Amaya Reef concerned over security situation

... the refurbishment of the hotel and the revaluation undertaken contributed towards an increase in property, plant and equipment from Rs.153.4 million to Rs. 303.3 million.

Hotel Reefcomber Ltd, managers of the Amaya Reef Hotel which depends heavily on European and Scandinavian markets, have been unable to achieve their targets due to the security situation in the country.

“The period of high occupancy for a year is usually six months. However we had contracted with new operators in order to increase this high occupancy period to nine months, but then again as a result of the deterioration of the security in the country, we will not be able to achieve our targets,” Chairman, B. M. Amarasekera said in his annual statement for 2006-07, adding that the company would resort to other remedies such as placing great emphasis on local tourism.

He said the refurbishment of the hotel and the revaluation undertaken contributed towards an increase in property, plant and equipment from Rs.153.4 million to Rs. 303.3 million.

“The hotel is now in a position to exploit any improvement in the security situation in the country. However, it is my belief that this could only be achieved if there is an effective ceasefire,” he stressed.

Weerasinghe further said despite the revenue increase by over eight percent from Rs.44.30 million to Rs.47.96 million, profit before tax dropped from Rs.2.53 million to Rs.0.13 million.

“A sum of Rs.24.34 million was spent on the acquisition of property, plant and equipment in the ongoing refurbishment programme,” he said, adding that a change in accounting policies which required the charging of depreciation on such acquisitions from the time the asset “is available for use” resulted in a higher depreciation and deferred tax charges which further affected our bottom line which showed a net loss after tax of Rs.6.08 million compared with a net profit after tax of Rs.1.42 million last year.