Investor Presentation Review of FY2019 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 John Keells Group - Confidential
About JKH ▪ Market cap of USD 1.14 billion ▪ No controlling shareholder - 99% free float ▪ Debt : Equity ratio of 23.7% ▪ The Board comprises of two Executive Directors and six Independent Non- Executive Directors 2 John Keells Group - Confidential
Portfolio profitability PAT attributable to equity holders 2017/18 2018/19 2016/17 15% 23% 22% Transportation 4% 33% 33% 36% Consumer foods Retail 11% Leisure 17% 1% 32% Property 5% 8% Financial 10% 16% 10% Services 4% 20% Note: The above excludes the contribution from Other including Information Technology and Plantations Services ▪ 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 John Keells Group - Confidential
Cumulative EBITDA : for the year ended 31 March 2019 FY2019 FY2018 YoY Growth Industry Group (%) (Rs. Million) (Rs. Million) Transportation 4,555 3,438 32 Consumer Foods 2,913 3,132 (9) Retail 2,146 2,520 (15) Leisure 5,017 6,330 (21) Property 323 1,382 (77) Financial Services 4,548 8,873 (49) Other, incl. IT and Plantation Services 6,388 6,439 (1) 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 John Keells Group - Confidential
EBITDA : for the quarter ended 31 March 2019 Q4 FY2019 Q4 FY2018 YoY Growth Industry Group (Rs. Million) (Rs. Million) (%) Transportation 1,282 497 158 Consumer Foods 1,103 864 28 Retail 827 580 42 Leisure 2,375 2,540 (7) Property 195 1,158 (83) Financial Services 1,590 6,459 (75) Other, incl. IT and Plantation Services 437 1,995 (78) Total EBITDA 7,809 14,092 (45) Following are the reasons for the deviations in performance due to one-off/non-operational impacts: • Transportation EBITDA in Q4 2017/18 included an impairment provision for doubtful debt and a cumulative deferred tax charge at SAGT. • Property EBITDA in Q4 2017/18 included a one-off revenue recognition at Rajawella Holdings Limited on the sale of leasehold rights and lower fair value gains on investment in 2018/19. The performance for the quarter also included an exchange loss at the Holding Company as a result of the appreciation • of the Rupee, in comparison to an exchange gain recorded in the fourth quarter of 2017/18. 5 John Keells Group - Confidential
Portfolio evaluation 2018/19; returns vs. effective capital deployed Industry group Effective capital employed (%) Cinnamon Life 24 Adjusted ROCE (%) Leisure 21 Property (Excluding Cinnamon Life) 13 IT - 54% Transportation 8 Financial Services 6 Retail 4 Consumer Foods 3 Plantations 1 Financial Services - 25% Information Technology 0.1 Transportation - 21% ▪ In addition, the Holding Company accounts for 18 per cent of effective capital employed which consists primarily of cash Consumer Foods - 21% Plantations - 15% Hurdle Rate - 15% Retail - 13% Leisure - 4% Property (Excl. Cinnamon Life) – 0.2% Cinnamon Life – (0.1%) Adjusted effective capital employed (Rs.bn) 6 John Keells Group - Confidential
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: Project Expected completion Cinnamon Life - Residential and Commercial towers 4Q FY2020 1Q FY2021 - Hotel and Retail Mall 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 7 John Keells Group - Confidential
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 8 John Keells Group - Confidential
The strategic location of the Port of Colombo linking key shipping routes GWADAR BAHL KARACHI KOLKATA MUMBAI VISHAKHAPATNAM CHITTAGONG YANGON CHENNAI ADEN KOCHI LAMU MOMBASA DAR-ES-SALAM PORT LOUIS CAPE TOWN 9 John Keells Group - Confidential
Capacity enhancements in the Port of Colombo CICT - Colombo International Container Terminal • ECT - East Container Terminal • • SAGT - South Asia Gateway Terminal • JCT - Jaya Container Terminal 10 John Keells Group - Confidential
Sustained volume growth in the Port of Colombo 7.05 6.21 5.74 Million TEUs 5.19 4.91 4.31 2013 2014 2015 2016 2017 2018 11 John Keells Group - Confidential
Rapid absorption of capacity in the Port of Colombo 800 Port of Colombo - volumes ('000 TEUs) Port Container handling capacity (TEUs) CICT Colombo 8 million JCT 600 Hong Kong 21 million SAGT Singapore 40 million Shanghai 36 million 400 Q4 Q1 Q2 Q3 Q4 2017/18 2018/19 Volumes % YoY 4Q Earnings update: (TEU) Change Transportation industry Q4 Q1 Q2 Q3 Q4 group SAGT 507,668 504,312 538,723 516,037 514,589 1 (Rs. mn) Q4 Q4 JCT 559,681 547,629 592,551 604,672 607,913 9 2018/19 2017/18 CICT 639,002 656,986 676,710 703,470 668,230 5 EBITDA 1,282 497 Total 1,706,350 1,708,927 1,807,984 1,824,179 1,790,732 5 • SAGT profits driven by improvement in volumes and mix. 2017/18 2018/19 SAGT • 2017/18 included an Q4 Q1 Q2 Q3 Q4 impairment provision for Domestic: Transshipment 20:80 17:83 17:82 20:80 21:79 doubtful debt and a volume mix cumulative deferred tax charge at SAGT. Sources: Government websites/ Sri Lanka Ports Authority 12 John Keells Group - Confidential
Opportunities for growth in the Bunkering businesses Bunkering Business (Lanka Marine Services) 2017/18 2018/19 LMS Q4 Q1 Q2 Q3 Q4 Volume growth 20 20 2 9 (4) LMS revenue recorded an increase although profitability was impacted by the appreciation of the Rupee ▪ 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. Sources: Government websites/ Sri Lanka Ports Authority 13 John Keells Group - Confidential
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 4Q Earnings update: Consumer Foods industry group Key performance indicators (%) FY2016 FY2017 FY2018 FY2019 Growth of frozen confectionery volumes 15 11 (4) 10 (Rs. mn) Q4 Q4 2018/19 2017/18 Growth of beverage volumes 22 10 (16) (25) EBITDA 1,103 864 Growth of convenience food volumes 11 (4) 3 7 Frozen confectionery: EBITDA margin (%) 26 27 20 18 • Improved performance in the Frozen Confectionery business FY2019 Q4 driven by strong volume growth Key performance indicators (%) FY2018 Q1 Q2 Q3 Q4 Beverages: Growth of frozen confectionery volumes 2 3 8 7 21 • Improved profitability in the Growth of beverage volumes (22) (37) (31) (23) (6) Beverage business as a result of higher margins. Growth of convenience foods volumes 11 12 12 3 1 • Growth in monthly volumes within EBITDA (Rs. million) 864 523 691 596 1,103 the second half of 2018/19 has EBITDA margin (%) 21 14 16 16 24 consistently witnessed an upward trend. Revenue mix (Bev:FC) 59:41 49:51 50:50 47:53 49:51 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, whilst selling prices of selected SKUs will be revised in 1Q of 2019/20 14 John Keells Group - Confidential
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