International Hotel Investments plc - Full Year Results

The Board of Directors of International Hotel Investments p.l.c. announced the financial results for the year ended 31 December 2003 denominated for the first time in Euros following shareholder approval at the Extraordinary General Meeting on 9 December 2003.

During 2003, total Group turnover amounted to €34.7 million, an increase of 4.7% over last year. It is worth noting that due to the closure of the Alfa Hotel in Lisbon in February 2003 (for an extensive refurbishment programme which was completed in May 2004) and the opening of the Grand Hotel Royal in Budapest in April 2003, only 36% of the Group’s room stock was in operation for the period under review. Moreover, 2003 also proved to be another difficult year for the international hotel industry in general.

Given these circumstances as well as exceptional items, the Group incurred a loss after tax of €9.3 million. Following the closure of the hotel in Lisbon, the Group incurred substantial costs relating to staff indemnity payments (€1.2 million) and pre-operating expenses (€2.9 million). Also, as required by International Accounting Standard 36, a revaluation of IHI’s assets was carried out including a revaluation of investment property in line with the fair value model of International Accounting Standard 40. The combined effect of these items resulted in a net increase of €6.6 million in the value of the property in the Group balance sheet.

This adjustment comprises a decrease of €17.8 million in the value of the San Gorg Hotel in Malta and the Grand Hotel Royal in Budapest and an increase of €24.4 million related to a higher value attributable to the properties adjacent to the hotel in St. Petersburg. It appears that the Company will be carrying out a valuation of its assets on a yearly basis, as required by International Accounting Standards, and which could result in significant changes year-on-year.

As at 31 December 2003, Group assets amounted to €323.7 million with shareholders' funds at €130.5 million. Based on the weighted average number of shares in issue of 119,051,305 the net asset value per share works out at €1.10. IHI’s equity is currently trading at 30% below its stated net asset value.

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