On 4 April International Hotel Investments plc announced its preliminary results for the financial year ended 31st December 2011. Despite being affected by the turmoil in Libya, for the financial year under review the Group reported a 2.3% increase in revenue to €104.2 million (2010: €101.8 million). The Corinthia Hotel in Tripoli, historically the Group’s main contributor to revenue and profitability, suffered a 35% drop in revenue equivalent to €10.6 million from the downturn in business at this hotel during the war conflict in Libya. This was offset by a €13.1 million increase in revenue across all other Group properties which with the exception of Corinthia Hotel St.George’s Bay in Malta, registered doubled digit growth in turnover.
On the expenditure side, direct costs increased by 2.6% to €53.86 million in line with the improved hotel occupancy levels. On the other hand, the Group reduced other operating costs on measures taken at Corinthia Hotel Tripoli to reduce overhead costs in view of the forced stoppage at this property. After accounting for the write-off of non-recurring costs incurred in prior years amounting to €1.8 million, total operating costs increased by 5.7% to just below €28 million. The Group reported a 2.1% drop in earnings before interest, tax, depreciation and amortization (EBITDA) to €22.4 million.
Depreciation charge for the financial year 2011 amounted to €24.4million and was in line with that reported for 2010 at €24.7million.
The valuation of the Group’s investment properties resulted in a net uplift of €5.5 million mainly due to the increase in the value of the new commercial center in St. Petersburg, Russia. On the other hand, the valuation of the Group’s hotel properties declined by €2.5 million as the €4.5 million uplift in the value of the hotel in Prague was offset by the €4.3 million impairment on the Corinthia Hotel in Budapest as well as a €2.7 million reduction in the value of the Corinthia Hotel St. George’s Bay. It is also noteworthy to highlight that the IHI Group also reported an impairment expense of €10.2 million on the Corinthia Hotel St. Petersburg and a further €4.4 million impairment charge on its share of Corinthia Hotel London. The latter two impairments were not included in the income statement but registered in the statements of comprehensive income as per accounting rules.
Overall, the IHI Group reported an operating profit of €0.9 million compared to the €3.3 million profit recorded in 2010.
IHI also accounted for a €1.2 million profit from its 50% investment in Corinthia Hotel London (inaugurated in April 2011) and adjoining apartments. The Group also reported an increase in financial income of €1.2 million over the last year on gains on currency translation. Finance costs edged 7.5% higher to €15.73 million reflecting the rise in euribor base rate and the Group’s additional bank borrowings to finance the investment in London and equity stake in Medina Tower in Tripoli. As a result, IHI’s loss before tax amounted to €11.8 million (2010: €11.4 million loss). After accounting for a tax income of €1.1 million, the Group reported a loss for the year of €10.4 million (2010: €12.5 million loss) for a negative earnings of €0.02 per share. The board of directors decided not declare a dividend.
In its outlook for 2012 the Group explained that given the resilience showed during the significant adverse events of 2011 (namely the turmoil in Libya and the Eurozone debt crisis) IHI remains confident that this year the Group will continue to improve its profitability. This will be achieved through sustained improvement in the operating performance and cost effective set-up.
The Directors also noted that in February 2012, the Group acquired the Corinthia Marina Hotel (adjacent to the St.George Hotel in St.Julians, Malta) from its parent company, Corinthia Palace Hotel Company Ltd. IHI also expects that works on the 12 luxury apartments located in Whitehall Place London will be completed by mid-2012.
Download a copy of the International Hotel Investments plc 2011 Preliminary Full-Year Results.