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Sri Lanka's John Keells Holdings PLC has recorded a 22 percent drop in net profit during the quarter ended 30 June 2009 after seeing revenues for its bunker fuel subsidiary Lanka Marine Services decline significantly since being ordered to vacate a tank farm it operated in Colombo last year.

Interim results for the company show that the profits attributable to equity holders for the quarter ended 30 June 2009, of 650 million rupees ($5.67 million) reflected a decrease of 22 per cent over the corresponding period in the previous year.

Profit before tax for the same period was 959 million rupees ($8.35 million), 16 per cent below the PBT of 1.14 billion rupees in the corresponding quarter of the previous year.

Revenue for the quarter was 10.07 billion rupees, 9 per cent below that of the corresponding period of the previous year of 11.09 billion rupees.

The transportation devision of John Keells, which includes Lanka Marine Services, recorded a 43 percent decrease in profit before tax. The decline was said to be mainly due to "Lanka Marine Services experiencing a decrease in revenue and increased costs from the new operating format".

The latest financial results follow a court ruling last year which resulted in Lanka Marine Services (LMS) being ordered to vacate the tank farm it occupied at the port of Colombo.

During the ruling the Supreme Court decided 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 for refuelling ships.