| Tue 31 Jan 2017, 10:30 | | INTERNATIONAL HOTEL PROPERTIES LIMITED - Quarterly report and Financial Statements for the three months ended 30 November 2016 |
|
IHL 201701310024A
Quarterly report and Financial Statements for the three months ended 30 November 2016
INTERNATIONAL HOTEL PROPERTIES LIMITED
(Previously International Hotel Group Limited)
(Incorporated in the British Virgin Islands, company number: 1862176)
JSE share code: IHL
ISIN: VGG487261064
("IHL" or the "Company" or the "Group")
FINANCIAL STATEMENTS FOR THE 3 MONTHS ENDED 30 NOVEMBER 2016
IHL, the hotel and leisure focused property investment company, is pleased to announce its results for the three
months ended 30 November 2016.
Financial Highlights
Three months ended: 30 November 2016 30 November 2015 % Change
- Underlying distributable earnings GBP0.9 million GBP0.2 million +356%
- Underlying distributable EPS 1.65 pence 1.26 pence + 31%
Trading Highlights
- Trading performance ahead of expectations
- Trading hotels have achieved RevPAR growth of 8.7% over the prior year of their trading
- Average RevPAR is 105.7% of competitor sets of trading hotels
Operational Highlights
- Full drawdown of previously available debt facilities providing capital to deploy on acquisitions
Post Period Activity
- Acquisition of Holiday Inn Express Edinburgh City Centre
Jon Colley, Chief Executive Officer, commented:
"During Quarter 1 the Company has remained focused on consolidating the performance of recent hotel acquisitions
and continued to deliver satisfactory underlying distributable earnings. Quarter 1 is typically a quieter period with
respect to occupancy levels when compared to the previous quarter, which included the busier summer months. The
Company delivered revenues for the quarter of GBP4.4 million, which converted to underlying distributable earnings of
GBP0.9 million. This is an increase of GBP0.7 million, or 356%, on prior year underlying distributable earnings of
GBP0.2 million. However, the prior year performance is incomparable as the Company was still in a start-up phase at
that time and owned only two hotels for the three month period to November 2015. Year-on-year growth has
therefore been the direct result of IHL now owning eight profitable hotels throughout the three months to November 2016.
During the period the Company drew down fully (circa GBP10.0 million) on its previously arranged debt facilities which
was mostly utilised, post period end, to acquire the Holiday Inn Express Edinburgh City Centre for GBP17.7 million plus
costs. Santander, the Company's primary bankers, also provided an additional five year loan facility of GBP9.6 million
for this acquisition, taking IHL's total loan-to-value to 51%. The acquisition continues IHL's growth and investment
into the UK hotel sector and is the Company's ninth hotel acquisition since August 2015. This property adds a further
161 hotel bedrooms and takes IHL's portfolio to nine hotels with a total of 1,135 bedrooms. The Holiday Inn Express
Edinburgh City Centre is a high quality asset in the most stable hotel market in the UK, outside of London, and is an
excellent addition to IHL's growing portfolio. Edinburgh's occupancy and daily rates are supported by a consistent
corporate demand helping drive a high annual occupancy, resulting in a RevPAR (Revenue Per Available Room)
performance that is among the highest in the UK. The hotel consistently trades at a very high occupancy and is a
mature stable business having been open for over 12 years. The hotel also has the potential for the addition of more
bedrooms, which management are exploring. The hotel will remain branded as a Holiday Inn Express, under a new 20
year franchise agreement with IHG (InterContinental Hotels Group), and will be managed by Redefine BDL Hotel
Group Limited.
Management continue to review and assess potential acquisitions that meet its investment strategy both in the UK and
across Europe."
For further information, please contact:
M Partners
Luxembourg listing agent +352 263 868 602
Java Capital
JSE sponsor +27 (0) 11 722 3050
FTI Consulting
South African Public Relations Advisor
Max Gebhardt +27 (0) 11 214 2402
Company Secretary
Osiris Secretarial Services Ltd +1 (284) 494 9820
Notes to editors:
IHL is a hotel and leisure focused property investment company which owns nine hotels in the UK. The Company's
shares are currently listed on the Euro MTF Market of the Luxembourg Stock Exchange, which constitutes its primary
listing, and on the AltX of the JSE which constitutes its secondary listing.
31 January 2017
Quarterly report and Financial Statements for the three months ended 30 November 2016
GROUP HIGHLIGHTS
- Quarter 1 underlying distributable earnings of GBP0.9 million (prior year Quarter 1 GBP0.2 million).
- Owner-operated hotels:
- 8.7% RevPAR increase on prior year
- RGI (market share of revenue) at 105.7% of the competitor set
- Trading performance ahead of expectations
- Full drawdown of previously available debt facilities providing capital to deploy on acquisitions.
- Significant positive post period end activity:
- Acquisition of the Holiday Inn Express Edinburgh City Centre (161 rooms)
- Utilisation of GBP9.6 million debt giving IHL a portfolio loan-to-value of 51%.
CHIEF EXECUTIVE OFFICER OVERVIEW
During Quarter 1 the Company has remained focused on consolidating the performance of recent hotel acquisitions and continued to deliver satisfactory underlying distributable
earnings. Quarter 1 is typically a quieter period with respect to occupancy levels when compared to the previous quarter, which included the busier summer months. The Company
delivered revenues for the quarter of GBP4.4 million, which converted to underlying distributable earnings of GBP0.9 million. This is an increase of GBP0.7 million, or 356%, on prior year
underlying distributable earnings of GBP0.2 million. However, the prior year performance is incomparable as the Company was still in a start-up phase at that time and owned only two
hotels for the three month period to November 2015. Year-on-year growth has therefore been the direct result of IHL owning eight profitable hotels throughout the three months to
November 2016.
During the period the Company drew down fully (circa GBP10.0 million) on its previously arranged debt facilities which was mostly utilised, post period end, to acquire the Holiday Inn
Express Edinburgh City Centre for GBP17.7 million plus costs. Santander, the Company's primary bankers, also provided an additional five year loan facility of GBP9.6 million for this
acquisition, taking IHL's total loan-to-value to 51%. The acquisition continues IHL's growth and investment into the UK hotel sector and is the Company's ninth hotel acquisition
since August 2015. This property adds a further 161 hotel bedrooms and takes IHL's portfolio to nine hotels with a total of 1,135 bedrooms. The Holiday Inn Express Edinburgh City
Centre is a high quality asset in the most stable hotel market in the UK, outside of London, and is an excellent addition to IHL's growing portfolio. Edinburgh's occupancy and daily
rates are supported by a consistent corporate demand helping drive a high annual occupancy, resulting in a RevPAR (Revenue Per Available Room) performance that is among the
highest in the UK. The hotel consistently trades at a very high occupancy and is a mature stable business having been open for over 12 years. The hotel also has the potential for the
addition of more bedrooms, which management are exploring. The hotel will remain branded as a Holiday Inn Express, under a new 20 year franchise agreement with IHG
(InterContinental Hotels Group), and will be managed by Redefine BDL Hotel Group.
Management continue to review and assess potential acquisitions that meet its investment strategy both in the UK and across Europe.
CHIEF FINANCIAL OFFICER OVERVIEW
Quarter 1 was a period of consolidation of previous acquisitions and preparation for further acquisitions.
Revenue from the owner-operated hotels totalled GBP3.9 million with a further GBP0.4 million of rental income derived from the leased hotels. Total operating costs in the business were
GBP3.0 million with GBP2.4 million of these arising in the owner-operated hotels. The GBP0.6 million of Administrative Expenses includes GBP0.2 million of ground rent and GBP0.2 million of
depreciation on the owner-operated hotels (property, plant and equipment). The income statement also includes, within Net Finance Costs, a GBP0.6 million unrealised gain on the
interest rate swaps and cap currently in place which substantially reversed the unrealised loss that was recognised in the financial statements for the year ended 31 August 2016.
The GBP0.7 million increase in underlying distributable earnings compared to the prior period is the result of the acquisitions that have taken place since then and can be further broken
down into:
- GBP1.1 million of additional operating profit from owner-operated hotels due to the acquisitions that have taken place
- GBP0.3 million of operating profit from leased hotels due to the acquisitions that have taken place
- GBP0.3 million increase in net finance costs due to the increased bank funding in place to support the acquisitions made
- GBP0.3 million of additional taxation charge on incremental profits earned
- GBP0.1 million further provision for replacement of fixtures, fittings and equipment.
IHL's cash balance increased by GBP9.2 million since the August 2016 year-end mainly due to the further drawdown of GBP10.0 million of previously agreed debt facilities, leaving the
Company fully drawn on its facilities with a loan-to-value of 51%. Subsequent to the period end the majority of this further drawdown was utilised in the acquisition of the Holiday
Inn Express Edinburgh City Centre hotel alongside an additional GBP9.6 million debt facility.
The dividend declared in August 2016 of 3.0 pence per share was paid to shareholders on 14 October 2016.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the three months ended 30 November 2016
Three months ended Three months ended Year ended
Notes 30 November 2016 30 November 2015 31 August 2016
GBP GBP GBP
Continuing operations
Trading hotel revenue 3,938,959 677,920 8,361,490
Rental income 412,786 - 1,111,260
Total revenue 4,351,745 677,920 9,472,750
Net fair value gain on investment property - - 468,541
Trading hotel cost of sales/expenses (2,388,899) (560,027) (5,365,772)
Administrative expenses (649,475) (446,990) (3,744,144)
Operating profit 1,313,371 (329,097) 831,375
Net finance costs 205,823 46,063 (1,554,956)
Finance income 699 106,121 258,289
Finance expense 205,124 (60,058) (1,813,245)
Profit/(loss) before tax from continuing operations 1,519,194 (283,034) (723,581)
Taxation charge (260,863) 1,925 (83,329)
Profit/(loss) after taxation from continuing operations 1,258,331 (281,109) (806,910)
Discontinued operation
Profit/(loss) after tax for the year from discontinued operation - 65,801 (73,422)
Profit/(loss) for the period 1,258,331 (215,308) (880,332)
Other comprehensive income
Other comprehensive income that will not be reclassified to profit or loss in subsequent periods:
Revaluation of land and buildings, net of tax - 110,129 1,150,185
Related deferred tax - - (229,117)
Other comprehensive income for the period, net of tax - 110,129 921,068
Total comprehensive profit/(loss) for the period 1,258,331 (105,179) 40,736
Earnings per share
Basic earnings/(loss) per share (pence) 1 2.25 (1.34) (2.18)
Diluted earnings/(loss) per share (pence) 1 2.25 (1.34) (2.18)
Basic headline earnings/(loss) per share (pence) 1 2.25 (1.34) 0.53
Diluted headline earnings/(loss) per share (pence) 1 2.25 (1.34) 0.53
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the three months ended 30 November 2016
As at As at As at
30 November 2016 30 November 2015 31 August 2016
GBP GBP GBP
ASSETS
Non-current assets 87,564,915 36,860,671 87,683,239
Property, plant and equipment 57,587,649 8,800,000 57,713,520
Goodwill 1,015,968 993,411 1,015,968
Investment property 28,950,000 1,288,846 28,950,000
Derivatives 11,298 43,936 3,751
Non-current financial assets - 25,734,478 -
Current assets 14,853,543 5,879,366 5,952,927
Inventories 23,819 4,597 31,337
Trade and other receivables 1,106,619 3,195,395 1,363,505
Cash and cash equivalents 13,723,105 2,679,374 4,558,085
Assets of a disposal Group held for sale - 5,389,243 -
Total assets 102,418,458 48,129,280 93,636,166
EQUITY
Capital and Reserves 53,319,846 34,337,928 52,061,515
Share capital 56,000 35,000 56,000
Share premium 55,233,171 34,596,499 55,233,171
Retained earnings (2,890,393) (500,215) (4,148,724)
Revaluation reserve 921,068 110,129 921,068
Reserves of a disposal Group held for sale - 96,515 -
LIABILITIES
Non-current liabilities 45,047,014 5,088,914 35,963,744
Loans and borrowings 43,785,781 4,393,283 34,150,108
Derivatives 472,909 - 1,025,312
Deferred tax liabilities 788,324 695,631 788,324
Current liabilities 4,051,598 6,125,512 5,610,907
Trade and other payables 2,959,774 1,304,531 4,891,946
Short-term portion of interest-bearing loans and borrowings 661,000 4,807,859 549,000
Current tax liabilities 430,824 13,122 169,961
Liabilities of a disposal Group held for sale - 2,576,926 -
Total equity and liabilities 102,418,458 48,129,280 93,636,166
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the three months ended 30 November 2016
Share capital Share premium Retained earnings Revaluation reserve Total equity
GBP GBP GBP GBP GBP
Balance as at 31 August 2015 2,650 2,562,616 (188,392) - 2,376,874
Loss for the year - - (880,332) - (880,332)
Other comprehensive income for the year - - - 921,068 921,068
Total comprehensive profit for the year - - (880,332) 921,068 40,736
Transactions with owners of the Company
Issue of shares - 14 October 2015 12,350 12,127,314 - - 12,139,664
Issue of shares - 20 October 2015 13,875 13,810,102 - - 13,823,977
Issue of shares - 20 November 2015 6,125 6,069,640 - - 6,075,765
Issue of shares - 23 February 2016 13,000 12,655,385 - - 12,668,385
Issue of shares - 30 March 2016 7,000 6,957,455 - - 6,964,455
Issue of shares - 28 May 2016 1,000 1,050,659 - - 1,051,659
Dividends paid and proposed - - (3,080,000) - (3,080,000)
Total transactions with owners of the Company 53,350 52,670,555 (3,080,000) - 49,643,905
Balance as at 31 August 2016 56,000 55,233,171 (4,148,724) 921,068 52,061,515
Profit for the period - - 1,258,331 - 1,258,331
Other comprehensive income for the period - - - - -
Total comprehensive profit for the period - - 1,258,331 - 1,258,331
Balance as at 30 November 2016 56,000 55,233,171 (2,890,393) 921,068 53,319,846
CONSOLIDATED STATEMENT OF CASH FLOWS
For the three months ended 30 November 2016
Three months ended Three months ended Year ended
30 November 2016 30 November 2015 31 August 2016
GBP GBP GBP
CASH FLOWS FROM OPERATING ACTIVITIES:
Profit/(loss) for the period 1,258,331 (215,308) (880,332)
Adjustments to reconcile loss after tax to net cash flows:
Net fair value movement for the period in investment properties - - (468,541)
Depreciation of property, plant and equipment 232,425 138,978 177,160
Fair value loss on interest rate cap and swap - 17,266 -
Foreign exchange loss - (282,386) -
Net finance costs (205,823) (46,063) 1,554,956
Impairment of goodwill - - 1,057,900
Tax charge 260,863 (1,925) 83,329
Fair value loss on property, plant and equipment - - 364,706
Loss on sale of discontinued operation - (65,801) 73,422
Working capital adjustments:
Decrease/(increase) in trade and other receivables and prepayments 256,886 (19,782) (16,651)
(Decrease)/increase in trade and other payables (439,114) 306,404 833,785
Decrease/(increase) in inventories 7,518 1,702 (593)
Cash generated from operating activities 1,371,086 (166,915) 2,779,141
Interest paid (139,201) (46,130) (515,450)
Interest received 699 - 258,289
Tax paid - - (48,176)
Net cash outflow from disposal group - (92,263) -
Net cash inflow/(outflow) from operating activities 1,232,584 (305,308) 2,473,804
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment and net cash flows of related assets (106,554) - (41,305,165)
and liabilities acquired
Additions to investment property - - (24,030,093)
Development expenditure on investment property - (488,846) (3,780,882)
Proceeds from the sale of a disposal group (net of cash disposed) - 410,392
Net cash outflow from investing activities (106,554) (488,846) (68,705,748)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loans and borrowings 10,086,708 (26,506,494) 24,217,500
Repayment of loans and borrowings (127,250) - (6,501,022)
Transaction costs relating to loans and borrowings (240,468) (97,106) (490,251)
Proceeds from issue of share capital - 29,539 55,000
Proceeds from issue of share premium - 29,506,461 54,945,000
Transaction costs relating to issue of shares - (283,767) (768,829)
Dividends paid (1,680,000) - (1,400,000)
Net cash flow from disposal group (subsidiary) - 25,000 -
Net cash inflow from financing activities 8,038,990 2,673,633 70,057,398
Net increase in cash and cash equivalents 9,165,020 1,879,479 3,825,454
Balance at the beginning of the period 4,558,085 732,631 732,631
Cash equivalents of disposal group included in cash balance at beginning of period - (376,094) -
Cash equivalents of disposal group at end of period - 443,358 -
BALANCE AT PERIOD END/YEAR-END 13,723,105 2,679,374 4,558,085
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. EARNINGS PER SHARE (EPS), HEADLINE EARNINGS PER SHARE (HEPS) AND UNDERLYING DISTRIBUTABLE EARNINGS PER SHARE
Basic EPS amounts are calculated by dividing the profit for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares
outstanding during the period. Diluted EPS amounts are calculated by dividing the profit attributable to ordinary equity holders by the weighted average number of ordinary shares
outstanding during the period plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
Headline earnings and headline earnings per share are required to be disclosed as a result of the secondary listing on the AltX of the Johannesburg Stock Exchange.
The following reflects the income and share data used in the basic and diluted EPS computations:
Three months ended Three months ended Year ended
30 November 2016 30 November 2015 31 August 2016
GBP GBP GBP
Profit/(loss) attributable to ordinary equity holders of the parent for basic earnings:
Continuing operations 1,258,331 (281,109) (806,910)
Discontinued operations - 65,801 (73,422)
Potential dilution - - -
Profit/(loss) attributable to ordinary equity holders adjusted for basic and diluted EPS 1,258,331 (215,308) (880,332)
Number of ordinary shares in issue 56,000,000 35,000,000 56,000,000
Weighted average number of ordinary shares for basic and diluted EPS 56,000,000 16,100,833 40,402,945
Earnings/(loss) per share (pence)
- Basic 2.25 (1.34) (2.18)
- Diluted 2.25 (1.34) (2.18)
Earnings/(loss) per share for continuing operations
Basic earnings/(loss) per share (pence) 2.25 (1.75) (2.00)
Diluted earnings/(loss) per share (pence) 2.25 (1.75) (2.00)
Earnings/(loss) per share for discontinued operations
Basic earnings/(loss) per share (pence) - 0.41 (0.18)
Diluted earnings/(loss) per share (pence) - 0.41 (0.18)
Headline earnings per share
The following table provides the profit/(loss) amount used to calculate headline earnings per share:
Profit/(loss) attributable to equity holders of the parent for the basic and diluted EPS calculations 1,258,331 (215,308) (880,332)
Adjustments:
Revaluation gain on investment property - - (468,541)
Revaluation loss on property, plant and equipment - - 364,706
Goodwill write off - - 1,057,900
(Profit)/loss on discontinued operation - - 139,224
Headline earnings 1,258,331 (215,308) 212,957
Headline earnings per share (pence):
- Basic 2.25 (1.34) 0.53
- Diluted 2.25 (1.34) 0.53
Underlying distributable earnings
Adjustments to headline earnings:
Profit/(loss) on discontinued operation - - (139,224)
Unrealised (gain)/loss on interest rate swaps/cap, net of tax impact (475,952) 17,266 1,082,763
Costs of aborted acquisitions - - 473,374
Expenses incurred on assumption of net liabilities of Travelodge-owning entities - - 238,013
Foreign exchange loss - 282,386 185,703
Amortisation of debt issue costs 28,682 - 49,486
Depreciation 232,425 138,978 177,160
Fixtures, fittings and equipment replacement reserve provision(1) (118,169) (20,338) (250,845)
Underlying distributable earnings 925,317 202,984 2,029,387
Underlying distributable earnings per share (pence) 1.65 1.26 5.02
(1) The fixtures, fittings and equipment replacement reserve provision is based on 3% of trading hotel revenue and is adjusted to ensure sufficient earnings
are retained in the business for future expenditure on fixtures, fittings and equipment and refurbishment.
Date: 31/01/2017 10:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
