International Hotel Investments plc - Interim Results

On 22 August, International Hotel Investments plc published its 2014 interim results covering the six months ended 30 June 2014.

 Performance Overview

During the first six months of 2014, the IHI Group registered a 6.6% decrease in revenue to €55.6 million. This decline was largely the result of geopolitical unrest in Russia and Libya which has significantly impacted the demand for hotel accommodation in St Petersburg and Tripoli. Meanwhile revenues from the Group’s hotels in Malta, Prague, Budapest, Lisbon and London continued to increase year-on-year, although these increases did not offset the negative impact of Russia and Libya.

While the Group’s finance costs declined by 30% to €7.6 million, underpinned by the lower interest rates payable due to principal loan repayments and an FX loss of €2.2 million that was not repeated this year, the Group experienced an increase in operating costs of 4.3% compared to the same period of last year. This resulted in a 23.7% decline in EBITDA to €12.4 million.

After accounting for losses emanating from equity investments of €11.2 million (1H2013: €4.6 million; +141.4%), the Group’s loss before taxation amounted to €13.7 million. A tax credit of €6 million however, brought the net loss down to €7.7 million.

The Group’s balance sheet shows total assets of €1.06 billion (FY2013: €1.09 million), including a bond sinking fund of €6.1 million in favour of bondholders. The repayment of some borrowings brought the Group’s liabilities down by 3.4%, while IHI’s equity stood at €606.1 million.

Outlook

The Directors explained that while the outlook for IHI’s hotels in Budapest, Lisbon, Malta and Prague remains positive, Libya and Russia are of concern. The unrest in Libya has severely curtailed international demand for hotel accommodation in Tripoli and the surrounding areas. Nevertheless, IHI continues to operation the Tripoli hotel, through a nucleus of core employees, after it was forced to downsize its staff complement. In Russia, the performance of the St Petersburg hotel was adversely affected by the developments in Ukraine, resulting in a volatile ruble and weakened demand for hotel accommodation, apart from the cancellation of a number of major events and conferences planned. The Directors do not exclude the possibility that these events could have a negative impact on the value of the property at the end of this financial year, and the resultant full-year performance could be negatively impacted accordingly.

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International Hotel Investments plc – Half-Year Report covering the six months ended 30 June 2014