IHI reports pre-tax loss of €1.5m

International Hotels Investment has reported a pre-tax loss of €1.5 million for 2009 compared to a profit of €22 million in 2008.

Revenue dropped by €24.6 million to €103.3 million.

In 2008, IHI had registered a significant increase in the carrying amount of its properties, which had resulted in a substantial positive effect on the income statement for that year through the revaluation to fair value of investment properties amounting to €26.3 million and a net positive effect of €3.5 million. In 2008, the group had also recognised an impairment of goodwill amounting to €15.1 million.

"In 2009, in view of the global recession, the value of some of the group’s hotel properties computed on the basis of future cash flows discounted to present day values, was negatively affected. The properties mostly affected were those in Central Europe. This impairment was, however, off-set by the geographical and sectoral diversification of the group’s activities which resulted in uplifts in values of the group’s properties located in the United Kingdom, Russia and Libya. The final effect of these adjustments was a net revaluation uplift of €4.2 million," IHI said.

In 2009, the Group invested €59.7 million mainly on two projects, the completion of the Nevskij Palace project in St Petersburg and work on a major new hotel in London.

During the year, the Group raised an additional €44.4 million through a new bond and from bank borrowings. It also repaid €20.6 million in bank loans for a net increase in total borrowings of €23.8 million. Notwithstanding the difficulties faced by the international banking sector in 2009, the Group succeeded in securing a £135 million syndicated bank loan for its associate company NLI Limited to part finance the acquisition and development of the Corinthia Hotel and Residences in London, which project is expected to be completed by the end of 2010.

The group, in partnership with LFICO, stepped up its efforts on the mixed use development of a five-star deluxe hotel, office and residential complex in Benghazi, Libya. The application for the building permit and other groundwork necessary for this project are now at an advanced stage and construction works are expected to commence soon.

In July 2009, the group’s hotel operating company CHI Limited started to operate the Tiran Island Hotel in Sharm El Sheikh, Egypt, under a management agreement from a third-party owner.

IHI said that on the international scene there are now signs of a gradual yet slow recovery of the hospitality industry in general and this augured well for its activities.