International Hotel Investments plc - Full-Year Results & Bonus Issue

On 9 April 2008 International Hotel Investments plc (IHI) published its Preliminary Profits Statement for the year ended 31 December 2007. The Directors are recommending a bonus issue of 3 new shares for every 100 held. Shareholders as at close of trading on Tuesday 15 April are eligible to this bonus share issue, which will be put forward for shareholders’ approval during the Annual General Meeting scheduled to take place on 15 May 2008.

The key highlights are:
• Turnover rises to €104 million;
• EBITDA climbs to €33.8 million;
• Revaluation of investment property of €7.7 million;
• Pre-tax profit of €14 million;
• Shareholders’ funds of €585.6 million (NAV per share of €1.09);
• Bonus share issue of 3 new shares for every 100 held.

Total revenue generated by the IHI Group during the year ended 31 December 2007 amounted to €104.2 million compared to €60.4 million in the previous year. The Directors attributed this increased turnover to 3 factors, namely: (i) the improved performance of the hotels in Budapest, Lisbon, St.Petersburg and Malta; (ii) the full-year’s contribution of the management company CHI Ltd; and (iii) the 7-month contribution from the newly-acquired hotels in Prague and Tripoli. Direct costs increased to €65.7 million, resulting in a gross profit of €38.5 million (2006: €21.3 million) with other operating costs rising by 23 per cent during the period under review to €22.3 million.

Earnings before interest, tax, depreciation and amortisation (EBITDA) surged to €33.8 million from €13 million in 2006 with the EBITDA margin improving to 32.4 per cent (2006: 21.6 per cent).

While in 2006, IHI recognised an impairment loss of €7.2 million on the Corinthia Lisboa Hotel in Lisbon, no further impairment was taken in 2007. Meanwhile, in line with the Group’s policy of revaluing the carrying amounts of its properties to fair value, two uplifts in the value of investment properties totalling €7.7 million were recognised in the income statement. The Directors explained in the Preliminary Profit Statement that a €5.7 million increase in value was recognised on one of the plots of land adjacent to the Corinthia Nevskij Palace Hotel in St. Petersburg with the other €2 million in relation to the Commercial Centre in Tripoli.

Net financing costs increased to €9.8 million following the rise in interest rates as well as the additional debt assumed on the acquisition of the two hotels in Libya and Czech Republic.

The IHI Group registered a pre-tax profit of €14 million during the year under review compared to a loss of €10.7 million in 2006. After accounting for taxation and the profit attributable to minority interests, the Group’s profit for the year amounted to €9.6 million.

Total assets of the IHI Group as at 31 December 2007 amounted to €989.2 million, significantly above the level in 2006 following the acquisition of the hotels in Libya and Czech Republic. Shareholders’ funds likewise increased to €585.6 million reflecting the issue of 192 million shares to Corinthia Palace Hotel Co. Ltd. as part consideration for the acquisition of the new hotels and the issue of 178 million shares to Istithmar Hotels of Dubai. IHI’s net asset value per share increased to €1.09.

Following the cash injection by Istithmar of €178 million, IHI had stated that this new capital will be used to purchase additional properties to increase the Group’s hotel portfolio. In recent weeks IHI issued two important announcements related to its acquisition programme.

O 6 February 2008, IHI announced that its bid for the acquisition of the Metropole Hotel and adjoining 10 Whitehall Place in London was successful. IHI along with its principal shareholders Istithmar and Libyan Foreign Investment Company (LFICO) acquired the property for GBP130 million (€174.4 million) from The Crown Estate of the UK. IHI and its partners are committed to develop this building into a 283-room five-star deluxe hotel and 12 luxury apartments. This hotel is scheduled to open in 2011 and CHI – the Group’s hotel management arm – will be responsible for its operation under the Corinthia brand.

Moreover on 22 February 2008 IHI announced that it entered into a Memorandum of Understanding with LFICO for a joint-venture agreement to develop a 5-star deluxe hotel on the waterfront in central Benghazi, Libya. IHI and LFICO plan to develop the 7,000-square metre site into a 360-room hotel with offices and retail outlets earmarked for rental to third parties. Construction is expected to commence in 2008 and on completion the hotel and other facilities will also be operated by CHI Limited.

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