John K Eells Holdings PLC L Annual R Eport 2015/16

John Keells Holdings PLC l Annual Report 2015/16 CONNECTED The John Keells story has been telling itself for over 145 years; a complex narrative of partnership, innovation, enterprise and endurance. A balance between corporate prudence, entrepreneurship and the satisfaction of societal needs has underlined, and is reflected in, our business model, resulting in our present dominance in several of the nation’s valuable industry sectors. Today we are benchmarked by many, as one of Sri Lanka’s most respected diversified companies with interests in shipping and logistics, consumer foods, hospitality, property development, retail, financial services, information technology and the manufacture and brokering of tea. We have a pool of exceptionally talented employees who bring a variety of skills, experience and innovative ideas to the work we do each day. The John Keells team includes over twelve thousand people, from diverse backgrounds. Recent investments, by our Group, in long-term projects are expected to significantly multiply the direct and indirect employment generated. Yet through all of this runs the single thread of John Keells’ intent; to create and share value by building sustainable businesses of excellence, integrity and worth. Diverse networks and synergies have evolved between John Keells and its many local and global partners, linking businesses, consumers, individuals, families and communities and the thousands of people whose lives we touch every day. We believe that their success is ours. Our society centric projects and initiatives have empowered, and enriched, the lives of individuals and communities in villages and cities across the island. Ours is an open-systems organisation constantly aligning itself to the environment we operate in and striving to satisfy our aspiration “To empower the nation for tomorrow”. Simply stated, it is a continuous effort to investing in self- sufficiency and prosperity in every transaction, across our entire chain of value. Our consistent financial performance and manifest ability to generate sustainable long-term value facilitate the endurance of these relationships, bringing together the John Keells Group and the many stakeholders we serve; all seamlessly CONNECTED to drive the engine of value that is your Company today. John Keells Holdings PLC Contents 106 Group Highlights 4 Introduction to the Report TRANSPORTATION 6 Our Business Model 8 Organisational Structure 9 Year at a Glance 10 Performance Highlights 12 Chairman’s Message 114 Governance LEISURE 18 Board of Directors 20 Group Executive Committee 21 Group Operating Committee 23 Corporate Governance Commentary 126 Management Discussion and Analysis PROPERTY Group Consolidated Review 51 The Economy 54 Capital Management Review Financial and Manufactured Capital Natural Capital Human Capital 134 Social and Relationship Capital CONSUMER FOODS Intellectual Capital AND RETAIL 73 Outlook 75 Strategy, Resource Allocation and Portfolio Management 81 Materiality and Stakeholder Relationships 90 Risks, Opportunities and Internal Controls 144 95 Share and Warrant Information Industry Group Review FINANCIAL SERVICES 106 Transportation 114 Leisure 126 Property 134 Consumer Foods and Retail 144 Financial Services 150 Information Technology 150 156 Other including Plantation Services INFORMATION TECHNOLOGY 156 OTHER INCLUDING PLANTATION SERVICES 2 Group Highlights l Governance l Management Discussion and Analysis l Financial Statements l Supplementary Information Financial Statements 165 Annual Report of the Board of Directors About Us 170 The Statement of Directors’ Responsibility 171 Independent Auditors’ Report John Keells Holdings PLC (JKH) is one 172 Income Statement of the largest listed companies on the 173 Statement of Comprehensive Income Colombo Stock Exchange, with business 174 Statement of Financial Position interests primarily in Transportation, 175 Statement of Cash Flows Leisure, Property, Consumer Foods and 176 Statement of Changes in Equity Retail and Financial Services among 181 Notes to the Financial Statements others. Started in the early 1870s as a produce and exchange broking business by Supplementary Information two Englishmen, Edwin and George John, the Group has been known to constantly 260 Economic Value Statement re-align, re-position and re-invent itself in 262 History of the John Keells Group pursuing growth sectors of the time. 264 Decade at a Glance 266 Indicative US Dollar Financial Statements JKH was incorporated as a public limited 268 Sri Lankan Economy liability company in 1979 and obtained a 270 Group Real Estate Portfolio listing on the Colombo Stock Exchange 272 Memberships Maintained by the Industry Groups in 1986. Having issued Global Depository 275 Independent Assurance Statement on Non-Financial Reporting Receipts (GDRs) which were listed on the 278 Group Directory Luxembourg Stock Exchange, JKH became 285 GRI G4 Content Index the first Sri Lankan company to be listed 291 Corporate Social Responsibility overseas. 294 Glossary of Financial Terms 295 Notice of Meeting The Group’s investment philosophy is 296 Corporate Information based on a positive outlook, bold approach, 297 Proxy Form commitment to delivery and flexibility to change. JKH is also committed to maintaining integrity, ethical dealings, sustainable development and greater social responsibility in a multi-stakeholder context. JKH is a full member of the World Chairman’s Message Economic Forum and a member of the UN 12 Global Compact. The Holding Company of the Group - John Capital Management Review Keells Holdings PLC is based at 117, 54 Sir Chittampalam A. Gardiner Mawatha, Colombo 2 and has offices and businesses located across Sri Lanka, India and the Strategy, Resource Allocation and Maldives. 75 Portfolio Management Risks, Opportunities and Internal 90 Controls 95 Share and Warrant Information 295 Notice of Meeting www.keells.com 3 G4-17, G4-23 John Keells Holdings PLC Annual Report 2015/16 Introduction to the Report We are pleased to present our first Integrated Report in accordance with the Integrated STANDARDS AND PRINCIPLES Reporting Framework of the International Reporting Integrated Reporting Council (IIRC). š ,QWHJUDWHG 5HSRUWLQJ )UDPHZRUN RI WKH ,QWHUQDWLRQDO ,QWHJUDWHG 5HSRUWLQJ &RXQFLO (IIRC) This Report reflects on: Governance, Risk Management and Operations š 7KH YDOXH FUHDWLRQ PRGHO RI WKH *URXS š /DZVDQGUHJXODWLRQVRIWKH&RPSDQLHV$FW1RRI combining the different forms of Capital š /LVWLQJ5XOHVRIWKH&RORPER6WRFN([FKDQJH &6( DQGVXEVHTXHQWUHYLVLRQVWRGDWH in the short, medium and long term š &RGHRI%HVW3UDFWLFHVRQ&RUSRUDWH*RYHUQDQFHMRLQWO\DGYRFDWHGE\WKH6HFXULWLHVDQG š *RYHUQDQFH ULVN PDQDJHPHQW DQG Exchange Commission of Sri Lanka (SEC) and the Institute of Chartered Accountants of sustainability frameworks entrenched Sri Lanka (CA Sri Lanka) within the John Keells Group š 8.&RUSRUDWH*RYHUQDQFH&RGH IRUPHUO\NQRZQDVWKH&RPELQHG&RGHRI š )LQDQFLDO RSHUDWLRQDO HQYLURQPHQWDO and social review and results of the Financial Reporting Group š 6UL/DQND$FFRXQWLQJ6WDQGDUGV 6/)56/.$6 LVVXHGE\WKH,QVWLWXWHRI&KDUWHUHG Accountants of Sri Lanka (CA Sri Lanka) In keeping this Report concise and pertinent to the year under review, whilst being Sustainability and Corporate Social Responsibility Reporting comprehensive and detailed, we have ensured š ŗ,QDFFRUGDQFH&RUHRI*OREDO5HSRUWLQJ,QLWLDWLYH *5, *5,6XVWDLQDELOLW\5HSRUWLQJ that the commentaries in certain sections are Guidelines limited to a helicopter view of the events and š ,)&6XVWDLQDELOLW\)UDPHZRUN3HUIRUPDQFH6WDQGDUG progress within the year, whilst the Group’s š 8QLWHG1DWLRQV6XVWDLQDEOH'HYHORSPHQW*RDOV standard policies, operating guidelines and š 8QLWHG1DWLRQV*OREDO&RPSDFW$GYDQFHG3ULQFLSOHV management approaches are available on the corporate website. SCOPE AND BOUNDARY The John Keells Annual Report 2015/16 is a in the Group Directory 2015/16. In expanding reflection of the Group’s integrated approach its sustainability scope, going forward, the of management (during the period from 1 Group will also seek to report on companies The seven guiding April 2015 to 31 March 2016) and strives to over which it does not exercise significant principles“ in integrated deliver a balanced and relevant report that management control, where relevant. will bring clarity and detail to the complex reporting; strategic focus task of reporting a year of diverse business ADOPTION OF THE INTEGRATED and future orientation, operations across multiple sectors. Material REPORTING GUIDELINES events post this reporting period, up to the connectivity of information, sign off date by the Board of Directors on 25 Towards our continuous stride in achieving stakeholder relationships, May 2016, have been included in this Report, a more cohesive and efficient approach to ensuring a more relevant and up to date corporate reporting, the Group voluntarily materiality, conciseness, Report. adopted the Integrated Reporting Framework reliability and completeness, of the IIRC. Given the complex task of reporting All Group subsidiary and associate companies an year of operations of a conglomerate, the consistency and were considered in capturing its financial Group has strived to deliver a comprehensive, comparability; have been performance. For the purpose of reporting balanced and relevant report, while adhering given due consideration its sustainability performance, the Group to the recommendations of the IIRC. has considered the companies in its sphere when preparing and of influence which are the legal entities for The seven guiding

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