The provisional annual results of Warimpex Finanz-und Beteiligungs AG published at the start of April with a loss for the period of €35,3 million have now been confirmed by the audited annual figures. While the company’s non-Russian business developed positively in 2014, as evidenced in particular by the 12 percent increase in net operating profit (NOP) per available room in these markets (increase by 2 percent over the entire hotel portfolio), the results for hotels whose guests come primarily from Russia and Ukraine were impacted by the effects of the Russia crisis and rouble depreciation.
The depreciation of the rouble (exchange rate on 31 December 2014 around 68 roubles to the euro, by the end of April 2015 around 56 roubles to the euro) particularly affected the Russian hotels in Ekaterinburg and St. Petersburg, where occupancy remained constant but the lower room rates due to the decrease in the rouble exchange rate resulted in a 10 percent decline in revenues as compared to 2013. At the same time, the crisis also impacted hotels outside Russia whose regular customers include mainly Russian and Ukrainian guests – especially the Dvorak hotel in Karlovy Vary, Czech Republic, which suffered a decline in revenues of as much as 20 percent. As regards measurement, write-downs on office properties in particular had a negative impact on the results in Russia. Finally, the negative trend in the rouble also put pressure on the financial result.
“These foreign exchange losses do not affect cash and thus represent snapshots. A recovery in the currency – as can currently be observed – will therefore also bring about an improvement in our results,” commented Warimpex CEO Franz Jurkowitsch. “At the same time, the successful closing of the sale of parts of AIRPORTCITY St. Petersburg after the reporting date shows that successful transactions are possible in Russia even in these difficult times.”
Due to the declines in revenues caused by rouble exchange rate effects, as well as to hotel sales in Prague and an accompanying reduction in the number of rooms, hotel revenues fell by a total of 11 percent year on year – 5 percent when joint ventures are included on a proportionate basis – to €61.6 million. Consolidated revenues decreased by 18 per cent to €73.8 million.
While operating cash flow from our assets was up 11 percent at €20.5 million, EBITDA declined by 9 percent to €17.1 million. This is attributable primarily to the loss of profits from the sale of properties – the Hotel Savoy in Prague was sold in June 2014 for roughly its carrying amount. The ultimately successful sale of two office towers at AIRPORTCITY St. Petersburg was not closed until March 2015 and therefore is not included in the statement of financial position. Due in particular to impairment losses and a loss on remeasurement of office properties, which have been recognised at market value since 2013, EBIT decreased from €35.6 million in 2013 to €-5.2 million. The impairment relates primarily to Russian properties. Despite a cent decline, earnings from joint ventures are positive at €1.5 million. The financial result was driven down by currency losses to a level of €-31.6 million, ultimately resulting in a loss for the year of €-35.3 million.
Warimpex successfully completed the strategic exit from the luxury hotel industry in Prague in the 2014 financial year. Following the sales of the Palace Hotel and Le Palais Hotel in 2013, the last of its five-star hotels in Prague, the Hotel Savoy, was sold in June 2014. However, Warimpex is staying true to the market with its two strong fourstar hotels, angelo and Diplomat.
There was progress in development business, too, in 2014: Warimpex concluded one of the largest rental agreements on the Hungarian office market in recent years with the long-term lease for 85 percent (around 12,250 sqm) of the ErzsŽbet office building in Budapest. The office complex is currently being revitalised and is expected to be completed and handed over to the tenant in mid-2015. In Russia, construction work for the already leased “Zeppelin” office tower (15,800 sqm) and a car park (around 20,000 sqm) at AIRPORTCITY St. Petersburg is expected to be completed this year. An office building on a building site adjacent to the Chopin Hotel in Krakow is also under development, as is commercial and conference space near the andel’s hotel in Berlin.
Jurkowitsch concluded: “Although we are currently also developing a number of office and commercial properties, we are still hotel industry experts. This is what enables us to implement successful developments such as offices and commercial properties in the areas around hotels. Our objectives for the current financial year are to press ahead with the ongoing development projects in Berlin, Krakow, Budapest and St. Petersburg and also to conclude one or two sales. In April we already signed a Memorandum of Understanding for a sale to an international investor. At the same time, we are constantly working to strengthen our financial basis, improve our financing conditions and further optimise operating cash flows from our assets.”
