Peel Hotels Share Discussion Threads

[skyship] 29/7/2018 10:12

"If there were more stewards like the Peel's on the stock market, then it would be a better place by far!" !!!!!

2010/11/12/13/14/17 - NO DIVIDENDS

2015/16 - WOW – total dividends of 3.5p….

Over the 9yrs of 2010-2017 t/o has averaged £15.7m from a range of £14.2m - £17.1m. Pre-tax profits in that time have averaged £255k; ie a return of just 1.6%. NB – this is over a 9yr period of manjana, manjana – just read through the statements.

No, the Peel brothers have kept this alive; but clearly are NOT excellent stewards. More companies like this on the stock-market wouldn't be of much use to shareholders.

I repeat, the best thing to happen would be for the Peel brothers to do the right thing, make an offer to outside shareholders and put this public listed company out of its misery.

If you two can make a case to the contrary – let’s hear it please. I would seriously like to read and learn.

[battlebus2] 28/7/2018 20:44

Indeed Topvest 👍

[topvest] 28/7/2018 20:20

I don't see any reason why it shouldn't be listed. If there were more stewards like the Peel's on the stock market, then it would be a better place by far!

[skyship] 28/7/2018 19:10

However you look at it, PHO shouldn't be a listed company. Best and easiest solution would be for the Peels to make an offer for the balance of the stock they don't own. A 90p offer would surely succeed.

A massive asset discount; but a 30% premium would be difficult to ignore!

[topvest] 28/7/2018 17:58

The covenant breach is a red flag, but the Peels have saved the company once already and will probably do so again.

[cjohn] 28/7/2018 13:47

The second half was weaker than the first half, but they still made an operating profit (discounting the write down in asset value of the two leasehold hotels) and a profit after tax.

But that level of profit wouldn't cover interest payments. Operational cash-flow was stronger, as they reduced working capital (Obviously, they can't go on doing that for more than a repoting period or two.) and so were able to reduce debt much mroe than expected.


Hi Topvest, I agree with your remarks re the breach post-year end.

[topvest] 27/7/2018 20:30

I think the covenant breach is now a red flag. It looks like it will be a struggle!

[pugugly] 27/7/2018 20:27

Most useful comments from CJohn & topvest - Gents - I think it would be prudent for me to continue to sit on the side.

[topvest] 27/7/2018 20:20

I suspect they have missed on an interest cover ratio. Implies Q1 post year-end deteriorated further.

[cjohn] 27/7/2018 19:51

My feeling is that the large discount to asset value and the very conservative balance sheet valuations provide a healthy margin-of-safety for asset-based investors.

Would the breach of the banking covenant relate to the ratio of operating profit to interest payments?

[topvest] 27/7/2018 19:36

Well its surprising that they have breached their banking covenants despite debt levels continuing to be reduced. Surely this should have been announced as there was a false market in the shares, as its clear from the share price that some people knew things had deteriorated.

I think the problem here is that the asset values probably don't represent lots of value. Who wants one of their fairly run-down hotels, as they are very difficult to keep profitable? I think they will survive, but only because of the Peel directors who will find a way forward and are excellent at running hotels. Trouble is they are getting quite old (as are the hotels!) and so are probably acutely aware of the need to try and get this onto a firmer footing / exit.

[cjohn] 27/7/2018 16:30

Hi Skyship,

As a matter of fact, discounting the write down of asset value of the leashold hotels of £1,161,241, they made a profit after tax of £327k and paid tax for the year of £109k.

[pugugly] 27/7/2018 14:20

CJohn - Very many thanks for those costs - £27.2M -v- current market cap of approx £9.6M - assuming ADVFN figures correct - then something very much adrift - time to dig deeper bu Mr Market usually right - If not possibly a wonderful break-up opportunity.

[skyship] 27/7/2018 14:05

Nice assets, but they lose money!

I wonder whether 10% shareholder David Barry might be able to move things along here; as the controlling brothers don't seem to be in any haste to do so...

[cjohn] 27/7/2018 11:53

Hi Pugugly,


A few months ago, Des Walker researched the valuation of the hotels. The freeholds were valued at cost and most were bought many years ago; so we might expect current market values to be considerably higher.


This is what he found out:


Anyway here is the list and purchase dates of the freehold properties ...

Bradford £4m - 1998
Leeds £4.75 - 1999
Newcastle £4m - 1999
Wallingford £?? - 2002
Peterborough £6.2m - 2007 (Lease was bought in 1998 for £3.85m, Freehold bought in 2007 for £2.35m so makes sense to value this as though it was bought entirely in 2007)
Bournemouth £8.25m - 2009

Ignoring Wallingford where I don't have a purchase price the other five cost prices together add up to £27.2m.




Thanks once again, Des, for you research

[cjohn] 27/7/2018 11:31

"The Board is considering its options in regard to the properties within the two Subsidiaries, including change of use, it is therefore possible that the impairment could be reversed if a more profitable future for the properties could be found."


I presume they must have something in mind, if they float the idea.


Overall, the results were better than I'd expected. Operational cash flow was strong. I'd expected debt to increase; instead a £1.1m decerease. Having said that, about £800k of cash was generated from better collection of receivables and later payment of payables, which might reverse in the next period. Though they do say they are focused on reducing debt and the cost base.

[pugugly] 27/7/2018 08:00

How certain is NTAV in current climate - Some of the propoerties appear to be in poor locations - OK Leasehold have been written down to zero but I wonder if negative values if full repairing lease terms (if any) - Watching but not jumping

[deswalker] 27/7/2018 07:40

Very poor trading. Excellent cash generation. NTAV = 164.7p per share. Increased emphasis on asset realisations.

[skyship] 27/7/2018 07:20

Well, I suppose all one can say about those results is that they are as bad as expected!

Could anyone manage the business any better; that is the question...

[cockerhoop] 06/7/2018 11:58

Millerman1007,

Checked companies house, accounts only available to end Jan 2017 for all 3 hotels. (ie I can't see any filings for this year - end Jan 18)

David,

Both Nottingham and Dunfermline have been consistently unprofitable over the last 6 years.

[davidosh] 06/7/2018 10:55

How do those £360k and £30k losses compare to the prior year ? If some of the hotels can no longer make profits as hotels maybe they need to consider alternative uses...

[meijiman] 04/7/2018 11:43

would you consider these to be 'material'? Moot point. I think value will out here but it may be a wait. Be good if the cheap rating could be linked to more than just NAV discount.

[topvest] 03/7/2018 18:10

That’s a bit odd. You shouldn’t be filing material subsidiary accounts without announcing group accounts by RNS. Must have broken a stock exchange rule, I suspect!