Interim Results

Peel Hotels PLC 05 October 2005 Peel Hotels PLC Interim Results For the 28 week period ended 28 August 2005 â€¢ Turnover up 17.6% to Â£7,989,456 (2004 - Â£6,794,715) â€¢ Operating Profit up 10.4% to Â£1,649,598 (2004 - Â£1,494,846) â€¢ Profit before tax increased 28.9% to Â£1,000,568 (2004 - Â£776,467) â€¢ 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 from the three hotels acquired on 16 May 2005 which nullified any impact from the conclusion of the Management Contract with Grace Hotels Ltd. There is still considerable 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 Â£7,989,456 and operating profit increased by 10.4% to Â£1,649,598. Earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 10.3% to Â£2,184,541. Profit before tax increased 28.9% to Â£1,000,568 reflecting the purchase of the three leasehold hotels from Grace Hotels on 16 May 2005. This transaction neatly concluded our Management Contract with Grace Hotels that had begun in the autumn of 1998. We pointed out, in the Annual Report, that the company would benefit from Libor being in excess of 4.99% at the fixing date 12 April 2005 and that we would benefit from 2% annualised savings on Â£7 million of our debt until 12 October 2005. The acquisition, together with a lesser overall cost of borrowing, have accelerated profit progress during the period and more than compensated for Â£86,181 lost management income in comparison to the previous year. Our previous portfolio of six hotels increased sales overall in the period by 2.2% and accommodation revenue per available room (revpar) increased by 1% with average room rate up by 3.9% and occupancy down 2.7%. Gross profit on these hotels increased 2.8% whilst our three new hotels collectively produced a healthy Â£302,622 contribution to gross profit. Group overheads increased 22.3% or by Â£72,350, of which Â£18,000 was spent on training and Â£25,000 of the increase was due to a rates rebate in the previous year. Depreciation increased Â£48,898 to Â£534,943 in the period. Tax has been provided at 30% less the discount on the deferred tax liabilities giving an effective rate of 25%. Basic earnings per share were 5.9p compared with 4.8p in the comparative period on a weighted 12,620,457 shares. The Company now has 12,787,123 shares in issue, having successfully placed 666,666 shares at 90p each which part funded the Â£2.75 million acquisition on 16 May 2005. FINANCE On 28 August 2005 net debt stood at Â£17,083,392 representing loans totalling Â£17,329,182 (including the additional Â£2.5 million ten year loan drawn down to finance our recent acquisition) and an overdraft of Â£4,688 less Â£250,478 cash at bank. Gearing on shareholders' funds was 109% with interest covered 2.5 times. Net debt increased Â£1,146,698 compared with the previous year end. The libor rate on our 'cap and collar' on Â£7 million of our debt is due for re-fixing on 11 October 2005 and unfortunately at the time of writing, with libor trending at 4.5%, it looks unlikely that we will benefit from the 2% annualised saving on Â£7 million that we are currently enjoying. CAPITAL EXPENDITURE Â£339,589 was spent in the period with just under half being spent on the Avon Gorge Hotel in Bristol. We are in the process of lodging some seven planning applications with a view, over the longer term, to develop the site out to its maximum potential and in such a way that benefits the local residents who are an integral part of life in Clifton, and that satisfies the planners and English Heritage. The process of seeking planning for some eighty five apartments with car parking on our redundant 0.8 acre site on Salem Street in Bradford continues, whilst we derive income from contract car parking in the meantime. Elsewhere throughout the company we strive to keep all our properties well maintained whilst continuing to increase benchmark standards in terms of comfort and facilities. SHAREHOLDERS We would encourage shareholders to visit our hotels and take advantage of our shareholders' discount scheme. All shareholders are entitled to a 25% discount off the listed tariff, using a special reservations number, 020 7266 1100 or email info@peelhotel.com. Shareholders can identify the hotels we own using the directory listed at the back of the interim report. THE FUTURE Revpar has continued to grow on the back of an ever improving product and translates into profit growth. We need to be vigilant to the pressures of wage growth and of operating cost growth. The substantial hike in the costs of energy, rates and statutory items in particular, are very difficult to control. There is still considerable scope to improve performance within the portfolio and we are confident that we can continue to progress. PROFIT AND LOSS ACCOUNT For 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 Â£ Â£ Â£ Â£ Â£ Â£ Turnover Original group 6,790,513 6,644,926 12,268,058 Discontinued 63,608 149,789 284,701 business Acquisitions 1,135,335 - - Total turnover 7,989,456 6,794,715 12,552,759 Cost of Sales (5,408,816) (4,490,075) (8,519,697) Gross profit Original group 2,214,410 2,154,851 3,748,361 Discontinued 63,608 149,789 284,701 business Acquisitions 302,622 - - Total gross 2,580,640 2,304,640 4,033,062 profit Administrative expenses Depreciation (534,943) (486,045) (902,655) Other (396,099) (323,749) (647,408) (931,042) (809,794) (1,550,063) Operating profit Original group 1,372,446 1,345,057 2,198,298 Discontinued 63,608 149,789 284,701 business Acquisitions 213,544 - - Total 1,649,598 1,494,846 2,482,999 operating profit Interest payable & similar (649,030) (718,379) (1,301,892) charges Profit on ordinary activities before 1,000,568 776,467 1,181,107 taxation Taxation 2 (250,142) (194,117) (272,094) Profit on ordinary activities after taxation 750,426 582,350 909,013 Dividend - - (545,421) Profit 750,426 582,350 363,592 retained Earnings per 3 share Basic 5.9p 4.8p 7.5p Diluted 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 Â£ Â£ Â£ Fixed assets 35,362,717 32,850,150 32,657,793 Current assets Stocks 123,111 102,374 93,729 Debtors 1,107,321 974,479 1,045,243 Cash at bank and in hand 250,478 158,323 147,137 1,480,910 1,235,176 1,286,109 Creditors (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 30,278,360 liabilities Creditors (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 reserves Called up share capital 1,278,712 1,212,046 1,212,046 Share premium account 9,013,772 8,519,477 8,519,477 Profit and loss account 5,361,071 4,829,403 4,610,645 Equity shareholders' funds 4 15,653,555 14,560,926 14,342,168 CASH FLOW STATEMENT For 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 Â£ Â£ Â£ Â£ Â£ Â£ Net cash inflow from operating 5 2,697,407 2,064,039 3,314,153 activities Returns on investments and servicing of finance Interest paid (634,335) (671,728) (1,294,185) Net cash outflow from returns on investments and servicing (634,335) (671,728) (1,294,185) of finance Taxation UK corporation 8,190 - (120,728) tax received/ (paid) Tax paid 8,190 - (120,728) Capital expenditure Purchase of (3,239,867) (491,794) (716,047) tangible fixed assets Net cash outflow from capital expenditure (3,239,867) (491,794) (716,047) Equity (545,421) (509,059) (509,059) dividend paid Net cash (outflow)/ inflow before financing (1,714,026) 391,458 674,134 Financing Issue of 599,999 - - ordinary share capital Share issue (39,038) - - expenses New loans 2,500,000 1,000,000 1,000,000 Loan (496,135) (492,270) (1,488,405) repayments Net cash inflow/ (outflow) from financing 2,564,826 507,730 (488,405) Increase in 6 850,800 899,188 (185,729) cash Reconciliation of net debt Increase in 850,800 899,188 (185,729) cash in the period Cash (inflow)/ outflow from (increase)/ (2,003,865) (507,730) 488,405 decrease in debt Change in net (1,153,065) 391,458 674,134 debt resulting from cashflows Non cash 6,367 (14,217) (26,403) changes Reduction in (1,146,698) 377,241 647,731 net debt in the period Net debt at (15,936,694) (16,584,425) (16,584,425) beginning of period Net debt at 6 (17,083,392) (16,207,184) (15,936,694) end of period NOTES TO THE INTERIM ACCOUNTS For the period ended 28 August 2005 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 13 February 2005 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 auditors reported on those accounts, their report was unqualified. The interim financial statements have been reviewed by the company's auditors. A copy of the auditors 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. 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 28/8/2005 29/8/2004 13/2/2005 Unaudited Unaudited Audited Average 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 Audited Profit for the period 750,426 582,350 909,013 Dividends and other appropriations - - (545,421) 750,426 582,350 363,592 Issue of shares less expenses 560,961 - - Net increase in shareholders' funds 1,311,387 582,350 363,592 Shareholders' funds at 14/02/05 14,342,168 13,978,576 13,978,576 Shareholders' funds at 28/08/05 15,653,555 14,560,926 14,342,168 5. Reconciliation of operating profit to net cash inflow from operating activities 28 weeks 28 weeks Year ended ended ended 28/8/2005 29/8/2004 13/2/2005 Unaudited Unaudited Audited Â£ Â£ Â£ Operating profit 1,649,598 1,494,846 2,482,999 Depreciation 534,943 486,045 902,655 Increase 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 Â£ Â£ Â£ Cash at bank and in hand 147,137 103,341 - 250,478 Bank 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 by semi-annual instalments plus a final payment on 11 April 2014. The company has a collar agreement on Â£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 October 2009, except where LIBOR falls below 4.99% between 24 June 2003 and 12 October 2009; in which case an additional 2% of interest is payable. In addition, the company has an interest rate swap agreement on the outstanding loan balances which are not covered by the collar agreement, commencing on 11 April 2003 to 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 receives interest at LIBOR plus 1.25% and pays interest at a fixed rate of 7.08%. The new loan of Â£2.5 million, which part financed the acquisition of the 3 new hotels, 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 for the 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 and the related notes 1 to 7. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Our responsibilities do not extend to any other information. This report is made solely to the company's members, as a body in accordance with guidance contained in APB Bulletin 1999/4 'Review of Interim Financial Information'. Our review work has been undertaken so that we might state to the company's members 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 and the company's members as a body, for our review work, for this report, or for the conclusions we have formed. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by the directors. They are responsible for preparing the interim report and ensuring that the accounting policies and presentation applied to the interim figures are consistent with those applied in preparing the preceding annual accounts except where any changes, 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 Board for use in the United Kingdom. A review consists principally of making enquiries of management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the 28 weeks ended 28 August 2005. Grant Thornton UK LLP Chartered Accountants 05 October 2005 This information is provided by RNS The company news service from the London Stock Exchange

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