Cinnamon Lakeside owner’s December profits halved

Trans Asia Hotels PLC saw its earnings halved during the December quarter compared with the corresponding quarter of the previous year amid lower top line gains, the interim financial accounts released to the Colombo Stock Exchange showed.

Trans Asia Hotels is a unit of the John Keells group, which owns five-star Cinnamon Lakeside Hotel. The company also derives a rental income from the investment property adjoining the hotel.

The net profit for the quarter fell 51 percent year-on-year (YoY) to Rs.98.8 million, while revenue fell 4 percent YoY to Rs.859.3 million.

Although the company saw a 3 percent YoY fall in the sales costs, the gross profit fell 8 percent YoY to Rs.505.6 million.

The distribution expenses for the quarter also rose 23 percent YoY to Rs.72.1 million while the administrative expenses remained steady at Rs.179.6 million.
For the nine months ended December 31, 2017, the company made a profit of Rs.319.9 million, down 31 percent YoY on a flat revenue of Rs.2.4 billion. 
The earnings per share for the period deteriorated to Rs.1.64 from Rs.2.30.

Interestingly, tourist arrivals to Sri Lanka reached an all-time high of 2,116,407 in 2017. 

But the minimum room rate that has been slapped on the hotels operating within the Colombo city and the growing informal accommodation sector appear to be a considerable threat to hotels like Cinnamon Lakeside. 

As at December 31, 2017, the John Keells group owned over 92 percent of the issued shares of the firm while state-controlled private sector pension fund, the Employees’ Provident Fund (EPF), held 2.15 percent being the fourth largest shareholder of the company. 

The percentage of shares held by the public as at the same date was 7.65 percent, unchanged from September 2017. The number of public shareholders was 1,366, little changed from 1,377 in September.