Spence books tidy capital profit selling Maldivian resort

Aitken Spence Hotel Holdings has sold its first island resort in the Maldives set up in 1993 booking a fat capital profit in the quarter ended December 31, 2008. "The resort island did not belong to us and the operating rights (on the property) had three more years to run," Mr. Rajan Brito, Chairman/MD of the Aitken Spence group explained. "We got a good offer for it and we decided to accept it as we would not have made that kind of profit had we run it on our own for three years." Brito said that a profit of Rs.218 million was booked on the transaction. As Aitken Spence owns 75% of Aitken Spence Hotel Holdings, Rs.163 million of this profit accrued to Aitken Spence. The Bathala resort was 95% owned by the Aitken Spence group with the balance 5% belonging to a Maldivian partner. Brito also said that a new Maldivian resort, Vadoo was due for completion at the end of March and will be commissioned in the forthcoming financial year. He said that the development of the new resort was funded by borrowings and internally generated funds. The group borrows abroad at the London Inter Bank Offered Rate plus 3% which was now going up slightly, Brito said. "We haven’t gone to our shareholders for funds for the last several years," he said. Aitken Spence was an early entrant to the Maldivian tourism industry and operates several profitable resorts in the archipelago with earnings there taking up the lag of depressed tourism earnings in Sri Lanka. Spence has also gone into hotel management in India and the Middle East. The December quarter saw the Aitken Spence group profit growing 38.4% to Rs.473 million. The nine months ended December 31, 2008 saw the group boosting revenue 21.4% to Rs.19.35 billion and the attributable profit by 15.1% to Rs.1.27 billion. With minority interest, the group’s after-tax profit was up 11.4% to Rs.1.87 billion translating to an earning per share of Rs.46.78, up 15.1% from Rs.40.63 earned a year earlier. Aitken Spence Hotels posted revenue growth of 9% to Rs.3.95 billion in the nine months under review and an attributable profit of Rs.264.6 million, more than double the Rs.131.2 million earned in the comparative period the previous year. The hotel subsidiary had an earning per share of Rs.6.59 during the nine-month period, more than double the Rs.3.12 earned in the comparative period the previous year, which analysts said partly reflected the capital profit earned on the sale of the Bathala resort.