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PPHE Hotel Grp Ltd (PPH)

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Tuesday 02 March, 2021

PPHE Hotel Grp Ltd

Annual Results

RNS Number : 7783Q
PPHE Hotel Group Limited
02 March 2021
 

 

 

 

2 March 2021

 

PPHE Hotel Group Limited

("PPHE" or the "Group")

 

Audited Annual Results for the financial year ended 31 December 2020
Publication of Annual Report & Accounts and Notice of Annual General Meeting

 

Well-positioned for recovery following continued
strategic progress and decisive actions

 

PPHE Hotel Group, the international hospitality real estate group which develops, owns and operates hotels and resorts, today announces its audited annual results for the financial year ended 31 December 2020.

 

Boris Ivesha, President & Chief Executive Officer, PPHE Hotel Group said:

"Despite the challenges presented over the past 12 months, our well-invested portfolio, agile owner-operator model and strong 30-year track record together provide a solid foundation for success, and we remain excited about the long-term future of the business.

After the UK government's recovery roadmap announcement last week, we have seen an encouraging early uplift in customer demand. We are optimistic that this positive trend will continue, supported by a calendar of cultural and sport events taking place in the UK during the second half of the year.

During the period we were pleased to progress a number of development projects and complete several new acquisitions in line with our long-term growth strategy, in addition to navigating the impact of the pandemic.

I am confident that our high-quality portfolio and strong pipeline, together with our unique owner operator approach and the operational initiatives implemented during 2020 positions the Company very well to benefit from the anticipated uplift in domestic and international demand as the global vaccine rollout continues and restrictions ease."

 

Operational initiatives and strategic progress

 

The Board and Executive Leadership Team reacted quickly to manage the impact of the COVID-19 pandemic, prioritising the safety and wellbeing of colleagues and guests by implementing externally accredited health and safety protocols and harnessing technology to ensure a seamless guest experience when hotels were open

 

Decisive actions were taken to protect the Group by preserving cash by reducing costs, temporarily closing properties where appropriate and utilising available government support initiatives, including job retention schemes

 

The Group made good strategic progress, well-positioning it for the future and to benefit from the recovery as lockdown restrictions ease. Highlights include:

 

 

Completion of committed property investment projects in Croatia (Arena Grand Kažela Medulin campsite and Arena Verudela Beach Apartments in Pula)

 

 

Continued construction of the 343-key art'otel london hoxton, for which the Group secured a £180 million loan in April 2020

 

 

Acquisition of properties in Pula (Croatia) and Belgrade (Serbia) and a 45-year lease agreement in Zagreb (Croatia), extended the Group's presence in Central and Eastern Europe

 

 

Obtained planning permission for the development of a 465-key hotel in London, on the site adjacent to Park Plaza London Park Royal.

 

In line with its commitment to positively impact its communities, the Group was proud to provide accommodation to key workers, offer events spaces to local organisations, and donate much-needed services and items to those in the communities across its countries of locations.

 

Well-positioned for recovery

 

Vaccine rollouts continue across all the Group's countries of operation, laying the foundation for the easing of government-imposed restrictions.

 

The Group's properties are excellently positioned to benefit from a phased recovery, with the anticipated return of domestic then international leisure demand during 2021.

 

Most of the Group's hotels are located in desirable city hubs, additionally the portfolio has benefited from completion of an extensive £100+ million multi-year investment and repositioning programme in 2019.

 

Strong active £200+ million pipeline of attractive projects to enhance long-term growth.

 

The Group has development and operational expertise and a 30-year track record of successfully managing through economic cycles, underpinned by a well-invested property portfolio, operational agility and experienced leadership team.

 

Financial Performance

 

Key financial statistics for the financial year ended 31 December 2020

 

 

Reported in GBP (£)

 

 

Year ended
31 December 2020

Year ended

31 December 2019

Total revenue

£101.8 million

£357.7 million

Room revenue

£63.6 million

£250.6 million

EBITDAR

£(9.1) million

£124.7 million

EBITDA

£(10.1) million

£122.9 million

EBITDA margin

(9.9)%

34.4%

Reported PBT

£(94.7) million

£38.5 million

Normalised PBT

£(89.8) million

£40.7 million

Normalised EPS

(181)p

85p

Dividend per share

-

37p

Occupancy

28.0%

80.6%

Average room rate

£105.1

£128.5

RevPAR

£29.4

£103.6

EPRA NRV per share

£22.08

£25.93

Adjusted EPRA earnings per share

(123)p

128p

       

 

The Group's financial performance was severely impacted by the COVID-19 pandemic and the resulting restrictions on both domestic and international travel across its markets.

 

Despite restrictions and hotel closures throughout the majority of the period, the Group delivered room revenues of £63.6m. Reported RevPAR was £29.4, with occupancy of 28.0% (2019: 80.6%) and decreased average room rate of £105.1 (2019: £128.5).

 

EPRA NRV per share remained resilient at £22.08, reflecting the Group's well-invested, centrally located properties.

 

The Group ended the year with a strong cash position, with £197.6m cash available as at 31 December 2020 (30 September 2020: £195.4m). This comprises cash of £114.2m at 31 December 2020 (30 September 2020: £132.4m), and access to undrawn facilities of £83.4m (30 September 2020: £63.0m).

 

Publication of Annual Report & Accounts and Notice of Annual General Meeting

 

PPHE Hotel Group Limited will publish later today its annual report and accounts for the financial year ended 31 December 2020 (the "Annual Report"), including the Notice of Annual General Meeting. These documents shall be available today on the Company's website www.pphe.com .

 

The Company's Annual General Meeting will be held on 19 May 2021 at 12 noon at 1st Floor, Elizabeth House, Les Ruettes Brayes, St Peter Port, Guernsey GY1 1EW.

 

Pursuant to UK Listing Rule 9.6.1, copies of the Annual Report and Notice of the Annual General Meeting shall be submitted later today to the National Storage Mechanism and will shortly be available for inspection at: http://www.morningstar.co.uk/uk/nsm  

 

In accordance with Disclosure Guidance and Transparency Rule 6.3.5, the information in the attached Appendix consisting of a Directors' Responsibility Statement, principal risks and uncertainties and related party transactions has been extracted unedited from the Annual Report & Accounts for the financial year ended 31 December 2019. This material is not a substitute for reading the full Annual Report.

 

This announcement contains inside information. The person responsible for arranging the release of this announcement on behalf of the company is Daniel Kos, Chief Financial Officer & Executive Director.

 

Enquiries

PPHE Hotel Group Limited

 

 

Daniel Kos, Chief Financial Officer & Executive Director

 

Robert Henke, Executive Vice President of Commercial Affairs

Tel: +31 (0)20 717 8600

Hudson Sandler

 

Wendy Baker/ Lucy Wollam

Tel: +44 (0)20 7796 4133

 

Notes to Editors

 

PPHE Hotel Group is an international hospitality real estate company, with a 1.7 billion portfolio, valued as at December 2020 by Savills and Zagreb nekretnine Ltd (ZANE), of primarily prime freehold and long leasehold assets in Europe.  

 

Through its subsidiaries, jointly controlled entities and associates it owns, co-owns, develops, leases, operates and franchises hospitality real estate. Its primary focus is full-service upscale, upper upscale and lifestyle hotels in major gateway cities and regional centres, as well as hotel, resort and campsite properties in select resort destinations.

 

PPHE Hotel Group benefits from having an exclusive and perpetual licence from the Radisson Hotel Group, one of the world's largest hotel groups, to develop and operate Park Plaza® branded hotels and resorts in Europe, the Middle East and Africa. In addition, PPHE Hotel Group wholly owns, and operates under, the art'otel® brand and its Croatian subsidiary owns, and operates under, the Arena Hotels & Apartments® and Arena Campsites® brands.

 

PPHE Hotel Group is a Guernsey registered company with shares listed on the London Stock Exchange. PPHE Hotel Group also holds a controlling ownership interest in Arena Hospitality Group, whose shares are listed on the Prime market of the Zagreb Stock Exchange.

 

Company websites: www.pphe.com / www.arenahospitalitygroup.com  

For reservations: / www.artotels.com / / www.arenacampsites.com  

 

 

 

CHAIRMAN'S STATEMENT

 

A thirty-year track record

 

Our resilient model

 

2020 will always be remembered as the year in which the COVID-19 pandemic impacted the world, its citizens and the global economies. Notwithstanding the major challenges this presented, our long-term development ambitions remain strong. Transforming properties and spaces and evolving our product offering to remain current and responsive to our markets has always been at the centre of our success. The strength and value driven from our repositioning programme is a testament to how well our hospitality offering satisfies the needs and trend appetites of the market at any given time. Our development goals, our drivers and our reliable success in developing and repositioning properties and spaces remained untouched by the many forces that otherwise tore through society and markets in 2020. With the obvious external macro challenges we consistently monitor our development projects and adapt where deemed appropriate. During 2020, we continued to progress several development projects and, as we discuss throughout the report, the business has expanded and diversified its approach top development.

 

We were able to progress with several developments and acquisitions through securing new funds or using resources earmarked specifically for such investments.

 

Following the successes of 2019, the Group was progressing with the continued aim of delivering another year of record growth. We were set to progress against our strategic objectives and drive value for stakeholders through our existing prime property portfolio and strong development pipeline. However, the past year has brought change and challenge unlike anything I have ever witnessed during my decades-long career. As the co-founder of a hospitality business, but also as a global citizen and a member of many communities and groups professionally and personally, I am humbled by the challenges and struggles faced by many in 2020.

 

This is my 31st year paving the path of our Group's growth and it has been without a doubt the most testing year. We could not control whether the pandemic impacted our business, but we were able to control the damage caused and are focussed in our swift and healthy recovery. As Chairman of the Group, I focus this statement on the steps taken in 2020 to chart the way toward an eventful and expeditious recovery and leave the reader to see, in particular from our Financial Review, how our inherent tenacity and ability to make good decisions without delay, carried us through 2020.

 

The Group has a strong 30-year track record of navigating markets and economic cycles, and this experience stood us in good stead in the face of the unprecedented disruption caused by the onset of COVID-19 and provided us with a strong and resilient foundation from which to steer the business through the challenges presented by the pandemic.

 

It is during these difficult months that our unique owner and operator model - which enables the Group to maximise revenue, drive value through its assets and provides the asset backing for financial flexibility - has shown its adaptability and strength. This model, together with our committed and experienced team and well-invested property portfolio, positions us well to benefit from the market recovery as a sense of normality resumes. We were encouraged to see that several of our properties outperformed the market during the year despite the challenges we faced, which is testament to the quality and attractive locations of our assets and the hard work of our teams.

 

Unfortunately the Group had to undertake fundamental changes to its workforce by reducing work hours and, unavoidably, through forgoing contract renewals and redundancies. We would like to thank all past and present staff for their hard work and commitment.

 

Responsible business

 

We aim to play a critical role in the communities where we operate. The 2020 year saw our communities hit by the devastation of the pandemic. This crisis underscored the key role that we as community members can play in helping to fill the gaps in support and care, caused by the pandemic. As a business, we are proud of the vital role our team members played in addressing local community needs by leveraging their skills, hospitable expertise and our collective resources.

 

For more information on our Responsible Business programme, please see page 72 of the Annual Report and Accounts 2020.

 

Governance and Board changes

 

The governance programme has continued to evolve with the 2020 year, and in some ways benefited from the tests presented by the diverse and unanticipated business changes felt in 2020. In keeping with our Board succession plans, the 2020 year provided the opportunity to diversify our Board by integrating new Non-Executive Directors, whose varied skills, background and interests facilitated the continued evolution and growth of our governance programme. This was further enhanced by the changes our Nomination Committee Chairman, Kenneth Bradley, implemented with regard to our approach toward nominations and induction programmes for new Board Members.

 

We were delighted to welcome Nigel Keen as an independent Non-Executive Director on 20 February 2020. Nigel's wealth of property experience will be invaluable as the Group's property capability and development pipeline grows. Nigel sits on the Audit, Remuneration and Nomination Committee.

 

We also welcomed Stephanie Coxon to the Board as an independent Non-Executive Director on 7 August. Stephanie's strong capital markets expertise, spanning more than 15 years, will be invaluable as we continue to address the unprecedented impact of the COVID-19 pandemic and support our long-term growth in exploring new development opportunities. Stephanie sits on the Audit, Remuneration and Nomination Committees.

 

Dividend

 

In March, the Board took the decision to withdraw its proposed 2019 final dividend payment to shareholders to enhance financial flexibility. Due to the ongoing uncertainty regarding restrictions on international travel, the Board continued to take a prudent approach to cash conservation and did not propose an interim or final dividend for the 2020 financial year.

 

The Board will continue to review the Group's dividend policy and will resume dividend payments when it is deemed appropriate.  

 

Looking ahead

 

After years of negotiations, the UK Government and the European Union finalised their new partnership agreement at the end of December, marking the end of the Brexit transition period. The main areas of impact for our Group of this new partnership are expected to be centred around employment and the delivery of food, drinks and products. Since the outcome of the Brexit referendum, our teams have been very proactive to mitigate the potential risks where possible and we have taken many steps to improve our employer value proposition and conducted a full supply chain analysis. However, the full economic impact of this new partnership is yet unclear and is currently masked by the pandemic.

 

2020 was truly the year of adversity for the hospitality industry, but both adversity and challenge bring opportunities to improve, strengthen and ultimately, succeed. Through cycles of challenge and opportunity the sector has time and again demonstrated its ability to bounce back. The European travel market, the largest in the world, has delivered sustained growth* for more than 70 years, despite cycles of downturns and upticks.

 

As the COVID-19 vaccines are rolled out, borders reopen and restrictions are eased, we expect to see a phased recovery.

 

Our owner operator model, well-invested portfolio and strong development pipeline means PPHE Hotel Group is well-placed to benefit from the market recovery and to capitalise on future opportunity in line with our growth strategy.

 

*  Source: UN World Tourism Organisation, World Tourism Barometer 2019.

 

Eli Papouchado

Chairman

 

 

 

PRESIDENT & CHIEF EXECUTIVE OFFICER'S STATEMENT

 

Well positioned to benefit from market recovery

 

As we entered 2020, the Group was well positioned for future growth following completion in 2019 of our multi-year £100 million plus investment programme, coupled with a strong pipeline of planned developments. However, the COVID-19 pandemic brought unprecedented challenges unlike anything the hospitality industry has experienced before. In the face of these difficulties, the Group has been resilient and has proven its ability to adapt to the ever-changing market conditions underpinned by its well-invested portfolio, flexible owner operator model and broad customer appeal.

 

2020 at a glance

 

Many hotels of the Group outperformed the market in January and February prior to the onset of COVID-19. However, from early March to May the pandemic unmistakably impacted operations. International and domestic travel came to a halt and the whole hospitality industry saw an unprecedented level of cancellations and re-bookings. Governments across Europe implemented extensive public health measures including lockdowns and property closures to restrict the movement of people. Consequently, most of our properties were closed for the months of April, May and June, with only a small number of properties remaining open to support key workers, such as medical personnel at nearby hospitals.

 

The Board and Executive Leadership Team took swift and decisive actions. We activated our business continuity plans enabling our corporate and regional office teams to work remotely. We prepared operational and commercials plans so we were ready to reopen properties when safe to do so. At the forefront of our plans was the safety and well-being of our team members and guests. We developed third party accredited health and safety programmes and protocols; 'Reassuring Moments' by Park Plaza and 'be bold. be creative. be safe' by art'otel. At selected restaurants, we developed takeaway and delivery options and various technology initiatives across our hotels were accelerated to provide guests with a contactless experience where desired.

 

To preserve cash and reduce costs and overheads, we secured additional new funding, we reduced payroll costs through utilising government job retention schemes available to the business across its operating markets, reduced employee working hours, implemented voluntary salary reductions and - as a last resort - restructurings and forgoing contract renewals. We utilised the business rates holiday in the UK and liaised with landlords on our rent arrangements. Shareholder dividends were withdrawn.

 

Full details of the liquidity and cash flow measures taken are set out in the Financial Review.

 

From late May as restrictions were eased in some of our markets, we began to reopen properties with new protocols in place, and operations increased for the peak leisure months of July and August. By July, 84% of operations had resumed. Nevertheless, restaurants, bars, leisure and events facilities remained severely limited or closed in a number of our properties. Bookings during this period were dominated by domestic leisure stays and demand from neighbouring countries, with high occupancy on weekends, often with short-lead time bookings. Our flagship, well-invested city centre properties benefited from this trend, outperforming the market in the third quarter. Nevertheless, curbs on international travel and social distancing meant that RevPAR and occupancy remained subdued compared with the same period last year.

 

Early September is typically the transition point from leisure to business travel and the fourth quarter is usually the busy quarter for meetings and events. Whilst we saw some return of government and corporate demand and some small and medium sized events, activity remained subdued, although weekend leisure demand held strong. Restaurants and bars started trading again.

 

However, by mid-September demand was once again severely impacted as infection rates increased across Europe and stricter measures, lockdowns, travel restrictions and quarantine measures were reintroduced in all our key and secondary markets. November and December were particularly challenging months again with further lockdowns and increased tier restrictions, eradicating all demand for the remainder of the year. However, most of our hotels remained open to allow us to respond and recover quickly when measures are lifted. Having taken many actions to significantly realign our operations to demand, we were able to minimise losses in the fourth quarter. 

 

Financial performance

 

The overall financial performance in the year was significantly impacted by the dramatic downturn in activity from March onwards. Reported total revenue declined by 71.5% to 101.8 million (2019: £357.7 million) and EBITDA fell to (10.1) million (2019: £122.9 million), resulting in an EBITDA margin of (9.9)%.

 

The key operating metrics were severely impacted by property closures and reduced capacity across the Group's operations. RevPAR was down by 71.6% to £29.4, reflecting unprecedented low levels of occupancy of 28.0%, compared with 80.6% in 2019 and an 18.2% reduction in average room rate to £105.1 (2019: £128.5).

 

As a result of the decisive COVID-19 actions taken, the Group finished the year in a strong financial position with a total consolidated cash balance of £114.2 million at 31 December 2020. During this period, the health and safety of team members, and all stakeholders was prioritised with the utmost importance.

 

The annual independent revaluation exercise on our operational property assets was carried out by Savills and ZANE and valued our portfolio at £1.7 billion (as at 31 December 2020). EPRA NRV per share decreased by 14.8% to £22.08 per share (as at 31 December 2020). The adjusted EPRA earnings per share were down to (123) pence (2019: 128 pence).

 

Full details of the financial performance are set out in the Financial Review.

 

Strategic process

 

We continued to make strategic progress despite the disruption caused by the pandemic. The Board takes a long-term view, and our owner operator business model gives us full control over the scope and phasing of investment projects and our development pipeline. This enabled us to evaluate and prioritise pipeline projects in the current environment.

 

Our largest development project is art'otel london hoxton. In April, in the midst of the pandemic, we secured £180 million of funding and construction of this mixed-use development is underway and will span multiple years. The hotel is expected to open in 2024. This new facility also offers the Group the ability to temporarily draw up to £41.1 million, if required, for any cash flow needs the Group may encounter in the short term. We took the decision to pause our development project in New York City, which is earmarked for an art'otel. Construction of art'otel london battersea power station progressed to plan and this hotel will be operated by the Group under a management agreement when it opens in 2022.

 

During the year, the Group secured planning permission to develop a 29,000 square metre mixed-use scheme, including a 465-key hotel, adjacent to our Park Plaza London Park Royal property. In 2012, the Group acquired a significant site opposite Park Royal London Underground Station, providing easy access to central London and Heathrow, for £7 million. It subsequently developed Park Plaza London Park Royal, which opened in 2017, using approximately only one third of the overall site. The additional land is earmarked for light industrial use and the Group has now successfully secured planning to develop a contemporary select service hotel, allowing for differentiation and creating further value for the Group.

 

Through our Croatian subsidiary Arena Hospitality Group d.d. we continued to invest in Central and Eastern Europe. In Croatia, committed investment projects at Arena Grand Kažela Medulin and Arena Verudela Beach Apartments in Pula were completed, and work continued on the approximately £30.9 million investment to reposition Hotel Brioni Pula.

 

The acquisition of Guest House Riviera Pula completed and plans to develop and then operate (under a 45-year lease agreement) a 115-room hotel in Zagreb moved forward.

 

Further details on our progress are set out on pages 24 to 25 of the Annual Report and Accounts and in Financial Review and Business Review below. 

 

Radisson Hotel Group Partnership

 

Since 2002, PPHE Hotel Group has benefited from an exclusive perpetual licence from Radisson Hotel Group ("Radisson"), giving it the rights to develop and operate Park Plaza branded hotels and resorts in Europe, the Middle East and Africa. Radisson is part of the world's second largest hotel group by number of rooms. This strategic partnership gives the Group access to Radisson's central reservation and global distribution systems, its powerful online and mobile platforms, global sales and marketing capabilities, as well as its loyalty programmes with more than 24 million members. These benefits are also extended to the Group's wholly owned art'otel brand.

 

Radisson continued to progress its multi-million-dollar technology investment programme which will transform, for all hotels on its reservations system, the core booking, selling and marketing capabilities. We anticipate that our hotels will start benefiting from this transformation from mid-2021. Furthermore, there has been continued investment to improve the radissonhotels.com multi-brand platform.

 

Our people and values

Our people and our values of Trust, Respect, Teamwork, Enthusiasm, Commitment and Care are at the heart of everything that we do, whether managing our hospitality assets or delivering consistent operational excellence across our portfolio.

 

We are proud to create a high performing culture, cultivated by our leadership team. This approach, with backing of our bespoke learning and development programmes, supports our delivery of best-in-class operations and high quality service to create memorable experiences for guests.

 

Experienced Leadership Team

 

We have a highly experienced Executive Leadership Team. These talented individuals have decades of experience and an impressive track record in the hospitality real estate industry. They drive the corporate vision and long-term strategy for the Group.

 

As part of the Company's ongoing succession planning programme, two senior company executives were promoted to key leadership positions in January 2020. Greg Hegarty was promoted to Deputy Chief Executive & Chief Operating Officer, taking on new responsibilities alongside his existing COO role. Inbar Zilberman was promoted to Chief Corporate & Legal Officer, driving forward the Group's corporate initiatives, including acquisitions and expansion, corporate governance and corporate social responsibility, alongside her existing leadership of the Group's legal and compliance functions.

 

Our team members

 

We aim to create an inclusive, open and fun working environment where our team members feel supported, motivated and empowered. The safety and well-being of our people continued to be key priority and in the current environment more important than ever. We adapted the way we communicate with our team members to ensure we maintained strong engagement with all our team members. We launched new internal communications initiatives and 'staying connected' newsletters. These weekly communications include video interviews with senior leadership, business updates, mental health guidance, self-learning initiatives and advice on best practice ways to work from home. For operational team members, we provided personal protective equipment and we introduced temperature and symptom checks when team members report to work.

 

The significantly lower consumer demand enforced property closes and reduced capacity had a direct impact on our team members across the business. Where possible, colleagues worked remotely. We utilised, and continue to access, job retention schemes available across our markets. Nonetheless, the prolonged disruption meant we had to take the difficult decision to reduce payroll costs, restructure our operations to ensure they were fit for purpose, and align them to guest demand for the short and medium term. As a result, we significantly restructured our hotel and corporate and regional workforces.

2020 was a difficult year for everyone and we are proud of the way our teams responded and adapted to the ever-changing market dynamics. On behalf of the Board, I would like to thank both present and past team members for their commitment, professionalism and hard work throughout these unprecedented times. 

 

Supporting the safety of our guests

 

Our dedicated team members are at the forefront of creating memorable experiences to all our guests, underpinned by our high quality and well-invested portfolio of properties.

 

When our properties re-opened, we launched our 'Reassuring Moments' and 'be bold. be creative. be safe' guest safety and well-being programmes across all Park Plaza and art'otel hotels. The programmes are designed to uphold enhanced and rigorous safety standards and provide effective and transparent communications to team members and guests about our health and safety procedures. The programmes include updates to operating procedures, training programmes, social distancing protocols, enhanced and high frequency cleaning with disinfectant and sanitising chemicals, with a greater focus on high touch areas, improved air circulation and air purification and sanitising stations to name but a few.

 

The Group also implemented a new 20-step protocol for hotels and a 10-step protocol for meeting and events operations in partnership with Radisson Hotel Group and SGS, a leading inspection, verification, testing and certification company. All our Park Plaza and art'otel hotels have received SGS accreditation.

 

We understand the important role that technology plays in our guests' overall experience. The roll out of initiatives such as Contactless Services were accelerated as we adapted our service offer to reduce person-to-person contact. Contactless Services available through a dedicated Park Plaza App include online check-in prior to arrival or self check-in on arrival, digital room keys via smartphone, contactless payment options, new messaging options for guests such as a real time messaging through chat or WhatsApp and online ordering of room service. Guests also receive a pre-arrival email with ancillary services to personalise their stays, including room upgrades, early check-in and late check-outs, breakfast and dinner options or special amenities. We also introduced a new in-room entertainment system across our hotels, enabling guests to play their own content on the Smart TVs through Chromecast (i.e. Netflix). We will continue implementing, and expanding upon, these solutions throughout our portfolio in 2021.

 

Community engagement

 

We remain committed to being part of and making a positive contribution to the communities in which we operate. Below is an overview of some of our activity during the year, particularly in response to the pandemic.

 

Among other initiatives, our team members focused on how we could provide service, resources and stewardship to those in our community who were most in need. We continued our partnership with Oasis Academy on London's South Bank to provide fresh delivered meals to underprivileged school children as well as those most in need within the local community, by cooking, preparing and delivering meals from Park Plaza Westminster Bridge London.

 

In Croatia, our teams prepared packed lunches for Pula General Hospital personnel, and provided equipment and hands on support for local partners, including those working in the hospital.

 

In Germany, we continued to support our local communities tableware donations to a local day care centre and offering conference rooms free of charge and donations to the worldwide relief agency - Malteser International.

 

In the early days of the pandemic, our own Board took the decision to forgo their own fees to support Hospitality Action, a charity that supports hospitality sector employees.

 

Further details of our Responsible Business Section are set out on pages 72 to 81 of the Annual Report and Accounts 2020.

 

Looking ahead

 

Looking ahead, our flexible owner operator model means we are well placed to benefit from a recovery when it comes. We anticipate there will be a phased recovery across the travel and hospitality sector. This will be kick started through the continued roll-out of the COVID-19 vaccines and we expect occupancy levels to recover initially, followed by room rates as consumer confidence returns.

In the first phase of recovery, hotel room demand is likely to continue to be predominately domestic leisure travel as local lockdown measures are gradually eased. In phase two, as a further easing of global measures occurs, we anticipate an increase in international travel and the gradual return of corporate business from small and medium sized domestic organisations, and medium scale meetings and events. The third phase will be the return to normal and stabilised trading environments, where large scale, international events are permitted, such as sporting events, large scale meetings and events and travel by international and large corporates.

 

At each phase of recovery, our high quality portfolio of newly refurbished properties, in superb locations will be extremely well placed to benefit. Our full value chain approach enables us to rapidly adapt our offer between guest segments and scale our offer to respond to demand. We have a strong development pipeline and have full control to prioritise and assess projects as we see fit.

 

 

Boris Ivesha

President & Chief Executive Officer

 

 

 

FINANCIAL REVIEW

 

Protecting cash flow with focus on long term strategy

 

Financial Results

 

Key financial statistics for the financial year ended 31 December 2020

 

 

Year ended

 31 December 2020

Year ended

 31 December 2019

Total revenue

£101.8 million

£357.7 million

Room revenue

£63.6 million

£250.6 million

EBITDAR

£(9.1) million

£124.7 million

EBITDA

£(10.1) million

£122.9 million

EBITDA margin

(9.9)%

34.4%

Reported PBT

£(94.7) million

£38.5 million

Normalised PBT

£(89.8) million

£40.7 million

Normalised EPS

(181)p

85p

Occupancy

28.0%

80.6%

Average room rate

£105.1

£128.5

RevPAR

£29.4

£103.6

EPRA NRV per share

£22.08

£25.93

Adjusted EPRA earnings per share

(123)p

128p

 

Overview of 2020

The Group's performance in the 2020 financial year was severely impacted by the COVID-19 pandemic and ever-changing government lockdowns and travel restrictions across its markets throughout the year. The pandemic resulted in an unprecedented overnight sharp economic downturn, paired with extreme health and safety risks.

 

Within days, the Group saw a strong start to a forecasted record year change into a year mired by hotel closures and single digit occupancy in the majority of its hotels for the remainder of the year. As a result, the strong cash flow position changed and turned into a cash burn scenario.

 

Our owner operator model enabled the Group to take decisive and swift actions to preserve cash flow and realign its operational structure to meet near-term demand, to align its operating and brand standards and reprioritise its investments, including capex programmes and development pipeline projects.

 

Measures to conserve cash mainly focused on reducing overhead costs and realigning expenditure in balance with the significantly subdued demand. This resulted in the Group undertaking fundamental changes to its workforce through reduced work hours, voluntary payroll reductions by senior team members and, unavoidably, through forgoing contract renewals and redundancies. The Group was also able to use the several government job retention schemes available, which helped maintain staffing levels to cope with sudden demand changes when restrictions were eased in certain months.

 

A material part of the Group's expense base is variable and is reduced in line with the reduced demand, including cost of sales. For most substantial fixed expenses (other than payroll and business rates, where government support was provided), the Group deferred payments to the extent possible and engaged in proactive discussions with landlords and lenders to agree revised payment terms. The Group is thankful to its partners that were supportive in these discussions.

 

Although demand was heavily impacted by government restrictions, the Group also saw a strong rebound of leisure demand during the months when government restrictions were lifted, which gives confidence for the domestic recovery, when restrictions are lifted with the added benefits of the vaccination programmes aiding consumer confidence. 

 

Operational performance

 

Revenue

 

In January and February, revenue grew by 8.7%, driven by an overall strong performance across the Group's key markets and an increase in room inventory versus the prior year as we continued to benefit from the property repositioning projects completed in recent years.

 

During March, sudden government restrictions started to be implemented throughout the regions we operate in, with Germany as one of the first countries to be locked down, followed by the Netherlands and the UK several weeks after. During the first lockdown, some properties remained open for key workers that we provided accommodation for.

 

With the first lockdown restrictions easing from the end of May, our revenue strategy led to some properties outperforming the market significantly, particularly with our flagship properties reaching full occupancy in certain periods. The demand in this period for most regions was dominated by domestic leisure and, in the Netherlands, arrivals from surrounding countries. Croatia started the season slow as expected, with occupancy increasing with the season progressing, however declining again at the end of August with surrounding countries imposing travel restrictions.

 

With autumn arriving, a second wave of COVID-19 cases appeared, causing most governments to impose heavier restrictions, again leading to loss of demand in all territories. Demand in the UK picked up again particularly for the Christmas and New Year's period, however also during that period increased restrictions caused a loss of those bookings.

 

For the year as a whole, reported total revenue declined by 71.5% to £101.8 million (2019: £357.7 million), reflecting the dramatic downturn in activity, property closures and reduced capacity from the second quarter onwards.

 

RevPAR fell 71.6% to £29.4 (2019: £103.6), with occupancy declining to 28.0%, compared with 80.6% in 2019. Average room rate decreased by 18.2% to £105.1 (2019: £128.5).

 

EBITDA Profit and Earnings Per Share

 

As a result of the revenue decline, Group Reported EBITDA was £(10.1) million (2019: £122.9 million). During this period, the hotels that reached an occupancy of approximately 30.0% were able to break even operationally (before debt service and ground rent payments), however properties trading below that level were unable to maintain positive EBITDA. The Group is grateful for the government support received over the period, which prevented many redundancies it throughout the pandemic and maintaining a certain staffing level helped during a sharp rebound of demand over the summer period. In total the Group has received £24.1 million in government grants relating to employment and the Group received a business rates holiday in the UK amounting to a £12 million reduction in costs.

 

Normalised profit before tax fell to £(89.8) million (2019: £40.7 million). Reported profit before tax decreased by £133.2 million to £(94.7) million (2019: £38.5 million). Below is a reconciliation table from reported to normalised profit.

In £ millions

12 months
ended

31 December
2020

12 months
ended

 31 December
2019

Reported (loss) profit before tax

(94.7)

38.5

Net insurance proceeds received in relation to one of the Group's UK hotels

(10.0)

-

Execution of the sale and purchase agreement with the Republic of Croatia related to Guest House Riviera Pula

1.5

-

Loss on buy back of units in Park Plaza Westminster Bridge London from private investors

-

0.7

Fair value adjustment on income swaps with private investors of Income Units in Park Plaza Westminster Bridge London

0.3

0.2

Release of provision for litigation

-

(1.1)

Results from marketable securities

(0.1)

(0.9)

Revaluation of finance lease

3.4

3.4

Revaluation of Park Plaza County Hall London Income Units

2.4

(0.9)

Pre-opening expenses

0.6

0.7

Capital loss on disposal of fixed assets and inventory

1.5

0.1

Impairment of property, plant and equipment and right-of-use assets

5.3

-

Normalised (loss) profit before tax

(89.8)

40.7

 

Reported basic/diluted earnings per share for the period were (192) pence (2019: 80 pence).

 

Depreciation excluding impairment in the year was £41.3 million (2019: £41.7 million). Depreciation is recorded in accordance with IFRS, nevertheless internally we consider our ongoing average capital expenditure (capex) over the lifespan of our hotels as a more relevant measure in determining profit, which in the hospitality industry is calculated as approximately 4% of total revenue. Our EPRA earnings number set out below is calculated using the 4% rate instead of the reported non-cash depreciation charge.

 

Capex

 

Despite the disruption caused by the pandemic, the Group continued to make strategic progress on its capex projects through 2020. Whilst bearing the Group's liquidity in mind, we have completed and progressed most of our committed investment projects as part of our strategy to upgrade our property portfolio. In total, our cash capex investment including acquisitions in the year amounted to £64.9 million.

 

We completed the final phase of investment to reposition Arena Grand Kažela Campsite, upgrade projects at Arena Verudela Beach Pula and Park Plaza Histria Pula and the final phase of works to reposition Holmes Hotel London.

 

In addition to the above we progressed selected development pipeline projects. Site works continued for the construction of art'otel london hoxton, and we started the HRK 260 million (£30.9 million) investment programme to reposition Hotel Brioni Pula in Croatia to an upper upscale 227-room, full-service hotel due to launch in summer 2021.

 

Finally, we have acquired two hotels for a total of £9.8 million in Eastern Europe. One hotel is located in the old city of Pula, Croatia and another in the city centre of Belgrade, Serbia. In addition, we entered into a 45-year lease agreement at a property in the centre of Zagreb, Croatia. These three hotels are earmarked for either full repositioning (Pula and Belgrade) or conversion from office to hotel (Zagreb).

The Group's development project in New York has been put on a hold temporarily and will be reviewed again post the pandemic.

 

The average maintenance capex profile across the estate has historically been around 4% of revenue, through the hotel cycle. Given the significant spend in the previous three years and the cycles of these expenses, the Group expects a low maintenance spend in the coming years.

 

Analysis on capital employed

 

The table below provides selected data from the Group's reported balance sheet and profit and loss accounts for the year ended 31 December 2020. With this table, the Group aims to assist investors in making a further analysis of the Group's performance and capital allocation, separating the Group's Zagreb listed subsidiary Arena Hospitality Group. This data is additional to the segments that are monitored separately by the Board for resource allocations and performance assessment, which are the segments of the Group. 

 

 

 

PPHE Hotel Group

Arena Hospitality Group5

Total

Trading properties
£m

Non-trading

 projects3

 m

Trading properties
£m

Non-trading

 projects3

 m

PPHE Hotel Group

Consolidated

£m

Balance Sheet

 

 

 

 

 

Book-value properties (excluding Income Units at Park Plaza Westminster Bridge London sold to third parties)1

 647.5

 154.3

270.9

12.9

 1,085.6

Right-of-use asset1

 191.9

-

19.2

12.7

 223.8

Book value intangible assets

 16.1

-

 1.6

-

 17.7

Book value non-consolidated investments

-

-

 4.7

-

 4.7

Other long-term assets

 15.6

-

 5.3

-

 20.9

Working capital

 (32.8)

 (1.9)

 (3.9)

(0.2)

 (38.8)

Cash and liquid investments

 65.0

 4.1

 52.1

-

 121.2

Bank/Institutional loans (short/long-term)

 (590.6)

 (40.5)

 (126.3)

-

 (757.4)

Finance lease liability, land concession and other provisions

 (210.7)

-

 (32.2)

(11.7)

 (254.6)

Deferred profit Income Units in Park Plaza Westminster Bridge London4

 (5.5)

-

 (2.3)

-

 (7.8)

Other provisions

 (10.4)

-

-

-

 (10.4)

Total capital consolidated

 86.1

 116.0

 189.1

13.7

 404.9

Minority shareholders

-

-

(89.0)

(6.4)

(95.4)

Total capital employed by PPHE Hotel Group shareholders

 86.1

 116.0

 100.1

7.3

 309.5

Normalised profit

 

 

 

 

 

Revenue

73.7

-

28.0

0.1

101.8

EBITDAR

(7.5)

(0.1)

(1.5)

-

(9.1)

Rental expenses

(0.3)

-

(0.7)

-

(1.0)

EBITDA

(7.8)

(0.1)

(2.2)

-

(10.1)

Depreciation6

(29.2)

-

(12.0)

(0.1)

(41.3)

EBIT

(37.0)

(0.1)

(14.2)

(0.1)

(51.4)

Interest expenses: banks and institutions

(20.1)

(0.3)

(3.0)

-

(23.4)

Interest on finance leases

(8.8)

-

(0.5)

-

(9.3)

Westminster Bridge London

(2.3)

-

-

-

(2.3)

Other finance expenses and income

(0.8)

-

(1.6)

(0.2)

(2.6)

Result from equity investments

-

-

(0.8)

-

(0.8)

Normalised loss before tax 31 December 20202

(69.0)

(0.4)

(20.1)

(0.3)

(89.8)

Reported tax

0.1

-

0.6

-

0.7

Normalised loss after reported tax

(68.9)

(0.4)

(19.5)

(0.3)

(89.1)

Normalised profit attributable to minority shareholders

-

-

12.2

-

12.2

Normalised loss after tax attributable to PPHE Hotel Group shareholders

(68.9)

(0.4)

(7.3)

(0.3)

(76.9)

 

1 These are stated at cost price less depreciation. The fair value of these properties is substantially higher.

2 A reconciliation of reported profit to normalised profit is provided on page 47 of the Annual Report and Accounts 2020.

3 This contains properties that are in development.

4 This is the book value of units in Park Plaza Westminster Bridge London netted with the advanced proceeds these investors received in 2010.

5 Arena Hospitality Group d.d is listed on the Zagreb Stock Exchange. The market capitalisation at 31 December 2020 is £204.5 million.

6 Depreciation excluding impairments of property, plant and equipment and right- of-use assets.

 

Real estate performance

 

EPRA NAV

 

The Group has a real estate driven business model. As a developer, owner and operator of hotels, resorts and campsites, returns are generated by both developing the assets we own and operating our properties to their full potential. Certain EPRA performance measurements are disclosed to aid investors in analysing the Group's performance and understanding the value of its assets and earnings from a property perspective. 

 

New EPRA guidelines

 

On 4 November 2019, the European Public Real Estate Association (EPRA) announced changes to its reporting guidelines for the Net Asset Value (NAV) performance measure, effective for the accounting period starting on 1 January 2020. The main reason for this change is to provide investors with information on different levels of assets' fluidity. The original EPRA NAV was created to capture the traditional investment property business model, which is based on long-term ownership, however over the years more real estate companies started to adopt a more flexible approach in the fluidity of their real estate asset ownership. As a result, EPRA NAV has been replaced by the following three new Net

 

Asset Value performance measures:

 

· EPRA Net Reinstatement Value (EPRA NRV)

 

The objective of the EPRA NRV measure is to highlight the value of net assets on a long-term basis. Assets and liabilities that are not expected to crystallise in normal circumstances, such as the fair value movements on financial derivatives and deferred taxes on property valuation surpluses, are therefore excluded.

 

EPRA NRV is calculated based on the same principles used for the EPRA NAV calculation in 2019 except for adding back the real estate transfer costs which were excluded from the EPRA NAV calculation for 2019.

 

As at the balance sheet date, the Group's intangible assets mainly include the management and franchise rights for the Park Plaza Hotels & Resorts and art'otel brands. Under those rights, the Group currently provides: management services to all the operating properties in the Group's portfolio, management services to Park Plaza County Hall London, and has two franchise agreements with Park Plaza Trier and Park Plaza Cardiff. Consistent with previous years, the Group's approach is not to revalue these intangible assets, although Management believe that their fair value significantly exceeds their book value.

 

· EPRA Net Tangible Assets (EPRA NTA)

 

The underlying assumption behind the EPRA NTA calculation assumes entities buy and sell assets, thereby crystallising certain levels of deferred tax liability. In addition, intangible assets included in the Group's consolidated financial statement should be excluded.

It should be noted that the Group does not intend to sell any of its properties in the long run and as such all the deferred taxes that directly relate to the properties have been excluded (similar to EPRA NRV calculation).

 

· EPRA Net Disposal Value (EPRA NDV)

 

This represents the value to shareholders under a disposal scenario, where deferred tax, financial instruments and fixed interest rate debt are calculated to the full extent of their liability.

 

EPRA NRV for 31 December 2020

 

In December 2020, the Group's properties (with the exception of operating leases, managed and franchised properties) were independently valued by Savills (in respect of properties in the Netherlands, UK and Germany) and by Zagreb nekretnine Ltd (ZANE) (in respect of properties in Croatia). Based on their valuations we have calculated the Group's EPRA NRV, EPRA NTA and EPRA NDV. The EPRA NRV as at 31 December 2020, set out in the table below amounts to £960.8 million, which equates to £22.08 per share. EPRA NRV decreased by £150.8 (£3.85 per share) due to losses of the Company during the pandemic and negative property valuations. In the valuations performed by external valuers the discount and cap rates remained largely unchanged, value declines are therefore mainly attributable to the income declines in all properties due to the pandemic and the effect this has on the discounted cash flows used in the valuation.

 

Our portfolio is made up of assets that were recently repositioned or built and assets that had reached operational maturity.  Particularly assets that have reached operational maturity were affected more by a negative revaluation compared to the assets that were recently built or repositioned. In their valuation models, the valuators have assumed the income in 2024 will return to, or to exceed, 2019. 

 

 

31 December 2020
£ million

EPRA NRV
 (Net Reinstatement Value)

EPRA NTA4
 (Net Tangible Assets)

EPRA NDV
 (Net Disposal Value)

NRV per the financial statements

 309.6

 309.6

 309.6

Effect of exercise of options

 13.2

 13.2

 13.2

Diluted NRV, after the exercise of options1

 322.8

 322.8

 322.8

Includes:

 

 

 

Revaluation of owned properties in operation (net of non-controlling interest)2

 602.1

 602.1

 602.1

Revaluation of the JV interest held in two German properties (net of non-controlling interest)

 3.2

 3.2

 3.2

Fair value of fixed interest rate debt

-

-

(84.5)

Deferred tax on revaluation of properties

-

-

(13.1)

Real estate transfer tax3

18.6

-

-

Excludes:

 

 

 

Fair value of financial instruments

 (0.7)

 (0.7)

-

Deferred tax

 (13.4)

 (13.4)

-

Intangibles as per the IFRS balance sheet

-

 17.8

-

NRV

 960.8

 924.4

 830.5

Fully diluted number of shares (in thousands)1

 43,521

 43,521

 43,521

NRV per share (in £)

22.08

21.24

19.08

 

1 The fully diluted number of shares excludes treasury shares but includes 1,196,996 outstanding dilutive options (as at 31 December 2019: 412,290).

2 The fair values of the properties were determined on the basis of independent external valuations prepared in December 2020. The properties under development are measured at cost.

3 EPRA NTA and EPRA NDV reflect fair value net of transfer costs. Transfer costs are added back when calculating EPRA NRV.

4 NTA is calculated under the assumption that the Group does not intend to sell any of its properties in the long run.

 

 

 

31 December 2019
£ million

EPRA NRV

Net

Reinstatement Value)

EPRA NTA4

 (Net Tangible Assets)

EPRA NDV

(Net Disposal Value)

EPRA NAV

(as reported in the 2019 financial statement)

NRV per the financial statements

377.3

377.3

377.3

377.3

Effect of exercise of options

4.0

4.0

4.0

4.0

Diluted NRV, after the exercise of options1

381.2

381.2

381.2

381.2

Includes:

 

 

 

 

Revaluation of owned properties in operation (net of non-controlling interest)2

699.2

699.2

699.2

699.2

Revaluation of the JV interest held in two German properties (net of non-controlling interest)

3.9

3.9

3.9

3.9

Fair value of fixed interest rate debt

-

-

(86.4)

-

Deferred tax on revaluation of properties

-

-

(29.9)

-

Real estate transfer tax3

19.8

-

-

-

Excludes:

 

 

 

 

Fair value of financial instruments

(0.7)

(0.7)

-

(0.7)

Deferred tax

(6.7)

(6.7)

-

(6.7)

Intangibles as per the IFRS balance sheet

-

18.0

-

-

NRV

1,111.5

1,073.7

968.0

1,091.7

Fully diluted number of shares (in thousands)1

42,872

42,872

42,872

42,872

NRV per share (in £)

25.93

25.04

22.58

25.46

 

1 The fully diluted number of shares excludes treasury shares but includes 412,290 outstanding dilutive options (as at 31 December 2018: 522,500).

2 The fair values of the properties were determined on the basis of independent external valuations prepared in the summer of 2019. The properties under development are measured at cost.

3 EPRA NTA and EPRA NDV reflect fair value net of transfer costs. Transfer costs are added back when calculating EPRA NRV

4 NTA is calculated under the assumption that the Group does not intend to sell any of its properties in the long run.

 

 

Below is a summary of the valuation basis of our assets as at 31 December 2020. The property market value, the discount rate and the cap rate have been taken from the independent valuer's report.

 

 

Region

Properties

Property

market value

£million

Discount Rate

Cap Rate

United Kingdom

 

 

 

 

London

6

864.1

7.0% - 8.5%

5.0% - 6.5%

Provinces

2

29.9

9.5% - 9.8%

7.5% - 7.8%

The Netherlands

 

 

 

 

Amsterdam

4

242.2

7.3% - 8.5%

5.3% - 6.5%

Provinces

2

37.7

9.3% - 9.5%

7.3% - 7.5%

Germany, Hungary and Serbia

6

87.2

8.5% - 8.8%

6.5% - 6.8%

Croatia

 

 

 

 

- Hotels and apartments

11

141.0

9.0% - 10%

7.0% - 9.0%

- Campsites

8

102.1

9.0% - 11%

7.0% - 9.0%

 

Other EPRA measurements

Given that the Group's asset portfolio is comprised of hotels, resorts and campsites which are also operated by the Group, a few of EPRA's performance measurements, which are relevant to real-estate companies with passive rental income, have not been disclosed as they are not relevant or non-existent. Those EPRA performance measurements include EPRA Net Initial Yield, EPRA 'Topped-up' NIY, EPRA Vacancy Rate and EPRA Cost Ratios.

 

Cash flow and EPRA Earnings

 

At the onset on the pandemic, the Group had a healthy balance and a strong cash position, with a total cash balance of £153 million (cash balance as of 31 December 2019) and a net bank debt leverage of 29.4%. However, when the scale of the pandemic became known and it was apparent that the Group would move into a cash burn scenario, immediate steps were taken to mitigate the impact and preserve cash. The actions taken in the year included:

 

Utilisation of the government support schemes available to the business across its markets; the COVID-19 Job Retention Scheme in the UK, the Temporary Emergency Measure for Work Retention scheme in the Netherlands, the Kurzarbeit scheme in Germany and the Job Preservation scheme in Croatia. Together, these schemes provided the Group with approximately £24.1 million of support in the period.

 

Using additional government support measures, such as the business rates holiday in the UK from 1 April 2020 until 31 March 2021, which amounted to a £1.4 million cash saving per month (total of £12 million in the period) and deferral of VAT and PAYE.

 

Withdrawal of the proposed 2019 final dividend payment to shareholders, equating to £8.6 million, and no interim dividend paid, which last year amounted to £6.8 million.

 

Restructuring programme (which is ongoing) to ensure the Group's operational structure is fit for purpose and is aligned with guest demand for the short and medium term.

 

Voluntary temporary fees and salary reductions in the second quarter of 2020; 100% cut of the fees and salary respectively for the Chairman of the Board and the President & CEO, as well as a 20% salary reduction across all members of the Executive Leadership Team.

 

Deferral of 2019 discretionary staff incentive payments (for which targets have been met), at an aggregate value of £1.8 million with such payments reconsidered, if appropriate, in due course.

 

Reviewed and reprioritised capex requirements for the development pipeline; resulting in the pausing of the project in New York.

 

Reviewed and reprioritised all areas of discretionary spend, reducing this to business-critical investments only.

 

Deferred loan amortisations for 2020 at an aggregated amount of £6.1 million.

 

In addition to cash flow saving measures, the Group also secured four facilities that provide the Group with further cash support throughout this period of cash burn. These include two revolving credit facilities totalling £50 million, one term loan totalling to €10 million and one construction loan that provides for a temporary £41.1 million to be drawn for general purposes.

 

The Group's cash flow measures outlined above have enabled it to reduce its quarterly cash outflow ('cash burn'). Further details in the Group's cash flow in the four quarters of 2020 are provided in the table below:

 

 

Three months ended
31 March

2020

£ million

Three months ended
30 June
2020

£ million

Three months ended
30 September 2020

£ million

Three months ended
31 December

 2020

£ million

12 months ended
31 December

2020

£ million

Operational cash flow (including working capital)

6.2

(3.1)

(3.9)

(4.4)

(5.2)

Investment in properties

(18.1)

(16.3)

(19.5)

(11.0)

(64.9)

Debt service including leases and unit holders in Park Plaza Westminster Bridge London

(13.6)

(10.7)

(7.8)

(9.8)

(41.9)

New facilities

4.9

16.8

26.5

8.7

56.9

Other exceptional items (including FX)

17.5

0.4

0.1

(1.7)

16.3

Total cash movement

(3.1)

(12.9)

(4.6)

(18.2)

(38.8)

 

 

 

 

 

 

Cash at beginning of period

153.0

149.9

137.0

132.4

153.0

Cash at end of period

149.9

137.0

132.4

114.2

114.2

Undrawn facilities at end of period1

4.1

63.0

63.0

83.4

83.4

 

1 The amount of undrawn facilities as at 31 December 2020 is £83.4 million which comprise the £41.1 million undrawn amount in the art'otel london hoxton facility and an undrawn amount of £42.3 million in the two revolving credit facilities.

 

The main adjustment to the normalised profit included in the Group's financial statements is adding back the IFRS depreciation charge, which is based on assets at historical cost, and replacing it with a charge calculated at 4% of the Group's total revenues. This represents the Group's expected average cost to maintain the estate in good quality. The basis for calculating the Company's 2020 adjusted EPRA earnings of £(52.1) million (2019: £54.2 million) and the Company's adjusted EPRA earnings per share of (123) pence (2019: 128 pence) is set out in the table below.

 

 

12 months ended

 31 December 2020

£ million

12 months ended

 31 December 2019

£ million

Earnings attributed to equity holders of the parent company

 (81.7)

 33.9

Depreciation and amortisation expenses

 46.6

 41.7

Revaluation of Park Plaza County Hall London Income Units

 2.4

 (0.9)

Changes in fair value of financial instruments

 0.2

 (0.7)

Non-controlling interests in respect of the above3

 (8.1)

 (7.8)

EPRA earnings

 (40.6)

 66.2

Weighted average number of shares (LTM)

 42,466,006

 42,390,693

EPRA earnings per share (in pence)

 (96)

 156

Company specific adjustments1:

 

 

Capital loss on buy-back of Income Units in Park Plaza Westminster Bridge London

 -

 0.7

Remeasurement of lease liability4

 3.4

 3.4

Other non-recurring expenses (including pre-opening expenses)9

 2.0

 0.8

Government settlement purchase of hotel Riviera7


1.5

 -

Gain from settlement of legal claim6

 -

 (1.1)

Adjustment of lease payments5

 (2.6)

 (2.2)

Insurance settlement10

 (10.0)

 -

Investment tax credit8

 (1.8)

 (5.1)

Maintenance capex2

 (4.0)

 (14.3)

Non-controlling interests in respect of the above3

 -

 5.8

Company adjusted EPRA earnings1

(52.1)

54.2

Company adjusted EPRA earnings per share (in pence)

(123)

128

 

 

 

Reconciliation Company adjusted EPRA earnings to normalised reported profit before tax

 

 

Company adjusted EPRA earnings

(52.1)

54.2

Reported depreciation11

(41.3)

(41.7)

Non-controlling interest in respect of reported depreciation

8.1

7.8

Maintenance capex2

4.0

14.3

Non-controlling interest on maintenance capex and the company specific adjustments

-

(5.8)

Adjustment of lease payments5

2.6

2.2

Investment tax credit8

1.8

5.1

(Loss) profit attributable to non-controlling interest

(12.2)

8.7

Reported tax

(0.7)

(4.1)

Normalised (loss) profit before tax

(89.8)

40.7

 

1  The 'Company specific adjustments' represent adjustments of non-recurring or non-trading items.

2  Calculated as 4% of revenues, which represents the expected average maintenance capital expenditure required in the operating properties.

3  Non-controlling interests include the non-controlling shareholders in Arena and third party investors in income units of Park Plaza Westminster Bridge London.

4  Non-cash revaluation of finance lease liability relating to minimum future CPI/RPI increases.

5  Lease cash payments which are not recorded as an expense in the Group's income statement due to the implementation of IFRS 16.

6  Release of accrual as a result of a settlement reached in a legal dispute in Croatia with Pula Herculanea d.o.o (see Note 25b in the annual consolidated financial statements).

7  Execution of the sale and purchase agreement with the Republic of Croatia related to Guest House Riviera Pula (see Note 5d in the annual consolidated financial statements).

8  Relates to investment tax credit received in Croatia and change in tax rate. (see Note 27 in the annual consolidated financial statements in the Annual Report and Accounts 2020)

9  Mainly relates to write-off value of fixed assets due to reconstruction of Hotel Brioni Pula (disposal of asset due to reconstruction).

10  Net insurance proceeds received in relation to one of the Group's UK hotels.

11  Reported depreciation excluding impairments of property, plant and equipment and right- of-use assets.

 

 

Funding

 

During the year additional funding was secured, the Group utilises various financing options. Additional funding was secured during the year to strengthen liquidity.

 

A new three-year £20 million Rolling Credit Facility was secured against Park Plaza London Waterloo, which can be used for the general working capital requirements of the Group. £14.7 million of this facility was undrawn at the year end.

 

The Group also agreed a three-year £30 million revolving credit facility backed by the UK Government (£27.5 million undrawn at balance sheet date), and it entered into a three-year €10 million (£9.1 million) term facility backed by the Dutch government in August 2020. Both these facilities were secured with the Group's current banking partners.

 

Despite the pandemic, the Group secured up to £180 million of funding for completion of the construction of art'otel london hoxton, its largest pipeline development project. This facility offers the Group the ability to temporarily draw up to £41.1 million, if required, for any cash flow needs the Group may encounter in the short term.

 

In the case of traditional bank funding, whereby assets are typically ringfenced into single or Group facilities, the loan to value ratio policy varies between 50% and 65%, depending on the location of the asset. The current net bank debt leverage of the Group stands at 37.1% (2019: 29.4%).

 

Through liaison with our lenders we have, where necessary, postponed financial covenant testing and amortisation of existing facilities until 2022. Deferred loan amortisations for 2020 and 2021 at an aggregated amount of £6.1 million and £7.9 million respectively. The Group is currently in compliance with respect to its loan-to-value covenants.

 

The Group's total assets (properties at fair value) represent a value after the deduction of lease liabilities and unit holder liabilities. Accordingly, in the total loan-to-value (LTV) analysis of the Group, management considers the value of the freehold and long leasehold assets (net of these liabilities) compared with its bank funding (i.e. excluding the lease and unit holder liabilities), which management believes is the most accurate representation of the Group's total leverage position. 

 

 

 

 m

Bank financing

 

Over 5-year debt

 609.4

Less than 5-year debt

 148.0

Cash and cash equivalents

121.2

Net bank debt

636.2

 

 

Equity

 

- Reported

 309.6

- Market value restatement

 638.0

Equity attributable to shareholders of the Group1

 947.6

Non-controlling interest

 

- Reported

 95.4

- Market value restatement2

 34.9

Equity attributable to non-controlling interest

 130.3

 

 

Total equity

1,077.9

 

 

Group's total asset (properties at fair value)

1,714.1

Net bank debt leverage

37.1%

 

1 Equity attributable to shareholders of the Group based on EPRA NRV excluding the £13.2 million effect due to exercise of dilutive options.

2 The market value restatement for the equity attributable to non-controlling interest represents the minority's share in the EPRA NRV adjustments.

 

The Group reported a gross bank debt liability of £757.4 million (31 December 2019: £678.3 million) and net bank debt of £636.2 million (31 December 2019: £514.7 million). Net bank debt increased by £121.5 primarily due to the cash burn during the period of COVID, capital expenditures as part of our development pipeline and the first time consolidation of the bank loan for the New York project after the acquisition of the remaining interests in the project In January 2020.

 

The table below provides a further breakdown of the Group's bank debt position.

 

Loan maturity profile at 31 December 2020 (£m)

 

 

Total

1 year

2 years

3 years

4 years

5 years

Thereafter

£m

757.4

36.4

22.0

25.1

45.4

19.1

609.4

 

Average cost of bank debt 3.1%

Average maturity of bank debt 5.8 years

Group average bank interest cover (1.2) (2019: 4.4)

 

Key characteristics debt for operating properties

 

Limited to no recourse to the Group for the asset backed loans

Asset backed

Borrowing policy 50-65% loan-to-value

Portfolio and single asset loans

21 facilities with 11 different lenders

Covenants on performance and value (facility level)

 

Cover Ratios

 

ICR1

DSCR2

2019

4.4x

2.7x

2020

(1.2)x

(0.4)x

 

1 EBITDA, less unitholder and lease payments, divided by bank interest.

2 EBITDA, less unitholder and lease payments, divided by the sum of bank interest and yearly loan redemption.

 

Acquisitions and development pipeline

 

In our strategy to drive long-term value we take a disciplined, focused approach to capital deployment. We aim to optimise the value of our existing portfolio and, where appropriate, extract value to fund new development opportunities in order to drive sustainable long-term growth. We are disciplined in selecting and progressing an investment opportunity, only targeting real estate with upside potential which fits our long-term growth strategy and above all creates strong shareholder value.

 

The Group's acquisition criteria include:

 

prime location;

attractive geographies (this includes territories where the Group is not currently present);

opportunity to create significant capital value; and

risk adjusted accretive IRRs.

 

In 2020, we completed a sale and purchase agreement for Guest House Hotel Riviera in Pula, Croatia (£4.4 million) and acquired 88 Rooms Hotel in Belgrade (£5.4 million). In addition, we entered into a 45-year lease agreement at a property in Zagreb Croatia, for the planned development and operation of a 115-room hotel.

The Group has an active pipeline of £200+ million plus development pipeline of new hotels, including the development in Hoxton, London. Our owner operator model enables us to have full control over this pipeline and considering the challenging market conditions, we thoroughly reviewed and reprioritised our development capex requirements. In the summer of 2020, we took the decision to pause our project in New York.

 

Dividend

 

On 19 March 2020, the Board of Directors announced its decision to withdraw its proposal for a final dividend of 20 pence per share (equating to £8.6 million) in respect of 2019 to preserve cash in the business in light of the severe cash flow implications that COVID-19 has on the Group's cash flow.

 

The Group recognises the importance of dividend, however, given the uncertainty pertaining to the pandemic and its impact on the future cash requirements for the Group, the Board did not propose an interim dividend in respect of the six-month period ended 30 June 2020 and nor is it proposing a final dividend for the year ended 31 December 2020.

 

Dividend growth as % of adjusted EPRA earnings:

 

 

Dividend

per share

(pence)

Adjusted EPRA

earnings per share

(pence)

Dividend as % of EPRA earning

per share

2014

19

91

21%

2015

20

96

21%

2016

21

97

22%

2017

24

104

23%

2018

35

115

30%

2019

17

128

13%

2020

-

(123)

-

 

The Group does intend to pay its shareholders a dividend, although does not consider this appropriate with the current negative cash flows. The Board will continue to review its dividend policy and any future dividend payments will be aligned to performance and underlying free cash flows of the business.

 

 

Daniel Kos

Chief Financial Officer & Executive Director
 

 

 

BUSINESS REVIEW

 

United Kingdom performance

 

Property portfolio

 

The Group has a well-invested portfolio in the upper upscale segment of the London hotel market, consisting of approximately 3,200 rooms in operation with a further approximate 1,100 rooms in the pipeline. Four of the Group's London hotels are in the popular South Bank area of London, with further properties in the busy Victoria, fashionable Marylebone and well-connected Park Royal areas. There are also three properties in the UK regional cities of Nottingham, Leeds and Cardiff.

 

Hotels with an ownership interest include: Park Plaza London Riverbank, Holmes Hotel London, Park Plaza Victoria London, Park Plaza Westminster Bridge London, Park Plaza London Waterloo, Park Plaza County Hall London2, Park Plaza London Park Royal, Park Plaza Leeds and Park Plaza Nottingham. Park Plaza Cardiff2 operates under a franchise agreement.

 

Total value of UK property portfolio £894m

 

Operations

UK

  Reported in GBP (£)

Year ended
31 Dec 2020

Year ended
31 Dec 2019

% change

Total revenue

£56.5m

 207.4m

(72.7)%

EBITDAR

£1.9m

 71.0m

(97.3)%

EBITDA

£1.5m

 70.7m

(97.9)%

Occupancy

29.0%

87.7%

(5,870) bps

Average Room Rate

£116.6

 152.4

(23.5)%

RevPAR

£33.8

 133.7

(74.7)%

Room revenue

£39.0m

 152.7m

(74.5)%

EBITDA %

2.6%

34.1%

(3,150) bps

 

Independent valuation by Savills in December 2020 and excluding the London development sites art'otel london hoxton and Westminster Bridge Road.

Revenues derived from these hotels are accounted for in Management and Holdings and their values and results are excluded from the data provided in this section.

 

Operational performance

The Group's UK operations were well-placed to benefit from the recently completed major investment programmes at several of its London hotels.

In January and February trading was strong, and all of our central London hotels outperformed the market. However, when the nationwide lockdown came into force on 23 March, nine of the Group's 10 UK hotels (owned, managed, franchised) were closed in line with government requirements and these properties remained closed throughout the second quarter. As per the government mandate, all restaurants and bars were also closed in the quarter.

 

Park Plaza Westminster Bridge London was kept open to support key workers including government workers and local schools and communities. The hotel provided accommodation, meals and other services such as laundry at significantly reduced rates. In addition, the Group seconded more than 70 team members to provide facility services at the hospital and this number has since increased to 145 team members working at the Guy's and St. Thomas Trust, assisting with support services (including 70 team members assisting with the roll-out of the vaccination programme).

 

When government restrictions were eased on 4 July, several hotels were reopened with enhanced health and safety protocols in place to protect guest and team members. However, from October onwards, the government's tiered system, restricting movement in certain areas of the country, a second national lockdown from 5 November and 2 December, followed by further tightening of restrictions in London and the South East of England in December had a significant impact on performance in the region.

 

Consequently, total reported revenue fell by 72.7% to £56.5 million. Reported RevPAR was 74.7% lower than the prior year. Occupancy fell to 29.0% and average room rate was 23.5% lower at £116.6. The Group took rapid action to minimise the impact of the closures, including accessing the COVID-19 Job Retention Scheme, business rate holidays and restructuring operations to lower demand in the short to medium-term, resulting in a reduction in operational and support roles.

Notwithstanding the actions taken, Reported EBITDAR was £1.9 million (2019: £71.0 million), and EBITDA declined to £1.5 million (2019: £70.7 million).

 

UK hotel performance compared to the wider market has been quite positive. We were quick to respond to the changes in the market and opened nearly all hotels when the restrictions eased, with only Park Plaza London Waterloo and Park Plaza London Riverbank remaining closed throughout. Park Plaza Westminster Bridge London remained open and accommodated essential workers. From July up to the end of September, before the introduction of the UK Government's Tier system in October, the majority of our operational London hotels performed ahead of their respective markets. Both Leeds and Nottingham performed well against their markets in both occupancy and average room rate over summer. The type of business was primarily leisure-focused and was predominantly domestic.

 

Asset management projects

 

The final phase to reposition Holmes Hotel London was completed in the year. The subterranean self-contained space has been reconfigured into meetings and events space, with break out spaces and a private pantry. These uniquely designed spaces, ideal for team away days and brainstorm sessions, will be launched in 2021 when market conditions allow.

 

Development pipeline

 

The Group has various developments in its London pipeline. In April, the Group secured £180 million of funding with Bank Hapoalim B.M. for the development of art'otel london hoxton. The development, which is in one of London's most exciting neighbourhoods, will comprise a new 27-storey building accommodating 343 hotel rooms and suites, five floors of office space, gym, swimming pool, wellness facilities and art gallery space. The development project is progressing, and construction has been extended to 44 months from June 2020. The project is expected to complete by 2024.

 

In December 2019, the Group acquired a vacant freehold site on London's South Bank (79-87 Westminster Bridge Road) with the intention of converting the property into a new hotel and office space. Planning for the mixed-use development has been submitted.

 

Late 2020, the Group successfully obtained planning permission for the development of a mixed-use scheme consisting of a 465-room hotel, 6,000m² of light industrial space and 3,000m² of state of the art co-working offices, gym and swimming pool adjacent to its Park Plaza London Park Royal property, an ideal location in close proximity to Heathrow Airport, Wembley Stadium, various film studios and with easy access to central London. The Group intends to secure funding and commence development in due course, creating further value for the Group.

 

Development of art'otel london battersea power station by the Battersea Power Statement Development Company is progressing. On completion, which is expected by 2022, the hotel will be managed by the Group under a long-term contract.

 

The UK hotel market*

COVID-19 severely disrupted the hospitality industry in 2020, with many countries imposing restrictions on domestic and international travel, country and regional level lockdowns, restrictions on services offered by hotels due to social distancing measures and in some cases, total hotel closures. This has restricted visibility on performance at a hotel competitor set level but at a Country/City market data level, the impact can be assessed. The below is based on full inventory availability compared to the same period in 2019.

 

United Kingdom

On a full year basis, the impact on the UK market was a 69.2% reduction in RevPAR to 22.5; which was the result of 60.0% reduction in occupancy to 30.8% and a 22.9% reduction in average room rate, to £73.0.

 

Full year performance saw London, which is PPHE Hotel Group's main market in the UK, fall 77.5% in RevPAR to £28.6. The impact to occupancy was a drop of 68.9% to 25.7% and a drop in average room rate of 27.8% to £111.3.

 

*  Source: STR European Hotel Review TRI: December 2020.

 

 

 

THE NETHERLANDS

 

Property portfolio

 

The Group has ownership interests in three hotels in the city centre of Amsterdam and a fourth property located near Amsterdam Airport Schiphol. The portfolio also extends to include two owned hotels in Utrecht and Eindhoven.

 

Total value of the Netherlands property portfolio £280m

 

Operations

 

The Netherlands

Reported in GBP2 (£)

Reported in Local Currency Euro (€)

 

Year ended
31 Dec

2020

Year ended
31 Dec 2019

% change

Year ended
31 Dec

2020

Year ended
31 Dec 2019

% change

Total revenue

 14.9m

 53.8m

(72.2)%

 16.8m

 61.4m

(72.6)%

EBITDAR

 0.0m

 15.0m

(100.1)%

 0.0m

 17.2m

(100.1)%

EBITDA

 (0.1)m

 15.0m

(100.4)%

 (0.1)m

 17.1m

(100.4)%

Occupancy

25.3%

86.2%

(6,090) bps

25.3%

86.2%

(6,090) bps

Average Room Rate

 98.3

 124.8

(21.2)%

 110.6

 142.6

(22.4)%

RevPAR

 24.9

 107.6

(76.9)%

 28.0

 122.9

(77.2)%

Room revenue

 9.8m

 40.3m

(75.7)%

 7.0m

 22.2m

(68.4)%

EBITDA %

(0.4)%

27.9%

(2,830) bps

(0.4)%

27.9%

(2,830) bps

         

 

1  Independent valuation by Savills in December 2020.

2  Average exchange rate from Euro to Pound Sterling for the year to December 2020 was 1.12 and for the year to December 2019 was 1.14, representing a 1.6% decrease.

 

Operational performance

Due to the pandemic, several Dutch hotels and all restaurants and bars within the Group's properties were temporarily closed in the second quarter. The remaining hotels operated at significantly reduced capacity as travel and lockdown restrictions hindered demand. As government restrictions were lifted in the summer, the Group reopened properties in the Netherlands with new health and well-being protocols in place. However in the autumn, the rise in infections in the country resulted in the reintroduction of government restrictions which were then further tightened in December. While the Group's hotels remained open, restaurants and bars in the properties were closed.

 

As a result, total revenue in euros fell to €16.8 million (€61.4 million). RevPAR was significantly impacted in the period and fell to €28.0 million (2019: €122.9), due to the sharp decline in occupancy to 25.3% (2019: 86.2%) and 22.4% reduction in average room rate to €110.6 (2019: €142.6).

 

The Group took various steps to reduce costs and overheads in the region and utilised the Temporary Emergency Measure for Work Retention scheme. From February 2020, the Group reviewed and made decisions on the non-extension temporary contracts. Further measures were taken from October onwards, restructuring and reducing both operational and regional support roles working proactively with two Unions and the PPHE Hotel Group Works Council. Nevertheless, EBITDA (in euros) fell to €(0.1) million (2019: €17.1 million).

 

It is worth noting that despite the extremely challenging market conditions, the quality and strength of the portfolio in the region, with several properties benefiting from major investment programmes, resulted in a Park Plaza Victoria Amsterdam and art'otel amsterdam outperformed the market in January and February before the implementation of global travel bans, due to the pandemic, which severely affected business. Park Plaza Vondelpark, Amsterdam narrowly performed below fair share. However it was starting to gather positive momentum after a €9.0 million repositioning project which completed in 2019. Park Plaza Eindhoven and Park Plaza Utrecht performed above fair share in January and February against their markets.

 

Over summer (July to September) the demand for Amsterdam was primarily leisure driven with Park Plaza Victoria Amsterdam proving to be exceptionally popular with guests compared with considerable higher occupancies than the market. Guest nationality was largely European with a high percentage of guests coming from Germany, the Netherlands, France and Belgium. Park Plaza Victoria Amsterdam and Park Plaza Vondelpark, Amsterdam performed in excess of fair share against the Amsterdam market. Park Plaza Eindhoven also performed above fair share over this period. art'otel amsterdam has remained closed over summer.

 

Netherlands hotel market*

 

COVID-19 severely disrupted the hospitality industry in 2020, with many countries imposing restrictions on domestic and international travel, country and regional level lockdowns, restrictions on services offered by hotels due to social distancing measures and in some cases, total hotel closures. This has restricted visibility on performance at a hotel competitor set level but at a Country/City market data level, the impact can be assessed. The below is based on full inventory availability compared to the same period in 2019.

 

The Netherlands

 

On a full year basis, the impact on the Netherlands market was a 71.7% reduction in RevPAR to €26.1; which was the result of 62.8% reduction in occupancy to 28.1% and a 23.9% reduction in average room rate, to 93.3.

 

Full year performance saw Amsterdam, PPHE Hotel Group's main market in the Netherlands, fall 79.3% in RevPAR to €24.8. The impact to occupancy was a drop of 70.9% to 23.7% and a drop in average room rate of 28.8% to €104.8.

 

*  Source: STR European Hotel Review TRI: December 2020.

 

 

 

CROATIA

 

Property portfolio

 

The Group's subsidiary, Arena Hospitality Group (Arena), owns and operates a Croatian portfolio of seven hotels, four resorts and eight campsites, all of which are located in Istria, Croatia's most prominent tourist region. Four of Arena's properties in Croatia are Park Plaza branded whereas the remainder of their portfolio operates independently or as part of the Arena Hotels & Apartments and Arena Campsites brands.

 

Total value of Croatian property portfolio1  £243m

 

Operations

Croatia

Reported in GBP2 (£)

Reported in Local Currency HRK

Year ended
31 Dec

2020

Year ended
31 Dec

2019

%

change

Year ended
31 Dec

2020

Year ended
31 Dec

2019

%

change

 

Total revenue

 18.7m

 61.1m

(69.4)%

 HRK 158.7m

 HRK 519.6m

(69.5)%

 

EBITDAR

£1.1m

 19.4m

(94.3)%

 HRK 9.4m

 HRK 164.4m

(94.3)%

 

EBITDA

£0.4m

 18.2m

(98.0)%

 HRK 3.1m

 HRK 154.4m

(98.0)%

 

Occupancy3

30.4%

63.1%

(3,272) bps

30.4%

63.1%

(3,272) bps

 

Average Room Rate3

 89.8

 91.1

(1.4)%

HRK 761.1

HRK 772.1

(1.4)%

 

RevPAR3

 27.3

 57.5

(52.6)%

HRK 231.1

HRK 487.1

(52.6)%

 

Room revenue

 8.1m

 33.5m

(75.9)%

 HRK 68.4m

HRK 283.5m

(75.9)%

 

EBITDA %

1.9%

29.8%

(2,787) bps

1.9%

29.7%

 (2.779) bps

 

         

 

1  Independent valuation by Zagreb nekretnine Ltd in December 2020 and excluding Hotel Brioni (Pula) and Zagreb which are under development..

2  Average exchange rate from Croatian Kuna to Pound Sterling for the year to December 2020 was 8.47 and for the year to December 2019 was 8.47, representing a 0.0% change.

3  The average room rate, occupancy and RevPAR statistics include all accommodation units at hotels and self-catering apartment complexes and excludes campsite and mobile homes.

 

Operational performance

 

The Group's Croatian operations are highly seasonal. Most of the properties are closed in the first quarter, and usually trade from Easter with peak season in July and August. Two thirds of revenue in the region is generated in the third quarter.

 

The pandemic and associated government lockdowns led to a delayed opening of hotels, resorts and campsites for the 2020 summer season. As lockdown restrictions in Croatia and the surrounding countries were eased from the end of May, campsites on the Istrian Peninsula began to reopen, closely followed by the opening of selected hotels and resorts. Summer season bookings and arrivals gradually increased throughout June, intensifying in July and peaking in mid-August. The business mix was substantially different this year, with the Campsites contributing proportionally more to the overall results due to their increased popularity and high margins.

 

However, from mid-August, several feeder countries, including Austria, Italy and Slovenia, changed their foreign travel advice on Croatia. This led to a sudden change in demand, early departures, cancellations and limited new bookings, curtailing the peak season.

 

Throughout the period, the Group utilised employee-related support schemes as well as other measures to reduce tax and contributions available from the government. Nevertheless, total revenue (in Croatian Kuna) was HRK 158.7 million. RevPAR declined to HRK 231.1, reflecting occupancy of 30.4% (2019: 63.1%) and a 1.4% reduction in average room rate to HRK 761.1 (2019: HRK 772.1). The region reported an EBITDA of HRK 3.1 million (2019: HRK 154.4 million).

 

Asset repositioning projects

 

The second and final phase of the major repositioning of the Arena Grand Kažela Campsite in Medulin was completed ahead of the summer season at an investment of £6.0 million (this followed a 2019 investment of £19.0 million). The project included the installation of 45 new holiday homes, the refurbishment of the existing restaurant & bar and sports centre, refurbishment of four existing sanitary blocks and the installation of one new sanitary block. The repositioning of this campsite, the largest in the Group's portfolio, is now completed.

 

Two further investment upgrade projects were completed. The refurbishment of 146 apartments and infrastructure works at Arena Verudela Beach Pula, a self-catering apartment resort (a £7 million investment). Park Plaza Histria Pula which underwent a soft refurbishment of all rooms, and the Yacht Bar & Restaurant and Lighthouse restaurant were refurbished.

 

The major repositioning of Hotel Brioni Pula commenced in January 2020 and phase one of the construction works has been completed. On 8 December, Arena entered into a new loan agreement with Erste & Steiermärkische banka d.d, and Zagrebačka banka d.d. in Croatia, for €24 million (£21.5 million) to partly fund the project. Phase two of the repositioning and redevelopment is underway and Arena is expected to open the repositioned hotel during the 2021 summer season. The hotel occupies a spectacular location on a cliff providing views of the Adriatic and Brijuni islands. The total investment of HRK 260 million (£30.9 million) investment will reposition the property as a luxury upper upscale hotel with 227 rooms, offering an indoor pool, gym, kids playground and several restaurants, bars and meeting and events facilities.

 

Acquisitions and development projects

 

On 30 January, Arena entered into a 45-year lease agreement for the development and operation of a 115-room hotel in Zagreb, Croatia, further extending its presence in Central Eastern Europe.

On 2 June, Arena signed a sale and purchase agreement for Guest House Hotel Riviera in Pula, with the Republic of Croatia, for a consideration of HRK 36.5 million (£4.4 million). Completion of the purchase allows Arena to commence plans to reposition the property into a luxury branded, 80-room hotel.

 

Together these projects further the Group's strategic aim to increase its footprint in attractive locations in Central and Eastern European cities.

 

 

 

GERMANY, HUNGARY AND SERBIA

 

Property portfolio

 

The Group's portfolio in the region includes four properties in Berlin and one hotel each in Cologne, Nuremberg and Trier in Germany and Budapest in Hungary. Hotels with an ownership interest include: Park Plaza Berlin Kudamm3, Park Plaza Nuremberg, art'otel berlin mitte3, art'otel berlin kudamm and art'otel cologne. Park Plaza Wallstreet Berlin Mitte and art'otel budapest operate under operating leases and Park Plaza Trier operates under a franchise agreement.

 

Total value of Germany, Hungary and Serbia property portfolio1   £87.2m

 

Operations

 

Germany

Reported in GBP2 (£)

Reported in Local Currency Euro (€)

 

Year ended
31 Dec

2020

Year ended
31 Dec

2019

%

change

Year ended
31 Dec

2020

Year ended
31 Dec

2019

%

change

 

Total revenue

 8.8m

 29.5m

(70.2)%

 9.9m

 33.7m

(70.6)%

 

EBITDAR

£(0.1)m

 9.1m

(106.0)%

€(0.1)m

 10.4m

(105.9)%

 

EBITDA

 (0.1)m

 8.7m

(106.3)%

 (0.1)m

 9.9m

(106.2)%

 

Occupancy

25.5%

80.7%

(5,514) bps

25.5%

80.7%

(5,514) bps

 

Average Room Rate

 83.0

 93.6

(11.3)%

 93.4

 106.9

(12.7)%

 

RevPAR

 21.2

 75.5

(71.9)%

 23.8

 86.2

(72.4)%

 

Room revenue

 6.8m

 24.2m

(71.9)%

 4.9m

 13.1m

(62.4)%

 

EBITDA %

(6.2)%

29.5%

 (3,572) bps

(6.2)%

29.5%

(3,572) bps

 

          

 

1  Independent valuation by Savills in December 2020 with the exception of the 88 Rooms Hotel in Belgrade, Park Plaza Wallstreet Berlin Mitte and art'otel budapest which are measured at book value.

2  Average exchange rate from Euro to Pound Sterling for the year to December 2020 was 1.12 and for the year to December 2019 was 1.14, representing a 1.6% decrease.

3 Revenues derived from these hotels are accounted for in Management and Central Services performance and their values and results are excluded from the data provided in this section.

 

 

Operational performance

 

Whilst the year started as expected, from March onwards the performance in the region was severely impacted by the pandemic. While most of the Group's hotels in the region remained opened and continued to operate, this was at a much reduced capacity. As government lockdown measures were eased in the summer, operations resumed at all the Group's hotels. art'otel cologne and Park Plaza Nuremberg performed above fair share against their markets over summer with occupancies fairly consistent across each weekday. This was almost exclusively from the domestic market.

 

However, during the autumn months increasing infection rates in Germany lead to further government restrictions. Christmas markets and fairs which typically drive demand for our hotels were cancelled. From November overnight accommodation was limited to essential travel only, not for tourism purposes, until mid-January 2021. A national lockdown was imposed in December.

 

As result of the above, total revenue (in euros) was €9.9 million (2019: €33.7 million). RevPAR was €23.8 (2019: €86.2), due to the dramatic drop in occupancy to 25.5% (2019: 80.7%). Average room rate reduced by 12.7% to €93.4 (2019: €106.9).

 

During the period the Group accessed Kurzarbeit, the German government's short-term work scheme to support jobs and it will continue to utilise this scheme as required in 2021. Nonetheless, despite Kurzarbeit and other steps taken to reduce costs in the region, EBITDA (in euros) decreased by 106.2% to €(0.1) million (2019: €9.9 million).

 

Acquisition and asset management projects

 

Arena announced on 17 December that it had entered into a HRK 32.0 million loan agreement with AIK Banka a.d for the acquisition of 88 Rooms Hotel in Belgrade, Serbia.

 

The purchase completed on 29 December 2020 for a total consideration of HRK 45.0 million (£5.4 million).

 

The Group intends to invest in a soft refurbishment of public areas and rooms at art'otel budapest.

 

Germany hotel market*

 

COVID-19 severely disrupted the hospitality industry in 2020, with many countries imposing restrictions on domestic and international travel, country and regional level lockdowns, restrictions on services offered by hotels due to social distancing measures and in some cases, total hotel closures. This has restricted visibility on performance at a hotel competitor set level but at a Country/City market data level, the impact can be assessed. The below is based on full inventory availability compared to the same period in 2019.

 

Germany

 

On a full year basis, the impact on the German market was a 65.1% reduction in RevPAR to €25.7; which was the result of 59.9% reduction in occupancy to 28.6% and a 12.9% reduction in average room rate, to €89.8.

 

Full year performance saw Berlin, PPHE Hotel Group's main market in Germany, fall 69.1% in RevPAR to €24.2. The impact to occupancy was a drop of 63.8% to 28.7% and a drop in average room rate of 14.8% to €84.5.

 

*  Source: STR European Hotel Review TRI: December 2020.

 

 

MANAGEMENT AND CENTRAL SERVICES PERFORMANCE

 

Our performance

 

Revenues in this segment are primarily management, sales, marketing and franchise fees, and other charges for central services.

 

These are predominantly charged within the Group and therefore eliminated upon consolidation. For the year ended 31 December 2020, the segment showed a negative EBITDA as both internally and externally charged management fees did not exceed the costs in this segment.

 

Management, Group Central Services and licence, sales and marketing fees are calculated as a percentage of revenues and profit, and therefore these are affected by underlying hotel performance.

 

 

  Reported in GBP (£)

Year ended

31 Dec 2020

Year ended

 31 Dec 2019

Total revenue before elimination

£14.4m

£44.3m

Revenues within the consolidated Group

£(11.6)m

£(38.4)m

External and reported revenue

£2.8m

£5.9m

EBITDA

£(11.3)m

£10.3m

 

 

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 

 

  As at 31 December

2020

£'000

2019

 '000

Assets

 

 

Non-current assets:

 

 

Intangible assets

17,754

18,036

Property, plant and equipment

1,201,358

1,113,661

Right-of-use assets

223,793

217,990

Investment in joint ventures

4,741

18,151

Other non-current assets

15,958

18,358

Restricted deposits and cash

2,261

1,841

Deferred income tax asset

6,724

5,173

 

1,472,589

1,393,210

Current assets:

 

 

Restricted deposits and cash

4,777

3,541

Inventories

2,260

2,317

Trade receivables

3,473

12,758

Other receivables and prepayments

8,044

15,065

Other current financial assets

27

5,221

Cash and cash equivalents

114,171

153,029

 

132,752

191,931

Total assets

1,605,341

1,585,141

 

 

 

Equity and liabilities

 

 

Equity:

 

 

Issued capital

-

-

Share premium

131,389

130,260

Treasury shares

(3,482)

(3,636)

Foreign currency translation reserve

20,804

8,094

Hedging reserve

(703)

(655)

Accumulated earnings

161,587

243,233

Attributable to equity holders of the parent

309,595

377,296

Non-controlling interests

95,358

103,465

Total equity

404,953

480,761

Non-current liabilities:

 

 

Borrowings

721,006

664,945

Provision for concession fee on land

5,399

4,730

Financial liability in respect of Income Units sold to private investors

126,155

126,704

Other financial liabilities

244,818

228,973

Deferred income taxes

8,472

7,920

 

1,105,850

1,033,272

Current liabilities:

 

 

Trade payables

6,502

10,466

Other payables and accruals

51,667

47,326

Borrowings

36,369

13,316

 

94,538

71,108

Total liabilities

1,200,388

1,104,380

Total equity and liabilities

1,605,341

1,585,141

 

The accompanying notes are an integral part of the consolidated financial statements. Date of approval of the financial statements 1 March 2021. Signed on behalf of the Board by Boris Ivesha and Daniel Kos.

 

 

CONSOLIDATED INCOME STATEMENT

 

Year ended 31 December

2020

£'000

2019

 '000

Revenues

101,787

357,692

Operating expenses

(110,870)

(233,024)

EBITDAR

(9,083)

124,668

Rental expenses

(1,004)

(1,774)

EBITDA

(10,087)

122,894

Depreciation and amortisation

(46,624)

(41,749)

EBIT

(56,711)

81,145

Financial expenses

(35,526)

(32,089)

Financial income

391

2,923

Other expenses

(9,736)

(5,110)

Other income

10,299

2,225

Net expenses for financial liability in respect of Income Units sold to private investors

(2,579)

(10,795)

Share in profit (loss) of joint ventures

(826)

178

Profit (loss) before tax

(94,688)

38,477

Income tax benefit

724

4,105

Profit (loss) for the year

(93,964)

42,582

 

 

 

Profit (loss) attributable to:

 

 

Equity holders of the parent

(81,731)

33,915

Non-controlling interests

(12,233)

8,667

 

(93,964)

42,582

 

 

 

Basic and diluted earnings (loss) per share (in Pound Sterling)

(1.92)

0.80

 

The accompanying notes are an integral part of the consolidated financial statements.

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

 

Year ended 31 December

2020

 '000

2019

£'000

Profit (loss) for the year

(93,964)

42,582

Other comprehensive income (loss) to be recycled through profit and loss in subsequent periods:*

 

 

Loss from cash flow hedges

(90)

(423)

Foreign currency translation adjustments of foreign operations

16,867

(20,958)

Other comprehensive income (loss)

16,777

(21,381)

Total comprehensive income (loss)

(77,187)

21,201

 

 

 

Total comprehensive income (loss) attributable to:

 

 

Equity holders of the parent

(69,069)

18,580

Non-controlling interests

(8,118)

2,621

 

(77,187)

21,201

 

*  There is no other comprehensive income that will not be reclassified to the profit and loss in subsequent periods.

 

The accompanying notes are an integral part of the consolidated financial statements.

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

 

In £'000

Issued

capital1

Share premium

Treasury

shares

Foreign

currency

translation

reserve

Hedging

reserve

Accumulated

earnings

Attributable to equity holders of the parent

Non-controlling interests

Total

 equity

Balance as at 1 January 2019

-

130,061

(3,636)

23,131

(437)

224,373

373,492

105,050

478,542

Profit for the year

-

-

-

-

-

33,915

33,915

8,667

42,582

Other comprehensive income (loss) for the year

-

-

-

(15,117)

(218)

-

(15,335)

(6,046)

(21,381)

Total comprehensive income (loss)

-

-

-

(15,117)

(218)

33,915

18,580

2,621

21,201

Share-based payments

-

199

-

-

-

-

199

-

199

Dividend distribution2

-

-

-

-

-

(15,263)

(15,263)

-

(15,263)

Dividend distribution by a subsidiary

-

-

-

-

-

-

-

(1,454)

(1,454)

Refund of cost in connection with prior year transactions with non-controlling interest

-

-

-

-

-

290

290

250

540

Transactions with

non-controlling interests
(see Note 6)

-

-

-

80

-

(82)

(2)

(3,002)

(3,004)

Balance as at 31 December 2019

-

130,260

(3,636)

8,094

(655)

243,233

377,296

103,465

480,761

Profit (loss) for the year 

-

-

-

-

-

(81,731)

(81,731)

(12,233)

(93,964)

Other comprehensive income (loss) for the year

-

-

-

12,710

(48)

-

12,662

4,115

16,777

Total comprehensive income (loss)

-

-

-

12,710

(48)

(81,731)

(69,069)

(8,118)

(77,187)

Issue of shares

-

870

154

-

-

-

1,024

-

1,024

Share-based payments

-

259

-

-

-

85

344

75

419

Transactions with

non-controlling interests
(see Note 6)

-

-

-

-

-

-

-

(64)

(64)

Balance as at 31 December 2020

-

131,389

(3,482)

20,804

(703)

161,587

309,595

95,358

404,953

 

1  No par value.

2  The dividend distribution in 2019 comprises a final dividend for the year ended 31 December 2018 of 19.0 pence per share and an interim dividend of 17 pence per share paid in 2019. There was no dividend distribution or dividend declaration in 2020.

 

The accompanying notes are an integral part of the consolidated financial statements.

 

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

 

  Year ended 31 December

2020

£'000

2019

£'000

Cash flows from operating activities:

 

 

Profit (loss) for the year

(93,964)

42,582

Adjustment to reconcile profit to cash provided by operating activities:

 

 

Financial expenses and expenses for financial liability in respect of Income Units sold to private investors

38,105

42,884

Financial income

(268)

(2,023)

Income tax benefit

(724)

(4,105)

Loss on buy-back of Income Units sold to private investors

-

694

Remeasurement of lease liability

3,369

3,359

Revaluation of Park Plaza County Hall London Units

2,402

(923)

Capital loss, net

1,457

92

Gain from marketable securities

(123)

(900)

Impairment of property, plant and equipment

2,500

-

Impairment of Right-of-use assets

2,781

-

Share in results of Joint Ventures

826

(178)

Release of provision for litigation

-

(1,093)

Depreciation and amortisation

41,343

41,749

Share-based payments

419

199

 

92,087

79,755

Changes in operating assets and liabilities:

 

 

Decrease in inventories

143

68

Decrease (increase) in trade and other receivables

13,505

(40)

Increase (decrease) in trade and other payables

(8,529)

2,043

 

5,119

2,071

Cash paid and received during the period for:

 

 

Interest paid

(31,412)

(44,664)

Interest received

173

1,412

Taxes paid

(1,076)

(1,748)

Taxes received

365

743

 

(31,950)

(44,257)

Net cash provided by (used in) operating activities

(28,708)

80,151

Cash flows from investing activities:

 

 

Acquisition of Hotel 88 Rooms in Belgrade, Serbia

(5,350)

-

Investments in property, plant and equipment

(57,388)

(72,422)

Disposal of property, plant and equipment

317

-

Investments in Intangible assets

(305)

-

Proceeds from sale of property

-

98

Loan to third party

-

(591)

Loan to Joint Venture

(583)

-

Investment in Joint Venture

(2,207)

(13,650)

Purchase plot of land nearby Waterloo Station

-

(12,582)

Decrease (increase) in restricted cash

(1,613)

109

Decrease in marketable securities, net

5,318

126

Net cash used in investing activities

(61,811)

(98,912)

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

 

 

  Year ended 31 December

2020

£'000

2019

£'000

Cash flows from financing activities:

 

 

Proceeds from loans and borrowings

56,948

9,600

Buy-back of Income Units previously sold to private investors

-

(1,622)

Repayment of loans and borrowings

(7,530)

(15,455)

Repayment of leases

(1,567)

(3,385)

Net proceeds from transactions with non-controlling interest

(64)

(3,004)

Refund of cost in connection with prior year transactions with non-controlling interest

-

540

Dividend payment

-

(15,263)

Dividend payment by a subsidiary

-

(1,454)

Net cash provided by (used in) financing activities

47,787

(30,043)

Decrease in cash and cash equivalents

(42,732)

(48,804)

Net foreign exchange differences

3,874

(5,827)

Cash and cash equivalents at beginning of year

153,029

207,660

Cash and cash equivalents at end of year

114,171

153,029

 

 

 

Non-cash items:

 

 

Lease additions and lease remeasurement

15,143

5,946

Outstanding payable on investments in property, plant and equipment

3,918

-

Issuance of shares for acquisition of art'otel rights

1,024

-

 

The accompanying notes are an integral part of the consolidated financial statements.

 

 

NOTES

 

Selected Notes to the consolidated financial statements

 

Note 1 General

 

a. The consolidated financial statements of PPHE Hotel Group Limited (the 'Company') and its subsidiaries (together the 'Group') for the year ended 31 December 2020 were authorised for issuance in accordance with a resolution of the Directors on 1 March 2021.

 

 The Company was incorporated in Guernsey on 14 June 2007 and is listed on the Premium Listing segment of the Official List of the UK Listing Authority (the 'UKLA') and the shares are traded on the Main Market for listed securities of the London Stock Exchange.

 

b.  Description of the Group business:

 The Group is an international hospitality real estate group, which owns, co-owns and develops hotels, resorts and campsites, operates the Park Plaza® brand in EMEA and owns and operates the art'otel® brand.

 

 The Group has interests in hotels in the United Kingdom, the Netherlands, Germany, Hungary and Serbia and hotels, self-catering apartment complexes and campsites in Croatia.

 

c.   Assessment of going concern and liquidity:

    From January 2020, COVID-19 began to spread from China to many countries across the world. The World Health Organization declared the outbreak of the virus a pandemic in March 2020. Governments and authorities across the globe took various measures to mitigate the spread of the virus, primarily by enforcing partial or complete population 'lockdowns', closing geographical borders, temporarily closing businesses and imposing social distancing.

 

     As a result of these measures, the Group's operations were significantly impacted. In response, the Group took swift action to mitigate the impact of the pandemic, including preserving cash by reducing costs and overheads. Amongst others, the Group has taken the following actions:

 

Cash flow measures

 

·Utilisation of the government support schemes available to the business across its markets which it operates in, the COVID-19 Job Retention Scheme in the UK, the Temporary Emergency Measure for Work Retention scheme in the Netherlands, the Kurzarbeit scheme in Germany and the Job Preservation scheme in Croatia. Together, these schemes provided the Group with approximately £24.1 million of support in the year which was recorded as an offset from operating expense in the consolidated income statement.

 

·Additional government support measures such as the business rates holiday in the UK from 1 April 2020 until 31 March 2021, which amounts to a £1.4 million cash saving per month and deferral of VAT and PAYE.

 

·Ongoing restructuring programme to ensure the Group's operational structure is fit for purpose and is aligned with guest demand for the short and medium term.

 

·Deferral of 2019 discretionary staff incentive payments, at an aggregate value of £1.8 million, with such payments reconsidered, if appropriate, in due course.

 

·  Withdrawal of proposed 2019 final dividend payment to shareholders, equating to £8.6 million. In addition, no dividend was declared in 2020.

 

· Reviewed and reprioritised capex requirements for development pipeline.

 

· Deferred loan amortisations for 2020 at an aggregated amount of £6.1 million. In addition, after the reporting period, it was agreed with one of the Group's lenders that loan amortisations for 2021 in an aggregated amount of £7.9 million will be deferred.

 

·Reviewed and reprioritised all areas of discretionary spend, reducing this to business-critical investments only.

 

Liquidity

 

·£20 million of new funding secured against Park Plaza London Waterloo, which can be used for the general working capital requirements of the Group (see Note 15b of the Annual Report and Accounts 2020).

 

· Secured a Dutch government backed COVID-19 go-arrangement term facility of €10 million (see Note 15b of the Annual Report and Accounts 2020).

 

·Up to £180 million of funding has been secured for the completion of the construction of art'otel london hoxton. This facility also offers the Group the ability to temporarily draw up to £41.1 million, if required, for any cash flow needs the Group may encounter in the short term (see Note 15b of the Annual Report and Accounts 2020).

 

·Secured a revolving facility for up to £30 million pursuant to the Coronavirus Large Business Interruption Loan Scheme (CLBILS) (see Note 15b of the Annual Report and Accounts 2020).

 

·  Financial covenant testing of existing facilities have been postponed, where appropriate, to 2022 (see Note 15c of the Annual Report and Accounts 2020).

 

·Despite the impact of COVID-19 on trading cash flows, the Group continues to hold a strong liquidity position with an overall consolidated cash balance of £114.2 million as at 31 December 2020 and undrawn cash facilities of £83.4 million.

 

Since the start of the COVID-19 pandemic multiple cashflow forecasts showing various scenarios have been modelled and reviewed by the Board to provide the basis for strategic actions taken across the business. The Directors have considered detailed cash flow projections for the next three-year period to 31 December 2023 which are constructed on a base case and a downside case basis. The base case assumes a very slow recovery in 2021 with EBITDA levels at approximately 10% of 2019, the 2022 EBITDA at 70% of 2019 and returning to 2019 EBITDA levels in 2023. The downside case assumes zero EBITDA for 2021, the 2022 EBITDA at 50% of 2019 and returning to 2019 EBITDA levels in 2023. These scenarios assume further extension of covenant waivers and refinancing of maturing credit facilities if necessary. Having reviewed those scenarios, the Directors have determined that the Company is likely to continue in business for at least 12 months from the date of approval of the consolidated financial statements without implementing any further protective measures to the operational structure.

 

 

Note 2: Earnings per share

 

The following reflects the income and share data used in the basic earnings per share computations:

 

 

 Year ended

31 December

 

 

2019
£'000

2018
£'000

Profit (loss) attributable to equity holders of the parent

(81,731)

33,915

Weighted average number of ordinary shares outstanding

42,466

42,391

 

Potentially dilutive instruments 140,140 in 2020 are not considered, since their effect is antidilutive (increase of loss per share) (2019: 211,518 had an immaterial effect on the basic earnings per share).

 

 

Note 3: Segments

 

For management purposes, the Group's activities are divided into Owned Hotel Operations and Management Activities (for further details see Note 14(c)(i)). Owned Hotel Operations are further divided into four reportable segments: the Netherlands, Germany, Hungary and Serbia, Croatia and the United Kingdom. The operating results of each of the aforementioned segments are monitored separately for the purpose of resource allocations and performance assessment. Segment performance is evaluated based on EBITDA, which is measured on the same basis as for financial reporting purposes in the consolidated income statement.

 

 

 

 Year ended 31 December 2020

 

The Netherlands
£'000

 

Germany, Hungary and Serbia
£'000

United Kingdom
£'000

Croatia
£'000

Management and Central Services
£'000

Adjustments*

£'000

Consolidated
£'000

Revenue

 

 

 

 

 

 

 

Third party

14,948

8,806

56,544

18,729

2,760

 

101,787

Inter-segment

 

 

 

 

11,633

(11,633)

  -

Total revenue

14,948

8,806

56,544

18,729

14,393

(11,633)

101,787

Segment EBITDA

(54)

(549)

1,466

362

(11,312)

-

(10,087)

Depreciation, amortisation
and impairment

 

 

 

 

 

 

(46,624)

Financial expenses

 

 

 

 

 

 

(35,526)

Financial income

 

 

 

 

 

 

391

Net expenses for liability in respect of Income Units sold to private investors

 

 

 

 

 

 


(2579)

Other income (expenses), net

 

 

 

 

 

 

563

Share in result of joint ventures

 

 

 

 

 

 

(826)

Profit before tax

 

 

 

 

 

 

(94,688)

         

 

* Consist of inter-company eliminations.

 

 

The Netherlands
£'000

Germany, Hungary and Serbia
£'000

United Kingdom
£'000

Croatia
£'000

Adjustments2

£'000

Consolidated
£'000

Geographical information

 

 

 

 

 

 

Non-current assets1

207,844

98,990

854,517

216,532

65,022

1,442,905

 

1  Non-current assets for this purpose consists of property, plant and equipment, right to use assets and intangible assets.

2  This includes the fixed assets of Management and Central Services and the intangible fixed assets.

 

 

 

 Year ended 31 December 2019

 

The Netherlands
£'000

 

Germany and Hungary
£'000

United Kingdom
£'000

Croatia
£'000

Management and Central Services
£'000

Adjustments*

£'000

Revenue

 

 

 

 

 

 

 

Third party

53,776

29,521

207,381

61,147

5,867

 

357,692

Inter-segment

 

 

 

 

38,384

(38,384)

-

Total revenue

53,776

29,521

207,381

61,147

44,251

(38,384)

357,692

Segment EBITDA

15,003

8,704

70,696

18,227

10,264

-

122,894

Depreciation, amortisation
and impairment

 

 

 

 

 

 

(41,749)

Financial expenses

 

 

 

 

 

 

(32,089)

Financial income

 

 

 

 

 

 

2,923

Net expenses for liability in respect of Income Units sold to private investors

 

 

 

 

 

 

(10,795)

Other expenses, net

 

 

 

 

 

 

(2,885)

Share in result of joint ventures

 

 

 

 

 

 

178

Profit before tax

 

 

 

 

 

 

38,477

 

* Consist of inter-company eliminations.

 

 

The Netherlands
£'000

Germany and Hungary
£'000

United Kingdom
£'000

Croatia
£'000

Adjustments2

£'000

Consolidated
£'000

Geographical information

 

 

 

 

 

 

Non-current assets1

202,673

97,195

840,130

178,928

30,761

1,349,687

 

1  Non-current assets for this purpose consists of property, plant and equipment, right to use assets and intangible assets.

2  This includes the fixed assets of Management and Central Services and the intangible fixed assets.

 

 

Note 4: Related parties

a.  Balances with related parties

 

As at 31 December

 

2020

£'000

2019
£'000

Loans to joint ventures

5,066

11,720

Short-term receivables

-

34

Short-term payable

88

-

Payable to GC Project Management Limited

903

(261)

Payable to Gear Construction UK Limited

1,862

-

    

 

b.  Transactions with related parties

 

  Year ended 31 December

 

2020

£'000

 

2019
£'000

Cost of transactions with GC Project Management Limited

(2,784)

(2,980)

Cost of transaction with Gear Construction UK Limited

(13,527)

-

Interest income from jointly controlled entities

95

571

 

c.  Significant other transactions with related parties

 

(i) Construction of the art'otel london hoxton-Following the approval by the independent shareholders, on 7 April 2020 the Group entered into a building contract with Gear Construction UK Limited ('Gear') for the design and construction of the art'otel london hoxton hotel on a"turn-key"basis (the 'building contract'). Under the building contract Gear assumes the responsibility for the design and construction of the main works for the design and build of art'otel london hoxton for a lump sum of £160 million (exclusive of VAT) (the 'Contract Sum).

 

On top of the contract sum, the Group is entitled to novate certain existing contracts relating to the project to Gear at cost subject to a cap of £5.1 million (exclusive of VAT). Gear is required to complete the works to be executed under the building contract by 2024.

 

Gear's obligations and liabilities under the building contract are supported by a corporate guarantee from Red Sea Hotels Limited, an associate of Euro Plaza Holdings B.V. and therefore a related party of the Company, in the amount of 10% of the Contract Sum (the 'corporate guarantee'). The corporate guarantee expires on the later of: (i) the expiry of the 2 year defects rectification period which follows practical completion of the works and (ii) the issue of the latent defect insurer's approval or final technical audit report.

 

As part of entering into the building contract, the Hoxton Project Management Agreement dated 21 June 2018 was terminated.

 

(ii) Sub-lease of office space - A member of the Group has agreed to sub-lease a small area of office space to members or affiliates of the Red Sea Group at its County Hall corporate office in London. Such sub-leases expire on 20 July 2021 and the rent payable by the Red Sea Group to PPHE Hotel Group is based on the cost at which the landlord is leasing such space to PPHE Hotel Group.

 

(iii) Pre-Construction and Maintenance Contract - The Group frequently uses GC Project Management Limited ('GC') to undertake preliminary assessment services, including appraisal work, and provide initial estimates of the construction costs. Further, GC provides ad-hoc maintenance work when required to the Group's various sites. Accordingly, the Group has entered into an agreement with GC for the provision of pre-construction and maintenance services by GC to the Group for a fixed annual retainer of £60,000.

 

(iv)  Transactions in the ordinary course of business, in connection with the use of hotel facilities (such as overnight room stays and food and beverages) are being charged at market prices. These transactions occur occasionally. 

 

(v) Compensation to key management personnel (Executive and Non-Executive Directors) for the year ended 31 December 2020:

 

 

 

Base salary
and fees
£'000

Salary sacrifice Options

£'000

Bonus

£'000

Additional remuneration
£'000

Retention award3

£'000

Pension contributions
£'000

Other
benefits
£'000

Total1
£'000

Total cash paid

£'000

 

Chairman and Executive Directors

 

730

 

9

 

752

 

-

 

-

 

114

 

16

 

944

 

448

Non-Executive Directors

232

-

-

-

-

-

-

232

232

 

962

9

75

-

-

114

16

1,176

680

 

Include the amounts which became payable in the 2020 financial year to the relevant Directors which were deferred.

2  An executive director is entitled to a bonus of £75,000 in respect of 2019 financial year which is subject to leaver provisions. This bonus was not paid in 2020 and as at 31 December 2020 is included in other payables and accruals.

3 An executive director joined the retention bonus scheme as of 1 January 2020. The retention bonus scheme awards the amount of £50,000 cash per year, payable on the 5th anniversary of joining only if the participant remains in employment subject to leaver provisions, as further specified in the scheme rules.

 

 

Base salary
and fees
£'000

Bonus

£'000

Additional remuneration
£'000

Retention award

£'000

Pension contributions
£'000

Other
benefits
£'000

Total
£'000

Total cash paid

£'000

 

Chairman and Executive Directors

 

855

 

601

 

-

 

53

 

113

 

5

 

1,086

 

1,086

Non-Executive Directors

243

-

30

 

-

-

273

273

 

1,098

60

30

53

113

5

1,359

1,359

 

1 Bonus to an executive director in respect of 2018 financial year that was paid in 2019.

 

 

Directors' interests in employee share incentive plan

As at 31 December 2020, the Executive Directors held share options to purchase 179,308 ordinary shares (2019: 75,000). 50,000 options were fully exercisable with an exercise price of £6.90 (2019: 50,000), 16,667 options were fully exercisable with an exercise price of £14.30 (2019: 8,333) and 718 options were fully exercisable with a £nil exercise price (2019: 0). No share options were granted to Non-Executive Directors of the Board.
 

 

Principal Risks and uncertainties

 

Our approach to risk management

 

Our risk priority is decided through an assessment of the likelihood of the risk and its impact should it materialise. Our assessments are weighted towards impact to encourage prioritisation of high impact risks. We have several areas of active risk, triggered by the COVID-19 pandemic, for which the response and oversight will continue to be our primary focus.

 

The table below details our principal risks and uncertainties for the year ahead. These are considered to be the most significant threats to the achievement of our objectives but are not an exhaustive list of all risks identified and monitored through our risk management process, which includes the consolidation of 10 underlying functional risk registers into the single view of risk reported to the Board.

 

Strategic Agenda references

 

1  Disciplined, focused capital deployment

2  Optimise the value of the existing portfolio

3  Extract value from portfolio to fund further growth

4  Pursue growth opportunities to drive long-term value

5  Continue to diversify our asset portfolio in different segments of the hospitality industry

6  Consistently deliver the refreshed intended guest experience across our properties

7  Maintain high operating margins

8  Leverage our scale and interregional synergies

9  Further investment in art'otel brand in preparation for new openings and future pipeline

 

· Unchanged

· Increased

· Reduced

 

MARKET AND MACRO ENVIROMENT

Principal Risk Description

 

Risk Priority

 

Risk Response and Outlook for 2021

 

Market Dynamics - Significant and prolonged decline in global travel and market demand

The restricted market conditions during the COVID-19 pandemic and the associated decline in demand over a prolonged period has had a major impact on the hospitality industry as a whole.

Revenue generation has been severely impacted with consumer confidence low and corporate budgets significantly reduced.

A failure to adapt to changing guest expectations in respect of health & safety, technology, sustainability and service could threaten our ability to recover from the COVID-19 pandemic and grow market share.

The recovery of international travel will be largely influenced by the speed and success of vaccination programmes across the world.  In the short-term, a reliance on domestic travel to drive demand will continue.

Strategic objectives under threat:

3  Extract value from portfolio to fund further growth

4  Pursue growth opportunities to drive long-term value

6  Consistently deliver the refreshed intended guest experience across our properties

7  Maintain high operating margins

 

 

Very High

(Increased)

 

 

Established Mitigating Controls

· Consistent brand standards applied across all hotels.

· Close collaboration with Radisson Hotel Group.

· Responsible Business strategy.

· Monitoring and analytics of customer feedback to identify issues and improve operations.

Response to COVID-19

· Introduced COVID-19 Health & Safety standards through our 'Reassuring Moments' and 'be bold. be creative. be safe' programmes.

· Achieved SGS accreditation for passing the Cleaning and Disinfection Pledge Assessment in all of our hotels.

· Accelerated roll-out of technology improvements to introduce a contactless guest experience.

· Targeted promotional activity and an aggressive pricing approach.

· Adapted our service offering in line with governmental guidance including the introduction of takeaway and delivery options.

· Modified operations at Park Plaza Westminster Bridge London to accommodate and support NHS frontline healthcare.

Outlook for 2021

The long-term impact of COVID-19 on global travel and hotel demand is uncertain, though we expect difficult market conditions throughout 2021. Actions to contain the impact of this risk include:

· Commercial initiatives to identify and target opportunities for new contracted business.

· Continued close monitoring of market conditions and pricing accordingly.

· Marketing activity targeting the domestic market.

· Continued roll-out of technology for the contactless guest experience.

· Maintaining the highest standards for cleanliness and wellness through our advanced health and safety programmes, to boost consumer confidence.

Adverse Economic Climate

Both COVID-19 and Brexit have increased macroeconomic volatility and the threat of a deeper and longer economic downturn in our regions. Increased national debt, coupled with falling domestic output, could be expected to impact future taxation and disposable income.

Combined with the Market Dynamics risk, a prolonged economic downturn impacts our ability to protect revenue and profitability. Brexit has also led to volatility in the cost of supply and could impact the cost of labour in the UK, with new restrictions on European workers.

Strategic objectives under threat:

4  Pursue growth opportunities to drive long-term value

7  Maintain high operating margins

8  Leverage our scale and interregional synergies

 

Very High

(Increased)

 

Established Mitigating Controls

· Cash preservation and scenario stress testing.

· Profit protection plans (with operational impact assessed).

· Budgetary control and frequent forecasting across all regions and property type.

Response to COVID-19

· Proactive measures to control costs during the period of forced hotel closures and reduce the cost profile of the business for the future.

· Significant restructuring of the hotel and support teams to reduce the existing payroll cost base.

· Fixed costs deferred and reduced wherever possible.

· Regular open/closed scenario analysis to support informed decisions.

Outlook for 2021

Economic conditions are expected to be challenging throughout 2021. As the threat of adverse economic conditions cannot be prevented, our actions are focused on containing the impact on the business as much as possible. These include:

· Further adapting the business model and centralising processes to reduce fixed costs.

· Benchmarking and verifying market pricing in respect of our supply chain.

· Monitoring changes in taxes.

FUNDING AND INVESTMENT

 

 

 

 

 

Funding and liquidity risk: including breach of debt covenants, inability to service existing debt and cash restrictions

The risk of breaching debt covenants and liquidity concerns increased significantly this year with the sudden loss of revenue brought about by government travel restrictions and temporary hotel closures.

The impact of failing to act and contain these threats during the COVID-19 pandemic and beyond would be severe, including an increased risk of cash traps being applied to hotel specific loans.

Strategic objectives under threat:

1.  Disciplined, focused capital deployment

3.  Extract value from portfolio to fund further growth

4.  Pursue growth opportunities to drive long-term value

9.  Further investment in art'otel brand in preparation for new openings and future pipeline

 

 

Very High

(Increased)

 

 

Established Mitigating Controls

· Monthly forward covenant testing with sensitivity and stress modelling.

· Robust treasury monitoring and reporting to the Board.

Response to COVID-19

· Actions taken to preserve cash and reduce costs, including use of government payroll support schemes across our regions, redundancies, salary reductions and salaries taken as share options.

· Proactive and transparent relation with lenders.

· Debt covenant waivers agreed with lenders to 2022.

· Deferred amortisation payment schedules.

· Daily cash monitoring.

· Deferral of liabilities where possible.

· New facilities signed to support Group cash and meet obligations.

Outlook for 2021

This risk will continue to be active throughout 2021. Actions will include:

· Continued enhanced monitoring controls.

· Use of Group funds to service debt and avoid cash trapping where possible.

· Regular liaison with lenders.

· Potential for securing alternative sources of finance.

 

Development Projects - delays or unforeseen cost increases

As we continue with significant development projects, we could experience delays, unforeseen increase in costs, disputes with contractors or inconsistent quality.

The long-term effects of the COVID-19 pandemic and Brexit include potential increases in material and labour costs, and new working practices impacting the timeline for project delivery.

Strategic objectives under threat:

2.  Disciplined, focused capital deployment

3.  Optimise the value of the existing portfolio

 

 

High

(Unchanged)

 

 

Established Mitigating Controls

· Fixed price agreement for the Group's key construction project.

· Senior leadership team oversight and close monitoring and support from our in-house Technical Services team.

Response to COVID-19

· Reassessment of pipeline projects and decisions taken to progress projects with secured funding and pausing others temporarily.

Outlook for 2021

The risk will be managed and contained throughout 2021 through:

· Continued close monitoring and executive oversight of our construction projects timelines and costs.

· Regular meetings with our key contractors to identify and tackle approaching issues which could impact the overall cost, targeted delivery schedule or the expected quality standards.

TECHNOLOGY AND INFORMATION SECURITY

 

Cyber Security Incident

The Group could be subject to a serious cyber attack resulting in significant disruption to operations and financial loss from falling revenues, cost of recovery and significant fines in the event of a related data breach.

The presence of effective technical controls and team member awareness programmes remained essential this year, with corporate and regional teams switching to remote working and an increased threat from email phishing attacks.

Strategic objectives under threat:

6.  Consistently deliver the refreshed intended guest experience across our properties

7.  Maintain high operating margins

 

 

Very High

(Increased)

 

 

Established Mitigating Controls

· Email protection and end-point protection and detection controls.

· Network security systems.

· Virtual Private Network (VPN) connections for securing remote connections to the corporate network.

· IT security policies.

· Relocated core technology infrastructure to a third party secure data centre.

· Incident response plans.

Response to COVID-19

· Remote working awareness training rolled out.

· Phishing security tests performed.

Outlook for 2021

Cyber risk remains a significant priority for the business. Projects are ongoing to further strengthen the security of our IT infrastructure and improve employee awareness. Ongoing actions include:

· Continued roll-out of a Network Access Control Solution across all properties.

· Further roll-out of an Identity Access Management tool.

· Review and enhancement of physical security of hardware.

· Updated cyber security awareness online training.

· Third party cyber security testing.

 

Data Privacy Breach

The Group could experience a serious data privacy breach which could result in ICO investigation, significant fines in accordance with the GDPR and subsequent reputational damage.

Strategic objectives under threat:

6  Consistently deliver the refreshed intended guest experience across our properties

7  Maintain high operating margins

 

High

(Unchanged)

 

Established Mitigating Controls

· Information Security and Data Privacy policies.

· Internal awareness communications and training.

· Breach protocols, reporting hotlines for team members and incident response plans.

· Use of third party experts for technical support when necessary.

· Credit card tokenisation with the introduction of a new payment solution.

Outlook for 2021

This risk is inherently very high and will remain an area of focus in 2021. The various technology projects to improve data security coupled with initiatives to improve team member awareness should contain the risk and potentially reduce it. Ongoing action includes:

· Further strengthening of internal communications for greater awareness.

· Enhanced technology controls - see Cyber Security risk.

Technology Resilience

A prolonged failure in our core technology infrastructure could present a significant threat to the continuation of our business operations, particularly where failures impact hotel management and reservation systems.

Strategic objectives under threat:

6  Consistently deliver the refreshed intended guest experience across our properties

7  Maintain high operating margins

 

Medium

(Decreased)

 

Established Mitigating Controls

A significant project has been delivered in 2020 to reduce the threat to the resilience of our core technology.

· Project completed to relocate our core technology infrastructure to a third party secure data centre and build redundancy to provide a robust back-up and recovery solution.

Outlook for 2021

The completion of the data centre project alongside other ongoing projects should see the risk of technology disruption reduce further in 2021. Ongoing actions include:

· Testing the resilience of the new core infrastructure.

· Continued roll-out of converged networks across our hotels.

SAFETY & CONTINUITY

 

 

 

 

 

Operational Disruption

We could experience disruption to our operations from incidents at our hotels or in the immediate vicinity, for example floods, extreme weather, social unrest, terrorism.

We would also be exposed to significant operational disruption from global events such as conflict, environmental disasters or future pandemics.

Hotel closures and lockdowns in all of our regions during the COVID-19 pandemic have been an extreme test of our operational resilience and crisis plans.

This risk remains active due to the dynamic nature of the pandemic and frequently changing government restrictions across our regions.

Strategic objectives under threat:

2.  Optimise the value of the existing portfolio

3.  Extract value from portfolio to fund further growth

6.  Consistently deliver the refreshed intended guest experience across our properties

7.  Maintain high operating margins

 

 

Very High

(Increased)

 

 

Established Mitigating Controls

· Hotel lockdown procedures.

· Hotel crisis plans including crisis communications.

· Business Continuity Plans.

· Contingency in place for critical supplies.

Response to COVID-19

· Cost control measures to reduce impact of closures and reduced capacity, including organisational restructuring.

· Services adapted to continue operations where possible.

· Remote working capabilities for corporate and regional teams, including Central Reservations and Customer Support.

· Close monitoring of key supplier stability and regular communications regarding anticipated demand levels.

· Robust procedures to open up closed hotels upon easing of government measures.

Outlook for 2021

Uncertainty regarding the continued operational disruption from COVID-19 persists, although we would expect the inherent risk level to reduce as vaccine programmes are rolled out across our markets.

We will continue to closely monitor and adapt to the changing nature of the COVID-19 pandemic. Ongoing actions include:

· Continued project for ensuring hotels are operating as efficiently as possible and in line with government guidance while offering guests the best possible experience.

· Regular updates of the open/closed scenario analysis, to support informed decision-making.

· Building on lessons learned from the COVID-19 pandemic to review and enhance existing Business Continuity and Crisis Plans.

 

Serious Health, Safety and Security Incidents

The Group could experience significant health and safety, food safety or physical security incidents.

A failure to take reasonable steps to prevent such incidents, or a failure to respond appropriately, could impact our reputation, disrupt our operations and result in significant loss of guest, team member and stakeholder confidence.

Note that this year we have merged both the Physical Security and Safety and Food Safety risks under a single Principal risk heading.

Strategic objectives under threat:

6.  Consistently deliver the refreshed intended guest experience across our properties

7.  Maintain high operating margins

 

Medium

(Unchanged)

 

Established Mitigating Controls

· Regular risk assessments.

· Security and fire safety procedures.

· Health & safety audit programmes.

· In-house and supplier food safety audit programme.

· Team member training programmes.

· Incident reporting.

· Hotel crisis plans.

Response to COVID-19

· 'Reassuring Moments' and 'be bold. be creative. be safe' programmes.

· Regular COVID-19 related Health & Safety audits and SGS accreditation for cleanliness and disinfection.

· Technology for temperature checking introduced within our hotels and corporate offices.

· COVID-19 incident protocol and centralised tracking of identified cases.

· Mental health and well-being training.

· Adapted security measures introduced for closed hotels.

Outlook for 2021

The actions taken during the COVID-19 pandemic to mitigate this risk will continue and where necessary be adapted to respond to any regulatory changes in 2021:

· Planning for health & safety requirements of national or regional tiered COVID-19 restrictions and reacting to future changes.

· Continuation of enhanced health & safety programmes.

· Roll-out of enhanced system for centralised incident reporting.

PEOPLE

 

 

 

 

Principal Risk Description

 

Risk Priority

 

Risk Response and Outlook for 2021

Decline in employee engagement and difficulty in retaining or attracting talent

The significant restructuring activity during the COVID-19 pandemic, along with enforced remote working and the need to furlough team members in the UK, is likely to have affected employee engagement negatively.

This could lead to increased difficulty in recruiting and retaining team members which would be detrimental to our recovery from the COVID-19 pandemic.

New barriers to entry for European workers, following Brexit, further exacerbates this threat by reducing the available labour pool in the UK.

Strategic objectives under threat:

6  Consistently deliver the refreshed intended guest experience across our properties

7  Maintain high operating margins

 

Very High

(Increased)

 

Established Mitigating Controls

· Recruitment and talent management strategy and processes.

· Employee engagement initiatives.

· Regular internal communications.

· Learning & development strategy.

Response to COVID-19

· Re-connect and Re-create programmes designed to re-engage and support team members following periods of lockdown.

· Increased focus on emotional well-being of team members and the impact of significant change on mental health.

· Regular communications and updates to remote working and furloughed team members.

· Development of online learning.

· Introduction of pulse survey to measure engagement and well-being.

· Introduction of COVID-19 related policies and procedures.

Outlook for 2021

This risk remains a high priority following the significant restructuring and disruption caused by the COVID-19 pandemic. The reduction in workforce during 2020 necessitates a greater focus on mitigating the risk around the retention of knowledge and experience within the business.

We will take various actions to meet the challenge of retaining employees and recruiting new team members, to scale back up as the business recovers from the COVID-19 pandemic, including:

· Continuation of Re-connect and Re-create programmes.

· Continued focus on employee well-being.

· Finalising new career site and Applicant Tracking System in readiness for scaling-up.

· Re-engagement activities with Hotel Schools.

· Different sourcing strategies available to include volume recruitment.

· Enhanced digital performance and development process to increase engagement and identifying development needs.

· Leadership Development available to drive change.

· Continuation of We are Creators - culture programme.

Development of in-house training content for the new Learning Management System.

· Introduce enhanced Talent Management strategy and technology to ensure full visibility of talent and succession planning.

· New set up of Annual Engagement Survey - Climate Analysis.

 

 

 

DIRECTORS' RESPONSIBILITY STATEMENT

 

Each of the directors named on pages 84 and 85 of the Annual Report and Accounts 2020, save for Nigel Jones and Dawn Morgan who were no longer Directors as of the time.

 

of the publication, confirms to the best of his or her knowledge that:

 

(i) the consolidated financial statements, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit and loss of the Company and the undertakings included in the consolidation taken as a whole; and

 

(ii) the Strategic Report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face, and provides information necessary for shareholders to assess the Company's performance, business model and strategies.

 

The Directors consider that the Annual Report and Accounts, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

 

· Eli Papouchado

· Boris Ivesha

· Daniel Kos

· Kevin McAuliffe

· Nigel Keen

· Kenneth Bradley

· Stephanie Coxon

 

 

Signed on behalf of the Board by

 

Boris Ivesha, President & Chief Executive Officer

Daniel Kos, Chief Financial Officer & Executive Director

 

1 March 2021

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