Publication of Annual Report and Notice of AGM

RNS Number : 0058C

PPHE Hotel Group Limited

10 April 2013

 



10 April 2013

PPHE Hotel Group Limited

("PPHE Hotel Group", the "Group", or the "Company")

Publication of Annual Report for the year ended 31 December 2012 and Notice of Annual General Meeting

PPHE Hotel Group, owner, operator, developer and franchisor of hotels, announces that it has published, and posted, its Annual Report and Accounts for the year ended 31 December 2012 (the "Annual Report"), including the Notice of Annual General Meeting.  These documents are also available on the Company's website www.pphe.com

The Company's Annual General Meeting will be held on Monday 13 May 2013 at 12 noon at 1^st and 2^nd Floors, Elizabeth House, Les Ruettes Brayes, St Peter Port, Guernsey GY1 1EW.

Copies of the Annual Report and Notice of the Annual General Meeting and the Form of Proxy for use at the Annual General Meeting have been submitted to the National Storage Mechanism and will shortly be available for inspection at: www.hemscott.com/nsm.do

A condensed set of the financial statements for the year ended 31 December 2012 together with information on important events that occurred during that financial year and their impact on the financial statements were contained in the preliminary results announcement made on 5 March 2013.  That information, together with the information set out in the appendices to this announcement, which is extracted from the Annual Report, constitute the material required by Disclosure and Transparency Rule 6.3.5 which is required to be communicated to the media in full unedited text through a Regulatory Information Service.  References to notes to the accounts made in the following Appendices, refer to notes to the accounts in the Annual Report.  This announcement is not a substitute for reading the Annual Report.

Enquiries: PPHE Hotel Group Limited
Chen Moravsky, Chief Financial Officer	Tel: [phone]
Hudson Sandler
Wendy Baker / George Parker	Tel: [phone]

Note to editors:

PPHE Hotel Group Limited (formerly Park Plaza Hotels Limited) is a Guernsey registered company, which, through its subsidiaries, jointly controlled entities and associates, owns, leases, operates, franchises and develops full service upscale and lifestyle hotels in major gateway cities and regional centres, predominantly in Europe.

The majority of the Group's hotels operate under two distinct brands, Park Plaza® Hotels & Resorts and art'otel® . The Company has an exclusive licence from Carlson^SM, a global privately owned hospitality and travel company, to develop and operate Park Plaza® Hotels & Resorts in Europe, the Middle East and Africa. The art'otel® brand is fully owned by the Group.

The Group has a minority ownership interest in the Arenaturist group, one of Croatia's leading hospitality companies. The Group's portfolio of owned, leased, managed and franchised hotels comprises 38 hotels offering a total of more than 8,200 rooms. Its development pipeline includes four new hotels, which together are expected to add nearly 800 rooms to the portfolio by the end of 2015.

Our company:

www.pphe.com

Our brands:

www.parkplaza.com

www.artotels.com

www.arenaturist.com

For images and logos visit www.vfmii.com/parkplaza

Forward-looking statements

This document may contain certain "forward-looking statements" which reflect the Company's and/or the directors' current views with respect to financial performance, business strategy and future plans, both with respect to the Group and the sectors and industries in which the Group operates. Statements which include the words "expects", "intends", "plans", "believes", "projects", "anticipates", "will", "targets", "aims", "may", "would", "could", "continue" and similar statements are of a future or forward-looking nature. All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause the Group's actual results to differ materially from those indicated in these statements. Any forward-looking statements in this document reflect the Group's current views with respect to future events and are subject to risks, uncertainties and assumptions relating to the Group's operations, results of operations and growth strategy. These forward-looking statements speak only as of the date of this document. Subject to any legal or regulatory obligations, the Company undertakes no obligation publicly to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. All subsequent written and oral forward-looking statements attributable to the Group or individuals acting on behalf of the Group are expressly qualified in their entirety by this paragraph. Nothing in this publication should be considered as a profit forecast.

Appendices

Appendix A: Responsibility Statement

The board of directors ("Board") confirms to the best of its knowledge that the consolidated financial statements, which have been prepared in accordance with IFRS as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit and loss of the Group and the undertakings included in the consolidation taken as a whole.

The Business review, the Chairman's statement, the Chief Executive Officer's statement and the Chief Financial Officer's statement, all of which are contained in the Annual Report, include a fair view of the development and performance of the business, the position of the Group and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face and provides information necessary for shareholders to assess the Company's performance, business model and strategies.

By Order of the Board

Boris Ivesha

President and Chief Executive Officer

Chen Moravsky

Chief Financial Officer

10 April 2013

Appendix B: Related Party Transactions

Note 29 Related Parties

a.  Balances with related parties:

	31 December
	2012  €'000	2011  €'000
Loans to jointly controlled entities2	6,670	19,829
Loan to associate - WH/DMREF Bora B.V.1	29,906	27,453
Short-term receivables	89	2,073
Loans from jointly controlled entities3	6,737	19,232
Trade receivables - the Arenaturist group1	3,755	4,856
Trade payables - WW Gear Construction Limited	-	4,431
Short-term payables - WW Gear Construction Limited	-	51
Short-term payables - other	-	11

b.   Transactions with related parties:

	As at 31 December
	2012  €'000	2011  €'000
Management fees income - the Arenaturist Group1	1,718	1,366
Reimbursement of expenses - the Arenaturist Group1	357	298
Sales and marketing fees - the Arenaturist Group1	693	1,472
Development management fees - the Arenaturist Group1	547	358
Interest charges Gear Construction Management Limited (see Note 29ba)	814	-
Construction management charges - Gear Construction Management Limited	664	2,515
Interest from associate - WH/DMREF Bora B.V.1	2,494	2,288
Interest income from jointly controlled entities	119	757

¹ The Group holds 20% of the equity in WH/DMREFBora B.V. (see Note 8).

² Includes loans to jointly controlled entities in the amount of €6.7 million (2011: €19.1 million) bearing fixed interest of LIBOR +3% per annum.

³ Includes loans from jointly controlled entities in the amount of €6.7 million (2011: €10.6 million) bearing an interest of LIBOR+3% per annum.

Significant other transactions with related parties

a.   In January 2012, Park Plaza Hotels (UK) Services Limited, a wholly-owned subsidiary of the Company, entered into a framework agreement with GC Project Management Limited ("GC") for the provision of project management services by GC to the Group for a fixed monthly fee of £45,000 (plus VAT) for a period of 36 months with effect from September 2011. GC is also entitled to reimbursement of properly incurred expenses in connection with the provision of the services.

b.   In January 2012, Marlbray Limited, a wholly owned subsidiary of the Company, repaid the remaining outstanding balance with GC for the construction of the Park Plaza Westminster Bridge London, including an interest charge for late payment of £659,000.

c.   Transactions in the ordinary course of business, in connection with the use of hotel facilities are being charged at market prices. These transactions occur occasionally.

The remuneration of the directors, who are the key management personnel of the Group, is disclosed in the Annual Report.

There were no other material related party transactions during the year ended 31 December 2012.

Appendix C: Our principal risks and uncertainties

Risk and Impact	Mitigation	Grading	Year-on-year
Information technology and systems The Group is reliant on certain technologies and systems for the operation of its business. Any material disruption or slowdown of the Group's information systems, especially any failures relating to its reservation system, could cause valuable information to be lost or operations to be delayed. In addition, the Group and its hotels maintain personal customer data, which is shared with and retained by the Group's partners. Such information may be misused by employees of the Group or its partners or other outsiders if there is an inappropriate or unauthorised access to the relevant information systems.	The Group invests in appropriate IT systems so as to obtain as much operational resilience as possible. Further, a variety of security measures is implemented in order to maintain the safety of personal customer information.	High	Unchanged during the year
Market and hotel industry risks The Group's operations and their results are subject to a number of factors that could adversely affect the Group's business, many of which are common to the hotel industry and beyond the Group's control, such as the global economic downturn, changes in travel patterns or in the structure of the travel industry and the increase of acts of terrorism. The impact of any of these factors (or a combination of them) may adversely affect sustained levels of occupancy, room rates and/or hotel values.	Although management continually seeks to identify risks at the earliest opportunity, many of these risks are beyond the control of the Group. The Group has in place contingency and recovery plans to enable it to respond to major incidents or crises and takes steps to minimise these exposures to the greatest extent possible.	High	Unchanged during the year
The Group's borrowings The Group is exposed to a variety of risks associated with the Group's existing bank borrowings and its ability to satisfy debt covenants. Failure to satisfy obligations under any current or future financing arrangements could give rise to default risk and require the Group to refinance its borrowings.	The Board monitors funding needs regularly. Financial covenant ratios are monitored and sensitised as part of normal financial planning procedures. For details of the Company's hedging arrangements and financial covenants, please refer to Notes 17 and 31h to the Consolidated financial statements.	Medium	Unchanged during the year
Fixed operating expenses The Group's operating expenses, such as personnel costs, operating leases, information technology and telecommunications, are to a large extent fixed. As such, the Group's operating results may be vulnerable to short-term changes in its revenues.	The Group has appropriate management systems in place (such as staff outsourcing) designed to create flexibility in the operating cost base so as to optimise operating profits in volatile trading conditions.	Medium	Unchanged during the year
Foreign exchange rate fluctuations The exchange rates between the functional currency of the Group's subsidiaries operating outside the Eurozone, and the Euro (the reporting currency for the purposes of the Consolidated financial statements) may fluctuate significantly, affecting the Group's financial results. In addition, the Group may incur currency transaction risk in the event that one of the Group companies enters into a transaction using a different currency from its functional currency.	The Group eliminates currency transaction risk by matching commitments, cash flows and debt in the same currency.	Low	Unchanged during the year
The Park Plaza® Hotels & Resorts brand and reservation system The Group's rights to the Park Plaza® Hotels & Resorts brand stem from a territorial licence  agreement with CarlsonSM, pursuant to which the Group has the exclusive right to use (and to  sub-license others to use) the Park Plaza® Hotels & Resorts trademark in 56 countries within the EMEA region. This agreement also allows the Group to use CarlsonSM's highly cost-effective central reservation system. Failure to maintain these rights could adversely affect the Group's brand recognition and its profitability.	The Group's rights to use the Park Plaza® Hotels & Resorts brand and CarlsonSM's central reservation system are in perpetuity. This unique and exclusive partnership is reinforced by the Group's continued focus on operational efficiency and portfolio growth through its intensified cooperation with CarlsonSM.	Low	Unchanged during the year
Guaranteed return of investment to Park Plaza Westminster Bridge London unit holders Marlbray Limited, the freehold owner of Park Plaza Westminster Bridge London, and the Company have guaranteed (directly or indirectly) to all (but four) of the purchasers of units in Park Plaza Westminster Bridge London a 5% or 6% return on their investment (with the exception of two units in respect of which the guaranteed annual return is less than 5%) for a period of five years from the second month of completion. To the extent that net income is less than the guaranteed return, Marlbray and the Company will be obliged to make up any shortfall.	Marlbray is entitled to receive and retain all net income generated by the units sold during the term of the guarantees and if such income exceeds guaranteed return, Marlbray benefits from the surplus. This arrangement, combined with a regular monitoring of revenues, allows management to effectively control costs and to minimise the impact of any shortfalls.	Low	Unchanged during the year
Key senior personnel and management The success of the Group's business is partially attributable to the efforts and abilities of its senior managers and key executives. Failure to retain its executive management team or other key personnel may threaten the success of the Group's operations.	The Group has appropriate systems in place for recruitment, reward and compensation and performance management. Development and maintenance of a Group culture also plays a leading role in minimising this risk. The Group has further enhanced its management structure by appointing a Director of Revenue, Director of Sales and Director of Health & Safety.	Low	Unchanged during the year

 

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