Summarised below are some of the key highlights for the quarter ended 31 March 2020.
- The Consumer Foods, Retail and Property industry groups recorded a growth in profits.
- While the performance of the Group initially witnessed strong momentum in the fourth quarter of the financial year 2019/20, the outbreak of the COVID-19 pandemic, globally, and then locally in March 2020 onwards, had varying levels of impact on the performance of the businesses.
- The Group’s Bunkering business recorded a strong growth in profits driven by improved margins. South Asia Gateway Terminal (SAGT), the Group’s Ports and Shipping business, became liable for corporate income tax from October 2019 onwards, which, therefore, had a negative impact on performance as the Group recognises its share of profit after tax, as SAGT is an equity accounted investee.
- The Beverages and Frozen Confectionery businesses recorded an improvement in performance driven by an expansion of margins due to a better sales mix. Both businesses recorded encouraging volume growth in the months of January and February, where volumes grew approximately 20 – 30 per cent, on average. However, the imposition of island-wide curfew due to the COVID-19 pandemic caused disruptions in sales in the last 2 weeks of March 2020, which is a peak sales month, resulting in a steep decline in volumes, thereby impacting overall volumes for the quarter.
- The Supermarket business recorded a strong performance driven by a notable contribution from new outlets and growth in same store sales. Same store sales recorded an encouraging growth of 5.7 per cent in January and February 2020. However, similar to the impacts in the Consumer Foods businesses, a steep decline in same store sales was recorded in March due to the imposition of curfew which resulted in outlets being closed during the latter half of March 2020. Consequently, same store sales for the quarter was 1.7 per cent.
- The Group’s Sri Lankan Leisure business displayed a faster than expected recovery post the Easter Sunday attacks, with occupancy in the peak season in line with the previous year, albeit at a moderately lower room rate. However, the momentum of this recovery was derailed by the developments surrounding the global spread of COVID-19 where arrivals to Sri Lanka were impacted gradually from February 2020 onwards. From mid-March 2020 onwards there were no tourist arrivals with the closure of the international airport. In addition, the quarter under review included the start-up costs relating to the newly launched premium resort in Sri Lanka, ‘Cinnamon Bentota Beach’ which affected the performance of the Sri Lankan Resorts segment.
- The ‘Tri-Zen’ residential development project continued its encouraging sales momentum, recording sales of 19 units during the months of January and February, although sales in March was impacted by the effects of the pandemic. Whilst the construction of both ‘Tri-Zen’ and ‘Cinnamon Life’ was suspended with the imposition of curfew, both sites have now gradually commenced work as permitted under the relevant Government directives. The EBITDA of the Property industry group for the quarter included fair value gains on investment property.
- Nations Trust Bank recorded a strong improvement in profits driven by the removal of the Debt Repayment Levy and NBT on financial services. Profitability of Union Assurance PLC during the quarter was impacted by a notional tax credit reversal under investment income.
Summarised below are some of the key highlights for the year ended 31 March 2020.
- The Consumer Foods, Retail and Property industry groups recorded a growth in profits.
- The Group’s year-on-year performance was impacted by the downturn in the Group’s Sri Lankan Leisure business due to the Easter Sunday terror attacks, lower finance income as a result of the deployment of cash in new investments and lower exchange gains on the Company’s foreign currency denominated cash holding as against the previous year.
- The Group’s Bunkering business recorded a strong growth in profits driven by improved margins. SAGT became liable for corporate income tax during the year under review, impacting profitability.
- Consumer Foods witnessed growth on account of an improved performance in the Beverages and Frozen Confectionery businesses driven by growth in volumes and expansion of margins due to a better sales mix.
- The Supermarket business witnessed a strong rebound in profits as it continued to gain market share, supported by a notable contribution from new outlets and strong growth in customer footfall.
- In the aftermath of the Easter Sunday terror attacks, both the City Hotels sector and the Sri Lankan Resorts segment recorded a decline in occupancy and average room rates. However, occupancy at our hotels recovered faster than expected with forward bookings maintaining an upward trend where occupancy in the peak season was in line with the previous year, albeit at a moderately lower room rate. Whilst the tourist arrivals to the country had recovered close to pre-incident levels, developments surrounding the global spread of COVID-19 derailed this momentum.
- The foundation work of the ‘Tri-Zen’ residential development project was completed ahead of schedule. The super structure work is currently in progress. ‘Tri-Zen’ recorded encouraging sales with 262 apartments sold as at 31 March 2020, outperforming the market.
- The finishing works of the ‘Cinnamon Life’ Residential and Office Towers are nearing completion whilst the interior works of the Hotel and Retail space are on-going.