An Irish-based internet hotel booking agent with high-profile backers plans to raise $40 million (€33.8 million) from a float on the London Stock Exchange on May 7th.
CNG Hotels, which flagged its flotation plans at the weekend, yesterday applied for admission to London's Alternative Investment Market (AIM) on May 7th. The company also stated that it planned to raise $40 million from the market.
The company's shareholders include Menolly Homes boss Mr Séamus Ross, who has invested $17 million in the business since its foundation, and Dr Michael Smurfit, who was appointed chairman at last week.
Mr Ross has 30 per cent of the company and his son is also a non-executive director. It is not possible to identify Dr Michael Smurfit's stake as he only recently invested in CNG. Its listing application makes it clear that it is more than 3 per cent.
Chief executive Mr Finbarr Power also has a significant stake.
The company increased its share capital by creating two million new deferred shares last month. CNG's returns to the Companies' Registration Office (CRO) list Enterprise Ireland and business woman Ms Gillian Bowler are listed as owning small stakes.
An initial pathfinder document issued by City of London advisers Evolution Beeson Gregory values the company at $120-$140 million. It bases this on projected post-tax profits for this year of $10.7 million.
The advisers point out that the valuation is 12-14 times its earnings, which in turn is a 30-40 per cent discount to the valuations of operations such as Lastminute.com and ebookers.
Evolution Beeson Gregory states that CNG had a turnover of $40.7 million last year, and had pre-tax profits of $2 million. It projects that revenues will rise to $62 million next year and pre-tax earnings to $11.8 million. This will jump to $95 million and $23 million turnover and profit respectively in 2006.
The latest CNG Hotels Ltd balance sheet filed with the CRO shows that it had accumulated losses of €582,000 at the end of 2001. It had been trading for more than two years. The company's auditor, Dublin firm Cremin McCarthy, warned that there was a fundamental uncertainty in the company's financial position.
However, the auditor also said that the turnover was increasing, and that cash flows prepared by the company's management indicated that it was moving toward profitability. It added that continued trading was dependent on those forecasts being "reasonably accurate".
CNG has been in business since 1999 and is based in Kenmare, Co Kerry. The company acts as an agent, selling hotel rooms to business travellers via the internet. It has also developed technology for this activity.
