JKH invests over Rs. 18 b in FY2018 to expand biz, tap future potential

• Pumps Rs. 9.4 b fresh equity into Waterfront Properties on top of Rs. 4.34 b infused in FY17
• Steps up footprint in property and real estate segment with further Rs. 6 b investment

Premier blue chip John Keells Holdings (JKH), which reported its best-ever results during the financial year ended 31 March 2018, has invested over Rs. 18 billion during this period into ongoing mega projects and new ventures as well as to acquire additional stake in existing companies.

As per the FY2018 interim results statement, JKH has invested Rs. 9.4 billion further as equity into Waterfront Properties Ltd., the JKH subsidiary involved in developing, owning, managing, operating, selling, leasing and renting luxury multi and mixed use integrated resort. In FY2017, Rs. 4.34 billion was invested as equity. The investment in the $ 850 million Waterfront is in addition to a $ 60 million investment in acquiring the land. The JKH Group, through Vauxhall Land Development Ltd. (VLDL), acquired a 2.09-acre plot of land on Vauxhall Street for Rs. 4.37 billion as well. 

This asset was consolidated with an existing land plot of 3.56 acres, transferred from Group firm Whittall Boustead Ltd, and 3.72 acres of land owned by Finlays Colombo Ltd. through a joint venture agreement signed in March 2018. Vauxhall Land Developments Ltd, which is 60.28% owned by JKH, now has a contiguous 9.38-acre property in one of the prime areas of the Colombo Central Business District.

In September 2017, the Group acquired a 50% stake with a total investment of Rs. 1.8 billion in Braybrooke Residential Properties Ltd. (formerly known as Indra Holdings Ltd.). 

This company plans to develop a residential apartment project of 891 units branded as “Tri-Zen” at Union Place, Colombo 2.

In November 2017, Trans-Ware Logistics Ltd. became a fully-owned subsidiary of the Group, arising from the buyout of the 50% stake from the other venture partners from Singapore and Malaysia, for a cash consideration of Rs. 305 million from JKH. 

In January this year, JKH invested Rs. 1.5 billion in NTB’s issue of ordinary non-voting convertible shares of the bank by way of a rights issue.

JKH on Friday reported its best ever results, reinforcing its resilience amidst challenging conditions during the financial year ended 31 March 2018.

Pre-tax profit was up 21% to Rs. 27.6 billion and post-tax grew by 28% to Rs. 23.2 billion. Net profit attributable to equity holders of the parent was up 29% to Rs. 21 billion.

Group revenue rose 14% to Rs. 121.2 billion.

Reflecting tougher market and business conditions, gross profit was down 6% to Rs. 29.3 billion and results from operating activities were down 20% to Rs. 11.46 billion.

However, Rs. 3.6 billion (share of result of equity accounted investees up 9% from FY17), Rs. 3.38 billion (change in contract liability due to transfer of one off surplus), Rs. 11.27 billion (finance income up 12% from FY17), and 50% reduction in change in insurance contract liabilities to Rs. 2.5 billion have helped improve consolidated pre-tax profit performance.

JKH’s Property sector (which has drawn bulk of FY18 investments) saw its pre-tax profit double to Rs. 1.27 billion in FY18. A Rs. 613 million change in fair value of investment property as against Rs. 290 million in FY17 contributed as well. The segment revenue improved to Rs. 1.44 billion from Rs. 1.32 billion.

Financial services made the biggest contribution, partly helped by the transfer of one-off surplus.  Pre-tax profit amounted to Rs. 8.58 billion, a huge gain from Rs. 2 billion. Revenue crossed the Rs. 10 billion mark as against Rs. 8.3 billion in FY17.

The Transportation segment pre-tax profit was Rs. 3.27 billion, up from Rs. 3.1 billion, whilst revenue saw healthy growth from Rs. 11.4 billion to Rs. 17.7 billion.

Sectors such as Leisure and Consumer Foods and Retail lagged, reporting lower profits though improving turnover. 

Consumer Foods and Retail, the biggest in terms of revenue, recorded Rs. 53.57 billion (up from Rs. 46 billion), reporting a pre-tax profit of Rs. 4.1 billion, which was lower than the Rs. 5.46 billion of FY17. 

The Leisure sector pre-tax profit was Rs. 3.9 billion, down from Rs. 5.7 billion. Revenue was almost flat at Rs. 25 billion.