International Hotel Investments plc - Full-Year Results
On 21 February, Island Hotels Group Holdings plc published its preliminary full-year results covering the financial year ended 31 October 2013.
Performance Overview
During the financial year under review, the Group reported a 20.4% increase in earnings before interest tax depreciation and amortisation (EBITDA) to €6.5 million on the back of a 6.6% increase in revenue to €35.3 million (largely reflecting the higher occupancy levels achieved at the three hotels) as well as an improvement in operating efficiencies (both in its hotel operations and vacation ownership business). In fact, the EBITDA margin reached a 3-year high of 18.5% (FY Oct 2012: 16.4%).
Island Hotels reported that it maintained its leading position in the event catering business. In this respect, the Directors noted that the Group has continued with its investment in this area with the opening of a number of COSTA Coffee outlets.
After accounting for depreciation of €3.2 million (-3.7%), net interest expense of €2.9 million (-2.5%) and share of loss from associate of €25,000, the Group’s pre-tax profit amounted to €0.45 million compared to a pre-tax loss of €0.8 million in the previous financial year. The Group benefitted from a tax charge of €0.1 million leading to a net profit for the period under review to €0.55 million representing a significant improvement over the previous year’s loss of €0.99 million. This translates into an earnings per share of €0.015 [FY Oct 2012: €(0.027)].
The Statement of Financial Position shows a 1.7% increase to €141.1 million largely due to a €1.4 million increase in trade receivables. Meanwhile, total equity declined by 0.7% to €36.2 million mainly due to movements in the currency translation reserve. The net asset value per share works out at €0.99. The gearing ratio increased by almost 5 basis points to 65.4% as total borrowings increased by 0.8% to €69.1 million while cash balances shrunk to €0.6 million.
Dividend
Similar to previous years, the Directors did not recommend the payment of a dividend with respect to the financial year ended 31 October 2013.
Outlook
The Directors noted that the Group will maintain its focus on enhancing profit margins and driving growth. In this respect, the Group has just announced its intention to dispose of the Coastline Hotel for €14 million and that it was awarded the exclusive right to open COSTA Coffee shops in Spain (East Coast), Balearic Islands and the Canary Islands. The latter project is expected to commence during the current financial year ending 31 October 2014.
The Group is also still seeking to raise fresh equity in view of the development of the Oasis project, its plans to further up-scale existing room stock and the investment required for the COSTA Coffee overseas venture. Apart from fresh equity capital, Island Hotels also indicated that it is also planning the issuance of a new bond on the local market.
In conclusion, the Directors explained that going forward the Group will focusing its operations on the local five star hotel segment, vacation ownership, event catering and the development of the Costa Coffee brand in Malta and internationally.