TSH posts neutral results

A. Tsokkos Hotels Pcl released its first half results posting a 3.1%

decrease in revenues to CYP 6.19 mln. Net profit fell to CYP 623.000 in the first half from CYP 659.000 a year ago in the same period. EPS was at 0.25 cent compared to 0.27 cent before.

Total Revenues fell primarily due to lower revenues from local operations due to a different accounting treatment one of the Company’s existing hotel units during the first half. Specifically, the hotel unit was treated as an associate company rather than as a subsidiary. Local revenues decreased by 5.5% to CYP 5.85 mln, while revenue from the Group’s operations in Egypt advanced by 70% to CYP 341.000. Occupancy rates remained at similar levels as in 1H04.

Gross Profit declined by 19.0% to CYP 1.13 mln, with the gross margin deteriorating to 18.2%. This is the reflection of lower revenues, higher energy prices and high payroll costs. Administration and management expenses increased by 5.9% to CYP 293.000, while as a percentage of revenues they increased to 4.7% from 4.2%.

Net financing expenses increased by 21.5% to CYP 712.000. The net results were positively affected by an unrealised FX related gain of CYP 264k against an FX loss of CYP 44k in 1H04, associated with the restructuring of the Company’s debt position from JPY to EUR.

Bottom line profitability for 1H05 decreased marginally to CYP 623.000 from CYP 659.000. Earnings Per Share was recorded at 0.25 cent vs.

0.27 cent in 1H04.

Due to the strong seasonality factors associated with the tourist industry (especially the hotel sector), 1HQ results are not indicative of the Group’s performance for the whole FY05, Egnatia Financial Services said in a flash note on the results. Hotel companies have their peak

performance during 3Q. However, Egnatia believe that TSH is in good shape and thus maintain their positive view for the performance of the Company in FY05 on the back of an improved local tourism outlook. Egnatia’s Target Price of CYP 15.8 cent and Buy Recommendation were kept unchanged.