Inspiration Hlt Regulatory News (IHC)

23 Jun 2008 16:37

India Hospitality Corp. Reports Preliminary Fiscal Year 2008 Results Revenues Improve 43% over Prior-Year Period, Kitchen Capacity Increased 55,000 Meals per Day in Fiscal 2008

LONDON, June 23 -- India Hospitality Corp. today announced unaudited preliminary results for its operating businesses, Mars Restaurants and SkyGourmet Catering, for the fiscal year ended March 31, 2008.

Fiscal year 2008 highlights:

-- Acquired Mars Restaurants Private Limited and SkyGourmet Catering Private Limited in July 2007 for $110 million.

-- Total revenues increased 42.8% on a year-over-year basis to $35.2 million.

-- Received $75 million investment commitment in December 2007 from Navis Capital Partners and Hayground Cove Asset Management.

-- Opened 25,000 meals per day Air Catering Unit in Delhi in June 2007; opened new SkyGourmet kitchen in January 2008 in Chennai with a capacity of 10,000 meals per day.

-- Launched new SkyGourmet kitchen in March 2008 in Hyderabad in conjunction with the opening of the city's new Rajiv Gandhi International Airport; Hyderabad kitchen capacity is 20,000 meals per day.

Subsequent Events:

-- On June 11, IHC's Board of Directors appointed Ravi Deol as Chairman and Chief Executive Officer of Mars Restaurants as part of a major initiative to rapidly grow its hotels and food services businesses.

-- On June 11, IHC announced the formation of a $200 million hospitality fund to be led by Mr. Deol. The fund will allow the company to make a significant investment into the development and/or acquisition of Indian hospitality properties and will be managed by Mars Restaurants, which also owns Gordon House Hotels. IHC will receive a management fee through an advisory agreement between the fund and Mars.

-- On June 16, IHC announced that its SkyGourmet division signed an air catering contract with Lufthansa for its flights to Frankfurt from Pune. Meals will initially be catered out of the Gordon House Hotel, which is operated by Mars Restaurants. SkyGourmet has also started catering to Kingfisher out of Pune, and is in discussions with several international carriers.

"The Indian economy and hospitality industry has continued its rapid growth over the past year and a half, and with 35 new regional airports and four major metropolitan airports currently under construction in India, IHC is poised to capitalize on this changing environment in South Asia," said IHC Deputy Chairman Richard Foyston. "With the addition of our new $200 million hospitality fund, we believe IHC is in a strong position to take advantage of the opportunities that this growth will provide over the next several years."

Fiscal Year 2008 Preliminary Results

For the fiscal year ended March 31, 2008, India Hospitality reported unaudited revenue of $35.2 million from Mars and SkyGourmet - a 42.8% increase from the combined results for the prior-year period. Top line growth was boosted by an approximate 62.9% increase in revenue from IHC's SkyGourmet division, aided by increased demand for meals, as well as the opening of a new kitchen in Chennai in January 2008 and a significant increase in capacity at the company's Delhi Air Catering Unit. Total meals served for fiscal year 2008 increased 58%.

Revenue at Mars Restaurants increased to $11.7 million, a 15.8% improvement over the prior-year period. The results at Mars were driven by a 29% increase in average room revenue (ARR) at the Gordon House Hotels. Same-store sales increased 6.5% at Birdy's cake shops, while other restaurant same-store sales increased 12%.

Total combined adjusted EBITDA for SkyGourmet and Mars for fiscal year 2008 was $6.8 million compared to $4.9 million in the prior-year period, a 37% improvement. Margin pressure occurred in the first half of the fiscal year due to higher fixed costs associated with capacity additions at SkyGourmet. Also associated with these higher fixed costs, SG&A increased from $13.7 million in fiscal 2007 to $18.6 million (adjusted) in fiscal 2008, primarily an investment in infrastructure to accommodate the anticipated growth at SkyGourmet over the next several years. Revenue growth in the second half of the year has now resulted in more normalized margins.

Included in one-time adjustments to EBITDA were a $1.6 million loss on sale of assets - almost all from the sale of an obsolete kitchen at SkyGourmet, a $0.9 million set-up costs charge at SkyGourmet (pre-opening expense) and a $0.7 million charge at Mars for a one-time compensation expense in recognition of service. Including all of these one-time items, EBITDA for SkyGourmet and Mars for fiscal year 2008 was $3.4 million. A detailed reconciliation table of these charges is included at the end of this announcement.

Liquidity and Balance Sheet

As of March 31, 2008, IHC has approximately $38 million in long-term debt on its balance sheet and $18 million of cash and cash equivalents - approximately $12 million of which is held at the IHC corporate level. Key balance sheet metrics are included at the end of this announcement.

Long-Term Outlook

Looking at the long-term time horizon, SkyGourmet is projecting that with continued kitchen expansion, it will be able to increase its capacity of meals per day to over 150,000 by fiscal year 2012. In addition, Gordon House has identified several opportunities for hotel acquisitions in New Delhi, Noida, Pune and Mumbai - all in moving toward a goal of eventually reaching 2,000 hotel rooms through organic growth and acquisitions.

About India Hospitality Corp.

India Hospitality Corporation's mission is to acquire and successfully operate Indian businesses or assets in the hospitality, leisure, tourism, travel and related industries, including but not limited to hotels, resorts, timeshares, serviced apartments and restaurants.

IHC operates through two wholly owned subsidiaries, Mars Restaurants Private Limited - an emerging hotel and restaurant company - and SkyGourmet Catering Private Limited, a leading airline catering company. The companies are headquartered in Mumbai and have over 1,700 employees across their facilities in India.

Deutsche Bank AG is IHC's nominated adviser and broker for the purposes of the AIM Rules for Companies. Its responsibilities as IHC's nominated adviser and broker under the AIM Rules for Nominated Advisers are owed solely to London Stock Exchange plc and not to IHC, any director of IHC or any other person.

No offer or invitation to purchase or subscribe for ordinary shares in or warrants to purchase or subscribe for ordinary shares or warrants of IHC is being made by this announcement.

Revenue and Adjusted EBITDA for the Periods Ended March 31 (in U.S. $mm) Mars Restaurants SkyGourmet Combined * Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Year/Year 2007 2008 2007 2008 2007 2008 Change Revenue $10.1 $11.7 $16.5 $26.9 $24.6 $35.2 42.8% Adjusted EBITDA $0.3 $1.5 $4.6 $5.2 $4.9 $6.8 37.1% * Combined revenue includes intercompany eliminations; adjusted EBITDA is net of non-recurring items. Adjustments to EBITDA (in U.S. $mm) Taxes for earlier years $0.10 Loss on sale of assets/Set-up cost of assets $2.50 Compensation charge in recognition of long-term service $0.70 Consultancy charges $0.05 Total $3.35 Key Balance Sheet Metrics Combined operating companies total (in U.S. $mm) Fiscal 2007 Fiscal 2008 Cash & cash equivalents * $0.8 $17.7 Total Assets 56.7 100.4 Total Liabilities 28.7 53.3 Shareholders Equity 28.0 47.1 Long-Term Debt 19.1 38.0 * Includes approximately $12 million held at the parent company. Unaudited Income Statement for Operating Companies (in US $000s) FY 2007 FY 2008 (adjusted) Profit & Loss SKY MARS Combined SKY MARS Combined Net Sales $16,499.7 $10,072.5 $26,572.2 $26,859.7 $11,657.3 $38,516.9 COGS (cost of materials) 5,420.9 3,490.0 8,910.9 10,310.3 3,711.5 14,021.9 Gross Profit 11,078.8 6,582.5 17,661.3 16,549.3 7,945.7 24,495.1 SG&A (including depreciation) 8,305.6 7,356.4 15,662.0 13,883.0 7,645.4 21,528.4 SG&A (excluding depreciation) 7,034.9 6,705.7 13,740.7 11,662.0 6,971.7 18,633.8 Operating Income 2,773.2 (773.9) 1,999.3 2,666.4 300.3 2,966.7 Other Income 590.0 427.3 1,017.3 355.4 544.2 899.6 EBIT 3,363.3 (346.6) 3,016.6 3,021.7 844.5 3,866.2 Interest 644.6 658.1 1,302.7 1,958.8 1,060.8 3,019.6 Interest for Office Purchase EBT 2,718.7 (1,004.7) 1,713.9 1,062.9 (216.3) 846.6 Taxes (excluding DT for 2004-05) 934.8 18.3 953.1 189.7 149.0 338.7 Net Income/ (Loss) 1,783.9 (1,023.1) 760.8 $873.2 ($365.2) 508.0 Other Information Depreciation & Amortization 1,270.7 650.7 1,921.4 2,220.9 673.7 2,894.6 EBITDA $4,633.9 $304.1 $4,938.0 $5,242.7 $1,518.2 $6,760.9 Balance Sheet Data (unaudited) (in US $000s) For Combined SKY and MARS FY2007 FY2008 CURRENT ASSETS Cash on Hand and at Banks $818 $1,663 Short Term Investment - 3,982 Accounts Receivable-Net 5,679 9,166 Inventories 342 519 Other Current Assets 5,068 2,685 Total Current Assets 11,907 18,015 Fixed Assets Net PP&E 32,137 67,263 Long-Term Investment 1,488 1,287 Other Fixed Assets 11,080 13,775 Total Fixed Assets 44,705 82,325 Intangible Assets 72 54 Total Assets $56,683 $100,394 CURRENT LIABILITIES Accounts Payable $7,585 $11,052 Other Current Liabilities 1,503 3,182 Total Current Liabilities 9,088 14,234 LT Liabilities Long-term Debt 19,108 38,022 Other Long-term Liabilities 511 998 Total LT Liabilities 19,619 39,020 Shareholders' Equity Total Shareholders' Equity 27,977 47,139 Total Liabilities & Shareholders' Equity $56,683 $100,394 Cautionary note regarding forward-looking statements

This preliminary earnings announcement contains certain forward-looking statements with respect to the financial condition, results of operations and business of India Hospitality Corp. (the Company), and certain plans and objectives of the board of directors of the Company. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "will", "may", "should", "would", "could" or other words of similar meaning. These statements are based on assumptions and assessments made by the board of directors of the Company in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe appropriate. By their nature, forward-looking statements involve risk and uncertainty, and the factors described in the context of such forward-looking statements in this announcement could cause actual results and developments to differ materially from those expressed in or implied by such forward-looking statements.

Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this release. India Hospitality Corp. assumes no obligation to update or correct the information contained in this release, whether as a result of new information, future events or otherwise, except to the extent legally required.

The statements contained in this announcement are made as at the date of this release, unless some other time is specified in relation to them, and service of this announcement shall not give rise to any implication that there has been no change in the facts set out in this announcement since such date. Nothing contained in this announcement shall be deemed to be a forecast, projection or estimate of the future financial performance of the Company except where expressly stated.

SOURCE India Hospitality Corp.

06/23/2008

/CONTACT: Media Contact: Mutual Image & Events Management Pvt. Ltd., Harsh Wardhan, +91-11-41416523; or Investor Relations Contact: ICR Inc., William Schmitt, +1-203-682-8200; or Nominated Adviser and Broker: Deutsche Bank AG, Mumtaz Naseem, +44-20-7545-8000/