5th Oct 2005 07:00
Peel Hotels PLC05 October 2005 Peel Hotels PLC Interim Results For the 28 week period ended 28 August 2005 • Turnover up 17.6% to £7,989,456 (2004 - £6,794,715) • Operating Profit up 10.4% to £1,649,598 (2004 - £1,494,846) • Profit before tax increased 28.9% to £1,000,568 (2004 - £776,467) • Earnings per share Basic 5.9p (2004 4.8p)Diluted 5.7p (2004 4.7p) "The Company achieved its budget which included a satisfactory contribution fromthe three hotels acquired on 16 May 2005 which nullified any impact from theconclusion of the Management Contract with Grace Hotels Ltd. There is stillconsiderable scope to improve performance within the portfolio". Further information Robert Peel 020 7266 1100 05 October 2005 CHAIRMAN'S STATEMENT RESULTS In the twenty eight weeks to 28 August 2005 turnover grew by 17.6% to £7,989,456and operating profit increased by 10.4% to £1,649,598. Earnings before interest,tax, depreciation and amortisation (EBITDA) increased by 10.3% to £2,184,541. Profit before tax increased 28.9% to £1,000,568 reflecting the purchase of thethree leasehold hotels from Grace Hotels on 16 May 2005. This transaction neatlyconcluded our Management Contract with Grace Hotels that had begun in the autumnof 1998. We pointed out, in the Annual Report, that the company would benefitfrom Libor being in excess of 4.99% at the fixing date 12 April 2005 and that wewould benefit from 2% annualised savings on £7 million of our debt until 12October 2005. The acquisition, together with a lesser overall cost of borrowing,have accelerated profit progress during the period and more than compensated for£86,181 lost management income in comparison to the previous year. Our previous portfolio of six hotels increased sales overall in the period by2.2% and accommodation revenue per available room (revpar) increased by 1% withaverage room rate up by 3.9% and occupancy down 2.7%. Gross profit on thesehotels increased 2.8% whilst our three new hotels collectively produced ahealthy £302,622 contribution to gross profit. Group overheads increased 22.3% or by £72,350, of which £18,000 was spent ontraining and £25,000 of the increase was due to a rates rebate in the previousyear. Depreciation increased £48,898 to £534,943 in the period. Tax has been provided at 30% less the discount on the deferred tax liabilitiesgiving an effective rate of 25%. Basic earnings per share were 5.9p comparedwith 4.8p in the comparative period on a weighted 12,620,457 shares. The Companynow has 12,787,123 shares in issue, having successfully placed 666,666 shares at90p each which part funded the £2.75 million acquisition on 16 May 2005. FINANCE On 28 August 2005 net debt stood at £17,083,392 representing loans totalling£17,329,182 (including the additional £2.5 million ten year loan drawn down tofinance our recent acquisition) and an overdraft of £4,688 less £250,478 cash atbank. Gearing on shareholders' funds was 109% with interest covered 2.5 times.Net debt increased £1,146,698 compared with the previous year end. The libor rate on our 'cap and collar' on £7 million of our debt is due forre-fixing on 11 October 2005 and unfortunately at the time of writing, withlibor trending at 4.5%, it looks unlikely that we will benefit from the 2%annualised saving on £7 million that we are currently enjoying. CAPITAL EXPENDITURE £339,589 was spent in the period with just under half being spent on the AvonGorge Hotel in Bristol. We are in the process of lodging some seven planningapplications with a view, over the longer term, to develop the site out to itsmaximum potential and in such a way that benefits the local residents who are anintegral part of life in Clifton, and that satisfies the planners and EnglishHeritage. The process of seeking planning for some eighty five apartments with car parkingon our redundant 0.8 acre site on Salem Street in Bradford continues, whilst wederive income from contract car parking in the meantime. Elsewhere throughout the company we strive to keep all our properties wellmaintained whilst continuing to increase benchmark standards in terms of comfortand facilities. SHAREHOLDERS We would encourage shareholders to visit our hotels and take advantage of ourshareholders' discount scheme. All shareholders are entitled to a 25% discountoff the listed tariff, using a special reservations number, 020 7266 1100 oremail [email protected]. Shareholders can identify the hotels we own using thedirectory listed at the back of the interim report. THE FUTURE Revpar has continued to grow on the back of an ever improving product andtranslates into profit growth. We need to be vigilant to the pressures of wagegrowth and of operating cost growth. The substantial hike in the costs ofenergy, rates and statutory items in particular, are very difficult to control. There is still considerable scope to improve performance within the portfolioand we are confident that we can continue to progress. PROFIT AND LOSS ACCOUNTFor period ended 28 August 2005 28 weeks 28 weeks Year ended ended ended 28/8/2005 29/8/2004 13/2/2005 Unaudited Unaudited Audited Note £ £ £ £ £ £TurnoverOriginal group 6,790,513 6,644,926 12,268,058Discontinued 63,608 149,789 284,701businessAcquisitions 1,135,335 - - Total turnover 7,989,456 6,794,715 12,552,759Cost of Sales (5,408,816) (4,490,075) (8,519,697) Gross profitOriginal group 2,214,410 2,154,851 3,748,361Discontinued 63,608 149,789 284,701businessAcquisitions 302,622 - - Total gross 2,580,640 2,304,640 4,033,062profitAdministrativeexpensesDepreciation (534,943) (486,045) (902,655)Other (396,099) (323,749) (647,408) (931,042) (809,794) (1,550,063) OperatingprofitOriginal group 1,372,446 1,345,057 2,198,298Discontinued 63,608 149,789 284,701businessAcquisitions 213,544 - - Total 1,649,598 1,494,846 2,482,999operatingprofit Interestpayable& similar (649,030) (718,379) (1,301,892)charges Profit onordinaryactivitiesbefore 1,000,568 776,467 1,181,107taxationTaxation 2 (250,142) (194,117) (272,094)Profit onordinaryactivitiesafter taxation 750,426 582,350 909,013Dividend - - (545,421) Profit 750,426 582,350 363,592retained Earnings per 3share Basic 5.9p 4.8p 7.5pDiluted 5.7p 4.7p 7.3p 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 28 AUGUST 2005 28/8/2005 29/8/2004 13/2/2005 Unaudited Unaudited Audited Note £ £ £Fixed assets 35,362,717 32,850,150 32,657,793Current assetsStocks 123,111 102,374 93,729Debtors 1,107,321 974,479 1,045,243Cash at bank and in hand 250,478 158,323 147,137 1,480,910 1,235,176 1,286,109Creditors (due within one year) (3,256,382) (3,516,253) (3,665,542)Net current liabilities (1,775,472) (2,281,077) (2,379,433)Total assets less current 33,587,245 30,569,073 30,278,360liabilitiesCreditors (due after one year) (16,586,912) (14,823,363) (14,589,414)Provisions for liabilities and (1,346,778) (1,184,784) (1,346,778)charges Net assets 15,653,555 14,560,926 14,342,168 Capital and reservesCalled up share capital 1,278,712 1,212,046 1,212,046Share premium account 9,013,772 8,519,477 8,519,477Profit and loss account 5,361,071 4,829,403 4,610,645Equity shareholders' funds 4 15,653,555 14,560,926 14,342,168 CASH FLOW STATEMENTFor the period ended 28 August 2005 28 weeks 28 weeks Year ended ended ended 28/8/2005 29/8/2004 13/2/2005 Unaudited Unaudited Audited Note £ £ £ £ £ £Net cashinflow fromoperating 5 2,697,407 2,064,039 3,314,153activitiesReturns oninvestmentsand servicingof financeInterest paid (634,335) (671,728) (1,294,185)Net cashoutflow fromreturns oninvestmentsand servicing (634,335) (671,728) (1,294,185)of financeTaxationUK corporation 8,190 - (120,728)tax received/(paid)Tax paid 8,190 - (120,728)CapitalexpenditurePurchase of (3,239,867) (491,794) (716,047)tangible fixedassetsNet cashoutflow fromcapitalexpenditure (3,239,867) (491,794) (716,047)Equity (545,421) (509,059) (509,059)dividend paidNet cash(outflow)/inflow beforefinancing (1,714,026) 391,458 674,134 FinancingIssue of 599,999 - -ordinary sharecapitalShare issue (39,038) - -expensesNew loans 2,500,000 1,000,000 1,000,000Loan (496,135) (492,270) (1,488,405)repaymentsNet cashinflow/(outflow)from financing 2,564,826 507,730 (488,405)Increase in 6 850,800 899,188 (185,729)cash Reconciliationof net debtIncrease in 850,800 899,188 (185,729)cash in theperiodCash (inflow)/outflow from(increase)/ (2,003,865) (507,730) 488,405decrease indebtChange in net (1,153,065) 391,458 674,134debt resultingfrom cashflowsNon cash 6,367 (14,217) (26,403)changesReduction in (1,146,698) 377,241 647,731net debt inthe periodNet debt at (15,936,694) (16,584,425) (16,584,425)beginning ofperiodNet debt at 6 (17,083,392) (16,207,184) (15,936,694)end of period NOTES TO THE INTERIM ACCOUNTSFor the period ended 28 August 2005 1. Basis of accounting The interim financial information has been prepared on the basis of theaccounting policies consistent with those applied in the last Annual Report. The financial information set out in respect of the year ended 13 February 2005does not constitute the company's statutory accounts for that year but isderived from those accounts. Statutory accounts for that year have beendelivered to the Registrar of Companies. The auditors reported on thoseaccounts, their report was unqualified. The interim financial statements havebeen reviewed by the company's auditors. A copy of the auditors review report isattached to this interim report. 2. Taxation Tax has been provided at a rate of 25% which represents the expected effectiverate for the full year. The company has continued to discount its deferred taxliability. 3. Earnings per share Earnings per share are based on the profit after taxation, and on the weightedaverage number of shares in issue during the period. 28 weeks 28 weeks Year ended ended ended 28/8/2005 29/8/2004 13/2/2005 Unaudited Unaudited AuditedAverage No. shares Basic 12,620,457 12,120,457 12,120,457 Diluted 13,056,409 12,441,851 12,445,067 4. Reconciliation of movements in shareholders' funds 28 weeks 28 weeks Year ended ended ended 28/8/2005 29/8/2004 13/2/2005 Unaudited Unaudited AuditedProfit for the period 750,426 582,350 909,013Dividends and other appropriations - - (545,421) 750,426 582,350 363,592Issue of shares less expenses 560,961 - - Net increase in shareholders' funds 1,311,387 582,350 363,592Shareholders' funds at 14/02/05 14,342,168 13,978,576 13,978,576Shareholders' funds at 28/08/05 15,653,555 14,560,926 14,342,168 5. Reconciliation of operating profit to net cash inflow from operatingactivities 28 weeks 28 weeks Year ended ended ended 28/8/2005 29/8/2004 13/2/2005 Unaudited Unaudited Audited £ £ £Operating profit 1,649,598 1,494,846 2,482,999Depreciation 534,943 486,045 902,655Increase in stocks (29,382) (20,855) (12,210)(Increase)/decrease in debtors (58,234) 17,330 (53,434)Increase/(decrease) in creditors 600,482 86,673 (5,857)Net cash inflow from operating activities 2,697,407 2,064,039 3,314,153 6. Analysis of net debt At beginning At end of period Non cash of period 14/2/2005 Cash flow changes 28/8/2005 £ £ £Cash at bank and in hand 147,137 103,341 - 250,478Bank overdraft (752,147) 747,459 - (4,688) (605,010) 850,800 - 245,790 Debt due within one year (742,270) - - (742,270)Debt due after one year (14,589,414) (2,003,865) 6,367 (16,586,912)Total (15,936,694) (1,153,065) 6,367 (17,083,392) 7. Financing The bank loans existing at the beginning of the period are repayable bysemi-annual instalments plus a final payment on 11 April 2014. The company has acollar agreement on £7 million which caps the company interest cost at 6.99%plus margin. The minimum interest cost is 4.99% plus margin, up to 12 October2009, except where LIBOR falls below 4.99% between 24 June 2003 and 12 October2009; in which case an additional 2% of interest is payable. In addition, thecompany has an interest rate swap agreement on the outstanding loan balanceswhich are not covered by the collar agreement, commencing on 11 April 2003 to 11April 2014 with an option for the Royal Bank of Scotland to terminate theagreement from 11 October 2009. Under the terms of this agreement the companyreceives interest at LIBOR plus 1.25% and pays interest at a fixed rate of7.08%. The new loan of £2.5 million, which part financed the acquisition of the 3 newhotels, is repayable over 10 years, with the final payment due on 31 March 2015.Interest is currently charged at 1.25% over LIBOR. INDEPENDENT REVIEW REPORT TO PEEL HOTELS PLC Introduction We have been instructed by the company to review the financial information forthe 28 weeks ended 28 August 2005 which comprises the profit and loss account,the balance sheet, the cash flow statement, the reconciliation of net debt andthe related notes 1 to 7. We have read the other information contained in theinterim report and considered whether it contains any apparent misstatements ormaterial inconsistencies with the financial information. Our responsibilities donot extend to any other information. This report is made solely to the company's members, as a body in accordancewith guidance contained in APB Bulletin 1999/4 "Review of Interim FinancialInformation". Our review work has been undertaken so that we might state to thecompany's members those matters we are required to state to them in a reviewreport and for no other purpose. To the fullest extent permitted by law, we donot accept or assume responsibility to anyone other than the company and thecompany's members as a body, for our review work, for this report, or for theconclusions we have formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. They areresponsible for preparing the interim report and ensuring that the accountingpolicies and presentation applied to the interim figures are consistent withthose applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4"Review of Interim Financial Information" issued by the Auditing Practices Boardfor use in the United Kingdom. A review consists principally of making enquiriesof management and applying analytical procedures to the financial informationand underlying financial data and, based thereon, assessing whether theaccounting policies and presentation have been consistently applied unlessotherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance with UnitedKingdom Auditing Standards and therefore provides a lower level of assurancethan an audit. Accordingly, we do not express an audit opinion on the financialinformation. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the 28 weeks ended28 August 2005. Grant Thornton UK LLPChartered Accountants 05 October 2005 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Peel Hotels