trust in our heritage · 2020-07-10 · ramadan expo

Keells Food Products PLC | Annual Report 2016/17

TRUST IN OUR HERITAGE

KREST

Access this report online http://www.keellsfoods.com/downloads

About Us

Our Products 2Events of the Year 4About Us, Vision and Values 6About this Report 7Performance Highlights 8

Chairman’s Review 12Our Business Model 16Stakeholder Engagement 18Key Product Lines 20

Governance and Risk

Corporate Governance 22The Board of Directors 54Enterprise Risk Management 56

Business Review

Capitals Report 65

Management Team 89

Annual Report of the Board of Directors 96

Statement of Directors’ Responsibility 106

Statement of Changes in Equity 112

Your Share in Detail 162

CONTENTS

TRUST IN OUR HERITAGE KeellsKrest and Elephant House are Sri Lankan brands

customers. Our long-standing commitment to product

has paved the way for strategic growth at every level of your Company. The year under review has been a challenging one, yet

for the thousands of customers and other stakeholders we serve.

products, faith in our consistent returns and trust in our heritage.

2 Keells Food Products PLC

OUR PRODUCTS

The KeellsKrest RangeThe KeellsKrest sausage range is renowned as a superior brand. A pioneer in the processed meats industry, KeellsKrest sausage endorses our premium quality and adherence to strict hygienic manufacturing guidelines.

Chicken MeatballsChicken meatballs a companion at every meal making every bite a special treat.

Cheesy BlastCheesy Blast is full of wholesome chicken and generous dollops of

wonder that this sausage is a hit among kids.

Spicy BitesThis sausage pays homage to

A delicious mix of red hot chillies and chunky sausage, you can count on Spicy Bites to turn on the heat

KRESTSSKREST

Sausage Buddy PackWholesome chicken sausages packed

companion.

Chicken SausagesThe oldest sausage in the Keells family, its classic recipe has stood the

goodness remains a crowd pleaser to this day.

Chicken Party PackA must to have at every party occasion the KeellsKrest party sausage packed with wholesome chicken goodness sharing the happiest party moments with the best quality sausages

Chicken BockwurstChicken Bockwurst full of wholesome chicken goodness in every bite.

Chicken Cheese and Onion SausagesEveryone loves sausages, but nothing

Chicken, Cheese and Onion Sausage.

Chicken Garlic SausagesA mouth watering favourite, this sausage is packed with juicy chicken

across the country.

Annual Report 2016/17 3

Chinese RollsBeing a Sri Lankan staple during snack

hearts of many. Synonymous with rolls is Krest, our ready-to–fry Chinese Roll range which is ideal for both

minutes.

Chicken SausageThe most popular variant which everybody likes to indulge in.

The superior golden crispy crumb

experience where with each bite you are guaranteed the delicious Krest experience.

LingusThe favourite legendary Elephant House Sausage taste is most famous for Lingus!

Mini KievsGolden crispy chicken ball centre

happening moments for kids and adults.

Bacon Whopper SausagesThe popular chunky pork sausage with superior bacon taste!

Kochchi BiteSpicy hot hot, crispy Kochchi Bite, best snack at gatherings and outdoor events making every bite a pleasure.

Corned BeefElephant House corned beef is a salt-cured beef product, a favourite among meat lovers and is an ideal spread for a quick snack.

a tantalizing treat eagerly

lovers.

The Krest Range

in minutes.

Elephant House Premium RangeThe much loved and craved Elephant House sausages has been a legendary brand name since its launch in 1966. Chicken Sausages, Elephant House Lingus, Bacon Whopper Sausages, Pawkies and English Gammon

KRESTSSKREST

Keells Food Products PLC

EVENTS OF THE YEAR 2016/17

April 16

October 16

May 16

November 16

June 16

December 16

Jason Derulo Live in ConcertElephant House Sausages joined hands with the event “Jason Derulo Live in Concert”. Being the co-sponsor for food with selling rights in this event gave the opportunity to reach the youth target segment.

EH/Krest Theme Night

success.

“Hot Dog Show Down” was hosted

Sausages in partnership with the

range among corporate employees whilst providing an opportunity to

discount rates.

Ramadan Expo

showcasing its Krest brand through

Annual Report AwardsKFP won the Gold award at the 52nd Annual Report Awards Ceremony 2016 in the Food and Beverage

Chartered Accountants of Sri-Lanka


July 16

January 17

August 16

February 17

September 16

March 17

Team Building

came together at an outbound training for team building and enhancing team dynamics.

New Theme LaunchThe sales team came together to revamp themselves under a new theme Dream Dare Deliver

KeellsKrest Vikunanno DinannoKFP conducted a merchandising campaign across the country to support trade and drive the brand

Launch of Krest Facebook PageKeellsKrest launched its Facebook page and within a month the page reached over 15,000 fans and more than

KFP partnered with the Colombo

more than 500,000 consumer contacts via the food stall placed at the premises.

School Cricket MatchesKFP partnered with all of the leading school big matches in Sri Lanka with a strong brand presence via the revamped KeellsKrest and EH food stalls

of our range of products.


ABOUT US

Keells Foods Products PLC

in processed food manufacturing in Sri Lanka with over 35 years of experience. As the market leader in the processed meat industry KFP is renowned for its quality, backed by stringent quality

“KFP is the market leader in the processed meat industry and is renowned for its trusted quality backed by stringent

and convenient products.”

developed in house and manufactured using state of the art food

whenever and wherever they choose to eat and drink.

VALUES : Doing the right thing always

Excellence : Constantly raising the barCaring : Fostering a great place to workTrust


ABOUT THIS REPORT

we have voluntarily adopted. The Financial Statements have

Standards which have been audited by Messers. Ernst & Young Chartered Accountants. The Annual Report complies with the

Sri Lanka.

stakeholders, the capital providers, to represent fairly the events

capital, human capital and natural capital. We have also complied

How We Complied

Strategic focus and We have maintained a strategic focus throughout the report. Our future

Review

Stakeholder engagement

have been provided in the report

Concise and consistent

and consistent manner

Comparabilityprovided wherever possible

Reliability Assurance has been provided by our external auditors on Financial Statements

obtained from credible sources as stated throughout the report.

Overall Report Architecture

Stock Exchange

Financial Statements

• Sri Lanka Accoun of 1995

Corporate Governance

Memberships

• Ceylon Chamber of Commerce

Sri Lanka

Scope and Boundary

environmental performance, whilst being comprehensive, has been limited to a review of events and progress within the year ended 31st March 2017.

For inquiries regarding this report, please contact;

Sector Financial ControllerKeells Food Products PLCP.O. Box 10 Minuwangoda Road, Ekala [email protected]


PERFORMANCE HIGHLIGHTS

31st March 2017, a commendable performance in what proved to be a challenging business environment. A sound balance sheet with minimal

Performance Highlights - Group

Performance2016/17 2015/16 %

Change

Revenue 1

PBT

PAT

Dividend Paid 52

EPS Rs. 13.13

Cash EPS Rs. 19.77 20.92

Times 31.70

ROCE 20.51 22.31

ROE 16.01 19.29

Balance Sheet Strength

2017 2016 % Change

Total Assets

Total Debt 123,175

1,670,129

25,500 25,500 -

Rs. 65.50

Debt/Equity

Debt/Total Assets 5.11

Times 2.30

Earnings Per Share vs Dividend Per ShareRs.

2013 2014 2015 2016 2017

Earnings Per Share Divedent Per Share

0

5

10

15

20

Revenue and Opera�ng ProfitRs. Mn Rs. Mn

2013 2014 2015 2016 2017Revenue Opera�ng Profit

0

500

1,000

1,500

2,000

2,500

3,000

3,500

-100

0

100

200

300

400

500


Social Performance 2016/17 2015/16 % Change

Market price of share as at 31st March Rs. 170.00

3,697,500

Enterprise value as at 31st March

Times 12.95

Dividend Payout

Dividend Per Share Rs. 16.75 11.00 52

Dividend Yield 11.55 79

EC1 Economic value added 5

77,726 69,220 12

EC7 Community services and infrastructure projects 2,996 2,913 3

-

Environmental Performance 2016/17 2015/16 % Change

GJ 6

m3 15

39,201

Programmes 2 1 100

Dividend Payout Vs Dividend Per ShareRs. Mn Rs.

Dividend Payout Dividend Per Share

0

100

200

300

400

500

0

5

10

15

20

2013 2014 2015 2016 2017

Net Profit and Taxa�onRs. Mn

12/13 13/14 14/15 15/16 16/17

Net Profit Taxa�on

-100

0

100

200

300

400

500

“Our brands are synonymous with quality and convenience, and are trusted by the consumers who have embraced our expanding range of products with enthusiasm.”


CHAIRMAN’S REVIEW

Dear Shareholder,

and the Audited Financial Statements of Keells Food Products PLC

in the previous year. However, the Company strengthened its

and coverage.

Building our brandKFP remains the market leader in processed meats with stable

of the mind brand recall amongst consumers supported by a

development of our products and have improved our products

needs and lifestyles.

During the year under review, the processed meat products were

under the “KeellsKrest” brand. All products under the “KeellsKrest”

“KFP remains the market leader in processed meats

mind brand recall amongst consumers supported by

to consumer convenience and availability.”

29%

Rs. 3,049 Mn

Rs. 275 Mn


were introduced to the market which was well received by our customers.

the Company to increase product availability while deriving

engagement with our distributors and dealers, focusing on mutual

just re-commenced, albeit on a smaller scale.

Sustainable Sourcing KFP strengthened its sustainable procurement sources for meat, vegetables and spices with farmer networks which comprise mainly of small and medium scale farmers. Guaranteed prices

provide technical support to ensure that quality is maintained

Our Team

at KFP and are passionate ambassadors of our brands. Talent management processes are coordinated and monitored by

implemented by a HR team at KFP to ensure that talent is

and they represent key components of our intellectual capital.

manufacturing processes and deepened their commitment to

Dividend

Governance

Samarajeewa and Mr. Pravir Samarasinghe.

Your Company opted to be transferred to the Diri Savi Board of

the Colombo Stock Exchange. The Parent Company, John Keells Holdings PLC, disposed of shares to ensure the minimum public

board was met.

Our prospects

processed meat industry with a proven track record supported by its network of distributors and suppliers. The expansion of its

more health conscious consumer, capitalising on the growing need

with our promise of quality while maintaining the great taste our

maintain its leadership

meat industry with a proven track record supported by its network of distributors and suppliers.”


Acknowledgements

consumers, we promise to uphold our commitment to quality. We

to thank my colleagues on the Board who have provided strategic

Shareholders is being held on the 5th of June 2017 which is a

early release of the Annual Report.

Susantha RatnayakeChairman

12th May 2017

CHAIRMAN’S REVIEW

our sustainability journey

its footprint in overseas markets to drive growth

development of our products. The

consumer needs and lifestyles.”


sustainable value to our stakeholders over the long-term.

FINANCIAL CAPITAL

Debt: Rs. 123 million

MANUFACTURED CAPITALManufacturing Plants

HUMAN CAPITAL

SOCIAL AND RELATIONSHIP CAPITAL

INTELLECTUAL CAPITALBrands, Tacit Knowledge and Processes

NATURAL CAPITAL

3

Environment Financial Management

Research and Development Technology Human

ManagementSupply Chain

KeellsKrest, Krest,

Elephant House

Products

Procurement

Manufacturing & Packaging

Quality Assurance

Warehousing

Star Class Hotel

Hotels, Restaurants and Catering

Establishment

Households

RESOURCES FOCUS

PROCESS

MARKETS

VALUE DRIVERS

OUR BUSINESS MODEL


SHAREHOLDERSGenerate sustainable earnings growth with transparency

Dividend Per Share Rs. 16.75

EMPLOYEES

life balance

Provide a safe and conducive working environment

Training and skill development

SUPPLIERS

Prompt payments

Fair and ethical sourcing

Training and Development

Payments to direct suppliers: Rs. 1,393 million

CONSUMERS

COMMUNITIES & ENVIRONMENT

Community Engagements: Rs. 3 million

3

VALUE CREATED


addressed in an equitable manner, enhancing the sustainability of

term plans.

Stakeholder Method and Frequency of Engagement Key Topics and Concerns

SHAREHOLDERS

shareholder is John Keells Holdings

other Companies within the JKH

shares. The remainder is held by the Public.

of Annual Report

• Regular quarterly performance updates

• Announcements to the Colombo Stock

environmental performance

• Returns commensurate with the risk undertaken

• Corporate Governance and risk management frameworks

• Transparency and credibility of disclosures

CONSUMERS

Consumer demand drives revenue growth and KFP seeks to have products that are relevant and appeal to both local and overseas customers.

• Surveys conducted by third party agencies

• Social Media

• Website

• Dedicated customer helpline

• Product quality

• Availability

• Taste

• Experience

• Price

DISTRIBUTORS AND RETAILERS

Distributors facilitate the availability of our products in retail stores and we rely on them to maintain cold chains and promote our products to customers.

• Sales team engages with distributors and retailers on an ongoing basis

• Facilitate earnings growth

Shareholders

Community

Employees

Suppliers

Retailers & Distributors

Consumers

“The structured stakeholder engagement mechanisms in place to ensures that the

and addressed in the interests of long term sustainability of the Company.”

Our Main Stakeholders

STAKEHOLDER ENGAGEMENT


Stakeholder Method and Frequency of Engagement Key Topics and Concerns

SUPPLIERS

We rely on suppliers for a stable supply of high quality raw materials at a fair price for our manufacturing processes.

• Focused Supply Chain team engagements and supplier audits

• Capacity building workshops

• Training and Development

• Support for growth

- Prompt payments

- Fair pricing

- Fair Terms of Trade

EMPLOYEES

Employees convert other capitals into value for stakeholders and are the

• Open door policy

• Performance Management System

• Health and safety

• Training and Development

• Career Progression

• Conducive work environment

• Dignity, Health and Safety

COMMUNITY

the community and how we impact their lives.

• Press releases

• Website

community leaders

• Complaints mechanisms with sustainable

• Create jobs

• Facilitate socio economic progress


Our brands are synonymous with quality and convenience, and are trusted by the consumers who have embraced our expanding range of

During the year under review, we have improved and re-branded the Keells

to. Our Keells

Product Brands

KRESTSSKREST

The KeellsKrest Range

Our re-branded product label Keells

the pioneer in the processed meat industry, the Keells

guidelines.

Our New Products

KEY PRODUCT LINES


The Krest Range

superior quality and our brands have been built on

products to the market.”

Elephant House Premium Range

The much loved and craved Elephant House sausages has been a legendary brand name since its launch in 1966. Elephant House Chicken

KRESTSSKREST


Governance philosophy founded on a culture of performance within a framework of conformance and compliance which helps

and equitable to all our stakeholders.

The Corporate Governance framework at Keells Food Products PLC

Management System and is designed to be a working structure

monitoring of both compliance and performance.

This report demonstrates in detail how KFP has embraced and complied with all the mandatory provisions of the Companies Act

guidelines.

and relevant, the components of the KFP Corporate Governance System; the mechanisms in place to ensure strict adherence

Governance.

CORPORATE GOVERNANCE COMMENTARY

KFP for the Year 2016/17• Plans of succession, of various Key Management

years were announced in February 2017.

held devices for invoicing online sales thus enabling the

changed the way business is run.

• A digital forensic tool, Forestpin was implemented

stakeholder interest for improved assurance.

survey was conducted across the KFP Group. Following its conclusion, the Management discussed the

“The Corporate Governance framework at Keells Food Products PLC is built on the core principles of

maintenance of a sustainable business model.”


The Corporate Governance Framework SystemJKH Corporate Governance Framework System within a Sustainability Development Framework

The diagram above depicts the key components of the JKH Corporate Governance System and their inter-linkages. The Corporate Governance Commentary is broadly sequenced in keeping with this diagram as follows;

1. Internal Governance Structure

GROUP

SECTOR /

SUBSECTOR

BU / DEPT

Strategy

Decision Making Process

Directorof 2007 Mandatory compliance

Colombo Stock Exchange

Mandatory compliance

on Corporate Governance as published by the

Commission and the

Accountants, Sri Lanka

Voluntary compliance

UK Corporate Governance

context of the nature of

Voluntary compliance

Human Resource Governance

Management

Employee

Ombudsperson

Stakeholder Management

JKH Code of Conduct

External Control

LEVEL INTERNAL GOVERNANCE STRUCTURE

INTEGRATED GOVERNANCE

ASSURANCE MECHANISMS

REGULATORY BENCHMARKS

Board of Directors and Senior Management

Human Resources

of JKH

Related Party

Review

of JKH

Audit

Governance Systems and Procedures

Systems and Procedures Key Components

CEO

Employee Empowerment


2. Integrated Governance Systems and Procedures

describe the overarching framework which governs the

transparent corporate conduct.

3. Assurance Mechanisms

The Assurance Mechanisms cover the “bodies and mechanisms” which are employed in enabling regular

providing assurance that actual outcomes are in line with

also indicates, where relevant, the benchmarks set for the

1 Internal Governance Structure

within the JKH Group, and as a result, have an impact on

Structure encompasses;

i. The Board of Directors

iv. Employee Empowerment

As depicted in the Governance framework, the above components in the structure are strengthened and complemented by internal policies, processes and

making, human resource governance, integrated risk

1.1 The Board of Directors

sustainable long term success of the Group;

• Reviewing and approving annual plans, and longer term business plans;

• Tracking actual progress against plans;

• Reviewing HR processes with emphasis on succession planning for the top management;

• Monitoring systems of governance and compliance;

• Overseeing systems of internal control, risk management, and establishing whistle-blowing conduits;

and capital expenditure;

documents;

• Approving in principle the issue of equity/debt

oversight.

During the year under review, the Board membership changed as follows;

having served the Board for more than 9 years.

• Mr. M P Jayawardena

• Mr. S H Amarasekera PC

• Mr. R Pieris



• Mr. P D Samarasinghe

• Ms. S De Silva

• Mr. A E H Sanderatne

illustrated as follows;

Age

Independent NEDNon-Independent NED

30-3940-4950-59Over 60

2

4

Gender

MaleFemale

7

1

Less than 5 years Over 5 years

4

4

4

4 1

1

1.1.3 Board Skills

discussions in the Board room. Further details of their

a very high level of integrity, business savvy, shareholder

Group is conscious of the need to maintain an appropriate mix of skills and experience in the Board, and thus, a regular review of the Board is conducted, to ensure that the skills

of the Group.

The following skills and exposure are currently represented on the KFP Board;

exposure and experience.

exposure and experience

• Macro Finance, Economics and Treasury skills

One Director serves as the Finance Director of the Parent Company and the other one as the Chairman of the Audit

importance requiring extensive discussions. The Board also

the need.

“Our Corporate Governance philosophy is founded on a culture of performance within a framework of conformance and compliance, which helps to create and maintain a successful business model.”


year 2016/17 was as follows;

Name of Director

26/04/2016 25/07/2016 25/10/2016 31/01/2017

Mr. S C Ratnayake Present Present Excused Present Mr. A D Gunewardene Present Present Present PresentMr J R F Peiris Present Present Present PresentMr. J R Gunaratne Present Present Present PresentMs. S De Silva * - Present Present Present Mr. E A H Sanderatne * - Present Present Present

- Present Present PresentMr. P D Samarasinghe * - Present Present PresentMr. M P Jayawardena ** Present - - -Mr. S H Amarasekera PC** Present - - -

Present - - -Mr. R Peiris** Present - - -

* Appointed to the Board on 10th June 2016

** Resigned from the Board on 9th June 2016

1.1.4.1 Board Agenda The Chairman ensured that all Board proceedings were

conducted in a proper manner, approving the agenda for

Board agenda in 2016/2017 was:

• Status updates of major projects

• Review of performance - in summary, and in detail, including high level commentary on actuals and outlook

• Approval of quarterly and annual Financial Statements

the Board

updates, Tax and Treasury updates

services and Company Secretaries are made available to the Board.

1.1.6 Board Secretary

Board minutes and Board records, the Board Secretary

The Board conducted its annual Board performance

process of individual appraisal enabled each member to self-appraise, the performance of the Board under the areas of:

• People mix and structures

• Systems and procedures

• Board image

We believe in a diverse workforce to serve our diverse

gender, age, ability, background or sexual preference. The

to make progress in improving the gender diversity of the Board and the senior management.



to nominee Directors of JKH, are paid to JKH and not to individual Directors.

Director Fees payable, if any, in terms of the contract.

contracts of the Company are addressed in the Annual Report of the Board of Directors. The Board of Directors

balanced assessment of results in the quarterly and annual Financial Statements.

1.1.11 Going Concern

of the Company or the Subsidiary Company fall below a half

forward.

The going concern principle has been adopted in preparing the Financial Statements. All statutory and material

the Board of Directors in the Annual Report. Financial

Statements are prepared in accordance with the Sri Lanka

Company and its Subsidiary that have translated into the

future results

when required. The Board met on four occasions during

appointed to the Board, they are apprised of the values

and are briefed on important developments in the business

development, subject to requirement and relevance for each Director. The Directors are constantly updated on the latest trends and issues facing the Company and the industry in general.

and also to strengthen its decision making, the Board encourages its members to seek independent professional

expense. This is coordinated through the Board Secretary as and when requested.


Accordingly Board obtains independent professional advice

aspects, market surveys, architectural and engineering

Directors are encouraged to seek expert opinion and/or

make a general disclosure of interests, as illustrated below;

Prior to appointment

interests

Once appointed • Directors obtain Board clearance prior to:

discussion:


Status of conformity

1. Shareholding carrying not less than 10 per cent of voting rights

2. Director of another Company*

income

appointment as Director

JKH Group

5. Close family member who is a Director, CEO or a Key Management Personnel Company

6. Has served on the Board continuously for a period exceeding nine years from the date of the first appointment


Name of Director Independent / Non Independent

Involvement/ Interest in Shareholding

Involvement/ Interest in Management

Involvement/ Interest in Supply Contracts

Served for 9 Years

Mr. S C Ratnayake – Chairman Yes Yes

Mr. A D. Gunewardene Yes

Mr. J R F Peiris Yes

Mr. J R Gunaratne Yes

Ms. S De Silva

Mr. E A H Sanderatne

Mr. P D Samarasinghe

1.1.16 Board Appointment

Board appointments follow a structured and formal process

of new Directors are disclosed to the shareholders at the

which will examine the facts and circumstances and make

any new Director who was appointed to the Board during

provided to the shareholders in advance to enable them to

the Company. Further, all Directors who are over the age of

designated areas of responsibility and impart knowledge

Parent Company -John Keells Holdings PLC

Keells Holdings PLC

Parent Company -John Keells Holdings PLC


Composition

Mandate

Scope

Compositionmajority of whom shall be independent.

Mandate

Scope

ii. Consider targets, and benchmark principles, for any performance related pay schemes

in view;

• Performance

iv. Succession planning of Key Management Personnel

1. Mr. A Cabraal - Chairman

2. Mr. A Omar

3. Dr. H Wijayasuriya



Composition

Mandate

Scope i. Assess skills required on the Board given the needs of the businesses

1. Mr. A Omar - Chairman

2. Ms. P Perera

3. Dr. H Wijayasuriya

Composition

Mandate

Scope


The undersigned and the following Directors served as members

Mr. A Cabraal

Mr. S C Ratnayake

Group Finance Director – Designate Mr. Gihan Cooray and

behalf of the Board, of John Keells Holdings PLC and its listed Subsidiaries, to ensure compliance with the Code on Related

Chartered Accountants of Sri Lanka and CSE.

• that there is compliance with the Code;

• that shareholder interests are protected; and

• that fairness and transparency are maintained.

recurrent RPTs of the Parent, John Keells Holdings PLC, and all its listed subsidiaries, namely; John Keells PLC, Tea Smallholder

PLC, John Keells Hotels PLC, Ceylon Cold Stores PLC, Keells Food Products PLC, and Union Assurance PLC. Further, recurrent RPTs

designated as KMPs in order to increase transparency and enhance good governance. Annual disclosures from all KMPs

communicated to the Board of Directors, quarterly through verbal

P Perera


24.05.2016 27.07.2016 24.10.2016 25.01.2017 Eligible to

Mr. F Amerasinghe* - 1 -Mr. A Cabraal

Ms. P PereraMr. S C Ratnayake - 3

1.3 CEO Appraisal

Directors appraise the performance of the CEO of the


As at 31st March 2017, the 9 member GEC consisted of the Chairman, the Deputy Chairman, the Group Finance Director

the overlay structure that implements, under the leadership

determined by the Board. The GEC manages through

A key responsibility of the members of the GEC is to act as

of the GEC are well equipped to execute these tasks and bring in a wealth of experience and diversity to the Group in

As at 31st March 2017, the 22 member GOC consisted of the Chairman , the Deputy Chairman, the Group Finance

synergies, across industry groups, sectors, business units

the year and is instrumental in preserving a common group

The GMC of the Consumer Foods Sectors operates under the leadership of the sector President and is dedicated

strategic business units or even at departmental level where appropriate and material.

and accountability to the lowest possible level, via suitably

The agenda of the GMC is carefully structured to avoid

applicable.

the strategies and policies determined by the Board.

management of human resource and managing through

and achieving plans as well as ensuring compliance with Group policies and guidelines rests with the President, the

where applicable.

Group

Sector

Business unit/

Group Management

Sector

Management

President

Vice President

Vice President/ Assistant

Vice President /Manager

• Strategy

• Performance monitoring

• Career management and succession planning

• Risk management

of Group

1.5 Employee Empowerment

Given the importance the Group places on its employees

goals, strategies and plans.

reduce bureaucracy and speed-up the decision making process.


annual and long-term plans and the Group which also ensured employee involvement in strategy, and thereby empowerment, in the process.

enable, and facilitate, high accessibility of all employees to every level of management.

is encouraged at all levels. The Group strongly believes

decision making.

Moreover, the Group provides a safe, secure and conducive environment for its employees, allows freedom

2 Integrated Governance Systems and Procedures Listed below are the main governance systems and

procedures of the Group. These systems and procedures

Structure, and are benchmarked against industry best

ii. Human resource governance, employee performance and people and talent management

vi. Sustainability governance

decision making process ensures the involvement of all

• Several views, opinions and advice are obtained prior to making an investment decision.

• All investment decisions are consensual in nature, made

decision making powers over investment decisions.

investment decision rests with the Chairman.

risk management for each

performance monitoring at

BU level

2. GEC review and approval

3. Business performance

six months against target

for the second half of the year and obtaining GEC approval

Performance

the second half/full year

2.1.1 Project Approval Process

Projects undertaken follow a detailed feasibility report

scenarios, within a framework of sustainability. The

only, but encompasses a wider scope of work covering risk management, sustainable development and HR

the Board. When appropriate, the GEC is empowered to approve such proposals in terms of the delegated decision rights with the Board being kept informed.



Project FeasibilityStudy

Review by theGEC

Due Diligence

Board/GECApproval

Risk Management

Sustainability Management

Project Appraisal Framework Flow

2.2 Human Resource Governance

The Group Human Resource Governance framework is designed in a manner that enables high accessibility by any employee to every

2.2.1 Performance Management

Pay decisions based on: Learning and Development

Rewards and Career Development

Talent Management

Succession Planning

• Employee of the Year• Champion of the Year

• High Performers• Group talent

• Long term development plans• Competency based training needs• Business focused training needs

• Jobs at risk• Suitable successors• Readiness level of successors• Development plans• External recruitments

Performance Management

System



ways of unearthing promising talent.

For succession planning at senior management levels, a

planning of Key Management Personnel.

measurable criteria, which have been pre-agreed on

which have impacted performance either favourably or adversely. Further, the senior management holds regular

levels based on pre-determined criteria which are uniformly applied across the eligible levels and performance levels.

Corporate Governance framework, where the employees

towards upholding the principles of Corporate Governance. Having considered its employees as its greatest asset, KFP engages employees at various levels to the internal

policies, processes and systems are in place to ensure

who possess the required competencies.

“Pay for performance”

Greater prominence is given to the incentive component of the total target compensation of the management.

•• Higher the authority level within the Group, higher the incentive component• Greater the decision influencing capability of a role, higher the weight given on organisational performance as opposed to the

individual performance• Long term incentives in the form of Employee Share Options

“More than just a workplace”

Continuously focuses on creating a sound work environment covering all aspects of employee satisfaction.

Performance Management

Compensation Policy

Satisfaction

External Equity

• Remuneration policy is built upon the premise of ensuring equal pay for equal roles.

• Manager and above level roles are banded using the Mercer methodology for job evaluation on the basis of the relative worth of jobs

• Fixed compensation is set at competitive levels using the median, 65th percentile and 75th percentile of the best

• Regular surveys are done to ensure that employees are not under / over compensated


Moreover, KFP provides a safe, secure and conducive environment for its employees, allows freedom of

on gender, race or religion, and promotes workplaces which are free from physical, verbal or sexual harassment, all of

goals, strategies and plans

a sense of ownership, reduce bureaucracy and speed-up the decision making process.

employee involvement and empowerment in the process

high accessibility by all employees to every level of management.

2.3 Integrated Risk Management

KFP risk management process focuses on wider

wealth.

management process are:

to planning, policies/procedures, culture, competency,

established limits for risk taking. The risk management programmes have allowed greater visibility and

a best of breed framework.

plan has been formulated to address issues of concern that stemmed from the audit.

Chairman

GEC

HoBSs

Sector Heads

Functional Heads

Ex

ecut

ive

Com

mitt

ee

O

pera

ting

Com

mitt

ee


employees and their families. Therefore, the Group follows open-door policies for its employees and key stakeholders and this is promoted at all levels of the Group. The Group

than their own immediate supervisor in an open but

2.5.3 Channels to Reach All Shareholders of the Company

Company and the shareholders are through the Annual

discussions with shareholders, as and when applicable,


• Measures in place in case of serious loss of capital

Shareholders/

Customers/Suppliers

Government

Other key Stakeholders

Employees

• Providing of quality and safe products• Constant engagement with customers

and ethically

• Accessibility to all levels of the management • Various means for employee involvement

- JK Forum - Young Forum

KFP adheres to the following procedures and makes use

shareholders.

the shareholders along with the Annual Report, within

available to answer queries

• Chairman ensures that the relevant senior managers are

• Proxy votes, those for, against, and withheld are counted

KFP HR division is designed in a manner that enables high accessibility by any employee to every level of

Stakeholder Management

Following are the key stakeholder management methodologies adopted by the Group.


Further, individual shareholders are encouraged to carry out adequate analysis or seek independent advice on their

is also released to employees, press and shareholders

2.5.5 Serious Loss of Capital

below half of shareholder funds, shareholders would be

the proposed way forward.

2.6 Sustainability Governance

Group places great importance on sustainable development.

brand image are closely aligned with sound corporate

responsibility. Please refer the Stakeholder Engagement

strategy of entrenching sustainability within its business

content.

During the year under review, the distributor Management

being equipped with hand held devices in order to monitor

company to have clear visibility of secondary sales data in

across the country.

3 Assurance Mechanisms The Assurance Mechanisms comprise of the various

supervisory, monitoring, and benchmarking elements of the Group Corporate Governance System which are used to measure “actuals” against “plan” with a view to signalling

mechanisms also act as “safety nets” and internal checks in the Governance system, which are discussed in detail in the

3.1 The Code of Conduct

Code of Conduct• Allegiance to the Company and the Group

the territories that the Group operates in

• Exercise of professionalism and integrity in all

conformance with corporate values and their degree of adherence to the Code of Conduct are the key elements of

3.1.2 Group Values

conformance with corporate values and their degree of adherence to the JKH Code of Conduct are key elements of

year

3.2 Independent Directors

corporate governance as stake holders need an independent

supervisory and monitoring role by focusing on the designated areas of responsibility passed to it by the Board.

and monitoring role by focusing on the designated areas of responsibility passed to it by the Board. For more


and employee awareness. The importance of

issued by the Chairman, Sector President and the

to interact with the senior management, KFP has created

as listed below.

• Exit interviews

• Employee surveys

• Ombudsperson

of the level of anonymity, and subsequently discussed and

During the year, the Group conducted the “Great Place To

to provide a comprehensive insight into how employees perceive the culture, structure, and management of an

and empowers people, to be a strategic priority, in keeping

3.5 Internal Controls

The Board has taken necessary steps to ensure the integrity

and that internal control systems remain robust and

periodic basis.

The Board has, through the involvement of the JKH

obtain assurance that systems designed to safeguard the

Guidelines

31st March 2017, the Group took steps to review and streamline the roles of each user on its Enterprise Resource

process in assigning roles to users of the ERP system.

The Group internal audit process is conducted by

Group. GBPR ensures that the internal audit plan adequately

The risk review programme covering the internal audit of the Company is outsourced to Messrs.

Accountants. Reports arising out of such audits are, in the

and the President of the industry group, are forwarded to

risk review process and systems of internal control on a regular basis.

was based on a cyclical process that involves manually


Annual Report 2016/17

in a complex and dynamic business environment where

during the year under review, the Company commenced “bigdata analysis” techniques on the total data.

3.6 Ombudsperson

An Ombudsperson is available to report any complaints

available mechanisms.

Ombudsperson, subsequent to an independent inquiry, is

duty of the Ombudsperson ceases.

may be, will place before the Board:

iii. where the Chairman or the JKH Group Senior

of disagreement and the reasons therefore.

of disagreement and decide on the way forward. The

expected to take such steps as are necessary to ensure that

invoked this process.

3.7 External Audit

Messrs. Ernst & Young is the External Auditor of the Company. They also audit the Consolidated Financial Statements of the Group.

and Young and the other External Auditors, also provided certain non-audit services to the Group. However, the lead/

for External Auditors. All such services have been provided

assessed to ensure that there is no compromise of External Auditor independence.

The Group is currently engaged with its External Auditors to jointly understand the extent of realigning the scope of

relevance of the report via reinforced transparency, and will

The Board has agreed that, such non-audit services should not exceed the value of the total audit fees charged by the subject Auditor within the relevant geographic territory. The

on an annual basis.

The Audit and non-audit fees paid by the Company and

The Board, through the JKH Group Legal division, Group

to ensure that the Company and all of its subsidiaries and

countries they operated in.

The Board of Directors also took all reasonable steps in

supplemented by a detailed Business Review which explains

sustainability and risk related aspects of the Company, and the means by which value is created and how it was

KFP is fully compliant with all the mandatory rules and

CSE; and


jointly set out by the CA Sri Lanka and the SEC, and have

5 Outlook and Emerging Challenges

governance, KFP is acutely aware of the need to remain vigilant and geared to meet the emerging governance needs of the Group, its stakeholders and the environment in which the Group operates. As is evident from the aforesaid

the year under review, to stay abreast of governance best

amongst many others, being addressed by the group.

5.1 Gender Diversity on the Board

The Group believes a wide range of people and experiences

During the year, there was one female Board Director appointed to our Board. Given that women comprise a

We acknowledge the challenges of increasing diversity

diversity of the Board.

There is increasing pressure for Boards to improve

experience, and enhance transparency and accountability. Our Board strives to take a balance of the two viewpoints

average age of the Board is 53 years as of 31st March 2017, in comparison to an average age of 60 years as at

Directors with great diversity of knowledge and experience in order to match boardroom talent with evolving business strategies.

designated Directors are fully prepared to engage directly

with a greater level of engagement.

5.4 Cyber Security

accepts that the risk of a security breach needs to be

review, necessary steps have been taken to help curtail the

5.5 Talent Risk Management

evolving strategies and growth markets, having the right

Board recognise the crucial role they play in human capital

ensuring that the leadership stays focused on building the right talent strategy. The Board will focus on how to

management levels.

5.6 Board Independence

number of contexts. The Group understands the importance of the independence of External Auditors and similarly,

The KFP Group will, as stated before, strike a right balance

is thought to facilitate independence, and tenured and experienced Board members, who are perceived as having lesser independence because of their extended tenure on the Board.



5.7 Greater Employee Involvement in Governance

The Group acknowledges, and recognises the role played

system. Going forward, the company will encourage

• A further strengthened performance management process

• Engagement and empowerment via greater authority

• Enhanced training and development

based on the age dynamics of employee segments.

CSE Rule 7.6 Compliancestatus

Reference in the KFP Annual Report 2016/2017

yearYes Annual report of Board of Directors

any changes thereinYes Management Discussion and Analysis

Annual Report of Board of Directors.

The names and the number of shares held by the 20 largest holders of Yes Your Share in Detail

The public holding percentage Yes Your Share in Detail

Yes Annual Report of Board of Directors.

Yes Enterprise Risk Management Report

Details of material issues pertaining to employees and industrial During the year 2016/17, there were no material issues pertaining to employees and industrial

Yes

Yes Your Share in Detail



value as at the end of the year

Yes

placement during the year during the year

SchemesYes Annual Report of Board of Directors

Statements

Yes Corporate Governance Report

Financial Statements, whichever is lower

Yes Annual Report of Board of Directors

6 Compliance Summary 6.1


6.2

Mandatory provisions - fully complied

CSE Rule Compliancestatus

7.10 Compliance

a./ b./ c.

Compliance with Corporate GovernanceRules

Yes KFP is in full compliance with the Corporate

where applicable

a./ b./ c.

At least two members or one third of the Board, whichever Yesthe need to maintain an appropriate mix of skills and experience in the Board and to refresh progressively

7.10.2 Independent Directors

a.“independent”

Yes

b.her independence or non-independence

Yes

a./ b. Board shall annually determine the independence or Yesof all their interests on an annual basis

c. A brief resume of each Director should be included in the Yes

d. Provide a resume of new Directors appointed to the Board along with details

Yes

a. to h.

Yes

a.majority of whom will be independent

Yes

by the Board of DirectorsYes

b. Yes

the JKH Group and as recommended by the Human



CSE Rule Compliancestatus

c. The Annual Report should disclose: Yes Corporate Governance Report - The Human

Yes Corporate Governance report - The Human

Yes

a.of whom should be independent

Yes

Yes

YesSector Financial Controller are permanent invitees to

Yes

b.

i.

with SLFRS/LKAS

Yes

ii. Yes

iii. Ensuring the internal and risk management controls are adequate, to meet the requirements of the SLFRS/LKAS

Yes

iv. Assessment of the independence and performance of Yes

v. External Auditors

Yes

c. Yes

auditors

Yes

Yes


6.3 Companies Act No.07 of 2007

Rule 168 ComplianceStatus

Reference - KFP Annual Report 2016/17

The nature of the business of the Group and the Company together YesAnnual Report of Board of Directors.

Yes

CompanyYes

Yes

Yes Annual Report of the Board of Directors

Yes

periodYes

Annual Report of Board of Directors.


Amounts paid/payable to the External Auditor as audit fees and Yes

SubsidiaryYes

Acknowledgement of the contents of this Report and signatures on behalf of the Board


6.4

Voluntary provisions - fully complied

A. Directors

Rule ComplianceStatus

Reference

A.1 The Board

A.1.1 Yes Corporate Governance Commentary -

A.1.2

risk management, compliance with laws and ethical standards,

Yes Corporate Governance Commentary -

Processes 2.1

A.1.3 Act in accordance with the laws of the country and obtain independent professional advice where necessary, at the

Yes Corporate Governance Commentary - Access to independent professional advice

All Directors should have access to the advice and services of the Company Secretary

Yes Corporate Governance Commentary - Access to independent professional advice




Reference

A.1.5 All Directors should bring independent judgment Yes Corporate Governance Commentary - The Board of Directors 1.1


Support Given 1.1.12


A.2 Yesseparated to ensure a balance of power and authority and to prevent any one individual

authority.

A.3 Chairman’s Role

A.3.1 The Chairman should ensure Board proceedings are conducted in a proper manner


A.4 Financial Acumen

The Board should ensure the availability within it of those with Yes Corporate Governance Commentary -

A.5 Board Balance

A.5.1should comprise a majority of the Board

A.5.2

A.5.3 Yes Corporate Governance Commentary - The Board of Directors 1.1

Yes Corporate Governance Commentary - The Board of Directors 1.1

A.5.5 Yes Corporate Governance Commentary - The Board of Directors 1.1

A.5.6

A.5.7

with other Directors who may have concerns

A.5.9the presence of EDs

Yes The Chairman conducts direct discussions

A.5.10which cannot be unanimously resolved, they should ensure their concerns are recorded in the Board minutes

Yes Corporate Governance Commentary - The Board of Directors 1.1.6



Reference

A.6.1 Management should provide the Board with appropriate and Yes Corporate Governance Commentary -

A.6.2 Timely submission of the minutes, agenda and papers required for Yes Corporate Governance Commentary -

A.7 Appointments to the Board

A.7.1appointments


A.7.2 Assessment of the capability of the Board to meet strategic demands of the company

Yes Corporate Governance Commentary 1.2.3

A.7.3 Yes Annual Report

removal of a Director

Yesfor a period of three years, and are eligible

maximum of three successive terms unless an extended Board tenure is necessitated by the exigencies of the Group. Corporate Governance Commentary 1.1.9

Yes

A.9 Appraisal of Board Performance

A.9.1 The Board should annually appraise itself on its performance in Yes Corporate Governance Commentary -


A.9.3been conducted

Yes Each member self-appraises, the performance of the Board. The scoring and open

Director, and the results are analysed to give

well as areas that required addressing and/or strengthening.

Corporate Governance Commentary -




Reference

A.10.1 Yes

A.11.1/A.11.2

Appraisal of the CEO against the set strategic targets Yes Corporate Governance Commentary 1.3


Reference

B.1.1 Yes Corporate Governance Commentary - Board

B.1.2 Yes Corporate Governance Commentary - Board

B.1.3should be listed in the Annual Report each year

Yes Corporate Governance Commentary - Board

Yes Corporate Governance Commentary - The Board of Directors 1.19

B.1.5

Directors

B.2.1

B.2.2

companies.

Yes

retaining high calibre talent within the

industry trends

B.2.3 Yes The “pay for performance” scheme is monitored and the CEO of Human Resources brief the Human Resources and

Directors should be designed to align their interests with those of the Company and main stakeholders

Yes

variable, linked to the expected return of shareholder funds and the peer adjusted

to perform at highest levels.



Reference

B.2.5

B.2.6 Yes

benchmark principles for any performance related pay schemes

B.2.7/the Directors

Yes Corporate Governance – Board of Directors

B.2.9 Yes Corporate Governance – Board of Directors

B.3.1

on the Board of KFP.


Reference

C.1.1 Yes

2.5.1

C.1.2 Yes The Group ensures that separate

is taken up at the AGM and shareholders are given an opportunity to vote on each issue separately. Corporate Governance Commentary 2.5.1

C.1.3 Yesavailable to answer all shareholder queries

other papers.Yes

are sent to the shareholders along with the Annual Report 15 working days excluding

and the date of the AGM

C.1.5 Yes The Group ensures that a summary of




Reference

C.2.1 Yes

shareholders by way of announcements to the CSE, press releases, the AGM and copies of the Annual Report, and Quarterly Reports

C.2.1 Channel to reach all shareholders of the company to disseminate Yes Corporate Governance Commentary 2.5

C.2.2shareholders

Yesand fair disclosure, with emphasis on

announcements are made to the CSE, SEC, and the press as and when appropriate

C.2.3 Disclose how the above policy is implemented Yesprior to the AGM to give them an

to the businesses of the KFP Group. Shareholders are provided with the Annual Report of KFP in CD form and may at any

of charge.

Announcements to the CSE and SEC are directed to the said bodies as and when required, while adhering to established protocol

Disclose the contact person for such disclosure Yesaddressed to the Company Secretary

C.2.5 Awareness of Directors on major issues and concerns of shareholders

Yes

of JKH also contributes towards keeping the Board informed of shareholder concerns

C.2.6 Contact person for shareholders Yes Shareholders can contact the company secretary and the KFP management

C.2.7 Process for responding to shareholders Yesapproved by the Board

C.3.1 Yes There were no major or material


D. Accountability and Audit


Reference

D.1.1reports to regulators.

Yes

balanced assessment of results in the quarterly

is promptly communicated to the CSE and such

press and shareholders. The Group ensures

D.1.2

of all material interests in contracts, equitable treatment of

Yes The Annual Report of the Board of Directors

D.1.3 The Annual Report should contain statements by Directors and Yes

The Annual Report of the Board of Directors

The Annual Report should contain a Management Discussion and YesReport

D.1.5 The Directors should report that the business is a going concern Yes Annual Report of Board of Directors

D.1.6 Yes

D.1.7 The Board should adequately and accurately disclose Related Yes Annual Report of Board of Directors

D.2 Internal Control

D.2.1 The Directors should conduct a review of internal controls at least annually Yes Corporate Governance Commentary 3.5.2

D.2.2 Yes

D.2.3of risk management and internal controls


Yes

D.3.1

should be independent, whichever is higher


D.3.2review the scope and results of the audit and the independence


D.3.3 Yes Corporate Governance Commentary 1.2.1




Reference

D.4 Code of Business Conduct and Ethics

Availability of a Code of Business Conduct and Ethics Yes Corporate Governance Commentary - The Code of Conduct 3.1


D.5 Corporate Governance Disclosures

D.5.1Corporate Governance Report

Yesout the manner and extent to which the company has complied, has been included


Reference

E.1.1 Yes The Group communicates with its shareholders via announcements made to the CSE, Annual Reports, Quarterly Reports,

E.2 Yes The Group prides itself in its widely acclaimed approach to Corporate Governance and as such, encourages investors of all types to give weight to all

F. Other Investors


Reference

F.1should be encouraged to carry out adequate analysis or seek

Yesteam has regular discussions with shareholders, as and when applicable, to

F.2 Yes The Group encourages all shareholders to

Rule Reference

G.1.1–G.1.7

Disclosure on adherence to sustainability principles The Group places great importance on sustainable

took steps to realign its approach to sustainability to support the Sustainable Development Goals adopted by the United


THE BOARD OF DIRECTORS

Mr. Susantha Ratnayake

Mr. Ratnayake was appointed to the Board of Keells Food Products PLC from the 1st of April 1993. Mr. Ratnayake was appointed as

years of management experience, all of which are within the John Keells Group. A past Chairman of the Sri Lanka Tea Board, Ceylon

Mr. Ajit Gunewardene

Mr. Gunewardene was appointed to the Board of Keells Food Products PLC from 1st October 2002. Ajit Gunewardene is the Deputy Chairman of John Keells Holdings PLC and has been

a Company established for the development of nanotechnology in Sri Lanka under the auspices of the Ministry of Science and

Economics and brings over 33 years of management experience.

Mr. Ronnie Peiris

Mr. Peiris was appointed to the Board of Keells Food Products PLC from 1st June 2003. Appointed to the John Keells Holdings PLC Board during 2002/03, Ronnie, as Group Finance Director,

the John Keells Group. He was previously the Managing Director

Management Accountants Sri Lanka and holds an MBA from the University of Cape Town, South Africa. Previously, the Chairman of

Mr. Jitendra Gunaratne

Mr. Gunaratne was appointed to the Board of Keells Food Products PLC from 1st July 2005. Jitendra Gunaratne is responsible for the Consumer Foods sector. Prior to his appointment as

37 years of management experience in the Group also covers Leisure and Property. He is a Director of Ceylon Cold Stores PLC and Keells Food Products PLC and is also the President of the

Ms. Shehara De Silva

Ms. De Silva was appointed to the Board of Keells Food Products PLC from the 10th of June 2016 and is a member of the Audit

with a track record of market development in East Asia and Sri Lanka, and has been behind the success of several regional

Music Project and was previously on the Boards of Arthur C Clarke


Mr. Amal Sanderatne

Mr. Sanderatne was appointed to the Board of Keells Food Products PLC from the 10th of June 2016 and is a member of the

He was the Head of Research of JP Morgan/Jardine Fleming in Sri Lanka. He was later transferred to Singapore and headed JP

of the Hong Kong based Access Products Group.

He is a graduate in Economics from the London School of Economics and is a CFA Charterholder.

Mr. Indrajit Samarajiva

Mr. Samarajiva was appointed to the Board of Keells Food Products PLC from the 10th of June 2016 and is a member of the

helped do at Dialog Axiata, The Sunday Leader, Sarvodaya and

Montreal, Canada.

His personal projects include KOTTU- a blog aggregator with over

language blog in Sri Lanka.

Mr. Pravir Samarasinghe

Mr. Samarasinghe was appointed to the Board of Keells Food Products PLC from the 10th of June 2016 and is the Chairman of

He has 30 years of professional and commercial experience and serves on the Board of Directors of several Public listed and unlisted Companies.


ENTERPRISE RISK MANAGEMENT

at KFP is to provide value to all stakeholders of the Company. Like any other business KFP also faces uncertainty and challenges

the value.

Sustainable Risk ManagementRisk Management process of KFP is intrinsically interwoven

engagements with internal and external stakeholders. The risk management process now extends to its value chain as

economic , environmental community, employees , value chain

Company.

The Enterprise Risk Management cycle begins during the second quarter of the year with the annual risk review of all Business

heads of Departments to comprehensively assess, rate and set

strategic risks relevant to each Business Unit, based on past

Any high level risks or Core Sustainability Risks were then

the Company and the measures taken to address these risks are detailed in this report.

responsible for reviewing their RCSA forms on a quarterly basis.

The Company risk review is considered by the JKH ERM division in

JKH group is depicted below in table 1.

John Keells Risk Universe Headline Risks

Risk Presentation

Risk

Risk Validation

Risk

JKH PLC Audit Committee

Risk

Man

agem

ent T

eam

Risk

and

Con

trol

Rev

iew

Tea

m

Listed Company Audit Committee

Business Unit

External Environment

Business Strategies

and Policies

Business Process

Organisation and People

Analysis and Reporting

JK Group Review Risk Report and Action

BU Review and Sector Risk Report

and Action

BU Risk Report

and Action

Technology and Data

Report Content

Table 1 -JKH Group Risk Management Process


The ERM Framework adopted by the John Keells Group and implemented by the Company and the Subsidiary involves the following:

A Risk Event -Any event with a degree of uncertainty which,

Core Sustainability Risks -Core Sustainability Risks are

probability of occurrence.

ii. Establishment of Risk Grid with Likelihood of Occurrence and

Using Group guidelines a risk grid is established for the Company. Every risk is analysed in terms of Likelihood of

2 for further details.

iii. Establishment of Level of Risk based on the Risk Grading Grid

Based on the values assigned for each individual risk, using the matrix given in Table 2 a level of risk is established by

Ultra High High Medium Low

Occurrence/Likelihood

Major/ Very high impact

Rare/Remote to Occur

Unlikely to Occur

Possible to Occur

Likely to Occur

Almost Certainto Occur

5

1

1 2 3 5Priority level

Colour code

Score

2 3 5

5 10 15 20 25

12 16 20

3 3 6 9 12 15

2 2 6 10

1 1 2 3 5

The Colour Matrix implies the following;

Table 2 -Guideline for Rating Risk


Risk Universe

given in Table 3.

Table 3 - Keells Food Products PLC - Risk Universe


Business Strategies and Policies

Business Process Organisation and People

Analysing and Reporting

Technology and Data

Political Reputation and Leadership Performance Measurement & Reporting

Technology

Architecture Competitor Capital & Finance Operations – Planning,

Production, ProcessSkills/ Competency/Motivation

Budgeting/ Financial Planning

Data Relevance &

Catastrophic Loss Strategy & Operations – Technology, Design, Execution, Continuity

Change Readiness Accounting/ Tax Data Processing

Customer Expectations

Business/Product Portfolio

Resource, Capacity & Allocation

Communication External Reporting & Disclosures

Technology Reliability & Recovery

Macro Economic Organisation Structure

Vendor/Partner Reliance Performance Pricing / Margins

Foreign Exchange Stakeholders Channel Effectiveness Accountability

Weather & Climate and Mergers &

Acquisitions

Fraud & Abuse Contract Commitment

Environment, Health and Safety

Customer Satisfaction Knowledge/

Legal, Regulatory Compliance and Privacy

Labour Relations

Property and Equipment Damage Liability

Attrition

1. Macro-Economic Environment, Changes in Interest Rates,

of raw materials sourced from local suppliers, as well as the raw

and lowers dependence on foreign imports

materials, lobbying against taxes and levies and maintaining an ongoing dialogue with the Government along with other leading retailers and suppliers.

the market rates and forward booking for imports to hedge against exchange rate risks. Guidance received from JKH Group Treasury

rates etc. has been of immense value in management of interest risk exposure.

Risk item Headline Risk

2016/17 2015/16

Macro Economic Environment,

Rates, Exchange Rates Taxes and


Medium Medium

2. Natural Disaster and Fire

business process by way of loss of life, loss and damage to



adequate insurance covers on all Property, Plant and Equipment

a safe working environment for its employees. The Company has


2016/17 2015/16

and Fire External Environment

Low Low

3. Business Process and Product Liability Risk

liability which can arise due to any fault in the product from food

has established a hot line for consumers to convey any message

complaints promptly.

Products manufactured and sold by the Company have a leading house hold brand name with high brand equity. Therefore, it must be managed and protected to survive and prosper in the years to come. The irreparable damage done to the brand following a crisis

visible costs.


2016/17 2015/16

Business Process and Product Liability Risk

Business Process

Medium Medium

Food Industry

The food manufacturing industry is subject to general risks of

concerns, the Company has a specialist Research and

conduct of regular internal and external audits as applicable to the industries and product lines we operate in.


2016/17 2015/16

Changing Customer

Requirements of

Business Process

Medium Medium

incinerator fumes

in the process of disposal of waste and also the possibility of gas or fuel leaks that could escape to the surrounding environment. Any

of the Ja-ela manufacturing facility directly to the Central Waste

Supply and Drainage Board. The waste water of the Pannala

within the factory before being irrigated in the land of the factory premises. The quality of the treated water complies with the

Central Environmental Authority.

“Enterprise risk management enables

trying to create value through capitalizing


Waste water quality checks are done fortnightly through accredited laboratories to ensure that the treated water conforms

its Oil & Grease as well as total Dissolved Solids parameters of its


2016/17 2015/16

Environmental

gas leaks and incinerator fumes

Business Process

Medium Medium

Material Price

chicken categories which are two of the key raw materials of the

by entering into long-term contracts with suppliers at guaranteed terms, giving know-how training to the local farmers of best

quality material at stable price levels.


2016/17 2015/16

Supply of Raw Materials and

Material Price

Business Process

Medium Medium

Key Human Resource areas such as recruitment, career development, performance management, training and development, competency frameworks, coaching and mentoring,

aligned to JKH group policies.

impact the image of the company. With a view to addressing the

basis with unionised employees to maintain cordial industrial

concern to the Company. KFP believes in succession planning to overcome this risk and has embedded various personal

that will come in the future.

has deployed specialised training programs which are targeted to improve specialised skills and knowledge.

For KFP, ensuring a safe working environment for its employees, suppliers and customers remains a top priority for the company,

accidents at the work place. The company has obtained OHSAS


2016/17 2015/16

Labour

Management and Health and Safety

and PeopleLow Low

the highest level of honesty and ethical dealings and will not

to protect itself and its resources from fraud and other similar

contractors, agents, intermediaries or its own employees.




2016/17 2015/16

Fraud and and People

Low Low

9. Break Down of Internal Controls Risk

audit procedures which are independent of each other enable the

as per laid down procedures.


2016/17 2015/16

Break Down of

Riskand People

Low Low

advantage, whilst recognising the need for stringent internal

structures and policies are followed by KFP having stringent access

a disaster recovery readiness in all business systems. Dedicated


2016/17 2015/16

Technology and Data

Low Low

“We provide high quality and

quickly converted into mouth-watering dishes.”


Sri Lankan EconomyOverall economic growth in Sri Lanka moderated in 2016 mainly

and followed by the worst drought in four decades. This resulted

2013 2014 2015 2016

Economic Growth

The highest contributor to GDP was industry related economic

expected to be the key driver of growth in 2017 as well.

Industry Outlook

and the food requirements are expected to keep pace with the

augurs well for the growth prospects of the Company.

Food & Beverages Industry

The food products subsector, the largest subsector in the Food

and dishes as well as prepared animal feed products reported an expansion in their output during the same period which is also

OPERATING ENVIRONMENT

augurs well for the growth prospects of the Company.”

GDP & Sector Growth Rates% %

2012 2013 2014 2015 2016Agriculture ServicesIndustry GDP

-6-4-202468

1012

-6

-4

-2

0

2

4

6

8

Per Capita Income and Price IndexUSD Index Point

2011 2012 2013 2014 2015 2016

Per Capita Income CCPI

0500

1,0001,5002,0002,5003,0003,5004,000

50

100

150

200

BUSINESS REVIEW


Composi�on of Domes�c Demand for Food and Beverages Industry

Private Investment Public

65%

7%

28%

Computed using data from Economic Development Highlights 1st Quarter 2016, published by CBSL.

BUSINESS REVIEW

Trends in Consump�on ExpenditureRs. Bn

YoY Growth(%)

14/15 15/16 16/17Food and Non-AlcoholicBeverages (Growth)

01,0002,0003,0004,0005,0006,0007,0008,000

Household Consump�onExpenditure

0

2

4

6

8

10


The Capitals Report seeks to provide insights to how the following Capitals are nurtured by the company to create value to key stakeholders.

consistent returns and trust in our heritage.”

KFP contributes to sustainable development as follows;

Financial Capital

Manufactured Capital Capital

Social and

Capital

Human Capital

Capital

Our work policies and procedures give priority to the adjacent

Our stringent controls over waste water management, energy and raw material

THE CAPITALS REPORT


FINANCIAL CAPITAL

2016/17 of Rs. 3.00 paid in March 2017, is over and above the industry norm that showcases a well-managed business that

future business growth.

Revenue Mix

47%28%

18%

7%

KeellsKrest Range Krest Range EH Range Trading

following increased taxes and adverse exchange rate impacts

and improved products, the forecast of sales growth in the coming

the reduced customer purchasing power.”

Revenue Growth

Keells

range and the Crumb and the Formed Meat range contributed

growers of chicken, pork, spices and vegetables along with the

BUSINESS REVIEW

Revenue Rs. 3,049 Mn

PAT Rs. 275 Mn

Rs. 427 MnTotal Dividend Payout


%

12/13 13/14 14/15 15/16 16/1720

25

30

Gross Margin

and variable overheads under control with stringent cost control mechanisms to ensure that the gross margin was maintained due to the stagnant revenue experienced during the year due to

drought.

income drive demand for our products.

Cost of SalesRs. Mn

2013 2014 2015 2016 2017Raw Material CostDepricia�on

Staff CostOther Overhead

0

500

1,000

1,500

2,000

2,500

Net Profit and Taxa�onRs. Mn

12/13 13/14 14/15 15/16 16/17

Net Profit Taxa�on

-100

0

100

200

300

400

500

with the Keells

increases whilst increase in market returns and spoilages also contributed towards increase in cost.

damages and spoilages as a result of non-vacuumed packs and expiry to ensure that such products are not sold to our valued consumers by the retailers.

Rs. Mn

12/13 13/14 14/15 15/16 16/17-200

0

200

400

600

800

1,000

Opera�ng Profit

S&D Expenses Gross ProfitAdmin ExpensesOper�ng Profit


qualifying payment relief being no longer available for use in the current year.

Dividends

of Rs. 3.00 per share to be paid on the 30th of May 2017, which is a total of Rs.11.75 per share for the year ended 31st March 2017 compared to Rs.12.00 in the previous year. Our dividend policy is based on the philosophy of providing our shareholders with the

Company to be aligned for future growth.

Total Assets

Dividend Payout Vs Dividend Per ShareRs. Mn Rs.

Dividend Payout Dividend Per Share

0

100

200

300

400

500

0

5

10

15

20

2013 2014 2015 2016 2017

Total AssetsRs. Mn Rs.

12/13 13/14 14/15 15/16 16/17PPECurrent Assets Net Assets Per Share

Non Current Assets

0

500

1,000

1,500

2,000

2,500

565860626466687072

Current AssetsRs. Mn Times

12/13 13/14 14/15 15/16 16/17Other Current Assets InventoriesShort Term Investment Current Ra�o Quick Ra�o

Trade & Other receivable

0

300

600

900

1,200

1,500

1.0

1.5

2.0

2.5

3.0

3.5

and Equipment during the year to upgrade and enhance the

during the year.

cash equivalents.

Rs. 65.50 in 2016/17 mainly due to high dividend payout. The

trade and other payables and income tax liability.

current year. Trade and other payables have also contributed to

BUSINESS REVIEW


Shareholders’ Fund + Debts Rs. Mn

Short Term Debt Long Term Debt Equity

15/16 16/17

0

500

1,000

1,500

2,000

AssetsRs. Mn

Long Term Assets Short Term Assets

15/16 16/17

0

300

600

900

1,200

1,500

“Our dividend policy is based on the philosophy of providing our shareholders with the maximum possible return, whilst

to be aligned for future growth.”

Rs. 2,408 Mn

155%

Shareholders’ Funds

million in 2015/16 to Rs. 1,670 million in 2016/17 as the Company

Cash Flow

Capital Expenditure

Liquidity

the graphs below despite the declines in net assets.

Current Liabili�esRs. Mn

12/13 13/14 14/15 15/16 16/17Trade, Related Party and Other PayablesOther Current Liabili�es including Bank Overdra�sEmployee Benefit Liabili�es

0

200

400

600

800

1,000

Deferred Tax Liabili�esInterest Bearing Borrowings


MANUFACTURED CAPITAL

of the most technologically advanced in the industry, and has been valued as follows;

Gross Carrying Value Net Carrying Value

31.03.2017 % 31.03.2017 %

Buildings 295,062 20 295,062 29

Plant and Machinery 71

3 15,161 1.5

Freezers 70,122 5 5

Other 16,002 1 0.5

Total Value of Depreciable Assets 100 1,013,315 100

Work in Progress

are manufactured using state of the art food technology and quality control processes.”

BUSINESS REVIEW


R&D Laboratory/Test KitchenOur R&D laboratory is equipped with latest food technology apparatus used to formulate, test and analyse recipes.

Plants at Ja-Ela

food safety and hygiene.

Plant at PannalaThis plant manufactures only chicken products for KFP which conform to

consumers in Sri Lanka.

QA LaboratoryAll batches are tested for a comprehensive range of parameters in


systems, processes and controls that have been put in place in this

changing lifestyle and preferences of the consumer. A dedicated Research and Development team is supported with advanced

maintain our leadership in the processed meat industry.

Over 30 products tested during the year

Rs. 6.1 million investment in Research and Development

team where they tested variety of products. The wide acceptance

through a robust performance management processes to ensure the delivery of value. Safeguarding of intellectual capital is a

Corporate values which guides day to day decision making and strategic vision.

BrandsCapability

Tacit Knowledge and Processes

• KeellsKrest• Elephant House• Krest

•

• All our recipes and products have been developed in-house

• recipes

• Our team has an average tenure of 7 years of service

• that conform to global standards

Brands

Our products are marketed under three main Brands which cater to

KeellsKrest range of

a wide appeal and are available throughout the island. The Krest range of snacks and bites are popular with Sri Lankans, and are eagerly sought

fast becoming part of Sri Lankan culture. Elephant House sausages and

and popular with the increasingly, discerning urban consumer and

employees understand our values, commitment to quality and the

INTELLECTUAL CAPITAL

of our products and we invest in

processes and controls to ensure that suppliers, distributors and our employees understand our commitment to quality.”

standards.”

BUSINESS REVIEW

KRESTSSKRESTKRESTSSKREST


Tacit Knowledge & Processes

adapted to our range of products, the changing tastes and habits of Sri Lankan consumers. During this period, we successfully,

established talent management processes ensure that mentoring and succession planning, combine to pass down our legacy which

Customer Requested

Product

Market Research

Product Concept

Product Brief

Outputs

Review

Changes

Approval from COO

Quality Plan

Review

Detailed Design Phase

Our R&D Processes

pages 20 to 21 for details of improved products and new product introduced during the year.

which served to increase awareness of our products amongst

During the year, the Company moved from prompt-selling to pre-selling its products and hand held mobile devices were introduced to

management of inventories and receivables.

KFP won the Gold award at the 52nd Annual Report Awards Ceremony 2016 in the Food and


Value Created to Shareholders

Human Capital

_

BUSINESS REVIEW

A Research and Development team with

over 20 years of experience.

18,415 retail outlets across Sri Lanka

Average Distributor tenure

exceeds 4 years

Partnership with farmers/out-growers

and suppliers spans over 12 years

Refer page 75 for details

Pioneers in processed food

of over 35 years

Over 75 unique recopies inherited and developed in-house.

Most advanced Research and Development facility in the processed meat industry.

Refer page 72 for details

for over 7 years

343 40 Distributors


SOCIAL AND RELATIONSHIP CAPITAL

Our Customers are consumers of our products branded KeellsKrest, Krest and Elephant House and these consumers are further

restaurants and catering establishments across the country. The

customers trust and expect convenience to the housewives and chefs as they can be quickly converted into a variety of mouth-watering dishes that are guaranteed to please those served.

Farmers/out-growers and Other Suppliers

Distributors and

Retailers

Consumers Environment and Government

•

•

•

• CSR Rs. 3.0 million

•million

• Market support provided by a team of 100 members

• 125 Freezers supplied to retailers

•

• Commission paid to Distributors Rs. 207 million

•million

•Distributors over the last 5 Years

Inputs Value outputs

many decades as it is a vital element to maintaining our social license to operate.”

decades and we are conscious of our responsibility to manage

nurtured and developed over many decades as it is a vital element to maintain our social license to operate.

Capital comprises of four key segments. Our Business Partners are;

• Farmers/out-growers and other suppliers

• Distributors and Retailers

• Consumers

are nurtured as follows;

Product Lines on pages 20 to 21 for details of improved products and new product introduced during the year.

which served to increase awareness of our products amongst

Social and

Capital


High Quality Products and Product Responsibility

product responsibility. Apart from the stringent internal policies our

consistent quality and standards in our processes.

Our Pledge

We will strive to ensure that all our suppliers, employees, customers, and other stakeholders are treated fairly and

High Quality Products

Convenience

Accessibility Available at Your Store

Convenient Packaging

Product Labelling

Product Responsibility

Easy to Prepare

Customer Health and Safety

to demonstrate its ability to control food safety hazards in order to

ensures that the products and/or services consistently meet

management systems eliminate or minimise risk to employees

Further, all our product labels are printed with the consumer helpline number and all helpline details are tracked. During the

BUSINESS REVIEW


Products and Services Policy

Keells Food Products PLC will strive to maintain products and services at the highest standards through embracing industry

in the markets we serve. All products and services will seek to

Our Business Partners include farmers/out-growers and other suppliers, and the distributors and retailers are key to the success

Distributors and Retailers

key to our growth as we rely on them to store, promote and sell our products to the end customers in accordance with stringent

ensure that the right product is available at the right place at the right

the country were provided with hand held devices in order to upload

the Company to have clear visibility of secondary sales data in order

are also in place to monitor and maintain, standardise temperatures

prompt sales model to a pre sales model in a restructure that also saw

restructured.

country, as shown in the above map.

Earnings Growth

Earnings per Share

Business Development and

Rs. 20 million


Development

capacity enhancements

Central

Eastern

North Central

North Western

Sabaragamuwa

Southern

Uva Western 18

3

4

3

4

2

3

1

2Northern

values and business requirements and are provided with guidance

Statements as part of our regular risk management processes.

to reach stretched goals and the ongoing dialogue with the

accordingly. We also conducted workshops to help Distributors


Product No. of Farmers

Products Supplied

Amount Paid

Rs.

PorkKatana, Kosgama, Pamunugama, Dambulla, Kandy,

2016/17 30

2016/17 -

2015/16 - 973 million

2015/16 25

Poultry Wennappuwa, Hanwella, Kosgama, Gampola, Udugampola, Meethirigala, Pannala.

2016/17 2,500

2015/16 2,200

Spices 2016/17 2,500 90,709

2015/16 2,500

Vegetables Ekala, Jaela. 2016/17 30

2015/16 30

KFP also uses the Supplier Assessment Process Criteria Developed by the JKH Group Sustainability Division where suppliers are assessed

Payments to Suppliers

Sustainable Business Growth

Fair Dealing and Timely Payments

Technical SupportTraining and

Development

animal husbandry and agriculture who visit their farms. An agreed pricing formula which is revised regularly ensures that farmers/out-growers get a fair price for the product considering the price of feed and other market factors, which facilitates a sustainable livelihood. Farmers/out-growers projects, are

Farmers/out-growers and Other Suppliers

from large and small scale suppliers who are mainly farmers/out-

to facilitate their growth. KFP creates value for its suppliers in the following manner;

Distributor Earnings vs No.of DistributorsRs. Mn No.

13/14 14/15 15/16 16/17

No.of Distributors

100

117

134

151

168

185

202

220

051015202530354045

Distributors Earnings

BUSINESS REVIEW


GovernmentThe food industry is regulated by the Sri Lankan Food Authority which reviews whether the products comply with the Food Act

disposal to ensure they are within the terms of the license.

and other turnover related taxes, income taxes and other taxes relevant to the business.

Community Engagement

During the year, KFP has contributed to the following community projects.

WAVE Public Awareness Campaign

Food Authority

Comply to Food Act Product

Labelling

Product

Central Environment

Authority Emissions Waste

Department of Inland

Revenue and The Director General of Customs

Rs. 557 in

and Levies

Health Clinic for Children & Elders

Pannaransi Dharma Mandhiraya for Children and Elders.


and improve future prospects available for students. Colombo 02 was selected due to its close proximity to our businesses. Since

– including

science and computer labs, provision of school furniture,

– for students

school leavers.

School

T.B. Jayah Maha Vidyalaya

Holy Rosary Tamil Vidyalaya

Holy Rosary Sinhala Vidyalaya

BUSINESS REVIEW


Our Team

our business by upholding business ethics

of and is evidence to our policy of keeping our people as the highest priority.

Employee Category 2016/17 2015/16 2014/152 3 2

Managers 19 16Assistant Managers 15 11 10

261 229Total Permanent Employees 343 322 301

123 125 105Total Workforce 466 447 406MaleFemale

Employee Category 2016/17 2015/16 2014/1565 3627 - 17

- 1 1Total New Recruits 92 49 54

Employee Category 2016/17 2015/16 2014/1510

22 193 2

71 27 45

New

Rec

ruits


Great Place to work in

Rs. 270 million

Health and Safety

Dignity and Human Rights

Training hours

Other Allowances Rs. 92 million Bargaining

the best they can be while maintaining a healthy work balance.”

HUMAN CAPITAL


We believe by fostering a high-performance culture, our Company will strive to achieve the best. Our focus is on ensuring employee

streamlining of processes and achieving economies of scale.

Employee Produc�vity No. Rs. Mn

13/14 14/15 15/16 16/17

Net Revenue/Employee

0

50

100

150

200

250

300

350

Net Profit/Employee

012345678910

Head Count

monthly pay comprises elements of both of the above, while other

service.

• Training and development on personal and career development

• Company products at a discounted rate• Sports Club Membership• Company sponsored Avurudu/Christmas events

• Uniforms

Training programs

On the job training

External Training

Programs

Foreign Training


Investment on Trainning and DevelopmentRs. Mn Hrs

14/15 15/16 16/17Traning Hours

0

2

4

6

8

10

Investment

01,0002,0003,0004,0005,0006,0007,0008,0009,000

BUSINESS REVIEW

Training & Development

the performance management process to address current and

to employees include technical training, competency development

Group also has mentoring and coaching programs for employees


Training and Development by employee category compared to previous year

Employee Category Training Hours Employee Coverage

2016/17 2015/16 2016/17 2015/16

Assistant Vice President and above 196 133

Managers 627

Assistant Managers

1,727

211

Total Work Force

Training and Development by Gender compared to previous year

Employee Category Training Hours Employee Coverage

2016/17 2015/16 2016/17 2015/16

Male

Female 603

Total Work Force

RecruitmentEqual opportunity, human rights and a code of ethics is followed in recruitment of our people. Once the person is recruited, these ethics

Each year high performing employees in manufacturing, sales and


Dignity, Health & Safety

the work place.

• A comprehensive Health and Safety programme is in place to ensure a Safe Working Place for all employees as depicted in the adjacent diagram.

health and safety of its employees.

• Employees are trained regularly on health and safety aspects and adherence is mandatory with line managers held accountable for enforcement.

Health and Safety 2016/17 2015/16 2014/15

15 13

77

Health and Safety Training Resource

Fire Team 36

First Aid Team Redcross Colombo

OHSAS Team

Annual Fire Training was conducted for the KFP Fire Team at the Ja-Ela factory in August 2016 by the Gampaha Fire Brigade which

methods and

Behavioural safety; helping employees to

understand the importance of

maintaining safety standards

Procedural safety; ensuring adequate procedures are

maintenance of all equipment

Process safety; ensuring safe

equipment and processes

BUSINESS REVIEW


More than Just a Work PlaceKFP strives to create a workplace where employees enjoy working together and inspire each other to strive higher to achieve Company goals. We undertake surveys every two years to ensure that employee engagement levels are high and that they are

engagements. The overall results of the 2016/17 Great Place to

parameters.

with enthusiasm. A photo collage captures the highlights;

Child Labour and Forced or Compulsory LabourKFP has a strict policy on child labour and forced or compulsory labour. The Company conforms to the labour laws of Sri Lanka, and

This policy is also followed when it comes to contracts. There have been no incidents of child labour reported to date.

Human Resource Department and a formal process is in place for

reported within the KFP during the year under review.


ComplianceAll our projects are screened for environmental compliance using

Group requirements as the baseline, frequently exceeding the

requirements of the CEA are monitored on a regular basis and are

by management and the Board to ensure that movement of

summarised below;

2016/17 2015/16 Change

m3

715

5.73 5.29

m3

0.17 0.15

0.90

climate change and eco system decline which directly impact our business in the short, medium and long term also needs to be managed. Accordingly, our environment management framework and its key elements are graphically depicted below;

Compliance

Screening projects for

Environmental compliance

EmissionsMaterials

Compliance with CEA and other

Waste and Energy Water

Managing Outputs

Environment Management Framework

NATURAL CAPITAL

“We believe that the progress of our business is dependent

every step we are conscious of our environment.”

BUSINESS REVIEW


Energy

processes towards reducing the same. Energy costs during the

healthy temperature gradient between the outside and inside of

Water

ingredient into our products, in used in cleansing raw material, machines and ancillary equipment and also for cooling and of the

below. A higher percentage of raw cuts coming from our own

EnergyReduce electrical energy

renewable energy

Water

3

Reduce annual water discharged by reusing of water

Solid Waste

EnergyGJ GJ/MT

14/15 15/16 16/17

Energy Consump�on Energy Intensity Ra�o

0

5,000

10,000

15,000

20,000

25,000

30,000

3.0

3.5

4.0

4.5

5.0

5.5

6.0

Waterm3 m3/MT

14/15 15/16 16/17Effluent Discharged

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

0246810121416

Water Consump�on

Water Intensity Ra�o

Managing Inputs & Outputs:

energy related inputs, are curtailed through energy management.


Waste Management

largely of packaging materials, meat and vegetable waste. A recycling programme is in place for packing materials which has been outsourced to a third party. Meat and vegetable waste are

Pannala and 150 kg per hour at Ja-Ela, to ensure that it is disposed in a responsible manner. The incinerator units comply fully

on an on-going basis. The waste output has increased due to the

Emissions

and our energy management, water management and solid waste

compared to previous year mainly due to the increase in the

WasteMT MT/MT

14/15 15/16 16/170

100200300400500600700800900

Total Waste MT of Waste Generated Per MT of Finished Goods Produced

0.020.030.050.070.090.100.120.140.160.18

EmissionsMT MT/MT

14/15 15/16 16/170

5001,0001,5002,0002,5003,0003,5004,0004,500

Emission Factor Emission Intensity

0.00.10.20.30.40.50.60.70.80.91.0

BUSINESS REVIEW

Ceylon Chamber of Commerce

Consumer Goods Forum


MANAGEMENT TEAM

Sales

Mr. S M PereraAssistant Vice President

Mr. S G De Silva Channel Manager – Modern Trade

Mr. G W C G B Gonigoda Channel Manager – General Trade

Mr. S T B S KumaraManager – Field Sales

Mr. S JayasingheChannel Manager – Specialized Catering

Mr. T G T P K Gamage

Mr. M K G W A AbayakoonAssistant Vice President

Mr. W A J B De Silva

Supply Chain

Assistant Vice President

Mr. W A V Boteju

Mr. K A V Fernando

Research and Development

Manager – Head of Quality Assurance and Research and Development

Procurement

Mr. S V R Boteju Manager – Purchasing

Engineering

Mr. H M P BandaraManager – Engineering

Quality Assurance

Mr. S H JayaratneManager – Quality Assurance

Mr. T H M A K Tennakoon

Human Resources

Assistant Vice President

Manager – Head of Human Resources

FinanceMr. S R Jayaweera

Vice PresidentSector Financial Controller – Consumer Foods Sector

Manager - Tax – Consumer Foods and Retail Group

Mr. A C Morris

Mr. M C R PereraManager – Credit

Ms. J D KanagarajManager – Finance


General Standard Disclosures

Indicator Disclosure Page Number/ Reference

1. Strategy and Analysis

Primary brands, products, and services 2, 3, 20, 21, 72

96

Markets served 13, 16

77

56 - 61

Externally developed economic, environmental, and social charters, principles, or other

7

Material Aspects 7

7

7

for such re-statements.

GLOBAL REPORTING INITIATIVE INDEX


Indicator Disclosure Page Number/ Reference

4. Stakeholder engagement

Key topics and concerns that have been raised through stakeholder engagement, and how

7

Date of most recent previous report 31st March 2016

7

7

90 - 93

External assurance The Company has not obtained external assurance on this report

6. Governance

23

7. Ethics & Integrity

6, 39


GLOBAL REPORTING INITIATIVE INDEX

Aspects Indicator Disclosure Page Number/Reference

Economic

Economic performance Economic performance

Local purchasing

Environmental

Energy

Water Water withdrawal by source

Emissions

Total weight of waste by type and disposal method

Compliance

76, 77

Social

Employment Total number and rates of new employee hires and employee turnover by age group, gender and region

agreements

Workers with high incidence or high risk of diseases

Health and safety topics covered in formal agreements with trade unions

Programs for skills management and lifelong learning that

assist them in managing career endings

Diversityof employees per employee category according togender, age group, minority group membership, andother indicators of diversity


Aspects Indicator Disclosure Page Number/Reference

Human Rights

Child Labourrisk for incidents of child labour, and measures taken to

Forced or Compulsory Labourrisk for incidents of forced or compulsory labour, and

forced or compulsory labour.

Society

Compliance

76, 77

Product Responsibility

Product and Service Labelling

76

Total number of incidents of non-compliance with

sponsorship, by type of outcomes 76

Product Compliance

use of products and services 76, 77

Statement of Cash Flows 111Statement of Changes in Equity 112

Financial CalendarFirst Quarter Released on 26th July 2016

Second Quarter Release on 25th October 2016

Third Quarter Release on 31st January 2017

Fourth Quarter Released on 12th of May 2017

Annual Report 2016/2017 Released on 12th of May 2017

5th June 2017


ANNUAL REPORT OF THE BOARD OF DIRECTORS

The Board of Directors of Keells Food Products PLC has pleasure

covers the Audited Financial Statements of the Company and the

ended 31st March 2017.

The content of this Report has also considered the requirements

Company are listed on the Colombo Stock Exchange. Pursuant

Company was re-registered under the Company number PQ 3 on 15th June 2007.

Corporate Conduct

conducted with the highest level of ethical standards.

Company

of processed meats, crumbed products and raw meats, which remained unchanged during the year.

Subsidiary

2017.

Review of Business

Company during the year and future business development is

of this Annual Report. These reports form an integral part of the Annual Report of the Board of Directors and together with the Audited Financial Statements provide a fair review of the performance of the Company and its Subsidiary during the

Financial Statements and Auditors’ ReportThe Financial Statements for the year ended 31st March 2017 has

The Financial Statements of the Group and the Company duly

Accountants of Sri Lanka are provided in detail, in the notes to the

the year under review.

Going Concern

in preparing these Financial Statements.

Stated CapitalThe Total Stated Capital of the Company as at 31st March

Statements.

Revenue

the Financial Statements.


Dividends

2016.

Rs. 3.00 per share for 2016/17 to be paid on the 30th of May 2017 to those shareholders on the register as of the 19th May 2017.

recognized as a liability as at 31st March 2017.

auditors, prior to declaring all dividends.

Dividend per share has been computed for all periods based on

will be subjected to a withholding tax at the rate prevailing at the date of payment.

is funded by JKH and its Subsidiaries and handles most of the JKH

consolidated revenue as per the latest Audited Financial

For the year ended 31st March Group in Rs. ‘000s 2017 2016

Finance Cost 20,067

279,706 560,206

- Balance Carried Forward 279,706


Statements as at 31st March 2016 have been disclosed in the table that follows;

Aggregate Value of Related Party

entered into during

Aggregate Value ofRelatedParty

Terms and

the RelatedParty

Company under common control

Sale of goods Ordinary course of business

Colombo Stock Exchange has been complied with.

ReservesTotal reserves as at 31st March 2017 for the Company and the

The detailed movement of Reserves is given in the Statement of Changes in Equity on page 112 of this Annual Report.

Statements.

Commitments as at 31st March 2017 except those disclosed in

The Group has an equal opportunity policy and these principles

marital status or physical disability.

The number of persons directly employed by the Company as at

There were no material issues pertaining to employees and


Property Plant and Equipment and Intangible Assets

for the Company and its Subsidiary. The details of Property, Plant

Capital Expenditure

approved and contracted but not provided in the Financial

The Land and Buildings owned by the Company were revalued by a

re-valued amounts are not in excess of the current market values

The details of the re-valued land and buildings of the Company as

on page 166 of the Annual Report.

Investments

22 to the Financial Statements.


ESOP scheme.

Company is of the Parent Company John Keells Holdings PLC.

• The Company has not directly or indirectly provided funds to its employees to purchase shares under the ESOP scheme.

System of Internal ControlsThe Directors acknowledge their responsibility for the system

risk management, have obtained reasonable assurance of their

date of signing the Financial Statements.

Corporate Governance

is in compliance with the Rules on Corporate Governance as per

The Directors declare that:

• The Company and its Subsidiary have not engaged in any

• The Directors have declared all material interests in contracts involving the Company and its Subsidiary and refrained from

• The Company has made all endeavours to ensure the equitable treatment of all shareholders.

• The Company, being listed on the Colombo Stock Exchange

Corporate Governance structure and process. A full report on Corporate Governance is found on pages 22 to 53.

Risk Management

part of the annual strategic planning cycle. A detailed overview of the process is outlined in the Enterprise Risk Management Report on pages 56 to 61.

Mr. M P Jayawardena – Chairman, Mr. S H Amarasekera PC,

appointed to the Board on the 10th of June 2016 and serve as

Mr. A E H Sanderatne

services provided by the External Auditors to the Group to ensure that their independence as Auditor has not been compromised.

Keells Holdings PLC, the Parent Company of Keells Food Products

Mr. D A Cabraal – Chairman, Mr. M A Omar, Dr. S H H Wijayasuriya

Governance Report on pages 36 to 37 of this Annual Report.

Annual Report.

as follows;

Mr. M A Omar - Chairman, Ms. P Perera, Dr. S H H Wijayasuriya, Mr. S C Ratnayake


Holdings PLC, the Parent Company of Keells Food Products PLC,

the Company and its Subsidiary.

Parent Company are as follows;

Mr. D A Cabraal

Report.

An Ordinary Share of the Company was quoted on the Colombo

165 of this report.

Shareholdings

percentage held by the public is given on page 162 of this report.

Exchange. The shares of the Company are now listed on the Dirisavi Board.

Equitable Treatment to all ShareholdersThe Company has made every endeavour to ensure the equitable treatment of all shareholders and has adopted adequate measures

The list of the top twenty shareholders is given on page 163 of this report.

The Board strives to be transparent and provide accurate

DirectorateThe Directors of Keells Food Products PLC who served during the year is given below;

than 9 years on the Board resigned on the 9th of June 2016. Four

of June 2016 to replace the Directors who resigned.

served during the year and as at the end of the Financial Year are given



Directors’ Interests in Shares

Name of Directors As at 31st As at 31stMarch 2017 March 2016

Mr. S C Ratnayake - Chairman 12,750 12,750

Mr. A D Gunewardane - -

Mr. J R F Peiris - -

Mr. J R Gunaratne - -

Ms. S De Silva - Appointed 10th June 2016 - -

Mr. P D Samarasinghe - Appointed 10th June 2016

- -

2016- -

Mr. A E H Sanderatne - Appointed 10th June 2016

- -

Mr. S H Amarasekera PC - Resigned 9th June 2016

- -

Mr. M P Jayawardena - Resigned 9th June 2016

- -

- -

Mr. R Pieris - Resigned 9th June 2016 - -

Mr. A E H Sanderatne all of who were appointed during the year

of JKH. The Directors are of the opinion that the framework

determined according to scales of payment decided upon by the

Financial Statements.

this report.

Interests Register

2016/17;

interests have been disclosed by any Director.

dealings during the year ended 31st March 2017.

Keells Food Products PLC from 10th June 2016 for 3 years at the

Financial Statements have been prepared in conformity with the

The Company and the Group has complied with all applicable laws

Statutory Payments

and taxes payable on behalf of and in respect of the employees of the Group and all other known statutory dues as were due and payable by Group as at the date of the Statement of Financial

SustainabilityThe Group pursues its business goals based on a model of

engagements have enabled the Company to focus on material

environment and material issues highlighted by other stakeholders such as the employees and the community. These steps have


Supplier PolicyThe Company applies an overall policy of agreeing and clearly

for its purchases in accordance with these agreed terms. As at 31st March 2017 the trade and other payables of the Company

AuditorsThe Financial Statements for the year has been audited by

Company, including the level of audit and non- audit fees paid to the Auditor.

As far as the Directors are aware, the Auditors have no other

Independent Auditor’s Report

107 of the Annual Report.

Approval of the Financial Statements The Audited Financial Statements were approved by the Board of Directors on 12th May 2017.

This Annual Report is signed for and on behalf of the Board of Directors by:

Director Director Secretaries

12th May 2017



AUDIT COMMITTEE REPORT

adopted by the Board. The terms of reference comply with the

shareholders, the investment community and other stakeholders

and is well managed in order to give accurate, appropriate and

disclosures are made in the Financial Statements in accordance

required and ensures that the risk management processes are

policies of the Group.

as a going concern in the foreseeable future.

is also tasked with the responsibility of recommending to the Board the re-appointment and change of External Auditors and to

and the management of the Company and to ensure that all

it deems necessary and review all internal control systems and procedures, compliance reports, risk management reports etc.

External Auditors, the audited Financial Statements, the quarterly

the Directors and the CFO.

appointed by and responsible to the Board of Directors. The

Stock Exchange.

June 2016 and four new members were appointed to the audit

9th June 2016.

• Mr. M P Jayawardena

• Mr. S H Amarasekera PC

• Mr. R Peiris

Directors.

or appropriate in its judgment and at least quarterly each year.

below.


Name 26th April 2016

18th July 2016

21st October

2016

18th January

2017

Mr. P D Samarasinghe -

-

Ms. S De Silva -

Mr. A E H Sanderatne -

Mr. M P Jayawardena - - -

Mr. S H Amarasekera PC - - -

- - -

Mr. R Peiris - - -

Oversight of Company and Consolidated Financial Statements

an opinion on the truth and fairness of the Financial Statements reviewed the Financial Statements of the Company and the

designed to provide reasonable assurance to the Directors that the

Group.

Internal Audit

or removal and for ensuring they have adequate access to

out, the scope of the audit, the areas to be covered and the fee to be paid for their services.

area, higher risk areas being on a shorter audit cycle. The Audit

thereof.

Risk and Control Review

External Audit

The External Auditors of the Company Messrs Ernst & Young

approach for the audits.

The areas of special emphasis have been selected due to the probability of error and the material impact it can have on the Financial Statements. At the conclusion of the audit, the External

AUDIT COMMITTEE REPORT


auditors in ensuring that their independence as Auditors was not compromised.

Company, which may have a bearing on their independence within

Chartered Accountants of Sri Lanka.

Messrs Ernst & Young, Chartered Accountants, be recommended

year commencing 1st April 2017, at the next Annual General

Requirements

adopted the standardised format of Annual Financial Statements

Conclusion

with accepted policies and that assets are properly accounted for

independent throughout the period under review.

P D Samarasinghe

12th May 2017


Statements, is set out in the following statement. The

Statements prepared in accordance with the provisions of the

Auditors Report.

The Directors have ensured that, in preparing these Financial Statements:

applied in a consistent manner and material departures, if any have been disclosed and explained; and

applied; and

Stock Exchange.

The Directors are also required to ensure that the Company and

Financial Statements.

Further, the Directors have a responsibility to ensure that the

records to disclose, with reasonable accuracy the Financial

The Directors are also responsible for taking reasonable steps to safeguard the assets of the Company and its Subsidiary, and in

STATEMENT OF DIRECTORS’ RESPONSIBILITY

The Directors are required to prepare the Financial Statements and to provide the Auditors with every opportunity to take

consider being appropriate to enable them to give their audit opinion.

as well as for all the dividend paid during the year ended 31st March 2017.

The Directors are of the view that they have discharged their

Compliance Report

employees of the Company and its Subsidiary, and all other known statutory dues as were due and payable by the Company and its

By Order of the Board

Secretaries

12th May 2017


INDEPENDENT AUDITORS’ REPORT

INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF KEELLS FOOD PRODUCTS PLCReport on the Financial Statements

at 31 March 2017, and the income statement and statement of comprehensive income, statement of changes in equity and

such internal controls as Board determines is necessary to enable

misstatement, whether due to fraud or error.

statements based on our audit. We conducted our audit in

require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether

An audit involves performing procedures to obtain audit evidence

including the assessment of the risks of material misstatement of

those risk assessments, the auditor considers internal control

give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of

and appropriate to provide a basis for our audit opinion.

Opinion

2007, we state the following:

as stated above.

were required for the audit and, as far as appears from our

the Company,

and

12th May 2017Colombo


Group CompanyFor the year ended 31st March 2017 2016 2017 2016

Note Rs. Rs. Rs. Rs.

Revenue 13.1

Cost of sales

Finance cost 15.1Finance income 15.2 20,067,393 23,763,150

6,605,551 6,339,052

16

Tax expense 19.1

Equity holders of the parent

Earnings per shareBasic 17.1 13.13

Dividend per share 16.75 11.00

INCOME STATEMENT


Group Company

For the year ended 31st March 2017 2016 2017 2016


Other comprehensive income

income statement in subsequent periods - -

income statement in subsequent periods - -

income statement in subsequent periods 20.1 & 20.2 17,652,327 17,652,327

1,033,703 1,033,703

to income statement in subsequent periods

19.2

Other comprehensive income for the period, net of tax 11,193,109

Total comprehensive income for the period, net of tax

Equity holders of the parent

form an integral part of these Financial Statements.

STATEMENT OF COMPREHENSIVE INCOME


STATEMENT OF FINANCIAL POSITION

Group CompanyAs at 31st March 2017 2016 2017 2016


ASSETSNon-current assetsProperty, plant and equipment 20.1 & 20.2 1,160,901,565 1,160,901,565

21.122.1 - - 3,177,793

23 23,365,357 23,365,357 Other non-current assets

Current assets25

Trade and other receivables 2637.1 113,509,295 113,509,295

Other current assets 27Short term investmentsCash in hand and at bank 29

926,052,111 Total assets

EQUITY AND LIABILITIES

Stated capital 30Revenue reserves 31Other components of equity 32Total equity 1,670,129,167

3319.5 195,257,563 195,257,563

77,726,255 77,726,255

Trade and other payables 3537.2 5,529,361 5,529,361 19.3 22,371,316 22,371,316

3336 19,513,231 29

S R Jayaweera

Signed for and on behalf of the board by,

J R F Peiris J R Gunaratne Director Director

form an integral part of these Financial Statements.12th May 2017


STATEMENT OF CASH FLOWS



CASH FLOWS FROM OPERATING ACTIVITIESA

3,972,212

26,935,755

Finance income received 17,622,566 Finance cost paidTax paidGratuity paid/transfers

393,722,031

Purchase of intangible assets - - Proceeds from sale of property, plant and equipment

Dividend paidRepayment of interest bearing borrowings

EQUIVALENTS

CASH AND CASH EQUIVALENTS AT THE BEGINNING- -

CASH AND CASH EQUIVALENTS AT THE END

ANALYSIS OF CASH AND CASH EQUIVALENTSFavourable balancesShort term investmentsCash in hand and at bank 29Unfavourable balances

29Cash and cash equivalents

Adjustments for:Finance incomeFinance cost

Gratuity provision and related costs 10,765,265 10,765,265 Share based payment expense 6,933,665 6,933,665

- -



STATEMENT OF CHANGES IN EQUITY

GROUP Stated capital reserve

Foreign currency

reserve

Employee

reserve

Revenue reserves

Total equity

Rs. Rs. Rs. Rs. Rs. Rs.

As at 1 April 2015 9,062,909

- - - -

- - 11,193,109

Total comprehensive income - - 329,399,905

Share based payments - - - 6,933,665 - 6,933,665

- - - -

- - - -

As at 31 March 2016

Other comprehensive income - -

Total comprehensive income - -

Share based payments - - - -

Final dividend paid - 2015/16 - - - -

1st interim dividend paid -2016/17 - - - -

2nd interim dividend paid -2016/17 - - - -

As at 31 March 2017 1,670,129,167

COMPANY Stated capital reserve

Employee

reserve

Revenue reserves

Total equity

Rs. Rs. Rs. Rs. Rs.

As at 1 April 2015 9,062,909

- - -

- -


Share based payments - - 6,933,665 - 6,933,665

- - -

- - -

As at 31 March 2016

- - -

Other comprehensive income - -


Share based payments - - -

Final dividend paid - 2015/16 - - -

1st interim dividend paid -2016/17 - - -

2nd interim dividend paid -2016/17 - - -

As at 31 March 2017



INDEX TO NOTES

12

3

5 1166 116

7119

9 12010 12111 Fair value measurement and related fair value disclosures 12712 Financial instruments and related policies 129

Notes to income statement, statement of comprehensive income and

13 Revenue 132133

1516 13517 Earnings per shares 135

Dividend per share 13619 Taxes 13620 Property, plant and equipment212223

Other non current assets2526 Trade and other receivables27 Other current assets 150

Short term investments 15029 Cash in hand and at bank 15030 Stated capital 15131 Revenue reserve 15132 Other components of equity 15133 153

35 Trade and other payables 15636 15637 157

Other disclosures160

39 Capital and other commitments 161161


NOTES TO THE FINANCIAL STATEMENTS

CORPORATE AND GROUP INFORMATION

Company incorporated and domiciled in Sri Lanka and is listed

Mawatha, Colombo 2, and the principal place of business is

Estate in Pannala.

The issued ordinary shares of the Company are listed on the Colombo Stock Exchange.

Consolidated Financial Statements

The Financial Statements for the year ended 31 March 2017, comprise “the Company” referring to Keells Food Products PLC as the holding Company and “the Group” referring to the Subsidiary whose accounts has been consolidated therein.

Approval of Consolidated Financial Statements

The Consolidated Financial Statements of the Group for the year ended 31st March 2017 were authorized for issue by the Directors on the 12th May 2017.

Company

sale of processed meats, which remained unchanged during the year.

Subsidiary

which remained unchanged during the year.

“the Company” refers to Keells Food Products PLC. “The Group” refers to the Subsidiary whose accounts has been consolidated therein.

Responsibility for Financial Statements

Responsibility report in this Annual report.

Statements of compliance

2.

Keells Holdings PLC which is incorporated in Sri Lanka.

BASIS OF PREPARATION AND OTHER SIGNIFICANT ACCOUNTING POLICIES

The Consolidated Financial Statements have been prepared

except for Land and Buildings that has been measured at fair value .

The Consolidated Financial Statements are presented in

environment in which the holding Company operates.

economic environment in which they operate as their

been rounded to the nearest rupee except when otherwise indicated.

Statements of the previous years have been amended if

comparable with those of the current year.

disclosed along with the relevant individual notes in the subsequent pages.


been applied consistently by the Group.

individual notes

An asset is considered as current when it is:

• expected to be realised or intended to be sold or

• held primarily for the purpose of trading

•

• cash or cash equivalent unless restricted from being

A liability is current when:

•

• it is held primarily for the purpose of trading

•

•

period.

and balances

currency.

Group operate.

cost in a foreign currency are translated using the exchange

existed when the values were determined. The gain or loss

in line with the gain or loss of the item that gave rise to the

of the overseas Subsidiary which is deemed to be foreign

subsequent to 1 April 2012 and any fair value adjustments to

the Group treated goodwill and any fair value adjustments to

by looking at the two extremes in the exchange rates that prevailed during the year which is the highest and lowest rate set during the year. This is especially important when


The exchange rates applicable during the period were as follows;

Currency Statement of Income Statement

Closing rate as at 31st March

Average rate

2017 2016 2016/17 2015/16

Rs. Rs. Rs. Rs.

2.22 2.21 2.13

result in outcomes that require a material adjustment to

policies , management has made various judgments. Those

Financial Statements have been discussed in the individual notes of the related Financial Statement line items.

change due to market changes or circumstances arising that are

follows;

adopted by the Group and may have an impact on the future Financial Statements.

StandardSummary of the Requirements Possible Impact on Consolidated Financial

Statements

SLFRS 9 - Financial

and Measurement. SLFRS 9 includes revised

The JKH Group has performed a high-level impact assessment of all three aspects of SLFRS 9. This preliminary assessment is based on currently

changes arising from further detailed analysis

Company in the future. Overall, the Company



StandardSummary of the Requirements Possible Impact on Consolidated Financial

Statements

SLFRS 15 - Revenue from Contracts with Customers

SLFRS 15 establishes a comprehensive framework for determining whether, how much

Programmes

with the assistance of external consultants. The JKH Group's current study has not revealed a

any impact to the current systems and processors

SLFRS 16 - Leases

SLFRS 16 sets out the principles for the

disclosure of leases and requires lessees to account for all leases under a single on-balance

is to ensure that lessees and lessors provide

gives a basis for the users of Financial

January 2019 of SLFRS 16 on its Consolidated Financial

•

•

•

•

•

•

•


GROUP BUSINESS, OPERATIONS AND MANAGEMENT

process and where the risk and return are similar.

Statements.

Statements of the Group.

7.1 Business segment analysis Group

For the year ended 31st March 2017 2016Manufacturing Trading Total Manufacturing Trading Total


Revenue 155,762,266

Segment Results

- -

- -

- -

- -

Finance cost - -

Finance income - 20,067,393 - 20,067,393

- 6,605,551 - 6,605,551

Segment Assets 30,693,713

- -

- - - 260,922 - 260,922

- -

- -

Gratuity provision and related costs - 10,765,265 - 10,765,265

* PPE - Property plant and equipment

7.1.1


The Consolidated Financial Statements comprise the Financial Statements of the Company and its Subsidiary as at 31st March 2017. Control is achieved when the Group is exposed or has right, to variable returns from its involvement with the investee and has the

Specially, the Group controls an investee if, and only if, the Group has:

• Exposure, or right, to variable return from its involvement with the investee

circumstances in assessing whether it has power over an investee, including:

• The contractual arrangement with the other vote holders of the investee

• Right arising from other contractual arrangements

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of

subsidiary.

Subsidiary

A Subsidiary is an enterprise controlled by the Parent.



• Derecognises the carrying amount of any non-controlling interest.

• Recognises the fair value of any investment retained.

earnings, as appropriate.

annually or more frequently if events or changes in circumstances indicate that the carrying value maybe impaired.

acquiree are assigned to those units.

amount of each asset in the unit.


The Company and its Subsidiary has loans and other receivables, trade and other receivables, and cash and short-term deposits that arise

10.1 Credit risk

10.1.1 Credit risk exposure

As at 31st March 2017Group Note Non current

assets

Cash in hand and at bank

Trade and other

receivables

Short term investments

Amounts due from related

Total % of


10.1.2 - - - - Deposits with bank 10.1.3 - - - - 3

- - - 9 Trade and other receivables 10.1.5 - - - - Amounts due from related

10.1.6 - - - - 113,509,295 113,509,295 17 Cash in hand and at bank 10.1.7 - - - - Total credit risk exposure 113,509,295 657,101,063 100



As at 31st March 2016Group Note Non current

assets


Trade and other

receivables



Total % of


10.1.2 - - - - Deposits with bank 10.1.3 - - - - 1

23,365,357 - - - 32,119,320 5 Trade and other receivables 10.1.5 - - 299,102,035 - - 299,102,035 Amounts due from related

10.1.6 - - - - 13 Cash in hand and at bank 10.1.7 - - - - 2 Total credit risk exposure 23,365,357 100

As at 31st March 2017Company Note Non current

assets


Trade and other

receivables



Total % of


10.1.2 - - - - 19 Deposits with bank 10.1.3 - - - - 2

- - - 9 Trade and other receivables 10.1.5 - - - - Amounts due from related

10.1.6 - - - - 113,509,295 113,509,295 17 Cash in hand and at bank 10.1.7 - - - - Total credit risk exposure 113,509,295 100

As at 31st March 2016Company Note Non current

assets


Trade and other

receivables



Total % of


10.1.2 - - - - 39 23,365,357 - - - 32,119,320

Trade and other receivables 10.1.5 - - 299,102,035 - - 299,102,035 Amounts due from related

10.1.6 - - - - 13 Cash in hand and at bank 10.1.7 - - - - 3 Total credit risk exposure 23,365,357 723,903,902 100

referred to as risk free due to the sovereign nature of the instrument.


10.1.3 Deposits with bank


Rs. total

Rs. total

Rs. total

Rs. total

AAA* 100 100 100 - - Total 100 100 100 - -

10.1.5 Trade and other receivables

Group Company

As at 31st March 2017 2016 2017 2016

Rs. Rs. Rs. Rs.

Neither past due nor impaired

01–60 days

Past due but not impaired

61–90 days 12,311,216 5,536,601 12,311,216 5,536,601

91–120 days 2,227,732 269,191 2,227,732 269,191

111,007 111,007

Impaired 609,967 609,967 609,967 609,967

Gross carrying value

Less: impairment provision

Total

The Company has obtained bank guarantees from all distributors as collateral by reviewing their past performance and credit worthiness.

historical data.

The balance consists of amounts due from the Parent, companies under common control, joint ventures and associates of the Parent.



10.2 Liquidity risk

The Group monitors its risk to a shortage of funds using a daily cash management process. This process considers the maturity of the

10.2.1 Net cash


Rs. Rs. Rs. Rs.

Short term investmentsCash in hand and at bank

Total liquid assets 303,593,915

Net cash 159,365,303

10.2.2 Liquidity risk management

sale of assets, repurchase agreement or other secured borrowing.

Maturity analysis

Group31st March 2017 Within 1

yearBetween 1-2 years

Between 2-3 years

Between 3-4 years

Between 4-5 years

More than 5 years

Total

Rs. Rs. Rs. Rs. Rs. Rs. Rs.

53,515,233 - - - - 93,070,122

Trade and other payables - - - - -

- - - - -

- - - - -

- - - -


31st March 2016 Within 1 year

Between 1-2 years

Between 2-3 years

Between 3-4 years

Between 4-5 years

More than 5 years

Total


- - -


5,529,361 - - - - - 5,529,361

- - - - -

- - -

Company31st March 2017 Within 1

yearBetween 1-2 years

Between 2-3 years

Between 3-4 years

Between 4-5 years

More than 5 years

Total


53,515,233 - - - 93,070,122


- - - - -

- - - - -

- - - -

31st March 2016 Within 1 year

Between 1-2 years

Between 2-3 years

Between 3-4 years

Between 4-5 years

More than 5 years

Total


- - -


5,529,361 - - - - - 5,529,361

- - - - -

- - -


10.3 Market risk

Market risk comprises of the following risks;

* Currency risk

the return.

10.3.1 Interest rate risk

Increase/

in basis pointsGroup Company

Rs. Rs. Rs.

Rupee borrowings2017

2016-99



10.3.2 Foreign currency risk

GroupExchange rate Increase/

in basis points

before tax Rs.

equity Rs.

2017 53,273

2016

10.4 Capital management

in order to support its business and maximise shareholder value.

the capital structure, the Group may issue new shares, have a rights issue or buy back of shares.

Group Company2017 2016 2017 2016

Debt / Equity

11 Fair value measurement and related fair value disclosures


transfer the liability takes place either:

The principal or the most advantageous market must be accessible by the Group.

use.

fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

indirectly observable

relevant external sources to determine whether the change is reasonable.



Fair Value Hierarchy

Note Level 1 Level 2 Level 3 As at 31st March 2017 2017 2017

Rs. Rs. Rs.

Assets measured at fair value property, plant and equipmentLand 20.1 & 20.2 - - Buildings on freehold land 20.1 & 20.2 - - Buildings on leasehold land 20.1 & 20.2 - - 232,210,513 Total

future usability and associated redevelopment requirements have been also considered. The valuer has made reference to market

rounded within the range of values.

12 Financial instruments and related policies

to purchase or sell the asset.

Financial assets-subsequent measurement

* Loans and receivables

* Held - to - maturity instruments

Loans and receivables


• Loans and borrowings

• Financial guarantee contracts

Loans and borrowings

Financial assets by categories Loans and receivablesGroup Company

As at 31st March 2017 2016 2017 2016Rs. Rs. Rs. Rs.

Financial instruments in non-current assets 23,365,357 23,365,357

Financial instruments in current assetsTrade and other receivables

113,509,295 113,509,295 Short term investmentsCash in hand and at bank

613,266,625

Total 657,101,063 723,903,902




Rs. Rs. Rs. Rs.

Borrowings

Trade and other payables 5,529,361 5,529,361

Total 370,507,102

models are taken from observable markets where possible. Where this is not feasible , a degree of judgment is required in establishing fair

13 Revenue

Sale of goods

control over the goods sold.

Turnover based taxes

statutes.


13.1 Revenue

Group Company2017 2016 2017 2016

Rs. Rs. Rs. Rs.

Revenue

Group Company2017 2016 2017 2016

Rs. Rs. Rs. Rs.

Sri Lanka 3,029,970,119 3,029,970,119 OthersTotal revenue

Gains and losses

related selling expenses.

Other income and expense

Other income and expenses are recognised on an accrual basis.


Rs. Rs. Rs. Rs.

Exchange gain 231,757 231,757 - -

Sundry income 3,135,715

for the Group and the Company.



Finance income

Finance income comprises of interest income on funds invested.

Finance cost

15.1 Finance cost


Rs. Rs. Rs. Rs.

Long term 13,375,656 13,375,656 Short term

15.2 Finance income


Rs. Rs. Rs. Rs.

16,095,619

20,067,393 23,763,150



Rs. Rs. Rs. Rs.

including the following;

763,022 79,500

10,765,265 10,765,265 30,205,197 29,325,315 30,205,197 29,325,315

2,996,203 2,912,693 2,996,203 2,912,693 Loss on disposal of property, plant and equipment - -

- -

17 Earnings per share

average number of ordinary shares outstanding during the year.

17.1 Basic earnings per share

GroupFor the year ended 31st March 2017 2016

Note Rs. Rs.

Weighted average number of ordinary shares 17.2 25,500,000 25,500,000

Basic earnings per share 13.13

17.2 Amount used as denominator

GroupFor the year ended 31st March 2017 2016

Rs. Rs.

Ordinary shares at the beginning of the year 25,500,000 25,500,000

Ordinary shares at the end of the year 25,500,000 25,500,000

Weighted average number of ordinary shares outstanding during the year 25,500,000 25,500,000



18 Dividend per share Equity dividend on ordinary shares

18.1 Declared and paid during the yearCompany

For the year ended 31st March 2017 2016Rs. Rs. Rs. Rs.

Final dividend* 7.00 1st interim dividend 5.75 102,000,000 2nd interim dividend 3.00 76,500,000 - - Total dividend 16.75 11.00

19 Taxes

Current tax

and establishes provisions, where appropriate.

Deferred tax

tax asset to be recovered.

A deferred tax assets and a liability is measured at tax rates that are expected to apply to the year when the asset is realised or liability is


Sales tax

Revenue, expenses and assets are recognised net of the amount of sales tax except:

•

• Where receivables and payables that are stated with the amount of sales tax included.

19.1 Tax expense

Note Group CompanyFor the year ended 31st March 2017 2016 2017 2016

Rs. Rs. Rs. Rs.

Current income tax

19.6

Deferred tax

19.2

116,395,357 116,395,357

Applicable rates of income tax

19.2 Deferred tax expense


Rs. Rs. Rs. Rs.

Income statementDeferred tax expense arising from;

Deferred tax charge

Other comprehensive incomeDeferred tax expense arising from;

569,057 569,057

Total deferred tax charge 30,633,011 72,577,701 30,633,011 72,577,701


19.3 Income tax payables



At the beginning of the year 22,371,316 - 22,371,316 - Transfer from income tax refund - - Charge for the yearPayments during the year*

22,371,316 22,371,316

treasury bills.

19.4 Income tax refund



At the beginning of the year

Transfer to income tax payables 19.3 - -




Charge 19.2 30,633,011 72,577,701 30,633,011 72,577,701

At the end of the year 195,257,563 195,257,563

The closing deferred tax asset and liability balances relate to the following;

- - 195,257,563 195,257,563



these losses as deferred tax assets.


Rs. Rs. Rs. Rs.

Other consolidated adjustments 1,399,917 - - 393,210,605 393,210,605

Disallowable expensesAllowable expenses

Taxable income

Under provision for previous years 36,172 - 36,172 -

Current tax charge


Rs. Rs. Rs. Rs.

393,210,605 393,210,605

119,900,109 119,900,109

- -

- - - - 1,261,070 1,261,070

Tax expense 116,395,357 116,395,357

19.8 Tax losses carried forward


Rs. Rs. Rs. Rs.

Tax losses brought forward

- -



20 Property, plant and equipment

Company and the cost of the asset can be reliably measured.

Basis of measurement

provision are met.

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

every 5 years.

derecognised.

scrapped.


Assets Years

Buildings on Leasehold Land 30-23Plant and machinery 20 – 10

Motor vehicles 5Freezers 12-10

Other equipment 2

Borrowing costs

borrowing of funds.

Impairment of property, plant and equipment



Land

and

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on

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and

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the property.

Property Method of Independent Valuer

Land and Building Ja Ela OMV 31 March 2017 Messrs. P.B Kalugalagedera Building Pannala OMV 31 March 2017

Type of Asset Fair value as at31.03.2017

Rs.

technique* unobservable

inputsunobservable

inputsfair value to unobservable inputs

Land OMVper perch Rs. 350,000/-

Buildings on freehold land OMVper square feet

Rs. 1,600/- correlated

Buildings on leasehold land 232,210,513 OMVper square feet

Rs. 7,000/- Rs. 5,000/-


Rs. Rs. Rs. Rs.

20.4 Carrying value of total assetsAt cost

1,160,901,565 1,160,901,565

20.5 Land and building


20.6


Rs. Rs. Rs. Rs.

Cost

20.7 in use by the Group and the Company.

20.8

purchase of Property, Plant and Equipment.

21 Intangible assets

the cost of the asset can be reliably measured.

Basis of measurement

losses.



21

Intangible AssetsUseful life

Acquired/ Internally generated

When indicators of impairment exists, the

is reviewed at each

Acquired

Acquired

21.1 Intangible assets

Group CompanyAs at 31 st March Goodwill 2017 2016 Goodwill 2017 2016

Purchased Purchased Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Cost/Carrying valueAt the beginning of the year

- - - 260,922 - - - 260,922At the end of the year

Accumulated

impairment


- -

- -

At the end of the year - -

Carrying value

As at 31 March 2017 - -

As at 31 March 2016 2,607,292 - 2,607,292 -

21.2 GoodwillGroup and Company

Net carrying value of

goodwill

Net carrying value of

goodwill

As at 31st March 2017 2016

Rs. Rs.


Ltd and goodwill is tested for impairment as follows;

Impairment of goodwill

impairment annually and when circumstances indicate that the carrying value may be impaired.

Gross margins The basis used to determine the value assigned to the budgeted gross margins, is the gross margins achieved in the year preceding the

Discount rates

Volume growth

22 Investment in subsidiary

investment in subsidiary is carried at cost less any accumulated impairment losses.

CompanyAs at 31st March 2017 2016

Rs. Rs.

22.1 Carrying value 220,291,730 220,291,730

Less

Allowance for impairment of investment

3,177,793





23.1 23,365,357 23,365,357

23,365,357 23,365,357


Rs. Rs. Rs. Rs.

At the beginning of the year 32,119,320 32,119,320

Loans granted

Recoveries


Receivable within one year

23,365,357 23,365,357

32,119,320 32,119,320

24 Other non-current assets


Rs. Rs. Rs. Rs.


25 Inventories

Raw materials At actual cost on weighted average basis

Work in progress

completed

Finished goods purchased At actual cost on weighted average basis

Spare parts At actual cost on weighted average basis

Other inventories At actual cost


Rs. Rs. Rs. Rs.

InventoriesRaw materials 100,093,370 100,093,370

Work-in-progress

Finished goods

Spare parts

Other inventories

26 Trade and other receivables

Group CompanyAs at 31st March Note 2017 2016 2017 2016

Rs. Rs. Rs. Rs.

Trade and other receivables 299,712,002 299,712,002

Less: impairment of trade debtors

23.1



27 Other current assets


Rs. Rs. Rs. Rs.

Prepayment and non cash receivables

28 Short term investments


Rs. Rs. Rs. Rs.

Fixed and call deposits -

29 Cash in hand and at bank


Rs. Rs. Rs. Rs.

Cash in hand 676,250 676,250

Cash at bank 17,356,522 27,137,712

Cash in hand and bank - favourable

Cash in hand and bank - unfavourable

Security and repayment terms of borrowings - Group and Company

Type of facility Lending Nature of facility

Facility amount Rs.

Security Repayment terms

Short term HSBC 50,000,000 pledge over company's assets in Ja Ela

On demand

Short term Deutsche Bank Clean basis On demand

Short term BOC 1,000,000 Clean basis On demand


30 Stated capital

The issued ordinary shares of the Company are listed on the Colombo Stock Exchange.

As at 31st March 2017 2016Number of Value of shares Number of Value of shares

shares Rs. shares Rs.

Fully paid ordinary shares

At the beginning of the year 25,500,000 25,500,000


31 Revenue reserves


Rs. Rs. Rs. Rs.

32 Other components of equity

Note Group CompanyAs at 31st March 2017 2016 2017 2016

Rs. Rs. Rs. Rs.

32.1

32.2 - -

32.3

32.1

32.2



32.3 Share-based payment plans

previous paragraph.


The expense recognised for employee services received during the year is shown in the following table;


Rs. Rs. Rs. Rs.

6,933,665 6,933,665

6,933,665 6,933,665

Movements in the year

the year:

Group Company2017 2017 2017 2017

No. WAEP Rs. No. WAEP Rs.

ESOP PLAN 8

Outstanding at the beginning of the year

Granted during the year

Exercised during the year - - - -

Expired during the year

Adjustment due to sub division of shares 169.73 169.73

Adjustment due to share warrants 190.96 190.96

Outstanding at the end of the year -

Exercisable at the end of the year

expected dividend yield and risk free interest rate.

33 Interest - bearing borrowings33.1 Movement


Rs. Rs. Rs. Rs.


Repayments

At the end of the year

Repayable within one year

Total borrowings



Security and repayment terms - Group and Company

Nominal interest rate

Year of maturity Carrying value of collaterals

2017 Rs.

2016 Rs.

DFCC Primary mortgage bond of Rs. 166,666,666/- on the building and assets at Pannala

using the projected unit credit method.


Rs. Rs. Rs. Rs.


Current service cost 5,526,161 5,526,161

Transfers - -

Payments

7,333,673 7,333,673


Statement in the following line items;

Cost of sales 7,260,799 7,260,799

650,232 650,232

10,765,265 10,765,265


Group and Company 2017 2016

Discount rate

Future salary increases

55 Years 55 Years


Rs Rs Rs Rs

Discount rate

Salary increment rate

Maturity analysis of the payments

Group and Company 2017 2016Rs Rs

Within the next 12 months 3,211,692

Between 1and 2 years

Between 2 and 5 years 16,323,573

Between 5 and 10 years 31,129,690

Total expected payments 77,726,255

6.15


35 Trade and other payables

business.


Rs. Rs. Rs. Rs.

Trade payables

Sundry creditors including accrued expenses


Rs. Rs. Rs. Rs.

Other taxes payable 19,513,231

19,513,231



than that, which have been disclosed below;

audited Financial Statements as at 31st March 2016.

Name of related party :-

Company under common control

Sale of goods


Rs. Rs. Rs. Rs.

37.1 - - - -

Subsidiary - - - -

Companies under common control

Equity accounted investees of the Parent

113,509,295 113,509,295

37.2 2,199,616 2,339,372 2,199,616 2,339,372

Subsidiary - - - -

Companies under common control 2,955,939 2,955,939


5,529,361 5,529,361


Amounts due from Amounts due toAs at 31st March 2017 2016 2017 2016

Rs. Rs. Rs. Rs.

Current

John Keells Holdings PLC. - - 2,199,616 2,339,372

Subsidiary

Current

- - - -


Current

- -

772,515 - -

Ceylon Cold Stores PLC. - 75,599

Ceylon Holiday Resorts Limited. - -

592,561 - -

Habarana Lodge Ltd. 532,302 - -

- -

- - 206,660 151,267

-

- - 272,650

John Keells PLC. - -

- -

300,275 - - -

- - 65,200 -

Trans Asia Hotels PLC. - -

- -

- -


- -

- -

113,509,295 5,529,361




Rs. Rs. Rs. Rs.


Sale of Goods

- -

- -

Subsidiary - - - -


Sale of Goods 5,257,797 1,337,631 5,257,797 1,337,631

received - -

Key management personnel - - - -

Companies controlled / jointly controlled /

family members - - - -

Key management personnel include members of the Board of Directors of Keells Food Products PLC and its Subsidiary and the Parent Company John Keells Holdings PLC.


Rs. Rs. Rs. Rs.

contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense



39 Capital and other commitments

As at 31st March 2017 2016Property Period of Lease Rentals Rs. Rs.

Renewed for 10 years from Within one year 1,621,596 1,621,596

Ekala, Ja Ela 1st September 2010

7,026,915

As at 31st March 2017 2016Property Period of Lease Rentals Rs. Rs.

35 years from January 2013 Within one year

Makandura Pannala -

656,000

other than the following;


YOUR SHARE IN DETAIL

Ordinary Shareholding

31st March 2017 31st March 2016

Shareholding Range No. of No. of % No. of No.of %

Shareholders Shares Held Shareholders Shares Held

Less than or equal to 1000 0.71 159,992 0.63

1,001 to 10,000 1.76 125

10,001 to 100,000 37 3.63 26

100,001 to 1,000,000 5 6

Over 1,000,001 3 3

1,155 25,500,000 100.00 25,500,000 100.00

Categories of Shareholders No. of No.of % No. of No.of %

Shareholders Shares Held Shareholders Shares Held

John Keells Holdings and Subsidiaries 22,937,250 91.57

Directors and Spouses 1 12,750 0.05 1 12,750 0.05

Public 1,150 2,550,000 10.00 1,029 2,136,592

Total 1,155 25,500,000 100.00 25,500,000 100.00

Sri Lankan Residents 1,135 25,335,910 99.30 1,026 99.60

20 0.70 12

Total 1,155 25,500,000 100.00 25,500,000 100.00

Market Capitalisa�on

Rs. Mn

0

1,000

2,000

3,000

4,000

5,000

2013 2014 2015 2016 2017

Market Price

Rs.

0

50

100

150

200

2013 2014 2015 2016 2017

Net Asset Per Share

Rs.

0

10

20

30

40

50

60

70

80

2013 2014 2015 2016 2017

Shareholders’ Funds

0

500

1,000

1,500

2,000

2013 2014 2015 2016 2017

Rs. Mn


As at 31st March 2017 As at 31st March 2016

Top 20 Shareholders No. of SharesHeld

% of IssuedCapital

No. of SharesHeld

% of IssuedCapital

John Keells Holdings PLC 19,110,399 19,110,399

John Keells PLC 2,573,196 10.09 2,573,196 10.09

Walkers Tours Limited

People's Leasing & Finance PLC/Mr. C D Kohombanwickramage 1.50

People's Leasing & Finance PLC/Mr. L P Hapangama 235,120 0.92 232,522 0.91

Mr. A H Udeshi 150,000 0.59 - -

People's Leasing & Finance PLC/Mr. L H L M P Haradasa

Mr. J B Hirdaramani

Mr. D J M Blackler 90,000 0.35 90,000 0.35

61,000 0.05

- -

Mr. J G De Mel 50,730 0.20 100 0.00

Mr. R Vasudevan 0.17 0.16

36,710 - -

33,273 0.13 33,273 0.13

Mrs. G J E S De Fonseka 0.13 0.13

31,500 0.12 31,500 0.12

Mr. P M Pathiraja 0.11 - -

27,672 0.11 22,732 0.09

Mr. K C Vignarajah 25,500 0.10 - -

2017 2016

170.00

Highest for the year 200.00 215.00

Lowest for the year 97.70

170.00


TEN YEAR INFORMATION AT A GLANCE

For t

he y

ear e

nded

31s

t Mar

ch 2

017

201

6 2

015

201

4 2

013

201

2 2

011

201

0 2

009

200

8

Gro

up

Gro

up

Gro

up

Gro

up

Gro

up

Gro

up

Gro

up

Gro

up

Gro

up

Reve

nue

2,1

96,1

56

1,7

92,6

35

1,5

52,0

00

110

,209

6,6

06

21,

639

50,

255

95,

552

16,

369

121

,510

129

,639

3

0,36

3

As a

t 31s

t Mar

ch 2

017

201

6 2

015

201

4 2

013

201

2 2

011

201

0 2

009

200

8

Gro

up

Gro

up

Gro

up

Gro

up

Gro

up

Gro

up

Gro

up

Gro

up

Gro

up

WHA

T W

E O

WN

ED

Prop

erty

, Pla

nt &

Equ

ipm

ent

1,1

60,9

02

1,1

52,5

92

173

,635

1

76,0

05

273

,156

3

3,95

9

766

,592

7

,237

2

2,36

9

253

,657

1

56,7

96

Trad

e an

d O

ther

Rec

eiva

ble

inclu

ding

due

s fro

m

236

,716

56,

555

9,6

21

672

,576

WHA

T W

E O

WED

Stat

ed C

apita

l

Reve

nue

Rese

rves

2

79,7

07

101

,092

1

23,0

72

Oth

er C

ompo

nent

s of E

quity

1

96,6

16

153

,623

9

2,00

7

Tota

l Equ

ity

1,6

70,1

29

1,5

97,6

16

322

,963

3

15,6

90

317

,639

50,

000

50,

000

50,

000

51,

102

-

-

--

-

12,

561

13,

070

26,

921

35,

013

255

,231

2

23,6

96

216

,220

22,

371

-

-

-

25,

330

-

-

17,

955

672

,576


KEY FIGURES AND RATIOS

For t

he y

ear e

nded

31s

t Mar

ch 2

017

201

6 2

015

201

4 2

013

201

2 2

011

201

0 2

009

200

8

Gro

up

Gro

up

Gro

up

Gro

up

Gro

up

Gro

up

Gro

up

Gro

up

Gro

up

9.0

3 1

1.05

0

.02

5.5

7

13.

13

10.

25

0.0

2

16.

01

19.

29

16.

09

0.0

3 9

.91

29.

99

20.

51

22.

31

9.9

5

Div

eide

nd P

er S

hare

- Pa

id

16.

75

11.

00

5.0

0 2

.00

2.0

0 -

-

2

.50

3.5

0 2

.50

12.

51

16.

57

19.

19

37.

39

5.9

3 1

1.09

69.

35

73.

27

55.

25

65.

77

55.

57

Liq

uidi

ty

2.1

5 3

.02

2.6

6 2

.29

1.9

3 2

.67

2.3

0 1

.99

1.6

0 0

.99

0.7

2 1

.11

31.

70

17.

25

7.5

2 1

.65

12.

10

12.

95

10.

57

2,7

50

6.5

5

1.1

9 2

.05

0.0

1 -

-

10,

911.

61

-

-

11.

55

-

-

3.6

2 6

.93

7.7

2 2

.27

15.

26

65.

50

66.

62

60.

77

62.

65

12.

67

11.

36

170

.00

55.

00

70.

00

100

.00

150

.00

69.

00

50.

50

56.

00

7,12

6 3

,576

3,59

3 1

,376

1

,566

.


REAL ESTATE PORTFOLIO

Net book value

Number of

Buildings

Buildings in

Sq. Feet

Land in Acres 2017 2016

Freehold Leasehold Rs. Rs.


16, Minuwangoda Road, Ekala, Ja Ela 5 3.00 -

16, Minuwangoda Road, Ekala, Ja Ela 1 7,700 - 1.00 9,759,610

3 - 222,650,672


Accrual BasisRecording Revenues and Expenses in the period in which they are earned or incurred regardless of whether cash is received or disbursed in that period

Capital Employed

Cash Earnings Per Share

non-cash items over the weighted average number of shares in issue during the period

because:

occurrence of one or more future events or,

Dividend CoverEarnings per share over Dividend Per Share

Dividend YieldDividend Per Share as a percentage of Market Price of Share at the end of the period

weighted average number of shares in issue during the period.

Enterprise Value

Equivalents

Earnings YieldEarnings per Share as a percentage of Market Price per Share at the end of the period

Interest Cover

GLOSSARY OF FINANCIAL TERMINOLOGY

the share price at end of the period

Net Assets

Net Asset Per Share

end of the period

Net DebtDebt minus Cash and Short Term Deposits

Net Turnover per Employee

Market Price of Share over Earnings per Share

Return on Assets

Return on Capital Employed

Return on Equity

Shareholders’ FundStated Capital, Other Components of Equity and Revenue Reserves

Total Equity over Total Assets

Total Assets

Current Assets

Total Debt

Total Debt/ Total AssetsTotal Debt over Total Assets

Total Value Added

Expenses, Cost of Materials and Services purchased from External Sources


• To receive and consider the Annual Report of the Directors and the Financial Statements for the Financial Year Ended 31st March 2017 with the Report of the Auditors thereon.

By Order of the Board

KEELLS FOOD PRODUCTS PLC

Secretaries

Colombo12th May 2017

Note:

• A proxy need not be a member of the Company.

NOTICE OF MEETING


NOTES


FORM OF PROXY

................................................................................................................................................................................................................................being a member/s of Keells Food Products PLC, hereby appoint: .................................................................................................................................................................................................................................................................................................................................................... of ...................................................................................................................................................................................................or failing him/her

Mr. Susantha Chaminda Ratnayake or failing him

Mr. Ajit Damon Gunewardene or failing him

Mr. James Ronnie Felitus Peiris or failing him

Mr. Jitendra Romesh Gunaratne or failing him

Ms. Shehara De Silva or failing her

Mr. Pravir Dhanoush Samarasinghe or failing him

Mr. Amal Eran Herath Sanderatne or failing him

of June 2017 at 10 a.m. and at any adjournment thereof, and at every poll which may be taken in consequence thereof.

FOR

To re-appoint Messers. Ernst and Young Chartered Accountants as Auditors and to authorise

.................................................................

Signature/s of shareholder/s


INSTRUCTIONS AS TO COMPLETION OF PROXY

of signature.

FORM OF PROXY

Designed & produced by

Printed by Printel (Pvt) Ltd.Photography by Dhanush De Costa

Name of Company

Legal FormPublic Limited Liability Company Established in 1982

Mawatha, Colombo 02.Sri LankaTel: +94 11 2421101

Ekala Factory

Ekala, Ja-Ela.Sri Lanka

E-Mail : [email protected]: www.keellsfoods.com

Pannala Factory

Sri Lanka

Board of Directors

Mr. A D Gunewardene

Mr. J R Gunaratne

Ms. S De Silva



CORPORATE INFORMATION


Ms. S De Silva


Secretaries & Registrars

Mawatha, Colombo 02. Sri Lanka

AuditorsErnst & Young , Chartered Accountants,201 , De Saram Place, Colombo 10. Sri Lanka

BankersBank of Ceylon Limited Deutsche Bank AG

Commercial Bank of Ceylon

The Ordinary Shares of the Company are Listed with

Subsidiary Company

G4-5 G4-7 G4-17

KRESTSSKREST

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