Full Year Results 2019

RNS Number : 9737D

Dalata Hotel Group PLC

25 February 2020

 

Robust Performance Delivering Strong Cash Flow

ISE: DHG  LSE: DAL

Dublin and London | 25 February 2020: Dalata Hotel Group plc ("Dalata" or "the Group"), the largest hotel operator in Ireland with a growing presence in the United Kingdom, announces its results for the year ended 31 December 2019.

Results Summary	Post IFRS 16 (as reported)		Pre IFRS 16[1]
€million	2019	Variance on 2018	2019	Variance on 2018
Revenue	429.2	9.3%	429.2	9.3%
Segments EBITDAR 1	182.8	9.3%	182.8	9.3%
Adjusted EBITDA1	162.2	35.6%	134.8	12.8%
Profit before tax	89.7	2.7%	98.4	12.7%
Basic EPS (cents)	42.4	3.7%	46.4	13.4%
Adjusted basic EPS1 (cents)	42.0	(1.9%)	46.0	7.5%
Dividend per share (cents)	10.75	7.5%	10.75	7.5%

Key performance indicators	2019	2018	2019	2018
	As reported		Like for Like1
Occupancy %	82.6%	83.7%	83.4%	84.1%
Average room rate (€)	113.14	112.51	110.51	110.93
RevPAR1 (€)	93.43	94.13	92.11	93.24

STRONG OPERATING PERFORMANCE

· Strong revenue growth of 9.3% to €429.2 million

· Adjusted EBITDA pre IFRS 16¹ increased by 12.8% to €134.8 million 

· Basic EPS of 42.4 cents (Adjusted basic EPS¹ pre IFRS 16 up 7.5% to 46.0 cents)

· Resilient performance in maturing Irish market backdrop

· Very strong performance in the UK

STRONG BALANCE SHEET - LOWLY GEARED AND ASSET BACKED 

· €1.5 billion of property, plant and equipment located in prime locations

· Further upward revaluation of properties of €122.3 million in 2019

· Net Debt to Adjusted EBITDA pre IFRS 16¹ of 2.8x at year end (post IFRS 16: 4.5x)

· Gearing remains at a very comfortable level with Debt and Lease Service Cover¹ of 3.2x

DRIVING SHAREHOLDER VALUE THROUGH OPERATIONS AND DEVELOPMENT

· Generated Free Cash Flow¹ over €100 million in 2019 funding progressive dividend policy and further portfolio growth

· 1,692 rooms added to portfolio over the last two years continue to perform very well and have been a significant driver of growth for 2019

· Exciting pipeline of circa 2,871 rooms in excellent locations on track to open between 2021 - 2023

· UK business expected to have a similar number of rooms to Dublin by 2022

ANNOUNCING TODAY

· The Board has proposed a final dividend of 7.25 cents per share

STRATEGIC AND OPERATING HIGHLIGHTS

· Revenue increase of €36.6 million to €429.2 million driven by new additions to the portfolio. The 1,692 rooms which were added in the last two years in Dublin, Cork, Galway, Belfast, Newcastle, Cambridge and London are performing very well.

· Strong cost control ensured Dalata maintained earnings despite tougher market conditions in Ireland. Dalata outperformed the market RevPAR change in Dublin.

· Very strong RevPAR performance in the UK. Our Regional UK hotels significantly outperformed the market in all cities² in which we operate - Birmingham, Leeds, Manchester, Cardiff and Belfast. Our London hotels were behind the city as a whole but performed well within their own local markets.

· Group hotel EBITDAR margin ¹ remained at 42.6% despite a 1.2% fall in Group 'like for like' RevPAR and the impact of six new hotels opened during 2018 and early 2019, which have not yet reached normal operating levels.

· The results for 2019 reflect the adoption of IFRS 16 Leases which has brought an accounting estimate of lease liabilities and corresponding right-of-use ("RoU") assets on to the balance sheet. This has reduced reported profit after tax by €7.5 million and basic EPS by 4.0 cents. Net debt has increased by €362.1 million due to the recognition of an accounting estimate of lease liabilities resulting in Net Debt to Adjusted EBITDA¹ increasing to 4.5x at year end (pre IFRS 16: 2.8x).

· 367 new rooms added to portfolio in London (212) and Cambridge (155) in 2019. Another 941 rooms added to the pipeline in Dublin, Liverpool, London and Birmingham.

· €15.2 million invested in capital refurbishment across all areas of the Group's hotels with a further 699 rooms refurbished in 2019. Over 60% of room stock either built or refurbished in last 5 years.

OUTLOOK

Trading across our three regions is in line with our expectations for the first quarter of 2020. We note the combination of positive strong economic projections for Ireland and the projected increase in rooms supply for Dublin. Our modern, well located, well invested portfolio of Dublin hotels is strongly positioned to compete with new supply.

We are building a strong track record of operational outperformance in our UK business, reinforced by our decentralised model. We expect our existing pipeline to open within the timelines advised and our UK business is expected to have a similar number of rooms as our Dublin business by the end of 2022. We are very encouraged by the quality of new opportunities that we are pursuing in the UK and expect to announce further exciting new projects during the year.

We continue to monitor closely the evolving and unfortunate COVID-19 outbreak but to date we have seen no material impact on our business.

Pat McCann, Dalata Group CEO, commented:

"I am pleased to report that 2019 has been another year of growth and development at Dalata. The business has performed strongly with revenue increasing by 9.3% to €429.2 million in the year. Excluding the impact of IFRS 16 (the new accounting standard on leasing), Adjusted EBITDA¹ increased 12.8% to €134.8 million and Adjusted basic EPS¹ increased by 7.5% to 46.0 cents.

I am delighted that we generated over €100 million in Free Cash Flow¹ for the first time in the history of the Group. Our continued strong cash generation and our strong balance sheet allows us to fund acquisitions and development in a sustainable and disciplined manner. It also allows us to fund a progressive dividend policy.

The Irish hospitality market experienced tougher market conditions in 2019, primarily due to the impact of the 4.5% VAT increase and the additional supply of approximately 1,500 bedrooms in Dublin. Our Irish hotels were not immune to these events but we did outperform the market in most cities.  On a 'like for like' basis, RevPAR at our Dublin portfolio declined by 3.1%, outperforming the market decline of 3.6%. 'Like for like' RevPAR at our Regional Ireland portfolio declined by 1.0%. I am very pleased with how we responded to the softer market conditions and increased our EBITDAR margins in both Dublin and Regional Ireland despite a fall in 'like for like' RevPAR through effective cost control and the growing impact of our investment in technology.

I am particularly happy with the performance of our UK hotels. RevPAR at all our existing hotels in Regional UK outperformed their local market and while our London hotels were behind the city as a whole, they performed well within their own local markets. We continue to convert revenue strongly with EBITDAR margin of 39.0%.

Our new hotels continue to make strong progress. The six hotels which opened in 2018 and early 2019 contributed €14.9 million in additional EBITDAR in 2019.

RevPAR performance is an important aspect of our business but it is not the only driver of strong performance. In 2017 and 2018 we invested in technology to help our people work more efficiently. 2019 was the year we saw the significant benefits of this investment through increases in food and beverage margins as a result of our investment in a new procurement system, payroll savings through the continued use of our human resources management system, Alkimii, and lower claims costs. In recent years we have successfully reduced claims through the use of technology and training.

We continue to grow our portfolio of hotels. We completed the acquisition of the Clayton Hotel City of London in early January 2019 and successfully opened it later that month. The hotel has traded strongly in its first year of operation. In August, we secured a prime site in Shoreditch, London and we expect to start construction later this year. Our success in securing these two projects has been a catalyst for us in being considered as an operator for other projects in London.

In November, we entered into a lease to take over the operation of The Tamburlaine Hotel in Cambridge, to be rebranded shortly to Clayton Hotel Cambridge. This hotel, which opened in 2017, is superbly located and a fantastic fit for our Clayton brand. We also announced that we have signed three new agreements for lease for The Samuel in Dublin, Maldron Hotel Liverpool and our most recent announcement, Maldron Hotel Croke Park in Dublin.

We remain disciplined in the way we grow our portfolio. Our Debt and Lease Service Cover¹, which measures our ability to meet our interest and rent commitments, remained at a very comfortable 3.2x. Our strong balance sheet continues to grow with hotel assets of €1.5 billion at 31 December 2019. This makes us an attractive partner for fixed income investors allowing us to enter into agreements to lease superbly located hotels in our target cities at attractive yields. Dalata has an excellent reputation amongst property developers and fixed income investors and I am very excited about the opportunities we are currently looking at.

We also extract good value from our assets with Normalised Return on Invested Capital1 of 12.1% at 31 December 2019. In addition to this, the Group also adds value through the acquisition and development of hotels. In 2019, the value of our property assets increased by a further €122.3 million. The total uplift in value to our property assets since 2014 is now €397 million highlighting our excellent ability to acquire and develop strategic assets at good prices and enhance their value further after acquisition/opening.

As a hospitality company people are always to the forefront of our mind. We offer a UK and Ireland Share Save Scheme to all employees to enable them to participate in the long-term profitability of the Group. We carry out engagement surveys of all our employees twice a year and we put a strong focus on training and development to support career progression with 367 employees enrolled in development courses during 2019. As a result of our focus on talent development, we will be in a position to appoint from within when filling the teams that will manage our 11 new hotels as they open over the next few years.

We continue to listen to our customers and received approximately 160,000 reviews through the various feedback channels. Our customer satisfaction ratings grew again in 2019. We continue to focus on the areas in which our customers say we can improve.

We continue to invest in our brands. We are in the midst of a significant piece of consumer research into our brands. We are encouraged by the growing number of members in our 'Click on Clayton' and 'Make it Maldron' user groups and the resulting increase in those booking directly on our websites.

ESG (Environmental, Social and Governance) is a key focus for the Board and management. The creation of an ESG sub-committee to the Board is a clear demonstration of that commitment. We received an AA rating from MSCI and B- rating from CDP. We see these ratings as a starting point and we are very focused on the areas of governance, our interaction with all stakeholders and our impact on the environment.

We are mindful that Dalata is exposed to global headwinds that can impact the hospitality sector. We expect approximately another 1,900 hotel rooms will open in Dublin during 2020 and the digestion of this new supply will have an impact on the market. However, I remain encouraged by the strong forecasts for the Irish economy, further job creation by multinational companies and the continued demand for bedrooms. We showed our resilience in 2019 in the face of the impact of a 4.5% increase in the VAT rate in Ireland. We have an appropriate level of gearing within the context of a very strong asset backed balance sheet. Our decentralised model also ensures we can respond quickly to events with local knowledge.

We will continue to grow our portfolio, develop our people, exceed our customers' expectations and maximise the return from our assets. We are very focused and ready for the challenges and opportunities that 2020 presents".

ENDS

About Dalata

Dalata Hotel Group plc was founded in August 2007 and listed as a plc in March 2014. Dalata has a strategy of owning or leasing its hotels and also has a small number of management contracts. The Group's portfolio now consists of 30 owned hotels, 11 leased hotels and three management contracts with a total of 9,208 bedrooms. In addition to this, the Group is currently developing 11 new hotels and has plans to extend two of its existing hotels, with a total of 2,871 bedrooms due to open over the next three years. This will bring the total number of bedrooms in Dalata to over 12,000. Dalata now has close to 5,000 employees. For the full year 2019, Dalata reported revenue of €429.2 million and a profit after tax of €78.2 million. Dalata is listed on the Main Market of Euronext Dublin (DHG) and the London Stock Exchange (DAL). For further information visit:   www.dalatahotelgroup.com

Conference Call Details | Analysts & Institutional Investors

Management will host a conference call for analysts and institutional investors at 08:30 GMT ( 03:30 ET), today 25 February 2020, and this can be accessed using the contact details below.

From Ireland dial: [phone]  

From the UK dial: [phone] 0804  

From the USA dial: 631 913 1422  

From other locations dial: [phone]  

Participant PIN code: 75237443#  

Contacts

Dalata Hotel Group plc	[e-mail]
Pat McCann, CEO	Tel [phone]
Dermot Crowley, Deputy CEO, Business Development & Finance
Sean McKeon, Company Secretary and Head of Risk and Compliance Niamh Carr, Investor Relations Manager
Joint Company Brokers
Davy: Anthony Farrell	Tel [phone]
Berenberg: Ben Wright	Tel [phone]
Investor Relations and PR | FTI Consulting	Tel [phone]
Melanie Farrell	[e-mail]

Note on forward-looking information

This Announcement contains forward-looking statements, which are subject to risks and uncertainties because they relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company or the industry in which it operates, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements referred to in this paragraph speak only as at the date of this Announcement. The Company will not undertake any obligation to release publicly any revision or updates to these forward-looking statements to reflect future events, circumstances, unanticipated events, new information or otherwise except as required by law or by any appropriate regulatory authority.
 

Full Year 2019 Financial Performance

€million	2019	2019	20183
	Post IFRS 16	Pre IFRS 161	As reported
Revenue	429.2	429.2	392.6
Segments EBITDAR1	182.8	182.8	167.2
Rent	(7.3)	(34.5)	(32.9)
Segments EBITDA1	175.5	148.3	134.3
Central costs	(11.8)	(12.0)	(13.3)
Share-based payments expense	(2.7)	(2.7)	(2.8)
Other income	1.2	1.2	1.4
Adjusted EBITDA1	162.2	134.8	119.6
Adjusting items to EBITDA	1.6	1.6	(3.0)
Group EBITDA1	163.8	136.4	116.6
Depreciation of PPE & Amortisation	(26.4)	(26.3)	(19.8)
Depreciation of RoU assets	(17.1)	-	-
Operating profit	120.3	110.1	96.8
Finance costs	(11.7)	(11.7)	(9.5)
Interest on lease liabilities	(18.9)	-	-
Profit before tax	89.7	98.4	87.3
Tax	(11.5)	(12.7)	(12.1)
Profit for the year	78.2	85.7	75.2
Basic earnings per share (cents)	42.4	46.4	40.9
Adjusted basic earnings1 per share (cents)	42.0	46.0	42.8
Hotel EBITDAR margin1	42.6%	42.6%	42.6%

Summary of hotel performance

Dalata delivered strong revenue growth of €36.6 million (9.3%) to €429.2 million in 2019. The opening of six new hotels in 2018 and 2019 and the addition of The Tamburlaine Hotel, Cambridge in November 2019 contributed €37.4 million to revenue growth. The existing hotels with a significant increase in available rooms year on year added €6.1 million. This includes Maldron Hotel Parnell Square, Dublin and Maldron Hotel Sandy Road, Galway which had extensions added during 2018 and the additional rooms acquired at Clayton Hotel Liffey Valley, Dublin. Clayton Hotel Dublin Airport which had a large extension added during 2018 added €2.4 million in revenue. The closure of the Tara Towers for redevelopment resulted in lost revenue of €2.9m. The extensive renovations ongoing at Clayton Hotel Burlington Road which decreased available rooms by circa 11% and impacted its ability to accept conference business resulted in a reduction of €4.9 million in revenue. Revenue at our other Republic of Ireland hotels decreased by €4.2 million due to the fall in RevPAR as the market digests the additional supply in Dublin and the impact of the VAT increase in Ireland as a whole. Revenue growth at our 'like for like' UK hotels added €2.0 million, which is particularly encouraging given our expansion plans for this region. Favourable movements in the value of sterling increased revenue by €0.7 million. The additional revenue converted strongly to the bottom line with Segments EBITDAR¹ increasing by €15.6 million. Hotel EBITDAR margin¹ is unchanged at 42.6% despite the challenging market dynamics and the opening of six new hotels which have yet to reach full operating performance. This is a clear demonstration of our excellent control of costs.

The results for 2019 are impacted by the application of IFRS 16 Leases. Under IFRS 16, almost all of Dalata's leases are recorded on the balance sheet in the form of right-of-use assets, representing our right to use the leased assets, and corresponding lease liabilities, representing our obligation to pay rental costs. Following the application of IFRS 16 Leases, Adjusted EBITDA¹ has increased by €27.4 million as fixed rental expenses are removed from profit or loss. However, under IFRS 16 total expenses are higher in the early years of implementation due to the front-loading effects of finance costs versus the straight-line rent expense under IAS 17. This resulted in a €7.5 million decrease to profit after tax and a 4.0 cents decrease to basic EPS for 2019.

Adjusted EBITDA bridge

The table below shows by region how Adjusted EBITDA has grown by €15.2million to €134.8 million (pre IFRS 16) in 2019.

		Dublin						Regional Ireland			UK
€million	20181	New hotels opened in 20182	Additional rooms added at existing hotels3	Closure of Tara Towers	Hotel with large renovation ongoing4	Performance at like for like hotels		New hotel opened in 20186	Additional rooms at existing hotel7	Performance at like for like hotels	New hotels added in 2018 & 20198	Effect of FX	Performance at like for like hotels	Movement in Group income and expenses9	2019 Pre IFRS 16	IFRS 16 impact10	2019 Post IFRS 16 (as reported)
						Clayton Hotel Dublin Airport 5	Other hotels
Revenue	392.6	13.4	5.5	(2.9)	(4.9)	2.4	(3.0)	5.9	0.6	(1.2)	18.1	0.7	2.0	-	429.2	-	429.2
Segments EBITDAR	167.2	6.6	3.7	(1.0)	(3.5)	1.1	(1.2)	2.0	0.4	(0.6)	6.7	0.4	1.0	-	182.8	-	182.8
Rent	(32.9)	-	-	-	-	-	0.6	-	-	-	(2.1)	(0.1)	-	-	(34.5)	27.2	(7.3)
Segments EBITDA	134.3	6.6	3.7	(1.0)	(3.5)	1.1	(0.6)	2.0	0.4	(0.6)	4.6	0.3	1.0	-	148.3	27.2	175.5
Other income	1.4	-	-	-	-	-	-	-	-	-	-	-	-	(0.2)	1.2	-	1.2
Central costs	(13.3)	-	-	-	-	-	-	-	-	-	-	-	-	1.3	(12.0)	0.2	(11.8)
Share-based payments expense	(2.8)	-	-	-	-	-	-	-	-	-	-	-	-	0.1	(2.7)	-	(2.7)
Adjusted EBITDA	119.6	6.6	3.7	(1.0)	(3.5)	1.1	(0.6)	2.0	0.4	(0.6)	4.6	0.3	1.0	1.2	134.8	27.4	162.2
Segments EBITDAR margin1	42.6%														42.6%		42.6%
1. Prior year comparatives and the KPI's calculated thereon have been restated to reflect the reclassification of income from managed hotels from revenue to other income in the year ended 31 December 2019. See note 1 in the condensed financial statements for the year ending 31 December 2019 for further information 2. Includes Maldron Hotel Kevin Street which opened in July 2018 and Clayton Hotel Charlemont which opened in November 2018 3. Includes hotels with a significant increase in available room numbers (greater than 10% year on year) - Maldron Hotel Parnell Square where we completed an extension at the end of 2018 and Clayton Hotel Liffey Valley where we acquired 78 rooms at various stages since January 2018 4. Clayton Hotel Burlington Road is currently undergoing extensive renovation works 5. Clayton Hotel Dublin Airport is shown separately as although the increase in available rooms year on year is not significant (greater than 10%), the scale of the development on the hotel has had a large EBITDAR impact 6. Maldron Hotel South Mall, Cork opened in December 2018 7. Maldron Hotel Sandy Road, Galway completed its extension in June 2018 8. Includes Maldron Hotel Belfast City which opened in March 2018, Maldron Hotel Newcastle which opened in December 2018, Clayton Hotel City of London which opened in January 2019 and The Tamburlaine Hotel, Cambridge which was leased from November 2019 9. Group income and expenses includes income from management contracts, rental income, central costs and the share-based payments expense 10. Includes the impact of IFRS 16 where fixed rental expenses are now excluded from profit or loss and replaced with finance costs on the lease liabilities and depreciation of the right-of-use assets

Performance Review | Segmental Analysis

The following section analyses the results from the Group's portfolio of hotels in Dublin, Regional Ireland and the United Kingdom.

1. Dublin Hotel Portfolio | Strong Growth Despite Negative Impact of VAT Increase and New Supply

€million	2019		2018
Room revenue		176.3		168.7
Food and beverage revenue		53.0		50.6
Other revenue		16.1		15.6
Total revenue		245.4		234.9
EBITDAR		119.7		114.0
Hotel EBITDAR margin %		48.8%		48.5%
Performance statistics (like for like)4
Occupancy		86.5%		88.2%
Average room rate (€)		124.15		125.72
RevPAR (€)		107.41		110.89
RevPAR % change		-3.1%
Dublin owned & leased portfolio
Hotels at year end		16		16
Room numbers at year end		4,482		4,460

Our sixteen hotels in the Group's Dublin portfolio consists of seven Maldron hotels, seven Clayton hotels, The Ballsbridge Hotel and The Gibson Hotel.

Revenue from our Dublin portfolio increased by €10.5 million (4.5%) in 2019 driven by the additional rooms added in 2018. The two new hotels which opened in 2018 continue to perform well contributing additional revenue of €13.4 million in 2019. Two hotels, which had a significant increase in available rooms year on year, added €5.5 million in revenue. These are Clayton Hotel Liffey Valley where we acquired an additional 78 rooms during 2018 and 2019 and Maldron Hotel Parnell Square which added a 53 room extension at the end of 2018. As noted earlier, the closure of Tara Towers in September 2018 and the renovations work on-going at Clayton Hotel Burlington Road resulted in a loss of revenue of €7.8 million.  

On a 'like for like' basis RevPAR at our Dublin hotels decreased by 3.1%, outperforming the market RevPAR decline of 3.6% in 2019. For the first time in several years, the Dublin market was impacted by significant headwinds notably the 4.5% VAT increase, a reduction in the number of major events in the second half of 2019 and the impact of approximately 2,500 additional rooms in the city over the last two years.

Dublin EBITDAR increased by €5.7 million to €119.7 million driven by the additional rooms added to the portfolio and excellent cost control throughout the portfolio. As a result, EBITDAR margin grew from 48.5% to 48.8%.

2. Regional Ireland Hotel Portfolio | Revenue and Margins Growing

€million	2019		2018
Room revenue		49.7		45.2
Food and beverage revenue		26.8		26.4
Other revenue		8.4		8.0
Total revenue		84.9		79.6
EBITDAR		24.5		22.7
Hotel EBITDAR margin %		28.9%		28.5%
Performance statistics (like for like) 5
Occupancy		74.9%		75.2%
Average room rate (€)		97.32		97.87
RevPAR (€)		72.87		73.57
RevPAR increase %		-1.0%
Regional Ireland owned & leased portfolio
Hotels		13		13
Room numbers		1,867		1,797

Our thirteen hotels in the Regional Ireland portfolio comprise seven Maldron hotels and six Clayton hotels located in Cork (x4), Galway (x3), Limerick (x2), Wexford (x2), Portlaoise and Sligo.

Dalata's hotels in the larger cities of Cork, Galway and Limerick account for 72% of the rooms, generate 72% of revenue and 75% of EBITDAR in this portfolio.

Total revenue in Regional Ireland increased by €5.3 million (6.8%) driven by a successful first year of trading at Maldron Hotel South Mall, Cork and the extension at Maldron Hotel Sandy Road, Galway which opened in June 2018 and together contributed €6.5 million. Revenue from the existing hotel portfolio decreased by €1.2 million on the prior year due to challenging market dynamics. In particular, the VAT increase of 4.5% had a significant once-off negative impact on the Regional Ireland market. However, the hotels achieved excellent control of costs which minimised the impact of falling revenues to the bottom line. EBITDAR margin for the portfolio continues to increase at 28.9%.

3. UK Hotel Portfolio | Continued Strong Performance is Proving our UK Model

Local currency - £million	2019		2018
Room revenue		62.8		48.1
Food and beverage revenue		17.8		15.2
Other revenue		6.1		5.8
Total revenue		86.7		69.1
EBITDAR		33.8		27.0
Hotel EBITDAR margin %		39.0%		39.0%
Performance statistics (like for like) 6
Occupancy		85.2%		84.7%
Average room rate (£)		84.03		82.33
RevPAR (£)		71.57		69.70
RevPAR increase %		2.7%
UK owned & leased portfolio
Hotels		12		10
Room numbers		2,600		2,233

Our UK hotel portfolio comprises 9 Clayton hotels and 3 Maldron hotels with 3 hotels situated in London, 6 hotels in regional UK and 3 hotels in Northern Ireland. Since December 2018, Dalata have added two hotels with the opening of Clayton Hotel City of London (212 rooms) in January 2019 and the addition of The Tamburlaine Hotel, Cambridge (155 rooms) in November 2019 (soon to be rebranded to Clayton Hotel Cambridge).

UK revenue has increased by £17.6 million (25.5%) largely driven by Maldron Hotel Belfast City and Maldron Hotel Newcastle which opened in 2018, Clayton Hotel City of London which opened in January 2019 and The Tamburlaine Hotel, Cambridge which was leased from November 2019.

Dalata's existing UK hotels performed very strongly in 2019, achieving a 'like for like' RevPAR increase of 2.7%. Our regional UK hotels outperformed the market on RevPAR in all cities. In particular, we performed very strongly in Birmingham (+8.1%), Leeds (+7.5%) and Manchester (+4.0%). This performance is a testament to our excellent teams in these hotels and the quality and location of our hotels within large UK cities. Our London hotels were behind the city as a whole but performed well within their own local markets.

UK EBITDAR increased by £6.8 million (25.2%) to £33.8 million in 2019. The additional revenue was converted strongly by our existing UK portfolio. The EBITDAR margin is unchanged at 39.0% and excluding the impact of the four new hotels, the 'like for like' EBITDAR margin increased from 39.8% to 40.1%.

Transition to IFRS 16

Under IFRS 16 Leases almost all of Dalata's leases are recorded on the balance sheet in the form of right-of-use assets, representing our right to use the leased assets, and corresponding lease liabilities, representing our obligation to pay rental costs.

The lease liability is calculated by discounting the future minimum rental cashflows using the estimated applicable incremental borrowing rate on a lease by lease basis. The weighted average incremental borrowing rate for the Group at 1 January 2019 for IFRS 16 discount rate purposes was 6.03%.

The right-of-use asset is equal to the lease liability at the date of initial application adjusted for any lease prepayments and accruals at that date. Total right-of-use assets amounted to €343.7 million on 1 January 2019. This amount includes €20.5 million which was part of the consideration paid for The Gibson Hotel lease in March 2016 and was previously recorded as an intangible asset.

Over the lease term, the lease liability is increased by the interest charge and decreased by the cash flows for fixed rent payments under the lease agreement. The right-of-use asset is depreciated on a straight-line basis over the lease term.

The lease liability will be remeasured during the lease term following the completion of any rent reviews, a reassessment of the lease term or where a lease contract is modified. This will result in a change to the interest charge and the corresponding adjustment made to the right-of-use asset will result in a modification to the depreciation of the right-of-use asset.

IFRS 16 results in a significant change to the profit or loss, cash flow statement presentation and statement of financial position for the year ended 31 December 2019. This impact, compared to how the 2019 financial statements would be reported on a pre IFRS 16 basis, is discussed in more detail in the tables below.

Impact on financial statements: Consolidated statement of comprehensive income

Element of IFRS 16	Impact on profit or loss for the year ended 31 December 2019
Fixed rental expenses are excluded from profit or loss and replaced with finance costs on the lease liabilities and depreciation of the right-of-use assets.	Adjusted EBITDA1 has increased by €27.4 million as fixed rental expenses are removed from profit or loss. However, under IFRS 16 total expenses are higher in the early years of leases due to the front-loading effects of finance costs versus the straight-line rent expense under IAS 17. This resulted in a €7.5 million decrease to profit after tax and a 4.0 cents decrease to basic EPS for 2019.

As permitted under IFRS 16 Leases, Dalata adopted the modified retrospective approach and therefore have not restated prior year comparatives. A summary of the impact of IFRS 16 on profit or loss for the year ended 31 December 2019 is outlined in the table hereafter, together with the results excluding the impact of IFRS 16, ("the pre IFRS 16 results") to aid comparability .

		Exclude IFRS 16 Impact
€million	2019	Add back fixed rent	Exclude depreciation of RoU assets and interest on lease liabilities	Taxation impact	2019	20183
	Post IFRS 16 As Reported				Pre IFRS 161
Revenue	429.2	-	-	-	429.2	392.6
Segments EBITDAR1	182.8	-	-	-	182.8	167.2
Rent	(7.3)	(27.2)	-	-	(34.5)	(32.9)
Other income	1.2	-	-	-	1.2	1.4
Central costs	(11.8)	(0.2)	-	-	(12.0)	(13.3)
Share-based payments expense	(2.7)	-	-	-	(2.7)	(2.8)
Adjusted EBITDA1	162.2	(27.4)	-	-	134.8	119.6
Adjusting items to EBITDA	1.6	-	-	-	1.6	(3.0)
Group EBITDA1	163.8	(27.4)	-	-	136.4	116.6
Depreciation and amortisation	(43.5)	-	17.2	-	(26.3)	(19.8)
Net finance costs	(30.6)	-	18.9	-	(11.7)	(9.5)
Profit before tax	89.7	(27.4)	36.1		98.4	87.3
Tax	(11.5)	-	-	(1.2)	(12.7)	(12.1)
Profit after tax	78.2	(27.4)	36.1	(1.2)	85.7	75.2

Impact on financial statements: Consolidated statement of financial position ("SOFP")

Element of IFRS 16	Impact on SOFP at 31 December 2019
Recognition of assets reflecting the right-of-use of leased assets.	Right-of-use assets amounted to €386.4 million at 31 December 2019.
Recognition of financial liabilities to pay rental costs.	Dalata's liabilities have increased by €362.1 million at 31 December 2019 as the accounting estimate of lease liabilities is brought on balance sheet. This results in an increase in Net Debt to Adjusted EBITDA1 at year end from 2.8x pre IFRS 16 to 4.5x post IFRS 16.

Impact on financial statements: Consolidated statement of cash flows

Element of IFRS 16	Impact on cash flow for the year ended 31 December 2019
The payment of fixed rental costs is now presented within cash flows from financing activities.	Net cash flow from operating activities has increased by €27.5 million as the payment of fixed rental costs is now presented within financing activities in the form of interest on lease liabilities (€18.9 million) and repayment of lease liabilities (€8.6 million). There is a minor impact on cash flows due to the positive cash benefit from the treatment of IFRS 16 by UK Tax Authorities.

Central costs and share-based payments expense

Central costs decreased by €1.5 million to €11.8 million in 2019. The Group released €1.9 million of insurance provisions made in previous accounting periods following the impact of better claims experience on original estimates. Our improving claims experience is driven by our investment in technology and strong focus on training which has improved our ability to record and track incidents, defend claims when they do arise and direct capital expenditure to prevent instances occurring in the future. Despite the impact of lower bonus costs this year (€0.7 million), wages and salaries included within central costs increased by €0.4 million following the impact of new hires to support the growing Group.

Other income

Other income comprises rental income of €0.3 million and income from management contracts of €0.9 million. As reported in our interim results for the six month period ended 30 June 2019, the Group changed the composition of operating segments with income from management contracts no longer presented as a separate segment . This change reflected the decreasing importance of management fees as an element of the business and represents the way the information is now reported and analysed internally by senior management. The income from managed hotels has been reclassified from revenue to other income in the year ended 31 December 2019. Prior period comparatives and the KPI's calculated thereon for the year ended 31 December 2018 have also been restated for this reclassification.

Adjusting items to EBITDA

€million	2019		2018
Proceeds from insurance claim		-		2.6
Hotel pre-opening expenses		-		(2.5)
Net revaluation movements through profit or loss		1.6		(3.1)
Adjusting items to EBITDA1		1.6		(3.0)

Adjusted EBITDA is presented as an alternative performance measure to show the underlying operating performance of the Group. Consequently, items which are not reflective of normal trading activities or distort comparability either 'year on year' or with other similar businesses are excluded.

In 2018, the Group incurred pre-opening expenses of €2.5 million relating to six new hotels which opened in 2018 and early 2019. Pre-opening expenses are expenses incurred in advance of a newly built hotel becoming operational. These typically include staff training costs, wages and salaries of the core hotel management team and sales and marketing expenses.

Depreciation of property, plant and equipment

Depreciation increased by €6.5 million to €26.2 million driven by growth in the portfolio. €3.0 million of the increase relates to the full year impact of the five new hotels and four extensions to existing properties which completed during 2018. €2.0 million relates to Clayton Hotel City of London which was acquired in January 2019. The remaining increase relates to the depreciation of refurbishment capital expenditure which replaced items that had already been fully depreciated in previous accounting periods.

Depreciation of right-of-use assets

Under IFRS 16, the right-of-use assets are depreciated on a straight-line basis from the transition date of 1 January 2019 or the commencement date of the lease, whichever is later, typically to the end of the lease term. The depreciation of right-of-use assets amounted to €17.1 million for 2019.

Finance Costs

€million	2019				2018
Interest expense on bank loans and borrowings			9.1			7.8
Impact of interest rate swaps			1.2			1.0
Other finance costs			1.5			2.8
Net exchange loss/(gain) on financing activities			0.4			(0.3)
Capitalised interest			(0.5)			(1.8)
Finance costs (pre IFRS 16)			11.7			9.5
Interest on lease liabilities			18.9			-
Finance costs (post IFRS 16)			30.6			9.5

Finance costs have increased primarily due to the application of IFRS 16, which results in the recognition of an interest charge on the lease liabilities totalling €18.9 million for the year. Capitalised interest has reduced by €1.3 million due to a decrease in the number of development projects ongoing during the year.

Interest on bank loans increased by €1.3 million. Interest increased due to the additional draw down of £60 million and €30.5 million from the multicurrency revolving credit facility to fund the acquisition of Clayton Hotel City of London and £30 million from the same facility to fund the acquisition of a site in London for the new Maldron Hotel Shoreditch. This was offset by a decrease in the interest rate on bank loans under the improved terms of the new facility agreement secured in October 2018.

The weighted average interest rate for 2019 was 2.42% (2018: 2.94%), of which 1.57% (2018: 2.15%) related to margin.

Tax charge

The Group's effective tax rate1 decreased from 13.8% in 2018 to 12.8% in 2019 largely due to the reversal of prior year valuation impairments which is not taxable and the release of an over provision from 2018. Work completed by external advisors on the level of capital allowances on the 2018 development capital expenditure resulted in a higher qualifying amount than originally estimated. In 2018, the non-deductible impairments led to a higher effective tax rate.

The current tax charge also includes a capital gains tax charge of €0.9 million on insurance proceeds received in 2018. These became taxable as a result of the Group's decision in 2019 not to redevelop an insured building which had been destroyed by fire.

Earnings per share

Cents (€)	2019	2019	2018
	Post IFRS 16	Pre IFRS 161	As reported3
Basic earnings per share	42.4	46.4	40.9
Diluted earnings per share	42.0	46.0	40.4
Adjusted basic earnings per share1	42.0	46.0	42.8

Excluding the impact of IFRS 16, the Group's strong operating performance has translated into an increase in basic earnings per share and adjusted basic earnings per share of 13.4% and 7.5% respectively. The adoption of IFRS 16 has resulted in a decrease of approximately 4.0 cents to basic earnings per share, adjusted basic earnings per share and diluted earnings per share.

Dividends

An interim dividend for 2019 of 3.5 cents per share was paid on 4 October 2019 on the ordinary shares in Dalata Hotel Group plc amounting to €6.5 million. On 24 February 2020, the Board proposed a final dividend of 7.25 cents per share amounting to €13.4 million. Subject to shareholders' approval at the Annual General Meeting on 29 April 2020, the payment date will be 6 May 2020 for the final dividend to shareholders registered on the record date 14 April 2020.

Over €100 million generated in Free Cash Flow

€million	2019		2018
Net cash from operating activities		155.0		115.8
Fixed rent paid7		(27.5)		-
Finance costs paid		(11.2)		(13.2)
Refurbishment capital expenditure paid		(15.7)		(15.9)
Exclude adjusting items with a cash effect		-		(0.1)
Free Cash Flow1		100.6		86.6

Free Cash Flow exceeded €100 million for the first time at the Group. The cash generated allows us to fund acquisitions and developments whilst also paying dividends to our shareholders.

Dalata allocates approximately 4% of annual revenue to refurbishment capital expenditure to ensure the portfolio remains fresh for our customers and adheres to brand standards. Refurbishment capital expenditure paid is slightly lower, compared to 4% of 2019 revenue, due to timing of projects ongoing at year end. We also exclude adjusting items to present normalised cash flows for the portfolio.

The front-loading impact under IFRS 16 decreases profit after tax and EPS metrics and obscures the underlying growth in the cash generated by the hotels. In a post IFRS 16 environment, management are increasingly focusing on Free Cash Flow as an important measure of underlying performance.

Balance Sheet | Lowly Geared and Asset Backed

€million	2019	2019	2018
Non-current assets	Post IFRS 16	Pre IFRS 16	As reported3
Property, plant and equipment	1,471.3	1,471.3	1,176.3
Right-of-use assets	386.4	-	-
Intangible assets and goodwill	36.1	57.2	54.4
Other non-current assets8	25.9	33.0	28.0
Current assets
Trade and other receivables and inventories	23.7	29.3	24.5
Cash and cash equivalents	40.6	40.6	35.9
Total assets	1,984.0	1,631.4	1,319.1
Equity	1,072.8	1,080.4	902.6
Loans and borrowings	411.7	411.7	301.9
Lease liabilities	362.1	-	-
Trade and other payables	66.2	67.7	65.2
Other liabilities9	71.2	71.6	49.4
Total equity and liabilities	1,984.0	1,631.4	1,319.1

Our strong balance sheet is vital as it will help support future growth. Maintaining a strong covenant with well-located property assets and low levels of gearing allows Dalata to attract and partner with strong fixed income investors and enter into leases at relatively low yields. This is critical for the Group's strategy of expanding in the UK primarily using the leasing model.

Dalata is committed to actively managing its balance sheet to ensure it has an appropriate level and mix of debt. The adoption of IFRS 16 has brought an accounting estimate of lease liabilities on to the balance sheet, increasing the Group's reported liabilities at year end by €362.1 million. This has resulted in an increase to our Net Debt and Lease Liabilities to Adjusted EBITDA¹ to 4.5x. Excluding the impact of IFRS 16 the Group's Net Debt to Adjusted EBITDA1 was 2.8x at year end (31 December 2018: 2.3x).

Dalata also monitor a ratio, referred to as our Debt and Lease Service Cover¹, to assess the Group's ability to meet debt and rent commitments. At the end of 2019, this ratio amounted to a particularly strong 3.2x (31 December 2018: 2.7x).

In 2019, Dalata's Normalised Return on Invested Capital¹ amounted to 12.1% (2018: 12.7%). This figure excludes the capital cost and trading impact of the five owned hotels, which opened during 2019 and 2018 and assets under construction at year end. In addition to this, the Group also adds value through the acquisition and development of hotels. In 2019, the value of our property assets increased by a further €122.3 million driven by uplifts on newly built hotels and extensions which were built at a cost below fair value and where trade has outperformed assumptions underpinning initial external valuations. In addition, hotel transactions in the wider market during 2019 have achieved improved valuation metrics which has led to increased valuations for the properties owned by the Group. The total uplift in value to our property assets since 2014 is now €397 million highlighting our excellent ability to acquire strategic assets and develop hotels in an efficient manner.

Property, plant and equipment

Property, plant and equipment amounted to €1,471.3 million at the end of 2019. The increase of €295.1 million since 2019 is driven by additions of €189.4 million, a net revaluation gain of €122.4 million, favourable foreign exchange movements which increased the value of the UK hotel assets by €12.7 million and capitalised labour and borrowing costs totalling €1.0 million offset by the depreciation charge of €26.2 million. €4.2 million of assets relating to a renovation project ongoing at Clayton Hotel Burlington Road, Dublin has been transferred to other receivables as a result of a contractual arrangement entered into in 2019, whereby assets totalling €7.5 million are to be transferred to the landlord for €7.5 million.

Additions through acquisitions and capital expenditure €million	2019		2018
Development capital expenditure:
Acquisition of freeholds or site purchases		156.2		9.2
Construction of new build hotels, hotel extensions and renovations		12.5		76.1
Other development expenditure		5.5		4.3
Total development capital expenditure		174.2		89.6
Total refurbishment capital expenditure		15.2		15.9
Additions to property, plant and equipment		189.4		105.5

The Group typically allocates 4% of revenue to refurbishment capital expenditure. In 2019, €6.2 million was spent on refurbishing bedrooms and a further €9.0 million was incurred on public areas, back of house areas and completing health and safety works.

During 2019 the Group completed two acquisitions in London with the acquisition of the effective freehold interest of a newly built hotel in Aldgate for a total cost of £92.9 million and a site with planning approval for a new hotel on Paul Street in Shoreditch for £33.8 million, including acquisition-related costs. The Group also acquired a site adjacent to the Clayton Hotel Cardiff Lane, Dublin for €5.9 million which the Group plans to redevelop into circa 88 bedrooms and ancillary facilities.

Right-of-use assets

Right-of-use assets are recorded at cost less accumulated depreciation. The initial cost at 1 January 2019 comprises the initial amount of the lease liability adjusted for lease prepayments and accruals at the commencement date, and reclassifications from intangible assets where applicable. At 31 December 2019, right-of-use assets amounted to €386.4 million. The remeasurement of lease liabilities of €9.2 million is explained below and increases the right of use assets accordingly.

€million
Right-of-use assets at 1 January 2019				343.7
Depreciation charge on RoU assets				(17.1)
Additions during the year				45.7
Remeasurement of lease liabilities				9.2
Translation adjustment				4.9
Right-of-use assets at 31 December 2019				386.4

Lease liabilities

Lease liabilities are initially measured at the present value of the outstanding lease payments, discounted using the estimated incremental borrowing rate attributable to the lease. The lease liabilities are subsequently remeasured during the lease term following the completion of rent reviews, a reassessment of the lease term or where a lease contract is modified. The remeasurement of lease liabilities relates to reassessment of the lease liability of three hotel leases following completion of two rent reviews and the extension of the lease term at the Ballsbridge Hotel during the period ended 31 December 2019.

€million
Lease liabilities at 1 January 2019				314.4
Interest on lease liabilities				18.9
Additions during the year				42.4
Remeasurement of lease liabilities				9.2
Lease payments				(27.5)
Translation adjustment				4.7
Lease liabilities at 31 December 2019				362.1

Loans and borrowings

Dalata refinanced its debt facilities with a new €525 million debt facility on improved terms in October 2018. The multicurrency facility agreement consists of a €200 million term loan facility and €325 million revolving credit facility (RCF). During 2019, the Group availed of the option to extend the term of the facility by one additional year so it is now maturing in October 2024.

As at 31 December 2019, the drawn loan facility amounted to €415.4 million and the undrawn loan facilities as at 31 December 2019 amounted to €121.2 million.

At 31 December 2019	Sterling borrowings £million	Euro borrowings €million	Total Borrowings €million
Term Loan	176.5	-	207.5
Revolving credit facility:
- Drawn in sterling	90.0	-	105.8
- Drawn in Euro	-	102.1	102.1
Loans and borrowings at 31 December 2019	266.5	102.1	415.4

During the year, the Group drew down £60.0 million and €30.5 million from the multicurrency revolving credit facility to fund the acquisition of a company which owned the Clayton Hotel City of London. The Group also drew down a further £30.0 million from the same facility to fund the acquisition of a site on Paul Street in Shoreditch, London.

The Group limits its exposure to foreign currency by using sterling term debt to act as a natural hedge against the impact of sterling rate fluctuations on the euro value of the Group's UK assets. The Group financed certain acquisitions and developments in the UK by obtaining funding through external borrowings denominated in Sterling. These borrowings amounted to £266.5 million (€313.2 million) at 31 December 2019 (2018: £176.5 million (€197.3 million) and are designated as net investment hedges. The net investment hedge was fully effective during the year.

The Group is also exposed to floating interest rates on its debt obligations and uses hedging instruments to mitigate the risk associated with interest rate fluctuations. This is achieved by entering into interest rate swaps which hedge the variability in cash flows attributable to the interest rate risk. As at 31 December 2019, the interest rate risk on 100% of the Group's term sterling denominated borrowings and 28% of the Group's RCF sterling denominated borrowings was hedged by interest rate swaps.

Principal Risks and Uncertainties

The Group's principal risks and uncertainties for 2020 are:

· The UK has now left the European Union (EU) but the nature of the future trading relationships between the UK and the EU as well as between the UK and other countries remains uncertain. This uncertainty and the resulting outcome may have a negative impact on both the UK and Irish economies. This, in turn, could impact on demand for hotel rooms in both countries.

· Geo-political or other events, such as international terrorism or global health pandemics, could result in uncertainty and have an impact on general economic activity in the UK and Ireland and further afield, which in turn could impact the number of people looking to stay at hotels in both countries. An example of this is the current COVID-19 outbreak in Asia which could result in a slowdown in the world economy resulting in an impact on the demand for hotel rooms. The outbreak has led to travel restrictions in and out of China which could also reduce demand for hotel rooms. We have very limited direct exposure to the Asian market with very small numbers of rooms sold to customers travelling from Asia. Any further restrictions in global travel is likely to reduce the demand for hotel rooms in Ireland and the UK.

· Significant fluctuations in exchange rates can make destinations more expensive or cheaper for potential customers to visit. The recent uncertainty around Brexit has caused notable fluctuations in the value of sterling versus other currencies. A significant reduction in the value of sterling would make Ireland a more expensive destination for UK visitors, which in turn could impact on the number of UK residents staying in Irish hotels. While UK visitors are an important part of our business in Ireland, 85% of our rooms in Dublin are sold to either domestic consumers or visitors from countries other than the UK. Only 8% of our rooms sold in our Regional Ireland hotels are to UK customers. Additionally, the reduction in UK visitors to Ireland is currently being more than offset by the growth in visitors from other markets such as North America and Europe.

· A very significant proportion of EBITDA is generated by the Dublin hotel portfolio, and therefore any downturn in the Dublin market is likely to have a material impact on the Group's performance. There is potential exposure to a decline in business in the event of either a decline in demand in Dublin or a significant increase in supply of rooms. However, demand for hotel rooms in Dublin continues to grow as the economy continues to expand. Our UK expansion strategy will reduce the proportion of EBITDA produced out of Dublin over time.

· The opening of new hotels presents an operational risk that expected earnings may not materialise. The Group is minimising this risk by having teams in place and contracting business with corporates and tour operators well in advance of the hotels' opening dates. Senior management have considerable past experience and a strong track record of success in opening new hotels. The new hotels opened in 2018 and 2019 are all performing well.

· As Dalata expands there is a risk that the organisation's unique culture and values could be damaged. The rollout of the Dalata business model is dependent on the retention of its strong culture. The Group is actively managing this risk by focusing on the behaviours of executive management, investing in training and development programmes and through its employee engagement programme.

· Dalata's business model is built on the ability to grow and retain expertise. There is a risk to the Group's ongoing and future success if it fails to retain key people and develop new talent within the Group. To minimise this risk the Group invests in training and development programmes and reviews market remuneration trends.

· The level of bank borrowings and the associated interest payments and related covenants impact the Group's operating and financial flexibility and increase the potential of default risk. The Group mitigates this risk by preparing detailed financial forecasting and analysis and monitoring debt covenants. The Group also remains disciplined in not overleveraging and ensuring that it can withstand substantial demand shocks. The Group's debt facilities have also been extended out to October 2024.

· As a high volume provider of accommodation and food and beverage services including catering for conferences, meetings and events, footfall at our properties exceeded five million people in 2019 and we employ nearly 5,000 employees. The Group has adequate insurance in place to cover any financial losses that may result due to incidents causing injury or harm to our guests or employees. However, the Group could suffer reputational damage as a result of such incidents. The Group invests significant resources into its health and safety systems to minimise the risk of such incidents occurring.

¹   See Supplementary Financial Information which contains definitions and reconciliations of Alternative Performance Measures ("APM") and other definitions.

² This excludes Newcastle as the hotel in this city only opened in December 2018 and Cambridge as the hotel in this city was added in November 2019 and therefore their performance is not included in our 'Like for Like' RevPAR statistics.

³   Prior year comparatives and the KPI's calculated thereon have been restated to reflect the reclassification of income from managed hotels from revenue to other income in the year ended 31 December 2019. The comparatives also do not include any adjustments for IFRS 16.

⁴ Performance statistics exclude the new hotels which opened during 2018 (Maldron Hotel Kevin Street and Clayton Hotel Charlemont) and the Tara Towers Hotel which closed in September 2018. To achieve an accurate 'like for like' comparison we have also excluded (i) Maldron Hotel Parnell Square due to the significant extensions completed during 2018 which distorts comparability, (ii) Clayton Hotel Liffey Valley due to the significant acquisition of rooms during 2018 and 2019 and (iii) Clayton Hotel Burlington Road due to the redevelopment works ongoing in the hotel.

⁵ Performance statistics exclude the new Maldron Hotel South Mall, Cork which opened in December 2018 and Maldron Hotel Sandy Road, Galway which had a significant extension added during 2018.

⁶ 'Like for like' performance statistics exclude Maldron Hotel Belfast City, Maldron Hotel Newcastle and Clayton Hotel City of London which opened in March 2018, December 2018 and January 2019 respectively and The Tamburlaine Hotel, Cambridge which was added in November 2019.

⁷ Included in net cash from operating activities in 2018 in line with previous applicable accounting standards. Under IFRS 16, in 2019 fixed rent paid is represented by lease repayments and interest.

⁸ Other non-current assets comprise investment property, deferred tax assets, contract fulfilment costs and other receivables (which primarily relate to costs incurred on a renovation project at a leased hotel where the Group will be reimbursed by the landlord).

⁹ Other liabilities comprise deferred tax liabilities, derivatives, provision for liabilities and current tax liabilities.

Dalata Hotel Group plc
Condensed consolidated statement of profit or loss and other comprehensive income
for the year ended 31 December 2019
				Restated*
			2019	2018
	Note		€'000	€'000
Continuing operations
Revenue	2		429,184	392,568
Cost of sales			(154,584)	(142,275)
Gross profit			274,600	250,293
Administrative expenses			(155,505)	(157,515)
Other income			1,206	4,037
Operating profit			120,301	96,815
Finance costs	4		(30,613)	(9,514)
Profit before tax			89,688	87,301
Tax charge			(11,476)	(12,077)
Profit for the year attributable to owners of the Company			78,212	75,224
Other comprehensive income
Items that will not be reclassified to profit or loss
Revaluation of property	7		120,723	102,946
Related deferred tax			(17,272)	(9,634)
			103,451	93,312
Items that are or may be reclassified subsequently to profit or loss
Exchange difference on translating foreign operations			23,592	(2,667)
(Loss)/gain on net investment hedge			(16,987)	1,625
Fair value movement on cash flow hedges			(4,238)	(554)
Cash flow hedges - reclassified to profit or loss			1,177	1,026
Related deferred tax			382	(59)
			3,926	(629)
Other comprehensive income for the year, net of tax			107,377	92,683
Total comprehensive income for the year attributable to owners of the Company			185,589	167,907
Earnings per share
Basic earnings per share	13		42.4 cents	40.9 cents
Diluted earnings per share	13		42.0 cents	40.4 cents

*Income from managed hotels has been reclassified from revenue to other income for the year ended 31 December 2019. The prior year figures have been restated for this reclassification (note 1).

Dalata Hotel Group plc
Condensed consolidated statement of financial position
at 31 December 2019
	Note		2019	2018
Assets			€'000	€'000
Non-current assets
Intangible assets and goodwill	6		36,133	54,417
Property, plant and equipment	7		1,471,315	1,176,260
Right-of-use assets	9		386,407	-
Investment property			2,149	1,560
Deferred tax assets			3,527	2,613
Contract fulfilment costs	10		13,346	9,066
Other receivables			6,760	14,759
Total non-current assets			1,919,637	1,258,675
Current assets
Trade and other receivables			21,802	22,566
Inventories			1,927	1,954
Cash and cash equivalents			40,586	35,907
Total current assets			64,315	60,427
Total assets			1,983,952	1,319,102
Equity
Share capital			1,851	1,843
Share premium			504,488	503,113
Capital contribution			25,724	25,724
Merger reserve			(10,337)	(10,337)
Share-based payment reserve			4,900	4,232
Hedging reserve			(3,958)	(1,279)
Revaluation reserve			351,869	248,418
Translation reserve			(6,593)	(13,198)
Retained earnings			204,897	144,061
Total equity			1,072,841	902,577
Liabilities
Non-current liabilities
Loans and borrowings	11		411,739	301,889
Lease liabilities	9		331,544	-
Deferred tax liabilities			59,358	41,129
Derivatives			4,434	1,306
Provision for liabilities			4,804	4,783
Total non-current liabilities			811,879	349,107
Current liabilities
Lease liabilities		9	30,557	-
Trade and other payables			66,163	65,250
Derivatives			89	-
Current tax liabilities			664	309
Provision for liabilities			1,759	1,859
Total current liabilities			99,232	67,418
Total liabilities			911,111	416,525
Total equity and liabilities			1,983,952	1,319,102

 On behalf of the Board:

 John Hennessy  Patrick McCann

 Chair   Director

Dalata Hotel Group plc Condensed consolidated statement of changes in equity for the year ended 31 December 2019
					Attributable to owners of the Company
					Share-based
	Share	Share	Capital	Merger	payment	Hedging	Revaluation	Translation	Retained
	capital	premium	contribution	reserve	reserve	reserve	reserve	reserve	earnings	Total
	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000
At 1 January 2019	1,843	503,113	25,724	(10,337)	4,232	(1,279)	248,418	(13,198)	144,061	902,577
Comprehensive income:
Profit for the year	-	-	-	-	-	-	-	-	78,212	78,212
Other comprehensive income
Exchange difference on translating foreign operations	-	-	-	-	-	-	-	23,592	-	23,592
Loss on net investment hedge	-	-	-	-	-	-	-	(16,987)	-	(16,987)
Revaluation of properties (note 7)	-	-	-	-	-	-	120,723	-	-	120,723
Fair value movement on cash flow hedges	-	-	-	-	-	(4,238)	-	-	-	(4,238)
Cash flow hedges - reclassified to profit or loss	-	-	-	-	-	1,177	-	-	-	1,177
Related deferred tax	-	-	-	-	-	382	(17,272)	-	-	(16,890)
Total comprehensive income for the year	-	-	-	-	-	(2,679)	103,451	6,605	78,212	185,589
Transactions with owners of the Company:
Equity-settled share-based payments (note 5)	-	-	-	-	2,679	-	-	-	-	2,679
Vesting of share awards and options (note 5)	8	1,375	-	-	(2,011)	-	-	-	2,011	1,383
Dividends paid	-	-	-	-	-	-	-	-	(19,387)	(19,387)
Total transactions with owners of the Company	8	1,375	-	-	668	-	-	-	(17,376)	(15,325)
At 31 December 2019	1,851	504,488	25,724	(10,337)	4,900	(3,958)	351,869	(6,593)	204,897	1,072,841

Dalata Hotel Group plc Condensed consolidated statement of changes in equity for the year ended 31 December 2018
					Attributable to owners of the Company
					Share-based
	Share	Share	Capital	Merger	payment	Hedging	Revaluation	Translation	Retained
	capital	premium	contribution	reserve	reserve	reserve	reserve	reserve	earnings	Total
	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000
At 1 January 2018	1,837	503,113	25,724	(10,337)	2,753	(1,692)	155,106	(12,156)	73,045	737,393
Comprehensive income:
Profit for the year	-	-	-	-	-	-	-	-	75,224	75,224
Other comprehensive income
Exchange difference on translating foreign operations	-	-	-	-	-	-	-	(2,667)	-	(2,667)
Gain on net investment hedge	-	-	-	-	-	-	-	1,625	-	1,625
Revaluation of properties (note 7)	-	-	-	-	-	-	102,946	-	-	102,946
Fair value movement on cash flow hedges	-	-	-	-	-	(554)	-	-	-	(554)
Cash flow hedges - reclassified to profit or loss	-	-	-	-	-	1,026	-	-	-	1,026
Related deferred tax	-	-	-	-	-	(59)	(9,634)	-	-	(9,693)
Total comprehensive income for the year	-	-	-	-	-	413	93,312	(1,042)	75,224	167,907
Transactions with owners of the Company:
Equity-settled share-based payments (note 5)	-	-	-	-	2,800	-	-	-	-	2,800
Vesting of share awards (note 5)	6	-	-	-	(1,321)	-	-	-	1,321	6
Dividends paid	-	-	-	-	-	-	-	-	(5,529)	(5,529)
Total transactions with owners of the Company	6	-	-	-	1,479	-	-	-	(4,208)	(2,723)
At 31 December 2018	1,843	503,113	25,724	(10,337)	4,232	(1,279)	248,418	(13,198)	144,061	902,577

Dalata Hotel Group plc
Condensed consolidated statement of cash flows
for the year ended 31 December 2019
			2019	2018
			€'000	€'000
Cash flows from operating activities
Profit for the year			78,212	75,224
Adjustments for:
Depreciation of property, plant and equipment			26,183	19,698
Depreciation of right-of-use assets			17,127	-
Amortisation of intangible assets			195	44
Net revaluation movements through profit or loss			(1,601)	3,137
Share-based payment expense			2,679	2,800
Interest on lease liabilities			18,945	-
Other interest and finance costs			11,668	9,514
Tax charge			11,476	12,077
			164,884	122,494
Increase in trade and other payables and provision for liabilities			1,569	7,950
Increase in current and non-current receivables			(793)	(2,414)
Decrease/(increase) in inventories			85	(191)
Tax paid			(10,776)	(12,085)
Net cash from operating activities			154,969	115,754
Cash flows from investing activities
Purchase of property, plant and equipment			(176,933)	(112,692)
Contract fulfilment cost payments			(3,528)	(304)
Costs paid on entering new leases and agreements for lease			(5,790)	(3,734)
Deposits and costs paid for future acquisitions			-	(5,613)
Purchase of intangible assets			(1,076)	-
Net cash used in investing activities			(187,327)	(122,343)
Cash flows from financing activities
Interest paid on lease liabilities			(18,945)	-
Other interest and finance costs paid			(11,196)	(13,188)
Receipt of bank loans			134,437	137,902
Repayment of bank loans			(42,158)	(92,563)
Repayment of lease liabilities			(8,569)	-
Dividends paid			(19,387)	(5,529)
Proceeds from vesting of share awards and options			1,383	6
Net cash from financing activities			35,565	26,628
Net increase in cash and cash equivalents			3,207	20,039
Cash and cash equivalents at the beginning of the year			35,907	15,745
Effect of movements in exchange rates			1,472	123
Cash and cash equivalents at the end of the year			40,586	35,907

Dalata Hotel Group plc

Notes to the condensed consolidated financial statements

1   General information and basis of preparation

Dalata Hotel Group plc (the 'Company') is a company domiciled in the Republic of Ireland. The Company's registered office is 4^th Floor, Burton Court, Burton Hall Drive, Sandyford, Dublin 18.

The financial information presented here in these condensed consolidated financial statements does not comprise full statutory financial statements for 2019 or 2018 and therefore does not include all of the information required for full annual financial statements. The condensed consolidated financial statements for the year ended 31 December 2019 comprise the Company and its subsidiary undertakings (the 'Group') and were authorised for issue by the Board of Directors on 24 February 2020. Full statutory financial statements for the year ended 31 December 2019, prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the EU, together with an unqualified audit report thereon under Section 391 of the Companies Act 2014, will be annexed to the annual return and filed with the Registrar of Companies. The full statutory financial statements for 2018 have already been filed with the Registrar of Companies with an unqualified audit report thereon.

These condensed consolidated financial statements are presented in Euro, rounded to the nearest thousand or million (this is clearly set out in the condensed financial statements where applicable), which is the functional currency of the parent company and also the presentation currency for the Group's financial reporting.

The preparation of financial statements in accordance with IFRS as adopted by the EU requires the Directors to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as disclosure of contingent assets and liabilities, at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting year. Such estimates and judgements are based on historical experience and other factors, including expectation of future events, that are believed to be reasonable under the circumstances and are subject to continued re-evaluation. Actual outcomes could differ from those estimates.

In preparing these financial statements, the critical judgements made by Directors in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2018 with the exception of estimates surrounding the implementation of IFRS 16 Leases, which is effective for the first time in the financial year ended 31 December 2019. Estimates surrounding the determination of the appropriate rate to discount lease payments under IFRS 16 Leases is a new source of estimation uncertainty.

The key judgements and estimates impacting these condensed consolidated financial statements are as follows:

Significant judgements

· Carrying value of own-use property measured at fair value (note 7);

· Carrying value of goodwill including assumptions underpinning the impairment tests; and

· Accounting for hotel acquisitions (notes 7, 9).

Key source of estimation uncertainty

· Appropriate discount rate for lease payments with regard to the implementation of IFRS 16 (note 8).

  Significant accounting policies

The accounting policies applied in these condensed consolidated financial statements are consistent with those applied in the consolidated financial statements for the year ended 31 December 2018 with the exception of the lease payments accounting policy as a result of the adoption of the new IFRS accounting standard, IFRS 16 Leases and the revenue recognition accounting policy as a result of a change in the composition of operating segments.

IFRS 16 Leases

The accounting policy for lease payments as included in the 2018 consolidated financial statements has been replaced with the following accounting policy from the date of initial application of IFRS 16 Leases being 1 January 2019.

IFRS 16 Leases introduces an on-balance sheet accounting model for lessees. As a result, the Group, as a lessee, has recognised right-of-use assets representing its rights to use the underlying assets and lease liabilities representing its obligation to make lease payments in its statement of financial position. The Group has applied IFRS 16 Leases using the modified retrospective approach. Accordingly, the comparative information for 2018 has not been restated. 

The impact of IFRS 16 Leases is detailed in notes 8 and 9 to the condensed consolidated financial statements.

At inception of a lease contract, the Group assesses whether a contract is, or contains, a lease. If the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration, it is recognised as a lease.

To assess the right to control, the Group assesses whether:

· the contract involves the use of an identified asset;

· the Group has the right to obtain substantially all of the economic benefits from the use of the asset; and

· the Group has the right to direct the use of the asset.

A lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. The Group uses its incremental borrowing rate as the discount rate, which is defined as the estimated rate of interest that the lessee would have to pay to borrow, over a similar term and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The estimated incremental borrowing rate for each leased asset is derived from country specific risk-free interest rates over the relevant lease term, adjusted for the finance margin attainable by each lessee and asset specific adjustments designed to reflect the underlying asset's location and condition.

Lease payments included in the measurement of the lease liability comprise the following:

· fixed payments (including in-substance fixed payments) less any lease incentives receivable;

· variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

· amounts expected to be payable under a residual value guarantee;

· the exercise price under a purchase option that the Group is reasonably certain to exercise; and

· penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.

Variable lease payments linked to future performance or use of an underlying asset are excluded from the measurement of the lease liability and the right-of-use asset. The related payments are recognised as an expense in the period in which the event or condition that triggers those payments occurs and are included in administrative expenses in profit or loss. 

The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect lease payments. 

The Group remeasures the lease liability where lease payments change due to changes in an index or rate, changes in expected lease term or where a lease contract is modified. When the lease liability is remeasured, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset and the end of the lease term.  Right-of-use assets are reviewed on an annual basis or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Group applies IAS 36 Impairment of Assets to determine whether a cash-generating unit with a right-of-use asset is impaired and accounts for any identified impairments through profit or loss.

The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. The Group applies the fair value model in IAS 40 Investment Property to right-of-use assets that meet the definition of investment property. 

The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of fixtures, fittings and equipment that have a lease term of 12 months or less and leases of low-value assets. Assets are considered low value if the value of the asset when new is less than €5,000.  

The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

Pre IFRS 16 alternative performance measures  

As set out in note 8 and 9, the adoption of IFRS 16 Leases has had a significant impact on the Group's condensed consolidated financial statements. In line with the transition approach selected by the Group under the standard, the modified retrospective approach, the 2018 comparative information has not been restated.

Given the scale of the impact and the non-restatement of the comparatives, the Group has elected to also disclose 2019 numbers as if IFRS 16 Leases had not applied. This is to provide additional quality and depth to users' understanding of the performance and financial position of the business. This is particularly important given key metrics, which users have heretofore placed significant reliance on, have been considerably impacted.

Change in reportable segments

During the year ended 31 December 2019, the Group changed the composition of operating segments. This reflected the decreasing importance of management fees as an element of the business and reflects the way the information is now reported and analysed internally by the chief operating decision makers.

The change in the revenue recognition accounting policy is isolated to a change in classification. In the year ended 31 December 2018, management fees earned from hotels managed by the Group were recognised within revenue. From 1 January 2019, the Group has included income earned from managed hotels within other income as a consequence of the change in reportable segments referred to hereafter.

The effect of the change on the prior year would have resulted in a decrease in revenue of €1.2 million for the year ended 31 December 2018, with a corresponding increase in other income of the same amount. These comparatives have been restated. The impact of this change on the comparatives for the Group for the year ended 31 December 2019 is presented hereafter.

	As reported in
	31 December	31 December	31 December
	2018 Financial	2018	2018
	Statements	Adjustments	Restated
	€'000	€'000	€'000
Revenue	393,736	(1,168)	392,568
Other income	2,869	1,168	4,037

If the Group had applied the previous composition of operating segments in the current year, this would have resulted in an increase in reported revenue of €0.9 million for the year ended 31 December 2019, with a corresponding decrease in other income of the same amount.

2   Operating Segments

The segments are reported in accordance with IFRS 8 Operating Segments. The segment information is reported in the same way as it is reviewed and analysed internally by the chief operating decision makers, primarily the CEO, Deputy CEOs and the Board of Directors.

The Group segments its leased and owned business by geographical region within which the hotels operate being Dublin, Regional Ireland and United Kingdom. These comprise the Group's three reportable segments.

Dublin, Regional Ireland and United Kingdom segments

These segments are concerned with hotels that are either owned or leased by the Group. As at 31 December 2019, the Group owns 28 hotels (31 December 2018: 27 hotels) and has effective ownership of one further hotel which it operates (31 December 2018: one hotel). It also owns the majority of one of the other hotels which it operates (31 December 2018: one hotel). The Group also leases 11 hotel buildings from property owners (31 December 2018: 10 hotels) and is entitled to the benefits and carries the risks associated with operating these hotels.

The Group's revenue from leased and owned hotels is primarily derived from room sales and food and beverage sales in restaurants, bars and banqueting. The main operating costs arising are payroll, cost of goods for resale, commissions paid to online travel agents on room sales, other operating costs, and, in the case of leased hotels, variable rent payments (where linked to turnover or profit) made to lessors. In 2019, fixed rental costs are no longer included in operating costs in accordance with IFRS 16 Leases which instead reflects interest on lease liabilities and depreciation of right-of-use assets.

Revenue		Restated*
	2019	2018
	€'000	€'000
Dublin	245,401	234,907
Regional Ireland	84,925	79,554
United Kingdom	98,858	78,107
	______	______
Total revenue	429,184	392,568
	______	______

*Income from managed hotels has been reclassified from revenue to other income in the year ended 31 December 2019 following the change in reportable segments during 2019, which is described in note 1. The prior year figures have been restated for this reclassification.

		Restated*
	2019	2018
	€'000	€'000
Segmental results - EBITDAR
Dublin	119,745	114,007
Regional Ireland	24,528	22,679
United Kingdom	38,505	30,494
	______	______
EBITDAR for reportable segments	182,778	167,180
	______	______
Segmental results - EBITDA
Dublin	112,922	86,368
Regional Ireland	24,426	21,577
United Kingdom	38,109	26,298
	______	______
EBITDA for reportable segments	175,457	134,243
	______	______
Reconciliation to results for the year
Segmental results - EBITDA	175,457	134,243
Other income	1,206	1,439
Central costs	(11,770)	(13,299)
Share-based payments expense	(2,679)	(2,800)
	______	______
Adjusted EBITDA	162,214	119,583
Net property revaluation movements through profit or loss	1,601	(3,137)
Proceeds from insurance claim	-	2,598
Hotel pre-opening expenses	(9)	(2,487)
	______	______
Group EBITDA	163,806	116,557
Depreciation of property, plant and equipment	(26,183)	(19,698)
Depreciation of right-of-use assets	(17,127)	-
Amortisation of intangible assets	(195)	(44)
Interest on lease liabilities	(18,945)	-
Other interest and finance costs	(11,668)	(9,514)
	______	______
Profit before tax	89,688	87,301
Adjusted tax charge	(10,561)	(12,452)
Tax adjustment for adjusting items	(58)	375
Tax impact of proceeds from insurance claim	(857)	-
	______	______
Profit for the year attributable to owners of the Company	78,212	75,224
	______	______

*Income from managed hotels has been reclassified from revenue to other income in the year ended 31 December 2019 following the change in reportable segments during 2019, which is described in note 1. The prior year figures have been restated for this reclassification.

Group EBITDA to 31 December 2019 represents earnings before interest on lease liabilities, other interest and finance costs, tax, depreciation of property, plant and equipment and right-of-use assets, and amortisation of intangible assets.

Group EBITDA to 31 December 2018 represents earnings before interest and finance costs, tax, depreciation of property, plant and equipment and amortisation of intangible assets.

In 2018, Group EBITDA is calculated after deduction of fixed rent of €25.4 million and variable rent of €7.5 million under IAS 17 Leases. From 1 January 2019, as a result of the application of IFRS 16, Group EBITDA has no comparative fixed rent deduction, however, Group EBITDA continues to include a deduction for variable rent. Interest on lease liabilities and depreciation of right-of-use assets are now recognised instead and appear below Group EBITDA. If the Group accounted for rent under IAS 17 to 31 December 2019, rental expenses would include fixed rent of €27.4 million and EBITDA would decrease by the same amount.  

Adjusted EBITDA is presented as an alternative performance measure to show the underlying operating performance of the Group excluding items which are not reflective of normal trading activities or distort comparability either period on period or with other similar businesses. Consequently, Adjusted EBITDA represents Group EBITDA before:

· Net property revaluation movements through profit or loss (note 7);

· Hotel pre-opening expenses (note 3); and

· Proceeds from insurance claim in 2018.

The line item 'central costs' includes costs of the Group's central functions including operations support, technology, sales and marketing, human resources, finance, corporate services and business development.

Share-based payments expense is presented separately from central costs as this expense relates to employees across the Group.

'Segmental results - EBITDA' for Dublin, Regional Ireland and United Kingdom represents the 'Adjusted EBITDA' for each geographical location before central costs, share-based payments expense and other income. It is the net operational contribution of leased and owned hotels in each geographical location.

'Segmental results - EBITDAR' for Dublin, Regional Ireland and United Kingdom represents 'Segmental results - EBITDA' before rent (fixed and variable).

Adjusted tax charge shows the tax charge excluding the tax effect of items which are not reflective of normal trading activities or distort comparability either period on period or with other similar businesses.

Tax impact of proceeds from insurance claim reflects the capital gains tax which is now payable following the Group's decision not to reinstate the asset that was the subject of the insurance claim in 2018. The tax adjustment for adjusting items reflects the impact of tax on other adjusting items. The adjusted tax charge excludes these two amounts.

Disaggregated revenue information

Disaggregated revenue is reported in the same way as it is reviewed and analysed internally by the chief operating decision makers, primarily the CEO, Deputy CEOs and the Board of Directors.

The key components of revenue reviewed by the chief operating decision makers are:

· Room revenue which relates to the rental of rooms in each hotel. Revenue is recognised when the hotel room is occupied, and the service is provided;

· Food and beverage revenue which relates to sales of food and beverages at the hotel property. Revenue is recognised at the point of sale; and

· Other revenue includes revenue from leisure centres, car parks, meeting room hire and other revenue sources at the hotels. Leisure centre revenue is recognised over the life of the membership while the other items are recognised when the service is provided.

Revenue review by segment - Dublin	2019	2018
	€'000	€'000
Room revenue	176,318	168,642
Food and beverage revenue	53,019	50,640
Other revenue	16,064	15,625
	______	______
Total revenue	245,401	234,907
	______	______

Revenue review by segment - Regional Ireland	2019	2018
	€'000	€'000
Room revenue	49,695	45,167
Food and beverage revenue	26,767	26,441
Other revenue	8,463	7,946
	______	______
Total revenue	84,925	79,554
	______	______

Revenue review by segment - United Kingdom	2019	2018
	€'000	€'000
Room revenue	71,503	54,416
Food and beverage revenue	20,373	17,167
Other revenue	6,982	6,524
	_____	______
Total revenue	98,858	78,107
	______	______

 Other geographical information

Revenue					Restated*
	2019				2018
	Republic of Ireland	United Kingdom	Total		Republic of Ireland	United Kingdom	Total
	€'000	€'000	€'000		€'000	€'000	€'000
Owned hotels	227,237	76,278	303,515		204,487	62,801	267,288
Leased hotels	103,089	22,580	125,669		109,974	15,306	125,280
	_____	_____	_____		_____	_____	_____
Total revenue	330,326	98,858	429,184		314,461	78,107	392,568
	_____	_____	_____		_____	_____	_____

					Restated*
EBITDAR	2019				2018
	Republic of Ireland	United Kingdom	Total		Republic of Ireland	United Kingdom	Total
	€'000	€'000	€'000		€'000	€'000	€'000
Owned hotels	96,268	30,362	126,630		84,398	24,894	109,292
Leased hotels	48,005	8,143	56,148		52,288	5,600	57,888
	_____	_____	_____		_____	_____	_____
Total EBITDAR	144,273	38,505	182,778		136,686	30,494	167,180
	_____	_____	_____		_____	_____	_____

Other information	2019				2018
	Republic of Ireland	United Kingdom	Total		Republic of Ireland	United Kingdom	Total
	€'000	€'000	€'000		€'000	€'000	€'000
Variable rent	6,927	394	7,321		7,175	371	7,546
Depreciation of property, plant and equipment	17,798	8,385	26,183		14,010	5,688	19,698
Depreciation of right-of-use assets	14,371	2,756	17,127		-	-	-
Interest on lease liabilities	13,237	5,708	18,945		-	-	-
Hotel fixed rental expense under IAS 17	-	-	-		21,568	3,823	25,391

*Income from managed hotels has been reclassified from revenue to other income in the year ended 31 December 2019 following the change in reportable segments during 2019, which is described in note 1. The prior year figures have been restated for this reclassification.

Assets and liabilities	At 31 December 2019				At 31 December 2018
	Republic of Ireland	United Kingdom	Total		Republic of Ireland	United Kingdom	Total
	€'000	€'000	€'000		€'000	€'000	€'000
Assets
Intangible assets and goodwill	23,309	12,824	36,133		41,588	12,829	54,417
Property, plant and equipment	1,052,442	418,873	1,471,315		930,676	245,584	1,176,260
Right-of-use assets	250,179	136,228	386,407		-	-	-
Contract fulfilment costs	13,346	-	13,346		9,066	-	9,066
Investment property	1,560	589	2,149		1,560	-	1,560
Other receivables	1,959	4,801	6,760		3,659	11,100	14,759
Current assets	38,851	25,464	64,315		44,016	16,411	60,427
	______	______	______		______	______	______
Total assets excluding deferred tax assets	1,381,646	598,779	1,980,425		1,030,565	285,924	1,316,489
	______	______			______	______
Deferred tax assets			3,527				2,613
			______				______
Total assets			1,983,952				1,319,102
			______				______
Liabilities
Loans and borrowings	98,505	313,234	411,739		102,508	199,381	301,889
Lease liabilities	231,808	130,293	362,101		-	-	-
Trade and other payables	50,886	15,277	66,163		54,225	11,025	65,250
	______	______	______		______	______	______
Total liabilities excluding provision for liabilities, derivatives and tax liabilities	381,199	458,804	840,003		156,733	210,406	367,139
	______	______			______	______
Provision for liabilities			6,563				6,642
Derivatives			4,523				1,306
Current tax liabilities			664				309
Deferred tax liabilities			59,358				41,129
			______				______
Total liabilities			911,111				416,525
			______				______
Revaluation reserve	317,165	34,704	351,869		225,290	23,128	248,418
	______	______	______		______	______	______

The above information on assets, liabilities and revaluation reserve is presented by country as it does not form part of the segmental information routinely reviewed by the chief operating decision makers.

Loans and borrowings are categorised according to their underlying currency. Loans and borrowings denominated in Sterling (£266.5 million (€313.2 million)) are classified as liabilities in the United Kingdom and act as a net investment hedge as at 31 December 2019 (2018: £176.5 million (€197.3 million)) (note 11). Loans and borrowings denominated in Euro are classified as liabilities in the Republic of Ireland.

3  Other information

	2019	2018
	€'000	€'000
Depreciation of property, plant and equipment	26,183	19,698
Depreciation of right-of-use assets	17,127	-
Operating lease rentals: land and buildings (including central office lease costs)	7,321	33,171
Hotel pre-opening expenses	9	2,487

Hotel pre-opening expenses relate to costs incurred by the Group in advance of the six new hotels which opened in 2018 (five) and early 2019 (one). These costs primarily relate to payroll expenses, sales and marketing costs and training costs of new staff.

4  Finance costs

	2019	2018
	€'000	€'000
Interest on lease liabilities (note 9)	18,945	-
Interest expense on bank loans and borrowings	9,126	7,801
Cash flow hedges - reclassified from other comprehensive income	1,177	1,026
Other finance costs	1,536	2,760
Net exchange loss/(gain) on financing activities	366	(325)
Interest capitalised to property, plant and equipment (note 7)	(400)	(1,748)
Interest capitalised to contract fulfilment costs (note 10)	(137)	-
	______	______
	30,613	9,514
	______	______

The Group incurred interest amounting to €18.9 million on lease liabilities since the date of initial application of IFRS 16 Leases (note 9).

The Group uses interest rate swaps to convert the interest rate on part of its debt from floating rate to fixed rate. The cash flow hedge amount reclassified from other comprehensive income is shown separately within finance costs and primarily represents the additional interest the Group paid as a result of the interest rate swaps.

Other finance costs include the amortisation of capitalised debt costs, commitment fees and other banking fees. As a result of refinancing in 2018, the write-off of unamortised arrangement fees relating to the original loan facility on modification of €0.9 million were also included in finance costs in 2018 (note 11).

Exchange gain/loss on financing activities relates principally to loans which did not form part of the net investment hedge.

Interest on loans and borrowings amounting to €0.4 million was capitalised to assets under construction on the basis that this cost was directly attributable to the construction of qualifying assets (note 7) (2018: €1.7 million). Interest on loans and borrowings amounting to €0.1 million was capitalised to contract fulfilment costs on the basis that this cost was directly attributable to the construction of qualifying assets (note 10) (2018: €nil). The capitalisation rates applied by the Group, which were reflective of the weighted average interest cost in respect of Euro denominated borrowings and Sterling denominated borrowings for the year, were 1.4% (2018: 2.03%) and 2.9% (2018: 3.43%) respectively.

5  Share-based payments expense

The total share-based payments expense for the Group's employee share schemes charged to the profit or loss during the year was €2.7 million (2018: €2.8 million), analysed as follows:

	2019	2018
	€'000	€'000
Long Term Incentive Plans	2,268	2,374
Share Save schemes	411	426
	______	______
	2,679	2,800
	______	______

  Details of the schemes operated by the Group are set out below:

  Long Term Incentive Plans

During the year ended 31 December 2019, the Board approved the conditional grant of 839,373 ordinary shares ('the Award') pursuant to the terms and conditions of the Group's 2017 Long Term Incentive Plan ('the 2017 LTIP'). The Award was made to senior employees across the Group (96 in total). Vesting of the Award is based on two independently assessed performance targets, each one representing 50% of the Award. The first is based on earnings per share ('EPS') and the second on total shareholder return ('TSR'). The performance period for the award is 1 January 2019 to 31 December 2021 and 25% of the award will vest at threshold performance, provided service conditions attaching to the awards are met. Threshold performance for the TSR condition is performance in line with the Dow Jones European STOXX Travel and Leisure Index with 100% vesting for outperformance of the index by 10% per annum. Threshold performance for the EPS condition, which is a non-market based performance condition, is based on the achievement of Adjusted Basic EPS pre IFRS 16, as disclosed in the Group's 2021 audited consolidated financial statements, of €0.45 with 100% vesting for Adjusted Basic EPS pre IFRS 16 of €0.55 or greater. Awards will vest on a straight-line basis for performance between these points. EPS targets may be amended in restricted circumstances if an event occurs which causes the Remuneration Committee to determine an amended or substituted performance condition would be more appropriate and not materially more or less difficult to satisfy.

Movements in the number of share awards are as follows:

	2019	2018
	Awards	Awards
Outstanding at the beginning of the year	2,159,409	2,114,579
Granted during the year	839,373	743,795
Forfeited during the year	(15,763)	(30,415)
Lapsed unvested during the year	(335,444)	-
Exercised during the year	(285,809)	(668,550)
	________	________
Outstanding at the end of the year	2,361,766	2,159,409
	________	________

	2019	2018
Grant date	Awards	Awards
March 2016	-	621,253
May 2017	804,976	816,407
March 2018	717,417	721,749
March 2019	839,373	-
	________	________
Outstanding at the end of the year	2,361,766	2,159,409
	________	________

During the year ended 31 December 2019, the Company issued 285,809 shares on foot of the vesting of awards granted in March 2016 under the terms of the 2014 LTIP. Over the course of the three year performance period, 18,658 share awards lapsed due to vesting conditions which were not satisfied. 335,444 shares lapsed unvested due to TSR performance below maximum target. The weighted average share price at the date of exercise for awards exercised during the year was €6.00.

Measurement of fair values

The fair value, at the grant date, of the TSR-based conditional share awards was measured using a Monte Carlo simulation model. Non-market based performance conditions attached to the awards were not taken into account in measuring fair value at the grant date. The valuation and key assumptions used in the measurement of the fair values at the grant date were as follows:

	March 2019	March 2018	May 2017	March 2016
Fair value at grant date	€3.43	€3.03	€2.14	€2.45
Share price at grant date	€5.98	€6.06	€5.09	€4.69
Exercise price	€0.01	€0.01	€0.01	€0.01
Expected volatility	29.96% p.a.	29.77% p.a.	25.89% p.a.	30.20% p.a.
Dividend yield	1.5%	1.5%	1.5%	1.5%
Performance period	3 years	3 years	3 years	3 years

For measurement purposes, a future dividend yield of 1.5% per annum has been assumed for the purpose of informing the projected Company dividend in the LTIP fair value calculation model. This percentage is not in any way indicative of the expected dividend yield of the Group. This will be decided by the Board of Directors as appropriate. Expected volatility is based on the historical volatility of the Company's share price.

Awards granted in 2017, 2018 and 2019 under the 2017 LTIP include EPS-based conditional share awards. The EPS-related performance condition is a non-market performance condition and does not impact the fair value of the award at the grant date, which equals the share price less exercise price. Instead, an estimate is made by the Group as to the number of shares which are expected to vest based on satisfaction of the EPS-related performance condition, and this, together with the fair value of the award at grant date, determines the accounting charge to be spread over the vesting period. The estimate of the number of shares which are expected to vest is reviewed in each reporting period over the vesting period of the award and the accounting charge is adjusted accordingly.

  Share Save schemes

The Remuneration Committee of the Board of Directors approved the granting of share options under the UK and Ireland Share Save schemes (the 'Schemes') for all eligible employees across the Group in 2016, 2017, 2018 and 2019. 527 employees availed of the Schemes in 2019 (379 employees availed of the Schemes in 2018). Each Scheme is for three years and employees may choose to purchase shares at the end of the three year period at the fixed discounted price set at the start of the three year period. The share price for the Schemes has been set at a 25% discount for Republic of Ireland based employees and 20% for United Kingdom based employees in line with the maximum amount permitted under tax legislation in both jurisdictions.

During the year ended 31 December 2019, the Company issued 465,145 shares on maturity of the share options granted as part of the Schemes granted in 2016. The weighted average share price at the date of exercise for options exercised during the year was €5.23.

Movements in the number of share options and the related weighted average exercise price ("WAEP") are as follows:

	2019		2018
	Options	WAEP € per share	Options	WAEP € per share
Outstanding at the beginning of the year	1,638,119	3.85	1,429,099	3.52
Granted during the year	947,434	3.66	411,966	5.02
Forfeited during the year	(336,286)	4.47	(202,794)	3.94
Exercised during the year	(465,145)	2.96	(152)	2.91
Outstanding at the end of the year	1,784,122	3.89	1,638,119	3.85

The weighted average remaining contractual life for the Schemes' share options outstanding at 31 December 2019 is 2.5 years (2018: 1.7 years).

6  Intangible assets and goodwill

	Goodwill	Other indefinite- lived intangible assets	Other intangible assets	Total
	€'000	€'000	€'000	€'000
Cost
Balance at 1 January 2018	79,126	20,500	676	100,302
Effect of movements in exchange rates	(96)	-	(5)	(101)
	_______	_______	_______	_______
Balance at 31 December 2018	79,030	20,500	671	100,201
	_______	_______	_______	_______
Balance at 1 January 2019	79,030	20,500	671	100,201
Transfer to investment property	-	-	(671)	(671)
Transfer to right-of-use assets (note 8)	-	(20,500)	-	(20,500)
Transfer from non-current prepayments	-	-	1,200	1,200
Addition of software licence agreement	-	-	1,216	1,216
Effect of movements in exchange rates	598	-	-	598
	_______	_______	_______	_______
Balance at 31 December 2019	79,628	-	2,416	82,044
	_______	_______	_______	_______
Accumulated amortisation and impairment losses
Balance at 1 January 2018	(45,716)	-	(24)	(45,740)
Amortisation of intangible assets	-	-	(44)	(44)
	_______	_______	_______	_______
Balance at 31 December 2018	(45,716)	-	(68)	(45,784)
	_______	_______	_______	_______
Balance at 1 January 2019	(45,716)	-	(68)	(45,784)
Transfer to investment property	-	-	68	68
Amortisation of intangible assets	-	-	(195)	(195)
	_______	_______	_______	_______
Balance at 31 December 2019	(45,716)	-	(195)	(45,911)
	_______	_______	_______	_______
Carrying amounts
At 31 December 2018	33,314	20,500	603	54,417
	_______	_______	_______	_______
At 31 December 2019	33,912	-	2,221	36,133
	_______	_______	_______	_______

  Goodwill

Goodwill is attributable to factors including expected profitability and revenue growth, increased market share, increased geographical presence, the opportunity to develop the Group's brands and the synergies expected to arise within the Group after acquisition. 

Included in the goodwill figure is €12.8 million (£10.9 million) which is attributable to goodwill arising on acquisition of foreign operations. Consequently, such goodwill is subsequently retranslated at the closing rate.

The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired.

At 31 December 2019, there were no indicators of impairment present and the Directors concluded that the carrying value of goodwill was not impaired at 31 December 2019.

Other indefinite-lived intangible assets

The indefinite-lived intangible asset amounting to €20.5 million at 31 December 2018, related to the Group's acquired leasehold interest in The Gibson Hotel, was transferred to right-of-use assets on 1 January 2019 in accordance with the transition provisions of IFRS 16 Leases (note 8).

Other intangible assets

Other intangible assets of €0.6 million at 31 December 2018 represented the Group's interest in a sub-lease (as sub-lessor) retained in respect of part of the Clayton Hotel Cardiff, UK following the sale and leaseback (operating lease) of that hotel property. The asset was transferred to investment property on 1 January 2019 upon recognition of a right-of-use asset with respect to the head lease in accordance with IFRS 16.

Additions to other intangible assets of €2.4 million represent the Group's cost of entering into a software licence agreement during 2019. At the commencement date, there were €1.2 million of prepayments relating to the software licence which were transferred to intangible assets. This software licence will run to 31 January 2024 and is being amortised on a straight line basis over the life of the asset.

The Group reviews the carrying amounts of other intangible assets annually to determine whether there is any indication of impairment. If any such indicators exist then the asset's recoverable amount is estimated.

At 31 December 2019, there were no indicators of impairment present and the Directors concluded that the carrying value of other intangible assets was not impaired at 31 December 2019. 

7  Property, plant and equipment

	Land and buildings	Assets under construction	Fixtures, fittings and equipment	Total
	€'000	€'000	€'000	€'000
At 31 December 2019
Valuation	1,324,468	-	-	1,324,468
Cost	-	59,600	135,676	195,276
Accumulated depreciation (and impairment charges) *	-	-	(48,429)	(48,429)
	_______	_______	_______	_______
Net carrying amount	1,324,468	59,600	87,247	1,471,315
	_______	_______	_______	_______
At 1 January 2019, net carrying amount	1,077,208	26,404	72,648	1,176,260
Additions through freehold or site purchases	105,543	45,539	5,117	156,199
Other additions through capital expenditure	2,643	9,756	20,741	33,140
Reclassification from assets under construction to land and buildings and fixtures, fittings and equipment for assets that have come into use	15,848	(18,336)	2,488	-
Capitalised labour costs	550	-	-	550
Capitalised borrowing costs (note 4)	-	400	-	400
Reclassification from assets under construction to other receivables for assets disposed of as part of a contractual arrangement	-	(4,163)	-	(4,163)
Revaluation gains through OCI	124,962	-	-	124,962
Revaluation losses through OCI	(4,239)	-	-	(4,239)
Reversal of revaluation losses through profit or loss	1,967	-	-	1,967
Revaluation losses through profit or loss	(322)	-	-	(322)
Depreciation charge for the year	(11,786)	-	(14,397)	(26,183)
Translation adjustment	12,094	-	650	12,744
	_______	_______	_______	_______
At 31 December 2019, net carrying amount	1,324,468	59,600	87,247	1,471,315
	_______	_______	_______	_______
The equivalent disclosure for the prior year is as follows:
At 31 December 2018
Valuation	1,077,208	-	-	1,077,208
Cost	-	26,404	106,680	133,084
Accumulated depreciation (and impairment charges) *	-	-	(34,032)	(34,032)
	_______	_______	_______	_______
Net carrying amount	1,077,208	26,404	72,648	1,176,260
	_______	_______	_______	_______
At 1 January 2018, net carrying amount	848,777	97,365	52,670	998,812
Additions through freehold or site purchases	9,187	-	-	9,187
Other additions through capital expenditure	1,133	76,231	18,971	96,335
Reclassification from assets under construction to land and buildings and fixtures, fittings and equipment for assets that have come into use	140,194	(152,047)	11,853	-
Transfer from land and buildings to asset under construction for land which is being developed into a new hotel	(6,615)	6,615	-	-
Transfer from land and buildings to contract fulfilment costs (note 10)	(8,085)	-	-	(8,085)
Capitalised borrowing costs (note 4)	-	1,748	-	1,748
Transfer of capitalised borrowing costs from assets under construction to land and buildings for assets that have come into use	3,300	(3,300)	-	-
Revaluation gains through OCI	111,221	-	-	111,221
Revaluation losses through OCI	(8,275)	-	-	(8,275)
Reversal of revaluation losses through profit or loss	290	-	-	290
Revaluation losses through profit or loss	(3,402)	-	-	(3,402)
Depreciation charge for the year	(8,927)	-	(10,771)	(19,698)
Translation adjustment	(1,590)	(208)	(75)	(1,873)
	_______	_______	_______	_______
At 31 December 2018, net carrying amount	1,077,208	26,404	72,648	1,176,260
	_______	_______	_______	_______
*Accumulated depreciation of buildings is stated after the elimination of depreciation, revaluation, disposals and impairments.

The carrying value of land and buildings (revalued at 31 December 2019) is €1,324.5 million. The value of these assets under the cost model is €927.8 million. In 2019, unrealised revaluation gains of €125.0 million and unrealised losses of €4.2 million have been reflected through other comprehensive income and in the revaluation reserve in equity. A revaluation loss of €0.3 million and a reversal of prior period revaluation losses of €2.0 million have been reflected in administrative expenses through profit or loss.

Included in land and buildings at 31 December 2019 is land at a carrying value of €499.8 million (2018: €412.7 million) which is not depreciated.

Additions to land and buildings and fixtures, fittings and equipment during the year ended 31 December 2019 primarily include the following asset purchase:

· On 3 January 2019, the Group completed the acquisition of the long leasehold (effective freehold) interest of a newly built hotel, located in Aldgate, London for total consideration of £91.0 million (€107.0 million) (through acquiring the entire issued share capital of Hintergard Limited) plus acquisition related costs of £1.9 million (€2.2 million). The hotel opened on 24 January 2019 and has been branded Clayton Hotel City of London.

Additions to assets under construction during the year ended 31 December 2019 include the following:

· On 12 August 2019, the Group acquired a site with planning approval for a new hotel on Paul Street in Shoreditch, London for £32.1 million (€37.7 million) plus acquisition related costs of £1.7 million (€2.0 million);

· On 8 January 2019, the Group acquired a site adjacent to Clayton Hotel Cardiff Lane, Dublin for €5.5 million plus capitalised acquisition costs of €0.4 million. The Group has plans to redevelop the area into circa 88 bedrooms and ancillary facilities and it is classified as assets under construction and not depreciated as the asset is not in use in its current form;

· Development expenditure incurred on new hotel builds of €5.6 million;

· Development expenditure incurred on hotel extensions and renovations of €4.2 million; and

· Interest capitalised on loans and borrowings relating to qualifying assets of €0.4 million (note 4).

Property previously classified as assets under construction (€18.3 million) has been transferred to land and buildings and fixtures, fittings and equipment as a result of the assets coming into use during the year ended 31 December 2019. This includes the following:

· Final completion works at Maldron Hotel South Mall, Cork;

· Final completion works at Maldron Hotel Parnell Square, Dublin; and

· Final completion works at Clayton Hotel Charlemont, Dublin.

Property previously classified as assets under construction (€4.2 million) relating to a renovation project ongoing at Clayton Hotel Burlington Road, Dublin has been transferred to other receivables as a result of a contractual arrangement entered into in 2019, whereby assets totalling €7.5 million are to be transferred to the landlord for €7.5 million.

Capitalised labour costs (€0.6 million) include labour costs relating to the Group's internal development team which are directly related to asset acquisitions and other construction work completed in relation to the Group's land and buildings.

The Group operates the Maldron Hotel Limerick and, since the acquisition of Fonteyn Property Holdings Limited in 2013, holds a secured loan over that property. The loan is not expected to be repaid. Accordingly, the Group has the risks and rewards of ownership and accounts for the hotel as an owned property, reflecting the substance of the arrangement.

At 31 December 2019, properties included within land and buildings with a carrying amount of €1,101.8 million (2018: €895.9 million) were pledged as security for loans and borrowings.

The value of the Group's property at 31 December 2019 reflects open market valuations carried out in December 2019 by independent external valuers having appropriate recognised professional qualifications and recent experience in the location and value of the property being valued. The external valuations performed were in accordance with the Royal Institution of Chartered Surveyors (RICS) Valuation Standards.

Measurement of fair value

The fair value measurement of the Group's own-use property has been categorised as a Level 3 fair value based on the inputs to the valuation technique used. At 31 December 2019, 30 properties were revalued by independent external valuers engaged by the Group (31 December 2018: 29).

The principal valuation technique used by the independent external valuers engaged by the Group was discounted cash flows. This valuation model considers the present value of net cash flows to be generated from the property over a ten year period (with an assumed terminal value at the end of year 10). Valuers' forecast cash flow included in these calculations represents the expectations of the valuers for EBITDA (driven by revenue per available room ("RevPAR") calculated as total rooms revenue divided by rooms available) for the property and also takes account of the expectations of a prospective purchaser. It also includes their expectation for capital expenditure which the valuers, typically, assume as approximately 4% of revenue per annum. This does not always reflect the profile of actual capital expenditure incurred by the Group. On specific assets, refurbishments are, by nature, periodic rather than annual. Valuers' expectations of EBITDA are based off their trading forecasts (benchmarked against competition, market and actual performance). The expected net cash flows are discounted using risk adjusted discount rates. Among other factors, the discount rate estimation considers the quality of the property and its location. The final valuation also includes a deduction of full purchaser's costs based on the valuers' estimates at 9.96% for Republic of Ireland domiciled assets (2018: 8.46%) and 6.8% for United Kingdom domiciled assets (2018: 6.8%). The increase in purchaser's costs in the Republic of Ireland versus 2018 was due to the increase in stamp duty relating to commercial property from 6% to 7.5%.

The valuers use their professional judgement and experience to balance the interplay between the different assumptions and valuation influences. For example, initial discounted cash flows based on individually reasonable inputs may result in a valuation which challenges the price per key metrics in recent transactions. This would then result in one or more of the inputs being amended for preparation of a revised discounted cash flow. Consequently, the individual inputs may change from the prior period or may look individually unusual and therefore must be considered as a whole in the context of the overall valuation.

The significant unobservable inputs and drivers thereof are summarised in the following table:

Significant unobservable inputs	31 December 2019
	Dublin	Regional Ireland	United Kingdom	Total
	Number of hotel assets
RevPAR
< €75/£75	1	7	5	13
€75-€100/£75-£100	3	4	2	9
> €100/£100	6	1	1	8
	10	12	8	30
Terminal (Year 10) capitalisation rate
<8%	9	8	6	23
8%-10%	1	4	2	7
	10	12	8	30
Price per key*
< €150k/£150k	1	10	6	17
€150k-€250k/£150k-£250k	1	1	-	2
> €250k/£250k	8	1	2	11
	10	12	8	30
	31 December 2018
	Dublin	Regional Ireland	United Kingdom	Total
	Number of hotel assets
RevPAR
< €75/£75	2	7	5	14
€75-€100/£75-£100	3	4	2	9
> €100/£100	5	1	-	6
	10	12	7	29
Terminal (Year 10) capitalisation rate
<8%	4	2	2	8
8%-10%	6	10	5	21
	10	12	7	29
Price per key*
< €150k/£150k	1	10	5	16
€150k-€250k/£150k-£250k	2	2	1	5
> €250k/£250k	7	-	1	8
	10	12	7	29

*Price per key represents the valuation of a hotel divided by the number of rooms in that hotel.

The valuers also applied risk adjusted discount rates of 7.25% to 10.75% for Dublin assets (31 December 2018: 9.25% to 11.25%), 6.75% to 11.00% for Regional Ireland assets (31 December 2018: 9.50% to 12.00%) and 7.25% to 11.25% for United Kingdom assets (31 December 2018: 8.25% to 12.00%). 

The most significant factors which have impacted valuations this year are the uplifts on newly built hotels and extensions which were built at a cost below fair value and where trade has outperformed assumptions underpinning initial external valuations. Hotel transactions in the wider market during the year have achieved improved valuation metrics which has led to increased valuations for the properties owned by the Group.

The potential impact of the United Kingdom's departure from the European Union may have a negative impact on both the United Kingdom and Irish economies. The Group continues to monitor the ongoing uncertainty surrounding the potential impact of Brexit but has seen no impact on trading and there is no indicator of impairment at 31 December 2019 as a result of this.

The estimated fair value under this valuation model would increase or decrease if:

· Valuers' forecast cash flow was higher or lower than expected; and/or

· The risk adjusted discount rate and terminal capitalisation rate was lower or higher.

Valuations also had regard to relevant price per key metrics from hotel sales activity.

8  Transition impact of IFRS 16 Leases

IFRS 16 Leases was effective for the first time in the financial year commencing 1 January 2019. IFRS 16 replaces IAS 17 Leases, IFRIC 4 Determining Whether an Arrangement Contains a Lease, SIC-15 Operating Leases - Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

IFRS 16 introduces new or amended requirements with respect to lease accounting. It introduces significant changes to lessee accounting by removing the distinction between operating and finance leases and requiring the recognition of right-of-use assets and lease liabilities at the commencement of most leases. This has a significant impact on the Group's financial statements as the Group is a lessee in a number of material property leases, which were formerly accounted for as operating leases. The requirements for lessor accounting remain largely unchanged.

The Group has applied IFRS 16 using the modified retrospective method. Lease liabilities were measured at the present value of the remaining lease payments, discounted at the Group's incremental borrowing rates as at 1 January 2019. Right-of-use assets have been measured at an amount equal to the lease liabilities adjusted by the amounts of any lease prepayments and accruals and reclassifications from intangible assets, where applicable. The comparative information has not been restated and is presented as previously reported under IAS 17 and related interpretations. Details of the impact of the change in accounting policies as well as the new accounting policies are disclosed hereafter.

Definition of a lease

Previously, the Group determined at contract inception whether an arrangement was or contained a lease under IFRIC 4. Under IFRS 16, a contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time. On transition to IFRS 16, the Group elected to apply the practical expedient to grandfather the assessment of which transactions are leases and applied IFRS 16 only to contracts that were previously identified as leases. Contracts that were not identified as leases under IAS 17 and IFRIC 4 were not reassessed for whether there is a lease. Therefore, the definition of a lease under IFRS 16 was applied only to contracts entered into or changed on/or after 1 January 2019.

As a lessee

As a lessee, the Group previously classified leases as operating or finance leases based on its assessment of whether the lease transferred substantially all of the risks and rewards incidental to ownership of the underlying asset to the Group. Under IFRS 16, the Group recognises right-of-use assets and lease liabilities for most leases and these are no longer excluded from the statement of financial position.

On transition, lease liabilities were measured at the present value of the remaining lease payments, discounted using the Group's incremental borrowing rates as at 1 January 2019. Determining the discount rate introduces a new source of estimation uncertainty into the financial statements. The Group has calculated the incremental borrowing rate by adding country specific risk-free government bonds to the Group finance spread to create a Group yield curve.

The Group finance spread was calculated by weighting the Group interest margin on loans and borrowings entered into in October 2018 (senior debt) and a hypothetical junior debt margin available to the Group using an appropriate loan-to-value ratio for the senior debt. Each lease was matched against the Group yield curve and subsequently adjusted for lessee and asset specific factors to reflect the underlying asset's location and condition. In most cases, the discount rate is determined in the first year of the lease and does not change for the remainder of the term unless an event such as a change in lease term or a modification of the lease occurs. The weighted-average incremental borrowing rate applied on transition was 6.03% (Republic of Ireland: 5.86%, United Kingdom: 6.49%).

The sensitivity of the Group's lease liabilities to a one percent (100bps) movement in the incremental borrowing rate is as follows:

	At existing rate	Sensitised upwards by 100 bps	Sensitised downwards by 100 bps
	€'000	€'000	€'000
Lease liabilities at 1 January 2019	314,430	286,246	347,350

A reconciliation from the operating lease commitments at 31 December 2018 to the opening balance for the lease liabilities at 1 January 2019 is shown below:

	€'000
Operating lease commitments at 31 December 2018	672,708
Discounted using the incremental borrowing rates at 1 January 2019	(358,278)
	_______
Lease liabilities recognised at 1 January 2019 (note 9)	314,430
	_______

Right-of-use assets have been measured at an amount equal to the lease liabilities adjusted by the amounts of any lease prepayments and accruals and reclassifications from intangible assets, where applicable. Fixed rental expenses under IAS 17 were removed from profit or loss under IFRS 16 and replaced with finance costs on the lease liabilities and depreciation of the right-of-use assets. Variable lease payments which are dependent on hotel performance continue to be recognised directly in profit or loss.

The Group used the following practical expedients when applying IFRS 16 to leases previously classified as operating leases under IAS 17:

· Applied a single discount rate to a portfolio of leases with similar characteristics;

· Relied on its assessment of whether leases are onerous immediately before 1 January 2019 as an alternative to performing an impairment review; and

· Applied the exemption not to recognise right-of-use assets and lease liabilities for leases with a remaining lease term of less than 12 months as at 1 January 2019.

The Group has elected not to recognise right-of-use assets and lease liabilities for leases of low value equipment. The Group did not recognise any finance leases under IAS 17 prior to the date of initial application.

Banking covenants as currently calculated under the existing debt facility agreement have not been amended as their calculation is in accordance with generally accepted accounting principles, policies, standards and practices applicable on the date of entry into the agreement which was prior to the adoption of IFRS 16.

As a lessor

Under IAS 17, the Group leased out its investment properties to lessees under operating leases. IFRS 16 does not substantially change how a lessor accounts for leases as a lessor continues to classify leases as either finance or operating leases. The Group's lessor contracts continue to be classified as operating leases under IFRS 16. However, when the Group is an intermediate lessor the sub-leases are classified with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. The Group sub-leases part of one of its properties and on transition to IFRS 16 the right-of-use asset recognised from the head lease is presented in investment property and measured at fair value on transition to IFRS 16.

Sale and leaseback

Under IFRS 16, the Group continues to account for Clayton Hotel Cardiff (completed in June 2017) and Clayton Hotel Birmingham (completed in August 2017) transactions as sale and leaseback transactions. As a result of IFRS 16, the Group has recognised right-of-use assets and lease liabilities for these leases on 1 January 2019. €1.1 million arising from the sale and leaseback of Clayton Hotel Birmingham, representing the difference between the proceeds received and the acquisition price, has been transferred from non-current receivables to right-of-use asset on this date.

Impact on condensed consolidated financial statements

The tables below show the adjustment for each financial statement line item affected by the application of IFRS 16 for the year ended 31 December 2019.

Excerpt from condensed consolidated statement of comprehensive income

*Only lines which are impacted are presented below	*As if IAS 17  still applied	IFRS 16 impact	*As  presented
	€'000	€'000	€'000
Administrative expenses	(165,762)	10,257	(155,505)
		_______
Operating profit	110,044	10,257	120,301
Finance costs	(11,668)	(18,945)	(30,613)
		_______
Profit before tax	98,376	(8,688)	89,688
Tax charge	(12,711)	1,235	(11,476)
		_______
Profit for the year	85,665	(7,453)	78,212
		_______
Earnings per share
Basic earnings per share	46.4 cents	(4.0) cents	42.4 cents
Diluted earnings per share	46.0 cents	(4.0) cents	42.0 cents

Excerpt from operating segments note (note 2)

*Only lines which are impacted are presented below	*As if IAS 17  still applied	IFRS 16 impact	*As  presented
	€'000	€'000	€'000
Segmental results - EBITDA
Dublin	92,761	20,161	112,922
Regional Ireland	23,429	997	24,426
United Kingdom	32,126	5,983	38,109
		_______
EBITDA for reportable segments	148,316	27,141	175,457
Central costs	(12,013)	243	(11,770)
		_______
Adjusted EBITDA	134,830	27,384	162,214
Net property revaluation movements through profit or loss	1,645	(44)	1,601
		_______
Group EBITDA	136,466	27,340	163,806
Depreciation of right-of-use assets	-	(17,127)	(17,127)
Amortisation of intangible assets	(239)	44	(195)
Interest on lease liabilities	-	(18,945)	(18,945)
		_______
Profit before tax	98,376	(8,688)	89,688
Tax charge	(12,711)	1,235	(11,476)
		_______
Profit for the year	85,665	(7,453)	78,212
		_______

The Group's profit has decreased by €7.5 million and basic earnings per share by 4.0 cents for the year ended 31 December 2019 due to the implementation of IFRS 16. Under the standard, total lease expenses increase in the early years of implementation due to the front-loading effect of finance costs versus the straight-line rent expense under IAS 17, resulting in a decrease in profit.

EBITDA for reportable segments and Adjusted EBITDA (existing alternative performance measures as defined in note 2), are significantly impacted by the implementation of IFRS 16 and have increased by €27.1 million and €27.4 million respectively due to the removal of fixed rent. Under IFRS 16, variable rents based on turnover or profit do not form part of the lease liability measurement and remain in administrative expenses and EBITDA.

Depreciation and finance costs, as currently reported in the Group's profit or loss, have increased, as under the new standard the right-of-use assets are depreciated over the term of the lease and interest costs are applied to the lease liabilities.

Excerpt from   condensed consolidated statement of financial position

On implementation of IFRS 16 on 1 January 2019, the following line items in the condensed consolidated statement of financial position were affected:

	As previously reported at 31 December 2018	IFRS 16 impact	As presented at 1 January 2019
	€'000	€'000	€'000
Non-current assets
Intangible assets and goodwill	54,417	(21,103)	33,314
Right-of-use assets	-	343,713	343,713
Other receivables	14,759	(5,422)	9,337
Investment property	1,560	603	2,163
Current assets
Trade and other receivables	22,566	(4,307)	18,259
		_______
Total impact on assets		313,484
		_______
Current liabilities
Trade and other payables	(65,250)	946	(64,304)
Lease liabilities	-	(26,259)	(26,259)
Non-current liabilities
Lease liabilities	-	(288,171)	(288,171)
		_______
Total impact on liabilities		(313,484)
		_______
Impact on net assets		-
		_______

On transition, the Group recognised lease liabilities amounting to €314.4 million and right-of-use assets of €343.7 million. The measurement of the right-of-use assets includes the amount of the lease liabilities and a further €29.3 million of items that were recognised elsewhere in the statement of financial position at 31 December 2018 as follows:

· Favourable terms relating to the Gibson hotel operating lease acquired as part of a business combination amounting to €20.5 million previously recognised in intangible assets;

· Lease prepayments amounting to €8.6 million previously recognised in non-current other receivables (€4.3 million) and current trade and other receivables (€4.3 million);

· €1.1 million arising from the sale and leaseback of Clayton Hotel Birmingham previously recognised in non-current receivables; less

· Lease accruals amounting to €0.9 million previously recognised in trade and other payables.

Condensed consolidated statement of cash flows

The adoption of IFRS 16 does not have any impact on Group leasing cash flows but the UK tax authorities have decided to follow the accounting changes and allow deductions for interest on lease liabilities and depreciation of right-of-use assets in lieu of lease payments which impact the tax cash flows. There are lower UK tax cash flows in the early years of the leases in line with the front-loading of expenses. There is no cash flow impact in Ireland as the basis for tax deduction remains unchanged.

The presentation of cash flows in the condensed consolidated statement of cash flows is also impacted. Under IFRS 16, lessees must present short-term lease payments, payments for leases of low-value assets and variable lease payments not included in the measurement of the lease liabilities as part of operating activities.

Lease liability payments are split into payments of interest and payments of principal and are presented separately in the condensed consolidated statement of cash flows. The Group has opted to include the element of cash flows recorded as interest as part of financing activities as permitted by IAS 7 Statement of Cash Flows. Cash payments for the principal portion have also been presented as part of financing activities.

Under IAS 17, all lease payments on operating leases were presented as part of cash flows from operating activities and consequently, as a result of the implementation of IFRS 16, the net cash flow from financing activities has decreased by €27.5 million while the net cash generated from operating activities has increased by the same amount.

9  Leases

Group as a lessee

The Group leases assets including land and buildings, vehicles, machinery and IT equipment. Information about leases for which the Group is a lessee is presented below:

 

Right-of-use assets	Land and buildings	Fixtures, fittings and equipment	Total
	€'000	€'000	€'000
Net book value at 1 January 2019 (note 8)	343,562	151	343,713
Additions	45,656	56	45,712
Depreciation charge for the year	(17,068)	(59)	(17,127)
Remeasurement of lease liabilities	9,239	-	9,239
Translation adjustment	4,869	1	4,870
	_______	_______	_______
Net book value at 31 December 2019	386,258	149	386,407
	_______	_______	_______

Right-of-use assets comprise leased assets that do not meet the definition of investment property .

Lease liabilities	€'000
Current	26,259
Non-current	288,171
	_______
Lease liabilities at 1 January 2019 (note 8)	314,430
	_______
Additions	42,391
Interest on lease liabilities (note 4)	18,945
Lease payments	(27,514)
Remeasurement of lease liabilities	9,239
Translation adjustment	4,610
	_______
Lease liabilities at 31 December 2019	362,101
	_______
Current	30,557
Non-current	331,544
	_______
Lease liabilities at 31 December 2019	362,101
	_______

The remeasurement of lease liabilities relates to the reassessment of the lease liabilities of two leases following completion of rent reviews and extension of the lease term at a third hotel during the year ended 31 December 2019.

Additions principally relate to the Group entering into a 30 year lease in November 2019 of the Tamburlaine Hotel in Cambridge, England which has resulted in a right-of-use asset and a lease liability of €45.5 million (£38.9 million) and €42.4 million (£36.3 million) respectively. The Group included €3.1 million (£2.6 million) of lease prepayments and initial direct costs in the measurement of the right-of-use asset .

Non-cancellable undiscounted lease cash flows payable under lease contracts are set out below:

	At 31 December 2019			At 31 December 2018
	Republic of Ireland	United Kingdom	Total	Republic of Ireland	United Kingdom	Total
	€'000	£'000	€'000	€'000	£'000	€'000
Year ended 31 December 2019	-	-	-	20,876	5,098	26,576
During the year 2020	22,112	7,159	30,526	18,717	4,821	24,106
During the year 2021	22,256	7,090	30,590	18,815	4,821	24,204
During the year 2022	19,442	7,217	27,925	19,152	4,969	24,707
During the year 2023	19,308	7,295	27,882	19,033	5,048	24,676
During the year 2024	17,155	7,363	25,809	16,680	5,075	22,353
During the year 2025	16,843	7,437	25,584	16,568	5,075	22,241
During the year 2026	16,921	7,437	25,662	16,646	5,075	22,320
During the years 2027 - 2036	166,401	78,997	259,251	166,103	54,191	226,683
During the years 2037 - 2046	101,182	87,055	203,504	101,432	59,653	168,118
From 2047 onwards	27,878	60,565	99,064	27,878	52,639	86,724
	_______	_______	______	_______	_______	_______
	429,498	277,615	755,797	441,900	206,465	672,708
	_______	_______	______	_______	_______	_______

Sterling amounts have been converted using the closing foreign exchange rate of 0.8508 as at 31 December 2019 (0.89453 as at 31 December 2018).

The weighted average lease life of future minimum rentals payable under leases is 29.4 years (31 December 2018: 30.3 years). The Group does not face a significant liquidity risk with regard to its lease liabilities which are expected to be capable of being paid from operating cash flows over the life of the leases. Lease liabilities are monitored within the Group's treasury function.

For the year ended 31 December 2019, the total fixed cash outflows amounted to €27.5 million for land and building leases and €0.3 million for leases of fixtures, fittings and equipment.

Proforma unwind of right-of-use assets and release of interest charge

The proforma unwinding of the right-of-use assets and the release of the interest on the lease liabilities through profit or loss over the terms of the leases have been disclosed in the following table:

	Depreciation of right-of-use assets				Interest on lease liabilities
	Republic of Ireland	United Kingdom	Total	Republic of Ireland		United Kingdom	Total
	€'000	£'000	€'000	€'000		£'000	€'000
During the year 2020	15,198	3,544	19,363	12,990		6,721	20,890
During the year 2021	15,166	3,536	19,322	12,529		6,697	20,400
During the year 2022	12,127	3,535	16,282	12,093		6,673	19,936
During the year 2023	11,957	3,535	16,112	11,678		6,638	19,480
During the year 2024	10,085	3,535	14,240	11,286		6,597	19,040
During the year 2025	10,003	3,535	14,158	10,954		6,548	18,650
During the year 2026	9,999	3,535	14,154	10,605		6,495	18,239
During the years 2027 - 2036	94,609	35,353	136,162	81,744		60,010	152,278
During the years 2037 - 2046	56,113	35,353	97,666	29,314		41,885	78,544
From 2047 onwards	14,922	20,442	38,948	4,497		18,498	26,239
	_______	_______	_______	_______		_______	_______
	250,179	115,903	386,407	197,690		166,762	393,696
	_______	_______	_______	_______		_______	_______

Sterling amounts have been converted using the closing foreign exchange rate of 0.8508 as at 31 December 2019.

The actual depreciation and interest charge through profit or loss will depend on the composition of the Group's lease portfolio in future years and is subject to change, driven by :

· commencement of new leases;

· modifications of existing leases;

· reassessments of lease liabilities following periodic rent reviews; and

· impairments of right-of-use assets.

There are no events or changes in circumstances which indicate that the carrying value of the right-of-use assets may not be recoverable.

  Leases of land and buildings

The Group leases land and buildings for its hotel operations and office space. The leases of hotels typically run for a period of between 25 and 35 years and leases of office space for 10 years.

Some leases provide for additional rent payments that are based on a percentage of the revenue/EBITDAR that the Group generates at the hotel in the period. The Group sub-leases part of one of its properties to a tenant under an operating lease.

Variable payments based on revenue/EBITDAR

These terms are common in hotel leases in the Republic of Ireland and the United Kingdom and link rental payments to hotel cash flows and reduce fixed payments. Variable lease payments based on revenue/EBITDAR for the year ended 31 December 2019 are as follows:

	Variable rent element	Estimated impact on variable rent of 5% increase in revenue/EBITDAR
	€'000	€'000
Leases with lease payments based on revenue/EBITDAR	7,321	600

Extension options and termination options

The Group, as a hotel lessee, does not have any extension options. The Group holds a single termination option in an office space lease. The Group assesses at lease commencement whether it is reasonably certain not to terminate the option and reassesses if there is a significant event or change in circumstances within its control. The relative magnitude of optional lease payments to lease payments is as follows:

	Lease liabilities recognised (discounted)	Potential future lease payments not included in lease liabilities (discounted)
	€'000	€'000
Office building	372	486

Leases not yet commenced to which the lessee is committed

The Group has multiple agreements for lease at 31 December 2019 and details of the non-cancellable lease rentals and other contractual obligations payable under these agreements are set out hereafter. These represent the minimum future lease payments (undiscounted) in aggregate that the Group is required to make under the agreements. An agreement for lease is a binding agreement between external third parties and the Group to enter into a lease at a future date. The commencement dates of these leases may change based on hotel opening dates. The amounts payable may also change slightly if there are any changes in room numbers delivered through construction.

Agreements for lease	At 31 December 2019	At 31 December 2018
	€'000	€'000
Less than one year	1,910	2,585
One to two years	17,314	9,947
Two to five years	66,656	55,660
Five to fifteen years	236,011	181,086
Fifteen to twenty five years	249,344	192,114
After twenty five years	307,763	240,088
	_______	_______
Total future lease payments	878,998	681,480
	_______	_______

The significant movement since the year ended 31 December 2018 is due principally to the following:

· The Group has signed an agreement to lease the Maldron Hotel Croke Park, to be built in Dublin. On completion of construction, the Group will commence operations in the hotel through a 35 year lease; and

· The Group has signed an agreement to lease a Maldron Hotel, to be built in Liverpool. On completion of construction, the Group will commence operations in the hotel through a 35 year lease.

Leases of fixtures, fittings and equipment

The Group leases a small number of vehicles, IT equipment and hotel equipment with lease terms of up to five years. The Group has applied the short-term and low value exemptions available under IFRS 16 Leases where applicable and recognises lease payments associated with short-term leases or leases for which the underlying asset is of low value as an expense on a straight-line basis over the lease term. Where the exemptions were not available, right-of-use assets have been recognised with corresponding lease liabilities.

	2019
	€'000
Expenses relating to short-term leases recognised in administrative expenses	172
Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets recognised in administrative expenses	111

Group as a lessor

Lease income from lease contracts in which the Group acts as lessor is outlined below:

	2019	2018
	€'000	€'000
Operating lease income	351	271

The Group leases its investment property and has classified these leases as operating leases because they do not transfer substantially all of the risks and rewards incidental to ownership of these assets to the lessee. Operating lease income from sub-leasing right-of-use assets for the year ended 31 December 2019 amounted to €0.1 million.

The following table sets out a maturity analysis of lease payments, showing the undiscounted lease payments receivable:

	2019	2018
	€'000	€'000
Less than one year	313	231
One to two years	283	231
Two to three years	249	231
Three to four years	238	231
Four to five years	238	231
More than five years	1,488	1,667
	_______	_______
Total undiscounted lease payments receivable	2,809	2,822
	_______	_______

10  Contract fulfilment costs

	2019	2018
Non-current asset	€'000	€'000
At 1 January	9,066	-
Transfer from land and buildings to contract fulfilment costs (note 7)	-	8,085
Other costs incurred in fulfilling contract to date	4,143	981
Interest capitalised on borrowing costs (note 4)	137	-
	_______	_______
At 31 December	13,346	9,066
	_______	_______

Contract fulfilment costs, within non-current assets, relate to the Group's contractual agreement with Irish Residential Properties REIT plc ("IRES"), entered into on 16 November 2018, for IRES to purchase a residential development the Group is developing (comprising 69 residential units) on the site of the former Tara Towers hotel.

Revenue and the associated cost will be recognised on this contract in profit or loss when the performance obligation in the contract has been met. Based on the terms of the contract, this will be on legal completion of the contract which will occur on practical completion of the development project which is expected to be in 2021. As a result, revenue will be recognised at a point in time in the future when the performance obligation is met, rather than over time.

Arising from the change in use by the Group of previously recognised property, plant and equipment during 2018, following the closure of the former Tara Towers Hotel, there was a transfer to contract fulfilment costs within non-current assets (€8.1 million) relating to the element of the land on the site of the former Tara Towers hotel (note 7) which will be used for the residential development.

Other costs incurred in fulfilling the contract of €4.1 million (2018: €1.0 million), which relate directly to this contractual arrangement with IRES, are also included within non-current assets at 31 December 2019. These costs have enhanced the asset which will be used for the residential development, have been used in order to satisfy the contract and the costs are expected to be recovered. They primarily relate to build costs, legal costs, architectural and planning costs and other professional fees incurred up to 31 December 2019 in fulfilling the contract.

Interest capitalised on loans and borrowings relating to this development (qualifying asset) was €0.1 million in the year to 31 December 2019 (2018: €nil) (note 4).

The overall sale value of the transaction is expected to be up to €42.4 million (excluding VAT). The overall value of the transaction will vary depending on how Part V obligations (Social and Affordable housing allocation) are settled with Dublin City Council.

Contract fulfilment costs paid have been included in investing activities in the condensed consolidated statement of cash flows as they are not primarily derived from the principal revenue-producing activities of the Group.

11  Loans and borrowings

	2019	2018
	€'000	€'000
Bank borrowings	415,432	306,078
Less: unamortised debt costs	(3,693)	(4,189)
	_______	_______
Total loans and borrowings	411,739	301,889
	_______	_______

On 26 October 2018, the Group successfully completed the refinancing of its existing debt facility with a banking club of six lenders - four original lenders who had participated in the previous facility and two new lenders to the Group. A new €525 million five year multicurrency facility was entered into consisting of a €200 million term loan facility and a €325 million revolving credit facility, with a maturity date of 26 October 2023. On 19 August 2019, the Group availed of its option to extend the €525 million multicurrency facility for an additional year to 26 October 2024.

In line with IFRS 9 derecognition criteria, the Group assessed whether the terms and cash flows of the modified liability were substantially different on refinancing.

Based on the '10% test', the loans and borrowings which were repriced to current market terms and which related to the original lenders were deemed to be non-substantially modified. As they are floating rate liabilities, the amortised cost of the loans and borrowings relating to the original lenders was recalculated by discounting the modified cash flows at an effective interest rate which reflected the market terms of the refinanced liabilities on 26 October 2018, which resulted in no gain or loss. These loans and borrowings are recognised at amortised cost with directly attributable costs being amortised to profit or loss on an effective interest rate basis over the term. Unamortised arrangement fees of €0.9 million on the original loans, which were not reflective of market terms at the refinancing date, were recognised immediately in finance costs in profit or loss in 2018 (note 4).

The loans and borrowings drawn with the two new lenders on 26 October 2018 were accounted for as new financial liabilities and accounted for at fair value less directly attributable transaction costs on initial recognition and subsequently, stated at amortised cost with directly attributable costs amortised to profit or loss on an effective interest rate basis.

As at 31 December 2019, the drawn loan facility is €415.4 million consisting of Sterling term borrowings of £176.5 million (€207.5 million) and revolving credit facility borrowings of €207.9 million - €102.1 million in Euro and £90 million (€105.8 million) in Sterling. Unamortised debt costs at that date total €3.7 million.

During 2019, £60 million and €30.5 million were drawn to fund the acquisition of the effective freehold interest in Clayton Hotel City of London (note 7) and £30 million was drawn to fund the purchase of a site on Paul Street in Shoreditch, London (note 7), from the revolving credit facility. The undrawn loan facilities as at 31 December 2019 were €121.2 million (2018: €216.2 million).

The loans bear interest at variable rates based on 3 month Euribor/LIBOR plus applicable margins. The Group has entered into certain derivative financial instruments to hedge interest rate exposure on a portion of these loans. The loans are secured on the Group's assets. Under the terms of the loan facility agreement, an interest rate floor is in place which prevents the Group from receiving the benefit of sub-zero benchmark LIBOR and Euribor rates.

Reconciliation of movement in net debt for the year ended 31 December 2019
	Sterling	Sterling	Euro
	facility	facility	facility	Total
Loans and borrowings (excluding unamortised debt costs)	£'000	€'000	€'000	€'000
At 1 January 2019	178,352	199,381	106,697	306,078
Cash flows
Facilities drawn down	90,000	98,937	35,500	134,437
Loan repayments	(1,852)	(2,158)	(40,000)	(42,158)
Non-cash changes
Effect of foreign exchange movements	-	17,075	-	17,075
	______	______	______	______
At 31 December 2019	266,500	313,235	102,197	415,432
	______	______	______	______
Cash and cash equivalents
At 1 January 2019				35,907
Movement during the year				4,679
				______
At 31 December 2019				40,586
				______
Net debt at 31 December 2019				374,846
				______
Reconciliation of net debt and lease liabilities
Net debt at 31 December 2019				374,846
Lease liabilities as at 1 January 2019 (note 9)				314,430
Additions (note 9)				42,391
Interest on lease liabilities (note 9)				18,945
Lease payments (note 9)				(27,514)
Remeasurement of lease liabilities (note 9)				9,239
Translation adjustment (note 9)				4,610
				______
Lease liabilities at 31 December 2019				362,101
				______
Net debt and lease liabilities at 31 December 2019				736,947
				______

Net debt is calculated in line with banking covenants and includes external loans and borrowings before deduction of amortised debt costs less cash and cash equivalents. The above table also includes a reconciliation to net debt and lease liabilities. Interest rate swaps of €4.5 million are not included in the above tables (2018: €1.3 million).

Reconciliation of movement in net debt for the year ended 31 December 2018
	Sterling	Sterling	Euro
	facility	facility	facility	Total
Loans and borrowings (excluding unamortised debt costs)	£'000	€'000	€'000	€'000
At 1 January 2018	174,352	196,512	65,797	262,309
Cash flows
Facilities drawn down	43,251	48,726	89,176	137,902
Loan repayments	(39,251)	(44,287)	(48,276)	(92,563)
Non-cash changes
Effect of foreign exchange movements	-	(1, 570)	-	(1, 570)
	______	______	______	______
At 31 December 2018	178,352	199,381	106,697	306,078
	______	______	______	______
Cash and cash equivalents
At 1 January 2018				15,745
Movement during the year				20,162
				______
At 31 December 2018				35,907
				______
Net debt at 31 December 2018				270,171
				______

The Group monitors capital using a ratio of Net Debt to Adjusted EBITDA in line with its banking covenants.   The Net Debt to Adjusted EBITDA pre IFRS 16 as at 31 December 2019 is 2.8 (2018: 2.3).

Net Debt to Adjusted EBITDA (pre IFRS 16)	2019	2018
	€'000	€'000
Adjusted EBITDA (note 2)	162,214	119,583
Deduct fixed rent costs* (note 8)	(27,384)	-
	_______	_______
Adjusted EBITDA pre IFRS 16	134,830	119,583
Net debt as at 31 December	374,846	270,171
	_______	_______
Net Debt to Adjusted EBITDA as at 31 December	2.8	2.3
	_______	_______

*No adjustment required to 2018 figures as prior year figures have not been restated for IFRS 16.

Net debt and lease liabilities to Adjusted EBITDA	2019
	€'000
Adjusted EBITDA (note 2)	162,214
Net debt and lease liabilities as at 31 December	736,947
	_______
Net debt and lease liabilities to Adjusted EBITDA as at 31 December	4.5
	_______

The comparative information is not shown above as it has not been restated for IFRS 16.

12  Subsequent events

Proposed final dividend

On 24 February 2020, the Board proposed a final dividend of 7.25 cents per share. This proposed dividend is subject to approval by the shareholders at the Annual General Meeting. The payment date for the final dividend will be 6 May 2020 to shareholders registered on the record date 14 April 2020. These condensed consolidated financial statements do not reflect this dividend. Based on shares in issue at 31 December 2019, the amount of dividends proposed is €13.4 million.

Vesting of share options

On 2 January 2020, the Company issued 49,245 shares of €0.01 per share following the partial vesting of the Share Save schemes granted in 2016.

On 3 February 2020, the Company issued 16,639 shares of €0.01 per share following the partial vesting of the Share Save schemes granted in 2016.

13  Earnings per share

Basic earnings per share is computed by dividing the profit for the year available to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share is computed by dividing the profit for the year available to ordinary shareholders by the weighted average number of ordinary shares outstanding and, when dilutive, adjusted for the effect of all potentially dilutive shares. The following table sets out the computation for basic and diluted earnings per share for the years ended 31 December 2019 and 31 December 2018.

	2019	2018
Profit attributable to shareholders of the parent (€'000) - basic and diluted	78,212	75,224
Adjusted profit attributable to shareholders of the parent (€'000) - basic and diluted	77,535	78,821
Earnings per share - Basic	42.4 cents	40.9 cents
Earnings per share - Diluted	42.0 cents	40.4 cents
Adjusted earnings per share - Basic	42.0 cents	42.8 cents
Adjusted earnings per share - Diluted	41.6 cents	42.3 cents
Weighted average shares outstanding - Basic	184,601,191	184,125,709
Weighted average shares outstanding - Diluted	186,305,549	186,156,827

The difference between the basic and diluted weighted average shares outstanding for the year ended 31 December 2019 is due to the dilutive impact of the conditional share awards granted in 2016 (for the period prior to exercise), 2017, 2018 and 2019 (note 5). There have been no adjustments made to the number of weighted average shares outstanding in calculating adjusted basic earnings per share and adjusted diluted earnings per share.

Adjusted earnings per share (basic and diluted) is presented as an alternative performance measure to show the underlying performance of the Group excluding the tax adjusted effects of items considered by management to not reflect normal trading activities or distort comparability either period on period or with other similar businesses (note 2).

	2019	2018
Reconciliation to adjusted profit for the year	€'000	€'000
Profit before tax	89,688	87,301
Finance costs	30,613	9,514
	______	______
Profit before tax and finance costs	120,301	96,815
Adjusting items (note 2)
Proceeds from insurance claim	-	(2,598)
Hotel pre-opening expenses	9	2,487
Net revaluation movements through profit or loss	(1,601)	3,137
	______	______
Adjusted profit before tax and finance costs	118,709	99,841
Finance costs	(30,613)	(9,514)
Adjusting items in finance costs
Write off of unamortised arrangement fees on original loans (note 4)	-	946
	______	______
Adjusted profit before tax	88,096	91,273
Tax charge	(11,476)	(12,077)
Adjusting items in tax charge (note 2)
Tax impact of proceeds from insurance claim	857	-
Tax adjustment for adjusting items	58	(375)
	______	______
Adjusted profit for the year	77,535	78,821
	______	______

Earnings per share has been restated to remove the impact of IFRS 16 Leases in 2019 and is presented in the following table. There is no comparative information for 2018 as IFRS 16 had not been applied in that year.

	2019
Pre IFRS 16 Earnings per share - Basic	46.4 cents
Pre IFRS 16 Earnings per share - Diluted	46.0 cents
Pre IFRS 16 Adjusted earnings per share - Basic	46.0 cents
Pre IFRS 16 Adjusted earnings per share - Diluted	45.6 cents

There have been no adjustments made to the number of weighted average shares outstanding in calculating the pre IFRS 16 earnings per share. A reconciliation of profit for the year as reported in accordance with prevailing IFRS to pre IFRS 16 profit for the year is included below.

	Profit for the year	Adjusted profit for the year
	€'000	€'000
As presented in accordance with prevailing IFRS	78,212	77,535
IFRS 16 impact on profit and adjusted profit for the year (note 8)	7,453	7,453
Loss on investment property	-	(44)
	______	______
Pre IFRS 16 profit and adjusted profit for the year	85,665	84,944
	______	______

14  Board approval

This announcement including the condensed consolidated financial statements was approved by the Board on 24 February 2020.

Supplementary Financial Information

Alternative Performance Measures ("APM") and other definitions

The Group reports certain alternative performance measures ('APMs') that are not defined under International Financial Reporting Standards ('IFRS'), which is the framework under which the condensed consolidated financial statements are prepared. These are sometimes referred to as 'non-GAAP' measures.

The Group believes that reporting these APMs provides useful supplemental information which, when viewed in conjunction with our IFRS financial information, provides investors with a more comprehensive understanding of the underlying financial and operating performance of the Group and its operating segments.

These APMs are primarily used for the following purposes:

· to evaluate the historical and planned underlying results of our operations; and

· to discuss and explain the Group's performance with the investment analyst community.

The APMs can have limitations as analytical tools and should not be considered in isolation or as a substitute for an analysis of our results in the condensed consolidated financial statements which are prepared under IFRS. These performance measures may not be calculated uniformly by all companies and therefore may not be directly comparable with similarly titled measures and disclosures of other companies.

The definitions of and reconciliations for certain APMs are contained within the condensed consolidated financial statements. A summary definition of these APMs together with the reference to the relevant note in the condensed financial statements where they are reconciled is included below. Also included below is information pertaining to certain APMs which is not mentioned within the condensed consolidated financial statements but which are referred to in other sections of this announcement. This information includes a definition of the APM in addition to a reconciliation of the APM to the most directly reconcilable line item presented in the condensed consolidated financial statements. References to the condensed consolidated financial statements are included as applicable.

(i)  Adjusted EBITDA

Adjusted EBITDA is an APM representing earnings before interest on lease liabilities, other interest and finance costs, depreciation of property, plant and equipment and right-of-use assets, amortisation of intangible assets and tax, adjusted to show the underlying operating performance of the Group and excludes items which are not reflective of normal trading activities or distort comparability either 'year on year' or with other similar businesses.

Reconciliation: Note 2

(ii) EBITDA and Segments EBITDA

EBITDA is an APM representing earnings before interest on lease liabilities, other interest and finance costs, depreciation of property, plant and equipment and right-of-use assets, amortisation of intangible assets and tax.

Reconciliation: Note 2

Segments EBITDA represents 'Adjusted EBITDA' before central costs, share-based payments expense and other income for each of the reportable segments: Dublin, Regional Ireland and United Kingdom. It is presented to show the net operational contribution of leased and owned hotels in each geographical location.

Reconciliation: Note 2

(iii) EBITDAR and Segments EBITDAR

EBITDAR is an APM representing earnings before rent (fixed and variable), interest on lease liabilities, other interest and finance costs, depreciation of property, plant and equipment and right-of-use assets, amortisation of intangible assets and tax.

Reconciliation: Note 2

Segments EBITDAR represents Segments EBITDA before rent (fixed and variable) for each of the reportable segments: Dublin, Regional Ireland and United Kingdom.

Reconciliation: Note 2

(iv) Adjusted basic earnings per share (EPS)

Adjusted Basic EPS is presented as an alternative performance measure to show the underlying performance of the Group excluding the effects of items considered by management to not reflect normal trading activities or distort comparability either year on year or with other similar businesses.

Reconciliation: Note 13

(v) Segments EBITDAR margin

Segments EBITDAR margin represents 'Segments EBITDAR' as a percentage of the total revenue for the following Group segments: Dublin, Regional Ireland and United Kingdom. Also referred to as Hotel EBITDAR margin.

(vi) Effective tax rate

The Group's annual tax charge divided by the profit before tax presented in the condensed consolidated statement of comprehensive income.

Reconciliation: Refer below

  (vii) Net Debt

Net Debt represents loans and borrowings (gross of unamortised debt costs) less cash and cash equivalents at year end.

Reconciliation: Note 11

(viii) Net Debt and Lease Liabilities

Net Debt and lease liabilities recorded at year end.

Reconciliation: Note 11

(ix) Net Debt to Adjusted EBITDA after Rent

Net Debt divided by the 'Adjusted EBITDA' after deducting fixed rent for the year. This APM is presented to show the Group's financial leverage before the application of IFRS 16 Leases .

Reconciliation: Note 11

(x) Net Debt and Lease Liabilities to Adjusted EBITDA

Net Debt and Lease Liabilities divided by the 'Adjusted EBITDA' for the year. This APM is presented to show the Group's financial leverage after including the accounting estimate of lease liabilities following the application of IFRS 16 Leases .

Reconciliation: Note 11

(xi) Free Cash Flow

Net cash from operating activities less amounts paid for interest, finance costs, refurbishment capital expenditure and after adding back cash paid in respect of adjusting items to EBITDA. The Group allocates approximately 4% of annual revenue to refurbishment capital expenditure to ensure the portfolio remains fresh for its customers and adheres to brand standards. Following the adoption of IFRS 16, fixed rent is also deducted. This APM is presented to show the cash generated to fund acquisitions, development expenditure, repayment of debt and dividends.

Reconciliation: Refer below

(xii) Debt and Lease Service Cover

Free Cash Flow before payments of rent, interest and finance costs divided by the total amount paid for rent, interest and finance costs. Debt and Lease Service Cover is presented to show the Group's ability to meet its debt and lease commitments.

Reconciliation: Refer below

(xiii) Normalised Return on Invested Capital

Adjusted EBIT for the year divided by the Group's average invested capital. The Group defines invested capital as total assets less total liabilities at the year end and excludes the accumulated revaluation gains/losses included in property, plant and equipment, Net Debt, derivative financial instruments, taxation related balances and is restated to remove the impact of adopting IFRS 16 Leases, including removing the accounting estimate for right-of-use assets and lease liabilities. The Group also excludes the impact of the investment in the construction of future assets or newly opened, owned assets in 2018 or 2019 which have not yet reached full operating performance.

The Group's net assets are adjusted to reflect the average level of acquisition investment spend and the average level of working capital for the accounting period. The average invested capital is the simple average of the opening and closing invested capital figures.

Adjusted EBIT represents the Group's Adjusted EBITDA after deducting the depreciation of property, plant and equipment, amortisation of intangible assets and is restated to remove the impact of adopting IFRS 16 by deducting the rental expense under IAS 17. The earnings from owned assets newly opened in 2018 or 2019 are excluded as they have not yet reached full operating performance.

The Group presents this APM to provide stakeholders with a more meaningful understanding of the underlying financial and operating performance of the Group. The Group excludes assets which have not yet reached full operating performance and assets under construction at year end and therefore did not generate a return to show the underlying performance of the Group.

Reconciliation: Refer below

(xiv) Pre IFRS 16 numbers

Due to the significant impact from the adoption of IFRS 16 Leases on the condensed consolidated financial statements, the Group has also disclosed numbers for the year ended 31 December 2019 as if they had been prepared under the previous accounting standard IAS 17 Leases. As the Group is not restating prior year comparatives under the transition method selected, these additional disclosures will provide the reader with more information to assist in interpreting the underlying operating performance of the Group. See note 8 to the condensed consolidated financial statements for the year ended 31 December 2019 for more information on the transition to IFRS 16.

In particular, the Group refers to the following APMs to enable comparison between years following the adoption of IFRS 16 Leases in the year.

Adjusted EBITDA pre IFRS 16

Earnings before adjusting items, interest and finance costs, tax, depreciation, amortisation of intangible assets and restated to remove the impact of adopting IFRS 16, replacing IFRS 16 right of use asset depreciation and lease liability interest with rental expenses under IAS 17. Earnings are adjusted to show the underlying operating performance of the Group and excludes items which are not reflective of normal trading activities or distort comparability either 'year on year' or with other similar businesses.

Reconciliation: Note 8

Profit before tax pre IFRS 16

Profit before tax restated to remove the impact of adopting IFRS 16, replacing IFRS 16 right of use asset depreciation and lease liability interest with rental expense under IAS 17.

Reconciliation: Note 8

Profit for the year pre IFRS 16

Profit for the year restated to remove the impact of adopting IFRS 16, including replacing IFRS 16 right of use asset depreciation and lease liability interest with rental expense under IAS 17.

Reconciliation: Note 8

Basic earnings per share pre IFRS 16

Basic earnings per share restated to remove the impact of adopting IFRS 16, including replacing IFRS 16 right of use asset depreciation and lease liability interest with rental expense under IAS 17.

Reconciliation: Note 8

Diluted earnings per share pre IFRS 16

Diluted earnings per share restated to remove the impact of adopting IFRS 16, including replacing IFRS 16 right of use asset depreciation and lease liability interest with rental expense under IAS 17.

Reconciliation: Note 8

Adjusted basic earnings per share pre IFRS 16

Basic EPS before adjusting items and restated to remove the impact of adopting IFRS 16, including replacing IFRS 16 right of use asset depreciation and lease liability interest with rental expense under IAS 17.

Reconciliation: Note 13

Reconciliation of pre IFRS 16 statement of financial position

A reconciliation of the reported condensed consolidated statement of financial position at 31 December 2019 to what would have been presented had IAS 17 still applied is shown in the table below.

Calculation - €'000	31 December 2019	IFRS 16 Impact	31 December 2019 As Reported
	Pre IFRS 16		Post IFRS 16
Non-current assets
Property, plant and equipment	1,471,315	-	1,471,315
Right-of-use assets	-	386,407	386,407
Goodwill and intangible assets	57,191	(21,058)	36,133
Other non-current assets	33,044	(7,262)	25,782
Current assets
Trade and other receivables and inventories	29,260	(5,531)	23,729
Cash and cash equivalents	40,586	-	40,586
Total assets	1,631,396	352,556	1,983,952
Equity	1,080,371	(7,530)	1,072,841
Loans and borrowings	411,739	-	411,739
Lease liabilities (non-current & current)	-	362,101	362,101
Trade and other payables	67,718	(1,555)	66,163
Other liabilities	71,568	(460)	71,108
Total equity and liabilities	1,631,396	352,556	1,983,952

Calculation of Effective tax rate (APM definition vi)

€'000	Reference in condensed financial statements	2019	2018
Tax charge	Statement of comprehensive Income	11,476	12,077
Profit before tax	Statement of comprehensive Income	89,688	87,301
Effective tax rate		12.8%	13.8%

Calculation of Free Cash Flow (APM definition xi) and Debt and Lease Service Cover (APM definition xii)

'000	Reference in condensed financial statements	2019	2018
Net cash from operating activities	Statement of cash flows	154,969	115,754
Other interest and finance costs paid	Statement of cash flows	(11,196)	(13,188)
Refurbishment capital expenditure paid		(15,625)	(15,868)
Exclude adjusting items with a cash effect		9	(111)
Fixed rent paid1
Interest paid on lease liabilities	Statement of cash flows	(18,945)	-
Repayment of lease liabilities	Statement of cash flows	(8,569)	-
Free Cash Flow		100,643	86,587
Add back total rent paid2		34,982	37,375
Add back interest and finance costs paid	Statement of cash flows	11,196	13,188
Free Cash Flow before rent and finance costs (A)		146,821	137,150
Total rent paid2		34,982	37,375
Interest and finance costs paid	Statement of cash flows	11,196	13,188
Total rent, interest and finance costs paid (B)		46,178	50,563
Debt and Lease Service Cover (A/B)		3.2x	2.7x

¹ In the prior year fixed rent paid was included in net cash from operating activities in accordance with the applicable accounting standards. Following the application of IFRS 16, fixed rent is now presented under net cash from financing activities.

² Total rent paid relates to payments of fixed and variable rent during the year in accordance with the lease agreements if they relate to the year.

Calculation of Normalised Return on Invested Capital (APM definition xiii)

€'000	Reference in condensed financial statements	2019 As Reported	2019		2018 2
Adjusted EBITDA	Note 2/8	162,214	134,830	119,583
Depreciation of property, plant and equipment	Note 2	(26,183)	(26,183)	(19,698)
Amortisation of intangible assets	Note 2/8	(195)	(239)	(44)
Fixed rent	Note 8	(27,384)	-	-
Adjusted EBIT from recently opened owned hotels1	Note 2/8	(11,631)	(11,631)	(2,298)
Adjusted EBIT pre IFRS 16 excluding results from recently opened owned hotels (A)		96,821	96,777		97,543

€'000	Reference in condensed financial statements	31 December 2019 As reported	31 December 2019	31 December 2018 2
		Post IFRS 16	Pre IFRS 16
Net assets at balance sheet date	Statement of financial position	1,072,841	1,080,371	902,577
Revaluation uplift in Property, Plant and Equipment3		(396,797)	(396,797)	(273,774)
Remove impact of IFRS 16:
Right-of-use assets	Statement of financial position	(386,407)	-	-
Lease liabilities	Statement of Financial Position	362,101	-	-
Intangible asset reclassed to RoU assets under IFRS 16		20,500	-	-
Working capital adjustment		3,976	-	-
Capitalised lease costs that existed under IAS 17		7,993	-	-
Net Debt	Note 11	374,846	374,846	270,171
Net deferred tax liability	Statement of financial position	55,831	56,004	38,516
Current tax liabilities	Statement of financial position	664	1,124	309
Derivative liabilities	Statement of financial position	4,523	4,523	1,306
Less assets under construction at year end	Note 7	(59,600)	(59,600)	(26,404)
Less contract fulfilment costs	Statement of financial position	(13,346)	(13,346)	(9,066)
Less new owned assets4		(235,141)	(235,141)	(110,479)
Normalised invested capital		811,984	811,984	793,156
Average normalised invested capital (B)		802,570	802,570	769,482
Normalised Return on Average Invested Capital (A/B)		12.1%	12.1%	12.7%

¹ The Adjusted EBIT from the five new, owned hotels which recently opened in 2018 or 2019 are excluded as these hotels have not benefited from a full twelve months of trading or have yet to reach normalised operating levels.

² The calculation was redefined during the period primarily to exclude contract fulfilment costs. This change does not have a material impact on prior period comparatives. Under the previous calculation, the Group's Normalised Return on Average Invested Capital amounted to 12.6% for 2018.

³ Includes the combined net revaluation uplift included in property, plant and equipment since the revaluation policy was adopted in 2014 or in the case of hotel assets acquired after this date, since the date of acquisition.   The carrying value of land and buildings, revalued at 31 December 2019, is €1,324.5 million (2018: €1,077.2 million). The value of these assets under the cost model is €927.8 million (2018: €803.4 million). Therefore, the revaluation uplift included in property plant and equipment is €396.7 million (2018: €273.8 million). Refer to note 7 to the condensed financial statements.

⁴ The cost of constructing the five new owned, hotels which opened during 2018 or 2019 are excluded as these hotels have not benefited from a full twelve months of trading or have yet to reach normalised operating levels.

Glossary

1. ARR

Average Room Rate (also ADR - Average Daily Rate)

2. Revenue per available room (RevPAR)

Revenue per available room is calculated as total rooms revenue divided by the number of available rooms, which is also equivalent to the occupancy rate multiplied by the average daily room rate achieved.

3. 'Like for like' RevPAR

'Like for like' RevPAR excludes the (i) hotels which were not in operation for a full year in the current year and substantially all of the preceding year, (ii) hotels with a significant change in available rooms year on year, which the Group defines as greater than 10% and (iii) hotels with significant renovations on-going in either the current or preceding year which significantly impacts the hotels ability to operate on a normal basis.

The Dublin portfolio excludes (i) Maldron Hotel Kevin Street and Clayton Hotel Charlemont which opened during 2018, (ii) Tara Towers Hotel which closed in September 2018, (iii) Maldron Hotel Parnell Square due to the significant extension completed during 2018, (iv) Clayton Hotel Liffey Valley due to the acquisition of rooms over the past two years and (v) Clayton Hotel Burlington Road due to the redevelopment works ongoing at the hotel.

The Regional Ireland portfolio excludes the new Maldron Hotel South Mall, Cork which opened in December 2018 and Maldron Hotel Sandy Road, Galway which had a significant extension added during 2018.

The UK portfolio excludes the new Maldron Hotel Belfast City, Maldron Hotel Newcastle and Clayton Hotel City of London which opened in March 2018, December 2018 and January 2019 respectively and also The Tamburlaine Hotel, Cambridge which was leased from November 2019.

'Like for like' Group RevPAR is also stated on a constant currency basis with the KPIs for the prior year restated at the foreign currency rates applicable in the current year.

4. Hotel assets

Hotel assets represents the value of property, plant and equipment per the condensed consolidated statement of financial position at 31 December 2019.

5. Refurbishment capital expenditure

The Group allocates approximately 4% of annual revenue to refurbishment capital expenditure to ensure the portfolio remains fresh for its customers and adheres to brand standards.

 

END

 

 

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