Transcription
John Keells Holdings PLC . Annual Report 2017/18
URSTR NGP INTSFinancial strengthGood governance, transparency and accountabilityLeadership and teamworkSustainability and social responsibilityOperational excellence and expertiseJohn Keells Holdings has been at the forefront of the local world of business forseveral decades, managing a range of industry groups strategically selected torepresent several key growth areas of the economy. Over the years, we havecome to exemplify the principles of leadership, through progressive policies,strong values and a commitment to achieving excellence in all that we chooseto do.We have driven success by uniting people to share one vision. We havedone this by closely engaging with our social, economic and environmentalresponsibilities; staying in lockstep with our stakeholders’ interests, ensuringgood governance at every level and returning consistent value to the nation,the people and communities we interact with every day.Today, we have identified several significant investments with the potential todrive future growth and we are confident that we can leverage on our strongpoints to serve our stakeholders by delivering consistent value, as we worktowards the success we anticipate in the years that lie ahead.
CONTENTS126 Leisure116 TransportationChairman’sMessage14140 Strategy, ResourceAllocation and PortfolioManagement286086Group HighlightsManagement Discussion and Analysis4Introduction to the ReportGroup Consolidated Review6Our Business Model57 External Environment8Organisational Structure60 Capital Management Review9Performance Highlights60 Financial and Manufactured Capital10 Year at a Glance66 Natural Capital12 Sustainable Development Goals and Impacts71 Human Capital13 Economic Value-Added Statement74 Social and Relationship Capital14 Chairman’s Message80 Intellectual Capital83 OutlookGovernance22 Board of Directors24 Group Executive Committee25 Group Operating Committee28 Corporate Governance Commentary86 Strategy, Resource Allocation and PortfolioManagement93 Sustainability Integration and StakeholderEngagement99 Risks, Opportunities and Internal Controls103 Investor Relations103 Share Information110 Key Investment ConsiderationsIndustry Group Review116 Transportation126 Leisure140 Property148 Consumer Foods and Retail162 Financial Services172 Information Technology180 Other including Plantation ServicesReference to other pages within the ReportReference to further reading onlineReference to a specific GRI StandardDetails of the CSR projects are available onhttp://www.johnkeellsfoundation.com/2John Keells Holdings PLC . Annual Report 2017/18This Annual Report is alsoavailable on our websitewww.keells.com/annual-reports
Group Highlights148 Consumer Foods and RetailRisks, Opportunitiesand Internal Controls99162 Financial ServicesShareInformation103172 Information TechnologyKey InvestmentConsiderationsNotice ofMeetingProxy Form110316317180 Other includingPlantation ServicesFinancial Statements191 Annual Report of the Board of Directors196 The Statement of Directors’ ResponsibilityAbout Us197 Independent Auditors’ Report200 Income StatementJohn Keells Holdings PLC (JKH) is the largest listed company on201 Statement of Comprehensive Incomethe Colombo Stock Exchange, with business interests primarily202 Statement of Financial Positionin Transportation, Leisure, Property, Consumer Foods and Retail203 Statement of Cash Flowsand Financial Services. Started in the early 1870s as a produce and204 Statement of Changes in Equityexchange broking business by two Englishmen, Edwin and George208 Notes to the Financial StatementsJohn, the Group has been known to constantly re-align, re-positionand re-invent itself in pursuing growth sectors of the time.Supplementary Information288 History of the John Keells Group289 Decade at a Glance290 Economic Value Statement292 Indicative US Dollar Financial StatementsJKH was incorporated as a public limited liability company in 1979and obtained a listing on the Colombo Stock Exchange in 1986.Having issued Global Depository Receipts (GDRs) which were listedon the Luxembourg Stock Exchange, JKH became the first Sri Lankancompany to be listed overseas.294 Group Real Estate PortfolioThe Group’s investment philosophy is based on a positive outlook,296 Sri Lankan Economybold approach, commitment to delivery and flexibility to change.298 GlossaryJKH is also committed to maintaining integrity, ethical dealings,299 Contribution to National and Internationalsustainable development and greater social responsibility in a multi-Governance and Advocacy Organisations300 Independent Assurance Statement onstakeholder context. JKH is a full member of the World EconomicForum and a member of the UN Global Compact.Non-Financial Reporting303 Group DirectoryThe Holding Company of the Group - John Keells Holdings PLC is308 GRI Content Indexbased at 117, Sir Chittampalam A. Gardiner Mawatha, Colombo 2 and316 Notice of Meetinghas offices and businesses located across Sri Lanka and the Maldives.317 Proxy Form319 Corporate InformationSee more onlinewww.keells.com3
GRI 102-46, 102-49INTRODUCTION TO THE REPORTWE ARE PLEASED TOPRESENT OUR THIRDINTEGRATED REPORTIN ACCORDANCE WITHTHE INTEGRATEDREPORTING FRAMEWORKOF THE INTERNATIONALINTEGRATED REPORTINGCOUNCIL IIRC .All Group subsidiary and equity accounted investees were considered in capturing its financialperformance. For the purpose of reporting its sustainability performance, all Group subsidiariesand equity accounted investees have been considered, barring companies in which the Groupdoes not exercise significant management control, non-operational companies, investmentcompanies and companies owning only land, which have been clearly identified in the reportingboundary specified in the Group Directory 2017/18. In expanding its sustainability scope,going forward, the Group will also seek to report on companies over which it does not exercisesignificant management control, where relevant.STANDARDS AND PRINCIPLESReportingy Integrated Reporting Framework of the International Integrated Reporting CouncilThe Report strives to deliver a balanced andrelevant report that will bring clarity and detailto the complex task of reporting a year ofdiverse business operations across multiplesectors.This Report reflects on:y The value creation model of the Groupcombining the different forms ofcapitals in the short, medium and longtermy Governance, risk management andsustainability frameworks entrenchedwithin the John Keells Groupy Financial, operational, environmentaland social review and results of theGroupIn keeping this Report concise and pertinentto the year under review, we have ensuredthat the commentaries in certain sections arelimited to a helicopter view of the events andprogress within the year, whilst the Group’sstandard policies, operating guidelines andmanagement approaches are available on thecorporate website.Governance, Risk Management and Operationsy Laws and regulations of the Companies Act No. 7 of 2007y Listing Rules of the Colombo Stock Exchange (CSE) and subsequent revisions to datey Code of Best Practices on Corporate Governance jointly advocated by the Securities andExchange Commission of Sri Lanka (SEC) and the Institute of Chartered Accountants of SriLanka (CA Sri Lanka)y UK Corporate Governance Code (formerly known as the Combined Code of 2010)Financial Reportingy Sri Lanka Accounting Standards (SLFRS/LKAS) issued by the Institute of CharteredAccountants of Sri Lanka (CA Sri Lanka)Sustainability Reportingy This Report has been prepared in accordance with the GRI Standards: Core optiony United Nations Sustainable Development Goalsy United Nations Global Compact Active PrinciplesINTEGRATED REPORTING AND GUIDING PRINCIPLESGiven the complex task of reporting an year of operations of a conglomerate, the Group has strivedto deliver a comprehensive, balanced and relevant report, while adhering to the recommendationsof the IIRC. The seven guiding principles in integrated reporting, as depicted, have been given dueconsideration when preparing and presenting this Report.Strategic focus andfuture orientationConnectivityof informationSCOPE AND BOUNDARYThe John Keells Annual Report 2017/18 is areflection of the Group’s integrated approachof management during the period from 1 April2017 to 31 March 2018. Material events postthis reporting period, up to the sign off dateby the Board of Directors on 25 May 2018 havebeen included in this Report ensuring a morerelevant and up to date Report.ConsistencyandcomparabilityGuiding Principlesof the 2017/18 JKHAnnual ReportReliability andcompletenessMaterialityConciseness4John Keells Holdings PLC . Annual Report 2017/18Stakeholderrelationships
Group HighlightsDETERMINING MATERIALITYMateriality analysis is a key process that enables the Group to define key triple bottom line issuesthat are of greatest significance for businesses and stakeholders, both internal and external, in theshort, medium and long term. Our focus on materiality, through emphasis on 11 material topicsrecognised by both internal and external stakeholders, is vital as we seek to drive performance,improve our sustainability framework and institutionalise the Group’s corporate governancephilosophy at all levels.The Group conducted an independent external stakeholder engagement during the year underreview in order to ascertain material topics to its significant stakeholders. In addition, materiality isalso assessed internally in ascertaining the topics material to the Group and thereby fine-tuningand streamlining its strategy and processes to manage these material issues. The outcome of thesestudies, were prioritised using a materiality matrix, representing their level of significance to theGroup and its external stakeholders, and then disclosed as per the clearly defined topics under theGRI Standards.While the matrix, as illustrated, indicates the prioritisation of these material aspects, the Groupcontinues to assess its internal and external materiality and disclose the performance of suchaspects. Its reporting scope will be expanded as and when an aspect becomes material to theGroup and its stakeholders.Importance to external stakeholdersHIGHTHE GROUP CONDUCTED ANINDEPENDENT EXTERNALSTAKEHOLDER ENGAGEMENTDURING THE YEAR UNDERREVIEW IN ORDER TOASCERTAIN MATERIALTOPICS TO ITS SIGNIFICANTSTAKEHOLDERS. IN ADDITION,MATERIALITY IS ALSOASSESSED INTERNALLY INASCERTAINING THE TOPICSMATERIAL TO THE GROUP ANDTHEREBY FINE TUNING ANDSTREAMLINING ITS STRATEGYAND PROCESSES TO MANAGETHESE MATERIAL ISSUES.INFORMATION VERIFICATION ANDQUALITY ASSURANCEThe information contained in this Reporthas been reviewed, as applicable, by:Included in this Report and/orCompany websitey The Board of Directorsy The Group Executive Committeey Audit Committee of the CompanyMinimal reporting/Not reportedLOWImportance to internal stakeholdersA detailed discussion on determiningmateriality is available on the Corporatewebsite.DISCLAIMER FOR THE PUBLICATION OF FORECAST DATAThe Report contains information about the plans and strategies of the Group for the medium andlong term and represent the management’s view. The plans are forward-looking in nature andtheir feasibility depends on a number of economic, political and legal factors which are outsidethe influence of the Group and Company such as global and domestic financial, economic andpolitical situations, the state of key markets, changes in tax, customs and environmental legislationand so forth. Given this, the actual performance of indicators in future years may differ fromthe forward-looking statements, published in this Report. The reader is advised to seek expertprofessional advice in all such respects.y An independent auditor confirmingthe accuracy of the annual financialstatementsy An independent auditor confirmingthe accuracy of the non-financialinformation in accordance with the GRIStandards: Core optionContact with StakeholdersPreparation of this Report took place incooperation with stakeholders in orderto improve transparency, accountabilityand the process in which materiality ofdisclosed information is viewed. Feedbackis gathered through questionnaires, adedicated mail-box, one-on-one meetingsand stakeholder engagement fora.As you flip through the pages of this Report,you will find a relevant, transparent andnoteworthy value proposition entrenchedwithin the John Keells Group that strivesto achieve the highest form of stakeholdersatisfaction through sustainable value creation.5
OUR BUSINESS MODELFundamental Capitals deployed by JKHValue creation leversSTAKEHOLDER RETURNS AND ENGAGEMENTINPUTSFINANCIAL ANDMANUFACTUREDCAPITAL Shareholder funds anddebt Cash flow fromoperations Land bank Machinery andequipmentNATURAL CAPITAL Energy Water Other natural resourcesEnterprise RiskManagement SystemITGovernanceHUMAN CAPITAL Employee diversity Experience Skills and competenciesStrategy, ResourceAllocation,and PortfolioManagementOur business activities:CorporateGovernanceTransportation, Leisure, Property,Consumer Foods and Retail, FinancialServices, Information Technology, andOther including Plantation ServicesBusiness OutlookSOCIAL ANDRELATIONSHIPCAPITALINTELLECTUALCAPITAL Dedicated CSR team Communitydevelopment Investor relations andstakeholder management Health and safetyinitiativesFinancial andNon-FinancialPerformanceduring the yearRisks andOpportunitiesCorporate SocialResponsibility Brand stewardship Research anddevelopment Technological expertiseVALUES :CARING, EXCELLENCE, TRUST, INNOVATION, INTEGRITY6John Keells Holdings PLC . Annual Report ork
Group HighlightsTransformed Capitals that produce stakeholder valueACTIVITIESOUTPUTSOUTCOMES Effective and responsible investments of shareholder funds Business development activities Cost reduction initiatives Shareholder returns anddividends Payments to otherstakeholders Share price appreciation Financial stability Financial growth Creation of wealth Adoption of Global Goals Environmental impact assessment and mitigation of impact Roll-out of carbon footprint and energy initiatives Strengthening of water and waste management processes Disposal of all effluent andwaste efficiently Reduction of carbonfootprint Reduced resource consumptionthrough better monitoring Sustainable natural resourceutilisation Bio-diversity preservation Channelling of employee skills and expertise for business growth Training and development of employee cadre Performance management and appraisals Employee survey initiatives Structured career development programmes Staff motivation Talented and efficientworkforce Job satisfaction Career progression Safe and equitableenvironment Alignment of workforce withGroup vision Profitable businesses throughimproved productivity andefficiency Investment in community and livelihood development Regular dialogue with investors, analysts and other stakeholders Social impact assessments Identification of key stakeholders and material aspects in relation to them Awareness creation and engagement of suppliers through the SupplierManagement Framework Social needs assessment based on Sustainable Development Goals(SDGs)/UN Global Compact/national agenda Community skillsdevelopment Well informed and soundinvestment decisions Better supplier/distributorand stakeholder relations Brand visibility andreputation Strengthened supply chain Adherence to UN SDGs Development of intangible infrastructure, processes and proceduresto improve efficiency New product development InnovationIntellectual property products: Patents Copyrights Evolving businesses to suitthe ever changing, dynamicconsumer An organisation betterprepared to face disruptivebusiness models7
ORGANISATIONAL STRUCTURETRANSPORTATIONPorts and ShippingTransportationLEISURECity HotelsResortsDestination ManagementHotel ManagementPROPERTY DEVELOPMENTProperty DevelopmentReal EstateCONSUMER FOODS AND RETAILConsumer FoodsRetailFINANCIAL SERVICESInsuranceBankingStock BrokingINFORMATION TECHNOLOGYIT ServicesOffice AutomationIT Enabled ServicesOTHER INCLUDINGPLANTATION SERVICESPlantation ServicesOtherCENTRE FUNCTIONSCorporate CommunicationsGroup Human ResourcesLegal and SecretarialCorporate Finance and StrategyGroup TaxNew Business DevelopmentGroup Business Process ReviewGroup TreasuryGroup FinanceJohn Keells ResearchStrategic Group InformationTechnology8John Keells Holdings PLC . Annual Report 2017/18Sustainability, Enterprise RiskManagement and Group InitiativesJohn Keells Foundation
Group HighlightsPERFORMANCE HIGHLIGHTSIndicatorUnit2017/182016/172015/16Group revenue - consolidatedRs.million121,215106,27393,710Group profit before interest and tax (EBIT)Group profit before interest, tax, depreciation andamortisation 0627,22224,707Financial CapitalGroup profit before taxRs.million27,63422,88819,198Group profit after taxRs.million23,12018,11715,792Group profit attributable to shareholdersRs.million21,02116,27514,070Diluted earnings per shareRs.15.1511.8410.52Return on equity (ROE)%11.19.89.6Pre-tax return on capital employed (ROCE)%11.911.511.1Total assetsRs.million322,448277,272240,975Net debt (cash)*Rs.million(33,519)(55,309)(51,849)Total shareholders' fundsRs.million199,920178,635154,982Economic value retainedRs.million16,53112,7969,873Dividend paid per shareRs.6.05.5Dividend payout ratio%Market capitalisationRs.millionNatural CapitalEnergy consumption - non renewable resourcesper Rs.million of revenueEnergy consumption - renewable resourcesper Rs.million of revenueGJGJ0.900.941.18Purchased energy - national grid per Rs.million of revenueGJ2.973.253.52Direct greenhouse gas emissions - scope 1MT27,53225,72715,621Indirect greenhouse gas emissions - scope 2MT68,53466,38463,041Total carbon footprint per Rs.million of revenueMT0.790.850.83Water withdrawal per Rs.million of revenuem316.019.021.1Water dischargem31,414,5461,460,7991,439,138Volume of hazardous waste generatedWaste recycled/reused by Group companies and throughthird party 76,0323.023.192.26Human CapitalTotal workforce (employees and contractor's staff )PersonsEmployee benefit liability as of 31 MarchRs.millionTotal attrition%Injury rate per 100 employeesInjuries1.031.061.11Lost day rate per 100 employeesLost days0.040.040.05Average hours of training per employeeHoursEmployee receiving performance reviews%474135100100100Social and Relationship CapitalProportion of purchases from suppliers within Sri Lanka%Community engagementNumber of persons impacted7283811,455,8141,010,200855,364Proportion of labels carrying ingredients usedProportion of labels carrying information on disposal%808181%929376Proportion of labels carrying sourcing of components%111* Customer advances in the Property Development sector and cash and cash equivalents relating to UA life fund have been excluded** Including a special dividend9
YEAR AT A GLANCETHE INTEGRATED NATURE OFTHIS REPORT EXEMPLIFIESTHE STAKEHOLDER CENTRICSTRATEGIES AND ACTIONSWHICH ARE FOUNDED ON THEPRINCIPLES OF COMPLIANCE,CONFORMANCE,GOVERNANCE, ETHICALCONDUCT AND SUSTAINABLEDEVELOPMENT.FINANCIAL ANDMANUFACTURED CAPITALREVENUENATURAL CAPITALGROUP CARBON FOOTPRINTRs.121 bn96,066 MTGrowth of 14 per centIncrease of 4 per centPROFIT BEFORE TAXCARBON FOOTPRINTRs.28 bnSusantha RatnayakeChairmanGrowth of 21 per cent Group ROCE 11.9 per cent Largest listed entity on the ColomboStock Exchange: Rs.221.44 billion marketcapitalisation Dividend per share of Rs.6.00Consumer Foods and Retail : 41%Leisure : 40%Property : 1%Transportation : 13%Financial Services : 1%Information Technology : 1%Other including Plantations Services : 3%GROUP WATER USAGE MESSRS. K. BALENDRAAND G. COORAY ASSUMEDDUTIES AS DEPUTYCHAIRMAN AND GROUPFINANCE DIRECTOR,RESPECTIVELY, IN JANUARY2018JOHN KEELLS PROPERTIESANNOUNCED THE LAUNCHOF “TRI ZEN” IN FEBRUARY2018, A RESIDENTIALDEVELOPMENT IN UNIONPLACE, COLOMBO 2 WITHEXPECTED COMPLETION IN2022/2310LMS commissioned a new bunker barge“MT LM Mahaweli”, the first doubled hulled,doubled bottomed barge in Sri LankaPROFIT AFTER TAXRs.23 bnGrowth of 28 per cent “Bentota Beach by Cinnamon” was closedfor reconstruction in May 2017 Vauxhall Land Developments Limitedpurchased 334 perches in Colombo 2 for aconsideration of Rs.4.37 billion Completion of construction of the FrozenConfectionery manufacturing plant CICLJohn Keells Holdings PLC . Annual Report 2017/181,908,422 m3Decrease of 6 per centUPHOLDING OUR SUSTAINABILITYGOALS10 stores within the Retail sector powered bysolar with 33 more expected to be convertedENERGY CONSUMPTION NONRENEWABLE RESOURCESPER RS. MILLION OF REVENUE3.02 GJDecrease of 5 per cent
Group HighlightsSOCIAL AND RELATIONSHIPCAPITALHUMAN CAPITAL A project was launched to implement astate-of-the-art electronic human resourceinformation platform to replace the GroupHR enterprise resource planning systemINTELLECTUAL CAPITAL Driving innovation: During the year underreview, the Bank launched “FriMi”, thecountry’s first digital bank, which enablesthe opening of a bank account through asmart device “FriMi” won the award for EmergingTechnologies-Led Innovation at the InfosysClient Innovation Global Awards in India inDecember 2017 JMSL launched a new store format for its“Keells” supermarkets in November 2017 Fostering and nurturing talent: JohnKeells X; the second leg of the openinnovation challenge opened its new coworking space at Crescat Boulevard Delivering goodness and nutrition: KFPlaunched its new range of ambient foodproducts JKIT; “Disruptive Ideas, your future actioned”was launched in August 2017 Nurturing the “Cinnamon” brand throughunique offerings: “The Sound of Music” wasthe first-ever event of its calibre performedin Sri Lanka, and set the stage for even morelarge-scale entertainment productions1,000 JobsCampaignHiring and training of 1,000 new employeeswithin the Retail sectorTOTAL WORKFORCE20,361Employees: 13,315Contractor’s staff : 7,046INVESTMENT IN OUR WORKFORCE629,770Sri Lanka’s annual open-air art fair “Kala Pola”which showcases and promotes visual artcelebrated its 25th year in January 2018EMPOWERING THE NATION FOR ABETTER TOMORROWCommunity service and infrastructure projectspendRs.125 mn Number of training hours Launch of the #JKHSTEM Programme,aimed at attracting graduates from theScience, Technology, Engineering andMathematics fields Partnered with “Coursera” to provide onlineeducation to Group employeesDigitising the value chain: The entiresourcing process managed by Groupsourcing was migrated to an electronicprocurement platform last year Value created: Total impact through CSRinitiatives: 1,455,814 individuals A stakeholder engagement survey wasconductedPROPORTION OF PURCHASES FROMSUPPLIERS WITHIN SRI LANKA72%11
SUSTAINABLE DEVELOPMENT GOALS AND IMPACTSOur vision: “Empowering the nation for tomorrow”In executing operational decisions, the Group strives to align its strategies, initiatives, and targets with the Sustainable Development Goals(SDGs) of the United Nations to address and action initiatives aimed at alleviating poverty, protecting the planet and ensuring that allpeople enjoy peace and prosperity. Given the conglomerate nature of the Group, the ensuing section illustrates the key pillars of John KeellsFoundation and its focus on the SDGs through its various projects and initiatives. In addition to the below, the Group through its businessesand other initiatives, impacts and contributes to all 17 SDGs.EducationDisaster ReliefArts & CultureTo provide better access to educationalopportunities for those in need towardsenhancing their employability andentrepreneurship.To come to the aid of Sri Lankans and globalcommunities in times of adversity and disastertowards enabling them to rebuild their lives andlivelihoods.To nurture the livelihoods of artists and preserveour cultural heritage towards safeguarding andpromoting Sri Lankan arts and culture.Our Projects John Keells English Language ScholarshipProgramme Neighbourhood Schools Development Project Soft Skills and Industrial Training for UniversityUndergraduates Higher Education Scholarship SchemeOur Projects Flood relief Meethotamulla disaster supportOur Projects Kala Pola (annual open air art fair) John Keells Digital Art Gallery Cinnamon ColomboscopeOur Impact Over 15,000 personsOur Impact 358 participating artists, over 28,000 visitorsand sales estimated over Rs.15 million at KalaPola 925 registered artists on Sri Lankan Art Gallery,250 artists on John Keells Art Gallery (curatedsite) 68 local and foreign participating artists ofwhom the Foundation sponsored 28 localartists and 12 local speakersLivelihood DevelopmentHealthEnvironmentTo foster sustainable livelihoods through relevantskills, capacity and infrastructure enhancementtowards building empowered and sustainablecommunities.Our Projects Village Adoption Project Rural BPO Initiative CKD Prevention Initiative UNGC Water StewardshipTo foster healthy communities towardsenhancing wellbeing and productivity of SriLanka and Sri Lankans.To minimise the impact of our operations andpromote conservation and sustainability towardsenhancing environmental and natural capital.Our Projects John Keells Vision Project John Keells HIV & AIDS Awareness Campaign Project WAVE (Working Against Violencethrough Education)Our Projects Nature Field Centre – Rumassala Project Leopard Elephant Research Forestry Project Paper Conservation PlasticcycleOur Impact 1,360 scholarships 6 schools, over 2,160 school children 42 University undergraduates 33 scholarships supporting A/Level andUniversity students from disadvantagedcommunitiesOur Impact 4 villages in three provinces, 3,015 persons 3 BPO centres in Mahavilachchiya, Seenigama,and Jaffna, 48 associates12Our Impact 972 surgeries, 12 eye camps,110 school screenings and 2,284 eye glassesdonated 7,360 persons sensitised on HIV & AIDS 104,547 persons sensitised on gender basedviolence and child abuse preventionJohn Keells Holdings PLC . Annual Report 2017/18Our Impact 1,579 school children 7 cattle pens donated during the year 2 GPS collars tracking 2 elephant herds 35 tea smallholders in 15.3 acres of land, 3,000trees with 92 per cent survival rate
Group HighlightsECONOMIC VALUE ADDED STATEMENTProfit on sale of assets and otherincomeRs.2,084 mn(2016/17: Rs.1,765 mn)Valuation gain oninvestment propertyRs.OPERATING COSTSRs.93,658 mnREVENUE(2016/17: Rs.81,548 mn)Rs.Direct economic value generatedEmployee wagesand benefitsRs.12,264 mn896 mn(2016/17: Rs.484 mn)121,215 mn(2016/17: Rs.106,273 mn)Rs.139,059 mnFINANCE INCOME(2016/17: Rs.12,746 mn)Rs.11,268 mn(2016/17: Rs.10,033 mn)Payments to providersof fundsRs.10,034 mn(2016/17: Rs.8,339 mn)Share of results of equityaccounted investeesEconomic value distributedRs.122,343 mnRs.3,596 mn(2016/17: Rs.3,303 mn)COMMUNITYINVESTMENTSRs.124 mn(2016/17: Rs.144 mn)Economic value retainedRs.16,716 mnPROFIT AFTERDIVIDENDSRs.12,696 mn(2016/17: Rs.8,995 mn)PAYMENTS TOGOVERNMENTRs.6,263 mn(2016/17: Rs.6,285 mn)AMORTISATIONRs.784 mn(2016/17: Rs.926 mn)DEPRECIATIONRs.3,236 mn(2016/17: Rs.2,875 mn)13
CHAIRMAN’S MESSAGEI am pleased to present the Integrated Annual Report and the Financial Statementsfor the financial year ended 31 March 2018.This is the third Annual Report prepared in conformance with the IntegratedReporting Framework of the International Integrated Reporting Council. I trustour Report will provide you with an in-depth understanding of the Group’s valuecreation process and the strategies in place to manage the diverse portfolio ofbusinesses towards driving sustainable growth.The integrated nature of this Reportexemplifies the stakeholder centric strategiesand actions which are founded on theprinciples of compliance, conformance,governance, ethical conduct and sustainabledevelopment. These fundamental principlesare supported by our corporate characteristicsof leadership, teamwork, social responsibility,operational excellence and business expertise;the strong points that make us who we aretoday.The Group profit before tax (PBT) increasedby 21 per cent to Rs.27.63 billion for thefinancial year ended 31 March 2018. Theprofit attributable to equity holders of theparent was Rs.21.02 billion, representing anincrease of 29 per cent over the Rs.16.28 billionrecorded in the previous year.I am pleased to state that your Group recordeda satisfactory year of performance despite thechallenging operating environment in the yearunder review, where economic growth wasmuted amidst pressures emanating from theexternal environment in addition to domesticmacro-economic pressures.During the year under review, the keybusinesses of the Group underwent acomprehensive five-year strategy formulationand planning exercise. Consequent to thisexercise, key investments were identifiedand earmarked for implementation over thenext few years across key growth businesses,particularly in the Leisure, Consumer Foodsand Retail, Financial Services and Propertyindustry groups.Given our strong balance sheet andanticipated cash generation, the Group willcontinue to deploy a significant quantum of14Summarised below are the key financial highlights of our operating performance during theyear under review.y Group revenue increased by 14 per cent to Rs.121.22 billiony Group profit before tax increased by 21 per cent to Rs.27.63 billion. Recurring profit beforetax increased by 7 per cent to Rs.24.27 billiony Profit attributable to equity holders of the parent increased by 29 per cent to Rs.21.02 billion.Recurring profit attributable to equity holders of the parent increased by 14 per cent toRs.18.32 billiony Group earnings before interest, tax, deprecia
drive future growth and we are confident that we can leverage on our strong points to serve our stakeholders by delivering consistent value, as we work towards the success we anticipate in the years that lie ahead. UR STR NG P INTS. 2 John Keells Holdings PLC . Annual Report 2017/18
