IHI management confirms that St George's Bay will go ahead in 2019

IHI management confirms that St George's Bay will go ahead in 2019

Interim results show loss after tax of €2.7 million

The Corinthia in London had some disappointing months.

The Corinthia in London had some disappointing months.

On August 31, the Board of Directors of International Hotel Investments plc (IHI) released the interim financial statements for 2018 for the IHI Group, which posted a loss after tax of €2.7 million.

The group currently owns 12 hotels and manages nine additional hotels. Four of these hotels, which are located in Brussels, Dubai, Bucharest and Doha, are still at development stage and are expected to be opened between 2019 and 2020.

The group is also active in real estate project management through QP Management Ltd and in property development through Corinthia Developments International Ltd.

During the first six months of the year revenue increased by 1.4 per cent to €117 million, as a result of a rent agreement signed with an international oil company for some office space in the Commercial Centre in Tripoli, general operational improvements and the consolidation of the Corinthia Palace Hotel from April 1, 2018.

At an EBITDA (earnings before interest, tax, depreciation and amortisation) level, the group registered an improvement of €600k, despite the Corinthia Hotel in London (the flagship of the Corinthia brand) achieved quite poor financial results in the first months of the year. In this regard, the management explained that, according to the available financial information, the financial performance of the London hotel in July and August picked up, recovering the fall in the first months. Additionally, in order to improve the general performance of the hotel, the management decided to convert the 20 less profitable standard bedrooms into suites to benefit from the opportunities within this segment.

Depreciation and amortisation decreased by €1 million despite the consolidation of the Corinthia Palace Hotel as a result of an exercise which determined an assessment and increase of the group’s buildings useful life.

The group also posted a €500k impairment loss attributable to the Island Catering brand, which is going to be impaired over a three-year period at €1 million per annum.

Compared to a net profit of €1 million in H1 2017, Corinthia Golden Sands registered a loss of €257k. According to the management this is attributable to a change in marketing/selling strategy for the time share apartments, which has been implemented recently and has not yet picked up. The management also decided to convert a floor of meeting rooms into super suites primarily to sell them through time-share.

Net finance costs decreased by €1.3 million as a result of the bank loan repayment started in 2017. In August 2018, the group raised a loan of €40 million from Bank of China partly to refinance an existing loan of the Corinthia Hotel in Lisbon and partly to finance the refurbishment of this property.

The group remains significantly exposed to foreign exchange risk due to part of the operations being denominated in Russian rouble and sterling. During the first six months of 2018, the group registered a €2.8 million net exchange loss on borrowings, in line with the comparing period, due to borrowings denominated in euro whereas the reporting currency is the Russian rouble.

The management indicated that, depending on the yearly financial results for 2018, the board would consider the payment of a final dividend.

Going forward, the group is actively looking at investment opportunities both in and outside Europe; for instance, it has signed two exclusivity agreements, one in Moscow and one in Cannes (France), with the intention to develop and operate two new Corinthia hotels and residential units (in Moscow only). In New York, the group is seeking financing for a development project.

In Malta, the management informed that the designing and planning of the site in St George’s Bay are well underway and the group expects the development works to start during 2019.


This article was issued by Elisabetta Gaudiano, Research Analyst at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice.

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