We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Customisable watchlists with full streaming quotes from leading exchanges, such as LSE, NASDAQ, NYSE, AMEX, Bovespa, BIT and more.
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Pphe Hotel Group Limited | LSE:PPH | London | Ordinary Share | GG00B1Z5FH87 | ORD NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -10.00 | -0.67% | 1,475.00 | 1,470.00 | 1,480.00 | 1,485.00 | 1,465.00 | 1,485.00 | 11,245 | 16:24:44 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Hotels And Motels | 419.01M | 22.42M | 0.5291 | 27.88 | 624.86M |
From Apr 2019 to Apr 2024
TIDMPPH
RNS Number : 0763Y
PPHE Hotel Group Limited
28 February 2017
28 February 2017
("PPHE Hotel Group" or the "Company")
Audited Annual Results for the year ended 31 December 2016
Publication of Annual Report & Accounts and Notice of Annual General Meeting
PPHE Hotel Group Limited, which owns, leases, develops, operates and franchises full service upscale and lifestyle hotels in major gateway cities and regional centres, predominantly in Europe, is pleased to announce its audited annual results for the year ended 31 December 2016.
Financial summary
-- Reported total revenue increased by 24.6% to GBP272.5 million (2015: GBP218.7 million), mainly due to the first time consolidation of our Croatian operations, new hotel openings and a currency exchange rate benefit. On a like-for-like basis(1) , revenue increased by 6.0%.
-- Reported EBITDA increased by 17.5% to GBP94.1 million (2015: GBP80.1 million) and on a like-for-like basis(1) EBITDA improved by 0.5%. Both reported and like-for-like EBITDA benefited from the first time consolidation of the Croatian operations which offset a softer performance of the existing operations in the first half of the year, as well as increased costs.
-- Normalised profit before tax increased by 6.4% to GBP31.7 million (2015: GBP29.8 million), driven by the Croatian acquisition, which was softened by a lower EBITDA of the pre-existing operations. Reported profit before tax increased by 36.2% to GBP38.2 million (2015: GBP28.1 million).
-- Normalised earnings per share was GBP0.68 (2015: GBP0.71). Reported basic/diluted earnings per share was GBP0.83, an increase of 19% (2015: GBP0.70)
-- Realising shareholder value via Special Dividend of GBP1.00 per ordinary share announced on 13 July 2016, paid to shareholders on 12 August 2016, returning GBP42.2 million of cash to shareholders.
Proposed final dividend of 11 pence per share (2015: 10 pence per share). Total dividend for the year (including the special dividend and interim dividend of 10 pence per share) GBP1.21 per share.
Operational highlights
-- Undertook several corporate activities to further re-shape the Group, paving the way for a successful future whilst continuing to operate a successful business and delivering exemplary service to our guests.
-- Acquisition of the interests from the Group's joint venture partner in Croatia and subsequent takeover offer and placement of shares. The Group's shareholding in Arenaturist d.d. is 77.09% following the transfer of its German and Hungarian operations.
-- Successfully completed debt restructuring programme, with several long-term refinancing facilities for most of the Group's assets at favourable conditions.
-- Park Plaza Nuremberg, a brand new 177-room hotel opened in June 2016, including new destination restaurant BA Beef Club.
-- Major extension project at Park Plaza London Riverbank completed, adding a further six floors (155 rooms) to the hotel. Chino Latino restaurant has been relocated to the first floor to maximise the views of the Houses of Parliament and River Thames.
-- Renovation programmes at Park Plaza Victoria London and art'otel berlin mitte in Germany completed.
-- Soft opening of Park Plaza London Waterloo, a 494-room hotel near Waterloo station, including an espressamente illy café.
-- Construction of Park Plaza London Park Royal, a 212-room hotel, is progressing well and the hotel is expected to open at the end of the first quarter.
Commenting on the results, Boris Ivesha, President and Chief Executive Officer, PPHE Hotel Group said:
"2016 has been a busy and fulfilling year for the Group and I am pleased to announce that we have continued to report a solid performance, particularly in the second half of the year, with revenues increasing across all of our regions in Europe over the year as a whole.
"Trading in the year to date is in line with the Board's expectations in all markets, with the improved market conditions experienced in the second half of 2016 continuing into 2017. In the year ahead we expect further benefit from our new room inventory in London and Nuremberg where our market presence will be strengthened significantly.
"We remain focused on the creation and realisation of shareholder value and we will continue to invest in our existing portfolio, with extensive renovations at several of our hotels in London and the Netherlands, to ensure that our hotels continue to improve on their strong market positions."
Key financial statistics
Hot Features
Premium
Reported in GBP Like-for-like GBP(1)
(GBP) (GBP)
------------------------------ ---------------------------------
Year ended Year ended Year ended Year ended
31 Dec 2016 31 Dec 31 Dec 2016 31 Dec 2015
2015
-------------- ---------------- ------------ --------------- ----------------
Total revenue GBP272.5 million GBP218.7 GBP269.8 GBP254.6 million
million million
-------------- ---------------- ------------ --------------- ----------------
EBITDAR GBP103.0 million GBP88.5 GBP103.1 GBP102.5 million
million million
-------------- ---------------- ------------ --------------- ----------------
EBITDA GBP94.1 million GBP80.1 GBP94.2 million GBP93.7 million
million
-------------- ---------------- ------------ --------------- ----------------
Occupancy 76.0% 84.3% 77.0% 78.0%
-------------- ---------------- ------------ --------------- ----------------
Average room GBP111.0 GBP109.1 GBP110.9 GBP102.1
rate
-------------- ---------------- ------------ --------------- ----------------
RevPAR GBP84.4 GBP92.0 GBP85.4 GBP79.6
-------------- ---------------- ------------ --------------- ----------------
Room revenue GBP183.2 million GBP147.7 GBP181.0 GBP167.9 million
million million
-------------- ---------------- ------------ --------------- ----------------
(1) The 2016 like-for-like comparison figures exclude Park Plaza London Waterloo and Park Plaza Nuremberg from the dates they opened in 2016. Furthermore, the 2015 like-for-like comparison figures include the Croatian operations apart from the first quarter of 2015 and exclude the figures from Park Plaza Prenzlauer Berg Berlin for the second half of the year.
Publication of Annual Report & Accounts and Notice of Annual General Meeting
PPHE Hotel Group Limited will publish later today its annual report and accounts for the year ended 31 December 2016 (the "Annual Report"), including the Notice of Annual General Meeting. These documents shall be available today on the Company's website www.pphe.com.
The Company's Annual General Meeting will be held on 8 May 2017 at 12 noon at 1(st) and 2(nd) Floors, Elizabeth House, Les Ruettes Brayes, St Peter Port, Guernsey GY1 1EW.
Copies of the Annual Report and Notice of the Annual General Meeting shall be submitted later today to the National Storage Mechanism and will shortly be available for inspection at: www.hemscott.com/nsm.do
In accordance with Disclosure Guidance and Transparency Rule 6.3.5, the information in the attached Appendix consisting of a Directors' Responsibility Statement, principal risks and uncertainties and related party transactions has been extracted unedited from the Annual Report & Accounts for the year ended 31 December 2016. This material is not a substitute for reading the full Annual Report.
Enquiries
PPHE Hotel Group Limited Chen Moravsky, Deputy Chief Executive Officer & Chief Financial Officer Tel: +44 (0)20 7034 4800 Hudson Sandler LLP Wendy Baker / Jocelyn Spottiswoode Tel: +44 (0)20 7796 4133
Notes to editors
The Company is a Guernsey registered company and through its subsidiaries, jointly controlled entities and associates, owns, leases, operates, franchises and develops full-service upscale upper upscale and lifestyle hotels in major gateway cities, regional centres and select resort destinations, predominantly in Europe.
The majority of the Group's hotels operate under the Park Plaza(R) or art'otel(R) brands. The Group has an exclusive licence from Carlson Hotels, one of the world's largest hotel groups, to develop and operate Park Plaza(R) Hotels & Resorts in Europe, the Middle East and Africa. The art'otel(R) brand is wholly owned by the Group.
The Group has a controlling ownership interest (77.09% of the share capital) in the Arenaturist group, one of Croatia's best known hospitality groups.
The Group's portfolio of owned, leased, managed and franchised hotels comprises 40 hotels offering a total of over 9,200 rooms. The Group's development pipeline includes two new hotels, which are expected to add an additional 500 rooms to the portfolio by the end of 2019.
Our Company:
www.pphe.com
Our Hotel Brands:
www.parkplaza.com
www.artotels.com
www.arenaturist.com
Forward-looking statements
This trading statement may contain certain "forward-looking statements' which reflect the Company's and/or the Directors' current views with respect to financial performance, business strategy and future plans, both with respect to the group and the sectors and industries in which the group operates. Statements which include the words "expects", "intends", "plans", "believes", "projects", "anticipates", "will", "targets", "aims", "may", "would", "could", "continue" and similar statements are of a future or forward-looking nature. All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause the group's actual results to differ materially from those indicated in these statements. Any forward-looking statements in this interim management statement reflect the group's current views with respect to future events and are subject to risks, uncertainties and assumptions relating to the group's operations, results of operations and growth strategy. These forward-looking statements speak only as of the date of this interim management statement. Subject to any legal or regulatory obligations, the Company undertakes no obligation publicly to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. All subsequent written and oral forward-looking statements attributable to the group or individuals acting on behalf of the group are expressly qualified in their entirety by this paragraph. Nothing in this publication should be considered as a profit forecast.
CHAIRMAN'S STATEMENT
2016 has been another exciting year for the Group. We continued to make significant progress towards our vision of realising our growth potential and creating long-term value for our shareholders.
Our performance during the year was in line with the Board's expectations.
Alongside our focus on operating a successful business and delivering exemplary service to our guests, we undertook several corporate activities to re-shape our Group and position it for future growth and success.
The Group's acquisition of a controlling interest in our Croatian operation, Arenaturist d.d. ('Arenaturist'), provides us with the opportunity to develop Arenaturist into a dynamic Central and Eastern European leisure and hospitality company, owning and managing its own assets and those of others primarily under the Park Plaza(R) brand.
Progress has continued on the expansion of our portfolio. We opened Park Plaza Nuremberg in the third quarter of the year, and had the soft opening of Park Plaza London Waterloo and completed the extension of Park Plaza London Riverbank in the fourth quarter. We have been working hard on our development projects in London which, in total, will add over 900 rooms to our London inventory once these projects are complete.
During the first six months of the year, the Group took advantage of favourable capital market conditions and successfully refinanced the majority of its assets, equating to just under 75% of the total outstanding borrowings. Following the debt restructuring, the Board approved the payment of its first special dividend of GBP1.00 per share in August 2016, returning GBP42.2 million of excess cash reserves to shareholders. This was in line with the Group's strategy to create and realise shareholder value.
The Board is proposing the payment of a final dividend of 11 pence per share which, together with the interim dividend of 10 pence per share paid on 7 October 2016, brings the total ordinary dividend for the year ended 31 December 2016 to 21 pence per share. Combined with the special dividend payment, a total of GBP51 million is expected to be returned to shareholders for the 2016 financial year.
I would like to take this opportunity to thank all members of the Board for their contribution, guidance and support during what has been a very busy year. Dawn Morgan joined the Board in May 2016 as a Non-Executive Director. Dawn is a Chartered Accountant and former Finance Director and Company Secretary of International Energy Group, and brings with her a wealth of experience.
In addition, on behalf of the Board, I would like to extend my sincere appreciation to our more than 2,700 team members around Europe who have contributed to these solid results.
Our industry continues to evolve and we remain mindful of the geopolitical environment and the uncertainties the European travel industry is currently facing. That said, we have a strong asset base and access to world-class brands and global distribution, inter-alia, through our long-standing relationship with the Carlson Rezidor Hotel Group ('Carlson Hotels'), and we pride ourselves on the high level of service provided to our guests.
We remain focused on our strategic objectives to grow our business and create long-term value for our shareholders, and we look forward to making further progress in the year ahead.
Eli Papouchado
Chairman
PRESIDENT & CHIEF EXECUTIVE OFFICER'S STATEMENT
2016 has been a busy and fulfilling year for the Group and I am pleased to announce that we have continued to report a solid performance, particularly in the second half of the year, with revenues increasing across all of our regions in Europe over the year as a whole.
Our reported total Group revenue increased by 24.6%, driven by our Croatian acquisition, contributions from new hotel openings and currency exchange rate benefit due to the devaluation of the Pound Sterling. On a like-for-like(1) basis, total revenue was up by 6.0%.
Whilst trading in some of our markets in the first half of the year was softer than expected in the build-up to the EU referendum and in the wake of various terrorist attacks, the second half of the year was more encouraging. In London we remained fully focused on optimising our revenue performance and preparing for the launch of several new hotels. Our Dutch hotels delivered a marginal improvement in revenue, reflecting slower year-on-year growth in Amsterdam than experienced in recent years due to weaker Pound Sterling impacting sentiment amongst British travellers.
Our strategy
We remain focused on and committed to the creation and realisation of shareholder value by becoming one of the leading hotel companies in the upscale, upper upscale, and lifestyle segments. Our strategy is built around six core objectives, details of which can be found in the 'Strategy at a glance' section of this report.
We have continued to make significant progress in 2016 against these objectives.
2016 corporate activity
Our Croatian transaction earlier this year made us the controlling shareholder in Arenaturist. Just before the year-end, we transferred our German and Hungarian assets to Arenaturist, transforming it into a year-round business with both leisure operations in Croatia as well as city centre hotels in Germany and Hungary.
Our aim is to broaden the appeal of Arenaturist and develop the company into a dynamic leisure and hospitality company with a unique business model built on owning and managing its own assets and third party assets where appropriate, primarily under the Park Plaza(R) brand.
In addition, this new formation brings benefits to Arenaturist and the German and Hungarian operations, such as inter-regional transfers of team members and cross-sales and marketing opportunities, with the German market being the main feeder market for Croatia.
During the year, we successfully completed the restructuring of several long-term financing facilities for most of the Group's assets in Central London and in The Netherlands on favourable terms.
The Group has in recent years adopted a progressive dividend policy and in 2016, in addition to the ordinary dividend, the Group returned GBP42.2 million of excess cash reserves to shareholders by way of a special dividend following the debt restructuring programme.
These corporate activities have further re-shaped our business and paved the way for future growth. More details can be found in the Deputy Chief Executive Officer & Chief Financial Officer's statement.
New developments
2016 was one of our most active years in terms of new development projects, with three hotel projects and a major hotel extension being progressed. Together these projects will add over 1,000 rooms to our portfolio, the vast majority of which are in the attractive London market.
The soft opening of Park Plaza London Waterloo took place at the end of the year and we look forward to all 494 rooms being operational by the second quarter of 2017. The hotel looks amazing and the feedback from our customers is highly positive.
The extension at Park Plaza London Riverbank, which added 155 new rooms, was completed during 2016. This project included, among others, a total redesign of the entrance to the hotel and the food and beverage facilities, including the relaunch of Chino Latino(R) which has been relocated to the first floor overlooking the River Thames. This major hotel now has more than 600 rooms. The reception in the market has been very positive and we are pleased with the result.
We are expecting to open Park Plaza London Park Royal in the first quarter of 2017. This 212-room hotel has been well designed and is in a great location with easy access to Central London, Wembley and London Heathrow Airport.
In Germany, we had a soft opening of Park Plaza Nuremberg in June 2016, our new vibrant hotel in the centre of the historic city. The hotel has a destination-led Bavarian American inspired restaurant, the BA Beef Club, which is receiving great reviews.
Investment in our portfolio
Through preventative maintenance and refurbishment programmes we are committed to maintaining the high standards of our existing hotels.
In Germany, renovation works were undertaken at Park Plaza Berlin Kudamm. We also relaunched art'otel berlin mitte and the new-look hotel has been well received in the market.
In the United Kingdom, partial renovations of Park Plaza Nottingham, Park Plaza Leeds and Park Plaza Victoria London were undertaken, with further renovations planned for Park Plaza Victoria London in 2017.
Looking ahead, major renovation projects are scheduled to start in 2017 at Park Plaza Vondelpark, Amsterdam, Park Plaza Utrecht and Park Plaza Sherlock Holmes London and are expected to continue in Park Plaza Victoria Amsterdam. This investment will renew and redesign these hotels to ensure they meet our high standards and further enhance each hotel's market position.
Enhanced service quality
Consistently delivering exceptional customer service remains one of the strongest differentiators within the hospitality industry. At PPHE Hotel Group we strongly believe that our team members are the cornerstone of our business, enabling us to continuously deliver exemplary service to our guests.
Our high level of service has been recognised in improvements in both guest satisfaction and service performance scores compared with those achieved in 2015, as measured through our guest satisfaction surveys. Our overall guest satisfaction score increased from 8.31 to 8.39 (on a scale of 1-10) and our service performance score increased from 8.63 to 8.71 (on a scale of 1-10), both of which are record scores for the Group. Naturally, we are proud of our teams delivering such a great result.
Investing in people
Our strong guest satisfaction scores are underpinned by investment in our people through structured training and development programmes. Our ability to attract and retain a highly competent workforce who as a team are wholly aligned to the Group's mission and values has played, and will continue to play, an instrumental role in the development of the Group in today's highly competitive marketplace.
The engagement of our employees within our organisation once again improved year-on-year with 2,630 team members participating in the annual employee engagement survey (2015: 2,552 employees), representing 93% of eligible team members. The overall Employee Engagement Index for the year increased to 84.9% (2015: 84.2%), with a Loyalty Index of 71%.
As part of this survey, engagement from respondents is measured across four drivers: My Job; My Manager; Our Team; and Our Company. Once again in 2016, the best performing driver is Our Team.
This survey provides us with valuable insights into where we perform well and where we can do better, and reflects increased engagement, involvement and commitment of team members.
It is essential that we have the right team in place to support our growth plans. In order to enhance our ability to attract new people into the business, we have adopted a multi-channel resourcing strategy to increase the visibility and reputation of the Park Plaza(R) brand and attract new talent into the business.
We have developed social media engagement campaigns on our careers web site, LinkedIn and XING, utilising digital imagery of our people, culture and values. This approach is part of the recruitment drive for new team members, particularly in London where our development projects have created over 300 jobs.
To complement the efforts made so far, we will soon be launching our new Team Value Proposition for our Park Plaza(R) brand, which aligns the attraction and retention of talent to our brand pillars and values. This proposition has been developed to aid retention of the strong talent we have within the business, as well as position the Park Plaza(R) brand as an attractive proposition to prospective talent. The initiative will enable our employees to achieve career satisfaction and support the Group's growth ambitions. In 2017, we aim to undertake a similar project for the art'otel(R) brand.
In addition, the Group is working in partnership with The Prince's Trust to support young people from disadvantaged backgrounds by providing opportunities for them in the hospitality industry. The Group has presented its careers opportunities at The Prince's Trust 'Get Hired' events and our Team Value Proposition has been well received. This has resulted in several young people being selected to be taken through the recruitment process to join our operational teams. We are looking to strengthen the partnership further with combined apprenticeships and additional resourcing collaborations.
All these initiatives will support future growth of our portfolio, encourage people into careers in the hospitality industry and enable us to maintain our commitment to exemplary customer service.
Partnership with Carlson Hotels
Our strategic and long-standing partnership with Carlson Hotels, one of the world's leading hotel companies, has gone from strength to strength.
The Group owns, operates and franchises hotels under multiple brands, including the Carlson Hotels owned Park Plaza(R) brand, for which it has a perpetual exclusive licence for certain countries in EMEA.
Through our relationship with Carlson Hotels we are able to compete with the international travel industry giants whilst having the operational agility of a medium-size owner/operator.
In an ever more globalised digital world, we are able to leverage this relationship which brings us many benefits, including global distribution of our products through associated travel agents, online travel websites, global sales teams, e-commerce and powerful global customer reward schemes.
Our participation in the Club Carlson(SM) loyalty scheme provides us with access to a growing database of international travellers, with membership of the scheme now in excess of 17.0 million. The scale of the scheme means our guests have significant opportunities to earn or redeem points, thereby fostering loyalty. Members of the loyalty programme are more likely to return than non-members, their loyalty score is higher and the average room rate associated with member stays is higher than with non-member stays. This, along with other marketing initiatives, enables us to increase our engagement with both existing and potential customers and drive revenue growth.
In addition, we are undertaking some brand positioning work with Carlson Hotels for the Park Plaza(R) brand to further carve out Park Plaza(R)'s niche in the competitive landscape.
During the year, Carlson Hotels Inc. was acquired by HNA Tourism Group. Following this transaction, we anticipate that the Park Plaza(R) brand will benefit from increased investment in technology and marketing by Carlson Hotels' new owners, as previously announced by Carlson Hotels.
Industry recognition
We are delighted to have been recognised for a number of awards within our industry. Our learning and development activities in areas such as on-boarding of new team members were recognised with an 'HR in Hospitality Award' in the category 'Embedding Company Culture'. We see this as an important recognition as our company culture and strong service focus are what helps us to differentiate within the industry.
Many of our hotels also received a 'Certificate of Excellence 2016' from TripAdvisor, which demonstrates that our hotels are generating positive reviews by guests staying with us. Such recognition will help attract new customers.
Supporting the community
During the year the Group has supported and raised funds for the World Childhood Foundation, Breast Cancer Care, the Pink Ribbon Foundation, Nottinghamshire Wildlife Trust and StreetSmart SleepSmart.
Our people
On behalf of the Board, I would like to take this opportunity to thank everyone that has worked for the Group during the year and contributed to our success. We are sincerely grateful for your hard work, professionalism and enthusiasm.
At the same time we would like to welcome all new team members who have joined our Group. We believe that we have fantastic hotels and the right people and are confident that we will succeed together.
Current trading and outlook
The improved market conditions experienced in the second half of 2016 have continued into 2017, and we expect to take advantage of such conditions, particularly as we benefit from our new room inventory in London and Nuremberg where our market position will be strengthened significantly. Trading in the year to date is in line with the Board's expectations in all markets.
We will continue to invest in our existing portfolio with extensive renovations at several of our hotels in London and the Netherlands to ensure that our hotels continue to improve on their strong market positions. As previously indicated, once renovations commence we anticipate reduced capacities and a short-term impact on revenue due to temporary closures of rooms and public areas. Whilst these programmes may negatively impact revenue in the short term, we believe that this investment will have a positive impact on our longer-term results and strengthen our position in the markets in which we operate.
Boris Ivesha
President & Chief Executive Officer
1 The 2016 like-for-like comparison figures exclude Park Plaza London Waterloo and Park Plaza Nuremberg from the dates they opened in 2016. Furthermore, the 2015 like-for-like comparison figures include the Croatian operations apart from the first quarter of 2015 and the figures from Park Plaza Prenzlauer Berg Berlin for the second half of the year.
DEPUTY CHIEF EXECUTIVE OFFICER & CHIEF FINANCIAL OFFICER'S STATEMENT
Reported in GBP Like-for-like GBP*
(GBP) (GBP)
------------------------------ ---------------------------------
Year ended Year ended Year ended Year ended
31 Dec 2016 31 Dec 31 Dec 2016 31 Dec 2015
2015
-------------- ---------------- ------------ --------------- ----------------
Total revenue GBP272.5 million GBP218.7 GBP269.8 GBP254.6 million
million million
-------------- ---------------- ------------ --------------- ----------------
EBITDAR GBP103.0 million GBP88.5 GBP103.1 GBP102.5 million
million million
-------------- ---------------- ------------ --------------- ----------------
EBITDA GBP94.1 million GBP80.1 GBP94.2 million GBP93.7 million
million
-------------- ---------------- ------------ --------------- ----------------
Occupancy 76.0% 84.3% 77.0% 78.0%
-------------- ---------------- ------------ --------------- ----------------
Average room GBP111.0 GBP109.1 GBP110.9 GBP102.1
rate
-------------- ---------------- ------------ --------------- ----------------
RevPAR GBP84.4 GBP92.0 GBP85.4 GBP79.6
-------------- ---------------- ------------ --------------- ----------------
Room revenue GBP183.2 million GBP147.7 GBP181.0 GBP167.9 million
million million
-------------- ---------------- ------------ --------------- ----------------
* The 2016 like-for-like comparison figures exclude Park Plaza London Waterloo and Park Plaza Nuremberg from the dates they opened in 2016. Furthermore, the 2015 like-for-like comparison figures include the Croatian operations apart from the first quarter of 2015 and exclude the figures from Park Plaza Prenzlauer Berg Berlin for the second half of the year.
Performance
We are pleased to have made further progress in what was a busy year for the Group and announce results in line with the Board's expectations. Reported total revenue was up 24.6% to GBP272.5 million (2015: GBP218.7 million) and EBITDA increased by 17.5% to GBP94.1 million (2015: GBP80.1 million). This growth was mainly the result of the first time consolidation of our Croatian operation with additional growth from the opening of new hotels and a currency exchange rate benefit. On a like-for-like basis(1) , total revenue increased by 6.0% and EBITDA improved by 0.5%. The late openings of the new hotels in London, as well as disruption due to major renovation works at Park Plaza London Riverbank and Park Plaza Victoria London, impacted the aforementioned like-for-like figures. However, given our strong presence in London, we expect to reach stabilised trading expeditiously.
Our performance was achieved in a year of significant corporate activity whereby we acquired the interests from the Group's former joint venture partner in Croatia as well as the subsequent takeover offer and sale of shares to institutional investors, the debt restructuring of the majority of the Group's assets and the return of excess cash to shareholders through a special dividend payment.
These activities have further re-shaped our business, paving the way for future growth.
RevPAR
Like-for-like(1) RevPAR increased by 7.2% to GBP85.4 (2015: GBP79.6) reflecting improved trading of our Croatian operations and a foreign currency exchange benefit due to the weakening of Pound Sterling against the Euro and Kuna. This RevPAR growth was achieved through an 8.6% increase in average room rate to GBP110.9 (2015: GBP102.1). Occupancy was flat at 77.0% (2015: 78.0%). As a result, like-for-like(1) room revenue was up 7.8% to GBP181.0 million (2015: GBP167.9 million).
Reported RevPAR decreased by 8.2% to GBP84.4 (2015: GBP92.0). This decrease was a direct result of the first time consolidation of our Croatian operation, which is a highly seasonal business heavily weighted towards the summer months.
Occupancy reduced by 830 bps and average room rate increased by 1.8%. Reported room revenue was up 24.0% to GBP183.2 million (2015: GBP147.7 million).
EBITDA
Reported EBITDA increased by 17.5% to GBP94.1 million (2015: GBP80.1 million) and our reported EBITDA margin for the year reduced by 210 bps to 34.5% (2015: 36.6%).
On a like-for-like(1) basis, EBITDA increased by 0.5% to GBP94.2 million (2015: GBP93.7 million) and our EBITDA margin reduced by 110 bps to 34.9% (2015: 36.0%).
Both reported and like-for-like EBITDA were positively affected by the first time consolidation of the Croatian operation and improved trading in the Croatian operation, which were offset by a softer performance of the existing operations in the first half of the year, as well as increased costs including payroll in the United Kingdom and cost of sales.
Normalised profit before tax
Reconciliation reported
to normalised profit
--------------------------
Year ended Year ended
31 Dec 31 Dec 2015
2016 GBP million
GBP million
------------------------------------------------------- ------------ ------------
Reported profit before tax 38.2 28.1
------------------------------------------------------- ------------ ------------
Fair value movements on derivatives recognised
in the profit and loss (0.2) (0.4)
------------------------------------------------------- ------------ ------------
Negative goodwill and capital gains after the
acquisition of the remaining interests in Arenaturist (26.2) -
------------------------------------------------------- ------------ ------------
Refinance costs and expenses (including termination
of hedge) 23.4 -
------------------------------------------------------- ------------ ------------
Park Plaza Westminster Bridge London fair value
adjustment on income swaps and buy back of Income
Units 0.6 2.8
------------------------------------------------------- ------------ ------------
Forfeited deposits from rescinded sale contracts
of Income Units at Park Plaza Westminster Bridge (6.5) -
London to private investors
------------------------------------------------------- ------------ ------------
Restructuring expenses and pre-opening expenses
2.4 -
------------------------------------------------------- ------------ ------------
2015 other one-off adjustments (see Note 24 to
the Consolidated financial statements ) - (0.7)
------------------------------------------------------- ------------ ------------
Normalised profit before tax* 31.7 29.8
------------------------------------------------------- ------------ ------------
*The normalised earnings per share amount to GBP0.68, calculated with 42,173,000 average outstanding shares.
Normalised profit before tax increased by 6.4% to GBP31.7 million (2015: GBP29.8 million). The Croatian acquisition was the main driver of the increase, which was softened by a lower EBITDA of the pre-existing operations. Adjustments made to normalise reported results relate to items that the Group considers unrelated to its day-to-day business activities and important for the understanding of the underlying performance, for which a reconciliation is provided in the table above.
Profit before tax
Reported profit before tax increased by GBP10.1 million (36.2%) to GBP38.2 million (2015: GBP28.1 million). The increase in reported profit was affected by gains arising from the application of International Financial Reporting Standards accounting following the Group obtaining control of Arenaturist, in which we previously held a minority interest (refer to Note 3 in the Consolidated financial statements in the 2016 Annual Report and Accounts), amounting to GBP26.2 million. GBP23.4 million relates to costs incurred in the 2016 refinancings which were the result of the breakage of interest rate derivatives and transaction fees. Furthermore, the reported profit was affected by the recognition of deferred income coming from the release of forfeited deposits in connection with rescinded sales of Income Units at Park Plaza Westminster Bridge London to private investors. All of the above and other minor adjustments are outlined in the table above.
Asset base and leverage
The Group realises over 90% of its revenue and EBITDA from assets in ownership, of which the majority of EBITDA is generated by assets which are located in Central London and Amsterdam. The development pipeline increases our asset base of freehold units in the strong London market. Apart from successfully operating the hotels it owns, the Group has over 30 years of experience in developing and managing assets. This unique in-depth knowledge of the real estate market and its proven track record of developing and realising value from property transactions and development over the last decade, enables the Group to act quickly on opportunities.
This business model requires significant capital investment, which the Group leverages by borrowing from well-known financial institutions within a 50%-65% loan-to-value ratio. The Group also relies on its extensive experience in property finance, with strong relations with funding institutions and a track record of refinancing its assets, even when met with challenging market conditions.
In the year, the Group has successfully refinanced all of its assets in the Netherlands and Central London (excluding developments), equating to approximately GBP565 million (reflecting just under 75% of total outstanding borrowings as at 31 December 2016). With the debt restructuring the Group has extended the weighted average term to maturity of its debt facilities from approximately three years to approximately nine years.
Below is a synopsis of the key factors of the new borrowing and refinanced packages.
Over the past years both the London and the Amsterdam real estate markets have shown a strong and diversified demand for hotel investments which has led to an increase in real estate prices. As part of the process of securing the new facilities, an independent valuation of the Group's interests in the hotels was obtained. In the financial statements the Group measures its assets at cost price less accumulated depreciation. The table below summarises the independent valuations that were obtained in the past months, comparing these with the book values.
Book value of property, plant and equipment compared with fair value
Book value Fair value*
In GBP millions 31 December 31 December
2016 2016
------------------ ------------ ------------
Total properties 1,069.7 1,508.7
------------------ ------------ ------------
*The fair value of 2016 refinanced properties has been determined in the last 12 months; these have been prepared by market leading independent valuators such as Savills Plc and Knight Frank LLP, which were engaged by each of Aareal Bank AG, AIG Asset Management (Europe) Limited and Cornerstone Real Estate Advisers Europe LLP for their respective financings. The fair value takes into account approximately GBP35.4 million planned capex and all properties under development are stated at cost.
The majority of the Group's facilities are asset backed and have limited or no recourse. These debts are managed on either a single property or a portfolio basis. These asset backed loans contain certain covenants and most commonly a loan to value ratio. The Company is usually permitted to rectify any potential default thus removing the threat of needing to refinance at less favourable terms.
Loan Restructuring
Newly obtained loans Refinanced loans
---------------------------------------------------- ---------------------------------------------------
Refinanced
Current Amount Lending Amount
lending bank in millions Maturity Interest bank in millions Maturity Interest
-------------- ------------ ---------- ---------- ------------- ------------ ---------- ----------
Aareal Bank June Aareal December
AG EUR182.0 2026 2.165% Bank AG EUR141.9 2018 4.599%
-------------- ------------ ---------- ---------- ------------- ------------ ---------- ----------
Aareal Bank June Aareal December
AG GBP150.0 2026 3.248% Bank AG GBP100.8 2018 5.665%
-------------- ------------ ---------- ---------- ------------- ------------ ---------- ----------
Cornerstone
Real Estate
Advisers April Aareal December
Europe LLP GBP87.0 2026 3.41% Bank AG GBP64.8 2018 5.665%
-------------- ------------ ---------- ---------- ------------- ------------ ---------- ----------
AIG Asset
Management Bank Hapoalim
(Europe) May (Luxembourg) June
Limited GBP182.4 2028 3.785% S.A. GBP104.2 2018 5.560%
-------------- ------------ ---------- ---------- ------------- ------------ ---------- ----------
Dividend
For the year 2016 the Board is proposing a final dividend payment of 11 pence per share (2015: 10 pence per share) which, when combined with the interim dividend of 10 pence per share (2015: 10 pence per share) paid to shareholders on 7 October 2016 and the special dividend of GBP1.00 per share paid to shareholders on 12 August 2016, brings the total dividend for the year ended 31 December 2016 to GBP1.21 per share (2015: 20.0 pence per share).
With the current year profit, the dividend cover (earnings per share divided by the ordinary dividend per share) amounts to 4.0, indicating a sustainable level.
The Company started paying dividends in 2012 and, given the Board's confidence in the strength of the business, in 2013 it indicated its intention to follow a progressive dividend policy, retaining proper and prudent reserves. The chart below provides an overview of the dividend payment history.
Subject to shareholder approval at the Annual General Meeting, to be held on 8 May 2017, the dividend will be paid on 12 May 2017 to shareholders on the register at 31 March 2017. The shares will go ex-dividend on 30 March 2017.
In addition to the ordinary dividends, following the successful refinancing in 2016 of several hotels which resulted in excess cash reserves, a special dividend of 100 pence per ordinary share was announced on 13 July 2016 and was paid to shareholders on 12 August 2016, returning GBP42,197,512 to shareholders. This special dividend is in line with the Group's primary objective of creating and realising shareholder value, which it achieved by realising part of the value of its assets.
Financial position
The net bank debt as at 31 December 2016 was GBP584.9 million, an increase of GBP187.3 million (as at December 2015: GBP397.6 million). During the period, the movement in net bank debt included, among others, an increase due to the acquisition and consolidation of the Croatian operations of GBP64.3 million; a GBP25.2 million increase to finance the construction of Park Plaza London Waterloo; a GBP3.4 million increase to finance the extension of Park Plaza London Riverbank; a GBP15.3 million increase to finance the construction of Park Plaza London Park Royal; a GBP6.6 million increase to finance the construction of Park Plaza Nuremburg; a GBP180.7 million increase as part of refinanced facilities in the United Kingdom and the Netherlands; and a GBP26.7 million increase which relates to foreign exchange. In addition, a decrease of GBP15.4 million relates to the redemption of loans and an improved cash and deposit position of GBP121.7 million.
Earnings and shareholder value
Normalised earnings per share was GBP0.68 (2015: GBP0.71), representing a decrease of 3.76%. Reported basic/diluted earnings per share for the period was GBP0.83, an increase of 19% (2015: GBP0.70).
Transforming Arenaturist
Arenaturist: A Timeline
2008
-- PPHE Hotel Group acquires a minority interest in the entity which holds a controlling share in Arenaturist
-- The Group is awarded various management agreements for Arenaturist's properties and the properties of the three Croatian private companies held by the joint venture ('Small Boras')
2008- 2011
-- Focus on improving overall quality, guest satisfaction and profitability -- Preparation of plans for extensive renovations and redevelopments
2012 -2015
-- Extensive renovations of approximately half of Arenaturist's hotel rooms -- Rebranding of three hotels and one self-catering apartment complex to Park Plaza(R) :
o Park Plaza Histria Pula
o Park Plaza Verudela Pula
o Park Plaza Belvedere Medulin
o Park Plaza Arena Pula
-- Rebranding of one hotel to Sensimar Hotel Medulin
2016
-- The Group acquires a controlling interest in Arenaturist, made a mandatory takeover offer of Arenaturist and subsequently sold some of its shares to two of Croatia's largest institutional investors
-- Further consolidation of Arenaturist as the Small Boras are sold to Arenaturist
-- Listing of Arenaturist's shares is moved from the Regular Market to the Official Market of the Zagreb Stock Exchange
-- Arenaturist entered into an agreement to acquire the freehold interests in art'otel cologne and art'otel berlin kudamm
-- PPHE Hotel Group transfers its German and Hungarian operations to Arenaturist, together with an exclusive right in certain countries within the CEE Region to develop and manage hotels under the Park Plaza(R) brand - in exchange for new shares in Arenaturist - establishing Arenaturist as a dynamic international leisure and hospitality company with excellent growth prospects
-- Arenaturist convenes a General Assembly to be held in March 2017 to approve, among others, a capital increase of its shares from 3,273,750 ordinary shares to between 4,273,750 and 5,273,750 ordinary shares by way of a public offering of new shares in the Republic of Croatia
Investment in Croatia
2016 was an important year of transition for our investment in Croatia and significant activities were undertaken to re- shape the Arenaturist group, paving the way for a successful strategy to develop Arenaturist into a dynamic hospitality company in Central and Eastern Europe whilst strengthening and developing its business and market position in the upscale and upper upscale segments of the hospitality market, primarily within Croatia and Germany. With the execution of such strategy, the Group is able to achieve further sustainable growth by having access to different capital markets (both equity and debt).
The Group first entered Croatia in 2008 with the acquisition of a 20% stake in a company known as WH/DMREF Bora B.V. ('Bora'). Bora indirectly held 74.15% of the issued share capital of Arenaturist, a Croatian joint stock company then listed on the Regular Market of the Zagreb Stock Exchange (it is now listed on the Official Market of the Zagreb Stock Exchange), and had 100% ownership of three Croatian private operating companies. Together, these companies at the time owned eight hotels and five self-catering holiday apartment resorts and operated five campsites in Istria. In addition to this 20% acquisition, the Company was awarded management agreements for the Arenaturist properties and those properties of the three Croatian private operating companies. At that stage, the Arenaturist group was accounted for as an associate, and its results were not consolidated but presented as a separate line in the profit and loss and balance sheet.
Furthermore, in February 2017, Arenaturist completed the acquisition of the freehold interests in art'otel berlin kudamm and art'otel cologne, which the Group leased and managed, for an amount of EUR54.5 million (GBP47.4 million) net of any applicable VAT (of which EUR2,329,000 (GBP2.0 million) is on account of fixtures, fittings and equipment payable by the operating companies within the Group). Following completion of this transaction, the previous lease expenses are eliminated. Furthermore, Arenaturist was able to secure funding on beneficial terms.
As a next step in its transition, Arenaturist is now planning a capital increase of its issued ordinary shares from 3,273,750 to between 4,273,750 and 5,273,750 ordinary shares by way of a non-preemptive public offering of new shares in Croatia. The proposed public offering is a further step in the execution of our strategy of developing Arenaturist into a dynamic Central and Eastern European leisure and hospitality company with a business model that includes owning and managing its own assets and those of others, primarily under the Park Plaza(R) brand.
Return on capital employed
The Group actively pursues a strategy of hotel ownership, which is different from many hotel groups where ownership of hotel assets is separated from hotel operations. One of the benefits of our owner/operator model is to remove the usual conflict associated between the two different interests in the property. Our strategy has proven to create significant value by enabling the Group to fund its growth in recent years. The Group has the expertise to master the complexities involved in real estate ownership and transactions, including debt/equity structuring, exit strategies, and (re)developing real estate into valuable hotel properties.
Joint ventures
Owned properties and associates
------------------------ ------------------------ ------------
GBP millions In Under Operating In Under Management
operation development leases operation development and central
costs Reported
-------------------- ---------- ------------ --------- ---------- ------------ ------------ --------
Balance Sheet
-------------------- ---------- ------------ --------- ---------- ------------ ------------ --------
Book value
properties(1,2) 768.4 144.7 1.3 - - 2.3 916.7
-------------------- ---------- ------------ --------- ---------- ------------ ------------ --------
Book value
intangible
assets - - - - - 25.2 25.2
-------------------- ---------- ------------ --------- ---------- ------------ ------------ --------
Book value
non-consolidated
investments - - - 3.8 14.6 - 18.4
-------------------- ---------- ------------ --------- ---------- ------------ ------------ --------
Bank loans,
(short restricted)
cash and
liquid assets
(adjusted
net debt) (569.2) (102.8) 2.7 - - 84.2 (585.1)
-------------------- ---------- ------------ --------- ---------- ------------ ------------ --------
Deferred
contribution
of sales
of Income
Units at
Park Plaza
Westminster
Bridge London (10.2) - - - - - (10.2)
-------------------- ---------- ------------ --------- ---------- ------------ ------------ --------
Other assets
and liabilities (26.0) (4.7) (1.5) - - (2.6)(4) (34.8)
-------------------- ---------- ------------ --------- ---------- ------------ ------------ --------
Capital employed 163.0 37.2 2.5 3.8 14.6 109.1 330.2
-------------------- ---------- ------------ --------- ---------- ------------ ------------ --------
Normalised
profit
-------------------- ---------- ------------ --------- ---------- ------------ ------------ --------
Revenues 245.0 0.4 22.7 - - 4.4 272.5
-------------------- ---------- ------------ --------- ---------- ------------ ------------ --------
Adjusted
EBITDA(3) 97.9 (0.4) 1.9 0.4 - (5.7)(3) 94.1
-------------------- ---------- ------------ --------- ---------- ------------ ------------ --------
Depreciation
and amortisation (22.3) - (0.3) - - (2.7) (25.3)
-------------------- ---------- ------------ --------- ---------- ------------ ------------ --------
EBIT 75.6 (0.4) 1.6 0.4 - (8.4) 68.8
-------------------- ---------- ------------ --------- ---------- ------------ ------------ --------
Interest
expenses
banks and
finance leases (24.7) (0.9) - - - (0.2) (25.8)
-------------------- ---------- ------------ --------- ---------- ------------ ------------ --------
Interest
guaranteed
to unit holders (10.5) - - (10.5)
-------------------- ---------- ------------ --------- ---------- ------------ ------------ --------
Other finance
expenses
and income - - - 0.7 0.3 (0.1) 0.9
-------------------- ---------- ------------ --------- ---------- ------------ ------------ --------
Result from
joint ventures
and associates - - - (1.5) (0.2) - (1.7)
-------------------- ---------- ------------ --------- ---------- ------------ ------------ --------
Normalised
profit before
tax 31 December
2016 40.4 (1.3) 1.6 (0.4) 0.1 (8.7) 31.7
-------------------- ---------- ------------ --------- ---------- ------------ ------------ --------
Normalised
profit before
tax 31 December
2015 30.8 (0.7) 0.7 3.6 0.1 (4.7) 29.8
-------------------- ---------- ------------ --------- ---------- ------------ ------------ --------
(1) Assets are reported at cost, less depreciation.
(2) Finance lease liabilities and deferred taxes relating to properties have been netted with the property book value.
(3) Management fees generated on owned and leased hotels are added back on the results of those hotels.
(4) Including unallocated assets and liabilities.
Hotel real estate is an important part of the Group's assets and it is essential to understand this ownership business model in order to be able to accurately value this critical investment. This model is capital intensive and the funding structure of these properties using debt and equity has a significant impact on the equity returns of the Group. Properties under development place a burden on the capital of the Group without creating an immediate return. However, once these developments complete, they will add to the profitability of the Group like any other trading asset it owns.
Although the Group pursues full property ownership, we understand that the capital intensity required for full ownership may hinder the Group's growth in other attractive markets. Therefore, the Group has a mixed portfolio approach that provides a spread of risk and reward. The Group has entered into some strategic investments, whereby a non-controlling stake was taken in the real estate, sometimes together with a long-term management agreement. In some of these cases the Group's stake is structured via equity interests and debt funding, providing the Group with potential dividends and interest income. One of the main benefits from such arrangements remains the management and incentive fee earned by the Group in managing these hotels. Furthermore, the Group has entered into several lease, management or franchise agreements. Each of these business models has its own merits but they have in common that they require little to no capital. This enables the Group to grow the portfolio whilst it benefits from fee-based income.
The table opposite provides some selected data for these assets for the year ended 31 December 2016, prepared in Pound Sterling millions. This data is additional to the segments that are monitored separately by the Board for resource allocations and performance assessment, which are the segments of the Group. The table shows that the return on capital (normalised profit before tax divided by capital employed) for the fully owned properties in operation improved during the year, mainly due to the first time consolidation of the Croatian operations, which at the same time is also the reason for the decreased performance in the capital return on joint ventures and associates.
Looking ahead
The corporate activity in 2016 means the Group is well placed to make further progress as we continue to expand our portfolio in London and invest in major renovation projects at four of our hotels, all of which will further strengthen the
Group's competitive position.
We are finalising our plans for extensive renovations of Park Plaza Vondelpark, Amsterdam, Park Plaza Utrecht and Park Plaza Sherlock Holmes London which will start in the third quarter of 2017 whilst works on Park Plaza Victoria Amsterdam have already commenced. In total we plan to invest approximately GBP35 million in these projects, which we anticipate will be completed in 2018. As part of the plans to reposition and renovate Park Plaza Vondelpark, Amsterdam, the Group entered into an agreement for the sale of one of the three properties that currently comprise the hotel. Following such sale and planned renovations, Park Plaza Vondelpark, Amsterdam will continue to operate from the other two soon-to-be renovated premises.
As previously announced, the planned renovations may have a temporary negative impact on the performance of these hotels due to closures of rooms and public areas. However, we believe that our investment in these renovation projects will have a positive impact on our long-term performance. In addition, we look forward to the full opening of Park Plaza London Waterloo in the second quarter of 2017 and the soft opening of Park Plaza London Park Royal which is expected at the end of the first quarter of 2017. The Company is currently considering the release of equity following practical completion of each of these hotels whilst retaining operational control, by way of debt structuring and/or sale and leaseback.
As a further step in the execution of our growth strategy for Arenaturist, Arenaturist convened a General Assembly of its shareholders to approve a capital increase by way of a non-preemptive public offering of new shares in Croatia and to list such shares on the Official Market of the Zagreb Stock Exchange. Subject to the approval by the General Assembly and all required regulatory approvals, Arenaturist will determine the timing and terms of the offering, depending on the market conditions and other factors at the time. However, there can be no assurance that the offering, even if approved by the General Assembly, will proceed at all or as to the terms of any such offering.
Chen Moravsky,
Deputy Chief Executive Officer & Chief Financial Officer
BUSINESS REVIEW 2016
UNITED KINGDOM
Reported(1) Like-for-like(2) Reported (GBP)
(GBP) (GBP)
---------------- ---------------- ----------------
Year ended Year ended Year ended
31 Dec 2016 31 Dec 2016 31 Dec 2015
-------------- ---------------- ---------------- ----------------
Total revenue GBP148.7 million GBP148.3 million GBP147.4 million
-------------- ---------------- ---------------- ----------------
EBITDAR GBP52.5 million GBP52.9 million GBP55.7 million
-------------- ---------------- ---------------- ----------------
EBITDA GBP51.1 million GBP51.6 million GBP54.4 million
-------------- ---------------- ---------------- ----------------
Occupancy 84.2% 85.2% 87.3%
-------------- ---------------- ---------------- ----------------
Average room GBP143.8 GBP143.9 GBP139.6
rate
-------------- ---------------- ---------------- ----------------
RevPAR GBP121.1 GBP122.6 GBP121.8
-------------- ---------------- ---------------- ----------------
Room revenue GBP102.1 million GBP101.8 million GBP100.0 million
-------------- ---------------- ---------------- ----------------
(1) Franchised and/or managed hotels do not count towards any of the figures presented in the table.
(2) Like-for-like figures to December 2016 exclude Park Plaza London Waterloo, which had its soft opening in the fourth quarter of 2016.
Reported total revenue was broadly flat due to a softening of the London hotel market, particularly in the first half of the year.
Whilst the trading environment improved in the second half of 2016 with particularly strong trading in London in December, an increased supply and reduction in demand in Greater London for the year as a whole resulted in a 90 bps decrease in occupancy to 81.3%.
Against this backdrop our teams focused on successfully growing average room rate which increased by 3% year-on-year to GBP143.8 (2015: GBP139.6), resulting in maintained RevPAR of GBP121.1 (2015: GBP121.8).
EBITDAR was GBP52.5 million (2015: GBP55.7 million) and EBITDA was GBP51.1 million (2015: GBP54.4 million). On a like-for-like basis, EBITDAR was GBP52.9 million and EBITDA was GBP51.6 million.
Reported room revenue increased by 2.0% to GBP102.1 million, and on a like-for-like basis by 1.8% to GBP101.8 million (2015: GBP100.0 million).
All our London hotels maintained a strong competitive position, outperforming their competitive sets in terms of occupancy during the year. Furthermore, Park Plaza Westminster Bridge London once again delivered another very strong performance, significantly outperforming its competitive set in terms of occupancy, average room rate and RevPAR.
Whilst the performance of Park Plaza Leeds was mixed, Park Plaza Nottingham outperformed its competitive set in terms of occupancy, average room rate and RevPAR.
Development pipeline and renovation projects
Significant progress has been made during the year on two new hotels and a major renovation project.
Park Plaza London Waterloo, located near the bustling South Bank, had a soft opening in the fourth quarter in 2016 with a partial room inventory open and the majority of public spaces open, including an espressamente illy, swimming pool and gym. The hotel, which is expected to be fully open by the end of the second quarter, will feature 494 contemporary new hotel rooms, a new destination restaurant and bar, a spa and an executive lounge with views across the London skyline.
Construction of Park Plaza London Park Royal is progressing well, albeit slightly behind schedule. The hotel, which is located opposite Park Royal underground station, is close to Wembley Stadium and within easy access of London Heathrow Airport. It is expected to open at the end of the first quarter of 2017. This newly built hotel will have 212 rooms and offer guests a range of facilities, including a restaurant, bar, gym, meeting rooms and secure parking.
The extension at Park Plaza London Riverbank has now been completed and provides a further six floors, adding a further 155 rooms to the hotel. The ground floor areas and first floor meeting facilities have been remodelled and a new restaurant created on the first floor, offering spectacular views of the River Thames. During 2017, a reconfiguration project is expected to increase the number of rooms even further.
When completed, these three projects will increase the number of rooms by 900 to 3,158 rooms within the M25 and will create almost 300 jobs for the hospitality industry in London. As a result, the Park Plaza(R) brand will be one of the largest international upscale and upper upscale brands in the Greater London area.
The planning of major renovation works at Park Plaza Sherlock Holmes London have continued to progress with the project due to commence in 2017. In addition, refurbishment of the public areas at Park Plaza Victoria London will also begin this year.
In our longer-term development pipeline, plans for our mixed-use scheme in Hoxton have continued to move forward. Our first art'otel in London, art'otel london battersea power station, has proceeded on track.
The United Kingdom hotel market(*)
In 2016, the United Kingdom hotel market was impacted by uncertainty regarding the EU referendum, an increase in terrorism acts in parts of Europe and a lack of notable events, such as the 2015 Rugby World Cup. However, the weakness of Pound Sterling in the second half of the year made the United Kingdom market more attractive and affordable to overseas visitors. In addition, it is predicted that 'staycations' will play a major role for hotel performance across the United Kingdom in 2017 as travelling abroad has become more expensive.
In the Greater London hotel market, the supply of hotel rooms increased by 2.7%, outstripping an uplift in demand of 1.8%. Occupancy was down by 90 bps to 81.3% and the average room rate was flat at GBP143.4, resulting in a 90 bps reduction in RevPAR to GBP116.6.
The Nottingham hotel market reported RevPAR of GBP43.2, an increase of 4.1%, driven by a 0.8% increase in occupancy to 74.4% and a 3.3% increase in average room rate to GBP58.3. In Leeds, RevPAR increased by 3.7% to GBP53.9, reflecting a 0.1% decline in occupancy to 70.3% and a 3.9% uplift in average room rate to GBP68.9.
* Source: STR Global, December 2016
THE NETHERLANDS
Reported in GBP(1) Reported in local
(GBP) currency Euro (EUR)
----------------------------- -----------------------------
Year ended Year ended Year ended Year ended
31 Dec 2016 31 Dec 2015 31 Dec 2016 31 Dec 2015
-------------- --------------- ------------ --------------- ------------
GBP42.3 EUR58.5
Total revenue GBP48.3 million million EUR59.0 million million
-------------- --------------- ------------ --------------- ------------
GBP13.5 EUR18.7
EBITDAR GBP14.8 million million EUR18.1 million million
-------------- --------------- ------------ --------------- ------------
GBP13.4 EUR18.6
EBITDA GBP14.6 million million EUR17.9 million million
-------------- --------------- ------------ --------------- ------------
Occupancy 83.3% 81.9% 83.3% 81.9%
-------------- --------------- ------------ --------------- ------------
Average room
rate GBP104.4 GBP93.3 EUR127.4 EUR129.0
-------------- --------------- ------------ --------------- ------------
RevPAR GBP87.0 GBP76.4 EUR106.1 EUR105.7
-------------- --------------- ------------ --------------- ------------
GBP31.2 EUR43.1
Room revenue GBP35.6 million million EUR43.4 million million
-------------- --------------- ------------ --------------- ------------
(1) Average exchange rate from Euro to Pound Sterling for year to December 2016 was 0.82 and for the year to December 2015 was 0.72, representing a 12% increase.
Reported total revenue for our hotels in the Netherlands was up 14.4% to GBP48.3 million, driven by a foreign exchange benefit as a result of the devaluation of Pound Sterling.
In local currency, performance in the Netherlands was adversely impacted by political uncertainty and the weakness of Pound Sterling (reducing demand from the United Kingdom) and terrorist attacks in Brussels and Germany. In Euros, total revenue declined by 84 bps to EUR59.0 million.
Reported EBITDAR increased by 9.5% to GBP14.8 million and EBTIDA increased by 8.9% to GBP14.6 million; however, in local currency EBITDAR and EBITDA reduced by 3.4% and 4.0% respectively, reflecting the more challenging trading environment in the second half of 2016.
Whilst reported RevPAR increased by 13.8% due to currency movements, in local currency, RevPAR was broadly flat at EUR106.1 (2015: EUR105.7), reflecting a 1.2% decline in average room rate and 135 bps improvement in occupancy.
Against the backdrop of reduced demand in the Dutch hotel market, particularly in Amsterdam, our hotels maintained their competitive positions and (excluding Park Plaza Vondelpark, Amsterdam) outperformed their competitive sets in terms of occupancy. Park Plaza Vondelpark, Amsterdam outperformed in terms of RevPAR and average room rate.
Outside of Amsterdam, our hotels Park Plaza Utrecht and Park Plaza Eindhoven both significantly outperformed their competitive sets in occupancy, average room rate and RevPAR.
Renovation projects
Works in Park Plaza Victoria Amsterdam have commenced and preparations have continued for the planned extensive renovation of Park Plaza Vondelpark, Amsterdam and Park Plaza Utrecht. The renovation at these hotels is expected to start in 2017.
The Dutch hotel market(*)
The hotel market in greater Amsterdam reported a RevPAR increase of 17.2% to EUR87.88. Average room rate increased by 17.2% to EUR112.58, whilst occupancy was flat at 78.1%.
In Utrecht, hotels reported a 9.4% increase in RevPAR to EUR69.46. This increase was a result of a 6.7% increase in average room rate to EUR98.59 and a 2.6% increase in occupancy to 70.5%.
The market in Eindhoven reported a good growth with a 9.1% increase in RevPAR to EUR51.38. Average room rate increased by 5.5% to EUR 80.38 and occupancy increased 3.4% to 63.9%.
* Source: STR Global, December 2016
GERMANY AND HUNGARY
Reported in GBP(1) Reported in local
(GBP) currency Euro (EUR)
------------------------------- -------------------------------
Year ended Year ended Year ended Year ended
31 Dec 2016 31 Dec 2015 31 Dec 2016 31 Dec 2015
-------------- --------------- -------------- --------------- --------------
GBP21.8 EUR30.2
Total revenue GBP25.0 million million EUR30.5 million million
-------------- --------------- -------------- --------------- --------------
EBITDAR GBP7.0 million GBP6.3 million EUR8.6 million EUR8.7 million
-------------- --------------- -------------- --------------- --------------
GBP(0.4) EUR(0.5)
EBITDA GBP0.9 million million EUR1.1 million million
-------------- --------------- -------------- --------------- --------------
Occupancy 70.9% 80.4% 70.9% 80.4%
-------------- --------------- -------------- --------------- --------------
Average room
rate GBP69.7 GBP54.5 EUR85.0 EUR75.3
-------------- --------------- -------------- --------------- --------------
RevPAR GBP49.4 GBP43.8 EUR60.3 EUR60.6
-------------- --------------- -------------- --------------- --------------
GBP16.5 EUR22.8
Room revenue GBP19.1 million million EUR23.2 million million
-------------- --------------- -------------- --------------- --------------
Like-for-like(2) in Like-for-like(2)
GBP (GBP) in local currency
Euro (EUR)
------------------------------- -------------------------------
Year ended Year ended Year ended Year ended
31 Dec 2016 31 Dec 2015 31 Dec 2016 31 Dec 2015
-------------- --------------- -------------- --------------- --------------
GBP20.7 EUR28.6
Total revenue GBP22.7 million million EUR27.7 million million
-------------- --------------- -------------- --------------- --------------
EBITDAR GBP6.7 million GBP6.0 million EUR8.1 million EUR8.3 million
-------------- --------------- -------------- --------------- --------------
GBP(0.4) EUR(0.5)
EBITDA GBP0.6 million million EUR0.7 million million
-------------- --------------- -------------- --------------- --------------
Occupancy 74.2% 79.9% 74.2% 79.9%
-------------- --------------- -------------- --------------- --------------
Average room
rate GBP66.4 GBP55.9 EUR81.0 EUR77.4
-------------- --------------- -------------- --------------- --------------
RevPAR GBP49.2 GBP44.7 EUR60.1 EUR61.8
-------------- --------------- -------------- --------------- --------------
GBP15.5 EUR21.5
Room revenue GBP17.2 million million EUR21.0 million million
-------------- --------------- -------------- --------------- --------------
(1) Average exchange rate from Euro to Pound Sterling for year to December 2016 was 0.82 and for the year to December 2015 was 0.72, representing a 12% increase.
(2) Like-for-like figures exclude Park Plaza Nuremberg. Like-for-like figures for December 2015 excludes in the second half of the year for Park Plaza Prenzlauer Berg Berlin.
As with the Netherlands, reported total revenue for Germany and Hungary benefited from currency exchange rates and increased by 14.3% to GBP25.0 million (2015: GBP21.8 million).
Reported revenue in local currency increased 0.8% to EUR30.5 million (2015: EUR30.2 million).
On a like-for-like basis, total revenue was up 9.8% to GBP22.7 million (2015: GBP20.7 million). In local currency like-for-like revenue was down 3.2% to EUR27.7 million (2015: EUR28.6 million).
Reported EBITDAR increased by 12.5% to GBP7.0 million (2015: GBP6.3 million) and by 11.1% to GBP6.7 million on a like-for-like basis (2015: GBP6.0 million).
Reported EBITDA improved to GBP0.9 million (2015: GBP(0.4) million), which was positively affected by a GBP1.0 million lower incentive rent and the opening of Park Plaza Nuremburg.
On a like-for-like basis, EBITDA grew to GBP0.6 million (2015: GBP(0.4) million). In Euros, like-for-like EBITDA was EUR0.7 million (2015: GBP(0.5) million).
Since it opened, Park Plaza Nuremberg has outperformed its competitive set in average room rates and RevPAR. Guest feedback has been positive and we look forward to building on its market position further in the coming year.
Performances of some of our hotels in Berlin were affected by renovation works and these hotels were unable to outperform their competitive set. Over time, we expect the performance of these hotels to improve. Our hotel in Cologne outperformed its competitive set in occupancy, whilst our hotel in Dresden was unable to outperform its competitive set. art'otel budapest has continued to perform well during the year, significantly outperforming its competitive set in all key metrics: occupancy, average room rate and RevPAR.
Development pipeline and renovation projects
Park Plaza Nuremberg, our new 177-room hotel in Germany, fully opened in September 2016. The hotel is situated in the heart of the old town, opposite Nuremberg's 19th century Central Railway Station.
The town is home to Germany's oldest Christmas market and is within close proximity to many local attractions, including Nuremberg Zoo and its 10th century castle. In addition to a fitness centre, sauna and meeting rooms, the hotel has opened the BA Beef Club Restaurant and the Bavarian American Bar.
The extensive renovation project refurbishing all the rooms and public spaces at art'otel berlin mitte has finished. Guest feedback scores have improved and average room rates have increased.
The lease agreement for Park Plaza Prenzlauer Berg Berlin was terminated on 30 June 2016. This termination has no material effect on the Group as a whole.
Arenaturist acquired the freehold interests in art'otel berlin kudamm and art'otel cologne which acquisition was funded by a loan agreement from Deutsche Hypothekenbank AG.
The German and Hungarian hotel market(*)
The hotels in Greater Berlin reported a year-on-year increase of 3.5% in RevPAR to EUR74.17. This growth was a result of a 2.6% increase in average room rate to EUR96.12 and a 0.8% increase in occupancy to 77.2%.
In Cologne, hotels reported a 0.2% decrease in RevPAR to EUR80.19. This decrease was a result of a 0.7% decrease in occupancy to 71.2%, slightly offset by a 0.8% increase in average room rate to EUR113.04.
RevPAR in Dresden increased by 1.1% to EUR49.67, which was achieved through an average room rate increase of 1.8%, to EUR75.85, whilst occupancy decreased by 0.4% to 65.5%.
In Nuremberg, hotels reported a 15.0% increase in RevPAR to EUR75.40. This increase was a result of a 12.8% increase in average room rate to EUR105.36 and a 1.4% increase in occupancy to 71.6%.
In Hungary, the performance of the hotel market in Budapest continued to improve with RevPAR increasing by 9.4% to HUF 17,829.02. This growth was a result of a 6.5% increase in average room rate to HUF 23,683.02 and a 2% increase in occupancy to 75.3%.
* Source: STR Global, December 2016
CROATIA
Like-for-like in GBP(1,2) Like-for-like in
(GBP) local currency(2)
(HRK)
----------------------------- --------------------------
Year ended Year ended Year ended Year ended
31 Dec 2016 31 Dec 2015 31 Dec 2016 31 Dec 2015
-------------- --------------- ------------ ------------ ------------
Total revenue GBP46.1 million GBP37.1 HRK 423.1 HRK 391.2
million million million
-------------- --------------- ------------ ------------ ------------
EBITDAR GBP17.5 million GBP14.2 HRK 160.4 HRK 149.7
million million million
-------------- --------------- ------------ ------------ ------------
EBITDA GBP16.8 million GBP13.6 HRK 153.9 HRK 143.0
million million million
-------------- --------------- ------------ ------------ ------------
Occupancy 61.3% 59.2% 61.3% 59.2%
-------------- --------------- ------------ ------------ ------------
Average room GBP81.3 GBP67.2 HRK 746 HRK 707
rate
-------------- --------------- ------------ ------------ ------------
RevPAR GBP49.8 GBP39.8 HRK 457 HRK 419
-------------- --------------- ------------ ------------ ------------
Room revenue GBP26.5 million GBP21.1 HRK 243.0 HRK 222.6
million million million
-------------- --------------- ------------ ------------ ------------
(1) Average exchange rate from Kuna to Pound Sterling for year to December 2016 was 0.11 and for the year to December 2015 was 0.09, representing a 13% increase.
(2) The Croatian operations have been consolidated from 1 April 2016 and the 2015 like-for-like comparison number is adjusted to reflect the same period.
Following the acquisition of a controlling interest in our Croatian operations, results for our operations in Croatia have been consolidated into the Group results from 1 April 2016, denoted as the like-for-like performance.
Reported total revenue was GBP46.1 million. On a like-for-like basis, total revenue increased by 24.2% to GBP46.1 million (2015: GBP37.1 million), reflecting the devaluation of Pound Sterling against the Kuna and strong trading in the summer season. In local currency, the like-for-like total revenue grew by 8.2% to HRK 423.1 million (2015: HRK 391.2 million).
Like-for-like RevPAR in Pound Sterling grew by 25.1% to GBP49.8 (2015: GBP39.8), and by 9.0% in local currency to HRK 457 (2015: HRK 419), driven by a 5.4% increase in average room rates to HRK 746 (2015: HRK 707) and a 210 bps uplift in occupancy to 61.3% (2015: 59.2%).
In Pound Sterling like-for-like EBITDA was GBP16.8 million, an increase of 23.3%, reflecting the weakening of Pound Sterling against the Kuna. In local currency, like-for-like EBITDA was up 7.6% to HRK 153.9 million, reflecting strong trading during the summer 2016 season.
It should be noted that our operations in Croatia are of a highly seasonal nature and the main trading months are June to September. The performance of the main shoulder months (April, May and October) are highly dependent on the timing of public holidays (particularly Easter) and school holidays, as well as weather conditions.
Renovation projects
Extensive renovation works across the portfolio were completed between 2012 and 2015, strengthening our Croatian hotels' market position. In total we operate 2,778 rooms in Croatia.
In June 2016, six suites were added to the inventory at Park Plaza Arena Pula in time for the peak summer season, bringing the total number of rooms at this hotel to 181. These new suites have been well-received by the market.
The addition of a new golf driving range and putting green adjacent to Park Plaza Verudela Pula was opened in early summer, extending the resort's leisure offering and widening its appeal to guests.
The Croatian hotel market
Croatia has continued to be an attractive holiday destination, particularly against the backdrop of terrorist attacks in some other affordable leisure markets such as North Africa and Egypt.
MANAGEMENT AND HOLDINGS OPERATIONS:
Reported in GBP (GBP)
------------------------------
Year ended Year ended
31 Dec 2016 31 Dec 2015
-------------- --------------
Total revenue before
elimination 29.2 million 32.6 million
---------------------- -------------- --------------
Revenues within the (24.8) million (25.4) million
consolidated Group
---------------------- -------------- --------------
External and reported
revenue 4.4 million 7.2 million
---------------------- -------------- --------------
EBITDA 10.7 million 12.6 million
---------------------- -------------- --------------
Our performance
As an owner/operator, the majority of our hotel portfolio is owned and managed by us, and all related hotel management revenues and recharged expenses for these hotels, which are included under the segment 'Management and Holdings', are eliminated upon consolidation as intra-Group revenue. This is a presentation adjustment only and does not affect the EBITDA of Management and Holdings. The segment also includes the costs of the management company, corporate office expenses and certain holding companies.
Management considers this segment crucial to its operations and the performance should be reviewed taking all revenue (before elimination) into consideration.
Total Management and Holdings revenue decreased by 10.4% to GBP29.2 million (2015: GBP32.6 million) due mainly to decreased operating profits in the hotels, which has impacted the incentive fees. After elimination (consolidated presentation) of intra-Group revenue, reported revenues decreased by 39% to GBP4.4 million (2015: GBP7.2 million). This decrease was primarily the result of consolidation of the Croatian investment, as this group is consolidated after the acquisition in April 2016 and fees are now eliminated upon consolidation. Reported EBITDA decreased by 15.3% to GBP10.7 million (2015: GBP12.6 million), mainly due to an increase in legal and consultant costs incurred in a year of significant corporate activity.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December
---------------------------------------------
2016 2015
GBP'000 GBP'000
---------------------------------------------------- ----------------------- --------------------
Assets
Non-current assets:
Intangible assets 25,158 21,878
Property, plant and equipment 1,069,702 813,026
Investment in associates - 16,483
Investment in joint ventures 18,409 17,328
Other non-current assets 3,090 16,900
Restricted deposits and cash 5,235 -
Deferred income tax asset 713 -
---------------------------------------------------- ----------------------- --------------------
1,122,307 885,615
---------------------------------------------------- ----------------------- --------------------
Current assets:
Restricted deposits and cash 25,513 3,206
Inventories 2,412 999
Trade receivables 12,576 9,154
Other receivables and prepayments 10,370 7,721
Cash and cash equivalents 144,732 50,623
---------------------------------------------------- ----------------------- --------------------
195,603 71,703
---------------------------------------------------- ----------------------- --------------------
Total assets 1,317,910 957,318
---------------------------------------------------- ----------------------- --------------------
Equity and liabilities
Equity:
Issued capital - -
Share premium 129,527 129,140
Treasury shares (3,208) (3,208)
Foreign currency translation reserve 14,450 (19,449)
Hedging reserve (895) (14,944)
Accumulated earnings 159,755 176,365
---------------------------------------------------- ----------------------- --------------------
Attributable to equity holders of the parent 299,629 267,904
Non-controlling interests 30,573 -
---------------------------------------------------- ----------------------- --------------------
Total equity 330,202 267,904
---------------------------------------------------- ----------------------- --------------------
Non-current liabilities:
Borrowings 642,120 440,110
Provision for litigation 3,392 -
Provision for concession fee on land 2,885 -
Financial liability in respect of Income Units sold
to private investors 133,983 136,203
Other financial liabilities 22,979 45,198
Deferred income taxes 9,345 8,028
---------------------------------------------------- ----------------------- --------------------
814,704 629,539
---------------------------------------------------- ----------------------- --------------------
Current liabilities:
Trade payables 10,754 10,455
Other payables and accruals 43,959 38,045
Borrowings 118,291 11,375
---------------------------------------------------- ----------------------- --------------------
173,004 59,875
---------------------------------------------------- ----------------------- --------------------
Total liabilities 987,708 689,414
---------------------------------------------------- ----------------------- --------------------
Total equity and liabilities 1,317,910 957,318
---------------------------------------------------- ----------------------- --------------------
Date of approval of the financial statements 28 February 2017. Signed on behalf of the Board by Boris Ivesha, President & Chief Executive Officer and Chen Moravsky, Deputy Chief Executive Officer & Chief Financial Officer.
CONSOLIDATED INCOME STATEMENT
Year ended 31 December
2016 2015
GBP'000 GBP'000
------------------------------------------------ -------------- -------------
Revenues 272,470 218,669
Operating expenses (169,491) (130,172)
------------------------------------------------ -------------- -------------
EBITDAR 102,979 88,497
Rental expenses (8,844) (8,362)
------------------------------------------------ -------------- -------------
EBITDA 94,135 80,135
Depreciation and amortisation (25,330) (19,056)
------------------------------------------------ -------------- -------------
EBIT 68,805 61,079
Financial expenses (27,220) (24,221)
Financial income 2,559 4,859
Other expenses (27,195) (582)
Other income 33,700 454
Net expenses for financial liability in respect
of Income Units sold to private investors (10,680) (11,588)
Share in result of associate and joint ventures (1,750) (1,948)
------------------------------------------------ -------------- -------------
Profit before tax 38,219 28,053
Income tax benefit (expense) (62) 1,189
------------------------------------------------ -------------- -------------
Profit for the year 38,157 29,242
------------------------------------------------ -------------- -------------
Profit attributable to:
Equity holders of the parent 35,117 29,424
Non-controlling interests 3,040 -
38,157 29,242
Basic and diluted earnings per share in Pounds
Sterling 0.83 0.70
------------------------------------------------ -------------- -------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended 31 December
----------------------------------
2016 2015
GBP'000 GBP'000
----------------------------------- ---------------- ----------------
Profit for the year 38,157 29,242
----------------------------------- ---------------- ----------------
Other comprehensive income
(loss) to be recycled through
profit and loss in subsequent
periods(1) :
Fair value gain reclassified
to the profit and loss upon
disposal of available-for-sale
financial assets - (169)
Profit (loss) from cash flow
hedges (1,537) 3,823
Reclassification to the income
statement of cash flow hedge
results upon discontinuation
of hedge accounting 15,586 998
Foreign currency translation
adjustments of foreign operations 35,844 (10,754)
Reclassification to the income
statement of currency translation
adjustments upon the Croatian
acquisition 250 -
Foreign currency translation
adjustment of associate and
joint ventures 15 9
----------------------------------- ---------------- ----------------
Other comprehensive income
(loss) 50,158 (6,093)
----------------------------------- ---------------- ----------------
Total comprehensive income 88,315 23,149
----------------------------------- ---------------- ----------------
Total comprehensive income
attributable to:
Equity holders of the parent 83,006 23,149
Non-controlling interests 5,309 -
----------------------------------- ---------------- ----------------
88,315 23,149
----------------------------------- ---------------- ----------------
(1) There is no other comprehensive income that will not be reclassified to the profit and loss in subsequent periods.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable
Foreign to equity
currency holders
Issued Share Other Treasury translation Hedging Accumulated of the Non-controlling Total
In GBP'000 capital(*) premium reserves shares reserve reserve earnings parent interests equity
----------------- ---------- ------- -------- -------- ----------- -------- ----------- ------------ --------------- --------
Balance as
at
1 January
2015** - 128,547 169 (3,208) (8,704) (19,765) 155,481 252,520 - 252,520
----------------- ---------- ------- -------- -------- ----------- -------- ----------- ------------ --------------- --------
Profit for
the year - - - - - - 29,242 29,242 - 29,242
Other
comprehensive
loss for the
year - - (169) - (10,745) 4,821 - (6,093) - (6,093)
----------------- ---------- ------- -------- -------- ----------- -------- ----------- ------------ --------------- --------
Total
comprehensive
income - - (169) - (10,745) 4,821 29,242 23,149 - 23,149
Share-based
payments - 29 - - - - - 29 - 29
Issue of shares - 564 - - - - - 564 - 564
Dividend
distribution - - - - - - (8,358) (8,358) - (8,358)
Balance as
at 31 December
2015 - 129,140 - (3,208) (19,449) (14,944) 176,365 267,904 - 267,904
----------------- ---------- ------- -------- -------- ----------- -------- ----------- ------------ --------------- --------
Profit for
the year - - - - - - 35,117 35,117 3,040 38,158
Other
comprehensive
income loss
for the year - - - - 33,840 14,049 - 47,889 2,269 50,158
----------------- ---------- ------- -------- -------- ----------- -------- ----------- ------------ --------------- --------
Total
comprehensive
income - - - - 33,840 14,049 35,117 83,006 5,309 88,315
Issue of shares - 387 - - - - - 387 - 387
Dividend
Distribution*** - - - - - - (50,637) (50,637) - (50,637)
Acquisition
of a subsidiary
(see Note
3) - - - - - - - - 19,054 19,054
Transactions
with
non-controlling
interests - - - - - - (1,031) (1,031) 6,210 5,179
Balance as
at
31 December
2016 - 129,527 - (3,208) 14,391 (895) 159,814 299,629 30,573 330,202
----------------- ---------- ------- -------- -------- ----------- -------- ----------- ------------ --------------- --------
* No par value.
** Comparative date revised to reflect change in presentation currency - see Note 2(c).
*** The dividend distribution compromises a final dividend for the year ended 31 December 2015 of 10.0 pence per share and an interim dividend of 10.0 pence per share paid in 2016
CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended 31
December
--------------------
2016 2015
GBP'000 GBP'000
--------------------------------------------- --------- ---------
Cash flows from operating activities:
Profit for the year 38,157 29,242
Adjustment to reconcile profit to
cash provided by operating activities:
Financial expenses and expenses for
financial liability in respect of
Income Units sold to private investors 37,900 35,809
Financial income (2,559) (4,859)
Income tax charge (benefit) 62 (1,189)
Loss on buy back of Income Units sold
to private investors 372 582
Gain on Croatian acquisition (26,195) -
Refinance expenses 23,397 -
Income from forfeited deposits (6,543) -
Capital gain upon buy back of loans - (77)
Fair value gain on deferred consideration
business combinations - (377)
Share in results of joint ventures 279 121
Share in loss of associates 1,471 1,827
Depreciation and amortisation 25,330 19,056
Share-based payments - 29
--------------------------------------------- --------- ---------
53,514 50,922
--------------------------------------------- --------- ---------
Changes in operating assets and liabilities:
Decrease (increase) in inventories 88 (139)
(Increase) decrease in trade and other
receivables (6,757) 346
(Decrease) increase in trade and other
payables (6,146) 4,834
--------------------------------------------- --------- ---------
(12,815) 5,041
--------------------------------------------- --------- ---------
Cash paid and received during the
period for:
Interest paid (38,642) (32,832)
Interest received 1,338 332
Taxes (paid) received 33 (84)
--------------------------------------------- --------- ---------
(37,271) (32,584)
--------------------------------------------- --------- ---------
Net cash provided by operating activities 41,585 52,621
--------------------------------------------- --------- ---------
Cash flows from investing activities:
Investments in property, plant and
equipment (87,298) (63,103)
Investments in jointly controlled
entities and loans to partners in
jointly controlled entities (426) (561)
Proceeds from sales of available-for-sale
financial assets - 838 Increase in restricted cash (4,786) - Collection of loans to related parties 13,197 - Cash outflows for the Croatian acquisition (22,030) (3,615) --------------------------------------------- --------- --------- Net cash used in investing activities (101,343) (66,441) --------------------------------------------- --------- ---------
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
Year ended 31
December
--------------------
2016 2015
GBP'000 GBP'000
------------------------------------------ --------- ---------
Cash flows from financing activities:
Issuance of shares upon exercise of
options 387 565
Proceeds from long-term loans 614,102 38,008
Buy back of Income Units previously
sold to private investors (1,366) (3,210)
Repayment of long-term bank loans
and other long term liabilities (419,044) (15,629)
Net proceeds from transactions with
non-controlling interest 5,179 -
Dividend payment (50,630) (8,358)
Net cash provided by financing activities 148,628 11,376
------------------------------------------ --------- ---------
Increase in cash and cash equivalents 88,870 (2,444)
Net foreign exchange differences 5,239 (1,647)
Cash and cash equivalents at beginning
of year 50,623 54,714
------------------------------------------ --------- ---------
Cash and cash equivalents at end of
year 144,732 50,623
------------------------------------------ --------- ---------
Non-cash items:
------------------------------------------ --------- ---------
Outstanding payable on investments
in property, plant and equipment 5,155 10,824
------------------------------------------ --------- ---------
APPIX
Selected notes to consolidated financial statements
Note 1: General
a. The Consolidated financial statements of PPHE Hotel Group Limited (the 'Company') and its subsidiaries (together the 'Group') for the year ended 31 December 2016 were authorised for issuance in accordance with a resolution of the Directors on 28 February 2017.
b. Description of business and formation of the Company: The Company was incorporated and registered in Guernsey on 14 June 2007. The shares of the Company are publicly traded. The Company's primary activity is owning, leasing, developing, operating and franchising full-service upscale and upper upscale and lifestyle hotels in major gateway cities, regional centres and select resort destinations, predominantly in Europe.
c. Assessment of going concern: As part of their ongoing responsibilities, the Directors have recently undertaken a thorough review of the Group's cash flow forecast and potential liquidity risks. Detailed budgets and cash flow projections have been prepared for 2017 and 2018 which show that the Group's hotel operations will be cash generative during the period.
The Group has entered into a number of loan facilities, the details of which are set out in Note 15 of the Consolidated financial statements in the 2016 Annual Report and Accounts. The Board believes that the Group currently has adequate resources and in the future will generate sufficient funds to honour its financial obligations and continue its operations as a going concern for the foreseeable future. The Group analyses its ability to comply with debt covenants in the near future.
Note 2: Earnings per share
The following reflects the income and share data used in the basic earnings per share computations:
Year ended 31
December
--------------------
2016 2015
GBP'000 GBP'000
------------------------------ --------- ---------
Profit of equity holders of
the parent 35,117 29,242
------------------------------ --------- ---------
Weighted average number of
Ordinary shares outstanding 42,173 41,792
------------------------------ --------- ---------
Potentially dilutive instruments 227,000 in 2016 (2015: 317,000) had an immaterial effect on the basic earnings per share.
Note 3 Segments
For management purposes, the Group's activities are divided into Owned Hotel Operations and Management Activities (for further details see Note 14(c)(i) of the Consolidated financial statements in the 2016 Annual Report and Account.). Owned Hotel Operations are further divided into four reportable segments: the Netherlands, Germany and Hungary, Croatia and the United Kingdom. The operating results of each of the aforementioned segments are monitored separately for the purpose of resource allocations and performance assessment. Segment performance is evaluated based on EBITDA, which is measured on the same basis as for financial reporting purposes in the consolidated income statement.
Year ended 31 December 2016
---------------------------------------------------------------------------
Holding
companies
Germany United and
The Netherlands and Hungary Kingdom Croatia Management Adjustments(*) Consolidated
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- --------------- ------------ -------- -------- ---------- --------------- ------------
Revenue
Third party 48,342 24,978 148,692 46,089 4,369 - 272,470
Inter-segment - - - - 24,838 (24,838) -
-------------------- --------------- ------------ -------- -------- ---------- --------------- ------------
Total revenue 48,342 24,978 148,692 46,089 29,207 (24,838) 272,470
-------------------- --------------- ------------ -------- -------- ---------- --------------- ------------
Segment EBITDA 14,637 908 51,147 16,764 10,679 - 94,135
-------------------- --------------- ------------ -------- -------- ---------- --------------- ------------
Depreciation,
amortisation
and impairment - - - - - - (25,330)
Financial expenses - - - - - - (27,220)
Financial income - - - - - - 2,559
Net expenses
for liability
in respect
of Income Units
sold to private
investors - - - - - - (10,680)
Other income,
net - - - - - - 6,505
Share in loss
of associate
and joint ventures - - - - - - (1,750)
-------------------- --------------- ------------ -------- -------- ---------- --------------- ------------
Profit before
tax - - - - - - 38,219
-------------------- --------------- ------------ -------- -------- ---------- --------------- ------------
*Consist of inter-company eliminations
Germany Holding companies
and United and
The Netherlands Hungary Kingdom Croatia Adjustments(*) Consolidated
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------------- -------- -------- -------- ----------------- ------------
Geographical information
Non-Current assets(*) 183,784 25,508 712,338 145,732 27,498 1,094,860
------------------------- --------------- -------- -------- -------- ----------------- ------------
* Non-current assets for this purpose consists of property, plant and equipment and intangible assets.
Year ended 31 December 2015
----------------------------------------------------------------------------------
Holding
companies
Germany United and
The Netherlands and Hungary Kingdom Management Adjustments(*) Consolidated
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
-------------------- --------------- ------------ -------- ---------- --------------- ------------
Revenue
Third party 42,271 21,848 147,384 7,166 218,669
Inter-segment 25,421 (25,421) -
-------------------- --------------- ------------ -------- ---------- --------------- ------------
Total revenue 42,271 21,848 147,384 32,587 (25,421) 218,669
-------------------- --------------- ------------ -------- ---------- --------------- ------------
Segment EBITDA 13,445 (361) 54,437 12,614 80,135
-------------------- --------------- ------------ -------- ---------- --------------- ------------
Depreciation,
amortisation
and impairment - - - - - (19,056)
Financial expenses - - - - - (24,221)
Financial income - - - - - 4,859
Net expenses
for liability
in respect
of Income Units
sold to private
investors - - - - - (11,588)
Other income,
net - - - - - (128)
Share in loss
of associate
and joint ventures - - - - - (1,948)
-------------------- --------------- ------------ -------- ---------- --------------- ------------
Profit before
tax - - - - - 28,053
-------------------- --------------- ------------ -------- ---------- --------------- ------------
(*) Consist of inter-company eliminations.
Germany United Holding companies
The Netherlands and Hungary Kingdom And Adjustments(*) Consolidated
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------- --------------- ------------ -------- ------------------- ------------
Geographical
information
Non-Current
assets(*) 159,868 15,310 636,846 22,880 834,904
------------- --------------- ------------ -------- ------------------- ------------
* Non-current assets for this purpose consists of property, plant and equipment and intangible assets.
Note 4: Related parties
Significant other transactions with related parties
a. On 18 June 2014, Hercules House Holding B.V. entered into a building contract with WW Gear Construction Limited ('Gear'), a related party, for the design and construction of the hotel near London Waterloo Station (now known as Park Plaza London Waterloo) on a 'turn-key' basis. The basic contract price payable to Gear is GBP70,480,000 for 494 rooms. The Non-Executive Directors of the Company had Gear's tender for the construction of the hotel independently reviewed to ensure that it was competitive.
On 1 August 2014, Riverbank Hotel Holding B.V. entered into a building contract with Gear for a six-storey extension to Park Plaza London Riverbank. The basic contract price payable to Gear is GBP24,741,879 for the 148-room extension.
On 23 December 2014, Club A40 entered into a building contract with Gear for the construction of the 166-room Park Plaza London Park Royal. The basic contract price payable to Gear is GBP16,520,183. On 4 February 2016, the parties agreed to vary the agreement to incorporate additional works, extend the completion date and increase the contract sum. The additional works included an extra 44 rooms, a new access road and reinstatement of a higher specification, amongst others. In addition, the contract price was increased by GBP7,920,599 to GBP24,440,782.
On 13 June 2016, Riverbank Hotel Holding B.V. entered into a building contract with Gear for refurbishment works to the existing public areas at Park Plaza London Riverbank. The basic contract price under the building contract is GBP6,695,773.
b. In September 2016, the Company received the amounts outstanding in a loan to Red Sea Hotels Limited, due from the disposal of a site in Pattaya, in the amount of Thai Baht 600 million.
c. The Directors consider that the aforementioned building contracts were entered into on arm's length terms and are in the interests of the Group. Gear is a company in whose shares the Chairman of the Company and certain members of his family are interested. Under the relationship agreement entered into between Euro Plaza Holdings B.V. ('Euro Plaza'), the principal shareholder of the Company (in whose shares the Chairman and certain members of his family are interested) and the Company, transactions between the Company and Euro Plaza (and its associates, which include Gear) are required to be on arm's length terms.
d. Transactions in the ordinary course of business, in connection with the use of hotel facilities (such as overnight room stays and food and beverages) are being charged at market prices. These transactions occur occasionally.
Directors' interests in employee share incentive plan
As at 31 December 2016, the Executive Directors held share options to purchase 70,000 ordinary shares. All options are fully exercisable with an exercise price of GBP2.33, which will expire in 2022. No share options have been granted to Non-Executive members of the Board.
Directors' interests in employee share incentive plan
As at 31 December 2015, the Executive Directors held share options to purchase 70,000 ordinary shares. All options are fully exercisable with an exercise price of GBP2.33, which will expire in 2022. No share options have been granted to Non-Executive members of the Board. The total costs in 2015 relating to options granted to key management staff amounted to GBP8,000.
Directors' responsibility statement
The Board confirms to the best of its knowledge that the Consolidated financial statements, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit and loss of the Company and the undertakings included in the consolidation taken as a whole.
The Strategic Report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face, and provides information necessary for shareholders to assess the Company's performance, business model and strategies.
Principal risks and uncertainties
Risk and impact Mitigation Grading Year-on-year ------------------------------------- ---------------------------- --------- ------------- Market disruptors The travel industry The Group invests Medium Unchanged has changed considerably in areas such as during in recent years as connectivity to the a result of changes third parties, year in travel patterns, distribution and the emergence of low-cost marketing of its airlines and online products, e-commerce travel agents, new and technology. technologies, and changes The Group further in customer booking mitigates this behaviour and travel risk by working expectations. This closely with Carlson trend is anticipated Hotels, ensuring to persist and the that global trends travel industry is are identified expected to continue and acted upon to be impacted by the in a concerted rise of online travel manner, whilst agents and other dominant benefiting from forces such as search the scale, negotiating engines and social power, knowledge media networks. The and skills that Group is exposed to our global partnership risks such as the dominance brings. Executives of one such third party and managers regularly over another, the loss attend seminars, of control over its workshops and trainings inventory and/or pricing to ensure that and challenges to keep their knowledge up with developments is kept up to date. in the market. ------------------------------------- ---------------------------- --------- ------------- Information technology
and systems The Group invests High Unchanged
The Group is reliant in appropriate during
on certain technologies IT systems so as the
and systems for the to obtain as much year
operation of its business. operational resilience
Any material disruption as possible. Further,
or slowdown in the a variety of security
Group's information measures are implemented
systems, especially in order to maintain
any failures relating the safety of personal
to its reservation customer information.
system, could cause
valuable information
to be lost or operations
to be delayed.
In addition, the Group
and its hotels maintain
personal customer data,
which is shared with
and retained by the
Group's partners. Such
information may be
misused by employees
of the Group or its
partners or other outsiders
if there is inappropriate
or unauthorised access
to the relevant information
systems.
------------------------------------- ---------------------------- --------- -------------
Hotel industry risks
The Group's operations Although management High Unchanged
and their results are continually seeks during
subject to a number to identify risks the
of factors that could at the earliest year
adversely affect the opportunity, many
Group's business, many of these risks
of which are common are beyond the
to the hotel industry control of the
and beyond the Group's Group. The Group
control, such as global has in place contingency
economic uncertainties, and recovery plans
political instabilities to enable it to
and the increase in respond to major
acts of terrorism. incidents or crises
The impact of any of and takes steps
these factors (or a to minimise these
combination of them) exposures to the
may adversely affect greatest extent
sustained levels of possible.
occupancy, room rates
and/or hotel values.
------------------------------------- ---------------------------- --------- -------------
Fixed operating expenses
The Group's operating The Group has appropriate High Increased
expenses, such as personnel management systems during
costs, the impact of in place (such the
the Living Wage in as staff outsourcing) year
the United Kingdom, which are designed
operating leases, information to create flexibility
technology and telecommunications, in the operating
are to a large extent cost base so as
fixed. As such, the to optimise operating
Group's operating results profits in volatile
may be vulnerable to trading conditions.
short-term changes
in its revenues.
------------------------------------- ---------------------------- --------- -------------
The Group's borrowings
The vast majority of The Board monitors Low Decreased
the Group's bank borrowings funding needs regularly. during
are with two banks Financial covenant the
and these financing ratios are monitored year
arrangements contain and sensitised
either cross-collateralisation as part of normal
or cross-default provisions. financial planning
Therefore, there is procedures.
a risk that more than
one property may be
affected by a default
under these financing
arrangements. The Group
is exposed to a variety
of risks associated
with the Group's existing
bank borrowings and
its ability to satisfy
debt covenants. Failure
to satisfy obligations
under any current or
future financing arrangements
could give rise to
default risk and require
the Group to refinance
its borrowings.
The Group uses debt
to partly finance its
property investment.
By doing so, the Group
leverages its investment
and is able to acquire
properties without
raising equity. Leverage
magnifies both gains
and losses, and therefore
the risk of using leverage
is that the loss is
much greater than it
would have been if
the investment had
not been leveraged.
The risk exists that
interest expenses and
default on debt covenants
negatively impact shareholder
value and return.
------------------------------------- ---------------------------- --------- -------------
Risk and impact Mitigation Grading Year
on Year
---------------------------------- ---------------------------- --------- ------------
Foreign exchange rate
fluctuations The Group eliminates Medium Unchanged
The exchange rates currency transaction during
between the functional risk by matching the
currency of the Group's commitments, cash year
subsidiaries operating flows and debt
inside the Eurozone, in the same currency.
and the Croatian Kuna After due and careful
and Pound Sterling consideration,
(the reporting currency the Group decided
for the purposes of not to hedge this
the Consolidated financial currency risk.
statements) may fluctuate
significantly, affecting
the Group's financial
results. In addition,
the Group may incur
a currency transaction
risk in the event that
one of the Group companies
enters into a transaction
using a different currency
from its functional
currency.
---------------------------------- ---------------------------- --------- ------------
The Park Plaza(R) Hotels
& Resorts brand and
reservation system
The Group's rights Medium Unchanged
The Group's rights to use the Park during
to the Park Plaza(R) Plaza(R) Hotels the
Hotels & Resorts brand & Resorts brand year
stem from a territorial and Carlson Hotels'
licence agreement with central reservation
Carlson Hotels, pursuant system are in perpetuity.
to which the Group This unique and
has the exclusive right exclusive partnership
to use (and to sub-license is reinforced by
others to use) the the Group's continued
Park Plaza(R) Hotels focus on operational
& Resorts trademark efficiency and
in 56 countries within portfolio growth
the EMEA region. This through its intensified
agreement also allows cooperation with
the Group to use Carlson Carlson Hotels.
Hotels' global central To ensure that
reservation system, the Group's interests
participate in its are represented,
various loyalty schemes several of its
and have access to executives and
global distribution managers participate
channels connected in collaborative
to its central reservation groups initiated
system. Failure to by Carlson Hotels
maintain these rights to discuss, review
could adversely affect and optimise the
the Group's brand recognition collective performance
and its profitability. in areas such as
The Group is also dependent sales, loyalty
on Carlson Hotels to marketing, partnerships,
invest in the further e-commerce and
development of its distribution.
global reservation
system and associated
technologies and infrastructure.
The Park Plaza(R) Hotels
& Resorts outside of
the EMEA region are
managed or franchised
by Carlson Hotels directly,
and failure at its
end to control and
maintain a similar
quality level of hotels
may have a detrimental
effect on the reputation
of the Park Plaza(R)
brand and the hotels
operating under the
brand name.
---------------------------------- ---------------------------- --------- --------------
Development projects
The Group has various The Group retains Low Reduced
ongoing development an ownership interest during
projects which are in the development the
capital intensive. sites and therefore year
These development projects it is well placed
may increase the Group's to capitalise on
expenses and reduce any future rises
the Group's cash flows in property prices.
and revenues. If capital The Group tends
expenditures ('capex') to enter into fixed
exceed the Group's price turn-key
expectations, this contracts in respect
excess would have an of its developments
adverse effect on the in order to minimise
Group's available cash. the risk of cost
There is a risk that overrun. The Group
such developments may draws on its previous
not be available on experience in running
favourable terms, that and managing developments
construction may not to manage potential
be completed on schedule development risks.
or within budget, and
that the property market
conditions are subject
to changes in environmental
law and regulations,
zoning laws, and other
governmental rules
and fiscal policies.
---------------------------------- ---------------------------- --------- --------------
Capital required to The Group focuses Medium Unchanged
maintain product standards heavily on preventative during
The Group owns and maintenance across the
co-owns many of its its portfolio and year
hotels. As is common employs engineers
in owning hotels, this and technicians
business model requires to ensure that
capital to maintain its hotels are
the high quality level maintained to a
of the products and high standard.
facilities offered. In addition, as
In addition to maintenance part of its operating
costs and capex, the agreements, the
Group may be exposed Group has capex
to disruptions in revenue reserves for each
if hotels are to be hotel to invest
(part) closed for product in medium to large
improvements. renovations and
replacements of
technical installations.
To minimise short-term
revenue displacements
due to renovations,
the Group develops
- prior to undertaking
such renovations
- detailed renovation
planning programmes
which take into
account factors
such as hotel closures,
phased approaches,
seasonality and
demand patterns.
---------------------------------- ---------------------------- --------- --------------
Employee turnover
The success of the The Group has appropriate Low Unchanged
Group's business is systems in place during
partially attributable for recruitment, the
to the efforts and reward and compensation year
abilities of its (senior) and performance
managers and key executives. management. Development
Failure to retain its and maintenance
executive management of a Group culture
team or other key personnel and comprehensive
may threaten the success training programmes
of the Group's operations. and feedback systems
The consistent delivery also play a leading
of high quality service role in minimising
levels depends on the this risk.
skills and knowledge
of our teams. A high
turnover rate may threaten
the consistent delivery
of this service level.
---------------------------------- ---------------------------- --------- --------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR FVLFLDLFEBBB
(END) Dow Jones Newswires
February 28, 2017 06:55 ET (11:55 GMT)
1 Year Pphe Hotel Chart |
1 Month Pphe Hotel Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
