The Directors of The Lighthouse Hotel PLC present their Report together with the Audited Financial Statements of the Company for the year ended 31st March, 2014.
The details set out herein provide the pertinent information required by the Companies Act No. 07 of 2007, Listing Rules of the Colombo Stock Exchange and are guided by recommended best accounting practices.
Review of the Year
The Chairman’s Message, Managing Director’s Review and, the Management Discussion and Analysis describes the year’s operations, financial performance, sustainability review and details of the future development of the Company.
The Principal Activity of the Company
The principal activity of the Company is hoteliering and there has been no change in the nature of such activity during the year.
Financial Statements
The Financial Statements of the Company duly signed by Directors are given on Firnacial Reports section of this Annual Report.
Auditors’ Report
The Auditors’ Report on the Financial Statements is given under Financial Reports section.
Accounting Policies
The accounting policies adopted by the Company in the preparation of Financial Statements are given on Notes to the Financial Statements section in this Annual Report.
The accounting policies adopted are consistent with these of the previous financial year.
Interests Register
Directors’ Interests in Transactions
The Directors of the Company have made the general disclosures provided for in Section 192 (2) of the Companies Act No. 07 of 2007. The related party disclosures and the Directors of each of those related parties are given under Annexes section of this Annual Report.
Directors’ Interests in Shares
There were no changes in the Directors’ shareholdings during the year.
Jetwing Hotels Management Services (Pvt) Ltd., of which Messrs N.J.H.M. Cooray and N.T.M.S. Cooray are also Directors, purchased 362,216 shares in the Company during the year.
Jetwing Eco Holidays (Pvt) Ltd., of which Messrs N.J.H.M. Cooray, R.A.E. Samarasinghe and C.S.R.S. Anthony are also Directors, purchased 73,385 shares in the Company during the year.
Mercantile Investments and Finance PLC and The Nuwara Eliya Hotels Company PLC, of which Ms. A.M. Ondaatjie is a Director, purchased 80,177 shares and 500,000 shares respectively in the Company during the year.
Directors’ Remuneration
The aggregate emoluments paid to the Non-Executive Directors during the year, amounting to Rs. 1,596,000/- is reflected on Note 24.1 to the Financial Statements.
Insurance and Indemnity
The Company has obtained a Corporate Guard insurance policy from CHARTIS Insurance Ltd. to indemnify Directors and Officers (D&O) of the Company. The policy is extended worldwide excluding USA and Canada with a total cover of Rs. 25,000,000/-. The premium is Rs. 420,000/- +Taxes.
Directors’ Shareholding
| Directors | Directors’ Direct Shareholding | |
| As at 31st March, 2014 |
As at 1st April, 2013 |
|
| Mr. N.J.H.M. Cooray | 748,803 | 748,803 |
| Ms. N.T.M.S. Cooray | 789,803 | 789,803 |
| Mr. R.A.E. Samarasinghe | 50,000 | 50,000 |
| Mr. C.S.R.S. Anthony | 1,000 | 1,000 |
| Mr. R. de Silva | 10,000 | 10,000 |
| Mr. A.T.P. Edirisinghe | 1,000 | 1,000 |
Directorate
Names of the Directors who held office during the financial year are given below:
Executive Directors
Mr. N.J.H.M. Cooray (Chairman), Mr. R.A.E. Samarasinghe (Managing Director), Mr. C.S.R.S. Anthony.
Non-Executive Directors
Ms. N.T.M.S. Cooray, Ms. A.M. Ondaatjie.
Non-Executive Independent Directors
Mr. N. Wadugodapitiya, Mr. R. de Silva, Mr. E.P.A. Cooray, Dr. C. Pathiraja, Mr. T. Nadesan, Mr. A.T.P. Edirisinghe.
Donations
At the last Annual General Meeting shareholders authorized Directors to determine contributions to donations. The donations given during the year amounted to Rs. 769,362/-.
Auditors
Messrs Ernst & Young, Chartered Accountants are deemed reappointed, in terms of Section 158 of the Companies Act No. 07 of 2007 as Auditors of the Company.
A resolution proposing the Directors be authorized to determine the remuneration of the Auditors will be submitted to the Annual General Meeting.
Auditors’ Remuneration
Messrs Ernst & Young were paid Rs. 567,010/- as audit fees and expenses by the Company. In addition, they were paid Rs. 402,160/- by the Company for non-audit related work, which consisted mainly of tax consultancy and advisory.
As far as the Directors are aware, the Auditor does not have any relationship (other than that of an Auditor) with the Company other than those disclosed above. The Auditors also do not have any interests in the Company.
Turnover
The turnover for the year was Rs. 681,104,565/- (2012/13 - Rs. 614,727,300/-).
Profit/(Loss)
| 2014 | 2013 | |
| Rs. | Rs. | |
| Net Profit/(Loss) for the year after providing for all expenses, known liabilities and depreciation of fixed assets was | 122,319,393 | 112,153,962 |
| Other Comprehensive Income | (3,518,460) | (1,449,070) |
| Final Dividend for 2013 - Rs. 2/- per share (2012 - Rs. 2/-) | (92,000,000) | (92,000,000) |
| Transferred to Special Reserve during the Year | – | (1,325,671,060) |
| Prior Year Retained Profit | 247,125,876 | 1,554,092,044 |
| Retained Profit at the End of the Year | 273,926,809 | 247,125,876 |
Dividends
The Board of Directors recommend a payment of final dividend of Rs. 2/- per share for financial year 2013/14 to holders of the issued ordinary shares of 46,000,000 of the Company.
Reserves
| 2014 | 2013 | |
| Rs. | Rs. | |
| Revaluation Reserve | 369,921,676 | 369,921,676 |
| Special Reserve | 1,325,671,060 | 1,325,671,060 |
| Available-for-Sale Reserve | 1,129,105 | 811,802 |
| 1,696,721,841 | 1,696,404,538 |
Revaluation Reserve
| On: Freehold Land | ||
| As at 1st April, | 369,921,676 | 357,535,737 |
| Effect of Revaluation Carried Out in 2013 | – | 12,385,939 |
| As at 31st March, | 369,921,676 | 369,921,676 |
Special Reserve
| 2014 | 2013 | |
| Rs. | ||
| As at 1st April, | 1,325,671,060 | – |
| Transferred from Retained Earnings | – | 1,325,671,060 |
| As at 31st March, | 1,325,671,060 | 1,325,671,060 |
With the adoption of SLFRS, the Company opted to reflect its building at deemed cost. The Board resolved to transfer such impact to a Special Reserve during the year 2013. This Special Reserve is available to be used in a manner determined by the Board from time to time.
Available-for-Sale Reserve
| 2014 | 2013 | |
| Rs. | Rs. | |
| As at 1st April, | 811,802 | – |
| Gain on Available-for-Sale Financial Assets | 317,303 | 811,802 |
| As at 31st March, | 1,129,105 | 811,802 |
Taxation
Pursuant to an agreement dated 29th January, 1994 entered into with Board of Investment under Section 17 of the Board of Investment Law the Company is taxed at the rate of 2% of the turnover from 1st April, 2008 for a period of 15 years in accordance with the said agreement. However, taxation on interest income earned has been provided for, based on the provisions of the Inland Revenue Act. Income tax on operation of ERA Beach, Galle Heritage Villa and Kurulubedda are computed on taxable profits at prevailing rates stipulated by the Inland Revenue Act.
Property, Plant and Equipment
The total expenditure on acquisition of Property, Plant and Equipment during the year amounted to Rs. 388,909,544/- (2013 - Rs. 110,597,298/-) details of which are given in Note 4.1 to the Financial Statements.
Market value of the land including
the valuation method and the effective date of the valuation are provided in Note 4.4 to the Financial Statements.
Stated Capital
There were no changes in the Company’s Stated Capital during the year under review. In terms of the Companies Act No. 07 of 2007, the Stated Capital of the Company was Rs. 460,000,974/- as at 31st March, 2014. (Comprising 46,000,000 ordinary shares)
Events Occurring after the Reporting Date
There have been no material events occurring after the reporting date, that require adjustments to or disclosures in the Financial Statements, other than proposed dividends which is disclosed in Note 15 to the Financial Statements.
Statutory Payments
The Directors confirm that to the best of their knowledge all taxes and dues payable by the Company and 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 as at the reporting date have been paid or provided.
Public Shareholding
As at 31st March, 2014, 25.54% of the issued capital of the Company was held by the public.
Going Concern
The Directors, after making necessary inquiries and reviews including reviews of the Company budget for the ensuing year, capital expenditure requirements, future prospects and risks, cash flows and borrowing facilities have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Therefore, the going concern basis has been adopted in the preparation of the Financial Statements.
For and on behalf of the Board,
 |
 |
| N.J.H.M. Cooray; Chairman |
R.A.E. Samarasinghe Managing Director |
Corporate Services (Pvt) Ltd.
Secretaries
The Lighthouse Hotel PLC
28th April, 2014