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2017-18 Report Annual | Plc Holdings Softlogic

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SOFTLOGIC HOLDINGS PLC | ANNUAL REPORT 2017-18 EXCELLENCE OF ENTREPRENEURSHIP Annual Report 2017-18 EXCELLENCE OF ENTREPRENEURSHIP The excellence of entrepreneurship pushes the bar towards the skies, a core aspiration for Softlogic. We build people in our endeavours to champion the best consumer-focused conglomerate with solid brand equity. Softlogic’s aspirations are ambitious, aimed at achieving something of great import. Our focus will always be on increasing value in our businesses and our renewed impetus for capital will thereby create superior enterprise value and shareholder wealth. 2 SOFTLOGIC HOLDINGS PLC CONTENTS Pages 03-15 OVERVIEW About this Report ...................3 Financial Highlights ..................4 Pages 42-55 Highlights of the year ................6 OPERATING CONTEXT About Us .........................10 Pages 120-126 Stronger Together ..................12 AND STRATEGY COMMITTEE REPORTS The Restructuring ..................13 Value Creation Model ...............42 Snapshot of our businesses .......... 14 Stakeholder Engagement ............43 Annual Report of The Board Economic and Industry Environment ..45 of Directors on The Affairs of The Company ..................120 Material Matters ...................48 Board Audit Committee Report ......124 Pages 18-41 Risk Management Report ............49 Board Related Party Transactions LEADERSHIP & Review Committee Report ..........125 GOVERNANCE HR & Remuneration Pages 56-119 Committee Report ................126 Chairman’s Message ...............18 Board of Directors. 22 MANAGEMENT DISCUSSION Sector Heads .....................28 AND ANALYSIS Pages 128-243 Functional Heads ..................32 Business Line Reviews Corporate Governance ..............36 FINANCIAL STATEMENTS Retail Sector ......................56 Healthcare Services ................64 Statement of Directors’ Responsibilities ...................128 Information Communications Technology .......................70 Independent Auditors’ Report .......129 Financial Services ..................76 Income Statement ................134 Leisure & Property .................82 Statement of Comprehensive Income 135 Automobile .......................88 Statement of Financial Position ......136 Statement of Changes in Equity .....138 Capital Management Reports Cash Flow Statement .............140 Financial Capital ...................92 Notes to The Financial Statements ...142 Manufactured Capital ...............97 Human Capital ...................100 Social and Relationship Capital ...... 107 Pages 244-252 Intellectual Capital ................ 114 SUPPLEMENTARY Natural Capital ................... 116 INFORMATION Investor Information ...............244 Corporate Directory ...............246 Corporate Information .............247 Notice of Meeting .................250 Form of Proxy ....................251 OVERVIEW ANNUAL REPORT 2017-18 3 ABOUT THIS REPORT Softlogic Group’s Annual Report for the financial year end 31 March 2018, presents a balanced and comprehensive overview of factors which shaped the Group’s financial, social and environmental performance during the year. This report covers the operations of Financial Capital Softlogic Holdings PLC and its 53 subsidiaries. The content included in Pages 92 - 96 this Report has been determined based on a materiality analysis which identified the most significant matters for stakeholders (vide page 48). Financial statements included here have been prepared in accordance with Sri Lanka Accounting Standards issued by CA Sri Lanka and independently audited by Messrs. Ernst & Young. The Report meets the requirements of the Companies Act No.7 of 2007 and the listing requirements of the Colombo Stock Exchange and takes note of the Manufactured Capital Code of Best Practice on Corporate Governance jointly issued by the Pages 97 - 99 Securities and Exchange Commission of Sri Lanka (SEC) and CA Sri Lanka. Reporting improvements Every year we give attention to improving the readability and meaningfulness of the Report and this year we have focused on the following aspects: Human Capital » A gradual transition towards an Integrated Annual Report. Thus, the Pages 100 - 106 narrative is based on the six capital inputs defined by the Integrated Reporting Framework. » Increased connectivity between information through use of navigation icons and signposting. » Improved disclosure of non-financial information. Social and Relationship Capital Pages 107 - 113 Visit Us Online Intellectual Capital Pages 114 - 115 www.softlogic.lk Scan the QR Code with your smart Scan the QR Codes to connect device to view this report online. with us on social media. Natural Capital Pages 116 - 119 4 SOFTLOGIC HOLDINGS PLC FINANCIAL HIGHLIGHTS For the year ended 31 March 2018 2017 2016 2015 2014 2013 2012 Restated Restated Earnings Highlights Group Revenue Rs.Mn 66,019 58,882 54,600 39,564 29,246 25,351 21,819 Gross Profit Rs.Mn 23,673 19,579 18,559 14,117 11,012 8,983 7,330 Earnings Before Interest, Tax, Depreciation & Amortisation Rs.Mn 11,695 8,451 7,897 6,398 5,025 4,227 4,486 Group Earnings Before Interest & Taxation Rs.Mn 9,052 6,391 6,082 4,959 3,918 3,208 3,608 Group Earnings Before Taxation Rs.Mn 3,092 1,581 2,836 2,266 1,258 453 1,601 Group Earnings After Taxation Rs.Mn 2,278 920 1,870 1,819 1,009 153 1,016 Total Comprehensive Income Net of Taxation Rs.Mn 2,827 1,793 2,859 2,160 1,237 2,077 856 Group Earnings Attributable to Equity Holders Rs.Mn 204 120 565 556 156 (371) 448 Group Comprehensive Income Attributable to Equity Holders Rs.Mn 450 783 1,829 761 220 557 340 Gross Profit Margin % 36 33 34 36.0 38.0 35.0 34.0 Net Profit Margin % 3.45 1.56 3.43 5.0 3.0 1.0 5.0 Earnings Per Share Rs. 0.26 0.15 0.73 0.72 0.20 (0.44) 0.60 Dividends Rs.Mn 503 387 194 - 120 234 101 Return on Capital Employed * % 11.02 9.42 9.81 8.37 8.73 8.76 10.58 Balance Sheet Highlights Total Assets Rs.Mn 118,823 100,915 93,152 87,324 65,863 53,836 44,688 Current Ratio No. of times 0.93 0.94 0.84 1.04 0.90 0.80 0.70 Asset Turnover No. of times 0.60 0.61 0.61 0.45 0.40 0.50 0.50 Total Interest Bearing Borrowings Rs.Mn 61,227 52,255 46,480 43,906 31,518 23,037 22,782 Shareholders' Funds Rs.Mn 11,591 8,547 8,159 7,336 6,802 7,288 7,202 Net Asset Value Per Share ** Rs. 14.91 11.04 10.54 9.47 8.7 9.4 9.2 Total Equity Rs.Mn 20,917 15,623 15,531 15,356 13,351 13,568 11,312 Debt : Equity *** No. of times 2.93 3.34 2.99 2.86 2.40 1.70 2.00 Debt : Total Assets No. of times 0.52 0.52 0.50 0.50 0.50 0.40 0.50 Operating Cashflow Rs.Mn -216 2,331 3,432 426 1,775 1,777 157 Capital Expenditure Rs.Mn 4,524 6,311 5,252 4,438 3,604 2,271 1,138 Cash Earnings Per Share Rs. (0.28) 3.01 4.43 0.50 2.30 2.30 0.20 Investor Information Market Price as at 31 March Rs. 24.6 11.9 13.3 13.2 10.6 10.4 11.2 Shares in Issue Mn 962 779 779 779 779 779 779 Market Capitalisation as at 31 March Rs.Mn 23,659 9,270 10,205 10,283 8,257 8,102 8,725 52-Week Market Share Price High Rs. 26.20 15.50 18.0 20.4 8.1 13.3 28.0 52-Week Market Share Price Low Rs. 11.70 11.70 12.30 10.3 12.5 9.4 11.10 Price to Book Value No. of times 1.65 1.01 1.10 1.40 1.50 1.40 1.40 Enterprise Value Rs.Mn 78,733 58,730 53,677 52,263 38,014 29,816 30,593 Enterprise Value : EBITDA No. of times 6.73 7.19 6.60 8.20 7.60 7.10 6.80 Dividend Per Share Rs. 0.65 0.50 0.25 - 0.16 0.30 0.13 * Return on Capital Employed calculated as a percentage of EBIT to Total Capital Employed (Equity plus Interest Bearing Borrowings) ** Net Asset Value Per Share calculated based on weighted number of shares as at 31.03.2018 *** Debt to Equity calculated based on Total Equity Capital OVERVIEW ANNUAL REPORT 2017-18 5 Equity infusion to enhance business value and growth Rs.Mn Rs.Mn Rs.Mn 70,000 9,000 120,000 8,000 60,000 100,000 7,000 50,000 6,000 80,000 40,000 5,000 60,000 30,000 4,000 3,000 40,000 20,000 2,000 10,000 20,000 1,000 0 0 0 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 REVENUE OPERATING PROFIT TOTAL ASSETS 66.0 8.3 118.8 Rs. Bn Rs. Bn Rs. Bn More than Close to More than 50 10,000 100 Operating companies Employees across International in Sri Lanka our six diverse sectors brands and Australia 6 SOFTLOGIC HOLDINGS PLC HIGHLIGHTS OF THE YEAR 2017 – Galleria, an International Watch & Sunglass store and an International JULY APRIL Luggage store. This helps us further tap into the tourist market. Softlogic Restaurants acquired the franchise for Baskin-Robbins, the world’s largest chain of ice cream specialty outlets. Softlogic Retail acquired Suzuki Motors Softlogic Life Insurance launched a Lanka Limited, the exclusive distributor flood relief campaign through a mobile of Suzuki motorcycles, spare parts & network and this was recognised as accessories under a distributorship the most innovative global mobile arrangement with the Suzuki Motor Mövenpick Hotel Colombo attained messaging campaign in the world. Corporation, Japan. numerous awards and recognitions during its first year in operation, JUNE Softlogic Life Insurance won the ‘Best including the Brand Leadership and Agency Distribution’ and ‘Excellence Best Employer Award at the Golden in Claims’ awards at the National Globe Tigers Awards 2017. The hotel Insurance Awards by Fintelekt. was also adjudged Sri Lanka’s Leading Hotel in 2017 and the Country’s Mövenpick Hotel Colombo was Leading Hotel Suite for the year by crowned as Sri Lanka’s Leading World Travel Awards.
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