As Sri Lanka ushers in a New Year - 2020, we, at the John Keells Group are humbled, and excited, as we commemorate our 150th year of partnering our country’s growth and delivering exceptional value to our stakeholders. We are proud of our heritage as a tea and produce broker with the advent of the tea plantations in Sri Lanka over a century ago. Today, we are honoured as we are benchmarked by many as one of Sri Lanka’s most respected diversified companies – where we have interests in shipping and logistics, consumer foods, leisure, property development, retail, financial services and information technology.
We are thankful that we have grown with our nation, diversifying into many growth sectors over the last 150 years as Sri Lanka also prospered. As we celebrate this milestone, we recognise and thank you, our stakeholders: shareholders, the government, suppliers, partners, employees, and customers. We owe a debt of gratitude to you for partnering us on this exciting journey, helping to shape and transform lives and nurturing Sri Lankan grown brands such as Cinnamon Hotels and Resorts, Elephant House, Keells and Union Assurance.
We are gratified to have played our part in driving the growth of our country, investing in landmark projects which have, and will, define Sri Lanka - such as our investment in the first private port terminal in the country named South Asia Gateway Terminals (SAGT) or the USD 900 million, 4.5 million square foot, integrated mixed-use complex, branded as Cinnamon Life, both projects being the largest ever private investments in Sri Lanka at the time.
Our strength has always been our exceptionally talented pool of employees who bring a variety of skills, experience and innovative ideas to the work we do each day. Whilst the immediate John Keells family includes over 20,000 people, from diverse backgrounds, we have fostered a much larger eco system of partners and suppliers that we have upskilled and introduced innovation, sustainability practices and technology. We are driven by the thought that we touch the lives of many through our products and services – many of which are locally developed, and branded, to serve our people.
We are John Keells, and this is our story…
Our business commenced in 1870 as a produce broker in tea, the most thriving industry in the country at that time.
Over the years, we have aligned ourselves with the growth sectors of the country, evolving our portfolio of businesses to remain relevant at each juncture of time. Today, most of the businesses of the Group are leaders in their respective industries.
John Keells Holdings PLC (JKH) entered the tourism sector in the 1970s and has been at the forefront of spearheading the tourism industry in the country where we are the largest owner and operator of rooms with 2,400 rooms under the Cinnamon brand. Cinnamon Hotels and Resorts is recognised as being a home-grown Sri Lankan brand with the capability to compete with the best international brands.
We at John Keells have constantly explored opportunities for growth, particularly in long term strategic assets. The acquisition of Asian Hotels and Properties in 2003, which, at the time, was the largest transaction on the Colombo Stock Exchange (CSE), was where we acquired interests in what is known today as Cinnamon Grand and Cinnamon Lakeside. Our belief in tourism then, holds true today and we are convinced that tourism, can and will be, one of the biggest drivers of economic growth for Sri Lanka and that we should aspire to attract over 5 million tourists to the country, thus providing essential foreign exchange and also ensuring the creation of employment opportunities and cascading benefits for the entire populace.
SAGT, the first private terminal in the country, led by JKH, played a pivotal role in establishing the Port of Colombo as one of the leading transshipment hub ports in Asia. The investment of USD 240 million in 1999 was the largest private sector investment in the country at the time. The structuring of the project facilitated a transfer of technology and know-how to Sri Lankan staff and SAGT’s world class operations have been recognised internationally. This is exemplified through the various accolades SAGT has received over the years, such as being ranked as number one in South Asia and number four in the world for Terminal Productivity by the Journal of Commerce, USA and as the ‘Best Transshipment Hub Port Terminal of the Year’ by the Global Ports Forum.
The Group entered into the beverage and ice creams business through the acquisition of Whittall Boustead Limited in 1991 - which again, at the time was the largest acquisition in the history of corporate Sri Lanka, which also owned hotel properties and a stake in the insurance business – Union Assurance Limited. “Elephant House” is quintessentially Sri Lankan. The beverages and ice creams produced and sold under the Elephant House brand are synonymous with many Sri Lankans considering the island-wide distribution network and retail base of over 80,000 outlets and the established nature of the products as we have catered to the needs of our people for over a century. Elephant House has continued to maintain a dominant position in the market place, despite the presence of large multinational players, showcasing the ability of locally developed and manufactured products to serve the needs of our consumers.
The supermarkets business under the brand ‘Keells’ has established itself as one of the leading chains, recognised for its unique offering and service standards, at value for money. We have expanded to over 100 outlets at present and serve millions of Sri Lankan consumers on a monthly basis. We believe we have played our part in uplifting the quality of life of the people of our nation through our various products and offerings and will continue to push ourselves to serve our customers better, whilst ensuring fair price and transfer of know-how to improve the supply chain and enhance the practices of our farming community.
In another landmark investment for the Group, in the post-conflict era, JKH took the bold step to construct and develop a large mixed-use project comprising of an 800-room hotel, 2 residential apartment towers, a commercial complex, space for conferencing and banqueting for over 4,000 pax and a retail and entertainment space. This project, branded as “Cinnamon Life”, is Sri Lanka’s single largest private sector investment at over USD 900 million underpinning the financial strength of the Group and the confidence we have in the underlying opportunity for Sri Lanka. The iconic 4.5 million square foot development was designed by world renowned architect Cecil Balmond OBE and reflects his Sri Lankan origin in its shape of the “moonstones” and “guard stones” which herald the entry into the new Colombo. The development contains essential entertainment and conferencing facilities aimed at catalysing the demand and excitement to catapult Colombo into the tourism destination it can be.
While the financial services infrastructure in the country has evolved significantly, the prevalence of life insurance protection in the country remains significantly low compared to many of our regional peers. The investment and protection policy covers - through our 90 per cent owned life insurance business, Union Assurance PLC - provides Sri Lankans with various protection mechanisms. The strength and stability of the Group has been a cornerstone in driving this business forward as we cater to over 250,000 policy holders who have placed their trust in us. JKH has also played a role in establishing Nations Trust Bank in 1999 as a founder shareholder.
As we reach this important milestone, we have reflected on our journey: the pitfalls, and successes, along the way. It is our belief that one of the key successes of the John Keells story has been the foresight and willingness to broad-base our shareholding. We are the rare Sri Lankan company not controlled by a single shareholder. This has driven a meritocracy and a performance-based management team that has consistently delivered value to our diverse base of stakeholders.
The initial listing of JKH, the investment holding company in 1986, was the largest initial public offering of shares on the CSE at that time. In March 1987, 25 per cent of JKH was owned by 2,179 public shareholders with a market capitalisation of Rs. 110 million. We are pleased that, today, JKH has over 11,000 shareholders, further broad-basing the ownership of the company which includes many internationally renowned foreign institutional funds, who have been long-standing shareholders, exemplifying, what we believe to be, the value creation process of the company and the high standards of governance. At the time of writing this article, JKH commanded a market capitalisation of Rs. 216 billion, being the largest listed company on the CSE. The other companies which form the top five in terms of market capitalisation are: Ceylon Tobacco Company– Rs. 207 billion; Dialog Axiata– Rs. 101 billion, Commercial Bank of Ceylon – Rs. 92 billion and the Distilleries Company of Sri Lanka – Rs. 84 billion.
In 1996, our shareholders approved an employee share option plan (ESOP), a first in the country at the time, which enabled employees to become shareholders of JKH. The ESOP awards have been made to over 1,000 of our employees, thereby creating a greater sense of ownership and alignment.
The era post listing on the CSE paved the way for us to undertake many landmark transactions as access to capital was less of a constraint considering the willingness to opt for growth and value creation over shareholding control. In 1994, we became the first Sri Lankan company to obtain a listing overseas and issued Global Depository Receipts quoted on the Luxembourg Stock Exchange. The strong track record of JKH over many decades, together with the profile and support of our shareholders, has enabled the Group to raise capital at various times throughout our history – most notably in 2013 when Rs. 23.1 billion was raised. We are gratified and humbled by the vote of confidence placed in us by our shareholders who have always supported the growth plans of the company.
We have absolute conviction that our success is driven by the people working in this organisation. The sense of ownership and the team-driven culture have been hallmarks for success in ensuring we attract and retain the best talent our country has to offer. As we have grown over the decades, becoming a large and complex eco-system, we have ensured we invested in the right processes and systems to enable us to remain relevant. We were one of the first corporates to introduce a robust and cutting-edge performance management system and more recently, the Group pioneered SAP SuccessFactors which is a cutting-edge human resource information system.
We have always strived to evolve ahead of the market, adopting systems and technology which are visionary and disruptive. As one of the first corporates to adopt and implement the ERP system SAP in the country, we were able to serve our customers better and instill best practices and governance standards hitherto unseen. We continue to push the boundaries as we continue to adopt, and adapt, our technology landscape to remain relevant, and agile, considering the diversified nature of our business. In yet another landmark initiative, we have now embarked on an ambitious but exciting advanced data analytics transformation journey, in partnership with a leading global consultancy firm, which will establish and foster a new set of skills not only at JKH, but the country at large.
While our businesses invest in research and development to enhance their own product offerings, we established John Keells Research, a science-based unit to foster the culture of innovation and research in the country which focuses on creating intellectual property in the sphere of science. We are proud of the achievements, where we have, within a short span of five years since being established, obtained a patent, in collaboration with an Indian research institute, for a novel energy storage device. We remain confident of our ability to help contribute towards innovation and the development of intellectual property given the exceptional talent we possess in the country.
As we look to the future, acutely aware that our continued success is tied to the responsibility we carry towards the upliftment and sustainable growth of Sri Lanka, as a whole. Our corporate social responsibility and sustainability initiatives are at the foundation of everything we do. John Keells were pioneers in introducing, and instilling, the practice and culture of sustainability in corporate Sri Lanka. We are pleased that sustainable initiatives are at the core of all we do and are intertwined to form an integral part of our future business strategies.
As we look to the next 150 years, we are conscious of the resource constraints and the need to drive responsible consumption. As a result, we have set ourselves goals to reduce our carbon, energy, water and plastic footprints and to optimise our consumption of resources. Given the scale of our businesses, we appreciate the impacts our products have on the ecosystem and have taken many initiatives to ensure such impacts are minimal. Our commitment to this is demonstrated with initiatives such as ‘Plasticcycle’ where we have committed to collect plastics for recycling.
Our corporate social responsibility initiatives driven by John Keells Foundation, under the vision of “empowering the nation for tomorrow”, have long term interventions, targeting national priorities based on the UN Sustainable Development Goals and have made measurable impact in the areas of health, environment, education, livelihoods, arts and culture and disaster relief. Over the years, about three million persons have been impacted through our CSR initiatives which are carried out primarily by employee volunteers. Highlights of these include long term programmes to combat gender-based violence; develop soft skills, English language and vocations skills of our youth; promotion of Sri Lankan arts; and reforestation.
Diversity has been at the epicenter of our success. We have voluntarily adopted many forward-thinking HR practices that encourage non-discrimination of any form. JKH has always promoted gender equality and we are pleased that over a third of our workforce, including at executive level, are female and we encourage women in higher management. John Keells was also the first Sri Lankan company to include non-discrimination against the LGBTIQ community in HR policies and practices thereby truly creating equal opportunity for all. We continue to foster and encourage diversity in all forms as we firmly believe this provides us with unique perspectives and encourages teamwork. Following the very unfortunate Easter Sunday attacks in April 2019, the Group took a strong stance to encourage unity amongst our fellow employees and partners through a pledge: “We are stronger united. Let us Stand Together as one nation”. It is our belief, that, in the end, it is our ability to co-exist and collaborate together that has ensured our prosperity, as a country, and, as a corporate citizen.
So, it is with a deep sense of gratitude and excitement that we look forward to the future. One where we hope to continually foster a sense of camaraderie, collaboration and excellence in realizing our passion to serve our stakeholders. Come share in our journey as we continue to partner the future of Sri Lanka and deliver value for all stakeholders.