Dalata Hotel Group PLC (DAL,DHG) Dalata Hotel Group PLC: 2021
Half Year Report 01-Sep-2021 / 07:00 GMT/BST Dissemination of a
Regulatory Announcement, transmitted by EQS Group. The issuer is
solely responsible for the content of this announcement.
-----------------------------------------------------------------------------------------------------------------------
Emerging Strong as Recovery Commences
Occupancy levels improving month on month
Dermot Crowley to assume role of CEO on 31 October
ISE: DHG LSE: DAL
Dublin and London | 1 September 2021: Dalata Hotel Group plc
("Dalata" or the "Group"), the largest hotel operator in Ireland
with a growing presence in the United Kingdom, announces its
results for the six month period ended 30 June 2021.
Results Summary
H1 2021 H1 2020 Variance
EURmillion
Revenue 39.6 80.8 (51.0%)
Segments EBITDAR1 6.7 15.6 (57.1%)
Adjusted EBITDA1 1.4 10.1 (85.8%)
Loss before tax (37.8) (70.9) 46.6%
Basic loss per share (cents) (13.6) (34.0) 60.0%
Adjusted basic loss per share1 (cents) (14.5) (13.1) (10.7%)
Group key performance indicators H1 2021 H1 2020 Variance
Occupancy % 19.9% 34.3%
Average room rate1 (EUR) 81.99 95.28 (13.9%)
RevPAR1 (EUR) 16.28 32.69 (50.2%)
PROTECTING OUR PEOPLE, CASH AND BUSINESS
-- Hotels now fully re-opened having remained operational for
essential services throughout the period inline with government
restrictions
-- Positive Adjusted EBITDA of EUR1.4 million driven by strong
operational management
-- Cash outflow2 of EUR24 million for the first six months
-- Proactive working capital management and government support
schemes allowed us to protect employmentwithin the Group and
preserve cash during periods of low occupancies
-- Maintained engagement with our employees enabling the
business to effectively ramp up with an engagedworkforce as
economies re-open
WELL-POSITIONED FOR THE RECOVERY
-- Increasing demand for staycations since hotels fully
re-opened for leisure in May (UK) and June (ROI)
-- Group occupancy3 of 44% in June 2021 - increasing to 58% in
July and 68% in August
-- Strong customer satisfaction scores since re-opening
STRONG BALANCE SHEET PROVIDES SECURITY, FLEXIBILITY AND THE
ENGINE FOR FUTURE GROWTH
-- Robust balance sheet backed by EUR1.2 billion in property,
plant and equipment (no significant change toproperty valuations
since 31 December 2020)
-- Liquidity remains strong with cash and undrawn committed debt
facilities of EUR270 million at 30 June 2021
-- Gearing remains conservative with Net Debt to Value1 of 27%
(31 December 2020: 23%)
REMAINING FOCUSED ON LONG-TERM GROWTH
-- Current pipeline of over 2,600 rooms in prime locations which
will see UK footprint surpass Dublin by2025
-- Opening of new Maldron Hotel Glasgow City in August 2021;
further six hotels on track to open by May 2022
-- Reputation with current and prospective landlords has been
enhanced
STRATEGIC AND OPERATING HIGHLIGHTS
RE-OPENING DELIVERS STRONG RECOVERY
-- Dalata hotels have fully re-opened with trading improving
markedly during the summer period. Our strategyto retain our core
teams throughout the pandemic ensured a swift and smooth
re-opening.
-- The Group earned positive Adjusted EBITDA despite hotels only
open for essential services for themajority of the period. The
impact of reduced trading was mitigated through pro-active cost
control measures andthe utilisation of government supports.
-- Really encouraging occupancy for the Group of 44% in June,
58% in July and 68% in August as the recoverystarts to take hold
across all our markets. Occupancies at our Dublin and London hotels
will remain lower until thereturn of international travel and large
events, but this has been partially offset by staycations.
RETENTION OF CORE TEAMS CRITICAL TO BUSINESS SUCCESS
-- We continued to stay in constant contact with our people
through our employee app and providing learningand development
opportunities with over 44,000 courses completed on Dalata Online
during the first six months of2021. This ensured our people were
well prepared and motivated when returning to work. This in turn
allows uscontinue to provide our guests with the excellent Dalata
experience they are accustomed to. Our hotels areachieving strong
customer satisfaction scores since re-opening.
-- We have renewed the accreditation of our Dalata Keep Safe
Programme with Bureau Veritas, a world leaderin Health and Safety
testing, inspection and certification. This gives our guests,
employees and suppliers thecomfort that we are operating our hotels
safely in line with best practice health and safety protocols.
MAINTAINING STRONG CULTURE AND VALUES
-- The Board has appointed Dermot Crowley to succeed Pat McCann
as CEO on 31 October 2021 following arigorous selection process.
Dermot has played a key role in the development of the business
since 2012 and iscommitted to continuing to grow the business and
protecting and enhancing the Dalata culture.
-- Following Dermot's appointment as CEO, Carol Phelan was
promoted to CFO. Since joining the business in2014, Carol has been
key member of the management team developing the finance and
treasury function post IPO.
-- The Board, through the Nomination committee, is continuing to
address the question of Board composition.It is expected that a new
non-executive director will be appointed before the end of
2021.
-- ESG performance remains a top priority for management. We
have accelerated our ESG initiatives despitethe challenges from
Covid-19 and are currently developing a 3-year ESG Strategy plan
that will be launched by Q12022. Dalata achieved 36 gold and 8
silver awards with Green Tourism in 2021, representing significant
progress onour 2019 scores.
GROWTH STRATEGY REMAINS COMPELLING
-- We opened our first hotel in Scotland, the 300-room Maldron
Hotel Glasgow City in August. The hotelmanagement team is made up
of existing Dalata employees who will ensure that the Dalata
culture and operating modelare adopted from the outset.
-- We are excited to open a further six hotels in Bristol,
Manchester, Glasgow and Dublin between Decemberthis year and May
2022, totalling over 1,500 rooms. We have started the construction
of Maldron Hotel Shoreditch inLondon. The remaining pipeline of
four hotels, including one hotel in Ireland and three in the UK,
are at thepre-construction phase. Our Acquisitions and Development
team are continuously looking at opportunities to add tothis
pipeline.
-- Dalata's robust balance sheet, backed by EUR1.2 billion of
hotel assets, and strong financial position withcash and undrawn
committed debt facilities of EUR293 million at the end of August,
ensures the Group iswell-positioned to avail of future
opportunities for leases.
-- We remain confident that our enhanced reputation as a strong
reliable covenant will provide us with anadvantage in securing new
opportunities as we expand our pipeline in the future.
UpdatED LTIP performance condition
In line with guidance from the Investment Association, the Group
deferred the finalisation of the performance condition target
ranges in respect of the 2021 share awards granted on 3 March 2021,
in light of the uncertainty concerning future market conditions due
to the impact of Covid-19. The Group confirms that the performance
condition measures and targets in respect of the 2021 share awards
made on 3 March 2021 are as set out below:
Threshold Maximum
Performance condition Weighting
(25% vesting) (100% vesting)
TSRA 50% Median Upper quartile
Free cash flow per share (FCPS)B 50% EUR0.35 EUR0.47
A Total shareholder return (TSR) is measured against a bespoke
comparator group of 20 listed peer companies in the travel and
leisure sector. For performance between the median and upper
quartile, vesting is determined by assessing between which two
ranked companies Dalata's TSR falls and calculating vesting on a
linear basis between the two companies.
B Basic free cash flow per share (FCPS)1 achieved in the year
ending 31 December 2023. The adoption of FCPS instead of EPS (as
initially set out in the annual report) follows careful
consideration of the needs of the business as it recovers from the
disruption of the pandemic and continues the execution of its
growth strategy. We intend to consult with shareholders on this and
other matters concerning the implementation of remuneration policy
later this year.
OUTLOOK
Following the full re-opening of the hospitality industry in May
in the UK and June in Ireland, Covid-19 restrictions continue to be
relaxed as the rollout of vaccines in both countries reaches an
advanced stage with more than 60% of the entire population fully
vaccinated in both countries. The UK has lifted many of the legal
restrictions introduced to curb the spread of Covid-19. In Ireland
non-essential international travel was permitted from 19 July but
restrictions on large events remain in place. The Irish Government
has published a road map on the easing of the remaining Covid-19
restrictions with most restrictions expected to be lifted by 22
October.
As expected, there was strong domestic demand for hotel stays
once restrictions were lifted with occupancies improving month on
month and hitting 68% in August. It is expected the improved
trading environment will deliver an increase in earnings with
Adjusted EBITDA for July and August projected to be approximately
EUR24 million. In addition, the Group had combined cash resources
and undrawn debt facilities of EUR293 million at the end of August
2021.
While the emergence of new variants remains a threat, the
progress being made on the rollout of vaccines across Europe and
globally is very encouraging. The outlook for the near term remains
uncertain at present. A strong recovery in domestic leisure is
underway and we expect domestic corporate business to further
recover this month given the progressive easing of restrictions.
The timing of the recovery of international leisure and corporate
travel is somewhat uncertain but the ongoing global rollout of
vaccines is a very positive influencing factor. The recovery of
international travel is important for our Dublin and London
hotels.
The Group will continue to implement measures to combat the
impact of Covid-19 on the business. In addition, our Acquisitions
and Development team are assessing distressed opportunities as they
arise. Our reputation as a strong reliable covenant has been
enhanced through the course of the pandemic and we are confident
that this will place Dalata in a stronger position to secure
further growth opportunities.
The Group's asset backing and strong liquidity ensure it is
well-positioned to withstand any remaining Covid-19 restrictions in
2021 and participate in the recovery of global tourism. The
hospitality sector has historically shown tremendous resilience to
recover from other demand shocks and crises. As a result, the Board
remain confident that Dalata is well placed to benefit with its
strong balance sheet, young, well-invested portfolio and
experienced and motivated teams at hotels and central office.
Pat McCann, Dalata Hotel Group CEO, commented:
"I am pleased to report our hotels have successfully re-opened
to all guests in recent months. As a sense of normality returns to
society, the demand for domestic leisure has increased across
Ireland and the UK. Our people have skilfully managed the
re-opening and are once again providing our guests with an
exceptional experience.
As I reflect on my time at Dalata, I am incredibly proud of what
we have achieved as a Group. Through good times and bad, the
dedication and resilience shown by our teams has been admirable.
This has never been tested to such a great degree as during the
course of the last 18 months. Our values and beliefs have shone a
light to guide us through this difficult time and we will come out
the other side more confident than ever in our abilities and in how
we operate our business. Our skilled and wonderful people will
drive the business to new heights in the future.
It gives me great pleasure to be handing over the reins of the
business to Dermot Crowley on 31 October 2021. Dermot has been
instrumental in the development of the business and execution of
our strategy since he joined in 2012 and has been selected by the
Board to succeed me as CEO. I have known Dermot for over twenty
years, and I am confident he will lead Dalata through the next
phase of growth while maintaining the wonderful culture and people
focus that we have built together at Dalata.
As I prepare to step aside from my time at Dalata, I will be
watching its progress with great enthusiasm. The Group has all the
attributes to be a great success into the future, with superb
people at its core. We are entering a period of great opportunity
in the hotel industry. Dalata has a wonderful reputation with
stakeholders across all areas of the business and is strongly
positioned to take advantage of future opportunities in new and
existing markets. I have full confidence in the Dalata team as it
embarks on this pursuit".
Dermot Crowley, Dalata Hotel Group CEO Designate, commented:
"I am honoured to have been chosen by the Board to succeed Pat
as CEO. I have known Pat for over 20 years, during which he has
given me great guidance and support which I hugely appreciate. I
plan to continue to uphold the strong culture and values we have
built together at Dalata.
The roll out of vaccines in both Ireland, the UK and globally
has been very encouraging to date. International travel in Ireland
returned on 19 July and restrictions were relaxed in the UK earlier
in the summer. This is an important development as our hotels in
Dublin and London require the return of international travel for
occupancies to recover more substantially.
The Irish and UK governments have provided tremendous supports
to the hospitality industry over the last 18 months which have
greatly helped us in weathering this crisis and protecting
employment. As the hospitality industry begins to recover and these
supports unwind, it is important to bear in mind that it will take
some time for the industry to fully recover. One key support has
been the reduced VAT rate of 9% in Ireland which should be extended
further to support the industry and the large number of jobs that
depend on it.
Our HR team have been instrumental in building a strong
framework around how we recruit, retain and develop our people. Our
Dalata Academy and the wealth of training opportunities available
within the organisation allows our people to constantly grow and
develop, making Dalata a great place to work in the hospitality
industry in both Ireland and the UK. I am delighted to reveal that
2021 will see our largest ever graduate intake.
ESG considerations continue to be front and centre of everything
we do at Dalata and we have made further progress in this area in
the last six months. We believe that embedding sustainability
across all areas of the business will give us a competitive
advantage in the future. Following a rigorous tendering process, we
have partnered with a leading ESG Advisory firm to support the
development of our 3-year ESG Strategy plan which will be launched
by Q1 2022. Our ESG strategy plan will be aligned with best
practice and will bring together and complement our current actions
and objectives. We are also committed to setting climate targets
that align with TCFD (Task Force on Climate-Related Financial
Disclosures). I am delighted that our hotels received 36 gold and 8
silver awards with Green Tourism in 2021 representing significant
progress on our previous results. This provides us with a solid
platform across all hotels from which we can build and improve.
Our financial position remains very strong and we have protected
our cash through strong operational management, cutting
non-essential costs and availing of government supports. Our asset
backed balance sheet has continued to serve us well and will give
us great flexibility and security as we look at opportunities that
begin to arise.
I am delighted that we have opened our first hotel in Scotland
with the Maldron Hotel Glasgow City on 3 August. This 300-room
hotel is ideally located on Renfrew Street in the city centre. The
project was successfully managed by our Acquisitions and
Development team in conjunction with our development partners,
before handing over to the management team at the hotel. As is the
case with all our new hotels, the senior management team was
promoted from within the Group, highlighting our ability to provide
our people with opportunities to grow and develop within Dalata
while de-risking the execution of our growth plans.
We will add a further six hotels to the Dalata portfolio between
December 2021 and May 2022. This includes our first ever hotel in
Bristol, two hotels in Manchester city centre, a Clayton Hotel in
Glasgow to complement our existing Maldron hotel in the city and
two hotels in Dublin. These new openings along with the future
openings planned for 2023 and 2024 are transforming our portfolio.
Our teams will continue to work on sourcing and securing additional
projects to add to our pipeline in the future".
S
About Dalata
Dalata Hotel Group plc was founded in August 2007 and listed as
a plc in March 2014. Dalata has a strategy of owning or leasing its
hotels and also has a small number of management contracts. The
Group's portfolio now consists of 29 owned hotels, 13 leased hotels
and three management contracts with a total of 9,561 bedrooms. In
addition to this, the Group is currently developing 11 new hotels
and has plans to extend four of its existing hotels, adding over
2,600 bedrooms in total. For the first six months of 2021, Dalata
reported revenue of EUR39.6 million and a loss after tax of EUR30.4
million. Dalata is listed on the Main Market of Euronext Dublin
(DHG) and the London Stock Exchange (DAL). For further information
visit: www.dalatahotelgroup.com
Conference Call Details | Analysts and Institutional
Investors
Management will host a conference call for analysts and
institutional investors at 08:30 BST (03:30 ET) today 1 September
2021, and this can be accessed using the contact details below.
From Ireland dial: +353 1 431 1252
From the UK dial: +44 3333 000 804
From the USA dial: +1 631 913 1422
From other locations dial: +353 1 431 1252
Participant PIN code: 16039997#
Contacts
Dalata Hotel Group plc investorrelations@dalatahotelgroup.com
Pat McCann, CEO Tel +353 1 206 9400
Dermot Crowley, CEO Designate
Carol Phelan, CFO
Niamh Carr, Group Head of Investor Relations and Strategic Forecasting
Joint Group Brokers
Davy: Anthony Farrell Tel +353 1 679 6363
Berenberg: Ben Wright Tel +44 20 3753 3069
Investor Relations and PR | FTI Consulting Tel +353 86 401 5250
Melanie Farrell dalata@fticonsulting.com
Note on forward-looking information
This Announcement contains forward-looking statements, which are
subject to risks and uncertainties because they relate to
expectations, beliefs, projections, future plans and strategies,
anticipated events or trends, and similar expressions concerning
matters that are not historical facts. Such forward-looking
statements involve known and unknown risks, uncertainties and other
factors, which may cause the actual results, performance or
achievements of the Group or the industry in which it operates, to
be materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements. The forward-looking statements referred to in this
paragraph speak only as at the date of this Announcement. The Group
will not undertake any obligation to release publicly any revision
or updates to these forward-looking statements to reflect future
events, circumstances, unanticipated events, new information or
otherwise except as required by law or by any appropriate
regulatory authority.
Half Year 2021 Financial Performance
EURmillion Six months ended 30 June Six months ended 30 June
2021 2020
Revenue 39.6 80.8
Segments EBITDAR1 6.7 15.6
Hotel variable lease costs - (0.3)
Segments EBITDA1 6.7 15.3
Other income 0.2 0.2
Central costs (4.4) (4.3)
Share-based payments expense (1.1) (1.1)
Adjusted EBITDA1 1.4 10.1
Adjusting items4 2.1 (40.6)
EBITDA1 3.5 (30.5)
Depreciation of PPE and amortisation (13.7) (13.8)
Depreciation of right-of-use assets (9.8) (10.6)
Operating loss (20.0) (54.9)
Interest on lease liabilities (11.8) (10.9)
Other interest and finance costs (6.0) (5.1)
Loss before tax (37.8) (70.9)
Tax credit 7.4 7.8
Loss for the period (30.4) (63.1)
Adjusted EBITDA excluding the impact of IFRS 161 (16.0) (5.3)
Loss per share (cents) - basic (13.6) (34.0)
Adjusted loss per share1 (cents) - basic (14.5) (13.1)
Adjusted loss per share excluding the impact of IFRS 161 (cents) (13.1) (10.4)
- basic
Hotel EBITDAR margin1 16.9% 19.3%
Summary of hotel performance
The Group's business continued to be significantly impacted by
Covid-19 during the first six months of 2021 with revenue
decreasing by 51.0% on H1 2020 (80.4% on H1 2019) to EUR39.6
million. For most of the period, the Group's hotels were only open
for essential business. Hotels in the UK were permitted to re-open
for outdoor dining during April. The Group's hotels fully re-opened
for overnight leisure stays on 17 May in England and Wales, 24 May
in Northern Ireland and 2 June in Ireland. However, some government
restrictions remained in place at this point including restrictions
on international travel, certain large events and public gatherings
with limited numbers at weddings.
Six months ended
Like for Like occupancy1 Six months ended 30 June 2020
30 June 2021
Dublin 19.1% 38.0%
Regional Ireland 23.9% 30.1%
UK 21.2% 33.0%
Occupancy for the Group amounted to 14%5 in Q1 2021 underpinned
by demand for essential services only. Trading was higher in the
same quarter last year where the Group experienced normal trading
conditions in January and February 2020 before it was severely
impacted by the Covid-19 pandemic from March 2020 onwards. Trade
increased into Q2 2021 as hotels re-opened with occupancy for the
Group reaching 44%5 in June driven by domestic leisure demand.
However, Dublin and London hotels continue to be significantly
impacted by restrictions on international travel and a lack of
events which are required before occupancies in these regions can
recover more substantially.
Segments EBITDAR decreased by 57.1% to EUR6.7 million for the
six month period. Pro-active cost control and the continued
utilisation of government grants and assistance helped mitigate the
financial impact of reduced trading levels. The Group continued to
maintain significant savings across all categories of expenditure.
This included variable costs such as the cost of food and beverage
purchases, consumables for bedrooms and commissions which decreased
substantially during the period when the hotels were closed.
The Group continued to benefit from the utilisation of
government supports during the first six months of the year
(EUR29.1 million). The Group received wage subsidies of EUR17.2
million to support the incomes of employees and government grants
amounting to EUR5.8 million which were introduced to support
businesses during the pandemic and contribute towards re-opening
and other operating costs. The Group has also received financial
assistance by way of commercial rates waivers from the Irish and UK
governments for the first six months of 2021 (EUR6.1 million).
Performance Review | Segmental Analysis
The following section analyses the results from the Group's
portfolio of hotels in Dublin, Regional Ireland and the UK.
1. Dublin Hotel Portfolio
EURmillion Six months ended 30 June 2021 Six months ended 30 June 2020
Room revenue 10.6 29.9
Food and beverage revenue 3.8 10.9
Other revenue 1.7 4.0
Total revenue 16.1 44.8
EBITDAR 2.1 13.4
Hotel EBITDAR margin % 13.3% 29.9%
Performance statistics (like for like)5
Occupancy 19.1% 38.0%
Average room rate (EUR) 74.92 99.48
RevPAR (EUR) 14.31 37.82
RevPAR % change on six months ended 30 June 2020 (62.2%)
RevPAR % change on six months ended 30 June 2019 (86.4%)
Dublin owned and leased portfolio
Hotels 16 16
Room numbers 4,488 4,488
The Dublin hotel portfolio consists of seven Maldron hotels,
seven Clayton hotels, the Ballsbridge Hotel and The Gibson Hotel.
Nine hotels are owned and seven are operated under leases.
The Group's Dublin hotels continued to be impacted by the
Covid-19 pandemic restrictions with demand limited to essential
services for the majority of the period leading to a reduction in
both occupancy and average room rate with RevPAR down 62.2% on H1
2020 and 86.4% on H1 2019.
The Group's Dublin hotels were permitted to reopen to the
general public on 2 June with our hotels targeting the return of
domestic leisure. However, the city requires the return of
international and corporate travel and large events before
occupancies and room rates can recover to more normal trading
levels.
Revenue decreased by 64.1% to EUR16.1 million compared to the
first six months of 2020 which had normal trading levels up until
the Covid-19 restrictions were implemented in March 2020. Since
re-opening, occupancies lifted strongly reaching 37% in June 2021
with total revenues of EUR6.4 million. The utilisation of
government grants and assistance totalling EUR13.3 million for the
period (H1 2020: EUR2.5 million) and the continuation of the
proactive cost reductions reduced the impact of lost revenue on
EBITDAR.
2. Regional Ireland Hotel Portfolio
EURmillion Six months ended 30 June 2021 Six months ended 30 June 2020
Room revenue 7.3 8.8
Food and beverage revenue 3.3 4.9
Other revenue 1.0 1.9
Total revenue 11.6 15.6
EBITDAR 3.2 (0.3)
Hotel EBITDAR margin % 27.2% (2.0%)
Performance statistics6
Occupancy 23.9% 30.1%
Average room rate (EUR) 90.55 86.27
RevPAR (EUR) 21.65 25.93
RevPAR % change on six months ended 30 June 2020 (16.5%)
RevPAR % change on six months ended 30 June 2019 (67.0%)
Regional Ireland owned and leased portfolio
Hotels 13 13
Room numbers 1,867 1,867
The Regional Ireland hotel portfolio comprises seven Maldron
hotels and six Clayton hotels located in Cork (x4), Galway (x3),
Limerick (x2), Wexford (x2), Portlaoise and Sligo. 12 hotels are
owned and one is operated under a lease.
The Group's Regional Ireland hotels experienced challenging
trading conditions as the hotels only remained open for essential
business for most of the period in line with government
restrictions, which resulted in reduced occupancies. RevPAR
declined by 16.5% to EUR21.65 from H1 2020 and 67.0% from H1 2019.
As restrictions on trade were eased in June, the Regional Ireland
portfolio benefited from the return of domestic tourism with people
opting for staycations in light of international travel
restrictions.
Revenue decreased by 25.3% to EUR11.6 million compared to the
first six months of 2020 which had normal trading levels up until
the Covid-19 restrictions were implemented in March 2020. From
re-opening, occupancies lifted strongly reaching 60% in June 2021
with total revenues of EUR6.1 million. Proactive cost reductions
and the utilisation of government grants and assistance amounting
to EUR9.2 million (H1 2020: EUR1.4 million) mitigated the impact on
EBITDAR.
3. UK Hotel Portfolio
Local currency - GBPmillion Six months ended 30 June 2021 Six months ended 30 June 2020
Room revenue 7.4 12.2
Food and beverage revenue 2.2 3.8
Other revenue 0.6 1.5
Total revenue 10.2 17.5
EBITDAR 1.2 2.1
Hotel EBITDAR margin % 11.8% 12.0%
Performance statistics (like for like)7
Occupancy 21.2% 33.0%
Average room rate (GBP) 73.45 78.07
RevPAR (GBP) 15.54 25.79
RevPAR % change on six months ended 30 June 2020 (39.7%)
RevPAR % change on six months ended 30 June 2019 (76.7%)
UK owned and leased portfolio
Hotels 12 12
Room numbers 2,644 2,600
The UK hotel portfolio comprises nine Clayton hotels and three
Maldron hotels with three hotels situated in London, six hotels in
regional UK and three hotels in Northern Ireland. Seven hotels are
owned, four are operated under long-term leases and one hotel is
effectively owned through a 99-year lease. The 44-bedroom extension
at the Clayton Hotel Birmingham was completed in November 2020.
Maldron Hotel Glasgow City opened after the period end in August
2021.
The Group's UK Hotels were closed to the general public from the
start of the year before gradually reopening to the public from
mid-April as the vaccination rollout progressed throughout the UK.
Trading was curtailed by government restrictions leading to a
reduction in both occupancy and average room rate with RevPAR down
39.7% to GBP15.54 from H1 2020 and 76.7% from H1 2019.
Hotels in England and Wales fully re-opened to the general
public on 17 May followed by Northern Ireland on 24 May. The UK
portfolio saw a steady increase in demand with occupancy reaching
29% in May and 44% in June, underpinned by staycations in regional
UK and Northern Ireland. The occupancy for June has already
exceeded the level achieved in July and August 2020. However,
recovery in London during June was slower than regional UK due to
its reliance on international travel.
Revenue decreased by 41.7% to GBP10.2 million compared to the
first six months of 2020 which had normal trading levels up until
the Covid-19 restrictions were implemented in March 2020. As
occupancies had lifted strongly from re-opening, total revenues
reached GBP4.1 million in June 2021. Proactive cost reductions and
government supports mitigated the impact of the lost revenue to the
bottom line. The Group received government assistance in the form
of grants amounting to GBP1.9 million and rates waivers of GBP2.1
million during the first six months of the year (H1 2020: GBP1.1
million). The Group also continued to utilise the Coronavirus Job
Retention Scheme (furlough) amounting to GBP1.7 million allowing it
to retain and pay employees who were not working in the business
using government support.
Government grants and assistance
The Group continued to avail of support schemes from the Irish
and UK governments totalling EUR29.1 million during the period. The
Group's EBITDA for the six months ended 30 June 2021 reflects
government grants of EUR23.0 million and assistance (by way of
commercial rates waivers) of EUR6.1 million.
EURmillion Six months ended 30 June 2021 Six months ended 30 June 2020
Temporary Wage Subsidy Scheme (Ireland) - 2.5
Employment Wage Subsidy Scheme (Ireland) 15.3 -
Coronavirus Job Retention Scheme (UK) 1.9 2.7
Other government grants related to income 5.8 -
Total grants 23.0 5.2
For the first six months of 2021, the Group received wage
subsidies for employees working in the business from the Irish
government amounting to EUR15.3 million in the form of the
Employment Wage Subsidy Scheme (EWSS), which replaced the Temporary
Wage Subsidy Scheme (TWSS) on 1 September 2020. In the UK, the
Group received government grants in the form of the Coronavirus Job
Retention Scheme amounting to GBP1.7 million (EUR1.9 million) for
the same period.
The Group also availed of government grants amounting to EUR5.8
million which were introduced to support businesses during the
pandemic and contribute towards re-opening and other operating
costs, including and not limited to the Covid Restrictions Support
Schemes in Ireland, and The Large Tourism and Hospitality Business
Support Scheme in Northern Ireland. These grants were not in effect
in the prior period.
The Group also received financial assistance by way of
commercial rates waivers for the full six month period to 30 June
2021 in both Ireland and the UK. This represented a saving of
EUR3.6 million at the Group's Irish hotels (H1 2020: EUR1.8
million) and GBP2.1 million (EUR2.5 million) at its UK hotels (H1
2020: GBP1.1/EUR1.3 million). The movement compared to the prior
period is due to the waivers only being introduced from 27 March
2020 in Ireland and 1 April 2020 in the UK. The rates waivers in
Ireland are currently set to continue until 30 September 2021. The
full rates waivers in Wales and Northern Ireland has been extended
until 31 March 2022. In England, the full rates waivers were in
effect until 30 June 2021 with 66% waived thereafter until 31 March
2022.
Under the warehousing of tax liabilities scheme introduced by
the Irish government, Irish VAT liabilities of EUR4.9 million and
payroll tax liabilities of EUR11.2 million have been deferred as at
30 June 2021. As at 30 June 2021, these liabilities are expected to
be payable during 2022. In line with the scheme, EUR3.4 million of
payroll tax liabilities were warehoused during 2021 and this was
added to the amounts already warehoused during 2020.
In the UK, VAT liabilities relating to the year ended 31
December 2020 are being paid by instalments (as agreed with the UK
tax authorities), under the VAT payment deferral scheme. The
outstanding deferred VAT liabilities at 30 June 2021 are GBP0.3
million (EUR0.4 million). These deferred liabilities are payable by
31 December 2021. No additional UK VAT liabilities were warehoused
during 2021.
Central costs
Central costs amounted to EUR4.4 million for the first six
months of 2021, broadly in line with the same period last year.
Savings in overheads and sales and marketing spend were offset by
additional employee costs as cuts to pay and hours (in place from 1
April 2020) were reversed for staff from 1 January 2021. Director
pay cuts were not reversed until 1 April 2021.
Adjusting items to EBITDA
EURmillion Six months ended 30 June Six months ended 30 June 2020
2021
Net property revaluation movements through profit or loss 2.5 (27.3)
Remeasurement gain on right-of-use assets 0.3 -
Hotel pre-opening expenses (0.4) -
Impairment of fixtures, fittings and equipment at leased hotels - (1.1)
Impairment of right-of-use assets (0.3) (7.4)
Impairment of goodwill - (3.2)
Accounting loss on sale and leaseback of Clayton Hotel Charlemont - (1.6)
Adjusting items1 2.1 (40.6)
Adjusted EBITDA is presented as an alternative performance
measure to show the underlying operating performance of the Group.
Consequently, 'adjusting items' items which are not reflective of
normal trading activities or distort comparability either period on
period or with other similar businesses are excluded.
The Group recorded a net revaluation gain through profit or loss
of EUR2.5 million on the revaluation of its property assets for the
first six months of 2021 which represents revaluation losses
through profit or loss of EUR1.1 million and the reversal of
previous revaluation losses recognised through profit or loss of
EUR3.6 million. Further detail is provided in the 'Property, plant
and equipment' section.
In the period ended 30 June 2021, the Group agreed a rent
amendment with the landlord for one of its hotels resulting in a
remeasurement of the lease liability. As a result of this
modification, the lease liability has decreased by EUR1.1 million.
As the right-of-use asset had previously been impaired, the
modification resulted in the right-of-use asset being reduced by
EUR0.8 million to EURnil. The difference has been recognised as a
remeasurement gain on right-of-use assets in profit or loss.
The Group also incurred EUR0.4 million of pre-opening expenses,
primarily in relation to Maldron Hotel Glasgow City which opened in
August and The Samuel Hotel, Dublin which is expected to open in Q1
2022.
As a result of the ongoing impact of Covid-19 on expected
trading, particularly on near term profitability, assets related
primarily to our leased properties including goodwill, fixtures,
fittings and equipment and right-of-use assets were assessed for
impairment based on their discounted cash flows. The impact on near
term cash flows has led to an impairment through profit or loss
totalling EUR0.3 million on the right-of-use asset of one leased
hotel.
Depreciation of right-of-use assets
Under IFRS 16, the right-of-use assets are depreciated on a
straight-line basis to the end of their estimated useful life, most
typically the end of the lease term. The depreciation of
right-of-use assets decreased by EUR0.8 million to EUR9.8 million
due principally to the impairments of the right-of-use assets
recorded during 2020 which have reduced the depreciation charge
accordingly, offset by the full period impact of Clayton Hotel
Charlemont, Dublin which was leased from April 2020.
Depreciation of property, plant and equipment
The depreciation of property, plant and equipment remained in
line with the prior period at EUR13.4 million for the first six
months of 2021. The decrease in depreciation arising from the sale
and leaseback of Clayton Hotel Charlemont, Dublin in April 2020 was
offset by the additional charge on the new conference centre at
Clayton Hotel Cardiff Lane, Dublin and the Group's element of the
renovation works at Clayton Hotel Burlington Road, Dublin, both of
which were completed after 30 June 2020.
Finance Costs
EURmillion Six months ended 30 June 2021 Six months ended 30 June 2020
Interest expense on bank loans and borrowings 4.9 4.2
Impact of interest rate swaps 1.3 0.9
Other finance costs 1.0 0.7
Net exchange gain on financing activities - (0.1)
Capitalised interest (1.2) (0.6)
Finance costs excluding the impact of IFRS 16 6.0 5.1
Interest on lease liabilities 11.8 10.9
Finance costs 17.8 16.0
Interest on lease liabilities increased by EUR0.9 million
primarily due to the full period impact of the lease on Clayton
Hotel Charlemont, Dublin from April 2020.
The Group also incurred higher margins on loans as shown by the
increase to the Group's weighted average interest cost in respect
of Euro denominated borrowings and Sterling denominated borrowings
for the year, which were 2.4% (2020: 1.4%) and 3.6% (2020: 2.9%)
respectively. These increases were partially offset by additional
capitalised interest on the site in Shoreditch, London (acquired in
August 2019) and the new Maldron Hotel and residential units at
Merrion Road in Dublin.
Tax charge
As the Group incurred a loss before tax in the first six months
of 2021, the Group has recognised a tax credit of EUR7.4 million in
the six month period ended 30 June 2021 primarily relating to the
net value of tax losses which will be available to offset against
future taxable profits. The value of the tax losses incurred in the
current period is EUR5.8 million. The Group also recognised a tax
credit of EUR1.9 million in the current period relating to the
remeasurement of UK deferred tax assets and liabilities, which are
forecast to be realised at the corporation tax rate of 25%. During
the current period, the UK government substantively enacted an
increase in the corporation tax rate from 19% to 25%, with effect
from 1 April 2023.
Loss per share (EPS)
The Group's loss per share for the first six months of 2021
continued to be impacted by the Covid-19 pandemic restrictions.
This resulted in a basic loss per share of 13.6 cents and an
adjusted basic loss per share of 14.5 cents for the six months
ended 30 June 2021.
Cents (EUR) Six months ended 30 June 2021 Six months ended 30 June 2020
Loss per share - basic (13.6) (34.0)
Loss per share - diluted (13.6) (34.0)
Adjusted loss per share - basic1 (14.5) (13.1)
Proactive cash flow management leaves the Group well
positioned
The Group continues to maintain a strong liquidity position with
significant financial resources. At the end of June 2021, the Group
had cash resources of EUR40.9 million and undrawn committed debt
facilities of EUR229.0 million.
The Group's proactive approach to cash flow management limited
the cash outflow to EUR24 million (as defined above) for the first
six months ended 30 June 2021. This principally comprises committed
and essential capital expenditure of EUR3.6 million, contract
fulfilment cost payments of EUR3.0m, costs paid on entering new
leases and agreements for lease of EUR0.6 million, fixed rent
payments of EUR15.7 million and interest and finance cost payments
of EUR7.0 million offset by an inflow from net operating cash of
EUR5.6 million from trade and working capital.
The Group has continued the measures adopted during 2020 to
mitigate the impact of Covid-19 on cash including proactive working
capital management and a rolling review of costs across all areas
of the Group. The Group continues to benefit from government
support initiatives in both Ireland and the UK. These have taken
the form of government grants and assistance and the deferral of
VAT and payroll tax liabilities.
At 30 June 2021, the Group has capital expenditure commitments
totalling EUR29.6 million which relates primarily to the new
Maldron Hotel and residential units at Merrion Road in Dublin. This
project is expected to be completed in 2022 at which point the
Group will legally complete the agreed contract to sell the
residential units for up to EUR42.4 million to Irish Residential
Properties REIT plc ("IRES"), the overall value depending on how
Part V obligations (Social and Affordable housing allocation) are
settled with Dublin City Council. Those funds will then be
received. Following the period end, the Group signed a new
agreement on 2 July 2021 in relation to the new-build hotel
development of the Maldron Hotel Shoreditch, London. The estimated
cost of the project is GBP25.0 million (EUR29.1 million).
Projected lease payments payable under current lease contracts
as at 30 June 2021 are EUR17.5 million for the six months ending 31
December 2021 and EUR31.2 million for the year ending 31 December
2022. In addition to this, the Group has committed to
non-cancellable lease rentals and other contractual obligations
payable under the agreements for lease which have not yet
commenced. These payments are projected to amount to EUR7.6 million
for the six months ending 31 December 2021 and EUR18.0 million for
the year ending 31 December 2022. The timing and amounts payable
are subject to change depending on the date of commencement of
these leases and final bedroom numbers.
Balance Sheet | Strong asset backing provides security,
flexibility and the engine for future growth
EURmillion 30 June 2021 31 December 2020
Non-current assets
Property, plant and equipment 1,212.3 1,202.7
Right-of-use assets 406.1 411.0
Intangible assets and goodwill 32.0 31.7
Contract fulfilment costs - 22.4
Other non-current assets8 32.9 23.5
Current assets
Trade and other receivables and inventories 14.1 10.5
Contract fulfilment costs 27.2 -
Cash and cash equivalents 40.9 50.2
Total assets 1,765.5 1,752.0
Equity 910.8 932.8
Loans and borrowings 342.0 314.1
Lease liabilities 400.8 399.6
Trade and other payables 57.5 48.7
Other liabilities9 54.4 56.8
Total equity and liabilities 1,765.5 1,752.0
Despite the continued challenges from Covid-19, the Group's
balance sheet remains robust with property, plant and equipment of
EUR1.2 billion in prime locations across Ireland and the UK. At 30
June 2021, the Group had cash and undrawn debt facilities of
EUR269.9 million and conservative gearing with Net Debt to Value1
of 27% (31 December 2020: 23%). The Group's strong balance sheet
ensures it is well positioned to withstand challenges and benefit
from opportunities in the future.
Property, plant and equipment
Property, plant and equipment amounted to EUR1.2 billion at 30
June 2021. The increase of EUR9.6 million in the six month period
is driven principally by foreign exchange movements which increased
the value of the UK hotel assets by EUR16.6 million and additions
of EUR4.9 million, partially offset by the depreciation charge of
EUR13.4 million.
The Group revalues its property assets at each reporting date
using independent external valuers. The principal valuation
technique utilised is discounted cash flows which utilise asset
specific risk adjusted discount rates and terminal capitalisation
rates. They also have regard to relevant recent data on hotel sales
activity metrics.
Overall, the valuations of the Group's property assets have not
changed significantly since 31 December 2020 with the Group
recording a net revaluation gain of EUR0.6 million at 30 June 2021
(year ended 31 December 2020: net revaluation loss of EUR174.4
million). At June 2021, the net valuation increase of EUR2.5
million recorded through profit or loss was partially offset by a
EUR1.9 million reduction recorded through the revaluation reserve.
EUR198.2 million remains in the revaluation reserve as at 30 June
2021 relating to prior period revaluation gains.
Additions through acquisitions and capital expenditure
30 June 2021 30 June 2020
EURmillion
Development capital expenditure:
Acquisition of freeholds or site purchases - 0.3
Construction of new build hotels, hotel extensions and renovations 2.7 6.2
Other development expenditure 0.7 3.9
Total development capital expenditure 3.4 10.4
Total refurbishment capital expenditure 1.5 7.1
Additions to property, plant and equipment 4.9 17.5
The Group typically allocates 4% of revenue to refurbishment
capital expenditure. However, as a result of the pandemic, the
Group has temporarily suspended non-committed and non-essential
capital expenditure in order to preserve cash. Furthermore,
government restrictions in Ireland necessitated the closure of most
construction sites during the Covid-19 lockdown in the first
quarter of 2021 which slowed contracted spend.
During the period, the Group incurred EUR3.4 million on
previously committed development capital expenditure including
EUR1.6 million on the development of the new Maldron Hotel Merrion
Road, Dublin and EUR1.0 million in relation to the new Maldron
Hotel proposed for a site in Shoreditch, London. In the first six
months of 2021, the Group incurred EUR1.5 million in refurbishment
capital expenditure which mainly covered essential works at the
hotels.
Contract fulfilment costs
Contract fulfilment costs relate to the Group's contractual
agreement with IRES entered into on 16 November 2018, for IRES to
purchase a residential development the Group is developing
(comprising 69 residential units) on the site of the former Tara
Towers hotel. Dalata incurred development costs in fulfilling the
contract of EUR4.5 million during the period.
The overall sale value of the transaction is expected to be up
to EUR42.4 million (excluding VAT). As the amount is due to be
received in March 2022 (upon practical completion), the Group has
reclassified these contract fulfilment costs from non-current
assets to current assets on the statement of financial position as
at 30 June 2021, as the amount is receivable within 12 months of
this date.
EURmillion
Contract fulfilment costs at 1 January 2021 22.4
Other costs incurred in fulfilling contract to date 4.5
Capitalised borrowing costs 0.3
Contract fulfilment costs at 30 June 2021 27.2
Right-of-use assets and lease liabilities
At 30 June 2021, the Group's right-of-use assets amounted to
EUR406.1 million and lease liabilities amounted to EUR400.8
million.
Lease Right-of-use
EURmillion
liabilities assets
Net book value at 1 January 2021 399.6 411.0
Depreciation charge on right-of-use assets - (9.8)
Interest on lease liabilities 11.8 -
Impairment of right-of-use asset - (0.3)
Remeasurement of lease liabilities (1.1) (0.8)
Lease payments (15.7) -
Translation adjustment 6.2 6.0
Net book value at 30 June 2021 400.8 406.1
Right-of-use assets are recorded at cost less accumulated
depreciation and impairment. The initial cost comprises the initial
amount of the lease liability adjusted for lease prepayments and
accruals at the commencement date, initial direct costs and, where
applicable, reclassifications from intangible assets or accounting
adjustments related to sale and leasebacks.
Lease liabilities are initially measured at the present value of
the outstanding lease payments, discounted using the estimated
incremental borrowing rate attributable to the lease. The lease
liabilities are subsequently remeasured during the lease term
following the completion of rent reviews, a reassessment of the
lease term or where a lease contract is modified. The weighted
average lease life of future minimum rentals payable under leases
is 29.1 years (31 December 2020: 29.4 years).
The remeasurement of lease liabilities in the period ended 30
June 2021 relates to the remeasurement of lease liabilities for one
hotel following an agreed rent amendment with the landlord. As a
result of this modification, the lease liability has decreased by
EUR1.1 million with a decrease of EUR0.8 million to the carrying
value of the right-of-use asset, as this right-of-use asset had
been previously impaired. The resulting difference has been
recognised as a remeasurement gain on right-of-use assets in profit
or loss.
Loans and borrowings
As at 30 June 2021, the Group had loans and borrowings of
EUR342.0 million and undrawn committed debt facilities of EUR229.0
million. Loans and borrowings increased during the six month period
due to net loan drawdowns totalling EUR13.0 million and foreign
exchange movements which increased the translated value of the
loans drawn in Sterling by EUR14.3 million.
Sterling borrowings Euro borrowings
At 30 June 2021 Total borrowings EURmillion
GBPmillion EURmillion
Term Loan 176.5 - 205.7
Revolving credit facility:
- Drawn in Sterling 93.0 - 108.4
- Drawn in Euro - 27.0 27.0
Impact of IFRS 9 accounting - - 0.9
Loans and borrowings at 30 June 2021 269.5 27.0 342.0
The Group refinanced its debt facility in 2018 with a new EUR525
million multicurrency debt facility consisting of a EUR200 million
term loan facility and a EUR325 million revolving credit facility
("RCF"). In August 2019, the Group availed of its option to extend
this facility for an additional year so it now expires on 26
October 2024.
On 9 July 2020, the Group entered into an amended and restated
facility agreement with its banking club to provide additional
flexibility and liquidity to support the Group following the impact
of Covid-19. The Group raised an additional EUR39.4 million in
revolving credit facilities with a maturity date of 30 September
2022 and the maturity of EUR20.1 million of revolving credit
facilities was shortened to 30 September 2022 from 26 October 2024.
The Group also agreed a new temporary suite of covenants with its
banking club. The revised covenants in this agreement include Net
Debt to Value covenants and a minimum liquidity restriction whereby
either cash, remaining available facilities or a combination of
both must not fall below EUR50 million at any point to 30 March
2022. The Group is in compliance with all covenants at 30 June
2021.
The Group will revert to the previous covenants comprising Net
Debt to EBITDA and Interest Cover covenants for testing at 30 June
2022. At 30 June 2022, the Net Debt to EBITDA covenant limit is
6.0x and the Interest Cover limit is 4.0x. The Net Debt to EBITDA
covenant moves to 4.0x at 31 December 2022.
Forecasting of near-term trade performance remains difficult in
the current environment. To address this, multiple reasonable
scenarios have been prepared by the Group with key assumptions
varying around the timing of the return to more normal levels of
international travel and the ongoing nature and extent of
government supports. In all reasonable scenarios, the Group is
forecast to have sufficient available funds and liquidity during
the forecast period to December 2024. However, some of the
scenarios show a potential temporary breach of Net Debt to EBITDA
and Interest Cover covenants when they are re-instated and tested
as of 30 June 2022. All scenarios show compliance at the following
testing period, 31 December 2022 and thereafter. As demonstrated
during 2020, there are various mitigating actions available to the
Group should it deem them to be necessary. However, at this point
the Group does not feel any of these actions are necessary and is
focused on maximising trading opportunities and operational
performance given the lifting of restrictions.
The Group limits its exposure to foreign currency by using
Sterling debt to act as a natural hedge against the impact of
Sterling rate fluctuations on the Euro value of the Group's UK
assets. The Group is also exposed to floating interest rates on its
debt obligations and uses hedging instruments to mitigate the risk
associated with interest rate fluctuations. This is achieved by
entering into interest rate swaps which hedge the variability in
cash flows attributable to the interest rate risk.
Principal Risks and Uncertainties
Since our last reporting on our principal risks in March 2021,
there have been ongoing developments in our risk environment and a
small number of reported principal risks. These developments relate
to easing government restrictions in Ireland and the UK this year,
enabling us to reopen all our hotels. In addition, some risks
associated explicitly with the pandemic, such as enhanced hygiene
requirements, are now embedded in our standard operating
procedures. The principal risks and uncertainties facing the Group
are: 1. Living with Covid-19 - As the Group and societies emerge
from the effects of the pandemic, several risksare becoming evident
that will shape the Group's response over the coming months. These
relate to internal risksaround embedding updated operational
processes into our business and continuing to protect our guests
and employeeswhile providing expected service levels. There are
also other risks around changing government regulations thataffect
how we operate our business and in areas such as the return of
international travel and supply chain risks.
We continue to be aware of the risks and emerging risks in the
current environment. Our actions are driven by our experiences from
reopening our hotels in mid-2020 and the hygiene, operational,
financial, training and employee support structures we successfully
implemented.
We remain confident that the Group can address any risks in
these "living with Covid-19" times. Our central and hotel
management structures are sound, and the key management teams
remain in place at our hotels. We have embedded any new or updated
processes into our standard operational routines. We maintain close
contact with government and industry bodies to help shape revised
regulations and other stakeholders on short-term matters affecting
our business. 2. Debt and Cash/Liquidity Positions - The level of
bank borrowings, the associated interest payments andrelated
covenants impact the Group's operating and financial flexibility
and increase the potential of defaultrisk. The Group remains
disciplined in not overleveraging and ensuring that it can
withstand substantial demandshocks. The Group also mitigates this
risk by preparing detailed financial forecasting and analysis and
monitoringdebt covenants. In response to the difficulties in
forecasting near-term trade performance in the currentenvironment,
the Group prepared multiple reasonable scenarios which showed it
has sufficient available funds andliquidity during the forecast
period to December 2024. However, some of the scenarios show a
potential temporarybreach of covenants when they are re-instated
and tested as of 30 June 2022 due to the recovery only now
commencingin the trailing 12-month period underpinning the
calculation of EBITDA for those covenants. As demonstrated
during2020, there are various mitigating actions available to the
Group should it deem them to be necessary. However, atthis point
the Group does not feel any of these actions are necessary and is
focused on maximising tradingopportunities and operational
performance given the lifting of restrictions. Furthermore, the
Group would beconfident of the ongoing support of its banking club
given the strong relationships it has with the club and thevalue of
its assets upon which the banking club has security with a Net Debt
to Value ratio of 27% at 30 June 2021. 3. Expansion Strategy and
Risks Associated with Growth - The opening of new hotels presents
an operationalrisk that expected earnings may not materialise,
particularly as some of the hotels are scheduled to open against
avery uncertain market backdrop. All new hotel developments and
potential expansion plans are rigorously assessed bythe Board
before their commencements. The Group has structured plans to
prepare the Group for expansion, includingthe development of
internal human resources, standardisation of processes and
promotion of our culture. Seniormanagement also have considerable
past experience and a strong track record of success in opening new
hotels. 4. New Hotel Openings - The Group has an active schedule in
2021 and 2022 for new hotel openings. However,there are specific
risks associated with these openings relating to costs, timing,
customer service delivery andfinancial returns. Detailed hotel
opening plans are in place and are a focus area for management. The
opening ofMaldron Hotel Glasgow City in August 2021 was a success,
with additional insights noted that will support our sixnew
openings over the course of the next nine months. 5. Culture and
Values - As Dalata expands there is a risk that the organisation's
unique culture and valuescould be damaged. The rollout of the
Dalata business model is dependent on the retention of its strong
culture. TheGroup is actively managing this risk by focusing on the
behaviours of executive management, investing in trainingand
development programmes and through its employee engagement
programme. These values were reflected in thedecision-making
process throughout the pandemic. 6. Concentration in the Dublin
Market - The Group's activities are currently concentrated in the
Dublinhotel market. Therefore, any downturn in Dublin is likely to
have a material impact on performance. There ispotential exposure
to a decline in business in the event of reduced demand in Dublin
or a significant increase insupply. This will be an ongoing risk
for the Group, offset by the UK development programme and any
potentialexpansion in other markets. We opened our Maldron Hotel
Glasgow City in August 2021 and new UK hotel openings arescheduled
for the remainder of this year and early 2022. 7. Preparing for the
Changing Face of the Hospitality and Hotel Markets - The pandemic
impacted the hoteland hospitality industry as never before, as well
as its lasting effects on wider society. This was a new risk
areaintroduced as part of our 2020 reporting. As a response to this
risk, we developed and implemented severalinitiatives around guest
technologies, enhanced hygiene levels and guest service delivery as
part of our 2020 hotelreopening programme. Many of these are now
embedded in our business. We continue to look forward to how
hotelscould operate, and we would expect to adapt to any emerging
stakeholder requirements. The Group will continue toidentify and
embrace such changes, giving us a potential advantage in our
markets. 8. Environment and Climate Change - The Group is keenly
aware of the risks to society associated withclimate change and
environmental issues. We take our responsibilities in this area
seriously and recognise ourstakeholders' concerns and expectations.
There is a risk that Dalata could suffer reputational damage and a
loss incustomer, employee or other stakeholder confidence if it
does not appropriately recognise and respond to the impactof our
business activities on the environment. The Group is committed to
addressing stakeholder concerns through arange of initiatives.
These include the launch of the Living Green Programme including
'Green Tourism'Certification across the Group. The Group have also
engaged a leading ESG Advisory firm to support the developmentof a
3-year ESG Strategy plan which will be launched by Q1 2022. 9.
Development of Expertise and Availability of Resources - Dalata's
business model is built on our abilityto grow and retain expertise.
There could be a failure to retain key expertise and experiences
and develop talentwithin the Group to ensure its ongoing and future
success. Throughout 2020 and 2021, our strategy remainedunchanged
in this area. As the pandemic restrictions have eased, the Group is
now seeing the benefits of itsstrategy to retain the hotel
management teams and continue investing in development
programmes.
The effects of the pandemic and issues including the relocation
of people, international travel restrictions and Brexit have
resulted in changes to the employment market in many industries,
including hospitality. These factors could impact the Group's
ability to find and retain employees, particularly at the
operational level and in particular skill areas. Like many other
businesses, the Group is now operating in a challenging market to
find and retain sufficient resources. We are putting in place a
range of strategies to attract resources and highlight Dalata as
the employer of choice in our industry. However, the medium-term
exposure to this risk is uncertain as to whether it will have a
short-term impact or represent a structural change in the
employment market for these industries. 10. Health and Safety - As
a large hotel operator, there is a range of risks associated with
life safety,fire safety and food safety. Health and Safety
continues to be a priority for the Board and management. There
hasbeen no reduction in this priority during 2021, and all
preventative maintenance, life and fire system servicing,and
management oversight of health and safety remains in place. In
addition, we implemented enhanced hygienerequirements as part of
hotel re-openings through our Dalata Keep Safe Programme. These
requirements are nowembedded in hotel operational routines, and all
team members are trained on their implementation. These health
andsafety protocols continue to be accredited by Bureau Veritas, a
world leader in testing inspection andcertification in the Health
and Safety area. 11. Information Security and Data Protection - All
businesses face increased information security risksassociated with
sophisticated cyber- attacks, including those targeting data held
by companies. With Covid-19, morepeople are working from home,
increasing the risk profile in these areas. A successful cyber
event could causesignificant disruption to the business. Losing
control of personal data could result in reputational damage
andregulatory fines. Dalata's Information Security Management
System is based on ISO27001 and protects the Group'sinformation
resources. This framework is supported by audits, company policies
and employee training, overseen byexternal advisors and ongoing
security monitoring. We continue to invest in modern and secure
technologies,supported by employee awareness and training in
information security. Our data protection policies set out
ourobligations regarding the handling of personal data, and the
procedures and principles that are to be followed. Ourprivacy
committee, including senior management and external privacy
specialists, provide leadership in this area,with regular updates
to executive management, Board and Board committees.
1 See Supplementary Financial Information which contains
definitions and reconciliations of Alternative Performance Measures
("APM") and other definitions.
2 Cash outflow of EUR24 million excludes impact of net receipt
of loans and movements in exchange rates.
3 Excludes the Ballsbridge Hotel in Dublin as it is not
currently trading and the new Maldron Hotel Glasgow City in the UK
which opened in August 2021.
4 The main adjusting item is the net property revaluation gain
of EUR2.5 million (six months ended 30 June 2020: net revaluation
loss of EUR27.3 million) following the valuation of property
assets. Further detail on adjusting items is provided in the
section titled 'Adjusting items to EBITDA'.
5 Performance statistics exclude the Ballsbridge Hotel in Dublin
as the hotel effectively has not traded since early 2020.
6 Regional Ireland performance statistics reflect a full
six-month performance of all hotels in this portfolio for both
periods.
7 UK performance statistics reflect a full six-month performance
of all hotels in this portfolio for both periods regardless of when
acquired.
8 Other non-current assets comprise investment property,
deferred tax assets and other receivables (which primarily relate
to professional fees associated with future lease agreements for
hotels currently being constructed or in planning).
9 Other liabilities comprise deferred tax liabilities,
derivatives, provision for liabilities and current tax
liabilities.
Dalata Hotel Group plc
Unaudited condensed consolidated statement of comprehensive
income
for the six months ended 30 June 2021
6 months 6 months
ended ended
30 June 30 June
2021 2020
Note EUR'000 EUR'000
Continuing operations
Revenue 4 39,586 80,796
Cost of sales (13,191) (33,611)
Gross profit 26,395 47,185
Administrative expenses 5 (46,657) (102,276)
Other income 258 226
Operating loss (20,004) (54,865)
Finance costs 8 (17,814) (16,020)
Loss before tax (37,818) (70,885)
Tax credit 10 7,443 7,769
Loss for the period attributable to owners of the Company (30,375) (63,116)
Other comprehensive income/(loss)
Items that will not be reclassified to profit or loss
Revaluation of property 12 (1,940) (133,673)
Related deferred tax 839 20,390
(1,101) (113,283)
Items that are or may be reclassified subsequently to profit or loss
Exchange gain/(loss) on translating foreign operations 18,741 (28,674)
(Loss)/gain on net investment hedge (14,157) 21,157
Fair value gain/(loss) on cash flow hedges 2,297 (6,109)
Cash flow hedges - reclassified to profit or loss 1,316 929
Related deferred tax - 649
8,197 (12,048)
Other comprehensive income/(loss) for the period, net of tax 7,096 (125,331)
Total comprehensive loss for the period attributable to owners of the Company (23,279) (188,447)
Earnings per share
Basic loss per share 22 (13.6) cents (34.0) cents
Diluted loss per share 22 (13.6) cents (34.0) cents
Dalata Hotel Group plc
Unaudited condensed consolidated statement of financial
position
at 30 June 2021
30 June 31 December
2021 2020
Assets Note EUR'000 EUR'000
Non-current assets
Intangible assets and goodwill 11 32,028 31,733
Property, plant and equipment 12 1,212,323 1,202,743
Right-of-use assets 13 406,073 411,007
Investment property 2,090 2,089
Deferred tax assets 19 20,893 12,344
Contract fulfilment costs 14 - 22,374
Other receivables 9,888 9,059
Total non-current assets 1,683,295 1,691,349
Current assets
Contract fulfilment costs 14 27,216 -
Trade and other receivables 12,716 9,231
Inventories 1,372 1,258
Cash and cash equivalents 40,928 50,197
Total current assets 82,232 60,686
Total assets 1,765,527 1,752,035
Equity
Share capital 21 2,229 2,227
Share premium 21 504,895 504,735
Capital contribution 25,724 25,724
Merger reserve 81,264 81,264
Share-based payment reserve 2,150 3,419
Hedging reserve (5,429) (9,042)
Revaluation reserve 198,205 199,306
Translation reserve (8,518) (13,102)
Retained earnings 110,256 138,249
Total equity 910,776 932,780
Liabilities
Non-current liabilities
Loans and borrowings 18 341,963 314,143
Lease liabilities 13 391,004 388,871
Deferred tax liabilities 19 39,692 39,404
Derivatives 5,429 9,042
Provision for liabilities 15 7,735 6,747
Total non-current liabilities 785,823 758,207
Current liabilities
Lease liabilities 13 9,766 10,761
Trade and other payables 57,551 48,668
Current tax liabilities 82 91
Provision for liabilities 15 1,529 1,528
Total current liabilities 68,928 61,048
Total liabilities 854,751 819,255
Total equity and liabilities 1,765,527 1,752,035
Dalata Hotel Group plc
Unaudited condensed consolidated statement of changes in equity
for the six months ended 30 June 2021
Attributable to owners of the Company
Share-based
Share Share Capital Merger payment Hedging Revaluation Translation Retained
capital premium Contribution reserve reserve reserve reserve reserve earnings Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
At 1 January 2021 2,227 504,735 25,724 81,264 3,419 (9,042) 199,306 (13,102) 138,249 932,780
Comprehensive
loss:
Loss for the - - - - - - - - (30,375) (30,375)
period
Other
comprehensive
income/(loss)
Exchange gain on
translating - - - - - - - 18,741 - 18,741
foreign operations
Loss on net - - - - - - - (14,157) (14,157)
investment hedge
Revaluation of - - - - - - (1,940) - - (1,940)
property
Fair value gain on - - - - - 2,297 - - - 2,297
cash flow hedges
Cash flow hedges -
reclassified to - - - - - 1,316 - - - 1,316
profit or loss
Related deferred - - - - - - 839 - - 839
tax
Total
comprehensive loss - - - - - 3,613 (1,101) 4,584 (30,375) (23,279)
for the period
Transactions with
owners of the
Company:
Equity-settled
share-based - - - - 1,113 - - - - 1,113
payments
Vesting of share 2 160 - - - - - - - 162
awards and options
Transfer from
share-based - - - - (2,382) - - - 2,382 -
payment reserve to
retained earnings
Total transactions
with owners of the 2 160 - - (1,269) - - - 2,382 1,275
Company
At 30 June 2021 2,229 504,895 25,724 81,264 2,150 (5,429) 198,205 (8,518) 110,256 910,776
Dalata Hotel Group plc
Unaudited condensed consolidated statement of changes in
equity
for the six months ended 30 June 2020
Attributable to owners of the Company
Share-based
Share Share Capital Merger payment Hedging Revaluation Translation Retained
capital premium Contribution reserve reserve reserve reserve reserve earnings Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
At 1 January 1,851 504,488 25,724 (10,337) 4,900 (3,958) 351,869 (6,593) 204,897 1,072,841
2020
Comprehensive
loss:
Loss for the - - - - - - - - (63,116) (63,116)
period
Other
comprehensive
income/(loss)
Exchange loss on
translating - - - - - - - (28,674) - (28,674)
foreign
operations
Gain on net - - - - - - - 21,157 - 21,157
investment hedge
Revaluation of - - - - - - (133,673) - - (133,673)
property
Transfer of
revaluation
gains to - - - - - - (30,269) - 30,269 -
retained
earnings on sale
of property
Fair value loss
on cash flow - - - - - (6,109) - - - (6,109)
hedges
Cash flow hedges
- reclassified - - - - - 929 - - - 929
to profit or
loss
Related deferred - - - - - 649 20,390 - - 21,039
tax
Total
comprehensive - - - - - (4,531) (143,552) (7,517) (32,847) (188,447)
loss for the
period
Transactions
with owners of
the Company:
Equity-settled
share-based - - - - 1,078 - - - - 1,078
payments
Vesting of share
awards and 6 247 - - (3,040) - - - 3,040 253
options
Total
transactions 6 247 - - (1,962) - - - 3,040 1,331
with owners of
the Company
At 30 June 2020 1,857 504,735 25,724 (10,337) 2,938 (8,489) 208,317 (14,110) 175,090 885,725
Dalata Hotel Group plc
Unaudited condensed consolidated statement of cash flows
for the six months ended 30 June 2021
6 months 6 months
ended ended
30 June 30 June
2021 2020
EUR'000 EUR'000
Cash flows from operating activities
Loss for the period (30,375) (63,116)
Adjustments for:
Depreciation of property, plant and equipment 13,416 13,481
Depreciation of right-of-use assets 9,805 10,627
Amortisation of intangible assets 281 270
Net property revaluation movements through profit or loss (2,477) 27,261
Loss on sale and leaseback - 1,673
Impairment of goodwill - 3,226
Impairment of right-of-use assets 315 7,415
Impairment of fixtures, fittings and equipment 5 1,054
Remeasurement gain on right-of-use assets (277) -
Share-based payments expense 1,113 1,078
Interest on lease liabilities 11,771 10,881
Other interest and finance costs 6,043 5,139
Tax credit (7,443) (7,769)
2,177 11,220
Increase/(decrease) in trade and other payables and provision for 6,911 (16,391)
liabilities
Increase in current and non-current trade and other receivables (3,244) (3,292)
(Increase)/decrease in inventories (114) 556
Tax paid (104) (767)
Net cash from/(used in) operating activities 5,626 (8,674)
Cash flows from investing activities
Purchase of property, plant and equipment (3,580) (17,267)
Contract fulfilment cost payments (3,039) (1,735)
Costs paid on entering new leases and agreements for lease (632) (5,771)
Proceeds from sale of Clayton Hotel Charlemont - 64,190
Purchase of intangible assets (47) (493)
Net cash (used in)/from investing activities (7,298) 38,924
Cash flows from financing activities
Net receipt of revolving credit facility loans 13,000 50,986
Repayment of lease liabilities (3,962) (3,171)
Interest paid on lease liabilities (11,771) (10,881)
Other interest and finance costs paid (6,994) (4,642)
Proceeds from vesting of share awards and options 162 253
Net cash (used in)/from financing activities (9,565) 32,545
Net (decrease)/increase in cash and cash equivalents (11,237) 62,795
Cash and cash equivalents at beginning of period 50,197 40,586
Effect of movements in exchange rates 1,968 (242)
Cash and cash equivalents at end of period 40,928 103,139
________
Dalata Hotel Group plc
Notes to the unaudited condensed consolidated interim financial
statements 1. General information and basis of preparation
Dalata Hotel Group plc ('the Company') is a company domiciled in
the Republic of Ireland. The unaudited condensed consolidated
financial statements for the six month period ended 30 June 2021
(the 'Interim Financial Statements') include the Company and its
subsidiaries (together referred to as the 'Group'). The Interim
Financial Statements were authorised for issue by the Directors on
31 August 2021.
These unaudited Interim Financial Statements have been prepared
by Dalata Hotel Group plc in accordance with IAS 34 Interim
Financial Reporting ('IAS 34') as adopted by the European Union
('EU'). They do not include all of the information required for a
complete set of financial statements prepared in accordance with
International Financial Reporting Standards ('IFRS') as adopted by
the EU. However, selected explanatory notes are included to explain
events and transactions that are significant to an understanding of
the changes in the Group's financial position and performance since
31 December 2020. They should be read in conjunction with the
consolidated financial statements of Dalata Hotel Group plc, which
were prepared in accordance with IFRS as adopted by the EU, as at
and for the year ended 31 December 2020.
These Interim Financial Statements are presented in Euro,
rounded to the nearest thousand, which is the functional currency
of the parent company and also the presentation currency for the
Group's financial reporting.
The preparation of Interim Financial Statements requires
management to make judgements, estimates and assumptions that
affect the application of policies and reported amounts of assets
and liabilities, income and expenses. Actual results could differ
materially from these estimates. In preparing these Interim
Financial Statements, the critical judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the
consolidated financial statements as at and for the year ended 31
December 2020.
The Interim Financial Statements do not constitute statutory
financial statements. The statutory financial statements for the
year ended 31 December 2020, together with the independent
auditor's report thereon, have been filed with the Companies
Registration Office and are available on the Company's website
www.dalatahotelgroup.com. The auditor's report on those financial
statements was not qualified and it contained an emphasis of matter
paragraph, drawing attention to the disclosures in the financial
statements concerning the material valuation uncertainty in respect
of the estimated fair value of the Group's owned land and buildings
as at 31 December 2020 on the basis of uncertainties in the hotel
property market, at that time, caused by the Covid-19 pandemic.
Going concern
Ongoing government restrictions due to Covid-19 continued to
have a significant impact on the earnings and operations of the
Group in the first half of 2021. These included the closure of the
hospitality industry to all except for essential services business
from the start of the period in Ireland until 2 June 2021. All of
the Group's UK hotels were only open at limited capacity between
January 2021 and May 2021.Hotels re-opened fully to the public in
England and Wales on 17 May 2021 and in Northern Ireland on 24 May
2021. In both Ireland and the UK, international travel has also
largely been restricted to essential travel only for the entire
period. Large events and public gatherings were prohibited
throughout the period. Restrictions are however being gradually
lifted in light of the success of the ongoing vaccine rollouts in
both jurisdictions and globally.
The impact of the Covid-19 restrictions has resulted in Group
revenue declining by EUR162.3 million compared to the first half of
2019, a period unimpacted by Covid-19. Covid-19 has also impacted a
number of other areas of the business which are further detailed in
the Operating segments note 4, Property, plant and equipment note
12, Impairment note 6 and Financial risk management note 17.
The Group entered the Covid-19 pandemic with a strong balance
sheet and liquidity position and, despite the material impact
Covid-19 has on the Group's financial performance, the Group
remains in a strong position. As at 30 June 2021, the Group had
property, plant and equipment of EUR1,212.3 million and cash and
undrawn facilities of EUR269.9 million. The Group was not in breach
of any of its covenants as at 30 June 2021.
The Group continued to tightly manage its cash and liquidity in
the first half of 2021 and executed a number of strategies
including:
-- Availing of government wage subsidy schemes, other
non-payroll related grants, and government assistancein the form of
commercial rates waivers and warehousing of tax liabilities, where
possible, in Ireland and in theUK (note 7);
-- Postponement and cancellation of non-committed non-essential
capital expenditure; and
-- Strict working capital and cost management in all hotels and
Central Office.
In 2020, similar measures to the above were implemented in
addition to other liquidity strengthening actions such as the
cancellation of the 2019 final dividend originally recommended by
the Board, the sale and leaseback of Clayton Hotel Charlemont for
EUR64.2 million in April 2020 and an equity raise in September 2020
raising net proceeds of EUR92.0 million.
In addition, on 9 July 2020, the Group entered into an amended
and restated facility agreement with its banking club to provide
additional flexibility and liquidity to support the Group following
the impact of Covid-19 restrictions. The Group raised an additional
EUR39.4 million in revolving credit facilities with a maturity date
of 30 September 2022 and the maturity of EUR20.1 million of
revolving credit facilities was shortened to 30 September 2022 from
26 October 2024. The Group also agreed a new temporary suite of
covenants with its banking club. The revised covenants include Net
Debt to Value covenants and a minimum liquidity restriction whereby
either cash, remaining available facilities or a combination of
both must not fall below EUR50 million at any point to 30 March
2022. The revised covenants were put in place to avoid potential
breaches in covenants based on trailing 12-month EBITDA during the
period of recovery in trading profits following the impact of
Covid-19.
The Group will revert to the previous covenants comprising Net
Debt to EBITDA and Interest Cover covenants for testing at 30 June
2022. At 30 June 2022, the Net Debt to EBITDA covenant limit is
6.0x and the Interest Cover minimum is 4.0x. The Net Debt to EBITDA
covenant limit reduces to 4.0x at 31 December 2022.
Forecasts completed as part of the amendment and restatement in
July 2020 assumed recovery would commence earlier in 2021 and did
not forecast the extended lockdowns in both Ireland and the UK,
which resulted from the severity of the third wave of Covid-19
infections and the new variants despite the success of the vaccine
rollout. As the recovery only commenced in quarter two 2021
following lifting of restrictions, the trailing 12-month EBITDA
from 1 July 2021 to 30 June 2022 will be lower than when revised
covenants were originally agreed.
Forecasting of near-term trade performance remains difficult in
the current environment. To address this, multiple reasonable
scenarios have been prepared by the Group with key assumptions
varying around the timing of the return to more normal levels of
international travel and the ongoing nature and extent of
government supports. Since re-opening in quarter two 2021 and the
gradual lifting of travel restrictions, trade, primarily domestic
leisure, continues to exceed expectations and the business
continues to see later booking patterns than normal across all
channels. Governments have announced ongoing supports but detail on
some of these have not yet been formalised and consequently cannot
be forecast with precision at this time.
In all reasonable scenarios, the Group is forecast to have
sufficient available funds and liquidity during the forecast period
to December 2024. However, some of the scenarios show a potential
temporary breach of Net Debt to EBITDA and Interest Cover covenants
when they are re-instated and tested as of 30 June 2022 due to the
recovery only now commencing in the trailing 12-month period
underpinning the calculation of EBITDA for those covenants. All
scenarios show compliance at the following testing period, 31
December 2022 and thereafter. If the covenants were temporarily
breached as at 30 June 2022, all of the Group's borrowings would
become repayable on demand under the terms of the Group's Facility
Agreement from that point.
The Group will continue to monitor the evolving trade forecasts
and pursue proactive and timely mitigating actions if necessary as
it has since the start of the pandemic. As visibility on forecasts
increases, any appropriate mitigating actions which are not
currently modelled to prevent a possible covenant breach will be
taken. These include engaging with the Group's banking club as to
the timing of reverting to previous covenants given the longer than
expected duration of Covid-19 restrictions. The Group will also
consider other strategies such as a sale of an asset, a further
share placing, negotiations with landlords on rental obligations
and more severe cost cutting.
If a request for an extension of the temporary suite of
covenants were made of the Group's banking club or even if a
covenant breach were to arise, the Group would be confident of the
ongoing support of its banking club given the strong relationships
it has with the club as the Group has successfully navigated the
unprecedented circumstances following Covid-19, the resumption of
recovery towards more normal levels of trade, the Group's historic
profitability and successful management and, not least, the value
of the Group's assets upon which the banking club has security. Net
Debt to Value ratio at 30 June 2021 was 27%.
At this point, the Group does not feel any of these further
mitigating actions are necessary. The Group is focused on
maximising trading opportunities and operational performance given
the lifting of restrictions and on its future growth, including the
opening of five more hotels in 2021 and early 2022, following the
successful opening of Maldron Hotel Glasgow City in August 2021. In
early 2022, the Group is also on target to execute the forward sale
of the residential units it has developed along with the building
of the Maldron Merrion Road Hotel, which will lead to a cash inflow
of approximately EUR42 million (excluding VAT).
The Directors have considered all of the above, with all
available information and the current liquidity and capital
position of the Group in assessing the going concern of the Group.
On the basis of these judgements, the Directors have prepared these
condensed consolidated interim financial statements on a going
concern basis. Furthermore, they do not believe there is any
material uncertainty related to events or conditions that may cast
significant doubt on the Group's ability to continue as a going
concern. 2. Significant accounting policies
The accounting policies applied in these Interim Financial
Statements are consistent with those applied in the consolidated
financial statements as at and for the year ended 31 December 2020.
3. Seasonality
In a typical year, hotel revenue and operating profit are driven
by seasonal factors such as July and August being typically the
busiest months in the operating cycle. In 2020 and the current
period, due to the impact of Covid-19 restrictions, typical
patterns of seasonality are disrupted and are not comparable to
previous periods. 4. Operating segments
The Group's segments are reported in accordance with IFRS 8
Operating Segments. The segment information is reported in the same
way as it is reviewed and analysed internally by the chief
operating decision makers, primarily the Executive Directors.
The Group segments its leased and owned business by geographical
region within which the hotels operate being Dublin, Regional
Ireland and the UK. These comprise the Group's three reportable
segments.
Dublin, Regional Ireland and UK segments
These segments are concerned with hotels that are either owned
or leased by the Group. As at 30 June 2021, the Group owns 27
hotels (31 December 2020: 27 hotels, 30 June 2020: 27 hotels) and
has effective ownership of one further hotel which it operates (31
December 2020: one hotel, 30 June 2020: one hotel). It also owns
the majority of one further hotel it operates (31 December 2020:
one hotel, 30 June 2020: one hotel). The Group also leases 12 hotel
buildings from property owners (31 December 2020: 12 hotels, 30
June 2020: 12 hotels) and is entitled to the benefits and carries
the risks associated with operating these hotels.
The Group's revenue from leased and owned hotels is primarily
derived from room sales and food and beverage sales in restaurants,
bars and banqueting. The main costs arising are payroll, cost of
goods for resale, commissions paid to online travel agents on room
sales, other operating costs, and, in the case of leased hotels,
variable lease costs (where linked to turnover or profit) payable
to lessors.
Revenue 6 months 6 months
ended ended
30 June 30 June
2021 2020
EUR'000 EUR'000
Dublin 16,120 44,847
Regional Ireland 11,639 15,591
UK 11,827 20,358
______ ______
Total revenue 39,586 80,796
______ ______
Revenue for each of the geographical locations represents the
operating revenue (room revenue, food and beverage revenue and
other hotel revenue) from leased and owned hotels situated in (i)
Dublin, (ii) Regional Ireland and (iii) the UK.
The Covid-19 pandemic has resulted in a material loss of revenue
for the period ended 30 June 2021. The prior period was also
impacted by Covid-19 from March 2020. Varying global restrictions
on travel and numerous public health initiatives have resulted in
significantly reduced demand in the wider hospitality industry. In
Ireland, all hotels except for one hotel remained open in a limited
capacity to provide for essential services business between January
2021 and May 2021. On 2 June 2021, the hotels in Ireland re-opened
to the public, however, food and beverage was only available to
hotel guests in line with government restrictions. All of the
Group's UK hotels were open at limited capacity between January
2021 and May 2021. Hotels re-opened fully to the public in England
and Wales on 17 May 2021 and in Northern Ireland on 24 May
2021.
6 months 6 months
ended ended
30 June 30 June
2021 2020
EUR'000 EUR'000
Segmental results - EBITDAR
Dublin 2,143 13,393
Regional Ireland 3,162 (317)
UK 1,384 2,502
______ ______
EBITDAR for reportable segments 6,689 15,578
______ ______
Segmental results - EBITDA
Dublin 2,143 13,198
Regional Ireland 3,162 (327)
UK 1,384 2,470
______ ______
EBITDA for reportable segments 6,689 15,341
______
Reconciliation to results for the period
Segments EBITDA 6,689 15,341
Other income 258 226
Central costs (4,397) (4,347)
Share-based payments expense (1,113) (1,078)
______ ______
Adjusted EBITDA 1,437 10,142
Hotel pre-opening expenses (373) -
Net property revaluation movements through profit or loss 2,477 (27,261)
Impairment of goodwill - (3,226)
Impairment of fixtures, fittings and equipment (5) (1,054)
Impairment of right-of-use assets (315) (7,415)
Remeasurement gain on right-of-use assets 277 -
Loss on sale and leaseback - (1,673)
______ ______
Group EBITDA 3,498 (30,487)
Depreciation of property, plant and equipment (13,416) (13,481)
Depreciation of right-of-use assets (9,805) (10,627)
Amortisation of intangible assets (281) (270)
Interest on lease liabilities (11,771) (10,881)
Other interest and finance costs (6,043) (5,139)
______ ______
Loss before tax (37,818) (70,885)
Tax credit 7,443 7,769
______ ______
Loss for the period (30,375) (63,116)
______ ______
Group EBITDA represents earnings before interest on lease
liabilities, other interest and finance costs, tax, depreciation of
property, plant and equipment and right-of-use assets, and
amortisation of intangible assets.
Adjusted EBITDA is presented as an alternative performance
measure to show the underlying operating performance of the Group
excluding items which are not reflective of normal trading
activities or distort comparability either period on period or with
other similar businesses. Consequently, Adjusted EBITDA represents
Group EBITDA before:
-- Net property revaluation movements through profit or loss
(note 12);
-- Impairment of goodwill (note 11), right-of-use assets (note
13) or related fixtures, fittings andequipment (note 12);
-- Hotel pre-opening expenses, which relate primarily to payroll
expenses, sales and marketing costs andtraining costs of new staff,
that are incurred by the Group in advance of new hotel
openings;
-- The remeasurement gain on right-of-use assets (note 13);
and
-- The accounting loss on the sale and leaseback.
The line item 'central costs' includes costs of the Group's
central functions including operations support, technology, sales
and marketing, human resources, finance, corporate services and
business development. Share-based payments expense is presented
separately from central costs as this expense relates to employees
across the Group.
'Segmental results - EBITDA' for Dublin, Regional Ireland and UK
represents the 'Adjusted EBITDA' for each geographical location
before central costs, share-based payments expense and other
income. It is the net operational contribution of leased and owned
hotels in each geographical location.
'Segmental results - EBITDAR' for Dublin, Regional Ireland and
UK represents 'Segmental results - EBITDA' before variable lease
costs.
Disaggregated revenue information
Disaggregated revenue is reported in the same way as it is
reviewed and analysed internally by the chief operating decision
makers, primarily the Executive Directors. The key components of
revenue reviewed by the chief operating decision makers are:
-- Room revenue which relates to the rental of rooms in each
hotel. Revenue is recognised when the hotelroom is occupied, and
the service is provided;
-- Food and beverage revenue which relates to sales of food and
beverages at the hotel property. Thisrevenue is recognised at the
point of sale; and
-- Other revenue includes revenue from leisure centres, car
parks, meeting room hire and other revenuesources at the hotels.
Leisure centre revenue is recognised over the life of the
membership while the other itemsare recognised when the service is
provided.
6 months 6 months
ended ended
30 June 30 June
2021 2020
EUR'000 EUR'000
Revenue review by segment - Dublin
Room revenue 10,591 29,899
Food and beverage revenue 3,851 10,965
Other revenue 1,678 3,983
______ ______
Total revenue 16,120 44,847
______ ______
Revenue review by segment - Regional Ireland
Room revenue 7,315 8,810
Food and beverage revenue 3,284 4,875
Other revenue 1,040 1,906
______ ______
Total revenue 11,639 15,591
______ ______
Revenue review by segment - UK
Room revenue 8,597 14,208
Food and beverage revenue 2,524 4,435
Other revenue 706 1,715
_____ _____
Total revenue 11,827 20,358
_____ ______
Other geographical information
Revenue 6 months ended 30 June 2021 6 months ended 30 June 2020
Republic of Ireland UK Republic of Ireland UK
Total Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Owned hotels 21,699 7,659 29,358 41,070 14,694 55,764
Leased hotels 6,060 4,168 10,228 19,368 5,664 25,032
Total revenue 27,759 11,827 39,586 60,438 20,358 80,796
EBITDAR 6 months ended 30 June 2021 6 months ended 30 June 2020
Republic of Ireland UK Republic of Ireland UK
Total Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Owned hotels 5,814 1,234 7,048 8,595 2,140 10,735
Leased hotels (509) 150 (359) 4,481 362 4,843
Total EBITDAR 5,305 1,384 6,689 13,076 2,502 15,578
EBITDAR 6 months ended 30 June 2021 6 months ended 30 June 2020
Republic of Ireland UK Republic of Ireland UK
Total Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Variable lease costs - - - 205 32 237
Depreciation of property, plant
8,989 4,427 13,416 9,159 4,322 13,481
and equipment
Depreciation of right-of-use assets 7,451 2,354 9,805 7,959 2,668 10,627
Interest on lease liabilities 7,731 4,040 11,771 7,031 3,850 10,881
5 Administrative expenses
6 months 6 months
ended ended
30 June 30 June
2021 2020
EUR'000 EUR'000
Depreciation of property, plant and equipment (note 12) 13,416 13,481
Depreciation of right-of-use assets (note 13) 9,805 10,627
Net property revaluation movements through profit or loss* (2,477) 27,261
Impairment of goodwill - 3,226
Impairment of fixtures, fittings and equipment (note 12) 5 1,054
Impairment of right-of-use assets (note 13) 315 7,415
Remeasurement gain on right-of-use assets (note 13) (277) -
Amortisation of intangible assets (note 11) 281 270
Other administrative expenses 25,216 37,032
Hotel pre-opening expenses 373 -
Loss on sale and leaseback - 1,673
Variable lease costs - 237
_______ _______
46,657 102,276
_______ ______
*Net property revaluation movements through profit or loss
relate to the net reversal of revaluation losses of EUR2.5 million
through profit or loss (note 12) offset by a EUR0.02m fair value
loss on investment property. 6. Impairment
At 30 June 2021, as a result of the impact of Covid-19 on
expected trading, particularly on near term profitability, and the
carrying amount of the net assets of the Group being more than its
market capitalisation (market capitalisation is calculated by
multiplying the share price on that date by the number of shares in
issue), the Group tested each cash generating unit ('CGU') for
impairment as both were deemed to be potential impairment
indicators. Market capitalisation can be influenced by a number of
different market factors and uncertainties, most evidently the
impact of Covid-19. In addition, share prices reflect a discount
due to lack of control rights.
Impairment arises where the carrying value of the CGU (which
includes, where relevant, revalued properties and/or right-of-use
assets, allocated goodwill, fixtures, fittings and equipment)
exceeds its recoverable amount on a value in use ('VIU') basis.
Each individual hotel is considered to be a CGU for the purposes of
impairment testing.
At 30 June 2021, the recoverable amounts of the Group's CGUs
were based on VIU, determined by discounting the estimated future
cash flows generated from the continuing use of these hotels. VIU
cash flow projections are prepared for each CGU and then compared
against the carrying value of the assets, including goodwill,
properties, fixtures, fittings and equipment and right-of-use
assets, in that CGU. The VIU assumptions are detailed below. The
VIU cash flows take into account changes in market conditions as a
result of Covid-19.
The VIU estimates were based on the following key
assumptions:
-- Cash flow projections are based on operating results and
forecasts prepared by management covering aten-year period in the
case of freehold properties. This period was chosen due to the
nature of the hotel assetsand is consistent with the valuation
basis used by independent external property valuers when performing
theirhotel valuations (note 12). For CGUs with right-of-use assets,
the lease term was used;
-- Revenue and EBITDA projections are based on management's best
estimate projections as at 30 June 2021.Forecasted revenue and
EBITDA are based on expectations of future outcomes taking into
account the currentearnings, impact of Covid-19, past experience
and adjusted for anticipated revenue and cost growth;
-- Cash flow projections assume a long-term compound annual
growth rate of 2% in EBITDA for CGUs in theRepublic of Ireland and
in the UK;
-- Cash flows include an average annual capital outlay on
maintenance for the hotels dependent on thecondition of the hotel
or typically 4% of revenues but assume no enhancements to any
property;
-- In the case of CGUs with freehold properties, the VIU
calculations also include a terminal value based onterminal (year
10) capitalisation rates consistent with those used by the external
property valuers whichincorporates a long-term growth rate of 2%
for Irish and for UK properties;
-- The cash flows are discounted using a risk adjusted discount
rate specific to each property. Riskadjusted discount rates of
7.75% to 9.50% for Dublin assets (31 December 2020: 8.25% to
9.75%), 9.0% to 11.0% forRegional Ireland assets (31 December 2020:
9.0% to 11.25%), 7.0% to 11.25% for UK assets (31 December 2020:
7.0% to11.25%) have been used; and
-- The values applied to each of these key assumptions are
derived from a combination of internal andexternal factors based on
historical experience of the valuers and of management and taking
into account thestability of cash flows typically associated with
these factors.
At 30 June 2021, the recoverable amount was deemed lower than
the carrying amount in one of the Group's CGUs and resulted in an
impairment charge of GBP0.3 million (EUR0.3 million), relating to a
right-of-use asset (note 13) and fixtures, fittings and equipment
(note 12), being recognised at 30 June 2021.
At 30 June 2021, the carrying value of the Group's other CGUs
did not exceed their recoverable amount and no impairment was
required following assessment.
Covid-19 continues to impact the Group's business and
operations. As a result, the Group's projections are subject to a
greater level of uncertainty than usual as governments worldwide
continue to implement measures to protect public health, roll out
vaccine programmes and support business and employment. As at 30
June 2021, all of the Group's hotels except for one hotel had
re-opened to the public, however, the impact on the hospitality
industry has been severe and predicting the path and the eventual
containment of Covid-19 and the consequent lifting of travel and
public health restrictions is difficult particularly in the
immediate short term. Therefore, the estimation of cash flows which
take into account the ongoing impacts of the pandemic, prepared to
support the VIU estimates, is a key source of estimation
uncertainty. Projections have been prepared on a conservative basis
taking into account all information reasonably available in the
environment at 30 June 2021. Broadly, the cash flow projections
assume that the vaccine roll out continues, the projections assume
international travel gradually returns during the second half of
2021 which continues through 2022 with trade broadly back to more
normal levels in 2023 and 2024.
7 Government grants and government assistance
6 months 6 months
ended ended
30 June 30 June
2021 2020
EUR'000 EUR'000
Temporary Wage Subsidy Scheme (Ireland) - 2,519
Employment Wage Subsidy Scheme (Ireland) 15,233 -
Coronavirus Job Retention Scheme (UK) 1,930 2,724
Other government grants related to income 5,834 -
_______ _______
Grants related to income 22,997 5,243
_______ ______
Payroll-related government grants
During the period ended 30 June 2021, the Group availed of the
Employment Wage Subsidy Scheme in Ireland and the Coronavirus Job
Retention Scheme in the UK. The Employment Wage Subsidy Scheme is
available to employers who suffered a minimum 30% reduction in
turnover as a result of the Covid-19 pandemic, and provides a flat
rate subsidy based on the number of eligible employees. The
Coronavirus Job Retention Scheme is available for eligible
employees for the hours the employees are on furlough.
The Group was in compliance with all the conditions of the
respective schemes during the period ended 30 June 2021 and availed
of these schemes. The grant income received has been offset against
the related costs in cost of sales and administrative expenses in
profit or loss. No contingencies are attached to any of these
schemes as at 30 June 2021. The Group continues to avail of the
wage subsidy schemes.
Other government grants
During the period ended 30 June 2021, the Group availed of other
grant schemes introduced by the Irish and UK governments to support
businesses during the Covid-19 pandemic and contribute towards
re-opening and other operating costs, including and not limited to
the Covid Restrictions Support Schemes in Ireland, and The Large
Tourism and Hospitality Business Support Scheme in Northern
Ireland. These grants, which totalled EUR5.8 million, have been
offset against the related costs of EUR5.8 million in
administrative expenses in profit or loss (period ended 30 June
2020: EURnil).
The Group availed of the ERF Sector Specific Support Fund in the
UK, which is aimed to support business survival and safeguarding
jobs. A condition of the grant is that, businesses are expected to
safeguard the relevant jobs for a minimum of 12-months. Therefore,
there is a contingent liability in this respect amounting to
GBP0.05 million (EUR0.06 million) as at 30 June 2021 (30 June 2020:
EURnil).
Government assistance
In addition, the Group received financial assistance by way of
commercial rates waivers and deferrals of tax liabilities from the
Irish and UK governments.
In Ireland, the Group benefitted from a commercial rates waiver
of EUR3.6 million for the period ended 30 June 2021 (for the period
ended 30 June 2020: EUR1.8 million). In the UK, the Group
benefitted from a commercial rates waiver of GBP2.1 million (EUR2.5
million) for the period ended 30 June 2021 (for the period ended 30
June 2020: GBP1.1 million (EUR1.3 million)).
Under the warehousing of tax liabilities legislation introduced
by the Financial Provisions (Covid-19) (No. 2) Bill 2020, Irish VAT
liabilities of EUR4.9 million and payroll tax liabilities of
EUR11.2 million have been deferred as at 30 June 2021 and are
expected to be payable during 2022.
In the UK, VAT liabilities relating to the year ended 31
December 2020 are being paid by instalments, under the VAT payment
deferral scheme. The outstanding deferred VAT liabilities at 30
June 2021 are GBP0.3 million (EUR0.4 million). These deferred
liabilities are payable in monthly instalments from July 2021 to
December 2021.
8 Finance costs
6 months 6 months
ended ended
30 June 30 June
2021 2020
EUR'000 EUR'000
Interest on lease liabilities (note 13) 11,771 10,881
Interest expense on bank loans and borrowings 4,929 4,213
Cash flow hedges - reclassified from other comprehensive income 1,316 929
Net exchange gain on loans and borrowings, and cash and cash equivalents (29) (69)
Other finance costs 1,021 692
Interest capitalised to property, plant and equipment (note 12) (886) (548)
Interest capitalised to contract fulfilment costs (note 14) (308) (78)
_______ _______
17,814 16,020
_______ _______
The Group uses interest rate swaps to convert the interest rate
on part of its debt from floating rate to fixed rate. The cash flow
hedge amount reclassified from other comprehensive income is shown
separately within finance costs and represents the additional
interest the Group paid as a result of the interest rate swaps.
Other finance costs primarily relate to commitment fees and
other banking fees. Net exchange gains on financing activities
relates principally to loans which did not form part of the net
investment hedge (note 17).
Interest on loans and borrowings amounting to EUR1.2 million
(period ended 30 June 2020: EUR0.6 million) was capitalised to
assets under construction and contract fulfilment costs on the
basis that this cost was directly attributable to the construction
of qualifying assets (notes 12,14). The capitalisation rates
applied by the Group, which were reflective of the weighted average
interest cost in respect of Euro denominated borrowings and
Sterling denominated borrowings for the period, were 2.4% (30 June
2020: 1.4 %) and 3.6% (30 June 2020: 2.9%) respectively.
9 Share-based payments expense
The total share-based payments expense for the Group's employee
share schemes charged to profit or loss during the period was
EUR1.1 million (six months ended 30 June 2020: EUR1.1 million),
analysed as follows:
6 months 6 months
ended ended
30 June 30 June
2021 2020
EUR'000 EUR'000
Long Term Incentive Plans 890 582
Share Save schemes 223 496
______ ______
1,113 1,078
______ ______
Details of the schemes operated by the Group are set out
hereafter:
Long Term Incentive Plans
Awards granted
In March 2021, the Board approved the conditional grant of
1,361,145 ordinary shares ('the Award') pursuant to the terms and
conditions of the Group's 2017 Long Term Incentive Plan ('the 2017
LTIP'). The Award was made to senior employees across the Group
(106 in total). As the Covid-19 pandemic has significantly impacted
the Group, setting targets of a market and non-market nature proved
difficult at this time and as a result, in line with guidance from
the Investment Association, the setting of the performance
condition target ranges was postponed until the second half of 2021
so that they could be appropriately set. The performance period of
the Award is 1 January 2021 to 31 December 2023. As the service
conditions had been set and the relevant service had been commenced
by employees during the period ended 30 June 2021, the Group has
recognised a cost in these condensed consolidated interim financial
statements in relation to these employees from March 2021 based on
the Group's best estimate as at the end of the reporting
period.
On 31 August 2021, the Board on the Remuneration Committee's
recommendation approved the new performance terms and conditions
for the 2021 LTIP which includes 50% of the performance target
being based on total shareholder return and 50% based on free cash
flow per share with varying thresholds.
Awards vested
As a result of the impact of Covid-19 on the Group, the
performance conditions under the 2018 LTIP scheme, total
shareholder return ('TSR') and earnings per share ('EPS') were not
satisfied. In January 2021, the Board on the Remuneration
Committee's recommendation, as permitted under the deed of grant,
modified the performance terms and conditions of the 2018 LTIP
scheme, to recognise the ongoing commitment by certain senior
employees of the Group. The modified conditions set out were that
the employee must have been a beneficiary of the 2018 LTIP scheme,
who was in employment on 25 January 2021 and was neither a Director
or Company Secretary. A maximum discretionary award of 25% of the
conditional awards under the 2018 LTIP scheme relating to these
employees vested and the related expense was fully accounted for in
the period ended 30 June 2021. The Group determined the fair value
on the date of modification to be the publicly available share
price on 25 January 2021 less the nominal value.
Movements in the number of share awards are as follows:
6 months ended Year ended
30 June 31 December
2021 2020
Awards Awards
Outstanding at the beginning of the period/year 3,842,928 2,361,766
Granted during the period/year 1,361,145 2,282,533
Dividend equivalents - 42,006
Forfeited during the period/year (43,148) (29,906)
Lapsed unvested during the period/year (628,524) (264,092)
Exercised during the period/year (93,172) (549,379)
Outstanding at the end of the period/year 4,439,229 3,842,928
6 months ended Year ended
30 June 31 December
2021
2020
Awards Awards
March 2018 - 728,288
March 2019 838,046 847,276
March 2020 2,244,725 2,267,364
March 2021 1,356,458 -
Outstanding at the end of the period/year 4,439,229 3,842,928
Share Save schemes
During the six months ended 30 June 2021, the Company issued
39,291 shares on maturity of the share options granted as part of
the Share Save scheme granted in 2017. The weighted average share
price at the date of exercise for options exercised during the
period was EUR4.53.
10 Tax credit
6 months 6 months
ended ended
30 June 30 June
2021 2020
EUR'000 EUR'000
Current tax
Irish corporation tax - -
Foreign corporation tax 5 77
Deferred tax credit (7,448) (7,846)
_____ _______
Tax credit (7,443) (7,769)
_____ _______
The deferred tax credit for the period ended 30 June 2021 of
EUR7.4 million relates mainly to the recognition of deferred tax
assets in respect of corporation tax losses incurred during the
period of EUR5.8 million, the remeasurement of UK deferred tax
assets and liabilities of EUR1.9 million, and other offsetting
movements of (EUR0.3 million), which are forecast to be realised at
the corporation tax rate of 25%. During the period ended 30 June
2021, the UK government substantively enacted an increase in the
corporation tax rate from 19% to 25%, with effect from 1 April 2023
(note 19). The increase in the effective income tax rate relative
to the prior period mainly relates to this remeasurement of UK
deferred tax assets and liabilities at the 25% rate. In addition,
the impact of non-deductible impairments reduced the effective tax
rate in the prior period, relative to the period ended 30 June
2021.
11 Intangible assets and goodwill
Other
intangible
Goodwill assets Total
EUR'000 EUR'000 EUR'000
Cost
Balance at 1 January 2021 78,963 2,470 81,433
Additions - 47 47
Effect of movement in exchange rates 529 - 529
_______ _______ _______
Balance at 30 June 2021 79,492 2,517 82,009
_______ _______ _______
Accumulated amortisation and impairment losses
Balance at 1 January 2021 (48,947) (753) (49,700)
Amortisation of intangible assets - (281) (281)
_______ _______ _______
Balance at 30 June 2021 (48,947) (1,034) (49,981)
_______ _______ _______
Carrying amounts
At 30 June 2021 30,545 1,483 32,028
_______ _______ _______
At 31 December 2020 30,016 1,717 31,733
_______ _______ _______
Goodwill
Goodwill is attributable to factors including expected
profitability and revenue growth, increased market share, increased
geographical presence, the opportunity to develop the Group's
brands and the synergies expected to arise within the Group after
acquisition.
Included in the goodwill figure is EUR12.0 million (GBP10.3
million), which is attributable to goodwill arising on acquisition
of foreign operations. Consequently, such goodwill is subsequently
retranslated at the closing rate.
The Group tests goodwill annually for impairment or more
frequently if there are indicators it may be impaired. Covid-19 and
the carrying amount of the net assets of the Group being more than
its market capitalisation have been deemed indicators of impairment
and as a result the Group performed an impairment test of the
Group's CGUs at 30 June 2021 (note 6). As a result of the
impairment tests, the Directors concluded that the carrying value
of goodwill was not impaired at 30 June 2021 (31 December 2020:
goodwill impairment of EUR2.6 million for a CGU relating to an
Irish hotel and EUR0.6 million (GBP0.6 million) for a CGU relating
to a UK hotel). 12 Property, plant and equipment
Fixtures,
Land and Assets under Total
buildings construction fittings and
equipment
EUR'000 EUR'000 EUR'000 EUR'000
At 30 June 2021
Valuation 1,067,023 - - 1,067,023
Cost - 67,459 141,338 208,797
Accumulated depreciation (and impairment - - (63,497) (63,497)
charges)*
Net carrying amount 1,067,023 67,459 77,841 1,212,323
At 1 January 2021, net carrying amount 1,058,548 61,886 82,309 1,202,743
Additions 1 2,757 2,130 4,888
Capitalised borrowing costs - 886 - 886
Capitalised labour costs 8 35 8 51
Revaluation losses through OCI (7,864) - - (7,864)
Revaluation gains through OCI 5,924 - - 5,924
Revaluation losses through profit or loss (1,070) - - (1,070)
Reversal of revaluation losses through profit 3,570 - - 3,570
or loss
Impairment of fixtures, fittings and equipment - - (5) (5)
Depreciation charge for the period (5,599) - (7,817) (13,416)
Translation adjustment 13,505 1,895 1,216 16,616
At 30 June 2021, net carrying amount 1,067,023 67,459 77,841 1,212,323
*Accumulated depreciation of buildings is stated after the elimination of depreciation on revaluation, disposals and
impairments.
The carrying value of land and buildings, revalued at 30 June
2021, is EUR1,067.0 million (31 December 2020: EUR1,058.5 million).
The value of these assets under the cost model is EUR844.6 million
(31 December 2020: EUR834.2 million).
In the period ended 30 June 2021, unrealised revaluation gains
of EUR5.9 million and unrealised revaluation losses arising of
EUR7.9 million (year ended 31 December 2020: net unrealised
revaluation losses EUR143.6 million) have been reflected through
other comprehensive income and in the revaluation reserve in
equity.
In the period ended 30 June 2021, a net revaluation gain of
EUR2.5 million (year ended 31 December 2020: net revaluation losses
of EUR30.8 million) has been reflected in administrative expenses
through profit or loss, which represents the combination of
revaluation losses in profit or loss of EUR1.1 million (year ended
31 December 2020: EUR32.2 million) and the reversal of previously
recognised revaluation losses recognised in profit or loss in the
period of EUR3.6 million (year ended 31 December 2020: EUR1.4
million).
Included in land and buildings at 30 June 2021 is land at a
carrying value of EUR301.0 million which is not depreciated (31
December 2020: EUR301.3 million).
Additions to assets under construction during the period ended
30 June 2021 primarily relate to development expenditure incurred
on the new hotel being built at the former Tara Towers site in
Dublin.
Interest of EUR0.9 million was capitalised on loans and
borrowings relating to qualifying assets (note 8) during the period
ended 30 June 2021, and labour costs of EUR0.1 million were
capitalised relating to the Group's internal development team which
are directly related to asset acquisitions and other construction
work completed in relation to the Group's property, plant and
equipment.
Measurement of fair value
The value of the Group's property at 30 June 2021 reflects open
market valuations carried out as at 30 June 2021 by independent
external valuers having appropriate recognised professional
qualifications and recent experience in the location and value of
the property being valued. The external valuations performed were
in accordance with the Royal Institution of Chartered Surveyors
(RICS) Valuation Standards. As a result of Covid-19, similar to
other real estate markets, the market for hotel assets has
experienced significantly lower levels of transactional activity
and liquidity. As at the valuation date of 30 June 2021 some
property markets have started to function again and other relevant
market evidence exists upon which to base opinions of value, and
therefore the valuations as at 30 June 2021 are not being reported
by the valuers on the basis of 'material valuation uncertainty', as
set out in VPS 3 and VPGA 10 of the RICS Valuation Global
Standards. The valuations at 31 December 2020 were reported on the
basis of 'material valuation uncertainty'.
The fair value measurement of the Group's own-use property has
been categorised as a Level 3 fair value based on the inputs to the
valuation technique used. At 30 June 2021, 29 properties were
revalued by independent external valuers engaged by the Group (31
December 2020: 29 properties).
The principal valuation technique used by the independent
external valuers engaged by the Group was discounted cash flows.
This valuation model considers the present value of net cash flows
to be generated from the property over a ten-year period (with an
assumed terminal value at the end of year 10). Valuers' forecast
cash flow included in these calculations represents the
expectations of the valuers for EBITDA (driven by revenue per
available room ('RevPAR') calculated as total rooms revenue divided
by rooms available) for the property and also takes account of the
expectations of a prospective purchaser. It also includes their
expectation for capital expenditure which the valuers, typically,
assume as approximately 4% of revenue per annum. This does not
always reflect the profile of actual capital expenditure incurred
by the Group. On specific assets, refurbishments are, by nature,
periodic rather than annual. Valuers' expectations of EBITDA are
based on their trading forecasts (benchmarked against competition,
market and actual performance). The expected net cash flows are
discounted using risk adjusted discount rates. Among other factors,
the discount rate estimation considers the quality of the property
and its location. The final valuation also includes a deduction of
full purchaser's costs based on the valuers' estimates at 9.96% for
Republic of Ireland domiciled assets (31 December 2020: 9.92%) and
6.8% for UK domiciled assets (31 December 2020: 6.8%).
The valuers use their professional judgement and experience to
balance the interplay between the different assumptions and
valuation influences. For example, initial discounted cash flows
based on individually reasonable inputs may result in a valuation
which challenges the price per key metrics (value of hotel divided
by room numbers) in recent hotel transactions. This would then
result in one or more of the inputs being amended for preparation
of a revised discounted cash flow. Consequently, the individual
inputs may change from the prior period or may look individually
unusual and therefore must be considered as a whole in the context
of the overall valuation.
The significant unobservable inputs are:
-- Valuers' forecast cash flow;
-- Risk adjusted discount rates and Terminal (Year 10)
capitalisation rates are specific to each property.
-- Dublin assets:
-- Risk adjusted discount rates range between 7.75% and 9.50%
(31 December 2020: 8.25% and 9.75%).
-- Weighted average risk adjusted discount rate is 8.72% (31
December 2020: 8.88%).
-- Terminal capitalisation rates range between 5.75% and 7.50%
(31 December 2020: 6.25% and 7.75%).
-- Weighted average terminal capitalisation rate is 6.72% (31
December 2020: 6.88%).
-- Regional Ireland:
-- Risk adjusted discount rates range between 9.0% and 11.0% (31
December 2020: 9.0% and 11.25%).
-- Weighted average risk adjusted discount rate is 9.55% (31
December 2020: 9.69%).
-- Terminal capitalisation rates range between 7.00% and 9.00%
(31 December 2020: 7.00% and 9.25%).
-- Weighted average terminal capitalisation rate is 7.55% (31
December 2020: 7.69%).
-- UK:
-- Risk adjusted discount rates range between 7.0% and 11.25%
(31 December 2020: 7.0% and 11.25%).
-- Weighted average risk adjusted discount rate is 8.54% (31
December 2020: 8.52%).
-- Terminal capitalisation rates range between 5.00% and 9.25%
(31 December 2020: 5.00% and 9.25%).
-- Weighted average terminal capitalisation rate is 6.54% (31
December 2020: 6.52%).
The estimated fair value under this valuation model may increase
or decrease if:
-- Valuers' forecast cash flow was higher or lower than
expected; or
-- The risk adjusted discount rate and terminal capitalisation
rate was higher or lower. 13 Leases
The Group leases assets including land and buildings, vehicles,
machinery and IT equipment. Information
about leases for which the Group is a lessee is presented
below:
Right-of-use assets EUR'000
Net book value at 1 January 2021 411,007
Additions 10
Depreciation charge for the period (9,805)
Remeasurement of lease liabilities (765)
Impairment of right-of-use assets (315)
Translation adjustment 5,941
_______
Net book value at 30 June 2021 406,073
_______
Right-of-use assets comprise leased assets that do not meet the
definition of investment property.
Lease liabilities EUR'000
Lease liabilities at 1 January 2021 399,632
Additions 10
Interest on lease liabilities 11,771
Lease payments (15,733)
Remeasurement of lease liabilities (1,042)
Translation adjustment 6,132
_______
Lease liabilities at 30 June 2021 400,770
_______
30 June 31 December
2021 2020
EUR'000 EUR'000
Current 9,766 10,761
Non-current 391,004 388,871
_______ _______
400,770 399,632
_______ _______
The Group has chosen not to avail of the alternative accounting
treatment set out in IFRS 16 - Covid-19 Related Rent Concessions
during the period ended 30 June 2021 or the year ended 31 December
2020. Consequently, any adjustments to the terms of the impacted
leases have been treated as a remeasurement. The remeasurement of
lease liabilities in the period ended 30 June 2021 relates to the
remeasurement of lease liabilities for one hotel following an
agreed rent amendment with the landlord. As a result of this
modification, the lease liability has decreased by EUR1.1 million
with a decrease of EUR0.8 million to the carrying value of the
right-of-use asset, as this right-of-use asset had been previously
impaired. The resulting difference of EUR0.3 million has been
recognised as a remeasurement gain on right-of-use assets in profit
or loss (note 4).
Non-cancellable undiscounted lease cash flows payable under
lease contracts are set out below:
At 30 June 2021 At 31 December 2020
Republic of Ireland UK Total Republic of Ireland UK Total
EUR'000 GBP'000 EUR'000 EUR'000 GBP'000 EUR'000
6 months/year ending 31 December 2021 25,515 7,486 33,842
13,166 3,689 17,465
During the year 2022 22,473 7,526 31,244 22,492 7,526 30,863
During the year 2023 22,358 7,605 31,221 22,358 7,605 30,817
During the year 2024 20,205 7,673 29,147 20,205 7,673 28,740
During the year 2025 19,965 7,753 29,001 19,965 7,753 28,589
During the year 2026 20,048 7,772 29,106 20,048 7,772 28,693
During the years 2027 - 2036 198,375 82,545 294,576 198,375 82,545 290,191
During the years 2037 - 2046 134,791 91,183 241,059 134,791 91,183 236,215
From 2047 onwards 56,181 63,051 129,663 56,181 63,051 126,313
_______ ______ ______ _______ _______ _______
507,562 278,797 832,482 519,930 282,594 834,263
_______ _______ ______ _______ _______ _______
Sterling amounts have been converted using the closing foreign
exchange rate of 0.85805 as at 30 June 2021 (0.89903 as at 31
December 2020).
The weighted average lease life of future minimum rentals
payable under leases is 29.1 years (31 December 2020: 29.4 years).
Lease liabilities are monitored within the Group's treasury
function. Unwind of right-of-use assets and release of interest
charge
The unwinding of the right-of-use assets and the release of the
interest on the lease liabilities through profit or loss over the
terms of the leases have been disclosed in the following table:
Depreciation of right-of-use assets Interest on lease liabilities
Republic of Ireland UK Total Republic of Ireland UK Total
EUR'000 GBP'000 EUR'000 EUR'000 GBP'000 EUR'000
6 months ending 31 December 2021 6,864 2,041 9,244 7,555 3,501 11,635
During the year 2022 13,693 4,082 18,450 14,809 6,984 22,948
During the year 2023 13,522 4,082 18,279 14,368 6,949 22,467
During the year 2024 11,650 4,082 16,407 13,955 6,908 22,006
During the year 2025 11,568 4,082 16,325 13,600 6,860 21,595
During the year 2026 11,563 3,738 15,919 13,223 6,806 21,155
During the years 2027 - 2036 108,611 34,620 148,958 105,891 62,956 179,262
During the years 2037 - 2046 71,431 34,545 111,691 47,078 44,042 98,406
From 2047 onwards 27,665 19,851 50,800 10,200 18,910 32,238
_______ _______ _______ _______ _______ _______
276,567 111,123 406,073 240,679 163,916 431,712
_______ _______ _______ _______ _______ _______
Sterling amounts have been converted using the closing foreign
exchange rate of 0.85805 as at 30 June 2021.
The actual depreciation and interest charge through profit or
loss will depend on the composition of the Group's lease portfolio
in future years and is subject to change, driven by:
-- commencement of new leases;
-- modifications of existing leases;
-- reassessments of lease liabilities following periodic rent
reviews; and
-- impairments of right-of-use assets.
As a result of the impact of Covid-19, impairment tests were
carried out on the Group's CGUs as at 30 June 2021 (note 6). Each
hotel operating business is deemed to be a CGU as the cash flows
generated are independent of other hotels in the Group. As a result
of the impairment testing, one of the Group's right-of-use assets
in relation to a UK CGU was impaired by EUR0.3 million (GBP0.3
million) (note 6).
Leases not yet commenced to which the lessee is committed
The Group has multiple agreements for lease at 30 June 2021 and
details of the non-cancellable lease rentals and other contractual
obligations payable under these agreements are set out hereafter.
These represent the minimum future lease payments (undiscounted) in
aggregate that the Group is required to make under the agreements.
An agreement for lease is a binding agreement between external
third parties and the Group to enter into a lease at a future date.
The dates of commencement of these leases may change based on the
hotel opening dates. The amounts payable may also change slightly
if there are any changes in room numbers delivered through
construction.
30 June
Agreements for lease 31 December 2020
2021
EUR'000 EUR'000
Less than one year 17,753 5,165
One to two years 15,799 20,794
Two to three years 26,843 21,682
Three to five years 47,384 51,801
Five to fifteen years 245,977 262,042
Fifteen to twenty five years 260,243 274,672
After twenty five years 301,440 336,512
_______ _______
Total future lease payments 915,439 972,668
_______ _______
Included in the above table are future lease payments for
agreements for lease, with a lease term of 35 years with the
expected opening dates as follows: for Maldron Hotel Glasgow City
(opened 3 August 2021), Clayton Hotel Manchester City Centre (Q4
2021), Maldron Hotel Manchester (Q1 2022), The Samuel, Dublin (Q1
2022), Clayton Hotel Bristol (Q1 2022), Clayton Hotel Glasgow (Q2
2022), Maldron Hotel Brighton (Q1 2024), Maldron Hotel Croke Park,
Dublin (Q1 2024), Maldron Hotel Victoria, Manchester (estimated to
be in 2024) and Maldron Hotel Liverpool (estimated to be in
2024).
The agreement for lease for the Maldron Hotel in Birmingham,
which was reflected in the amount as at 31 December 2020, will no
longer proceed. 14 Contract fulfilment costs
30 June 31 December
2021 2020
EUR'000 EUR'000
At 1 January 22,374 13,346
Costs incurred in fulfilling contract to date 4,534 8,737
Capitalised borrowing costs (note 8) 308 291
_______ _______
At end of period/year 27,216 22,374
_______ _______
Contract fulfilment costs relate to the Group's contractual
agreement with Irish Residential Properties REIT plc ('I-RES'),
entered into on 16 November 2018, for I-RES to purchase a
residential development which the Group is developing (comprising
69 residential units) on the site of the former Tara Towers
Hotel.
Revenue and the associated cost will be recognised on this
contract in profit or loss when the performance obligation in the
contract has been met, which is expected to be on practical
completion in March 2022. As a result, revenue will be recognised
at this point in time in the future when the performance obligation
is met, rather than over time. The overall sale value of the
transaction is expected to be EUR42.4 million (excluding VAT),
which is due in March 2022 (upon practical completion). The Group
has reclassified these contract fulfilment costs from non-current
assets to current assets on the statement of financial position as
at 30 June 2021, as the revenue will be receivable within 12-months
of this date. 15 Provision for liabilities
30 June 31 December
2021 2020
EUR'000 EUR'000
Non-current liabilities
Insurance provision 7,735 6,747
Current liabilities
Insurance provision 1,529 1,528
_______ _______
Total provision at end of period/year 9,264 8,275
_______ _______
The reconciliation of the movement in the provision for the period/year is as follows:
Period ended Year ended
30 June 31 December
2021 2020
EUR'000 EUR'000
At 1 January 8,275 6,563
Provisions made during the period/year - charged to profit or loss 1,250 2,500
Utilised during the period/year (261) (758)
Reversed to profit or loss during the period/year - (30)
_______ _______
At end of period/year 9,264 8,275
_______ _______
The insurance provision relates to actual and potential
obligations arising from the Group's insurance arrangements where
the Group is self-insured. The Group has third party insurance
cover above specific limits for individual claims and has an
overall maximum aggregate payable for all claims in any one year.
The amount provided is principally based on projected settlements
as determined by external loss adjusters. The provision also
includes an estimate for claims incurred but not yet reported and
incurred but not enough reported.
The utilisation of the provision is dependent on the timing of
settlement of the outstanding claims. The Group expects the
majority of the insurance provision will be utilised within five
years of the period end date however, due to the nature of the
provision, there is a level of uncertainty in the timing of
settlement as the Group generally cannot precisely determine the
extent and duration of the claim process. The provision has been
discounted to reflect the time value of money though the effect is
not significant.
The self-insurance programme commenced in July 2015 and
increasing levels of claims data is becoming available. Claims
provisions are assessed in light of claims experience and amended
accordingly, where necessary, to ensure provisions reflect recent
experience and trends. 16 Commitments
Capital expenditure commitments
The Group has the following commitments for future capital
expenditure under its contractual arrangements.
30 June 31 December
2021 2020
EUR'000 EUR'000
Contracted but not provided for 29,574 30,608
_______ _______
At 30 June 2021, the commitments relate primarily to the
following:
-- New-build hotel development of Maldron Hotel Merrion Road,
Dublin; and
-- Residential development (comprising 69 residential units) on
the site of the former Tara Towers Hotel(note 14).
It also includes other capital expenditure committed at other
hotels in the Group.
The Group also has other commitments in relation to fixtures,
fittings and equipment in some of its leased hotels. Under certain
lease agreements, the Group has committed to spending a percentage
of revenue on capital expenditure in respect of fixtures, fittings
and equipment in the leased hotels over the life of the lease. The
Group has estimated the commitment in relation to these leases to
be EUR49.9 million (31 December 2020: EUR51.2 million) spread over
the life of the various leases which primarily range in length from
10 years to 34 years. The revenue figures used in the estimate of
the commitment at 30 June 2021 have been based on 2019 trading
levels, which was prior to Covid-19. The actual commitment will be
higher or lower dependent on the actual revenue earned in each of
the lease years.
In addition, a new construction agreement was signed on 2 July
2021 in relation to the new-build hotel development of the Maldron
Hotel Shoreditch, London. The total estimated cost of the project
is expected to be in the region of GBP25.0 million (EUR29.1
million).
17 Financial risk management
Risk exposures
The Group is exposed to various financial risks arising in the
normal course of business. Its financial risk exposures are
predominantly related to the creditworthiness of counterparties and
risks relating to changes in interest rates and foreign currency
exchange rates. The Group is exposed to external economic risk
associated with the Covid-19 pandemic which severely impacted the
business and operations of the Group (note 1).
The Group uses financial instruments throughout its business:
loans and borrowings and cash and cash equivalents are used to
finance the Group's operations; trade and other receivables, trade
payables and accruals arise directly from operations and
derivatives are used to manage interest rate risks and to achieve a
desired profile of borrowings. The Group uses a net investment
hedge with Sterling denominated borrowings to hedge the foreign
exchange risk from investments in certain UK operations. The Group
does not trade in financial instruments. The Group is managing
working capital in order to mitigate the risk associated with the
Covid-19 pandemic.
Fair values
The following tables show the carrying amount of Group financial
assets and liabilities including their values in the fair value
hierarchy at 30 June 2021. The tables do not include fair value
information for financial assets and financial liabilities not
measured at fair value if the carrying amount is a reasonable
approximation of fair value. A fair value disclosure for lease
liability is not required.
Fair value
Financial assets
Financial measured at Total
assets
measured at amortised cost carrying Level Level 2 Level Total
fair value amount 1 3
30 June 30 June 30 June 30 30 June 30 30 June
June June
2021 2021 2021 2021 2021 2021 2021
Financial assets EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Trade and other receivables, - 10,572 10,572
excluding prepayments
Cash at bank and in hand - 40,928 40,928
_______ _______ _______
- 51,500 51,500
_
Financial
liabilities
Financial measured at Total carrying
liabilities
measured at amortised cost amount Level Level 2 Level Total
fair value 1 3
30 June 30 June 30 June 30 30 June 30 30 June
June June
2021 2021 2021 2021 2021 2021 2021
Financial liabilities EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Bank loans - (341,963) (341,963) (341,963) (341,963)
Trade payables and accruals - (31,388) (31,388)
Derivatives - hedging instruments (5,429) - (5,429) (5,429) (5,429)
_______ _______ _______
(5,429) (373,351) (378,780)
The following tables show the carrying amount of Group financial
assets and liabilities including their values in the fair value
hierarchy at 31 December 2020. The tables do not include fair value
information for financial assets and financial liabilities not
measured at fair value if the carrying amount is a reasonable
approximation of fair value. A fair value disclosure for lease
liability is not required.
Financial assets Fair value
Financial assets measured at Total
measured at fair amortised cost carrying amount Level 1 Level 2 Level 3 Total
value
31 December 31 December 31 December 31 31 31 31
December December December December
2020 2020 2020 2020 2020 2020 2020
Financial assets EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Trade and other receivables, - 7,860 7,860
excluding prepayments
Cash at bank and in hand - 50,197 50,197
_______ _______ _______
- 58,057 58,057
Financial
liabilities
Financial measured at Total carrying
liabilities
measured at fair amortised cost amount Level 1 Level 2 Level 3 Total
value
31 December 31 December 31 December 31 31 31 31
December December December December
2020 2020 2020 2020 2020 2020 2020
Financial liabilities EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Bank loans - (314,143) (314,143) (314,143) (314,143)
Trade payables and accruals - (25,527) (25,527)
Derivatives- hedging (9,042) - (9,042) (9,042) (9,042)
instruments
_______ _______ _______
(9,042) (339,670) (348,712)
_
Fair value hierarchy
The Group measures the fair value of financial instruments based
on the degree to which inputs to the fair value measurements are
observable and the significance of the inputs to the fair value
measurements. Financial instruments are categorised by the type of
valuation method used. The valuation methods are as follows:
-- Level 1: Quoted prices (unadjusted) in active markets for
identical assets or liabilities;
-- Level 2: Inputs other than quoted prices included within
Level 1 that are observable for the financialinstrument, either
directly (i.e. as prices) or indirectly (i.e. derived from prices);
and
-- Level 3: Inputs for the financial instrument that are not
based on observable market data (unobservableinputs).
The Group's policy is to recognise any transfers between levels
of the fair value hierarchy as of the end of the reporting period
during which the transfer occurred. During the period ended 30 June
2021, there were no reclassifications of financial instruments and
no transfers between levels of the fair value hierarchy used in
measuring the fair value of financial instruments.
Estimation of fair values
The principal methods and assumptions used in estimating the
fair values of financial assets and liabilities are explained
hereafter.
Cash at bank and in hand
For cash at bank and in hand, the carrying value is deemed to
reflect a reasonable approximation of fair value.
Derivatives
Discounted cash flow analyses have been used to determine the
fair value of the interest rate swaps, taking into account current
market inputs and rates (Level 2).
Receivables/payables
For receivables and payables with a remaining term of less than
one year or demand balances, the carrying value net of impairment
provision, where appropriate, is a reasonable approximation of fair
value. The non-current receivables carrying value is a reasonable
approximation of fair value.
Bank loans
For bank loans, the fair value was calculated based on the
present value of the expected future principal and interest cash
flows discounted at interest rates effective at the reporting date.
The carrying value of floating rate loans and borrowings is
considered to be a reasonable approximation of fair value.
(a) Credit risk
Exposure to credit risk
Credit risk is the risk of financial loss to the Group arising
from granting credit to customers and from investing cash and cash
equivalents with banks and financial institutions.
Trade and other receivables
The Group's exposure to credit risk is influenced mainly by the
individual characteristics of each customer. Management has a
credit policy in place and the exposure to credit risk is monitored
on an ongoing basis. Outstanding customer balances are regularly
monitored and reviewed for indicators of impairment (evidence of
financial difficulty of the customer or payment default). The
maximum exposure to credit risk is represented by the carrying
amount of each financial asset.
Management does not expect any significant losses from
receivables that have not been provided for as at 30 June 2021.
Other receivables primarily relate to amounts owed from the
government in the form of wage subsidies and amounts from large
institutional landlords for reimbursements of certain amounts
incurred on capital expenditure on these properties.
The Group has a contractual agreement with I-RES whereby I-RES
will purchase a residential development that the Group is
developing on the site of the former Tara Towers Hotel. The overall
sale value of the transaction is expected to be EUR42.4 million
(excluding VAT) with costs of EUR27.2 million incurred as at 30
June 2021 (note 14). These contract fulfilment costs are not
considered financial assets and are not covered by the credit risk
disclosures, however, the Group continues to monitor the potential
for any future credit risk. There is no evidence of such as at 30
June 2021.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and
give rise to credit risk on the amounts due from counterparties.
The maximum credit risk is represented by the carrying value at the
reporting date. The Group's policy for investing cash is to limit
risk of principal loss and to ensure the ultimate recovery of
invested funds by limiting credit risk. The Group reviews regularly
the credit rating of each bank and if necessary, takes action to
ensure there is appropriate cash and cash equivalents held with
each bank based on their credit rating. During the period ended 30
June 2021, cash and cash equivalents were held in line with
predetermined limits depending on the credit rating of the relevant
bank/financial institution.
The carrying amount of the following financial assets represents
the Group's maximum credit exposure. The maximum exposure to credit
risk at the end of the period/year was as follows:
30 June 31 December
2021 2020
EUR'000 EUR'000
Trade receivables 3,763 2,238
Other receivables 4,725 4,297
Contract assets 1,349 720
Accrued income 735 605
Cash at bank and in hand 40,928 50,197
_______ _______
51,500 58,057
(b) Liquidity risk
The Group entered the Covid-19 pandemic with a strong balance
sheet and liquidity position and, despite the material impact
Covid-19 has on the Group's financial performance, the Group
remains in a strong position. As at 30 June 2021, the Group had
property, plant and equipment of EUR1,212.3 million and cash and
undrawn facilities of EUR269.9 million. The Group was not in breach
of any of its covenants as at 30 June 2021.
The Group continued to tightly manage its cash and liquidity in
the first half of 2021 and executed a number of strategies
including:
-- Availing of government wage subsidy schemes, other
non-payroll related grants, and government assistancein the form of
commercial rates waivers and warehousing of tax liabilities, where
possible, in Ireland and the UK(note 7);
-- Postponement and cancellation of non-committed non-essential
capital expenditure; and
-- Strict working capital and cost management in all hotels and
Central Office.
Forecasting of near-term trade performance remains difficult in
the current environment. To address this, multiple reasonable
scenarios have been prepared by the Group with key assumptions
varying around the timing of the return to more normal levels of
international travel and the ongoing nature and extent of
government supports. Since re-opening in quarter two 2021 and the
gradual lifting of travel restrictions, trade, primarily domestic
leisure, continues to exceed expectations and the business
continues to see later booking patterns than normal across all
channels. Governments have announced ongoing supports but detail on
some of these have not yet been formalised and consequently cannot
be forecast with precision at this time.
The Group will revert to the previous covenants comprising Net
Debt to EBITDA and Interest Cover covenants for testing at 30 June
2022. At 30 June 2022, the Net Debt to EBITDA covenant limit will
be 6.0x and the Interest Cover minimum will be 4.0x. The Net Debt
to EBITDA covenant reduces to 4.0x at 31 December 2022.
If the covenants were temporarily breached as at 30 June 2022,
all of the Group's borrowings would become repayable on demand
under the terms of the Group's Facility Agreement from that
point.
The Group will continue to monitor the evolving trade forecasts
and pursue proactive and timely mitigating actions if necessary as
it has since the start of the pandemic. As visibility on forecasts
increases, any appropriate mitigating actions which are not
currently modelled to prevent a possible covenant breach will be
taken. These include engaging with the Group's banking club as to
the timing of reverting to previous covenants given the longer than
expected duration of Covid-19 restrictions. The Group will also
consider other strategies which could be considered such as a sale
of an asset, a further share placing, negotiations with landlords
on rental obligations and more severe cost cutting.
If a request for an extension of the temporary suite of
covenants were made of the Group's banking club or even if a
covenant breach were to arise, the Group would be confident of the
ongoing support of its banking club given the strong relationships
it has with the club as the Group has successfully navigated the
unprecedented circumstances following Covid-19, the resumption of
recovery towards more normal levels of trade, the Group's historic
profitability and successful management and, not least, the value
of the Group's assets upon which the banking club has security. Net
Debt to Value ratio at 30 June 2021 was 27%.
On 9 July 2020, the Group entered into an amended and restated
facility agreement with its banking club to provide additional
flexibility and liquidity to support the Group following the impact
of Covid-19 restrictions. The Group raised an additional EUR39.4
million in revolving credit facilities with a maturity date of 30
September 2022 and the maturity of EUR20.1 million of revolving
credit facilities was shortened to 30 September 2022 from 26
October 2024. The Group also agreed a new temporary suite of
covenants with its banking club. The revised covenants include Net
Debt to Value covenants and a minimum liquidity restriction whereby
either cash, remaining available facilities or a combination of
both must not fall below EUR50 million at any point to 30 March
2022. The revised covenants were put in place to avoid potential
breaches in covenants based on trailing 12-month EBITDA during the
period of recovery in trading profits following the impact of
Covid-19. The undrawn loan facilities as at 30 June 2021 were
EUR229.0 million.
The Group also monitors its Debt and Lease Service cover, which
is 0.6 times for the 12-month period ended 30 June 2021 (31
December 2020: 0.1 times), in order to monitor gearing and
liquidity taking into account both bank and lease financing.
In addition, in September 2020, the Group successfully conducted
a placing of 37,000,000 new ordinary shares, raising gross proceeds
of EUR94.4 million (net proceeds of EUR92.0 million).
(c) Market risk
Market risk is the risk that changes in market prices and
indices, such as interest rates and foreign exchange rates, will
affect the Group's income or the value of its holdings of financial
instruments. The objective of market risk management is to manage
and control market risk exposures within acceptable parameters,
while optimising the return.
(i) Interest rate risk
The Group is exposed to floating interest rates on its debt
obligations and uses hedging instruments to mitigate the risk
associated with interest rate fluctuations. The Group has entered
into interest rate swaps which hedge the variability in cash flows
attributable to the interest rate risk. All such transactions are
carried out within the guidelines set by the Board. The Group seeks
to apply hedge accounting to manage volatility in profit or
loss.
The Group determines the existence of an economic relationship
between the hedging instrument and the hedged item based on the
reference interest rates, maturities and notional amounts. The
Group assesses whether the derivative designated in each hedging
relationship is expected to be effective in offsetting changes in
cash flows of the hedged item using the hypothetical derivative
method.
A fundamental review and reform of major interest rate
benchmarks is being undertaken globally. As a result, the LIBOR
benchmark rate will cease to be published from 31 December 2021 and
will be replaced with an alternative benchmark rate, SONIA
(Sterling Overnight Index Average).
As at 30 June 2021, the Group has GBP269.5 million (EUR314.1
million) of loans and borrowings that will be subject to IBOR
reform. The Group has commenced conversations with certain of its
derivative counterparties and lenders and envisions the transition
to be implemented on or by 31 December 2021. The Group believes
that there will be limited exposure as the Group will continue to
manage, as best as the Group can, to ensure that the SONIA rate and
spread on both the hedged item and hedge instruments will closely
match the LIBOR rate referenced in the financial instruments, as
well as ensuring that terms are matched as well.
In addition, the IASB has amended IFRS 9 and introduced
practical expedients in order to allow companies to continue to
apply hedge accounting in the case of changes to hedged
items/hedging instruments as a result of the IBOR reform and also,
the ability to account for changes prospectively by updating the
effective interest rate.
As at 30 June 2021, the Group's derivatives continue to hedge
the LIBOR variable interest rate on Sterling borrowings. As a
result, the Group continues to apply hedge accounting as at this
date. There is no impact on these condensed consolidated interim
financial statements of the Group as a result of the IBOR
reform.
(ii) Foreign currency risk
The Group is exposed to risks arising from fluctuations in the
Euro/Sterling exchange rate. The Group is exposed to transactional
foreign currency risk on trading activities conducted by
subsidiaries in currencies other than their functional currency and
to foreign currency translation risk on the retranslation of
foreign operations to Euro.
The Group's policy is to manage foreign currency exposures
commercially and through netting of exposures where possible. The
Group's principal transactional exposure to foreign exchange risk
relates to interest costs on its Sterling borrowings. This risk is
mitigated by the earnings from UK subsidiaries which are
denominated in Sterling.
The Group's gain or loss on retranslation of the net assets of
foreign currency subsidiaries is taken directly to the translation
reserve.
The Group limits its exposure to foreign currency risk by using
Sterling debt to hedge part of the Group's investment in UK
subsidiaries. The Group financed certain operations in the UK by
obtaining funding through external borrowings denominated in
Sterling. These borrowings amounted to GBP266.5 million (EUR310.6
million) at 30 June 2021 (31 December 2020: GBP266.5 million
(EUR296.4 million)) and are designated as net investment hedges.
The net investment hedge was fully effective during the year.
This enables gains and losses arising on retranslation of those
foreign currency borrowings to be recognised in other comprehensive
income, providing a partial offset in reserves against the gains
and losses arising on retranslation of the net assets of those UK
operations.
(d) Capital management
The Group's policy is to maintain a strong capital base so as to
retain investor, creditor and market confidence and to sustain
future development of the business. Management monitors the return
on capital to ordinary shareholders.
The Board of Directors seeks to maintain a balance between the
higher returns that might be possible with higher levels of
borrowings and the advantages and security afforded by a sound
capital position. The Group's target is to achieve a pre-tax
leveraged return on equity of at least 15% on investments and a
rent cover of at least 1.85 times in year three for new leased
assets.
Typically, the Group monitors capital using a ratio of Net Debt
to EBITDA after fixed rent which excludes the effects of IFRS 16 in
line with its banking covenants. This is calculated based on the
prior 12-month period. As at 30 June 2021, Net Debt to EBITDA is
not relevant due to losses. Following the amended facility
agreement in July 2020, this covenant is not required to be tested
until June 2022, however, it continues to be monitored by the Group
and serves to set margins on the Group's loans. Similarly, the
Group monitors Net Debt and Lease Liabilities to EBITDA, however,
it is also not relevant as at 30 June 2021 due to losses.
The Group's approach to capital management has ensured that it
entered the Covid-19 crisis with a very strong balance sheet and an
appropriate level of gearing and that it has also emerged from 2020
in a similar position following actions taken. The Group's asset
backing provided it with the ability to realise funds from the sale
and leaseback of Clayton Hotel Charlemont in 2020 whilst its level
of gearing ensured the Group continues to be able to meet its
funding costs of both interest and rent and retain the support of
its banking club and institutional landlords. The Board reviews the
Group's capital structure on an ongoing basis as part of the normal
strategic and financial planning process. It ensures that it is
appropriate for the hotel industry given its exposure to demand
shocks and the normal economic cycles.
18 Loans and borrowings
30 June 31 December
2021 2020
EUR'000 EUR'000
Non-current liabilities
Bank borrowings 341,963 314,143
_______ _______
Total loans and borrowings 341,963 314,143
_______ _______
As at 30 June 2021, the amortised cost of the loans and
borrowings was EUR342.0 million. The drawn loan facility, being the
amount owed to the lenders, at this date was EUR341.1 million
consisting of Sterling term borrowings of GBP176.5 million
(EUR205.7 million) and revolving credit facility borrowings of
EUR135.4 million - EUR27 million denominated in Euro and GBP93
million (EUR108.4 million) in Sterling. The undrawn loan facilities
as at 30 June 2021 were EUR229.0 million.
The loans bear interest at variable rates based on 1-month or
3-month LIBOR/EURIBOR plus applicable margins. The Group has
entered into certain derivative financial instruments to hedge
interest rate exposure on a portion of these loans. The loans are
secured by the Group's assets. Under the terms of the loan facility
agreement, an interest rate floor is in place which prevents the
Group from receiving the benefit of sub-zero benchmark LIBOR and
EURIBOR rates.
The weighted average interest cost in respect of Euro
denominated borrowings and Sterling denominated borrowings for the
period, were 2.4% (30 June 2020: 1.4 %) and 3.6% (30 June 2020:
2.9%) respectively.
The Group has a multicurrency loan facility consisting of a
EUR200.0 million term loan facility, with a maturity date of 26
October 2024 and EUR364.4 million revolving credit facility - with
EUR304.9 million with a maturity date of 26 October 2024 and
EUR59.5 million with a maturity date of 30 September 2022.
19 Deferred tax
30 June 31 December
2021 2020
EUR'000 EUR'000
Deferred tax assets 20,893 12,344
Deferred tax liabilities (39,692) (39,404)
_______ _______
Net deferred tax liabilities (18,799) (27,060)
_______ _______
As a result of the ongoing impact of the Covid-19 pandemic, the
Group incurred Irish and UK corporation tax losses during the
period ended 30 June 2021. Together with the losses carried forward
at 31 December 2020, these tax losses can be carried forward
indefinitely for offset against future taxable profits. A deferred
tax asset has been recognised in respect of these Irish and UK tax
losses on the basis that it is probable that, after the carry back
of tax losses for the year ended 31 December 2020, there will be
sufficient taxable profits in future periods to utilise these tax
losses.
At 30 June 2021, deferred tax assets have been recognised in
respect of corporation tax losses of EUR18.6 million (31 December
2020: EUR10.0 million), which represents the majority of the
deferred tax assets recognised of EUR20.9 million. During the
period ended 30 June 2021, the UK government substantively enacted
an increase in the corporation tax rate from 19% to 25%, with
effect from 1 April 2023.
The increase in the deferred tax asset recognised in respect of
corporation tax losses of EUR8.6 million relates to a credit of
EUR5.9 million for current period tax losses and a credit of EUR2.7
million relating to the impact of the remeasurement of a portion of
the UK tax losses at the 25% rate which are forecasted to be
realised after 1 April 2023.
The Group has considered all relevant evidence to determine
whether it is probable there will be sufficient taxable profits in
future periods, in order to recognise the deferred tax assets of
EUR20.9 million as at 30 June 2021. The Group has prepared
forecasted taxable profits on a trade by trade basis for future
periods, to schedule the reversal of the deferred tax assets
recognised in respect of the corporation tax losses carried
forward. These forecasts assume a gradual recovery to normal levels
of pre-pandemic trade consistent with external sources of
information and commentary.
Based on the supporting forecasts and evidence, it is probable
that the deferred tax assets recognised in respect of corporation
tax losses at 30 June 2021 will be fully utilised by the year
ending 31 December 2028 with the majority being utilised by the
year ending 31 December 2025.
The Group has also considered any relevant evidence in preparing
forecasts to determine whether there will be sufficient future
taxable profits to utilise the tax losses carried forward. The
Covid-19 pandemic has had a significant impact on business, with
travel and other restrictions contributing to the tax losses that
were incurred by the Group during 2020 and 30 June 2021. The
forecasts of future taxable profits are subject to uncertainty. The
Group has taken a prudent approach when forecasting profits for
each entity and have considered these relevant factors in
forecasting the future taxable profits for the purposes of the
recognition of deferred tax assets as at 30 June 2021.
There is no deferred tax asset recognised in relation to the
hedging reserve at 30 June 2021 due to uncertainty in obtaining a
tax benefit for the cash flow hedges in future periods.
The deferred tax liabilities have increased from EUR39.4 million
at 31 December 2020 to EUR39.7 million at 30 June 2021. The
majority of the deferred tax liabilities result from the Group's
policy of ongoing revaluation of land and buildings. Where the
carrying value of a property in the financial statements is greater
than its tax base cost, the Group recognises a deferred tax
liability. The increase in the deferred tax liabilities relates
mainly to the remeasurement of UK deferred tax liabilities at the
25% rate that will apply from 1 April 2023.
20 Related party transactions
Under IAS 24 Related Party Disclosures, the Group has related
party relationships with its shareholders and Directors of the
Company.
There were no changes in related party transactions in the six
month period ended 30 June 2021 that materially affected the
financial position or the performance of the Group during that
period.
21 Share capital and share premium
At 30 June 2021
Authorised share capital Number EUR'000
Ordinary shares of EUR0.01 each 10,000,000,000 100,000
____________ _______
Allotted, called-up and fully paid shares Number EUR'000
Ordinary shares of EUR0.01 each 222,865,363 2,229
____________ _______
Share premium 504,895
_______
At 31 December 2020
Authorised share capital Number EUR'000
Ordinary shares of EUR0.01 each 10,000,000,000 100,000
____________ _______
Allotted, called-up and fully paid shares Number EUR'000
Ordinary shares of EUR0.01 each 222,732,900 2,227
____________ _______
Share premium 504,735
_______
During the six month period ended 30 June 2021, the Company
issued 93,172 shares of EUR0.01 per share following the vesting of
Awards granted in relation to the March 2018 LTIP, under the 2017
LTIP plan (note 9).
39,291 shares were issued during the six month period ended 30
June 2021 (note 9) under the Share Save schemes granted in 2017.
The weighted average share price at the date of exercise for
options exercised during the period was EUR4.53 per share.
Dividends
During the six month period ended 30 June 2021, the Group did
not make any dividend payments (year ended 31 December 2020:
EURnil).
22 Earnings per share
Basic earnings per share ('EPS') is computed by dividing the
loss/profit for the period attributable to ordinary shareholders by
the weighted average number of ordinary shares outstanding during
the period. Diluted earnings per share is computed by dividing the
loss/profit attributable to ordinary shareholders for the period by
the weighted average number of ordinary shares outstanding and,
when dilutive, adjusted for the effect of all potentially dilutive
shares. The following table sets out the computation for basic and
diluted earnings per share for the periods ended 30 June 2021 and
30 June 2020:
6 months 6 months
ended ended
30 June 2021 30 June 2020
Loss attributable to shareholders of the parent (EUR'000) - basic and diluted (30,375) (63,116)
Adjusted loss attributable to shareholders of the parent (EUR'000) - basic and diluted (32,400) (24,384)
Loss per share - Basic (13.6) cents (34.0) cents
Loss per share - Diluted (13.6) cents (34.0) cents
Adjusted loss per share - Basic (14.5) cents (13.1) cents
Adjusted loss per share - Diluted (14.5) cents (13.1) cents
Weighted average shares outstanding - Basic 222,796,160 185,503,265
Weighted average shares outstanding - Diluted 222,796,160 185,503,265
There is no difference between basic and diluted loss per share
for the periods ended 30 June 2021 and 30 June 2020. The potential
ordinary shares from conditional share awards granted (note 9) are
not dilutive because of the loss made in the period. There have
been no adjustments made to the number of weighted average shares
outstanding in calculating adjusted basic or adjusted diluted
earnings per share.
Adjusted basic and adjusted diluted earnings per share are
presented as alternative performance measures to show the
underlying performance of the Group excluding the tax adjusted
effects of items considered by management to not reflect normal
trading activities or which distort comparability either period on
period or with other similar businesses (note 4).
6 months 6 months
ended ended
30 June 2021 30 June 2020
EUR'000 EUR'000
Reconciliation to adjusted loss for the period
Loss before tax (37,818) (70,885)
Adjusting items (note 4)
Hotel pre-opening expenses 373 -
Loss on sale and leaseback - 1,673
Net property revaluation movements through profit or loss (2,477) 27,261
Impairment of goodwill - 3,226
Impairment of fixtures, fittings and equipment 5 1,054
Impairment of right-of-use assets 315 7,415
Remeasurement gain on right-of-use assets (277) -
______ ______
Adjusted loss before tax for the period (39,879) (30,256)
Tax credit 7,443 7,769
Tax adjustment for adjusting items 36 (1,897)
______ ______
Adjusted loss for the period (32,400) (24,384)
______ ______
23 Events after the reporting date
A new construction agreement was signed on 2 July 2021 in
relation to the new-build hotel development of the Maldron Hotel
Shoreditch, London. The total estimated cost of the project is
expected to be in the region of GBP25.0 million (EUR29.1
million).
On 3 August 2021, the Group opened its new Maldron Hotel Glasgow
City, which it is leasing on a 35-year lease.
On 31 August 2021, the Board on the Remuneration Committee's
recommendation approved the new performance terms and conditions
for the 2021 LTIP which includes 50% of the performance target
being based on total shareholder return and 50% based on free cash
flow per share with varying thresholds.
There were no other events after the reporting date which would
require an adjustment to, or a disclosure thereon, in these
condensed consolidated interim financial statements.
24 Approval of financial statements
The Board of Directors approved the Interim Financial Statements
for the six months ended 30 June 2021 on 31 August 2021.
Supplementary Financial Information
Alternative Performance Measures ("APM") and other
definitions
The Group reports certain alternative performance measures
('APMs') that are not defined under International Financial
Reporting Standards ('IFRS'), which is the framework under which
the condensed consolidated interim financial statements are
prepared. These are sometimes referred to as 'non-GAAP'
measures.
The Group believes that reporting these APMs provides useful
supplemental information which, when viewed in conjunction with the
IFRS financial information, provides stakeholders with a more
comprehensive understanding of the underlying financial and
operating performance of the Group and its operating segments.
These APMs are primarily used for the following purposes:
-- to evaluate underlying results of the operations; and
-- to discuss and explain the Group's performance with the
investment analyst community.
The APMs can have limitations as analytical tools and should not
be considered in isolation or as a substitute for an analysis of
the results in the condensed consolidated interim financial
statements which are prepared under IFRS. These performance
measures may not be calculated uniformly by all companies and
therefore may not be directly comparable with similarly titled
measures and disclosures of other companies.
The definitions of and reconciliations for certain APMs are
contained within the condensed consolidated interim financial
statements. A summary definition of these APMs together with the
reference to the relevant note in the condensed consolidated
interim financial statements where they are reconciled is included
below. Also included below is information pertaining to certain
APMs which are not mentioned within the condensed consolidated
interim financial statements but which are referred to in other
sections of this report. This information includes a definition of
the APM, in addition to a reconciliation of the APM to the most
directly reconcilable line item presented in the condensed
consolidated interim financial statements. References to the
condensed consolidated interim financial statements are included as
applicable. i. Adjusted EBITDA
Adjusted EBITDA is an APM representing earnings before interest
on lease liabilities, other interest and finance costs, tax,
depreciation of property, plant and equipment and right-of-use
assets and amortisation of intangible assets, adjusted to show the
underlying operating performance of the Group and excludes items
which are not reflective of normal trading activities or distort
comparability either period on period or with other similar
businesses.
Reconciliation: Note 4 ii. Adjusting items
Items which are not reflective of normal trading activities or
distort comparability either period on period or with other similar
businesses.
Reconciliation: Note 4 iii. EBITDA and Segments EBITDA
EBITDA is an APM representing earnings before interest on lease
liabilities, other interest and finance costs, tax, depreciation of
property, plant and equipment and right-of-use assets and
amortisation of intangible assets.
Reconciliation: Note 4
Segments EBITDA represents 'Adjusted EBITDA' before central
costs, share-based payments expense and other income for each of
the reportable segments: Dublin, Regional Ireland and the UK. It is
presented to show the net operational contribution of leased and
owned hotels in each geographical location.
Reconciliation: Note 4 iv. EBITDAR and Segments EBITDAR
EBITDAR is an APM representing earnings before lease costs,
interest on lease liabilities, other interest and finance costs,
tax, depreciation of property, plant and equipment and right-of-use
assets and amortisation of intangible assets.
Reconciliation: Note 4
Segments EBITDAR represents Segments EBITDA before lease costs
for each of the reportable segments: Dublin, Regional Ireland and
the UK.
Reconciliation: Note 4 v. Segments EBITDAR margin
Segments EBITDAR margin represents 'Segments EBITDAR' as a
percentage of the total revenue for the following Group segments:
Dublin, Regional Ireland and the UK. Also referred to as Hotel
EBITDAR margin. vi. Adjusted basic (loss)/earnings per share
(EPS)
Adjusted Basic EPS is presented as an alternative performance
measure to show the underlying performance of the Group excluding
the effects of items considered by management to not reflect normal
trading activities or distort comparability either period on period
or with other similar businesses.
Reconciliation: Note 22 vii. Free cash flow per share (FCPS)
Free Cash Flow (see definition xvi) divided by the weighted
average shares outstanding - basic. viii. Effective tax rate
The Group's tax credit/(charge) for the period divided by the
(loss)/profit before tax presented in the condensed consolidated
statement of comprehensive income. ix. Available funds
Available funds comprise cash and cash equivalents of EUR40.9
million as presented in the condensed consolidated statement of
financial position and the undrawn revolving credit facilities of
EUR229.0 million at period end which are available for use subject
to the EUR50 million minimum liquidity restriction when it is in
effect. x. Fixed lease costs
Fixed costs incurred by the lessee for the right to use an
underlying asset during the lease term as calculated under IAS 17
Leases. xi. Net Debt
Net debt is calculated in line with banking covenants and
includes external loans and borrowings drawn and owed to the
banking club as at period end (rather than the amortised cost of
the loans and borrowings under IFRS 9), less cash and cash
equivalents.
Reconciliation: Refer below xii. Net Debt and Lease
Liabilities
Net Debt (see definition xi) and Lease Liabilities at period
end.
Reconciliation: Refer below xiii. Net Debt to Adjusted EBITDA
excluding the impact of IFRS 16
Net Debt (see definition xi) divided by the 'Adjusted EBITDA
excluding the impact of IFRS 16' (see definition xix) after
deducting fixed lease costs (see definition x) for the 12 month
period ended 30 June. This APM is presented to show the Group's
financial leverage before the application of IFRS 16 Leases.
Reconciliation: Refer below xiv. Net Debt and Lease Liabilities
to Adjusted EBITDA
Net Debt and Lease Liabilities (see definition xii) divided by
the 'Adjusted EBITDA' (see definition i) for the 12 month period
ended 30 June. This APM is presented to show the Group's financial
leverage after including the accounting estimate of lease
liabilities following the application of IFRS 16.
Reconciliation: Refer below xv. Net Debt to Value
Net Debt (see definition xi) divided by the valuation of
property assets as provided by external valuers at period end. This
APM is presented to show the gearing level of the Group under
banking covenants.
Reconciliation: Refer below
Calculation of Net Debt APMs - definitions (xi), (xii), (xiii),
(xiv), (xv)
Reference in condensed interim 30 June 2021 31 December 2020
financial statements EUR'000 EUR'000
Loans and borrowings Statement of financial position 341,963 314,143
Exclude accounting impact of IFRS 9 (879) (375)
External loans and borrowings drawn 341,084 313,768
Less cash and cash equivalents Statement of financial position (40,928) (50,197)
Net Debt - (APM xi) (A) 300,156 263,571
Lease Liabilities - current and non-current Statement of financial position 400,770 399,632
Net Debt and Lease Liabilities - (APM xii) (B) 700,926 663,203
12 months ended 30 June 12 months ended 31 December
2021 2020
EUR'000 EUR'000
Adjusted EBITDA1 (C) 9,987 18,692
Negative Adjusted EBITDA excluding the impact of IFRS 162 (D) (22,658) (11,949)
Net Debt to Adjusted EBITDA excluding the impact of IFRS 163 (A/ n/a n/a
- (APM xiii) D)
Net Debt and Lease Liabilities to Adjusted EBITDA - (APM (B/ 70.2x 35.5x
xiv) C)
Valuation of property assets as provided by external valuers (E) 1,128,306 1,124,256
4
Net Debt to Value - (APM xv) (A/ 27% 23%
E)
1 Adjusted EBITDA of EUR9,987k for the 12 months ended 30 June
2021 is calculated as follows:
-- Adjusted EBITDA of EUR1,437k for the six months ended 30 June
2021; and
-- Adjusted EBITDA of EUR18,692k for the 12 months ended 31
December 2020 less Adjusted EBITDA of EUR10,142k forthe six months
ended 30 June 2020.
2 Negative Adjusted EBITDA excluding the impact of IFRS 16 of
EUR22,658k for the 12 months ended 30 June 2021 is calculated as
follows:
-- Negative Adjusted EBITDA excluding the impact of IFRS 16 of
EUR15,990k for the six months ended 30 June2021 as per APM (xix)
below; and
-- Negative Adjusted EBITDA excluding the impact of IFRS 16 of
EUR11,949k for the 12 months ended 31 December2020 less Negative
Adjusted EBITDA excluding the impact of IFRS 16 of EUR5,281k for
the six months ended 30 June2020.
3 Net Debt to Adjusted EBITDA excluding the impact of IFRS 16 is
not applicable in both periods as Adjusted EBITDA was negative.
4 Property assets valued exclude assets under construction and
fittings, fixtures and equipment in leased hotels. xvi. Free Cash
Flow
Net cash from operating activities less amounts paid for
interest, finance costs, refurbishment capital expenditure, fixed
lease payments and after adding back cash impact of adjusting
items. Following the adoption of IFRS 16, fixed lease payments
comprises the repayment of lease liabilities and interest paid on
lease liabilities as presented in the condensed consolidated
statement of cash flows.
Since the onset of the Covid-19 pandemic in March 2020, the
Group deferred VAT and payroll taxes under government support
schemes. This non-recurring initiative was introduced by government
Covid-19 support schemes. It allows the temporary retention of an
element of taxes collected during 2020 and 2021 on behalf of tax
authorities. To remove the effect of this distortion on cash flows
from trading, the impact of these deferrals have been excluded in
the calculation of Free Cash Flow. This APM is presented to show
the cash generated to fund acquisitions, development expenditure,
repayment of debt and dividends.
Reference in condensed interim 6 months ended 30 June 6 months ended 30 June
2021 2020
financial statements
EUR'000 EUR'000
Net cash from/(used in) operating activities Statement of cash 5,626 (8,674)
flows
Other interest and finance costs paid Statement of cash (6,994) (4,642)
flows
Refurbishment capital expenditure paid (1,301) (7,984)
Exclude adjusting items with a cash effect - Note 4 373 -
pre-opening costs
Exclude net outflow from tax deferrals from government Covid-19 support (2,991) (9,398)
schemes1
Fixed lease payments:
- Interest paid on lease liabilities Statement of cash (11,771) (10,881)
flows
- Repayment of lease liabilities Statement of cash (3,962) (3,171)
flows
Free cash outflow - (APM xvi) (21,020) (44,750)
1 Since the onset of the Covid-19 pandemic in March 2020, the
Group deferred VAT and payroll taxes under government support
schemes resulting in liabilities of EUR3.0 million at period end
which are expected to be payable during 2022. This balance
comprises EUR3.4 million deferred during the period less amounts
totalling EUR0.4 million that were deferred during 2020 and paid
during the current period. This non-recurring initiative was
introduced by government Covid-19 support schemes. It allows the
temporary retention of an element of taxes collected during 2020
and 2021 on behalf of tax authorities. To remove the effect of this
distortion on cash flows from trading and accurately reflect the
period in which these amounts relate to, the impact of these
deferrals have been excluded in the calculation of Free Cash Flow.
This adjustment was not included in the calculation of Free Cash
Flow for the six months ended 30 June 2020 and therefore the Group
has restated the prior period comparative for the impact of these
deferrals to ensure comparability period on period. As a result,
the Free Cash Flow calculation for the six months ended 30 June
2020 has decreased by EUR9.4 million to EUR44.8 million. xvii. Debt
and Lease Service Cover
Free Cash Flow before payment of lease costs, interest and
finance costs divided by the total amount paid for lease costs,
interest and finance costs. This APM is presented to show the
Group's ability to meet its debt and lease commitments.
6 months ended 6 months 6 months ended 12 months
Reference in 12 months 30 June ended 30 June ended
condensed ended
2021 31 Dec 2020 31 Dec
interim financial 30 June 2021 2020 20202
statements EUR'000 EUR'000 EUR'000
EUR'000 EUR'000
D=E+F E F=G-H H G
Free cash outflow (see APM xvi) (A) (17,599) (21,020) 3,421 (44,750) (41,329)
Add back:
Total lease costs paid1 29,749 15,733 14,016 16,948 30,964
Interest and finance costs paid Statement of cash 15,308 6,994 8,314 4,642 12,956
flows
Total lease costs, interest and (B) 45,057 22,727 22,330 21,590 43,920
finance costs paid
Free Cash Flow before lease and (C= 27,458 1,707 25,751 (23,160) 2,591
finance costs A+B)
Debt and Lease Service Cover - (C/ 0.6 0.1
(APM xvii) B)
1 Total lease costs paid comprises payments of fixed and
variable lease costs during the period if applicable in accordance
with the lease agreements if they relate to the period.
2 Numbers sourced from 2020 Annual Report. xviii. Return on
Invested Capital
In prior periods, the Group presented this APM to provide
stakeholders with a more meaningful understanding of the underlying
financial and operating performance of the Group. Due to the
significant impact of Covid-19 on the Group's financial
performance, the return is negative for the 12 month period ended
30 June 2021 as the Group incurred losses in the period. As a
result, this APM is no longer disclosed here.
Excluding IFRS 16 numbers
Due to the significant impact from the adoption of IFRS 16 on
the condensed consolidated interim financial statements from 2019
onwards, the Group has included additional APMs that will provide
the reader with more information to assist in interpreting the
underlying operating performance of the Group. In addition, targets
for existing share-based payment schemes and the banking facilities
agreements and covenants under those agreements continue to be
calculated excluding the impact of IFRS 16. In particular, the
Group refers to the following APMs to enable comparison between
periods following the adoption of IFRS 16. xix. Adjusted EBITDA
excluding the impact of IFRS 16
Loss before adjusting items, interest and finance costs, tax,
depreciation, amortisation of intangible assets as defined above
and restated to remove the impact of adopting IFRS 16, replacing
IFRS 16 right-of-use asset depreciation and lease liability
interest with lease costs as calculated under IAS 17.
Reconciliation: Refer below xx. EBIT excluding the impact of
IFRS 16
Loss before interest and finance costs, tax and restated to
remove the impact of adopting IFRS 16, by excluding IFRS 16
right-of-use asset depreciation, impairment of right-of-use assets,
impairment of fixtures, fittings and equipment and the
remeasurement gain on right of-use-assets and including the lease
costs as calculated under IAS 17. In the prior period, the
additional loss on the sale and leaseback as calculated under IAS
17 is also included. The Group discloses this APM to show the
earnings generated by the Group before the application of IFRS
16.
Reconciliation: Refer below xxi. Adjusted EBIT excluding the
impact of IFRS 16
EBIT excluding the impact of IFRS 16 as defined in (xx) above
before adjusting items. The Group discloses this APM to show the
earnings generated by the Group before the application of IFRS 16
and excludes items which are not reflective of normal trading
activities or distort comparability either period on period or with
other similar businesses.
Reconciliation: Refer below xxii. Loss for the period excluding
the impact of IFRS 16
Loss for the period restated to remove the impact of adopting
IFRS 16, including replacing IFRS 16 right-of-use asset
depreciation, lease liability interest, impairment of right-of-use
assets, impairment of fixtures, fittings and equipment and the
remeasurement gain on right of-use-assets with the lease costs as
calculated under IAS 17.
Reconciliation: Refer below xxiii. Loss per share excluding the
impact of IFRS 16 - basic
Basic loss per share restated to remove the impact of adopting
IFRS 16, including replacing IFRS 16 right of-use-asset
depreciation, lease liability interest, impairment of right-of-use
assets, impairment of fixtures, fittings and equipment and the
remeasurement gain on right of-use-assets with the lease costs as
calculated under IAS 17.
Reconciliation: Refer below xxiv. Loss per share excluding the
impact of IFRS 16 - diluted
Diluted loss per share restated to remove the impact of adopting
IFRS 16, including replacing IFRS 16 right-of-use asset
depreciation, lease liability interest and impairment of
right-of-use assets and fixtures, fittings and equipment and the
remeasurement gain on right of-use-assets with the lease costs as
calculated under IAS 17.
Reconciliation: Refer below xxv. Adjusted loss per share
excluding the impact of IFRS 16 - basic
Basic loss per share before adjusting items and restated to
remove the impact of adopting IFRS 16, including replacing IFRS 16
right-of-use asset depreciation and lease liability interest with
lease costs under IAS 17.
Reconciliation: Refer below xxvi. Adjusted loss per share
excluding the impact of IFRS 16 - diluted
Diluted loss per share before adjusting items and restated to
remove the impact of adopting IFRS 16, including replacing IFRS 16
right-of-use asset depreciation and lease liability interest with
lease costs under IAS 17.
Reconciliation: Refer below
Calculation of APMs excluding IFRS 16 - definitions (xix), (xx),
(xxi), (xxii), (xxiii), (xxiv), (xxv), (xxvi)
Reference in condensed interim 6 months ended 30 6 months ended 30
June 2021 June 2020
financial statements
EUR'000 EUR'000
Operating loss Statement of (20,004) (54,865)
comprehensive income
Add back:
Total adjusting items as per the financial statements Note 4 (2,061) 40,629
Depreciation of property, plant and equipment Note 4 13,416 13,481
Depreciation of right-of-use assets Note 4 9,805 10,627
Amortisation of intangible assets Note 4 281 270
Less fixed lease costs (17,427) (15,423)
Adjusted EBITDA excluding the impact of IFRS 16 - (APM (15,990) (5,281)
xix)
Amortisation of lease costs (155) -
Amortisation of intangible assets as if IAS 17 still (304) (270)
applied
Depreciation of property, plant and equipment Note 4 (13,416) (13,481)
Adjusted EBIT excluding the impact of IFRS 16 - (APM (29,865) (19,032)
xxi)
Adjusting items excluding IFRS 161:
Hotel pre-opening expenses Note 4 (373) -
Net revaluation movements through profit or loss
2,499 (27,261)
as if IAS 17 still applied
Impairment of goodwill Note 4 - (3,226)
Impairment of fixtures, fittings and equipment Note 4 - (1,054)
Loss on sale and leaseback of Clayton Hotel Charlemont - (7,650)
2
EBIT excluding the impact of IFRS 16 - (APM xx) (27,739) (58,223)
Other interest and finance costs Note 4 (6,043) (5,139)
Tax credit excluding IFRS 16 6,646 5,694
Loss for the period excluding the impact of IFRS 16 - (A) (27,136) (57,668)
(APM xxii)
Exclude adjusting items excluding IFRS 16 (per above) (2,126) 39,191
Tax impact of adjusting items 84 (727)
Adjusted loss excluding the impact of IFRS 16 (B) (29,178) (19,204)
Weighted average shares outstanding - basic (C) Note 22 222,796,160 185,503,265
Weighted average shares outstanding - diluted (D) Note 22 222,796,160 185,503,265
Loss per share excluding the impact of IFRS 16 - basic (A/C) (12.2) cents (31.1) cents
(APM xxiii)
Loss per share excluding the impact of IFRS 16 - (A/D) (12.2) cents (31.1) cents
diluted (APM xxiv)
Adjusted loss per share excluding the impact of IFRS (B/C) (13.1) cents (10.4) cents
16 - basic (APM xxv)
Adjusted loss per share excluding the impact of IFRS (B/D) (13.1) cents (10.4) cents
16 - diluted (APM xxvi)
1 Right-of-use assets are not recognised under the previous
accounting standard, IAS 17 Leases. Therefore, there would have
been no impairment of right-of-use assets or remeasurement gain on
right-of-use assets. As the impairment of fixtures, fittings and
equipment related to the impairment of right-of-use assets, this
impairment is also excluded.
2 In the prior period, the accounting for the loss on the sale
and leaseback of Clayton Hotel Charlemont differs under IFRS 16
compared to the previous accounting standard, IAS 17. Under IFRS
16, the property is derecognised upon sale of the asset and
replaced with a right-of-use asset following the leaseback. A
portion of the EUR7.7 million difference between the fair value
prior to sale and the sales proceeds was capitalised as part of the
right-of-use asset, with the remaining balance recorded in profit
or loss. Under the previous accounting standard, the entire
difference must be recorded immediately as a loss in profit or
loss.
Glossary
1. Revenue per available room (RevPAR)
Revenue per available room is calculated as total rooms revenue
divided by the number of available rooms, which is also equivalent
to the occupancy rate multiplied by the average daily room rate
achieved.
2. 'Like for Like' occupancy, ARR and RevPAR KPIs
'Like for Like' occupancy, ARR and RevPAR KPIs includes a half
year performance of all hotels regardless of when acquired. In
Dublin, the Ballsbridge Hotel is excluded as the hotel effectively
has not traded since March 2020.
3. ARR
Average Room Rate (also ADR - Average Daily Rate).
4. Hotel assets
Hotel assets represents the value of property, plant and
equipment per the condensed consolidated interim statement of
financial position at 30 June 2021.
5. Refurbishment capital expenditure
The Group typically allocates approximately 4% of annual revenue
to refurbishment capital expenditure to ensure the portfolio
remains fresh for its customers and adheres to brand standards.
-----------------------------------------------------------------------------------------------------------------------
ISIN: IE00BJMZDW83, IE00BJMZDW83
Category Code: IR
TIDM: DAL,DHG
LEI Code: 635400L2CWET7ONOBJ04
OAM Categories: 1.2. Half yearly financial reports and audit reports/limited reviews
Sequence No.: 121169
EQS News ID: 1230258
End of Announcement EQS News Service
=------------------------------------------------------------------------------------
Image link:
https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=show_t_gif&application_id=1230258&application_name=news
(END) Dow Jones Newswires
September 01, 2021 02:00 ET (06:00 GMT)
Dalata Hotel (LSE:DAL)
Gráfica de Acción Histórica
De Mar 2024 a Abr 2024
Dalata Hotel (LSE:DAL)
Gráfica de Acción Histórica
De Abr 2023 a Abr 2024
