Wednesday, May 29, 2013

JKH proves its prowess

◾ Despite challenging conditions, ends FY13 with highest-ever profit by a listed corporate

◾Group pre-tax profit up 23% to Rs. 15.78 b; post-tax figure up 24% to Rs. 13.6 b

◾Results from operating activities down 7% to Rs. 6.7 b but bottom line buttressed by higher net finance income and others

◾Net profit attributable to equity holders up 26% to Rs. 12.2 b

◾Recurring net profit up 21% to Rs. 8.54 b; PBT up 19% to Rs. 13.5 b

◾Group revenue expands by 10% to  Rs. 85.5 b

John Keells Holdings (JKH) has proved its prowess in a challenging year and reinforced the premier blue chip status by posting the highest-ever profit by a listed corporate, surprising expectations of even the most optimistic analysts.

The conglomerate, which is also the most valuable in the country by market capitalisation, yesterday disclosed a Group Profit Before Tax (PBT) of Rs. 15.78 billion for the financial year ended on 31 March 2013, reflecting a 23% growth over the previous year.

 Post-tax profit showing a similar double digit growth was Rs. 13.59 billion, whilst profit attributable to the equity holders of the parent was Rs. 12.20 billion, a 26% increase over FY12.

 For FY13, revenue was Rs.85.56 billion, up 10% from the previous year, whilst gross profit improved by 13% to Rs. 20.45 billion. The result from operating activities however was down by 7% to Rs. 6.7 billion due to higher increase in expenses and 20% dip in other operating income.

 Nevertheless the bottom line was buttressed by net finance income growth of 153% to Rs. 3.68 billion and a 42% rise in change in fair value of investment property to Rs. 2 billion along with share of results of equity accounted investees growing by 22% to Rs. 3.36 billion.

 JKH explained that the finance income of Rs.4.77 billion for the year included Union Assurance PLC’s Life and General insurance funds’ interest income of Rs. 2.66 billion, which net of related costs has been reflected under the Financial Services operating segment results.

 It also said the recurring PBT for the financial year 2012/13, excluding fair value adjustments on investment property and capital gains on share disposals, was Rs. 13.54 billion, an increase of 19% over the recurring PBT of Rs. 11.41 billion in the previous year.

On a similar basis, the recurring profit attributable to equity holders of the parent was Rs. 10.31 billion, representing an increase of 21% over the Rs. 8.54 billion recorded in the previous year.

 Interim results for FY13 were announced after the market was closed. Despite the Colombo Bourse declining yesterday, JKH managed to close marginally on the up at Rs. 289, commanding a market capitalisation of Rs. 247.8 billion or 9.92% share of the total. Last week it crossed the 10% milestone and the share price remains at highest levels.

 Analysts said JKH results reaffirm its resilience amidst challenging macroeconomic environment with lower GDP growth in calendar year 2012 and rising costs, etc.

 The FY13 bottom line of JKH is the highest-ever by a listed corporate, beating the previous best achieved by Dialog in 2006 with Rs. 10.12 billion net profit (EBIT of Rs. 10.85 billion) on a turnover of Rs. 27 billion.

 In tandem with the release of results, JKH announced a final dividend of Rs. 1.50 per share on top of Rs. 2 per share paid previously via interim dividends bringing the total to Rs. 3.50 per share, up from Rs. 3 per share paid in FY12.

 All key sectors of JKH have fared better than the previous year, though some continued to struggle in terms of profitability.

 The Leisure sector reinforced its supremacy within JKH Group, delivering Rs. 5.2 billion pre-tax profit, up from Rs. 4.17 billion, whilst its turnover rose from Rs. 17.5 billion to Rs. 20.6 billion.

 The Transportation sector improved its pre-tax profit to Rs. 3.6 billion from Rs. 3.3 billion whilst turnover grew from Rs. 18.8 billion to Rs. 19.7 billion. The Property sector of JKH crossed the Rs. 1 billion mark in pretax profit posting Rs. 1.2 billion up from Rs. 977 million in FY12. Its turnover was down from Rs. 4 billion to Rs. 3.4 billion. Financial sector pre-tax profit was Rs. 1.77 billion up from Rs. 1.5 billion whilst turnover rose from Rs. 8 billion to Rs. 8.7 billion.

 Consumer foods and retail saw pre-tax profit dip to Rs. 2.4 billion from Rs. 2.7 billion though top-line saw growth to Rs. 24.3 billion from Rs. 22 billion. IT sector had improved profits as well as others sector with the latter generating Rs. 1.1 billion pre-tax profit as against a loss in the previous year.

 JKH net asset per share was Rs. 104.78 at Group level, up from Rs. 83.22 in FY12. Group assets surpassed the Rs. 150 billion mark to stand at Rs. 159 billion, up from Rs. 134.4 billion in FY12. This included Rs. 26.5 billion in short term investments up from Rs. 24.8 billion whilst fixed assets were Rs. 109 billion, up from Rs. 86.7 billion.

 Revenue reserves were a staggering Rs. 42.7 billion as at 31 March 2013, up from Rs. 33 billion a year earlier. Long term liabilities of JKH Group grew to Rs. 32.4 billion from Rs. 29.8 billion whilst current liabilities were Rs. 25.5 billion, as against Rs. 24.4 billion in FY12.

 The JKH Board of Directors comprises Susantha Ratnayake (Chairman), Ajit Gunewardene (Deputy Chairman), Ronnie Peiris, Franklyn Amerasinghe, S.S. Tiruchelvam, Tarun Das, Indrajit Coomaraswamy, A.R. Gunasekara and Ashroff Omar.

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