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Sunday Dec 22, 2024
Wednesday, 2 August 2017 00:08 - - {{hitsCtrl.values.hits}}
In a move akin to walking the talk on the much-publicised restructuring of State-owned non-strategic commercial entities, the Cabinet yesterday approved the process on the sale of Hotel Developers (Lanka) Plc, the company which owns Hilton Colombo.
As per the agreed process, the controlling 51% stake of Hotel Developers (Lanka) Plc (HDEV) will be sold through a Special Board of the Colombo Stock Exchange (CSE) to the highest bidder among shortlisted strategic investors. A further 45% stake will be divested through an Offer for Sale on the CSE at a fixed price. The balance 4% will be transferred to employees free of cost.
To undertake this exercise, it was agreed to appoint a Cabinet-Appointed Procurement Committee (CAPC) and a Technical Evaluation Committee (TEC). The Government will call for Expression of Interests (EOIs) from local and international advisors with prior experience in marketing real estate and select a transaction advisor after following a tender process.
Other non-strategic state enterprises previously disclosed to be divested by the Government include Lanka Hospitals, Grand Orient Hotel, Waters Edge, Hyatt Residencies, Ceylinco Hospital, Mobitel, West Coast, Manthai Salt and Hambanthota Salt.
Hotel Developers’ assets are worth Rs. 15 billion and its net asset value per share is Rs. 6.76.
In 2011, under the contentious Revival of Underperforming Enter-prises and Underutilized Assets Act or Expropriation Act, the then Government took over the publicly listed HDEV with the entire shareholding coming to the Treasury.
The stated capital of HDEV is Rs. 20.46 billion. It has an accumulated loss of Rs. 6.65 billion, down from Rs. 6.9 billion on 31 March 2016. Noncurrent liabilities were Rs. 569 million and current liabilities amounted to Rs. 663 million as at 31 March 2017, down from Rs. 965 million at end 2016.
Despite the closure of several rooms and other public facilities due to renovation, HDEV in FY2016 reported revenue of Rs. 2.5 billion up from the Rs. 1.5 billion reported in the nine months in 2015.
Gross profit was Rs. 2.07 billion, up from Rs. 1.3 billion. Pre-tax profit was Rs. 153 million as against Rs. 92 million in the nine months of 2015. After tax profit was Rs. 138 million, in comparison to Rs. 26 million in 2015.
In the first quarter of FY17, revenue grew to Rs. 704 million from Rs. 654 million a year earlier and Gross Profit amounted to Rs. 571.5 million, marginally down from Rs. 559 million in the first quarter of FY16. Higher depreciation (Rs. 115 million versus Rs. 84 million) saw pre-tax profit decline to Rs. 30 million from Rs. 55.6 million in the first quarter of 2016.
