Investor Presentation Review of FY2019 - Version 1.0 - John Keells Holdings
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Investor Presentation Review of FY2019 Version 1.0 This Investor Presentation should be read in conjunction with the JKH Annual Report 2018/19 to obtain a more comprehensive understanding of the drivers and strategies of our businesses John Keells Group - Confidential
About JKH
▪ Market cap of USD 1.14 billion
▪ No controlling shareholder - 99% free float
▪ Debt : Equity ratio of 23.7%
▪ The Board comprises of two Executive Directors and six Independent Non-
Executive Directors
2
John Keells Group - Confidential
Portfolio profitability
PAT attributable to equity holders
2016/17 2017/18 2018/19
15%
23% 22%
Transportation
4% 33% 33%
36% Consumer foods
Retail
11%
Leisure
17%
32% 1% Property
5% 8%
Financial
16% 10%
10% Services
20% 4%
Note: The above excludes the contribution from Other including Information Technology and Plantations Services
▪ The Group has consciously focused on the shift in the composition of its earnings, targeting a greater
contribution from higher ROCE earning industry groups such as Consumer Foods, Retail and Financial
Services
▪ 2017/18 excludes the one-off surplus transfer of Rs.3.38 billion at Union Assurance PLC
▪ The decline in contribution from the Property industry group is due to revenue of residential apartments
at Cinnamon Life not being recognised
3
John Keells Group - Confidential
Cumulative EBITDA : for the year ended 31 March
2019
FY2019 FY2018 YoY Growth
Industry Group
(Rs. Million) (Rs. Million) (%)
Transportation 4,555 3,438 32
Consumer Foods 2,913 3,132 (9)
Retail 2,146 2,520 (15)
Leisure 5,017 6,330 (21)
Property 323 1,382 (77)
Financial Services 4,548 8,873 (49)
Other, incl. IT and Plantation Services 6,388 6,439 (1)
Total EBITDA 25,890 32,174 (20)
Recurring EBITDA* 25,672 28,805 (11)
*Refer page 36 of the JKH Annual Report 2018/19 for commentary on recurring adjustments
4
John Keells Group - Confidential
EBITDA : for the quarter ended 31 March 2019
Q4 FY2019 Q4 FY2018 YoY Growth
Industry Group
(Rs. Million) (Rs. Million) (%)
Transportation 1,282 497 158
Consumer Foods 1,103 864 28
Retail 827 580 42
Leisure 2,375 2,540 (7)
Property 195 1,158 (83)
Financial Services 1,590 6,459 (75)
Other, incl. IT and Plantation Services 437 1,995 (78)
Total EBITDA 7,809 14,092 (45)
Following are the reasons for the deviations in performance due to one-off/non-operational impacts:
• Transportation EBITDA in Q4 2017/18 included an impairment provision for doubtful debt and a cumulative deferred
tax charge at SAGT.
• Property EBITDA in Q4 2017/18 included a one-off revenue recognition at Rajawella Holdings Limited on the sale of
leasehold rights and lower fair value gains on investment in 2018/19.
• The performance for the quarter also included an exchange loss at the Holding Company as a result of the appreciation
of the Rupee, in comparison to an exchange gain recorded in the fourth quarter of 2017/18.
5
John Keells Group - Confidential
Portfolio evaluation 2018/19;
returns vs. effective capital deployed
Industry group Effective capital employed (%)
Adjusted ROCE (%) Cinnamon Life 24
Leisure 21
Property (Excluding Cinnamon Life) 13
IT - 54%
Transportation 8
Financial Services 6
Retail 4
Consumer Foods 3
Plantations 1
Financial Services - 25% Information Technology 0.1
Transportation - 21% ▪ In addition, the Holding Company accounts for 18 per cent of effective capital
Consumer Foods - 21% employed which consists primarily of cash
Plantations - 15%
Retail - 13% Hurdle Rate - 15%
Leisure - 4%
Property (Excl. Cinnamon Life) – 0.2%
Cinnamon Life – (0.1%)
Adjusted effective capital
employed (Rs.bn)
6
John Keells Group - Confidential
Investment pipeline comprises primarily of
Cinnamon Life
▪ Investment pipeline comprises primarily of Cinnamon Life, where completion is staggered
▪ The realisation of benefits from these investments is expected to accrue from beyond the next
12-18 months, particularly with Cinnamon Life.
▪ These investments will be funded through available/internally generated cash. Some of the key
projects include:
Project Expected completion
Cinnamon Life - Residential and Commercial towers 4Q FY2020
1Q FY2021
- Hotel and Retail Mall
Reconstruction of Bentota Beach by Cinnamon End 2019
Reconstruction of Cinnamon Hakura Huraa Maldives End 2019
Cinnamon red Kandy FY2021
Roll out of 55-60 Retail outlets FY2020 & FY2021
Retail Centralised Distribution Centre 1H FY2021
JK Logistics - construction of a warehouse 1H FY2021
7
John Keells Group - Confidential
Transportation - overview
▪ 42% stake in SAGT
▪ SAGT capacity: ~2 million TEUs
▪ Largest cargo and logistics service provider in the country
▪ Leading bunkering services provider
▪ Joint Ventures with Deutsche Post for DHL air express and A P
Moller for Maersk Lanka
▪ GSA for Jet Airways, KLM Royal Dutch airlines and Gulf Air. Other
operations include warehousing and supply chain management
8
John Keells Group - Confidential
The strategic location of the Port of Colombo
linking key shipping routes
GWADAR
BAHL
KARACHI
KOLKATA
MUMBAI VISHAKHAPATNAM
CHITTAGONG
CHENNAI YANGON
ADEN
KOCHI
LAMU
MOMBASA
DAR-ES-SALAM
PORT LOUIS
CAPE TOWN
9
John Keells Group - Confidential
Capacity enhancements in the Port of Colombo
• CICT - Colombo International Container Terminal
• ECT - East Container Terminal
• SAGT - South Asia Gateway Terminal
• JCT - Jaya Container Terminal
10
John Keells Group - ConfidentialSustained volume growth in the Port of Colombo
7.05
6.21
5.74
Million TEUs
5.19
4.91
4.31
2013 2014 2015 2016 2017 2018
11
John Keells Group - ConfidentialRapid absorption of capacity in the Port of
Colombo
800
Port of Colombo - volumes ('000 TEUs)
Port Container handling
capacity (TEUs)
CICT
Colombo 8 million
JCT
600
Hong Kong 21 million SAGT
Singapore 40 million
Shanghai 36 million
400
Q4 Q1 Q2 Q3 Q4
Volumes 2017/18 2018/19 % YoY 4Q Earnings update:
(TEU) Q4 Q1 Q2 Q3 Q4 Change Transportation industry
SAGT 507,668 504,312 538,723 516,037 514,589 1
group
(Rs. mn) Q4 Q4
JCT 559,681 547,629 592,551 604,672 607,913 9 2018/19 2017/18
CICT 639,002 656,986 676,710 703,470 668,230 5 EBITDA 1,282 497
Total 1,706,350 1,708,927 1,807,984 1,824,179 1,790,732 5
• SAGT profits driven by
improvement in volumes and
2017/18 2018/19 mix.
SAGT • 2017/18 included an
Q4 Q1 Q2 Q3 Q4
impairment provision for
Domestic: Transshipment 20:80 17:83 17:82 20:80 21:79 doubtful debt and a
volume mix cumulative deferred tax
charge at SAGT.
Sources: Government websites/ Sri Lanka Ports Authority
12
John Keells Group - ConfidentialOpportunities for growth in the Bunkering
businesses
Bunkering Business (Lanka Marine Services)
2017/18 2018/19
LMS
Q4 Q1 Q2 Q3 Q4
Volume growth 20 20 2 9 (4)
▪ LMS revenue recorded an increase although profitability was impacted by the appreciation of the Rupee
Port of Hambantota
▪ Strong opportunities for private bunkering service providers with infrastructure in place for inland
storage of petrochemicals and a pipeline to the Port
▪ The Port will occupy an area of 1,815 hectares and have a capacity to accommodate 33 vessels at a time
▪ Positioned within 10 nautical miles of the world’s busiest shipping lanes in which 200 to 300 ships sail
through on a daily basis
Logistics Business (John Keells Logistics)
▪ Total warehouse space under management grew to approx. 315,000 sq.ft. in the year 2018/19, at a
capacity utilisation of 90 per cent.
Sources: Government websites/ Sri Lanka Ports Authority
13
John Keells Group - ConfidentialConsumer Foods - overview
▪ Market leader in soft drinks, ice creams and processed meats
▪ Custodians of the consumer brands “Elephant House”, “Keells - Krest”: high brand
equity
4Q Earnings update: Consumer
Key performance indicators (%) FY2016 FY2017 FY2018 FY2019 Foods industry group
Growth of frozen confectionery volumes 15 11 (4) 10 (Rs. mn) Q4 Q4
Growth of beverage volumes 22 10 (16) (25) 2018/19 2017/18
Growth of convenience food volumes 11 (4) 3 7 EBITDA 1,103 864
EBITDA margin (%) 26 27 20 18 Frozen confectionery:
• Improved performance in the
Frozen Confectionery business
Q4 FY2019
Key performance indicators (%) driven by strong volume growth
FY2018 Q1 Q2 Q3 Q4
Growth of frozen confectionery volumes 2 3 8 7 21 Beverages:
• Improved profitability in the
Growth of beverage volumes (22) (37) (31) (23) (6)
Beverage business as a result of
Growth of convenience foods volumes 11 12 12 3 1 higher margins.
EBITDA (Rs. million) 864 523 691 596 1,103 • Growth in monthly volumes within
the second half of 2018/19 has
EBITDA margin (%) 21 14 16 16 24
consistently witnessed an upward
Revenue mix (Bev:FC) 59:41 49:51 50:50 47:53 49:51
trend.
▪ A sugar tax on carbonated beverages was implemented from 9 November 2017 onwards, resulting in an upward revision
of the selling prices across the CSD portfolio. Subsequently, the tax was revised to a threshold-based tax for sugar content
for both CSD and fruit-based beverages in December 2018.
▪ Following the implementation of the threshold-based tax, selling prices of large PET packs of the CSD portfolio were
reduced by ~20 per cent from February 2019, whilst selling prices of selected SKUs will be revised in 1Q of 2019/20 14
John Keells Group - ConfidentialLow consumption patterns and penetration
reflects potential for sustained growth
Bulk vs. Impulse Split - Regional
▪ The bulk-impulse mix of regional markets are
8% 44% highly skewed towards the impulse markets,
30% 70% 92% demonstrating the significant growth potential
56% for the impulse category.
Sri Lanka Thailand Malaysia
Impulse Bulk
▪ CCS reformulated its flagship flavours and
currently, approximately 70 per cent of the CSD
Carbonated Soft Drinks - Per Capita Consumption
(Litres)
portfolio’s calorific sugar content is reformulated
and replaced with Stevia; a natural sweetener
with zero calories.
52.0
39.0 ▪ CCS also implemented the following initiatives;
31.4
• Launch of sugar free CSD variants -
19.0
branded “GO Sugar Free
10.0
• Acceleration of non-CSD product launches
Philippines Thailand Singapore Malaysia Sri Lanka
(flavoured milk and water branded under
Elephant House, and additional flavours of
fruit juice branded under “Fit-O”) 15
John Keells Group - ConfidentialRetail - overview
▪ The Retail industry group consists of two business verticals;
▪ Supermarkets
▪ Office Automation
▪ “Keells” is a chain of ~10,000 square foot modern grocery
retail outlets
Modern Retail Penetration (%)
70
49 48
43 40
16
Singapore Malaysia Hong Taiwan Thailand Sri Lanka
Kong
Present share of modern retail No. of outlets
Keells * 96
Cargills 380
Arpico 50
Laugfs 37
* As at 31 March 2019
Sources: Central Bank of Sri Lanka, Nomura Research Institute, Unilever Corp, Web articles
16
John Keells Group - ConfidentialRapid expansion to capitalise on low retail
penetration levels
Modern trade density – population (’000) per store Keells Super current coverage
132
47
30
21.0
7.3
4.7
4.5
3.7
3.6
3.4
3.0
2.5
1.9
0.9
Source: Retail and shopper trends in the Asia Pacific, AC Nielsen
▪ Comparatively higher modern trade density – population per store
ratios as against regional peers
▪ High potential for expansion due to lower penetration of modern trade
in Sri Lanka
▪ Approximately 225-250 outlets expected by FY2022/23. No. of new stores expected
▪ The sector will undertake planned capex of approximately USD 65 FY2020 25-30
million over the next two years for 60 new stores and the construction FY2021 30
of the centralised distribution centre
17
John Keells Group - ConfidentialSupermarkets - overview
Profitability margin 4Q Earnings update: Retail
FY2016 FY2017 FY2018 FY2019
(%) industry group
EBITDA (Rs.milllion) 1,537 2,010 1,975 1,623
(Rs. mn) Q4 Q4
EBITDA margin 6.9 6.7 5.3 3.6 2018/19 2017/18
EBIT margin 5.8 5.7 4.0 2.0 EBITDA 827 580
▪ Profitability margins were impacted by the cost of expanding and • Retail performance was driven
operating new stores coupled with the one-off cost associated with by strong revenue growth in the
rebranding and refitting stores Supermarket business
supported by new outlets and a
▪ The blended margins in the ensuing year are expected to improve pick up in same store sales to
as a result of the benefit of a larger base of existing outlets showing 4.5 per cent.
an improvement in the performance. However, there may be a
certain dilutive effect on margins due to the opening of new outlets
Q4 FY2019
Key performance indicators (%)
FY2018 Q1 Q2 Q3 Q4
Same store sales growth 3.5 1.4 0.8 2.4 4.5
Same store footfall growth 3.8 3.9 2.7 4.2 7.1
Average basket value growth (0.3) (2.4) (1.9) (1.7) (2.4)
EBITDA margin 4.2 3.5 1.6 4.0 5.0
▪ The Q4 FY2019 same store sales were driven by the same store footfall growth for the quarter,
although the average basket vales were impacted by the current economic conditions
18
John Keells Group - ConfidentialLeisure - overview
▪ Chain of Resort hotels in Sri Lanka
‾ 8 Resort hotels in strategic tourist destinations (1,000 rooms)
‾ 10% of the country’s 4-5 star class tourist accommodation
▪ 2 five star city hotels in Colombo (847 rooms)
▪ 240 roomed lean luxury hotel managed by Cinnamon; “Cinnamon red”
▪ 3 Resort properties in the Maldives (340 rooms)
▪ Established hotel brand – “Cinnamon”
▪ Leading inbound tour operator in Sri Lanka
▪ Tour operator partners include global players such as Thomas Cook, Kuoni, Hotel
Plan and Virgin Holidays
19
John Keells Group - ConfidentialRound trip offering in key tourist destinations; further
potential to expand the ‘Cinnamon’ footprint
▪ Greater focus on asset light investment models as a part of the
strategy to enhance the ‘Cinnamon’ footprint in Sri Lanka
▪ Land bank of 173 acres of freehold and 127 acres of leasehold
land in addition to 517 acres of leasehold land in Digana
▪ Of the total freehold land acreage owned, a total of 96 acres
of freehold land are in key tourist hotspots:
▪ Ahungalla (Southern Province) : 10.9 acres
▪ Trincomalee (Eastern Province) : 14.6 acres
▪ Nilaveli (Eastern Province) : 41.7 acres
▪ Wirawila (Southern Province) : 25.2 acres
▪ Nuwaraeliya (Central Province) : 3.4 acres
20
John Keells Group - ConfidentialExpanding the ‘Cinnamon’ footprint
▪ "Cinnamon Hakuraa Huraa Maldives“ and "Cinnamon Bentota Beach Bentota“ - reconstruction
of new hotels with expected completion in December 2019.
▪ The industry group commenced the construction of "Cinnamon red Kandy" in the heart of the
hill capital of Sri Lanka in January 2019, complementing its round trip offering of its hotel
portfolio
• The development will follow a similar asset light business model
• Jointly developed by John Keells Hotels PLC (KHL) and Indra Traders (Private) Limited
• Consists 210 rooms at an aggregate investment of Rs.6.50 billion; where KHL’s
investment is estimated to be Rs.1.00 billion
• Located in proximity to the upcoming Kandy-Colombo Expressway and is the first LEED-
Gold green building certified hotel in Kandy.
▪ Entered into a MoU and in the process of finalising a sublease agreement for a new property in
the Maldives with a partner under the "Cinnamon" umbrella.
• The new property is located in close proximity to the Velana International Airport (VIA).
• The property will be subleased for a period of 10 years, with the option for further
extensions.
21
John Keells Group - ConfidentialOccupancies and average room rates
FY2019 FY2018 4Q Earnings update: Leisure
Sector EBITDA EBITDA industry group
Occupancy ARR Occupancy ARR
Margin Margin
(%) (US $) (%) (US $) (Rs. mn) Q4 Q4
(%) (%)
2018/19 2017/18
City 48 128 22 64 127 27
EBITDA 2,375 2,540
Hotels*
Sri Lankan 80 90 28 81 91 28 • Leisure performance impacted
Resorts by lower occupancies in the City
Hotels sector due to the
Maldivian 84 320 23 82 263 24
Resorts
increase in room inventory
within Colombo and the closure
*City Hotels occupancy and ARR excludes Cinnamon red of "Cinnamon Hakuraa Huraa
Maldives" for the reconstruction
of a new hotel.
City Hotels * Sri Lankan Resorts Maldivian Resorts
Key indicators
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Occupancy (%) 43 52 65 48 74 81 70 87 73 79 92 95
ARR(US $) 128 127 128 126 69 85 85 109 298 257 300 393
EBITDA Margin (%) 13 25 23 25 101 22 21 493 (3)2 18 16 38
1. The reduced margin as a result of the off-season period for most resort properties.
2. Impact of the closure of “Cinnamon Hakuraa Huraa Maldives” and the partial closure of “Cinnamon Dhonveli Maldives”
3. Sri Lanka Resorts EBITDA includes IP gains
*City Hotels occupancy and ARR excludes Cinnamon red 22
John Keells Group - ConfidentialImpact analysis: Easter Sunday attacks 2019
▪ Sri Lanka witnessed a series of coordinated attacks on Easter Sunday, 21 April 2019, which
resulted in a death toll of over 250 people and injured over 500 individuals.
▪ The attacks targeted several religious establishments and three city hotels including
“Cinnamon Grand Colombo”; the flagship city hotel property of the JKH Group. The damages
sustained to the hotel were limited to the “Taprobane” restaurant and the surrounding
vicinity.
▪ The hotel commenced accepting new bookings soon after the incident while its restaurants
were opened to the public from 30 April 2019 onwards.
▪ The tourism industry witnessed cancellations particularly given adverse travel advisories
from key source markets within a few days of the incident.
▪ However, the safety and security measures are currently confirmed to be in place by the
Authorities.
▪ Subsequent to the the initial cancellations, forward bookings of the Group’s hotels are already
witnessing a pick-up.
23
John Keells Group - ConfidentialEaster Sunday attacks: recovery seen to be in
12-18 months
▪ Studies of other travel destinations that were Estimates by the World Travel and Tourism council show the
average recovery time in months by type of crisis:
impacted by similar terrorism incidents indicate that
destinations typically require 12 to 18 months to Crisis Category Average recovery time (months)
revert to pre-incident levels. Political Turmoil 26.7
▪ Popular destinations which were affected by acts of Terrorism 13.0
terrorism such as Bali, Mumbai, Paris and Brussels Pandemic 21.3
have indicated a recovery in less than 18 months. Environmental Disaster 23.8
(Source: World Economic Forum)
Trend in tourist arrivals post terror attacks:
Indonesia and Bali tourist arrivals
Thailand and Bangkok tourist arrivals Belgium Tourist Arrivals
16,000 Indonesia Bali 10,000
Thailand Bangkok
40,000
12,000 8,000
35,000
30,000 6,000
8,000 25,000
20,000 4,000
4,000 15,000
2,000
10,000
- 5,000 -
-
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
(Source: World Bank and Bali Hotel Association) (Source: Ministry of Tourism, Thailand) (Source: World Bank)
24
John Keells Group - ConfidentialEaster Sunday attacks: recovery and way forward
▪ The GoSL has proactively initiated a range of measures and concessions to help the revival of
the tourism industry.:
▪ Implement a public relations campaign to curtail the negative global media coverage
whilst working towards the removal of adverse travel advisories for key tourist markets.
▪ A one-year moratorium on loans taken by the tourism related businesses.
▪ A proposed amendment to the Value Added Tax (VAT) for hotel and tour operators.
▪ The Group re-evaluated its short term plans for recovery of the Leisure businesses,
particularly in the city hotels. Given the anticipated reduction in arrivals, particularly in the
next 3 months, which is a relatively lower occupancy period. The mitigatory strategies for the
immediate short term are as follows:
▪ Engage the domestic market to boost occupancy in the short term.
▪ Initiate marketing and outreach efforts once travel advisories on key tourist markets are
removed.
▪ Develop agile cost structures within the hotel properties to remain flexible in managing
short term operations costs.
▪ Critical evaluation of operating models to ensure optimum operating costs whilst
maintaining the sustenance of the brand and service standards.
25
John Keells Group - ConfidentialTrend of tourist arrivals to Sri Lanka
Annual tourist arrivals to Sri Lanka ('000)
2,500 Tourist
Growth
Year arrivals
(%)
2,000
(In 000’s)
2010 654 46
1,500
2011 856 31
1,000
2012 1,006 18
500 2013 1,275 27
2014 1,527 20
-
1985 1996 2007 2018
2015 1,798 18
2016 2,051 14
▪ Tourist arrivals from January – March 2019 was 740,600,
2017 2,116 3
an increase of 4.6%, as compared to the 707,924 recorded
in the comparative period of the previous year. 2018 2,334 10
2019-YTD 908 2
▪ Arrivals for April 2019 declined by 7.5 per cent.
Source: Sri Lanka Tourism Development Authority
26
John Keells Group - ConfidentialSignificant growth in Asian arrivals to Sri Lanka
962,395 966,731
938,697
822,272
Tourist arrivals
640,045
527,656
383,748
334,274
245,753
2010 2011 2012 2013 2014 2015 2016 2017 2018
Calendar Year
Source: Sri Lanka Tourism Development Authority
27
John Keells Group - ConfidentialTourist arrivals to Sri Lanka lag well below
regional peers
40
35
30
Arrivals in millions
25
20
15
10
5
0
Malaysia Indonesia Thailand Vietnam Cambodia Sri Lanka
1990 2018 Actual/ Target
Source: Governmental tourism websites
28
John Keells Group - ConfidentialRoom inventory in Colombo lags far behind other
popular regional capital cities
60,000
31,790
30,114
26,113
9,100 7,600
5,019
Bangkok Manila Kuala Lampur Jakarta Ho Chi Minh Hanoi Colombo
29
John Keells Group - ConfidentialPipeline of room inventory to support arrivals
trajectory
▪ Colombo is increasingly becoming an attractive location for City Hotel
developments
▪ Expected 5-star room supply:
Year of
Development No. of rooms
completion
Cinnamon Life 800 1Q 2021
ITC 350 2021
Ritz Carlton* 473 2022
Total rooms 1,623
* Note that the year of completion of the above is uncertain and is likely to be later than stipulated
▪ Operations at “Cinnamon Life” is expected to commence in March 2021 with
the residential apartments and office complex ready for hand over and
occupation by early 2020
30
John Keells Group - ConfidentialProperty - overview
▪ “John Keells Properties”; explore property development
opportunities by leveraging on brand equity
▪ Focused strategies for expansion via developer/landowner
tie ups
▪ Catering to different target market segments: “7th Sense” on Gregory’s Road
▪ Luxe Spaces
▪ Metropolitan Spaces
▪ Suburban Spaces
▪ High-rise apartment complexes completed
▪ “7th Sense” on Gregory’s Road
▪ OnThree20
▪ The Emperor
▪ The Monarch
OnThree20
31
John Keells Group - ConfidentialIndustry potential
▪ Low levels of urbanisation within Sri Lanka in comparison to regional peers
▪ Annual condominium supply far below regional peers
Annual condominium supply in regional cities
53,796
38,000
2,187
KL Ho Chi Minh City Colombo
Source: KL: CBRE property market outlook 1Q 2018 (forecast for 2018)
HCMC: CBRE Vietnam property overview Q1 2017 (forecast for 2018)
CMB: Internal Estimates (forecast for 2018)
32
John Keells Group - ConfidentialLow penetration of apartment living in Colombo
5%
20%
30% 36%
40% 45%
50%
90%
95%
80%
70% 65%
60% 55%
50%
10%
Greater Singapore Thailand Thailand Malaysia Malaysia India (Chennai) India
Colombo (Central (Outskirts) (Central KL) (Greater KL) (Bangalore)
Bangkok)
Apartments Landed houses
Source: Company analysis
33
John Keells Group - ConfidentialDevelopable land bank of over 36 acres in central
Colombo
▪ Prime developable land bank of over 36
acres held in central Colombo
Cinnamon Lakeside
7.40 acres leasehold land ▪ One of the largest privately owned land
Cinnamon Life banks
7.1 acres freehold
3.03 acres leasehold ▪ Opportunities for development at land
Vauxhall Street
banks held in Crescat City and Cinnamon
9.3 acres freehold land Lakeside
Vauxhall street land bank
Crescat ▪ Prime freehold land extent of 9.38 acres,
8.03 acres freehold land Union Place
1.5 acres
to be developed with Finlays Colombo
Limited
▪ Located in close proximity to the Beira
lake water front which is earmarked for
development of recreational and
residential projects by the UDA
34
John Keells Group - ConfidentialDevelopable freehold land of approximately 25
acres in close proximity to Colombo city
▪ Greater connectivity and reduction in travel time to
Colombo city post construction of the outer circular
expressway
▪ Direct connectivity to the Port City Colombo and a multi
modal transportation hub to be developed
▪ Opportunity to expand into residential apartment
projects in proximity to the Colombo city
Suburban Space development
▪ Master planning is currently underway for the 18-acre
land in Thudella
▪ The site will be developed in phases, as a fully
integrated community with approximately 2,000 units.
▪ The preliminary approvals for the development are in
place, and the design work has been initiated.
35
John Keells Group - ConfidentialRobust development pipeline; on-going
developments
Number of units sold
Cumulative sales (units) 4Q Earnings update: Property industry
as at 31 March ‘19 group
Cinnamon Life:
(Rs. mn) Q4 2018/19 Q4 2017/18
The Residence at Cinnamon Life 136
EBITDA 195 1,158
Suites at Cinnamon Life 110
• Performance of Property was impacted due to
Cinnamon Life commercial
4 floors 2017/18 including a one-off revenue
complex recognition at Rajawella Holdings Limited on
Tri-Zen 200 the sale of leasehold rights and lower fair
value gains on investment property in
2018/19 in comparison to 2017/18.
1. Revenue recognition of Cinnamon Life will be upon completion in CY2021. The completion dates of the
project are as follows:
✓ Residential and office towers : March 2020
✓ Hotel and retail mall : March 2021
2. “Tri-Zen”- an 891 apartment residential development in central Colombo, with expected completion in
FY2022/23
3. Master planning has been initiated for the jointly held 9.38-acre property in Vauxhall Street and the 18-acre
site in Thudella
4. Acquisition of approximately 100 perches of land located in Colombo for a niche residential development
5. Future development of the land bank held at Rajawella Holdings Limited, as discussed in detail overleaf
36
John Keells Group - ConfidentialRobust development pipeline: Scenic 500 acre land
bank with an 18-hole golf course
Rajawella Holdings Limited (RHL)
▪ Owners of a majority stake in RHL to complement the Group’s leisure and property
portfolios
▪ The 500 acre land in Digana includes an 18-hole, Donald Steel designed, Golf Course and
developable land extent of approximately 80 acres
▪ Currently developing the master plan to maximise the development potential of the land
plot
▪ Troon International has taken over the management of the course and the refurbishment of
the course commenced in February 2018
▪ Expected appreciation of land value with the completion of the central expressway
▪ Development and sale of properties such as villas, club house facilities, activity zones and
possible operation of a hotel in the long term
37
John Keells Group - ConfidentialCinnamon Life Integrated
Resort
38
John Keells Group - ConfidentialIntegrated development in Colombo
39
John Keells Group - ConfidentialIntegrated development in Colombo
40
John Keells Group - Confidential41 John Keells Group - Confidential
As at December 2018
42
John Keells Group - ConfidentialAs at May 2019
43
John Keells Group - ConfidentialDevelopment programme
Conferencing ; capacity (4,837 pax) in
three venues and car park facility (2,450
slots)
800 guest room hotel, including
conferencing, banqueting, 7 specialty
restaurants and entertainment facilities
Rentable mall and entertainment space of
372,000 Sq. Ft (Gross – 518,000 Sq. Ft)
First residential development of
approximately – 358,000 Sq. Ft
(231 units).
Second residential development of
approximately – 255,000 Sq. Ft
(196 units).
A standalone office development -
254,000 Sq. Ft rentable area
Note: Areas are subject to change based on final drawings
44
John Keells Group - ConfidentialThe growth in Indian MICE travel to complement
Cinnamon Life
Indian Outbound MICE (Millions)
2.11
1.94
1.78
1.63
1.5
2017 2018 2019 2020 2021
Source: MasterCard
45
John Keells Group - ConfidentialFinancial Services – Insurance sector overview
▪ Union Assurance (JKH Stake : 90%)
▪ Committed to a “digital first” business model with an investment of over Rs. 800Mn to become the largest digital
insurer in Sri Lanka
▪ Developing Bancassurance channels - UA entered into exclusive bancassurance partnerships with Nations Trust
Bank PLC and Union Bank PLC
Life Insurance Penetration as a % of Life Insurance Gross Written Premiums
GDP - 2016
6% 80.3
71.0
5% 64.0
4% Global average – 3.47% 54.0
45.0
Rs. Bn
3%
2%
1%
0%
2014 2015 2016 2017 2018
46
John Keells Group - ConfidentialFinancial Services – Insurance sector overview
Key performance indicators CY2013 CY2014 CY2015 CY2016 CY2017 CY2018
4Q Earnings update:
Market share (%) 14 13 13 13 14 14 Financial Services industry
GWP growth (%) 8 8 17 19 22 11 group
Recurring net profit (Rs.Mn) 791 881 1,127 1,313 4,002* 1,640 (Rs. mn) Q4 Q4
2018/19 2017/18
Surplus from Life Fund (Rs.Mn) 612 750 800 1,100 3,642 1,100
EBITDA 1,590 6,459
Life Fund (Rs.Bn) 19.3 23.1 26.3 30.3 29.1 32.1
• The Life Insurance business
Capital Adequacy Ratio N/A N/A N/A 411% 352% 262%
included a one-off surplus
*Excludes a one-off surplus of Rs. 3.38 billion arising from the change in policy liability valuation and optimal surplus transfer
recorded in 2017/18 which
Key Q4 FY2018 Q1 FY2019 Q2 FY 2019 Q3 FY 2019 Q4 FY2019 cumulatively amounted to
performance (Jan-Mar (Apr-Jun (Jul- Sep (Oct- Dec (Jan-Mar Rs.7.02 billion.
indicators 2018) 2018) 2018) 2018) 2019) • The annual life insurance
surplus recorded by UA
GWP growth
(% YoY)
12 13 4 15 (1) amounted to Rs.1.10 billion
in 2018/19.
Net profit 304 300 1,638 1,002 178 • Profits were further impacted
(Rs.Mn) by the downturn in economic
Net profit growth conditions mark-to-market
181 349 1,693 (86) (41) losses on its equity
(% YoY)
investment portfolio due to a
*The company recognised a deferred tax asset amounting to Rs.1.53 billion arising from brought decline in the stock market.
forward tax losses as at 31 December 2017 • NTB performance impacted
by introduction of the Debt
Repayment Levy and higher
impairment charges.
47
John Keells Group - ConfidentialFinancial Services – Banking sector overview
▪ Nations Trust Bank (JKH effective economic interest : 32.16%)
▪ Focus on SME / retail strategy
▪ Franchise for American Express cards
Key performance indicators CY2013 CY2014 CY2015 CY2016 CY2017 CY2018
Loans and advances growth (%) 12.10 19.50 22.4 23.70 25.00 19.00
Industry (LCB’s) (%) 8.50 12.30 23.50 17.84 15.77 17.87*
Return on equity (%) 19.60 19.80 18.20 17.70 17.40 15.26
Industry (LCB’s) (%) 17.30 16.80 15.70 17.30 17.50 14.5*
Net Interest Margin (%) 5.80 5.80 5.50 5.10 4.50 4.60
Industry (LCB’s) (%) 3.70 3.60 3.50 3.50 3.50 3.70*
NPL ratio (%) 3.5 4.2 2.8 2.8 2.3 4.6
Deposit base (Rs. Bn) 96 111 129 152 194 231
Asset base (Rs. Bn) 142 159 176 211 268 325
Net Profit (Rs. Mn) 2,136 2,537 2,614 2,869 3,371 3,702
*As at September 2018
Key performance Q4 FY2018 Q1 FY2019 Q2 FY2019 Q3 FY2019 Q4 FY2019
indicators (Jan-Mar 2018) (Apr-Jun 2018) (Jul-Sep 2018) (Oct- Dec 2018) (Jan-Mar 2019)
Net profit (Rs. Mn) 939 936 1,043 783 773
Net profit growth
30 33 3 (16) (18)
(% YoY)
Loan growth (% YoY) 28 24 25 20 18
Net Interest Margin (% 5.5 5.0 5.0 5.0 4.9
NPL Ratio (%) 2.62 3.06 3.71 4.58 4.88 48
John Keells Group - ConfidentialTHANK YOU
This document was produced by John Keells Holdings PLC for information purposes only. The information
contained in this document are a review of the financial information pertaining to FY2019, and does not
constitute an issue prospectus or a financial analysis. This Investor Presentation should be read in conjunction
with the JKH Annual Report 2018/19 to obtain a more comprehensive understanding of the drivers and
strategies of our businesses.
Whilst John Keells Holdings accepts responsibility for the accuracy of the information contained in this
document, it does not assume any responsibility for investment decision made by the prospective investors based
on information contained herein. In making the investment decision, prospective investors must rely on their
own examination and assessments of the Company including the risks involved.
49
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