Compass Hotel Group says it will not achieve its 10 per cent growth forecast for fiscal 2009 as "unprecedented economic conditions" knocked its half year net profit firmly into the red.
The company, which owns a number of hotels and pubs in Western Australia, reported an interim net loss of $80.7 million, down from the previous corresponding period's $9 million.
Included in the net loss was a $21.3 million write down on the fair value of its fixed interest rate financial instrument and a 29 per cent or $58.4 million write down on the carrying value of its assets.
Revenue for the six months to the end of December 2008 was $39.9 million.
Compass said it incurred an operating loss of $2.03 million for the half year, including $911,000 depreciation and a number of one-off expenses totalling $1.37 million.
"The Group has previously stated that integration of all properties acquired took materially longer than had been anticipated due to unforeseen issues relating to staff development and implementation of new systems and overcoming cultural issues which existed in some hotels," Compass said.
"The Group initially geared up for expansion and consequently middle management was bolstered. The unprecedented change in world economies and subsequent flow on effects to WA has changed the Group's direction from expansionary to consolidation of the existing portfolio."
Compass added that food revenue was impacted by negative consumer sentiment which affected revenue by 26 per cent compared to its forecast,
Similarly bar revenue was also affected and combined with the downturn in food sales, revenue for 22 per cent below forecast.
At the end of the period, the company had $3.1 million in cash and cash equivalents, down from $123.1 million.
No interim dividend was declared.
