TIDMPPH
RNS Number : 8661K
PPHE Hotel Group Limited
31 August 2023
31 August 2023
PPHE Hotel Group Limited
("PPHE" or the "Group")
Unaudited Interim Results for the six months ended 30 June
2023
Strong Group performance across main markets
PPHE Hotel Group, the international hospitality real estate
group which develops, owns and operates hotels and resorts,
announces its unaudited interim results for the six months ended 30
June 2023 (the "Period").
Commenting on the results, Boris Ivesha, President and Chief
Executive Officer, PPHE Hotel Group said:
"We are very pleased to report a strong performance for the
Group across our main markets, with record revenues following
significant increases on last year and the pre-pandemic period.
This momentum has continued into the second half, giving us
confidence in our full-year outlook and longer-term growth.
Our strong performance also enables us to reward our
shareholders for their continued trust and support by returning to
our historical capital returns policy of distributing approximately
30% of adjusted EPRA earnings, whilst also continuing to support
investment in future growth opportunities.
We are now entering a very exciting time for the Group, with our
GBP300+ million pipeline nearing completion. New property openings
are afoot in the next nine months, in Belgrade, Zagreb, Rome and
London Hoxton and, upon stabilisation of trading, these new hotels
are targeted to generate at least GBP25 million of EBITDA for the
Group.
We are encouraged by the strong trading seen over the summer
period and are thankful to our teams for delivering such exemplary
results and providing our guests with great hospitality across all
our destinations."
Financial highlights
-- Total revenue was up 59.0% year-on-year at GBP180.0 million
(H1 2022: GBP113.2 million) and up 15.9% on the pre-pandemic levels
(H1 2019: GBP155.3 million) with strong quarter-on-quarter momentum
in the Period.
-- Revenue growth was led by strong room rate growth. Average
room rate was GBP159.6, up 13.1% compared with H1 2022 and up 31.2%
on H1 2019.
-- The recovery in occupancy rates continues, with H1 occupancy
up to 69.1% compared with 48.0% in H1 2022 and 76.8% in H1
2019.
-- RevPAR at GBP110.3, materially above pre-pandemic levels (H1
2019: GBP93.4) and last year (H1 2022:
GBP67.8).
-- EBITDA of GBP45.2 million, up 165.7% versus H1 2022 (H1 2022:
GBP17.0 million), and in line with H1 2019 levels (H1 2019: GBP45.7
million) with margins improving.
-- EPRA NRV per share* at 30 June 2023 was flat at GBP25.05 (31
December 2022: GBP25.17), driven entirely by the change in the
GBP/EUR currency conversion rate. Revaluations will be completed at
the year end, as per usual course of business.
-- Adjusted EPRA Earnings of 106 pence for the twelve months
ended 30 June 2023 was up by 112% versus 2022 (31 December 2022: 50
pence).
-- Given the strength of trading and confidence in outlook, the
Board believes the Company is now in a position to return to its
historical capital returns policy of distributing approximately 30%
of adjusted EPRA earnings (reported at GBP1.06 in the twelve month
period to 30 June 2023), while continuing to support investment in
future growth opportunities. In light of the continued significant
share price discount (c60% as at 31 August 2023) relative to EPRA
NRV per share, the Board intends to consult with shareholders
regarding the most appropriate and effective mechanism for such
distributions to take place, including dividends, share buybacks,
tender offers or a combination thereof. The Board looks forward to
updating the market on this capital return policy in the near
future.
(*) EPRA NRV and EPRA NRV per share were calculated based on the
independent external valuations prepared in December 2022.
Operational highlights
-- Strong growth in the Group's key markets - the United Kingdom and the Netherlands - driven by international corporate, leisure and meetings demand and a particularly strong London events calendar, even before the benefit of the coronation of King Charles III.
-- The Croatian summer season has enjoyed a solid start and the
Group expect to derive further benefits from recently refurbished
and relaunched properties. In the smallest region, Germany, trading
at the Group's properties started to improve from Q2 onwards.
Strategic highlights
-- February saw the full opening of the first art'otel in the
UK, art'otel London Battersea Power Station, which is operated by
the Group's hospitality management platform.
-- Significant progress with the development pipeline, and on
track to open four properties between October 2023 and H1 2024.
o The fourth quarter 2023 will see the opening of the Radisson
RED Belgrade in Serbia, which is the second hotel to open under the
recently extended partnership with Radisson and the first Radisson
RED to be operated by the Group.
o Three premium lifestyle art'otel properties are set to open,
starting with art'otel Zagreb in October 2023, then art'otel London
Hoxton in Q1 2024 and art'otel Rome in H1 2024.
-- Regulatory approvals were obtained for the new EUR250 million
European Hospitality Real Estate Fund, taking advantage of the
Group's flexible and scalable in-house hospitality management
platform. The Fund enables the Group to capture attractive
acquisition opportunities via the use of non-dilutive third-party
capital as well as increasing the number of assets managed on our
platform.
ESG highlights
-- The Company has taken several measures to increase
transparency and stakeholder accountability for its ESG strategy.
Management has increased its focus on the Group's strategic
approach to sustainability and responsible business, with a view to
publication of its strategy, targets and KPIs in the 2023 Annual
Report and Accounts. This includes dedicated increased resources
including staff hires to ESG as well as retaining external
specialist consultancies to advise on carbon foot-printing and
reporting to stakeholders.
-- Reporting on ESG in a way that is most useful for investors
and customers is an ongoing priority. The Group has submitted its
annual CDP data for 2023, which CDP expect to publish at year-end,
and which will allow year-on-year progress-tracking on ESG.
Globally recognised and standardised reporting channels such as CDP
allow stakeholders to engage with all businesses on ESG.
-- The Group completed a full carbon footprint for scopes 1, 2
and 3. This is for the purpose of analysis of the tonnage of carbon
dioxide equivalent (CO2e) emitted both in operations and in the
supply chain, and design actions for carbon reduction.
-- The Company is in the process of reviewing its water
consumption and waste outputs. The objective is to ensure robust
data collection on water usage, benchmarking consumption against
comparators, and identifying strategic targets and KPIs for
minimising consumption and consequent contribution to water
stress.
Current trading and outlook
-- Entering the strongest half of the year, th e previously
announced strong trading conditions have been maintained through Q2
and into Q3 across all main market segments of leisure, corporate
travel and meetings and events.
-- Continued focus on maintaining and driving room rates, to
cover inflationary pressures, while continuing to rebuild
occupancy.
-- The Board remains confident in the Group's longer-term
growth, underpinned by the persistent strength of consumer leisure
demand internationally, its quality assets, fully-funded
development pipeline and strong financial position.
-- As previously announced, the Group expects to deliver FY 2023
revenue of at least GBP400 million and EBITDA of at least GBP120
million.
-- Entering an exciting time for the Group as GBP300+ million
pipeline nears completion, with four new openings afoot in the next
nine months, targeted to generate at least GBP25 million EBITDA on
stabilised trading.
Enquiries:
PPHE Hotel Group Limited
Daniel Kos,
Chief Financial Officer & Executive Director
Robert Henke Tel: +31 (0)20 717 8600
Executive Vice President of Commercial
Affairs
Hudson Sandler
Wendy Baker / Charlotte Cobb / India Laidlaw Tel: +44 (0)20 7796
4133
Email: pphe@hudsonsandler.com
Notes to Editors
PPHE Hotel Group is an international hospitality real estate
company, with a GBP2.0 billion portfolio, valued as at December
2022 by Savills and Zagreb nekretnine Ltd (ZANE), of primarily
prime freehold and long leasehold assets in Europe.
Through its subsidiaries, jointly controlled entities and
associates it owns, co-owns, develops, leases, operates and
franchises hospitality real estate. Its portfolio includes
full-service upscale, upper upscale and lifestyle hotels in major
gateway cities and regional centres, as well as hotel, resort and
campsite properties in select resort destinations. The Group's
strategy is to grow its portfolio of core upper upscale city centre
hotels, leisure and outdoor hospitality and hospitality management
platform.
PPHE Hotel Group benefits from having an exclusive and perpetual
licence from the Radisson Hotel Group, one of the world's largest
hotel groups, to develop and operate Park Plaza(R) branded hotels
and resorts in Europe, the Middle East and Africa. In addition,
PPHE Hotel Group wholly owns, and operates under, the art'otel(R)
brand and its Croatian subsidiary owns, and operates under, the
Arena Hotels & Apartments(R) and Arena Campsites(R) brands.
PPHE Hotel Group is a Guernsey registered company with shares
listed on the London Stock Exchange. PPHE Hotel Group also holds a
controlling ownership interest in Arena Hospitality Group, whose
shares are listed on the Prime market of the Zagreb Stock
Exchange.
Company websites: www.pphe.com |
www.arenahospitalitygroup.com
For reservations:
www.parkplaza.com | www.artotel.com | www.arenahotels.com |
www.arenacampsites.com
BUSINESS & FINANCIAL REVIEW
BUSINESS REVIEW
The first six months of 2023 saw continued strong trading
conditions and positive forward booking momentum across the Group's
property portfolio and regions and across all market segments of
leisure, corporate travel and meetings and events. This enabled the
Group to achieve record H1 revenue and a full recovery in EBITDA.
When we look at the key metrics of room rate and RevPAR, the Group
is now trading consistently and materially above pre-pandemic
levels, whilst occupancy continues to recover strongly. We now
believe the worst effects of the pandemic have been successfully
overcome.
Strategically, the Group continued to take a disciplined
rates-led approach across its portfolio, which helped mitigate
industry-wide cost inflation and further illustrated the strong
international demand for our hotels. In the Period, average room
rates were up 13.1% compared with H1 2022, and up 31.2% on
pre-pandemic levels reported in H1 2019. Notably, the average room
rate in all our operating regions exceeded those achieved in 2019,
with average room rates during Q1 up 24.6% and in Q2 up 35.6% on
the same period in 2019.
The Group's hotels in the UK and The Netherlands remained the
strongest performing across the portfolio, driven by a combination
of continuing rate growth and occupancy recovery. Occupancy levels
further improved, tracking closer to 2019 levels in the UK and The
Netherlands. Meanwhile, the Group's hotel and camping assets in
Croatia experienced a solid start to the summer season, supporting
confidence in the Group's wider full year outlook. As previously
announced, while the German region had a slower start to the year
it has seen an improving trend in bookings through Q2 and into
Q3.
Additionally, the Group continued to make excellent progress
with its development projects with four new h otels scheduled to
open during H2 2023 and H1 2024, consisting of two repositioned
properties and two new hotels.
As a result, total revenue in the Period increased by 59.0% to
GBP180.0 million, representing an improved performance of 15.9%
versus pre-pandemic levels (H1 2022: GBP113.2m, H1 2019:
GBP155.3m). RevPAR was GBP110.3 (H1 2022: GBP67.8, H1 2019:
GBP93.4).
Despite macroeconomic challenges and inflationary pressures, the
Group achieved enhanced operational profit in H1 2023 with EBITDA
at GBP45.2 million, compared with GBP17.0 million in H1 2022.
EBITDA was in line with the pre-pandemic H1 2019 of GBP45.7
million.
Alongside maintaining its disciplined rates-led strategy and
growing occupancy, the Group successfully mitigated a number of
inflationary and sector-specific issues through the implementation
of innovative solutions and forward planning focused on enhancing
its sustainability and energy efficiency. For example, staffing is
much less of a constraint for the Group due to its proactive
approach to investment in people, automation and employer brand.
Furthermore, the Group's utility cost hedging has been important in
mitigating energy cost increases, alongside a multitude of internal
innovations and efforts to reduce energy consumption across our
operations.
Given the strength of trading and confidence in outlook, the
Board believes the Company is now in a position to return to its
historical capital returns policy of distributing approximately 30%
of adjusted EPRA earnings (reported at GBP1.06 in the twelve month
period to 30 June 2023), while continuing to support investment in
future growth opportunities. In light of the continued significant
share price discount (c60% as at 31 August 2023) relative to EPRA
NRV per share, the Board intends to consult with shareholders
regarding the most appropriate and effective mechanism for such
distributions to take place, including dividends, share buybacks,
tender offers or a combination thereof. The Board looks forward to
updating the market on this capital return policy in the near
future.
Strategic progress and development pipeline
Reflecting its strong track record in developing, launching and
operating hospitality properties, the Group remained focused on its
consistent strategic investment in its portfolio of premium
assets.
In London, the art'otel London Battersea Power Station fully
opened to critical acclaim in February 2023, operated by PPHE under
a management agreement through its hospitality management platform,
and initial trading has been strong.
In Croatia, recently completed repositioning projects have
supported the initial strong start to peak trading in the region.
Grand Hotel Brioni in Pula will trade through its first summer
season fully open as a Radisson Collection Hotel under the expanded
strategic partnership with Radisson Hotel Group ("RHG"), following
an extensive repositioning project completed in 2022, alongside the
improvements made to properties at Arena Stoja Campsite (luxury
mobile homes) in Pula. In Austria, Arena FRANZ Ferdinand hotel in
Nassfeld benefited from development investment in enhanced
facilities, including a pool and spa facilities.
At the International Hospitality Investment Forum in May 2023,
PPHE further cemented its expanded partnership with RHG with a
commitment to continue to grow and leverage the brands of each
company's portfolio internationally. RHG integrated the art'otel
brand as its tenth brand to be operated and marketed under one
overarching Radisson Hotel Group umbrella.
Further evidence of the significant opportunity that remains in
the Group's GBP300+ million development pipeline includes the
ongoing conversion of an iconic office building in the centre of
Zagreb into Croatia's first art'otel (opening H2 2023), the
repositioning of a new art'otel in Rome (reopening H1 2024), and
construction of art'otel London Hoxton (opening Q1 2024) which is
progressing well following the appointment of globally recognised
British contemporary street artist D*Face as its Signature Artist
during the Period. As ever, the Company continues to invest in its
development pipeline to both expand the portfolio and deliver
attractive shareholder returns.
The second half of 2023 and early 2024 will be exceptionally
busy for our teams as we prepare to open a number of further
premium hotels internationally. In addition to the three new
art'otels, the pipeline includes a Radisson RED in Belgrade,
Serbia. Previously branded Arena 88 Rooms Hotel, the property is
being refurbished to re-open as an upscale Radisson RED hotel.
European Hospitality Real Estate Fund
As part of the Group's long-term growth ambitions, regulatory
approvals for PPHE's inaugural European Hospitality Real Estate
Fund ("the Fund") were secured during the Period following its
launch in March 2023. The Fund of up to EUR250 million equity
enables the Group to further accelerate its strategy of
identifying, acquiring and developing attractive hotel assets
across a range of key European markets. Hotels acquired by the Fund
will be operated by PPHE's hospitality management platform,
building further scale in the platform.
PPHE has committed to participate in the Fund for an amount up
to EUR50 million in cash and/or assets. In March 2023, the Group
announced Clal Insurance as the Fund's cornerstone investor, which
has committed to invest up to EUR75 million. In March, our property
in Rome (soon to open as art'otel Rome) was contributed as a seed
asset.
Following receipt of regulatory approvals, with full equity
subscription and combined with a targeted 50% bank leverage, the
investment potential of the Fund will be around EUR500 million.
The Fund is consistent with PPHE's longstanding approach to
building shareholder value through the careful stewardship of its
own balance sheet and partnership with third-party capital
providers, and we look forward to sharing further progress over
coming months.
The Board
The composition of the Board and its diversity remains critical
to the Group's approach to governance. As previously announced,
Kevin McAuliffe, Non-Executive Chairman resigned from the Board at
the conclusion of the 2023 Annual General Meeting (AGM). The Board
has distributed his responsibilities to other non-executive
directors.
In addition, following more than a decade with the Group, Greg
Hegarty, Deputy Chief Executive Officer & Chief Operating
Officer, was appointed as an Executive Director of the Company and
joined the Board, effective from the conclusion of the AGM. The
Directors believe that Greg's appointment will enhance the
leadership attributes of the Board by strengthening its strategic
capacity, whilst also providing invaluable operational expertise of
the Group's day-to-day business and grassroot implementation of its
strategy. Greg has significant experience in investor relations and
is keen to meet with investors on a regular basis. This appointment
forms part of the Group's wider commitment to periodically refresh
the Board and is also in keeping with its internal talent
management strategy of promoting intra-group mobility.
The Company continues to take every step to engage with
shareholders both before and after the AGM, however it does
recognise that shareholders expressed concerns on some elements of
the Group's corporate governance. The feedback session held after
the AGM in April 2023 provided very useful information regarding
investor priorities, and our work to meet investor expectations is
ongoing.
Environmental, Social and Governance ("ESG")
Stakeholder engagement:
The Group has taken a number of steps to increase resources
within its ESG function. The Group's Corporate & Legal team has
been expanded to ensure that the Group's ESG strategy
implementation is appropriately resourced, including to enable
ongoing reporting against KPIs and ensure greater transparency for
all stakeholders. The Company completed further CDP reporting, and
will further expand into the Global Reporting Initiative (GRI) and
Workforce Disclosure Initiative (WDI) reporting. This will allow
investors and customers alike to compare ESG scores across
standardised metrics. Company disclosures made in line with UK
requirements arising from the Task Force on Climate-related
Financial Disclosures (TCFD) in 2021 and 2022 shall be updated in
2023. Additionally, we anticipate the introduction of new IFRS S1
and S2 reporting standards from 2024 onwards, and will be taking
steps to report in the required manner when the new requirements
are implemented.
People:
The Group reviewed its 'pulse' survey feedback and identified
ESG as a target area for greater transparency and communications
with the wider workforce. We therefore introduced new ESG
communication methods, including a dedicated learning and
development calendar for ESG issues such as diversity, equity and
inclusion. We also identified grass-roots initiatives to support
career development and local communities, and are implementing
targets to ensure that the social value of these are correctly
measured and communicated.
Carbon & energy :
During the Period, we completed a full Group-wide carbon
footprint exercise covering all regions over the last 12 months.
This is the first time our full footprint including our supply
chain ("scope 3 emissions") has been mapped in its entirety. The
data will be used for benchmarking the business and prioritising
carbon reduction activities in order to confirm the Group's Carbon
Net Zero target. This will allow us to ask the Science-Based
Targets Initiative (SBTi) to verify our target, and for us to
publish it alongside other ESG targets at year end in the Annual
Report and Accounts.
Governance :
Details of Board changes in the Period are detailed above. We
have also moved ahead with adopting ESG targets, to which we can be
held publicly accountable moving forwards, and are looking ahead to
new corporate governance requirements which will affect our
reporting in the future. Our year end Annual Report and Accounts
will contain full details.
Current trading and outlook
The second half of the year is typically the Group's strongest
trading period, particularly with the onset of the summer leisure
season, which leads to the opening of our well-invested portfolio
of hotel and camping assets in Croatia. Strong forward booking
momentum in Q2 has continued into Q3, and further significant
revenue contribution is expected from the recently refurbished and
relaunched properties. As previously announced, EUR200 million has
been invested in the Croatia region in total since 2008, with EUR50
million alone invested in the last two years, so we are encouraged
by the prospects in what is now one of the Group's largest
operating regions.
As announced in our Trading Update in June 2023, the Board
expects EBITDA margins to continue to improve as we continue
through the second half of FY 2023, despite broader cost inflation
that has been largely absorbed over the last 12 months. The Board
anticipates that this cost inflation effect will diminish through
FY 2024 and beyond, as forward energy cost hedges flow through at
substantially lower levels than those fixed for FY 2023.
The Group continues to expect to deliver FY 2023 revenue of at
least GBP400 million and EBITDA of at least GBP120 million.
In the medium to longer term, the Board's confidence in the
future of the Group is stronger than ever in spite of ongoing
macroeconomic uncertainties. Given the persistent strength of
consumer leisure demand internationally, the Group's investment in
its high-quality portfolio of assets and development pipeline, and
its strong financial position, PPHE remains well-positioned to
continue to take advantage of ongoing momentum in the sector and
deliver enhanced returns for shareholders.
FINANCIAL PERFORMANCE
H1 Reported in GBP (GBP)
-------------- ------------------------------------------------------------------------------------------------------
Six months Six months Change(1) Six months Change(1)
ended ended ended
30 June 30 June 30 June
2023 2022 2019
-------------- --------------------------------- ---------------------------- ---------- ----------- ------------
GBP180.0 GBP155.3
Total revenue million GBP113.2 million 59.0% million 15.9%
------------------ ----------------------------- ---------------------------- ---------- ----------- ------------
GBP133.6 GBP109.1
Room revenue million GBP82.0 million 63.0% million 22.4%
------------------ ----------------------------- ---------------------------- ---------- ----------- ------------
GBP46.4 GBP46.5
EBITDAR million GBP18.2 million 155.9% million (0.1)%
------------------ ----------------------------- ---------------------------- ---------- ----------- ------------
GBP45.2 GBP45.7
EBITDA million GBP17.0 million 165.7% million (0.9)%
------------------ ----------------------------- ---------------------------- ---------- ----------- ------------
(430)
EBITDA margin 25.1% 15.0% 1,010 bps 29.4% bps
------------------ ----------------------------- ---------------------------- ---------- ----------- ------------
Reported GBP(26.1) GBP4.3
PBT GBP2.0 million million n/a million (52.6)%
------------------ ----------------------------- ---------------------------- ---------- ----------- ------------
Normalised GBP(23.9) GBP5.5
PBT GBP3.6 million million n/a million (32.1)%
------------------ ----------------------------- ---------------------------- ---------- ----------- ------------
(770)
Occupancy 69.1% 48.0% 2,110 bps 76.8% bps
------------------ ----------------------------- ---------------------------- ---------- ----------- ------------
Average room
rate GBP159.6 GBP141.1 13.1% 121.7 31.2%
------------------ ----------------------------- ---------------------------- ---------- ----------- ------------
RevPAR GBP110.3 GBP67.8 62.6% 93.4 18.1%
------------------ ----------------------------- ---------------------------- ---------- ----------- ------------
(1) Percentage change figures are calculated from actual figures
as opposed to the rounded figures included in the above table.
Q2 Reported in GBP (GBP)
--------------- ---------------------------------------------------------------------------------------------------
Three months Three months Change(1) Three months Change(1)
ended ended ended
30 June 30 June 30 June
2023 2022 2019
--------------- ----------------------------- ----------------------------- ---------- ------------- ----------
GBP92.8
Total revenue GBP111.2 million GBP81.2 million 36.9% million 19.8%
--------------- ----------------------------- ----------------------------- ---------- ------------- ----------
GBP65.7
Room revenue GBP83.2 million GBP59.4 million 40.0% million 26.6%
--------------- ----------------------------- ----------------------------- ---------- ------------- ----------
GBP33.7
EBITDAR GBP40.3 million GBP22.6 million 78.2% million 19.6%
--------------- ----------------------------- ----------------------------- ---------- ------------- ----------
GBP33.8
EBITDA GBP39.7 million GBP22.0 million 80.6% million 17.4%
--------------- ----------------------------- ----------------------------- ---------- ------------- ----------
(70)
EBITDA margin 35.7% 27.1% 860 bps 36.4% bps
--------------- ----------------------------- ----------------------------- ---------- ------------- ----------
1,200 (630)
Occupancy 70.8% 58.8% bps 77.1% bps
--------------- ----------------------------- ----------------------------- ---------- ------------- ----------
Average room
rate GBP171.0 GBP148.9 14.8% 126.1 35.6%
--------------- ----------------------------- ----------------------------- ---------- ------------- ----------
RevPAR GBP121.0 GBP87.5 38.2% 97.2 24.5%
--------------- ----------------------------- ----------------------------- ---------- ------------- ----------
H1 saw a strong rebound in activity across all of the Group's
key markets, particularly in the UK. This trend continued
consistently through the first half.
This recovery across our regions, driven by demand for leisure
stays, helped to deliver a reported total revenue of GBP180.0
million; an increase of 59.0% compared with the prior year (H1
2022: GBP113.2 million).
In the first half RevPAR increased by 62.6% to GBP110.3, driven
by a 13.1% increase in average room rate to GBP159.6 (H1 2022:
GBP141.1). Occupancy rose by 2,110 bps to 69.1% (H1 2022: 48.0%).
Notably, average room rate in the Period was 31.2% ahead of the
same period pre-pandemic (H1 2019: GBP121.7).
In Q2 average room rate increased to GBP171.0; 14.8% higher than
the prior year and 35.6% higher than the rates achieved in Q2 2019.
Occupancy rose by 1,200 bps to 70.8% (Q2 2022: 58.8%). This
delivered Q2 RevPAR of GBP121.0 (Q2 2022: GBP87.5, Q2 2019:
GBP97.2).
Group reported EBITDA in the Period increased to GBP45.2 million
(H1 2022: GBP17.0 million, H1 2019: GBP45.7 million) and the EBITDA
margin improved to 25.1% (H1 2022: 15.0%, H1 2019: 29.4%).
Reconciliation of reported profit before tax to normalised
profit before tax
Six months Six months 12 months 12 months
ended ended ended ended
30 June 30 June 30 June 31 December
In GBP millions 2023 2022 2023 2022
---------------------------------- ---------- ---------- --------- ------------
Reported profit (loss) before
tax 2.0 (26.1) 39.6 11.5
---------------------------------- ---------- ---------- --------- ------------
Loss on buy back of units in Park
Plaza Westminster Bridge London
from private investors 1.3 0.7 2.1 1.5
---------------------------------- ---------- ---------- --------- ------------
Revaluation of finance lease 1.9 1.8 3.8 3.7
---------------------------------- ---------- ---------- --------- ------------
Revaluation of Park Plaza County
Hall London Income Units - - (0.3) (0.3)
---------------------------------- ---------- ---------- --------- ------------
Disposals and Other non-recurring
expenses (including pre-opening
expenses) 0.2 1.0 0.7 1.5
---------------------------------- ---------- ---------- --------- ------------
Revaluation of share appreciation
rights (2.4) 1.4 (3.7) 0.1
---------------------------------- ---------- ---------- --------- ------------
Fair value IRS 0.6 (2.7) (6.4) (9.7)
---------------------------------- ---------- ---------- --------- ------------
Normalised profit (loss) before
tax 3.6 (23.9) 35.8 8.3
---------------------------------- ---------- ---------- --------- ------------
Shareholder returns
Given the strength of trading and confidence in outlook, the
Board believes the Company is now in a position to return to its
historical capital returns policy of distributing approximately 30%
of adjusted EPRA earnings (reported at GBP1.06 in the twelvemonth
period to 30 June 2023), while continuing to support investment in
future growth opportunities. In light of the continued significant
share price discount (c60% as at 31 August 2023) relative to EPRA
NRV per share, the Board intends to consult with shareholders
regarding the most appropriate and effective mechanism for such
distributions to take place, including dividends, share buybacks,
tender offers or a combination thereof. The Board looks forward to
updating the market on this capital return policy in the near
future.
EPRA accounting information
The Group is a developer, owner and operator of hotels, resorts
and campsites and realises returns through both developing and
owning assets as well as the operations of those assets to their
full potential. Certain EPRA performance measurements are disclosed
to aid investors in analysing the Group's performance and
understanding the value of its assets and earnings from a property
perspective.
EPRA performance indicators
The Group's last 12 months adjusted EPRA earnings per share to
30 June 2023 increased to 106 pence per share. A summary of the
Group's EPRA performance measures is set out in the table
below.
30 June 2023 31 December 2022
GBP million GBP million
--------------------------------------- ------------- ----------------
EPRA earnings (LTM)(1) 58.1 32.7
--------------------------------------- ------------- ----------------
Adjusted EPRA earnings (LTM)(1) 44.9 21.2
--------------------------------------- ------------- ----------------
EPRA NRV(2) 1,063.1 1,078.7
--------------------------------------- ------------- ----------------
Per share figures: 30 June 31 December
2023 2022
GBP GBP
--------------------------------------- ------------- ----------------
EPRA Earnings per share (LTM) 1.37 0.77
--------------------------------------- ------------- ----------------
Adjusted EPRA earnings per share (LTM) 1.06 0.50
--------------------------------------- ------------- ----------------
EPRA NRV per share(2) 25.05 25.17
--------------------------------------- ------------- ----------------
(1) EPRA earnings and adjusted EPRA earnings for 30 June 2023
are calculated for the last 12-month period ended on 30 June
2023.
(2) EPRA NRV and EPRA NRV per share were calculated based on the
independent external valuations prepared in December 2022.
EPRA performance measures
a. EPRA net asset value
To guide investors on the market value of the Group's property
portfolio and performance, the Group has been reporting various
EPRA key performance indicators since 2018, alongside its
operational metrics. Property valuations have historically been
undertaken once a year by independent external valuers, using
established and widely recognised methods including applying
appropriate discount rates to property cash flow generation and
applying capitalisation rates from precedent transactions.
In December 2022, the Group's properties (with the exception of
operating leases, managed and franchised properties) were
independently valued by Savills (in respect of properties in the
Netherlands, UK and Germany) and by Zagreb nekretnine Ltd (ZANE)
(in respect of properties in Croatia). Based on those valuations
the Directors had updated the Group's EPRA NRV, EPRA NTA and EPRA
NDV for 30 June 2023. The EPRA NRV as at 30 June 2023, set out in
the table below, amounts to GBP1,063.1 million (2022: GBP1,078.7
million), which equates to GBP25.05 per share (2022: GBP25.17).
This NRV slight decline was mainly as a result of the change in the
GBP/EUR currency conversion rate and a dividend distribution in the
Period. The Group's annual revaluation will take place in December
2023.
30 June 2023
GBP million
------------------------------------- -------------------------------------------------------------------------------
EPRA NRV EPRA NTA(4) EPRA NDV
(Net Reinstatement Value) (Net Tangible Assets) (Net Disposal Value)
------------------------------------- ---------------------------- ------------------------ -----------------------
NAV per the financial statements 304.7 304.7 304.7
Effect of exercise of options - - -
Diluted NAV, after the exercise of
options(1) 304.7 304.7 304.7
Includes:
Revaluation of owned properties in
operation (net of non-controlling
interest)(2) 747.7 747.7 747.7
Revaluation of the JV interest held
in two German properties (net of
non-controlling interest)
(2) 6.8 6.8 6.8
Fair value of fixed interest rate
debt - - (8.3)
Deferred tax on revaluation of
properties - - (31.0)
Real estate transfer tax(3) 18.5 - -
Excludes:
Fair value of financial instruments 23.1 23.1 -
Deferred tax (8.5) (8.5) -
Intangibles as per the IFRS balance - 11.1 -
sheet
EPRA NAV 1,063.1 1,033.5 1,019.9
Fully diluted number of shares (in
thousands)(1) 42,433 42,433 42,433
EPRA NAV per share (in GBP) 25.05 24.36 24.04
(1) The fully diluted number of shares excludes treasury shares
but includes 132,848 outstanding dilutive options (as at 31
December 2022: 407,223).
(2) The fair values of the properties were determined on the
basis of independent external valuations prepared in December 2022.
The properties under development are measured at cost.
(3) EPRA NTA and EPRA NDV reflect fair value net of transfer
costs. Transfer costs are added back when calculating EPRA NRV.
(4) NTA is calculated under the assumption that the Group does
not intend to sell any of its properties in the long run.
31 December 2022
GBP million
------------------------------------- -------------------------------------------------------------------------------
EPRA NRV EPRA NTA(4) EPRA NDV
(Net Reinstatement Value) (Net Tangible Assets) (Net Disposal Value)
------------------------------------- ---------------------------- ------------------------ -----------------------
NAV per the financial statements 315.1 315.1 315.1
------------------------------------- ---------------------------- ------------------------ -----------------------
Effect of exercise of options 3.0 3.0 3.0
------------------------------------- ---------------------------- ------------------------ -----------------------
Diluted NAV, after the exercise of
options(1) 318.1 318.1 318.1
------------------------------------- ---------------------------- ------------------------ -----------------------
Includes:
------------------------------------- ---------------------------- ------------------------ -----------------------
Revaluation of owned properties in
operation (net of non-controlling
interest)(2) 746.9 746.9 746.9
------------------------------------- ---------------------------- ------------------------ -----------------------
Revaluation of the JV interest held
in two German properties (net of
non-controlling interest)
(2) 6.8 6.8 6.8
------------------------------------- ---------------------------- ------------------------ -----------------------
Fair value of fixed interest rate
debt - - (9.2)
------------------------------------- ---------------------------- ------------------------ -----------------------
Deferred tax on revaluation of
properties - - (31.7)
------------------------------------- ---------------------------- ------------------------ -----------------------
Real estate transfer tax(3) 18.7 - -
------------------------------------- ---------------------------- ------------------------ -----------------------
Excludes:
------------------------------------- ---------------------------- ------------------------ -----------------------
Fair value of financial instruments 21.1 21.1 -
------------------------------------- ---------------------------- ------------------------ -----------------------
Deferred tax (9.3) (9.3) -
------------------------------------- ---------------------------- ------------------------ -----------------------
Intangibles as per the IFRS balance
sheet - 12.8 -
------------------------------------- ---------------------------- ------------------------ -----------------------
EPRA NAV 1,078.7 1,047.2 1,030.9
------------------------------------- ---------------------------- ------------------------ -----------------------
Fully diluted number of shares (in
thousands)(1) 42,846 42,846 42,846
------------------------------------- ---------------------------- ------------------------ -----------------------
EPRA NAV per share (in GBP) 25.17 24.44 24.06
------------------------------------- ---------------------------- ------------------------ -----------------------
(1) The fully diluted number of shares excludes treasury shares
but includes 407,223 outstanding dilutive options (as at 31
December 2021: 585,867).
(2) The fair values of the properties were determined on the
basis of independent external valuations prepared in December
2022.
(3) EPRA NTA and EPRA NDV reflect fair value net of transfer
costs. Transfer costs are added back when calculating EPRA NRV.
(4) NTA is calculated under the assumption that the Group does
not intend to sell any of its properties in the long run.
EPRA earnings
The basis for calculating the Company's adjusted EPRA earnings
of GBP44.9 million for the 12 months to 30 June 2023 (12 months to
31 December 2022: GBP21.2 million) and the Company's adjusted EPRA
earnings per share of 106 pence for the 12 months to 30 June 2023
(12 months to 31 December 2022: 50 pence) is set out in the table
below.
12 months ended 12 months ended
30 June 2023 31 December 2022
GBP million GBP million
-------------------------------------------------------------------------------- ---------------- ------------------
Earnings attributed to equity holders of the parent company 36.1 10.2
-------------------------------------------------------------------------------- ---------------- ------------------
Depreciation and amortisation expenses 40.6 40.0
-------------------------------------------------------------------------------- ---------------- ------------------
Revaluation of Park Plaza County Hall London Income Units (0.3) (0.3)
-------------------------------------------------------------------------------- ---------------- ------------------
Changes in fair value of financial instruments (10.1) (9.6)
-------------------------------------------------------------------------------- ---------------- ------------------
Non-controlling interests in respect of the above(3) (8.2) (7.6)
-------------------------------------------------------------------------------- ---------------- ------------------
EPRA earnings 58.1 32.7
-------------------------------------------------------------------------------- ---------------- ------------------
Weighted average number of shares (in thousands) (LTM) 42,503 42,523
-------------------------------------------------------------------------------- ---------------- ------------------
EPRA earnings per share (in pence) 137 77
-------------------------------------------------------------------------------- ---------------- ------------------
Company specific adjustments(1) :
-------------------------------------------------------------------------------- ---------------- ------------------
Capital loss on buy-back of Income Units in Park Plaza Westminster Bridge
London 2.1 1.5
-------------------------------------------------------------------------------- ---------------- ------------------
Remeasurement of lease liability(4) 3.8 3.7
-------------------------------------------------------------------------------- ---------------- ------------------
Disposals and Other non-recurring expenses (including pre-opening expenses)(7) 0.7 1.5
-------------------------------------------------------------------------------- ---------------- ------------------
Adjustment of lease payments(5) (2.2) (2.2)
-------------------------------------------------------------------------------- ---------------- ------------------
One off tax adjustments(6) (5.9) (5.8)
-------------------------------------------------------------------------------- ---------------- ------------------
Maintenance capex(2) (15.9) (13.2)
-------------------------------------------------------------------------------- ---------------- ------------------
Non-controlling interests in respect of the above(3) 4.2 3.0
-------------------------------------------------------------------------------- ---------------- ------------------
Company adjusted EPRA earnings(1) 44.9 21.2
-------------------------------------------------------------------------------- ---------------- ------------------
Company adjusted EPRA earnings per share (in pence) 106 50
-------------------------------------------------------------------------------- ---------------- ------------------
Reconciliation Company adjusted EPRA earnings to normalised reported profit
before tax
-------------------------------------------------------------------------------- ---------------- ------------------
Company adjusted EPRA earnings 44.9 21.2
-------------------------------------------------------------------------------- ---------------- ------------------
Reported depreciation and amortisation (40.6) (40.0)
-------------------------------------------------------------------------------- ---------------- ------------------
Non-controlling interest in respect of reported depreciation and
amortisation(3) 8.2 7.6
-------------------------------------------------------------------------------- ---------------- ------------------
Maintenance capex(2) 15.9 13.2
-------------------------------------------------------------------------------- ---------------- ------------------
Non-controlling interest on maintenance capex and the company specific
adjustments(3) (4.2) (3.0)
-------------------------------------------------------------------------------- ---------------- ------------------
Adjustment of lease payments(5) 2.2 2.2
-------------------------------------------------------------------------------- ---------------- ------------------
One off tax adjustments(6) 5.9 5.8
-------------------------------------------------------------------------------- ---------------- ------------------
Reported profit attributable to non-controlling interest 5.6 4.7
-------------------------------------------------------------------------------- ---------------- ------------------
Reported tax (2.1) (3.4)
-------------------------------------------------------------------------------- ---------------- ------------------
Normalised profit before tax 35.8 8.3
-------------------------------------------------------------------------------- ---------------- ------------------
(1) The 'Company specific adjustments' represent adjustments of
non-recurring or non-trading items.
(2) Calculated as 4% of revenues, which represents the expected
average maintenance capital expenditure required in the operating
properties.
(3) Non-controlling interests include the non-controlling
shareholders in Arena, third-party investors in income units of
Park Plaza Westminster Bridge London and the non-controlling
shareholders in the partnership with Clal that was entered into in
June 2021 and March 2023 respectively.
(4) Non-cash revaluation of finance lease liability relating to minimum future CPI/RPI increases.
(5) Lease cash payments which are not recorded as an expense in
the Group's income statement due to the implementation of IFRS
16.
(6) Mainly relates to deferred tax asset recorded in 2022 (see
Note 22b in the 2022 annual consolidated financial statements).
(7) Mainly relates to pre-opening expense and net profit and
loss on disposal of property, plant and equipment.
REVIEW OF OPERATIONS
United Kingdom
Hotel operations
Reported in GBP
----------------------------------------- -----------------------------
Six months Six months ended
ended 30 June 2022
30 June 2023
-------------------------------- ------------------- -----------------
Total revenue GBP110.0 million GBP71.1 million
-------------------------------- ------------------- -----------------
EBITDAR GBP32.0 million GBP16.2 million
-------------------------------- ------------------- -----------------
EBITDA GBP31.8 million GBP16.1 million
-------------------------------- ------------------- -----------------
Occupancy 81.7% 56.5%
-------------------------------- ------------------- -----------------
Average room rate GBP184.3 GBP169.2
-------------------------------- ------------------- -----------------
RevPAR GBP150.5 GBP95.6
-------------------------------- ------------------- -----------------
Room revenue GBP85.9 million GBP54.6 million
-------------------------------- ------------------- -----------------
Hotel portfolio performance
The United Kingdom remained our strongest performing region,
driven by a combination of growth in room rate, which continued to
exceed 2019 levels, as well as an ongoing recovery in occupancy.
This was achieved throughout the Group's main segments of leisure,
corporate and meetings and events alike, as events such as the
coronation of King Charles III and a return to business travel
encouraged a good level of new bookings and activity in London.
All of the Group's UK hotels achieved or exceeded their fair
market share in occupancy terms and the majority of its London
hotels also outperformed their competitor sets in terms of average
room rate(1) .
Total revenue increased by 54.7% to GBP110.0 million (H1 2022:
GBP71.1 million). The Group's disciplined focus on driving rates
meant that the average room rate increased by 8.9% to GBP184.3 (H1
2022: GBP169.2), which was 28.0% higher than the average room rate
pre-pandemic (H1 2019: GBP144.0). Occupancy improved to 81.7% (H1
2022: 56.5%), which resulted in RevPAR of GBP150.5 (H1 2022:
GBP95.6).
EBITDA increased by 98.1% to GBP31.8 million (H1 2022: GBP16.1
million).
In February 2023, we fully opened - to much acclaim - the UK's
first art'otel, located at Battersea Power Station. This hotel is
managed by the Group under a long-term operating agreement and as a
result, its financial performance is not included in the
performance reported in this segment. Management fees are accounted
for in the Management and Central Services segment.
The United Kingdom hotel market*
RevPAR was up 24.4% at GBP84.8 (H1 2022: GBP68.2), driven by a
13.4% increase in average room rate to GBP113.0 (H1 2022: GBP99.5)
and a 9.7% increase in occupancy to 75.0% (H1 2022: 68.5%).
In London, RevPAR increased by 34.0% to GBP144.1 compared with
GBP108.1 in H1 2022, reflecting a 15.4% increase in occupancy to
76.9% (H1 2022: 66.9%) and a 16.1% increase in average room rate to
GBP187.5 (H1 2022: GBP161.5).
(1) STR Hotel Benchmarking, June 2023
*STR European Hotel Review, June 2023
The Netherlands
Hotel operations
Reported in GBP Reported in local currency
EUR(1)
--------------- ----------------------------------- ----------------------------------
Six months Six months Six months Six months
ended ended ended ended
30 June 30 June 30 June 30 June
2023 2022 2023 2022
---------------- ---------------- ---------------- ---------------- ----------------
Total revenue GBP30.2 million GBP14.7 million EUR34.6 million EUR17.5 million
---------------- ---------------- ---------------- ---------------- ----------------
EBITDAR GBP9.5 million GBP3.1 million EUR10.8 million EUR3.6 million
---------------- ---------------- ---------------- ---------------- ----------------
EBITDA GBP9.4 million GBP3.1 million EUR10.8 million EUR3.6 million
---------------- ---------------- ---------------- ---------------- ----------------
Occupancy 79.6% 40.9% 79.6% 40.9%
---------------- ---------------- ---------------- ---------------- ----------------
Average room
rate GBP149.6 GBP139.5 EUR171.2 EUR165.3
---------------- ---------------- ---------------- ---------------- ----------------
RevPAR GBP119.1 GBP57.0 EUR136.3 EUR67.5
---------------- ---------------- ---------------- ---------------- ----------------
Room revenue GBP23.1 million GBP11.1 million EUR26.5 million EUR13.1 million
---------------- ---------------- ---------------- ---------------- ----------------
(1 Average exchange rate from Euro to Pound Sterling for the
period ended 30 June 2023 was 1.144 and for the period ended 30
June 2022 was 1.185, representing a 3.4% decrease.)
Hotel portfolio performance
The Netherlands continued to perform strongly. As in the United
Kingdom, the performance was also driven by a combination of rate
growth and occupancy recovery.
All of the Group's hotels in the Netherlands exceeded their fair
market share in occupancy terms and two out of three of its
Amsterdam city centre hotels also outperformed their competitor
sets in terms of average room rate(1) .
Total revenue (in local currency) increased to EUR34.6 million
(H1 2022: EUR17.5 million), which represented an increase of 16.8%
on H1 2019 (EUR29.6 million). Average room rate increased by 3.6%
to EUR171.2 (H1 2022: EUR165.3); an increase of 18.0% compared to
H1 2019: EUR145.0. Occupancy improved to 79.6% which, together with
the improvement in average room rate, led to RevPAR of EUR136.3 (H1
2022: EUR67.5).
EBITDA improved by EUR7.2 million to EUR10.8 million (H1 2022:
EUR3.6 million).
The Dutch hotel market*
During H1 2022 RevPAR increased by 49.6% to EUR106.3 compared to
EUR71.3 in H1 2022. Occupancy increased by 27.8% to 69.4% (H1 2022:
54.3%), and the average room rate was EUR153.2 (H1 2022: EUR131.3);
17.0% higher than in H1 2022.
In Amsterdam, our main market in The Netherlands, RevPAR
increased by 58.0% to EUR132.0 (H1 2022: EUR84.1). Occupancy levels
increased by 34.1% to 72.7% (H1 2022: 53.9%), and the average daily
room rate increased by 17.9% to EUR181.5 (H1 2022: EUR155.9).
(1) STR Hotel Benchmarking, June 2023
*STR European Hotel Review, June 2023
Croatia
Hotel operations
Reported in GBP Reported in local currency
EUR(1)
----------------- ------------------------------------ ------------------------------------
Six months Six months Six months Six months
ended 30 June ended 30 June ended ended
2023 2022 30 June 2023 30 June 2022(3)
----------------- ----------------- ----------------- ----------------- -----------------
Total revenue GBP22.1 million GBP16.2 million EUR25.3 million EUR19.3 million
----------------- ----------------- ----------------- ----------------- -----------------
EBITDAR GBP0.5 million GBP(0.1) million EUR0.6 million EUR(0.1) million
----------------- ----------------- ----------------- ----------------- -----------------
EBITDA GBP(0.4) million GBP(0.9) million EUR(0.5) million EUR(1.1) million
----------------- ----------------- ----------------- ----------------- -----------------
Occupancy(2) 47.2% 43.6% 47.2% 43.6%
----------------- ----------------- ----------------- ----------------- -----------------
Average room
rate(2) GBP102.3 GBP84.5 EUR117.0 EUR100.2
----------------- ----------------- ----------------- ----------------- -----------------
RevPAR(2) GBP48.3 GBP36.8 EUR55.3 EUR43.6
----------------- ----------------- ----------------- ----------------- -----------------
Room revenue(2) GBP12.6 million GBP8.7 million EUR14.4 million EUR10.3 million
----------------- ----------------- ----------------- ----------------- -----------------
(1 Average exchange rate from Euro to Pound Sterling for the
period ended 30 June 2023 was 1.144 and for the period ended 30
June 2022 was 1.185, representing a 3.4% decrease.)
(2 The room revenue, average room rate, occupancy and RevPAR
statistics include all accommodation units at hotels and
self-catering apartment complexes and excludes campsite and mobile
homes.)
(3. The results for June 2022, which were previously presented
in HRK, were translated to Euro using average exchange rate from
HRK to EUR for the period ended 30 June 2023 of 7.546.)
Hotel portfolio performance
The seasonality of our operations in Croatia meant that as
usual, activity in the region started to accelerate during the
second quarter as our hotels, apartments and campsites opened for
the summer season. The Group saw strong trading in the early season
with ongoing booking momentum as the period progressed.
The revenue performance for H1 showed strong growth compared
with last year and exceeded the same period pre-pandemic in 2019.
Total revenue (in local currency) increased significantly to
EUR25.3 million (H1 2022: EUR19.3 million).
This performance was driven by strong rate growth across the
Group's hotels, with average room rate up 16.9% to EUR117.0.
Occupancy improved from 43.6% in H1 2022 to 47.2% in H1 2023. As a
result, RevPAR rose significantly to EUR55.3 (H1 2022: EUR43.6); an
increase of 36.3% compared with pre-pandemic levels in 2019 (H1
2019: EUR40.6).
Despite the strong revenue performance, EBITDA was impacted by
cost inflation for utilities, food and payroll. Overall, the EBITDA
loss was reduced to EUR0.5 million (H1 2022: EUR(1.1) million).
Since PPHE first acquired an interest in Arena Hospitality Group
(AHG) in 2008, the business has been transformed through an
extensive programme of new asset acquisitions, asset repositioning,
operational improvements and ongoing capital expenditure. In total,
the Group has invested approximately EUR200 million into the
Croatian leisure assets, including approximately EUR50 million in
the more recent relaunch of the Grand Hotel Brioni Pula and the
upcoming art'otel Zagreb, which are yet to contribute meaningfully
to the Group.
Further revenue contributed from a number of recently
refurbished and relaunched properties is also expected to be
significant. Additional works were completed at Arena Stoja
Campsite, where phase two investments included the introduction of
a new reception and restaurant and bar, supporting the 2022
introduction of luxury mobile homes.
From 1 January 2023, Croatia joined the Eurozone. Consequently,
from the start of FY 2023 the financial performance for the region
is reported in Euros.
Germany
Hotel operations
Reported in GBP Reported in local currency
EUR(1)
--------------- --------------------------------- ---------------------------------
Six months Six months Six months Six months
ended 30 June ended 30 June ended 30 June ended 30 June
2023 2022 2023 2022
--------------- ---------------- --------------- ---------------- ---------------
Total revenue GBP10.6 million GBP6.4 million EUR12.1 million EUR7.6 million
--------------- ---------------- --------------- ---------------- ---------------
EBITDAR GBP2.3 million GBP2.7 million EUR2.6 million EUR3.2 million
--------------- ---------------- --------------- ---------------- ---------------
EBITDA GBP2.3 million GBP2.7 million EUR2.6 million EUR3.2 million
--------------- ---------------- --------------- ---------------- ---------------
Occupancy 56.1% 42.0% 56.1% 42.0%
--------------- ---------------- --------------- ---------------- ---------------
Average room
rate GBP125.1 GBP98.9 EUR143.1 EUR117.2
--------------- ---------------- --------------- ---------------- ---------------
RevPAR GBP70.2 GBP41.5 EUR80.3 EUR49.2
--------------- ---------------- --------------- ---------------- ---------------
Room revenue GBP9.1 million GBP5.4 million EUR10.4 million EUR6.4 million
--------------- ---------------- --------------- ---------------- ---------------
(1 Average exchange rate from Euro to Pound Sterling for the
period ended 30 June 2023 was 1.144 and for the period ended 30
June 2022 was 1.185, representing a 3.4% decrease.)
Hotel portfolio performance
As previously reported, the German region had a slower start to
the year than other regions, due to market dynamics impacting rate
and occupancy growth. However, the Group saw an improving trend in
bookings through Q2 and expects this to continue into Q3 and
beyond.
Total revenue (in local currency) was EUR12.1 million, compared
with EUR7.6 million for the same period last year. In line with our
strategy to drive rates, average room rate increased by 22.1% to
EUR143.1 (H1 2022: EUR117.2) and was 29.9% above the average room
rate in H1 2019 (H1 2019: EUR110.2). However, occupancy improved at
a slower rate to 56.1% (H1 2022: 42.0%). As a result, RevPAR
increased to EUR80.3, up from EUR49.2.
EBITDA decreased to EUR2.6 million, compared to EUR3.2 million
in the prior year and EUR3.7 million in 2019. In H1 2022, our
EBITDA performance included EUR2.5 million in government grants to
support payroll and operating costs, demonstrating the underlying
strong performance in 2023.
The German hotel market*
The German market experienced a 44.0% increase in RevPAR to
EUR70.7 (H1 2022: EUR49.4), resulting from a 24.5% improvement in
occupancy to 62.2% (H1 2022: 50.1%) and a 15.7% increase in average
room rate to EUR113.7 (H1 2022: EUR98.5).
In Berlin, RevPAR increased by 44.0% to EUR82.1 (H1 2022:
EUR58.6) and occupancy increased by 19.6% to 68.9% (H1 2022:
57.6%). Average room rate increased 17.0% to EUR119.1 (H1 2022:
EUR101.8).
*STR European Hotel Review, June 2023
Other Markets: Austria, Hungary, Italy and Serbia
Hotel operations
Reported in GBP
------------------- ------------------------------------
Six months Six months ended
ended 30 June 2022
30 June 2023
------------------- ----------------- -----------------
Total revenue GBP3.8 million GBP3.2 million
------------------- ----------------- -----------------
EBITDAR GBP(0.2) million GBP0.2 million
------------------- ----------------- -----------------
EBITDA GBP(0.2) million GBP0.2 million
------------------- ----------------- -----------------
Occupancy 36.3% 27.8%
------------------- ----------------- -----------------
Average room rate GBP140.4 GBP103.9
------------------- ----------------- -----------------
RevPAR GBP51.0 GBP28.9
------------------- ----------------- -----------------
Room revenue GBP2.9 million GBP2.3 million
------------------- ----------------- -----------------
Hotel portfolio performance
The Group's recently refurbished property in Austria, the FRANZ
Ferdinand Mountain Resort Nassfeld, performed well during the
winter ski season; its second under the Group's ownership. Since
then, we have invested further in a number of amenities to support
the hotel's opening year-round, including air-conditioning
throughout the property and the creation of relaxation and wellness
areas including indoor and outdoor swimming pools.
In Hungary, following its post-pandemic reopening in 2022, our
refurbished property in Budapest also performed well, with a
bedroom renovation programme currently at planning stages.
In Italy, the repositioning of the Group's property in Rome
continued apace. The 99-room hotel in the city centre, which closed
in the second half of 2022, is set to transform into an upper
upscale lifestyle art'otel. The hotel is expected to reopen in H1
2024.
Finally, in Serbia, the repositioning of the 88 Rooms Hotel in
Belgrade is nearing completion and the hotel is scheduled to reopen
as Radisson RED Belgrade in the fourth quarter of 2023.
Total revenue was GBP3.8 million and EBITDA was GBP(0.2) million
mainly as a result of the closing of our Rome property for
repositioning.
The Italian hotel market*
The Italian market experienced a 37.9% increase in RevPAR to
EUR134.7, resulting from a 21.2% improvement in occupancy to 68.1%
and a 13.8% increase in average room rate to EUR197.8.
In Rome, RevPAR increased by 50.2% to EUR160.3 and occupancy
increased by 21.3% to 71.2%. Average room rate increased 23.8% to
EUR225.1.
The Hungarian hotel market*
The Hungarian market experienced a 39.6% increase in RevPAR to
EUR70.1, resulting from a 18.8% increase in occupancy to 63.5% and
a 17.5% increase in average room rate to EUR110.4.
In Budapest, RevPAR increased by 39.4% to EUR72.5 and occupancy
increased by 19.2% to 63.1%. Average room rate increased 16.9% to
EUR115.0.
The Belgrade hotel market*
In Belgrade, RevPAR increased by 36.9% to EUR68.2 and occupancy
increased by 16.5% to 61.9%. Average room rate increased by 17.6%
to EUR110.2.
*Source STR European Hotel Review, June 2023
Management and Central Services
Reported in GBP
--------------------------------------- ----------------------------------
Six months ended Six months ended
30 June 2023 30 June 2022
--------------------------------- -------------------- ------------------
Total revenue before elimination GBP21.5 million GBP13.3 million
--------------------------------- -------------------- ------------------
Revenues within the consolidated GBP(18.2) million GBP(11.8) million
Group
--------------------------------- -------------------- ------------------
External and reported revenue GBP3.3 million GBP1.5 million
--------------------------------- -------------------- ------------------
EBITDA GBP2.3 million GBP(4.0) million
--------------------------------- -------------------- ------------------
Our performance
Revenues in this segment are primarily management, sales,
marketing and franchise fees, and other charges for central
services.
These are predominantly charged within the Group and therefore
eliminated upon consolidation. For the six months ended 30 June
2023 the segment showed an EBITDA profit of GBP2.3 million, as both
internally and externally charged management fees exceed the costs
in this segment (H1 2022: loss of GBP4.0 million).
Management, Group Central Services and licence, sales and
marketing fees are calculated as a percentage of revenues and
profit, and therefore these are affected by underlying hotel
performance.
PRINCIPAL RISKS AND UNCERTAINTIES
Our proactive risk management practices and reporting ensure
that key business decisions are taken with full knowledge of both
our existing risk environment and any emerging threats which could
have a notable impact on our business.
While our current risk profile is largely in line with the
principal risks detailed on pages 77-84 of the 2022 Annual Report,
in some key areas we have updated and reduced the residual risk
assessments where our mitigating actions have resulted in a more
positive outlook.
Risk update
Annual Report Assessment Interim update
Principal Risks Inherent Risk Residual Risk Inherent Risk Residual Risk Movement
for 2023 Assessment Assessment Assessment Assessment
------------------- ------------------ ------------------ ------------------ ------------------- ----------
1 Undetected / Very High High Very High High
unrestricted
cyber-attack
------------------- ------------------ ------------------ ------------------ ------------------- ----------
2 Adverse economic High High High High
climate
------------------- ------------------ ------------------ ------------------ ------------------- ----------
3 Significant Very High High Very High High
development
project delays or
unforeseen cost
increases
------------------- ------------------ ------------------ ------------------ ------------------- ----------
4 Difficulty in High High High Medium
attracting,
engaging and
retaining talent
------------------- ------------------ ------------------ ------------------ ------------------- ----------
5 Market dynamics - High High High Medium
significant and
prolonged decline
in global travel
and market demand
------------------- ------------------ ------------------ ------------------ ------------------- ----------
6 Technology High Medium High Medium
disruption -
prolonged failure
of core
technology
------------------- ------------------ ------------------ ------------------ ------------------- ----------
7 Serious data Very High Medium Very High Medium
privacy breach
(GDPR)
------------------- ------------------ ------------------ ------------------ ------------------- ----------
8 Funding and High Medium High Medium
liquidity risk
(including breach
of debt
covenants)
------------------- ------------------ ------------------ ------------------ ------------------- ----------
9 Significant High Medium High Medium
operational
disruption
------------------- ------------------ ------------------ ------------------ ------------------- ----------
10 Negative High Medium High Medium
stakeholder
perception of the
Group with regard
to Environmental,
Social and
Governance
(ESG) matters
------------------- ------------------ ------------------ ------------------ ------------------- ----------
11 Serious threat to High Medium High Medium
guest, team
member or 3rd
party health,
safety and
security
------------------- ------------------ ------------------ ------------------ ------------------- ----------
12 Fraud High Medium High Low
------------------- ------------------ ------------------ ------------------ ------------------- ----------
The adverse economic climate continues to pose a threat, with
uncertainty driven by high inflation and interest rate increases.
While the risk remains high, we are well positioned to withstand
these pressures and continue to thrive in the challenging
conditions.
While the labour market continues to present challenges, we are
pleased that our initiatives to tackle the difficulties in
attracting and retaining talent have seen improved results and
decreased the residual risk impact. As such, our overall assessment
of this key risk area has reduced from High to Medium.
Our assessment of our market dynamics risk has also been
downgraded since the year-end as our performance to date and
business on the books continues to outperform expectations.
We have reduced our residual risk assessment for the threat of
fraud as our internal control environment has continued to mature
throughout 2023. The inherent assessment is still considered to be
high, and the risk will continue to be monitored closely.
The Group has not identified any new principal risks or emerging
risks that will impact the remaining six months of the financial
year.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors confirm that, to the best of their knowledge,
these interim condensed consolidated financial statements have been
prepared in accordance with IAS 34 "Interim Financial Reporting"
and give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Company and the undertakings
included in the consolidation as a whole for the period ended 30
June 2023. The interim management report includes a fair review of
the information required by DTR 4.2.7 R and DTR 4.2.8 R,
namely:
-- An indication of important events which have occurred during
the first six months and their impact on the condensed set of
financial statements, plus a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
-- Material related-party transactions in the first six months
and any material changes in the related party transactions
described in the last annual report for the year ended 31 December
2022; and
-- The directors of the Company are listed in the last annual
report for the year ended 31 December 2022. A current list of
directors is maintained on the website of the Company (
www.pphe.com ).
GOING CONCERN
The Board believes it is taking all appropriate steps to support
the sustainability and growth of the Group's activities. Detailed
budgets and cash flow projections have been prepared for 2023 and
2024 which show that the Group's hotel operations will be cash
generative during the period. The Directors have assessed the
viability of the Group over a period to 31 December 2025, as set
out further on page 85 of the last annual report for the year ended
31 December 2022. The Directors have determined that the Company is
likely to continue in business for at least 12 months from the date
of this announcement. This, taken together with their conclusions
on the matters referred to herein and in Note 1 to the consolidated
financial statements, has led the Directors to conclude that it is
appropriate to prepare the half year consolidated financial
statements on a going concern basis.
INDEPENT REVIEW REPORT TO PPHE HOTEL GROUP LIMITED
To: The Board of Directors of PPHE Hotel Group Limited
Introduction
We have reviewed the accompanying interim condensed consolidated
financial statements of PPHE Hotel Group Limited and its
subsidiaries (the Group) as of 30 June 2023 which comprise the
interim consolidated statement of financial position as of 30 June
2023 and the related interim consolidated income statement,
consolidated statements of comprehensive income, changes in equity
and cash flows statement for the six-month period then ended, and
explanatory notes.
Management is responsible for the preparation and presentation
of this interim financial information in accordance with
International Accounting Standard 34 Interim Financial Reporting
(IAS 34) and the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on this interim
financial information based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements 2410, "Review of Interim Financial
Information Performed by the Independent Auditor of the Entity". A
review of interim financial information consists of making
inquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
and consequently does not enable us to obtain assurance that we
would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the accompanying interim condensed
financial information is not prepared, in all material respects, in
accordance with IAS 34 and the Disclosure Guidance and Transparency
Rules of the United Kingdom's Financial Conduct Authority.
KOST FORER GABBAY & KASIERER
A Member of Ernst & Young Global
Tel Aviv, Israel
30 August 2023
INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 June 2023 31 December 2022
Unaudited Audited
GBP'000 GBP'000
----------------------------------- ------------ ----------------
ASSETS
----------------------------------- ------------ ----------------
NON-CURRENT ASSETS:
----------------------------------- ------------ ----------------
Intangible assets 11,120 12,805
----------------------------------- ------------ ----------------
Property, plant and equipment 1,362,370 1,335,184
----------------------------------- ------------ ----------------
Right-of-use assets 228,038 225,443
----------------------------------- ------------ ----------------
Investment in joint ventures 5,715 4,961
----------------------------------- ------------ ----------------
Other non-current financial assets 52,652 47,245
----------------------------------- ------------ ----------------
Restricted deposits and cash 9,123 9,272
----------------------------------- ------------ ----------------
Deferred income tax assets 12,735 12,909
----------------------------------- ------------ ----------------
1,681,753 1,647,819
----------------------------------- ------------ ----------------
CURRENT ASSETS:
----------------------------------- ------------ ----------------
Restricted deposits and cash 2,900 9,229
----------------------------------- ------------ ----------------
Inventories 3,351 3,181
----------------------------------- ------------ ----------------
Trade receivables 23,296 18,533
----------------------------------- ------------ ----------------
Other receivables and prepayments 35,602 17,866
----------------------------------- ------------ ----------------
Cash and cash equivalents 137,765 163,589
----------------------------------- ------------ ----------------
202,914 212,398
----------------------------------- ------------ ----------------
Total assets 1,884,667 1,860,217
----------------------------------- ------------ ----------------
The accompanying notes are an integral part of the Condensed
consolidated interim financial statements.
INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 June
2023 31 December 2022
Unaudited Audited
GBP'000 GBP'000
----------------------------------------- ---------- -------------------------
EQUITY AND LIABILITIES
----------------------------------------- ---------- -------------------------
EQUITY:
----------------------------------------- ---------- -------------------------
Issued capital - -
----------------------------------------- ---------- -------------------------
Share premium 133,336 133,177
----------------------------------------- ---------- -------------------------
Treasury shares (6,888) (5,472)
----------------------------------------- ---------- -------------------------
Foreign currency translation reserve 10,882 20,039
----------------------------------------- ---------- -------------------------
Hedging reserve 13,355 10,950
----------------------------------------- ---------- -------------------------
Accumulated earnings 154,017 156,364
----------------------------------------- ---------- -------------------------
Attributable to equity holders of the
parent 304,702 315,058
----------------------------------------- ---------- -------------------------
Non-controlling interests 213,785 188,187
----------------------------------------- ---------- -------------------------
Total equity 518,487 503,245
----------------------------------------- ---------- -------------------------
NON-CURRENT LIABILITIES:
----------------------------------------- ---------- -------------------------
Bank borrowings 810,884 817,631
----------------------------------------- ---------- -------------------------
Provision for concession fee on land 5,168 5,331
----------------------------------------- ---------- -------------------------
Financial liability in respect of Income
Units sold to private investors 117,722 121,084
----------------------------------------- ---------- -------------------------
Other financial liabilities 271,296 265,494
----------------------------------------- ---------- -------------------------
Deferred income taxes 5,835 5,922
----------------------------------------- ---------- -------------------------
1,210,905 1,215,462
----------------------------------------- ---------- -------------------------
CURRENT LIABILITIES:
----------------------------------------- ---------- -------------------------
Trade payables 14,837 13,565
----------------------------------------- ---------- -------------------------
Other payables and accruals 94,204 80,844
----------------------------------------- ---------- -------------------------
Bank borrowings 46,234 47,101
----------------------------------------- ---------- -------------------------
155,275 141,510
----------------------------------------- ---------- -------------------------
Total liabilities 1,366,180 1,356,972
----------------------------------------- ---------- -------------------------
Total equity and liabilities 1,884,667 1,860,217
----------------------------------------- ---------- -------------------------
The accompanying notes are an integral part of the Condensed
consolidated interim financial statements.
INTERIM CONSOLIDATED INCOME STATEMENT
Six months ended
------------------------------------------------- ------------------------
30 June 2023 30 June 2022
Unaudited Unaudited
GBP'000 GBP'000
--------------------------------------------- -------------- --------------
Revenues 179,971 113,191
--------------------------------------------- -------------- --------------
Operating expenses (133,525) (95,040)
--------------------------------------------- -------------- --------------
EBITDAR 46,446 18,151
--------------------------------------------- -------------- --------------
Rental expenses (1,210) (1,129)
--------------------------------------------- -------------- --------------
EBITDA 45,236 17,022
--------------------------------------------- -------------- --------------
Depreciation and amortisation (20,071) (19,488)
--------------------------------------------- -------------- --------------
EBIT 25,165 (2,466)
--------------------------------------------- -------------- --------------
Financial expenses (18,039) (18,724)
--------------------------------------------- -------------- --------------
Financial income 2,826 539
--------------------------------------------- -------------- --------------
Other income 2,348 2,670
--------------------------------------------- -------------- --------------
Other expenses (4,036) (4,922)
--------------------------------------------- -------------- --------------
Net income (expense) for financial liability
in respect of Income Units sold to private
investors (6,188) (3,103)
--------------------------------------------- -------------- --------------
Share in results of associate and joint
ventures (50) (95)
--------------------------------------------- -------------- --------------
Profit (loss) before tax 2,026 (26,101)
--------------------------------------------- -------------- --------------
Income tax benefit (tax expense) (1,082) 144
--------------------------------------------- -------------- --------------
Profit (loss) for the period 944 (25,957)
--------------------------------------------- -------------- --------------
Profit (loss) attributable to:
Equity holders of the parent 3,858 (22,110)
--------------------------------------------- -------------- --------------
Non-controlling interests (2,914) (3,847)
--------------------------------------------- -------------- --------------
944 (25,957)
--------------------------------------------- -------------- --------------
Basic and diluted earnings per share (in
Pound Sterling) 0.09 (0.52)
--------------------------------------------- -------------- --------------
The accompanying notes are an integral part of the Condensed
consolidated interim financial statements.
INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months ended
30 June 2023 30 June 2022
Unaudited Unaudited
GBP'000 GBP'000
----------------------------------------------- -------------- ------------
Profit (loss) for the period 944 (25,957)
----------------------------------------------- -------------- ------------
Other comprehensive income (loss) to be
recycled
through profit and loss in subsequent
periods:
----------------------------------------------- -------------- ------------
Profit from cash flow hedges(1) 5,860 8,735
----------------------------------------------- -------------- ------------
Foreign currency translation adjustments
of foreign operations(2) (13,117) 10,005
----------------------------------------------- -------------- ------------
Other comprehensive income (loss), net (7,257) 18,740
----------------------------------------------- -------------- ------------
Total comprehensive loss (6,313) (7,217)
----------------------------------------------- -------------- ------------
Total comprehensive income (loss) attributable
to:
Equity holders of the parent (2,211) (9,592)
----------------------------------------------- -------------- ------------
Non-controlling interest (4,102) 2,375
----------------------------------------------- -------------- ------------
(6,313) (7,217)
----------------------------------------------- -------------- ------------
1 Included in hedging reserve.
2 Included in foreign currency translation reserve.
The accompanying notes are an integral part of the Condensed
consolidated interim financial statements.
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable
to equity
Foreign holders
currency of Non-
Issued Share Treasury translation Hedging Accumulated the controlling Total
capital(1) premium shares reserve reserve earnings parent interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
Balance as at
1 January 2023
(audited) - 133,177 (5,472) 20,039 10,950 156,364 315,058 188,187 503,245
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
Profit (loss)
for the period - - - - - 3,858 3,858 (2,914) 944
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
Other
comprehensive
income (loss)
for the period - - - (9,047) 2,978 - (6,069) (1,188) (7,257)
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
Total
comprehensive
income (loss) - - - (9,047) 2,978 3,858 (2,211) (4,102) (6,313)
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
Share based
payments - 293 - - - - 293 44 337
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
Share buy back
(note 3c) - - (1,620) - - - (1,620) - (1,620)
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
Exercise of
options - (134) 204 - - - 70 - 70
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
Dividend
distribution(2) - - - - - (5,119) (5,119) - (5,119)
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
Dividend
distribution
by a subsidiary
to
non-controlling
interests - - - - - - - (1,444) (1,444)
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
Transactions
with
non-controlling
interests (note
3a & 3b) - - (110) (573) (1,086) (1,769) 31,100 29,331
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
Balance as at
30 June 2023
(unaudited) - 133,336 (6,888) 10,882 13,355 154,017 304,702 213,785 518,487
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
Balance as at
1 January 2022
(audited) - 131,229 (3,482) 3,806 (434) 147,350 278,469 168,742 447,211
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
Loss for the
period - - - - - (22,110) (22,110) (3,847) (25,957)
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
Other
comprehensive
income (loss)
for the period - - - 7,780 4,738 - 12,518 6,222 18,740
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
Total
comprehensive
income (loss) - - - 7,780 4,738 (22,110) (9,592) 2,375 (7,217)
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
Share based
payments - 1,024 - - - - 1,024 37 1,061
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
Share buy back - - (12) - - - (12) - (12)
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
Balance as at
30 June 2022
(unaudited) - 132,253 (3,494) 11,586 4,304 125,240 269,889 171,154 441,043
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
1 No par value.
2 The dividend distribution comprises a final dividend for the
year ended 31 December 2022 of 12.0 pence per share.
The accompanying notes are an integral part of the Condensed
consolidated interim financial statements.
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
Six months ended
30 June
2023 30 June 2022
Unaudited Unaudited
GBP'000 GBP'000
Cash flows from operating activities:
------------------------------------------------- ---------- ------------
Profit (loss) for the period 944 (25,957)
------------------------------------------------- ---------- ------------
Adjustments to reconcile profit (loss) to
cash provided by operating activities:
------------------------------------------------- ---------- ------------
Financial expenses including expenses for
financial liability in respect of Income Units
sold to private investors 24,227 21,827
------------------------------------------------- ---------- ------------
Financial income (2,826) (539)
------------------------------------------------- ---------- ------------
Income tax expense (tax benefit) 1,082 (144)
------------------------------------------------- ---------- ------------
Gain on disposal of assets - 45
------------------------------------------------- ---------- ------------
Loss on buy-back of Income Units sold to private
investors 1,289 733
------------------------------------------------- ---------- ------------
Share based payments 337 1,061
------------------------------------------------- ---------- ------------
Revaluation of lease liability 1,914 1,841
------------------------------------------------- ---------- ------------
Share in results of associate and joint ventures 50 95
------------------------------------------------- ---------- ------------
Share appreciation rights revaluation (2,348) 1,350
------------------------------------------------- ---------- ------------
Fair value movement derivatives through profit
and loss 569 (2,670)
------------------------------------------------- ---------- ------------
Depreciation and amortisation 20,071 19,488
------------------------------------------------- ---------- ------------
44,365 43,087
------------------------------------------------- ---------- ------------
Changes in operating assets and liabilities:
------------------------------------------------- ---------- ------------
Increase in inventories (252) (940)
------------------------------------------------- ---------- ------------
Increase in trade and other receivables (5,453) (9,105)
------------------------------------------------- ---------- ------------
Increase in trade and other payables 7,833 25,881
------------------------------------------------- ---------- ------------
2,128 15,836
------------------------------------------------- ---------- ------------
Cash paid and received during the period
for:
------------------------------------------------- ---------- ------------
Interest paid (24,071) (18,653)
------------------------------------------------- ---------- ------------
Interest received 1,128 420
------------------------------------------------- ---------- ------------
Taxes paid (242) (168)
------------------------------------------------- ---------- ------------
(23,185) (18,401)
------------------------------------------------- ---------- ------------
Net cash flows provided by operating activities 24,252 14,565
------------------------------------------------- ---------- ------------
The accompanying notes are an integral part of the Condensed
consolidated interim financial statements.
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
Six months ended
30 June 2023 30 June 2022
Unaudited Unaudited
GBP'000 GBP'000
---------------------------------------------------- ------------ ------------
Cash flows from investing activities:
---------------------------------------------------- ------------ ------------
Investments in property, plant and equipment (54,525) (46,885)
---------------------------------------------------- ------------ ------------
Investment in intangible assets (11) (77)
---------------------------------------------------- ------------ ------------
Loan to Joint Venture (912) (844)
---------------------------------------------------- ------------ ------------
Decrease (increase) in restricted cash,
net 6,211 (776)
---------------------------------------------------- ------------ ------------
Net cash flows used in investing activities (49,237) (48,582)
---------------------------------------------------- ------------ ------------
Cash flows from financing activities:
---------------------------------------------------- ------------ ------------
Net proceeds from transactions with non-controlling
interests 13,790 -
---------------------------------------------------- ------------ ------------
Proceeds from long-term loans 17,829 39,019
---------------------------------------------------- ------------ ------------
Repayment of long-term loans (15,483) (12,093)
---------------------------------------------------- ------------ ------------
Repayment of leases (2,178) (2,538)
---------------------------------------------------- ------------ ------------
Purchase of treasury shares (1,621) -
---------------------------------------------------- ------------ ------------
Exercise of options settled in cash 70 -
---------------------------------------------------- ------------ ------------
Interest rate cap (4,080) -
---------------------------------------------------- ------------ ------------
Dividend payment (5,119) -
---------------------------------------------------- ------------ ------------
Dividend payment by a subsidiary to non-controlling
interests (1,444) -
---------------------------------------------------- ------------ ------------
Buy-back of Income Units previously sold
to private investors - (2,231)
---------------------------------------------------- ------------ ------------
Net cash flows provided by financing activities 1,764 22,157
---------------------------------------------------- ------------ ------------
Decrease in cash and cash equivalents (23,221) (11,860)
---------------------------------------------------- ------------ ------------
Net foreign exchange differences (2,603) 1,065
---------------------------------------------------- ------------ ------------
Cash and cash equivalents at beginning
of period 163,589 136,802
---------------------------------------------------- ------------ ------------
Cash and cash equivalents at end of period 137,765 126,007
---------------------------------------------------- ------------ ------------
Non-cash items:
---------------------------------------------------- ------------ ------------
Lease additions and lease remeasurement 6,481 4,978
---------------------------------------------------- ------------ ------------
Outstanding payables on investments in property,
plant and equipment 12,471 4,606
---------------------------------------------------- ------------ ------------
Receivables in respect of transaction with
non-controlling interests 15,541 -
---------------------------------------------------- ------------ ------------
The accompanying notes are an integral part of the Condensed
consolidated interim financial statements.
NOTES:
Note 1: General
a. PPHE Hotel Group, together with its subsidiaries (the
'Group'), is an international hospitality real estate group, which
owns, co-owns and develops hotels, resorts and campsites, operates
the Park Plaza(R) brand in EMEA and owns and operates the
art'otel(R) brand.
b. These financial statements have been prepared in a condensed
format as of 30 June 2023 and for the six months then ended
('interim consolidated financial statements'). These financial
statements should be read in conjunction with the Company's annual
consolidated financial statements as of 31 December 2022 and for
the year then ended and the accompanying notes ('annual
consolidated financial statements').
c. The Company is listed on the Premium Listing segment of the
Official List of the UK Listing Authority (the 'UKLA') and the
shares are traded on the Main Market for listed securities of the
London Stock Exchange.
d. Going concern and liquidity
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, which take into account the current trading
environment and the industry-wide cost pressures, have been
prepared for 2023 and 2024 and show that the Group's hotel
operations are expected to be cash generative during the Period.
Having reviewed those cash flow projections, the Directors have
determined that the Company is likely to continue in business for
at least 12 months from the date of approval of the consolidated
financial statements.
Note 2: Basis of preparation and changes in accounting
policies
The interim consolidated financial statements have been prepared
in accordance with IAS 34 'Interim Financial Reporting'. The
accounting policies adopted in the preparation of the interim
consolidated financial statements are consistent with those
followed in the preparation of the Group's annual consolidated
financial statements, except for the adoption of new standards
effective as of 1 January 2023. The Group has not early adopted any
other standard, interpretation or amendment that has been issued
but is not yet effective.
The adoption of the following new standards effective as of 1
January 2023 had no material impact on the interim consolidated
financial statements:
-- Definition of Accounting Estimates - Amendments to IAS 8
-- Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2
-- Deferred Tax related to Assets and Liabilities arising from a
Single Transaction - Amendments to IAS 12
Note 3: Significant events during the reported period
a. European Hospitality Real Estate Fund
In March 2023, the Group launched a new European Hospitality
Real Estate Fund ("the Fund") with a target size of up to EUR250
million. Clal Insurance ("Clal"), one of Israel's leading insurance
and long-term savings companies, participated as a cornerstone
investor, committing up to EUR75 million (limited to 49% of total
participation). The Group also committed to invest up to EUR50
million in the Fund. Additional investors have the opportunity to
participate in the Fund for the remaining EUR125 million of
equity.
Upon full subscription and with a targeted 50% bank leverage,
the Fund's investment potential is expected to reach approximately
EUR500 million. The Fund has a planned duration of seven years and
aims to provide an attractive double-digit internal rate of return
(IRR) for its investors. The primary investment focus will be on
value-add opportunities, and the Fund will employ the
well-established and successful PPHE strategy.
As part of the agreement signed with Clal, it was decided to
incorporate the fund under Signature Top II Ltd ("Signature Top
II"), a UK incorporated company, with a 51% ownership by the Group
and 49% by Clal, until additional investors join.
At the inception of the fund, PPHE contributed the shares of
Società Immobiliare Alessandro De Gasperis S.r.l., the owner of the
Londra & Cargill Hotel in Rome, Italy ("Londra"), valued at
EUR29.3 million (GBP25.8 million), for its 51% participation in
Signature Top II. Clal made an initial cash contribution of EUR28.1
million (GBP24.8 million), payable at the Group's request, for its
49% participation. As of the reporting date, Clal transferred EUR10
million out of the EUR28.1 million, with an additional EUR10
million transferred after the reporting date. The outstanding
EUR8.1 million is expected to be received within the next few
months.
The Group has assessed the transaction and determined that it
exercises control over Signature Top II. Consequently, the change
in the ownership interest of Londra does not trigger a change of
control and is therefore accounted for as an equity transaction in
accordance with IFRS 10 Consolidated Financial Statements. The
excess of consideration received over the carrying amount of the
non-controlling interests (net of GBP0.8 million in transaction
costs) amounting to GBP0.4 million is recognised in the parent
company's equity. The Group has chosen to recognise this amount in
accumulated earnings. Additionally, GBP0.6 million was reclassified
from the Foreign currency translation reserve and hedging reserve
to accumulated earnings.
b. art'otel London Hoxton Development
During the reporting period, the expected construction costs of
art'otel London Hoxton, in which Clal holds a minority interest
through the joint venture vehicle Signature Top Limited, have
increased mainly due to the interest to be incurred throughout the
construction phase.
On April 27, 2023, both the Group and Clal mutually agreed that
the sharing of these cost referred to above, would be funded by 65%
from the Group and 35% from Clal. The excess consideration of
GBP2.2 million paid by the Group is recognised in the equity of the
parent company. The Group has chosen to recognise this amount in
accumulated earnings.
c. Share buyback programme
During the reporting period, the Company completed a purchase of
138,611 shares under share buy-back programme that was approved on
18 November 2022, for a total consideration of GBP1,621 thousand,
representing an average price of 1,162 pence per share. The Company
re-issued 59,000 treasury shares in connection with the exercise of
options. The total number of treasury shares as at 30 June 2023 is
1,988,653.
Note 4: Segment data
For management purposes, the Group's activities are divided into
Owned Hotel Operations and Management Activities. Owned Hotel
Operations are further divided into four reportable segments: the
Netherlands, Germany, Croatia and the United Kingdom. Other
includes individual hotels in Hungary, Serbia, Italy and Austria.
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.
Six months ended 30 June 2023 (unaudited)
--------------- -------------- -------------------------------------------------------------------------------------
Management
The Germany United and holding
Netherlands Kingdom Croatia Other(1) companies Adjustments(2) Consolidated
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------------- -------- -------- -------- ---------- ------------ --------------- ------------
REVENUE
--------------- -------------- -------- -------- -------- ---------- ------------ --------------- ------------
Third party 30,244 10,560 109,989 22,071 3,802 3,305 179,971
--------------- -------------- -------- -------- -------- ---------- ------------ --------------- ------------
Inter-segment 200 71 18,146 (18,417)
--------------- -------------- -------- -------- -------- ---------- ------------ --------------- ------------
Total revenue 30,244 10,560 110,189 22,142 3,802 21,451 (18,417) 179,971
--------------- -------------- -------- -------- -------- ---------- ------------ --------------- ------------
Segment EBITDA 9,438 2,303 31,820 (402) (236) 2,313 45,236
--------------- -------------- -------- -------- -------- ---------- ------------ --------------- ------------
Depreciation
and
amortisation (20,071)
--------------- -------------- -------- -------- -------- ---------- ------------ --------------- ------------
Financial
expenses (18,039)
--------------- -------------- -------- -------- -------- ---------- ------------ --------------- ------------
Financial
income 2,826
--------------- -------------- -------- -------- -------- ---------- ------------ --------------- ------------
Net expenses
for
financial
liability
in respect of
Income
Units sold to
private
investors (6,188)
--------------- -------------- -------- -------- -------- ---------- ------------ --------------- ------------
Other income
(expenses),
net (1,688)
--------------- -------------- -------- -------- -------- ---------- ------------ --------------- ------------
Share in
results
of associate
and
joint ventures (50)
--------------- -------------- -------- -------- -------- ---------- ------------ --------------- ------------
Profit before
tax 2,026
--------------- -------------- -------- -------- -------- ---------- ------------ --------------- ------------
(1.) Includes Park Plaza Budapest in Hungary, 88 Rooms Hotel in
Belgrade, Serbia, Londra & Cargill Hotel in Rome, Italy, FRANZ
Ferdinand Mountain Resort in Nassfeld, Austria.
(2.) Consist of inter-company eliminations.
Six months ended 30 June 2022 (unaudited)
--------------- -------------- -------------------------------------------------------------------------------------
Management
The United and holding
Netherlands Germany Kingdom Croatia Other(1) companies Adjustments(2) Consolidated
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------------- -------- -------- -------- ---------- ------------ --------------- ------------
REVENUE
--------------- -------------- -------- -------- -------- ---------- ------------ --------------- ------------
Third party 14,743 6,374 71,098 16,230 3,234 1,512 113,191
--------------- -------------- -------- -------- -------- ---------- ------------ --------------- ------------
Inter-segment 102 72 11,776 (11,950)
--------------- -------------- -------- -------- -------- ---------- ------------ --------------- ------------
Total revenue 14,743 6,374 71,200 16,302 3,234 13,288 (11,950) 113,191
--------------- -------------- -------- -------- -------- ---------- ------------ --------------- ------------
Segment EBITDA 3,050 2,700 16,061 (944) 192 (4,037) 17,022
--------------- -------------- -------- -------- -------- ---------- ------------ --------------- ------------
Depreciation
and
amortisation (19,488)
--------------- -------------- -------- -------- -------- ---------- ------------ --------------- ------------
Financial
expenses (18,724)
--------------- -------------- -------- -------- -------- ---------- ------------ --------------- ------------
Financial
income 539
--------------- -------------- -------- -------- -------- ---------- ------------ --------------- ------------
Net income for
financial
liability
in respect of
Income
Units sold to
private
investors (3,103)
--------------- -------------- -------- -------- -------- ---------- ------------ --------------- ------------
Other income
(expenses),
net (2,252)
--------------- -------------- -------- -------- -------- ---------- ------------ --------------- ------------
Share in
results
of associate
and
joint ventures (95)
--------------- -------------- -------- -------- -------- ---------- ------------ --------------- ------------
Loss before tax (26,101)
--------------- -------------- -------- -------- -------- ---------- ------------ --------------- ------------
(1.) Includes Park Plaza Budapest in Hungary, 88 Rooms Hotel in
Belgrade, Serbia, Londra & Cargill Hotel in Rome, Italy, FRANZ
Ferdinand Mountain Resort in Nassfeld, Austria.
(2.) Consist of inter-company eliminations.
Note 5: Financial instruments
Fair value of financial instruments:
The Company has entered into interest rate swap contracts with
unrelated financial institutions in order to reduce the effect of
interest rate fluctuations or risk of certain real estate
investment's interest expense on its variable rate debt. The
Company is exposed to credit risk in the event of non-performance
by the counterparty to these financial instruments. Management
believes the risk of loss due to non-performance to be minimal and
therefore decided not to hedge this.
The accounting treatment for the interest rate swaps and whether
they qualify as accounting hedges under IFRS 9 is determined
separately for each contract. If the contract qualifies as
accounting hedge then the unrealised gain or loss on the contract
is recorded in the consolidated statement of comprehensive income.
If the contract does not qualify as accounting hedge then the gain
or loss on the contract is recorded in the consolidated income
statement. The fair value of the interest rate swaps is determined
by taking into account the present interest rates compared to the
contracted fixed rate over the life of the contract. The valuation
models incorporate various market inputs such as interest rate
curves and the fair value measurement is classified to Level 2 of
the fair value hierarchy.
For the six months ended June 30, 2023, the Company recorded a
loss of GBP0.6 million in Other expenses in the consolidated income
statement and an unrealised profit of GBP5.9 million in the
consolidated statement of comprehensive income representing the
change in the fair value of these interest rate swaps during the
period. The aggregate fair value of the interest rate swap
contracts was GBP40.5 as of June 30, 2023 and is included in Other
receivables and prepayments and Other non-current financial assets
on the consolidated statements of financial position.
During the period ended 30 June 2023, there were no transfers
between Level 1 and Level 2 fair value measurements, and no
transfers into and out of Level 3 fair value measurements.
Note 6: Other disclosures
a. Seasonality
The Group is in an industry with seasonal variations. Sales and
profits vary by quarter and the second half of the year is
generally the stronger trading period.
b. Revenues
Six months Six months
ended ended
30 June 30 June
2023 2022
(Unaudited) (Unaudited)
GBP'000 GBP'000
------------------------------ ------------ ------------
Rooms 133,570 81,956
------------------------------ ------------ ------------
Campsites and mobile homes 4,919 3,967
------------------------------ ------------ ------------
Food and beverage 33,808 22,627
------------------------------ ------------ ------------
Minor operating 3,347 2,403
------------------------------ ------------ ------------
Management fee 1,412 729
------------------------------ ------------ ------------
Franchise and reservation fee 719 172
------------------------------ ------------ ------------
Marketing fee 399 214
------------------------------ ------------ ------------
Rent revenue 1,346 1,035
------------------------------ ------------ ------------
Other 451 88
------------------------------ ------------ ------------
Total 179,971 113,191
------------------------------ ------------ ------------
c. Other income
Six months Six months
ended ended
30 June 30 June
2023 2022
(Unaudited) (Unaudited)
GBP'000 GBP'000
----------------------------------------- ------------ ------------
Revaluation of interest rate swap - 2,670
----------------------------------------- ------------ ------------
Revaluation of share appreciation rights 2,348 -
----------------------------------------- ------------ ------------
Total 2,348 2,670
----------------------------------------- ------------ ------------
d. Other expenses
Six months Six months
ended 30 ended
June 2023 30 June 2022
(Unaudited) (Unaudited)
GBP'000 GBP'000
----------------------------------------- ------------ -------------
Revaluation of finance lease(1) (1,914) (1,841)
----------------------------------------- ------------ -------------
Capital loss on buy-back of income units
previously sold to private investors (1,289) (733)
----------------------------------------- ------------ -------------
Revaluation of share appreciation rights - (1,350)
----------------------------------------- ------------ -------------
Revaluation of interest rate swap (569) -
----------------------------------------- ------------ -------------
Loss on disposal of property, plant and
equipment - (45)
----------------------------------------- ------------ -------------
Other non-recurring expenses (including
pre-opening expenses) (264) (953)
----------------------------------------- ------------ -------------
Total (4,036) (4,922)
----------------------------------------- ------------ -------------
1. Non-cash revaluation of finance lease liability relating to
minimum future CPI/RPI increases.
e. Earnings per share
The following reflects the income and share data used in the
basic earnings per share computations:
In 2023 the effect of Potentially dilutive instruments on
diluted EPS is immaterial, in 2022, Potentially dilutive
instruments are not considered since their effect is antidilutive
(increase of loss per share).
Six months
ended 30
June
Six months
ended 30
June 2023 2022
(Unaudited) (Unaudited)
---------------------------------------------- -------------- -------------
Reported profit (loss) attributable to Equity
holders of the parent (GBP'000) 3,858 (22,110)
---------------------------------------------- -------------- -------------
Weighted average number of ordinary shares
outstanding (in thousands) 42,368 42,545
---------------------------------------------- -------------- -------------
f. Related parties
Balances with related parties
30 June 31 December
2023 2022
GBP'000 GBP'000
(Unaudited) (Audited)
----------------------------------------- ------------ -----------
Loans to joint ventures 6,464 5,573
Short-term receivables 78 100
Payable to GC Project Management Limited - (185)
Payable to Gear Construction UK Limited (13,523) (6,218)
----------------------------------------- ------------ -----------
Transactions with related parties
Six months Six months
ended ended
30 June 30 June
2023 2022
(Unaudited) (Unaudited)
GBP'000 GBP'000
------------------------------------------------ ------------ ------------
Cost of transactions with GC Project Management
Limited (270) (60)
Cost of transaction with Gear Construction
UK Limited (30,654) (27,057)
Rent income from sub lease of office space 28 39
Management fee revenue from joint ventures 419 322
Interest income from jointly controlled
entities 169 59
------------------------------------------------ ------------ ------------
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END
IR SDLFWSEDSEEA
(END) Dow Jones Newswires
August 31, 2023 02:00 ET (06:00 GMT)
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