Publication of Annual Report and Notice of AGM

RNS Number : 7129F

PPHE Hotel Group Limited

29 April 2014

 



29 April 2014

PPHE Hotel Group Limited

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

Publication of Annual Report for the year ended 31 December 2013
and Notice of Annual General Meeting

PPHE Hotel Group Limited, which together with its subsidiaries (the "Group"), owns, leases, develops, operates and franchises full service upscale and lifestyle hotels in major gateway cities and regional centres, predominantly in Europe, announces that it has today published, and posted, its annual report and accounts for the year ended 31 December 2013 (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 Wednesday 11 June 2014 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 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 2013 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 19 March 2014.  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 / Katie Matthews	Tel: [phone]

Notes to Editors

PPHE Hotel Group Limited is a Guernsey registered company and through its subsidiaries, jointly controlled entities and associates, owns, leases, develops, operates and franchises 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 Group has an exclusive licence from Carlson, a global privately held 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 portfolio of owned, leased, managed and franchised hotels comprises 38 hotels in operation offering a total of more than 8,300 rooms.  The development pipeline includes four new hotel projects, one hotel extension and reconfiguration and two rebranding projects. These developments are expected to add over 1,200 rooms to our portfolio by 2017.

Our Brands:                             Our Company:

www.parkplaza.com                   www.pphe.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

29 April 2014

Appendix B: Related Party Transactions

a.  Balances with related parties:

	31 December
	2013  €'000	2012  €'000
Loan to associate - WH/DMREF Bora B.V.1	32,241	29,906
Loans to jointly controlled entities2	6,697	6,670
Loan to Red Sea Hotels Limited	9.991	-
Short-term receivables	196	89
Loans from jointly controlled entities2	6,762	6,737
Trade receivables - the Arenaturist group1	3,538	3,755

b.   Transactions with related parties:

	As at 31 December
	2013  €'000	2012  €'000
Management fees income - the Arenaturist group1	1,797	1,718
Reimbursement of expenses - the Arenaturist group1	376	357
Sales and marketing fees - the Arenaturist group1	722	693
Development management fees - the Arenaturist group1	-	547
Interest charges Gear Construction Management Limited (see (b) below	-	814
Construction management charges - Gear Construction Management Limited	804	664
Interest from associate - WH/DMREF Bora B.V.1	2,723	2,494
Interest income from jointly controlled entities	-	119

¹   The Group holds 20% of the equity in WH/DMREFBora B.V..

²   Includes loans bearing fixed interest of LIBOR+3% per annum.

Significant other transactions with related parties

a.   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 until September 2014. GC is also entitled to reimbursement of properly incurred expenses in connection with the provision of the services.

b.   In January 2012, Marlbray Limited 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 (such as overnight room stays and food and beverage) are being charged at market prices. These transactions occur occasionally.

d.   Compensation to key management personnel (Executive and Non-Executive Board members) for the year ended 31 December 2013:

	Base salary and fees €'000	Bonus	Pension contributions €'000	Other benefits €'000	Total €'000
Chairman and Executive Board	811	267	161	134	1,373
Non-Executive Board	168	-	-	-	168
	979	267	161	134	1,541

Directors' interests in employee share incentive plan

As at 31 December 2013, the Executive Board members hold share options to purchase 305,000 Ordinary shares. 95,000 options are fully exercisable with an exercise price of £1.00 (€1.23), these will expire in 2017. 210,000 options are exercisable in three equal tranches in 2013, 2014 and 2015 with an exercise price of £2.33 (€2.87); these will expire in 2022. No share options have been granted to Non-Executive members of the Board. The total costs in 2013 relating to options granted to key management staff amounts to £33,000.

e.   Compensation to key management personnel (Executive and Non-Executive Board members) for the year ended 31 December 2012:

	Base salary and fees €'000	Bonus	Pension contributions €'000	Other benefits €'000	Total €'000
Chairman and Executive Board	818	-	164	137	1,119
Non-Executive Board	165	-	-	-	165
	983	-	164	137	1,284

Director's interests in employee share incentive plan

As at 31 December 2012, the Executive Board members hold share options to purchase 305,000 Ordinary shares. 95,000 Options are fully exercisable with an exercise price of £1.00 (€1.23), these will expire in 2017. 210,000 options are exercisable in three equal tranches in 2013, 2014 and 2015 with an exercise price of £2.33 (€2.87); these will expire in 2022. No share options have been granted to Non-Executive members of the Board. The total costs in 2012 relating to options granted to key management staff amounts to £3,000.

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 majority of the Group's bank borrowings are primarily with two bank lenders and these financing arrangements contain either cross-collaterisation or cross-default provisions. Therefore, there is a risk that more than oneproperty may be affected by a default under these financing arrangements. 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 30(h) and 17 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 a 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 with the exception of the outstanding consideration in Thai Baht relating to the disposal of the site in Pattaya Bay, Thailand. After due and careful consideration, the Group decided not to hedge this currency risk.	Medium	Increased 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
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.	Low	Unchanged during the year
Development (projects) The Group has various ongoing development projects which are capital intensive. These development projects may increase the Group's expenses and reduce the Group's cash flows and revenues. If capital expenditures exceed the Group's expectations, this excess would have an adverse effect on the Group's available cash. There is a risk that such developments may not be available on favourable terms, that construction may not be completed on schedule or within budget, and that the property market conditions are subject to changes on environmental law and regulations, zoning laws and other governmental rules and fiscal policies.	The Group retains an ownership interest in the development sites and therefore it is well placed to capitalise on any future rises in property prices. The Group tends to enter into fixed price turn-key contracts in respect of its developments in order to minimise the risk of cost overrun. The Group draws on its previous experience in running and managing developments to manage potential development risks.	Medium	Unchanged during the year

 

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