Business
JKH recurring EBITDA grows by 17% to Rs.45.74 billion for 2022/23
The Group reported a resilient performance during the year, amidst the unprecedented challenges in the operating environment, recording a recurring EBITDA growth of 17% to Rs.45.74 billion. This is despite the substantial EBITDA recognition of Rs.6.30 billion from the revenue of the handover of the residential apartment units and commercial floors at ‘Cinnamon Life Integrated Resort’ in 2021/22, compared to the absence of corresponding recognition in the current year.
The growth in recurring Group EBITDA was mainly driven by the Transportation businesses, the significant turnaround in the Group’s Leisure businesses and improved performance across other business verticals.
Sri Lanka has witnessed a strong turnaround from the onset of its worst macroeconomic crisis, and it is encouraging to witness the continuation of normal day-to-day activities in the country, supported by continued political and social stability.
The Group’s Bunkering business recorded a significant increase in profitability driven by higher margins on account of the steep increase in fuel oil prices and volumes during the first half of the year, whilst the profitability of the Group’s Ports and Shipping business recorded an increase as a result of higher revenue from ancillary operations and the translation impact due to the depreciation of the Rupee.
The groundwork on the West Container Terminal (WCT-1) at the Port of Colombo is progressing well with the entirety of the dredging works for both phases near complete.
The Leisure industry group recorded a strong performance driven by the Maldivian Resorts and the recovery momentum in the Colombo Hotels and Sri Lankan Resorts segments, supported by a return to normalcy on the back of continued political and social stability during the second half of the financial year.
The Supermarket business recorded a recurring EBITDA growth of 45% to Rs.7.46 billion due to an increase in same store sales driven by a combination of higher customer footfall and basket values on account of high inflation.
Profitability in the Consumer Foods businesses was impacted by volume declines in the second half of the year, reflective of dampened consumer sentiments, and lower margins. With global raw material prices coming off its peak, the stabilisation of the country’s foreign exchange liquidity position and the appreciation of the Rupee, the pressure on margins has started to gradually ease from the fourth quarter of 2022/23 onwards.
The Property industry group recorded a decline in profitability due to 2021/22 including revenue and profit recognition from the handover of the residential apartment units at ‘Cinnamon Life Integrated Resort’, compared with the absence of any corresponding recognition in the current year. The recognition of revenue of all units sold at ‘Cinnamon Life Integrated Resort’ was completed by 31 March 2022.
Subsequent to the gazetting of the gaming regulations by the Government in August 2022, the Group is currently engaged in discussions with leading international gaming operators to secure the necessary international gaming expertise to operate at ‘Cinnamon Life Integrated Resort’ with the Group leasing the space for such operations. Similar to the experience with integrated resorts in other Asian countries, ‘Cinnamon Life Integrated Resort’ has the potential to transform Colombo as a destination for leisure and entertainment and lead to significant foreign exchange earnings for the country.
The Financial Services industry group recorded a strong growth in profitability, where the Insurance business witnessed a growth in the life insurance surplus and gross written premiums whilst Nations Trust Bank recorded an increase in net interest margins and a reduction in costs. (JKH)
Dr. Harsha Cabral, Chairman of the National Savings Bank, formally presented the bank’s annual report for the year 2022 to Minister of Finance, Economic Stabilization & National Policies President Ranil Wickremesinghe at the Presidential Secretariat on Thursday (01).
The report, titled “Strengthening Our Strength,” provides an integrated overview of the bank’s performance within the economic framework and its engagements with the social and environmental sectors.
The Monetary Board of the Central Bank of Sri Lanka, at its meeting held on 31 May 2023, decided to reduce the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank by 250 basis points to 13.00 per cent and 14.00 per cent, respectively.
The Board arrived at this decision with a view to easing monetary conditions in line with the faster than expected slowing of inflation, gradual dissipation of inflationary pressures and further anchoring of inflation expectations. The commencing of such monetary easing is expected to provide an impetus for the economy to rebound from the historic contraction of activity witnessed in 2022, while easing pressures in the financial markets.
* Q1 Revenue grows 49.7% to Rs 1.489 billion
* Pre-tax profit up 44.6% to Rs 417.2 million
* Major investments in replanting of rubber and tea to continue in 2023
Agalawatte Plantations PLC (APL) has reported impressive revenue and profit growth in the first quarter of 2023, consolidating on the remarkable turnaround achieved subsequent to the acquisition of a majority stake in the Company by the Damro Group.
Revenue grew by 49.7% to Rs 1.489 billion for the three months ending 31st March 2023, with revenue from tea doubling to Rs 796.2 million over the first quarter of 2022, and revenue from oil palm up 57.5% to Rs 305.1 million. Rubber contributed Rs 216.9 million to the Company’s top line in the quarter reviewed.
Stable tea prices and an increased oil palm crop enabled APL to post pre-tax profit of Rs 417.2 million for the three months, reflecting growth of 44.6%. Total assets grew by 21.2% since end 2022 to Rs 6.448 billion as at 31st March 2023, and the Company’s net assets value per share improved by 23.5% to Rs 26.09.
Nalaka Gunathilake, Managing Director / CEO of Agalawatte Plantations described the growth achieved in the first quarter of 2023 as extremely encouraging in the context of the Company’s achievement of net profit of Rs 1.76 billion for the year ended 31st December 2022, the highest profit in its history.
Once debt-ridden and at risk of liquidation, Agalawatte Plantations became part of the Damro Group in 2017 when the latter acquired the majority stake in the Company and infused Rs 3.2 billion for the payment of unsettled dues and statutory obligations. Timely investments in replanting, factory modernisation, redefining strategic focus and leadership transformed the Company into the strong corporate it is today, Gunathilake said. Good management practices together with agricultural inputs and professional human resources management policies too played pivotal role in this turnaround.
APL produces around 2 million kgs of latex annually and the company has facilities to manufacture Latex Crepe, Ribbed Smoked Sheets (RSS) and Centrifuged latex depending on the demand in the market. The Company’s tea production is around 2 million kgs per year and this volume is expected to increase with the availability of chemical fertilizer and agrochemicals in the country. APL also produces more than 11 million kgs of oil palm crop annually, generating substantial returns for the Company.
With the Company’s acquisition by Damro Group a strategic management decision was taken to prioritise replanting across all estates under APL management. An extent of over 2,600 acres of aged and uneconomical rubber land has since been replanted with high yielding clones to ensure company’s productivity and sustainability in the years ahead.
The Company disclosed that a further extent of over 1,000 acres is to be replanted in 2023 and land preparation and preliminary work in these areas has already commenced. In order to support the company’s ambitious rubber replanting programme, Agalawatte Plantations has its own network of rubber nurseries and has established 400,000 seedlings in six regional nurseries to supply healthy and vigorous plants.
Between 2017-2022, an extent of over 263 acres of tea has also been replanted and the preliminary work on another 150 acres has been commenced in 2023. Five tea nurseries with 900,000 plants will supply the requirement of high yielding vigorous tea plants for the replanting programme.
APL said it is gearing up for a new phase of growth in the tea plantations by obtaining system and quality management certifications. The company has obtained the Rain Forest Alliance (RA) certification for its upcountry tea estates while all tea manufacturing facilities have obtained the ISO 22000 Food Safety Management System certification.
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