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IHI p.l.c. registered an improved performance in 2005 through increased turnover and reporting a profit before tax against a loss in the previous year. The Group is the only entity on the Malta Stock Exchange which trades and reports its results in Euros and has not declared any dividend.
This entity is involved in the ownership, development and operation of hotels and leisure facilities.
The Group succeeded in improving its revenue by 17% to exceed Euro 54.5million. After deducting the direct and operating costs, it registered an operating profit of over Euros 1.1 million which is a marked improvement form a loss of over Euros 1.3 million registered in 2004.
At this stage, the condensed income statement includes two transactions that positively affected this years results which are a partial reversal of an impairment charge of euros 5.47 million,which had been recognised in previous years on the Corinthia Grand Hotel Royal and Corinthia San Gorg. This contrasts with a Euro 2.2 million impairment loss sustained in 2004. Another positive figure was the Euro 2.4 million revaluation to the fair value of an investment property being the Group’s land adjacent to the Corinthia Nevskij Palace Hotel. Under International Financial Reporting Standards, the Board of Directors have to determine whether the book value of its assets and liabilities are correct and adjust accordingly.
Moreover, the Group earned other operating income in 2005 of Euro 288,000 against a loss of Euros 203,000 sustained in 2004. The Board state in their review that they achieved better results in all Hotels in 2005 except for the Corinthia Alfa Hotel based in Lisbon. One has to recall that in the previous year there was the UEFA European Football Finals 2004 in Portugal.
The Group’s Profit before Financing Costs were Euros 9.3million against a loss of Euros 3.7 million in the previous year. Corinthia earned less in financial income and incurred more in Financial expenses which was attributable to the increase in the Euribor rate on the international markets. The share from associates in 2005 was higher.
The Profit before Tax exceeded Euros three quarters of a million in 2005 against a loss of Euros 11.3 million. In 2004 the Group had an income tax credit to utilise whilst in 2005, the reversal of the impairment charge on the hotel properties and the revaluation of the fair value of the investment property triggered a tax charge. In 2004, there was a positive reversal of a prior year tax charge from the revaluation of the tax rate applicable on the revaluation of the investment property.
Despite the favourable figures resulting from reversals of impairments, revaluations and tax charge adjustments, one also notes, the increase in revenues is much higher than the increase in costs and the group has a loss for the year of Euros 737,000 against the Euros 8.1 million sustained in 2004. This is reflected in the loss per share being one euro cent in 2005.
Analysing the Balance Sheet one notes that the total assets of the Group are increasing and at Euro 374 million adequately cover all liabilities at Euros 219 million. Moreover, the Group succeeded in registering at end 2005 an improved figure in Cash and its equivalents at Euros 1.9 million against the Euros 234,000 of 2004 mainly turning more cash from operating activities. The increase in cash used in investing activities is commensurate from cash coming from financing activities. During the year the Group had a cash injection of Euro 10 million which sustains the operations of this entity which this year, 2006, will have reduced activity in two of its hotels as a result of refurbishment. However the Board gives a positive outlook on its overall operating performance for this year, as it continues, concurrently to undertake further investments in its hotels.
Analysing the segmental reporting, one notes that the Group’s revenue is earned 50% from other EU countries whilst the Maltese operations generate nearly as much as the other European countries.
IHI p.l.c operates in the tourism sector in different countries. Moreover, its trading is in various currencies but determines its financial statements in Euros. On the basis that the parent company has continued to invest in IHI plc, the financial markets sustain in financing its operations. From the valuation of its properties, one can conclude that this is an enterprise that is registering positive results from economies of different European countries. This Hotel chain does Malta proud of the entrepreneurial spirit of its management and workers.
Surely the concierge bell will continue to ring at the reception desk and register more guests!
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