International Hotel Investments p.l.c. projecting €57.4 million loss for 2020

International Hotel Investments p.l.c. owners and managers of the Corinthia hotels and other properties and businesses are projecting a loss of €57.4 million for FY2020.

Revenue is projected to drop by €175.1 million to €93.2 million for FY2020 on account of the complete shutdown of the majority of the Group’s operations in Q2 2020, and the curtailment of operations during the remainder of the financial year as a result of COVID-19.

As a result, EBITDA is expected to decline from €69.8 million in FY2019 to €5.2 million which, considering the substantial reduction in revenue, is quite an achievement which was only possible in consequence of the very significant reductions in the operating cost base.

Furthermore, this projection does not include possible wage support beyond September 2020, grants still being defined by the relevant authorities and the potential income from insurance claims.

MZ Investment Services Ltd published the IHI Group Financial Analysis Summary yesterday.

Depreciation and amortisation and share of losses from equity-accounted investments are projected to decrease by €1.2 million and €1.9 million to €35.6 million and €2.0 million respectively.

Net finance costs are expected to be broadly unchanged at €23.8 million (FY2019: €23.2 million). After accounting for a tax credit of €17.5 million, the loss for the year is estimated at €57.4 million.

Other comprehensive expense principally includes adverse currency translation differences of €35.7 million. Due to this negative movement and the expected loss for the year, total comprehensive expense is estimated at €93.1 million (FY2019: total comprehensive income of €38.9 million).

Assets

Total assets of the Group as at 31 December 2019 amounted to €1,687 million (FY2018: €1,618 million). ‘Other investments’ amounting to €8.4 million represents the acquisition by the Group of 10% of Global Hotel Alliance and 10% shareholding in a hotel and residential development in Moscow.

Following the adoption of IFRS 16, the Group recognised right-of-use assets and lease liabilities amounting to €13.8 million and €14.0 million respectively.

In FY2019, the Group issued €20 million of additional bonds and the aggregate outstanding bonds at year-end amounted to €222.6 million (FY2018: €202.5 million). Net debt in FY2019 amounted to €530.1 million compared to €511.2 million in FY2018.

Total assets in FY2020 are projected to amount to €1,566 million, a decrease of €121 million from a year earlier. The value of investment property and property, plant & equipment is expected to decrease by €75.5 million, mainly on account of adverse exchange rate fluctuations in the rouble and pound sterling and the annual depreciation charge,

partly offset by capital expenditure anticipated to amount to €13.8 million. Due to the disruptions caused by the COVID-19 pandemic, inventories and trade & other receivables are expected to decline by €4.8 million and €10.2 million respectively. Furthermore, cash and cash equivalents are projected to decrease y-o-y by €28.0 million.

Liabilities

A decrease of €27.9 million is being forecast for total liabilities, whereby other current and non-current liabilities (mainly comprising trade & other payables and deferred taxation respectively) are expected to decrease by €44.0 million. On the other hand, bank and other borrowings are projected to increase by €12.2 million in FY2020 to €604.8 million.

Due to an increase in borrowings, the gearing ratio of the Group is expected to increase from 37% in FY2019 to 42%. Notwithstanding, the liquidity ratio is projected to increase to 1.16 times from 1.13 times reported at the end of FY2019.