Profit Before Tax(1) on Target, at EUR875 Million PARIS, February
25 /PRNewswire-FirstCall/ -- - Accor is Staying on Course and
Continuing to Transform its two Core Businesses - Operating Profit
Before tax and Non-Recurring Items: EUR875 Million, on Target up
13.0% Like-For-Like and Excluding the Impact of the Return to
Shareholders - Operating Margin up 1.0 Point to 29.6% - A Solid
Balance Sheet: Adjusted FFO/Adjusted net Debt at 25.8%(2) (in EUR
millions) 2007 2008 % change % change as reported like-for-like(3)
Revenue 8,121 7,739 -4.7% +2.8% EBITDAR 2,321 2,290 -1.3% +4.0%
EBITDAR margin 28.6% 29.6% +1.0 pt +0.4 pt Operating profit before
tax and non-recurring items 907 875 -3.5% +6.8%(4) Net profit,
Group share 883 575 -34.9% (1) Operating profit before tax and
non-recurring items (2) Adjusted Funds From Operations / Net debt
adjusted for NPV of minimum lease payments discounted at 8% (3)
Excluding changes in scope of consolidation and exchange rates (4)
13.0% like-for-like excluding the impact of the return to
shareholders - Operating profit before tax and non-recurring items
in line with targets Consolidated revenue totaled EUR7,739 million
in 2008, representing a 2.8% increase at comparable scope of
consolidation and exchange rates (like-for-like) and a 4.7% decline
as reported. Reported revenue was negatively impacted by the large
number of asset disposals during the year and the unfavorable
currency effect, notably from the US dollar and the British pound
against the euro. The 2.8% like-for-like growth was led by
sustained gains in Prepaid Services and the firm resistance of
Economy Hotels outside the United States. - Prepaid Services
revenue rose 12.9% like-for like and 10.5% on a reported basis, in
line with the 8 to 16% medium-term organic growth target set for
the business by the Group. - Hotels revenue ended the year up 2.1%
like-for-like and down 1.0% on a reported basis, with growth led by
Economy Hotels outside the United States (up 3.2% like-for-like),
and the Upscale and Midscale segments (up 2.6% like-for-like).
Revenue from Economy Hotels in the US declined by 2.1% during the
year. Consolidated EBITDAR stood at EUR2,290 million, for an
EBITDAR margin of 29.6%, up 1.0 point as reported and 0.4 points
like-for-like compared with 2007. - Prepaid Services reported an
EBITDAR margin of 43.5% for the year, a 1.4-point like-for-like
improvement that confirmed the business' excellent performance in
most of its markets (up 1.1 points in the first half and up 1.6
points in the second). The flow-through ratio stood at 54.7%.(1) -
EBITDAR margin in the Hotels business is up 0.1 points
like-for-like, to 31.5%. Margin improved by 0.1 point like-for-like
in the Upscale and Midscale segment (up 0.5 points in the first
half and down 0.3 points in the second), with a flow-through ratio
of 29.8%. Margin widened by 0.6 points like-for-like in the Economy
Hotels outside the US up 1.0 points in the first half and 0.3
points in the second, with a flow-through ratio of 56.6%. Operating
margin in the US Economy segment declined by 1.3 points
like-for-like during the year. Operating profit before tax and
non-recurring items amounted to EUR875 million in 2008, in line
with the Group's target given in October 2008. Excluding the impact
of the cost of the return to shareholders, it increased by 13.0%
like-for-like over the year, of which 25.3% in the first half and
4.3% in the second. - Net profit included significantly fewer
capital gains than in 2007 Net profit, Group share stood at EUR575
million, down 34.9% for the year. Part of the decline was
attributable to the decrease in capital gains on asset disposals,
to EUR150 million from EUR481 million in 2007. Earnings per share
came to EUR2.60, versus EUR3.92 in 2007, based on the weighted
average 221 million shares outstanding during the year. Operating
profit before non-recurring items, net of tax, per share amounted
to EUR2.73, down 4.5% from 2007. At the Combined Annual and
Extraordinary Shareholders' Meeting on May 13, 2009, shareholders
will be asked to approve a dividend of EUR1.65 per share, unchanged
from the dividend paid in respect to 2007. The dividend 2008 will
be payable in cash or in stock at the shareholder's option. The
payout ratio, calculated on operating profit before non-recurring
items, net of tax(2), stood at 60%, versus 58% in 2007. - Solid
financial position Net debt stood at EUR1,072 million at December
31, 2008, after taking into account EUR1,086 million in expansion
capital expenditure (of which EUR1,014 million in the Hotels
business) and EUR560 million in proceeds from asset disposals. The
latter comprise EUR110 million from the sale of non-strategic
assets (mainly EUR83 million for the Brazilian foodservices
business) and EUR450 million from the disposal of 123 hotels under
the hotel asset management strategy. Dividends paid in 2008
amounted to EUR719 million, of which EUR332 million in a special
dividend of EUR1.50 per share. As of December 31, 2008, Accor had
EUR1,345 million in unused, confirmed lines of credit and no major
refinancing needs before 2012. Less than EUR500 million in debt
will fall due over the 2009 to 2011 period. In 2009, the estimated
impact on net debt will include the settlement of Compagnie des
Wagons Lits (CIWLT) tax dispute for a consideration of EUR242
million and a potential exercise of Colony's put on Casinos Lucien
Barrière (EUR250 million, value of the transaction in 2003). In
addition, EUR62 million worth of shares were purchased during the
year under the EUR400 million share buyback program approved in
March 2008 and since suspended. After the impact on net debt of
2009 factors and after the bond issue (see below), the unused,
confirmed lines of credit would total EUR1.5 billion. The main
financial ratios demonstrate the Group's robust financial position.
Gearing stood at 30% at December 31, 2008, while the ratio of funds
from operations to net debt(3) was 25.8%, versus 26.2% at December
31, 2007. Return on capital employed(4) rose to a record 14.1% at
year-end, compared with 13.6% at December 31, 2007. A battle plan
to face a difficult environment As the effects of the global
economic downturn quickly spread to the Hotels business, especially
in the fourth quarter, Accor pro-actively moved to attenuate the
potential impact on earnings with measures in three key areas: -
Measures to enhance operational responsiveness Accor's marketing
dynamic to carry on the battle for revenue is based on such
powerful drivers as a broad range of accommodations from budget to
luxury, a marketplace strategy in 20 leading European cities and
the A|Club loyalty card currently used by 1.7 million members
worldwide. In addition, a program has been implemented to reduce
support costs by EUR100million of which EUR75 million in 2009 and
another EUR25 million in 2010. The savings will be primarily
generated in marketing expenditure, purchasing, the cancellation or
postponement of non-priority projects. - Responsive measures to
preserve cash Renovation capital expenditure was already reduced by
EUR25 million in the second half, with a further EUR125 million
reduction scheduled for 2009. After four years of major capital
expenditure, renovation projects will be more carefully selected,
without diminishing quality of service. The hotel expansion capital
expenditure budget, currently set at EUR500 million a year in 2009
and 2010, will be reduced to EUR400 million a year in the following
years. The EUR100 million reduction will be divided between the
Upscale (for EUR55 million) and Midscale segments (for EUR65
million). On the other hand, capital expenditure allocated to
Economy Hotels in Europe will be increased by EUR20 million. -
Measures to secure the Group's financing In January 2009, the Group
carried out a highly successful EUR600 million bond issue of
five-year maturing February 4, 2014 with a 7.5% coupon. The issue
helped to diversify the Group's sources of financing in addition to
bank loans and extended the average maturity of its debt. Firm
resilience in Economy Hotels outside US and growth in Prepaid
Services With 70% of its EBIT derived from Prepaid Services and
Economy Hotels outside US, Accor is now less sensitive to economic
cycles. In the second half, for example, EBIT rose 19.4%
like-for-like in Prepaid Services and was stable in the Economy
Hotels in Europe segment, but declined 10.8% in Upscale and
Midscale Hotels and 23.1% in Economy Hotels in the United States.
All in all, consolidated EBIT was stable in the second half
compared with second half 2007. The 2008 results reflect the
transformation of the Hotels business model, which is already well
underway, and the shift to variable-rent leases will have an even
greater positive impact in 2009. Accor is staying on course and
continuing to transform its two core businesses Prepaid Services
Accor is continuing to grow its traditional prepaid products
(employee benefits) and is committed to winning new contracts in
the prepaid services market, which is experiencing very fast
growth, especially in Europe. Accor Services' strategy is built
around five markets (employee benefits, rewards and loyalty
programs, expense management, insurance claims settlement and
payroll cards), a variety of media from paper to electronic, and a
wide range of acceptance networks. In this regard, the partnership
with MasterCard Europe will play an important role in enabling the
Group to meet its ambitions in Prepaid Services. Hotels Accor
intends to continue transforming its Hotels business model, a
process that has been well underway for the past three years. To
become the world leader in economy lodging and a major player in
the Upscale and Luxury segments, Accor is leveraging three
strategic growth drivers: - A portfolio of powerful brands that
have now been repositioned The brand portfolio has been reorganized
and now covers every segment of the hotel market. With Sofitel's
repositioning in the international luxury hotel segment, the launch
of the Pullman brand in the Upscale segment and the launch of the
All Seasons brand in the non-standardized economy segment, the
network is fully aligned across the market. - An "Asset-Right"
property management strategy designed to lower capital intensity
and earnings volatility By the end of 2008, 625 hotels had been
restructured, leading to the disposal of more than EUR4 billion in
hotel property assets. At that time, 56% of the rooms in the hotel
base were held under variable-rent leases, management contracts or
franchise agreements, corresponding to 60% of the objective. The
pace at which the remaining 40% of the objective is met will depend
on the property environment. - Expansion aligned with global demand
Depending on global demand, Accor is focusing its expansion capital
expenditure on the Economy Hotels outside the US segment and
emphasizing asset-light operating structures in the Upscale and
Midscale segment. In addition, the Group may shift to acquiring
hotel properties rather than driving organic growth. The Group
opened 28,000 new rooms during the year, 89% in the Economy and
Midscale segments. Of the total, 79% are being operated under low
capital-intensive structures, such as variable-rent leases,
management contracts and franchise agreements. Sustained expansion
remains a priority, with 101,000 rooms in the pipeline and an
objective to opening 30,000 in 2009, 35,000 in 2010 and 40,000 a
year in the years afterwards. Those 40,000 rooms a year will
represent an annual investment for Accor of EUR400 million.
Upcoming events - April 16: First-quarter revenue - May 13: Annual
Shareholders' Meeting Accor, a major global group and the European
leader in hotels, as well as the global leader in prepaid services,
operates in nearly 100 countries with 150,000 employees. It offers
to its clients over 40 years of expertise in two core businesses: -
Hotels, with the Sofitel, Pullman, MGallery, 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
Lenôtre; - Prepaid Services, with 32 million people in 40 countries
benefiting from Accor Services products in employee and public
benefits, rewards and loyalty, and expense management.
-------------------- (1)The flow-through ratio corresponds to the
like-for-like change in EBITDAR divided by like-for-like change in
revenue (2)Operating profit before tax and non-recurring items less
operating tax, less minority interests. (3) Funds from operations
before non-recurring items correspond 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.
(4) Corresponding to EBITDA expressed as a percentage of fixed
assets at cost plus working capital. DATASOURCE: Accor CONTACT:
MEDIA CONTACT : Alain Delrieu, Senior Media Relations Officer,
Phone: +33-1-45-38-84-85, ; Aurélie Langevin, Junior Press Officer,
Phone: +33-1-45-38-84-76; INVESTORS CONTACTS : �?liane
Rouyer-Chevalier, Senior Vice President , Investor Relations and
Financial Communication, Phone: +33-1-45-38-86-26; Solène Zammito,
Deputy Director, Investor Relations, Phone : +33-1-45-38-86-33
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