Peel Hotels Regulatory News (PHO)

9 Oct 2007 07:00

Peel Hotels PLC09 October 2007 PEEL HOTELS PLC Interim Results--------------------- For the 28 weeks ended 26 August 2007 # Operating Profit up 11% to £1,378,888 (2006:£1,244,743) # Profit before tax up 45% to £755,226 (2006:£521,180) # Earnings per share Basic 4.4p + 46.6% (2006 : 3.0p) Diluted 4.1p + 41.4% (2006 : 2.9p) # Sale of Avon Gorge Hotel for £15,500,000 # Contracts exchanged for £2,000,000 for sale of Salem Street site, Bradford # Acquisition of the Head Lease and two small freeholds of the Bull Hotel inPeterborough for a consideration of £2,350,000 # Conditional Heads of Terms agreed for 25 year lease of the basement of theMidland Hotel, Bradford to Clermont Leisure (UK) Limited, who have successfullygained a gaming licence for the Hotel # Interim dividend of 2.0p per share (2006- Nil) Chairman Robert Peel said: "We have shown encouraging progress in the period.The net effect of our asset sales and lease acquisition, apart from asignificant capital gain from the former, will be to leave the Company totallydebt free going forward." Nominated AdviserKBC Peel Hunt Ltd - David Davies 020 7418 8900 CHAIRMAN'S STATEMENT RESULTS In the twenty eight weeks to 26 August 2007 turnover grew by 1% to £8,763,974and operating profit increased by 11% to £1,378,888. Profit before tax increasedby 45% to £755,226 reflecting better comparative energy costs in the period,less overall debt due to the sale of Aire House in Leeds in October 2006 for£2,050,000 and the benefit of the Cap on £7 million of our debt. The comparative sales increase from our Hotels was 2.2% and accommodationrevenue per available room (revpar) increased by 4.2% with occupancy up 1.7% andaverage room rate up 2.3%. Gross profit on Hotels increased 9.3% with return onsales improving from 25.6% to 28.0% illustrating the benefit of cost savings inthe period. All the Hotels performed well in the period with the exception ofthe Strathdon in Nottingham which made a gross loss of £108,928. Group overheads increased 10.7% (amounting to £43,944) and depreciation andamortisation increased 5.4% (amounting to £31,892). Tax has been provided at 30%, less the discount on the deferred tax liabilities,giving an effective rate of 25%. Basic earnings per share were 4.4p comparedwith 3.0p in the comparative period on a weighted average 12,912,123 shares inissue. 55,000 employee share options were exercised in the period. POST BALANCE SHEET EVENTS On 30 August 2007 the Company announced that the Avon Gorge Hotel in Bristoltogether with the associated staff house at 10, Caledonia Place had been soldfor an aggregate consideration of £15,500,000 in cash, paid on 3 September 2007.In view of the ongoing need for considerable reinvestment on the property andthe attractive price offered, your Board felt they had no option other than toagree to sell the Hotel. The Company announced on the same day that it had reached agreement on 24 August2007 to sell the freehold of three quarters of an acre of land with planningpermission for 99 apartments, office space and associated car parking at itsSalem Street site in Bradford for a consideration of £2,000,000 with completionon 26 November 2007. On 4 September 2007 the Company exchanged contracts to purchase the head leaseand two small freeholds of the Bull Hotel in Peterborough for £2,350,000 thussaving the current rent payable of £211,540 per annum less £32,465 rent to theLandlord. On 14 September 2007 Clermont Leisure (UK) Limited gained council approval for agaming licence at the Midland Hotel in Bradford. The Company has agreedconditional heads of terms, for a twenty five year lease to rent the basement ofthe property, whereby Clermont Leisure (UK) Limited will make a significantinvestment in the construction of the new Casino. The Company expect to report not less than £8,500,000 profit on disposal ofproperty for the year ending 10 February 2008. FINANCE On 26 August net debt stood at £15,387,609 representing loans totalling£15,057,639 and an overdraft of £843,672 less £513,702 cash at bank. Gearing onshareholders' funds was 93.2% with interest covered 2.2 times. Net debtincreased £118,426 compared with the previous year end. In simple terms, the net effect of the asset sales, apart from significantcapital profit, will be to leave the Company totally debt free going forward. Anorderly repayment of various loans is underway and we are currently reviewingoptions with regard to the unwinding of either one or two of our financialinstruments or keeping a proportion of funds on deposit with a view tominimising borrowing costs. The Board has decided to pay an interim dividend of 2p amounting to £258,243 on23 November 2007. We expect the total annual dividends to exceed 5p that waspaid last year. CAPITAL EXPENDITURE £731,838 was spent in the period of which £216,292 was on the Avon Gorge Hotelmainly on renovating the outside of the building. Further external renovationworks have been undertaken at the Midland Hotel in Bradford. We have renovated 15 of the 68 bedrooms at the Strathdon Hotel in Nottingham toa high standard. Bedroom improvements have continued at the Crown and MitreHotel in Carlisle and have started at the Caledonian Hotel in Newcastle. TheBallroom at the King Malcolm in Dunfermline has been totally refurbished. In line with our strategy of making all our Hotels more accessible for all, newbedrooms for the disabled have been constructed at the Caledonian in Newcastle,the Strathdon in Nottingham and the Golden Lion in Leeds. Improved wheelchairaccess to all our properties, together with first class bedrooms for thephysically challenged, remains a top priority. NON-CORE ASSETS We have achieved our plan to dispose of Salem Street (subject to successfulcompletion) and we are currently awaiting planning permission for fiveapartments in our staff house on Grosvenor Place in Jesmond, Newcastle which,when received, will enable us either to rent or sell this property. SHAREHOLDERS We urge all Shareholders to visit our Hotels and see for themselves the majorimprovements we are making to the portfolio each year and to take advantage ofour Shareholders' discount scheme. All Shareholders are entitled to a 30%discount, using the special reservation number, 0207 266 1100 or e-mailinfo@peelhotel.com. Shareholders might like to visit our new websitewww.peelhotels.co.uk THE FUTURE The sale of the Avon Gorge Hotel, after the half year end, for £15,500,000 andSalem Street, for £2,000,000, has effectively left the Company with no debt, netof the acquisition of the head lease of the Bull Hotel in Peterborough. TheBoard believes that the Company is in a strong position going forward toconsider the merits of expansion dependent upon beneficial market conditions. There is still considerable scope to improve the overall performance and marketpositioning of the eight Hotels in the Portfolio which will self-fund capitalimprovements and deliver to Shareholders a progressive dividend policy. Robert Peel9 October 2007 DIRECTORS AND ADVISORS Directors Robert Edmund Guy Peel Executive Chairman Clement John Govett Non-executive Director Keith Peter Benham Non-executive Director Norbert Paul Gottfried Petersen Chief Operating Officer SecretarySabretooth Law Ltd1 Berkeley Street, Mayfair, London W1J 8DJ Registered Office4th Floor, 111 Old Broad Street, London EC2N 1PH Company registration number 3473990 AuditorGrant Thornton UK LLPNo 1 Whitehall Riverside, Leeds, LS1 4BN BankersRoyal Bank of Scotland Plc280 Bishopsgate, London EC2M 4RB RegistrarsComputershare Services PlcPO Box No. 82, The Pavilions, Bridgwater Road, Bristol BS99 7NH SolicitorsSabretooth Law Ltd1 Berkeley Street, Mayfair, London W1J 8DJ Davidson Webber SolicitorsRoyal House, 110 Station Parade, Harrogate HG1 1EP StockbrokersKBC Peel Hunt Ltd4th Floor, 111 Old Broad Street, London EC2N 1PH PROFIT AND LOSS ACCOUNT For the period ended 26 August 2007 28 weeks 28 weeks Year ended ended ended 26/8/2007 27/8/2006 11/2/2007 Unaudited Unaudited Audited Note £ £ £ £ £ £----------------- ----- ------- -------- ------- -------- -------- --------Turnover 8,763,974 8,687,161 15,919,976Cost of Sales (6,307,610) (6,440,778) (12,049,329)----------------- ----- ------- -------- ------- -------- -------- -------- Gross profit 2,456,364 2,246,383 3,870,647----------------- ----- ------- -------- ------- -------- -------- --------Administrativeexpenses Depreciation (621,516) (589,624) (1,133,957)Other (455,960) (412,016) (742,857) (1,007,476) (1,001,640) (1,876,814)Operating profit 1,378,888 1,244,743 1,993,833Profit on disposalof - - 850,000propertyInterest payable (623,662) (723,563) (1,280,713)& similar charges----------------- ----- ------- -------- ------- -------- -------- --------Profit on ordinaryactivitiesbefore taxation 755,226 521,180 1,563,120Taxation 2 (188,806) (130,295) (299,000)----------------- ----- ------- -------- ------- -------- -------- --------Profit on ordinaryactivities aftertaxation 566,420 390,885 1,264,120----------------- ----- ------- -------- ------- -------- -------- --------Earnings per share 3Basic 4.4p 3.0p 9.8pDiluted 4.1p 2.9p 9.3p----------------- ----- ------- -------- ------- -------- -------- -------- There are no recognised gains and losses other than stated above. Accordingly,no statement of total recognised gains and losses is given. BALANCE SHEET AS AT 26 AUGUST 2007 26/8/2007 27/8/2006 11/2/2007 Unaudited Unaudited Audited Note £ £ £-------------------- ------------- ------------- -------------Fixed assets 34,858,166 36,030,457 34,747,844Tangible assets-------------------- ------------- ------------- -------------Current assetsStocks 123,773 126,416 116,581Debtors 1,295,384 1,096,658 1,052,859Cash at bank and in hand 513,702 237,720 158,530-------------------- ------------- ------------- ------------- 1,932,859 1,460,794 1,327,970Creditors (due within one year) (4,292,896) (3,967,387) (3,206,767)-------------------- ------------- ------------- -------------Net current liabilities (2,360,037) (2,506,593) (1,878,797)-------------------- ------------- ------------- -------------Total assets less currentliabilities 32,498,129 33,523,864 32,869,047Creditors (due after one year) (14,315,369) (16,268,427) (14,670,677)Provisions for liabilities andcharges (1,664,102) (1,630,492) (1,664,102)-------------------- ------------- ------------- -------------Total assets 16,518,658 15,624,945 16,534,268-------------------- ------------- ------------- ------------- Capital and reserves Called up share capital 1,291,213 1,284,412 1,285,713Share premium account 9,111,995 9,058,876 9,068,950Profit and loss account 6,115,450 5,281,657 6,179,605-------------------- ------------- ------------- -------------Equity shareholders' funds 4 16,518,658 15,624,945 16,534,268-------------------- ------------- ------------- ------------- CASH FLOW STATEMENT For the period ended 26 August 2007 28 weeks 28 weeks Year ended ended ended 26/8/2007 27/8/2006 11/2/2007 Unaudited Unaudited Audited Note £ £ £ £ £ £------------------ ------ -------- -------- -------- -------- -------- --------Net cash inflowfromoperating 5 1,785,736 2,051,459 3,239,888activitiesReturns oninvestmentsand servicing offinanceInterest paid (562,186) (766,860) (1,319,704) -------- -------- --------Net cash outflowfromreturns oninvestmentsand servicing offinance (562,186) (766,860) (1,319,704) Taxation UK corporation taxpaid - - (107,482) -------- --------Tax paid - - (107,482) Capital expenditure -------- -------- --------Purchase oftangible (731,838) (1,099,612) (1,469,168)fixed assetsSale of tangiblefixed assets - - 2,050,000 -------- -------- --------Net cash outflowfrom capitalexpenditure (731,838) (1,099,612) 580,832Equity dividendspaid (642,856) (608,576) (608,576) -------- -------- --------Net cash outflowbefore Financing (151,144) (423,589) 1,784,958------------------ ------ -------- -------- -------- -------- -------- --------Financing 48,545 28,930 40,305Issue of ordinaryshare capitalNew long term loans - 400,000 400,000Less loanarrangement fees - - (4,000)Loan repayments - (125,000) (2,107,945) -------- -------- --------Net cash inflowfrom financing 48,545 303,930 (1,671,640)------------------ ------ -------- -------- -------- -------- -------- --------(Decrease)/increasein cash 6 (102,599) (119,659) 113,318------------------ ------ -------- -------- -------- -------- -------- -------- Reconciliation ofnet debt(Decrease)/increasein cash in theperiod (102,599) (119,659) 113,318Cash inflow fromincrease in debt - (275,000) 1,707,945 -------- -------- --------Change in net debtresulting fromcashflows (102,599) (394,659) 1,821,263Non cash changes (15,827) (11,599) (25,659) -------- -------- --------Increase in netdebt (118,426) (406,258) 1,795,604in the periodNet debt atbeginning of period (15,269,183) (17,064,787) (17,064,787)------------------ ------ -------- -------- -------- -------- -------- --------Net debt at end ofperiod 6 (15,387,609) (17,471,045) (15,269,183)------------------ ------ -------- -------- -------- -------- -------- -------- NOTES TO THE INTERIM ACCOUNTS For the period ended 26 August 2007 1. Basis of accounting The interim financial information has been prepared on the basis of theaccounting policies consistent with those applied in the last Annual Report. The financial information set out in respect of the year ended 11 February 2007does not constitute the company's statutory accounts for that year but isderived from those accounts. Statutory accounts for that year have beendelivered to the Registrar of Companies. The auditor reported on those accountsand their report was unqualified. The interim financial statements have beenreviewed by the company's auditor and a copy of the auditor's review report isattached to this interim report. 2. Taxation Tax has been provided at a rate of 25% which represents the expected effectiverate for the full year. The company has continued to discount its deferred taxliability. 3. Earnings per share Earnings per share are based on the profit after taxation, and on the weightedaverage number of shares in issue during the period. ------------------------- --------- --------- -------- 28 weeks 28 weeks Year ended ended ended 11/2/2007 26/8/2007 27/8/2006 Audited Unaudited Unaudited------------------------- --------- --------- --------Average No. shares - Basic 12,863,271 12,828,035 12,831,222 - Diluted 13,667,016 13,431,446 13,512,236------------------------- --------- --------- -------- 4. Reconciliation of movements in shareholders' funds ------------------------- --------- --------- -------- 28 weeks 28 weeks Year ended ended ended 11/2/2007 26/8/2007 27/8/2006 Audited Unaudited Unaudited------------------------- --------- --------- --------Profit for the period 566,420 390,885 1,264,120Dividends paid relating to previousyear (642,856) (608,576) (608,576)Issue of shares less expenses 48,545 28,930 40,305Recognition of equity-settled sharebased payments 12,281 - 24,713------------------------- --------- --------- --------Net (decrease)/ increase inshareholders' funds (15,610) (188,761) 720,562 ----------- ---------Shareholders' funds at 11/02/07 16,534,268 15,813,706 15,813,706------------------------- --------- --------- --------Shareholders' funds at 26/08/07 16,518,658 15,624,945 16,534,268------------------------- --------- --------- -------- 5.Reconciliation of operating profit to net cash inflow from operatingactivities ------------------------- --------- --------- -------- 28 weeks 28 weeks Year ended ended ended 11/2/2007 26/8/2007 27/8/2006 Audited Unaudited Unaudited £ &------------------------- --------- --------- --------Operating profit 1,378,888 1,244,743 1,993,833Depreciation 621,516 589,624 1,133,957Recognition of equity-settled share basedpayments 12,281 - 24,713(Increase)/decrease in stocks (7,192) (9,419) 416Increase in debtors (242,525) (131,089) (86,795) ----------- ----------Increase in creditors 22,768 357,600 173,764------------------------- --------- --------- --------Net cash inflow from operating activities 1,785,736 2,051,459 3,239,888------------------------- --------- --------- -------- NOTES TO THE INTERIM ACCOUNTSFor the period ended 26 August 2007 6. Analysis of net debt At beginning At end of period Non cash of period 12/2/2007 Cash flow changes 26/8/2007 £ £ £-------------- --------- --------- --------- -----------Cash at bank and in hand 158,530 355,172 - 513,702Bank overdraft (385,901) (457,771) - (843,672)-------------- --------- --------- --------- ----------- (227,371) (102,599) - (329,970) Debt due within one year (371,135) (371,135) - (742,270)Debt due after one year (14,670,677) 371,135 (15,827) (14,315,369)-------------- --------- --------- --------- -----------Total (15,269,183) (102,599) (15,827) (15,387,609)-------------- --------- --------- --------- ----------- 7. Financing The original bank loan is repayable by semi-annual instalments plus a finalpayment on 11 April 2014. Interest is charged at 1.25% over LIBOR. The Companyhas entered into a collar agreement on £7 million which caps the Companyinterest cost at 6.99% plus margin of 1.25%. The minimum interest cost is 4.99%plus margin of 1.25%, up to 12 October 2009, except when LIBOR is below 4.99%between 24 June 2003 and 12 October 2009, in which case an additional 2% ofinterest is payable. The Company has entered into a GBP roller coaster callable interest rate swapagreement which commenced on 11 April 2003 and ends on 11 April 2014 with anoption for the Royal Bank of Scotland to terminate the agreement from 11 October2009. Under the terms of this agreement the Company fixes its interest paymentsup to 11 April 2014 on outstanding loan balances which are not covered by thecollar agreement. The fixed interest swap requires the company to pay 5.83% onthese amounts and therefore effectively fixes its borrowing costs on thisportion of its debt portfolio at 7.08% (after inclusion of the 1.25% margin). A loan of £2.5 million was taken to part fund the acquisition of the 3 hotels inthe year ended 12 February 2006. This is repayable over 10 years by semi-annualinstalments. Interest is charged at 1.25% over LIBOR. The loans and overdraft are secured by debentures dated 7 December 1998, 8September 1999, 21 June 2002 and 17 May 2005 over all of the Company's freeholdand long leasehold properties. A new loan of £400,000 was taken out last year to finance the redevelopment ofthe Princes Ballroom at the Midland Hotel, Bradford. Interest is charged at1.25% over LIBOR. On 5 September 2007 the company repaid the £400,000 loan and the £2.0 millionoutstanding balance of the £2.5 million loan. On 5 September 2007 the company also settled future loan repayments on theoriginal loan for the financial years 2007/08 and 2008/09, totalling £1,722,945. INDEPENDENT REVIEW REPORT TOPEEL HOTELS PLC Introduction We have been instructed by the Company to review the financial information forthe 28 weeks ended 26 August 2007 which comprises the profit and loss account,the balance sheet, the cash flow statement, the reconciliation of net debt andthe related notes 1 to 7. We have read the other information contained in theinterim report and considered whether it contains any apparent misstatements ormaterial inconsistencies with the financial information. Our responsibilities donot extend to any other information. This report is made solely to the Company's members, as a body, in accordancewith guidance contained in APB Bulletin 1999/4 "Review of Interim FinancialInformation". Our review work has been undertaken so that we might state to theCompany's members those matters we are required to state to them in a reviewreport and for no other purpose. To the fullest extent permitted by law, we donot accept or assume responsibility to anyone other than the Company and theCompany's members, as a body, for our review work, for this report, or for theconclusions we have formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. They areresponsible for preparing the interim report and ensuring that the accountingpolicies and presentation applied to the interim figures are consistent withthose applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4"Review of Interim Financial Information" issued by the Auditing Practices Boardfor use in the United Kingdom. A review consists principally of making enquiriesof management and applying analytical procedures to the financial informationand underlying financial data and, based thereon, assessing whether theaccounting policies and presentation have been consistently applied unlessotherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance withInternational Standards on Auditing (UK and Ireland) and therefore provides alower level of assurance than an audit. Accordingly, we do not express an auditopinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the 28 weeks ended26 August 2007. Grant Thornton UK LLPChartered AccountantsLeeds9 October 2007 HOTEL DIRECTORY PEEL HOTELS PLC 19 Warwick Avenue London W9 2PS Telephone: 020 7266 1100 FAX: 020 7289 5746 Location Hotel Rating Rooms Telephone Facsimile Bradford Midland Hotel **** 90 01274 735735 01274 720003 Carlisle Crown & Mitre Hotel **** 94 01228 525491 01228 514553 Dunfermline King Malcolm Hotel **** 48 01383 722611 01383 730865 Leeds Golden Lion Hotel **** 89 0113 243 6454 0113 242 9327 Newcastle Upon Tyne Caledonian Hotel **** 89 0191 281 7881 0191 281 6241 Nottingham Strathdon Hotel **** 68 0115 941 8501 0115 948 3725 Peterborough Bull Hotel **** 118 01733 561364 01733 557304 Wallingford George Hotel **** 39 01491 836665 01491 825359 635 For reservations at any Peel Hotel call 020 7266 1100 Or dial into our web site on www.peelhotels.co.uk e-mail - info@peelhotel.com This information is provided by RNS The company news service from the London Stock Exchange