2004 was a watershed year for IHI plc, with the successful completion of a five-year investment programme announced after the company’s formation in March 2000.

Last year saw the conclusion of the total refurbishment of the 517-room Corinthia Alfa Hotel in Lisbon, thus completing the investment programme, which included the acquisition and completion of hotel investment projects in Malta, Budapest and St Petersburg undertaken in previous years.

Throughout these years, IHI raised €140 million in equity, which, backed by an equivalent amount of bank loans and Corporate Bonds, has enabled the company to acquire and develop these four landmark hotels, with 1,466 hotel rooms in the five-star category.

Alfred Pisani, chairman and CEO of IHI, told shareholders at the annual general meeting held on Wednesday, that the company is well on track to achieve its performance targets, with all of the company’s hotels now in full operation. “2005 is our first year in business with all our hotels operating for the whole year. Performance to date is well in line with our expectations, which will no doubt result in achieving the true value of these assets,” he told shareholders.

“Malta, Budapest and St Petersburg in particular have all registered strong increases in demand and profitability, while our newly-refurbished hotel in Lisbon is on its way to re-establishing itself as a leading five-star conference hotel in the Portuguese market,” he said.

With 2005 being the first year of full operation for IHI, turnover is expected to reach €57 million in 2005. This improved performance is being further underpinned by a general positive turnaround in the global hospitality industry, as well as the lifting of sanctions, which had previously prohibited US citizens and corporations from conducting business with IHI.

IHI was launched by the Corinthia Group of Malta in March 2000 and floated on the Malta Stock Exchange soon after. Corinthia retains a 78 per cent shareholding in the company. The hotels acquired and developed by IHI since then, include:

• The 250-room Corinthia San Gorg Hotel in Malta, located on 23,800m2 of exclusive seafront real estate, which was acquired as an operating business on IHI’s inception;

• The 288-room Corinthia Nevskij Palace Hotel in St Petersburg, Russia acquired as an operating business in January 2002, along with substantial, adjoining vacant property on the city’s main boulevard. The hotel is one of the city’s main five-star properties, while the vacant property has the possibility of being developed into an additional 105 hotel bedrooms, together with the city’s first conference centre including a grand ballroom, 4,500m2 of retail areas and 7,500m2 in commercial offices for rent to third parties. Outline planning permits for this landmark development are in hand;

• The 414-room Corinthia Grand Hotel Royal in Budapest, Hungary, was acquired as a vacant site on inception, was subsequently demolished and entirely rebuilt as a landmark deluxe hotel. The new hotel was re-opened in April 2003, winning several architectural awards for its fully restored 19th century façade and grand ballroom, while establishing itself as the premier hotel in the city. The development also includes a 1000m2 spa and 28 penthouse apartments that will come into full operation in December 2005; and

• The high-rise, 517-room Corinthia Alfa Hotel in the financial district of Lisbon, Portugal, a four-star hotel which was subsequently closed to make way for a complete refurbishment and upgrade to five-star status. The project also included the completion of the hotel’s upper four floors, which had never been completed by the former owners. The hotel was re-opened in May 2004.

IHI has also since acquired:

• A 20 per cent shareholding in Corinthia Hotels International, which is the Corinthia Group’s hotel management arm. This company provides industry-standard hotel management services to properties owned by Corinthia, by IHI and by third parties; and

• A 20 per cent shareholding in Quality Project Management Limited, a construction project management company, that has supported IHI in developing new projects, exercising discipline over consultants and contractors, and providing expertise in evaluating architectural designs and tender bids.

IHI is now aiming to raise further capital and debt to fund the extension project in St Petersburg, and to proceed with more acquisitions and developments in the hotel sector, particularly in newly emerging countries.