Post on 09-Aug-2020
Investor Presentation
Review of Q4 FY2020
Version 1.0
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 0.80 billion
No controlling shareholder - 99% free float
Debt : Equity ratio of 41.4%*
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 32.7%.
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. Approximately 50 per cent ofearnings are contributed from these businesses.
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
Sri Lankan Context
• Following the diagnosis of COVID-19 patients in Sri Lanka, the Government declared an island-widecurfew, imposed from 20 March 2020 onwards. Restrictions were waived only for services classifiedas 'essential’.
• Curfew has been gradually eased off in many parts of the country, except for two high risk districts,including the Colombo district. The most recent release by the Government states that curfew in thetwo districts will remain, with restrictions being eased off during the day for the gradualcommencement of economic activity by the public and private sectors.
• With the resumption of activity across the country post the easing of curfew restrictions, the Groupis seeing early signs of an encouraging recovery of consumer activity which should be positive forconsumer-focused businesses such as Consumer Foods, Retail, Logistics and Insurance.
• It is encouraging that there is no indication of community spread in the country.
4
COVID-19 – impact to Sri Lanka and JKH
Group response:
• In order to evaluate the financial position of each business, particularly over the next 12 months,each of the businesses were stress-tested under multiple operating scenarios, and, subsequently ata Group consolidated level, to ascertain the impact on the ability to sustain its operations with itscash reserves and banking facilities in place.
• Whilst the assumptions vary across the businesses, the Group is satisfied of the ability of thebusinesses to manage its operations even under an extreme stress-tested scenario.
• Whilst the short-term impact to the Group performance is expected to be significant, the Group hasundertaken various measures to ensure a sustainable and agile operating model, with a focusedview on cash management and liquidity, in particular.
• The Group has evaluated all health and safety guidelines issued by the Government as well asinternational best practice to ensure suitable working arrangements and safe conditions foremployees, customers and other stakeholders.
• With the easing of restrictions, we have seen a smooth transition with the resumption of businessactivity where we are already seeing a positive momentum.
5
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
6
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 31 March 2020
7
Industry GroupQ4 FY2020
(Rs. Million)Q4 FY2019 * (Rs. Million)
YoY Growth (%)
Transportation 952 1,290 (26)
Consumer Foods 1,111 1,105 1
Retail 1,421 1,060 34
Leisure 1,933 2,502 (23)
Property 497 188 164
Financial Services 833 1,185 (30)
Total EBITDA 8,104 7,541 7
*Note that the FY2019 EBITDA is adjusted to reflect impact from SLFRS 16 - Leases, for comparison purposes
While the performance of the Group initially witnessed strong momentum in the fourth quarter ofthe financial year 2019/20, the outbreak of the COVID-19 pandemic had varying levels of impact onthe performance of the businesses. This is discussed further in the ensuing slides.
Adjusted effective capital employed (Rs.bn)
Portfolio evaluation 2019/20; returns vs. effective capital deployed
8
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 32Leisure 24Property (Excluding Cinnamon Life) 8Transportation 7Financial Services 6Retail 6Consumer Foods 3Plantations 1Information 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.
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
4Q FY20 earnings update: Transportation industry group
• LMS recorded a strong growth in profits driven by improved margins.
• SAGT became liable for corporate income tax from October 2019 onwards, thereby negatively impacting performance as the Group recognises its share of profit after tax of SAGT as an equity accounted investee.
(Rs. mn) Q4 2019/20
Q4 2018/19
EBITDA 952 1,290
Volumes (TEU)
2018/19 2019/20 % YoY ChangeQ4 Q1 Q2 Q3 Q4
SAGT 514,589 535,998 492,542 509,012 528,641 3%
JCT 607,913 561,897 580,747 532,052 548,944 -10%
CICT 668,230 702,745 763,123 759,448 726,303 9%
Total 1,790,732 1,800,639 1,836,411 1,800,512 1,803,888 1%
SAGT2018/19 2019/20
Q4 Q1 Q2 Q3 Q4Domestic: Transshipment volume mix
21:79 19:81 19:81 19:81 20:80
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.
14
LMS2018/19 2019/20
Q4 Q1 Q2 Q3 Q4
Volume growth 9 (4) (16) (6) (8)
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 food volumes (4) 3 7 (0)
EBITDA margin (%) 27 20 18 20
15
4Q FY20 earnings update: Consumer Foods industry group
*Adjusted for SLFRS 16 – Leases, for comparison purposes
• The Beverages and Frozen Confectionery businesses recorded an improvement in performance driven by an expansion of margins due to a better sales mix.
• Both businesses recorded encouraging volume growth in the months of January and February, where volumes grew approximately 20%-30%, on average.
• However, the imposition of island-wide curfew due to the COVID-19 pandemic caused disruptions in sales in the last 2 weeks of March 2020, which is a peak sales month, resulting in a steep decline in volumes, thereby impacting overall volumes for the quarter.
(Rs. mn) Q4 2019/20
Q4 2018/19*
EBITDA 1,111 1,105
Key performance indicators (%)FY2019 FY2020
Q4 Q1 Q2 Q3 Q4
Growth of frozen confectionery volumes 21 19 1 4 (12)
Growth of beverage volumes (6) 22 2 4 1
Growth of convenience foods volumes 1 (2) 0 7 (9)
EBITDA (Rs. million) 1,103 843 736 722 1,111
EBITDA margin (%) 24 19 17 18 26
Revenue mix (Bev:FC) 49:51 48:52 48:52 44:56 51:49
• 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.
• The relative impact on volumes in March is more pronounced given the seasonality associated with the Beverages and Frozen Confectionery businesses, where sales peak due to the traditional New Year in April.
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 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
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 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 * 109
Cargills 410
Arpico 47
Laugfs 37
* As at 31 March 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
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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
Whilst approximately 200-225 outlets are expected by FY2022/23, considering the significant disruption to operations in the current operating environment, the planned outlet roll-out has been temporarily suspended and will be re-evaluated once operations settle.
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
Rapid expansion to capitalise on low retail penetration levels
18
Supermarkets - overview
19
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
4Q FY20 earnings update: Retail industry group
*Adjusted for SLFRS 16 – Leases, for comparison purposes
• The Supermarket business recorded a strong performance driven by growth in same store sales and a notable contribution from new outlets.
(Rs. mn) Q4 2019/20
Q4 2018/19*
EBITDA 1,420 1,060
Key performance indicators (%)
FY2020
Q4 Q1 Q2 Q3 Q4
Same store sales growth
4.5 3.6 5.1 5.4 1.7
Same store footfall growth
7.1 2 5.7 6.1 (6.2)
Average basket value growth
(2.4) 1.6 (0.6) (0.6) 8.4
EBITDA margin 5.0 7 .0 6.3 9.0 8.8
• Same store sales recorded an encouraging growth of 5.7 per cent in January and February 2020.• However, a steep decline in same store sales was recorded in March due to the imposition of curfew which
resulted in outlets being closed during the latter half of March 2020, which is a peak sales month.• ABV growth was flat throughout most of the year and was skewed primarily as a result of the effect of
customers stockpiling grocery items in the latter half of March 2020.• While customers transitioned to online channels, this shift was inadequate to cater to the loss of footfall to
outlets. With the easing of curfew restrictions, sales have rebounded.
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
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
*City Hotels occupancy and ARR excludes Cinnamon red
Occupancies and average room rates
22
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
*Sri Lanka Resorts EBITDA includes IP gains
4Q Earnings update: Leisure industry group
*Adjusted for SLFRS 16 – Leases, for comparison purposes
• The quarter was impacted by the developments surrounding the global spread of COVID-19, derailing the momentum of recovery in arrivals from the Easter Sunday attacks.
• In addition, the quarter included the start-up costs relating to the newly refurbished premium resort in Sri Lanka, Cinnamon Bentota Beach.
(Rs. mn) Q4 2019/20
Q4 2018/19*
EBITDA 1,933 2,502
Key indicators
City Hotels ** Sri Lankan Resorts Maldivian Resorts
FY2020 FY2020 FY2020
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Occupancy (%) 14 35 43 42 46 65 76 58 55 47 56 63
ARR(US $) 123 106 93 93 72 67 70 99 325 297 357 419
EBITDA Margin (%) (34) 12 18 27 (15) 4 9 32 22 13 19 40
• The annual occupancy and ARRs in City Hotels and Sri Lanka Resorts were impacted as a result of the decline in arrivals due to the Easter Sunday attacks in April 2019. Until the outbreak of the COVID-19 pandemic, forward bookings were showing positive momentum with arrivals in line with levels seen before the Easter Sunday attacks.
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.
The SLTDA has initiated a two-phased post COVID-19 action plan to revive the tourism sector.
Source: Sri Lanka Tourism Development Authority
Trend of tourist arrivals to Sri Lanka
23
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
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
24
*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
25
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
26
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
27
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
28
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
29
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
30
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.
31
Robust development pipeline; on-going developments
32
4Q FY20 earnings update: Property industry group
*Adjusted for SLFRS 16 – Leases, for comparison purposes
• The EBITDA of the Property industry group for the quarter includes fair value gains on investment property.
• Tri-Zen residential development project continued its encouraging sales momentum, recording sales of 19 units during the months of January and February, although March was impacted by the imposition of curfew.
• Whilst the construction sites of both Tri-Zen and Cinnamon Life were closed from the time of curfew imposition, both sites are now gradually commencing work as permitted under the relevant Government directives.
• Cinnamon Life is working closely with the contractor to understand the impact on the overall project to manage resources and deliverables.
(Rs. mn) Q4 2019/20 Q4 2018/19
EBITDA 497 188
Cumulative sales (units)Number of units sold
as at 31 March ‘20Cinnamon Life:
The Residence at Cinnamon Life 137
Suites at Cinnamon Life 110Cinnamon 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
33
Robust development pipeline: Scenic 500 acre land bank with an 18-hole golf course
Cinnamon Life Integrated Resort
34
Integrated development in Colombo
35
Integrated development in Colombo
36
37
38As at March 2020
39
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
40
The growth in Indian MICE travel to complement Cinnamon Life
Source: MasterCard
41
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%
42
4554
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
43
4Q FY20 earnings update: Financial Services industry group
*Adjusted for SLFRS 16 – Leases, for comparison purposes
• Nations Trust Bank recorded a strong improvement in profits driven by the removal of the Debt Repayment Levy and NBT on financial services.
• Profitability of Union Assurance PLC was impacted by a notional tax credit reversal under investment income.
(Rs. mn) Q4 2019/20
Q4 2018/19
EBITDA 833 1,185
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
Q4 FY2019 (Jan-Mar
2019)
Q1 FY2020(Apr-Jun
2019)
Q2 FY2020(Jul-Sep 2019)
Q3 FY2020 (Oct – Dec
2019)
Q4 FY2020 (Jan – Mar
2020)
GWP growth (% YoY)
(1) (1) 8 7 5
Net profit(Rs.Mn)
178 324 153 681 167
Net profit growth (% YoY)
(41) (46) (91) (32) (6)
Nations Trust Bank (JKH effective economic interest : 32.16%) Focus on SME / retail strategy Franchise for American Express cards
Financial Services – Banking sector overview
44
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 Q4 FY2019 (Jan-Mar 2019)
Q1 FY2020 (Apr-Jun 2019)
Q2 FY2020(Jul-Sep 2019)
Q3 FY2020 (Oct – Dec
2019)
Q4 FY2020 (Jan-March
2020)
Net profit (Rs. Mn) 773 575 1,066 1,113 959
Net profit growth (% YoY) (18) (34) 9 54 27
Gross Loan growth (% YoY) 18 12 8 3 (1)
Net Interest Margin (%) 4.9 4.8 4.8 4.9 4.6
NPL Ratio (%) 4.9 6.1 6.1 6.2 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 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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