is circulated along with the Notice of Meeting.


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Communication with Shareholders


SEC & ICASL

Code Reference

Level of Compliance

Policy and methodology for communication with shareholders

C.2 The Company disseminates information pertaining to the performance of the Company through the publication of the Interim Financial Statements and the Annual Report in a timely manner. Announcement is also made to the Colombo Stock Exchange on any information which may materially affect the share performance.

The Company Secretary could be contacted in relation to shareholder matters. The contact details are indicated in the Corporate Information section of the Annual Report.

Major Transactions


SEC & ICASL

Code Reference

Level of Compliance

Disclosure on major transactions

C.3.1 The Directors ensure that any corporate transaction that would materially affect the net assets base of the Company or the Group is communicated to the Shareholders.

There were no major transactions as defined under section 185 of the Companies Act No. 7 of 2007 during the year under review.

D. ACCOUNTABILITY AND AUDITFinancial Reporting


SEC & ICASL

Code Reference

Level of Compliance

Board’s responsibility for statutory and regulatory reporting

D.1.1 The Board is accountable for presenting the consolidated Financial Statements of the Company and its subsidiaries as well as the information required to be presented by Statute, to regulators

Declarations by Directors.

D.1.2 The Declarations to be made by the Directors are included in the Annual Report of the Board of Directors.

Statement of Directors and Auditors responsibility for the Financial Statements

D.1.3 The Statement of Directors Responsibilities in the Preparation of the Financial Statements is given on page 76 while the Independent Auditors Statement on page 77 states the Auditors responsibility for the Financial Statements.

Management Discussion Analysis

D.1.4 Management Discussion and Analysis is given on page 30 of this Report.

Declaration on Going Concern of business

D.1.5 The Declaration by the Board that the Company is a going concern is given in the Annual Report of the Board of Directors.

Serious loss of Capital

D.1.6 The Directors ensure that in the event the net assets of the Company fall below 50% of the value of the Company’s Shareholders funds an Extraordinary General Meeting will be called to notify the shareholders of the position and the remedial action being taken.


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SEC & ICASL

Code Reference

Level of Compliance

Related Party Transactions

D.1.7 The transactions entered into by the Company with related parties are disclosed in Note 31 to the Financial Statements.

Internal Control


SEC & ICASL

Code Reference

Level of Compliance

Annual review of the system of internal controls

D.2 The Board maintains a sound system of internal control to safeguard shareholders investments and the Company’s assets. The adequacy and the effectiveness of the internal controls are reviewed by the Internal Auditors under the direction of the Audit Committee.

Audit Committee


SEC & ICASL

Code Reference

Level of Compliance

Composition D.3.1 In terms of the Listing Rules, the Audit Committee comprises two Independent Directors and a Non Executive Director. The Chairman of the Committee is an Independent Director.

Duties D.3.2 The main purpose of the Committee is to assist the Board in the effective discharge of its responsibilities on financial reporting, risk management and internal control. It also reviews the nature and extent of non-audit services provided by the Auditors seeking to balance objectivity and independence.

Terms of Reference D.3.3 The Committee has a written Terms of Reference detailing clearly with its authorities and duties.

Disclosures D.3.4 The Members of the Committee are indicated in the Annual Report of the Board of Directors. The Managing Director of the Company attends the Meeting by invitation.

The Committee met four times during the year under review and the attendance at these meetings are given below:

Name of Director Capacity No. of meetings attended

Prof. L D K B Gamage Chairman/Independent Director

4/4

Mr. M A Jafferjee Member/ Independent Director

4/4

Mr. A N Esufally Member/Non Executive Director

4/4

Mr. D T R De Silva Managing Director 4/4

The Report of the Audit Committee is given on page 72


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Code of Business conduct and ethics


SEC & ICASL

Code Reference

Level of Compliance

Disclosure of Code of Business conduct and Ethics

D.4.1 The Company has adopted a Code of Business Conduct and Ethics and the Directors and Members of the Senior Management are committed to the code and the principles contained therein.

Corporate Governance Disclosures


SEC & ICASL

Code Reference

Level of Compliance

Corporate Governance Report

D.5.1 The manner and extent to which the Company complies with the provisions and principles of the Code is disclosed in the Report on Corporate Governance.

SECTION 2 : SHAREHOLDERS

E: INSTITUTIONAL INVESTORSShareholder voting


SEC & ICASL

Code Reference

Level of Compliance

Communication with shareholders

E.1.1 The Chairman conducts a structured dialogue with the institutional shareholders based on the mutual understanding of objectives and ensures that the views of the shareholders are communicated to the Board as whole.

Evaluation of Governance disclosures

E.2 When evaluating the governance arrangements particularly in relation to Board structure and composition, institutional investors are encouraged to give due weight to all relevant factors drawn to their attention.

F : OTHER INVESTORS Investing /Divesting decision


SEC & ICASL

Code Reference

Level of Compliance

Individual shareholders

F.1. Individual investors are encouraged to carry out adequate analysis or seek independent advice when making investing and divesting decisions.

The Company places great emphasis on releasing its Financial Statements on a timely manner so as to ensure that shareholders have access to information on which they could make informed decisions.

Shareholder Voting


SEC & ICASL

Code Reference

Level of Compliance

Individual shareholder voting

F.2 All shareholders are encouraged to participate at General Meetings of the Company and a Form of Proxy accompanies each Notice providing shareholders who are unable to attend such Meeting the opportunity to cast their vote.


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G : SUSTAINABILITY REPORTING


SEC & ICASL

Code Reference

Level of Compliance

Principles of Sustainability Reporting

G.1. The Sustainability Report on Page 44 details the sustainability practices of the Company.

The following table presents the Company’s compliance with Section 7.10 of Listing Rules on Corporate Governance issued by the Colombo Stock Exchange.


SEC & ICASL

Code Reference

Level of Compliance Status of compliance

Board of Directors

7.10.1. Non Executive Directors(NEDs)

One – third of the total number of Directors subject to a minimum of two.

Complied

7.10.2 (a) Independent Directors

One – third of the Non-Executive Directors subject to a minimum of two.

Complied

7.10.2(b) Declaration of Independence

Each Non-Executive Director should submit a declaration of independence/ non-independence.

Complied

7.10.3(a) and (b) Disclosure relating to

Directors Independence

Names of Independent Directors should be disclosed in the Annual Report and the basis for determination of independence of Non-Executive Directors, if criteria for independence is not met.

Complied

7.10.3(c) A brief resume of each Director should be included in the Annual Report, including his area of expertise.

Complied

7.10.3(d) Upon appointment of a new Director a brief resume of the Director to be submitted to the Stock Exchange.

Complied

Remuneration Committee

7.10.5(a) Composition The Committee shall comprise of Non–Executive Directors, a majority of whom shall be independent.

The Chairman of the Committee shall be a Non-Executive Director.

Complied

7.10.5(b) Functions of the

Remuneration

Committee

The Committee shall recommend the remuneration payable to the Executive Directors and Chief Executive Officer or equivalent role.

Complied


64


SEC & ICASL

Code Reference

Level of Compliance Status of compliance

7.10.5 (c) Disclosure in the

Annual Report

The Annual Report should set out the names of the members of the Remuneration Committee, a statement of Remuneration Policy and the aggregate remuneration paid to Executive and Non-Executive Directors.

Complied

Audit Committee

7.10.6.(a) Composition The Committee shall comprise Non-Executive Directors a majority of who shall be independent.

The Chairman shall be a Non-Executive Director.

The Chairman or a Member should be a member of a recognized professional accounting body.

Complied

7.10.6. (b) Functions *Overseeing the preparation , presentation and adequacy of the disclosures in the financial statements in accordance with the SLAS.

*Overseeing compliance with financial reporting related regulations and requirements.

*Overseeing the processes to ensure that internal controls and risk management are adequate.

*Assessing the independence and performance of the External Auditors.

*Recommending to the Board the appointment, re- appointment and removal of the External Auditors and approving their remuneration and terms of engagement.

Complied

7.10.6.(c) Disclosure in the

Annual Report

The names of the Members of the Audit Committee should be disclosed in the Annual Report

The Audit Committee to determine the independence of Auditors and disclose the basis of such determination in the Annual Report.

Annual Report to contain a report by the Audit Committee setting out the manner of compliance in relation with their functions.

Complied


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Remuneration Committee Report

In accordance with the Rules on Corporate Governance issued by the Colombo Stock Exchange, the Remuneration Committee appointed by the Board of the Parent Company, Hemas Holdings PLC, functions as the Remuneration Committee of the Company.

At the commencement of the financial year, the Remuneration Committee comprised of the following Independent Directors of Hemas Holdings PLC

Mr. Pradipta Mohapatra – Independent Director (Chairman)

Dr. Anura Ekanayake – Independent Director

Frequency of meetings

The Committee meets at least four times a year. Additional Meetings shall be convened at the request of the Chairman or a Member of the Committee.

Remuneration Policy

The Committee has given full consideration to the principles of Good Governance as set out in the Code with reference to Directors’ remuneration. The main objectives of the Policy are to ensure that pay and benefits packages are sufficiently competitive to attract, develop and retain high calibre executives. The Committee will continue in the future to ensure that a competitive and well-balanced

package is maintained. It also seeks to align individual reward and incentives with the performance of the Group and hence, with the interests of the shareholders. When carrying out its role the Committee will consider corporate performance in environmental, social and corporate governance issues.

Role of the Committee

The scope of the Remuneration Committee shall cover the following responsibilities:-

Compensation philosophy /policies including stock options and benefits

Fixed pay (based on grading /evaluation

Performance bonus

Special schemes

Performance Management Systems

Annual Goals and Performance Targets

Performance Assessment anddevelopment plans

Executive search

Pradipta Mohapatra

Chairman

26th May 2015


66

Annual Report of the Board of DirectorsThe Board of Directors of Serendib Hotels PLC takes pleasure in presenting their Report together with the Audited Financial Statements of the Company and Consolidated Financial Statements of the Group for the year ended 31st March 2015.

Principal Activity of the Company & GroupThe Principal activity of the Company and its subsidiaries which is hoteliering remained unchanged during the year under review.

The Company owns and operates AVANI Bentota Resort & Spa at Bentota. (Formally known as “Serendib Hotel”)

Subsidiaries & AssociatesSerendib Hotels PLC is the major shareholder of Hotel Sigiriya PLC, which owns Hotel Sigiriya in Dambulla and Dolphin Hotels PLC, which owns the Club Hotel Dolphin and Miami Cottages in Waikkal. It also has a 19.9% stake in Jada Resort & Spa (Pvt) Ltd., which owns AVANI Kalutara Resort in Kalutara.

The Company’s fully owned subsidiary Serendib Leisure Management Limited. manages the above properties.

The Directors to the best of their knowledge and belief confirm that neither the Company nor its subsidiaries have been engaged in any activity that contravenes laws and regulations.

Review of Operations & Future DevelopmentsThe financial and operational performance of the Company during the year under review and future developments are discussed in the Managing Director’s Review and the Management Discussion & Analysis. These Reports together with the Audited Financial Statements reflect the state of affairs of the Company and the Group.


The Directors confirm that the Company complies with the Rules on Corporate Governance laid down by the Colombo Stock Exchange and has adopted the relevant rules on Corporate Governance issued by the Securities & Exchange Commission of Sri Lanka and the Institute of Chartered Accountants of Sri Lanka . The Corporate Governance practices of the Company are given from page 53 to 64 of the Annual Report.

Risk Management

The Company has put in place a process to identify, evaluate and manage any significant risks faced by the entity, where annual risk reviews are carried out by the Group Risk & Control Dept. The principal risks and mitigating actions are reviewed by the Audit Committee on a quarterly basis. A detailed overview of the Risk Management process is outlined in the Risk Management Report on page 50

Going Concern

The Board having considered the financial position, operating conditions, regulatory and other factors and such matters required to be addressed in

the Corporate Governance Code, have a reasonable expectation that the Company possesses adequate resources to continue its operations for the foreseeable future. For this reason, the Company continues to adopt the ‘Going Concern basis’ in preparing the Financial Statements.

Financial Statements & Auditors Report

The Financial Statements of the Company and Group as at 31st March 2015 duly signed by the Directors are given from page 78 to 127 while the Auditor’s Report on the Financial Statements is provided on page 77

Accounting Policies

The Financial Statements for the period ended 31st March 2015 have been prepared in accordance with the Sri Lanka Accounting Standards which were in effect upto that date. The Accounting Policies adopted in the preparation of these Financial Statements are given from page 84 to 95

Results

The Financial Results of the Group and Company as at the Balance Sheet date are tabulated below:-

Group Company

2015 (Rs) 2014 (Rs) 2015 (Rs) 2014 (Rs)

Revenue 1,575,998,748 1,278,215,938 418,652,920 429,356,560Gross Profit 1,227,421,256 1,006,790,777 338,322,406 352,457,176Profit Before Tax 328,738,926 236,979,182 60,900,176 59,270,883Income Tax expenses

(49,266,437) (35,272,297) (5,006,494) (10,999,570)

Profit/(loss) After Tax

279,472,489 201,706,884 55,893,682 48,271,312

Attributable to :-Equity holders of the Parent

201,355,787 151,834,662 - -

Non-Controlling Interest

78,116,702 49,872,222 - -

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Corporate Donations

Donations made by the Group and Company during the year under review amounted to Rs. 166,446/- (2014 – Rs. 153,953/-) and Rs. Nil (2014 – Rs. 8,726/-) respectively.

Directors

The Board of Directors of the Company during the financial year under review is given below:-

Mr. A N Esufally – Chairman

Mr. D T R De Silva – Managing Director

Deshamanya J C L De Mel- Independent Director

Mr. W M De F Arsakularatne - Non Executive Director

Prof. L D K B Gamage - Independent Director

Mr. M A Jafferjee - Independent Director

Mr. E J D Rajakarier - Non Executive Director

Dr. R N A Athukorala - Independent Director

Mr. S M Enderby - Non Executive Director

Mr. V H A Perera (Alternate Director to Mr. A N Esufally)

Messrs. D T R De Silva and Dr. R N A Athukorala retire by rotation in terms of Article 85 of the Articles of Association of the Company and being eligible offer themselves for re-election, with the unanimous support of the Board.

Deshamanya J C L De Mel, who reached the age of 78 years on 6th May 2015 vacates office in terms of section 210 (2) of the Companies Act No. 7 of 2007. A resolution to re-appoint Deshamanya J C L De Mel in accordance with Section 211 (1) of the Statute is given in the Notice convening the meeting. He is therefore eligible for re-appointment with the unanimous consent of the Board.

Dividends

The Directors have approved the payment of an Interim dividend of Rs. 1/- per share for the financial year 2014/15 which is payable to the shareholders by 16th June 2015 (2013/14 – Nil)

As required by Section 56(2) of the Companies Act No. 7 of 2007, the Directors have signed Certificate stating that in their opinion the Company, based on the information available, satisfies the Solvency Test immediately after the dividend distribution. A Certificate of Solvency was obtained from the Auditors of the Company in terms of the Act.

Property Plant & Equipment

The capital expenditure incurred by the Group and Company during the year amounted to Rs. 154,556,433/- (2014 – Rs. 716,909,278/-) and Rs. 51,005,350/- (2014 – Rs. 75,397,620/-) respectively.

Details of Property, Plant & Equipment and their movement during the financial year are disclosed under Note 10 to the Financial Statements.

Details of Land and Buildings held by the Company are given below;-

LocationTourist Resort, Bentota

Extent3 Acres 1 Rood 3 Perches(Leasehold land)

Stated Capital

The stated capital of the Company as at 31st March 2015 amounted to Rs. 913,121,694 (2014 – Rs. 913,121,694/-) divided into 75,514,738 (2014-75,514,738) ordinary voting and 36,011,056 (2014- 36,011,056) ordinary non -voting shares.

Events Occurring After the Reporting periodNo circumstances have arisen since the Balance Sheet date that would require adjustment to or disclosure in the Accounts other than those disclosed in Note 28 to the Financial Statements.

Statutory Payments & Compliance with Laws and regulations The Directors confirm that to the best of their knowledge, all taxes, duties and levies payable by the Company and its subsidiaries, all contributions, levies and taxes payable on behalf of and in respect of the employees of the Company and its subsidiaries as at the Balance sheet date have been paid, or where relevant, provided for in the Financial Statements.

The Company has also ensured that it has complied with the applicable laws and regulations including the Listing Rules of the Colombo Stock Exchange.

Employment

The Group adopts a non-discriminatory policy in recruitment and employment which gives full and fair consideration to persons in selection, training, development and promotions, ensuring that all decisions are based on merit.

Sustainability

The Company has taken specific steps, particularly in ensuring the conservation of the natural resources and environment while addressing material issues highlighted by its stakeholders. Every endevour is made to minimize the adverse effect on the environment to ensure sustainable continuity of our natural resources. The Company’s sustainable practices are detailed on pages 44 to 49


68

Board Committees

The following members served on the Audit & Remuneration Committees of the Board:-

Audit Committee

Prof. L D K B Gamage - Chairman/Independent Director

Mr. M A Jafferjee - Independent Director

Mr. A N Esufally - Non Executive Director

Remuneration Committee

The Remuneration Committee of the Parent Company, Hemas Holdings PLC functions as the Remuneration Committee of the Company. The names of the Members of the Committee are given below:-

Mr. Pradipta Mohapatra - Independent Director (Chairman)

Dr. Anura Ekanayake - Independent Director

Related Party Transactions Review Committee

In compliance with the Code of Best Practices on Related Party transactions issued by the Securities & Exchange Commission of Sri Lanka the Directors have appointed a Related Party Transaction Review Committee comprising the following members.

Mr. M A Jafferjee - Chairman

Prof. L D K B Gamage

Mr. A N Esufally

Mr. D T R De Silva

Remuneration & Other Benefits of Directors

Details of Directors emoluments paid during the year are disclosed in Note 32 of the Financial Statements.

Interest Register

In compliance with the requirements of the Companies Act No. 7 of 2007, an Interest Register was maintained by the Company during the accounting period ended 31st March 2015.

Directors' Interest in Contract

In terms of section 192 (2) of the Companies Act, the Directors' have declared their interests in contracts in the Company and have refrained from voting on matters in which they were materially interested. Directors' Interest in contracts with the Company is disclosed on page 70 of the Annual Report.

Directors’ Interest in Shares

In compliance with Section 200 of the Companies Act, the Directors have disclosed their relevant interest in shares of the Company.

The shareholdings of the Directors during the financial year were as follows:

2015 2014

31.03.15 01.04.14 31.03.14

Mr. A. N. Esufally 16,565 16,565 16,565Deshamanya J. C. L. De Mel 601,925 601,925 601,925

Annual Report of the Board of Directors

Mr. W. M. De F. Arsakularatne - - Prof. L. D. B. K Gamage - - -Mr. E. J. D. Rajakarier - - -Dr. R. N. A. Athukorala - - -Mr. M. A. Jafferjee - - -Mr. D. T. R. De Silva 7,681 7,681 7,681Mr. S. M. Enderby - - -

Related Party Transactions

There were no recurrent or non-recurrent transactions carried out by the Company with related parties during the year under review that is required to be disclosed in terms of the Code of Best Practice on Related Party Transactions.

Company Secretaries

Messrs. Hemas Corporate Services (Pvt) Ltd. of Hemas House, No. 75, Braybrooke Place, Colombo 02 functions as the Secretaries to the Company

Registrars

Messrs. SSP Corporate Services (Pvt) Ltd. of No.101, Inner Flower Road, Colombo 03, function as the Registrars of the Company.

Internal Control

The Board has reviewed the internal controls covering financial, operational and compliance controls and risk management and have obtained reasonable assurance of its effectiveness.

Shareholders

The Company has made all endeavours to ensure equitable treatment to all its Shareholders.

Auditors

During the year under review Messrs Ernst & Young, Chartered Accountants served as the External Auditors of the Company. The Audit Fees payable and fees paid for other services rendered are as follows;

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Audit Fees - Rs. 768,822 /- (2014 – Rs. 699,160/-)

Fees for non –audit services - Rs. 206,346/-(2014 – Rs. 174,440/-)

The Directors have confirmed that to the best of their knowledge the Auditors have had no interest in or relationship with the Company or its subsidiaries other than that of External Auditors.

The Auditors have confirmed that they are independent in accordance with the Code of Ethics of the Institute of Chartered Accountants of Sri Lanka.

Messrs. Ernst & Young have expressed their willingness to continue in office. A resolution to re-appoint them and to authorize the Directors to determine their remuneration will be proposed at the forthcoming Annual General Meeting.

By Order of the Board of

Serendib Hotels PLC

A. N. Esufally D T R De SilvaChairman Managing Director

Hemas Corporate Services (Pvt) Ltd.Secretaries26th May 2015


70

Directors' Interest in Contracts with the CompanyRelated Party disclosures as required by the Sri Lanka Accounting Standards No. 24 on Related Party Disclosures is detailed in Note 31 to the Financial Statements. In addition, the Company carried out transactions in the ordinary course of business with entities where the Directors of the Company are Directors of such entities.

Company Directors/s Nature of Transaction Value 2014/15 Value 2013/14

Dolphin Hotels PLC A N Esufally

W M De F Arsakularatne

D T R De Silva

Finance charges payable

Expenses incurred on behalf of the company

Settlement of dues from related parties

Settlement of dues to related parties

Expenses incurred on behalf of others

Finance charges paid

Loan capital paid/granted

-

21,992,158

(19,918,384)

42,143

(2,956,704)

-

-

(857,143)

6,897,815

(6,729,571)

97,188

(783,710)

713,710

-

Hotel Sigiriya PLC A N Esufally


D T R De Silva

Finance charges payable





-

862,015

(1,231,761)

5,922

(5,922)

-

1,437,118

(1,301,687)

190,654

(190,654)

Serendib Leisure Management Ltd.

A N Esufally

D T R De Silva

E J D Rajakarier





4,950,854

(873,629)

48,963,295

(52,775,289)

4,042,003

(3,477,962)

40,270,507

(46,161,573)

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Jada Resort & Spa (Pvt) Ltd. A N Esufally

E J D Rajakarier





2,537,479

(3,292,697)

(408,234)

(881,720)

8,043,389 (7,771,173)

(224,491)

(673,145)

Peace Haven Resorts Ltd. A N Esufally Expenses incurred on behalf of the company

Settlement of Dues from Related Parties



921,761

-

-

-

434,592

(862,360)

355,092

(355,092)

Diethelm Travels Lanka (Pvt) Ltd.

A N Esufally




6,823,278

(6,101,984)

5,079,755

(4,794,317)

Hemas Corporate Services (Pvt) Ltd.

W M De F Arsakularatne Settlement of dues to related parties


540,541

(540,541)

353,739

(290,253)

Hemas Holdings PLC J C L de Mel

A N Esufally

S M Enderby





25,853,221

(25,833,102)

1,110,170

(2,909,475)

6,685,286

(30,453,603)

6,479,721

(7,254,067)


72

Composition

The Audit Committee appointed by the Board comprises two Independent Directors, namely Prof. Lalith Gamage (Chairman), Mr. Murtaza Jafferjee and a Non-Executive Director, Mr. Abbas Esufally.

The Managing Director of the Company, Director Finance of the Managing Agent and the Head of Risk & Control of the Hemas Group attend Meetings by invitation. The Company Secretary serves as the Secretary to the Committee.

The activities and views of the Committee have been communicated to the Board through verbal briefings and by tabling the Minutes of the Committee Meetings.

As permitted by the Listing Rules of the Colombo Stock Exchange, the Committee also functions as the Audit Committee for its quoted subsidiaries Dolphin Hotels PLC & Hotel Sigiriya PLC.

Role of the Committee

The Audit Committee operates within the Terms of Reference outlined in Its Charter and assists the Board in fulfilling their oversight responsibilities in the following areas;

(i) quality and integrity of the Company’s Financial Statements and financial reporting process, including the preparation, presentation and adequacy of disclosures in the Financial Statements in accordance with the Sri Lanka Accounting Standards;

(ii) system of internal accounting and financial control of the Company;

(iii) compliance with legal and statutory requirements including financial reporting requirements, disclosure requirements of the

Companies Act and other relevant financial reporting related regulations and requirements;

(iv) performance of internal audit functions including the process to ensure that the internal controls and risk management of Company are adequate to meet the requirements of the Sri Lanka Auditing Standards.

(v) assess the independence and performance of the External Auditors of the Company and make recommendations to the Board pertaining to the appointment, re-appointment or removal of External Auditors and their remuneration and approve terms of engagement of the External Auditors.

Main activities carried out during the year

The Audit Committee met four times during the year ended 31st March 2015 and carried out the following activities;

• ReviewedanddiscussedtheUn-audited Quarterly Financial Statements with the Management prior to publication.

• ReviewedanddiscussedtheAudited Financial Statements with both the Management and External Auditors prior to publication

• DiscussedtheManagementLetterissued by the External Auditors for the year 2014/15 along with the management responses, and monitored follow up action.

• ApprovedtheInternalAuditPlanand monitored the performance of the Internal Auditors

• Reviewedanddiscussedwiththe Internal Auditors, the Internal Audit reports and monitored follow-up action by the Management.

Report of the Audit Committee

• ReviewedtheRiskprofileoftheGroup together with the remedial measures taken to manage them.

• ReviewedtheReportsonstatutoryand regulatory compliance submitted by the Management.

Internal Audit

The Internal Audit function of the Company is carried out by Messrs. BDO Burah Hathy, Chartered Accountants under the overarching control of the Hemas Group Risk & Control Division. Internal Audit independently reviews the risks and control processes operated by management. It carries out independent audits in accordance with an Internal Audit Plan which is approved by the Audit Committee before the commencement of the financial year.

The Internal Audit Report which includes recommendations to improve internal controls together with agreed management action plans to resolve the issues, is presented to the Audit Committee for review. The Group Internal Audit follows up on the implementation of recommendations and reports progress to the Audit Committee.

External Audit

The External Audit function of the Company is carried out by Messrs Ernst & Young, Chartered Accountants. The External Auditors Letter of Engagement including the scope of the Audit is discussed with the External Auditors and the Management prior to commencement of the Audit.

The 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. Confirmation has been obtained from the external Auditors of their compliance with the independence guidance given in the Code of Ethics of

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the Institute of Chartered Accountants of Sri Lanka.

Having reviewed the effectiveness of the external audit, the Committee recommended to the Board that Messrs Ernst & Young, Chartered Accountants be re-appointed External Auditors of the Company for the year ending 31st March 2016, subject to approval by the shareholders at the forthcoming Annual General Meeting.

Prof. L. D. K. B. Gamage

Chairman – Audit Committee

26th May 2015

We have relentlessly pursued excellence in everything we do. It is undeniably how we have come to be a cut above the rest

Redefining excellence to give you a different experience...

Pursuing Excellence

75


76

The Statement of Directors' responsibilities is to be read in conjunction with the Report of the Auditors and is made to distinguish the respective responsibilities of the Directors and of the Auditors in relation to the Financial Statements.

The Companies Act No. 7 of 2007 requires that the Directors to prepare and circulate among shareholders Financial Statements which give a true and fair view of the state of affairs of the Company and of the Group as at the Balance Sheet date and the profit and loss of the Company and the Group for the financial year.

The Directors are required to ensure that in preparing the Financial Statements;

appropriate accounting policies are used, selected and applied in a consistent manner, and material departures, if any, have been disclosed and explained.

all applicable and relevant Accounting Standards have been followed

judgement and estimates have been made which are reasonable and prudent.

Statement of Directors’ Responsibility In Relation To Preparing Financial Statements

The Directors confirm that the companies within the Group maintain accounting records, which disclose with reasonable accuracy the financial position of the Company and the Group and that the Financial Statements have been prepared in accordance with the Companies Act No. 7 of 2007, Sri Lanka Accounting & Standards and have provided the information required by or otherwise complied with the Rules of the Colombo Stock Exchange.

The Directors having reviewed the Group’s future financial projections cash flows and current performance are satisfied that the Company has adequate resources to continue its operations in the foreseeable future. The Directors have thus adopted a ‘Going concern basis’ in preparing the Financial Statements.

The Directors have also taken reasonable steps to safeguard the assets of the Company and of the Group and to establish proper systems of internal control with a view to detect and prevent any irregularities.

The Directors are of the view that they have discharged their responsibilities as set out in this Statement.

Further as required by Section 56(2) of the Companies Act No. 7 of 2007, the Directors have confirmed that the Company satisfies the Solvency Test immediately after the distribution in accordance with Section 57 of the said Act and have obtained a Certificate from the Auditors prior to dispatching the Interim dividend of Rs. 1/- per share.

Compliance Report

The Directors confirm that to the best of their knowledge, all statutory payments relating to employees and the Government that were due in respect of the Company and its subsidiaries as at the Balance Sheet date have been paid or where relevant provided for the in Financial statements.

By order of the Board ofSerendib Hotels PLC

Hemas Corporate Services (Pvt) Ltd.Secretaries

26th May 2015

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Independent Auditor’s Report

TO THE SHAREHOLDERS OF SERENDIB HOTELS PLC

Report on the Financial Statements

We have audited the accompanying financial statements of Serendib Hotels PLC, (“the Company”), and the consolidated financial statements of the Company and its subsidiaries (“Group”), which comprise the statement of financial position as at 31 March 2015 and the statement of profit or loss and comprehensive income, statement of changes in equity and, cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Board’s Responsibility for the Financial Statements

The Board of Directors (“Board”) is responsible for the preparation of these financial statements that give a true and fair view in accordance with Sri Lanka Accounting Standards and for such internal control as Board determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our 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 comply with ethical requirements and plan and perform the

for the year then ended in accordance with Sri Lanka Accounting Standards.

Report on Other Legal and Regulatory Requirements

As required by section 163 (2) of the Companies Act No. 07 of 2007, we state the following:

a) The basis of opinion, scope and limitations of the audit are as stated above.

b) In our opinion:

• we have obtained all the information and explanations that were required for the audit and, as far as appears from our examination, proper accounting records have been kept by the Company,

• the financial statements of the Company give a true and fair view of its financial position as at March 31, 2015, and of its financial performance and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards, and

• the financial statements of the Company and the Group comply with the requirements of sections 151 and 153 of the Companies Act No. 07 of 2007.

26th May 2015Colombo

audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Board, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Group as at 31 March 2015, and of its financial performance and cash flows


78

Statement of Financial Position

As at 31 March Group Company

ASSETS Note 2015 2014 2015 2014

Rs. Rs. Rs. Rs.

Non-Current AssetsProperty, Plant and Equipment 10 2,865,295,449 2,863,884,475 869,298,526 864,145,570 Leasehold Right 11 32,957,841 34,788,830 30,630,555 32,332,251 Intangible Assets 12 24,926,214 25,540,417 696,068 1,064,708 Investments in Subsidiaries 13 - - 260,497,335 260,497,335 Investment in an Associate 14 383,560,619 380,302,491 360,623,100 360,623,100 Other Financial Assets 15 12,000,010 12,000,010 4,000,010 4,000,010 Deferred Tax Assets 8 935,082 686,672 - -

3,319,675,215 3,317,202,896 1,525,745,594 1,522,662,974

Current AssetsInventories 16 18,226,834 21,081,306 5,934,191 6,802,070 Trade and Other Receivables 17 229,999,403 239,377,875 57,877,399 60,482,257 Taxation Recoverables 6,254,695 8,057,276 1,756,657 845,888 Other Financial Assets 15 46,488,169 227,663,420 20,119 5,963,420 Cash and Cash Equivalents 18 296,738,469 336,020,108 92,187,878 93,284,663

597,707,570 832,199,984 157,776,242 167,378,299 Total Assets 3,917,382,785 4,149,402,879 1,683,521,838 1,690,041,272

EQUITY AND LIABILITIESEquityStated Capital 19 913,121,694 913,121,694 913,121,694 913,121,694 Other Component of Equity 20 247,373,131 137,121,015 56,846,837 7,660,047 Other Revenue Reserve 20 19,940,000 19,940,000 14,500,000 14,500,000 Retained Earnings 1,058,417,004 856,125,795 285,489,010 227,760,605 Equity Attributable to Equity Holders of the Parent

2,238,851,829 1,926,308,504 1,269,957,541 1,163,042,346

Non Controlling Interest 599,601,992 498,445,996 - - Total Equity 2,838,453,821 2,424,754,501 1,269,957,541 1,163,042,346

Non-Current Liabilities Interest Bearing Loans and Borrowings 21 323,398,206 959,619,950 132,339,154 273,811,097 Deferred Tax Liabilities 8 86,987,145 78,179,685 9,798,922 5,433,076 Employee Benefit Liability 22 49,576,349 38,558,306 14,078,975 11,633,780

459,961,700 1,076,357,941 156,217,051 290,877,953

Current Liabilities Trade and Other Payables 24 361,022,404 461,957,134 141,456,656 143,985,265 Dividends Payable 26 4,135,204 3,837,247 1,385,354 1,385,354 Income Tax Liabilities 10,140,655 1,693,672 - - Non-interest Bearing Loans and Borrowings 25 657,000 657,000 - - Interest Bearing Loans and Borrowings 21 243,012,001 180,145,385 114,505,236 90,750,354

618,967,264 648,290,438 257,347,246 236,120,972 Total Equity and Liabilities 3,917,382,785 4,149,402,879 1,683,521,838 1,690,041,272

These Financial Statements are in compliance with the requirements of the Companies Act No.07 of 2007.

Dayan GunasekeraDirector Finance

The Board of Directors is responsible for the preparation and presentation of these Financial Statements. Signed for and on behalf of the Board by.

A.N. Esufally D.T.R. De Silva Chairman Managing Director

The accounting policies and notes on page 84 through 127 form an Integral Part of the Financial

Pursuing Excellence

79

Statement of Profit or Loss

Year ended 31 March Group Company

Note 2015 2014 2015 2014

Rs. Rs. Rs. Rs.

Revenue 3 1,575,998,748 1,278,215,938 418,652,920 429,356,560 Cost of Sales (348,577,492) (271,425,161) (80,330,514) (76,899,384)Gross Profit 1,227,421,256 1,006,790,777 338,322,406 352,457,176 Dividend Income 4 - - 18,904,975 3,361,163 Other Operating Income and Gains 5 1,717,858 2,867,181 360,434 2,165,023 Sales and Marketing Expenses (48,949,778) (50,145,973) (20,834,406) (21,286,669)Administrative Expenses (794,449,238) (744,057,218) (256,436,216) (265,137,928)Operating Profit 385,740,098 215,454,768 80,317,193 71,558,765 Finance Cost 6 (36,157,893) (49,689,849) (13,320,229) (17,334,517)Finance Income 6 21,991,891 49,535,968 1,987,057 2,973,038 Exchange Gain/(Loss) (48,956,955) 13,725,659 (8,083,845) 2,073,597 Share of Results of Associate 14 6,121,785 7,952,637 - - Profit Before Tax 7 328,738,926 236,979,182 60,900,176 59,270,883 Income Tax Expense 8 (49,266,437) (35,272,297) (5,006,494) (10,999,570)Profit for the Year 279,472,489 201,706,884 55,893,682 48,271,312

Attributable to: Equity Holders of the Parent 201,355,787 151,834,662

Non Controlling Interest 78,116,702 49,872,222 279,472,489 201,706,884

Earnings Per Share - Basic 9 1.81 1.36 0.50 0.43



80

Year ended 31 March Group Company

2015 2014 2015 2014

Rs. Rs. Rs. Rs.

Profit for the Period 279,472,489 201,706,884 55,893,682 48,271,312 Other Comprehensive Income Other Comprehensive Income to be reclassified to profit or loss in subsequent periodsNet Movement on Cash Flow Hedge 150,160,805 (70,731,506) 51,557,487 (33,662,561)Net Other Comprehensive Income to be reclassified to profit or loss in subsequent periods 150,160,805 (70,731,506) 51,557,487 (33,662,561)Other Comprehensive Income not to be reclassified to profit or loss in subsequent periodsRevaluation of Land and Buildings - 31,895,989 - - Deferred Taxation Attributable to Revaluation of Land and Buildings - (607,888) - - Defined Benefit Obligation Acturial Gain/(Loss) (6,035,253) (3,473,257) (976,421) (1,417,451)Deferred Taxation Attributable to Acturial (Gain)/Loss 724,230 228,610 117,171 128,474 Share of Acturial Gain/(Loss) Results of Associate - (258,712) - - Net Other Comprehensive Income not to be reclassified to profit or loss in subsequent periods (5,311,023) 27,784,742 (859,250) (1,288,977)Other Comprehensive Income for the Year, Net of Tax 144,849,782 (42,946,764) 50,698,237 (34,951,538)Total Comprehensive Income for the Period, Net of Tax 424,322,271 158,760,120 106,591,918 13,319,774

Attributable to:Equity Holders of the Parent 312,304,253 111,910,055 Non Controlling Interest 112,018,018 46,850,064

424,322,271 158,760,120


Statement of Comprehensive Income

Pursuing Excellence

81

Att

ribu

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e to

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ity

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ders

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aren

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acc

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pag

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thr

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127

form

an

In

tegr

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art

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inan

cial

Statement of Changes in Equity


82

Att

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Equ

ity

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ders

of t

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pril

2013

913

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Net

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-

-

55,

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55,

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77

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323

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31

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015

913

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4,92

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1,91

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1,2

69,9

57,5

41

The

acc

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tin

g po

licie

s an

d n

otes

on

pag

e 84

thr

ough

127

form

an

In

tegr

al P

art

of t

he F

inan

cial

Statement of Changes in Equity

Pursuing Excellence

83

Statement of Cash Flows

Year ended 31 March Group CompanyNote 2015 2014 2015 2014

Cash Flows From/(Used in) Operating Activities

Rs. Rs. Rs. Rs.

Net Profit/(loss) Before Income Tax 328,738,926 236,979,182 60,900,176 59,270,883 Adjustments forDepreciation of PPE 10 146,586,100 117,148,132 45,664,369 47,669,981 Amortization 11 & 12 3,328,379 3,101,561 2,070,336 2,070,337 Foreign Currency (Gains)/Losses 5,330,354 13,657,637 195,298 11,462,643 Dividend Income - - (18,904,975) (3,361,163)Finance Income 6 (21,991,891) (49,535,968) (1,987,057) (2,973,038)Finance Costs 6 36,157,893 49,689,849 13,320,229 17,334,517 Share of Results of Associate 14 (6,121,785) (7,952,637) - - Loss/(Gains) on Disposal of Property, Plant and Equipment (451,975) (1,223,610) (48,684) (1,125,975)Writing Back of Grant Received 23 - (1,214,932) - - Write Back of Non Interest Bearing Borrowings - (550,000) - - Movements in Provisions, Pensions and Government Grants 9,833,869 6,598,268 2,559,602 1,681,493

501,409,870 366,697,483 103,769,294 132,029,678 Working Capital Adjustments:(Increase)/Decrease in Inventories 16 2,854,472 (4,063,890) 867,879 (1,341,755)(Increase)/Decrease in Trade and Other Receivables 17 9,378,472 (31,990,611) 8,548,159 4,937,652 Increase/(Decrease) in Trade and Other Payables 24 (100,636,773) 187,337,072 (2,528,609) 46,359,032 Cash Generated from Operations 413,006,041 517,980,054 110,656,723 181,984,607 Repayment of Project Creditors (7,041,394) - (289,297)Finance Cost Paid 6 (36,157,893) (49,689,849) (13,320,229) (17,334,517)Defined Benefit Plan Costs Paid 22 (4,851,079) (2,663,825) (1,090,828) (762,115)Income Tax Paid (26,374,036) (49,631,488) (1,110,968) (1,184,483)Net Cash Flows from Operating Activities 345,623,033 408,953,498 95,134,699 162,414,194 Investing ActivitiesAcquisition of Property, Plant and Equipment and Intangibles 10 & 12 (154,556,433) (716,909,278) (51,005,350) (75,397,620)Proceeds from Disposal of Property, Plant and Equipment 7,011,335 11,792,381 236,706 8,002,564 Acquisition of Investment 12 (883,185) - - - Loans Granted to Related Parties 151,675,251 (878,203,000) (25,000,000) (5,000,000)Loans Settled by Related Parties 29,500,000 1,398,203,000 25,000,000 22,500,000 Interest Received 6 21,991,891 49,535,968 1,987,057 2,973,038 Dividend Received - - 18,904,975 3,361,163 Net Cash Flows Used in Investing Activities 54,738,859 (135,580,929) (29,876,612) (43,560,855)Financing ActivitiesProceeds from Interest Bearing Loans and Borrowings 21 - 400,168,567 - Repayment of Interest Bearing Loans and Borrowings 21 (500,359,495) (517,200,702) (90,109,754) (83,405,644)Dividend Paid (11,118,857) - - - Net Cash Flows From Financing Activities (511,478,352) (117,032,135) (90,109,754) (83,405,644)Net Effect of Exchange Rate Changes on Cash and Cash EquivalentsNet Increase/(Decrease) in Cash and Cash Equivalents (111,116,461) 156,340,434 (24,851,667) 35,447,695 Cash and Cash Equivalents at the Beginning of the Year 18 317,585,064 161,244,630 93,284,663 57,836,968 Cash and Cash Equivalents at the End of the Year 18 206,468,603 317,585,064 68,432,996 93,284,663



84

1. CORPORATE INFORMATION1.1 GeneralThe Company is a limited liability Company incorporated and domiciled in Sri Lanka. The registered office is located at Level 5, Hemas House, No 75, Braybrooke Place, Colombo 2.

1.2 Consolidated Financial StatementsThe Consolidated financial statements of the Company for the year ended 31 March 2015 comprise Serendib Hotels PLC (“Company”) and all its Subsidiaries and Associates whose accounts have been consolidated therein (The “Group”).

1.3 Principal Activities and Nature of Operations The principal activity of the Group/Company is the operation of hotels.

1.4 Parent Entity and Ultimate Parent EntityThe Company’s ultimate parent undertaking and controlling party is Hemas Holdings PLC, which is incorporated in Sri Lanka.

1.5 Date of Authorisation for IssueThe financial statements of the Company for the year ended 31 March 2015 were authorized for issue in accordance with a resolution of the directors on 26 May 2015.

2. GENERAL POLICIES2.1 Basis of Preparation The financial statements of the Company and its subsidiary have been prepared in accordance with Sri Lanka Accounting Standards, comprising SLFRSs and LKASs (here after “SLFRS”) as issued by the Institute of Chartered Accountants of Sri Lanka.

The financial statements of the Group have been prepared on an accrual basis and under the historical cost conversion unless otherwise stated. The financial statements are presented in

Sri Lankan Rupees. The preparation and presentation of these Financial Statements are in compliance with the Companies Act No. 07 of 2007.

2.1.1 Comparative InformationThe accounting policies have been consistently applied by the Company during the year under review with those used in the previous year.

2.1.2 Going ConcernThe Directors have made an assessment of the Company’s ability to continue as a going concern and they do not intend either to liquidate or to cease trading.

2.2 Basis of ConsolidationThe consolidated financial statements comprise the financial statement of the Group and its subsidiaries as at 31 March 2015. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has :

• Powerovertheinvestee(i.e.existingrights that give it the current ability to direct he relevant activities of the investee)

• Exposure,orrights,tovariablereturns from its involvement with the investee

• Theabilitytouseitspowerovertheinvestee to affect its returns

Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

• Thecontractualarrangementwiththe other vote holders of the investee

Rights arising from other contractual arrangements

• TheGroup’svotingrightsandpotential voting rights

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of Other Comprehensive Income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity while any resultant gain or loss recognized in profit or loss. Any investment retained is recognized at fair value.

Notes to The Financial StatementsYear ended 31 March 2015

Pursuing Excellence

85

(a) Investment in AssociateThe Group’ investments is Associates is accounted for using the equity method. An associate is an entity in which the Group has significant influence.

Under the equity method, the investment is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the Group’s share of net assets of Associate since acquisition date.

Goodwill relating to the associate is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment.

The Statement of profit or loss reflects the Group’s share of results of operations of the Associate. When there has been a change recognised directly in the equity of the associate, the Group recognises its share of any changes, when applicable, in the statement of changes in equity. Unrealised gains and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associate.

The Group’s share of the profit or loss of an associate is shown on the face of the Statement of profit or loss and represents profit or loss after tax and non-controlling interests in the subsidiaries of the associate.

The financial statements of the Associate are prepared for the same reporting period as the Group. When necessary, adjustments are made to bring the accounting policies in line with those of the Group.

After application of the equity method, the Group determines whether it is necessary to recognise an impairment loss on its investment in its associate. The Group determines at each reporting date whether there is any objective evidence that the investment in the

associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in ‘share of losses of an associate’ in the Statement of profit or loss. Upon loss of significant influence over the associate, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the retaining investment and proceeds from disposal is recognised in profit or loss.

(b) Business Combination and GoodwillBusiness combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at the acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each business combination, the Group elects whether to measure the non-controlling interest in the acquiree at fair value or at the proportionate share of the acquiree at the fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred and included in administrative expenses.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.If the business combination is achieved in stages, the previously held equity interest is remeasured at its acquisition date fair value and any resulting gain or loss is recognized in Statement of profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognized at fair value at the acquisition date. Contingent consideration which is deemed to be an asset or liability that is a financial instrument and within the scope of LKAS 39 Financial Instruments: Recognition and measurement, is measured at fair value with changes in fair value either in profit or loss or as a change to other comprehensive income (OCI). If the contingent consideration is not within the scope of LKAS 39, it is measured in accordance with the appropriate SLFRS. Contingent consideration that is classified as equity is not re-measured and subsequent settlement is measured at fair value with change in fair value either in the Statement of profit or loss or as a change to the other comprehensive income (OCI).

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interest over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the gain is recognised in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash generating units that are expected to benefit from the combination transferred.

Where goodwill has been allocated to a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal


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of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.

2.3 Summary of Significant Accounting Policies2.3.1 Revenue RecognitionRevenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue and associated costs or to be incurred can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable net of trade discounts value added taxes.

The following specific recognition criteria must also be met before revenue is recognised:

(a) Apartment, Food and Beverage Sales Apartment revenue is recognized on the rooms occupied on a daily basis, and food and beverage are accounted for at the time of sale.

(b) Rendering of ServicesRevenue from rendering of services is recognised in the accounting period in which the services are rendered or performed.

(c) Interest IncomeFor all financial instruments measured at amortised cost and interest bearing financial assets classified as available for sale, interest income or expense is recorded using the effective interest rate (EIR), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income is included in finance income in the Statement of profit or loss.

(d) DividendsIncome is recognised when the Group/Company’s right to receive the payment is established.

(e) Rental IncomeRental income is recognised on an accrual basis.

(f ) OthersOther income is recognised on an accrual basis.

2.3.2 Foreign CurrencyThe Group’s/Company’s consolidated financial statements are presented in Sri Lankan Rupees, which is also the parent Company’ s functional currency. For each entity the Group determines the functional currency and items included in the financial statements of each entity are measured using that functional currency. The Group uses the direct method of consolidation and has elected to recycle the gain or loss arises from this method.

(a) Transactions and Balances.Transactions in foreign currency are initially recorded by the Group entity's respective functional currency rates prevailing at the date of the transaction.

Monetary assets and liabilities denominated in foreign currency are translated at the functional currency spot rate of exchange ruling at the reporting date.

Differences arising on settlement or transaction of monetary items are recognized in Profit or Loss with the exception of all monetary items that forms part of a net investment in a foreign operation. These are recognised in other comprehensive income until the disposal of the net investment, at which time they are reclassified to profit or loss. Tax charges and credits attributable to exchange differences on those monetary items are also recorded in other comprehensive income.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined.

The gain or loss arising on translation of non-monetary items measured fair value is treated in line with the recognition of gain or loss on change in fair value in the item (translation differences on items whose gain or loss is recognised in other comprehensive income or profit or loss is also recognised in other comprehensive income or profit or loss respectively).

2.3.3 Taxation(a) Current Income TaxesCurrent income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the Commissioner General of Inland Revenue. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date in the country where the Group operates and generates taxable income. Current income tax relating to items recognized directly in equity is recognized in equity and not in the Statement of profit or loss.

The provision for income tax is based on the elements of income and expenditure as reported in the financial statements and computed in accordance with the provisions of the Inland Revenue Act. No 10 of 2006 and amendments thereto.

(b) Deferred TaxationDeferred income tax is provided, using the liability method, on all temporary differences at the reporting date between the tax bases of assets and

Notes to the Financial Statements Year ended 31 March 2015

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liabilities and their carrying amounts for financial reporting purposes.Deferred income tax liabilities are recognised for all taxable temporary differences except;

i) Where the deferred income tax liability arises from the initial recognition of goodwill, an asset or a liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

ii) In respect of taxable temporary differences associated with investments in subsidiaries, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax credits and unused tax losses can be utilized except:i). Where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

ii). In respect of deductible temporary differences associated with investments in subsidiaries, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences

can be utilized.The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Unrecognised deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax assets to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted as at the reporting date.

Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same taxable entity and the same taxation authority.

(c) Tax on Dividend Income Tax on dividend income from subsidiaries is recognized as an expense in the Consolidated Statement of profit or loss.

2.3.4 Property, Plant and Equipment Plant and machineries, furniture fittings and equipment, cutlery cookery glassware and silverware, motor vehicles, soil erosion prevention and

landscaping are stated at cost, net of accumulated depreciation and/or accumulated impairment losses, if any. Such costs includes the cost of replacing component parts of the property, plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of property, plant and equipment are required to be replaced at intervals, the Company derecognises the replaced part, and recognizes the new part with its own associated useful life and depreciation. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in the Statement of profit or loss as incurred.

Where items of freehold land, buildings on leasehold land, land improvements and buildings on freehold land are subsequently revalued, the entire class of such assets is revalued. Any revaluation surplus is recognised in other comprehensive income and accumulated in equity in the asset revaluation reserve, except to the extent that it reverses a revaluation decrease of the same asset previously recognised in the Statement of profit or loss, in which case the increase is recognised in the Statement of profit or loss. A revaluation deficit is recognised in the Statement of profit or loss, except to the extent that it offsets an existing surplus on the same asset recognised in the asset revaluation reserve.

Accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. Upon disposal, any revaluation reserve relating to the particular asset being sold is transferred to retained earnings.Depreciation is calculated on straight line basis over the estimated useful lives


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of the assets as follows:

2015 2014

Buildings (Old) on Leasehold Land

Over the Remaining Lease Period

Over the Remaining Lease Period

Buildings (New) on Leasehold Land

60 Years 60 Years

Buildings on Freehold Land

60 Years 60 Years

Furniture, Fittings and Equipment

5 -10 Years 5 -10 Years

Motor Vehicles 5 -10 Years 5 -10 YearsPlant and Machinery

5 -10 Years 5 -10 Years

Soil Erosion Prevention

10 Years 10 Years

Landscaping Over 60 Years

Over 60 Years

An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of profit or loss when the asset is derecognised.

a) Leasehold Right/ Prepaid Lease RentalPrepaid lease rentals paid to acquire land use right are amortised over the lease term. Details of the lease rentals paid in advance are given in note 11 to the financial statements.

b) Operating LeasesOperating lease payments are recognized as an operating expense in the Statement of profit or loss on straight line basis over the lease term.

2.3.5 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 an entity incurs in connection with the borrowing of funds.

2.3.6 Intangible AssetsIntangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is reflected in the Statement of profit or loss in the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite lives are amortised over their useful economic lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The

amortisation expense on intangible assets with finite lives is recognised in the Statement of profit or loss in the expense category consistent with the function of the intangible assets.

Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of profit or loss when the asset is derecognised.

2.3.7 InventoriesInventories are valued at the lower of cost and net realisable value, after making due allowances for obsolete and slow moving items.

The cost incurred in bringing inventories to its present location and conditions are accounted using the following cost formulae:-

Foods and Beverages Stocks - At actual cost on weighted average basis.Maintenance and Others - At actual cost on weighted average basis.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.


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2.3.8 Financial Instruments- Initial Recognition and Subsequent Measurementi) Financial AssetsInitial Recognition and Measurement Financial 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 and available-for-sale financial assets, as appropriate and determine the classification of its financial assets at initial recognition.

All financial assets are recognised initially at fair value plus transaction costs of assets, in the case of investments not at fair value through profit or loss.

The financial assets include cash and short-term deposits, trade and other receivables, other financial assets.

Subsequent MeasurementThe subsequent measurement of financial assets depends on their classification as follows:

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 Statement of profit or loss. The losses arising from impairment are recognised in the Statement of profit or loss in finance cost.

Available-For-Sale Financial InvestmentsAvailable-for-sale financial investments include equity and debt securities. Equity investments classified as available for- sale are those, which are neither classified as held for trading nor designated at fair value through profit or loss. Debt securities in this category are those which are intended to be held for an indefinite period of time and which may be sold in response to needs for liquidity or in response to changes in the market conditions.

After initial measurement, available-for-sale financial investments are subsequently measured at fair value with unrealized gains or losses recognised as other comprehensive income in the available-for-sale reserve until the investment is derecognised, at which time the cumulative gain or loss is recognised in other operating income, or determined to be impaired, at which time the cumulative loss is reclassified to the Statement of profit or loss in finance costs and removed from the available-for-sale reserve. Interest income on available-for-sale debt securities is calculated using the effective interest method and is recognised in profit or loss.

The Group evaluates its available-for-sale financial assets to determine whether the ability and intention to sell them in the near term is still appropriate. When the Group is unable to trade these financial assets due to inactive markets and management’s intention to do so significantly changes in the foreseeable future, the Group may elect to reclassify these financial assets in rare circumstances. Reclassification to loans and receivables is permitted when the financial assets meet the definition of loans and receivables and the Group has the intent and ability to hold these assets for the foreseeable future or until maturity. Reclassification to the held-to-maturity category is

permitted only when the entity has the ability and intention to hold the financial asset accordingly.

For a financial assets reclassified out of the available for sale category, any previous gain or loss on that asset that has been recognized in equity is amortized to profit or loss over the remaining life of the investment using the EIR. Any difference between the new amortized cost and the expected cash flows is also amortized over the remaining life of the asset using the EIR. If the assets are subsequently determined to be impaired, then the amount recorded in equity is reclassified to the Statement of profit or loss.

DerecognitionA financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised when,

i) The rights to receive cash flows from the asset have expiredii) The Group has 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- The Group has transferred substantially all the risks and rewards of the asset, or- The Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has 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’s continuing involvement in it.


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In that case, the Group also recognizes an associated liability. The transferred assets and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

ii) Impairment of Financial AssetsThe Group assesses at each reporting date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated.

Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganization and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

Financial Assets Carried at Amortised CostFor financial assets carried at amortised cost, the Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or

collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the Statement of profit or loss. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of finance income in the Statement of profit or loss. Loans together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Group. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment

loss is increased or reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is credited to finance costs in the Statement of profit or loss.

Available-For-Sale Financial InvestmentsFor available-for-sale financial investments, the Group assesses at each reporting date whether there is objective evidence that an investment or a group of investments is impaired.

In the case of equity investments classified as available-for-sale, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. Where there is evidence of impairment, the cumulative loss measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognised in the Statement of profit or loss, is removed from other comprehensive income and recognised in the Statement of profit or loss. Impairment losses on equity investments are not reversed through the Statement of profit or loss; increases in their fair value after impairments are recognised directly in other comprehensive income.

In the case of debt instruments classified as available-for-sale, impairment is assessed based on the same criteria as financial assets carried at amortised cost. However, the amount recorded for impairment is the cumulative loss measured as the difference between the amortised cost and the current fair value, less any impairment loss on that investment previously recognised in the Statement of profit or loss.

Future interest income continues to be accrued based on the reduced carrying amount of the asset, using the rate of interest used to discount the future cash


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flows for the purpose of measuring the impairment loss. The interest income is recorded as part of finance income. If, in a subsequent year, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in the Statement of profit or loss, the impairment loss is reversed through the Statement of profit or loss.

iii) Financial LiabilitiesInitial Recognition and MeasurementFinancial liabilities within the scope of LKAS 39 are classified as financial liabilities at fair value through profit or loss, loans and borrowings, other financial liabilities or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Group determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings, and other financial liabilities carried at amortised cost. This includes directly attributable transaction costs.

The Group’s financial liabilities include trade and other payables, bank overdrafts, loans and borrowings, other financial liabilities.

Subsequent MeasurementThe measurement of financial liabilities depends on their classification as follows;

Loans and Borrowings/Other Financial LiabilitiesAfter initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in the Statement of profit or loss 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 Statement of profit or loss

DerecognitionA financial liability is derecognised when the obligation under the liability is discharged or cancelled 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 derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the Statement of profit or loss.

iv) Offsetting of Financial InstrumentsFinancial assets and financial liabilities are offset and the net amount reported in the statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

v) Fair Value of Financial InstrumentsThe fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices or dealer price quotations. (bid price for long position and ask price for short positions) ,without any deduction for transaction costs.

For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques may include using recent arm’s length market transactions; reference to the

current fair value of another instrument that is substantially the same; a discounted cash flow analysis or other valuation models.

2.3.9 Impairment of Non - Financial AssetsThe Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. 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. In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators.

Impairment losses of continuing operations, including impairment on inventories, are recognised in the Statement of profit or loss in those expense categories consistent with the function of the impaired asset, except for a property previously revalued where the revaluation was taken to other comprehensive income. In this


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case, the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or cash-generating unit’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the Statement of profit or loss unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase

GoodwillGoodwill is tested for impairment annually as at 31 March and when circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than their carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods.

Intangible AssetsIntangible assets with indefinite useful lives are tested for impairment annually as at 31 March either individually or at the CGU level, as appropriate and when circumstances indicate that the carrying value may be impaired.

2.3.10 Cash and Short Term DepositsCash 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 Company statement of cash flows, cash and cash equivalents consist of cash and short-term deposits as defined above, net of outstanding bank overdrafts.

2.3.11 ProvisionsProvisions are recognised when the Group has 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 Group expects 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 Statement of profit or loss 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.

2.3.12 Retirement Benefit Liability(a) Defined Contribution Plans - Employees’ Provident Fund and Employees’ Trust FundEmployees are eligible for Employees’ Provident Fund Contributions and Employees’ Trust Fund Contributions in line with the respective statutes and regulations. The Company contributes 12% and 3% of gross emoluments of employees to Employees’ Provident Fund and Employees’ Trust Fund respectively.

(b) Defined Benefit Plans – Gratuity A defined benefit plan is post-employment benefits plan other than a defined contribution plans - Employees’ Provident Fund and Employees’ Trust Fund. The liability recognised in the Statement of Financial Position in respect of defined benefit plans is the present value of the defined benefit obligation at the reporting date. The defined benefit obligation is calculated using the ‘Projected Unit Credit method’. The present value of the defined benefit obligation is determined by discounting the estimated future cash flows using interest rates that are denominated in the currency in which the benefits will be paid, and that have terms of maturity approximating to the terms of the liability.

Provision has been made in the Financial Statements for retiring gratuities from the first year of service for all employees, in conformity with LKAS 19 R - “Employee Benefits”. Acturial gain or loss are recognised in Other Comprehensive Income (OCI) in the period which it arises.

However, according to the Payment of Gratuity Act No. 12 of 1983, the liability for payment to an employee arises only after the completion of 5 years continued service. The liability is not externally funded.

2.4 Significant Accounting Judgments, Estimates and AssumptionsThe preparation of the Group financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.


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JudgmentsIn the process of applying the company accounting policies, management has made the following judgments, which have the most significant effect on the amounts recognised in the financial statements:

Deferred Tax AssetsDeferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies.

Estimates and AssumptionsThe key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Group based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

Defined Benefit PlansThe cost of defined benefit plans-gratuity is determined using actuarial valuations. The actuarial valuation involves making assumptions about discount rates, futures salary increases and retirement age. Due to the long term nature of these plans, such estimates are subject to significant uncertainty. All assumptions are reviewed at each reporting date.

2.5 New Accounting Standards That Became Effective During The Year The following Sri Lanka Accounting Standards were issued by the Institute of Chartered Accountants of Sri Lanka and is effective for the periods commencing on or after of 1January 2014.

a) SLFRS 10 - Consolidated Financial Statements.SLFRS 10 replaces the portion of LKAS 27 (Consolidated and Separate Financial Statements) that addresses the accounting for consolidated financial statements. It also addresses the issues raised in SIC 12 (Consolidation of Special Purpose Entities).

SLFRS 10 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by SLFRS 10 will require the management to exercise significant judgment to determine which entities are controlled and therefore are required to be consolidated by a parent.

The effect of the change of new standard is disclosed in note 13 to the Consolidated Financial Statements.

b) SLFRS 12 - Disclosure of Interests in Other Entities SLFRS 12 includes all of the disclosures that were previously in LKAS 27 (Consolidated and Separate Financial Statements) related to consolidated financial statements and LKAS 28 (Investments in Associates). These disclosures relate to an entity’s interest in subsidiaries and associates.

The effect of the change of new standard is disclosed in note 13 to the Financial Statements.

c) SLFRS 13 - Fair Value MeasurementThe Group measures Non financial assets such as certain classes of Property, Plant and Equipment at fair value at each reporting date. Fair value related disclosures for non-financial assets that are measured at fair value or where fair values are disclosed are summarized under the respective notes.Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

In the principal market for the asset or liability

Or In the absence of a principal market,

in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible by the Group.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.


94

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities

Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization at the end of each reporting period.

External valuers are involved for valuation of significant assets, such as properties and significant liabilities, such as defined benefit obligations. Involvement of external valuers is decided upon annually after discussion with and approval by the Group’s Board Audit Committee wherever necessary. Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained. The Board Audit

Committee whenever necessary after discussions with the Group’s external valuers decide which valuation techniques and inputs to use for each case.

At each reporting date the Management analyses the movements in the values of assets and liabilities which are required to be re-measured or re-assessed as per the Group’s accounting policies. For this analysis, the Management verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents. The Management in conjunction with the Group’s external valuers, also compares the change in the fair value of each asset and liability with relevant external sources to determine whether the change is reasonable. This includes a discussion of the major assumptions used in the valuations.

For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

An analysis of fair values of financial instruments, Non financial assets and liabilities and further details as to how they are measured are provided in Note 33.

2.6 Effects of Sri Lanka Accounting Standards Issued But not yet Effective: The following SLFRS issued by the Institute of Chartered Accountants of Sri Lanka that have an effective date in future and have not been applied in preparing these financial Statements. Those SLFRS will have an effect on the Accounting policies currently

adopted by the Company and may have an impact on the future financial statements.

SLFRS 14 - Regulatory Deferral AccountsThe objective of this Standard is to specify the financial reporting requirements for regulatory deferral account balances that arise when an entity provides goods or services to customers at a price or rate that is subject to rate regulation.

This Standard becomes effective for annual periods beginning 01 January 2016.

SLFRS 15 - Revenue from Contracts with CustomersThe objective of this Standard is to establish the principles that an entity shall apply to report useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from a contract with a customer.


SLFRS 09 - Financial InstrumentsThis standard will replace LKAS 39, Financial Instruments, Recognition and Measurement. The improvements introduced by SLFRS 9 includes a logical model for classification and measurement, a single, forward-looking ‘Expected Loss’ impairment model and a substantially-reformed approach to hedge accounting which are detailed below.


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Phase1:Classification and Measurement

Classification determines how financial assets and financial liabilities are accounted for in the financial statements and, in particular, how they are measured on an ongoing basis. SLFRS 9 introduces a logical approach for the classification of financial assets driven by cash flow characteristics and the business model in which an asset is held. This single, principle-based approach replaces existing rule-based requirements that are complex and difficult to apply.

Phase 2:Impairment SLFRS 09 introduces a new, expected loss impairment model that will require more timely recognition of expected credit losses. Specifically, the new Standard requires entities to account for expected credit losses from when financial instruments are first recognised and it lowers the threshold for recognition of full lifetime expected losses.

Phase 3: Hedge accounting

SLFRS 9 introduces a substantially-reformed model for hedge accounting with enhanced disclosures about risk management activity. The new model represents a substantial overhaul of hedge accounting that aligns the accounting treatment with risk management activities, enabling entities to better reflect these activities in their financial statements. In addition, as a result of these changes, users of the financial statements will be provided with better information about risk management and the effect of hedge accounting on the financial statements.


The Group will adopt these standards when they become effective. Pending the completion of detailed review, the financial impact is not reasonably estimable as at the date of publication of these financial statements.


96

Group Company2015 2014 2015 2014

Rs. Rs. Rs. Rs.

3. REVENUERendering of Services (Net) 1,524,208,608 1,237,507,086 406,092,020 415,393,114Tourism Development Levy 32,193,568 12,627,242 4,218,927 4,390,538

1,556,402,176 1,250,134,328 410,310,947 419,783,653 Nation Building Tax 19,596,572 28,081,610 8,341,973 9,572,908

1,575,998,748 1,278,215,938 418,652,920 429,356,560

Group Company2015 2014 2015 2014

Rs. Rs. Rs. Rs.

4. DIVIDEND INCOMEIncome from Investments - Related Parties - - 18,904,975 3,361,163

- - 18,904,975 3,361,163

Group Company2015 2014 2015 2014

Rs. Rs. Rs. Rs.

5. OTHER OPERATING INCOME AND GAINSRental Income from - Related Parties 270,000 - 270,000 - - Others 738,000 479,999 - - Profit on Disposal of Property Plant and Equipment

451,975 1,125,975 48,684 1,125,975

Sundry Income 257,883 1,261,206 41,750 1,039,047 1,717,858 2,867,181 360,434 2,165,023

Group Company2015 2014 2015 2014

Rs. Rs. Rs. Rs.

6. FINANCE COST AND INCOME6.1 Finance Costs

Interest Expense on Overdrafts 256,189 157,287 53,221 36,396 Interest Expense on Loans and Borrowings - Related Parties

- 14,617,384 - -

Interest Expense on Loans and Borrowings - Others

35,901,704 34,915,178 13,267,008 17,298,121

36,157,893 49,689,849 13,320,229 17,334,517

Group Company2015 2014 2015 2014

Rs. Rs. Rs. Rs.

6.2 Finance IncomeInterest Income from - Related Parties 11,307,374 22,014,240 853,221 1,683,129 - Others 10,684,517 27,521,727 1,133,836 1,289,909

21,991,891 49,535,968 1,987,057 2,973,038


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Group Company2015 2014 2015 2014

Rs. Rs. Rs. Rs.

7. PROFIT BEFORE TAXStated After Charging/(Crediting)Included in Administrative Expenses Employees Benefits including the following 341,262,260 346,581,664 94,260,310 89,597,476 - Defined Benefit Plan Costs - Gratuity 11,610,556 6,598,268 2,559,602 1,681,493 - Defined Contribution Plan Costs - EPF and ETF 26,845,745 22,670,151 6,982,513 5,982,062 Depreciation & Amortisation 150,553,345 120,249,694 47,734,702 49,740,318 Loss on Disposal of Property, Plant and Equipment

- 19,125 - -

Directors' Fees and Remuneration 3,963,394 3,044,670 3,963,394 3,044,670 Auditors' Remuneration (Fees and Expenses) 1,902,140 1,816,530 816,940 699,160 Management Fees - - 26,652,474 28,521,816 Legal Fees 164,965 534,160 2,956 229,090 Donations 166,446 153,953 - 8,726

Included in Selling and Marketing ExpensesAdvertising and Sales Promotion Cost 29,179,248 25,246,818 10,722,674 11,858,742 Impairment of Debts (5,430,258) 964,122 (1,151,769) (2,288,651)Others 25,200,788 23,935,033 11,263,501 11,716,579

Group Company2015 2014 2015 2014

Rs. Rs. Rs. Rs.

8. INCOME TAX EXPENSEIncome StatementCurrent Income TaxCurrent Tax Expense on Ordinary Activities for the Year (8.1) 26,911,562 21,588,080 200,201 471,276 Under/(Over) Provision of Current Taxes in Respect of Prior Years 7,614,387 115,648 - 1,449,219 Share of Associate Company Income Tax 2,863,657 - - - Tax on Dividends 2,097,645 373,463 - - Deferred Income TaxDeferred Taxation Charge/(Reversal) (8.2.1) 9,779,186 13,195,107 4,806,293 9,079,075

49,266,437 35,272,297 5,006,494 10,999,570

Statement of Other Comprehensive IncomeDeferred Taxation Impact on Deferred Tax Liability (389,043) (4,640) - - Deferred Taxation Impact on Deferred Tax Assets (335,187) (223,970) (117,171) (128,475)

(724,230) (228,610) (117,171) (128,475)Differed Tax on Revaluation of Buildings - 607,888 - - Income Tax Expense Recorded in Total Comprehensive Income 48,542,207 35,651,575 4,889,323 10,871,095


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Group Company2015 2014 2015 2014

Rs. Rs. Rs. Rs.

8.1 Reconciliation Between Current Tax Expense and the Product of Accounting Profit.Accounting Profit (Profit Before Tax) 328,738,926 236,979,182 60,900,176 59,270,883

Consolidation Adjustment 111,834,015 (53,427,279) - -Aggregate Disallowable Items 232,775,245 149,659,864 109,142,895 58,342,898 Aggregate Allowable Items (486,937,441) (234,904,736) (179,649,895) (131,255,268)

186,410,745 98,307,031 (9,606,824) (13,641,487)Tax Loss utilised (20.1.1) (7,297,723) (7,501,816) (385,002) (589,095)Taxable Profit from Trade Income 179,113,024 90,805,215 - - Taxable Profit from Interest Income 19,349,996 41,398,829 715,003 1,683,129

198,463,021 132,204,044 715,003 1,683,129

Income Tax - 12% (2014-12%) 21,493,563 9,996,408 - - Income Tax - 28% (2014-28%) 5,417,999 11,591,672 200,201 471,276 Current Income Tax Expense 26,911,562 21,588,080 200,201 471,276

Tax Losses Brought Forward 18,944,814 14,488,271 252,399,385 241,030,121 Tax Losses Incurred During the Year 7,619,765 11,958,359 7,619,765 11,958,359 Tax Losses Utilized (7,297,723) (7,501,816) (385,002) (589,095)Tax Losses Carried Forward 19,266,856 18,944,814 259,634,148 252,399,385

8.2 Differed Tax8.2.1 Group

2015 2014Rs. Rs.

Deferred Tax Assets, Liabilities and Income Tax Relates to the Followings ;Deferred Tax Liability 86,987,145 78,179,685 Deferred Tax Assets (935,082) (686,672)Net Deferred Tax Liability 86,052,063 77,493,013


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Deferred Taxation Charge/(Reversal) - Income Statement/Other Comprehensive Income

Income Statement Other Comprehensive Income / Directly through Equity

2015 2014 2015 2014Rs. Rs. Rs. Rs.

Deferred Tax LiabilityCapital Allowances for Tax Purposes 11,366,409 21,651,213 - - Excess Depreciation Transfer on Revaluation of Buildings

(1,623,070) (495,905) -

Actuarial (Gain)/Loss - - (389,043) (4,640)Revaluation of Buildings - - - 607,888

Deferred Tax Assets Defined Benefit Plans (1,064,033) (611,013) - - Collective Impairment of Trade and Other Receivables

(667,071) (144,586) - -

Carry Forward of Unused Tax Losses 143,881 (6,077,437) - - Actuarial (Gain)/Loss - - (335,187) (223,970)

9,779,186 13,195,107 (1,220,135) 379,278

Balance Sheet Statement of Comprehensive Income

2015 2014 2015 2014Rs. Rs. Rs. Rs.

Deferred Tax Assets/LiabilityDeferred Tax LiabilityCapital Allowances for Tax Purposes 104,689,138 93,322,729 11,366,409 21,651,213 Excess Depreciation Transfer on Revaluation of Buildings 24,142,104 24,638,010 (495,905) (1,623,070)Actuarial (Gain)/Loss (364,393) 24,650 (389,043) (4,640)Revaluation of Buildings 607,888 607,888 - 607,888

129,074,737 118,593,277

Deferred Tax Assets Defined Benefit Plans 5,224,938 4,160,905 (1,064,033) (611,013)Collective Impairment of Trade and Other Receivables 811,657 144,586 (667,071) (144,586)Carry Forward of Unused Tax Losses 36,209,451 36,353,332 143,881 (6,077,437)

Actuarial (Gain)/Loss 776,628 441,441 (335,187) (223,970) 43,022,674 41,100,264

Deferred Income Tax - Income 8,559,051 13,574,385Net Deferred Tax Liability 86,052,063 77,493,013


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8.2.2 Company2015 2014

Rs. Rs.

Deferred Tax Assets, Liabilities and Income Tax Relates to the Followings ;Deferred Tax Liability 9,798,922 5,433,076 Deferred Tax Assets - - Net Deferred Tax Liability 9,798,922 5,433,076

Deferred Taxation Charge/(Reversal) - Income Statement/Other Comprehensive Income

Income Statement Other Comprehensive Income / Directly through Equity

2015 2014 2015 2014Rs. Rs. Rs. Rs.

Deferred Tax LiabilityCapital Allowances for Tax Purposes 6,588,259 11,769,381 - -Excess Depreciation Transfer on Revaluation of Buildings

- (646,554) (323,277) -

Deferred Tax Assets Defined Benefit Plans (346,347) (151,945) - -Carry Forward of Unused Tax Losses (1,570,238) (1,566,287) - -Collective Impairment of Trade and Other Receivables

134,619 (325,520) - -

Actuarial (Gain)/Loss - - (117,171) (128,475)4,806,293 9,079,075 (440,447) (128,475)

Balance Sheet Statement of Comprehensive Income

2015 2014 2015 2014Rs. Rs. Rs. Rs.

Deferred Tax Assets/LiabilityDeferred Tax LiabilityCapital Allowances for Tax Purposes 44,278,364 37,690,104 6,588,259 11,769,381 Excess Depreciation Transfer on Revaluation of Buildings

983,451 1,306,728 (323,277) (646,554)

45,261,815 38,996,833

Deferred Tax Assets Defined Benefit Plans 1,572,306 1,225,959 (346,347) (151,945)Collective Impairment of Trade and Other Receivables

190,901 325,520 134,619 (325,520)

Carry Forward of Unused Tax Losses 33,412,421 31,842,183 (1,570,238) (1,566,287) 4,483,016 9,079,075

Actuarial (Gain)/Loss 287,265 170,094 (117,171) (128,475) 35,462,893 33,563,757

Deferred Income Tax - Income 4,365,845 8,950,600 Net Deferred Tax Liability/(Assets) 9,798,922 5,433,076


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9. EARNING PER SHARE 9.1 Basic Earnings Per Share amounts are calculated by dividing the net profit for the year attributable to ordinary equity

holders of the Ordinary Shareholders by the weighted average number of ordinary shares outstanding during the year.

9.2 The following reflects the income and share data used in the Basic Earnings Per Share computation.

Group Company2015 2014 2015 2014

Rs. Rs. Rs. Rs.

Amounts Used as the Numerator:Profit Attributable to Ordinary Shareholders 201,355,787 151,834,662 55,893,682 48,271,312

2015 2014 2015 2014

Number Number Rs. Number

Number of Ordinary Shares Used as the Denominator:Weighted Average Number of Ordinary Shares in IssueApplicable to Basic Earnings Per Share 111,525,794 111,525,794 111,525,794 111,525,794

Earnings Per Share - Basic 1.81 1.36 0.50 0.43

As there were no potential ordinary shares outstanding as at the year end, Diluted Earnings per Share is equal to the Basic Earnings per Share for the year.


102

10. PROPERTY, PLANT AND EQUIPMENT 10.1. Group

10.1.1 Gross Carrying Amounts

Balance As at

01.04.2014

Additions Disposal Transfers from Capital Work in Progress

Balance As at

31.03.2015

Rs. Rs. Rs. Rs. Rs.

At CostPlant and Machinery 348,465,891 18,982,862 (1,289,608) - 366,159,145 Furniture, Fittings and Equipment

504,511,918 27,912,411 (464,318) 161,433 532,121,444

Cutlery, Crockery, Glassware and Silverware

23,606,563 - - - 23,606,563

Motor Vehicles 34,332,439 9,991,160 (7,833,348) - 36,490,251 Soil Erosion Prevention 19,108,922 - - - 19,108,922 Energy Saving Technique - - - - - Landscaping 3,156,270 27,808 - - 3,184,078

933,182,003 56,914,241 (9,587,274) 161,433 980,670,403

At Valuation and subsequent improvement Freehold Land 248,739,002 - - - 248,739,002 Buildings on Freehold Land 1,300,792,223 - - 9,074,288 1,309,866,511 Buildings on Leasehold Land 811,349,660 1,158,612 - 64,224,301 876,732,573 Land Improvements 3,690,591 - - - 3,690,591

2,364,571,476 1,158,612 - 73,298,589 2,439,028,677 Total Value of Depreciable Assets 3,297,753,479 58,072,853 (9,587,274) 73,460,022 3,419,699,080

10.1.2 In the Course of Construction

Balance As at

01.04.2014

Incurred Disposal Transfers Balance As at

31.03.2015

Rs. Rs. Rs. Rs. Rs.

Capital Work in Progress 1,280,757 96,483,580 - (73,460,022) 24,304,315 1,280,757 96,483,580 - (73,460,022) 24,304,315

Total Gross Carrying Amount 3,299,034,236 154,556,433 (9,587,274) - 3,444,003,395


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10.1.3 Depreciation

Balance As at

01.04.2014

Charge for the

Year

Disposals Balance As at

31.03.2015Rs. Rs. Rs. Rs.

At CostPlant and Machinery 141,278,589 33,854,316 (1,221,927) 173,910,978 Furniture, Fittings and Equipment 238,460,806 52,308,272 (342,639) 290,426,439 Cutlery, Crockery, Glassware and Silverware 4,460,815 11,290,095 - 15,750,910 Motor Vehicles 6,166,325 6,205,941 (1,463,348) 10,908,918 Soil Erosion Prevention 14,718,549 847,110 - 15,565,659 Landscaping 56,071 52,875 - 108,946

405,141,155 104,558,609 (3,027,914) 506,671,850

At Valuation and subsequent improvement Buildings on Freehold Land 4,722,183 20,757,986 - 25,480,169 Buildings on Leasehold Land 25,286,424 21,269,505 - 46,555,929

30,008,607 42,027,491 - 72,036,098Total Depreciation 435,149,762 146,586,100 (3,027,914) 578,707,948

10.1.4 Net Book Value

2015 2014Rs. Rs.

At CostPlant and Machinery 192,248,167 207,187,301 Furniture, Fittings and Equipment 241,695,006 266,051,113 Cutlery, Crockery, Glassware and Silverware 7,855,654 19,145,748 Motor Vehicles 25,581,333 28,166,114 Soil Erosion Prevention 3,543,263 4,390,373 Landscaping 3,075,132 3,100,199

473,998,555 528,040,848

At Valuation and subsequent improvement Freehold Land 248,739,002 248,739,002 Buildings on Freehold Land 1,284,386,342 1,296,070,040 Buildings on Leasehold Land 830,176,644 786,063,237 Land Improvements 3,690,591 3,690,591

2,366,992,579 2,334,562,870

In the Course of ConstructionBuilding Work in Progress 24,304,315 1,280,757

24,304,315 1,280,757

Total Carrying Amount of Property, Plant and Equipment

2,865,295,449 2,863,884,475

10.1.5 During the financial year, the Group acquired Property, Plant and Equipment to the aggregate value of Rs.154,556,433/-

(2014 - Rs 716,909,278/- ), the consideration for which was settled by cash.

10.1.6 Property, Plant and Equipment includes fully depreciated assets having a gross carrying amounts of Rs.199,540,017 (2014 Rs. 147,788,577/- ).

10.1.7 Borrowing cost has not been capitalised during the year (2014 - Rs. 3,748,266)


104

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Pursuing Excellence

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10.2 Company10.2.1 Gross Carrying Amounts

Balance As at 01.04.2014

Additions Disposals Transfers fromWIP

Increase(Decrease) in Revaluation

Balance As at

31.03.2015

Rs. Rs. Rs. Rs. Rs. Rs.

At CostPlant and Machinery 117,557,500 9,337,035 - - - 126,894,534 Furniture, Fittings and Equipment

194,889,899 19,296,283 (313,818) 161,433 - 214,033,797


5,560,173 - - - - 5,560,173

Landscaping 3,156,270 27,808 - - - 3,184,078 Motor Vehicles 7,334,988 4,936,000 - - - 12,270,988

328,498,830 33,597,126 (313,818) 161,433 - 361,943,570

At Valuation and subsequent improvement

Freehold Land 16,639,000 - - - - 16,639,000 Buildings on Leasehold Land

648,148,376 1,158,612 - 16,456,701 - 665,763,689

664,787,376 1,158,612 - 16,456,701 - 682,402,689 Total Value of Depreciable Assets

993,286,206 34,755,738 (313,818) 16,618,134 - 1,044,346,259

10.2.2 In the Course of Construction

Balance As at01.04.2014

Incurred Disposals/Transfer

Transfers Increase inRevaluation



Capital Work in Progress

368,522 16,249,612 - (16,618,134) - -

368,522 16,249,612 - (16,618,134) - - Total Gross Carrying Amount

993,654,728 51,005,350 (313,818) - - 10,044,346,259


106

10.2.3 Depreciation


Charge for the year

Disposals/Transfers

Transfers Increase inRevaluation



At CostPlant and Machinery 37,107,459 10,815,108 - - 47,922,567 Furniture, Fittings and Equipment

60,228,796 21,464,204 (125,796) - - 81,567,205


5,560,173 - - - - 5,560,173

Landscaping 107,676 52,875 - - - 160,551 Motor Vehicles 3,879,738 897,683 - - - 4,777,421

106,883,842 33,229,870 (125,796) - - 139,987,917

At Valuation and subsequent improvement Buildings on Leasehold Land

22,625,317 12,434,499 - - - 35,059,817

22,625,317 12,434,499 - - - 35,059,817 Total Depreciation 129,509,159 45,664,369 (125,796) - - 175,047,734

10.2.4 Net Book Values2015 2014

Rs. Rs.

At CostPlant and Machinery 78,971,967 80,450,040 Furniture, Fittings and Equipment 132,466,593 134,661,103 Landscaping 3,023,527 3,048,594

Motor Vehicles 7,493,567 3,455,250 221,955,654 221,614,988

At Valuation and subsequent improvement Freehold Land 16,639,000 16,639,000 Buildings on Leasehold Land 630,703,872 625,523,061

647,342,872 642,162,061 In the Course of ConstructionBuilding Work in Progress - 368,522

- 368,522 Total Carrying Amount of Property, Plant and Equipment 869,298,526 864,145,570

10.2.5 The Company acquired Property, Plant and Equipment to the aggregate value of Rs.51,005,350/- during the financial year (2014 - Rs.75,397,620/-). Cash payments amounting to Rs. 51,005,350/- (2014 - Rs. 75,397,620/-) were made during the year for purchase of Property, Plant and Equipment.


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10.2.6 Property, Plant and Equipment includes fully depreciated assets having a gross carrying amounts of Rs.37,920,817 (2014 - Rs. 29,405,688/- ).

10.2.7 The carrying amount of revalued assets that would have been included in the financial statements had the assets been carried at cost less depreciation is as follows:

CumulativeDepreciation Net Carrying Net Carrying

If Assets were Amount AmountCost Carried at Cost 2015 2014

Rs. Rs. Rs. Rs.

GroupBuildings on Freehold Land 1,028,907,744 115,420,367 913,487,377 1,110,635,839

Buildings on Leasehold Land 814,629,660 125,788,017 688,841,643 702,418,805

CompanyBuildings on Leasehold Land 550,777,483 64,303,860 486,473,623 495,653,248

11 LEASEHOLD RIGHTGroup Company

2015 2014 2015 2014Rs. Rs. Rs. Rs.

At the Beginning of the Year 34,788,830 36,549,090 32,332,251 34,033,948 Amortisation for the Year (1,830,989) (1,760,260) (1,701,696) (1,701,697)At the End of the Year 32,957,841 34,788,830 30,630,555 32,332,251

The Company has Obtained Leasehold Rights to two lots of Land Situated in Bentota from The Sri Lanka Tourist Board by the agreement dated 19/02/1969 and 28/02/1973 respectively (the lease expires on 01/02/2019 and 28/02/2033 respectively)

The revised UITF Ruling does not permit further revaluation of Leasehold Property. An amount of Rs.42,548,432/- and Rs.3,148,141/- in Serendib Hotels PLC and Hotel Sigiriya PLC respectively are remaining in equity under Revaluation Surplus relating to previous revaluation of Leasehold rights to land.

12. INTANGIBLE ASSETSGroup Company

2015 2014 2015 2014Rs. Rs. Rs. Rs.

At CostComputer SoftwareAt the Beginning of the Year 6,944,137 6,666,636 1,908,205 1,908,205 Additions 883,185 277,500 - - At the End of the Year 7,827,322 6,944,137 1,908,205 1,908,205

Amortisation and ImpairmentAt the Beginning of the Year 3,656,283 2,314,981 843,497 474,857 Amortisation 1,497,389 1,341,302 368,640 368,640 At the End of the Year 5,153,672 3,656,283 1,212,137 843,497

Carrying Value 2,673,650 3,287,854 696,068 1,064,708


108

12.1 Goodwill Group Company

2015 2014 2015 2014Rs. Rs. Rs. Rs.

Balance As at the Beginning of the Year 22,252,564 174,124,906 - - Adjustment to Goodwill During the Year - (151,872,342) - -

Balance As at End of the Year 22,252,564 22,252,564 - - 24,926,214 25,540,417 696,068 1,064,708

12.2 Goodwill is annually tested for the impairment and Computer Software are Amortized Over the Useful Economic Life. Useful Economic Life is Estimated as 5-10 Years.

13 INVESTMENTS IN SUBSIDIARIES - COMPANY

Country of Incorporation

Holding - % Cost Market Value Cost Market Value

2015 2014 2015 2015 2014 2014% % Rs. Rs. Rs. Rs.

a Quoted InvestmentsDolphin Hotels PLC. Sri Lanka 65 65 203,692,502 1,166,881,188 203,692,502 865,419,792 Hotel Sigiriya PLC. Sri Lanka 62 62 56,704,833 319,157,077 56,704,833 283,211,058 Total Quoted Investments in Subsidiaries 260,397,335

1,486,038,265 260,397,335 1,148,630,850

b Non-QuotedSerendib Leisure Management Ltd Sri Lanka 100 100 100,000 - 100,000 - Total Non-Quoted Investments in Subsidiaries 100,000 - 100,000 - Total Net Carrying Value of Investments in Subsidiaries 260,497,335

1,486,038,265 260,497,335 1,148,630,850

13.1 Material Partly-Owned SubsidiariesFinancial information of subsidiaries that have material non-controlling interests is provided below:

Proportion of interest held by non-controlling interests

2015 2014 2015 2014% % Rs. Rs.

Dolphin Hotels PLC 35 35 475,468,016 397,332,262 Hotel Sigiriya PLC 38 38 123,550,825 100,580,907

Total Comprehensive income allocated to material non-controlling interest:

2015 2014Rs. Rs.

Dolphin Hotels PLC 89,127,608 36,283,794 Hotel Sigiriya PLC 22,890,410 10,566,270


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Summarised Financial Information of Material partly-owned subsidiaries ;

2015 2014Rs. Rs.

Dolphin Hotels PLCCurrent Assets 225,479,358 492,943,390 Non Current Assets 1,713,075,119 1,746,620,788 Current Liabilities 304,258,918 343,768,224 Non-Current Liabilities 282,088,090 765,405,450 Total Equity 1,352,207,469 1,130,390,504

Revenue 870,773,971 606,767,997 Profit Before Tax 186,765,545 121,160,745 Profit After Tax 155,855,136 110,731,612 Other Comprehensive Income 97,619,363 (7,182,421)Total Comprehensive Income for the year 253,474,499 103,549,191

2015 2014Rs. Rs.

Hotel Sigiriya PLCCurrent Assets 84,365,707 59,118,889 Non Current Assets 310,636,496 274,201,981 Current Liabilities 52,344,216 49,136,026 Non-Current Liabilities 17,767,785 19,696,517 Total Equity 324,890,202 264,488,327

Revenue 258,287,530 211,882,730 Profit Before Tax 63,930,106 30,727,163 Profit After Tax 60,807,630 27,589,039 Other Comprehensive Income (614,832) (882,894)Total Comprehensive Income for the year 60,192,798 26,706,145

14 INVESTMENTS IN ASSOCIATES - GROUP/COMPANY14.1 Group

The Group has a 19.90% interest in Jada Resorts and Spa (Pvt) Ltd, which is involved in the operation of a hotel, Jada Resorts and Spa is a private entity that is not listed on any public exchange. Given below is the summarised financial information of the Group’s investments in Jada Resorts and Spa (Pvt) Ltd.

Holding2015 2014 2015 2014

% % Rs. Rs.

Jada Resort (Pvt) Ltd 19.90 19.90 209,927,903 209,927,903 Cumulative profit accruing to the Group net of Dividend

21,760,375 18,502,247

231,688,278 228,430,150 Transfer- Goodwill on Acquisition 151,872,341 151,872,341 Carrying Amount of the Investment 383,560,619 380,302,491


110

2015 2014Rs. Rs.

Associate’s Statement of Financial PositionCurrent Assets 553,814,336 1,037,078,999 Non - Current Assets 2,307,346,968 1,273,212,055 Current Liabilities 319,717,067 311,272,333 Non - Current Liabilities 204,085,723 401,226,889 Net Assets 2,337,358,514 1,597,791,832

2015 2014Rs. Rs.

Group Share of Associate’s Income StatementShare of the Associate Revenue 118,864,591 80,385,709 Share of the Associate Profit before tax 6,121,785 11,651,277 Share of the Associate Profit after tax 3,258,128 7,693,925

The Profit share of Associate has been taken for the 15 months ended 31 March 2015 (2014 - 12 months ended 31 December 2013) in order to be in line with the Accounting period of the Group.

14.2 Company

2015 2014Rs. Rs.

Jada Resort and Spa (Pvt) Ltd 360,623,100 360,623,100 360,623,100 360,623,100


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15. OTHER FINANCIAL ASSETSGroup Company

2015 2014 2015 2014Rs. Rs. Rs. Rs.

Non Current - Available for Sale InvestmentsInvestments in Equity Securities (Rainforest Ecolodge (Pvt) Ltd)

12,000,010 12,000,010 4,000,010 4,000,010

12,000,010 12,000,010 4,000,010 4,000,010

CurrentLoans Due from Related Parties (15.2) 46,488,169 227,663,420 20,119 5,963,420

46,488,169 227,663,420 20,119 5,963,420 Total Other Financial Assets 58,488,179 239,663,430 4,020,129 9,963,430

15.1 Investment in Rainforest Ecolodge (Pvt) Ltd is carried at cost due to impracticability of assessing the fair value of the investment.

15.2 CurrentGroup Company

2015 2014 2015 2014Rs. Rs. Rs. Rs.

Loans Due from Related Parties (Note 15.2.1) 46,488,169 227,663,420 20,119 5,963,420 Total Current Financial Assets 46,488,169 227,663,420 20,119 5,963,420

15.2.1 Loans Due From Related PartiesGroup Company

2015 2014 2015 2014Relationship Rs. Rs. Rs. Rs.

CurrentHemas Holdings PLC Ultimate Parent

Company 46,488,169 227,663,420 20,119 5,963,420

15.2.2 Loans Due From Related Parties

Relationship As at 01.04.2014

Loans Granted

Repayment As at 01.04.2015

Repayment Terms

Rates of Interest

Rs. Rs. Rs. Rs.

GroupHemas Holdings PLC Ultimate Parent

Company

227,663,420

(181,175,251) 46,488,169 on DemandAt a margin

over AWPLR

CompanyHemas Holdings PLC Ultimate Parent

Company 5,963,420 (5,943,301) 20,119 on DemandAt a margin

over AWPLR


112

16 INVENTORIES Group Company

2015 2014 2015 2014Rs. Rs. Rs. Rs.

Food 3,641,359 4,694,887 1,238,247 1,751,262 Beverage 6,267,068 7,083,008 2,127,494 2,231,506 House Keeping and Maintenance 5,604,356 7,433,431 2,064,788 2,278,955 Printing and Stationery 941,747 1,201,278 413,957 509,666 Linen and Cutlery 1,772,304 668,702 89,705 30,681

18,226,834 21,081,306 5,934,191 6,802,070

17. TRADE AND OTHER RECEIVABLESGroup Company

2015 2014 2015 2014Rs. Rs. Rs. Rs.

Trade Receivable - Related Parties (17.2) 20,274,462 9,498,994 2,895,8879 1,957,037 - Other 169,895,621 181,781,765 39,303,954 44,910,430 Less: Debtors' Impairment (17.6) (10,123,683) (15,642,122) (1,906,859) (3,058,628)

180,046,400 175,638,637 40,292,974 43,808,839

Other Debtors 7,024,382 28,811,333 695,901 741,920 Advances and Prepayments 18,655,646 23,608,517 7,059,724 12,025,712 Less: Debtors' Impairment - - - -

25,680,028 52,419,850 7,755,625 12,767,631

Festival Advances (17.3) 5,129,161 2,413,533 1,382,870 130,080 Non Trade Dues from Related Parties (17.4) 19,143,812 8,905,855 8,445,930 3,775,707

229,999,403 239,377,875 57,877,399 60,482,257

17.1 Trade Debtors Age Analysis

Group Total Current 30-90 Days 91-120 Days >120 Days

2015 180,046,400 123,976,800 50,108,039 5,257,242 704,319

2014 175,638,637 117,297,690 53,231,974 5,107,868 1,105

Company Total Current 30-90 Days 91-120 Days >120 Days

2015 40,292,972 27,606,168 11,004,855 977,630 704,319 2014 43,808,839 27,476,089 16,171,427 161,323 -


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17.2 Trade Dues Receivables from Related PartiesGroup Company


Hemas Holdings PLC. Ultimate Parent Company

100,250 918,545 - -

Hemas Manufacturing (Pvt) Ltd. Other Related Party 6,225 - - - Diethelm Travel Lanka (Pvt) Ltd. Other Related Party 7,364,206 1,550,747 1,817,973 1,096,680 Hemas Air Services (Pvt) Ltd. Other Related Party - 40,000 - 40,000 Hemas Travels (Pvt) Ltd. Other Related Party - 60,000 - - P H Resort (Pvt) Ltd. Other Related Party - 631,347 - - Jada Resorts and Spa (Pvt) Ltd. Associate Company 12,803,781 6,298,355 - 800,357 Serendib Leisure Management Ltd.

Subsidiary - - 1,077,906 20,000

20,274,462 9,498,994 2,895,879 1,957,037

17.3 Festival AdvancesGroup Company

2015 2014 2015 2014Rs. Rs. Rs. Rs.

SummaryBalance as at Beginning of the Year 2,413,533 1,251,505 130,080 354,552

Loans Granted During the Year 9,466,660 8,068,887 2,388,243 1,448,393 Less: Repayments During the Year (6,751,032) (6,906,858) (1,135,453) (1,672,865)Balance as at End of the Year 5,129,161 2,413,533 1,382,870 130,080

17.4 Amounts Due From Related PartiesGroup Company


Hemas Holdings PLC. Ultimate Parent Company

1,377,517 2,087,162 - -

Hotel Sigiriya PLC. Subsidiary - - - 369,746 Hemtours (Pvt) Ltd. Other Related Party - - - - Peace Haven Resorts Ltd. Associate Company 628,976 207,147 59,401 207,147 Jada Resorts and Spa (Pvt) Ltd. Other Related Party 10,879,781 6,038,371 2,443,595 3,198,814 P H Resort (Pvt) Ltd. Associate Company 837,527 252,742 - - Paradise Island Resort (Pvt) Ltd Subsidiary 48,222 40,622 - - Kammala Hotelliers (Pvt) Ltd. Subsidiary 343,263 279,811 - - Kaluthara Luxury Resort (Pvt) Ltd.

Other Related Party 4,158,687

Serendib Leisure Management Ltd Subsidiary - - 2,999,319 - Dolphin Hotels PLC Subsidiary - - 2,073,774 - Minor International Other Related Party 869,841 - 869,841 -

19,143,814 8,905,855 8,445,930 3,775,707


114

17.6 Movement in Individual and Collective Impairment During the Year

Group CompanyIndividual

ImpairmentCollective

ImpairmentTotal

ImpairmentIndividual

ImpairmentCollective

ImpairmentTotal

Impairment


At 1 April 2014 5,672,887 9,969,235 15,642,122 345,963 2,712,665 3,058,628 Charge to Profit or Loss (29,942) (5,488,497) (5,518,439) (29,942) (1,121,827) (1,151,769)Write-off during the period - - - - - - At 31 March 2015 5,642,945 4,480,738 10,123,683 316,021 1,590,838 1,906,859

17.7 The group grants credit approvals to its customers after establishing controls to ensure these limits are decided based on internal controls established by the finance teams after consultation and recommendation by the marketing team. The average credit granted to such Debtors are 30 Days.

18 CASH AND SHORT TERM DEPOSITS IN THE CASH FLOW STATEMENT

Components of Cash and Cash Equivalents

Group Company2015 2014 2015 2014

Rs. Rs. Rs. Rs.

18.1 Favourable Cash and Cash Equivalent Balances

Cash and Bank Balances 296,738,469 269,120,108 92,187,878 85,684,663 Fixed Deposit - 66,900,000 - 7,600,000

296,738,469 336,020,108 92,187,878 93,284,663

18.2 Unfavourable Cash and Cash Equivalent Balances

Bank Overdraft (21.1 and 21.2) (90,269,866) (18,435,044) (23,754,882) - Total Cash and Cash Equivalents for the Purpose of Cash Flow Statement 206,468,603 317,585,064 68,432,996 93,284,663

19 ISSUED CAPITAL - GROUP/COMPANY

2015 2014 2015 2014Number Number Rs. Rs.

19.1 Fully Paid Ordinary Shares 75,514,738 75,514,738 614,282,951 614,282,951Fully Paid Non-Voting Ordinary Shares 36,011,056 36,011,056 298,838,743 298,838,743

111,525,794 111,525,794 913,121,694 913,121,694

19.2 Rights, Preference and Restrictions of Classes of CapitalThe Holders of Ordinary Shares confer their right to receive dividends as declared from time to time. The holders of Voting Ordinary Shares are entitled to one vote per share at a meeting of the Company.


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20 RESERVESSummary

Group Company2015 2014 2015 2014

Rs. Rs. Rs. Rs.

(a) Revenue Reserves General Reserve (20.2) 19,940,000 19,940,000 14,500,000 14,500,000

19,940,000 19,940,000 14,500,000 14,500,000

(b) Other Component of Equity Asset Revaluation Reserve (20.1) 189,580,768 194,818,207 38,951,911 41,322,608 Cash Flow Hedge Reserve (20.3) 57,792,363 (57,697,192) 17,894,926 (33,662,561)

247,373,131 137,121,015 56,846,837 7,660,047

20.1 Revaluation ReserveGroup Company

2015 2014 2015 2014Rs. Rs. Rs. Rs.

On: Property, Plant and EquipmentBalance as at the Beginning of the Year 194,818,207 180,198,391 41,322,608 44,016,582 Revaluation Surplus During the Year - 20,680,607 - -Deferred Tax attributable to Revaluation Surplus 429,212 (394,141) 323,277 -Depreciation Transfer on Revaluation Surplus (5,666,651) (5,666,651) (2,693,974) (2,693,974)Balance as at the End of the Year 189,580,768 194,818,207 38,951,911 41,322,608

20.2 General Reserve Which is a Revenue Reserve represents the amounts set aside by the Directors for general application.

20.3 Cash Flow Hedge ReserveThe group / company designated its identified foreign currency loans as a hedging instrument against its highly probable, specifically identified future revenue in foreign currency namely apartment revenue. Through which, the company hedged the risk of changes in value of the identified foreign currency loans, caused by the fluctuations in foreign exchange rates.

The effective portion of the gain or loss on the hedging instrument is recognised directly in Other Comprehensive Income in the cash flow hedge reserve, while any ineffective portion is recognised immediately in the Statement of Profit or Loss as other operating expenses. Amounts recognised as Other Comprehensive Income are transferred to Statement of Profit or Loss when the hedged transaction occurs (when the a forecast revenue realises). If the forecast transaction is no longer expected to occur, the cumulative gain or loss previously recognised in Other Comprehensive Income is transferred to the Statement of Profit or Loss. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked, any cumulative gain or loss previously recognised in Other Comprehensive Income remains in equity until the forecast transaction occurs as per the hedge agreement.

Dolphin Hotels PLC has prepaid one of its designated loans during the year, which resulted in the termination of the underlying hedged instrument. Accordingly, the previously recognised gain in Other Comprehensive Income, attributable to this portion of the loan, amounting to Rs. 57,897,401/- remains in the hedge reserve and will be transferred to the Statement of Profit or Loss over seven years starting from December 2015 (when the forecasted transaction occur) as per the hedge agreement.

20.4 Cash Flow Hedge ReserveGroup Company

2015 2014 2015 2014Rs. Rs. Rs. Rs.

Balance At the Beginning of the Year (57,697,192) - (33,662,561) -Net Movement of Cashflow Hedge Reserve 115,489,555 (57,697,192) 51,557,487 (33,662,561)Balance at the End of the Period 57,792,363 (57,697,192) 17,894,926 (33,662,561)


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21 INTEREST BEARING LOANS AND BORROWINGS21.1 Group

2015 2014Amount Amount Total Amount Amount Total

Repayable Repayable Repayable RepayableWithin 1 Year After 1 Year Within 1 Year After 1 Year


Bank Loans (21.1.1) 152,742,135 323,398,206 476,140,341 161,710,341 959,619,950 1,121,330,291 Bank Overdrafts (18.2) 90,269,866 - 90,269,866 18,435,044 - 18,435,044

243,012,001 323,398,206 566,410,207 180,145,385 959,619,950 1,139,765,335

21.1.1 Bank Loans As at

01.04.2014 Loans

Obtained Repayment Exchange

GainAs at

31.03.2015 Rs. Rs. Rs. Rs. Rs.

Bank Loans (21.3) 1,121,330,291 - (500,359,495) (144,830,455) 476,140,341 1,121,330,291 - (500,359,495) (144,830,455) 476,140,341

21.2 Company2015 2014

Amount Amount Total Amount Amount TotalRepayable Repayable Repayable Repayable

Within 1 Year

After 1 Year Within 1 Year

After 1 Year


Bank Loans (22.2.1) 90,750,354 132,339,154 223,089,508 90,750,354 273,811,097 364,561,451 Bank Overdrafts (18.2) 23,754,882 - 23,754,882 - - -

114,505,236 132,339,154 246,844,390 90,750,354 273,811,097 364,561,451

21.2.1 Bank Loans As at Loans Repayment Exchange Gain As at

01.04.2014 Obtained 31.03.2015Rs. Rs. Rs. Rs. Rs.

Bank Loans (21.3) 364,561,451 - (90,109,754) (51,362,189) 223,089,508 364,561,451 - (90,109,754) (51,362,189) 223,089,508

21.3 Bank Loans - SummaryBalance As at

01.04.2014 Loans

ObtainedRepayment Exchange

GainBalance As at

31.03.2015 Rs. Rs. Rs. Rs. Rs.

Serendib Hotels PLC. (21.4.1) 364,561,451 - (90,109,754) (51,362,189) 223,089,507 Dolphin Hotels PLC. (21.4.2) 517,540,490 - (364,595,400) (74,548,997) 78,396,093 Miami Beach Hotels Ltd. (21.4.3) 239,228,350 - (45,654,341) (18,919,268) 174,654,741 Hotel Sigiriya PLC. (21.4.4) - - - - -

1,121,330,291 - (500,359,495) (144,830,454) 476,140,341


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118

22 RETIREMENT BENEFIT OBLIGATIONGratuity

Group Company2015 2014 2015 2014

Rs. Rs. Rs. Rs.

Balance As at Beginning of the Year 38,558,306 31,150,606 11,633,780 9,296,951 Interest Cost 5,077,410 3,513,952 1,279,716 1,022,665 Current Service Cost 4,756,459 3,084,316 1,279,886 658,828 Benefits Paid (4,851,079) (2,663,825) (1,090,828) (762,115)Actuarial (Gain)/Loss 6,035,253 3,473,257 976,421 1,417,451 Balance as at End of the Year 49,576,349 38,558,306 14,078,975 11,633,780

22.2 Messers K.A Pandith Actuaries, consultants and Actuaries, carried out an actuarial valuation of the defined benefit plan gratuity on 31.03.2015 Appropriate and compatible assumptions were used in determining the cost of retirement benefits. The principle assumptions used as follows :

22.3 The Principal Assumptions Used Were as Follows;

Group Company

2015 2014 2015 2014

a) Demographic Assumptions Retirement Age 55 Years 55 Years 55 Years 55 Years

b) Financial AssumptionsDiscount Rate 11% 11% 11% 11%Future Salary Increment Rate 9% 9% 9% 9%

22.4 Sensitivity of Assumptions Employed in Actuarial Valuation The following table demonstrates the sensitivity to a reasonable possible change in the key assumptions used, with all other variables held constant in the post employment benefit liability measurement, in respect of the year 2014/15.

The sensitivity of the Statement of profit or loss and Statement of Financial Position is the effect of the assumed changes in discount rate and salary increment rate on the profit or loss and post employment benefit obligation for the year.

GroupSensitivity Effect on Defined Benefit Obligation

Delta Effect of +1% Delta Effect of (-1%)2015 2014 2015 2014

Increase/(Decrease) in Discount Rate (4,558,238) (3,388,649) 5,360,626 3,962,734 Increase/(Decrease) in Salary Increment Rate 5,360,619 4,001,753 (4,636,042) (3,475,609)Increase/(Decrease) in Employee Turnover 230,216 511,330 (287,113) (598,916)

CompanySensitivity Effect on Defined Benefit Obligation

Delta Effect of +1% Delta Effect of (-1%)2015 2014 2015 2014

Increase/(Decrease) in Discount Rate (1,002,357) (783,763) 1,165,078 904,328 Increase/(Decrease) in Salary Increment Rate 1,165,075 913,174 (1,019,573) (804,020)Increase/(Decrease) in Employee Turnover 39,549 106,071 (50,273) (123,287)


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22.5 Following payments are expected contributions to the defined benefit plan obligation on the future years:

Group Company2015 2014 2015 2014

Rs. Rs. Rs. Rs.

Years From the Current Period1st Following Year 4,462,444 2,908,647 2,867,896 1,485,246 2nd Following Year 952,663 1,680,841 170,887 986,381 3rd Following Year 4,810,566 4,438,340 1,592,477 1,478,071 4th Following Year 3,064,443 3,878,074 788,821 1,576,916 5th Following Year 4,986,957 2,892,594 1,577,987 780,168 Sum of Years 6 to 10 40,639,925 38,761,898 9,117,987 8,956,953

23 DEFERRED INCOMEGroup

2015 2014Rs. Rs.

As at Beginning of the Year - 1,214,932 Less: Amortization During the Year - (1,214,932)As at End of the Year - -

Hotel Sigiriya introduced a Gassifire system for the steam boiler to replace the existing diesel burner with a wood burner. This has been considered as an environment friendly project and The Ceylon Chamber of Commerce has granted facility for such projects under promotion of Eco Efficient Productivity (PEP) projects. The Hotel Sigiriya PLC received 50% of the total project cost as a grant (Rs. 1.75Mn). The Gassifire started generating steam from 1 October 2008. This has been disposed in the year ended 31 March 2014 and the total grant has been recognised in other income as of the same year.

24 TRADE AND OTHER PAYABLES

Group Company2015 2014 2015 2014

Rs. Rs. Rs. Rs.

Trade Payable - Related Parties (24.1) - 95,381 - 95,381 - Other 60,973,725 58,634,596 14,703,311 13,591,520 Other PayablesSundry Creditors Including Accrued Expenses 273,902,405 365,516,134 99,124,937 110,564,562 Non Trade Payables to Related Parties (24.2) 26,146,274 37,711,023 27,628,408 19,733,802

361,022,404 461,957,134 141,456,656 143,985,265

24.1 Trade Payable - Related PartiesGroup Company

2015 2014 2015 2014

Relationship Rs. Rs. Rs. Rs.

J.L.Morison Son & Jones (Ceylon) PLC.

Other Related Party - 6,360 - 6,360

Hemas Manufacturing (Pvt) Ltd. Other Related Party - 89,021 - 89,021 - 95,381 - 95,381


120

24.2 The average credit period for the group is 60 days.

24.3 Amounts due to Related PartiesGroup Company


Dolphin Hotels PLC. Subsidiary - - 6,060,229 3,145,669 Serendib Leisure Management Ltd. Subsidiary - - 11,599,590 7,787,596 Peace Haven Resorts Ltd. Other Related Party 227,445 - 227,445 - Hemas Holdings PLC. Ultimate Parent

Company 21,849,728 33,309,392 9,053,372 8,585,952

Diethelm Travels Ltd. Other Related Party 310,228 481,989 - - Jada Resorts and Spa (Pvt) Ltd. Associate Company 1,318,962 449,757 473,486 - Hemas Corporate Services Ltd. Other Related Party 608,707 1,668,892 - - Hemas Developments (Pvt) Ltd. Other Related Party 1,080,100 1,183,996 - - Hemas Travels (Pvt) Ltd. Other Related Party 536,818 402,413 - - Vishwa BPO (Pvt) Ltd. Other Related Party 214,286 214,585 214,286 214,585

26,146,274 37,711,023 27,628,408 19,733,802

25 NON INTEREST BEARING LOANS AND BORROWINGS

Group

2015 2014Rs. Rs.

Ministry of Tourism 657,000 657,000 657,000 657,000

26 DIVIDENDS PAYABLEGroup Company

2015 2014 2015 2014Rs. Rs. Rs. Rs.

Unclaimed Dividends 4,135,204 3,837,247 1,385,354 1,385,354 4,135,204 3,837,247 1,385,354 1,385,354

27 COMMITMENTS AND CONTINGENCIESThere are no Significant Commitment and/or Contingencies As at the Reporting Date.

28 EVENTS AFTER THE REPORTING PERIOD The Board of Directors of the Company has declared a interim dividend of Rs. 1/- per share for the financial year ended 31 March 2015 as required by section 56(2) of the companies Act No 07 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. 07 of 2007, and has obtained a certificate from the Auditors, prior to declaring the final dividend which is to be paid on 16th June 2015.

In accordance with the Sri Lanka Accounting Standard (LKAS 10) - Events after the reporting date, the declared dividend has not been recognized as a liability in the financial statements as at 31 March 2015.

Except for the above there have been no material events occurring after the reporting date that require adjustments to or disclosure in the Financial Statements.


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29 ASSETS PLEDGED The following Assets have been Pledged as Security for Liabilities.

Nature of Assets Nature of Liability Carrying Amount Pledged Included Under

2015Rs.

2014Rs.

Dolphin Hotels PLCFreehold Land and Building Primary Mortgage Bond No.3120

dated 12/07/2010 for Rs.146.3M executed over Club Hotel Dolphin’s Hotel premises at Waikkal owned by the company. Extent 5A-3R-2.6P (Lot 1 in plane No.3105) to Commercial Bank of Ceylon PLC (EIB Loan of Rs.126.6M and overdraft facility of Rs.20M)

965,416,666 980,000,000 Property, Plant and Equipment

Freehold Land and Building A supplementary Mortgage Bond in Euro executed in connection with Primary Mortgage Bond No.3120 dated 13/07/2010 linking the Rupee exposure in foreign currency.


Miami Beach Hotels LtdFreehold Land and Building Primary Mortgage Bond No.1425

dated 13/07/2010 for Rs.244.6M executed over Miami Beach Hotels premises at Waikkal owned by the Company. (Extent 7A:3R:31P) to Commercial Bank of Ceylon PLC (EIB Loan of Rs.234.6M and overdraft facility of Rs.10M)


Freehold Land and Buildings A supplementary Mortgage Bond in GBP executed in connection with Primary Mortgage Bond No.1425 dated 13/07/2010 linking the Rupee exposure in foreign currency.


Serendib Hotels PLC Corporate Guarantee from Hemas Holdings PLC for Euro.1.315Mn (Equivalent to LKR. 208.5Mn) in favour of Hatton National BankCorporate Guarantee from Hemas Holdings PLC for GBP 0.615Mn (Equivalent to LKR. 110.3Mn) in favour of Hatton National BankCorporate Guarantee from Hemas Holdings PLC for Euro 660,000 in favour of Hatton National Bank


122


Terms and Conditions:Sales and purchase of goods and/or services to Related Parties were made at on the basis of the price lists in force with non Related Parties, but subject to approved discounts. Property, Plant and Equipment purchases and sales are made at Net Book Values

31 RELATED PARTY DISCLOSURES

Details of Significant Related Party Disclosures are As Follows:

Ultimate Parent Subsidiary Other Related parties

Hemas Holdings PLC. Dolphin Hotels PLC. Hotel Sigiriya PLC Serendib Leisure Mgt. Ltd. Diethlem Travels Lanka (Pvt) Ltd. Hemtours (Pvt) Ltd Jada Resorts & Spa (Pvt) Ltd. Hemas Corporate Services Ltd. Peace Haven Resorts Ltd. Vishwa BPO (Pvt) Ltd. Total

Nature of Transaction 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014

Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Opening Balance

Trade and Other Receivable - - - - - - - - 1,096,680 811,241 - - - - - - - 1,096,680 811,241

Amounts Due From Related Parties - 23,768,316 - 1,905,529 369,746 234,315 - 1,257,146 3,198,814 2,926,598 - - - - - - - 3,568,560 30,091,904

Amounts Due To Related Parties (7,254,067) (6,479,721) (3,145,669) (4,604,348) - - (7,787,596) (3,717,719) - (223,973) - (63,486) (227,445) (227,445) (214,285) - - - (18,629,063) (15,316,692)

(7,254,067) 17,288,595 (3,145,669) (2,698,819) 369,746 234,315 (7,787,596) (2,460,572) 1,096,680 811,241 3,198,814 2,702,624 - (63,486) (227,445) (227,445) (214,285) - (13,963,823) 15,586,453

Sales of Property and Other Assets - - - - - - - - - - - - - - (354,705) (348,019) (354,705) (348,019)

Finance Income Payable - - (857,143) - - - - - - - - - - - (857,143)

Expenses Incurred on Behalf of the

Company

25,853,221 6,685,286 21,992,158 6,897,815 862,015 1,437,118 4,950,854 4,042,004 6,823,278 5,079,755 2,537,479 8,043,389 - - 921,761 434,592 - - 869,841 63,940,765 32,619,959

Settlement of Dues from Related

Parties

(25,833,102) (30,453,603) (19,918,384) (6,729,571) (1,231,761) (1,301,687) (873,629) (3,477,962) (6,101,984) (4,794,317) (3,292,698) (7,771,173) - - (862,360) - - (58,113,918) (54,528,311)

Settlement of Dues to Related

Parties

1,110,170 6,479,721 42,143 97,188 5,922 190,654 48,963,295 40,270,507 - - 408,234 224,491 540,541 353,739 355,092 - - 51,070,304 47,971,391

Expenses Incurred on Behalf of

the Others

(2,909,475) (7,254,067) (2,956,704) (783,710) (5,922) (190,654) (52,775,289) (46,161,573) - - (881,720) (673,145) (540,541) (290,253) (355,092) - - (60,069,650) (55,708,494)

Finance Income Paid - - 713,987 - - - - - - - - 140,420 133,733 140,420 847,720

(1,779,186) (18,531,127) (840,787) (661,434) (369,746) 135,431 265,232 (5,327,024) 721,293 285,439 (1,228,705) (579,001) - 63,486 59,401 434,592 (214,285) (214,285) (3,386,783) (24,393,924)

(9,033,253) (1,242,532) (3,986,455) (3,360,253) - 369,746 (7,522,364) (7,787,596) 1,817,973 1,096,680 1,970,109 2,123,623 - - (168,044) 207,147 (428,570) (214,285) (17,350,606) (8,807,471)

Closing Balance

Trade and Other Receivable - - - - - - 1,817,973 1,096,680 - - - - - - 1,817,973 1,096,680

Amounts Due From Related Parties 20,119 - 2,073,774 - 369,746 4,077,225 - - - 2,443,595 3,198,814 - - 59,401 207,147 - - 869,841 - 8,674,114 3,775,707

Amounts Due To Related Parties (9,053,372) (7,254,067) (6,060,229) (3,145,669) - - (11,599,590) (7,787,596) - - (473,486) - - - (227,445) - (214,285) (214,285) - - (27,628,408) (18,401,617)

Total (9,033,253) (1,242,532) (3,986,455) (3,145,669) - 369,746 (7,522,364) (7,787,596) 1,817,973 1,096,680 1,970,109 2,123,623 - - (168,044) 207,147 (214,285) (214,285) (17,136,321) (8,592,886)

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31 RELATED PARTY DISCLOSURES

Details of Significant Related Party Disclosures are As Follows:

Ultimate Parent Subsidiary Other Related parties

Hemas Holdings PLC. Dolphin Hotels PLC. Hotel Sigiriya PLC Serendib Leisure Mgt. Ltd. Diethlem Travels Lanka (Pvt) Ltd. Hemtours (Pvt) Ltd Jada Resorts & Spa (Pvt) Ltd. Hemas Corporate Services Ltd. Peace Haven Resorts Ltd. Vishwa BPO (Pvt) Ltd. Total

Nature of Transaction 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014

Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Opening Balance

Trade and Other Receivable - - - - - - - - 1,096,680 811,241 - - - - - - - 1,096,680 811,241

Amounts Due From Related Parties - 23,768,316 - 1,905,529 369,746 234,315 - 1,257,146 3,198,814 2,926,598 - - - - - - - 3,568,560 30,091,904

Amounts Due To Related Parties (7,254,067) (6,479,721) (3,145,669) (4,604,348) - - (7,787,596) (3,717,719) - (223,973) - (63,486) (227,445) (227,445) (214,285) - - - (18,629,063) (15,316,692)

(7,254,067) 17,288,595 (3,145,669) (2,698,819) 369,746 234,315 (7,787,596) (2,460,572) 1,096,680 811,241 3,198,814 2,702,624 - (63,486) (227,445) (227,445) (214,285) - (13,963,823) 15,586,453

Sales of Property and Other Assets - - - - - - - - - - - - - - (354,705) (348,019) (354,705) (348,019)

Finance Income Payable - - (857,143) - - - - - - - - - - - (857,143)

Expenses Incurred on Behalf of the

Company

25,853,221 6,685,286 21,992,158 6,897,815 862,015 1,437,118 4,950,854 4,042,004 6,823,278 5,079,755 2,537,479 8,043,389 - - 921,761 434,592 - - 869,841 63,940,765 32,619,959

Settlement of Dues from Related

Parties

(25,833,102) (30,453,603) (19,918,384) (6,729,571) (1,231,761) (1,301,687) (873,629) (3,477,962) (6,101,984) (4,794,317) (3,292,698) (7,771,173) - - (862,360) - - (58,113,918) (54,528,311)

Settlement of Dues to Related

Parties

1,110,170 6,479,721 42,143 97,188 5,922 190,654 48,963,295 40,270,507 - - 408,234 224,491 540,541 353,739 355,092 - - 51,070,304 47,971,391

Expenses Incurred on Behalf of

the Others

(2,909,475) (7,254,067) (2,956,704) (783,710) (5,922) (190,654) (52,775,289) (46,161,573) - - (881,720) (673,145) (540,541) (290,253) (355,092) - - (60,069,650) (55,708,494)

Finance Income Paid - - 713,987 - - - - - - - - 140,420 133,733 140,420 847,720

(1,779,186) (18,531,127) (840,787) (661,434) (369,746) 135,431 265,232 (5,327,024) 721,293 285,439 (1,228,705) (579,001) - 63,486 59,401 434,592 (214,285) (214,285) (3,386,783) (24,393,924)

(9,033,253) (1,242,532) (3,986,455) (3,360,253) - 369,746 (7,522,364) (7,787,596) 1,817,973 1,096,680 1,970,109 2,123,623 - - (168,044) 207,147 (428,570) (214,285) (17,350,606) (8,807,471)

Closing Balance

Trade and Other Receivable - - - - - - 1,817,973 1,096,680 - - - - - - 1,817,973 1,096,680

Amounts Due From Related Parties 20,119 - 2,073,774 - 369,746 4,077,225 - - - 2,443,595 3,198,814 - - 59,401 207,147 - - 869,841 - 8,674,114 3,775,707

Amounts Due To Related Parties (9,053,372) (7,254,067) (6,060,229) (3,145,669) - - (11,599,590) (7,787,596) - - (473,486) - - - (227,445) - (214,285) (214,285) - - (27,628,408) (18,401,617)

Total (9,033,253) (1,242,532) (3,986,455) (3,145,669) - 369,746 (7,522,364) (7,787,596) 1,817,973 1,096,680 1,970,109 2,123,623 - - (168,044) 207,147 (214,285) (214,285) (17,136,321) (8,592,886)


124

32 TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL OF THE COMPANY OR ITS PARENTThe Key Management Personnel of the Company are the members of its Board of Directors and that of its Parent . Group

2015 2014Rs. Rs.

a) Key Management Personnel Compensation Short Term Employee Benefits (Cash & Non-Cash) 51,789,811 34,358,028 Post Employee Benefits 1,275,750 -

53,065,561 34,358,028

b) Other Transactions With Key Management Personnel

There were no other transactions with the Key Management Personnel during the year.

33 FAIR VALUE The fair values of the financial assets and liabilities are 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.

The following methods and assumptions were used to estimate the fair values:

Cash and short-term deposits, trade receivables and trade payables approximate their carrying amounts largely due to the short-term maturities of these instruments.

Long-term floating - rate receivables/borrowings are evaluated by the Group/Company based on parameters such as interest rates, specific country risk factors, individual creditworthiness of the customer and the risk characteristics of the financed project. Based on this evaluation, allowances are taken to account for the expected losses of these receivables. As at 31 March 2015, the carrying amounts of such receivables, net of allowances, are not materially different from their calculated fair values


33.1 Fair Value HierarchyThe Group/Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation techniques.

Level 1: Quoted (unadjusted ) prices in active markets for identical assets or liabilities

Level 2: Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly

Level 3: Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data

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34 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (GROUP/COMPANY) The Group’s/Company’s principal financial liabilities, other than derivatives, comprise loans and borrowings and trade and other payables. The main purpose of these financial liabilities is to finance the Group’s/Company’s operations and to provide guarantees to support its operations. The Group/Company have loan and other receivables, trade and other receivables, and cash and short-term deposits that arrive directly from its operations.

The Group/Company are exposed to market risk, credit risk and liquidity risk

The Group’s/Company’s senior management oversees the management of these risks. The Group’s/Company’s senior management is supported by the Board of Directors (BOD) that advises on financial risks and the appropriate financial risk governance framework for the Company. BOD provides assurance to the Group’s/Company’s senior management that the Group’s/Company’s financial risk-taking activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with group policies and group risk appetite. It is the Group’s policy that all derivative activities for risk management purposes are required to be approved by Board of Directors of Hemas Holdings PLC.

The Board of Directors reviews and agrees policies for managing each of these risks which are summarized below.

Market RiskMarket risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise four types of risk: interest rate risk, currency risk, commodity price risk and other price risk, such as equity price risk. Financial instruments affected by market risk include loans and borrowings and deposits.

The overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the entity’s financial performance.

Interest Rate RiskInterest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

Foreign Currency RiskForeign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group’s/Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s/Company’s operating activities (when revenue or expense is denominated in a different currency from the Group’s/Company’s functional currency).

Group

Non-Financial Assets Measured at Fair Value 31-Mar-2015 Level 1 Level 2 Level 3Land and Building 2,439,028,677 2,439,028,677

31-Mar-2014 Level 1 Level 2 Level 3

Land and Building 2,364,571,476 2,364,571,476

Company

Non-Financial Assets Measured at Fair Value 31-Mar-2015 Level 1 Level 2 Level 3Land and Building 682,402,689 682,402,689

31-Mar-2014 Level 1 Level 2 Level 3Land and Building 664,787,376 664,787,376


126

Equity Price RiskThe Group’s/Company’s listed and unlisted equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Group’s/Company’s Board of Directors reviews and approves all equity investment decisions.

Credit RiskCredit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group/Company is exposed to credit risk from its operating activities (primarily for trade receivables).

Trade ReceivablesCustomer credit risk is managed by each company subject to the Group’s established policy, procedures and control relating to customer credit risk management. Credit quality of the customer is assessed based on the credit risk evaluation model and individual credit limits are defined in accordance with this assessment.

Outstanding customer receivables are regularly monitored and contracts are signed and agreed with all credit customers.

Additionally, a large number of minor receivables are grouped into homogenous groups and assessed for Impairment collectively. The calculation is based on actual incurred historical data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in Note 17. The company does not hold collateral as security.

Financial Instruments and Cash Deposits Credit risk from balances with banks is managed by the Group’s treasury department in accordance with the Group’s policy. Investments of surplus funds are made only with approved counter-parties as per the Treasury Policy and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the Group’s Board of Directors on an annual basis, and may be updated throughout the year subject to approval of the Group’s Treasury Committee. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through potential counterparty’s failure. The company’s maximum exposure to credit risk for the components of the statement of financial position is the carrying amounts as illustrated in Note 17 except for financial guarantees and derivative financial instruments.

Liquidity Risk The Group/Company monitors its risk to a shortage of funds by setting up a minimum liquidity level. The Group’s/Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts and bank loans. The Group/Company assessed the concentration of risk with respect to refinancing its debt and concluded it to be low. Access to sources of funding is sufficiently available and debt maturing within 12 months can be rolled over with existing lenders.


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The table below summarizes the maturity profile of the Group’s financial liabilities based on contractual payments.

Group

As at 31st March 2015 On Demand Less Than 3 Months

3 to 12 Months

1 to 5 Years > 5 Years Total


Interest-Bearing Loans and Borrowings

90,269,866 38,185,534 114,556,602 323,398,206 - 566,410,208

Trade and Other Payable - 361,022,404 - - - 361,022,404 90,269,866 399,207,938 114,556,602 323,398,206 - 927,432,612

As at 31st March 2014 On Demand Less Than 3 Months

3 to 12 Months



Interest - Bearing Loans and Borrowings

18,435,044 37,747,790 113,243,368 970,339,134 - 1,139,765,336

Trade and Other Payable - 461,957,134 - - - 461,957,134 18,435,044 499,704,924 113,243,368 970,339,134 - 1,601,722,470

Company

As at 31st March 2015 On Demand Less than 3 Months

3 to 12 Months




23,754,882 22,687,589 68,062,766 132,339,154 - 246,844,391

Trade and Other Payable - 141,456,656 - - - 141,456,656 23,754,882 164,144,245 68,062,766 132,339,154 - 388,301,047

As at 31st March 2014 On Demand Less than 3 Months

3 to 12 Months




- 22,687,589 68,062,766 273,811,097 - 364,561,452

Trade and Other Payable - 143,985,265 - - - 143,985,265 - 166,672,854 68,062,766 273,811,097 - 508,546,717

Capital ManagementCapital includes ordinary shares. The primary objective of the Group’s/Company’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize shareholder value.

The Group/Company manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure, the Group/Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes managing capital during the years ended 31 March 2015 and 31 March 2014. The Group/Company monitors capital using a gearing ratio, which is debt divided by total capital plus debt. The Group’s policy is to keep the gearing ratio below 40%.


128

ANALYSIS OF SHAREHOLDERS Ordinary Voting Shares

31.03.2015 31.03.2014No. of Total % No. of Total %

Shareholders Holding Shareholders Holding

1 - 1000 652 144,858 0.19 716 169,946 0.22 1,001 - 10,000 250 985,137 1.30 282 1,110,966 1.47 10,001 - 100,000 131 4,393,879 5.82 142 4,834,904 6.40 100,001 - 1,000,000 36 9,352,816 12.39 33 7,740,874 10.25 Over 1,000,000 5 60,638,048 80.30 5 61,658,048 81.66

1,074 75,514,738 100.00 1,178 75,514,738 100.00

Institutions 72 64,941,826 86.00 68 56,852,687 75.29Individuals 1,002 10,572,912 14.00 1,110 18,662,051 24,71

1,074 75,514,738 100.00 1,178 75,514,738 100.00

Ordinary Non-Voting Shares

31.03.2015 31.03.2014No. of Total % No. of Total %

Shareholders Holding Shareholders Holding

1 - 1000 426 125,915 0.35 481 145,054 0.40 1,001 - 10,000 189 653,832 1.81 215 786,570 2.19 10,001 - 100,000 76 2,364,691 6.57 84 2,386,329 6.62 100,001 - 1,000,000 18 5,081,520 14.11 14 3,824,285 10.62 Over 1,000,000 4 27,785,098 77.15 4 28,868,818 80.17

713 36,011,056 100.00 798 36,011,056 100.00

Institutions 74 33,251,363 92.34 68 32,193,697 89.40Individuals 639 2,759,693 7.66 730 3,817,359 10.60

713 36,011,056 100.00 798 36,011,056 100.00

SHARE TRADING INFORMATIONOrdinary Voting Shares

2015 2014

Highest Market Price (Rs) 37.00 (2.10.14) 32.00 (16.01.14)Lowest Market Price (Rs) 27.00 (18.06.14) 21.70 (14.05.13)Last Traded Price (Rs) 28.00(25.3.15) 28.00 (31.03.14)No. of Shares Traded 10,311,844 3,727,661No. of Trades 941 1,354Turnover (Rs) 317,253,598 102,393,057

Ordinary Non-Voting Shares2015 2014

Highest Market Price (Rs) 27.30(07.10.14) 20.00 (02.05.13)Lowest Market Price (Rs) 17.10(06.05.14) 13.50 (05.09.13)Last Traded Price (Rs) 21.50(27.03.15) 18.70 (28.03.14)No. of Shares Traded 7,022,309 2,216,611No. of Trades 1,543 1,218Turnover (Rs) 157,078,181 38,100,665

Investor Information

PUBLIC HOLDING

2015 2014

Ordinary (Voting) Shares 20.01% 28.75%Ordinary (Non-Voting) Shares 26.64% 26.64%

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MAJOR SHAREHOLDERS

20 Major shareholders - Voting Ordinary Shares

31.03.2015 31.03.2014No. of Shares % No. of Shares %

Leisure Asia Investments Ltd 21,251,037 28.14 21,251,037 28.14Hemas Holdings PLC 20,957,881 27.75 16,521,918 21.88Lodging Investment (Labuan) Ltd. 14,972,006 19.83 14,972,006 19.83Lodging Investment (Labuan) Ltd. 2,162,572 2.86 - -Seylan Bank Ltd./ B.S.M. De Silva 1,294,552 1.71 1,294,552 1.71Mr. E. J. De Soysa 800,000 1.06 800,000 1.06Mr. J. C. L. De Mel 601,925 0.80 601,925 0.80The Ceylon Guardian Investment Trust PLC 560,924 0.74 - -Mrs. B. C. R. Wickramaratne 552,305 0.73 552,305 0.73The Ceylon Investment PLC 549,890 0.73 - -Acuity Partners (Pvt) Ltd. / Mr B S M De Silva 490,000 0.65 490,000 0.65Mrs. M. V. Fernando 400,000 0.53 390,765 0.52The Chamber Of Commerce Account No 02 375,000 0.50 - -Dr. B. G. S. De Silva 355,747 0.47 355,747 0.47Mrs. C. A. Wenceslaus 286,337 0.38 286,337 0.38Peoples' Leasing & Finance PLC/L. P. Hapangama 281,991 0.37 - -Rubber Investment Trust Ltd. 270,067 0.36 - -Mrs. A. R. Gamage 248,838 0.33 248,838 0.33Dr. R. S. Deraniyagala 225,662 0.30 225,662 0.30Mrs. H. G. S. Ansell 216,825 0.29 216,825 0.29

66,853,559 88.53 - -Shares held by the balance shareholders 8,661,179 11.47 - -

75,514,738 100 - -

20 Major Shareholders - Non-Voting Ordinary Shares

31.03.2015 31.03.2014No. of Shares % No. of Shares %

Leisure Asia Investments Ltd. 10,165,975 28.23 10,165,975 28.24Hemas Holdings PLC 9,094,512 25.25 9,094,512 25.25Lodging Investment (Labuan) Ltd. 7,156,750 19.87 7,156,750 19.87Deutsche Bank AG as Trustee for JB Vantage Value Equity Fund 1,367,861 3.8 - -Askold (Pvt) Ltd. 750,000 2.08 - -Trading Partners (Pvt) Ltd. 543,201 1.51 - -Ceylon Guardian Investment Trust PLC A/C # 01 464,400 1.29 101,040 0.28Rosewood (Pvt) Ltd - Account No. 1 420,026 1.17 2,451,581 6.81Shalsri Investments (Pvt) Ltd. 341,825 0.95 341,825 0.95Intercom Ltd. 320,000 0.89 320,000 0.89Acuity Partners (Pvt) Ltd. /Mr. B. S. M. De Silva 309,570 0.86 309,570 0.86Ceylon Investment PLC 266,296 0.74 - -Waldock Mackenzie Ltd/ Mrs. G. Soysa 256,856 0.71 356,856 0.99Pershing LLC S/A Averbach Grauson & Co 196,526 0.55 - -Guardian Fund Management Ltd. / The Aitken Spence and Associated Companies Executive Staff Provident

195,000 0.54 - -

Peoples leasing & Finance PLC/L.P.Hapangama 193,747 0.54 - -Mr. H. W. M. Woodward 184,723 0.51 184,723 0.51Ms. P. G. Nirosha Dilrukshi 155,899 0.43 - -Ms. H. G. S. Ansell 136,300 0.38 136,300 0.38Mr. M. K. Kutubdeen 134,000 0.37 134,000 0.37

32,653,467 90.68 - -Shares held by the balance shareholders 3,357,589 9.32 - -

36,011,056 100 - -


130

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131

NOTICE IS HEREBY GIVEN that the FORTY SEVENTH (47TH) ANNUAL GENERAL MEETING of SERENDIB HOTELS PLC will be held at the Auditorium of The Institute of Chartered Accountants of Sri Lanka, No. 30 A, Malalasekara Mawatha, Colombo 7 on Friday, 10th July 2015 at 3:00 p.m. for the following purpose:

AGENDA

1. To receive and consider the Statement of Accounts for the year ended 31st March 2015 together with the Report of the Directors and Auditors thereon.

2. To re-elect Mr. D.T.R. De Silva who retires by rotation in terms of Article 85 of the Articles of Association of the Company.

3. To re-elect Dr. R. N. A. Athukorala, who retires by rotation in terms of Article 85 of the Articles of Association of the Company.

4. To pass the Ordinary Resolution set out below to re-appoint as a Director Deshamanya J. C. L. De Mel who has reached the age of 78 years on 6th May 2015 and vacates office as a Director of the Company in terms of Section 210 (2) (b) of the Companies Act No. 7 of 2007.

“RESOLVED that Deshamanya J. C. L. De Mel who has reached the age of 78 years on 6th May 2015 be and is hereby re-appointed a Director of the Company and it is hereby declared that as provided for in Section 211 (1) of the Companies Act No. 7 of 2007 that the age limit of 70 years referred to in Section 210 of the said Companies Act shall not apply to Deshamanya J. C. L. De Mel.”

5. To re-appoint Messrs Ernst & Young, Chartered Accountants as the Auditors of the Company for the ensuing year and authorize the Directors to determine their remuneration.

6. To authorize the Directors to determine and make contributions to charity.

7. To consider any other business of which due notice has been given.

By Order of the Board of

SERENDIB HOTELS PLC

HEMAS CORPORATE SERVICES (PVT) LTDSecretaries Colombo17th June 2015

Notes:(i) A Member unable to attend is entitled to appoint a proxy to attend and vote on his/her behalf.

(ii) A proxy need not be a Member of the Company.

(iii) A Form of Proxy accompanies this Notice.

Notice of Meeting


132

Notes

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133

Form of Proxy (Voting Shareholders)

I/We ……………………………………………………………………………………………………………………(NIC No………….....................……………..)

of…………………………………………………………………………………………….......................……………………………………………..……………………

being a Member/s of SERENDIB HOTELS PLC do hereby appoint …………………............................….…………………….…………………

……………………………………………………………………………………………..................………………(NIC No.………….................………….……..)

of…………………………………………....................................……………………….……………………………………………………or failing him/her

Mr. A. N. Esufally or failing him

Mr. D. T. R. De Silva or failing him

Deshamanya J. C. L. De Mel or failing him

Mr. W. M. De F. Arsakularatne or failing him

Prof. L. D. K. B. Gamage or failing him

Mr. E. J. D. Rajakarier or failing him

Mr. M. A. Jafferjee or failing him

Dr. R. N. A. Athukorala or failing him

Mr. S. M. Enderby

as*my/our proxyholder to represent *me/us and to vote on *my/our behalf at the Forty Seventh (47th) Annual General Meeting of the Company to be held on Friday, 10th July 2015 at 3.00 p.m. at the Auditorium of The Institute of Chartered Accountants of Sri Lanka, No. 30 A, Malalasekara Mawatha, Colombo 7 and any adjournment thereof and at every poll which may be taken in consequence thereof.

For Against

1 To receive and consider the Statement of Accounts for the year ended 31st March 2015 together with the Report of the Directors and Auditors thereon.

2 To re-elect Mr. D. T. R De Silva, who retires by rotation in terms of the Articles of Association of the Company

3 To re-elect Dr. R. N. A. Athukorala, who retires by rotation in terms of the Articles of Association of the Company

4 To re-appoint Deshamanya J. C. L. De Mel, as Director, in terms of Section 211 (1) of the Companies Act No. 7 of 2007

5 To re-appoint Messrs Ernst & Young as Auditors and authorize the Directors to determine their remuneration.

6 To authorize the Directors to determine and make Contributions to charity.

Signature of Shareholder/s …………………….….................................……………… NIC/Passport No…………..........................………….

Dated this ……….......................................……… day of ………………………. 2015.

(i) *Please delete the inappropriate words.

(ii) Instructions regarding completion appear on the reverse hereof


134

INSTRUCTIONS FOR COMPLETION

1. Kindly perfect the Form of Proxy by filling in legibly your name in full, NIC No. and address and by signing in the space provided. Please fill in the date of signature.

2. Shareholders should fill in the appropriate Form of Proxy as per the class of shares held by them.

3. Please indicate with an “X” in the space provided how your Proxy is to vote on each resolution. If no indication is given, the Proxy in his/her discretion will vote as he/she thinks fit.

4. In the case of Corporate Members, the Form of Proxy must be completed under the Common Seal, which should be affixed and attested in the manner prescribed by the Articles of Association.

5 If the Form of Proxy is signed by an Attorney, the relevant Power of Attorney should also accompany the completed Form of Proxy.

6. In case of joint holders the Form of Proxy must be signed by the first holder.

7. The completed Form of Proxy should addressed to the Secretaries and deposited at the Registered Office of the Company at “Hemas House”, No. 75, Braybrooke Place, Colombo 02 not less than forty eight (48) hours before the appointed time for the Meeting

Pursuing Excellence

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Form of Proxy (Non -Voting Shareholders)

I/We ……………………………………………………………………………………………………………………(NIC No………….....................……………..)

of…………………………………………………………………………………………….......................……………………………………………..……………………

being a Member/s of SERENDIB HOTELS PLC do hereby appoint …………………............................….…………………….…………………

……………………………………………………………………………………………..................………………(NIC No.………….................………….……..)

of…………………………………………....................................……………………….……………………………………………………or failing him/her

Mr. A. N. Esufally or failing him

Mr. D. T. R. De Silva or failing him

Deshamanya J. C. L. De Mel or failing him

Mr. W. M. De F Arsakularatne or failing him

Prof. L. D. K. B. Gamage or failing him

Mr. E. J. D. Rajakarier or failing him

Mr. M. A .Jafferjee or failing him

Dr. R. N. A. Athukorala or failing him

Mr. S. M. Enderby

as*my/our proxyholder to represent *me/us and /or to speak on *my/our behalf at the Forty Seventh (47th) Annual General Meeting of the Company to be held on Friday, 10th July 2015 at 3.00 p.m. at the Auditorium of The Institute of Chartered Accountants of Sri Lanka, No. 30 A, Malalasekara, Colombo 7 and any adjournment thereof and at every poll which may be taken in consequence thereof.

Signature of Shareholder/s …………………….………………… NIC/Passport No…………………………….

Dated this ……………… day of ………………………. 2015.

(i) *Please delete the inappropriate words.

(ii) Shareholders of Non-Voting shares are entitled only to attend and speak at the meeting.

(ii) Instructions regarding completion appear on the reverse hereof.


136

INSTRUCTIONS FOR COMPLETION

1. Kindly perfect the appropriate Form of Proxy by filling in legibly your name in full, NIC No. and address and by signing in the space provided. Please fill in the date of signature.

2. Shareholders should fill in the appropriate Form of Proxy as per the class of shares held by them.

3. In the case of Corporate Members, the Form of Proxy must be completed under the Common Seal, which should be affixed and attested in the manner prescribed by the Articles of Association.

4 If the Form of Proxy is signed by an Attorney, the relevant Power of Attorney should also accompany the completed Form of Proxy.

5. In case of joint holders the Form of Proxy must be signed by the first holder.

6. The completed Form of Proxy should be addressed to the Secretaries and deposited at the Registered Office of the Company at “Hemas House”, No. 75, Braybrooke Place, Colombo 02 not less than forty eight (48) hours before the appointed time for the meeting.

Corporate Information

NAME OF THE COMPANY Serendib Hotels PLC

LEGAL FORMA public Quoted Company with Limited Liability incorporated on 9th September 1966 under the Companies Ordinance No. 51 of 1938 (Cap 145) and re-registered under the Companies Act No. 7 of 2007.

COMPANY REGISTRATION NOPQ223

BOARD OF DIRECTORS A.N. Esufally – Chairman (Alt V.H.A.Perera)D. T. R. De Silva – Managing DirectorDeshamanya J. C. L. De Mel W. M. De F. ArsakularatneProf. L. D. K. B. GamageE. J. D. RajakarierM. A. JafferjeeDr. R. N. A. AthukoralaS. M. Enderby

REGISTERED OFFICE “ Hemas House”, No. 75, Braybrooke Place, Colombo 02.Tel: +94 (11) 4790500-6Fax: +94 (11) 2438933E-mail: [email protected]: www.serendibleisure.com

SECRETARIES Hemas Corporate Services (Pvt) Ltd.Level 9, “Hemas House”, No. 75, Braybrooke Place,Colombo 02 Tel : + 94 (11) 4731731Fax : +94 (11) 4731777

REGISTRARSSSP Corporate Services (Pvt) Ltd.No. 101, Inner Flower RoadColombo 03Tel : + 94 (11) 2573894Fax : +94 (11) 2573609

MANAGING AGENTSerendib Leisure Management Limited

AUDITORS Ernst & YoungChartered Accountants201, De Saram Place,Colombo 10.

BANKERS Commercial Bank of Ceylon PLCHatton National Bank PLCSampath Bank PLC

HOTEL Avani Bentota Resort & SpaBentotaTel: +94 (34) 4641464 - 7Fax: + 94 (34) 2275313

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Printed by Softwave Printing and Publishing (Pvt) LtdPhotography by Dhanush de Costa

www.serendibleisure.com

Serendib Hotel AR 2014-15

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Transcript of Serendib Hotel AR 2014-15