Course Work – In-Class Assesment 2

COMPARABLE COMPANY ANALYSIS BETWEEN

AITKEN SPENCE HOTELS HOLDINGS AND

ASIAN HOTELS & PROPERTIES

Group Members

 G.G.C.B.Upalirathna KAHDBM-F231F-014
 G.G.H.B.Upalirathna KAHDBM-F231F-015
 Y.M.C.A.Y. Bandara KAHDBM-F231F-017
 B.M.R.T. Basnayake KAHDBM-F231F-022
Table of Contents
1) Introduction of the hotels ........................................................................................................ 4
 Aitken Spence Hotels Holdings PLC...................................................................................... 4
 Asian Hotels & Properties PLC ............................................................................................. 5
2) Ratio analysis............................................................................................................................ 6
1. Profitability Ratios ................................................................................................................ 6
 Gross Profit Ratio ............................................................................................................. 6
 Operating profit ratio ....................................................................................................... 6
 Net Profit Ratio ................................................................................................................ 7
 Return on Capital Employed ............................................................................................ 8
 Return on Equity .............................................................................................................. 8
2. Liquidity Ratios ................................................................................................................... 10
 Current ratio ................................................................................................................... 10
 Quick ratio ...................................................................................................................... 10
3. Efficiency Ratios ................................................................................................................. 12
 Inventory Turnover Ratio ............................................................................................... 12
 Inventory Holding Period ............................................................................................... 12
4. Gearing Ratios .................................................................................................................... 13
 Debt Ratio ...................................................................................................................... 13
 Debt – Equity Ratio ........................................................................................................ 14
 Interest Coverage Ratio .................................................................................................. 14
 Summary of The Ratios ...................................................................................................... 16
 Recommendations ............................................................................................................. 17
 conclusions......................................................................................................................... 17
3) Share Price Movements ......................................................................................................... 18
 Aitken Spence Hotel Holdings PLC ..................................................................................... 18
 Asian Hotels and Properties PLC ........................................................................................ 19
4) Calculation of Weighted Average Cost of Capital................................................................... 21
1. Cost of Debt (Kd) ................................................................................................................ 21
2. Cost of Equity (Ke) .............................................................................................................. 22
3. Weighted of Debt (Wd) ...................................................................................................... 22
4. Weighted of Equity (We) .................................................................................................... 23
5. Weighted Average Cost of Capital ...................................................................................... 23
6. Recommendations: ............................................................................................................ 24
7. Conclusion for Weighted Average Cost of Capital (WACC): ............................................... 24
5) Special Events......................................................................................................................... 25
 Aitken Spence Hotels & Properties PLC ............................................................................. 25
1)Heritance-Kandalama-Sustainability................................................................................... 25
2)Heritance-Ahungalla-Sustainability .................................................................................... 25
3)Heritance-Ayurveda-Maha-Gedara..................................................................................... 25
4)Heritance-Tea-Factory......................................................................................................... 25
5)Heritance Negombo ............................................................................................................ 25
 CINNAMON RAINFOREST RESTORATION PROJECT............................................................. 26

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 1. Cinnamon Rainforest Restoration Project:..................................................................... 26
2. "Live and Let Live" Project in mitigating the Human-Elephant Conflict:........................ 26
3. PROJECT LEOPARD:......................................................................................................... 26
4. PROJECT WHALE: ........................................................................................................... 26
6) Changes of Directors .............................................................................................................. 27
 Aitken Spence Hotels & Properties PLC ............................................................................. 27
 Asian Spence Hotel Holdings PLC ....................................................................................... 28
7) Diversified Investments .......................................................................................................... 29
 Aitken Spence Hotel Holdings PLC ..................................................................................... 29
 Overseas Operations ...................................................................................................... 29
 Hotel Portfolio ................................................................................................................ 29
 Sustainability and Renewable Energy ............................................................................ 29
 Ancillary Businesses ....................................................................................................... 29
 Asian Hotels and Properties PLC ........................................................................................ 30
 Hotel Portfolio ................................................................................................................ 30
 Overseas Operations ...................................................................................................... 30
8) Participation of Members ...................................................................................................... 31

3
1) Introduction of the hotels

 Aitken Spence Hotels Holdings PLC

An established hotel chain with 22 properties is run by Aitken Spence Hotels in Sri Lanka,
India, Oman, and the Maldives. The organization, which has a significant presence in
popular tourist areas, provides a wide choice of accommodations to suit various demands
and price points while upholding their dedication to providing excellent service.

Heritance Hotels and Resorts and Adaaran Resorts and Spa are two of the company's
premium brands. These names are closely associated with elegance, comfort, and first-
rate customer care. Aitken Spence Hotels makes sure that each hotel upholds the
company's consistent dedication to excellence, whether you're looking for a pricey retreat
or a sumptuous getaway. The Heritance Kandalama, a prize-winning property with a
reputation for eco-friendly initiatives, stands out among their range of hotels. This
outstanding hotel is ideally situated close to two UNESCO World history sites, giving
visitors the chance to discover Sri Lanka's rich cultural and historical history. Aitken Spence
Hotels also runs the Desert Nights Camp in Oman in addition to their spectacular Sri
Lankan resorts. One of the top ten desert retreats in the world, this amazing hideaway
offers visitors a singular and unforgettable experience in the Arabian desert.

Aitken Spence Hotels is well-known as a pioneer in the international hospitality sector.

They stand out due to their dedication to supplying outstanding service, upholding high
standards, and offering distinctive and unforgettable experiences. Aitken Spence Hotels
guarantees to make your upcoming holiday genuinely unforgettable, whether you're
searching for a beachside paradise, a cultural experience, or a tranquil desert retreat.

 Vision: To achieve excellence in all our activities, establish high growth businesses
in Sri Lanka and across new frontiers, and become a globally competitive market
leader in the region.

4
  Asian Hotels & Properties PLC
A well-known Sri Lankan corporation with operations in the hotel and real estate
development industries is Asian Hotels and Properties PLC. The company's business
portfolio is diverse and comprises management, property development, and hoteliering.
Leisure and real estate make up the two primary business segments for Asian Hotels and
Properties PLC.

Under the name Cinnamon Hotels and Resorts, the business operates two opulent five-
star city hotels in Colombo, Sri Lanka, as part of its leisure division. Cinnamon Grand
Colombo and Cinnamon Lakeside Colombo are the names of these hotels. Both locations
provide top-notch lodging, eating, and recreational options to meet the requirements of
both domestic and foreign visitors. The rental income from the investment property next
to the hotels is the main emphasis of Asian Hotels and Properties PLC's property division.
The corporation owns Crescat Boulevard, one of its prized investment sites, and it is ideally
situated close to the hotels. The rental income stream for the business benefits from this
asset.

Over the course of its two five-star hotels, Asian Hotels and Properties PLC has a total of
about 847 rooms available for hotel guests. 22 restaurants and bars are among the many
amenities the resorts have to offer, giving visitors a variety of dining alternatives. The
hotels also include four main ballrooms, which can accommodate a variety of events like
weddings, conferences, and social gatherings. Asian Hotels and Properties PLC also has a
sizable rental property portfolio in addition to its hotel holdings. The corporation owns
rental property of about 200,744 square feet, which brings in extra money for the
business. Asian Hotels and Properties PLC's subsidiary, Trans Asia Hotels PLC, works in the
hospitality sector and is managed and owned by the parent firm.

Asian Hotels and Properties PLC is dedicated to providing outstanding guest experiences,
upholding high standards of service, and assisting in the expansion of Sri Lanka's
hospitality and real estate industries.

 Vision: To be the largest and most profitable Asian-origin hotel chain.

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2) Ratio analysis

1. Profitability Ratios

Profitability ratios are a class of financial metrics that are used to assess a business's ability
to generate earnings relative to its revenue, operating costs, balance sheet assets, or
shareholders' equity over time, using data from a specific point in time.

 Gross Profit Ratio

The Gross Profit Ratio derives its name from the fact that it measures the relationship
between the gross profit and the net sales revenue of a company. As a percentage, it is
also called Gross Profit Margin when it is expressed as a percentage.

Gross profit Ratio = (Gross Profit/Sales) x 100

Following table interprets the gross profit ratios of Asian Hotels & Properties PLC and
Aitken Spence Hotels Holdings Company since last three years.

Gross Profit Ratio

50.00%

40.00%

30.00%

20.00% Gross Profit Ratio ASHH

10.00% Gross Profit Ratio AHPP

0.00%
2021 2022 2023
-10.00%

-20.00%

According to this bar chart we can see Asian hotels and properties PLC better than Aitken
space hotels holding company. But we can see Asian hotels holding company manage their
gross profit in 2021 year

 Operating profit ratio

The operating profit ratio or OPR is a type of profitability ratio that is used for determining
the operating profit and the net revenue generated from the operations of a business. It
is expressed as a percentage.

Operating profit = (Operation Profit / Sales) x 100

Following table interprets the operating profit ratios of Asian Hotels & Properties PLC and
Aitken Spence Hotels Holdings Company since last three years.

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 Operating Profit Ratio
100.00%

50.00%

0.00%
2021 2022 2023
-50.00% Operation profit ratio ASHH

-100.00% Operation profit ratio AHPP

-150.00%

-200.00%

-250.00%

According to this bar chart we can see Aitken Spence Hotels Holdings Company only cover
their operating cost in 2022. But other years both of companies couldn’t cover their
operating cost because during the Covid – 19 period tourism industry fallen down and, as
it hotel industry had to face this situation.

 Net Profit Ratio

Net profit ratio is an important profitability ratio that shows the relationship between net
sales and net profit after tax of a company. When expressed as percentage, it is known as
net profit margin.

Net Profit Ratio = (Net Profit/Sales) x 100

Following table interprets the net profit ratios of Asian Hotels & Properties PLC and Aitken
Spence Hotels Holdings Company since last three years.

Net Profit Ratio

50.00%

0.00%
2021 2022 2023
-50.00%

Net Profit Ratio ASHH

-100.00%
Net Profit Ratio AHPP

-150.00%

-200.00%

-250.00%

According to this bar graph we can see only Aitken Spence Hotels Holdings Company earn
net profit in 2022 .it means they have been able to cover their financial expenses in

7
addition to operating expenses during that year. But any other years any company
couldn’t earn net profit.

 Return on Capital Employed

Return on capital employed (ROCE) or Return on Investment is a profitability ratio that

measures how well a company is able to generate profits from its capital. It is an important
ratio that is mostly used by investors while screening for companies to invest.

ROCE = Operating Profit/ (Equity + Debt) x 100

Following table interprets the return on capital employed ratios of Asian Hotels &
Properties PLC and Aitken Spence Hotels Holdings Company since last three years.

ROCE
3.00%

2.00%

1.00%

0.00% ROCE ASHH

2021 2022 2023
-1.00% ROCE AHPP

-2.00%

-3.00%

-4.00%

According to the above bar chart we can see in any company in any years (except Aitken
Spence Hotels Holdings Company in2022) couldn’t cover their capital employed it means
recent three years any company inefficient use of their capital employed.

 Return on Equity

Return on equity is a measure of a company's financial performance that shows the

relationship between a company's profit and the investor's return.

ROE = (Profit After Tax-Dividend Income) / (Shareholder Equity) X 100

Following table interprets the return on equity ratios of Asian Hotels & Properties PLC and
Aitken Spence Hotels Holdings Company since last three years.

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 ROE
5%

0%
2021 2022 20253
-5%
ROE ASHH
-10%
ROE AHPP
-15%

-20%

-25%

According to the above bar chart, we can see only Aitken Spence Hotels Holdings Company
in 2022 cover their shareholders’ equity return it’s 3%. But other years they couldn’t give
return to their shareholders and also Asian Hotels & Properties PLC couldn’t cover their
ROE last recent three years

According to these details, last recent three years both of companies going to down worth
their profitability because of covid -19 situation. But Asian Hotels & Properties PLC have
positive path last two years than Aitken Spence Hotels Holdings Company

 RETURN ON ASSESTS

Return on assets (ROA) is a financial statistic measuring how profitable the company is in
relation to its total assets.

ROA = Net Income / Total Assets

Following table interprets the return on equity ratios of Asian Hotels & Properties PLC and
Aitken Spence Hotels Holdings Company since last three years.

ROA
2.00%

1.00%

0.00%
2021 2022 2023
-1.00% ROA ASHH

-2.00% ROA AHPP

-3.00%

-4.00%

-5.00%

9
According to the above chart we can see Aitken Spence Hotels Holdings Company in 2022
only profitable in relation to its total assets but both of company get losses in other years,
in relation to total assets

2. Liquidity Ratios

 Current ratio
The current ratio assesses a company's capacity to pay its current liabilities (debt and
payables) with current, or short-term, assets (cash, inventory, and receivables).

Current Ratio = Current Assets / Current Liabilities

Following table interprets the current ratios of Asian Hotels & Properties PLC and Aitken
Spence Hotels Holdings Company since last three years.

Current ratio
1.4

1.2

0.8
Current assets Ratio ASHH
0.6
Current assets Ratio AHPP
0.4

0.2

0
2021 2022 2023

According to the above bar chart Aitken Spence Hotels Holdings Company hotel manage
the gap between current assets and current liabilities continuously than Asian Hotels &
Properties PLC. Because last two years their current ratio is higher than one. Current ratio
is higher than one means, they can cover their current liabilities any time using their
current assets.

 Quick ratio

The quick ratio also evaluates a company's liquidity by determining how well its current
assets can pay its current liabilities. The fast ratio, on the other hand, is a more
conservative measure of liquidity because it does not include all of the elements included
in the current ratio. The quick ratio, also known as the acid-test ratio, contains only assets
that can be converted to cash in less than 90 days.

Quick Ratio = (Current Assets-Inventory)/Current Liabilities

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Following table interprets the quick ratios of Asian Hotels & Properties PLC and Aitken
Spence Hotels Holdings Company since last three years.

Quick ratio
1.4

1.2

0.8
Quick Assets Ratio ASHH
0.6
Quick Assets Ratio AHPP
0.4

0.2

0
2021 2022 2023

According to the above bar chart we can see Aitken Spence hotels & holdings company’s
quick ratio is better than Asian hotels and properties PLC. Because last two years Aitken
Spence hotel’s quick ratio is higher than one. It means using their current assets (except
inventory) they can cover their current liabilities.

According to the above current ratio and quick ratio details, we can Think Aitken Spence
and Hotel Holdings Company manage their current assets and current liabilities better
than Asian Hotels & Properties PLC Company.

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3. Efficiency Ratios

 Inventory Turnover Ratio

The rate at which inventory stock is sold, used, and replaced is referred to as inventory
turnover. Divide the cost of products by the average inventory for the same period to get
the inventory turnover ratio. A larger ratio indicates good sales, whereas a lower ratio
indicates dismal sales.

Inventory Turnover Ratio = (Cost of Sales/Average Stocks) X 100

Following table interprets the inventory turnover ratios of Asian Hotels & Properties PLC
and Aitken Spence Hotels Holdings Company since last three years.

Inventory Turnover Ratio

16
14
12
10 Inventory Turnover Ratio
8 ASHH
6 Inventory Turnover Ratio
AHPP
4
2
0
2021 2022 2023

According to the above bar chart we can see Asian Hotels & Properties PLC company’s
inventory turnover ratio is higher than Aitken Spence Hotels Holdings Company. It means
Asian Hotels & Properties PLC perform better than Aitken Spence Hotels Holdings
Company.

 Inventory Holding Period

Inventory Holding Period is a ratio that shows how long an organization keeps inventory
before selling it. It indicates how long it takes for inventory to cycle in the business.

Inventory Holding Period = 356/Inventory Turnover Ratio

Following table interprets the inventory holding period ratios of Asian Hotels &
Properties PLC and Aitken Spence Hotels Holdings Company since last three years.

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 Inventory Holding Period
30.00%

25.00%

20.00%
Inventory Holding Period
15.00% ASHH
Inventory Holding Period
10.00% AHPP

5.00%

0.00%
2021 2022 2023

According to the above bar chart we can see Asian Hotels & Properties PLC’s inventory
holding period is lower than Aitken Spence Hotels Holdings Company. It means Asian
Hotels & Properties PLC is performing better than Aitken Spence Hotels Holdings
Company.

4. Gearing Ratios

 Debt Ratio
The phrase debt ratio refers to a financial ratio that reflects the degree of indebtedness in
a corporation. The debt ratio is defined as the decimal or percentage ratio of total debt to
total assets.

Debt Ratio = Debt Capital/Total Capital*100

Following table interprets the debt ratios of Asian Hotels & Properties PLC and Aitken
Spence Hotels Holdings Company since last three years.

Debt Ratio
8.00%
7.00%
6.00%
5.00%
4.00% Debt Ratio ASHH

3.00% Debt Ratio AHPP

2.00%
1.00%
0.00%
2021 2022 2023

According to this bar chart we can see Asian Hotels & Properties PLC company is managing
their debt and total equity gap better than Aitken Spence Hotels Holdings Company.

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  Debt – Equity Ratio
The debt-to-equity ratio compares the amount of a firm owned by creditors (those it has
borrowed money from) to the amount of shareholder equity held by the company.

Debt –Equity Ratio = (Debt Capital /Equity Capital) X 100

Following table interprets the Debt - Equity Ratios of Asian Hotels & Properties PLC and
Aitken Spence Hotels Holdings Company since last three years.

0.08

0.07

0.06

0.05

0.04 Debt-Equity Ratio ASHH

Debt-Equity Ratio AHPP
0.03

0.02

0.01

0
2021 2022 2023

According to this bar chart we can see Asian Hotels & Properties PLC perform better than
Aitken Spence Hotels Holdings Company.

 Interest Coverage Ratio

The interest coverage ratio is a debt and profitability statistic that measures how readily a
corporation can pay interest on existing debt.

Interest Coverage Ratio=Profit Before Interest and Tax /Interest Expenses

Following table interprets the interest coverage ratios of Asian Hotels & Properties PLC
and Aitken Spence Hotels Holdings Company since last three years.

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 Interest Coverage Ratio
40

20

0
2021 2022 2023
-20

-40 Interest Coverage Ratio

ASHH
-60 Interest Coverage Ratio
AHPP
-80

-100

-120

-140

-160

According to the above bar chart year in 2021 Asian Hotels & Properties PLC company
couldn’t cover their interest but in the same year Aitken Spence Hotels Holdings Company
could cover their interest. year in 2022 any company couldn’t cover their interest using
their income but year2023 both of companies cover their interests to some extent as this
situation in near future we can guess they can go to positive side according to this ratio.

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 Summary of The Ratios

Ratio Company 2021/3/31 2022/3/31 2023/3/31

Gross Profit Ratio ASHH 11.06% 5.68% 7.07%

AHPP -12.53% 33.04% 43.06%
Net Profit Ratio ASHH -210.45% 30.3% -33.03%
AHPP -145.56% -22.48% -3.3%
ROCE ASHH -1.9% 1.8% -0.1%
AHPP -3.19% -1.03% 0.0021%
ROE ASHH -8% 3% -20%
AHPP -5.52% -1.72% -0.87%
ROA ASHH -2.1% 1.2% -2.03%
AHPP -4.14% -1.72% -1%
Current Assets Ratio ASHH 0.7 1.3 1.3
AHPP 0.47 0.45 0.44
Quick Assets Ratio ASHH 0.7 1.3 1.3
AHPP 0.41 0.38 0.32
Operation Profit Ratio ASHH -193.06% 45.6% -1.8%
AHPP -112% -16% 0.016214%
Inventory Turnover Ratio ASHH 102.3% 137.7% 135.16%
AHPP 13.6% 14.79% 13.8%
Inventory Holding Period ASHH 3.5 2.7 2.7
AHPP 27 24.67 26.45
Debt Ratio ASHH 6.9% 7% 6.4%
AHPP 0.16% 3.7% 1.5%
Debt-Equity Ratio ASHH 0.07% 0.07% 0.06%
AHPP 0% 0.038% 0.16%
Interest Coverage Ratio ASHH 29% -3.1% 0.04%
AHPP -146.28% -5.85% 0.004%

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 Recommendations
 Recommendations for Aitken Spence Hotel Holdings PLC

1. Enhance Operational Efficiency

2. Revise Pricing Strategy
3. Strengthen Working Capital Management
4. Maintain Diligent Debt Management

 Recommendations for AHPP

1. Maximize Profit Margins

2. Strengthen Cost Management
3. Optimize Working Capital Efficiency
4. Foster Research and Development Investments:

 Conclusions

Firstly, ASHH has faced challenges in terms of declining gross profit ratio, negative
net profit, and decreasing return on equity (ROE). The company should prioritize
improving operational efficiency, reducing losses, and optimizing asset utilization
to enhance profitability. It needs to address its negative net profit and return on
assets (ROA) figures. Additionally, ASHH should closely monitor its liquidity ratios
and focus on maintaining adequate liquidity to meet short-term obligations.

Secondly, AHPP has shown signs of improvement, particularly in its gross profit
ratio, indicating better profitability. However, it still faces challenges with negative
net profit and ROE figures. The company should continue its efforts to optimize
cost management, enhance working capital efficiency, and maximize profit
margins to achieve positive financial results. AHPP should also work on improving
its interest coverage ratio and return on capital employed (ROCE) to ensure
sustainable financial performance.

Overall, both ASHH and AHPP should concentrate on enhancing profitability,

optimizing operational efficiency, and managing their financial resources
effectively. This involves addressing specific areas of improvement, such as cost
control, working capital management, and debt management. By implementing
strategies tailored to their circumstances and industry dynamics, the companies
can strive for sustainable growth, improved financial performance, and enhanced
shareholder value. It is crucial for them to undertake further analysis, develop
detailed action plans, and monitor their progress regularly to achieve their
financial goals.

17
3) Share Price Movements

 Aitken Spence Hotel Holdings PLC

According to the Aitken Spence Hotel Holdings PLC, the share price on the 1st of January
2020 is nearly 26.23 rupees. The price has been decreased until the 16th of March 2020
to 14.87 rupees and it is the lowest share price of the year 2020. Then the share price has
been increased until 11th of May 2020 to 19.57 rupees. In that period, the hotel reported
that Aitken Spence records a profit of Rs. 4.2 billion in 2019-2020 amidst unprecedented
challenges. After that, the share price fluctuated between 19 and 22 rupees from May to
October 2020.

The share price on the 1st of January 2021 is nearly 33.43 rupees. After October 2020, the
price has been increased until the 18th of January 2021 to 35.32 rupees. In that period,
Aitken Spence achieves 33% growth in 2Q PBT from non-tourism sectors. After that, the
share price has been decreased until the 15th of March 2021 to 28.93. At that period, the
Sri Lanka stock market reported it fell 6.5% wiping out Rs.245Bn. Then again, the share
price has fluctuated between 28 and 34 rupees from March to August 2021. Then after
the fluctuation, the share price has been increased until 27th September to 43.73 rupees
and it is the highest share price of the year 2021. After that peak, the share price has been
decreased until 13th December 2021 to 36.57 rupees.

The share price on the 1st of January 2022 is nearly 40.26 rupees. From the 1st of January
to the 21st of March 2022, the share price fluctuated between 40 and 44 rupees. Then
the share price has been decreased until 11th of July 2022 to 28.40 rupees and it is the
lowest share price of the year. After that, the share price has been increased until the 12th
of September 2022 to 66.79 rupees and it is the highest share price of the year. Aitken
Spence PLC reported a cumulative profit before tax of Rs.10.3Bn for the nine months
ended 31st December 2022, which was a significant growth of 213.7% over last year. Then
18
the share price has been decreased until the 02nd of January 2023 to 48.24 rupees. In
that period, the Share price has been decreased because the company lost rs.223Mn in
the December quarter. The group reported losses of 77 cents per share for the quoter.

 Asian Hotels and Properties PLC

According to the Asian Hotels and Properties PLC, the share price on the 1st of January
2020 is nearly 38.83 rupees. Then the share price has been decreased until the 11th of
May 2020 to 24.04 rupees. After that decrease, the share price has been increased until
the 18th of January 2021 to 46.05 rupees.

The share price on the 1st of January 2021 is nearly 43.83 rupees. Then the share price
has been increased until the 18th of January 2021 to 46.05 rupees. After that increase,
the share price has been decreased until the 08th of February 2021 to 37.35 rupees. Then
the share price has been increased until the 15th of February 2021 to 45.58 rupees. During
that period, Cinnamon Hotels appointed a new General Manager for Cinnamon Grand. On
15th February 2021 to 29th of March 2021, the share price has been decreased to 36.80
rupees. Then the share price fluctuated between 36 and 40 rupees from March to August
2021 and at that time, the company marked their lowest share as 35.04 rupees on 03rd
of May 2021. In the month of June, over 3,000 meals are provided to flood victims by
Union Assurance and Cinnamon Hotels. After that, the share price has been increased
until the 25th of October 2021 to 47.90 rupees. After the decrease, the share price
fluctuated between 42 and 47 rupees from October to December 2021.

The share price on the 1st of January 2022 is nearly 46.05 rupees. The share price has
been increased until 17th of January 2022 to 48.85 rupees and it is their highest share
price of 2022. In that period, HNB and Cinnamon Hotels collaborate to provide LANKAQR
payment options to Cinnamon Hotel. Then they marked their highest share price, next
few months they have been decreased their share price until the 02nd of May 2022 to
28.51 rupees and it was their lowest share price of that year. At that period, they issued

19
their annual report for the year ended 31st March 2022 and it shows they got lost in that
year. Then they have been increased their share price a little bit until the 06th of June
2022 to 34.10 rupees. After that again the share price has been decreased until 04th of
July 2022 to 28.80 rupees. Then they faced an increase in share price until the 12th of
September 2022 to 47.02 rupees. After that, the share price has been decreased until 19th
of December 2022 to 35.02 rupees.

20
4) Calculation of Weighted Average Cost of Capital
1. Cost of Debt (Kd)

AITKEN ASIAN
Interest Expense 299,770 191,090
Short Term Debt
Interest bearing Borrowing 177,154 87,881
Bank Overdraft 168,939 928,554
Long Term Debt
Interest bearing Borrowing 535,332 125,000
Cost of Debt 34% 17%
Tax Rate 14% 14%
Cost of Debt (1-T) 29.25% 14.62%

Cost of Debt (Kd) = Interest Expenses / (Short Term Debt + Long Term Debt)

 Aitken Spence Hotel Holdings PLC

Kd = 299,770 / (346,093 + 535,332) = 34%
 Asian Hotels and Properties PLC
Kd = 191,090 / (1,016,435 + 125,000) = 17%

Cost of Debt Before Tax (Kd*(1-T)) = Cost of Debt * (1 – Effective Tax Rate)

 Aitken Spence Hotel Holdings PLC

Kd (1-T) = 34% * (1 – 14%) = 29.25%
 Asian Hotels and Properties PLC
Kd (1-T) = 17% * (1-14%) = 14.62%
When comparing the cost of debt before tax, we can see that Asian Hotels and Properties
PLC (14.62%) has a lower figure than Aitken Spence Hotel Holdings PLC (29.25%). This
suggests that even after accounting for the impact of the effective tax rate, Aitken Spence
Hotel Holdings PLC still has a higher cost of debt.

It's important to keep in mind, though, that a lower cost of debt is typically viewed
favorably because it implies lower interest expenses relative to the total debt. A lower
cost of debt may be a sign of improved financial standing and could mean lower borrowing
costs for the business. The cost of debt figures alone suggest that Asian Hotels and
Properties PLC has a lower cost of debt before tax, which might be viewed as more
advantageous.

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 2. Cost of Equity (Ke)

Cost of Equity (Ke) = Risk free rate + (Beta*(Market Return-Risk free return))

AITKEN ASIAN
Risk Free Rate 25.99% 25.99%
Beta 0.55 -0.30
Market Return 4.78% 4.78%
Cost of Equity 14% 32%

 Aitken Spence Hotel Holdings PLC

Ke = 25.99% + (-0.30 * (4.78% - 25.99%)) = 14%
 Asian Hotels and Properties PLC
Ke = 25.99% + (0.55 * (4.78% - 25.99%)) = 32%
Aitken Spence Hotel Holdings PLC has a lower cost of equity (14% compared to 32%,
according to an analysis of the cost of equity data) than Asian Hotels and Properties PLC.
Aitken Spence Hotel Holdings PLC appears to have a lower cost of equity in this instance
based solely on the cost of equity figures. Since a lower cost of equity suggests that
investors are expecting a lower return for holding the stock, it is generally thought to be
more favorable. It suggests that the business is regarded as being less risky or as having a
more secure financial situation.

3. Weighted of Debt (Wd)

Weight of Debt (Wd) = Total Debt / Total Debt and Equity

AITKEN ASIAN

Total Debt 881,425 1,141,435

Total Equity 10,445,918 26,955,777

Total Debt and Equity 11,327,343 28,097,212

 Aitken Spence Hotel Holdings PLC

Wd = 881,425 / 11,327,343 = 0.0780
 Asian Hotels and Properties PLC
Wd = 1,141,435 / 28,955,777 = 0.0406

Aitken Spence Hotel Holdings PLC has a higher weight of debt (7.80%) than Asian Hotels
and Properties PLC (4.06%), according to an analysis of the debt data.
Aitken Spence Hotel Holdings PLC is more dependent on debt financing, as indicated by
the higher weight of debt. Both benefits and drawbacks may result from this. On the one
hand, having more debt may result in tax benefits and lower capital costs. However, it also
raises financial risk and the need to pay interest expenses.

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 4. Weighted of Equity (We)

Weight of Equity (We) = Total Equity / Total Debt and Equity

AITKEN ASIAN

Total Debt 881,425 1,141,435

Total Equity 10,445,918 26,955,777

Total Debt and Equity 11,327,343 28,097,212

 Aitken Spence Hotel Holdings PLC

We = 10,445,918 / 11,327,343 = 0.9222
 Asian Hotels and Properties PLC
We = 26,955,777 / 28,097,212 = 0.9593
Aitken Spence Hotel Holdings PLC has a lower weight of equity (92.22%) than Asian Hotels
and Properties PLC (95.93%), according to an analysis of the equity weight figures.
Asian Hotels and Properties PLC's capital structure demonstrates this by having a higher
weight of equity, which indicates a greater reliance on equity financing. This may imply a
more cautious approach to financing and a lower level of financial risk when compared to
a higher percentage of debt.

5. Weighted Average Cost of Capital

WACC = (Ke*We) + (Kd*Wd)

AITKEN ASIAN
Cost of Debt (1-T) (Kd) 29.25% 14.62%
Cost of Equity (Ke) 14% 32%
Weight of Debt (Wd) 0.078 0.0406
Weight of Equity (We) 0.9222 0.9593

 Aitken Spence Hotel Holdings PLC

WACC = (14% * 0.9222) + (29.25% * 0.078) = 15.49%
 Asian Hotels and Properties PLC
WACC = (32% * 0.9593) + (14.62% * 0.0406) = 31.38%
Aitken Spence Hotel Holdings PLC has a lower WACC (15.49%) than Asian Hotels and
Properties PLC (31.38%), according to an analysis of the WACC figures.
The WACC shows the typical rate of return needed by both equity and debt investors to
put money into the business. A lower WACC may be an indication of better financial health
and more effective capital allocation, as well as a lower cost of capital. Determining the
overall strength and potential of each company requires further analysis, even though
Aitken Spence Hotel Holdings PLC may have a more favorable WACC in this analysis.

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 6. Recommendations:
 Recommendations for Aitken Spence Hotel Holdings PLC:

1. Improve debt management by keeping an eye on debt levels and looking into
refinancing and favorable interest rate options.
2. Boost profitability by bringing down operating costs and boosting operational
effectiveness.
3. Investigate potential market expansion and product/service offering growth
opportunities.

 Recommendations for Asian Hotels and Properties PLC:

1. Make debt reduction a top priority to reduce interest costs and increase financial
stability.
2. Complete a thorough risk assessment to find and reduce potential hazards.
3. Increase efficiency and profitability by streamlining processes and lowering overhead
expenses.
4. To lessen reliance on a particular market or customer segment, think about market
diversification.

7. Conclusion for Weighted Average Cost of Capital (WACC):

In summary, the analysis of Aitken Spence Hotel Holdings PLC and Asian Hotels and
Properties PLC, based on the determination of their Weighted Average Cost of Capital
(WACC), offers important information about their capital structure and financial
performance. The cost of debt and equity are both taken into account in the WACC
calculation, which is a useful tool for assessing the companies' investment prospects and
general financial health.
Weighted Average Cost of Capital (WACC) for Aitken Spence Hotel Holdings PLC is 15.49%,
which represents the typical rate of return needed by investors to finance the company's
operations. The suggestions for Aitken Spence Hotel Holdings PLC center on improving
debt management, boosting profitability, and looking into expansion possibilities. Aitken
Spence Hotel Holdings PLC can boost its financial performance and long-term
sustainability by actively managing its debt levels, cutting operating costs, increasing the
range of products/services it offers, and reaching a wider market.
A higher Weighted Average Cost of Capital (WACC) of 31.38% for Asian Hotels and
Properties PLC, on the other hand, points to a higher cost of capital. The
recommendations for Asian Hotels and Properties PLC place a high priority on carrying
out thorough risk assessments, increasing profitability and efficiency, and taking market
diversification into consideration. Asian Hotels and Properties PLC can increase its
financial stability and profitability by lowering its debt load, minimizing risks, streamlining
its business processes, and investigating new markets.

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5) Special Events
 Aitken Spence Hotels & Properties PLC

1)Heritance-Kandalama-Sustainability
Medical Camps:
Ensuring healthy, strong and efficient work force at the workplace, the hotel conducts a
Medical Camp annually for employees and their immediate family members. This is done
in collaboration with Dambulla Hospital. All employees are benefited with a fee medical
check-up.

2)Heritance-Ahungalla-Sustainability
Medical Camps:
Ensuring healthy, strong and efficient work force at the workplace, the hotel conducts a
Medical Camp annually for employees and their immediate family members. This is done
in collaboration with Kalubowila Hospital. All employees are benefited with a fee medical
check-up.
3)Heritance-Ayurveda-Maha-Gedara
Waste Management:
Action plan to reduce waste -
1. Reducing the consumption of paper and other office supplies and encourage
use of electronic media, such as e mail and social media.
2. Prepare meal for available head count (staff & Guest).
3. Purchase bulk and refill the containers such as guest room amenities (shampoo,
shower gel etc.).
4. Purchasing only recycle paper if possible.
5. Implement method of “repair” rather than “replace”.
6. “Smart purchase” Choose less packed and organic product.
7. Print document, when necessary, only and choose double side printing or use
re-use paper.
4)Heritance-Tea-Factory
After 20+ years in the industry and many lessons learned in relation to CSR, Heritance Tea Factory
strives daily to be a committed and responsible hotel with regards to the impact of its activity in
the community and environment. Over the course of this journey, we have adopted a series of
commitments to sustainable development that have become the company’s roadmap for
corporate social responsibility. • Annual donations to the village school, supply of school bags,
sweaters and school shoes to the students from grade 1 to grade 5.

5)Heritance Negombo
Organic Vegetable Garden We are growing and planting vegetables and plants without use of any
chemicals or pesticides. Moreover, it is recycling process of decomposing all dry leaves collecting
from hotel garden and mixing with wet garbage (kitchen waste). All scrap chemical containers
using for planting vegetables (recycled chemical and oil cans used for hotel operation). The harvest
we use for staff cafeteria and specially for Sri Lankan cuisine offers at the main restaurant buffet.

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  CINNAMON RAINFOREST RESTORATION PROJECT

1. Cinnamon Rainforest Restoration Project:

Cinnamon Hotels & Resorts proudly launched its latest sustainability initiative, “Cinnamon
Rainforest Restoration Project” in collaboration with “Ruk Rakaganno” (The Tree Society
of Sri Lanka), Forest Department Sri Lanka and the John Keells Foundation, to restore a
degraded 50-acre plot over a period of three years after which nature will take over the
regeneration process. Natural forest regrowth is increasingly being seen as a viable
climate change solution globally and this project, heralds the dawn of a new era in
enriching Sri Lanka’s biodiversity amid a sense of urgency.
The 50-acre site is situated in the Ratnapura District, at proximity of 3.5 kilometers from
the biodiversity hotspot and UNESCO World Heritage Site, the Sinharaja Forest Reserve,
one of the few virgin forests left in the country. Restoring and reforesting this 50-acre site
will further enrich the ecological significance of the region which also consists of
numerous waterfalls and places of cultural and religious significance. The “Cinnamon
Rainforest Restoration Project” provides a timely role model for corporate institutions
working with government organizations and NGOs to conserve the biodiversity.
2. "Live and Let Live" Project in mitigating the Human-Elephant Conflict:
The ‘Live and Let Live’ a community driven project is a collaborative effort between
Cinnamon Nature Trails, the Centre for Conservation and Research (CCR) and TUI Germany
to develop best practices of meaningful coexistence in mitigating the growing Human-
Elephant Conflict in Sri Lanka. This pilot project aims to save lives on both sides of the
fences (both humans and elephants), minimize the destruction of crop raiding by 50% that
will allow utilization of abandoned farmlands and reduce damage to the property and
resources in the village.
The solar-powered electric fences that have been erected to protect the homes and crops
of the villagers was inaugurated at Badi Wewa village (located in Habarana – North
Western Province of Sri Lanka) on the 28th of October 2022 and handed over to the
villagers by CCR together with TUI Germany and Cinnamon Nature Trails. Badi Wewa is
home to 108 village families and their primary occupation is farming and cultivation. This
project is an extension to the existing Cinnamon Hotels & Resorts ‘Cinnamon Elephant
Project’ which has been running for the past six years in the Minneriya-Kaudulla area.
3. Project Leopard:
An on-going project in its fourth year of operation, Project Leopard in Yala has dual
objectives of supporting the livelihoods of cattle farmers and protects the leopard
population living in and outside the boundary of the parks. We have distributed 50 steel
pens to cattle farmers, enabling them to protect their cattle from leopards in the area, an
effort that won the distinguished Davis Award for Peace last year at the University of Clark
– USA. This project is supervised and deployed by the Cinnamon Nature Trails naturalists
at Cinnamon Wild, Yala.
4. Project Whale:
Cinnamon Nature Trails has been involved in conducting whale watching in the East since
2009. Our teams have been recording unusually high numbers of sperm whales off the
Trincomalee sea each year. This phenomenon has now been identified as the Super Pods
of sperm whales, and the team began collating data to understand the reasons for these
mega congregations in Trinco, also observed in Mirissa and Kalpitiya.

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 6) Changes of Directors
 Aitken Spence Hotels & Properties PLC
Year Chairman Managing Executive Non- Non-Executive Non-Executive
Director Director Executive Director Director ( Non-
Director (Independent) Independent)
2020 Deshamanya Dr. M.P. Ms. D.S.T. Mr. J.M.S. Mr. G.P.J.
/21 D.H.S. Dissanayake Jayawardana Brito Goonewardene
Jayawardana
Mr. C.M.S. Mr. N.J. De Mr.R.N.
Jayawickrama Silva Deva Asirwantham
Aditya
Mr. C.H. Gomez

2021 Deshamanya Dr. M.P. Ms. D.S.T. Mr. J.M.S. Mr. G.P.J.
/22 D.H.S. Dissanayake Jayawardana Brito Goonewardene
Jayawardana
Mr. C.M.S. Mr. N.J. De Mr.R.N.
Jayawickrama Silva Deva Asirwantham
Aditya
Mr. C.H. Gomez

2022 Deshamanya Dr. M.P. Ms. D.S.T. Mr. G.P.J. Mr. J.M.S.
/23 D.H.S. Dissanayake Jayawardana Goonewardene Brito
Jayawardana
Mr. C.M.S. Mr.R.N. Mr. M.A.N.S.
Jayawickrama Asirwantham Perera
Mr. C.H. Gomez
Mr. N.J. De Silva
Deva Aditya

 In 2022/23, We can see there are 3 changes.

1) Mr. N.J. De Silva Deva Aditya changed from being a Non-Executive

Director to a Independent, Non-Executive Director.
2) Mr. J.M.S. Brito changed from being a Non-Executive Director to a Non-
Independent, Non-Executive Director.
3) Mr. M.A.N.S. Perera joined as a Non-Independent, Non-Executive
Directors.

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  Asian Spence Hotel Holdings PLC

Year Chairman Executive Director Non-Executive Directors

(Independent)
2020/21 Mr. K. N. J. Balendra Mr. S. Rajendra Mr. C. J. L. Pinto
Mr. J. G. A. Cooray Mr. J. Durairatnam
Mr. C. L. P. Gunawardane Mr. A. S. De Zoysa
Mr. M. R. Svensson

2021/22 Mr. K. N. J. Balendra Mr. S. Rajendra Ms. A. Nanayakkara

Mr. J. G. A. Cooray Mr. J. Durairatnam
Mr. C. L. P. Gunawardane Mr. A. S. De Zoysa
Mr. M. R. Svensson

2022/23 Mr. K. N. J. Balendra Mr. S. Rajendra Ms. A. Nanayakkara

Mr. J. G. A. Cooray Mr. J. Durairatnam
Mr. C. L. P. Gunawardane Mr. A. S. De Zoysa
Mr. M. R. Svensson

 In 2020/21, We can see Mr. C.J.L. Pinto stepped down as a Non-Executive

Director.
 In 2021/22, We can see Ms. A. Nanayakkara joined as a new Non-Executive
Director

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7) Diversified Investments

Diversified investments are a strategy for distributing investment funds among various
assets, industries, or geographical areas in order to minimize risk and maximize
returns. It entails making investments in a range of assets with various risk and
performance profiles. In order to reduce the risk of loss if a particular investment
performs poorly, diversification aims to prevent overexposure to any one asset class
or investment. By diversifying their holdings, investors hope to make their portfolios
less susceptible to changes in market conditions or the volatility of specific
investments.

 Aitken Spence Hotel Holdings PLC

 Overseas Operations
The diversification of Aitken Spence Hotel Holdings PLC's operations and investments
outside of Sri Lanka is evidenced by these investments. It has subsidiaries and operations
in the Maldives, India, Oman, and the British Virgin Islands, which cover a variety of hotel
and hospitality-related activities, such as resorts, travel services, investment activities,
vacation homes, and hotel management services.

 Hotel Portfolio
Heritance Aarah, the newest jewel in the Group’s portfolio, commences commercial
operations. A portfolio of hotels and resorts in Sri Lanka and abroad was owned and
managed by Aitken Spence Hotel Holdings PLC. Their portfolio contained residences in the
Maldives like Heritance Kandalama, Heritance Ahungalla, Turyaa Kalutara, and Adaaran
Resorts.

 Sustainability and Renewable Energy

Heritance Aarah and Turyaa kalutara obtained 20% of its total energy requirement from
renewable solar power system. ASHH has a strong sustainable tourism value proposition
for guests with unique locations and sustainable practices which will appeal to the
growing numbers of environment conscious guests.

 Ancillary Businesses
In addition to its primary hotel operations, Aitken Spence Hotel Holdings PLC has pursued
diversified investments through the provision of ancillary services and experiences. These
services, which include excursions with immersive community interactions, the creation
of local sweetmeats, hoppers, and entertainment with local dancers, represent a strategic
diversification of the company's service offering. Aitken Spence Hotel Holdings PLC hopes
to differentiate itself from competitors, improve the guest experience, and create new
revenue streams by going beyond standard hotel amenities. These varied services exhibit
the business' dedication to giving visitors distinctive and culturally immersive experiences,
which ultimately aids in its overall expansion and success in the cutthroat hotel business.

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  Asian Hotels and Properties PLC
 Hotel Portfolio
The company's extensive hotel portfolio serves as an example of its varied hotel industry
investments. The portfolio is a reflection of the company's triple bottom line strategy and
unwavering dedication to operational excellence. Cinnamon Bentota Beach, Habarana
Village by Cinnamon, Cinnamon Lodge Habarana, Cinnamon Citadel Kandy, Cinnamon
Wild Yala, Cinnamon Bey Beruwala, Hikka Tranz by Cinnamon, and Trinco Blu by Cinnamon
are just a few of the carefully chosen properties that make up this collection. Each
property offers distinctive experiences catered to the wide range of preferences of
visitors. The business has successfully diversified its investments and attracted a large
customer base across various market segments through strategic acquisitions and
developments. With a focus on sustainable practices and responsible tourism, the
company is better positioned for long-term growth and success in the fiercely competitive
hotel sector.

 Overseas Operations
A hotel chain called Cinnamon Hotels & Resorts has expanded its business by purchasing
several properties in the Maldives. These qualities consist of:
1. Cinnamon's Ellaidhoo Maldives
2. The Maldives' Cinnamon Dhonveli
3. The Maldives' Cinnamon Hakuraa Huraa
4. The Maldives' Cinnamon Velifushi
The overseas operations and growth strategy of Cinnamon Hotels & Resorts are aided by
these resorts in the Maldives. Each property showcases the company's varied approach
to the hospitality sector by providing distinctive experiences and appealing to various
traveler types.

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8) Participation of Members

Name Index Numbers Topics

G.G.C.B.Upalirathna KAHDBM-F231F-014  Share Market Analysis in Both of
Companies.
 Weighted Average Cost of capital in Both of
Companies.
 Diversified Investments in Both of
Companies.
G.G.H.B.Upalirathna KAHDBM-F231F-015  Financial Analysis in Aitken Spence Hotel
Holdings PLC.
 Special Events in Asian Hotels & Properties
PLC.
Y.M.C.A.Y. Bandara KAHDBM-F231F-017  Financial Analysis in Asian Hotels &
Properties PLC.
B.M.R.T. Basnayake KAHDBM-F231F-022  Introduction of Both Companies.
 Directors Changes in Both of Companies.
 Special Events in Aitken Spence Hotel
Holdings PLC.

31