Approval of Interim Unaudited Financial Statements and information to the market related to variances

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HH Finance plc has announced that during its meeting held last week, the board of directors approved the company’s interim unaudited financial statements for the six-month period ending 30 June.

The year 2020 is likely to see the company close its accounts and financials with the following variances relative to full year 2020 projections previously published including:

1.         An increase in the valuation of the investment property held by the company (H Hotel, situated at Triq Santu Wistin, Paceville, St Julian’s Malta), projected at €35,000,000 and revalued at €45,000,000, thus resulting in a €10,000,000 difference. This was occasioned by a valuation of the property in terms of the relevant disclosures made in the financial statements for the financial year ended 31 December 2019;

2.         A reduction of the non-current liabilities versus projections made, in particular a reduction in the intra-group payables owed to Hugo’s Hotel Limited by €3,000,000 in line with representations made in Company Announcement Ref: 16/2020, MSE Ref: HHF36;

3.         The above explains the higher net assets and total shareholder equity the company expects to close the year 2020 with;

4.        Finally, and in conclusion, the company expects for revenues in 2020 to be approximately 30% higher than that projected for the year 2020 due to a change in accounting policy of the company following advice from its auditors and the necessary adjustments being made. This is in relation to and by reason of the accounting treatment of rental income generated from the investment property and allowing for its recognition on a straight-line basis during the course of the lease.

The company would also like to update the market on the continued adverse effects of the COVID-19 pandemic on the core business of the Lessee of the investment property (hotel business) and the measures applied by the health authorities to reduce contagion, including restrictive measures relating to travel and gatherings of a certain size.

It is undeniable that the protraction and uninterrupted duration of such conditions and the consequential stresses on the tourism industry locally continue to weigh on the operations and business of the Lessee and shall continue to contribute to the adverse conditions on the business.

While the company has no reason at this time to doubt that the company and Lessee shall be able to continue servicing their obligations over the coming months, the uncertainty relating to the return to normality of the tourism industry and a global resolution to the pandemic-related crisis has heightened sensibility of the company for prudence and vigilance of unforeseeable and, or accelerative triggers of an adverse nature and outside of the company’s control.

As this volatile situation related to contagion, locally and abroad, as well as public health measures continue to evolve – and their incidence on the business of the company and the Lessee become actual and material – the company will update the market accordingly.