BANSEI ROYAL RESORTS
HIKKADUWA PLC
CORAL ROCK BY BANSEI
ANNUAL REPORT 2023/2024
ANNUAL REPORT
2023/2024
PERFORMANCE HIGHLIGHTS
FOR THE YEAR | 2023/24 | 2022/23 | 2021/22 | 2020/21 | 2019/20 |
Turnover | 115,915,482 | 98,572,861 | 51,901,508 | 9,498,728 | 60,143,680 |
Profit/(Loss) Before Tax | 32,310,694 | 26,089,816 | 1,275,425 | (26,192,873) | 4,490,289 |
Profit/(Loss) After Tax | 22,082,541 | 16,472,022 | 821,537 | (23,312,102) | 3,548,802 |
AT THE YEAR END | |||||
Shareholders' Funds | 294,482,806 | 283,745,630 | 267,103,713 | 265,512,500 | 291,700,108 |
Total Assets | 334,473,867 | 311,314,964 | 280,753,840 | 280,080,544 | 309,548,628 |
Company Employment ( No of Persons ) | 38 | 38 | 38 | 35 | 45 |
PER SHARE | |||||
Earnings (Rs) | 0.41 | 0.31 | 0.02 | (0.43) | 0.07 |
Dividend (Rs) | - | 0.20 | - | - | 0.05 |
Net Assets (Rs) | 5.48 | 5.28 | 4.97 | 4.94 | 5.43 |
Market Value (Closing Price ) (Rs) | 12.90 | 11.30 | 10.60 | 9.00 | 4.00 |
Highest Price (Rs) | 13.70 | 12.90 | 14.00 | 10.80 | 7.90 |
Lowest Price (Rs) | 8.50 | 7.00 | 7.00 | 3.80 | 3.90 |
RATIO | |||||
Gross Profit (%) | 79% | 78% | 79% | 65% | 85% |
Current Ratio (Times) | 9.14 | 8.36 | 8.76 | 8.42 | 10.94 |
Dividend payout (%) | - | 65% | - | - | 76% |
PUBLIC HOLDING | |||||
Percentage of Public Holding As st 31st March 10% | 10% | 10% | 10% | 10% |
BANSEI ROYAL RESORTS HIKKADUWA PLC
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ANNUAL REPORT
2023/2024
CONTENTS
1. | Management Discussion and Analysis | 03 |
2. | Profile of the Board of Directors | 04 |
3. | Risk Management | 07 |
4. | Annual Report of The Board of Directors on The Affairs of The Company | 10 |
5. | Corporate Governance | 15 |
6. | Audit Committee Report | 17 |
7. | Related Party Transactions Review Committee Report | 18 |
8. | Statement of Directors' Responsibility | 20 |
9. | Independent Auditors' Report | 21 |
10. | Statement of Financial Position | 25 |
11. | Statement of Profit or Loss and Other Comprehensive Income | 26 |
12. | Statement of Changes in Equity | 27 |
13. | Statement of Cash Flow | 28 |
14. | Notes to the Financial Statements | 29 |
15. | Shareholders and Investor Information | 58 |
16. | Real Estate Portfolio | 60 |
17. | Corporate Information | 61 |
18. | Notice of Meeting | 62 |
19. | Instructions to Participate at the Annual General Meeting (AGM) | 63 |
20. | Form of Request | 64 |
21. | Note | 65 |
22. | Circular to Shareholders | 66 |
23. | Form of Proxy | 67 |
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BANSEI ROYAL RESORTS HIKKADUWA PLC
ANNUAL REPORT
2023/2024
MANAGEMENT DISCUSSION AND ANALYSIS
We are pleased to present to you the highlights of the Annual Report and Financial Statements of Bansei Royal Resorts Hikkaduwa PLC for the year ended 31 March 2024.
Coral Rock by Bansei in Hikkaduwa Sri Lanka, is a popular destination in the south for both local and international guests. We have 14 Deluxe and 02 Super Deluxe rooms overlooking the Hikkaduwa beach. We have 14 standard rooms with delightful views of the city. Our full-length swimming pool, complete with a poolside bar, is just steps away from the beautiful beach extending out towards the ocean. Our restaurant serves the best of regional culinary delights. At Coral Rock by Bansei, we offer a unique hospitality experience, giving you the contemporary best of a star-class hotel in Hikkaduwa, Sri Lanka.
The company's strong performance driven by our core values, reflects our commitment to teamwork and sustainable development. Our strategy, guided by clear direction and people-centric leadership, underscores our focus on sustainable growth. Revenue for the year increased by 18% to LKR. 116 million, resulting in a 24% increase in profit before tax to LKR. 32 million.
The company earned a net profit of LKR. 22 million, reflecting a 34% increase from the previous year. Bansei Royal Resorts Hikkaduwa PLC has historically paid out maximum dividends to its shareholders while continuing to care for the hotel property and all stakeholders of the business.
THE GLOBAL ECONOMY
The 2023 United Nations World Tourism Organization (UNWTO) World Tourism Barometer indicates a significant rebound in international tourism, with destinations worldwide welcoming global travellers and reaching 88% of pre-pandemic levels. This resurgence is attributed to the unleashing of pent-up demand, improved air connectivity, and the robust recovery of Asian markets.
GLOBAL TOURISM
The UNWTO forecasts a full recovery of international tourism by the end of 2024, with initial estimates suggesting a 2% growth above 2019 levels. This optimistic outlook is, however, tempered by the pace of recovery in Asia, and ongoing economic and geopolitical risks. South Asia has shown remarkable resilience, recovering 87% of its pre-pandemic tourism levels, while Northeast Asia lags at 55%.
SRI LANKA ECONOMY
The relative stabilisation of the economic, social, and political environment, aided by the improved air connectivity, resulted in a resurgence in tourist arrivals of close to 1.5 million travellers, in 2023, recording 106.6% growth from approximately 720 thousand arrivals in 2022. Arrivals for the month of December 2023, crossed 200,000 for the first time since 2019, and the momentum was sustained in the first quarter of CY 2024.
As the fiscal year 2023 concluded, Sri Lanka's economy exhibited signs of stabilisation and a gradual revival from its deepest post-independence economic downturn. The nation's GDP contracted by 2.3% in 2023, despite growth in the latter two quarters, signalling a slow but positive shift in economic momentum.
SRI LANKAN TOURISM
The year 2023 has been a remarkable period for Sri Lanka's tourism sector, marking a significant turnaround from the challenges of the past. The industry witnessed a robust revival with the country, registering the highest influx of visitors since 2019, reaching almost 1.5 million tourists. This achievement is particularly noteworthy, given the consecutive challenges faced over the previous four years, including the Easter Sunday attacks, and the global pandemic.
The Sri Lanka Tourism Development Authority (SLTDA), aims to attract 2.3 million visitors in CY2024. Although arrivals are still below pre-pandemic levels, it is encouraging to witness the month-on-month pickup in inquiries and forward bookings.
The Sri Lanka Tourism Development Authority (SLTDA), has been instrumental in driving growth through various initiatives, including enhancing digital connectivity, streamlining visa processes, and improving accessibility to key tourist sites. These efforts have been complemented by a focus on sustainable tourism practices, ensuring that the natural and cultural assets of the country are preserved for future generations.
CONCLUSION
We would like to express our heartfelt gratitude to the banking partners, suppliers, members of the local community, tour operators, travel agents, online sales partners, and our guests.
We are hopeful that this financial year will bring more success to our company and our country, as we welcome a new era of tourism in Sri Lanka.
BANSEI ROYAL RESORTS HIKKADUWA PLC
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ANNUAL REPORT
2023/2024
BOARD OF DIRECTORS
Mr. T. de Zoysa,
Chairman
Mr. T. Murakami
Deputy Chairman
A well-known figure in the Sri Lankan business community, Tilak de Zoysa, FCMI (UK) FPRI (SL), Honorary Consul for Croatia and Global Ambassador for HelpAge International was conferred the title of "Deshabandu" by His Excellency the President of Sri Lanka in recognition of his services to the Country and was the recipient of "The Order of the Rising Sun. Gold Rays with Neck Ribbon" conferred by His Majesty the Emperor of Japan, and was the Recipient of the LMD lifetime achievers' Award 2017.
In addition to being the Chairman of Carson Cumberbatch PLC, Associated CEAT (Pvt) Ltd, Amaya Hotels and Resorts USA (Radisson), Jetwing Zinc Journey Lanka (Pvt) Ltd, Trinity Steel (Pvt) Ltd, CG Corp Global Sri Lanka and HelpAge Sri Lanka.
He is also the Vice Chairman of CEAT Kelani Holdings (Pvt) Ltd., and serves on the boards of several listed and private Companies which include TAL Lanka Hotels PLC (Taj), TAL Hotels and Resorts Ltd, Nawaloka Hospitals PLC, Associated Electrical Corporation Ltd, INOAC Polymer Lanka (Pvt) Ltd, Cinnovation INC, Varun Beverages Lanka (Pvt) Ltd (Pepsi), and Is a Member of the Kalutara Bodhi Trust.
Mr. Tilak de Zoysa was the past Chairman of the Supervisory Board (AMW) and Advisor to the Al-Futtaim Group of Companies in Sri Lanka, past Chairman of the Ceylon Chamber of Commerce, the National Chamber of Commerce of Sri Lanka, HelpAge International (UK), Colombo YMBA and Board of Governors and the Sasakawa Memorial Sri Lanka Japan Cultural Centre Trust, and served as a Member of the Monetary Board of Sri Lanka (2003-2009).
Mr. Toyohiko Murakami is the Chief Executive of Bansei Group Japan. Mr. Murakami has over 36 years of experience in managing various business fields consisting of Securities, Finance, Insurance, and Real Estate.
Mr. Murakami has a degree in Bachelor of Law from Kyoto University, Japan.Mr. Murakami joined Bansei Securities Co. Ltd. in November 2005.
He was appointed to Executive Vice President in February 2006 and to President and C.E.O of the Company in June 2009.
He is also the CEO of Bansei Holdings Co., Bansei Hoken (Insurance) Community Co. Ltd, Bansei Ayuryveda Co. Ltd, Bansei Research Institute Co. Ltd, Bansei Sho Co. Ltd., Ceylontime Co. Ltd in Bansei Group Japan.
Formerly Mr. Murakami was Advisor with Zenkoku Hosho Co., Ltd from November 2005 to February 2006 and Director of H. S. Securities Co., Ltd from June 2002 to August 2005.
In Sri Lanka, Mr. Murakami serves as a Director of Bansei Holding LK (Pvt) Ltd, Bansei Securities Capital (Pvt) Ltd, Bentota Club Villa (Pvt) Ltd.
Mr. Murakami was appointed to the Board on 30th June 2013.
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BANSEI ROYAL RESORTS HIKKADUWA PLC
ANNUAL REPORT
2023/2024
Mr. H. Ota
Director/Chief Executive
Officer
Mr. J. V. W.Malawana
Non - Executive Director
Mr. Ota is the Managing Director of Bansei Securities Co. Ltd., and counts over 36 years of experience in finance business (Commercial Banking, Trust Banking, Lease Finance, Securities Business). Mr. Ota has a Bachelor of Law from Kyoto University, Japan.
He joined Bansei Securities Co. as a Managing Director in November 2014. He has supported Mr. Toyohiko Murakami who is the Chief Executive of Bansei Group to transfer the Company to be strong and profitable. He is a director of Pan Asia Banking Corporation. He is known as the man who has bridged Sri Lanka and Japan in Financial Business.
Formerly he worked for The Long-Term Credit Bank of Japan (April 1982- September 2000) and Sumitomo Trust & Banking Co. Ltd (October 2000 - September 2011) and Ricoh Co. Ltd (October 2011- October 2014).
Mr. Ota was appointed to the Board on 12th March 2015.
With a long spanning career in the financial services industry, Mr. Viraj Malawana has held senior positions at the Colombo Stock Exchange and Brunei Stock Exchange, HSBC and Standard Chartered Bank and is credited for structuring and creating novel investment instruments customized specifically for foreign investors into Sri Lanka. He later founded and served as Chief Executive Officer of New World Securities Pvt Ltd, a trading member of the Colombo Stock Exchange.
He is currently the Managing Director of NWS Holdings Pvt. Ltd and NWS Management Services Pvt Ltd, as well as Veritas Holdings Pvt Ltd and Aspen Capital (PTY) Ltd Australia. He serves as the Chairman of Sushi Bar Samurai Pvt. Ltd. His Directorates includes Aspen Hills Capital Inc. (Canada), Ollier Powder Coating (PTY) Ltd (Australia) kokusai (PTY) Ltd (Australia). He was also a former Director of Ideal Finance Ltd (a licensed Finance Company registered under Central Bank of Sri Lanak), Wealth Trust Securities Ltd, a registered Primary Dealer under the Central Bank of Sri Lanka and Strategic Business Innovator Pvt. Ltd (a subsidiary of SBI Japan). Viraj was a former Chairman of Bansei Securities Capital Pvt Ltd, a licensed Margin Provider registered and regulated under the Securities and Exchange Commission of Sri Lanka, where he currently serves as a Consultant.
He previously served as a Member of the Advisory Committee to the Ministry of Tourism.
BANSEI ROYAL RESORTS HIKKADUWA PLC
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Mr. G. C. A. de Silva
Non-Executive Director
Mr. C. S. J. Perera
Independent/Non-Executive Director
ANNUAL REPORT
2023/2024
Channa de Silva is the Chairman of Sarvodaya Development Finance PLC from 2016. He is also the Vice President of Sarvodaya Movement, one of the largest not for profit social development movements in Sri Lanka.
He previously served as the Managing Director of Summit Finance PLC as well as the Managing Director of George Steuart Finance PLC. Formerly, he served as a Director of Pan Asia Bank PLC. He also served as the Group Managing Director of Delmege Group Limited. He has served the government sector previously as the Director General of the Securities and Exchange Commission (SEC) and the Executive Director of the Board of Investments (BOI) Sri Lanka. He is the Chairman/Co-founder of Capital media, publisher of Echelon business magazine and business news portal EconomyNext and Neon Media.
He holds a Bachelor's Degree from the University of Colombo and Master's Degrees from Harvard University and Melbourne University. Fellow of the Chartered Institute of Management Accountants (FCMA - UK) and Fellow of the Chartered Certified Accountants (FCCA - UK).
He serves as Governing Council Member of the University of Colombo. He also serves as a board member of Investment as well as Finance Committee along with being a board member of many faculties and institutions of the University of Colombo. He serves as a Sri Lankan council member of the Chartered Institute for Securities & Investments (CISI- UK). He is an Edward Mason Fellow of Harvard University and served as a Teaching Fellow in Public Finance at the Harvard Kennedy School.
Mr. Surith Perera is a Business Consultant possessing broad experience in leading Organizations,People brands.
Having worked at Unilever for 24 years, Mr. Perera has gained a wealth of knowledge and experience in growing and developing a wide portfolio of brands in Sri Lanka as well as in India. Having been a part of the Board of Management at Unilever Sri Lanka, serving as Marketing as well as Customer Development Director, he joined Sunshine Consumer Lanka Ltd (formerly Watawala Tea Ceylon Ltd) as CEO. Having transformed the company by driving an inclusive culture, developing people and introducing new technology, he was successful in taking the company to new heights with profitable growth and significant market share gains, while diversifying the business.
He possesses an MBA from the Post Graduate Institute of Management, University of Sri Jayewardenepura, Sri Lanka and is a Fellow Member of the Institute of Chartered Institute of Management Accountants, UK.
Mr. Perera was appointed to the Board on 12th March 2014
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BANSEI ROYAL RESORTS HIKKADUWA PLC
ANNUAL REPORT
2023/2024
RISK MANAGEMENT
The company's risk management strategy is integrated with its sustainability management framework, enabling a holistic approach towards the identification, management, and mitigation of risk. Risk management therefore extends beyond managing the operational and financial risks faced by the company, to incorporate broader environmental, community, employee, value chain, and other non-financial risks related to the triple bottom-line approach of the company, providing a foundation for productive engagements with internal and external stakeholders.
The Board of Directors bears responsibility for managing risk, and has put in place a framework for managing risk. The Audit Committee has oversight responsibility for risk management and reports the same to the Board. The Audit Committee reviews the risk assessments and reports to the Board on matters relating to risk management.
The risk reviews are also a key input into the company's strategic planning and budgeting processes to ensure alignment with the forecast risk environment and effective management of resources.
RISK MANAGEMENT FRAMEWORK
Our risk management processes are summarised below
Risk Assessment & Prioritisation
Risk Mitigation
- Determine risk management approach for each risk: avoid, accept, mitigate or transfer
- Develop an appropriate risk response for imple mentation
- Assess probability of occurrence and severity of impact
- Determine risk category using risk assessment matrix
- Classify risk
- Determine cause of significant risk
Risk Identification
● Identify potential risks
RISK
MANAGEMENT
PROCESS
Risk Monitoring
- Monitoring and review the effectiveness of the mitigation measure
- Tracking and assessing the progress of risk management activities
- Identifying potential risks
Risk Reporting
● Reporting the status of the risk reduction actions and progress of risk management
BANSEI ROYAL RESORTS HIKKADUWA PLC
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ANNUAL REPORT
2023/2024
PRINCIPAL RISKS IN 2023/24
The principal risks are those that are assessed to significantly and negatively impact our ability to create value in the short, medium, and long term. These risks are identified through the Risk Prioritisation and Assessment step of the risk management process, taking into account the severity of impact and likelihood of occurrence of identified risks. The significant risk areas impacting the company's strategic business objectives and the measures taken to address these risks are discussed below.
Risk
Mitigating Actions
Risk Assessment
Political, Economic and Environmental | • Management regularly reviews political and | |
• Reduced revenue, increased operating | Impact - High | |
costs resulting in reduced profitability | economic developments and seeks to identify | |
and cash flows | emerging risks at the earliest opportunity | Likelihood- High |
• Occupancy and room rates adversely | • Transferring risks to third parties through | Risk Rating - High |
affected by events that reducedomestic | ||
insurance policies The adequacy of insurance | ||
or international travel. Suchevents | ||
covers is regularly reviewed and adjusted when | ||
may include acts of terrorism,war, | ||
necessary | ||
or perceived increased risk ofarmed | ||
conflicts, epidemics, naturaldisasters, | ||
increased cost of travel, andindustrial | ||
action. Reduced demand willimpact on | ||
revenues and operational profitability | ||
Employee | ▪ Development and maintenance of | Impact - High |
▪ Inability to achieve planned business | ||
objectives | company culture, compensation and benefits | Likelihood- High |
▪ Reduced quality of standards resulting in | arrangements,training and development, are key | |
activities carried out | Risk Rating - High | |
reduced guest satisfaction | ||
▪ Realigning of service standards. | ||
Cyber security | • Conduct of cyber security assessment | Impact - High |
• Loss of revenue | ||
• Reduced profitability | • Establish network access controls | Likelihood- Possible to Occur |
• Loss of data | • Implementation of SD WAN and antivirus software | Risk Rating - High |
• Adverse impact on reputation | • Continuous monitoring of network traffic | |
Technology | • Regular review of systems and upgrades where | |
• Inaccurate information | Impact - High | |
appropriate | ||
• Reputation and performance of the | • Introduction of new technology where possible and | Likelihood- Possible to Occur |
company adversely affected | ||
appropriate | Risk Rating - Medium | |
•Worsening efficiency, loss of competitive | ||
advantage | ||
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BANSEI ROYAL RESORTS HIKKADUWA PLC
ANNUAL REPORT
2023/2024
Interest Rate Risk | ||
• Reduced profitability | • Negotiate favourable terms and conditions with | Impact - High |
• Reduced cash flows | the banks | Likelihood- Possible to Occur |
Risk Rating - Medium | ||
Liquidity | • Preparation of regular cash flow forecasts in line with | Impact - High |
• Reduced cash flows | ||
• Reduced profitability | projected occupancy fluctuations, in order to assess the | Likelihood- High |
liquidity position of the company in the short term | ||
• Monitor and review bank balances regularly | Risk Rating - High | |
• Preparation and review of actual performance against | ||
the budget, monthly | ||
Inflation Risk | ||
▪ Reduced profitability | ▪ Preparation of forecasts in line with projected | Impact - High |
▪ Reduced return on investment | occupancy and cost | Likelihood- Possible to Occur |
▪ Initiated cost control activities | ||
▪ Review of pricing and making necessary adjustments | Risk Rating - High | |
Statutory and Legal Risk | ||
• Legal fees and penalties resulting in | • Company continues to monitor changes in the | Impact - High |
reduced profitability | regulatory environment in which it operates | |
▪ Adverse impact on reputation | ▪ Statutory declaration is made to board each quarter | Likelihood - Low |
▪ Loss arising from defective contracts | Risk Rating - Low | |
Supply chain issues/Supply chain | ||
shortages | Impact - Medium | |
• Inability of suppliers to fulfill deliv | • Review supplier standards, maintenance of agreements, | |
ery requirements in terms of quality | supplier forums and continuous monitoring | Likelihood - Unlikely to occur |
and price can lead to negative | • Identification of alternative suppliers | |
impacts on service quality and | • Modifying the menus and ordering process accordingly, | Risk Rating - Low |
margin pressure. Short supply of raw | ||
robust supplier engagement | ||
materials could result in disruption to | ||
operations | ||
Equipment/Machinery | ||
breakdown | Impact - High | |
• Breakdown can cause disruption | • Regular preventative maintenance programmes are | |
to operations, adversely | carried out | |
impacting our services and guest | • Regular inspections, supervision, and monthly mainte | Likelihood - likely to occur |
experiences resulting in loss of | ||
nance | ||
reputation and increased costs | Risk Rating - High | |
• Maintenance is done on a needs basis upon identifi | ||
cation of issues from detective measures or breakdown | ||
incidents | ||
BANSEI ROYAL RESORTS HIKKADUWA PLC
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