RNS Number:7909J
Peel Hotels PLC
09 April 2003
PEEL HOTELS PLC
PRELIMINARY ANNOUNCEMENT
Derived from the audited results for financial year ended 16 February 2003
PEEL HOTELS PLC
HIGHLIGHTS
*Acquisition of two hotels, on 10 June 2002, with a combined cost of #9.8
million.
*Turnover up by 23.9% to #11.0 million (2002 - #8.9 million)
*Operating profit up by 17.9% to #2.7 million (2002 - #2.3 million)
*Pre-tax profits grew by 16.1% to #1.76 million (2002 - #1.52 million)
*'Revpar' (accommodation revenue per available room) improved by 7.8%.
*Dividend increased by 14.3% to 4.0p per share (2002 - 3.5p per share)
PRESS ENQUIRIES TO ROBERT PEEL 020 7266 1100
CHAIRMAN'S STATEMENT
RESULTS
Turnover grew 23.9% to #11,000,362 and operating profit grew 17.9% to
#2,708,779. Earnings before interest, tax,
depreciation and amortisation grew from #2,808,312 to #3,374,182, an increase of
20.1%.
The pre-tax result increased 16.1% to #1,760,528 from #1,515,958. After a full
tax provision of 30% less allowances, earnings per share were 10.9p basic and
10.6p on a diluted basis, a decline of 10.0% and 8.6% respectively on the
previous year as a result of the larger average number of shares in issue.
Shareholders should note that the charge for depreciation increased to #665,403
some #155,503 or 30% more than the previous year as a consequence of the Board's
strategy of continually upgrading its properties.
The results include trading from the acquisition of the freeholds and businesses
of the Avon Gorge Hotel, Bristol, and the George Hotel, Wallingford, from 10
June 2002 and which are split out in the accounts.
As at 16 February 2003, net debt stood at #16,746,809 representing loans
totalling #16,751,823 and an overdraft of #129,349 less #134,363 cash at bank.
Gearing on shareholders' funds was 124.6% with interest covered 2.9 times.
For the year as a whole 'Revpar' (accommodation revenue per available room) on
an increased number of rooms owned improved by 7.8%. Room sales increased 29.9%
on the previous year, reflecting the new acquisitions.
In general terms profit growth slowed in the second half particularly due to
comparatively low sales growth, increased costs and, in the case of Leeds,
increased competitive product coming on stream. The Caledonian Hotel in
Newcastle continued to grow its revenues strongly, whilst the new acquisitions
performed to plan.
The fall in management fee income to #696,363 from #719,780 was rather less than
expected. There are seven hotels remaining within the Grace Hotel portfolio of
which several are likely to be sold imminently. Income from this source will
come to an end in 2003/2004 and, as was stated in the half-year report, the
challenge is to compensate the loss of earnings from this source, through group
overhead cost reduction and improved performance in our existing and two
recently acquired hotels.
Group overhead reduction continued in the year with a further #31,761 saving
made. We are in the process of installing a new property management/head office
accounting system, which will be seamless and personal computer based, and will
enable us to make further savings on overheads. A further benefit will be an
integrated guest history system, which will optimise our sales and marketing
activity.
We were very pleased to have received the 'Best Service Award 2002' for the
Caledonian Hotel, Newcastle from North East One, which is part of the
Northumbrian Tourist Authority. The award was won against stiff competition in
the north east of England.
The Board has recommended increasing the dividend from 3.5p to 4.0p per share,
amounting to #484,818, which, if approved by shareholders, will be paid on
Friday 16 May 2003 to shareholders on the register at 22 April 2003.
CAPITAL EXPENDITURE
In addition to #9,774,884 inclusive of stamp duty and fees expended on the
acquisition of the Avon Gorge Hotel and the George Hotel, a sum of #1,239,852
was spent in the year.
A total of 20 bedrooms have been rebuilt at the Bull, Peterborough, with a
further nine currently under re-construction. At the Caledonian Hotel,
Newcastle, 17 bedrooms were refurbished and the Billabong Bar further extended.
The provision of a new passenger lift at the Midland Hotel, Bradford, is well
under way and expected to be operational in May 2003. The programme of continual
investment in our owned hotels will persist in the current year in line with our
strategy of improving the quality of our portfolio to the standard expected of
four star hotels.
We have finally received planning permission to demolish Aire House in Leeds to
expand the Golden Lion Hotel by 45 bedrooms and create a new retail area in what
is currently the Hakuna Matata Bar. In view of the considerable amount of new
hotels that have opened and are about to open in Leeds, the Board is currently
reviewing its options, either to proceed with the development plan, dispose of
the property or retain it as an investment property for a further period of
time.
In addition to capital improvements, keeping our hotels well maintained is an
important part of our strategy of winning over clients from competing hotel
groups, and each hotel has a comprehensive rolling maintenance plan expensed
from its profit and loss account.
THE FUTURE
It is not going to get any easier for hotel companies within the current
economic climate and with the current war in Iraq, which will destabilise
tourism.
The location of Peel Hotels and the continuing re-investment programme give us
opportunities to increase profits. We are not reliant on international tourism
and are well placed to benefit from the increased Government spending which is
currently underway.
In a difficult market place we believe we can continue to grow 'Revpar' in the
current year and obtain further benefit in sales and profit from the
considerable effort we put into our food and beverage concepts and operations.
In simple terms, our focus in the current year is the challenge of lifting the
profit performance of our owned hotels to compensate for the loss of the income
derived from the Management Contract.
ROBERT PEEL
CHAIRMAN
PROFIT AND LOSS ACCOUNT
For the financial year ended 16 February 2003
52 weeks to 52 weeks to
Note 16 February 2003 17 February 2002
# # # #
---------------------- ------ -------- -------- -------- --------
Turnover
Continuing operations 8,899,052 8,875,183
Acquisitions 2,101,310 -
--------------------- ------ -------- -------- -------- --------
Total Turnover 11,000,362 8,875,183
--------------------- ------ -------- -------- -------- --------
Cost of sales
Continuing operations (5,507,963) (5,341,380)
Acquisitions (1,424,485) -
--------------------- ------ -------- -------- -------- --------
Total Cost of Sales (6,932,448) (5,341,380)
--------------------- ------ -------- -------- -------- --------
Gross profit
Continuing Operations 3,391,089 3,533,803
Acquisitions 676,825 -
--------------------- ------ -------- -------- -------- --------
Total Gross Profit 4,067,914 3,533,803
Administrative Expenses
Depreciation (665,403) (509,900)
Other (693,732) (725,491)
(1,359,135) (1,235,391)
--------------------- ------ -------- -------- -------- --------
Operating profit 2,708,779 2,298,412
Interest payable and similar charges (1,006,344) (814,892)
Other interest receivable and similar income 58,093 32,438
--------------------- ------ -------- -------- -------- --------
Profit on ordinary activities before taxation 1,760,528 1,515,958
Taxation (440,133) (378,990)
--------------------- ------ -------- -------- -------- --------
Profit on ordinary activities after taxation 1,320,395 1,136,968
Dividends 1 (484,818) (424,216)
--------------------- ------ -------- -------- -------- --------
Profit retained 835,577 712,752
--------------------- ------ -------- -------- -------- --------
Earnings per share 2
Basic 10.9p 12.1p
Diluted 10.6p 11.6p
There are no recognised gains and losses for the current financial year and
preceding financial year other than the retained profit of #835,577 (2002 -
#712,752) shown above.
Operating profit has not been analysed between acquisitions and continuing
operations as required by Financial Reporting Standard 3. This is on the grounds
that the businesses have been fully integrated and, as a result, separate
records of administrative expenses of the acquired operations are not
maintained.
BALANCE SHEET
As at 16 February 2003
16 February 17 February
2003 2002
# #
--------------------- --------- --------
Fixed assets
Tangible assets 32,365,051 22,015,718
--------------------- --------- --------
Current assets
Stocks 76,672 56,211
Debtors 870,436 753,696
Cash at bank and in hand 134,363 2,917,489
--------------------- --------- --------
1,081,471 3,727,396
Creditors (due within one year) (3,298,041) (2,778,516)
--------------------- --------- --------
Net current liabilities (2,216,570) 948,880
--------------------- --------- --------
Total assets less current liabilities 30,148,481 22,964,598
Creditors (due after one year) (15,767,283) (9,644,323)
Provision for liabilities & charges (948,540) (687,871)
--------------------- --------- --------
Total assets 13,432,658 12,632,404
--------------------- --------- --------
Capital and reserves
Called up share capital 1,212,046 1,212,046
Share premium account 8,519,477 8,554,800
Profit and loss account 3,701,135 2,865,558
--------------------- --------- --------
Equity shareholders' funds 13,432,658 12,632,404
--------------------- --------- --------
CASH FLOW STATEMENT
For the financial year ended 16 February 2003
52 weeks to 52 weeks to
Note 16 February 17 February
2003 2002
# # # #
------------------------- ----- -------- -------- -------- --------
Net cash inflow from operating activities 3 3,635,528 3,072,919
Returns on investments and servicing of finance
Interest paid (768,714) (811,908)
Net cash outflow from returns on investments and
servicing of finance (768,714) (811,908)
Taxation
UK corporation tax paid (272,345) (241,287)
------------------------- ----- -------- -------- -------- --------
Tax paid (272,345) (241,287)
Capital expenditure
Purchase of tangible fixed assets (1,239,852) (1,238,874)
------------------------- ----- -------- -------- -------- --------
Net cash outflow from capital expenditure (1,239,852) (1,238,874)
Acquisition of businesses (9,774,884) -
Equity dividend paid (424,216) (260,000)
------------------------- ----- -------- -------- -------- --------
Net cash (outflow)/inflow before financing (8,844,483) 520,850
Financing
Issue of ordinary share capital - 3,004,798
Less: share issue cost * (35,323) (168,649)
New long term loans 7,150,000 -
Less: loan arrangement fees (97,960) -
Loan repayments (667,270) (593,750)
------------------------- ----- -------- -------- -------- --------
Net cash inflow from financing 6,349,447 2,242,399
------------------------- ----- -------- -------- -------- --------
(Decrease)/increase in cash 4 (2,495,036) 2,763,249
------------------------- ----- -------- -------- -------- --------
Reconciliation of net debt
(Decrease)/increase in cash (2,495,036) 2,763,249
(Increase)/decrease in debt (6,384,770) 593,750
(Increase)/reduction in net debt resulting from cash flows (8,879,806) 3,356,999
------------------------- ----- -------- --------
Non cash changes (48,980) (19,728)
(Increase)/reduction in net debt in the year (8,928,786) 3,337,271
Net debt at beginning of year (7,818,023) (11,155,294)
------------------------- ----- -------- --------
Net debt at end of year 4 (16,746,809) (7,818,023)
------------------------- ----- -------- --------
Purchase of tangible fixed assets include #34,526 relating to acquisitions.
All other cash flows have not been analysed between acquisitions and continuing
operations as required by Financial Reporting Standard 1. This is on the grounds
that the businesses have been fully integrated and, as a result, separate
records of the acquired operations are not maintained.
* These costs relate to the prior year equity issue.
NOTES TO THE ACCOUNTS
Financial Year Ended 16 February 2003
1. Dividends
2003 2002
# #
Final proposed dividend of 4p per share (2002 - 3.5p) 484,818 424,216
------------------------------------- -------- --------
2. Earnings per share
Basic
Calculated on the average number of shares in issue 12,120,457 9,397,276
during the year and on profit after taxation #1,320,395 #1,136,968
Diluted
Calculated on average of number of shares 12,436,057 9,768,016
available during year and on the profit after taxation #1,320,395 #1,136,968
------------------------------------- -------- --------
In calculating the diluted earnings per share, the weighted average number of
shares is adjusted for the dilutive effect of the share options by 315,600 (2002
- 370,740), giving an adjusted number of shares of 12,436,057 (2002 -
9,768,016).
3. Reconciliation of operating profit to net cash inflow from operating activities
------------------------------------- -------- --------
2003 2002
# #
------------------------------------- -------- --------
Operating profit 2,708,779 2,298,412
Depreciation charges 665,403 509,900
(Increase)/decrease in stocks (20,461) 4,741
(Increase)/decrease in debtors (87,124) 123,385
Increase in creditors 368,931 136,481
------------------------------------- -------- --------
Net cash inflow from operating activities 3,635,528 3,072,919
------------------------------------- -------- --------
4. Analysis of net debt
------------------------ -------- -------- -------- --------
At beginning Non
of year Cash Cash At end of year
# Flow Changes #
# #
------------------------ -------- -------- -------- --------
Cash at bank and in hand 2,917,489 (2,783,126) - 134,363
Bank overdrafts (417,439) 288,090 - (129,349)
------------------------ -------- -------- -------- --------
2,500,050 (2,495,036) - 5,014
Debt due within one year (673,750) (310,790) (984,540)
Debt due after one year (9,644,323) (6,073,980) (48,980) (15,767,283)
------------------------ -------- -------- -------- --------
Total (7,818,023) (8,879,806) (48,980) (16,746,809)
------------------------ -------- -------- -------- --------
5. Acquisitions
On 10 June 2002 the company acquired the Avon Gorge Hotel, Bristol and the
George Hotel, Wallingford and has accounted for them under acquisition
accounting as required by the Financial Reporting Standard 6.
Fair Value of Net Assets Acquired
Avon Gorge George Hotel Total
Hotel
# # #
Tangible fixed assets 6,849,858 2,925,026 9,774,884
Stocks 12,320 12,102 24,422
Debtors 6,564 9,045 15,609
Prepayments 3,874 5,038 8,912
Creditors (22,758) (26,185) (48,943)
----------------------- --------- --------- ---------
Net assets acquired 6,849,858 2,925,026 9,774,884
----------------------- --------- --------- ---------
Satisfied by:
Cash 6,600,000 2,800,000 9,400,000
Expenses 249,858 125,026 374,884
----------------------- --------- --------- ---------
6,849,858 2,925,026 9,774,884
----------------------- --------- --------- ---------
Book values, as recorded in the vendor's books immediately before the
acquisition, are not available. Accordingly, their disclosure as required by
Financial Reporting Standard 6 is not provided.
Turnover and cost of sales for the acquired hotels in the period 17 February
2002 to 10 June 2002 (the date of acquisition) was #981,170 and #694,728
respectively. Additional disclosures of profits for the acquired hotels prior to
the acquisition, as required by Financial Reporting Standard 6 for substantial
acquisitions, are not provided. This is due to the fact that the hotels acquired
formed part of a larger portfolio owned by the vendor, and the necessary
information on operating expenses, interest and tax is not available.
6. The financial information set out above does not constitute the
company's statutory accounts for periods ended 16 February 2003 and February
2002 but is derived from those accounts. Statutory accounts for 2002 have been
delivered to the Registrar of Companies and those for 2003 will be delivered
following the company's annual general meeting.
The auditors reported on those accounts: their reports were unqualified and did
not contain statements under section 237 (2) or (3) of the Companies Act 1985.
This preliminary announcement is prepared on the basis of accounting policies as
stated in the previous year's financial statements.
7. The annual report for the period ended 16 February 2003 will be
posted to shareholders by 22 April 2003, and the Annual General Meeting will
take place at the offices of KBC Peel Hunt Ltd, 4th Floor, 111 Old Broad Street,
London EC2N 1PH at 12:00 noon on Thursday, 15 May 2003.
08 April 2003
This information is provided by RNS
The company news service from the London Stock Exchange
END
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