8 Jun 2012 07:00
PEEL HOTELS PLC
PRELIMINARY ANNOUNCEMENT
Derived from audited results for Financial Year Ended 5 February 2012.
Highlights
·; Turnover down 4% to £14,647,126 (2011: £15,263,682)
·; Profit before interest down 54% to £598,396 (2011: £1,298,676)
·; EBITDA down 29.4% to £1,557,655 (2011: £2,334,892)
·; Net debt decreased £600,163
·; Loss before tax of £227,802
·; Earnings per share basic and diluted 0.01p (2011: 3.6p)
2011/2012 was the toughest encountered in the Company's history with sales down, margins under pressure and energy costs rising rapidly. In spite of the weak results net debt decreased £600,163. In the first quarter of 2012/2013 we have been encouraged by sales growth of 5.1% but continue the struggle of containing costs against inflationary pressure.
Robert Peel
Chairman
0207 286 6823
Press Enquiries
Peel Hunt Ltd / Capel Irwin
0207 418 8907
CHAIRMAN'S STATEMENT
RESULTS
2011/2012 Financial Year was the toughest encountered thus far in the Group's history. We were never going to be able to claw back the additional 2.5% Value Added Tax and this together with severe discounting in the provinces, cut backs in Government spending, increased energy costs and the disproportionate costs in relation to a Rent Review at the Crown and Mitre Hotel in Carlisle, have resulted in reporting a pre-tax Loss of £227,802.
Like for like hotel revenues fell by 4% to £14,647,126 (2011: £15,263,682) and like for like hotel profits after depreciation and before Group administration costs decreased by 24.5% to £2,258,536 (2011: £2,992,613). REVPAR (accommodation revenue per available bedroom) decreased by 1.8% in the year with occupancy down 1.9% and average room rate up 0.1%.
The pre-tax result before profit on disposal of a staff house in Wallingford, and the fair value movement on the swap was a Loss of £586,375 (2011: Profit £61,699).Tax has been provided at a rate of 26%, less the discount on deferred tax liabilities, giving an effective rate of 25% less allowances and producing a credit of £229,590. Earnings per share on basic and diluted basis were 0.01p (2011: 3.6p).
In view of the very high operational gearing of hotels a comparatively modest decline in turnover translates into a substantial decline in profitability. This was compounded in the year through our inability to achieve the normal margins of profit on our food and liquor sales, in simple terms we were unable to pass on the substantial increases in the cost of food and liquor products.
FINANCE
As at 5 February 2012 net debt stood at £12,843,559 representing loans totalling £11,973,659 and an overdraft of £912,429 less £42,529 cash at bank. Gearing on Shareholders' funds was 58.8% with interest covered 0.4 times. Net debt decreased by £600,163 compared with the previous year. Shareholders should note that in spite of disappointing trading results and an onerous fixed interest swap at 5.83% plus margin of 2.5% on the majority of our debt we have managed to decrease our overall debt level over the last two years by £1,916,010.
We sold 21/23 The High Street, the staff house for the George Hotel in Wallingford, for a consideration of £470,000 giving rise to a profit of £232,766 and the proceeds from this disposal were used to make additional payments of part of the Group's bank loan over and above the semi-annual repayment instalments of £223,000.
The cost of buying out our swap at the year-end was £806,441 and the Board's view is still that it would make little economic sense. However they continue to monitor the situation closely. In any event the cost of buying out the swap will lessen as we approach the maturity of the swap on 11 April 2014.
CAPITAL EXPENDITURE
£568,441 was spent in the year and, as has been mentioned in previous Reports, expenditure has been slowed down but not to a point that would jeopardise our strategy of improving Automobile Association Product and Service Percentages on each Property each year.
Apart from the total renovation of the swimming pool and leisure facilities at the Crown and Mitre Hotel in Carlisle the majority of the capital expenditure was spent on upgrading bedrooms at the Bull Hotel in Peterborough, the Midland Hotel in Bradford, the Crown and Mitre in Carlisle and the King Malcolm in Dunfermline.
In addition to such capital expenditure a further £541,381 (2011: £570,154) was expensed in the year on repairs and renewals which clearly demonstrates our commitment to maintaining and improving the quality of our Estate.
SHAREHOLDERS
Regrettably we are still unable to recommend a dividend for the year ended 5 February 2012.
We are always delighted to welcome Shareholders to our Hotels where they can see for themselves the progress we continue to make, whilst enjoying a beneficial discount. The discount for Shareholders is 50% of our rack rate tariff using the special reservations number 0207 266 1100 or e-mail info@peelhotel.com. Shareholders can also keep in touch with progress in the Group and various promotional activities by visiting our website www.peelhotels.co.uk.
THE FUTURE
The first quarter of the new financial year has been encouraging with sales growth of 5.1% and we believe there is a degree of optimism, that in provincial terms, the 'bottom of the cycle' has been reached. However we need to contain our costs against inflationary pressures in order to improve our profits in the current year and thereby gradually getting into a position that will enable us to return to paying dividends to our Shareholders.
The fact that we have maintained the quality of our product and not been tempted to slash staff costs throughout the recession, we believe, will stand us in good stead going forward to increase market share and drive our sales growth.
Robert Peel
Chairman
8 June 2012
Group Statement of Comprehensive Income
for the year ended 5 February 2012
2012 | 2011 | ||||||
£ | £ | ||||||
Revenue |
| 14,647,126 | 15,263,682 | ||||
Cost of sales | (12,388,590) | (12,271,069) | |||||
Gross profit | 2,258,536 | 2,992,613 | |||||
Administration expenses | (700,881) | (657,721) | |||||
Depreciation | (1,192,025) | (1,239,991) | |||||
Operating profit | 365,630 | 1,094,901 | |||||
Profit on disposal of property | 232,766 | 203,775 | |||||
Finance income | 21 | 406 | |||||
Finance expense | (952,026) | (1,033,608) | |||||
Fair value movement on derivative | 125,807 | 289,855 | |||||
(Loss)/profit before tax | (227,802) | 555,329 | |||||
Income tax | 229,590 | (55,351) | |||||
Profit and total comprehensive income for the period attributable to owners | 1,788 | 499,978 | |||||
Earnings per share | |||||||
Basic & diluted (pence) | 0.01 | 3.6 | |||||
Group statement of changes in equity
for the years ended 5 February 2012
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Year ended 5 February 2012 | Share Capital | Share premium account | Profit and loss account | Total |
£ | £ | £ | £ | |
Balance brought forward at 7 February 2011 | 1,401,213 | 9,743,495 | 10,902,946 | 22,047,654 |
Employee share options | - | - | - | - |
Transactions with owners | - | - | - | - |
Profit and total comprehensive income for the period | - | - | 1,788 | 1,788 |
Balance at 5 February 2012 | 1,401,213 | 9,743,495 | 10,904,734 | 22,049,442 |
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Year ended 6 February 2011 | Share Capital | Share premium account | Profit and loss account | Total |
£ | £ | £ | £ | |
Balance brought forward at 8 February 2010 |
1,401,213 |
9,743,495 | 10,401,199 | 21,545,907 |
Employee share options | - | - | 1,769 | 1,769 |
Transactions with owners | - | - | 1,769 | 1,769 |
Profit and total comprehensive income for the period |
- | - | 499,978 | 499,978 |
Balance at 6 February 2011 | 1,401,213 | 9,743,495 | 10,902,946 | 22,047,654 |
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Group Balance Sheet
at 5 February 2012
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| 2012 | 2011 |
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| £ | £ |
Assets |
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Non-current assets |
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Property, plant and equipment |
| 37,735,319 | 38,583,903 |
Deferred tax asset |
| 201,610 | 251,707 |
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Total non-current assets |
| 37,936,929 | 38,835,610 |
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Current assets |
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Inventories |
| 102,306 | 106,788 |
Trade and other receivables |
| 1,215,163 | 1,244,761 |
Current tax asset |
| 39,537 | - |
Cash at bank and in hand |
| 42,529 | 111,186 |
Total current assets |
| 1,399,535 | 1,462,735 |
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Total assets |
| 39,336,464 | 40,298,345 |
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Equity and liabilities |
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Equity attributable to owners of the parent |
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Share capital |
| 1,401,213 | 1,401,213 |
Share premium |
| 9,743,495 | 9,743,495 |
Retained earnings |
| 10,904,734 | 10,902,946 |
Total equity |
| 22,049,442 | 22,047,654 |
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Liabilities |
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Non-current |
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Borrowings (due after one year) |
| 9,762,605 | 10,663,422 |
Deferred tax liabilities Derivative financial instruments |
| 1,417,523 483,865 | 1,618,568 665,892 |
Non-current liabilities |
| 11,663,993 | 12,947,882 |
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Current |
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Trade and other payables |
| 2,176,970 | 2,023,531 |
Borrowings (due within one year) |
| 3,123,483 | 2,891,486 |
Current tax liabilities |
| - | 121,436 |
Derivative financial instruments |
| 322,576 | 266,356 |
Current Liabilities |
| 5,623,029 | 5,302,809 |
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Total liabilities and equity |
| 39,336,464 | 40,298,345 |
Group Cash Flow Statement
for the year ended 5 February 2012
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| 2012 | 2011 | |
| £ | £ | |
Cash flows from operating activities | |||
Profit for the year | 1,788 | 499,978 | |
Adjustments for: | |||
Equity settled share-based payment expenses | - | 1,769 | |
Financial income | (21) | (406) | |
Financial expense | 952,026 | 1,033,608 | |
Fair value movement on derivative | (125,807) | (289,855) | |
Income tax income | (229,590) | 55,351 | |
Profit on sale of property | (232,766) | (203,775) | |
Depreciation | 1,192,025 | 1,239,991 | |
1,557,655 | 2,336,661 | ||
Operating profit before changes in working capital and provisions | |||
UK corporation tax (received)/paid | (82,331) | 100,706 | |
Decrease/(increase) in trade and other receivables | 13,770 | (68,504) | |
Increase in trade and other payables | 190,200 | 109,360 | |
Decrease in inventories | 4,482 | 6,052 | |
Net cash from operating activities | 1,683,776 | 2,484,275 | |
Cash flows from investing activities | |||
Interest paid | (1,004,935) | (1,063,907) | |
Acquisition of property, plant and equipment | (568,441) | (515,102) | |
Sale of property, plant and equipment | 462,927 | 408,776 | |
Net cash from investing activities | (1,110,449) | (1,170,233) | |
Cash flows from financing activities | |||
New loans | 300,000 | 500,000 | |
Loan repayments | (908,981) | (861,105) | |
Net cash from financing activities | (608,981) | (361,105) | |
Net (decrease)/increase in cash and cash equivalents | (35,654) | 952,937 | |
Cash and cash equivalents at the beginning of the period | (834,246) | (1,787,183) | |
Cash and cash equivalents at the end of the period | (869,900) | (834,246) | |
For the purposes of the cash flow statement, cash and cash equivalents comprise: | |||
Cash and bank balances | 42,529 | 111,186 | |
Bank overdrafts | (912,429) | (945,432) | |
Notes
(forming part of the financial statements)
1 Basis of preparation
The financial statements, from which this preliminary announcement has been extracted, have been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the EU ("Adopted IFRSs"). The financial statements have been prepared under the historical cost convention, except for derivative financial instruments which are included at their fair value.The IFRS accounting policies have been applied consistently to all periods presented in these financial statements. The financial statements are presented in sterling. 2 Publication of non-statutory financial statements
The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006.The group statement of comprehensive income, the group statement of changes in equity, the group balance sheet and the group cash flow statement have been extracted from the Group's financial statements for the year ended 5 February 2012 upon which the auditors' opinion is unqualified and does not include any statement under section 498(2) or 498(3) of the Companies Act 2006. Those financial statements have not yet been delivered to the Registrar.
3 Earnings per share
Basic earnings per share
The calculation of basic earnings per share at 5 February 2012 was based on the profit attributable to ordinary shareholders of £1,788 (2011: £499,978) and a weighted average number of ordinary shares outstanding of 14,012,123 (2011: 14,012,123). No shares were issued in 2012 or 2011.
Diluted earnings per share
There were no potentially dilutive options in issue in 2012 and 2011 and consequently there is no difference between basic and diluted earnings per share.