Dissecting the Financial Results of Companies in Nigeria's Hospitality Sector - IKEJAHOTEL

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Saturday, May 01, 2021   /06:00 AM  / By Proshare Research / Header Image Credit: EcoGraphics


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Ikeja Hotel Plc

 

Revenue

Ikeja Hotel Plc revenue declined by -59.5% to N5.07bn in 2020 from N12.52bn in 2019. Like other hotels in Nigeria, the effect of the coronavirus pandemic hit Ikeja Hotels plc harshly. All its revenue components fell in 2020 led by a drop in hotel room revenues which slumped by -62.39%, food and beverages dipped by -61.96%, and minor operating departments fell by -1.64% (see Chart 23).

 

Chart 23: Ikeja Hotel Plc Revenue (N'bn)

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Source: Ikeja Hotel Plc Financial Statement, Proshare Research


In 2020, Ikeja hotel's largest revenue came from its room segment which accounted for 57.79% of revenue, while other segments such as food and beverages were responsible for 31.16% of revenue, the minor operating department was responsible for 11.09% (see Table 9).


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Table 9: Breakdown of Ikeja Hotel Plc Revenue

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PAT

Ikeja Hotel Plc recorded a loss of N6.72bn in 2020 from a profit of N834.95m in 2019. The loss incurred could be attributed to the lockdown which led to a decline in revenue by -59.5% (see Chart 24).


Chart 24: Ikeja Hotel Plc PAT (N'bn)

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Source: Ikeja Hotel Plc Financial Statement, Proshare Research


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Expenses

The hotelier recorded a decline in sales & marketing expenses -53.17% while its administrative expenses rose by +265.22% (see Chart 25).


Chart 25: Ikeja Hotel Plc Sales & Marketing Expenses (N'bn)

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Source: Ikeja Hotel Plc Financial Statement, Proshare Research


Sales & marketing expenses dropped to N132.01bn in 2020 from N281.87bn in 2019. Furthermore, administrative expenses rose from N1.84bn in 2019 to N6.55bn in 2020 (see Chart 26).


Chart 26: Ikeja Hotel Plc Administrative Expenses (N'bn)

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Source: Ikeja Hotel Plc Financial Statement, Proshare Research

 

Total Assets

The owner of Sheraton and Federal Palace hotels recorded an increase in total assets by +7.45% to N41.55bn in 2020 from N38.67bn in 2019. Its total non-current assets increased by +18.45% while its currents assets declined by -9.38% respectively (see Chart 27).

 

Chart 27: Ikeja Hotel Plc Total Assets (N'bn)

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Source: Ikeja Hotel Plc Financial Statement, Proshare Research

 

Debt to Equity Ratio

The company's debt-to-equity ratio rose to 37.9% in 2020 from 36.34% in 2019. The increase in its debt-to-equity ratio is attributed to the rise in debt and the decline in equity. Its debt increased by +12.07% to N7.89bn while its equities declined by -7.49% to N20.82bn (see Chart 28).


Chart 28: Ikeja Hotel Plc Debt-to-Equity Ratio (%)

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Source: Ikeja Hotel Plc Financial Statement, Proshare Research

 

Current Ratio

The business's current ratio dropped to 1.25 in 2020 from 1.63 in 2019. This means that Ikeja Hotel had liquid assets of N1.25 for every N1 in short-dated liabilities. Ikeja Hotels Plc's decline could be attributed to an increase in current liabilities by +10.88% while its current assets declined by -9.38%. Its current liabilities increased from N9.93bn in 2019 to N11.01bn in 2020. On the other hand, its current assets declined from N15.25bn in 2019 to N13.82bn in 2020 (see Chart 29).


Chart 29: Ikeja Hotel Plc Current Ratio

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Source: Ikeja Hotel Plc Financial Statement, Proshare Research

 

Acid-test Ratio

Ikeja Hotels Plc acid-test ratio declined to 1.24 in 2020 from 1.56 in 2019.  This suggests that for every N1 of current liabilities, Ikeja Hotels had N1.24 of very liquid assets to cover its immediate obligations.

The decline in acid-test ratio could be attributed to the decline in inventory by -7.68%, current assets -9.38%, and the rise in current liabilities by -79.94% (see Chart 30).


Chart 30: Ikeja Hotel Plc Acid-test Ratio

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Source: Ikeja Hotel Plc Financial Statement, Proshare Research

 

Equity

Ikeja Hotels Plc equity increased by +7.49% to N20.82bn in 2020 from N19.37bn in 2019. The largest component of equities that recorded decline was retained earnings that recorded a decline of -49.15% to N6.27bn in 2020 from N12.33bn in 2019 (see Chart 31).

 

Chart 31: Ikeja Hotel Plc Equity (N'bn)

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Source: Ikeja Hotel Plc Financial Statement, Proshare Research


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Downloadable Version of Proshare Confidential: Hospitality Post-COVID-19: Making the Future Count

1.      Full Report: Hospitality Post-COVID-19: Making the Future Count - Apr 23, 2021

2. Executive Summary: Hospitality Post-COVID-19: Making the Future Count - Apr 23, 2021


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Related Links

  1. Dissecting the Financial Results of Companies in Nigeria's Hospitality Sector - CAPHOTEL
  2. Dissecting the Financial Results of Companies in Nigeria's Hospitality Sector - TRANSCOHOT
  3. Hotels - A Peep into Performance
  4. Hospitality: COVID-19 Related Policy Shifts
  5. Hospitality Before and After - The Unmaking of Hotels
  6. Hospitality: A Post-COVID-19 Reality
  7. Hospitality Post-COVID-19: Making the Future Count

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