Annual Report 2009-2010 - Colombo Stock Exchange

Our VisionTo be in the forefront of the hospitality industry providingour valued Guest a memorable experience.Our MissionTo achieve our vision, we provide the most comprehensiveholiday package and ensure caring service to the Guest.

Our ValuesWe assure our Guests, our inspirational strength,dependable support and our high standard of service.Our business revolves around people, in building the rightatmosphere to serve our valued customers.We consider our staff the most valuable assetand strive to improve their levels ofperformance through training.Above all we pledge to safeguard theenvironment we live.

ContentsOur Vision, Our Mission Inner FrontOur Values 1Financial Highlights 4Graphical Review 5Chairman’s Review 6Annual Report of the Board of Directors 10Board of Directors & Corporate Management 15Profile of Directors 16Statement of Directors’ Responsibilities 20Corporate Governance 21Financial SectionFinancial Calendar 27Audit Committee Report 28Independent Auditors’ Report 29Balance Sheet 30Income Statement 31Statement of Changes in Equity 32Cash Flow Statement 33Notes to the Financial Statements 34Investor Information 53Five Year Summary 55Notice of Meeting 56Form of Proxy 59Corporate Information Back Inner Cover

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010FINANCIAL HIGHLIGHTSYear Ended 31 st March2010Rs.’ 0002009Rs.’ 000%ChangeResults for the YearGross RevenueCost of SalesOperating Profit Before Interest & TaxInterest ExpenseProfit/(Loss) Before TaxIncome Tax ExpenseProfit/(Loss) After TaxProfit/(Loss) Attributable to ShareholdersDividend Paid408,497(152,089)97,042(1,134)95,908(17,253)78,65578,65511,171325,565(121,091)42,070(1,769)40,301(5,710)34,59134,5912,9322526131(36)138202127127-Financial Position at the End of the YearShareholders’ Funds (Stated Capital & Reserves)Total AssetsNumber of Shares in Issue (Nos.)1,271,4001,471,50350,000,000965,2791,123,59550,000,0003231-Information Per Ordinary ShareEarnings Per Share (Rs.)Dividend Per Share (Rs.)Net Asset Per Share (Rs.)1.550.4025.430.630.2019.31146-32RatiosReturn on Shareholders’ Funds (%)Return on Total Assets (%)Year on Year EPS Growth (%)Interest Cover (Times)Dividend Cover (Times)Equity : Assets (%)Current Ratio (Times)Gearing Ratio (Times)6.195.4214685.58786.402.820.013.653.2443.1823.7811.8085.912.510.0469(67)238260(40)112(75)Market Shareholder InformationMarket Price of a Share as at 31 st March (Rs.)Market Capitalisation (Rs.’000)Price Earnings Ratio (Times)65.503,275,00042.2631.751,587,50050.40106106(16)4

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010GRAPHICAL REVIEWRevenueRs. MnRs. Mn450 90400 80350 70300 60250 50200 40150 301002050 100 02010 2009 2008 2007 2006Year2010Net Profit After Tax2009 2008 2007 2006YearRs.1.81.61.41.21.00.80.60.40.202010Earnings Per Share2009 2008 2007 2006YearRs. Mn9080706050403020100Profit Before Other Income & Interest201020092008Year20072006Rs. Mn1800160014001200100080060040020002010Total Assets2009 2008 2007Year2006Rs. Mn90807060504030201002010Tax Paid to the Govt.2009 2008 2007 2006YearRs. Mn18001600140012001000800600400200020102009Equity2008Year20072006Rs.0.200.150.100.050Dividend Per Share2010 2009 2008 2007 2006YearPercentage9.008.007.006.005.004.003.002.001.000.00Return on Total Assets2010 2009 2008 2007 2006YearFinancial SummaryFor the Year ended 31 st MarchTotal Revenue (Rs. Mn)Net Profit After Tax (Rs. Mn)Earning Per Share (Rs.)Profit Before Other Income and InterestExpenses (Rs. Mn)Total Assests (Rs. Mn)Tax Paid to the Govt. (Rs. Mn)Equity (Rs. Mn)Dividend Per Share (Rs.)Return on Total Assets (%)2010408791.55871,472591,2710.25.422009326350.63421,1245596503.242008285260.44311,1025194902.512007257200.31201,077499320.21.922006210200.29248973778402.425

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010CHAIRMAN’s reviewDeshabandu George L.A. OndaatjieOn behalf of the Board of Directors, it gives me much pleasure to present to you the Annual Reportand the Audited Financial Statements for the year ended 31 st March 2010.I am indeed pleased that with the end of war on terrorism in May last year, it has opened-up new vistas forthe travel and tourism industry in Sri Lanka. New York times in particular in early this year placed Sri Lanka asthe number one hot spot in tourism destinations amongst 31 others. Statistics indicate that the tourist arrivalsincreased by 2.1 per cent, over last year, despite the sharp drop during the first few months. The arrivals,which had been declining, year-on-year, at an average rate of 18.3 per cent during the first five monthsof 2009, increased significantly with the end of the conflict in May and grew year-on-year, at an averagerate of 20.4 per cent in the subsequent seven month period. The tourism industry in Sri Lanka received afurther boost when the adverse travel advisories issued by some countries were subsequently retracted orrelaxed as the circumstances changed. The largest number of tourist arrivals was recorded from India (83,634),followed by the UK (81,594), the Maldives (31,916) and Germany (29,654) in 2009. Increases were also notedfrom the Middle East, France, Australia, Singapore and Malaysia. Nearly 80.0 per cent of tourists visited forholiday and pleasure, while 8.6 per cent came for business purposes. Royal Palms in particular was also ableto harness and made a remarkable growth in revenues and profits during the year under review.6

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010CHAIRMAN’s review......However, we must take note that merely because the war is over the industry may not jump start on thefast track. There are many pre-conditions that have to be put in place to generate rapid growth. In orderto achieve higher rates of growth, higher levels of investment is needed. Apart from local investments to theindustry, substantial increase in foreign investments is required to achieve higher growth. Peaceful condition,political stability, good governance and policies to stabilize the economy and improve economic basicscould provide the setting for higher foreign investment. These fundamentals are imperative to attract largernumbers of tourist arrivals as envisaged in the near future.The hospitality industry is a cyclical industry and at different stages in the cycle, we must re-adjust ourstrategies, though never changing our mission of creating long-term shareholder and stakeholder value.The immense amount of knowledge and experience we had gained during the last downturn has helpedto develop our strategies to be more immune. We will continue our vigorous exercise to reduce expenses,retain liquidity and position the Company to be able to take advantage of future opportunities which willbloom once the economy rebounds.Financial HighlightsThe Company’s turnover increased by 25 per cent to Rs. 408 million compared to Rs. 325 million in theprevious year. Turnover of the leisure industry increased mainly due to improved occupancy levels, afterthe relaxation of the travel advisories which was imposed by the western countries due to civil unrest inSri Lanka. Immediately after the end of armed conflict, we saw improvement in tourist arrivals. The companyachieved an average occupancy of 80 per cent during the year compared to 71 per cent last yearrecording an increase of 09 per cent.Cost of Sales was Rs. 152 million as against the Rs. 121 million compared to the previous year. However,Cost of Sales to Turnover has decreased by 0.02 per cent this was mainly due to increased turnover duringthe fiscal period under review.Gross Profit of the Company for the year under review was Rs. 256 million as against Rs. 204 million in theprevious year, which is a 25 per cent increase against last year.Other Operating Income of the Company increased from a loss of Rs. (424,172) to an income of Rs. 10.3million, mainly due to positive exchange gain and interest income.General and Administration expenses of the Company increased by 4 per cent from Rs. 152.8 million in 2009to Rs. 158.8 million in 2010. During the financial year, management took continued initiatives to curtail thecosts in order to maximize the shareholders’ wealth.Marketing Expenses increased from Rs. 8.4 million to Rs. 9.9 million during the financial year under review. Thisincrease was mainly due to sales promotion, discounts and commission, music and entertainment.Finance Cost decreased from Rs. 1.7 million to Rs. 1.1 million, a decrease of 36 per cent. This substantialdecrease is due to surplus funds and improved working capital management.7

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010CHAIRMAN’s review......The total tax provision for the year has increased to Rs. 17.2 million as against Rs. 5.7 million. The higher taxprovision is mainly due to the higher profit recorded during the financial year.The Company recorded a profit of Rs. 78.6 million after tax for the financial year under review. The profitfor the year increased over last year from Rs. 34.5 million to Rs. 78.6 million a growth of 127 per cent due tosubstantial improvement in performance at Royal Palms.Liquidity PositionOur primary focus is to generate cash and control costs across our business to manage the hotel as efficientlyas possible during the recession. At the same time, our businesses remain focused on delivering value forthe consumer by offering quality products with great customer service at attractive prices. We believe thisapproach is serving us well and leaves us well placed when recovery begins.The liquidity position of the company had continued to improve year on year during the last few years.The current ratio recorded for the year is 2.82 times compared to the previous year’s ratio of 2.51 times.The main areas of improvement are the generation of cash by operations as well as the reduction of theworking capital cycle.The company has been able to invest Rs. 86.2 million in fixed deposits, thereby improving the liquidity ofthe Company substantially.THE FUTURE AND OUR GROWTH POTENTIALWe are optimistic about the long-term prospects for the hospitality industry and more specifically, the futureprospects for Royal Palms will not be an exception. The entire industry is looking forward for recovery butwill be subjected to competitive elements amongst its various players. However, since the industry did nothave any tendency towards development or investment in upgrading properties, our hotel is likely to be aprime beneficiary of this scenario as our hotels are high quality, well located, and enhanced by a renownedbrand such as Royal Palms Beach Hotels.• We have re-opened Orient with new gourmet menus and special promotion are been carried out tostimulate sales and have been very successful.• Royal Palms became a very popular destination for foreign weddings and performed more than 17weddings for the year 2009/2010.• Also few defect kitchen equipments were changed to face the challenges in the field of culinary withinstallation of modern kitchen equipments.• We have started to revamp our back of the house in order to be in par with the rest of the 5 star hoteloperations.• Present Coffee Shop has been converted in to a grill room and open for dinner with wide varieties ofSteaks from all over the world.8

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010CHAIRMAN’s review......• Special Theme nights introduced with authentic food from seven continents.Eg. Mexican, Indian, Arabic, Chinese, Italian, Sri Lanka etc.• More than 14 Community development projects completed with the 12 months in areas of PediatricianWard at the Nagoda General Hospital, donating medical equipments to the hospital, distributingspectacles, distributing wheel chairs and helping the community in educating them on many aspectsalong with other professional bodies• Our kitchen staff participated in Culinary Art 2009 competition and won 10 Bronze Medals and 8 SilverMedals being placed11th in the entire Island.Capital ExpenditureThe Company continued its investment on the infrastructure development in the Royal Palms during theyear. The Company invested on the revived renovation and construction of the banquet hall, from whichthe company expects to increase further cash flows. The timely initiative of the Managing Director in thisregard is commendable.• The banquet hall renovation on the existing structure for 250 pax is due to complete in September2010.• Water circulation system was introduced in order to reduce cost on energy from the previous oldpumps that had been used for the last 12 years.• Computer software upgrading of the Front Office with Reservation, and POS giving easy access to allHead Of Departments to monitor management information related to revenues.• We have revamped the laundry operation by installing a new dryer and a washing machine in orderto reduce the operations to one shift thus saving the entire energy cost on the 2nd shift.ConclusionWe believe our plan for fiscal year 2011 reinforces and extends the progress made to date in transformingthe Company. And in doing so, it puts Royal Palms in an even more confident path to sustaining strongprofitable sales growth, becoming a special place and realizing our potential to excel. Thank you for beinga shareholder and placing your trust in our ability to build a great company that will perform strongly andethically for years to come.Deshabandu George L.A. OndaatjieChairman1 st August 20109

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010ANNUAL REPORT OF THE BOARD OF DIRECTORSThe Directors have pleasure in submitting their report, together with the Audited Accounts for theFinancial Year ended 31 st March 2010.Review of the YearThe Chairman’s Report on pages 6 to 9 contains a review of the operations during the FinancialYear.Principal ActivityThe principal activity of the Company, which is hotelliering, remained unchanged.Corporate GovernanceThe Board of Directors of the Company is responsible for the governance of the Company, whichinclude setting out strategic aims, providing leadership and supervising the management. TheCorporate Governance practices of the Company are given on Pages 21 to 25.TurnoverThe net turnover for the year was Rs. 408,496,615/- (2008/09 - Rs. 325,565,366/-).Profit & Loss AccountProfit Before TaxLess: Provision for TaxationNet Profit for the YearUnappropriated Profit Brought ForwardDividends PaidRedemption of Preference SharesProfit Available for Appropriation31.03.201095,908,138(17,252,975)78,655,163136,840,998(11,406,335)(20,000,000)184,089,82631.03.200940,301,459(5,710,011)34, 591,448120,717,530(3,467,980)(15,000,000)136,840,998DividendsThe following dividends were paid to the Preference Shareholders at the point of redemption inrespect of the 10.75% Cumulative Redeemable Preference Shares held by them.Accrued Period Amount (Rs.) Date of Payment20/02/2009 - 20/05/2009 132,534/- 20 th May 200920/02/2009 - 15/10/2009 700,958/- 15 th October 200920/02/2009 - 15/03/2010 572,842/- 15 th March 2010The Directors recommend a first and final dividend of Rs. 0.40 per share for the ordinary shareholdersthis Financial Year.10

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010ANNUAL REPORT OF THE BOARD OF DIRECTORS......Capital ExpenditureThe total capital expenditure incurred on the acquisition of fixed assets during the year amountedto Rs. 25,844,118/- (2009 - Rs. 27,108,679/-) details of which are given in Note 4.5 to the FinancialStatements.Property, Plant & EquipmentThe details of Property, Plant & Equipment of the Company are shown in Note 4 to the FinancialStatements.ReservesThe movements during the year of Capital and Revenue Reserves are shown in the Statement ofChanges in Equity on page 32.DonationsDuring the year donations amounting to Rs. 59,000/- (2009 – Rs. 69,161/-) were made by the Companyto various charities.Post Balance Sheet EventsNo Circumstances have arisen since the Balance Sheet date, which would require adjustment to ordisclosure in the Accounts.DirectorsThe names of the Directors are shown on page 15.In terms of Section 90 of the Articles of Association, Mr. N.H.V. Perera, Mr. A. de Zoysa andMr. M.U. Maniku retire by rotation and being eligible offer themselves for re-election.Special notice has been given of the intention to propose ordinary resolutions as set out in the Noticeof Meeting to re-elect Mr. G.L.A. Ondaatjie, Mr. V. Balasubramaniam and Mr. M.J. Fernando as Directorsof the Company in terms of Section 211 of the Companies Act No. 07 of 2007.Board CommitteesThe following members of the Board serve on the Audit Committee.Mr. N.H.V. PereraMr. R.S. WeerawardaneMr. M.U. Maniku (Alternate Mr. W.P. Hettiarachchi)11

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010ANNUAL REPORT OF THE BOARD OF DIRECTORS......The report of the Audit Committee is given on page 28 of this report.The following members of the Board serve on the Remuneration Committee.Mr. N.H.V. PereraMr. R.S. WeerawardenaMr. M.U. Maniku (Alternate Mr. W.P. Hettiarachchi)Directors’ Interest RegisterThe Company maintains an Interest Register in compliance with the Companies Act No. 07 of2007.Directors Interest in ContractsThe Directors of the Company have made the general disclosures provided for in Section 192 (2) ofthe Companies Act No. 07 of 2007. The related party disclosures and the Directors of each of thoserelated parties are given on page 51.Directors RemunerationThe aggregate emoluments paid to the Directors during the year, amounted to Rs. 406,000/-.Director’s ShareholdingsAs at 31 st March 2010 2009Mr. G.L.A. OndaatjieMs. A.M. OndaatjieMr. V. BalasubramaniamMr. G.G. OndaatjieMr. T.J. OndaatjieMr. J.P. Van TwestMr. M. KeerthiratneMr. R.S. WeerawardenaMr. A.N. EsufallyMr. M.U. ManikuMr. M.J. FernandoMr. A. de ZoysaMr. N.H.V. PereraMr. J.D. VazTOTAL2,742,700197,50060,999167,500500,0009,515220,000192,775232,1382,552,8233,649,403625265,7951,83310,793,6062,742,700197,50060,999167,500500,0009,515220,000192,775232,1382,552,8233,649,403125265,7951,83310,793,10610.75% Redeemable Cumulative Preference Shares.Mr. G.L.A. OndaatjieNil2,000,000There is no Chief Executive Officer in the Company. Mr. G.L.A. Ondaatjie and Ms. A.M. Ondaatjieserve as Jt. Managing Directors.12

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010ANNUAL REPORT OF THE BOARD OF DIRECTORS......Public HoldingThe number of Ordinary Shares held by the public as at 31st March 2010 was 7,466,088 shares(2009 - 7,461,936), which amounted to 14.93% (2009 - 14.92%) of the issued ordinary capital of theCompany.AuditorsMessrs. Ernst & Young retire and being eligible offer themselves for re-election. A resolution tore-appoint them as Auditors and authorizing the Board to fix their remuneration will be proposed atthe Annual General Meeting.The Auditors Messrs. Ernst & Young were accrued Rs. 231,568/- as audit fees for the Company.As far as the Directors are aware, the Auditor does not have any relationship (other than that of anAuditor) with the Company other than those disclosed above. The Auditors also do not have anyinterests in the Company.For and behalf of the Board,G.L.A. OndaatjieChairman/Jt. Managing DirectorAngeline OndaatjieJt. Managing DirectorMercantile Investments LtdSecretaries1 st August 2010Colombo13

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010BOARD OF DIRECTORSBoard of directors1 2 2 3 4BOD5 6 7 89 10 11 1213 1414

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010BOARD OF DIRECTORS& Corporate ManagementBOARD OF DIRECTORS& CORPORATE MANAGEMENTBOARD OF DIRECTORS1. Deshabandu G.L.A. Ondaatjie - Chairman / Joint Managing Director2. A.M. Ondaatjie BSc, MSc - Joint Managing Director3. G.G. Ondaatjie BSc - Executive Director4. T.J. Ondaatjie BSc - Executive Director5. V. Balasubramaniam - Non-Executive Director6. J.P. Van Twest - Non-Executive Director7. R.S. Weerawardena - Non-Executive Independent Director8. N.H.V. Perera - Non-Executive Independent Director9. M. Keerthiratne BArch (HK) FIA (SL) - Non-Executive Independent Director10. A.N. Esufally FCA (England & Wales) - Non-Executive Director11. M.U. Maniku - Non-Executive Independent Director(Alternate : Mr. W.P. Hettiaratchi FCA)12. M.J. Fernando - Non-Executive Independent Director(Alternate : Mr. D.C. Fernando)13. A. De Zoysa - Non-Executive Independent Director14. J.D. Vaz - Executive DirectorCORPORATE MANAGEMENTRavi KurukulasooriyaGeneral ManagerM.I. Shahabdeen FCA ACMAGroup Financial ControllerManil GalagodaGroup EngineerASCMA MIH (UK) ACQI (UK)Ravi Fernando MBA (UK) MApp Fin (Sjp) ACMIGroup AccountantJ.D. VazDirector / Manager Finance & Administration15

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010PROFILE OF DIRECTORSDeshabandu G.L.A. Ondaatjie – Chairman / Joint Managing DirectorMr. George Ondaatjie is a pioneer in the tourism sector and is the Founder of MercantileInvestments Group of Companies. He counts over 35 years extensive experience in the financialservices, tourism and trading sectors. He is presently the Chairman & Managing Director ofMercantile Investments Ltd and Chairman of ten other companies which include TangerineBeach Hotels PLC, The Nuwara Eliya Hotels Co. PLC and Nilaveli Beach Hotels (Pvt) Ltd whichwas the first planned hotel development on the East Coast of Sri Lanka. He has been the PastChairman of the Tourist Hotels Association, Pacific Asia Travel Association – Sri Lanka Chapter andFinance Houses Association. He has also been a Past Director of the Colombo Stock Exchangeand the Pacific Asia Travel Association – International Chapter. He was awarded the prestigious“Deshabandu” title by the Government of Sri Lanka in 1994 for his pioneering efforts as anEntrepreneur, Financier and Hotelier.A.M. Ondaatjie – Joint Managing DirectorMs. Angeline Ondaatjie was appointed to the Board in 1994 and appointed as Joint ManagingDirector on 01 st May 2005. She has over 15 years experience in the tourism, financial services andmanufacturing sectors. She holds a Masters Degree from the University of Texas in Austin, USA anda BSc Degree from the Massachusetts Institute of Technology USA. She is presently the ManagingDirector of Tangerine Tours (Pvt) Ltd and Joint Managing Director of Tangerine Beach Hotels PLC.She holds Directorship in ten other companies including The Nuwara Eliya Hotels Co. PLC (GrandHotel) and Nilaveli Beach Hotels (Pvt) Ltd. She is presently a Committee Member of the TouristHotels Association and a Director of Sri Lanka Convention Bureau.G.G. Ondaatjie - Executive DirectorMr. Gerard Ondaatjie was appointed to the Board in 1994. He has over 15 years experience inthe tourism, financial services and trading sectors. He holds a BSc Degree in Accountancy fromthe Arizona State University, USA. He is presently the Managing Director of The Nuwara EliyaHotels Co. PLC (Grand Hotel) and Mercantile Fortunes (Pvt) Ltd. He is also the Executive DeputyChairman of Mercantile Investments Ltd and Nilaveli Beach Hotels (Pvt) Ltd and a Director ofseven other companies which includes Tangerine Beach Hotels PLC.T.J. Ondaatjie – Executive DirectorMr. Travice Ondaatjie was appointed to the Board in 1998. He has over 15 years experiencein the tourism and the financial services sectors. He holds a BSc Degree from the Arizona StateUniversity USA. He is presently the Managing Director of Nilaveli Beach Hotels (Pvt) Ltd and aDirector of eleven other companies which include Tangerine Beach Hotels PLC and The NuwaraEliya Hotels Co. PLC (Grand Hotel).16

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010PROFILE OF DIRECTORS......V. Balasubramaniam – Non-Executive DirectorMr. Balasubramaniam was appointed to the Board in 1992 and counts over 50 years of experiencein trade and industry. He is the Chairman of N. Vaitilingam & Co. Ltd., Ceylon GalvanizingIndustries Ltd and Tinpak (Pvt) Ltd He is also a Director of Confifi Hotel Holdings PLC, Riverina HotelsLtd., Tangerine Beach Hotels PLC and Blue Oceanic Beach Hotels Ltd.J.P. Van Twest – Non-Executive DirectorMr. Jan Van Twest was appointed to the Board in 1994. He has over 25 years experience in thetourism sector which he gained in Sri Lanka and overseas. He is a holder of a Hotel Managementdegree from the University of Munich, Germany and is a Fellow of the Ceylon Hotel SchoolGraduates’ Association. Mr. Van Twest is also a Director of Tangerine Beach Hotels PLC andTangerine Tours (Pvt) Ltd.R.S. Weerawardena - Non-Executive Independent DirectorMr. Ranjan Weerawardena was appointed to the Board in 1994. He is a holder of a Diploma inPolymer Science & Rubber Technology from the National College of Rubber Technology, London,UK. He has over fifteen years experience in the service sector and is presently managing propertyand estates owned by the family.Mr. Weerawardena has been a Director of the Company for a period of over nine years and theBoard taking account of all the circumstances is of the opinion that he should be considered asa Non-Executive Independent Director.N.H.V. Perera – Non-Executive Independent DirectorMr. Hasantha Perera was appointed to the Board in 1999. He has been attached to LucianV. Perera Associates a legal firm for over a period of ten years. Amongst others, he is a Director ofTangerine Beach Hotels PLC, Blue Oceanic Beach Hotels Ltd and Yala Safari Beach Hotels Ltd.Mr. Hasantha Perera is a Director of Tangerine Beach Hotels PLC, which is an Associate Companyand had been a Director of the Company for over nine years. The Board taking account of all thecircumstances is of the opinion that he should be considered as a Non-Executive IndependentDirector.M. Keerthiratne – Non-Executive Independent DirectorMr. Mihindu Keerthiratne was appointed to the Board in 1994. He is a Chartered Architect byprofession and the Chairman & Managing Director of Mihindu Keerthiratne Associates (CharteredArchitects, Engineers & Urban Planners). He is a holder of a Bachelor’s Degree in Architecture17

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010PROFILE OF DIRECTORS......from the University of Hongkong and is an Honorary Fellow of the Sri Lanka Institute of Architectsand has also served as President of the Institute. He is an Associate of the Indian Institute of InteriorDesigners, Associate of the Royal Institute of British Architects and a Member of the AmericanInstitute of Architects. He is the founder Chairman of South Asian Association for Regional Cooperationof Architects (SAARCH). Mr. Keerthiratne is the founder of MIKE Group of Companiesand is the Chairman and Managing Director of several affiliated companies.Mr. Keerthiratne has been a Director of Royal Palms Beach Hotels PLC for a period of over nineyears and the Board taking account of all the circumstances is of the opinion that he should beconsidered as a Non-Executive Independent Director.A.N. Esufally – Non-Executive DirectorMr. Abbas Esufally was appointed to the Board in 1994. He is a Fellow of both the Instituteof Chartered Accountants (England & Wales) and The Institute of Chartered AccountantsSri Lanka and is an All Island Justice of Peace. He is also the Honorary Consul General of Bhutan inSri Lanka. He counts over 25 years experience in the Tourism Industry. Mr. Esufally holds Directorshipsin several companies including Hemas Holdings PLC, Stafford Hotels PLC, Hotel Sigiriya PLC,Serendib Hotels PLC, Mahaweli Reach Hotels PLC, Printcare PLC and several other companies.He has been a past President of Group Tour Agencies and a Member of the Presidential TaskForce. He serves as Director of the Sri Lanka Tourism Development Authority and Member of theOversight Committee the apex body of the Tourism Institution which came into effect after thenew Tourism Act was signed into law effective 1 st October 2007. Mr. Esufally is also a member ofthe National Advisory Council for Export Development of Sri Lanka Export Development Board,member of the Tourism Strategic Action Group (TSAG) and a Member of the Committee of theChamber of Commerce.Mr. M.U. Maniku – Non-Executive Independent DirectorMr. Maniku was appointed to the Board in 1994. He holds a Masters Degree in Agriculture fromthe University of Bangladesh. He is the Chairman of Universal Enterprises (Pvt) Ltd, a Companythat owns and operates eight tourist resorts in the Maldives and La-breez Seychelles. Mr. Manikuis the Chairman of the Maldives Association of Tourism Industry of the Republic of Maldives. Hehas over 35 years experience in the Hospitality Industry and is being considered as the pioneerin the development of tourism in Maldives.Mr. Maniku has been a Director of the Company for a period of over nine years and the Boardtaking account of all the circumstances is of the opinion that he should be considered as aNon-Executive Independent Director.18

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010PROFILE OF DIRECTORS......M.J. Fernando – Non-Executive Independent DirectorMr. Merrill J. Fernando was appointed to the Board in 1997 and is the Chairman of M.J.F. HoldingsLtd. He founded the ‘Dilmah’ tea brand which re-launched Pure Ceylon Tea in Australia twodecades ago. Dilmah is marketed in over 90 countries now. Mr. Fernando established the M.J.F.Charitable Foundation, a charity that fulfils the pledge he made to make his business a matterof human service. With that objective the M.J.F. Foundation strives to create better conditions forplantation workers, marginalized women, underprivileged children, elders and sick or destitutepeople.Mr. Merrill J. Fernando has been a Director of the Company for a period of over nine years andthe Board taking account of all the circumstances is of the opinion that he should be consideredas a Non-Executive Independent Director.A. de Zoysa – Non-Executive Independent DirectorMr. Ajita de Zoysa was appointed to the Board in 1999. He is the Chairman of Associated ElectricalCorporation Ltd. Mr. de Zoysa has held a series of leadership roles in the fields of Manufacturing,Trading and Financial Services. He is also the Chairman of Union Bank of Ceylon Ltd., a Directorof Trelleborg Lanka (Pvt) Ltd and Trelleborg Tyres Lanka (Pvt) Ltd.Mr. de Zoysa has been a Director of the Company for a period of over nine years and the Boardtaking account of all the circumstances is of the opinion that he should be considered as aNon-Executive Independent Director.J.D. Vaz – Executive DirectorMr. J.D. Vaz was appointed to the Board on 20 th December 2007. He has over 35 years experiencein the Finance & Administration field in the tourism sector. He is the Executive Director at NilaveliBeach Hotels (Pvt) Ltd and presently the Manager, Finance & Administration Manager at TangerineBeach Hotels PLC and Royal Palms Beach Hotel PLC.19

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010Statement of Directors’ ResponsibilitiesStatement Of Directors’ Responsibilities In Relation To TheFinancial StatementsThe responsibilities of the Directors, in relation to the Financial Statements of the Companydiffer from the responsibilities of the Auditors, which are set out in the Report of the Auditors onpage 29.As per the provisions of the Companies Act No. 07 of 2007 the Directors are required to prepareFinancial Statements for each financial year giving a true and fair view of the state of affairsof the Company as at the end of the financial year and of the results of its operations for thefinancial year.The Directors consider that, in preparing these Financial Statements set out through pages 30 to52 appropriate Accounting Policies have been selected and applied in a consistent manner,supported by reasonable and prudent judgement and that all applicable Accounting Standards,as relevant, have been followed.The Directors are confident that the Company has adequate resources to continue in operationand have applied the going concern basis in preparing these Financial Statements. Further,the Directors have a responsibility to ensure that the Company maintains sufficient accountingrecords to disclose with reasonable accuracy, the financial position of the Company and toensure that the Financial Statements presented comply with the Companies Act No. 07 of 2007.The Directors are also responsible for taking reasonable steps to safeguard the assets of theCompany and in this regard to give proper consideration to the establishment of appropriateinternal control systems to prevent and detect fraud and other irregularities.The Directors are confident that they have discharged their responsibilities as set out in thestatement. The Directors also confirm that to the best of their knowledge, all statutory paymentspayable by the Company as at the Balance Sheet date have been paid or where relevant,provided for.Sgd.By Order of the BoardMercantile Investments LtdSecretaries1 st August 2010Colombo20

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010Corporate GovernanceRoyal Palms Beach Hotels PLC is committed towards maintaining good Corporate Governance. Corporate Governanceis the system by which the Company is directed and controlled. A good Corporate Governance structure encouragescompanies to create value through entrepreneurism, innovation and establishes accountability and transparencycommensurate with the inherent risks and opportunities available to the Company. It influences how the objectivesof the Company are set and achieved, risks identified and managed and organizational performance optimized.The Board of Directors ensure that all activities of the Board are conducted upholding the highest standards oftransparency, accountability and ethics.Corporate Governance PrincipleLevel of ComplianceBoard CompositionRole and Function of the Board ofDirectorsThe Board comprises of 14 Directors including the Chairman andManaging Director. This includes 06 Independent Non-Executive Directors,05 Executive Directors and 03 Non-Executive Directors.The Board has overall control and oversight of the activities, the strategicdirection and the Governance of the Company. Its role includes controland oversight of the Company’s businesses, risk management andcompliance, the performance of management, approving and monitoringfinancial and other reports and capital expenditure and reporting toshareholders.The Board meets as a practice as and when required. Agendas andpapers are circulated in advance to enable informed deliberation atmeetings and decisions are made by consensus.Board IndependenceThe Responsibilities of theBoardNone of the Independent Directors have held executive responsibilities intheir capacity as Independent Directors and had submitted a declarationconfirming their Independence as at March 2010 in accordance withsection 07 of the CSE listing regulations on Corporate Governance.The Board of Directors are responsible for;• Formulating of business strategies taking into consideration theCompany’s strengths, competencies and risks• Implementing and monitoring of such strategies• Reviewing and ratifying systems in operation relating to riskmanagement, internal control, codes of conduct and compliancewith the laws, statutes and regulations• Reviewing, monitoring and ratifying all capital expenditure,acquisitions and divestitures• Monitoring Senior Management performance• Ensuring that effective information and audit systems are in place• Ensuring that due attention is given to annual and interim FinancialStatements prior to publication• Determining the quantum of the final dividend for approval by theshareholders• Approving and monitoring financial and other reporting21

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010Corporate Governance.....Corporate Governance PrincipleLevel of ComplianceCompliance with LegalRequirementsAudit CommitteeThe Board is conscious of its responsibility to the Shareholders, theGovernment and the Society at large, in which it operates and isunequivocally committed to upholding ethical behavior in conducting itsbusiness. The Board, through the Company’s Administrative and FinanceDivisions, strives to ensure that the businesses of the Company comply withthe laws and regulations of the country. The Board of Directors ensuresthat all Financial Statements are prepared in accordance with theSri Lanka Accounting Standards and conform to the requirements of theColombo Stock Exchange.The Audit Committee comprises of 03 Independent Non-ExecutiveDirectors.The members of the Audit Committee are as follows:Mr. N.H.V. Perera is an Independent Non-Executive Director on theBoard. He is the Chairman of the Audit Committee, R.S. Weerawardena,M.U. Maniku, Alternate: W.P. Hettiratchi (Chartered Accountant). TheExternal Auditors, the Group Financial Controller and the General Managerattend the Audit Committee meetings by invitation. The Audit Committeeis assisted by the Internal Audit. Internal Controls have been designed toensure transparency and good governance within the Company.The Audit Committee met several times during the year according to apredetermined agenda.Remuneration CommitteeThe Remuneration Committee consists of 03 Non-Executive IndependentDirectors. The Committee is chaired by the Non-Executive Director,N.H.V. Perera. The Group Financial Controller assists the committee byproviding the relevant information and participating in the analysis anddeliberations.The objective of the Remuneration Committee is to review and recommendthe remuneration payable to the Executive Directors.The Remuneration Committee met once during the financial year.Relationship with stakeholdersThe Board of Directors ensured that the top management team possessesright skills to deliver their best contribution towards the Company. The Boardhas empowered such employees to make operational decisions and alsoencourage them to make recommendations to the Board on areas ofstrategic importance. The vision, goals and objectives of the Companyhave been formulated and all the employees have been briefed clearlyof their specific job to achieve overall results for the Company.The Company maintains sound relationship with regulatory authorities. TheShareholders have the right to voice their concerns to Board of Directors22

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010Corporate Governance......Corporate Governance PrincipleLevel of Complianceand exercise their votes at Annual General Meetings/ExtraordinaryGeneral Meetings of the Company. The notice of such meetings, andrelevant documents as required by the Companies Act No. 07 of 2007and Listing Rules of Colombo Stock Exchange are circulated to all theshareholders at least 15 working days prior to the date of the meeting.DisclosureGoing ConcernCompliance ReportOther InformationThe Board’s policy is to disclose all relevant information to stakeholders,within the bounds of prudent commercial judgement, in additionto preparing the Financial Statements in accordance with Sri LankaAccounting Standards, the Companies Act No. 07 of 2007 and inconformity with Stock Exchange disclosure requirements.The Board of Directors after reviewing the financial position and cash flowof the Company is confident that the company has adequate resourcesto continue in operation for the foreseeable future. Accordingly, the“Going Concern Basis” has been adopted in the preparation of theFinancial Statements.The Directors confirm that to the best of their knowledge all taxes andduties payable by the Company and all contribution levies and taxespayable on behalf of and in respect of the employees of the Companyand all other known statutory dues payable as at the Balance Sheet datehave been paid or are provided for in the accounts.The Annual Report contains statements from the Board including theresponsibilities of the Directors for the preparation of the FinancialStatements and the Directors are of the view that they have dischargedtheir responsibilities as set out in this statement. The performance of theCompany during the year under review and the future prospects of theCompany are covered in the Chairman’s review of operations.23

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010Corporate Governance.....Levels of compliance with the CSE’s New Listing Rules - Section 7.10, Rules on Corporate Governance are given inthe following table.Rule No. Subject Applicable Requirement ComplianceStatusDetails7.10.1 (a) Non-ExecutiveDirectorsAt least one third of the totalnumber of Directors shouldbe Non-Executive DirectorsCompliantNine out of fourteenDirectors areNon-ExecutiveDirectors7.10.2 (a) IndependentDirectorsTwo or one third of Non-Executive Directors,whichever is higher shouldbe IndependentCompliantSix out of the NineNon-Executive Directorsare IndependentNon-ExecutiveDirectors7.10.2 (b) IndependentDirectorsEach Non-Executive Directorshould submit a declarationof Independence/Non-Independencein the prescribed formatCompliantNon-ExecutiveDirectors havesubmitted thedeclaration7.10.3 (a) Disclosurerelating toDirectorsThe Board shall annuallymake a determination as tothe independence or otherwise of the Non-ExecutiveDirectors and names ofIndependent Directorsshould be disclosed in theAnnual ReportCompliantPlease refer ‘Board ofDirectors’ on page 15.7.10.3 (c) Disclosurerelating toDirectorsA brief resume of eachDirector should be includedin the Annual Reportincluding the areas ofExpertiseCompliant Please refer ‘Profile ofDirectors’ on pages 16 to 19.7.10.3 (d) Disclosurerelating toDirectors7.10.5 RemunerationCommitteeForthwith provide a briefresume of new Directorsappointed to the Boardwith details specified in7.10.3 (a), (b) and (c) to theExchangeA listed company shall havea Remuneration CommitteeCompliant A brief resumeprovided to theExchangeCompliant RemunerationCommittee consists of ThreeNon-Executive Directors &Alternate Director (CharteredAccountant).24

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010Corporate Governance......Rule No. Subject Applicable Requirement ComplianceStatusDetails7.10.6 AuditCommitteeThe Company shall have anAudit CommitteeCompliantNames of themembers of the AuditCommittee are statedon page 28.7.10.6 (a) CompositionofAuditCommitteeShall comprise of Non-Executive Directors amajority of whom will beindependentCompliantAudit Committeeconsists of ThreeIndependent Non-ExecutiveDirectors (& AlternateChartered Accountant)7.10.6 (a) AuditCommitteeFunctionsA Non-Executive Directorshall be appointed as theChairman of the CommitteeCompliantChairman of the AuditCommittee is anIndependentNon-Executive DirectorCEO & Chief Financial Officershould attend AuditCommittee MeetingsCompliantGroup FinancialController and GeneralManager attendedmeetings by invitationThe Chairman of the AuditCommittee or one membershould be a member of aprofessional accounting bodyCompliantOne member of the AuditCommittee is a CharteredAccountant25

PICTURE

FINANCIALSECTIONFINANCIAL SECTIONAudit Committee Report 28Independent Auditors’ Report 29Balance Sheet 30Income Statement 31Statement of Changes in Equity 32Cash Flow Statement 33Notes to the Financial Statements 34FINANCIALFinancial Calendar 2009/2010Eighteenth Annual General Meeting 23 rd September 2010Extra Ordinary General MeetingCalendar23 rd September 2010Seventeenth Annual General Meeting 25 th September 2009Interim Financial Statements in terms ofRule 8.3 of the Colombo Stock ExchangeFor the three months ended 30 th June 2009 (unaudited) 29 th July 2009For the six months ended 30 th September 2009 (unaudited) 03 rd November 2009For the nine months ended 31 st December 2009 (unaudited) 01 st February 2010For the twelve months ended 31 st March 2010 (unaudited) 07 th May 2010

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010audit commitTee ReportThe Audit Committee functioned during the year to oversee the internal audit function, mattersrelating to regulatory compliance, business risk and control issues in accordance with the rules ofCorporate Governance.The Audit Committee of the Company comprises of three Independent Non-Executive DirectorsMr. N.H.V. Perera, Mr. R.S. Weerawardena, Mr. M.U. Maniku, (alternate Director Mr. W.P. Hettiaratchi(a Chartered Accountant). The External Auditor, for the Chief Executive Officer (The GeneralManager) and the Group Financial Controller attend meetings of the Audit Committee.The Audit Committee meetings were held as follows and operated within its purview according toa pre determined agenda.1. 26 th May 20092. 29 th July 20093. 9 th November 20094. 12 th February 2010As far as the Directors are aware, the Auditor does not have any relationship (other than of anAuditor) with the Company. The Auditors also do not have interest in the Company. For the saidreasons the Committee determined that the Auditor is independent.The Audit Committee has recommended to the Board of Directors that M/s Ernst & Young bere-appointed as External Auditors for the Financial Year ending 31 st March 2011 subject to theapproval of the shareholders at the Annual General Meeting.N.H.V. PereraChairman – Audit Committee1 st August 2010Colombo28

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010Independent Auditor’s ReportChartered Accountants201 De Saram PlaceP.O. Box 101Colombo 10Sri LankaTelephone : (0) 11 2463500Fax Gen : (0) 11 2697369Tax : (0) 11 5578180eysl@lk.ey.comINDEPENDENT AUDITOR’S REPORTTO THE SHAREHOLDERS OF ROYAL PALMS BEACH HOTELS PLCReport on the Financial StatementsWe have audited the accompanying Financial Statements of Royal Palms Beach Hotels PLC (“Company”), whichcomprise the balance sheet as at 31 st March 2010, and the Income Statement, Statement of Changes in Equityand Cash Flow Statement for the year then ended, and a summary of significant accounting policies and otherexplanatory notes.Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these Financial Statements in accordance withSri Lanka Accounting Standards. This responsibility includes: designing, implementing and maintaining internal controlrelevant to the preparation and fair presentation of Financial Statements that are free from material misstatement,whether due to fraud or error; selecting and applying appropriate accounting policies; and making accountingestimates that are reasonable in the circumstances.Scope of Audit and Basis of OpinionOur responsibility is to express an opinion on these Financial Statements based on our audit. We conducted our auditin accordance with Sri Lanka Auditing Standards. Those standards require that we plan and perform the audit toobtain reasonable assurance whether the financial statements are free from material misstatement.An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the FinancialStatements. An audit also includes assessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statement presentation.We have obtained all the information and explanations which to the best of our knowledge and belief werenecessary for the purposes of our audit. We therefore believe that our audit provides a reasonable basis for ouropinion.OpinionIn our opinion, so far as appears from our examination, the Company maintained proper accounting records for theyear ended 31 st March 2010 and the Financial Statements give a true and fair view of the Company’s state of affairsas at 31 st March 2010 and its profit and cash flows for the year then ended in accordance with Sri Lanka AccountingStandards.Report on Other Legal and Regulatory RequirementsIn our opinion, these Financial Statements also comply with the requirements of Section 151(2) of the Companies ActNo. 07 of 2007.1 st August 2010ColomboPartners :A D B Talwatte FCA FCMA M P D Cooray FCA FCMA R N De Saram aca fcma Ms. Y A De Silva ACA W R H Fernando FCA FCMAW K B S P Fernando FCA ACMA A P A Gunasekera FCA FCMA A Herath FCA D K Hulangamuwa FCA FCMA LLB (Lond)H M A Jayesinghe FCA FCMA Ms. G G S Manatunga ACA Ms. L C G Nanayakkara FCA FCMA B E Wijesuriya ACA ACMA29

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010balance sheetAs at 31 st MarchNote2010Rs.2009Rs.ASSETSNon-Current AssetsProperty, Plant & Equipment41,246,456,2351,246,456,235967,531,314967,531,314Current AssetsInventoriesTrade and Other ReceivablesAmounts Due from Related PartiesCash and Bank BalancesTotal Assets5677,771,563107,167,05486,463110,021,531225,046,6111,471,502,8467,759,22469,393,8617,766,09671,144,153156,063,3341,123,594,648EQUITY AND LIABILITIESCapital and ReserveStated CapitalRevaluation ReserveRetained EarningsTotal Equity89521,583,448565,726,735184,089,8261,271,400,009521,583,448306,854,992136,840,998965,279,438Non-Current LiabilitiesInterest Bearing Loans and BorrowingsDeferred Tax LiabilitiesDefined Benefit LiabilityCurrent LiabilitiesTrade and Other PayablesAmounts Due to Related PartiesInterest Bearing Loans and BorrowingsTotal Equity and Liabilities10151112131014,020,10496,850,0719,320,186120,190,36266,541,2484,492,9348,878,29379,912,4751,471,502,84614,963,24272,484,6338,685,71496,133,58948,732,9172,429,78011,018,92462,181,6211,123,594,648These Financial Statements are in compliance with the requirements of the Companies Act No. 7 of 2007.M.I. Shahabdeen - Group Financial ControllerThe Board of Directors is responsible for the preparation and presentation of these Financial Statements.Signed for and on behalf of the board by;G.L.A. Ondaatjie - Chairman/Jt. Managing DirectorA.M. Ondaatjie - Jt. Managing DirectorThe Accounting Policies and Notes on pages 34 through 52 form an integral part of the Financial Statements.1 st August 2010Colombo30

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010income statementYear Ended 31 st MarchNote2010Rs.2009Rs.Revenue3408,496,615325,565,366Cost of Sales(152,089,105)(121,091,098)Gross Profit256,407,510204,474,268Other Income and Gains1610,359,888(424,172)Selling and Distribution Costs(9,938,868)(8,419,987)Administrative Expenses(158,821,673)(152,787,315)Other Expenses(964,784)(772,311)Finance Cost17(1,133,935)(1,769,024)Profit Before Taxation1895,908,13840,301,459Income Tax Expense15(17,252,975)(5,710,011)Profit for the Year78,655,16334,591,448Earnings Per Share-Basic191.550.63Dividends Per Share0.400.20The Accounting Policies and Notes on pages 34 through 52 form an integral part of the Financial Statements.31

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010STATEMENT OF CHANGES IN EQUITYYear Ended 31 st March 2010StatedCapitalRs.RevaluationSurplusRs.RetainedEarningsRs.TotalRs.As At 31 st March 2008521,583,448306,575,867120,717,530948,876,845Net Profit for the Year--34,591,44834,591,448Preference Dividends 2007/08 - Final--(536,027)(536,027)Preference Dividends 2008/09--(2,931,953)(2,931,953)Redemption of Preference Shares--(15,000,000)(15,000,000)Tax effect of Revaluation Surplus-279,125-279,125As at 31 st March 2009521,583,448306,854,992136,840,998965,279,438Net Profit for the Year--78,655,16378,655,163Surplus on Revaluation of Property,Plant & Equipment-278,815,022-278,815,022Preference Dividends 2008/09 - Final--(235,616)(235,616)Preference Dividends 2009/10--(1,170,719)(1,170,719)Ordinary Dividends--(10,000,000)(10,000,000)Redemption of Preference Shares--(20,000,000)(20,000,000)Tax Effect of Revaluation Surplus-(19,943,279)-(19,943,279)As at 31 st March 2010521,583,448565,726,735184,089,8261,271,400,009The Accounting Policies and Notes on pages 34 to 52 form an integral part of the Financial Statements.32

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010cash flow statementYear Ended 31 st MarchCash Flows From Operating ActivitiesNote2010Rs.2009Rs.Profit Before Taxation95,908,13840,301,459Adjustments for :DepreciationInterest IncomeFinance Costs(Surplus)/Deficit on Year End Foreign Currency Conversion(Gain)/Loss on Disposal of Property, Plant & EquipmentProvision for Retirement Benefit ObligationsOperating Profit Before Working Capital Changes(Increase)/Decrease in Inventories(Increase)/Decrease in Trade and Other Receivables(Increase)/Decrease in Amounts Due from Related PartiesIncrease/(Decrease) in Trade and Other PayablesIncrease/(Decrease) in Amounts Due to Related PartiesCash Generated from OperationsFinance Costs PaidRetirement Benefit Costs PaidNet Cash From Operating Activities181617161825,734,219(7,247,548)1,133,935(3,112,340)-1,704,782114,121,186(12,339)(35,363,775)7,679,6309,657,0472,063,15498,144,903(1,133,935)(1,070,310)95,940,65825,158,179(2,431,500)1,769,0244,056,928(1,201,256)939,50968,592,343581,528(11,864,639)(964,418)(754,554)762,47356,352,733(1,769,024)(1,709,390)52,874,319Cash Flows From/(Used in) Investing ActivitiesAcquisition of Property, Plant & EquipmentInterest ReceivedDisposal of Property, Plant & EquipmentNet Cash Flows Used in Investing Activities4.5(25,844,118)3,270,941-(22,573,177)(27,108,679)2,431,5001,574,181(23,102,998)Cash Flows Used in Financing ActivitiesRedemption of Preference ShareRepayment of Interest Bearing Loans & BorrowingsDividends Paid - on Preference SharesDividends Paid - on Ordinary ShareNet Cash Flows Used in Financing Activities8.214.1(20,000,000)833,826(1,406,335)(10,000,000)(30,572,509)(15,000,000)(3,124,995)(3,467,980)-(21,592,975)Net Increase/(Decrease) in Cash and Cash Equivalents42,794,9728,178,346Cash and Cash Equivalents at the beginning of the YearCash and Cash Equivalents at the end of the Year202060,578,661103,373,63452,400,31560,578,661The Accounting Policies and Notes on pages 34 to 52 form an integral part of the Financial Statements.33

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010notes to the financial statements1. CORPORATE INFORMATION1.1 GeneralRoyal Palms Beach Hotels PLC (“Company”) is a limited liability company incorporated and domiciled inSri Lanka. The registered office of the Company is located at No. 236, Galle Road, Colombo 03, and theprincipal place of business is situated at St. Abrew’s Drive Road, Waskaduwa, Kalutara North.1.2 Principal Activities and Nature of OperationsDuring the year, the principal activity of the Company was hoteliering.1.3 Date of Authorisation for IssueThe Financial statements of Royal Palms Beach Hotels PLC for the year ended 31 st March 2010 were authorizedfor issue in accordance with a resolution of the Board of Directors on 1 st August 2010.2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES2.1 Basis of PreparationThe Financial Statements have been prepared on a historical cost basis, except for the revaluation of certainProperty, Plant & Equipment. The Financial Statements are presented in Sri Lankan Rupees.The preparation and presentation of these Financial Statements is in compliance with the CompaniesAct No. 07 of 2007.2.1.1 Statement of ComplianceThe Financial Statements of Royal Palms Beach Hotels PLC have been prepared in accordance withSri Lanka Accounting Standards (SLAS).2.1.2 Going ConcernThe Directors have made an assessment of the Company’s ability to continue as a going concern and theydo not intend either to liquidate or to cease trading.2.1.3 Comparative InformationThe Accounting Policies have been consistently applied by the Company and, are consistent with thoseused in the previous year. Previous year figures and phases have been rearranged wherever necessary inconformity with the current year’s presentation.34

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010notes to the financial statements......2.1.4 Change in Accounting PoliciesThe following standards have been issued by the Institute of Chartered Accountants of Sri Lanka and areeffective for the accounting periods on the dates specified below.a) Sri Lanka Accounting Standard 44 - Financial Instruments; Presentation (SLAS 44) andSri Lanka Accounting Standard 45 - Financial Instruments; Recognition & Measurement (SLAS 45)SLAS 44 and 45 become effective for financial years beginning on or after 1 st January 2011. Accordingly,the Financial Statements for the year ending 31 st March 2012 will adopt SLAS 44 and 45, for the firsttime. These two standards together provide comprehensive guidance on identification, classification,measurement and presentation of financial instruments (including Derivatives) into financial assets,financial liabilities and equity instruments.In order to comply with the requirements of these standards, the Company is in the process of assessingthe effect of adoption of the aforesaid two standards. Due to the complex nature of the effect of thesestandards the impact of adoption is not estimable as at the date of publication of these FinancialStatements.b) Sri Lanka Accounting Standard 39 - Share Based Payments (SLAS 39)SLAS 39-Share based payments is effective for periods beginning on or after 1 st January 2010 and willbe first adopted in the year ending 31 st March 2011. This standard require an expense to be recognizedwhere the Company buys goods or services in exchange for shares or rights over shares (equity–settledtransactions), or in exchange for other assets equivalent in value to a given number of shares or rightsover shares (cash-settled transactions). For equity-settled share-based payment transactions, theCompany is required to apply SLAS 39 to grants of shares, share options or other equity instruments thatwere granted after 1 st January 2010.The Company is in the process of evaluating to impact of this standard, and the impact of the same isnot currently estimable as at the date of the publication of these Financial Statements.2.2 SIGNIFICANT ACCOUNTING JUDGEMENTSJudgementsIn the process of applying the Company’s Accounting Policies, management has made judgements, apartfrom those involving estimations, which has the most significant effect on the amounts recognized in theFinancial Statements.Impairment Losses on Receivables and Other ReceivableCompany reviews its receivables and other receivable at each reporting date to assess whether anallowance for impairment should be recorded in the Financial Statements. Judgement by the managementis required in the estimation of these amounts and such estimations are based on assumptions about anumber of factors and actual results may differ, resulting in future changes to the allowance.35

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010notes to the financial statements......Estimates and AssumptionsThe key assumptions concerning the future and other key sources of estimation uncertainty at the BalanceSheet date, that have a significant risk of causing a material adjustments to the carrying amounts of assetsand liabilities within the next financial year are discussed below. The respective carrying amounts of assetsand liabilities are given in related Notes to the Financial Statements.Fair Value of Property, Plant & EquipmentThe Property, Plant & Equipment of the Company are reflected at fair value. When current market prices ofsimilar assets are available, such evidences are considered in estimating fair values of theses assets. In theabsence of such information the Company determines within a reasonable fair value estimates, amountsthat can be attributed as fair values, taking in to consideration discounted cash flow projections based onestimates, derived evidence such as current market rents for similar properties and using discount rates thatreflect uncertainty in the amount and timing of cash flows.Defined Benefit PlansThe Defined Benefit Obligation and the related charge for the year is determined using actuarial valuations.The actuarial valuations involve making assumptions about discount rates, future salary increases, mortalityrates etc. Due to the long-term nature of such obligations these estimates are subject to significantuncertainty. Further details are given in Note 11 to these Financial Statements.Useful Lives of Property, Plant & EquipmentThe Company reviews the assets’ residual values, useful lives and methods of depreciation at each reportingdate. Judgement by the management is exercised in the estimation of these values, rates, methods.2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES2.3.1 Foreign Currency TranslationThe Financial Statements are presented in Sri Lanka Rupees, which is the Company’s functional andpresentation currency. Transactions in foreign currencies are initially recorded at the functional currency rateruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies areretranslated at the functional currency rate of exchange ruling at the Balance Sheet date. All differencesare taken to profit or loss. Non-monetary items that are measured in terms of historical cost in a foreigncurrency are translated using the exchange rates as at the dates of the initial transactions.2.3.2 Retirement Benefit Obligationsa) Defined Benefit Plan – GratuityThe Company measures the present value of the promised retirement benefits for gratuity, which is adefined benefit plan with the advice of an independent professional actuary using the Projected UnitCredit Method (PUC) as required by Sri Lanka Accounting Standards No. 16, Employee Benefits (Revised2006).The item is stated under Defined Benefit Liability in the Balance Sheet.36

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010notes to the financial statements......Recognition of Actuarial Gains and LossesActuarial gains and losses are recognized as income or expenses when the net cumulative unrecognizedactuarial gains and losses at the end of the previous reporting period exceeded 10% of the higher ofthe defined benefit obligation and the fair value of plan assets at the date.The gains/losses are recognized over the expected average remaining working lives of the employeesparticipating in the plan.Recognition of Past Service Cost (Applicable only when a plan has been changed)Past Service Costs are recognized as an expense on a straight line basis over the average period untilthe benefits become vested. If the benefits have already been vested, immediately following theintroduction of, or changes to the plan, past service costs are recognized immediately.Funding ArrangementsThe Gratuity liability is not externally funded.b) Defined Contribution Plans – Employees’ Provident Fund & Employees’ Trust FundEmployees are eligible for Employees’ Provident Fund Contributions and Employees’ Trust FundContributions in line with the respective statutes and regulations. The Company contributes 12% and3% of gross emoluments of employees to Employees’ Provident Fund and Employees’ Trust Fundrespectively.2.3.3 TaxationCurrent TaxesCurrent income tax assets and liabilities for the current and prior periods are measured at the amountexpected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used tocompute the amount are those that are enacted or substantively enacted by the Balance Sheet date.The provision for income tax is based on the elements of income and expenditure as reported in theFinancial Statements and computed in accordance with the provisions of the relevant tax legislations.Current income tax relating to items recognised directly in equity is recognised in equity and not in theIncome Statement.Deferred TaxationDeferred income tax is provided, using the liability method, on temporary differences at the Balance Sheetdate between the tax bases of assets and liabilities and their carrying amounts for financial reportingpurposes.Deferred income tax liabilities are recognised for all taxable temporary differences except where thedeferred income tax liability arises from the initial recognition of an asset or liability in a transaction that isnot a business combination and, at the time of the transaction, affects neither the accounting profit nortaxable profit or loss.37

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010notes to the financial statements......Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unusedtax assets and unused tax losses, to the extent that it is probable that taxable profit will be available againstwhich the deductible temporary differences, and the carry-forward of unused tax assets and unused taxlosses can be utilised .The carrying amount of deferred income tax assets is reviewed at each Balance Sheet date and reducedto the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part ofthe deferred income tax asset to be utilised.Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to theyear when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have beenenacted or substantively enacted at the Balance Sheet date.Deferred income tax relating to items recognised directly in equity is recognised in equity and not in theIncome Statement2.3.4 Borrowing CostsBorrowing costs are recognised as an expense in the period in which they are incurred, except to the extentwhere borrowing costs that are directly attributable to the acquisition, construction, or production of anasset that takes a substantial period of time to get ready for its intended use or sale, are capitalized as partof that asset.2.3.5 InventoriesInventories are valued at the lower of cost and net realisable value, after making due allowances forobsolete and slow moving items. Net realisable value is the price at which inventories can be sold in theordinary course of business less the estimated cost of completion and the estimated cost necessary to makethe sale.The cost incurred in bringing inventories to its present location and condition are accounted using thefollowing cost formulae:Food & BeverageHousekeeping & GeneralOther ConsumablesGift Boutique InventoriesUniforms- At purchase cost on weighted average basis- At purchase cost on weighted average basis- At purchase cost on weighted average basis- At purchase cost on weighted average basis- At Purchase cost2.3.6 Trade and Other ReceivablesTrade receivables are stated at the amounts they are estimated to realise net of allowances for bad anddoubtful receivables.Other receivables and dues from Related Parties are recognised at cost less allowances for bad anddoubtful receivables.38

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010notes to the financial statements......2.3.7 Cash and Cash EquivalentsCash and cash equivalents are cash in hand, demand deposits and short-term highly liquid investments,readily convertible to known amounts of cash and subject to insignificant risk of changes in value.For the purpose of Cash Flow Statement, cash and cash equivalents consist of cash in hand and deposits inbanks net of outstanding bank overdrafts. Investments with short maturities i.e. three months or less from thedate of acquisition are also treated as cash equivalents.2.3.8 Property, Plant & EquipmentPlant & Equipment is stated at cost, excluding the costs of day to day servicing, less accumulated depreciationand accumulated impairment in value. Such cost includes the cost of replacing part of the plant andequipment when that cost is incurred, if the recognition criteria are met.Any revaluation surplus is credited to the revaluation reserve included in the equity section of the BalanceSheet, except to the extent that it reverses a revaluation decrease of the same asset previously recognisedin profit or loss, in which case the increase is recognised in profit or loss. A revaluation deficit is recognisedin profit or loss, except that a deficit directly offsetting a previous surplus on the same asset is directly offsetagainst the surplus in the asset revaluation reserve.Accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of theasset and the net amount is restated to the revalued amount of the asset. Upon disposal, any revaluationreserve relating to the particular asset being sold is transferred to retained earnings.When each major inspection is performed, its cost is recognised in the carrying amount of the plant andequipment as a replacement if the recognition criteria are satisfied.An item of Property, Plant & Equipment is derecognised upon disposal or when no future economic benefitsare expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated asthe difference between the net disposal proceeds and the carrying amount of the asset) is included in theIncome Statement in the year the asset is derecognised.The assets’ residual values, useful lives and methods of depreciation are reviewed, and adjusted if appropriate,at each financial year end.Depreciation is calculated on a straight line basis over the useful lives of the assets.The useful lives of the assets are estimated as follows:2010 2009Buildings on Freehold LandMotor VehiclesKitchen EquipmentFurniture and FittingsOffice EquipmentRecreational EquipmentHotel EquipmentComputer EquipmentLinen & FurnishingCutlery, Crockery & Glassware1006.662020201020533YearsYearsYearsYearsYearsYearsYearsYearsYearsYears1006.662020201020533YearsYearsYearsYearsYearsYearsYearsYearsYearsYears39

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010notes to the financial statements......2.3.9 ProvisionsProvisions are recognized when the Company has a present obligation (legal or constructive) as a result of apast event, where it is probable that an outflow of resources embodying economic benefits will be requiredto settle the obligation and a reliable estimate can be made of the amount of the obligation. The expenserelating to any provision is presented in the Income Statement net of any reimbursement.2.3.10 Impairment of AssetsThe Company assesses at each reporting date whether there is an indication that an asset may be impaired.If any such indication exists, or when annual impairment testing for an asset is required, the Company makesan estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’sor cash-generating unit’s fair value less costs to sell and its value in use and is determined for an individualasset, unless the asset does not generate cash inflows that are largely independent of those from otherassets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, theasset is considered impaired and is written down to its recoverable amount. In assessing value in use, theestimated future cash flows are discounted to their present value using a pre-tax discount rate that reflectscurrent market assessments of the time value of money and the risks specific to the asset. In determiningfair value less costs to sell, an appropriate valuation model is used. These calculations are corroborated byvaluation multiples or other available fair value indicators.Impairment losses of continuing operations are recognised in the Income Statement in those expensecategories consistent with the function of the impaired asset, except for property previously revalued wherethe revaluation was taken to equity. In this case the impairment is also recognised in equity up to theamount of any previous revaluation.For assets, an assessment is made at each reporting date as to whether there is any indication that previouslyrecognised impairment losses may no longer exist or may have decreased. If such indication exists, theCompany makes an estimate of recoverable amount. A previously recognised impairment loss is reversedonly if there has been a change in the estimates used to determine the asset’s recoverable amount sincethe last impairment loss was recognised. If that is the case the carrying amount of the asset is increased toits recoverable amount. That increased amount cannot exceed the carrying amount that would have beendetermined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Suchreversal is recognised in the income statement unless the asset is carried at revalued amount, in which casethe reversal is treated as a revaluation increase.2.3.11 Revenue RecognitionRevenue is recognised to the extent that it is probable that the economic benefits will flow to the Companyand the revenue and associated costs incurred or to be incurred can be reliably measured. Revenue ismeasured at the fair value of the consideration received or receivable net of trade discounts and salestaxes. The following specific criteria are used for the purpose of recognition of revenue.a) Apartment RevenueApartment Revenue is recognised on the rooms occupied on a daily basis.b) Food & Beverage RevenueFood & Beverage revenue is accounted for at the time of the sale.40

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010notes to the financial statements......c) Other Hotel Related RevenueOther Hotel Related Revenue is accounted for when such service is rendered.d) InterestInterest Income is recognized as interest accrues unless collectability is in doubt.e) OthersOther income is recognized on an accrual basis.Gains and losses arising from incidental activities to main revenue generating activities and thosearising from a group of similar transactions, which are not material, are aggregated, reported andpresented on a net basis.2.3.12 Expenditure Recognitiona) Expenses are recognised in the Income Statement on the basis of a direct association between thecost incurred and the earning of specific items of income. All expenditure incurred in the running of thebusiness and in maintaining the Property, Plant & Equipment in a state of efficiency has been chargedto income in arriving at the profit for the year.b) For the purpose of presentation of Income Statement the Directors are of the opinion that function ofexpenses method presents fairly the elements of the Company’s performances, hence such presentationmethod is adopted.41

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010notes to the financial statements......3. REVENUETotal revenue derived from rendering of services comprises the following categories :2010Rs.2009Rs.Apartment RevenueFood and Beverage RevenueOther Hotel Related RevenueLess : Tourist Development LevyTurnover Tax4. PROPERTY, PLANT & EQUIPMENT279,160,833119,697,25113,988,640412,846,724(4,170,313)(179,796)408,496,615213,443,935104,749,37010,788,457328,981,762(3,249,764)(166,632)325,565,3664.1 Gross Carrying AmountsAt Cost or ValuationBalanceAs at01.04.2009Rs.Additions/TransfersRs.Increase inRevaluationRs.Disposals/TransfersRs.BalanceAs at31.03.2010Rs.Freehold LandBuildings on Freehold LandMotor VehiclesKitchen EquipmentFurniture & FittingsOffice EquipmentRecreational EquipmentHotel EquipmentComputer EquipmentLinen & FurnishingCutlery, Crockery & GlasswareTotal Value of Depreciable Assets240,000,000615,075,07213,860,61928,748,39865,776,9962,386,1375,702,96368,519,2456,913,88316,330,6355,026,7931,068,340,741--195,000111,480387,68039,500412,9909,442,873745,9984,883,502943,57617,162,599144,000,000134,815,022---------278,815,022-(20,502,501)-------(2,407,555)(1,186,042)(24,096,098)384,000,000729,387,59314,055,61928,859,87866,164,6762,425,6376,115,95377,962,1187,659,88118,806,5824,784,3271,340,222,264In the Course of ConstructionCapital Work-in-ProgressTotal Gross Carrying Amount-1,068,340,7418,681,51925,844,118-278,815,022-(24,096,098)8,681,5191,348,903,7834.2 DepreciationAt Cost or ValuationBalanceAs at01.04.2009Rs.Charge forthe YearRs.Transfers toRevaluationReserveRs.DisposalsRs.BalanceAs at31.03.2010Rs.Buildings on Freehold LandMotor VehiclesKitchen EquipmentFurniture & FittingsOffice EquipmentRecreational EquipmentHotel EquipmentComputer EquipmentLinen & FurnishingCutlery, Crockery & GlasswareTotal Depreciation13,668,3345,832,18711,883,90122,920,0601,187,6753,252,09725,527,4805,396,0158,502,2022,639,476100,809,4276,834,1671,774,1651,439,0303,301,432120,294369,4743,505,948701,9996,346,9971,340,71325,734,219(20,502,501)---------(20,502,501)--------2,407,5551,186,0423,593,597-7,606,35213,322,93126,221,4921,307,9693,621,57129,033,4286,098,01412,441,6442,794,147102,447,54842

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010notes to the financial statements......4.3 Net Book ValuesAt Cost or ValuationFreehold LandBuildings on Freehold LandMotor VehiclesKitchen EquipmentFurniture and FittingsOffice EquipmentRecreational EquipmentHotel EquipmentComputer EquipmentLinen & FurnishingCutlery, Crockery & GlasswareTotal Carrying Amount of Property, Plant & EquipmentIn the Course of ConstructionCapital Work-in-Progress2010Rs.384,000,000729,387,5936,449,26715,536,94739,943,1841,117,6682,494,38248,928,6901,561,8676,364,9381,990,1801,237,774,7168,681,5191,246,456,2352009Rs.240,000,000601,406,7388,028,43216,864,49742,856,9361,198,4622,450,86642,991,7651,517,8687,828,4332,387,317967,531,314-967,531,3144.4 The fair value of land and buildings was determined by means of a revaluation during the financial year2009/2010 by Messrs D.S.A. Senaratne an independent valuer with reference to market based evidence. Theresults of such revaluation had been incorporated in the Financial Statements from its effective date whichis 31 st March 2010. The surplus arising from the revaluation had also been transferred to a revaluation reserveat that date.The carrying amount of revalued assets that would have been included in the financial statements had theassets been carried at cost less depreciation, is as follows:Class of AssetCostRs.CumulativeDepreciationIf Assets wereAt costRs.Net CarryingAmount2010Rs.Net CarryingAmount2009Rs.Freehold LandBuildings on Freehold Land31,416,975476,446,883507,863,858-43,680,75043,680,75031,416,975432,766,133464,183,10831,416,975437,740,467469,157,4424.5 During the financial year, the Company acquired Property, Plant & Equipment to the aggregate value ofRs. 25,844,118/- (2009 - Rs. 27,108,679/-) for cash consideration.4.6 Property, Plant & Equipment includes fully depreciated assets having a gross carrying amount ofRs. 18,020,906/- (2009 - Rs. 8,426,988/-).4.7 Land and Building with a carrying value of Rs. 1,113,387,593/- are subject to a primary mortgage to MercantileInvestments Ltd., as morefully described in Note 10 and Note 22.43

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010notes to the financial statements......5. INVENTORIESFood & Beverage InventoriesHousekeeping & General InventoriesUniformsOthers ConsumablesGift Boutique InventoriesLess: Allowances for Uniforms2010Rs.3,564,027695,0081,025,7181,402,3421,781,8668,468,961(697,398)7,771,5632009Rs.3,202,827621,8681,096,6831,174,7001,952,7668,048,844(289,620)7,759,2246. TRADE AND OTHER RECEIVABLESTrade Receivables - Related Party- OtherLess: Allowances for Doubtful Trade ReceivablesOther ReceivablesAdvances and PrepaymentsLoans to Company Officers17,724,10078,860,094(224,350)96,359,8445,332,7035,355,711118,796107,167,05419,617,69841,488,223(224,350)60,881,5714,222,7044,180,086112,50069,396,8616.1 Trade due from Related PartiesName of the CompanyRelationshipTangerine Tours Ltd.Group Entity17,724,10017,724,100--6.2 Loans to Company OfficersBalance at the Beginning of the YearLoans Granted During the YearRepayments During the YearBalance at the End of the Year112,500258,973(252,677)118,79616,000279,500(183,000)112,5007. AMOUNTS DUE FROM RELATED PARTIESName of Related PartyTangerine Beach Hotels PLCNilaveli Beach Hotels LtdGrand Hotels (Pvt) Ltd.RelationshipSignificant InvestorGroup EntityGroup Entity86,463--86,4637,618,3172,166145,6137,766,0962010 20098. STATED CAPITALNumberRs.NumberRs.Ordinary Share CapitalPreference Share Capital(Note 8.1)(Note 8.2)50,000,000-50,000,000521,583,448-521,583,44850,000,0002,000,00052,000,000501,583,49820,000,000521,583,49844

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010notes to the financial statements......8.1 Ordinary SharesNumber2010Rs.Number2009Rs.Balance at Beginning of the YearRedemption of PreferencesBalance at the End of the Year50,000,000-50,000,000501,583,44820,000,000521,583,44850,000,000-50,000,000486,583,49815,000,000501,583,4988.2 Preference SharesNumber2010Rs.Number2009Rs.Balance at Beginning of the YearRedeemed During the YearBalance at the End of the Year2,000,000(2,000,000)-20,000,000(20,000,000)-3,500,000(1,500,000)2,000,00035,000,000(15,000,000)20,000,0008.3 Rights, Preference and Restriction of Classes of Capital8.3.1 Ordinary SharesThe holders of ordinary shares are entitled to receive dividends as declared from time to time on the residueof Profits after payment of dividends to preference shareholders and are entitled to participate in anysurplus assets in a winding up. They are also entitled to one vote per share at meetings of the Company.There are no other preferences or restrictions on ordinary shares.8.3.2 Preference SharesThe holders of Preference Shares were entitled to a fixed dividend of 10.75% (2009 - 10.75%) per annumin priority to all other shares. In a winding up these shares rank in priority to all the other shares as regardscapital and accumulated dividend but are not entitled to participate in surplus assets. They do not carry theright to vote.8.3.3 Redemption of Preference SharesPreference Shares are held by Mr. G.L.A. Ondaatjie, confer the right to cumulative preference dividends andare redeemable in one or more tranches of minimum 500,000 shares per year at Rs. 10/- each commencingfrom January 2006.9. REVALUATION SURPLUSOn: Property, Plant & EquipmentAs at the Beginning of the YearRevaluation Surplus Tranfered During the YearTax Effect of Revaluation SurplusAs at the End of the Year2010Rs.306,854,992278,815,022(19,943,279)565,726,7352009Rs.306,575,867-279,125306,854,992The above revaluation surplus consists of net surplus resulting from the revaluation of Property, Plant &Equipment as described in Note 4.4. The unrealised amount cannot be directly distributed to shareholders.45

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010notes to the financial statements......10. INTEREST BEARING LOANS AND BORROWINGS2010AmountRepayableWithin 1 YearRs.2010AmountRepayableAfter 1 YearRs.2010YearRs.2009AmountRepayableWithin 1 YearRs.2009AmountRepayableAfter 1 YearRs.2009YearRs.Term Loan (Note 10.1)Bank Overdrafts (Note 20.2)2,230,3966,647,8978,878,29314,020,104-14,020,10416,250,5006,647,89722,898,397453,43210,565,49211,018,92414,963,242-14,963,24215,416,67410,565,49225,982,16610.1 Term Loan - Mercantile Investments Ltd.Balance as at Beginning of the YearRepayment/Obtained During the YearBalance as at the End of the Year2010Rs.15,416,674833,82616,250,5002009Rs.18,541,669(3,124,995)15,416,674Security:Company has pledged its land and premises as security, by way of a primary mortgage, as more fullydescribed in Note 22 and Note 4.7.11. DEFINED BENEFIT LIABILITYBalance as at the Beginning of the YearAmount Charged for the Year (Note 11.1)Payments During the YearBalance as at the End of the year8,685,7141,704,782(1,070,310)9,320,1869,455,595939,509(1,709,390)8,685,714An actuarial valuation of the gratuity was carried out as at 31 st March 2009 by Actuarial and ManagementConsultants (Pvt) Ltd., a firm of professional actuaries. The valuation method used by the actuaries to valuethe Fund is the “Projected Unit Credit Method”, recommended by SLAS No. 16 Employee Benefits.11.1 Expenses on Defined Benefit PlanCurrent Service Cost for the YearActuarial LossInterest Cost for the YearRecognition of Transitional Asset836,211-868,571-1,704,7821,127,695--(188,186)939,50911.2 Actuarial AssumptionsDiscount Rate 10%Salary Increment 12%Mortality - A 67/70 Mortality Table issued by the Institute of Actuaries LondonRetirement Age - 55 years46

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010notes to the financial statements......12. TRADE AND OTHER PAYABLESTrade PayablesSundry Payables Including Accrued Expenses13. AMOUNTS DUE TO RELATED PARTIES2010Rs.21,847,17344,694,07566,541,2482009Rs.20,906,43627,826,48148,732,917Name of the Related PartyRelationshipSecurity Ceylon (Pvt) Ltd.Tangerine Tours Ltd.Mercantile Investments Ltd.Nilaveli Beach Hotels Ltd.Grand Hotel (Pvt) Ltd.Group EntityGroup EntityGroup Entity468,5233,832,3791,415189,6171,0004,492,934426,6151,842,079161,086--2,429,78014. DIVIDEND PAID14.1 Dividend Paid on Cumulative Preference SharesThe Company has declared and paid preference dividends amounting to Rs. 1,406,335/- in respect ofpreference shares held by Mr. G.L.A. Ondaatjie (Director) for 2008/09 and 2009/10 at the rate of 10.75%.Period20.02.2009 - 31.03.200901.04.2009 - 20.05.200921.05.2009 - 15.10.200916.10.2009 - 15.03.2010DividendRs.235,616294,521653,835222,3631,406,33547

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010notes to the financial statements......15. INCOME TAXThe major components of income tax expense for theyear ended 31 March are as follows :Income StatementCurrent Income TaxCurrent Income Tax chargeUnder/(Over) Provision of current taxes in respect of prior years2010Rs.12,706,596124,2202009Rs.3,717,791(2,919,895)Deferred Income TaxDeferred Taxation Charge/(Reversal) (Note 15.2)Income Tax Expense Reported in the Income Statement4,422,15917,252,9754,912,1155,710,011Statement of Changes in EquityDeferred Income Tax Related to Items Charged or Credited Directly to Equity:Net Gain on Revaluation of Land and BuildingsIncome Tax Expense Reported in Equity19,943,27919,943,279279,125279,12515.1 A reconciliation between tax expense and the product of accounting profitmultiplied by the statutory tax rate is as follows :2010Rs.2009Rs.Accounting Profit Before Tax95,908,13840,301,459Income Tax Expense at the statutory income tax rate of 15% (2009:15%)14,386,2216,045,219Adjustments in respect to current income tax of Previous YearTax Effect of Disallowable ExpensesTax Effect of Income Exempt from Income Tax and Other Allowable CreditsOthersIncome Tax Expense at the Effective Income Tax Rate of 18% (2009 : 14%)124,2204,186,823(8,353,839)6,909,55017,252,975(2,919,895)2,752,504(167,817)-5,710,01148

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010notes to the financial statements......15.2 Deferred Tax Assets, Liabilities and Income Tax relates to the followingsDeferred Tax LiabilityCapital Allowances for Tax PurposesBalance Sheet2010Rs.53,893,29153,893,2912009Rs.49,314,79549,314,795Income Statement2010Rs.4,578,4964,578,4962009Rs.4,796,6334,796,633Revaluation of Land and Building44,493,07024,549,791--Deferred Tax AssetsDefined Benefit PlansGeneral ProvisionsDeferred Tax Expense(1,398,028)(138,262)(1,536,290)(1,302,857)(77,096)(1,379,953)(95,171)(61,166)4,422,159115,482-4,912,115Tax Effect on Revaluation SurplusNet Deferred Tax Liability96,850,07172,484,63319,943,27924,365,438278,9755,191,09016. OTHER INCOME AND GAINSInterest IncomeSurplus/ (Deficit) on year end Foreign Currency ConversionGain on Disposal of Property, Plant & Equipment7,247,5483,112,340-10,359,8882,431,500(4,056,928)1,201,256(424,172)17. FINANCE COSTInterest on Bank OverdraftsInterest on Term Loan18. PROFIT BEFORE TAXATIONStated After Charging/(Crediting)DepreciationAuditors’ remuneration (Fees & Expenses)Operation and Marketing FeeStaff Cost (including following Retirement Benefit Plan Costs)- Defined Benefit Plan Costs - Gratuity- Defined Contribution Plan Costs - EPF & ETFDonationsSurplus/(Deficit) on Year End Foriegn Currency Conversion170,148963,7871,133,93525,734,219231,56815,139,80763,439,7621,704,7826,290,57059,000(3,112,340)783,853985,1711,769,02425,158,179184,50012,351,35057,414,972939,5095,298,76369,1614,056,92819. EARNINGS PER SHAREBasic Earnings Per Share is calculated by dividing the net profit for the year attributable to ordinaryshareholders (after deducting preference share dividends) by the weighted average number of ordinaryshares outstanding during the year. The weighted average number of ordinary shares outstanding duringthe year and the previous year are adjusted for events that have changed the number of ordinary sharesoutstanding.The following reflects the income and share data used in the Basic Earnings Per Share computations.49

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010notes to the financial statements......Amount Used as the Numerator:2010Rs.2009Rs.Net Profit Before Preference DividendsDividends on Preference Shares for the YearNet Profit Attributable to Ordinary Shareholders for Basic Earnings Per Share78,655,163(1,170,719)77,484,44434,591,448(3,167,568)31,423,880Number of Ordinary Shares Used as DenominatorWeighted average number of Ordinary Shares Applicable toBasic Earnings Per ShareNumber50,000,000Number50,000,00020. CASH AND CASH EQUIVALENTS IN THE CASH FLOW STATEMENT20.1 Favourable Cash & Cash Equivalent BalancesCash & Bank BalancesInvesments in Repurchase AgreementsInvestments in Fixed DepositsInvesments in Call Deposits2010Rs.23,736,143-86,285,388-110,021,5312009Rs.52,394,994-18,749,159-71,144,15320.2 Unfavourable Cash & Cash Equivalent BalancesBank OverdraftsTotal Cash and Cash Equivalentsfor the Purpose of Cash Flow Statement(6,647,897)103,373,634(10,565,492)60,578,66121. COMMITMENTS AND CONTINGENCIES21.1 Financial CommitmentsThe Company has guaranteed financial accommodation for Tangerine Beach Hotels PLC the SignificantInvestor to a limit of Rs. 80 million (2009 - Rs. 80 million)21.2 Capital Expenditure CommitmentsThere are no capital expenditure commitments as at the Balance Sheet date.21.3 ContingenciesThere are no significant contingencies as at the Balance Sheet date.22. ASSETS PLEDGEDThe following assets have been pledged as security for liabilities.2010Nature of AssetsRs.Immovable Properties20,000,000Loan Outstanding Balance16,250,0002009Rs.20,000,00015,416,674Included underProperty, Plant& Equipment50

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010notes to the financial statements......23. EVENTS OCCURRING AFTER THE BALANCE SHEET DATEThere have been no material events occurring after the Balance Sheet date that require adjustments to ordisclosure in the Financial Statements, except followings:The Board of Directors recommend the payment of a first and final dividend of Rs. 0.40 per share on theordinary shares of the Company for the year ended 31 st March 2010 for approval by the shareholders at theAnnual General Meeting to be held on 23 rd September 2010.The Directors have confirmed that the Company satisfies the solvency test requirement under section 56 ofthe Companies Act No. 07 of 2007 for the dividend proposed. The solvency certificate has been audited bythe Auditors in respect of aforementioned dividend.24. RELATED PARTY DISCLOSURESDetails of significant related party disclosures are as follows:24.1 Transactions with Related PartiesRelated parties include entities that are affliated to the entry; including Tangerine Beach Hotels PLCTransaction with Entities having Significant Influence Over the CompanyThe following table provides the significant amount of transactions, which has been entered into with relatedparty for the relevent financial year (for information regarding outstanding balances at 31 st March 2010 and2009, refer to Notes 7 and 12 accordingly).20102009CompanyTangerine BeachHotels PLCRelationshipAssociateNature of TransactionsGoods Transferred from the CompanyGoods Transferred to the CompanyReimbursement of ExpensesOperational ExpensesFunds Transfers for SettlementsRs.10,609,299(18,798,400)5,769,522(5,246,069)(78,342)Rs.11,211,632(14,460,218)7,047,754(3,836,251)1,065,49124.2 Transactions with Key Management PersonnelKey Management Personal (KMPs) are defended as those persons having authority and responsibility forplanning, direction and controlling the activities of the Company. The key management personnel ofthe Company are the Board of Directors of the Company and personnel holding Designation GeneralManager and above. Transaction with Key Management Personnel and transactions with the Close Familymembers(CFMs) of the KPMs, if any, also have been taken into consideration in the following disclosure.2010 2009Rs.Rs.a) Key Management Personnel CompensationShort-term employee benefits406,000 972,986b) Redemption Preference Shares20,000,00015,000,000c) Payment of Preference Shares Dividends1,406,3353,467,98051

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010notes to the financial statements......24.3 Transactions with Other Related PartiesOther related parties include entities that are affliated to the entity; including Nilaweli Beach Hotels(Pvt) Ltd, Mercantile Invesment Ltd, Grand Hotel PLC, Tangerine Tours (Pvt) Ltd, Security Ceylon (Pvt) Ltd.The following table provides the significant amount of transtractions, which have been entered parties forthe relevent Financial Year (for information regarding outsatnding balance at 31 st March 2010 and 2009,refer to Notes No.07 and 12 accordingly)CompanyRelationshipNature of Transaction2010Rs.2009Rs.TangerineTours (Pvt) Ltd.Other related CompanySales Made throughTour OperationOperation andMarketing Fees PaidReimbursement of ExpensesFunds Transfers forSettlements - Receipts66,309,740(15,139,807)1,093,88354,448,95471,207,77712,351,350727,16046,793,128Nilaweli BeachHotels (Pvt) Ltd.Other related CompanyGoods Transferred fromthe CompanyReimbursement of ExpensesFunds Transfers for Settlements159,905207,79180,897139,856415,072-Grand Hotel(Pvt) Ltd.Other related CompanyGoods Transferred tothe CompanyReimbursement of ExpensesFunds Transfers for Settlements-957,2291,103,843205,550535,244-SecurityCeylon (Pvt) Ltd.Other related CompanySecurity ServicesReimbursement of ExpensesFunds Transfers for Settlements5,606,9591,302,6024,262,9894,572,000--MercantileInvesments Ltd.Other related CompanyFinance ArrangementsReimbursement of ExpensesFunds Transfers for Settlements129,1613,599,1753,888,8074,110,1661,396,608-* The Company has pledged land and premises as security, by way of a primary mortgage, to obtainRs. 20,000,000/- loan from Mercantile Investments Ltd under concessionary rate of 6% granted by the CentralBank of Sri Lanka for the Tsunami affected hotel.Further, the Company has guaranteed financial accommodation for Tangerine Beach Hotels PLC, theSignificant investor to a limit of Rs. 80 million (2009 - Rs. 80 million).52

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010investor informationShareholdingsNo. ofShareholding%Members11,00110,001100,001---->1,00010,000100,0001,000,0001,000,00086720777317206,749783,6672,270,3498,658,24838,080,9870.411.574.5417.3276.16118950,000,000100.00CategoryShareholding%CategoryShareholding%ResidentNon-Resident47,284,3242,715,67694.575.43IndividualsCorporate15,387,13834,612,86230.7769.2350,000,000100.0050,000,000100.00Shareholding2010Rs.2009Rs.Market Value Per Share as at 31 st MarchHighest Market Value Per ShareLowest Market Value Per Share65.5080.0028.0031.7541.7520.25Public HoldingNo. of Ordinary SharesPercentage7,466,08814.93%7,461,93614.92%53

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010Investor information......20 Largest ShareholdersName2010No. of Shares%2009No. of Shares%Tangerine Beach Hotels PLC14,202,78628.4114,202,78628.41Mercantile Investments Ltd.8,550,70017.108,550,70017.10Tangerine Tours (Pvt) Ltd.3,882,5757.773,882,5757.77Mr. M.J. Fernando3,649,4037.303,649,4037.30Mr. G.L.A. Ondaatjie2,742,7005.492,742,7005.49Mr. M.U. Maniku2,552,8235.112,552,8235.11Grand Hotel (Pvt) Ltd.2,500,0005.002,500,0005.00Mercantile Fortunes (Pvt) Ltd.829,8701.66829,8701.66Nilaveli Beach Hotels (Pvt) Ltd.707,3751.41707,3751.41Security Ceylon (Pvt) Ltd.650,0001.30650,0001.30City Properties (Pvt) Ltd.558,4281.12558,4281.12Mr. T.J. Ondaatjie500,0001.00500,0001.00Mrs. K.M.N. Perera414,5420.83414,5420.83N. Vaitilingam & Co. (Pvt) Ltd.362,4980.72226,2680.45Mr. J.A.S.S. Adhihetty299,0500.60299,0500.60Mr. N.H.V. Perera265,7950.53265,7950.53The Nuwara Eliya Hotels Co. PLC250,0000.50250,0000.50Mr. D.C. Fernando250,0000.50250,0000.50Ceylon Galvernizing Industries Ltd.249,9980.50249,9980.50Renuka Consultants & Services Ltd.248,7470.50--43,418,54386.8343,282,31386.5854

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010five year summaryYear2010Rs. ‘000Year2009Rs. ‘000Year2008Rs. ’000Year2007Rs. ‘000Year2006Rs. ‘000Trading ResultsTurnover Net of TaxOperating Profit Before Interest Exp.and Other IncomeProfit Before TaxationTaxation ProvisionProfit After Taxation on Ordinary Activities408,49786,68295,908(17,253)78,655325,56542,49540,301(5,710)34,591284,72330,70634,786(8,485)26,301257,11419,64725,239(5,304)19,935210,15124,42323,829(3,976)19,853Capital & ReservesStated CapitalShare DiscountCapital Redemption Reserve FundRevaluation ReserveRetained EarningsTotal Equity521,583--565,727184,0901,271,400521,583--306,855136,841965,279521,583--306,576120,718948,877540,000(13,417)10,000305,18490,248932,015545,000(13,417)5,000156,86390,106783,552Assets EmployedCurrent AssetsCurrent LiabilitiesWorking CapitalProperty, Plant & EquipmentNon-Current Liabilities225,046(79,912)145,1341,246,456(120,190)1,271,400156,063(62,181)93,882967,531(96,134)965,279136,810(61,580)75,230965,954(92,307)948,87799,425(54,814)44,611977,785(90,381)932,015105,233(41,204)64,029792,751(73,228)783,552Ratios & StatisticsGearing Ratio (Times)Current Ratio (Times)Market Price Per ShareEarnings Per ShareNet Assets Per ShareInterest Cover (Times)Return on Shareholder’s Funds (%)Return on Total Assets (%)Price Earnings Ratio0.012.8265.501.5525.4385.586.195.4242.260.042.5131.750.6318.9123.783.653.2450.400.062.2240.000.4418.2826.262.772.5190.910.061.8139.500.3117.8436.602.141.92127.420.082.5542.000.2914.7713.782.532.42144.8355

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010NOTICE OF MEETINGNOTICE IS HEREBY GIVEN that the 18 th Annual General Meeting of Royal Palms Beach Hotels PLC will be held atTangerine Beach Hotel Kalutara on 23 rd September 2010 at 12.00 noon to transact the following business:1. To receive and adopt the Report of the Directors and the Statements of Accounts for theyear ended 31 st March 2010, with the Report of the Auditors thereon.2. To re-elect Mr. N.H.V. Perera, Mr. A. de Zoysa and Mr. M.U. Maniku who retire in terms ofArticle 90 of the Articles of Association of the Company.3. To re-elect Mr. G.L.A Ondaatjie, Mr. V. Balasubramaniam and Mr. M.J. Fernando in terms ofSection 211 of the Companies Act No. 07 of 2007 and to pass the following resolutions asordinary resolutions for such purpose.a) “Resolved that the age limit of 70 years referred to in Sections 210 of the CompaniesAct No. 07 of 2007 shall not be applicable to Mr. George Lawrence AndrewOndaatjie who is 75 years of age and whose appointment as a Director of the Company beand is hereby approved and who is elected a Director of the Company not withstandingthe provisions of the said Section 210 of the Companies Act.”b) “Resolved that the age limit of 70 years referred to in Sections 210 of the CompaniesAct No. 07 of 2007 shall not be applicable to Mr. Vaitilingam Balasubramaniam who is88 years of age and whose appointment as a Director of the Company be and ishereby approved and who is elected a Director of the Company not withstandingthe provisions of the said Section 210 of the Companies Act.”c) “Resolved that the age limit of 70 years referred to in Sections 210 of the CompaniesAct No. 07 of 2007 shall not be applicable to Mr. Merrill Joseph Fernando who is 80 years ofage and whose appointment as a Director of the Company be and is hereby approved andwho is elected a Director of the Company not withstanding the provisions of the saidSection 210 of the Companies Act.”4. To appoint Auditors and authorise the Directors to determine their remuneration.56

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010NOTICE OF MEETING......5. To authorize the Directors to determine payments for charitable and other purposes foryear 2010/11.6. To declare first and final dividend of Rs. 0.40 per share for the year ended 31 st March 2010.By Order of the Board,Mercantile Investments Ltd.Secretaries1 st August 2010ColomboNotes:A member entitled to attend and vote at the meeting is entitled to appoint a Proxy (whether a member or not) toattend and vote instead of him. A Form of Proxy is enclosed with the Report for this purpose and Shareholders whoare unable to attend the meeting in person are requested to kindly complete and return such Form of Proxy in duetime, in accordance with the instructions noted on the Form of Proxy.57

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010NOTES58

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010FORM OF PROXY* I/We ………………………………………………………………………………….............................….........................................................................of ………………………………………………………………………………………….....................................................................................................being a *member/members of ROYAL PALMS BEACH HOTELS PLC, do hereby appoint;George Lawrence Andrew OndaatjieAngeline Myrese OndaatjieGerard George OndaatjieVaitilingam BalasubramaniamTravice John OndaatjieJan Peter Van TwestNawagamuwage Hasantha Viraj PereraMohamed Umar ManikuRajan Sri WeerawardenaAbbasally Nuruddin EsufallyMerrill Joseph FernandoAjita de ZoysaMihindu KeerthiratneJohn Damasene Vazor failing himor failing heror failing himor failing himor failing himor failing himor failing himor failing himor failing himor failing himor failing himor failing himor failing himor failing him…………………………………………………………………………………….....................................................................………of………………………………………………………………………………...........................................................................……as *my/our proxy to represent *me/us and to vote for *me/us on *my/our behalf at the Annual General Meeting ofthe Company to held on the 23 rd of September 2010 at Tangerine Beach Hotel Kalutara at 12.00 noon and at anyadjournment thereof, and at every poll which may be taken in consequence thereof.1. To receive and adopt the Report of Directors and theStatement of Accounts for the year ended31 st March 2010, with the Report of the Auditorsthereon.FORAGAINST2. To elect Mr. N.H.V. Perera retiring in terms of Article 90of the Articles of Association of the Company.3. To elect Mr. A. de Zoysa retiring in terms of Article 90of the Articles of Association of the Company.4. To elect Mr. M.U. Maniku retiring in terms of Article 90of the Articles of Association of the Company.5. To elect Mr. G.L.A. Ondaatjie in terms of Section211 of the Companies Act No. 07 of 2007.6. To elect Mr. V. Balasubramaniam in terms ofSection 211 of the Companies Act No. 07 of 200759

ROYAL PALMS BEACH HOTELS PLC Annual Report 2009/2010FORM OF PPROXY......7) To elect Mr. M.J. Fernando in terms of Section 211of the Companies Act No. 07 of 2007.8) To appoint Auditors and authorize Directors todetermine their remuneration.9) To authorize the Directors to determine payments forcharitable and other purposes for the year 2010/11.10) To declare first and final dividend of Rs. 0.40 per sharefor the year 2009/10.As witness *my/our hand this ………...............................……….day of ….................................……………2010...............................................................Signature of Shareholder/sNote:Please delete the inappropriate words.(Instructions as to completion are noted below)INSTRUCTIONS AS TO COMPLETION1. Kindly perfect the Form of Proxy, after filling legibly your full name and address and by signing in the space providedand please fill in the date of signature.2. If the Proxy Form is signed by an Attorney, the relative Power of Attorney should also accompany the Proxy Formfor registration, if such Power of Attorney has not already been registered with the Company.3. In the case of a Company/Corporation, the Proxy must be under its Common Seal, which should be affixed andattested in the manner prescribed by its Articles of Association.4. The completed Form of Proxy should be deposited at the Registered Office of the Company atNo. 236, Galle Road, Colombo 3, not less than 48 hours before the time appointed for the meeting.60

CORPORATE INFORMATIONName of the CompanyRoyal Palms Beach Hotels PLCStatus & Legal FormPublic quoted company with limited liabilityIncorporated in Sri Lanka on 20th May 1992Company Registration No.PQ 167Tax Payer Identification Number114092118VAT Registration Number114092118 7000Communication Registered Office236, Galle Road, Colombo 03P.O. Box 195, ColomboTel : 2343720-7Fax : 2434524, 2448279E-mail : tangerinetours@mi.com.lkWebsite : www.tangerinehotels.comHotelRoyal Palms Beach Hotel, St.Abrew’s Road,Nagashandiya, Waskaduwa.Tel : 034-2228113-7Fax : 034-2228112E-mail : tanbch@sltnet.lkRoyalpal@sltnet.lkSecretariesMercantile Investments Ltd.External AuditorsErnst & YoungInternal AuditorsSJMS AssociatesBankersHatton National BankCommercial BankBoard of DirectorsDeshabandu George L.A. Ondaatjie -Chairman/Joint Managing DirectorA.M. Ondaatjie - Joint Managing DirectorG.G. OndaatjieT.J. OndaatjieV. BalasuramaniamJ.P. Van TwestR.S. WeerawardenaN.H.V. PereraM. KeerthiratneA.N. EsufallyM.U. ManikuM.J. FernandoA.De. ZoysaJ.D. VazCorporate ManagementRavi KurukulasooriyaM.I. ShahabdeenManil GalagodaRavi FernandoJ.D. VazManagement TeamRavi KurukulasooriyaManoj AlwisMenaka FernandoB.D. GratianRumeisha KarunarathneBandula PriyanthaGeneral ManagerGroup Financial ControllerGroup EngineerGroup AccountantDirector/Manager Finance & AdministrationGeneral ManagerAssistant ManagerChief AccountantMaintenance EngineerFront Office ManagerExecutive ChefRemuneration CommitteeChairman – N.H.V. PereraR.S. WeerawardenaM.U. ManikuAlternate: W.P. Hettiaratchi (Chartered Accountant)Audit CommitteeChairman – N.H.V. PereraR.S. WeerawardenaM.U. ManikuAlternate: W.P. Hettiaratchi (Chartered Accountant)