Waskaduwa Beach Resort : Annual Report for the Financial Year ended 31st March 2022

Waskaduwa Beach Resort PLC

Annual Report 2021/22

Contents

Chairman's Review 1 CEO's Review 4 Board of Directors 7

Management Discussion and Analysis 10 Annual Report of the Board of Directors on

• the Affairs of the Company 16 Statement of Directors' Responsibility 22 Corporate Governance 24
  Audit Committee Report 54 Remuneration Committee Report 57 Related Party Transactions Review
• Committee Report 59

Risk Management 61 Independent Auditors' Report 63 Statement of Profit or Loss and Other

• Comprehensive Income 68 Statement of Financial Position 69 Statement of Changes in Equity 70 Statement of Cash Flows 71
  Notes to the Financial Statements 72 Five Year Summary 132 Statement of Value Added 133 Share Information 134
  Notice of Annual General Meeting 137 Form of Proxy 139
  Corporate Information Inner Back Cover

Waskaduwa Beach Resort PLC | Annual Report 2021/22

Chairman's Review

I am pleased to present the Annual Report of Waskaduwa Beach Resort PLC for the financial year 2021/22 which provides an insight into the Company's strategies and performance. Despite the unprecedented economic environment due to the COVID-19 pandemic as well as the ongoing economic downturn of Sri Lanka, we have maintained our commitment to timely and transparent financial reporting.

Industry Overview

Subsequent to the pandemic which affected most businesses and lives throughout the last financial year, this financial year began with even greater uncertainty for all Sri Lankans in the form an acute economic crisis further fuelling social and political unrest, which is of grave concern for all businesses and especially the leisure sector at the time of writing this message.

As a forerunner in the local leisure sector who closely works with and is involved in this business segment, we felt the hardship and the financial stress, and sadly, it has been aggravated further by the turmoil of acute shortage of foreign exchange, basic essentials and especially fuel which is grinding the economy to a halt.

The country's tourism sector has grown over time to emerge as one of the most valuable players in the Sri Lankan economy, contributing 12% to the country's GDP. This sector also contributes towards employment generation, forex earnings as well as ensuring a steady supply of revenue. It was indeed hearting to witness the positive trends which

are depicted in the international tourist arrivals, which have increased by more than two folds to

a staggering 130% in January 2022. However, this trend was hampered with the Omicron variant wreaking havoc globally and travel restrictions coming into force. The war in Ukraine poses new challenges to the global economic environment and risks hampering the return of confidence in global travel. Russia and Ukraine, remain as the top and third-largest tourist markets respectively. Nearly 20,000 tourists from Russia and Ukraine have travelled to Sri Lanka in January 2022, accounting for more than a quarter of all visitors. A steady influx of tourists would undoubtedly help aid the recovery of the disaster-hit industry with its foreign exchange woes; it is critical that the industry strives to obtain optimum results from the upcoming tourist seasons; increased tourist arrivals and tourism receipts will form the basis for a turnaround of the industry as well as the country.

Government Contribution

On behalf of the Board, I wish to thank the Government and the Central Bank of Sri Lanka for the directives given to the banks facilitating moratoriums and new loans at concessionary interest rates. These measures are vital steps which have been embarked on in order to stabilise

the holistic sector. It is also encouraging to note the strides the tourism authorities are taking to formulate a future marketing strategy together with the key stakeholders in the industry. It is important that all stakeholders pull together in achieving this common goal. Sri Lanka has carved a niche in the source markets of India, China, the United Kingdom and Germany, and more recently with Russia

and Ukraine. These markets remain hopeful and optimistic of the potential of this our island nation, and is therefore necessary that we ensure our house

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Waskaduwa Beach Resort PLC | Annual Report 2021/22

Chairman's Review

is in order which will enable us to take giant steps towards prosperity.

Company Performance

Our performance demonstrates how far we have come in building operational agility and lasting margin resilience into the business and the actions we took were fully in line with the strategic growth pillars. Clearly, the COVID-19 pandemic and the economic recession of the country during the second half of the year had an impact on our performance. The biggest impact of the trading and movement restrictions imposed to reduce the spread of the COVID-19 pandemic during Q1-Q2 resulted in holistic slowdown in the industry. Despite this negativity, the Company was able to report a turnover of Rs. 351 Mn against the previous year turnover of Rs. 239 Mn, reporting a year-on-year growth of 47%.

Looking Ahead

Although Sri Lanka Tourism declared 2022 as the 'Visit Sri Lanka Year' in line with the integrated five-year Global Communication Campaign (GCC), aiming to attract six million tourists and USD 10 billion revenue by 2025 despite the challenges faced due to COVID, Sri Lanka's on-going economic crisis seems to have crippled these plans. The United Kingdom and Canada have issued travel advisories to their citizens to restrict visiting Sri Lanka, warning of the country's current power failures, gas and food shortages and accelerating essential food prices. Besides the pandemic fear, the sudden spread of dengue in the island has put Sri Lanka into a quite desolate state. In order to resurrect from these doldrums, the national fiscal and monetary authorities need to carefully sequence, calibrate

and coordinate their policies to avoid sudden disruptions. This requires the complete mobilisation of governments, international financial institutions, credit-rating agencies and others.

However, all seems not lost with the European winter season approaching. It is necessary for the Tourist Board to take hastened steps through promotions targeting this segment, which will in turn ensure a substantial number of travellers being captured through these promotions. A positive winter season would mark a significant turnaround to the dwindling dollar reserve issue, while ensuring a positive impact across the entire hotel and leisure sector.

The Chinese travel market is one of the top ten markets for Sri Lanka and Sri Lanka is an ideal destination which caters to their holiday and travel requirements at all times. China's outbound travel market is driven by powerful demographics. Its 1.4 billion people are becoming wealthier, with steady income and high purchasing power results in increased travel out of the country.

The Sri Lankan Tourist Board also aims at tapping into the Indian tourist market and has in place a string of events including roadshows which will be held in the cities of Chennai, Bangalore, Hyderabad, Mumbai, and New Delhi later on this year. Tourists from India dominated Sri Lanka's tourism market last year, contributing almost 23% of the total 194,000 tourists who visited the island country in 2021.

The increase in air fares has been a damper in attracting many tourists into our island nation, especially from the European sectors, however

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Waskaduwa Beach Resort PLC | Annual Report 2021/22

these markets too are been looked at lucratively with authorities taking necessary steps to increases inflow. On the flip side the lower air travel costs incurred within the Asian region has given rise to the increase in number of Indian and Chinese travellers. There are proposals to increase flights between Sri Lanka and India, especially budget carriers; if these plans come to fruition, Sri Lanka would become more attractive to the Indian market especially in light of massive increases in airfares around the world.

The Russian-Ukranian war has curtailed many travellers from these two countries, with travel bans on Russians increasing in the intent of a peaceful solution been achieved. With limited destinations available to these travellers, it is necessary for the tourism authorities take hastened steps to capture this segment.

Tourism is slated to play a crucial role in the resurrection of the country's distressed economic condition, by attracting foreign exchange earnings and complementing the growth rate in the years to come. With the country looking for a way out of the mess it finds itself in on the economic front, the tourism sector will be expected to revive its fortunes, which in the past had been a source of much glory for the Sri Lankan economy.

It would also be necessary to rebrand Colombo as an Entertainment Hub, which will attract more travellers. The city has many new developments slated to transform the entertainment offering to tourists. This includes the proposed Cinnamon Life project and the Port City Colombo project which hold unprecedented potential to promote the entertainment industry.

Appreciations

I would like to express my sincere gratitude to my fellow board members for their continued support throughout the year under review. I would also like to place on record my appreciation to the management and employees of the Company, as well as the government authorities, who ensured the Company remained afloat amidst the many challenges the year brought upon us.

On behalf of the Board of Directors, I thank all our stakeholders and you, our valued shareholders, for the trust you have placed in us to lead your Company in the coming years.

E P A Cooray

Chairman

31 August 2022

In order to generate greater interest, Sri Lanka needs	Colombo
to increase the visibility of the destination, selling
the destination as a must visit place in the world as
well as marketing the various products and services
available in Sri Lanka.

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