PARIS, February 27 /PRNewswire-FirstCall/ -- - Operating Profit
Before Tax up 25% - Operating Profit Before Tax and Non-Recurring
Items up 25% to EUR907 Million - Net Profit, Group Share up 76% to
EUR883 million - Earnings Per Share up 76% to EUR3.92 - Ordinary
Dividend up 14% to EUR1.65 Per Share - New Return to Shareholders
of EUR750 Million (Subject to Shareholders' Approval at the Annual
General Meeting): - Special Dividend of EUR1.50 Per Share - Share
Buyback of EUR400 Million Excellent Results in 2007 The Board of
Directors met on February 26, 2008 under the chairmanship of Serge
Weinberg and approved the financial statements for the year ended
December 31, 2007. (in EUR millions) 2006 2007 % Change % Change
reported L/L (1) Revenue 7,607 8,121 +6.8% +6.5% EBITDAR 2,084
2,321 +11.4% +9.2% EBITDAR margin 27.4% 28.6% +1.2pt +0.7pt
Operating profit 727 907 +24.8% +21.6% before tax and non-recurring
items Net profit, Group 501 883 +76.2% share (1) L/L: Like-for-like
(excluding changes in scope of consolidation and exchange rates) -
Growth in revenue and improved margins : operating profit before
tax up 25% Consolidated revenue grew by a reported 6.8% in 2007. At
constant scope of consolidation and exchange rates, the
like-for-like increase was 6.5%, reflecting strong growth in the
Group's two core businesses, Services and Hotels. Services revenue
rose 11.9% like-for like and 16.5% on a reported basis, in line
with the Group's medium-term organic growth target for this
business of between 8% and 16%. The Hotels business was boosted by
the continued upturn in the hotel cycle in Europe that began in
mid-2005, both in terms of occupancy rates and average rates. This
trend fueled a 6.4% increase in like-for-like revenue from the
region. Worldwide, Hotel revenue rose by 5.8% at constant scope of
consolidation and exchange rates and 7.8% on a reported basis.
Consolidated Ebitdar amounted to EUR2,321 million, up 11.4% from
the reported 2006 figure. Ebitdar margin reached 28.6%, an historic
record margin for Accor, gaining 0.7 points like-for-like and 1.2
points on a reported basis. Services reported an Ebitdar margin of
42.6% for 2007, a 2.1-point like-for-like improvement that
confirmed the business' excellent performance in all its markets.
The Hotels business achieved an Ebitdar margin of 32.0% for 2007, a
0.8 points improvement compared to 2006 on a like-for-like basis.
This increase translates the favorable hotel cycle in Europe, an
improved operating performance (in particular as a result of
dynamic pricing and cost-reduction measures in France and Germany),
and moves to adapt hotel ownership structure. This reflects
improvements of 0.7 points in the Upscale and Midscale segment, 0.9
points in European Economy Hotels and 1.3 points in US Economy
Hotels. Operating profit before tax and non-recurring items totaled
EUR907 million, an increase of 21.6% like-for-like (after 28.7% in
2006). This is higher than the target of EUR870-EUR890 million
announced by Accor in August 2007. - Strong 76% increase in net
profit, Group share Net profit, Group share rose 76.2% over the
year to EUR883 million. This includes EUR319 million in capital
gains on real estate disposals in the United Kingdom, Germany and
the Netherlands, a capital gain of EUR204 million on the disposal
of Go Voyages and a capital loss of EUR174 million recognized in
connection with the sale of Red Roof Inn. Earnings per share grew
by 75.6% to EUR3.92 from EUR2.23 in 2006, based on the weighted
average 225 million shares outstanding during the year. Earnings
per share after tax came to EUR2.86, up 24.3% from 2006. At the
Combined Annual and Extraordinary Shareholders' Meeting on May 13,
2008, shareholders will be asked to approve an ordinary dividend of
EUR1.65, to be paid on May 20, 2008. This represents a 13.8%
increase from the year before and corresponds to 58% of operating
profit before non-recurring items, net of tax (1), compared with
63% in 2006. The payout ratio is expected to gradually trend
towards 50% in the next three years. - Solid financial position Net
debt amounted to EUR204 million at December 31, 2007, after taking
into account EUR1,198 million in development expenditure (of which
EUR821 million in the Hotels business and EUR335 million in
Services) and EUR1,635 million in proceeds from asset disposals.
Out of those, EUR540 million came from the disposal of
non-strategic assets (notably Go Voyages for EUR280 million), and
EUR1,095 million from the hotel asset management strategy,
including the divestment of Red Roof Inn for EUR377 million.
Dividends paid in 2007 amounted to EUR680 million, versus EUR276
million in 2006, including a special dividend of EUR1.50 per share
for a total payout of EUR336 million. Equity was reduced by
EUR1,200 million during the year through the buyback of Accor SA
shares in May (EUR700 million) and August (EUR500 million). The
main financial ratios improved significantly, reflecting the
Group's robust financial position. Gearing stood at 6% at December
31, 2007 versus 11.3% one year earlier. The ratio of funds from
operations before non-recurring items to adjusted net debt(2)
improved by 4.0 points over the year to 26.2%, while return on
capital employed (ROCE (3)) reached a record 13.6% at year-end
compared with 11.9% at December 31, 2006. Achievements In Line With
Strategic Objectives Services The Services business actively
expanded in 2007 and early 2008 through eight acquisitions. The
largest of these was the French gift card and voucher market leader
Kadeos, announced in March 2007, for EUR211 million. Two other high
profile acquisitions made during the year that will be key for
Accor Services' future expansion were PrePay Technologies Ltd
(100%), UK leader in prepaid cards, and the acquisition of a 62%
stake in Motivano UK, a UK leading provider of online employee
benefits solutions. Overall, in 2006 and 2007, the Services
business carried out a steady acquisitions program in an amount of
EUR583 million to bring in future growth drivers. Hotels - A brand
strategy In 2007, Accor redeployed Sofitel in the international
luxury hotel segment and launched the Pullman brand in the upscale
segment. Pullman will primarily expand through management and
franchise contracts with a potential of 300 hotels by 2015. Accor
has expanded its offer in the non-standardized economy segment with
the launch of the All Seasons brand, which now comprises ten hotels
in France. A minimum of 40 hotels will be under the All Seasons
flag in Europe by end of 2008. - Expansion well underway Accor has
opened more than 50,000 new rooms since early 2006, of which 28,000
in 2007. There are another 93,000 rooms in the pipeline, in keeping
with the expansion program target of 200,000 new rooms between 2006
and 2010. Overall, 92% of the openings in 2007 were in the economy
and midscale segments, 38% were in emerging markets and 93% through
low capital-intensive ownership structures (variable leases,
management contracts or franchise agreements). In 2006-2007, Accor
invested EUR745 million for its share in a EUR2.5 billion expansion
program planned between 2006 and 2010. It also devoted EUR407
million to changes in its business base in 2007, such as the
controlling stake in Germany's Dorint. - "Asset-right" program on
track In 2007, Accor pursued its strategy of adapting owning
structure to the risk-reward profile of each market segment and
region. Between 2005 and December 31, 2007, divestments of property
assets (502 hotels) generated EUR3,486 million. During the year,
the Group switched 117 hotels to variable-lease contracts (impact
of EUR1,081 million) and 8 hotels to management contracts (impact
of EUR229 million). Another 73 properties were transformed into
franchise contracts or sold (impact of EUR302 million). In all, 198
hotels were restructured in 2007 for a total impact of EUR1,612
million, of which EUR311 million in second half. In addition, in
December 2007, Accor announced the signature of a Memorandum Of
Understanding to sell 47 hotel properties in France and 10 in
Switzerland, representing a total of 8,200 rooms, to a real estate
consortium comprising two investment funds managed by AXA Real
Estate Investment Managers and Caisse des Depots et Consignations
for EUR518 million and a yield of 5.70%. Accor will continue to
operate the hotels under a 12-year variable lease, with no
guaranteed minimum. The leases are renewable six times. The
transaction will enable Accor to reduce its adjusted net debt by
EUR373 million in 2008, of which EUR312 million will be added to
the Group's cash reserves. As part of the plan scheduled for
completion by the end of 2008, Accor intends to modify the owning
structure of nearly 233 additional hotels, for an expected impact
of around EUR600 million. In 2009-2010, another 614 hotels will be
added to the list, including 14 Sofitel and Pullman hotels in
Europe (expected impact of EUR 652 million) after their
repositioning. A Group more resilient to the economic cycles
Accor's profile has evolved significantly since the last business
cycle 2001-2003. The effect of the Group's strategies can be seen
by simulating what the last cycle's impact would have been based on
the current portfolio. Operating profit (Ebit), for example, would
have declined by only 9% between 2001 and 2003 instead of the 27%
actually recorded, which represents a three-fold decrease in
volatility. With the divestment of non-strategic, more cyclical
operations, the Group's reduced sensitivity reflects a significant
change in its two businesses. - Contribution from Services doubled
between 2001 and 2007 Thanks to more than double-digit organic
growth over the past ten years and acquisitions, the Services
business' contribution to operating profit has grown from 21% to
38%. Services, which are not particularly vulnerable to business
cycles, enjoy strong growth potential. - Hotels restructured on the
basis of a new business model - Reduced exposure in the United
States. Following the September 2007 divestment of Red Roof Inn
(341 hotels and 36,683 rooms), Accor's exposure in North America
now represents 8% of operating profit compared with 25% in 2001.
With the dollar at a historic low against the euro, currency risk
is more limited. - Greater contribution from European economy
hotels, which are less cyclical and offer substantial potential for
expansion. Economy hotels outside the United States accounted for
23% of consolidated operating profit in 2001 and 30% in 2007,
representing an increase of 43%. This segment has a history of low
sensitivity to business cycles. - Deployment of the "asset-right"
strategy promoting a less-capital intensive owning model. Since
2003, the "asset-right" strategy to match hotel ownership
structures to profitability and cyclical exposure has led to a
profound shift in the hotel base. At present 55% of the Group's
hotels operate under less cyclical variable leases, management or
franchise contracts, compared with 35% at end of 2001. New Return
to Shareholders In addition to a proposed ordinary dividend of
EUR1.65 per share, shareholders will be asked to approve at the
Combined Annual and Extraordinary Meeting of May 13, 2008, a EUR400
million share buyback program and a special dividend of EUR1.50 per
share (around EUR350 million), to be paid on May 20, 2008,
representing a total return to shareholders of EUR750 million.
These proposals are part of the return to shareholders' policy that
already translated into EUR2 billion returned to shareholders since
2006. "2007 was a very good year for Accor: Excellent results
thanks to solid operating performances," declared Gilles Pelisson,
Chief Executive Officer of Accor. "We continued to achieve the
milestones in our roadmap. We start 2008 with a good month of
January in our two core businesses and our group's profile is more
resilient to business cycles." Upcoming events - April 15: Q1
revenue - May 13: Annual Shareholders' Meeting With operations in
nearly 100 countries and 150,000 employees, Accor is a major global
hotel group and the European market leader, as well as the world
leader in corporate services. It offers to its clients over 40
years of expertise in its two core businesses: - Hotels, with the
Sofitel, Pullman, Novotel, Mercure, Suitehotel, Ibis, all seasons,
Etap Hotel, Formule 1 and Motel 6 brands, representing 4,000 hotels
and nearly 500,000 rooms in 90 countries, as well as strategically
related activities, such as Lenotre. - Services, 30 million people
in 40 countries benefit from Accor Services products (human
resources, marketing services and expense management). Notes (1)
Operating profit before non-recurring items, net of tax = Operating
profit before tax and non-recurring items less operating tax, less
minority interests (2) Funds from operations before non-recurring
items corresponds to cash flow from operating activities before
non-recurring items and changes in working capital requirement. The
ratio of funds from operations before non-recurring items to
adjusted net debt is calculated according to a method used by the
main rating agencies, with net debt adjusted for the 8% discounting
of future minimum lease payments and funds from operations adjusted
for interest expense on these payments. (3) Corresponding to EBITDA
expressed as a percentage of fixed assets at cost plus working
capital. DATASOURCE: Accor CONTACT: MEDIA CONTACTS: Armelle
Volkringer, Vice President, Corporate, Communication and External
Relations, Tel.:+33(0)1-45-38-84-85; Emmanuelle Baumgartner, Chief
Media Relations Officer, Tel.:+33(0)1-45-38-84-77; Anne-Sophie
Sibout, Media Relations Officer, Tel.:+33(0)1-45-38-84-84; Eliane
Rouyer, Senior Vice President, Investor Relations and Financial
Communication, Tel.: +33(0)1-45-38-86-26; Solene Zammito, Deputy
Director Investor Relations, Tel.: +33-1-45-38-86-33
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