Federal Palace Declares N5.5 billion Loss After Tax
Tourist Company of Nigeria, the owners of Federal Palace Hotels has declared a N5.5 billion loss after tax for the year ended June 2016.
According to the results of the company, posted on the website of the NSE, revenue for the year was N2.48 billion (2015: N3.2billion) with gaming and hospitality making up N1.4 billion and N1.48 billion respectively.
The company also reported an operating loss of about N444 million compared to N50.2 million operating loss a year earlier. The company’s loss however ballooned after it reported a hefty finance cost of N5.1 billion which included an exchange rate loss of about N4.2 billion. According to the company, its total loans of N16.2 billion are unsecured with N10.9 billion owed to its shareholders. Ikeja Hotels (owners of Sheraton) is owed N5.3 billion, while its operator Sun International is owed N5.6 billion. The directors of the company claim interest is at 5% per annum and it is at their discretion to repay the loans according to their cash flows.
Another loans of N5.2 billion is owed to Omano Investments and is currently subject to dispute. However, it is unclear if the loan is also subject to the discretion of the directors to repay.
The company also reported a pre-tax loss of N1.6 billion in the first quarter of ended September 2016 continuing a trend that has increased accumulated losses to about N14 billion and a negative equity of N8.5 billion. The company has been technically insolvent since June 2015 when its equity was a negative N1.4 billion.