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INDUSTRY GROUP REVIEWDesigningStrategy116 Transportation 124 Leisure 136 Property 144 Consumer Foods and Retail 154 Financial Services 160 Information Technology 166 Other including Plantation Services

115Group Highlights Governance Management Discussion & Analysis Financial Statements Supplementary InformationIndustry Group ReviewINDUSTRY GROUP FINANCIAL AND NON-FINANCIAL HIGHLIGHTS%0CF&RFin nue* (Rs. billion)* Revenue is inclusive of the Group's share of equity accounted investees revenueOtherITFin SerCF&RPropertyLeisureTRPEBIT (Rs. 47.732.3371.81ITOtherProperty50.59Fin SerLeisure15.49CF&RTRP2014/15PropertyCF&RFin Fin 55,0412444,4468141,07583059 26,4411,5501,3093,8982015/162,091 40,767525 29,0601,4071,2693,5432016/171,690 40,670924 CF&RFin SerOtherIT2,313 39,698CF&RFin SerPropertyLeisure2014/15231668010029137 2234351183152213812932016 / 17%0204013603098013161002172014 / 151225823112192015 / 16132532493232016 / 17209406029807 210018431205 4 1344 31332014 / 158282015 / 16831202016 / 1720840256016801006172262014 / 1572418715227261771522720402015 / 1662016 / 1736043806100129108131787356872014 / 153432015 / 1633922016 / 17%0Carbon Footprint (MT)602015 / 16%0Employees (number)TRP20%0Total Assets (Rs. billion)402014 / 15%0Capital Employed (Rs. billion)TRPLeisureProperty20320406080100533522 5523722 44121 42014 / 1532015 / 1624912016 / 17Consumer Foods and RetailFinancial ServicesITOtherInformation TechnologyOther including Plantation Services

116John Keells Holdings PLC Annual Report 2016/17Industry Group ReviewTRANSPORTATIONOur Business ModelVision and ScopeThe vision of the Transportation industrygroup is to be recognised as a leadingprovider of transportation solutions andrelated services through a diversifiedportfolio of businesses in selectedmarkets. These operations comprise of acontainer terminal in the Port of Colombo,a marine bunkering business, joint venture/associations with leading shipping, logisticsand air transportation multinationals, as wellas travel and airline services in Sri Lanka andthe Maldives.Contribution to JKH Group15%13%8%2%RevenueEBITCapital employedCarbon footprintA wide array of transportation solutionsincluding container handling at SAGT, logisticsby JKLL, and air transportation services. SAGTwas also recognised as the “Best Terminalin South Asia” by the Global Ports forum inFebruary 2017.Ports andShippingTransportationCO20.15 MT perRs.mn revenue

117Group Highlights Governance Management Discussion & Analysis Financial Statements Supplementary InformationSectorsPorts and ShippingThe business withinthe sectorKey external/internal variablesimpacting thebusiness Operation of a container terminal in the Port of Colomboas a public-private partnership on a build, operateand transfer (BOT) basis through South Asia GatewayTerminals (SAGT) Associate stake in Maersk Lanka, agents in Sri Lankaand the Maldives for Maersk Line and Safmarine The total volume through the Port of Colombo forthe financial year 2016 grew by 9 per cent, withtransshipment and domestic volumes growing by9 per cent and 16 per cent respectively, althoughthe performance of the regional shipping and portsindustry declined Key developmentsduring the financialyearTransportationPossibility of further consolidation of global shippinglines through mergers, acquisitions and alliances tobenefit from greater operational efficiencies throughcost pooling and strengthened purchasing power Improved prospects in the ports and shipping industryin Colombo and Hambantota for private sectorparticipation SAGT recognised as the "Best Terminal in South Asia",awarded by the Global Ports Forum in February 2017 Logistics services include the operation of DHL airexpress in Sri Lanka, a joint venture with DeutschePost, third party logistics (3PL), warehousing, truckingand freight forwarding solutions under the John KeellsLogistics brand and a joint venture with XPO Logistics(referred to as NDO), marine bunkering and relatedservices under Lanka Marine Services (LMS) as wellas airline, aviation, travel and related services throughSaffron Aviation (owners and operators of CinnamonAir), Mack Air and Mackinnons American Express Prospects for further private sector participation inthe bunkering industry Growth in demand for 3PL offerings on the back ofmore local businesses aspiring to global benchmarksand significant shifts to organised retail Increase in capacity in the airline industry through theentry of new players and intensified competition fromexisting players Continued strong occupancies on the East coast andsignificant hotel developments on the Southern coastof Sri Lanka increasing the opportunities for domesticair transport LMS maintained its market leadership position in thebunkering industry JKLL launched “Store4u”, an online storage solutionfor individuals and SMEsKey IndicatorsOutputs (19)2,3132016/172015/16(%)2014/15Total assets18,06517,163516,656Total 11,690Inputs (Rs.mn)Total debtCapital employed1Employees (number)2Turnover3EBIT per employee4Carbon footprint (MT)21 For equity accounted investees the capital employed is representative ofthe Group’s equity investment in these companies2 Excludes SAGT, DHL, Maersk Lanka, NDO and Cinnamon Air3 Turnover is inclusive of the Group’s share of equity accounted investees4 As per the sustainability reporting boundary

118John Keells Holdings PLC Annual Report 2016/17Industry Group ReviewTRANSPORTATIONExternal Environment and OperationalReviewThe Port of Colombo recorded a growth involumes of 9 per cent during the financialyear under review [2015/16: 6 per cent],despite the muted performance of theglobal ports and shipping industry and otherregional ports such as Singapore, Shanghaiand Hong Kong; underscoring the strategiclocation and potential of the Port of Colombo.The overall growth was mainly driven by theexistence of deep water terminal facilitieswhich can cater to new generation containervessels, combined with its strategic link tokey trade routes.During the financial year, the Group’s Portbusiness, South Asia Gateway Terminals(SAGT), recorded encouraging growth of 22per cent, handling 1.70 million twenty footequivalent units (TEUs) with transshipmentvolumes accounting for 80 per cent of totalvolumes, in comparison to the 1.40 millionTEUs handled during the previous year,where transshipment volumes contributed to77 per cent of total volumes. The increasedactivity witnessed across the Port of Colomboenabled SAGT to increase its market share in2016/17.During the year under review, SAGTcontinued to focus on improving theproductivity of its operations through variouscost management initiatives and productivityenhancing measures. SAGT’s continued effortto improve productivity and performanceproved fruitful with it being recognised as the"Best Terminal in South Asia" by the GlobalPorts Forum in February 2017.The Port of Colombo operated at a capacityin excess of 70 per cent during the calendaryear, highlighting the need for an increasein capacity to facilitate growth. Growth indeep draft handling capacity is a currentand crucial requirement at the Port ofColombo, especially considering its strategiclocation along the East-West sea route,and the growth opportunities Sri Lankacan capitalise on in the context of regionalgrowth led by India and the “Belt and Road”initiative launched by China. In keeping withaddressing the need for growth, the Sri LankaPorts Authority (SLPA) called for Expressionsof Interest (EOI) in developing and operatingthe East Container Terminal (ECT) in June2016. The Group, together with its consortiumpartners, APM Terminals and CONCOR(Container Corporation of India), submittedDuring the financial year, the Group’sPort business, South Asia GatewayTerminals recorded a throughputgrowth of 22 per centThe Port of Colombo recorded agrowth in volumes of 9 per centduring the financial year underreview [2015/16: 6 per cent],despite the muted performanceof the global ports and shippingindustry.John Keells Logistics Limited (JKLL) recordedan increase in total throughput managed,driven by the growth in volumes handled forits existing customers and the rise in demandfrom domestic companies, increasinglyseeking to outsource components of theirsupply chain. During the year under review,JKLL’s focus on improving productivity acrossits facilities led to a 42 per cent increase intotal throughput managed. Leveraging onthe cross sectoral opportunities within theGroup, JKLL, together with Jay Kay MarketingServices - the operators of the Keells Superchain of supermarkets, developed andfinalised the feasibility for a state-of-the-artdistribution centre for its business. Furtherdetails on the distribution centre can be foundin the Consumer Foods and Retail IndustryGroup Review section of this Report.3.10BnRs.Transportation industrygroup PBTan expression of interest in September 2016.However, a decision on the EOIs and the nextsteps regarding the development of ECT isstill being awaited.Lanka Marine Services (LMS), the Group’sBunkering business, maintained its positionas the market leader despite price competitionfrom bunker suppliers operating in Colombo,and, to a lesser extent, India. The year underreview witnessed a significant increase in thebase prices of bunker fuels compared to theprevious year, which resulted in an improvedtop line of the business. LMS recordedpromising volume growth during the fourthquarter, aided by the overall growth in thePort of Colombo.LMS continued to leverage on its marketleadership position and reputation to improveits procurement strategy and supplierrelationships. During the year under review,the company contracted to install flow metersto its bunker barges to improve service andquality standards offered to its customers.The meters are expected to be installed in thefirst quarter of 2017/18, which will provideLMS a first mover advantage for higherservice quality within the Sri Lankan market.Furthermore, LMS will upgrade its deliveryinfrastructure in the ensuing year when “MTLanka Marine Mahaweli”, a new 2,200 MTbarge is commissioned in April 2017.A 24 per cent growthDHL Keells witnessed promising growth in theyear under review with inbound and outboundvolumes experiencing a healthy growth of 9per cent over the previous year. During theyear under review, the company recorded anincrease in market share, stemming from anumber of new marketing initiatives whichwere rolled out during the year. As part of itscontinuous efforts to maintain its position asthe service provider of choice, and operate ata higher level of productivity and efficiency,DHL Keells invested in a fleet of new vehicles.The Airline SBU witnessed significant growth inthe year, as expected, with double digit growthin both cargo and passenger segments of thebusiness. KLM, Gulf Air and Mega MaldivesAirlines, represented by Mack Air (MAL) asgeneral sales agents, commenced "on-line"operations with multiple weekly flights, duringthe 2016/17 financial year. This translatedinto significant volume increases in both thepassenger and cargo segments of the businesswith total volumes increasing by 24 per centand 36 per cent respectively in the year.Cinnamon Air witnessed double-digit growthin passenger volumes from both scheduledand charter flight operations, primarily onaccount of the 14 per cent increase in touristarrivals to Sri Lanka during the calendaryear 2016. Despite facing a few challenges

Group Highlights Governance Management Discussion & Analysis Financial Statements Supplementary Informationas a result of the restriction in operationsdue to the resurfacing and expansion of therunway of the Bandaranaike InternationalAirport (BIA) from January to April 2017 andthe sporadic unavailability of its amphibiousaircraft during peak season, Cinnamon Airmanaged its operations successfully withminimal schedule disruptions.The travel business, Mackinnons AmericanExpress (MAET), invested in an online bookingapplication in the year under review in orderto compete in the online travel market space.Further investments were undertaken inorder to increase staff productivity andenable scalability.Capital Management ReviewThe Freight Forwarding business, NDO Lanka(NDO) continued to grow its project cargovertical to target emerging infrastructure andreal estate projects. NDO was successful inacquiring large scale opportunities in thisvertical, including a project in Northern SriLanka, among others.Further to the external environment andoperations review, this section outlines theforms of Capital available for the execution ofthe businesses’ near, medium and long termstrategies in creating value and discusses theperformance of the sectors under each formof Capital.Key indicators under each form of Capital are as follows;SectorsFinancial and Manufactured Capital revenue and growthFinancial and Manufactured Capital EBIT and growthNatural Capital - carbon footprintHuman Capital - number ofemployeesPorts and ShippingTransportationRs.5.42 billion, 10 per centincreaseRs.2.16 billion, 18 per centincreaseNot within the boundary ofsustainability reportingNot within th