International Hotel Investments plc - Full-Year Results
On 23 April, International Hotel Investments plc published its financial statements for the year ended 31 December 2013.
Performance Overview
During the year under review, the IHI Group registered a 4.4% increase in revenue to €123.7 million on the back of increased turnover across all the fully-owned hotels with the exception of the Corinthia Hotel Prague. This revenue figure excludes the contribution from the Corinthia Hotel London which is 50% owned and therefore not consolidated with Group results. The preliminary report also noted that the best performer during 2013 was the Corinthia Hotel and Commercial Centre in St. Petersburg (+18%) whilst the Corinthia Hotel Tripoli managed to grow its revenue figure by 12% despite the uncertainty that still adversely affects the North African country.
Direct costs and other operating expenses increased in line with (i) the growth in occupancy rates, (ii) additional payroll costs in Libya in view of changes in the country’s work practices and (iii) enhanced brand service standards being introduced across the Group. Furthermore, the 2012 cost base included a one-time cost of €1 million incurred in connection with the acquisition of the Marina Hotel.
As a result, the IHI Group registered an earnings before interest, tax, depreciation and amortisation (EBITDA) of €34.98 million representing a 26.2% increase over the previous year’s comparable figure. The EBITDA margin improved from 23.4% in 2012 to 28.3% in 2013.
The depreciation and amortisation charge declined marginally to €23.76 million as certain assets become fully depreciated. Furthermore, the income statement of IHI was positively impacted by a €5 million reversal of prior years’ impairments on the Lisbon property (2012: €7.8 million impairment largely relating to the Lisbon property) as well as a €0.57 million uplift in the fair value of the Commercial centre in St. Petersburg (2012: €4.2 million uplift in the value of the same property).
Overall, the Group registered a turnaround in operating profit to €16.8 million compared to the marginal loss of €0.13 million registered in the previous financial year.
On the other hand, the income statement was adversely affected by the €5.8 million charge relating to the share of loss from equity accounted investments which mainly includes the Corinthia Hotel in London in contrast to the €5 million share of profit registered in the previous financial year. Nonetheless, it is noteworthy to highlight that the 2012 figure includes a one-time uplift in the value of the twelve London residences. In fact, the preliminary results noted that the operational performance of the hotel in London improved in 2013 with its operating profit growing to GBP14 million from GBP8 million in 2012.
Net finance costs also decreased by 13.4% to €15.9 million reflecting the lower debt levels as the Group continues to honour its capital repayments. IHI also benefitted from a €1.9 million (2012: €1 million) uplift in the net fair value gain on interest rate swaps as the securities approach maturity thereby reversing prior year impairments.
As a result, the loss for 2013 amounted to €4 million compared to €11.4 million in the previous financial year. However, after accounting for a tax credit of €4.3 million, the Group’s 2013 net profit position was practically break-even at €0.27 million.
The Statement of Financial Position shows total assets edging 0.4% higher to €1,092.7 million whilst total liabilities were reduced by 4.6% to €466.2 million. Total equity increased by 4.4% to €626.5 million largely reflecting the Group’s share of the uplift on the value of the London hotel which was partially offset by the impairment on the St. Petersburg hotel. This translates into a net asset value per share of €1.13 (2012: €1.083).
Events after financial year-end
After the end of the 2013 financial year-end, the IHI Group sold 11 of the 12 residential apartments adjoining the Corinthia Hotel in London. The remaining apartment, namely the Penthouse, is being retained by NLI. However, the Group failed to disclose the consideration received for the sale of the 11 apartments for confidentiality reasons.
The Directors of IHI also approved the payment of a net interim dividend of €0.03 per share (equivalent to a total of €16.62 million) to all shareholders as at the close of trading on Monday 28 April. The dividend will subsequently be paid on 16 May.