IHI plc’s losses before tax up by €8.898 million for 2010

The announcement was made in a company announcement filed on the Malta Stock Exchange (MSE) this morning by company secretary Alfred Fabri. Today is the deadline for submissions by listed companies of their interim results to the exchange.

The company registered a loss before tax for the period of €10.330 million compared to a loss before tax of €1,432 for the same period last year, an increase of €8.898 million.

However, IHI plc registered an operating profit before depreciation and amortisation of €10.7 million for the first six months of 2010 as opposed to €15.4 million for the same period last year, a decrease of €4.7 million.

When compared to the corresponding period last year, IHI plc registered a drop in turnover of €2 million (4%) from €51.4 million in the first six months of 2009 to €49.4 million during the first half of this year.

Finance income decreased from €1.499 million during the first half of last year to €430,000 when compared with the corresponding period, a drop of almost 60%.

The company attributed this drop to “the part utilization of excess cash and the further reduction in interest rates on deposits”.

IHI’s direct costs for the first six months of 2009 increased slightly by €2.156 million, from €23.064 million during the first six months of 2009 to €25.224 million during the first six months of this year.

Likewise, the company’s other operating costs for the period increased slightly by € 0.324 million, from €12.926 million for the first six months of 2009 to €13.250 for the first six months of 2010.

During the first six months of 2010, IHI’s activities were hampered by “the continued difficult business environment.

The company lamented that the “sluggish economic recovery” was also being negatively affected by “the austerity measures being introduced in countries that provide IHI’s feeder markets”.

IHI reported that excluding the Corinthia Tripoli Hotel, the company registered a 3% increase in its room revenue per available room over that registered in the comparative period.

In fact, profit in the North Africa market dropped significantly from €5.220 million in the first half of 2009 to €1.839 million in the first half of this year.

The performance of the Corinthia Tripoli Hotel was negatively impacted “by increased competition and by a general slowdown in business” but it was now “expected to stabilise at current levels”, the company explained.

IHI incurred a higher finance cost for the first six months of 2010 “mainly as a result of additional financing raised in the second half of 2009 for the Group’s investment in the properties located in Saint Petersburg and in London,”

During the first six months of 2010, IHI suffered a further loss in value of €1.1 million on the two interest rate swap arrangements currently in place. The company attributed this to “expectations that the euro base rate will remain at its current low level”.

The company also suffered a value loss on a third interest rate swap, held by IHI associate company NLI Ltd. in relation to the bank loan taken for the refurbishment of the Corinthia London Hotel.

However, it was IHI’s intention “to hold these instruments to maturity with the result that these fair value losses will reverse over time,” the company explained.

Moreover, IHI incurred €3.454 million during the first six months of 2010 “in pre-opening and marketing costs by Corinthia London Hotel in preparation for its planned opening early next year”.