JOHN KEELLS HOLDINGS PLC

(Company Registration No. PQ 14)

130 Glennie Street, Colombo 02

CIRCULAR TO SHAREHOLDERS
INVESTMENT BY JOHN KEELLS HOLDINGS PLC IN THE WATERFRONT DEVELOPMENT PROJECT AT JUSTICE AKBAR MAWATHA AND GLENNIE STREET, COLOMBO 2, BORDERING BEIRA LAKE

IF YOU REQUIRE CLARIFICATIONS AS TO THE ACTION YOU SHOULD TAKE YOU SHOULD CONSULT YOUR INVESTMENT ADVISOR, STOCK BROKER OR OTHER PROFESSIONAL ADVISOR

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Contents
Letter to Shareholders......................................................................................... 2 1. 1.1. 1.2. 1.3. 1.4. Information relating to the Project........................................................... 3 Overview of the Project.......................................................................... 3 The investment vehicle and its shareholders............................................ 5 The integrated resort concept................................................................. 5 Demand drivers..................................................................................... 6

1.5. Concessions/Approvals.......................................................................... 7 1.6. 1.7. Financial feasibility................................................................................. 8 Project funding...................................................................................... 8

Annex 1 ............................................................................................................ 9 NOTICE OF MEETING......................................................................................... 12 PROXY FORM................................................................................................... 13

JOHN KEELLS HOLDINGS PLC | CIRCULAR TO SHAREHOLDERS

Letter to Shareholders
26 July 2013 Dear Shareholder,

INVESTMENT BY JOHN KEELLS HOLDINGS PLC IN THE WATERFRONT DEVELOPMENT PROJECT AT JUSTICE AKBAR MAWATHA AND GLENNIE STREET, COLOMBO 2, BORDERING BEIRA LAKE
We write further to the announcement made on 26 July 2013 convening an Extraordinary General Meeting for approving the aforesaid investment as a Major Transaction. As per our announcement dated 10 July 2013 John Keells Holdings PLC (JKH) communicated that: It has proposed to the Government of Sri Lanka a project, valued in excess of USD650 Million, involving the developing, owning, managing, operating, selling, leasing and renting a luxury multi/mixed use Integrated Resort (the Project) in the land owned and occupied by its subsidiaries Ceylon Cold Stores PLC (CCS), John Keells PLC (JKL), John Keells Properties (Private) Limited (JKP) and Waterfront Properties (Private) Limited (Project Company) in Colombo 2. John Keells Holdings PLC together with its subsidiaries CCS, JKL and JKP will be majority shareholders in the Project Company. Your Board of Directors has approved the Project, in principle, subject to Shareholder approval (including approval as a Major Transaction). The Project Company will enter into an agreement with the Board of Investment of Sri Lanka to facilitate the requisite approvals which are at an advanced stage including the approval as a Strategic Development Project. Upon receipt of requisite approvals to the satisfaction of your Board of Directors, further announcements will be made. The anticipated investment in the Project by JKH is greater than half the value of the assets of JKH as at 30 June 2013 and therefore constitutes a Major Transaction as per section 185 of the Companies Act No 7 of 2007. Your Board of Directors recommends the investment by John Keells Holdings PLC in the Project based on the rationale outlined herein. To the best of the Directors knowledge and belief, all risk factors which are material to Shareholders in making an informed decision on the proposed investment have been considered and action taken, and planned, to mitigate the risks insofar as such is commercially feasible. In the aforesaid, Shareholder consent is sought by way of a SPECIAL RESOLUTION for the investment by John Keells Holdings PLC in Waterfront Properties (Private) Limited as a MAJOR TRANSACTION in terms of section 185 of the Companies Act No 7 of 2007, as a further step towards obtaining all approvals, statutory and otherwise, to commence the Project in terms of the annexed Notice convening the Extraordinary General Meeting.

1.

Information relating to the Project

1.1. Overview of the Project

Project description and objective
The Project is an integrated resort consisting of multiple businesses including a luxury hotel, convention centre, entertainment and gaming facilities, international standard shopping mall, luxury condominiums, serviced apartments and office space similar to the integrated resort developments seen in the South East Asian region. It is a tourism related Project targeted towards the creation of a large and unique development, which will aesthetically and functionally add to transforming the landscape of Colombo, potentially making it one of the most sought after destinations in South Asia and will further complement the businesses of the main industry groups of the John Keells Group. The Project is for the development, construction, equipping, commissioning, owning, managing, operating, selling, leasing, and renting a luxury multi/mixed use iconic integrated resort and to carry on all related business activities associated therewith including but not limited to the managing, leasing/renting, selling and operating the aforesaid luxury hotel, convention centre, entertainment and gaming facilities, international standard shopping mall, luxury condominiums, serviced apartments and office space. The Project will cater to multiple emerging demand drivers including the growing mobility and spending power of outbound South Asian regional travellers, the increase in global connectivity to Sri Lanka and the accompanying growth in Sri Lankas tourism sector and the growing demand for entertainment/gaming and retail from the Middle East, India and East Asia. The Project is envisaged to create a multiplier effect in the economy, spurring growth in industries ranging from leisure, entertainment, food and beverage, consumer durables, travel and financial services among others, as witnessed in similar developments in the region.

Project features
This development is designed by Balmond Studio Limited, a design firm founded by Sri Lankan born Cecil Balmond, one of the worlds most influential designers. Mr. Balmond currently holds the Paul Philippe Cret chair at Penn Design as Professor of Architecture at University of Pennsylvania USA and was the Deputy Chairman of Arup UK, one of the worlds leading engineering consulting firms. Under Mr. Balmonds artistic direction, Arup has designed some of the worlds most famous structures including the CCTV tower in China with Rem Koolhaas. He has also been the creative force behind Londons high profile Serpentine Pavilion. One of Mr. Balmonds most recent projects is the Arcelor Mittal Orbit a 120m high sculpture designed with Anish Kapoor for the 2012 Olympics in London. The Project is expected to be completed over a period of five (5) years or eight (8) years depending on the timing of Phase 2, if undertaken. It should be noted that the Project Company has the flexibility to undertake the Project in two phases, with Phase 2 being undertaken subject to, and based on, prevalent market conditions.

JOHN KEELLS HOLDINGS PLC | CIRCULAR TO SHAREHOLDERS

Phase 1
Luxury hotel The Project will feature a five-star luxury hotel with approximately 800 rooms with the attendant facilities. Convention centre The convention centre will be built to cater to approximately 2,500 guests at a given time. Shopping mall The shopping mall will comprise approximately 400,000 square feet of built-up area. Entertainment and gaming facilities The entertainment and gaming facilities will span approximately 150,000 square feet and will be situated with access to both the hotel and retail facilities. Luxury condominiums (Residential tower 1) The Project will have a residential tower which will house approximately 240 luxury condominiums. Car park facility The car park facility will feature approximately 2,500 slots.

Phase 2
Serviced apartments or condominiums (Residential tower 2) This tower will house approximately 200 serviced or residential apartment units. Office complex The Project will have an office tower within the property with a built up area of approximately 400,000 square feet. The Project will consist of a total built up area of approximately 4,500,000 square feet. Please note that the configuration stated herein is based on the current design envisaged for the Project and may be adjusted within the overall parameters of an integrated resort.

1.2. The investment vehicle and its shareholders

Waterfront Properties (Private) Limited, the Project Company, a subsidiary of JKH, has been incorporated to undertake the development of the Project. The Project entails the development of the lands owned and occupied by CCS, JKL, JKP and the Project Company at Colombo 2, all subsidiary companies of JKH; CCS, JKL and JKP will receive shares in the Project Company in consideration for the lands transferred to the Project Company. The combination of the land owned by CCS, JKL, JKP and the Project Company, all subsidiary companies of JKH, and land, previously occupied by subsidiaries of JKH on long term leases and Annual Permits, to be leased from the Board of Investment of Sri Lanka for a period of 99 years, creates a plot area large enough to undertake an integrated resort of the scale envisaged. The scale of the Project allows the attraction of concessions and benefits as afforded under the Strategic Development Projects Act (detailed in 1.5 herein). Such benefits have a positive impact on the Project financials as a result of a reduction in the capital expenditure and the tax benefits on operational cash flows which positively impact the cash flows to equity owners on a sustainable basis. Based on estimated Project costs and the envisaged capital structure, JKH will own approximately 79.24%* of the Project Company. With CCS, JKL and JKP owning approximately 14.15%*, 5.03%* and 1.57%* respectively, JKH will have effective control of 96.70%*. * Can vary based on actual exchange rates

1.3. The integrated resort concept

The concept of an integrated resort is a property development offering a mixed product portfolio which includes a luxury hotel, convention centre, entertainment and gaming facilities, international standard shopping mall, luxury condominiums, serviced apartments and office space. This format enables customers to access an array of products and services with minimal effort. The concept has gained immense popularity in the Asia-Pacific region during the past decade as evidenced particularly in Singapore, Macau and the Philippines. The composite offering of a luxury hotel, entertainment and gaming facilities and international standard shopping mall through a single destination has appealed to many regional and western tourists, and the region has seen an increased number of tourist arrivals as a result.

JOHN KEELLS HOLDINGS PLC | CIRCULAR TO SHAREHOLDERS

1.4. Demand drivers

Sri Lankas macro level conditions
Sri Lankas tourism industry remained stagnant during the 30-year conflict period with tourist arrivals being bound within a narrow range. However, during this period, tourism within the region grew at a rapid pace, demonstrating the potential that Sri Lanka can exploit in its tourism industry. Table: International Tourist Arrivals in Millions Country Malaysia Thailand Indonesia Vietnam Cambodia Sri Lanka
Source: UNWTO

Year 2012 25.0 22.3 8.0 6.8 3.6 1.0

Sri Lankas economy, in terms of gross domestic product (GDP), grew by 8.0%, 8.3% and 6.4% in 2010, 2011 and 2012 respectively. The latest Central Bank of Sri Lanka target for growth in 2013 is estimated to be 7.5% while the Asian Development Bank has forecasted a growth of 6.8%.

Leveraging on the strategic location of Sri Lanka

On the tourism front, key source markets such as India, the Middle East and East Asia are poised to generate significant traffic to the country on the back of the relatively short flight durations to access the destination via key airports. The Colombo-Katunayake expressway which is scheduled to be in operation by September 2013 would reduce travel time from the countrys main international airport to Colombo to approximately 20 minutes. Arrangements to increase the current passenger handling capacity at the Bandaranaike International Airport would enable better travel flow to and from Sri Lanka. Sri Lanka outperforms regional peers in social and economic benchmarks, and with its location, is poised to become a viable hub for tourism, particularly entertainment and gaming activities similar to other established regional destinations such as Macau, Singapore and Philippines.

Proximity to key markets in the sub-continent and SAARC region

Sri Lanka is situated amidst a high population density region which includes India, Bangladesh, Pakistan and Maldives; the region collectively generates material outbound tourist volumes in the high spending tourist brackets. India, currently the 10th largest economy in the world and gearing up to reach USD2 Trillion in GDP by the end of 2013, creates great potential for Sri Lanka to strengthen its retail, leisure and tourism industry.

 For the first nine months of 2012, 670,000 Indian tourists travelled to Singapore while Malaysia received 691,000 Indian tourists for the full year. Indian tourists were the 5th and 6th largest contributors to Singapores and Malaysias tourist arrivals respectively. The mixed offering of the Project is viewed as a catalyst, and a unique selling point, in attracting a share of the Indian outbound travel market. Indian tourists would find the option of travelling to Sri Lanka more convenient as opposed to travelling to East Asian destinations to experience competing offerings.

1.5. Concessions/Approvals
Strategic Development Projects Act
Having considered the magnitude, the strategic importance of this Project to the country, the Board of Investments of Sri Lanka (BOI) has identified the Project as a Strategic Development Project under the Strategic Development Projects Act 14 of 2008 (Amended) and an agreement has been entered into between the Project Company and the BOI in this regard. As per the Gazette published on 18 July 2013 (Appended herein in annex 1) under, and in terms of, the Strategic Development Projects Act, subject to other approvals in terms of the said Act, the Project is to receive, inter alia, exemptions from: a. The provisions of the Inland Revenue Act No. 10 of 2006 relating to the imposition of income tax on the Project Company on the profit and income generated from the non-gaming activities of the Integrated Resort for a period of ten (10) years. i. The said Tax Exemption Period to commence from the first year in which the Project Company makes taxable profit or three (03) years after commencement of commercial operations, whichever falls first. ii. After the expiration of the aforesaid Tax Exemption Period referred to above, the profits and income of the Project Company shall be charged at the rate of the lower of six per centum (6%) or fifty per centum (50%) of the prevailing tax rate for the hotel industry, for a period of fifteen (15) years immediately succeeding the last date of the Tax Exemption Period. b. Income tax on dividends distributed to the shareholders out of the exempted profit during the said Tax Exemption Period and one year thereafter. c. Withholding Tax, on interest paid on foreign loans and debt obtained for capital expenditure and on technical fees. d. Value Added Tax (VAT) on the importation of project related goods and services and the local purchases of project related goods and services, PAYE tax for foreign employees; Customs Duty and Port and Airport Development Levy on project related items and Construction Industry Guarantee Fund Levy.

Other approvals
The Project Company is currently at an advanced stage of negotiation with relevant statutory and other authorities to obtain other approvals.

JOHN KEELLS HOLDINGS PLC | CIRCULAR TO SHAREHOLDERS

1.6. Financial feasibility

The assumptions and financial projections are based on the knowledge and prior experience of JKH in city hotels, banqueting, retail malls and residential apartments and validated with international benchmarks. The total cost of the Phase 1 and 2 will amount to approximately USD820 Million and with implementation of Phase 2 being subject to market conditions. It is envisaged that the minimum investment in Phase 1 will be USD650 Million. Based on the Project assumptions, the Board of Directors expects the forecasted returns in US dollar terms to be value accretive to the Project Company and to a JKH Shareholder. The flexibility incorporated in the configuration of the Project as well as the options available in the financial structuring of the Project provide an opportunity to de-risk exposure in the event of a change in the macro environment.

1.7. Project funding

The Project will be financed through a combination of equity for land transferred from group subsidiaries (CCS, JKL and JKP), equity infusions into the Project Company, pre-sales of residential apartments during the construction phase, and debt at the Project Company. JKH will fund its equity requirement for the Project through existing cash reserves and a combination of debt and equity, as appropriate, over the period of the Project so as to ensure an optimum investment by JKH in the Project Company. If appropriate, and at the relevant time, JKH may seek an infusion of capital to JKH. The initial investment in the Project Company will comprise land of approximately USD60 Million, equity infusion from JKH of approximately USD240 Million and debt for the balance at Project Company. At peak funding, the Project will have a debt-equity ratio of approximately 60:40. Project Company has mandated a leading foreign financial institution to structure and raise the required debt financing requirements for the Project and significant progress has been achieved in this regard. Upon receipt of Shareholder consent as aforesaid for the investment by JKH in the Project Company and obtaining of all other necessary approvals and or execution of contracts necessary to undertake the Project by the Project Company to the satisfaction of the Board, your Board of Directors intends to make the requisite investments in the Project Company. The requisite resolution to give effect to the above is set out in the attached notice convening an Extraordinary General Meeting (EGM) to be held for that purpose on 23 August 2013. By Order of the Board JOHN KEELLS HOLDINGS PLC Keells Consultants (Private) Limited

Secretaries

Annex 1

JOHN KEELLS HOLDINGS PLC | CIRCULAR TO SHAREHOLDERS

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End of Annex 1

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JOHN KEELLS HOLDINGS PLC | CIRCULAR TO SHAREHOLDERS

NOTICE OF MEETING
Notice is hereby given that an Extraordinary General Meeting of John Keells Holdings PLC will be held on 23 August 2013 at 10.00 a.m. at The Auditorium, the Institute of Chartered Accountants of Sri Lanka, 30A, Malalasekera Mawatha (Longdon Place), Colombo 7, to consider and if thought fit, to pass the following as a Special Resolution: SPECIAL RESOLUTION MAJOR TRANSACTION IT IS HEREBY RESOLVED THAT The following transaction which constitutes a Major Transaction in terms of Section 185 of the Companies Act No. 7 of 2007 be and is hereby approved and the Directors be authorised to: a. Invest in the Project, being a project for the development, construction, equipping, commissioning, owning, managing, operating, selling, leasing and renting a luxury multi/mixed use iconic integrated resort consisting of multiple businesses including a luxury hotel, convention centre, entertainment and gaming facilities, international standard shopping mall, luxury condominiums, serviced apartments and office space and at an estimated Project cost of United States Dollars Eight Hundred and Twenty Million (USD820 Million) through Waterfront Properties (Private) Limited (PV 82153) (the Project Company), a special purpose vehicle incorporated for this purpose. b. Infuse the required funds for John Keells Holdings PLCs equity subscription in the Project Company through existing cash reserves and a combination of debt and equity, as appropriate, over the duration of the Project, subject to such approvals as may be necessary in law; and c. To take such further and other action as the Board of Directors shall deem appropriate and necessary for the commencement and execution of the Project including raising debt, borrowing, mortgaging or hypothecating property, guaranteeing or indemnifying the performance of obligations by the Project Company. By Order of the Board JOHN KEELLS HOLDINGS PLC Keells Consultants (Private) Limited

Secretaries 26 July 2013 Notes: i. A member unable to attend is entitled to appoint a Proxy to attend and vote in his/her place. ii. A Proxy need not be a member of the Company. iii. A member wishing to vote by Proxy at the Meeting may use the Proxy Form enclosed. iv. In order to be valid, the completed Proxy Form must be lodged at the Registered Office of the Company not less than 48 hours before the meeting.

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PROXY FORM
I/We ...... ...... of .. being a member/s of John Keells Holdings PLC hereby ppoint ..... of ... or failing him/her MR. SUSANTHA CHAMINDA RATNAYAKE MR. AJIT DAMON GUNEWARDENE MR. JAMES RONNIE FELITUS PEIRIS MR. EMMANUEL FRANKLYN GAMINI AMERASINGHE MR. TARUN DAS MRS. SITHIE SUBAHNIYA TIRUCHELVAM DR. INDRAJITH COOMARASWAMY MR. ANTHONY RANJIT GUNASEKARA MR. MOHAMED ASHROFF OMAR or failing him or failing him or failing him or failing him or failing him or failing her or failing him or failing him of Colombo

as my/our proxy to represent me/us and vote on my/our behalf at the Extraordinary General Meeting of the Company to be held on 23 August 2013 at 10.00 a.m. at The Auditorium, the Institute of Chartered Accountants of Sri Lanka, 30A, Malalasekera Mawatha (Longdon Place), Colombo 7, and at any adjournment thereof, and at every poll which may be taken in consequence thereof. I/We, the undersigned, hereby direct my/our proxy to vote for me/us and on my/our behalf on the specified Resolution as indicated by the letter X in the appropriate cage: SPECIAL RESOLUTION - MAJOR TRANSACTION FOR AGAINST

Signed on this day of Two Thousand and Thirteen. . Signature/s of Shareholder/s NOTE: INSTRUCTIONS AS TO COMPLETION OF PROXY FORM ARE NOTED ON THE REVERSE.

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JOHN KEELLS HOLDINGS PLC | CIRCULAR TO SHAREHOLDERS

INSTRUCTIONS AS TO COMPLETION OF PROXY 1. Please perfect the Form of Proxy by filling in legibly your full name and address, signing in the space provided and filling in the date of signature. 2. The completed Form of Proxy should be deposited at the Registered Office of the Company at No. 130, Glennie Street, Colombo 2, not later than 48 hours before the time appointed for the holding of the Meeting. 3. If the Form of Proxy is signed by an Attorney, the relevant Power of Attorney should accompany the completed Form of Proxy for registration, if such Power of Attorney has not already been registered with the Company. 4. If the appointer is a company or Corporation, the Form of Proxy should be executed under its Common Seal or by a duly authorised officer of the company or Corporation in accordance with its Articles of Association or Constitution. 5. If this Form of Proxy is returned without any indication of how the person appointed as Proxy shall vote, then the Proxy shall exercise his/her discretion as to how he/she votes or, whether or not he/she abstains from voting.

Please fill in the following details: Name Address : :

. . Jointly with :

Share Folio No. :

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