Rs. 1.3 b extra windfall for JKH shareholders

Shareholders of Sri Lanka’s premier blue chip John Keells Holdings are in for Rs. 1.3 billion extra windfall following its decision to propose a special dividend of Rs. 2 per share.

The JKH Board resolved this move since the Company has had higher profits after tax in the current financial year on account of a higher dividend income, interest income in a high interest rate environment and various cost saving measures.

Traditionally JKH has been declaring two interim dividends of one rupee each in December and March prior to the final dividend of equal value. In December 2007 it paid an interim dividend of one rupee amounting to a payout of Rs. 630 million.

In February last year JKH raised nearly Rs.13 billion via a 1:5 Rights Issue. According to CT Smith Stockbrokers approximately Rs.7 billion of the money raised has been utilised to retire debt which JKH undertook to increase its stake in South Asia Gateway Terminals (SAGT), while also using the funds to subscribe to the Rights Issue of its subsidiary John Keells Hotels (KHL) in June 2007. The proceeds of KHL’s Rights Issue were used to repay debt which had been undertaken to fund its recent investments in the Maldives.

“The payment of the Special Dividend amounts to a total of Rs.1.3 billion, which is approximately 10% of the total capital raised, and 21% of the unutilised Rs.6 billion. We expect JKH to pay its routine dividend of Rs.3 per share in FY08E, in addition to the Special Dividend,” CT Smith Stockbrokers added.