GALADARI Hotels Lanka : Annual Report for the Year Ended 31st December 2023

Contents

Corporate Information	2
Notice of Meeting	3
Chairman's Message	4
Management Discussion and Analysis	5-6
Board of Directors	7-8
Statement of Directors' Responsibilities	9
Annual Report of the Board of Directors	10-11
Corporate Governance	12-21
Report of the Audit Committee	22-23
Report of the Remuneration Committee	23
Report of the Related Party Transactions Review Committee	24
Independent Auditor's Report	25-27
Statement of Financial Position	28
Statement of Profit or Loss	29
Statement of Comprehensive Income	30
Statement of Changes in Equity	31
Statement of Cash Flows	32
Notes to the Financial Statements	33-58
Information to Shareholders	59
Five Year Summary	61
Notes	62
Form of Proxy	63

2

GALADARI Hotels (Lanka) PLC

Annual Report - 2023

Corporate Information

COMPANY NAME

Galadari Hotels (Lanka) PLC

COMPANY REGISTRATION NO.

PQ 137

LEGAL STATUS

A quoted Public Company with limited liability incorporated in

Sri Lanka

BOARD OF DIRECTORS

Mr. M A I Galadari - Chairman

Mr. S A I H Galadari

Mr. I A I Galadari

Mr. L R De Silva

Dr. J A S Felix PC

Mr. V Radhakrishnan

AUDIT COMMITTEE

Mr. V Radhakrishnan - Chairman Dr. J A S Felix PC

Mr. L R De Silva

REMUNERATION COMMITTEE

Mr. M A I Galadari - Chairman

Dr. J A S Felix PC

Mr. L R De Silva

RELATED PARTY TRANSACTIONS REVIEW COMMITTEE

Mr. L R De Silva - Chairman

Mr. V Radhakrishnan

Dr. J A S Felix PC

SECRETARIES & REGISTRARS

Central Corporate and Consultancy

Services (Private) Limited

No.48, Rosmead Place,

Colombo 07

Tel: [phone]

REGISTERED OFFICE

No.48, Rosmead Place,

Colombo 07

AUDITORS

M/s Ernst & Young,

Chartered Accountants

109, Rotunda Towers

Galle Rd, Colombo 3

LAWYERS

Tiruchelvam Associates

No.48, Rosmead Place

Colombo 07.

BANKERS

Hatton National Bank

City Office, No. 16, Janadhipathi Mawatha,

Colombo 1

Hongkong & Shanghai Banking Corporation

24, Sir Baron Jayatilaka Mawatha,

Colombo 1

Bank of Ceylon - Corporate Branch Head Office

No.4, Bank of Ceylon Mawatha,

Colombo 01

Commercial Bank of Ceylon PLC

World Trade Centre Branch

L03-Wt-01, Third Floor, West Tower

World Trade Centre,

Colombo 01

Sampath Bank, Fort Branch,

No. 98, Chatham Street

Colombo 01

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GALADARI Hotels (Lanka) PLC

Annual Report - 2023

Notice of Meeting

NOTICE IS HEREBY GIVEN THAT the 43rd Annual General Meeting of GALADARI HOTELS (LANKA) PLC will be held as a Virtual Meeting emanating from the "Board Room" of Galadari Hotels (Lanka) PLC, No. 64, Lotus Road, Colombo 01, on 27th June 2024 at

3.30 p.m. for the following purposes:

Agenda

1. To receive and consider the Audited Financial Statements for the Year Ended 31st December, 2023 together with the Reports of the Directors' and Auditors' thereon.
2. Subject to Section 9.1.4 (1)(d) and 9.1.4(3) of the Listing Rules, to re-elect Mr. Lalith Rukman De Silva, Director, who retires by rotation in terms of Article 87 and 88 of the Articles of Association of the Company and being over the age of seventy (70), who also retires in terms of Section 210 of the Companies Act No.7 of 2007 (as amended), by the passing of the following ordinary resolution:
   "IT IS HEREBY RESOLVED THAT the age limit stipulated in Section 210 of the Companies Act No.7 of 2007 (as amended) shall not apply to Mr. L.R. De Silva who is seventy-three (73) years of age and that he shall be re-elected as a Director of the Company."
3. Subject to Section 9.1.4(3) of the Listing Rules, to re-elect Dr. John Anthony Shivaji Felix PC, Director, who retires by rotation in terms of Article 87 and 88 of the Articles of Association of the Company.
4. To appoint Messrs. KPMG, Chartered Accountants as the Auditors of the Company in place of Messrs. Ernst & Young, Chartered Accountants, to hold office until the conclusion of the next Annual General Meeting and to authorise the Directors to determine their remuneration.

BY ORDER OF THE BOARD

CENTRAL CORPORATE AND CONSULTANCY

SERVICES (PRIVATE) LIMITED

SECRETARIES

04th June 2024

Colombo

Notes:

• A shareholder is entitled to appoint a Proxy to attend and vote instead of him/herself and a Proxy need not be a shareholder of the Company.
• A Form of Proxy is enclosed for this purpose. The instrument appointing a proxy must be delivered to the office of Central Corporate and Consultancy Services (Private) Limited, Secretaries and Registrars to Galadari Hotels (Lanka) PLC, No. 48, Rosmead Place, Colombo 07 not less than forty-eight (48) hours before the time fixed for the meeting.
• As mentioned in the Circular to the Shareholders dated 04th June 2024, the 43rd Annual General Meeting will be held as a Virtual meeting. Instructions given in the Circular to Shareholders must be followed to join the meeting virtually.

4

GALADARI Hotels (Lanka) PLC

Annual Report - 2023

Chairman's Message

Dear Shareholders,

On behalf of the Board of Directors, it gives me great pleasure to welcome you to the 43rd Annual General Meeting of Galadari Hotels (Lanka) PLC and present you the Annual Report and Audited Financial Statements of the company for the year ended 31st December 2023.

Company Performance

The hotel remains steadfast focusing on key strengths and long-term calculated objectsives which combines operational excellence and continous brand value enhancements. Having won the prestigious SLIM - Kantar "People's Hotel Brand of the Year", awarded by the Sri Lanka Institute of Marketing (SLIM) for the 5th consecutive time is a clear indciator of strong brand value acknowledgement.

With tourist arrivals indicating a favorable incline the hotel is moving forward with its renovation plans with the intention of better catering to the surge in tourist arrivals. Adding value to its current brand identity a co-branding with an internationally acknowledged giant in the hospitality industry will further strengthen brand appeal locally as well as internationally.

It is with immense pride and gratitude that I present our Company's performance and strength during these challenging times. In the face of complexity, we have demonstrated resilience, adaptability, and determination. We have undertaken proactive measures to optimize our operations, streamline costs, and improve efficiency.

Future Outlook

The recent boost in tourism is encouraging to the hospitality industry adding a positive light on the on the current financial position. The hotel's planed transformation will further heighten its standing in the industry and present an enhanced platform, streamlining it as a key frontline player in

Sri Lanka's tourism industy. We therefore continue with utmost confidence and look forward to better tomorrows regardless of the hurdles that may lay ahead.

Acknowledgement

On behalf of the Board of Directors, I would like to express our sincere gratitude to the Government of Sri Lanka for its vision and continued support to the hotel. I wish to take this opportunity to thank my fellow board members for their invaluable efforts and support. I sincerely appreciate the management team and the staff for their untiring efforts and commitment during this challenging year. Finally, I thank our shareholders for the confidence and trust they have relentlessly placed in Galadari Hotels (Lanka) PLC.

M A I Galadari

Chairman

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GALADARI Hotels (Lanka) PLC

Annual Report - 2023

Management Discussion and Analysis

The County's Macro Business Review

The year 2023 turned out to be a promising one for the country with tourist arrivals indicating a

favorable incline. Between January and December 2023, Sri Lanka reached a noteworthy achievement in the overall count of tourist arrivals. The total surpassed the previous year's figure of 719,978, reaching an impressive 1,487,303 visitors. In December 2023, there was a significant upswing in visitors to Sri Lanka, with India, Russia, the United Kingdom, Germany, and Australia standing out as the key source markets.

In December 2023, Sri Lanka experienced a notable increase in the arrival of international tourists, reaching the peak for the entire year. The number of foreign visitors saw a remarkable surge of 128.7%, totaling 210,352 arrivals. This upswing may be linked to the peak tourist season, favorable conditions in Sri Lanka, and the recognition of Sri Lanka as one of the top destinations by travel-related entities.

These countries played a crucial role in propelling the growth in tourist arrivals, contributing significantly to the overall rejuvenation of Sri Lanka's tourism industry. UNWTO (UN Tourism) had predicted a slowdown in the fourth quarter of 2023 due to existing economic and geopolitical challenges. Nevertheless, the total number of international arrivals reached 1.5 million in 2023.

Despite grappling with economic issues such as high inflation and reduced output, as well as specific geopolitical tensions and conflicts, international tourism is on track to approach pre-pandemic levels by 2024. According to the World Travel & Tourism Council's (WTTC) 2023 Economic Impact Research (EIR), the Travel & Tourism sector is nearing its 2019 peak, recovering by over 95%.

Monthly Tourism Arrivals

Month	2022	2023	% change
2023/22
January	82,327	102,545	24.5
February	96,507	107.639	11.5
March	106,500	125,495	17.8
April	62,980	105,498	67.5
May	30,207	83,309	175.8
June	32,856	100,388	205.5
July	47,293	143,039	202.4
August	37,760	136,405	261.2
September	29,802	111,938	275.6
October	42,026	109,199	159.8
November	59,759	151,496	153.51
December	91,961	210,352	128.7
Total	719,978	1,487,303	106.6

Top Ten Source Markets 2023

From January to December 2023, Sri Lanka experienced an increase in international tourist arrivals from its primary source markets compared to the corresponding period in 2022. Particularly noteworthy was the significant surge in tourists coming from countries like India, Australia, the USA, Russia and the Maldives, making substantial contributions to the overall growth in tourist numbers for the year 2023. However, it is important to emphasize that tourist arrivals from the United Kingdom, France, and Canada did not exhibit significant growth compared to the same period in the previous year. This suggests evolving travel preferences and patterns specific to these countries.

Top Ten Markets to Sri Lanka 2023

Rank	Country of	Tourist Arrivals	Tourist Arrivals
Residence	(Jan.-Dec. 2023)	(Jan. - Dec.2022)
1	India	302,844	123,004
2	Russian Federation	197,498	91,272
3	United Kingdom	130,088	85,187
4	Germany	102,539	55,542
5	China	68,789	4,715
6	Australia	67,436	30,924
7	France	56,251	35,482
8	United States	46,344	22,230
9	Canada	43,944	26,845
10	Maldives	37,328	18,880
11	Others	434,242	225,897
	Total	1,487,303	719,978

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GALADARI Hotels (Lanka) PLC

Annual Report - 2023

Management Discussion and Analysis Contd...

Top ten source markets to Sri Lanka in 2023

Others, 29%

Maldives, 2%

Canada, 3%

United States, 3%

France, 4%

Australia, 5%

India, 20%

Russian Federation

13%

United Kingdom

9%

Germany, 7%

China, 5%

Future Outlook

Sri Lanka is targeting 2.3 million tourists in 2024 with India, Russia, China, the United Kingdom, and Germany expected to bring most of the arrivals. India expected to bring in a majority of visitors with a target of 310,000 - 343,000 tourists. Sri Lanka is targeting at least 258,000 tourists from Russia, 251,000 from China, 193,000 from the UK and 151,000 from Germany. Sri Lanka tourist authorities are promoting the country internationally through the use of social media influencers. In addition, several domestic events are also planned in tourist hotspots.

Hotel

The hotel remains unshacken focusing on its key stregths and longe-terms startegic objectsives which combines operational excellnce and continous brand value enhancements despite the economic shock- waves. Having been awarded "The People's Hotel Brand of the Year", awarded by the Sri Lanka Institute of Marketing (SLIM) for the 5th consecutive time running is a clear indciator of brand value being acknowledged to the maximum.

As the country moves forward whilst still badly affected by the economic unsertainity, it is clear that a positive shifting towards a more financial and econimic stablity is certain in the future. The recent boost in tourism is encouraging to the hospitality industry adding a positive light on the on the current financial crisis.

The hotel's currrent facelift will further enhance its standing in the industry and present a better platform to for the hotel to be a strong frontline player in Sri Lanka's tourism industy. We therefore continue with utmost confidence and look forward to better tomorrows regardless of the hurdles that may lay ahead.

Reference

https://www.sltda.gov.lk/en/tourism-industry-report https://economynext.com/business/

Sampath Siriwardhana

General Manager

4th June 2024

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GALADARI Hotels (Lanka) PLC

Annual Report - 2023

Board of Directors

MR. MOHAMMED ABDULLATIF IBRAHIM GALADARI Chairman Non-ExecutiveDirector

Skills and Experience

Mr. Mohammed Abdullatif Ibrahim Galadari is a son of Late Mr. Abdullatif Ibrahim Galadari Ex-Chairman of Galadari Brothers Co. LLC.

Mr. Mohammed A.I. Galadari the Emirati businessman, is the Co-Chairman and Group CEO of Galadari Group of Companies and he has rich experience in Business Management for nearly a decade. He is a qualified Bachelors in Finance from Suffolk University Boston, USA. He has endowed a vast knowledge to the Galadari Group of Companies which is a conglomerate Group.

Mr. Mohammed Abdullatif Ibrahim Galadari is a decisive and Strategic Expertise Leader, Managing areas of Major risks of the Organization, possessing extensive industry expertise and a fundamental understanding of governance.

Board Sub-Committee memberships

Remuneration Committee

Directorships in other Companies in Sri Lanka

None

Material Business Relationship with other Directors

None

MR. SUHAIL ABDULLATIF IBRAHIM HASSAN GALADARI

Non-Executive Director

Skills and Experience

Mr. Suhail Abdullatif Ibrahim Hassan Galadari is the eldest son of the late Mr. Abdullatif Ibrahim Galadari - Founding Ex-Chairman of Galadari Brothers Co. LLC. Mr. Suhail Abdullatif Ibrahim Hassan Galadari, the Emirati businessman is a Director of Galadari Brothers Co. LLC since 2006. He was also appointed as Co-Chairman of Galadari Brothers Co. LLC and its Subsidiaries.

Mr. Suhail Galadari has over 13 years of leadership experience at Galadari Brothers Co. LLC which is a multibillion, multidiscipline leading group in UAE, well-diversified in different industries such as Media, Printing, Heavy Construction Equipment, Automotive, Hospitality, Food & Beverage, Engineering, Industrial Trading, and Travel & Tourism.

Board Sub-Committee memberships

None

Directorships in other Companies in Sri Lanka

None

Material Business Relationship with other Directors

None

MR. IBRAHIM ABDULLATIF IBRAHIM GALADARI

Non-Executive Director

Skills and Experience

Mr. Ibrahim Abdullatif Ibrahim Galadari is a son of Late Mr. Abdul Latif Ibrahim Galadari Ex- Chairman of Galadari Brothers Co. LLC. Mr. Ibrahim Galadari the Emirati businessman, is the Group Chief Investment Officer of the Galadari Group of Companies. He is a qualified Bachelor in Business Management from American University in Dubai. He has endowed a vast knowledge to the Galadari Group of Companies which is a conglomerate Company.

Mr. Ibrahim Abdullatif Ibrahim Galadari has essential governance understanding and vast knowledge of the industry.

Board Sub-Committee memberships

None

Directorships in other Companies in Sri Lanka

None

Material Business Relationship with other Directors

None

DR JOHN ANTHONY SHIVAJI FELIX PC

Non-Executive-Independent Director

Skills and Experience

Dr. Shivaji Felix, President's Counsel, was awarded LL. B. (Honours) degrees by the University of Colombo and the University of London in 1994. He passed the final examination for the admission of Attorneys-at-Law with first class honours in 1995 and was admitted and enrolled as an Attorney-at-Law of the Supreme Court of Sri Lanka in 1996. In December 2023 he was appointed a President's Counsel by His Excellency the President of Sri Lanka. He is a Fellow of the Society for Advanced Legal Studies of the University of London. In 2000

he was awarded a Ph. D. degree by the University of London for his work on administrative law. He is a Fellow of the Chartered Institute Taxation of Sri Lanka (FCIT) (2009) and was previously an Associate of the Sri Lanka Institute of Taxation (ATII)(2003). He was awarded a Diploma (cum laude) by the Institute of Federalism, University of Fribourg, Switzerland (2004). In 2005 University College London, appointed him an Honorary Research Fellow of the Faculty of Laws in recognition of his contribution to legal scholarship. He is a member of the Taxes Committee of the International Bar Association, a Fellow of the Royal Society of Arts (England) and a member of the Society of Legal Scholars (United Kingdom and Ireland).

Dr. Felix has many locally and internationally refereed publications to his credit. He has also functioned as a consultant to the World Bank in its Country Financial Accountability Assessment Study for Sri Lanka (CFAA). He is a Council Member of the Sri Lanka Institute of Taxation and a Committee member of the Sri Lanka Branch of the International Fiscal Association. Dr. Felix practices as President's Counsel of Sri Lanka with a focus on Public Law and Revenue Law. He has taught and functioned as an examiner at the Faculty of Law, University of Colombo.

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GALADARI Hotels (Lanka) PLC

Annual Report - 2023

Board of Directors Contd...

Board Sub-Committee memberships Audit Committee, Remuneration Committee and Related Party Transactions Review Committee

Directorships in other Companies in Sri Lanka

Director - Renuka Foods PLC Director - Law and Society Trust

Material Business Relationship with other Directors

None

MR. LALITH RUKMAN DE SILVA

Non-Executive-Independent Director

Skills and Experience

Mr. Lalith De Silva holds a special degree in economics and a post graduate diploma in Public Financial Management. He is a fellow member

of the Institute of Public Finance and Development Accountancy.

He has held several senior positions in the public service, including the Director General of Treasury Operations in the Ministry of Finance, Deputy Secretary to the Treasury, Secretary Ministry of Trade, Marketing Development Cooperatives and Consumer Services.

Currently serves as the Consultant to the Public Accounts Committee of Sri Lanka Parliament and also act as the Chairman/Managing Director of the Riyohwel Lanka (Private) Limited

Board Sub-Committee memberships Audit Committee, Remuneration Committee and Related Party Transactions Review Committee

Directorship or Key Management Position in other Companies in Sri Lanka

Riyohwel Lanka (Private) Limited

Material Business Relationship with other Directors

None

MR. VENKATRAMANAN

RADHAKRISHNAN

Non-Executive Director

Skills and Experience

Mr. Venkatramanan Radhakrishnan is an accomplished finance professional with over 20 years of international, multi-industry experience. He is a qualified Chartered Accountant and a member of the Institute of Chartered Accountants of India. His extensive career spans across various industry verticals, showcasing his versatility and expertise.

Mr. Ramanan has been with Galadari Brothers Group since Year 2011 and presently serves as the Group Chief Financial officer. He oversees the Group Finance function responsible for Accounting and Reporting, Corporate Finance and Treasury, Strategic Financial Planning, Business Performance Management, Corporate Governance amongst others.

He is also a Cost Accountant and a Certified Information Systems Auditor with a track record of successfully delivering strategic projects and recognized for financial restructuring, fostering banking relationships, Fundraising, successful Mergers and

Acquisitions and implementing Corporate Governance models.

Board Sub-Committee memberships Audit Committee and Related Party Transactions Review Committee

Directorships in other Companies in Sri Lanka

None

Material Business Relationship with other Directors

None