Hikkaduwa Beach Resort : Interim Financial Statements for the Quarter Ended 30.09.2022

Hikkaduwa Beach Resort PLC

Interim Financial Statements

For the Quarter ended 30th September 2022

Hikkaduwa Beach Resort PLC and Its Subsidiary

CEO Message

Dear Shareholders,

It is with great pleasure that I share with you the interim financial statements of Hikkaduwa Beach Resort PLC for the quarter ending 30th September 2022.

The Group hotels had its normal operations during the quarter under review whilst previous year's operation as an Intermediary Care Centers which concluded on the 30th of September 2022. Overall, the Group recorded a Revenue of Rs. 203 Mn (YoY 82%) for the quarter ending 30th September 2022 while maintaining GP ratio at 55% against previous year's recorded 71%. Also the Group incurred operating loss amounting to Rs. 122 Mn and Net Loss amounting to Rs. 292 Mn during the quarter under review.

For the Six month ending 30th September 2022, the Group posted Rs. 410Mn (YoY 89%) revenue and 59% GP margin against previous year's recorded 71%. Also Admin and operational expenses increased by 55% and finance cost by 131% compared to previous year same period. Hence Company's profitability decreased significantly and recorded Rs. 187 Mn operating loss and Rs. 501 Mn net loss for the same period. Citrus Hikkaduwa hotel contributed Rs. 144 Mn and Citrus Waskaduwa Rs. 267 Mn towards the Group's total revenue for the six month period under review.

With the crisis situation in the country, most of the expenses and cost have increased sharply compared to previous year and almost all food and beverage items, other expenses and services have increased over 300%. In addition to this, the sudden introduction of 15% Value added Tax and 2.5% Social Security Contribution Levy have further deteriorated our margins. With the continuous power cuts and shortage of fuel and also the increase in fuel prices, the hotels had to incur significant cost increase as generators had to be used on a daily basis for times ranging from 3 to 10 hours. Also due to the lack of foreigners, the hotels were not able to get the benefit of a higher exchange rate as well. In addition to above, increase in interest rates over 300% have eroded the profitability of the Group.

Future Outlook

It is evident that Russian market will continue to generate marginal numbers during the Winter period but European market are yet to open up as uncertainties in and increases in fares of Air travel has discouraged many European holiday makers to look at long haul travel to the Asian region. The Industry is expecting political stability in the country to ensure shortages of essential commodities do not occur in the immediate future.

Thank You

P C B Talwatte

Chief Executive Officer

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Hikkaduwa Beach Resort PLC and Its Subsidiary

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

		Quarter ended 30th September	Six month ended 30th September	Year Ended
		2022	2021	Increase /	2022	2021	Increase /	31st March 2022
		Unaudited	Unaudited	(Decrease) %	Unaudited	Unaudited	(Decrease) %	Audited
		Rs.	Rs.		Rs.	Rs.		Rs.
Revenue from contracts with customers	203,545,937	112,024,428	82%	410,855,693	217,146,368	89%	583,458,255
Cost of Sales	(92,353,726)	(32,020,713)	188%	(167,345,797)	(62,361,133)	168%	(175,143,189)
Gross Profit	111,192,210	80,003,715	39%	243,509,896	154,785,235	57%	408,315,066
Other Income and Gains	547,673	9,332,915	-94%	2,281,786	14,371,061	-84%	19,777,096
Administrative Expenses	(113,542,361)	(81,536,336)	39%	(214,134,465)	(164,278,266)	30%	(352,021,242)
Operating Expenses	(111,325,155)	(51,452,053)	116%	(198,540,233)	(101,699,687)	95%	(255,720,826)
Selling and Marketing Expenses	(9,669,472)	(1,619,564)	497%	(20,754,786)	(3,835,414)	441%	(15,704,998)
Operating Loss		(122,797,104)	(45,271,323)	171%	(187,637,802)	(100,657,071)	86%	(195,354,904)
Finance Income	1,328,631	596,373	123%	2,722,240	1,441,655	89%	3,678,969
Finance Expenses	(163,695,455)	(64,470,599)	154%	(304,946,364)	(131,972,899)	131%	(304,134,181)
Share of Profit/ (Loss) of Investment in Associate	(7,535,993)	(8,241,686)	9%	(10,929,194)	(12,343,926)	11%	126,123,638
Impairment of Associate	-	-		-	-		(35,935,461)
		(292,699,921)	(117,387,234)	149%	(500,791,121)	(243,532,242)	106%	(405,621,939)
Loss Before Tax
Income Tax Reversal/ (Expenses)	(194,221)	(168,767)	15%	(277,204)	(486,195)	-43%	28,099,022
		(292,894,142)	(117,556,001)	149%	(501,068,325)	(244,018,436)	105%	(377,522,917)
Loss for the period/ year
Loss Attributable to;
Equity Holders of the Parent		(257,835,539)	(110,200,513)	134%	(442,662,412)	(229,600,171)	93%	(329,321,296)
Non-Controlling Interest	(35,058,603)	(7,355,488)	377%	(58,405,912)	(14,418,265)	305%	(48,201,621)
		(292,894,142)	(117,556,001)		(501,068,325)	(244,018,436)		(377,522,917)
Other Comprehensive Income/ (Loss)
Revaluation Gain on Land and Building	-	-		-	-		1,127,412,710
Deferred Tax effect on Revaluation of Land and Building	-	-		-	-		(157,837,779)
Actuarial Gain/ (Loss) on Defined Benefit Plan	-	-		-	-		(371,140)
Income Tax effect on defined benefit plan	-	-		-	-		51,960
Share of other comprehensive income of associate	-	-		-	-		2,572,180
Total Other Comprehensive Income for the period/ year, net of	-	-		-	-		971,827,930
tax
Total Comprehensive Loss for the period/ year, net of tax	(292,894,142)	(117,556,001)	149%	(501,068,325)	(244,018,436)	105%	594,305,013
Total Comprehensive Loss Attributable to;		(257,835,539)	(110,200,513)	134%	(442,662,412)	(229,600,171)	93%	511,491,412
Equity Holders of the Parent
Non-Controlling Interest	(35,058,603)	(7,355,488)	377%	(58,405,912)	(14,418,265)	305%	82,813,601
		(292,894,142)	(117,556,001)		(501,068,325)	(244,018,436)		594,305,013
Loss per share - Basic (Rs.)	(0.91)	(0.39)		(1.55)	(0.81)		(1.16)

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Hikkaduwa Beach Resort PLC and Its Subsidiary

STATEMENT OF COMPREHENSIVE INCOME

				Company
	Quarter Ended 30th September	Six month ended 30th September	Year Ended
	2022	2021		2022	2021		31st March 2022
	Unaudited	Unaudited	Increase /	Unaudited	Unaudited	Increase /	Audited
	Rs.	Rs.	(Decrease) %	Rs.	Rs.	(Decrease) %	Rs.
	69,249,329	38,317,080	81%	144,169,638	71,598,470	101%	232,611,118
Revenue from contracts with customers
Cost of Sales	(31,119,942)	(11,217,784)	177%	(56,192,960)	(22,997,271)	144%	(64,079,947)
	38,129,387	27,099,296	41%	87,976,678	48,601,200	81%	168,531,171
Gross Profit
Other Income and Gains	152,120	5,310,671	97%	1,412,289	6,069,322	-77%	9,893,371
Administrative Expenses	(32,769,989)	(23,907,854)	37%	(64,702,711)	(48,738,400)	33%	(109,641,618)
Operating Expenses	(25,639,988)	(15,844,159)	62%	(48,669,074)	(32,174,849)	51%	(73,224,008)
Selling and Marketing Expenses	(5,600,944)	(663,864)	744%	(13,392,808)	(2,159,328)	520%	(9,270,089)
	(25,729,414)	(8,005,910)	221%	(37,375,626)	(28,402,055)	32%	(13,711,173)
Operating Loss
Finance Income	2,858,795	556,771	413%	4,976,752	1,395,932	257%	4,097,881
Finance Costs	(58,322,798)	(28,508,675)	105%	(117,611,833)	(60,742,879)	94%	(147,547,564)
Share of profit/ (Loss) of Investment in Associate	(7,535,993)	(8,241,686)	9%	(10,929,194)	(12,343,926)	11%	126,123,638
Impairment of Associate	-	-		-	-		(35,935,461)
Loss Before Tax	(88,729,410)	(44,199,500)	101%	(160,939,901)	(100,092,928)	61%	(66,972,679)
Income Tax Reversal / (Expenses)	-	-		-	(131,718)	-100%	28,672,020
	(88,729,410)	(44,199,500)	101%	(160,939,901)	(100,224,646)	61%	(38,300,659)
Loss for the period/ year
Other Comprehensive Income/ (loss)
Revaluation Gain on Land and Building	-	-		-	-		239,123,109
Deferred Tax effect on Revaluation of Land and Building	-	-		-	-		(33,477,235)
Actuarial Gain on Defined Benefit Plan	-	-		-	-		743,202
Income Tax effort on defined benefit plan	-	-		-	-		(104,048)
Share of other comprehensive income of associate	-	-		-	-		2,572,180
Total Other Comprehensive Income for the period/ year,	-	-		-	-		208,857,208
net of tax
Total Comprehensive Loss for the period/ year, net of tax	(88,729,410)	(44,199,500)	101%	(160,939,901)	(100,224,646)	61%	170,556,549
Loss per share - Basic (Rs.)	(0.31)	(0.16)		(0.56)	(0.35)		(0.13)

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Hikkaduwa Beach Resort PLC and Its Subsidiary

STATEMENT OF FINANCIAL POSITION

As at	Group		Company
30.09.2022		31.03.2022	30.09.2022	31.03.2022
	Unaudited		Audited	Unaudited	Audited
ASSETS	Rs.		Rs.	Rs.	Rs.
Non Current Assets
Property, Plant & Equipment	6,268,608,135		6,358,035,451	1,318,690,556	1,334,021,195
Investment Properties	576,496,266		576,496,266	576,496,266	576,496,266
Right-of-use Assets	177,275,895		178,288,899	177,275,895	178,288,899
Intangible Assets	454,587		790,869	322,938	478,227
Investment In Associate	2,317,679,390		2,328,608,584	2,317,679,390	2,328,608,584
Investment in Subsidiary	-		-	1,881,851,775	1,881,851,775
Other receivables - related parties	-		-	57,121,034	28,561,494
	9,340,514,273		9,442,220,069	6,329,437,854	6,328,306,440
Current Assets
Inventories	51,216,579		28,849,484	14,702,791	9,231,352
Trade and Other Receivables	57,185,727		74,227,745	32,947,657	41,866,221
Other Current Financial Assets	27,469,323		27,874,823	4,743,900	5,149,400
Tax Receivables	5,658,149		5,814,305	5,161,610	5,061,308
Advances and Prepayments	17,780,759		22,800,674	9,988,382	4,312,639
Cash and Bank Balances	15,877,414		50,649,963	7,796,805	46,793,619
	175,187,951		210,216,994	75,341,146	112,414,539
TOTAL ASSETS	9,515,702,224		9,652,437,063	6,404,779,000	6,440,720,979
EQUITY AND LIABILITIES
Capital and Reserves
Stated Capital	4,624,023,566		4,624,023,566	4,624,023,566	4,624,023,566
Revaluation Reserve	1,908,989,935		1,908,989,935	513,090,599	513,090,599
Merger Reserve	332,134,791		332,134,791	332,134,791	332,134,791
Retained Earnings	(2,239,624,357)		(1,796,961,944)	(802,104,225)	(641,164,324)
Equity attributable to equity holders of the parent	4,625,523,935		5,068,186,348	4,667,144,731	4,828,084,633
Non-controlling Interest	365,478,611		423,884,523	-	-
Total Equity	4,991,002,546		5,492,070,871	4,667,144,731	4,828,084,633
Non-Current Liabilities
Interest Bearing Loans and Borrowings	2,500,015,764		2,715,406,244	875,006,142	906,407,787
Retirement Benefit obligation	29,521,585		27,590,336	18,192,936	16,490,936
Deferred Tax Liability	353,870,432		353,870,432	56,579,707	56,579,706
Other Payables - Related Parties	48,399,078		21,375,023	48,399,078	21,375,023
	2,931,806,859		3,118,242,035	998,177,863	1,000,853,452
Current Liabilities
Trade and Other Payables	566,723,376		354,476,217	215,106,650	110,603,663
Interest Bearing Loans and Borrowings	980,230,826		650,704,169	521,439,848	477,011,362
Contract Liabilities	45,938,616		36,943,771	2,909,908	24,167,869
	1,592,892,818		1,042,124,157	739,456,406	611,782,894
TOTAL EQUITY & LIABILITIES	9,515,702,224		9,652,437,063	6,404,779,000	6,440,720,979

These Financial Statements are in compliance with the requirements of the Companies Act No. 07 of 2007.

………..………………

D. C. A. Sandanayake

Group Finance Manager

The Board of Directors is responsible for the preparation and presentation of these Financial Statements.

Signed for and on behalf of the Board by,

………..………………	………..………………
E. P. A. Cooray	S. A. Ameresekera
Director	Director
15 November 2022
Colombo

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