COLOMBO, Sri Lanka – August 31, 2026 – The Kandy Hotels Company (1938) PLC (KHC) has announced its Annual Report for the financial year ended March 31, 2026, revealing a significant financial turnaround and its strongest performance since the acquisition of United Hotels Co. Ltd and its subsidiaries in 2019. Despite navigating challenges from Cyclone Ditwah and the Middle East crisis, the Group delivered impressive revenue and profit growth, driven by strategic refurbishments and improved operational efficiency.
Exceptional Financial Highlights for FY 2025/26
The Annual Report, published on August 31, 2026, showcases a remarkable resurgence for KHC. Consolidated revenue surged by 47% year-on-year to LKR 2,215.6 million, up from LKR 1,506.1 million in the previous year. This robust top-line growth translated into an even more substantial increase in profitability:
- Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) soared by 88% to LKR 519.1 million.
- Profit Before Tax (PBT) witnessed a five-fold increase, jumping 444% to LKR 284.6 million from LKR 52.3 million in FY 2024/25.
- Profit After Tax (PAT) nearly doubled, recording a 92% rise to LKR 214.7 million (FY 2025: LKR 111.9 million).
- Earnings Per Share (EPS) improved commensurately to LKR 0.28 from LKR 0.15.
The Group’s financial position remains strong, with total assets increasing by 6% to LKR 15,579.4 million and total equity strengthening by 11% to LKR 11,136.6 million. Furthermore, total interest-bearing debt, including overdrafts, was reduced by 10% to LKR 1,268.0 million, reflecting prudent financial management. The Company’s share price also saw a healthy 27% increase, closing at LKR 14.60 as of March 31, 2026.
Chairman’s Review: Resilience and Strategic Milestones
Sanjeev Gardiner, Chairman of The Kandy Hotels Company (1938) PLC, expressed pleasure at the Group’s strong results, attributing the growth to the return of Hotel Suisse to full operation after its comprehensive refurbishment, improved occupancies, and stronger average room rates. He acknowledged the significant hurdles faced during the year, including Cyclone Ditwah in November 2025, which severely impacted access to the Central Highlands, and the Middle East crisis from late February 2026, which curtailed tourist arrivals during the peak season.
The refurbishment of Hotel Suisse was highlighted as a defining milestone, blending its colonial heritage with modern standards to position it as a flagship destination. The Chairman noted that while the property is yet to reach its full post-refurbishment potential, it is expected to mature over the coming year. The consolidated performance of United Hotels Company Limited and Tissa Resort (Pvt) Limited also played a crucial role, contributing approximately LKR 1,295 million in revenue—an increase of 31.2%.
Operational Strength and Future Outlook
The Group’s operational efficiency was evident in the gross profit margin improving to 77.4% from 75%, demonstrating that incremental revenue was secured on improving margins rather than discounting. Capital expenditure normalised to LKR 102 million (FY 2025: LKR 762 million) as the major refurbishment cycle reached substantial completion.
Looking ahead, KHC’s priorities for the new financial year include bringing Hotel Suisse to its targeted occupancy and rate levels, returning the Company to net profitability at the standalone level, and completing the Board’s assessment for a return to the Main Board of the Colombo Stock Exchange (CSE). The company aims to remain disciplined in its investment strategy and responsive to ongoing market volatility.
Economic Context and Tourism Dynamics
The Sri Lankan economy continued its recovery during FY 2025/26, with the Central Bank reporting a GDP growth of 5.0% for calendar 2025. Sri Lanka also recorded its highest-ever annual tourist arrivals in calendar 2025, welcoming 2,362,521 visitors. However, the report noted that tourism earnings grew only marginally, indicating a persistent challenge in converting volume to value. The escalation of the Middle East conflict in the final quarter of FY 2025/26 caused a noticeable dip in arrivals and placed pressure on the Rupee, highlighting the industry’s vulnerability to geopolitical events and reliance on Gulf transit hubs.
Commitment to Sustainability and Governance
The Kandy Hotels Company (1938) PLC is dedicated to integrating sustainability into its business strategy, aligning with global best practices. The Annual Report includes comprehensive Sustainability-Related Financial Disclosures prepared with reference to the Sri Lanka Sustainability Disclosure Standards, SLFRS S1 and S2. This marks the Group’s first reporting period under these new standards, initiating crucial steps like greenhouse gas (GHG) emissions quantification to establish a baseline for future reduction targets.
The Group’s robust corporate governance framework, overseen by the Board of Directors and supported by various sub-committees including the Audit Committee and Related Party Transactions Review Committee, ensures compliance with CSE listing rules and ethical business conduct. The appointment of a Senior Independent Director further enhances board independence and oversight.
The Kandy Hotels Company (1938) PLC’s strong financial showing in a challenging environment underscores its resilience and strategic foresight, positioning it for continued growth as Sri Lanka’s tourism sector evolves.
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