JKH Expands Leisure Sector. Sri Lanka’s Biggest Conglomerate Shows Profit Gains

31st January 2010, www.sundaytimes.lk

John Keells Holdings (JKH), Sri Lanka’s biggest conglomerate, showed profit gains in several sectors including leisure, transportation, financial services and information technology for the third quarter ended December 31, 2009, including plans to expand in the leisure sector with new projects and refurbishing existing hotels.

According to the interim report released this week, net profit for the period under review was Rs.863 million, a 21% decrease compared to the Rs.1.09 billion in the corresponding period of the previous year. Similarly, the net profit for the nine months ended 31 December 2009 stood at Rs.2.83 billion, a 29% fall compared to Rs.3.96 billion in the corresponding period of 2008 which included the capital profit of Rs.1.21 billion on the sale of the investment in Associated Motorways (AMW).

The consolidated income statement shows that revenue increased by 9% in the nine months ended 31 December 2009 to Rs.34 billion from Rs.31.1 billion the previous year. Gross profit also increased by 9% to Rs.7.3 billion from Rs.6.7 billion the previous year.

Other operating income increased by 55% during the same period to Rs.3.2 billion but there were increases in distribution and administrative expenses as well as other operating expenses.

In a statement, JKH Chairman Susantha Ratnayake said the improved performance in the third quarter under review is only an early indication of the potential the Group offers in a new environment. The leisure sector saw a significant improvement in the third quarter compared to the corresponding period of the previous year with profits before tax increasing by 174% to Rs.333 million from Rs.122 million in 2008.

Mr. Ratnayake said this improvement in performance was mainly from the Sri Lankan city hotels and resort hotels. During the quarter, JKH acquired four acres of land next to the former Hotel Bayroo which gives a contiguous block of 10 acres on the prime Beruwala beach front to construct a 190 room hotel. Mr. Ratnayake added that the South Wing of the Cinnamon Grand Hotel in Colombo, comprising of 254 rooms will be refurbished during the next few months.