19th May 2009 07:00
PEEL HOTELS PLC
PRELIMINARY ANNOUNCEMENT
Derived from the audited results for financial year ended 8 February 2009
HIGHLIGHTS
# Pre-Tax profits £664,429 (2008:£9,589,533)
# Excluding exceptional profits, Pre-Tax profits £664,429 (2008:£1,447,012)
# Excluding exceptional profits and discontinued business, Pre-Tax profits £664,429 (2008:£934,950)
# Net debt £3,856,916 (2008:£40,417)
# Earnings per share
Basic 7.4p (2008:63.4p)
Diluted 7.4p (2008:62.8p)
# Final dividend 3.5p making 5.5p for the year (2008:5.5p)
# Contracts exchanged on 18 May 2009 for the acquisition of the freehold of the 95 bedroom Norfolk Royale Hotel, Bournemouth, for a consideration of £8,250,000, to be completed on 01 June 2009. This AA listed four star hotel is located on Richmond Hill in the town centre of Bournemouth.
Clearly our results are disappointing and it is impossible to predict when the economy will start to recover. In the current environment our strategy will continue to be one of further investment in our product, weighted to our freeholds, in order to gain market share and a higher average room rate. The acquisition of the Norfolk Royale will enable us to make use of our financial instruments and will save us a significant amount of capital gains tax.
KBC Peel Hunt Ltd
David Davies
Nicholas Marren
CHAIRMAN'S STATEMENT
Results
Like for like hotel revenues fell by 4.7% and like for like hotel profits after depreciation and before Company administration costs decreased 34.4%. REVPAR (accommodation revenue per available bedroom) decreased 3.4% in the year with occupancy down by 8.4% and average room rate up by 5.8%.
Total turnover was £12,720,245 (2008: £15,150,339 of which £1,809,469 was in respect of The Avon Gorge Hotel which was sold on 30 August 2007). Operating profit for the full year decreased by 58.6% to £907,095 (2008: £2,192,541 of which £512,062 was in respect of the Avon Gorge Hotel).
The pre-tax result was £664,429 (2008: £9,589,553 of which £8,142,521 was profit on disposal of the Avon Gorge Hotel and a piece of land in Salem Street, Bradford). After a full tax provision less the discount on the deferred tax liabilities and taking an adjustment for prior year capital gains tax basic earnings per share were 7.4p and 7.4p on a diluted basis (2008: 63.4p basic and 62.8p diluted).
At 8 February 2009, net debt stood at £3,856,916 representing loans totalling £3,989,321 less £132,405 cash at bank. Gearing on Shareholders' funds was 16.8 % with interest covered 3.7 times.
Clearly the results in the year under review were very disappointing and we were not able to improve on the downward trading trend experienced in the first half year and capitalise on the significant drop in the cost of finance. We were unable to stem the combined losses of the Strathdon Hotel in Nottingham and the King Malcolm Hotel in Dunfermline which totalled £410,598 (2008: £159,702). Electricity and gas costs increased 35.8% or £161,039. Our hotels have suffered from a downturn in commercial demand and nationwide cut backs in discretionary spending. However we have taken a long term view and not compromised our product by way of cutting back on personnel and/or service standards. This strategy should stand us in good stead in the future.
Finance
Net debt increased £3,816,499 in the year primarily through the distribution of the one off bonus dividend of £2,101,818 paid on 28 April 2008. Capital expenditure on upgrading the hotels increased £516,381 from £1,494,392 to £2,010,773 in the year.
The Company still has two financial instruments in place which unfortunately will disadvantage us in the short term. These are on £7,000,000 which we paid back in financial year 2007/2008, firstly a Cap and Collar which entails the Company paying the difference between 6.99% and LIBOR from April to October 2009 and thereafter a Roller Coaster which entails the Company paying the difference between 5.83% and LIBOR set at six monthly intervals up until 2014. £7,000,000 of any new borrowing will be effectively hedged at 5.83% plus margin. If we do not increase our borrowings and LIBOR stays constant the Company will suffer the burden of paying finance costs on money that it has already paid back.
The Board has decided to recommend paying a final dividend of 3.5p amounting to £490,424, which, if approved by Shareholders, will be paid on 26 June 2009 to Shareholders on the register on 29 May 2009 making a total of 5.5p for the year (2008: 5.5p).
Capital Expenditure
Following the sale of assets in financial year 2007/2008 and the low overall gearing of the Company the Board planned to accelerate improvements to its hotels, in particular the freeholds, in the financial years 2008/2009 and 2009/2010.
During the period capital expenditure amounted to £2,010,773 which was spent on upgrading the Company's hotels. Major bedroom improvements have been made at the Bull Hotel in Peterborough and it is a pleasure to report that this hotel has achieved an Automobile Association four star rating with a high merit score. This not only benefits our clients but has a significant impact on value.
We have begun the re-launch of the Cosmopolitan Hotel, Restaurant and Bar in Leeds (formerly the Golden Lion Hotel). The external elevations have been remodelled and all the public areas including a new restaurant, bar and kitchen are in the process of being designed and rebuilt to reflect a boutique style trendy hotel.
The ongoing refurbishment of the bedrooms at the Midland Hotel in Bradford continues using our own in-house resources, as opposed to using contractors, thereby giving us significant cost savings. We have doubled the size of the bar at the George Hotel in Wallingford and carried out enabling works to protect a planning permission for three additional bedrooms.
We intend to continue our aggressive investment in our hotels in the current year with a view to increasing market share and increasing our REVPAR.
We are in the process of installing new property management and Epos systems in all our hotels and in our administration office in Leeds. This will integrate and unify the entire business and provide a seamless solution to management reporting, accounting and marketing requirements. This roll out is scheduled to be completed by August 2009.
Shareholders
We are delighted to welcome Shareholders to our hotels when they can see for themselves the improvements that we have made, whilst enjoying a beneficial discount. All Shareholders are entitled to a 30% discount, 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 web site 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 wellbeing of its guests. In the final analysis it is their friendliness and care for the guests that will build the Company's reputation and thereby grow the business. Salaries and wages have had to stagnate to compensate for the overall decline in demand and we are very grateful for their patience, loyalty and understanding.
The Future
It is impossible to predict when the economy will start to recover. In the current environment our strategy will continue to be one of further investment in our product, weighted to our freeholds, in order to gain market share and a higher average room rate.
It is extremely important that we address the trading problem at the Strathdon Hotel in Nottingham. We are reviewing all our options in regard to this leasehold including redevelopment and change of use. In the meantime we have made a management change, contracted a series of leisure groups and cosmetically improved the product.
Contracts were exchanged on 18 May 2009 for the acquisition of the freehold of the 95 bedroom Norfolk Royale Hotel, Bournemouth, for a consideration of £8,250,000, to be completed on 1 June 2009. This AA listed four star hotel is located on Richmond Hill in the town centre of Bournemouth. This acquisition will have the added benefits of making use of our financial instruments and the saving of a significant amount of capital gains tax.
PROFIT & LOSS ACCOUNT
For the 52 weeks ended 8 February 2009
|
Note |
8 February 2009 |
10 February 2008 |
|||
|
£ |
£ |
£ |
£ |
||
|
Turnover |
12,720,245 |
15,150,339 |
|||
|
Cost of Sales |
(9,988,967) |
(11,010,153) |
|||
|
Gross Profit |
2,731,278 |
4,140,186 |
|||
|
Administrative expenses |
|||||
|
Depreciation |
(1,073,635) |
(1,092,642) |
|||
|
Other |
(750,548) |
(855,003) |
|||
|
(1,824,183) |
(1,947,645) |
||||
|
Operating profit |
907,095 |
2,192,541 |
|||
|
Profit on disposal of property |
- |
8,142,521 |
|||
|
Net interest |
(242,666) |
(745,529) |
|||
|
Profit on ordinary |
|||||
|
activities before taxation |
664,429 |
9,589,533 |
|||
|
Taxation |
378,246 |
(1,215,554) |
|||
|
Profit on ordinary |
|||||
|
activities after taxation |
1,042,675 |
8,373,979 |
|||
|
Earnings per share |
2 |
||||
|
Basic |
7.4p |
63.4p |
|||
|
Diluted |
7.4p |
62.8p |
BALANCE SHEET
As at 8 February 2009
|
8 February 2009 £ |
10 February 2008 £ |
||||
|
Fixed assets |
|||||
|
Tangible assets |
29,661,798 |
28,724,660 |
|||
|
Current assets |
|||||
|
Stocks |
92,945 |
86,786 |
|||
|
Debtors |
1,205,298 |
1,342,973 |
|||
|
Cash at bank and in hand |
132,405 |
4,108,123 |
|||
|
1,430,648 |
5,537,882 |
||||
|
Creditors (due within one year) |
(4,519,391) |
(4,784,341) |
|||
|
Net current liabilities |
(3,088,743) |
753,541 |
|||
|
Total assets less current liabilities |
26,573,055 |
29,478,201 |
|||
|
Creditors (due after one year) |
(3,004,781) |
(3,970,783) |
|||
|
Provision for liabilities |
(588,000) |
(707,000) |
|||
|
Total assets |
22,980,274 |
24,800,418 |
|||
|
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 |
11,835,566 |
13,655,710 |
|||
|
Equity shareholders' funds |
22,980,274 |
24,800,418 |
CASH FLOW STATEMENT
For the 52 weeks ended 8 February 2009
|
Note |
£ |
52 weeks to 8 February 2009
£ |
£ |
52 weeks to 10 February 2008
£ |
||||
|
Net cash inflow from operating activities |
3 |
1,269,258 |
3,272,305 |
|||||
|
Returns on investments & servicing of finance |
||||||||
|
Interest paid |
(181,745) |
(1,000,074) |
||||||
|
Net cash outflow from returns on investments and servicing of finance |
(181,745) |
(1,000,074) |
||||||
|
Taxation |
||||||||
|
UK corporation tax paid |
64 |
(30,656) |
||||||
|
Tax (received)/paid |
64 |
(30,656) |
||||||
|
Capital expenditure |
||||||||
|
Purchase of tangible fixed assets Sale of tangible fixed assets |
(2,010,773) - |
(3,978,456) 17,148,617 |
||||||
|
Net cash (outflow)/inflow from capital expenditure |
(2,010,773) |
13,170,161 |
||||||
|
Equity dividend paid |
(2,874,765) |
(921,099) |
||||||
|
Net cash (outflow)/inflow before financing |
(3,797,961) |
14,490,637 |
||||||
|
Financing Issue of ordinary share capital Loan repayments |
- - |
790,045 (11,122,945) |
||||||
|
Net cash outflow from financing |
- |
(10,332,900) |
||||||
|
(Decrease)/increase in cash |
(3,797,961) |
4,157,737 |
||||||
Reconciliation of net debt
|
(Decrease)/increase in cash
|
|
|
(3,797,961)
|
|
4,157,737
|
|
Decrease in debt
|
|
|
-
|
|
11,122,945
|
|
|
|
|
|
|
|
|
(Increase)/reduction in net debt
resulting from cash flows
|
|
|
(3,797,961)
|
|
15,280,682
|
|
Non cash changes
|
|
|
(18,538)
|
|
(51,916)
|
|
(Increase)/decrease in net debt in the year
Net debt at beginning of year
|
|
|
(3,816,499)
(40,417)
|
|
15,228,766
(15,269,183)
|
|
|
|
|
|
|
|
|
Net debt at end of year
|
|
(3,856,916)
|
|
(40,417)
|
|
NOTES TO ACCOUNTS
Financial year ended 8 February 2009
1. Dividends
|
Equity dividends on ordinary shares |
2009 |
2008 |
||
|
£ |
£ |
|||
|
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) Bonus dividend proposed after the year end (not recognised as a liability) |
490,424 282,522 2,101,819 490,424 - |
642,856 278,243 - 490,424 2,101,819 |
||
2. Earnings per share
|
Basic |
|||||
|
Calculated on the average number of shares in issue |
14,012,123 |
13,214,179 |
|||
|
during the year and on profit after taxation |
|
£1,042,675 |
£8,373,979 |
||
|
Diluted |
|||||
|
Calculated on average of number of shares available during year and on the profit after taxation |
14,100,551 £1,042,675 |
13,344,490 £8,373,979 |
|||
In calculating the diluted earnings per share, the weighted average number of shares is adjusted for the dilutive effect of the share options by 88,428 (2008 - 130,311), giving an adjusted number of shares of 14,100,551 (2008 - 13,344,490).
3. Reconciliation of operating profit to net cash inflow from operating activities
|
Operating profit |
907,095 |
2,192,541 |
||||
|
Depreciation |
1,073,635 |
1,092,642 |
||||
|
Recognition of equity-settled share-based payments |
11,946 |
23,225 |
||||
|
(Increase)/decrease in stocks |
(6,159) |
29,795 |
||||
|
Decrease/(increase) in debtors |
94,573 |
(257,867) |
||||
|
(Decrease)/increase in creditors |
(811,832) |
191,969 |
||||
|
Net cash inflow from operating activities |
1,269,258 |
3,272,305 |
||||
4. Analysis of net debt
|
At beginning of year £ |
Cash flow £ |
Non cash changes £ |
At end of year £ |
||
|
Cash at bank and in hand |
4,108,123 |
(3,975,718) |
- |
132,405 |
|
|
Bank overdrafts |
(177,757) |
177,757 |
- |
- |
|
|
3,930,366 |
(3,797,961) |
- |
132,405 |
||
|
Debt due within one year |
- |
(984,540) |
- |
(984,540) |
|
|
Debt due after one year |
(3,970,783) |
947,464 |
18,538 |
(3,004,781) |
|
|
Total |
(40,417) |
(3,835,037) |
18,538 |
(3,856,916) |
NOTES TO ACCOUNTS
Financial year ended 8 February 2009
5. The financial information set out above does not constitute the Company's statutory accounts for period ended 8 February 2009 but is derived from those accounts. Statutory accounts for 2008 have been delivered to the Registrar of Companies and those for 2009 will be delivered following the Company's Annual General Meeting.
The auditors reported on those accounts; their reports were unqualified and did not contain statements under section 237 (2) or (3) of the Companies Act 1985.
6. The annual report for the period ended 8 February 2009 will be posted to Shareholders by 1 June 2009. The Annual General Meeting will be held at The Norfolk Royale Hotel, Richmond Hill, Bournemouth, Dorset BH2 6EN on Wednesday 24 June 2009 at noon.
Related Shares:
Peel Hotels