Ikeja Hotels reports N3.79 billion pre-tax profits, up 213% YoY

Ikeja Hotels Plc has reported a profit before tax of N3.79 billion for the year ended 31 December 2023.

According to the financial statements reviewed by Nairametrics, Ikeja Hotels reported revenue of N11.113 billion, a 13.83% decline from the N12.9 billion reported the year prior.

A significant portion of this revenue was from room sales of N7.21 billion compared to the N7.5 billion reported a year earlier.

Key highlights (2023 vs 2022 FY)

• Gross earnings: N11.1 billion -13.83% YoY
• Cost of sales: N6.984 billion -24.58% YoY
• Gross profit: N4.13 billion +13.53% YoY
• Exchange gain: N2.195 billion +1,726% YoY
• Sales and marketing expenses: N403 million +26.53% YoY
• Administrative expenses: N1.499 billion -74.62% YoY
• Operating profit: N4.460 billion +284% YoY
• Finance cost: N1.188 billion +12.13% YoY
• Profit after tax: N2.074 billion +152.66% YoY
• Earnings per share: N0.96 +151% YoY

Ikeja Hotel’s share price closed at N6.43 (up 9.9%) on Wednesday March 27th, 2024. The share price is up 7.17% YTD and has a 52-week high of N10.2 per share.

Key insights of the result

• Profit surge: The substantial growth in pre-tax profit can be attributed to the significant growth in exchange gains. The group recorded exchange gains of N2.195 billion, representing about 1,726% YoY growth.

This shifted the company’s financial performance from a loss in 2022  to profitability in 2023

• Expense Analysis: On the expense side, especially the administrative expenses, it declined due to a one-off loss of N4.5 billion from the partial disposal of its interest in Capital Hotels Plc, which was recognized in 2022.
• Balance Sheet: Total assets grew by 100% YoY to N59.76 billion with robust cash reserve of N14.45 billion. Also shareholders’ funds increased by 203% to N23.587 billion driven by revaluation reserve.

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