07 July 2004

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IHI expecting positive turn in 2004

The target that was set by International Hotels Investment upon its inception more than four years ago, to acquire and develop four major hotels within a five year time span, has been achieved and the Corinthia-owned hotel chain is now aiming to reap the dividends.
June 2004, represented the first full month since IHI’s launch when each of the four hotels were fully operational, collectively comprising 1,469 bedrooms and support facilities.
The announcement was made recently by IHI chairman and CEO Alfred Pisani during the presentation of the company’s annual report and financial statements for 2003.
Pisani remarked that the financial statements must be viewed within the context of IHI’s strategy adopted over the past four years wherein the group sought to increase its portfolio rather than consolidate its operations.
It is only now that the group, with all the new hotels functioning, would be able to reap the benefits of the expansion strategy that characterised the period since 2000.
Furthermore, the early years of IHI coincided with a turbulent period for the international hotel industry. Declining global economic performance in 2000 was made worse with the tragic events of September 11 in 2001 and the subsequent wars in Afghanistan and Iraq.
Pisani, however, said that the first signs of a global economic turnaround are being seen in 2004, which augurs well for IHI. “The completion of our initial development phase has fortunately coincided with this general upturn in the travel and tourism business, now being translated in higher forecasts for our hotels,” Pisani said.
The removal of US sanctions against Libya is also expected to have a positive impact on IHI’s hotels, previously precluded from doing business with US clients. “IHI now has an open door to an entirely new and major base of clientele, as well as a range of options in determining our future strategies for the management of our hotels and the attraction of equity investors,” Pisani said.
As for the company’s financial performance, Pisani insisted that the investment strategy pursued over the past four years meant that the company witnessed a continuous and substantial stream of capital outflows and bank borrowings. “During such a phase, it was always evident that the financial performance of the Company in these years, including in particular 2003, will ultimately reflect the realities of such heavy capital outlays. What is important to ask at this stage therefore, is whether such investment was judiciously and intelligently employed, indeed whether our objective to achieve capital appreciation in our underlying investments is being fulfilled,” Pisani said.
The CEO remarked that the objective was being fulfilled “as evidenced by feedback and assessments made by potential investors and analysis.”

Financial figures
The IHI Group generated revenues of EUR 34.7 million, nearly five per cent higher than the turnover generated in 2002 at EUR 33.2 million.
The parent company, IHI plc registered a profit after tax of EUR 4.8 million for 2003 against a loss after tax of EUR 1.4 million in 2002. The main sources of income for the Company were interest receivable on loans and management fees charged to Group companies together with gains made and interest received on an interest rate swap on Bonds issued in 2003. Total revenues generated from the above sources amounted to EUR 1.3 million.
The Group, on the other hand, registered a loss after tax of EUR 9.3 million for the year 2003. In 2002 the Group had registered a loss on EUR 1.6 million.
Earnings per share were up by 0.04 for IHI plc, up from a downward turn in 2002, while the Group registered a loss per share of 0.08.
The weekly average number of persons employed by the Group during 2003 was 667 - 120 management and administration staff and 547 in operations.
Income tax on taxable income for 2003 amounted to EUR 885,494. The total tax expense, after taking into account deferred taxation and revaluation of Fair Value of investment property, amounted to EUR 3.6 million.
And investors can expect another equity issue in 2004, partly to finance two bank bridge loans amounting to EUR 20 million.

Copyright © Newsworks Ltd. Malta.
Editor: Saviour Balzan
The Malta Financial & Business Times, Newsworks Ltd, Vjal ir-Rihan, San Gwann
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