John Keells Hotels losses widen after Sri Lanka Easter bombings

ECONOMYNEXT – Net losses at John Keells Hotels Plc (KHL) grew 66 percent to 437 million rupees in the June quarter from a year earlier, as revenues from hotes in Sri Lanka fell 27 percent, on top of a closure of a property in the Maldives, interim accounts showed.

KHL which operates the Cinnamon branded hotels outside Sri Lanka’s capital Colombo, and the Maldives, said it lost 30 cents per share in the quarter. The firm’s share last traded at 7.70 rupees a share.

Sales in Sri Lanka fell 27.6 percent to 746.3 million rupees, as tourist arrivals to Sri Lanka plunged 71 percent in May after East Sunday bomb attacks, followed by a 57 percent fall in June.

Cinnamon Grand, which is part of the same chain but is operated through Asia Hotels and Properties Plc responsible for the group’s Colombo city hotels, was victim to the bombings.

Cinnamon hotels had offered discounts in the aftermath of the attacks, especially targeting locals.

Meanwhile, revenue at KHL’s Maldives operation fell 15.7 percent to 948 million rupees, as one of its island resorts, Cinnamon Dhonveli Maldives, was partially closed for refurbishment.

Group level revenue for the June quarter fell 22 percent to 1.7 billion rupees from a year earlier while cost of sales rose 19 percent to 658 million rupees, leading to gross profits falling 23 percent to 1 billion rupees.

Finance costs grew 75 percent to 104.6 million rupees.

Long-term borrowings as at June 30 grew to 10.9 billion rupees from 9.5 billion rupees three months earlier, while short-term borrowings grew to 1.6 billion rupees from 979.4 million rupees.

Total assets grew to 44.7 billion rupees from 37.3 billion rupees, as the firm changed accounting standards.

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The move to SLFRS 16 from the older LKAS 17 standard changes lease rentals paid in advance to right of use assets.

KHL said that the main leases are for properties, typically ranging from 10 to 35 years, with options for extension. (Colombo/Jul25/2019)

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