Fribourg, 18 September 2020
AEVIS VICTORIA SA: Half-year results 2020 - Good overall resilience to COVID-19 crisis
In the first half-year 2020, AEVIS VICTORIA SA (AEVIS) achieved revenues of CHF 346.6 million, 1.5% below the previous year on an adjusted basis (1H2019: CHF 351.8m). Progress in the year 2020, which for the hospitality segment had begun under the best possible prospects with the integration of the Seiler Hotels in Zermatt, the InterContinental in Davos and the reopening of the Eden au Lac in Zurich under the brand «La Réserve», was suddenly interrupted by the Covid-19 pandemic. The hospital segment, which had also benefited from a promising start to the year, saw its activities severely disrupted by the federal ban on elective surgery, despite active participation in the cantonal schemes of the various cantons in which Swiss Medical Network is present. However, the management of each entity reacted quickly and implemented various operational optimisation and cost cutting measures, with a view to preserving liquidity, which resulted in a positive cash flow in both key segments and an increase in the cash flow from operating activities at the Group level by 76% to CHF 12.6 million (1H2019: CHF 7.1m). After repayment of the CHF 55.0 million bond at maturity in June 2020, short and medium-term liquidity is secured with cash and available credit lines in the amount of CHF 65.5 million at the end of the reporting period. Overall, in view of the exceptional circumstances, all the participations of the Group performed honourably well, with an EBITDAR margin of 12.7%, corresponding to an EBITDAR of CHF 38.3 million (1H2019: CHF 47.9m). Due to the debt reduction, the Group's financial expenses strongly decreased to CHF 7.9 million (1H2019: CHF 12.3m). The covenants did not have to be renegotiated and were all respected as at 30 June 2020.
Swiss Medical Network: Solid growth outside the period of forced slowdown in activity
While business was developing well and in line with the budget until mid-March, the ban on non-urgent medical interventions imposed by the Swiss Federal Council between 16 March and 27 April 2020 led to a significant decline in activity during 45 days. Capacity utilization was only 35% in March and April but 90% in May and even above previous year in June. Since the beginning of the second half-year, the situation has almost returned to normal, and Swiss Medical Network's hospitals are operating again, although in budget catch-up mode. Collaboration with the cantons within the framework of health systems has been adapted to each situation, and Swiss Medical Network has now organised itself so that it can make its resources and capacities available in less than 48 hours, which should make a preventive interruption of activity in the event of a recurrence unnecessary.
Swiss Medical Network responded quickly to the pandemic. Externally, the group immediately cooperated with all cantons in a flexible way in order to support efforts to fight the pandemic. Internally, Swiss Medical Network immediately adapted operating processes to mitigate the impact of the forced slowdown in activity of its hospitals. Cost savings were achieved by introducing short-time work during the lockdown and simplifying the hotel services as well as negotiating with property owners or suppliers. The 5-year business plan was extended by one year and certain non-urgent investments were postponed by one year or more. In total, Swiss Medical Network limited the decline in turnover to 5.9%, or CHF 294.6 million (1H2019: CHF 313.0m). EBITDAR fell from CHF 51.1 million in the previous year to CHF 39.4m in the reporting period. The solid margin of 15.7% (1H2019: 19.0%) in these challenging times proves the resilience of the business model.
With the exception of technical unemployment, no compensation has for now been paid by the Confederation, the cantons or insurance companies for the losses caused by the ban on consultations and non-urgent medical interventions promulgated by the Federal Council and the ensuing measures.
Swiss Medical Network believes that this health crisis is an additional catalyst for further consolidation in the healthcare sector. Indeed, this crisis shows the importance of a well-organized care network with strong and flexible healthcare infrastructures. As such, Swiss Medical Network is currently discussing possible acquisitions with several healthcare providers, mainly in outpatient activity. Also, as previously disclosed, AEVIS could progressively reduce its stake in Swiss Medical Network if new strategic investors come on board.
Hospitality: Higher operating result due to strong winter season
After an excellent 2019/2020 winter season, particularly in the mountain hotels, the closure of all hotels as of 19 March 2020 for several weeks had a lasting impact on the results of the hospitality segment. Since the staggered reopening of four hotels (La Réserve Eden au Lac, Bellevue Palace, Grand Hotel Victoria-Jungfrau and Mont Cervin Palace), the level of activity and the average prices in the summer season 2020 were well below previous years. In addition to the lack of foreign guests, the almost complete absence of MICE business (meetings, incentives, conventions, exhibitions), especially in the Bellevue Palace in Berne, was a particular burden. Greater popularity among domestic guests and the growing restaurant business were only partially able to compensate for this decline.
Revenues in the hospitality segment however increased by 49.8% to CHF 43.8 million (1H2019: CHF 29.2m) driven by the acquisitions of the Mont Cervin Palace and Monte Rosa hotels in Zermatt (consolidated since 1 November 2019) and the Hotel InterContinental in Davos (consolidated since 1 January 2020). In organic terms, the recorded decrease in revenues was 51.5%. The increase of the mountain hotel portfolio led to a positive operating result as highlighted by an EBITDAR of CHF 5.5 million, corresponding to a margin of 12.6%.
Growing high quality hotel real estate portfolio
In order to ensure optimum long-term cooperation between its different hotels, the real estate subsidiary Swiss Hotel Properties SA will focus on owning four and five-star hotels. It now controls 17 unique landmark properties with a total value of approximately CHF 435 million. The properties in Zermatt, namely the Mont Cervin Palace and Le Petit Cervin, were formally added to the portfolio in July 2020, after the balance sheet date, and will reduce rental charges in the consolidated result.
The start to 2020 was encouraging in all of AEVIS's focus sectors and helped to mitigate the negative effects of the Covid-19 crisis during the spring and early summer. In recent weeks, visibility improved in the hospitals segment, while developments in the hospitality sector, which contributes approximately one fifth of Group revenues, remain impossible to predict as long as the Confederation maintains its policy of quarantines with variable geometry. AEVIS is therefore refraining from publishing revenue objectives at the Group level for the remainder of 2020, but the EBITDA margin and cash flow from operating activities will remain largely positive, provided that the current trend continues and no further restrictive measures are resumed.
Capacity utilization in the hospitals is very good again since June, but the losses in revenue and margins suffered in the second quarter will not be offset until the end of the year. Swiss Medical Network benefits from its decentralised organisation and agility. Teleworking was already introduced in the Group five years ago, and the administration is largely digitised with a cloud-based IT architecture implemented in recent years with Swisscom.
The coming months will of course continue to be challenging for the tourism and hotel industry. The Group's hotels cannot rely on additional domestic tourism to cushion the cancellations of international guests and the continuing weak MICE activities. The planning of the coming winter season is still subject to the Swiss framework policies that will be applicable and bookings are being received more slowly and at much shorter notice than in previous years. AEVIS will probably take the opportunity of this troubled period to close several hotels and to perform the planned substantial makeover and transformation works, in order to be able to reinforce its market share and remain a leader in the industry when the situation normalizes. The hotel portfolio is solely made up of the jewels of the Swiss hotel industry and its value can only continue to increase once the crisis is over.
AEVIS VICTORIA SA's Half-Year Report 2020 can be downloaded via this link:
Webcast today at 10.00 CET
AEVIS VICTORIA SA will present its Half-Year Results 2020 during a webcast today at 10:00 CET. The results call will be headed by Antoine Hubert, Delegate of the Board. The conference will be held in English.
For participants to the conference call (slides only):
Dial-in numbers for conference call function only:
Switzerland: ++41 44 580 6522
Germany: ++49 692 0174 4220
UK: ++44 203 009 2470
US: ++1 877 423 0830
Code PIN participants: 94434707#
For further information:
AEVIS VICTORIA SA Media and Investor Relations: c/o Dynamics Group, Zurich
Philippe R. Blangey, email@example.com, +41 (0) 43 268 32 35 or +41 (0) 79 785 46 32
Séverine Van der Schueren, firstname.lastname@example.org, +41 (0) 79 635 04 10
AEVIS VICTORIA SA - Investing for a better life
AEVIS VICTORIA SA invests in healthcare, hospitality & lifestyle and infrastructure. AEVIS′s main shareholdings are Swiss Medical Network SA, the only Swiss private network of hospitals present in the country's three main language regions, Victoria-Jungfrau AG, a luxury hotel group managing luxury hotels in Switzerland, Infracore SA (30%, directly and indirectly), a real estate company dedicated to healthcare-related infrastructure, a hospitality real estate division, Medgate (40%), the leading telemedicine provider in Switzerland, and NESCENS SA, a brand dedicated to better aging. AEVIS is listed on the Swiss Reporting Standard of the SIX Swiss Exchange (AEVS.SW). www.aevis.com.