International Hotel Investments Plc

Annual Report • Jun 26, 2020

COMPANY ANNOUNCEMENT

Financial Statements for 2019

The Board of Directors of International Hotel Investments p.l.c. has approved the financial statements for the year ended 31 December 2019.

A full copy of the financial statements is attached to this company announcement and is also available on https://www.corinthiagroup.com/investors/financialreport/.

Jean-Pierre Schembri Company Secretary

Encl.

26 June 2020

INTERNATIONAL HOTEL INVESTMENTS P.L.C.

International Hotel Investments p.l.c. Report & Financial Statements 31 December 2019

Company registration number: C 26136

PRINCIPAL MILESTONES AND ACHIEVEMENTS

• 1 The company has achieved a record pre-tax net profit for 2019, totalling €13.9m.
• 2 Adjusted EBITDA has grown to €60.3m in 2019, almost double the €33m in 2014.
• 3 We have entered into arrangements with a third party investor to develop and eventually lease a prime property in Rome. The property is the former headquarters of the Bank of Italy and will be transformed into a luxury Corinthia Hotel.
• 4 Development work on the Corinthia Hotels in Bucharest, Brussels and Dubai has proceeded in 2019, and works on site in Moscow, Rome, and Doha have commenced in 2020.

Contents

Group structure		3
Our portfolio		4
Board of directors		5
Chairman's statement		7
CEOs' report		12
Directors' report		FS1
Statement by the directors on the financial statements and other information included in the annual report		FS5
Statement by the directors on non-financial information		FS6
Statement by the directors on compliance with the Code of Principles of Good Corporate Governance		FS22
Other disclosures in terms of the Listing Rules		FS29
Remuneration statement		FS32
Independent auditor's report	FS34 –	FS45
Consolidated financial statements:
Income statement		FS46
Statement of comprehensive income		FS47
Statement of financial position		FS48
Statement of changes in equity		FS50
Statement of cash flows		FS51
Company financial statements:
Statement of comprehensive income		FS53
Statement of financial position		FS54
Statement of changes in equity		FS56
Statement of cash flows		FS57
Notes to the financial statements		FS58

GROUP STRUCTURE

IHI IS A LUXURY HOSPITALITY AND REAL ESTATE GROUP FOCUSED ON THE MARKET-LEADING CORINTHIA BRAND.

From concept to acquisition, design and development through to successful operation, the IHI Group is uniquely positioned in the industry. The Group is determined to build on the success of its iconic Corinthia Hotels brand, pursue related real estate projects, and explore opportunities with like-minded third parties in key locations around the world.

THE GROUP COMPRISES A NUMBER OF KEY SUBSIDIARY ENTITIES:

CORINTHIA HOTELS LIMITED is a hotel, resort and catering management company which manages hotels under the Corinthia brand, worldwide.

CORINTHIA DEVELOPMENTS INTERNATIONAL LIMITED (CDI) is a development company which originates, plans, structures, transacts and manages the Group's ongoing developments.

QP LIMITED

is a project management company which supports the Group and third parties with architectural, engineering, management and technical construction services.

OUR PORTFOLIO

OUR VISION IS TO BUILD CORINTHIA WORLDWIDE, NOT ONLY WITHIN EUROPE AND THE MIDDLE EAST, BUT EQUALLY INTHE WORLD'S MAIN GATEWAY CITIES AND RESORTS.

BRUSSELS Corinthia Hotel (opening 2023 former Grand Hotel Astoria) 125 Rooms / 50% Holding

BUDAPEST

Corinthia Hotel (former Grand Hotel Royal) 439 Rooms / 100% Holding

LISBON Corinthia Hotel 518 Rooms / 100% Holding

LONDON Corinthia Hotel & Residences 283 Rooms / 50% Holding

MALTA Corinthia Palace Hotel – Attard 150 Rooms / 100% Holding

Corinthia Hotel – St George's Bay 250 Rooms / 100% Holding

Radisson Blu Resort & Spa – Golden Sands 329 Rooms / 50% Holding

Marina Hotel – St George's Bay 200 Rooms / 100% Holding

Radisson Blu Resort – St Julian's 252 Rooms / 100% Holding TRIPOLI

BUCHAREST Corinthia Hotel (opening 2022 former Grand Hotel Du Boulevard) 34 Rooms

BUDAPEST Acquincum Hotel 310 Rooms

DOHA Corinthia Hotel Residences Golf & Yacht Club (opening 2023) 118 Rooms

DUBAI Corinthia Meydan Beach Hotel (opening 2021) 360 Rooms

KHARTOUM Corinthia Hotel 230 Rooms

MOSCOW Corinthia Hotel & Residences (opening 2023) 54 Rooms / 10% Holding

PRAGUE Corinthia Hotel 551 Rooms / 100% Holding

ST PETERSBURG Corinthia Hotel 385 Rooms / 100% Holding

Corinthia Hotel 300 Rooms / 100% Holding

PRAGUE Panorama Hotel 440 Rooms

ROME Corinthia Hotel (opening 2022) 60 Rooms

TUNIS Ramada Plaza 309 Rooms

BUDAPEST Royal Residences

LONDON 10, Whitehall Place Residences

MALTA Oasis at Ħal Ferħ (Planning Stage)

MOSCOW Corinthia Residences (Under Development)

ST PETERSBURG Nevskij Plaza Shopping & Office Centre

TRIPOLI Corinthia Commercial Centre

Board of Directors

ALFRED PISANI

Chairman of IHI. He founded the Corinthia Group in 1962 and has guided the Group and IHI ever since, spearheading investment and growth across three continents over five decades.

JOSEPH J. VELLA

Partner in a leading law practice, and a director on the boards of several major companies. He is also Chairman of the Nomination and Remuneration Committee.

ABUAGILA ALMAHDI

Vice Chairman of Corinthia Palace Hotel Company Limited, nominated by LAFICO. He is a graduate in accounting from the University of Tripoli and holds a Masters in Finance, Accounting and Management from Bradford University.

DOURAID ZAGHOUANI

Chief Operating Officer of the Investment Corporation of Dubai (ICD). Previously, he was with Xerox for over 25 years, holding a number of senior management, sales and marketing posts in Europe and North America. Was Board Chairman of several Xerox companies; his last appointment was Corporate Officer and President, Channel Partner Operations for Xerox in New York.

ABDULNASER AHMIDA

Head of the Risk Management Department at LAFICO. He is a director of ASRY, Arab Shipbuilding and Repair Yard in Bahrain. He is a graduate in computer engineering from Naser University and holds a Masters in Finance, Accounting and Management from Bradford University.

SALEM M.O. HNESH

Appointed General Manager of Libyan Foreign Investment Company (LAFICO) in August 2018. He is a former Chairman and CEO of Asteris in Greece and Chairman and CEO of Libyan Greek Investment Company. Mr Hnesh is a graduate in agricultural engineering from the University of Tripoli.

HAMAD BUAMIM

President and CEO of the Dubai Chamber of Commerce and Industry and serves as the Deputy Chairman of the World Chambers Federation – ICC – in Paris. He is a member of the Board of Directors of the UAE Central Bank, Chairman of National General Insurance and Board Member of Union Properties.

JOSEPH PISANI

Founder director and member of the main board of Corinthia Palace Hotel Company Limited (CPHCL) as from 1962, and has served on a number of boards of subsidiary companies. From 2000 to 2014 he has served as Chairman of the Monitoring Committee of IHI.

Board of Directors - continued

WINSTON V. ZAHRA

Founded Island Hotels Group Holdings p.l.c. now owned by IHI. He was Managing Director of the IHG Group until 2009 and prior to 1987, he was the co-founder of one of the leading tourism-oriented companies in Malta. Mr Zahra has served on various boards and committees related to the tourism industry. Mr Zahra is also a director of Caritas.

FRANK XERRI DE CARO

Joined the Board of IHI in 2005, having previously been the General Manager of Bank of Valletta p.l.c., besides serving on the boards of several major financial, banking and insurance institutions. He is also Senior Independent Director and Chairman of the IHI Audit Committee.

JEAN-PIERRE SCHEMBRI

Company Secretary, joined IHI in 2018. Mr Schembri occupied senior positions with the Maltese public service. He served at the Permanent Representation of Malta to the EU. He joined the European Union Civil Service in 2012 where he occupied the senior management positions within the European Asylum Support Office. While at EASO, he also headed the board secretariat of the agency.

Chairman's Statement

Dear fellow shareholders,

First and foremost, I trust that all of you are in good health in the light of COVID19 which is still amongst us and would recommend that we have to be even more careful now that certain restrictions have been lifted in an effort to bring back a level of economic normality. This consideration has become even more crucial with the opening of various establishments, and more importantly with the arrival of foreigners amongst us on the basis of the imminent opening of the airport.

My report, as with every year, covers our performance for the prior year, however due to this unprecedented pandemic that has hit us since March of this year, I am obliged to first address the events of the first six months of 2020. It is important for me to point out that prior to the dark cloud that has affected our industry since March, we were up to then, still planning to announce a further dividend, similar to what was distributed in previous years. In fact, this was indicated in the first draft of my address to the shareholders which I had prepared in January. This draft has now been pushed aside in view of the closure of all our hotels since March. I have no doubt that all shareholders fully appreciate the difficult situation that we find ourselves in, and therefore we are not recommending the issue of dividends for this year.

It is my duty to inform you, our shareholders, on the many actions that the Board and Management have together carried out to ensure the continued viability of our Company, looking forward as far as December 2021 and beyond. This is important as we want to safeguard the Company and our responsibilities towards our employees, shareholders, bondholders, banks and everyone connected to us.

In brief, we took the following actions:

A. We have of course adopted all health and safety measures as directed by the relevant authorities in the various jurisdictions in which we operate. Internal guidelines on operations and staff welfare have also been circulated and updated regularly, especially now as we enter into a phase of re-opening our hotels.

B. We have addressed a series of far-reaching cost cutting and cost containment measures, which included shutting down hotels from March, as in any case there was no business. Nevertheless, we still provided round the clock security and maintenance of our properties, whilst making sure to keep costs to a minimum.

C. We have also suspended all capital expenditure (CAPEX) other than to finish ongoing works that had been nearing completion.

D. Furthermore, we have taken many other actions following a detailed review of every cost item in our hotels, other business units and corporate offices where we could either renegotiate rates or enter into an agreement of payment deferment.

E. The Company also took immediate action to curtail its payroll by shedding all part-time workers and others on probation, whilst also removing all outside labour service providers. Many of our employees have also taken drastic cuts in their take-home pay.

F. Moreover, in all countries in which we operate, including Malta, Prague, Budapest, Lisbon and London, the Company benefitted from various schemes adopted by the respective Governments which included salary subsidies, as well as the waiver or deferral of payroll taxes and social security contributions. In the case of the United Kingdom, we also benefitted from a waiver of property taxes for 2020. These schemes are of significant benefit to the Company.

G. The Company has also negotiated with its banks both in Malta and internationally to defer payment of capital and, in some cases also interest. The Company has also organized separate lines of credit from various banks and even with related parties.

Chairman's Statement - continued

In the light of these actions we are confident, as indicated in our Company Announcement dated 28 March, that whilst projecting a scenario of little or no income for the next foreseeable months, the Company has sufficient resources and funds to maintain all its payment obligations including bond and bank interest as they arise through the course of the year.

Dear Shareholders, as I am now writing this report in June 2020, the picture when looking ahead is now becoming clearer for us to assess. The effects of the pandemic will not be as short-term as originally understood globally, but rather, we are facing a challenging road to recovery over a longer period than what was initially assumed. Your Board is fully conscious of these evolving challenges, and working on the basis that business will not revert to prepandemic levels any time soon, certainly not in 2020, or even in 2021.

In the light of these considerations, we have now revised our outlook to extend beyond the end of this year and up to December 2021. I say this because our assumptions, on taking into account various unfolding concerns, lead us to conclude that for this year we see very little business, and contrary to what we had previously assumed in the early part of the pandemic, we are now seeing a longer and slower period of recovery up to December 2021. In consequence, the Board has taken a very definite decision that we need to look further and deeper into our operations and make every effort so that at best in 2021 we will breakeven after paying interest on the bonds and bank loans. As your Board, we have the responsibility to guide the Company in these turbulent times in a manner so as to ensure its continual strength.

I did, in the preceding paragraphs, indicate a number of measures that we have taken over recent months. Today, as a clearer understanding of the future unfolds, as also our views on the pace of recovery, we have to double up our actions on cost containment, which actions though painful are nonetheless inevitable to reduce our operating costs.

For example it will be irrational and unsustainable to carry a staff complement that was established over the past years to cater for average occupancies of around 80%, to the significantly lower levels of occupancies we are forecasting between now and the end of 2021, and further compounded by the probability of lower average room rates. This is even more relevant as we expect Government subsidies in various countries to be reduced over a period of time. The Board is thus acting responsibly to ensure that we take all steps to go through this period of low business to enable us to meet the future with strength and confidence.

Notwithstanding the above, and as I have indicated earlier, this report however covers our performance for 2019, where once again we had a very successful result when the EBITDA increased to around €70 million, driven by increased profitability and improved performance from our various business segments. In fact, last year was a record year.

As you know, our financial results are reported in Euro. However, our operational currencies in London and Russia are denominated in sterling and Russian Rouble respectively, which means that any strengths and weaknesses in these currencies in relation to the Euro will affect our final group performance. I am happy to inform that during 2019 the movements in exchange rates for both the Russian Rouble and Sterling have worked to our favour against the Euro, which is the reporting currency of IHI, and this is a payback and reversal of the heavy losses that took place in these currencies in previous years.

As all of you are aware, Libya has experienced and is still experiencing political uncertainties, which obviously affect our trading in our Tripoli hotel. Nevertheless, as we have experienced all along, we are fortunate that our commercial office centre adjoining the hotel maintained practically full occupancy, thus generating sufficient surplus funds to compensate for the loss of revenue in the hotel operation. In fact, the net outcome of these two operations resulted in an EBITDA of €4.59 million and a profit before tax of €1.37 million after deducting interest and depreciation.

Chairman's Statement - continued

It is important to note that in normal trading this hotel would yield a GOP of around €18 million annually. However, when considering that interest and depreciation are already reported in our consolidated results, any future improved GOP from this hotel would then all cascade right down to the profit line.

As I have mentioned on numerous occasions, our three sister subsidiary companies make IHI quite unique in the world by offering a one-stop-shop service for hotel and real estate development. In fact, we are not only hotel owners, but we also develop hotels and real estate through our company CDI. During construction we provide the services of project management through QP. Ultimately, we also manage hotels under the brand Corinthia through our company, CHL.

This integration of an owning company with these three sister companies gives us tremendous spin-off benefits as each company will, in the course of its business, find occasions to introduce the other members of the group.

In addition, we have an extremely well- structured organisation and a very committed workforce that reflects the spirit of a family which we call, the Spirit of Corinthia. This imparts substantial value, which, though not discernible in the balance sheet, yet gives our company an edge over competition.

Looking forward and as a policy we will continue searching locations to proudly fly the Corinthia flag either through management agreements or possibly joint ventures.

In fact, we are proud to announce that we are moving ahead with our hotel property in Rome, which we are developing under a lease agreement with an investment fund. The property is the former seat of the Central Bank of Italy in Parliament Square. Plans are in hand for the conversion of the 7,500m2 building into a luxury destination, featuring a number of suites and top of the range bedrooms. The luxurious public areas include two restaurants, bars and lounges, all wrapped around a central garden. The hotel also has a spa and other amenities. I am confident that this hotel development will be a successful operation which will consolidate our relationship with the fund that owns the property, prompting both parties to repeat similar agreements in other destinations.

May I add that we are at present involved in a number of other projects. We are for example developing a mixeduse residential and hotel property in Moscow, by way of a joint venture in which IHI has 10% shareholding, as also the management contract for 30 years. We are also developing a hotel in Brussels in which IHI owns 50%, together with the management agreement. Purely as a provider of management and technical services, IHI, through its management company, CHL, is also involved in the development of three luxury hotels under construction in Bucharest, Dubai and Doha, and once completed CHL will take responsibility for the hotel management of these three properties.

As we entered into 2020, the Company had been planning to eventually explore business in certain locations in the African continent, on the basis of this continent's significant growth potential, and where we would like to take the opportunity to fly our flag. This is no different to what we had pioneered in the Eastern European countries more than two decades ago.

In all of our developments, I cannot emphasise enough the importance of joint ventures. Being 100% owners of hotels, as we had to do in the past, entails the utilization of substantial amounts of our capital. The concept of joint ventures increases our chances to participate in more projects, as joint ventures allow us more elbow room to use excess funds in the acquisition of more properties, providing more opportunities to fly our Corinthia flag, whilst spreading wider our reach and achieving more profitability. However, notwithstanding the appreciation in the investments of hotels and real estate, we nevertheless see that the provision of pure management of hotels on behalf of third parties is a faster growth path for our company, nevertheless we shall pursue all fronts to achieve growth.

As indicated last year at the annual general meeting, we are planning to divest one or two of our properties which have reached their full maturity with the scope of recycling the funds generated through the sale of such properties as also give us the opportunity to issue ad-hoc dividends.

Chairman's Statement - continued

At present, we have put on the market our hotel in Prague where an exclusivity agreement has been signed, identifying heads of terms on the sale. Our negotiations on this front are proceeding, however one must appreciate that the pandemic has brought an uncertain timetable to these discussions.

Nevertheless, we remain hopeful that once a level of normality returns to business, we will be able to achieve a successful closing. As had been expected, the terms of the agreement that we have been discussing with a prospective buyer were at a price significantly higher than our book value as currently shown in our balance sheet. Based on this expectation, this will prove, once a sale is concluded, what we have been saying time and time again, that the potential of our hotels is much higher than their balance sheet value.

As a Maltese public company, IHI, is still very committed to continue to develop and expand further in Malta. Our plans for the San Ġorġ project to develop a luxury hotel and real estate depend on the ongoing discussions with Government, which we hope to resume shortly, and we are confident that we will ultimately be successful.

Concurrently, as owners of 85,000 square meters of land at Ħal Ferħ, with a permit for tourism, we are presently discussing with Government certain changes in the development brief which would be more in keeping with current trends in the luxury hotel market to also include a degree of high-end residential villas, but never exceeding in height or in volume the limitations imposed on the land by the current planning parameters. In fact, I am happy to inform that the consultation procedure on the Development Brief is in progress and we look forward to seeing this concluded positively.

Corinthia is fully conscious of the onerous duty which it carries as a leading organisation in Malta. It is proud of its highly professional service, its active participation in eco-friendly measures and policies, its social involvement and contribution and its drive to look forward with determination to achieve the best for our island. Our company is endowed with a social conscience.

Over the years I have often said that though we are known for our beautiful properties and our personalized customer service, it is our integrity and humanity, our care for one another that enrich us with something even more valuable and enable us to achieve something even more special. All the material things which we see around us pale into oblivion if we lose what I have insistently referred to as the Spirit of Corinthia.

The Spirit of Corinthia is a sum total of sentiments, philosophies, guidelines and sensitivities which make us different from others. It is the totality of all this which forms our Corinthian DNA, our identity. The sense of family which binds us all gives rise to a culture of care. This does not merely guide our spirit; it is also a social message. The practice of nurture and assistance motivates the giver and the receiver. It ensures a sharing of experience and hence gives rise to higher standards in our organisation, our service, our look, and the feelings we share with everyone, including our guests.

The Spirit of Corinthia also encompasses a constant and sincere passion for one's work, which therefore gives rise to an unswerving determination to reach the goal of personal contentment. It also includes a drive for perfection and always looking forward for new heights. All these requisites become stronger when coupled with a sense of righteousness, honesty and integrity.

It is our responsibility to show gratitude towards all those who have helped this company to move forward and I cannot but sincerely thank, from the bottom of my heart, all employees of all grades who have strived hard to fulfill themselves and at the same time enrich this company. Every person of goodwill has a place in this success story. I also emphasise the importance of the managerial class who have strived and guided and inspired their colleagues. The CEOs who have directed the Corinthia ship through thick and thin. The members of the Board who have instigated and curated numerous decisions for the betterment of this Company.

Chairman's Statement - continued

Ultimately, dear shareholders, I turn to you as the last on my list, not out of any disrespect but on the contrary to reserve for you the best seat of gratitude. Your faith in us gives us solace, strength and courage but it also makes us fully conscious that we must repay all this by offering and performing our best, especially in these difficult times when the support of all is most important.

Alfred Pisani Chairman

CEO's Report

Dear Shareholders,

This Annual Report focuses on the performance of the IHI Group in 2019, another successful year by any measure.

We write this review in full knowledge of the testing months we are living through in 2020 and more so in the knowledge of the difficult road ahead for our industry. Demand has dropped to historic lows everywhere. By all accounts, recovery will be gradual. These challenges are however being met with an undiminished commitment, creativity and entrepreneurial guile that has seen us grow our company over so many years, against several odds. Above all, we are benefitting from a financially conservative position and sound business strategy in the run-up to the 2020 pandemic, as shown in the results we are publishing.

The Chairman has written extensively on the manner with which the Company is handling the impact of the 2020 pandemic. We have also issued public statements on actions taken to mitigate these circumstances. We have terminated all casual and part-time labour in our operations, minimised all operating expenses to the barest of minimums, stopped all CAPEX, reorganized our funding, tapped into Government subsidies where applicable and more.

We are also of course, above all, appreciative of the personal sacrifices of many of our colleagues who have continued to work hard and support the company in spite of payroll measures that have impacted every member of our company.

Focus on 2019

Our pre-tax profit increased by 63% from €8.5 million in 2018 to €13.9 million in 2019.

Our core EBITDA from the various businesses we own increased by €2.29 million to €69.8 million.

Over the six years prior to 2019, we have practically doubled our EBITDA, as shown in the graphs accompanying our report.

This is the result of higher revenues in our hotels, better containment of costs and improved conversions to operating profits, apart from further acquisitions and investment in new businesses that have increased our portfolio, as indicated hereunder:

• Ownership stakes in 13 hotels in London, Brussels, Prague, Budapest, St Petersburg, Tripoli, Lisbon and, more recently in Moscow, besides four owned and one jointly owned hotels in Malta.
• Ownership of the Corinthia Brand and Corinthia Hotels Limited, a management company that is involved in and operates 21 hotels, of which 15 are branded Corinthia.
• The formation of Corinthia Developments International Limited, a developer that originates and executes branded real estate projects for IHI and other investors.
• QP Limited, another wholly owned subsidiary, a technical, design & project management company, the largest in Malta, but also operating internationally.
• Corinthia Caterers, an event & industrial catering company, that also owns the Costa Coffee franchise in Malta and Spain.

• An ownership stake in the Global Hotels Alliance, alongside six world class hotel brands and software companies providing a global hospitality loyalty platform to hotels worldwide

as well as:

• Land, commercial & residential real estate property in Malta, Tripoli, London, St Petersburg, Budapest and Moscow.

The financial statements reproduced later in this report give a fuller, more detailed picture of our performance in 2019.

	2018	2019
	€ 000	€ 000
Owned Hotels Revenue	209,514	219,404
Rental Income	12,835	13,694
Catering Income	24,815	25,081
ee Income from third parties	9,150	10,107
TURNOVER	256,314	268,286
BITDA	67,504	69,790
	26,34%	26.01%
Adjusted EBITDA*	61,333	60,289
NET PROFIT BEFORE TAX	8,472	13,912
ax	(13)	(8,793)
NET PROFIT AFTER TAX	8,459	5,119

* Adjusted EBITDA includes consolidated EBITDA plus our share of associates and joint ventures less non-controlling interest in NLI.

In summary, revenues are up to €268 million, an improvement of €12 million relative to the previous year mostly due to improved revenues from existing businesses.

Over 80% of this revenue is driven by the operation of our owned hotels. This revenue is described in more detail later in this report. Rental income comprises the leasing of offices and retail units at our purpose-built commercial centers in Tripoli and St Petersburg, as well as the rental of our luxury residential penthouse in London. Total rental income amounted to €13.7 million in 2019.

Fee income from third parties is derived principally from charges levied by Corinthia Hotels Limited and QP Limited, our hotel management company and design and project management company respectively, to third party owned hotels and real estate projects. Fees charged to group companies are netted off on consolidation. The growth of this line item is a strategic focus of the Group, as we double up efforts to grow QP into an international force and expand Corinthia Hotels as a management company that operates hotels owned by other investors across the globe. In 2019, such third-party fee income increased by 10% to top the €10m mark. By way of a summary explanation on the costs and income below EBITDA, the most significant movements include:

• Depreciation and Amortisation, €36.8 million in 2019 relative to €33.2 million in 2018

The increase of €3.6 million was principally due to a higher charge in depreciation on the hotel properties in London, Lisbon and Prague in consequence of property value uplifts in these Hotels in 2018. Furthermore, following a change in accounting standards, there has also been a significant increase in lease amortisation costs relating to shop leases on the Costa Coffee Operations in Malta and in Spain. In prior years, this cost was accounted for as rent payment and reported under costs prior to arriving at the EBITDA figure.

• Net finance costs increased by €2.5 million year-on-year to €23.2 million in 2019 relative to €20.7 million in 2018.

In 2019, a new bond for €20 million was issued to fund the Group's investments in Brussels, Moscow and the acquisition of an equity position in GHA. An increase of €10 million in the debt funding of the Corinthia Lisbon Hotel was also concluded during the year under review. Notwithstanding the increased interest cost on this additional indebtedness, the reduction in interest cost through scheduled payments of bank loans by far exceeded this increase.

• Adjustments in value of property and intangible assets amounted to a loss of €3.6 million in 2019 relative to a gain of €3.9 million in 2018.

The movements in this line item for 2019 mainly represent a decrease of €1.2 million in the carrying value of the London Penthouse, a €3.0 million impairment on the brand value of Island Caterers Ltd and an impairment on the property, plant and equipment of Costa Coffee Spain less an increase in the investment property value in St Petersburg of €1.0 million.

• Net changes in fair value of contingent consideration includes the reversal of an overprovision of €4.4 million in the overage payment to the Crown Estate on the London Penthouse the year before.

• Gains or losses on exchange rate movements represented a €4.7 million gain in 2019 relative to a loss of €8.0 million in 2018.

Although the reporting currency of the Company is the Euro, the functional currency of its properties and operations in the United Kingdom and in the Russian Federation are the Pound Sterling and the Rouble respectively. Whilst in 2018 as the value of these two currencies continued to lose ground against 2017, there was a recovery in both currencies during 2019, such that there was an improvement in this line item of €12.7 million year-on-year.

• Tax Charge of €8.8 million in 2019 relative to a tax charge of €0.013 million in 2018.

The tax charge is calculated at the tax rate applicable to the profits made in each of the countries where we operate. In 2018, the Company benefitted from a one-time tax gain of €5 million following an increase in the tax base of the Corinthia brand.

OWNED HOTELS' OPERATING PROFITS AND EBITDA

Over 80% of our revenue is derived from our owned or partially owned hotels. The tables hereunder show the EBITDA performance of each of our owned hotels following the payment of operating and asset management fees to IHI and Corinthia Hotels Ltd, indicating an improved year-on-year result in most operations. The results for the hotels in London and St Petersburg are shown in Sterling and Rouble respectively, besides in Euro, highlighting the impact of significant currency fluctuations.

CORINTHIA HOTEL BUDAPEST
	2014	2015	2016	2017	2018	2019
	Audited	Audited	Audited	Audited	Audited	Audited
	€'000	€,000	€ 000	€'000	€'000	€'000
GOP	6.498	8.364	8,728	9.601	8.953	9.790
EBITDA	5.591	6.671	7.100	7.988	7.514	8.181
EBITDA margin	26%	29%	30%	31%	29%	29%

2014	2015	2016	2017	2018	2019
Audited	Audited	Audited	Audited	Audited	Audited
€ 000	€'000	€'000	€ 000	€'000	€'000
5.674	6.242	6,808	8.202	8.668	9.419
4.673	4.718	5.616	7.056	7,125	7.995
24%	23%	26%	29%	27%	28%

CORINTHIA HOTEL PRAGUE
	2014	2015	2016	2017	2018	2019
	Audited	Audited	Audited	Audited	Audited	Audited
	€'000	€'000	€'000	€'000	€ 000	€'000
GOP	4.064	4.931	5.155	5.920	6,374	6.396
EBITDA	3.278	3,947	4.191	4,905	5,323	5.231
EBITDA margin	21%	23%	25%	25%	26%	26%

CORINTHIA HOTEL ST GEORGE'S BAY
	2014	2015	2016	2017	2018	2019
	Audited	Audited	Audited	Audited	Audited	Audited
	€'000	€'000	€,000	€'000	€'000	€'000
GOP	3.049	4,244	4.500	5.342	4.828	4.643
EBITDA	2.485	3.511	3,773	4.475	4,112	3.960
EBITDA margin	17%	23%	24%	27%	25%	24%

MARINA HOTEL
	2014	2015	2016	2017	2018	2019
	Audited	Audited	Audited	Audited	Audited	Audited
	€ 000	€,000	€ 000	€'000	€'000	€'000
GOP	1.822	2.957	2.979	3.293	3.356	3.047
EBITDA	1.566	2,583	2,603	2,833	2,972	2.677
EBITDA margin	23%	27%	26%	28%	29%	27%

CORINTHIA PALACE HOTEL & SPA
	2018*	2019
	Audited	Audited
	€.000	€'000
GOP	810	513
EBITDA	218	258
EBITDA margin	3%	3%
*2010. NINE MOSAITLI CINICE ACQUICCTION ON 1 4 2010

CORINTHIA HOTEL TRIPOLI
	2014	2015	2016	2017	2018	2019
	Audited	Audited	Audited	Audited	Audited	Audited
	€'000	€,000	€,000	€,000	€'000	€,000
GOP	(1,211)	(3,004)	(3,030)	(2,979)	(1,827)	(1,739)
Net rental income	5,863	5.088	4.553	4.874	6.423	6.736
EBITDA	4,227	1,076	1.198	1,605	4,061	4,595
EBITDA margin	29%	18%	11%	13%	24%	27%

CORINTHIA HOTEL ST PETERSBURG
	2014	2015	2016	2017	2018	2019
	Audited	Audited	Audited	Audited	Audited	Audited
	RBL'000	RBL'000	RBL'000	RBL'000	RBL'000	RBL'000
GOP	154,319	271,800	427,046	498,545	630,398	578,995
Net rental income	179.415	225,697	304,647	307.941	368.961	350,128
EBITDA	210,207	313,194	541,923	656,548	821,849	739,560
EBITDA - €	4.096	4,882	7.465	10,041	11,111	10,036
EBITDA margin	22%	30%	32%	37%	41%	100%

CORINTHIA HOTEL LONDON
	2014	2015	2016	2017	2018	2019
	Audited	Audited	Audited	Audited	Audited	Audited
	£'000	£'000	£'000	£'000	£'000	£'000
GOP (100%)	14.374	16,546	16,984	18.449	20,574	19.588
EBITDA (100%)	7.160	11,673	13,041	13,311	13,425	14,163
EBITDA (50%) - €	4.475	8.040	7.965	7.596	7,565	8.044
EBITDA marqin	15%	22%	24%	22%	22%	21%

RADISSON BLU BAY POINT HOTEL
	2015*	2016	2017	2018	2019
	Audited	Audited	Audited	Audited	Audited
	€'000	€ 000	€,000	€ 000	€'000
GOP	2.809	4,373	4.692	4,748	4,296
EBITDA	1.872	4.492	4,241	4.095	3,728
EBITDA margin	27%	35%	31%	29%	28%

RADISSON BLU GOLDEN SANDS RESORT
	2015*	2016	2017	2018	2019
	Audited	Audited	Audited	Audited	Audited
	RBL'000	RBL'000	RBL'000	RBL'000	RBL'000
EBITDA - Timeshare	(2,652)	(4,755)	(3,805)	(2,132)	(6,223)
EBITDA - Hotel	3.940	6,743	5,503	4.919	3,308
Total EBITDA (100%)	1,288	1,988	1.698	2,787	(2.915)
EBITDA (50%)	644	994	849	1,394	(1,457)
EBITDA marqin	9%	7%	6%	9%	4%

Developments

2019 was another year of significant growth. The Group is actively involved as an investor, operator, technical project manager or combination of all of the above in six projects that have all progressed well in 2019 and continue to progress further notwithstanding the 2020 pandemic.

Rome

Opening 2022

The Rome project remains on track. Design work is progressing as planned, and early strip-out and site preparation works are underway. Corinthia Developments International Limited is contracted to deliver the project, whilst Corinthia Hotels Limited is the operator and lessee.

Brussels

Opening 2023

The project delays in 2019 are mainly attributed to intensive re-design and negotiations with various contractors with the objective to achieve a project price in line with the group's targets. Discussions with a selected contractor are now nearing completion and the company expects to be in a position to award a main contract as soon as it is in the group's interest to proceed with works on site. Corinthia Developments International Limited is contracted to deliver the project, whilst Corinthia Hotels Limited is the operator.

Dubai

Opening 2020

Corinthia Hotels Limited, as the operator and provider of hotel technical services, has stayed closely involved in the construction of the 55-storey flagship project on Jumeirah Beach. Works are now targeted for completion by 2021.

Doha

Opening 2023

Corinthia Hotels Limited has entered into contractual arrangements to provide technical services and manage a luxury hotel, residential serviced villas, a beach club and a yacht club on the iconic Gewan Island, part of the Pearl development in Doha. Design work is well underway, and construction has commenced.

Ħal Ferħ

Planning stage

The Group has commenced a process to revise its plans for the Ħal Ferħ site in Malta. A public consultation is underway to rezone the site allowing residential use, besides tourism. Subject to permits, the group intends developing a flagship low-rise, extensively landscaped resort and residential project, set within existing restrictions on building heights, volumes and footprints.

Bucharest

Opening 2022

Work will be picking up again on the redevelopment of the landmark Grand Hotel du Bulevard in Bucharest, where a luxury Corinthia all-suite Hotel is to be created. QP Limited has been entrusted with project management, whilst Corinthia Hotels will be the operator of the property once completed.

Moscow

Opening 2023

The group has a 10 per cent stake in a major project on Moscow's main boulevard, a stone's throw from the Kremlin. The site is being redeveloped behind a retained historic façade and will feature a Corinthia Hotel, high street retail areas, and over 100 branded residences. Works on foundations and excavations are underway and in their early stages.

Joint CEO Joint CEO

Simon Naudi Joseph Fenech

Directors' Report Year ended 31 December 2019

The Directors present their report on International Hotel Investments p.l.c. (the 'Company') and the Group of which it is the parent for the year ended 31 December 2019.

Principal activities

International Hotel Investments p.l.c. carries on the business of an investment company in connection with the ownership, development and operation of hotels, residential and commercial real estate. The Company owns a number of investments in subsidiary and associate companies (as detailed in the notes to the financial statements), through which it furthers the business of the Group.

Review of business development and financial position

Total revenue for the year under review amounted to €268.3 million compared to €256.3 million the year before. The increase in revenue is attributable to an increase in revenues in consequence of continued performance improvements in most of the operations in the Group.

EBITDA for 2019, excluding the consolidation of the results of jointly controlled companies, amounted to €69.8 million compared to €67.5 million achieved in 2018. The increase of €2.3 million is mainly attributable to an improved performance from the hotel operations in Budapest, Lisbon and London which registered a year-onyear increase. Conversely the hotel operations in Malta registered a lower performance in 2019 compared to that of 2018.

Contrary to 2018, in 2019 the Group reported an exchange profit of €4.7 million, compared to a loss on exchange of €8.0 million the year before. This overall improvement of €12.7 million in exchange differences is mainly related to the St Petersburg property, on account of an improved rouble compared to last year.

The Group's share of the associates and joint ventures, reflecting the Golden Sands hotel and timeshare operation in 2019, resulted in a €4.0 million erosion to the Group's EBITDA. The corresponding loss registered in 2018 was €1.4 million from this activity. The timeshare operation has been discontinued in 2020.

On an adjusted basis, the EBITDA for the Group including its share of the joint venture's EBITDA is €60.3 million compared to € 61.3 million in 2018.

In 2019, the Group registered net property uplifts of €6.9 million before tax on account of the continued improved trading performance of the Group's assets. The net property uplift before tax for 2018 amounted to €42.8 million.

On account of an improved sterling and rouble relative to the reporting currency of the Group which is Euro, the Group recorded a combined currency translation profit of €34.5 million in 2019, relative to a loss of €15.3 million registered in 2018.

The Group registered a total comprehensive income of €38.9 million in 2019 against €25.3 million registered in 2018. This improved performance has to be also considered in the light of a €8.8 million tax charge in 2019 relative to a marginal tax element in 2018 in consequence of exceptional tax effects.

At 31 December 2019, the Group is again reporting a positive working capital of €16.8 million, which is a further improvement of €6.9 million compared to the figure of €9.9 million reported in 2018. This additional improvement is in consequence of a further increase of €22.5 million in cash and cash balances, which was partly offset by a reduction in trade receivables of €9.8 million and a combined increase of €8.2 million in trade payables and current portion of bank borrowings.

Directors' Report - continued Year ended 31 December 2019

Future developments

IHI's business as a developer and operator of hotels and real estate has evolved and its dependence on any single hotel is now marginal. The outlook for 2020 in all the Company's hotels in the first quarter of the year was positive, with actual performances surpassing the performance registered in the first quarter of 2019.

However, since the start of 2020, the world has suffered from a widespread COVID-19 pandemic, resulting in disruptions to businesses worldwide. Global border restrictions, local mobility restrictions, and the enforced closure of hotels, food and beverage outlets and other places of entertainment, have had a negative impact on the Company and the Group, the hospitality industry in general as well as most other economic sectors worldwide. Governments in many countries have responded with monetary and fiscal interventions to assist companies to overcome these unprecedented financial difficulties.

As a result of the pandemic and notwithstanding the measures taken by governments, the Group experienced a severe curtailment of its business since the second half of March 2020. The Group has taken significant measures to reduce its cost base and is also in receipt of various COVID-19 business assistance programmes aimed at mitigating against the adverse financial impact of this pandemic and to safeguard its future wellbeing, as well as that of its employees and all stakeholders. The Group took immediate action to curtail its payroll by shedding allpart-time workers and others on probation, whist also terminating all outside labour service providers. Many of the Group's employees have also taken drastic cuts in their take home pay. Internal guidelines on operations and staff welfare have also been circulated and updated regularly, especially now, as the Group enters into a phase of re-opening its hotels.

The Directors are giving due consideration to the uncertainties and mitigating factors that have been taken across the board in order to ensure the going concern of the Company. The Directors continue to closely monitor the situation on an ongoing basis with a view to minimizing the impact of the COVID -19 pandemic on the Group, the more so now as various governments are lifting border restrictions and local mobility restrictions. The Group is also reviewing on an ongoing basis the right-sizing of its operating base, even more so now as the level of business generated in the second half of 2020 will, with the gradual opening of its hotel operations, be a fraction of that generated in the corresponding period in 2019.

Work on the designs for the redevelopment of the Corinthia Hotel Brussels is progressing at a good pace. The main construction contract is under negotiation and will be awarded as soon as IHI decides to proceed with construction on site.

Works on a mixed-used residential and hotel property in Moscow, in which IHI has a 10% shareholding, is also progressing well, with completion scheduled for 2023.

Corinthia Hotels (CHL), the Group's hotel management company, is also involved in the development of four luxury hotels under construction. These are located in Rome, Bucharest, Dubai and Doha and once completed CHL will take responsibility for the hotel management of these three properties. In the case of Bucharest and Rome, the Group, via its QP Limited and CDI Limited subsidiaries is also involved in the project development as project managers and developer.

Going concern

The Directors have reviewed the Company's and the Group's operational and cash flow forecasts. Based on this review, after making enquiries, and in the light of the current financial position, the existing banking facilities and other funding arrangements, the Directors confirm, in accordance with Listing Rule 5.62, that they have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future.

Directors' Report - continued Year ended 31 December 2019

Principal risks and uncertainties

The Group started trading in 2000, undertaking a strategy of rapid expansion. The hotel industry globally is marked by strong and increasing consolidation and many of the Group's current and potential competitors may thus have bigger name recognition, larger customer bases and greater financial and other resources than the companies within the Group.

The Group is subject to general market and economic risks that may have a significant impact on the valuations of its properties (comprising hotels and investment property). A number of the Group's major operations are located in stable economies. The Group also owns certain subsidiaries that have operations situated in emerging or unstable markets. Such markets present different economic and political conditions from those of the more developed markets and present less social, political and economic stability. Businesses in unstable markets are not operating in a market-oriented economy as known in other developed or emerging markets. Further information about the significant uncertainties being faced in Libya are included in Note 6.

The Group is exposed to various risks arising through its use of financial instruments including market risk, credit risk and liquidity risk, which result from its operating activities.

The most significant financial risks as well as an explanation of the risk management policies employed by the Group are included in Note 43 of the financial statements.

Subsequent events

As from mid-March 2020, the Company and the Group were negatively impacted by the adverse effects of the COVID-19, pandemic. The risks, uncertainties and mitigating actions taken by the Company and the Group are better described in the section relating to 'Outlook' in this report. However, the Directors are of the view that the Company and the Group have sufficient financial resources, including new credit lines, to withstand this calamity at least up to 30th June 2021, which is twelve months from the sign-off date of these financial statements.

No other adjusting or significant non-adjusting events have occurred between the end of the reporting period and the date of authorisation by the board.

Note 3.1 to the financial statements gives more detail about the consequences of COVID-19 on the appropriateness of preparing the company's financial statements on a going concern basis.

Reserves

During the year under review, the Company declared and paid a dividend to its shareholders of €12.3 million. The movements on reserves are as set out in the statements of changes in equity.

Board of directors

Mr Alfred Pisani (Chairman) Mr Frank Xerri de Caro (Senior Independent Director) Mr Salem M.O.Hnesh Mr Abdulnaser Ahmida Mr Hamad Buamim Mr Abuagila Almahdi Mr Douraid Zaghouani Mr Joseph Pisani Dr Joseph J. Vella Mr Winston V. Zahra

Directors' Report - continued Year ended 31 December 2019

Auditors

PricewaterhouseCoopers have expressed their willingness to continue in office. A resolution proposing the reappointment of PricewaterhouseCoopers as auditors of the Company will be submitted at the forthcoming Annual General Meeting.

Approved by the Board of Directors on and signed on 26 June 2020 on its behalf by:

Alfred Pisani Frank Xerri de Caro Chairman Senior Independent Director

Registered Office 22 Europa Centre, Floriana FRN 1400, Malta

STATEMENT BY THE DIRECTORS On the Financial Statements and other information included in the Annual Report

Pursuant to Listing Rule 5.68, we, the undersigned, declare that to the best of our knowledge, the financial statements included in the annual report and prepared in accordance with the requirements of International Financial Reporting Standards, as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and results of the Company and its undertakings included in the consolidation taken as a whole and that this report includes a fair review of the development and performance of the business and position of the Company and its undertakings together with a description of the principal risks and uncertainties that they face.

ON NON-FINANCIAL INFORMATION

Introduction

This report details the various actions taken by International Hotel Investments p.l.c. (the 'Company') as the parent company, and its subsidiaries (the 'Group') to enhance sustainability in terms of its operations and its activities related to corporate responsibility.

As described in more detail in the annual report, the Group is a hotel and real estate developer and operator.

The Group strives for sustainability in what it considers the three pillars of Corporate Social Responsibility (CSR):

• Environmental sustainability;
• Personal sustainability; and
• Community sustainability.

The Group aims and strives to achieve the highest standards in the best sustainable way possible. It ensures that the resulting benefits are shared by its shareholders, clients and the community at large.

The Group envisages it will further integrate and generate awareness on sustainability practices throughout its operations in the countries it operates. It aims at engraining the concept of sustainability in each of its employees, thus becoming an integral part of its business. This philosophy provides a framework to manage and monitor the Group's performance and mitigate as much as possible, the environmental or social risks that it faces.

This report will delve into the ways the Group implements policies related to environmental protection, social responsibility, treatment of employees, respect for human rights, anti-corruption and bribery.

Governance

The Group believes that strong sustainable governance processes ensure that delivery on performance with sustainability topics are integrated into and not separate from the business.

The Board plays an essential role in determining strategic priorities and considers sustainability issues as an integral part of the business oversight. The Audit Committee assists the Board in providing more focused oversight for the Group's policies, programmes and related risks that concern key public policy and sustainability matters.

Risk Management

The Group has a Risk Management Committee, which is responsible for:

• Building a risk aware culture;
• Developing and recommending a Risk Management Framework to the Board;
• Coordinating and reviewing the risk assessment, evaluation and response processes; and
• Monitoring and reporting on risk performance.

The Group has a Risk Management Policy to provide an effective structure for the management of risk across the Group and to formalise and communicate the approach towards risk management.

The Group has adopted a standard methodology which is based on the guiding principles of the International Risk Management Standard ISO 31000:2009, and the COSO (Committee of Sponsoring Organisations of the Treadway Commission) standard for Enterprise Risk Management.

ON NON-FINANCIAL INFORMATION - continued

The Group proactively identifies, mitigates and manages principal business risks through an effective risk management framework, which includes key Group policies. It is working to incorporate sustainability risks in the Group Risk register, which is an assessment of the principal strategic and operational risks affecting the Group.

Ethical Conduct

Anti-Fraud and Whistleblower Policy

The Group's set of values underpins its high standards of ethical conduct. It respects human rights, embraces diversity and stands firm against corruption. In September 2014, the Group introduced The Anti-Fraud and Whistleblower Policy. This was drawn up by the Audit Committee with a purpose to minimise the risk of fraud and maintain integrity in the Group's business dealings. The Anti-Fraud and Whistleblower policy is implemented in the jurisdictions where the Group operates.

The primary objective of the policy is to:

• Provide a clear and unambiguous statement of the Group's position on theft, fraud and corruption;
• Minimise the risk of fraud;
• Enhance the Group's governance and related internal controls;
• Standardise business activities;
• Maintain integrity in the Group's business dealings; and
• Establish procedures and protections that allow employees of the Group and members of the public to act on suspected fraud or corruption with potentially adverse ramifications and to achieve the legitimate business objectives of the Group for the benefit of its shareholders.

The Policy also outlines the systems that facilitate reporting of misconduct and the procedures to investigation and resolve malpractices. As a Group which values good governance, it remains committed to ensuring that its staff act within the utmost integrity through training and well-defined guidelines and procedures.

The Policy has been widely distributed and is currently publicly available on the Group website www.corinthiagroup.com. There have been no cases reported under this policy in 2019.

Employee Handbook

To provide its employees with guidance on adhering to the Group's values of Authenticity, Passion, Precision and Understanding in all we do, the Group's Employee Handbook was revised during 2017 to include such issues as anti-fraud, anti-corruption, anti-bribery, whistleblowing, fair competition, equal opportunity, customer and employee data privacy and anti-slavery policies. All employees undergo training on codes of conduct so that they are familiar with the Group's expectations on ethical and professional conduct as well as its approach to equal opportunity and anti-fraud, data protection amongst others.

The Group encourages and enables employees, staff and external parties, such as agents, advisors and representatives, to raise serious concerns within the Group.

ON NON-FINANCIAL INFORMATION - continued

The Handbook will be reviewed regularly by a Designated Executive to ensure that its provisions continue to meet legal obligations and reflect best practice.

All executives have a specific responsibility to operate in accordance with the provisions set out in the Handbook, to ensure that all colleagues understand what standards of behaviour are expected of them and when to take action once behaviour falls below those requirements. Executives are given appropriate training in order that they may do so.

Those working at a management level have a specific responsibility to set an appropriate standard of behaviour, to lead by example, ensure that those they manage adhere to the policies and procedures and promote the Group's aims and objectives.

Social and Employee Matters

Employees

As at 31 December 2019, the Group employed 2,614 (2018 – 2,737) full-time staff across its businesses worldwide. Of these 1,476 (2018 – 1,520) were males and 1,138 (2018 – 1,217) were females. Agency services are used for part-time employees across all jurisdictions. Employees in the various locations are represented by inhouse union representatives who liaise with sectoral unions covering the various industry trades.

TABLE OF EMPLOYEES

Information on employees and other workers			2018							2019
Contract type		Permanent		Temporary			Permanent			Temporary
By region, by gender	M	F	Total	M	F	Total	M	F	Total	M	F	Total
CHStPetersburg	72	130	202	8	9	17	87	113	200	7	5	12
CHLisbon	48	53	101	62	54	116	65	61	126	54	45	99
CHLondon	419	374	793	31	26	57	413	346	759	27	23	50
CHTripoli	115	15	130	-	-	-	111	14	125	-	-	-
CHPrague	84	104	188	-	-	-	67	102	169	4	3	8
CHBudapest	128	118	246	-	-	-	112	88	200	-	-	-
Spain - Costa Coffee	51	55	106	-	-	-	45	60	105	-	-	-
Malta - St George's Bay	90	63	153	29	13	42	103	66	169	15	6	21
Malta - Marina	46	27	73	27	16	43	45	30	75	27	21	48
Malta - Palace	77	40	117	20	14	34	63	34	97	40	19	59
Malta - Radisson St. Julians	92	39	131	-	-	-	88	35	123	-	-	-
Malta and UK - CHL	30	31	61	-	1	1	31	27	58	-	1	1
Malta - Costa Coffee	64	94	158	-	-	-	80	93	173	-	-	-
Malta - ICL	162	56	218	73	51	124	122	46	168	4	-	4
Malta - QPM	42	18	60	-	-	-	44	23	67	-	-	-
Total	1,520	1,217	2,737	250	184	434	1,476	1,138	2,614	178	123	302

ON NON-FINANCIAL INFORMATION - continued

The Group strives to remain an exemplary and leading employer. It provides its employees with the right development opportunities to cultivate their abilities and enable them to grow within the Group. Employees can gain experience by means of cross-exposure programmes and job rotations in different aspects of the Group's business and are provided with training programmes that help refine and build on their expertise. These programmes aim to enhance the operational know-how and long-term professional development of the Group's employees. Despite challenging economic circumstances in some of the markets, the Group remains committed to the growth of its people and does not compromise on training and development initiatives.

Diversity

The Group is committed to providing an inclusive and harmonious workplace to its employees regardless of gender, age, nationality, religion, sexual orientation, disability, or other aspects of diversity.

In total circa 43.5 per cent of the Group's workforce is female, with the highest participation rate experienced in the Czech Republic (60.4 per cent) followed by Russia (56.5 per cent).

The Group supports parents by facilitating parenting through family-friendly measures, including parental leave to both males and females.

Parental Leave	2018		2019
	M	F	M	F
Total number of employees entitled to
parental leave
CHBudapest	0	14	0	11
CHLondon	287	384	255	351
CHSPetersburg	0	18	0	18
CHLisbon	3	5	7	4
CHTripoli	0	0	0	11
CHPrague	0	22	0	20
Spain - Costa Coffee	0	0	0	2
Malta - St George's Bay	18	10	11	8
Malta - Marina	0	0	0	0
Malta - Palace	97	54	103	53
Malta - Radisson St. Julians	0	0	0	0
Malta and UK - CHL	30	31	31	28
Malta - Costa Coffee	0	0	0	0
Malta - ICL	0	0	0	0
Malta - QPM	4	1	4	1

TABLE PARENTAL LEAVE

ON NON-FINANCIAL INFORMATION - continued

Health and safety

The Group ensures the health and safety of clients and employees at all its entities and on all its premises. It has, and will continue to upgrade the physical security systems in all its properties. In fact, it has invested significantly in enhanced security systems and practices in those jurisdictions which are considered of high risk.

To standardise procedures for handling any security concerns in the various jurisdictions where the Group operates, the Group has developed operational emergency action plans to comply with local and international health and safety standards. These standards are rolled out across its operations and updated on a regular basis.

The Emergency Action Plan is split into three sections namely:

• Preparing for emergencies/crises;
• A security assessment toolkit; and
• Dealing with emergencies.

During 2019 system upgrades have remained a major priority and mainly focused on:

• CCTV systems;
• Guest Rooms' door lock systems;
• Scanning machines;
• Undertaking of security risk assessments; and
• Introducing of electronic key control systems.

Throughout its operations, the Group encourages its employees, through constant communication and rigorous training to report any risks promptly so that they can be addressed as they arise.

Food Safety

During 2019 the Group has continued with its drive to increase food safety awareness which is considered to be a major operational risk in the hospitality sector. It continues to sponsor robust systems to ensure compliance to its high standards. Where appropriate, the Group has sought to base its food safety management systems on Hazard Analysis and Critical Control Points (HACCP) which is a tool to assess hazards in the food chain and establish control systems that focus on preventing these hazards thereby ensuring the safety of food.

Food service employees are trained in food hygiene, allergen management and HACCP related to their responsibilities. Employees are trained and made responsible for ensuring strict adherence to Group food safety standards. Management assumes the role of supervision of all food service employees for compliance and conformance with the Group food safety policies and standards.

Compliance with these standards is regularly monitored by third party auditors to ensure that clients are served and provided with safe and wholesome food.

ON NON-FINANCIAL INFORMATION - continued

Procurement Practices

The purchasing departments in the individual entities forming the IHI Group are responsible for the procurement of all food, beverage, printing, consumables, cleaning equipment and supplies for the respective entities, in sufficient quantities, at the desired quality standards, at the most competitive price, and within the required time frame.

The primary role of the Central Purchasing Department is to source quality products at competitive prices, continuously liaising with the heads of department concerned, and to consistently maintain price quotations from several suppliers.

The Group has a process in place to screen suppliers. Suppliers are typically assessed against specific requirements and criteria, following which formal approval is required by the Central Purchasing Department. They may be approved in terms of product quality, brand, adherence to health and safety requirements, HACCP requirements, reliability and reputation.

Environment

When it comes to environmental issues and practices, the hospitality industry is continuously evolving, resulting in the creation of the brands that prove to be eco-friendly.

Over the years, the Group has developed policies and procedures for energy and water conservation and waste management to help it mentor employees and standardise approaches on the effective management and conservation of these resources. All operations report on their energy and water performance on a regular basis, with these being constantly reviewed throughout the year.

Within the Group, specific initiatives have been taken to promote sustainability, plastic use reduction, energy efficiency and CSR activities. In the 2019 Senior Team Meeting, the topic of sustainability was the prime concern of participants and as a result the Group decided to act in a focused and coordinated manner. A cross-functional Sustainability-Committee was set up to drive the activity.

The issuing of a Sustainability and CSR Policy Document will include guidance on the type of CSR initiatives which the Company will be supporting, an outline of policy principles, a declaration/mission statement, a sustainability organigram within all divisions.

It is envisaged, as a minimum, that the actions will encompass the following activities:

Environmental Pillar

• Designing waste management strategies to reduce waste. This will involve also the setting-up of a monitoring and reporting system, separation of waste, strategies to eliminate plastic waste and control of food waste. A number of these initiatives are already implemented in some properties.
• Using the in-house energy and resource consumption monitoring system to control usage. The hotels in Malta will continue using the best system for accurate monitoring.
• Undertaking initiatives to increase energy efficiency. To this effect the Company is undertaking a number of contracts with third parties offering services which are intended to optimize energy use. Contracts for six hotels have already been undertaken (London, Lisbon, Budapest, St George's Bay, Radisson St Julians, St Petersburg).
• Carrying out energy audits and the implementation of resultant action plans.
• Investigating the opportunities for implementing specific renewable energy projects in individual properties.

ON NON-FINANCIAL INFORMATION - continued

Social Pillar

• Undertaking community-oriented initiatives organised by the various entities such as educational activities with particular emphasis on sustainable living education, charity activities, community service activities and staff events.

Economic Pillar

• This pillar is already adequately covered by the Principles of Good Governance which set out the activities of the Group as a Listed company.
• The principle of generating profit without affecting the environmental and social responsibilities is the key driver behind this pillar.

The activities which will be undertaken, and indeed the whole project are designed to move the Group to the forefront of sustainability within the economic sector it operates in.

Sustainable activity will also produce positive effects on the economic activity and areas such as energy efficiency and waste management have indeed a direct positive impact on profit. Non-tangible positive factors result from these activities, particularly staff wellbeing and the instilling of disciplined processes, the effects of which spill over to other activities in the day-to-day operation.

Climate Change and Energy

The Group is committed to reducing its carbon emissions and making its business more sustainable. Within this context, the Group is aware that its ability to deliver its services and products without increasing substantially utility costs will be challenging, with fluctuations in cost, posing possible disruptions to its business operations. Many of its operations are already responding to these risks in their efforts to be more efficient in their use of natural resources.

Direct (Scope 1) GHG emissions	2018	2019
Operation	IHI	IHI
CO2 emissions - Diesel (tonnes)	1,061	894
CO2 emissions - Petrol (tonnes)	21	22
CO2 emissions - LPG (tonnes)	422	530
CO2 emissions - NG (tonnes)	8,619	8,247
CO2 emissions - HGO/TFO50 (Tonnes)	1,350	1,297
Total CO2 emissions (Scope 1) (tonnes)	11,473	10,990

Going forward, the Group will continue to set internal key performance indicators, as well as to implement strategies to further reduce its overall environmental footprint in line with industry benchmarks.

ON NON-FINANCIAL INFORMATION - continued

	2018	2019
Operation	IHI	IHI
Total (Scope 2) (tonnes) CO2 emissions	30,566	28,697
GHG emissions intensity	2018	2019
Operation	IHI	IHI
Unit of measurement	Tonnes	Tonnes
CO2 emissions intensity (Tonnes CO2 / organisational metric)	1.5	1.3

The Group has developed policies and procedures for energy conservation and waste management to help it instruct employees and standardise approaches on the effective management and conservation of these resources. All operations report on their energy and water performance on a regular basis, with these being constantly reviewed throughout the year.

The Group aims to reduce its energy usage through its continued implementation of appropriate technology and engineering solutions. Data from across its operations helps it to better identify and manage any inefficiencies in consumption. Further reductions will require a concerted effort, one that is supported by newer technology and continued behavioural change.

Reducing the energy that the Group uses, helps it to be more efficient as a business, lowering both operational costs and carbon footprint. It continues to be more efficient in its operations, increasing efficiency through continuous reviews and investment in energy efficient equipment and practices including:

• The replacement of all halogen bulbs with LED lighting in all areas of the hotels;
• The constant monitoring of air-conditioning in guest rooms and public areas according to requirements and external temperatures;
• The replacement of chillers to ones with a much higher coefficient of performance, use of heat pump chillers, fine tuning with the building management systems wherever possible and introduction of three-way valves for space heating;
• The replacement of equipment (e.g. calorifiers, kitchen equipment, minibars);
• The carrying out of energy audits, optimisation and general management of energy;
• The installation of double glazed aluminium apertures;
• The installation of automation in the guest room balcony doors such as presence detectors;
• The use of detectors lighting control in public toilets;
• The introduction of micro switches with every balcony door which cuts off the air conditioning if door is left open;
• The implementation of key switches in all guest rooms;
• The reduction of paper usage for notifications to the guests which are done using in-house TV systems;
• The implementation of paperless reservations using digital processing for reservations; and
• The separation of packaging and waste material.

ON NON-FINANCIAL INFORMATION - continued

Energy Consumption and Emissions –2018-2019

In 2019, the total energy consumption within the organisation was 429,039,631 mega joules (2018 – 443,952,272)¹ . The foregoing energy saving initiatives yielded a substantial reduction of energy consumption of 3.36 per cent from 2018.

Fuel consumption	2018	2019
Operation	IHI	IHI
Unit of measurement	MJ	MJ
Fuel consumed - Diesel	15,454,785	13,016,767
Fuel consumed - Petrol	301,857	317,760
Fuel consumed - LPG	6,671,813	8,367,280
Fuel consumed - NG	168,527,470	161,306,556
Fuel consumed - HGO/TFO50	18,728,766	17,979,085
Total fuel consumed	209,684,691	200,987,448
Electricity / heating / cooling / steam consumed	2018	2019
Operation	IHI	IHI
Unit of measurement	MJ	MJ
Electrical energy purchased	229,429,307	223,929,881
Eletrical energy from PV systems	147,355	163,202
Electrical energy from CHP	4,690,919	3,959,100
Total consumed	234,267,581	228,052,183
Electricity / heating / cooling / steam sold	2018	2019
Operation	IHI	IHI
Unit of measurement	MJ	MJ
Electrical energy purchased	-	-
Eletrical energy from PV systems	-	-
Total sold	-	-
Total energy consumption with the organisation	443,952,272	429,039,631

The Group continues to explore ways to achieve reductions, such as sharing best practices with the engineering teams Group-wide, encouraging achievement of energy saving goals, introducing more Combined Heat and Power units in the properties, replacing old equipment to more efficient ones and introduction of Room Energy Management Systems.

ON NON-FINANCIAL INFORMATION - continued

Using Water Efficiently

Water is an essential commodity that has applications throughout the business, and the Company takes care to use this resource efficiently. As periods of drought are common in countries where it operates, such as Sudan, Libya, and Tunisia, it is essential to be committed to reducing water usage whilst trying to influence and inspire its partners on better water management. In 2019, the Company has consumed 731,258m³ (2018 – 756,318m³ ) ² of water, resulting in 3.31 per cent less than the amount used in 2018. This reduction in water consumption is a direct result of:

• The constant monitoring and metering of consumption;
• The increase in the collection and consumption of second class water;
• The installation of twin-flush cisterns within toilets and reducing the water used in toilet flushing by either adjusting the vacuum flush mechanism or installing toilet tank displacement devices;
• The installation of water tap pressure reducers;
• The introduction of frequent pipework inspection and immediate fixing of water leaks;
• The reduction of laundry load tonnage by using bath towel change cards; and
• The encouragement of water efficient behaviours during technical and operational visits.

Operation	IHI	IHI
Unit of measurement	m ³	m ³
Total	756,318	731,258

Even though there is a substantial decrease in water consumption, the Company is looking into ways to increase the percentage of recycled water since only 1.93 per cent was recycled in 2019 (2018 – 4.18 per cent) 3 . This can be achieved by looking into the possibility of introducing sewage treatment plants, rain water catchment and/or grey water system to produce and use second-class water for irrigation and toilet water flushing.

Water withdrawal by source	2018	2019
Operation	IHI	IHI
Unit of measurement	m ³ 756,318
Total
Even though there is a substantial decrease in water consumption, the Company is looking into ways to increase the percentage of recycled water since only 1.93 per cent was recycled in 2019 (2018 – achieved by looking into the possibility of introducing sewage treatment plants, rain water catchment and/or grey water system to produce and use second-class water for irrigation and toilet water flushing.		4.18 per cent)
Water recycled and reused	2018	2019
Operation	IHI	IHI
Unit of measurement	m ³	m ³
Total water withdrawn	756,318	731,258
Total water reused	31,615	14,087
% of recycled water	4.18	1.93
2 Figures for 2018 have been restated to include updated figures.

³ Figures and percentages for 2018 have been restated to include updated figures.

ON NON-FINANCIAL INFORMATION - continued

Managing Waste

The Company proactively manages increasing regulations imposed by local governments in response to waste management. Given the lack of suitable products or service alternatives, the nature of the operations produces waste that needs to be effectively managed. The Company reduces and manages the waste that it produces, encouraging both concepts of recycling and up-cycling throughout the individual operations.

Water discharge by quality and destination		2018	2019
Operation		IHI	IHI
Unit of measurement		m ³	m ³
Planned
Volume of discharged water		680,686	658,132
		2018	2019
Hazardous waste by type and disposal
method	Unit	IHI	IHI
Total	kg	12,065	21,413
		2018	2019
Non-hazardous waste by type and disposal
method	Unit	IHI	IHI
Total	kg	4,510,500	4,651,962

Best practice recommendations have been developed which take into account the various operational aspects, as well as possible costs and benefits for each recommendation.

The Company is making its waste monitoring methodologies more consistent to ensure that data is robust and comparable across the Company. It is committed to improving its efforts, however, these are sometimes constrained due to a lack of public awareness and lack of infrastructure to reduce waste and increase recycling. The Company will continue to look into this issue and understand how it can implement effective solutions moving forward.

The Company has introduced energy saving as a key result area target in the Balance Score Card of each entity to ensure that the overall environmental impact is being given its merited and due importance.

Furthermore, the Company will continue upgrading the Building Management Systems in its entities and will be implementing a Computer Aided Management software which amongst other important functions is able to monitor and record all preventive and breakdown maintenance works, as well as improve scheduling and resource planning. Regular and planned maintenance keeps the equipment and systems operating at their optimal efficiency, ensuring that energy conservation remains one of the ultimate ongoing operational targets.

ON NON-FINANCIAL INFORMATION - continued

Current Initiatives

As part of the Company's Green Programme and sustainability efforts it has entered into a corporate agreement with a private company offering some innovative programs to deliver water and energy cost-saving across the diverse operational functions including:

Food & Beverage

• 'Dive-Easy' cold-water soaking for effective and safe cleaning of highly carbonised kitchen items. Dive-Easy will reduce cost for heating water and provide a much safer solution.
• 'IntelliDish' online monitoring for large dishwashing machines. IntelliDish will reduce cost for water, energy and chemicals and help increase efficiency of machine utilization.

Housekeeping and Laundry

'Efficient Housekeeping Programme' based on innovative microfibre technology and ergonomic cleaning tools will reduce chemical consumption and deliver better cleaning performance at less time and with more ergonomic working conditions for the room attendants.

TASKI floor cleaning machines deliver innovative technology to enhance ease- of-use with such cleaning machines using an innovative 'whisper-technology' which delivers carpet vacuuming at lowest noise with TASKI aero.

These machines also offer innovative encapsulated carpet shampooing with TASKI pro carpet machines which will reduce turnaround time of carpets to reduce labour cost and time.

In the laundry areas, innovative solutions such as CLAX Advance low temperature technology will deliver lower water and energy cost. The fabric spotter kits of CLAX Magic will enhance ease-of-use for the laundry teams. State-of-the-art dispensing and dosing system are provided for laundry operations which helps operations to monitor online the energy and water consumptions in reaching the optimum efficiency levels.

SOCIAL AND COMMUNITY ACTIVITIES

Initiatives within the Company

In line with the Company's philosophy of Uplifting Lives, various entities within the Company organised charitable initiatives to help improve the lives of others.

These initiatives included an unsolicited joint action of employees who donated a day from their leave entitlement for a colleague who needed to accompany his young child for months of hospitalisation abroad. Another involved entertaining a very young cancer patient with the surprise of his life. A Corinthia hotel invited this child with his mother and sister for a weekend at the hotel, where the child was entertained by a magician on his arrival and led to a room full of surprises. But the best surprise was when, during breakfast, the magician turned up with three boxes, one of which contained an iPad, which was the gift the child always dreamt of. These are just two examples of a long list of uplifting initiatives.

A group of Corinthia employees volunteered to clean, whitewash and paint Dar San Gużepp Ħaddiem in Żejtun which helps people who require support. These now have a workshop that they attend daily and work according to their needs under the guidance of a workshop manager.

ON NON-FINANCIAL INFORMATION - continued

The Company has also entertained young under-privileged children and senior citizens, by organising visits to places of interest and recreation, such as historical sites and animal parks.

Restoration

The Company has contributed towards the restoration of a painting by the Russian artist Dimitri Levitsky, which hangs in the President's Palace in Valletta and which was sent to Moscow for an exhibition held in its honour at the Tsaritsyno Palace Museum.

This painting was a personal gift from the Empress of Russia, Catherine the Great, to Grand Master Emmanuel de Rohan, in 1790 to further strengthen the good relationship between Russia and the Order of Malta.

ON NON-FINANCIAL INFORMATION - continued

Scholarship aid

The Company has continued to annually award scholarship aid to two financially needy and deserving undergraduate students enrolled at the New York University School of Professional Studies, Jonathan M. Tisch Centre for Hospitality. Eight students have benefited from this aid by end 2019.

Just a Drop

The Company has continued its sponsorship of Just a Drop (JAD), an international water-aid charity which aims to contribute positively to the reduction of child mortality caused as a result of poor sanitation and unsafe water, and to actively reduce the numbers of people without access to clean water. Working with local partners at a grassroots level, JAD provides a local, clean water supply through appropriate engineering solutions to some of the poorest communities in the world.

The Company has supported a total of five JAD projects in Tanzania, Zambia, Uganda and Kenya and Cambodia. These projects have brought life-changing clean water to a total of 45,325 children and families over the past four years.

Talent and educational support

The Company has retained its strong support of the BOV Joseph Calleja Foundation, which assists gifted youths to develop their career even internationally. The Foundation also helps vulnerable children and is involved in a programme run by the Helen O'Grady Academy in conjunction with the Department of Education, aimed at enabling a number of immigrant children from 27 countries to integrate into mainstream schooling and with Maltese children.

Conclusion

The Company approaches sustainability with a consistently optimistic, yet realistic attitude. Above all, it approaches sustainability holistically, including environmental protection, human rights and the social aspects related to it. Its determination to improve not only the business but also the lives of the team members and the wider community, remains unabated.

The Company is ambitious in its desire to make a difference. In its continued efforts to perfect the quality of care, the Company strives to enhance experiences, not only those of its guests but also those of the team members and the wider community.

ON NON-FINANCIAL INFORMATION - continued

Case study: Saġġar

The crucial role of trees is the production of oxygen and removal of excess carbon dioxide in the air. They are our life-savers.

Deeply conscious of this, the Company decided to sponsor a bold ecological intervention by pledging its support to the foundation, Saġġar.

Saġġar actually means 'to afforest' in Maltese, a fitting name for this organisation which aims to plant one million trees and shrubs of the native genotype and rehabilitate ecological reserves, public land and private lands. The aim is that 70 per cent of the project will be afforestation while the remaining 30 per cent will form a social project called 'Green Lungs'. Naturally this will involve also a programme to instill a nature-eco-culture in the general public and local authorities.

The afforestation process has various phases. First a propagation centre is identified where the vast majority of the trees is grown in cycles. Then, once grown, the trees are transported and planted in ecological reserves, agroforestry, private land and public land.

When presented with this project, the Company enthusiastically accepted to assist financially, and this in line with its active role in establishing environmentally-friendly practices across its properties.

BOV Bank of Valletta	01-234 Dar faurt is
Pay --------------------------------------------------------------------------------------------------------------------------------------------------------------------------	€ 30,000	49
Close in rail x Gerings Street us set uses or mark below this line DOO123 45-6281: 901231,56781

ON NON-FINANCIAL INFORMATION - continued

The Company believes that every gift, smile, and effort can make a significant difference.

Though significant improvements have already been successfully realised, the vision remains fundamentally forward-looking.

Signed on behalf of the board of directors on 26 June 2020 by:

Alfred Pisani Chairman

Frank Xerri de Caro Senior Independent Director

ON COMPLIANCE WITH THE CODE OF PRINCIPLES OF GOOD CORPORATE GOVERNANCE

Listed companies are subject to The Code of Principles of Good Corporate Governance (the 'Code'). The adoption of the Code is not mandatory, but listed companies are required under the Listing Rules issued by the Listing Authority to include a Statement of Compliance with the Code in their Annual Report, accompanied by a report of the independent auditors.

The board of directors (the 'directors' or the 'board') of International Hotel Investments p.l.c. ('IHI' or the 'Company') restate their support for the Code and note that the adoption of the Code has resulted in positive effects to the Company.

The board considers that during the reporting period, the Company has been in compliance with the Code to the extent that was considered adequate with the size and operations of the Company. Instances of divergence from the Code are disclosed and explained below.

COMPLIANCE WITH THE CODE

Principles 1 and 4: The board

The board of directors is entrusted with the overall direction and management of the Company, including the establishment of strategies for future development, and the approval of any proposed acquisitions by the Company in pursuing its investment strategies.

Its responsibilities also involve the oversight of the Company's internal control procedures and financial performance, and the review of business risks facing the Company, ensuring that these are adequately identified, evaluated, managed and minimised. All the directors have access to independent professional advice at the expense of the Company, should they so require.

Further to the relevant section in Appendix 5.1 to the Listing Rules the board of directors acknowledge that they are stewards of the Company's assets and their behaviour is focused on working with management to enhance value to the shareholders.

The board is composed of persons who are fit and proper to direct the business of the Company with the shareholders as the owners of the Company.

All directors are required to:

• Exercise prudent and effective controls which enable risk to be assessed and managed in order to achieve continued prosperity to the Company;
• Be accountable for all actions or non-actions arising from discussion and actions taken by them or their delegates;
• Determine the Company's strategic aims and the organisational structure;
• Regularly review management performance and ensure that the Company has the appropriate mix of financial and human resources to meet its objectives and improve the economic and commercial prosperity of the company;
• Acquire a broad knowledge of the business of the Company;

ON COMPLIANCE WITH THE CODE OF PRINCIPLES OF GOOD CORPORATE GOVERNANCE continued

• Be aware of and be conversant with the statutory and regulatory requirements connected to the business of the Company;
• Allocate sufficient time to perform their responsibilities; and
• Regularly attend meetings of the board.

The board strives to achieve a balance of ethnicity, age, culture and educational backgrounds in order to reflect the multicultural environment of its ownership and the environment in which it operates.

The board comprises a number of individuals, all of whom have extensive knowledge of hotel operations and real estate development, in particular across the various jurisdictions in which IHI operates. Members of the board are selected on the basis of their core competencies and professional background in the industry so as to ensure the continued success of IHI. There is no formal diversity policy in place however, the board will be considering the need of issuing guidelines for the Group in this respect.

In terms of Listing Rules 5.117 – 5.134 the board has established an Audit committee to monitor the Company's present and future operations, threats and risks in the external environment and current and future strengths and weaknesses. The Audit committee ensures that the Company has the appropriate policies and procedures in place to ensure that the Company and its employees maintain the highest standards of corporate conduct, including compliance with applicable laws, regulations, business and ethical standards. The Audit committee has a direct link to the board and is represented by the Chairman of the Audit committee in all board meetings.

Principle 2: Chairman and Chief Executive

Mr Alfred Pisani occupies the position of Chairman. The role of CEO has been jointly held by Mr Joseph Fenech in charge of Corporate Affairs and Mr Simon Naudi in charge of Development.

The Chairman is responsible to:

• Lead the board and set its agenda;
• Ensure that the directors of the board receive precise, timely and objective information so that they can take sound decisions and effectively monitor the performance of the company;
• Ensure effective communication with shareholders; and
• Encourage active engagement by all members of the board for discussion of complex or contentious issues.

Principle 3: Composition of the board

The board of directors consists of one executive director and nine non-executive directors. The present mix of executive and non-executive directors is considered to create a healthy balance and serves to unite all shareholders' interests, whilst providing direction to the Company's management to help maintain a sustainable organisation. The non-executive directors constitute a majority on the board and their main functions are to monitor the operations of the executive director and CEOs and their performance as well as to analyse any investment opportunities that are proposed by the executive director. In addition, the non-executive directors have the role of acting as an important check on the possible conflicts of interest of the executive director, which may exist as a result of his dual role as executive director of the Company and his role as officer of IHI's parent company, Corinthia Palace Hotel Company Limited ("CPHCL") and its other subsidiaries.

ON COMPLIANCE WITH THE CODE OF PRINCIPLES OF GOOD CORPORATE GOVERNANCE continued

For the purpose of Listing Rules 5.118 and 5.119, the non-executive directors are deemed independent. The board believes that the independence of its directors is not compromised because of long service or the provision of any other service to the Corinthia Group. Each director is mindful of maintaining independence, professionalism and integrity in carrying out his duties, responsibilities and providing judgement as a director of the Company.

Each director declares that he undertakes to:

• a) maintain in all circumstances his independence of analysis, decision and action;
• b) not to seek or accept any unreasonable advantages that could be considered as compromising his independence; and
• c) clearly express his opposition in the event that he finds that a decision of the board may harm the Company.

The board is made up as follows:

29 March 2000 Mr Salem M.O.Hnesh………15 November 2018 Mr Hamad Buamim 31 December 2013 Mr Abdulnaser Ahmida 21 January 2014 Mr Abuagila Almahdi 16 October 2014 Mr Douraid Zaghouani 3 November 2014 Mr Joseph Pisani 22 December 2014 Dr Joseph J. Vella 29 March 2000 Mr Frank Xerri de Caro 2 July 2004 9 June 2016	Executive director	Date of first appointment
	Mr Alfred Pisani, Chairman
	Non-executive directors
	Mr Winston V. Zahra

Mr Jean-Pierre Schembri acts as Secretary to the board of directors

Principle 5: Board meetings

The board met five times during the period under review. The number of board meetings attended by directors for the year under review is as follows:

Mr Alfred Pisani ………...............5 Mr Salem M. O. Hnesh ………......2 Mr Hamad Buamim ………...........1 Mr Abdulnaser Ahmida ………......0 Mr Abuagila Almahdi 5 Mr Douraid Zaghouani 5 Mr Joseph Pisani 5 Dr Joseph J. Vella 5 Mr Frank Xerri de Caro 5 Mr Winston V. Zahra 4

ON COMPLIANCE WITH THE CODE OF PRINCIPLES OF GOOD CORPORATE GOVERNANCE continued

Principle 6: Information and Professional Development

The Company ensures that it provides directors with relevant information to enable them to effectively contribute to board decisions. The Company is committed to provide adequate and detailed induction training to directors who are newly appointed to the board. The Company pledges to make available to the directors all training and advice as required.

Principle 8: Committees

Audit committee

The primary objective of the Audit committee is to assist the board in fulfilling its oversight responsibilities over the financial reporting processes, financial policies and internal control structure. The committee, set up in 2002, is made up of non-executive directors and reports directly to the board of directors. The committee oversees the conduct of the internal and external audit and acts to facilitate communication between the board, management, the internal audit team and the external auditors.

During the year under review, the committee met 11 times. The internal and external auditors were invited to attend these meetings.

Mr Frank Xerri de Caro acts as Chairman, Mr Abdulnaser Ahmida and Dr Joseph J. Vella act as members, The Company Secretary, Mr Jean-Pierre Schembri acts as Secretary to the committee.

The board of directors, in terms of Listing Rule 5.118A, has indicated Mr Frank Xerri de Caro as the independent non-executive member of the Audit committee who is considered "... to be independent and competent in accounting and/or auditing" in view of his considerable experience at a senior level in the banking field.

The Audit committee is also responsible for the overview of the internal audit function. The role of the internal auditor is to carry out systematic risk-based reviews and appraisals of the operations of the Company (as well as of the subsidiaries and associates of the Group) for the purpose of advising management and the board, through the Audit committee, on the efficiency and effectiveness of management policies, practices and internal controls. The function is expected to promote the application of best practices within the organisation. During 2019, the internal audit function continued to advise the Audit committee on aspects of the regulatory framework which affect the day-to-day operations of the hotels.

ON COMPLIANCE WITH THE CODE OF PRINCIPLES OF GOOD CORPORATE GOVERNANCE continued

The directors are fully aware that the close association of the Company with CPHCL and its other subsidiaries is central to the attainment by the Company of its investment objectives and implementation of its strategies. The Audit committee ensures that transactions entered into with related parties are carried out on an arm's length basis and are for the benefit of the Company, and that the Company and its subsidiaries accurately report all related party transactions in the notes to the financial statements.

In the year under review the Audit committee is ensuring compliance in terms of the General Data Protection Regulation which came into effect in 2018.

The Audit committee oversaw the introduction of risk management processes and the development of this function within the Company.

Pursuant to Articles 16 and 17 of Title III of the provisions of the Statutory Audit Regulations the Audit committee has been entrusted with overseeing the process of appointment of the statutory auditors or audit firms.

Nomination and Remuneration committee

The function of this committee is to propose the appointment and the remuneration package of directors and senior executives of IHI and its subsidiaries. The members of the committee are Dr Joseph J. Vella acting as Chairman and non-executive directors Mr Abuagila Almahdi and Mr Frank Xerri de Caro as members. Mr Jean-Pierre Schembri acts as Secretary to the committee.

The Nomination and Remuneration committee met five times in the course of 2019.

Principle 9: Relations with shareholders and with the market

The Company is highly committed to having an open and communicative relationship with its shareholders and investors. In this respect, over and above the statutory and regulatory requirements relating to the Annual General Meeting, the publication of interim and annual financial statements, two Interim directors' statements and respective Company announcements, the Company seeks to address the diverse information needs of its broad spectrum of shareholders in various ways. It has invested considerable time and effort in setting up and maintaining its website and making it user-friendly, with a new section dedicated specifically to investors.

In the course of 2019, 24 company announcements were issued through the Malta Stock Exchange. Individual shareholders can raise matters relating to their shareholdings and the business of the Group at any time throughout the year, and are given the opportunity to ask questions at the Annual General Meeting or to submit written questions in advance.

The Company holds an additional meeting for stockbrokers and institutional investors twice a year to coincide with the publication of its financial information. As a result of these initiatives, the investing public is kept abreast of all developments and key events concerning the Company, whether these take place in Malta or abroad.

ON COMPLIANCE WITH THE CODE OF PRINCIPLES OF GOOD CORPORATE GOVERNANCE continued

During 2019 the Company continued issuing the IHI Insider newsletter which is available on the IHI website. The purpose of this newsletter is to keep stakeholders fully informed of developments in the Company.

The Company's commitment to its shareholders is shown by the special concessions which it makes available to them. In order to better serve the investing public, the board has appointed the Company Secretary to be responsible for shareholder relations.

Principle 10: Institutional shareholders

The Company ensures that it is constantly in close touch with its principal institutional shareholders and bondholders (institutional investors). The Company is aware that institutional investors have the knowledge and expertise to analyse market information and make their independent and objective conclusions of the information available.

Institutional investors are expected to give due weight to relevant factors drawn to their attention when evaluating the Company's governance arrangements in particular those relating to board structure and composition and departure from the Code of Corporate Governance.

Principle 11: Conflicts of interest

The directors are fully aware of their obligations regarding dealings in securities of the Company as required by the Listing Rules in force during the year. Moreover, they are notified of blackout periods prior to the issue of the Company's interim and annual financial information during which they may not trade in the Company's shares and bonds. Mr Alfred Pisani, Mr Abuagila Almahdi, and Mr Joseph Pisani have common directorships with the ultimate parent of the Corinthia Group. Commercial relationships between International Hotel Investments p.l.c. and Corinthia Palace Hotel Company Limited are entered into in the ordinary course of business.

As at year end, Mr Alfred Pisani had a beneficial interest of 1,223,389 shares and an indirect beneficial interest of 3,240,835 shares, Mr Winston V. Zahra had an indirect beneficial interest through a family company of 3,953,762 shares. Mr Frank Xerri de Caro had a beneficial interest of 10,927 shares, and Dr Joseph J. Vella had a beneficial interest of 67,742 shares. None of the other Directors of the Company have any interest in the shares of the Company or the Company's subsidiaries or investees or any disclosable interest in any contracts or arrangements either subsisting at the end of the last financial year or entered into during this financial year.

In September 2019, the Company provided all Directors and Senior Executives with training to ensure that the legal requirements emanating from the Market Abuse Regulation (MAR) are well understood by each individual.

ON COMPLIANCE WITH THE CODE OF PRINCIPLES OF GOOD CORPORATE GOVERNANCE continued

Principle 12: Corporate social responsibility

The Company understands that it has an obligation towards society at large to put into practice sound principles of corporate social responsibility (CSR). It has embarked on several initiatives which support the community, its culture, as well as sports and the arts in the various locations where it operates.

The Company recognises the importance of good CSR principles within the structure of its dealings with its employees. In this regard, the Company actively encourages initiative and personal development, and consistently creates such opportunities. The Company is committed towards a proper work-life balance and the quality of life of its work force and their families, and of the environment in which it operates.

NON-COMPLIANCE WITH THE CODE

Principle 7: Evaluation of the board's performance

Under the present circumstances, the board does not consider it necessary to appoint a committee to carry out a performance evaluation of its role, as the board's performance is always under the scrutiny of the shareholders.

Principle 9: Conflicts between Shareholders

Currently there is no established mechanism disclosed in the Company's memorandum and articles of association to trigger arbitration in the case of conflict between the minority shareholders and the controlling shareholders. In any such cases should a conflict arise, the matter is dealt with in the board meetings and through the open channel of communication between the Company and the minority shareholders via the Office of the Company Secretary.

Approved by the board of directors on 26 June 2020 and signed on its behalf by:

Frank Xerri de Caro Senior Independent Director and Chairman of the Audit Committee

Joseph J. Vella Director

OTHER DISCLOSURES IN TERMS OF LISTING RULES

Pursuant to Listing Rule 5.64.1

Share capital structure

The Company's issued share capital is six hundred and fifteen million and six hundred and eighty four thousand nine hundred and twenty (615,684,920) ordinary shares of €1 each. All of the issued shares of the Company form part of one class of ordinary shares in the Company, which shares are listed on the Malta Stock Exchange. All shares in the Company have the same rights and entitlements and rank pari passu between themselves.

Pursuant to Listing Rule 5.64.3

Shareholders holding 5 per cent or more of the equity share capital as at 31 December 2019:

	SHARES	%
Corinthia Palace Hotel Company Limited	355,988,463	57.81
Istithmar Hotels FZE	133,561,548	21.69
Libyan Foreign Investment Company	66,780,771	10.85

There were no changes in shareholders holding 5 per cent or more of the equity share capital as at 26 June 2020.

Pursuant to Listing Rule 5.64.8

Appointment and replacement of directors

In terms of the Memorandum and Articles of Association of the Company, the directors of the Company shall be appointed through an election. All shareholders are entitled to vote for the nominations in the list provided by the nominations committee. The rules governing the nomination, appointment and removal of directors are contained in Article 19 of the Articles of Association.

Amendments to the Memorandum and Articles of Association

In terms of the Companies Act the Company may by extraordinary resolution at a general meeting alter or add to its Memorandum or Articles of Association.

Pursuant to Listing Rule 5.64.9

Powers of board members The powers of directors are outlined in Article 21 of the Articles of Association.

Statement by the directors pursuant to Listing Rule 5.70.1

Pursuant to Listing Rule 5.70.1 there are no material contracts to which the Company, or anyone of its subsidiaries, was party to and in which anyone of the directors had a direct or indirect interest therein.

OTHER DISCLOSURES IN TERMS OF LISTING RULES - continued

Pursuant to Listing Rule 5.70.2

Company Secretary and registered office Jean-Pierre Schembri 22 Europa Centre, Floriana FRN 1400, Malta Telephone (+356) 2123 3141

Pursuant to Listing Rule 5.97.4

Internal Controls and Risk mitigation practices

Internal Control

The board is ultimately responsible for the Company's system of internal controls and for reviewing its effectiveness. Such a system is designed to manage rather than eliminate risk to achieve business objectives, and can provide only reasonable, and not absolute, assurance against normal business risks or loss.

Through the Audit Committee, the board reviews the effectiveness of the Company's system of internal controls.

The key features of the Company's system of internal control are as follows:

Organisation

The Company operates through the CEOs with clear reporting lines and delegation of powers.

Control Environment

The Company is committed to the highest standards of business conduct and seeks to maintain these standards across all its operations. Company polices and employee procedures are in place for the reporting and resolution of improper activities.

The Company has an appropriate organisational structure for planning, executing, controlling and monitoring business operations in order to achieve Company objectives. Lines of responsibility and delegation of authority are documented. The Company has implemented control procedures designed to ensure complete and accurate accounting for financial transactions and to limit the potential exposure to loss of assets or fraud. Measures taken include physical controls, segregation of duties and reviews by management, internal audit and the external auditors.

Risk Identification

Company management is responsible for the identification and evaluation of key risks applicable to their respective areas of business. These risks are assessed on a continued basis and may be associated with a variety of internal or external sources including control breakdowns, disruption in information systems, competition, natural catastrophe and regulatory requirements.

A risk management function has been set up and training on risk management is being extended to all the Company's subsidiaries.

OTHER DISCLOSURES IN TERMS OF LISTING RULES - continued

Information and communication

The Company participates in periodic strategic reviews including consideration of long-term financial projections and the evaluation of business alternatives.

Monitoring and corrective action

There are clear and consistent procedures in place for monitoring the system of internal financial controls. The Audit committee met 11 times in 2019 and, within its terms of reference, reviews the effectiveness of the Company's system of internal financial controls. The Committee receives reports from management, internal audit and the external auditors.

Signed on behalf of the board of directors on 26 June 2020 by:

Alfred Pisani Chairman

Frank Xerri de Caro Senior Independent Director

REMUNERATION STATEMENT

IHI Remuneration Statement

In terms of Rule 8A.4 of the Code, the Company is to include a remuneration statement in its annual report which shall include details of the remuneration policy of the Company and the financial packages of Directors and the joint Chief Executive Officers ("CEOs").

The resolution by the shareholders of the Company at the Annual General Meeting held on 13th June 2017, approved an aggregate figure for the fees and remuneration due to the Chairman and non-Executive Directors of the Company, capped at €850,000 per annum. This figure relates only to: the salary of the Chairman; directors' fees due to the Chairman and non-Executive Directors in their capacity as directors of the Company and of the Company's subsidiaries; and fees due to the Chairman and non-Executive Directors with respect to their membership on sub-committees of the board of directors of the Company.

Remuneration Committee report

The function of the Nomination and Remuneration Committee is to propose the appointment and the remuneration package of directors and senior executives of IHI and its subsidiaries. In 2019, the members of the committee were Dr Joseph J. Vella acting as Chairman and non-executive directors Mr Abuagila Almahdi and Mr Frank Xerri de Caro as members. Mr Jean-Pierre Schembri acts as Secretary to the committee.

The Nomination and Remuneration committee met five times in the course of 2019.

Remuneration Policy – Directors and senior executives

The Executive Chairman and the CEOs are each entitled to a combination of a fixed base salary together with a variable performance bonus. The fixed base salary of the Executive Chairman and CEOs is based on a predefined amount, while their variable performance bonus is based on a predefined percentage of EBITDA. The bonus of other senior executives is based on a discretionary percentage of the base salary determined in line with the performance of the Company or the hotel they manage. These bonuses constitute the variable remuneration disclosed herein.

All senior executives are entitled to non-cash benefits in terms of a number of services offered by the Group and to health insurance. Furthermore, the Executive Chairman and the non-executive directors of the Company are entitled to complimentary use of the Company's hotels and establishments. The Company does not award sharebased remuneration. The Company does not offer any profit-sharing, share options or pension benefit schemes.

The compensation and employment conditions of the Board of Directors of the Company, including the Executive Chairman and CEOs and senior executives are considered to be in line with the pay and employment conditions applied by international companies operating in the same industry sector as the Company and are considered commensurate to the importance of the role performed by such persons in a company of such reputation and standing.

The remuneration of the Executive Chairman and Senior Executives of the Company and its subsidiaries paid during 2019 amounted to a fixed portion of €5.6 million and a variable portion of €2.3 million. This amount includes an accrual that has been made for bonuses (variable portion), relating to 2019. Other than those bonuses that are contractual, the final amounts still need to be formally approved.

REMUNERATION STATEMENT - continued

Directors' fees

The directors' fees for 2019 including those for membership of board committees and other subsidiary boards are:

	€
Mr Alfred Pisani	50,000
Mr Salem M.O.Hnesh	21,932
Mr Hamad Buamim	15,000
Mr Abdulnaser Ahmida	47,500
Mr Abuagila Almahdi	25,000
Mr Douraid Zaghouani	15,000
Mr Joseph Pisani	15,000
Dr Joseph J. Vella	92,500
Mr Frank Xerri de Caro	100,000
Mr Winston V. Zahra	25,000

The foregoing amounts all comprise fixed remuneration. There are no variable remuneration considerations or share options.

The proposed remuneration policy of the Company shall be put to a binding vote of the shareholders at the next Annual General Meeting. This remuneration policy shall be reviewed regularly, and any material amendments thereto shall be submitted to a vote by the annual general meeting of the Company before adoption, and in any case at least every four years.

* Net of rechargeable for Executives

Signed on behalf of the board of directors on 26 June 2020 by:

Registered Office 22 Europa Centre, Floriana FRN 1400, Malta

Alfred Pisani Frank Xerri de Caro Chairman Senior Independent Director

Independent auditor's report

To the Shareholders of International Hotel Investments p.l.c.

Report on the audit of the financial statements

Our opinion

In our opinion:

• International Hotel Investments p.l.c.'s Group financial statements and Parent Company financial statements (the "financial statements") give a true and fair view of the Group and the Parent Company's financial position as at 31 December 2019, and of the Group's and the Parent Company's financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards ('IFRSs') as adopted by the EU; and
• The financial statements have been prepared in accordance with the requirements of the Maltese Companies Act (Cap. 386).

Our opinion is consistent with our additional report to the Audit Committee.

What we have audited

International Hotel Investments p.l.c.'s financial statements, set out on pages FS46 to FS162, comprise:

• the Income statement for the Group for the year ended 31 December 2019;
• the Statement of comprehensive income for the Group for the year then ended;
• the Statement of financial position of the Group as at 31 December 2019;
• the Statement of changes in equity for the Group for the year then ended;
• the Statement of cash flows for the Group for the year then ended;
• the Statement of comprehensive income for the Company for the year then ended;
• the Statement of financial position of the Company as at 31 December 2019;
• the Statement of changes in equity for the Company for the year then ended;
• the Statement of cash flows for the Company for the year then ended; and
• the Notes to the financial statements, which include a summary of significant accounting policies.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

To the Shareholders of International Hotel Investments p.l.c.

Independence

We are independent of the Group and the Parent Company in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements of the Accountancy Profession (Code of Ethics for Warrant Holders) Directive issued in terms of the Accountancy Profession Act (Cap. 281) that are relevant to our audit of the financial statements in Malta. We have fulfilled our other ethical responsibilities in accordance with these Codes.

To the best of our knowledge and belief, we declare that non-audit services that we have provided to the parent company and its subsidiaries are in accordance with the applicable law and regulations in Malta and that we have not provided non-audit services that are prohibited under Article 18A of the Accountancy Profession Act (Cap. 281).

The non-audit services that we have provided to the group and its subsidiaries, in the period from 1 January 2019 to 31 December 2019 are disclosed in Note 8.1 to the financial statements.

Material Uncertainty Relating to Going Concern as a Result of COVID-19

We draw attention to Note 3.1 to these financial statements, which describes the directors' assessment of the estimated impacts of COVID-19 on the Group's projected financial results, cash flows and financial position, taking cognisance of the unprecedented nature of the adverse economic conditions currently being experienced. These events or conditions, along with other matters as set forth in the said Note, indicate the existence of a material uncertainty which may cast significant doubt about the Group's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Our audit approach

Overview

To the Shareholders of International Hotel Investments p.l.c.

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the consolidated financial statements. In particular, we considered where the directors made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.

Materiality

The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated financial statements.

Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group materiality for the consolidated financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the financial statements as a whole.

Overall group materiality How we determined it		€2,600,000 approximately 1% of revenue
		We selected 1% based on our professional judgement, noting that it is also within the range of commonly accepted revenue related benchmarks.

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above €260,000 as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.

To the Shareholders of International Hotel Investments p.l.c.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Material uncertainty relating to going concern section, we have determined the matters described below to be the key audit matters to be communicated in our report. The following key matters were identified at both a Group level and Company level (given their direct impact on the fair value of the subsidiaries).

Key audit matter	How our audit addressed the Key audit
	matter

Significant political and economic uncertainties prevailing in Libya

Refer to Note 6 in the Group financial statements

We focused on the Group's activities in Libya in view of the political instability continuing to prevail during the financial year ended 31 December 2019 and its negative effect on the Libyan hospitality and real estate sectors.

The Group's assets in Libya principally comprise the Corinthia Hotel Tripoli with a carrying amount of €74.1 million and the adjoining investment property with a carrying amount of €103.2 million.

The future performance of the hotel and the Commercial Centre and the fair value of the related property assets are largely dependent on how soon the political situation in Libya will return to normality and on how quickly the international oil and gas industry recovers once political risks subside. The events that occurred subsequent to the end of the reporting period in relation to COVID-19 give rise to heightened risks, even though the situation in Libya in this respect does not appear to be particularly adverse on the basis of information which is publicly available.

The directors have continued to monitor the situation in Libya closely. They recognise the fact that the situation in Libya has not improved in line with their expectations and economic activity remains limited across all sectors in which the Group is involved. However, the directors also recognise that there is interest from a number of sources for short and long-term accommodation. The Group secured further lease agreements resulting in the Commercial Centre being almost fully leased out as from last quarter of 2018. With respect to the hotel, the In addition to the procedures listed in the key audit matter below for the valuation of property, plant and equipment and investment property, we also performed the following on the assets attributable to the Group's activities in Libya:

• We reviewed the valuation assessments made by the directors in support of the carrying amount of the Group's properties in Libya and focused on assumptions about the impact of the political unrest in Libya.
• We discussed the underlying assumptions including the projected cash flows (particularly the speed of recovery) and the discount rate (with particular emphasis on certain components including the country risk premium) with management and the Audit Committee.
• We have also analysed in detail the long outstanding debts of the company and held detailed discussions about these debtors.

In addition, we evaluated the adequacy of the disclosures made in the financial statements regarding the situation in Libya, including those regarding the key assumptions and sensitivities to changes in such assumptions. In particular, Note 6 to the financial statements highlights the significant political and economic uncertainties prevailing in Libya and their impact on the

To the Shareholders of International Hotel Investments p.l.c.

Key audit matter

How our audit addressed the Key audit matter

directors have retained the expectations for a gradual recovery. The assumptions underlying the valuation assessments are explained in more detail in Note 6. These assumptions are highly judgemental in view of the significant uncertainties surrounding the operations in Libya and, therefore, the projected cash flows from the relative operations as well as their timing. The uncertainty could potentially be exacerbated by the events related to COVID-19, which events are dealt with separately below in the key audit matter for the valuation of property, plant and equipment and investment property.

Group's results for 2019. The note also explains the significant uncertainties and judgements surrounding the valuation of the Group's assets in Libya that have also a bearing on the projected cash flows from the relative operations, which are in turn influenced by the timing of a recovery in the country. The events that occurred subsequent to the end of the reporting period in respect of COVID-19 and the potential impact on the prevailing uncertainty have also been referred to in the disclosures within the financial statements as referred to in the key audit matter below for the valuation of property, plant and equipment and investment property.

The economic conditions in Libya also create significant uncertainty in relation to the recoverability of debtors, amongst other current assets. As at 31 December 2019, in addition to a current tax asset of €2.3 million, Corinthia Towers Tripoli Limited also had amounts due from Government related entities and other amounts receivable from embassies and corporate clients. Increased provisions for impairment have been registered to reflect the net estimated recoverable amounts in this respect.

We believe that different plausible scenarios may impact the financial performance of the Libya operations and the valuation of related assets in a significant manner, also taking cognisance of future developments in respect of the COVID-19 pandemic. This matter is considered to be of fundamental importance to the users' understanding of the financial statements because of the potential impact that this uncertainty may have on the valuation of the Group's assets in Libya.

Valuation and impairment of property, plant and equipment and investment properties

Refer to Notes 15 and 16 of the Group's financial statements

The Group's property comprises hotels, commercial centres and land for commercial use amounting to €1.4 billion. This represents the majority of the Group's assets as at 31 December 2019.

The valuation of the Group's property portfolio is inherently subjective due to, among other factors, the individual nature of each property, its location and the expected future returns.

Our procedures in relation to the valuation of the properties included:

• Reviewing management's assessments to challenge assumptions and specific considerations being made with respect to each property.
• Reviewing the methodologies used by the external valuers and by management to estimate the fair value for all properties. We confirmed that the valuation approach for each property was suitable for use in

To the Shareholders of International Hotel Investments p.l.c.

Key audit matter	How our audit addressed the Key audit matter
The existence of significant estimation uncertainty evidenced by the sensitivity of the property valuations to possible shifts in key assumptions as described in Note 16 could result in material misstatement, and therefore we have devoted specific audit focus and attention to this area.	determining the carrying value of properties as at 31 December 2019. - Testing the mathematical accuracy of the calculations derived from each model. - Assessing the key inputs in the calculations such as revenue growth and discount rate, by reference to management's forecasts,
Management has carried out assessments for its hotels classified as property, plant and equipment to determine whether a material shift in fair value would have occurred during 2019. This assessment was performed by carrying out a number of procedures including comparing actual financial results to projections, review of events and circumstances or changed conditions impacting the property, and review of discount rate. Full revaluation assessments were obtained from third party qualified valuers where significant or volatile movements were identified.	rental agreements for investment property, data external to the Group and our own expertise. - Considering the appropriateness of the fair values estimated by the external valuers based on our knowledge of the industry. We engaged our own in-house valuation experts to challenge the work performed and assumptions used by the valuers. - Considering the potential impact of reasonably possible changes in the key

The valuations of investment properties are performed annually on the basis of valuation reports prepared by third party qualified valuers.

The valuation reports by the third party valuers are based on both:

• Information provided by the Group
• Assumptions and valuation models used by the valuers, with assumptions being typically market related and based on professional judgement and market observation. The most significant judgements relate to the projected cash flows, the discount rate and growth rates (including the terminal rate).

Fair value movements arising on these properties amounted to a net gain of €6.9 million, of which a loss of €0.1 million is accounted for in the Income Statement. The shifts in fair value determined during the year ended 31 December 2019 are analysed in Notes 15 and 16.

The judgements relating to the carrying value of the properties located in Libya is dealt with separately above.

assumptions underlying the valuations.

It was evident from our discussions with management and the valuers and our review of the valuation reports that attention had been paid to each property's individual characteristics and its geographic location.

We challenged management, the Audit Committee and the directors on the significant movements in the valuations and found that they were able to provide explanations and refer to appropriate supporting evidence.

We have also reviewed the disclosures relating to non-adjusting events occurring after the end of the reporting period indicating the estimated impact of COVID-19 on the carrying amount of the assets as at the date of approval of the financial statements.

Developments and revisions to forecast economic and market conditions after the date of approval of the financial statements might give rise to potential changes in the

To the Shareholders of International Hotel Investments p.l.c.

Key audit matter

How our audit addressed the Key audit matter

Developments relating to the COVID-19 pandemic that occurred after the end of the reporting period are deemed to be non-adjusting subsequent events for financial reporting purposes. However, the Group's financial reporting framework requires disclosure of material impacts of these developments on the fair valuation or carrying amount of the Group's property as at the date of approval of the financial statements.

outcome of management assessments carried out subsequent to that date.

Assessment of carrying amount of goodwill and intangible assets

Refer to Note 13 in the Group financial statements

Goodwill with a carrying amount of €17.1 million and intangible assets having a carrying amount of €32.0 million as at 31 December 2019, that are supported by the Group's cash flow forecasts, are included on the Group's Statement of Financial Position as at 31 December 2019.

An assessment is required annually to establish whether goodwill and intangible assets that have an indefinite useful life should continue to be recognised, or if any impairment is required. The assessment was performed at the lowest level at which the Group could allocate and assess goodwill, which is referred to as a cash generating unit ('CGU'). Goodwill and intangible assets arising from acquisitions have been allocated to the respective CGUs (refer to Note 13).

The impairment assessment relied on the calculation of a value-in-use for each of the CGUs. This calculation was based on estimated future cash flows for each CGU, including assumptions around revenue growth, margins and EBITDA levels, discounted at an appropriate weighted average cost of capital.

As the directors have described in the accounting policies, estimating future cash flows requires the application of significant judgement. The key judgements made by the directors include estimating future taxable returns, long term growth and discount rates. The estimation of future cash flows and the level to which they are discounted is inherently uncertain and requires judgement. The extent of judgement and the size of the goodwill and related We evaluated the suitability and appropriateness of the impairment methodology applied and the discounted cash flow model as prepared by management.

We assessed the methodology and assumptions used by utilising our independent valuation experts. The calculations used in the model were re-performed to check accuracy and the key inputs in the model were agreed to approved sources.

Management's cash flow forecasts used in the model were assessed by:

• testing that the forecasts agreed to the business plan which had been approved by the Board of Directors; and
• considering current year performance against plan and the reasons for any deviation also through discussion with management for each CGU.

Our independent valuation experts critically challenged the revenue growth and margin assumptions and assessed the discount rate used in the models.

The review of our valuation experts mainly focused on the underlying cash flows expected to be generated by the CGUs. Our experts also reviewed the valuation methodology adopted to determine the discount rates applied in the valuation of each CGU by reference to the overall cost of capital for the Group as well as assessing

To the Shareholders of International Hotel Investments p.l.c.

Key audit matter	How our audit addressed the Key audit matter
assets, resulted in this matter being identified as an area of audit focus.	which benchmarks were the most appropriate in determining the terminal growth rate of the cash flows for each CGU. We concluded that the parameters utilised were reasonable, given economic outlook, and other relevant market data.
	We considered the sensitivity of the calculations to assess whether or not a reasonably possible change to the assumptions could result in an impairment. We concur with management that a material change in these assumptions would be required to trigger an impairment charge.
	The appropriateness of disclosures made in relation to goodwill and intangible assets was also reviewed.

How we tailored our Group audit scope

We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial statements as a whole, taking into account the geographic and management structure of the Group, the accounting processes and controls, and the industry in which the Group operates.

The Group includes a number of subsidiaries, mainly located in Malta, UK, Portugal, Hungary, Russia, Czech Republic and Libya. It also holds a number of investments in associates and joint ventures, the main one being the Golden Sands Group that is engaged in the operation and management of a combined location ownership and hotel operation. The consolidated financial statements are a consolidation of all of these components.

We therefore assessed what audit work was necessary in each of these components, based on their financial significance to the financial statements and our assessment of risk and Group materiality. At the component, we performed a combination of full scope audits and specified audit procedures on certain account balances in order to achieve the desired level of audit evidence.

In establishing the overall audit approach to the Group audit, we determined the type of work that needed to be performed by us, as the Group engagement team, or by component auditors. For the work performed by component auditors operating under our instructions, we determined the level of involvement we needed to have in the audit work at those locations to be satisfied that sufficient audit evidence had been obtained for the purposes of our opinion. We kept in regular communication with audit teams throughout the year with phone calls, discussions and written instructions and review of working papers where appropriate.

We ensured that our involvement in the work of our component auditors, together with the additional procedures performed at the Group level, were sufficient to allow us to conclude on our opinion on the Group financial statements as a whole.

To the Shareholders of International Hotel Investments p.l.c.

The Group audit team performed all of this work by applying the overall Group materiality, together with additional procedures performed on the consolidation. This gave us sufficient appropriate audit evidence for our opinion on the Group financial statements as a whole.

Other information

The directors are responsible for the other information. The other information comprises reports on the Principal Milestones & Achievements, Group Structure, Our Portfolio, the Board of Directors, the Chairman's Statement, the CEOs' report, the Directors' report, the Statement by the Directors on the financial statements and other information included in the annual report, Statement by the Directors on non-financial information, Other disclosures in terms of the Listing Rules and the Remuneration Statement (but does not include the financial statements and our auditor's report thereon).

Our opinion on the financial statements does not cover the other information, including the directors' report.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

With respect to the directors' report, we also considered whether the directors' report includes the disclosures required by Article 177 of the Maltese Companies Act (Cap. 386).

Based on the work we have performed, in our opinion:

• The information given in the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
• the directors' report has been prepared in accordance with the Maltese Companies Act (Cap. 386).

In addition, in light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we are required to report if we have identified material misstatements in the directors' report and other information. We have nothing to report in this regard.

Responsibilities of the directors and those charged with governance for the financial statements

The directors are responsible for the preparation of financial statements that give a true and fair view in accordance with IFRSs as adopted by the EU and the requirements of the Maltese Companies Act (Cap. 386), and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Group's and the Parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group's financial reporting process.

To the Shareholders of International Hotel Investments p.l.c.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's and the Parent Company's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's or the Parent Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group or the Parent Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

To the Shareholders of International Hotel Investments p.l.c.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes. public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication

Report on other legal and regulatory requirements

Report on the statement of compliance with the Principles of Good Corporate Governance

The Listing Rules issued by the Malta Listing Authority require the directors to prepare and include in their Annual Report a Statement of Compliance providing an explanation of the extent to which they have adopted the Code of Principles of Good Corporate Governance and the effective measures that they have taken to ensure compliance throughout the accounting period with those Principles.

The Listing Rules also require the auditor to include a report on the Statement of Compliance prepared by the directors.

We read the Statement of Compliance and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements included in the Annual Report. Our responsibilities do not extend to considering whether this statement is consistent with any other information included in the Annual Report.

We are not required to, and we do not, consider whether the Board's statements on internal control included in the Statement of Compliance cover all risks and controls, or form an opinion on the effectiveness of the Company's corporate governance procedures or its risk and control procedures.

In our opinion, the Statement of Compliance set out on pages FS22 to FS28 has been properly prepared in accordance with the requirements of the Listing Rules issued by the Malta Listing Authority.

Other matters on which we are required to report by exception

We also have responsibilities:

• under the Maltese Companies Act (Cap. 386) to report to you if, in our opinion:
  • Adequate accounting records have not been kept, or that returns adequate for our audit have not been received from branches not visited by us.
  • The financial statements are not in agreement with the accounting records and returns.
  • We have not received all the information and explanations we require for our audit.
• under the Listing Rules to review the statement made by the directors that the business is a going concern together with supporting assumptions or qualifications as necessary.

We have nothing to report to you in respect of these responsibilities.

To the Shareholders of International Hotel Investments p.l.c.

Appointment

We were first appointed as auditors of the Company on 11 June 2015. Our appointment has been renewed annually by shareholder resolution representing a total period of uninterrupted engagement appointment of 5 years.

PricewaterhouseCoopers 78, Mill Street Qormi Malta

Simon Flynn Partner

26 June 2020

Income statement - the Group

		2019	2018
		€'000	€'000
	Notes
Revenue	7	268,286	256,314
Costs of providing services	8	(127,789)	(122,379)
		140,497	133,935
Marketing costs		(10,933)	(10,622)
Administrative expenses	8	(41,763)	(36,721)
Other operating expenses	8	(18,011)	(19,088)
		69,790	67,504
Depreciation and amortisation	13, 16, 17	(36,766)	(33,202)
Other losses arising on property, plant and equipment	16	(1,826)	(1,070)
Impairment losses attributable to intangibles	13	(1,693)	(1,980)
Net changes in fair value of investment property	15	(137)	6,994
Net changes in fair value of contingent consideration	8	5,008	353
Net changes in fair value of indemnification assets	14	(210)	(210)
Results from operating activities	7	34,166	38,389
Net changes in fair value of financial assets through profit and loss	23	2,252	126
Finance income	10
- interest and similar income		546	833
Finance costs	10
- interest expense and similar charges		(23,765)	(21,484)
- net exchange differences on borrowings		4,664	(8,028)
Share of net loss of associates and joint ventures accounted
for using the equity method	19	(3,951)	(1,364)
Profit before tax		13,912	8,472
Tax expense	11	(8,793)	(13)
Profit for the year		5,119	8,459
Profit for the year attributable to:
- Owners of IHI		6,815	11,350
- Non-controlling interests		(1,696)	(2,891)
		5,119	8,459
Earnings per share	12	0.011	0.018

Statement of comprehensive income - the Group

	Notes	2019 €'000	2018 €'000
Profit for the year		5,119	8,459
Other comprehensive income:
Items that will not be subsequently reclassified to profit or loss
Gross surplus arising on revaluation of hotel properties	16, 26	7,000	35,842
Deferred tax on surplus arising on revaluation of hotel property		(1,330)	(6,255)
Share of other comprehensive income of joint ventures and
associates accounted for using the equity method
- revaluation of hotel properties	26	(4,550)	-
Items that may be subsequently reclassified to profit or loss
Currency translation differences	11.2	34,498	(15,310)
Deferred tax arising on currency translation differences	11.2	(2,048)	1,895
Share of other comprehensive income of joint ventures and
associates accounted for using the equity method
- currency translation differences		211	631
Other comprehensive income for the year, net of tax		33,781	16,803
Total comprehensive income for the year		38,900	25,262
Attributable to:
- Owners of IHI		29,945	26,992
- Non-controlling interests		8,955	(1,730)
		38,900	25,262

Statement of financial position - the Group

		31 December 2019 €'000	31 December 2018 €'000
	Notes
Assets
Non-current
Intangible assets	13	49,036	48,361
Indemnification assets	14	23,396	23,605
Investment property	15	214,174	203,539
Property, plant and equipment	16	1,181,944	1,151,245
Right-of-use assets	17	13,776	-
Deferred tax assets	34	9,233	10,963
Investments accounted for using the equity method	19	40,144	48,189
Financial assets at fair value through profit or loss	23	8,401	-
Other financial assets at amortised cost	20	1,801	184
Trade and other receivables	22	-	596
Assets placed under trust arrangement	43, 32	3,698	3,645
		1,545,603	1,490,327
Current
Inventories	21	12,626	11,490
Other financial assets at amortised cost	20	125	1,683
Trade and other receivables	22	43,192	53,029
Current tax asset		3,922	2,527
Financial assets at fair value through profit or loss	23	8,909	8,485
Cash and cash equivalents	24	72,699	50,190
Assets placed under trust arrangement	43, 32	122	122
		141,595	127,526
Total assets		1,687,198	1,617,853

Statement of financial position - the Group

		31 December	31 December
		2019 €'000	2018 €'000
	Notes
Equity and liabilities
Equity
Capital and reserves attributable to owners of IHI:
Issued capital	25	615,685	615,685
Revaluation reserve	26	27,538	26,418
Translation reserve	27	475	(21,535)
Reporting currency conversion difference	29	443	443
Other components of equity	28	2,617	2,617
Retained earnings	30	54,247	59,746
		701,005	683,374
Non-controlling interests		196,142	194,246
Total equity		897,147	877,620
Liabilities
Non-current
Trade and other payables	35	6,257	5,410
Bank borrowings	31	324,597	317,559
Bonds	32	222,584	202,507
Lease liabilities	17	11,202	-
Other financial liabilities	33	-	59
Deferred tax liabilities	34	100,422	96,936
Provisions		206	206
		665,268	622,677
Current
Trade and other payables	35	74,777	71,501
Bank borrowings	31	45,436	40,517
Lease liabilities	17	2,795	-
Other financial liabilities	33	-	4,553
Current tax liabilities		1,775	985
		124,783	117,556
Total liabilities		790,051	740,233
Total equity and liabilities		1,687,198	1,617,853

The financial statements on pages FS46 to FS162 were approved by the board of directors, authorised for issue on 26 June 2020 and signed on its behalf by:

Chairman Director

Alfred Pisani Frank Xerri de Caro

Statement of changes in equity - the Group

					Reporting
		Share	Revaluation	Translation	currency conversion	Other equity	Retained	Total attributable	Non controlling
		capital	reserve	reserve	difference	components	earnings	to owners	interests	Total equity
	Notes	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000
Balance at 1 January 2018		615,685	-	(10,759)	443	2,617	60,710	668,696	195,976	864,672
Profit for the year		-	-	-	-	-	11,350	11,350	(2,891)	8,459
Other comprehensive income		-	26,418	(10,776)	-	-	-	15,642	1,161	16,803
Total comprehensive income		-	26,418	(10,776)	-	-	11,350	26,992	(1,730)	25,262
Transactions with owners in their capacity as owners:
Dividend declared or paid	36	-	-	-	-	-	(12,314)	(12,314)	-	(12,314)
Balance at 31 December 2018		615,685	26,418	(21,535)	443	2,617	59,746	683,374	194,246	877,620
Balance at 1 January 2019		615,685	26,418	(21,535)	443	2,617	59,746	683,374	194,246	877,620
Profit for the year		-	-	-	-	-	6,815	6,815	(1,696)	5,119
Other comprehensive income		-	1,120	22,010	-	-	-	23,130	10,651	33,781
Total comprehensive income		-	1,120	22,010	-	-	6,815	29,945	8,955	38,900
Transactions with owners in their capacity as owners:
Dividend declared or paid	36	-	-	-	-	-	(12,314)	(12,314)	(7,059)	(19,373)
Balance at 31 December 2019		615,685	27,538	475	443	2,617	54,247	701,005	196,142	897,147

Statement of cash flows - the Group

		2019	2018
		€'000	€'000
	Notes
Profit before tax		13,912	8,472
Adjustments	37	52,562	60,284
Working capital changes:
Inventories		(574)	(800)
Trade and other receivables		5,470	(8,214)
Advance payments		1,714	(311)
Trade and other payables		(5,304)	4,615
Cash generated from operations		67,780	64,046
Tax paid		(4,930)	(5,066)
Net cash generated from operating activities		62,850	58,980
Investing activities
Payments to acquire property, plant and equipment		(16,045)	(27,474)
Payments to acquire intangible assets		(924)	(153)
Payments to acquire investment property		(275)	(13)
Payments for the acquisition of businesses, net of cash acquired	40	677	(8,631)
Payments for the acquisition of financial assets at fair value through
profit or loss		(11,639)	-
Proceeds from sale of financial asset at fair value through profit or loss		5,277	-
Payments for the acquisition of financial assets at fair value through
other comprehensive income		-	(7)
Loan to parent company		941	-
Repayments of loan by parent company		-	(269)
Loan to joint venture		(1,000)	-
Interest received		546	891
Dividend received		-	504
Net cash used in investing activities		(22,442)	(35,152)

Statement of cash flows - the Group

		2019	2018
	Notes	€'000	€'000
Financing activities
Proceeds from bank borrowings		36,359	52,161
Repayment of bank borrowings		(36,436)	(39,861)
Proceeds from the issue of bonds		19,687	-
Bank loan arrangement fees		-	(471)
Repayment of loans from related parties		(3,716)	(52)
Principal elements of lease payments		(2,139)	-
Contributions to sinking fund		(53)	(1,478)
Interest paid		(22,976)	(20,824)
Dividends paid		(12,313)	(10,314)
Net cash used in financing activities		(21,587)	(20,839)
Net change in cash and cash equivalents		18,821	2,989
Cash and cash equivalents at beginning of year		44,291	42,652
Effect of translation of group entities to presentation currency		2,351	(1,350)
Cash and cash equivalents at end of year	24	65,463	44,291

Statement of comprehensive income - the Company

….	……	2019	2018
	Notes	€'000	€'000
Dividend income		18,080	39,705
Interest income on other financial assets at amortised cost		3,219	3,406
Management fees and other similar income		4,554	4,412
Interest expense and similar charges		(12,551)	(11,718)
Administrative expenses		(8,934)	(8,077)
Gain on disposal of intangible asset	13	-	15,400
Net changes in fair value of contingent consideration		563	-
Profit before tax		4,931	43,128
Tax income/(expense)	11	3,575	(760)
Profit for the year		8,506	42,368
Other comprehensive income
Items that will not be subsequently reclassified to profit or loss
Net changes in fair value of investments in subsidiaries,
associates and joint ventures	28.2	(9,975)	(1,826)
Income tax relating to these items	28.2	2,656	359
Reversal of deferred income tax liability on fair value
movements following amendment in tax legislation	28.2	42,683	-
Other comprehensive income for the year, net of tax		35,364	(1,467)
Total comprehensive income for the year		43,870	40,901

Statement of financial position - the Company

	…… ……	31 December 2019 €'000	31 December 2018 €'000
	Notes
Assets
Non-current
Intangible assets	13	2,449	3
Indemnification assets	14	1,997	1,997
Property, plant and equipment	16	136	83
Right-of-use assets	17	358	-
Deferred tax assets	34	3,202	-
Investments in subsidiaries	18	892,774	877,428
Investments in associates and joint ventures	19	12,790	12,760
Other financial assets at amortised cost	20	86,478	85,957
Assets placed under trust arrangement	43, 32	3,698	3,645
		1,003,882	981,873
Current
Other financial assets at amortised cost	20	91	672
Trade and other receivables	22	40,495	42,394
Current tax asset		1,053	3,056
Cash and cash equivalents	24	15,043	7,824
Assets placed under trust arrangement	43, 32	122	122
		56,804	54,068
Total assets		1,060,686	1,035,941

Statement of financial position - the Company

	…… …… Notes ……	31 December 2019 €'000	31 December 2018 €'000
Equity
Issued capital	25	615,685	615,685
Other reserves	28.2	102,179	66,815
Reporting currency conversion difference	29	443	443
Accumulated losses	30	29,417	33,225
Total equity		747,724	716,168
Liabilities
Non-current
Trade and other payables	35	822	563
Bank borrowings	31	10,718	8,592
Bonds	32	222,584	202,507
Other financial liabilities	33	39,781	26,027
Lease liabilities	17	176	-
Deferred tax liabilities	34	26,142	71,495
		300,223	309,184
Current
Trade and other payables	35	10,484	8,920
Bank borrowings	31	1,872	1,584
Other financial liabilities	33	98	85
Lease liabilities	17	285	-
		12,739	10,589
Total liabilities		312,962	319,773
Total equity and liabilities		1,060,686	1,035,941

The financial statements on pages FS46 to FS162 were approved by the board of directors, authorised for issue on 26 June 2020 and signed on its behalf by:

Chairman Director

Alfred Pisani Frank Xerri de Caro

Statement of changes in equity - the Company

			Reporting currency
	Share	Other	conversion	Retained	Total
	capital €'000	reserve €'000	difference €'000	earnings €'000	equity €'000
Balance at 1 January 2018	615,685	81,736	443	(10,283)	687,581
Profit for the year	-	-	-	42,368	42,368
Other comprehensive income	-	(1,467)	-	-	(1,467)
Total comprehensive income	-	(1,467)	-	42,368	40,901
Transactions with owners in their capacity as owners:
Absorption of losses	-	(13,454)	-	13,454	-
Dividend declared or paid	-	-	-	(12,314)	(12,314)
Total transactions with owners,
recognised directly in equity	-	(13,454)	-	1,140	(12,314)
Balance at 31 December 2018	615,685	66,815	443	33,225	716,168
Balance at 1 January 2019	615,685	66,815	443	33,225	716,168
Profit for the year	-	-	-	8,506	8,506
Other comprehensive income	-	35,364	-	-	35,364
Total comprehensive income	-	35,364	-	8,506	43,870
Transactions with owners in their capacity as owners:
Dividend declared or paid	-	-	-	(12,314)	(12,314)
Balance at 31 December 2019	615,685	102,179	443	29,417	747,724

Statement of cash flows - the Company

		2019	2018
	Notes	€'000	€'000
Profit before tax		4,931	43,128
Adjustments	37	(9,091)	(46,751)
Working capital changes:
Trade and other receivables		6,003	11,784
Trade and other payables		2,460	(3,833)
Cash generated from operations		4,303	4,328
Interest received		1,590	1,659
Interest paid		(12,124)	(10,730)
Dividend received		-	505
Net cash used in operating activities		(6,231)	(4,238)
Tax refunded/(paid)		2,003	(199)
Net cash used in operating activities		(4,228)	(4,437)
Investing activities
Payments to acquire property, plant and equipment		(80)	(29)
Payments to acquire intangible assets		(54)	-
Purchase of investment in subsidiary		(4,685)	-
Loan repayments received from related parties		6,052	12,142
Advance of loan to parent company		-	(2,500)
Net cash generated from investing activities		1,233	9,613
Financing activities
Proceeds from bank borrowings		4,500	-
Repayment of bank borrowings		(2,086)	(2,038)
Proceeds from bond issue		19,686	-
Proceeds of loans from related parties		-	11,500
Repayment of loan from related parties		750	(1,062)
Lease payment - principal		(269)	-
Dividends paid		(12,314)	(10,314)
Contributions to sinking fund		(53)	(1,477)
Net cash generated from/(used in) financing activities		10,214	(3,391)
Net change in cash and cash equivalents		7,219	1,785
Cash and cash equivalents at beginning of year		7,824	6,039
Cash and cash equivalents at end of year	24	15,043	7,824

Notes to the financial statements

1. General information

International Hotel Investments p.l.c., (the 'Company'), is a public limited liability company incorporated and domiciled in Malta. The address of the Company's registered office and principal place of business is 22, Europa Centre, Floriana FRN 1400, Malta. The ultimate parent company is Corinthia Palace Hotel Company Limited (CPHCL) with the same registered office address.

2. Nature of operations

International Hotel Investments p.l.c. and subsidiaries' (the 'Group' or 'IHI') principal activities include the ownership, development and operation of hotels, leisure facilities and other activities related to the tourism industry. It also owns property held for rental.

3. Summary of significant accounting policies

This note provides a list of the significant accounting policies adopted in the preparation of these consolidated financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.

3.1 Basis of preparation

The consolidated financial statements of the Group have been prepared in accordance with the requirements of International Financial Reporting Standards (IFRS) as adopted by the European Union (EU).

The financial statements have been prepared on a historical cost basis, except for financial assets and financial liabilities at classified at fair value through profit or loss (FVTPL), financial assets at fair value through other comprehensive income (FVOCI), the land and buildings class within property, plant and equipment and investment property – which are measured at fair value.

The preparation of consolidated financial statements in conformity with IFRSs as adopted by the EU requires the use of certain accounting estimates. It also requires the directors to exercise their judgement in the process of applying the Group's and the Company's accounting policies (see Note 5 – Critical accounting estimates, judgements and errors).

Assessment of the appropriateness of the going concern assumption taking cognisance of the COVID-19 related events that occurred subsequent to the end of the reporting period

In view of the developments pertaining to the COVID-19 pandemic that occurred after the end of the reporting period, the Group's operations within the hospitality sector were principally closed for business or suspended for a period of time, in line with the directions given by the health authorities of the jurisdictions within which the Group operates.

For financial reporting purposes, events relating to the COVID-19 pandemic are deemed to be non-adjusting subsequent events, and accordingly the Group's financial results and financial position reported in the financial statements for the year ended 31 December 2019 have not been impacted by these events. However, these events have a significant impact on the Group's operations during the year ending 31 December 2020 and on the financial results expected to be registered during the year with material adverse impact on the Group's profitability, cash flows and financial position. The Board's views are that the situation is unprecedented and the directors and senior management remain committed to taking all necessary actions to mitigate the negative impact that COVID-19 could have on the Group.

3.1 Basis of preparation - continued

Assessment of the appropriateness of the going concern assumption taking cognisance of the COVID-19 related events that occurred subsequent to the end of the reporting period - continued

In a company announcement dated 28 March 2020, the Group stated that the global pandemic had a significant impact on the hospitality industry, with the Group's hotels, related commercial properties and catering activities being at best in partial operation with significantly reduced business at that point in time. As outlined previously, the Group ultimately curtailed its principal hospitality and catering businesses as events unfolded. Immediate measures have been adopted across the Group to reduce operating costs to the minimum required to secure and maintain the Group's properties, with the objective of preserving financial resources. The Group's most material remaining operating cost is payroll and accordingly the Group has taken immediate action to reduce its payroll related costs. The Group adopted a series of bold and far-reaching measures that have significantly reduced operating costs and payroll expenses. It is benefitting from varying schemes adopted by the respective Governments in all countries in which the Group operates, including Malta and the United Kingdom, which include outright salary subsidies, as well as the waiver or deferral of payroll taxes and social security contributions, together with waiver of property taxes for 2020.

The Company's senior management team has compiled Group financial projections for the years ending 31 December 2020 and 31 December 2021, comprising historical financial information up to the date of authorisation for issue of these financial statements and forecast financial information for the residual period, incorporating the estimated impact of the events referred to above on the projected financial results, cash flows and financial position of the Group. The projected financial information reflects the estimated impact of the stressed conditions currently experienced, under a scenario which encompasses a set of prudent and severe assumptions that capture the forecast business conditions until 31 December 2021. These assumptions centre around the expected timing of resumption of operations of the different hospitality and catering businesses, the expected pace of recovery to business as usual once operations resume, and expected level of activity and revenues post resumption. The Group is incorporating minimal forecast revenues for the residual period of the financial year ending 31 December 2020 within the projections and is assuming that forecast revenues for the subsequent year would amount to a fraction of the historical 2019 figures. Hence the Group is projecting that revenue levels will not revert to pre COVID-19 benchmarks before the financial year ending 31 December 2022. The projections referred to above contemplate the impact of the cost containment and management measures taken, together with government support in respect of operating expenditure until 31 December 2020. The cost containment measures adopted in 2020 are assumed to be lifted in relation to operating costs throughout 2021, but the Group may continue to apply certain measures should the need arise.

The Group is assessing the resumption of business dates on a specific property and business basis. The Group intends to resume certain operations in the latter part of 2020 and others during 2021, but this plan is reviewed on an ongoing basis taking into account developments and events as these unfold.

The Group is in the process of applying for banking facilities with local banks under the Malta Development Bank COVID-19 Guarantee Scheme, with the requested facilities amounting to the maximum amount possible under the Scheme. At the date of authorisation for issue of these financial statements, the Group has submitted applications for a part of the aggregate amount. The entire amount of the facilities is included as liquidity inflows within the projections as the rest of the applications will be filed shortly.

Also, the Group has engaged in an extensive dialogue with its funding banks in Malta and internationally, and has entered into ad hoc arrangements with some of its principal lending banks to defer capital and in some cases interest payments too, which deferrals are reflected within the projections.

3.1 Basis of preparation - continued

Assessment of the appropriateness of the going concern assumption taking cognisance of the COVID-19 related events that occurred subsequent to the end of the reporting period - continued

Certain banking facilities include loan to value and debt service cover covenants which are tested on a periodical basis. On the basis of the projections made, the Group is expected to breach specific covenants exclusively in view of COVID-19 impact on its business and financial results. Whilst waivers have been obtained in respect of breaches expected throughout a substantial part of 2020, waivers for the forecast breaches in the latter part of 2020 and in 2021 have not been obtained at the date of approval of the 31 December 2019 financial statements, as it is premature to apply for such waivers now. If waivers are not successfully negotiated, then the Group would be technically considered in default in respect of the related loan agreements and facilities would need to be repaid, which may mean that the Group may not be able to meet these liabilities at that point in time. However, the Group expects to secure these waivers and this is assumed within the financial projections.

The Company has secured a line of credit from its parent company, Corinthia Palace Hotel Company Limited, to ensure funding is available in case of any cashflow shortfalls. This line of credit would be partly utilised during 2020 according to the projections and a more significant part of the facility would be drawn down during 2021. At the date of approval of the financial statements, the Company needs to formalise approval from its parent in respect of the amount expected to be utilised during 2021.

The Group will be reviewing other funding arrangements expected to mature throughout 2021. Interest payment obligations on all such funding arrangements are included within the projections.

The Group is not relying on asset disposals for cash flow purposes and accordingly did not reflect proceeds from disposal of any significant assets during the explicit period of the cash flow projections, although disposals are an option.

The combined effects of the actions effected are to safeguard the Group's financial and liquidity positions to see the business through the period of the pandemic, taking into account the forecasted revenue levels expected to be generated by the Group's hotels and catering businesses within the explicit period of the projections. Under the cash flow projections, utilising a prudent scenario, the Group is expected to have sufficient liquidity and financial resources to meet its obligations and expected cash outflows taking into account the actual outcome of actions taken so far by the Group and also the expected outcome of other forecasted funding actions and related initiatives throughout the explicit period of the projections. Hence, the Group is likely to have sufficient resources and funds to meet all its payment obligations, including bond interest payments as they arise through the course of the explicit period, as the projections reveal a certain level of headroom in respect of liquidity available to the Group throughout the period to 31 December 2021.

The impact of the expected reduction in revenues and deterioration of financial results during the years ending 31 December 2020 and 2021 on the fair valuation of the Group's properties is not expected to have a significant impact on the Statement of Financial Position on the basis of the information available at date of signing.

The Directors are conscious that, in common with similar businesses operating in the same sectors, all judgements reached at this stage remain subject to a material degree of underlying uncertainty, however the following matters are considered to constitute a material uncertainty that may cast significant doubt about the Group's ability to continue as a going concern:

• While the Group's analysis assumes a sharp downturn in the level of business activity during 2020, followed by a gradual recovery into 2021, limited to a fraction of the business generated in 2019, the eventual outcome of the pandemic remains subject to material uncertainty. A more prolonged outbreak, or a resurgence of the disease, would lead to more widespread economic disruption; which may in part be countered by further governmental measures that also cannot be foreseen at this stage.

3.1 Basis of preparation - continued

Assessment of the appropriateness of the going concern assumption taking cognisance of the COVID-19 related events that occurred subsequent to the end of the reporting period - continued

• The political and economic uncertainties prevailing in Libya entail significant uncertainties and judgements surrounding the valuation of the Group's assets in Libya, which is influenced by the timing of a recovery in the country that in turn has a bearing on the projected cash flows from the relative operations. These projections remain subjective and difficult to predict due to the current market environment, also taking into account the COVID-19 related events subsequent to the end of the reporting period. Different plausible scenarios may impact the financial performance of the Libya operations and the valuation of related assets in a significant manner (refer to Note x to the financial statements for further information in this respect).
• At the date of approval of these financial statements, the Group has not yet obtained approval of the required banking facilities from local banks under the Malta Development Bank COVID-19 Guarantee Scheme and has not obtained waivers for the forecast covenant breaches in the latter part of 2020 and in 2021, attributable to certain banking facilities. At that date, the Company has not yet formally secured the approval of the amount expected to be utilised by the Group during 2021 under the line of credit made available by CPHCL. Also the outcome in respect of the Group's remaining funding arrangements, referred to above, is not yet within the control of the Group as at the date of the 2019 financial statements.

Should an adverse outcome emanate from the uncertainties surrounding any one individual item out of banking facilities under the Malta Development Bank COVID-19 Guarantee Scheme and the line of credit made available by CPHCL and the assumed refinancing of the other funding arrangements, the level of headroom in respect of liquidity available to the Group throughout the period to 31 December 2021 is impacted in a significant manner but not depleted. Should adverse developments occur in respect of more than one factor referred to above or should waivers for the forecast covenant breaches attributable to certain banking facilities not be secured, the headroom of liquidity available to the Group would be depleted. However, should these latter unlikely events materialise, the Group would be able to deploy other mechanisms or funding options as highlighted previously.

The Directors confirm that, after considering the matters set out above, they have a reasonable expectation that the Group will be successful in securing:

• the approval of the full amount of requested banking facilities from local banks under the Malta Development Bank COVID-19 Guarantee Scheme;
• continued support from its funding banks and waivers for the forecast covenant breaches in the latter part of 2020 and in 2021 together with refinancing of other funding arrangements; and
• continued support from the Company's parent, CPHCL, which is considered as willing and financially able to support the Group.

Accordingly, based on the outcome of the cash flow projections in a prudent scenario as referred to, the Directors and senior management consider the going concern assumption in the preparation of the Group's financial statements as appropriate as at the date of authorisation for issue of the 2019 financial statements.

The board of directors and senior management remain vigilant on developments and will be taking further measures as and when necessary to ensure the continued viability of the Group and to preserve the Group's liquid resources to enable it to manage the liquidity demands over the coming months in an agile and decisive manner as events unfold.

3.2 Merger by acquisition

On 29 December 2017, IHGH p.l.c. merged into International Hotel Investments p.l.c. ("the Company") in terms of the Maltese Companies Act (Cap. 386), as part of a restructuring exercise undertaken by the Group. IHGH p.l.c. ceased to exist on this date. The merger was accounted for in accordance with the accounting policy disclosed in Note 3.8. The merger did not have any impact on the consolidated financial statements for.

3.3 Standards, interpretations and amendments to published standards effective in 2019

In 2019, the Group applied the following standards and amendments that are mandatory for the Group's accounting period beginning on 1 January 2019, comprising:

• IFRS 16 Leases
• Annual Improvements 2015-2017 cycle
• Transfers to Investment Property Amendments to IAS 40
• Long term interests in Associates and Joint Ventures Amendments to IAS 28
• Interpretation 23 Uncertainty over Income Tax Treatment

The Group and the Company had to change its accounting policies following the adoption of IFRS 16. The impact of this change in accounting policy is disclosed in Note 4. The other amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods.

3.4 Standards, interpretations and amendments to published standards that are not yet effective

Certain new standards, amendments and interpretations to existing standards have been published by the date of authorisation for issue of these financial statements but are mandatory for accounting periods beginning after 1 January 2019. The Group has not early adopted these revisions to the requirements of IFRSs as adopted by the EU and the directors are of the opinion that there are no requirements that will have a possible significant impact on the Group's and the Company's current or future reporting periods and on foreseeable future transactions.

3.5 Principles of consolidation and equity accounting

(i) Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The acquisition method of accounting is used to account for business combinations by the Group (refer to Note 3.7).

Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated income statement, statement of comprehensive income, statement of changes in equity and statement of financial position respectively.

3.5 Principles of consolidation and equity accounting - continued

(ii) Associates

Associates are all entities over which the Group has significant influence but not control or joint control. This is generally the case where the Group holds between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting (see (iv) below), after initially being recognised at cost.

(iii) Joint arrangements

Under IFRS 11, 'Joint Arrangements', investments in joint arrangements are classified as either joint operations or joint ventures. The classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement.

Interests in joint ventures are accounted for using the equity method (see (iv) below), after initially being recognised at cost in the consolidated balance sheet.

(iv) Equity method

Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise the Group's share of the post-acquisition profits or losses of the investee in profit or loss, and the Group's share of movements in other comprehensive income of the investee in other comprehensive income. Dividends received or receivable from associates and joint ventures are recognised as a reduction in the carrying amount of the investment.

When the Group's share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the other entity.

Unrealised gains on transactions between the Group and its associates and joint ventures are eliminated to the extent of the Group's interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of equity accounted investees have been changed where necessary to ensure consistency with the policies adopted by the Group.

The carrying amount of equity-accounted investments is tested for impairment in accordance with the policy described in Note 3.13.

(v) Changes in ownership interests

The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in a separate reserve within equity attributable to owners of IHI.

When the Group ceases to consolidate or equity account for an investment because of a loss of control, joint control or significant influence, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. This fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity, are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

3.5 Principles of consolidation and equity accounting - continued

(v) Changes in ownership interests - continued

If the ownership interest in a joint venture or an associate is reduced but joint control or significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss, where appropriate.

3.6 Investments in subsidiaries, associates and joint ventures in the Company's stand-alone financial statements

In the Company's stand-alone financial statements, investments in subsidiaries, associates and joint ventures are accounted for in accordance with IFRS 9's requirements for equity investments. The Company elects, on an instrument-by-instrument basis, whether its investments will be measured at fair value, with fair value movements in other comprehensive income. Management has adopted the FVOCI election for all of its investments in subsidiaries, associates and joint ventures. The fair value of investments in subsidiaries, associates and joint ventures is established by using valuation techniques, in most cases by reference to the net asset backing of the investee taking cognisance of the fair values of the underlying assets.

Additional detail on the subsequent measurement and impairment requirements for FVOCI assets is disclosed in Note 3.14.

3.7 Business combinations

The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the:

• fair values of the assets transferred;
• liabilities incurred to the former owners of the acquired business;
• equity interests issued by the Group;
• fair value of any asset or liability resulting from a contingent consideration arrangement; and
• fair value of any pre-existing equity interest in the subsidiary.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. The Group recognises any noncontrolling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the noncontrolling interest's proportionate share of the acquired entity's net identifiable assets.

Acquisition-related costs are expensed as incurred.

The excess of the:

• consideration transferred;
• amount of any non-controlling interest in the acquired entity; and
• acquisition-date fair value of any previous equity interest in the acquired entity

over the fair value of the net identifiable assets acquired, is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired, the difference is recognised directly in profit or loss as a bargain purchase.

3.7 Business combinations - continued

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity's incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss.

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains or losses arising from such remeasurement are recognised in profit or loss.

3.8 Mergers between entities under common control

Mergers between entities under common control, which do not fall within the scope of IFRS 3, are accounted for using the predecessor method of accounting. Under the predecessor method of accounting, assets and liabilities are incorporated at the predecessor carrying values, which are the carrying amounts of assets and liabilities of the acquired entity from their financial statements.

No goodwill arises in predecessor accounting, and any difference between the consideration given and the aggregate book value of the assets and liabilities (as of the date of the transaction) of the acquired entity, is included in equity as a separate reorganisation reserve. In order to provide more meaningful information, the merged entity's results are incorporated into the financial statements of the Group/Company as if both entities had always been merged, with the result that the financial statements of the surviving company reflect both entities' full year's results even though the merger may have occurred part way through the year.

3.9 Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The consolidated financial statements are presented in euro, which is IHI's functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates, are generally recognised in profit or loss. They are deferred in equity if they relate to part of the net investment in a foreign operation.

Foreign exchange gains and losses that relate to borrowings are presented in the income statement, within finance costs. All other, foreign exchange gains and losses are presented in the income statement on a net basis within administrative expenses.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss.

3.9 Foreign currency translation - continued

(iii) Group companies

The results and financial position of foreign operations that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

• assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
• income and expenses for each income statement and statement of comprehensive income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and
• all resulting exchange differences are recognised in other comprehensive income.

On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings are recognised in other comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

3.10 Property, plant and equipment

All property, plant and equipment is initially recorded at historical cost. Land and buildings are subsequently shown at fair value, based on periodic valuations by professional valuers, less subsequent depreciation for buildings. Valuations are carried out on a regular basis such that the carrying amount of property does not differ materially from that which would be determined using fair values at the end of the reporting period. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset, and the net amount is restated to the revalued amount of the asset. All other property, plant and equipment is subsequently stated at historical cost less depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Borrowing costs which are incurred for the purpose of acquiring or constructing a qualifying asset are capitalised as part of its cost. Borrowing costs are capitalised while acquisition or construction is actively underway. Capitalisation of borrowing costs is ceased once the asset is substantially complete and is suspended if the development of the asset is suspended.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

Increases in the carrying amount arising on revaluation of land and buildings are credited to other comprehensive income and shown as a revaluation reserve in shareholders' equity. However, the increase shall be recognised in profit or loss to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss. Decreases that offset previous increases of the same asset are charged in other comprehensive income and debited against the revaluation reserve; all other decreases are charged to profit or loss. Each year the difference between depreciation based on the revalued carrying amount of the asset (the depreciation charged to profit or loss) and depreciation based on the asset's original cost, net of any related deferred income taxes, is transferred from the revaluation reserve to retained earnings.

Depreciation is calculated using the straight-line method to allocate the cost or revalued amounts of the assets to their residual values over their estimated useful lives, as follows:

3.10 Property, plant and equipment - continued

	Years
Freehold buildings	50
Hotel plant and equipment	2-15
Furniture, fixture and fittings	3-10
Motor vehicles	5

Freehold land is not depreciated as it is deemed to have an indefinite life. Assets in the course of construction and payments on account are not depreciated.

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

Property, plant and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable (refer to Note 3.14.4). An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. Property, plant and equipment that suffered an impairment is reviewed for possible reversal of the impairment at the end of each reporting period.

Gains and losses on disposals of property, plant and equipment are determined by comparing proceeds with carrying amount and are recognised in profit or loss. When revalued assets are disposed of, the amounts included in the revaluation reserve relating to the assets are transferred to retained earnings.

3.11 Investment property

Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by entities forming part of the Group is classified as investment property. Investment property also includes property that is being constructed or developed for future use as investment property, when such identification is made. Investment property principally comprises land and buildings.

Investment property is measured initially at its historical cost, including related transaction costs and borrowing costs. Borrowing costs which are incurred for the purpose of acquiring or constructing a qualifying investment property are capitalised as part of its cost. Borrowing costs are capitalised while acquisition or construction is actively underway. Capitalisation of borrowing costs is ceased once the asset is substantially complete and is suspended if the development of the asset is suspended. After initial recognition, investment property is carried at fair value, representing open market value determined annually.

These fair valuations are reviewed regularly by a professional valuer. The fair value of investment property generally reflects, among other things, rental income from current leases and assumptions about rental income from future leases in the light of current market conditions. The fair value also reflects, on a similar basis, any cash outflows that could be expected in respect of the property.

Subsequent expenditure is capitalised to the asset's carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance costs are charged to profit or loss during the financial period in which they are incurred. When part of an investment property is replaced, the carrying amount of the replaced part is derecognised.

Changes in fair values are recognised in profit or loss. Investment properties are derecognised either when they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal.

3.11 Investment property - continued

If an investment property becomes owner-occupied, it is reclassified as property, plant and equipment. Its fair value at the date of the reclassification becomes its cost for subsequent accounting purposes.

If an item of property, plant and equipment becomes an investment property because its use has changed, any difference resulting between the carrying amount and the fair value of this item at the date of transfer is treated in the same way as a revaluation surplus under IAS 16.

3.12 Intangible assets

(a) Goodwill

Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is not amortised, but it is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net identifiable assets of the acquired subsidiary/associate at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in 'Intangible assets'. Goodwill on acquisitions of joint ventures and associates is included within the carrying amount of the investments. Separately recognised goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or Groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose. The units or Groups of units are identified at the lowest level at which goodwill is monitored for internal management purposes, being the operating segments (Note 7).

(b) Brands

The brands comprise the 'Corinthia' brand name and the 'Island Caterers' brand name. The 'Corinthia' brand was acquired from the Group's parent, CPHCL, and represents the consideration paid on its acquisition. The 'Island Caterers' brand name was separately identified as part of the assets acquired on the acquisition of Island Hotels Groups Holdings p.l.c.

The brands do not have a finite life and are measured at cost less accumulated impairment losses. The brands are regarded as having an indefinite life, since based on all relevant factors, there is not foreseeable limit to the period over which the assets are expected to generate cash inflows.

(c) Other intangible assets

Separately acquired intangible assets, such as purchased computer software are shown at historical cost. Customer contracts acquired in a business combination are recognised at fair value at the acquisition date. These intangible assets have a finite useful life and are subsequently carried at cost less accumulated amortisation and impairment losses.

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it related. All other expenditure including costs incurred in the ongoing maintenance of software, is recognised in profit or loss as incurred.

3.12 Intangible assets - continued

(c) Other intangible assets - continued

Intangible assets include intangibles with finite lives, which are amortised, on a straight-line basis over their estimated useful lives. Estimated useful life is the lower of legal duration and expected useful life. The estimated useful lives are as follows:

	Years
Brand design fee and other rights	5 - 10
Concessions	2 - 10
Operating contracts	20
Others	3

3.13 Impairment of non-financial assets

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-financial assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

3.14 Financial assets

3.14.1 Classification

The Group and the Company classify their financial assets in the following measurement categories:

• those to be measured subsequently at fair value (either through OCI or through profit or loss), and
• those to be measured at amortised cost.

The classification depends on the entity's business model for managing the financial assets and the contractual terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI).

The Group reclassifies debt investments when and only when its business model for managing those assets changes.

3.14.2 Recognition and derecognition

The Group recognises a financial asset in its statement of financial position when it becomes a party to the contractual provisions of the instrument. Regular way purchases and sales of financial assets are recognised on settlement date, which is the date on which an asset is delivered to or by the Group. Any change in fair value for the asset to be received is recognised between the trade date and settlement date in respect of assets which are carried at fair value in accordance with the measurement rules applicable to the respective financial assets.

3.14 Financial assets – continued

3.14.2 Recognition and derecognition - continued

Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

3.14.3 Measurement

At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to the acquisition of the financial asset. Financial assets carried at fair value through profit or loss are initially recognised at fair value. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.

Debt instruments

Subsequent measurement of debt instruments depends on the Group's business model for managing the asset and the cash flow characteristics of the asset. The Group's and the Company's debt instruments principally comprise loans and advances to other undertakings. The Group also holds investments in mutual funds; management has assessed that such investments do not meet the definition of equity in accordance with IAS 32 from the issuer's perspective since the Group can sell its holding back to the fund in return for cash. Accordingly, these investments are considered to be debt instruments from the Group's perspective.

There are two measurement categories into which the Group classifies its debt instruments:

• Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other operating expenses together with foreign exchange gains and losses. Impairment losses are presented as separate line item in the statement of profit or loss.
• FVTPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVTPL. A gain or loss on a debt investment that is subsequently measured at FVTPL is recognised in profit or loss and presented net within investment income in the period in which it arises. The Group classified its investments in mutual funds in this category, on the basis that such investments fails to meet the 'solely payments of principal and interest' test.

Equity instruments

The Group and the Company subsequently measure all equity investments at fair value. Where the Group's management has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognised in profit or loss as other income (from the Group's perspective) / revenue (from the Company's perspective), when the entity's right to receive payments is established.

Changes in the fair value of financial assets at FVTPL are recognised in investment income in the statement of profit or loss as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.

3.14.4 Impairment

The Group and the Company assesses on a forward-looking basis the expected credit losses associated with its debt instruments carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

3.14 Financial assets - continued

3.14.4 Impairment - continued

For trade receivables, the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables, see Note 43.1 for further details.

3.15 Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less loss allowance. Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components, when they are recognised at fair value. The Group holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method. Details about the Group's impairment policies and the calculation of the loss allowance are provided in Note 43.1.

3.16 Inventories

Inventories are stated at the lower of cost and net realisable value. Costs are assigned to individual items of inventory on the basis of weighted average costs. The cost of inventories comprises the invoice value of goods and, in general, includes transport and handling costs. Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business less and the estimated costs necessary to make the sale.

3.17 Cash and cash equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position.

3.18 Financial liabilities

The Group recognises a financial liability in its statement of financial position when it becomes a party to the contractual provisions of the instrument. The Group's financial liabilities, other than derivative financial instruments, are classified as financial liabilities which are not at fair value through profit or loss (classified as 'Other liabilities') under IFRS 9. Financial liabilities not at fair value through profit or loss are recognised initially at fair value, being the fair value of consideration received, net of transaction costs that are directly attributable to the acquisition or the issue of the financial liability. These liabilities are subsequently measured at amortised cost. Financial liabilities at fair value through profit or loss would be initially recognised at fair value through profit or loss with transaction costs in profit or loss and would be subsequently measured at fair value. The Group derecognises a financial liability from its statement of financial position when the obligation specified in the contract or arrangement is discharged, is cancelled or expires.

3.19 Trade and other payables

These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.

3.20 Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.

Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

3.21 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

3.22 Income tax

The income tax expense or credit for the period is the tax payable on the current period's taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the company's subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

The deferred tax liability in relation to investment property that is measured at fair value is determined assuming the property will be recovered entirely through sale.

Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in foreign operations where the company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

3.22 Income tax - continued

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

3.23 Provisions

Provisions for legal claims and other obligations are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses.

Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pretax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.

3.24 Contingent liabilities

Contingent liabilities are possible obligations that arise from past events whose existence will be confirmed only by occurrence, or non-occurrence, of one or more uncertain future event not wholly within the control of the Group; or are present obligations that have arisen from past events but are not recognised because it is not probable that settlement will require the outflow of economic benefits, or because the amount of the obligations cannot be reliably measured. Contingent liabilities are not recognised in the financial statement but are disclosed unless the probability of settlement is remote.

3.25 Revenue recognition

(a) Revenue from hotel operations

Revenue from hotel operations includes revenue from accommodation, food and beverage services, and other ancillary services. The substantial majority of services are provided to customers during their stays in one of the Group's hotels, and, depending on the type of booking, some services would generally be amalgamated into one 'contract' (for example, bed and breakfast).

Each of the services rendered is assessed to be a distinct performance obligation, and if applicable, the Group allocates the transaction price to each of the services rendered to the customer on a relative basis, based on their stand-alone selling price. Revenue from such operations is recognised over time since the customer benefits as the Group is performing; the majority of revenue relates to accommodation (i.e. the amount allocated to such performance obligation is recognised over the customer's stay at the respective hotel).

3.25 Revenue recognition - continued

(b) Catering services

The Group provides services in the catering industry. The transaction price comprises a fixed amount agreed with the respective customer. Any upfront payments are deferred as contract liabilities, and revenue is recognised in the period that the services are provided to the customer.

(c) Project management services

The Group provides a wide range of project management services, some of which may span over multiple accounting periods. Some contracts require the provision of multiple services, and the Group assesses whether these constitute distinct performance obligations in the context of the arrangement. In any case, revenue from such performance obligations is recognised over time, using an input method of progress to calculate the stage of completion.

The consideration for project management services is based on the expected number of hours that the Group expects to be required for the project to be completed. Revenue and contract costs are recognised over the period of the contract, respectively, as revenue and expenses. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

The stage of completion is measured by reference to the proportion of contract costs incurred for work performed up to the end of the reporting period in relation to the estimated total costs for the contract. Costs incurred during the year that relate to future activity on a contract are excluded from contract costs in determining the stage of completion and are shown as contract work in progress.

The aggregate of the costs incurred and the profit or loss recognised on each contract is compared against the progress billings up to the end of the reporting period. The Group presents as a contract asset the gross amount due from customers for contract work for all contracts in progress for which costs incurred plus recognised profits (less recognised losses) exceed progress billings, within trade and other receivables. The Group presents as a contract liability the gross amount due to customers for contract work for all contracts in progress for which progress billings exceed costs incurred plus recognised profits (less recognised losses), within trade and other payables.

3.26 Leases

As explained in note 3.3 above, the Group has changed its accounting policy for leases where the Group is the lessee. The Group accounting policy applicable as from 1 January 2019 is disclosed in Note 17 and the impact of the change is explained in Note 4.

3.26.1 Accounting policy where the Group is the lessee until 31 December 2018

Leases of property, plant and equipment where the Group, as lessee, had substantially all the risks and rewards of ownership were classified as finance leases. Finance leases were capitalised at the lease's inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other short-term and long-term payables. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over the asset's useful life or over the shorter of the asset's useful life and the lease term if there is no reasonable certainty that the Group will obtain ownership at the end of the lease term.

3.26 Leases - continued

3.26.1 Accounting policy where the Group is the lessee until 31 December 2018 - continued

Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease.

3.26.2 Accounting policy where the Group is the lessor

Lease income from operating leases where the Group is a lessor is recognised in income on a straight-line basis over the lease term. Initial direct costs incurred in obtaining an operating lease are added to the carrying amount of the underlying asset and recognised as expense over the lease term on the same basis as lease income. The respective leased assets are included in the statement of financial position based on their nature. The Group did not need to make any adjustments to the accounting for assets held as lessor as a result of adopting the new leasing standard.

3.27 Borrowing costs

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.

Borrowing costs are recognised for all interest-bearing instruments on an accrual basis using the effective interest method. Interest costs include the effect of amortising any difference between initial net proceeds and redemption value in respect of interest-bearing borrowings.

Other borrowing costs are expensed in the period in which they are incurred.

3.28 Employee benefits

(a) Short-term obligations

Liabilities for wages and salaries, including non-monetary benefits and accumulating leave that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.

(b) Bonus plans

The Group recognises a liability and an expense for bonuses based on a formula that takes into consideration the profit attributable to the company's shareholders after certain adjustments. The Group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

(c) Contributions to defined contribution pension plans

The Group contributes towards the State defined contribution pension plan in accordance with local legislation in exchange for services rendered by employees and to which it has no commitment beyond the payment of fixed contributions. Obligation for contributions are recognised as an employee benefit in profit or loss in the periods during which services are rendered by employees.

3.29 Contributed equity

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.

3.30 Dividends

Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.

3.31 Earnings per share

Basic earnings per share

Basic earnings per share is calculated by dividing:

• the profit attributable to owners of the Company,
• by the weighted average number of ordinary shares outstanding during the financial year.

3.32 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.

The board of IHI has appointed a strategic steering committee which assesses the financial performance and position of the Group and makes strategic decisions and accordingly has been identified as being the chief operating decision maker.

4. Changes in accounting policies

This note explains the impact of the adoption of IFRS 16 Leases on the Group's and the Company's financial statements.

The Group has adopted IFRS 16 Leases retrospectively from 1 January 2019 but has not restated comparatives for the 2018 reporting period, as permitted under the specific transition provisions in the standard. The reclassifications and the adjustments arising from the new leasing rules are therefore recognised in the opening balance sheet on 1 January 2019. The new accounting policies are disclosed in Note 17(b).

On adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified as 'operating leases' under the principles of IAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate as of 1 January 2019. The Group's weighted average lessee's incremental borrowing rate applied to the lease liabilities on 1 January 2019 was 5.1%, whilst the Company's weighted average rate was 5.0%.

4. Changes in accounting policies - continued

i. Practical expedients applied

In applying IFRS 16 for the first time, the Group has used the following practical expedients permitted by the standard:

• excluding initial direct costs for the measurement of the right-of-use asset at the date of initial application, and
• using hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

The Group has also elected not to reassess whether a contract is, or contains a lease at the date of initial application. Instead, for contracts entered into before the transition date the Group relied on its assessment made applying IAS 17 and Interpretation 4 Determining whether an Arrangement contains a Lease.

ii. Measurement of lease liabilities

	The Group	The Company
	2019	2019
	€'000	€'000
Operating lease commitments disclosed as at 31 December 2018	28,997	702
Discounted using the lessee's incremental borrowing rate at the date of application	(16,391)	(76)
Add: adjustments as a result of a different treatment of extension and termination
options	1,208	-
Lease liability recognised as at 1 January 2019	13,814	626
Of which are:
Current lease liabilities	2,133	430
Non-current lease liabilities	11,681	196
	13,814	626

iii. Measurement of right-of-use assets

Right-of-use assets were measured at the amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the statement of financial position as at 31 December 2018. There was no impact on opening retained earnings as a result of the initial application of IFRS 16.

iv. Adjustments recognised in the statement of financial position on 1 January 2019

The change in accounting policy affected the following items in the statement of financial position on 1 January 2019:

Group:

• right-of-use assets (property, plant and equipment increase by €13.8m
• lease liabilities increase by €13.8m

Company:

• right-of-use assets (property, plant and equipment) increase by €0.6m
• lease liabilities increase by €0.6m

4. Changes in accounting policies - continued

v. Lessor accounting

The Group did not need to make any adjustments to the accounting for assets held as lessor under operating leases as a result of the adoption of IFRS 16.

5. Critical accounting estimates, judgements and errors

5.1 Significant estimates and judgements

Management makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal actual results. The estimates, assumptions and management judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

The fair value of property, plant and equipment and investment properties is determined by using valuation techniques. Further details of the judgements and assumptions made are disclosed in Note 16. This Note highlights information about the fair value estimation of land and buildings and investment property, together with a sensitivity analysis of the effects of shifts in unobservable inputs used in determining these fair values.

Additionally, the significant estimates and uncertainties arising from the Group's operations in Libya are disclosed in Note 6.

The Company's critical estimates pertain to the fair valuation of its investments in subsidiaries, associates and joint ventures. Refer to Note 43.6 for more information.

In the opinion of the directors, the accounting estimates and judgements made in the course of preparing these financial statements are, with the exception of the fair valuation of property, not difficult, subjective or complex to a degree which would warrant their description as critical in terms of the requirements of IAS 1.

6. The Group's operations in Libya

The Group's activities in Libya principally comprise:

• The Corinthia Hotel Tripoli, a fully owned five-star hotel in Tripoli with a carrying amount of €74.1m (2018: €76.4m);
• An adjoining Commercial Centre to the above-mentioned hotel, with a carrying amount of €73.7m (2018: €73.7m);
• The ownership of a site surrounding the hotel, with a carrying amount of €29.5m (2018: €29.5m); and
• The development of the Medina Towers Project through an associated undertaking in which the Group holds a 25% share, which investment has a carrying amount of €12.8m (2018: €12.8m).

The first three activities are managed through the Group's investment in Corinthia Towers Tripoli Limited, a company registered in Malta with a branch in Libya.

Since 2014, Libya experienced severe political instability due to the collapse of the central government during the same year and the country has been going through difficult times ever since. A United Nations-brokered ceasefire deal was reached in December 2015 and the Libyan Political Agreement to form a Government of National Accord was signed. On 31 March 2016, the leaders of the new UN-supported unity government arrived in Tripoli. In May 2018 Libya's rival leaders agreed to hold parliamentary and presidential elections following a meeting in Paris. No firm date for such elections has been set with rival leaders jostling for territory, which could further exacerbate the situation. The political instability in Libya and the state of economic uncertainty that continued to prevail during the financial year ended 31 December 2019 have a negative effect on the Libyan hospitality and real estate sectors. This situation continues to impact the Group's financial results in Libya. The events that occurred subsequent to the end of the reporting period in relation to COVID-19 (refer to Note 3.1) give rise to heightened risks, even though the situation in Libya in this respect does not appear to be particularly adverse on the basis of information which is publicly available.

6. The Group's operations in Libya - continued

Having stated the above, it should be noted that the turnover registered during 2019 by Corinthia Towers Tripoli Limited amounts to €10.4m (2018: €10.7m) representing 3.9% (2018: 4.2%) of the Group's revenue, with a profit before tax of €1.4m (2018: €6.5m). Current year revenue includes €7.2m (2018: €6.9m) generated from rental contracts attributable to the Commercial Centre that remained in full operation throughout since its opening, generating a steady income from the lease of commercial offices within the Centre. The existence of long-term leases has mitigated the impact of the continued political instability and state of uncertainty on the Commercial Centre. The Group secured further lease agreements resulting in the commercial centre being almost fully leased out as from the last quarter of 2018.

Accordingly, whilst the hotel sustained negative net financial results during 2019 and 2018 particularly in view of the relatively fixed nature of certain expenses, the net contribution from the Commercial Centre was positive. Management's objective for the hotel is to minimise operational losses and to ensure that payroll and other operating costs are managed in the context of the reduced operating income levels. At the same time, however, the company continues to invest in maintenance and security costs to ensure that the hotel is kept in a pristine condition to allow it to resume operations once the situation improves.

The significant economic and political uncertainty prevailing in Libya at present, renders fair valuation of property assets situated in Libya, by reference to projected cash flows from operating the asset or to market sales prices, extremely difficult and judgemental. The uncertainty could potentially be exacerbated by the events related to COVID-19.

The future performance of the hotel and the Commercial Centre and the fair value of the related property assets are largely dependent on how soon the political situation in Libya will return to normality and on how quickly the international oil and gas industry recovers once political risks subside.

In assessing the value of the hotel, the directors also believe that the outlook has not changed significantly over the past twelve months and therefore they have retained the expectations of a gradual recovery for the hotel. However, the directors also recognise that there is interest from a number of sources for short and long-term accommodation. Hotel occupancy rates in the initial months of 2020 are encouraging and occupancy levels of 20% have been reached. The results of the valuation assessment supporting the carrying amount of the Hotel in Libya is substantially in line with the assessments made last year, save for a reduction in the carrying value of €2.6 million representing the depreciation charge for the year under review. In accordance with this assessment, no further impairment charges were deemed necessary in these financial statements after taking into account the impairment charges of €40.5 million recognised in 2014 and further depreciation charges amounting to €14.4 million accounted for between 2015 and 2019.

In the case of the Commercial Centre, in 2018 the Directors engaged a firm of independent third-party valuers to assist them in establishing fair value of this asset. This exercise resulted in the value of the premises increasing by €5.5 million. This increase was supported by the fact that the premises were almost fully leased out to blue chip companies. The carrying amount of the property is unchanged as at 31 December 2019.

Further information on the key assumptions and judgements underlying the valuation of property assets is disclosed in Note 16, together with an analysis of sensitivity of the valuations to shifts or changes in the key parameters reflected. Information on the estimated impacts of the COVID-19 related events, that occurred subsequent to the end of the reporting period, on the valuations is also referred to in the said note.

The economic conditions in Libya also create significant uncertainty in relation to the recoverability of debtors, amongst other current assets. As at 31 December 2019, in addition to a current tax asset of €2.3 million, Corinthia Towers Tripoli Limited also had amounts due from Government related entities and other amounts receivable from embassies and corporate clients. Increased provisions for impairment have been registered to reflect the net estimated recoverable amounts in this respect.

6. The Group's operations in Libya - continued

The Group's investment property also includes a site surrounding the hotel, with no determined commercial use, having a carrying amount of €29.5m as at 31 December 2019, which is unchanged from the carrying amount as at 31 December 2018. This fair valuation is based on an independent real estate value of the site taking into account limited available market information.

In view of the prevailing circumstances in Libya, The Medina Towers Project carried out through an associate has slowed down considerably. The key assets within this company as at 31 December 2019 comprise the project site carried at €28.2m (2018: €27.8m), amounts capitalised in respect of the project amounting to €16.4m (2018: €16.0m) and cash balances amounting to €8.1m (2018: €8.4m).

The exposures emanating from the Group's activities in Libya are summarised in the table below:

	Carrying amount as at
	31 December 2019	31 December 2018
	€m	€m
Corinthia Towers Tripoli Limited
Property, plant and equipment	74.1	76.4
Investment property	103.2	103.2
Inventories	1.7	1.7
Trade receivables, net of provisions	1.3	1.3
Current tax receivable	2.3	2.3
Medina Towers J.S.C. Investment in associate accounted for using the equity
method of accounting	12.8	12.8

At this point in time, different scenarios in terms of the future political landscape in Libya are plausible, which scenarios, negative and positive, could significantly influence the timing and amount of projected cash flows and the availability of property market sales price information. The impact of these different plausible scenarios on the operating and financial performance of the hotel and Commercial Centre and on the fair valuation of the related property assets would accordingly vary in a significant manner, also taking cognisance of potential future developments in respect of the COVID-19 pandemic as referred to in Note 3.1 to the financial statements.

It is somewhat difficult to predict when the political situation in the country will start stabilising and forecasting the timing of any economic recovery in Libya is judgemental. Past experience has shown that, because of the keen interest by the international oil and gas industry to return to Libya, the Group's performance in respect of its operations in Libya is likely to recover quickly once the situation in the country improves in a meaningful manner.

7. Segment reporting

The standard requires a "management approach" under which segment information is presented on the same basis as that used for internal reporting purposes. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Group's board of directors.

An operating segment is a group of assets and operations engaged in providing services that are subject to risks and returns that are different from that of other segments. Each hotel is considered to be an operating segment.

Hotel ownership, development and operations is the dominant source of the Group's risks and returns. The Group is also engaged in the ownership and leasing of its investment property. Malta is the jurisdiction of the parent and management companies.

7. Segment reporting - continued

The board of directors assesses performance based on the measure of EBITDA (earnings before interest, tax, depreciation and amortisation) of each hotel.

The Group is not required to report a measure of total assets and liabilities for each reportable segment since such amounts are not regularly provided to the chief operating decision maker. However, in accordance with IFRS 8, non-current assets (other than financial instruments, investments accounted for using the equity method and deferred tax assets) are divided into geographical areas.

7. Segment reporting - continued

Information about reportable segments

Hotels	Malta		Portugal		Hungary		Russia		Prague		London		Libya		Total
	2019	2018	2019	2018	2019	2018	2019	2018	2019	2018	2019	2018	2019	2018	2019	2018
	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000
Segment revenue	48,000	47,568	28,635	26,404	28,054	26,360	16,243	16,500	20,454	20,100	74,862	68,803	3,156	3,779	219,404	209,514
EBITDA	10,623	11,397	7,911	7,125	8,181	7,514	5,848	6,775	5,231	5,323	15,272	14,971	(2,141)	(2,362)	50,925	50,743
Depreciation and amortisation	(4,217)	(4,354)	(3,188)	(2,679)	(1,648)	(1,432)	(2,422)	(2,462)	(2,245)	(1,686)	(14,370)	(13,807)	(2,601)	(2,598)	(30,691)	(29,018)
Segment profit or loss	6,406	7,043	4,723	4,446	6,533	6,082	3,426	4,313	2,986	3,637	902	1,164	(4,742)	(4,960)	20,234	21,725

7. Segment reporting - continued

Information about reportable segments - continued

Hotels	Malta				Portugal Hungary			Russia		Prague		London		Libya			Total
	2019	2018	2019	2018	2019	2018	2019	2018	2019	2018	2019	2018	2019	2018
	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000	2019	2018
															€'000	€'000
Segment revenue															219,404	209,514
Rental income from investment property															13,694	12,836
Hotel management company revenue															16,963	17,014
Catering business revenue															25,081	24,815
Project management revenue															6,876	5,956
Development revenue															834	917
Holding company revenue															34,575	57,961
Elimination of intra-group revenue															(49,141)	(72,699)
Group revenue															268,286	256,314
Segment profit or loss															20,234	21,725
Net rental income from investment property															11,739	10,918
Change in fair value of investment property															(137)	6,994
Catering business result															929	1,274
Impairment of catering non-current assets															(3,013)	(1,980)
Other impairments															(205)	-
Net changes in fair value of contingent
consideration															5,008	353
Project management business result															1,314	1,328
Development business result															88	137
Corporate office operating profit															14,667	52,307
Hotel management company operating profit Depreciation															8,107 (3,903)	7,523 (1,542)
Amortisation															(2,172)	(2,642)
Movement in indemnification assets															(210)	(210)
Unallocated items															(496)	(559)
Consolidation adjustments															(17,784)	(57,237)
															34,166	38,389
Share of results from equity accounted investments															(3,951)	(1,364)
Net changes in fair value of financial assets at fair
value through profit and loss															2,252	126
Finance income															546	833
Finance costs															(19,101)	(29,512)
Profit before tax															13,912	8,472

7. Segment reporting - continued

Information about reportable segments - continued

Hotels	Malta		Portugal		Hungary			Russia		Prague		London		Libya		Total
	2019 €'000	2018 €'000	2019 €'000	2018 €'000	2019 €'000	2018 €'000	2019 €'000	2018 €'000	2019 €'000	2018 €'000	2019 €'000	2018 €'000	2019 €'000	2018 €'000
															Total 2019 €'000	2018 €'000
Hotels	169,850	168,881	116,943	114,736	123,323	121,874	88,690	79,146	94,040	88,300	512,206	496,398	74,106	76,367	1,179,158	1,145,702
Investment properties															214,174	203,539
Hotel management															28,860	23,580
Catering business															8,743	11,321
Project management business															2,641	2,666
Development business															2	4
Holding company															58,453	60,084
Unallocated items															53,572	43,431
															1,545,603	1,490,327

During the current and comparative year there were no material inter-segment sale transactions.

8. Expenses by nature

The major items included within profit or loss are included below:

	The Group		The Company
	2019	2018	2019	2018
	€'000	€'000	€'000	€'000
(Gain)/loss on disposal of property, plant and
equipment	(232)	1,763	(563)	2
Depreciation of property, plant and equipment
(Note 16)	32,409	30,560	27	24
Depreciation of right-of-use assets* (Note 17)	2,185	-	185	-
Amortisation of intangible assets (Note 13)	2,172	2,642	8	15
Operating lease costs*	-	4,729	-	218
Net exchange differences	282	314	-	-
Professional fees	4,246	3,322	426	664
Cost of goods sold	23,918	22,212	-	-
Energy utilities	8,384	8,144	-	-
Employee benefit expenses (Note 9)	94,487	86,806	5,352	4,863
Property taxes	3,138	3,136	-	-
Repairs and maintenance	2,213	2,201	-	-

*From 1 January 2019, the Group recognised right-of-use assets for leases in which the Group is a lessee and which were previously recognised as operating leases. See Note 4 and 17 for more information.

Net changes in fair value of contingent consideration relate to movements in the fair value of liabilities that emanate from agreements in which the Group acquired assets or businesses, and which are subject to consideration that is dependent on the performance of the underlying assets or businesses. During 2019, the Group settled a liability related to previously acquired assets. The fair value of the liability from 1 January to settlement decreased by €4.4m, thereby resulting in a gain recognised in profit or loss.

Director's remuneration charged in the income statements in 2019 amounted €0.9m (2018: €0.9m). This amount is net of a recharge of €0.5m (2018: €0.5m) to CPHCL, the Group's immediate parent entity. The gross amount includes a fixed portion of €0.9m (2018: €0.9m) and a variable portion of €0.5m (2018: €0.5m). Included in this remuneration are Directors' fees of €0.4m (2018: €0.4m).

8.1 Auditor's fees

Fees charged by the auditor (including fees charged by other network firms) for services rendered during the financial years ended 31 December 2019 and 31 December 2018 are shown in the table below.

	The Group	The Company
	2019	2018	2019	2018
	€'000	€'000	€'000	€'000
Annual statutory audit	561	493	97	88
Tax compliance and advisory fees	185	158	113	18
Other non-audit services	59	32	59	27
	805	683	269	133

9. Personnel expenses

		The Group
	2019	2018	The Company 2019	2018
	€'000	€'000	€'000	€'000
Wages and salaries	80,318	73,436	5,256	4,777
Social security contributions	7,080	6,523	57	49
Other staff costs	7,089	6,847	39	37
	94,487	86,806	5,352	4,863

Weekly average number of employees:

	The Group	The Company
	2019	2018	2019	2018
	No.	No.	No.	No.
Management and administrative	599	720	29	24
Operating	2,353	1,990	-	-
	2,952	2,710	29	24

10. Finance income and finance costs

	The Group
	2019	2018
	€'000	€'000
Finance income:
Interest income on:
Loans advanced to related companies	195	445
Other balances	9	12
Bank deposits	342	376
Finance income	546	833
Finance costs:
Interest expense on:
Bank borrowings	(10,693)	(9,689)
Bonds	(10,852)	(10,238)
Amortisation of transaction costs on borrowings	(1,384)	(845)
Lease liabilities	(721)	-
Capital and other creditors	(109)	(668)
Other costs	(6)	(44)
Net exchange differences	4,664	(8,028)
Finance costs	(19,101)	(29,512)

11. Tax (expense)/income

The (charge)/credit for income tax on profits derived from local and foreign operations has been calculated at the applicable tax rates.

	The Group		The Company
	2019	2018	2019	2018
	€'000	€'000	€'000	€'000
Current taxation:
Current year tax expense	(6,307)	(3,052)	(674)	(3,288)
Deferred taxation:
Deferred tax income	(1,908)	2,333	4,249	2,528
Adjustment recognised in financial period
for deferred tax of prior period	(578)	706	-	-
	(8,793)	(13)	3,575	(760)

Refer to Note 34 for information on the deferred tax assets and liabilities.

11.1 Tax (expense)/income reconciliation

	The Group		The Company
	2019	2018	2019	2018
	€'000	€'000	€'000	€'000
Profit before tax	13,912	8,472	4,931	43,128
Income tax using the Company's domestic
tax rate	(4,869)	(2,965)	(1,726)	(15,094)
Effect of (losses)/income subject to
foreign/different tax rates	3,076	(1,325)	5,301	14,334
Effect of reduction in tax rate on opening
temporary difference	(1,658)	-	-	-
Non-tax deductible expenses	(1,234)	(205)	-
(Under)/over provision in respect of previous
years	(578)	706	-	-
Movement in unrecognised temporary differences	(1,479)	(820)	-
Increase in tax base of intangible asset	-	5,390	-	-
Effect of Group's share of profit and loss of
investments recognised using the equity method	(1,383)	(477)	-	-
Other	(668)	(317)	-	-
Tax (expense)/income	(8,793)	(13)	3,575	(760)

During 2019, the elements that contributed to an increased consolidated tax rate as a percentage of profits mainly comprise:

• the one-off impact of a decreased corporate income tax rate emanating from NLI operations, from 20% to 17%. The reduction in tax rate mainly had the impact of reducing opening deferred tax assets on unutilised tax losses, increasing the consolidated tax charge by €1.7m;
• losses recognised by subsidiary undertakings, namely the Group's catering operations in Spain, for which the directors assessed recoverability of tax losses as not probable in the foreseeable future; and
• the tax impact of the Group's share of losses from investments accounted for using the equity method. Such losses are not tax deductible.

The amount of €5.4m in the comparative tax reconciliation, explained as an 'increase in tax base of intangible asset' pertains to a deferred tax asset recognised following an intra-group transfer of the Corinthia brand (Note 13), which resulted in an increase in the tax base of the intangible.

11. Tax (expense)/income - continued

11.2 Tax recognised in other comprehensive income

The tax impacts which are entirely attributable to deferred taxation, relating to components of other comprehensive income and accordingly presented directly in equity are as follows:

	Before tax €'000	2019 Tax (charge)/ credit €'000	Net of tax €'000	Before tax €'000	2018 Tax (charge)/ credit €'000	Net of tax €'000
Group
Fair valuation of land and
buildings	7,000	(1,330)	5,670	35,842	(6,255)	29,587
Currency translation differences	34,498	(2,048)	32,450	(15,310)	1,895	(13,415)
	41,498	(3,378)	38,120	20,532	(4,360)	16,172
Company
Fair value movements on
investments in
subsidiaries, associates
and joint ventures	(9,975)	45,339	35,364	(1,826)	359	(1,467)

During 2019, following an amendment to Maltese income tax legislation, the Company recognised a gain of €42.7m within other comprehensive income representing a reversal of part of the opening deferred tax liability on fair value movements of investments in subsidiaries, associates and joint ventures (Note 28.2).

The change in legislation provides that any capital gain derived by companies registered in Malta on the sale of shares of foreign investees that do not own immovable property in Malta, is exempt at the level of the Maltese company. Further to this, any capital gains derived by Maltese companies on the sale of shares of local investees that own immovable property outside of Malta is exempt to the extent of the portion of the gain to which non-residents are beneficially entitled.

Until the year ended 31 December 2018, deferred tax in respect of these investees was recognised at the Maltese income tax rate of 35%, calculated on the fair value movements.

12. Earnings per share

Basic earnings per share is calculated by dividing profit/loss attributable to equity holders of IHI by the weighted average number of ordinary shares in issue during the year.

	The Group 2019 €'000	2018 €'000
Profit from operations attributable to the owners of the parent	6,815	11,350
Number of shares: At 1 January and 31 December	615,685	615,685
Weighted average number of shares: At 1 January and 31 December	615,685	615,685

As at 31 December 2019 and 2018, the Group does not have any dilutive shares. Accordingly, the diluted earnings per share disclosure which would have otherwise been required by IAS 33, is not presented.

13. Intangible assets

				The Group
			Brand
	Goodwill	Brands	design fee and	Concessions	Operating contracts	Others	Total
			other rights
	€'000	€'000	€'000	€'000	€'000	€'000	€'000
Cost
At 1 January 2018	28,614	22,721	10,682	463	23,334	2,143	87,957
Business combinations
(Note 40)	2,368	-	-	-	-	-	2,368
Additions	-	-	66	-	-	284	350
Disposal	-	-	(1,190)	-	-	-	(1,190)
At 31 December 2018	30,982	22,721	9,558	463	23,334	2,427	89,485
At 1 January 2019	30,982	22,721	9,558	463	23,334	2,427	89,485
Business combinations
(Note 40)	1,215	2,400	-	-	-	-	3,615
Additions	-	-	194	-	-	731	925
At 31 December 2019	32,197	25,121	9,752	463	23,334	3,158	94,025
Amortisation
At 1 January 2018	15,114	500	5,920	290	13,031	1,744	36,599
Impairment	-	1,000	980	-	-	-	1,980
Amortisation for the year	-	-	1,326	40	1,167	109	2,642
Disposal	-	-	(97)	-	-	-	(97)
At 31 December 2018	15,114	1,500	8,129	330	14,198	1,853	41,124
At 1 January 2019	15,114	1,500	8,129	330	14,198	1,853	41,124
Impairment	-	1,693	-	-	-	-	1,693
Amortisation for the year	-	-	586	40	1,167	379	2,172
At 31 December 2019	15,114	3,193	8,715	370	15,365	2,232	44,989
Carrying amount At 1 January 2018	13,500	22,221	4,762	173	10,303	399	51,358
At 31 December 2018	15,868	21,221	1,429	133	9,136	574	48,361
At 31 December 2019	17,083	21,928	1,037	93	7,969	926	49,036

	The Company
	Brand	Others	Total
	€'000	€'000	€'000
Cost
At 1 January 2018	19,600	1,081	20,681
Acquisitions	(19,600)	(153)	(19,753)
At 31 December 2018	-	928	928
At 1 January 2019	-	928	928
Additions	2,400	54	2,454
At 31 December 2019	2,400	982	3,382
Amortisation
At 1 January 2018	-	1,007	1,007
Disposal	-	(97)	(97)
Amortisation for the year	-	15	15
At 31 December 2018	-	925	925
At 1 January 2019	-	925	925
Amortisation for the year	-	8	8
At 31 December 2019	-	933	933
Carrying amount
At 1 January 2018	19,600	74	19,674
At 31 December 2018	-	3	3
At 31 December 2019	2,400	49	2,449

During 2019, the Group, through IHI p.l.c., acquired rights to use the Corinthia brand in all respects. The rights acquired during the year are in addition to the rights previously held by the Group on the acquisition of the Corinthia brand in 2010.

Simultaneously with the acquisition of the brand, IHI p.l.c. also acquired investments in Catermax Limited and Corinthia Caterers Limited. These were assessed as one business combination from a Group perspective on which goodwill of €1.2m was recognised. Refer to Note 40 for further detail.

Intangible assets arising from hotel management

On the acquisition of Corinthia Hotels Limited, formerly known as CHI Limited, ("CHL") in 2006, the Group recognised goodwill amounting to €9.7m, and operating contracts, amounting to €23.3m, representing the assumed value attributable to the operation of hotel properties.

Further to the above, in December 2010, the Company purchased the Corinthia brand from its parent company (CPHCL) for €19.6m. This value was determined by independent valuers on the basis of the projected income statements of existing hotels as at the end of 2009 and was subject to an adjustment following a similar valuation exercise based on 2010 figures. The agreement also provides for a 10-year period within which any addition of Corinthia branded rooms to the portfolio will result in an additional payment of €6,400 per room payable to CPHCL.

During 2018, the Company sold the Corinthia brand to CHL for an amount of €35.0m, recognising a profit on disposal of €15.4m. Although the intra-group profit was eliminated at Group level, the tax base from use of the brand from a Group perspective increased from €19.6m to €35.0m, and a deferred tax asset was recognised in this respect (Notes 11 and 34).

The goodwill, operating contracts and the Corinthia brand were tested for impairment in conjunction on the basis that these intangibles comprise one cash-generating unit. The impairment test was performed by virtue of an expert valuation of an independent party. The indicative valuation is based on the discounted cash flows derived from hotel operating projections as prepared by specialists in hotel consulting and valuations, and confirm that no impairment charge is required as at 31 December 2019 and 2018.

The discounted cash flow (value-in-use) calculation was determined by discounting the forecast future cash flows generated by CHL for a ten-year explicit period 2020 - 2029. The following are the key assumptions underlying the projections:

• revenue derived from IHI properties is based on operational projections. This accounts for 75.0% of the total revenue in the explicit period (2018 - 72.0%);
• revenue from other properties is assumed to increase by 2.0% per annum on 2020 budget (2018 2.0% on 2019 budget) (in-perpetuity growth rate of 2.0% per annum applied subsequently to the ten-year period covered by the explicit projections); and
• a pre-tax discount rate of 13.4% was applied to the operating projections of CHL (2018 12.9%).

Goodwill on the acquisition of the IHGH Group

During the year ended 31 December 2015, IHI acquired the IHGH Group. The goodwill arising on this major acquisition was of €1.4m. The goodwill is attributable to cost synergies expected from combining the operations of IHGH Group and the Group. Relative to the Group's total asset base, the goodwill arising on this acquisition is not material to warrant the disclosures that would have otherwise been required by IAS 36.

13. Intangible assets - continued

Goodwill on the acquisition of QPM Limited

During the year ended 31 December 2016, the Group acquired QPM Limited and its subsidiaries, as a result of which, the Group recognised goodwill amounting to €2.5m. Relative to the Group's total asset base, the goodwill arising on this acquisition is not material to warrant the disclosures that would have otherwise been required by IAS 36.

Island Caterers Brand

As part of the acquisition of the IHGH Group, IHI identified and recognised an amount of €3.1m attributable to the 'Island Caterers' brand name. The value of the brand was determined by independent experts. In 2019, following an assessment of the brand's recoverable amount, the directors impaired the value of the brand by €1.6m (2018: €1m). Following the recognition of the impairment loss, the brand's carrying amount as at 31 December 2019 is nil (2018: €1.6m). Given that the brand is no longer being used, it was fully impaired.

Brand design fee and other rights

The Group has franchise agreements with Costa International Limited to develop and operate the Costa Coffee brand in the Maltese Islands as well as in the territory of Spain (East Coast), the Balearic Islands and the Canary Islands. These intangibles arise from the acquisition of the IHGH Group in 2015 and the Group is identifying two cash-generating units ("CGUs") from this acquisition: Costa Coffee Spain and Costa Coffee Malta. The total amount of brand design fees and other rights recognised on acquisition amounted to €8.7m, of which €6.1m related to Costa Coffee Spain.

Costa Coffee Malta

This cash-generating unit includes the operation of the Costa Coffee retail brand in Malta. At 31 December 2019 and 2018, the Group operated twelve outlets each enjoying a strategic location in areas popular for retail operations.

Costa Coffee Spain

The Group operates twelve Costa Coffee outlets in the East Coast of Spain, the Canary and Balearic Islands.

The recoverable amount of these cash-generating units is determined based on a value in use calculation which uses cash flow projections based on financial budgets approved by the directors. In relation to the Costa Coffee Spain CGU a fifteen-year explicit period has been adopted to reflect more accurately expected renewals of the operational arrangements. The discount rates are based on the group's weighted average cost of capital adjusted for specific industry risks and the group's optimal desired debt-to-equity ratio. The cash flow projections from the Costa Coffee Malta CGU are mainly based on the initial five-year period, also extrapolated to a fifteen-year period to reflect expected renewal of operational agreements.

With respect to the Costa Coffee Spain CGU, given the negative results, the related intangible was fully impaired in 2018.

The key assumptions utilised in determining the value of these CGUs as at 31 December 2018 is disclosed below. There was no indication of impairment of the Costa Coffee Malta brand, or conversely, an indicator that the Costa Coffee Spain CGU brand impairment may be subject to a reversal. Accordingly, during 2019, an impairment test on these CGUs was deemed to not be required.

13. Intangible assets - continued

Brand design fee and other rights- continued

Information about significant unobservable inputs in determining recoverable amount as at 31 December 2018

Description by class based on highest and best use	Valuation technique		Significant unobservable inputs weighted average
	Income capitalisation approach (DCF)	Evolution of EBITDA
			Pre-tax discount		Capitalisation
			rate (WACC)	Growth rate	rate
			%	%	%
Costa Coffee Malta		€1.4m - €1.3m initial five year period FY19 - FY23	18.75	2.00	16.75
Costa Coffee Spain		€(0.3)m - €0.4m – initial five year period FY19- FY23 €0.6m - €1.2m second five year period FY24- FY28	9.4	2.00	7.4

Others

Other intangible assets represent web-site development costs, a lease premium fee and licences.

14. Indemnification assets

	The Group		The Company
	2019	2018	2019	2018
	€'000	€'000	€'000	€'000
At 1 January	23,606	23,815	1,997	1,997
Change in fair value	(210)	(210)	-	-
At 31 December	23,396	23,605	1,997	1,997

In view of Group tax relief provisions applicable in Malta, any tax due by Corinthia Palace Hotel Company Limited ("CPHCL") on the transfer of the shares in IHI Towers s.r.o ("IHIT") and Corinthia Towers Tripoli Limited ("CTTL") to IHI effected in 2007 was deferred. This tax will only become due in the eventuality that IHI sells the shares in IHIT and/or CTTL and/or their underlying properties outside the Group. In accordance with the indemnity agreement entered into at the time of the acquisitions, CPHCL has indemnified the Group for future tax it may incur should the Group sell the shares or the underlying properties outside the Group. This indemnity will be equivalent to the tax that will be due by IHI on the gain that was untaxed in the hands of CPHCL. The indemnity has no time limit and has a maximum value of €45.0m.

14. Indemnification assets - continued

The indemnity agreement provides that in the event of a sale of the shares in IHIT and/or CTTL and/or their underlying properties outside the Group, CPHCL will be liable for the tax that will be due on the gain that was exempt in the hands of CPHCL at the time of the sale. Since it is certain that indemnification will be received from CPHCL if IHI settles the tax obligation, the indemnification assets have been recognised and treated as separate assets.

On the sale of its shares in Marina San Gorg Limited ("MSG"), CPHCL provided a tax indemnity to IHI, initially recognised at an amount of €1.5m, and had a carrying amount of €0.2m as at 31 December 2018. The indemnity agreement expired during 2019 and was written down to nil. The change in value of €0.2m was recognised in profit or loss.

On the sale of its shares in QP Management Limited ("QPM") during the year ended 31 December 2016, CPHCL provided a tax indemnity to IHI. The sales contract was exempt from taxation on the basis that CPHCL and IHI form part of the same ultimate group for tax purposes. Should IHI dispose of the shares, it may become liable to tax that it would not have become liable to pay had CPHCL not been a related party. The indemnity has been recognised as a separate asset of €1.9m, representing the tax that will be due by IHI on the gain that was untaxed in the hands of CPHCL.

15. Investment property

	The Group
	2019
	€'000	2018 €'000
At 1 January	203,539	205,238
Change in fair value (a)	(137)	6,994
Additions	275	13
Currency translation differences	10,497	(8,706)
At 31 December	214,174	203,539

a) The Group investment properties are valued annually on 31 December at fair value, by independent professionally qualified valuers having appropriate recognised professional qualifications and experience in the location and category of the property being valued.

Disclosures required in terms of IFRS 13 in relation to fair value measurements attributable to investment property are presented in Note 16.1.

The carrying amount of each investment property is as follows:

	The Group
	2019	2018
	€'000	€'000
Investment property
Commercial Centre in St Petersburg	64,829	55,687
Commercial Centre in Tripoli	73,743	73,743
Apartment block in Lisbon	3,160	2,800
Site in Tripoli	29,500	29,500
Apartment in London	42,942	41,809
	214,174	203,539

b) All investment property is hypothecated in favour of the Group's bankers as collateral for amounts borrowed as stated in Note 31.

15. Investment property - continued

• c) Rental income earned by the Group for the period from investment property amounted to €13.7m (2018: €12.8m) and direct expenses to €2.0m (2018: €1.9m).
• d) All investment property is leased out under operating leases with rentals payable monthly. Lease payments for some contracts include Consumer Price Index (CPI) increases. Where considered necessary to reduce credit risk, the Group may obtain bank guarantees for the term of the lease.

Although the Group is exposed to changes in the residual value at the end of the current leases, the Group typically enters into new operating leases and therefore will not immediately realise any reduction in residual value at the end of these leases. Expectations about the future residual values are reflected in the fair value of the properties.

16. Property, plant and equipment

	The Group
			Furniture,		Assets in the
	Land and	Plant and	fixtures and	Motor	course of
	buildings	equipment	fittings	vehicles	construction	Total
	€'000	€'000	€'000	€'000	€'000	€'000
Cost/revalued amount Balance at 1 January 2018	1,238,259	114,165	109,270	1,017	53,629	1,516,340
Revaluation surplus	35,842	-	-	-	-	35,842
Business combinations (Note 40)	25,510	488	1,235	-	-	27,233
Additions	4,213	6,320	4,582	-	13,712	28,827
Reallocations	3,952	3,518	873	3	(8,346)	-
Disposals	(171)	(357)	(2,197)	(157)	(14)	(2,896)
Currency translation differences	(19,394)	(1,495)	(1,690)	(19)	(326)	(22,924)
Balance at 31 December 2018	1,288,211	122,639	112,073	844	58,655	1,582,422
Balance at 1 January 2019	1,288,211	122,639	112,073	844	58,655	1,582,422
Revaluation surplus	7,000	-	-	-	-	7,000
Business combinations (Note 40)	603	962	291	561	-	2,417
Additions Reallocations	1,944 1,985	2,713 4,768	1,634 1,154	56 23	10,636 (7,930)	16,983 -
Disposals	(42)	(2,262)	(831)	(45)	-	(3,180)
Currency translation differences	40,508	3,572	3,897	18	1,511	49,506
Balance at 31 December 2019	1,340,209	132,392	118,218	1,457	62,872	1,655,148
Depreciation and impairment losses
Balance at 1 January 2018	243,275	86,159	77,708	947	-	408,089
Depreciation for the year	14,069	8,374	8,091	26	-	30,560
Net impairment losses	-	6	120	-	-	126
Reallocations	-	425	(441)	16	-	-
Disposals	(141)	-	(1,183)	(164)	-	(1,488)
Currency translation differences	(3,465)	(1,272)	(1,357)	(16)	-	(6,110)
Balance at 31 December 2018	253,738	93,692	82,938	809	-	431,177
Balance at 1 January 2019	253,738	93,692	82,938	809	-	431,177
Depreciation for the year Net impairment losses	14,803 -	9,192 713	8,391 607	23 -	- -	32,409 1,320
Reallocations	-	-	-	-	-	-
Disposals	(57)	(2,021)	(574)	-	-	(2,652)
Currency translation differences	4,809	2,980	3,145	16	-	10,950
Balance at 31 December 2019	273,293	104,556	94,507	848	-	473,204
Carrying amounts
At 1 January 2018	994,984	28,006	31,562	70	53,629	1,108,251
At 31 December 2018	1,034,473	28,947	29,135	35	58,655	1,151,245
At 31 December 2019	1,066,916	27,836	23,711	609	62,872	1,181,944

			The Company Furniture,
	Land and	Plant and	fixtures and	Motor
	buildings €'000	equipment €'000	fittings €'000	vehicles €'000	Total €'000
Cost
Balance at 1 January 2018	4	187	119	42	352
Additions	-	21	8	-	29
Disposals	-	(3)	-	-	(3)
Balance at 31 December 2018	4	205	127	42	378
Balance at 1 January 2019	4	205	127	42	378
Additions	-	25	55	-	80
Balance at 31 December 2019	4	230	182	42	458
Depreciation
Balance at 1 January 2018	-	132	98	42	272
Depreciation for the year	-	19	5	-	24
Disposals	-	(1)	-	-	(1)
Balance at 31 December 2018	-	150	103	42	295
Balance at 1 January 2019	-	150	103	42	295
Depreciation for the year	1	21	5	-	27
Balance at 31 December 2019	1	171	108	42	322
Carrying amounts
At 1 January 2018	4	55	21	-	80
At 31 December 2018	4	55	24	-	83
At 31 December 2019	3	59	74	-	136

Impairment losses of property, plant and equipment is disclosed within 'Other losses arising on property, plant and equipment in the Group's income statement.

16.1 Fair valuation of property

The disclosure below, including the sensitivities to shifts in unobservable fair value inputs, reflects the events and circumstances existent as at 31 December 2019, and do not take into account the events after reporting period. Refer to Note 3.1 for information on how management believes that the fair values of hotel and other properties may be impacted as a result of the COVID-19 pandemic after the year end.

During 2019, management has carried out an assessment for those properties measured in accordance with the revaluation model under IAS 16, to determine whether a material shift in fair value had occurred.

The revaluations in 2019 were made by the directors, assisted, where applicable, by independent professionally qualified property valuers having appropriate recognised professional qualifications and experience in the location and category of the property being valued. Where a valuation resulted in an amount that was significantly different than the carrying amount of the respective property, the book value of the property was adjusted as at the respective year end date, as the directors had reviewed the carrying amount of the properties on the basis of assessments by the property valuers.

16.1 Fair valuation of property - continued

During the year ended 31 December 2018, the Group acquired the Corinthia Palace Hotel and Spa, Malta through the acquisition described in Note 40. The fair value of the hotel building at year end remained unchanged to that determined in the valuation on the date of the transaction. The inputs used in the valuation are disclosed in the table below.

In addition to the revaluations carried out on hotel properties, the Group's investment properties are measured at fair value on an annual basis as required by IAS 40.

The resultant shift in value, net of applicable deferred income taxes, was reflected within the revaluation reserve in shareholders' equity (Note 26) or in profit or loss in accordance with the Group's accounting policies. Adjustments to the carrying amounts of the properties are disclosed in the tables below.

The Group is required to analyse non-financial assets carried at fair value by level of the fair value hierarchy within which, the recurring fair value measurements are categorised in their entirety (Level 1, 2 or 3). The different levels of the fair value hierarchy have been defined as fair value measurements using:

• Quoted prices (unadjusted) in active markets for identical assets (Level 1);
• Inputs other than quoted prices included within Level 1 that are observable for the asset, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2);
• Inputs for the asset that are not based on observable market data (that is, unobservable inputs) (Level 3).

The Group's land and buildings, within property, plant and equipment, consists principally of hotel properties that are owned and managed by companies forming part of the Group. The Group's investment property comprises property that is held for long-term rental yields or for capital appreciation or both, and principally comprise the Commercial Centre in St Petersburg, the Commercial Centre in Tripoli and a site forming part of the grounds of the Corinthia Hotel in Tripoli, an apartment block in Lisbon and an apartment in London. All the recurring property fair value measurements at 31 December 2019 and 2018, as applicable, use significant unobservable inputs and are accordingly categorised within Level 3 of the fair valuation hierarchy.

The Group's policy is to recognise transfers into and out of fair value hierarchy levels as of the beginning of the reporting period. There were no transfers between different levels of the fair value hierarchy during the current and preceding financial years.

A reconciliation from the opening balance to the closing balance of property for recurring fair value measurements categorised within Level 3 of the fair value hierarchy, for the current and preceding financial years, is reflected in the table above and in Note 15 for investment property.

Valuation processes

Where management, through its assessment, concludes that the fair value of properties differs materially from its carrying amount, an independent valuation report prepared by third party qualified valuers, is performed. These reports are based on both:

• information provided by the Group which is derived from the respective company's financial systems and is subject to the company's overall control environment; and
• assumptions and valuation models used by the valuers, with assumptions being typically market related and based on professional judgement and market observation.

16.1 Fair valuation of property - continued

Valuation processes - continued

The information provided to the valuers, together with the assumptions and the valuation models used by the valuers, are reviewed by designated officers within the Group. This includes a review of fair value movements over the period. When the designated officers consider that the valuation report is appropriate, the valuation report is recommended to the Audit Committee and Board of directors. The Audit Committee and Board then consider the valuation report as part of their overall responsibilities.

The external valuations of the Level 3 property as at 31 December 2019 and 2018, as applicable, have been performed using a multi-criteria approach, with every property being valued utilising the valuation technique considered by the external valuer to be the most appropriate for the respective property.

In view of a limited number of similar or comparable properties and property transactions, comprising sales or rentals in the respective market in which the properties are located, the valuations have been performed using unobservable inputs. The significant inputs to the approaches used are generally those described below:

Income capitalisation or discounted cash flow ("DCF") approach: considers the free cash flows arising from the projected income streams expected to be derived from the operation of the property, discounted to present value using an estimate of the weighted average cost of capital that would be available to finance such an operation. The significant unobservable inputs utilised with this technique include:

Earnings before interest, taxes, depreciation and amortisation (EBITDA)	based on projected income streams less operating expenditure necessary to operate the property, but prior to depreciation and financing charges;
Growth rate	based on management's estimated average growth of EBITDA levels, mainly determined by projected growth in income streams;
Discount rate	reflecting the current market assessment of the uncertainty in the amount and timing of projected cash flows. The discount rate reflects the estimated weighted average cost of capital that would be available for financing such an operation. The discount rate is based on an assumed debt to equity ratio; estimation of cost of equity is based on risk free interest rates adjusted for country risk and equity risk premium adjusted for entity-specific risk factor. Estimation of cost of debt is based on risk free interest rates adjusted for country risk and assumed credit spread.

Adjusted sales comparison approach: a sales price per square metre or per room related to transactions in comparable properties located in proximity to the respective property, with adjustments for differences in the size, age, exact location and condition of the property.

The table below include information about fair value measurements of hotel properties (classified within property, plant and equipment) and investment properties using significant unobservable inputs (Level 3). For hotel properties, where, following management's assessment or an independent valuation, the fair value of the respective property did not differ materially from its carrying amount as at year-end, the fair value inputs disclosed for that respective property are those that were used in the last valuation that gave rise to a revaluation.

16.1 Fair valuation of property - continued

Information about fair value measurements using significant unobservable inputs (Level 3)

	31 Dec	Fair value at 31 Dec
Description by class based on highest and best use	2019 €'000	2018 €'000	Valuation technique		Significant unobservable inputs
Current use as hotel properties (classified as property,	€000	€000	Income capitalisation		Evolution of EBITDA over initial projected		Pre-tax			Capitalisation
plant and equipment):			approach (DCF)		five-year period		rate (WACC)		Growth rate		rate
				2019	2018	2019	2018	2019	2018	2019	2018
						%	%	%	%	%	%
Corinthia Hotel & SPA				FY19-FY23	FY19-FY23
Lisbon (a)	116,943	114,736		€8.2m - €10.7m	€8.2m - €10.7m	7.66	7.66	2.00	2.00	5.66	5.66
				FY20-FY24	FY19-FY23
Corinthia Hotel Prague	93,552	88,300		€5.5m - €6.8m	€5.5m - €6.8m	7.34	7.74	2.00	2.00	5.34	5.74
Marina Hotel, St. George's				FY17-FY21	FY17-FY21
Bay, Malta (c)	29,918	30,500		€2.9m - €3.1m	€2.9m - €3.1m	9.91	9.91	1.80	1.80	5.23	5.23
				FY17-FY21
Corinthia Hotel, St. George's Bay, Malta (c)	38,498	39,070		€4.1m - €4.5m	FY17-FY21 €4.1m - €4.5m	10.56	10.56	1.80	1.80	5.66	5.66
Corinthia Hotel St				FY19-FY23	FY19-FY23
Petersburg (a)	88,690	79,022		RUB562m – RUB630m	RUB562m – RUB630m	12.25	12.25	4.00	4.00	8.25	8.25
				FY18-FY22	FY18-FY22
Corinthia Hotel Tripoli (b)	74,106	76,367		(€2.7m) - €9.7m	(€2.7m) - €9.7m	11.82	11.82	2.00	2.00	9.82	9.82
Radisson Blu Resort,				FY17-FY21	FY17-FY21
Malta (c)	36,580	37,513		€3.9m - €4.3m	€3.9m - €4.3m	10.42	10.42	1.80	1.80	5.57	5.57
Corinthia Hotel				FY18-FY22	FY18-FY22
London (b)	485,509	472,622		£19.2m - £25.7m	£19.2m - £25.7m	7.20	7.20	2.70	2.70	4.50	4.50

16.1 Fair valuation of property - continued

Information about fair value measurements using significant unobservable inputs (Level 3) - continued

		Fair value at
Description by class based on highest and best use	31 Dec 2019 €'000	31 Dec 2018 €'000	Valuation technique		Significant unobservable inputs
Current use as hotel properties	€000	€000	Income
(classified as property,			capitalisation		Evolution of EBITDA over initial projected		Pre-tax			Capitalisation
plant and equipment):			approach (DCF)		five-year period		rate (WACC)		Growth rate		rate
				2019	2018	2019	2018	2019	2018	2019	2018
						%	%	%	%	%	%
Corinthia Palace Hotel				FY18-FY22	FY18-FY22
and Spa, Malta (b)	30,925	28,915		€1.2m - €3.3m	€1.2m - €3.3m	11.72	11.72	1.80	1.80	1.92	1.92
Current use as hotel properties (classified as property,			Adjusted sales- comparison
plant and equipment):			approach		Sales price per room
				2019	2018
Corinthia Hotel
Budapest (c)	122,744	121,874		€1,769	€1,769
Current property for			Income
commercial use (classified			capitalisation		Evolution of EBITDA over initial projected		Pre-tax			Capitalisation
as investment property):			approach (DCF)		projected five-year period		rate (WACC)		Growth rate		rate
				2019	2018	2019	2018	2019	2018	2019	2018
						%	%	%	%	%	%
Commercial Centre in St				FY20-FY24	FY19-FY23
Petersburg	64,829	55,687		RUB353m – RUB448m	RUB352m – RUB463m	11.80	12.70	3.00	3.00	8.80	9.70
Commercial Centre in				FY20-FY24	FY19-FY23
Tripoli	73,743	73,743		€6.7m - €8.3m	€6.8m - €7.2m	12.00	11.20	3.00	3.00	9.00	7.84

16.1 Fair valuation of property - continued

Information about fair value measurements using significant unobservable inputs (Level 3) - continued

Description by class based on highest and best use	Fair value at 31 Dec 2019 €'000	31 Dec 2018 €'000	Valuation technique		Significant unobservable inputs
Current property for commercial use (classified as investment property):	€000	€000	Adjusted sales comparison approach	2019	Sales price per square meter 2018
Apartment block in Lisbon Site in Tripoli London apartment	3,160 29,500 42,942	2,800 29,500 41,809		€6,492 €2,300 £29,642	€5,572 €2,300 £28,860

In relation to the DCF approach, an increase in the projected level of EBITDA and growth rate would result in an increased fair value of the property, whereas a higher discount rate would give rise to a lower fair value. With respect to the adjusted sales comparison approach, the higher the sales price per square metre, the higher the resultant fair valuation.

The fair value inputs for those properties for which a revaluation was not recognised as at 31 December 2019 reflect the inputs used in the valuations as at: (a) 2018; (b) 2017; and

(c) 2016.

The Group experienced a significant movement in the carrying amount of the Corinthia Hotel St. Petersburg and Corinthia Hotel London during 2019. The shift in the carrying amount of these properties is the result of translating the financial position of the respect subsidiaries that own these properties from their functional currency (RUB and GBP respectively), into the Group's presentation currency (EUR).

16.1 Fair valuation of property - continued

Information about fair value measurements using significant unobservable inputs (Level 3) as at 31 December 2019 - continued

As evidenced in the tables above, the highest and best use of the Group properties is equivalent to their current use as at 31 December 2019.

As explained in Note 6 to the financial statements, the future performance of the Group's hotel and the commercial centre situated in Tripoli and the fair value of the related property assets are largely dependent on how soon the political situation in Libya will return to normality and on how quickly the international oil and gas industry recovers once political risks subside. In accordance with the fair valuations as at 31 December 2019 no further impairment charges were deemed necessary in these financial statements, after taking into account the impairment charges of €40.5m recognised in 2014.

The sensitivity of the property valuations to possible shifts in key assumptions is illustrated in the table below:

	Shift in discount rate (+/- 0.5%)		Shift in cash flows (EBITDA) (+/- 5%)
	2019	2018	2019	2018
	€'000	€'000	€'000	€'000
Corinthia Hotel & Spa Lisbon	+/-	+/-	+/-	+/-
	10,050	10,050	7,772	7,772
Corinthia Hotel Budapest	+/-	+/-	+/-	+/-
	720	720	5,600	5,600
Corinthia Hotel Prague	+/-	+/-	+/-	+/-
	8,168	7,105	4,729	4,395
Marina Hotel, St George's Bay, Malta	+/-	+/-	+/-	+/-
	200	200	1,600	1,600
Corinthia Hotel St George's Bay, Malta	+/-	+/-	+/-	+/-
	250	250	2,000	2,000
Corinthia Hotel St Petersburg	+/-	+/-	+/-	+/-
	4,658	4,658	4,506	4,506
Corinthia Hotel Tripoli	+/-	+/-	+/-	+/-
	3,625	3,000	3,863	4,000
Commercial Centre in St Petersburg	+/-	+/-	+/-	+/-
	1,755	2,921	3,406	2,929
Commercial Centre in Tripoli	+/-	+/-	+/-	+/-
	4,236	4,236	3,722	3,722
Radisson Blu Resort, Malta	+/-	+/-	+/-	+/-
	250	250	2,000	2,000
Corinthia Hotel London	+/-	+/-	+/-	+/-
	20,000	20,000	24,000	24,000
Corinthia Palace Hotel and Spa, Malta	+/-	+/-	+/-	+/-
	1,974	1,974	1,544	1,544

16.2 Adjustments to carrying amount of properties

Revaluation surplus and impairment charges recognised in other comprehensive income (within revaluation reserve), gross of deferred tax:

	The Group
	At 1 January 2019	Movement	At 31 December 2019
	€'000	€'000	€'000
Hotel property
Corinthia Hotel St George's Bay, Malta	12,169	-	12,169
Corinthia Hotel & Spa Lisbon	34,911	-	34,911
Corinthia Hotel Prague	10,857	7,000	17,857
Corinthia Hotel Budapest	25,129	-	25,129
Corinthia Hotel London	18,526	-	18,526
Marina Hotel, St George's Bay, Malta	9,206	-	9,206
Corinthia Hotel St Petersburg	8,577	-	8,577
Radisson Blu Resort, Malta	4,284	-	4,284
	123,659	7,000	130,659

	At 1 January 2018 €'000	Movement €'000	At 31 December 2018 €'000
Hotel property
Corinthia Hotel St George's Bay, Malta	12,169	-	12,169
Corinthia Hotel & Spa Lisbon	17,761	17,150	34,911
Corinthia Hotel Prague	3,415	7,442	10,857
Corinthia Hotel Budapest	25,129	-	25,129
Corinthia Hotel London	12,186	6,340	18,526
Marina Hotel, St George's Bay, Malta	9,206	-	9,206
Corinthia Hotel St Petersburg	3,667	4,910	8,577
Radisson Blu Resort, Malta	4,284	-	4,284
	87,817	35,842	123,659

Impairment charges recognised in profit or loss, gross of deferred tax:

	The Group
	At 1 January 2019	Movement	At 31 December 2019
	€'000	€'000	€'000
Hotel property
Corinthia Hotel St George's Bay, Malta	522	-	522
Corinthia Hotel & Spa Lisbon	1,068	-	1,068
Corinthia Hotel Prague	3,642	-	3,642
Corinthia Hotel Tripoli	8,038	-	8,038
Corinthia Hotel Budapest	1,628	-	1,628
Corinthia Hotel St Petersburg	340	-	340
Marina Hotel, St George's Bay, Malta	121	-	121
	15,359	-	15,359

16.2 Adjustments to carrying amount of properties - continued

	At 1 January 2018	Movement	At 31 December 2018
	€'000	€'000	€'000
Hotel property
Corinthia Hotel St George's Bay, Malta	522	-	522
Corinthia Hotel & Spa Lisbon	1,068	-	1,068
Corinthia Hotel Prague	3,642	-	3,642
Corinthia Hotel Tripoli	8,038	-	8,038
Corinthia Hotel Budapest	1,628	-	1,628
Corinthia Hotel St Petersburg	340	-	340
Marina Hotel, St George's Bay, Malta	121	-	121
	15,359	-	15,359

The description of the hotel properties in the above tables indicate the segment to which each hotel property pertains.

The shifts in fair value determined in 2019 and 2018, reflected in the above tables, are principally attributable to changes in the projected financial performance and net operating cash inflows of the hotel properties and commercial centres.

The impairment charges recognised are attributable to reductions in the carrying amount of property so as to reflect the recoverable amount based on computing value in use determined at individual asset level.

16.3 Carrying amounts of hotel properties

Following the adjustments to revision of the hotel property carrying amounts to reflect the outcome of the fair valuation process referred to above at each reporting period, the carrying amount of each hotel property is as follows:

	The Group
	2019	2018
	€'000	€'000
Hotel property
Corinthia Hotel St George's Bay, Malta	38,498	39,070
Corinthia Hotel & Spa Lisbon	116,943	114,736
Corinthia Hotel Prague	93,552	88,300
Corinthia Hotel Tripoli	74,106	76,367
Corinthia Hotel Budapest	122,744	121,874
Corinthia Hotel St Petersburg	88,690	79,022
Corinthia Hotel London	485,509	472,622
Marina Hotel, St George's Bay, Malta	29,918	30,500
Radisson Blu Resort, Malta	36,580	37,513
Corinthia Palace Hotel and Spa, Malta	30,925	28,915
	1,117,465	1,008,919

16.4 Historic cost basis of properties

If the cost model had been used the carrying amounts of the revalued properties would be €987.9m (2018: €968.5m). The revalued amounts include a revaluation surplus of €130.7m before tax (2018: €123.7m), which is not available for distribution to the shareholders of IHI.

16. Property, plant and equipment - continued

16.5 Use as collateral

All tangible fixed assets owned by the Group are hypothecated in favour of the Group's bankers as collateral for amounts borrowed as stated in Note 31.

17. Leases

This note provides information for leases where the Group is a lessee. For leases where the Group is a lessor, see Note 15.

i. Amounts recognised in the balance sheet

The balance sheet shows the following amounts relating to leases:

		The Group		The Company
	31 December	1 January	31 December	1 January
	2019	2019*	2019	2019*
	€'000	€'000	€'000	€'000
Right-of-use assets
Land and buildings	11,302	12,143	122	430
Plant and equipment	1,977	1,158	-	-
Motor vehicles	497	513	236	196
	13,776	13,814	358	626
Lease liabilities
Current	2,795	2,133	285	430
Non-current	11,202	11,681	176	196
	13,997	13,814	461	626

* In the previous year, the Group did not recognise lease assets and lease liabilities in relation to leases, since all of the Group's leases were assessed as having been 'operating leases' under IAS 17 Leases.

Additions to the Group's and the Company's right-of-use assets during the 2019 financial year were €2.4m (out of which €1.0m pertained to additions on business combinations) and €0.1m respectively.

17. Leases - continued

ii. Amounts recognised in the statement of profit or loss

The statement of profit or loss shows the following amounts relating to leases:

	The Group		The Company
	1 January	31 December	1 January	31 December
	2019	2018	2019	2018
	€'000	€'000	€'000	€'000
Depreciation charge of right-of-use
assets
Land and buildings	1,770	-	122	-
Plant and equipment	271	-	-	-
Motor vehicles	144	-	63	-
	2,185	-	185	-
Interest expense (included in
finance cost)	721	-	23	-
Expense relating to variable lease
payments not included in lease
liabilities (included in administrative
expenses)	2,160	-	-	-

The total cash outflow for leases in 2019 was €2.9m for the Group and €0.3m for the Company.

iii. The Group's leasing activities and how these are accounted for

The Group leases various offices, land, retail outlets, plant and equipment and motor vehicles. Emphyteutical grants from the government pertaining to land on which the Group's hotel properties are built are typically made for fixed periods of up to 99 years. Other contracts are made for periods up to 12 years and may include extension options as described further below. The Company's leases pertain to offices used for administration purposes and motor vehicles, and are typically made for periods of up to 9 years.

Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.

Until 2018, leases of property, plant and equipment were classified as either finance leases or operating leases. From 1 January 2019, leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

• fixed payments (including in-substance fixed payments), less any lease incentives receivable
• variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the commencement date
• amounts expected to be payable by the Group under residual value guarantees, and
• the exercise price of a purchase option if the Group is reasonably certain to exercise that option.

17. Leases - continued

iii. The Group's leasing activities and how these are accounted for - continued

Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Group, the incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.

To determine the incremental borrowing rate, the Group uses recent third-party financing received by the individual lessee as a starting point, adjusted to reflect changes in financing conditions since third party financing was received, and for other items specific to the leased asset.

The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.

Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Right-of-use assets are measured at cost comprising the amount of the initial measurement of lease liability. Rightof-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset's useful life. While the Group revalues its land and buildings that are presented within property, plant and equipment, it has chosen not to do so for the right-of-use buildings held by the Group.

iv. Variable lease payments

Variable payment terms are used for a variety of reasons including minimising the fixed costs base for newly established stores.

Some property leases contain variable payment terms that are linked to sales generated from retail stores, and which range from 7.0% to 23.5% of sales. An increase of €1.0m in sales per store in the Group with such variable lease contracts would increase variable lease payments by approximately €0.2m (17%).

Other property leases contain variable payment terms that are linked to sales generated from catering establishments. Variable payment on such leases range from 10.0% to 23.1% of sales. An increase of €1.0m in sales per catering establishment in the Group with such variable lease contracts would increase total lease payments by approximately €0.2m (15%).

The variable lease payments element amounts to €2.2m for the year ended 31 December 2019. Variable lease payments that depend on sales are excluded from the measurement of the lease liability and are recognised in profit or loss in the period in which the condition that triggers those payments occurs.

17. Leases - continued

v. Extension and termination options

Extension and termination options are included in a number of property and equipment leases across the Group. These are used to maximise operational flexibility in terms of managing the assets used in the Group's operations.

Judgements in determining the lease term

In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).

For leases of retail outlets, the following factors are normally the most relevant:

• If there are significant penalties to terminate (or not extend), the Group is typically reasonably certain to extend (or not terminate).
• If any leasehold improvements are expected to have a significant remaining value, the group is typically reasonably certain to extend (or not terminate).
• Otherwise, the Group considers other factors including historical lease durations and the costs and business disruption required to replace the leased asset.

Most extension options in offices and motor vehicles leases have not been included in the lease liability, because the Group could replace the assets without significant cost or business disruption.

18. Investments in subsidiaries

The amounts stated in the statement of financial position of the Company are analysed as follows:

	The Company
	2019	2018
	€'000	€'000
Share in subsidiary companies (Note 18.3)	714,517	708,479
Loans to subsidiary companies	178,257	168,949
	892,774	877,428

18. Investments in subsidiaries - continued

18.1 Principal subsidiaries

The Group had the following subsidiaries as at 31 December 2019 and 31 December 2018:

Subsidiary company	Registered office	Nature of business	Percentage of ownership and voting rights held directly by the Company 2019 2018		Percentage of ownership and voting rights held by the Group 2019 2018		Percentage of ownership and voting rights held by non - controlling interests 2019 2018
Alfa Investimentos Turisticos Lda	Avenida Columbano Bordalo Pinheiro, 105 Lisboa 1099 – 031 Portugal	Owns and operates the Corinthia Hotel & Spa Lisbon Portugal	72	72	100	100	-	-
Corinthia Hotels Limited (formerly, CHI Limited)	1, Europa Centre Floriana Malta	Hotel management company	100	100	100	100	-	-
Corinthia Company Limited	22, Europa Centre Floriana Malta	Investment company	100	100	100	100	-	-
Corinthia Towers Tripoli Limited Five Star Hotels	22, Europa Centre Floriana Malta 22, Europa Centre	Owns and operates the Corinthia Bab Africa Hotel and Commercial Centre Libya Owns and	100 100	100 100	100 100	100 100	- -	- -
Limited	Floriana Malta	operates the Corinthia Hotel St George's Bay, Malta
IHI Benelux B.V.	Kingsfordweg 151, 1043 GR Amsterdam The Netherlands	Owns and operates the Corinthia Hotel St Petersburg	100	100	100	100	-	-

18. Investments in subsidiaries - continued

Subsidiary company	Registered office	Nature of business	Percentage of ownership and voting rights held directly by the Company		Percentage of ownership and voting rights held by the Group		Percentage of ownership and voting rights held by non controlling interests
			2019	2018	2019	2018	2019	2018
IHI Hungary Zrt	Erzsebet Krt 43-49 H-1073, Budapest Hungary	Owns and operates the Corinthia Hotel Budapest	100	100	100	100	-	-
IHI Lisbon Limited	22, Europa Centre Floriana Malta	Investment company holding an equity stake in Alfa Investimentos Turisticos Lda	100	100	100	100	-	-
IHI St Petersburg LLC	57, Nevskij Prospect St Petersburg 191025 Russian Federation	Investment company	100	100	100	100	-	-
IHI Towers s.r.o.	Kongresová 1655/1 1406 / 69 Praha 4 Czech Republic	Owns and operates the Corinthia Hotel Prague Czech Republic	100	100	100	100	-	-

Subsidiary company	Registered office	Nature of business	Percentage of ownership and voting rights held directly by the Company		Percentage of ownership and voting rights held by the Group		Percentage of ownership and voting rights held by non controlling interests
			2019	2018	2019	2018	2019	2018
IHI Zagreb d.d.	Centar Kaptol Nova Ves 11 10000 Zagreb Croatia	Investment company	100	100	100	100	-	-
Libya Holding Development Inc. JSC	Benghazi Libya	Owns the Benghazi hotel project	-	-	55	55	45	45
Marina San Gorg Limited	22, Europa Centre Floriana Malta	Owns and operates the Marina Hotel in St George's Bay, Malta	100	100	100	100	-	-
Island Resorts International Limited	First Name House, Victoria Residence, Douglas Isle of Man	Investment company	100	100	100	100	-	-
Corinthia (Malta) Staff Services Limited (formerly, Island Hotels Group Limited)	22, Europa Centre Floriana Malta	Holding and management company	100	100	100	100	-	-

Subsidiary company	Registered office	Nature of business	Percentage of ownership and voting rights held directly by the Company		Percentage of ownership and voting rights held by the Group		Percentage of ownership and voting rights held by non controlling interests
			2019	2018	2019	2018	2019	2018
Bay Point Hotel Limited	22, Europa Centre Floriana Malta	Owner and operator of hotel	100	-	100	100	-	-
Bay Point Properties Limited	22, Europa Centre Floriana Malta	Non-operating	100	100	100	100	-	-
Bay Point Collection Limited	First Name House, Victoria Residence, Dougles Isle of Man	Vacation ownership company	100	100	100	100	-	-
Island Caterers Limited (merged with Corinthia Caterers Limited during 2019)	22, Europa Centre Floriana Malta	Event catering company	100	100	100	100	-	-
Catering Holding Limited (merged with Corinthia Caterers Limited during 2019)	22, Europa Centre Floriana Malta	Retail catering and holding company	100	100	100	100	-	-
Catering Operations Limited (merged with Corinthia Caterers Limited during 2019)	22, Europa Centre Floriana Malta	Contract catering company	-	-	100	100	-	-

Subsidiary company	Registered office	Nature of business	Percentage of ownership and voting rights held directly by the Company		Percentage of ownership and voting rights held by the Group		Percentage of ownership and voting rights held by non controlling interests
			2019	2018	2019	2018	2019	2018
The Heavenly Collection Limited	22, Europa Centre Floriana Malta	Owner of tract land in Golden Bay	100	-	100	100	-	-
The Coffee Company Malta Limited	22, Europa Centre Floriana Malta	Franchise retail catering company	-	-	100	100	-	-
The Coffee Company Spain S.L.	COSTA Diagonal, Avinguda Diagonal, 566 Barcelona 08021	Franchise retail catering company	-	-	100	100	-	-
QPM Limited	22, Europa Centre Floriana Malta	Project management	100	100	100	100	-	-
QPM Africa Limited	22, Europa Centre Floriana Malta	Non-trading company	-	-	100	100	-	-
D.X. Design Consultancy Ltd	22, Europa Centre Floriana Malta	Project management services	-	-	100	100	-	-

Subsidiary company	Registered office	Nature of business	Percentage of ownership and voting rights held directly by the Company		Percentage of ownership and voting rights held by the Group		Percentage of ownership and voting rights held by non controlling
			2019	2018	2019	2018	2019	interests 2018
QPM (UK) Ltd	The Corinthia Hotel London Whitehall Place London SW1 2BD, United	Project management services	-	-	100	100	-	-
NLI Holding Limited	Kingdom CTV House La Pouquelaye St Helier Jersey	Parent company of a Group that owns and operates the Corinthia Hotel London and 10 Whitehall Place in London, UK	50	50	50	50	50	50
NLI Hotels Limited	CTV House La Pouquelaye St Helier Jersey	Owns the Corinthia Hotel London, UK	-	-	50	50	50	50
NLI Penthouse Limited	CTV House La Pouquelaye St Helier Jersey	Owns apartment 12, 10 Whitehall Place	-	-	50	50	50	50
NLI Finance Limited	CTV House La Pouquelaye St Helier Jersey	Provision of finance to companies within the NLI Holdings Limited Group structure.	-	-	50	50	50	50

Subsidiary company	Registered office	Nature of business	Percentage of ownership and voting rights held directly by the Company		Percentage of ownership and voting rights held by the Group		Percentage of ownership and voting rights held by non controlling interests
IHI Brussels	22, Europa Centre	Holding	2019 -	2018 -	2019 50	2018 50	2019 50	2018 50
Limited	Floriana Malta	company of Hotel Astoria SA
NLI Operator Limited	Corinthia Hotel London, Whitehall Place, London SW1A 28D	Operates Corinthia Hotel London, a five star luxury hotel	-	-	50	50	50	50
IHI Malta Hotel Limited	22, Europa Centre Floriana Malta	Owns and operates the Corinthia Palace Hotel and Spa, Malta	100	100	100	100	-	-
QPM Belgium SPRL	Avenue de Tervueren 168/18, 1150 Woluwe Saint Pierre, Brussels, Belgium	Project and cost management and other ancillary services	-	-	100	100	-	-
IHI Holdings Limited	34, Kosti Palama 1096,Aspelia Court 4th Floor, office D4 Nicosia Cyprus	Investment company	100	100	100	100	-	-
Corinthia Caterers Limited	22, Europa Centre Floriana Malta	Event catering	100	-	100	-	-	-
Catermax Limited	22, Europa Centre Floriana Malta	Event catering	100	-	100	-	-	-
Corinthia Hotels (UK) Limited	Corinthia Hotel London, Whitehall Place, London SW1A 28D	Management consultancy services	100	-	100	-	-	-

18.1 Principal subsidiaries - continued

As disclosed in Note 40, in June 2019, the Group, through IHI p.l.c., obtained control of the operations of Catermax Limited and Corinthia Caterers Limited. As a result of these transactions, as from the acquisition date, the results and financial position of these businesses are consolidated within the Group. Following this acquisition, the companies relating to catering were restructured such that Island Caterers Limited merged into Corinthia Caterers Limited; and Catering Holding Limited, Catering Operations Limited and Catering Management Limited merged into Catermax Limited.

As disclosed in Note 40, on 10 April 2018, the Group, through IHI Malta Hotel Limited, obtained control of the operations of the Corinthia Palace Hotel in Attard. As a result of the transaction, as from the acquisition date, the results and financial position of this business are consolidated within the Group.

All subsidiary undertakings are included in the consolidation.

18.2 Subsidiaries with material non-controlling interests

Set out below is summarised financial information for the NLI Holdings Group. The amounts disclosed for are before inter-company eliminations.

	2019	2018
Summarised balance sheet	€000	€000
Current assets	45,259	40,865
Current liabilities	(34,570)	(46,082)
Current net assets	10,689	(5,217)
Non-current assets	564,206	548,767
Non-current liabilities	(183,820)	(156,254)
Non-current net assets	380,386	392,513
Net assets	391,075	387,296
Accumulated NCI	195,538	193,648
	2019	2018
Summarised statement of comprehensive income	€000	€000
Revenue	75,896	69,159
Loss for the period	(3,391)	(5,782)
Other comprehensive income	21,301	2,320
Total comprehensive income	17,910	(3,462)
Loss allocated to NCI	(1,696)	(2,891)
Other comprehensive income allocated to NCI	10,651	1,160
Dividend paid to NCI	7,059	-

18.2 Subsidiaries with material non-controlling interests - continued

Summarised cash flows	2019 €000	2018 €000
Cash flows from operating activities	12,782	12,373
Cash flows used in investing activities Cash flows used in financing activities	(8,470) (6,276)	(12,875) (4,032)
Net decrease in cash and cash equivalents	(1,964)	(4,534)

18.3 Shares in subsidiary companies

	The Company
	2019	2018
	€000	€000
At 1 January	708,479	623,664
Additions	16,043	86,797
Change in fair value	(10,005)	(1,982)
At 31 December	714,517	708,479

€10.7m (2018: €51.8m) of the additions in investments in subsidiaries during the current reporting period pertain to the capitalisation of several loans receivable from a number of subsidiaries.

18.3.1 Investments in subsidiaries at fair value through other comprehensive income

The fair values of the Company's investments in its subsidiaries, accounted for at fair value through other comprehensive income (as explained further in Note 3.6), have been determined by reference to the fair values of the underlying properties held by the respective subsidiaries and, in the case of CHL and QPM, by reference to its enterprise value.

19. Other investments

19.1 Investments accounted for using the equity method

The amounts recognised in the consolidated statement of financial position are as follows:

	The Group 2019 2018 €000 €000
Associates	12,790	12,760
Joint ventures	27,354	35,429
At 31 December	40,144	48,189

19.1 Investments accounted for using the equity method - continued

The amounts recognised in the consolidated income statement are as follows:

	The Group 2019 2018 €000 €000
Associates Joint ventures	(149) (3,802)	(173) (1,191)
At 31 December	(3,951)	(1,364)

The amounts recognised in the consolidated other comprehensive income are as follows:

	The Group 2019 €000	2018 €000
Associates	177	329
Joint ventures	(4,516)	302
At 31 December	(4,339)	631

19.2 Investments in associates and joint ventures

The amounts recognised in the Company's statement of financial position are as follows:

	The Company 2019 €'000	2018 €'000
Associates	12,790	12,760
At 31 December	12,790	12,760

Fair value movements recognised in the Company's other comprehensive income are as follows:

	The Company 2019 €'000	2018 €'000
Associates	30	156
At 31 December	30	156

19.3 Investments in associates

	The Group		The Company
	2019	2018	2019	2018
	€'000	€'000	€'000	€'000
At 1 January	12,760	12,604	12,760	12,604
Share of results	(149)	(173)	-	-
Share of other comprehensive income	177	329	-	-
Fair value movements	-	-	30	156
Other movements	2	-	-	-
At 31 December	12,790	12,760	12,790	12,760

Set out below are the associates of the Group as at 31 December 2019 and 31 December 2018. The associates listed below have share capital consisting solely of ordinary shares, which are held directly by the Group.

Company name	Registered office	Nature of business	% of ownership interest held by the Group and the Company
			2019	2018
Medina Towers J.S.C.	Suite 107, Tower 2 Tripoli Tower Tripoli Libya	Owns the Medina Towers project in Tripoli	25	25

19.3 Investments in associates - continued

Refer to Note 6 for a summary of a contingent liability relating to Medina Towers J.S.C. (Libya), an associate of the Group.

19.3.1 Summarised financial information for material associates

Summarised financial information of the material associate is included in the table below:

	Medina Towers J.S.C.
	2019	2018
	€000	€000
Non-current assets	43,330	42,736
Current assets	8,053	8,417
Total assets	51,383	51,153
Current liabilities	223	113
Total liabilities	223	113
Loss for the year	(589)	(692)
Other comprehensive income	711	1,318
Total comprehensive income	122	626

19.3.2 Reconciliation of summarised financial information

Reconciliation of the summarised information presented to the carrying amount of its interest in the associate:

	Medina Towers J.S.C.
	2019	2018
	€000	€000
1 January	51,038	50,412
Loss for the period	(589)	(692)
Other comprehensive income	711	1,318
Closing net assets	51,160	51,038
Interest in associate (25%)	12,790	12,760
Carrying value	12,790	12,760

19.4 Investments in joint ventures

	The Group
	2019	2018
	€000	€000
At 1 January	35,429	36,822
Share of results	(3,802)	(1,191)
Share of other comprehensive income	(4,516)	302
Dividend distribution	-	(504)
Other movements	243	-
At 31 December	27,354	35,429

The significant joint ventures of the Group as at 31 December 2019 and 2018 are set out below. The joint ventures listed below have share capital consisting solely of ordinary shares, which are held directly by the Group.

Company name	Registered office	Nature of business	% of ownership interest held by the Group 2019	2018
Golden Sands Resort Limited	The Radisson SAS Golden Sands Resort & Spa Golden Bay l/o Mellieha, Malta	A five-star luxury hotel	50	50
Azure Services Limited (in liquidation)	Level 1 LM Complex Brewery Street Mriehel, Malta	Marketing and promotional services	50	50
Azure Ultra Limited (in liquidation)	Level 1 LM Complex Brewery Street Mriehel, Malta	Luxury yacht leasing	50	50

19. Other investments - continued

19.4 Investments in joint ventures - continued

			% of ownership interest held by the Group
Company name	Registered office	Nature of business	% Ownership
Azure XP Limited (in liquidation)	Level 1, Palm Grove House Wickham's Cay 1 Road Town, Tortola British Virgin Islands	Financing of vacation ownership	2019 50	2018 50
Heathfield Overseas Limited (in liquidation)	Level 1, Palm Grove House Wickham's Cay 1 Road Town, Tortola British Virgin Islands	Payment solutions	50	50
Azure Resorts Limited (in liquidation)	Level 1, Palm Grove House Wickham's Cay 1 Road Town, Tortola British Virgin Islands	Vacation ownership selling agent	50	50
Brooksfield Overseas Limited (in liquidation)	Level 1, Palm Grove House Wickham's Cay 1 Road Town, Tortola British Virgin Islands	Marketing and promotional services	50	50
Medi International Limited (in liquidation)	Level 1, Palm Grove House Wickham's Cay 1 Road Town, Tortola British Virgin Islands	Internal financing	50	50

19.4 Investments in joint ventures - continued

Company name	Registered office	Nature of	% of ownership interest held by the Group % Ownership
		business	2019	2018
Catering Management Limited (formerly MKIC Limited)	22, Europa Centre Floriana Malta	Non-trading	50	50
Quality Catering & Retail Services Ltd	Miller House Airport Way Tarxien Road Luqa, Malta	Catering company	50	50

All joint ventures are private companies and there is no quoted market price available for its shares.

There are no contingent liabilities relating to the Group's interest in the joint ventures.

The Directors consider Golden Sands Resort to be a material joint venture of the Group.

(i) Hotel and vacation ownership at Golden Sands Resort - Golden Sands Resort Group (GSR)

This joint venture includes the Group's investment in Golden Sands Resort Limited and Azure Resorts Group (made up of Azure Resorts Limited, Azure Services Limited, Azure Ultra Limited, Vacation Financial Limited, Heathfield Overseas Limited, Brooksfield Overseas Limited, Medi International Limited). Together these companies are engaged in the operation and management of a combined vacation ownership and hotel operation of "The Radisson SAS Golden Sands Resort and Spa", a 5-star resort situated in Golden Sands and which are collectively referred to as the Golden Sands Resort Group.

The Group's shares in Golden Sands Resort Limited have been pledged in favour of credit institution in relation to banking facilities granted to the Group.

Judgements and estimates on the investment in Azure Resorts Group

As disclosed in Note 42, subsequent to year-end, the Azure Resorts Group was placed into liquidation. The event was treated as a non-adjusting event from the Group's perspective since, in management's view, the events and conditions for liquidation were not yet present as at 31 December 2019. This is notwithstanding that, as at yearend, Azure's management had announced that it intends to downsize the scale of operations, in order to focus on servicing its existing members' base, rather than to sell its developer stock. The COVID-19 pandemic occurring after year-end was, in the directors' opinion, the event that provided circumstances for Azure to enter liquidation. Accordingly, the carrying amount of the investment in the joint venture was recognised using the equity method without adjusting for the possible impacts of the liquidation on both classification and measurement of the investment.

19.4 Investments in joint ventures - continued

(i) Hotel and vacation ownership at Golden Sands Resort - Golden Sands Resort Group (GSR) - continued

Judgements and estimates on the investment in Azure Resorts Group - continued

The directors believe that both the announcements made at 31 December and the losses incurred during past period provided indicators of impairment that warranted an impairment test of the carrying amount of the investment in accordance with IAS 36's requirements. The test involved an estimate of the recoverable amount of Azure Resorts based on a 'fair value less costs of disposal' approach. The most significant estimate included in the impairment test is the realisable value less costs to sell of unsold developer stock. Following the impairment test, the directors concluded that the recoverable amount exceeds its carrying amount, and on this basis, no impairment was recognised.

19.4.1 Summarised financial information for material joint ventures

Summarised financial information of material joint ventures is set out below:

		Golden Sands Resort
	2019	2018
	€000	€000
Cash and cash equivalents	128	169
Non-current assets	63,761	81,577
Current assets	2,205	3,216
Total assets	66,094	84,962
Current financial liabilities (excluding trade and
other payables and provisions)	18,366	6,028
Current liabilities	22,061	10,308
Non-current financial liabilities (excluding trade
and other payables and provisions)	4,091	18,148
Non-current liabilities	15,747	25,713
Total liabilities	37,808	46,021
Revenue	17,828	18,715
EBITDA	2,619	4,919
Depreciation and amortisation	(3,439)	(3,273)
Interest income	66	48
Interest expense	(740)	(825)
Income tax expense	533	(332)
Loss for the year	(961)	537
Other comprehensive income	(9,100)	-
Total comprehensive income	(10,061)	537

19.4 Investments in joint ventures - continued

19.4.2 Reconciliation of summarised financial information

Reconciliation of the summarised information presented to the carrying amount of its interest in the joint venture:

	Golden Sands Resort
	2019	2018
	€000	€000
1 January	39,478	38,941
Loss for the period	(961)	537
Other comprehensive income	(9,100)	-
Closing net assets	29,417	39,478
Interest in joint venture (50%)	14,708	19,739
Goodwill	6,456	6,456
Carrying value	21,164	26,195

The summarised financial information for Azure Resorts Group has been excluded from the above table as the directors believe that, relative to the Group's total asset base, its carrying amount is not significant to warrant the disclosures detailing the composition of assets, liabilities and profit or loss, that would have otherwise been required by IFRS 12. The information required for individually immaterial associates is disclosed in its stead:

		Azure Resorts
	2019	2018
	€000	€000
Loss for the year	(6,700)	(2,920)
Other comprehensive income	64	604
Total comprehensive income	(6,636)	(2,316)

20. Other financial assets at amortised cost

	The Group		The Company
	2019	2018	2019	2018
	€'000	€'000	€'000	€'000
Non-current
Ultimate parent company	672	-	672	-
Group companies	-	-	85,806	85,957
Joint ventures	1,000	-	-	-
Other	129	184	-	-
Total non-current loans receivable	1,801	184	86,478	85,957
Current
Ultimate parent company	73	672	-	672
Other related parties	-	961	-	-
Other	52	50	91	-
Total current loans receivable	125	1,683	91	672

The carrying amount of loans receivable is considered to be a reasonable approximation of fair value on the basis of discounted cash flows.

Information about the impairment of financial assets at amortised cost and the Group's and the Company's exposure to credit risk, foreign currency risk and interest rate risk can be found in Note 43.

Terms

€54.0m (2018: €54.0m) of the Company's loans to Group companies are unsecured, bear interest at Euribor + 3.25% and are subordinated to bank loans.

€26.0m (2018: €26.0m) of the Company's loans to Group companies are unsecured, bear interest at 4.00% and are subordinated to bank loans.

€4.4m (2018: €5.5m) of the Company's loans to Group companies are unsecured, bear interest at 6.25% and are subordinated to bank loans.

€0.5m (2018: €0.5m) of the Company's loans to Group companies are unsecured, bear interest at 5% and are subordinated to bank loans and repayable on demand with twelve months' notice to be given by the Company.

€1.0m of the Company's loans to Group companies are unsecured, bear interest at 3% and are subordinated to bank loans.

The Group's and Company's non-current loan to ultimate parent company is unsecured and bears interest at 5%.

€1.0m of the Group's loans to joint ventures are unsecured and interest-free. Although repayable by written demand, the Group does not expect settlement of these amounts within a period of one year from balance sheet date.

21. Inventories

	The Group
	2019	2018
	€'000	€'000
Food and beverages	3,024	2,143
Consumables	751	718
Goods held for resale	296	199
Others	8,555	8,430
	12,626	11,490

22. Trade and other receivables

		The Company
			2018
€'000	€'000	€'000	€'000
			-
-	596	-	-
			65
			6,806
			31,994
			-
			-
			2
			1,279
			2,102
			42,248
			-
			146
43,192	53,029	40,495	42,394
	2019 - 18,446 8,073 - 34 3,120 3,882 3,638 1,632 38,825 513 3,854	The Group 2018 596 14,721 16,147 - 31 1,663 4,010 6,770 2,283 45,625 1,052 6,352	2019 - 36 1,005 36,795 - 163 1 235 2,095 40,330 - 165

Amounts owed by related parties are unsecured, interest free and are repayable on demand.

The carrying amount of trade and other receivables is considered to be a reasonable approximation of fair value.

Information about the impairment of trade receivables and the Group's and the Company's exposure to credit risk, foreign currency risk and interest rate risk can be found in Note 43.

The Group's contract assets primarily comprise balances from services in relation to project management for which the Group would not yet have an unconditional right to receive payment. The Company's contract assets relate to management services provided during the year, which the Company had not yet invoiced.

23. Financial assets at fair value through profit or loss

(i) Classification of financial assets at fair value through profit or loss

The Group classifies the following financial assets at fair value through profit or loss (FVTPL):

• Debt investments that do not qualify for measurement at either amortised cost or FVOCI. As at 31 December 2019 and 2018, these include investments in funds and mutual funds whose instruments fail to meet the definition of equity from the issuer's perspective.
• Equity investments for which the Group has not elected to recognise fair value gains and losses through OCI.

	The Group
	2019	2018
	€'000	€'000
Non-current assets
Unlisted equity securities	8,401	-
Current assets
Listed securities
Equities	4,641	1,821
Mutual funds	4,268	6,664
	8,909	8,485

In 2019, the Group acquired 10% of Global Hotel Alliance, and a 10% shareholding in a hotel and residential development in Moscow. During the year, the Group recognised €2.3m (2018: €0.1m) fair value gains or losses in profit or loss.

24. Cash and cash equivalents

Cash and cash equivalents include the following components:

	The Group		The Company
	2019	2018	2019	2018
	€'000	€'000	€'000	€'000
Cash and bank balances:
Current	72,699	50,190	15,043	7,824
Cash and cash equivalents in the statement of
financial position	72,699	50,190	15,043	7,824
Bank overdraft (Note 31)	(7,236)	(5,899)	-	-
Cash and cash equivalents in the statement of cash
cash flows	65,463	44,291	15,043	7,824

The bank balances include amounts of €11.1m (2018: €10.2m) set aside by the Group for debt servicing requirements of which €0.7m (2018: €0.7m) are set aside by the Company and €2.2m (2018: €0.8m) set aside for capital expenditure purposes.

25. Share capital

25.1 Authorised share capital

The authorised share capital consists of 1,000m ordinary shares with a nominal value of €1 each.

25. Share capital - continued

25.2 Issued share capital

The issued share capital consists of 615.7m (2018: 615.7m) ordinary shares of €1 each, fully paid up.

		The Group and Company
	2019	2018
	€'000	€'000
At 1 January and 31 December	615,685	615,685

25.3 Shareholder rights

Shareholders are entitled to vote at shareholders' meetings of the Company on the basis of one vote for each share held. They are entitled to receive dividends as declared from time to time. The shares in issue shall, at all times, rank pari passu with respect to any distribution whether of dividends or capital, in a winding up or otherwise.

26. Revaluation reserve

Revaluation reserve relating to movements in property, plant and equipment of entities forming part of the Group:

	The Group
	Revaluation	Deferred
	surplus	taxation	Net
	€'000	€'000	€'000
At 1 January 2019	€'000 114,397	€'000 (22,940)	€'000 91,457
Revaluation surplus arising during the year: Corinthia Hotel Prague	7,000	(1,330)	5,670
At 31 December 2019	121,397	(24,270)	97,127
Analysed as follows:
Corinthia Hotel St George's Bay, Malta	12,169	(4,259)	7,910
Corinthia Hotel & Spa Lisbon	34,911	(7,856)	27,055
Corinthia Hotel Prague	17,857	(3,392)	14,465
Corinthia Hotel Budapest	25,129	(2,327)	22,802
Marina Hotel, St George's Bay, Malta	9,206	(3,222)	5,984
Radisson Blu Resort, Malta	4,284	(1,499)	2,785
Corinthia Hotel St Petersburg	8,577	(1,715)	6,862
Corinthia Hotel London	9,264	-	9,264
	121,397	(24,270)	97,127

26. Revaluation reserve - continued

	Revaluation surplus €'000	The Group Deferred taxation €'000	Net €'000
At 1 January 2018	€'000 81,724	€'000 (16,685)	€'000 65,039
Revaluation surplus arising during the year:
Corinthia Hotel & Spa Lisbon	17,150	(3,859)	13,291
Corinthia Hotel Prague	7,442	(1,414)	6,028
Corinthia Hotel St Petersburg	4,910	(982)	3,928
Corinthia Hotel London:
- Gross of non-controlling interests' share	6,340	-	6,340
- Share attributable to non-controlling interests	(3,169)	-	(3,169)
- Share attributable to owners of the parent	3,171	-	3,171
	32,673	(6,255)	26,418
At 31 December 2018	114,397	(22,940)	91,457
Analysed as follows:
Corinthia Hotel St George's Bay, Malta	12,169	(4,259)	7,910
Corinthia Hotel & Spa Lisbon	34,911	(7,856)	27,055
Corinthia Hotel Prague	10,857	(2,062)	8,795
Corinthia Hotel Budapest	25,129	(2,327)	22,802
Marina Hotel, St George's Bay, Malta	9,206	(3,222)	5,984
Radisson Blu Resort, Malta	4,284	(1,499)	2,785
Corinthia Hotel St Petersburg	8,577	(1,715)	6,862
Corinthia Hotel London	9,264	-	9,264
	114,397	(22,940)	91,457

Share of joint ventures' revaluation reserve relating to movements in property, plant and equipment:

	Revaluation surplus €'000	The Group Deferred taxation €'000	Net €'000
At 1 January 2018 and 31 December 2018	10,348	(3,623)	6,725
At 1 January 2019	10,348	(3,623)	6,725
Golden Sands Resort	(7,000)	2,450	(4,550)
At 31 December 2019	3,348	(1,173)	2,175

The revaluation reserve is non-distributable.

The tax impacts relating to this component of other comprehensive income is presented in the tables above.

26. Revaluation reserve - continued

During the previous years, the Group has capitalised the revaluation reserve by issuing bonus shares and upon the issuance of additional shares to previous owners of the IHG Group. Movements relating to bonus share issues are included in the table below:

	The Group 2019 €'000	2018 €'000
Aggregate amounts disclosed in tables above:	99,302	98,182
Bonus and other similar share issues: Opening and closing balance	(71,764)	(71,764)
Total revaluation reserve	27,538	26,418

27. Translation reserve

The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations into the Group's presentation currency. Translation reserve movements are presented within other comprehensive income.

28. Other reserves and equity components

28.1 Other equity components

The Group	Stepped acquisition of subsidiary €'000	Other €'000	Total €'000
At 1 January 2018, 31 December 2018 and 31 December 2019	3,859	(1,242)	2,617

Stepped acquisition of subsidiary

The stepped acquisition of subsidiary reserve relates to the increase in value of original shareholding in Corinthia Hotel Investments Limited, pursuant to independent valuation carried out on acquisition of further shareholding in 2006, net of deferred tax.

28. Other reserves and equity components - continued

28.2 Other reserves

The Company
	FVOCI	Bonus
	reserve	shares	Other	Total
	€'000	€'000	€'000	€'000
As at 1 January 2018	167,381	(75,090)	(10,555)	81,736
Fair value movements on
investments in subsidiaries,
associates and joint ventures, net
of tax	(1,467)	-	-	(1,467)
Absorption of losses	-	-	(13,454)	(13,454)
At 31 December 2018	165,914	(75,090)	(24,009)	66,815
Fair value movements on
investments in subsidiaries,
associates and joint ventures, net
of tax	(7,319)	-	-	(7,319)
Reversal of opening deferred income tax
liability on fair value movements
following amendment in tax legislation	42,683	-	-	42,683
At 31 December 2019	201,278	(75,090)	(24,009)	102,179

Financial assets at FVOCI

The Company has elected to recognise changes in the fair value of investments in subsidiaries, associates and joint ventures in OCI, as explained in Note 3.6. These changes are accumulated within the FVOCI reserve within equity. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised.

Other reserves

The Company's other reserves principally relate to the absorption of losses.

29. Reporting currency conversion difference

The reporting currency conversion difference represents the excess of total assets over the aggregate of total liabilities and funds attributable to the shareholders, following the re-denomination of the paid-up share capital from Maltese lira to euro in 2003.

30. Retained earnings

The profit for the year has been transferred to retained earnings as set out in the statements of changes in equity.

31. Bank borrowings

	The Group		The Company
	2019	2018	2019	2018
	€'000	€'000	€'000	€'000
Bank overdraft	7,236	5,899	-	-
Bank loans	362,797	352,177	12,590	10,176
	370,033	358,076	12,590	10,176
Comprising:
Non-current bank borrowings
Bank loans due within 2 – 5 years	252,175	104,394	8,296	4,831
Bank loans due later than 5 years	72,422	213,165	2,422	3,761
	324,597	317,559	10,718	8,592
Current bank borrowings
Bank overdraft	7,236	5,899	-	-
Bank loans due within 1 year	38,200	34,618	1,872	1,584
	45,436	40,517	1,872	1,584

Bank borrowings are subject to variable interest rates linked to Euribor, other reference rates or bank base rates with an average interest rate of 2.95% annually at 31 December 2019 (2018: 2.75% annually) for the Group and 3.59% annually at 31 December 2019 (2018: 4.8%) for the Company.

These facilities are secured by general hypothecs on the Group's and the Company's assets, special hypothecs, privileges on the Group's property, guarantees by related parties, as well as pledges over the shares in subsidiaries and joint ventures.

The carrying amount of bank borrowings is considered a reasonable approximation of fair value based on discounted cash flows, taking cognisance of the variable interest nature of the principal borrowings.

32. Bonds

		The Group		The Company
	2019	2018	2019	2018
	€'000	€'000	€'000	€'000
Bond V	19,879	19,823	19,879	19,823
Bond VI	9,938	9,925	9,938	9,925
Bond VII	44,400	44,308	44,400	44,308
Bond IX	34,677	34,603	34,677	34,603
Bond X	54,440	54,367	54,440	54,367
Bond XI	59,250	39,481	59,250	39,481
	222,584	202,507	222,584	202,507
Non-current	222,584	202,507	222,584	202,507
Current	-	-	-	-
	222,584	202,507	222,584	202,507

32. Bonds - continued

(i) The Group has the following bonds in issue:

	Year of issue	Nominal amount €'000	Rate of interest %	Maturity date
Bond V	2012	20,000	5.80	21 December 2021
Bond VI	2013	10,000	5.80	14 November 2023
Bond VII	2015	45,000	5.75	13 May 2025
Bond IX	2014	35,000	6.00	15 May 2024
Bond X	2016	55,000	4.00	29 July 2026
Bond XI	2016	60,000	4.00	20 December 2026

(ii) Interest

Interest is payable annually in arrears on the due date.

(iii) Security

The bonds constitute the general, direct, unconditional, unsecured and unsubordinated obligations of the Company and will rank pari passu, without any priority or preference, with all other present and future unsecured and unsubordinated obligations of the Company.

(iv) Sinking funds

The prospectus for bond V provides for the setting up of sinking funds administered independently to cover 50% of the repayment of the bonds on maturity. The required contributions to the sinking funds as deposited under a trust arrangement as at 31 December 2019 amounted to €3.8m (2018: €3.8m).

(v) The carrying amount of the bonds is as follows:

	V	VI	VII	IX	X	XI
	€'000	€'000	€'000	€'000	€'000	€'000
At 1 January 2018	19,770	9,912	44,220	34,530	54,297	39,427
Amortisation of transaction costs	53	13	88	73	70	54
At 31 December 2018	19,823	9,925	44,308	34,603	54,367	39,481
Proceeds from issue	-	-	-	-	-	20,000
Amortisation of transaction costs	56	13	92	74	73	82
Issue costs	-	-	-	-	-	(313)
At 31 December 2019	19,879	9,938	44,400	34,677	54,440	59,250

The carrying amount of bonds is considered a reasonable approximation of fair value.

32. Bonds - continued

The market price of bonds in issue is as follows:

	2019	2018
	€	€
Bond V	101.5	107.0
Bond VI	108.5	107.0
Bond VII	106.5	109.5
Bond IX	106.3	109.2
Bond X	103.0	103.0
Bond XI	101.0	102.0

33. Other financial liabilities

	The Group		The Company
	2019	2018	2019	2018
	€'000	€'000	€'000	€'000
Amounts owed to:
Group companies	-	-	39,879	26,112
Related companies	-	4,500	-	-
Obligations - lease	-	112	-	-
	-	4,612	39,879	26,112
Non-current liabilities
Amounts owed to:
Group companies	-	-	39,781	26,027
Obligations - lease	-	59	-	-
	-	59	39,781	26,027
Current liabilities
Amounts owed to:
Group companies	-	-	98	85
Related companies	-	4,500	-	-
Obligations - lease	-	53	-	-
	-	4,553	98	85

The carrying amount of other financial liabilities is considered a reasonable approximation of fair value on the basis of discounted cash flows.

33. Other financial liabilities - continued

The terms of the amounts owed by the Group and the Company, as applicable, are as follows:

	€'000	Interest	Repayable by
At 31 December 2019
Group companies	6,900	4.95%	Due by 4 August 2025
Group companies	13,000	Euribor + 2.65%	Due by 3 August 2025
Group companies	19,979	0%	Due within 3 years
	39,879
At 31 December 2018
Group companies	6,900	4.95%	Due by 4 August 2025
Group companies	13,000	Euribor + 2.65%	Due by 3 August 2025
Group companies	6,212	0%	Due within 12 months from written notice
Other liabilities	4,500	3.7%	Due by the 15 February 2019
Obligations - lease	112
	30,724

None of the loans are secured.

34. Deferred tax assets and liabilities

Deferred taxes are calculated on all temporary differences under the liability method and are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled based on tax rates (and tax laws) that have been substantively enacted by the end of the reporting period.

The balance at 31 December represents temporary differences attributable to:

The Group	Assets		Liabilities		Net
	2019	2018	2019	2018	2019	2018
	€'000	€'000	€'000	€'000	€'000	€'000
Depreciation of property, plant and
equipment	-	-	(39,252)	(43,642)	(39,252)	(43,642)
Fair valuation of land and buildings	-	-	(60,214)	(52,779)	(60,214)	(52,779)
Fair valuation of investment property	-	-	(16,612)	(15,694)	(16,612)	(15,694)
Intangible assets	-	-	(665)	(572)	(665)	(572)
Investment in subsidiaries	-	-	(7,147)	(7,147)	(7,147)	(7,147)
Investment in associates	101	101	-	-	101	101
Unrelieved tax losses and unabsorbed
capital allowances	30,501	31,709	-	-	30,501	31,709
Exchange differences	-	-	(181)	(125)	(181)	(125)
Provision on trade receivables	1,898	1,808	-	-	1,898	1,808
Other	382	368	-	-	382	368
Tax assets/(liabilities) – before offsetting	32,882	33,986	(124,071)	(119,959)	(91,189)	(85,973)
Offset in the statement of financial position	(23,649)	(23,023)	23,649	23,023	-	-
Tax assets/(liabilities) – as presented in
the statement of financial position	9,233	10,963	(100,422)	(96,936)	(91,189)	(85,973)

34. Deferred tax assets and liabilities - continued

The Company	Assets		Liabilities		Net
	2019	2018	2019	2018	2019	2018
	€'000	€'000	€'000	€'000	€'000	€'000
Depreciation of property, plant and equipment	-	-	(23)	(11)	(23)	(11)
Investment in subsidiaries	-	-	(26,141)	(71,678)	(26,141)	(71,678)
Investment in associates	-	198	-	-	-	198
Unrelieved tax losses and unabsorbed capital
allowances	3,245	-	-	-	3,245	-
Exchange differences	-	-	(21)	(4)	(21)	(4)
Tax assets/(liabilities)	3,245	198	(26,185)	(71,693)	(22,940)	(71,495)
Offset in the statement of financial position	(43)	(198)	43	198	-	-
Tax assets/(liabilities) – as presented in statement
of financial position	3,202	-	(26,142)	(71,495)	(22,940)	(71,495)

The recognised deferred tax assets and liabilities are expected to be recovered or settled principally after more than twelve months from the end of the reporting period. The deferred tax assets and liabilities reflected in other comprehensive income relate to fair valuation of property, plant and equipment and investments in subsidiaries, associates and joint venture which have been measured as financial assets at fair value through other comprehensive income.

The movement on the Group's deferred tax assets and liabilities during the year, without taking into consideration offsetting of balances, is as follows:

34. Deferred tax assets and liabilities - continued

			Recognised				Recognised
The Group			in other				in other
		Recognised				Recognised
	Balance	in profit	comprehensive	Business	Balance	in profit	comprehensive	Business	Balance
	01.01.2018	or loss	income	combinations	31.12.2018	or loss	income	combinations	31.12.2019
	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000
Property, plant and
equipment	(88,335)	627	(4,296)	(4,417)	(96,421)	61	(3,406)	300	(99,466)
Investment
property	(13,903)	(2,490)	699	-	(15,694)	(210)	(708)	-	(16,612)
Intangible assets	(11,547)	10,975	-	-	(572)	(93)	-	-	(665)
Investments in					)
subsidiaries	(7,147)	-	-	-	(7,147)	-	-	-	(7,147)
Investments in
associates	101	-	-	-	101	-	-	-	101
Unrelieved tax losses
and capital
allowances	36,629	(6,734)	(235)	2,049	31,709	(2,249)	830	211	30,501
Exchange
differences	(368)	240	3	-	(125)	(55)	(1)	-	(181)
Provision on trade
receivables	1,429	379	-	-	1,808	90	-	-	1,898
Others	369	42	(43)	-	368	(30)	44	-	382
	(82,772)	3,039	(3,872)	(2,368)	(85,973)	(2,486)	(3,241)	511	(91,189)

Unrecognised deferred tax assets

Deferred income taxes are recognised for tax loss carry-forwards to the extent that the realisation of the related tax benefit through future taxable profits is probable. In 2019, the Group did not recognise deferred income tax assets of €2.7m (2018: €2.0m), in respect of losses amounting to €10.5m (2018: €8.1m) that can be carried forward against future taxable income.

The movement in the Company's deferred tax assets and liabilities during the year, without taking into consideration the offsetting of balances, is as follows:

34. Deferred tax assets and liabilities - continued

The Company	Balance 01.01.2018 €'000	Recognised in profit or loss €'000	Recognised in other comprehensive income €'000	Balance 31.12.2018 €'000	Recognised in profit or loss €'000	Recognised in other comprehensive income €'000	Surrender of losses €'000	Balance 31.12.2019 €'000
Property, plant and equipment	(25)	14	-	(11)	(12)	-	-	(23)
Intangible assets	(5,488)	5,488	-	-	-	-	-	-
Investments in subsidiaries	(72,092)	-	414	(71,678)	-	45,537	-	(26,141)
Investments in associates	253	-	(55)	198	-	(198)	-	-
Unrelieved tax losses and capital
allowances	2,972	(2,972)	-	-	4,278	-	(1,033)	3,245
Exchange differences	(2)	(2)	-	(4)	(17)	-	-	(21)
	(74,382)	2,528	359	(71,495)	4,249	45,339	(1,033)	(22,940)

Unrecognised deferred tax assets

The Company did not have unrecognised deferred income tax assets that could be carried forward against future taxable income as at 31 December 2019 and 31 December 2018.

35. Trade and other payables

	The Group		The Company
	2019	2018	2019	2018
	€'000	€'000	€'000	€'000
Non-current
Other payables	3,299	1,639	822	-
Other liabilities - contingent consideration (Note 43.6)	-	563	-	563
Financial liabilities	3,299	2,202	822	563
Contract liabilities	2,475	2,854	-	-
Advance payments	483	354	-	-
Total payables - non-current	6,257	5,410	822	563
Current
Trade payables	19,054	16,926	256	426
Amounts owed to:
Parent company	680	37	-	-
Subsidiary companies	-	-	2,400	990
Joint ventures	250	401	-	29
Other related parties	7,620	1,505	240	240
Capital creditors	1,236	1,596	-	-
Other payables	8,625	6,362	990	1,069
Other liabilities – contingent consideration (Note 43.6)	-	8,688	-	-
Refundable lease deposits	247	-	-	-
Accruals	22,198	21,270	6,525	6,139
Financial liabilities	59,910	56,785	10,411	8,893
Contract liabilities	6,302	6,069	-	-
Lease payments received in advance	3,961	3,093	-	-
Statutory liabilities	4,604	5,554	73	27
Total payables - current	74,777	71,501	10,484	8,920

Amounts owed to related parties are unsecured, interest free and are repayable on demand.

The carrying amount of trade and other payables is considered a reasonable approximation of fair value in view of the short-term nature of these instruments.

Current contract liabilities mainly include advance deposits on hotel bookings and cash received for vouchers to be redeemed by customers in hotels. The revenue in relation to these amounts received in advance is recognised only when the Group satisfies its performance obligation (i.e. as the customer utilises their right to use the hotel room).

Non-current contract liabilities emanate from a transaction in which the Group sold a block of serviced apartments but retained the obligation to maintain such apartments for the very long-term. The consideration that was paid by the buyer to the Group was partly allocated to the service element in the arrangement and will be recognised over the remaining number of years for which the obligation remains.

The aggregate transaction price allocated to this long-term arrangement amounted to £2.3m (€2.7m), of which £2.0m (€2.4m) remains unsatisfied as at year-end. Management expects that the unsatisfied portion of the transaction price will be recognised as revenue on a straight-line basis over the remaining term of 43 years, since the directors consider the arrangement consistent with a stand-ready obligation to perform.

Revenue recognised during 2019 that was included in the contract liability balance at the beginning of the period amounted to €6.1m.

36. Dividends

During 2019, the Company declared an interim dividend amounting to €12.3m (2018: €12.3m). This equates to €0.02 per share (2018: €0.02 per share).

37. Cash flow information

37.1 Cash generated from/(used in) operations

	The Group		The Company
	2019	2018	2019	2018
	€'000	€'000	€'000	€'000
Adjustments:
Depreciation of property, plant and equipment	32,409	30,560	27	24
Depreciation of right-of-use assets	2,185	-	185	-
Increase in provision for impairment of trade
receivables	89	388	-	-
Net (gain)/loss on disposal of property, plant and
equipment	(232)	1,763	-	2
Amortisation of intangible assets	2,172	2,642	8	15
Impairment losses on intangible assets	1,693	1,980	-	-
Net gain on disposal of intangible assets	-	-	-	(15,344)
Net impairment losses on property, plant and equipment	1,320	-	-	-
Net changes in fair value of contingent consideration	(5,008)	-	(563)	-
Fair value movements on investment properties	137	(6,994)	-	-
Fair value movements on investments	(2,252)	-	-	-
Share of results of associates and joint ventures	3,951	1,364	-	-
Net changes in fair value of indemnification assets	210	210	-	-
Amortisation of transaction costs on borrowings	1,384	845	391	351
Interest income	(546)	(833)	(3,219)	(3,461)
Interest expense	22,372	20,513	12,160	11,367
Dividend income	-	-	(18,080)	(39,705)
Net exchange differences	(7,322)	7,846	-	-
	52,562	60,284	(9,091)	(46,751)

37. Cash flow information - continued

37.2 Reconciliation of financing liabilities

The Group
			Liabilities from financing activities
	Assets
	placed under trust		Bank	Other financial	Lease
	arrangement	Bonds	loans	liabilities	liabilities	Total
	€'000	€'000	€'000	€'000	€'000	€'000
As at 1 Jan 2018
- Principal	2,290	(202,156)	(341,269)	(4,664)	-	(545,799)
- Accrued interest	-	(4,063)	(801)	-	-	(4,864)
- Net	2,290	(206,219)	(342,070)	(4,664)	-	(550,663)
Cash flows	1,477	10,227	(1,093)	52	-	10,663
Acquisition of subsidiaries	-	-	(443)	-	-	(443)
Foreign exchange
adjustments	-	-	(6,791)	-	-	(6,791)
Currency translation	-	-	8,500	-	-	8,500
differences Other movements	-	(10,589)	(11,211)	-	-	(21,800)
As at 31 December 2018	3,767	(206,581)	(353,108)	(4,612)	-	(560,534)
Comprising:
- Principal	3,767	(202,507)	(352,177)	(4,612)	-	(555,529)
- Accrued interest	-	(4,074)	(931)	-	-	(5,005)
As at 31 December 2018	3,767	(206,581)	(353,108)	(4,612)	-	(560,534)
As at 1 Jan 2019
- Principal	3,767	(202,507)	(352,177)	(4,612)	-	(555,529)
- Accrued interest	-	(4,074)	(931)	-	-	(5,005)
- Net	3,767	(206,581)	(353,108)	(4,612)	-	(560,534)
- Initial application of IFRS 16	-	-	-	-	(13,814)	(13,814)
Cash flows	53	(8,835)	11,479	3,716	2,860	9,273
Acquisition of subsidiaries	-	-	(150)	-	(1,004)	(1,154)
Foreign exchange
adjustments	-	-	7,118	-	-	7,118
Currency translation	-	-	(16,688)	-	-	(16,688)
differences Other movements	-	(11,244)	(12,512)	896	(2,039)	(24,899)
As at 31 December 2019	3,820	(226,660)	(363,861)	-	(13,997)	(600,698)
Comprising:
- Principal	3,820	(222,584)	(362,797)	-	(13,997)	(595,558)
- Accrued interest	-	(4,076)	(1,064)	-	-	(5,140)
As at 31 December 2019	3,820	(226,660)	(363,861)	-	(13,997)	(600,698)

37. Cash flow information - continued

37.2 Reconciliation of financing liabilities - continued

The Company
				Liabilities from financing activities
	Assets
	placed under			Other
	trust		Bank	financial	Lease
	arrangement	Bonds	loans	liabilities	liabilities	Total
	€'000	€'000	€'000	€'000	€'000	€'000
As at 1 Jan 2018
- Principal	2,290	(202,156)	(12,214)	(20,363)	-	(232,443)
- Accrued interest	-	(4,063)	(16)	-	-	(4,079)
- Net	2,290	(206,219)	(12,230)	(20,363)	-	(236,522)
Cash flows	1,477	10,226	2,529	(10,438)	-	3,794
Other movements	-	(10,588)	(480)	4,689	-	(6,379)
As at 31 December 2018	3,767	(206,581)	(10,181)	(26,112)	-	(239,107)
Comprising:
- Principal	3,767	(202,507)	(10,176)	(26,112)	-	(235,028)
- Accrued interest	-	(4,074)	(5)	-	-	(4,079)
As at 31 December 2018	3,767	(206,581)	(10,181)	(26,112)	-	(239,107)
As at 1 Jan 2019
- Principal	3,767	(202,507)	(10,176)	(26,112)	-	(235,028)
- Accrued interest	-	(4,074)	(5)	-	-	(4,079)
- Net	3,767	(206,581)	(10,181)	(26,112)	-	(239,107)
- Initial application of
IFRS 16	-	-	-	-	(626)	(626)
Cash flows	53	(8,835)	(1,173)	(750)	292	(10,413)
Other movements	-	(11,244)	(1,311)	(13,017)	(127)	(25,699)
As at 31 December 2019	3,820	(226,660)	(12,665)	(39,879)	(461)	(275,845)
Comprising:
- Principal	3,820	(222,584)	(12,590)	(39,879)	(461)	(271,694)
- Accrued interest	-	(4,076)	(75)	-	-	(4,151)
As at 31 December 2019	3,820	(226,660)	(12,665)	(39,879)	(461)	(275,845)

37.3 Significant non-cash transactions

As disclosed in Note 40, the Group obtained control of the catering companies and the Corinthia brand from CPHCL for €3.7m. The consideration was settled through a set-off of amounts receivable from the same party.

The Group obtained control of the operations of the Corinthia Hotel Attard from CPHCL for an amount of €26.6m on 10 April 2018. €17.9m of the consideration was settled through a set-off of amounts receivable from the same party.

During 2018, the Company disposed of the Corinthia brand in exchange for a shares in CHL Limited, with a fair value of €35.0m. Additionally, the Company increased its investment in various subsidiaries through the capitalisation of loans, amounting to €51.8m.

38. Commitments

Capital expenditure contracted for at the end of the reporting period but not yet incurred is as follows:

	The Group
	2019	2018
	€'000	€'000
Contracted for:
Property, plant and equipment	3,500	2,774
Authorised but not yet contracted for:
Property, plant and equipment	71,078	81,352
	74,578	84,126

The board of directors of joint ventures have not authorised capital commitments for property, plant and equipment during the year (2018: €0.4m). The Group's share of the 2018 commitments was equivalent to 50%.

Operating leases

The future aggregate minimum lease payments under non-cancellable property operating leases are as follows:

	The Group		The Company
	2019	2018	2019	2018
	€'000	€'000	€'000	€'000
Less than one year	-	2,170	-	291
Between one and five years	-	5,961	-	408
More than five years	-	20,866	-	3
	-	28,997	-	702

The above lease rentals arise on the temporary emphyteusis for a period of 99 years in relation to the land underlying the Corinthia Hotel St George's Bay, the Marina Hotel St George's Bay, and the Radisson SAS Bay Point Hotel.

The Group is a party to several operating lease agreements for the lease land on which the hotels are situated.

The Group is committed to pay periodic payments to the lessor. The Group also leases certain catering establishments with rental payments based on a percentage of turnover with minimum guaranteed payments or a fixed amount per annum with specified increases. The Group does not have an option to purchase the leased land or catering establishment at the expiry of the lease periods.

During the year ended 31 December 2018, €4.7m and €0.2m for the Group and Company respectively were recognised as an expense in the income statement in respect of operating leases.

From 1 January 2019, the Group has recognised right-of-use assets for these leases.

39. Contingent liabilities

A claim in relation to brokerage fees on the sale of Lisbon Hotel to IHI in 2000 amounting to €1.7m is being made by an individual against 8 defendants including IHI p.l.c.

No provision has been made in these financial statements as the Company believes that it has a strong defence in respect of these claims.

40. Business combinations

Business combinations during 2019

On 12 June 2019 and 15 June 2019, the Group acquired 100% of Catermax Limited and Corinthia Caterers Limited from its parent, CPHCL. During the same period, the Group also contracted to acquire from CPHCL any and all residual rights relating to the Corinthia Brand in relation to catering as well as any other additional right to use the Corinthia brand name exclusively. The rights are incremental to those previously held by the Group when it had acquired the Corinthia brand in 2010.

Although legally considered as three separate contracts, the substance of these acquisitions was deemed to be that of one business combination, and the details of the purchase consideration, fair value of the net identifiable assets and liabilities acquired, and goodwill are presented in aggregate below:

The Group
	Catermax and
	Corinthia Caterers
	€'000
Purchase consideration:
Cash consideration (see below)	3,700
	3,700
Recognised amounts of identifiable assets acquired
	677
Cash and cash equivalents and liabilities assumed
Property, plant and equipment	2,417
Right-of-use assets	1,004
Deferred tax asset	511
Intangible assets: Corinthia brand	2,400
Inventories	300
Trade and other receivables	862
Trade and other payables	(2,853)
Lease liabilities	(1,004)
Borrowings	(150)
Net identifiable assets acquired	4,164
Add: goodwill	1,215
Deduct: net receivables given up on acquisition	(1,679)
Net assets acquired	3,700

The goodwill is attributable to expected synergies from centralisation and consolidation of support services now that all catering operations are owned by the Group.

The fair value of acquired receivables is €1.7m, none of which is expected to be uncollectible.

40. Business combinations - continued

Business combinations during 2019 - continued

The acquired business contributed revenues of €4.9m and a net loss of €0.1m to the Group for the period from acquisition date to 31 December 2019. If the acquisition had occurred on 1 January 2019, consolidated pro-forma revenue and profit for the year ended 31 December 2019 would have been €271.8m and €6.3m respectively.

Purchase consideration - cash outflow

The Group	Catermax and Corinthia Caterers €'000
Outflow of cash to acquire subsidiary, net of cash acquired
Balances acquired:
Cash and cash equivalents	(677)
Net outflow of cash – investing activities	(677)

The cash consideration of €3.7m payable by the Group to its parent was set off against amounts receivable from the parent.

Business combinations during 2018

On 10 April 2018, the Group acquired 100% of the Corinthia Palace Hotel business in Attard through a newly formed subsidiary, for a consideration of €26.6m, from its ultimate parent, CPHCL.

Details of the purchase consideration, the net assets acquired and goodwill are as follows:

The Group	Corinthia Palace Hotel
	& Spa €'000
Purchase consideration	26,616
Recognised amounts of identifiable assets acquired
Cash and cash equivalents and liabilities assumed	38
Property, plant and equipment	27,233
Deferred tax asset	2,049
Inventories	590
Trade and other receivables	1,741
Trade and other payables	(2,543)
Borrowings	(443)
Deferred tax liabilities	(4,417)
Net identifiable assets acquired	24,248
Add: goodwill	2,368
Net assets acquired	26,616

The goodwill is attributable to expected synergies from centralisation and consolidation of support services now that all Corinthia Malta operations are owned by the Group.

40. Business combinations - continued

Business combinations during 2018 - continued

The fair value of acquired receivables is €1.7m, none of which is expected to be uncollectible.

The acquired business contributed revenues of €6.9m and a net loss of €0.9m to the Group for the period from acquisition date to 31 December 2018. If the acquisition had occurred on 1 January 2018, consolidated pro-forma revenue and loss for the year ended 31 December 2018 would have been €256.3m and €8.5m respectively.

Purchase consideration - cash outflow

The Group	Corinthia Palace Hotel & Spa €'000
Outflow of cash to acquire subsidiary, net of cash acquired Cash consideration Less: Balances acquired	8,669
Cash	(38)
Net outflow of cash – investing activities	8,631

41. Related parties

The Company and its subsidiaries have related party relationships with CPHCL, the Company's ultimate controlling party (Note 44), all related entities ultimately controlled, jointly controlled or significantly influenced by CPHCL. Related parties also comprise the shareholders of CPHCL, other major shareholders of IHI, the Group's associates and joint ventures (Note 19) together with the Group companies' key management personnel.

Key management personnel includes directors (executive and non-executive), members of the Executive Committee, the Company Secretary and the Head of Internal Audit. The compensation paid or payable to key management for employee services is disclosed in Note 41.2.

No guarantees were given or received. Amounts owed by/to related parties are shown separately in Notes 20, 22, 33 and 35.

41. Related parties - continued

41.1 Transactions with related parties

		The Group		The Company
	2019	2018	2019	2018
	€'000	€'000	€'000	€'000
Revenue
Services rendered to:
Parent company	1,233	1,595	1,100	1,100
Subsidiaries	-	-	3,466	3,257
Other related parties	2,179	1,637	-	-
Joint ventures	-	98	-	-
Dividends received from:
Subsidiaries	-	-	18,080	39,705
	3,412	3,330	22,646	44,062
Financing
Interest income
Parent company	161	377	73	260
Subsidiaries	-	-	3,146	3,146
Other related parties	34	67	-	-
Interest expenses
Subsidiaries	-	-	(833)	(638)
	195	444	2,386	2,768
Equity transactions
Dividend distributed to:
Parent company	7,120	7,120	7,120	7,120

During 2018, the Group acquired the operations of Corinthia Palace Hotel & Spa from its ultimate parent company, as disclosed in Note 40. Also, during 2019, the Group acquired the operations of Corinthia Catering Ltd and Catermax Ltd from its ultimate parent company, as disclosed in Note 40.

Also during 2018, the Company sold the Corinthia brand to its subsidiary, CHL Limited, for an amount of €35.0m, recognising a profit on disposal of €15.4m (Note 13).

Subsequent to year-end, as explained in Note 3.1, the Company has secured a line of credit from its parent company, CPHCL, to ensure funding is available in case of any cash flow shortfalls.

41.2 Transactions with key management personnel

In addition to the remuneration paid to the directors included in Note 8, in the course of its operations the Group has a number of arrangements in place with its officers, executives and other related parties whereby concessions are made available for hospitality services rendered to them according to accepted industry norms.

In 2019, the remuneration of the executive Chairman and Senior Executives of the Company and its subsidiaries amounted to €7.9m (2018: €8.5m). The foregoing comprises a fixed portion of €5.6m (2018: €6.2m) and a variable portion of €2.3m (2018: €2.3m). This variable portion includes an accrual that has been made for bonuses relating to 2019. Other than those bonuses that are contractual, the final amounts still need to be formally approved.

42. Events after the reporting period

Outbreak of COVID-19

In early January 2020, Asia experienced an outbreak of a novel coronavirus (COVID-19). This was declared a global pandemic by the World Health Organisation in March 2020. The Group's operations were significantly impacted as a result of the pandemic. Further information on the impact of COVID-19 on the Group is disclosed in Note 3.1.

Liquidation of joint venture

As disclosed in Note 19.4, the Azure Resorts Group was placed into liquidation. As at the date of signing these financial statements, the Group's directors are still assessing the impact of the liquidation on the classification of the investment following the appointment of a liquidator, and the measurement of the investment in the Group's financial statements subsequent to year end. As at 31 December 2019, the Group's interest in Azure Resorts was carried at €6.2m. An additional amount of €2.8m is recognised within the Group's translation reserves as a loss of translation. Upon liquidation, the amount recognised in the translation reserve will be reclassified to profit or loss.

43. Risk management objectives and policies

The Group is exposed to various risks through its use of financial instruments. The main types of risks are market risk, credit risk and liquidity risk, which result from both its operating and investing activities. The Group's risk management is coordinated at its head office, in close co-operation with the board of directors and focuses on actively securing the Group's short to medium term cash flows by minimising the exposure to financial markets. Long-term financial investments are managed to generate lasting returns.

The board of directors has overall responsibility for the establishment and oversight of the Group's risk management framework.

The Group's risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group's activities. The Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Audit Committee oversees how management monitors compliance with the Group's risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Audit Committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.

The most significant financial risks to which the Group is exposed to are described below. See also Note 43.5 for a summary of the Group's financial assets and liabilities by category.

43.1 Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Group's receivables from related parties and customers. The Group's exposure to credit risk is measured by reference to the carrying amount of financial assets recognised at the balance sheet date, as summarised below:

43.1 Credit risk - continued

	The Group		The Company
	2019	2018	2019	2018
	€'000	€'000	€'000	€'000
Classes of financial assets - carrying amounts
Long-term loans	1,801	184	86,478	85,957
Short-term loans	125	1,683	91	672
Assets placed under trust arrangement	3,820	3,767	3,820	3,767
Trade and other receivables, including contract assets	38,825	46,221	40,330	42,248
Cash in hand and at bank	72,699	50,190	15,043	7,824
	117,270	102,045	145,762	140,468

The maximum exposure to credit risk at the end of the reporting period in respect of financial assets mentioned above is equivalent to their carrying amount as disclosed in the respective notes to the financial statements. The Group does not hold any significant collateral in this respect.

(i) Risk management and security

The subsidiary companies within the Group have, over the years, conducted business with various corporates, tour operators and individuals located in different jurisdictions and, owing to the spread of the Group's debtor base, there is no concentration of credit risk.

The Group has a credit policy in place under which new customers are analysed individually for creditworthiness before the Group's standard payment and delivery terms and conditions are offered. The Group's review includes external ratings, where available, and in some cases bank references. Customers that fail to meet the Group's benchmark creditworthiness may transact with the Group only on a cash basis.

In monitoring customer credit risk, customers are individually assessed. Customers that are graded as "high risk" are placed on a restricted customer list and future sales are only made on a prepayment basis.

The Group does not require collateral in respect of trade and other receivables. The Group establishes an allowance for doubtful recoveries that represents its estimate of losses in respect of trade and other receivables.

The Company has a concentration of credit risk on its exposures to loans receivables from the subsidiaries. The Company monitors intra-Group credit exposures at individual entity level on a regular basis and ensures timely performance of these assets in the context of overall Group liquidity management. The Company assesses the credit quality of these related parties taking into account financial positions, performance and other factors. The Company takes cognisance of the related party relationship with these entities and management does not expect any losses from non-performance or default. Accordingly, credit risk with respect to these receivables is expected to be limited.

(ii) Impairment of financial assets

The Group and the Company have three types of financial assets that are subject to the expected credit loss model:

• trade receivables and contract assets relating to the provision of services;
• other financial assets at amortised cost, comprising loans receivable from related parties and, in the case of the Company, subsidiary undertakings; and
• cash and cash equivalents.

43.1 Credit risk - continued

(ii) Impairment of financial assets

The impairment methodology and conclusions below represent management's assessment at year-end and do not take into account the pandemic after the year-end (Note 3.1). Given the nature of the Group's operations, management do not expect a significant impact on the expected loss allowance of the Group's trade and other receivables. However, the impact of the loss allowance of other receivables and the Company's loans to related parties is still being assessed due to the loss of business/forced closures that group companies and other related parties are experiencing, which in turn may result in a significant increase in credit risk.

Trade receivables and contract assets

The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables and contract assets.

To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk characteristics and the days past due. The Group has concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for the contract assets since they have substantially the same characteristics.

The expected loss rates are based on the payment profiles of sales over a period of 3 to 4 months before 31 December 2019 and 31 December 2018 respectively and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables.

Based on the assessment carried out in accordance with the above methodology, the movement in loss allowances identified as at 31 December 2019 and 31 December 2018 is deemed immaterial by management.

The Group's loss allowance balance on trade receivables and contract assets as at 31 December 2019 and 2018 mainly comprises a provision on an amount due from an individual counterparty that did not have an impact on the identified loss rates and expected credit losses on the rest of the Group's trade receivables and contract assets. On this basis, the information pertaining to loss rates and loss allowances in the Group's provisions matrix, which would have otherwise been required by IFRS 7, is not presented as at 31 December 2019 and 31 December 2018.

The closing loss allowances for trade receivables and contract assets as at 31 December 2019 reconcile to the opening loss allowance as follows:

The Group	Trade receivables and contract assets
	2019	2018
	€'000	€'000
Opening loss allowance as at 1 January	5,740	4,929
Increase in loss allowance recognised
in profit or loss during the year	224	980
Business combinations	153	-
Receivables written off during the year
as uncollectible	(135)	(130)
Unused amounts reversed	-	(39)
At 31 December	5,982	5,740

43.1 Credit risk - continued

Trade receivables and contract assets - continued

Trade receivables and contract assets are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, failure to settlement after a number of attempts being made to collect past due debts; amounts deemed unrecoverable after a court ruling; and by the Group to provide original documentation in case of invoices contested by the customer.

Impairment losses on trade receivables and contract assets are recognised with administrative expenses. Subsequent recoveries of amounts previously written off are credited against the same line item.

All impaired balances were unsecured.

Other financial assets at amortised cost

The Group's and the Company's other financial assets at amortised cost which are subject to IFRS 9's general impairment model mainly include the following balances:

	The Group		The Company
	2019 €'000	2018 €'000	2019 €'000	2018
				€'000
Amounts due from ultimate parent
entity	745	672	672	672
Amounts due from subsidiaries	-	-	85,806	85,957
Amounts due from other related
parties	1,000	961	-	-
At 31 December	1,745	1,633	86,478	86,629

Other financial assets at amortised cost - continued

The Group and the Company monitor intra-group credit exposures at individual entity level on a regular basis and ensure timely performance of these assets in the context of its overall liquidity management. The loss allowances for these financial assets are based on assumptions about risk of default and expected loss rates. The Company's management uses judgement in making these assumptions, based on the counterparty's past history, existing market conditions, as well as forward-looking estimates at the end of each reporting period.

As at year-end, based on the Directors' assessments of these factors, the equity position of the respective counterparty, and, where the probability of default is high, the recovery strategies contemplated by management together with the support of shareholders in place, the resulting impairment charge required was deemed to be immaterial.

Cash at bank

The Group's cash is placed with reputable financial institutions, such that management does not expect any institution to fail to meet repayments of amounts held in the name of the companies within the Group. While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, the identified impairment loss was insignificant.

43.1 Credit risk - continued

Financial assets at fair value through profit or loss

The Group is also directly and indirectly exposed to credit risk in relation to certain bond funds that are measured at fair value through profit or loss. The maximum exposure at the end of the reporting period is the carrying amount of these investments €0.5m. (2018: €0.5m).

43.2 Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Note 3.1 discloses the measures that the Group has taken or is currently taking to manage the impact of the economic situation pursuant to the outbreak of COVID-19 subsequent to year end. The Group's exposure and management of liquidity risk as 31 December 2019 is disclosed below.

The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities as they fall due, under both normal and stressed conditions. Liquidity risk management includes maintaining sufficient cash and committed credit lines to ensure the availability of an adequate amount of funding to meet the Group's obligations.

The Group actively manages its cash flow requirements. Management monitors liquidity risk by reviewing expected cash flows through cash flow forecasts, covering both Head Office corporate cash flows and all Group entities' cash flows, financing facilities are expected to be required. This is performed at a central treasury function, which controls the overall liquidity requirements of the Group within certain parameters. Each subsidiary company within the Group updates its cash flow on a monthly basis.

Typically, the Group ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 60 days, including the servicing of financing or borrowing obligations. This excludes the potential impact of extreme circumstances that cannot be reasonably forecasted.

The Group's liquidity risk is actively managed taking cognisance of the matching of operational cash inflows and outflows arising from expected maturities of financial instruments, attributable to the Group's different operations, together with the Group's committed bank borrowing facilities and other financing that it can access to meet liquidity needs. The Group also reviews periodically its presence in the local capital markets and considers actively the disposal of non-core assets to secure potential cash inflows constituting a buffer for liquidity management purposes.

As at 31 December 2019 and 31 December 2018 the Group has financial liabilities, including estimated interest payments, with contractual maturities which are summarised below:

The Group
	Current	Non-current
	Within 1	1-5 years	More than 5
	year		years
31 December 2019	€'000	€'000	€'000
Non-derivatives:
Bank borrowings	45,000	266,905	77,131
Bonds	11,028	105,052	171,788
Lease liabilities	2,748	6,339	20,549
Bank overdraft	7,525	-	-
Trade and other payables	59,910	3,299	-
	126,211	381,595	269,468

43.2 Liquidity risk - continued

This compares to the maturity of the Group's financial liabilities in the previous reporting period as follows:

The Group	Current		Non-current
	Within 1	1-5 years	More than 5
	year		years
31 December 2018	€'000	€'000	€'000
Non-derivatives:
Bank borrowings	40,294	121,826	218,917
Bonds	10,228	68,592	193,676
Other financial liabilities	4,574	59	-
Bank overdraft	6,135	-	-
Trade and other payables	56,894	2,259	310
	118,125	192,736	412,903

The above contractual maturities reflect the gross cash flows, which may differ from the carrying values of the liabilities at the balance sheet date.

As at 31 December 2019 and 31 December 2018 the Company has financial liabilities, including estimated interest payments, with contractual maturities which are summarised below:

The Company
	Current	Non-current
	Within 1	1-5 years	Within 1 year
	year
31 December 2019	€'000	€'000	€'000
Non-derivatives:
Bank borrowings	2,331	9,382	2,466
Bonds	11,028	105,052	171,788
Other financial liabilities	97	169	43,625
Lease liabilities	301	186	7
Trade and other payables	10,411	822	-
	24,168	115,611	217,886

This compares to the maturity of the Company's financial liabilities in the previous reporting periods as follows:

The Company
	Current		Non-current
	Within 1	1-5 years	Within 1 year
	year
31 December 2018	€'000	€'000	€'000
Non-derivatives:
Bank borrowings	2,001	5,916	3,945
Bonds	10,228	68,592	193,676
Other financial liabilities	85	-	30,549
Trade and other payables	9,002	620	310
	21,316	75,128	228,480

43.3 Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, and quoted prices, will affect the Group's income or financial position. The objective of the Group's market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.

(i) Foreign currency risk

Foreign currency risk arises from future commercial transactions and recognised assets and liabilities which are denominated in a currency that is not the respective entity's functional currency, which would be considered a foreign currency from the entity's perspective.

All Group entities have euro as their functional currency with the exception of IHI Benelux BV, with Russian Rouble as its functional currency, the entities within the NLI Group, with the pound sterling as their functional currency, and Libya Hotels Development and Investment JSC, with Libyan dinars as its functional currency. IHI Benelux BV is exposed to foreign currency risk mainly with respect to a portion of revenue and purchases, which are denominated in euro, and all the entity's borrowings which are also denominated in euro.

The Group operates internationally and is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the functional currency of Group entities, the euro.

The Group has operations in Russia, Hungary, Czech Republic, United Kingdom and Libya and has subsidiaries domiciled in those territories. These entities are exposed to foreign currency in respect of a portion of their respected revenue and purchases which are denominated in foreign currencies.

The Group's and Company's main risk exposure reflecting the carrying amount of receivables and payables denominated in foreign currencies at the end of the reporting period analysed by the functional currency of the respective entity or entities, were as follows:

43.3 Market risk - continued

(i) Foreign currency risk - continued

The Group		2019				2018
		Functional currency				Functional currency
	EUR		RUB		EUR		RUB
	HUF	LYD	CZK	EUR	HUF	LYD	CZK	EUR
	€'000	€'000	€'000	€000	€'000	€'000	€'000	€'000
Group
Assets: Loans and receivables:
Trade receivables	1,774	1,595	581	-	2,304	2,101	478	-
Other receivables	596	155	523	-	932	191	510	-
Liabilities:
Bank borrowings	-	-	-	(46,187)	-	-	-	(48,775)
Trade payables	(770)	(1,137)	(1,180)	-	(805)	(746)	(1,047)	-
Other payables	(2,805)	(2,867)	(2,385)	-	(3,065)	(2,847)	(2,120)	-
Net exposure	(1,205)	(2,254)	(2,461)	(46,187)	(634)	(1,301)	(2,179)	(48,775)

• 43.3 Market risk continued
• (i) Foreign currency risk continued

At 31 December 2019, if the euro had weakened/strengthened by 10% (2018: 10%) against the Rouble with all other variables held constant, Group post-tax profit for the year would have been €5.1m lower/€5.1m higher (2018: €5.4m lower/€5.4m higher) as a result of foreign exchange losses/gains on translation of the euro denominated borrowings.

Additionally, IHI Benelux is also exposed to other financial liabilities and other payables due to Group companies which are eliminated on consolidation. These balances amounting to €54.1m (2018: €54.1m) and €13.8m (2018: €16.8m) respectively, are considered part of the Group's net investment in the foreign operation. Accordingly, any foreign exchange differences with respect to these balances, which at IHI Benelux standalone level are recognised in profit or loss, were reclassified to other comprehensive income on consolidation.

At 31 December 2019, if the euro had weakened/strengthened by 10% (2018: 10%) against the Rouble with all other variables held constant, the Group's equity would have been €7.8m lower/€7.8m higher (2018: €8.1m lower/€8.1m higher) as a result of foreign exchange losses/gains recognised in other comprehensive income on translation of the euro denominated payables.

Management does not consider foreign currency risk attributable to recognised assets and liabilities arising from transactions denominated in foreign currencies where the respective entities' functional currency is/was the euro, presented within the tables above, to be significant. Accordingly, a sensitivity analysis for foreign currency risk disclosing how profit or loss and equity would have been affected by changes in foreign exchange rates that were reasonably possible at the end of the reporting period is not deemed necessary.

In respect of monetary assets and liabilities denominated in foreign currencies, the Group strives to manage its net exposure within acceptable parameters by buying or selling foreign currencies at spot rates, when necessary, to address short-term mismatches.

Borrowings required to fund certain operations are generally denominated in currencies that match the cash flows generated by the respective operations of the Group so as to provide an economic hedge.

43.3 Market risk - continued

(ii) Interest rate risk

The Group is exposed to changes in market interest rates principally through bank borrowings and related party loans taken out at variable interest rates. The interest rate profile of the Group's interest-bearing financial instruments at the reporting dates was as follows:

	The Group		The Company
	2019	2018	2019	2018
	€'000	€'000	€'000	€'000
Fixed rate instruments
Financial assets:
Parent company loan and other loans receivable	926	1,867	32,425	32,576
Assets placed under trust arrangement	3,820	3,767	3,820	3,767
Financial liabilities:
Bonds	(222,584)	(202,507)	(222,584)	(202,507)
Other financial liabilities	-	(4,500)	(6,900)	(6,900)
	(217,838)	(201,373)	(193,239)	(173,064)
Variable rate instruments
Financial assets:
Loans to related company	-	-	54,053	54,053
Financial liabilities:
Bank borrowings	(370,033)	(358,076)	(12,590)	(10,176)
Other financial liabilities	-	-	(13,000)	(13,000)
	(370,033)	(358,076)	28,463	30,877

The Group manages its exposure to changes in cash flows in relation to interest rates on interest-bearing borrowings due by the parent company and its subsidiaries, by entering into financial arrangements subject to fixed rates of interest whenever as much as is practicable. The Group is exposed to fair value interest rate risk on its financial assets and liabilities bearing fixed rates of interest, but all these instruments are measured at amortised cost and accordingly a shift in interest rates would not have an impact on profit or loss or other comprehensive income.

The Group's interest rate risk principally arises from bank borrowings issued at variable rates, which expose the Group to cash flow interest rate risk. Floating interest rates on these financial instruments are linked to reference rates such as Euribor or the respective banker's base rate. Management monitors the impact of changes in market interest rates on amounts reported in profit or loss in respect of these instruments taking into consideration refinancing and hedging techniques.

At 31 December, if interest rates had been 100 basis points higher/lower with all other variables held constant, posttax profit for the year for the Group would have been €3.5m (2018: €3.1m) lower/higher as a result of higher/lower net interest expense.

At 31 December, if interest rates had been 100 basis points higher/lower with all other variables held constant, posttax profit for the year for the Company would have been €99.8k (2018: €22.9k) lower/higher as a result of higher/lower net interest expense.

43.3 Market risk - continued

(iii) Price risk

The Group's exposure to equity securities price risk arises from its investments in equities, funds and mutual funds, which are classified in the balance sheet as financial assets at fair value through profit or loss. As at 31 December 2019, the carrying amount of these investments amounted to €17.3m (2018: €8.5m).

€8.9m (2018: €€8.5m) of investments are publicly traded. Management does not consider that a reasonable shift in indexes will have a significant impact on the Group's equity and post-tax profit. Accordingly, a sensitivity analysis disclosing how profit or loss and equity would have been affected by changes in indexes that were reasonably possible at the end of the reporting period is not deemed necessary.

In addition to the above, the Group holds a 10% investment in two private equities that were purchased during the reporting period. As at year-end, management do not consider that reasonable movements in market prices will impact the fair value of these investments materially.

43.4 Capital management policies and procedures

The Group's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Company may issue new shares or adjust the amount of dividends paid to shareholders.

The Group monitors the level of capital on the basis of the ratio of aggregated net debt to total capital. Net debt is calculated as total borrowings (as shown in the statement of financial position) less cash and cash equivalents. Total capital is calculated as equity, as shown in the respective statement of financial position, plus net debt.

	The Group		The Company
	2019	2018	2019	2018
	€'000	€'000	€'000	€'000
Bank loans (Note 31)	362,797	352,177	12,590	10,176
Other financial liabilities (Note 33)	-	4,612	39,879	26,112
Bonds (Note 32)	222,584	202,507	222,584	202,507
Lease liabilities (Note 17)	13,997	-	461	-
Less: cash and cash equivalents (Note 24)	(65,463)	(44,291)	(15,043)	(7,824)
Net debt	533,915	515,005	260,471	230,971
Total equity	897,147	877,620	747,724	716,168
Total capital	1,431,062	1,392,625	1,008,195	947,139
Net debt ratio	37.3%	37.0%	25.8%	24.4%

The figures in respect of the Group's equity and borrowings are reflected below:

The net debt to equity ratio of the Group and the Company increased from 37.0% to 37.3% and from 24.4% to 25.8% respectively following the adoption of IFRS 16 Leases. Both net debt and gross assets increased following the recognition of right-of-use assets and lease liabilities on 1 January 2019. See Note 4 for further information.

43.4 Capital management policies and procedures - continued

The Group manages the relationship between equity injections and borrowings, being the constituent elements of capital as reflected above, with a view to managing the cost of capital. The level of capital, as reflected in the consolidated statement of financial position, is maintained by reference to the Group's respective financial obligations and commitments arising from operational requirements. In view of the nature of the Group's activities and the extent of borrowings or debt, the capital level at the end of the reporting period determined by reference to the consolidated financial statements is deemed adequate by the directors.

The carrying amounts of the Group's financial assets and liabilities as recognised at balance sheet date of the reporting periods under review may also be categorised as follows. See Note 3.14 for explanations about how the category of financial instruments affects their subsequent measurement.

43.5 Summary of financial assets and liabilities by category

	The Group		The Company
	2019	2018	2019	2018
	€'000	€'000	€'000	€'000
Assets
Other financial assets at amortised cost
Cash and cash equivalents	72,699	50,190	15,043	7,824
Trade receivables	18,446	14,721	36	65
Other receivables	5,270	9,053	2,330	3,381
Amounts due from Group and related
companies	16,854	23,484	302,699	294,380
Assets placed under trust arrangement	3,820	3,767	3,820	3,767
Financial assets measured at fair
value
Equity securities
Private equities:
Investments in subsidiaries	-	-	714,517	708,479
Investments in associates and joint ventures	-	-	12,790	12,760
Financial assets at fair value through
profit or loss	8,401	-	-	-
Listed equities:
Financial assets at fair value through
profit or loss	4,641	1,821	-	-
Funds and mutual funds
Financial assets at fair value through
profit or loss	4,268	6,664	-	-
Total assets	134,399	109,700	1,051,235	1,030,656

43.5 Summary of financial assets and liabilities by category - continued

	The Group		The Company
	2019	2018	2019	2018
	€'000	€'000	€'000	€'000
Liabilities
Financial liabilities measured at fair value
Contingent consideration	-	9,251	-	563
Other financial liabilities measured at amortised cost
Bank borrowings	370,033	358,076	12,590	10,176
Bonds	222,584	202,507	222,584	202,507
Other financial liabilities	-	4,612	39,879	26,112
Lease liabilities	13,997	-	461	-
Trade payables	19,054	16,926	256	426
Other payables	21,957	20,791	4,452	2,891
Accruals	22,198	21,270	6,525	6,139
Total liabilities	669,823	633,433	286,747	248,814

43.6 Financial instruments measured at fair value

The following table presents financial assets and liabilities measured at fair value in the balance sheet in accordance with the fair value hierarchy. This hierarchy groups financial assets and liabilities into three levels based on the significance of inputs used in measuring the fair value of the financial assets and liabilities. The fair value hierarchy has the following levels:

• Level 1: based on quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2: based on information other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
• Level 3: information for the asset or liability that is not based on observable market data (unobservable inputs).

The level within which the financial asset or liability is classified is determined based on the lowest level of significant input to the fair value measurement.

The key financial assets and liabilities measured at fair value in the balance sheet are grouped into the fair value hierarchy as follows:

The Group	2019 €'000	2018 €'000
Level 1
Investments in publicly-traded investments measured instruments at fair value through profit or loss	8,909	8,485
Level 3
Investments in unlisted equities measured at fair value through profit or loss Contingent consideration	8,401 -	- (9,251)

43.6 Financial instruments measured at fair value - continued

The Company	2019 €'000	2018 €'000
Level 3
Investments in subsidiaries (a)	714,517	708,479
Investments in associates and joint ventures (b)	12,790	12,760
Contingent consideration	-	(563)

Measurement of fair value

The fair value of investments in financial assets at FVTPL was obtained by reference to published market prices as at the balance sheet date.

Investments in unlisted equity securities comprise the acquisition during 2019 of minority stakes in Global Hotel Alliance and a Moscow Project. In the opinion of the directors, as at year-end, the fair value of these investments is best represented by the Group's acquisition price given these were recent transactions undertaken between unrelated parties.

The methods and valuation techniques used for the purpose of measuring fair value are unchanged compared to the previous reporting period.

a. Investment in subsidiaries

The fair value of investment in subsidiaries have been determined by reference to the fair values of the underlying properties or enterprise value as outlined in Note 16.1. Movements in the carrying amounts of investments in subsidiaries are indicated in Note 18.

b. Investment in associates and joint ventures

Investment in associates and joint ventures are accounted for as financial assets at fair value through other comprehensive income in the Company's balance sheet as outlined in Note 19. The fair value of investments in associates and joint ventures has been determined in the same manner as outlined above.

There have been no transfers of financial assets between the different level of the fair value hierarchy.

43.7 Financial instruments not measured at fair value

Disclosure in respect of the fair value of financial instruments not carried at fair value are presented within Notes 20, 22, 31, 32, 33 and 35. The directors consider the carrying amount to be reasonable estimate of their fair value principally in view of the relatively short periods to repricing or maturity from the end of the reporting periods.

The following tables provide an analysis of the Group and the Company's financial instruments disclosed above, grouped into Levels 1 to 3:

43.7 Financial instruments not measured at fair value - continued

	The Group
	2019	2018	2019	2018
	€'000	€'000	€'000	€'000
	Level 1		Level 3
Financial assets
Other financial assets at amortised cost	-	-	1,926	1,867
Trade and other receivables	-	-	38,825	45,625
Assets placed under trust arrangement	-	-	3,820	3,767
	-	-	44,571	51,259
Financial liabilities
Bank borrowings	-	-	370,033	358,076
Bonds	222,584	202,507	-	-
Other financial liabilities	-	-	-	4,612
Lease liabilities	-	-	13,997	-
Trade and other payables	-	-	59,910	56,785
	222,584	202,507	443,940	419,473
	The Company
	2019	2018	2019	2018
	€'000	€'000	€'000	€'000
	Level 1		Level 3
Financial assets
Loans receivable	-	-	264,826	245,906
Trade and other receivables	-	-	40,330	42,248
Assets placed under trust arrangement	-	-	3,820	3,767
	-	-	308,976	291,921
Financial liabilities
Bank borrowings	-	-	12,590	10,176
Bonds	222,584	202,507	-	-
Other financial liabilities	-	-	39,879	26,112
Lease liabilities	-	-	461	-
Trade and other payables	-	-	10,411	8,893
	222,584	202,507	63,341	45,181

44. Ultimate controlling party

The Group's ultimate parent company is CPHCL, the registered office of which is 22, Europa Centre, Floriana FRN 1400, Malta.

CPHCL prepares the consolidated financial statements of the Group of which IHI and its subsidiaries form part. These financial statements are filed and are available for public inspection at the Registry of Companies in Malta.