Marawila Resorts PLC had succeeded in reducing losses during the year ended March 31, 2002 to Rs.10.9 million from Rs.51.9 million the previous year on account of savings on interest payments and effective cost controls but carries

Rs.784.3 million accumulated losses in its books, the just released annual report reveals.

Its auditors, KPMG Ford, Rhodes, Thornton & Company, has issued a qualified opinion stating that the company’s current liabilities exceeds its current assets by Rs.190.4 million and says that there are "substantial doubts as to the company’s ability to continue as a going concern."

The auditors have said that the company may be unable to realize its assets and discharge its liabilities in the normal course of business and added that the financial statements do not disclose this fact.

They have also pointed out that Marawila had not settled statutory payments and the penalties that have arisen including GST, VAT, Payee Tax and EPF and ETF liabilities. These add up to over Rs.87.7 million.

The company’s Chairman, Mr. A. Rajaratnam, said that the escalating violence and security situation in the country had led to adverse travel advisories from traditional tourist generating countries. This had sharply pushed down tourist arrivals during the year under review.

"The average occupancy recorded was 57%. The company had to offer steep discounts in rates in order to attract clients both foreign and local," he said.

Rajaratnam warned that the ever increasing cost of fuel, high interest rates and unprecedented electricity rates will drive up overheads and negatively impact on the profitability of the company.

"It is crucial that policy makers rein-in the rate of inflation in order that the hotel sector is able to carry on operations without the rampant increase in costs," he said.

Marawila has a stated capital of Rs.616 million and a revaluation reserve of Rs.428.6 million.

It carries interest bearing loans and borrowings of Rs.334.2 million in its books as a non-current liability and a current liability of Rs.98.8 million on account of interest bearing loans and borrowings.

The accounts revealed that the net finance cost was down to Rs.7.1 million during the year from Rs.47.8 million a year earlier while income tax expenses were down to Rs.11 million from the previous year’s Rs.51.9 million.

Net assets per share were down to Rs.3.72 from Rs.3.84 and the company’s share traded at a high of Rs.7 and a low of Rs.4.20 during the year under review. This compared to a trading range of Rs.9 to Rs.5.50 the previous year.

Lankem Ceylon PLC with 23.79%, Colombo Fort Hotels Ltd. with 20.63% and Mr. T. Al-Nakib with 7.7% are the major shareholders of the company which is controlled by the Colombo Fort Land and Buildings group.

The directors of the company are: Messrs. A. Rajaratnam (Chairman – alternate Anushman Rajaratnam w.e.f. 01.08.2007), R. Senathi Rajah, S.D.R. Arudpragasam, T. Theyagamurti, G.R. Jayatilaka, A.R. Peiris and J. Hewage.