Hilton owning company reports Rs 712 mln profits, repays Rs. 1 billion off Rs. 3 bln loan
View(s):Hotel Developers (Lanka) PLC (HDL), owning company of Hilton Colombo, last week paid Rs. 1 billion to the Treasury as part settlement of a longstanding loan from the Government, and at the same time reported a post-tax profit (unaccounted) of Rs 712 million for the year ending March 31, 2013.
A company statement said that the cheque was handed over to Dr. P.B. Jayasundera, the Secretary to the Treasury, Ministry of Finance & Planning. HDL Chairman, Mr. Thirukumar Nadesan said that within a period of 24 months, the company managed to turn around its negative position into a positive one, recording Rs. 712 million unaudited profit after interest and tax at the conclusion of the last financial year from a Rs. 958 million loss in 2012.
This, he said, became possible as a result of the Balance Sheet Restructuring Programme initiated by the company with the support of the Government involving conversion of 80 per cent loan into equity which brought about a saving of Rs. 1.1 billion by way of interest. It was also due to the HDL’s success in negotiating a new Management Agreement with Hilton International Management Corporation, where the total management fees payable to its operator Hilton Worldwide was brought down to 11.75 per cent from 33 per cent which was a significant milestone in the turnaround, which guaranteed a contribution to the profitability of around Rs. 250 million annually. Despite initial criticism, Expropriation Act which acquired the Underperforming and Underutilized Assets, the move was a successful one, Nadesan said, pointing out that this was a key reason for the Company’s turnaround.
“There was a lot of criticism at the time it was brought in (under the Expropriation Act),” he noted. “We were the only company vested by the Government under the said Act, while all others were assets. Within a period of two years, we have been able to revitalize the company and show much better performance than expected. Hence the repayment of Rs. 1 billion.”
The hotel is embarking on an extensive refurbishment programme at a cost of US$30 million to begin in December. HDL has requested for a syndicated loan of US$ 25 million for this purpose on the basis that the rest of the expenses be borne by the company. This is the first time the hotel is going for a massive refurbishment since commencing operations in 1987.
Ahead of the Commonwealth Summit, a soft refurbishment will be done in the hotel starting next month, he said. “The real competition will be when the international chains come in. We want to carry forward our brand image as the only international chain in the local market by offering new, modern, and world-class luxuries in the metropolitan,” he said.
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