International Hotel Investments plc - Full Year Results

Thursday, April 28th, 2005

The Board of Directors of International Hotel Investments plc met on 27 April 2005 and approved the Preliminary Statement of Annual Results for 2004.

During the twelve months ended 31 December 2004, Group turnover amounted to €46.62 million, an increase of 34.3% over the revenue in 2003. This increase in revenue is due to the opening of the Alfa Hotel in Lisbon in June 2004 and the gradual maturity of the Grand Hotel Royal in Budapest, coupled with the positive effect of a steady recovery in the Hungarian hospitality industry.

The Group’s gross profit increased by €4.3 million (39.5%) to €15 million resulting in a margin improvement of 32.3% compared to 31.1% in 2003. Operating costs (including depreciation) increased from €13 million to €14.1 million.

As required by IAS 36 – Impairment of Assets, the carrying amounts of the Group’s hotel properties were tested for impairment. The valuation of the Alfa Hotel in Lisbon resulted in an impairment charge of €6.5 million as the refurbished hotel is in its first full year of operation. On the other hand, the improving results of the Grand Hotel Royal in Budapest resulted in a partial reversal of €4.32 million of an original impairment of €6.45 million recognised in 2003. The total impairment loss in 2003 amounted to €18.3 million. In 2003, however, there was a positive effect of €22.84 million arising from the fair value adjustment of the investment properties in Russia. As noted last year, the Company will be carrying out a valuation of its assets on a yearly basis, as required by International Accounting Standards. This could result in certain impairment charges or write-backs being passed through the profit and loss account on a yearly basis.

The Group incurred pre-operating expenses of €2.3 million which represent start-up costs such as payroll, training and marketing expenses incurred in providing the necessary set-up for the opening of the Alfa Hotel in June 2004. Net financing costs increased by €0.74 million to €8.28 million. This increase was due to interest incurred on new short-term bank facilities that were first utilised in 2004 and a full year’s interest charge on the 2003 bond issue against a 10-month charge in 2003.

The Group’s loss after tax for the year amounted to €8.11 million resulted in a loss per share of €0.07. This is based on the average number of shares in issue during the year of 119,845,839.

As at 31 December 2004, Group assets amounted to €336.5 million with shareholders' funds at €134.3 million. Based on the number of shares in issue as at the end of the year of 129,053,489 the net asset value per share works out at €1.04. IHI’s equity is currently trading at a 25% discount to its net asset value.

In the statement accompanying the Preliminary Statement of Results the Directors noted that "the Group’s performance for 2005 will continue to improve on past years as a result of a general upturn in the hospitality industry across Europe, the accession of Malta and Hungary to the European Union, the lifting of the US sanctions on Libya, and the fact that as from May 2004 the Group has been operating with a full inventory of its hotel rooms after the completion of the refurbishment programme at the Alfa Hotel in Lisbon".

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