Island Hotels Group Holdings plc - Full-Year Results

Tuesday, February 24th, 2015

On 24 February, Island Hotels Group Holdings plc published its financial statements covering the twelve months ended 31 October 2014. It is important to note that the comparable figures for the financial year ended 31 October 2013 have been restated to take into account of the disposal of the Coastline Hotel Limited and MKIC Limited during the year under review. These have been reclassified as discounted operations.

Performance Overview

During the financial year under review, the Island Hotels Group registered a 19.2% increase in revenue to €36.6 million reflecting the Group’s sustained efforts in achieving profits across all areas of activity. In fact, given the combined effect of the record tourist arrivals in Malta during the period under review as well as the Group’s own marketing initiatives, its hotels reported slightly higher occupancy levels and significantly better room rates. Furthermore, the Group registered a higher level of Vacation Ownership sales and an increased volume of activity in the event catering business. Additionally, the Costa Coffee outlets in Malta have also begun to realise their potential. It is also noteworthy to highlight that after the end of the financial year under review, the Group opened its first costa Coffee outlet in Barcelona with a further 7 outlets contracted to open in the months ahead in Spain.

Meanwhile, operating costs only increased by 12.6% to €27.77 million as the Group maintained strict cost control measures across its business especially in the Vacation Ownership area.

As a result, the Group’s earnings before interest tax depreciation and amortisation (EBITDA) improved by 46.1% to €8.79 million.

This improvement was partially offset by a 6.3% increase in depreciation and amortisation to €3 million as well as a 33.8% increase in net finance costs to €3.3 million following the latest bond issue of €35 million.

Overall, the Island Hotels Group registered a significant improvement in pre-tax profits from continuous operations to €2.5 million compared to €0.69 million during the previous financial year. In addition, the Group also recognised a €1.2 million profit from the discontinued operations of the Coastline Hotel and the Monte Kristo Estates which is largely related to the €1.98 million profit on the disposal of the four-star hotel.

After accounting for a tax expense of €0.94 million, the Group’s net profit for the period amounted to €2.7 million compared to €0.55 million for the financial year ended 31 October 2013.

The Statement of Financial Position shows a 6.1% increase in total assets to €149.76 million largely relating to the bond proceeds which have not been utilised given that the Group has postponed the refurbishment of the St. Julian’s property in view of the intention of International Hotel Investments plc to acquire the entire issued share capital of Island Hotels Group Holdings plc. Following the aforementioned €35 million bond issue, total liabilities also increased by 4.2% to €109.4 million. This resulted in an 11.5% rise in shareholders’ funds to €40.37 million which translates into a net asset value per share of €1.104 (FY2013: €0.99).

Proposed Deal by IHI    

On 16 January 2015, the Directors issued a statement confirming that the major shareholders of the Group had reached an agreement in principle for the sale of the entire shareholding to International Hotel Investments plc (IHI). This transaction is subject to the satisfaction of various conditions, including but not limited to the usual due diligence processes, and is expected to be concluded during the course of the current financial year. The conclusion of this deal will lead to Island Hotels Group Holdings plc (IHG) becoming a subsidiary of IHI and, in the process, will be placed in a position to leverage the strength of the IHG operations with those of IHI. The Directors believe that through this transaction the combined operations will be placed in a stronger position to achieve further growth in an important segment of the Maltese economy.

Dividend

In view of the above mentioned transaction, the Directors do not propose the payment of a dividend with respect to the year under review.

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Island Hotels Group Holdings plc – Audited Financial Statements for the financial year ended 31 October 2014.

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