PPHE Hotel Group (LON: PPH), the international hospitality real estate group which owns, co-owns and develops hotels, resorts and campsites, has this morning announced its results for the six months ended 30 June 2019.
Financial highlights and EPRA reporting
· On a like-for-like1 basis, total revenue increased by 6.3% to £155.2 million
(H1 2018: £146.0 million). Reported total revenue increased by 4.3% to £155.3 million
(H1 2018: £148.8 million)
· On a like-for-like basis1, EBITDA increased 5.7% to £43.1 million (H1 2018: £40.8 million). Reported EBITDA increased by 12.5% to £45.7 million (H1 2018: £40.6 million), benefiting from the adoption of IFRS 16
· Like-for-like1 RevPAR increased by 7.5% to £93.4 (H1 2018: £86.9). Reported RevPAR increased by 9.0% to £93.4 (H1 2018: £85.7). In the UK, like-for-like and reported RevPAR increased by 9.3% to £122.3 (H1 2018: £112.0)
· Normalised profit before tax increased by 7.5% to £5.5 million (H1 2018: £5.1 million).
In H1 2018 reported profit before tax benefited from a one-off revaluation resulting in an
H1 2019 reported profit before tax decrease to £4.3 million (H1 2018: £16.4 million) 1
· Normalised EPS3 was £0.16 (H1 2018: £0.15), reported EPS was £0.16 (H1 2018: £0.42)
· Last 12 months (LTM) adjusted EPRA earnings per share to 30 June 2019 increased by 4.7% to £1.20 per share (12 months ending 31 December 2018: £1.15)
· Interim ordinary dividend of 17 pence per share, up 6.3% from last year (H1 2018: 16.0 pence per share), which is in line with the Company’s progressive dividend policy
· Following a recent independent valuation of the portfolio, the Group’s total assets now amount to £1.7 billion which translates to an EPRA NAV of £25.52 per share as at 30 June 2019, reflecting a 3.9% increase since 31 December 2018 (£24.57 per share)4
1 The like-for-like comparison for 2019 excludes the influence of IFRS 16, which was issued in January 2016 and applies to annual reporting periods beginning on or after 1 January 2019. Furthermore, the like-for-like figures for 30 June 2018 exclude the operations of Park Plaza Vondelpark, Amsterdam from January to March 2018, and exclude the operations of art’otel dresden during H1 2018 (the lease of which was terminated on 31 July 2018).
3 Earnings for the year, adjusted to remove any unusual or one-off influences, divided by the weighted average number of ordinary shares outstanding during the year.
4 Properties have been valued on a discounted cash flow basis, assuming operational under management contracts. The properties in the United Kingdom, the Netherlands and Germany have been valued by Savills and the properties in Croatia have been valued by Zagreb nekretnine Ltd.
Corporate activity and operational highlights
· Completion of a multiyear extensive £100 million+ hotel investment programme aimed at repositioning and further upgrading property portfolio in the UK and Netherlands
· Successful reopening of Holmes Hotel London, which received a £9.0 million investment to reposition the property
· Good progress also made with repositioning projects at Park Plaza Vondelpark, Amsterdam and Park Plaza Utrecht with soft openings at both properties
· Site works progressing at the Group’s 100% owned art’otel london hoxton, with improved planning consent. Works are also underway at art’otel london battersea power station, which will be managed by the Group on completion of the construction
· Entry into the United States for our 100% owned art’otel brand with a joint venture agreement to develop a prime site located in Manhattan, New York
· Arena Hospitality Group (Arena) has agreed to acquire the 88 Rooms Hotel in Belgrade, Serbia, for HRK 47 million (approximately £5.7 million), subject to certain conditions being fulfilled
· Second major repositioning project for 2019 unveiled as Arena completed a multi-million-pound repositioning of the Arena Kažela Campsite including brand-new luxury camping homes
· Inclusion in the FTSE 250 and FTSE All Share indices
Current trading and outlook:
The second half of the year is usually the stronger trading period in all of PPHE’s markets. While in 2019 Croatia is experiencing competitive market conditions, London and the Netherlands continue to trade well. Overall, trading since 30 June 2019 is in line with expectations.
Commenting on the results, Boris Ivesha, President and Chief Executive Officer, PPHE Hotel Group, said:
“We are pleased to report a good first half performance, with continued revenue growth and Group like-for-like EBITDA up 5.7%. This reflects an increase in all of our key operating metrics, with good growth in occupancy and average room rate both contributing to strong RevPAR growth, as well as to the strength of our portfolio. This performance has been driven by a solid operating performance from our UK hotel portfolio.
Our real estate investment programme has progressed well, and we are delighted with the completion of several significant repositioning projects which have transformed our portfolio. Going into the second half of the year, all of our hotels are now fully operational.
We remain committed to delivering future growth. Our current pipeline is strong, and the Group expects to spend approximately £300 million on exciting developments such as art’otel london hoxton. We also remain open to asset acquisitions to broaden our portfolio and deliver our target returns on investment.
PPHE’s proven development strategy is to target real estate in prime locations and attractive geographies where we believe there is significant upside potential to drive growth and long-term value through both the property portfolio and operations. The recent independent valuations of our properties represent an EPRA NAV per share of £25.52, up 3.9% from 31 December 2018.
We continue to expect PPHE’s full year performance to be in line with previous expectations.”