Four year ‘gestation’ for Keells Waterfront project, JKH Chief says
View(s):Despite describing it as “challenging at times”, John Keells Holdings (JKH) Chairman Susantha Ratnayake also commented that the group’s financial year 2013-2014 (FY13), which ended on March 31, 2014, would prove “transformational” for both John Keells and the country, as a whole, because it was the year in which the landmark Waterfront development broke ground. Making this statement in JKH’s recently released FY13 annual report, he also indicated that this development had a four year, or 48 month, “gestation” period.
There was no reference however to whether or not the development will include a casino, a bone of contention in recent times following protests from opposition groups and the clergy.
Additionally, its FY13 saw JKH’s group revenue increase by 5 per cent to Rs. 89.26 billion and PAT (post tax profit) grow by 9 per cent, to Rs. 11.34 billion, while net cash flow from operating activities fell by 43 per cent, to Rs.8.36 billion. The latter trend was also true for Return on Capital Employed (ROCE), down to 11.8 per cent, Return on Equity (ROE), bottoming out at 11.0 per cent, and diluted Earnings per Share, dropping by 10 per cent, to Rs.12.33. Also, the Debt to Equity ratio was 19.5 per cent, down from 19.9 per cent the previous year.
At the same time, the annual report also identified JKH’s Leisure sector as contributing the greatest amount to the group’s profitability, shown as 37 per cent of group PAT, or Rs.4.82 billion. This sector also provided for 23 per cent of group revenue, equalling Rs. 22.55 billion; narrowly beating out revenue numbers from the next best performing sector, transportation, which showed revenue as Rs. 21.80 billion and a PAT of Rs. 2.51 billion, having given over 22 per cent and 19 per cent to group revenue and PAT, respectively.
“Arrivals to Sri Lanka grew 27 per cent to reach 1.27 million tourists for the calendar year 2013 with Western Europe and South Asia continuing to be the dominant generating markets. While all key markets demonstrated appreciable growth, Eastern Europe, South Asia and East Asia, in particular, grew at a rapid pace,” stated Mr. Ratnayake in the FY13 annual report.
He also added that the “Sri Lankan resorts sector achieved higher occupancies across all its hotels compared to the previous year on the back of the growth in overall tourism. This is demonstrated by the sharp increase in overall occupancies within the sector from 61 per cent in the previous year to 75 per cent in the current year. The trend of improving occupancies will enable further focus on yield management, which is expected to have a positive impact on the overall revenue of the sector”.
Meanwhile, Mr. Ratnayake also noted that the “city hotels sector increased market share and further consolidated its leadership position, despite additional competing inventory coming on stream during the year. The construction of the 240 room select service business hotel, ‘Cinnamon Red’, which will be managed by the group’s Hotel Management sector, is expected to commence operations during the second quarter of the financial year 2014/15″.
“The Maldivian Resorts sector experienced growth, achieving higher average room rates and occupancies in the backdrop of a 17 per cent growth in tourist arrivals to the country,” he further added.
Commenting on plans for this, its most profitable, sector over the next year, Mr. Ratnayake revealed that it would “consolidate its overall branding strategy where all resorts will be brought under the ‘Cinnamon’ brand resulting in Cinnamon Hotels and Resorts having 14 hotel properties and over 2,400 rooms under its umbrella. The group is also conscious of the need to further inculcate the desired ‘lifestyle’ service culture within our staff through the re-invention of our standard operating procedures and processes. This will be augmented with the implementation of a new property management system across all hotels, improving the availability of guest information and enhancing our ability to improve satisfaction”.
(JH)