By Dipo Olowookere
The board of Ikeja Hotel Plc has revealed that the N786 million loss after tax the company recorded in the first six months of this year was caused by the COVID-19 pandemic.
In a statement on Monday, the firm explained that the movement restrictions imposed on some parts of the country as a result of the contagion affected its operations.
On March 30, 2020, the federal government imposed total lockdown in Lagos, Abuja and Ogun State except for essential workers.
This affected players in several sectors of the economy, including those in the hospitality business as flights and hotels were asked to shut down.
Last week, the company released its financial statements for the period ended June 30, 2020, and from the analysis by Business Post, the revenue generated during the period significantly reduced to N2.9 billion from N5.8 billion in the corresponding period of last year.
This decline in turnover was broadly impacted by the revenue raked from guests lodging in the hotel rooms. In H1 2020, only N1.7 billion was generated from rooms compared with N3.5 billion 12 months earlier, while revenue from food and beverage dropped to N887.4 million from N1.9 billion, with miscellaneous income crashing to N109.9 million from N313.3 million.
In the period under review, the cost of sales went down to N2.7 billion from N4.4 billion, while the gross profit crashed to N177.4 million from N1.5 billion in H1 2019.
However, the other income jumped to N268.3million from N149.1 million as a result of the N13.3 million made from the sales of scrap as well as exchange gain on translation of currency.
Despite the lockdown and the halting of activities in some parts of the country, the administrative and general expenses of Ikeja Hotel increased to N677.7 million from N628.1 million, while the sales and distribution expenses reduced to N124.3 million from N242.6 million, leaving the company with an operating loss of N356.3 million as against the operating profit of N728.3 million in the first six months of last year.
With a finance income of N11.5 million and finance costs of N432.3 million (versus N386.4 million in H1’19), Ikeja Hotel closed June 30, 2020, with a loss before tax of N777.1 million compared with the profit before tax of N341.9 million in 2019 half-year.
In the first six months of last year, the firm recorded a profit after tax of N284.5 million and the board has promised to improve the fortunes of the company as business activities are gradually picking up.
“The company will respond appropriately to reduce this negative impact significantly and improve the fortunes of the company as the government further relaxes COVID-19 pandemic regulations and allows resumption of international flights,” Ikeja Hotel assured.
Ikeja Hotel owns the popular Sheraton Lagos Hotel and also has significant shareholding in the Tourist Company of Nigeria Plc, owners of Federal Palace Hotel & Casino, Lagos.
