Property sector brings biggest returns to JKH for 3Q 2013/14
View(s):The property sector of John Keells Holdings (JKH) recorded the highest growth – 93 per cent – in pre-tax profits (PBT) in the entire group for the third quarter 2013/14 largely due to rapid sales of units of its apartment complexes under development.
In a statement, JKH said the property industry group PBT of Rs. 347 million for the third quarter was a 93 per cent increase over the PBT recorded in the corresponding period of the previous financial year [2012/13 Q3 - Rs. 180 million]. “The growth in PBT is on account of higher revenue recognition during the quarter in the ‘OnThree20’ development and the recognition of revenues from ‘7th Sense’ which had not commenced in the previous year. Construction of both developments are progressing as scheduled with approximately 90 per cent of units of ‘OnThree20’ and 70 per cent of ‘7th Sense’ sold to date,” the company said.
As per the performance of the entire group, group revenues were reported at Rs. 23.89 billion and Rs. 64.98 billion in the third quarter and the nine months ended 31 December 2013, respectively, which were 11 per cent and 4 per cent above the Rs. 21.51 billion and Rs. 62.20 billion recorded in the corresponding periods in the previous year.
Group PBT at Rs. 4.27 billion in the third quarter of the financial year 2013/14 was an increase of 19 per cent over the Rs. 3.58 billion recorded in the corresponding period in the previous financial year, the statement said.
Group PBT for the nine months ended 31 December 2013 of Rs. 9.11 billion was an increase of 2 per cent over the Rs. 8.97 billion recorded in the corresponding period of the previous year.
“The PBT for the nine months ended 31 December 2013, included a non-recurring charge of Rs. 139 million on account of the voluntary retirement scheme offered at Keells Food Products PLC, a non-cash charge of Rs. 144 million relating to the share based payments which came into effect in the current financial year and an impairment loss of Rs. 141 million arising from the demolition of buildings at Glennie Street and Justice Akbar Mawatha, totaling to Rs 424 million. The impact of these expenses on PBT for the quarter amounted to Rs. 211 million,” it said.
The company said the Waterfront Project was re-gazetted under the Strategic Development Projects Act on 17th December 2013 subsequent to the withdrawal of the previous gazettes. There was no reference to the operation of a casino, which is to be included in the mixed development project. Proposed new casinos in upcoming mixed development projects have drawn angry protests from various quarters including the Buddhist clergy prompting the Government to say no new casinos are being approved.
The statement said the leisure sector PBT of Rs. 1.54 billion for the third quarter of 2013/14 was an increase of 15 per cent compared to the corresponding period of the previous financial year [2012/13 Q3: Rs. 1.34 billion].
JKH said the increase was driven by the improved performance of Sri Lankan and Maldivian resorts compared to the previous year. “The performance of Sri Lankan resorts improved as a result of revised market positioning and implementation of effective yield management strategies which resulted in higher occupancies across the portfolio of hotels, whilst Maldivian resorts also benefitted from higher occupancies. The performance of City Hotels and Destination Management continued to be in line with expectations,” the company said.