International Hotel Investments plc - Interim Results

On 30 August 2019, International Hotel Investments plc (“IHI”) published its interim financial statements covering the six-month period ended 30 June 2019.

Performance Overview

During the first six months of 2019, IHI generated €122.5 million in revenues, representing an increase of 4.8% over the previous comparable figure of €116.9 million. The growth was driven by the hotel segment which registered a 6.9% increase in revenues to €100.5 million compared to €94 million in the first six months of 2018. On the other hand, revenues at the catering segment contracted by 21.2% to €9.68 million whilst rental income from investment property and hotel management revenues remained virtually unchanged.

On the expenditure side, operating costs (excluding depreciation and amortisation charges) increased by 5.9% to €94.6 million. Accordingly, EBITDA improved by 1.3% to almost €30 million compared to €27.6 million in H1 2018. However, this figure includes the 100% consolidation of Corinthia Hotel London in which IHI only has a 50% shareholding, and also excludes IHI’s share of EBITDA from its 50% shareholding in the Golden Sands Resort. Moreover, the introduction of accounting rule IFRS 16 which came into effect as from 1 January 2019 had a positive effect on the EBITDA reported by IHI of €0.5 million. As a result, on an adjusted basis, EBITDA dropped by 1.9% to €24.9 million largely reflecting the lower contribution from the Corinthia Hotel Tripoli amid the very difficult socio-political environment in Libya.

Depreciation and amortisation charges amounted to €17.3 million, representing an increase of 9.3% over the previous comparable period. Conversely, the financial performance of IHI was boosted by a much lower net finance charge of only €3.52 million compared to €12.6 million in the first half of 2018 on the back of income from treasury activities of €2 million as well as favourable movements amounting to €5.31 million in exchange difference on borrowings (H1 2018: charge of €2.77 million) reflecting the strengthening of Russian Rouble against the euro currency. Meanwhile, the share of loss from IHI’s investment in the Golden Sands Resort increased by 19.5% to €1.02 million (H1 2018: share of loss of €0.85 million) as this hotel property continues with its exercise to refocus its business model.

Overall, IHI reported a pre-tax profit of €5.16 million compared to a pre-tax loss of €2.34 million in the first half of 2018. After accounting for a tax charge of €1.4 million and a loss of €2.09 million pertaining to minority interests (H1 2018: loss of €2.85 million), IHI posted a net profit of €5.86 million which, in turn, translates into an annualised return on average equity of 1.71%.

The Statement of Financial Position as at 30 June 2019, when compared to the corresponding figures as at 31 December 2018, shows that IHI’s net assets increased by 0.3% to €685.3 million which, in turn, translates into a net asset value per share of €1.1131. Total assets grew by 2.6% to €1.66 billion mostly reflecting higher amounts of property, plant and equipment (+€16.7 million) and cash balances (+€14.2 million). Total liabilities increased by 5.6% to €781.6 million largely due to higher amounts of borrowings (+€23.6 million) and trade and other payables (+€17 million).

Outlook

In their commentary, the Directors of IHI explained that the general business outlook for the Group’s hotels and catering operations remains positive. With respect to the catering operations, IHI noted that in June 2019, it acquired the businesses of Corinthia Caterers Limited and Catermax Limited from Corinthia Palace Hotel Company Limited for €1.3 million. These two business units will now be integrated into IHI’s other catering companies which together will be rebranded as ‘Corinthia Caterers’. Furthermore, IHI’s hotel management subsidiary – Corinthia Hotels Limited – remains active in its drive for global growth as planning and/or construction works in various parts of the world (namely, Bucharest, Moscow, Brussels and Dubai) are ongoing.

Download

International Hotel Investments plc – Half-Yearly Report for the six-month period ended 30 June 2019.