SORTED GROUP HOLDINGS PLC — Audit Report / Information 2011

Feb 23, 2012

Date of Announcement: 23 February 2012 Reference: 29/2012

The following is a Company Announcement issued by Island Hotels Group Holdings plc pursuant to the Malta Financial Services Authority Listing Rules.

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The Board of Directors of Island Hotels Group Holdings p.l.c. (the Company) has today, the 23 February 2012, approved the audited financial statements for the financial year ended 31 October 2011. The Board resolved that these audited financial statements be submitted for the approval of the shareholders at the forthcoming Annual General Meeting which is scheduled to be held on Thursday 17 May 2012. The said audited financial statements are available for viewing on the Company's website www.islandhotels.com or at the Company's registered address at "The Coastline Hotel", Salina Bay, Salina. A preliminary statement of annual results is being attached herewith in terms of the Listing Rules.

The Board of Directors do not recommend the payment of a dividend for the year ended 31 October 2011.

Shareholders on the Company's share register at the Central Securities Depository of the Malta Stock Exchange as at close of business on Tuesday 17 April 2012 (this will include trades undertaken up to and including Thursday 12 April 2012), will receive notice of the Annual General Meeting, together with the Financial Statements for the financial year ended 31 October 2011.

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Signed:

_____________________

Kenneth Abela Company Secretary

Income statements

Year ended 31 October 2011

	Group		Holding
	2011 €	2010 €	2011 €	2010 €
Continuing operations Revenue Staff costs Food and beverage costs Other operating costs Other operating income Depreciation and amortisation	30,254,333 (11,860,954) (3,461,992) (9,427,289) - (3,211,916)	28,761,730 (11,443,193) (2,981,288) (8,770,687) - (3,237,101)	- - - (170,981) 113,451 -	- - - (168,130) 130,706 -
Operating profit/(loss) Investment income Finance costs	————— 2,292,182 151,446 (3,041,345)	————— 2,329,461 52,625 (2,999,873)	————— (57,530) 1,615,583 (1,477,365)	————— (37,424) 1,565,397 (1,421,677)
(Loss)/profit before tax Income tax credit/(expense)	————— (597,717) 355,355	————— (617,787) 419,787	————— 80,688 (47,025)	————— 106,296 (49,288)
(Loss)/profit for the year from continuing operations	————— (242,362)	————— (198,000)	————— 33,663	————— 57,008
Discontinued operation Loss for the year from discontinued operation	-	(451,693)	-	-
(Loss)/profit for the year	————— (242,362) —————	————— (649,693) —————	————— 33,663 —————	————— 57,008 —————
(Loss)/profit for the year attributable to the owners of the holding company	(242,362) ================	(649,693) ================	33,663 ================	57,008 ================
Earnings/(loss) per share
From continuing operations Basic/diluted (per share)	(0.007) ================	(0.006) ================
From continuing and discontinued operations Basic/diluted (per share)	(0.007) ================	(0.019) ================

Island Hotels Group Holdings p.l.c.

Registered Address: The Coastline Hotel, Salina Bay, Salina, NXR 9030, Malta. Telephone: +356 2157 3781/4

Statements of comprehensive income

Year ended 31 October 2011

	2011 €	Group 2010 €	2011 €	Holding 2010 €
(Loss)/profit for the year	(242,362)	(649,693)	33,663	57,008
Other comprehensive income Exchange differences on translating foreign operations	————— 134,887 —————	————— 148,380 —————	————— - —————	————— - —————
Total comprehensive (expense)/ income for the year	(107,475) ================	(501,313) ================	33,663 ================	57,008 ================
Total comprehensive (expense)/ income for the year attributable to the owners of the holding company	(107,475) ================	(501,313) ================	33,663 ================	57,008 ================

Statements of financial position

31 October 2011

	Group 2010 2011		Holding 2010 2011
	€	€	€	€
ASSETS AND LIABILITIES Non-current assets
Goodwill Other intangible assets	32,683,204 596,561	31,782,672 -	- -	- -
Property, plant and equipment	87,038,218	88,016,808	-	-
Investments in subsidiaries Investment in associates Investments in jointly	- 1,543	- -	52,801,199 -	52,801,199 -
controlled entities	-	-	17,070,960	16,000,000
Loans and receivables Deferred tax assets	8,146,142 - ——————	3,663,208 605,755 —————	403,435 - —————	1,440,652 - —————
	——————	128,465,668 124,068,443 —————	70,275,594 —————	70,241,851 —————
Current assets
Inventories Trade and other receivables	1,138,519 8,093,723	902,706 6,463,050	- 1,788,091	- 204,979
Current taxation Cash and cash equivalents	32,428 903,617	- 334,590	32,428 -	- 8,338
	————— 10,168,287	————— 7,700,346	————— 1,820,519	————— 213,317
Total assets	————— =================== ===================	————— 138,633,955 131,768,789	————— 72,096,113 ==================	————— 70,455,168 ==================
EQUITY AND LIABILITIES Equity attributable to the owners of the holding company
Share capital Currency translation reserve	36,340,160 (204,152)	35,269,200 (339,039)	36,340,160 -	35,269,200 -
Retained earnings	43,342 —————	285,704 —————	384,072 —————	350,409 —————
Total equity	36,179,350 —————	35,215,865 —————	36,724,232 —————	35,619,609 —————
Non-current liabilities
Bank loans	23,471,805	31,516,166	7,111,710	7,036,425
Other financial liabilities Trade and other payables	23,913,197 1,358,176	19,229,303 -	25,405,544 -	24,805,234 -
Deferred tax liabilities	11,849,802	12,889,210 —————	-	- —————
	————— 60,592,980 —————	63,634,679 —————	————— 32,517,254 —————	31,841,659 —————

Island Hotels Group Holdings p.l.c.

Registered Address: The Coastline Hotel, Salina Bay, Salina, NXR 9030, Malta. Telephone: +356 2157 3781/4

Statements of financial position (continued)

31 October 2011

	Group			Holding
	2011 €	2010 €	2011 €	2010 €
Current liabilities
Trade and other payables	18,327,741	16,634,298	537,582	501,014
Bank overdrafts and loans	21,348,218	13,775,970	1,861,020	1,987,520
Current taxation	58,460	271,787	-	66,587
Other financial liabilities	2,127,206	2,236,190	456,025	438,779
	————— 41,861,625 —————	————— 32,918,245 —————	————— 2,854,627 —————	————— 2,993,900 —————
Total liabilities	102,454,605	96,552,924	35,371,881	34,835,559
Total equity and liabilities	————— 138,633,955 131,768,789 ===================	————— ==================	————— 72,096,113 =================	————— 70,455,168 =================

Statement of changes in equity - Group

Year ended 31 October 2011

Group

Equity attributable to the owners of the holding company

	Share capital €	Currency translation reserve €	Retained earnings €	Total €
Balance at 31 October 2009	35,269,200	(487,419)	1,358,628	36,140,409
Dividends	————— - —————	————— - —————	————— (423,231) —————	————— (423,231) —————
Loss for the year Other comprehensive income	-	-	(649,693)	(649,693)
for the year	-	148,380	-	148,380
Total comprehensive income/ (expense) for the year	————— -	————— 148,380	————— (649,693)	————— (501,313)
Balance at 31 October 2010	————— 35,269,200 —————	————— (339,039) —————	————— 285,704 —————	————— 35,215,865 —————
Issue of ordinary shares	1,070,960 —————	- —————	- —————	1,070,960 —————
Loss for the year	-	-	(242,362)	(242,362)
Other comprehensive income for the year	-	134,887	-	134,887
Total comprehensive income/ (expense) for the year	————— - —————	————— 134,887 —————	————— (242,362) —————	————— (107,475) —————-
Balance at 31 October 2011	36,340,160 ==================	(204,152) ================	43,342 ================	36,179,350 ====================

Island Hotels Group Holdings p.l.c.

Registered Address: The Coastline Hotel, Salina Bay, Salina, NXR 9030, Malta. Telephone: +356 2157 3781/4

Statement of changes in equity – Holding company

Year ended 31 October 2011

Holding company

	Share capital €	Retained earnings €	Total €
Balance at 31 October 2009	35,269,200	716,632	35,985,832
Dividends	—————	—————	—————
	-	(423,231)	(423,231)
	—————	—————	—————
Profit/total comprehensive income for the year	-	57,008	57,008
Balance at 31 October 2010	—————	—————	—————
	35,269,200	350,409	35,619,609
	—————	—————	—————
Issue of ordinary shares	1,070,960	-	1,070,960
	—————	—————	—————
Profit/total comprehensive income	-	33,663	33,663
for the year	—————	—————	—————
Balance at 31 October 2011	36,340,160	384,072	36,724,232
	================	================	================

Island Hotels Group Holdings p.l.c.

Registered Address: The Coastline Hotel, Salina Bay, Salina, NXR 9030, Malta. Telephone: +356 2157 3781/4

Statements of cash flows

Year ended 31 October 2011

	Group		Holding
Cash flows from operating activities	2011 €	2010 €	2011 €	2010 €
(Loss)/profit before tax Adjustments for:	(597,717)	(617,787)	80,688	106,296
Depreciation and amortisation	3,211,916	3,237,101	-	-
Movement in provision for bad debts	(65,755)	(22,045)	-	-
Bad debts written off	148	-	-	-
Loss on disposal of property, P & E	51,219	68,921	-	-
Discontinued operations	-	(451,693)	-	-
Interest income	(151,446)	(52,625)	(185,579)	(215,164)
Dividend income	-	-	(1,430,004)	(1,350,233)
Interest expense	3,041,345 —————	2,999,873 —————	1,477,365 —————	1,421,677 —————
Operating profit/(loss) before
working capital movements	5,489,710	5,161,745	(57,530)	(37,424)
Movement in inventory	(135,813)	7,736	-	-
Movement in trade and other receivables		1,346,907		(166,969)
	(1,469,759)		(1,583,112)
Movement in trade and other payables	2,122,095 —————	563,816 —————	36,568 —————	390,165 —————
Cash flows from operations	6,006,233	7,080,204	(1,604,074)	185,772
Interest paid	(2,955,425)	(2,478,043)	(1,477,365)	(1,421,677)
Taxation paid	(401,818)	(127,629)	(146,040)	(172,592)
	—————	—————	—————	—————
Net cash flows from operating activities	2,648,990 —————	4,474,532 —————	(3,227,479) —————	(1,408,497) —————
Cash flows from investing activities
Purchase of property, P & E	(1,529,088)	(4,849,966)	-	-
Proceeds from sale of property, P & E	320,366	86,549	-	-
Net cash outflow on acquisition
of jointly controlled entities	(350,352)	(3,434,026)	-	-
Movement in loans and other rec.	(4,482,934)	-	1,037,217	1,550,817
Dividends received	-	-	1,430,004	1,350,233
Interest received	151,446	52,625	185,579	215,164
	—————	—————	—————	—————
Net cash flows from investing activities	(5,890,562) —————	(8,144,818) —————	2,652,800 —————	3,116,214 —————
Cash flows from financing activities
Movement in bank loans	(3,409,966)	1,789,192	(611,060)	583,294
Repayment of debt securities	-	(93,000)
Movement in related party balances	4,574,910	(841,453)	617,556	(1,863,521)
Dividends paid	-	(423,231)	-	(423,231)
Net cash flows from financing activities	————— 1,164,944 —————	————— 431,508 —————	————— 6,496 —————	————— (1,703,458) —————
Net movement
in cash and cash equivalents	(2,076,628)	(3,238,778)	(568,183)	4,259
Cash and cash equivalents at the
beginning of the year	(7,521,317)	(4,430,919)	8,338	4,079
Effect of foreign exchange rate changes	(79,550) —————	148,380 —————	- —————	- —————
Cash and cash equivalents at the
end of the year	(9,677,495)	(7,521,317)	(559,845)	8,338
	===================	================	===================	====================

Island Hotels Group Holdings p.l.c.

Registered Address: The Coastline Hotel, Salina Bay, Salina, NXR 9030, Malta. Telephone: +356 2157 3781/4

Commentary on Financial Statements for period ended 31 October 2011

Background

The group's business comprises the ownership and operation of hotels in Malta and the provision of accommodation, catering and related services. The group is made up of a holding company, that acts as an investment company, together with its subsidiaries and jointly controlled entities.

Review of Business

The results of the group in this preliminary statement represent the results of the holding company together with those of its subsidiaries and its share of jointly controlled entities for the year ending 31 October 2011.

The business patterns and operating results for the year ended 31 October 2011 were very similar to those of the previous year. The performance of the tourist market generally exceeded expectations but the vacation ownership market remained difficult. There were, once again, considerable vacation ownership sales on a tradein basis, where only the incremental value of an upgraded sale is taken to profit. The value of the ownership rights traded in is not taken to stock but is available for resale in future years, thereby extending the life and profitability of the project.

The acquisition of 50% of Buttigieg Holdings Limited extended considerably the group's production capacity for event catering. The acquisition was made in the latter part of the financial year and its full benefits will be felt in the group's results in future years. This acquisition was financed by the issue of 1,070,960 Ordinary shares of € 1 each.

As a result of increased activity, staff costs, food and beverage costs and other operating costs have increased considerably over the previous year, notwithstanding some significant operational efficiency improvement. Depreciation and finance costs increased marginally.

The business conditions that the group faces remain difficult and do not show immediate signs of improving. The worsening economic conditions in all of the group's major markets, will continue to present challenges. These challenges will again be faced by a strong focus on vacation ownership sales, by a continued drive to improve operational efficiency and by continuing to seek new business opportunities. The plans to develop Hal Ferh into a high quality resort are at the stage of obtaining the various permits and concurrently the group is actively seeking fresh external equity to finance this development. The group will continue to focus on event catering activities to leverage on its clear market leadership position. The group is confident that new exclusive venues will increase its service offering in the coming year.

In terms of Listing Rule 5.54.6, the financial information of the company and the group for the year ended 31 October 2011 contained within this company announcement has been agreed with the group's auditors and has been extracted from the audited financial statements of the group which were approved by the board of directors on the 23 February 2012.