INTRODUCTORY DOCUMENT - CSE

INTRODUCTORY DOCUMENT Listing of 40,297,530 Ordinary Voting Shares on the Diri Savi Board of the Colombo Stock Exchange through an Introduction Financial Advisor & Manager to the Introduction

The delivery of this Introductory Document shall not under any circumstance constitute a representation or create any implication or suggestion that there has been no material change in the affairs of the Company since the date of this Introductory Document. If you are in doubt regarding the contents of this document or if you require any advice in this regard, you should consult your Stock Broker, Bank Manager, Lawyer or any other professional advisor.

This Introductory Document is dated 07 November 2017

The Colombo Stock Exchange (“CSE”) has taken reasonable care to ensure full and fair disclosure of information in this Introductory Document. However, the CSE assumes no responsibility for the accuracy of the statements made, opinions expressed or reports included in the Introductory Document. Moreover, the CSE does not regulate the pricing of the shares, which is decided solely by the Company.

This Introductory Document has been prepared from information provided by Renuka Hotels Limited (hereinafter referred to as “Renuka Hotels”, “RHL” or “Company”) and its Directors and/or from publicly available sources. The Company and its Directors having made all reasonable inquiries, confirm that to the best of their knowledge and belief, the information contained herein is true and correct in all material respects and that there are no other material facts, the omission of which would make any statement herein misleading. Where representations regarding the future performance of Renuka Hotels have been given in this Introductory Document, such representations have been made after due and careful enquiry of the information available to the Company and making assumptions that are considered to be reasonable at the present point in time in their best judgment. The Company accepts responsibility for the information contained in this Introductory Document. While the Company has taken reasonable care to ensure full and fair disclosure of information, prospective investors are advised to carefully read this Introductory Document and rely on their own examination and assessment of the Company including the risks involved prior to making any investment decision. No person is authorized to give any information or make any representation not contained in this Introductory Document and if given or made, any such information or representation must not be relied upon as having been authorized by the Company.

TABLE OF CONTENTS

DEFINITIONS/INTERPRETATIONS ................................................................................................................... 1

1.0 CORPORATE INFORMATION .............................................................................................................. 2

2.0 RELEVANT PARTIES TO THE INTRODUCTION ...................................................................................... 3

3.0 INFORMATION RELEVANT TO THE INTRODUCTION ........................................................................... 4

3.1 INTRODUCTION OF ORDINARY VOTING SHARES OF RENUKA HOTELS LIMITED ....................................................... 4

3.2 REFERENCE PRICE FOR THE ORDINARY VOTING SHARES ................................................................................... 4

3.3 OBJECTIVES OF THE LISTING ........................................................................................................................ 6

3.4 SPECIFIC RISKS RELATING TO THE LISTING ...................................................................................................... 7

3.5 COST OF THE LISTING ................................................................................................................................ 7

3.6 HOSTING OF INTRODUCTORY DOCUMENT, ARTICLES OF ASSOCIATION, INDEPENDENT VALUATION REPORT AND THE

FINANCIAL STATEMENTS ON THE WEB ....................................................................................................................... 7

3.7 INSPECTION OF DOCUMENTS ...................................................................................................................... 7

3.8 REPORTS BY EXPERTS ................................................................................................................................ 7

3.9 COPIES OF THE INTRODUCTORY DOCUMENT .................................................................................................. 7

4.0 PROFILE OF RENUKA HOTELS LIMITED ............................................................................................... 8

4.1 HISTORY OF RENUKA HOTELS ..................................................................................................................... 8

4.2 BUSINESS OPERATIONS OF RENUKA HOTELS .................................................................................................. 8

4.3 GROUP STRUCTURE .................................................................................................................................. 9

4.4 HUMAN RESOURCES ............................................................................................................................... 10

4.5 ACCOLADES & RECOGNITION .................................................................................................................... 10

4.6 CAPITAL STRUCTURE ............................................................................................................................... 10

4.7 TAXATION ............................................................................................................................................. 15

4.8 LITIGATION, DISPUTES AND CONTINGENT LIABILITIES ..................................................................................... 16

4.9 MANAGEMENT AGREEMENTS ................................................................................................................... 18

4.10 MATERIAL CONTRACTS ............................................................................................................................ 18

4.11 DETAILS OF COMMISSIONS PAID ............................................................................................................... 18

4.12 DETAILS OF BENEFITS PAID TO PROMOTERS................................................................................................. 18

4.13 DEGREE OF DEPENDENCE ON CUSTOMERS, BORROWERS OR SUPPLIERS ............................................................ 18

4.14 FUTURE PLANS FOR RENUKA HOTELS LIMITED ............................................................................................. 18

5.0 CORPORATE STRUCTURE ................................................................................................................. 20

5.1 BOARD OF DIRECTORS ............................................................................................................................. 20

5.2 PROFILES OF THE BOARD OF DIRECTORS ..................................................................................................... 20

5.3 OTHER DIRECTORSHIPS HELD BY THE BOARD ............................................................................................... 22

5.4 DIRECTORS’ INTEREST IN SHARES ............................................................................................................... 24

5.5 STATEMENT - BOARD OF DIRECTORS .......................................................................................................... 26

5.6 CORPORATE GOVERNANCE PRACTICES ....................................................................................................... 26

5.7 SENIOR MANAGEMENT ........................................................................................................................... 28

5.8 STATEMENT BY THE EXECUTIVE CHAIRPERSON AND JOINT MANAGING DIRECTORS .............................................. 29

6.0 FINANCIAL INFORMATION .............................................................................................................. 30

6.1 FINANCIAL HIGHLIGHTS OF RENUKA HOTELS LIMITED .................................................................................... 30

6.2 DIVIDENDS ............................................................................................................................................ 32

6.3 DETAILS OF MATERIAL INDEBTEDNESS ........................................................................................................ 32

6.4 WORKING CAPITAL ................................................................................................................................. 33

7.0 INVESTMENT CONSIDERATIONS AND ASSOCIATED RISK FACTORS .................................................. 34

7.1 RISKS RELATED TO THE HOSPITALITY SECTOR ............................................................................................... 34

7.2 RISKS RELATED TO THE BUSINESS OPERATIONS ............................................................................................ 34

7.3 RISKS RELATED TO THE LISTING OF THE SHARES ............................................................................................ 35

8.0 STATUTORY DECLARATION.............................................................................................................. 36

ANNEXURE A: INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS AND AUDITED FINANCIAL

STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2017 ................................................................ 37

ANNEXURE B: INTERIM FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 AUGUST 2017 ...................... 73

ANNEXURE C: INDEPENDENT VALUATION REPORT BY AN INDEPENDENT VALUER ...................................... 86

ANNEXURE D: COLLECTION POINTS ........................................................................................................... 112

ANNEXURE E: INDEX ON TABLES ILLUSTRATED IN THE INTRODUCTORY DOCUMENT ................................. 115

Renuka Hotels Limited – Introductory Document | 1

DEFINITIONS/INTERPRETATIONS

The following definitions/interpretations apply throughout this Introductory Document, unless the context otherwise requires:

“Articles of Association” Articles of Association of Renuka Hotels Limited “Auditors & Reporting Accountants to the Company”

BDO Partners

“Bn” Billion “CDS” Central Depository Systems (Private) Limited “Companies Act” Companies Act No. 07 of 2007 “CSE” Colombo Stock Exchange “Directors” The Directors for the time being of the Company, unless otherwise

stated “ESC” Economic Service Charge “FY” Financial Year “GDP” Gross Domestic Product “Group”, “Renuka Hotels Group” Renuka Hotels Ltd and Renuka City Hotels PLC “Introductory Document” This Introductory Document dated 07 November 2017 issued by

the Company “LKAS”, “SLFRS” Sri Lanka Accounting Standards “LKR”, “Rs.”, “Rupees” Sri Lankan Rupees “Local Time” Sri Lanka Time “Market Day” Any day on which the CSE is open for trading “Mn” Million “NBT” Nation Building Tax “Ordinary Shares”, “Shares”, “Issued and Paid up Ordinary Shares”

Ordinary shares of the Company, with the right to one vote on a poll at a meeting of the Company on any resolution, the right to an equal share in dividends paid by the Company and the right to an equal share in the distribution of the surplus assets of the Company in liquidation.

“Reference Price” The initial listing price of the shares to be listed by way of the Introduction. Reference price is LKR 139.00 per Ordinary Voting Share

“RHL”, “Renuka Hotels”, “the Company”

Renuka Hotels Limited

“SEC” The Securities and Exchange Commission of Sri Lanka “Stated Capital” The Stated Capital of Renuka Hotels Limited “The Board”, “The Board of Directors” The Board of Directors of Renuka Hotels Limited “USD” United States Dollars “VAT” Value Added Tax “WHT” Withholding Tax

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1.0 CORPORATE INFORMATION

Company Renuka Hotels Limited

Registered Office

328, Galle Road, Colombo 03, Sri Lanka Tel: +94 11-2573598 Fax:+94 11-2574137

Date and Authority of Incorporation A Public Limited Liability Company Incorporated in Sri Lanka on 31 March 1969 under the Companies Ordinance, No. 51 of 1938 and was reregistered on 27 November 2008 under the Companies Act No. 07 of 2007

Company Registration Number (as a Public Company)

PB 776

Place of Incorporation Colombo, Sri Lanka

Board of Directors

Ms. S R Thambiayah – Executive Chairperson & Joint Managing Director

Ms. A L Thambiayah – Executive Joint Managing Director

Mrs. S R Dominic – Non-Executive Non-Independent Director

Mr. M J Fernando – Non-Executive Non-Independent Director

Mr. G U Nanayakkara – Non-Executive Independent Director

Mr. S Nagendra – Non-Executive Independent Director

Mrs. M A Jayawardena – Executive Director/Company Secretary

Ms. N R Thambiayah – Executive Director

Mr. R N Asirwatham – Non-Executive Independent Director

Company Secretary Mrs. M A Jayawardena 328, Galle Road, Colombo 03, Sri Lanka Tel: +94 11-2573598 Fax:+94 11-2574137

Auditors and Reporting Accountants to the Company

BDO Partners (Chartered Accountants) 65/2, Sir Chittampalam A Gardiner Mawatha, Colombo 02, Sri Lanka Tel: +94 11- 2421878 Fax: +94 11-2336064

Lawyers to the Company Nithya Partners 97A, Galle Road, Colombo 03, Sri Lanka Tel: +94 11- 4712625 Fax:+94 11-2328817

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2.0 RELEVANT PARTIES TO THE INTRODUCTION

Financial Advisors and Managers to the Introduction

Acuity Partners (Private) Limited 53, Dharmapala Mawatha Colombo 03, Sri Lanka Tel: +94 11- 2206206 Fax:+94 11- 2437149

Lawyers to the Introduction Nithya Partners 97A, Galle Road, Colombo 03, Sri Lanka Tel: +94 11- 4712625 Fax:+94 11-2328817

Registrars to the Company S S P Corporate Services (Pvt) Limited Corporate Secretaries, 101, Inner Flower Road, Colombo 3, Sri Lanka Tel: +94 11-2573894/+94 11-2576871 Fax: +94 11-2573609

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3.0 INFORMATION RELEVANT TO THE INTRODUCTION

3.1 Introduction of Ordinary Voting Shares of Renuka Hotels Limited This Introductory Document, dated 07 November 2017 is published for the purposes of obtaining a listing for the Forty Million Two Hundred and Ninety Seven Thousand Five Hundred and Thirty (40,297,530) Ordinary Voting Shares of Renuka Hotels Limited on the Diri Savi Board of the Colombo Stock Exchange.

3.2 Reference Price for the Ordinary Voting Shares

The Reference Price of LKR 139.00 per share was determined by the Company in consultation with Wijeratne & Company (Chartered Accountants), the Independent Valuer. The Consolidated Net Asset Value per share of the Company (NAV), adjusted for cost of realisation as at 31 August 2017 was LKR 142.20, and the Reference Price is 0.98 times this NAV. The Independent Valuation Report prepared by Wijeratne & Company (Chartered Accountants) is provided in Annex C of this Introductory Document.

3.2.1 Qualifications of the Independent Valuer

The individuals who prepared the Independent Valuation Report provided in Annex C, representing the Independent Valuer, Wijeratne & Co. (Chartered Accountants), possess the following qualifications and experience; Mr. W J L S Fernando W J L S Fernando is an Associate member of the Institute of Chartered Accountants of Sri Lanka and a Fellow member of the Chartered Institute of Management Accountants (UK). He joined Wijeratne & Co. in 1998 after being associated with the organisation for over 12 years. He has experience in the mercantile sector as well as auditing at a wide range of organisations. Mr. S Egodagamage S Egodagamage is an Associate member of the Institute of Chartered Accountants of Sri Lanka and holds a BSc Business Administration degree from the University of Sri Jayewardenapura. He has over 10 years of extensive experience in audit and tax, and has worked for Pricewaterhousecoopers overseas. 3.2.2 Declaration by the Independent Valuer A declaration has been made by the independent valuer in line with Section 3.4.8 (b) (ii) stating the following; When arriving at a fair value of equity shares of Renuka Hotels Ltd, the Independent valuer has made

all the inquiries that they believe were desirable and appropriate in order to arrive at a competent independent opinion.

Staff engaged in this assignment are members of good standing in a professional association relevant to the valuation assignment undertaken and have the necessary skills and resources at their disposal to arrive at a competent independent opinion in determining the reference price.

The Independent Valuer is not a related party of Renuka Hotels Ltd as defined in LKAS nor has a significant interest in or financial connection with Renuka Hotels Ltd or the group.

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As detailed in the Independent Valuation Report, the Independent Valuer has relied on data and information made available to them through different sources, including prospective financial information obtained from the Company, sector specific information obtained from the public domain, and financial and industry sources. The Independent Valuer has not independently verified the factual accuracy of the financial statements and other information relating to the business provided by the management and information gathered from the public domain, except for the verifications carried out as mentioned below. With regard to the information provided by the management, the Independent Valuer has relied upon the Company’s management to provide them with representation that the information provided is materially accurate and complete, fair in the manner of its portrayal and therefore forms a reliable basis for the share valuation. The Independent Valuer has undertaken an analysis of the financial projections including revenues, expenses, working capital and capital expenditure. They have discussed the basis of the financial projections and assumptions used with the Management of the Company and have independently verified the reasonableness of such assumptions by analysing the historical operating results, Industry trends and publicly available information of similar listed entities. They have also carried out an analysis of other facts and data, including those specific to the Company and the industry in which it operates, which they have considered pertinent to this valuation, to arrive at the fair market value. Investors should read the following summary with the risk factors included in Section 7 of this Introductory Document and the details about the entity and its financial statements included in this Introductory Document. 3.2.3 Qualitative Factors The qualitative factors that were considered by the Entity and the Independent Valuer when arriving at the Reference Price is as given below; Industry dynamics and competitive environment The long standing reputation of the Company, convenient location, established brand name as well

as the service quality and customer base The qualitative factors that were considered by the Independent Valuer when arriving at the recommended price is included on pages 9 & 10 of the Independent Valuation Report provided in Annex C of this Introductory Document. 3.2.4 Quantitative Factors

Adjusted Earnings per Share (EPS) & Average Return on Equity (ROE %) For the Period Ended using Consolidated Financial Statements

Basic EPS (LKR) *

Diluted EPS (LKR) *

Adjusted EPS (LKR) **

ROE

31 March 2015 (Audited) 12.03 12.03 11.65 7.55% 31 March 2016 (Audited) 10.16 10.16 10.16 7.54% 31 March 2017 (Audited) 12.90 12.90 12.90 8.40% Average EPS 11.70 11.70 11.57 Five Months ended 31 August 2017 11.39 11.39 11.39 6.20% +

14.89% ++ * Based on the reported EPS ** EPS adjusted for the total number of shares post capitalisation and split.

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+ Using the earnings based on the respective interim financial statements

++ Using the annualised earnings based on the respective interim financial statements. Price/Earnings Ratio (P/E) in relation to Reference Price of LKR 139.00 a) Based on the basic adjusted consolidated EPS for the financial year ended 31 March 2017, the P/E

is 10.78 times. b) Based on the average consolidated EPS of LKR 11.57, the P/E is 12.02 times. c) The P/E range of the industry peers is as given below using the market information as at 20

September 2017;

Name of the Peer Company * P/E

Highest Tal Lanka Hotels PLC 26.25 times Lowest Renuka City Hotel PLC 5.34 times Industry Composite 14.95 times

Source – CSE and Peer company annual reports Sector Classification – Hotels and Travels * The peer entities have been selected based on comparability on type of hotel operated by the entity (i.e city hotels).

Net Asset Value (NAV) The consolidated Net Asset Value (prior to the adjustment for cost of realisation) per share was; a) LKR 155.46, based on the financial statements for the year ended 31 March 2017 b) LKR 158.00 based on the interim financial statements for the five months ended 31 August 2017 c) LKR158.00, based on the post listing number of shares based on the interim financial statements

for the five months ended 31 August 2017 d) Reference Price is LKR 139.00 Peer Entity Accounting Ratios The comparable ratios of entities which are to some extent similar in business are given below, as per the latest audited financial statements and using the market data as at 20 September 2017;

Peer Company * Net Asset Value per

Share (LKR)

Earnings per Share

(EPS) P/E (X)

Return on Equity (%)

Galadari Hotels (Lanka) PLC 19.69 0.68 13.25 3.45% Renuka City Hotel PLC 616.11 54.31 5.34 8.81% Tal Lanka Hotels PLC 16.99 0.74 26.25 4.37%

Source – CSE and Peer company annual reports Sector Classification – Hotels and Travels * The peer entities have been selected based on comparability on type of hotel operated by the entity (i.e city hotels).

3.3 Objectives of the Listing The Company intends to list its Shares on the CSE in order to;

(i) Fulfil the request made by shareholders to list the Company (ii) Broad-base the ownership of the Company over time, which would strengthen the image and

identity of the Company

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3.4 Specific Risks Relating to the Listing There are no specific risks related to the listing except for the risks mentioned under Section 7.3 of this Introductory Document.

3.5 Cost of the Listing The total costs associated with the listing are estimated to be approximately LKR 1.5 million. These include all direct costs and expenses associated with the listing, inclusive of but not limited to the initial listing fees to the CSE, management fees payable to the Financial Advisors and Managers to the listing, fees for the registrar function, legal, independent valuer’s fees and printing costs. The costs will be recovered from the internally generate funds of the Company.

3.6 Hosting of Introductory Document, Articles of Association, Independent Valuation Report and the Financial Statements on the Web

This Introductory Document, the Articles of Association of the Company together with the audited financial statement for the years ended 31 March 2016 and 31 March 2015 will be available on the website of the CSE (www.cse.lk) and on the Company website (www.renukahotel.com) for a period of not less than seven (7) Market Days prior to the submission of the Declaration by the Company and for a period not less than fourteen (14) Market Days from the date of submission of such declaration. The report prepared by the competent independent valuer will be available on the website of the CSE (www.cse.lk) and on the Company website (www.renukahotel.com), for a period of two (02) months from the date of being granted CSE approval for the listing.

3.7 Inspection of Documents

The Articles of Association, the Auditor’s Report, Audited Financial Statements of RHL as at 31 March 2017, and all other documents to which references are made in this Introductory Document could be inspected by the public during normal working hours at the Registered Office of the Company from the date hereof for a period not less than fourteen (14) Market Days.

3.8 Reports by Experts The Independent Valuation Report prepared by Wijeratne & Company (Chartered Accountants) is provided in Annex C of this Introductory Document.

3.9 Copies of the Introductory Document The Introductory Document will be made available free of charge from the collection points listed in Annex D. The Introductory Document can also be downloaded from www.cse.lk and www.renukahotel.com.

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4.0 PROFILE OF RENUKA HOTELS LIMITED

4.1 History of Renuka Hotels The late Mr. A L Thambiayah who represented Kayts in Sri Lanka’s first two parliaments between 1947 to 1956, and who was Chairman of Cargills and Millers as well as Cargo Boat Dispatch Company Limited, a well known port operator in its day, is credited with the vision that saw the birth of Hotel Renuka. A L Thambiayah saw prospects for the hotel industry when development incentives were offered in 1970 and decided to embark on setting up a star class city hotel on family property in Galle Road, Kollupitiya. He sent his younger son, Ravi, who had just completed a degree in economics, for training at the Royal Lancaster in London. Ravi returned to Colombo to take over the management of Hotel Renuka in June 1972, when the first hotel was commissioned. Renuka City Hotel started operations on the adjacent property in 1995 as a quoted company in order to take full advantage of the incentives given to quoted BOI companies at that time. Renuka City Hotel was listed in 1992. Ravi Thambiayah passed on the baton to his two daughters, Shibani Thambiayah and Arnila Thambiayah, who are now the Joint Managing Directors of the two hotel companies, Renuka Hotels Limited and Renuka City Hotels PLC, from February 2010.

4.2 Business Operations of Renuka Hotels Renuka Hotels Ltd and Renuka City Hotels PLC which form the Renuka Hotels Group own and manage two separate city hotels consisting of a combined room count of 99 rooms including 60 deluxe rooms in the heart of Colombo. The hotels are located adjoining each other at nos. 326 & 328 Galle Road, Colombo 3. The hotel owned and managed by Renuka Hotel Ltd, under the name of ‘Hotel Renuka’, consists of 41 rooms, whilst the hotel owned and managed by Renuka City Hotel PLC, operates under the brand name ‘Renuka City Hotel’ and has 58 rooms. The income and expenditure of the two hotels are identified and accounted for separately in the books of accounts of the respective hotel. The two hotels are conveniently located just steps away from some of the city’s best attractions. Despite being amidst the hustle and bustle of city life, the hotels’ carefully planned interiors ensure a restful and serene getaway for business and leisure travellers alike. The facilities and services of the hotel include a roof top infinity swimming pool and kid’s pool, state-of-the-art gymnasium, same day laundry & dry cleaning service, foreign currency encashment, free newspaper, luggage storage, car hire and tour arrangements, doctor on call, business centre with secretarial services, free parking facilities, banqueting, conference and outside catering facilities, 24 hour room service, in addition to the luxury accommodation, complemented by the highest levels of service designed to cater to the individual discerning taste with true Sri Lankan hospitality. The Palmyrah restaurant, located at the Hotel Renuka focuses on creating an elegant dining space, augmented by only the very finest cuisine. For over 40 years, the Palmyrah has been considered de rigueur by those who enjoy authentic Sri Lankan cuisine. The luxury banquet venues, equipped with deluxe interiors and state of the art lighting are ideal for celebrating special occasions, hosting a corporate function or conference. With the flexibility to host

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20 to 250 participants, the multi-functional banquet hall has in-built partitions creating sound-proof individual rooms to meet each client’s requirements. The Group also owns and manages an extensive share portfolio, consisting of mainly listed equities. The sectors covered include hospitality, plantations, manufacturing, financial services, telecommunication, construction and engineering, healthcare etc. The share investments are done after thorough analysis of the companies and the expected returns to RHL. Both dividend as well as capital appreciation returns are taken into consideration prior to making an investment decision. The share portfolio is constantly monitored with the changes in the market conditions in order to reduce the associated risks as explained under Section 7.2. In addition to the share portfolio, the Company also holds a significant investment in listed debentures. The debentures have been selected based on the returns offered as well as the investment rating of both the entity and the instrument. Further information on the investment portfolio is provided in the financial statements of RHL.

4.3 Group Structure

Renuka Hotels Ltd holds 62.22% of Renuka City Hotels PLC, which is considered a subsidiary of Renuka Hotels Ltd. Amalgamated Theatres (Pvt) Ltd, of which Renuka Hotels Ltd holds 41.06%, is not consolidated in the preparation of the consolidated financial statements of Renuka Hotels Ltd, since it is categorised as a financial investment available for sale. TABLE 4.1– SHAREHOLDERS OF THE GROUP COMPANIES Crescent Launderers and Dry Cleaners (Pvt) Ltd

Shareholders No. of Ordinary Shares % Renuka Consultants and Services Limited 284,500 47.417% Renuka Enterprises Limited 265,500 44.250% Renuka Investments (Pvt) Limited 19,500 3.250% Renuka Hotels Limited 7,500 1.250% Renuka City Hotels Limited 7,500 1.250% Mr. R B Thabiayah 7,500 1.250% Ms. N A Thambiayah 7,500 1.250% Renuka Properties Limited 250 0.042% Lancaster Holdings Limited 250 0.042% Total 600,000 100.000%


Renuka City Hotels PLC

Amalgamated Theatres (Pvt)

Ltd

Cargo Boat Development Company PLC

Crescent Launderers

and Dry Cleaners (Pvt)

Ltd

62.22% 1.25% 41.06% 0.004%

1.25%

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Amalgamated Theatres (Pvt) Ltd Shareholders No. of Ordinary Shares % Renuka Hotels Limited 20,531 41.062% Renuka Investments (Pvt) Limited 12,998 25.996% Ms. N A Thambiayah 6,124 12.248% Cyril Gardiner Ltd 5,250 10.500% Mr. R B Thabiayah 3,844 7.688% Late Mr. Cyril Gardiner & Mrs. Mavis Gardiner 1,250 2.500% Estate of Late Mr. A L Thambiayah 3 0.006% Total 50,000 100.000%

TABLE 4.2– DIRECTORS OF THE GROUP COMPANIES

Company Directors Crescent Launderers and Dry Cleaners (Pvt) Ltd Mr. R B Thambiayah

Ms. N A Thambiayah Ms. M A Jayawardena Ms. S R Thambiayah Mr. S L Perera Mr. R St. Clair Paul

Amalgamated Theatres (Pvt) Ltd Mr. R B Thambiayah Ms. N A Thambiayah Ms. M A Jayawardena

4.4 Human Resources

As at 31 August 2017, the Group had 113 employees, in the following categories; TABLE 4.3– BREAK UP OF EMPLOYEES

Category Number of Employees Executive 33 Non Executive 80 Total 113

As at the date of this Introductory Document, there were no labour unions, significant agreements entered into between the labour unions and the Company.

4.5 Accolades & Recognition In 2012 Renuka Hotel was the proud recipient of the Agoda.Com - Gold Circle Award. In 2014 it won the Booking.com - Outstanding Hotel Partner Award. The Trip Advisor Certificate of Excellence Winner Awards were won by Renuka Hotel in both 2014 and 2015. In 2016 Renuka Hotel won the Booking.com - Outstanding Hotel Partner Award again for Best Performance.

4.6 Capital Structure As at the date of this Introductory Document, the Stated Capital of the Company is Sri Lankan Rupees One Hundred and Twelve Million Five Hundred and Eight Thousand Six Hundred and Forty Eight (LKR 112,508,648) divided into Forty Million Two Hundred and Ninety Seven Thousand Five Hundred and Thirty (40,297,530) fully paid up Ordinary Shares.

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4.6.1 An Overview of the Capital Structure The detailed breakdown of the Stated Capital of Renuka Hotels Limited is given below.

TABLE 4.4 - STATED CAPITAL OF RENUKA HOTELS LIMITED 31 August

2017 31 March

2017 31 March

2016 31 March

2015 Stated Capital (LKR) 112,508,648 112,508,648 112,508,648 6,000,000 Number of Ordinary Shares in Issue 40,297,530 40,297,530 40,297,530* 600,000 *A capitalisation of reserves amounting to LKR 106,508,648, at a proportion of 1 share for every 30.0571 shares held was carried out in 12 August 2015, which resulted in the issue of 19,962 shares at the rate of LKR 5,335.57 per share. Subsequent to this, a share split of 1 : 65 was carried out on the same day with shareholder approval. No shares were issued during the last 24 months. In terms of CSE Listing Rule 2.1.1(f)(i), the shares continued to be held by all existing “Non Public” shareholders, as defined in Section 4.6.2, namely the 25,772,088 shares, as shown in Table 4.5 of this Introductory Document, would be subject to a “lock-in” for a period of Six (6) months from the dates of listing. As such these shares would not be available for secondary market trading on the CSE upon RHL obtaining listing of its shares contemplated via this Introductory Document until the expiry of the aforesaid Six (6) months period from the respective date of listing. In terms of CSE Listing Rule 2.1.1(f)(ii), the shares continued to be held by all existing “Public” shareholders, as defined in Section 4.6.2, namely the 14,525,442 shares as shown in Table 4.5 of this Introductory Document, would not be subject to a “lock-in” period. As such these shares would be available for secondary market trading on the CSE upon RHL obtaining listing of its shares contemplated via this Introductory Document. No share transfers were carried out during the 12 months immediately preceding the Initial Listing Application. TABLE 4.5 - SHARE LOCK-IN DETAILS (PRE LISTING)

Category of Shareholders (Pre-Listing)

Locked-in Shares

The Months after which the Shares will be Available

for Trading

No. of Shares

No. of Shares as a percentage of

Total Number of Shares in Issue

Non Public

Shares held by Non Public Shareholders

prior to the date of the Initial Listing

Application - Locked-in

6 months from the date of listing

25,772,088 63.95%

Public * Not Locked-in - 14,525,442 36.05% Total 40,297,530 100.00%

* ‘Public’ defined under the definition mentioned in CSE Listing Rules 2.1.1(f) (Refer Section 4.6.2 of the Introductory Document) The Company hereby confirms that the information furnished herewith shall remain unchanged to the date of listing.

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Public Holding (Shares held by the ‘Public’ as a % of the total number of Shares), as per the ‘Public’ definition provided in the CSE Listing Rules 2.1.1(f) is 36.05%, represented by 211 ‘Public’ shareholders. (Total unlocked-Shares post-listing that will be held by the Public as a % of the total Shares in issue post-listing) Tabulated below are the names of the “Non Public Shareholders” and their relationship with the Company; TABLE 4.6 – NON PUBLIC SHAREHOLDERS

Name Relationship with the Company

M/S Renuka Consultants & Services Ltd Company in the Group with common Directors Mr. G U Nanayakkara Director Mr. G U Nanayakkara / Ms. D M Nanayakkara

Director (held by the director jointly with Ms. D M Nanayakkara)

Mr. M J Fernando Director Mr. R B Thambiayah Shareholder owning more than 5% of the issued shares

of the Company (in joint capacity with some directors) Mr. R B Thambiayah / Ms. A L Thambiayah

Shareholder owning more than 5% of the issued shares of the Company (in joint capacity with some directors) / Director

Mr. R B Thambiayah / Ms. N R Thambiayah

Shareholder owning more than 5% of the issued shares of the Company (in joint capacity with some directors) / Director

Mr. R B Thambiayah / Ms. S R Thambiayah

Shareholder owning more than 5% of the issued shares of the Company (in joint capacity with some directors) / Chairperson

Mrs. N A Thambiayah Shareholder owning more than 5% of the issued shares of the Company (in joint capacity with some directors)

Mrs. S Nagendra Director Mrs. S R Dominic Director Mrs. S R Dominic / Mr. D P Dominic Director (held by the director jointly with Mr. D P

Dominic) Ms. A L Thambiayah Jt. Managing Director Ms. N R Thambiayah Director Ms. S R Thambiayah Chairperson/Jt. Managing Director The Estate of the Late Rasiah Yogarajah Former Director’s shares where the testamentary case

and the devolvement is not finalised Tabulated below are the top Ten (10) shareholders of the Company as at 10 October 2016. TABLE 4.7 - TEN LARGEST SHAREHOLDERS PRE LISTING

Name No. of Ordinary Shares % Ms. N A Thambiayah 5,851,430 14.52% Mr. R B Thambiayah / Ms. S R Thambiayah 4,480,315 11.12% Mr. R B Thambiayah / Ms. N R Thambiayah 4,480,250 11.12% Mr. R B Thambiayah / Ms. A L Thambiayah 4,480,185 11.12% Ms. I R Rajiyah 3,646,890 9.05%

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Mr. D J Nirmalalingam 3,210,117 7.97% Mr. R B Thambiayah 3,105,873 7.71% Ms. S R Nirmalalingam 1,085,528 2.69% Mr. M J Fernando 915,910 2.27% Cabraal Consulting Group (Pvt) Ltd 560,100 1.39% Total 31,816,598 78.95%

TABLE 4.8 - THIRTEEN LARGEST PUBLIC SHAREHOLDERS PRE LISTING

Name No. of Ordinary Shares % Mrs. I R Rajiyah 3,646,890 9.0499% Mr. D J Nirmalalingam 3,210,117 7.9660% Ms. S R Nirmalalingam 1,085,528 2.6938% M/S Cabraal Consulting Group (Pvt) Ltd 560,100 1.3899% Mr. M J Fernando 458,055 1.1367% Mr. D C Fernando 457,855 1.1362% M/S Cargo Boat Despatch Co, Ltd 425,755 1.0565% Ms. M M Sellamuttu 402,800 0.9996% Mr. M Selvanathan 398,185 0.9881% Dr. S R Rajiyah 397,085 0.9854% Top 10 Public Shareholders 11,042,370 27.4021% Mr. C R Raymond 298,800 0.7415% Ms. N M Nirmalalingam 298,800 0.7415% Mr. W Sellamuttu 278,650 0.6915% Top 13 Public Shareholders 11,918,620 29.5766%

The CSE Listing Rules Section 2.1.3 c) (second para) states that “in the event the applicant entity is seeking a listing on the Exhange by way of an Introduction, such Entity shall ensure that not more than 50% of the shares in the hands of Public Shareholders are held by the three (03) largest Public Shareholders of the entity at the time of listing”. The three largest Public Shareholders of the Company hold more than 50% of the shares held by the Public Shareholders as shown in the table above. In this regard the CSE has granted a waiver on the above requirement taking into account the reasoning set out by the Company together with the Manager to the Introduction in their letter dated 2 November 2016, as given below; At present the top three (03) Public Shareholders hold 19.7097% (more than 50%) out of the total public holding of 36.05%. However, since the Company has 211 Public Shareholders and a total public holding of 36.05%, which is significantly higher than the minimum requirement of 10% as per the Securities and Exchange Commission of Sri Lanka Directive SEC/LEG/16/11/13 dated 17 November 2016, the top three (03) Public Shareholders owning more than 50% of the public holding would not significantly affect the liquidity of the share. Furthermore, even when the top three (03) Public Shareholders are disregarded in the calculation of the public holding, the Company’s public holding would amount to 16.34% held by 208 Public Shareholders.

4.6.2 Free Transferability of Shares

Upon being listed on the CSE, all Shares shall be freely transferable except for those Shares mentioned in Section 4.6.1 above, disclosed under the ‘shares locked-in’, which will be locked-in to be in compliant with CSE Listing Rules 2.1.1(f).

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In accordance with CSE Listing Rule 2.1.1(f): All Shares held by “Non Public Shareholders”* prior to Twelve (12) months from the date of an

Initial Listing Application shall be locked-in for a period of Six (06) months from the date of listing of the entity.

All Shares held by “Public Shareholders”** prior to Twelve (12) months from the date of an Initial Listing Application shall not be locked-in.

All shares acquired by way of a transfer from another shareholder (irrespective of being Non Public or Public Shareholders) during the period of Twelve (12) months immediately preceding the date of an Initial Listing Application shall be locked in for a minimum of Six (6) months from the date of listing or 12 months from the date of acquisition of those shares, whichever is longer.

All Shares acquired by way of an allotment during the period of Twelve (12) months immediately preceding the date of an initial listing application shall be dealt with by the discretion vested in the Securities and Exchange Commission under Section 28A of the Securities and Exchange Commission of Sri Lanka Act No. 36 of 1987 where the Commission grants a waiver to an entity in terms of the said provision.

* Non Public Shareholders, shall mean the following parties who hold, directly or indirectly, shares of the Company;

a) its parent, any subsidiary or associate companies or any subsidiaries or associates of its parent company;

b) its Directors who are holding office as directors of the entity and their close family members; c) Chief Executive Officer and his/her close family members; d) Key Management Personnel and their close family members; e) Any party acting in concert with the parties set out in a), b), c) and d) above; f) Shareholders whose shares are in a locked account with the CDS due to a statutory or regulatory

requirement other than those shareholders exempted under (h) below and whose shares have been subject to a voluntary lock-in at the option of the shareholder

g) Employees of the Company, who have been allotted shares of a Listed Entity which are directly or indirectly controlled by the management or the majority shareholder of the Company

h) Any Entity or an individual or individuals jointly or severally holding 5% or more of the shares of the Listed Entity if the Company is a Diri Savi Board Entity and 10% or more of the shares if the Company is a Main Board Entity, except where such shareholder is; i. a statutory institution managing funds belonging to contributors or investors who are

members of the public; or ii. an entity established as a unit trust or any other investment fund approved by the SEC; or

iii. not a related party declared in terms of Sri Lanka Accounting Standards or a party acting in concert declared in terms of the Company Takeovers and Mergers Code.

‘Close Family Member’ shall mean the spouse or a financially dependent child. ‘Key Management Personnel’ shall mean those persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly, including any director (whether executive or otherwise) of the Company. ** Public Shareholders shall mean any party who hold Shares of the Company other than the parties identified as ‘Non Public Shareholders’ abovementioned. The details of the lock-in periods for the shares are mentioned in Table 4.5, and the shares that will be subject to a lock-in will not be available for trading.

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4.6.3 Other Securities The Company has not issued any convertible debt securities or any other class of shares other than the shares stated above. 4.6.4 Private Issues of Share The Company is not issuing nor are the shareholders disposing of Shares privately in conjunction with the Listing through Introduction. 4.6.5 Share Re-Purchases or Redemptions The Company has not engaged in any share re-purchase, redemption or stated capital reduction exercises in the two years preceding the date of this Introductory Document. 4.6.6 Takeover Offers There have been no takeover offers by third parties in respect of the Company’s Shares during the past two years and no takeover offers have been made by the Company in respect of shares of third parties. 4.6.7 Further Issue of Shares The Company does not intend to raise further funds through a rights issue within the next 12 months subsequent to the listing.

4.7 Taxation

The Company is liable to the following taxes based on the regulations that are currently prevalent; Income Tax Taxation will be based on the elements of income and expenditure as reported in the financial statements and computed in accordance with the provisions of the Inland Revenue Act. Renuka Hotels is currently liable for Income Tax of the hotel operation at the rate of 12% and other income at the rate of 28%. However, as per the revised tax rate structure on profits from business proposed in the Inland Revenue Bill 2017, Renuka Hotels may be liable for income tax on the hotel operations at the rate of 14% from 1 April 2018. Value added Tax Renuka Hotels’ business operations are liable to VAT, under the Value Added Tax Act No. 13 of 2002 and its subsequent amendments, at the rate of 15% at present. Share Transactions Levy (On commencement of trading of Shares on the CSE) Upon the listing of the shares of the Company, a transaction levy at the rate of 0.3% on the sales and purchases of all share transactions is charged from both the buyer and the seller in terms of the Finance Act No. 5 of 2005 as amended.

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Withholding Tax (WHT) for Dividends In general, dividends distributed by resident companies out of taxable income to resident or non-resident shareholders are subject to WHT at the rate of 10% under Section 153 of the Inland Revenue Act No. 10 of 2006. The Company is required to deduct dividend tax at source and remit the same to the Department of Inland Revenue. The Inland Revenue Bill 2017 has proposed that the WHT rate on dividends be increased to 14% with effect from 1 April 2018. Other than the WHT referred to above, dividends paid on shares to shareholders of the Company will not be subject to any other Sri Lankan tax. Dividend income received by a company resident in Sri Lanka from another company resident in Sri Lanka does not form part of statutory income and is therefore not taxable in the hands of the recipient company.

4.8 Litigation, Disputes and Contingent Liabilities An action was filed by two individual shareholders against certain other shareholders and the company alleging oppression and mismanagement as detailed in note 31.1 of the financial statements of the company for the year ended 31 March 2017. The plaintiffs are shareholders of the Company, while the defendants are also shareholders who were at that point in time also acting as directors of the Company. The said action filed by the two individuals, who were plaintiffs in the case (being shareholders of the company), was consequent to a family dispute. The Commercial High Court of the Western Province (exercising civil jurisdiction) had made an order in the said case (H.C. (Civil) 01/2002 (02)), that the shares of the company held by the plaintiffs, be purchased by certain individual shareholders, who were defendants in the case, and had further ordered that failing which, the shares would have had to be repurchased by the Company. This order made by the Commercial High Court, which is a court of first instance, was appealed from, by the defendants, to the Supreme Court, which is the final appellate court, and the said appeal has been pending thereat. During the pendency of the said appeal (S.C. (CHC) Appeal No. 07/2008), the defendants-appellants and the plaintiffs-respondents entered into settlement discussions, which finally culminated in the execution of a formal settlement agreement, entered into between these parties on 22 July 2015 and the said agreement was formally filed in the Supreme Court and the express terms and conditions contained therein, were specifically brought to the attention of the Honourable Court, both by way of an accompanying formal motion that was filed as well as oral submissions made by Counsel. In view of the fact that the said settlement agreement contained several terms and conditions to be fulfilled by the parties thereto, the case was called on several dates in order to ascertain the progress of the same and the Honourable Court was pleased to accommodate the same, so that the final resolution of the matter could be conclusively effected, by and through the satisfaction of all the terms and conditions of the agreement. Thereafter, with due progression, the terms and conditions were fulfilled by the parties and the only condition that remained was for the Company to seek and obtain listing on the Colombo Stock Exchange. The Colombo Stock Exchange issued a formal letter dated 16 October 2017, granting its approval in-principle for the listing of the shares of Renuka Hotels Limited on the Diri Savi Board of the Colombo Stock Exchange.

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Accordingly, when the case came up before the Honourable Supreme Court on 20 October 2017, a copy of the said letter was produced for the perusal of the Supreme Court, which was presided over by His Lordship, Honourable Justice Buwaneka Aluvihare and it was formally intimated to the Supreme Court that the condition with regard to the listing had been complied with in substance and that the only further condition that remains, is for the listing to be effected, in terms of the express terms and conditions of the Settlement Agreement executed between the parties. This settlement will result in the judgement of the Commercial High Court that had been appealed from, being pro forma set aside in terms of the settlement between the parties. It was also agreed on the said date (i.e 20 October 2017), before the Supreme Court that immediately upon the shares of the Company being listed on the Colombo Stock Exchange, that the parties would file a joint motion, intimating the same to the Court and that the parties would move to bring the entire case to a complete conclusion by having the impugned judgement of the Commercial High Court, being pro forma set aside by the Court. In view of these very positive development and the case virtually in sight, the Court fixed the case to be mentioned on 5 December 2017. In view of the progression of the above events, culminating in the last day’s proceedings before the Supreme Court, based on the receipt of approval in-principle by CSE for the listing of the Company, the Company believes that it would not encounter the requirement to repurchase the shares since a terms of settlement has been entered into as mentioned above subsequent to the impugned court order, as a result of which the Company does not expect any probable liability on the settlement and no provision has been recognized in the financial statements. The parties pursuant to the execution of the settlement agreement and the several proceedings before the Supreme Court pertaining to the same as well as the in-principle approval from the CSE for the listing and importantly the last day’s (i.e 20 October 2017) proceedings before the Supreme Court where the parties agreed that the settlement could be fulfilled in its entirety and the case accordingly brought to a conclusion it appears highly unlikely at this juncture that there will be any other contingency. However, theoretically at least, in the very remote event of an unforeseen obstacle arising, then once again, theoretically at least, the case would be listed for argument in the Supreme Court. Even in such an event this would still not preclude the parties from making a further attempt at resolving the matter prior to the date of argument. Cases Filed by the Colombo Municipal Council against the Hotel There are 8 cases filed by the Colombo Municipal Council at the magistrate’s court against the Hotel for operating without a license for the years 2009, 2010, 2011, 2012, 2013, 2014, 2015 and 2016. No action has yet been taken, pending the outcome of the writ application filed in the court of appeal which has been re-fixed for argument on 28 February 2018. The above cases have been fixed for trial/preliminary objections during October and November 2017. The hotel is operating under a valid licence issued by the Sri Lanka Tourism Development Authority. However, the Trade Licence to operate a hotel within the Colombo municipality area is pending based on the outcome of the municipal council cases mentioned above. The company has adequate resources to settle any liability which may arise from the court’s decision and does not expect any significant impact on the operations of the Company. A best estimate of the liability is based on calculating the tax as 0.5% of the revenue of hotel operations (accommodation and food and beverage) of Renuka Hotel for the years 2008/9 to 2016/17. This amounts to approximately LKR 6,650,000.

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The Company was not involved in any arbitration or mediation proceedings in the recent past which had any significant effects on the Company’s financial position or profitability. Further there are no penalties imposed by any regulatory or state authority against the Company, other than any penalties that may arise from the above cases. Except as set out above, the Company does not have any contingent liabilities that would affect its current and future profits, as at 31 August 2017.

4.9 Management Agreements There are no management agreements as at 31 August 2017.

4.10 Material Contracts There are no material contracts entered into by the Company other than those contracts entered into in the ordinary course of business.

4.11 Details of Commissions Paid No commission has been paid in the two (2) years preceding the Listing or payable for subscribing or agreeing to subscribe or procuring or agreeing to procure subscriptions for any Shares of the Company.

4.12 Details of Benefits Paid to Promoters No benefit has been paid or given within the two (2) years preceding the Listing and there are no benefits intended to be paid or given to any promoter.

4.13 Degree of Dependence on Customers, Borrowers or Suppliers There is no material dependency on key customers, borrowers or suppliers in terms of the overall business operations of the Company.

4.14 Future Plans for Renuka Hotels Limited The management of the Company proposes to continue with its core business of running a successful city hotel and managing its extensive share portfolio. The Company together with its subsidiary Renuka City Hotels PLC will continue to manage the two hotels owned by the group whereby the hotels will continue to be a preferred accommodation provider for many foreign and local travellers. The facilities provided within the hotels including the restaurants, in-room facilities and other common facilities will be maintained and managed efficiently and effectively in order to ensure that the guests enjoy the benefits of these facilities and the hotels maintain their competitive edge over the competitors. Since the hotel was renovated during the period of August 2014 to May 2015 and the facilities were upgraded simultaneously, using internally generated funds, the management does not foresee the need to invest in overhauling or upgrading the facilities in the short to medium term. However, if the requirement arises, the management in consultation with the Board of Directors will assess the requirement and carryout the developments as necessary. In respect of the investment portfolio, the Company would continue to make necessary changes to the investment portfolio whilst continuing to make any investment decisions after carrying out thorough analysis of the risks and returns of the proposals. The Company will also make changes to

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the investment portfolio by taking into consideration the interest rate movements as well as the capital market movements. Investment decisions are taken by the Chairperson and Key Management Personnel after studying the performance of the quoted companies that they wish to invest in. Investments are made as and when the opportunity arises. No thresholds in respect of investments are currently applicable. Although no major changes are expected in the business operations of the Company, the executive directors are always looking into opportunities to expand the company’s business and to diversify its operations when feasible. Opportunities such as any new government incentives for tourism related entities or any significant surge in tourist arrivals and the demand for accommodation would be considered positively by the Directors, and necessary steps will be taken to either expand or upgrade the facilities as required, after taking into account the related risks and rewards. 4.14.1 Assumptions and Risks Relating to the Future Plans The future plans of the Company as explained above are based on the assumption that the current global and local economic conditions will prevail at its current levels. However, any economic downturn or significant improvement or any other factor that will adversely or favourably affect the tourism sector will result in an alteration of the above mentioned plans. The future plans of the Company will be subject to the risks mentioned in Section 7.1 and 7.2.

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5.0 CORPORATE STRUCTURE 5.1 Board of Directors

The Board of Directors guides and supervises the business and operations of the Company. The Board consists of Three (3) Independent Non-Executive Directors, and Six (6) Non-Independent Directors including the Chairperson. As at the date of this Introductory Document, the composition of the Board is as follows. TABLE 5.1 - DETAILS OF RENUKA HOTELS LIMITED BOARD OF DIRECTORS

Name Age Address Designation Ms. S R Thambiayah 40 16/2, Bagatalle Road, Colombo 03 Executive Chairperson/

Joint Managing Director Ms. A L Thambiayah 35 16/2, Bagatalle Road, Colombo 03 Executive Joint Managing

Director Mrs. S R Dominic 82 Kings Court, 4/5, 15, Havelock Road,

Colombo 05 Non-Executive Non-Independent Director

Mr. M J Fernando 87 83/6, Buthgamuwa Road, Rajagiriya Non-Executive Non-Independent Director

Mr. G U Nanayakkara 66 7, Siripa Lane, Colombo 05 Non-Executive Independent Director

Mr. S Nagendra 78 52B, Crescat Residencies 75, Galle Road, Colombo 03

Non-Executive Independent Director

Mrs. M A Jayawardena 63 207/4, Dharmapala Mawatha, Colombo 07

Executive Director/Company Secretary

Ms. N R Thambiayah 37 16/2, Bagatalle Road, Colombo 03 Executive Director Mr. R N Asirwatham 75 27/1, Unity Place, Colombo 03 Non-Executive

Independent Director 5.2 Profiles of the Board of Directors

Ms. S R Thambiayah – Executive Chairperson/Joint Managing Director Ms. S Thambiayah holds a Bachelor of Economics (Hons.) degree from the University of Nottingham, UK; and a Master of Management in Hospitality from Cornel University, USA. She began her career in the hospitality industry in 1999 as a Management Trainee at Hotel Renuka and Renuka City Hotel and is currently the Chairperson of Renuka Hotels Limited and Joint Managing Director for both hotels. Ms. Thambiayah has also held positions at Nestle Lanka PLC and with Expedia Inc. in New York as a Market Manager during her career. She was appointed to the Board on 14 March 2005 and was appointed Chairperson in September 2017. She served on the DFCC Vardhana Bank PLC Board from September 2012 to March 2015 and she currently serves on the DFCC Bank PLC Board from March 2015. Ms. A L Thambiayah – Executive Joint Managing Director Ms. Arnila Lakshmi Thambiayah holds a Bachelor of Arts (Hons.) in Management Studies from the University of Nottingham, UK and a Master of Science in International Business and Management from Manchester Business School, University of Manchester, UK. She has worked as an Executive at Keells Hotel Management and John Keells Holdings - New Business Development and Group Initiatives for two and a half years. She commenced work at Hotel Renuka and Renuka City Hotel in 2006 and is currently Joint Managing Director for the hotels. She was appointed to the Board on 24 February 2009.

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Mrs. S R Dominic - Non-Executive Non-Independent Director Mrs. Sita Dominic is a Non-Executive Non-Independent Director and has been on the board since 1991. She joined the hotel in 1972 and was in charge of the food and beverage section until her retirement. Mr. M J Fernando - Non-Executive Non-Independent Director Mr. Fernando is the founder of the MJF Group of Companies and the global brand DILMAH which re-launched Ceylon Tea successfully. He developed the first ever brand owned in a tea producing country, which is competing successfully with multinational brands to become a respected global brand name. He pioneered value addition to tea at origin, combined with branding and marketing with the objective of retaining in Sri Lanka the profits which are lost to the producer through traders whose blending and packing centres are overseas. Mr. G U Nanayakkara - Non-Executive Independent Director Mr. Nanayakkara joined the family business in 1968 for a short while prior to pursuing his studies to UK to specialize in tourism and aviation. He once again joined the business in 1972 on a fulltime basis. During his illustrious carrier, he joined many forums and associations and was in the executive committee in many associations dedicating himself in serving the industry and country. He was President of the Travel Agent’s Association in Sri Lanka and served three terms. Co–Founder of the Sri Lanka Association of Airlines Representatives which he subsequently was appointed as the President. He is also the Founder President – IATA Agents Association of Sri Lanka, which he served for two terms. He was also the first Sri Lankan to be appointed as the Chairman/President of UFTAA (Universal Federation of Travel Agent’s Associations in Monaco). He served this position for 2 consecutive years. At present he is the Honorary President and still serves on the Board. During his tenure as Chairman of Sri Lanka Tourism he restructured the Board to perform even better than a private sector organization. Mr. S Nagendra - Non-Executive Independent Director He was a former Senior Director of Carson Cumberbatch PLC, and several of its subsidiaries and associate companies. He is also the Senior Director and Consultant of CML-MTD Construction Ltd, Executive Chairman –Travelserve Ltd and Travelon Ltd and Director and Chairman of several Public Listed and Private Companies. He was a former Committee Member of Transport, Highways and Aviation of the Monitoring & Progress Division of the Ministry of Policy Development and Implementation. He was also the Past President of Skal International Colombo (International Association of Travel and Tourism Professionals) and the Past Secretary of Skal International Asian Area Region and Past President of the Pacific Asia Travel Association, Sri Lanka Chapter. Mr. Nagendra was the Immediate Past President of the Sri Lanka Benelux Business Council and Sri Lanka Pakistan Business Council and also the Past Executive Committee Member of the Ceylon Chamber of Commerce and former Chairman of the Import Section of the Ceylon Chamber of Commerce. Mr. Nagendra was the Past President of Chartered Management Institute- UK, Sri Lanka Chapter. Mr. Nagendra is also a companion of the Chartered Management Institute (UK) and holds a Master of Business Administration (UK) and is a fellow of the Institute of Certified Professional Managers, Sri Lanka. Mrs. M A Jayawardena – Executive Director/Company Secretary Mrs. Jayawardena is a Fellow of the Institute of Chartered Accountants of Sri Lanka and the Chartered Institute of Management Accountants, UK. Mrs. Jayawardena has over 25 years experience in Accounting and Finance both locally and internationally. She worked in Zambia for more than 13 years

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in various capacities including Group Chief Accountant of the Copperbelt Companies of Anglo American Corporation (Central Africa) Ltd. She was also the Group Financial Controller of the EDS Group of Companies overseeing the Accounting and Finance of their regional IT Companies in South Asia prior to joining Renuka Hotels Group. She was appointed to the Board on 14 March 2005. Ms. N R Thambiayah - Executive Director Ms. Niruja Thambiayah holds a Bachelor of Arts in Industrial Economics from the University of Nottingham, UK and a Master in International Business from Monash University, Australia. She has also obtained a Certificate IV in Property Services from the Real Estate Institute of Victoria. She has worked at Asia Securities (Pvt) Ltd., for 2 years as an Investment Advisor and she has also worked at Monash University Australia in the office of the Deputy Vice Chancellor as a Project Officer. She was appointed to the Board on 06 July 2010. She was appointed to the board of Royal Ceramics Lanka PLC in October 2015. Mr. R N Asirwatham - Non-Executive Independent Director Mr. Rajan Asirwatham was the Senior Partner and Country Head of KPMG Ford Rhodes Thornton & Company from 2001 to 2008. Further, he was the Chairman of the Steering Committee for the Sustainable Tourism Project funded by the World Bank for the Ministry of Tourism and also a member of the Presidential Commission on Taxation, appointed by His Excellency the President. Mr. Asirwatham is a fellow member of the Institute of Chartered Accountants of Sri Lanka and a member of the Ceylon Chamber of Commerce Advisory Council.

5.3 Other Directorships Held by the Board TABLE 5.2 - OTHER DIRECTORSHIPS Name of Director Other Directorships Held Ms. S R Thambiayah Renuka City Hotel PLC

Cargo Boat Development Company PLC Crescent Launderers& Dry Cleaners (Pvt) Ltd Renuka Consultants & Services Ltd Renuka Properties Ltd Lancaster Holding Ltd Portfolio Management Services (Pvt) Ltd DFCC Bank PLC

Ms. A L Thambiayah Renuka City Hotels PLC Cargo Boat Development Company PLC Renuka Consultants & Services Ltd

Mrs. S R Dominic Renuka Consultants & Services Ltd Mr. M J Fernando Cargo Boat Development Company PLC

Aitken Spence Plantation Management PLC Browns Hills Development (PVT) Ltd Cape Weligama (Pvt) Ltd Dilmah Ceylon Tea Company PLC City Properties (PVT) Ltd Coco Palm Beach (PVT) ltd Ceylon Tea Framers (PVT) Ltd Dilmah Australia (PVT) Ltd Dilmah Fine Teas & Herbs (PVT) Ltd Dilmah Investments PTY Ltd(Australia)

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Dilmah New Zealand Ltd Dilmah Properties (PVT) Ltd Dilmah Property Developments (PVT) ltd Durdans Medical & Surgical Hospitals (PVT) Ltd Elpitiya Plantations Ltd Elpitiya Tea Farmers (PVT) Ltd Eastern Resources Holdings (PVT) Ltd Epoch Investment Lanka (PVT) Ltd Forbes Plantations (PVT) Ltd Forbes & Walkers Ltd Hayleys Plantation Services Ltd Kahawatte Plantation (Pvt) Ltd M.J.F. Exports (PVT) Ltd M.J.F. Teas (PVT) Ltd M.J.F. Beverages (PVT) Ltd M.J.F. Tea Gardens (PVT) Ltd M.J.F. Holdings Ltd M.J.F. Leisure (PVT) Ltd M.J.F Media (PVT) Ltd M.J.F. Properties (PVT) Ltd M.J.F. Travel & Trucking (PVT) Ltd M.J.F. Foundation Investments (PVT) Ltd Merril J. Fernando & Sons (PVT) Ltd PCL Solutions (PVT) Ltd Packages Lanka (PVT) Ltd Printcare (Ceylon) PLC Printcare Packaging (PVT) Ltd Printcare Publishing (PVT) Ltd Princare Universal (PVT) Ltd Red Rock Beach (PVT) Ltd Resplendent Ceylon (PVT) Ltd Royal Palm Beach Hotel Ltd Stanes MJF (PVT) Ltd Talawakele Tea Estates Ltd Tea Trails (PVT) Ltd The Ceylon Spice Co. (PVT) Ltd The Fortress Resorts PLC Timber Concepts (PVT) Ltd Water Villas (PVT) Ltd Wild Coast Lodge (PVT) Ltd

Mr. G U Nanayakkara DUT Holdings (Pvt) Ltd Centara-Ceysand Resorts Ltd Softlogic City Hotels (Pvt) Ltd Esna (Pvt) Ltd Esna Allied Enterprises (Pvt) Ltd

Mr. S Nagendra CML-MTD Construction Ltd Pegasus Hotels of Ceylon PLC Equity Insurance Brokers LTD Equity One LTD Serendib Land PLC

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Special Projects Company (Pvt) Ltd E Futures (Pvt) Ltd Travelserv Ltd Travelon Ltd Travelon Management Services (Pvt) Ltd

Mrs. M A Jayawardena Renuka City Hotels PLC Cargo Boat Development Company PLC Crescent Launderers& Dry Cleaners (Pvt) Ltd Amalgamated Theatres (Pvt) Ltd

Ms. N R Thambiayah Renuka City Hotels PLC Cargo Boat Development Company PLC Renuka Consultants & Services Ltd Lancaster Holdings Ltd Royal Ceramics Lanka PLC

Mr. R N Asirwatham Vallibel One PLC Dilmah Ceylon Tea Company PLC CIC Holdings PLC Aitken Spence PLC Aitken Spence Hotels PLC Dial Tex Industries (Pvt) Ltd Royal Ceramics Lanka PLC Mercantile Merchant Bank Dankotuwa Porcelain PLC Colombo City Holdings PLC Peninsular Properties (Pvt) Ltd Yaal Hotels (Pvt) Ltd Ceylon Agro Industries (PVT) Ltd Browns Beach Hotels PLC

5.4 Directors’ Interest in Shares

5.4.1 Directors’ Direct and Indirect Shareholdings in the Company The Directors’ direct shareholdings in the Company as at 10 October 2016 are tabulated below. TABLE 5.3 - DIRECTORS’ DIRECT & INDIRECT SHAREHOLDINGS IN RENUKA HOTELS LIMITED AS AT 10 OCTOBER 2016

Name of Director Number of Shares Held

Percentage of Shareholding (%)

Ms. S R Thambiayah / Mr. R B Thambiayah 4,480,315 11.12% Ms. N R Thambiayah / Mr. R B Thambiayah 4,480,250 11.12% Ms. A L Thambiayah / Mr. R B Thambiayah 4,480,185 11.12% Ms. S R Thambiayah 505,370 1.25% Ms. A L Thambiayah 441,475 1.10% Mrs. S R Dominic 83,715 0.21% Mrs. S R Dominic/Mr. D P Dominic 160,675 0.40% Mr. M J Fernando 915,910 2.27% Mr. G U Nanayakkara 268,445 0.67% Mr. G U Nanayakkara / Ms. D M Nanayakkara 268,445 0.67% Ms. S Nagendra - - Ms. M A Jayawardena - -

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Ms. N R Thambiayah 419,180 1.04% Renuka Consultants and Services Limited (Common Directors with Renuka Hotels include Ms. S R Thambiayah, Ms. A L Thambiayah, Mrs. S R Dominic & Ms. N R Thambiayah)

83,715 0.2%

Mr. R N Asirwatham - - Total 16,587,680 41.16%

There are no indirect shareholdings by Directors of the Company. 5.4.2 Sale or Purchase of Shares by the Directors There were no share issues, sales, transfers or purchases of shares made by/to the Directors of the Company during the last 12 months prior to the date of this Introductory Document. 5.4.3 Directors’ Emoluments The Directors were remunerated in the form of fees, salary, bonus and ex- gratia payments during FY2016/2017 to an approximate extent of LKR 29,368,000.00. The Directors are expected to be remunerated in the form of fees, salary, bonus and ex-gratia payments during FY2017/18 to an approximate extent of LKR 203,000,000.

5.4.4 Directors’ Interest in Assets

The Directors hold no interest in assets acquired, disposed or leased by the Company during the two years preceding the Listing. Furthermore, it is not proposed that the Directors will hold any interest in assets to be acquired, disposed or leased by the Company in the two years subsequent to the Listing. 5.4.5 Directors’ Interest in Material Contracts

There were no contracts or arrangements in force as at 31 August 2017 in which the Directors of the Company are materially interested in relation to the business of the Company. The assets/investments held by and the transactions associated with companies related to Renuka Hotels Limited, is as follows;

TABLE 5.4 - RELATED COMPANY INTEREST IN CONTRACTS

Name of Director Nature of Transaction Amount (LKR)

as at 31 August 2017

Amount (LKR) as at

31 March 2017 Renuka City Hotels PLC

Ms. S R Thambiayah Ms. A L Thambiayah Ms. N R Thambiayah Mrs. M A Jayawardena

Dividend income Net fund transfers from Renuka City Hotels PLC

- (10,616,348)

Expenses incurred on behalf of Renuka City Hotels PLC

- 8,018,488

Expenses incurred by Renuka City Hotels PLC on behalf of the Company

- (1,651,244)

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Transfer of food cost expense (apportioned) to Renuka City Hotels PLC

9,516,972 18,475,324

Crescent Launderers & Dry Cleaners (Pvt) Ltd Ms. S R Thambiayah Mrs. M A Jayawardena

Net fund transfers to/(from) Crescent Launderers & Dry Cleaners (Pvt) Ltd

- 7,058

Expenses incurred on behalf of Crescent Launderers & Dry Cleaners (Pvt) Ltd

- (2,500)

Cargo Boat Development Company PLC Ms. S R Thambiayah Ms. A L Thambiayah Ms. N R Thambiayah Mrs. M A Jayawardena Mr. M J Fernando

Net fund transfers to/(from) Cargo Boat Development Company PLC

- (475)

Expenses incurred on behalf of Cargo Boat Development Company PLC

-

Renuka Lands (Pvt) Ltd (Company was sold outside the group on 25 August 2016) Ms. S R Thambiayah Ms. A L Thambiayah Ms. N R Thambiayah Mrs. M A Jayawardena

Loan interest received from Renuka Lands (Pvt) Ltd

- 10,417,389

Net fund transfers - (310,454,939)

Renuka Consultants and Services Ltd Ms. S R Thambiayah Ms. A L Thambiayah Ms. N R Thambiayah Mrs. S R Dominic

Net fund transfers to/(from) Renuka Consultants & Services Ltd

- (1,300,000)

Laundry and staff quarters rent Expense

333,333 800,000

Expenses incurred on behalf of Renuka Consultants & Services Ltd

(6,350) 500,000

5.5 Statement - Board of Directors

No Director or a person nominated to become a Director of the Company is or was involved in any of the following events: A petition under any bankruptcy laws filed against such person or any partnership in which he was

a partner or any corporation of which he was an executive officer; Convicted for fraud, misappropriation or breach of trust or any other similar offence which the CSE

considers a disqualification.

5.6 Corporate Governance Practices Corporate Governance deals with the systems by which companies are led, directed and controlled, the role of the board of directors, the framework of internal controls and relationships between the board of directors, shareholders and auditors. The platform on which corporate governance principles are structured in Sri Lanka is that the board of directors is responsible for the proper governance of the company. In that context, the board of directors of Renuka Hotels Limited, have recognized that their responsibilities include the setting out of the Company’s strategic aims, providing the necessary leadership to implement such aims,

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supervising the management of the business and reporting to the shareholders on their stewardship. Therefore, they strive to discharge such duties collectively. The shareholders’ responsibilities cover the appointing of directors and auditors and satisfying themselves that the appropriate governance structures are in place. 5.6.1 The Board of Directors The board of directors of Renuka Hotels Limited takes responsibility for the good corporate governance of the Company. The Board sets out the Company’s strategic focus, and oversees the business and connected affairs of the Company and it also formulates the strategic objectives and policy frame work for the Company. Directors Responsibility for the Preparation of the Financial Statements The board of directors accepts the responsibility for the preparation of the financial statements, maintaining adequate records for safeguarding the assets of the Company, and preventing and detecting fraud and/or other irregularities. The board of directors also confirm that the applicable Sri Lanka Accounting Standards have been adhered to, subject to any material departures being disclosed and explained in the Notes to the Financial Statements. The board of directors further confirm that suitable accounting policies are consistently applied and supported by reasonable and prudent judgement and estimates, in the preparation of the financial statements. Compliance Regarding Payments The board of directors confirm that all known statutory payments have been paid up to date and all retirement gratuities have been provided for in the financial statements. At the same time, all payments made to related parties have been reflected in the financial statements. Internal Control The Board is responsible for ensuring that the Company has adequate and effective internal controls in place. Going Concern The board of directors is satisfied that the Company is a going concern and has adequate resources to continue in business for the foreseeable future. For this reason, the Company follows the “going concern” basis when preparing financial statements. The Board is in compliance with the regulatory requirements of the Listing Rules of the Colombo Stock Exchange in its Corporate Governance practices. The constitution of the Board in compliance with the above rules is as follows;

TABLE 5.5 – BOARD COMPOSITION

Type Number of Directors Executive Directors 4 Non-Executive Non-Independent Directors 2 Non-Executive Independent Directors 3 Total 9

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Audit Committee The Company’s Audit committee consists of three Non-Executive Directors namely Mr. R N Asirwatham (Chairman – Independent Director), Mr. S Nagendra (Independent Director) and Mr. M J Fernando (Non-Executive Non-Independent Director). The Audit Committee assist the Directors fulfil their responsibility with regard to certain aspects of best Corporate Governance practices, namely Audit and Risk Management. The Committee is empowered to review the activities and financial affairs of the Company. The Committee also reviews the financial reporting of the company to ensure the compliance and adequacy of disclosure as per the requirements of the Sri Lanka Accounting Standards and other financial reporting regulators. The Audit Committee also receives reports from the External Auditors on their audit findings and provides a forum for the impartial review of these reports. The Audit Committee makes recommendations to the Board of Directors regarding the appointment, re-appointment and removal of External Auditors. Remuneration Committee The company's Remuneration Committee consists of three Non-Executive Directors namely, Mr. M J Fernando (Chairman - Non-Executive Non-Independent Director), Mr. G U Nanayakkara (Independent Director) and Mr. S Nagendra (Independent Director). The Remuneration Committee lays down guidelines and recommends the remuneration payable to the Executive Directors and the Senior Management staff, keeping in line with the industry standards, for the Board to make the final decision based on these recommendations. Related Party Transaction Review Committee The company’s Related Party Transaction Review Committee consists of three Non-Executive Directors namely Mr. G U Nanayakkara (Chairman – Independent Non Executive Director), Mr. M J Fernando (Non-Executive Non Independent Director) and Mr. S Nagendra (Independent Director). The committee conducts an independent review of all Related Party Transactions of the company and ensures that they comply with the code of Best Practices on Related Party Transactions issued by the SEC.

5.7 Senior Management

The Senior Management team of the Company is headed by the Joint Managing Directors. The key management personnel set out below are employees of the Company and they are responsible for managing the affairs of RHL in addition to managing their key responsibilities. Ms. S R Thambiayah – Executive Joint Managing Director Please refer Section 5.1 and 5.2 for details. Ms. A L Thambiayah – Executive Joint Managing Director Please refer Section 5.1 and 5.2 for details. Mr. Sajeewa Perera - Assistant Manager Mr. Sajeewa Perera counts over 14 years of experience at Renuka Hotels Limited and is responsible for managing the hotel operations with direct reporting to the Managing Directors. He has been instrumental in providing the highest level of service to our guests throughout their stay at the Hotel. Mr. K Narendrababu - Assistant Front Office Manager Mr. K Narendrababu has experience of over 23 years in the front office department in various capacities. He is entrusted with managing the front office operation of the hotel to maximise guest satisfaction.

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Mr. Gavesh Koggalage - Head of Finance Mr Gavesh Koggalage is an Associate Member of the Institute of Chartered Accountants of Sri Lanka since 2003 and also holds a Master in Business Administration degree from the University of Southern Queensland, Australia. He has over 18 years experience in various capacities in the finance functions at PricewaterhouseCoopers Sri Lanka and other prestigious companies in Sri Lanka. 5.7.1 Senior Management Emoluments The Senior Management were remunerated in the form of salaries, bonuses and ex-gratia payments during FY2016/2017 to an extent of LKR 4,149,000 (excluding all remuneration of Jt. Managing Directors). The Senior Management are expected to be remunerated in the form of salaries, bonuses and ex-gratia payments during FY2017/2018 to an approximate extent of LKR 5,820,000 (excluding all remuneration of Jt. Managing Directors).

5.8 Statement by the Executive Chairperson and Joint Managing Directors The Executive Chairperson and Joint Managing Directors of the Company have not been involved in any of the following: A petition under any bankruptcy laws filed against such person/s or any partnership in which

he/she/they was/were a partner/s or any corporation of which he/she/they was/were an executive officer/s;

Convicted for fraud, misappropriation or breach of trust or any other similar offence which the CSE considers a disqualification.

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6.0 FINANCIAL INFORMATION

6.1 Financial Highlights of Renuka Hotels Limited The summarised financial statements of the Company for the last five financial years together with the interim financial statements is as given below; TABLE 6.1– FINANCIAL HIGHLIGHTS OF RENUKA HOTELS

COMPANY For the Period Ended

LKR 31 August 2017 Unaudited

31 March 2017 Audited



Revenue 90,464,213 223,213,217 191,168,372 81,739,200 Gross Profit 68,654,507 159,239,255 119,575,042 444,396,842 Other Income & Finance Income Dividend Income 22,936,222 176,752,535 144,079,463 106,007,199 Interest Income - Debentures 9,485,172 17,223,232 13,330,280 13,293,585 Interest Income - Fixed Deposits & Short Term Deposits

7,515,013 26,942,340 3,746,559 4,347,805

Interest Income - Savings Deposits

49,073,058 20,203,369 2,841,565 12,135,683

Interest Income - Treasury Bills - - - - Interest Income – Renuka Lands (Pvt) Ltd

- 10,417,389 50,000,000 -

Realised Gain on Financial Assets Available for Sale

474,792,423 2,188,119 17,639,542 147,147,906

Other Income 23,052 41,815,664 595,453 1,305,313 Profit before Tax 401,255,195 331,878,287 207,312,094 240,028,203 Profit after Tax 392,568,136 309,335,988 192,545,991 239,870,513 Other Comprehensive Income * (368,992,982) 16,189,591 (707,612,393) 436,198,389 Total Comprehensive Income 23,575,154 325,525,579 (515,066,402) 676,068,902

COMPANY As at

LKR 31 August 2017

Unaudited 31 March 2017

Audited 31 March 2016


Audited Non Current Assets 2,670,810,211 2,928,381,068 2,867,240,873 3,527,504,723 Current Assets 1,090,397,142 791,468,817 535,172,588 417,271,512 Total Assets 3,761,207,353 3,719,849,885 3,402,413,461 3,944,776,235 Equity 3,674,211,396 3,650,636,242 3,339,214,799 3,856,981,201 Non Controlling Interest - - - - Total Equity 3,674,211,396 3,650,636,242 3,339,214,799 3,856,981,201 Non Current Liabilities 27,199,604 27,829,204 23,811,363 19,019,063 Current Liabilities 59,796,353 41,384,439 39,387,299 68,775,971 Total Equity & Liabilities 3,761,207,353 3,719,849,885 3,402,413,461 3,944,776,235

CONSOLIDATED For the Period Ended

LKR 31 August 2017




Audited Revenue 195,190,669 490,978,829 451,808,919 331,711,475 Gross Profit 151,708,345 371,393,356 331,993,035 261,393,131 Other Income

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Dividend Income 30,757,448 241,672,759 207,779,149 155,439,542 Interest Income – Debentures 12,006,560 23,222,805 18,065,620 13,293,585 Interest Income - Fixed Deposits & Short Term Deposits

8,013,908 117,576,250 6,851,608 20,188,286

Interest Income - Savings Deposits

49,706,315 21,003,932 69,425,514 63,103,435

Interest Income - Treasury Bills - - - - Interest Income – Renuka Lands (Pvt) Ltd

- 10,417,389 50,000,000 -

Realised Gain on Financial Assets Available for Sale

502,742,112 2,188,119 17,639,542 265,307,354

Other Income 68,962,931 137,978,784 142,530,937 29,690,355 Profit before Tax 513,024,990 700,277,707 574,181,678 628,921,484 Profit after Tax 499,127,717 663,370,240 556,792,151 619,805,810 Other Comprehensive Income * (341,555,984) (120,117,856) (1,370,389,724) 1,002,434,223 Total Comprehensive Income 157,571,733 543,252,384 (813,597,573) 1,622,240,033

Profit Attributable to Equity Holders of the Company 458,869,508 519,754,208 409,318,366 469,267,734 Non Controlling Interest 40,258,209 143,616,032 147,473,785 150,538,076 Total Comprehensive Income Attributable to

Equity Holders of the Company 100,653,771 451,129,217 (710,693,965) 1,257,755,439 Non Controlling Interest 56,917,962 92,123,167 (102,903,608) 364,484,594

CONSOLIDATED As at

LKR 31 August 2017




Audited Non Current Assets 4,674,369,708 4,888,470,179 4,966,867,309 6,170,555,650 Current Assets 3,565,332,968 3,168,750,762 2,554,921,486 2,190,582,571 Total Assets 8,239,702,676 8,057,220,941 7,521,788,795 8,361,138,221 Equity 6,366,989,420 6,264,795,163 5,827,770,082 6,541,164,048 Non Controlling Interest 1,677,073,297 1,629,335,757 1,553,078,930 1,671,848,877 Total Equity 8,044,062,717 7,894,130,920 7,380,849,012 8,213,012,925 Non Current Liabilities 60,231,569 60,925,045 54,236,158 51,474,583 Current Liabilities 135,408,390 102,164,976 86,703,625 96,650,713 Total Equity & Liabilities 8,239,702,676 8,057,220,941 7,521,788,795 8,361,138,221

* Other Comprehensive Income consists of the remeasurement of defined benefit obligation, fair value gain/loss, realised fair value gain/loss and the reclassification of gain/loss on financial assets available for sale. The Renuka Hotel was closed for a period of 8 months during FY2014/15 for renovation purposes and commenced operations in May 2015. Renuka City Hotel operated for the whole duration of FY2014/15.

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The audited financial statements for the year ended 31 March 2017 is provided in Annex A of this Introductory Document, while the interim financial statements for the period ended 31 August 2017 is provided in Annex B. The financial forecast of the Company and the assumptions used for the same are provided in pages 22-23 and pages 11-12, respectively, of the Independent Valuation Report provided in Annex C of this Introductory Document.

6.2 Dividends 6.2.1 Dividend Policy

The Company may, subject to the provisions of the Articles of Association and the Companies Act No. 07 of 2007, make dividend payments by way of interim and final dividends to its shareholders in relation to the profits made from time to time. Such dividends will be paid after taking into consideration the Company’s earnings, investment requirements and other financial conditions.

6.2.2 Dividend History The Company has declared and paid the following dividends during the last three financial years immediately preceding the date of this Introductory Document; TABLE 6.2 – DIVIDEND HISTORY

(LKR) Financial Year Ended

31 March 2017 31 March 2016 31 March 2015 Interim Dividends - - 2,700,000 Final Dividends 32,238,024.00 14,104,135.50 ** Total Dividend for the Year 32,238,024.00 14,104,135.50 2,700,000 Dividend Per Share 0.80 0.35 4.50 Adjusted Dividend Per Share * 0.80 0.35 0.07

* Adjusted for the number of shares post capitalisation and share split. ** A final dividend was not declared for the FY2014/15 since the hotel was closed for renovations for 8 months, and was operational only for 4 months.

6.3 Details of Material Indebtedness

RHL is not materially indebted to any other Institution or individual. Particulars of term loans, other borrowings, indebtedness in the nature of borrowings including bank overdrafts and liabilities under acceptance (other than normal trading bills) or acceptance credit of RHL as at 31 August 2017 are given below; TABLE 6.3 – MATERIAL INDEBTEDNESS

Bank/Financial Institution

Outstanding Balance as at 31 August 2017

(LKR) Bank Overdraft 2,163,720

There were no lease, lease purchase, hire purchase and capital commitments as at 31 August 2017.

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There were no material contingent liabilities, including acceptances and guarantees outstanding as at 31 August 2017 other than in the ordinary course of business. There were no balances due to/from related parties of RHL including inter-company balances as at 31 August 2017, except for the following; TABLE 6.4 – RELATED PARTY RECEIVABLES AND PAYABLES AS AT 31 AUGUST 2017

Description

Outstanding Balance as at 31 August 2017

(LKR) Amounts due from Related Party

Cargo Boat Development Company PLC 20,244 Amalgamated Theatres Ltd 293 Portfolio Management Services 516 Renuka Consultants & Services Ltd 6,350

Amounts due to Related Party Renuka Consultants & Services Ltd 333,000 Crescent Launderers & Dry Cleaners (Pvt) Ltd 2,500

There were no mortgages or charges on assets of RHL as at 31 August 2017. There were no guarantees issued by the Company or the Group as at 31 August 2017. There was no loan capital outstanding as at 31 August 2017.

6.4 Working Capital The Board is of the opinion that the working capital is sufficient for the purpose of carrying out day to day operations of the Company.

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7.0 INVESTMENT CONSIDERATIONS AND ASSOCIATED RISK FACTORS Risk Factors Prospective investors should pay particular attention to the fact that the Company and its business activities are subject to a number of risk factors which may be within or outside the control of the Company. The risk factors that follow may be considered material to investors in making an informed judgment on the Company. If any of the considerations and uncertainties given below develops into actual events, the Company’s business, financial conditions or results of operations and prospects could be adversely affected. However, given the strategic initiatives employed by the Company, the business operations of the Company are expected to be sustainable in the foreseeable future.

7.1 Risks Related to the Hospitality Sector Economic Downturn: The global economic conditions are likely to have a direct impact on the leisure sector since this will determine the disposable income of the customers. In addition to this, the local economic conditions will also have an impact on the industry since the infrastructural development will play a major role in attracting the overseas travellers, whilst the local traveller’s disposable income will also depend on the prevalent economic conditions. Furthermore, any changes to the subsidies and incentives provided for the industry will also have a direct impact on the performance of the industry. Political Stability: Any political instability or security related issued would have an adverse impact on the industry since this may give rise to global travel warnings etc. Regional Competition: Changes in the regional competition in terms of better value for money would directly affect the Sri Lankan leisure sector.

7.2 Risks Related to the Business Operations Exchange Rate Fluctuations: Since the Company serves many overseas travellers and engages in procuring supplies from abroad, any changes in the exchange rates may have an effect on the performance of RHL. Operational Risk: Failure of the processes and procedures put in place to ensure the smooth flow of daily operations and any unforeseen events would have an impact on the business operations of the Company. Investment Related Risk: Given the significant investment portfolio of the Company consisting of listed debentures and listed equity shares, the Company is exposed to the risks associated with the changes in the market value of these securities. Any adverse changes in the market prices would expose the Company to incurring losses. Furthermore, the credit risk associated with the investments where the issuer of the security fails to repay the principal and the interested payments, would expose the Company to the risk of losing its investment and investment income either in full or partially. RHL is also exposed to the risk of concentration whereby the Company’s excessive exposure to a particular industry, company or geographic segment will pose a threat to the investment. The liquidity risk associated with investments would mean that the Company is unable to cash-in its investments when required. The Company takes into account the significance of all the above risks and ensures that the

34


investments are selected after thorough analysis. Furthermore, in order to reduce the credit and liquidity risks, the Company makes a majority of its investments in listed securities.

7.3 Risks Related to the Listing of the Shares

Nonexistence of prior market for the Shares: Prior to the listing there has been no public market for the Company’s Shares. There can be no assurance that an active trading market for the Shares will develop or if developed, will be sustained, or that the market price of the Shares shall not decline below the Reference Price. The Reference Price may not be indicative of the market price for the Company’s Shares after completion of the listing. Price volatility in the secondary market: The price of the Shares may fluctuate due to and not limited to the following: variations in operating results, changes in operating environment, transitions in the regulatory front, strategic alliances or acquisitions, industrial or environmental laws, fluctuations in the market prices for products or raw materials, macroeconomic factors and external events. Price of Shares may follow general investor sentiment prevalent in the market at a given time. In addition, the price of the Shares in the market will fluctuate as a result of share trading volumes.

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8.0 STATUTORY DECLARATION Statutory Declaration by the Directors

07 November 2017

We the undersigned, who are named in the Introductory Document as Directors of RHL, hereby declare and confirm that we have read the provisions of the CSE Listing Rules and of the Companies Act No. 07 of 2007 and any amendments to it relating to the issue of this Introductory Document, and that those provisions have been complied with. This Introductory Document has been seen and approved by us and we collectively and individually accept full responsibility for the accuracy of the information given and confirm that after making all reasonable enquiries and to the best of our knowledge and belief, there are no other facts the omission of which would make any statement herein misleading or inaccurate. Where representations regarding the future performance of RHL have been given in the Introductory Document, such representations have been made after due and careful enquiry of the information available to RHL and making assumptions that are considered to be reasonable at the present point in time in our best judgement.

Name Designation Signature Ms. S R Thambiayah Executive Chairperson / Joint Managing Director Sgd Ms. A L Thambiayah Executive Joint Managing Director Sgd Mrs. S R Dominic Non-Executive Non-Independent Director Sgd Mr. M J Fernando Non-Executive Non-Independent Director Sgd Mr. G U Nanayakkara Non-Executive Independent Director Sgd Mr. S Nagendra Non-Executive Independent Director Sgd Mrs. M A Jayawardena Executive Director/Company Secretary Sgd Ms. N R Thambiayah Executive Director Sgd Mr. R N Asirwatham Non-Executive Independent Director Sgd

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ANNEXURE A: INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS AND AUDITED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2017

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ANNEXURE B: INTERIM FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 AUGUST 2017

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ANNEXURE C: INDEPENDENT VALUATION REPORT BY AN INDEPENDENT VALUER

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WIJEYERATNE & COMPANY

Independent Valuation Report as at 31 August 2017


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Important message to any person not authorized to have access to this report.

Should any unauthorized person obtain access to and read this report, by reading this report such person accepts and agrees to the following terms:

1. The reader of this report understands that the work performed by Wijeyeratne & Company was performed in accordance with instructions provided by our addressee client and was performed exclusively for our addressee client’s sole benefit and use.

2. The reader of this report acknowledges that this report was prepared at the direction of our addressee client and may not include all procedures deemed necessary for the purposes of the reader.

3. The reader agrees that Wijeyeratne & Company, its partners, principals, employees and agents neither owe nor accept any duty or responsibility to it, whether in contract or in tort (including without limitation, negligence and breach of statutory duty), and shall not be liable in respect of any loss, damage or expense of whatsoever nature which is caused by any use the reader may choose to make of this report, or which is otherwise consequent upon the gaining of access to the report by the reader. Further, the reader agrees that this report is not to be referred to or quoted, in whole or in part, in any prospectus, registration statement, offering circular, public filing, loan, other agreement or document and not to distribute the report without Wijeyeratne & Company prior written consent.

For any clarification or comment on the information contained in this document, please contact Navodya Premaratne, Manager – Wijeyeratne & Company, No 15, Maitland Crescent, Colombo 07 or telephone +94 115 736 844.

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Renuka Hotels Limited, 328, Galle Road, Colombo 3 21st of September 2017 Dear Sirs,

Independent Share Valuation of Renuka Hotels Ltd

In accordance with your instructions, we present our independent opinion of the fair market value (the “Valuation”), as at 31st August 2017 of Renuka Hotels Ltd, which operates in the hospitality industry in Colombo. This valuation is based on the assumptions provided by the management of the Company (“Management”).

When arriving at the Fair Value of the Equity Shares of Renuka Hotels Limited, we have complied with the applicable regulatory and technical requirements in our capacity as the independent valuer.

Staff engaged in this assignment were members of good standing employed in a professional manner relevant to the valuation assignment undertaken. They also possessed the necessary skill and resources to arrive at a competent independent opinion in determining the reference price.

Further, we confirm that we are not a related party of the Renuka Hotels Limited as defined in the SLAS, nor has a conflict of interest with the company or the group nor significant interest in or financial connection with Renuka Hotels Limited or the group.

We initially presented a valuation report on Renuka Hotels Ltd erroneously dated 15th September 2014 (should read as 15th September 2015) reflecting the position of the Company where the value per share ranged between LKR 85-88. The valuation was amended subsequently after taking into consideration the observations made by the Colombo Stock Exchange to reflect the group position to facilitate the proposed listing through Introduction. The consolidated performance of the group derives a more accurate picture considering the significant impact of the subsidiary which resulted in an amended value ranging from LKR 89.77-151.24. The Increase in value from 2015 to 2017 is due to the use of consolidated results of the group and the respective enhanced performance over the past 2 years.

We draw your attention to important comments regarding the scope and process of our work, set out immediately following this letter.

If you require any clarification or further information, please do not hesitate to contact the under signed on +94 11 5 736 844.

Yours faithfully,

CHARTERED ACCOUNTANTS

Partners : C.S. Wijeyeratne FCA, FCMA , W.J.L.S Fernando ACA, FCMA, Mrs. D N Perera ACA, FCMA, B.Sc, Mrs. N S Perera ACA, S Egodagamage ACA, ACCA, B.Sc (Bus. Admin) Sp. (USJ)

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Table of Contents

Scope and Process.................................................................................................................................... 5

Executive Summary ................................................................................................................................. 7

Company Profile and Industry Overview ............................................................................................... 8

Financial Projections/Performances ..................................................................................................... 11

Valuations .............................................................................................................................................. 13

Appendices ............................................................................................................................................. 22

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SCOPE AND PROCESS

Scope of work Wijeyeratne & Company has been engaged by the management of Renuka Hotels Limited (“Management”) to provide an independent assessment of the fair market value of Renuka Hotels Limited as at 31 August 2017 (“Valuation Date”).

Valuation is not a precise science and the conclusions arrived at in many cases will be subjective and dependent on the exercise of individual judgment. Given the same set of facts and using the same assumptions, expert opinions may differ due to the number of separate judgment decisions which have to be made. There is, therefore, no indisputable single value and we normally express our opinion as falling within a likely range.

We define fair market value as the price which might reasonably be expected to be obtained in money or money’s worth, in a sale between a willing buyer and a willing seller, each of whom is deemed to be acting for self-interest and gain and both of whom are equally well informed about the business and the markets in which it operates.

Purpose of valuation Our work was carried out in connection with the proposed listing through Introduction on the Colombo Stock Exchange.

We also do not envisage our valuation report(s) to be used by the Company for any other financial reporting purposes.

Basis of valuation

Sources of information

In providing our fair market value opinion, we have adopted the Discounted Cash Flow (“DCF”) methodology, Net Assets Value Methodology and Earnings Capitalisation Methodology described in detail later in this report. Implicit in the use of these methodologies is the assumption that the business is a going concern.

During the course of our work, we have relied on data and information made available to us through different sources, including prospective financial information (“PFI”) obtained from the Company, sector specific information obtained from the public domain, and financial and industry sources.

The principal sources of information provided to us by Management included:

• Consolidated audited financial statements of Renuka Hotels Limited from FY 14/15 to FY 16/17.**

• Consolidated interim financial statements of Renuka Hotels Limited for the period ended 31st August 2017.**

• Management projections for the succeeding financial years from FY 17/18 to FY 21/22 (the “projection period”).

• Other Information Provided by the management on the company overview, average daily rates, capacity, occupancy, projected expansion plans and capital structure.**

(** We have not independently verified the factual accuracy of these information presented, and have relied upon the members of management to

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provide us with representation that the information contained is materially accurate and complete, fair in the manner of its portrayal and therefore forms a reliable basis for the share valuation.)

Procedures performed

Other sources of Information are as follows:

• Colombo Stock Exchange - www.cse.lk

• Central Bank Of Sri Lanka- www.cbsl.lk

• Industry specific information and research on sector performance and expectations published by the Sri Lanka Tourism Development Authority (SLTDA)

Based on the information set out in the preceding paragraphs, we undertook an analysis of the financial projections including revenues, expenses, working capital and capital expenditure.

We discussed the basis of the financial projections and assumptions used with the members of Management. We independently verified the reasonableness of such assumptions by analysing the historical operating results, Industry trends (Source-SLTDA) and publically available information of similar listed entities (Source- CSE).

We also undertook an analysis of other facts and data, including those specific to the Company and the industry in which it operates, which we considered pertinent to this valuation, to arrive at the fair market value.

Limiting conditions

This report has been prepared by Wijeyeratne & Company solely for the purpose of Listing at the Colombo Stock Exchange. We do not accept or assume any liability or duty of care for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent. In no event, regardless of whether consent has been provided, shall we assume any responsibility to any third party to which the report is disclosed or otherwise made available.

Wijeyeratne & Company expressly disclaims all liability for any loss or damage of whatsoever kind which may arise from any person acting on any information and opinions relating to Renuka Hotels Ltd contained in this report.

Our work has not included any legal review and accordingly have not considered impact or outcome of any existing or potential legal matters.

Our Services are provided as at the date of this report. Economic conditions and market factors may result in the information contained in the document becoming quickly outdated and may require updating from time to time or before any major decisions are taken based on our Report. Hence, the validity period of the report is 7 Months. In any event, if you intend to make any decision based on our Services more than 7 months from the date of the Report you must request our confirmation as to the efficacy of our Services. The valuation conclusions arrived at in many cases are by their very nature subjective and dependent on the exercise of individual judgement. Given the same set of facts and using the same assumptions, expert opinions may differ due to the number of separate judgement decisions which have to be made.

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EXECUTIVE SUMMARY

The report sets out the indicative value assessment of Renuka Hotels Limited. The assessment of value has been carried out as at 31 August 2017 for the purpose of facilitating the Listing on the Colombo Stock Exchange (“CSE”) by way of an ‘Introduction’. The proposed listing at the CSE consists of 40,297,530 Voting Shares, and the three methodologies used for the valuation depict the fair value per share as follows: Valuation Summary

Methodology Fair Value Per Share (LKR) Discounted Cash Flow Method (DCF) 151.24 Net Assets Value Method 142.20 Earnings Capitalisation Method 89.77

Based on the analysis, a value which is within the likely range of LKR. 151.24 to 89.77 per share can be justified. Hence, the reference price of LKR 139.00 per share can be considered fair and reasonable. Valuation Methodologies Discounted Cash Flow Method; For revenue projections, we have reviewed forecasts prepared by management, and where applicable made adjustments based on market prospects and competition in the industry. Therefore, the value derived from the Discounted Cash Flow method is greatly dependent on the achievement of such revenue projections vis-à-vis the growth projections for the local tourism industry. We note that the management will need to manage future costs and position the property within target markets in order to secure suitable room rates and revenue in order to maintain desired GOP margin levels. The value conclusion has taken into consideration:

We have assumed constant room inventory in the forecast period,

The Company’s ability to leverage on “Renuka” brand to promote the property, especially amongst its South Asian and East Asian clientele and hence maintain a relatively higher price point relative to some local peers in the vicinity;

Impact from competition and newer hotel properties as well as informal accommodation (i.e. –

Airbnb) within the region, which have had and are likely to continue to negatively impact occupancies of larger properties.

A Cost of Equity at 15.7% and assumed a terminal growth of 4% per annum.

Net Assets Value Method; No adjustments have been considered on the statement of financial position of the company and the group provided as at 31 August 2017 and assumed that all assets and liabilities are stated at fair values. A realization cost of 10% was assumed for valuation purposes. Earnings Capitalisation Method; Value per share is derived by considering the weighted average maintainable earnings based on historic performance capitalized at the rate of expected return. A capitalization rate of 15.7% is employed.

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COMPANY PROFILE

General

Renuka Hotels Limited (“the Company”) operates a three star category hotel registered with the Sri Lanka Tourist Development Board.

Nestled in the heart of the commercial district, where the splendor of modern living meets the needs of every discerning traveler is one of the most unique hotels in Colombo city. Lying within a mere 45 minutes from the Bandaranaike International Airport, the Hotel Renuka stands majestically above the hustle and bustle of the city. Every guest can find an abundance of business hubs, healthcare centres, restaurants and entertainment venues within an easy and convenient distance from the hotel.

Renuka Hotels Group consists of 99 rooms and 3 restaurants and primarily caters to business and transit travelers mostly from South Asia and East Asia. The property also includes other facilities such as a banquet hall, conference rooms, pool and fitness center.

Group Structure

Renuka Hotels Limited is the ultimate parent of Renuka City Hotels PLC with a controlling interest of 62.22%.

INDUSTRY OVERVIEW

Sri Lanka is a growing market with great potential as a tourism destination. Many of the challenges posed by the three-decade civil war which ended in 2009 are subsiding, as strong government support for the industry is providing necessary improvements to infrastructure and industry standards, and increasing awareness of what the country has to offer through marketing campaigns. Overall, the industry is fast growing and promising. The tourism industry is beginning to attract more foreign investment, which should increase competition in the market and pressure the large domestic conglomerates that currently operate much of the tourism industry to become more competitive.

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QUALITATIVE FACTORS

Industry Outlook

For the first time in the history, Tourist arrivals reached to new milestone of 2 million arrivals in 2016 registering 14% increase compared to 2015. Total number of nights spent by a tourist who visited the country during the year could be taken as a better and stable measure of tourism volume. Reported number of tourist nights in 2016 increased by 15 % with an average duration of 10.2 nights. (Source- SLTDA)

(Source: BMI Forecast for tourist arrival)

Visitors from Asia continued to be the main source of Tourism to Sri Lanka in the year 2016 accounting for 45% of the total share. Similarly, the number of arrivals from Western Europe continued to be the second source of tourism with a share of 31%. (Source- SLTDA)

The overall annual room occupancy rate of tourist hotels increased to 75% in 2016 from 74.5% per cent in the preceding year. Colombo city recorded an increase of 0.35 percentage compared to the previous year. (Source- SLTDA)

(Source- SLTDA Occupancy in Colombo)

Tourism arrival from all regions increased amongst which Western Europe remains the largest region of tourist origin for Sri Lanka representing 31.4%, with the number of tourists increasing by 16.5%. Tourist earning increased due to higher spending and increased duration of stay. Earnings during 2016 amounted to USD3.5Bn during 2016. (Source- SLTDA)

The trends and forecasts suggest prospects of growth in the Hospitality Industry. Further, various projects initiated by the government including the Port–City Project and anticipated depreciation of LKR against major currencies will also have a positive impact on the Hospitality Industry.

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Services and Customer Base

The group capacity of Renuka Hotels comprises two ‘3 star’ category hotels with 99 rooms and 3 restaurants/ bars and also offers other facilities such as a banquet hall, conference rooms, pool and fitness center. Hotel is often recommended and receives good reviews in popular booking sites.

Customers are mainly business and transit travelers mostly from South Asia and East Asia.

As stated by SLTDA, visitors from Asia continued to be the main source of Tourism to Sri Lanka accounting for 45% of the total share. Similarly, the number of arrivals from Western Europe continued to be the second source of tourism with a share of 31%.

Per SLTDA, the largest proportion of business travelers were from South Asia (50.5%), followed by East Asia (22.2%) and Western Europe (15.6%).

The trends suggests promising business for Renuka Hotels Limited.

Convenient Location

Colombo 3 is a great choice for travelers interested in food, restaurants and shopping and an ideal location for travelers visiting for business purposes having ease of access to the Commercial hub of the country. Also, the hotel is just 30 km from the Airport and makes it a convenient location to the transit traveler.

Competitor Assessment

Renuka Hotels Limited is located in close proximity to other City Hotels and Corporate Hotels including Cinnamon red, OZO, Mandarina, Ramada and also many other high end hotels which in itself leads to intense competition amongst the hotels.

Hotel Room Inventory Average Daily Rate (Range)

Star Rating Location

Renuka Hotels Group 99 USD 70-75 3 Star Colombo Cinnamon Red 242 USD 90-100 4 Star Colombo Ozo 158 USD 80-85 4 Star Colombo Mandarina 80 USD 70-80 3 Star Colombo

( Source: Company Websites)

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FINANCIAL PROJECTIONS

The key management assumptions that have underpinned the forecasts are as follows.

Revenue

Tariff Adjustments to financial forecasts have been made to reflect expected revenue commensurate with price trends, service offerings and competition. Revenue growth assumptions were considered a major value driver (driving many cost assumptions as well) and thus we have focused on establishing reasonable estimates. Room revenue which accounts for a majority of the company revenue has been estimated based on occupancy rates and Average Daily Rates (ADR per year) provided by management. Renuks Hotels Group consists of 99 Rooms including Deluxe and Super Deluxe Rooms. Despite the high competition within the region and newer hotels which have commenced operations recently, Renuka Hotels Limited has managed to sustain an average occupancy rate over 80% post the major refurbishment done in 2014/2015. This is slightly above the average industry occupancy rate of 75% Hence, we have assumed forecast occupancy to remain at 80% in the forecast period which is in line with average historical occupancy of the Hotel.

ADR has been forecast at a marginal growth rate of 10% per annum during the forecast period, given the historical growth in ADR. Growth in revenue may also be positively impacted by the expected currency depreciation. Increase in ADR appears to coincide with the growth rate in ADR for other competitive hotels. Revenue forecasts have been assumed exclusive of taxes (NBT, VAT, TDL and service charge) which will all be pass-through costs to the customer.

Occupancy Rates

Month FY16/17April 65%May 71%June 62%July 78%Aug 102%Sep 87%Oct 68%Nov 85%Dec 90%Jan 94%Feb 97%March 77%Average 81%

Average Daily Rates

Month FY16/17April 71.78May 70.97June 71.75July 71.99Aug 73.67Sep 72.26Oct 71.86Nov 71.69Dec 76.96Jan 74.04Feb 70.08March 68.17Average 72.10

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Food and Beverages/other operating income Revenue from F&B and other revenue were forecasted at 35% and 25% of revenue respectively, in line with historical performance.

Direct Costs (Cost of Sales)

Calculated as 25% of revenue for expenses associated with Rooms, F&B and other revenue in line with historical costs recorded.

Sales and marketing expenses

Forecast at 5 % of revenue which is in relation to the historical trends.

Administration expenses and Other Expenses

Projected to grow adjacent to the forecast national inflationary rate of 5%.

Income Tax Expenses

The Company is liable for corporate tax at the rate of 12% up to the FY 2017/2018, however the corporate tax rates will be increased to 14% per the New Inland Revenue Department Bill which will be effective from the 01st of April 2018. Hence, an income tax rate of 14% has been considered for the Projection Period from FY2018/2019 to 2021/2022. Dividend Income is considered tax exempt.

Other Income Other non-operating income including Dividend and Interest Income are assumed to be constant over the projection period based on prior financial years.

Increase/(Decrease) in working capital

Working capital has also been assumed in line with the Company’s historical working capital requirement. Working capital No.of Days Inventories 17 Trade debtors 26 Trade creditors 125

Capital Expenditure Budget

The Hotel has undergone a major refurbishment project during the Financial year 2014/2015 and the management has no plans of further expansion or significant refurbishment during the projection period. Hence, we have considered 1% of revenue for replacement of furniture, fittings and equipment based on past trends in capex. Deprecation has been assumed in line with the Company’s standard depreciation policies.

(Refer Appendix 1.1and 1.2 for detailed calculation of cash flow projection)

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VALUATION

Basis of value assessment and key considerations

Basis of valuation

• Our indicative assessments of the valuation of shares of Renuka Hotels Limited, is based on the future profitability and cash flows generated from the use of assets held by the above mentioned business.

• For the purpose of this report Fair Market Value is defined as the price that would be negotiated at the Valuation Date in an open and unrestricted market between a knowledgeable, willing but not anxious buyer and a knowledgeable, willing but not anxious seller acting at arm’s length.

• For the purpose of our valuation, we have adopted the discounted cash flow (“DCF”) approach as our primary valuation methodology. The principal elements of a DCF approach are estimating the likely cash flows that will be generated by the continuing operations of the business and applying a discount rate to the cash flows that is commensurate with risks attaching to such cash flows

• Also, Net Assets Value per share attributable Equity Holders was calculated as at 31 August 2017 which generally depicts a conservative value of shares. The valuation is derived by taking the value of net assets (i.e Invested equity capital + Reserves) adjusted for cost of realization.

• Further, Earnings capitalization method was utilized to derive at the value per share based on maintainable profits based on historical performance of the company which is capitalized at rate equivalent to the expected rate of return.

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1. DISCOUNTED CASHFLOW METHOD (DCF)

Valuation Summary

Forecast

FCF to Firm FY17/18 FY18/19 FY19/20 FY20/21 FY21/22

EBT

724,946,665

755,010,616

788,491,036

825,750,076

867,187,127

Less: Taxation

(52,793,600)

(56,401,274)

(60,418,924)

(64,890,009)

(69,862,455)

Add: Depreciation

46,678,058

46,678,058

46,678,058

46,678,058

46,678,058

Add: Changes in working capital

1,175,727

218,831

240,714

264,786

291,264

Less: Capital expenditure

(5,502,592)

(6,052,851)

(6,658,136)

(7,323,949)

(8,056,344)

FCFF

714,504,258

739,453,380

768,332,748

800,478,961

836,237,649

Terminal Value

7,425,192,784

Discount factor at 15.7% 0.86 0.75 0.65 0.56 0.48

Discounted FCFF

617,481,522

552,266,993

495,914,467

446,505,178

3,982,455,874

Enterprise Value

6,094,624,034

No. of shares

40,297,530

Value per share

151.24 Assumptions Cost of equity / WACC 15.7%

Risk free rate 10.6% MRP 6.4%

Beta

0.80 Terminal Growth Per Annum 4.0%

Key Considerations

• To facilitate the preparation of this analysis, the management of Renuka Hotels Limited has provided us with information on the company including the consolidated audited financial statements for FY14/15. FY15/16, FY16/17and consolidated Interim Financial Statements as at 31 August 2017.

• As at 31 August 2017, we have reviewed the Company operations and projected the financial performances over the forthcoming 5 years until FY21/22.

• For our analysis, we have assumed that the Company will continue current operations on substantially an ‘as-is’ basis. We have also determined a terminal value based on the continuing operations of the Company following the end of the projection period.

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• In considering the value on an ‘as-is’ basis, we have only considered the likely future returns from company under its incumbent management, existing and available operating scale, branding and facilities, and considering the present capital structure. We have not investigated or considered the impact of any change to any of these factors, either individually or collectively, which may have a material impact on the overall conclusions arrived at in our report.

• The estimates of future performance have been primarily based on its normal course of operations. We have not undertaken any revaluation of property, plant or equipment of the company and where necessary, book values or other relevant information provided by the Company have been employed.

Assumptions

• For the purpose of our projections, we have considered an accounting period reflective of the respective company’s financial reporting period. Thus the forecast captures a 12 month period commencing from April to March.

• The projected growth in income and the supporting operating costs for the Company has been based on management view of future financial outlook.

• In estimating the discount rate for the DCF approach, we have used industry data on other related companies whose operations and geographical locations are broadly comparable to the respective companies.

Cost of Capital

• When applying the Income Approach, the cash flows expected to be generated by a business are discounted to their present value equivalent using a rate of return that reflects the relative risk of the investment, as well as the time value of money. This return is an overall rate based upon the individual rates of return for Invested Capital/Enterprise Value (equity and interest-bearing debt). This return, known as the weighted average cost of capital (also known as the rate of return on Invested Capital/Enterprise Value) WACC, is calculated by weighting the required returns on interest bearing debt and common equity capital in proportion to their estimated percentages in an expected capital structure.

• Renuka Hotels Limited is a fully equity financed Company, hence the WACC will be equivalent to the Cost of Equity.

Cost of equity

• We used the International Capital Asset Pricing Model (“CAPM”) to determine the required return on equity.

• CAPM has been empirically tested and is widely accepted for the purpose of estimating a company’s required return on equity capital. In applying the international variant of CAPM, the rate of return on common equity is estimated as the current risk-free rate of return uplifted for country risk, plus a market risk premium expected over the risk-free rate of return, multiplied by the “beta” for the stock. Beta is defined as a risk measure that reflects the sensitivity of a company’s stock price to the movements of the stock market as a whole.

• The CAPM rate of return on equity capital is calculated using the formula:

Ke=((1+Rf ) x (1+CRP)-1) + (β x (Rm - Rf))

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where:

Ke=Rate of return on equity capital

Rf=Risk-free rate of return

CRP=Country risk premium (used where Rf is not inclusive of such premium)

β=Beta or systematic risk for this type of equity investment

Rm - Rf =Market risk premium; The expected return on a broad portfolio of stocks in the market (Rm) less the risk free rate (Rf)

Beta

• Beta is a statistical measure of the volatility of the price of a specific stock relative to the movement of a general group. Generally, beta is considered to be indicative of the market’s perception of the relative risk of the specific stock. For unlisted firms, practical application of the CAPM is dependent upon the ability to identify publicly traded companies that have similar risk characteristics to the subject company, in order to derive meaningful measures of the subject company beta.

• Betas reported in public sources are “leveraged”, which incorporates the added risk to a stockholder due to the debt financing of the company. To derive a beta applicable to the subject company based on our guideline companies, the reported leveraged betas must first be unlevered and then re-levered at assumed target debt levels appropriate for the Company. In the case of Renuka Hotels Ltd, re-levering of beta is not required as the company is fully equity financed.

• This beta calculation has been based on the betas for comparable companies with similar businesses as at 31 August 2017 which derived an equity beta of 0.80.

(Refer Appendix 1.3 for the calculation of Equity Beta)

Equity market risk premium

• Practical application also relies on an estimate of the Market Risk Premium. Since the expectations of the average investor are not directly observable, the Market Risk Premium must be inferred using one of several methods. One approach is to use premiums that investors have historically earned over and above the returns on long-term bonds. The premium obtained using the historical approach is sensitive to the time period over which one calculates the average.

The Country Risk Premium of 6.4% is used in this regard which is obtained from a publication of NYU Stern.

(Refer - appendix 1.4)

Risk free rate

• The risk-free rate of 10.6% was taken as the yield to maturity on the LKR ten year bonds as at August 2017 which was obtained from the website of Central Bank of Sri Lanka.

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Gearing

• Gearing is defined as the debt capital as a percentage of the sum of the debt, preferred and common equity capital (“Total Invested Capital”).

• Presently the Capital Structure of the company consists only of Equity capital and the management intends to maintain the prevailing capital structure in the long-run.

Terminal value

• The terminal value represents the present value of all future cash flows projected to be generated by the Company beyond the last year of the explicit projection period into perpetuity. A terminal growth rate of 4% has been used for the entity based on long term economic growth outlook, consumer spending and competitive nature of business.

• We have used the following cash flow into perpetuity formula to calculate the terminal value:

Terminal Value = (Projected Maintainable Cash Flows) x (1+g)

(WACC-g)

Where:

WACC = weighted average cost of capital

g = expected growth rate into perpetuity

Conclusion

• Combining the above assumptions produces a base case WACC or Cost of Equity of 15.7% for the Company and terminal value of LKR 7,425,192,784.

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2. NET ASSETS VALUE METHOD.

Valuation summary

Net Assets FY15/16 FY16/17 YTD AUG FY17/18

Stated Capital

112,508,648

112,508,648

112,508,648 Reserves

Revenue reserves

3,763,481,067

4,263,481,067

4,263,481,067

Retaining Earnings

288,117,918

295,699,150

754,568,658

AFS Reserve

1,663,662,449

1,593,106,298

1,236,431,048

EQUITY

5,827,770,082

6,264,795,163

6,366,989,421 Realization Cost 10% 10% 10%

Cost of Realization Cost

582,777,008

626,479,516

636,698,942

Realizable net assets of the company attributable to equity holders

5,244,993,074

5,638,315,647

5,730,290,479

Number of shares

Ordinary Shares

40,297,530

40,297,530

40,297,530

Realizable Net Assets Value per Share

130.16

139.92

142.20

Key considerations

• To facilitate the preparation of this analysis, the management of Renuka Hotels Limited has provided us with information on the company including the consolidated audited financial statements for FY16/17 and the interim financial statements as at 31 August 2017.

• For our analysis, we have assumed that the Company will continue current operations on an ‘as-is’ basis.

• We have not undertaken any revaluation of property, plant or equipment of the company or obtained the services of a professional valuer.

Assumptions

• For the purpose of the valuation, we have assumed that Financial Statements provided by the management states all assets and liabilities at fair values

• The Cost of Realisation of assets is assumed at 10% considering the capital gains tax and other costs that may arise.

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3. EARNINGS CAPITALISATION METHOD

Valuation Summary

FY15/16 FY16/17 FY17/18

(annualised) PAT attributable to Equity holders 409,318,366 519,754,208 652,969,830 2017/2018* Annualised 652,969,830 2016/2017 519,754,208 519,754,208 2015/2016 409,318,366 409,318,366 409,318,366 2014/2015 469,267,734 469,267,734 2013/2014 388,013,100 Calculation of Weighted Average Profit 425,750,611 474,527,848 567,956,045 Capitalization Rate 15.7% 15.7% 15.7% Value of the company 2,711,787,331 3,022,470,372 3,617,554,428 Number of shares 40,297,530 40,297,530 40,297,530 ECM Value per share

67.29 75.00 89.77

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Key considerations and Assumptions

• To facilitate the preparation of this analysis, the management of Renuka Hotels Limited has provided the consolidated audited financial statements of the company and the group for FY 2015/2016, 2016/2017 and the interim financial statements as at 31 August 2017.

• For our analysis, we have assumed that the Company will continue current operations on an ‘as-is’ basis.

• To normalise the earnings, adjustments pertaining to one-off gains, one-off employee benefits, seasonality of the business and dividend income were incorporated.

• To determine the maintainable earnings, weighted average earnings over a period of 3 years where most recent earnings are given a higher weightage was used.

• Capitalization rate of 15.7% is calculated using the formula:

Capitalisation rate= Rf + (β x (Rm - Rf)) +Company Specific Risk Premium

Rf =Risk Free Rate of 10.6% was taken as the yield to maturity on the LKR ten year bonds as at August 2017 which was obtained from the publication of Central Bank of Sri Lanka.

Β = This beta calculation has been based on the betas for comparable companies with similar businesses as at 31 August 2017 which derived an equity beta of 0.80.

Rm - Rf= The expected return on a broad portfolio of stocks in the market (Equity Risk Premium) of 6.4 % is used.

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QUALIFICATIONS AND EXPERIENCE

J L S Fernando ACA, FCMA

Partner

W J L S Fernando is an Associate Member of the Institute of Chartered Accountants of Sri Lanka, a Fellow Member of the Chartered Institute of Management Accountants (UK). He joined the partnership in 1998 after being associated with the organization for over 12 years.

W J L S Fernando has served as the engagement partner in numerous advisory engagements ranging from business valuations, financial due diligences, private placements, and mergers for enterprises in diverse industries.

S Egodagamage ACA, B.Sc (Bus Admin) Sp. (USJ)

Partner

S Egodagamage is an Associate member of the Institute of Chartered Accountants of Sri Lanka and holds a BSc. (Bus. Admin) Special degree from the University of Sri Jayewardenepura. He has extensive tax, audit and advisory experience of 10 years having worked for PricewaterhouseCoopers (overseas). He has served as the engagement partner in numerous advisory engagements ranging from business valuations, financial due diligences, private placements, and mergers for enterprises in diverse industries including retail, leisure and banking sectors.

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APPENDIX

1.1 Key Drivers

Income statement in LKR FY16/17 FY17/18 FY18/19 FY19/20 FY20/21 FY21/22

Room revenueNo. of rooms 99 99 99 99 99 99 Available room days 36,135 36,135 36,135 36,135 36,135 36,135 Occupancy % 81% 80% 80% 80% 80% 80%Occupied room days 29,397 28,908 28,908 28,908 28,908 28,908 ADR in USD 72.10 79.31 87.24 95.97 105.56 116.12 ADR in LKR 10,815.25 11,896.78 13,086.45 14,395.10 15,834.61 17,418.07 Growth % 10% 10% 10% 10% 10% 10%RevPAR in USD 59 63 70 77 84 93 RevPAR in LKR 8,799 9,517 10,469 11,516 12,668 13,934 Revenue in LKR 322,030,640 343,911,972 378,303,169 416,133,486 457,746,834 503,521,518 F&B revenueF&B as a % of room revenue 32% 35% 35% 35% 35% 35%Total 103,430,669 120,369,190 132,406,109 145,646,720 160,211,392 176,232,531 Other revenue As a % of room revenue 20% 25% 25% 25% 25% 25%Total 65,517,520 85,977,993 94,575,792 104,033,371 114,436,709 125,880,379 Total gross revenue 490,978,829 550,259,155 605,285,070 665,813,577 732,394,935 805,634,428 Growth % 12% 10% 10% 10% 10%

Forecast

Direct costsCost of sales (119,585,473) As a % of tota l revenue 24% 25% 25% 25% 25% 25%Total forecasted cost of sa les (137,564,789) (151,321,268) (166,453,394) (183,098,734) (201,408,607)

Gross profitHotel gross profi t 371,393,356 412,694,366 453,963,803 499,360,183 549,296,201 604,225,821 Margin % 76% 75% 75% 75% 75% 75%

Other incomeDividend income 241,672,759 Profi t on disposal of PPE 41,749,673 Gain of FVTPL 2,188,119 Sundry Income 58,522 Tota l forecasted Other Income 285,669,073 285,000,000 285,000,000 285,000,000 285,000,000 285,000,000

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1.2 Forecasted EBT

OverheadsMarketing expenses (20,024,125) As a % of tota l revenue 4% 5% 5% 5% 5% 5%

Forecasted marketing expenses (27,512,958) (30,264,254) (33,290,679) (36,619,747) (40,281,721) Adminis tration expenses (155,437,705) As a % of tota l revenue 32% Forecasted admin expenses (5% inflationary rate) (163,209,590) (171,370,070) (179,938,573) (188,935,502) (198,382,277) Operating expenses (780,942) As a % of tota l revenue 0%

Forecasted operating expenses (819,989) (860,989) (904,038) (949,240) (996,702) Other expenses (2,254,857) As a % of tota l revenue/growth % 0% 0% 0% 0% 0% 0%

Forecasted other expenses (2,527,106) (2,779,817) (3,057,799) (3,363,579) (3,699,936) Tota l overheads (178,497,629) (194,069,643) (205,275,129) (217,191,089) (229,868,067) (243,360,637) Depreciation (46,678,058) (46,678,058) (46,678,058) (46,678,058) (46,678,058) (46,678,058)

Income statement in LKR FY17/18 FY18/19 FY19/20 FY20/21 FY21/22

Revenue 550,259,155 605,285,070 665,813,577 732,394,935 805,634,428

Cost of sales (137,564,789) (151,321,268) (166,453,394) (183,098,734) (201,408,607)

Gross profit 412,694,366 453,963,803 499,360,183 549,296,201 604,225,821

Other Income 285,000,000 285,000,000 285,000,000 285,000,000 285,000,000

Marketing expenses (27,512,958) (30,264,254) (33,290,679) (36,619,747) (40,281,721)

Administrative expenses (163,209,590) (171,370,070) (179,938,573) (188,935,502) (198,382,277)

Operating expenses (819,989) (860,989) (904,038) (949,240) (996,702)

Other expenses (2,527,106) (2,779,817) (3,057,799) (3,363,579) (3,699,936)

EBITDA 503,624,723 533,688,674 567,169,094 604,428,134 645,865,185

Depreciation (46,678,058) (46,678,058) (46,678,058) (46,678,058) (46,678,058)

Finance Income 268,000,000 268,000,000 268,000,000 268,000,000 268,000,000

EBT 724,946,665 755,010,616 788,491,036 825,750,076 867,187,127

Forecast

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1.3 Calculation of the Ungeared Equity Beta

Name Debt Equity DE ratio Equity Beta City Hotels

The Kingsbury PLC 1,510,856,000 1,449,646,000 104% 1.11

Renuka City Hotel PLC - 551,909,620 0% 0.47

Galadari Hotels (Lanka) PLC - 768,522,683 0% 1.17

Trans Asia 370,256,000 1,112,880,000 33% 1.39

Average 470,278,000 970,739,576 34% 1.04

Ungeared beta 0.80

*We have obtained the equity beta from the Colombo Stock Exchange as at 19 September 2017. Further, the debt to equity distribution was noted from the published annual reports for FY16/17.

1.4 Risk Premium

Reference: http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/ctryprem.html

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1.5 Historical Financial Ratios

Consolidated Income Statement Base Year Income statement in LKR FY15/16 FY16/17 Revenue 451,808,919 490,978,829 Cost of sales (119,815,884) (119,585,473) Gross profit 331,993,035 371,393,356 Other Income 225,990,926 285,669,073 Marketing expenses (23,689,942) (20,024,125) Administrative expenses (81,993,628) (108,759,647) Operating expenses (49,435,405) (47,459,000) Other expenses (66,749,314) (2,254,857) EBITDA 336,115,672 478,564,800 Depreciation (48,235,438) (46,678,058) Finance Income 286,301,444 268,390,965 EBT 574,181,678 700,277,707 Income tax expenses (17,389,527) (36,907,467) Profit for the year 556,792,151 663,370,240 GP Margin 73% 76% EBITDA Margin 74% 97% EBT Margin 127% 143% PAT Margin 123% 135% EPS LKR 10.16 LKR 12.90

1.6 Revenue Composition

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ANNEXURE D: COLLECTION POINTS

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Copies of the Introductory Document can be obtained free of charge from the following collection points. Managers to the Introduction Acuity Partners (Private) Limited 53, Dharmapala Mawatha, Colombo 3 T: 011 2206206 Members & Trading Members of the CSE Acuity Stockbrokers (Private) Limited 53, Dharmapala Mawatha, Colombo 3 T: 011 2206206

Asha Phillips Securities Limited 321, Galle Road, 2nd Floor, Lakshmans Building, Colombo 3 T: 011 2429100

Asia Securities (Private) Limited 2nd Floor, 176/1 - 2/1, Thimbirigasyaya Road, Colombo 5 Tel. 011 7722000

Assetline Securities (Private) Limited 120, 120A, Pannipitiya Road, Battaramulla T: 011 4700100

Bartleet Religare Securities (Private) Limited Level G, ‘Bartleet House’, 65, Braybrooke Place, Colombo 2 T: 011 5220200

Candor Equities Limited Level 8, South Wing, ‘Millennium House’, 46/58, Nawam Mawatha, Colombo 2 T: 011 2359100

Capital Trust Securities (Private) Limited 42, Mohamed Macan Markar Mawatha, Colombo 3 T: 011 2174174-5

Claridge Stockbrokers (Private) Limited 97, Ananda Rajakaruna Mawatha, Colombo 10 T: 011 2689248

CT CLSA Securities (Private) Limited 4-14, Majestic City, 10, Station Road, Colombo 4 T: 011 2552290-4

Capital Alliance Securities (Private) Limited Level 5, ‘Millenium House’, 46/58, Navam Mawatha, Colombo 2 T: 011 2317777

Enterprise Ceylon Capital (Private) Limited 26th Floor, East Tower, World Trade Centre, Colombo 1 T: 011 2372541

First Capital Equities (Private) Limited 2, Deal Place, Colombo 3 T: 011 2639898

First Guardian Equities (Private) Limited 32nd Floor, East Tower, World Trade Centre, Colombo 1 T: 011 5884400

J B Securities (Private) Limited 150, St. Joseph Street, Colombo 14 T: 011 2490900

John Keells Stock Brokers (Private) Limited 186, Vauxhall Street, Colombo 2 T: 011 2306250

Lanka Securities (Private) Limited 228/1, Galle Road, Colombo 4, T: 011 4706757, 011 2554942

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LOLC Securities Limited 481, T B Jayah Mawatha, Colombo 10 T: 011 5889889

Nation Lanka Equities (Private) Limited 44, Guildford Crescent, Colombo 7 T: 011 4658658

Navara Securities (Private) Limited 12B, Gregory’s Road, Colombo 07 T: 011 2358700/20

NDB Securities (Private) Limited Level 2, NDB Capital Building, 135, Bauddhaoka Mawatha, Colombo 4 T: 011 2314170-8, 011 2131000

Richard Pieris Securities (Private) Limited 55/20, Vauxhall Lane, Colombo 2 T: 011 7448900, 011 5900800

SC Securities (Private) Limited 5th Floor, 26B, Alwis Place, Colombo 3 T: 011 4711000, 011 4711001

SMB Securities (Private) Limited 02, Gower Street, Colombo 05 T: 011 4388138

Softlogic Stockbrokers (Private) Limited 6, 37th Lane, Queens Road, Colombo 03 T: 011 7277000

Somerville Stockbrokers (Private) Limited 1A, Park Way, Park Road Colombo 5 T: 011 2502852, 011 2502854

Taprobane Securities (Private) Limited 2nd Floor, 10, Gothami Road, Colombo 08 T: 011 5328200, 011 5328100

TKS Securities (Private) Limited 4th Floor, 245, Dharmapala Mawatha, Colombo 7 T: 011 7857799

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ANNEXURE E: INDEX ON TABLES ILLUSTRATED IN THE INTRODUCTORY DOCUMENT

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TABLE 4.1– SHAREHOLDERS OF THE GROUP COMPANIES ................................................................................................. 9 TABLE 4.2– DIRECTORS OF THE GROUP COMPANIES ..................................................................................................... 10 TABLE 4.3– BREAK UP OF EMPLOYEES ....................................................................................................................... 10 TABLE 4.4 - STATED CAPITAL OF RENUKA HOTELS LIMITED ............................................................................................ 11 TABLE 4.5 - SHARE LOCK-IN DETAILS (PRE LISTING) ...................................................................................................... 11 TABLE 4.6 – NON PUBLIC SHAREHOLDERS ................................................................................................................... 12 TABLE 5.1 - DETAILS OF RENUKA HOTELS LIMITED BOARD OF DIRECTORS ....................................................................... 20 TABLE 5.2 - OTHER DIRECTORSHIPS ........................................................................................................................... 22 TABLE 5.3 - DIRECTORS’ DIRECT & INDIRECT SHAREHOLDINGS IN RENUKA HOTELS LIMITED AS AT 10 OCTOBER 2016 ............ 24 TABLE 5.4 - RELATED COMPANY INTEREST IN CONTRACTS.............................................................................................. 25 TABLE 5.5 – BOARD COMPOSITION............................................................................................................................ 27 TABLE 6.1– FINANCIAL HIGHLIGHTS OF RENUKA HOTELS ............................................................................................... 30 TABLE 6.2 – DIVIDEND HISTORY ................................................................................................................................ 32 TABLE 6.3 – MATERIAL INDEBTEDNESS ....................................................................................................................... 32 TABLE 6.4 – RELATED PARTY RECEIVABLES AND PAYABLES AS AT 31 AUGUST 2017 .......................................................... 33

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