Investor Presentation Review of Q2 FY2020 · Review of Q2 FY2020 Version 1.1 This Investor...
Transcript of Investor Presentation Review of Q2 FY2020 · Review of Q2 FY2020 Version 1.1 This Investor...
Investor Presentation
Review of Q2 FY2020
Version 1.1
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
About JKH
▪ Market cap of USD 1.12 billion
▪ No controlling shareholder - 99% free float
▪ Debt : Equity ratio of 32.12%
▪ The Board comprises of two Executive Directors and six Independent Non-
Executive Directors
2
Portfolio profitability
Note: The above excludes the contribution from Other including Information Technology and Plantations Services
2016/17
PAT attributable to equity holders
2017/18
▪ 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
2018/19
36%
10%4%
16%
1%
33%
Transportation
Consumer foods
Retail
Leisure
Property
FinancialServices
23%
17%
10%
32%
4%
15%
22%
11%
8%
20%
5%
33%
Cumulative EBITDA : for the year ended 31 March 2019
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
Industry GroupFY2019 FY2018 YoY Growth
(%)(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)
EBITDA : for the quarter ended 30 September 2019
5
Industry GroupQ2 FY2020
(Rs. Million)Q2 FY2019 * (Rs. Million)
YoY Growth (%)
Transportation 1,119 1,154 (3)
Consumer Foods 736 693 6
Retail 1,018 431 136
Leisure** 134 1,136 (88)
Property 48 (11) 538
Financial Services 563 564 0
Total EBITDA 4,800 6,411 (25)
• The Group’s Sri Lankan leisure business continued to be significantly impacted post the Easter Sunday terror attacks in April 2019.
• The quarter under review marked the first tranche of revenue recognition for the “Tri-Zen” residential development project. Revenue recognition of the project will ramp up over the next few quarters as the project progresses.
*Note that the Q2 FY2019 EBITDA is adjusted for SLFRS 16 - Leases
EBITDA : for six months ended 30 September 2019
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Industry GroupYTD FY2020 (Rs. Million)
YTD FY2019 * (Rs. Million)
YoY Growth (%)
Transportation 2,174 2,086 4
Consumer Foods 1,578 1,217 30
Retail 2,105 1,065 98
Leisure** (198) 1,509 (113)
Property 36 37 (2)
Financial Services 999 1,161 (14)
Total EBITDA 8,503 10,816 (21)
**The Group’s Sri Lankan leisure business continued to be significantly impacted post the Easter Sunday terror attacks in April 2019.
*Note that the Q2 FY2019 EBITDA is adjusted for SLFRS 16 - Leases
Adjusted effective capital employed (Rs.bn)
Portfolio evaluation 2018/19; returns vs. effective capital deployed
7
Adjusted ROCE (%)
IT - 54%
Financial Services - 25%
Transportation - 21%
Consumer Foods - 21%
Plantations - 15%
Retail - 13%
Leisure - 4%Property (Excl. Cinnamon Life) – 0.2%
Cinnamon Life – (0.1%)
Hurdle Rate - 15%
Industry group Effective capital employed (%)
Cinnamon Life 24
Leisure 21
Property (Excluding Cinnamon Life) 13
Transportation 8
Financial Services 6
Retail 4
Consumer Foods 3
Plantations 1
Information Technology 0.1
▪ In addition, the Holding Company accounts for 18 per cent of effective capital employed which consists primarily of cash
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:
8
Project Expected completion
Cinnamon Life - Residential and Commercial towers 4Q FY2020
- Hotel and Retail Mall 1Q FY2021
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
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
9
KARACHI
GWADARBAHL
MUMBAI
CHENNAI
VISHAKHAPATNAM
KOLKATA
CHITTAGONG
YANGON
MOMBASA
LAMU
DAR-ES-SALAM
CAPE TOWN
PORT LOUIS
ADEN
KOCHI
The strategic location of the Port of Colombo linking key shipping routes
10
Capacity enhancements in the Port of Colombo
11
• CICT - Colombo International Container Terminal• ECT - East Container Terminal• SAGT - South Asia Gateway Terminal• JCT - Jaya Container Terminal
Sustained volume growth in the Port of Colombo
12
4.31
4.91 5.19
5.74
6.21
7.05
2013 2014 2015 2016 2017 2018
Mil
lio
n T
EU
s
Port Container handling capacity (TEUs)
Colombo 8 million
Hong Kong 21 million
Singapore 40 million
Shanghai 36 million
Sources: Government websites/ Sri Lanka Ports Authority
Rapid absorption of capacity in the Port of Colombo
13
2Q FY20 earnings update: Transportation industry group
• LMS recorded a strong growth in profits driven by improved margins.
• Performance of SAGT impacted by a decline in overall volumes due to a disruption in operations in September 2019
(Rs. mn) Q2 2018/19
Q2 2017/18
EBITDA 1,119 1,154
Volumes (TEU)
2018/19 2019/20% YoY ChangeQ2 Q3 Q4 Q1 Q2
SAGT 538,723 516,037 514,589 535,998 492,542 (9)
JCT 592,551 604,672 607,913 561,897 580,747 (2)
CICT 676,710 703,470 668,230 702,745 763,123 13
Total 1,807,984 1,824,179 1,790,732 1,800,639 1,836,411 2
SAGT2018/19 2019/20
Q2 Q3 Q4 Q1 Q2
Domestic: Transshipment volume mix
17:83 20:80 21:79 19:81 19:81
300,000
500,000
700,000
900,000
Q2 Q3 Q4 Q1 Q2
2018/19 2019/20
Port of Colombo - Volumes ('000 TEUs) SAGT
JCT
CICT
Opportunities for growth in the Bunkering businesses
Bunkering Business (Lanka Marine Services)
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.
14
LMSQ2018/19 2019/20
Q2 Q3 Q4 Q1 Q2
Volume growth 2 9 (4) (16) (6)
Consumer Foods - overview
▪ Market leader in soft drinks, ice creams and processed meats▪ Custodians of the consumer brands “Elephant House”, “Keells - Krest”: high brand
equity
Key performance indicators (%) FY2016 FY2017 FY2018 FY2019
Growth of frozen confectionery volumes 15 11 (4) 10
Growth of beverage volumes 22 10 (16) (25)
Growth of convenience food volumes 11 (4) 3 7
EBITDA margin (%) 26 27 20 18
▪ 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.
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2Q FY20 earnings update: Consumer Foods industry group
• Consumer Foods witnessed growth on account of improved performance in the Beverages and Frozen Confectionery businesses, driven by growth in volumes and higher margins.
• The volume growth momentum prior to the month of September displayed encouraging double-digit growth, although adverse weather impacted volumes in September.
(Rs. mn) Q2 2019/20
Q2 2018/19
EBITDA 736 693
Key performance indicators (%)FY2019 FY2020
Q2 Q3 Q4 Q1 Q2
Growth of frozen confectionery volumes 8 7 21 19 1
Growth of beverage volumes (31) (23) (6) 22 2
Growth of convenience foods volumes 12 3 1 (2) 0
EBITDA (Rs. million) 691 596 1,103 843 736
EBITDA margin (%) 16 16 24 19 17
Revenue mix (Bev:FC) 50:50 47:53 49:51 48:52 48:52
Low consumption patterns and penetration reflects potential for sustained growth
▪ The bulk-impulse mix of regional markets ishighly skewed towards the impulse markets,demonstrating the significant growth potentialfor the impulse category.
▪ To leverage on the opportunity available in theimpulse category, CCS invested in a state-of-theart ice cream plant in Seethawaka withoperations commencing in Q1 FY208/19.
▪ CCS reformulated its flagship flavours andcurrently, approximately 70 per cent of the CSDportfolio’s calorific sugar content isreformulated and replaced with Stevia; anatural sweetener with zero calories.
▪ CCS also launched non-CSD products such as ;flavoured milk, water branded under ElephantHouse, and additional flavours of fruit juicebranded under “Fit-O”)
Sri Lanka Thailand Malaysia
70%30%
8%
92%
56%
44%
Bulk vs. Impulse Split - Regional
Impulse Bulk
16
52.0
39.0
31.4
19.0
10.0
Philippines Thailand Singapore Malaysia Sri Lanka
Carbonated Soft Drinks - Per Capita Consumption (Litres)
Sources: Central Bank of Sri Lanka, Nomura Research Institute, Unilever Corp, Web articles
70
49 4843 40
16
Singapore Malaysia HongKong
Taiwan Thailand Sri Lanka
Modern Retail Penetration (%)
Retail - overview
Present share of modern retail No. of outlets
Keells * 100
Cargills 395
Arpico 49
Laugfs 38
* As at 30 September 2019
▪ 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
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▪ 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 outlets expected by FY2022/23.
▪ The sector will undertake planned capex of approximately USD 65 million over the next two years for 50-60 new stores and the construction of the centralised distribution centre
13
2
47
30
21
.0
7.3
4.7
4.5
3.7
3.6
3.4
3.0
2.5
1.9
0.9
Modern trade density – population (’000) per store
Source: Retail and shopper trends in the Asia Pacific, AC Nielsen
Keells current coverage
No. of new stores expected
FY2020 20
FY2021 25-30
Rapid expansion to capitalise on low retail penetration levels
18
Supermarkets - overview
▪ Profitability margins were impacted by the cost of expanding and operating new stores coupled with the one-off cost associated with rebranding and refitting stores
▪ The blended margins in the ensuing year are expected to improve as a result of the benefit of a larger base of existing outlets showing an improvement in the performance. However, there may be a certain dilutive effect on margins due to the opening of new outlets
19
Profitability margin (%)
FY2016 FY2017 FY2018 FY2019
EBITDA (Rs.milllion) 1,537 2,010 1,975 1,623
EBITDA margin 6.9 6.7 5.3 3.6
EBIT margin 5.8 5.7 4.0 2.0
2Q FY20 earnings update: Retail industry group
• Retail performance was driven by robust revenue growth in the Supermarkets business, supported by a notable contribution from new outlets and strong growth in customer footfall.
*Note that the 2018/19 EBITDA is adjusted for SLFRS 16 - Leases
(Rs. mn) Q2 2019/20
Q2 2018/19*
EBITDA 1,018 431
Key performance indicators (%)FY2019 FY2020
Q2 Q3 Q4 Q1 Q2
Same store sales growth 0.8 2.4 4.5 3.6 5.1
Same store footfall growth 2.7 4.2 7.1 2 5.7
Average basket value growth (1.9) (1.7) (2.4) 1.6 (0.6)
EBITDA margin 1.6 3.9 5.0 7 .0 6.3
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”
▪ 4 Resort properties in the Maldives (430 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
20
▪ 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
Round trip offering in key tourist destinations; further potential to expand the ‘Cinnamon’ footprint
21
▪ 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 deluxe resort. • Initial bookings for the resort are above expectations. • The new property is located in close proximity to the Velana International Airport (VIA).
▪ "Cinnamon Hakuraa Huraa Maldives“ and "Cinnamon Bentota Beach Bentota“ - reconstruction of new hotels with expected completion in December 2019.
▪ Commencement of 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.
Expanding the ‘Cinnamon’ footprint
22
Easter Sunday terror attacks April 2019: Way forward
23
▪ In the aftermath of the attacks, the significant dip witnessed in the tourist arrivals to the country has gradually witnessed an upward momentum, indicating signs of recovery.
▪ The forward bookings for the Group’s Sri Lankan hotels have witnessed an upward trend and occupancy is expected to pick-up in the peak season to be in line with the previous year, albeit at a moderately lower room rate.
▪ Arrivals for the quarter (July-September) declined by 35 per cent to 367,863 compared to 567,275 recorded in the comparative quarter of the previous financial year.
Post-crisis recovery initiatives• A one-year moratorium on loans taken
by the tourism related businesses.• A revision of the Value Added Tax (VAT)
for hotel and tour operators from 15 per cent to 7 per cent.
• An allocation of Rs. 1.51 billion to provide relief for the tourism sector loans under Enterprise Sri Lanka loan schemes.
• Implemented visa free arrival for 36 countries in a bid to improve tourist arrivals.
Group initiatives • Engage the domestic market to boost
occupancies in the short term and medium term.
• Critical evaluation of operating models and development of agile cost structures within the hotel properties to remain flexible in managing short term operations costs.
• Launched “Bring a friend home” campaign to assist the recovery plan of the industry.
Easter Sunday attacks: recovery seen to be in 12-18 months
24
▪ Studies of other travel destinations that were impacted by similar terrorism incidents indicate that destinations typically require 12 to 18 months to revert to pre-incident levels.
▪ Popular destinations which were affected by acts of terrorism such as Bali, Mumbai, Paris and Brussels have indicated a recovery in less than 18 months.
Crisis Category Average recovery time (months)
Political Turmoil 26.7
Terrorism 13.0
Pandemic 21.3
Environmental Disaster 23.8
Trend in tourist arrivals post terror attacks:
Source: World Economic Forum
Estimates by the World Travel and Tourism council show the average recovery time in months by type of crisis:
-
4,000
8,000
12,000
16,000
Indonesia and Bali tourist arrivals
Indonesia Bali
Source: World Bank and Bali Hotel Association
-
2,000
4,000
6,000
8,000
10,000
Belgium Tourist Arrivals
Source: World BankSource: Ministry of Tourism, Thailand
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
20
002
001
20
022
003
20
042
005
20
062
007
20
082
009
20
102
011
20
122
013
20
142
015
20
162
017
Thailand and Bangkok tourist arrivals
Thailand Bangkok
*City Hotels occupancy and ARR excludes Cinnamon red
Occupancies and average room rates
25
Sector
FY2019 FY2018
Occupancy (%)
ARR (US $)
EBITDA Margin
(%)
Occupancy (%)
ARR (US $)
EBITDA Margin
(%)
City Hotels* 48 128 22 64 127 27
Sri Lankan Resorts
80 90 28 81 91 28
Maldivian Resorts
84 320 23 82 263 24
*Sri Lanka Resorts EBITDA includes IP gains
2Q Earnings update: Leisure industry group
• The decline is profitability is on account of the negative impacts to the Sri Lankan leisure business as a result of the Easter Sunday terror attacks in April 2019, the partial closure of Cinnamon Dhonveli Maldives for refurbishment and start-up costs related to Cinnamon Hakuraa Huraa Maldives and our new resort, Cinnamon Velifushi Maldives.
*Note that the 2018/19 EBITDA is adjusted for SLFRS 16 - Leases
(Rs. mn) Q2 2019/20
Q2 2018/19*
EBITDA 134 1,136
**City Hotels occupancy and ARR excludes Cinnamon red
Key indicators
City Hotels ** Sri Lankan Resorts Maldivian Resorts
FY2019 FY2020 FY2019 FY2020 FY2019 FY2020
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Occupancy (%) 65 48 14 35 70 87 46 65 92 95 55 47
ARR(US $) 128 126 123 106 85 109 72 67 300 393 325 297
EBITDA Margin (%) 23 25 (34) 12 21 49* (15) 4 16 38 22 13
YearTouristarrivals
(In 000’s)Growth (%)
2010 654 46
2011 856 31
2012 1,006 18
2013 1,275 27
2014 1,527 20
2015 1,798 18
2016 2,051 14
2017 2,116 3
2018 2,334 10
2019-YTD 1,376 (21)
▪ Tourist arrivals from January – September 2019 was 1,376,312 a decrease of 21%, as compared to the 1,731,922 recorded in the comparative period of the previous year.
▪ Arrivals for the quarter (July-September) declined by 35 per cent to 367,863 compared to 567,275 recorded in the comparative quarter, subsequent to the Easter Sunday attacks which took place in April 2019.
Source: Sri Lanka Tourism Development Authority
Trend of tourist arrivals to Sri Lanka
26
-
500
1,000
1,500
2,000
2,500
1985 1996 2007 2018
Annual tourist arrivals to Sri Lanka ('000)
MonthTourist Arrivals
(In 000’s)Growth %
May 38 (71)
June 63 (57)
July 116 (47)
August 144 (28)
September 109 (27)
Source: Sri Lanka Tourism Development Authority
Significant growth in Asian arrivals to Sri Lanka
27
245,753
334,274 383,748
527,656
640,045
822,272
938,697 962,395 966,731
2010 2011 2012 2013 2014 2015 2016 2017 2018
To
uri
st a
rriv
als
Calendar Year
Source: Governmental tourism websites
Tourist arrivals to Sri Lanka lag well below regional peers
28
0
5
10
15
20
25
30
35
40
Malaysia Indonesia Thailand Vietnam Cambodia Sri Lanka
Arr
ival
s in
mil
lio
ns
1990 2018 Actual/ Target
60,000
31,79030,114
26,113
9,100 7,6005,019
Bangkok Manila Kuala Lampur Jakarta Ho Chi Minh Hanoi Colombo
Room inventory in Colombo lags far behind other popular regional capital cities
29
▪ Colombo is increasingly becoming an attractive location for City Hotel developments
▪ Expected 5-star room supply:
▪ 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 April 2020 onwards
Pipeline of room inventory to support arrivals trajectory
30
* Note that the year of completion of the above is uncertain and is likely to be later than stipulated
Development No. of roomsYear of
completion
Cinnamon Life 800 1Q 2021
ITC 350 2021
Ritz Carlton* 473 2022
Total rooms 1,623
Property - 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:▪ Luxe Spaces▪ Metropolitan Spaces▪ Suburban Spaces
▪ High-rise apartment complexes completed▪ “7th Sense” on Gregory’s Road▪ OnThree20▪ The Emperor▪ The Monarch
“7th Sense” on Gregory’s Road
OnThree20
31
▪ Low levels of urbanisation within Sri Lanka in comparison to regional peers
▪ Annual condominium supply far below regional peers
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)
Industry potential
32
53,796
38,000
2,187
KL Ho Chi Minh City Colombo
Annual condominium supply in regional cities
Low penetration of apartment living in Colombo
33
Source: Company analysis
10%
95%
80%
60%70%
50% 55%65%
90%
5%
20%
40%30%
50% 45%36%
GreaterColombo
Singapore Thailand(Central
Bangkok)
Thailand(Outskirts)
Malaysia(Central KL)
Malaysia(Greater KL)
India (Chennai) India(Bangalore)
Apartments Landed houses
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
▪ Prime freehold land extent of 9.38 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
Cinnamon Lakeside, Colombo
Vauxhall Street
Union Place
Cinnamon Grand, Colombo
Crescat Boulevard
Cinnamon Life
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 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
Robust development pipeline; on-going developments
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 overleaf36
2Q FY20 earnings update: Property industry group
• First tranche of revenue for the “Tri-Zen” residential development project recognised during the quarter. The revenue recognition of the project will ramp up over the next few quarters as the project progresses.
(Rs. mn) Q2 2019/20 Q2 2018/19
EBITDA 48 (11)
Cumulative sales (units)Number of units sold
as at 30 September ‘19
Cinnamon Life:
The Residence at Cinnamon Life 135
Suites at Cinnamon Life 110
Cinnamon Life commercial complex
4 floors
Tri-Zen 229
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
Robust development pipeline: Scenic 500 acre land bank with an 18-hole golf course
Cinnamon Life Integrated Resort
38
Integrated development in Colombo
39
Integrated development in Colombo
40
41
42As at September 2019
43As at September 2019
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
Development programme
Note: Areas are subject to change based on final drawings
44
The growth in Indian MICE travel to complement Cinnamon Life
Source: MasterCard
45
1.51.63
1.78
1.94
2.11
2017 2018 2019 2020 2021
Indian Outbound MICE (Millions)
▪ 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
Financial Services – Insurance sector overview
0%
1%
2%
3%
4%
5%
6%
Life Insurance Penetration as a % of GDP - 2016
Global average – 3.47%
46
45.0
54.0
64.0 71.0
80.3
2014 2015 2016 2017 2018
Rs.
Bn
Life Insurance Gross Written Premiums
*Excludes a one-off surplus of Rs. 3.38 billion arising from the change in policy liability valuation
Financial Services – Insurance sector overview
47
Key performance indicators CY2013 CY2014 CY2015 CY2016 CY2017 CY2018
Market share (%) 14 13 13 13 14 14
GWP growth (%) 8 8 17 19 22 11
Recurring net profit (Rs.Mn) 791 881 1,127 1,313 4,002* 1,640
Surplus from Life Fund (Rs.Mn) 612 750 800 1,100 3,642 1,100
Life Fund (Rs.Bn) 19.3 23.1 26.3 30.3 29.1 32.1
Capital Adequacy Ratio N/A N/A N/A 411% 352% 262%
2Q FY20 earnings update: Financial Services industry group
• Nations Trust Bank PLC recorded an improvement in profitability as a result of focused efforts on collections and a lower impairment charge compared to the corresponding quarter of the previous year.
• The performance of Union Assurance PLC recorded a marginal decline whilst the gross written premiums demonstrated growth.
*Note that the 2018/19 EBITDA is adjusted for SLFRS 16 - Leases
(Rs. mn) Q2 2019/20
Q2 2018/19
EBITDA 563 564
Keyperformance indicators
Q2 FY 2019(Jul- Sep 2018)
Q3 FY 2019(Oct- Dec
2018)
Q4 FY2019 (Jan-Mar
2019)
Q1 FY2020(Apr-Jun
2019)
Q2 FY2020(Jul-Sep 2019)
GWP growth (% YoY)
4 15 (1) (1) 8
Net profit(Rs.Mn)
1,638 1,002 178 324 153
Net profit growth (% YoY)
1,693 (86) (41) (46) (91)
▪ Nations Trust Bank (JKH effective economic interest : 32.16%)▪ Focus on SME / retail strategy▪ Franchise for American Express cards
Financial Services – Banking sector overview
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Key performance indicators CY2013 CY2014 CY2015 CY2016 CY2017 CY2018
Loans and advances growth (%) 12.1 19.5 22.4 23.7 25.0 19.0
Industry (LCB’s) (%) 8.5 12.3 23.5 17.8 15.8 20.3
Return on equity (%) 19.6 19.8 18.20 17.7 17.4 15.3
Industry (LCB’s) (%) 17.3 16.8 15.7 17.3 17.5 13.7
Net Interest Margin (%) 5.8 5.8 5.5 5.1 4.5 4.6
Industry (LCB’s) (%) 3.7 3.6 3.5 3.5 3.5 3.7
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
Key performance indicators Q2 FY2019 (Jul-Sep 2018)
Q3 FY2019 (Oct- Dec 2018)
Q4 FY2019 (Jan-Mar 2019)
Q1 FY2020 (Apr-Jun 2019)
Q2 FY2020(Jul-Sep 2019)
Net profit (Rs. Mn) 974 783 773 575 1,066
Net profit growth (% YoY) (7) (16) (18) (34) 9
Gross Loan growth (% YoY) 18 20 18 12 8
Net Interest Margin (%) 5.0 5.0 4.9 4.8 4.8
NPL Ratio (%) 3.7 4.6 4.9 6.1 6.1
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 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.
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