14th Apr 2005 07:00
Peel Hotels PLC14 April 2005 PEEL HOTELS PLC PRELIMINARY ANNOUNCEMENT Derived from the audited results for financial year ended 13 February 2005 HIGHLIGHTS • Owned hotels turnover up by 5.3% to £12,268,058 (2004 - £11,651,849) • Hotel profit, excluding income from Management Contract, flat at £2,845,707 (2004 - £2,848,079) • Pre-Tax profits down 16% to £1,181,107 (2004 - £1,406,636) • Revpar (Accommodation revenue per available room) improved by 4.4% • Earnings per share Basic 7.5p (2004 : 8.7p) Diluted 7.3p (2004 : 8.5p) • Dividend increased by 7.1% to 4.5p per share (2004 - 4.2p per share) POST BALANCE SHEET EXPANSION On Wednesday 13 April 2005 the company exchanged contracts to purchase the threeremaining leasehold hotels within Grace Hotels Ltd., together with the freeholdof the Golden Lion in Leeds, hitherto held on a 99 year lease at a peppercorn,for a consideration of £2.75 million. To fund this acquisition the company isarranging to place £600,000 worth of shares at 90p per share and has secured aloan of £2.5 million repayable over 10 years. The lease of the Strathdon Hotelin Nottingham will be transferred, subject to a deed of variation, still to beentered into, by the freeholder of the land, which has been recently sold by thecity of Nottingham. The leaseholds are for the 94 bedroom Crown & Mitre in Carlisle, the 68 bedroomStrathdon in Nottingham and the 48 bedroom King Malcolm in Dunfermline. Application will be made for the 666,666 new ordinary shares to be admitted toAIM. It is expected that admission will take place on 13 May 2005. Chairman Robert Peel said "Our owned hotels, apart from the Golden Lion,performed well in the year with like for like sales growth of 5.3% and Revpar up4.4%, even including the Golden Lion's disappointing performance. The completionof the Management Contract, by way of acquiring the remaining three leaseholdsand the freehold of the Golden Lion in Leeds, will give us the income goingforward to compensate for loss of earnings from the Management Contract". PRESS ENQUIRIES TO ROBERT PEEL 020 7266 1100 CHAIRMAN'S STATEMENT RESULTS Total turnover grew by 4% to £12,552,759 and our six owned hotels' turnover grewby 5.3% to £12,268,058 (2004: £11,651,849). Operating profit was £2,482,999(2004: £2,671,658) a decrease of 7.1%; there was £133,894 less ManagementContract income and depreciation was £119,002 more than the previous year. Earnings before interest, tax and depreciation were £69,657 less than theprevious year at £3,385,654 (2004: £3,455,311). A rebate on rates at the MidlandHotel, Bradford, of £60,000 in the previous year accounted for the differentialin group overheads. The pre-tax result decreased 16% to £1,181,107 from £1,406,636. After a full taxprovision less discounting, earnings per share were 7.5p basic and 7.3p on adiluted basis (2004: 8.7p basic and 8.5p diluted). At 13 February 2005 net debt stood at £15,936,694 representing loans totalling£15,331,684 and an overdraft of £752,147 less £147,137 cash at bank. Gearing onshareholders' funds was 111% with interest covered 1.9 times. Net debt decreased£647,731 compared with the previous year. Sales in our six owned hotels, on a like for like basis, grew by 5.3%, and I ampleased to report that Revpar (accommodation revenue per available room) grewfor the seventh successive year. This growth was 4.4% in the year, withoccupancy up by 0.4% and average room rate up by 4.1%, justifying our continuingreinvestment in our properties. The performance of our six owned hotels, apart from the Golden Lion in Leeds,was satisfactory with the Bull in Peterborough having an exceptional year. Wefeel confident that, with the change of manager and a clear tariff strategygoing forward, the decline in profitability at the hotel in Leeds will bearrested and we can look forward to steady growth of profitability in thecurrent year. Shareholders should be interested to note that in addition to arigorous policy of depreciation of capital expenditure in our hotels, we arepassionate about keeping our properties well maintained and in good repair.Expenditure on repairs and renewals in our hotels increased 14.3% from £440,996to £504,158. Our policy of high standards of maintenance and generous staffing levels hasgiven us excellent feedback on client satisfaction and will give us theconsequential benefits of increasing custom. FINANCIAL CHARGES Net debt in the period decreased by £647,731 to a total of £15,936,694.Unfortunately the libor rate on our 'Cap and Collar' on £7 million of our debtwas marginally under 4.99% at the fixing date on 11 October 2004. Happily on 11April 2005 the rate was above this figure and consequently this gives us thebenefit of reducing interest charges going forward by up to an annualised£140,000. The balance of our loan debt excluding overdraft is fixed at 5.83% +1.25% margin and this, together with our 'Cap and Collar' gives us an effectivehedge against any interest charge rises in the immediate future. The Board has recommended increasing the dividend from 4.2p per share to 4.5pper share, amounting to £545,421, which, if approved by shareholders, will bepaid on 24 May 2005 to shareholders on the register at 3 May 2005. The dividendwill not be paid to the holders of 666,666 shares to be admitted to AIM on 13May 2005 in connection with the expansion referred to below. CAPITAL EXPENDITURE A total of £716,047 was spent in the period which was £186,608 less than thedepreciation charge for the period. The Billabong Bar at the Caledonian in Newcastle has been doubled in size, a newswitchboard has been installed at the Midland in Bradford and new hot waterboilers installed at the Avon Gorge in Bristol. Bedroom improvements have taken place at the Midland in Bradford, the Avon Gorgein Bristol and the Bull in Peterborough. We are currently preparing a comprehensive development brief for the Avon Gorgeand are working in consultation with the planners in Bristol, and the localresidents in Clifton, with a view to submitting a planning application that willdevelop the potential of the site. Planning permission to build 24 new bedrooms and a leisure complex at theCaledonian in Newcastle was refused and we are considering whether to progresswith a public appeal or submit a scaled down application. The city centre of Bradford is currently being rebuilt with massive car parkingfacilities in prospect, thereby making our 0.8 acre site, some 500 yards fromthe Midland Hotel in Bradford, superfluous to requirements. We are in theprocess of seeking planning permission for residential use for this piece ofland with a view to selling it some time in the future. Currently the site isused for hotel car parking and contract parking. At the time of writing we have not sold Aire House, adjacent to the Golden Lionin Leeds. During the year the profit contribution of Hakuna Matata, locatedwithin the ground floor of the building, dramatically improved and consequentlythis has increased our exit value expectation. Our administration offices arecurrently located on a mezzanine floor leaving two 1400sq ft floors of currentlyunused and dilapidated office space. Shareholders will be aware that we haveplanning permission to demolish Aire House and build a forty-five room extensionto the Golden Lion Hotel should we choose that option. EXPANSION We announced the exchange of contracts on Wednesday 13 April 2005 for theacquisition of the three remaining leasehold hotels within Grace Hotels Ltd,together with the freehold of the Golden Lion Hotel in Leeds, hitherto held on a99 year lease at a peppercorn, for a consideration of £2.75 million. To fundthis acquisition we have successfully placed £600,000 worth of shares at 90p pershare and arranged for a loan of £2.5 million repayable over 10 years. The leaseof the Strathdon in Nottingham will be transferred, subject to a deed ofvariation, still to be entered into, with the freeholder of the land, which hasbeen recently sold by the city of Nottingham.The leaseholds are for the 94 bedroom Crown & Mitre in Carlisle, the 68 bedroomStrathdon in Nottingham and lastly the 48 bedroom King Malcolm in Dunfermline. This transaction will neatly bring to an end the Management Contract of GraceHotels Ltd on behalf of Lehman Brothers Merchant Bank. The net contribution fromthe three additional hotels should more than compensate for the loss ofManagement Contract income. SHAREHOLDERS We would encourage shareholders to take advantage of our Shareholders' discountscheme. All shareholders are entitled to a 25% discount off the listed tariff,using the special reservations number, 020 7266 1100 or email [email protected]. Shareholders can identify our hotels using the directory at the back of theAnnual Report. We do hope you visit our hotels and enjoy them. STAFF The welfare and retention of our staff is a top priority in achieving ourobjective of continually improving the guest experience at a Peel Hotel. TheBoard would like to express their appreciation and thanks to all management andstaff who have contributed to a further year of progress in our owned hotels. THE FUTURE The completion of the Management Contract will enable us to concentrate on ourowned hotels where there is still considerable scope to improve performance. Weare confident that we can continue to grow Revpar on the back of an improvingoverall product and our total commitment service. 13 April 2005 15:15 PROFIT AND LOSS ACCOUNTFor the 52 weeks ended 13 February 2005 Note 13 February 15 February 2005 2004 £ £ £ £ Turnover 12,552,759 12,070,444Cost of sales (8,519,697) (8,020,119)Gross profit 4,033,062 4,050,325Administrative expensesDepreciation (902,655) (783,653)Other (647,408) (595,014) (1,550,063) (1,378,667)Operating profit 2,482,999 2,671,658Interest payable & similar (1,301,892) (1,265,022)chargesProfit on ordinary 1,181,107 1,406,636activities before taxationTax on profit on ordinary (272,094) (351,659)activities Profit on ordinary activities 909,013 1,054,977after taxationDividends 1 (545,421) (509,059) Profit retained 363,592 545,918 Earnings per share 2Basic 7.5p 8.7pDiluted 7.3p 8.5p All activities derive from continuing operations. There are no recognised gains and losses for the current financial year andpreceding financial year other than the profits shown above. BALANCE SHEETAs at 13 February 2005 13 February 15 February 2005 2004 £ £ Fixed assetsTangible assets 32,657,793 32,844,401 Current assetsStocks 93,729 81,519Debtors 1,045,243 991,809Cash at bank and in hand 147,137 135,739 1,286,109 1,209,067Creditors (due within one year) (3,665,542) (4,080,962) Net current liabilities (2,379,433) (2,871,895) Total assets less current liabilities 30,278,360 29,972,506 Creditors (due after one year) (14,589,414) (14,809,146)Provision for liabilities & charges (1,346,778) (1,184,784) Total assets 14,342,168 13,978,576 Capital and reservesCalled up share capital 1,212,046 1,212,046Share premium account 8,519,477 8,519,477Profit and loss account 4,610,645 4,247,053 Equity shareholders' funds 14,342,168 13,978,576 Approved by the board on 13 April 2005 Robert Peel, Director John Perkins, Director CASH FLOW STATEMENTFor the 52 weeks ended 13 February 2005 52 weeks to 52 weeks to 13 February 15 February Note 2005 2004 £ £ £ £ Net cash inflow from 3 3,314,153 3,264,814operating activitiesReturns on investments& servicing of financeInterest paid (1,294,185) (1,136,284) Net cash outflow from (1,294,185) (1,136,284)returns on investmentsand servicing of financeTaxationUK corporation tax paid (120,728) (191,922) Tax paid (120,728) (191,922) Capital expenditurePurchase of tangible fixed (716,047) (1,263,003)assets Net cash outflow from (716,047) (1,263,003)capital expenditure Equity dividend paid (509,059) (484,818) Net cash inflow 674,134 188,787before financing FinancingLoan received 1,000,000 -Loan repayments (1,488,405) (984,540) Net cash (outflow) from (488,405) (984,540)financing Increase / (decrease) in 185,729 (795,753)cash Reconciliation of net debtIncrease / (decrease) in cash 185,729 (795,753)Decrease in debt 488,405 984,540 Reduction in net debt 674,134 188,787resulting from cash flowsNon cash changes (26,403) (26,403) Reduction in net debt in the year 647,731 162,384 Net debt at beginning of year (16,584,425) (16,746,809) Net debt at end of year 4 (15,936,694) (16,584,425) NOTES TO THE ACCOUNTS Financial year ended 13 February 2005 1. Dividends 13 February 15 February 2005 2004 Final proposed dividend of 4.5p per share (2004 - 4.2p) 545,421 509,059 2. Earnings per shareBasicCalculated on the average number of shares in issue 12,120,457 12,120,457during the year and on profit after taxation £909,013 £1,054,977 DilutedCalculated on average of number of shares 12,451,151 12,445,067available during year and on the profit after taxation £909,013 £1,054,977 In calculating the diluted earnings per share, the weighted average number ofshares is adjusted for the dilutive effect of the share options by 330,694 (2004- 324,610), giving an adjusted number of shares of 12,451,151 (2004 -12,445,067). 3. Reconciliation of operating profit to net cash inflow from operatingactivities Operating profit 2,482,999 2,671,658Depreciation 902,655 783,653Increase in stocks (12,210) (4,847)Increase in debtors (53,434) (150,106)Decrease in creditors (5,857) (35,544) Net cash inflow from operating activities 3,314,153 3,264,814 4. Analysis of net debt At beginning of Cash Non cash At end of year flow changes year £ £ £ £ Cash at bank and in hand 135,739 11,398 - 147,137Bank overdrafts (926,478) 174,331 - (752,147) (790,739) 185,729 - (605,010)Debt due within one year (984,540) 242,270 - (742,270)Debt due after one year (14,809,146) 246,135 (26,403) (14,589,414) Total (16,584,425) 674,134 (26,403) (15,936,694) 5. The financial information set out above does not constitute the company'sstatutory accounts for periods ended 13 February 2005 and 15 February 2004 butis derived from those accounts. Statutory accounts for 2004 have been deliveredto the Registrar of Companies and those for 2005 will be delivered following thecompany's annual general meeting.The auditors reported on those accounts; their reports were unqualified and didnot contain statements under section 237 (2) or (3) of the Companies Act 1985. 6. The annual report for the period ended 13 February 2005 will be posted toshareholders by 29 April 2005. 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Peel Hotels