Interim Results

9th Oct 2008 07:00



PEEL HOTELS PLC

INTERIM RESULTS

For the 28 weeks ended 24 August 2008 

 

# Profit before tax down 42% to £437,832 (2007:£755,226)

(The Avon Gorge Hotel was sold on 30 August 2007)

# Profit after tax down 7.9% to £521,430 (2007:£566,420)

# Gearing on shareholders' funds 11.2% with interest covered 4.9 times

# Earnings per share

Basic 3.8p (2007: 4.4p)

  Diluted 3.7p (2007: 4.1p)

# Interim dividend maintained at 2.0p per share (2007: 2.0p).The Board expect the total annual dividends in respect of the current financial year will be no less than the 5.5p paid last year.

Chairman Robert Peel said: "The impact of the huge increase in the cost of energy affects almost everything to do with everyday business life and therefore our domestic market is being challenged and one would expect this to continue for a year or so. In spite of disappointing interim results our revpar is similar to the comparative period and if we can grow this in the full year we will be better able to absorb increased costs. Our overall debt level is low and we are in a good position to take advantage of any beneficial acquisition opportunities should they arise in the future"

9 October 2008

Press Enquiries: 0207 266 1100

Nominated adviser and broker 020 7418 8900

KBC Peel Hunt Ltd.

David Davies

Nicholas Marren

CHAIRMAN'S STATEMENT

RESULTS

In the twenty eight weeks to 24 August 2008 turnover decreased 22.2% to £6,819,298 (2007: £8,763,974 of which £1,758,076 was in respect of the Avon Gorge Hotel which was sold on 30 August 2007) and operating profit decreased 60.2% to £549,180 (2007: £1,378,888 of which £518,274 was in respect of the Avon Gorge Hotel). Profit before tax decreased 42.0% to £437,832 (2007: £755,226).

The decrease in like for like sales from our Hotels in the period was 2.6% with overall costs increasing by 2.7%. However hotel operating profit decreased 26% on a like for like basis clearly illustrating the high operational gearing of a Hotel business. Accommodation revenue per available room (revpar) decreased marginally with occupancy down 4.3% and average room rate up by 4.1%. Return on sales decreased from 18.7% to 14.2%. 

The results have been impacted by combined losses at the Strathdon in Nottingham and the King Malcolm in Dunfermline of £165,826 (2007: £41,076). Energy costs increased to £300,410 from £197,586 and our food and liquor margins have been under pressure through abnormal increases caused either through the high cost of energy or currency fluctuation. It is not generally possible in the current market place to pass these increases on to our guests and under the circumstances we have done well to contain the overall cost base to an increase of 2.8%. However it is disappointing to report these results particularly as we have paid £512,314 lower financial costs in the period.

Group overheads decreased by 11.3% amounting to a saving of £53,678 on the previous year and depreciation and amortisation increased 7.3% amounting to £562,471. 

Tax has been provided at 28% less the discount on the deferred tax liabilities, giving an effective rate of 25%, less an adjustment for prior year capital gains tax. Basic earnings per share were 3.8p compared with 4.4p in the comparative period on a weighted average of 13,852,041 shares in issue (2007: 12,863,271). 114,000 employee share options were exercised in the period.

FINANCE

On 24 August 2008 net debt stood at £2,568,935 representing loans totalling £3,980,765 and an overdraft of £242,904 less £1,654,734 cash on deposit at Bank. Gearing on shareholders' funds was 11.2% with interest covered 4.9 times. Net debt increased £2,528,518 compared with the previous year end, due to the fact that, following the sale of the Avon Gorge Hotel in Bristol and property at Salem Street in Bradford, the Company paid out a special dividend of 25p amounting to £2,102,000 in addition to the final dividend of 3.5p amounting to £490,000. In line with the Board's declared strategy, an interim dividend of 2p amounting to £282,522 will be paid on 24 November 2008 and we expect that the total annual dividends in respect of the current financial year will not be less than the 5.5p paid last year. The record date will be 21 November 2008 and the ex-dividend date will be 19 November 2008.

CAPITAL EXPENDITURE

£700,340 was spent in the period in further improving the Company's assets. We have upgraded 22 bedrooms at the Bull Hotel in Peterborough and rebuilt six bedrooms as part of an ongoing programme to produce 18 more luxury air conditioned bedrooms. The Tavern bar at the George Hotel in Wallingford has been expanded and refurbished together with Reception. Work is underway to upgrade 26 bedrooms at the Midland Hotel in Bradford and we continue the process of renovation to the external elevations of this building.

The Board has decided to accelerate capital expenditure in the current financial year given the comparatively low gearing of the Company, the need to capture more business in a competitive market and the fact that many competitors are highly geared and therefore unable to invest in improving their product. Given the current uncertainty and possible volatility in relation to asset values we believe that reinvestment in our freehold properties and moving them further upmarket will stand us in good stead going forward.

 SHAREHOLDERS

We are always delighted when Shareholders visit our Hotels and see for themselves the continual improvements we are making to our portfolio of eight Hotels. All shareholders are entitled to a 30% discount, using the special reservation number, 0207 266 1100 or e-mail [email protected] Shareholders might like to visit our website www.peelhotels.co.uk

THE FUTURE

It is difficult to predict the ongoing impact of the huge increase in the cost of energy as it affects almost everything to do with everyday business life. Undoubtedly our domestic market is currently being challenged and one would expect this to continue for the next year or so. We believe we are well able to overcome the difficulties and with a comparatively low overall debt level feel that we are in a very good position to take advantage of any beneficial acquisition opportunities should they arise in the future. In spite of a disappointing interim result our revpar is similar to the comparative period and if we can grow this for the full year we will be better able to absorb increased costs.

Copies of the interim results are today available on the Company's website at www.peelhotels.co.uk 

DIRECTORS AND ADVISORS

Directors

Robert Edmund Guy Peel Executive Chairman

Clement John Govett Non-executive Director

Keith Peter Benham Non-executive Director

Norbert Paul Gottfried Petersen Chief Operating Officer

Secretary

Thring Townsend Lee & Pembertons

Kinnaird House, 1 Pall Mall East, London SW1Y 5AU

Registered Office

4th Floor, 111 Old Broad Street, London EC2N 1PH

Company registration number 3473990

Auditor

Grant Thornton UK LLP

No 1 Whitehall Riverside, Leeds, LS1 4BN

Bankers

Royal Bank of Scotland Plc

280 Bishopsgate, London EC2M 4RB

Registrars

Computershare Services Plc

PO Box No. 82, The Pavilions, Bridgwater Road, Bristol BS99 7NH

Solicitors

Sabretooth Law Ltd

1 Berkeley Street, Mayfair, London W1J 8DJ

Davidson Webber Solicitors

Royal House, 110 Station Parade, Harrogate HG1 1EP

Stockbrokers

KBC Peel Hunt Ltd

4th Floor, 111 Old Broad Street, London EC2N 1PH

  

PROFIT AND LOSS ACCOUNT

For the period ended 24 August 2008

			28 weeks		28 weeks		Year
			ended		ended		ended
			24/8/2008		26/8/2007		10/2/2008
			Unaudited		Unaudited		Audited
	Note	£	£	£	£	£	£
Turnover			6,819,298		8,763,974		15,150,339
Cost of sales			(5,285,976)		(6,307,610)		(11,010,153)
Gross profit			1,533,322		2,456,364		4,140,186
Administrative expenses
Depreciation		(562,471)		(621,516)		(1,092,642)
Other		(421,671)		(455,960)		(855,003)
			(984,142)		(1,077,476)		(1,947,645)
Operating profit Profit on disposal of property Interest payable & similar charges			549,180 - (111,348)		1,378,888 - (623,662)		2,192,541 8,142,521 (745,529)
Profit on ordinary activities
before taxation			437,832		755,226		9,589,533
Taxation	2		83,598		(188,806)		(1,215,554)
Profit on ordinary activities after taxation			521,430		566,420		8,373,979
Earnings per share	3
Basic			3.8p		4.4p		63.4p
Diluted			3.7p		4.1p		62.8p

There are no recognised gains and losses other than stated above. Accordingly, no statement of total recognised gains and losses is given.

BALANCE SHEET AS AT 24 AUGUST 2008

	24/8/2008	26/8/2007	10/2/2008
	Unaudited	Unaudited	Audited
Note	£	£	£
Fixed assets Tangible assets	28,862,530	34,858,166	28,724,660
Current assets
Stocks	84,028	123,773	86,786
Debtors	1,124,381	1,295,384	1,342,973
Cash at bank and in hand	1,654,734	513,702	4,108,123
	2,863,143	1,932,859	5,537,882
Creditors (due within one year)	(4,677,903)	(4,292,896)	(4,784,341)
Net current liabilities	(1,814,760)	(2,360,037)	753,541
Total assets less current liabilities	27,047,770	32,498,129	29,478,201
Creditors (due after one year)	(3,488,495)	(14,315,369)	(3,970,783)
Provisions for liabilities	(707,000)	(1,664,102)	(707,000)
Total assets	22,852,275	16,518,658	24,800,418
Capital and reserves
Called up share capital	1,412,613	1,291,213	1,401,213
Share premium account	9,845,705	9,111,995	9,743,495
Profit and loss account	11,593,957	6,115,450	13,655,710
Equity shareholders' funds 4	22,852,275	16,518,658	24,800,418

  

CASH FLOW STATEMENT

For the period ended 24 August 2008

			28 weeks		28 weeks		Year
			ended		ended		ended
			24/8/2008		26/8/2007		10/2/2008
			Unaudited		Unaudited		Audited
	Note	£	£	£	£	£	£
Net cash inflow from
operating activities	5		711,207		1,785,736		3,272,305
Returns on investments
and servicing of finance
Interest paid		(50,833)		(562,186)		(1,000,074)
Net cash outflow from
returns on investments
and servicing of finance			(50,833)		(562,186)		(1,000,074)
Taxation
UK corporation tax received/(paid)		64		-		(30,656)
Tax paid			64		-		(30,656)
Capital expenditure
Purchase of tangible fixed assets Sale of tangible fixed assets		(700,341) -		(731,838) -		(3,978,456) 17,148,617
Net cash outflow from capital
expenditure			(700,341)		(731,838)		13,170,161
Equity dividends paid			(2,592,243)		(642,856)		(921,099)
Net cash outflow before
financing			(2,632,146)		(151,144)		14,490,637
Financing Issue of ordinary share capital		113,610		48,545		790,045
Loan repayments		-		-		(11,122,945)
Net cash inflow/(outflow)
from financing			113,610		48,545		(10,332,900)
(Decrease)/increase in cash	6		(2,518,536)		(102,599)		4,157,737
Reconciliation of net debt
(Decrease)/increase in cash in the period			(2,518,536)		(102,599)		4,157,737
Cash outflow from
reduction in net debt			-		-		11,122,945
Change in net debt resulting from cashflows			(2,518,536)		(102,599)		15,280,682
Non cash changes			(9,982)		(15,827)		(51,916)
(Decrease)/increase in net debt in the period			(2,528,518)		(118,426)		15,228,766
Net debt at beginning of period			(40,417)		(15,269,183)		(15,269,183)
Net debt at end of period	6		(2,568,935)		(15,387,609)		(40,417)

  NOTES TO THE INTERIM RESULTS

For the period ended 24 August 2008

1. Basis of accounting

The interim financial information has been prepared on the basis of the accounting policies consistent with those applied in the last Annual Report.

The financial information set out in respect of the year ended 10 February 2008 does not constitute the Company's statutory accounts for that year but is derived from those accounts. Statutory accounts for that year have been delivered to the Registrar of Companies. The auditor reported on those accounts and their report was unqualified. The interim financial statements have been reviewed by the Company's auditor and a copy of the auditor's review report is attached to this interim report.

 

2. Taxation

Tax has been provided at a rate of 25% which represents the expected effective rate for the full year less an adjustment for prior year capital gains tax. The Company has continued to discount its deferred tax liability.

 

3. Earnings per share

Earnings per share are based on the profit after taxation, and on the weighted average number of shares in issue during the period.

28 weeks 28 weeks Year

ended ended ended

24/8/2008 26/8/2007 10/2/2008

Unaudited Unaudited Audited

Average No. shares - Basic 13,852,041 12,863,271 13,214,179

- Diluted 13,928,922 13,667,016 13,344,490

 

4. Reconciliation of movements in shareholders' funds

28 weeks 28 weeks Year

ended ended ended

24/8/2008 26/8/2007 10/2/2008

Unaudited Unaudited Audited

Profit for the period 521,430 566,420 8,373,979

Dividends paid relating to previous year (2,592,243) (642,856) (921,099)

Issue of shares less expenses 113,610 48,545 790,045

Recognition of equity-settled share based payments 9,060 12,281 23,225

Net (decrease)/ increase in shareholders' funds (1,948,143) (15,610) 8,266,150

Shareholders' funds at 11/02/08 24,800,418 16,534,268 16,534,268

Shareholders' funds at 24/08/08  22,852,275 16,518,658 24,800,418

 

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

28 weeks 28 weeks Year

ended ended ended

24/8/2008 26/8/2007 10/2/2008

Unaudited Unaudited Audited

£ £ £

Operating profit 549,180 1,378,888 2,192,541

Depreciation 562,471 621,516 1,092,642

Recognition of equity-settled share based payments 9,060 12,281 23,225

Increase/(decrease) in stocks 2,758 (7,192) 29,795

Increase/(decrease) in debtors 181,280 (242,525) (257,867)

(Decrease)/increase in creditors (593,542) 22,768 191,969

Net cash inflow from operating activities 711,207 1,785,736 3,272,305

  

NOTES TO THE INTERIM ACCOUNTS

For the period ended 24 August 2008

6. Analysis of net debt

	At beginning			At end
	of period		Non cash	of period
	11/2/2008	Cash flow	changes	24/8/2008
	£	£		£
Cash at bank and in hand	4,108,123	(2,453,389)	-	1,654,734
Bank overdraft	(177,757)	(65,147)	-	(242,904)
	3,930,366	(2,518,536)	-	1,411,830
Debt due within one year	-	(492,270)	-	(492,270)
Debt due after one year	(3,970,783)	492,270	(9,982)	(3,488,495)
Total	(40,417)	(2,518,536)	(9,982)	(2,568,935)

7. Financing

The original bank loan is repayable by 8 semi-annual instalments plus a final payment on 11 April 2014. Interest is charged at 1.0% over LIBOR. The Company has entered into a collar agreement on £7 million which caps the Company interest cost at 6.99% plus margin of 1.0%. The minimum interest cost is 4.99% plus margin of 1.0%, up to 12 October 2009, except when LIBOR is below 4.99% between 24 June 2003 and 12 October 2009; in which case an additional 2% of interest is payable. The Company repaid the £7 million loan on 7 October 2007 but the collar agreement remains in place.

The Company has entered into a GBP roller coaster callable interest rate swap agreement which commenced on 11 April 2003 and ends on 11 April 2014 with an option for the Royal Bank of Scotland to terminate the agreement from 11 October 2009. Under the terms of this agreement the Company fixes its interest payments up to 11 April 2014 on outstanding loan balances which are not covered by the collar agreement. The fixed interest swap requires the Company to pay 5.83% on these amounts and therefore effectively fixes its borrowing costs on this portion of its debt portfolio at 6.83% (after inclusion of the 1.0% margin).

The loans and overdraft are secured by debentures dated 7 December 1998, 8 September 1999, 21 June 2002 and 17 May 2005 over all of the Company's freehold and long leasehold properties.

  

Independent review report to Peel Hotels PLC 

Introduction

We have been engaged by the Company to review the financial information in the interim financial report for the 28 weeks ended 24 August 2008 which comprises the profit and loss account, the balance sheet, the cash flow statement, the reconciliation of net debt and the related notes 1 to 7. We have read the other information contained in the interim financial report which comprises only the Chairman's Statement and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. 

This report is made solely to the company in accordance with guidance contained in International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information performed by the Independent Auditor of the Entity'. Our review work has been undertaken so that we might state to the Company those matters we are required to state to them in a review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusion we have formed.

Directors' responsibilities 

The interim financial report is the responsibility of, and has been approved by, the directors. The AIM rules of the London Stock Exchange require that the accounting policies and presentation applied to the interim figures are consistent with those which will be adopted in the annual accounts having regard to the accounting standards applicable for such accounts.

Our responsibility 

Our responsibility is to express to the Company a conclusion on the financial information in the interim financial report based on our review. 

Scope of review 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, 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 (UK and Ireland) 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 financial information in the interim financial report for the 28 weeks ended 24 August 2008 is not prepared, in all material respects, in accordance with the basis of accounting described in note 1. 

GRANT THORNTON UK LLP AUDITORLeeds9 October 2008

  

HOTEL DIRECTORY

PEEL HOTELS PLC

19 Warwick Avenue London W9 2PS

Telephone: 020 7266 1100 FAX: 020 7289 5746

Location Hotel Rating Rooms Telephone Facsimile

Bradford Midland Hotel **** 90 01274 735735 01274 720003

Carlisle Crown & Mitre Hotel **** 94 01228 525491 01228 514553

Dunfermline King Malcolm Hotel **** 48 01383 722611 01383 730865

Leeds Golden Lion Hotel **** 89 0113 243 6454 0113 242 9327

Newcastle Upon Tyne Caledonian Hotel **** 91 0191 281 7881 0191 281 6241

Nottingham Strathdon Hotel **** 68 0115 941 8501 0115 948 3725

Peterborough Bull Hotel **** 118 01733 561364 01733 557304

Wallingford George Hotel **** 39 01491 836665 01491 825359

637

For reservations at any Peel Hotel call 020 7266 1100

Or dial into our web site on www.peelhotels.co.uk

e-mail - [email protected]

ENDIR MPBATMMMMBIP

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