Annual Report 2013-2014 Aitken Spence PLC | Annual Report 2013 - 2014 FACE TO FACE As one of the nation’s biggest diversifi ed conglomerates,Aitken Spence holds itself accountable to thousands of stakeholders; from customers and business partners to investors, employees and the communities we work with. In this report we take a long hard look at how we have delivered on our responsibilities to each of them, bringing the reader face to face with our long-term strategies and internal operations as we analyse Group and sector performances in the context of our broader vision for the success of the Company. This year as always, we present to our shareholders a solid balance sheet achieved in a challenging environment; proof of the hard work and commitment of every member of our team. The report also deconstructs in detail the prudent policies and far-sighted decisions that have made such results possible. Aitken Spence Talking to our stakeholders Face to face. CONTENTS GROUP OVERVIEW FINANCIAL STATEMENTS Group Highlights 4 Independent Auditors’ Report 124 Aitken Spence at a Glance 8 Financial Statements 125 Consolidated Financial Statements in USD 190 LEADERSHIP REVIEW Chairman’s Message 12 INVESTOR INFORMATION Managing Director’s Review 15 Investor Information 192 Ten Year Summary 197 MANAGEMENT DISCUSSION AND ANALYSIS About Aitken Spence and the Operating Environment 21 SUPPLEMENTARY INFORMATION Engagement with Stakeholders 26 UN Global Compact 198 Our Strategy 29 GRI Index 202 Risk Management 34 Awards and Recognition 2013 - 2014 210 Our People 40 Group Companies and Directorate 211 Who Leads Us 44 Glossary of Terms 220 Group Performance 59 Notice of Meeting 224 Business Sectors Form of Proxy Tourism 66 Shareholder Feedback Form Maritime Cargo Logistics 74 IBC Corporate Information Strategic Investments 82 Services 92 GOVERNANCE REVIEW Corporate Governance Report 100 Nomination Committee Report 106 Remuneration Committee Report 107 Audit Committee Report 108 Statement of Directors’ Responsibilities 117 Annual Report of Directors 118 chairman's message page 12 group performance review pages 59 - 65 2 Aitken Spence PLC AN INTRODUCTION TO THE CONTENTS OF THIS REPORT We are pleased to present to stakeholders our integrated annual report for the year ended Chairman’s Message Page 12 31st March 2014. Managing Director’s Review Page 15 The report covers the integrated economic, Management Discussion and Analysis Page 19 social and environmental performance of the Financial Statements Page 123 companies in which Aitken Spence PLC.,has signifi cant operational and management control, including activities in Asia, Africa and South Pacifi c. The report provides information on our subsidiaries, joint ventures and equity accounted investees. The names and details The report covers the integrated economic, of the companies are set out on pages 211 to 219. social and environmental performance of This year, we have reported our performance the companies in which Aitken Spence PLC.,has “in accordance” - Core with the Global significant operational and management Reporting Initiative’s G4 Reporting Framework for disclosure on sustainability performance control, including activities in Asia, Africa which was launched in May 2013. With the launch of the G4 reporting framework, the and south pacific. process of identifying material aspects was revised and improved to look at the nature Standards (SLFRSs and LKASs) in alignment the disclosures inclusive of all operational of individual operations for different aspects. with the International Financial Reporting activities, material and relevant to the impacts Selection of sustainability priorities and the Standards (IFRS) the Companies Act No.07 and risks within our systems and is focused assessment of materiality are detailed on of 2007, the Listing Rules of the Colombo on educating the stakeholders about the pages 21 to 33. This study is still, mostly an Stock Exchange, as well as the Code of Best operations of Aitken Spence. A comprehensive internally conducted scientifi c study, guided Practices on Corporate Governance Principles shareholder feedback form is available at by the historical data of the organisation, 2013 and other related guidance. the end of the report so that the disclosures feedback from specifi c key stakeholders in future reports can be improved to suit that the organisation has engaged with A limitation in this report is that the the reader’s needs better. Further our social through the years, feedback from the sustainability performance is monitored for media could also be used to get in touch with Group’s sustainability team members and our operations only in Sri Lanka and the us for feedback and comments. guidance from senior management. The Maldives. Also, where sustainability systems methods used,assumptions made and are still in the implementation process, exclusions are explained in detail in the comprehensive data is not yet available. Our Group Performance Review. We have provided reporting process is driven and supervised material disclosures on governance, ethics, entirely by the internal expertise of the Group strategy, risk, opportunity and remuneration and our short to medium term goal is to make in relation to our fi nancial, economic, ethical, social and environmental performance and REPORT NAVIGATION AID prospects, at both Group and operating level at the respective sectors. It is our hope that Web link provides reference Further reading the annual integrated report will set the to online disclosures. basis for meaningful engagement with our within this report. stakeholders in the year ahead. Performance data relevant to the Performance data relevant to the The fi nancial statements are prepared in Women’s Empowerment Principles UNGC Communication on Progress accordance with the Sri Lanka Accounting Annual Report 2013 - 2014 3 GROUP HIGHLIGHTS RS. 39.7 Bn RS.36.6 Bn MARKET TOTAL CAPITALISATION 1.6% OF CSE TOTAL MARKET CAPITALISATION REVENUE BUSINESS GEOGRAPHIES ASIA Bangladesh Pakistan India Dhaka Oman Chittagong Chennai Puducherry Fiji Coimbatore Islands Trivandrum Sri Lanka AFRICA Maldives Mozambique South Africa TOURISM STRATEGIC INVESTMENT MARITIME CARGO LOGISTICS SERVICES 4 Aitken Spence PLC 3,672 2014 3,288 LEGACY OF OVER 2013 3,488 2012 150 YEARS Net Profit Attributable to Equity HolDers RS. 3,672 Mn for the year ended 31st March IN BUSINESS TOTAL ASSETS Jaffna RS. 61.1 Bn FOR THE 8TH Vavuniya CONSECUTIVE YEAR Trincomalee RANKED AMONG THE TEN BEST CORPORATE CITIZENS OF SRI LANKA Mihintale Dambulla Workforce Matale Kurunegala Kandy Negombo 6000+ Katunayake Welisara Pudaluoya Mabole Biyagama Pussellawa Colombo Malabe Nuwara Eliya Ratmalana ENVIRONMENTAL Ambewela Bandarawela Kalutara Matugama MANAGEMENT Beruwala Hambantota Talgaswela Embilipitiya SYSTEMS Ahungalla Elpitiya Wanduraba Galle Matara 43 12 are ISO 14001 CERTIFIED Koggala Annual Report 2013 - 2014 5 performance HIGHLIGHTS 2013-2014 Financial 2013/2014 2012/2013 Change % Rs. Mn Rs. Mn Results for the year Group revenue with equity-accounted investees 37,673 38,252 (1.5) Group revenue 36,598 37,140 (1.5) Profi t from operations 5,703 5,531 3.1 Profi t before tax 5,409 5,025 7.6 Profi t attributable to equity holders of the Company 3,672 3,288 11.7 As at 31st March Total assets 61,145 56,151 8.9 Total liabilities 22,367 22,648 (1.2) Current ratio (times) 1.86 1.44 29.2 Debt to equity (times) 0.19 0.19 – Return on equity (%) 12.2 12.4 (1.5) Per Share (Rs.) Earnings per share 9.04 8.10 11.7 Dividends per share 2.00 1.50 33.3 Net asset value per share as at 31st March 79.46 69.10 15.0 Market price per share as at 31st March 97.90 119.60 (18.1) Our Performance will drive the creation of real and long-term beneficial relationships with social and business RS.9.04 partners within the company and the communities in which we operate. Earnings 12.2% Per Share Return on equity Growth in net profit to RS.7.2 Bn 11.7% Equity holders EBITDA 19.7% EBITDA RS.32.3 BN MARGIN Shareholders’ funds 6 Aitken Spence PLC Social Pg 19 15% to 97 24 hrs of employees have been in of training per employee service for over 10 years RS. 38.9 Mn Total funds channelled for 62% 20% community development of TOTAL EMPLOYEES of total are below 35 years managers are young managers Environment 273,252 m3 RS. 109.4 Mn Volume of water recycled and / or reused Total investment in environmental protection which is 31.8% of total water withdrawn 1,457 TonNEs 55,341 GJ Total paper recycled and / or sold for reuse Energy produced from renewable sources which is We remain committed to 4,780 tonnes champion sustainability within of GHG emissions 3% our businesses and the wider reduced and / of total energy private sector. or offset produced Annual Report 2013 - 2014 7 aitken spence at a glance TOURISM MARITIME CARGO Hotels Inbound & Outbound Travels LOGISTICS Airline GSA Maritime Services Sectors Integrated Logistics Freight Forwarding Courier Services Aitken Spence is an illustrious name in Sri Lanka’s tourism Aitken Spence has emerged from humble beginnings to become sector with a presence spanning over four decades. The Group’s a leader in the Sri Lankan maritime and cargo logistics sector. Key interests operations vary from owning and managing star class hotels, to Through a progressive journey the company has integrated its providing both inbound and outbound travel solutions covering operations in air-sea freight forwarding, warehousing, distriparks the entire spectrum of requirements of the modern day traveller. and related services, courier and transport to provide a total, The Group’s strength in the hospitality industry is showcased by seamless solution to the importer and exporter alike. We were its expansion in to global tourism hot spots with luxury resorts in the fi rst Company in Sri Lanka to extend port management the Maldives, India and Oman.