Solid performance driven by significant improvement in hotel operations

Durrant Pate/Contributor

Sagicor XFund has turned in a solid year-to-date performance in which it has reversed the losses incurred last year to post net profits attributable to stockholders of J$211.60 million.

This is a significant improvement over the prior year’s net loss of J$65.43 million. The solid performance for the nine months ended September 30, 2022 continues to be driven by Sagicor XFund’s hotel operations, buoyed by an increase in bookings and occupancy levels.

The Group’s earnings per share improved to J$0.09 (-$0.03 in September 2021). XFund’s share price ended the September quarter at J$8.20 with a market capitalisation of J$18.39 billion.

Earnings for the group were bolstered by a 32 per cent year-over-year growth in total revenues to end the period under review at J$5.17 billion. Occupancy levels increased alongside hotel bookings, which resulted in a J$2.16 billion or 71 per cent rise in hotel revenues over 2021.

Big jump in hotel expenses

Hotel expenses also increased by J$1.40 billion or 59 per cent but operational efficiencies were evident with hotel margins improving from 21 per cent to 27 per cent. An increase in the group’s interest-earning assets coupled with a decrease in finance costs contributed positively to the overall performance.

However, market volatilities resulted in capital losses of J$231.70 million, a decrease against the prior year’s gains of $791.57 million. Sagicor XFund’s main hotel operations, DoubleTree Orlando (DTO) in Florida, recognised profits of J$343.89 million against the prior year’s loss of J$185.04 million, an improvement of J$528.92 million.

The hotel segment is operating considerably better than in the pre-pandemic era of strong performance. This is driven by the accelerating demand for hotel rooms, which led to occupancy levels increasing by 10 per cent over September 2021 to close the period at 93 per cent.

The segment also benefitted from the average daily rate increasing by 39 per cent, which aligns with the growing demand for leisure-related activities. EBITDA for the period came out at J$1.41 billion, which is more than double the results of the same period last year.

A combination of strong revenue growth and the implementation of cost-containment strategies are the major contributors to the performance.

Indirect commercial operations flopped

Indirect commercial operations have seen significant improvements with net losses shrinking by 99 per cent against the prior year. The performance of the segment is driven by fair value movements on Sagicor XFund’s holdings in the Sigma Fund. In the other operations segment, a loss of J$130.83 million was reported compared to a profit last year of J$643.70 million.

The performance reflects unfavorable market conditions as foreign exchange and capital losses for the period were J$72.6 million and J$157.2 million respectively. However, growth in investment securities resulted in an improvement in net investment income of J$134.54 million, up 175 per cent since 2021.

Additionally, substantial debts were retired, which resulted in savings of J$183.13 million on finance costs. The Group generated positive cash flows of J$1.99 billion from its operating activities an improvement over the prior year’s J$716.19 million.

Cash and cash equivalents excluding restricted cash increased to J$4.89 billion (September 2021: J$4.14 billion), evidencing the financial health of the Group. Total assets at the end of the period were J$28.37 billion, nine per cent less than the J$31.32 billion as at December 2021.

The decrease is primarily due to the wind-up of Jamziv, which led to the cancellation of a promissory note with the non-controlling interest holder. Stockholders’ Equity at September 2022 was J$18.71 billion, an increase over the J$16.59 billion as at December 2021, due to the gains on the revaluation of hotel property and strong performance from the hotel operations.