TIDMPPH
RNS Number : 2983K
PPHE Hotel Group Limited
01 September 2021
1 September 2021
PPHE Hotel Group Limited
("PPHE" or the "Group")
Unaudited Interim Results for the six months ended 30 June
2021
Improving demand during the second quarter
PPHE Hotel Group, the international hospitality real estate
group which develops, owns and operates hotels and resorts,
announces its unaudited interim results for the six months ended 30
June 2021 (the "Period").
Further significant progress
-- Secured a contract to operate two hotels exclusively as part of
the UK government's hotel quarantine programme, and secured an
exclusive agreement for Park Plaza Westminster Bridge London to
act as official player hotel for the 2021 Wimbledon Championships
-- Unlocked GBP113.7 million of equity at the Group's latest NAV through
a long-term partnership with Clal Insurance ("Clal"), providing
financial headroom for future growth opportunities and to support
recovery
-- Continued progress on GBP200+ million development pipeline to enhance
long-term growth, which includes flagship developments art'otel
london hoxton and Hotel Brioni in Pula, Croatia. In Croatia, construction
of a hotel in Zagreb is expected to start in September (opening
Q4 2022), detailed planning is underway for the repositioning of
a hotel in Pula, and another campsite has been earmarked for repositioning
-- Multiple actions taken to attract and retain talent in a highly
competitive labour market and recognised as 'Top-6 Best Places
to Work' and shortlisted for the 'Best Employer' by The Caterer,
a leading UK hospitality industry trade publication, which will
further strengthen the Group's position for recruitment.
Financial performance and strong cash position
-- Total revenue in H1 was GBP25.8 million (H1 2020: GBP61.9 million,
which included a pre-COVID January and February). In Q2, total
revenue was GBP20.4 million, up 95.8% vs Q2 2020
-- EBITDA loss limited to GBP14.0 million in H1 through decisive actions
to mitigate the impact of the COVID-19 pandemic ("pandemic") (H1
2020: loss of GBP3.3 million, which included a pre-COVID January
and February). In Q2, EBITDA was GBP(3.9) million, up 42.4% vs
Q2 2020
-- EPRA NRV per share* at 30 June 2021 was GBP20.85 (31 December 2020:
GBP22.08)
-- EPRA Earnings per share (LTM) was GBP(1.34) vs 31 December 2020:
GBP(0.96). Adjusted EPRA earnings per share (LTM) was GBP(1.35)
vs 31 December 2020: GBP(1.23)
-- Financial position is strong, with GBP237.9 million cash available
at 30 June 2021, which consists of consolidated net cash of GBP177.9
million, and further access to undrawn facilities of GBP60 million
(*) EPRA NRV and EPRA NRV per share were calculated based on the
independent external valuations prepared in December 2020.
Well positioned for recovery
-- Majority of properties in operation, following a prolonged period
of lockdowns and temporary closures since the onset of the pandemic
-- Occupancy in the Group's key cities is currently dominated by domestic
leisure demand as air travel is still subdued
-- Positive booking trends continued into July and August in the UK,
the Netherlands and Germany, again driven by predominantly domestic
leisure activity
-- In Croatia, July and August performance exceeded expectations,
with the aggregrate revenue during this key demand period at approximately
90% of the revenue generated in the same period in 2019
-- In the UK, the Group is encouraged by the increasing number of
meeting and event enquiries, which are at the highest level since
the start of the pandemic and demonstrate the demand when markets
stabilise, albeit enquiry levels are still some way behind 2019
-- The Group's well-invested portfolio together with its agile owner-operator
model and strong track record provides a solid foundation for further
recovery
Commenting on the results, Boris Ivesha, President and Chief
Executive Officer, PPHE Hotel Group said:
"We were delighted to welcome back guests to our properties and
see improving demand as restrictions eased across our markets in Q2
following a long period of lockdown measures and ongoing domestic
and international travel restrictions which impacted trading in the
period. In the period, we secured some exclusive contracts across
several of our London properties and our flagship Park Plaza
Westminster Bridge London was the proud host hotel for the players
and support teams of the Wimbledon Championships. We also continued
to make progress on our GBP200+ million development pipeline and
through a partnership on two London properties we were able to
unlock GBP113.7 million of equity at the Group's latest NAV to grow
our Group to further increase our financial flexibility and support
our recovery.
"Post period end, we have seen the increasing trend for leisure
demand continue, while the number of enquiries for meetings and
events in the UK is at the highest level since the pandemic
started. In Croatia we have reported a strong July and August
performance, with revenues at approximately 90% of those generated
during the same period in 2019."
Enquiries
PPHE Hotel Group Limited Tel: +31 (0)20 717 8600
Daniel Kos, Chief Financial Officer & Executive
Director
Robert Henke, Executive Vice President
of Commercial Affairs
Hudson Sandler Tel: +44 (0)20 7796
4133
Wendy Baker/ Lucy Wollam / Nick Moore pphe@hudsonsandler.com
Notes to Editors
PPHE Hotel Group is an international hospitality real estate
company, with a GBP1.7 billion portfolio, valued as at December
2020 by Savills and Zagreb nekretnine Ltd (ZANE), of primarily
prime freehold and long leasehold assets in Europe.
Through its subsidiaries, jointly controlled entities and
associates it owns, co-owns, develops, leases, operates and
franchises hospitality real estate. Its primary focus is
full-service upscale, upper upscale and lifestyle hotels in major
gateway cities and regional centres, as well as hotel, resort and
campsite properties in select resort destinations.
PPHE Hotel Group benefits from having an exclusive and perpetual
licence from the Radisson Hotel Group, one of the world's largest
hotel groups, to develop and operate Park Plaza(R) branded hotels
and resorts in Europe, the Middle East and Africa. In addition,
PPHE Hotel Group wholly owns, and operates under, the art'otel(R)
brand and its Croatian subsidiary owns, and operates under, the
Arena Hotels & Apartments(R) and Arena Campsites(R) brands.
PPHE Hotel Group is a Guernsey registered company with shares
listed on the London Stock Exchange. PPHE Hotel Group also holds a
controlling ownership interest in Arena Hospitality Group, whose
shares are listed on the Prime market of the Zagreb Stock
Exchange.
Company websites:
www.pphe.com | www.arenahospitalitygroup.com
For reservations:
www.parkplaza.com | www.artotels.com | www.arenahotels.com | www.arenacampsites.com
BUSINESS & FINANCIAL REVIEW
BUSINESS REVIEW
In the first six months of 2021, the ongoing challenges
presented by the pandemic continued to cause severe disruption to
the global hospitality sector, with government imposed domestic and
international travel restrictions and social distancing measures in
place for much of the period. Consequently, as expected, the
Group's trading in the first half was severely subdued due to the
majority of its hotels either temporarily closed or operating at
reduced capacity.
However, our proactive strategy resulted in the Group securing
various Essential Business arrangements across several of its
London properties, including its current support to the UK
government's hotel quarantine programme at two of its hotels. In
addition, our flagship Park Plaza Westminster Bridge London was the
proud host hotel for the players and support teams of the 2021
Wimbledon Championships.
In Q2 2021, travel restrictions were progressively eased across
the Group's operating markets. In the UK, all the Group's hotels
were reopened to guests on 17 May, in line with the UK government's
roadmap, and from June restrictions were gradually eased across
Continental Europe. By the end of the second quarter, all the Group
properties (except for Park Plaza Amsterdam Airport and art'otel
budapest) were open and trading for the first time since the onset
of the pandemic. Booking demand is gradually improving with short
lead times.
Demand across all regions has been predominantly leisure
focused, with provincial cities and resort destinations proving to
be more popular than capital cities. In the UK, due to the
restrictions on international travel, leisure demand is largely
from the domestic market which, also prior to the pandemic, is
historically the Group's largest source market. With measures
easing and sports events once again being allowed we were well
placed to benefit from demand associated with events such as the
2020 UEFA European Football Championships and the Cricket Hundred
Series. The Group has also seen an increased level of enquiries
from the business travel and meeting planner sectors for the
Group's meetings and events offer in the UK.
Across Continental Europe the Group has seen greater signs of
international leisure travel recovering and we are particularly
pleased with our Croatian subsidiary's performance during the
summer months, welcoming guests from many European source
markets.
With the vaccination programmes firmly underway across all our
operating regions, the increased acceptance of lateral flow and PCR
testing and vaccination passports introduced across Europe, the
Group expects the positive demand trends to continue gaining
momentum.
Despite the challenges during the Period, the Group maintained a
strong financial position and made further progress in line with
its long-term growth strategy. It entered into a long-term
partnership with Clal, which unlocked GBP113.7 million of equity
and advanced on its GBP200+ million development pipeline, all of
which demonstrates the Group adaptability to ever-changing
prevailing market conditions.
Furthermore, the Group meticulously prepared for the reopening
of properties by leveraging its well-invested estate, flexible
owner operator model and broad customer appeal, including by
enhancing its technological capabilities, and re-engaging with team
members to ensure the continued delivery of the high-quality and
memorable guest experience that is synonymous with the Group.
As widely reported, the hospitality industry is going through
fundamental changes in terms of employment and the Group is no
exception. However, the Group's strong focus on leadership and
development initiatives, for which it has won numerous awards in
recent years, has resulted in the Group being recognised in the
'Top-6 Best Places to Work in Hospitality' awards by The Caterer,
the UK's leading hospitality trade publication. This award
showcases the very best places to work in what has been an
incredibly difficult time for the sector caused by the pandemic. We
are therefore especially proud of our continued investment in our
people, and the on-going care and support we provide to all our
team members.
Further details are set out below and in the Financial
Performance, and the Review of Operations.
Long-term partnership with Clal
In June, the Group entered into a long-term partnership with
Clal, a leading insurance and long-term savings company, in respect
of Park Plaza London Riverbank and art'otel london hoxton. As part
of the transaction, PPHE received GBP113.7 million in cash and Clal
was granted 5 million share appreciation rights ('SAR') to have a
value upside if the gap between the Group's latest reported EPRA
NAV and its' current market price narrows over the maturity period.
The SAR has a 7-year maturity with a strike price of GBP16 per
share and the upside is capped at GBP21 per share. Clal has also
committed to a further cash injection of GBP12.1 million to fund
its portion of the remaining equity commitments of the art'otel
london hoxton development project. Clal's investment, taking into
account existing bank debt and remaining development costs, is
based on a GBP263 million property valuation for Park Plaza London
Riverbank and an all-in development budget cost of GBP279.3 million
for the art'otel london hoxton project.
The Group remains the majority owner of the hotels by retaining
a 51% holding in one joint venture company holding ("JVCo") and
through its management company has secured a 20-year hotel
management agreement in respect of both hotels. Clal became a
minority partner and owner of 49% of the shares in JVCo, holding
indirectly the real estate and operations of these two
properties.
The agreement provides the Group with additional liquidity to
pursue new growth opportunities and to support the recovery
ahead.
Development pipeline
Good progress was made in the Group's GBP200+ million
development pipeline, which includes flagship developments such as
art'otel london hoxton and Hotel Brioni Pula in Croatia.
In the UK, construction progressed at art'otel london hoxton,
the Group's largest development project. The new 27-storey building
will accommodate 343 hotel rooms and suites, five floors of office
space, gym, swimming pool, wellness facilities and art gallery
space. The project is expected to complete by 2024.
art'otel london battersea power station, which is to be operated
by the Group under a long-term management agreement, is expected to
open during the first half of 2022.
Excellent progress was made at Hotel Brioni in Pula to
reposition the property as an upper upscale 227-room, full-service
hotel. The Group is evaluating the optimum time to reopen and
relaunch the property as Grand Hotel Brioni Pula, which is expected
to be during the 2022 summer season.
Also in London, plans were prepared for two further development
projects: (i) a mixed-use scheme including a 465-room hotel,
adjacent to Park Plaza London Park Royal; (ii) work is in progress
for a planning application to develop a mixed-use scheme, including
a hotel at 79-87 Westminster Bridge Road.
In September 2021, following a period of design and planning,
the Group is expected to commence construction of its property
(under a 45-year lease agreement) in the centre of Zagreb, Croatia
at an estimated cost of EUR16 million. The Group will operate the
hotel when the property is relaunched as a luxury hotel (expected
Q4 2022).
The Group's longer term project pipeline includes a development
site in New York and two repositioning projects in Pula,
Croatia.
Operational update
The Group has demonstrated throughout the pandemic the ability
to generate revenue from those sectors of the market which were
still travelling, including securing Essential Business travel
arrangements.
In the UK, the Group entered into a commercial agreement with
the Department of Health and Social Care ("DHSC") to provide
temporary accommodation for individuals returning from 'red-list'
countries, which provided the Group with an alternative revenue
stream. Park Plaza London Waterloo and Park Plaza Victoria London
have operated solely as quarantine hotels since May and July
respectively. The service provided by these hotels is set by DHSC
and the hotels have limited contact with guests during their
quarantine. DHSC is responsible for the provision of medical and
security staff to the hotel.
Park Plaza Westminster Bridge London was selected by the All
England Lawn Tennis Club ("AELTC") to be the Official Player Hotel
for the Wimbledon Championships in order to provide a minimised
risk environment for all players and their support teams at this
year's competition. The Group was proud to secure this exclusive
agreement which comprised full-service hospitality including
testing and recovery centres, gyms, hospitality desks for players
and highly tailored nutritional food and beverage offerings.
The Group's commercial action plan supports the reopening and
ramping up period and focuses on proactively driving customer and
business demand. As part of this plan, the Group has been involved
in the London Mayor's 'Let's do London' recovery campaign, and has
entered into a partnership with Merlin Entertainments for a jointly
funded media campaign consisting of attractive room rates and
access to 2-for-1 tickets at Merlin attractions, including the
London Eye and Sea Life.
Investment in operations and digital transformation
The Group has continued to implement contactless services at its
hotels, which offer guest reduced person-to-person contact during
their stay. The dedicated Apps for Park Plaza and art'otel enable
guest to check-in online prior to arrival or self-check-in on
arrival, have a digital room key via smartphone, contactless
payment options, new messaging options for guests such as a real
time messaging through chat or WhatsApp and online ordering of room
service. Guests also receive a pre-arrival email with ancillary
services to personalise their stays, including room upgrades, early
check-in and late check-outs, breakfast and dinner options or
special amenities.
Engagement with team members
A key focus for the Group throughout the pandemic has been
safeguarding the wellbeing of its own team members.
The Group's internal communications initiatives and 'staying
connected' newsletters and regular video interviews with senior
management continue to be well received and provide a channel to
enhance communications with team members. Furthermore, in the
Period the Group proactively engaged with all its team members,
providing a re-boarding programme in preparation for the returned
to work as hotels reopened. This included one-to-one meeting with
their line manager, online learning, and importantly, safety
training and wellbeing support.
To address the well-documented pressures across the hospitality
labour market, the Group continues to implement initiatives to
attract and retain team members, including enhanced standard pay
rates for critical recruitment and retention, the introduction of a
retention bonus, as well as wellbeing days to promote work life
balance. Open days have also developed our presence as an employer
of choice in local communities and we continue to leverage LinkedIn
and industry recruitment websites.
Industry Recognition
In recognition of the Group's commitment to preparing team
leaders and managers to lead the business post-lockdown, the Group
is proud to have received several accolades in the Period; 'Top-6
Best Places to Work in Hospitality' by The Caterer, winner of the
'Best Management Preparation Award' at the HR in Hospitality Awards
2021, shortlisted for The Caterer's upcoming 'Best Employer Award'.
In Croatia, the Group's subsidiary Arena Hospitality d.d. ("Arena")
was awarded the national 'Safe Stay in Croatia' label.
Environmental, Social and Governance ("ESG")
During the Period, the Group has been working towards
establishing ESG activities as an intrinsic part of the
infrastructure forming its response to the pandemic and business
recovery. The highlights are set out below:
-- Workforce engagement: establishment of a UK team member forum of
elected representatives to facilitate communication between management
and team members.
-- Carbon & energy: PPHE's owned and managed hotels across the UK,
the Netherlands and Germany are now reliant on electricity generated
from 100% renewable sources. The Group has also been working with
its energy consultant on the production of a 'room per night carbon
factor', which will allow the Group to calculate the amount of CO2
generated per occupied room per night to allow the Group to set
science-based carbon targets. The Group is also gathering data to
allow it to comply with the reporting requirements prescribed by
the Task Force on Climate-Related Financial Disclosures in its next
financial statements. Hotel guests support the Group's activities
through its "Save Tomorrow, Today" and "eco-logical" ongoing programmes,
which rewards guests for helping to reduce water, detergent and
electricity usage.
-- Sustainable development: For properties in development, sustainability
is key. In the UK, the Group is on-target to achieve an 'Excellent'
Building Research Establishment Environmental Assessment Method
("BREEAM") sustainability rating for art'otel london hoxton. Outside
the UK, the Group's ongoing works at Hotel Brioni Pula have included
façade works, window replacements, new air-cooling systems
and energy-efficient boilers in line with applicable local climate
regulations.
-- Governance : The Group has updated its Whistleblowing Policy and
rolled out a whistleblowing publicity refresh across the Group.
It has also established an ESG Committee consisting of non-executive
directors to take responsibility for the progress and oversight
of ESG.
-- Supply chain due diligence: The Group has been working on constructing
an up-to-date supplier database which includes and tracks key information
on, among other things, packaging, transport, workforce and supply
chain. This will allow it to set targets on these key components
and curate our supplier base to meet these targets.
-- Communities: In the UK, the Group enrolled team members to support
the NHS in the vaccination roll-out. In the Netherlands, Park Plaza
Amsterdam Airport supported a local school in being able to continue
to educate children whilst observing social distancing measures
by providing a meeting space which was converted into classroom
space for 400 students a day. As well as providing local hands-on
assistance in the pandemic response, team members in Croatia were
also able to provide ten fully equipped mobile homes from its campsites
to impacted communities within 24 hours of an earthquake striking
Sisak-Moslavina County in July 2021.
Current trading
As we enter the second half of 2021, government-imposed
restrictions are progressively being eased, aided by ongoing
vaccination programmes across the Group's countries of operation,
making European travel possible as of 1 July. Consequently, the
Group is seeing increasing levels of enquiries and bookings, across
both the leisure and events segments.
In July and August, trading in the UK, the Netherlands and
Germany was driven by domestic leisure activity. Meeting and event
enquiries in the UK have been at their highest level since the
start of the pandemic, albeit at subdued levels compared to 2019.
Due to the short lead times currently experienced, it is premature
to assess the pace of business travel for the second half of the
year. In Croatia, the Group reported a strong performance during
July and August (peak summer season), with an aggregated revenue at
approximately 90% of the revenue generated during the same period
in 2019.
The Group has a well-invested portfolio, agile owner-operator
model and strong track record, which together provide a solid
foundation for further recovery. While the Board remains mindful of
ongoing uncertainty, it remains confident in the appeal and
long-term prospects of the travel sector and the Group's ability to
capitalise on continued recovery to achieve long-term success.
FINANCIAL PERFORMANCE
Key financial statistics for the six months and three months
ended 30 June 2021 (unaudited)
H1 Reported in GBP (GBP)
---------------- -------------------------------------------------------------
Six months ended Six months ended
30 June 2021 30 June 2020 Change(1)
---------------- ---------------------------- ------------------ -----------
Total revenue GBP25.8 million GBP61.9 million (58.4)%
---------------- ---------------------------- ------------------ -----------
Room revenue GBP13.7 million GBP39.5 million (65.4)%
---------------- ---------------------------- ------------------ -----------
EBITDAR GBP(12.8) million GBP(2.8) million (358.8)%
---------------- ---------------------------- ------------------ -----------
EBITDA GBP(14.0) million GBP(3.3) million (322.5)%
---------------- ---------------------------- ------------------ -----------
(4,900)
EBITDA margin (54.4)% (5.4)% bps
---------------- ---------------------------- ------------------ -----------
Reported PBT GBP(50.3) million GBP(40.7) million (23.8)%
---------------- ---------------------------- ------------------ -----------
Normalised PBT GBP(48.9) million GBP(44.6) million (9.7)%
---------------- ---------------------------- ------------------ -----------
(2,190)
Occupancy 12.8% 34.7% bps
---------------- ---------------------------- ------------------ -----------
Average room
rate GBP95.2 GBP112.0 (15.0)%
---------------- ---------------------------- ------------------ -----------
RevPAR GBP12.2 GBP38.9 (68.6)%
---------------- ---------------------------- ------------------ -----------
(1) Percentage change figures are calculated from actual figures
as opposed to the rounded figures included in the above table.
Q2 Reported in GBP (GBP)
--------------- -------------------------------------------------------------
Three months ended Three months
30 June 2021 ended Change(1)
30 June 2020
--------------- ----------------------------- ----------------- -----------
Total revenue GBP20.4 million GBP10.4 million 95.8%
--------------- ----------------------------- ----------------- -----------
Room revenue GBP11.1 million GBP5.1 million 117.3%
--------------- ----------------------------- ----------------- -----------
EBITDAR GBP(3.4) million GBP(6.6) million 48.8%
--------------- ----------------------------- ----------------- -----------
EBITDA GBP(3.9) million GBP(6.8) million 42.4%
--------------- ----------------------------- ----------------- -----------
EBITDA margin (19.2)% (65.1)% 4600 bps
--------------- ----------------------------- ----------------- -----------
Occupancy 17.5% 10.7% 680 bps
--------------- ----------------------------- ----------------- -----------
Average room
rate GBP102.6 GBP94.6 8.4%
--------------- ----------------------------- ----------------- -----------
RevPAR GBP18.0 GBP10.1 78.6%
--------------- ----------------------------- ----------------- -----------
(1) Percentage change figures are calculated from actual figures
as opposed to the rounded figures included in the above table.
The Group has been encouraged by the early demand experienced
from mid-May onwards for its UK hotels and from June for its
Croatian region in particular. These early signs of recovery,
paired with Essential Business travel arrangements for two of our
London hotels and an exclusive use event at another property
enabled the Group to deliver a 95.8% revenue increase in the second
quarter, to GBP20.4 million (Q2 2020: GBP10.4 million). Room
revenue increased by 117.8% to GBP11.1 million (Q2 2020: GBP5.1
million).
Overall trading in H1 2021 was subdued domestic and
international travel restrictions in place across the Group's
operating markets for much of the first half. Activity levels
continued to be severely reduced with most of the Group's
properties closed or operating at significantly reduced capacity,
resulting in Group revenue and occupancy during the Period
decreasing. This challenging performance compares to a strong
performance in the first two and a half months of 2020 prior to the
onset of the pandemic and any associated restrictions. The limited
demand during the first half was primarily from essential stays and
contracted group business, albeit there was some return of leisure
guests from May as restrictions were progressively eased across
operating markets.
As a result, in H1 2021 reported total revenue declined by 58.4%
to GBP25.8 million (H1 2020: GBP61.9 million). RevPAR declined by
68.6%, with occupancy of 12.8% compared with 34.7% in H1 2020.
Average room rate declined by 15.0% to GBP95.2 (H1 2020:
GBP112.0).
Consequently, Group reported an EBITDA loss of GBP14.0 million
(H1 2020: EBITDA loss of GBP3.3 million) and the EBITDA margin fell
to -54.4% (H1 2020: -5.4%).
Normalised profit before tax decreased to GBP(48.9) million (H1
2020: GBP(44.6) million). Reported profit before tax decreased to
GBP(50.3) million (H1 2020: GBP(40.7) million).
Reconciliation of reported profit before tax to normalised
profit before tax
Six months Six months 12 months 12 months
ended ended ended ended
30 June 30 June 30 June 31 December
In GBP millions 2021 2020 2021 2020
----------------------------------- ---------- ---------- --------- ------------
Reported profit (loss) before
tax (50.3) (40.7) (104.3) (94.7)
----------------------------------- ---------- ---------- --------- ------------
Net insurance proceeds received
in relation to one of the Group's
UK hotels - (10.0) - (10.0)
----------------------------------- ---------- ---------- --------- ------------
Execution of the sale and purchase
agreement with the Republic of
Croatia related to Guest House
Riviera Pula - 1.6 (0.1) 1.5
----------------------------------- ---------- ---------- --------- ------------
Fair value adjustment on income
swaps with private investors
of Income Units in Park Plaza
Westminster Bridge London - 0.3 - 0.3
----------------------------------- ---------- ---------- --------- ------------
Loan early prepayment break costs 0.6 - 0.6 -
----------------------------------- ---------- ---------- --------- ------------
Results from marketable securities - (0.1) - (0.1)
----------------------------------- ---------- ---------- --------- ------------
Revaluation of finance lease 1.7 1.7 3.4 3.4
----------------------------------- ---------- ---------- --------- ------------
Revaluation of Park Plaza County
Hall London Income Units - 0.6 1.8 2.4
----------------------------------- ---------- ---------- --------- ------------
Disposals and Other non-recurring
expenses (including pre-opening
expenses) (0.9) 2.0 (0.8) 2.1
----------------------------------- ---------- ---------- --------- ------------
Impairment of property, plant
and equipment and right-of-use
assets - - 5.3 5.3
----------------------------------- ---------- ---------- --------- ------------
Normalised profit (loss) before
tax (48.9) (44.6) (94.1) (89.8)
----------------------------------- ---------- ---------- --------- ------------
Funding and liquidity
The Group's financial position remains strong, with GBP237.9
million cash available at 30 June 2021 (31 March 2021: GBP168.9
million), which consists of a consolidated cash position of
GBP177.9 million at 30 June 2021 (31 March 2021: GBP99.9 million),
and further access to undrawn facilities of GBP60.0 million (31
March 2021: GBP69.0 million, including GBP37.2 million of funding
for art'otel london hoxton).
In the Period, the Group fully repaid the drawn balance under
the Coronavirus Large Business Interruption Loan Scheme ("CLBILS")
facility and the Waterloo facility. The Group had previously
secured a development loan for its art'otel london hoxton
development project, which included an option to draw GBP37.2
million (remaining undrawn balance as at 31 December 2020) for
corporate purposes. With the Group unlocking equity by entering
into a joint venture with Clal, it has elected to forego on this
option. As a result of these changes, the Group currently has
access to GBP60 million of undrawn facilities.
Dividend
Given the continuous nature of government restrictions across
our operating regions as a result of the pandemic, the Board is not
proposing an interim dividend in respect of the six-month period
ended 30 June 2021.
The Board appreciates the importance of dividends and will
continue to review any future dividend payments in line with the
recovery trajectory and the business returning to cash flow
positive trading.
EPRA accounting information
The Group is a developer, owner and operator of hotels, resorts
and campsites and realises returns through both developing and
owning ass ets as well as the operations of those assets to their
full potential. Certain EPRA performance measurements are disclosed
to aid investors in analysing the Group's performance and
understanding the value of its assets and earnings from a property
perspective.
EPRA performance indicators
The Group's last 12 months adjusted EPRA earnings per share to
30 June 2021 decreased by 9.8% to GBP(1.35) per share. A summary of
the Group's EPRA performance measures is set out in the table
below.
30 June 2021 31 December 2020
GBP million GBP million
--------------------------------------- ------------- -----------------
EPRA earnings (LTM)(1) (56.9) (40.6)
--------------------------------------- ------------- -----------------
Adjusted EPRA earnings (LTM)(1) (57.7) (52.1)
--------------------------------------- ------------- -----------------
EPRA NRV (*) 895.2 960.8
--------------------------------------- ------------- -----------------
Per share figures: 30 June 31 December
2021 2020
GBP GBP
--------------------------------------- ------------- -----------------
EPRA Earnings per share (LTM) (1.34) (0.96)
--------------------------------------- ------------- -----------------
Adjusted EPRA earnings per share (LTM) (1.35) (1.23)
--------------------------------------- ------------- -----------------
EPRA NRV per share (*) 20.85 22.08
--------------------------------------- ------------- -----------------
(1) EPRA earnings and adjusted EPRA earnings for 30 June 2021
are calculated for the last 12-month period ended on 30 June
2021.
(*) EPRA NRV and EPRA NRV per share were calculated based on the
independent external valuations prepared in December 2020.
EPRA performance measures
a. EPRA net asset value
To guide investors on the market value of the Group's property
portfolio and performance, the Group has been reporting various
EPRA key performance indicators since 2018, alongside its
operational metrics. Property valuations have historically been
undertaken once a year by independent external valuers, using
established and widely recognised methods including applying
appropriate discount rates to property cash flow generation and
applying capitalisation rates from precedent transactions.
In December 2020, the Group's properties (with the exception of
operating leases, managed and franchised properties) were
independently valued by Savills (in respect of properties in the
Netherlands, UK and Germany) and by Zagreb nekretnine Ltd (ZANE)
(in respect of properties in Croatia). Based on those valuations we
have calculated the Group's EPRA NRV, EPRA NTA and EPRA NDV for 30
June 2021 and 31 December 2020.The EPRA NRV as at 30 June 2021, set
out in the table below amounts to GBP895.2 million, which equates
to GBP20.85 per share. EPRA NRV decreased by GBP65.6 million
(GBP1.23 per share) mainly due to the last six-month losses.
30 June 2021
GBP million
------------------------------------- -------------------------------------------------------------------------------
EPRA NRV EPRA NTA(4) EPRA NDV
(Net Reinstatement Value) (Net Tangible Assets) (Net Disposal Value)
------------------------------------- ---------------------------- ------------------------ -----------------------
NAV per the financial statements 291.6 291.6 291.6
Effect of exercise of options 6.2 6.2 6.2
Diluted NAV, after the exercise of
options(1) 297.8 297.8 297.8
Includes:
Revaluation of owned properties in
operation (net of non-controlling
interest)(2) 567.2 567.2 567.2
Revaluation of the JV interest held
in two German properties (net of
non-controlling interest)
(2) 3.1 3.1 3.1
Fair value of fixed interest rate
debt - - (65.5)
Deferred tax on revaluation of
properties - - (10.8)
Real estate transfer tax(3) 16.4 - -
Excludes:
Fair value of financial instruments (0.6) (0.6) -
Deferred tax (10.1) (10.1) -
Intangibles as per the IFRS balance - 15.9 -
sheet
EPRA NAV 895.2 862.9 791.8
Fully diluted number of shares (in
thousands)(1) 42,938 42,938 42,938
EPRA NAV per share (in GBP) 20.85 20.09 18.44
(1) The fully diluted number of shares excludes treasury shares
but includes 589,367 outstanding dilutive options (as at 31
December 2020: 1,196,996).
(2) The fair values of the properties were determined on the
basis of independent external valuations prepared in December 2020.
The properties under development are measured at cost.
(3) EPRA NTA and EPRA NDV reflect fair value net of transfer
costs. Transfer costs are added back when calculating EPRA NRV.
(4) NTA is calculated under the assumption that the Group does
not intend to sell any of its properties in the long run.
31 December 2020
GBP million
------------------------------------- -------------------------------------------------------------------------------
EPRA NRV EPRA NTA(4) EPRA NDV
(Net Reinstatement Value) (Net Tangible Assets) (Net Disposal Value)
------------------------------------- ---------------------------- ------------------------ -----------------------
NAV per the financial statements 309.6 309.6 309.6
------------------------------------- ---------------------------- ------------------------ -----------------------
Effect of exercise of options 13.2 13.2 13.2
------------------------------------- ---------------------------- ------------------------ -----------------------
Diluted NAV, after the exercise of
options(1) 322.8 322.8 322.8
------------------------------------- ---------------------------- ------------------------ -----------------------
Includes:
------------------------------------- ---------------------------- ------------------------ -----------------------
Revaluation of owned properties in
operation (net of non-controlling
interest)(2) 602.1 602.1 602.1
------------------------------------- ---------------------------- ------------------------ -----------------------
Revaluation of the JV interest held
in two German properties (net of
non-controlling interest)
(2) 3.2 3.2 3.2
------------------------------------- ---------------------------- ------------------------ -----------------------
Fair value of fixed interest rate
debt - - (84.5)
------------------------------------- ---------------------------- ------------------------ -----------------------
Deferred tax on revaluation of
properties - - (13.1)
------------------------------------- ---------------------------- ------------------------ -----------------------
Real estate transfer tax(3) 18.6 - -
------------------------------------- ---------------------------- ------------------------ -----------------------
Excludes:
------------------------------------- ---------------------------- ------------------------ -----------------------
Fair value of financial instruments (0.7) (0.7) -
------------------------------------- ---------------------------- ------------------------ -----------------------
Deferred tax (13.4) (13.4) -
------------------------------------- ---------------------------- ------------------------ -----------------------
Intangibles as per the IFRS balance - 17.8 -
sheet
------------------------------------- ---------------------------- ------------------------ -----------------------
EPRA NAV 960.8 924.4 830.5
------------------------------------- ---------------------------- ------------------------ -----------------------
Fully diluted number of shares (in
thousands)(1) 43,521 43,521 43,521
------------------------------------- ---------------------------- ------------------------ -----------------------
EPRA NAV per share (in GBP) 22.08 21.24 19.08
(1) The fully diluted number of shares excludes treasury shares
but includes 1,196,996 outstanding dilutive options (as at 31
December 2019: 412,290).
(2) The fair values of the properties were determined on the
basis of independent external valuations prepared in December 2020.
The properties under development are measured at cost.
(3) EPRA NTA and EPRA NDV reflect fair value net of transfer
costs. Transfer costs are added back when calculating EPRA NRV.
(4) NTA is calculated under the assumption that the Group does
not intend to sell any of its properties in the long run.
Cash flow and EPRA earnings
The table below provides details on the Group's cash flow in the
first and second quarter of 2021 (see Note 1d for further
details)
Three months ended Three months ended
31 March 2021 30 June 2021
GBP million GBP million
------------------- -------------------
Operational cash flow (including working capital) (8.2) 3.0
Investment in properties (10.6) (17.5)
Debt service including leases and unit holders in Park Plaza Westminster
Bridge London (9.1) (11.5)
Proceeds from loans 16.3 18.4
Repayment of loans - (40.4)
Joint Venture with Clal Insurance(2) - 125.8
Other exceptional items (including FX) (2.7) 0.2
------------------- -------------------
Total cash movement (14.3) 78.0
Cash at beginning of period 114.2 99.9
Cash at end of period 99.9 177.9
Undrawn facilities at end of period (1) 69.0 60.0
(1) The amount of undrawn facilities as at 30 June 2021 comprise
of the GBP40 million undrawn amount under the CLBILS facility and
the GBP20 million undrawn amount under the Park Plaza London
Waterloo facility. The amount of undrawn facilities as at 31 March
2021 comprise of GBP17.0 million undrawn amount under the CLBILS
facility, GBP14.8 million undrawn amount under the Park Plaza
London Waterloo facility and access to GBP37.2 million undrawn
amount under the art'otel london hoxton facility which was
cancelled due to the Group entering into a joint venture with
Clal.
(2) Comprise of the GBP113.7 million cash received as part of
entering into a long-term partnership with Clal, including the
further cash injection of GBP12.1 million to fund the remaining
equity commitments of the art'otel london hoxton development
project.
The basis for calculating the Company's adjusted EPRA earnings
of GBP(57.7) million for the 12 months to 30 June 2021 (12 months
to 31 December 2020: GBP(52.1) million) and the Company's adjusted
EPRA earnings per share of GBP(1.35) for the 12 months to 30 June
2021 (12 months to 31 December 2020: GBP(1.23)) is set out in the
table below.
12 months ended 12 months ended
30 June 2021 31 December 2020
GBP million GBP million
-------------------------------------------------------------------------------- ---------------- ------------------
Earnings attributed to equity holders of the parent company (95.6) (81.7)
-------------------------------------------------------------------------------- ---------------- ------------------
Depreciation and amortisation expenses 44.7 46.6
-------------------------------------------------------------------------------- ---------------- ------------------
Revaluation of Park Plaza County Hall London Income Units 1.8 2.4
-------------------------------------------------------------------------------- ---------------- ------------------
Changes in fair value of financial instruments - 0.2
-------------------------------------------------------------------------------- ---------------- ------------------
Non-controlling interests in respect of the above(3) (7.8) (8.1)
-------------------------------------------------------------------------------- ---------------- ------------------
EPRA earnings (56.9) (40.6)
-------------------------------------------------------------------------------- ---------------- ------------------
Weighted average number of shares (LTM) 42,506,006 42,466,006
-------------------------------------------------------------------------------- ---------------- ------------------
EPRA earnings per share (in pence) (134) (96)
-------------------------------------------------------------------------------- ---------------- ------------------
Company specific adjustments(1) :
-------------------------------------------------------------------------------- ---------------- ------------------
Remeasurement of lease liability(4) 3.4 3.4
-------------------------------------------------------------------------------- ---------------- ------------------
Disposals and Other non-recurring expenses (including pre-opening expenses)(9) (0.8) 2.0
-------------------------------------------------------------------------------- ---------------- ------------------
Government settlement purchase of hotel Riviera(6) (0.1) 1.5
-------------------------------------------------------------------------------- ---------------- ------------------
Loan early prepayment break costs 0.6 -
-------------------------------------------------------------------------------- ---------------- ------------------
Adjustment of lease payments(5) (1.8) (2.6)
-------------------------------------------------------------------------------- ---------------- ------------------
Insurance settlement(7) - (10.0)
-------------------------------------------------------------------------------- ---------------- ------------------
Investment tax credit and change in tax(8) (0.7) (1.8)
-------------------------------------------------------------------------------- ---------------- ------------------
Maintenance capex(2) (2.6) (4.0)
-------------------------------------------------------------------------------- ---------------- ------------------
Non-controlling interests in respect of the above(3) 1.2 -
-------------------------------------------------------------------------------- ---------------- ------------------
Company adjusted EPRA earnings(1) (57.7) (52.1)
-------------------------------------------------------------------------------- ---------------- ------------------
Company adjusted EPRA earnings per share (in pence) (135) (123)
-------------------------------------------------------------------------------- ---------------- ------------------
Reconciliation Company adjusted EPRA earnings to normalised reported profit
before tax
-------------------------------------------------------------------------------- ---------------- ------------------
Company adjusted EPRA earnings (57.7) (52.1)
-------------------------------------------------------------------------------- ---------------- ------------------
Reported depreciation(10) (39.4) (41.3)
-------------------------------------------------------------------------------- ---------------- ------------------
Non-controlling interest in respect of reported depreciation 7.8 8.1
-------------------------------------------------------------------------------- ---------------- ------------------
Maintenance capex(2) 2.6 4.0
-------------------------------------------------------------------------------- ---------------- ------------------
Non-controlling interest on maintenance capex and the company specific (1.2) -
adjustments
-------------------------------------------------------------------------------- ---------------- ------------------
Adjustment of lease payments(5) 1.8 2.6
-------------------------------------------------------------------------------- ---------------- ------------------
Investment tax credit and change in tax rate(8) 0.7 1.8
-------------------------------------------------------------------------------- ---------------- ------------------
Reported loss attributable to non-controlling interest (11.1) (12.2)
-------------------------------------------------------------------------------- ---------------- ------------------
Reported tax 2.4 (0.7)
-------------------------------------------------------------------------------- ---------------- ------------------
Normalised (loss) profit before tax (94.1) (89.8)
(1) The 'Company specific adjustments' represent adjustments of
non-recurring or non-trading items.
(2) Calculated as 4% of revenues, which represents the expected
average maintenance capital expenditure required in the operating
properties.
(3) Non-controlling interests include the non-controlling
shareholders in Arena and third-party investors in income units of
Park Plaza Westminster Bridge London.
(4) Non-cash revaluation of finance lease liability relating to minimum future CPI/RPI increases.
(5) Lease cash payments which are not recorded as an expense in
the Group's income statement due to the implementation of IFRS
16.
(6) Execution of the sale and purchase agreement with the
Republic of Croatia related to Guest House Riviera Pula (see Note
5d in the 2020 annual consolidated financial statements).
(7) Net insurance proceeds received in relation to one of the
Group's UK hotels.
(8) Relates to investment tax credit received in Croatia and
change in tax rate (see Note 27 in the 2020 annual consolidated
financial statements)
(9) Mainly relates to write-off value and sale of fixed
assets.
(10) Reported depreciation excluding impairments of property,
plant and equipment and right-of-use assets.
REVIEW OF OPERATIONS
United Kingdom
Hotel operations
Reported in GBP
------------------- -----------------------------------
Six months Six months
ended ended
30 June 30 June
2021 2020
------------------- ----------------- ----------------
Total revenue GBP15.3 million GBP41.8 million
------------------- ----------------- ----------------
EBITDAR GBP(1.4) million GBP4.9 million
------------------- ----------------- ----------------
EBITDA GBP(1.7) million GBP4.8 million
------------------- ----------------- ----------------
Occupancy 14.9% 37.9%
------------------- ----------------- ----------------
Average room rate GBP113.7 GBP126.5
------------------- ----------------- ----------------
RevPAR GBP16.9 GBP47.9
------------------- ----------------- ----------------
Room revenue GBP9.7 million GBP27.5 million
------------------- ----------------- ----------------
Hotel portfolio performance
Restrictions were eased on 17 May and the Group was pleased to
reopen our UK hotels, welcoming back guests for non-essential
travel. Since, there have been encouraged by early signs of a
return in demand, primarily from domestic leisure guests with
international travel still subject to restrictions and measures.
The commercial agreement with DHSC to provide quarantine
accommodation at two hotels, and our agreement with AELTC to be the
exclusive hotel for players and their teams, provided a secure
revenue stream in the recovery period.
During this period, we completed works on The Residence at
Holmes Hotel London. This subterranean self-contained event space
includes a private pantry and is ideal for team away days and
collaborative group sessions in a unique setting.
Most of the Group's hotels in the UK (the Group's key market)
were temporarily closed from 6 January until 17 May, in line with
the UK Government's international and domestic travel restrictions
due to the pandemic. All restaurants and bars within properties
were also closed, both significantly impacting the half year
performance.
Total revenue in the first half declined by 63.4% to GBP15.3
million (H1 2020: GBP41.8 million). RevPAR was 64.6% lower at
GBP16.9 (H1 2020: GBP47.9), primarily due to a significantly fall
in occupancy to 14.9% (H1 2020: 37.9%), and a 10.1% reduction in
average room rate to GBP113.7 (H1 2020: GBP126.5). During the
Period, the Group continued minimise the impact of the closures,
such as accessing the COVID-19 Job Retention Scheme and the
business rates holiday, nevertheless reported EBITDA was GBP(1.7)
million (H1 2020: GBP4.8 million).
The United Kingdom hotel market*
The UK hotel market experienced a significant decline in
activity in H1 2021 vs H1 2020. RevPAR was down 26.8% at GBP18.08,
driven by a 21.3% decline in average room rate to GBP62.78 and a
7.0% reduction in occupancy to 28.8%
In London, RevPAR fell by 61.5% to GBP15.69 compared with H1
2020, reflecting a 38.7% fall in occupancy to 19.8%, and a 37.1%
reduction in average room rate to GBP79.13.
*STR European Hotel Review, June 2021
The Netherlands
Hotel operations
Reported in GBP Reported in local currency
EUR(1)
------------------------------------------------- -----------------------------------
Six months Six months Six months Six months
ended ended ended ended
30 June 30 June 30 June 30 June
2021 2020 2021 2020
---------------- --------------- --------------- ----------------- ----------------
Total revenue GBP1.9 million GBP9.5 million EUR2.2 million EUR10.8 million
---------------- --------------- --------------- ----------------- ----------------
GBP(2.0)
EBITDAR million GBP0.4 million EUR(2.3) million EUR0.5 million
---------------- --------------- --------------- ----------------- ----------------
GBP(2.0)
EBITDA million GBP0.4 million EUR(2.3) million EUR0.5 million
---------------- --------------- --------------- ----------------- ----------------
Occupancy 5.5% 29.5% 5.5% 29.5%
---------------- --------------- --------------- ----------------- ----------------
Average room
rate GBP91.5 GBP106.9 EUR105.7 EUR121.7
---------------- --------------- --------------- ----------------- ----------------
RevPAR GBP5.0 GBP31.5 EUR5.8 EUR35.9
---------------- --------------- --------------- ----------------- ----------------
Room revenue GBP1.0 million GBP6.2 million EUR1.1 million EUR7.0 million
---------------- --------------- --------------- ----------------- ----------------
(1) Average exchange rate from Euro to Pound Sterling for the
period ended 30 June 2021 was 1.155 and for the period ended 30
June 2020 was 1.139, representing a 1.4% increase.
Hotel portfolio performance
Trading during the first half was severely impacted by
government lockdown measures, including travel restrictions,
curfews and the temporary closure of restaurants, cafes, and bars.
While hotels could remain open, extremely lower demand resulted in
the Group's hotels being either temporarily closed or operated at
significantly reduced capacity. All restaurants and bars within the
properties were closed.
All properties, except for Park Plaza Amsterdam Airport, are now
in operation.
Total revenue (in euros) was 79.6% lower at EUR2.2 million (H1
2020: EUR10.8 million). RevPAR was EUR5.8 (H1 2020: EUR35.9),
mainly due to the sharp fall in occupancy to 5.5% (H1 2020: 29.5%).
Average room rate declined by 13.2% to EUR105.7 (H1 2020:
EUR121.7).
The Group continued to focus on its cost base and utilised the
government support schemes, nevertheless EBITDA during the period
was EUR(2.3) million (H1 2020: EUR0.5 million).
A relaunch of art'otel amsterdam, including a new restaurant
design and concept by Henrique Sá Pessoa, a Portuguese two Michelin
starred chef, is planned for the final quarter of 2021. The Group
has completed a refurbishment of a new all-day café, Carsten's Café
Amsterdam, positioned near the entrance of the hotel.
The Dutch hotel market*
The market was severely disrupted in H1 2021. RevPAR declined by
51.7% to EUR14.54 compared to H1 2020. Occupancy fell by 40.5% to
17.6%, and the average room rate was EUR82.49, 18.8% lower than in
H1 2020.
In Amsterdam, our main market in the Netherlands, RevPAR
significantly fell by 71.0% to EUR10.08. Occupancy levels declined
by 59.4% to 12.2%, and the average daily room rate declined by
28.6% to EUR82.98.
*STR European Hotel Review, June 2021
Croatia
Operations
Reported in GBP Reported in local currency
HRK(1)
--------------- ------------------------------------ --------------------------------------
Six months ended Six months Six months ended Six months
30 June 2021 ended 30 June 2021 ended
30 June 2020 30 June 2020
--------------- ----------------- ----------------- ------------------- -----------------
Total revenue GBP5.3 million GBP3.3 million HRK 46.6 million HRK 28.3 million
--------------- ----------------- ----------------- ------------------- -----------------
EBITDAR GBP(2.3) million GBP(3.5) million HRK (19.7) million HRK (29.7)
million
--------------- ----------------- ----------------- ------------------- -----------------
EBITDA GBP(3.2) million GBP(3.9) million HRK (27.5) million HRK (33.5)
million
--------------- ----------------- ----------------- ------------------- -----------------
Occupancy 18.8% 35.6% 18.8% 35.6%
--------------- ----------------- ----------------- ------------------- -----------------
Average room GBP62.9 GBP50.5 HRK 547.7 HRK 433.2
rate
--------------- ----------------- ----------------- ------------------- -----------------
RevPAR GBP11.8 GBP18.0 HRK 102.9 HRK 154.3
--------------- ----------------- ----------------- ------------------- -----------------
Room revenue GBP2.2 million GBP1.6 million HRK 19.4 million HRK 13.3 million
--------------- ----------------- ----------------- ------------------- -----------------
(1) Average exchange rate from Kuna to Pound Sterling for the
period ended 30 June 2021 was 8.713 and for the period ended 30
June 2020 was 8.580, representing a 1.6% increase.
Portfolio performance
In Croatia, most of the Group's hotels and apartment complexes
were closed until early June due the pandemic and measures taken by
the Croatian government.
During the second quarter, plans were prepared for reopening the
properties for the summer season, which included hiring part time
employees and revamping the properties ahead of opening. From early
June, all properties were reopened, and booking activity started to
increase. As a service to guests, Arena provided PCR test locations
to guests at several of its properties.
Total revenue (in local currency) increased by 64.7% to HRK 46.6
million (H1 2020: HRK 28.3 million). However, RevPAR declined by
33.3% to HRK 102.9 (H1 2020: HRK 154.3), reflecting a decline in
occupancy to 18.8% (H1 2020: 35.6%), albeit average room rate was
up 26.4% to HRK 547.7.
EBITDA loss improved by 18.0% to HRK 27.5 million (2020: HRK
33.5 million). The Group continued to utilise government grants to
support payroll costs.
Germany, Hungary, and Serbia
Hotel operations
Reported in GBP Reported in local currency
EUR(1)
--------------- ---------------------------------- ----------------------------------
Six months Six months Six months Six months
ended 30 June ended ended 30 June ended
2021 30 June 2020 2021 30 June 2020
--------------- ----------------- --------------- ----------------- ---------------
Total revenue GBP1.0 million GBP5.6 million EUR1.1 million EUR6.4 million
--------------- ----------------- --------------- ----------------- ---------------
EBITDAR GBP(1.8) million GBP0.1 million EUR(2.0) million EUR0.1 million
--------------- ----------------- --------------- ----------------- ---------------
EBITDA GBP(1.8) million GBP0.1 million EUR(2.1) million EUR0.1 million
--------------- ----------------- --------------- ----------------- ---------------
Occupancy 7.4% 29.5% 7.4% 29.5%
--------------- ----------------- --------------- ----------------- ---------------
Average room
rate GBP63.9 GBP91.6 EUR73.8 EUR104.4
--------------- ----------------- --------------- ----------------- ---------------
RevPAR GBP4.8 GBP27.1 EUR5.5 EUR30.8
--------------- ----------------- --------------- ----------------- ---------------
Room revenue GBP0.8 million GBP4.3 million EUR0.9 million EUR4.9 million
--------------- ----------------- --------------- ----------------- ---------------
(1) Average exchange rate from Euro to Pound Sterling for the
period ended 30 June 2021 was 1.155 and for the period ended 30
June 2020 was 1.139, representing a 1.4% increase.
Hotel portfolio performance
Tighter travel restrictions and lockdowns were in place for most
of the first half. In Germany, demand was flat and primarily from
the leisure segment, with a slight uplift in activity in June as
restrictions were eased. The hotels in Nuremberg and Cologne
performed better than in Berlin (the Group's main market in the
region) due to a stronger domestic leisure demand for these
destinations.
In Hungary, art'otel budapest was closed (and remains closed)
due to the imposed lockdown and continued low levels of demand. The
Group opened Hotel 88 Rooms, its new hotel in Belgrade, Serbia in
May 2021.
As a result, total revenue (in euros) fell by 82.3% to EUR1.1
million. RevPAR was down 82.2% at EUR5.5, reflecting the sharp fall
in occupancy to 7.4% (H1 2020: 29.5%). Average room rate reduced by
29.2% to EUR73.8 (H1 2020: EUR104.4).
During the Period, the Group continued to access government
support schemes in the region to mitigate the impact of the
pandemic. Alongside payroll support ("Kurzarbeit") in Germany, new
subsidies are available including a retrospective scheme from
October 2020, and a scheme from January to September 2021. In
addition, in Hungary, an amendment to the lease agreement for
art'otel budapest was signed in June 2021, which granted the lessor
a waiver to six monthly rents for the Period from August 2020 to
January 2021. Despite the steps taken to reduce costs, EBITDA
decreased to EUR(2.1) million from EUR0.1 million in H1 2020.
The German hotel market*
The German market experienced a 62.2% decline in RevPAR to
EUR10.37, resulting from a 52.7% reduction in occupancy to 13.7%
and a 20.1% reduction in average room rate to EUR75.75.
In Berlin, RevPAR fell by 65.3% to EUR9.77, due to a 53.6% fall
in occupancy to 14.3%, and average room rate reduced 25.3% to
EUR68.33.
*STR European Hotel Review, June 2021
Management and Central Services
Reported in GBP
----------------------------------- ------------------------------------
Six months ended Six months ended
30 June 2021 30 June 2020
--------------------------------- ------------------- -----------------
Total revenue before elimination GBP6.1 million GBP9.1 million
--------------------------------- ------------------- -----------------
Revenues within the consolidated GBP(3.9) million GBP(7.4) million
Group
--------------------------------- ------------------- -----------------
External and reported revenue GBP2.2 million GBP1.7 million
--------------------------------- ------------------- -----------------
EBITDA GBP(5.3) million GBP(4.7) million
--------------------------------- ------------------- -----------------
Our performance
Revenues in this segment are primarily management, sales,
marketing and franchise fees, and other charges for central
services.
These are predominantly charged within the Group and therefore
eliminated upon consolidation. For the six months ended 30 June
2021 the segment showed a negative EBITDA of GBP5.3 million as
management fees that were charged, both internally and externally,
did not exceed the costs in this segment.
Management, Group Central Services and licence, sales and
marketing fees are calculated as a percentage of revenues and
profit, and therefore these are affected by underlying hotel
performance.
PRINCIPAL RISKS AND UNCERTAINTIES
Our ERM framework supports the pursuit of our objectives through
enabling informed and calculated risk-taking, while protecting our
financial strength and reputation. The integration of risk
management and routine assessments of risks within each corporate
function allows us greater information at the leadership level to
ensure each function remains alert and accountable to assess and
report on risks on a regular basis, whether or not the risk profile
of an area has changed.
Our risk priority is decided through an assessment of the
likelihood of the risk and its impact should it materialise. Our
assessments are weighted towards impact to encourage prioritisation
of high impact risks. We have several areas of active risk,
triggered by the pandemic, for which the response and oversight
will continue to be our primary focus.
We continue to have several areas of active risk, triggered by
the pandemic, for which the response and oversight remains our
primary focus.
Whilst we are well positioned for a strong recovery and we see
positive trends across our markets, we have not yet reduced our
assessments in respect of our most significant principal risks and
consider that all areas of risk priority within the 2020 Annual
Report remain unchanged due to the continued uncertainty caused by
the pandemic and the impact of Brexit.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors confirm that, to the best of their knowledge,
these interim condensed consolidated financial statements have been
prepared in accordance with IAS 34 "Interim Financial Reporting"
give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Company and the undertakings
included in the consolidation as a whole for the period ended 30
June 2021. The interim management report includes a fair review of
the information required by DTR 4.2.7 R and DTR 4.2.8 R,
namely:
-- An indication of important events which have occurred during
the first six months and their impact on the condensed set of
financial statements, plus a description of the principal risks and
uncertainties for the remaining six months of the financial
year
-- Material related-party transactions in the first six months
and any material changes in the related-party transactions
described in the last annual report for the year ended 31 December
2020
-- The directors of the Company are listed in the last annual
report for the year ended 31 December 2020. A current list of
directors is maintained on the website of the Company (
www.pphe.com )
GOING CONCERN
The Group continued to take effective action to conserve cash in
the six months ended 30 June 2021 and as at 30 June 2021 it
continued to hold a strong liquidity position with an overall
consolidated cash balance of GBP177.9 million and access to GBP60
million of undrawn facilities.
The scenario considered and assessment made by the Directors in
adopting the going concern basis for preparing these financial
statements is included in Note 1 to the Interim Financial
Statements. Having reviewed this scenario, the Directors have
determined that the Company is likely to continue in business for
at least 12 months from the date of this announcement. This, taken
together with their conclusions on the matters referred to herein
and in Note 1 to the consolidated financial statements, has led the
Directors to conclude that it is appropriate to prepare the
half-year consolidated financial statements on a going concern
basis.
INDEPENT REVIEW REPORT TO PPHE HOTEL GROUP LIMITED
To: The Board of Directors of PPHE Hotel Group Limited
Introduction
We have reviewed the accompanying interim condensed consolidated
financial statements of PPHE Hotel Group Limited and its
subsidiaries (the Group) as at 30 June 2021 which comprise the
interim consolidated statement of financial position as at 30 June
2021 and the related interim consolidated income statement, and
consolidated statements of comprehensive income, changes in equity
and cash flows for the six-month period then ended, and explanatory
notes.
Management is responsible for the preparation and presentation
of this interim financial information in accordance with
International Accounting Standard 34 Interim Financial Reporting
(IAS 34) and the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on this interim
financial information based on our review.
We conducted our review in accordance with International
Standard on Review Engagements 2410, Review of Interim Financial
Information Performed by the Independent Auditor of the Entity. A
review of interim financial information consists of making
inquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
and, consequently, does not enable us to obtain assurance that we
would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the accompanying interim financial
information is not prepared, in all material respects, in
accordance with IAS 34 and the Disclosure Guidance and Transparency
Rules of the United Kingdom's Financial Conduct Authority.
KOST FORER GABBAY & KASIERER
A Member of Ernst & Young Global
Tel Aviv, Israel
31 August 2021
INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 June 2021 31 December 2020
Unaudited Audited
GBP'000 GBP'000
------------------------------------- ------------ ----------------
ASSETS
------------------------------------- ------------ ----------------
NON-CURRENT ASSETS:
------------------------------------- ------------ ----------------
Intangible assets 15,909 17,754
------------------------------------- ------------ ----------------
Property, plant and equipment 1,192,628 1,201,358
------------------------------------- ------------ ----------------
Right-of-use assets 221,059 223,793
------------------------------------- ------------ ----------------
Investment in joint ventures 4,558 4,741
------------------------------------- ------------ ----------------
Other non-current financial assets 15,965 15,958
------------------------------------- ------------ ----------------
Restricted deposits and cash 2,196 2,261
------------------------------------- ------------ ----------------
Deferred income tax assets 6,477 6,724
------------------------------------- ------------ ----------------
1,458,792 1,472,589
------------------------------------- ------------ ----------------
CURRENT ASSETS:
------------------------------------- ------------ ----------------
Restricted deposits 4,775 4,777
------------------------------------- ------------ ----------------
Inventories 2,069 2,260
------------------------------------- ------------ ----------------
Trade receivables 7,431 3,473
------------------------------------- ------------ ----------------
Other receivables and prepayments 13,634 8,044
------------------------------------- ------------ ----------------
Investments in marketable securities 26 27
------------------------------------- ------------ ----------------
Cash and cash equivalents 177,923 114,171
------------------------------------- ------------ ----------------
205,858 132,752
------------------------------------- ------------ ----------------
Total assets 1,664,650 1,605,341
------------------------------------- ------------ ----------------
The accompanying notes are an integral part of the Consolidated
interim financial statements.
INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 June
2021 31 December 2020
Unaudited Audited
GBP'000 GBP'000
----------------------------------------- ---------- ----------------
EQUITY AND LIABILITIES
----------------------------------------- ---------- ----------------
EQUITY:
----------------------------------------- ---------- ----------------
Issued capital - -
----------------------------------------- ---------- ----------------
Share premium 130,479 131,389
----------------------------------------- ---------- ----------------
Treasury shares (3,482) (3,482)
----------------------------------------- ---------- ----------------
Foreign currency translation reserve 10,163 20,804
----------------------------------------- ---------- ----------------
Hedging reserve (555) (703)
----------------------------------------- ---------- ----------------
Accumulated earnings 154,853 161,587
----------------------------------------- ---------- ----------------
Attributable to equity holders of the
parent 291,458 309,595
----------------------------------------- ---------- ----------------
Non-controlling interests 165,907 95,358
----------------------------------------- ---------- ----------------
Total equity 457,365 404,953
----------------------------------------- ---------- ----------------
NON-CURRENT LIABILITIES:
----------------------------------------- ---------- ----------------
Bank borrowings 704,413 721,006
----------------------------------------- ---------- ----------------
Provision for concession fee on land 5,201 5,399
----------------------------------------- ---------- ----------------
Financial liability in respect of Income
Units sold to private investors 125,664 126,155
----------------------------------------- ---------- ----------------
Other financial liabilities 253,821 244,818
----------------------------------------- ---------- ----------------
Deferred income taxes 8,030 8,472
----------------------------------------- ---------- ----------------
1,097,129 1,105,850
----------------------------------------- ---------- ----------------
CURRENT LIABILITIES:
----------------------------------------- ---------- ----------------
Trade payables 14,075 6,502
----------------------------------------- ---------- ----------------
Other payables and accruals 64,178 51,667
----------------------------------------- ---------- ----------------
Bank borrowings 31,903 36,369
----------------------------------------- ---------- ----------------
110,156 94,538
----------------------------------------- ---------- ----------------
Total liabilities 1,207,285 1,200,388
----------------------------------------- ---------- ----------------
Total equity and liabilities 1,664,650 1,605,341
----------------------------------------- ---------- ----------------
The accompanying notes are an integral part of the Consolidated
interim financial statements.
INTERIM CONSOLIDATED INCOME STATEMENT
Six months ended
--------------------------------------------- ---------------- ------------
30 June 2021 30 June 2020
Unaudited Unaudited
GBP'000 GBP'000
--------------------------------------------- ---------------- ------------
Revenues 25,758 61,856
--------------------------------------------- ---------------- ------------
Operating expenses (38,577) (64,650)
--------------------------------------------- ---------------- ------------
EBITDAR (12,819) (2,794)
--------------------------------------------- ---------------- ------------
Rental expenses (1,185) (520)
--------------------------------------------- ---------------- ------------
EBITDA (14,004) (3,314)
--------------------------------------------- ---------------- ------------
Depreciation and amortisation (19,054) (20,999)
--------------------------------------------- ---------------- ------------
EBIT (33,058) (24,313)
--------------------------------------------- ---------------- ------------
Financial expenses (16,574) (18,622)
--------------------------------------------- ---------------- ------------
Financial income 921 370
--------------------------------------------- ---------------- ------------
Other income 1,033 9,982
--------------------------------------------- ---------------- ------------
Other expenses (2,448) (5,826)
--------------------------------------------- ---------------- ------------
Net income (expense) for financial liability
in respect of Income Units sold to private
investors 279 (1,850)
--------------------------------------------- ---------------- ------------
Share in results of associate and joint
ventures (486) (393)
--------------------------------------------- ---------------- ------------
Loss before tax (50,333) (40,652)
--------------------------------------------- ---------------- ------------
Income tax benefit 59 3,138
--------------------------------------------- ---------------- ------------
Loss for the period (50,274) (37,514)
--------------------------------------------- ---------------- ------------
Loss attributable to:
Equity holders of the parent (44,677) (30,806)
--------------------------------------------- ---------------- ------------
Non-controlling interests (5,597) (6,708)
--------------------------------------------- ---------------- ------------
(50,274) (37,514)
--------------------------------------------- ---------------- ------------
Basic and diluted earnings per share (in
Pound Sterling) (1.05) (0.72)
--------------------------------------------- ---------------- ------------
The accompanying notes are an integral part of the Consolidated
interim financial statements.
INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months ended
30 June 2021 30 June 2020
Unaudited Unaudited
GBP'000 GBP'000
------------------------------------------ ------------ ------------
Loss for the period (50,274) (37,514)
------------------------------------------ ------------ ------------
Other comprehensive income (loss) to be
recycled
through profit and loss in subsequent
periods:
------------------------------------------ ------------ ------------
Profit (loss) from cash flow hedges(1) 280 (174)
------------------------------------------ ------------ ------------
Foreign currency translation adjustments
of foreign operations(2) (14,106) 24,993
------------------------------------------ ------------ ------------
Other comprehensive income (loss), net (13,826) 24,819
------------------------------------------ ------------ ------------
Total comprehensive loss (64,100) (12,695)
------------------------------------------ ------------ ------------
Total comprehensive loss attributable to:
Equity holders of the parent (55,085) (11,551)
------------------------------------------ ------------ ------------
Non-controlling interest (9,015) (1,144)
------------------------------------------ ------------ ------------
(64,100) (12,695)
------------------------------------------ ------------ ------------
1 Included in hedging reserve.
2 Included in foreign currency translation reserve.
The accompanying notes are an integral part of the Consolidated
interim financial statements.
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable
to equity
Foreign holders
currency of Non-
Issued Share Treasury translation Hedging Accumulated the controlling Total
capital(1) premium shares reserve reserve earnings parent interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
Balance as at
1 January 2021
(audited) - 131,389 (3,482) 20,804 (703) 161,587 309,595 95,358 404,953
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
Loss for the
period - - - - - (44,677) (44,677) (5,597) (50,274)
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
Other
comprehensive
income (loss)
for the period - - - (10,556) 148 - (10,408) (3,418) (13,826)
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
Total
comprehensive
income (loss) - - - (10,556) 148 (44,677) (55,085) (9,015) (64,100)
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
Share based
payments - 432 - - - 49 481 44 525
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
Exercise of
options - (1,342) - - - - (1,342) - (1,342)
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
Transactions
with
non-controlling
interests (note
3a) - - - - - 37,809 37,809 79,520 117,329
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
Balance as at
30 June 2021
(unaudited) - 130,479 (3,482) 10,248 (555) 154,768 291,458 165,907 457,365
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
Balance as at
1 January 2020
(audited) - 130,260 (3,636) 8,094 (655) 243,233 377,296 103,465 480,761
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
Loss for the
period - - - - - (30,806) (30,806) (6,708) (37,514)
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
Other
comprehensive
income (loss)
for the period - - - 19,347 (92) - 19,255 5,564 24,819
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
Total
comprehensive
income (loss) - - - 19,347 (92) (30,806) (11,551) (1,144) (12,695)
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
Share based
payments - 62 - - - 33 95 30 125
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
Transactions
with
non-controlling
interests - - - - - - - (63) (63)
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
Balance as at
30 June 2020
(unaudited) - 130,322 (3,636) 27,441 (747) 212,460 365,840 102,288 468,128
---------------- ---------- ------- -------- ----------- ------- ----------- ------------ ----------- --------
1 No par value.
The accompanying notes are an integral part of the Consolidated
interim financial statements.
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
Six months ended
30 June
2021 30 June 2020
Unaudited Unaudited
GBP'000 GBP'000
Cash flows from operating activities:
--------------------------------------------------- ---------- ------------
Loss for the period (50,274) (37,514)
--------------------------------------------------- ---------- ------------
Adjustments to reconcile loss to cash used
in operating activities:
--------------------------------------------------- ---------- ------------
Financial expenses including changes in fair
value of derivatives and expenses for financial
liability in respect of Income Units sold
to private investors 16,295 20,472
--------------------------------------------------- ---------- ------------
Financial income (921) (263)
--------------------------------------------------- ---------- ------------
Income tax benefit (59) (3,138)
--------------------------------------------------- ---------- ------------
Loss (gain) on disposal of assets (1,033) 1,470
--------------------------------------------------- ---------- ------------
Gain from marketable securities - (107)
--------------------------------------------------- ---------- ------------
Share based payments 525 125
--------------------------------------------------- ---------- ------------
Revaluation of lease liability 1,773 1,738
--------------------------------------------------- ---------- ------------
Revaluation of County Hall units - 600
--------------------------------------------------- ---------- ------------
Share in loss of associate and joint ventures 486 393
--------------------------------------------------- ---------- ------------
Depreciation and amortisation 19,054 20,999
--------------------------------------------------- ---------- ------------
36,120 42,289
--------------------------------------------------- ---------- ------------
Changes in operating assets and liabilities:
--------------------------------------------------- ---------- ------------
Decrease in inventories 118 375
--------------------------------------------------- ---------- ------------
Decrease (increase) in trade and other receivables (9,648) 7,479
--------------------------------------------------- ---------- ------------
Increase (decrease) in trade and other payables 17,940 (1,318)
--------------------------------------------------- ---------- ------------
8,410 6,536
--------------------------------------------------- ---------- ------------
Cash paid and received during the period for:
--------------------------------------------------- ---------- ------------
Interest paid (15,247) (18,970)
--------------------------------------------------- ---------- ------------
Interest received 300 313
--------------------------------------------------- ---------- ------------
Taxes paid (193) (380)
--------------------------------------------------- ---------- ------------
(15,140) (19,037)
--------------------------------------------------- ---------- ------------
Net cash flows used in operating activities (20,884) (7,726)
--------------------------------------------------- ---------- ------------
The accompanying notes are an integral part of the Consolidated
interim financial statements.
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
Six months ended
30 June 2021 30 June 2020
Unaudited Unaudited
GBP'000 GBP'000
------------------------------------------------- ------------ ------------
Cash flows from investing activities:
------------------------------------------------- ------------ ------------
Investments in property, plant and equipment (27,965) (32,230)
------------------------------------------------- ------------ ------------
Proceeds from disposal of property, plant
and equipment 1,373 85
------------------------------------------------- ------------ ------------
Purchase of remaining interest in previously
held joint venture - (2,207)
------------------------------------------------- ------------ ------------
Investment in Intangibles (131) -
------------------------------------------------- ------------ ------------
Loan to third jointly controlled entities (403) -
------------------------------------------------- ------------ ------------
Increase in restricted cash, net (21) (871)
------------------------------------------------- ------------ ------------
Sale of investments in marketable securities,
net - 5,303
------------------------------------------------- ------------ ------------
Net cash flows used in investing activities (27,147) (29,920)
------------------------------------------------- ------------ ------------
Cash flows from financing activities:
------------------------------------------------- ------------ ------------
Net proceeds (payments) from transactions
with non-controlling interests 125,823 (63)
------------------------------------------------- ------------ ------------
Proceeds from long-term loans 11,177 21,680
------------------------------------------------- ------------ ------------
Repayment of long-term loans (22,475) (4,771)
------------------------------------------------- ------------ ------------
Net cash flows provided by financing activities 114,525 16,846
------------------------------------------------- ------------ ------------
Increase (decrease) in cash and cash equivalents 66,494 (20,800)
------------------------------------------------- ------------ ------------
Net foreign exchange differences (2,742) 4,766
------------------------------------------------- ------------ ------------
Cash and cash equivalents at beginning of
period 114,171 153,029
------------------------------------------------- ------------ ------------
Cash and cash equivalents at end of period 177,923 136,995
------------------------------------------------- ------------ ------------
Non-cash items:
------------------------------------------------- ------------ ------------
Lease additions 2,273 13,476
------------------------------------------------- ------------ ------------
Outstanding payables on investments in property,
plant and equipment 4,006 5,445
------------------------------------------------- ------------ ------------
The accompanying notes are an integral part of the Consolidated
interim financial statements.
NOTES:
Note 1: General
a. PPHE Hotel Group, together with its subsidiaries (the
'Group'), is an international hospitality real estate group, which
owns, co-owns and develops hotels, resorts and campsites, operates
the Park Plaza(R) brand in EMEA and owns and operates the
art'otel(R) brand.
b. These financial statements have been prepared in a condensed
format as of 30 June 2021 and for the six months then ended
('interim consolidated financial statements'). These financial
statements should be read in conjunction with the Company's annual
consolidated financial statements as of 31 December 2020 and for
the year then ended and the accompanying notes ('annual
consolidated financial statements').
c. The Company is listed on the Premium Listing segment of the
Official List of the UK Listing Authority (the 'UKLA') and the
shares are traded on the Main Market for listed securities of the
London Stock Exchange.
d. Going concern and liquidity
In the first six months of 2021, the ongoing challenges
presented by the pandemic continued to cause severe disruption to
the global hospitality sector, with government imposed domestic and
international travel restrictions and social distancing measures in
place for much of the Period. Consequently, as expected, the
Group's trading in the first half was severely subdued due to the
majority of its hotels either temporarily closed or operating at
reduced capacity. However, in Q2 2021 travel restrictions were
progressively eased across the Group's operating markets. In the
UK, all the Group's hotels were reopened to guests on 17 May, in
line with the UK government's roadmap, and from June restrictions
were gradually eased across Continental Europe. By the end of the
second quarter, all the Group properties (except for Park Plaza
Amsterdam Airport and art'otel budapest) were open and trading for
the first time since the onset of the pandemic.
The Group continued to take effective action to conserve cash in
the six months ended 30 June 2021. Actions mainly included
utilisation of government support schemes available to the business
across its market, such as government job support schemes
(amounting to GBP9.3 million) and the business rates holiday (100%
relief) in the UK (amounting to saving of approximately GBP8.4
million), which holiday is being reduced to 66% business rates
relief from 1 July 2021. Furthermore, capital expenditure
requirements for the Group's development pipeline have been
prioritised, and discretionary spend has been reduced to
business-critical investments only. The Board has not recommended a
dividend payment to shareholders and future payments will be
aligned to the recovery trajectory and performance of the
business.
In the period, the Group further strengthened its liquidity
through raising GBP125.8 million in cash as part of its joint
venture transaction with Clal (see note 3a) and as at 30 June 2021
the Group continues to hold a strong liquidity position with an
overall consolidated cash balance of GBP177.9 million. Furthermore,
in June 2021 the Group fully repaid the drawn balance under the
CLBILS facility and the Waterloo facility and currently has access
to GBP60 million of undrawn facilities.
The Directors have considered detailed cash flow projection for
the next three years which assumes a very slow recovery in the rest
of 2021 with EBITDA levels at approximately 25% of 2019, 2022
EBITDA at 70% of 2019, EBITDA in 2023 returning to 2019 levels.
This scenario assumes that covenant waivers will be extended if
necessary. Having reviewed this scenario, the Directors have
determined that the Company is likely to continue in business for
at least 12 months from the date of this announcement.
Note 2: Basis of preparation and changes in accounting
policies
The interim consolidated financial statements have been prepared
in accordance with IAS 34 'Interim Financial Reporting'. The
accounting policies adopted in the preparation of the interim
consolidated financial statements are consistent with those
followed in the preparation of the Group's annual consolidated
financial statements, except for the adoption of new standards
effective as of 1 January 2021. The Group has not early adopted any
other standard, interpretation or amendment that has been issued
but is not yet effective.
The adoption of the following new standards effective as of 1
January 2021 had no material impact on the interim Consolidated
financial statements:
-- Interest Rate Benchmark Reform - Phase 2: Amendments to IFRS
9, IAS 39, IFRS 7, IFRS 4 and IFRS
Note 3: Significant events during the reported period
a. Long term partnership for 49% of Park Plaza London Riverbank
and art'otel london hoxton development project
On 23 June 2021 a wholly owned subsidiary of PPHE Hotel Group,
entered into a sale and purchase agreement with Clal Insurance
("Clal"), one of Israel's leading insurance and long-term savings
companies. As part of this agreement, Clal became a minority
partner and owner of 49% of the shares of Signature Top Ltd, a
wholly owned subsidiary of the Group, ("Signature Top") which
indirectly holds the real estate and operations of both the
646-room Park Plaza London Riverbank ("Riverbank") and the 343-room
art'otel london hoxton development project ("Hoxton"), which is
scheduled to open in 2024. As part of this agreement the Group has
secured a 20-year hotel management agreement in respect of both
hotels.
In addition, Clal was granted 5 million share appreciation
rights ('SAR') of the Company which has a seven-year maturity with
a strike price of GBP16 per share and a cap of GBP21 per share. The
SAR will vest as follows:
-- 500,000 SAR Units shall vest and become exercisable on the
first anniversary of the completion of the sale and purchase
agreement ("Completion")
-- 500,000 SAR Units shall vest and become exercisable on the
date being 18 months after Completion
-- The remaining four million SAR Units shall vest and become
exercisable on the second anniversary of Completion.
Upon exercise, the Company will have a right to determine
whether an amount equal to the SAR Value as of the date of the
exercise will be satisfied by a payment of cash or by the issuance
of the Company's shares.
The SAR instrument, which is included in level 2 in the fair
value hierarchy, was valued by an independent valuer using the
Black-Scholes model. The following lists the inputs used for the
fair value measurement:
Dividend yield 0%
Expected volatility of the share price 29.13%
--------
Risk-free interest rate 0.931%
--------
Years to expiration 7 years
--------
The total price paid by Clal in connection with the transaction
amounts to GBP113.7 million in cash, subject to working capital
adjustments, out of which GBP7.2 million was allocated to the SAR.
In addition, Clal provided further cash injection of GBP12.1
million to fund their portion of the remaining equity commitments
of the art'otel london hoxton development project.
The arrangements between the Group and Clal contain customary
exit provisions which include a right for Clal to require a sale of
either or both of the companies which own the hotels following
seven years from completion or earlier in a change of control of
PPHE and certain events of default. If triggered, such provisions
afford the Group a pre-emption right in respect of such companies.
The Group has also given certain guarantees to Clal regarding
completion of the art'otel london hoxton development project.
The Group has assessed this transaction and concluded that the
sale of the ownership interest in Signature Top does not trigger a
change of control and should be accounted for as an equity
transaction in accordance with IFRS 10 Consolidated Financial
Statements. The excess of consideration received over the carrying
amount of the non-controlling interests (net of GBP1.3 million of
transaction costs) in the amount of GBP37.8 million) is recognised
in equity of the parent. The Group has elected to recognise this
amount in accumulated earnings. Furthermore, the SAR liability in
the amount of GBP7.2 million was classified as a Financial
liability measured at fair value through profit or loss in line
with IAS 32 Financial Instruments: Presentation and IFRS 9
Financial Instruments and is included (net of the current portion
in the amount of GBP0.7 million) in Other financial liabilities in
the Group's consolidated balance sheet.
b. CLBILS extension
On 26 May 2021, Park Plaza Hotels (UK) Limited, a wholly-owned
subsidiary of the Company, entered into an agreement with Santander
UK Plc to extend the GBP30 million Coronavirus Large Business
Interruption Loan Scheme (CLBILS) facility which was signed on 10
November 2020 to GBP40 million under the same terms and conditions.
As at 30 June 2021 the facility is undrawn.
c. Repayment of Grandis loan
On 25 June 2021, Grandis Netherlands Holding B.V., a
wholly-owned subsidiary of the Company, voluntarily prepaid the
loan facility with Aareal Bank AG ('Aareal') which had an
outstanding balance of GBP9.2 million. The break costs of the early
prepayment which amounted to GBP0.6 million were recorded in other
expense in the Group's consolidated income statement.
Note 4: Segment data
For management purposes, the Group's activities are divided into
Owned Hotel Operations and Management Activities. Owned Hotel
Operations are further divided into four reportable segments: The
Netherlands, Germany, Hungary and Serbia, the United Kingdom, and
Croatia. The operating results of each of the aforementioned
segments are monitored separately for the purpose of resource
allocations and performance assessment. Segment performance is
evaluated based on EBITDA, which is measured on the same basis as
the amount presented in the consolidated income statement.
Six months ended 30 June 2021 (unaudited)
------------------------- ------------------------------------------------------------------------------------------
Germany, Management
Hungary United and holding
The Netherlands and Serbia Kingdom Croatia companies Adjustments Consolidated
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------------- ----------- -------- -------- ------------ ------------ ------------
REVENUE
------------------------- --------------- ----------- -------- -------- ------------ ------------ ------------
Third party 1,902 984 15,290 5,324 2,258 - 25,758
------------------------- --------------- ----------- -------- -------- ------------ ------------ ------------
Inter-segment - - 14 19 3,888 (3,921)
------------------------- --------------- ----------- -------- -------- ------------ ------------ ------------
Total revenue 1,902 984 15,304 5,343 6,146 (3,921) 25,758
------------------------- --------------- ----------- -------- -------- ------------ ------------ ------------
Segment EBITDA (2,008) (1,783) (1,742) (3,158) (5,313) - (14,004)
------------------------- --------------- ----------- -------- -------- ------------ ------------ ------------
Depreciation and
amortisation (19,054)
------------------------- --------------- ----------- -------- -------- ------------ ------------ ------------
Financial expenses (16,574)
------------------------- --------------- ----------- -------- -------- ------------ ------------ ------------
Financial income 921
------------------------- --------------- ----------- -------- -------- ------------ ------------ ------------
Net income for financial
liability in respect
of Income Units
sold to private
investors 279
------------------------- --------------- ----------- -------- -------- ------------ ------------ ------------
Other income (expenses),
net ( 1,415)
------------------------- --------------- ----------- -------- -------- ------------ ------------ ------------
Share in results
of associate and
joint ventures (486)
------------------------- --------------- ----------- -------- -------- ------------ ------------ ------------
Loss before tax (50,333)
------------------------- --------------- ----------- -------- -------- ------------ ------------ ------------
Six months ended 30 June 2020 (unaudited)
------------------------- ------------------------------------------------------------------------------------------
Germany, Management
Hungary United and holding
The Netherlands and Serbia Kingdom Croatia companies Adjustments Consolidated
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------------- ----------- -------- -------- ------------ ------------ ------------
REVENUE
------------------------- --------------- ----------- -------- -------- ------------ ------------ ------------
Third party 9,470 5,637 41,795 3,285 1,669 - 61,856
------------------------- --------------- ----------- -------- -------- ------------ ------------ ------------
Inter-segment - - - - 7,420 (7,420) -
------------------------- --------------- ----------- -------- -------- ------------ ------------ ------------
Total revenue 9,470 5,637 41,795 3,285 9,089 (7,420) 61,856
------------------------- --------------- ----------- -------- -------- ------------ ------------ ------------
Segment EBITDA 406 74 4,769 (3,909) (4,654) - (3,314)
------------------------- --------------- ----------- -------- -------- ------------ ------------ ------------
Depreciation and
amortisation (20,999)
------------------------- --------------- ----------- -------- -------- ------------ ------------ ------------
Financial expenses (18,622)
------------------------- --------------- ----------- -------- -------- ------------ ------------ ------------
Financial income 370
------------------------- --------------- ----------- -------- -------- ------------ ------------ ------------
Net expenses for
financial liability
in respect of Income
Units sold to private
investors (1,850)
------------------------- --------------- ----------- -------- -------- ------------ ------------ ------------
Other income (expenses),
net 4,156
------------------------- --------------- ----------- -------- -------- ------------ ------------ ------------
Share in results
of associate and
joint ventures (393)
------------------------- --------------- ----------- -------- -------- ------------ ------------ ------------
Loss before tax (40,652)
------------------------- --------------- ----------- -------- -------- ------------ ------------ ------------
Note 5: Financial instruments
Fair value of financial instruments:
During the period ended 30 June 2021, there were no transfers
between Level 1 and Level 2 fair value measurements, and no
transfers into and out of Level 3 fair value measurements.
There were no material changes in interest rates that
significantly affected the fair value of the Group's financial
assets and liabilities. As assets are matched with liabilities in
the same currency, the exposure to currency risk is limited.
Note 6: Other disclosures
a. Seasonality
The Group is in an industry with seasonal variations. Sales and
profits vary by quarter and the second half of the year is
generally the stronger trading period.
b. Other income
Six months Six months
ended ended
30 June 30 June
2021 2020
(Unaudited) (Unaudited)
GBP'000 GBP'000
------------------------------------------ ------------ ------------
Net proceeds from settlement of insurance
claim (1) - 9,982
------------------------------------------ ------------ ------------
Gain from sale of property, plant and
equipment 1,033 -
------------------------------------------ ------------ ------------
Total 1,033 9,982
------------------------------------------ ------------ ------------
(1) Net insurance proceeds received in relation to one of the
Group's UK hotels.
c. Other expenses
Six months Six months
ended 30 ended
June 2021 30 June 2020
(Unaudited) (Unaudited)
GBP'000 GBP'000
------------------------------------------- ------------ -------------
Loan early repayment break costs (see note
3c) (572) -
------------------------------------------- ------------ -------------
Other non-recurring expenses (including
pre-opening expenses) (103) (392)
------------------------------------------- ------------ -------------
Disposal of assets (1) - (1,470)
------------------------------------------- ------------ -------------
Settlement with the Republic of Croatia
in relation to Guest House Riviera Pula - (1,626)
------------------------------------------- ------------ -------------
Revaluation of finance lease(2) (1,773) (1,738)
------------------------------------------- ------------ -------------
Revaluation of Income Units at Park Plaza
County Hall London - (600)
------------------------------------------- ------------ -------------
Total (2,448) (5,826)
------------------------------------------- ------------ -------------
1. Mainly relates to the write-off value of fixed assets due to
reconstruction of Hotel Brioni Pula (disposal of asset due to
reconstruction).
2. Non-cash revaluation of finance lease liability relating to
minimum future CPI/RPI increases.
d. Earnings per share
The following reflects the income and share data used in the
basic earnings per share computations:
Potentially dilutive instruments are not considered since their
effect is antidilutive (increase of loss per share).
Six months ended 30 June
2021 2020
(Unaudited) (Unaudited)
--------------------------------------------- -------------- -------------
Reported loss attributable to Equity holders
of the parent (GBP'000) (44,677) (30,806)
--------------------------------------------- -------------- -------------
Weighted average number of ordinary shares
outstanding (in thousands) 42,539 42,459
--------------------------------------------- -------------- -------------
e. Related parties
Balances with related parties
30 June 31 December
2021 2020
GBP'000 GBP'000
----------------------------------------- -------- -----------
Loans to joint ventures 5,299 5,066
Short-term payable 15 88
Payable to GC Project Management Limited 51 903
Payable to Gear Construction UK Limited 622 1,862
----------------------------------------- -------- -----------
Transactions with related parties
Six months ended 30
June
----------------------------------------------------------------------
2021 2020
GBP'000 GBP'000
-------------------------------------------------- -------- ---------
Cost of transactions with GC Project Management
Limited - 1,874
Cost of transaction with Gear Construction UK
Limited 11,475 -
Interest income from jointly controlled entities 49 46
-------------------------------------------------- -------- ---------
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END
IR SDIFWFEFSEIA
(END) Dow Jones Newswires
September 01, 2021 02:00 ET (06:00 GMT)
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