Anticipating the future At John Keells PLC, we believe that corporate agility, adaptability and resilience have driven our success for over 147 years. We have always embraced the challenges of change, transforming and growing through far-sighted strategies, ethical processes and innovative new products. Today we look to the future with confidence, anticipating the growing value we can generate through our disruptive approach, proactive attitude and willingness to change. We know we can achieve our goals in a competitive environment, as we grow through our challenges towards the future success we confidently anticipate today. Vision To be internationally recognised as the best Produce Broker in the world. Mission To retain the pre-eminent position as sri Lanka’s leading Tea and Rubber broker; To uphold the traditions and ethics of the Tea and Rubber trades; To ensure superior customer service through a dedicated and motivated workforce. VaLues We are committed to the highest level of integrity and ethical conduct in all our business activities. We will look towards exceeding shareholder and customer expectations by achieving excellence in all areas of operations. We recognise the right of every individual to be treated with fairness, dignity and respect and assist our employees to improve their skills and reward their accomplishments. We will focus on corporate social responsibility and look to protect and safeguard the environment. 2 John Keells PlC Contents 05 Financial Highlights 12 14 Board of Directors Chairman’s Message 44 76 85 Corporate Governance enterprise Risk Management annual Report of the Board of Directors Group structure 04 statement of Directors Responsibility 91 Financial Highlights 05 independent auditor’s Report 93 Milestones 06 income statement 94 Performance Highlights 08 statement of Comprehensive income 95 an introduction to this Report 10 statement of Financial Position 96 Year at a Glance 11 statement of Changes in equity 97 Chairman’s Message 12 Cash Flow statement 98 The Board of Directors 14 notes to the Financial statements 100 senior Management Team 16 information to shareholders and investors 146 Management Discussion & analysis 17 Five Year summary 148 GRi index 37 Key Ratios and information 150 Corporate Governance 44 Glossary of Financial Terminology 152 enterprise Risk Management 76 notice of Meeting 153 audit Committee Report 82 Form of Proxy 155 annual Report of the Board of Directors 85 Annual Report 2015/16 3 G4-4 Group Structure Company service Product Produce John Keells PLC Broking Inc 1960 ownership Tea & Rubber John Keells 100% Produce Warehousing Warehousing (Pvt) Ltd Inc 2001 John Keells Share Stock Brokers 76% Broking Shares (Pvt) Ltd Inc 1979 Cataloguing Human Resources Research Support Functions Sample Handling Finance IT services Claim Settlements Staff Provident Fund CSR Committee Funds & Committees Staff Thrift Society Fund Welfare & Recreation Committee 4 John Keells PlC Financial Highlights Group Revenue Group Profits Group Assets 2014/2015 Rs.959.9 Mn 2014/2015 Rs.332.9 Mn 2014/2015 Rs.6,074 Mn Associate Share Broking Produce Broking Share Broking 2015/2016 2015/2016 2015/2016 4,982 Warehousing 707 Produce Broking 63 Warehousing Rs. Mn Rs. Mn Rs. Mn Produce Broking Share Broking Warehousing Carbon Foot Print Economic Value added Employee Composition 2014/2015 185 MT 2014/2015 Rs.1,014Mn 2014/2015 Nos. 96 Warehousing Warehousing Share Broking Share Broking 2015/2016 2015/2016 Share Broking 2015/2016 96 Produce Broking 814 Nos. 196 Rs. Mn Associate Produce Broking MT Produce Broking Warehousing Group Capital & Returns Group Assets Revenue Composition Rs. Mn % Rs. Mn Rs. Mn 4000 4000 48 3500 3500 2012 41 3000 3000 35 2013 2500 2500 29 2000 2000 2014 23 1500 1500 16 2015 1000 1000 10 500 500 4 2016 0 0 -2 2016 2015 2014 2013 2012 0 200 400 600 800 1,000 2016 2015 2014 2013 2012 Total shareholder funds Net current assets Produce Broking and Warehousing Profits after tax Fixed assets and investment Share Broking Return on capital employed (%) Growth in shareholder funds (%) Annual Report 2015/16 5 Milestones 1870 1876 1878 edwin John came to Ceylon, a partnership styled “John This partnership was dissolved and edwin John started an as the island was then called, Brothers and Company” was establishment of his own titled “e. John” and carried on the business to join his brother George. formed with offices situated of produce and exchange broking. The first decade of business Together, they established in Colombo and Kandy. of e. John was one of low activity. Villers records this period thus, themselves as Produce and “Business in those days was very limited. Coffee had all but gone exchange Brokers. out, Tea had not expanded sufficiently and the little business in Chinchona was not enough to go around.” During this period, Reginald, son of edwin John, joined his father in Ceylon. 1986 1976 1971 1970 John Keells Holdings PLC, acquired John Keells PLC., John Keells PLC., M.C. Bostock was the controlling interest of John Keells became a People’s moved its offices to elected Chairman PLC., M.C. Bostock retired and D.J.M. Company. Glennie street, slave of the Company. Blackler took over as the Chairman of the island. Company. 1990 1993 2000 2001 K. Balendra took over as Financial statements of the K. Balendra retired V. Lintotawela took over as Chairman, the first Sri Lankan to associates Keells Realtors as Chairman on 31st Chairman on 1st January, 2001. hold this position. John Keells Ltd., and international December 2000 John Keells PLC., incorporated PLC., acquired controlling Tourists and Hoteliers Ltd. John Keells Warehousing (Pvt) interests in John Keells stock were incorporated to the Ltd., a fully owned subsidiary Brokers (Pvt) Ltd. Consolidated accounts. with B.o.i. status. 2015 2013 2011 in Compliance to the new securities The Company disposed of its The Board of Directors at a meeting held on 11th exchange Commission directive which land at 130, Glennie street May 2011 resolved to increase the number of came in to effect from 1st January Colombo 2. shares by way of a share sub -division in the ratio 2016 the shares of the company which of one (1) share for every one (1) share held. were listed on the Main Board was Consequently, the number of shares after the sub transferred to the Diri savi Board of the – division increased to 60,800,000 shares from Colombo stock exchange. the previous 30,400,000 shares. 6 John Keells PlC 1890 1895 1948 Prospects began to Reginald John was taken e. John and Co., amalgamated with two London improve rapidly with into the partnership of e. Tea Broking firms, William Jas and Hy Thompson the approaching tea John and Co. By this time, and Co. and Geo White and Co. The firm was then business. business was growing incorporated as a private limited liability company and quite rapidly in tea, shares, the name was changed to e. John, Thompson, White oil and exchange. and Co. Ltd. 1966 1962 1960 The initial step towards The firm moved to the e. John, Thompson, White and Co. Ltd., amalgamated with Keells diversification of the sixth floor of the then and Waldock Ltd. The name was changed to John Keells Thompson activities of the Company newly constructed White Ltd. This Company had its office in the National Mutual was taken with the Ceylinco House. Insurance Company building in Chatham Street. The first Chairman acquisition of Ceylon of the Company was Douglas armitage and on his retirement he Mineral Waters Ltd. was succeeded by a.G.R. Willis. The Company acquired its Glennie street premises from Dodwell and Company which were initially used as a warehousing. 2003 2004 2005 The state of the art warehouse of John Keells The Company disposed its V. Lintotawela retired as Chairman Warehousing (Pvt) Ltd., which is the largest investment in international on 31st December 2005 and s hi-tech tea warehouse in this part of the Tourists and Hoteliers Ltd. Ratnayake took over as Chairman region was commissioned for storing pre- on 01st January 2006. auctioned produce. 2010 2007 The Board of Directors at a meeting held on 20 th July 2010 resolved to The name of the Company was increase the number of shares by way of share sub – division in the ratio changed to John Keells PLC which is of one (1) share for every one (1) share held. Consequently, the no of a new requirement of the Companies shares after the sub – division increased to 30,400,000 shares from the act no. 7 of 2007. current 15,200,000 shares. Annual Report 2015/16 7 G4-9 Performance Highlights Financial Highlights – Three Year Performance Year ended 31st March 2015/2016 2014/2015 2013/2014 indicator Earnings Highlights and Ratios Group revenue Rs. 000's 706,664 959,925 874,797 Group profits before interest and tax (EBIT) Rs. 000's 128,648 410,622 418,499 Group profits before tax Rs. 000's 63,466 332,979 317,327 Group profits after tax Rs. 000's 54,213 231,847 215,473 Group profits attributable to shareholders Rs. 000's 52,746 217,401 150,251 earnings per share Rs. 0.87 3.58 2.47 interest cover no. of times 1.97 5.29 4.14 Return on equity % 1.62 7.06 6.66 Return on capital employed % 3.24 9.58 9.80 Balance Sheet Highlights and Ratios Total assets Rs. 000's 4,982,427 6,074,386 5,935,864 Total debt Rs. 000's 652,115 908,330 1,079,811 number of shares in issue 000's 60,800 60,800 60,800 Total shareholder funds Rs. 000's 3,312,398 3,379,434 3,190,693 net assets per share Rs. 54.48 55.58 52.48 Debt/equity % 19.68 26.88 33.84 Debt/Total assets % 13.09 14.95 18.19 Market/ Shareholder information Market price as at 31st March Rs. 70.00 92.00 70.00 Market capitalization Rs. 000's 4,256,000 5,593,600 4,256,000 Price earning ratio no. of times 80.69 25.73 28.34 Dividend paid Rs. 000's 228,000 206,720 212,800 Dividend per share Rs. 3.75 3.40 3.50 Dividend payout ratio % 432.26 95.09 141.70 Dividend yield % 5.36 3.70 5.00 8 John Keells PlC