Final Results

RNS Number : 5796K

Peel Hotels PLC

22 April 2010

 

PEEL HOTELS PLC

 

PRELIMINARY ANNOUNCEMENT

 

Derived from the audited results for financial year ended 7 February 2010

 

 

 

 

HIGHLIGHTS

 

·; Turnover up 11.5% to £14,186,042 (2009 : £12,720,245)

 

·; Profit before interest down 12.8% to £790,980 (2009 : £907,095)

 

·; Pre tax loss £74,106 (2009 : Profit £664,429)

 

·; Profit after tax up 9.4% to £1,140,529 (2009: £1,042,675)

 

·; Earnings per share

 

Basic 8.1p (2009:7.4p)

Diluted 8.1p (2009:7.4p)

 

" Improvement in trading during the first few months of the second half was not sustained and our results have continued to be impacted by the weak economy.

 

The acquisition of the Norfolk Royale Hotel, no disruption at the Cosmopolitan Hotel and the benefit of our significant capital expenditure should put us in a better position for improvement in the current year."

 

 

Robert Peel

Chairman

22 April 2010

 

 

Press Enquiries

0207 266 1100

 

KBC Peel Hunt Ltd

Capel Irwin

020 7418 8900

 

CHAIRMAN'S STATEMENT

 

Like for like hotel revenues fell by 3% and like for like hotel profits after depreciation and before Company administration costs decreased 35.4%. REVPAR (accommodation revenue per available bedroom) decreased 6.9% in the year with occupancy down 3.2% and average room rate down 3.8%. In an attempt to benchmark this result TRI Hospitality Consulting reported Provincial REVPAR in the United Kingdom down 10.8% and Price Waterhouse Coopers reported a reduction of 12.6% in the calendar year 2009.

 

Total turnover was £14,186,042 of which £1,868,568 was in respect of the Norfolk Royale Hotel which was acquired on 1 June 2009 (2009: £12,720,245). Operating profit for the full year was £790,980 (2009: £907,095). EBITDA (Earnings before interest, tax and depreciation) was £2,005,080 (2009: £1,980,730)

 

The pre-tax result was a loss of £74,106 (2009: Profit of £664,429). After a full tax provision less the discount on the deferred tax liabilities and taking a further adjustment of £1,214,635 for an over provision of Capital gains tax for prior years, earnings per share were 8.1p and 8.1p on a diluted basis (2009: 7.4p basic and 7.4p diluted).

 

Clearly the results in the year under review were very disappointing and there is no real sign of a recovery in the economy from a provincial point of view. The lack of commercial activity in terms of cut backs in overnight stays, conferences and training courses has continued throughout the year whilst the supply side has grown in terms of new hotel openings that had been financed when credit was relatively easy.

 

On a like for like basis we lost some £524,240 of accommodation revenue, and this has had a significant impact on the year end results. Interestingly our two leisure reliant hotels, in Carlisle and Bournemouth, both significantly increased their occupancy illustrating that 'Staycations'(UK holidaymakers feeling the effects of the significant drop in the value of sterling and not travelling abroad) were helping sales at leisure driven destinations within the United Kingdom.

 

 On a positive note it is satisfactory to report that food sales increased 3.5% and liquor sales increased 5% on a like for like basis.

 

Group overheads decreased £116,131 on the previous year to £634,417 and depreciation and amortisation was £1,214,100 (2009: £1,073,635).

 

FINANCE

 

At 7 February 2010 net debt stood at £14,794,570 representing loans totalling £13,007,387 and an overdraft of £1,892,095 less £104,912 cash at bank. Gearing on Shareholders' funds was 62.9% with interest covered 0.9 times. Net debt increased by £10,937,654 compared with the previous year.

 

The Four Star AA listed Norfolk Royale hotel in Bournemouth was acquired on 1 June 2009 for a consideration of £8,250,000 together with £435,884 expenses. The additional bank debt assumed to finance this acquisition gave the Company the benefit of actually making use of our two financial instruments committed on 24 June 2003 and a significant saving on Capital Gains Tax due on the sale of the Avon Gorge Hotel in September 2007.

 

The Cap and Collar on £7,000,000 of our bank loan finished on the 12 October 2009 and thereafter, in simple terms, the fixed interest swap at 5.83% plus margin of 1.95 is payable initially on £10,034,700 and thereafter on a declining balance until the swap ceases on 11 April 2014. Interest on the balance of the £12,331,100 bank loan is charged at six monthly LIBOR plus a margin of 1.95%.

 

In view of the continuing depressed trading environment, the uncertainty of the immediate future trading environment and with UK GDP growth under pressure, the Board have decided regrettably not to recommend a Dividend in respect of the 2009/2010 Financial Year. Shareholders are well aware that the payment of a Dividend is very much the Company's strategic purpose and it is a primary objective to be able to produce a payment in respect of the current financial year.

 

CAPITAL EXPENDITURE

 

In line with our strategy of accelerating capital improvements to our Hotels, following the sale of assets in financial year 2007/2008, we spent £2,380,210 in the financial year.

 

£931,355 was spent on the public areas and a new Restaurant and Bar at the Cosmopolitan Hotel in Leeds (formerly the Golden Lion Hotel). These improvements affected the trading results at this Hotel whilst extremely disruptive building works were ongoing in the first five months of the year.

 

£678,218 was spent in refurbishing to very high standards fifteen bedrooms and all the corridors at the Caledonian Hotel in Newcastle.

 

Work is continuing in gradually refurbishing the bedroom stock at the Midland Hotel using our own in house resources with a view to achieving an AA four Star rating within the next couple of years. The Bull Hotel in Peterborough achieved the coveted AA four Star rating in the year under review which is very satisfactory and value enhancing.

 

The installation and commissioning of a fully integrated property management and EPOS system has been completed, the cost which amounted to £129,936 in 2008/2009 and £273,051 in 2009/2010. We are optimistic that integrated guest history will greatly improve our ability to market and promote to our expanding customer base.

 

We will slow down our Capital expenditure in the current financial year in order to conserve cash in what is still an uncertain market place. However our objective remains to upgrade our existing freehold properties to AA four Star standards over time.

 

SHAREHOLDERS

 

We are very sorry that Shareholders have had to forgo their interim and final dividend for the financial year 2009/2010 but look forward to reinstatement as soon as improved trading or asset sales allow.

 

We are very proud of our product and welcome Shareholders to our Hotels so that they can see for themselves the improvements we have made to our product whilst enjoying a beneficial discount. All Shareholders are entitled to a 30% discount on listed tariff, using the special reservations number 0207 266 1100 or e-mail [email protected]. Shareholders can keep in touch with progress in the Company and various promotional initiatives by visiting our website www.peelhotels.co.uk

 

STAFF

 

The Board would like to thank the management and staff for their contribution to the business of Peel Hotels and for the safety and well being of its guests. In these difficult times salaries and wages have had to mark time to compensate for the overall decline in demand and we are very grateful for their patience, loyalty and understanding. Our guest satisfaction levels have reached a high standard in the year and in the final analysis it is the staff's friendliness and care for our guests that will build the Company's reputation and thereby grow the business.

 

THE FUTURE

 

Unfortunately our optimism at the half year of achieving overall REVPAR growth was not to be in spite of room occupancy growth in the eighth, ninth and tenth periods of the year. However the REVPAR did improve from a cumulative shortfall of 8.8% at the half year to 6.9% at the year end.

 

The provincial market has yet to recover in terms of commercial activity whilst the relative cheapness of the pound in relation to the majority of the world's currencies augers well for improvement in the domestic discretionary market and incoming tourism. It is difficult at this stage to determine overall growth apart from market share.

 

 The acquisition of the Norfolk Royale, no disruption at the Cosmopolitan Hotel and the benefit of our significant capital expenditure should put us in a better position for improvement in the current year.

 

Robert Peel

Chairman

 22 April 2010

 

 

 

 

 

 

PROFIT & LOSS ACCOUNT

 

For the 52 weeks ended 7 February 2010

 

						Note							7 February 2010									8 February 2009
								£		£					£				£
Turnover Continuing operations Norfolk Royale acquired 01/06/2009 Total turnover											12,317,474 1,868,568 14,186,042									12,720,245 - 12,720,245
Cost of Sales Continuing operations Norfolk Royale acquired 01/06/2009 Total cost of sales												(10,084,982) (1,461,563) (11,546,545)									(9,988,967) - (9,988,967)
Gross Profit Continuing operations Norfolk Royale acquired 01/06/2009 Total gross profit												2,232,492 407,005 2,639,497									2,731,278 - 2,731,278
Administrative expenses
Depreciation								(1,214,100)								(1,073,635)
Other								(634,417)								(750,548)
												(1,848,517)									(1,824,183)
Operating profit Total operating profit												790,980									907,095
Net Interest												(865,086)									(242,666)
(Loss) profit on ordinary
activities before taxation												(74,106)									664,429
Taxation												1,214,635									378,246
Profit on ordinary
activities after taxation												1,140,529									1,042,675
Earnings per share					2
Basic												8.1p									7.4p
Diluted												8.1p									7.4p

 

 

BALANCE SHEET

 

As at 7 February 2010

 

 

				7 February 2010   £	8 February 2009   £
Fixed assets
Tangible assets				39,513,792	29,661,798
Current assets
Stocks				112,840	92,945
Debtors				1,227,562	1,205,298
Cash at bank and in hand				104,912	132,405
				1,445,314	1,430,648
Creditors (due within one year)				(5,203,856)	(4,519,391)
Net current liabilities				(3,758,542)	(3,088,743)
Total assets less current liabilities				35,755,250	26,573,055
Creditors (due after one year)				(11,557,618)	(3,004,781)
Provision for liabilities				(561,000)	(588,000)
Total assets				23,636,632	22,980,274
Capital and reserves
Called up share capital				1,401,213	1,401,213
Share premium account				9,743,495	9,743,495
Profit and loss account				12,491,924	11,835,566
Equity shareholders' funds				23,636,632	22,980,274

 

 

 

CASH FLOW STATEMENT

 

For the 52 weeks ended 7 February 2010

	Note	£	52 weeks to 7 February 2010   £	£	52 weeks to 8 February 2009   £
Net cash inflow from operating activities	3		2,345,561		1,269,258
Returns on investments & servicing of finance
Interest paid		(760,549)		(181,745)
Net cash outflow from returns on investments and servicing of finance			(760,549)		(181,745)
Taxation
UK corporation tax paid		(1,050,566)		64
Tax paid			(1,050,566)		64
Capital expenditure
Purchase of tangible fixed assets Acquisition of hotel		(2,380,960) (8,685,134)		(2,010,773)
Net cash (outflow) from capital expenditure			(11,066,094)		(2,010,773)
Equity dividend paid		(490,424)		(2,874,765)
Net cash (outflow) before financing			(11,022,072)		(3,797,961)
Financing
New loans		13,331,100		-
Loan repayments		(4,228,616)		-
Net cash inflow from financing		9,102,484		-
Decrease in cash			(1,919,588)		(3,797,961)

 

Reconciliation of net debt

Decrease in cash			(1,919,588)		(3,797,961)
(Increase) in debt			(9,102,484)		-
Increase in net debt resulting from cash flows			(11,022,072)		(3,797,961)
Non cash changes			84,418		(18,538)
(Increase) in net debt in the year Net debt at beginning of year			(10,937,654) (3,856,916)		(3,816,499) (40,417)
Net debt at end of year			(14,794,570)		(3,856,916)

 

 

NOTES TO ACCOUNTS

Financial year ended 7 February 2010

1. Dividends 2010 2009

£ £

Equity dividends on ordinary shares
Dividend paid during the year Interim dividend paid during the year Bonus dividend paid during the year Proposed after the year end (not recognised as a liability)			490,424   -	490,424 282,522 2,101,819 490,424

2. Earnings per share

Basic
Basic
Calculated on the average number of shares in issue				14,012,123	14,012,123
during the year and on profit after taxation				£1,140,529	£1,042,675
Diluted
Calculated on average of number of shares available during year and on the profit after taxation				14,017,518 £1,140,529	14,100,551 £1,042,675

In calculating the diluted earnings per share, the weighted average number of shares is adjusted for the dilutive effect of the share options by 5,395 (2009 - 88,428), giving an adjusted number of shares of 14,017,518 (2009 - 14,100,551).

 

3. Reconciliation of operating profit to net cash inflow from operating activities

Operating profit							790,980		907,095
Depreciation							1,214,100		1,073,635
Recognition of equity-settled share-based payments							6,253		11,946
(Increase) in stocks							(19,895)		(6,159)
Decrease in debtors							80,749		94,573
Increase/(decrease) in creditors							273,374		(811,832)
Net cash inflow from operating activities							2,345,561		1,269,258

 

4. Analysis of net debt

		At beginning of year £	Cash flow £	Non cash changes £	At end of year £
Cash at bank and in hand		132,405	(27,493)	-	104,912
Bank overdrafts		-	(1,892,095)	-	(1,892,095)
		132,405	(1,919,588)	-	(1,787,183)
Debt due within one year		(984,540)	(465,229)	-	(1,449,769)
Debt due after one year		(3,004,781)	(8,637,255)	84,418	(11,557,618)
Total		(3,856,916)	(11,022,072)	84,418	(14,794,570)

 

 

 

NOTES TO ACCOUNTS

Financial year ended 7 February 2010

 

5. The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in Sections 434 and 435 of the Companies Act 2006.

 

The profit and loss account, balance sheet at 7 February 2010 and the cash flow statement have been extracted from the Company's financial statements upon which the auditors opinion is unqualified and does not include any statement under section 498(2) or 498(3) of the Companies Act 2006. Those financial statements have not yet been delivered to the Registrar.

 

The statutory accounts for the year ended 8 February 2009 have been delivered to the Registrar, contained an unqualified audit report and did not include a statement under section 237(2) or 237(3) of the Companies Act 1985.

 

 

6. The annual report for the period ended 7 February 2010 will be posted to Shareholders by 7 May 2010. The Annual General Meeting will be held at The Bull Hotel, Westgate, Peterborough, PE11 1RB on Thursday 3 June 2010 at noon.

 

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