International Hotel Investments plc - Interim Results

Thursday, August 24th, 2017

On 24 August, International Hotel Investments plc published its interim financial statements covering the six-month period ended 30 June 2017.

It is important to highlight that following a change in the structure of the Board of Directors of NLI Group (“NLI”) – which is the owner of the hotel properties located in London and Brussels – the financial performance of NLI is, for the first time, being consolidated with the rest of the IHI Group. Accordingly, the financial results for the six-month period ended 30 June 2017 are not directly comparable with those of the first half of FY2016.

Performance Overview

During the first six months of FY2017, IHI generated €115.3 million in revenues reflecting growth across all of the Group’s business lines. On the other hand, direct and other operating costs amounted to €88.3 million, leading to an EBITDA of €27 million.

IHI explained that on a like-with-like basis, EBITDA excluding the London and Golden Sands hotels surged by 35.2% to €20.5 million from €15.1 million generated in the first six months last year. On the other hand, the 50% share of EBITDA generated by the London and the Golden Sands hotels in aggregate dropped by 22.4% to €5.31 million from €6.85 million. IHI also made reference to the adverse effect of the weakening in the value of Pound Sterling against the Euro which materially impacted the results of the Corinthia Hotel London when translated into Euro. In fact, whereas Corinthia London registered a 16% increase in EBITDA over H1 2016 in Pounds Sterling, this was only 4% higher when translated into Euro.

In total, overall EBITDA (including the contribution from the London property and Golden Sands) amounted to €25.8 million (2016: €22 million).

After taking into account depreciation and amortisation costs, which during the period under review amounted to €16.9 million, IHI reported an operating profit of €10 million. The Group incurred €10.4 million in net finance costs as well as a €2.89 million charge related to net foreign exchange translation differences compared to a positive adjustment of €5.32 million registered in the first six months last year. On the other hand, the share of profit from equity accounted investments, which reflects the 50% share of profits of IHI’s investment in the Golden Sands Resort, amounted to €0.96 million when compared to just €0.1 million generated in H1 2016 which also included the London Hotel.

Overall, IHI reported a pre-tax loss of €2.3 million. After accounting for a tax credit of €0.44 million and a loss of €1.4 million pertaining to minority interest, the net loss attributable to the owners of the Company amounted to €0.46 million.

The condensed Statement of Financial Position as at 30 June 2017, which also reflects the consolidation of the Corinthia London Hotel, shows total assets at nearly €1.58 billion and total liabilities at €730.4 million, resulting in a total equity base of €849.4 million. The latter translates into a net asset value per share (excluding minority interests) of €1.10 from €1.08 as at the end of December 2016.

Outlook

Looking ahead, the Directors noted that the general business outlook for IHI’s hotels and the catering business remains positive with year-on-year growth forecasted in both turnover and operating profits.

With respect to the 50%-owned Corinthia Grand Hotel Astoria located in Brussels, IHI noted that it is moving ahead with its plans to extend and refurbish this property which was acquired in 2016. As such, IHI is expecting to start construction works by the end of 2017 while it is being anticipated to open for business late in 2019. Funding for this particular project has been secured through fresh bank borrowings.

IHI also remarked that its hotel management arm – Corinthia Hotels Limited (“CHL”) – remains very active in its pursuit for further global growth. At present, two new Corinthia branded hotels are being built – one in Dubai and another in Qatar – where CHL has been engaged as the operator by the investors owning these two developments. Furthermore, CHL expects to conclude other similar agreements in 2017, including in the United States and Germany.

The Directors also made reference to the Company Announcement dated 31 January 2017 whereby it was explained that IHI appointed Numis Securities to help it explore financing options, including potential capital raising to enable the Group to take advantage of its growing pipeline of potential development project opportunities.

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International Hotel Investments plc – Interim results for the six months ended 30 June 2017.

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