JKH: Retiring chairman Susantha hands over baton to Krishan Balendra
View(s):As originally announced, John Keells Holdings (JKH) Chairman Susantha Ratnayake retires at the end of next month (December) after a long tenure in the company, making way for a new team to take over the reins at the country’s largest listed conglomerate.
“As announced in the Group’s succession plan, I will be retiring on the 31st of December 2018 having functioned as the Chairman of the company since 2006. Mr. Krishan Balendra will assume office as the Chairman/CEO and Mr. Gihan Cooray as the Deputy Chairman/ Group Finance Director, with effect from January 2019. I am confident that the leadership team will continue to deliver value to all stakeholders and contribute positively towards the group’s future direction,” he said in a November 6 statement on the group’s financials for the 6-month period ending September 2018.
In what is possibly his final statement as chairman before winding up, Mr. Ratnayake also thanked his board colleagues – past and present –, all employees and stakeholders for the cooperation and support extended to him throughout his tenure in the John Keells Group.
While JKH group revenue rose by 10 per cent to Rs.32.57 billion for the period under review, the challenges the organization face came from the leisure sector owing to lower occupancies in its Colombo hotels sector – a common problem faced by 5-star hotels due to an over- supply of accommodation – and closure of some properties for refurbishing.
The leisure sector pre-tax profits of Rs.453 million in the second quarter of 2018/19 was a sharp drop of 46 per cent over the second quarter of the previous financial year (2017/18 Q2: Rs.838 million), the financial statement said.
This was also due to the partial closure of “Ellaidhoo Maldives by Cinnamon” for refurbishment and the closure of “Cinnamon Hakuraa Huraa Maldives” for the reconstruction of the hotel.
“Whilst the city hotels sector maintained average room rates, profitability was impacted by a decline in occupancies, due to the increased supply of room inventory within Colombo and the lower volumes generated through the corporate segment,” it said.
Profitability in the resorts was also impacted by an exchange loss on the translation of its foreign currency denominated debt arising from the depreciation of the rupee during the quarter. The business will however accrue the benefits of the depreciation on account of its foreign currency denominated revenue streams over the ensuing periods, the company said.
Profit attributable to equity holders in the second half at Rs.5.10 billion was an increase of 37 per cent over the corresponding period of the previous financial year, whilst the first six months performance at Rs.7.28 billion is an increase of 11 per cent over the previous year.
The group’s cumulative pre-tax profit for the first half of the financial year 2018/19 at Rs.7.60 billion was a decrease of 16 per cent over the same period last year.
In the transportation sector, the market share and profits of the group’s Bunkering business, Lanka Marine Services (LMS), increased as a result of a growth in volumes and improved margins. Whilst South Asia Gateway Terminals (SAGT) recorded a 12 per cent growth in throughput over the corresponding period of the previous financial year, a decline in the volume of domestic TEUs impacted profitability.
The property industry group pre-tax tax “of negative Rs.14 million in the second quarter of 2018/19 is a decrease over the second quarter of the previous financial year (2017/18 Q2: Rs.57 million),” it said, adding that the decline in profitability is mainly attributable to Rajawella golf course, which is currently undergoing a relaying of the fairways.
The construction of “Cinnamon Life” is progressing with encouraging momentum with the super structure of all buildings in the development expected to be completed by April 2019. The project is slated for completion in the calendar year 2020 with the residential apartments and office complex ready for hand over and occupation by early 2020.
In consumer foods, profits fell due to a volume decline of 31 per cent in the carbonated soft drinks (CSD) range of the beverages business and costs relating to the commissioning of the new ice cream factory.