29
February 2024
PPHE Hotel Group
Limited
("PPHE
Hotel Group", "PPHE, or the "Group")
Audited Annual Results for
the financial year ended 31 December 2023
Publication of Annual Report
& Accounts
Record revenue and EBITDA
performance, and significant increase in dividend
PPHE Hotel Group, the
international hospitality real estate group which develops, owns
and operates hotels and resorts, is pleased to announce its audited
annual results for the financial year ended 31 December
2023.
Summary
|
Reported in GBP (£)
|
|
Year
ended
31 December 2023
|
Year
ended
31
December 2022
|
Variance
|
Total revenue
|
£414.6
million
|
£330.1
million
|
+25.6%
|
EBITDA
|
£128.2
million
|
£94.6
million
|
+35.5%
|
EPRA NRV per share
|
£26.72
|
£25.17
|
+6.2%
|
Adjusted EPRA earnings per
share
|
118p
|
50p
|
+136.0%
|
Dividend per share
|
36p
|
15p
|
+140.0%
|
Occupancy
|
72.4%
|
60.0%
|
+1,240
bps
|
Average room rate
|
£166.8
|
£160.4
|
+4.0%
|
RevPAR
|
£120.7
|
£96.2
|
+25.5%
|
Commenting on the results, Boris Ivesha, President &
Chief Executive Officer, PPHE Hotel Group said:
"PPHE continues to deliver
significant growth and value creation through the hard work and
dedication of our teams. In 2023, we achieved record levels of
revenue and EBITDA, with EPRA earnings and NRV per share above 2022
levels, enabling us to propose a significantly enhanced dividend
for shareholders. Meanwhile, we continued to deliver on our highly
anticipated development pipeline, growing both our proprietary
art'otel brand and our Radisson branded hotels, as well as
delivering meaningful EBITDA upside.
2024 is set to be a very exciting
year for the Group, as we are set to open our art'otel London
Hoxton and art'otel Rome Piazza Sallustio, and we are able to
welcome ever-increasing numbers of guests. The new year has started
well and has seen a continuation of our strong momentum, which
supports the Board's confidence in the Group's outlook."
Financial highlights
· Total revenue increased by 25.6% to a record £414.6 million
(2022: £330.1 million).
· EBITDA increased by 35.5% to £128.2 million, a record for the
Group (2022: £94.6 million).
· Improved EBITDA margin of 30.9% (2022: 28.7%), due to the
successful mitigation of inflationary and sector-specific costs
through proactive investments in energy efficiency and our
people.
· EPRA
NRV per share increased by 6.2% to £26.72 (2022: £25.17), with our
December 2023 external property valuations showing further growth
over 2022. Despite higher interest rates, valuations have risen due
to the benefit of improved trading and upgraded outlook.
· Adjusted EPRA earnings per share improved by 136.0% to 118
pence (2022: 50 pence).
· The
Group continued to rebuild occupancy, whilst increasing average
room rates:
· Occupancy increased to 72.4%, reflecting sustained growth
throughout the year (2022: 60.0%).
· Average room rate continued to increase, by 4.0% to £166.8
(2022: £160.4).
· RevPAR was up 25.5% at £120.7 (2022: £96.2).
· The
UK and The Netherlands performed well across all segments, driving
occupancy and rate growth alike. Operations in Croatia also saw
solid demand including during the peak summer period, with Grand
Hotel Brioni Pula trading its first full year.
· Enhanced shareholder returns, with a final proposed dividend
of 20p per share which, including the 16p interim dividend paid,
would deliver a total dividend for 2023 of 36p per share (2022: 15p
per share). The Group re-instated its progressive dividend policy,
whereby the prospective dividend should be approximately 30% of
adjusted EPRA earnings.
Strategic highlights
· On
track with £300+ million pipeline which is nearing completion in H1
2024:
· Fully opened premium lifestyle art'otel London Battersea Power Station
(February 2023) and soft launched art'otel Zagreb (October
2023).
· Signed first Radisson
RED branded property which opened in Belgrade, Serbia (February 2024),
following an extensive repositioning.
· Highly anticipated art'otel properties in Hoxton, London and Rome, Italy will launch in H1
2024.
· Other exciting projects planned for 2024 and beyond
include:
· Park
Plaza Berlin Kudamm (set to reopen Q2 2024 following extensive
renovation works) as the Radisson
RED Berlin Kudamm, the Group's second Radisson RED property,
and third under its expanded partnership with Radisson Hotel
Group.
· Detailed planning is underway to develop a 179-room hotel in
a predominantly subterranean space of our Park Plaza Victoria London property.
This new hotel is expected to have its own brand concept with a
dedicated entrance and facilities and services.
· The
European Hospitality Fund launched in March 2023 to support the
Group's future pipeline and is set to close to new investors in
March 2024. Following this, it is anticipated to become a joint
venture with cornerstone investor Clal Insurance, with a total
potential value of around €300m (with 50% leverage), including the
contribution of our 'seed' asset in Rome.
· Continued to progress and enhance ESG initiatives and
credentials, overseen by the Board, to support the future prospects
of the Group and our assets, including:
· Investments in the availability and use of renewable energy
in our hotels;
· Energy efficiency programme launched last year to achieve a
baseload reduction in power consumption;
· The
achievement or otherwise ambition of BREEAM certifications for our
properties; and
· An
intensive emissions mapping process including for Scope 3 to create
our ESG targets. We continue to work with the SBTi (Science-Based
Targets initiative) to set and verify our formal net zero
target.
Post-Period end
· Appointed Greg Hegarty to Co-CEO, to be responsible for
day-to-day managing of the Group and implementing the long-term
strategy.
Outlook
· Continued momentum into 2024, with overall forward booking
levels consistent with those at this point in 2023.
· As
previously reported, the mix of corporate and leisure bookings has
begun to normalise, with growing demand for meetings and events and
an emphasis on rebuilding occupancy. On
account of this mix and the rapid growth in average room rate
throughout the past three years, we expect average room rate to
stabilise during 2024.
· Upon
stablisation of trading, new openings are together targeted to
deliver at least £25 million of incremental EBITDA to the
Group.
· The
Board anticipates that cost inflation will remain in 2024, but will
continue to be manageable. Utility cost hedges are expected to
positively impact margins and the Group continues to manage
labour-related cost pressures, particularly recently announced
minimum wage increases, to ensure limited impact on margins. Hedges
are also already in place to mitigate the impact of rising interest
rates, with most loans fixed to 2028, and no significant loans to
refinance before 2026.
· All
of the above supports the Board's confidence in its future
prospects. Although it is still early in the new financial year,
the good start made by the Group underpins confidence that FY2024
performance will be in line with current market
consensus1.
1 As at 28 February 2024,
PPHE complied analysts' consensus forecast range for FY 2024 showed
a revenue range of £435.5 million to £466.9 million, with a
consensus mean of £450.0m, and an EBITDA range of £135.3 million to
£150.9 million, with a consensus mean of £142.7m.
Key financial statistics
|
Reported in GBP (£)
|
|
Year
ended
31 December 2023
|
Year
ended
31
December 2022
|
Total revenue
|
£414.6
million
|
£330.1
million
|
EBITDAR
|
£130.5
million
|
£97.0
million
|
EBITDA
|
£128.2
million
|
£94.6
million
|
EBITDA margin
|
30.9%
|
28.7%
|
Reported PBT
|
£28.8
million
|
£11.5 million
|
Normalised PBT
|
£37.5
million
|
£8.3
million
|
Reported EPS
|
53p
|
24p
|
Adjusted EPRA earnings per
share
|
118p
|
50p
|
EPRA NRV per share
|
£26.72
|
£25.17p
|
|
|
|
Occupancy
|
72.4%
|
60.0%
|
Average room rate
|
£166.8
|
£160.4
|
RevPAR
|
£120.7
|
£96.2
|
Room revenue
|
£300.1
million
|
£237.8
million
|
Publication of Annual Report & Accounts
PPHE Hotel Group Limited will
publish later today its annual report and accounts for the
financial year ended 31 December 2023 (the "Annual Report"). This
document shall be available today on the Company's
website: www.pphe.com
Pursuant to UK Listing Rule 9.6.1,
copies of the Annual Report shall be submitted later today to the
National Storage Mechanism and will shortly be available for
inspection at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism
In accordance with Disclosure
Guidance and Transparency Rule 6.3.5, the information in the
attached Appendix consisting of a Directors' Responsibility
Statement, principal risks and uncertainties and related party
transactions has been extracted unedited from the Annual Report
& Accounts for the financial year ended 31 December 2023. This
material is not a substitute for reading the full Annual
Report.
This announcement contains inside
information. The person responsible for arranging the release of
this announcement on behalf of the Company is Daniel Kos, Chief
Financial Officer & Executive Director.
- Ends -
Enquiries:
PPHE Hotel Group Limited
|
Tel: +31 (0)20 717 8600
|
Greg Hegarty, Co-Chief Executive
Officer & Executive Director
|
|
Daniel Kos, Chief Financial
Officer & Executive Director
|
|
Robert Henke, Executive Vice
President of Commercial Affairs
|
|
Hudson Sandler
|
Tel: +44 (0)20 7796
4133
|
Wendy Baker / Charlotte Cobb /
India Laidlaw
|
pphe@hudsonsandler.com
|
Notes to Editors:
PPHE Hotel Group is an
international hospitality real estate company, with a £2.2 billion
portfolio, valued as at December 2023 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® branded hotels and resorts in Europe, the
Middle East and Africa. In addition, PPHE Hotel Group wholly owns,
and operates under, the art'otel® brand and its Croatian subsidiary
owns, and operates under, the Arena Hotels & Apartments® and
Arena Campsites® 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
CHAIRMAN'S STATEMENT
Introduction
2023 was an important year of
financial and strategic progress for the Group. We delivered a full
recovery to pre-pandemic levels, driven by continued strong room
rates and improving occupancy rates across our portfolio of
well-invested hotels, resorts and campsites. We also entered a very
exciting phase, as we near completion of our extensive development
pipeline. Together, these provide extremely strong foundations for
our performance and future growth going into 2024 and
beyond.
Throughout the year, we acted
where possible to manage the impact of ongoing macro-economic,
geo-political and wider cost pressures on our business. The 2023
performance is a testament to this and our team members, who remain
at the heart of everything we do. Their dedication to delivering
memorable guest experiences is steadfast.
PPHE's unique 'Buy, Build,
Operate' business model is also central to our success, positioning
the Group strongly across its key markets and segments, and
supporting our growth strategy, strong financial performance and
our outlook upgrade at the half-year point of 2023. Furthermore,
our long-standing relationship with Radisson Hotel Group, and the
recent extension of our partnership, support our multi-brand
approach and our future growth and opportunities.
Extensive pipeline nears
completion
Many years of hard work on
construction and refurbishment projects in our £300+ million
development pipeline are coming to fruition. In 2023, we opened two
contemporary upper upscale lifestyle hotels - art'otel London
Battersea Power Station and art'otel Zagreb, Croatia.
In February 2024, we opened our
first Radisson RED in Belgrade, representing our second hotel under
our extended partnership with Radisson Hotel Group. A further
repositioning and rebranding programme is underway in Berlin, and
we plan to launch Radisson RED Berlin Kudamm in Q2 2024.
The highlight of 2024 will be the
opening of our much anticipated and highly impressive art'otel
London Hoxton development, following three years of construction.
This will increase our presence in the attractive London market,
bringing the total number of rooms we operate in the capital to
over 3,700. In addition, our new art'otel in Rome, marking our
entry in Italy, will open in H1 2024. These recent and upcoming
openings in Belgrade, Zagreb, London Hoxton and Rome are targeted
to generate at least £25 million of EBITDA for the Group upon
stabilisation of trading.
Sustainability in focus
During the year, our
sustainability-dedicated teams expanded further, and we worked with
retained external specialist consultancies to advise on carbon
footprint and reporting to stakeholders, to ramp up our efforts in
this important area. This included measures to increase
transparency and stakeholder accountability for our Sustainability
Strategy, including informing the Science-Based Targets initiative
of our work to set robust net zero targets, and be held accountable
to them. We are pushing to gather more data in various areas
including water consumption, waste and creation of social value by
monetary, work-hour and in-kind donations. This will allow us to
set baselines, and set targets with the kind of robust metrics that
allow stakeholder accountability.
Further details around our new
strategy, targets and KPIs are set out in the Strategy and Key
Performance Indicator sections of our 2023 Annual
Report.
The Board
We were delighted to welcome Greg
Hegarty to the Board in May. His appointment provides important
operational expertise given his tenure with the Group to date. It
is also in line with the Board's commitment to refreshing its
expertise while developing and preserving internal talent. Further
enhancing our succession planning, Greg was promoted to a Co-CEO
role in February 2024, being responsible for creating and
implementing the Group's operational strategies, including
Operations, People & Culture and Commercial, while driving
PPHE's corporate vision and growth strategy. In December 2023, the
Board appointed Ken Bradley, as a Deputy Chairman, providing an
independent view and support on the governance duties of the Board.
The Board remains focused on engaging with shareholders and
implementing best-practice corporate governance to secure the best
possible future for the Group.
Enhanced shareholder value
The Board has a long-standing
commitment to shareholder value. We completed our £3.7 million
share buy-back programme in March 2023, which enhanced capital
returns to shareholders. Our strong financial performance and the
business momentum during H1 enabled the Board to announce a return
to its historic capital return policy of distributing approximately
30% of adjusted EPRA earnings. This resulted in a total dividend
for the year of 36 pence per share.
The Board continues to prioritise
its progressive dividend policy, and we look forward to continuing
to deliver consistent shareholder returns.
A future of great promise
We started 2024 with positive
trading momentum and a significant amount of confidence for the
future. Leisure and business travel continue to be in demand across
our key markets, and while headwinds persist globally, we do not
see this demand changing materially going forward.
The Group will continue to focus
on pulling the strategic levers it can and build on the successes
it achieved over the last year. We look forward to updating all
stakeholders further on our progress in the coming months and
years.
Eli Papouchado
Chairman
PRESIDENT
& CEO'S REVIEW
A full recovery
We are very pleased to have
delivered a full recovery across the business in 2023 with a
financial performance significantly ahead of that expected at the
outset of the year, achieved despite the macro headwinds
experienced across the sector during the year.
This was thanks to a combination
of our strong financial and strategic progress, due to the hard
work and dedication of our team members across our
markets.
2023 in review
The positive momentum in 2022
following the ongoing international easing of previous
pandemic-related restrictions on travel, continued into the 2023
financial year and was sustained throughout 2023. Our teams should
be proud of the progress made across all of the markets and
segments in which we operate. Our outperformance versus
expectations enabled us to upgrade our outlook during the year,
resulting in FY 2023 revenue of £414.6 million and EBITDA of £128.2
million.
Initially, we saw strong rate
growth across the leisure segment in particular. This helped us to
part mitigate the well-documented inflationary cost pressures, and
was followed by an ongoing narrowing of the occupancy gap versus
2019 levels, as we focused on building this back up to pre-COVID
levels. We saw this most notably in the UK and the Netherlands,
which were the first of our markets to reopen fully in
2022.
Elsewhere, our assets in Croatia
delivered a solid performance, including throughout the peak summer
season, following significant investments in recent years to
upgrade many of our unique hotels and campsites there. Our new
Grand Hotel Brioni Pula traded its first full year and made a good
contribution. In Germany, our smallest region, recovery was slower
than in our other markets but improved as the year
progressed.
Our performance this year has
further illustrated the strength and resilience of our unique
business model and proposition. Our confidence in our abilities and
positioning in the market continues to grow, as we own, operate and
manage a wide variety of different brands and assets that cater
fully to the needs of our valued guests.
Strong momentum delivered throughout the
year
Reported total revenue increased
by 25.6% to £414.6 million (2022: £330.1 million) and EBITDA
improved 35.5% to £128.2 million (2022: £94.6 million), resulting
in an EBITDA margin of 30.9% (2022: 28.7%).
Revenue growth was driven by both
strong rates, which increased to £166.8 (2022: £160.4) as well as
improving occupancy to 72.4% (2022: 60.0%), which was 89.8% of 2019
levels. This resulted in a 25.5% improvement in RevPAR to £120.7
(2022: 96.2), 116.5% of 2019 levels.
Our property portfolio was
predominantly valued by Savills and Zane at £2.2 billion as at 31
December 2023. EPRA NRV per share increased by 6.2% to £26.72 per
share (2022: £25.17 per share). The adjusted EPRA earnings per
share was 118 pence (2022: 50 pence).
Delivery of our £300+ million development
pipeline
We are in a very exciting phase of
the Group's development which will see the culmination of many
years of work to upgrade and extend our property portfolio as well
as our geographic footprint. We are now in the final stages of
delivering our £300+ million development pipeline, which has
included the construction of new hotels and the upgrade and
repositioning of existing properties.
During the year, we successfully
opened two new hotels. Our first UK art'otel at London Battersea
Power Station officially opened February 2023. This hotel is
managed by our hospitality management platform under a long-term
management agreement. In October, we opened art'otel Zagreb, our
first hotel in the city centre of the Croatian capital. Radisson
RED Belgrade, our first Radisson RED hotel, opened in February
2024. Our flagship new property, art'otel London Hoxton, started to
take bookings for 2024 during Q4, and is set for a soft opening in
April 2024. Meanwhile, the new art'otel in Rome is due to open
during H1 2024 following an extensive repositioning
project.
Upon stabilisation of trading, the
Zagreb, Belgrade, London Hoxton and Rome hotel openings are
together targeted to generate at least £25 million EBITDA to the
Group's portfolio.
We continued to enhance our
long-standing and well-established relationship with Radisson Hotel
Group, which was expanded during 2022 to enable both companies to
invest fully in and further grow the reaches of their portfolio of
brands which together include brands such as Park Plaza, art'otel,
Radisson Collection, Radisson Blu and Radisson RED. Alongside the
forthcoming opening of our first Radisson RED properties, our
recently launched Grand Hotel Brioni Pula, a Radisson Collection
Hotel, traded its first full summer season in 2023, and we were
very pleased with its progress, performance and feedback from our
guests.
We further cemented our
partnership with Radisson at the International Hospitality
Investment Forum in May 2023, when Radisson fully incorporated
art'otel into their brand architecture, and we look forward to
seeing what more this innovative partnership can deliver for PPHE
and Radisson and our respective brand portfolios over the coming
months and years.
In addition, we continue to
progress three longer-term development projects in London and one
property repositioning project in Berlin, Germany.
Further details on our development
pipeline are set out in the Business Review.
Continuous investment in our
teams
Our people continue to be the
backbone of our operations. Having rebuilt our teams after the
pandemic, our long-term approach is centred on investing in our
people from the point of recruitment onwards, and positioning PPHE
as a best-in-class employer. This includes talent attraction and
retention initiatives and employee engagement and wellbeing
programmes.
2023 saw the return of 'business
as usual' for the Group, in line with the resumption of normal
operations and a strong focus on future growth. We hired hundreds
of new recruits through our partnerships with the Department for
Work and Pensions, charities, universities and colleges, as well as
through our internship and apprenticeship schemes, our 'Recommend a
Friend' scheme and our Hospitality Career Centre. For the opening
of art'otel London Battersea Power Station alone, we created 200
new jobs, and have hundreds more in the pipeline for the opening of
art'otel London Hoxton in 2024.
This meant the reactivation and in
many cases upgrading of our leading people-focused policies and
practices, including new and improved benefits and wellbeing
packages, learning and development, and the amplification of
diversity and inclusion initiatives.
ESG highlights
During 2023, we doubled down on
our ESG efforts, to enhance our contributions to the environment
and society around us in all our markets. We expanded our internal
resources, hiring new talent and specialist consultancies where
required, to bring in industry-leading experience and
expertise.
We have submitted our notification
to the Science-Based Targets Initiative (SBTi). This sets out our
intention to set robust targets for achieving net zero by 2040.
This also involves setting interim targets. We have mapped our full
carbon emissions, including working with specialists to achieve a
detailed footprint of Scope 3 emissions, which will be key to
achieving ambitious goals.
We want to have net positive
impact on society as a whole, so we are looking at how we can
ensure best practice as an employer and developer of our workforce,
and a contributor to our local communities.
Further detail on our new
strategy, targets and KPIs are set out in our Annual Report and
Accounts 2023, and I look forward to regularly updating all our
stakeholders on our progress against our goals over the coming
months and years.
Commitment to shareholder returns
Given our consistently strong
performance during the course of 2023, we continued to look for
ways to deliver enhanced value for our shareholders.
We engaged with investors -
particularly during the second half of the year - to gauge their
views as to the best mechanisms to return value to shareholders.
This resulted in a 16 pence per share interim dividend being
announced and paid following the Interim Results, which represented
a 13 pence per share increase year-on-year.
With the final dividend proposed
at 20 pence per share, the total dividend paid is 36 pence per
share.
Looking ahead
We have an exciting year ahead in
2024, with highly anticipated new property launches in Belgrade,
London and Rome. We launched Radisson RED Belgrade in February and
we are launching two art'otels in Hoxton, London, and in Rome.
These new openings are targeted to deliver
at least £25 million of incremental EBITDA to the Group upon
stabilised trading.
We also remain ambitious in our
plans for future growth as we continue to identify opportunity and
find new, entrepreneurial ways to continue to deliver value for our
shareholders. PPHE has committed up to €50 million in cash and/or
assets to a European Hospitality Real Estate Fund founded by the
Group. The Fund's cornerstone investor, Clal Insurance ("Clal"),
has committed to invest up to €75 million, however, capped at any
time at 49% of the contributed equity. Throughout the year, the
Group engaged with investment bankers to raise the remaining equity
for the European Hospitality Real Estate Fund ("the Fund"), however
the significant changes in the interest rate market during this
period meant that the Group was not successful in signing up new
investors up to the date of these results. If further investors
haven't joined the Fund by 13 March 2024 (unless mutually
extended), the Fund will carry on as a joint venture with Clal. The
Group may top up its own equity contribution (currently at up to
€50 million) to €78 million, representing 51%, to give the total
joint venture a c.€150 million equity value.
With full equity subscription
combined with a targeted 50% bank leverage, the investment
potential of the joint venture will then be around €300 million.
The Fund has an investment period of 24 months from March 2023,
which can be extended by an additional 12 months (subject to
consent).
The booking demand experienced in
2023 has continued momentum into 2024, with overall forward booking
levels consistent with those at this point in 2023. As previously
reported, the mix of corporate and leisure bookings has begun to
normalise, with growing demand for meetings and events and an
emphasis on rebuilding occupancy.
We anticipate that cost inflation
will remain in 2024, but will continue to be manageable. Utility
cost hedges are expected to positively impact margins and the Group
continues to manage labour-related cost pressures. Hedges are also
already in place to mitigate any impact of rising interest
rates.
Based on the above,
we are confident in the Group's future prospects
for what is expected to be milestone year in our history and
beyond.
Boris Ivesha
President & Chief Executive
Officer
FINANCIAL REVIEW
Overview of 2023
2023 ended on a high, reporting
fully recovered, record results and strong performance across our
main markets. Since 2019, results of the Group have been distorted
with the impacts of COVID-19 restrictions around the world, and
2023 marked the first year since with a normal trading pattern.
2023 kicked off with strong RevPAR increases compared to 2019,
slightly above inflation reported over the four-year period that
passed. Inflation did also affect many of our cost lines, most
noticeably in the costs of utilities and labour.
The Group successfully mitigated a
number of inflationary and sector-specific issues through the
implementation of innovative solutions and forward planning. We
have invested in enhancing our energy efficiency, and staffing is
also much less of a constraint for the Group due to its proactive
approach to investment in people, automation and employer
branding.
We reported EBITDA margins that
are behind on 2019, however lower utility hedges in the near future
are expected to positively impact margin recovery. We keep focusing
on managing the continued cost pressures we see on the labour side,
due to minimum wage increases in all our territories.
Although 2023 showed sharp
interest rate increases, the Group's results were not affected by
this as all our loans are near fully hedged on fixed interest
rates. These hedges limit the majority of exposure to interest rate
risk on average to 2028. Furthermore, there are no significant
loans up for refinance before 2026.
The elevated interest rate
environment also impacts the discount rates used in property
valuations, but despite increased rates, valuations have again
shown a small improvement as improved trading and outlooks more
than offset yield expansion.
Throughout the year, we spent
approximately £126 million on capital expenditure, and the Group is
now nearing completion of a heavy development cycle, where a record
pipeline of more than £300 million will begin to contribute for the
first time. This pipeline is estimated to grow EBITDA by at least
£25 million once fully stabilised.
Operational performance
Revenue
Total revenue was up 25.6% at
£414.6 million and was 15.9% ahead of 2019 levels. RevPAR was
£120.7, up 25.5%, and was 16.5% ahead of 2019 levels. This
reflected some further growth in average room rate, up 4.0% versus
2022 and 29.8% versus 2019, alongside a consistent recovery in
occupancy levels to 72.4%, compared with 60.0% in 2022 and 80.6% in
2019.
Overall, RevPAR levels led to a
total room revenue of £300.1 million, up 26.2% versus 2022 and up
19.7% of room revenue in 2019. The 2023 trading comparison with
2022 normalised month-on-month throughout the year. Where the first
comparative quarter of 2022 was still heavily impacted by COVID-19
(thus showing significant year-on-year growth), the latter part of
2022 actually showed a fully recovered and strong trading
comparable.
Financial results
Key financial statistics for the
financial year ended 31 December 2023.
|
Year ended
31 December 2023
|
Year ended
31 December 2022
|
Year ended
31 December 2019
|
Total revenue
|
£414.6 million
|
£330.1 million
|
£357.7 million
|
Room revenue
|
£300.1 million
|
£237.8 million
|
£250.6 million
|
EBITDAR
|
£130.5 million
|
£97.0 million
|
£124.7 million
|
EBITDA
|
£128.2 million
|
£94.6 million
|
£122.9 million
|
EBITDA margin
|
30.9%
|
28.7%
|
34.4%
|
Reported PBT
|
£28.8 million
|
£11.5 million
|
£38.5 million
|
Normalised PBT
|
£37.5 million
|
£8.3 million
|
£40.7 million
|
Reported EPS
|
53p
|
24p
|
80p
|
Occupancy
|
72.4%
|
60.0%
|
80.6%
|
Average room rate
|
£166.8
|
£160.4
|
£128.5
|
RevPAR
|
£120.7
|
£96.2
|
£103.6
|
EPRA NRV per share
|
£26.72
|
£25.17
|
£25.93
|
Adjusted EPRA earnings per
share
|
118p
|
50p
|
128p
|
Q1 2023 saw a strengthening of demand for
leisure, corporate travel and meeting events across all our
markets. Our rate-led strategy supported topline growth which
helped to mitigate inflationary headwinds, with average room rate
up 15.9% versus Q1 2022 and 24.6% ahead of Q1 2019 levels.
Occupancy levels continued to improve and track closer to 2019
levels in the UK and the Netherlands, with slower recovery in
Germany. Overall, Q1 2023 occupancy was 950 bps behind Q1
2019.
This momentum continued into the
second quarter, supported by the Coronation, taking place in
London, where total revenue was up 36.9% year-on-year and up 19.8%
versus Q2 2019. Average room rate grew by 14.8% versus Q2 2022 and
was up 35.6% versus Q2 2019. Occupancy continued to rebuild to
70.8% (58.8% in Q2 2022 and 77.1% in Q2 2019).
In Q3, a quarter heavily impacted
by the seasonal trading in Croatia, total revenue was up 8.8%
versus Q3 2022 and up 16.5% versus Q3 2019, driven primarily by
strong occupancy growth to 77.5% (Q3 2022: 70.8%). Average room
rate remained solid, up 0.8% versus Q3 2022, despite the strong
comparative performance in Q3 2022 which was boosted by a record
summer 2022 trading in Croatia and several significant events in
London, including the State Funeral of Her Majesty The
Queen.
The performance in Q4 continued to
be solid, with further occupancy recovery. Compared to Q4 2022
revenue was up 7.2% (up 15% versus Q4 2019). Room rate was
marginally down on Q4 2022 and up 25.1% versus Q4 2019. Occupancy
increased to 72.8% (Q4 2022: 72.1%).
Normalised profit
£million
|
12 months ended
31 December 2023
|
12 months ended
31 December 2022
|
Reported profit before
tax
|
28.8
|
11.5
|
Loss on buy-back of units in Park
Plaza Westminster Bridge London from private investors
|
3.3
|
1.5
|
Non-cash revaluation of finance
lease
|
3.9
|
3.7
|
Non-cash changes in fair value of
Park Plaza County Hall London Income Units
|
(1.6)
|
(0.3)
|
Pre-opening expenses and other
non-recurring expenses
|
1.4
|
1.4
|
Capital loss on disposal of fixed
assets and inventory
|
-
|
0.1
|
Non-cash changes in fair value of
financial instruments
|
1.7
|
(9.6)
|
Normalised profit before
tax
|
37.5
|
8.3
|
EBITDA, profit and earnings per
share
The Group reported EBITDA of
£128.2 million (2022: £94.6 million and 2019: £122.9 million). The
EBITDA margin continued to improve year-on-year to 30.9%, compared
with 28.7% in 2022 and 34.4% in 2019. Broader cost inflation,
particularly for utilities and labour, impacted full pre-COVID
margin recovery over the last 12 months. The Board anticipates that
cost inflation will remain topical in 2024, particularly with the
recently announced minimum wage increases, however forward energy
cost hedges will start flowing through at substantially lower
levels than those fixed for 2023.
Normalised profit before tax
improved to £37.5 million (2022: £8.3 million). Reported profit
before tax improved by £17.3 million to £28.8 million (2022: £11.5
million). Reported profit before tax was negatively affected by
non-cash revaluations of - amongst others - hedging derivatives and
lease liabilities. A table of normalisation adjustments is provided
above.
Reported basic/diluted earnings
per share for the period were 53 pence (2022: 24 pence).
Depreciation in the year was £45.1 million (2022: £40.0 million).
Depreciation is recorded in accordance with IFRS, however,
internally we consider the Group's ongoing average capital
expenditure (CAPEX) over the lifespan of our hotels as a more
relevant measure in determining profit, which in the hospitality
industry is calculated as approximately 4% of total revenue. Our
EPRA earnings number is calculated using the 4% rate instead of the
reported non-cash depreciation charge (see EPRA Earnings table
below).
Real estate performance
Valuations
The Group is an integrated
developer, owner and operator of hotels, resorts and campsites and
its business model is real estate driven. We generate returns and
drive increased value for all our stakeholders by developing the
assets that we own and operating our properties 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.
In December 2023, the Group's
properties (with the exception of operating leases and managed and
franchised properties) were once again independently valued
predominantly 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 their valuations, we have
calculated the Group's EPRA NRV, EPRA NTA and EPRA NDV. The EPRA
NRV as at 31 December 2023, set out in the EPRA Performance
Measurement section below, amounts to £1,136.4 million (2022:
£1,078.7 million), which equates to £26.72 per share (2022: £25.17
per share).
The EPRA NRV was positively
impacted by the profit in the year of £22.4 million and positively
impacted by marginally increased property valuations of £50.8
million (based on constant currency). This year the valuations were
negatively affected by an increase in the discount rates used,
mainly as a result of the higher interest rate environment. The
value effect of these increased rates, however, were more than
offset by the increased underlying results of the hotels used in
the valuations, with expectations on improving margin embedded in
the profit forecasts.
The table below provides
additional information regarding the discount and cap rates
used.
Actualised trading versus assumption in 2023
valuations
|
Discount rates
|
Cap
rates
|
|
2023 Valuations
|
2022 Valuations
|
2023 Valuations
|
2022 Valuations
|
United Kingdom
|
7.75%-10.50%
|
7.75%-10.50%
|
5.25%-8.00%
|
5.25%-8.00%
|
The Netherlands
|
8.25%-9.75%
|
7.75%-9.50%
|
5.75%-7.25%
|
5.25%-7.00%
|
Germany
|
8.25%-9.25%
|
8.00%-9.25%
|
5.75%-6.75%
|
5.50%-6.75%
|
Croatia
|
8.00%-11.00%
|
8.00%-11.00%
|
6.00%-9.00%
|
6.00%-9.00%
|
Valuation
Comparison
2023 versus 2022 valuation - Total
portfolio +2.3%
|
|
United Kingdom
|
+2.0%
|
The Netherlands
|
+5.5%
|
Germany
|
-6.5%
|
Croatia
|
+4.0%
|
Cash flow and EPRA earnings
In 2023, the Group had a positive
operational cash flow of £126.1 million, due to its record fully
recovered trading. Cash used for debt service increased to £82.2
million (2022: £68.0 million), of which £46.4 million (2022: £41.8
million) is due to interest expenses, £31.7 million (2022: £21.3
million) due to loan amortisations and £4.1 million (2022: £4.9
million) due to lease amortisations.
Investment cash flows reported an
outflow of £121.5 million, of which about 86.5% was due to
development projects and
£15.0 million regarding our usual maintenance CAPEX projects. Most
noticeable was the £80.6 million CAPEX related to our development
projects in Hoxton London and art'otel Rome Piazza Sallustio. These
hotels are due to open in the current financial year, hence
construction CAPEX is expected to significantly decrease from the
third quarter onwards.
The Group has a healthy balance
sheet, no significant refinancing until 2026 and a total cash
position of £150.4 million, with access to a further £30 million of
undrawn facilities.
The Group reported adjusted EPRA
earnings of £50.1 million, up 137% (2022: £21.2 million), and
adjusted EPRA earnings per share of 118 pence, up 136% (2022: 50
pence, 2019: 128 pence per share).
EPRA Performance measurement
EPRA summary
|
Summary
of EPRA Performance indicators
|
|
Year ended 31 December
2023
|
Year ended 31 December
2022
|
|
£ million
|
Per Share
|
£ million
|
Per Share
|
EPRA NRV (Net Reinstatement
Value)
|
1,136.4
|
£26.72
|
1,078.7
|
£25.17
|
EPRA NTA (Net Tangible
Assets)
|
1,106.6
|
£26.02
|
1,047.2
|
£24.44
|
EPRA NDV (Net Disposal
Value)
|
1,070.4
|
£25.17
|
1,030.9
|
£24.06
|
EPRA earnings
|
59.0
|
139p
|
32.7
|
77p
|
Adjusted EPRA earnings
|
50.1
|
118p
|
21.1
|
50p
|
EPRA NRV
|
31 December 2023
|
31 December 2022
|
£
million
|
EPRA NRV
|
EPRA NTA
4
|
EPRA NDV
|
EPRA NRV
|
EPRA NTA 4
|
EPRA NDV
|
NAV per the financial
statements
|
314.6
|
314.6
|
314.6
|
315.1
|
315.1
|
315.1
|
Effect of exercise of
options
|
-
|
-
|
-
|
3.0
|
3.0
|
3.0
|
Diluted NAV, after the exercise of
options1
|
314.6
|
314.6
|
314.6
|
318.1
|
318.1
|
318.1
|
Includes:
|
|
|
|
|
|
|
Revaluation of owned properties in
operation (net of non-controlling interest)2
|
794.6
|
794.6
|
794.6
|
746.9
|
746.9
|
746.9
|
Revaluation of the joint venture
interest held in two German properties (net of non-controlling
interest)
|
6.1
|
6.1
|
6.1
|
6.8
|
6.8
|
6.8
|
Fair value of fixed interest rate
debt
|
-
|
-
|
(5.9)
|
-
|
-
|
(9.2)
|
Deferred tax on revaluation of
properties
|
-
|
-
|
(39.0)
|
-
|
-
|
(31.7)
|
Real estate transfer
tax3
|
19.1
|
-
|
-
|
18.7
|
-
|
-
|
Excludes:
|
|
|
|
|
|
|
Fair value of financial
instruments
|
14.2
|
14.2
|
-
|
21.1
|
21.1
|
-
|
Deferred tax
|
(16.2)
|
(16.2)
|
-
|
(9.3)
|
(9.3)
|
-
|
Intangibles as per the IFRS
balance sheet
|
-
|
10.7
|
-
|
-
|
12.8
|
-
|
NAV
|
1,136.4
|
1,106.6
|
1,070.4
|
1,078.7
|
1,047.2
|
1,030.9
|
Fully diluted number of shares (in
thousands)1
|
42,527
|
42,527
|
42,527
|
42,846
|
42,846
|
42,846
|
NAV per share (in £)
|
26.72
|
26.02
|
25.17
|
25.17
|
24.44
|
24.06
|
1 The
fully diluted number of shares excludes treasury shares but
includes 163,221 outstanding dilutive options (as at 31 December
2022: 150,223).
2 The
fair values of the properties were determined on the basis of
independent external valuations prepared in December
2023.
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
|
12 months ended
31 December 2023
£ million
|
12 months ended
31 December 2022
£ million
|
Earnings attributed to equity
holders of the parent company
|
22.4
|
10.2
|
Reported depreciation and
amortisation
|
45.1
|
40.0
|
Revaluation of Park Plaza County
Hall London Income Units
|
(1.6)
|
(0.3)
|
Changes in fair value of financial
instruments
|
1.7
|
(9.6)
|
Non-controlling interests in
respect of the above3
|
(8.6)
|
(7.6)
|
EPRA Earnings
|
59.0
|
32.7
|
Weighted average number of
ordinary shares outstanding
|
42,541,186
|
42,522,523
|
EPRA Earnings per Share (in
pence)
|
139
|
77
|
Company specific
adjustments:1
|
|
|
Capital loss on buy-back of Income
Units in Park Plaza Westminster Bridge London
|
3.3
|
1.5
|
Remeasurement of lease
liability4
|
3.9
|
3.7
|
Disposals and Other non-recurring
expenses (including pre-opening expenses)7
|
1.4
|
1.5
|
Adjustment of lease
payments5
|
(2.3)
|
(2.2)
|
One-off tax
adjustments6
|
(2.5)
|
(5.8)
|
Maintenance
CAPEX2
|
(16.6)
|
(13.2)
|
Non-controlling interests in
respect of Maintenance CAPEX and the adjustments
above3
|
3.9
|
3.0
|
Company Adjusted EPRA Earnings1
|
50.1
|
21.2
|
Company Adjusted EPRA Earnings per
Share (in pence)
|
118
|
50
|
Reconciliation Company adjusted
EPRA earnings to normalised PBT:
|
|
|
Company Adjusted EPRA
Earnings1
|
50.1
|
21.2
|
Reported depreciation and
amortisation
|
(45.1)
|
(40.0)
|
Non-controlling interest in
respect of reported depreciation3
|
8.6
|
7.6
|
Maintenance
CAPEX2
|
16.6
|
13.2
|
Non-controlling interests in
respect of Maintenance CAPEX and the adjustments
above3
|
(3.9)
|
(3.0)
|
Adjustment of lease
payments5
|
2.3
|
2.2
|
One-off tax
adjustments6
|
2.5
|
5.8
|
Profit attributable to
non-controlling interests3
|
4.7
|
4.7
|
Reported tax
|
1.7
|
(3.4)
|
Normalised profit before
tax
|
37.5
|
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.
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 on carry forward losses recorded in 2023.
7 Mainly relates to
pre-opening expense and net profit and loss on disposal of
property, plant and equipment.
Other EPRA measurements
Given that the Group's asset
portfolio is comprised of hotels, resorts and campsites which are
also operated by the Group, a few of EPRA's performance
measurements, which are relevant to real estate companies with
passive rental income, have not been disclosed as they are not
relevant or non-existent. Those EPRA performance measurements
include EPRA Net Initial Yield (NIY), EPRA 'Topped-up' NIY, EPRA
Vacancy Rate and EPRA Cost Ratios.
Capital structure
Call impact minorities and future
As part of our strategy, we unlock
capital on the back of our assets in many different ways. We do
this by raising debt, raising equity through several different
forms of partnerships or sometimes by entering into 100+ year
ground rent structures. This funding strategy gives us access to
capital on the back of the fair value of our assets and also
balances the liquidity and interest rate risk attached to our
capital structure.
Our partnerships, such as the
third party unit holders in Park Plaza Westminster Bridge London,
the third party shareholders in our listed Croatian subsidiary or
the individual professional partners we work with on several
assets, provide us with long-term equity and therewith sharing of
the risks and returns on each asset.
The 100+ year ground rent
structures give us long-term access to capital, with no covenants,
no recourse to the Group and no refinance risk or interest rate
exposure. These structures are typically linked to inflation,
although, these are often capped at around 4-5%
annually.
Finally, our asset-backed
mortgages are mostly entered into with long-standing banking
partners, with a five- to ten-year maturity and with a fixed rate
or a variable rate with hedging arrangements. Our mortgages have
covenants around the value of assets (Loan to Value) and trading
(interest or debt service cover ratios). The level of debt raised
on trading assets is typically around 50% of the value of these
assets and appropriate buffers are kept towards the covenants on
the loan. Furthermore, most of our loans are amortised annually
around 2.5% of the nominal amount over the term. The current net
bank debt leverage (EPRA LTV) percentage is 33.4%.
Although our mortgages are exposed
to interest rate risks, most of these were entered into years ago,
averaging at 3.5% interest (98% fixed) and with an average
remaining maturity of 4.0 years. In early 2022, the Group entered
into multiple forward starting hedges (starting when loans roll
over or refinance in 2024 and 2026) for approximately £380 million,
around 1.4%-1.9% swap rate, significantly below current market
levels. The loans on trading assets are non-recourse.
European Hospitality Real Estate
Fund
Consistent with PPHE's
long-standing approach to building shareholder value through the
careful stewardship of its own balance sheet and partnership with
third party capital providers, we launched our inaugural European
Hospitality Real Estate Fund (the 'Fund') in March 2023 to support
the Group's long-term growth ambitions. Hotels acquired by the Fund
will be operated by PPHE's hospitality management platform,
building further scale in the platform. PPHE has committed up to
€50 million in cash and/or assets to the Fund and the Fund's
cornerstone investor, Clal Insurance, has committed to invest up to
€75 million (however, capped at 49% of the equity contributed at
any time). In March 2023, our property in Rome (soon to open as
art'otel Rome Piazza Sallustio) was contributed as a seed
asset.
Throughout the year the Group
engaged with investment bankers to raise the remaining equity for
the Fund, however, the significant changes in the interest rate
market during this period has meant that the Group was not
successful in signing up new investors.
If further investors have not
joined the Fund by 13 March 2024 (unless mutually extended), the
Fund will carry on as a joint venture with Clal. Furthermore, the
Group has the option to top up its own equity contribution
(currently at up to €50 million) to €78 million to give the total
joint venture a c.€150 million equity value. With full equity
subscription combined with a targeted 50% bank leverage, the
investment potential of the joint venture will then be around €300
million. The Fund has an investment period of 24 months from March
2023, which can be extended by an additional 12 months (subject to
consent).
Net debt leverage/EPRA LTV
reconciliation
|
Group as reported under
IFRS
£'million
|
Adjustments to arrive at EPRA
Group LTV
£'million
|
Group EPRA LTV before NCI
adjustment
£'million
|
Proportionate Consolidation
(Non-controlling interest)
£'million
|
Combined EPRA LTV
£'million
|
Include:
|
|
|
|
|
|
Borrowings
|
|
|
|
|
|
(short-/long-term)
|
893.0
|
-
|
893.0
|
(202.4)
|
690.6
|
Exclude:
|
|
|
|
|
|
Cash & cash equivalents and
restricted cash
|
(167.7)
|
-
|
(167.7)
|
36.6
|
(131.1)
|
Net Debt (a)
|
725.3
|
-
|
725.3
|
(165.8)
|
559.5
|
|
|
|
|
|
|
Include:
|
|
|
|
|
|
PP&E
|
1,412.8
|
762.4
|
2,175.2
|
(511.8)
|
1,663.4
|
Right-of-use assets
|
229.2
|
(229.2)
|
-
|
-
|
-
|
Lease liabilities
|
(277.4)
|
277.4
|
-
|
-
|
-
|
Liability to income units in
Westminster Bridge hotels
|
(114.3)
|
114.3
|
-
|
-
|
-
|
Intangible assets
|
10.7
|
-
|
10.7
|
(0.9)
|
9.8
|
Investments in Joint
ventures1
|
5.4
|
11.4
|
16.8
|
(7.8)
|
9.0
|
Other assets and liabilities,
net
|
(9.9)
|
(4.0)
|
(13.9)
|
8.5
|
(5.4)
|
Total Property Value
(b)
|
1,256.5
|
932.3
|
2,188.8
|
(512.0)
|
1,676.8
|
|
|
|
|
|
|
EPRA LTV (a/b)
|
57.7%
|
-
|
33.1%
|
-
|
33.4%
|
|
|
|
|
|
|
Adjustments to reported EPRA
NRV:
|
|
|
|
|
|
Real estate transfer
tax
|
-
|
21.9
|
21.9
|
(2.8)
|
19.1
|
|
|
|
|
|
|
Total Property Value after
adjustments (c)
|
1,256.5
|
954.2
|
2,210.7
|
(514.8)
|
1,695.9
|
|
|
|
|
|
|
Total Equity (c-a)
|
531.2
|
954.2
|
1,485.4
|
(349.0)
|
1,136.4
|
|
|
|
|
|
| |
1 Proportionate consolidation was
not applied to the Joint ventures as it is considered as not
material.
Capital Expenditure/Development pipeline
update
With an expansion CAPEX of £110.6
million, we remained focused on implementing our strategy,
progressing our development pipeline, and expanding our footprint
into new, highly attractive markets.
The construction phase of our new
hotel in Hoxton London (art'otel London Hoxton) is nearing
completion and handover of certain areas commenced in Q1 2024
enabling our operational teams to start preparing the hotel for its
expected opening in Q2 2024.
We opened our first art'otel in
Croatia in Q3 2023, art'otel Zagreb. This was an office-to-hotel
conversion project in Zagreb city centre at a total investment of
£18 million.
Similarly, the first Radisson RED
property to be operated by the Group, and the second to open under
the extended Radisson partnership, opened for bookings in Q4 2023,
following an extensive repositioning (previously known as Arena 88
Rooms Hotel).
In Rome, the Group had embarked on
a full repositioning and construction of the former Londra &
Cargill Hotel located in the city centre in July 2022. Works are
underway to reposition this hotel into a 99-room premium art'otel,
which is expected to open in the first half of 2024.
On the above £300+ million
pipeline, the Group has a remaining commitment of approximately £60
million.
We are constantly working on
improving our existing portfolio and looking for interesting
opportunities to acquire further assets to broaden the Group's
portfolio. The diagram in the Financial Review section of the
Annual Report provides a summary of the investments done in the
past ten years.
Dividend
The strength of trading during the
first half of 2023 and the Board's confidence in the outlook
enabled it to recommend a return to the Company's historical
capital returns policy of distributing approximately 30% of
adjusted EPRA earnings while continuing to support investment in
future growth opportunities. Given the continued share price
discount relative to the Company's EPRA NRV per share, the Board
consulted with shareholders about the most appropriate and
effective mechanism for such distributions to take place, including
dividends, share buy-backs, tender offers or a combination of
these. During this exercise, a broad range of opinions and
preferences were expressed by shareholders. Having listened
carefully to all the viewpoints provided, the Group took the
decision to pay an interim dividend of 16 pence per share for the
period ended 30 June 2023, which represented a year-on-year
increase of 13 pence per share (H1 2022: 3 pence per
share).
Further to the above, and in line
with the Board's confidence in the Group's performance and the
strength of its development pipeline being delivered, the Board has
proposed a final dividend payment of 20 pence per share. When
combined with the interim ordinary dividend, it will bring the
total dividend for the year to 36 pence per share.
The Board will continue to
regularly review its capital returns policy.
Daniel Kos
Chief Financial Officer & Executive
Director
BUSINESS
REVIEW
INTRODUCTION
Demand among leisure and corporate
visitors alike remained resilient and grew consistently during
2023. This was despite persistent macro-economic challenges and
wider concerns about consumer confidence, as people around the
world sought to travel and meet in person at levels close to and in
many cases exceeding those of 2019 (which was the last full
pre-pandemic year).
Our strategic progress was
similarly broad-based, with openings across all of our key markets
successfully completed to plan. Our newly opened art'otel at London
Battersea Power Station was a particular highlight and has traded
well in a well-known and highly desirable destination. We were also
pleased to open art'otel Zagreb, our first city-centre hotel in
Croatia, as well as our first Radisson RED branded property in
Belgrade, Serbia.
As our £300+ million development
pipeline nears completion, we have continued to find innovative
ways to drive further growth and shareholder returns in the years
ahead. This includes the equity partnership with Clal, which gives
us, when leveraged, access to an investment potential of between
€200 and €300 million (based on leverage assumption of 50% and
including PPHE's participation) for new property acquisitions, and
an asset optimisation including securing planning to convert
subterranean space at Park Plaza Victoria London into a 179-room
hotel concept.
As activity grew throughout the
year, our teams once again worked extremely hard to deliver a
memorable guest experience for all our guests, resulting in high
levels of guest satisfaction. We continued to prioritise
recruitment, learning and development, engagement and retention.
Our long-term approach and investment in our people has positioned
us strongly in the market and this remains a key focus. Our
talented and dedicated teams remain critical to the long-term
success of the Group, and I would like to reiterate my gratitude to
them.
Investment in new technologies and
systems remained a key priority as we sought new ways to innovate
and enhance our service offering, and create efficiencies in our
processes. This included the continued use of automation and
robotics across several business functions, alongside the
implementation of two highly regarded revenue management systems to
optimise pricing and forecasting. We also further upgraded our
Digital Services suite of products, including online check-in and
digital keys, to create a more seamless guest journey.
While leveraging the additional
Radisson brands in line with our expanded partnership, each with
their distinct personas and market positioning (Radisson RED and
Radisson Collection), we continued to expand and evolve our
offering, within both our restaurant and bar concepts. During the
year, we opened a number of new destination restaurants and bars,
including Portuguese-inspired JOIA on the 15th floor at art'otel
London Battersea Power Station, following our successful
collaboration with Executive Chef Henrique Sá Pessoa at art'otel
Amsterdam. TOZI Grand Café also opened on the ground floor,
inspired by the elegance of Europe's famous grand cafés and
celebrating authentic Italian dishes, and TOZI Counter - a casual
outlet specialising in fresh Italian sandwiches, pastries and
specialty coffees - is located adjacent to TOZI Grand Café.
Furthermore, in November 2023 we opened our first YEZI restaurant,
at our new art'otel in Zagreb, which provides a relaxed fine-dining
experience inspired by the traditional Asian tea house.
I look forward to keeping
shareholders updated on our performance and strategic progress over
the coming months. In the meantime, please read on for our 2023
Business Review.
Greg Hegarty
Co-Chief Executive Officer & Executive
Director
united kingdom
property portfolio
The Group's well-invested property
portfolio consists of approximately 3,350 rooms in operation in the
upper upscale segment of the London hotel market. In addition, the
Group will be soft opening the 357-room art'otel London Hoxton in
April 2024 and it has a further three development sites in London,
which could add up to over 800 rooms.
Four of the Group's London hotels
are in the popular South Bank area of London, with further
properties in Victoria, Marylebone, Battersea and Park Royal. There
are also three properties located in the UK regional cities of
Nottingham, Leeds and Cardiff2.
The Group has an ownership
interest in ten properties: Park Plaza Westminster Bridge London,
Park Plaza London Riverbank, Park Plaza London Waterloo, Park Plaza
County Hall London2, Park Plaza Victoria London, Park
Plaza London Park Royal, art'otel London Hoxton, Holmes Hotel
London, Park Plaza Leeds and Park Plaza Nottingham. Park Plaza
Cardiff2 operates under a franchise agreement. The Group
operates art'otel London Battersea Power Station2 hotel
under a long-term management agreement through its hospitality
platform.
Total value of the UK property portfolio¹ £1,014m (2022:
£991m)
Financial performance
|
Reported in Pound Sterling (£)
|
|
Year ended
31 Dec 2023
|
Year ended
31 Dec 2022
|
% change
|
Year ended
31 Dec 2019
|
% change
|
Total revenue
|
£234.9m
|
£190.1m
|
23.6%
|
£207.4m
|
13.3%
|
EBITDAR
|
£76.6m
|
£56.8m
|
35.0%
|
£71.0m
|
7.9%
|
EBITDA
|
£76.3m
|
£56.2m
|
35.7%
|
£70.7m
|
7.9%
|
Occupancy
|
83.6%
|
67.8%
|
1,590 bps
|
87.7%
|
(405) bps
|
Average room rate
|
£190.8
|
£192.3
|
(0.8)%
|
£152.4
|
25.2%
|
RevPAR
|
£159.6
|
£130.3
|
22.5%
|
£133.7
|
19.4%
|
Room revenue
|
£183.8m
|
£149.9m
|
22.6%
|
£152.7m
|
20.4%
|
EBITDA margin
|
32.5%
|
29.6%
|
290 bps
|
34.1%
|
(160) bps
|
1 Independent valuation by Savills
in December 2023 and excluding the London development sites
art'otel London Hoxton and Westminster Bridge Road.
2 Revenues derived from these
hotels are accounted for in Management and Holdings, and their
values and results are excluded from the data provided in this
section.
Portfolio performance
The United Kingdom remains the
Group's largest region in terms of revenue generated and property
value. Throughout the year, the portfolio performed strongly across
the Group's main segments of leisure, corporate and meetings. This
was predominantly achieved through a further growth in room rate
alongside a significant recovery in occupancy. Booking activity was
supported by a number of events in London, including the Coronation
of King Charles III in May, and a return to business
travel.
Total reported revenue was up
23.6% to £234.9 million (2022: £190.1 million). Reported RevPAR was
£159.6 (2022: £130.3), driven by a stable average room rate of £190.8,
down 0.8% (2022: £192.3), and a further
improvement in occupancy to 83.6% (2022:
67.8%).
EBITDA was £76.3 million (2022:
£56.2 million).
Development pipeline
The Group's flagship project,
art'otel London Hoxton, is now in the final stages of development
ahead of soft opening in April 2024. Located in the vibrant
Shoreditch area in East London, this premium lifestyle hotel will
comprise 357 rooms and suites, five floors of 5,900m2 office space,
wellness facilities, a gym and swimming pool, and an art gallery
space. The hotel's Signature Artist is London-born British street
artist D*Face, who is recognised globally as one of his
generation's most prolific contemporary urban artists, blending
art, design and graffiti. The General Manager has been appointed
along with a support function to prepare the hotel for
launch.
The Group also has three
longer-term development projects in London. The first is a site
adjacent to Park Plaza London Park Royal (in West London), the
second site is at 79-87 Westminster Bridge Road, close to the
Group's Park Plaza London Waterloo and Westminster Bridge
properties, and the third development project is the potential to
create a 179-bedroom subterranean hotel at the Group's Park Plaza
London Victoria property. The Park Royal and Park Plaza London
Victoria sites both have planning consent.
Hospitality management platform
projects
In February 2023, the Group fully
opened - to critical acclaim - the UK's first art'otel, located
within the Battersea Power Station development. The property
features 164 bedrooms, a Venetian inspired Italian TOZI restaurant
and bar, a skyline destination restaurant, JOIA, and a spectacular
rooftop swimming pool. The hotel also offers a gym, spa, event
facilities, and an art gallery with regular art programmes
throughout the hotel. Jaime Hayon is the hotel's interior designer
and Signature Artist, and two Michelin starred Portuguese chef
Henrique Sá Pessoa is the JOIA restaurant Concept Chef. 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 14.5% at £92.4,
driven by an 8.7% increase in average room rate to £119.5 and a
5.3% increase in occupancy to 77.3%.
In London, RevPAR increased by
17.1% to £156.2 compared with 2022, reflecting an 8.8% increase in
occupancy to 79.8%, and a 7.6% increase in average room rate to
£195.7.
* Source STR European Hotel Review,
December 2023.
THE NETHERLANDS
Property portfolio
The Group has an ownership
interest in three hotels in the centre of Amsterdam (Park Plaza
Victoria Amsterdam, art'otel Amsterdam and Park Plaza Vondelpark,
Amsterdam), and a fourth property located near Schiphol Airport
(Park Plaza Amsterdam Airport). It also owns Park Plaza branded
hotels in Utrecht and Eindhoven.
Total value of the Netherlands property portfolio1
£318m (2022: £307m)
Financial performance
|
Reported in Pound Sterling2 (£)
|
Reported in local currency Euro (€)
|
The
Netherlands
|
Year ended 31 Dec 2023
|
Year ended 31 Dec
2022
|
% change
|
Year ended 31 Dec
2019
|
% change
|
Year ended 31 Dec
2023
|
Year ended 31 Dec
2022
|
% change
|
Year ended 31 Dec
2019
|
% change
|
Total revenue
|
£63.3.m
|
£41.6m
|
52.3%
|
£53.8m
|
17.7%
|
€72.8m
|
€48.7m
|
49.6%
|
€61.4m
|
18.6%
|
EBITDAR
|
£19.6m
|
£11.2m
|
75.2%
|
£15.0m
|
30.5%
|
€22.6m
|
€13.1m
|
72.1%
|
€17.2m
|
31.5%
|
EBITDA
|
£19.6m
|
£11.2m
|
75.4%
|
£15.0m
|
30.5%
|
€22.5m
|
€13.1m
|
72.3%
|
€17.1m
|
31.5%
|
Occupancy
|
82.4%
|
57.3%
|
2,510 bps
|
86.2%
|
(385) bps
|
82.4%
|
57.3%
|
2,510 bps
|
86.2%
|
(385) bps
|
Average room rate
|
£149.1
|
£142.2
|
4.9%
|
£124.8
|
19.5%
|
€171.6
|
€166.6
|
3.0%
|
€142.6
|
20.3%
|
RevPAR
|
£122.8
|
£81.5
|
50.7%
|
£107.6
|
14.1%
|
€141.4
|
€95.5
|
48.0%
|
€122.9
|
15.0%
|
Room revenue
|
£48.1m
|
£31.9m
|
50.7%
|
£40.3m
|
19.5%
|
€55.4
|
€37.4m
|
48.0%
|
€46.0m
|
20.4%
|
EBITDA margin
|
30.9%
|
26.9%
|
410 bps
|
27.9%
|
305 bps
|
30.9%
|
26.9%
|
410 bps
|
27.9%
|
305 bps
|
|
|
|
|
|
|
|
|
|
|
| |
1 Independent valuation by Savills in December 2023.
2 Average exchange rate from
Euro to Pound Sterling for the period ended 31 December 2023 was
1.151 and for the period ended 31 December 2022 was
1.172 representing a 1.8%
decrease.
Portfolio performance
As in the United Kingdom, the
Group's Dutch properties performed strongly throughout the year,
driven by a combination of rate growth and occupancy
recovery.
Total revenue (in local currency)
was up 49.6% at €72.8 million (2022: €48.7 million). RevPAR
increased to €141.4 (2022: €95.5), reflecting the 3.0% uplift in
average room rate to €171.6 (2022: €166.6), and the significant improvement in occupancy to 82.4% (2022:
57.3%). EBITDA improved by €9.4 million to €22.5 million (2022:
€13.1 million).
The Dutch hotel market*
RevPAR increased by 25.4% to
€108.3 compared with 2022. Occupancy increased by 13.4% to 71.3%,
and the average room rate was €151.9, 10.6% higher than in
2022.
In Amsterdam, our main market in
the Netherlands, RevPAR increased by 29.3% to €134.2. Occupancy
levels increased by 16.6% to 74.8%, and the average daily room rate
increased by 10.9% to €179.4.
* Source STR European Hotel Review,
December 2023.
CROATIA
Property portfolio
The Group's subsidiary, Arena
Hospitality Group d.d. ('Arena'), owns and operates a Croatian
portfolio compromising more than 8,500 rooms and accommodation
units across eight hotels, six resorts and eight campsites. With
the exception of art'otel Zagreb, all these properties are located
in Istria, Croatia's most prominent tourist region. Four of these
properties are Park Plaza branded, one property is art'otel
branded, and Grand Hotel Brioni is a Radisson Collection hotel. The
remainder of our portfolio operates as part of the Arena Hotels
& Apartments and Arena Campsites brands. The Group opened its
first art'otel in Zagreb in Q4 2023.
Total value of the Croatian property portfolio1
£361m (2022: £334m)
Financial performance
|
Reported in Pound Sterling2 (£)
|
Reported in local currency Euro (€)4
|
Croatia
|
Year ended 31 Dec 2023
|
Year ended 31 Dec
2022
|
% change
|
Year ended 31 Dec
2019
|
% change
|
Year ended 31 Dec
2023
|
Year ended 31 Dec
2022
|
% change
|
Year ended 31 Dec
2019
|
% change
|
|
Total revenue
|
£78.1m
|
£69.2m
|
12.8%
|
£61.1m
|
27.8%
|
€89.9m
|
€81.3m
|
10.6%
|
€70.1m
|
28.3%
|
|
EBITDAR
|
£22.4m
|
£23.3m
|
(3.9)%
|
£19.4m
|
15.2%
|
€25.7m
|
€27.2m
|
(5.6)%
|
€22.2m
|
16.0%
|
|
EBITDA
|
£20.4m
|
£21.4m
|
(4.7)%
|
£18.2m
|
12.0%
|
€23.5m
|
€25.1m
|
(6.4)%
|
€20.8m
|
12.8%
|
|
Occupancy3
|
52.7%
|
55.1%
|
(240) bps
|
63.1%
|
(1,040) bps
|
52.7%
|
55.1%
|
(240) bps
|
63.1%
|
(1,040) bps
|
|
Average room rate3
|
£140.2
|
£123.2
|
13.8%
|
£91.1
|
53.8%
|
€161.3
|
€144.4
|
11.7%
|
€104.1
|
54.9%
|
|
RevPAR3
|
£73.8
|
£67.8
|
8.8%
|
£57.5
|
28.4%
|
€85.0
|
€79.5
|
6.9%
|
€65.7
|
29.4%
|
|
Room revenue3
|
£42.6m
|
£36.1m
|
17.9%
|
£33.5m
|
27.3%
|
€49.0m
|
€42.3m
|
15.8%
|
€38.2m
|
28.2%
|
|
EBITDA margin
|
26.1%
|
30.9%
|
(480) bps
|
29.8%
|
(370) bps
|
26.1%
|
30.9%
|
(475) bps
|
29.7%
|
(360) bps
|
|
1 Independent valuation by
Zagreb nekretnine Ltd in December 2023.
2 Average exchange rate from
Euro to Pound Sterling for the period ended 31 December 2023 was
1.151 and for the period ended 31 December 2022 was
1.172 representing a
1.8% decrease.
3 The room revenue, average
room rate, occupancy and RevPAR statistics include all
accommodation units at hotels and self-catering apartment complexes
and exclude campsites and mobile
homes.
4 Since 1 January 2023, the
Group's Croatian portfolio performance has been reported in euros,
following Croatia's admission to the eurozone.
Portfolio performance
The Group's Croatian operations
are predominately seasonal, with most of the properties closed
during the first and last quarter of the year. From around Easter
time, business activity intensifies while hotels, resorts and
campsites are fully open and trading for the peak summer season in
June, July and August. Most properties are then closed in late
September/mid-October for winter.
The region continued to benefit
from the maturing of properties following significant repositioning
investment programmes to upscale market positions across the
portfolio. Revenue growth was primarily from hotels and apartments,
especially from Grand Hotel Brioni Pula due to its first full-year
trading since it opened in May 2022. In addition, campsites
performed well and delivered year-on-year revenue growth, building
on the record performance in 2022. This performance was achieved
despite reduced air travel capacity to and from Pula airport,
adverse weather conditions (with torrential rains during the summer
season) and the full re-opening of other global tourist markets
compared with 2022, providing tourists with more travel
options.
Total revenue (in local currency)
was up 10.6% to €89.9 million (2022: €81.3 million) and was 28.3%
above revenue in 2019. This was driven by an 11.7% increase in
average room rate to €161.3 (2022: €144.4) with occupancy
decreasing 240 bps to 52.7% (2022: 55.1%). Consequently, RevPAR
grew to €85.0, mainly due to the higher average room
rate.
EBITDA was €23.5 million, which
was 12.8% above 2019, however, it was 6.4% lower than 2022 (2022:
€25.1 million), primarily due to the impact of significantly higher
utilities costs, up 71.0% year-on-year, and increased payroll
expenses.
Asset management projects
Following phase one of renovations
at Arena Stoja Campsite in 2022, phase two was completed ahead of
the 2023 summer season. This €8.3 million investment included a new
arrival and entrance area for the campsite, an extensive renovation
of its main restaurant and coffee shop, along with major
infrastructure upgrades, further strengthening the campsite's
offering and appeal.
In Croatia, we are taking a more
cautious approach to new developments and postponing larger
projects, such as the conversion of the Hotel Riviera, Pula into a
premium offering, until such time that we can be sure that new
investments meet our targeted return hurdle rate. Our planned
investment in Hotel Riviera in Pula is temporarily paused due to
construction cost inflation associated with the project.
Development projects
In October 2023, the Group opened
art'otel Zagreb following a €18 million investment to convert an
iconic office building in the heart of the city centre, known to be
one of the best examples of Zagreb's Art Deco architecture. Located
just off Zagreb's main square (Ban Jelačić Square), the hotel
features 110 rooms, a rooftop bar with a panoramic view of the city
(opening in 2024), pan-Asian destination restaurant and bar YEZI,
four meeting spaces, a spa and an indoor pool. The hotel's
Signature Artist is the late Boris Bućan, one of Croatia's
best-known artists. His artwork is layered within the very fabric
of the hotel for guests to enjoy during their stay - it is a
poignant last collection of his life's creativity. The hotel has
been well received since its launch in October 2023, and
contributed nine weeks of performance to the results.
GERMANY
Property portfolio
The Group's portfolio includes
four properties in Berlin and one hotel each in Cologne, Nuremberg
and Trier. Hotels with an ownership interest include Park Plaza
Berlin Kudamm (relaunching in Q2 2024 as Radisson RED Berlin
Kudamm)3, Park Plaza Nuremberg, art'otel Berlin
Mitte3, Park Plaza Berlin and art'otel Cologne. Park
Plaza Wallstreet Berlin Mitte operates under an operating lease and
Park Plaza Trier3 operates under a franchise
agreement.
Total value of the German property portfolio1 £92m
(2022: £100m)
Financial performance
|
Reported in Pound
Sterling2 (£)
|
Reported in local
currency Euro (€)
|
Germany
|
Year ended 31 Dec
2023
|
Year ended 31 Dec
2022
|
% change
|
Year ended 31 Dec
2019
|
% change
|
Year ended 31 Dec
2023
|
Year ended 31 Dec
2022
|
% change
|
Year ended 31 Dec
2019
|
% change
|
Total revenue
|
£22.8m
|
£17.7m
|
28.4%
|
£24.2m
|
(6.1)%
|
€26.2m
|
€20.8m
|
26.0%
|
€27.7m
|
(5.4)%
|
EBITDAR
|
£5.5m
|
£6.4m
|
(14.2)%
|
£7.0m
|
(21.6)%
|
€6.3m
|
€7.5m
|
(15.7)%
|
€8.0m
|
(21.0)%
|
EBITDA
|
£5.5m
|
£6.4m
|
(14.2)%
|
£7.0m
|
(21.6)%
|
€6.3m
|
€7.5m
|
(15.7)%
|
€8.0m
|
(21.0)%
|
Occupancy
|
62.3%
|
53.0%
|
930 bps
|
79.4%
|
(1,715) bps
|
62.3%
|
53.0%
|
930 bps
|
79.4%
|
(1,715) bps
|
Average room rate
|
£120.3
|
£110.3
|
9.0%
|
£96.7
|
24.3%
|
€138.4
|
€129.3
|
7.1%
|
€110.5
|
25.2%
|
RevPAR
|
£74.9
|
£58.4
|
28.2%
|
£76.8
|
(2.5)%
|
€86.2
|
€68.5
|
25.9%
|
€87.8
|
(1.8)%
|
Room revenue
|
£19.5m
|
£15.2m
|
28.2%
|
£20.0m
|
(2.5)%
|
€22.5m
|
€17.8m
|
25.9%
|
€22.9m
|
(1.8)%
|
EBITDA margin
|
24.0%
|
35.9%
|
(1,190) bps
|
28.8%
|
(480) bps
|
24.0%
|
35.9%
|
(1,190) bps
|
28.8%
|
(480) bps
|
1 Independent valuation by Savills
in December 2023.
2 Average exchange rate from Euro
to Pound Sterling for the period ended 31 December 2023 was 1.151
and for the period ended 31 December 2022 was 1.172, representing a
1.8% decrease.
3 Revenues derived from these
hotels are accounted for in Management and Central Services
performance and their values and results are excluded from the data
provided in this section.
Portfolio performance
Germany is the Group's smallest
region and as previously reported, operations had a slower start to
the year than other regions, with both rate and occupancy growth
impacted by market dynamics in the region. However, trading
improved as the year progressed.
Market conditions in Germany saw a
continued rebuilding in guest numbers. While this took longer than
anticipated, revenue grew significantly year-on-year as a result of
an increase in occupancy and average rate. This was supported by
the various fairs and events which were hosted in Cologne,
Nuremburg and Berlin throughout the period.
Despite the improved revenue
performance, the bottom line was impacted by inflation related to
rising costs in utilities, food, and service contracts, as well as
the ending of government grants for payroll and operating
costs.
Total revenue (in local currency)
was up 26.0% at €26.2 million (2022: €20.8 million). Occupancy
continued to recover to 62.3% (2022: 53.0%) and average room rate
grew by 7.1% to €138.4 (2022: €129.3). As a result, RevPAR
increased by 25.9% to €86.2 (2022: €68.5).
However, EBITDA was €6.3 million
(2022: €7.5 million), impacted by inflationary increases in the
cost of goods and services and higher labour costs. In 2022, EBITDA
benefited from non-recurring government grants of €2.9
million.
Asset management projects
In Berlin, Park Plaza Berlin
Kudamm was closed in November 2023 for a six-month refurbishment
programme, which includes a complete refurbishment of all public
areas and guest rooms. The hotel is expected to reopen as Radisson
RED Berlin Kudamm in Q2 2024.
The German hotel market*
The German market experienced a
18.5% increase in RevPAR to €74.2, resulting from a 11.5%
improvement in occupancy to 64.8% and a 6.2% increase in average
room rate to €114.5.
In Berlin, RevPAR increased by
16.4% to €85.8 and occupancy increased by 8.3% to 71.3%. Average
room rate increased 7.5% to €120.3.
* Source STR European Hotel Review, December
2023.
Other markets
Italy, Hungary, Serbia and
Austria
This includes recently acquired
properties in Italy, Serbia and Austria and a hotel operated in
Budapest, Hungary. The Group's properties in Austria and Budapest
were open throughout the year. However, the properties in Belgrade
(Serbia) and Rome (Italy) were closed all year due to ongoing
investment programmes to reposition these properties.
Financial performance
|
|
|
Reported in Pound
Sterling (£)
|
|
Year ended
31 Dec 2023
|
Year ended
31 Dec 2022
|
% change
|
Total revenue
|
£7.9m
|
£6.3m
|
23.9%
|
EBITDAR
|
£(0.5)m
|
£(0.6)m
|
n/a
|
EBITDA
|
£(0.5)m
|
£(0.6)m
|
n/a
|
Occupancy
|
44.4%
|
34.3%
|
1,010 bps
|
Average room rate
|
£129.8
|
£97.2
|
33.5%
|
RevPAR
|
£57.7
|
£33.4
|
72.7%
|
Room revenue
|
£6.1m
|
£4.6m
|
32.3%
|
Nassfeld, Austria
The Arena FRANZ Ferdinand hotel in
Nassfeld performed well in its first year as a year-round operation
(144 rooms). This followed recent investments to refurbish the
hotel and upgrade the amenities, such as air-conditioning
throughout the property and the addition of wellness areas,
including an indoor and outdoor swimming pool. Following completion
of the investment, we started to reposition the hotel to capture
both the summer and winter seasons. The hotel was open for almost
nine months of the year, with average rates increasing
substantially year-on-year.
Rome, Italy
The multi million investment in
the repositioning of the former Londra & Cargill Hotel is
nearing completion. The property, which is in a prime location in
the city of Rome, was closed in July 2022 for major refurbishment
works, including reconfiguration of the hotel layout and its
interior design. The hotel is on track to reopen during H1 2024 as
the upper upscale 99-room lifestyle art'otel Rome Piazza
Sallustio.
Belgrade, Serbia
The former Arena 88 Rooms Hotel in
Belgrade city centre was closed in March 2023 to undergo a £2.6
million refurbishment programme. This was completed early 2024 with
the hotel reopening in February 2024 as Radisson RED Belgrade, the
Group's first Radisson RED branded property and the second hotel to
be operated and marketed by the Group under its extended
partnership with Radisson. The hotel has 88 rooms and includes a
gym, an all-day restaurant, flexible event spaces, including game
areas and a co-working area, and a rooftop bar with views of the
historic city centre.
Budapest, Hungary
In March 2023, the property in
Budapest was rebranded Park Plaza Budapest (formerly art'otel
Budapest). This followed an investment programme in 2022 to
redesign and upgrade the public areas. The hotel continued to see
an improvement in performance during the year.
MANAGEMENT AND CENTRAL SERVICES
our performance
Revenues in this segment are
primarily related to management, sales, marketing and franchise
fees, and other charges for central services. This includes
properties operated by the Group's hospitality management platform,
such as art'otel London Battersea Power Station.
These are predominantly charged
within the Group and therefore eliminated upon
consolidation.
For the year ended 31 December
2023, the segment showed a significant improvement due to the
recovery.
Management, Group central services
and licence, sales and marketing fees are calculated as a
percentage of revenues and profit, and therefore are affected by
underlying hotel performance.
|
Reported in Pound
Sterling (£) Year ended 31 Dec 2023
|
|
Listed
Company
|
Development
Projects
|
Management
Platform
|
Arena
Hospitality Group
|
Total
|
Management revenue
|
-
|
-
|
£34.2m
|
-
|
£34.2m
|
Central Services revenue
|
-
|
-
|
-
|
£14.1 m
|
£14.1m
|
Revenues within the consolidated
Group
|
-
|
-
|
£(27.7)m
|
£(12.9)m
|
£(40.6)m
|
External and reported revenue
|
-
|
-
|
£6.5m
|
£1.2m
|
£7.7m
|
EBITDA
|
£(2.2)m
|
£(1.0)m
|
£12.1m
|
£(1.9)m
|
£7.0m
|
|
Reported in Pound
Sterling (£) Year ended 31 Dec 2022
|
|
Listed Company
|
Development Projects
|
Management Platform
|
Arena Hospitality Group
|
Total
|
Management revenue
|
-
|
-
|
£24.9m
|
-
|
£24.9m
|
Central Services revenue
|
-
|
-
|
-
|
£12.6m
|
£12.6m
|
Revenues within the consolidated
Group
|
-
|
-
|
£(20.7)m
|
£(11.7)m
|
£(32.4)m
|
External and reported revenue
|
-
|
-
|
£4.2m
|
£0.9m
|
£5.1m
|
EBITDA
|
£(3.9)m
|
£(0.4)m
|
£5.5m
|
£(1.2)m
|
£0.0 m
|
Consolidated Statement of Financial
Position
for the year ended 31 December 2023
|
|
|
|
|
2023
£'000
|
2022
£'000
|
Assets
|
|
|
|
Non-current assets:
|
|
|
|
Intangible assets
|
|
10,665
|
12,805
|
Property, plant and equipment
|
|
1,412,830
|
1,335,184
|
Right-of-use assets
|
|
229,215
|
225,443
|
Investment in joint ventures
|
|
5,438
|
4,961
|
Other non-current assets
|
|
39,646
|
47,245
|
Restricted deposits and cash
|
|
10,385
|
9,272
|
Deferred income tax asset
|
|
13,833
|
12,909
|
|
|
1,722,012
|
1,647,819
|
Current assets:
|
|
|
|
Restricted deposits and cash
|
|
6,909
|
9,229
|
Inventories
|
|
3,288
|
3,181
|
Trade receivables
|
|
17,880
|
18,533
|
Other receivables and prepayments
|
|
23,260
|
17,866
|
Cash and cash equivalents
|
|
150,416
|
163,589
|
|
|
201,753
|
212,398
|
Total assets
|
|
1,923,765
|
1,860,217
|
Equity and liabilities
|
|
|
|
Equity:
|
|
|
|
Issued capital
|
|
-
|
-
|
Share premium
|
|
133,469
|
133,177
|
Treasury shares
|
|
(6,873)
|
(5,472)
|
Foreign currency translation
reserve
|
|
13,903
|
20,039
|
Hedging reserve
|
|
7,801
|
10,950
|
Accumulated earnings
|
|
166,281
|
156,364
|
Attributable to equity holders of the
parent
|
|
314,581
|
315,058
|
Non-controlling interests
|
|
216,592
|
188,187
|
Total equity
|
|
531,173
|
503,245
|
Non-current liabilities:
|
|
|
|
Borrowings
|
|
845,199
|
817,631
|
Provision for concession fee on
land
|
|
5,233
|
5,331
|
Financial liability in respect of Income Units
sold to private investors
|
|
114,287
|
121,084
|
Other financial liabilities
|
|
280,200
|
265,494
|
Deferred income taxes
|
|
5,878
|
5,922
|
|
|
1,250,797
|
1,215,462
|
Current liabilities:
|
|
|
|
Trade payables
|
|
14,809
|
13,565
|
Other payables and accruals
|
|
79,149
|
80,844
|
Borrowings
|
|
47,837
|
47,101
|
|
|
141,795
|
141,510
|
Total liabilities
|
|
1,392,592
|
1,356,972
|
Total equity and liabilities
|
|
1,923,765
|
1,860,217
|
The accompanying notes are an integral part of
the consolidated financial statements. Date of approval of the
financial statements 28 February 2024. Signed on behalf of the
Board by Boris Ivesha and Daniel Kos.
Boris
Ivesha
President & Chief
Executive Officer
|
Daniel Kos
Chief Financial
Officer & Executive Director
|
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December
2023
|
|
As at
31 December
|
|
|
|
2023
£'000
|
2022
£'000
|
Revenues
|
|
414,598
|
330,091
|
Operating expenses
|
|
(284,090)
|
(233,087)
|
EBITDAR
|
|
130,508
|
97,004
|
Rental expenses
|
|
(2,332)
|
(2,421)
|
EBITDA
|
|
128,176
|
94,583
|
Depreciation and
amortisation
|
|
(45,068)
|
(40,006)
|
EBIT
|
|
83,108
|
54,577
|
Financial expenses
|
|
(36,145)
|
(37,257)
|
Financial income
|
|
4,758
|
1,516
|
Other expenses
|
|
(13,046)
|
(6,791)
|
Other income
|
|
4,416
|
9,992
|
Net expenses for financial
liability in respect of Income Units sold to private
investors
|
|
(14,156)
|
(10,783)
|
Share in results of joint
ventures
|
|
(113)
|
202
|
Profit before tax
|
|
28,822
|
11,456
|
Income tax (expense)
benefit
|
|
(1,677)
|
3,356
|
Profit for the year
|
|
27,145
|
14,812
|
|
|
|
|
Profit attributable to:
|
|
|
|
Equity holders of the
parent
|
|
22,415
|
10,159
|
Non-controlling
interests
|
|
4,730
|
4,653
|
|
|
27,145
|
14,812
|
|
|
|
|
Basic and diluted profit per share
(in Pound Sterling)
|
|
0.53
|
0.24
|
The accompanying notes are an integral part of
the consolidated financial statements.
Consolidated Statement of Comprehensive
Income
for the year ended 31 December 2023
|
As at
31 December
|
|
2023
£'000
|
2022
£'000
|
Profit for the year
|
27,145
|
14,812
|
Other comprehensive income (loss)
to be recycled through profit and loss in subsequent
periods:1
|
|
|
Profit (loss) from cash flow
hedges
|
(5,007)
|
21,133
|
Foreign currency translation
adjustments of foreign operations
|
(8,463)
|
22,000
|
Other comprehensive income
(loss)
|
(13,470)
|
43,133
|
Total comprehensive
income
|
13,675
|
57,945
|
|
|
|
Total comprehensive income (loss)
attributable to:
|
|
|
|
Equity holders of the
parent
|
13,812
|
37,732
|
Non-controlling
interests
|
(137)
|
20,213
|
|
13,675
|
57,945
|
1 There is no other comprehensive
income that will not be reclassified to the profit and loss in
subsequent periods.
The accompanying notes are an integral part of
the consolidated financial statements.
Consolidated Statement of Changes in
Equity
for the year ended 31 December
2023
In
£'000
|
Issued
capital1
|
Share premium
|
Treasury shares
|
Foreign currency translation
reserve
|
Hedging reserve
|
Accumulated earnings
|
Attributable to equity holders of
the parent
|
Non-controlling
interests
|
Total equity
|
Balance as at 1 January
2023
|
-
|
133,177
|
(5,472)
|
20,039
|
10,950
|
156,364
|
315,058
|
188,187
|
503,245
|
Profit for the year
|
-
|
-
|
-
|
-
|
-
|
22,415
|
22,415
|
4,730
|
27,145
|
Other comprehensive income (loss)
for the year
|
-
|
-
|
-
|
(6,027)
|
(2,576)
|
-
|
(8,603)
|
(4,867)
|
(13,470)
|
Total comprehensive income
(loss)
|
-
|
-
|
-
|
(6,027)
|
(2,576)
|
22,415
|
13,812
|
(137)
|
13,675
|
Share-based payments
|
-
|
442
|
-
|
-
|
-
|
93
|
535
|
87
|
622
|
Share buy-back
|
-
|
-
|
(1,621)
|
-
|
-
|
-
|
(1,621)
|
-
|
(1,621)
|
Dividend
distribution2
|
-
|
-
|
-
|
-
|
-
|
(11,897)
|
(11,897)
|
-
|
(11,897)
|
Dividend distribution by a
subsidiary
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,436)
|
(1,436)
|
Exercise of options
|
-
|
(150)
|
220
|
-
|
-
|
-
|
70
|
-
|
70
|
Transactions with non-controlling
interests
|
-
|
-
|
-
|
(109)
|
(573)
|
(694)
|
(1,376)
|
29,891
|
28,515
|
Balance as at 31 December
2023
|
-
|
133,469
|
(6,873)
|
13,903
|
7,801
|
166,281
|
314,581
|
216,592
|
531,173
|
Balance as at 1 January
2022
|
-
|
131,229
|
(3,482)
|
3,806
|
(434)
|
147,350
|
278,469
|
168,742
|
447,211
|
Profit for the year
|
-
|
-
|
-
|
-
|
-
|
10,159
|
10,159
|
4,653
|
14,812
|
Other comprehensive income for the
year
|
-
|
-
|
-
|
16,191
|
11,382
|
-
|
27,573
|
15,560
|
43,133
|
Total comprehensive
income
|
-
|
-
|
|
16,191
|
11,382
|
10,159
|
37,732
|
20,213
|
57,945
|
Share-based payments
|
-
|
2,056
|
-
|
-
|
-
|
-
|
2,056
|
81
|
2,137
|
Share buy-back
|
-
|
-
|
(2,098)
|
-
|
-
|
-
|
(2,098)
|
-
|
(2,098)
|
Dividend
distribution2
|
-
|
-
|
-
|
-
|
-
|
(1,278)
|
(1,278)
|
-
|
(1,278)
|
Exercise of options
|
|
(108)
|
108
|
-
|
-
|
-
|
-
|
-
|
-
|
Transactions with non-controlling
interests
|
-
|
-
|
-
|
42
|
2
|
133
|
177
|
(849)
|
(672)
|
Balance as at 31 December
2022
|
-
|
133,177
|
(5,472)
|
20,039
|
10,950
|
156,364
|
315,058
|
188,187
|
503,245
|
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 (31 December 2021: nil pence per share) and an
interim dividend of 16.0 pence per share paid in 2023 (2022: 3.0
pence per share).
The accompanying notes are an
integral part of the consolidated financial statements.
Consolidated Statement of Cash Flows
for the year ended 31 December
2023
|
|
As at 31
December
|
|
|
2023
£'000
|
2022
£'000
|
Cash flows from operating
activities:
|
|
|
|
Profit for the year
|
|
27,145
|
14,812
|
Adjustment to reconcile profit to cash
provided by operating activities:
|
|
|
|
Financial expenses and expenses for financial
liability in respect of Income Units sold to private
investors
|
|
50,301
|
48,040
|
Financial income
|
|
(4,758)
|
(1,516)
|
Income tax expense (benefit)
|
|
1,677
|
(3,356)
|
Loss on buy-back of Income Units sold to
private investors
|
|
3,266
|
1,499
|
Re-measurement of lease liability
|
|
3,852
|
3,704
|
Revaluation of Park Plaza County Hall London
Units
|
|
(1,600)
|
(300)
|
Capital loss on sale of fixed assets,
net
|
|
29
|
47
|
Share in results of joint ventures
|
|
113
|
(202)
|
Share appreciation rights
revaluation
|
|
(2,816)
|
119
|
Fair value movement derivatives through profit
and loss
|
|
4,553
|
(9,692)
|
Depreciation and amortisation
|
|
45,068
|
40,006
|
Share-based payments
|
|
622
|
2,137
|
|
|
100,307
|
80,486
|
Changes in operating assets and
liabilities:
|
|
|
|
Increase in inventories
|
|
(152)
|
(1,228)
|
Increase in trade and other
receivables
|
|
(1,803)
|
(16,118)
|
Increase in trade and other
payables
|
|
1,795
|
20,772
|
|
|
(160)
|
3,426
|
Cash paid and received during the period
for:
|
|
|
|
Interest paid
|
|
(50,104)
|
(43,520)
|
Interest received
|
|
3,721
|
1,728
|
Taxes paid
|
|
(2,558)
|
(311)
|
Taxes received
|
|
-
|
87
|
|
|
(48,941)
|
(42,016)
|
Net cash provided by operating
activities
|
|
78,351
|
56,708
|
Cash flows from investing
activities:
|
|
|
|
Investments in property, plant and
equipment
|
|
(115,090)
|
(90,870)
|
Investments in intangible assets
|
|
(779)
|
(386)
|
Loan to joint venture
|
|
(888)
|
(403)
|
Decrease (increase) in restricted
cash
|
|
960
|
(4,695)
|
Net cash used in investing
activities
|
|
(115,797)
|
(96,354)
|
Cash flows from financing
activities:
|
|
|
|
Proceeds from loans and borrowings
|
|
65,265
|
106,879
|
Buy-back of Income Units previously sold to
private investors
|
|
(5,609)
|
(4,887)
|
Interest rate cap
|
|
(4,080)
|
-
|
Dividend payment
|
|
(11,897)
|
(1,278)
|
Dividend payment by a subsidiary to
non-controlling shareholders
|
|
(1,436)
|
-
|
Repayment of loans and borrowings
|
|
(31,717)
|
(31,087)
|
Repayment of leases
|
|
(4,095)
|
(4,890)
|
Net proceeds from transactions with
non-controlling interest
|
|
21,471
|
(672)
|
Purchase of treasury shares
|
|
(1,621)
|
(2,098)
|
Exercise of options settled in cash
|
|
70
|
-
|
Net cash provided by financing
activities
|
|
26,351
|
61,967
|
|
|
|
|
Increase (decrease) in cash and cash
equivalents
|
|
(11,095)
|
22,321
|
Net foreign exchange differences
|
|
(2,078)
|
4,466
|
Cash and cash equivalents at beginning of
year
|
|
163,589
|
136,802
|
Cash and cash equivalents at end of
year
|
|
150,416
|
163,589
|
|
|
|
|
Non-cash items:
|
|
|
|
Lease additions and lease
re-measurement
|
|
11,166
|
14,499
|
Outstanding payable on investments in
property, plant and equipment
|
|
13,934
|
5,786
|
Receivables in respect of transaction with
non-controlling interests
|
|
7,044
|
-
|
The accompanying notes are an integral part of
the consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December
2023
Note 1: General
a. The consolidated
financial statements of PPHE Hotel Group Limited (the 'Company')
and its subsidiaries (together the 'Group') for the year ended 31
December 2023 were authorised for issuance in accordance with a
resolution of the Directors on 28 February 2024.
The Company was incorporated in
Guernsey on 14 June 2007 and 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.
b. Description of the
Group business:
The Group is an international
hospitality real estate group, which owns, co-owns and develops
hotels, resorts and campsites, operates the Park Plaza®
brand in EMEA and owns and operates the art'otel®
brand.
The Group has interests in hotels
in the United Kingdom, the Netherlands, Germany, Hungary, Serbia,
Italy and Austria and hotels, self-catering apartment complexes and
campsites in Croatia.
c. Assessment of 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 2024 and 2025, and show that the
Group's hotel operations are expected to be cash generative during
this period. Furthermore, under those cash flow projections it is
expected that the Group will comply with its loan covenants. 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: Earnings per share
The following reflects the income
and share data used in the basic earnings per share
computations:
|
As at 31
December
|
|
2023
£'000
|
2022
£'000
|
Profit attributable to equity
holders of the parent
|
22,415
|
10,159
|
Weighted average number of ordinary
shares outstanding (in thousands)
|
42,365
|
42,523
|
Potentially dilutive instruments
173,054 in 2023 had an immaterial effect on the basic earnings per
share (2022: 399,294).
Note 3: Segments
For management purposes, the
Group's activities are divided into Owned Hotel Operations and
Management and Central Services Activities (for further details see
Note 12(c)(i) of the 2023 Annual Report). Owned Hotel Operations
are further divided into five 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.
|
Year
ended 31 December 2023
|
|
|
The Netherlands £'000
|
Germany £'000
|
United Kingdom £'000
|
Croatia £'000
|
Other1
£'000
|
Management and Central Services
£'000
|
Adjustments2
£'000
|
Consolidated £'000
|
Revenue
|
|
|
|
|
|
|
|
|
Third party
|
63,302
|
22,759
|
234,912
|
78,123
|
7,859
|
7,643
|
-
|
414,598
|
Inter-segment
|
-
|
-
|
400
|
257
|
-
|
40,626
|
(41,283)
|
-
|
Total revenue
|
63,302
|
22,759
|
235,312
|
78,380
|
7,859
|
48,269
|
(41,283)
|
414,598
|
Segment EBITDA
|
19,580
|
5,466
|
76,276
|
20,409
|
(528)
|
6,973
|
-
|
128,176
|
Depreciation,
amortisation
|
|
|
|
|
|
|
|
(45,068)
|
Financial expenses
|
|
|
|
|
|
|
|
(36,145)
|
Financial income
|
|
|
|
|
|
|
|
4,758
|
Net expenses for liability in
respect of Income Units sold to private investors
|
|
|
|
|
|
|
|
(14,156)
|
Other income (expenses),
net
|
|
|
|
|
|
|
|
(8,630)
|
Share in result of joint
ventures
|
|
|
|
|
|
|
|
(113)
|
Profit before tax
|
|
|
|
|
|
|
|
28,822
|
|
|
|
|
|
|
|
|
|
| |
1 Includes art'otel Budapest in
Hungary, 88 Rooms Hotel in Belgrade, Serbia, Londra & Cargill
Hotel in Rome, Italy, and FRANZ Ferdinand Mountain Resort in
Nassfeld, Austria.
2 Consist of inter-company
eliminations.
|
The Netherlands
£'000
|
Germany
£'000
|
United Kingdom
£'000
|
Croatia
£'000
|
Other1
£'000
|
Adjustments2
£'000
|
Consolidated
£'000
|
Geographical information
|
|
|
|
|
|
|
|
Non-current
assets1
|
190,420
|
72,311
|
1,007,301
|
249,910
|
86,306
|
46,462
|
1,652,710
|
1 Non-current assets for this
purpose consist of property, plant and equipment, right-of-use
assets and intangible assets.
2 This includes the non-current
assets of Management and Central Services.
|
Year
ended 31 December 2022
|
|
The Netherlands £'000
|
Germany £'000
|
United Kingdom £'000
|
Croatia £'000
|
Other1
£'000
|
Management and Central Services
£'000
|
Adjustments2
£'000
|
Consolidated £'000
|
Revenue
|
|
|
|
|
|
|
|
|
Third party
|
41,573
|
17,724
|
190,105
|
69,237
|
6,344
|
5,108
|
-
|
330,091
|
Inter-segment
|
-
|
16
|
302
|
168
|
-
|
32,365
|
(32,851)
|
-
|
Total revenue
|
41,573
|
17,740
|
190,407
|
69,405
|
6,344
|
37,473
|
(32,851)
|
330,091
|
Segment EBITDA
|
11,163
|
6,368
|
56,218
|
21,426
|
(629)
|
37
|
|
94,583
|
Depreciation, amortisation and
impairment
|
|
|
|
|
|
|
|
(40,006)
|
Financial expenses
|
|
|
|
|
|
|
|
(37,257)
|
Financial income
|
|
|
|
|
|
|
|
1,516
|
Net expenses for liability in respect of Income
Units sold to private investors
|
|
|
|
|
|
|
|
(10,783)
|
Other income (expenses), net
|
|
|
|
|
|
|
|
3,201
|
Share in result of joint ventures
|
|
|
|
|
|
|
|
202
|
Profit before tax
|
|
|
|
|
|
|
|
11,456
|
1 Includes art'otel Budapest in
Hungary, 88 Rooms Hotel in Belgrade, Serbia, Londra & Cargill
Hotel in Rome, Italy, and FRANZ ferdinand Mountain Resort in
Nassfeld, Austria.
2 Consist of inter-company
eliminations.
|
The Netherlands £'000
|
Germany £'000
|
United Kingdom £'000
|
Croatia £'000
|
Other
£'000
|
Adjustments2
£'000
|
Consolidated £'000
|
Geographical information
|
|
|
|
|
|
|
|
Non-current assets1
|
194,833
|
72,537
|
949,931
|
241,312
|
59,307
|
55,512
|
1,573,432
|
1 Non-current assets for this
purpose consist of property, plant and equipment, right-of-use
assets and intangible assets.
2 This includes the non-current
assets of Management and Central Services.
Note 4: Related parties
a. Balances with related
parties
|
As at 31
December
|
|
2023
£'000
|
2022
£'000
|
Loans to joint ventures
|
6,515
|
5,573
|
Short-term receivables
|
65
|
100
|
Payable to GC Project Management
Limited
|
(75)
|
(185)
|
Payable to Gear Construction UK
Limited
|
(12,445)
|
(6,218)
|
b. Transactions with related
parties
|
As at 31
December
|
|
2023
£'000
|
2022
£'000
|
Cost of transactions with GC
Project Management Limited
|
(670)
|
(300)
|
Cost of transactions with Gear
Construction UK Limited
|
(55,069)
|
(47,872)
|
Rent income from sub-lease of
office space
|
56
|
67
|
Management fee revenue from jointly
controlled entities
|
872
|
822
|
Interest income from jointly
controlled entities
|
354
|
118
|
c. Significant other transactions with related
parties
(i)
Construction of the art'otel
London Hoxton - Following the approval by the independent
shareholders, on 7 April 2020 the Group entered into a building
contract with Gear Construction UK Limited ('Gear') for the design
and construction of the art'otel London Hoxton hotel on a
'turn-key' basis (the 'building contract'). Under the building
contract Gear assumes the responsibility for the design and
construction of the main works for the design and build of art'otel
London Hoxton for a lump sum of £160 million (exclusive of VAT)
(the 'Contract Sum'). Of this amount, circa.£24.6 million is based
on provisional sums, primarily in respect of FF&E and fit out
of the hotel which are detailed and set out as provisional sums in
the building contract. This might cause the total amount payable to
Gear UK under the building agreement to be greater or less than the
Contract Sum. On top of the Contract Sum, the Group novated certain
existing contracts relating to the project to Gear at cost subject
to a cap of £6 million (exclusive of VAT). Gear is required to
complete the works to be executed under the building contract by
2024.
Gear makes monthly applications
for payments in line with the building contract and following
construction industry contractual norms. The applications will be
valued by AECOM acting as the Employer's agent and providing cost
management services, who is appointed by the Employer but has a
duty to act fairly in accordance with the terms of the contract.
The Employer's agent will also be responsible for assessing any
applications by Gear for extensions of time, variations or
additional scope of work or additional loss and/or expense under
the building agreement.
Gear's obligations and liabilities
under the building contract are supported by a corporate guarantee
from Red Sea Hotels Limited, an associate of Euro Plaza Holdings
B.V. and therefore a related party of the Company, in the amount of
10% of the Contract Sum (the 'corporate guarantee'). The corporate
guarantee expires on the later of: (i) the expiry of the two-year
defects rectification period which follows practical completion of
the works; and (ii) the issue of the latent defect insurer's
approval or final technical audit report.
(ii)
Sub-lease of office space -
A member of the Group has agreed to sub-lease a small area of
office space to members or affiliates of the Red Sea Group at its
County Hall corporate office in London. The rent payable by the Red
Sea Group to PPHE Hotel Group is based on the cost at which the
landlord is leasing such space to PPHE Hotel Group.
(iii) Pre-Construction and Maintenance
Contract - The Group frequently uses GC Project Management
Limited (GC) to undertake preliminary assessment services,
including appraisal work, and provide initial estimates of the
construction costs. Further, GC provides ad-hoc maintenance work
when required to the Group's various sites. Accordingly, the Group
has entered into an agreement with GC for the provision of
pre-construction and maintenance services by GC to the Group for a
fixed annual retainer of £60,000.
(iv) Transactions
in the ordinary course of business, in connection with the use of
hotel facilities (such as overnight room stays and food and
beverages) are being charged at market prices. These transactions
occur occasionally.
(v) Londra & Cargill project management
agreement - The Group entered into a series of agreements
with GC Project Management Limited for the provision of project
management services and site supervision services to the Group in
respect of the redevelopment of Hotel Londra & Cargill in Rome,
Italy, commencing in 2022 and completing in 2024 for a fee capped
at £920,000 to be paid in monthly instalments for the duration of
the project.
Summary of the remuneration for Executive and Non-Executive
Directors for the year ended 31 December 2023:
|
Base salary and fees £'000
|
Bonus
£'000
|
Pension contributions £'000
|
Other benefits £'000
|
Total
£'000
|
Chairman and Executive
Directors
|
1,726
|
473
|
67
|
19
|
2,285
|
Non-Executive Directors
|
283
|
-
|
-
|
-
|
283
|
|
2,009
|
473
|
67
|
19
|
2,568
|
1 Figures Include the annual
remuneration of Greg Hegarty, Deputy CEO & COO, who joined the
Board following the 2023 Annual General Meeting which was held in
May 2023.
Summary of the remuneration for
Executive and Non-Executive Directors for the year ended 31
December 2022:
|
Base salary and fees £'000
|
Bonus
£'000
|
Pension contributions £'000
|
Other benefits £'000
|
Total
£'000
|
Chairman and Executive
Directors
|
1,148
|
531
|
64
|
13
|
1,756
|
Non-Executive Directors
|
284
|
-
|
-
|
-
|
284
|
|
1,432
|
531
|
64
|
13
|
2,040
|
Directors' interests in employee share incentive
plan
As at 31 December 2023, the
Executive Directors held share options to purchase 121,308 ordinary
shares (2022: 70,000). 50,000 options were fully exercisable with
an exercise price of £14.30 (2022: 25,000) and 27,308 options were
fully exercisable with a £nil exercise price (2022: 23,000). No
share options were granted to Non-Executive Directors of the
Board.
PRINCIPAL RISKS AND UNCERTAINTIES
Our Risk Environment
With risk informed leadership we
continue to perform and grow against a backdrop of geo-political
and macro-economic uncertainty. The actions taken in recent years
to reinforce our financial and operational resilience positions
have enabled the Group to succeed during challenging times and
seize new opportunities as our risk environment changes.
Our Executive Leadership continues
to monitor and respond to the impact of major global risk drivers
such as ongoing geo-political tension and conflicts which can
influence economic conditions, supply chains, customer behaviours
and social cohesion.
We also recognise areas of
emerging risk and opportunity such as the growing influence of
Artificial Intelligence ("AI"). While our Executive Leadership Team
embraces new technologies to improve the efficiency of our hotel
management platform and the overall guest experience, the
associated risks of using AI in business have been reviewed and
actions taken to raise awareness of these risks across the
Group.
There is greater urgency in the
international response to the climate crisis, to drive radical
decarbonisation of the global economy. We evaluate both the
physical and transitional climate related risks as part of our
current risk profile and assess the impact these threats could have
on our existing principal risks as they become more probable and
with a greater impact. A summary of climate related risk can be
seen in our TCFD Summary (page 81 of our Annual Report).
As well as monitoring these
climate related threats, we see significant opportunity in
improving our environmental and social impact through the delivery
of our ESG strategy (see pages 66-79 of our Annual
Report).
The hospitality sector has seen
several high-profile cyber-attacks in 2023. We partner with expert
organisations to ensure we are well placed to prevent and detect
malicious activity. We also continue to invest in enhancing our
resilience through building our incident response and recovery
capability.
In 2024 we enter an exciting
period of operational growth with several new openings across the
Group. This will intensify the persistent challenge of attracting
and retaining team members which we will continue to tackle through
proactive employee engagement and wellbeing initiatives as well as
programmes to drive a diverse and inclusive culture.
Beyond these openings we are
securing new capital to support the pursuit of our ambitious
long-term growth plans. We are prepared for managing the risks that
are inherent to any plans for accelerated growth.
Principal risks - at a glance
We define our principal risks as
those which could have the greatest impact on our business and
represent the most significant threats to the achievement of our
objectives in the year ahead. To be considered a principal risk the
potential downside or residual impact must be assessed as 'Major'
or above, equating to a negative financial impact or falling asset
values greater than 5% of annual EBITDA (under normal operating
conditions).
Principal Risks for
2024
|
Inherent Risk Assessment
|
Residual Risk Assessment
|
Trend from previous year
|
Oversight responsibility
|
1
|
Adverse economic climate
|
High
|
High
|
Unchanged
|
CFO
|
2
|
Significant development project delays or
unforeseen cost increases
|
High
|
High
|
Unchanged
|
CCLO and
Co-CEO
|
3
|
Difficulty in attracting, engaging and
retaining a suitably skilled workforce
|
High
|
Medium
|
Decreased
|
Co-CEO
|
4
|
Technology disruption - prolonged failure of
core technology
|
High
|
Medium
|
Unchanged
|
CFO
|
5
|
Funding and liquidity risk
|
High
|
Medium
|
Unchanged
|
CFO
|
6
|
Cyber threat - undetected / unrestricted cyber
security incidents
|
Very
High
|
Medium
|
Decreased
|
CFO
|
7
|
Data privacy - risk of data breach
|
Very
High
|
Medium
|
Unchanged
|
CCLO
|
8
|
Operational disruption
|
High
|
Medium
|
Unchanged
|
Co-CEO
|
9
|
Negative stakeholder perception of the Group
with regard to Environmental, Social and Governance (ESG)
matters
|
High
|
Medium
|
Unchanged
|
CCLO
|
10
|
Market dynamics - significant decline in market
demand
|
High
|
Medium
|
Decreased
|
EVP Commercial
Affairs
|
11
|
Serious threat to guest, team member or third
party health, safety and security
|
High
|
Medium
|
Unchanged
|
Co-CEO
|
During 2023 the residual risk assessment for
the threat of Fraud was reduced as the Group's internal control
environment continued to mature. The residual risk no longer meets
our definition of a principal risk for disclosure and the risk has
been removed from the list above. The inherent assessment is still
considered to be high, and the risk and associated controls
continue to be monitored closely.
Our Risk-Reward Strategy
Our Risk-Reward Strategy, which
articulates our risk appetite across various business activities,
is aligned to our strategic objectives. It has been reviewed by the
Board and remains unchanged. Risk appetite is cascaded throughout
the Group through our policies and procedures.
Risk Appetite
Levels
|
Definition
|
Business
Activities
|
Key sources of value
and strategic enablers
|
Active
|
We will actively seek to take calculated risks
in this area in pursuit of our strategic objectives, as long as the
associated benefits significantly outweigh the risk impact and the
risk remains within our tolerances. We will apply appropriate
safeguards when pursuing these opportunities.
|
· Acquisitions and
development opportunities
· Diversification
of property portfolio
|
Diverse prime property portfolio
|
Neutral
|
We will take
on a limited increased exposure to risk in pursuit of our
strategic objectives if the associated benefits outweigh the risk
impact and the risk remains within our tolerances. We will apply
appropriate safeguards when pursuing these
opportunities.
|
· Development
projects (Construction)
· Working with
third parties
·
Funding
· Technological
change / development
· Commercial and
promotional activity
|
Financial strength and non-dilutive capital
approach
International network
Multi-brand approach
|
Averse
|
We will act to protect the business from increased
risk exposure in these areas.
|
· Environmental
impact
· Responsible and
ethical sourcing
· Human
Rights
· Operational
continuity
· Data
privacy
·
Compliance
· Financial and tax
reporting
· Financial
control
|
Meaningful ESG impact for the benefit of all
stakeholders
Our people and culture
In-house hospitality management
platform
|
Our Risk Governance and Risk Management
Process
GOVERNANCE
|
Executive Leadership - Risk Forum
· Agree the Risk
Policy and Framework and formulate a risk-reward strategy (risk
appetite) for proposal to the Board.
· Challenge the
robustness and completeness of the full-year and half-year updates
to the Group's risk registers, including key actions.
· Report PPHE
Principal Risks for Board approval and inclusion in the Annual
Report.
· Ensure effective
monitoring of emerging risk and progress against key risk
actions.
|
Audit Committee
· Keep under review
the effectiveness of the Group's procedures for the identification,
assessment and reporting of risks, assisting the Board in
monitoring the Group's risk management systems.
· Oversee internal
and external assurance requirements.
ESG Committee
· Keep under review
specific ESG and Climate-related risk assessment.
|
Board
· Ultimately
responsible for risk management including approval of the Group
risk profile; the Group Risk Policy & Framework; the Risk and
Reward Strategy; and the statement on risk management in the Annual
Report.
|
PROCESS
|
ENTERPRISE RISK
ASSESSMENT
Consolidation of underlying functional and subsidiary risks into a
single view of risk reported to the Board. The enterprise
assessment underpins the Group's principal risk
disclosure.
|
CURRENT RISKS
Existing threats to the achievement of our
business objectives
Regular risk updates from functional management
to identify, assess and respond to current risks. Key steps
include:
· Assessment of the
severity of each risk using the Group risk assessment criteria.
Consideration is given to the effectiveness of the current controls
/ mitigating activity.
· Establishing
clear actions with nominated accountability where further
mitigation is required to contain or reduce risks to a more
acceptable level.
· Regular risk
reporting to Executive Leadership to support informed
decision-making and prioritisation of resources.
· Reporting the
Enterprise risk profile to the Audit Committee
quarterly.
|
EMERGING RISKS
Future threats that cannot be accurately
assessed at the current time but could have a material impact on
the business in the future through either heightening existing
risks or becoming new stand-alone risks.
Horizon scanning for emerging risk is
considered at each functional risk workshop and each Executive
Level Risk Forum with a view to improving our response plans and
exploit potential opportunities. Emerging risk trends are reported
alongside the current enterprise risk assessment to the Audit
Committee quarterly.
When identifying emerging risk, we consider
several drivers of change including:
· Shifts in market
dynamics
· Social,
geo-political, macro-economic and environmental factors
· Technological
trends
· Legal and
regulatory developments
|
FUNCTIONAL AND
SUBSIDIARY RISK ASSESSMENTS
Management
identifying, assessing and managing the risks and controls across
all business functions.
|
|
|
| |
Emerging risk
Our executive leadership consider
emerging threats and risk drivers that could have a material impact
on the business in the future, with a view to improving our
response plans and exploit potential opportunities. The near-term
threats may already influence our principal risk assessments and
the prioritisation of our risk actions.
Principal risks
The tables below detail our
principal risks for the year ahead. The reported risks are those we
consider could have the greatest impact on our business and
represent the most significant threats to the achievement of our
objectives. This is not an exhaustive list of all risks identified
and monitored through our risk management process, which includes
the consolidation of underlying functional and subsidiary risk
registers into a single view of risk reported to the Board. Our
risk level is decided through an assessment of the likelihood of
the risk and its impact should it materialise. Our assessments are
weighted towards impact to encourage prioritisation of high impact
risks.
Strategic Blocks
|
Sources of value
|
1 Core, upper upscale, city centre
hotels
|
4 Diverse prime property portfolio
|
7 International network
|
2 Leisure and outdoor hospitality
|
5 Multi-brand approach
|
8 Our people and culture
|
3 Hospitality management platform
|
6 In-house hospitality management
platform
|
9 Financial strength and
non-dilutive capital approach
|
MARKET AND MACROECONOMIC ENVIRONMENT
|
Risk Appetite: Neutral
|
Principal Risk
Description
|
Residual
Risk
|
Outlook and Risk
Response for 2024
|
Adverse economic climate
Economic stress fuelled by the volatile
geo-political environment could mean a continuation of steep
inflation and unstable interest rates impacting growth and profit
margins.
Related strategic blocks:
1, 2, 3
Related sources of value:
7, 8, 9
|
High
|
Acting to protect our margins in the face of
steep inflation remained a key focus throughout 2023. While
inflation and interest rates are expected to stabilise, we still
consider an adverse economic climate to be a significant risk to
monitor and manage in the year ahead as several of the emerging
threats we have identified could influence the scale and impact of
this risk area.
In addition to our long established controls,
2024 will see:
· Close monitoring
of economic and market forces.
· Budgetary control
and frequent forecasting across all regions and property
type.
· A drive to
develop process automation for labour intensive processes, freeing
resource to focus on delivering greater value to the
business.
· Projects to drive
efficiency of operational teams.
· Continued focus
on control of food and beverage costs.
· Energy
consumption reduction initiatives.
|
Market dynamics - significant decline in market
demand
Uncertainty in future market demand could arise
due to volatile macro-economic or geo-political conditions, or
significant incidents which impact global travel.
Related strategic blocks:
1, 2, 3
Related sources of value:
4, 5
|
Medium
|
Our overall residual assessment of this risk
has reduced as confidence grows due to positive booking momentum,
increased occupancies and average daily rates being maintained.
Demand for Meetings and Events also looks stronger over the medium
and longer term.
There will remain some uncertainty as market
strength is linked to changes in the economic climate and
geo-political environment. We are proactive in driving demand to
our properties and responding to market movements. Our key
mitigating actions include:
· Fully leveraging
the revenue management technologies introduced during
2023.
· Focussed
promotional initiatives to drive demand in advance and tactical
campaigns for 'need' periods.
· Leveraging our
partnerships and promotional opportunities with third party
distribution partners and booking channels.
· Continuing our
close collaboration with Radisson Hotel Group and leveraging their
reach for promotional campaigns.
· Leveraging the
Radisson Rewards programme which consists of 11+ million
members.
· Increasing our
focus on digital marketing and online advertising.
· Delivering our
planned activities across key source markets and market segments,
including tradeshows, hosted events and sales missions.
|
FUNDING AND INVESTMENT
|
Risk Appetite: Neutral
|
Principal Risk
Description
|
Residual
Risk
|
Outlook and Risk
Response for 2024
|
Funding and liquidity risk
The impact of failing to proactively manage
funding and liquidity risk could include a breach of debt
covenants, cash restrictions, loss of stakeholder confidence and
less favourable terms when refinancing in the future.
Related strategic blocks:
1, 2
Related sources of value:
7, 9
|
Medium
|
Against the backdrop of interest rate movements
and general economic pressures, our funding and liquidity risk
continues to be managed to an acceptable level due to the Group's
strong trading performance, steady property valuations and fixed
rates on most of our loans.
We will continue to contain this risk with our
established treasury monitoring and reporting controls which
include:
· Board approved
treasury policy.
· Monthly forward
covenant testing.
· Monthly treasury
monitoring and reporting to the Board.
· Proactive and
regular liaison with our lenders.
As highlighted in our emerging risk summary,
the value of our property portfolio could be impacted over time by
sustainable building regulations, unless there is sufficient
investment in upgrading our assets to meet the
requirements.
Long-term capital expenditure plans have been
developed to mitigate this threat.
|
DEVELOPMENT PROJECTS
|
Risk Appetite: Neutral
|
Principal Risk
Description
|
Residual
Risk
|
Outlook and Risk
Response for 2024
|
Significant development project delays or
unforeseen cost increases
Various factors, such as supply chain
disruption, labour market pressures and steep increases in cost of
materials can influence the delivery of major construction projects
resulting in additional cost or delays in new openings.
Related strategic blocks:
1, 2
Related sources of value:
4, 7
|
High
|
The delivery of major projects remains a high
risk area and is subject to focused oversight from senior
leadership and our in-house Technical Services team, with key
controls including:
· Regular project
meetings with our contractors to identify and tackle any
approaching issues which could impact the overall cost, targeted
delivery schedule or the expected quality standards.
· Independent
monitoring of projects by appointed third party experts.
Throughout 2024 we would expect this risk to
reduce as major long-term developments are delivered and new
openings become operational.
|
TECHNOLOGY AND INFORMATION SECURITY
|
Risk Appetite: Averse
|
Principal Risk Description
|
Residual Risk
|
Outlook and Risk Response for 2024
|
Cyber threat - undetected /
unrestricted cyber security incidents
The Group could be subject to a serious
cyber-attack resulting in significant disruption to operations and
financial loss from falling revenues, cost of recovery, reputation
loss and significant fines in the event of a related data
breach.
Related strategic blocks:
1, 2, 3
Related sources of value:
6
|
Medium
|
Although we expect the inherent risk of
cyber-attack to remain very high, our residual risk assessment has
been reduced this year to reflect the implementation of new and
enhanced security controls and the continued investment into
protecting the business from this significant threat.
Newly established controls in place for the
year ahead and further planned progress includes:
· Compliance to the
official Payment Card Industry Data Security Standard (PCI
DSS).
· AI powered
network monitoring & detecting and autonomously responding to
threats.
· Continuous
vulnerability scanning and remediation.
· Enhanced back-up
and recovery solution, including ransomware recovery.
· Focused team
member awareness campaigns and training programmes.
· Increased
targeted phishing training.
· Enhanced
filtering of malicious phishing sites.
· Increase in
external penetration testing.
· Targeted risk
analysis/profiling and security incident tabletop
exercises.
|
Data privacy - risk of data breach
The Group could experience a serious data
privacy breach which could result in investigation, significant
fines in accordance with the GDPR and subsequent reputational
damage.
Related strategic blocks:
1, 2, 3
Related sources of value:
6, 8
|
Medium
|
We remain focused on mitigating the high
inherent regulatory risk associated with the processing of personal
data, which is essential to the successful operations of our
business.
Activity planned for 2024 includes:
· Implementation of
a new governance, risk and compliance tool for data privacy and
information security.
· An internal
awareness campaign and updated training programmes, as part of
onboarding the new tool.
· Review and update
of documented data protection and privacy procedures.
· Update of data
inventory.
· Monitoring
databases containing Personally Identifiable Information, with data
owners.
· Renewing and
updating data privacy risk assessments and other documentation
required under GDPR.
|
Technology disruption
A prolonged failure in our core technology
infrastructure could present a significant threat to the
continuation of our business operations, particularly where
failures impact hotel management and reservation
systems.
Related strategic blocks:
1, 2, 3
Related sources of value:
6
|
Medium
|
The availability and performance of our core
technology is key to the success of our business operations, and we
have continued with investment into strengthening our networks,
implementing our DR solution, and improving
connectivity.
In 2024 we will continue to improve our
resilience through:
· Continued
projects to enhance network resilience and security.
· Network
monitoring and enhanced vulnerability scanning.
· Enhanced back-up
and recovery solution.
· Targeted testing
of back-up and recovery plans.
|
SAFETY & CONTINUITY
|
|
Risk Appetite: Averse
|
Principal Risk Description
|
Residual Risk
|
Outlook and Risk Response for 2024
|
Operational Disruption
Major global events such as pandemic, war or
environmental disasters could result in widespread disruption,
impacting our guests, our supply chain, and our hotel
operations.
We could also experience more localised
disruption to our operations from incidents at our hotels or in the
immediate vicinity, for example floods, extreme weather, social
unrest, or terrorism.
Related strategic blocks:
1, 2, 3
Related sources of value:
6, 7, 8
|
Medium
|
Our strength and resilience have been key to
the continued success of our business in recent years.
In 2024 we will continue to prepare for
significant disruptive incidents through:
· Regularly
training team members in our established crisis plans and
procedures.
· Review of our
approach to Business Continuity Management to ensure we have
prepared proportionate responses to the most significant threats
which could impact the continuity of our critical services and
operations.
· Working closely
with key suppliers to identify and mitigate any potential issues
which could impact the continuity of their service.
|
Serious Health, Safety and Security
Incidents
The Group could experience significant health
and safety, food safety or physical security incidents.
A failure to take reasonable steps to prevent
such incidents, or a failure to respond appropriately, could impact
our reputation, disrupt our operations and result in significant
loss of guest, team member and stakeholder confidence.
Related strategic blocks:
1, 2, 3
Related sources of value:
6, 8
|
Medium
|
In the year ahead we will continue to drive our
high standards to provide a safe stay for our guests and a safe
working environment for our team members.
Our established controls include:
· Regular risk
assessments.
· Security and fire
safety procedures.
· Health &
Safety audit programmes.
· In-house and
supplier food safety audit programme.
· Team member
training programmes.
· Mental health and
wellbeing training.
· Centralised
incident reporting.
· Proactive
gathering of intelligence and advice on potential security risks
through regular liaison with local police and security
services.
We will also monitor the ongoing consultation
in respect of Martyn's Law but are confident that our existing
procedures will meet the new requirements proposed as part of the
UK's Terrorism (Protection of Premises) Bill.
|
PEOPLE
|
|
Risk Appetite: Averse
|
Principal Risk
Description
|
Residual
Risk
|
Outlook and Risk
Response for 2024
|
Difficulty in attracting, engaging and
retaining a suitably skilled workforce
Difficulties in maintaining an engaged and
suitably skilled workforce could impact our service standards,
drive up operating costs, disrupt operations and impact the overall
delivery of our key strategic objectives.
Related strategic blocks:
1, 2, 3
Related sources of value:
6, 8
|
Medium
|
While the successful management of this risk
remains fundamental to our success, our overall residual risk
assessment has reduced to Medium.
Throughout 2023 we have not experienced any
staffing issues that would restrict operations. Some improvement
has also been noted in retention rates.
2024 presents new resourcing challenges with
the opening of new hotels and we will continue to manage this risk
proactively with new initiatives including:
· Creation of a new
Employee Experience team to develop deeper understanding of
employee needs and sentiment and tasked with group initiatives on
developing retention, wellbeing, and engagement.
· Employer value
proposition development to attract candidates and drive
retention.
· Investment in new
HR technology landscape, improving people analytics.
· Creation of
expanded Learning & Development team with focus on technical
skills and management development.
· Internal
communication strategy and use of related technologies for further
employee voice enablement.
· Full employment
policy review.
· Talent management
and succession planning to promote intra-company mobility
options.
· Regular talent
reviews and learning need analysis.
· Physical health
and well-being initiatives and investment.
|
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
|
Risk Appetite: Averse
|
Principal Risk
Description
|
Residual
Risk
|
Outlook and Risk
Response for 2024
|
Negative stakeholder perception of the Group
with regard to Environmental, Social and Governance
matters
With ESG being a key concern for our
stakeholders, a perception that the Group does not apply best
practice corporate governance principles or does not act
responsibly to protect the environment and the communities we
operate in, could impact our performance by damaging our appeal to
customers, investors, and other business partners. It could also
affect our ability to retain and attract talent.
A failure to comply with the upcoming
regulatory changes to governance and ESG reporting could further
heighten this area of risk.
Related strategic blocks:
1, 2, 3
Related sources of value:
8
|
Medium
|
We have made considerable progress in
formalising and communicating our ESG strategic approach and
priorities.
Our report on pages 66-79 details our ESG
strategic objectives which are focused on the priorities of our
stakeholders.
Activity in 2024 will include:
· Work on a series
of tasks aimed at delivering against our ESG targets, which are
designed to further the achievement of our published strategic
objectives.
· The ESG Manager
monitoring the adoption of the ESG targets with the assigned owners
and providing regular progress reports to the ESG
Committee.
· New ESG reporting
requirements being integrated into the compliance reporting
undertaken by the Head of Compliance, seeking third party support
where necessary at the request of the ESG Committee.
|
DIRECTORS' RESPONSIBILITY STATEMENT
Each of the directors named on
pages 98 and 99 of the Annual Report & Accounts 2023 as of the
time of the publication, confirms to the best of his or her
knowledge that:
(i) The
consolidated financial statements, which have been prepared in
accordance with International Financial Reporting Standards (IFRS)
as adopted by the European Union, give a true and fair view of the
assets, liabilities, financial position and profit and loss of the
Company and the undertakings included in the consolidation taken as
a whole.
(ii) The
Strategic Report includes a fair review of the development and
performance of the business and the position of the Company and the
undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and
uncertainties that they face, and provides information necessary
for shareholders to assess the Company's performance business model
and strategies.
(iii) The Directors
consider that the Annual Report and Accounts, taken as a whole, are
fair, balanced and understandable and provide the information
necessary for shareholders to assess the Company's position and
performance, business model and strategy.
Signed on behalf of the Board
by
Boris Ivesha
President & Chief Executive
Officer
Daniel Kos
Chief Financial Officer &
Executive Director
28 February 2024