John Keells Hotels June quarter in red due to resort refurbishments

By Chandeepa Wettasinghe
John Keells Hotels PLC (KHL), the hotel and resort operator of Sri Lanka’s largest business conglomerate John Keells Holdings PLC, posted a Rs.230.94 million net loss for the first quarter of 2018, nose-diving from a Rs.83.93 million net profit year-on-year (YoY) due to refurbishments and reconstruction.

Loss per share for the quarter was Rs.0.16, down from Rs.0.06 earnings per share YoY. KHL shares closed at Rs.10.70 per share at market close, compared to Rs.10.90 at the start of trading yesterday.
KHL operates the Cinnamon branded hotels and resorts in Sri Lanka and the Maldives, except for the Cinnamon city hotels in Colombo.

Revenue for the quarter fell four percent YoY to Rs.2.38 billion, while cost of sales increased eight percent YoY to Rs.910.58 million.

KHL’s Maldivian resorts, the Cinnamon Dhonveli Maldives and Ellaidhoo Maldives by Cinnamon were partially closed during the quarter for ongoing refurbishments, affecting sales.

Administrative expenses increased 18 percent YoY to Rs.1.32 billion, which included a non-cash impact of Rs.203 million on account of the acceleration of depreciation on assets from the closure of Bentota Beach by Cinnamon.

The iconic hotel designed by legendary architect Geoffery Bawa was closed for demolition and reconstruction, with the building designed by Bawa to be reconstructed identical to the original.
Operating losses for the quarter were Rs.219.24 million, down from a Rs.119.51 million operating profit YoY.

The KHL group asset base marginally fell to Rs.32.05 billion compared to the start of the financial year, while net assets per share were Rs.16.94, down from Rs.17.02 in the same period.

The quarter also saw long-term interest bearing borrowings increasing to Rs.3.39 billion from Rs.1.08 billion, while short-term interest bearing borrowings fell to Rs.1.05 billion from Rs.2.57 billion.
Losses after tax from the Sri Lanka market fell to Rs.231.72 million from Rs.52.45 million YoY due to the closure of Bentota Beach by Cinnamon while revenue from Sri Lankan operations increased to Rs.1.13 billion from Rs.1.06 billion YoY.

The losses after tax from the Maldivian resorts were just Rs.2.21 million, down from a Rs.135.88 million profit after tax YoY. Revenue from the archipelago fell to Rs.1.28 billion from Rs.1.45 billion YoY.

John Keells Holdings PLC owns 80.32 percent of shares in KHL, while the state owns approximately 10.76 percent of KHL shares through a retirement fund and various state-owned financial institutions.