Dalata Hotel Gp Regulatory News (DAL)

Covid-19 Update

ISE: DHG LSE: DAL

Dublin, 25 March 2020 | Dalata Hotel Group plc ("Dalata" or "the Group"), the largest hotel operator in Ireland with a growing presence in the United Kingdom, today provides an update in light of the unprecedented Covid-19 situation.

On 9 March 2020, the Company issued a trading update stating that the Group had experienced a significant reduction in bookings and a significant increase in cancellations following the spread of Covid-19 to Europe. Since then, there has been a material acceleration in the rate of contraction across Europe, major public events have been cancelled, travel restrictions introduced and most recently the purpose for which hotels can be used has been redefined by the Irish and UK governments.

Dalata now expects revenue in the quarter ending March 2020 to be down approximately 16% compared to the same period in 2019. The combination of the events noted above has severely impacted our business over the last two weeks, and we expect that to continue for as long as the current restrictions on movement and travel remain.

The Group has significant financial headroom with material cash resources of €80m post disbursement of quarterly rent and interest scheduled to be paid over the next few days. In addition, Dalata can avail of further undrawn committed debt facilities of approximately €65m. The Group has proactively engaged with its banking club and as a result of an amendment to the Group Facilities Agreement, Dalata fully expects to be in compliance with covenants in June 2020. Covenants are measured at the end of June and December each year. Given the uncertainty surrounding the length of the current crisis, and other possible initiatives that may occur, it is too early to predict the financial position at the end of December 2020 at this time. However, the Group believes it is very well positioned with a supportive banking club and the extensive cost mitigation plans in place to withstand a significant decrease in its business during 2020 arising from the Covid-19 pandemic.

The Group has already implemented several measures to mitigate the financial consequences of the impact of Covid-19 and to maintain the Group's strong liquidity. Postponement of uncommitted development capital expenditure and non-essential maintenance capital expenditure for this year will free up additional cash resources of approximately €60m. Total capital expenditure for the remainder of the year will be up to a maximum of €35m. This could reduce further if development projects are delayed due to the impact of restrictions surrounding the Covid-19 outbreak.

In addition, the Group has secured significant savings across all categories of expenditure over the last two weeks and will continue to do so in the coming weeks. The Group notes the revised guidelines issued by the Irish and UK Governments regarding the purposes for which hotels can be operated. Acting in accordance with these guidelines, the Group will temporarily close several of its hotels in Ireland and the UK over the coming days and significantly reduce operating capacity at its remaining hotels. Other initiatives include a combination of reduced working hours for some employees as well as a progressive, temporary reduction of basic salary for those whose hours have not been reduced. The Board has also taken reductions in basic pay and fees. These reductions will be in place for an initial two months and be reviewed on a rolling basis.

Unfortunately, we have also had to temporarily lay off a large number of employees for whom we currently have no work. Dalata welcomes the income support initiatives announced by the Irish and UK Governments in response to the Covid- 19 outbreak. The Group will seek to avail of these schemes and retain the link between these employees and Dalata. These staff members remain part of the Dalata team and the Group looks forward to welcoming them back to work as soon as our business recovers.

Additionally, as a consequence of the uncertain outlook and in order to preserve the Group's liquidity, the Board has decided to withdraw the proposed final dividend of 7.25c per share.

Pat McCann, Chief Executive Officer, Dalata said:

"This is an unprecedented situation, and we are working hard to mitigate the implications for our business. Our primary focus is on protecting our people, protecting our business and protecting our cash. We are looking to share the impact of the current crisis fairly between all stakeholders. The withdrawal of the proposed dividend and the recent fall in the share price is having a significant impact on our shareholders. Our banking club is supporting us through an Amended Facilities Agreement. All our people will suffer income loss through either layoffs, reduced working hours or salary cuts. Likewise, our Board is cutting its remuneration. We will be working with our other stakeholders to examine ways in which we can further protect our financial position in a fair and equitable manner.

Dalata is the strongest player in the Irish hotel market with a management team that has strong experience in managing through other major demand shocks and crises over the last 20 years. While we have never experienced something of the magnitude of the Covid-19 outbreak before, we are well positioned to manage our way through this crisis over the coming months.

Our primary concern continues to be the health and wellbeing of our staff and our guests. Dalata continues to implement and follow the guidelines provided by the health services in Ireland and the UK as well as the World Health Organisation".

About Dalata

Dalata Hotel Group plc was founded in August 2007 and listed as a plc in March 2014. Dalata has a strategy of owning or leasing its hotels and also has a small number of management contracts. The Group's portfolio now consists of 30 owned hotels, 11 leased hotels and three management contracts with a total of 9,211 bedrooms. In addition to this, the Group is currently developing eleven new hotels and has plans to extend two of its existing hotels, with a total of 2,871 bedrooms due to open over the next three years. This will bring the total number of bedrooms in Dalata to over 12,000. For the year ended December 2019, Dalata reported revenue of €429.2 million and a profit after tax of €78.2 million. Dalata is listed on the Main Market of Euronext Dublin (DHG) and the London Stock Exchange (DAL). For further information visit: www.dalatahotelgroup.com.

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