Asian Hotels and Properties PLC · 2016-09-29 · Asian Hotels and Properties PLC 1 annual report 15 In an Industry that caters to varIed lIfestyles, cInnamon Grand has stood the

Asian Hotels and Properties PLCAnnual Report 2014/15

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Asian Hotels and Properties PLCNo. 77, Galle road, Colombo 03,Sri Lanka.T : 0094 -11 2437437F : 0094 -11 5547555

Corporate Information

NAME OF COMPANYAsian Hotels and Properties PLC

LEGAL FORMA Public Limited Liability Company incorporated in Sri Lanka in 1993 and registered with the Board of Investment of Sri Lanka under Section 17 of the Board of Investment Law No. 4 of 1978.

The Company was re-registered as per the New Companies Act No. 7 of 2007 on 15th June 2007.

STOCK EXCHANGE LISTINGThe issued Ordinary shares of the Company are listed on the Main Board of the Colombo Stock Exchange of Sri Lanka.

COMPANY REGISTRATION NO. PQ 2

BOARD OF DIRECTORSMr. Susantha Chaminda Ratnayake - ChairmanMr. Ajit Damon Gunewardene - Managing DirectorMr. James Ronnie Felitus PeirisMr. Rohan Jebashantham KarunarajahMr. Suresh RajendraMr. Sanjiva Kanishka Gamini SenanayakeMs. Shirani Anoja JayasekaraMr. Cholmondeley John Lloyd Pinto

COMPANY SECRETARIESKeells Consultants (Private) Limited117, Sir Chittampalam, A .Gardiner Mawatha, Colombo 2.

REGISTERED OFFICENo.77, Galle Road, Colombo 03Tel: +94 11 2437437 Fax: +94 11 5547555E-mail: [email protected]

AUDITORSKPMGChartered Accountants32A, Sir Mohamed Macan Marker MawathaColombo 03.

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

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

1Asian Hotels and Properties Plc

Annual Report 2014/15

In an Industry that caters to varIed lIfestyles, cInnamon Grand has stood the test of tIme as a luxury hotel that delIvers the best experIences to travellers from all over the Globe. every member of our team strIves wIth passIon and dedIcatIon to make every Guest stay and experIence an

extraordInary one. We have remained true to the patterns

that have kept our valued customers coming back over the

years, by being the best in the business. We have remained

in the hearts of our valued patrons Who have returned

time and time again to be a part of a sustainable, ethical

and progressive movement, Where luxury is not only guilt-

free but aims at a greater cause. through the blueprint of

great service delivered by an exceptional team, consistent

standards, amazing ambiance and locale, We have created

unforgettable memories, and a formula for excellence as a

city hotel, that is unmatched.

Asian Hotels and Properties Plc


Contents

Group Financial Highlights of 2014/15 4Our Year at a Glance 8

Chairman’s Message 16

Management Discussion & Analysis 22Operating Environment 22

Group Performance Overview 24Management Structure of Cinnamon Grand 30

Awards and Certifications 32Stakeholder Mapping and Engagement Process 34

Developing a Dynamic Training Curriculum 45Sustainable Business 50

Corporate Social Responsibility 55

Board of Directors 60Risk Management 62

Corporate Governance 69Annual Report of the Board of Directors 98

Financial Statements Financial Calender 106

Report of the Audit Committee 108Statement of Directors’ Responsibility 110

Independent Auditors’ Report 111Income Statement 112

Statement of Profit or Loss and Other Comprehensive Income 113Statement of Financial Position 114Statement of Changes in Equity 115

Statement of Cash Flow 117Notes to the Financial Statements 118

Consolidated Value Added Statement 162Information to Shareholders & Investors 163

Five-Year Financial Summary of the Group 165Five-Year Financial Summary Property Development 165Five-Year Financial Summary Cinnamon Grand Hotel 166

Notice of Meeting 167Form of Proxy 171

Corporate Information Inner Back Cover



corporate missionTo generate long-term, sustainable,

shareholder wealth by developing the capacity to add value to land,

buildings and related investments and combine them uniquely so that

they complement and reinforce each other.

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



Group Financial Highlights of 2014/15

2014/15 2013/14 Change %

Financial Performance (Rs.'000)Total Revenue 8,080,152 8,256,149 -2%Gross Profit 4,723,424 5,016,587 -6%Net Finance Income 199,768 301,755 -34%Change in Fair Value of Investment Property 28,792 268,564 -89%Profit Before Taxation 2,350,653 3,046,463 -23%Income Tax 263,196 227,952 -15%Profit After Taxation 2,087,457 2,818,511 -26%

Financial Position (Rs.'000)Shareholders’ Funds 24,036,938 22,336,058 8%Market Capitalisation 27,894,844 26,035,188 7%Net Cash Flow from Operating Activities 2,575,285 3,321,144 -22%Cash & Cash Equivalents 2,858,903 3,434,655 -17%Total Non Current Assets 25,463,363 23,261,641 9%Current Assets 3,932,511 4,358,004 -10%Current Liabilities 1,387,524 1,273,455 9%

Information per Ordinary Share (Rs.)Earnings 3.97 5.42 -27%Dividend 4.0 4.0 0%Last Traded Market Price 63.0 58.8 7%Highest Market Price 75.0 79.0 -5%Lowest Market Price 58.0 57.0 2%Net Assets 54.29 50.45 8%

Key Performance IndicatorsGroup Occupancy % 66% 70% -4%P/E Ratio (Times) 15.88 10.85 46%Dividend Pay-out Ratio (Times) 1.01 0.74 36%Current Ratio ( Times) 2.83 3.42 -17%

2011

2012

2013

2014

2015

Net Assets per Share (Rs.)

77.5%

30.9833.83

49 50.4554.29

2011

2012

Group Revenue Profit Before Taxation

2013

2014

2015

Group Revenue & Profitability (Rs.Mn)

7,457

2,184

8,855

2,655

7,891

3,336

8,256

3,046

8,080

2,351



Rs. 3.97Earnings Per Share

Rs. 2.08 BnProfit After Tax

Rs. 54.29Net Assets Per Share

Rs. 4.00Dividend Per Share

Rs. 8.08 BnGroup Revenue

46%Rooms Market Share

2011

2012

2013

2014

2015

Dividend Payout Ratio (Times)

77.5%

0.12

0.41

0.71 0.74

1.01

2011

2012

2013

2014

2015

Earnings per Share (Rs.)

4.01

4.85

5.635.42

3.97



DiningTHE bEST IN quALITY, THE FReSheSt InGReDIentS. We pReSent the DISCeRnInG pAtteRnS THAT DELIGHT AND TITILLATE THE TASTE BuDS In A pROFuSIOn OF GREAT SkILL, CuLINARY ARTISTRY AND FLAVOuRS FROM AROunD the wORLD.



AmbienceRELAxED, INVIGORATING, INTIMATE, ADVENTuROuS. WhAteveR AMBIenCe YOu SEEk, wE CAN OFFER A DIveRSe RAnGe OF DInInG AnD enteRtAInMent OPTIONS THAT CAN SOOTHE, AnD eneRGISe YOuR MInD AND SOuL.



Cinnamon Grand organised an alms giving ceremony for the sangha at Nuga Gama, in view of the Vesak celebrations. the head priest of the Sri Nandana Pirivena Sarikkamulla, Keselwatta and 48 samanera monks attended the alms giving.

APRIL

LA SALLIAN MONTESSORI pROJeCt – phASe II

MAY

ALMSGIVING FOR SAMANERA MOnKS At nuGA GAMA

SuSTAINAbLE VESAk AT CInnAMOn GRAnD

On Earth Day, the Green Team and associates of Cinnamon Grand volunteered to paint the La Sallian Montessori Modera, to bring the beauty of nature within the walls of the Montessori, given its location devoid of a natural landscape. this was the phase II of an ongoing commitment to uplift the educational standards of these under privileged students, growing up in a challenging environment.

A special page on sustainability was launched in line with earth Day on the main Cinnamon Grand Facebook page. this page includes information on the hotel’s sustainability policy and tips on how individuals can help make a difference in creating a better planet.

Cinnamon Grand Colombo in keeping with its promise of being a sustainable five-star city hotel decorated the premises with unique decorations made out of discarded plastic bottles and cups. the décor was based on a three-month collection of 3,500 plastic bottles and 8,000 plastic cups.

Our Year at a Glance

LAuNCH OF SuSTAINAbILITY FACeBOOK pAGe



JUNE

wORLD ENVIRONMENT DAY SEMINAR ON CLIMATE CHANGE

bANNERS TO bAGS (b2b) SALE

INTER-DEPARTMENTAL PLANET quIZ

GRAND ExPERIENCE FOR JAFFnA StuDentS

CInnAMOn GRAnD WInS bATTLE OF THE SPICES

Cinnamon Grand Colombo organised a seminar for associates on Climate Change in commemoration of World Environment Day. Senior Lecturer Dr. Erandathi Lokupitiya from the university of Colombo provided insights into this subject.

The fifth edition of Cinnamon Grand’s unique recycling initiative Banners to Bags (B2b) sale was held on World environment Day on 5th June. 170 durable, water-proof and trendy bags were made with the 45 banners which were recycled for this cause.

Cinnamon Grand Colombo organised an Inter-departmental planet Quiz in commemoration of World environment Day on 06th June. Based on sustainability, climate change and eco practices at the hotel, the first- ever quiz was a resounding success, with the hR team emerging winners.

Cinnamon Grand Colombo hosted 30 students from Jaffna to a hotel tour, giving them the total hotel experience.

Cinnamon Grand won the coveted Chairman’s trophy at the 10th edition of the annual ‘Battle of the Spices’ encounter between Cinnamon Grand and Cinnamon Lakeside. Cinnamon Grand’s Dimutha Fernando from housekeeping was bestowed the title ‘Man of the Match’ while also taking home the title ‘Best Batsman.’ Sasindu Madusanka from Grand’s F&B Banquets was deemed ‘Best Bowler’ at the match.



JULY

OPENING OF NOODLES ReStAuRAnt

JUNE

DenGue AWAReneSS SeMInAR tRIpADvISOR CeRtIFICAteS OF ExCELLENCE

GRAnD tOuR FOR the STuDENTS OF CEYLON SCHOOL

FOR DEAF AND bLIND

National Dengue Control unit, Consultant Community physician Dr. namalika pannilahetti addressed the issues relating to and the prevention of dengue at an awareness seminar organised for hotel associates.

GReen CORRIDOR – phASe II

Cinnamon Grand’s Green Corridor was re-launched with informative boards showcasing the hotel’s monthly consumption of water, electricity and waste generated, etc; to create awareness among associates about the hotel's carbon footprint.

The world’s largest travel site, TripAdvisor further sealed Taprobane, Nuga Gama, The London Grill and echo with a branding stamp of distinction, honouring them with Certificates of Excellence.

expanding the eclectic dining offerings, Cinnamon Grand opened a new restaurant Noodles, featuring a fusion of flavours from Vietnam, Thailand, Singapore, Japan, China and Malaysia. extending the number of dining outlets to 14, the new restaurant presents over 70 noodle-based broths and dishes, made from 10 varieties of noodles.

Cinnamon Grand Colombo hosted 35 students with hearing impairments for a short tour of the hotel, concluding with lunch at nuga Gama.

Our Year at a Glance Contd.



SEPTEMBER

vISIt OF ChIneSe pReSIDent

AUGUST

InteR-COMpAnY SWIMMInG Meet

VISIT OF MALDIVIAN PRESIDENT

wORLD TOuRISM DAY SuPPLIER MEET

Cinnamon Grand and Cinnamon Lakeside teamed up for the JkH Inter-company Swimming Championship under the ‘Cinnamon's city hotels’ banner and emerged Overall Runners up of the championship. the combined team also took home the Overall Men's Championship trophy.

Cinnamon Grand Colombo extended a grand welcome to his excellency President of China xi Jinping and First Lady Peng Liyuan who arrived in Sri Lanka for a State visit on 16th September. Cinnamon hotels & Resorts Sector head-City hotels and Cinnamon Grand General Manager Rohan Karr welcomed the president.

Cinnamon Grand Colombo hosted Maldivian president Abdulla Yameen Abdul Gayoom as he arrived in the country for the 8th General Meeting of International Conference of Asian political parties (ICApp).

In commemoration of World tourism Day, Cinnamon Grand Colombo organised a Supplier Meet on 27th September at nuga Gama. the event provided a platform for over 20 talented artisans from across the island to showcase their skills and promote sales within Cinnamon's city hotels.



NOVEMBER

SeCRetARIeS' nIGht

OCTOBER

JKh InteR COMpAnY RuGBY 7’S

JKh Intercompany Rugby 7’s was held on 4th October at CR&FC. the team from Cinnamon Grand emerged plate Champions at the event. Cinnamon City Hotels – Cinnamon Grand Colombo, Cinnamon Lakeside and Cinnamon Red joined as one to cheer all teams and shared a common ‘Cinnamon City hotels’ tent at the event.

MISS FRAnCe AnD FRenCh TRAVEL AGENTS AT NuGA GAMA

BReASt CAnCeR AWAReneSS SeMInAR AnD SCReenInG

Cinnamon Grand hosted reigning Miss France 2014 Flora Coquerel, Miss France 2012 Delphine Wespiser and 57 French travel agents for a lavish authentic Sri Lankan dinner at Nuga Gama as they concluded a mega island familiarisation tour organised by Cinnamon hotels & Resorts in partnership with SriLankan Airlines.

Committed to nurturing the wellbeing of Cinnamon Grand's associates, the hotel conducted a Breast Cancer Awareness Seminar followed by a free-cancer screening and pap-smear test courtesy of Cancer Control Program for female staff. This was in commemoration of World Breast Cancer Awareness Month (October).

Cinnamon hotels & Resorts Sector head-City hotels and Cinnamon Grand General Manager Rohan Karr along with the sector sales team hosted an evening of appreciation and celebration to thank all those who support the Cinnamon's city hotels – Cinnamon Grand, Cinnamon Lakeside and Cinnamon Red at a gala Secretaries' night in november at the Oak Room, Cinnamon Grand Colombo. Held for the first time under the city sector banner, the evening saw 650 guests enjoying an eventful evening.




GRAnD SeRveS ReFReShMentS tO MASSeS AttenDInG hIS

HOLINESS POPE FRANCIS’S MASS AT GALLE FACE GREEN

DECEMBER JANUARY 2015

VISIT OF FORMER MALAYSIAN pRIMe MInISteR

Santa’s Workshop

InteR-DepARtMent CRICkET SIxES

Over 600 Cinnamon Grand associates gathered at the BRC Grounds to see 30 teams competing neck-to-neck, vying to take home the championship trophies (men/women) at the annual Inter-Department Cricket Sixes. housekeeping Superkings B team won the men's championship trophy while F&B Avengers won the womens championship. A Cricket Carnival was also organised to ensure a fun-filled day for the associates.

Cinnamon Grand extended a warm welcome to former prime Minister of Malaysia hon. tun. Dr. Mahathir Mohamad who arrived at the hotel on 09 December for a short stay to attend the ‘hambantota Conclave ’14, a first-of-its-kind forum bringing together major international investment gurus and business community of Sri Lanka. Resident Manager Chris Quyn is pictured welcoming him.

Over 230 kids enjoyed the magic of the season inside Santa’s Kitchen at Cinnamon Grand’s popular Santa’s workshop, held for the seventh consecutive year.

During his holiness pope Francis’s two-day visit to Sri Lanka, the Pope conducted a mass for the populace at the Galle Face Green on 14 January. For the large crowd that came from near and afar, Cinnamon Grand hosted a coffee stall in the early hours of the morning and a cool drinks stall from mid morning till noon. Over 15,000 cups of coffee were served to pilgrims heading for the mass in the morning and nearly 50,000 cups of cool drinks in the afternoon for those returning from the mass.



JANUARY 2015 FEBRUARY MARCH

tGIF FACeBOOK COMpetItIOn

ChInA'S tIAnJIn MARItIMe COLLEGE STuDENTS VISIT GRAND

Cinnamon Grand Colombo launched a weekly thank Grand It’s Friday Competition, giving away exciting prizes courtesy the hotel through a range of Facebook competitions to loyal fans and patrons.

Cinnamon Grand Colombo hosted 17 students from tianjin Maritime College on a Grand hotel tour, educating them on products and services that the hotel offers and the efficiencies that make Cinnamon Grand a truly ‘grand’ hotel.

StuDentS FROM MAnAGeMent FACuLTY OF uVA wELLASSA

vISIt GRAnD

CInnAMOn GRAnD BeCOMeS THE MOST SuSTAINAbLE CITY

HOTEL IN SRI LANkA

40 hospitality management students from the Management Faculty of uva Wellassa university toured Cinnamon Grand Colombo. After the tour, Cinnamon hotels & Resorts Sector head-City hotels and Cinnamon Grand General Manager Rohan Karr shared his life experience in an inspiring speech and entertained questions from students as well.

Cinnamon Grand Colombo achieved its vision of becoming the most sustainable five-star city hotel in Sri Lanka by 2015, by putting in place the state-of-the-art Schneider Building Management System (BMS) at an investment of Rs.170 million.

The hotel is also the first hotel in South Asia to put the system in place. With the wholly integrated system, Cinnamon Grand is coined as an “intelligent building” by Lanka Energy Conservation, the company that worked with the hotel in implementing the system.




LONG SERVICE AwARDS

ASSOCIATES quARTERLY MEETING

eARth hOuR

Cinnamon Grand held its annual Service Awards to felicitate the commitment of associates who have served the hotel over the years. 165 staff members who had completed tenures of five, 10, 15, 20, 25 and 30 years were recognized at this annual event by Cinnamon hotels & Resorts Sector head-City hotels and Cinnamon Grand General Manager Rohan Karr.

Cinnamon Grand Colombo joined the global earth hour initiative by switching off lights at all restaurants and public areas for 60 minutes starting 8.30 p.m. Over 1000, patrons who were dining in the hotel’s 14 restaurants and 900 invitees attending the gala cocktail celebrating the 41st Convocation of the Bar Association of Sri Lanka were participants of this initiative.

Cinnamon Grand Colombo held its Associates Quarterly Meeting at the Oak Room. Cinnamon hotels & Resorts Sector head-City hotels and Cinnamon Grand General Manager Rohan Karr commended and recognised several dynamic and dedicated members of the Grand team for their dedication and commitment towards the hotel while also expressing his plans for the future.

DOn’t DRInK AnD DRIve CAMpAIGn WORKShOp – phASe II

phase II of the Don’t Drink and Drive campaign was held on 30th and 31st March at the Ivy Room as a City Sector initiative, educating over 250 F&b personnel of the three city hotels – Cinnamon Grand, Cinnamon Lakeside and Cinnamon Red. An initiative by the Marketing Communications and F&B Departments of Cinnamon Grand, the campaign was organised in partnership with Diageo. the trainer for the Drink Iq program Gavin Gomez, a representative from Diageo arrived in Sri Lanka for the training, which focused on educating beverage handlers of the hotels on correct methodologies of serving customers. A total of eight, one-and-a-half hour sessions were conducted within the two days.



Chairman’s Message

IN kEEPING wITH THE OVERALL BRANDING STRATEGY, THE NEw BRAND IDENTITY wAS FINALISED DURING THE YEAR wHICH wILL HELP THE CINNAMON BRAND OCCUPY A UNIqUE POSITIONING IN AN INCREASINGLY-FRAGMENTED MARkET. CINNAMON wILL BE DIFFERENTIATED AS A LIFESTYLE BRAND, ENABLING US TO GO BEYOND THE TRADITIONAL HOSPITALITY OFFERINGS BY FOCUSING ON ExPERIENCES THAT wILL INSPIRE OUR CUSTOMERS. wE CALL THIS ‘INSPIRED LIVING’.

Cinnamon Grand’s Green Vision of becoming the Most Sustainable Five-

Star City Hotel in Sri Lanka by 2015 was achieved during the period under

review with the commissioning of the new BMS, which not only infused

multiple benefits that would ultimately minimise its carbon footprint, but

also made the property a leader in sustainable energy management in

Sri Lanka.

Dear Stakeholder,

On behalf of the board of Asian Hotels & Properties PLC, I am pleased to present the Annual Report and Financial Statements of the Company and the Group for the year ended 31st March 2015.

Group Performancethe room inventory within the City of Colombo witnessed substantial growth in the year under review, particularly in the three and four star category intensifying competition and restricting growth in average room rate for the five-star city hotels. whilst this increase in capacity stemmed from the expected growth in tourist arrivals, these new offerings at lower rates resulted in a citywide drop of 2 per cent in the business segment of the five-star city hotels.

Nevertheless, your Group retained its leadership position among the five-star city hotels which is reflected in the 46 per cent market share achieved during the year.

Group revenue showed a marginal decrease to Rs. 8.08 Bn in the current year compared to the Rs. 8.26 Bn achieved in 2013/14 with the Group's signature restaurants and banquet venues excelling and generating incremental revenue of Rs. 170.3 Mn over last year, which helped to mitigate the fall in room revenue.

The effectiveness of stringent cost management initiatives that were launched during the year is reflected in the marginal increase in Group expenses by only



4 per cent compared to last year. Income tax expense increased by 15 per cent due to the new turnover based income tax adopted by the Company at the conclusion of the BOI tax holiday period on 31st March 2014.

Group profit before tax was Rs. 2.35 bn compared to the Rs. 3.05 Bn achieved during 2013/14. this included the change in fair value of the investment property amounting to Rs. 28.7Mn and Rs. 268.5 Mn respectively.

Cinnamon Grand ColomboCinnamon Grand Colombo recorded an average occupancy of 75 per cent which was well above the five-star city hotels average of 55 per cent, while maintaining a market share of 32 per cent.

Revenue grew by 1 per cent to Rs. 4.93 Bn primarily due to the Rs. 122 Mn increase in food and beverage revenue although room revenue was 4 per cent lower than the previous year. However, the altered revenue composition and the increase in overheads led to the Hotels profit declining by 11 per cent to Rs. 1.54 Bn from the profit of Rs.1.73 bn reported for the last financial year.

Cinnamon Lakeside ColomboFood and Beverage business generated Rs. 1.27 bn in revenue, which is a 4 per cent increase over the previous year. In spite of the intense competition, the average room rate was maintained at Rs.18,267/-, however, room revenue declined by Rs. 213.5 Mn due to the drop in year-round occupancy. net revenue for the year amounted to Rs 2.79 Bn against

the Rs.2.94 Bn recorded in 2013/14. the lower Gp margins due to the altered revenue mix and the increase in sales and marketing expenses contributed to the decline in Profit before Tax to Rs. 664 Mn, compared to the profit of Rs.871.8 Mn in the previous year.

Property Developmentthe Company's property Development Division's Crescat boulevard continued to affirm its position as Colombo’s premier shopping mall, with shop rental income increasing by Rs. 21 Mn year-on-year. Leasing revenue decreased by Rs.46.5 Mn over the previous year while apartment sales dropped by Rs.37.5Mn due to the conclusion of the sale of apartments as the Company concluded revenue recognition on all apartments of the emperor project in the previous year.

Profit before Tax decreased to Rs. 293 Mn, primarily due to the comparatively lower gain arising from the fair valuation of investment property which decreased to Rs.8.1 Mn from the Rs. 268.5 Mn in the preceding year.

Global TourismAlthough global economic growth in 2014 as per the World Bank was relatively muted at 2.6 per cent, outbound travel recorded robust growth with an additional 51 million tourists travelling internationally despite health and aviation safety concerns, political, economic and security concerns in many key markets. International arrivals worldwide reached 1,138 million,

representing year-on-year growth of 4.7 per cent according to the World tourism Barometer published by the united nations World tourism Organisation (unWtO) in January 2015. Led by stronger growth in Asia and the Pacific (+4 per cent to +5 per cent), the Americas (+4 per cent to +5 per cent) followed by Europe (+3 per cent to +4 per cent), prospects for global tourism are positive.

Sri Lanka TourismTourist arrivals to Sri Lanka continued to demonstrate strong growth with Sri Lanka surpassing its annual tourism target of 1.5 million arrivals for 2014, recording 1,527,153 international tourist visits to the country, representing a growth of 19.8 per cent over the previous calendar year. the surge in arrivals was led by the Chinese market, which grew by 136 per cent year-on-year and became the third largest source market in to Sri Lanka. In comparison, the two other main source markets, India and uk, recorded a growth of 16.3 per cent (242,734 arrivals) and 4.9 per cent (144,168 arrivals) respectively. Germany and France, considered as traditional source markets, also performed well. According to the Central bank of Sri Lanka, receipts from tourism in 2014 grew by 42 per cent to uSD 2.4 billion.

The Sri Lanka Tourism Development Authority (SLTDA) has established a target of two million arrivals for 2015. The growth in the first quarter of 2015 has averaged 14 per cent. Coupled with the ongoing private and public sector marketing initiatives and interest in the destination, which has



been stimulated by positive global media coverage, it is anticipated that growth in tourism will be strong in the ensuing year.

New InitiativesAs stated last year, a new property management system was installed at Cinnamon Grand and Cinnamon Lakeside during the year under review. The new system, which runs on the world-renowned SAp platform has seamlessly integrated back office and front office processing, enhancing operational efficiencies and making guest information available across all Cinnamon hotels and Resorts. Furthermore, it provides further assurance of the adequacy of the Company's internal control on financial reporting as required by the Sarbanes-Oxley Act.

In keeping with the overall branding strategy, the new brand identity was finalised during the year which will help the Cinnamon brand occupy a unique positioning in an increasingly-fragmented market. Cinnamon will be differentiated as a Lifestyle brand, enabling us to go beyond the traditional hospitality offerings by focusing on experiences that will inspire our customers. We call this ‘inspired living’.

In keeping with this brand promise, Cinnamon hotels & Resorts took the initiative to establish vibrant lifestyle offerings through several inspiring events. these included the pre-pageant tours for the Miss India and Miss China contestants, a unique familiarisation tour for French travel agents titled "treasure hunt"

and Asia’s first-ever Travel bloggers Conference which not only helped to create significant publicity and exposure for the Cinnamon hotels & Resorts Brand among the target markets and in the online sphere, but also enhanced the attractiveness of Sri Lanka as a “must visit” tourism destination.

With the installation of the Building Management System (bMS), which uses the world's first magnetic bearing chiller technology to control, monitor and quantify energy usage across the entirety of the hotel, Cinnamon Grand became the most intelligent building in Sri Lanka and the first hotel in South Asia to deploy the BMS. the hotel has achieved a substantial saving on energy following installation.

Awards and Accoladesthe benchmarked leadership status espoused by the Cinnamon brand has placed both Cinnamon Grand and Cinnamon Lakeside as award winning properties, which have over the years, gained numerous accolades that add credence to its superlative product and service offerings, innovative mindset and excellence in service standards.

the sustainable business model of the Group is founded on the simple strategy of conducting business with a responsible consciousness for social and environmental dynamics. Our systems, processes and, most importantly, our mindset are developed on platforms that reflect our social and environmental consciousness, resulting in the

permeation of socio-economic benefits to every stakeholder. I am indeed proud that Cinnamon Grand’s Green vision of becoming the Most Sustainable Five-Star City hotel in Sri Lanka by 2015 was achieved during the period under review with the commissioning of the new bMS, which not only infused multiple benefits that would ultimately minimise its carbon footprint, but also made the property a leader in sustainable energy management in Sri Lanka. Further details of our achievements are comprehensively captured in our Management Discussion & Analysis.

Outlook for the futuretourist arrivals are expected to continue the current growth trajectory driven by newly established source markets which have demonstrated significant growth potential. Arrivals from China are likely to continue the strong growth momentum witnessed in 2014, driven by increasing awareness, focused marketing and better connectivity. Arrivals from India, the largest source market, are expected to grow with both the leisure and business segments contributing. while the Sri Lankan tourism industry has recorded double digit growth over the past few years, there still remains untapped potential, particularly in terms of attracting outbound travel under Meetings, Incentives, Conferences and exhibitions (MICe) tourism segments from key source markets such as India. India is expected to record a significant increase in outbound travel over the next five years. Amongst the outbound

Chairman’s Message contd.



tourist segment from India, the MICE segment has shown encouraging growth over the years, both in terms of absolute tourist numbers and average spend per tourist. India is expected to continue to drive outbound travel in the MICe market where Sri Lanka has the distinct added advantage of being located within close proximity and will further benefit from the improving connectivity between the two destinations.

Your Company remains positive that the newly initiated Cinnamon brand architecture, coupled with the digital and social media strategy, will strengthen the Cinnamon brand presence and help achieve differentiation in a market which now has a variety of product and service offerings. we will continue our online marketing strategy in order to drive direct online sales. The revamped, responsive and multilingual Cinnamon website, in keeping with the new brand identity, will be launched by December 2015. With the standardisation of all online marketing components and furtherance of our vibrant social media strategy, we are confident of securing a stronger online brand presence and establishing Cinnamon hotels & Resorts as the leading lifestyle brand in Sri Lanka.

ConclusionI express my sincere thanks to our shareholders for their continued confidence in the Group and take this opportunity to thank my fellow directors for the guidance and support extended during this year.

Reflecting on the performance of the Group, on behalf of the board of Directors, I wish to express my sincere appreciation to each of our guests, our valued business partners who have remained firm in their relationships with us and to our team for whom no challenge is impossible, proving unequivocally that excellence is a bar that must be continuously pushed upwards.

Susantha RatnayakeChairmanAsian Hotels and Properties PLC29th May 2015



Servicethe pAtteRn OF GReAt SERVICE, ExCELLENCE IS INGRAINED IN ALL OuR STAFF. LIkE THE DIVERSE LINES THAT RuN ACROSS THE PALM, THE PASSION AnD DeDICAtIOn thAt We CheRISh RunS thROuGh EVERY INDIVIDuAL, AS wE WORK tOGetheR tOWARDS ExCELLENCE. EVERY MINuTE DETAIL COuNTS.



RelaxationTAkE THE PLuNGE AND ExPERIENCE LuxE FIVE-STAR FACILITIES IN THE VERY HEART OF COLOMbO. WhetheR It'S A hIGh POwERED buSINESS LuNCH OR A DAY Out WIth the kIDS, OuR PATTERN OF quALITY NEVER wAVERS, neveR DIMInISheS. thIS unIFORMItY IS A pAtteRn AnD A pASSIOn.



OPERATING ENVIRONMENT

Global economyAs per the IMF World economic Outlook, the global economy recorded a modest 3.4 per cent growth in 2014 – primarily driven by advanced economies, while emerging and developing markets lagged behind. Despite the slowdown, emerging markets and developing economies still accounted for three-fourths of the global growth in 2014. Growth in the united States was stronger than expected, averaging a 4 per cent annualised rate in the last three quarters of 2014, while in the Euro area, activity was weaker than expected mid-last year but showed signs of improvement in the fourth quarter, with consumption supported by lower oil prices and higher net exports. Asia Pacific also slowed its growth progress from 5.9 per cent in 2013 to 5.6 per cent in 2014. the setback is attributed to the internal and external activities in the region, while the sluggish development in large economies such as China, Japan and Indonesia also added extra weight. Overall, global growth is anticipated to reach 3.5 per cent and 3.8 per cent in 2015 and 2016, respectively. Growth projection for 2015 marks the advanced economies taking a stronger lead than in 2014, while emerging markets continue on a sluggish pace, reflecting more subdued prospects for some large emerging market economies and oil exporters. Asia’s growth forecast has been trimmed to 5.6 per cent in 2015

Management Discussion & Analysis

and 5.5 per cent in 2016, with diverse performances across the region. However, India’s growth is expected to strengthen from 7.2 per cent last year to 7.5 per cent this year.

Sri Lankan EconomyAccording to the Central Bank of Sri Lanka Annual Report 2014, the Sri Lankan economy sustained its growth momentum, recording a real GDp growth of 7.4 per cent during 2014, compared to 7.2 per cent in 2013. Inflation remained at low single-digit levels throughout 2014, reflecting the impact of demand management policies, improved supply conditions, downward revision of administered prices and effectively-contained inflation expectations. The Sri Lankan Rupee appreciated by 0.29 per cent during the first nine months of the year in the backdrop of increased earnings from exports of goods and services

and higher workers’ remittances, but remained relatively stable during 2014. Interest rates in most market segments declined to historically-low levels during 2014, with the relaxed monetary policy stance of the Central Bank and high excess liquidity in the domestic money market supported by low inflation expectations.

the growth in earnings from tourism was supported by increased average spending of tourists and average period of stay, together with increased tourist arrivals during the year. the tourism sector also benefitted from electricity tariff reductions. The electricity tariff, which was raised substantially in 2013, was revised downwards in 2014. this resulted in a 15 per cent downward revision to the tariff applicable on ‘Hotels’ and all other ‘Industry’ and ‘General Purposes’ categories. Meanwhile, the Fuel Adjustment Charge (FAC) was absorbed into the energy charge while maintaining effective reductions at levels stated above.

Global Tourism Industry OverviewAccording to the latest unWtO world Tourism barometer, international tourist arrivals reached 1,138 million by end 2014, a 4.7 per cent increase over the previous year. This is the fifth consecutive year of robust growth in international tourism above the long-term average since the financial crisis of 2009. The growth in 2014 was mainly driven by America, which saw a 7 per cent increase in tourism, followed by Asia and the Pacific region, which saw a 5 per cent growth. Meanwhile, it’s

Per Capita GDP US$

Annual Average Inflation (%)

2010

2011

2012

2013

2014

Per Capita GDP & Annual Average Inflation

2,3972,836

6.2%6.7%

7.6%6.9% 3.3%

2,9223,280 3,625

Source: Central Bank of Sri Lanka Annual Report 2014



“THE GROwTH IN EARNINGS FROM TOURISM wAS SUPPORTED BY INCREASED AvERAGE SPENDING OF TOURISTS AND AVERAGE PERIOD OF STAY, TOGETHER wITH INCREASED TOURIST ARRIVALS DURING THE YEAR.”

heartiening to note that the sub region South Asia experienced a faster growth in tourism, valued at 7 per cent, which is indeed encouraging. Demand is expected to grow in 2015 supported by lower oil prices, which will reduce cost of transportation and boost economic growth by enhancing purchasing power and private demand in oil importing economies. However, lower oil prices could negatively impact some of the oil exporting countries which have emerged as strong tourism source markets. the forecast for 2015, although not exceptional, is predominantly positive. Global tourism is projected to continue its growth trend at a slow 3 to 4 per cent. The Asia Pacific region is expected to sustain comparatively high 4 to 5 per cent growth.

Sri Lankan Tourism IndustrySri Lanka’s tourism industry performance continued to remain positive in 2014, with 19.8 percent growth compared to last year. However, 2014 tourist arrivals in the country surpassed the united nations World tourism Organisation’s 2014 annual estimates of 4.7 per cent growth for the entire world and 7.1 per cent growth for South Asia.

Subsequently, the hotels and restaurants sub sector expanded at a slower pace of 11.5 per cent during 2014, compared to 22.3 per cent in 2013. Further, the room occupancy rate in graded hotel establishments approved by the Sri Lanka Tourism Development Authority (SLTDA) increased to 74.3 per cent in 2014, from 71.7 per cent in the previous year. earnings from tourism surpassed the uSD 2 billion landmark by the

Jan

Feb

2013

Mar

Ap

r

May

Jun

Jul

Au

g

Se

p

Oct

Nov

De

c

Tourist Arrivals (No. of Tourists)

110,543113,208113,968

80,737

74,838

90,279

107,016123,269

90,339107,057

109,420

153,918

2014

146,575 141,878 133,048

112,631

90,046

103,175

133,971140,319

105,535121,576

119,727

178,672

Market wise Tourist Arrivalsas a percentage of total arrivals

2013 2014

North America 5% 5%

Latin America 0% 0%

Western Europe 33% 31%

Eastern Europe 10% 10%

Middle East 6% 6%

Africa 1% 1%

East Asia 14% 18%

South Asia 26% 24%

Australasia 5% 4%

2014 2013

Source: Sri Lanka Tourism Development Authority.



Management Discussion & Analysis Contd.

end of the year, registering an annual growth of 41.7 per cent. the growth in earnings from tourism was supported by increased average spending of tourists and average period of stay, together with increased tourist arrivals during the year. tourism arrivals remained strong in early 2015, with arrivals increasing by 6.6 percent, 16.7 percent, and 18 percent respectively, in January, February and March. Western europe remained the largest source destination for tourists, accounting for 479,007 arrivals, followed by South Asia with 370,299 arrivals. Country-wise India, uk, China, Germany and the Middle east were the top five tourism sources in 2014, accounting for 46 per cent of total arrivals.

Market OverviewWhile the year under review saw a level of competition previously never experienced among Colombo’s city hotels, the Cinnamon brand continued to retain its market leadership. Despite a 1.5 million influx of tourist arrivals to the country, comparative to last year, the city occupancy increased marginally to 55 per cent compared to last year’s 53 per cent. It is important to note that there were no significant MICE events during the year, as opposed to what was witnessed in the preceding years. Therefore five-star city hotels depended largely on corporate and leisure segments of the business. newly-opened three-star properties limited the pricing flexibility of the two Cinnamon city hotels. In response to these properties entering the market, the Group had to adopt a volume-driven strategy by leveraging on brand and service levels.

A momentous occasion for the Group in 2014 was the President of China, His Excellency xi Ping, choosing a Cinnamon hotel to stay during his official State visit to Sri Lanka. The premium five-star Cinnamon Grand was the chosen venue for the Chinese President, First Lady and the trade delegation, which further confirmed the hotel’s service excellence, having been able to successfully serve one of the world’s most powerful leaders of our time. Representing the premium segment of the city hotels market, the brand, through Cinnamon Grand and Cinnamon Lakeside, holds a market share of 46 per cent among Colombo city hotels, well above its fair share of 38.7 per cent.

"THE PREMIUM FIVE-STAR CINNAMON GRAND wAS THE CHOSEN VENUE FOR THE CHINESE PRESIDENT, FIRST LADY AND THE TRADE DELEGATION, wHICH FURTHER CONFIRMED THE HOTEL’S SERVICE ExCELLENCE, HAvING BEEN ABLE TO SUCCESSFULLY SERVE, ONE OF THE wORLD’S MOST POwERFUL LEADERS OF OUR TIME"

GROUP PERFORMANCE OVERVIEw

Cinnamon Hotels & Resorts Sector Head-City Hotels and Cinnamon Grand General Manager Rohan Karr extending a grand welcome to His Excellency President of China Xi Jinping and First Lady Peng Liyuan



A new branding initiative will be rolled out during the new financial year which will enhance market and mind share of the brand. the rejuvenated Cinnamon brand will be unveiled in mid-2015, accompanied by across-the-board improvements that will position the brand well above the competition.

Group Performance Highlights Group revenue declined by 2 per cent in 2014/15, from Rs. 8.25 bn in 2013/14, to Rs. 8.08 bn, in the current year. Notably, Group revenues have remained on a growth trajectory since 2010/11, indicating the strength of the brand. However, consequent to the dual impacts of revenue reduction from Cinnamon Lakeside and the Property sector, Group revenue registered a decline during the current financial year.

Although the property division was a major contributor to Group revenue in the past, the dynamics changed with the completion of all apartment sales by April 2013. the division now relies mainly on the rent income earned from the Crescat mall.

the Group's hotels are now the core contributors to Group revenue, with only a marginal contribution coming from the property division. With the last tranche of the payment for apartment sales at the emperor residencies being concluded during the last financial year, revenues from the property sector are now tapering off. As a result, Group revenues from

the property sector are no longer a significant contributor towards elevating overall revenues. Of the total Group revenue, Cinnamon Grand Colombo accounted for 61 per cent, while a further 34 per cent came from Cinnamon Lakeside Colombo. In the hotel segment, room revenues saw a decline during the year, compared to a strong performance in the previous year. However, F&b revenue continued a steady increase against the previous year, despite continuous increase in competition among star-grade and other dining options in Colombo city.

this is indeed a commendable achievement, given the intensity of competition and challenging industry landscape experienced in the current year.

Group Revenue Composition (%)

2014 2015

Rooms 49% 46%

F & B 41% 44%

Shop Rental 5% 5%

Other 3% 4%

Apartment Leasing 1% 1%

Apartment Selling 0% 0%

2015 2014

The Group’s continuous efforts at energy and water conservation, coupled with investments in efficiency enhancements and prudent financial management has resulted in well-managed overheads. Cost increases were controlled to ensure a stronger bottom line. During the current financial year, the cost of sales increased by a minimum 4 per cent year-on-year, while distribution expenses saw a 15 per cent increase. Administrative expenses increased by a marginal 3 per cent, while other operating expenses registered a reduction of 4 per cent. Group tax expenses meanwhile increased by 15 per cent due to the new turnover-based tax implemented from this financial year, given the completion of the bOI tax holiday period with effect from 31st March 2014.

Group Expenses (%)

2014 2015

Cost of Sales 53% 53%

Administrative Expenses 3% 4%

Distribution Expenses 29% 29%

Other Operating Expenses 10% 10%

Finance Cost 0% 0%

Income Tax Expense 4% 4%

2015 2014



Group Net Profit after Tax was Rs. 2.08 bn for the year, compared to Rs. 2.81 Bn recorded in the preceding year. This decline of 25.7 per cent, year-on-year, was largely due to the reduction in revenue by Rs. 176 million. On the other hand, finance income, which was a key contributor to the Group’s bottom line, reduced by Rs. 105 million compared to 2013/2014 due to reduction in interest rates offered by banks. As per the Central bank’s Annual Report for 2014, the average weighted deposit rate of commercial banks dropped to 6.2 per cent, compared to the previous year’s 9.37 per cent. the change in the fair value of investment property, which made a Rs. 268.5 million contribution to Group profitability during the last year, was reduced to Rs. 28.7 million in the current year. Cost of sales, which represented 53 per cent of the total expenses, increased only

by 4 per cent due to stringent cost management initiatives adopted by the management. the increase in tax expenses by Rs. 35.2 million had a notable impact on the decrease in profitability.

Shareholder valueearnings per Share declined from Rs. 5.42 in the previous year to Rs. 3.97 for the year under review, as a result of the reduction in profitability. However, the Group continued to uphold its commitments to deliver consistent value to shareholders and maintained the Dividend per Share at Rs. 4.00 on par with the previous two years. the dividend pay-out ratio was 1.01 against 0.74 in the previous year. the closing market price for the year was Rs. 63, which led to a market capitalisation of Rs. 27.8 billion. the highest market price recorded during the year was Rs. 75. the p/e ratio

increased to 15.88 from last year’s 10.85.

Financial PositionFreehold land and buildings of the Group were valued by M/s p.B kalugalagedara & Associates, an independent Chartered Valuer, by 31st March 2015, which resulted in an increase in value of land and building by Rs. 1.687 billion. As a result, Group net assets per share increased to Rs. 54.29, from Rs. 50.45 in the previous year, while the after tax return on net assets declined to 7.31 per cent from 10.73 per cent as a dual impact of the reduction in profitability as well as the increase in land and building value. the current ratio for the year was 2.83 times, compared to last year’s 3.42. Cash and cash equivalents at the year-end was Rs. 2.85 billion, compared to last year’s Rs. 3.43 billion, as a result of utilising cash

2011

2012

Cinnamon Grand Property Division Cinnamon Lakeside

2013

2014

2015

Contribution to Group Revenue (Rs.Mn)

3,017

2,469

1,972

3,804

2,6762,375

4,623

428

2,840

4,898

419

2,939

4,939

356

2,786




for dividend payments, as well as for ongoing capital expenditures.

Group Net Finance Income (Rs.'000)

Average Weighted Deposit Rate (AWDR) %

2011

2012

2013

2014

2015

Group Net Finance Income

33,783

87,7556.23

7.24

10.19.37

6.2

311,565301,756

199,768

Cinnamon Grand Colombothe Cinnamon Grand retained its star performance during the current financial year despite the plethora of lower cost new entrants into the Colombo city hotels segment. the hotel maintained its premium five-star brand image and remained true to its brand promise in delivering customer satisfaction through its 501 luxury rooms and full range of services, including extensive dining venues.

with the industry offering travellers more three and four-star accommodations, the Cinnamon Grand saw occupancy levels dropping at a marginal rate, to 75 per cent from 76 per cent in the previous financial year. Room nights totalled at 138,036 compared to 138,483 room nights in the previous year. the hotel continued to retain its share of one-third of the market at 32 per cent of market share,

which is only a marginal decline from the 33 per cent share in the previous year. Despite the new restaurants that opened in Colombo, expanding the city’s dining options, customers have continued to patronise the iconic restaurants at Cinnamon Grand.

As a hospitality services provider, the Cinnamon Grand is highly conscious of customer satisfaction, which is at the heart of the hotel’s operations. During the current year too, the hotel strived to delight customers through superior services, products and facilities. Customer touch points were introduced at the Lobby and restaurants to capture customer feedback that is analysed regularly, with swift responses whenever needed. Customer feedback received from tripAdvisor is studied as a top priority in understanding and responding to customer needs. the Cinnamon Grand's revenue increased by Rs. 40.9 million in the current year, which is a 1 per cent growth from Rs. 4.89 billion to Rs. 4.93 billion. this growth in revenue was driven by F&b revenues, with the Cinnamon Grand’s restaurants and banqueting facilities remaining extremely popular throughout the year. F&B revenue increased by Rs. 122.66 million compared to last year. However, room revenue declined by Rs. 94.20 million, mainly due to the reduction in room nights and in average room rate by 4 percent.

2011

2012

Revenue Profit Before Tax

2013

2014

2015

Cinnamon Grand Revenue & Profitability in (Rs.Bn)

3.01

0.69

3.80

1.18

4.62

1.72

4.89

1.73

4.93

1.53

Source: Central Bank of Sri Lanka Annual Report 2014



Despite the sustained growth in revenue during the year, the hotel’s Profit before Tax saw an 11 per cent decline, valued at Rs. 194.7 million. Profit before Tax was recorded at Rs. 1.537 billion. In 2013/2014 this number was Rs. 1.732 billion.

Noodles Restaurant Cinnamon Grand Colombo launched its latest dining experience ‘noodles’ in July 2014, offering guests an opportunity to relish the flavours of Asia in exotic noodle-based broths and dishes.

the 50-seater restaurant provides the ultimate feast for discerning noodles lovers, with a menu that features over 70 dishes made from 10 types of noodles. Drawing inspiration from the intriguing cuisines of Vietnam, China, Thailand, Japan and Malaysia, the nightly feast is prepared by an expert Vietnamese chef, ably assisted by a thai chef and a team of local chefs. these chefs brings to the table years of international exposure in varied speciality areas. trendy decoration influenced by Asian landscapes creates a casual yet smart ambience for diners to enjoy their meal. An open kitchen adds to the drama, with the team of chefs serving up the cold and warm broths and noodle dishes that pay tribute to Asia.

the restaurant has been highly popular since the launch, with sustained high reservations and strong positive customer reviews. Cinnamon Lakeside ColomboThe Cinnamon Lakeside saw occupancy levels decline from 61

per cent to 51 per cent in the current financial year, with its market share also shrinking from 18 per cent to 15 per cent. the hotel achieved 64,923 room nights against 76,790 room nights in 2013/14. this lower performance on room sales was due to a combination of causes, including the diversion of customers to lower cost city hotels. As a result, room revenue decreased by Rs. 213 million to Rs. 1.18 billion. this downturn in revenue was compensated by a Rs. 47.7 million increase in F&B revenue. As a result, Cinnamon Lakeside closed the year with a total revenue of Rs. 2.78 billion, which is a decline in revenue of 5 per cent. Profit before tax was lower by 24 per cent against the previous financial year, at Rs. 664 million, while profit after tax declined by 21 per cent, at Rs. 584.6 million. the hotel retained its 17 per cent share of the F&B market among five-star hotels in Colombo,

with its restaurants, bars and banquet facilities continuing to attract strong patronage.

The Cinnamon Lakeside was closed partially for a refurbishment since March 2015 and the hotel will reopen to customers in September 2015, with an image enhancement under the Cinnamon hotel’s branding strategy. the revamped brand image along with the planned marketing drive is expected to generate strong and improved financial results in the new financial year. Property DivisionThe Crescat boulevard, which is the property Development Division’s premium business and the finest up-market shopping mall in Colombo, continued to affirm its stand as Colombo’s iconic shopping mall. the level of occupancy was retained at

The newly opened Noodles restaurant




99%, on par with the previous year, while the footfall for the year was 2,074,097, which was a 12% drop compared to the preceding year.

total revenue of the property division declined by 15% compared to the previous year, mainly due to apartment leasing operations being concluded during the current financial year. The business of leasing apartments ceased from the month of November 2014, causing a 50 per cent drop in revenues from apartment leasing, compared to the previous year. However, rental income from the Crescat boulevard shopping mall, which is the division’s main source of income, continued to increase year-on-year, registering a growth of 7%. Finance income for the period too, decreased to Rs. 29.7 million, due to the reduction in interest rates. The profit before tax of the division decreased by Rs. 293 million compared to the previous year as the fair value of investment property decreased to Rs. 8.1 million in the current year, compared to Rs. 268.5 million in 2013/14. Future Direction the Cinnamon Grand and Cinnamon Lakeside will emerge in the new financial year with a stronger ‘lifestyle’ brand image that appeal to the expectations and lifestyles of modern international travellers. this transition will be supported by internal operational changes and upgrades

in service and product offerings, including new menus that provide a range of cuisine with global flavours.

The Cinnamon Lakeside is confident of a positive outcome in facing the challenges of the external market, following its refurbishment. the renovations, coupled with the new brand image, will strengthen the property and differentiate it from the competition, giving a competitive advantage that can be successfully sustained for future growth. Cinnamon Grand will continue to dominate the corporate market, while aggressively deploying strategies to increase revenue generated from booking engines, which is one of the hotel’s main revenue sources. With its consistently high international track record, Cinnamon Grand is confident of a strong performance in the new financial year. The two city hotels plan to maintain increasing F&B revenues through new product development and service standards. the range of global flavours offered by all restaurants will be further heightened through the initiation of new menus that cater to diverse palates. Overall profitability expectations for the Group are positive for the coming year and the hotels will leverage on service excellence to outperform competitors.

Rooms Market Share (%)

Cinnamon Grand

Cinnamon Lakeside

Other City Hotels

53% 32%

15%



MANAGEMENT STRUCTURE OF CINNAMON GRAND


Resident Manager

Manager Restaurant & Bars

Manager Compliance,

health & Safety

executive housekeeper

Deputy executive

housekeeper

Front Office Manager

Head of Leisure Sales

- City hotels

head of Corporate Sales

- City hotels

head of Banquet Sales

Head of Marketing Communications - City HotelsHead of Sales - City Hotels

Sector Head - City Hotels / General Manager

Executive Chef



Chief Engineer

Learning & Development

Manager

human Resources Manager

Finance Manager

purchasing Manager

Director Security

Security Consultant

- City hotels

Head of Human Resources - City Hotels Director Finance



AwARDS AND CERTIFICATIONS

AHPPLCAnnual Report Award from the Institute of Chartered Accounts of Sri Lanka Diversified Holdings (up to 5 subsidiaries) bronze award December 2014

CINNAMON GRAND COLOMBOhealth and Safety excellency Awards 2014 Awarded by nIOSh (the national Institute of Occupational Safety and health)

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

ISO Recertification for OHSAS 18001, ISO 14001 and ISO 22000(Swiss accreditation by SGS Lanka (Pvt) Ltd) – Cinnamon Grand is the first five -star city hotel in Sri Lanka to receive and maintain uninterrupted ISO certification for the past eight years

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

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

TripAdvisor Certificates of ExcellenceTaprobane, Nuga Gama, The London Grill and Echo were further sealed with a branding stamp of distinction, with the world’s largest travel site, TripAdvisor honouring them with Certificates of Excellence




Culinary Awards Culinary world Cup Competition, Luxembourg

Cinnamon Grand’s senior kitchen artist Chef Weeraman won two Gold medals at the Culinary World Cup Competition held in Luxembourg

5 crowns for Food Hygiene by Indo-Expo certification Limited

Sports Awards

John keells Inter Company Swimming ChampionshipOverall Runners up and overall Mens Championship

John keells Inter Company Rugby 7s plate Champions at the John Keells Inter Company Rugby 7s 2014.

Travel Trade 5–a-side Beach Tag Rugby Tournament 2014 Cup - Joint Champions - Cinnamon Grand A team with Walkers tours teamplate Champions Cinnamon Grand – B team

Mercantile Swimming Championship 2014 Two Gold medals, four Silver medals and two bronze medals at the Mercantile Athletic Championship 2013.

Travel Trade Hardball Cricket Sixes 2014Joint Champions - Cinnamon Grand with Keells hotels Best Batsman - Janudika Sriyapala of Cinnamon Grand

Membership in Industry AssociationsSri Lanka Conventions bureau | La Chaine des Rotisseurs: Echo, the Italian restaurant and The London Grill, the hotels fine dining restaurant are certified members | Tourist Hotel Association of Sri Lanka | Ceylon Chamber of Commerce | Pacific Asia Travel Association (PATA) | Indo-Lanka Chamber of Commerce | AMCHAM | SkAL International (International Association of Travel and Tourism Professionals) | Sri Lanka-british business Council | Sri Lanka-Japan business Council | Sri Lanka-New Zealand business Council | Sri Lanka-Malaysia business Council | Field Ornithology Group of Sri Lanka | Sri Lanka business and biodiversity Platform

CINNAMON LAkESIDE COLOMBOAnnual Report Award from the Institute of Chartered Accountants of Sri Lanka December 2014 Silver Award hotel category

Hotel Hygiene Classification Audit 2014 by the Colombo Municipal Council'A+' Grade

National Occupational Safety & Health Excellence Awards 2014Merit Award – organised by the national Institute of Occupational Safety and health

Green Hotel Awards 2014Water Conservation Champion Runner up at the Green hotel Awards 2014



STAkEHOLDER MAPPING AND ENGAGEMENT PROCESS

The Company firmly believes a sustainable business platform cannot be achieved in isolation, particularly in the business of leisure and property management, which are service industries that are highly susceptible to quality of relationships. the business model of Asian hotels and properties has been designed to incorporate transparent procedures to manage stakeholder relationships as an integral element of the daily business operations. the stakeholder engagement process is illustrated below.

Stakeholder Engagement Process

Stakeholder Stakeholder Sub Category

Current Method of Engagement and Frequency

Materiality of Stakeholder Issues

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

Frequency of Engagement: Face-to-face feedback Guest Comment Cards in

rooms and restaurants Feedback and reviews on

tripAdvisor Duty Manager’s Log Restaurant log books Bi-annual personal meetings Awareness through press

releases, posters and social media

Annual fundraising for Cancer hospital and participation in international environmental events

Annual Secretaries’ party Media nights Daily sales visits entertainment of clients and

patrons

1. Rate fixing2. ethical products3. Carbon footprint4. ethical marketing5. Corporate community engagement6. health and safety







Children Method of Engagement:Awareness and education through print media and cultural education through site visits, children’s workshops

Frequency of Engagement: Monthly cultural and

educational visits to nuga Gama

Children’s workshops Kiddies events feedback form

Associates Managers, Executives and non-executives

Method of Engagement:participation in the Green Corridor campaigns, green forums, direct reporting, open door policy, annual events, training and development activities, sustainability awareness seminars, celebrations of international environmental dates, employee satisfaction surveys, intranet communication, competitions and quarterly associate meeting

7. Accommodation8. Basic salary9. employee awareness and training10. employee rewards and remuneration11. Occupational health and safety12. Emissions, effluences and waste13. Mutually beneficial relationship with

supplier






Associates Managers, Executives and non-executives

Frequency of Engagement: weekly meetings, updates

on sustainability notice board, green corridor and internet

Social media posts. Monthly poster campaigns,

initiative awareness and educational sessions

Monthly management meetings Staff quarterly meetings Mid-year review Annual performance review Annual gatherings, parties and

sports events Custom-made training

programmes and development activities according to sustainability guidelines

voice of employee survey (vOe) Great place to Work survey

(GptW) ‘tell GM’ box where associates

can directly communicate with the General Manager on issues they face at work.

Businesspartners

Hotel School, Inbound/Destination travels Agents

Method of Engagement:questionnaires and surveys, one-on-one meetings, e-mail correspondence, circulars, membership in industry associations

Frequency of Engagement: Annual contract renegotiations

on-going through conference calls, e-mails and circulars

Business travel trade shows experiential tours Daily sales visits

14. health and safety15. product diversity16. Adhering to international standards17. Best practices18. Community engagement and Carbon

Footprint19. Confidentiality







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

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

Frequency of Engagement: engagement with the

community is done prior to initiating projects in the respective areas of focus:

Bi-annual discussions for community development projects

Annual supplier sustainability awareness sessions

Awareness campaigns in key areas where suppliers congregate

Annual donations to the Field Ornithology Group

Sponsorships of educational and social events

Arts and cultural activities Familiarisation visits, training

programmes and specific hospitality career related training

20. Infrastructure development21. Creating awareness for youth






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

Frequency of Engagement: promoting responsible

tourism/products through community-related awareness activities that are organised and in which the hotel participates

Monthly review meetings Awareness session on quality Monthly price review meeting Annual contract renegotiations

22. environmentally friendly packaging23. Resources scarcity24. Awareness on environmental issues25. ethical production26. Child labour remediation policy







Government Sri Lanka Tourist board, Sri Lanka Institute of tourism and hotel Management, Central environmental Authority, National Cleaner production Centre, Ceylon Electricity board, national Water Supply and Drainage board, National Ozone unit, national Institute for Occupational Safety and Health, National Cancer Hospital, national Cancer Control Programme, Colombo Municipal Council, Labour Department and Sustainable energy Authority

Method of Engagement:Meetings, discussions, phone calls, presentations and briefings, advisory meetings, Sri Lanka Tourist board membership, Sri Lanka Hotel School training programme membership, awareness workshops on tourism/sustainability-related issues are ongoing processes with tourism-related Government agencies.

Frequency of Engagement: engagement with these

Government bodies is an ongoing process through monthly newsletters, e-mails, circulars, quarterly briefings, websites, etc.

the Senior Management is on the Advisory Board of the Sri Lanka Institute of Tourism and hotel Management and are visiting lecturers on a quarterly basis

27. Compliances/regulatory restrictions






SocietypressureGroups/Media

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

Method of Engagement:websites, press releases, media briefings, correspondence, discussions, participation at NGO forums

Frequency of Engagement: engagement with stakeholders

are carried out on an ongoing basis, through correspondence, websites, media briefings and press releases (at least monthly)

28. ethical business practices

the Company follows a philosophy of excellence, guided not only by the pursuit of continuous excellence, but also with a commitment to deliver coherent values to those associated with the business. Ingrained into the core values of the Company is the principle that stakeholders’ welfare drives business, shaping its strategic development agenda.

employees are valued as key stakeholders of the Company and as brand ambassadors. As a responsible and non-discriminatory employer, the Company provides equal opportunities for employees from point of recruitment by varied training and development activities, performance reviews and promotions ensuring that all decisions are based on merit. In line with the Group policy, Cinnamon Grand Colombo practices equality of opportunity for employees irrespective of ethnic origin, religion, political opinion, gender or marital status or physical ability.

Further supporting the brand image as a responsible entity, the Company associates with suppliers who are reputed for their premium quality products for daily business operations. In accordance with the Group’s Policy, the Company maintains transparency in all levels of transactions, by clearly communicating terms of payment as part of the commercial agreements negotiated with suppliers. payments are released on the agreed terms.

Customers are the nucleus of Company operations. to exceed their expectations on a daily basis, the Company conducts careful analysis of guest feedback and develops prompt actions to address identified issues. Focusing on retaining leadership as a value-for-money entity that provides enhanced services with improved service delivery and consistent quality, the ultimate objective is not just to satisfy customers, but to delight them in every possible way.

the Company also operates on a socially-conscious mindset and as a result conducts a number of welfare events on an annual basis, linking benefits across social groups.

Guest Engagement

Guest Feedbackthe Cinnamon Grand maintains ongoing guest engagement processes to evaluate customer feedback to ensure the growth of the business. Many channels have been introduced to frequently gather customer feedback, gauge satisfaction levels and identify ways to enhance products and services. these include guest comment cards in rooms and restaurants, where guests are able to leave feedback with regard to service and product standards. these comment cards are collected and analysed daily. Customer feedback is also monitored through digital mediums such as the travel website trip Advisor and online




social networking sites Facebook and twitter.

Customer complaints are treated as priority and responded to within 24 hours. Complaints are received through guest comment cards. All customer complaints are entered into the system and categorised broadly as F&B and room stays. All complaints are examined by the heads of Departments daily at the morning meeting and a response to the customer is provided within 24 hours.��Earth Hour CelebrationCinnamon Grand Colombo joined in the global earth hour initiative by switching off lights at all restaurants and public areas for 60 minutes starting at 8:30 p.m. Over 1,000 patrons who were dining in the hotel’s 14 restaurants and the 900 invitees attending the gala cocktail celebrating the 41st convocation of the bar Association of Sri Lanka were participants of this initiative. Cinnamon Grand celebrated this year’s earth hour as the most sustainable hotel in Sri Lanka, given its Rs. 170 million investment in the latest Building Management System (BMS).

Launch of the Sustainability Facebook pageA special page on sustainability was launched in line with earth Day via the Cinnamon Grand’s Facebook page on 23rd April 2014. this page was launched in order to create a greener mindset among our guests and associates.

‘Connect with Us’ cards for social mediathe hotel’s Marketing Communications Department specially developed ‘Connect with us’ cards featuring all social media platforms, which the hotel currently utilises to engage with customers. these cards are distributed at all hotel events to encourage guests to join in the online conversations.

Grand’s Green Gestures In-room compendium page All in-room compendiums comprise a page highlighting different ways in which guests can participate in the efforts for environmental conservation and sustain livelihoods of indigenous craftsmen.

Green CardsGreen Cards are placed in all 501 rooms, encouraging guests to support the hotel’s green initiatives to save water by considering the option of reusing towels for more than one day.

Diabetic MenuIn keeping with the hotel’s promise of guilt-free indulgence, the existing Diabetic Menu was further enhanced in response to growing demand, given the recent escalation of diabetes. the menu is available at all restaurants and consists of 30 dishes.

As part of the Hotel's Earth Hour celebrations, the driveway to the hotel featured these symbolic Earth Hour logos, powered by energy efficient LED lighting



Supplier Engagement

the Cinnamon Grand works with a wide network of suppliers to provide premium quality products and services. Relationships are based on trust and partnership to ensure quality and consistency. the supplier policy and engagement mechanisms ensure clear communications of the hotel’s standards to suppliers with timely and optimum quality of delivery.

Supplier Meet at Nuga Gama In commemoration of World Tourism Day 2014, Cinnamon Grand Colombo organised a Supplier Meet on 27th September at nuga Gama, bringing together over 20 talented artisans from across the island. the forum enabled them to display their products and garner orders throughout the year. the supplier meet’s main objective was to showcase the artisan creations at these indigenous craftsman within Cinnamon’s city hotels. Currently most of the suppliers are only promoting their crafts through Cinnamon Grand’s Nuga Gama, the village in the city.

Employee Engagement

the Company considers its employees, as a valuable asset and ensure fair treatment and employment benefits, alongside work opportunities, competitive remuneration and a high quality working environment. the Company also provides its employees professional and career development training to ensure personal development and growth.

With the objective of creating a dynamic resource pool, the Cinnamon Grand adopts an open-door management policy that promotes a communicative employment culture within the organisation. A comprehensive agenda facilitates greater interactions between employees and key management, through regular meetings and conferences. taking the form of consultative discussions, these forums are a meeting of minds that stimulate the exchange of mutually-beneficial ideas. These regular interactions also help nurture employee goal congruence and engender workforce loyalty towards the organisation. Further efforts to address employee concerns has prompted the introduction of

a communication box titled ‘tell GM,’ which serves to deliver written grievances, opinions and suggestions of associates. Once collated and addressed by the General Manager, solutions are posted on a board next to the box. Moreover, the hotel maintains relationships with three unions, namely the Sri Lanka Nidahas Sevaka Sangamaya (SLNSS), the Jathika Sevaka Sangamaya (JSS) and the Inter Company employee’s union (ICeu).JSS and ICeu collectively represent less than 10% of our workforce. even in the absence of any collective agreement with these unions, the management continues to maintain a healthy relationship with them.

The artisans supplying local crafts to Nuga Gama with the Cinnamon Grand's teams from Marketing Communications and Sustainability and Nuga Gama at the Suppliers Meet 2014




Rewards and Recognition Schemes

Associate quarterly Awards:Associates are recognised on a quarterly basis for outstanding achievements in terms of commitment, going the extra mile, productivity and contribution to the common goal of making the Cinnamon Grand the best hotel in the city. nominated by their respective departments, they are rewarded at the Quarterly Associates’ Meeting. Categories of award winners include: Associate of the quarter, Associate of the Year and GM’s Award. the nominees as well as winners are awarded cash rewards and letters of appreciation.

Long Service Awardsthe Service Awards Ceremony is held annually to felicitate the commitment of associates who have served the hotel over the years and have completed tenures of 5, 10, 15, 20, 25 and 30 years. these associates are given gold sovereigns in proportion to their years of service (up to 35 years).

Creating a Healthy work-Life BalanceA firm belief that a healthy, motivated workforce is an unparalleled resource has the hotel adopting a holistic approach towards creating a meaningful work-life balance for all associates. the Cinnamon Grand provides a mentoring role in supporting employees to meet work challenges while ensuring they remain committed to the long-term objectives of the Company.

Recognising and rewarding both personal and professional achievements form a key part of the endeavour to encourage associates to tap into their potential talents and develop leadership abilities that underpin their success.

key 'work-Life' Initiatives for the Year

Inter Department Cricket 6sThe Inter Department Cricket 6s, held annually, is a highly-anticipated sporting event of the Cinnamon Grand. this was held at the Burgher Recreation Club (BRC) Grounds on 14th November 2014, with housekeeping B emerging as winners in the male Category and F&B as winners in the female category.

Improving Employee Wellness

Facilities available to improve employee wellness include:

Annual medical checks for all associates over 40

Senior executives’ annual medical check-ups

Special annual medical checks for food-handlers

eye clinic 24-hour in-house clinic. A doctor

visits twice a day First Aid trainers

Dengue Awareness Seminar at Cinnamon Grand the Cinnamon Grand conducted a Dengue Awareness Seminar in commemoration of the kitchen stewarding associate who succumbed to the fever earlier this year. held on

26th June, National Dengue Control unit Consultant Community physician Dr. nimalka pannilahetti addressed over 300 associates at the seminar on tell-tale signs and symptoms of the fever and preventive methods.

Breast Cancer Awareness Seminar and Screening Committed to nurturing the wellbeing of its associates, Cinnamon Grand Colombo conducted a Breast Cancer Awareness Seminar followed by a free cancer screening and pap-smear test for female staff in commemoration of World Breast Cancer Month (October). eminent speakers such as the Cancer Control programme's former Director Dr. Neelamani Paranagama, Cancer Control Program Medical Officer Dr. harshini Amaradasa and Mithuruwela Cancer Support network Founding Member Mala thalayasingam focused on the importance of early detection and educated associates on self-examination techniques.

Don’t Drink and Drive Campaign workshop – Phase IIphase II of the Don’t Drink and Drive campaign was held on 30th and 31st March at the Ivy Room as a City Sector initiative, educating over 250 F&b personnel of the three city hotels – Cinnamon Grand, Cinnamon Lakeside and Cinnamon red. An initiative by the Marketing Communications and F&B Departments of Cinnamon Grand, the campaign was organised in partnership with Diageo. Diageo trainer for the Drink IQ program Gavin Gomez arrived in Sri Lanka for the training, which focused on educating beverage handlers of the hotels on



responsible drinking and correct methodologies of serving customers. A total of eight one-and-a-half hour sessions were conducted within the two days.

Creating a Greener Mindset

Climate Change Seminar An educative seminar on Climate Change was held for hotel associates by Senior Lecturer Dr. Erandathi Lokupitiya from university of Colombo (Department of Zoology).Over 230 associates participated in this seminar. Dr. Lokupitiya outlined the causes of climate change and its effect on the environment and the world. A future outlook and methods through which one could mitigate the adverse impacts of climate change were also shown, drawing examples from environmental disasters occurring all over the world.

Planet Quiz An Interdepartmental planet Quiz on sustainability, climate change and eco practices was organised by the Marketing Communications and Sustainability team for hotel associates. this interactive competition was held in conjunction with the hotel’s World environment Day celebrations. All 13 departments took part in the event, with two representatives entering the competition. the human Resources Team emerged winners, with Finance and Front Office teams coming in at second and third places.

Employee Awareness through weekly Sustainability Short Takesthe Cinnamon Grand continued to educate associates on sustainability topics through weekly sustainability short takes. these were printed and circulated among employees in both Sinhala and english. periodic audits on these short takes were conducted to ensure associate awareness on the contents of these documents.

Sustainable Vesak decorationsIn keeping with the Cinnamon Grand’s sustainability commitment to instill a greener mindset, the hotel’s engineering Department constructed a range of stunning vesak décor using discarded plastic cups and bottles.

the vesak lanterns displayed on the hotel’s lawn featured 8,000 discarded plastic cups and 3,500 plastic bottles. It was a symbolic indication of our indulgence-driven lifestyles and the need to cultivate habits that are less environmentally destructive.

Cinnamon Hotels & Resorts Sector Head-City Hotels and Cinnamon Grand General Manager Rohan Karr announcing the winners of the Interdepartmental Planet Quiz




DEvELOPING A DYNAMIC TRAINING CURRICULUM

Efforts to enrich our people have always been underscored by the need to create a dynamic training blueprint that would caption the current needs of our workforce. by collating the results of a series of formal and informal indicators, we are able to develop a comprehensive training needs Analysis (tnA) that forms the basis of the annual training curriculum at Cinnamon Grand.

The Importance of In-house Training Given the highly competitive nature of our business, where service differentiation remains the key to success, in-house training plays a critical role in manifesting the desired level of service clarity and professionalism to pursue Cinnamon Grand’s unique selling proposition. Conducted by the Learning and Development team together with the support of our departmental trainers (Train, Assess and Develop or TAD trainers), Cinnamon Grand's in-house training framework follows a dynamic approach to enhance and improve knowledge and skills, while instilling the right attitudes to help associates absorb the hotel's unique value culture. Cinnamon Grand's Manager Learning and Development Shashi Jayawardena

explaining the internal processors to the new associates at the induction programme

Annual Performance Review

Guest ReviewsFeedback from

Managers

Training Needs Analysis (TNA)

Voice of the Employee Surveys Training Audits



In-house Training Programme

Programme Description Staff per Programme

Cinnamon Grand Induction

A three-day comprehensive program to introduce new recruits into Cinnamon Grand’s operational code. It provides an introduction into the value culture of a star-class resort, while stressing on the importance of being part of the JkH group

352

SOp Workshops (Standard Operating procedures)

A training initiative for associates to ensure departmental staff are kept abreast of the standard operating procedures in use, in the respective departments. these also include training sessions conducted by tAD trainers from other departments

280

On-the-job training at Front Office and Food and Beverage Departments

trainers work on a roster basis at these departments to identify and analyse the training requirements and to conduct on-the-job training within each department

119

Cinnamon Magic A programme aimed at instilling the right mind-set among new recruits, the sessions are conducted by a team of Cinnamon Magic trainers comprising staff from different departments to provide a wealth of experience and knowledge

210

tAD trainer programme Conducted by the Learning and Development trainers, the programme is designed to nurture potential tAD trainers from among hotel’s associates. upon completion of the programme, all successful TAD trainers are then certified as such at the Associate quarterly Meeting (AqM). All certified TAD trainers would then be responsible for delivering high intensity departmental SOp trainings within Cinnamon Grand in addition to playing a lead role at SOp workshops for their respective departments

86

Soft Skills for Security this tailor-made soft skills programme addresses the critical role played by the security staff to ensure Cinnamon Grand continues to maintain its star-class standards

38

hIv/AIDS Awareness to create awareness among all new recruits on the principles practiced in the JKh Group with regards to hIv/AIDS victims and to avoid discrimination

352

Fire Awareness training To educate all staff on procedures to be followed during a fire or any other emergency situation. How to use fire extinguishers, fire blankets and other safety equipments were conveyed, along with occupational health and safety aspects of working in a hotel. this programme was conducted by the in-house fire fighting team.

997

First Aid Ambassador training programme

basic training for staff to understand the fundamentals of First Aid. The programme was conducted in-house by the Red Cross First Aid team of Sri Lanka

62

Seasonal Information This programme was conducted for all staff during the months of October and november to give the basic knowledge of the upcoming events and promotions which were planned for the December season

2053




In-house Training Programme

Programme Description Staff per Programme

personal Grooming All ladies were given training on the grooming standards that need to be followed while at work. this programme gave practical training on how to apply make-up, how to do one's hair, etc. with the help of professionals

143

Guest Service (Level 01) Conducted for all staff at Level 01 (Junior Executive and below), the programme delivers the key competencies that are required in the leisure sector. This workshop is an in-depth, customer focused session that targets all areas of customer handling

178

Soft Skills for trainee Chefs

this programme focuses all trainees of the Kitchen department. The programme contains :� A set of soft skills that will be needed while working at action stations for

the chefs knife skills, basic cuts of vegetables and mother sauces �Introduction to carving by our Senior kitchen Artist Standards, certificates and good hygiene practices by the Compliance,

health & Safety Manager� All trainees are evaluated through an exam at the conclusion

46

F&B and Culinary policy Workshop

16 policies relevant to F&B and kitchen departments were discussed at this training with the heads of the Departments and senior managers involved in operations

33

F&b Front Office & housekeeping how to’s Workshop

15 F&b relevant How To’s, 10 generic how to’s and 28 housekeeping how to’s were discussed with the heads of the Departments and Senior Managers

74

Mandatory Front Office Information

A presentation for Front Office staff to educate them on the most important information needed to give a better service to guestsThe programme contains :

�Categories of rooms at Cinnamon Grand Smoking and non-smoking rooms �business Centre facilities and rates �Facilities given at Executive Floor

� types of vegetarians � Currency exchange

�Taxes guest have to pay

32

Soft Skills for Walkers tours taxi Drivers

training on basic soft skills needed to be practiced during throughout the dayThe programme contains :

Magic words in the industry Important phrases to use when handling guests tips on communication

� Body language� Grooming standards

�Hotel information

25



External Training Statistics for the year

Category Q1 Q2 Q3 Q4 Total No of

Hours

No of Staff

Average Hours

Number of hours of training: AVP and above - 2 - - 2 1 2.0

Number of hours of training: Manager 12 15 - 96 123 10 12.3

Number of hours of training: Assistant Managers - 48 15 128 191 15 12.7

Number of hours of training: Executives 482 555 703 1,735 3,475 527 6.6

Number of hours of training: Non-Executives 14,558 6,657 11,132 9,785 42,132 3,613 11.7

number of hours of training for male employees by category: AVP and above

- 2 - - 2 1 2.0

number of hours of training for male employees by category: Manager

- 3 - 77 80 7 11.4

number of hours of training for male employees by category: Assistant Manager

- 24 11 102 137 11 12.5

number of hours of training for male employees by category: Executives

434 500 633 1,562 3,128 474 6.6

number of hours of training for male employees by category: Non-Executives

13,102 5,991 10,019 8,807 37,919 3,252 11.7

number of hours of training for female employees by category: Manager

12 12 - 19 43 3 14

number of hours of training for female employees by category: Assistant Manager

- 24 4 26 54 4 14

number of hours of training for female employees by category: Executives

48 55 70 173 347 53 7

number of hours of training for female employees by category: Non-Executives

1,456 666 1,113 978 4,213 361 12




2014 2015

Cinnamon Grand

Cinnamon Lakeside

PropertySector

Group Cinnamon Grand

Cinnamon Lakeside

PropertySector

Group

Defined Contribution Plan Obligation (EPF & ETF) in Rs.’000’

epF 59,468 33,714 2,412 95,594 65,506 34,429 2,617 102,551

etF 11,847 8,531 362 20,740 13,058 8,542 392 21,993

Defined Benefit Plan Obligation ( Gratuity ) in Rs.’000’

Employee benefit Liability

109,936 106,570 4,728 221,234 126,382 109,999 5,491 241,873

payments During the Year

5,977 11,072 - 17,049 8,802 14,561 - 23,363

Ag

e

18-2

0

Ag

e

21-3

0

Ag

e

31-4

0

Ag

e

41-5

5

Ove

r 55

2013/14 2014/15

Total Employees Age Analysis (No. of Employees)

25 14

466434 419

440

319337

4 4

Attrition by Age (%)

Age 18-20

Age 21-30

24.0%

11.7% 6.4%

57.9%

Age 31-40

Age 41-50



SUSTAINABLE BUSINESS

Product Responsibilitythe Cinnamon Grand believes a sustainable business model should balance financial growth with non-financial aspects which also contribute towards overall business sustainability. These non-financial aspects include community welfare and environmental responsibility. the hotel has invested in a range of quality control and certification systems that contribute towards our sustainable business model.

Industry best practices complying with a range of international certification helps the hotel maintain high standards in its product offering. Cinnamon Grand maintains the highest standard of products and services at all times by implementing industry best practices and complying with a range of international certifications. This is a core aspect of the overall sustainability model, by ensuring the safety and wellbeing of hotel guests, employees and other stakeholders. the hotel’s food and beverage requirements are transported, stored, produced and processed under stringent quality controls to ensure international standards. Suppliers are continually audited to ensure safety standards are maintained along the supply chain. In addition to food safety, the physical safety and privacy of guests are ensured through security systems and physical design

Hotel Hygiene Classification Audit, conducted by the Colombo Municipal Council through a number of unannounced visits to the Cinnamon Grand kitchens for strict inspection of kitchen operations. the hotel was awarded an A+ Grade kitchen by the Colombo Municipal Council following these audits. this achievement is indicative of the quality of food at the Cinnamon Grand and differentiates the hotel from its many competitors in the city as our standards ensure the best quality of materials prepared in the most hygienic fashion.

ISO 22000 & 2005 Food Safety Management System Standard:The ISO 22000 & 2005 standard is an international standard that is applicable to all organisations, regardless of size, which are involved in any aspect of the food chain and want to implement systems that consistently provide safe products. Our systems were re-certified as ISO compliant in the current financial year following independent audits by SGS Lanka.

elements. the hotel has also invested in environmental safety standards to ensure an environmentally-sustainable business operation.

Asian Hotels and Properties PLC was fully compliant with all relevant and applicable laws and regulations as stipulated by the various national agencies during the year. In fact, the Company is proud to record that the efforts towards running a sustainable business model were further reiterated through continued compliance with internationally-recognised independent certification systems.

Food Safety Systems 5 crowns Certification: the Cinnamon Grand Colombo was awarded 5 crowns at the Food hygiene awards ceremony following extensive pre and final assessments carried out by the Sri Lanka Tourism Development Authority (SLTDA) in partnership with Ind-Expo certification (Pvt) Ltd. The Crowns scheme criteria for assessment covers the commitment of an establishment towards the maintenance of food safety management systems, infrastructure, environment, cleanliness, food preparation procedures, storage, display, personal hygiene, use of clean water and effective use of raw materials.

A+ from Colombo Municipal Council (CMC): Continuing its achievements for the year, the Cinnamon Grand was awarded the 'A+' Grade at the




Foreign Tour Operator Audits:During the current financial year, the Cinnamon Grand successfully faced two health and safety audits from two of the world’s largest travel agencies. thomas Cook Group plc is a British Global travel Company listed on the London Stock Exchange and Cooney World Adventures is another leading British travel agency. Independent and separately conducted audits by both agencies regarding the diverse aspects of the hotel’s operations confirmed the high standards of the hotel and established the hotel as a leading tourism services provider in Sri Lanka for travellers from across the world.

Supplier Audits: All products sourced by the hotel adhere to the supply chain policies of the Cinnamon Grand and the JKh Group. this allows for a guaranteed supply at a fair price and establishes quality standards for suppliers to ensure the premium standards of the hotel are always maintained. During the current year, 10 suppliers were audited for their standards to ensure that expected quality standards are always met throughout the supply chain and to ensure the delivery of the highest quality products to the Cinnamon Grand kitchens.

Health and Safety at Work As always, the health and safety of the workforce remains a primary concern for Cinnamon Grand as the hotel strives to uphold international hospitality standards at all times. A sound set of principles and practices form the basis of Cinnamon Grand's safety policy, which is comprehensively captured in the safety manual. The hotel’s Department of Compliance, Health and Safety is the apex body within the organisation, in charge of all safety aspects. Furthermore, the Accident Committee and the Evaluation and Prevention Committee, which falls under the supervision of the Compliance, Health and Safety Department, also offers proactive support in maintaining safety standards. The department is tasked with monitoring, reviewing and reporting on day-to-day adherence to safety standards and procedures. the Company’s safety procedures are further strengthened by OHSAS 18001 certification obtained from SGS Lanka, the accredited body for OHSAS certification in Sri Lanka. The certification confirms that Cinnamon Grand’s systems and processes are fully compliant with OhSAS 18001 international standards for occupational health and management systems.

Injury RateIn the financial year under review, a total of seven associates of Cinnamon Grand were affected by occupational injuries, a decrease of 70% compared to last year.

2014/15 2013/14

total no of Man Days for the period 324,456 325,512

Total No of Man Days Lost (TMDL) 101 199

TMDL as a % of Total Man Days for the Period 0.03% 0.06%

Certifications OHSAS 18001: the hotel has implemented the OhSAS 18001 standard to

create a healthy and safe work environment for all employees and also guests. During the current financial year, the Cinnamon Grand continued to qualify for the OHSAS 18001 certification, following inspection audits conducted by independent auditors. the Occupational health and Safety Assessment Series is a British standard for occupational health and safety management and the implementation of the system ensures a safe working environment for our employees and also other stakeholders.

Awards Occupational Health and Safety Award: the Cinnamon Grand won a Merit

award under the five-Star Hotel category at the first Occupational Health and Safety Awards conducted in Sri Lanka by the National Institute of Safety and Health Sri Lanka, which is part of the Labour Department.



Environmental Sustainability Certifications

Green Globe Certification: this is an international certification programme for sustainable tourism, entailing 41 standard criteria and 137 compliance indicators. In 2014, the hotel obtained a score of 75% in the Green Globe ranking system, making us one of the most sustainably operated hotels in the country.

ISO 14000 Environmental Management Standard: the hotel is highly conscious of the environmental impacts of its operations and has invested consistently on minimising negative environmental impacts, as part of the sustainability strategy. the Cinnamon Grand is certified ISO 14000 compliant, indicating that the systems and processes are designed to abate environmental impacts of all business operations. Annual environment impact assessments are conducted and management programmes developed accordingly to conserve water and electricity and reduce waste.

Carbon Footprint the carbon footprint is the total amount of greenhouse gases produced by an organisation or person and is usually expressed in equivalent tons of carbon dioxide (CO2). As an element of the overall sustainability strategy, the hotel has been actively engaged in reducing its carbon footprint. During the current year, the Cinnamon Grand saw a

3 per cent reduction in its carbon footprint during the financial year due to energy conservation initiatives established to manage the hotel’s carbon footprint. Over the next year, the Cinnamon Grand will see a reduction of over 4,000 tons of Greenhouse Gases (GHGs) annually due to the latest improvements to the systems.

Water ConservationAs a precious natural resource, water conservation is an integral element of the hotel’s sustainability model.the Cinnamon Grand continually strives to improve the systems to reduce wastage of water. Over the years the hotel has introduced many initiatives to not only reduce consumption but also to reduce environmental impacts. this is achieved by adherence to prescribed standards for effluents discharged. . During the current year the hotel saw a 2.51 per cent saving in water consumption and improved the system of discharging water to further reduce environmental impact.

The pumping system was modified during the current year to conserve both water and energy. the single pumping station was replaced by two pumping systems, catering separately to lower levels and upper levels of the building. Previously, pumps were running at higher capacity to maintain water pressure at higher levels, which resulted in higher energy consumption and high wastage. the changes introduced to the pumping system in the current financial year have reduced the energy requirement to pump water and also reduced water wastage.

To reduce environmental impacts through water discharges, the hotel installed three grease traps to clean discharged water which is relapsed to manholes.

2012

2013

2014

2015

Water in Units (m3)

285,560

257,402238,263 232,290




12

2013

2014

2015

Electricity in KWH ('000)

15,274

14,04213,841

13,243

Cinnamon Grand Green vision

To be ranked as the Best five-star Sustainable City Hotel in Sri Lanka by 2015

We are proud to place on record that the Cinnamon Grand’s green vision of becoming the best five-star sustainable city hotel in Sri Lanka was achieved during the current financial year with the implementation of our new Building Management System (BMS). The BMS regulates the environment within the hotel to maintain optimum environmental conditions, while minimising energy wastage. ”

“

Cinnamon Grand's Chief Engineer Panduka Wijeyawardena and Lanka Energy Conservation Pvt Limited Chairman and Managing Director Dammicca

Wickramarathne in front of the newly installed chillers, under the BMS initiative

Energy Conservation A Building Management System

(BMS) was installed in March 2015 to centrally and automatically control the ambient air within the Cinnamon Grand. the system controls, monitors and quantifies energy usage across the entirety of the hotel. the system regulates heating, ventilation and air conditioning in all parts of the building, except for guest rooms. The bMS monitors CO2 levels, and exhaust and pressure systems and maintains optimum levels by automatically adjusting the systems. Anticipated savings per annum is Rs. 52 million from this Rs. 170 million project.

As part of the bMS initiative, two new chillers were installed for air conditioning in January 2015. These high-efficiency chillers help save around 8,500-10,000 kwh of electricity per day.

two electric ovens in the kitchens were replaced with LPG ovens.

these improvements reduced electricity consumption by 4.32 per cent during the current year as against the previous year.



waste Management The hotel has in place, systems for the disposal of waste generated through daily operations. Such waste disposal systems include the use of the 3R methodology of Reusing, Recycling and Reducing techniques. As Colombo’s largest five-star property, with 501 rooms and 14 restaurants, the Cinnamon Grand’s main waste product is wet garbage, comprising food waste, which accounts for about 86 per cent of total waste output of the hotel. Therefore, food waste management is an integral part of the hotel’s day-to-day functions. In addition, plastic, paper and glass bottles account for 6.7 per cent of total waste output. Hazardous waste of the hotel, comprising e-waste such as computers and mobile phones, is sent for proper disposal and recycling. Moreover, the hotel’s discarded CFL bulbs are sent for recycling to a Central Environment Authority-certified waste disposer.

Banners to Bags (B2b) sale at Cinnamon Grand the Cinnamon Grand Colombo's popular Banners to Bags (B2b) initiative was held in commemoration of World Environment Day. The sale was held for the fifth time in June 2014 and featured 170 exclusive and trendy bags made out of used flexi banners of the hotel.

The Cinnamon Grand is Asia's first and the world's fourth company to embark on this unique recycling initiative. All proceeds from the sale of the bags are directed towards the Children’s Ward of the Maharagama Cancer hospital. this innovative concept was introduced in 2009 and was endorsed by Professor Mohan Munasinghe, who is the Vice Chairman of the Intergovernmental panel on Climate Change and shared the 2007 nobel peace prize with Al Gore.

waste Management efforts for the year

Waste type Method of disposal 2013/14 kgs

2014/15 kgs

Wet garbage Collected by three piggery farms 761,942 793,862

Kitchen used oil used for the hotel’s boilers 11,372 11,061

plastic and polythene Given to Central environmental Authority listed collectors for recycling 59,023 63,146

paper and glass bottles Given to piramal Glass Company for recycling

hazardous waste(e-waste and CFL and tube bulbs)

All e-waste is collected by think Green All CFL and tube bulbs are collected by Orange Both companies are registered with the Central environmental Authority

351 1,577

Metal tins and cans Given for recycling to the same collector as plastic and polythene

2,189 4,588

Composting Composting is processed in the hotel and used for the garden areas

42,717 7,636

Landfill waste Given to the Colombo Municipal Council for dumping 43,636 43,636

Coconut shells Collected by a Coconut Development Authority registered supplier

568 7,147




Cinnamon Grand associates serving hot cups of coffee in the wee hours of the morning for those rallying towards the Galle Face Green for the Papal Mass

CORPORATE SOCIAL RESPONSIBILITY

the Cinnamon Grand’s approach to CSR is aimed at supporting local and national endeavours to uplift social standards and living conditions of less-developed and vulnerable communities in the country. the Company is committed to conduct business in a manner that benefits the economy, society and quality of environment. the Marketing Communications and Sustainability Department together with the human Resources Department raises awareness among the staff regarding the role of CSR in the Company’s sustainable growth objectives.

Supporting the La-Salian Montessori, Modarathe Cinnamon Grand has been supporting the La-Salian Montessori at Henamulla Camp, Modara, since 2012 to uplift the learning environment for underprivileged children. this Community and Education Service Centre, which is operated by the La-Salian Foundation, has 145 students between the ages of 3-5 years, with six teachers to care for them. In an attempt to improve their learning environment, the Cinnamon Grand has refurbished the teachers’ room and three toilets and painted the main classroom walls as part of the second phase of this project in April 2014.

In November 2014, the Cinnamon Grand donated 10 used plastic chairs to the La-Salian centre. The hotel also donated a range of linen such as bed sheets, pool towels, bath towels, duvet covers, tablecloths and face towels.

Neighbourhood School Project the Cinnamon Grand understands the importance of being a good neighbour to its surrounding community. the hotel has been supporting the development and maintenance of infrastructure and facilities of disadvantaged Government schools in Colombo 2, towards creating an environment more conducive for learning. the schools cater to a mixed student population representing all communities and religions. this project is a collaboration between the John Keells Foundation and the hotel.

Refreshment Stall during His Holiness Pope Francis’s Mass at Galle Face GreenThe Cinnamon Grand hosted a coffee and cool drinks stall for the large crowds who came from across the country and abroad to Galle Face Green to attend Mass and seek blessings from his holiness pope Francis during his two-day visit to Sri Lanka. The Cinnamon Grand staff worked tirelessly in making this historic event a success by sparing no efforts to ensure the welfare of the masses visiting the event. visitors entering Galle Face Green in the early hours of the day were provided with hot cups of coffee to quench their thirst and ease their fatigue after travelling from far and wide to participate in the momentous occasion. As the day got progressively warmer, the Cinnamon Grand staff



worked hard irrespective of the heat and disregarding their personal discomfort to ensure the availability of cooling and refreshing drinks towards mid-day. these attentive ministrations by our staff ensured that the elderly and the young were well taken care of during the day. Over 15,000 cups of coffee and nearly 50,000 cups of cool drinks were served to pilgrims by the Cinnamon Grand during this historic occasion.

Environmental Wisdom Cardsthe Cinnamon Grand’s ‘environmental Wisdom Card packs’ continued to remain popular among guests and other stakeholders. the cards that were launched to commemorate World environment Day in 2010 contain 12 beautiful wisdom cards, with images of the over 200-year old Banyan tree at nuga Gama. the photographs for the cards were taken by Steve Cohn, a famous photographer from Los Angeles. Each card bears an inspirational quote from famous environmental advocates and is printed on recycled paper. the packs are sold to guests in all restaurants and at the reception. proceeds from sales go to the Field Ornithology Group of Sri Lanka, a conservation society involved in conservation of local avifauna.

Promoting Sri Lankan Crafts and ProduceThe hotel also promote batik items, Cinnamon-branded bookmarks, locally-manufactured children’s sling pouches, recycled paper notepads, wooden handicrafts and masks to

promote and sustain the livelihood of small-scale entrepreneurs through the kadé at Nuga Gama, the village in the city.

Assisting Senior Citizens: The Dias Elders’ Home the Cinnamon Grand Colombo provides dry rations and medicinal items to the Dias elders’ home every month, to support senior citizens who reside in the home. the Dias elders’ home provides shelter to senior citizens who do not have family or other forms of financial support and/or care.

Alzheimer’s Foundationthe Cinnamon Grand Colombo is the hospitality sponsor of the Memory walk, the flagship event of the Lanka Alzheimer’s Foundation. The hotel provided refreshments to the

Ecstatic students from Ceylon School for the Deaf and Blind at the end of the hotel tour with the Cinnamon Grand team

participants. the annual walk aims at raising awareness and funds for those affected with Alzheimer’s disease.

A Day Out for Hearing Impaired Children the Cinnamon Grand Colombo hosted 35 students from the Ceylon School for the Deaf and Blind on 25th July 2014. the children were welcomed at the lobby and presented with welcome drinks at the Courtyard. taken on a short tour of the hotel, the children were shown the Chocolate Room and the fish pond next to Taprobane, and concluded their visit with an enjoyable lunch at nuga Gama.

Donation of White CanesA donation of 100 white canes was made to the Sri Lanka welfare Society of the Blind in aid of the visually-handicapped, in commemoration of White Cane Day in October.




Assisting Senior Citizens: St. Anne’s Home for Elders On the request of the former Roman Catholic Archbishop of Colombo, Father Oswald thomas Colman Gomis, the Cinnamon Grand donated a consignment of discarded linen to the St. Anne’s home for elders in kelaniya. Together with the linen, which included bed sheets, pillow cases, towels and serviettes, the hotel also donated a variety of crockery and cutlery items.

Annual Christmas visit from Don Bosco Boys’ Homethe annual Christmas celebration for the boys from Don Bosco Boys’ home in Maggona was held for the ninth consecutive year. the hotel organised a host of fun-filled activities in true Cinnamon Grand style. In addition, the boys were also gifted books, stationery, school uniforms and shoes for the coming year at the Christmas Party, ending the day on a very positive note. Staff from all departments took time off from their busy seasonal schedules to create this memorable experience for the kids.

Donation of LinenThe Cinnamon Grand is highly conscious of its five-star image and hygiene standards and regularly replaces large volumes of household linen with new items to maintain its premium image. the hotel regularly donates the cleaned, discarded linen which is in good condition to suitable charities as an environmentally-friendly method of disposal.

During the current year, a batch of discarded linen was donated to the Diyangala boys Town at Ragama, on 21st June 2014.

Another batch, mainly bed sheets, was donated to the Maharagama Cancer hospital on 28th June 2014.

More hotel linen was donated to the Institute of Mental health on 29th October 2014.

victims of landslides in Koslanda were gifted with second-hand linen and other items of clothing in July 2014. Families and children who were displaced and facing the cold climate of the hill country were presented with the warm gift of sheets, bed spreads, blankets, towels, shirts and trousers.

Linen, including bath towels and bed sheets, was donated to an Ayurveda Clinic in panadura to improve facilities for patients seeking Ayurveda treatment.

Discarded linen was donated to the peter Weerasekara home for the fun-raising ‘village Fair’ project organised by the home.

the hotel donated linen for the use of an employee’s mother who was admitted to the Cancer hospital

Children from the Don Bosco Boys' Home Maggona, enjoying themselves at the annual Christmas celebrations at the Cinnamon Grand



CORPORATE SOCIAL RESPONSIBILITY CINNAMON LAkESIDE

Being a responsible corporate citizen is an unwavering priority in Cinnamon Lakeside’s entire corporate ethos. At Cinnamon Lakeside, the corporate stewardship is a daily philosophy, well ingrained into every facet of the way business is conducted. In line with this overarching objective, Cinnamon Lakeside has, over the years, worked on integrated social responsibility platforms designed to have maximum impact on all stakeholders, where the relationships nurtured with them are constructed on strong sustainable foundations that would prompt a win-win formula for both them and us. the hotel team encompassing both management and associates, remains integral to the CSR ethos; encouraging associates to identify community initiatives that would involve their participation. hence volunteerism remains ingrained into productivity and performance goals and aligned to their individual career aspirations.

Believing strongly that the impact that Cinnamon Lakeside has on the community must be a sustainable long term one, the projects identified, strengthened and nurtured are programmes founded on the platforms of permeating education for under-served communities as well as extending vocational training programmes for youth from economically disadvantaged backgrounds. It is also imperative

that the hotel inculcate a milieu of inclusivity in each of the social projects and hence promoting religious harmony remains ingrained into these. ‘One Creed for All Creeds for One’ thus was founded on and promotes the concept of unity in diversity, encouraging celebration of the diversity among us, whether in ethnicity, culturally, religious, socially and economically, spearheading change through processes to encourage nation building, reconciliation and peace.

All CSR programmes are implemented in a highly coordinated environment, with key projects undertaken at Group level, in collaboration with the Corporate Social Responsibility Foundation of John keells Holdings PLC.

Encouraging religious harmonySt. James Church in wewaldeniya, nittambuwa was refurbished and renovated this year as a facet of Cinnamon Lakeside’s social responsibility platform to promote religious harmony. each year, the hotel selects a site of significance to any religion and spurs its refurbishment. This year, the hotel had the participation of 100 from the hotel’s team in the project, which included cleaning the surrounds and painting the interiors, exteriors and statues within the Church. also Breakfast and lunch were also provided to the inmates of the children accommodated at the orphanage situated within and managed by the church.

Cinnamon Lakeside associates renovating the St. James Church in Wewaldeniya, Nittambuwa




Cinnamon Lakeside team after the Lady Ridgway refurbishment project

projects that promote religious harmony will continue as an integral facet within the social responsibility initiatives and each year, Cinnamon Lakeside team will identify a religious site that requires attention to gain proactive participation.

Better Health for Allthe totality of the ent Ward of the Lady Ridgeway Children's Hospital was completely refurbished with the voluntary participation of 50 of hotel’s team, in February 2015. In addition to ensuring that the ward was completely renovated by painting, cleaning and even dry cleaning curtains at the hotel laundry, the hotel also presented the ward with fans, bed linen and other essentials.

Accessibility to EducationSpearheading the tenet that knowledge gain will always be the tool for success, which is eventually translated into a knowledge empowered society that contributes towards national development, this year the hotel presented 3,000 exercise books to school children who are within the Lahiru Scholarship Foundation in bibile, based in the Moneragala District. this was a project that saw the joint efforts of both the hotel and hotel’s team members contributing towards the cost of the books, well entrenched in the mindset that education must be accessible to all and hence, Cinnamon Lakeside must do its part to ensure this becomes a reality.



Board of Directors

Susantha RatnayakeChairmanSusantha Ratnayake was appointed as a Director of Asian hotels and Properties PLC in September 2003 and Chairman and CeO of John keells Holdings PLC in January 2006. he has served on the JKh Board since 1992/1993 and has 37 years of management experience, all of which is within the John Keells Group.

he is the Chairman of the employers Federation of Ceylon, Non-Executive Chairman of Ceylon tobacco Company PLC and is a past Chairman of the Ceylon Chamber of Commerce and the Sri Lanka Tea board.

Ajit GunewardeneDirectorAjit Gunewardene is the Deputy Chairman of John keells Holdings PLC and has been a member of the Board for over 20 years. he is a Director of many companies in the John Keells Group and is the Chairman of union Assurance PLC. He is a member of the board of SLINTEC, a company established for the development of nanotechnology in Sri Lanka under the auspices of the Ministry of Science and technology. he is also an Advisory Committee Member of COSTI, the coordinating Secretariat for Science technology and Innovation under the purview of the Minister (Senior) of Scientific Affairs. He has also served as the Chairman of the Colombo Stock exchange and nations

Trust bank PLC. Ajit has a Degree in economics and brings over 32 years of management experience.

Ronnie Peiris DirectorRonnie peiris was appointed as a Director of Asian hotels & properties PLC in 2003. As the Group Finance Director of John keells Holdings PLC, Ronnie has overall responsibility for the Group’s Finance and Accounting, Taxation, Corporate Finance, treasury and Information technology functions. he is also Director of several companies in the John Keells Group. he was previously the Managing Director of Anglo American Corporation (Central Africa) Limited in Zambia.

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

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

Shirani JayasekaraDirectorShirani Jayasekara was appointed as a Director in September 2009. She has over 35 years of experience combining; Finance, IT, Audit and Risk Management in Sri Lanka, Zambia and Bahrain. She has been selected to serve on various committees of the Institute of Chartered Accountants of Sri Lanka such as the Annual Report awards Committee (Sustainability Reporting) and Audit Committee of the Institute. She is also an external Independent Director at Lb Finance. She is a Fellow of the Institute of Chartered Accountants of Sri Lanka and a Fellow of the Chartered Institute of Management Accountants uK.



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

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

prior to that he held several key positions in the Citibank group in Sri Lanka and overseas. Senanayake holds a BSc degree in electronic and electrical engineering from King’s College, university of London and an MSc in Communication engineering from the Imperial College of Science and Technology, university of London. he is also a Director of Sampath Bank PLC and Hemas Pharmaceuticals Ltd.

Rohan KarunarajahDirectorRohan Karunarajah is an executive vice president of the John Keells Group and is also the Sector head of the Cinnamon City Hotels, currently overlooking the management of the Cinnamon Grand, Cinnamon Lakeside and Cinnamon Red. A career hotelier counting over three decades, both in the local and international hospitality industry, he has held the position of General Manager in several hotels in the united kingdom, lastly being the Marriott Marble Arch, London. he is a Director of Asian hotels and Properties PLC. He read for his Masters in hospitality and Business Studies from the thames valley university, London. He was also appointed as a Director of trans Asia Hotels PLC, from 1st May 2015.

Suresh RajendraDirectorSuresh Rajendra is the president of the property Group of John Keells Holdings PLC. He also serves as a Director in many companies of the John Keells Group. he has over 22 years of experience in the fields of finance, travel and tourism, and business development acquired both in Sri Lanka and overseas. Prior to joining the Group, he was the head of Commercial and Business Development for nRMA Motoring and Services in Sydney, Australia and Director/General Manger of Aitken Spence Hotel Managements (Pvt) Ltd, Sri Lanka. Suresh is a Fellow of the Chartered Institute of Management Accountants, uk.



Risk Management

quarter with an annual risk review by the John Keells Group’s enterprise Risk Management division which assists heads of business units and their respective Heads of Departments to comprehensively assess, rate and set mitigation plans for any structural, operational, financial and strategic risks relevant to each company, based on past information and horizon scanning.

Risk Management Processthe Risk Management process is carried out in order to identify risk events and rank, and prioritise each risk by assigning a risk rating. This is rated by assessing the likelihood of occurrence [probability] and the level of impact to the Company. the velocity of risk is also a factor when assessing risks in order to ascertain the speed at which risks would impact the Company. the product of the risk assessment are tabulated in a risk grid that rates the risks on a scale of ‘ultra High’ to ‘Insignificant’, which enables the company to prioritise the risks and to plan out risk mitigation strategies.

the Management Committee of each business unit was apprised of the high level risks and core sustainability risks that emerged during the risk review process. based on the score derived by each identified risk, the Committee decides on the appropriate risk response strategies which are categorised

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

the Company has recognised the Risk Management process as an essential component of both the investment management process ensuring safe and high quality products as well as maintaining sustainable business operations for all our stakeholders. enhancements were continuously made to the Risk Management Framework throughout 2014/15 based on the guiding principles of the enterprise Risk Management (eRM) process recommended by the John Keells Group Sustainability and enterprise Risk Management Division. the enterprise Risk Management cycle begins during the second

Insi

gn

ifica

nt

Ult

ra H

igh

Audit Committee

Board

hotel/property Risk Management

team

Business Impact

Velocity

Likelihood of Occurrence

Risk Champions

Risk Grid



into three broad areas; namely preventive, detective and corrective. based on the field of expertise, risks are assigned to a risk owner who is responsible for the implementation and reporting of the strategy. the risk owner is responsible for ensuring that all required resources needed to effectively implement the strategy are included in the capital expenditure or operational expenditure budget of the Company. Subsequent to the resource planning, the Risk Owner is responsible for the implementation of the strategy within the agreed date plan and to update the Committee accordingly.

the Company does understand that in a dynamic environment, the risk does not stay constant and continuous monitoring of the environment and the assessed risks ensure that the Company identifies and is able to stay abreast of such changes proactively.

the Company follows a well-structured risk reporting mechanism where the risk grid is reviewed on a quarterly basis by the Risk Committee and the team signs off on a compliance statement on a quarterly basis. the responsibility of maintaining an effective system of internal control and risk management lies with the board and the consolidated financial

and operational compliance report is received by the Audit Committee from the President of the Leisure Group. the Audit Committee has also included a risk review on the agenda of Audit Committee Meeting and the Audit Committee on behalf of the Board reviews the risk management process adopted by the Company.

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

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

Strategic Risks

Business Risk the performance of the Companycould be adversely affected due tointense competition, unfavourableeconomic conditions and new entrants

Reduction in fair shareof market and loss of revenue

Adverse impact on planned profitability and cash flow

Risk Rating – Medium the Company closely monitors competitor

activities and strategies. this process includes the reviewing of competitors’ market share and performance. where necessary, new strategies are formulated or existing strategies are revised to counter the actions of competitors

Ongoing and timely investments to upgrade properties and facilities

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

providing value for money by enhancing services, improving service delivery and focusing on consistent quality

Growing web-generated business




Brand Image and Reputation Risk the Company’s success depends on the continued strength and recognition of the brand on a local and regional basis

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

Decline in customer base, loss of marketshare, market penetration and ability to develop the business

Inability to maintain room rate differentiationand competitive advantage

Erosion in confidencemay damage sustainability of Group business

Risk Rating - LowAlthough some factors are beyond its control, the group adopts the following approaches to mitigate this risk:

Regular Brand Audits of the ’Cinnamon‘ brand are carried out

Both the hotel Division and the property Division ensure that they secure the most sought after and qualified staff to hold high Managerial positions (in different hierarchies)

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

the brand of ’Cinnamon’ with emphasis on maintaining Minimum Quality Standards and Standards of performance carries out ongoing reviews of guest comments in order to exceed customer expectations

encouraging and nurturing responsible corporate citizenship through CSR initiatives

Continuous monitoring and reviewing of online customer reviews and rating

Uncertainty in Regulatory Environment RiskChanges in legal and regulatory framework requires significant changes to operating process

potential exposure tolitigation

Risk Rating – Low

Creating awareness about legal & statutory obligations at all levels

Internal auditors carrying out specific reviews and checks to ensure that operations and services remain in compliance with regulations

tax/regulatory returns submitted by the company being subjected to regular monitoring and scrutiny by the tax Division of the Leisure Group

The Legal Division of John keells Group provides guidance and direction to safeguard the company against any losses or loss of reputation that could arise from any legal consequences of transactions it enters into

Risk Management contd.




Operational Risks

Risks from Natural or Man-made DisastersLoss of property and equipment resulting in significant losses

Injuries to staff and guests, damage toproperty and cost implication

Risk Rating – Low

Documented business continuity and disaster recovery plans are in place and appropriate signage is in place

A process to communicate awareness of such incidents is in place

Fire fighting systems, trained staff and procedures are in place

Relevant insurance policies are in place and the adequacy of such cover is subject to regular review

Human Resource Riskthe Company’s human resourcesare the backbone of the business, holding the Company together. thegrowth of the Company is heavilydependent on the talents and effortsof the highly skilled individuals that the Company is able to attract andretain. the recruitment and retention of employees is a constant challenge

Inability to maintainquality standards and meet guest expectations

higher operational costs and loss of business

Adverse impact on the company’s brand image

Risk Rating – Low As part of the performance appraisal process

carried out in the Company, a clear vision has been set out on career development and succession plans, enabling the Company to retain its employees

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

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

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




Technology and Data Protection RiskFailure to keep pace with developments in the technology sphere could impair our competitive position and operation

Risk of cyber attacks

Adverse impact on efficiency of operations, guest satisfaction, loss of competitive advantage

Data theft

Risk Rating – Low Reservation, property management, material

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

the It division of the sector and the John Keells Group have implemented procedures to safeguard the computer installations of the Company to ensure continuity of operations

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

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

Clearly defined IT policy, which is communicated to all associates

Supply Chain Risks Short supply of goods and raw material resulting in disruptions to operations

Cost overruns, reputational loss

Risk Rating – Low Alternate suppliers have been identified Maintain good business relationships with

supply chain, rotating contracts when economically possible

Identification of local supplier base





Internal operational processes Risk of financial loss due to breakdown in internal controls

Disruption of operations, loss of profits and ineffective use of assets and resources

Risk Rating – Low Clearly defined systems and procedures

are in place to ensure compliance with internal controls, which are monitored and reviewed for their continued efficiency and effectiveness

An outsourced internal audit firm reviews and provides assurance on the adequacy of the Group’s financial and operational systems on a quarterly basis

quarterly confirmation of compliance with financial, operational and sustainability procedures and requirements which include any incidence of fraud

A formal process is in place to review and monitor all audit findings

Financial Risk

Liquidity and Credit Risk The economic instability, high inflation rates, adverse foreign currency fluctuations and the global monetary crisis could affect the Company in recovering the cash from clients of the hotel and tenants of the mall

exposure and losses due to default ofsettlement by debtors

Reduced cash flow and profitability

probable penalty charges and adverse credit terms for future business

Risk Rating – Low Regular review mechanisms are in place to

monitor the performance of the Company against approved budget targets to achieve a balance between liquidity and profitability

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

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

Interest Rate Risk Drop in interest rates will lead to a lower interest income as a result ofwhich, the Company would have an impact on its Other Income

Reduced income and profitability

Risk Rating – Low the Company has taken measures to

maximise the interest income with the assistance and guidance of the JKh Group treasury Department

Keeping abreast of global as well as local interest rate activities




Foreign Exchange Risk Reduced revenue and profitability

Risk Rating – Low transacting revenue in strong currencies Matching payments to collection of the same

currency Continuous monitoring of the exchange rate

and updating the conversion rates according

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




Corporate Governance

CORPORATE GOVERNANCE COMMENTARY

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

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

the Company holds itself accountable to the highest standards of Corporate Governance and transparency that enhances the public’s access to information about our Company. Effective Corporate Governance in line with the highest international standards is an important part of our identity. Our system of Corporate Governance lays the basis for responsible performance-oriented management and control which is

geared towards sustainable value creation. Most importantly, our efforts go hand in hand with an unwavering commitment to the accurate, clear communication of our performance and the facts of our business.

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

� Companies Act No. 7 of 2007 – Mandatory compliance

� The Continuing Listing Rules of the Colombo Stock exchange (CSe) – Mandatory compliance

the Recommendations of the Code of Best practice on Governance issued jointly by the Securities and exchange Commission of Sri Lanka (SEC) and the Institute of Chartered Accountants of Sri Lanka (ICASL) to the extent that they are practicable – voluntary compliance



Corporate Governance System within a Sustainability Development Framework

The Corporate Governance framework is founded on the following principles:

(i) Allegiance to John keells Holdings PLC (JkH) and the John keells Group, and upholding of Group values.(ii) Compliance with the laws and Company Rules and Regulations applying to the territories that the John Keells Group

operates in.(iii) Conduct of business in an ethical manner at all times, in line with acceptable business practices.(iv) exercise of professionalism and integrity in all business and “public” personal transactions.(v) ensure that no one person has unfettered powers of decision making.(vi) Opting for the early adoption of accounting standards and best practices in governance regulation when practical.(vii) encourage proactive discussions with the relevant regulatory bodies to facilitate the implementation of matters of

governance and other business reforms in Sri Lanka.(viii) Make business decisions and resource allocations, in an efficient and timely manner, within a framework that ensures

transparent and ethical dealings which adhere to the laws of the country and the standards of governance that stakeholders expect from the Company.

The Company Corporate Governance SystemThe Company Corporate Governance System diagram depicts the key components as at current, and their inter-linkages. this commentary is broadly sequenced in keeping with this diagram. Internal Governance Structure This comprises a committees which formulate, execute and monitor Company related strategies, initiatives, processes and procedures which support are weaved into the fabric of these committees, enabling them to perform their roles effectively.

Corporate Governance contd.

Regulatory BenchmarksAssurance Mechanisms Internal Governance Structure

President/Sector Head

People & Talent Management

Board Committees

Employees Performance Governance

Internal Control

Stakeholder Management

JKH Code of Conduct

Effective & Transparent Management

External Audit

Employee Participation

IT Governance

Risk Management

Management Team

Employee Empowerment

Companies Act No. 07 of 2007

Listing Rules of the CSE

The Code of Best Practices on Corporate Governance

issued jointly by SEC & ICASL

Audit Committee

Human Resources &

Compensation Committee

Related Party Transaction

Review Committee

Nominations Committee

Chairman & the Board of Directors



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

Regulatory Benchmarks this comprises regulations which govern, in the main, all our corporate activities from the Companies Act no. 07 of 2007 to Listing Rules of the CSE, Rules of the SeC and the benchmarks we have set for ourselves in working towards local and global best practices.

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

Internal Governance Structurethe Internal Governance Structure encompasses;� The board of Directors,� board Sub-committees, and� Senior Management Committees

Strengthened and complemented by internal policies, processes and procedures, the key components being:� Strategy formulation and decision

making� human resource governance � Integrated risk management

It governance and� Stakeholder management and

effective communication

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

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

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

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

� encouraging debate and constructive criticism

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

� Leading the board and individual Director performance assessments

� Speaking and acting for the Board and representing the Board to shareholders

� presenting shareholders’ views to the Board

� Facilitating the relationship between the Board and the Management

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

Chairman appraisalthe human Resources and Compensation Committee of the ultimate parent Company, John keells Holdings PLC appraises the performance of the Chairman on an organisational and individual basis as approved by the Board.

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



Composition of the Board and Directors’ Independence

As at 31st March 2015, the board consisted of 8 Directors comprising:� 2 executive Directors (eD) � 3 non-executive non-Independent Directors (neD/nID) � 3 non-executive Independent Directors (neD/ID)

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

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

Name of Director/Capacity

Share Holding (1) Material Business Relationship (2)

Employee of Company (3)

Family Member a Director or CEO (4)

Continuous service for nine years (5)

Non-Executive ,Non-Independent Directors (NED/NID)

Mr. S.C. Ratnayake Yes no no no n/A

Mr. A.D. Gunewardene no no no no n/A

Mr. J.R.F. peiris no no no no n/A

Executive ,Non-Independent Directors (ED/NID)

Mr. R.J. Karunarajah Yes no no no n/A

Mr. S. Rajendra no no no no n/A

Non-Executive, Independent Directors (NED/ID)

Mr. C.J.L. Pinto Yes no no no no

Mr. S.K.G. Senanayake no no no no no

Mrs. S.A. Jayasekara no no no no no

Definitions 1. have shares in the Company.2. Income/Non cash benefits derived from the Company equivalent to 20 per cent of the Directors annual income.3. Director was employed by the company two years immediately preceding appointment.4. Close family member who is a Director or CeO. 5. has served on the Board continuously for a period exceeding nine years.

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

Directors that made up the Company board participate in defining goals, vision, strategies and business targets. All Directors are able to and willingly add value and independent opinion on the decision making process, which is of immense benefit to the effective functioning of the board. The details of the current board of Directors along with a brief resume of each Director is found from page 60 and 61 of the Report.




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

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

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

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

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

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

The board aims to fulfil its responsibilities by creating value for all stakeholders that is sustainable and beneficial. Stakeholders include shareholders, employees, customers, the community and the environment. without limiting the board’s function, its specific responsibilities include:�� Approving objectives, strategies

and financial plans and monitoring the Company’s performance against these plans

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

�� Reviewing and approving all significant policies and procedures

�� exercising objective judgment on all corporate matters independent from the executive Management

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

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

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

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

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

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

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



Prior to Appointment

Once Appointed

During Board Meetings

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

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

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

Directors who have disclosed an interest in a matter under discussion have,

� Excused themselves from deliberations on the subject matter.

Refrained from voting on the subject matter (such abstentions from Board decisions are duly recorded).


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

Board Meetings, Agenda and AttendanceFor the financial year 2014/2015 there was a total of four (4) Board meetings. During the meetings, the Chairman of the Board appropriately allocated time for Directors to carefully review and discuss all relative information. there were also written minutes that were made available for verification and approved by the Board. All Directors have access to Keells Consultants [Private] Limited who act as Company Secretaries for advice on relevant matters.

the Board met on key matters of importance to the Company, including; � Confirmation of previous minutes � Matters arising from the previous

minutes � Board subcommittee reports and

other matters exclusive to the Board

Status updates of major projects Review of performance – in

summary and in detail, including high level commentary on actuals and outlook

� Summation of strategic issues discussed at pre-Board meetings

� Approval of Quarterly and Annual Financial Statements

� Ratification of capital expenditure and donations

� Ratification of the use of the company seal and share certificates issued

Ratification of Circular resolutions� new resolutions � Report on corporate social

responsibility � Review of Group risks,

sustainability, HR practices/updates

� Any other business



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

Attendance at Board Meetings

Name of Director 29-04-2014 30-07-2014 30-10-2014 28-01-2015 Meetings Attended

Mr. S.C. Ratnayake √ √ √ √ 4/4

Mr. A.D. Gunewardene √ √ √ √ 4/4

Mr. J.R.F. peiris √ √ √ √ 4/4

Mr. R.J. Karunarajah √ √ √ √ 4/4

Mr. S. Rajendra √ √ √ √ 4/4

Mr. C.J.L. Pinto √ - √ √ 3/4

Mr. S.K.G. Senanayake - √ √ - 2/4

Mrs. S.A. Jayasekara √ √ √ √ 4/4

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

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

effectively and efficiently� periodic performance reports� Information updates from Management on topical matters, new regulations

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

Board evaluationThe board conducted its annual board performance appraisal for the financial year 2014/15. this formalised process of individual appraisal enabled each member to self-appraise on an anonymous basis, the performance of the board under the areas of:

Role clarity and effective discharge of responsibilities people mix and structures

Systems and procedures Quality of participation Board image

the scoring and open comments were collated by the Independent Director, and the results were analysed to give the Board an indication of its effectiveness as well as areas that required addressing and/or strengthening.

Board Secretarykeells Consultants (Pvt) Ltd functions as the Secretaries and Registrars of the Company and provide the Secretarial input for the Board proceedings in addition to maintaining Board minutes and Board records.

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

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

Independent Directors, on the other hand, can be appointed to office for three consecutive terms of three years, which however, is subjected to the age limit set by statute at the time of re-appointment following the end of a term.



the proposal for the re-appointment of Directors is set out in the Directors Report as well as the notice of Meeting on page 167 of this Report.

Board Sub-Committeesthe Board has delegated some of its functions to sub-committees, while retaining final decision rights. Members of these sub-committees are able to focus on their designated areas of responsibility and impart knowledge and oversight in areas where they have greater expertise.

Of the four committees mentioned below, other than the Audit Committee, the board sub-committees of the ultimate parent Company, John keells Holding PLC (JkH), functions as the sub-committees of the Company and its subsidiaries as permitted by the listing rules of the CSe.

1. Audit Committee2. nominations Committee3. human Resources and

Compensation Committee4. Related party transactions Review

Committee

Audit Committee

Role of the Committeethe role of the Audit Committee is to assist the board in fulfilling its oversight responsibilities for the integrity of the Financial Statements of the Company, the internal control and risk management systems of the Company and its compliance with legal and regulatory requirements, the External Auditors’ performance,

qualifications and independence, and the adequacy and performance of the Internal Audit function, which at the parent company (JKh) is termed Group Business process Review Division (Group BpR). this is detailed in the terms of reference of the Committee which has been approved by the Board and is reviewed annually.

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

Composition of the Committee and Meetingsthe Audit Committee comprises of three Independent non-executive Directors. As prescribed in the Listing Rules of CSE. The Chairman of the Audit Committee is a Fellow member of the Institute of Chartered Accountants of Sri Lanka with several years of experience in financial auditing and accounting.

Four (4) meetings were held during the year. the executive Directors and Senior Management of Cinnamon Grand Colombo and Crescat property Division attend the Audit Committee meetings by invitation. Further the representatives of the Internal Auditors (Messrs. pricewaterhouseCoopers (private) Limited), John keells Group business process Review Division and the External Auditors Messrs. kPMG, Chartered Accountants also attend the Audit Committee meetings by invitation. the Audit Committee performs an important monitoring

function in the overall governance of the Company.

The Committee reviews the following; � procedures for identifying

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

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

� Budgeting and forecasting systems, financial reporting systems and controls

� procedures for ensuring compliance with relevant regulatory and legal requirements

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

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

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




Audit Committee attendance during the subject period was;

Attendance at Board Audit Committee Meetings

Name of Director 19-05-2014 28-07-2014 28-10-2014 26-01-2015 Meetings Attended

Mr. C.J.L. Pinto √ √ √ √ 4/4

Mr. S.K.G. Senanayake √ √ √ √ 4/4

Mrs. S.A. Jayasekara √ √ √ √ 4/4

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

All newly appointed Directors shall hold office until the next Annual General Meeting and shall be eligible for re-election by the Shareholders of the Company, as provided by Article 91 of the Articles of Association of the Company. The Nominations Committee of JkH comprises five Independent Directors and one Non-Independent Director namely as at 31st March 2015:

Mr. t. Das - Chairman Mr. S.C. Ratnayake - (non-Independent)Mr. M.A. OmarMr. e.F.G. AmerasingheMr. D.A. CabraalMs. p. perera*

*Appointed with effect from 24th July 2014.

Human Resources and Compensation Committee As permitted by the Listing Rules of the CSE, the Human Resources and Compensation Committee of JkH, the Parent Company of Asian Hotels and Properties PLC, functions as the Human Resources and Compensation Committee of the Company and its Subsidiary. the human Resources and Compensation Committee of JkH comprise of five Non-Executive Independent Directors.

Mr. e.F.G. Amerasinghe - Chairman Dr. I. CoomaraswamyMr. A.R. Gunasekara* Mr. M.A. OmarMr. n.A. FonsekaMr. D.A. Cabraal**

*Resigned with effect from 30th June 2014**Appointed with effect from 29th January 2015.

the remuneration policy adopted by the Company as recommended by the human Resources and Compensation Committee of its Parent Company, JKh is formulated to attract and retain high calibre executives and motivate them to develop and implement the business strategy in order to optimise long-term shareholder value creation. the customised “pay for performance scheme” continues to apply for all Company employees based on the pillars of individual performance and organisational performance. the remuneration package for all employees at Assistant Manager level and above is based on organisational performance and individual performance. However, in respect of the Executive level and below, the employees scheme operates purely on the basis of individual performance.

Related Party Transactions Review CommitteeAs required by the SeC under its Code of best Practice for Listed Companies, the Related party transactions Review Committee was formed at the Parent Company level with effect



from the 01st April 2014. the parent Company Level Committee will act on behalf of the Company, as permitted by the Listing Rules of the Colombo Stock Exchange, with the intention of ensuring, on behalf of the board, that all related party transactions of JKh and its listed subsidiaries are consistent with the Code of Best practices on Related party transactions issued by the SeC.

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

(i) Developing, and recommending for adoption by the Board of Directors of JKh and its listed subsidiaries, a Related Party transaction policy consistent with that proposed by the SeC and is in synchronisation with the Operating Model and the delegated Decision Rights of the Group.

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

this committee of JKh comprises four non-executive Independent Directors and two non-executive non-Independent Directors. the head of Group Business process Review will operate as the secretary to this committee.

Mr. n. Fonseka - Chairman Mr. e.F.G. Amerasinghe Mr. D.A. Cabraal Mr. S.C. Ratnayake Mr. J.R.F. peiris Ms. p. perera*

*Appointed with effect from 24th July 2014 Board Remuneration

Remuneration for Non-Executive, Non-Independent DirectorsCompensation for non-executive Directors, Non-Independent Directors [neD/nIDs] is determined by reference to fees paid to other neD/nIDs of comparable companies. Director fees applicable to non-executive Directors nominated by JKh are paid directly to the Company and not to individuals.

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

the Company does not have an employee share option scheme.

total aggregate of non-executive Director Remuneration for the year was Rs. 4,770,000.

Remuneration for Executive and Non-Independent Directorsthe remuneration of the executive Directors is determined as per the remuneration principles of the Group. the human Resources and Compensation Committee conducted a market survey of executive Director remuneration with a view to assessing the appropriateness of compensation with market benchmarks. having taken into account the complexities associated with the Group, it was established that the compensation is in-line with the market.

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

total aggregate executive Director Remuneration for the year was Rs. 59,210,947.

Accountability and Assurance

System of Internal Controlsthe Board has overall responsibility for the system of internal control. A sound system of internal control is designed to manage rather than eliminate the risk of failure to achieve business objectives. the Company continues to stress on the importance of strong internal control throughout the organisation. Written responsibilities, authority delegation and management controls have been




adopted to create transparency for utilisation of the Company’s resources and to distinguish the duties of staff and controllers in order to ensure that proper verification and monitoring processes are in place.

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

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

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

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

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

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

� The existing SAP SOx processes were reviewed and updated to ensure compliance with Sarbanes Oxley Act of 2002 – Section 404.

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

� Carried out frequent surprise cash counts across the Group.

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

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

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

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



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

Monitoring of Financial and Operational Data� Financial results and key

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

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

� the It systems in place facilitate the online display of information relevant to the needs of hotel managers and functional heads pertinent to their areas of responsibility.

Information Technology Governancethe Company Information technology (It) Governance policy has evolved in line with the Group's It Governance policy in the last year to deliver and embrace new technologies which have aligned with the overall business objective of the Group. this evolution occurred as the Company discerned the competitive advantage

gained and the enhancement of business value which came about through the skilful alignment of It with its business objectives and the prudent management of its It resources. the Company has always been a step ahead in embracing emerging technologies and systems, consistently investing in developing its It infrastructure. Continuous focus on cutting-edge technology has ensured greater reliability of It systems and has shortened information delivery times to both internal and external stakeholders.

The IT governance system, in particular, was closely reviewed during the year towards ensuring the following:� Leverage IT as a strategic asset� Ensure agility, in view of the fast

changing technology� establish the right balance

between business needs and It enablement

� ensure that all It investments have a quantifiable (or visible) business return

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

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

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

Following linkages of pMS were further strengthened:� Learning and development� Career development

Succession planning� talent management� Reward and recognition� Compensation and benefits

Management Committee the hotel and property divisions of Asian Hotels and Properties PLC have two separate Management Committees consisting of Sector Head of the City Hotel, President of the property Division and other key managers of divisions in order to discuss matters pertaining to strategy and operations.

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




policies, internal controls, the Human Resources Strategy and the Risk Management policy.

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

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

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

Additionally, a technically strong Management Audit function aligned with the Company’s strategies adds value in a variety of ways, including –

� Providing an independent opinion on the integrity, reliability and relevance of management information

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

� Reviewing compliance with corporate policies and external regulations

� Reducing the risk of fraud

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

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

Information in the Financial Statements of the Annual Report are supplemented by a detailed ‘Management Discussion and Analysis’ from pages 22 to 59 which

explains to shareholders the strategic, operational, investment and risk related aspects of the Company that have translated into the reported financial performance and are likely to influence future results.

the Statement of Directors' Responsibilities in relation to financial reporting is given on page 110 of the Annual Report. the Directors' interests in contracts of the Company are addressed on page 101 of the Annual Report.

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

Sri Lanka Financial Reporting Standards (SLFRS)Living by the Company’s philosophy of good governance and reporting, the Financial Statements for year 2014/15 have been prepared and presented in accordance with Sri Lanka Accounting Standards (SLFRS/LkAS) which have materially converged with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).



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

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

External AuditMessrs. KpMG serves as the external auditors of the Company.

the audit fees paid by the Company and Group to Messrs. KpMG are separately classified on page 131 in the notes to the Financial Statements of the Annual Report.

the Auditors' report on the Financial Statements of the Company for the year under review is found on page 111 of the Annual Report.

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

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

Employee Participation in AssuranceThe following meetings, interviews, evaluations and surveys were conducted during the year:� Skip Level meetings� exit interviews� Young Forum meetings� 360 degree evaluation� Great place to Work survey� voice of employee survey

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

OmbudspersonIn order to deal with a situation in which an employee or group of employees feel that an alleged violation has not been addressed satisfactorily using the available/existing procedures and processes, an

Ombudsperson has been appointed by JKh being the ultimate parent Company to entertain such concerns.

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

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

recommendations of the Ombudsperson

� the action taken based on the recommendations

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

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

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




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

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

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

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

Allegiance to the Company and the Group

Code of Conduct

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

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

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

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

Roles of Stakeholdersthe Company realises the importance of ensuring that all stakeholders’ rights are properly observed. pertinent procedures are carried out in line with the rules and regulations of the CSE, as well as the related laws.

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

Customers: the Company is committed to continuously develop better quality of goods and services for the benefit and satisfaction of its customers.

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



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

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

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

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

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

Going Forwardthe Board is committed to the highest standards of Corporate Governance in order that the Company shall achieve its long term sustainable growth objectives. the Board is accountable to the Company’s shareholders for good governance in its management of the affairs of the Company. The board confirms that the Company was fully compliant throughout the year ended 31st March 2015 with all the principles and provisions of the good Corporate Governance and the Code of Business Conduct and ethics.

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

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

Regulatory Benchmarks the Board of Directors has taken all reasonable steps to ensure that all Financial Statements are prepared in accordance with the Sri Lanka Accounting Standards(SLFRS/LkAS) issued by ICASL and the requirements of the CSe and other applicable authorities.

the Company and its subsidiary are fully compliant with all the mandatory rules and regulations stipulated by the Corporate Governance Listing Rules published by the CSe and also by the Companies Act no. 07 of 2007. the Group has also given due consideration to the Best practice on Corporate Governance Reporting guidelines jointly set out by ICASL and the SeC and has voluntarily adopted the relevant provisions as far as is practicable.




Statement of Compliance under Section 7.10 of the Rules of the Colombo Stock exchange (CSe) on Corporate Governance(Mandatory provisions – fully complied)

Compliant Non Compliant

CSE Rule No.

Subject Compliance Requirement Compliance Status

Applicable Section in the Annual Report

7.10(a-c)

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


7.10.1(a-c)

non-executive Directors � two or at least one-third of the total number of Directors should be non-Executive Directors, whichever is higher


7.10.2(a) Independent Directors � two or one-third of non-executive Directors, whichever is higher, should be independent


7.10.2(b) Independent Directors � each non-executive Director should submit a declaration of independence/non-Independence in the prescribed format

Available with the Secretaries for review

7.10.3(a) Disclosure relating to Directors

� the Board shall annually determine the independence or otherwise of the non-executive Directors

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


7.10.3(b) Disclosure relating to Directors

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


7.10.3(c) Disclosure relating to Directors

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

Board of Directors (profile) section in the Annual Report

7.10.3(d) Disclosure relating to Directors

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




CSE Rule No.



7.10.4 (a-h)

Criteria for defining Independence

� Requirements for meeting criteria to be Independent


7.10.5 human Resources and Compensation Committee

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


7.10.5(a) Composition of human Resources and Compensation Committee

� Shall comprise of non–executive Directors, a majority of whom will be Independent


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

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


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

� names of Directors comprising the human Resources and Compensation Committee

Statement of Remuneration policy Aggregated remuneration paid to executive and non–executive Directors

Corporate Governance and the Board of Directors Reports

7.10.6 Audit Committee � the Company shall have an Audit Committee


7.10.6(a) Composition of Audit Committee

� Shall comprise of non–executive Directors a majority of whom will be Independent

� A non–executive Director shall be appointed as the Chairman of the Committee

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

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





CSE Rule No.



7.10.6(b) Audit Committee Functions

Overseeing of the � Preparation, presentation and

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

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

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

� Assessment of the independence and performance of the external auditors

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


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

� names of Directors comprising the Audit Committee

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

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

Corporate Governance and the Audit Committee Report



Code of best Practice of Corporate Governance Jointly Issued by the Securities and Exchange Commission of Sri Lanka (SEC) and the Institute of Chartered Accountants of Sri Lanka (ICASL)

Compliant Non Compliant

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

A. Directors

A.1 The Board

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

√ Corporate Governance

A.1.1 Frequency of Board Meetings

� board should meet regularly, at least once in every quarter

√ Corporate Governance/Annual Report of the Board of Directors

A.1.2 Responsibilities of the Board

� Formulation and implementation of strategy

� Skill adequacy of management and succession

� Integrity of information, internal controls and risk management

� Compliance with laws, regulations and ethical standards

� Code of conduct Adoption of appropriate

accounting policies

√

√

√

√

√√


A.1.3 Access to professional advice

� Procedure to obtain independent professional advice when deemed necessary


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

� procedure for Directors to access services of Company Secretary

√

√


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






A.1.6 Dedication of adequate time and effort by Directors

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


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


A.2 Chairman and Chief Executive Officer

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

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


A.3 Chairman’s Role

A.3.1 ensure good corporate governance

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


A.4 Financial Acumen

A.4.1 possession of adequate financial acumen

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


A.5 Board Balance

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


A.5.2 proportion of Independent Directors

� two or one-third of the non-executive Directors should be independent


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





A.5.4 Declaration of Independence

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


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

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


A.5.6 Appointment of an alternate Director

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

n/A

A.5.7 Appointment of Senior Independent Director (SID)

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

n/A

A.5.8 Availability of Senior Independent Director to other Directors

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

n/A

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

� the Chairman should meet the non-executive Independent Directors at least once a year


A.5.10 Directors concerns to be recorded

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

n/A

A.6 Supply of Information

A.6.1 provision of adequate information to Board

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


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

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






A.7 Appointment to the Board

A.7 Appointments to the Board

� Formal and transparent procedure for Board appointments


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


A.7.2 Annual assessment of Board composition

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


A.7.3 Disclosure of new Board appointments

� Profiles of new board appointments to be communicated to Shareholders

√ Corporate Governance/notice of Meeting

A.8 Re-election

A.8.1 Appointment of non-executive Directors

� Appointment of non-executive Directors should be for specified terms and re-election should not be automatic


A.8.2 Shareholders approval of appointment of all Directors

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

√ Corporate Governance/Annual Report of the Board of Directors/notice of Meeting

A.9 Appraisal of Board Performance

A.9.1 Annual appraisal of Board performance

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


A.9.2 Self evaluation of Board and Board Committee

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

√ Corporate Governance/Audit Committee Report

A.9.3 Declaration of basis of performance evaluation

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





A.10 Disclosure of Information in respect of Directors

A.10.1 biographical Profiles and relevant details of Directors to be disclosed

� Annual Report should disclose the biographical details of Directors and attendance at Board/Committee meetings

√ Board of Directors profiles section/ Corporate Governance/ Audit Committee Report

A.11 Appraisal of Chief Executive Officer

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

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


A.11.2 evaluation of CeO performance

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


B. Directors Remuneration

B.1 Remuneration Procedure

B.1.1 Appointment of Remuneration Committee

� Remuneration Committee of the ultimate parent Company may function as such for the Company to make recommendations on Director’s remuneration


B.1.2 Composition of Remuneration Committee

� Remuneration Committee should consist exclusively of non-executive Directors


B.1.3 Disclosure of members of Remuneration Committee

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


B.1.4 Remuneration of non-executive Directors

� Board to determine the level of remuneration of non-executive Directors


B.1.5 Access to professional advice

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






B.2 Level and Make up of Remuneration

B.2.1 to B.2.4

performance related elements in pay structure and alignment to industry practices

� packages should be structured to attract, retain and motivate executive Directors

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

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

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

√

√

√

√


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


B.2.6 to B.2.9

Remuneration packages for non-executive Directors

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


B.3 Disclosure of Remuneration

B.3.1 Disclosure of details of remuneration

� the Annual Report should disclose the remuneration paid to Directors

√ Financial Statements

C. Relations with Shareholders

C.1 Constructive Use and Conduct of Annual General Meeting

C.1.1 proxy votes to be counted

� the Company should count and indicate the level of proxies lodged for and against in respect of each resolution


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

√ Corporate Governance/ notice of Meeting

C.1.3 Availability of Chairman's of Committees at AGM

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


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

√ notice of Meeting




C.1.5 procedure for voting at meetings

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

√ notice of Meeting

C.2 Communication with Shareholders

C.2.1 Chanel of Communication

� Channel to reach all shareholders to disseminate timely information


C.2.2 – C.2.7

policy and Methodology of Communication

� Policy and Methodology of communication with shareholders and implementation


C.3 Major and Material Transactions

C.3.1 Disclosure of Major transactions

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

√ notes to the Financial Statements

D. Accountability and Audit

D.1 Financial Reporting

D.1.1 presentation of public Reports

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

√ Corporate Governance/Risk Management/Financial Statements

D.1.2 Directors’ Report the Directors’ Report should be included in the Annual Report and confirm that ,� the Company has not contravened

laws or regulations in conducting its activities

� Material interests in contracts have been declared by Directors

� the Company has endeavoured to ensure equitable treatment of shareholders

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

� that the business is a “going concern”

√

√

√

√

√

Annual Report of the Board of Directors

Audit Committee Report

Annual Report of the Board of DirectorsCorporate Governance

Audit Committee Report/Risk Management






D.1.3 Respective responsibilities of Directors and Auditors

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

√ Respective responsibilities of the Directors and Auditors

D.1.4 Management Discussion and Analysis

Annual report to include section on Management Discussion and Analysis

√ Management Discussion

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

√ Annual Report of the Board of Directors

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

n/A

D.1.7 Related party transactions

� Disclosure of Related Party transactions

√ notes to the Financial Statements

D.2 Internal Control

D.2.1 Effectiveness of system of internal controls

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

√ Audit Committee Report/Risk Management

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


D.2.3-D.2.4

Continuity of Internal control

� Maintaining a sound system of internal control


D.3 Audit Committee

D.3.1 Chairman and Composition of Audit Committee

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

� Audit Committee Chairman should be appointed by the Board

√

√

Audit Committee Report




D.3.2 Duties of Audit Committee

Should include� Review of scope and results of

audit and its effectiveness� Independence and objectivity of

the Auditors

√

√


D.3.3 terms of Reference / Charter

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


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

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

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

√

√

√

Corporate Governance/Audit Committee Report


Audit Committee

D.4 Code of Business Conduct and Ethics

D.4.1 Adoption of Code of Business Conduct and ethics

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


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

√ Chairman’s Statement/Director’s Report





D.5 Corporate Governance Disclosures

D.5.1 Corporate Governance Report

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


E. Institutional Investors

E.1 Structured Dialogue

e.1.1 Structured Dialogue with Shareholders

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


e.2 evaluation of Governance Disclosure by Institutional Investors

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


F. Other Investors

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


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

√ Corporate Governance/Form of proxy

G. Sustainability Reporting

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

√ Annual Report-Management Discussion




the Board of Directors has pleasure in presenting the 21st Annual Report of your Company together with the Audited Financial Statements for the year ended 31st March 2015.

Principal Activitiesthe Company is engaged in hoteliering and property Development/Management. trans Asia Hotels PLC (the owner and operator of Cinnamon Lakeside Hotel) is a subsidiary of the Company and its principal activity is hoteliering. there has been no material change in the activities of the Company or of the subsidiary during the period under review.

Review of Business and Future DevelopmentsThe financial and operational performance, during the year ended 31st March 2015 and future business development of the Company and Group is provided in the Chairman’s Statement, the Management Discussion and Analysis in this Annual Report. These reports, which form an integral part of the Directors’ Report together with the Audited Financial Statements, reflect the state of affairs of the Company and Group for the financial year ended 2014/2015.

Financial Statements and Auditors’ ReportThe Financial Statements, duly signed by the Directors, is provided from pages 112 to 161 and the Auditors’ Report on the Financial Statements is provided on page 111 of this Annual Report.

Segment ReportingA review of the financial and operational and future business development of the Group and its business units are described in the management discussion and analysis section of the Annual Report. These reports, together with the audited Financial Statements, reflect the state of affairs of the Company and the Group Segment-wise contribution to Group revenue, results, assets and liabilities are provided in note 36 to the Financial Statements.

RevenueRevenue generated by the Company amounted to Rs. 5,294 million (Rs. 5,317 million in 2014), whilst Group revenue amounted to Rs. 8,080 million (Rs. 8,256 million in 2014).Contribution to Group revenue, from the different business segments are provided in note 36 to the Financial Statements.

Results and Appropriations The Profit After Tax of the Company was Rs. 1,807 million (Rs. 2,379 million in 2014) whilst the Group profit attributable to the equity holders of the Parent Company for the year was Rs. 1,757 million (Rs. 2,398 million in 2014). A detailed description of the Group results and appropriations are given below.

2014/15 Rs. ‘000

2013/14 Rs.‘000

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

2,350,653 3,046,463

From which Income Tax has been deducted of: (263,196) (227,952)

Leaving thereafter a Net Profit After Tax of: 2,087,457 2,818,511

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

(330,828) (420,565)

Leaving a Profit Available to the Group of: 1,756,629 2,397,946

The brought Forward Profit is: 7,880,070 7,242,060

Transferred to Revenue Reserve of: 17,358 15,407

Other Comprehensive Income: 109 (4,242)

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

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

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

7,883,065 7,880,070

* In accordance with the LkAS 10, Events after the reporting period, the final dividend has not been recognised as a liability in the Financial Statements.



Accounting PoliciesThe Financial Statements, which comprise the Income Statement, Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in equity and the Statement of Cash Flow, together with the accounting policies and notes (‘the Financial Statements’) have been prepared in accordance with Sri Lanka Accounting Standards (SLFRS/LkAS) as issued by the Institute of Chartered Accountants of Sri Lanka (ICASL) and the requirement of the Companies Act no. 7 of 2007. the changes to accounting policies have been applied consistently to all financial periods presented in these Financial Statements, unless otherwise indicated. the accounting policies adopted in preparation of the Financial Statements are given from pages 118 to 129 of this Report.

DividendsA Final Dividend of Rs. 3/- per share for the financial year ended 31st March 2014, was paid during the current financial year on 18th June 2014 to those shareholders in the register as of 6th June 2014, resulting in a total cash pay out amounting to Rs. 1,328 million.

An Interim Dividend of Rs. 1/- per share for the year ended 31st March 2015, amounting to Rs. 442 million was paid on 31st March 2015.

The board of Directors, has declared a Final Dividend of Rs. 3/- per share for the financial year ended 31st March 2015. the Final Dividend will be paid on 19th June 2015 to those

shareholders on the register as at 10th June 2015.

As required by Section 56 (2) of the Companies Act No. 7 of 2007, the board of Directors has confirmed that the Company satisfies the Solvency test in accordance with Section 57 of the Companies Act no. 7 of 2007 and has obtained a certificate from the Auditors, prior to declaring the above dividends. Property, Plant and Equipment The book value of Property, Plant and equipment as at the balance sheet date amounted to Rs. 17,285 million (2014 – Rs. 15,053 million) and Rs. 20,704 million (2014 – Rs. 18,511 million) for the Company and Group respectively.

Capital expenditure for the Company and Group amounted to Rs. 838 million (2014 – Rs. 301 million) and Rs. 1,010 million (2014 – Rs. 673 million) respectively.

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

Details of Land and buildings with net book values including details of Property, Plant and Equipment of the Group and their movements are given in note 14 to the Financial Statements on page 135.

Market Value of PropertiesThe Land and buildings of the Group were revalued on 31st March 2015 by M/s p.B. Kalugalagedara and

Associates, Chartered Valuation Surveyor.

All properties classified as investment property were also revalued as at 31st March 2015 in accordance with the requirements of LkAS 40. This valuation too was carried out by M/s p.B. Kalugalagedara and Associates.

Details of property valuations, including the valuation methods are provided in note 14 to the Financial Statement on page 137 of this report.

Investment PropertiesIn accordance with SLAS 40-Investment Property (2005), the net book value of properties held to earn rental income, and properties held for capital appreciation have been classified as Investment properties. the details of Investment properties are explained in note 16 to the Financial Statements on page 138.

Investment in Subsidiary

Company no. of Shares

% holding

trans Asia Hotels PLC (Quoted)

86,823,028 43.41

Stated Capitalthe Stated Capital of the Company as at 31st March 2015 is Rs. 3,345 million (2014 – Rs.3,345 million) comprising of 442,775,300 Ordinary Shares.

Share Informationthe market value of an Ordinary Share of the Company as at 31st March 2015 was Rs. 63.00 (31st March 2014 – Rs. 58.80).



the distribution and composition of shareholders and the information relating to earnings, dividend, net assets, and market value per share is given in the Share Information and Five (5) Year Financial Review section of the Annual Report.

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

Major ShareholdersDetails of the twenty largest shareholders of the Company and the percentage shareholding held by the public are disclosed in the Share Information section of the Annual Report from page 163 and 164.

Reservestotal reserves as at 31st March 2015 for the Company and Group amounted to Rs. 18,753 million (2014 – Rs. 17,003 million) and Rs. 20,692 million (2014 – Rs. 18,991 million), respectively.

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

Directorsthe Board of Directors of the Company as at 31st March 2015 and brief profiles of each Director are given in the Board of Directors section of the Annual Report.

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

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

Mr. C. J. L. Pinto and Mr. J. R. F. Peiris retire by rotation in terms of Article 84 of the Articles of Association of the Company and being eligible for re-election are recommended by the board for re-election. brief profiles of Mr. C. J. L. Pinto and Mr. J. R. F. Peiris are found on page 60.

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

Mr. S.C. Ratnayake - ChairmanMr. A.D. GunewardeneMr. J.R.F. peiris Mr. N.L. GooneratneMr. C.J.L. PintoMr. e.h. WijenaikeMrs. J.C. ponniahMr. R.J. Karunarajah*

*Appointed with effect from 01st May 2015

Responsibility of the BoardDetails of responsibilities of the Board and the manner in which those responsibilities were discharged

during the year are disclosed in the Corporate Governance section of the Annual Report.

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

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

the Report of the Audit Committee is given on page 108 of this Report.

Human Resources and Compensation Committee As permitted by the listing rules of the Colombo Stock Exchange, the human Resources and Compensation Committee of the Parent Company, John keells Holdings PLC (JkH), functions as the human Resources and Compensation Committee of the Company.

the following members serve on the human Resources and Compensation Committee:

Mr. e.F.G. Amerasinghe - ChairmanDr. I. CoomaraswamyMr. A.R. Gunasekara*Mr. M.A. OmarMr. n.A. FonsekaMr. D.A. Cabraal**

*Resigned with effect from 30th June 2014.**Appointed with effect from 29th January 2015.

Annual Report of the Board of Directors contd.



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

Nominations CommitteeAs permitted by the listing rules of the Colombo Stock Exchange, the nomination Committee of the parent Company John keells Holdings PLC (JKh) functions as the nomination Committee of the Company.

the nominations Committee comprises five Independent Directors and one non Independent Director as at 31st March 2015:

Mr. t. Das - Chairman Mr. S.C. Ratnayake (non-Independent)Mr. M.A. OmarMr. e.F.G. AmerasingheMr. D.A. Cabraal Ms. p. perera *


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

Related Party Transactions Review Committeethe Related party transactions Review Committee of the parent Company John keells Holdings PLC (JKh) functions as the Related party transactions Review Committee of the Company which was formed with effect from 01st April 2014.

the Related party transactions Review Committee comprises four Independent Directors and two non Independent Directors as at 31st March 2015:

Mr. n.A. Fonseka - ChairmanMr. e.F.G. AmerasingheMr. D.A. CabraalMs. p. perera* Mr. S.C. RatnayakeMr. J.R.F. peiris


the Related party transactions Review Committee is given in the Corporate Governance section of the Annual Report.

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

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

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

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

Indemnities and Remuneration the Board approved the payment to

Messrs. R. J. Karunarajah and S. Rajendra, Executive Directors of Asian Hotels & Properties PLC, a remuneration comprising of;

An increment from 1 July 2014 based on the individual performance rating obtained by the executive Directors in terms of the performance management system of the John keells Group;

Short term variable incentive based on individual performance, organization performance and role responsibility based on the results of the financial year 2013/2014, paid in July 2014; and

Long Term incentive in the nature of eSOp in John Keells holdings PLC dependent on the aforesaid performance rating, organisational rating and role responsibility granted in July 2014.



as recommended by the human Resource and Compensation Committee of John Keells holdings PLC the holding company of Asian Hotels & Properties PLC in keeping with the Group remuneration policy.

the Board approved the payment of increased non-executive Directors fee for Messrs. S. C. Ratnayake, A. D. Gunewardene, J. R. F. Peiris, S. G. k Senanayake, C. L. J. Pinto, and S. A. Jayasekara as recommended by the human Resource and Compensation Committee of John Keells holdings PLC the holding company of Asian Hotels & Properties PLC in keeping with the Group remuneration policy. Fees payable to non-executive nominee Directors of John Keells Holdings PLC was paid to John keells Holdings PLC and not to individual Directors. Further the Board approved the renewal of C. L. J. Pinto’s contract as a non-executive Director of Asian Hotels and Properties PLC was for a further period at increased non-executive Directors' fees approved by the human Resources and Compensation Committee of John keells Holdings PLC.

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

Changes to the remuneration paid to the Directors of trans Asia hotels PLC for the financial year ended 31st March 2015 are set out in note 10 to the Financial Statement of page 131.

The Non-Executive Directors of Trans Asia Hotels PLC received an increment in fees with effect from 01st July 2014, as recommended by the Human Resources and Compensation Committee of John keells Holdings PLC (being its holding Company and as permitted by Rules of the Colombo Stock exchange) which increase is commensurate with the market and complexities of the business of the Company. the fees payable to non-executive nominees of John Keells Holdings PLC are paid to the Company and not to individual Directors.

Directors’ Shareholdingsthe shares held by Directors’ and their spouses in the Company as at 31st March 2015 are as follows;

Director Shareholding as at 31.03.2015

Shareholding as at 31.03.2014

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

Mr. A.D. Gunewardene NIL NIL

Mr. J.R.F. peiris NIL NIL

Mr. R.J. Karunarajah 200 200

Mr. S. Rajendra NIL NIL

Mr. S.K.G. Senanayake NIL NIL

Mrs. S.A. Jayasekara NIL NIL

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

7,800 7,800

Employee Share Option Plan (ESOP)employees of the Company receive remuneration in the form of share-based payment under the John Keells Group’s employees Share Option Scheme (ESOP), share options of the parent are granted to senior executives of the company, whereby employees render services as consideration for equity instruments (equity-settled transactions). the cost of the employee services received in respect of the shares or share options granted is recognised in the Income Statement over the period that employees provide services, from the time when the award is granted up to the vesting date of the options. the overall cost of the award is calculated using the number of share options expected to vest and the fair value of the options at the date of grant.

the employee remuneration expense resulting from the Group’s share option scheme to the employees of Asian Hotels and Properties PLC is recognised in the income statement of the company. this transaction does not result in a cash outflow to the Company and expense recognised is met with a corresponding equity reserve increase, thus having no impact on the Statement of Financial




position (SOFp). the fair value of the share options is estimated at the grant date using a binomial option pricing model, taking into account the terms and conditions upon which the share options were granted. the valuation takes into account factors such as stock price, expected time to maturity, exercise price, expected volatility of share price, expected dividend yield and risk free interest rate.

Corporate GovernanceDirectors’ Declarations

The Directors declare that;a) the Company has complied with

all applicable laws and regulations in conducting its business.

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

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

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

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

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

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

A comprehensive report on Corporate Governance practices and principles with respect to the management and operations of the Company are set out from pages 69 to 97 of this Report.

Sustainabilitythe Company is conscious of the need to preserve the environment and its natural resources and has taken specific steps, particularly in ensuring the conservation of its natural resources and environment as well as addressing material issues highlighted by its stakeholders. every endeavour has been made to minimise adverse effects on the environment to ensure sustainable continuity of natural resources. the Company’s sustainable practices are detailed from pages 34 to 59.

Employmentthe Company has an equal opportunity policy in respect of employment and these principles are enshrined in specific selection,

training, development and promotion policies, ensuring that all decisions are based on merit. The Company, in line with the Group policy, practices equality of opportunity for all employees irrespective of ethnic origin, religion, political opinion, gender, marital status or physical disability.

the number of persons employed by the Company and Group as at 31st March 2015 was 1,230 (1,234 in 2014) and 2,078 (2,089 in 2014), respectively.

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

Supplier PolicyThe Company, in line with the Group’s policies, applies an overall policy of agreeing and clearly communicating terms of payment as part of the commercial agreements negotiated with suppliers and endeavours to pay for all items properly charged in accordance with these agreed terms. As at 31st March 2015, the trade and other payables of the Company and Group amounted to Rs. 434 million (2014 – Rs. 404 million) and Rs. 682 million (2014 – Rs. 627 million), respectively.

Environmental Protectionthe Company is in compliance with the relevant environmental laws, regulations and endeavours to comply with best practices applicable in the country. A summary of selected Group activities in the



above area is contained in the Management Discussion and Analysis. the Company has not engaged in any activity that is harmful to the environment.

Statutory PaymentsThe Directors confirm that to the best of their knowledge, all taxes, duties and levies payable by the Company and its Subsidiary, all contributions, levies and taxes payable on behalf of, and in respect of the employees of the Company and its Subsidiary, and all other known statutory dues that were due and payable by the Company and its Subsidiary as at the Balance Sheet date have been paid or, where relevant provided for, except as specified in Note 37 to the Financial Statements, covering Contingent Liabilities.

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

the details of the Risk Report and Risk Management process are set out from pages 62 to 68 of this Report.

Internal ControlThe board, through the involvement of the Group Business process Review (Group bPR) Division, takes steps to

gain assurance on the effectiveness of control systems in place. the Audit Committee receives regular reports on the adequacy and effectiveness of internal controls in the Company. These include compliance with laws, regulations and established policies and procedures of the Company.

the head of Group BpR Division has direct access to the Chairman of the Audit Committee. Reports of the outsourced internal auditors are also reviewed by the Committee on matters pertaining to the Company.

the Directors acknowledge their responsibility for the Company’s systems of internal controls. the statements of Corporate Governance from pages 69 to 97 sets out in detail the Company’s system of internal controls.

Related Party Transactionsthere were no related party transactions required to be disclosed under the Listing Rules of the CSE other than as disclosed under note 33 to the Financial Statements.

Donationstotal donations made by the Company during the year amounted to Rs. 16.09 million and donations made by the Group amounted to Rs. 26.93 million (31st March 2014 – Company Rs. 13.98 million/Group Rs. 21.08 million).

Events Subsequent to the Balance Sheet Dateexcept for the matters disclosed in note 39 to the Financial Statements on page 161 there were no material

events which require adjustments or disclosure in the Financial Statements.

Going ConcernThe board of Directors, after considering the financial position, operating conditions, regulatory and other factors, and such matters required to be addressed in the Code of Best practice on Corporate Governance issued jointly by the Securities and exchange Commission and the Institute of Chartered Accountants of Sri Lanka, has a reasonable expectation that the Company and its Subsidiary possess adequate resources to continue in operation for the foreseeable future. For this reason, the board continues to adopt the Going Concern basis in preparing the Financial Statements.

Auditorsthe retiring Auditors Messrs. kPMG, Chartered Accountants, have expressed their willingness to continue in office. The Audit Committee at a meeting held on 27th April 2015 recommended that they be re-appointed as Auditors. A Resolution to re-appoint them as auditors and authorising the Directors to determine their remuneration will be proposed at the Annual General Meeting.

the Independent Auditors’ Report to the shareholders on the Financial Statements is given on page 111.

the Audit Committee reviews the appointment of the Auditor, its effectiveness, independence and its relationship with the Company,


105Asian Hotels and Properties PLC


including the level of audit and non–audit fees paid to the Auditor.

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

Annual Reportthe Board of Directors approved the Consolidated Financial Statements on 29th May 2015. the appropriate number of copies of this Report will be submitted to the Colombo Stock Exchange and to the Sri Lanka Accounting and Auditing Standards Monitoring Board on 4th June 2015.

Annual General Meetingthe 21st Annual General Meeting of the Company will be held at the Auditorium of Ceylon Chamber of Commerce, at No. 50, Navam Mawatha, Colombo 2, on 26th June

2015 at 11.45 a.m. the notice of Annual General Meeting appears on page 167 of the Annual Report.

this Annual Report is signed for and on behalf of the board of Directors by;

Director Director

By Order of the Board

kEELLS CONSULTANTS (PRIVATE)

LIMITED

Secretaries

Colombo29th May 2015

Asian Hotels and Properties PLC


Financial Calendar

Interim Reports

1st Quarter 30th July 2014

2nd Quarter 30th October 2014

3rd Quarter 28th January 2015

4th Quarter 29th May 2015

Annual Reports

2013/14 28th May 2014

2014/15 29th May 2015

Meetings

20th Annual General Meeting 27th June 2014

21st Annual General Meeting 26th June 2015

Dividends

Final dividend of Rs.3/- per share for the year 2013/14 was paid on 18th June 2014

Interim dividend of Rs.1/- per share for the year 2014/15 was paid on 31st March 2015



Financial StatementS



introductionThe Board Audit Committee is formally constituted as a Sub-Committee of the Main Board, to which it is accountable. Charter of the Committee clearly defines the terms of reference of the Audit Committee. It demonstrates that activities of the Audit Committee are in-line with the Code of Best Practice on Corporate Governance issued jointly by the Institute of Chartered Accountants of Sri Lanka and the Securities and Exchange Commission of Sri Lanka. The effectiveness of the Committee is evaluated annually by each member of the Committee and the results are communicated to the Board.

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

composition of the committee and meetings The Audit Committee comprised of three Non-Executive Independent Directors. The Chairman of the Audit

Report of the audit committee

Committee and another member of the Committee are Chartered Accountants while the other member of the Committee has a specialist financial background. All Non-Executive Directors satisfy the criteria for independence as specified in the Standards on Corporate Governance for listed Companies issued by the Securities and Exchange Commission of Sri Lanka. The Audit Committee reports directly to the Board. The individual and collective financial and hotel industry specific knowledge, business experience and independence of members are brought to bear on all matters, which fall within the committee’s purview. The Director Finance of the Hotel sector served as the Secretary to the Audit Committee.

The President of the Property Group of John Keells Holdings, Sector Head of Cinnamon City Hotels, Sector Financial Controllers of Property and Hotels Sectors together with the Head of Group Business Process Review of John Keells Holdings PLC, attend Audit Committee meetings by invitation. Other officials are invited to attend on a needs basis. Outsourced Internal Auditors, PricewaterhouseCoopers (Pvt) Ltd., and Independent External Auditors KPMG are required to attend meetings on a regular basis.

The Audit Committee held four (4) meetings during the financial year. Information on the attendance at these meetings is given under Corporate Governance on page 77 In addition, the Chairman of the Committee met the Internal and External Auditors and in house personnel, as necessary, to

strengthen guidance and oversight related to Audit Committee matters.

The activities and views of the Committee have been communicated to the Board of Directors quarterly through verbal briefings and by tabling the minutes of the Committee’s meetings. Financial ReportingThe Audit Committee has reviewed and discussed the Company’s quarterly and annual Financial Statements prior to publication with management and the external auditors, including the extent of compliance with Sri Lanka Accounting Standards, the appropriateness of its accounting policies and material judgmental matters. The Committee has also regularly discussed the operations of the Company and its future prospects with Management and is satisfied that all relevant matters have been taken into account in the preparation of the Financial Statements.

internal audit, Risks and controlsPricewaterhouseCoopers (Pvt) Ltd continued to serve as the Outsourced Internal Auditors of the Company, and the audit plans and scope of work were formulated in consultation with the John Keells Group Business Process Review (Group BPR) Division and approved by the Committee.

The main focus of the Internal Audit was to provide independent assurance on the overall system of internal controls, risk management and governance, by evaluating the adequacy and effectiveness of internal



controls, and compliance with laws and regulations and established policies and procedures of the company.

During the year, reports were received by the Committee from the Outsourced Internal Auditors, which were reviewed and discussed with Management, the Outsourced Internal Auditors and the John Keells Group BPR Division. The recommendations of the Internal Auditors have been followed up and are being implemented.

The Audit Committee has also reviewed the processes for the identification, evaluation and management of all significant operational risks faced by the Company. The most significant operational risks and the remedial measures taken to mitigate them have been reviewed with the management and the John Keells Group Sustainability and Enterprise Risk Management division.

Formal confirmations and assurances have been received from senior management on a quarterly basis regarding the efficacy and status of the internal control systems and risk management systems, and compliance with applicable laws and regulations. The Committee reviewed the whistle blowing arrangements for the Company which is in-line with the group arrangements and had direct access to the Ombudsman for the Group.

external auditThe External Auditors’ letter of engagement, including the scope of the audit, was reviewed and discussed by the Committee with the external auditors and Management prior to the commencement of the audit.

The External Auditors kept the Committee advised on an on-going basis regarding any unresolved matters of significance. Before the conclusion of the audit, the Committee met with the External Auditors to discuss all audit issues and agree on their treatment. This included the discussion of formal reports from the External Auditors to the Committee. The Committee also met the External Auditors, without the management being present, prior to the finalisation of the Financial Statements.

The Audit Committee is satisfied that the independence of the External Auditors has not been impaired by any event or service that gives rise to a conflict of interest. Due consideration has been given to the level of audit and non-audit fees received by the External Auditors from the John Keells Group and confirmation has been received from the External Auditors of their compliance with the independence criteria given in the Code of Ethics of the Institute of Chartered Accountants of Sri Lanka.

The performance of the External Auditors has been evaluated and discussed with the senior management of the Company, and the

Committee has recommended to the Board that KPMG be re-appointed as the External Auditors of Asian Hotels and Properties PLC for the financial year ending 31st March 2016, subject to approval by the shareholders at the Annual General Meeting.

conclusionBased on the reports submitted by the External Auditors and the Outsourced Internal Auditors of the Company, the assurances and certifications provided by the senior management, and the discussions with management and the auditors both at formal meetings and informally, the Committee is of the view that the control environment within the Company is satisfactory and provides reasonable assurance that the financial position of the Company is adequately monitored and its assets are safeguarded.

c.J.l. PintoChairman of the Audit Committee

29th May 2015



Statement of Directors’ Responsibility

The responsibility of the Directors in relation to the Financial Statements is set out in the following statement and should be read in conjunction with the Report of the Auditors. The responsibility of the Auditors, in relation to the Financial Statements prepared in accordance with the provisions of the Companies Act No. 7 of 2007, is set out in the Report of the Auditors.

The Financial Statements comprise of:

● ● IncomeStatementandStatementofComprehensiveIncomeofthe Company and of the Group, which present a true and fair viewoftheprofitandlossoftheCompany and of the Group for the respectivefinancialyear.

● ● AStatementoftheFinancialPosition, which presents a true andfairviewofthestateofaffairsof the Company and of the Group asattheendofthefinancialyear:and

TheDirectorsarerequiredtoconfirmthat the Financial Statements have been:

● ● preparedusingappropriateaccounting policies which have been selected and applied in a consistent manner, and material departures, if any, have been disclosed and explained; and

● ● presentedinaccordancewiththeSri Lanka Accounting Standards (SLFRS/LKAS) and that reasonable and prudent judgments and

estimates have been made so that the form and substance of transactionsareclearlyreflected;and

● ● providetheinformationrequiredby and otherwise comply with the Companies Act No. 7 of 2007 and the Listing Rules of the Colombo Stock Exchange.

The Directors are also required to ensure that the Company has adequate resources to continue in operation to justify applying the going concern basis in preparing these Financial Statements.

Furthermore, the Directors have a responsibility to ensure that theCompanymaintainssufficientaccounting records to disclose, with reasonableaccuracy,thefinancialposition of the Company and of the Group.

The Directors have also taken all reasonable steps to safeguard the assets of the Company and of the Group.InthisregardtheDirectorshave implemented appropriate systems of internal control with a view of preventing and detecting fraud and other irregularities.

The Directors are required to prepare the Financial Statements and to provide the Auditors with every opportunity to take whatever steps and undertake whatever inspections that may be considered being appropriate to enable them to give their audit opinion.

Moreover, as required by Section 56 (2) of the Companies Act No. 7 of 2007, the Board of Directors have confirmedthattheCompany,basedontheinformationavailable,satisfiesthe solvency test immediately after the distribution, in accordance with Section 57 of the Companies Act No. 7 of 2007, and have obtained a certificatefromtheAuditors,priorto declaring a Final Dividend of Rs. 3/- per share for the year ended 31st March 2015, to be paid on 19th June 2015.

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

compliance ReportTheDirectorsconfirmthat,tothebestof their knowledge, all taxes, duties and levies payable by the Company, all contributions, levies and taxes payable on behalf of and in respect of the employees of the Company and all other known statutory dues as were due and payable by the Company as at the Balance Sheet date have been paid and/or provided for,exceptasspecifiedinNote37tothe Financial Statements covering Contingent Liabilities.

By Order of the Board

Keells consultants (Private) limitedSecretaries

29th May 2015



independent auditors’ Report

tO tHe SHaReHOlDeRS OF aSian HOtelS anD PROPeRtieS Plc

Report on the Financial StatementsWe have audited the accompanying Financial

Statements of Asian Hotels and Properties

PLC, (the “Company”), and the consolidated

Financial Statements of the Company and

its subsidiary (the “Group”), which comprise

thestatementoffinancialpositionasat31st

March 2015, and income statement, statement

ofprofitorlossandothercomprehensive

income, statement of changes in equity and

cashflowstatementfortheyearthenended,

andasummaryofsignificantaccounting

policies and other explanatory notes set out

on pages 112 to 161.

Board’s Responsibility for the Financial Statements The Board of Directors (“Board”) is responsible

forthepreparationofthesefinancial

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.

Auditors’ ResponsibilityOur 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 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

auditors’ judgment, including the assessment

of the risks of material misstatement of the

Financial Statements, whether due to fraud

orerror.Inmakingthoseriskassessments,

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

ontheeffectivenessoftheentity’sinternal

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

obtainedissufficientandappropriateto

provide a basis for our audit opinion.

OpinionInouropinion,theconsolidatedFinancial

Statements give a true and fair view of the

financialpositionoftheGroupasat31stMarch

2015,andofitsfinancialperformanceandcash

flowsfortheyearthenendedinaccordance

with Sri Lanka Accounting Standards.

Report on Other Legal and Regulatory RequirementsAs required by Section 163 (2) of the

Companies Act No. 07 of 2007, we state the

following:

a) The basis of opinion and scope and

limitations of the audit are as stated

above.

b) Inouropinion;

- 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

financialpositionasat31stMarch2015,

andofitsfinancialperformanceand

cashflowsfortheyearthenendedin

accordance with Sri Lanka Accounting

Standards.

- 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.

chartered accountants

29th May 2015

Colombo.



GROUP cOmPanYFor the year ended 31st march 2015 2014 2015 2014 in Rs.’000s Page no. note

Revenue 130 5 8,080,152 8,256,149 5,294,080 5,316,686Cost of Sales (3,356,728) (3,239,562) (2,201,856) (2,096,108)

Gross Profit 4,723,424 5,016,587 3,092,224 3,220,578

Dividend Income 130 6 - - 273,493 273,493Other Operating Income 130 7 80,523 75,546 70,523 62,261Distribution Expenses (238,765) (207,964) (108,885) (118,633)Administrative Expenses (1,836,041) (1,776,265) (1,179,197) (1,126,839)Other Operating Expenses (607,048) (631,760) (361,448) (377,721)

Results from operating activities 2,122,093 2,476,144 1,786,710 1,933,139

Finance Cost 130 8 (190) (3,287) - (3,249)Finance Income 131 9 199,958 305,042 165,046 249,783Net Finance Income 199,768 301,755 165,046 246,534Change in Fair Value of Investment Property 138 16 28,792 268,564 8,142 268,564

Profit Before Tax 131 10 2,350,653 3,046,463 1,959,898 2,448,237Income Tax Expense 132 11 (263,196) (227,952) (153,164) (69,025)Profit for the Year 2,087,457 2,818,511 1,806,734 2,379,212

attributable to:Owners of the Company 1,756,629 2,397,946 1,806,734 2,379,212Non-controlling Interest 330,828 420,565 - - 2,087,457 2,818,511 1,806,734 2,379,212

Rs. Rs. Rs. Rs.

earnings Per Share 134 12 3.97 5.42 4.08 5.37

Figures in brackets indicate deductions.The accounting policies and notes as set out in pages 118 to 161 form an integral part of these Financial Statements.

income Statement



Statement of Profit or Loss and Other Comprehensive Income

GROUP cOmPanYFor the year ended 31st march note 2015 2014 2015 2014 in Rs.’000s

Profit for the Year 2,087,457 2,818,511 1,806,734 2,379,212

Other comprehensive incomeItems that will never be reclassified to profit or loss Revaluation of land and buildings 14.1-14.2 1,687,240 - 1,687,240 -Re-measurement gain/(loss) on defined benefit plans 29 1,215 (4,860) (574) (3,768)Deferred tax effect on actuarial valuation gain (215) - - -

Other comprehensive income for the year, net of tax 1,688,240 (4,860) 1,686,666 (3,768)

total comprehensive income for the year, net of tax 3,775,697 2,813,651 3,493,400 2,375,444

attributable to :Owners of the Company 3,443,978 2,393,704 3,493,400 2,375,444Non-controlling Interest 331,719 419,947 - - 3,775,697 2,813,651 3,493,400 2,375,444




GROUP cOmPanYas at 31st march 2015 2014 2015 2014 in Rs.’000s Page no. note

aSSetSnon current assetsProperty, Plant and Equipment 135 14 20,703,920 18,511,385 17,284,527 15,053,598Lease Hold property 137 15 806,260 818,664 - -Investment Property 138 16 3,935,508 3,904,514 2,156,608 2,146,264Intangible Assets 139 17 2,858 5,265 708 1,002Investment in Subsidiary 140 18 - - 660,045 660,045Non Current Financial Assets 141 20 12,173 17,027 8,436 11,391Other Non Current Assets 141 21 2,644 4,786 2,002 3,264total non current assets 25,463,363 23,261,641 20,112,326 17,875,564

current assetsInventories 141 22 120,336 121,019 86,412 85,146Trade and Other Receivables 142 23 637,985 481,912 322,227 247,463Amounts Due from Related Parties 148 33.2 66,484 48,863 31,801 34,717Other Current Assets 142 24 132,075 141,475 88,830 100,725Short Term Investments 142 25 2,475,667 3,134,194 2,239,351 2,647,269Cash In Hand and at Bank 499,964 430,541 267,245 289,804total current assets 3,932,511 4,358,004 3,035,866 3,405,124total assets 29,395,874 27,619,645 23,148,192 21,280,688

EQUITY & LIABILITIESequity attributable to equity holders of the parentStated Capital 143 26 3,345,117 3,345,117 3,345,117 3,345,117Revenue Reserves 7,883,065 7,880,070 6,432,793 6,391,287Other components of equity 143 27 12,808,756 11,110,871 12,319,823 10,612,101 24,036,938 22,336,058 22,097,733 20,348,505

non-controlling interest 3,388,477 3,451,487 - -total equity 27,425,415 25,787,545 22,097,733 20,348,505

non current liabilitiesDeferred tax liabilities 145 28 341,062 337,411 - -

Employee benefit liabilities 146 29 241,873 221,234 131,873 114,664

total non current liabilities 582,935 558,645 131,873 114,664

current liabilitiesTrade and Other Payables 147 30 682,330 626,523 434,129 403,725Amounts Due to Related Parties 148 33.3 111,471 87,341 85,971 60,904Income tax liabilities 147 31 144,236 111,863 117,099 53,545Other current liabilities 147 32 332,759 317,648 221,558 223,229Bank Overdrafts 116,728 130,080 59,829 76,116total current liabilities 1,387,524 1,273,455 918,586 817,519total equity and liabilities 29,395,874 27,619,645 23,148,192 21,280,688

I certify that the Financial Statements comply with the requirements of the Companies Act No. 7 of 2007.

Sunil PeirisSector Financial Controller

The Board of Directors is responsible for the preparation and presentation of these Financial Statements.

a.D. Gunewardene J.R.F. PeirisDirector Director

The accounting policies and notes as set out in pages 118 to 161 form an integral part of these Financial Statements.

29th May 2015

Statement of Financial Position



GROUP attributable to owners of the company

note Stated Revaluation Other Retained total non total

capital Reserve capital earnings controlling equity

Reserve interest

in Rs.’000s

as at 01st april 2013 3,345,117 11,110,290 - 7,242,060 21,697,467 3,425,692 25,123,159total comprehensive incomeProfit for the year - - - 2,397,946 2,397,946 420,565 2,818,511

Other Comprehensive Income - - - (4,242) (4,242) (618) (4,860)Total Comprehensive Income - - - 2,393,704 2,393,704 419,947 2,813,651transactions with Owners of the companyTransferred to Revenue Reserve (Note a) - (4,496) - 4,496 - - -Transferred to Revenue Reserve (Note b) - (10,911) - 10,911 - - -Share based payments 27.2 - - 15,988 - 15,988 1,978 17,966Final Dividend Paid - 2012/2013 13 - - - (1,328,326) (1,328,326) - (1,328,326)Interim Dividend Paid - 2013/2014 13 - - - (442,775) (442,775) - (442,775)

Subsidiary dividend to Non-controlling Interest -2012/2013 - - - - - (226,360) (226,360)Subsidiary dividend to

Non-controlling Interest -2013/2014 - - - - - (169,770) (169,770)as at 31st march 2014 3,345,117 11,094,883 15,988 7,880,070 22,336,058 3,451,487 25,787,545as at 01st april 2014 3,345,117 11,094,883 15,988 7,880,070 22,336,058 3,451,487 25,787,545total comprehensive incomeProfit for the year - - - 1,756,629 1,756,629 330,828 2,087,457

Other Comprehensive Income - 1,687,240 - 109 1,687,349 891 1,688,240Total Comprehensive Income - 1,687,240 - 1,756,738 3,443,978 331,719 3,775,697

transactions with Owners of the companyTransferred to Revenue Reserve Note (a) - (6,447) 6,447 - - -Transferred to Revenue Reserve (Note b) - (10,911) 10,911 - - -Share based payments 27.2 - - 28,003 - 28,003 1,401 29,404Final Dividend Paid - 2013/2014 13 - - - (1,328,326) (1,328,326) - (1,328,326)Interim Dividend - 2014/2015 13 - - (442,775) (442,775) - (442,775)Subsidiary dividend to

Non-controlling Interest -2013/2014 - - - - - (226,360) (226,360)

Subsidiary dividend to

Non-controlling Interest -2014/2015 - - - - - (169,770) (169,770)

as at 31st march 2015 3,345,117 12,764,765 43,991 7,883,065 24,036,938 3,388,477 27,425,415

Note (a) According to the Sri Lanka Accounting Standard - 16 “Property, Plant and Equipment”, the Revaluation Surplus included

in the Equity can be transferred to Retained Earnings when the surplus is realised. Accordingly, the surplus realised amounting to

Rs.6.44 Mn (Rs.4.49 Mn in 2014) has been transferred directly to Retained Earnings as at the reporting date.

Note (b) According to the Sri Lanka Accounting Standard - 16 “Property, Plant and Equipment”, when the revalued asset is used by

an entity, the difference between depreciation based on the revalued carrying amount of the asset and depreciation based on the

assets the original cost is transferred from revaluation surplus to retained earnings amounting Rs.10.91 Mn. (Rs.10.91 Mn in 2014).

Figures in brackets indicate deductions.

The Notes to the Financial Statements from Pages 118 to 161 form an integral part of these Financial Statements.

Statement of changes in equity



cOmPanY note Stated Revaluation Other Retained total capital Reserve capital earnings equity Reserve in Rs.’000s

as at 01st april, 2013 3,345,117 10,602,127 - 5,782,448 19,729,692

total comprehensive income

Profit for the year - - 2,379,212 2,379,212Other Comprehensive Income - - - (3,768) (3,768)

Total Comprehensive Income - - - 2,375,444 2,375,444

transactions with Owners of the company

Transferred to Revenue Reserve Note (a) - (4,496) - 4,496 -

Share based payments 27.3 - - 14,470 - 14,470

Final Dividend Paid - 2012/2013 13 - - - (1,328,326) (1,328,326)Interim Dividend - 2013/2014 13 - - - (442,775) (442,775)

as at 31st march, 2014 3,345,117 10,597,631 14,470 6,391,287 20,348,505

total comprehensive income

Profit for the year 2013/2014 - - - 1,806,734 1,806,734

Other Comprehensive Income 1,687,240 - (574) 1,686,666

Total Comprehensive Income - 1,687,240 - 1,806,160 3,493,400

transactions with Owners of the company

Transferred to Revenue Reserve Note (a) - (6,447) - 6,447 -

Share based payments 27.3 - - 26,929 - 26,929

Final Dividend Paid - 2013/2014 13 - - - (1,328,326) (1,328,326)Interim Dividend - 2014/2015 13 - - - (442,775) (442,775)as at 31st march, 2015 3,345,117 12,278,424 41,399 6,432,793 22,097,733

Note (a) According to the Sri Lanka Accounting Standard - 16 “Property, Plant and Equipment”, the Revaluation surplus included in the Equity can be transferred to Retained Earnings when the Surplus is realised. Accordingly, the surplus realised amounting to Rs.6.44 Mn (Rs.4.49 Mn in 2014) has been transferred directly to RetainedEarnings as at the reporting date. (Refer Note No 27 on page 143 for details)


Statement of Changes in Equity Contd.



Statement of cash Flow

GROUP cOmPanYFor the Year ended 31st march note 2015 2014 2015 2014 in Rs.'000s

caSH FlOWS FROm OPeRatinG actiVitieSOperating Profit Before Working Capital Changes A 2,698,412 3,019,811 1,851,406 1,971,041

(Increase) / Decrease in Inventories 683 14,158 (1,266) 17,009(Increase) / Decrease in Trade and Other Receivables (159,869) 32,222 (75,222) 41,972(Increase) / Decrease Amounts Due from Related Parties (17,621) (14,204) 2,916 (14,581)(Increase) / Decrease Other Current Assets (35,583) 74,638 (18,648) 31,802Increase / (Decrease) Trade and Other Payables 55,807 (28,007) 30,404 (62,668)Increase / (Decrease) Amounts Due to Related Parties 24,130 (302) 25,067 2,527Increase Other Current Liabilities 18,896 159,263 2,114 161,090

cash Generated from Operations 2,584,855 3,257,579 1,816,771 2,148,192Finance Income received 9 199,958 305,042 165,046 249,783Finance Cost Paid 8 (190) (3,287) - (3,249)Dividend Received 6 - - 273,493 273,493Tax Paid (185,975) (219,775) (62,853) (54,747)Gratuity Paid 29 (23,363) (18,415) (8,802) (7,344)net cash Flow from Operating activities 2,575,285 3,321,144 2,183,655 2,606,128

caSH FlOWS FROm/(USeD in) inVeStinG actiVitieSPurchase and Construction of Property, Plant and Equipment 14.1-14.2 (1,009,938) (673,031) (838,093) (300,645)Addition to Investment Property 16 - (17,200) - (17,200)Addition to Intangible Assets 17 (800) (622) - (299)Proceeds from Sale of Property, Plant and Equipment 19,936 10,319 7,132 3,049Proceeds from/ (Repayment of) Other Assets (Net) 6,996 2,188 4,217 637net cash Used in investing activities (983,806) (678,346) (826,744) (314,458)

caSH FlOWS FROm / (USeD in) FinancinG actiVitieSDividend Paid to Equity Holders of Parent 13 (1,771,101) (1,771,101) (1,771,101) (1,771,101)Dividend paid to Shareholders with non-controlling Interest (396,130) (396,130) - -Repayment of Long Term Borrowings - (1,436) - -net cash Used in Financing activities (2,167,231) (2,168,667) (1,771,101) (1,771,101)

net incReaSe / (DecReaSe) in caSH anD caSH eQUiValentS (575,752) 474,131 (414,190) 520,569CASH AND CASH EQUIVALENTS AT THE BEGINNING 3,434,655 2,960,524 2,860,957 2,340,388caSH anD caSH eQUiValentS at tHe enD 2,858,903 3,434,655 2,446,767 2,860,957

analYSiS OF caSH anD caSH eQUiValentSFavourable BalancesCash and Bank 499,964 430,541 267,245 289,804Short Term Investments 2,475,667 3,134,194 2,239,351 2,647,269Unfavourable BalancesBank Overdrafts (116,728) (130,080) (59,829) (76,116)tOtal caSH anD caSH eQUiValentS 2,858,903 3,434,655 2,446,767 2,860,957

A Operating Profit Before Working Capital ChangesProfit before Tax 2,350,653 3,046,463 1,959,898 2,448,237

adjustments for: Finance Income 9 (199,958) (305,042) (165,046) (249,783) Dividend Income 6 - - (273,493) (273,493) Finance Cost 8 190 3,287 - 3,249 Change in Fair Value of Investment Property 16 (28,792) (268,564) (8,142) (268,564) Depreciation of Property, Plant and Equipment 14.1-14.2 482,938 455,964 283,110 266,153 (Profit) / Loss on Disposal of Property, Plant and Equipment (434) 4,346 1,959 6,982 Amortisation of Leasehold Properties 15 12,404 12,404 - - Amortisation of Intangible Assets 17 3,207 3,874 294 359 Provision /(Reversal) for Doubtful Debts 23 3,091 8,413 460 1,262 Gratuity Charge and Related Costs 29 44,846 40,692 25,437 22,169 Share Based Payment Expenses 27.2-27.3 29,404 17,966 26,929 14,470 Provision made on slow moving Inventory 22 863 8 - - 2,698,412 3,019,811 1,851,406 1,971,041

Figures in brackets indicate deductions The accounting policies and notes as set out in pages 118 to 161 form an integral part of these Financial Statements.



notes to the Financial Statements

1. RePORtinG entitY

Asian Hotels and Properties PLC is

a public limited liability Company

incorporated and domiciled in Sri

Lanka and listed on the Colombo

Stock Exchange. The registered office

and principal place of business of the

company is located at No.77, Galle

Road, Colombo 03. The consolidated

financial statements of the Company

as at and for the year ended 31st

March 2015 comprise the financial

information of the Company and its

subsidiary; Trans Asia Hotels PLC

(together referred to as the ‘Group’

and individually as ‘Group entities’).

The principal activities of the Company

and the Group during the year were

hoteliering and property development.

There were no significant changes in

the nature of the principal activities of

the Company and the Group during

the financial year under review.

The Group had 2,078 (2014 – 2,089)

employees and the Company had

1,230 (2014- 1,234) employees as at the

Reporting date.

2. BASIS OF PREPARATION

(a) Statement of compliance

The Financial Statements of the

Company and the Group comprise

the statements of financial position,

income, profit or loss and other

comprehensive income, changes in

equity and cash flows together with

the notes to the financial statements.

The consolidated Financial Statements

have been prepared in accordance

with Sri Lanka Accounting Standards

(LKAS/SLFRS) laid down by the

Institute of Chartered Accountants

of Sri Lanka and the requirements of

Companies Act No. 7 of 2007.

The consolidated Financial Statements

were authorized for issue by the Board

of Directors on 29th May, 2015.

(b) Bases of Measurement

The Financial Statements have been

prepared on an accrual basis and

under the historical cost convention

except for followings.

● Freehold Land and Buildings which

are measured at cost, at the time

of acquisition are subsequently

recognised at revalued amounts

which are the fair values at

the date of revaluation less

accumulated depreciation and

impairment cost if any

● Investment properties which are

stated at fair values.

● Defined benefit obligations are

measured at its present value,

based on an actuarial valuation as

explained in Note 29.

● Staff loans which are stated at

amortised cost.

(c) Presentation and Functional

Currency

The Consolidated Financial

Statements are presented in Sri

Lankan Rupees, the Group’s functional

and presentation currency, which is

the currency of the primary economic

environment in which the Holding

Company operates. Each entity in

the Group uses the currency of the

primary economic environment in

which they operate as their functional

currency. All values are rounded to

the nearest rupees thousand (Rs.’000)

except when otherwise indicated.

(d) Use of estimates and judgments.

The preparation of the Consolidated

Financial Statements in conformity

with LKAS/SLFRS requires

management to make judgments,

Estimates and assumptions that affect

the application of accounting policies

and the reported amounts of assets,

liabilities, income and expenses.

Actual results may differ from these

estimates. Estimates and underlying

assumptions are reviewed on an

ongoing basis. Revisions to accounting

estimates are recognised in the period

in which the estimates are revised

and in any future periods affected.

Judgments made by management

in the application of LKAS/SLFRs

that have a significant effect on the

Financial Statements are mentioned

below.

● Valuation of property, plant and

equipment - Note (d)

● Valuation of investment property -

Note (f)

● Deferred taxation - Note (r) ii

● Defined Benefit Plans - Note (k)



(e) Changes to Accounting

Policies and Adaptation of New

Accounting Standards

Except for the changes below, the

Group has consistently applied the

accounting policies as set out in Note

4 to all periods presented in these

Consolidated Financial Statements.

The Group has adopted the following

new standards and amendments to

standards, including any consequential

amendments to other standards, with

a date of initial application of 1st April

2014:

i. SLFRS 10 - ‘Consolidated

Financial Statements’

As a result of SLFRS 10, the Group

has changed its accounting policy for

determining whether it has control

over and consequently whether it

consolidates other entities. SLFRS 10

introduces a new control model that

focuses on whether the Group has

power over an investee, exposure

or rights to variable returns from its

involvement with the investee and the

ability to use its power to affect those

returns. The Group reassessed its

control conclusions as of 1st January

2014. There are no changes in control

conclusion from previous year.

ii. SLFRS 13 - ‘Fair Value

Measurement’

In accordance with SLFRS 13,

the Group has applied the new

definition of fair value, it unifies the

definition of fair value as the price

that would be received to sell an

asset or paid to transfer liability in an

orderly transaction between market

participants at the measurement

date prospectively. The change

had no significant impact on the

measurements of the Group’s assets

and liabilities, but the Group has

included new disclosures in the

Financial Statements, which are

required under SLFRS 13.

measurement of Fair Values:

A number of the Group’s accounting

policies and disclosures require the

measurement of fair values for both

financial and non-financial assets

and liabilities. Company regularly

reviews significant unobservable

inputs and valuation adjustments.

If third party information is used

to measure fair values, Company

assesses the evidence obtained

from the third parties to support the

conclusion that such valuations meet

the requirements of SLFRS, including

the level in the fair value hierarchy

in which such valuations should be

classified. Significant valuation issues

are reported to the Group’s Audit

Committee. When measuring the

fair value of an asset or a liability,

the Group uses observable market

data as far as possible. Fair values

are categorised into different levels

in a fair value hierarchy based on

the inputs used in the valuation

techniques as follows:

I. Level 1: Quoted prices (unadjusted)

in active markets for identical

assets or liabilities.

II. Level 2: Inputs other than quoted

prices included in Level 1 that are

observable for the asset or liability,

either directly (i.e. as prices) or

indirectly (i.e. derived from prices).

III. Level 3: Inputs for the asset

or liability that are not based

on observable market data

(unobservable inputs).

If the inputs used to measure the

fair value of an asset or a liability

fall into different levels of the fair

value hierarchy, then the fair value

measurement is categorised in its

entirety in the same level of the fair

value hierarchy as the lowest level

input that is significant to the entire

measurement.

The Group recognises transfers

between levels of the fair value

hierarchy at the end of the reporting

period during which the change has

occurred.

3. cOmPaRatiVe

inFORmatiOn

The presentation and classification

of the Financial Statements of the

previous years have been amended,

where relevant for better presentation

and to be comparable with those of

the current year.



Notes to the Financial Statements Contd.

4. accOUntinG POlicieS

The Accounting Policies set out below

have been applied consistently,

except for the changes described in

1 (e), to all periods presented in the

Financial Statements of the Company

and the Group unless otherwise

indicated.

(a) Basis of consolidation

(i) Business combinations

Business combinations are accounted

for using the acquisition method as at

the acquisition date - i.e. when control

is transferred to the Group. Control is

the power to govern the financial and

operating policies of an entity so as

to obtain benefits from its activities. In

assessing control, the Group takes into

consideration potential voting rights

that are currently exercisable.

(ii) Non-controlling interests

NCI are measured at their

proportionate share of the acquiree’s

identifiable net assets, which are

generally at fair value at the date of

acquisition.

Changes in the Group’s interest in

a subsidiary that do not result in a

loss of control are accounted for

as transactions with owners in their

capacity as owners. Adjustments to

non-controlling interests are based

on a proportionate amount of the net

assets of the subsidiary.

(iii) Subsidiaries

Subsidiaries are those enterprises

controlled by the parent. Control

exists when the parent has the power,

directly or indirectly to govern the

financial and operating policies of an

enterprise. Subsidiaries are controlled

from the date the parent obtains

control until the date that control

ceases. Asian Hotels and Properties

PLC has the power to directly govern

the financial and operating policies of

Trans Asia Hotels PLC, accordingly

the entity is considered as a subsidiary

of Asian Hotels and Properties PLC.

The total profits and losses for the

year, of the Company and of its

Subsidiaries included in consolidation

and all assets and liabilities of the

Company and of its Subsidiaries

included in consolidation are shown

in the consolidated statements of

Income, other comprehensive income

and financial position respectively.

Minority interests which represents the

portion of profit or loss and net assets

not held by the Group, are presented

separately in the consolidated income

statement and within equity in the

consolidated statement of financial

position, separately from parent

shareholders’ equity. The consolidated

cash flow statement includes the

cash flows of the Company and its

Subsidiaries.

(iv) Loss of control

On the loss of control, the Group

derecognises the assets and liabilities

of the subsidiary, any non-controlling

interests and the other components of

equity related to the subsidiary. Any

surplus or deficit arising on the loss of

control is recognised in profit or loss.

If the Group retains any interest in the

previous subsidiary, then such interest

is measured at fair value at the date

that control is lost. Subsequently that

retained interest is accounted for as

an equity-accounted investee or as

an available-for-sale financial asset

depending on the level of influence

retained.

(v) Transactions eliminated on

consolidation

Intra-group balances and transactions,

and any unrealised income and

expenses arising from intra-group

transactions, are eliminated in

preparing the Consolidated Financial

Statements.

(b) Foreign currency transactions

Transactions in foreign currencies

are translated to the respective

functional currencies of Group entities

at exchange rates at the dates of the

transactions. Monetary assets and

liabilities denominated in foreign

currencies at the reporting date are

retranslated to the functional currency

at the exchange rate at that date.



The foreign currency gain or loss

on monetary items is the difference

between amortised cost in the

functional currency at the beginning

of the year, adjusted for effective

interest and payments during the

year, and the amortised cost in foreign

currency translated at the exchange

rate at the end of the year. Non-

monetary assets and liabilities that

are measured at fair value in a foreign

currency are retranslated to the

functional currency at the exchange

rate at the date that the fair value was

determined. Non-monetary items that

are measured based on historical cost

in a foreign currency are translated

using the exchange rate at the date

of the transaction. Foreign currency

differences arising on retranslation are

recognised in profit or loss.

(c) Financial instruments

(i) Non-Derivative 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, available-for-

sale financial assets, or as derivatives

designated as hedging instruments in

an effective hedge, as appropriate. The

Company and the Group determine

the classification of its financial assets

at initial recognition. All financial

assets are recognised initially at fair

value plus, in the case of assets not

at fair value through profit or loss,

directly attributable transaction costs.

Purchases or sales of financial assets

that require delivery of assets within a

time frame established by regulation

or convention in the marketplace

(regular way trades) are recognised

on the trade date, i.e., the date that the

Company and the Group commit to

purchase or sell the asset. However, as

at each reporting date, the Company

and the Group hold on only the

financial assets categorised as ‘loans

and receivables’.

The Company and the Group initially

recognise such loans and receivables

on the date that they are originated.

Financial assets and liabilities are

offset and the net amount presented

in the statement of financial position

when, and only when the Company

and the Group have a legal right to

offset the amounts and intends either

to settle them on a net basis or to

realise the asset and settle the liability

simultaneously.

Subsequent measurement

The subsequent measurement of

financial assets depends on their

classification and the Company and

the Group only hold financial assets

categorised as loans and receivables.

Loans and receivables

Loans and receivables are financial

assets with fixed or determinable

payments that are not quoted

in an active market. After initial

measurement, such financial assets

are subsequently measured at

amortised cost using the Effective

Interest Rate method (EIR), less

impairment. Amortised cost is

calculated by taking into account any

discount or premium on acquisition

and fees or costs that are an integral

part of the EIR. The EIR amortisation

is included in finance income in the

income statement. The losses arising

from impairment are recognised in the

income statement in finance costs.

De-recognition

A financial asset is de-recognised

when:

● The rights to receive cash flows

from the asset have expired

● The Company and the Group

have transferred its rights to

receive cash flows from the asset

or has assumed an obligation to

pay the received cash flows in

full without material delay to a

third party under a ‘passthrough’

arrangement; and either

a) the Company and the Group have

transferred substantially all the

risks and rewards of the asset, or




(b) the Company and the Group have

neither transferred nor retained

substantially all the risks and

rewards of the asset, but has

transferred control of the asset.

When the Company and the

Group have transferred its rights to

receive cash flows from an asset

or has entered into a passthrough

arrangement, and has neither

transferred nor retained substantially

all of the risks and rewards of the

asset nor transferred control of it,

the asset is recognised to the extent

of the Company and the Group’s

continuing involvement in it. In that

case, the Company and the Group also

recognise an associated liability. The

transferred asset and the associated

liability are measured on a basis that

reflects the rights and obligations that

the Company and the Group have

retained

ii) Non-Derivative Financial

Liabilities

Initial recognition and measurement

Financial liabilities within the scope

of LKAS 39 are classified as financial

liabilities at fair value through profit

or loss, other financial liabilities, or as

derivatives designated as hedging

instruments in an effective hedge, as

appropriate. The Company and the

Group determine the classification

of its financial liabilities at initial

recognition.

When a financial liability is recognised

initially, an entity shall measure it

at its fair value plus, in the case of

a financial liability not at fair value

through profit or loss, transaction

costs that are directly attributable to

the acquisition or issue of financial

liability. The Company and the Group

classify financial liabilities into the

other financial liabilities category.

Such financial liabilities are recognised

initially at fair value less any directly

attributable transaction costs.

Subsequent measurement

The measurement of financial liabilities

depends on their classification and

the Company and the Group only hold

financial liabilities categorised as other

financial liabilities.

Other liabilities

After initial recognition, other liabilities

are subsequently measured at

amortised cost using the effective

interest rate method. Gains and

losses are recognised in the income

statement when the liabilities are

derecognised as well as through the

effective interest rate method (EIR)

amortisation process. Amortised

cost is calculated by taking into

account any discount or premium on

acquisition and fees or costs that are

an integral part of the EIR. The EIR

amortisation is included in finance

costs in the income statement.

De-recognition

A financial liability is de-recognised

when the obligation under the liability

is discharged or canceled or expires.

When an existing financial liability is

replaced by another from the same

lender on substantially different terms,

or the terms of an existing liability

are substantially modified, such an

exchange or modification is treated as

a de-recognition of the original liability

and the recognition of a new liability,

and the difference in the respective

carrying amounts is recognised in the

income statement.

Amortised cost measurement

The amortised cost of a financial asset

or liability is the amount at which the

financial asset or liability is measured

at initial recognition, minus principal

repayments and any impairment

and plus/minus the cumulative

amortisation using the effective

interest method of any difference

between the initial amount recognised

and the maturity amount.

(d) Property, Plant, and Equipment

Basis of recognition

Property, plant and equipment are

recognised if it is probable that future

economic benefits associated with the

asset will flow to the company and

the cost of the asset can be reliably

measured.



Basis of measurement

All items of property, plant and

equipment are initially recorded at

cost. Where items of property, plant

and equipment are subsequently

revalued, the entire class of such

assets is revalued at fair value. The

Group applies cost model to property,

plant and equipment except for land

and buildings and records at cost of

purchase or construction together

with any incidental expenses thereon

less accumulated depreciation and

any accumulated impairment losses.

The carrying values of property

plant and equipment are reviewed

for impairment when events or

changes in circumstances indicate

that the carrying value may not be

recoverable.

The Group applies the re-valuation

model to land and buildings. The

Group has adopted a policy of

revaluing assets every five years.

If an asset's carrying amount is

increased as a result of a revaluation,

the increase shall be recognised

in other comprehensive income

and accumulated in equity under

the heading of revaluation surplus.

However, the increase shall be

recognised in profit or loss to the

extent that it reverses a revaluation

decrease of the same asset previously

recognised in profit or loss.

If an asset's carrying amount is

decreased as a result of a revaluation,

the decrease shall be recognised in

profit or loss.

However, the decrease shall be

recognised in other comprehensive

income to the extent of any credit

balance existing in the revaluation

surplus in respect of that asset.

The decrease recognised in other

comprehensive income reduces the

amount accumulated in equity under

the heading of revaluation surplus.

The revaluation surplus included

in equity in respect of an item of

property, plant and equipment

may be transferred directly to

retained earnings when the asset is

derecognised.

De-recognition

An item of property, plant and

equipment are de-recognised upon

replacement, disposal or when no

future economic benefits are expected

from its use.

Any gain or loss arising on

de-recognition of the asset is included

in the income statement in the year

the asset is de-recognised.

Depreciation

Depreciation is calculated by using

a straight-line method on the cost or

valuation of all property, plant and

equipment, other than freehold land,

in order to write off such amounts over

the estimated useful economic life of

such assets. The estimated useful life

of assets is as follows:

Assets Years

Buildings 75

Plant and Machinery 10-20

Motor Vehicles 4-10

Floating Restaurant 18

Furniture,Furnishings Equipment

5-15

Computers 5

Base Stock/Circulating Assets

3-10

The asset’s residual values and useful

lives are reviewed, and adjusted if

appropriate, at each financial year end.

Buildings of the subsidiary are

depreciated using reducing balance

method in order to depreciate over the

balance lease period of 65 years.

Depreciation of an assets ceases at

the earlier of the date that the asset is

classified as held for sale and the date

that asset is de-recognised.

(e) Leasehold property

Prepaid lease rentals paid to acquire

land use rights are amortised over

the lease term in accordance with

the pattern of benefits provided.

Leasehold property comprising of land

use rights and stated at valuation,are

amortised on a straight line basis over

the remaining lease term.




Trans Asia Hotels PLC – The leasehold

land is for 99 years commencing 7th

August 1981 and is being amortised

over a period of 94 years commencing

from 1st April 1986.

(f) Investmentproperties

Basis of Recognition

Investment properties are initially

recognised at cost. Subsequent to

initial recognition the Investment

Properties are stated at fair value,

which reflects market conditions at the

Statement of Financial Position date.

Basis of Measurement

Investment properties are revalued

where necessary to ensure that

the carrying amount does not differ

materially from fair values at the

Balance Sheet date, and are revalued

at least once in three years. Gains

or losses arising from changes in

fair value are included in the profit

or loss in the year in which they

arise. Investment properties are

de-recognised when disposed of,

or permanently withdrawn from use

because no future economic benefits

are expected.

Any gains or losses on retirement

or disposal are recognised in profit

or loss in the year of retirement or

disposal. Transfers are made to and

from investment property only when

there is a change in use in accordance

with the criteria listed in Sri Lanka

Accounting Standard 40 “Investment

Property” (LKAS 40).

(g) Intangibleassets

An intangible asset is an identifiable

non monitory asset without physical

substance held for use in the

production or supply goods or other

services, rental to others or for

administrative purposes.An intangible

asset is initially recognised at cost, if

it is probable that future economic

benefit will flow to the enterprise, and

the cost of the asset can be measured

reliably. Following initial recognition,

intangible assets are carried at cost

less any accumulated amortisation

and any accumulated impairment

losses.

(i) Computer software

All computer software costs incurred,

licensed for use by the Group, which

are not integrally related to associated

hardware, which can be clearly

identified, reliably measured and it’s

probable that they will lead to future

economic benefits, are included in

the Statement of Financial Position

under the category intangible assets

and carried at cost less accumulated

amortisation and any accumulated

impairment losses.

(ii) Amortisation

Intangible assets with finite lives

are amortised over the estimated

useful economic life and assessed

for impairment whenever there is an

indication that the intangible asset

may be impaired. Intangible assets are

amortised on a straight line basis in the

Income Statement from the date on

which the asset was available for use,

over the best estimate of its useful life.

The estimated useful life of software

is 5 years. The amortisation period

and the amortisation method for an

intangible asset with a finite useful life

are reviewed at least at each financial

year-end.

Amotisation shall cease at the earlier

of the date that the asset is classified

as held for sale or the date that asset

is de-recognised.

(iii) De-recognition

An intangible asset is de-recognised

on disposal or when no future

economic benefits are expected from

its use and subsequent disposal.

(h) Inventories

Inventories are valued at the lower

of cost and net realisable value. Net

realisable value is the estimated

selling price less estimated costs of

completion and the estimated costs

necessary to make the sale.

(i) Cash and Cash Equivalents

Cash and short-term deposits in

the statement of financial position

comprise cash at banks and on

hand and short-term deposits with

a maturity of three months or less.

For the purpose of the cash flow

statement, cash and cash equivalents

consist of cash



and short-term deposits as defined

above, net of outstanding bank

overdrafts.

(j) Impairment

The recoverable amount of an asset

or Cash Generating Unit (CGU) is

the greater of its value in use and

its fair value less costs to sell. In

assessing value in use, the estimated

future cash flows are discounted to

their present value using a pre-tax

discount rate that reflects current

market assessments of the time

value of money and the risks specific

to the asset or CGU, or impairment

testing, assets are grouped together

into the smallest group of assets

that generates cash inflows from

continuing use that are largely

independent of the cash inflows of

other assets or CGUs. Impairment

losses are recognised in profit or

loss. Impairment losses recognised

in respect of CGUs are allocated to

reduce the carrying amounts of the

other assets in the CGU (group of

CGUs) on a pro-rata basis.

For other assets, an impairment loss

is reversed only to the extent that

the asset’s carrying amount does

not exceed the carrying amount that

would have been determined, net

of depreciation or amortisation, if no

impairment loss had been recognised.

(i) ImpairmentofNon-derivative

Financial Assets

Financial assets are assessed at

each reporting date to determine

whether there is objective evidence

that it is impaired. A financial asset is

impaired if there is objective evidence

of impairment as a result of one or

more events that occurred after the

initial recognition of the asset, and that

loss event(s) had an impact on the

estimated future cash flows of that

asset that can be estimated reliably.

Objective evidence that financial

assets are impaired includes default or

delinquency by a debtor, restructuring

of an amount due to the company

on terms that the Company and the

Group would not consider otherwise,

indications that a debtor or issuer will

enter bankruptcy, adverse changes

in the payment status of borrowers

or issuers, economic conditions

that correlate with defaults or the

disappearance of an active market for

a security.

(ii) ImpairmentlossesonFinancial

Assets carried at amortised cost

The Company and the Group consider

evidence of impairment for financial

assets measured at amortised cost

(loans and receivables) at specific

asset level. All individually significant

assets are assessed for specific

impairment.

An impairment loss in respect of a

financial asset measured at amortised

cost is calculated as the difference

between its carrying amount and the

present value of the estimated future

cash flows discounted at the asset’s

original effective interest rate. Losses

are recognised in profit or loss and

reflected in an allowance account

against loans and receivables or

held-to maturity investment securities.

Interest on the impaired asset

continues to be recognised. When an

event occurring after the impairment

was recognised causes the amount

of impairment loss to decrease,

the decrease in impairment loss is

reversed through profit or loss.

(iii) Non-Financial Assets

The carrying amounts of the Company

and the Group non-financial assets,

other than inventories and deferred tax

assets, are reviewed at each reporting

date to determine whether there is

any indication of impairment. If any

such indication exists, then the asset’s

recoverable amount is estimated. An

impairment loss is recognised if the

carrying amount of an asset exceeds

its recoverable amount.

(k) EmployeeBenefits

(i) Defined contribution plans

Employees’ Provident Fund and

Employees’ Trust Fund (EPF & ETF) are

recognised as incurred.

Employees are eligible for Employees’

Provident Fund contributions and

Employees’ Trust Fund contributions

in line with respective statutes and

regulations.

The Company and the Group

contribute 3% of gross emoluments

of employees to the Employees’



Trust Fund. Company contributes

15 % & subsidiary contributes 12 % of

gross emoluments of employees to

Employees’ Provident Fund.

(ii) Defined benefit plans

A defined benefit plan is a post-

employment benefit plan other than a

defined contribution plan.

The Company and the Group are liable

to pay retirement benefits under the

Payment of Gratuity Act, No. 12 of 1983.

The liability recognised in the

statement of financial position is the

present value of the defined benefit

obligation at the reporting date.

The defined benefit obligation is

calculated by a qualified actuary

as at the reporting date using the

Projected Unit Credit (PUC) method

as recommended by LKAS 19 -

‘Employee Benefits’. Such actuarial

valuations will be carried out every

year.

The liability is not externally funded.

All Actuarial gains or losses are

recognised immediately in the other

comprehensive income. Under the

Payment of Gratuity Act No. 12 of 1983,

the liability to an employee arises

only on completion of five-years of

continued service.

(l) Provisions

Provisions are recognised when

the Company and the Group have

a present obligation (legal or

constructive) as a result of a past

event, it is probable that an outflow

of resources embodying economic

benefits will be required to settle the

obligation and a reliable estimate

can be made of the amount of the

obligation. Where the Company

and the Group expect some or all

of a provision to be reimbursed, for

example under an insurance contract,

the reimbursement is recognised as

a separate asset but only when the

reimbursement is virtually certain. The

expense relating to any provision is

presented in the income statement net

of any reimbursement.

If the effect of the time value of

money is material, provisions are

discounted using a current pre-tax

rate that reflects, where appropriate,

the risks specific to the liability. Where

discounting is used, the increase in the

provision due to the passage of time is

recognised as a finance cost.

(m) Contingent Assets and

Contingent Liabilities

All contingent liabilities are disclosed

as a note to the financial statements

unless the outflow of resources

is remote. A contingent liability

recognised in a business combination

is initially measured at its fair value.

Subsequently, it is measured at the

higher of:

● The amount that would be

recognised in accordance with the

general guidance for provisions

above (LKAS 37) or

● The amount initially recognised

less, when appropriate, cumulative

amortisation recognised in

accordance with the guidance for

revenue recognition (LKAS 18)

Contingent assets are disclosed,

where inflow of economic benefit is

probable but not virtually certain.

(n) Revenue recognition

Revenue is recognised to the extent

that it is probable that the economic

benefits will flow to the Group, and the

revenue and associated costs incurred

or to be incurred can be reliably

measured. Revenue is measured at

the fair value of the consideration

received or receivable, net of trade

discounts and value added taxes, after

eliminating sales within the Group. The

following specific criteria are used for

recognition of revenue:

(i) Income from Hotel/

Restaurants

Revenue is recognised on the rooms

occupied on daily basis and food and

beverages and hotel related sales are

accounted for at the time of sale.

(ii) Interest Income

Interest income is recognised on an

accrual basis.

(iii) Rental Income

Rental income is recognised on an

accrual basis.




(iv) Dividend Income

Dividend income is recognised on a

cash basis.

(v) Other Gains and Losses

Net gains and losses of a revenue

nature arising from the disposal of

property, plant and equipment and

other non current assets, including

investments, are accounted for in the

income statement, after deducting

from the proceeds on disposal, the

carrying amount of such assets and

the related selling expenses.

(vii) Other Income

Other income is recognised on an

accrual basis. Net gains and losses

of a revenue nature arising from

the disposal of property, land and

equipment and other non current

assets, including investments,

are accounted for in the income

statement, after deducting from the

proceeds on disposal, the carrying

amount of such assets and the related

selling expenses. Gains and losses

arising from activities incidental to the

main revenue generating activities

and those arising from a Group of

similar transactions, which are not

material are aggregated, reported and

presented on a net basis. Any losses

arising from guaranteed rentals are

accounted for in the year of incurring

the same. A provision is recognised if

the projection indicates a loss.

(o) Expenditure recognition

Expenses are recognised in the

income statement on the basis of a

direct association between the cost

incurred and the earning of specific

items of income. All expenditure

incurred in the running of the business

and in maintaining the property,

plant and equipment in a state of

efficiency has been charged to the

income statement. For the purpose of

presentation of the income statement,

the “function of expenses” method

has been adopted, on the basis that

it presents fairly the elements of the

Company and Group’s performance.

(p) Guaranteed Rental

Losses, if any, of guaranteed rentals

will be accounted for in the year

in which they occur. A provision

is recognised if the best estimate

indicates a loss.

(q) Segment Reporting

A segment is a distinguishable

component of the Company that is

engaged either in providing products

or services which are subject to

risks and rewards that are different

from those of other segments.

The rental income generated from

the Commercial Centre which is

categorised as Investment Property is

shown separately.

(r) Income Tax Expenses

Income tax expenses comprise of

current and deferred tax.

(i) Current Taxation

The subsidiary company is liable for

taxation at a rate of 12% in terms of

Section 46(1) of the Inland Revenue

Act No.10 of 2006 and amendments

thereto, on its profits derived from

“promotion of tourism”.

In accordance with BOI agreement

dated 11th March 1994 the profits and

income of the company were exempt

from taxation until 2014 and at the

expiry of said period the following

options were available for the

Company.

(a) Income tax payable for the year of

assessment shall be computed at

2% of the turnover of the Company

or;

(b) To adapt the provisions of the

Inland Revenue Laws for the time

being imposed

The Board of the Company resolved to

compute the income tax payable at 2%

of the turnover of the company with

effective from 01st April 2014.

The Group is liable for Income Tax on

any other income at 28%.



(ii) Deferred Taxation

Deferred taxation is provided using the

Statement of Financial Position liability

method providing for temporary

difference between the carrying

amount of assets and liabilities for

financial reporting purposes and the

amounts used for taxation purposes.

The amount of deferred tax provided

is based on the expected manner

of realisation or settlement of the

carrying amount of assets and

liabilities using tax rates enacted or

substantively enacted by the reporting

date. Deferred tax assets including

those related to tax effects of income

tax losses and credits available to be

carried forward, are recognised only

to the extent that it is probable that

future taxable profit will be available

against which the asset can be utilised.

Deferred tax assets are reviewed at

each reporting date and are reduced

to the extent that is no longer

probable that the related tax benefit

will be realised.

s) Events after the Reporting

Period

All material events after the

reporting date has been considered

and appropriate adjustments or

disclosures have been made in the

respective Notes to the Financial

Statements.

(t) Cash Flow Statement

The Cash Flow Statement has been

prepared using the “Indirect Method”

of preparing Cash Flows in accordance

with the Sri Lanka Accounting

Standard LKAS 7. The cash and cash

equivalent include cash in-hand,

balances with banks and money at call

and short notice.

(u) Directors’ Responsibility

The Board of Directors is responsible

for the preparation and presentation of

the Financial Statements. This is more

fully described under the relevant

clause in the Directors’ Report.

(v) Share based payments

In accounting for employee

remuneration in the form of shares,

SLFRS 2 – Share based payments, is

effective for the Company’s parents

entity John Keells Holdings Plc, from

the financial year beginning 2013/14.

Employees of the company receive

remuneration in the form of share

based payment transactions, whereby

employees render services as

consideration for equity instruments of

the Parent entity John Keells Holdings

PLC (equity settled transactions).

The cost of the employee services

received in respect of the shares or

share options granted is recognised in

the income statements over the period

that employees provide services, from

the time when the award is granted up

to the vesting date of the options. The

overall cost of the award is calculated

using the number of share options

expected to vest and the fair value of

the options at the date of grant.

The employee remuneration expense

resulting from the John Keells

Holdings PLC’s share option scheme

to the employees of Asian Hotels and

Properties PlC is recognised in the

income statement of the company.

This transaction does not result in

a cash outflow to the company and

expense recognised is met with

a corresponding equity reserve

increase, thus having no impact on

the Statement of Financial Position

(SOFP). The fair value of the options

granted is determined by the John

Keells Holdings PLC using and option

model and the relevant details are

communicated by the John Keells

Holdings PLC to all applicable

subsidiary companies.

(w) New accounting standards not

effectiveatthereportingdate

The following SLFRSs have been

issued by the Institute of Chartered

Accountants of Sri Lanka (CA Sri

Lanka) that have an effective date

in the future and have not been

applied in preparing these Financial

Statements. Those SLFRSs will have

an effect on the accounting policies

currently adopted by the Company

and may have an impact on the future

Financial Statements.

Standards issued but not yet

adopted which may have an impact

SLFRS 9 “Financial Instruments

Classification and Measurement”




The objective of this SLFRS is to

establish principles for the financial

reporting of financial assets and

financial liabilities that will present

relevant and useful information to

users of financial statements for their

assessment of the amounts, timing

and uncertainty of an entity’s future

cash flows.

An entity shall apply this SLFRS to

all items within the scope of LKAS 39

Financial Instruments: Recognition and

Measurement. SLFRS 9 is effective for

annual period beginning on or after

1st January 2018 with early adoption

permitted.

The Group is assessing the potential

impact on its Financial Statements

resulting from the application of

SLFRS.


adopted which may not have

significant impact

SLFRS 15 Revenue from contracts with

customers – effective from 1st January

2017.


adopted which is not expected to

have an impact

The following new or amended

standards are not expected to have

an impact of the Group’s Financial

Statements.

i. SLFRS 14 - Regulatory Deferral

Accounts – effective from 01st

January 2016

ii. Agriculture: Bearer Plants

(Amendments to LKAS 16 and

LKAS 41) – effective from 01st

January 2016



GROUP cOmPanYFor the year ended 31st march 2015 2014 2015 2014 Rs.’000 5. ReVenUeGross Revenue 9,095,286 9,301,184 5,951,652 5,976,629Value Added Tax (1,015,134) (1,045,035) (657,572) (659,943)Net Revenue 8,080,152 8,256,149 5,294,080 5,316,686

For the year ended 31st march cOmPanYin Rs.’000s 2015 2014

6. DiViDenD incOmeDividend from Subsidiary (Trans Asia Hotels PLC) 273,493 273,493 273,493 273,493

For the year ended 31st march GROUP cOmPanYin Rs.’000s 2015 2014 2015 2014

7. OtHeR OPeRatinG incOmeExchange Gain 13,386 19,172 7,213 12,989Profit/(Loss) on Disposal of Property, Plant & Equipment 434 (4,347) (1,959) (6,983)Car Park Income 19,949 16,944 19,949 16,944Promotional Income 20,674 18,658 20,674 18,658Taxi Line Commission 9,445 11,397 9,445 11,397Sundry Income 16,635 13,722 15,201 9,256 80,523 75,546 70,523 62,261

GROUP cOmPanYFor the year ended 31st march 2015 2014 2015 2014 in Rs.’000s

8. Finance cOStFinance cost on other financial instruments 190 3,287 - 3,249 190 3,287 - 3,249





9. Finance incOmeInterest income on a loan to employees 2,028 2,197 2,028 2,197Income from short term investments 197,930 302,845 163,018 247,586 199,958 305,042 165,046 249,783


10. PROFIT BEFORE TAXProfit Before Tax is stated after charging all expenses including the followingRemuneration to Executive Directors 59,211 55,327 59,211 55,327Remuneration to Non-Executive Directors 10,335 6,000 4,770 2,880

Remuneration to auditors Audit fee 1,567 1,500 1,000 960 Audit related service - fee 190 465 133 335

Defined benefit plan cost 44,846 39,732 25,437 22,169Defined contribution plan cost - EPF and ETF 124,544 116,334 81,573 74,089Staff Expenses 1,350,533 1,174,055 810,535 700,534Depreciation of Property, Plant and Equipment 482,938 455,964 283,110 266,153Amortisation Lease Hold Property 12,404 12,404 - -Donations 26,932 21,087 16,089 13,983Amortisation of Intangible Assets 3,207 3,912 294 397Impairment losses on Trade and other receivables 3,091 8,413 460 1,262




11. INCOME TAX EXPENSEcurrent income taxCurrent tax charge (Note 11.1) 229,372 189,466 153,164 69,025Provision for Deferred tax (Note 11.2) 3,436 8,098 - - 10% Withholding tax on inter company dividends 30,388 30,388 - - 263,196 227,952 153,164 69,025

The profits of Trans Asia Hotels PLC, being involved in the promotion of tourism has been taxed on its adjusted profit at 12% in terms of the Inland Revenue Act Number 10 of 2006 and the amendment thereto. Income Tax on other income has been provided at the normal tax rate of 28% (2014 - 28%).

In accordance with BOI agreement dated 11th March 1994 the profits and income of the company were exempt from taxation until year 2014.

“The Board of Directors of the Asian Hotels and Properties PLC (Company) resolved to compute the income tax payable at 2% of the turnover of the company with effective from 1st April 2014.

Income Tax of Asian Hotels and Properties PLC (Company) on other income has been provided at the normal tax rate of 28% (2014 -28%).





11.1 ReconciliationbetweenIncomeTax ExpenseandtheProductofAccountingProfitProfit Before Tax 2,350,653 3,046,463 1,959,898 2,448,237Exempt Profits (275,563) (2,202,644) (274,549) (2,201,718)Disallowable expenses 3,841,440 - 3,841,440 -Accounting profit / (loss) chargeable to income taxes 5,916,530 843,819 5,526,789 246,519

Disallowable expensesTax effect on chargeable profits 246,906 190,583 153,138 69,025Tax effect on disallowable Expenses 3,372 5,298 - -Tax effect on aggregate Allowable expenses (2,478) - - -Qualifying Payment Relief - (170) - -Tax effect on adjustment to opening Deferred tax liability (1,681) (20) - - Under provision for previous years (13,311) 1,873 26 - Tax on inter company dividend 30,388 30,388 - - 263,196 227,952 153,164 69,025

Income Tax charged atStandard rate 28% - CSE Listed Companies (2014 - 28%) 70,680 98,885 45,857 69,025Other concessionary rates (2% on Revenue) 107,281 - 107,281 -Concessionary rate of 12% - (2014 - 12%) 64,722 88,708 - -Under provision for previous years (13,311) 1,873 26 -current income tax charge 229,372 189,466 153,164 69,025




11.2 Provision for Deferred TaxDeferred Tax arising fromAccelerated Depreciation for tax purposes 4,064 9,123 - -Post-Employment Medical Benefits (628) (1,025) - -Total Deferred Tax Charge 3,436 8,098 - -Impact of actuarial adjustment on gratuity 215 - - -Total Deferred Tax Charge (Reverse) 3,651 8,098 - -

Deferred tax liability have been computed taking in to consideration the tax rate of 12% applicable for the tourism industry.

12. eaRninGS PeR SHaReThe Basic Earnings per Share is based on the profit attributable to Asian Hotels & Properties PLC.


Net Profit for the Year 1,756,629 2,397,946 1,806,734 2,379,212Number of Ordinary Shares 442,775 442,775 442,775 442,775Basic Earnings per Share (Rs.) 3.97 5.42 4.08 5.37


13. DiViDenD PeR SHaReFinal Dividend Paid - 2012/2013 - 1,328,326 - 1,328,326Interim Dividend Paid - 2013/2014 - 442,775 - 442,775Final Dividend Paid - 2013/2014 1,328,326 - 1,328,326 -Interim Dividend - 2014/2015 442,775 - 442,775 -Total Dividends 1,771,101 1,771,101 1,771,101 1,771,101Dividend Per Share (Rs.) 4.00 4.00 4.00 4.00




Outdoor Plant & Base Furniture, Motor Capital Total Total

As at 31 st March Freehold Land Buildings Car park Machinery Stock & Fittings & Vehicles Work In 2015 2014

in Rs. ‘000s Development circulating equipment Progress

14. PROPeRtY, Plant

anD eQUiPment

14.1 Group

cost or Valuation

At the Beginning of the Year 10,018,325 6,441,156 11,783 1,278,154 1,339,063 1,823,396 79,617 12,988 21,004,482 20,427,841

Additions - 32,442 - 167,802 137,269 177,551 8,571 486,303 1,009,938 673,517

Disposals - - - (121,580) (49,658) (82,320) (7,613) - (261,171) (96,390)

Revaluations Gain 1,212,945 474,295 - - - - - - 1,687,240 -

Depreciation adjustment on

Revaluation - (160,097) - - - - - - (160,097) -

Transfers to investment property - - - (20,173) - (2,094) - - (22,267) -

Transfers from work-in-progress - 18,744 - 41,971 - 23,852 - (84,567) - (486)

At the End of the Year 11,231,270 6,806,540 11,783 1,346,174 1,426,674 1,940,385 80,575 414,724 23,258,125 21,004,482

accumulated Depreciation

At the Beginning of the Year - 122,792 4,323 712,948 781,875 846,608 24,549 - 2,493,095 2,118,858

Charge for the Year - 125,303 1,178 50,055 176,242 121,742 8,418 - 482,938 455,964

Disposals - - - (117,359) (42,580) (74,115) (7,613) - (241,667) (81,725)

Revaluations - (160,097) - - - - - - (160,097) -


At the End of the Year - 87,998 5,501 627,232 915,537 892,583 25,354 - 2,554,205 2,493,097

carrying Value

as at 31st march 2015 11,231,270 6,718,542 6,282 718,942 511,137 1,047,802 55,221 414,724 20,703,920 -

As at 31st March 2014 10,018,325 6,318,364 7,460 565,206 557,188 976,788 55,068 12,988 - 18,511,385

note-14.1. a Freehold Land and Buildings of the Parent were valued by M/s. P.B. Kalugalagedara & Associates, an independent Chartered Valuer as at 31st

March 2015, and the book values were written up to correspond with the valuation.

Had the revalued Buildings of the Group been included at cost, the carrying value of the said asset would amount to Rs. 4,507 Mn. (Rs. 4,368 Mn in

2014) Had the revalued Land of Group been included at cost, the carrying value of the said asset would amount to Rs. 470 Mn. (Rs. 470 Mn in 2014). (Details of the fair value hierarchy is given in note 14.3).

note-14.1. b Details of Groups’ Land and Building stated at valuation are indicated below

Property Land /Building Extent location

Free hold Land and Building

Company Land 1 A08 - R0- P05.08 No 77, Galle Road, Colombo 03

Building- Stage(1) 348,818 Sq Ft No 77, Galle Road, Colombo 03

Building- Stage (11) & (111) 299,975 Sq Ft No 77, Galle Road, Colombo 03

investment Properties

Company Building 1 145,196 Sq Ft No 89, Galle Road, Colombo 03

Subsidiary Building 1 55,548 Sq Ft No. 117, Sir Chittampalam A. Gardiner Mawatha, Colombo 02.

Land A01 - R02- P30.0 No. 117, Sir Chittampalam A. Gardiner Mawatha, Colombo 02.

lease hold Properties

Subsidiary Building 1 316,067 Sq Ft No. 115, Sir Chittampalam A. Gardiner Mawatha, Colombo 02.

Land A05 - R02- P34.28 No. 115, Sir Chittampalam A. Gardiner Mawatha, Colombo 02.



note-14.1. c The vessel of floating restaurant of the Subsidiary has been classified under Motor Vehicles.

note-14.1. d The cost of the fully depreciated assets in the Group which are still in use of the Company amounting Rs. 1,021.07 Mn. (in 2014 Rs. 390.58 Mn).

note-14.1. e There are no assets pledged that required to disclose in the Group.

note-14.1. f Transfer to investment Property

During 2015, equipment were transferred to investment property (See Note 16), because it was no longer used by the Group and it was decided

that the equipment would be leased to a third party.

Immediate before the transfer the Group remeasured the property to fair value and note changes with carrying value of assets.

Outdoor Plant & Base Furniture, Motor Capital Total Total

As at 31 st March Freehold Land Buildings Car park Machinery Stock & Fittings & Vehicles Work In 2015 2014

in Rs. ‘000s Development circulating equipment Progress

14. PROPeRtY, Plant

anD eQUiPment

(contd.)

14.2 Company

cost or Valuation

At the Beginning of the Year 10,018,325 3,923,265 11,783 780,572 578,178 1,069,419 14,757 4,441 16,400,740 16,162,137

Additions - 10,099 - 126,129 87,103 141,864 - 472,898 838,093 301,131

Disposals - - - (112,827) (36,448) (50,519) - - (199,794) (62,042)

Revaluations Gain 1,212,945 474,295 - - - - - - 1,687,240 -

Depreciation adjustment on

Revaluation - (160,097) - - - - - - (160,097) -


Transfers from work-in-progress - 17,616 - 41,971 - 23,852 - (83,439) - (486)

At the End of the Year 11,231,270 4,265,178 11,783 815,672 628,833 1,182,522 14,757 393,900 18,543,915 16,400,740

accumulated Depreciation

At the Beginning of the Year - 79,962 4,323 470,669 286,246 497,507 8,434 - 1,347,141 1,132,998

Charge for the Year - 80,135 1,178 29,265 94,384 75,197 2,951 - 283,110 266,153

Disposals - - - (111,935) (32,819) (45,948) - - (190,702) (52,009)

Revaluations - (160,097) - - - - - - (160,097) -


At the End of the Year - - 5,501 369,587 347,811 525,104 11,385 - 1,259,388 1,347,142

carrying Value

As at 31st March 2015 11,231,270 4,265,178 6,282 446,085 281,022 657,418 3,372 393,900 17,284,527 -

As at 31st March 2014 10,018,325 3,843,303 7,460 309,903 291,932 571,912 6,323 4,441 - 15,053,598

note-14.2 a Freehold Land and Buildings of the Company were valued by M/s. P. B. Kalugalagedara & Associates, an independent Chartered Valuer as at 31st

March 2015, and the book values were written up to correspond with the valuation.

Had the revalued Buildings of the company been included at cost, the carrying value of the said asset would amount to Rs. 3,149 Mn. (Rs. 3,170 Mn

in 2014) Had the revalued Land been included at cost,the carrying value of the said asset would amount to Rs. 470 Mn. (Rs. 470 Mn in 2014).

note-14.2 b The cost of the fully depreciated assets which are still in use of the Company amounting Rs. 467.19 Mn. (in 2014 Rs. 666.17 Mn).

note-14.2 c There are no assets pledged that required to disclose in the Company.

The Company has started construction of new human resource building and cost incurred up to 31st March 2015 totaling to 312.5 Mn (2014:Nil) .




method ofvaluation

Effective dateof valuation

Propertyvaluer

14.3 Details of Group’s land, building and other properties stated at valuation are indicated below;

Buildings on leasehold land of Trans Asia Hotels PLC.

Open market value method

31-Mar-2013 P B Kalugalagedara, Chartered Valuation Surveyor

Land and building of Asian Hotels and Properties PLC.

Investment Summation basis

31-Mar-2015 P B Kalugalagedara, Chartered Valuation Surveyor

(i) Fair Value HierarchyThe fair value of property was determined by an external independent property valuer, having appropriate recognised professional qualifications and recent experience in the location and category of the property being valued.

The fair value measurement for all of properties has been categorised as level 03 fair value based on the input to the valuation technique used.

(ii) ValuationTechniqueandSignificantUnobservableInputsThe following table shows the valuation technique used in measuring the fair value of property, as well as the significant unobservable inputs used:

Valuation technique Significant Unobservable Inputs interrelationship between Key Unobservable inputs and Fair Value

measurements

Open market value method; Estimated open market price per square feet Positive correlated sensitivity

Summation method; Estimated constructed cost per square feet Positive correlated sensitivity

GROUPas at 31st march 2015 2014 in Rs. ‘000s

15. leaSeHOlD PROPeRtYAt the beginning of the year 818,664 831,068Amortisation for the year (12,404) (12,404)At the end of the year 806,260 818,664

The leasehold property is amortised on a straight line basis over 74 years. The remaining period of lease as at 31st March 2015 was 65 years. land extent lease Group Property (in acres) period in Rs. ‘000s 2015 2014 15.1 Details of leasehold propertyTrans Asia Hotels PLC. 806,260 818,664Colombo 7.65 99 years from 07-08-1981 806,260 818,664



GROUP cOmPanYas at 31st march 2015 2014 2015 2014 in Rs. ‘000s

16. inVeStment PROPeRtYAt the beginning of the year 3,904,514 3,618,750 2,146,264 1,860,500Additions - 16,714 - 16,714Net transfers from PPE 2,202 486 2,202 486Change in fair value during the year 28,792 268,564 8,142 268,564At the end of the year 3,935,508 3,904,514 2,156,608 2,146,264

16.1 Valuation details of investment propertyInvestment properties of the Group were valued by a qualified professional valuer as at 31st March 2015, Details of which are as follows;

In order to adopt the Fair Value model on Investment Property, as per Sri Lanka Accounting Standard 40 “Investment Property” the Land & Building classified as Investment Property of Asian Hotels and Properties PLC which includes Crescat Boulevard was valued by Mr. P.B. Kalugalagedera, a Chartered Valuation Surveyor using investment method of valuation on 01st of April 2005 (date of adoption of the Standard), 31st March 2006, 31st March 2007, 31st March 2009, 31st March 2011, 31st March 2012,31st March 2013,31st March 2014 and 31st March 2015 respectively.

The Commercial Centre of Trans Asia Hotels PLC was valued by Messrs. A.Y. Daniel and Sons, a Professional Valuer using accredited contractor (cost) method of valuation on 1st April 2005, 31st March 2006, 31st March 2009 respectively. The Commercial Centre of Trans Asia Hotels PLC was valued by Mr. P.B. Kalugalagedera, a Chartered Valuation Surveyor using the Market Value Method on 31st March 2011, 31st March 2012,31st March 2013 and 31st March 2015 respectively.

Changes in the values are recognised as gains in profit or loss. All gain are unrealised.

Rental Income earned from Investment Property by the Company and Group amounted to Rs. 309 Mn (2014 Rs. 288 Mn) and Rs. 370 Mn (2014 Rs. 349 Mn) respectively. Direct Operating Expenses incurred by the Company and Group amounted to Rs. 72 Mn (2014 Rs. 79 Mn) and Rs. 78Mn (2014 Rs. 86 Mn) respectively.

The significant assumptions used by the valuer in the years 2014 and 2015 are as follows;

as at 31 march method of Property Valuation

Asian Hotels and Properties PLC. Income capitalisation approach Crescat Boulevard, Colombo 3

Trans Asia Hotels PLC. * Open market value based on annual rent Commercial Centre, Colombo 2




16.2 (i) Fair Value HierarchyThe fair value of property was determined by an external independent property valuer, having appropriate recognised professional qualifications and recent experience in the location and category of the property being valued.The fair value measurement for all of properties has been categorised as level 03 fair value based on the input to the valuation technique used.

(ii) ValuationTechniqueandSignificantUnobservableInputsThe following table shows the valuation technique used in measuring the fair value of investment property, as well as the significant unobservable inputs used:

Valuation technique Significant Unobservable Inputs interrelationship between Key Unobservable inputs and Fair Value measurements

Income capitalisation approach Estimated net rental income and rental period

Positively correlated sensitivity

Open market value based on annual rent

Estimated market rental rate per square feet and rental period

Positively correlated sensitivity


17. INTANGIABLE ASSETScomputer SoftwarecostAt the Beginning of the Year 33,426 32,804 9,009 8,710Additions 800 1,020 - 697Transfers - (398) - (398)At the End of the Year 34,226 33,426 9,009 9,009

accumulated amortisationAt the Beginning of the Year 28,161 24,287 8,007 7,648Amortisation 3,207 3,912 294 397Transfers - (38) - (38)At the End of the Year 31,368 28,161 8,301 8,007

carrying valueAs at 31 March 2,858 5,265 708 1,002



18. INVESTMENTS IN SUBSIDIARIES2015 Number of Effective Cost of Market shares holding % investment Value

Trans Asia Hotels PLC At Cost (Quoted) 86,823,028 43.41% 660,045 8,161,365

2014 Number of Effective Cost of Market shares holding % investment Value

Trans Asia Hotels PLC At Cost (Quoted) 86,823,028 43.41% 660,045 6,937,160

nci in subsidiaryThe following table summarises the information relating to the Group's subsidiary that has NCI.

nci percentage 56.59% 56.59%

2015 2014

Non current assets 3,401,673 3,421,500Current assets 507,743 539,398Non current liabilities (255,255) (251,249)Current liabilities (265,684) (258,162)net assets 3,388,477 3,451,487carrying amount of nci 3,388,477 3,451,487

Revenue 1,576,638 1,663,442Profit 330,827 420,566Other comprehensive income 891 (618)total comprehensive income allocated to nci 331,718 419,948

Cash flow from operating activities 395,154 576,655Cash flow from investing activities (90,453) (206,804)Cash flow from financing activities (396,130) (396,130)net increase in cash and cash equivalents (91,429) (26,279)


19. lOnG teRm inVeStmentSSri Lanka Hotel & Tourism 100 100 100 100(-) Fall in value of the Investment (100) (100) (100) (100) - - - -

The Company has fully provided for the above investment during the year 2009/2010, due to the non recoverability of the same.





20. nOn cURRent Financial aSSetS20.1 Loans to executivesAt the beginning of the year 22,457 26,651 15,617 18,041Loans granted / (transfers) 10,075 7,486 4,525 3,286Recoveries (15,362) (11,680) (7,854) (5,710)At the end of the year 17,170 22,457 12,288 15,617

Receivable within one year 4,997 5,430 3,852 4,226Receivable between one and five years 12,173 17,027 8,436 11,391 17,170 22,457 12,288 15,617


21. OtHeR nOn cURRent aSSetS 2,644 4,786 2,002 3,264


22. inVentORieSFood & Beverage 80,167 78,866 53,833 51,271General 10,899 11,684 8,748 8,898Diesel/ Furnace/ Gas Stock 14,069 13,197 8,951 8,477Engineering Stock 23,246 24,454 14,880 16,500Inventory Slow-moving Provision (8,045) (7,182) - -At the End of the Year 120,336 121,019 86,412 85,146



GROUP cOmPanYas at 31st march 2015 2014 2015 2014 in Rs.’000s

23. TRADE AND OTHER RECEIVABLESTrade receivables 616,048 463,460 316,642 248,335Other receivables 50,560 43,984 22,459 15,542Less: Impairment (28,623) (25,532) (16,874) (16,414) 637,985 481,912 322,227 247,463

impairmentAt the beginning of the year 25,532 17,119 16,414 15,153Provision for the year 3,549 8,480 508 1,328Written off during the year (458) (67) (48) (67)At the end of the year 28,623 25,532 16,874 16,414


24. OtHeR cURRent aSSetSPrepayments and non cash receivables 77,592 72,492 50,344 41,200WHT Recoverable 20,438 29,616 16,240 24,688ESC Recoverable 3,284 14,651 3,284 14,651Advance to Creditors 30,761 24,716 18,962 20,186 132,075 141,475 88,830 100,725


25. SHORt teRm inVeStmentSFixed & Call deposits 2,475,667 3,134,194 2,239,351 2,647,269 2,475,667 3,134,194 2,239,351 2,647,269




GROUP cOmPanY 2015 2014 2015 2014 number Value number Value number Value number Value of of of of of of of of as at 31st march shares shares shares shares shares shares shares sharesin ‘000s Rs. Rs. Rs. Rs.

26. StateD caPital 442,775 3,345,117 442,775 3,345,117 442,775 3,345,117 442,775 3,345,117

GROUP cOmPanYas at 31st march 2015 2014 2015 2014 in Rs.’000s note

27. OtHeR cOmPOnentS OF eQUitYRevaluation reserve 27.1 12,764,765 11,094,883 12,278,424 10,597,631Share based payments 27.2 43,991 15,988 41,399 14,470 12,808,756 11,110,871 12,319,823 10,612,101

27.1 Revaluation reserveAt the Beginning of the Year 11,094,883 11,110,290 10,597,631 10,602,127Transferred to Revenue Reserve (6,447) (4,496) (6,447) (4,496)Transferred to Revenue Reserve (10,911) (10,911) - -Revaluation gain on Freehold Land & Buildings 1,687,240 - 1,687,240 -At the End of the Year 12,764,765 11,094,883 12,278,424 10,597,631

27.2 Share-based payment plans - Group

Employee Share Option SchemeUnder the John Keells Group’s Employees Share Option scheme (ESOP), share options of the parent are granted to senior executives of the Company with more than 12 months of service. The exercise price of the share options is equal to the 30 day volume weighted average market price of the underlying shares on the date of grant. The share options vest over a period of four years and is dependent on a performance criteria and a service criteria. The performance criteria being a minimum performance achievement of “Met Expectations” and service criteria being that the employee has to be in employment at the time the share options vest. The fair value of the share options is estimated at the grant date using a binomial option pricing model, taking into account the terms and conditions upon which the share options were granted.

The contractual term for each option granted is five years. There are no cash settlement alternatives. The Group does not have a past practice of cash settlement for these share options.



The expense recognised for employee services received during the year is shown in the following table: 2015 2014

At the beginning of the year 17,966 -Expense arising from equity-settled share-based payment transactions 29,404 17,966Total expense arising from share-based payment transactions 29,404 17,966At the end of the year 47,370 17,966

Movements in the yearThe following table illustrates the number (No.) and weighted average exercise prices (WAEP) of, and movements in, share options during the year:

2015 2014 no. WaeP no. WaeP

Outstanding at 1st April 598,385 253.16 - -Granted during the year 562,227 229.93 615,692 253.16Forfeited during the year - - (17,307) 253.16Exercised during the year - - 253.16Expired during the year (118,985) 241.61 - -Transfers (25,499) 253.16Outstanding at 31st March 1,016,128 241.08 598,385 253.16Exercisable at 31st March 151,125 253.16 -

Fair value of the share option and assumptionsThe fair value of the share options is estimated at the grant date using a binomial option pricing model, taking into account the terms and conditions upon which the share options were granted.

The valuation takes into account factors such as stock price, expected time to maturity, exercise price, expected volatility of share price, expected dividend yield and risk free interest rate.

27.3 Share-based payment plans - CompanyEmployee Share Option Scheme

The expense recognised for employee services received during the year is shown in the following table:

2015 2014

At the beginning of the year 14,470 -Expense arising from equity-settled share-based payment transactions 26,929 14,470Total expense arising from share-based payment transactions 26,929 14,470At the end of the year 41,399 14,470




Movements in the yearThe following table illustrates the number (No.) and weighted average exercise prices (WAEP) of, and movements in, share options during the year:

2015 2015 2014 2014 no. WaeP no. WaeP

Outstanding at 1st April 495,466 253.16 - -Granted during the year 507,790 229.93 495,466 253.16Forfeited during the year - - 253.16Exercised during the year 253.16Expired during the year (32,573) 241.61 - -Transfers (25,499) 253.16Outstanding at 31st March 945,184 241.08 495,466 253.16Exercisable at 31st March 123,867 253.16

GROUPas at 31st march 2015 2014 in Rs.’000s

28. DEFERRED TAXATIONAt the Beginning of the Year 337,411 329,313Charge for the Year 3,651 8,098At the End of the Year 341,062 337,411

The closing Deferred Tax liability relates to the followings

GROUPas at 31st march 2015 2014 in Rs.’000s

Revaluation of Land and buildings to Fair value 47,960 47,960Accelerated Depreciation for tax purposes 306,302 302,239Employee Benefit Liability (13,200) (12,788) 341,062 337,411

In accordance with the BOI agreement dated 11th March 1994 the profits and income of the Company were exemptfrom taxation till year 2014, and at the expiry of said period the following options were available for the Company.

(a) Income tax payable for the year of assessment shall be computed at 2% of the Turnover of the Company or;(b) The provisions of the Inland Revenue Laws for the time being imposed shall apply.

Since the Company elected for option (a) no Deferred Tax liability will arise even after the expiry of the tax exemption period.




29. EMPLOYEE BENEFIT LIABILITIESAt the beginning of the year 221,234 194,097 114,664 96,071Current service cost 20,510 22,384 12,824 11,601Interest cost on benefit obligation 24,336 18,308 12,613 10,568Payments (23,363) (17,049) (8,802) (5,977)(Gain)/Loss arising from changes in assumptions (1,215) 4,860 574 3,768Transfers 371 (1,366) - (1,367)At the end of the year 241,873 221,234 131,873 114,664

The employee benefit liability of the Company and Group is based on the actuarial valuations carried out as at 31st March 2015 by Mr. M. Poopalanathan, AIA, Messers. Actuarial & Management Consultant (Pvt) Ltd; a firm of professional actuaries.

The principal assumptions used in determining the cost of employee benefits were:

2015 2014

Discount rate 10% 11%Future salary increases 8% 10%

29.1 Sensitivity of assumptions usedIf a one percentage point change in the assumed discount rate would have the following effects:

Discount rate Salary increment 2015 2015in Rs.’000s Group company Group company

Increase by one percentage point 8,146 3,582 (14,557) (9,258)Decrease by one percentage point (13,746) (8,763) 9,060 4,133

29.2 Maturity analysis of the paymentsThe following payments are expected on employee benefit liabilities in future years 2015 2014 Group company Group company

within the next 12 months 37,742 19,260 30,752 15,805Between 1-2years 61,186 31,084 57,756 32,355Between 2-5years 62,318 32,966 58,835 29,508Between 5-10 years 58,136 36,039 51,825 29,136Beyond 10 years 22,491 12,524 22,066 7,860Total 241,873 131,873 221,234 114,664





30. TRADE AND OTHER PAYABLESTrade Payables 193,680 177,073 124,058 111,271Payable to Contractors - 2,744 - 2,744Retention on Construction 45,762 21,560 45,762 21,560Accrued Expenses 140,593 139,275 31,657 51,007Other Creditors 302,295 285,871 232,652 217,143 682,330 626,523 434,129 403,725


31. INCOME TAX LIABILITIESAt the beginning of the year 111,863 65,252 53,545 -Charge for the year 229,372 189,466 153,164 69,025Payments and set off against refunds (196,999) (142,855) (89,610) (15,480)At the end of the year 144,236 111,863 117,099 53,545


32. OTHER CURRENT LIABILITIESOther tax payables 81,913 66,105 38,156 45,347Banquet Advanced 155,611 156,803 95,553 89,978Other Advanced 95,235 94,740 87,849 87,904 332,759 317,648 221,558 223,229



33. RelateD PaRtY disclosuresGroup carried out transactions in the ordinary course of business with parties who are defined as related parties as per LKAS 24 "Related Party Disclosure".

33.1 Parent and Ultimate Controlling Party The Company’s Ultimate Parent Undertaking and controlling party is John Keells Holding PLC. The amounts receivable from or payable to related parties as at 31st March 2015, are below,

GROUP cOmPanYas at 31st march 2015 2014 2015 2014 in Rs. ’000s

33.2 Amounts due from related partiesParent-John Keells Holdings PLC 1,303 1,591 56 1,129 Subsidiary-Trans Asia Hotels PLC - - 505 15Associates - 36 - 36Companies under common control of JKH PLC 65,181 47,236 31,240 33,537 66,484 48,863 31,801 34,717

GROUP cOmPanYas at 31st march 2015 2014 2015 2014 in Rs. ’000s

33.3 Amounts due to related partiesParent-John Keells Holdings PLC 3,925 5,106 3,005 2,742Subsidiary-Trans Asia Hotels PLC - - 76 263Companies under common control of JKH PLC 107,546 82,235 82,890 57,899 111,471 87,341 85,971 60,904




33.4 Transactions with related partiesThe Group and Company carried out transactions with the following related entities.


(a) transactions with parent companythe company's parent is John Keells Holdings Plc Rendering /(Receiving) of services (44,945) (43,713) (26,111) (23,578)Rent Received / (Paid) 25,199 37,529 - -

(b) transactions with Subsidiary companies(Receiving) / Rendering of services - - 644 (1,135)Rent received / (paid) - - 536 1,014Sales/(Purchases) of goods - - (48) -

(c) transaction with companies under common control of JKH PLCRendering /(Receiving) of services (457,103) (554,317) (409,464) (334,599)Rent received / (paid) 80,998 67,721 43,474 42,929Sales / (Purchases) of goods (11,310) (18,761) (3,332) (6,148)Sales / (Purchases) of property plant & equipment - (3,117) - (3,117)

33.5 Transactions with Key Management Personnel According to Sri Lanka Accounting Standard (LKAS) 24 - Related Party Disclosure, "Key Management Personnel" are

those having authority and responsibility for planning, directing and controlling the activities of the entity. Accordingly, the Directors (including Executive and Non-Executive Directors) and their immediate family members have been classified as KMP of the Company.

As the John Keells Holding PLC is the Parent of the Company and the Board of Directors of the Parent Company has the authority and responsibility of planning, directing and controlling the activities of the Company, the Directors of the parent Company and their immediate family member have also been identified as Key Management Personnel of the Company. Immediate family member is defined as spouse or dependant. A dependant is defined as anyone who depends on the respective Director for more than 50% of his/her financial needs.


(i) compensation of Key management PersonnelShort-term employee benefits 69,546 61,327 63,981 58,207Contributions to the provident fund 3,892 4,028 3,473 3,574Share based payment 17,067 10,914 17,067 10,914

In addition to their salaries the Company provides non-cash benefits to the Key Management Personnel and contributes to a post-employment defined benefit plan on their behalf. Directors’ emoluments are disclosed in Note 10 to the Financial Statements.



34 Financial inStRUmentS - accOUntS claSSiFicatiOn anD FaiR ValUeS OF tHe GROUP34.1 Financial Assets and Liabilities by CategoriesThe following methods and assumptions were used to estimate the fair values:

Financial assets and liabilities in the tables below are split into categories in accordance with LKAS 39.

Financial assets by categories Financial liabilities by categories

loans and receivables

Financial assets at fair value through

profit or loss

available for-sale-financial

assets

Held-to-maturity investments

total Financial liabilities measured at

amortised costas at 31 st march note 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014

in Rs. '000Financial instruments in non-current assets

Othernon-currentfinancialassets 20.1 12,173 17,027 - - - - - - 12,173 17,027 - -

Financial instruments in current assets - - - - - - - - - - - -

Trade and other receivables / Payable 23-30 637,985 481,912 - - - - - - 637,985 481,912 682,330 626,523

Amounts due from / due to related parties 33.2-33.3 66,484 48,863 - - - - - - 66,484 48,863 111,471 87,341

Other current liabilities 32 - - - - - - - - - - 332,759 317,648

Short term investments 25 2,475,667 3,134,194 - - - - - - 2,475,667 3,134,194 - -

Cash in hand and at bank 499,964 430,541 - - - - - - 499,964 430,541 - -

Bank overdrafts - - - - - - - - - - 116,728 130,080

total 3,692,273 4,112,537 - - - - - - 3,692,273 4,112,537 1,243,288 1,161,592

The management assessed that the fair value of cash at bank, short term deposits, trade receivables, other payables, bank overdrafts and other current financial liabilities approximate their carrying amounts largely due to the short term maturities of these instruments. Accordingly the fair value hierarchy does not apply. 34 Financial inStRUmentS - accOUntS claSSiFicatiOn anD FaiR ValUeS OF tHe cOmPanY34.2 Financial Assets and Liabilities by CategoriesFinancial assets and liabilities in the tables below are split into categories in accordance with LKAS 39.




profit or loss


assets




in Rs. '000

Financial instruments in non-current assets








Bank overdrafts - - - - - - - - - - 59,829 76,116

total 2,869,060 3,230,644 - - - - - - 2,869,060 3,230,644 801,487 763,974

The management assessed that the fair value of cash at bank, short term deposits, trade receivables, other payables, bank overdrafts and other current financial liabilities approximate their carrying amounts largely due to the short term maturities of these instruments. Accordingly the fair value hierarchy does not apply.




34 Financial inStRUmentS - accOUntS claSSiFicatiOn anD FaiR ValUeS OF tHe GROUP34.1 Financial Assets and Liabilities by CategoriesThe following methods and assumptions were used to estimate the fair values:

Financial assets and liabilities in the tables below are split into categories in accordance with LKAS 39.




profit or loss


assets




in Rs. '000Financial instruments in non-current assets








Bank overdrafts - - - - - - - - - - 116,728 130,080

total 3,692,273 4,112,537 - - - - - - 3,692,273 4,112,537 1,243,288 1,161,592

The management assessed that the fair value of cash at bank, short term deposits, trade receivables, other payables, bank overdrafts and other current financial liabilities approximate their carrying amounts largely due to the short term maturities of these instruments. Accordingly the fair value hierarchy does not apply. 34 Financial inStRUmentS - accOUntS claSSiFicatiOn anD FaiR ValUeS OF tHe cOmPanY34.2 Financial Assets and Liabilities by CategoriesFinancial assets and liabilities in the tables below are split into categories in accordance with LKAS 39.




profit or loss


assets




in Rs. '000

Financial instruments in non-current assets








Bank overdrafts - - - - - - - - - - 59,829 76,116

total 2,869,060 3,230,644 - - - - - - 2,869,060 3,230,644 801,487 763,974

The management assessed that the fair value of cash at bank, short term deposits, trade receivables, other payables, bank overdrafts and other current financial liabilities approximate their carrying amounts largely due to the short term maturities of these instruments. Accordingly the fair value hierarchy does not apply.



35. Financial risk management Objectives and PoliciesFinancial instruments held by the Group, principally comprise of cash at bank, short-term deposits, other non current assets, amounts due from/due to related parties, trade receivables, trade payables, bank overdrafts and other current financial liabilities. The main purpose of these financial instruments is to manage the operating, investing and financing activities of the Group.

Financial risk management of the Group is carried out based on guidelines established by its parent company’s central treasury department (Group Treasury) which comes under the purview of the Group Executive Committee (GEC) of the parent company.

Group Treasury identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units. The parent company provides guidelines for overall risk management, as well, covering specific areas such as credit risk, investment of excess liquidity, interest rate risk and foreign currency risk.

The Group has established guidelines for risk controlling procedures and for the use of financial instruments, including a clear segregation of duties with regard to financial activities, settlement, accounting and related controlling. The guidelines upon which the Group’s risk management processes are based are designed to identify and analyse these risks throughout the Group, to set appropriate risk limits and controls and to monitor the risks by means of reliable and up-to-date administrative and information systems. The guidelines and systems are regularly reviewed and adjusted to changes in markets and products. The Group manages and monitors these risks primarily through its operating and financing activities.

The Audit Committee of John Keells Holdings PLC, the parent Company, oversees how management monitors compliance with the Group’s risk management policies and procedures,and reviews the adequacy of the risk management framework in relation to the risks faced by the Group.

The Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.




35.1 Credit riskCredit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.

The Group trades only with recognised, credit worthy third parties. It is the Group’s policy that all clients who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.

With respect to credit risk arising from the other financial assets of the Group, such as cash and cash equivalents, available-for-sale financial investments, investments, and certain derivative instruments, the Group’s exposure to credit risk arises from default of the counterparty. The Group manages its operations to avoid any excessive concentration of counterparty risk and the Group takes all reasonable steps to ensure the counterparties fulfill their obligations.



35.1.1 Risk exposureCredit risk is the risk of financial loss to the Group, if a customer or counter party to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers and placements in deposits with banking institutions and in government securities.

The maximum risk positions of financial assets which are generally subject to credit risk are equal to their carrying amounts (without consideration of collateral, if available). Following table shows the maximum risk positions.

as at 31 st march 2015 2014

in Rs. '000 notes Other non current

financial assets

cash in hand and at

bank

trade and other

receivables

Short term investments

amounts due from

related parties

total % of allocation

Other non current financial assets

cash in hand and at bank

trade and other receivables


amounts due from related parties


Risk exposure Group

Deposits with bank 35.1.2 - - - 2,475,667 - 2,475,667 67% - - - 3,134,194 - 3,134,194 76%

Loans to executives 35.1.3 12,173 - 4,997 - - 17,170 0% 17,027 - 5,430 - - 22,457 1%

Trade and other receivables 35.1.4 - - 632,988 - - 632,988 17% - - 476,482 - - 476,482 12%

Amounts due from related parties 35.1.5 - - - - 66,484 66,484 2% - - - - 48,863 48,863 1%

Cash in hand and at bank 35.1.6 - 499,964 - - - 499,964 14% - 430,541 - - - 430,541 10%

total credit risk exposure 12,173 499,964 637,985 2,475,667 66,484 3,692,275 100% 17,027 430,541 481,912 3,134,194 48,863 4,112,537 100%

total 12,173 499,964 637,985 2,475,667 66,484 17,027 430,541 481,912 3,134,194 48,863



financial assets

cash in hand and at

bank

trade and other

receivables


amounts due from

related parties








Risk exposure company







total 8,436 267,245 322,227 2,239,351 31,801 11,390 289,804 247,463 2,647,269 34,717




35.1.1 Risk exposureCredit risk is the risk of financial loss to the Group, if a customer or counter party to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers and placements in deposits with banking institutions and in government securities.

The maximum risk positions of financial assets which are generally subject to credit risk are equal to their carrying amounts (without consideration of collateral, if available). Following table shows the maximum risk positions.



financial assets

cash in hand and at

bank

trade and other

receivables


amounts due from

related parties








Risk exposure Group







total 12,173 499,964 637,985 2,475,667 66,484 17,027 430,541 481,912 3,134,194 48,863



financial assets

cash in hand and at

bank

trade and other

receivables


amounts due from

related parties








Risk exposure company







total 8,436 267,245 322,227 2,239,351 31,801 11,390 289,804 247,463 2,647,269 34,717



35.1.2 Deposits with bankDeposits with bank mainly consist of repurchase agreement (Repo), fixed and call deposits.As at 31st March 2015, Repo comprise 98% (2014- 0%) and 98% (2014- 0%) for the Group and Company respectively were rated “A+” or better.

GROUP cOmPanYas at 31st march 2015 2014 2015 2014Fitch ratings in Rating % in Rating % in Rating % in Rating % Rs. ’000s of Rs. ’000s of Rs. ’000s of Rs. ’000s of total total total total

AA+ - - 659,103 21% - - 659,103 25%AA 2,055,620 83% 359,968 11% 1,819,304 81% - -AA- 420,047 17% 672,298 22% 420,077 19% 672,298 25%A - - 1,442,825 46% - - 1,315,868 50%Total 2,475,667 100% 3,134,194 100% 2,239,381 100% 2,647,269 100%

* Rating agencies

35.1.3 Loans to executivesLoans to executive portfolio is largely made up of vehicle loans which are given to staff at assistant manager level and above. The respective business units have obtained the necessary Power of Attorney/promissory notes as collateral for the loans granted.

35.1.4 Trade and other receivables GROUP cOmPanY 2015 2014 2015 2014 in Rs. ’000s in Rs. ’000s in Rs. ’000s in Rs. ’000s

neither past due nor impaired 222,653 221,428 49,322 34,947

Past due but not impaired 0-30 days 234,566 163,339 137,341 128,601 31–60 days 61–90 days 85,463 51,863 64,295 44,320 91–120 days 32,901 9,838 20,203 7,837 121–180 days 25,716 5,078 16,481 2,657 > 181 days 11,151 5,413 10,457 4,751 42,409 41,012 41,002 40,409impaired 11,749 9,473 - 355Gross carrying value 666,608 507,444 339,101 263,877Less: impairment provisionCollectively assessed impairment provision - - - -Individually assessed impairment provision (28,623) (25,532) (16,874) (16,414)total 637,985 481,912 322,227 247,463

The Group has obtained customer deposit from major customers by reviewing their past performance and credit worthiness.

The requirement for an impairment is analysed at each reporting date on an individual basis for major customers. Additionally, a large number of minor receivables are grouped into homogeneous groups and assessed for impairment collectively. The calculation is based on actual incurred historical data.




35.1.5 Amounts due from related partiesThe Group’s amounts due from related party mainly consists of associates and other venture partners’ balances from joint ventures.

The Company balance consists of the balance from affiliate companies.

35.1.6 Credit risk relating to cash and cash equivalentsIn order to mitigate the concentration, settlement and operational risks related to cash and cash equivalents, the Group consciously manages the exposure to a single counterparty taking into consideration, where relevant, the rating or financial standing of the counterparty, where the position is reviewed as and when required, the duration of the exposure in managing such exposures and the nature of the transaction and agreement governing the exposure.

35.2 Liquidity RiskThe Group’s policy is to hold cash and undrawn committed facilities at a level sufficient to ensure that the Group has available funds to meet its short and medium term capital and funding obligations, including organic growth and acquisition activities, and to meet any unforeseen obligations and opportunities. The Group holds cash and undrawn committed facilities to enable the Group to manage its liquidity risk.

The Group monitors its risk to a shortage of funds using a daily cash management process. This process considers the maturity of both the Group’s financial investments and financial assets (e.g. accounts receivable, other financial assets) and projected cash flows from operations.

The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of multiple sources of funding including bank loans, overdrafts and over a broad spread of maturities.

35.2.1 Net debt/(cash) GROUP cOmPanY 2015 2014 2015 2014

Short term investments 2,475,667 3,134,194 2,239,351 2,647,269Cash in hand and at bank 499,964 430,541 267,245 289,804total liquid assets 2,975,631 3,564,735 2,506,596 2,937,073

Bank overdrafts 116,728 130,080 59,829 76,116total liabilities 116,728 130,080 59,829 76,116net debt (cash) (2,858,903) (3,434,655) (2,446,767) (2,860,957)

35.2.2 Liquidity risk managementThe mixed approach combines elements of the cash flow matching approach and the liquid assets approach. The business units attempt to match cash outflows in each time bucket against a combination of contractual cash inflows plus other inflows that can be generated through the sale of assets, repurchase agreement or other secured borrowing.



Maturity analysisThe table below summarises the maturity profile of the Group’s financial liabilities at 31st March 2015 based on contractual undiscounted payments.

GROUP Within Between Between Between Between More than Total 1 1-2 2-3 3-4 4-5 5 2015 in Rs. ’000s years years years years years years

Trade and other payables 682,330 - - - - - 682,330Amounts due to related parties 111,471 - - - - - 111,471Other current financial liabilities 332,759 - - - - - 332,759Bank overdrafts 116,728 - - - - - 116,728 1,243,288 - - - - - 1,243,288

Within Between Between Between Between More than Total 1 1-2 2-3 3-4 4-5 5 2014 in Rs. ’000s years years years years years years

Trade and other payables 626,523 - - - - - 626,523Amounts due to related parties 87,341 - - - - - 87,341Other current financial liabilities 317,648 - - - - - 317,648Bank overdrafts 130,080 - - - - - 130,080 1,161,592 - - - - - 1,161,592

cOmPanY Within Between Between Between Between More than Total 1 1-2 2-3 3-4 4-5 5 2015 in Rs. ’000s years years years years years years

Trade and other payables 434,129 - - - - - 434,129Amounts due to related parties 85,971 - - - - - 85,971Other current financial liabilities 221,558 - - - - - 221,558Bank overdrafts 59,829 - - - - - 59,829 801,487 - - - - - 801,487

Within Between Between Between Between More than Total 1 1-2 2-3 3-4 4-5 5 2014 in Rs. ’000s years years years years years years

Trade and other payables 403,725 - - - - - 403,725Amounts due to related parties 60,904 - - - - - 60,904Other current financial liabilities 223,229 - - - - - 223,229Bank overdrafts 76,116 - - - - - 76,116 763,974 - - - - - 763,974




35.3 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* Equity price risk

The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

35.3.1 Interest rate riskInterest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s long-term debt obligations with floating interest rates.

Most lenders grant loans under floating interest rates. To manage this, based on the market condition and outlook of the interest rate, the Group takes mitigating action such as interest rate swaps ,caps, etc.

The group has not obtained financial facilities from financial institute for the reporting period and bank deposits will be matured within three months period with fixed interest rate. Hence, the group is not exposure interest rate risk for the reporting period. 35.4 Capital managementThe primary objective of the Group’s capital management is to ensure that it maintains a strong financial position and healthy capital ratios in order to support its business and maximise shareholder value.

The Group manages its capital structure, and makes adjustments to it, in the light of changes in economic conditions. To maintain or adjust the capital structure, the Group may issue new shares, have a rights issue or buy back of shares.

GROUP cOmPanY 2015 2014 2015 2014

Debt / Equity 0.4% 0.5% 0.3% 0.4%



36. OPeRatinG SeGment inFORmatiOnThe Group has the following two strategic divisions, which are its reportable segments. The following summary describes the operations of each reportable segment. Reportable Segments Operations

Hotel Provide hoteliering services to local and foreign customers Property Property development and rent out premises

ReVenUe HOtelS PROPeRtY GROUP tOtalFor the year ended 31st march 2015 2014 2015 2014 2015 2014 in Rs. ’000s

External revenue 7,663,293 7,775,954 416,858 480,194 8,080,152 8,256,149Inter segment revenue - - - - - -Total Segment Revenue 7,663,293 7,775,954 416,858 480,194 8,080,152 8,256,149Segment Operating Profits Before Finance Expenses 2,399,625 2,826,850 195,919 227,828 2,595,544 3,054,678Inter Company Dividends (273,493) (273,493) - - (273,493) (273,493)Finance Expenses (190) (3,287) - - (190) (3,287)

Change in Fair Value of Investment Properties Company - - 8,142 268,564 8,142 268,564 Commercial Centre of Subsidiary - - 20,650 - 20,650 -

Profit Before Taxation 2,125,942 2,550,071 224,711 496,392 2,350,653 3,046,463Income Tax Expense (216,442) (181,084) (16,366) (16,480) (232,808) (197,564)Eliminations (30,388) (30,388) - - (30,388) (30,388)Profit After Taxation 1,879,112 2,338,599 208,345 479,912 2,087,457 2,818,511Minority Interest (287,871) (389,881) (42,957) (30,684) (330,828) (420,565)Net Profit for the Year 1,591,241 1,948,717 165,388 449,228 1,756,629 2,397,946

HOtelS PROPeRtY GROUP tOtalas at 31st march 2015 2014 2015 2014 2015 2014 in Rs. ’000s

assetsSegment Assets 23,166,638 21,237,446 7,359,693 7,993,672 30,526,331 29,231,118Eliminations - - - - (1,130,457) (1,611,473)Total Assets 23,166,638 21,237,446 7,359,693 7,993,672 29,395,874 27,619,645

liabilitiesSegment Liabilities 2,259,116 2,563,710 181,787 219,801 2,440,913 2,783,511Eliminations/Adjustments - - - - (470,454) (951,411)total liabilities 2,259,116 2,563,710 181,787 219,801 1,970,459 1,832,100




37. CONTINGENT LIABILITIES There were no material contingent liabilities existing as at reporting date. 38. caPital cOmmitmentS The Asian Hotels & Properties PLC Group had capital expenditure contracted for Rs. 548.4 Mn as at 31st March 2015, which were not provided for in the Consolidated Financial Statements. 39 EVENTS SUBSEQUENT TO THE REPORTING DATE AND OTHER MATTERS

There have been no events subsequent to the reporting date which would have any material effect on the Company or on the Group, other than matters disclosed below.

39.1 The Board of Directors of the Company has declared a Final Dividend of Rs. 3/- per share for the financial year ended 31st March 2015.

As required by Section 56 (2) of the Companies Act No. 7 of 2007, the Board of Directors have confirmed that the Company satisfies the Solvency test in accordance with Section 57 of the Companies Act No. 7 of 2007, and have obtained a certificate from Auditors, prior to declaring a Final Dividend. In accordance with Sri Lanka Accounting Standard (LKAS) 10, Events after reporting date, the proposed final Dividend has not been recognised as a liability in the Financial Statements as at 31st March 2015.

39.2 Other MattersSuper Gains TaxAn imposition of a Super Gains Tax has been recommended for the approval of Parliament per a Bill dated 27th March 2015. Since the Bill had not been approved by the parliament as at the reporting date, being 31st March 2015, the Group has not provided for the potential liability in the Financial Statements for the year ended 31st March 2015.

40. DIRECTORS’ RESPONSIBILITY STATEMENT The Board of Directors is responsible for the preparation and presentation of these Financial Statements. Please referpage 110 for the Statement of Directors' Responsibility for Financial Reporting.



2015 2014 in Rs. ‘000s

Revenue 8,080,152 8,256,149

Adjustment for Change in Fair Value of Investment Property 28,792 268,564Adjustment for Finance Income 199,958 305,042Adjustment for other Income 80,523 75,546 8,389,425 8,905,301

Less : Cost of Materials & ServicesPurchased from external sources 1,247,237 1,319,224Value Added 7,142,188 7,586,077

Distributed as follows: 2015 % 2014 % in Rs. ‘000s

To Employees as Remuneration 1,519,923 20% 1,330,120 18%To the Government as Taxes 1,280,470 18% 1,211,336 16%To the Providers of CapitalAs Interest on Loans 190 0% 3,287 0%As Minority Interest 330,828 5% 420,565 6%To Shareholders as Dividends 1,771,101 26% 1,771,101 23%Retained within the businessAs Depreciation 482,938 7% 455,964 6%As Reserves 1,756,738 24% 2,393,704 31% 7,142,188 100% 7,586,077 100%

consolidated Value added Statement

2014/15

To Employees as Remuneration

To the Government as Taxes

As Interest on Loans

As Minority Interest

To Shareholders as Dividends

As Depreciation

As Reserves

7%

26%

24%

18%

20%

5%

2013/14

To Employees as Remuneration

To the Government as Taxes

As Interest on Loans

As Minority Interest

To Shareholders as Dividends

As Depreciation

As Reserves

6%

23%

32%

16%

17%

6%



information to Shareholders & investors

STOCK EXCHANGE LISTINGThe Issued Ordinary Shares of Asian Hotels and Properties PLC are listed with the Colombo Stock Exchange ofSri Lanka. The Audited Financial Statements of the Company and the Consolidated Financial Statements for theyear ended 31st March 2015 have been submitted to the Colombo Stock Exchange.

DISTRIBUTION OF SHAREHOLDINGS 31.03.2015 31.03.2014From to number of total Percentage number of total Percentage Share Share of Share Share Share of Share Holders Holdings Holdings Holders Holdings Holdings

1 - 1,000 2,156 604,747 0.1 2,218 641,523 0.11,001 - 10,000 761 2,696,983 0.6 799 2,867,237 0.710,001 - 100,000 164 4,529,410 1.0 177 4,941,326 1.1100,001 - 1,000,000 22 5,276,208 1.2 24 5,989,598 1.41,000,001 and above 13 429,667,952 97.1 12 428,335,616 96.7 3,116 442,775,300 100.0 3,230 442,775,300 100.0

analYSiS OF SHaReHOlDeRS

Categories of Shareholders 31.03.2015 31.03.2014 Holdings % Holdings % number number

Individual 13,413,413 3.03 13,694,105 3.09Institutions 429,361,887 96.97 429,081,195 96.91 442,775,300 100.00 442,775,300 100.00

Resident 433,639,407 97.94 432,649,633 97.71Non Resident 9,135,893 2.06 10,125,667 2.29 442,775,300 100.00 442,775,300 100.00

Public 94,923,108 21.44 94,646,347 21.38Non Public* 347,852,192 78.56 348,128,953 78.62 442,775,300 100.00 442,775,300 100.00

*Includes shareholdings of Parent Company, Directors & Spouses.



For the Year ended 31st march 2015 2014 Rs. Rs.

market Value Highest Market Price per Share 75.00 79.00 Lowest Market Price per Share 58.00 57.00 Last Traded Market Price per Share as at 63.00 58.80

Dividend Payments Interim Dividend per Share 1.00 1.00 Final Dividend per Share 3.00 3.00

tOP tWentY SHaReHOlDeRS as at as at 31.03.2015 31.03.2014name Share Percentage Share Percentage Holdings Holdings

John Keells Holdings PLC 347,824,192 78.56 347,824,192 78.56Employees Provident Fund 43,552,236 9.84 42,477,714 9.59Sri Lanka Insurance Corporation Ltd - Life Fund 10,055,900 2.27 10,055,900 2.27Bank of Ceylon A/C Ceybank Unit Trust 9,537,403 2.15 9,285,390 2.10Dr. S. Yaddehige 3,415,200 0.77 3,415,200 0.77HSBC International Nominees Limited - MSNY- Bay Pond Partners L.P. 3,151,924 0.71 3,580,000 0.81Bank of Ceylon-No. 2 A/C 2,583,400 0.58 2,583,400 0.58Bank of Ceylon-No. 1 Account 2,367,741 0.53 2,232,400 0.50Mr. M.J. Fernando 2,018,000 0.46 2,018,000 0.46HSBC International Nominees Limited - MSNY- Bay Pond Investors (Bermuda) L.P 1,377,276 0.31 1,724,200 0.39National Savings Bank 1,366,132 0.31 441,000 0.10AIA Insurance Lanka PLC A/C No.07 1,234,139 0.28 1,966,528 0.44Bank of Ceylon A/C Ceybank Century Growth Fund 1,184,409 0.27 1,172,692 0.26Employee Trust Fund Board 767,478 0.17 767,478 0.17Mr. M. Mannawarajan 650,016 0.15 650,016 0.15Richard Pieris & Co Ltd - Account No. 01 639,400 0.14 639,400 0.14RBC Investor Services Bank - Alquity Sicav - Alquity Asia Fund 496,950 0.11 - 0.00Merrill J Fernando & Sons (Pvt) Limited 220,000 0.05 220,000 0.05Hatton National Bank PLC A/C No.05 (Trading Portfolio) 207,476 0.05 - 0.00Merchant Bank of Sri Lanka Ltd A/C No 1 206,214 0.05 163,814 0.05 432,855,486 97.76 431,217,324 97.39

Information to Shareholders & Investors Contd.



Five-Year Financial Summary of the Group

2014/15 2013/14 2012/13 2011/12 2010/11 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000

Revenue 8,080,152 8,256,149 7,890,978 8,855,241 7,457,325

Profit After Taxation 2,087,457 2,818,511 3,097,386 2,502,458 2,147,886

Share capital & ReservesStated Capital 3,345,117 3,345,117 3,345,117 3,345,117 3,345,117Other Components of Equity 12,808,756 11,110,871 11,110,290 5,143,193 5,179,592Retained Profit 7,883,065 7,880,070 7,242,060 6,490,690 5,194,517Shareholders’ Funds 24,036,938 22,336,058 21,697,467 14,979,000 13,719,226

Minority Interest 3,388,477 3,451,487 3,425,692 2,963,109 2,783,930 27,425,415 25,787,545 25,123,159 17,942,109 16,503,156

assets & (liabilities)Current Assets 3,932,511 4,358,006 3,986,497 4,038,373 2,705,026Current Liabilities (1,387,524) (1,273,457) (1,128,402) (1,640,220) (1,219,974)Net Current Assets 2,544,987 3,084,549 2,858,095 2,398,153 1,485,052Non Current Assets 25,463,363 23,261,641 22,789,890 16,011,297 15,446,194Non Current Liabilities (582,935) (558,645) (524,826) (467,341) (428,090) 27,425,415 25,787,545 25,123,159 17,942,109 16,503,156

Ratio analysisEarnings per Share (Rs)* 3.97 5.42 5.63 4.85 4.01Net Assets per Share (Rs) 54.29 50.45 49.00 33.83 30.98Current Ratio (Times) 2.83 3.42 3.53 2.46 2.22After Tax Return on Net Assets 7.31% 10.73% 11.50% 14.35% 12.93%Dividend Per Share* 4.00 4.00 4.00 2.00 0.50P/E Ratio 15.88 10.85 12.43 16.07 23.44Dividend Payout Ratio 1.01 0.74 0.71 0.41 0.12

*The increased number of ordinary shares of 442,775,300 has been considered for the previous Year’s comparative figures.

Five-Year Financial Summary Property Development

2014/15 2013/14 2012/13 2011/12 2010/11 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000

Revenue 355,528 419,119 428,062 2,675,625 2,468,699Cost of Sales 191,677 243,057 272,726 2,071,868 1,788,148Gross Profit 163,851 176,062 155,336 603,757 680,551

Administration & Other Overheads 104,700 109,215 113,387 199,634 155,485Other Income 81,510 106,759 134,559 111,903 62,638Change in Fair Value of Investment Property 8,142 268,564 228,500 206,971 215,088Net Profit Before Tax 148,803 442,170 405,008 722,997 802,792



Five-Year Financial Summary cinnamon Grand Hotel

2014/15 2013/14 2012/13 2011/12 2010/11 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000

RevenueRooms 2,495,720 2,589,915 2,460,356 1,921,952 1,425,573Food 1,884,175 1,779,373 1,638,767 1,405,859 1,220,522Beverage 316,647 298,787 284,989 249,572 216,899Food & Beverage Others 17,386 16,467 19,488 20,264 15,638Telephone 3,401 4,827 4,914 5,349 6,451Rental Income 18,360 16,668 15,289 12,510 11,419Other Operating Income 202,862 191,530 198,890 188,631 120,268Total Revenue 4,938,552 4,897,567 4,622,693 3,804,137 3,016,770

expensesRoom 380,079 343,617 301,195 255,945 210,295Food Cost 748,639 696,668 658,271 561,902 497,769Beverage Cost 104,407 90,929 87,993 79,662 74,734Food & Beverage Other 600,315 548,926 511,554 454,770 372,665Telephone 5,548 5,289 5,021 4,987 4,453Other 171,191 167,622 157,042 133,371 84,625Total Expenses 2,010,179 1,853,051 1,721,076 1,490,637 1,244,541

Gross Operating income 2,928,373 3,044,516 2,901,618 2,313,500 1,772,229

expensesAdministration & General 323,849 262,603 241,584 199,685 180,941Advertising & Sales Promotion 103,407 111,808 86,428 72,363 86,139Heat, Light & Power 359,804 376,177 324,795 285,126 261,680Repair & Maintenance 156,589 173,579 138,856 140,729 121,717total Deductions 943,650 924,167 791,663 697,903 650,477

Gross Operating Profit 1,984,723 2,120,349 2,109,955 1,615,597 1,121,752Interest Income 135,294 188,746 153,787 37,403 6,391Dividend Income 273,493 273,493 234,422 117,211 39,070Sundry Income 18,765 16,538 17,915 12,067 14,832 2,412,276 2,599,127 2,516,079 1,782,278 1,182,045

insurance 11,778 13,436 17,897 16,098 15,335Interest Expenses - 3,249 - 84 39,829Rates 11,658 11,796 11,660 10,516 10,135Management / Marketing Fee 300,752 304,917 294,239 232,340 178,499Depreciation 276,989 259,662 237,830 218,036 203,297 601,176 593,060 561,625 477,074 447,095

Net Profit Before Tax 1,811,095 2,006,067 1,954,453 1,305,204 734,950



notice of meeting

NOTICEISHEREBYGIVENthattheTwentyFirstAnnualGeneralMeetingofAsianHotelsandPropertiesPLCwillbeheldat the Auditorium of the Ceylon Chamber of Commerce, No. 50, Navam Mawatha, Colombo 2, on 26th June 2015 at 11.45 a.m for the following purposes:

1. To read the notice convening the meeting.

2. To receive and consider the Annual Report and Audited Financial Statements of the Company for the year ended 31st March 2015 together with the Report of the Auditors thereon.

3. To re-elect as a Director Mr. C. J. L. Pinto who retires by rotation in terms of Article 84 of the Articles of Association of the Company.

4. To re-elect as a Director Mr. J. R. F. Peiris who retires by rotation in terms of Article 84 of the Articles of Association of the Company

5. To re-appoint the retiring Auditors, Messrs. KPMG Chartered Accountants, and to authorise the Directors to determine their remuneration.

6. To consider any other business of which due notice has been given in terms of the relevant laws and regulations.

BYORDEROFTHEBOARDASIANHOTELSANDPROPERTIESPLC

Keells consultants (Private) limitedSecretaries

Colombo,4th June 2015

notes:(i) A member is entitled to appoint a proxy to attend and vote in his / her place.(ii) A proxy need not be a member of the Company.(iii) A member wishing to vote by proxy at the meeting may use the Proxy Form enclosed.(iv)Tobevalid,thecompletedProxyFormmustbelodgedattheregisteredofficeoftheCompanynotlaterthan48hours

before the meeting.(v) Ifapollisdemanded,avotecanbetakenonashowofhandorbypoll.Eachshareisentitledtoonevote.Votescan

becastinperson,byproxyorcorporaterepresentatives.Intheeventanindividualshareholderandhisproxyholderarebothpresentatthemeeting,onlytheshareholder’svotewillbecounted.Ifproxyholder’sappointerhasindicatedthe manner of voting, only the appointer’s indication of the manner of vote will be used.



notes





Notes Contd.



*I/We.............................................................................................................................................................................................................................................................

of .....................................................................................................................................................................................................................................................................

being a *member/members of Asian Hotels and Properties PLC hereby appoint

..................................................................................................................................................................................................................................................................... of

...................................................................................................................................................................................................................................................... or failing

*him/her

Mr. S. C. Ratnayake of Colombo, failing whomMr. A. D. Gunewardene of Colombo, failing whomMr. J. R. F. Peiris of Colombo, failing whomMr. R. J. Karunarajah of Colombo, failing whomMr. S. Rajendra of Colombo, failing whomMr. C. J. L. Pinto of Colombo, failing whomMr. S. K. G. Senanayake of Colombo, failing whomMrs. S. A. Jayasekera of Colombo

as *my/our proxy to represent *me/us and to vote on *my/our behalf at the 21st Annual General Meeting of the Company, to be held on the 26th day of June 2015 at 11.45 a.m. and at any adjournment thereof, and at any poll which may be taken inconsequencethereof.*I/Wetheundersignedherebyauthorise*my/ourproxytovoteon*my/ourbehalfinaccordancewith the preferences indicated below:

FOR aGainSt1. To re-elect as a Director Mr. C. J. L. Pinto who retires in terms of Article 84 of the Articles of

Association.

2. To re-elect as a Director Mr. J. R. F. Peiris who retires in terms of Article 84 of the Articles of Association.

3. To re-appoint the retiring Auditors, Messrs. KPMG, Chartered Accountants, and to Authorise the Directors to determine their remuneration.

Signed this .................................................... day of ................................................... Two Thousand and Fifteen ......................................................... Signature of shareholder

notes:(a) *Strike out whichever is not desired.(b) InstructionstocompletionoftheFormofProxyaresetoutonthereversehereof.(c) A proxy need not be a Member of the Company.(d) Pleaseindicatean“X”inthecageprovidedhowyourProxyshouldvoteoneachResolution.Ifnoindicationisgiven,

or if there is, in the view of the Proxy holder, any doubt (by reason of the manner in which the instructions contained in the Proxy have been completed) as to the way in which the Proxy holder should vote, the Proxy holder in his/her discretionmayvoteashe/shethinksfit.

Form of Proxy



inStRUctiOnS aS tO cOmPletiOn1. PleaseperfecttheFormofProxybyfillinginlegiblyyourfullnameandaddress,

signinginthespaceprovidedandfillinginthedateofsignature.

2. ThecompletedFormofProxyshouldbedepositedattheRegisteredOfficeoftheCompany at No. 77, Galle Road, Colombo 03, not later than 48 hours before the time appointed for the holding of the Meeting.

3. IftheFormofProxyissignedbyanAttorney,therelevantPowerofAttorneyshould accompany the completed Form of Proxy for registration, if such Power of Attorney has not already been registered with the Company.

4. IftheappointerisaCompanyorCorporation,theFormofProxyshouldbeexecutedunderitsCommonSealorbyadulyauthorisedofficeroftheCompanyor Corporation in accordance with its Articles of Association or Constitution.

5. IfthisFormofProxyisreturnedwithoutanyindicationofhowthepersonappointed as Proxy shall vote, then the Proxy shall exercise his/her discretion as to how he/she votes or, whether or not he/she abstains from voting.

Please fill in the following details:

name : .................................................................................................................................................

address : .................................................................................................................................................

.................................................................................................................................................

.................................................................................................................................................

Jointly with : .................................................................................................................................................

Share Folio no. : .................................................................................................................................................

Form of Proxy contd.

Corporate Information

NAME OF COMPANYAsian Hotels and Properties PLC

LEGAL FORMA Public Limited Liability Company incorporated in Sri Lanka in 1993 and registered with the Board of Investment of Sri Lanka under Section 17 of the Board of Investment Law No. 4 of 1978.

The Company was re-registered as per the New Companies Act No. 7 of 2007 on 15th June 2007.

STOCK EXCHANGE LISTINGThe issued Ordinary shares of the Company are listed on the Main Board of the Colombo Stock Exchange of Sri Lanka.

COMPANY REGISTRATION NO. PQ 2

BOARD OF DIRECTORSMr. Susantha Chaminda Ratnayake - ChairmanMr. Ajit Damon Gunewardene - Managing DirectorMr. James Ronnie Felitus PeirisMr. Rohan Jebashantham KarunarajahMr. Suresh RajendraMr. Sanjiva Kanishka Gamini SenanayakeMs. Shirani Anoja JayasekaraMr. Cholmondeley John Lloyd Pinto

COMPANY SECRETARIESKeells Consultants (Private) Limited117, Sir Chittampalam, A .Gardiner Mawatha, Colombo 2.

REGISTERED OFFICENo.77, Galle Road, Colombo 03Tel: +94 11 2437437 Fax: +94 11 5547555E-mail: [email protected]

AUDITORSKPMGChartered Accountants32A, Sir Mohamed Macan Marker MawathaColombo 03.

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

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

Asian Hotels and Properties PLCAnnual Report 2014/15

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Asian Hotels and Properties PLCNo. 77, Galle road, Colombo 03,Sri Lanka.T : 0094 -11 2437437F : 0094 -11 5547555

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Asian Hotels and Properties PLC · 2016-09-29 · Asian Hotels and Properties PLC 1 annual report 15 In an Industry that caters to varIed lIfestyles, cInnamon Grand has stood the