News
Softlogic Holdings weighs offloading of hotels to trim debt, books Rs 15.2b group loss
View(s):By Kapila Bandara
Conglomerate Softlogic Holdings Plc, which has been dealing with heavy debt challenges and multi-billion rupee accumulated financial losses, is seeking buyers for its hotel assets.
Asoka Kariyawasam Pathirage who heads the laregly-retail driven conglomerate, says in annual filings for 2023-2024 that the group is, “actively seeking buyers for our hotel sector, with a focus on securing pricing at valuations that accurately reflect the full potential of these businesses’’.
Outlining its management strategies, Softlogic Holdings said the “board has been actively engaged in discussions with potential buyers/investors for the leisure sector’’.
For the year ended 31 March, the group booked a loss of Rs 15.20 billion on revenue of Rs 99.83b, up from Rs. 96.9b in the year before. Losses have ballooned since 2020. The company has not paid a dividend since 2021.
Softlogic Holdings also reported Rs 13.72b accumulated losses, while the group (company and subsidiaries) accumulated loss was Rs. 69.59b.
Softlogic Holdings is the group’s holding company.
The Employees’ Provident Fund has 0.61% interest in Softlogic Holdings.
Softlogic Holdings notes in annual filings that liquidity and funding risk is “increasing’’.
Cash and cash equivalents by the end of the year was Rs. 2.8b versus Rs. 4.6b last year.
The leisure and property business only accounts for 3% of revenue.
In June this year, Thailand’s Minor Hotels Group, which runs Anantara Kalutara Resort, Anantara Peace Haven Tangalle Resort, and Avani Kalutara Resort, took over the management of Softlogic Holdings’ two hotels and renamed them as NH Collection Colombo (opened in 2017 as Mövenpick Colombo with 219 rooms), and NH Bentota Ceysands Resort (opened in 2014 with 166 rooms).
The hotels are a part of Softlogic Properties (Pvt) Ltd.
Thailand’s Minor International Public Company has an extensive hotels business. Information from Minor Hotels says it “owns 375 hotels and manages 186 hotels and serviced suites in 57 countries’’. Anantara and NH Collection are among its brands.
Dillip Rajakarier, chief executive officer of Minor Hotels and Group CEO of Minor International, said in June in a statement that the group is “excited to be part’’ of the 2023 tourism rebound in Sri Lanka, “and look forward to capitalising on the pent-up demand’’.
Softlogic Holdings says handing over management of the Colombo hotel to Minor Hotels in view of the tourism recovery, “has positioned the hotel for long-term success, capitalising on the growing demand for high-quality hospitality in the region’’. And the “integration of Minor Hotel’s operational expertise and global standards is anticipated to further enhance the Bentota Ceysand Resort’s market position.
Offloading non-core business has been outlined as a priority for the company along with trimming substantial debt through raising equity.
In recent years, Softlogic Holdings has taken initiatives to buttress liquidity, while restructuring existing debt in a low interest rate environment.
New offer letters have been signed/received for loans of Rs. 17.74b during 2023-2024 and Rs. 25.70b between the year-end date and reporting date. Interest rebates have been received for above Rs. 1b in 2023-2024.
The group has also submitted letters to financial institutions to restructure loans of Rs 13.34b. Credit committee approvals are pending.
The group said it has secured general financial support letters for Rs. 7.29b from financial institutions where restructure requests letters are pending credit committee approvals.
Among other measures was a rights issue in September that raised Rs 2 billion to settle debt.
Softlogic Holdings said in its 2024 filings, it expects to further raise up to Rs. 6.41b equity by 31 March 2025.
Also, Softlogic Life Insurance bought back shares to provide Softlogic Capital with Rs. 2.6b to further reduce debt. Softlogic Capital is the holding company of the financial services business.
Softlogic Life Insurance has also booked an impairment provision of Rs 2.9b against its investment in International Sovereign Bonds and Sri Lanka Development Bonds.
In February 2023, Softlogic Holdings subsidiary, Softlogic Capital, made an announcement to the Colombo Stock Exchange on the potential sale of Softlogic Life Insurance.
Retail is the largest revenue generator of the Softlogic Group, accounting for 33% ahead of healthcare services. The retail operation includes consumer electronics, mobile handsets, apparel, footwear (Bata), restaurants (six franchises including Burger King, Delifrance, Subway, Popeyes, Baskin Robbins), and supermarkets (Glomark).
In 2024, the biggest losses were incurred by the retail and leisure businesses. The retail business loss was Rs. 13.94b versus Rs.11.07b in 2023. “Lack of working capital funding hindered the performance of the retail sector.’’
The leisure business loss was Rs. 2.48b (versus Rs. 3.33b in 2023).
Softlogic Holdings reported accumulated losses of Rs. 13.72b. In 2023, retained earnings were restated as Rs. 4.58b and accumulated losses for the group as Rs. 69.59b (2023 Rs.51.54b).
Directors’ remuneration for the financial year ended 31 March 2024 was Rs. 62.95 million.
The auditor EY (Ernst & Young) notes that “the company and group incurred a loss after tax of Rs. 9.13b and Rs. 15.20b, respectively, for the year ended 31 March 2024 and as of that date, the company and group’s current liabilities exceeded Its current assets by Rs. 25.5b and Rs. 76.95b respectively’’.
The reported accumulated losses of the company and group (company and subsidiaries) amounted to Rs. 13.72b and Rs. 69.59b respectively, and the group reported a negative net assets position of Rs. 30.19b as of the reporting date, EY notes.
EY also notes that these events and conditions indicate that a material uncertainty exists which may cast significant doubt on the company’s and group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter, EY says.
Softlogic directors say that they, “have justified in adopting the going concern basis in preparing the financial statements since adequate resources are available to continue operations in
the foreseeable future’’.
Mr Pathirage has 41.35% interest in Softlogic Holdings.
The best way to say that you found the home of your dreams is by finding it on Hitad.lk. We have listings for apartments for sale or rent in Sri Lanka, no matter what locale you're looking for! Whether you live in Colombo, Galle, Kandy, Matara, Jaffna and more - we've got them all!