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 * 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% 2
Portfolio profitability PAT attributable to equity holders 2018/19 2019/20 2017/18 22% 29% Transportation 33% 33% 36% Consumer Foods 54% Retail 4% Leisure 11% Property -17% 1% Financial Services 5% 8% 10% 13% 16% 18% 4% 20% Note: The above excludes the contribution from Other including Information Technology and Plantations Services The Group is conscious of the composition of its earnings and targets 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 ▪ 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 impacted from the fourth quarter onwards with the global outbreak of the COVID-19 pandemic 3
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 this momentum is expected to continue if the pandemic remains contained. • The proactive cost containment and productivity improvement measures undertaken to strengthen the Group’s financial and cash position from the beginning of the quarter, combined with the recovery momentum in business activity, enabled the Group to record cash profits despite the extremely challenging operating conditions. • The Leisure business, however, continues to be significantly impacted given the closure of the airport in Sri Lanka and the high dependency on the recovery of key source markets in particular. • As elaborated in the JKH Annual Report 2019/20, the COVID-19 pandemic was contained in Sri Lanka through the aggressive and proactive measures undertaken by the Government and the relevant authorities. • A possible second wave was well managed in July with no restrictions in movement for the general 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 there are no current indications of community transmission. 4
Cumulative EBITDA : for the year ended 31 March 2020 FY2020 FY2019* YoY Growth Industry Group (%) (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) Total EBITDA 22,174 25,798 (14) Recurring EBITDA** 22,055 25,579 (14) Recurring EBITDA excluding Leisure*** 19,714 20,278 (3) *Note that the FY2019 EBITDA is adjusted to reflect impact from SLFRS 16 - Leases, for comparison purposes ** 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
EBITDA: for the quarter ended 30 June 2020 Q1 FY2021 Q1 FY2020 YoY Growth Industry Group (Rs. Million) (Rs. Million) (%) 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 on • account 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 in June 2020. This will be discussed in the ensuing slides 6
Portfolio evaluation 2019/20; returns vs. effective capital deployed Industry group Effective capital employed (%) Cinnamon Life 32 Adjusted ROCE (%) Leisure 24 Property (Excluding Cinnamon Life) 8 Transportation 7 Consumer Foods - 23% Financial Services 6 Retail 6 IT - 23% Consumer Foods 3 Plantations 1 Transportation - 19% Information Technology 1 Retail - 16% ▪ In addition, the Holding Company accounts for 12 per cent of effective Financial Services - 15% capital employed which consists primarily of cash Hurdle Rate - 15% Property (Excl. Cinnamon Life) - 2% Leisure – (1%) Plantations – (0.2%) Cinnamon Life – (0.1%) Adjusted effective capital employed (Rs.bn) 7
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
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
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
Sustained volume growth in the Port of Colombo 8.00 7.23 7.05 7.00 6.21 5.74 6.00 5.19 4.91 5.00 Million TEUs 4.31 4.00 3.00 2.00 1.00 - 2013 2014 2015 2016 2017 2018 2019 11
Rapid absorption of capacity in the Port of Colombo Port of Colombo - volumes ('000 TEUs) Port Container handling 1Q FY21 earnings update: SAGT capacity (TEUs) Transportation industry JCT 800 Colombo 8 million group CICT 700 (Rs. mn) Q1 Q1 Hong Kong 21 million 600 2020/21 2019/20 500 Singapore 40 million EBITDA 395 1,053 400 Shanghai 36 million 300 • Profitability of SAGT was Q1 Q2 Q3 Q4 Q1 impacted by lower 2019/20 2020/21 throughput due to the lockdowns in Sri Lanka and 2019/20 2020/21 Volumes % YoY India. Overall volumes in (TEU) Change Q1 Q2 Q3 Q4 Q1 April recorded a decline in excess of 40 per cent. SAGT 535,998 492,542 509,012 528,641 376,777 (30) However, post the easing of the lockdown in mid-May and JCT 561,897 580,747 532,052 548,944 449,313 (20) resumption in activity in India, volumes in June have CICT 702,745 763,123 759,448 726,303 648,291 (8) been on a recovery trend, recording a decline of Total 1,800,639 1,836,411 1,800,512 1,803,888 1,474,381 (18) approximately 20 per cent compared to the previous year. 2019/20 2020/21 • LMS recorded an increase in SAGT Q1 Q2 Q3 Q4 Q1 profitability due to improved Domestic: Transshipment margins. 19:81 19:81 19:81 20:80 10:90 volume mix 12 Sources: Government websites/ Sri Lanka Ports Authority
Opportunities for growth in the Bunkering businesses Bunkering Business (Lanka Marine Services) 2019/20 2020/21 LMS Q1 Q2 Q3 Q4 Q1 YoY Volume growth (%) (4) (16) (6) (8) (30) 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
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