Puma Hotels - Interim Results

23rd Sep 2009 13:07



For immediate release  23 September 2009

Puma Hotels plc 

Interim results for the 6 months ended 30 June 2009

Highlights

	H1 2009  (Unaudited)		H1 2008  (Unaudited)
Turnover	£14.9m		£13.7m
Operating Profit	£13.0m		£11.4m
Retained Loss for Period	(£1.1m)		(£3.7m)
Note: Annual rent increased from £28m to £30m on 4 September 2008

 

Term of senior debt facility extended by three years to 31 December 2012

£20 million equity raising successfully completed

Substantial increase in Operating Profit during the first half of 2009

New interest rate swaps executed will be fully effective for the year ending December 2010, reducing annual interest costs by £3.5 m 

Howard Shore, Chairman of Puma Hotels plc, said:

"The successful extension in the maturity of the Company's senior debt places PHP in a very strong financial position which is further enhanced by an improvement in operating performance. This improvement is the result of an increase in rent against the comparable period in the prior year and lower costs achieved through a cost reduction programme implemented over the last twelve months. The full benefit of the cost savings will accrue for 2010 annuals as a result of new interest rate hedges."

 

 

Press Enquiries:

Puma Hotels plc

Howard Shore 020 7408 4050

Peter Procopis   020 7408 4050

Notes to Editors

 

 

CENTRAL ENGLAND				Bedrooms	No. of meeting rooms	Health & Leisure	Location
1			Barceló Billesley Manor Hotel, Nr. Stratford*	72	12	Y	Country
2			Barceló Cheltenham Park Hotel	152	11	Y	Country
3			Barceló Daventry Hotel	155	8	Y	Country
4			Barceló Hinckley Island Hotel	362	21	Y	Country
5			Barceló Oxford Hotel	168	25	Y	City
6			Barceló  Buxton Palace Hotel	122	9	Y	Country
7			Barceló Walton Hall Hotel & Spa, Warwickshire* +	202	20	Y	Country
8			Barceló The Lygon Arms, Cotswolds*	77	8	Y	Country
NORTHERN ENGLAND
9			Barceló  Blackpool Imperial Hotel	180	15	Y	Coast
10			Barceló  Harrogate Majestic Hotel	167	10	Y	City
11			Barceló Redworth Hall Hotel, Co. Durham*	143	10	Y	Country
12			Barceló Shrigley Hall Hotel, Cheshire*	148	12	Y	Country
SCOTLAND
13			Barceló  Edinburgh Carlton Hotel	189	10	Y	City
14			Barceló  Troon Marine Hotel*	89	4	Y	Coast
15			Barceló Stirling Highland Hotel	96	7	Y	City
SOUTHERN ENGLAND
16			Barceló Combe Grove Manor, Bath*	42	5	Y	Country
17			Barceló Basingstoke Country Hotel	100	10	Y	Country
18			Barceló  Torquay Imperial Hotel	152	7	Y	Coast
19			Barceló  Brighton Old Ship Hotel	154	11	N	Coast
WALES
20			Barceló  Cardiff Angel Hotel	102	7	N	City
			Total	2,872	222

*  Barceló Premium Hotels

+ Operationally, Barceló split this property into a Barceló Premium Hotel, Barceló Walton Hall  and a Barceló Hotel, Barceló Walton Hotel

  

Chairman's Statement 

Introduction

Since the granting of leases to Barceló Group ("Barceló") on 6 September 2007, Puma Hotels plc ("PHP" or the "Group") trades solely as an owner of hotel property receiving income from property rents. The Company's hotels are let on 45 year FRI leases to Barceló, a leading Spanish hospitality group with substantial global hotel and other leisure related operations.  

Financial Performance

Turnover for the six months ended 30 June 2009 of £14.9m represents rent received from Barceló (2008H1: £13.7m). Operating profit of £13.0m (2008H1: £11.4m) substantially increased reflecting the benefit of the increase in rent and the reduction in overhead costs.

The loss on ordinary activities of £1.1m (2008H1: £3.7m) for the period is after deducting bank interest payable on the Company's senior facility and after deducting £2m of payments to bondholders of the Company's deep discounted bonds. Therefore before payments to bondholders, the Company showed a net profit of circa £1m.

Net bank interest payable decreased by £1m against the prior year period. This decrease reflects a combination of lower interest costs and the fact that the 2008H1 expense included the final tranche of amortisation of loan arrangement costs of £0.6m.

Anglo Irish Bank Debt Facility Extension and Issue of Equity

As announced on 14 May 2009 and subsequently on 13 July 2009, the Company has extended the term of its senior debt facility with Anglo Irish Bank Limited ("Anglo Irish"). This facility was due for repayment on 31 December 2009 but will now mature on 31 December 2012. In a volatile and difficult credit market, this extension by three years represents a key milestone in safeguarding the Company's financial position. The various conditions relating to the extension were fulfilled by 13 July 2009. Key features of the extension are:

The facility was reduced to £332.3m from its previous ceiling of £350m (of which £347.5m was drawn) on 13 July 2009. PHP funded this reduction, together with associated costs, by raising an additional £20m in new equity primarily from the Company's existing shareholders. 

The new equity was issued in the form of cumulative convertible preference shares. These preference shares bear a cumulative 7% p.a. coupon beginning in 2010 and are convertible into new ordinary shares on a 1 for 1 basis. Of the £20m subscribed, £11.77m was subscribed by The Hotel Corporation plc, the AIM-listed investment company which owns 49.92% of the Company's ordinary shares.

Anglo Irish have agreed that there will be no further loan to value covenant testing for the duration of the facility (i.e. up to and including 31 December 2012). This provides significant stability to shareholders in the current market.

The margin on the facility has increased from 1.75% to 2.5% from 13 July 2009.   

The maturity of the Group's outstanding bonds has also been extended to align it with the Bank facility, although approximately £2m of these bonds was, as previously scheduled, redeemed on 30 June 2009.  Also, as detailed in the Post Balance Sheet Date events section of this Statement, the outstanding bonds have been listed on the Channel Islands Stock Exchange.

Leases and Property Revaluation

The leases granted to Barceló place full repairing and insuring obligations on the tenant. Therefore, PHP does not fund maintenance expenditure other than, as previously reported, that PHP has agreed, as part of the lease arrangements, to make a £10m contribution for capital works over the first 10 years of the lease. Of this, £4.3m has already been contributed in accordance with the agreement (£1.4m of this was paid in September 2009).  

The leases also provide guaranteed rental growth over the first four years which is inflation-indexed thereafter and can also increase if hotel EBITDA performs well.  Therefore the asset values on the balance sheet of PHP reflect these lease arrangements.

For the purpose of preparing its 30 June 2009 interim financial statements, PHP has used the external professional valuation completed by the Company's valuers Colliers Robert Barry on 30 April 2009 for the purposes of the bank valuation.  This valuation of each property in the portfolio, which excludes land held for non-hotel development, is at £480m and is unchanged from 31 December 2008. The Board of PHP considers that the current value of the land held for development amounts to a further £3.5m.

Interest Rate Hedging

As part of the maturity extension agreement with Anglo Irish, the Company executed three interest rate SWAP agreements on 30 April 2009. These SWAP agreements relate to a principal amount of £182.345m and commence on 31 December 2009 when the current SWAP arrangement relating to this amount expires. The profile of these SWAPS is as follows:

31 December 2009 to 31 December 2010: 2.230%

31 December 2010 to 31 December 2011: 3.330%

31 December 2011 to 31 December 2012: 3.945%

The remaining £150m of the facility is already subject to an interest rate SWAP

agreement at a rate of 5.145% until 31 December 2014. The full benefit of the new SWAPS will accrue from the 2010 financial year, resulting in an annual interest cost saving of circa £3.5 million.

Development Plans 

In the past, PHP has successfully exploited the potential for gains in value through developing the portfolio by adding extra rooms, conference and other facilities. This programme is expected to continue and at present PHP has the potential to add approximately 800 rooms (over 25 per cent of the current estate) of which 370 rooms have already received the necessary planning or listed building consent. There are also schemes for 2,500 sq.m (over 60 per cent of which has planning consent) of additional meeting rooms and upgrades for several leisure clubs. The economics of adding these rooms can be highly attractive for both parties. The value of the development potential of the portfolio is not typically fully recognised in a professional valuation and PHP therefore believes that fulfilling the programme will add significantly to net asset value over time.

In order to realise these development plans PHP continues to monitor and protect planning permissions already granted. 

Strategy and Plans

PHP's transformation into a hotel property investment company in September 2007 has proven to be very advantageous. The guaranteed and escalating income from Barceló, a blue chip tenant, has meant that the Group has been better able to withstand the effects of the economic downturn brought about by the deterioration in the global financial markets. Whilst the value of the Group's assets over the last two years reflects some of the reduction in investment yields, cashflow has increased. Further, the extension of the maturity date of the senior debt to 31 December 2012 illustrates the confidence of our Lender and Shareholders in the Group's operating structure and represents a significant milestone for the Group.

In the medium term, there is the opportunity to unlock significant value by executing the Group's development plans and consider selective asset disposals as and when the investment market recovers. The Board considers that as the investment market recovers, the Group's assets should once again prove highly attractive because of the longevity of the leases and the associated indexation. The extended maturity of the senior debt provides the flexibility to optimise the potential returns to shareholders.

Post Balance Sheet Date Events

On 13 July 2009, the Company announced the completion of the refinancing of its bank borrowings. Under the terms of this refinancing, Puma Hotels has extended the term of its loan facilities with Anglo Irish by an additional three years to 31 December 2012. Details of the refinancing were provided earlier in this statement.

As approved by bondholders, the Group's deep-discount bonds have been listed on the Channel Islands Stock Exchange. The listing was completed on 21 August 2009. The listed bonds bear 12% interest, payable semi-annually. 

Prospects

The Company is well-placed to protect and grow value for shareholders. It has an attractive portfolio of assets which is let to a progressive tenant with a strong covenant. Cashflow will gradually improve and the Company is well placed to exploit any recovery in investment  values and pick-up in inflation.

Howard Shore

Chairman

23 September 2009

  INDEPENDENT REVIEW REPORT TO PUMA HOTELS PLC

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2009 which comprises the profit and loss account, the balance sheet, statement of total recognised gains and losses, the cash flow statement and related notes 1 to 5. We have read the other information contained in the half-yearly financial report 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 International Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to them in an independent 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 conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the United Kingdom Accounting Standards Board's Statement 'Half-Yearly Financial Reports'.

As disclosed in note 1, the annual financial statements of the company are prepared in accordance with United Kingdom Generally Accepted Accounting Practice. The condensed set of financial statements included in this half-yearly financial report have been prepared in accordance with the accounting policies the group intends to use in preparing its next annual financial statements.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly 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 inquiries, 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 condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2009 is not prepared, in all material respects, in accordance with United Kingdom Accounting Standards Board's Statement 'Half-Yearly Financial Reports'.

Deloitte LLP

Chartered Accountants and Registered Auditor

Leeds

23 September 2009  

Puma Hotels plc
Consolidated Profit and Loss Account
6 Months Ended 30 June 2009
	Unaudited 6 months ended 30 June 2009	Unaudited 6 months ended 30 June 2008	Audited Year ended  31 December 2008
	£'000	£'000	£'000
Turnover	14,877	13,696	28,455
Cost of Sales	-	-	-
Gross profit	14,877	13,696	28,455
Administrative Expenses	(1,909)	(2,333)	(4,540)
Deficit on revaluation of properties	-	-	(3,283)
Operating Profit	12,968	11,363	20,632
Interest receivable and similar income	17	26	71
Bank interest payable	(12,112)	(12,416)	(24,796)
Interest on shareholder loans	(1,983)	(1,989)	(4,000)
Other interest payable and similar charges	-	(675)	(686)
Total Interest payable and similar charges	(14,095)	(15,080)	(29,482)
Loss on ordinary activities before taxation	(1,110)	(3,691)	(8,779)
Tax on loss on ordinary activities	-	-	3
Retained loss for the financial period	(1,110)	(3,691)	(8,776)

No statement of Total Recognised Gains and Losses has been presented as all items have been reported in the profit and loss account.

   

Puma Hotels plc
Consolidated Balance Sheet
As at 30 June 2009
	Unaudited As at 30 June 2009	Unaudited As at 30 June 2008	Audited As at 31 December 2008
	£'000	£'000	£'000
Fixed assets
Intangible assets - Goodwill	8,221	8,742	8,481
Tangible assets	486,010	531,852	483,520
	494,231	540,594	492,001
Current Assets
Debtors	-	61	2,387
Cash at Bank and in hand	26,994	9,540	8,748
	26,994	9,601	11,135
Creditors amounts falling due within one year	(13,898)	(14,161)	(361,846)
Net current assets / (liabilities)	13,096	(4,560)	(350,711)
Total assets less current liabilities	507,327	536,034	141,290
Creditors amounts falling due after more than one year	(400,302)	(378,490)	(33,155)
Provision for liabilities	-	(3)	-
Net assets	107,025	157,541	108,135
Capital and reserves
Called up share capital	1,658	1,658	1,658
Share premium account	32,137	32,137	32,137
Revaluation reserve	105,104	149,425	105,104
Profit and loss account	(31,874)	(25,679)	(30,764)
Equity shareholders' funds	107,025	157,541	108,135

  

Puma Hotels plc
Consolidated Cash Flow Statement
6 Months ended 30 June 2009
	Unaudited 6 months ended 30 June 2009	Unaudited 6 months ended 30 June 2008	Audited Year ended 31 December 2008
	£'000	£'000	£'000
Net cash inflow from operating activities	15,311	5,979	18,621
Returns on investments and servicing of finance
Interest received	17	26	71
Interest paid	(13,289)	(13,106)	(26,480)
Interest paid on finance leases	-	(1)	(12)
Net cash outflow from returns on investments and servicing of finance	(13,272)	(13,081)	(26,421)
Taxation
Corporation tax paid	-	-	-
Capital expenditure
Purchase of tangible fixed assets	(2,490)	(792)	(1,564)
Net cash outflow before financing	(451)	(7,894)	(9,364)
Financing
Issue of preference share capital	20,000	-	-
New term loans raised	-	11,940	13,929
Bonds repaid	(1,110)	(1,259)	(2,448)
Term loan issue costs	(193)	(205)	(195)
Repayment of principal under finance leases	-	(21)	(153)
Net cash inflow from financing	18,697	10,455	11,133
Increase in cash	18,246	2,561	1,769

  Notes:

ACCOUNTING POLICIES

The interim financial information for the 6 months ended 30 June 2009 has been prepared in accordance with applicable United Kingdom accounting standards using policies consistent with those applied to the year ended 31 December 2008 and the 6 months ended 30 June 2008. The interim information, together with the comparative information contained in this report for the year ended 31 December 2008, does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. The interim financial information has not been audited by the Company's auditor. The interim financial information has been reviewed by the Company's auditor and the Independent review report is set out in this document. The statutory accounts for the year ended 31 December 2008 have been reported on by the Company's auditors, Deloitte LLP, and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985.

2. SEGMENTAL ANALYSIS

The Group's turnover, loss before taxation and net assets are derived from its principal activity within the UK and as such no segmental information has been disclosed.

3. RELATED PARTY TRANSACTIONS

The Group has been involved in transactions with companies within the Shore Capital Group: 

	Profit and loss  charge in the period £'000			Outstanding creditor at the period end £'000
Management fees charged by Shore Capital Limited to Puma Hotels plc			1,510	755

The management fee charged by Shore Capital Limited is based on 60 basis points of gross asset value per annum.

  

4.  RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES

				Unaudited  6 months ended  30 June 2009		Unaudited  6 months ended  30 June 2008		Audited  Year ended 31 December 2008
				£'000		£'000		£'000
Operating profit				12,968		11,363		20,632
Impairment of tangible fixed assets				-		-		3,283
Depreciation of tangible fixed assets				-		-		-
Amortisation of goodwill				260		260		521
Decrease / (Increase) in debtors				2,387		776		(68)
(Decrease) in creditors				(304)		(6,420)		(5,747)
Net cash inflow from operating activities				15,311		5,979		18,621

5. Post balance sheet date events

On 13 July 2009, the Company announced the completion of the refinancing of its bank borrowings. Under the terms of this refinancing, Puma Hotels has extended the term of its loan facilities with Anglo Irish by an additional three years to 31 December 2012.

As approved by bond-holders, the Group's deep-discount bonds have been listed on the Channel Islands Stock Exchange. The listing was completed on 21 August 2009.

ENDIR EAFNDASKNEFE

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