investor presentation review of q1 fy2021 · (rs. mn) q1 2020/21 q1 2019/20 ebitda 487 841 key...
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Investor Presentation
Review of Q1 FY2021
Version 2.0
This Investor Presentation should be read in conjunction with the JKH Annual Report 2019/20 to obtain a more comprehensive understanding of the drivers and strategies of our businesses
About JKH
▪ Market cap of USD 0.87 billion
▪ No controlling shareholder - 99% free float
▪ Debt : Equity ratio of 42.0%
▪ The Board comprises of two Executive Directors and five Independent
Non-Executive Directors
2
*Debt includes the Right-of-Use assets due to the accounting impacts of SLFRS 16 – Leases. The debt to equity ratio excluding SLFRS 16 - Leases is 33.0%
Portfolio profitability
Note: The above excludes the contribution from Other including Information Technology and Plantations Services
PAT attributable to equity holders
2017/18
▪ The Group is conscious of the composition of its earnings and targets a greater contribution from higher ROCEearning 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▪ Earnings of the Sri Lankan Leisure businesses in 2019/20 were significantly impacted by the Easter Sunday
attacks in April 2019 and resultant impact on tourist arrivals to the country. Performance was further impactedfrom the fourth quarter onwards with the global outbreak of the COVID-19 pandemic
3
2018/19
22%
11%
8%
20%
5%
33%
2019/20
36%
10%4%
16%
1%
33%54%
18%13%
-17%
4%
29%Transportation
Consumer Foods
Retail
Leisure
Property
Financial Services
COVID-19 impact to Sri Lanka and JKH; faster than anticipated recovery momentum in business activity
• Post the easing of the strict lockdown measures which were in place in the country till mid-May,business recovery is reverting to almost pre- COVID-19 levels, faster than anticipated, and thismomentum is expected to continue if the pandemic remains contained.
• The proactive cost containment and productivity improvement measures undertaken tostrengthen the Group’s financial and cash position from the beginning of the quarter, combinedwith the recovery momentum in business activity, enabled the Group to record cash profitsdespite the extremely challenging operating conditions.
• The Leisure business, however, continues to be significantly impacted given the closure of theairport in Sri Lanka and the high dependency on the recovery of key source markets inparticular.
• As elaborated in the JKH Annual Report 2019/20, the COVID-19 pandemic was contained in SriLanka through the aggressive and proactive measures undertaken by the Government and therelevant authorities.
• A possible second wave was well managed in July with no restrictions in movement for thegeneral public. Contact tracing was done proactively to identify and contain a cluster spread
• New cases have been restricted to this cluster and health authorities have assured that thereare no current indications of community transmission. 4
Cumulative EBITDA : for the year ended 31 March 2020
Total EBITDA 22,174 25,798 (14)
Recurring EBITDA** 22,055 25,579 (14)
Recurring EBITDA excluding Leisure*** 19,714 20,278 (3)
**Refer page 38 of the JKH Annual Report 2019/20 for commentary on recurring adjustments***Leisure is excluded due to the impacts of the Easter Sunday attacks
5
Industry GroupFY2020 FY2019* YoY Growth
(%)(Rs. Million) (Rs. Million)
Transportation 4,417 4,563 (3)
Consumer Foods 3,412 2,920 17
Retail 5,110 2,890 77
Leisure 2,363 5,354 (56)
Property 568 323 76
Financial Services 2,988 3,359 (11)
Other, incl. IT and Plantation Services 3,315 6,388 (48)
*Note that the FY2019 EBITDA is adjusted to reflect impact from SLFRS 16 - Leases, for comparison purposes
EBITDA: for the quarter ended 30 June 2020
6
Industry GroupQ1 FY2021
(Rs. Million)Q1 FY2020
(Rs. Million)YoY Growth
(%)
Transportation 395 1,053 (63)
Consumer Foods 487 841 (42)
Retail 502 1,036 (52)
Leisure (1,461) (336) (335)
Property (29) 47 (162)
Financial Services 537 436 23
Total EBITDA 802 3,565 (78)
Total EBITDA excluding Leisure 2,263 3,901 (42)
• The performance in the quarter under review was significantly impacted and extremely challenging onaccount of the stringent lockdown measures prevailing for the first one and a half months of the quarter,with the resumption of activity commencing gradually only from mid-May onwards
• However, many of the Group’s businesses witnessed a faster than anticipated recovery post lockdown inJune 2020. This will be discussed in the ensuing slides
Adjusted effective capital employed (Rs.bn)
Portfolio evaluation 2019/20; returns vs. effective capital deployed
7
Adjusted ROCE (%)
Consumer Foods - 23%
IT - 23%
Transportation - 19%
Retail - 16%
Financial Services - 15%
Property (Excl. Cinnamon Life) - 2%
Cinnamon Life – (0.1%) Plantations – (0.2%) Leisure – (1%)
Industry group Effective capital employed (%)
Cinnamon Life 32
Leisure 24
Property (Excluding Cinnamon Life) 8
Transportation 7
Financial Services 6
Retail 6
Consumer Foods 3
Plantations 1
Information Technology 1
▪ In addition, the Holding Company accounts for 12 per cent of effective capital employed which consists primarily of cash
Hurdle Rate - 15%
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
8
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
9
Capacity enhancements in the Port of Colombo
10
• 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
11
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
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
12
1Q FY21 earnings update: Transportation industry group
• Profitability of SAGT was impacted by lower throughput due to the lockdowns in Sri Lanka and India. Overall volumes in April recorded a decline in excess of 40 per cent. However, post the easing of the lockdown in mid-May and resumption in activity in India, volumes in June have been on a recovery trend, recording a decline of approximately 20 per cent compared to the previous year.
• LMS recorded an increase in profitability due to improved margins.
(Rs. mn) Q1 2020/21
Q1 2019/20
EBITDA 395 1,053
Volumes (TEU)
2019/20 2020/21 % YoY ChangeQ1 Q2 Q3 Q4 Q1
SAGT 535,998 492,542 509,012 528,641 376,777 (30)
JCT 561,897 580,747 532,052 548,944 449,313 (20)
CICT 702,745 763,123 759,448 726,303 648,291 (8)
Total 1,800,639 1,836,411 1,800,512 1,803,888 1,474,381 (18)
SAGT2019/20 2020/21
Q1 Q2 Q3 Q4 Q1
Domestic: Transshipment volume mix
19:81 19:81 19:81 20:80 10:90
300
400
500
600
700
800
Q1 Q2 Q3 Q4 Q1
2019/20 2020/21
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. 318,000 sq.ft. in the year 2019/20, at a capacity utilisation of 96 per cent.
13
LMS2019/20 2020/21
Q1 Q2 Q3 Q4 Q1
YoY Volume growth (%) (4) (16) (6) (8) (30)
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 (%) FY2017 FY2018 FY2019 FY2020
Growth of Frozen Confectionery volumes 11 (4) 10 3
Growth of Beverage volumes 10 (16) (25) 7
Growth of Convenience Foods volumes (4) 3 7 (0)
EBITDA margin (%) 27 20 18 20
14
1Q FY21 earnings update: Consumer Foods industry group
• The decline in profitability was mainly on account of the steep decrease in volumes across all businesses during the lockdown period.
• However, post the easing of the lockdown in mid-May, business activity displayed a faster than expected recovery in volumes with the Frozen Confectionery and Convenience Foods businesses recording a volume growth of 8 per cent and 2 per cent respectively in June, whilst the Beverage business recorded a decline of 5 per cent.
• The overall EBITDA of the industry group in the month of June was a growth over the corresponding period of the previous year, reflecting the momentum witnessed.
(Rs. mn) Q1 2020/21
Q1 2019/20
EBITDA 487 841
Key performance indicators (%)FY2020 FY2021
Q1 Q2 Q3 Q4 Q1*
Growth of Frozen Confectionery volumes 19 1 4 (12) (36)
Growth of Beverage volumes 22 2 4 1 (44)
Growth of Convenience Foods volumes (2) 0 7 (9) (27)
EBITDA (Rs. million) 843 736 722 1,111 487
EBITDA margin (%) 19 17 18 26 17
Revenue mix (Bev:FC) 48:52 48:52 44:56 51:49 42:58
• Annual volume growth in the Consumer Foods businesses was impacted as a result of the disruptions to sales in March 2020 due to the COVID-19 pandemic.
* For the month of June, the Frozen Confectionery and the Convenience Foods businesses recorded a volume growth of 8 per cent and 2 per cent respectively, whilst the Beverage business recorded a decline of 5 per cent.
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 whichcommenced operations in Q1 FY2018/19.
▪ CCS reformulated its flagship flavours andcurrently, approximately 30 - 45 per cent of theCSD portfolio’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
15
52.0
39.0
31.4
19.0
14.0
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 * 109
Cargills 416
Arpico 48
Laugfs 37
* As at 30 June 2020
▪ 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
16
▪ 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
▪ Whilst approximately 200-225 outlets are expected by FY2022/23, the planned outlet roll-out for the first quarter was temporarily put on hold as a result of the COVID-19 pandemic.
▪ However, 3 new outlets were opened in the month of July 2020
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
Rapid expansion to capitalise on low retail penetration levels
17
Supermarkets - overview
18
Profitability margin (%)
FY2017 FY2018 FY2019 FY2020
EBITDA (Rs.milllion) 2,010 1,975 1,623 4,267
EBITDA margin 6.7 5.3 3.6 7.8
EBIT margin 5.7 4.0 2.0 4.6
1Q FY21 earnings update: Retail industry group
• Revenue was negatively impacted during the quarter, as most of the outlets remained closed during the curfew period, while online sales could not fully offset the impact.
• Blended margins for the quarter were also impacted by a shift in the sales mix towards low margin essential items.
• The business has seen a sharp rebound in sales, which is encouraging with footfall gradually recovering close to pre COVID-19 levels.
(Rs. mn) Q1 2020/21
Q1 2019/20
EBITDA 502 1,036
Key performance
indicators (%)
FY2020 FY2021
Q1 Q2 Q3 Q4 Q1
Same store sales growth
3.6 5.1 5.4 1.7 (33.2)
Same store footfall growth
2 5.7 6.1 (6.2) (55.3)
Average basket value growth
1.6 (0.6) (0.6) 8.4 49.7
EBITDA margin 7 .0 6.3 9.0 8.8 3.1
• Supermarket operations continued during the quarter due to their classification as an ‘essential service’,though sales were limited to online channels during periods of curfew, thereby negatively impacting the samestore sales and footfall growth for the quarter.
• Same store sales growth for the month of June recovered to a negative 8 per cent compared to the decline of45 per cent, on average, in the months of April and May.
• Due to the change in the shopping patterns of customers in terms of frequency and purchase patterns, thestatistics on footfall and basket values remain distorted in the short term.
Leisure - overview
▪ Chain of Resort hotels in Sri Lanka
‾ 8 Resort hotels in strategic tourist destinations (1,022 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 (454 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
19
▪ 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
20
*City Hotels occupancy and ARR excludes Cinnamon red
Occupancies and average room rates
21
Sector
FY2020 FY2019
Occupancy (%)
ARR (US $)
EBITDA Margin
(%)
Occupancy (%)
ARR (US $)
EBITDA Margin
(%)
City Hotels*
34 100 10.8 48 128 22
Sri Lankan Resorts
61 78 11.4 80 90 28
Maldivian Resorts
56 364 26.7 84 320 23
1Q FY21 Earnings update: Leisure industry group
• Profitability was significantly impacted given the suspension of operations of the hotels in April and May on account of the closure of the airports in Sri Lanka and the Maldives and the lockdown measures in Sri Lanka.
• The Maldivian airport was opened for arrivals in mid-July, whilst Sri Lanka is yet to re-open its airport.
(Rs. mn) Q1 2020/21
Q1 2019/20
EBITDA (1,461) (336)
Key indicators
City Hotels Sri Lankan Resorts Maldivian Resorts
FY2020 FY2021 FY2020 FY2021 FY2020 FY2021
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Occupancy (%) 35 43 42 0 65 76 58 1 47 56 63 2
ARR(US $) 106 93 93 0 67 70 99 66 297 357 419 160
EBITDA Margin (%) 12 18 27 (359) 4 9 32 (1,242) 13 19 40 (3,035)
• The Maldives resorts segment witnessed strong forward bookings for the peak season of January to April 2021, exceeding the bookings for the same time last year.
• The Sri Lankan resorts have now commenced operations where the recovery of domestic tourism has been encouraging.
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 first quarter (Jan - Mar) of 2020 was 435, 941 compared with 740, 600 in the previous year, impacted by travel restrictions on account of COVID-19 and the closure of the Bandaranaike International Airport from March 2020 onwards.
▪ Following the Easter Sunday terror attacks in April 2019, the MoM tourist arrivals to the country were witnessing a gradual recovery by January 2020 prior to the outbreak out of the COVID-19 pandemic.
Source: Sri Lanka Tourism Development Authority
Trend of tourist arrivals to Sri Lanka
22
MonthTourist Arrivals
(In 000’s)Growth %
August ‘19 144 (28)
September ’19 109 (27)
October ’19 119 (23)
November ’19 177 (10)
December ‘19 242 (5)
January ‘20 228 (6)
February ‘20 208 (18)
March ‘20 71 (71)
-
500
1,000
1,500
2,000
2,500
19
85
19
87
19
89
19
91
19
93
19
95
19
97
19
99
20
01
20
03
20
05
20
07
20
09
20
11
20
13
20
15
20
17
20
19
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
23
*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
24
0
5
10
15
20
25
30
35
40
45
Malaysia Indonesia Thailand Vietnam Cambodia Sri Lanka
Arr
ival
s in
mil
lio
ns
1990 2019
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
25
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
26
▪ 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
27
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
28
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
29
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.
30
Robust development pipeline; on-going developments
31
1Q FY21 earnings update: Property industry group
• The decline in profitability is mainly on account of the performance of the mall operations which were significantly impacted as a result of the pandemic.
• Construction resumed at ‘Cinnamon Life’ in mid-May after a 2 month closure and it is encouraging to note that the momentum is gradually reaching pre COVID-19 levels.
• The finishing work of the apartment and office towers are being re-sequenced to be completed within the financial year to enable handover.
(Rs. mn) Q1 2020/21 Q1 2019/20
EBITDA (29) 47
Cumulative sales (units)Number of units sold
as at 30 June‘20
Cinnamon Life:
The Residence at Cinnamon Life 137
Suites at Cinnamon Life 111
Cinnamon Life commercial complex
4 floors
Tri-Zen 262
Development Pipeline:
1. “Tri-Zen”- an 891 apartment residential development in central Colombo.
2. Revenue for Cinnamon Life will be recognized upon completion.
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
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
32
Robust development pipeline: Scenic 500 acre land bank with an 18-hole golf course
Cinnamon Life Integrated Resort
33
Integrated development in Colombo
34
Integrated development in Colombo
35
36
37As at March 2020
38As at March 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
39
The growth in Indian MICE travel to complement Cinnamon Life
Source: MasterCard
40
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%
41
45
54
6471
80.388.8
2014 2015 2016 2017 2018 2019
Life Insurance Gross Written Premiums
Rs.
Bn
*Excludes a one-off surplus of Rs. 3.38 billion arising from the change in policy liability valuation
Financial Services – Insurance sector overview
42
1Q FY21 earnings update: Financial Services industry group
• The profitability of Nations Trust Bank recorded an increase despite pressure on margins, due to the positive impact on account of the removal of the Debt Repayment Levy from January 2020 onwards.
• The performance of Union Assurance was impacted in the month of April and May. However, the business witnessed a strong recovery in its gross written premiums in the month of June.
(Rs. mn) Q1 2020/21
Q1 2019/20
EBITDA 537 436
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
Q1 FY2020(Apr-Jun
2019)
Q2 FY2020(Jul-Sep 2019)
Q3 FY2020 (Oct – Dec
2019)
Q4 FY2020 (Jan – Mar
2020)
Q1 FY2021 (Apr – Jun
2020)
GWP growth (% YoY)
(1) 8 7 5 (6)
Net profit(Rs.Mn)
324 153 681 167 170
Net profit growth (% YoY)
(46) (91) (32) (6) 17
▪ Nations Trust Bank (JKH effective economic interest : 32.16%)▪ Focus on SME / retail strategy▪ Franchise for American Express cards
Financial Services – Banking sector overview
43
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 5.0
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 10.3
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 Q1 FY2020 (Apr-Jun 2019)
Q2 FY2020(Jul-Sep 2019)
Q3 FY2020 (Oct – Dec 2019)
Q4 FY2020 (Jan-March
2020)
Q1 FY2021 (Apr-Jun 2020)
Net profit (Rs. Mn) 575 1,066 1,113 894 729
Net profit growth (% YoY) (34) 9 54 27 27
Gross Loan growth (% YoY) 12 8 3 (1) (5)
Net Interest Margin (%) 4.8 4.8 4.9 4.6 4.0
NPL Ratio (%) 6.1 6.1 6.2 6.2 6.6
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 FY2021 and does not
constitute an issue prospectus or a financial analysis. This Investor Presentation should be read in conjunction with the JKH Annual Report 2019/20 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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