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Sri Lanka's John Keells Holdings (JKH) has released its quarterly results to shareholders and the Colombo Stock Exchange (CSE) for the period ended June 30th 2008.

Group profit before tax increased by 5 percent to Rs. 1.14 billion whilst group revenues increased by 31 percent to Rs. 11.09 billion. Profit attributable to equity holders increased by 1 per cent to Rs. 833 million.

JKH said that despite the considerable rise in sales, net profit had been affected by high energy costs during the same period. The main contributions to revenue came from its transportation, leisure, consumer foods and retails businesses.

Speaking about the results, John Keells Chairman Susantha Ratnayake [pictured] said "The depressed profit margins, despite the high growth in turnover, are mainly a result of the significant increases in power and energy costs across the group, higher input costs in consumer foods and retail and lower than previous year operating income at the holding company."

Ratnayake emphasized that the retention of its bunkering business Lanka Marine Services (LMS) was a key priority for the group going forward. However, it's participation in the marine fuels market has been in doubt since the Supreme Court decided last month that there had been serious irregularities in the manner in which LMS had been privatized by John Keells Holdings Ltd.

The court ruled that the sale of land at Bloemendhal Road, Colombo without a valutation and Cabinet approval was unlawful. It then proceeded to cancel its tax holiday agreement with LMS, ordering John Keells Holdings to pay back taxes and give up the land it used to store product for its bunkering operations at the port of Colombo.

"These have been difficult times for JKH," Ratnayake told shareholders on Friday, with the release of the company's quarterly accounts.

"In this context, I wish to reassure our stakeholders that in keeping with the traditions, reputation and track record of transparency and ethical standards that JKH has demonstrated over the years, we will be resolute in the pursuit of our strategic direction.

"The issue in LMS may have, understandably, created questions in your own mind. You would appreciate that this poses new challenges not only to your company but the private sector as a whole. As part of our internal processes, the Board will continue to self evaluate in this respect with an objective of achieving learnings out of the issue and towards ensuring further safeguards in transactions of this nature in future,” the chairman said in his report.

Lanka Marine Services has until September 10th to vacate its premises at the port of Colombo and hand the land back to the Sri Lanka Ports Authority (SLPA).