TIDMPHO
RNS Number : 9413V
Peel Hotels PLC
27 July 2018
PEEL HOTELS PLC
PRELIMINARY ANNOUNCEMENT
Derived from audited results for Financial Year Ended 28 January
2018.
HIGHLIGHTS
# Turnover decreased 4.1% to GBP16,097,313 (2017: GBP16,790,320)
# Operating Profit excluding the exceptional expenses decreased 29.6% to GBP893,115 (2017: GBP1,268,734). Operating loss after exceptional expense GBP268,126 (2017 - operating profit of GBP1,098,234) on a statutory basis.
# EBITDA excluding the exceptional expenses in the current and
previous year decreased 18.5% to GBP1,833,611 (2017:
GBP2,250,328).
# Net debt decreased GBP1,101,207
# Loss before tax, (including the exceptional expense of
GBP1,161,241 due to impairment of the Net Book Values of two
leasehold properties held within subsidiaries in the current year
and the previous year's exceptional expense re the Strathdon Hotel)
was GBP734,986 loss (2017: GBP575,387 profit).
# Basic and diluted loss per share of 6.0p (2017: earnings per share 3.1p)
'Demand has slowed in many of the provincial areas of the United
Kingdom, and together with upwards pressure from increases in the
living wage, business rates and energy costs this has created
challenges to the profitability of the Company.
However it is not unreasonable to suppose that once the terms
and conditions of Brexit are clear, that stability and growth will
return.
In the mean time we remain focused on reducing debt and our
overall cost base.'
Robert Peel
Chairman
0207 286 6823
Nominated adviser and Broker
Peel Hunt LLP / Capel Irwin
0207 418 8907
Review of the business
RESULTS
The key performance indicators for the Group are revenue,
EBITDA, profit before tax, REVPAR and net debt levels.
The Financial Year ended 28 January 2018 has been a very
challenging year for the Group with hotel revenues decreasing by
4.1% to GBP16,097,313 (2017: GBP16,790,320). Hotel gross profit
before depreciation and Group administration expenses decreased
14.6% to GBP2,508,933 (2017: GBP2,938,211). EBITDA excluding the
exceptional expenses in the current and previous year decreased
18.5% to GBP1,833,611 (2017: GBP2,250,328).
Loss before tax, (including the exceptional expense due to
impairment of the Net Book Values of two leasehold properties in
the current year and the previous year's exceptional expense re the
Strathdon Hotel) was GBP734,986 (2017: Profit GBP575,387).
Shareholders are aware that there have been persistent problems
in regard to the cost base of two of the Group's Subsidiary
Companies, the Strathdon Hotel (Nottingham) Limited and the King
Malcolm Hotel (Dunfermline) Limited. The Board have reviewed the
carrying values of the two Hotels within those subsidiaries and
determined that it is appropriate to write them down to zero. The
impairment of the value of the two Hotels is provided for as an
Exceptional Item of GBP1,161,241 in this year's accounts. The Board
is considering its options in regard to the properties within the
two Subsidiaries, including change of use, it is therefore possible
that the impairment could be reversed if a more profitable future
for the properties could be found.
REVPAR (accommodation revenue per available room) was down 3.5%
with occupancy down 4.5% and average room rate up 1.0%
Administration expenses decreased 1.8%. Depreciation and
amortisation decreased 4.2%.
FINANCE
As at 28 January 2018 net debt stood at GBP8,453,562 (2017:
GBP9,554,769) representing loans totalling GBP8,453,562 (2017:
GBP9,847,422) and an overdraft of GBPnil (2017: GBPnil) less
GBP1,287,277 (2017: GBP292,653) cash at bank. Gearing on
Shareholders' funds was 34.8% with interest covered 1.9 times,
excluding exceptional expense. Net debt decreased by GBP1,101,207
compared with the previous year.
On 19 September 2017 the Company entered into a GBP9,900,000
five year term loan facility with Allied Irish Bank. This facility
has been used to repay the Company's existing facilities with Royal
Bank of Scotland as well as the remaining balances of the
Director's Loan and Loan Notes. The revised financial structure
will result in a significant reduction in financial charges going
forward.
CAPITAL EXPITURE
GBP705,548 (2017: GBP710,701) was spent in the year mainly on
the refurbishment of three suites and the public areas at the
Norfolk Royale. We completed the refurbishment of the public areas
and ballroom at the Crown and Mitre Hotel in Carlisle. We are
currently refurbishing bedrooms and upgrading air conditioning
systems at the Bull Hotel in Peterborough.
We continue to invest in our internet access throughout all our
Hotels giving our Guests faster connection. This service is
absolutely free to our Guests and is a vital component to them
having a satisfactory stay with us.
In addition to Capital Expenditure GBP614,098 (2017: GBP661,317)
was spent on repairs and renewals which help us ensure that we are
constantly and consistently maintaining and improving our product.
Proof of which is the continuing improvements in ratings of each
Hotel assessed by the Automobile Association.
Group Statement of Comprehensive Income
for the year ended 28 January 2018
2018 2017
GBP GBP
Revenue 16,097,313 16,790,320
Cost of sales (13,588,380) (13,852,109)
------------ ------------
Gross profit 2,508,933 2,938,211
Administration expenses (675,322) (687,883)
Exceptional expense
(note 4) (1,161,241) (170,500)
Depreciation (940,496) (981,594)
Total administration
expenses (2,777,059) (1,839,977)
Operating profit (268,126) 1,098,234
Finance expense (466,860) (522,847)
Profit before tax (734,986) 575,387
Income tax (109,286) (140,665)
------------ ------------
Profit and total comprehensive
income for the period
attributable to owners (844,272) 434,722
=========== ============ ========= ============
(Loss) / Earnings per
share
(note 3)
Basic & diluted (pence) (6.0) 3.1
------------ ------------
Group statement of changes in equity
for the years ended 28 January 2018 and 29 January 2017
Year ended 28 January Share Share Profit Total
2018 Capital premium and loss
account account
GBP GBP GBP GBP
Balance brought forward
at 30 January 2017 1,401,213 9,743,495 12,775,387 23,920,095
Profit and total comprehensive
income for the period - - (844,272) (844,272)
Transactions with owners
Dividend - - - -
Balance at 28 January
2018 1,401,213 9,743,495 11,931,115 23,075,823
========== ========== =========== ===========
Year ended 29 January Share Profit
2017 Share premium and loss
Capital account account Total
GBP GBP GBP GBP
Balance brought forward
at 1 February 2016 1,401,213 9,743,495 12,620,907 23,765,615
Profit and total comprehensive
income for the period - - 434,722 434,722
Transaction with owners
Dividend - - (280,242) (280,242)
Balance at 29 January
2017 1,401,213 9,743,495 12,775,387 23,920,095
=========== =========== =============== ===============
Group Balance Sheet
at 28 January 2018
2018 2017
GBP GBP
Assets
Non-current assets
Property, plant and equipment 34,106,375 35,502,564
Total non-current assets 34,106,375 35,502,564
Current assets
Inventories 109,271 114,034
Trade and other receivables 845,058 1,095,481
Cash and cash equivalents 1,287,277 292,653
Total current assets 2,241,606 1,502,168
Total assets 36,347,981 37,004,732
Equity and liabilities
Equity attributable to owners of
the parent
Share capital 1,401,213 1,401,213
Share premium 9,743,495 9,743,495
Retained earnings 11,931,115 12,775,387
----------- -----------
Total equity 23,075,823 23,920,095
Liabilities
Non-current
Borrowings 9,240,839 1,030,000
Deferred tax liabilities 824,009 861,330
----------- -----------
Non-current liabilities 10,064,848 1,891,330
Current
Trade and other payables 2,636,396 2,259,437
Borrowings 500,000 8,817,422
Current tax liabilities 70,914 116,448
Current Liabilities 3,207,310 11,193,307
----------- -----------
Total liabilities and equity 36,347,981 37,004,732
=========== ===========
Group Cash Flow Statement
for the year ended 28 January 2018
2018 2017
GBP GBP
Cash flows from operating activities
Profit for the year (844,272) 434,722
Adjustments for:
Financial income - -
Financial expense 466,860 522,847
Income tax 109,286 140,665
Depreciation 2,101,737 981,594
------------ -------------
Cash flows before changes in working capital
and provisions 1,833,611 2,079,828
UK corporation tax paid (192,142) (228,168)
Decrease in trade and other receivables 383,811 149,237
Increase in trade and other payables 437,903 112,381
Decrease/(Increase) in inventories 4,763 (1,449)
------------ -------------
Net cash from operating activities 2,467,946 2,111,829
------------ -------------
Cash flows from investing activities
Acquisition of property, plant and equipment (705,548) (710,701)
------------ -------------
Net cash outflow from investing activities (705,548) (710,701)
------------ -------------
Cash flows from financing activities
Interest paid (661,192) (480,223)
New loan 9,740,840 -
Loan repayments (9,847,422) (410,000)
Equity dividends paid - (280,242)
Net cash outflow from financing activities (767,774) (1,170,465)
------------ -------------
Net increase in cash and cash equivalents 994,624 230,663
------------ -------------
Cash and cash equivalents at the beginning
of the period 292,653 61990
------------ -------------
Cash and cash equivalents at the end of
the period 1,287,277 292,653
============ =============
For the purposes of the cash flow statement,
cash and cash equivalents comprise:
Cash and bank balances 1,287,277 292,653
Notes
(forming part of the financial statements)
1 Basis of preparation
The financial information set out in this preliminary
announcement does not constitute statutory accounts as defined by
section 434 of the Companies Act 2006. It has been prepared in
accordance with the recognition and measurement principles of
International Financial Reporting Standards (IFRS) adopted for use
in the European Union, including IFRIC interpretations issued by
the International Accounting Standards Board, and in accordance
with the AIM rules and is not therefore in full compliance with
IFRS. The principal accounting policies of the Group have remained
unchanged from those set out in the Group's 2017 annual report. The
financial statements have been prepared under the historical cost
convention and are presented in sterling.
On 19 September 2017 the Company entered into a GBP9,900,000
five year term loan facility with Allied Irish Bank. This facility
has been used to repay the Company's existing facilities with Royal
Bank of Scotland as well as the remaining balances of the
Director's Loan and Loan Notes. The revised financial structure
will result in a significant reduction in financial charges going
forward.
After the Financial Year end, the Company breached its financial
covenants, which breach resulted in the Company's Bank issuing a
"Reservation of Rights" letter, reserving the Bank's position in
relation to the breach of covenant, whilst also confirming the
Bank's current intention not to exercise any of its rights in
relation to the breach. Whilst your Directors recognise that the
breach of covenant, combined with a challenging trading outlook,
results in material uncertainty for the Company, and increases the
possibility that the Company may be unable to continue realizing
its assets and discharging its liabilities in the normal course of
business which might impact upon the company's ability to continue
as a going concern, they are confident that the Company has
adequate resources to meet its commitments, for the reasons
described below.
The Directors have prepared forecasts for more than 12 months
from the date of signing these accounts, which fairly represent
their best, prudent estimate of hotel trading and cash flows in the
current economic environment, which forecasts show that: the
Company will be able to meet its loan repayment and financing costs
within the facility referred to above; meet its tax payments; and
pay its creditors on normal terms in the 12 months from the date of
signing these accounts. The Directors have considered contingency
plans in the event of unforeseen deterioration beyond their prudent
forecasts, including a return to support from Directors Loans,
reduced capital expenditure, and the sale of assets, In reliance on
their forecasts and contingency plans, your Directors are happy to
continue to adopt the going concern basis of accounting in
preparing the Company's annual financial statements.
2 Publication of non-statutory financial statements
The financial information for the period ended 28 January 2018
was approved by the Board on 26 July 2018 and has been extracted
from the Group's financial statements upon which the auditor's
opinion is unqualified, but is modified to include an emphasis of
matter relating to the material uncertainty described in note 1.
The auditor's opinion does not include a statement under section
498(2) or (3) of the Companies Act 2006. The statutory accounts for
the period ended 28 January 2018 will, in due course, be delivered
to the Registrar of Companies. The statutory accounts for the
period ended 29 January 2017 have been delivered to the Registrar
of Companies.
3 Loss / Earnings per share
Basic earnings per share
The calculation of basic earnings per share at 28 January 2018
was based on the loss attributable to ordinary shareholders of
GBP844,272 (2017: Profit of GBP434,722) and a weighted average
number of ordinary shares outstanding of 14,012,123 (2016:
14,012,123). No shares were issued in 2018 or 2017.
Diluted earnings per share
The potentially dilutive options in issue in 2018 and 2017 do
not cause a difference between basic and diluted earnings per
share.
4 Exceptional expense
The exceptional expense of GBP1,161,241 is due to impairment of
the Net Book Values of two leasehold properties held within
subsidiary Companies, which have been written down to zero in the
current year.
The exceptional expense of GBP170,500 in the previous year's
accounts was due to a charge for back rent re the Strathdon Hotel,
Nottingham.
This information is provided by RNS, the news service of the
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END
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