John Keells Group records recurring Rs. 18.40 b PBT for 2018/19 | Sunday Observer

John Keells Group records recurring Rs. 18.40 b PBT for 2018/19

26 May, 2019

The John Keells Group’s revenue increased by 12% to Rs. 135.46 billion while recurring Group earnings before interest expense, tax, depreciation and amortisation (EBITDA) decreased by 11% to Rs. 25.67 billion, for the financial year 2018/19.

Company’s chairman, Krishan Balendra said in his review, “The decline in recurring EBITDA was on account of the performance of the leisure, financial services, property and retail industry groups, where we witnessed some one-off impacts in addition to the downturn in the performance of the City Hotels sector due to a significant increase in the room supply within a short period.”

The one-off impacts, which have not been eliminated in the recurring EBITDA, include the impact of the closure of ‘Cinnamon Hakuraa Huraa Maldives’ which was operational in the previous financial year, recognition of higher investment property gains in the previous year and the costs associated with the refit and rebranding program of the supermarket business.

The recurring Group profit before tax (PBT) decreased by 24% to Rs. 18.40 billion for the financial year ended March 31, 2019. The recurring profit attributable to equity holders of the parent decreased by 25% to Rs. 13.68 billion.

South Asia Gateway Terminals (SAGT), the Group’s Ports and Shipping business, maintained its growth momentum with a volume growth of 11%.

The Frozen Confectionery business recorded a volume growth of 10 per cent, despite difficult market conditions, driven by the Impulse segment and the expansion of its product portfolio, post the commissioning of the new factory. The Beverage business displayed signs of recovery and is expected to witness growth in volumes following price reductions, post the introduction of a threshold on the sugar tax.

The Supermarket business continued to gain market share. The “Keells” brand was launched in October 2018 with the completion of a refit and rebranding across all outlets. The outlet roll-out continued beyond the Western Province.

The City Hotels sector maintained its fair share in the five-star hotel category despite a sharp increase in room supply and political volatility during the latter part of 2018. The newly reconstructed ‘Cinnamon Hakuraa Huraa Maldives’ and ‘Cinnamon Bentota Beach’ will commence operations in December 2019.

The ‘Tri-Zen’ residential development project is witnessing strong momentum in sales with 200 units sold. Revenue recognition will commence from the June 2019 quarter onwards.

The construction of ‘Cinnamon Life’ is continuing with encouraging momentum with the residential apartments and office tower slated for handover from March 2020 onwards.

Financial Services was impacted by mark-to-market losses at Union Assurance PLC (UA) due to a decline in the stock market.

UA’s profits in 2017/18 included a one-off surplus of Rs.3.38 billion. Nations Trust Bank (NTB) recorded a double- digit growth in both deposits and advances, although profitability was impacted by introduction of the Debt Repayment Levy and higher impairment charges due to the elevated credit risk stemming from subdued economic performance and the implementation of SLFRS 9.

As announced to the Colombo Stock Exchange, the repurchase offer for 69,376,433 ordinary shares, (being 5 per cent of its issued shares) concluded in January 2019, with acceptance of 46 per cent of the offer (32,189,118 ordinary shares) and the balance (37,187,315 ordinary shares) being accepted proportionately based on applications for additional shares to be repurchased. Accordingly, a total amounting to Rs.11.10 billion was paid out on January 25, 2019.

The company declared a third and final dividend of Rs.1 per share to be paid on June 14, 2019. The first and second interim dividends for the year of Rs. 2 per share, each, were paid in November 2018 and February 2019.

The total dividend payout for 2018/19 including the share repurchase amounted to Rs.17.83 billion. 

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