Annual Report 2011 - Colombo Stock Exchange

ContentsHistory of the Company 2Analysis of Tourist Arrivals 3Information to Shareholders and Investors 4Financial Review 5Board of Directors 6-7Chairman’s Message 8Risk Management 9Corporate Governance 10-12Report of the Directors 13-16Statement of Directors 17Independent Auditor’s Report 18Income Statement 19Balance Sheet 20Statement of Changes in Equity 21Cash Flow Statement 22Notes to the Financial Statements 23-33Management Committee Team at Hotel 34Staff Cadre 34Corporate Information 35Notice of Meeting 36Form of Proxy 39-40

2 Annual Report 2011History of the CompanyMILESTONES13th March 1973 Incorporation of Non Traditional Enterprises Ltd., under the Companies Ordinance No. 51of 1938.1973/74 Hotel Swanee commenced operations with a room strength of 32.The Company was registered as a Public Company.The John Keells Group acquired controlling interest of the Company.Walkers Tours Ltd. took over the management of Hotel Swanee.1977/78 An additional 20 rooms were constructed.1981/82 Keells Hotel Management Services Ltd. took over the management of the Hotel.1988/89 The Company changed its name to Beruwela Walk Inn Limited.2000/01 Hotel Swanee was closed for a period of eight months due to the refurbishment of the hoteland was re-opened on 1st December 2000.2003 October Banyan Tree Holdings Pte Ltd acquired controlling interest of the Company.2004 April The Hotel was closed for refurbishment.2004 December The Hotel was extensively damaged by Tsunami on 26th December 2004.2005 The Company changed its financial year end from 31st March to 31st December to be inline with Banyan Tree Holdings Limited (formerly known as Banyan Tree Holdings Pte Ltd).2008 Change of name from Beruwela Walk Inn Limited to Beruwela Walk Inn PLC pursuant to theCompanies Act No. 7 of 2007.

Beruwela Walk Inn PLC 3Analysis of Tourist ArrivalsTourist arrivals to the country by Month*For the Year Ended % Increase/Month 2011 2010 (Decrease)Jan 74,197 50,757 46.18Feb 65,797 57,300 14.83Mar 75,130 52,352 43.51Apr 63,835 38,300 66.67May 48,943 35,213 38.99Jun 53,636 44,730 19.91Jul 83,786 63,339 32.28Aug 72,463 55,898 29.63Sep 60,219 47,339 27.21Oct 69,563 52,370 32.83Nov 90,889 72,251 25.80Dec 97,517 84,627 15.23855,975 654,476Tourist arrivals to the country by Region*2011 2010North America 49,057 40,216Western Europe 315,210 256,861Eastern Europe 49,249 35,517East Asia 96,194 68,430South Asia 237,647 175,694Australia 46,467 37,290Others 62,151 40,468855,975 654,476* Source: Extracted from Tourist Board monthly Bulletin issued by Sri Lanka Tourism Development Authority.Tourist Arrivals to the Country by Month100,00090,00080,00070,00060,00050,00040,00030,00020,00010,000-Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec20112010Tourist Arrivals to the Country by Region900,000800,000700,000600,000500,000400,000300,000200,000100,00002011 2010OthersAustraliaSouth AsiaEast AsiaEastern EuropeWestern EuropeNorth America

4 Annual Report 2011Information to Shareholders and InvestorsGENERALStated CapitalThe Stated Capital of the Company is Rs.9,000,000 consisting of 900,000 Ordinary Shares as at 31 st December 2011.ORDINARY SHAREHOLDERSNo. of Shareholders: 328 as at 31.12.2011 (255 as at 31.12.2010)As at 31 st December, 2011 2010No. of No. of No. of No. ofCategory Shareholders Shares % Shareholders Shares %Up to 1,000 304 74,606 8.29 230 50,946 5.661,001 - 5,000 18 37,050 4.11 15 33,010 3.675,001 - 10,000 2 15,910 1.77 4 29,710 3.3010,001 - 50,000 3 53,800 5.98 5 67,700 7.5250,001 - 100,000 - - - - - -100,001 - 500,000 - - - - - -500,001 - 1,000,000 1 718,634 79.85 1 718,634 79.85Totals 328 900,000 100.00 255 900,000 100.00CATEGORIES OF SHAREHOLDERSBanyan Tree Holdings Limited 1 718,634 79.85 1 718,634 79.85Directors & Spouses 2 12,000 1.33 2 12,000 1.33Public: Institutions 28 61,201 6.80 20 78,476 8.72Individuals 297 108,165 12.02 232 90,890 10.10Totals 328 900,000 100.00 255 900,000 100.00MARKET VALUEThe Market value of an Ordinary Share of Beruwela Walk Inn PLC:Highest Lowest As at 31 st December2011 350.30 (On 06/05/2011) 100.00 (On 04/01/2011) 145.102010 180.00 (On 21/10/2010) 60.00 (On 25/02/2010) 130.002009 69.50 (On 09/10/2009) 25.25 (On 08/02/2009) 62.502008 85.00 (On 15/02/2008) 15.25 (On 31/12/2008) 25.002007 70.00 (On 12/12/2007) 31.25 (On 11/12/2007) 62.002006 94.75 (On 10/04/2006) 20.00 (On 31/08/2006) 63.002005 100.00 (On 25/10/2005) 57.00 (On 28/12/2005) 57.002004/2005 95.00 (On 14/10/2004) 48.50 (On 11/05/2004) 70.00*2003/2004 60.00 (On 02/12/2003) 23.00 (On 10/07/2003) 47.00*2002/2003 35.00 (On 21/01/2003) 21.00 (On 12/06/2002) 25.00*2001/2002 25.00 (On 29/01/2002) 19.00 (On 25/02/2002) 22.00*2000/2001 25.00 (On 13/03/2001) 19.00 (On 22/08/2000) 25.00**As at 31 st MarchFor the Year Ended 31 st December, 2011 2010Number of trades 2,304 479Number of shares traded 434,700 176,300Turnover of shares traded (Rs.) 91,760,590 16,294,920

Beruwela Walk Inn PLC 5Financial ReviewIn Rs. ‘000 unless otherwise statedPercentage ofOccupancy (%)2011* 2010* 2009* 2008* 2007* 2006* 2005* 2004* 03/04 02/03## ## ## ## ## ## ## # 72 57Trading ResultsTurnover - - - - - - - 14,726 44,326 41,574Loss before Tax (45,110) (24,628) (35,673) (48,539) (43,986) (67,512) (34,886) (34,824) (15,796) (11,747)Loss after Tax (45,110) (24,628) (35,673) (48,539) (43,986) (67,512) (34,886) (34,824) (15,796) (11,747)Net AssetsProperty, Plant and Equipment 322,997 329,730 47,703 77,908 79,398 81,083 82,516 75,679 106,970 110,594Net Current Assets /(Current Liabilities) (152,690) (205,088) (174,884) (172,039) (133,769) (103,705) (145,326) (241,061) (78,798) (65,926)Less: Long Term Liabilities (252,542) (266,492) (272,681) (270,057) (261,279) (249,041) (221,634) (108,936) (2,692) (3,769)Deferred Liabilities - - - - - - - - (1,991) (1,614)Net Assets (82,235) (141,850) (399,862) (364,189) (315,649) (271,663) (284,444) (274,319) 23,489 39,285Stated Capital 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000Reserves (91,235) (150,850) (408,862) (373,189) (324,649) (280,663) (293,444) (283,319) 14,489 30,285Shareholders’ Funds (82,235) (141,850) (399,862) (364,189) (315,649) (271,663) (284,444) (274,319) 23,489 39,285Revenue to GovernmentG.S.T./V.A.T. (Output Tax) - - - - - - - 1,759 5,086 4,404Tourists Board Levy - - - - - - - 136 244 -Total - - - - - - - 1,895 5,330 4,404Value to Shareholders@Return on Equity (%) (54.85) (17.36) (8.92) (13.33) (13.94) (24.85) (12.26) (12.69) (67.25) (29.90)Earnings/(loss) per Share (Rs.) 66.24 (27.36) (39.64) (53.93) (48.87) 14.20 (11.25) (332.34) (17.55) (13.05)Market Value per Share (Rs.) 145 130 63 25 62 63 57 70 47 25Net Assets per Share (Rs.) (91.37) (157.61) (444.29) (404.65) (350.72) (301.85) (316.05) (304.80) 26.10 43.65Hotel OperationsTurnover per revenue room - - - - - - - - 2,644 3,761Operating Profit/(Loss)per Revenue Room (Rs.) - - - - - - - - (1,543) (296)Rupee Value of ForeignCurrency encashed - - - - - - - - 16,463 12,891* For the Year Ended 31 December# Closed for refurbishment for the period May 2004 to Dec 2004.## Closure due to damage caused by Tsunami.@Return on Equity excludes extraordinary activities

6 Annual Report 2011Board of DirectorsAriel P VeraChairmanMr. Vera is the Group Managing Director of Banyan Tree Holdings Limited, a company incorporated in the Republic ofSingapore and listed on the Singapore Exchange Securities Trading Limited. He is also a Director of a company listed onthe Stock Exchange of Thailand, Laguna Resorts & Hotels Public Company Limited and Director of certain companies in theBanyan Tree Group.He has over 25 years of experience in the hotel industry.A Certified Public Accountant in the Philippines, Mr. Vera holds a Bachelor of Science in Business Administration fromUniversity of the East, Philippines, as well as a Master of Business Administration from the National University of Singapore.Appointed Director to the Board of Beruwela Walk Inn PLC on 4 November 2003, Mr. Vera has been elected Chairman on 15July 2004.See Hock Lye EddyDirectorMr. See is the Senior Vice President and Chief Financial Officer of Banyan Tree Holdings Limited as well as Director of certaincompanies in the Banyan Tree Group.He was the Managing Director of Asia Business Forum from 2002 to 2004 and its Chief Financial Officer from 2001 to 2004.From 1996 to 2001, Mr. See was the Group Financial Controller of Amara Holdings Limited and the General Director of AmaraHotel Saigon Company Ltd. He was previously with Ernst & Young for almost 10 years.Mr. See holds a Bachelor of Commerce from University of Auckland and is an Associate Chartered Accountant, New Zealand.Mr. See was appointed to the Board of Beruwela Walk Inn PLC on 30 May 2007.Chong Kim Seng PaulDirectorMr. Chong is the Vice President, Business Development and Group Legal as well as Joint Company Secretary of Banyan TreeHoldings Limited and Director of certain companies in the Banyan Tree Group. He oversees the global development teamand all legal matters related to the Banyan Tree Group and its international expansion.He has more than 15 years of working experience, having previously worked in several top legal firms in Singapore includingAllen & Gledhill and Rajah & Tann.Mr. Chong holds a Bachelor of Laws (Hons) from the National University of Singapore.Mr. Chong was appointed to the Board of Beruwela Walk Inn PLC on 4 November 2003.

Beruwela Walk Inn PLC 7Board of DirectorsMahinda P. HaradasaDirectorMr. Haradasa is an Attorney-at-Law counting over 30 years in the legal profession, having been admitted to the Bar in 1977.He is also admitted as a Solicitor in the UK and as a Solicitor and Barrister in Australia.He is a Senior Partner of Varners, a prestigious legal firm with international affiliations, and has wide experience in the fieldsof Commercial and Intellectual Property Law. He has been a Legal Advisor to many large scale privatizations and to foreigninvestors on joint venture agreements. He serves on the Boards of several companies.Mr. Haradasa was appointed to the Board of Beruwela Walk Inn PLC on 4 November 2003.Kaliappapillai SoundararajanDirectorMr. Soundararajan had his education at the Imperial College of Science and Technology in London and holds a Bachelor ofScience Degree in Chemical Engineering.He is Chairman of Mercantile Corporation Ltd which was established in 1939 and KMK Group of Companies. KMK Groupholds extensive investments in various fields of properties, plantations and companies and in trade. Mr. Soundararajan hasover 45 years of experience in business and investments.Mr. Soundararajan has been a member of the Board of Beruwela Walk Inn PLC since 1976 and, having ceased to hold officeon attaining the age of 70 years last year, was reappointed to the Board at the Annual General Meeting held on 28 June 2010in terms of Section 211 of the Companies Act No. 07 of 2007.

8 Annual Report 2011Chairman’s MessageAs Europe faces uncertainty with an ongoing sovereign debt crisis and a weakened American economy suffers fromcrippling unemployment and decreasing confidence, we are faced with a global outlook that continues to be volatile.Political uprisings in the Middle East and Africa have only added to these woes.In Sri Lanka, however, we remain cautiously optimistic despite the challenges the country faces in terms of ballooning tradedeficits, rising costs of living and a depreciating currency. Rapidly developing rural areas, increased consumer spending anda surge of foreign direct investment all point to an economy that is poised for growth.We are continuing to explore various options in respect of redeveloping Hotel Swanee. Raising funds for the redevelopmentis a critical factor and could be challenging; we are currently investigating various ways to raise funds, including throughrights issue to existing shareholders, issue of new shares to new investors, etc. We will continue to exercise prudence inBeruwela Walk Inn PLC through cost containment measures where necessary. We remain committed to being an engagedpartner with Sri Lanka to develop the island’s positive tourism potential and tap into the rich appeal of its many culturalattractions, natural beauty, traditional heritage and welcoming people.Ariel P VeraChairman15 th May 2012

Beruwela Walk Inn PLC 9Risk ManagementRisks are the uncertain events, which could influence the achievement of an organization’s strategic, operational andfinancial objectives. The purpose of risk management is to manage and control risk rather than eliminating it. A brief reviewof the key risks associated with the Company’s business and the management of these risks by the Company up till financialyear 2004 when the Company was still active are enumerated below.Business RiskThe tourism industry is susceptible to internal and global factors such as security, political and health concerns whichinfluence travel, particularly to long haul destinations. These issues receive wide publicity in the print and electronicmedia and have an immediate impact on arrivals to the country. The Company always communicates with our trusted touroperators and updates them of the situation in Sri Lanka and mitigates the negative impact arising from the adverse mediapublicity. Furthermore, the sales and marketing division of the Company constantly monitor the advance booking statuswith the respective tour operator and the travel agent to ensure that the occupancy of the hotel is optimized.Operational RiskOperational risk, which is inherent in all business activities, can be caused due to the breakdown of internal controls,information technology failures and human error. The finance division of the hotel assists in the mitigation of this risk.Systems and procedures have been laid down to ensure compliance with the internal controls. These are constantly checkedfor the compliance and reviewed for the effectiveness. The finance division of the Company ensures the strict adherence tothe data back up system to guard against the loss of data and procedures to safeguard the computer system of the hotelso that minimum disruption is caused. The company ensures that the key managerial positions are held by staff who aresuitably qualified and trained and with sufficient experience in the hotel industry.Comprehensive insurance cover has been obtained to mitigate losses arising from a multitude of risks such as fire, burglary,natural causes, fraud by staff, claims by clients and third party on negligence and business interruptions.Financial RiskForeign Exchange RiskA significant amount of the hotel revenue is derived from foreign currency whilst exposure on imports in foreign currency islimited and not significant. Every endeavor is made to contract the hotel rates in US dollars or Euros to ensure that exposureto adverse exchange fluctuations is minimized. The finance division of the Company monitors exchange rate on a daily basisand ensure that the best rates are obtained for conversion of foreign currency whilst also taking into accounts future trendsto determine the timing of conversion.Interest Rate RiskThe Company debts have been structured utilizing a mix of both fixed and variable interest rate instruments to ensure thatthe financial impact due to volatility in the capital market is minimized.Liquidity RiskThe Company aims to maintain a balance between continuity and flexibility of funding through the use of borrowings witha range of maturities.Credit RiskWhilst granting credit to tour operators and travel agents is essential, every endeavor is made to obtain advances wherepossible as well as follow up on trade debtors.Recognizing the dynamic nature of the business transactions and having identified the major areas of risk, the Companycontinuously seeks ways and means of strengthening and developing its risk management system to achieve its objectives.

10 Annual Report 2011Corporate GovernanceThe Board of Directors (“the Board”) is responsible for the governance of the Company whilst the Shareholders’ role ingovernance is to appoint the Directors and the Auditors and to satisfy themselves that an appropriate governance structureis in place.Compliance with Code of Best PracticeHaving given due consideration to the Code of Best Practice for Corporate Governance issued by the Institute of CharteredAccountants of Sri Lanka, the Board is pleased to note that several key areas of the code are already being complied with.Accordingly, the Board confirms that the following aspects of the Code are currently being complied with.Board of DirectorsThe Board, towards the end of the financial year 2011, comprised five non-executive directors. The names of the Directorsare set out on page 14 to this Annual Report. In terms of the Articles of Association, all Directors are required to be electedby Shareholders at the first Annual General Meeting after their appointment and furthermore one-third of the Directorsshall retire by rotation every year but are eligible for re-election at the Annual General Meeting. The Board has assessedthe independence of the directors against the criteria set out in the Corporate Governance Rules of the Colombo StockExchange and determined that two directors are independent as indicated below although one of whom has served on theboard for more than nine consecutive years:-Name of Director Executive Non-Executive IndependentAriel P Vera - √ -See Hock Lye Eddy - √ -Chong Kim Seng Paul - √ -Mahinda P. Haradasa - √ √Kaliappapillai Soundararajan - √ √Audit CommitteeThe Audit Committee comprises 3 non-executive directors, Mr. See Hock Lye Eddy (Chairman), Mr. Mahinda P. Haradasa andMr. Kaliappapillai Soundararajan. However, no Audit Committee meetings were held during the financial year under review asthere were no material transactions in view of the fact that the Company was inactive during the preceding as well as financialyear 2011.The Audit Committee shall act as an effective forum in assisting the Board of Director to discharge their responsibilities withregard to internal control, internal and external audits, addressing environmental and business risks, business ethics, statutoryrequirements compliance etc. In doing so, the Audit Committee is empowered to examine and review any activity in relationto the financial affairs of the Company. A firm of Chartered Accountants will be engaged to conduct Internal Audits periodicallyto supplement the process.The Audit Committee is satisfied with the independence of the external auditors and recommends their re-appointment forthe ensuing financial year.The Chairman of the Audit Committee has not presented a separate report as there have been no Audit Committee meetingsheld during the year.Remuneration CommitteeThe Remuneration Committee comprises 3 non-executive directors, Mr. See Hock Lye Eddy (Chairman), Mr. Mahinda P.Haradasa and Mr. Kaliappapillai Soundararajan. However, no Remuneration Committee meetings were held during thefinancial year under review in view of the fact that the Company has not appointed a Chief Executive Officer (“CEO”) orExecutive Director as it has been inactive during the preceding as well as financial year 2011. There was no remunerationpayable to any Director of the Company.The function of the Remuneration Committee is to recommend the remuneration payable to the Executive Director andCEO of the Company upon such appointment.

Beruwela Walk Inn PLC 11Corporate GovernanceEffectiveness of the BoardThe Board consists of persons with an appropriate balance of expertise and ability in the fields of senior corporatemanagement, legal, finance and marketing and in the hospitality industry.The Board communicates with the Senior Management of the Company to consider among other matters, the performanceand Financial Statements for the period and discuss the strategies and forecast for the next quarter.The decisions relating to capital expenditure, investment and employment of key managerial staff require the approval ofthe Board.Company SecretariesVarners International (Private) Limited, who act as Secretaries to the Company are qualified to act as Secretaries as per theprovisions of the Companies Act No. 07 of 2007(“the Act”).Directors’ TrainingFormal and basic training is undertaken by and provided to all Directors as and when deemed necessary in such fields asmay be appropriate. All Directors have access to the advice and services of the Company Secretaries.Compliance with Legal RequirementsThe Board makes every endeavor to ensure that the Company complies with the Laws and Regulations.The Board requires that in all possible aspects, the Financial Statements of the Company are prepared in accordance with SriLanka Accounting Standards and in accordance with the requirements of the Colombo Stock Exchange (“CSE”).The Board recognizes and takes responsibility to ensure compliance with applicable laws and regulations including the Act,Securities and Exchange Commission Act No. 36 of 1987 and the rules of the CSE.CSE Rules on Corporate Governance – Section 7CSE RulesNon-Executive DirectorsIndependent DirectorsAudit CommitteeRemuneration CommitteeStatus of the CompanyIn complianceIn complianceIn complianceIn complianceDirectors’ Responsibility for the Preparation of Financial Statements and ComplianceThis statement is provided on page 17 of this Report.Internal ControlThe Board has overall responsibility for the Company’s system of internal financial control and for reviewing its effectiveness.The Company’s system has been designed to provide the Directors with reasonable assurance that assets are safeguarded,transactions are authorized and recorded properly and that material errors and irregularities are either prevented ordetected within a timely period.

12 Annual Report 2011Corporate GovernanceGoing ConcernBanyan Tree Holdings Limited as the major shareholder of the Company, has continued to show its commitment to theCompany by providing the necessary financial support. Hence, the Directors confirm that they are satisfied that theCompany has sufficient resources to continue in operation for the foreseeable future. Accordingly, they continue to adoptthe going concern basis in preparing the Company’s Financial Statements.Other InformationThe performance of the Company during the past year and the future prospects of the activities of the Company are coveredin the Chairman’s Message.

Beruwela Walk Inn PLC 13Report of the DirectorsTo be presented at the Thirty-Ninth Annual General Meeting of the Company to be held in Colombo, on 21 st June 2012 at10.00 a.m. (“Annual General Meeting”).The Directors have pleasure in presenting to the members their Report together with the Audited Financial Statements ofBERUWELA WALK INN PLC for the year ended 31 st December 2011.Principal ActivityThe principal activity of the Company, which is hotel operation, remains unchanged.Review of the Year and Future DevelopmentsA review of the operation of the Company during the financial year, results of those operations and developments for thefuture are described in the Chairman’s Message on page 8 of this Annual Report.TurnoverThe Turnover of the Company during the year was Rs.nil (2010: Rs.nil).EmploymentThe number of persons employed by BERUWELA WALK INN PLC as at 31 st December 2011 was 4 (31 st December 2010:4).Share InformationThe market value of an ordinary share of the Company as at 31 st December 2011 was Rs. 145.10 (31 st December 2010:Rs. 130.00). The number of shareholders as at 31 st December 2011 was 328 (31 st December 2010: 255). An analysis ofshareholders based on shares held, the distribution of ownership and details of share transactions during the year and theinformation that would be of importance to Investors is provided on page 4 of this report.Results and Appropriations for the year ended 31 st December2011 2010Rs.’000Rs.’000Loss after making provision for doubtful debts, and all known liabilities and beforeproviding for depreciation on Property, Plant and Equipment was (38,376) (24,014)From which has to be deducted the depreciation on Property, Plant and Equipment of (6,733) (614)Which leaves a Loss Before Taxation of (45,109) (24,628)Taxation was - -Leaving a Net Loss for the year of (45,109) (24,628)Extraordinary Items 104,725 -Leaving a Net Profit/ (Loss) for the year of 59,616 (24,628)With the Retained Profit Brought Forward (496,903) (472,275)The amount available for appropriation was (437,287) (496,903)AppropriationsTransfer from Reserves leaving an unappropriate balance to be carried forward of (437,287) (496,903)DividendFor the year ended 31 st December 2011, the Directors are of the opinion that the Company should not declare dividends.

14 Annual Report 2011Report of the DirectorsProperty, Plant and EquipmentThe freehold land of the Company was revalued on 21 st March 2011 and the results of such valuation were incorporated intothe financial statements for the financial year ended 31 st December 2010. The movements in Property, Plant and Equipmentduring the year are shown in Note 9 to the Financial Statements.Capital ExpenditureExpenditure on Property, Plant and Equipment during the year was nil (2010: Rs.nil).Stated CapitalThere has been no change in the Stated Capital since the Balance Sheet date.ReservesThe details of Capital and Revenue Reserves of the Company are shown in Statement of Changes in Equity.DonationsTotal Donations made by the Company during the financial year was nil (2010: nil).Environmental ProtectionThe Company is conscious of the impact, direct and indirect, on the environment due to its business activities. Every endeavoris made to minimize the adverse effects on the environment to ensure sustainable continuity of our natural resources.DirectorateThe Directors of the Company as at 31 st December 2011 wereMr. Ariel P Vera – ChairmanMr. See Hock Lye EddyMr. Chong Kim Seng PaulMr. Mahinda P. HaradasaMr. Kaliappapillai SoundararajanAll of the above named Directors held office throughout the financial year under review.Mr. Kaliappapillai Soundararajan, who is the age of 72 years, will retire at the conclusion of the Annual General Meetingin terms of Section 210 of the Companies Act No. 07 of 2007 (“the Act”) but is eligible to be appointed as a Director inaccordance with Section 211 of the Act.Directors’ ShareholdingThe shareholding of Directors as at 31 st December 2011 were as follows:No. of SharesName of Director As at 01.01.2011 As at 31.12.2011Mr. Ariel P Vera - -Mr. See Hock Lye Eddy - -Mr. Chong Kim Seng Paul - -Mr. Mahinda P. Haradasa 1,000 1,000Mr. Kaliappapillai Soundararajan 11,000* 11,000** Shares held jointly.

Beruwela Walk Inn PLC 15Report of the DirectorsDirectors’ Interests in ContractsThe Directors have no interest either direct or indirect in any contract or proposed contract with the Company except asstated in Note 21 to these financial statements.Retirement of Directors by rotation or otherwise and their re-electionIn terms of Articles 84 and 85 of the Articles of Association, Mr. Chong Kim Seng Paul retires by rotation and being eligibleoffers himself for re-election.Mr. Kaliappapillai Soundararajan, who is the age of 72 years, will retire in at the conclusion of the Annual General Meetingpursuant to Section 210 of the Act. Due notice has been given by a Shareholder of the intention to pass a resolution to reappointMr. Kaliappapillai Soundararajan pursuant to Section 211 of the Act. The Directors recommend the re-election ofMr.Kaliappapillai Soundararajan as a Director of the Board.Major ShareholdingThe following are the twenty major shareholders of the Company as at 31 st December 2011:2011 2010No. of Shares % No. of Shares %Banyan Tree Holdings Limited 718,634 79.85 718,634 79.85Waldock Mackenzie Ltd/K.M.K. Holdings Ltd 31,300 3.48 15,800 1.76Mrs. N. Tirimanne 11,500 1.28 12,700 1.41Mr. Kaliappapillai Soundararajan & Kaliappapillai Padmanadan 11,000 1.22 11,000 1.22Waldock Mackenzie Ltd /G. Soysa 9,210 1.02 9,210 1.02Mr. L.S.I. Perera 6,700 0.74 6,700 0.74Mrs. Fathima Nisreen Safiyullah 4,800 0.53 - -Mr. Premadasa Manamperi 3,500 0.39 - -Mr. A.W. Atukorala 2,900 0.32 2,600 0.29Seylan Bank Plc/ Mr. Liyanage Saliya Ignatious Perera 2,900 0.32 11,200 1.24Waldock Mackenzie Limited/ Dr. Hennedige Srinath Dilanjan Soysa 2,900 0.32 2,900 0.32Mr. Douglas Edward Jayasuriya 2,500 0.28 2,500 0.28First Capital Markets Limited/Mr. R.A.D. Rupasinghe 2,200 0.24 - -Mr. M.S. Hiripitiya 2,200 0.24 2,000 0.22Mr. D.G. Denawaka 1,500 0.17 - -Mrs. Palamandadige Pamela Girlie Cooray 1,400 0.16 - -First Capital Markets Limited/Mr. M.A.U. Gnanathilaka 1,400 0.16 - -Mrs. Navarathne Hetti Mudiyanselage Shirani Sandaya Kumari 1,400 0.16 - -Shalsri Investments Ltd. 1,350 0.15 - -First Capital Markets Limited/P.G. Kumaradasa 1,300 0.14 - -K.M. Kaliappapillai & Co. Limited - - 17,000 1.89Waldock Mackenzie Ltd /Mr. L.S.I. Perera - - 8,600 0.96Mr. S.N.C.W.M.B.C. Kandegedara - - 5,200 0.58Mercantile Corporation Limited - - 5,000 0.56Mrs. T. Goonawardena - - 3,400 0.38Mr. S. Ellawala - - 2,200 0.24Ms. Lintotage Iona Jocelin Fernando - - 2,160 0.24Mr. H.K. Pushpakumara - - 2,000 0.22Merchant Bank of Sri Lanka Plc/ Mr. Kamal Raja Upali - - 1,600 0.18Others 79,406 8.82 57,596 6.40Total 900,000 100.00 900,000 100.00

16 Annual Report 2011Report of the DirectorsShareholding by PublicAs at 31 st December 2011, 18.82% (31 st December 2010: 18.82%) of the issued shares were held by the public.Corporate Governance/Internal ControlsThe Corporate Governance practices of the Company are set out on page 10. The Board is satisfied with the effectiveness ofthe system of internal control for the period up to the date of signing of the Financial Statements.Risk ManagementSpecific steps taken by the Company in managing various risks are detailed on page 9 of this report.Events Occurring after the Balance Sheet DateNo events have occurred since the Balance Sheet date which would require adjustments or disclosure in the FinancialStatements.AuditorsThe Financial Statements for the financial year have been audited By Messrs. Tudor V. Perera & Co. (Chartered Accountants)who offer themselves for re-appointment. A Resolution to re-appoint the Auditors will be proposed at the forthcomingannual general meeting.By Order of the Board,Varners International (Private) LimitedCompany SecretariesColombo15 th May 2012

Beruwela Walk Inn PLC 17Statement of DirectorsResponsibilities for Preparing the Financial StatementsThe following statement which should be read in conjunction with the Report of the Auditors of their responsibilities set outin their report is made with the view to distinguish for the shareholders the respective responsibilities of the Directors andof the Auditors, in relation to the Financial Statements.The Directors of Beruwela Walk Inn PLC, are required by the Act, to prepare financial statements for each financial year andplace before a general meeting, Financial Statements which give a true and fair view of the state of affairs of the Company,as set out in the Balance Sheet at the end of the financial year and of the Income Statement, Cash Flow and the Statementof Changes in Equity of the Company for the financial year. The Directors are required to prepare these Financial Statementson a going concern basis, unless it is deemed not appropriate.The Directors consider that in preparing the Financial Statements for the financial year ended 31 st December 2011 on page19 to 33 the Company has used appropriate accounting policies, consistently applied and supported by reasonable andprudent judgments and estimates. The Directors also consider that all applicable accounting standards have been followedand confirm that the Financial Statements have been prepared on a going concern basis. As the Directors are satisfied thatthe Company has the resources to continue in business for the foreseeable future, the Financial Statements continue to beprepared on the said basis.The Directors are responsible for ensuring that the Company keeps accounting records, which disclose with reasonableaccuracy at any time the financial position of the Company, which enable them to ensure that the Financial Statementscomply with the Companies Act No. 07 of 2007.The Directors are also responsible for taking such steps as are reasonably open to them to safeguard the assets of theCompany and to prevent and detect fraud and other irregularities.The Directors are required to prepare the Financial Statements and to provide the Auditors with every opportunity to takewhatever steps and undertake whatever inspections they consider to be appropriate for the purpose of enabling them togive their audit report.The Directors are of the view that they have discharged their responsibilities as set out in this statement.Compliance ReportThe Directors confirm that to the best of their knowledge, all taxes, duties and levies payable by the Company and allcontributions, levies and taxes payable on behalf of and in respect of the employees of the Company and all other knownStatutory dues as were due and payable by the Balance Sheet date have been paid, or where relevant, provided for.By Order of the Board,Varners International (Private) LimitedCompany SecretariesColombo15 th May 2012

18 Annual Report 2011Independent Auditor’s ReportTo The Members Of Beruwela Walk Inn PlcReport on the Financial StatementsWe have audited the accompanying Financial Statements of Beruwela Walk Inn PLC, which comprise the Balance Sheet as at31 st December 2011, and the Income Statement, Statement of Changes in Equity and Cash Flow Statement for the year thenended, and a summary of significant Accounting Policies and other explanatory 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, whetherdue to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that arereasonable 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 to obtainreasonable assurance whether the financial statements are free from material misstatements.An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements.An audit also includes assessing the accounting principles used and significant estimates made by the management, as wellas evaluating the overall financial statement presentation.We have obtained information and explanations which to the best of our knowledge and belief were necessary for thepurpose of our audit. We therefore believe that our audit provides a reasonable basis for our opinion.OpinionIn our opinion, so far as appears from our examination, the company maintained accounting records for the year ended31 st December 2011 and the financial statements give a true and fair view of the Company’s state of affairs as at 31 st December2011 and of its profit and cash flows for the year then ended in accordance with generally accepted accounting principles.Without qualifying our opinion, we draw attention to Note 20 to the financial statements on the going concern of theCompany where the net assets are less than half of the stated capital and face a serious loss of capital situation in terms ofsection 220 of the Companies Act No. 07 of 2007.Report on Other Legal & Regulatory RequirementsThese financial statements also comply with the requirements of section 151 (2) of the companies Act No.7 of 2007.TUDOR V. PERERA & CO.,Chartered Accountants.Colombo18 th May 2012

Beruwela Walk Inn PLC 19Income StatementFor the year ended 31 st December 2011NotesTurnover - -Cost of Sales - -2011Rs.2010Rs.Gross Profit - -Other Operating Income 3 - 5,799,926Administrative Expenses (19,246,860) (4,760,947)Other Operating Expenses (6,994,668) (819,224)Loss from Operating Activities 4 (26,241,528) 219,755Finance Costs 5 (18,868,093) (24,847,705)Loss before Taxation (45,109,621) (24,627,950)Income Tax 6 - -Net Loss from Ordinary Activities (45,109,621) (24,627,950)Extraordinary Activities 7 104,725,089 -Net Profit / (Loss) for the year 59,615,468 (24,627,950)Earnings / Loss per Share - Basic 8 66.24 (27.36)The figures in brackets indicate deductions.The accounting policies and notes from page 23 to 33 form an integral part of these financial statements.

20 Annual Report 2011Balance SheetAs at 31 st December 2011ASSETSNotes2011Rs.2010Rs.NON CURRENT ASSETSProperty, Plant & Equipment 9 322,996,622 329,729,622CURRENT ASSETSTrade & Other Receivables 10 21,809,107 25,181,315Tax Recoverable 838,388 838,388Cash in Banks 11 1,923,483 929,78624,570,978 26,949,489TOTAL ASSETS 347,567,600 356,679,111EQUITY & LIABILITIESCAPITAL & RESERVESStated Capital 12 9,000,000 9,000,000Revaluation Reserves 13 340,287,080 340,287,080Other Reserves 14 5,766,000 5,766,000Accumulated Profit / (Loss) (437,287,841) (496,903,309)(82,234,761) (141,850,229)NON CURRENT LIABILITIESAmount due to Related Company 15 251,708,513 265,708,288Retirement Benefit Obligations 16 833,105 784,355252,541,618 266,492,643CURRENT LIABILITIESTrade & Other Payables 17 507,318 421,826Amounts due to Related Company 15 176,753,425 231,614,871177,260,743 232,036,697347,567,600 356,679,111I certify that the above Financial Statements comply with the requirements of the Companies Act No. 07 of 2007.Chief Financial OfficerThe Board of Directors is responsible for the preparation & presentation of these financial statements.Approved and signed for and on behalf of the Board.15 th May 2012Mr. Ariel P VeraDirectorMr. Chong Kim Seng PaulDirectorThe figures in brackets indicate deductions.The accounting policies and notes from page 23 to 33 form an integral part of these financial statements.

Beruwela Walk Inn PLC 21Statement of Changes in EquityYear ended 31 st December 2011StatedCapitalRs.RevaluationReserveRs.OtherReserveRs.AccumulatedProfit / (Loss)Rs.TotalRs.Balance as at 1 st January 2010 9,000,000 57,647,080 5,766,000 (472,275,359) (399,862,279)Revaluation of Freehold Land - 282,640,000 - - 282,640,000Loss for the year - - - (24,627,950) (24,627,950)Balance as at 31 st December 2010 9,000,000 340,287,080 5,766,000 (496,903,309) (141,850,229)Profit for the year - - - 59,615,468 59,615,468Balance as at 31 st December 2011 9,000,000 340,287,080 5,766,000 (437,287,841) (82,234,761)The figures in brackets indicate deductions.The accounting policies and notes from page 23 to 33 form an integral part of these financial statements.

22 Annual Report 2011Cash Flow StatementFor the year ended 31 st December 2011Cash flow from Operating Activities2011Rs.2010Rs.Profit/(Loss) from Operations before Tax 59,615,468 (24,627,950)Adjustments for:Interest Expenses - 24,775,095Depreciation 6,733,000 613,629Provision for Retirement Benefit Cost 48,750 (13,253)Loss/(Gain) on Exchange 10,860,653 (1,823,753)Operating Profit before Working Capital Changes 77,257,871 (1,076,232)(Increase)/Decrease in Trade & Other Receivables 3,372,208 (2,043,347)Increase / (Decrease) in Amounts due to Related Company (79,721,874) 29,599,973Increase/(Decrease) in Trade & Other Payables 85,492 66,809Cash Generated from Operations 993,697 26,547,203Interest paid - (24,775,095)Net Cash Flow generated from / (Used in) Operating Activities 993,697 1,772,108Net Decrease in Cash & Cash Equivalents 993,697 1,772,108Cash and Cash Equivalents at the beginning of the year 929,786 (842,322)CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 1,923,483 929,786The figures in brackets indicate deductions.The accounting policies and notes from page 23 to 33 form an integral part of these financial statements.

Beruwela Walk Inn PLC 23Notes to the Financial StatementsYear ended 31 st December 20111. CORPORATE INFORMATION1.1. GeneralBeruwela Walk Inn PLC is a limited liability company incorporated and domiciled in Sri Lanka. The registeredoffice of the Company is located at Level 14, West Tower, World Trade Centre, Echelon Square, Colombo 01,Sri Lanka and the principal place of business is situated at Beruwela, but was seriously damaged during 26 thDecember 2004 Asian Tsunami.Its major shareholder is Banyan Tree Holdings Limited which is incorporated in Singapore.1.2. Principal Activities and Nature of OperationsThe principal activity of the Company, which is hotel operation, remains unchanged. However, the Hotel wasclosed for business since 28 th April 2004 to date for refurbishment.1.3. Number of EmployeesThe number of employees at the end of the year was 4 (2010 – 4).2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES2.1. General Policies2.1.1. Basis of PreparationThe Balance Sheet, Income Statement, Statement of Changes in Equity, Cash Flow Statement andAccounting Policies and Notes (Financial Statements) of Beruwela Walk Inn PLC have been preparedin accordance with the Standards issued by the Institute of Chartered Accountants of Sri Lanka. TheFinancial Statements comply with the Sri Lanka Accounting Standards. The Financial Statements ofthe Company are prepared under the historical cost convention except for revaluation of certainProperty, Plant & Equipment. The said Financial Statements are presented in Sri Lankan Rupees (Rs.).2.1.2. Going ConcernThe Directors have made an assessment of the Company’s ability to continue as a going concernwith no intention to either liquidate or cease trading.2.1.3. Comparative InformationThe accounting policies have been consistently applied by the Company and are consistent withthose used in the previous year. Previous year’s figures and phrases have been re-arranged wherevernecessary to conform to the current year’s presentation.2.1.4. Foreign Currency TransactionsAll foreign exchange transactions are converted into Sri Lankan Rupees at the rate of exchangeprevailing at the time the transactions were effected. Monetary assets and liabilities denominated inforeign currencies are translated into Sri Lankan Rupees at the rate of exchange ruling at the balancesheet date. The resulting gains and losses are accounted for in the Income Statement.2.1.5. Taxationa) Current TaxesThe provision for income tax is based on the elements of income and expenditure as reportedin the financial statements and computed in accordance with the provisions of the InlandRevenue Act No. 10 of 2006 and amendments thereto. Relevant details are disclosed in Note 6to the Financial Statements.

24 Annual Report 2011Notes to the Financial StatementsYear ended 31 st December 20112. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)2.1. General Policies (cont’d)2.1.5. Taxation (cont’d)b) Deferred TaxationDeferred taxation is provided using the liability method. The tax effect of all temporary timingdifferences which occur where items are allowed for income tax purposes in a period differentfrom that when they are recognized in financial statements is included in the provision fordeferred taxation (or future income tax benefits as applicable) at current rates of taxation.Deferred tax assets (debits) are recognized for all deductible temporary timing differences andcarried forward unused tax losses to the extent that it is probable that future taxable profitswill be available against which such unused tax losses and deductible temporary timingdifferences can be utilized. Deferred tax assets are reduced to the extent that it is no longerprobable that the related tax benefit will be realized.2.1.6. Borrowing CostsBorrowing costs are recognized as an expense in the period in which they are incurred, except tothe extent where borrowing costs that are directly attributable to the acquisition, construction, orproduction of an asset that takes a substantial period of time to get ready for its intended use of sale,are capitalized as part of that assets.2.1.7. Post Balance Sheet EventsAll material events occurring after the Balance Sheet date are considered and where necessary,adjustments or disclosures have been made in the Financial Statements.2.2. Valuation of Assets and their Measurement Bases2.2.1. InventoriesInventories are valued at the lower of cost and estimated net realizable value, after making dueallowances for obsolete and slow moving items. Net realizable value is the price at which inventoriescan be sold in the normal course of business after allowing for cost of realization and / or cost ofconversion from their existing state to saleable condition.The cost of each category of inventory is determined on the following basis:Food and Beverages - At actual cost of first in first out (FIFO) basis.Housekeeping, Maintenance & Other - At actual cost on first in first out (FIFO) basis.2.2.2. Trade & Other ReceivablesTrade receivables are stated at the amounts they are estimated to realize net of provision for bad anddoubtful receivables.Other receivables and dues from related parties are recognized at cost less provision for bad anddoubtful receivables.2.2.3. Cash & Cash EquivalentsCash and cash equivalents are defined as cash in hand, demand deposits in bank and short termhighly liquid investments, readily convertible to known amounts of cash and subject to insignificantrisk of change in value.For the purpose of Cash Flow Statement, cash and cash equivalents consist of cash in hand anddeposits in banks, net of outstanding bank overdrafts.Interest paid is classified as operating cash flows, interest and dividend received are classified asinvesting cash flows while dividend paid are classified as financing cash flows for the purpose ofpresentation of Cash Flow Statement, reported based on the indirect method.

Beruwela Walk Inn PLC 25Notes to the Financial StatementsYear ended 31 st December 20112. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)2.2. Valuation of Assets and their Measurement Bases (cont’d)2.2.4. Property, Plant & Equipmenta) Cost and ValuationAll items of Property, Plant & Equipment are initially recorded at cost. Where items of Property,Plant & Equipment are subsequently revalued, the entire class of such assets is revalued.Revaluations are made with sufficient regularity to ensure that their carrying amounts donot differ materially from their fair values at the balance sheet date. Subsequent to the initialrecognition as an asset at cost, revalued property, plant and equipment are carried at revaluedamounts less any subsequent depreciation thereon. All other property, plant and equipmentare stated at historical cost less depreciation.When an asset is revalued, any increase in the carrying amount is credited directly to arevaluation surplus unless it reverses a previous revaluation decrease relating to the sameasset, which was previously recognized as an expense. In these circumstances, the increaseis recognized as income to the extent of the previous write down. When an asset’s carryingamount is decreased as a result of a revaluation, the decrease is recognized as an expenseunless it reverses a previous increment relating to that asset, in which case it is charged againstany related revaluation surplus, to the extent that the decrease does not exceed the amountheld in the revaluation surplus in respect of the same asset. Any balance remaining in therevaluation surplus in respect of an asset is transferred directly to Accumulated Profits onretirement or disposal of the asset.b) DepreciationThe provision for depreciation is calculated by using the Straight Line method, on the cost orvaluation of all property, plant & equipment other than freehold land, in order to write off suchamounts over the following estimated useful lives by equal installments.Buildings on Freehold LandPlant & MachineryFurniture & FittingsEquipmentComputer EquipmentMotor VehiclesConstruction in ProgressOver 40 yearsOver 10 yearsOver 8 yearsOver 6 yearsOver 3 yearsOver 6 yearsOver 3 yearsPrior to 1 st April 1995, the basis of depreciation was on a reducing balance method. The writtendown value of property, plant & equipment in existence as at 31 st March 1995 is written off inequal installments over respective periods as indicated above.Depreciation has not been provided on freehold land. Full year’s provision is made in the yearof disposal, whereas no depreciation is charged in the year of purchase.2.2.5. InvestmentsThe cost of investments is the cost of acquisition, inclusive of brokerage, duties and bank fees.Investments are classified as long term and valued as follows:a) Quoted InvestmentsQuoted investments are stated at the lower of cost and market value determined on aggregateportfolio basis.b) Unquoted InvestmentsUnquoted investments are stated at cost. Provision is made for diminution in value ofinvestments only if such diminution is expected to be other than temporary.

26 Annual Report 2011Notes to the Financial StatementsYear ended 31 st December 20112. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)2.3. Liabilities & Provisions2.3.1. Trade & Other PayablesTrade and other payables are stated at their cost.2.3.2. Retirement Benefit Costsa) Defined Benefit Plan – Retirement GratuityFull provision has been made on account of retiring gratuity from the first year of service of theemployee in conformity with the Sri Lanka Accounting Standard No. 16 “Retirement BenefitCosts” at half (1/2) month’s salary of each year of service.However, according to the payment of Gratuity Act No. 12 of 1983, the liability for gratuity foran employee arises only on completion of five years of continued service.The liability is not externally funded nor is it actuarially valued. This item is grouped under Non-Current Liabilities in the Balance Sheet.b) Defined Contribution Plans – Employees’ Provident Fund & Employees’ Trust FundAll employees who are eligible for Employees’ Provident Fund Contribution and Employees’Trust Fund Contributions are covered by relevant contribution funds in line with respectivestatues and regulations.2.3.3. ProvisionsProvisions are made for all obligations existing as at the Balance Sheet date when it is probable thatsuch an obligation will result in an outflow of resources and a reliable estimate can be made of thequantum of the outflow.2.4. Capital Commitments and ContingenciesAll material capital commitments and contingent liabilities of the company are disclosed in the respectivenotes to the Financial Statements.2.5. Grants & SubsidiesGrants and subsidies related to assets, including non-monetary grants at fair value are deducted at arriving atthe carrying value of the asset.2.6. Income Statement2.6.1. TurnoverTurnover represents the amounts derived from the provision of goods and services which fall withinthe Company’s ordinary activities net of trade discounts and turnover related taxes and service charge.2.6.2. Revenue and Expenses2.6.2.1. Revenue RecognitionRevenue is recognized to the extent that it is probable that the economic benefits will flowto the Company and the revenue and associated costs incurred or to be incurred can bereliably measured. Revenue is measured at the fair value of the consideration received orreceivable net of trade discounts and sale taxes. The following specific criteria are used forthe purpose of recognition of revenue.a) Income from HotelApartment revenue is recognized on the rooms occupied on a daily basis and foodand beverage and other hotel related sales are accounted for at the time of sale.b) Interest IncomeInterest income is recognized as the interest accrues (taking into account theeffective yield on the asset) unless collectibles are in doubt.

Beruwela Walk Inn PLC 27Notes to the Financial StatementsYear ended 31 st December 20112. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)2.6. Income Statement (cont’d)2.6.2. Revenue and Expenses (cont’d)2.6.2.1. Revenue Recognition (cont’d)c) DividendsDividend income is recognized when the shareholders’ right to receive the paymentis established.d) OthersOther income is recognized on an accrual basis.Gains and losses of a revenue nature on the disposal of property, plant & equipmenthave been accounted for in the Income Statement.2.6.2.2. Expenditure Recognitiona) Expenses are recognized in the Income Statement on the basis of a directassociation between the cost incurred and the earning of specific items of income.All expenditure incurred in the running of the business and in maintaining theproperty, plant & equipment in a state of efficiency has been charged to income inarriving at the loss for the year.b) For the purpose of presentation of Income Statement, the Directors are of theopinion that “function of expenses” method presents fairly the elements of theCompany’s performance, hence such presentation method is adopted.2.7. Segment ReportingA segment is a distinguishable component of an enterprise that is engaged in either providing products orservices (business segment) or in providing product or services within a particular economic environment(geographical segment), which is subject to risk and rewards that are different from those of the segment.However there are no distinguishable components to be identified as segment for the Company.2011Rs.2010Rs.3. OTHER OPERATING INCOMEExchange Gain - 5,799,9264. LOSS FROM OPERATING ACTIVITIESStated after charging :Auditors' Fees and Expenses 28,600 28,600Depreciation 6,733,000 613,629Salaries, Wages and Other Related Costs 676,922 619,357Exchange Loss 10,860,653 –

28 Annual Report 2011Notes to the Financial StatementsYear ended 31 st December 20112011Rs.2010Rs.5. FINANCE COSTBank Charges & Overdraft Interest 6,303 72,610Interest Payable - Related Parties 18,861,790 24,775,09518,868,093 24,847,7056. INCOME TAX EXPENSESCurrent Tax on ordinary activities for the year (Note 6.2) - -Over provision of current taxes in respect of prior years - -Deferred Taxation Charges - -- -6.1 In terms of Section 40 (1) of the Inland Revenue Act No. 10 of 2006, the Company is liable for income tax at aconcessionary rate of 12% on its operating profit, which is applicable to undertakings engaged in promotionof tourism.6.2 In view of the brought forward losses, deferred tax has not been provided for.7. EXTRAORDINARY ACTIVITIES2011Rs.Insurance Claim Received 104,725,089 -2010Rs.8. EARNINGS / (LOSS) PER SHAREEarnings / (Loss) per share is based on the Profit / (Loss) for the year attributable to ordinary shareholders. Theaverage number of Ordinary Shares deemed to be outstanding during the year, is determined by weighing theshares in issue on a time basis.2011Rs.2010Rs.Profit / (Loss) after Tax attributable to Ordinary Shareholders 59,615,468 (24,627,950)Weighted Average number of Ordinary Shares deemed to be in issue 900,000 900,000Earnings / (Loss) per Share - Basic 66.24 (27.36)

Beruwela Walk Inn PLC 29Notes to the Financial StatementsYear ended 31 st December 20119. PROPERTY, PLANT & EQUIPMENT9.1. Cost/ValuationAt Cost/Cost Incurred since lastBalanceas at01.01.2011Rs.AdditionsRs.DisposalsRs.Balanceas at31.12.2011Rs.Revaluation:Plant & Machinery 10,823,407 - - 10,823,407Computer Equipment 234,688 - - 234,688Furniture, Fittings & Equipment 1,630,991 - - 1,630,991Construction in Progress 19,494,934 - - 19,494,934Motor Vehicle 2,446,518 - - 2,446,51834,630,538 - - 34,630,538At Valuation:Freehold Land 310,000,000 - - 310,000,000310,000,000 - - 310,000,000Total Value of Assets 344,630,538 - - 344,630,5389.2. Depreciation:Plant & Machinery 10,823,407 - - 10,823,407Furniture, Fittings & Equipment 1,630,991 - - 1,630,991Motor Vehicle 2,446,518 - - 2,446,518Construction in Progress - 6,498,312 - 6,498,312Computer Equipment - 234,688 - 234,68814,900,916 6,733,000 - 21,633,9169.3. Net Book Value of Assets2011Rs.2010Rs.AssetsAt Cost 12,996,622 19,729,622At Valuation 310,000,000 310,000,000322,996,622 329,729,622

30 Annual Report 2011Notes to the Financial StatementsYear ended 31 st December 20119. PROPERTY, PLANT & EQUIPMENT (cont’d)9.3. Net Book Value of Assets (cont’d)The freehold land located in Moragalla, Beruwala, with an extent of A 4. R 3. P. 23.34 was inspected andrevalued on 21 st March 2011, for Rs. 310,000,000 by independent professional valuers, Ariyatillake & Co. (Pvt)Ltd. (Chartered Valuers). The results of such valuation were incorporated into the financial statements for theyear ended 31 st December 2010. The surplus of Rs. 282,640,000 arising from the revaluation was transferredto the revaluation reserve.The carrying amount of revalued asset that would have been included in the Financial Statements had theasset been carried at cost less depreciation is as follows:Class of AssetCostRs.CumulatedDepreciation ifthe asset werecarried at costRs.Net BookValueRs.Freehold Land 19,750,000 - 19,750,0002011Rs.2010Rs.10. TRADE AND OTHER RECEIVABLESOther Debtors 21,809,107 25,181,31511. CASH AND CASH EQUIVALENTS IN CASH FLOW STATEMENTComponents of Cash and Cash Equivalents11.1. Favorable of Cash & Cash EquivalentsBank Balances 1,923,483 929,78611.2. Unfavorable Cash & Cash EquivalentsBank Overdraft - -Total Cash and Cash Equivalents for the purpose of Cash Flow Statement 1,923,483 929,78612. STATED CAPITALNumber of Ordinary Shares Issued & Fully paid 900,000 900,000Rs.Rs.Ordinary Shares Issued & Fully paid 9,000,000 9,000,000

Beruwela Walk Inn PLC 31Notes to the Financial StatementsYear ended 31 st December 20112011Rs.2010Rs.13. REVALUATION RESERVEProperty, Plant & EquipmentAt the beginning of the year 340,287,080 57,647,080Add: Transfer of surplus on Revaluation of Assets during the year - 282,640,000At the end of the year 340,287,080 340,287,08014. OTHER RESERVESDividend Equalization Reserve 766,000 766,000General Reserve 5,000,000 5,000,0005,766,000 5,766,00015. AMOUNT DUE TO RELATED COMPANYRelationshipAmountPayablewithinone yearRs.2011AmountPayableafter oneyearRs.TotalRs.AmountPayablewithinone yearRs.2010AmountPayableafter oneyearRs.TotalRs.Banyan TreeHoldingsLimited Parent 168,655,477 247,356,886 416,012,363 224,425,626 265,708,288 490,133,914Banyan Tree(Private)Limited Related 8,097,948 4,351,627 12,449,575 7,189,245 - 7,189,245176,753,425 251,708,513 428,461,938 231,614,871 265,708,288 497,323,159The amount payable to Banyan Tree Holdings Limited of Rs. 247,356,886 bears an interest of 7% per annum.The amount payable to Banyan Tree (Private) Limited of Rs. 4,351,627 bears an interest of 7% per annum.2011Rs.2010Rs.16. RETIREMENT BENEFIT OBLIGATIONSBalance at the beginning of the year 784,355 797,608Provision made during the year 48,750 (13,253)Balance at the end of the year 833,105 784,355

32 Annual Report 2011Notes to the Financial StatementsYear ended 31 st December 20112011Rs.2010Rs.17. TRADE AND OTHER PAYABLESAccrued Expenses 507,318 421,82618. EVENTS AFTER THE BALANCE SHEET DATEThere have been no material events after the Balance Sheet date that require adjustments or disclosure in theFinancial Statements.19. CONTINGENCIES19.1. Contingent LiabilitiesThere were no significant contingent liabilities as at the Balance Sheet date that require disclosure in theFinancial Statements.20. GOING CONCERNThe Company’s current liabilities have exceeded current assets by Rs. 152,689,765. The net assets stands at a deficitof Rs. 82,234,761 as at Balance Sheet date and as a result, the continuity of the business as a going concern is largelydependent on the borrowings or introduction of the capital by the shareholders.21. RELATED PARTY DISCLOSURESTransactions with the Related Parties in the ordinary course of business carried out on an arm’s length basis.21.1 Transactions with Key Management Personnel (“KMP”)KMP are persons who have authority and responsibility directly or indirectly for planning, directing andcontrolling the activities of the Company.The KMP comprise of the Board of Directors of the reporting entity.21.1.1 No compensation / (remuneration) were payable to or received by KMP during the year.21.1.2 No long-term post-employment, terminal benefits and share-based payments were made to the KMPduring the year.21.1.3 No loans were given to KMP during the year.

Beruwela Walk Inn PLC 33Notes to the Financial StatementsYear ended 31 st December 201121. RELATED PARTY DISCLOSURES21.1 Transactions with Key Management Personnel (“KMP”)21.1.4 The shareholding of the KMP are as follows:Name of the DirectorNo. of SharesMr. Kaliappapillai Soundararajan – Director 11,000 1Mr. Mahinda P. Haradasa – Director 1,000The names of the Directors of the Company, who are also Directors of other companies of Banyan TreeGroup are as follows:Name of DirectorsName of the CompanyMr. Ariel P Vera Banyan Tree Holdings Limited and certaincompanies in Banyan Tree GroupMr. See Hock Lye EddyCertain companies in Banyan Tree GroupMr. Chong Kim Seng PaulCertain companies in Banyan Tree GroupMr. Mahinda P. HaradasaBanyan Tree (Private) Limited21.2 Transactions with Close Family Members 2 of KMPThere were no transactions with the Close Family Members 2 of KMP during the year.21.3 Dealings with Related Parties21.3.1 Amount due to related companies as at 31 st December 2011 as follows (see Note 15):Banyan Tree Holdings Limited Rs. 416,012,363Banyan Tree (Private) Limited Rs. 12,449,575a) On 1 st January 2011, the Company entered into a Loan Agreement with Banyan Tree HoldingsLimited to renew a Loan facility of US$ 2,384,317 at an interest rate of 7% per annum. Therewere no collaterals offered by the Company to Banyan Tree Holdings Limited.b) On 1 st January 2011, the Company entered into a Loan Agreement with Banyan Tree (Private)Limited to renew a Loan facility of Rs. 4,351,627 at an interest rate of 7% per annum. There wereno collaterals offered by the Company to Banyan Tree (Private) Limited.21.3.2 The outstanding balances with related parties are not secured.21.3.3 No provisions were made for bad and doubtful debts against any related parties.21.3.4 Banyan Tree Holdings Limited has invested in 79.85% of the stated capital of the Company and theaccounts of the Company are consolidated with that of Banyan Tree Holdings Limited.1Shares held jointly.2Close members of the family of an individual are those that may be expected to influence, or be influenced by, thatperson in their dealings with the Company.

34 Annual Report 2011Management Committee team at Hotel1. Mr. S. P. Palitha Executive Housekeeper2. Ms. Amitha Kariyawasam SecretaryStaff Cadre2011 2010 2009 2008 2007 2006 2005 03/04Analysis by DesignationManager - - - - 1 2 2 2Executive 2 2 2 1 1 2 3 10Clerical 1 1 1 1 1 2 9 10Others 1 1 1 1 1 45 48 494 4 4 3 4 51 62 71Analysis by Years of Service00-05 Years - - - - - 12 21 2105-10 Years - - - 2 4 3 25 2810-15 Years 2 1 3 - - 22 5 915-20 Years 2 2 1 - - 6 4 6Above 20 Years - 1 - 1 - 8 7 74 4 4 3 4 51 62 71Analysis by AgeBelow 30 Years - - - - - 7 10 1130-40 Years - - - - 1 30 26 3440-50 Years 2 2 4 3 3 9 19 19Above 50 Years 2 2 - - - 5 7 74 4 4 3 4 51 62 71

36 Annual Report 2011Notice of Meeting1. To receive and consider the Report of the Directors and the Financial Statements for the financial year ended31 st December 2011 and the Report of the Auditors thereon.2. To re-elect as Director Mr. Chong Kim Seng Paul, who retires in terms of Articles 84 and 85 of the Articles of Associationof the Company.3. To re-appoint as Director Mr. Kaliappapillai Soundararajan, who is the age of 72 years, pursuant to Section 210 of theCompanies Act, No. 07 of 2007, to hold office from the date of this Annual General Meeting until the next AnnualGeneral Meeting.A notice has been received from a shareholder of the Company of the intention to move the following as an OrdinaryResolution at the forthcoming Annual General Meeting of the Company with regard to the re-appointment ofMr. Kaliappapillai Soundararajan who retires at the above Annual General Meeting.“Resolved that Mr. Kaliappapillai Soundararajan who is the age of 72 years be and is hereby re-appointed a Directorof the Company and it is further specifically declared that the age limit of 70 years shall not apply to the saidMr. Kaliappapillai Soundararajan.”4. To re-appoint Messrs. Tudor V. Perera & Co., the retiring Auditors and to authorize the Directors to determine theirremuneration.By Order of the Board,Varners International (Private) LimitedCompany SecretariesLevel 14, West Tower,World Trade Center, Echelon Square,Colombo 01Colombo30 th May 2012NOTICE IS HEREBY GIVEN that the THIRTY-NINTH ANNUAL GENERAL MEETING of BERUWELA WALK INN PLC will be held atIvy Room, Cinnamon Grand Colombo on 21 st June 2012 at 10.00 am for the following purposes:-Note:-1. A member unable to attend the above meeting is entitled to appoint a proxy, who need not be a member, to attendand vote in his/her place.2. A Form of Proxy is attached to this Report.3. The completed Form of Proxy should be deposited at the office of the Company Secretaries at Level 14, West Tower,World Trade Center, Echelon Square, Colombo 01, not less than 48 hours before the time fixed for the meeting.

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Form of ProxyI/We * ________________________________________________________________________________________________of ___________________________________________________________________________________________________being a member/members * of BERUWELA WALK INN PLC hereby appoint:-___________________________________________________________________________________________________ of_____________________________________________________________________________________________________or failing him/her*ARIEL P VERASEE HOCK LYE EDDYCHONG KIM SENG PAULMAHINDA P. HARADASAKALIAPPAPILLAI SOUNDARARAJANof Singapore or failing himof Singapore or failing himof Singapore or failing himof Colombo or failing himof Colomboas my/our * proxy to represent me/us * and to vote as indicated hereunder for me/us * and on my/our * behalf at theThirty-Ninth Annual General Meeting of the Company to be held on 21 st June 2012 and at every poll which may be takenin consequence of the aforesaid meeting and at any adjournment thereof.FORAGAINSTTo receive and adopt the Report of the Directors and the Financial Statements forthe financial year ended 31 st December 2011 with the Report of the Auditors thereonTo re-elect as Director Mr. Chong Kim Seng Paul, who retires in terms of Articles 84and 85 of the Articles of AssociationTo re-appoint as Director Mr. Kaliappapillai Soundararajan, who is the age of 72years, and retires, pursuant to Section 210 of the Companies Act, No. 07 of 2007(“the Act”), to hold office from the date of this Annual General Meeting until the nextAnnual General Meeting in accordance with Section 211 of the Act.To re-appoint Messrs. Tudor V. Perera & Co., Auditors for the ensuring year and toauthorize the Directors to determine their remunerationSigned this _____________________ day of __________ 2012.____________________________Signature(s) of Shareholder(s)* Please delete the inappropriate words.

Form of ProxyInstruction as to Completion:1. To be valid, this Form of Proxy must be deposited at the office of the Company Secretaries at Level 14, West Tower,World Trade Center, Echelon Square, Colombo 01, at least 48 hours before the time appointed for the meeting.2. In perfecting this Form of Proxy, please ensure that all details are legible.3. If you wish to appoint a person other than the Chairman or the Directors of the Company as your proxy, please insertthe relevant details at (1) above and initial against this entry.4. Please indicate clearly how your proxy is to vote on the resolutions. If no indication is given the proxy in his discretionmay vote as he/she thinks fit.5. 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.6. Where the proxy is signed under a Power of Attorney (POA) which has not been registered with the Company, theoriginal POA together with a photocopy of same or a copy certified by a Notary Public must be lodged with theCompany along with this proxy.7. A shareholder appointing a proxy (other than a Director of the Company) to attend the meeting should indicate theproxy holder’s National Identity Card (NIC) number on the Form of Proxy and should instruct the proxy holder tobring his/her National Identity Card to the meeting.Please provide the following information:Shareholder’s NIC No.__________________________________________Share Certificate No.__________________________________________No. of shares held__________________________________________Proxy holder’s NIC No. __________________________________________(if not a Director of the Company)