#surpriseparty #familytime #healthyliving #philipsairfryer #stohomeimprovement Airfryer Rapid air technology enables you to fry, bake, roast & grill the tastiest meals with less fat than using little or no oil! Attention This report comprises the annual report of state trading organization plc prepared in accordance with the companies act of the republic of maldives (10/96), listing rules of maldives stock exchange, the securities act of the republic of maldives (2/2006), securities continuing disclosure obligations of issuers regulation 2010 of capital market development authority and corporate governance code of capital market development authority requirements. Unless otherwise stated in this annual report, the terms ‘STO’, the ‘group’, ‘we’, ‘us’ and ‘our’ refer to state trading organization plc and its subsidiaries, associates and joint ventures collectively. The term ‘company’ refers to STO and/or its subsidiaries. STO prepares its financial statements in accordance with international financial reporting standards (IFRS). References to a year in this report are, unless otherwise indicated, references to the Company’s financial year ending 31st december 2016. In this report, financial and statistical information is, unless otherwise indicated, stated on the basis of the Company’s financial year. Information has been updated to the most practical date. This annual report contains forward looking statements that are based on current expectations or beliefs, as well as assumptions about future events. These forward looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward looking statements often use words such as ‘anticipate’, ‘target’, ‘expect’, ‘estimate’, ‘intend’, ‘plan’, ‘goal’, ‘believe’, ‘will’, ‘may’, ‘should’, ‘would’, ‘could’ or other words of similar meaning. Undue reliance should not be placed on any such statements because, by their very nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and STO plans and objectives, to differ materially from those expressed or implied in the forward looking statements. There are several factors which could cause actual results to differ materially from those expressed or implied in forward looking statements. Among the factors are changes in the global, political, economic, business, competitive, market and regulatory forces, future exchange and interest rates, changes in tax rates and future business combinations or dispositions. STO cannot guarantee future results, levels of activity, performance or achievements. CONTENTS ENRICHING CUSTOMER CORPORATE GOVERNANCE & EXPERIENCE 6 63 COMPLIANCE REPORT STO GROUP IN 2016 NOMINATION & REMUNERATION 7 65 COMMITTEE REPORT CHAIRMAN’S MESSAGE REMUNERATION 8 68 REPORT MANAGING DIRECTOR’S AUDIT COMMITTEE MESSAGE 10 74 BUSINESS ENVIRONMENT 14 76 RISK COMMITTEE FINANCIAL REVIEW 36 77 RISK REPORT STO FAMILY 40 80 SUSTAINABILITY BOARD OF DIRECTORS 43 87 GENERAL INFORMATION EXECUTIVE MANAGEMENT 47 92 STO DIRECTORY CORPORATE INDEPENDENT AUDITOR’S REPORT GOVERNANCE REPORT 51 95 & FINANCIAL STATEMENTS VISION Enriching lives through expansion and accessibility VALUES CARING ACCESSIBLE RESPECTFUL INNOVATIVE PROGRESSIVE MISSION Lead through expansion of existing businesses, diversification, exploring new possibilities and entering into new ventures. Explore beyond our borders, expand our markets and establish ourselves as an international player, respected by the international business community. Ensure accessibility with our presence nationwide; offer peace of mind and assurance to the public of uninterrupted provision and affordability of essential goods and services and those that contribute to a fulfilling modern lifestyle. Build a skilled workforce by investing in human development; build our competencies, to achieve sustainable and unhindered growth and fulfill our vision. ENRICHING CUSTOMER EXPERIENCE The STO Group operates nationwide with the long-term against manmade and natural disasters for the public by commitment to contributing the country’s community the Allied Insurance Company. Overall, more than 15 new by creating value and enriching the society’s livelihood brands and products were introduced within the year under through the distribution of quality products and services. the trading segment. The company has its presence at all inhabited islands of the country and possesses the capability of reaching With its comprehensive customers and consumer insight, out every citizen through its 54 distribution centers. The the Group aims not only to meet customers needs but to close relationship developed by the frequent interaction go beyond and exceed their expectations. The customer between the company and the customer provides valuable portfolio of the company is diverse, and it ranges from information for the company to use as a foundation for the governmental departments, corporate organizations, expansion and improvement of its product mix and offer resorts to wholesaling for sole proprietors. For instance, new and innovative solutions. within the medical services segment, the company came to an agreement with HEMAS Pharmaceuticals to acquire One of the main reasons behind the effectiveness of quality products at a lower cost. The execution of this the company’s sales and services strategies is the agreement will subsequently enhance the relationship understanding of the customer’s needs, wants and developed between the company and pharmacies and behaviors throughout all the segments. The company hospitals, leading to the public being able to acquire conducted a number of customer on the products essential drugs at affordable rates. and services supplied to customers. The results of this survey provided the company with important data that The Group always gives priority in supplying sustainable enabled the better understanding of customer needs, the products and services that promote prosperity to the performance areas they value and where improvement is customer and their surrounding environments. Eco-friendly required in the company’s services. air conditioners, refrigerators and other home appliances are available at the company’s home improvement To increase customer value and create demand, the outlets, educating customers to become more energy- company focuses on delivering new and attractive efficient. Also, two major continuous medical programs products and services. For example, elements from two were administered by the company towards healthcare different trading segments, construction materials, and professionals by bringing in experts from the medical home improvements combine to provide a much-required field from abroad. The incorporation of MIFCO appended solution to the construction industry by the supply of sustainability targets of the STO Group, as the MSC certified Kone elevators and the delivery of ready-mixed concrete frozen and canned tuna are high-quality sustainable solution directly to the construction site. Additionally, the products produced from traditional pole and line fishing identification of market pitfalls lead to the creation of tailor- methods that meet both local and international consumer made insurance packages such as the specialized scheme needs and expectations. for guesthouses was introduced which offered protection Presence in +250,000 19 Customers Atolls 7 STO GROUP IN 2016 Revenue Earnings Per Share Operating Profit 6,939 378 580 (in millions) MVR MVR (in millions) MVR Operating Cash Flow Profit for the Year Dividend Proposed 619 431 51 (in millions) MVR (in millions) MVR (per share) MVR SHARE OF REVENUE BY SEGMENTS Fuel and Lubricants 2016 56.5% Trading 2016 33.8% Gas 2016 2.5% Insurance 2016 3.3% Fisheries 2016 3.8 % Other services 0.1% CHAIRMAN’S MESSAGE On behalf of the board of directors, it is my pleasure to present STO Group’s annual report for the financial year ended 31st December 2016. I feel our report will provide you a comprehensive understanding of our business, financial results, current and future developments. Towards our continuous focus in achieving better results, I can proudly say that the management and the employees of STO together have built an exceptional organization, which has gained immense respect and trust of the community. I can also assure you that our board has the skills, experience, knowledge and the diversity to discharge the company’s operations and responsibilities successfully, and take the company to new heights. Performance and Shareholder return The Company generated a healthy result for 2016 in a volatile market environment. We continued to advance on our goals for a sustainable and profitable development; which include stabilizing essential commodity prices, offering new products, and providing excellent services to our customers. The Group has created numerous job opportunities in the field of medical sector. Simultaneously, with the introduction of power-mix concrete, STO has made a significant mark in the construction industry. The Group’s consistent performance, despite the challenges in major markets, demonstrates the resilience of our strategy. As we execute our long-term sustainable business model, we are confident that we will continue to meet the expectations of our stakeholders. Our strategic actions during the year have significantly enhanced our balance sheet, and efforts to decrease tied- up capital in the working capital have contributed strong net operating cash flow in 2016.