International Hotel Investments plc - 2006 Interim Results

At a meeting held on 25 October 2006, the Board of Directors of International Hotel Investments plc discussed and approved the financial statements for the six months ended 30 June 2006.

The turnover of the IHI Group during the six-month period to 30 June 2006 amounted to €27.95 million reflecting an increase of 7% on the revenue generated in the corresponding period. The main contributors to this increase were the Corinthia Lisboa Hotel in Lisbon and the Corinthia Grand Hotel Royal in Budapest which helped offset the lower revenues generated by the Corinthia San Gorg Hotel in Malta due to a reduction in the hotel’s room stock due to the refurbishment works. The Group’s gross profit increased by 27.3% to €9.9 million giving a gross profit margin of 35.4%. The Group’s operating costs edged 4.2% higher to €8.8 million with an operating profit of €1.1 million compared to a loss of €0.4 million in the first six months of 2005. The Directors attribute this turnaround mainly to lower depreciation charges. Earnings before interest, tax depreciation and amortisation (EBITDA) rose by 7.3% to €5.8 million. The EBITDA margin remained unchanged at 20.7%. Net financing costs amounted to €4.6 million resulting in a loss before tax of €3.3 million. The IHI Group incurred a loss of €3.5 million in the first six months of the year compared to a €5 million loss in the same period last year.

Total assets as at the end of June 2006 amounted to €384 million, 10% higher than the Group’s assets in June 2005. Shareholders’ funds likewise increased over last year and as at the end of June 2006 totalled €151.1 million. Based on the total number of shares in issue at the end of June of 139,053,489, IHI’s net asset value per share stands at €1.087. The equity is therefore currently trading at an 11% discount to its book value.

Since the end of the interim reporting period, IHI issued a total of 6.5 million new ordinary shares at €1 each to a number of institutional investors namely National Projects Holding Company (NPHC) and Bayan Investments Company, both from Kuwait together with HSBC No-Load Funds SICAV plc, one of the funds managed by HSBC Fund Management (Malta) Ltd. Further to the agreement between NPHC and IHI announced in May 2006, NPHC has an option which expires at the end of this month to acquire a further 33 million new shares at a price of €1 per share. Moreover, NPHC and IHI aim to raise a further €75 million in equity by 31 May 2007 at a price still to be determined. To this effect, the Directors reported in the half-yearly review that discussions are currently underway with other institutional investors for the issue of further equity to be applied in the acquisition and development of landmark hotels primarily situated in emerging markets.

Moreover as detailed in the Company Announcement issued on 10 August 2006, IHI entered into a Framework Agreement with Wyndham Hotel Group International Inc. of the United States, Corinthia Palace Hotel Company Ltd. and CHI Ltd. IHI will be acquiring another 50% shareholding in CHI Ltd. thereby pushing up its stake in this company from 20% to 70% through an issue of 15 million IHI shares to Corinthia Palace Hotel Company Ltd. The other 30% shareholding in CHI Ltd. is being acquired by Wyndham Hotel Group International Inc., one of the largest hotel companies worldwide. Concurrently with this change in shareholding, CHI is entering into exclusive licensing arrangements to offer management services under the Corinthia, Wyndham Grand, Wyndham and Ramada Plaza brands in Europe, Africa and the Middle East (EMEA). This will enable CHI to begin managing the Wyndham hotels in the EMEA region.

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