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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
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
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 31 December 2019
5
Industry GroupQ3 FY2020
(Rs. Million)Q3 FY2019 * (Rs. Million)
YoY Growth (%)
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 7,472 (25)
• The Group’s Sri Lankan leisure business continued to be significantly impacted post the Easter Sunday terror attacks in April 2019.
• The Holding Company recorded exchange losses on its foreign currency denominated cash holdings compared to the significant exchange gains recorded in Q3 FY2018/19 and lower finance income as a result of the deployment of cash in new investments
*Note that the Q3 FY2019 EBITDA is adjusted for SLFRS 16 - Leases
6
Industry GroupYTD FY2020 (Rs. Million)
YTD FY2019 * (Rs. Million)
YoY Growth (%)
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 EBITDA 14,070 18,257 (23)
• The Group’s Sri Lankan leisure business continued to be significantly impacted post the Easter Sunday terror attacks in April 2019.
• The Holding Company recorded exchange losses on its foreign currency denominated cash holdings compared to the significant exchange gains recorded in Q3 FY2018/19 and lower finance income as a result of the deployment of cash in new investments.
*Note that the FY2019 EBITDA is adjusted for SLFRS 16 - Leases
EBITDA : for nine months ended 31 December 2019
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 24Leisure 21Property (Excluding Cinnamon Life) 13Transportation 8Financial Services 6Retail 4Consumer Foods 3Plantations 1Information 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
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 April 2020 onwards
- Hotel and Retail Mall 1H FY2021
Cinnamon red Kandy FY2021
Roll out of 55-60 Retail outlets FY2021 & FY2022
Retail Centralised Distribution Centre 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 KLM Royal Dutch airlines and Gulf Air. Other operations
include warehousing and supply chain management
9
KARACHIGWADAR
BAHL
MUMBAI
CHENNAI
VISHAKHAPATNAMKOLKATA
CHITTAGONGYANGON
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 7.23
-
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
2013 2014 2015 2016 2017 2018 2019
Mill
ion
TEU
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
3Q FY20 earnings update: Transportation industry group
• The increase in profitability is attributable to the performance of LMS
• SAGT recorded flat volumes compared to Q3 2018/19
(Rs. mn) Q3 2019/20
Q3 2018/19
EBITDA 1,285 1,187
Volumes (TEU)
2018/19 2019/20 % YoY ChangeQ3 Q4 Q1 Q2 Q3
SAGT 516,037 514,589 535,998 492,542 509,012 (1)
JCT 604,672 607,913 561,897 580,747 532,052 (12)
CICT 703,470 668,230 702,745 763,123 759,448 8
Total 1,824,179 1,790,732 1,800,639 1,836,411 1,800,512 (1)
SAGT2018/19 2019/20
Q3 Q4 Q1 Q2 Q3Domestic: Transshipment volume mix
20:80 21:79 19:81 19:81 19:81
300,000
500,000
700,000
900,000
Q3 Q4 Q1 Q2 Q3
2018/19 2019/20
Port of Colombo - volumes ('000 TEUs) SAGTJCTCICT
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
Q3 Q4 Q1 Q2 Q3
Volume growth 9 (4) (16) (6) (11)
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
15
3Q 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 a better sales mix.
*Note that the 2018/19 EBITDA is adjusted for SLFRS 16 - Leases
(Rs. mn) Q3 2019/20
Q3 2018/19
EBITDA 722 598
Key performance indicators (%)FY2019 FY2020
Q3 Q4 Q1 Q2 Q3
Growth of frozen confectionery volumes 7 21 19 1 4
Growth of beverage volumes (23) (6) 22 2 4
Growth of convenience foods volumes 3 1 (2) 0 7
EBITDA (Rs. million) 596 1,103 843 736 722
EBITDA margin (%) 16 24 19 17 18
Revenue mix (Bev:FC) 47:53 49:51 48:52 48:52 44:56
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 FY2018/19.
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 asplain milk, flavoured milk and water brandedunder Elephant House, and additional flavoursof fruit juice branded 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 48 43 40
16
Singapore Malaysia HongKong
Taiwan Thailand Sri Lanka
Modern Retail Penetration (%)
Retail - overview
Present share of modern retail No. of outlets
Keells * 107
Cargills 401
Arpico 47
Laugfs 38
* As at 31 December 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
17
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
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
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.
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
3Q 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) Q3 2019/20
Q3 2018/19*
EBITDA 1,590 766
Key performance indicators (%)FY2019 FY2020
Q3 Q4 Q1 Q2 Q3
Same store sales growth 2.4 4.5 3.6 5.1 5.4
Same store footfall growth 4.2 7.1 2 5.7 6.1
Average basket value growth (1.7) (2.4) 1.6 (0.6) (0.6)
EBITDA margin 3.9 5.0 7 .0 6.3 9.0
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 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).
Expanding the ‘Cinnamon’ footprint
22
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.
Easter Sunday terror attacks April 2019: recovery to be seen in 12- 18 months
23
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 per cent to 537,390 compared to 601,874 recorded in the comparative quarter of the previous financial year.
The forward bookings for the Group’s Sri Lankan hotels continue to maintain an upward trend and occupancy in the peak season is in line with the previous year, albeit at a moderately lower room rate.
Crisis Category Average recovery time (months)
Political Turmoil 26.7
Terrorism 13.0
Pandemic 21.3
Environmental Disaster 23.8
Estimates by the World Travel and Tourism council show the average recovery time in months by type of crisis:
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.
*City Hotels occupancy and ARR excludes Cinnamon red
Occupancies and average room rates
24
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
3Q 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 and the partial closure of Cinnamon DhonveliMaldives for refurbishment.
*Note that the 2018/19 EBITDA is adjusted for SLFRS 16 - Leases
(Rs. mn) Q3 2019/20
Q3 2018/19*
EBITDA 656 1,344
**City Hotels occupancy and ARR excludes Cinnamon red
Key indicators
City Hotels ** Sri Lankan Resorts Maldivian Resorts
FY2019 FY2020 FY2019 FY2020 FY2019 FY2020
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Occupancy (%) 48 14 35 43 87 46 65 76 95 55 47 56
ARR(US $) 126 123 106 93 109 72 67 70 393 325 297 357
EBITDA Margin (%) 25 (34) 12 18 49* (15) 4 9 38 22 13 19
YearTouristarrivals
(In 000’s)Growth (%)
2010 654 46
2015 1,798 18
2016 2,051 14
2017 2,116 3
2018 2,334 10
2019 1,913 (18)
Tourist arrivals from January – December 2019 was 1,913,702; a decrease of 18%, as compared to the 2,333,796 recorded in the comparative period of the previous year.
Arrivals for the quarter (Oct-Dec) declined 11 by per cent to 537,390 compared to 601,874 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
25
MonthTourist Arrivals
(In 000’s)Growth %
May 38 (71)
June 63 (57)
July 116 (47)
August 144 (28)
September 109 (27)
October 119 (23)
November 177 (10)
December 242 (5)
-
500
1,000
1,500
2,000
2,500
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
2019
Annual tourist arrivals to Sri Lanka ('000)
*2010 included due to being the first full post-war year.
Source: Sri Lanka Tourism Development Authority
Significant growth in Asian arrivals to Sri Lanka
26
*2019 arrivals impacted by Easter Sunday terror attacks
-
200,000
400,000
600,000
800,000
1,000,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019*
Tourist Arrivals
Source: Governmental tourism websites
Tourist arrivals to Sri Lanka lag well below regional peers
27
0
5
10
15
20
25
30
35
40
45
Malaysia Indonesia Thailand Vietnam Cambodia Sri Lanka
Arr
ival
s in
mill
ions
1990 2019
60,000
31,790 30,11426,113
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
28
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 by April 2020 onwards
Pipeline of room inventory to support arrivals trajectory
29
* Note that the year of completion of the above is uncertain and is likely to be later than stipulated
Development No. of rooms Year 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
30
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
31
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
32
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
33
Cinnamon Lakeside, Colombo
Vauxhall Street
Union PlaceCinnamon 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.
34
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: Handover of the Residential and Office towers : commencing with the Office tower from April 2020
onwards Hotel and Retail Mall : 1H FY2021
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. Future development of the land bank held at Rajawella Holdings Limited, as discussed in detail overleaf
35
3Q FY20 earnings update: Property industry group
• The second tranche of revenue was recognised in the quarter under review, and this is expected to ramp up over the next few quarters as the project progresses
*Note that the 2018/19 EBITDA is adjusted for SLFRS 16 -Leases
(Rs. mn) Q3 2019/20 Q3 2018/19
EBITDA 34 97
Cumulative sales (units)Number of units sold
as at 31 December ‘19Cinnamon Life:
The Residence at Cinnamon Life 135
Suites at Cinnamon Life 110Cinnamon Life commercial complex
4 floors
Tri-Zen 243
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
36
Robust development pipeline: Scenic 500 acre land bank with an 18-hole golf course
Cinnamon Life Integrated Resort
37
Integrated development in Colombo
38
Integrated development in Colombo
39
40
41As at January 2020
42As at January 2020
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
43
The growth in Indian MICE travel to complement Cinnamon Life
Source: MasterCard
44
1.51.63
1.781.94
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%
45
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
46
3Q FY20 earnings update: Financial Services industry group
• NTB recorded a strong improvement in profitability as a result of an increase in fee-based income and better management of operational expenses.
• The performance of UA recorded an improvement driven by a growth in gross written premiums of 7 per cent.
*Note that the 2018/19 EBITDA is adjusted for SLFRS 16 - Leases
(Rs. mn) Q3 2019/20
Q3 2018/19
EBITDA 1,156 1,045
Key performance indicators CY2014 CY2015 CY2016 CY2017 CY2018 CY2019
Market share (%) 13 13 13 14 14 13
GWP growth (%) 8 17 19 22 11 4
Recurring net profit (Rs.Mn) 881 1,127 1,313 4,002* 1,640 1,200
Surplus from Life Fund (Rs.Mn) 750 800 1,100 3,642 1,100 1,000
Life Fund (Rs.Bn) 23.1 26.3 30.3 29.1 32.1 36.7
Capital Adequacy Ratio N/A N/A 411% 352% 262% 362%
Keyperformance indicators
Q3 FY 2019(Oct- Dec
2018)
Q4 FY2019 (Jan-Mar
2019)
Q1 FY2020(Apr-Jun
2019)
Q2 FY2020(Jul-Sep 2019)
Q3 FY2020 (Oct – Dec
2019)
GWP growth (% YoY)
15 (1) (1) 8 7
Net profit(Rs.Mn)
1,002 178 324 153 681
Net profit growth (% YoY)
(86) (41) (46) (91) (32)
Nations Trust Bank (JKH effective economic interest : 32.16%) Focus on SME / retail strategy Franchise for American Express cards
Financial Services – Banking sector overview
47
Key performance indicators CY2014 CY2015 CY2016 CY2017 CY2018 CY2019
Loans and advances growth (%) 19.5 22.4 23.7 25.0 19.0 2.0
Industry (LCB’s) (%) 12.3 23.5 17.8 15.8 20.3 4.9*
Return on equity (%) 19.8 18.20 17.7 17.4 15.3 12.2
Industry (LCB’s) (%) 16.8 15.7 17.3 17.5 13.7 10.6*
Net Interest Margin (%) 5.8 5.5 5.1 4.5 4.6 4.5
Industry (LCB’s) (%) 3.6 3.5 3.5 3.5 3.7 3.6*
NPL ratio (%) 4.2 2.8 2.8 2.3 4.6 6.2
Deposit base (Rs. Bn) 111 129 152 194 231 227
Asset base (Rs. Bn) 159 176 211 268 325 325
Net Profit (Rs. Mn) 2,537 2,614 2,869 3,371 3,702 3,454
Key performance indicators Q3 FY2019 (Oct- Dec 2018)
Q4 FY2019 (Jan-Mar 2019)
Q1 FY2020 (Apr-Jun 2019)
Q2 FY2020(Jul-Sep 2019)
Q3 FY2020 (Oct – Dec
2019)
Net profit (Rs. Mn) 783 773 575 1,066 1,113
Net profit growth (% YoY) (16) (18) (34) 9 54
Gross Loan growth (% YoY) 20 18 12 8 3
Net Interest Margin (%) 5.0 4.9 4.8 4.8 4.9
NPL Ratio (%) 4.6 4.9 6.1 6.1 6.2
*CBSL provisional figures for 2019
THANK YOUThis 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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