Beyond Ambition AMBEON HOLDINGS PLC | Annual Report 2017/18 Contents 07 14 18 Financial Chairman’s Group Managing Director/ Chief Highlights Review Executive Officer’s Review 26 49 72 Board of Capital Management Sectoral Directors Review Performance Review Group Overview Financial Statements Introduction to the Report 2 Independent Auditors’ Report 109 Organisation Structure 6 Statement of Profit or Loss 112 Financial Highlights 7 Statement of Comprehensive Income 113 Materiality Mapping 8 Statement of Financial Position 114 Stakeholder Engagement 10 Statement of Changes in Equity 116 Chairman’s Review 14 Statement of Cash Flows 117 Group Managing Director/ Notes to the Financial Statements 119 Chief Executive Officer’s Review 18 Supplementary Information Governance Shareholder Information 190 Board of Directors 26 Decade at a Glance 193 Heads of Business Subsidiaries 28 Details of Group Properties 193 Group Management Committee 29 Glossary of Financial Terminology 194 Governance, Risk and Compliance Report 30 Subsidiaries of Ambeon Holdings PLC 195 Notice of Meeting 198 Management Discussion and Analysis Form of Proxy 199 Operating Environment 46 Corporate Information Inner Back Cover Capital Management Review 49 Sectoral Performance Review 72 Report of the Audit Committee 98 Report of the Remuneration Committee 100 Report of the Related Party Transactions Review Committee 101 Annual Report of the Board of Directors on the Affairs of the Company 102 Statement of Directors’ Responsibility 105 Beyond Ambition Action means nothing without ambition, but at Ambeon Holdings we believe that going beyond ambition has revitalised our actions to take what we do to a whole new level of growth. With a diverse and well-honed portfolio, leadership that has already placed us in the trajectory of success and the experience of established and experienced entities, we’re following a transformed path that is result-driven and we look forward to the future which holds endless potential and development in all that we do. www.ambeonholdings.com Introduction to the Report This is our first integrated annual report and has been compiled to enhance transparency and disclosure by sharing in-depth information regarding the Group’s activities during the year under review. The information provided in this report provides a clear picture of the operations of Ambeon Holdings PLC and its subsidiaries. It also provides strategic indications of the Group’s future direction and objectives through alignment of subsidiaries with the overall Group vision. Scope and Boundary This report contains a range of information extending from quantitative to qualitative data covering the various capitals and operational aspects of the Group. The compilation of this annual report is based on the International Integrated Reporting Framework of 2013 The financial statements have been audited by the external auditors of the Group and the report of the auditors have been included herewith The Group adheres to the Code of Best Practice on Corporate Governance issued by the Institute of Chartered Accountants of Sri Lanka, December 2017 Reporting Guidelines The Group has voluntarily adopted the International Integrated Reporting Framework in compiling this report The Group adheres to the Companies Act No.7 of 2007 The Group adheres Listing Requirements of the Colombo Stock Exchange advocated by Security Exchange Commission The Sri Lanka Accounting standard (SLFRS/LKAS) issued by the institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) Assurance Assurance on the financial statements have been provided by Messrs. Ernst &Young, Chartered Accountants. Reporting Cycle Reporting period is for one year from April 1, 2017 to March 31, 2018 Reporting cycle is annual Annual Report 2017/18 2 Ambeon Holdings PLC Ambeon Holdings Ambeon Business Model The Ambeon story might be in its initial chapters. However, it is 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 respected diversified companies with interests in varied sectors such as financial services, property development, retail, financial services, information technology, manufacturing and brokering. 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. In order to stay ahead and become a leader in the sectors in which we are present, we need to constantly evolve. Our business model has been restructured and invigorated to reflect this visionary direction. Within this futuristic outlook, our business model is built upon the business strategy of addressing investor appetites based on a risk/reward matrix, on both investments and returns through a strategic process of venturing into the market space of 2020 and beyond. Our focuses remains within industries of now and tomorrow, through tech related acquisitions and financial services that drive fintech, which are aimed at driving technocentric consumerism across all businesses while enhancing business capabilities. This business model is also supported by excellence in management. Guided by a prudent corporate strategy to enhance capabilities of people and processes. As a responsible corporate citizen we have instilled a holistic and comprehensive framework of corporate governance to ensure the highest standards are been maintained in all our business activities across the Group. While individual business strategies have been developed and deployed across each subsidiary which are directly aligned with the overall corporate vision and ideology. Further, all subsidiaries have developed functional strategies for human resources management, marketing and sales, finances, IT, supply chain, risk management, investments, people and processes, to ensure the successful deployment of strategic objectives. Vision / Mission Legal Structure Core Ideology Positioning and Corporate Restructuring Strategy Values Policies and Practices 2020 and Beyond GRC Industries now Structure and tomorrow Management Market Space and Placement Risk Reward People, Experience, Appetite Systems, Resources Investor Capacities Core competency Appetite and Capabilities & core ideology Business Strategy 2020 & Beyond Accountability Annual Report 2017/18 Individual Business Strategies responsibility 3 (Inline with Corporate Ideology) rewards based Year / 5 years plans Functional Strategies Budget to implement strategy MKT People HR Fin Supp Risk Sales Ops IT Invest Process Chain Ambeon Holdings PLC Ambeon Holdings Introduction to the Report Ambeon Strategy Triangle The Ambeon Business Strategy Triangle (as depicted below) has been segregated into three levels in order to ensure that the group ideology and strategy is trickled down with the same intensity it is intended to bear. The first tier of the business model which is aimed at creating value to the shareholders is aligned to the Group’s holistic corporate strategy. It gives the shareholders and Board of Directors an eagles eye view of the lucrative business sectors and units the company should be capitalising on, in order to ensure growth. While the second tier melts down to the individual business sectors, in order that the business model is fine tuned in order to fit into the parameters of the individual sectors in which the Group is present. It ensures that the business stands out among its peers, while creating sustainable business value. The third and final tier as depicted by ‘functional strategies’ further fine tunes the model in order that it is adapted into the framework of each business unit. These are followed up by divisional and departmental level strategies that encompass implementation methods to achieve the above, hence ensuring the accomplishment of the Groups holistic corporate objectives. The overarching business strategy is to outsmart competition in the chosen fields at subsidiary level aimed at building a future centric business, supported by individual business strategies for clearly demarcated short, medium and long term objectives, along with accountability, responsibility and rewards. The functional strategies will integrate at each individual business strategy to drive it at business level. The focus of the Group is in building and connecting standard operating procedures along with policies and procedures so that growth, value and synergies are derived through this holistic process and disseminated across the Group. Building the Future The Strategy Triangle Holding The Helicopter Vision Core Ideology Company Businesses We Should Be in Level Corporate Creating long term Strategy value to shareholders. Differentiation strategies Business The Light House Vision to beat competition Unit Level Strategy / Tactics To Beat and build sustainable Business Competition businesses. Strategy Implementation methods to achieve The Football Field Vision above. Operational Methods To Divisional & Implement Tactics Department Functional Level Strategy Annual Report 2017/18 4 Ambeon Holdings PLC Ambeon Holdings The five pillars of the Ambeon corporate strategy are: Corporate Strategy - This includes the corporate identity, its legal structure, positioning, values, goals along with the business verticals of the Group. In essence it is all