13th Oct 2010 07:00
PEEL HOTELS PLC
INTERIM RESULTS
For 28 weeks ended 22 August 2010
§ Turnover up 15.1% to £8,275,804 (2009: £7,192,103)
§ Profit before interest up 31.8% to £637,215 (2009: £483,355)
§ Profit before tax up 33.4% to £102,379 (2009: £76,720)
§ Net debt decreased £611,339 to £14,183,231
§ Earnings per share (Adjusted for exceptional tax credit)
Basic 0.5p (2009: 0.4p)
Diluted 0.5p (2009: 0.4p)
Chairman Robert Peel said: A like for like increase of 6% on revpar in the period is certainly a positive sign of regaining an acceptable level of profitability within the Company. However an ever tightening cost base together with innovative marketing techniques are required to counter-balance what is an essentially oversupplied provincial market place within a cost cutting commercial and Government environment. The Directors hope there will be grounds to consider recommending a modest dividend in respect of the current financial year if occupancy continues to grow.
13 October 2010
Press Enquiries: 0207 266 1100
Nominated advisor and broker 0207 418 8900
KBC Peel Hunt
Capel Irwin
CHAIRMAN'S STATEMENT
Results
In the 28 weeks to 22 August 2010 turnover increased 15.1% to £8,275,804. Operating profit increased 31.8% to £637,215. EBITDA (Earnings before interest, tax and depreciation) increased 22.6% to £1,329,081.
Like for like sales in the period increased 4.4% and on the same basis revpar (accommodation revenue per available room) increased 6% with occupancy up 11.4% and average room rate down 4.8%.
The improvement in revpar arose through improved occupancy principally through the £99 'gold ingot' marketing campaign in February, an improvement in incoming Tourism, and more UK holidaymakers choosing not to go abroad. Occupancy improved in all our Hotels apart from the Strathdon in Nottingham and the Midland in Bradford.
Group overheads decreased £20,860 amounting to a saving of 5.4% on the previous year and depreciation and amortisation increased 15.3% to £691,866 reflecting the addition of the Norfolk Royale Hotel acquired on 1 June 2009.
Profit before tax increased 33.4% to £102,379.
Tax has been provided at a rate of 28% less the discount on deferred tax liabilities giving an effective rate of 25%. Last year there was a substantial credit to the tax provision amounting to £1,089,174. This had arisen from claiming roll over relief on the acquisition of the Norfolk Royale Hotel against a part of the charge to tax on capital gains suffered on the disposal of the Avon Gorge Hotel. Basic earnings per share were 0.5p compared with 8.2p in the comparative period on a weighted average of 14,012,123 (2009: 14,012,123) shares in issue. Earnings per share in the comparative period adjusted for the exceptional tax credit would have been 0.4p.
Finance
On 22 August 2010 net debt stood at £14,183,231 representing loans totalling £13,288,772 and an overdraft of £1,003,885 less £109,426 cash at bank. Gearing on Shareholders' funds was 59.8% with interest covered 1.2 times.
Net debt decreased £611,339 in the period on the year end position primarily through a reduction in the level of capital expenditure. Shareholders will be aware that the Company has a fixed interest swap at 5.83% plus margin of 1.95% on a declining balance, currently £9,542,700, until the swap ceases on 11 April 2014. Following a review by its bankers in regard to the Company's debt profile, with effect from 12 October 2010 they have increased the margin to 2.5% on £9,500,000 whilst increasing the margin on the balance from 1.95% to 4% over six monthly LIBOR. Margin on the Company's overdraft remains the same at 2.5% over Base Rate.
The review has cost the Company £72,547 in fees, charges and expenses which will be amortised over the term of the loan and will cost a further £47,520 over the same period. Whilst we are not happy in regard to these additional charges and increased margins, we understand that these new Banking rates are competitive in the overall provincial hotel market place. It is of course unfortunate that the increased margin in the case of our swap translates into a high overall cost of borrowing. We continue to monitor the cost of buying out the swap and currently it would make little economic sense. It is perhaps worth pointing out, however, that, without the burden of the swap, the Company's interim pre-tax profits would have been approximately three times as great, giving an indication of the potential improvement once the swap expires in three and a half year's time.
In the light of the new cost of borrowing it makes sense to review our non hotel assets with a view to disposal and we are currently marketing for sale two properties, one in Newcastle and one in Wallingford.
Capital Expenditure
We have slowed down capital expenditure as indicated in the latest Annual Report in order to conserve cash in what still is an uncertain market place. However the Company still spent £326,299 in the period, a third of which was spent on improving bedrooms at the Norfolk Royale Hotel and the balance was spread over the other eight Hotels. Our objective very much remains to upgrade our existing freehold properties to AA four star standards over time.
In addition to such capital expenditure a further £303,859 (2009:£238,253) was expensed through the profit and loss account in the period on repairs and renewals which demonstrates our commitment to maintaining and improving the quality of our estate.
Shareholders
We are always delighted to welcome Shareholders to our hotels where 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 website www.peelhotels.co.uk.
This year we have expanded last year's Christmas Gift Offer which was a huge success. Essentially it gives the recipient and their partner two nights stay on any dates in 2011, provided they are bought before 31 December 2010, inclusive of dinner each night and English breakfast each morning in any one of our nine hotels. The prepaid cost of this gift varies from £99 to £179 dependant upon the month chosen (the price will not be mentioned on the Voucher). To buy gift wrapped vouchers contact us on 0207 266 1100.
The Future
A like for like increase of 6% on revpar is certainly a positive sign in terms of regaining an acceptable level of profitability within the Company. However we must remain vigilant in terms of our cost base and recognise the need for innovative marketing techniques to counter-balance the effect of what is an essentially oversupplied provincial hotel market place within a cost cutting commercial and Governmental environment.
The significant capital expenditure that we have spent is definitely helping to increase occupancy and if this trend continues, the Directors will have grounds to consider recommending a modest dividend in respect of the current financial year.
Robert Peel
Chairman
October 2010
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
Thring Townsend Lee & Pembertons
Kinnaird House, 1 Pall Mall East, London SW1Y 5AU
Davidson Large
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 22 August 2010
|
|
|
|
28 weeks |
|
28 weeks |
|
Year |
|
|
|
|
ended |
|
ended |
|
ended |
|
|
|
|
22/8/2010 |
|
23/8/2009 |
|
7/2/2010 |
|
|
|
|
Unaudited |
|
Unaudited |
|
Audited |
|
|
Note |
£ |
£ |
£ |
£ |
£ |
£ |
| Turnover
|
|
|
8,275,804 |
|
7,192,103 |
|
14,186,042 |
| Cost of sales
|
|
|
(6,578,963) |
|
(5,719,864) |
|
(11,546,545) |
| Gross profit
|
|
|
1,696,841 |
|
1,472,239 |
|
2,639,497 |
| Administrative expenses |
|
|
|
|
|
|
|
|
Depreciation |
|
(691,866) |
|
(600,264) |
|
(1,214,100) |
|
|
Other |
|
(367,760) |
|
(388,620) |
|
(634,417) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,059,626) |
|
(988,884) |
|
(1,848,517)
|
| Operating profit
Total operating profit
|
|
|
637,215 |
|
483,355
|
|
790,980
|
| Net interest |
|
|
(534,836) |
|
(406,635) |
|
(865,086) |
|
Profit (loss) on ordinary activities |
|
|
|
|
|
|
|
|
before taxation |
|
|
102,379 |
|
76,720 |
|
(74,106) |
|
Taxation
|
2 |
|
(25,595) |
|
1,069,994 |
|
1,214,635 |
|
|
|
|
|
|
|
|
|
| Profit on ordinary activities after taxation |
|
|
76,784 |
|
1,146,714 |
|
1,140,529 |
|
|
|
|
|
|
|
|
|
| Earnings per share |
3 |
|
|
|
|
|
|
|
Basic |
|
|
0.5p |
|
8.2p |
|
8.1p |
|
Diluted
|
|
|
0.5p |
|
8.2p |
|
8.1p |
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 22 AUGUST 2010
|
|
22/8/2010 |
23/8/2009 |
7/2/2010 |
|
|
Unaudited |
Unaudited |
Audited |
|
Note |
£ |
£ |
£ |
| Fixed assets
Tangible assets
|
39,148,225 |
39,947,522 |
39,513,792 |
|
Current assets
|
|
|
|
|
Stocks |
108,850 |
125,089 |
112,840 |
|
Debtors |
1,522,114 |
1,551,152 |
1,227,562 |
|
Cash at bank and in hand |
109,426 |
- |
104,912 |
|
|
1,740,390 |
1,676,241 |
1,445,314 |
|
Creditors (due within one year) |
(5,280,920) |
(5,622,698) |
(5,203,856) |
|
Net current liabilities |
(3,540,530) |
(3,946,457) |
(3,758,542) |
|
Total assets less current liabilities |
35,607,695 |
36,001,065 |
35,755,250 |
|
Creditors (due after one year) |
(11,331,511) |
(11,773,134) |
(11,557,618) |
| Provisions for liabilities |
(561,000) |
(588,000) |
(561,000) |
| Net assets |
23,715,184 |
23,639,931 |
23,636,632 |
| Capital and reserves |
|
|
|
|
Called up share capital |
1,401,213 |
1,401,213 |
1,401,213 |
|
Share premium account |
9,743,495 |
9,743,495 |
9,743,495 |
|
Profit and loss account |
12,570,476 |
12,495,223 |
12,491,924 |
| Equity shareholders' funds 4 |
23,715,184 |
23,639,931 |
23,636,632 |
CASH FLOW STATEMENT
For the period ended 22 August 2010
|
|
|
|
28 weeks |
|
28 weeks |
|
Year |
|
|||
|
|
|
|
ended |
|
ended |
|
ended |
|
|||
|
|
|
|
22/8/2010 |
|
23/8/2009 |
|
7/2/2010 |
|
|||
|
|
|
|
Unaudited |
|
Unaudited |
|
Audited |
|
|||
|
|
Note |
£ |
£ |
£ |
£ |
£ |
£ |
|
|||
| Net cash inflow from |
|
|
|
|
|
|
|
||||
|
operating activities |
5 |
|
1,389,020 |
|
1,765,173 |
|
2,345,561 |
||||
| Returns on investments |
|
|
|
|
|
|
|
||||
|
and servicing of finance |
|
|
|
|
|
|
|
||||
|
Interest paid |
|
(547,677) |
|
(318,840) |
|
(760,549) |
|
||||
| Net cash outflow from |
|
|
|
|
|
|
|
||||
|
returns on investments |
|
|
|
|
|
|
|
||||
|
and servicing of finance |
|
|
(547,677) |
|
(318,840) |
|
(760,549) |
||||
| Taxation |
|
|
|
|
|
|
|
||||
|
UK corporation tax received/(paid) |
|
100,707 |
|
(818,644) |
|
(1,050,566) |
|
||||
|
Tax paid/received
Capital expenditure Purchase of tangible fixed assets |
|
(326,299) |
100,707 |
(10,855,988) |
(818,644) |
(11,066,094) |
(1,050,566) |
||||
| Net cash outflow from capital |
|
|
|
|
|
|
|
||||
|
expenditure |
|
|
(326,299) |
|
(10,885,988) |
|
(11,066,094) |
||||
| Equity dividends paid |
|
|
- |
|
(490,424) |
|
(490,424) |
||||
| Net cash inflow/ (outflow) |
|
|
|
|
|
|
|
||||
|
below financing |
|
|
615,751 |
|
(10,748,723) |
|
(11,022,072) |
||||
| Financing
Share issue expenses New Loans |
|
- 500,000 |
|
- 12,831,100 |
|
- 13,331,100 |
|
||||
|
Loan repayments |
|
(223,027) |
|
(4,009,314) |
|
(4,228,616) |
|
||||
| Net cash inflow |
|
|
|
|
|
|
|
||||
|
from financing |
|
|
276,973 |
|
8,821,786 |
|
9,102,484 |
||||
|
Increase/(decrease) in cash |
6 |
|
892,724 |
|
(1,926,937) |
|
(1,919,588) |
||||
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|||||
| Reconciliation of net debt |
|
|
|
|
|
|
|
||||
|
Increase/ (decrease) in cash in the period |
|
|
892,724 |
|
(1,926,937) |
|
(1,919,588) |
||||
|
Cash inflow from |
|
|
|
|
|
|
|
||||
|
change in net debt |
|
|
(276,973) |
|
(8,821,786) |
|
(9,102,484) |
||||
|
Change in net debt resulting from cashflows |
|
|
615,751 |
|
(10,748,723) |
|
(11,022,072) |
||||
|
Non cash changes |
|
|
(4,412) |
|
95,573 |
|
84,418 |
||||
|
Decrease/ (increase) in net debt in the period |
|
|
611,339 |
|
(10,653,150) |
|
(10,937,654) |
||||
|
Net debt at beginning of period |
|
|
(14,794,570) |
|
(3,856,916) |
|
(3,856,916) |
||||
| Net debt at end of period |
6 |
|
(14,183,231) |
|
(14,510,066) |
|
(14,794,570) |
||||
|
|
|
|
|
|
|
|
|
||||
NOTES TO THE INTERIM RESULTS
For the period ended 22 August 2010
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 7 February 2010 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.
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
22/8/2010 23/8/2009 7/2/2010
Unaudited Unaudited Audited
Average No. shares - Basic 14,012,123 14,012,123 14,012,123
- Diluted 14,012,123 14,017,483 14,017,518
4. Reconciliation of movements in shareholders' funds
28 weeks 28 weeks Year
ended ended ended
22/8/2010 23/8/2009 7/2/2010
Unaudited Unaudited Audited
Profit for the period 76,784 1,146,714 1,140,529
Dividends paid relating to previous year - (490,424) (490,424)
Issue of shares less expenses - - -
Recognition of equity-settled share based payments 1,768 3,367 6,253
Net increase in shareholders' funds 78,552 659,657 656,358
Shareholders' funds at 07/02/10 23,636,632 22,980,274 22,980,274
Shareholders' funds at 22/08/10 23,715,184 23,639,931 23,636,632
5. Reconciliation of operating profit to net cash inflow from operating activities
28 weeks 28 weeks Year
ended ended ended
22/8/2010 23/8/2009 7/2/2010
Unaudited Unaudited Audited
£ £ £
Operating profit 637,215 483,355 790,980
Depreciation 691,866 600,264 1,214,100
Recognition of equity-settled share based payments 1,768 3,367 6,253
Increase/(Decrease) in stocks 3,990 (32,144) (19,895)
(Decrease)/increase in debtors (330,950) (328,686) 80,749
Increase in creditors 385,131 1,039,017 273,374
Net cash inflow from operating activities 1,389,020 1,765,173 2,345,561
NOTES TO THE INTERIM ACCOUNTS
For the period ended 22 August 2010
6. Analysis of net debt
|
|
At beginning |
|
|
At end |
|
|
of period |
|
Non cash |
of period |
|
|
07/02/2010 |
Cash flow |
changes |
22/8/2010 |
|
|
£ |
£ |
|
£ |
|
Cash at bank and in hand |
104,912 |
4,514 |
- |
109,426 |
|
Bank overdraft |
(1,892,095) |
888,210 |
- |
(1,003,885) |
|
|
(1,787,183) |
892,724 |
- |
(894,459) |
|
|
|
|
|
|
|
Debt due within one year |
(1,449,769) |
(507,492) |
- |
(1,957,261) |
|
Debt due after one year |
(11,557,618) |
230,519 |
(4,412) |
(11,331,511) |
|
Total |
(14,794,570) |
615,751 |
(4,412) |
(14,183,231) |
7. Financing
On the 1st June 2009 the Company took a loan of £12,331,100 to assist with the purchase of the Norfolk Royale Hotel and to refinance the existing LIBOR loan (with an outstanding balance of £3,506,063 as at 28 May 2009). Interest is charged at 1.95% above LIBOR and the loan is repayable by 9 half yearly instalments calculated on a 20 year capital and interest repayment programme with a final lump sum repayment due 5 months after the date the penultimate instalment is paid.
On 11 April 2003 the Company entered into a GBP Roller Coaster callable interest rate swap agreement which ends on 11 April 2014. Under the terms of this agreement the Company fixes its interest payments at 5.83% plus margin on a reducing total (£9,542,430 at 22 August 2010). This amount decreases by £492,270 every six months until 11 April 2014.
Following a review by The Royal Bank of Scotland in regard to the Company's debt profile, with effect from 12 October 2010 they have increased the margin on the first £9,500,000 of the Company's loan to 2.5% above six monthly LIBOR. The bank has increased the margin on the balance of the loan (£2,388,697 at 22 August 2010) to 4.0% above six monthly LIBOR.
The loan and overdraft are secured by a debenture dated 6 March 1998 over all 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 22 August 2010 which comprises the profit and loss account, the balance sheet, the cash flow statement, 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 22 August 2010 is not prepared, in all material respects, in accordance with the basis of accounting described in note 1.
GRANT THORNTON UK LLP AUDITOR Leeds
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
Bournemouth Norfolk Royale **** 95 01202 551521 01202 299729
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 Cosmopolitan 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
732
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]
Related Shares:
Peel Hotels