During the first six months of 2004, revenue generated from the Group’s four hotel properties amounted to €22.3 million compared to €16.3 million during the comparative period last year. This translates into a 37% rise and is mainly as a result of a significant turnaround in the Corinthia Grand Hotel Royal in Budapest which during the review period was operational for the full six months whilst in the previous year it was only in operation for two months following its official inauguration at the end of April 2003 coupled with a steady recovery of the Hungarian hospitality industry.
Another factor that contributed to this increased turnover is the re-opening of the Corinthia Alfa Hotel and Congress Centre in Lisbon in May of 2004 in time for the European Football Championship during which the Alfa Hotel was booked at premium rates for its first two months of operation. This hotel was closed for a refurbishment project in February of last year. With direct costs increasing by 7.3% to €13.4 million, the gross profit for the six months ended 30 June 2004 amounted to just under €9 million compared to €3.8 million in the same period of last year.
Other operating costs increased marginally to €6.5 million whilst other operating income dropped from €276,261 to €91,565. The Group’s operating profit for the first six months of the year totalled €2.6 million, a significant turnaround compared to the €2.5 loss incurred in the six months to 30 June 2003.
Whilst in the comparative period last year, IHI incurred just over €1 million in staff indemnities following the closure of the Alfa Hotel, pre-operating expenses related to the Lisbon hotel amounted to €2.3 million in the period under review, up from €1.2 million in 2003. Net financing costs increased by 13.8% to €4 million and was mainly due to interest incurred on new short term banking facilities that were utilised in 2004 and a full six month interest charge on the 2003 bond issue compared to a four and a half month charge for 2003.
The changeover to the Euro as the reporting currency of IHI following shareholders’ approval at the Extraordinary General Meeting in December 2003 and its weakening against the Maltese Lira during the first six months of the year resulted in unrealised net exchange losses of €0.6 million compared to unrealised gains of €0.7 million in 2003. Income from IHI’s associates, which is made up of its 20% equity participation in CHI and QPM, amounted to €173,759 as against a minor loss during the first six months of last year.
During the period under review the Group incurred a loss of €4 million before tax, a significant improvement over the €7.6 million loss incurred in the six months ended 30 June 2003. However, the Group benefited from a €3 million tax credit during the review period.
In the half-yearly report the Directors note that this was due to an overprovision in the tax incidence arising on the possible sale of the property in St. Petersburg when this was revalued at the end of 2003. On the strength of professional tax advice the charge for deferred taxation was revised downwards and the overprovision of tax taken last year has been reversed and recognised in the profit and loss account.
This resulted in the Group’s loss amounting to €1 million compared to €7.7 million in June 2003.
Total assets as at the end of June 2004 amounted to €335.5 million with shareholders' funds at €131.1 million, marginally higher than those at the end of December 2003. Based on the total number of shares in issue of 119,053,489, IHI’s net asset value per share stands at €1.10. The equity is currently trading at a 26% discount to its book value.