Interim Results

RNS Number : 9801P

Peel Hotels PLC

12 October 2011

 



                                             PEEL HOTELS PLC

                    INTERIM RESULTS

For 28 weeks ended 21 August 2011 

·     Turnover down 5.2% to £7,846,471 (2010:£8,275,804)

·     Profit before interest down 3.5% to £615,240 (2010: £637,215)

·     Profit before tax £32,998 (2010: Loss £7,104)

·     Net debt decreased £726,386 to £12,717,336 (2010: £14,183,231)

·     Earnings per share

                         Basic        0.4p    (2010: 0.2p)

                         Diluted     0.4p    (2010: 0.2p)

Chairman Robert Peel said: 'We have been unable to recoup the additional 2.5% Vat from our customers; Revpar decreased 1.8% with occupancy down 0.7% and average room rate down 1.2%. The positive news is that we reduced our overall borrowings by £726,386 through a combination of positive cash flow and the sale of an asset no longer required. We are prepared for a continuing tough trading environment in the short term but are determined to return to growth in Revpar by the end of the Financial Year.'        

12 October 2011

Press Enquiries:                                 0207 266 1100

Nominated Advisor and Broker            0207 418 8900

Peel Hunt LLP

Capel Irwin

CONTENTS 

                                                                                 Page No.

Chairman's Statement                                                                                              3-4

Directors and Advisers                                                                                               5

Consolidated Statement of Comprehensive Income                                                        6

Consolidated Statement of Changes in Equity                                                                7

Consolidated Balance Sheet                                                                                         8

Consolidated Cash Flow Statement                                                                              9

Notes to the Interim Results                                                                                      10

Independent Review Report to Peel Hotels plc                                                             11

Hotel Directory                                                                                                        12

CHAIRMAN'S STATEMENT

In the 28 weeks to 21 August 2011 turnover was £7,846,471, a decrease of 5.2% on the corresponding period of the previous year. Over the same period operating profit decreased 3.5% to £615,240 and EBITDA (earnings before interest, tax and depreciation) decreased 5.9% to £1,250,273.

Revpar (accommodation revenue per available room) decreased 1.8% with occupancy down 0.7% and average room rate down 1.2%. In simple terms we have been unable to recoup the additional 2.5% VAT from our customers as we continue to operate in an extremely challenging economic and competitive environment.

Group overheads decreased £20,114 amounting to a saving of 5.5% on the previous year whilst depreciation and amortisation decreased 8.2% to £635,033.

The sale of 21/23 The High Street, the staff house for the George Hotel in Wallingford for a consideration of £470,000 gave rise to a profit of £232,068 and the proceeds from this disposal were used to make additional repayments of part of the Company's bank loan over and above the regular semi annual repayment instalments.

We have finally settled the five yearly rent review at the Crown and Mitre Hotel in Carlisle covering 1 June 2008 to 1 June 2013 at a reasonable ongoing annual rent of £112,000 per annum (previously £86,000 per annum). However the Arbitrator adjudicated that each party should pay their own costs, which in our case totalled £202,724, of which £77,811 has already been written off our profits and the remaining £124,913 is to be written off over the period to 1 June 2013. We were disappointed with the costs adjudication in that we feel we were forced to incur substantial costs in terms of professional fees in order to protect our opinion of the fair rent compared with that proposed by the landlord.

Profit before tax was £32,998 including a negative fair value movement on the swap of £58,702 (28 weeks ended 22 August: loss before tax of £7,104).

Corporation Tax has been provided at an effective rate of 25%. Basic earnings per share were 0.4p compared with 0.2p in the comparative period on a weighted average of 14,012,123 (2010: 14,012,123) shares in issue.

FINANCE

On the 21 August 2011 net debt stood at £12,717,336 representing loans totalling £11,927,919 and an overdraft of £860,397 less £70,980 cash at bank. Gearing on Shareholders' funds was 57.5% with interest covered 1.2 times. Net debt decreased by £726,386 compared with the previous year end.

The cost of buying out the swap on 21 August 2011 was £990,950 and the Board's view is still that it would make little economic sense.

Following their review last year the Bank reduced our overdraft facility from £2,000,000 to £1,500,000 at the end of the last financial year with a further reduction in the facility to £1,000,000 from the 31 August 2011. Whilst we were thus given ample time to plan for these reductions, the reduced facility does not give us the room at this stage to consider the payment of an interim dividend.

The positive news is that in the last financial year we reduced our overall borrowings by £1,350,847 and in the current year thus far by a further £726,386 through a combination of positive cash flow and the sale of assets no longer required.

CAPITAL EXPENDITURE

We are careful to conserve cash but not to the detriment of maintaining and improving all of our properties. The Company spent £302,667 in the period across the portfolio. We completely refurbished the swimming pool and leisure facilities at the Crown and Mitre Hotel in Carlisle and continued to improve the bedrooms at the Midland, Bull and Norfolk Royale.

In addition to such capital expenditure a further £305,283 (2010: £ 345,970) was expensed through the profit and loss account in the period on repairs and renewals which further demonstrates our commitment to maintaining and improving the quality of our estate.

We continue to make progress in our objective of moving all our freehold properties to AA four star status over time.

SHAREHOLDERS

Shareholders have had to contend with a great deal of late, with no dividend payment and an enormously depressed share price, notwithstanding a relatively low turnover of shares.

We are always delighted to welcome Shareholders to our Hotels where they can see for themselves the progress we have made, whilst enjoying a beneficial discount. We have increased the discount for Shareholders to 50% of our rack rate tariff, using the special reservations number 0207 266 1100 or e-mail [e-mail] Shareholders can keep in touch with progress in the company and various promotional activities by visiting our website www.peelhotels.co.uk.

We are now selling the Christmas present 'at the top of everyone's list' giving the recipient and their partner two nights stay on any dates in 2012, provided they are bought before 31 December 2011, inclusive of dinner each night and English breakfast each morning in any one of our nine Hotels. The prepaid cost of this gift varies from £99 to £189 dependent upon the month chosen (the price will not be mentioned on the voucher). To buy gift wrapped vouchers contact us on 0207 266 1100.

THE FUTURE

In spite of provincial retail and commercial expenditure constraints we are managing to contain the decline in Revpar and thereby generate cash in order to pay down our loan and reinvest in our product. On a positive note net interest costs are now decreasing in the light of the declining debt profile.

The Company is becoming increasingly involved in a number of special promotions in making its Hotels available and easily booked on third party websites. It sees this as a way of compensating for the drops in volume from established methods of making reservations. Our key objective is a return to growth in Revpar by the end of the Financial Year.

We are prepared for a continuing tough trading environment in the short term and look to contain our costs but we expect the additional activity caused by the Olympics next year will help us grow our sales and improve our profitability.

Robert Peel

Chairman

12 October 2011

DIRECTORS AND ADVISORS

                                                      Directors

                   Robert Edmund Guy Peel                      Executive Chairman

                   Clement John Govett                            Non-executive Director

                   Keith Peter Benham                              Non-executive Director

                   Norbert Paul Gottfried Petersen             Chief Operating Officer

Secretary

Thrings LLP

Kinnaird House, 1 Pall Mall East, London SW1Y 5AU

Registered Office

4^th Floor, 111 Old Broad Street, London EC2N 1PH

Company registration number 3473990

Auditor

Grant Thornton UK LLP

No. 1 Whitehall Riverside, Leeds, LS1 4BN

Bankers    

Royal Bank of Scotland Plc

280 Bishopsgate, London EC2M 4RB

Registrars

Computershare Services Plc

PO Box No 82, The Pavilions, Bridgewater Road, Bristol BS99 7NH

Solicitors

Thrings LLP

Kinnaird House, 1 Pall Mall East, London SW1Y 5AU

Stockbroker

Peel Hunt LLP

4^th Floor, 111 Old Broad Street, London EC2N 1PH

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the period ended 21 August 2011

			28 weeks  ended		28 weeks ended		Year ended
			21/08/2011		22/08/2010		06/02/11
			Unaudited		Unaudited		Audited
	Note	£	£	£	£	£	£
Revenue			7,846,471		8,275,804		15,263,682
Cost of sales			(6,480,620)		(6,578,963)		(12,271,069)
Gross Profit			1,365,851		1,696,841		2,992,613
Administration expenses		(347,646)		(367,760)		(657,721)
Depreciation		(635,033)		(691,866)		(1,239,991)
Profit on disposal of property		232,068		-		203,775
Operating Profit			615,240		637,215		1,298,676
Finance expense			(523,540)		(534,836)		(1,033,202)
Fair value movement on derivative			(58,702)		(109,483)		289,855
Profit/(loss) before tax			32,998		(7,104)		555,329
Income tax	2		26,259		34,986		(55,351)
Profit and total comprehensive income for the period attributable to owners			59,257		27,882		499,978
Earnings per share
Basic & diluted (pence)	3		0.4		0.2		3.6

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the period ended 21 August 2011

6 months ended 22 August 2010		Share	Profit
Unaudited	Share	premium	and loss
	capital	account	account	Total
	£	£	£	£
Balance brought forward
at 8 February 2010	1,401,213	9,743,495	10,401,199	21,545,907
Employee share options	-	-	1,769	1,769
Transactions with owners	-	-	1,769	1,769
Profit and total comprehensive
income for the period	-	-	27,882	27,882
Balance at 22 August 2010	1,401,213	9,743,495	10,430,850	21,575,558
12 months ended 6 February 2011		Share	Profit
Audited	Share	premium	and loss
	capital	account	account	Total
	£	£	£	£
Balance brought forward
at 8 February 2010	1,401,213	9,743,495	10,401,199	21,545,907
Employee share options	-	-	1,769	1,769
Transactions with owners	-	-	1,769	1,769
Profit and total comprehensive
income for the period	-	-	499,978	499,978
Balance at 6 February 2011	1,401,213	9,743,495	10,902,946	22,047,654
6 months ended 21 August 2011		Share	Profit
Unaudited	Share	premium	and loss
	capital	account	account	Total
	£	£	£	£
Balance brought forward
at 7 February 2011	1,401,213	9,743,495	10,902,946	22,047,654
Profit and total comprehensive
income for the period	-	-	59,257	59,257
Balance at 21 August 2011	1,401,213	9,743,495	10,962,203	22,106,911

CONSOLIDATED BALANCESHEET

at 21 August 2011

	21/08/2011	22/08/2010	06/02/2011
	Unaudited	Unaudited	Audited
	£	£	£
Assets
Non-current assets
Property, plant and equipment	38,026,537	39,148,225	38,583,903
Deferred tax asset	257,647	359,528	251,707
Total non-current assets	38,284,184	39,507,753	38,835,610
Current assets
Inventories	103,533	108,850	106,788
Trade and other receivables	562,314	633,975	449,692
Prepayments	987,862	888,139	795,069
Cash at bank and in hand	70,980	109,426	111,186
Total current assets	1,724,689	1,740,390	1,462,735
Total assets	40,008,873	41,248,143	40,298,345
Equity and liabilities
Equity attributable to owners
Share capital	1,401,213	1,401,213	1,401,213
Share premium	9,743,495	9,743,495	9,743,495
Retained earnings	10,962,203	10,430,850	10,902,946
Total equity	22,106,911	21,575,558	22,047,654
Liabilities
Non-current
Borrowings (due after one year)	9,981,865	11,342,718	10,663,422
Deferred tax liabilities	1,575,325	1,728,568	1,618,568
Non-current liabilities	11,557,190	13,071,286	12,281,990
Current
Trade and other payables	2,403,011	2,290,855	2,023,531
Borrowings (due within one year)	2,806,451	2,949,940	2,891,486
Current tax liabilities	144,360	28,918	121,436
Derivative financial instruments	990,950	1,331,586	932,248
Current liabilities	6,344,772	6,601,299	5,968,701
Total liabilities and equity	40,008,873	41,248,143	40,298,345

The accompanying notes form an integral part of these financial statements.

Approved by the board 12 October 2011             

Robert Peel, Director

Norbert Petersen, Director

CONSOLIDATED CASH FLOW STATEMENT

for the Period ended 21 August 2011

	21/08/2011	22/08/2010	06/02/2011
	Unaudited	Unaudited	Audited
	£	£	£
Cash flows from operating activities
Profit for the period	59,257	27,882	499,978
Adjustments for:
Equity settled share-based payment expenses	-	1,769	1,769
Financial expense	523,540	534,836	1,033,202
Fair value movement on derivative	58,702	109,483	(289,855)
Income tax income	(26,259)	(34,986)	55,351
Profit on sale of property	(232,068)	-	(203,775)
Depreciation	635,033	691,866	1,239,991
Operating profit before changes in working capital and provisions	1,018,205	1,330,850	2,336,661
UK corporation tax received	-	100,706	100,706
(Increase) in trade and other receivables	(317,164)	(330,950)	(68,504)
Increase in trade and other payables	389,093	385,131	109,360
Decrease in inventories	3,255	3,990	6,052
Net cash from operating activities	1,093,389	1,489,727	2,484,275
Cash flows from investing activities
Interest paid	(522,866)	(547,677)	(1,063,907)
Acquisition of property, plant and equipment	(302,667)	(326,299)	(515,102)
Sale of property, plant and equipment	462,927	-	408,776
Net cash from investing activities	(362,606)	(873,976)	(1,170,233)
Cash flows from financing activities
New loans	-	500,000	500,000
Loan repayments	(685,954)	(223,027)	(861,105)
Net cash from financing activities	(685,954)	276,973	(361,105)
Net increase in cash and cash equivalents	44,829	892,724	952,937
Cash and cash equivalents at the beginning of the period	(834,246)	(1,787,183)	(1,787,183)
Cash and cash equivalents at the end of the period	(789,417)	(894,459)	(834,246)
For the purpose of the cash flow statement, cash and cash equivalents comprise:
Cash and bank balances	70,980	109,426	111,186
Bank overdraft	(860,397)	(1,003,885)	(945,432)

NOTES TO THE INTERIM RESULTS

for the period ended 21 August 2011

1. Basis of accounting

The interim financial information has been prepared on the basis of the recognition and measurement requirements of adopted IFRSs as at 21 August 2011 that are effective (or available for early adoption) at 5 February 2012. Based on these adopted IFRSs, the Directors have applied the accounting policies, which they expect to apply when the annual IFRS financial statements are prepared for the year ending 5 February 2012.

The group has chosen not to adopt IAS 34 (Interim Financial Statements) in preparing these interim financial statements and therefore the interim financial information is not in full compliance with International Financial Reporting Standards.

The financial information set out in this interim report does not constitute statutory accounts as defined in sections 434 and 435 of the Companies Act 2006.  The figures for the year ended 6 February 2011 have been extracted from the statutory financial statements which have been filed with the Registrar of Companies.  The auditor's report on those financial statements was unqualified and did not contain a statement under section 498(2) and 498(3) of the Companies Act 2006.

The group's accounting policies remain as stated in the group's full annual accounts for the year ended 6 February 2011.

2. Taxation

Tax has been provided at a rate of 25% which represents the expected effective rate for the full year. 

3. Earnings per share

Earnings per share are based on the profit after taxation and on the weighted average number of shares in issue during the period.

	28 weeks	28 weeks	Year
	ending	ending	ending
	21/08/2011	22/08/2010	06/02/2011
	Unaudited	Unaudited	Audited
Average No. Share - Basic	14,012,123	14,012,123	14,012,123
- Diluted	14,012,123	14,017,483	14,017,518

Independent review report to Peel Hotels plc

Introduction

We have been engaged by the company to review the financial information in the half-yearly financial report for the six months ended 21 August 2011 which comprises the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Consolidated Cash Flow Statement, the Consolidated Statement of Changes in Equity and the related notes.

We have read the other information contained in the half yearly financial report which comprises only the Chairman's Interim Statement and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with guidance contained in International Standard on Review Engagement (UK and Ireland) 2410, 'Review of Interim Financial Information performed by the Independent Auditor of the Entity'. Our review work has been undertaken so that we might state to the company those matters we are required to state to them in a review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusion we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The AIM rules of the London Stock Exchange require that the accounting policies and presentation applied to the financial information in the half-yearly financial report are consistent with those which will be adopted in the annual accounts having regard to the accounting standards applicable for such accounts.

As disclosed in Note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The financial information in the half-yearly financial report has been prepared in accordance with the basis of preparation in Note 1.

Our responsibility

Our responsibility is to express to the company a conclusion on the financial information in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the financial information in the half-yearly financial report for the six months ended 21 August 2011 is not prepared, in all material respects, in accordance with the basis of accounting described in Note 1.

GRANT THORNTON UK LLP

AUDITOR

LEEDS

12 October 2011

HOTEL DIRECTORY

Location                                        Hotel     Rating       Rooms           Telephone        Facsimile                

Bournemouth                     Norfolk Royale   ★★★★      95                  01202 551521    01202 299729
Bradford                              Midland Hotel   ★★★★      90                  01274 735735    01274 720003
Carlisle                     Crown & Mitre Hotel   ★★★★      94                  01228 525491    01228 514553

Dunfermline                King Malcolm Hotel   ★★★★      48                  01383 722611    01383 730865 Leeds                          Cosmopolitan Hotel   ★★★★     89                  0113 2436454    0113 2429327

Newcastle upon Tyne       Caledonian Hotel   ★★★★      91                  0191 2817881    0191 2816241

Nottingham                       Strathdon Hotel   ★★★★      68                  0115 9418501    0115 9483725

Peterborough                             Bull Hotel   ★★★★     118                 01733 561364    01733 557304

Wallingford                           George Hotel   ★★★★   39                  01491 836665    01491 825359

              Total of 9 Hotels                                             732

For reservations at any Peel Hotel call  020 7266 1100        

or log onto our web site on www.peelhotels.co.uk

e-mail - [e-mail]

 

END

 

 

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