Marawila Resorts PlcCSELK: MARA.N0000

Annual Report 2023/2024

· Issued by Marawila Resorts Plc

CONTENT

Corporate Information

02

Notice of Meeting

03 - 05

Chairman's Review

06 - 07

Board of Directors

08 - 09

Company Overview

10

Annual Report of the Board of Directors

11 - 13

Corporate Governance

14 - 21

Audit Committee Report

22

Remuneration Committee Report

23

Related Party Transactions Review Committee Report

24

FINANCIAL REPORTS

Independent Auditors' Report

25 - 28

Statement of Profit or Loss and Other Comprehensive Income

29

Statement of Financial Position

30 - 31

Statement of Changes in Equity

32

Statement of Cash Flows

33

Notes to the Financial Statements

34 - 77

Share Information

78 - 80

Five Year Summary

81

Graphical Review

82

Form of Proxy

83 - 84

MARAWILA RESORTS PLC | Annual Report 2023/2024

CORPORATE INFORMATION

Name of Company

Auditors

Marawila Resorts PLC

KPMG

Chartered Accountants,

Status & Legal Form

32 A, Sir Mohamed Macan Markar Mawatha,

A Public Quoted Company with Limited Liability Incorporated in

Colombo 03.

Sri Lanka on 22nd January 1992 Under the Companies Act No. 17

of 1982 and re-registered under the Companies Act No. 7 of 2007

Lawyers

on 3rd September 2008.

Julius & Creasy

P.O. Box 154,

Company Registration No.

Colombo.

PQ 198

Bankers

Registered Office

Commercial Bank of Ceylon PLC

8-5/2, Leyden Bastian Road,

Hatton National Bank PLC

York Arcade Building, Colombo 01.

Bank of Ceylon

Muslim Commercial Bank Ltd

Stock Exchange Listing

The Issued Ordinary Shares of Marawila Resorts PLC are

Hotel

listed on the Diri Savi Board of the Colombo Stock Exchange

Club Palm Bay

of Sri Lanka.

Thalwilawella, Thoduwawa, Marawila, Sri Lanka.

Tel

+94 (0)32 -2255830, +94 (0)32 -2254956

Board of Directors

+94 (0) 70 3512148

S.D.R. Arudpragasam - (Chairman)

E-mail

marawilaresort@forthotels.lk

C.P.R. Perera - (Deputy Chairman)

Web

www.clubpalmbay.lk

S. Rajaratnam

Amrit Rajaratnam

Sales & Reservation Office

A. R. Rasiah

York Hotel Management Services Ltd.

Anushman Rajaratnam

8-2/1, York Arcade Building,

Leyden Bastian Road,

Secretaries

Colombo 01.

Corporate Managers & Secretaries (Private) Ltd.

Tel

+94 (0) 11 2326927,

8-5/2, Leyden Bastian Road,

+94 (0) 70 3114928

York Arcade Building, Colombo 1.

E-mail

reservations@clubpalmbay.lk

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MARAWILA RESORTS PLC | Annual Report 2023/2024

NOTICE OF MEETING

Notice is hereby given that the Thirtieth Annual General Meeting of Marawila Resorts PLC will be held, on 20th September 2024 at 10.45 a.m. and conducted as a Virtual Meeting from 8-5/2, Leyden Bastian Road, York Arcade Building, Colombo 01, for the following purposes :

  1. To receive and consider the Annual Report of the Board of Directors and the Audited Financial Statements for the year ended 31st March 2024 with the Report of the Auditors thereon.
  2. To re-elect as a Director, Mr. Anushman Rajaratnam who retires in accordance with Articles 84 & 85 of the Articles of Association of the Company.
  3. To reappoint Mr. C.P.R. Perera who is over seventy years of age, as a Director. Special Notice has been received from a shareholder of the intention to pass a resolution which is set out below in relation to his reappointment. (see Note No.5)
  4. To reappoint Mr. A.R. Rasiah who is over seventy years of age, as a Director. Special Notice has been received from a shareholder of the intention to pass a resolution which is set out below in relation to his reappointment. (see Note No.6)
  5. To reappoint Mr. S.D.R. Arudpragasam who is over seventy years of age as a Director. Special Notice has been received from a shareholder of the intention to pass a resolution which is set out below in relation to his reappointment. (see Note No.7)
  6. To authorize the Directors to determine contributions to Charities.
  7. To reappoint KPMG Chartered Accountants as Auditors and authorize the Directors to determine their remuneration.
  8. Special Business
    To consider and if thought fit to pass the following Special Resolution to amend the Articles of Association of the Company in compliance with the Listing Rules of the Colombo Stock Exchange in the manner following;
    Special Resolution Resolved -
    "That the existing Article 74(1) be deleted and the following be substituted therefor:
    74(1). The Directors shall not be less than five nor more than twelve in number. Subject to the provisions of the Act and these presents, the Company may from time to time, by Special Resolution, increase or reduce the number of Directors.

• That the existing Article 105 be deleted and the following be substituted therefor:

105(1) A Director may, by notice in writing left at the office, appoint any person to be his Alternate to act in his place for such period as the appointor may stipulate and such appointment shall become effective upon approval thereof by the Board, provided however that:-

  1. An Alternate Director shall only be appointed in exceptional circumstances and for a maximum period of one (1) year from the date of appointment.
  2. If an Alternate Director is appointed by a Non-Executive Director such Alternate should not be an Executive of the Company.
  3. If an Alternate Director is appointed by an Independent Director, the person so appointed should meet the criteria of independence specified in the Listing Rules of the Colombo Stock Exchange and the Company shall satisfy the requirements relating to the minimum number of Independent Directors specified in the Listing Rules. The Nominations and Governance Committee of the Company shall review and determine that the person so nominated as the Alternate would qualify as an Independent Director before such appointment is made.
  4. The Company shall make an immediate Market Announcement on the Colombo Stock Exchange regarding the appointment of an Alternate Director. Such announcement shall include the following:

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MARAWILA RESORTS PLC | Annual Report 2023/2024

NOTICE OF MEETING

    1. the exceptional circumstances leading to such appointment
    2. the information on the capacity in which such Alternate Director is appointed, i.e. whether as an Executive, Non- Executive or Independent Director.
    3. the time period for which he/she is appointed, which shall not exceed one (1) year from the date of appointment and
    4. a statement by the Company indicating whether such appointment has been reviewed by the Nominations and Governance Committee of the Company.
  2. A person appointed to be an Alternate Director shall not in respect of such appointment be entitled to receive any remuneration from the Company, nor be required to hold any share qualification, but the Board may repay the Alternate Director such reasonable expenses as he may incur in attending and returning from meetings of the Directors which he is entitled to attend or which he may otherwise properly incur in or about the business of the Company or may pay such allowances as the Board may think proper in respect of these expenses.
  3. An Alternate Director shall be entitled to receive notices (on his giving an address for such notices to be served upon him) of all meetings of the Directors and to attend and vote as Director at any such meeting at which the Director appointing him is not personally present and generally at such meeting to perform all the functions of his appointor as a director in the absence of such appointor.
  4. If an Alternate Director is also a Director in his own right he shall have at any Board meeting two (2) votes, one (1) vote in his own right and one (1) vote in his capacity as an Alternate Director.
  5. An Alternate Director shall ipso facto cease to be an Alternate Director on the happening of any of the following events;
    1. Upon the Appointor's resumption of duties as a Director;
    2. If the appointment of the Alternate Director is revoked by notice in writing left at the office by his appointor.
    3. If his appointor ceases for any reason to be a Director; Provided that if any Director retires by rotation but is

    re-elected at the meeting at which such retirement took effect, any appointment made by him pursuant to this Article which was in force immediately prior to his retirement shall continue to operate after his re-election as if he had not so retired;

    1. If the Alternate Director shall have a receiving order made against him or compounds with his creditors or is adjudicated insolvent;
    2. If the Alternate Director becomes lunatic or becomes of unsound mind;
    3. If the Alternate Director resigns by a notice in writing given under his hand to the Company;
    4. If the Board resolves that the appointment of the Alternate Director be terminated; provided that such termination shall not take effect until the expiration of thirty (30) days after the date of the resolution of the Board;
    5. If he becomes subject to any of the provisions of Article 83 of these Present which, if he were a Director of the Company, would render his office vacated.
  2. A Director shall not vote on the question of the approval of an Alternate Director to act for him or on the question of the termination of the appointment of such an Alternate Director under the foregoing sub-clause of this Article, and if he does so, his vote shall not be counted; nor for the purpose of any resolution for either of these purposes shall he be counted in the quorum present at the Meeting.
  3. The attendance of any Alternate Director at any meeting subject to (6) above,including Board Committee meetings shall be counted for the purpose of quorum.

By Order of the Board

CORPORATE MANAGERS & SECRETARIES (PRIVATE) LTD

Secretaries

Colombo

16th August 2024

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MARAWILA RESORTS PLC | Annual Report 2023/2024

NOTICE OF MEETING

Notes:

  1. A member of the Company who is entitled to attend and vote may appoint a proxy to attend and vote instead of him or her. A proxy need not be a member of the Company.
  2. A Form of Proxy is enclosed with this Report.
  3. The instrument appointing a proxy must be deposited at the Registered Office of the Company's Secretaries at No. 8-5/2, Leyden Bastian Road, York Arcade Building, Colombo 1, not less than forty-eight hours before the time fixed for the meeting.
  4. Members are encouraged to vote by Proxy through the appointment of a member of the Board of Directors to represent them and vote on their behalf. Members are advised to complete the Form of Proxy and their voting preferences on the specified resolutions to be taken up at the meeting and submit the same to the Company Secretaries in accordance with the instructions given on the reverse of the Form of Proxy.
    Please refer the "Circular to Shareholders" dated 16th August 2024 for further instructions relating to the Annual General Meeting and for joining the Meeting virtually.
  5. The Company has received Special Notice from a shareholder giving notice of the intention to move the following Resolution as an Ordinary Resolution at the Annual General Meeting :
    Resolved
    "that Mr. C.P.R. Perera who is eighty years of age, be and is hereby reappointed a Director of the Company and it is further specially declared that the age limit of seventy years referred to in Section 210 of the Companies Act No. 7 of 2007 shall not apply to the said Director Mr. C.P.R. Perera."
  6. The Company has received Special Notice from a shareholder giving notice of the intention to move the following Resolution as an Ordinary Resolution at the Annual General Meeting :
    Resolved
    "that Mr. A.R. Rasiah who is seventy eight years of age, be and is hereby reappointed a Director of the Company and it is further specially declared that the age limit of seventy years referred to in Section 210 of the Companies Act No. 7 of 2007 shall not apply to the said Director Mr. A.R. Rasiah."
  7. The Company has received Special Notice from a shareholder giving notice of the intention to move the following Resolution as an Ordinary Resolution at the Annual General Meeting :
    Resolved
    "that Mr. S.D.R. Arudpragasam who as at the date of the Annual General Meeting would have reached seventy three years of age,be and is hereby reappointed a Director of the Company and it is further specially declared that the age limit of seventy years referred to in Section 210 of the Companies Act No.07 of 2007 shall not apply to the said Director, Mr. S.D.R. Arudpragasam".

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MARAWILA RESORTS PLC | Annual Report 2023/2024

CHAIRMAN'S REVIEW

I am delighted to welcome you to the 30th Annual General Meeting and share the Annual Report and Audited Financial Statements of Marawila Resorts PLC for the financial year ended March 31, 2024. This year has been marked by challenges and significant trials for both the nation and the Company which showed much resilience to overcome them. Despite the hurdles I am particularly pleased to showcase the achievements, and advancements that have shaped this remarkable period, after a strenuous three-year period.

Over the past year, our Company has demonstrated remarkable resilience and adaptability. Despite facing significant challenges in the first half of the year due to low tourist arrivals and macroeconomic uncertainties, we successfully recorded encouraging financial results. The travel industry, in particular, struggled with lackluster economic growth and widespread uncertainty due to wars in the Eastern Europe and the middle east with global economies increasingly facing a likelihood of recession or downturn due to high interest rates which was adopted to tame high inflation in feeding markets. However, a turning point came when key markets relaxed or lifted travel advisories, boosting the industry during the final few months of the financial year, coinciding with the winter tourism season.

During the year under review, tourist arrivals to the country reached 1.569 million, a significant increase from the 770,000 arrivals in the previous period, marking a remarkable 104% year- on-year growth. India led the main feeder markets with 352,000 arrivals, followed by Russia (208,000), the UK (160,000), Germany (124,000), and China (102,000). It was particularly encouraging to see a recovery in our traditional markets and stronger arrivals from China following the lifting of pandemic-related travel bans. These positive developments contributed to our Company's improved performance.

As the year progressed, we observed a gradual easing of some of the macroeconomic challenges the country faced. Prudent monetary policies were implemented, including raising policy rates to control rampant inflation yielded expected results. The adoption of a cost-plus pricing model for energy, fuel, and other utilities proved effective, helping to bring inflation under control. The Average Weighted Prime Lending Rate (AWPLR) was reduced to 10.6% from the previous year's 21.4%, facilitating

economic stimulation by lowering borrowing costs and promoting improvements in the previously stagnant economy with industry looking at improving facilities.

These positive developments drove economic growth, with the central bank forecasting a growth rate of 2.2%, a significant turnaround from the 2.3% contraction experienced in 2023. Strategic interventions, such as the IMF bailout package, adjustments in policy rates, and efforts to stabilize the economy, also bore fruit, offering a glimmer of hope for recovery. The resurgence of tourism, particularly with an influx of visitors from Eastern Europe and the Indian subcontinent, further indicated a positive trajectory for the industry.

On the positive side, the tourism sector experienced an upward trend, with hotels recording occupancy rates above 85% during the winter season. This boost provided the industry with vital momentum in the right direction. Significant developments such as the removal of travel advisories by our main markets, enhanced destination promotions through roadshows and trade fairs and relaxed policy rates facilitating more investments into the industry to propel growth were commendable and significantly contributed to progress.

Furthermore, the strategic promotion of the destination through roadshows in Europe, the Middle East, China, and India played a pivotal role in attracting more visitors. Relaxed policy rates also facilitated increased investments in the tourism sector, propelling growth and fostering further advancements. These collective efforts significantly contributed to the positive trajectory of the tourism industry, highlighting the effectiveness of targeted strategies and collaborative initiatives. However, significant challenges persist, including escalating power bills adversely affecting industry profitability and a shortage of skilled labor due to migration and foreign employment opportunities, requiring prompt attention from industry watchdogs and the government, remains a considerable challenge. Moreover, the LKR strengthened its position against the USD from Rs. 303 as of the year end from Rs. 330 a year ago which provided more stability to the currency and the commodity prices while assisting to ease the inflationary impact that persisted a year ago.

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CHAIRMAN'S REVIEW

Our unwavering commitment to overcoming these obstacles was rewarded as we approached the latter part of the financial year, coinciding with the traditional winter tourist season starting in November 2023. Marawila Resorts PLC reported a turnover of Rs.762 million, reflecting a remarkable 32% increase compared to the previous year's Rs.574 million. Occupancy rates reached 46%, a significant improvement from the previous year's 36%.

The higher revenue was primarily driven by increased tourist arrivals and higher occupancy rates, bolstered by the Company securing better rates from the Russian and European markets such as France and Germany during the winter season. Despite implementing thorough cost-management measures to manage expenses and mitigate the impact of unprecedented inflation on commodities, high energy costs with a rate hike of around 60% posed a challenge to profitability.

Nevertheless, the Company reported a net profit before tax (PBT) of Rs.59 million, a substantial turnaround from the net loss of Rs.139 million last year. Additionally, the Company accounted for an exchange gain of Rs.30 million (compared to an exchange loss of Rs.46 million in 2022/23) due to the strengthening of the LKR against the USD, with an average rate of Rs. 313, marking a significant appreciation of the LKR against the USD in the revaluation of its foreign currency-denominated term loan.

On another note, I would like to convey the Boards gratitude to the investors who subscribed to the rights issue which was concluded in May 2023 and the Company has immensely improved its equity position on its way bolstering the balance with the Company's noteworthy performance during the year under review. Further, the capital reduction measure was done with a view to improving the balance sheet position and enhancing the solvency of the Company which is a pivotal matter in a future profit distribution and any negotiation with financial institutions for further funding requirements.

While challenges remain on the horizon, recent developments suggest a move towards stability and growth. The Company is also proceeding with soft refurbishments of the property in preparation for the upcoming winter season. With rising hotel occupancy rates and positive industry trends, we are optimistic about the future.

MARAWILA RESORTS PLC | Annual Report 2023/2024

The recent easing of import restrictions, favorable exchange rate improvements, and increased foreign exchange remittances, alongside improved forex reserves, have provided a more stable foundation for the industry.

As we look forward to the upcoming winter season, we are confident in our ability to adapt to the evolving business landscape and seize emerging opportunities. The Company strongly value the dedication of our team, the support of our stakeholders, and the strategic direction from our Board of Directors in our pursuit of sustainable growth and success.

As a Company, we come together to remember our non-executive director, Mr Prema Cooray for his valuable inputs and the dedication shown in shaping the strategic vision of the Company. Though he is no longer with us, he will be always remembered as we strive forward into the future.

I wish to sincerely thank my colleagues on the Board for their invaluable support and guidance in shaping the strategic direction of the Company. I also deeply appreciate the dedication of our esteemed employees, loyal customers, numerous business partners, and valued shareholders. Your unwavering support is invaluable as we work towards the betterment of the Company with enhanced stakeholder value in the future.

S.D.R. Arudpragasam

Chairman

16th August 2024

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MARAWILA RESORTS PLC | Annual Report 2023/2024

BOARD OF DIRECTORS

Mr. S. D. R. Arudpragasam

FCMA (UK)

Chairman

Mr. S.D.R. Arudpragasam joined the Board in 1996 and was appointed Chairman in 2013. He was appointed Chairman of The Colombo Fort Land & Building PLC (CFLB) with effect from 1st July 2022. Mr. Arudpragasam has been associated with the CFLB Group since 1982 and prior to such appointment he held the position of Deputy Chairman on the Board of CFLB. He also serves as Chairman of several subsidiaries of CFLB and holds the position of Chairman, Lankem Ceylon PLC, C M Holdings PLC and Chairman/Managing Director of E.B. Creasy

  • Company PLC in addition to holding other Directorships within the CFLB Group.

Mr Arudpragasam is a Fellow of the Chartered Institute of Management Accountants (U.K)

Mr. C. P. R. Perera

Deputy Chairman

Mr. C.P.R. Perera joined the Board in 2011 and was appointed as Deputy Chairman in 2013. He was appointed to the Board of The Colombo Fort Land & Building PLC (CFLB) in May 2013 and as Deputy Chairman with effect from 1st July 2022. He serves on the Boards of several subsidiaries of the CFLB Group and also holds directorships in other private and public companies. He retired as Chairman of Forbes & Walker Ltd. and its subsidiary companies in June 2005 after almost 44 years of service. He is also a past Chairman of the Sri Lanka Tea Board, Sri Lanka Insurance Corporation, PERC and Bank of Ceylon. Mr. Perera having held the Office of Chairman of Ceylon Tea Brokers PLC until 1st April 2022 continues to serve as a Non- Executive Director of the said Company. Mr. Perera has served as a Committee Member of the Ceylon Chamber of Commerce, The Planters Association of Ceylon, and on the Committee of Management of the Ceylon Planters Provident Society.

Mr. S. Rajaratnam

B.Sc., CA

Director

Mr. S. Rajaratnam was appointed to the Board in 2011. He holds a Bachelor of Science Degree in Business Administration from Boston College, U.S.A. and is a member of the Institute of Chartered Accountants in Australia. He currently holds the position of Joint Managing Director of E.B. Creasy & Company PLC amongst other Directorships including that of The Colombo Fort Land & Building PLC.

Mr. Amrit Rajaratnam

LLB (Notts.), Barrister - at - Law

Director

Mr. Amrit Rajaratnam was appointed to the Board in 2012. He holds a Bachelor's Degree in Law from the University of Nottingham and is a Barrister at Law (Lincoln's Inn). He began his career at the Law Firm of Julius & Creasy and later joined Lankem Ceylon PLC. He is also a Director of York Arcade Holdings PLC amongst other Directorships in The Colombo Fort Land & Building Group.

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BOARD OF DIRECTORS...

Mr. A. R. Rasiah

B.Sc.(Cey.), FCA

Director

Mr. A.R. Rasiah was appointed to the Board in 2013. He functions as a Non-Executive Director of the E.B. Creasy Group of Companies and he was appointed to the Board of The Colombo Fort Land & Building PLC with effect from 8th June 2023. He is a Fellow Member of the Institute of Chartered Accountants of Sri Lanka and finalist of Chartered Institute of Management Accountants (UK). He holds a Bachelor of Science Degree from University of Ceylon.

Mr. A.R. Rasiah's illustrious career both in finance and commerce spans of over thirty-five years. He started his career with Ernst and Young and later served at Mercantile Group of Companies and Almulla Group of Companies, Kuwait. Finally, he joined Nestle Lanka PLC as Director Finance in 1994 and was with the Group until his retirement in 2005. He was formerly Chairman of Atlas Axillia (Pvt) Ltd, Chairman of the Sri Lanka Institute of Directors and Senior Director of Nations Trust Bank PLC. Currently Mr. Rasiah functions as the Chairman of the Hela Apparels Holdings PLC. Alternate to Chairman of Gestetner of Ceylon PLC and Non- and as a Director of Fintek Managed Solutions (Pvt) Ltd, Clindata Lanka (Pvt) Ltd. He is also a keen sportsman who represented Sri Lanka at Table-Tennis.

MARAWILA RESORTS PLC | Annual Report 2023/2024

Mr. Anushman Rajaratnam

B.Sc (Hons.), CPA, MBA

Director

Mr. Anushman Rajaratnam was appointed to the Board on 10th April 2019. He is at present the Group Managing Director of The Colombo Fort Land & Building PLC (CFLB). In addition, he serves on the board of several subsidiary companies of the CFLB group. Prior to joining the CFLB group, he worked oversees for a leading global Accountancy Firm.

He holds a Bachelor of Science degree in Economics from the University of Surrey, UK, CPA Australia and MBA from the Massachusetts Institute of Technology, USA.

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