Financial Performance Of The Srh Tourism

essay B

Get Full Essay

Get access to this section to get all the help you need with your essay and educational goals.

Get Access


1.1 Reasons for taking subject and organisation

The ground I choose this subject “ An analysis and rating of the concern and fiscal public presentation of organisation over three twelvemonth ‘s period “ is this subject necessitate application and demonstrate most of cognition gained throughout survey for ACCA tests, in existent clip scenario. In add-on this subject its focal point on both fiscal and concern public presentation of organisation, this provide me chance to analyze both fiscal and non-financial informations of organisation, as reconciliation of these both factors really much vital to success of organisation.

After the three decennary of civil war terminal in May 2009, the touristry industry of Sri Lanka is basking typical growing and with 46 % growing in 2010, state recorded as one of the highest growing rates in twelvemonth. Industry is expected to keep its growing above 30 % in 2012 ( SLTDA, 2012 )

The analysis and rating of organisation which operates in the surging industry will supply chance to understand non merely about organisation economic growing, but besides about the state ‘s economic system and preference of investors towards the industry. Serendib Hotels Plc ( SRH ) being one of taking local hotel group which operate in touristry industry is the ground to take this organisation for the research undertaking. Company presently has control over 4 tourist hotels located in the different part of the state. ( Bloom berg concern hebdomad 2012 )

1.2 Aims

Analyse, comparison and remark on the fiscal public presentation of the SRH for three twelvemonth stoping 31st March 2012

Evaluate and remark on the concern public presentation of SRH is three different theoretical accounts.

Analyze the public presentation of Serendib Hotel Plc compared to company ( Royal palm Beach Hotel Plc ) in same industry.

1.3 Research inquiry

How much company has financially grown in this period and its current fiscal place

What are the macro economic factors that affect the group public presentation

How good company has performed comparison to a other company in the industry

How has the billowy touristry industry effects the public presentation of SRH

1.4 The Overall Research Approach

The overall research attack chiefly centred as construction recommended by Oxford Brookes university in the information battalion 2011-2012.

Once research subject and organisation of was finalized, I started to explicate research aims and inquiries. The overall aim of this RR is analysis and rating of concern and finance public presentation of Serendib hotel Plc from 1st April 2009 to 31st March 2012. Research inquiries are set down in a manner that answers to these inquiries will stop up in accomplishing research aims.

After that information assemblage was started. As there is no primary beginning of information in this research study, Wide scope of secondary beginnings is used. Information related to srilanka economic system, touristry industry and its impact to economic system, was collected from official web sites relevant governments. Detail information about the Serendib hotel plc and Royal palm hotel Plc ( Listed company in Colombo stock exchange, operates tourist hotel in Srilanka ) was acquired via official web site of Colombo stock exchange, company ‘s web sites and intelligence documents.

The procedure of analysing and rating was commenced instantly after applicable informations to research aims and inquiry was obtained. Business Performance of Company was evaluated utilizing three different concern theoretical accounts, PESTELS, SWOT and Porters Five Forces. Ratio analysis is the method used for analysing and rating of fiscal public presentation of the group. As fiscal analysis is based on the group stockholders prospective, figures in the amalgamate fiscal studies are used.. Information appeared in company ‘s Annual studies, stock agents ‘ web sites and intelligence documents are chiefly used in rating of public presentation.

Finally findings from analysis and rating were brought on the face of the research study utilizing appropriate tabular arraies, graphs and explanatory notes. Research study was concluded with overall sentiment about the public presentation of the serendib hotel plc in the period under consideration.

1.5 Srilanka Tourism Over position and its part to economic system

Sri Lanka has a turning touristry industry and started taking off after the terminal of civil war in may 2009. Over the old ages, many beautiful resorts and hotels have opened. Competition among investors is turning as tourer reachings are quickly increasing twelvemonth by twelvemonth after 2009.

Figure 2: Tourist ARRIVALS BY Year

Beginning: Annual Statistical study of SLTDA ( hypertext transfer protocol: // )

As reference above touristry industry of srilanka is taking off after terminal of civil war which consequences the addition in tourer reachings to 654476 in 2010, which 46.1 % addition comparison to 2009. Tourist reaching has boomed to a new milepost of 855,975 reachings in 2011, which is an all clip high figure in the history of the state. There was 30.8 % addition from 2010 to 2011.its cardinal nonsubjective by governments to accomplish 2mn tourer reachings by the twelvemonth 2016

Foreign exchange net incomes by touristry

Srilanka has nonsubjective do touristry as the largest beginning of foreign exchange earner from its current rank of 6th largest FE earner.

Figure 3: Iron by Tourism

Beginning: Annual Statistical study of SLTDA ( hypertext transfer protocol: // )

In 2009 foreign exchange ( FE ) net incomes by touristry was USD 40,133mn.due to the rise of the reachings, Tourism upgrade its rank as the fifth largest FE earner in 2010 with USD 65018mn. In 2011Tourism rankings had a bead to sixth degree as the largest beginning of ( FE ) earner of the national economic system. But the part of touristry to the entire FE net incomes increased to 4.3 % from 3.8 % in 2011 with USD 91926mn.this was addition of 41.4 % comparison to 2010.

Figure 4: Employment by Tourism

Beginning: Annual Statistical study of SLTDA ( hypertext transfer protocol: // )

The direct employment by touristry has increase to 55023 in 2010 comparison to 52071 of 2009. And in 2011 with 5 % growing there it was 57786.and after consideration indirect employment created by touristry figures are 124934 in 2009, 132055 in 2010 and with 5 % growing 138685 in 2011.

1.6 Organization Overview

Group construction of the company



Figure 4: Effective Group Structure as FY 2012

Beginning: SRH ‘s Annual Report 2012

Degree centigrades: Program Files ( x86 ) Microsoft OfficeMEDIAOFFICE12BulletsBD14565_.gif Name of the Company: SERENDIB HOTEL PLC

Degree centigrades: Program Files ( x86 ) Microsoft OfficeMEDIAOFFICE12BulletsBD14565_.gif Sector: Travel and touristry

Degree centigrades: Program Files ( x86 ) Microsoft OfficeMEDIAOFFICE12BulletsBD14565_.gif Principle Business Operations: operation of tourer hotels

Degree centigrades: Program Files ( x86 ) Microsoft OfficeMEDIAOFFICE12BulletsBD14565_.gif Legal Form: formed in 1966 and Public quoted company since 1973

One of the prima hotel groups in Sri Lanka presently with the control of 4 hotels. SRH has built up a good repute as an ethical operator of some of the most alone hotels trade names in the Srilanka. The Serendib Leisure Group ‘s cordial reception has hotels in the cardinal attractive forces countries of the srilanka in beaches, jungle and river/lagoon.

Main operations under direct control of serendib hotel plc

Serendib Leisure Management Limited

Serendib Leisure Management Limited, unlisted Subsidiary of serendib hotel plc with 100 % retention. Which manages Avani Bentota Resort & A ; Spa ( once known as SerendibHotel ) , beach resort located as west seashore of Srilanka which is 99km off the Bandaranaike International Airport. Avani Kalutara ‘ ( once known as Kani Lanka ) , acquired early 2011, is presently being refurbished and be aftering to open in clip for the 2012 winter season.Avani kalutara is located on south seashore of srilanka.

Dolphin hotel plc

Dolphin hotel plc is based in Colombo stock exchange since 1981. Dolphin hotel plc is the proprietor of Club hotel mahimahi, 99 suites, 4 star beach hotel in waikkal, Srilanka and Miami Beach hotel, with 50 bungalows located next to club mahimahi. SRH holds 64.95 % portions of dolphin hotel plc.

Hotel sirgiriya plc

Another listed subordinate of SRH, with 61.97 % keeping. Hotel sigiriya plc manages 75 suites heritage hotel located in sirgiriya ‘s cardinal Srilanka vicinity, where near to archeological sites like dambulla cave temple.


2.1 Beginnings of information

This subdivision speaks about beginnings that used to garner information to fix research study. Wide scope secondary beginnings are used to garner information as there was no primary beginning used in this research. Primary beginnings non used, because it was hard to obtain, necessitate complicated formalities. Following are the secondary beginnings I have used for this RAP

Secondary beginnings

Annual studies of serendib hotel plc

Annual statistical study by Srilanka touristry development authorization ( SLTDA )

Annual studies by Central bank of Srilanka


News paper and articles.

Text books

2.1.2 Description of the methods used

Annual studies Serendib hotel plc

These studies are in the official web site of the Colombo stock exchange. It is the most dependable secondary beginning which provides information about fiscal public presentation of company for past few old ages. These studies besides provide information about major concern activities carried by company and its subordinates in that period.

Annual statistical study of Srilanka touristry by SLTDA

This is the study submitted every twelvemonth by Srilanka touristry development authorization ( SLTDA ) . Acquire equal information about Srilanka touristry industry is really of import to analysis the public presentation of the serendib plc. SLTDA studies provide item information about tourer reachings, manner of reaching, and tourer tenancy degree of different part of state. In add-on impact of touristry to srilankan economic system with foreign exchange earns by touristry and direct and indirect employment created by touristry featured in these studies.

Annual studies by Central bank of Srilanka

The macroeconomic factors affect the concerns in Srilanka chiefly acquired from these studies. Changes in involvement and exchanges rates used in RR are collected from these studies.


Most of the information used in the research and analysis study is obtained from the cyberspace. These includes

History, background and map of serendib hotel plc

Online News web sites and articles where I used to follow latest occurrences about the company and industry

Online trip advisory web sites are used to obtain information like, hotel evaluation and ranking in the position travel agents and tourer stayed in the hotels

Definition and theories about theoretical accounts used in the concern analysis are obtained from cyberspace.

Text Books

The survey texts published by Kaplan printing UK for ACCA course of studies were used to understand the theories and bring forthing utile thoughts to carryout concern and fiscal analysis

2.1.3 Limitation of beginning used

Most of information relevant the research is available merely in company connected web sites was favorable towards the company. Annual studies of company chiefly based on direction position, failing in the company is limited. Articles on the intelligence documents are besides chiefly dwelling of intelligence briefing presumptions by company functionaries. Information sing the lacks in direction and failing of company is chief restriction in the beginnings used. When roll uping information required for country like concern environment there are fluctuations in the information published by relevant governments, hard to make up one’s mind which 1 should trust on.

2.1.4 Ethical Issue and Resolution


As research study was based merely the information obtained from secondary beginnings, there is possibility of showing them as quoted in the beginnings. To avoid showing work of others as mine, first I did read the stuff and merely cardinal information is presented research study utilizing my ain words. I had made certain that proper commendation and mentions was given in wherever required.

2.2 Business and Accounting Techniques used

Three different theoretical accounts PESTEL, Porter five forces and SWOT were used to measure the concern public presentation of company and Ratio analysis is the accounting technique used to analyse the fiscal public presentation. An account of Business and accounting techniques used in research with their restriction are provided below.

PESTEL analysis

PESTEL analysis is tool for concern measuring. It focuses analysing of the external macro environment in which a concern operates. It is critical to see the influence of Political, economical, Social, technological, environmental and legal factors for concern and scheme be aftering even thought these factors are beyond the control of company.

Some Strength

Provides apprehension of wider concern environment

Encourages development of strategic thought

Helps organisation to place future troubles and extenuate the consequence

Helps organisation to descry future concern chance and work them efficaciously

Drawback of PESTEL analysis

The rapid gait alteration society makes it progressively hard to expect developments that may impact an organisation in the hereafter.

The analysis may based on premise that prove to baseless

There may be haphazard ‘s in obtaining information with respects to one of many of the factors mentioned above


Michael Porter ‘s five forces analysis is the tool that could supply a model to analyse the market industry and concern sectors. ( Porter, 1998 ) . In this theoretical account Porter has identified five competitory forces that shape every industry and every market. These forces determine the strength of competition and hence the profitableness and attraction of an industry. The aim of corporate scheme should be to modify these competitory forces in a manner that improves the place of the organisation.

The five forces in porter five forces method are

Dickering power of the clients

Dickering power of the providers

Menaces of new entryway

Menaces of new replacement

Competitive competition with in the industry

The major drawbacks of the five forces analysis are:

In porters five forces it assumes authoritative perfect market, so the more industry is regulated the less meaningful of consequences by the theoretical account.

The theoretical account is based on the thought of competition. It assumes that companies try to accomplish competitory advantages over other participants in the markets every bit good as over providers or clients. With this focal point, it does non truly take into consideration schemes like strategic confederations, electronic linking of information systems of all companies along a value concatenation, practical enterprise-networks or other.


SWOT Analysis is tool for placing internal strengths, failing, chances and menaces in the external environment for organisation. SWOT Analysis provides information that is serviceable in fiting house ‘s resources and capablenesss to competitory environment which it operates, as SWOT helps direction identify following factors

What concern does better than rivals

What rival does better than concern

What are chances available to concern and concern is turn toing to the chances.

Menaces of external environment and how a concern should move to extenuate those menaces.

Major restriction with SWOT analysis is it does emphasize up on the significance of the four elements associated with organisation and environmental analysis, but does non turn to on how company can place these facets itself.

hypertext transfer protocol: //

Ratio analysis

Most widely used method and understand by many users. Ratio analysis can used gaining control brief account of house ‘s fiscal public presentation and place in cardinal countries such as, profitableness, and pitching and investor place. With the ratios analysis public presentation house ‘s can be compared with industry norms, past old ages and rivals. In add-on ration can be used in the signifier of tendency analysis to place countries and periods where public presentation has improved or weakened overtime.

Restriction of the ratio analysis

Ratio analysis does non take into history the qualitative factors it chiefly focus on the figures, qualitative factors are really much of import for analysis of concern public presentation.

Ratio chiefly prepared based on past informations, non future

Basic ratios can be manipulated through acceptable changes of accounting policiesA e.g. : such as alterations in the accounting estimations

In the fiscal rating of SRH, ratios are chiefly divided into three major classs, profitableness, short and long-run geartrain and investor place. Selected Ratios from these classs were used compare group public presentation from twelvemonth to twelvemonth and with same ratios of royal thenars Beach hotel plc as company in similar concern.


Business Environment

The economic environment was steady and macro-economic factors are favourable towards investors for most of portion of three old ages. But after 1st One-fourth of FY 2012, concern environment started to go more volatile with lifting fuel and energy cost, involvement rate addition and devaluation of srilankan rupees.

GDP of Sri Lanka

Figure 3: GDP GROWTH

Beginning: Annual Statistical study of SLTDA ( hypertext transfer protocol: // page=Publications )

GDP of Srilanka started to turn instantly after terminal of civil war. The GDP growing was below 3 % prior to stop of civil war. In December 2010 had all clip high of 8.6 % growing, maintain above 8 % in 2011 and started to dropping in 2012 making 6.4 % in June 2012


Figure 3: Average weighted Prime loaning Rate

Beginning: Central Bank of Srilanka

( hypertext transfer protocol: // )

Average Weighted Prime Lending Rate ( AWPLR ) went down to 11.13 % 2010 compared to 18.16 % in 2009. This is chiefly due to positives impact to state economic system by terminal of civil war.

The leaden mean lending rate of state was lowest in twelvemonth 2011, started travel up due to anticipate higher budget shortages in 2012.

Exchange Ratess

Average Annual Exchange Rates ( 2008 to 2012 1st One-fourth )






2012 ( Q1 )



















Figure 3: Exchange rates

Beginning: Central Bank of Srilanka

hypertext transfer protocol: // )

The exchange rates had assorted fluctuations in last four old ages. In 2009 and 2010 instantly after war rupees gets strengthen and was weaken after that due to some economic uncertainnesss in the state and high budget shortages. Global foreign exchange rate alterations besides affect the value of the rupees in the period.



Internal strengths

Hotels have good repute among tourer as ethical operator.

Award winning hotels in assorted classs.

Have two merchandises heritage and beach hotels

Have strong concern relationship with planetary participants in the hotel industry.

Strong dedicated direction squad skilled staffs to function invitees

Positive feedback about the hotels by tourers in the universe taking travel consultative web sites

Strong relationship with travel agents and circuit operators.


Wholly depend on touristry which is volatile has significance influence by universe economic position

Lack of competitory selling run

Hazard of losing skilled staffs due the better offers by new entrants and bing rivals


Tourist reachings to srilanka is billowing after terminal of civil war

Government is offering inducements to development of hotel, like revenue enhancement vacations for investing above certain sums

Government is transporting out promotional activities to pull travelers to state.

Srilanka being the host state for 2012 20 20 cricket word cup and common wealth games 2014 will increase demand for hotels.


Adverse impact to grosss due to increasing competition by bing participants and new entrants.

Negative impact to tourist reachings by political instability in the state

Highly exposed to foreign exchange hazard by inauspicious motions of foreign currencies

Negative impact to extremely passing tourers from western states due to economic uncertainness in USA and Europe



The authorities of Srilanka has strong accent for the development of touristry industry. Government has sets the assorted marks, to accomplish 2.0 million tourer reachings by the twelvemonth 2016 and do touristry 3rd foreign exchange earner. To accomplish these ends, authorities has initiated several development and promotional activities.

Presently authorities of Srilanka is really acute to develop substructure of the state to back up the touristry industry. Construction of airdromes, ports, roads, railroads and power workss are among the first precedences of authorities ( hypertext transfer protocol: // )

The human right issues faced by authorities after the civil war and political instability which consequences protest have negative impact on touristry industry.


Economic environment of srilanka is steady for twelvemonth 2010 and 2011.In 2012 economic factors are unstable.-

Current challenges faced to hotel industry by Economic factors are additions in involvement, rising prices rates and raising fuel and energy costs and devaluation of Srilanka rupees.

This shows macro economic factors non favorable.


Srilanka is state with rich civilization as they are among most spiritual states in the universe with the recorded history of 2500 old ages.

There are many Buddhist temples, mosques, Hindu temples and churches all across the island with festivals that spread throughout the twelvemonth which attract tourers.

Sri Lanka Tourism Development Authority is acute to protect natural and cultural heritage sites alone to Sri Lanka. SLTDA besides carries out plans to educate local community near hotels, employees of the tourer constitutions about the benefits of touristry and different civilization of tourers.

Above societal factor which relates touristry seem to inline with industry demands leads to growing in the industry.


Invention and the execution of appropriate engineering are critical in touristry industry to react altering environment and demands of the tourers. Customers are need to extremely informed about the hotels to pull them, in modern universe cyberspace is chief method where tourer used to obtain travel information.

Recently Srilanka touristry publicity agency upgraded their web site with the option of exchanging more than 50 linguistic communication version.

Company installs sophisticated IT system in 2011 to aline group operation and concern to be automated.

Information about the hotels under serendib plc is besides available in most visited web sites by travelers. serendib plc besides has its ain cooperate web sites where tourer can makes the direct engagements for hotels.


Environment and touristry has really complex and mutualist relationship. The building of touristry installations could ensue in sand excavation which the chief ground for land eroding so the loss of beaches.

Main environmental factor consequence the concern is natural catastrophe, weather status and the clime alterations in the country where hotel operates.

Weather conditions of the countries where serendib plc hotels established are rather good throughout the twelvemonth.


The authorities of determination to bear down visa fee in visitants from 78 states, including states like India, Britain, Germany, France are among the top 10 beginning markets of Srilanka touristry and call off the on-arrival visa installation for other states except Maldives and Singapore.

The launch of on-line visa was launched effectual from 1st January 2012 for a utility natural of visa on reaching.

To promote touristry development authorities offers 5 twelvemonth revenue enhancement vacation in any investing over Rs 200mn.

Porters FIVE Forces Analysis

Dickering power of the providers

The term ‘suppliers ‘ comprises all beginnings for inputs that are needed in order toA provide goods or services.

This is non significant menace in the hotel industry. It can hold impact particularly in the country of labor and nutrient supplies.

Hazard of losing skilled staff is changeless due to better offers by rivals and new entrants

In Srilanka trained and skilled staffs to server and cover with tourer is limited.

Dickering power of the clients

The bargaining power of clients find how much clients can enforce force per unit area on borders and volumes.

In the hotel industry dickering power of the clients are high due to following grounds

Customers are extremely informed about the merchandises as hotels are supplying high degree of information about them, to pull clients.

In some unseasoned timings clients have more bargaining power so hotels have to offer price reductions.

Menaces of new entrants

The is Pressure of possible new rivals come ining the market and altering environment ( e.g. market portions, monetary values, client trueness ) .In Srilanka touristry sector menaces of new entryway really high due to following ground

The touristry industry has started to taking off instantly after the terminal of civil. Number of tourer reachings is quickly increasing.

Tourism industry has high net income borders compare to other industries so chance of early recovery of initial capital investing.

Internationally extremely client loyal hotel trade name are be aftering to put in Srilanka.

Government is offering 6 twelvemonth revenue enhancement vacation on investings above Rs 200mn to promote investing in touristry sector.

The menaces of replacement merchandises

Menaces from replacements exist if there are alternate merchandises with lower monetary values of better public presentation for the same intent. They could potentially pull a important proportion the market volume and hence cut down the gross revenues volume of bing participants.

The replacement for hotels will be cruise ships, campaign or merely another hotel merely nearby, with all monetary value scopes, changing degree of service and comfortss.

As there are around 20 hotels in Bentota, Srilanka where Avani Bentota beach hotel is located, menaces of utility merchandise seems high for serendib hotel plc.

Competitive competition with in the industry

This force describes the strength of competition among the bing participants in an industry. High force per unit area in competition consequences force per unit area on monetary values, border and hence, on profitableness for every individual company in the industry.

In the hotel industry this arises when hotel provides same degree of services like five star in the same part of the state.

Samman Villas and lunuganga are the current chief rival for Avani bentota beach hotel as they are two four star hotels located in bentota.



Figure 3: Gross Growth

Beginning: SRH & A ; RPBH ‘s Annual Reports 2009/10, 2010/11 and 2011/12

Serendib Hotel Plc had impressive public presentation by increasing its cyberspace turnover by 74 % over period of last three old ages. The company recorded its gross to a billion for the first clip in history ; on the twelvemonth terminal to 31 March 2012 for from Rs.583 in 2009.

In 2011 SRH had gross growing of 33 % with Rs.896mn comparison to 16 % of growing with gross of Rs 583mn in 2010. This is once more the best public presentation of the company history. The chief ground for growing is end of civil war in May 2009, which Srilanka has been strived for 3 decennaries. The tourer reachings to state started to billow due to takedown of Travel consultative notes issued by the provinces.

Outstanding public presentation by Avani bentota resort and watering place ( officially Serendib Hotel ) besides contribute to high growing in the group gross, hotel itself had a 52 % growing in gross. Hotel outperformed the mean tenancy of southern seashore, in most of clip throughout twelvemonth. Revenue growing of RBPH was merely 13 % in 2011 was much below comparison to SRH

In the twelvemonth 2012 gross growing was 13 % which is below Royal Palm Beach Hotel plc ‘s ( RPBH ) 20 % .Avani bentota resort and watering place, the flagship hotel of the company was closed for renovation for six months in the twelvemonth. This seems to be ground to worsen in the gross growing. Growth in the Net Gross chiefly reflects the outstanding public presentation company ‘s subordinates, in twelvemonth 2012 both Sirgiriya hotel plc and Dolphin Hotel Plc recorded highest fiscal public presentation in the history.

OPERATING Net income Margin

Operating net income step efficiency of pricing scheme and runing effectivity of the direction in pull offing variable cost related operation.

Figure 3: Operating Net income Margin

Beginning: SRH & A ; RPBH ‘s Annual Reports 2009/10, 2010/11 and 2011/12

Operating net income border of the SRH had an addition in FY 2011 and remains at same degree in 2012, but was below the RBPH for all three old ages. This is non in line with fluctuating and rapid growing in the gross.

In FY 2011 operating net income border SRH was 27 % with 6 % growing from 21 % of 2010.RBPH border at 28 % for both old ages. For the twelvemonth ended 2012 RPBH border was at 38 % which 11 % than that SRH. This indicates that RPBH performed good pull offing variable costs and other disbursals related to hotel operation. Main ground for limited growing in SRH border is during past three old ages some group hotels carryout assorted degrees of renovation, as portion of hotel or whole hotel closed for renovation leads to worsen in gross every bit good as addition in costs. The macro economic factors like addition in energy and fuel cost besides contributes to limited growing in the margin.SRH as group hotel will incur more disbursals than that of RPBH with merely one hotel in their operation.

Asset Turnover

Asset turnover calculates the gross generated for the every dollar of Asset Company owns. ( hypertext transfer protocol: // ) .

Figure 3: Asset Employee turnover

Beginning: SRH & A ; RPBH ‘s Annual Reports 2009/10, 2010/11 and 2011/12

Asset turnover SRH shows worsening tendency over the period, while RPBH manages to hold little betterment from twelvemonth to twelvemonth.

SRH plus turnover is 0.50 and 0.39 for twelvemonth 2010 and 2011 severally, was better than RPBH for the same old ages. In the twelvemonth 2012 RBPH was better in using its plus than SRH, with 0.33, while SRH had a bead to 0.32. The chief ground for the bead in plus turnover is increase in the entire assets of SRH. Assetss of SRH increased to 57 % in the three old ages ‘ clip. Sums invested in belongingss, to spread out concern chiefly contribute to lift in the entire assets.

Short and long term Liquidity

Debt to Equity

Debt to Equity measures the extent of debt used in capital construction of the company.

Figure 3: Debt to Equity

Beginning: SRH ‘s Annual Reports 2009/10, 2010/11 and 2011/12

SRH ‘s has merely 7 % of debts to finance its assets in the Year 2010.But in the FY 2011 there was critical degree of pitching with 64 % of debts, due to SRH ‘s aggressiveness in financing its enlargement with debt. Long term loans by SRH ‘s addition to Rs.462mn from Rs.26.8mn in 2010.

However SRH cut down its debt than equity by the terminal of FY 2012.the debt was 42 % comparison to 64 % in 2011. A net proceed of Rs.497.7mn from right issue in FY 2012 is chief ground for switched pitching degree in the twelvemonth. Long term loan by SRH besides addition by Rs.204.9mn from FY 2011 to 2012.

Finance Cost and Interest Cover

Interest screen step the figure of times a company could do the involvement payments its debts with net income before involvement and revenue enhancements.

Figure 3: Finance cost and Interest screen

Beginning: SRH Annual Reports 2009/10, 2010/11 and 2011/12

SRH ‘s Interest screen has important bead over three twelvemonth period. Main ground is the addition in the finance costs. The loans borrowed buy the group to carryout renovation of hotels and to put in belongingss leads to increase in finance cost. Entire figure of involvement bearing loans by the group increased to Rs.801.2mn in twelvemonth ended 2012 from 132.2mn in 2009. Finance cost of the group increased about 90 % over three twelvemonth period, from Rs 26.05mn in 2009 to Rs.49.6 in 2012, while Group gross growing for same period is 74 % .The group depending on Bankss overdrafts for short term funding besides addition from Rs.18.9mn to Rs.53.2mn in 2012.

Cash Operating Cycle

Cash runing rhythm calculates length of clip ( in yearss ) that company takes to change over resources inputs in to hard currency flows. This is step of public presentation efficiency of direction in roll uping trade receivables, pull offing stock list and covering with providers.

Figure 3: Cash operating Cycle

Beginning: SRH & A ; RPBH ‘s Annual Reports 2009/10, 2010/11 and 2011/12

Cash runing rhythm of both company is calculated merely utilizing trade payables and receivables

SRH runing rhythm has shortened over three twelvemonth period, from 54 yearss in FY 2010 to 25 yearss in 2012.RPBH COC has lengthen to 70 yearss in FY2012 from 52 yearss in 2010.

The direction of SRH and its subordinates has outperformed in covering with trade creditors and receivables than RPBH for FY 2011 and 2012.Receivable yearss cut down to 61 yearss from 74 yearss of in 2010 and collectible yearss has increased to 64 yearss from 49 yearss of in FY 2010.this is the ground for shorten hard currency operating rhythms in last two old ages.

Current and Quick Ratio

Current ratio steps Company ‘s ability to pay short footings duties and speedy ratio besides step same ability, but it is more conservative than current ratio as it exclude stock list.

Figure 3: Current Ratio

Beginning: SRH & A ; RPBH ‘s Annual Reports 2009/10, 2010/11 and 2011/12

Figure 3: Quick Ratio

Beginning: SRH & A ; RPBH ‘s Annual Reports 2009/10, 2010/11 and 2011/12

Current and Quick Ratio of both companies flows same tendency during the period. This clear indicant that stock list is non important point in service industries. SRH ability on footings current ratio is unequal for three twelvemonth period. In FY 2010 with 1.32 times is merely twelvemonth current plus is more than current liabilities. In last two twelvemonth 2011 and 2012 current assets were below current liabilities figures result to current ratio of 0.70 and 0.93 times severally. The chief ground for unsubstantial ratio is swelling in loan refunds figures in 2011. Sundry creditor figures increase in 2012 to 33 % . RPBH has better and equal ratios by prolonging both ratios above 3 times for last three old ages.


Tax return on Equity ( ROE )

ROE step how much company generates ( in footings of net income ) to stockholder for their fund in the company.

Figure 3: Roe

Beginning: SRH & A ; RPBH ‘s Annual Reports 2009/10, 2010/11 and 2011/12

ROE generated by SRH varied in the three twelvemonth period, while RPBH has been bit by bit bettering return to portion holder ‘s financess.

ROE of the SRH reached all clip of 12.7 % in FY2011, 7 % more than the old twelvemonth and 5 % more than RPBH ‘s for the same period. Impressive public presentation by SRH ‘s flag ship hotel, Avani bentota resort and watering place is mainspring for high ROE in the twelvemonth. Hotel is merely 100 % tourist hotel controlled by SRH. The 6 month closing during FY 2012 is ground for dropping ROE to 2 % . Unrealized foreign exchange loss recorded for the transition of foreign currency loan besides significantly leads to cut down ROE in 2012.

Net incomes per Share

Gaining per portions shows allocation of company net income to each portion outstanding at common stock.

Figure 3: Earning per Share

Beginning: SRH & A ; RPBH ‘s Annual Reports 2009/10, 2010/11 and 2011/12

In FY 2010 SRH ‘s EPS turned positive figures of Rs.2.47, after two old ages of negative EPS, reflecting positive impact of civil war terminal. The EPS of SRH surged to Rs.6.53 in the FY 2011, 164 % growing in a one twelvemonth. This is due to meritable public presentation by group hotels in the twelvemonth. In FY 2011 Profit property to equity stockholders increased to Rs.116.5mn from Rs.43.9mn in 2010.

But in the twelvemonth terminal to 2012 SRH, s EPS slumped to Rs.0.28.mainspring for Slumped EPS is addition to figure of portions by subdivision and right issue took topographic point at beginning of the twelvemonth, figure of portions were increased to 111,525,794 from 17,844,127.EPS of FY 2012 was calculated utilizing leaden mean figure of portions. In add-on net income Attribute to portion holders besides decreased to Rs.30.09mn, chiefly due to six month closing of avani bentota resort.

RPBH manages to increase its EPS bit by bit in the three twelvemonth period, but was below SRH in FY 2010 and 2011. SRH net incomes per portion were, 57 % , and 201 % higher than that of RPBH in 2010 and 2011 severally. In 2012 EPS of RPBH was 2.53, was 801 % higher than SRH ‘s EPS of 0.28.

Price Net incomes Ratio

P/E ratio expresses the sum the sum portion holder are prepared wage for portion as multiple of current net incomes ( Kaplan F9 )

Figure 3: Price Net incomes Ratio

Beginning: SRH and RPBH ‘s Annual Reports 2009/10, 2010/11 and 2011/12

P/E ratio SRH has improved in the three twelvemonth period, while RPBH P/E ratio has down ward tendency over three old ages.

SRH P/E ratio was below RPBH in the FY2009 and 2010, was 39 and 25 severally, while RBPH ratio is 42 and 32.Main ground for lessening P/E from 2010 to 2011 is increased net income.

SRH ‘S P/E ratio has skyrocketing to 89 by terminal twelvemonth 2012, which is highest since 2007, chiefly due to take down EPS resulted by right issue and lower net income to equity portion holders in the twelvemonth. In 2012 P/E ratios of RPBH went down to 22 times.


Three old ages period under consideration of this research is the 1 of the most aggressive fiscal old ages in the company history. Management of company has taken significant determination to get by with rapid growing in touristry industry and fastening competition. SRH, s Performance was admirable in both concern and fiscal footings in last three old ages.

Group has increased its entire plus by 130 % in last three old ages. The direction has made assorted capital investings to upgrade hotel and get the new belongingss. Serendib hotel group has increased its gross growing at appraisable degree in the three twelvemonth period with overall growing of 74 % . This clear indicant group is efficaciously taking the advantage of billowing touristry industry of Srilanka. Even though there is diminution in net income property to portion holders in 2012 due the six month closing flagship hotel and unfulfilled foreign exchange loan transition loss, its estimated addition in 2013.As hotel serendib was reopened in December 2011, as the first planetary trade name hotel unfastened in srilanka after terminal of civil war. avani bentota resort and watering place.

In concern footings company has developed its relationship with planetary participants in hotel industry. Avani is new trade name by mirnor international company. They are extremely reputed Thailand based hotel group operates universe category resorts under the universe celebrated trade names like ‘anantara ‘ , four seasaons and marriot, and are important participant in the planetary cordial reception industry. In partnership with mirnor international company besides acquired 105 room kani kanka resort and watering place, program to transform this belongings to universe category 5 Star Resort and watering place. Company has 19.9 % keeping in this undertaking. These trade names leads addition in group hotels repute, can used as selling tool and besides competitory advantage over other near by resorts.

Get instant access to
all materials

Become a Member