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| Tuesday, 02 November 2004 |
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JKH revenue up 15% to Rs. 10.92 billion in IH 2004 John Keells Holdings's (JKH) revenue for the first half ended September 30, 2004 has increased by 15% to Rs. 10.92 Billion and pre tax profits before exceptional items has also grown by 52% to Rs. 1.76 Billion, a press release by JKH said. The release also highlighted that the net profit attributable to shareholders increased by 158% to Rs. 1.22 Billion. The Transportation and Leisure Sectors exceeded earnings expectations. The Business giant JKH has also implemented SAP based Enterprise Resource Planning (ERP) System during the period. A 72.78% stake in Mercantile Leasing Limited was acquired following a Mandatory Offer made for outstanding shares of Trans Asia not already owned by the Group. The Group also established a single holding company for the Group's Resort Hotel Sector. Chairman of JKH , Vivendra Lintotawela said that the company continued to maintain its strong growth momentum during the second quarter of 2004/05. This was reflected by a 15 percent increase in Revenues to Rs. 10.92 billion from Rs. 9.47 billion, a 52 percent growth in Group pre-tax Profits prior to exceptional items to Rs. 1.76 billion from Rs. 1.16 billion, and an increase of 158 percent in profit attributable to shareholders to Rs. 1.22 billion from Rs. 0.47 billion, during the half year ended September 2004 relative to the corresponding period in 2003/04. "The period under review witnessed the successful launch of the first wave of the SAP based Enterprise Resource Planning (ERP) system, harmonising key business processes across the Group. It was the dedication, skill and the untiring efforts of the loyal men and women of JKH that made this feat possible 45 days prior to the stated schedule", Lintotawela said. "On July 14, 2004, JKH also acquired a 50.29 percent stake in Mercantile Leasing Limited (MLL) for a total cost of Rs. 362.6, at the highest paid price of Rs. 35.00 per share. In the mandatory offer that followed, JKH upped its stake in MLL to 72.78 percent. During the period under review, JKH also acquired a further stake in Trans Asia triggering a mandatory offer", he said. "Our efforts to restructure the Resort Hotel Sector of the Group, reached its penultimate phase when John Keells Hotels Limited (previously Keells Hotels Limited - KHL), a 100% subsidiary of John Keells Holdings Limited, made an offer to acquire the shares of all Group Resort Companies. KHL is now a listed 89% subsidiary of JKH with a market capitalisation of over Rs. 5.5 billion, and is the Holding Company of seven resorts and four prime properties in Sri Lanka as well as two resorts in the Maldives. The exercise has resulted in Rs. 771 million of book profits for JKH Limited (the "Company") given that KHL acquired the hotel shares at market and/or better than market prices", he said. "The Food and Beverage Sector registered lower profits prior to exceptional items, due to the company absorbing higher input costs in respect of Carbonated Soft Drinks (CSD) and Ice Creams and particularly the excise duty in the case of CSD. While the processed meats segment performed well following a rationalisation of its product portfolio and re-organisation we also refined our supermarket strategy, re-launching the previous Super polas as 'Keells' Supermarkets. The change has already proven to be very positive, both in customer perception and supermarket performance", he said. "With enhanced levels of trade and activity at the Port of Colombo and the increased passenger travel to and from the country, the Transportation sector continued to exceed our expectations. Growth in the Sector continues to be fuelled mainly by the Ports and Shipping operations with the enhanced capacity at South Asia Gateway Terminals Ltd improving our competitive position, while the Airlines division has also registered commendable growth, fuelled by LTU, and the newly acquired American Airlines GSA", he said. The strong momentum in tourist arrivals and higher average room rates resulted in significant earnings growth for the Leisure Sector and particularly for the cluster of Sri Lankan hotels. The Maldivian resorts also registered healthy earnings growth, while Sector earnings were further complemented by higher numbers and margins for its in-bound tour operations. The Sector is on a continuous pursuit for new opportunities and following the recent restructuring exercise and the creation of John Keells Hotels Limited, is in a better position to fund new investments. The Information Technology Sector declined in profits from the impact of lower margins for the software development and office automaton businesses, despite a healthy performance by the systems integration business. The sector continues its efforts to enhance its international infrastructure, scope and potential. Sluggish interest rate trends as well as lower Stock Market activity caused lower earnings for the Financial Services Sector, particularly for last year's main contributors to Sector earnings, Nations Trust Bank and John Keells Stockbrokers (JKSB). Additionally, the introduction of Finance VAT for the Stockbroking industry in 2004 resulted in JKSB incurring a charge of Rs. 10 million during the six months to September 30, 2004. |
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