International Hotel Investments plc - Interim Results

On 31 August 2020, International Hotel Investments plc published its interim financial statements covering the six-month period ended 30 June 2020.

Performance Overview

During the first six months of 2020, IHI generated €51.7 million in revenues, representing a drop of almost 58% over the previous comparable figure of €122.5 million as a result of the significant disruptions to the hotel business brought about by the ‘COVID-19’ pandemic.

Operating costs contracted by 36% to €72.2 million from €112.8 million in the first half of 2019 as IHI implemented various cost-cutting measures particularly in employee benefits and compensation. Excluding depreciation and amortisation charges which amounted to €18.4 million, IHI recorded a negative EBITDA of €2.13 million compared to a positive EBITDA of nearly €28 million in H1 2019.

IHI’s financial performance was also dented by higher interest expenses (+6.5% to €11.6 million), an adverse movement of €4.06 million in net exchange differences on borrowings (H1 2019: positive movement of €5.31 million) as well as lower finance income  which contracted by -72.7% to €0.56 million. On the other hand, the share of net loss of associates and joint ventures remained virtually unchanged at around €1 million.

Overall, IHI reported a pre-tax loss of €36.7 million compared to a pre-tax profit of €5.16 million in the first half of 2019. After accounting for tax income of €6.59 million and a loss of €5.01 million pertaining to minority interests (H1 2019: loss of €2.09 million), IHI posted a net loss of €30.1 million.

The Statement of Financial Position as at 30 June 2020, when compared to the corresponding figures as at 31 December 2019, shows that IHI’s net assets contracted by 6.8% to €653.2 million which, in turn, translates into a net asset value per share of €1.0609. Total assets decreased by 5.4% to €1.6 billion mostly reflecting the €51.4 million drop in property, plant and equipment to €1.13 billion and the €20.7 million reduction in cash balances to €52 million. Total liabilities dropped by 3.4% to €763.5 million largely due to a €13.3 million reduction in borrowings to €593.3 million, a €7.78 million contraction in deferred tax liabilities to €92.6 million as well as a €5.34 million drop in trade and other payables to €75.7 million.


In their commentary, the Directors of IHI explained that all the hotels and businesses have since re-opened in July or August, except for the Marina Hotel in Malta whose revenue demand is being diverted to the adjoining St George’s Hotel for the coming winter months. In re-opening of the hotels and businesses, IHI has right sized its human resource structure. In fact, in February 2020, IHI employed the equivalent of circa 4,500 persons in hotels and businesses which are owned or managed on behalf of related parties, of whom 3,400 were on full-time contracts. By July 2020, the number of full-time equivalents stood at 2,800 following natural attrition, the termination of part time and casual labour contracts, the non-replacement of retirements and employees on fixed term contracts, and only to a small degree, by way of redundancy programmes in some countries. The present headcount reflects IHI’s expected resource requirements for the foreseeable future. In parallel, certain payroll measures implemented earlier over the months since April have been amended, taking into account changes in Governmental support schemes in some countries, as well as changing legislative parameters for such measures to be implemented. In many cases, since opening the hotels, salary cuts have been either reduced or ended.

Nonetheless, IHI is continuing to maintain tight discipline on all operating costs whilst recruitment is largely on hold. Similarly, all capital expenditure remains suspended, other than projects which had been nearing completion in February 2020.

As business is starting to return, IHI’s targets for 2020 are not ambitious and the financial planning is premised on low revenue expectations and the continuation of subsidies and support schemes only to the extent that these have been publicly committed to. On the other hand, IHI notes the material uncertainties when it comes to forecasting revenues as bookings at the hotels are mostly month-in-month reflecting travellers’ wariness of booking well in advance of travel dates on account of uncertainties related to quarantine and flight cancellations.

In terms of cash, as at the end of June 2020, IHI had a cash balance of €43 million coupled with a further €9 million in marketable investments. To further improve its liquidity, other than benefiting from a moratorium on capital repayments and in some instances also on interest, IHI is also in advanced discussions with a number of banks to tap into EU funds made available in response to the ‘COVID-19’ crisis. Discussions in this respect are ongoing both in Malta and in the Czech Republic.

Despite the extraordinary circumstances, IHI noted that it remains focused on all of its new projects. Works are underway on Corinthia Hotel projects on site in Dubai, Doha, Rome and Moscow, where subsidiary companies are involved as development partners, technical services providers and hotel operators, with most of the capital funding for these projects being provided by third parties. Furthermore, a main contract for the redevelopment of the Grand Hotel Astoria in Brussels (which is only 50%-owned by IHI) is under negotiation with a renowned contractor. As for the redevelopment of the site known as Hal-Ferh in Malta, IHI explained that a public consultation process is underway to allow a degree of residential developments within the parameters on the gross floor area and building heights permitted albeit keeping with IHI’s intention of pursuing a low-rise, extensively landscaped mixed-use development.


International Hotel Investments plc – Interim Financial Statements for the six-month period ended 30 June 2020.

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