RESILIENCE IN INVESTING John Keells Holdings PLC Annual Report 2020/21 RESILIENCE IN INVESTING John Keells is an iconic business enterprise with a heritage of over 150 years and a reputation for strength, stability and resilience. Over the years, we have evolved our business model around a diverse portfolio of business sectors, curated to reflect the most prominent growth sectors of the economy. As one of Sri Lanka's largest diversified conglomerates, we strive to maintain the highest standards of governance and transparency, as we innovate with the latest digital technologies and invest in sustainable initiatives throughout our supply chains, creating employment and empowering rural communities across the island. Our story over the last few years has been characterised by our commitment to invest in both the tangible expansion of our businesses and the building of softer skills, which are of equal importance. Despite two challenging and unprecedented years, these investments have continued steadfastly, maintaining the depth and breadth of our long-term investment strategy which is now poised to come to fruition. Investments in recent years have focused on a refurbished portfolio of Leisure properties and the acquisition of a long-term lease on a new hotel in the Maldives. The Group has also doubled its store footprint in the Supermarket business to over 120 outlets over the last three years while investing heavily in building its brand value, and enhanced its capacity and capability in the Frozen Confectionery and Insurance businesses. We consolidated our strategy in land banking to enable monetisation to generate steady returns to the Group. The most significant investment in our portfolio, 'Cinnamon Life', is nearing completion – a long and arduous journey over the last six plus years is now on the verge of transforming the city of Colombo and being a catalyst for tourism in the country, with revenue and profit recognition about to commence from the handover of the Residential and Office units. Our 'Resilience in Investing' is not merely based on the investment of financial capital – we have been pioneers and early adopters in many aspects of corporate transformation, whether it be adopting governance, sustainability or people related practices ahead of time. In recent years, we have pioneered a ground-breaking data analytics transformation journey, leveraging our unique data across our diverse portfolio in our vision to create value, by converting advanced analytics insights into frontline business interventions. We serve a diverse constitution of groups and individuals; from customers and communities to shareholders, suppliers, partners and employees, where our actions impact many different lives in many different ways. Our commitment to non-discrimination and equal opportunity continues to strengthen as exemplified by the launch of our 'ONE JKH' brand, together with an increased emphasis on gender parity and inclusion, where our goal is to increase the number of women in the workforce to 40 per cent. The journey over the last couple of years has been challenging, to say the least, however, your company has weathered this storm through its 'Resilience in Investing', setting itself a strong platform for growth. Your company is now poised to fully benefit from its investments in the ensuing year and beyond. JOHN KEELLS HOLDINGS PLC CONTENTS 91938 Chairman's Investor Capital Management 66 Message Relations Review Transportation GROUP HIGHLIGHTS MANAGEMENT DISCUSSION AND ANALYSIS 75 4 Introduction to the Report 35 External Environment Consumer Foods 6 Our Business Model 38 Capital Management Review 8 Industry Groups and Sectors 38 Financial and Manufactured Capital 9 Chairman's Message 47 Natural Capital 19 Investor Relations 52 Human Capital 19 Group Highlights 58 Social and Relationship Capital 25 Industry Group Highlights 63 Intellectual Capital 86 66 Industry Group Review Retail 66 Transportation 75 Consumer Foods 86 Retail 96 Leisure 109 Property 118 Financial Services 96 126 Other, including Information Leisure Technology and Plantation Services 134 Outlook 149 Strategy, Resource Allocation and Portfolio Management 156 Share Information 109 Property NAVIGATING THIS REPORT 118 Financial Services 126 This Annual Report is available on our website: Other, including www.keells.com/resource/annual-report/John_Keells_ Information Technology Holdings_PLC_AR_2020_21_CSE.pdf and Plantation Services Reporting Guides Capital Guides Reference to other pages Financial and Manufactured within the Report Capital Reference to further Natural Capital reading online Human Capital Details of CSR projects available on Social and Relationship www.johnkeellsfoundation.com/ Capital Intellectual Capital 149 156 165 184 Strategy, Resource Share Corporate Governance Risks, Opportunities Allocation and Information Commentary and Internal Controls Portfolio Management GOVERNANCE SUPPLEMENTARY INFORMATION Further Reading Online 165 Corporate Governance Commentary 284 History of the John Keells Group The Group has a variety of reporting formats to meet diverse stakeholder requirements. 181 Sustainability Integration, Stakeholder 285 Decade at a Glance Engagement and Materiality 286 Economic Value Statement 184 Risks, Opportunities and Internal 288 Indicative US Dollar Financial Controls Statements 290 Group Real Estate Portfolio 292 Glossary FINANCIAL STATEMENTS www.keells.com/governance 293 Independent Assurance Statement on 187 Annual Report of the Board of Directors Non-Financial Reporting y Director and Management Profiles 192 The Statement of Directors' 296 Group Directory y Corporate Governance Commentary Responsibility 302 GRI Content Index y Sustainability Integration, Stakeholder 193 Independent Auditors' Report IBC Corporate Information Engagement and Materiality 196 Income Statement y Risks, Opportunities and Internal Controls 197 Statement of Comprehensive Income y Articles of Association 198 Statement of Financial Position y Progress Report UN Global Compact 199 Statement of Cash Flows Initiatives 200 Statement of Changes in Equity 202 Notes to the Financial Statements ABOUT US John Keells Holdings PLC (JKH) is one of the largest listed companies on the Colombo Stock Exchange, with business interests primarily in Transportation, Consumer Foods, Retail, Leisure, Property and Financial Services. Started in the early 1870s as a produce and exchange broking business by two Englishmen, Edwin and George John, the Group has been known to constantly re-align, re-position and re-invent itself in pursuing growth sectors of the time. JKH was incorporated as a public limited liability company in 1979 and obtained a listing on the Colombo Stock Exchange in 1986. Having issued Global Depository Receipts (GDRs) which were listed on the Luxembourg Stock Exchange, JKH became the first Sri Lankan company to be listed overseas. The Group's investment philosophy is based on a positive outlook, bold approach, 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 Economic Forum and a Participant member of the UN Global Compact. The Holding Company of the Group, John Keells Holdings PLC, is based at 117, Sir Chittampalam A. Gardiner Mawatha, Colombo 2 and has offices and businesses located across Sri Lanka and the Maldives. INTRODUCTION TO THE REPORT We are pleased to present our sixth Integrated Report in accordance with the International <IR> Framework of the International Integrated Reporting Council (IIRC). The Report strives to deliver a balanced and relevant report that will bring clarity and detail to the complex task of reporting a year of diverse business operations across multiple sectors. This Report reflects on: y The value creation model of the Group, combining different forms of Capital in the short, STANDARDS AND medium and long-term PRINCIPLES y Governance, risk management and sustainability frameworks entrenched within the Reporting John Keells Group y International <IR> Framework of y Financial, operational, environmental and social review and results of the Group the IIRC Governance, Risk Management In keeping this Report concise as possible and pertinent to the year under review, we have and Operations ensured that the commentaries in certain sections are limited to a helicopter view of the events and progress within the year, whilst the Group's standard policies, operating guidelines and y Laws and regulations of the management approaches are available on the corporate website. Companies Act No. 7 of 2007 y Listing Rules of the Colombo Stock SCOPE AND BOUNDARY Exchange (CSE) and subsequent revisions to date The John Keells Annual Report 2020/21 is a reflection of the Group's integrated approach of management during the period from 1 April 2020 to 31 March 2021. Material events post this y Securities and Exchange Commission reporting period, up to the sign off date by the Board of Directors on 24 May 2021, have been of Sri Lanka Act No. 36 of 1987, included in this Report, ensuring a more relevant and up-to-date Report. including directives and circulars y Code of Best Practice on Corporate For the purpose of reporting its sustainability performance, all Group subsidiaries and equity Governance (2013) jointly advocated accounted investees have been considered, barring companies in which the Group does not by the Securities and Exchange exercise significant