(Alliance News) - Ceiba Investments Ltd on Tuesday said its net asset value declined slightly in 2019, due mostly to a drop in the fair value of Miramar SA as travel to Cuban hotels from the US decreased.
The closed-ended investment company reported a NAV per sterling share of 114.5 pence, down from 117.7p, while the NAV per US dollar share dipped to USD1.50 from USD1.49.
During 2019, the Melia Habana and the Varadero Hotels in Cuba performed below expectations in 2019. Mirmara, a joint venture company which owns the hotel investments, was the "principal factor" in Ceiba's NAV decline. These Cuban hotels were hit especially by a worsening of US-Cuba relations, resulting in a drop in US travel to Cuba.
In response the Covid-19 pandemic, Ceiba opted to suspend its dividend policy and cancel the dividend schedules for payment in June 2020. It has also supported Miramar's decision to close its Havana and Varadero hotels and reduce its workforce. It has also opted "to restrict discretionary spending and uncommitted capital expenditure in Miramar".
Chair John Herring said: "In light of the high degree of uncertainty regarding the depth and duration of the Covid-19 pandemic and the resulting economic disruption, it is not possible at the present time to comment on the outlook of the company in the coming years. The board has taken sensible mitigation steps to safeguard the assets and cash position of the company in the present circumstances and the board believes that the company has adequate resources to sustain the immediate period of uncertainty. The board, in consultation with the investment manager, will adjust its views and its actions as new developments occur.
"In addition, the board remains convinced of the long-term investment case for its investment strategy regarding Cuba. The country is resilient and has long experience in dealing with difficult circumstances. We are hopeful that Cuba and its people will weather the present storm as effectively as they have traversed past challenges, and are confident that as this crisis subsides foreign investment will play an even more central role in Cuba's development strategy and that the company will be able to continue contributing in a positive and profitable manner to this strategy."
Shares in Ceiba were down 2.4% at 60.00 pence in London in afternoon trading.
By Anna Farley; annafarley@alliancenews.com
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Ceiba Investme. (CBA)