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Corinthia Palace Hotel, as the guarantor of Corinthia Finance plc which has a number of bonds traded on the Malta Stock Exchange, has published its financial results. The quoted company has three tradable bonds being a 6.7% bond which is redeemable in 2009, a 6.5% Euro-denominated bond redeemable in 2010 and another bond closing in 2012 of 6.7% interest.
Bondholders would be interested to know how the guarantor company to the funds they invested has performed in 2005. Corinthia registered good financials which were further boosted by one-off transactions that improved results directly.
The company had a turnover of Lm73.3 million against the Lm70.3 million registered in the previous year. This improved turnover figure reflected itself in the operating profit amount reaching Lm7.3 million against the Lm4.3 million of 2004.
Following this figure in 2005 two significant events affected positively the 2005 results. Corinthia earned Lm11.3 million from a sale of property and revalued its investment property upwards by Lm10.5 million. Following these transactions the profit before tax reached Lm19.8 million against the loss of Lm8.9 resulting in 2004. The profit after tax in 2005 was Lm14.4 million bringing earnings per share at Lm1.77, against the Lm5.7million loss in 2004 and a loss per share of Lm0.65.
The results are quite a turnaround from those registered previously. The tax charge for 2005 was also impacted by the disposal of asset transaction, and a deferred tax charge in the uplift of the value of investment properties. The improved turnover figure for 2005 excludes the catering activities of the company in Libya and the results of the operation of Corinthia Art Hotel in Turkey.
In 2004 the Corinthia results were impacted negatively through an impairment charge of Corinthia Lisboa Hotel in Lisbon.
Corinthia is showing that the 2005 results were registered as a result of a re-engineering process wherein it reduced debts through loan refinancing, and disposal of non-core assets, including one in Malta as well as a piece of land in Turkey. It also started to address the working capital deficiency and the long-term loans now have a better interest rate. The gearing ratio is now down to 60% against the 66% it was in 2004. The debt level is also down at Lm203.5 million at end-2005 against the Lm221.6 million of 2004. The shareholders funds balance has also improved.
The outlook for 2006 as stated by the company includes a programme to dispose of non-core assets and the company has the financing in hand for the St Petersburg Russia project whilst funding is on the way for the Jarizour Libya project.
With an improved cash flow and balance sheet, the guarantor company’s results for 2005 are stronger than that for the previous year.
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