Action Hotels PLC Trading update for the year ended 31 December 2016 (7946C)

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RNS Number : 7946C

Action Hotels PLC

20 April 2017

This announcement contains inside information

20 April 2017

Action Hotels plc

Trading update for the year ended 31 December 2016,

and Notice of Full Year Results Announcement

Action Hotels plc ("Action Hotels", the "Group" or the "Company"); a leading owner, developer, and asset manager of branded three and four-star hotels in the Middle East and Australia, provides the following update on its trading performance for the year ended 31 December 2016, and its current trading, ahead of the announcement of its full year audited results which is expected to be on 2 May 2017.

2016 Financial Overview

Action Hotels experienced another year of growth across it key main performance indicators of revenue, EBITDA and asset values, driven by solid performances across its operating portfolio along with the addition of three new hotels opening during the year. The openings of ibis Styles Brisbane Elizabeth Street, Tulip Inn Ras Al Khaimah and Mercure Sohar increased the number of operational rooms by 39.7% to 2,181 (2015: 1,561).

The Company expects to report total revenue increased by c.22% to approximately $53.1m (2015: $43.5m), adjusted EBITDA(1) increased by c.16% to approximately $18.5m (2015: $16.0m) and the value of Action Hotels' hotel assets increased by c.15% to approximately $458m (2015: $397m). As is typical in many development companies, Action Hotels experienced some unforeseen delays in opening dates of some of its new hotels and this has negatively impacted revenue resulting in a level that is materially below market expectations.

Total Assets grew with investment in the new hotels and development portfolio and outperformed market expectations. The development pipeline is currently being funded by operational cash flow along with increasing debt. This increased debt gives a LTV of 51%. Net Asset Value (NAV) is expected to be $195m, in line with market expectations.

Given Action Hotels is in accelerated growth and development phase, an overall net loss before tax position is expected as a result of the impact of pre-opening costs of the new hotels, finance costs and depreciation and amortization. These costs are charged from the day the hotel is capable of operating but before it reaches its mature operational performance levels and therefore have a disproportionate impact on profitability during this growth and development phase. As a result of the finance costs, relating to the increase in debt required to fund the development pipeline, and the other costs associated with the expansion programme, the net loss figure will be materially higher than original anticipated.

Dividend

In line with the Board's intentions to pay a progressive dividend to shareholders, the intention is to pay a final dividend in respect of the year ended 31 December 2016 in line with market expectations. The dividend is expected to be paid on or around the 15 June 2017, subject to the approval of the dividend at the Company's annual general meeting. It is expected that the Company's ordinary shares will be marked ex-entitlement to such dividend on 25 May 2017, and the dividend will be payable to all shareholders on the Company's share register at the close of business on 26 May 2017.

2017 Current trading

Trading in Q1 2017 is solid with total revenue up c.14% over the same period last year. Stable performances continue from our mature operating hotels(2) , with average occupancy in line with last year at c.76% (Q1 2016: 77%). We are mindful, however, of adverse pressure on the hotel sector across the Middle East, however management remain confident that its strategy to focus exclusively on the economy and midscale hotel sector, where the demand for this type of accommodation exceeds supply ensures fundamentals will remain solid with revenue growth coming from new rooms.

Hotel pipeline

Action Hotels now has 12 operating hotels. The Group's pipeline currently consists of a further six hotels, with a total of 354 new rooms expected to be completed by the end of 2017. We will open in our seventh country of operation and have a total of 3,184 rooms upon completion of the pipeline hotel developments.

Alain Debare, Action Hotels CEO said:

"We are pleased to update the market on our performance which has been robust across the Action Hotels portfolio. We remain focused on driving performance at our operating hotels and our growth reflects the strong contribution from our mature(2) hotel portfolio, as well as the encouraging success of our newest hotels as they gain traction in their respective markets. We have a good pipeline of hotels in development and are on track to complete an additional three hotels this year"

For more information, contact:

 
 Action Hotels PLC               Tel: +44 (0) 20 
                                 7907 9663 
 Alain Debare, Chief Executive 
  Officer 
 Katie Shelton, Director of 
  Corporate Affairs 
 
 
 
 Zeus Capital plc (NOMAD 
  & Broker) 
 Dan Bate / Jonathan Sharp   Tel: +44 (0) 16 
                              1831 1512 
 

Victoria Ayton Tel: [phone]

 
 Camarco (Press enquiries)        Tel: +44 (0) 20 
                                  3757 4994 
 Jennifer Renwick / Tom Huddart 
 
 

Notes to Editors

Action Hotels PLC

Action Hotels PLC is a leading owner, developer and asset manager of branded three and four star hotels in the Middle East and Australia. Established in 2005, Action Hotels currently has 12 completed hotels with 2,181 rooms in aggregate across the Middle East and Australia, with further properties in development in both regions.

More information is available at http://www.actionhotels.com/

Notes

1. Adjusted EBITDA is defined as operating profit before depreciation, amortisation, restructuring and listing costs, gains and losses arising from the disposal of property, plant and equipment and pre-opening costs.

2. Mature operating hotels are; ibis Glen Waverley, ibis Salmiya, ibis Muscat, ibis Amman, ibis Sharq, Holiday Inn Muscat, ibis Budget Melbourne Airport.

All currency amounts are in US$ unless otherwise stated.

Cautionary Statement

This announcement contains unaudited information and forward-looking statements that are based on current expectations or beliefs, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts and undue reliance should not be placed on any such statements because they speak only as at the date of this document and are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and Action Hotel's plans and objectives, to differ materially from those expressed or implied in the forward-looking statements. Action Hotels undertakes no obligation to revise or update any forward-looking statement contained within this announcement, regardless of whether those statements are affected as a result of new information, future events or otherwise, save as required by law and regulations.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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April 20, 2017 02:00 ET (06:00 GMT)