Most JKH profits from interest income

Questions are being raised by shareholders regarding John Keells Holdings’ (JKH) growth momentum during the third quarter coming from interest income, but the company dismisses it saying that it was worth their while.

Ajith Gunawardena, Deputy Chairman JKH rejected the claims saying that out of the Rs.13 billion rights issue, Rs.7 billion was utilised against the investments the company has made. “The balance was invested in the money market pending the investments we were going after. The interest we got from this investment was paid out to the shareholders as dividends,” he explained.

Stock market analysts said that the Rs.13 billion JKH raised last year through the rights issue was not invested in new projects as was communicated by the company, but the majority was secured in interest earning instrument such as treasury bills. They noted that interest income for the nine months last year was Rs.168 million, but it has jumped Rs.1.5 billion to make Rs.1628 million for the same period this year.

They also pointed out that during the earlier quarters the key money making sector was transport, but this third quarter out of the Rs.1.356 billion profit the company has made, Rs.677 million is from the transportation sector. “This is a remarkable decrease from the Rs.711 million during the same period cast year,” a stock market analyst said.

However he said that since the environment to invest is not conducive it was a prudent decision by the company to invest in treasury bills.