Stewardship

1. Strategic and Market Risks

• Reduced revenue, cash flow and profitability

• Hinder future growth

• Detailed operational and capital expenditure budgets are formulated on an annual basis and formally approved by the Board. These plans are thereafter monitored and reviewed by the Board to assess actual performance against those planned and take remedial action wherever necessary.

• Project feasibility studies are conducted for all major investments
• Implementation of cost control procedures and innovative cost saving initiatives particularly with regard to energy costs
• Performing Competitor analysis

• Reduced revenue, increased operating costs resulting in reduced profitability and cash flows

• Control over the ownership of assets

• Management regularly reviews political and economic developments and seeks to identify emerging risks at the earliest opportunity.

• The Company being a member of Tourist Hotels Association of Sri Lanka has been working closely with them and other various trade associations, relevant authorities and lobby groups in creating a better economic environment at all times.

• Occupancy and room rates can be adversely affected by events that reduce domestic or international travel. Such events may include acts of terrorism, war or perceived increased risk of armed conflicts, epidemics, natural disasters, increased cost of travel and industrial action. Reduced demand will impact on revenues and operational profitability

• The Company has in place contingency and recovery plans to enable it to respond to major incidents or crises.

• Loss of assets

• Transferring risks to third parties through insurance policies. The adequacy of insurance covers are regularly reviewed and adjusted when necessary.

• Future operating results could be adversely affected by industry over-capacity of number of rooms

• Reduction in market share (lower occupancies), rates resulting in reduced revenues, increase in marketing expenses reduces cash flows and profitability

• Providing a unique service quality associated with Jetwing brand only

• Consistently delivering of service quality to influence consumer preference and creating and maintaining value perception
• Make timely investments to upgrade the facilities
• Maintain the long-term relationships with major tour operators

• The Company is reliant on the reputation of its brand and the protection of its intellectual property rights

• Service quality may not be delivered in accordance with the Company’s standards

• Reduce brand value, market share, revenues, profitability and cash flows
• Increase Company’s exposure to litigation

• Continuous monitoring and review of online customer reviews and ratings

• Investments made in protecting the Company’s brand from misuse and infringement, by way of trade mark registration and domain name protection
• Company monitors adherence to its safety or operating and quality standards, or the significant regulations applicable to hotel operations
• Provides regular training to associates to educate on the quality standards and new developments in the hospitality industry

• Adverse impact on Company turnover due to shift in demand from traditional source markets to new emerging markets

• Reduce room nights, revenue

• Lower room rates due to lower occupancy

• The Hotel is well represented at international trade fairs

• Increase registration with Online Travel Agents
• Increase presence in social media channels
• Maintain the long term relationships with major tour operators

• Inability to achieve planned business objectives

• Reduced quality of standards resulting in reduced guest satisfaction

• Development and maintenance of a Company culture, compensation and benefits arrangements, training and development are key activities carried out

2.4. Technology Risk

• Inaccurate information

• Reputation and performance of the Company will be adversely affected

• Regular review of systems and upgrades where appropriate

2.5. Project Implementation Risk

• Cost overruns

• Delays in project implementation may cause loss of earnings

• Establish project cost and timelines in consultation with stakeholders

• Monitor project progress with budgeted cost and time

• Risk of litigation due to legal and statutory requirements not being fulfilled

• Legal fees and penalties resulting in reduced profitability

• Adverse impact to reputation
• Loss arising from defective contracts

• Company continues to monitor changes in the regulatory environment in which it operates

• Statutory declaration is made to Board each quarter
• Compliance audits are included in the scope of the internal audit programme
• Engage professional consultants to review contracts

• Risk of financial loss due to breakdown in internal controls

• Internal process failures

• Frauds
• Loss of data

• Outsource internal audits to reputed Audit Firms to review and report on the adequacy of the financial and operational controls

• Defined systems and procedures are in place to ensure compliance with internal controls
• Adequate fidelity covers are obtained

3.1. Credit Risk

Risk arising due to default of payment

• Reduce profitability
• Increase working capital

• Credit is provided only for credit approved agents. Credit approval is granted by the Credit Committee at corporate office and credit approved list has been prepared

• Actively monitor and review debtors

3.2. Exchange Rate Risk

Risk arising due to the volatility in foreign currency exchange rates

• Impact on profitability on translation of foreign currency transactions

• As far as possible enter into sales contracts with tour operators/agents in USD

• Monitor the exchange rates on a daily basis

3.3. Interest Rate Risk

Risk arising due to the volatility of fair value or future cash flows of a financial instrument fluctuating because of changes in market interest rates

• Reduce profitability

• Reduce cashflows

• Negotiate favourable terms and conditions with banks for loan facilities obtained