#1exp EXPOLANKA HOLDINGS PLC EXPOLANKA HOLDINGS INVESTOR PRESENTATION 2013#2GROUP OVERVIEW ● EXPOLANKA - AN OVERVIEW Expolanka is a diversified conglomerate listed in the Colombo Stock Exchange with a market capitalisation in excess of USD 100MN. The company was established in 1978. Its group companies are now established as the market leader in various industry verticals the most prominent of which is freight & logistics. Investor Presentation 2013 www.expolanka.com exp Business Beyond Borders#3GROUP OVERVIEW exp Business Beyond Borders UNIQUE . . Expo is the only listed entity in Sri Lanka that has a considerable sub continent footprint. Currently 60% of net profits are generated from the Indian subcontinent and future investments are focused within the region Asset light freight & logistics operational model with high ROE. High brand reputation with over 30 years of service history. Investor Presentation 2013 www.expolanka.com#4GROUP OVERVIEW SECTOR COMPOSITION exp Business Beyond Borders Freight & Logistics Travel and Leisure efl Simple Logistics UCL Logistics Pulsar Shipping sea-air-land Classictravel A world of difference AKQUA SUN GROUP LUXE ASIA Elegans Holidays. Tailor Made. EXPO RAIL International Trading & Manufacturing exp EXPOLANKA LIMITED exp EXPCZARKA CENOLME! (PV)LID t-sips NEPTUNE RECYCLERS EVERY DAY IS AN EARTH DAY Crescent FINE FOODS Baraka Investments and Services Expolanka GSAS A PII T ASIA PACIFIC INSTITUTE OF INFORMATION TECHNOLOGY Passive Investments Investor Presentation 2013 www.expolanka.com Saffrons Everyday Cuisine Paan Paan Speciality Breads#5PERFORMANCE REVIEW FINANCIAL SUMMARY Income Statement 2012/13 (LKR MN) 2012/13 2011/12 Revenue 50,075 35,414 Gross Profit 8,122 6,106 EBIT 1,883 1,797 Net Profit 1,278 1,209 NP for Equity Holder 1,060 1,033 Investor Presentation 2013 www.expolanka.com exp Business Beyond Borders#6SECTOR OVERVIEW SECTOR ANALYSIS Net Profit Breakdown for FY 2012/13 Intel. Trade & Inv. & Services Travel and Manu 4%-2% Leisure 6% 92% 50.00% 40.00% 30.00% 25.6% 20.00% 10.00% ROE by Sector 48.8% exp Business Beyond Borders 3.9% -0.6% 0.00% Freight & Freight & Logistics Travel & Leisure International Investments & Trading & Services -10.00% Logistics Manufacturing Freight & Logistics cluster is the largest contributor to group performance. Investor Presentation 2013 www.expolanka.com#7SECTOR OVERVIEW: FREIGHT & LOGISTICS FINANCIAL OVERVIEW OF FREIGHT & LOGISTICS SECTOR exp Business Beyond Borders Key Financials for Freight & Logistics 2013 Vs. 2012 (LKR MN) 2012/13 2011/12 Change Gross Profit 5,232 4,190 24.87% EBIT 1,485 1,502 (1.1%) Net Profit 1,177 1,104 6.6% ROE 25.6% 30.9% Investor Presentation 2013 www.expolanka.com Key Highlights Overall volume improved by over 50% within the air exports/imports businesses Market Share Focus and Higher Freight Rates resulting in Lower Yields New Investments in USA was profitable, China and Hong Kong expected to breakeven 2013-14. Bangladesh witnessing significant Volume growth during the year Warehouse Construction Completed, Opening Q2 2013/14#8SECTOR OVERVIEW: FREIGHT & LOGISTICS exp Business Beyond Borders FREIGHT VOLUMES BY OPERATING SEGMENTS GP Composition 2012/13 Export Import 75% 25% F&L Volumes 2013 vs. 2012 Air Export Air 68% Sea 32% 50% Air Import 64% Key Highlights High volume growth within the US trade lane - especially between Bangladesh-US & Sri Lanka-US Sea Export 6% Air imports showing continued strength on back of Asia strength Sea freight showed consistent growth, main area of focus for 13/14 Investor Presentation 2013 www.expolanka.com Sea Import -3%#9SECTOR OVERVIEW: FREIGHT & LOGISTICS FREIGHT VOLUME GROWTH Focus for the year was to drive market share - Budgeted Air Export Growth 20% - Actual Achieved 50% exp Business Beyond Borders Sri Lanka & Bangladesh key driver in volume growth in air exports - Sri Lanka Volume Growth 55% - Bangladesh Volume Growth 85% • Positive contribution from the US trade lane • Continued focus will be to increase volume in 13/14 as well driving profits through operational efficiencies Investor Presentation 2013 www.expolanka.com#10SECTOR OVERVIEW: FREIGHT & LOGISTICS exp Business Beyond Borders F&L OUTLOOK 2013/14 • Yields to remain challenging NP margins will be the focus for 2013-14 Volume Growth expected at 20% Contract logistics to start with warehouse operations in SL Investor Presentation 2013 www.expolanka.com 10#11SECTOR OVERVIEW: FREIGHT & LOGISTICS exp Business Beyond Borders F&L DEVELOPMENTS ● New office openings in Myanmar, Egypt & Maldives Value added services and warehousing operations in SL will position EFL as an end-to-end logistics player within the country Investor Presentation 2013 www.expolanka.com 11#12SECTOR OVERVIEW: FREIGHT & LOGISTICS WAREHOUSE COMPLEX Investor Presentation 2013 Expected Opening End Aug 2013 www.expolanka.com exp Business Beyond Borders 12#13SECTOR OVERVIEW: FREIGHT & LOGISTICS ESTABLISHMENT OF FREEPORT FACILITIES WITHIN SRI LANKA • exp Business Beyond Border The Government of SL issued a gazette notification establishing Colombo and Hambanthota as freeports and three export processing zones as bonded areas. The move is expected to bring in new foreign investments, help grow established industries such as apparel manufacturing, entreport trading, logistics and numerous other export services. This will also enable Sri Lanka to better compete with countries such as Dubai and Singapore which already has such freeport facilities. Position Sri Lanka as a transport hub for the sub-continent. Investor Presentation 2013 www.expolanka.com 13#14SECTOR OVERVIEW: FREIGHT & LOGISTICS IMPACT OF FREEPORT LEGISLATION TO ● EXPOLANKA exp Business Beyond Borders The company is in the process of establishing 'Expo Global Distribution Centre,' a value added bonded warehousing facility under the freeport regulations in Katunayake EPZ - first freeport enterprise in the country The centre is designed to provide value added services to international apparel retailers operating in SL and the region Main objective of the venture is to lock in the freight customer base by providing more value added logistics services at point of origin - enabling them to save costs and manage the supply chain effectively. Investor Presentation 2013 www.expolanka.com 14#15SECTOR OVERVIEW: TRAVEL & LEISURE exp Business Beyond Border OVERVIEW OF TRAVEL AND LEISURE SECTOR Key Financials for Travel & Leisure 2013 Vs. 2012 (LKR MN) 2012/13 2011/12 Change Gross Profit 594 277 114% EBIT 103 51 102% Net Profit 76 45 70% ROE 48.8% 30.8% Key Highlights: • Classic Travels exceeded budgetary expectations New Initiatives: Continue restructure within the leisure sector particularly the DMC Business Outlook: Investor Presentation 2013 www.expolanka.com . Volume expected to Grow • Margins to remain Stable 15#16SECTOR OVERVIEW: INTEL. TRADE & MANU. OVERVIEW OF THE INTERNATIONAL TRADING AND MANUFACTURING SECTOR Key Businesses: exp Business Beyond Borders Key Financials for Intl. Trading & Manu. 2013 Vs. 2012 (LKR MN) • Perishable & Tea Exports • Commodity Trading • Recycling Solutions 2012/13 2011/12 Change • Value Added Products Gross Profit 1,214 923 31% EBIT 241 264 (9%) Net Profit 50 119 (58%) • ROE 3.8% 10.9% Key Highlights: Tea Exports remained stable Commodity Trading was affected by Price Volatility Outlook/Highlights/Strategies for 2013 Restructure Non Core Business Units Investor Presentation 2013 www.expolanka.com 16#17SECTOR OVERVIEW: INVESTMENTS & SERVICES OVERVIEW OF INVESTMENTS AND SERVICES SECTOR expⓇ Business Beyond Border Key Financials for Investments & Services 2013 Vs. 2012 (LKR MN) 2012/13 2011/12 Change Gross Profit 1,082 716 51% • EBIT 53 -21 352% Net Profit -25 -58 57% ROE -0.6% -1.3% Investor Presentation 2013 www.expolanka.com Key Businesses: • Education • GSA BPO Services Key Highlights: Education Business continues to grow GSA Business Was Strengthened BPO Services was turned around Outlook/Highlights/Strategies for 2013 · Divest Non Core Investments 17#18STRATEGIC FRAMEWORK GROUP STRATEGY ROE Drive Group ROE > 25% FOCUS RESTRUCTURING All business should be able generate an ROE of 25% and have scale in operations On Existing businesses New projects & Investments should be able to generate an ROE > 25% Investor Presentation 2013 www.expolanka.com Spin offs/divestments of non-core businesses will drive ROE exp Business Beyond Borders Restructure strategic investments sector holding only core investments 18#19STRATEGIC FRAMEWORK RESTRUCTURE - OBJECTIVES Focus on F&L Sector Improve Group ROE Focus on positioning Expolanka's freight operations as the largest freight and logistics provider within the sub continent Increase the group ROE from the current levels by restructuring or divesting low ROE generating businesses within the group Investor Presentation 2013 www.expolanka.com exp Business Beyond Borders 19#20STRATEGIC FRAMEWORK RESTRUCTURE - OUTCOME exp Business Beyond Borders Restructure non-performing and low ROE generating businesses Bring in approximately LKR 2 Billion as proceeds from the restructure within the next 12 months Timeline: Stage 1 - LKR 1BN end of Q2 2013/14 Stage 2 - LKR 1BN end of Q1 2014/15 Investor Presentation 2013 www.expolanka.com 20 20#21SUMMARY exp Business Beyond Borders EXPOLANKA - A SUMMARY Sri Lankan company with sub continent exposure. Value added logistics provider for international fashion retailers with a strong reach within the Asian region. Growth focus with profitability and ROE targets. Investor Presentation 2013 www.expolanka.com 21#22Performance Analysis Q1 2013/14 Investor Presentation 2013 www.expolanka.com exp Business Beyond Border 22 22#23PERFORMANCE REVIEW Q1 2013/14 Q1 2013/14 FINANCIAL SUMMARY Income Statement Q1 2013/14 (LKR MN) Q1 2013/14 Q1 2012/13 Change Revenue Gross Profit 13,798 10,397 33% 2,069 1,905 9% EBIT 512 487 5% Net Profit 369 346 7% NP for Equity Holder 323 275 17% Investor Presentation 2013 www.expolanka.com exp Business Beyond Borders 23#24PERFORMANCE REVIEW Q1 2013/14 Q1 2013/14 FINANCIAL SUMMARY Income Statement Q1 2013/14 (LKR MN) exp Business Beyond Borders International Trade Freight & Logistics Travel & Leisure & Manufacturing Investments & Services Q1 13/14 % A Q1 13/14 % A Q1 13/14 % A Q1 13/14 % A Revenue 8,532 40% 747 5% 3,853 31% 665 3% Gross Profit 1,373 15% 162 -3% 288 -23% 247 42% EBIT 395 18% 31 -38% 51 -41% 34 148% Net Profit 309 24% 21 -51% 20 -64% 18 n/a Investor Presentation 2013 www.expolanka.com 24 24#25PERFORMANCE REVIEW Q1 2013/14 expⓇ Business Beyond Border OPERATIONAL HIGHLIGHTS OF F&L SEGMENT GP Composition Q1 2013/14 Exports 71% Air 69% Imports 29% Sea 31% F&L Volumes Q1 2014 vs. Q1 2013 Air Export 26% Air Import Key Highlights Continued growth from the new stations - US, HK, China - resulted in increased volumes compared to previous period Air imports division showed stellar performance due to growth in US operations Sea freight segment showed steady growth as expected Investor Presentation 2013 www.expolanka.com Sea Export 9% 73% Sea Import 2% 25#26DISCLAIMER exp Business Beyond Borders This presentation is an invitation to the Prospective Investors and shall not constitute an offer to buy shares of Expolanka Holdings PLC (the Company). Recipients of this information must conduct their own independent Investigations, analysis, assessment and evaluation of the information and data contained in this presentation. Recipients are responsible for their own independent evaluations. Each recipient of this Information who is an participant at this investors forum shall be deemed to have made its own independent investigations of the information setout herein and its own appraisal of the proposal, and must satisfy itself as to legal, technical, accounting and taxation issues and decide whether investing in the company is appropriate having regards to its own investment Objectives, financial situation and particular need or circumstances. Recipients must form their own views solely in reliance upon their investigations and assessments and their own skill and judgment in before making the commitment. Further, advise to consult their investment advisors and tax advisors prior to investing in shares of the Company. This presentation contains forward-looking statements which involve risks and uncertainties by the usage of words herein such as "may", "plans", "expects", "believes" and similar expressions, or by their context. These statements are made on the basis of current knowledge and assumptions. Various factors could cause actual future results, performance or events to differ materially from those described in these statements. No obligation is assumed to update any forward-looking statements. Potential risks and uncertainties include such factors as general economic conditions, foreign exchange fluctuations, competitive product and pricing pressures and regulatory developments. The Financial information provided in this presentation is prepared according to the Sri Lankan Accounting Standards prescribed by the Institute of Charted Accountants of Sri Lanka (ICASL). The information contained in this document has not been independently verified and no representation or warranty, express or implied, is made to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. The information in this presentation is subject to change without notice, it may be incomplete or condensed, and it may not contain all material information concerning the Expolanka Group. None of Expolanka Holdings PLC or its respective affiliates or subsidiaries shall have any liability whatsoever for any loss whatsoever arising from any use of this document, or otherwise arising in connection with this document. This presentation or the document does not constitute or form part of an offer to sell or a solicitation of an offer to purchase any shares and nor any part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. This information neither constitute an offer to buy shares of Expolanka Holdings PLC nor a prospectus with the statutory meaning given under the Company Laws of Sri Lanka. Investor Presentation 2012/13 www.expolanka.com 26