John Keells Holdings PLC · CSELK:JKH.N0000

John Keells — Q3 FY2020 Earnings Presentation

48 slides from John Keells's earnings presentation, May 13, 2020

  1. Slide 1: Investor Presentation: Review of Q3 FY2020

    Investor Presentation Review of Q3 FY2020 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

  2. Slide 2: About JKH

    About JKH  Market cap of USD 1.2 billion  No controlling shareholder - 99% free float  Debt : Equity ratio of 37%  The Board comprises of two Executive Directors and five Independent Non-Executive Directors 2

  3. Slide 3: Portfolio profitability

    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 Te

  4. Slide 4: Cumulative EBITDA for the year ended 31 March 2019

    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

  5. Slide 5: EBITDA for the quarter ended 31 December 2019

    EBITDA : for the quarter ended 31 December 2019 Q3 FY2020 Q3 FY2019 * YoY Growth Industry Group (Rs. Million) (Rs. Million) (%) Transportation 1,285 1,187 8 Consumer Foods 722 598 21 Retail 1,590 766 108 Leisure 656 1,344 (51) Property 34 97 (65) Financial Services 1,156 1,045 11 Total EBITDA 5,595

  6. Slide 6: EBITDA for nine months ended 31 December 2019

    EBITDA : for nine months ended 31 December 2019 YTD FY2020 YTD FY2019 * YoY Growth Industry Group (Rs. Million) (Rs. Million) (%) Transportation 3,459 3,273 6 Consumer Foods 2,301 1,815 27 Retail 3,695 1,830 102 Leisure 430 2,852 (85) Property 71 134 (48) Financial Services 2,155 2,174 (1) Total EBI

  7. Slide 7: Portfolio evaluation 2018/19; returns vs. effective capital deployed

    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 Serv

  8. Slide 8: Investment pipeline comprises primarily of Cinnamon Life

    Investment pipeline comprises primarily of Cinnamon Life  Investment pipeline comprises primarily of Cinnamon Life, where completion is staggered  These investments will be funded through available/internally generated cash. Some of the key projects include: Project Expected completion Cinnamon Li

  9. Slide 9: Transportation - overview

    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 KLM Royal Dutch airline

  10. Slide 10: The strategic location of the Port of Colombo

    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 10

  11. Slide 11: Capacity enhancements in the Port of Colombo

    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 11

  12. Slide 12: Sustained volume growth in the Port of Colombo

    Sustained volume growth in the Port of Colombo 8.00 7.23 7.05 7.00 6.21 6.00 5.74 5.19 5.00 4.91 Million TEUs 4.31 4.00 3.00 2.00 1.00 - 2013 2014 2015 2016 2017 2018 2019 12

  13. Slide 13: Rapid absorption of capacity in the Port of Colombo

    Rapid absorption of capacity in the Port of Colombo Port of Colombo - volumes ('000 TEUs) SAGT Port Container handling JCT capacity (TEUs) CICT 900,000 Colombo 8 million 700,000 Hong Kong 21 million 500,000 Singapore 40 million 300,000 Shanghai 36 million Q3 Q4 Q1 Q2 Q3 2018/19 2019/20 Volumes 2018/

  14. Slide 14: Opportunities for growth in the Bunkering businesses

    Opportunities for growth in the Bunkering businesses Bunkering Business (Lanka Marine Services) 2018/19 2019/20 LMSQ Q3 Q4 Q1 Q2 Q3 Volume growth 9 (4) (16) (6) (11) Port of Hambantota  Strong opportunities for private bunkering service providers with infrastructure in place for inland storage of p

  15. Slide 15: Consumer Foods - overview

    Consumer Foods - overview  Market leader in soft drinks, ice creams and processed meats  Custodians of the consumer brands “Elephant House”, “Keells - Krest”: high brand 3Q FY20 earnings update: equity Consumer Foods industry group Key performance indicators (%) FY2016 FY2017 FY2018 FY2019 (Rs. mn

  16. Slide 16: Low consumption patterns and penetration reflects potential for sustained growth

    Low consumption patterns and penetration reflects potential for sustained growth Bulk vs. Impulse Split - Regional  The bulk-impulse mix of regional markets is highly skewed towards the impulse markets, demonstrating the significant growth potential 8% 44% for the impulse category. 30% 70% 92% 56%

  17. Slide 17: Retail - overview

    Retail - 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 Prese

  18. Slide 18: Rapid expansion to capitalise on low retail penetration levels

    Rapid expansion to capitalise on low retail penetration levels Modern trade density – population (’000) per store Keells 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 densi

  19. Slide 19: Supermarkets - overview

    Supermarkets - overview Profitability margin 3Q FY20 earnings update: Retail industry FY2016 FY2017 FY2018 FY2019 (%) group EBITDA (Rs.milllion) 1,537 2,010 1,975 1,623 (Rs. mn) Q3 Q3 EBITDA margin 6.9 6.7 5.3 3.6 2019/20 2018/19* EBIT margin 5.8 5.7 4.0 2.0 EBITDA 1,590 766 • Retail performance was

  20. Slide 20: Leisure - overview

    Leisure - 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” 

  21. Slide 21: Round trip offering in key tourist destinations; potential to expand Cinnamon footprint

    Round 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 ad

  22. Slide 22: Expanding the Cinnamon footprint

    Expanding the ‘Cinnamon’ footprint  Introduction of the Group’s fourth Maldivian resort, “Cinnamon Velifushi Maldives” in October 2019: • In line with our asset light investment strategy, the hotel was handed over to Cinnamon on an operating lease. • Consists of 90 rooms; positioned as a 5-star del

  23. Slide 23: Easter Sunday terror attacks April 2019: recovery to be seen in 12-18 months

    Easter Sunday terror attacks April 2019: recovery to be seen in 12- 18 months  In the aftermath of the attacks, the tourist arrivals to the country have witnessed a gradual recovery, as expected, and is now close to pre-incident levels.  Arrivals for the quarter (October- December) declined by 11

  24. Slide 24: Occupancies and average room rates

    Occupancies and average room rates FY2019 FY2018 3Q Earnings update: Leisure industry Sector EBITDA EBITDA group Occupancy ARR Occupancy ARR Margin Margin (Rs. mn) Q3 Q3 (%) (US $) (%) (US $) (%) (%) 2019/20 2018/19* City Hotels* 48 128 22 64 127 27 EBITDA 656 1,344 Sri Lankan 80 90 28 81 91 28 Reso

  25. Slide 25: Trend of tourist arrivals to Sri Lanka

    Trend of tourist arrivals to Sri Lanka Tourist Annual tourist arrivals to Sri Lanka ('000) Year arrivals Growth (%) 2,500 (In 000’s) 2010 654 46 2,000 2015 1,798 18 2016 2,051 14 1,500 2017 2,116 3 1,000 2018 2,334 10 2019 1,913 (18) 500 *2010 included due to being the first full post-war year. - 19

  26. Slide 26: Significant growth in Asian arrivals to Sri Lanka

    Significant growth in Asian arrivals to Sri Lanka Tourist Arrivals 1,000,000 800,000 600,000 400,000 200,000 - 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019* *2019 arrivals impacted by Easter Sunday terror attacks Source: Sri Lanka Tourism Development Authority 26

  27. Slide 27: Tourist arrivals to Sri Lanka lag well below regional peers

    Tourist arrivals to Sri Lanka lag well below regional peers 45 40 35 30 Arrivals in millions 25 20 15 10 5 0 Malaysia Indonesia Thailand Vietnam Cambodia Sri Lanka 1990 2019 Source: Governmental tourism websites 27

  28. Slide 28: Room inventory in Colombo lags far behind other regional capital cities

    Room 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 28

  29. Slide 29: Pipeline of room inventory to support arrivals trajectory

    Pipeline 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 *

  30. Slide 30: Property - overview

    Property - overview  “John Keells Properties”; explore property development opportunities by leveraging on brand equity  Focused strategies for expansion via developer/landowner tie ups “7th Sense” on Gregory’s Road  Catering to different target market segments:  Luxe Spaces  Metropolitan Space

  31. Slide 31: Industry potential

    Industry 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 (forecas

  32. Slide 32: Low penetration of apartment living in Colombo

    Low 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: Compa

  33. Slide 33: Developable land bank of over 36 acres in central Colombo

    Developable land bank of over 36 acres in central Colombo  Prime developable land bank of over 36 acres held in central Colombo  One of the largest privately owned land banks  Opportunities for development at land banks held in Crescat City and Cinnamon Lakeside Vauxhall street land bank Cinnamon

  34. Slide 34: Developable freehold land of approximately 25 acres near Colombo city

    Developable 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 deve

  35. Slide 35: Robust development pipeline; on-going developments

    Robust development pipeline; on-going developments Number of units sold Cumulative sales (units) 3Q FY20 earnings update: Property as at 31 December ‘19 industry group Cinnamon Life: (Rs. mn) Q3 2019/20 Q3 2018/19 The Residence at Cinnamon Life 135 EBITDA 34 97 Suites at Cinnamon Life 110 • The seco

  36. Slide 36: Robust development pipeline: 500 acre land bank with 18-hole golf course

    Robust 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

  37. Slide 37: Cinnamon Life Integrated Resort

    Cinnamon Life Integrated Resort 37

  38. Slide 38: Integrated development in Colombo

    Integrated development in Colombo 38

  39. Slide 39: Integrated development in Colombo

    Integrated development in Colombo 39

  40. Slide 40: i j i a = a —_ — a Ue mc

    i j 5 i a = a —_ 4 — 4 a Ue mc 40

  41. Slide 41: As at January 2020

    As at January 2020 41

  42. Slide 42: As at January 2020

    As at January 2020 42

  43. Slide 43: Development programme

    Development 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

  44. Slide 44: The growth in Indian MICE travel to complement Cinnamon Life

    The 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 44

  45. Slide 45: Financial Services – Insurance sector overview

    Financial 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 par

  46. Slide 46: Financial Services – Insurance sector overview

    Financial Services – Insurance sector overview Key performance indicators CY2014 CY2015 CY2016 CY2017 CY2018 CY2019 3Q FY20 earnings update: Market share (%) 13 13 13 14 14 13 Financial Services industry GWP growth (%) 8 17 19 22 11 4 group Recurring net profit (Rs.Mn) 881 1,127 1,313 4,002* 1,640 1

  47. Slide 47: Financial Services – Banking sector overview

    Financial 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 CY2014 CY2015 CY2016 CY2017 CY2018 CY2019 Loans and advances growth (%) 19.5 22.4 23.7 25.0

  48. Slide 48: Thank You

    THANK 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 FY2020, and does not constitute an issue prospectus or a financial analysis. This Investor Presentation s

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