Peel Hotels Announcements

RNS Number : 4121F Peel Hotels PLC 09 October 2008  
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PEEL HOTELS PLC

INTERIM RESULTS

For the 28 weeks ended 24 August 2008 
 

# Profit before tax down 42% to £437,832 (2007:£755,226)
  (The Avon Gorge Hotel was sold on 30 August 2007)

# Profit after tax down 7.9% to £521,430 (2007:£566,420)

# Gearing on shareholders' funds 11.2% with interest covered 4.9 times

# Earnings per share

            Basic       3.8p   (2007: 4.4p)
            Diluted    3.7p    (2007: 4.1p)
# Interim dividend maintained at 2.0p per share (2007: 2.0p).The Board expect the total annual dividends in respect of the current financial year will be no less than the 5.5p paid last year.
Chairman Robert Peel said: "The impact of the huge increase in the cost of energy affects almost everything to do with everyday business life and therefore our domestic market is being challenged and one would expect this to continue for a year or so. In spite of disappointing interim results our revpar is similar to the comparative period and if we can grow this in the full year we will be better able to absorb increased costs. Our overall debt level is low and we are in a good position to take advantage of any beneficial acquisition opportunities should they arise in the future"
9 October 2008

Press Enquiries: 0207 266 1100

Nominated adviser and broker    020 7418 8900
KBC Peel Hunt Ltd.
David Davies
Nicholas Marren

CHAIRMAN'S STATEMENT

RESULTS

In the twenty eight weeks to 24 August 2008 turnover decreased 22.2% to £6,819,298 (2007: £8,763,974 of which £1,758,076 was in respect of the Avon Gorge Hotel which was sold on 30 August 2007) and operating profit decreased 60.2% to £549,180 (2007: £1,378,888 of which £518,274 was in respect of the Avon Gorge Hotel). Profit before tax decreased 42.0% to £437,832 (2007: £755,226).

The decrease in like for like sales from our Hotels in the period was 2.6% with overall costs increasing by 2.7%. However hotel operating profit decreased 26% on a like for like basis clearly illustrating the high operational gearing of a Hotel business. Accommodation revenue per available room (revpar) decreased marginally with occupancy down 4.3% and average room rate up by 4.1%. Return on sales decreased from 18.7% to 14.2%. 

The results have been impacted by combined losses at the Strathdon in Nottingham and the King Malcolm in Dunfermline of £165,826 (2007: £41,076). Energy costs increased to £300,410 from £197,586 and our food and liquor margins have been under pressure through abnormal increases caused either through the high cost of energy or currency fluctuation. It is not generally possible in the current market place to pass these increases on to our guests and under the circumstances we have done well to contain the overall cost base to an increase of 2.8%. However it is disappointing to report these results particularly as we have paid £512,314 lower financial costs in the period.

Group overheads decreased by 11.3% amounting to a saving of £53,678 on the previous year and depreciation and amortisation increased 7.3% amounting to £562,471. 

Tax has been provided at 28% less the discount on the deferred tax liabilities, giving an effective rate of 25%, less an adjustment for prior year capital gains tax. Basic earnings per share were 3.8p compared with 4.4p in the comparative period on a weighted average of 13,852,041 shares in issue (2007: 12,863,271). 114,000 employee share options were exercised in the period.

FINANCE

On 24 August 2008 net debt stood at £2,568,935 representing loans totalling £3,980,765 and an overdraft of £242,904 less £1,654,734 cash on deposit at Bank. Gearing on shareholders' funds was 11.2% with interest covered 4.9 times. Net debt increased £2,528,518 compared with the previous year end, due to the fact that, following the sale of the Avon Gorge Hotel in Bristol and property at Salem Street in Bradford, the Company paid out a special dividend of 25p amounting to £2,102,000 in addition to the final dividend of 3.5p amounting to £490,000. In line with the Board's declared strategy, an interim dividend of 2p amounting to £282,522 will be paid on 24 November 2008 and we expect that the total annual dividends in respect of the current financial year will not be less than the 5.5p paid last year.  The record date will be 21 November 2008 and the ex-dividend date will be 19 November 2008.  
CAPITAL EXPENDITURE

£700,340 was spent in the period in further improving the Company's assets. We have upgraded 22 bedrooms at the Bull Hotel in Peterborough and rebuilt six bedrooms as part of an ongoing programme to produce 18 more luxury air conditioned bedrooms. The Tavern bar at the George Hotel in Wallingford has been expanded and refurbished together with Reception. Work is underway to upgrade 26 bedrooms at the Midland Hotel in Bradford and we continue the process of renovation to the external elevations of this building.

The Board has decided to accelerate capital expenditure in the current financial year given the comparatively low gearing of the Company, the need to capture more business in a competitive market and the fact that many competitors are highly geared and therefore unable to invest in improving their product. Given the current uncertainty and possible volatility in relation to asset values we believe that reinvestment in our freehold properties and moving them further upmarket will stand us in good stead going forward.

 
 SHAREHOLDERS

We are always delighted when Shareholders visit our Hotels and see for themselves the continual improvements we are making to our portfolio of eight Hotels. All shareholders are entitled to a 30% discount, using the special reservation number, 0207 266 1100 or e-mail info@peelhotel.com  Shareholders might like to visit our website www.peelhotels.co.uk

THE FUTURE

It is difficult to predict the ongoing impact of the huge increase in the cost of energy as it affects almost everything to do with everyday business life. Undoubtedly our domestic market is currently being challenged and one would expect this to continue for the next year or so. We believe we are well able to overcome the difficulties and with a comparatively low overall debt level feel that we are in a very good position to take advantage of any beneficial acquisition opportunities should they arise in the future. In spite of a disappointing interim result our revpar is similar to the comparative period and if we can grow this for the full year we will be better able to absorb increased costs.

Copies of the interim results are today available on the Company's website at www.peelhotels.co.uk 
 

 
DIRECTORS AND ADVISORS
                 Directors
Robert Edmund Guy Peel                                                   Executive Chairman

Clement John Govett                                                          Non-executive Director

Keith Peter Benham                                                            Non-executive Director

Norbert Paul Gottfried Petersen                                       Chief Operating Officer

    Secretary
    Thring Townsend Lee & Pembertons
    Kinnaird House, 1 Pall Mall East, London SW1Y 5AU

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

                             Company registration number 3473990
    Auditor
    Grant Thornton UK LLP
    No 1 Whitehall Riverside, Leeds, LS1 4BN

    Bankers
    Royal Bank of Scotland Plc
    280 Bishopsgate, London EC2M 4RB

    Registrars
    Computershare Services Plc
    PO Box No. 82, The Pavilions, Bridgwater Road, Bristol BS99 7NH

    Solicitors
    Sabretooth Law Ltd
    1 Berkeley Street, Mayfair, London W1J 8DJ

    Davidson Webber Solicitors
    Royal House, 110 Station Parade, Harrogate HG1 1EP

    Stockbrokers
    KBC Peel Hunt Ltd
    4th Floor, 111 Old Broad Street, London EC2N 1PH

  
                    PROFIT AND LOSS ACCOUNT

                           For the period ended 24 August 2008

28 weeks

28 weeks

Year

ended

ended

ended

24/8/2008

26/8/2007

10/2/2008

Unaudited

Unaudited

Audited

Note
£
£
£
£
£
£

Turnover
6,819,298

8,763,974
15,150,339

Cost of sales
(5,285,976)

(6,307,610)

(11,010,153)

Gross profit
1,533,322
2,456,364
4,140,186

Administrative expenses

Depreciation 

(562,471)

(621,516)

(1,092,642)

Other 

(421,671)

(455,960)

(855,003)
(984,142)

(1,077,476)

(1,947,645)
Operating profit
Profit on disposal of property
Interest payable
& similar charges
549,180
-

(111,348)
1,378,888
-

(623,662)

2,192,541
8,142,521

(745,529)
Profit on ordinary activities

before taxation
437,832

755,226

9,589,533
Taxation
2

83,598

(188,806)

(1,215,554)
Profit on ordinary activities after taxation

521,430
566,420
8,373,979
Earnings per share
3
Basic
3.8p

4.4p

63.4p
Diluted
3.7p

4.1p

62.8p
                      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 24 AUGUST 2008

24/8/2008
26/8/2007
10/2/2008

Unaudited
Unaudited
Audited
   Note  
£
£
£

Fixed assets
Tangible assets

28,862,530
34,858,166
28,724,660
Current assets
Stocks
84,028
123,773
86,786
Debtors
1,124,381
1,295,384
1,342,973
Cash at bank and in hand
1,654,734
513,702
4,108,123
2,863,143
1,932,859
5,537,882
Creditors (due within one year)
(4,677,903)
(4,292,896)
(4,784,341)

Net current liabilities

(1,814,760)

(2,360,037)

753,541

Total assets less current liabilities

27,047,770

32,498,129

29,478,201

Creditors (due after one year)

(3,488,495)

(14,315,369)

(3,970,783)

Provisions for liabilities 

(707,000)

(1,664,102)

(707,000)

Total assets

22,852,275

16,518,658

24,800,418

Capital and reserves
Called up share capital

1,412,613

1,291,213

1,401,213

Share premium account

9,845,705

9,111,995

9,743,495

Profit and loss account

11,593,957

6,115,450

13,655,710

Equity shareholders' funds                4   

22,852,275

16,518,658

24,800,418

  
                   CASH FLOW STATEMENT

                          For the period ended 24 August 2008

 
 
 
28 weeks
 
28 weeks
 
Year
 
 
 
ended
 
ended
 
ended
 
 
 
24/8/2008
 
26/8/2007
 
10/2/2008
 
 
 
Unaudited
 
Unaudited
 
Audited
 
Note
£
£
£
£
£
£
Net cash inflow from

operating activities
5

711,207

1,785,736

3,272,305
Returns on investments

and servicing of finance

Interest paid

(50,833)

(562,186)

(1,000,074)

Net cash outflow from

returns on investments

and servicing of finance
(50,833)

(562,186)

(1,000,074)
Taxation

UK corporation tax received/(paid)

64

-

(30,656)

Tax paid
64

-

(30,656)
Capital expenditure

Purchase of tangible fixed assets
Sale of tangible fixed assets

(700,341)
-

(731,838)
-

   
(3,978,456)
17,148,617

Net cash outflow from capital

expenditure
(700,341)

(731,838)

13,170,161
Equity dividends paid
(2,592,243)

(642,856)

(921,099)
Net cash outflow before

financing
(2,632,146)

(151,144)

14,490,637

Financing
Issue of ordinary share capital

113,610

48,545

790,045

Loan repayments

-

-

(11,122,945)

Net cash inflow/(outflow)

from financing
113,610

48,545

(10,332,900)
(Decrease)/increase in cash 
6

(2,518,536)

(102,599)

4,157,737
Reconciliation of net debt

(Decrease)/increase in cash in the period
(2,518,536)

(102,599)

4,157,737
Cash outflow from

 reduction in net debt
-

-

11,122,945
Change in net debt resulting from cashflows

(2,518,536)
(102,599)
15,280,682
Non cash changes
(9,982)

(15,827)

(51,916)
(Decrease)/increase in net debt in the period
(2,528,518)

(118,426)

15,228,766
Net debt at beginning of period
(40,417)

(15,269,183)

(15,269,183)
Net debt at end of period
6

(2,568,935)

(15,387,609)

(40,417)
  NOTES TO THE INTERIM RESULTS
For the period ended 24 August 2008

1.  Basis of accounting
The interim financial information has been prepared on the basis of the accounting policies consistent with those applied in the last Annual Report.

The financial information set out in respect of the year ended 10 February 2008 does not constitute the Company's statutory accounts for that year but is derived from those accounts. Statutory accounts for that year have been delivered to the Registrar of Companies. The auditor reported on those accounts and their report was unqualified. The interim financial statements have been reviewed by the Company's auditor and a copy of the auditor's review report is attached to this interim report.
 
2.  Taxation
Tax has been provided at a rate of 25% which represents the expected effective rate for the full year less an adjustment for prior year capital gains tax. The Company has continued to discount its deferred tax liability.
 
3.  Earnings per share
Earnings per share are based on the profit after taxation, and on the weighted average number of shares in issue during the period.
                                                                                                                                 28 weeks        28 weeks               Year
                                                                                                                                       ended             ended             ended
                                                                                                                               24/8/2008       26/8/2007       10/2/2008
                                                                                                                                Unaudited     Unaudited         Audited
Average No. shares  -  Basic                                                                           13,852,041      12,863,271      13,214,179
                                     -  Diluted                                                                        13,928,922      13,667,016      13,344,490
 
4.  Reconciliation of movements in shareholders' funds

                                                                                                                                 28 weeks        28 weeks               Year
                                                                                                                                       ended             ended             ended
                                                                                                                              24/8/2008        26/8/2007        10/2/2008
                                                                                                                               Unaudited      Unaudited          Audited
Profit for the period                                                                                                521,430           566,420         8,373,979
Dividends paid relating to previous year                                                     (2,592,243)         (642,856)         (921,099)
Issue of shares less expenses                                                                              113,610              48,545           790,045
Recognition of equity-settled share based payments                                          9,060              12,281             23,225
Net (decrease)/ increase in shareholders' funds                                         (1,948,143)           (15,610)        8,266,150
Shareholders' funds at 11/02/08                                                                     24,800,418       16,534,268      16,534,268
Shareholders' funds at 24/08/08                                                                     22,852,275       16,518,658      24,800,418
 
5.  Reconciliation of operating profit to net cash inflow from operating activities

                                                                                                                                28 weeks          28 weeks              Year
                                                                                                                                      ended               ended            ended
                                                                                                                              24/8/2008         26/8/2007       10/2/2008
                                                                                                                              Unaudited        Unaudited         Audited
                                                                                                                                              £                        £                     £
Operating profit                                                                                                     549,180          1,378,888        2,192,541
Depreciation                                                                                                          562,471             621,516        1,092,642
Recognition of equity-settled share based payments                                         9,060               12,281             23,225
Increase/(decrease) in stocks                                                                                  2,758              (7,192)             29,795
Increase/(decrease) in debtors                                                                           181,280          (242,525)         (257,867)
(Decrease)/increase in creditors                                                                      (593,542)               22,768           191,969
Net cash inflow from operating activities                                                         711,207          1,785,736         3,272,305

  

NOTES TO THE INTERIM ACCOUNTS
For the period ended 24 August 2008

6.   Analysis of net debt
 
At beginning
 
 
At end
 
of period
 
Non cash
of period
 
11/2/2008
Cash flow
changes
24/8/2008
 
£
£
 
£
Cash at bank and in hand
4,108,123
(2,453,389)
-
1,654,734
Bank overdraft
(177,757)
(65,147)
-
(242,904)

3,930,366
(2,518,536)
-
1,411,830

Debt due within one year
-
(492,270)
-
(492,270)
Debt due after one year
(3,970,783)
492,270
(9,982)
(3,488,495)
Total
(40,417)
(2,518,536)
(9,982)
(2,568,935)

7.  Financing

The original bank loan is repayable by 8 semi-annual instalments plus a final payment on 11 April 2014. Interest is charged at 1.0% over LIBOR. The Company has entered into a collar agreement on £7 million which caps the Company interest cost at 6.99% plus margin of 1.0%. The minimum interest cost is 4.99% plus margin of 1.0%, 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% of interest is payable. The Company repaid the £7 million loan on 7 October 2007 but the collar agreement remains in place.

The Company has entered into a GBP roller coaster callable interest rate swap agreement which commenced on 11 April 2003 and ends on 11 April 2014 with an option for the Royal Bank of Scotland to terminate the agreement from 11 October 2009. Under the terms of this agreement the Company fixes its interest payments up to 11 April 2014 on outstanding loan balances which are not covered by the collar agreement. The fixed interest swap requires the Company to pay 5.83% on these amounts and therefore effectively fixes its borrowing costs on this portion of its debt portfolio at 6.83% (after inclusion of the 1.0% margin).

The loans and overdraft are secured by debentures dated 7 December 1998, 8 September 1999, 21 June 2002 and 17 May 2005 over all of the Company's freehold and long leasehold properties.

 
  
Independent review report to Peel Hotels PLC 

Introduction
We have been engaged by the Company to review the financial information in the interim financial report for the 28 weeks ended 24 August 2008 which comprises the profit and loss account, the balance sheet, the cash flow statement, the reconciliation of net debt and the related notes 1 to 7. We have read the other information contained in the interim financial report which comprises only the Chairman's Statement and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. 

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

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

Our responsibility 
Our responsibility is to express to the Company a conclusion on the financial information in the interim financial report based on our review. 

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

Conclusion 
Based on our review, nothing has come to our attention that causes us to believe that the financial information in the interim financial report for the 28 weeks ended 24 August 2008 is not prepared, in all material respects, in accordance with the basis of accounting described in note 1. 

GRANT THORNTON UK LLP
AUDITORLeeds9 October 2008

  
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                ****                      91           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
                                                                                                                                 637                                                                               

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
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