Financial Times

JKH to build new luxury apartment tower
John Keells Holdings, which has reported a strong first quarter 2004/2005 performance, expects to start building a new 30-storey luxury apartment complex next January on the back of "encouraging" indications on pre-sales of apartments.

Chairman Vivendra Lintotawela said the group's Real Estate sector "contributed well" to profitability mainly as a result of the sale and lease of Crescat apartments.

A Group Real Estate Strategy will be finalised once research and further discussion and evaluation are completed, he said in a note to shareholders accompanying the first quarter results.

The construction of a 30-storey, 200 luxury-apartment, "Monarch Tower", by Asian Hotels Properties Limited, has been approved subject to satisfaction of certain pre-sales criteria.

Lintotawela said JKH maintained the momentum of 2003/2004 in registering a strong first quarter 2004/2005 performance. Profit attributable to shareholders of Rs 537 million in the first quarter was an increase of 1088 per cent compared to the Rs 45 million in the corresponding period in the previous year.

Pre-tax profits, prior to exceptional items, of Rs 759 million, was an increase of 61 per cent over the same period. Group turnover rose 17 percent to Rs 5.2 billion.

The Food and Beverage Sector still performed below expectations, although it recorded a profit before tax of Rs 43 million compared with the loss of Rs 589 million in the first quarter 2003/2004 which was affected by the cost of the voluntary retirement scheme.

In the Transportation Sector, the availability of higher capacity and a greater level of activity at the Port of Colombo resulted in good contributions from South Asia Gateway Terminals and Lanka Marine Services.

The Leisure Sector was a "significant contributor" to the group's first quarter earnings. "Despite the sluggish arrivals in April, a recovery in May coupled with higher average room rates during the quarter enabled the resort hotels and in-bound tour operations to record healthy profit growth," Lintotawela said.

The city hotels, Colombo Plaza and Trans Asia, and the Maldivian hotels also performed well during the quarter. Good performances from Tea Smallholders and tea brokering helped the Plantations Sector to show a better performance than the previous year's first quarter profitability, despite the absence of Kegalle and Maskeliya Plantations, which were sold off.

The Financial Services Sector profitability, though lower than that recorded during the first quarter of the previous year, was above expectations during a period where the financial markets and overall investor confidence were negatively impacted by macro-economic and political uncertainties.

While the recommencement of the peace process is an absolute necessity, we believe that the longer-term sustainable growth of the economy is very dependant on the ability of the government to foster a sound economic partnership with the private sector," Lintotawela said.

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