Ikeja Hotel plc has said that its inability to pay dividend in the last two years was due to the planned refurbishment of one of its subsidiaries – Lagos Sheraton hotel.
Addressing shareholders of the company at its 39th Annual General Meeting (AGM) in Lagos on Tuesday, Mr. Goodie Ibru, Managing Director of the company, noted that they have to commence the refurbishment despite the fact that they have not been able to declare dividend in the past two years, saying that there is need to grow the company.
“The year under review posed a number of operating challenges to our company, the major one being increased competition from new hotels both in the catchment area of Sheraton, Ikeja and in the Lagos metropolis as a whole. The room department is the major revenue earner for any hotel,” Ibru explained.
He noted that the company has completed the acquisition of controlling interest in Capital Hotel Plc, adding that they are now focusing on addressing the challenges facing it in order to put the company in a position that would make it function efficiently in the present state of hotel business in the country.
His word, “Our company has now put behind it the cost of acquisition of controlling interest in Capital Hotel Plc. The immediate challenge is to reposition Sheraton Lagos to meet the growing competition in the Lagos metropolis.”
Continuing Ibru said “This will entail extensive and costly refurbishment of the hotel,” just as he added that the work on refurbishment has commenced, and that the issue of funding the project has not been fully resolved.”
The company recorded a turnover of N 7.03 billion compared with N7.66 billion in the previous year, indicating a decline of about N600 billion. This was a direct result of low capacity levels in the rooms department as a consequence of a more competitive trading environment.
The operating profit was N 1.5 billion compared with N2.4 billion in the previous year while profit before taxation and exceptional item was N2.2billion, as against N2.1 billion in 2010. Profit after exceptional item and taxation was N928.1 million compared with N2.2 billion in the preceding year.
Commenting, a shareholder activist, Mr. Boniface Okezie, implored the company to consider the plight of the shareholders who have waited enough to get their dividend paid.
In a bid to maintain its leadership position in the hotel sector of Nigeria’s hospitality industry, Ikeja Hotel extended its operation to the Federal Capital City, Abuja in 2002 through the acquisition of controlling interest in the Capital Hotels plc.