Source - RNS
RNS Number : 6246J
Action Hotels PLC
13 September 2016
 

13 September 2016

Action Hotels plc

Interim financial statements for the six months ended 30 June 2016 - Replacement

This announcement replaces RNS number 4943J issued by Action Hotels plc at 7.00am on 12 September 2016 which incorrectly stated the record and ex-dividend dates for the interim dividend which is expected to be paid on 25 November 2016. The announcement should have stated the record date as 14 October 2016 and the ex-dividend date as 13 October 2016. The remainder of the announcement remains unchanged and the full text of the amended announcement is set out below.

Action Hotels plc

Interim financial statements for the six months ended 30 June 2016

Action Hotels plc, the leading owner, developer and asset manager of branded three and four-star hotels in the Middle East and Australia, is pleased to announce its unaudited results for the six months ended 30 June 2016.

Financial Highlights

·      Total reported revenue increased by 18% to $25.6m (30 June 2015: $21.7m)

·      Gross Profit increased by 14% to $18.4m (30 June 2015: $16.1m)

·      Adjusted EBITDA1 increased by 18% to $7.2m (30 June 2015: $6.1m)

·      Property asset values have increased by $31m to $428m since 31 Dec 2015, resulting in a net asset value (NAV) of $189m at 30 June 2016 (31 December 2015: $196 m)

·      NAV is reviewed at year end as we roll out and fair value our portfolio

·      Interim dividend of GBP 0.76p, a 3% increase on the same period last year

Operating Highlights

·      Strong occupancy levels at mature hotels being maintained on a like for like basis at 74.7% (30 June 2015: 76.7%)

·      Exceptional operational and financial performances from the two hotels in Kuwait, ibis Salmiya and ibis Sharq, with the latter exceeding 90% occupancy

·      Average hotel breakeven occupancy across the portfolio remains low at c. 35%

·      1,928 operating rooms at the end of June, a 30% increase from H1 2015 (30 June 2015: 1,488)

·      ibis Styles Brisbane, Action's largest hotel, broke even in month 2 and grew to over 51% occupancy by June 2016

·      Acquisition of a prime freehold plot of land located in Innovation Hub, within Dubai's Media City

Alain Debare, Action Hotels CEO said:

"We are very pleased to update the market on a good first half, with a strong performance across the Action Hotels portfolio. We remain focused on driving performance at our operating hotels and our growth reflects the solid performance from our mature hotel portfolio, as well as the early success of our newest hotels.  We have a good pipeline of hotels in development and are on track to complete an additional three hotels this year"

Commenting on the results, Sheikh Mubarak A.M. Al Sabah, Founder and Chairman of Action Hotels said:

"It is my pleasure to announce another six months of growth for Action Hotels on the back of a very positive performance in 2015.  We continue to meet the increasing demand for quality, internationally branded economy and mid-market hotels and have outperformed expectations set out at IPO with regards to the number of rooms in operating and pipeline hotels by 29%, with rooms totalling 3,184. 

 

We remain committed to growing our portfolio and are continuously exploring new hotel opportunities on both a freehold and leasehold basis. In July we announced our partnership with AccorHotels on our first Novotel branded hotel in Dubai Health Care City, Action's third hotel in the U.A.E and first in Dubai. We look forward to updating the market on other further developments to our pipeline in due course."

For more information, contact:

Action Hotels PLC

 Tel: +44 (0) 20 7907 9663

Alain Debare, Chief Executive Officer

 

Katie Shelton, Director of Corporate Affairs

 

Zeus Capital plc (NOMAD & Broker)

 

Dan Bate / Jonathan Sharp

 Tel: +44 (0) 16 1831 1512

     

  Adam Pollock                                                                Tel: +44 (0) 20 3829 5000

Camarco (Media enquiries)

 Tel: +44 (0) 20 3757 4994

Jennifer Renwick / Tom Huddart

 

     

 

Notes to Editors

Action Hotels PLC

Action Hotels is a leading owner, developer and asset manager of branded three and four star hotels in the Middle East and Australia. Established in 2005, Action Hotels currently has 11 completed hotels with 2,030 rooms in aggregate across the Middle East and Australia, with further properties in development in both regions.

More information is available at http://www.actionhotels.com/

Notes

1.   Adjusted EBITDA is defined as operating profit before depreciation, amortisation, restructuring and listing costs, gains and losses arising from the disposal of property, plant and equipment and pre-opening costs.

2.   On a like-for-like basis - a comparison of the trading hotels that have been operating for at least 12 months excluding any currency movements.

3.   Adjusted NAV is the net asset value of the Group adjusted for the deferred tax provision required on the revaluation of properties to the Statement of Financial Position.

 

All currency amounts are in US $ unless otherwise stated.

 

Cautionary Statement

This announcement contains unaudited information and forward-looking statements that are based on current expectations or beliefs, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts and undue reliance should not be placed on any such statements because they speak only as at the date of this document and are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and Action Hotel's plans and objectives, to differ materially from those expressed or implied in the forward-looking statements.  Action Hotels undertakes no obligation to revise or update any forward-looking statement contained within this announcement, regardless of whether those statements are affected as a result of new information, future events or otherwise, save as required by law and regulations.

 

 

Operating performance

 

Six months ended 30 June 2016

Six months ended 30 June 2015

% change

Revenue

$25.6m

$21.7m

+18%

Occupancy 2

  74.7%

  76.7%

-2.6%

 

 

 

 

Consolidated revenues were 18% higher over the period, with both Middle East and Australian hotels contributing strong average occupancies.

 

Occupancy levels were broadly in line with the previous year, with the Kuwaiti hotels, ibis Sharq and ibis Salmiya, the top performers in the Middle East, delivering occupancy rates of 92% and 83% respectively.  

The Australian hotels also performed well, with the recently acquired ibis Budget Melbourne Airport delivering occupancy rates above 91%.  Action's newest and largest hotel, ibis Styles Brisbane, which became fully operational in March, is showing encouraging early trading figures with occupancy of over 51% at 30th June 2016.

Overall, the Group's mature hotels have continued to deliver strong occupancy levels with an average, on a like for like basis, of approximately 75%.

Total operating rooms reached 1,928 as at 30 June 2016, a 30% increase on the same period last year. The opening of Tulip Inn Ras Al-Kaminah and Ibis Styles Brisbane added a further 102 and 367 operating rooms respectively to the portfolio, with ibis Styles Brisbane breaking even in its second month.

In February the Company also announced the purchase of prime location investment land in Innovation Hub (Dubai Media City).

Hotel pipeline

Action Hotels now has 11 operating/completed hotels with 2,030 rooms.  The Group's pipeline currently consists of a further seven hotels, with a total of 384 new rooms expected to be completed by the end of 2016 and a total of 3,184 rooms upon completion of the pipeline hotel developments.

 

Financial Performance

 

Six months ended 30 June 2016

Six months ended 30 June 2015

% change

Total revenue

$25.6m

$21.7m

+18%

Adjusted EBITDA 1

  $7.2m

  $6.1m

+18%

Adjusted EBITDA 1 margin

     28%

     28%

+0%

Reported (loss) / profit before tax

   $(3,853k)

   $(556k)

 

 

Adjusted EBITDA amounted to $7.2m, an 18% increase over the same period last year with adjusted EBITDA margin remaining flat at 28%.

 

 

The performance from the Middle East hotels is stable and the growth is predominantly from the new rooms in Australia. The steady central overheads of the Head Office help to support year on year consistency in the EBITDA margin at 28%.

 

Finance costs have increased as the company has, as planned, utilised debt facilities to fund the pipeline of hotels, some of the funds are also directed to the operation increasing interest payments reported in the financial statements. With the opening of ibis Styles Brisbane and an additional 6 operating months of hotels opened in the latter half of 2015 the Depreciation and Amortisation charge has also increased as expected over last year.

 

Net Asset Value

 

Net asset value was $189m at 30 June 2016 (30 June 2015: $196m), NAV will be reviewed at year end as we roll out and fair value our portfolio at the end of the reporting period by certified valuers.

 

 

Six months ended 30 June 2016

Year ended 31 December 2015

% change

Net asset value

$189m

$196m

-3.6%

Adjusted NAV 3

$199m

$206m

-3.4%

Adjusted NAV 3 per share

$1.35

$1.40

-3.6%

 

Interim Dividend

The Group is pleased to announce an interim dividend for the six-month period ended 30 June 2016 of GBP 0.76p per share, which is expected to be paid on 25 November 2016. The Company's ordinary shares are expected to be marked ex-entitlement to such dividend on 13 October 2016 and the dividend will be payable to all shareholders on the Company's share register at the close of business on 14 October 2016.

Payment of the dividend will require shareholders approving a number of administrative matters at a general meeting which will be convened in due course.

Outlook

The Group has had a good start to 2016 and the Board remains optimistic about the future as the group continues to deliver the pipeline.

 

 

 

Review report on the condensed interim consolidated financial information to the board of directors of Action Hotels plc

 

Introduction

We have reviewed the accompanying condensed consolidated interim statement of financial position of Action Hotels plc and its subsidiaries (the 'Group') as at 30 June 2016 and the related condensed consolidated statements of income, comprehensive income, changes in equity and cash flows for the six-month period then ended and other explanatory notes. Management is responsible for the preparation and presentation of this condensed consolidated interim financial information in accordance with International Accounting Standard 34 "Interim Financial Reporting" as adopted for use in the European Union. Our responsibility is to express a conclusion on this condensed consolidated interim financial information based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity'. A review of interim financial information consists of making inquiries, 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 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 accompanying condensed consolidated interim financial information is not prepared, in all material respects, in accordance with International Accounting Standard 34 "Interim Financial Reporting" as adopted for use in the European Union.

 

 

 

PricewaterhouseCoopers

12 September 2016

 

Notes

The maintenance and integrity of the Action Hotels plc website is the responsibility of the directors; the work carried out by the independent auditors does not involve consideration of these matters and, accordingly, the independent auditors accept no responsibility for any changes that may have occurred to the consolidated condensed interim financial statements and half-yearly report since they were initially presented on the website.

 

 

 

Condensed interim consolidated income statement

 

 

Six month ended 30 June

 

                   2016

 

2015

 

USD'000

 

USD'000

 

(Unaudited)

 

(Unaudited)

 

 

 

 

Revenue

25,563

 

21,671

Cost of sales 

   (7,123)

 

(5,573)

Gross profit

18,440

 

16,098

General and administrative expenses

(16,711)

 

(13,983)

Operating profit

1,729

 

2,115

Adjusted EBITDA

7,202

 

6,111

Depreciation and amortisation

(4,669)

 

(3,098)

Pre-opening expenses

(804)

 

(898)

Operating profit

1,729

 

2,115

Finance income

101

 

293

Finance costs

(5,683)

 

(2,964)

Finance costs - net

(5,582)

 

(2,671)

Loss before income tax

(3,853)

 

(556)

Income tax expense

(87)

 

(123)

Loss for the period

(3,940)

 

(679)

Profit is attributable to:

 

 

 

Owners of Action Hotels plc

(3,672)

 

(679)

Non-controlling interests

(268)

 

-

 

 

 

 

Earnings per share attributable to equity holders of the company:

 

 

 

Basic earnings per share

(2.7)c

 

  (0.5)c

Diluted earnings per share

(2.7)c

 

  (0.5)c

 

All operations were continuing throughout the periods. The accompanying notes on pages 7 to 23 are an integral part of this condensed interim consolidated financial information.

 

 

Condensed interim consolidated statement of comprehensive income

 

 

 

Six month ended 30 June

 

 

2016

 

2015

 

 

USD'000

 

USD'000

 

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

Loss for the period

 

(3,940)

 

(679)

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

Items that will not be reclassified to profit or loss:

 

 

 

 

Loss on revaluation of land and buildings

 

(1,228)

 

-

Tax charge relating to revaluation

 

-

 

194

 

 

(1,228)

 

194

Items that may be reclassified to profit or loss:

 

 

 

 

Exchange differences on translation of foreign operations

 

1,062

 

(3,964)

Other comprehensive income/(loss) for the period net of tax

 

(166)

 

(3,770)

Total comprehensive loss for the period

 

    (4,106)

 

(4,449)

Total comprehensive loss for the period is attributable to:

 

 

 

 

Owners of Action Hotels plc

 

(3,224)

 

(4,449)

Non-controlling interests

 

(882)

 

-

 

 

(4,106)

 

(4,449)

 

 

 

 

 

 

Total comprehensive income attributable to equity shareholders arises from continuing operations. The accompanying notes on pages 7 to 23 are an integral part of this condensed interim consolidated financial information.

 

 

 

Condensed interim consolidated balance sheet

 

 

 

            30 June

 

31 December

 

 

2016

 

2015

 

Note

USD'000

 

USD'000

 

 

  (Unaudited)

 

(Audited)

Assets

 

 

 

 

Non-current assets

 

 

 

 

Intangible assets

 

15,244

 

15,343

Investment properties

7

23,886

 

33,440

Property and equipment

8

388,676

 

343,367

Cash and bank balances

 

178

 

176

Other receivables

 

-

 

4,812

 

 

427,984

 

397,138

Current assets

 

 

 

 

Cash and bank balances

 

5,562

 

9,584

Trade and other receivables

 

10,292

 

11,910

Receivables due from related parties

9

6,104

 

                 2,361

Inventories

 

228

 

172

 

 

22,186

 

24,027

Total assets

 

450,170

 

421,165

 

 

 

 

 

Liabilities and Equity

 

 

 

 

Liabilities

 

 

 

 

Current liabilities

 

 

 

 

Trade and other payables

 

14,188

 

19,912

Finance lease liabilities

 

306

 

-

Payables due to related parties

9

636

 

529

Borrowings

10

27,860

 

19,716

 

 

42,990

 

40,157

Net current liabilities

 

 (20,804)

 

(16,130)

 

 

 

 

 

Non-current liabilities

 

 

 

 

Borrowings

10

198,445

 

173,860

Finance lease liabilities

 

8,649

 

-

Provision for end of service benefits

 

865

 

802

Deferred tax liabilities

 

10,599

 

10,457

 

 

218,558

 

185,119

Total liabilities

 

261,548

 

225,276

Net assets

 

188,622

 

195,889

 

 

 

 

 

Equity

 

 

 

 

Share capital

11

24,102

 

24,102

Share premium

11

124,479

 

124,479

Revaluation reserve

 

73,332

 

73,946

Merger and other reserves

12

(7,656)

 

(10,293)

Accumulated losses

 

(41,303)

 

(32,895)

Net equity attributable to owners of Action Hotels plc

 

172,954

 

179,339

Non-controlling Interests

 

15,668

 

16,550

Total equity

 

188,622

 

195,889

 

The accompanying notes on pages 7 to 23 are an integral part of these condensed interim consolidated financial information. The condensed interim consolidated financial information was approved by the Board of Directors and authorised for issue on 12 September 2016. They were signed on its behalf by:

 

 

.............................................                                                  .............................................

Alain Debare                                                                            Andrew Lindley

Chief Executive Officer                                                              Finance Director   

 

Condensed interim consolidated statement of changes in equity

 

 

Attributable to owners of Action Hotels plc

 

 

 

 

 

Share

 

Share

 

Revaluation

 

Other 

 

Accumulated

 

 

 

 

Non-

controlling

 

Total

 

capital

 

premium

 

reserve

 

reserves

 

losses

 

        Total

 

interests

 

equity

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 January 2015 (Audited)

24,102

 

124,479

 

71,389

 

(4,492)

 

(29,489)

 

185,989

 

-

 

185,989

Loss for the period

-

 

-

 

-

 

                -

 

(679)

 

(679)

 

-

 

(679)

Other comprehensive income for the period

-

 

-

 

194

 

(3,964)

 

-

 

(3,770)

 

                           -                       

 

(3,770)

Total comprehensive income for the period

-

 

-

 

194

 

(3,964)

 

(679)

 

(4,449)

 

 

-

 

(4,449)

Transactions with owners:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends

-

 

-

 

-

 

                -

 

(3,302)

 

(3,302)

 

-

 

(3,302)

At 30 June 2015 (Unaudited)

24,102

 

124,479

 

71,583

 

(8,456)

 

(33,470)

 

178,238

 

-

 

178,238

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 January 2016 (Audited)

24,102

 

124,479

 

73,946

 

(10,293)

 

(32,895)

 

179,339

 

16,550

 

195,889

Loss for the period

-

 

-

 

-

 

                -

 

(3,672)

 

(3,672)

 

(268)

 

(3,940)

Other comprehensive income for the period

-

 

-

 

(614)

 

1,062

 

-

 

 

448

 

 

(614)

 

(166)

Total comprehensive income for the period

-

 

-

 

(614)

 

1,062

 

(3,672)

 

 

(3,224)

 

 

(882)

 

(4,106)

Transactions with owners:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share based payments

-

 

-

 

-

 

1

 

-

 

1

 

-

 

1

Transfer to statutory reserve

-

 

-

 

-

 

1,574

 

(1,574)

 

-

 

-

 

-

Dividends (note 12)

-

 

-

 

-

 

       -

 

(3,162)

 

(3,162)

 

-

 

(3,162)

At 30 June 2016 (Unaudited)

24,102

 

124,479

 

73,332

 

(7,656)

 

(41,303)

 

172,954

 

15,668

 

188,622

 

The accompanying notes on pages 7 to 23 are an integral part of this condensed interim consolidated financial information.

 

Condensed interim consolidated statement of cash flows

 

 

 

Six months ended 30 June

 

 

2016

 

2015

 

 

USD'000

 

USD'000

 

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

Net loss for the period

 

(3,940)

 

(679)

Adjustments for:

 

 

 

 

Finance costs

 

5,683

 

2,964

Finance income

 

(101)

 

(293)

Tax charge

 

87

 

                 123

Depreciation of property and equipment

 

4,415

 

              2,842

Amortisation of intangible assets

 

254

 

                 256

Provision for end of service benefits

 

230

 

240

Share based payments

 

56

 

-

Operating cash flows before payment of employees' end of service benefits and changes in working capital:

 

6,684

 

             5,453

Payment of employees end of service benefits

 

(169)

 

              (178)

Decrease/(Increase) in trade and other receivables

 

6,475

 

            (4,476)

Increase/(decrease) in receivables due from related parties

 

(1,794)

 

            1,054

Increase in inventory

 

(56)

 

                (61)

Decrease in trade and other payables

 

(5,807)

 

              (354)

Increase in payables due to related parties

 

107

 

              1,736

Cash generated from operation

 

5,440

 

              3,174

Tax paid

 

(214)

 

-

Net cash generated from operating activities

 

5,226

 

              3,174

 

 

 

 

 

Cash flow from investing activities

 

 

 

 

Interest received

 

101

 

293

Capital expenditure from restricted cash

 

1,139

 

-

Transfers to restricted cash

 

(758)

 

(621)

Amount paid for acquisition of subsidiary

 

-

 

             1,134

Purchase of investment property

 

(10,214)

 

-

Purchases of property and equipment

7

(21,496)

 

(28,701)

Net cash used in investing activities

 

(31,228)

 

          (27,895)

 

 

 

 

 

Cash flow from financing activities

 

 

 

 

Repayment of borrowings

 

(12,035)

 

(18,956)

Drawdown of borrowings

 

43,166

 

  52,398

Finance costs paid

 

(5,677)

 

(2,940)

Dividend paid

 

(3,161)

 

(3,302)

Net cash generated from financing activities

 

22,293

 

27,200

 

 

 

 

 

Net (decrease)/increase in cash and cash     equivalents

 

(3,709)

 

2,479

Cash and bank balances at the beginning of the period

 

7,844

 

4,975

Effect of foreign exchange changes

 

57

 

               (801)

Unrestricted Cash and cash equivalents at end of the period

 

4,192

 

6,653

Restricted cash and cash equivalents

 

1,370

 

1,086

Total Cash and cash equivalents at the end of the

   period

 

5,562

 

7,739

1          General information

 

Action Hotels plc ("the company") is incorporated in Jersey under the Companies (Jersey) Law 1991. The address of the registered office is 1st Floor, 17 Bond Street, St Helier, Jersey, JE2 3NP, Channel Islands. The company is a public limited company and has its primary listing on the AIM division of the London Stock Exchange. The principal activities of the company and its subsidiaries ("the Group") are owning, developing, operating hotels and properties in the Middle East and Australia. The Group's principal administrative subsidiary, Action Hotels Limited, is domiciled in Dubai International Financial Centre, which is its principal place of business.

 

Action Hotels plc was incorporated in Jersey on 7 May 2013 and took control of the Action Hotels business on 9 December 2013 through a common control transaction with its shareholder. The company issued 100 million shares to its shareholder in return for 100% of the beneficial interest in and voting control over the issued share capital of Action Hotels Limited. Action Hotels Limited in turn acquired 100% of the issued share capital of Action Hotels Company LLC, a company incorporated in Kuwait, through a share for share exchange.

 

Action Hotels plc was subsequently admitted to trading on the AIM division of the London Stock Exchange and issued a further 47,637,195 shares on 23 December 2013.

 

Pursuant to the transaction, Action Hotels Company LLC, which had previously been the parent company of the Group became a subsidiary of Action Hotels plc and the existing shareholder of Action Hotels Company LLC became the shareholder in Action Hotels plc.

 

The half year results and condensed interim consolidated financial information for the six months ended 30 June 2016 ("the interim financial statements") comprise the results for the Group.

 

These interim financial statements have been reviewed, not audited.

 

2          Basis of preparation

 

The interim financial statements have been prepared in accordance with IAS 34 'Interim financial reporting'. The interim financial statements should be read in conjunction with the annual audited financial statements for the year ended 31 December 2015, which have been prepared in accordance with International Financial Reporting Standards ('IFRS') and IFRS Interpretation Committee interpretations as adopted by the European Union and the Companies (Jersey) law 1991.

 

2.1        Going concern

 

The Group has reported accumulated losses of USD 41,303,000 (2015 Audited: USD 32,895,000) as at 30 June 2016, and as of that date, the Group's current liabilities exceed its current assets by USD 20,804,000 (2015 Audited: USD 16,130,000). Total assets continue to exceed total liabilities by USD 188,622,000 (2015 Audited: USD 195,889,000).

2          Basis of preparation (continued)

2.1        Going concern (continued)

 

Notwithstanding this, the financial statements have been prepared on the going concern basis. The Directors have made this assessment after consideration of the Group's expenditure commitments, current financial projections and expected future cash flows, together with the available cash resources and undrawn committed borrowing facilities.

 

The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, except for adoption of new and amended standard as set out below:

 

(a)        New and amended standard adopted by the Group

 

The following new standards, amendments to standards and interpretations are mandatory for the first time for the financial year beginning 1 January 2016, but do not have a material impact to the Group.

 

·              IFRS 10 and IAS 28 (amendments) "Sale or contribution of assets between an investor and its associate or joint venture" (effective 1 January 2016);

·              IAS 1 (amendments) "Disclosure Initiative" (effective 1 January 2016);

·              IAS 16 and IAS 38 (amendments) "Clarification of acceptable methods of depreciation and amortisation" (effective 1 January 2016); and

·              Annual Improvements to IFRSs 2012-2014 cycle (effective 1 January 2016).

 

(b)        Impact of standards issued but not yet applied by the Group
 

The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year beginning 1 January 2016 and have not been early adopted:

 

·              IFRS 9, 'Financial instruments' (effective 1 January 2018);

·              IFRS 15 'Revenue from contracts with customers' (effective 1 January 2018); and

·              IFRS 16 'Leases' (effective 1 January 2019).

 

3          Financial risk management

The Group's activities expose it to a variety of financial risks: market risk (including currency risk and interest rate risk), credit risk and liquidity risk.

 

The condensed interim financial statements do not include all financial risk management information and disclosures required in the annual financial statements; they should be read in conjunction with the Group's annual audited financial statements as at 31 December 2015. There have been no changes in the risk management department or in any risk management policies since the year end 31 December 2015.

4          Critical judgments and accounting estimates

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

 

In preparing these interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the Group's annual consolidated financial statements for the year ended 31 December 2015.

 

5          Segment information

 

The Board of Directors of the Group is the Group's chief operating decision-maker. Management has determined the operating segments based on the information reviewed by the Board of directors for the purposes of allocating resources and assessing performance of the Group.

The Group is organised within two geographical regions, Middle East and Australia excluding central functions. These geographical regions along with hotels under construction and undeveloped land sites comprise the Group's four reportable segments. No operating segments have been aggregated to form these reportable segments.

Central management costs represent the head office and management costs incurred at the Group level, which have not been subsequently allocated to any particular operating segment. Each of the geographical segments derives its revenue from the ownership and management of hotel operations.

The Board of Directors use a measure of adjusted EBITDA to assess performance.

 

(a)        Segmental revenue and results

 

The following is an analysis of the Group's revenue and results by reportable segments:

Six months ended 30 June 2016 (Unaudited)

Middle East

 

Australia

 

Consolidated

 

USD'000

 

USD'000

 

USD'000

Revenue

19,838

 

5,725

 

25,563

Adjusted EBITDA - hotel operations

8,222

 

1,610

 

9,832

Central management and other costs

 

 

 

 

(8,103)

Operating profit

 

 

 

 

1,729

Finance income

 

 

 

 

101

Finance cost

 

 

 

 

(5,683)

Loss before tax

 

 

 

 

(3,853)

 

 

 

 

 

 

5          Segments information (continued)

(a)        Segmental revenue and results (continued)

 

Six months ended 30 June 2015 (Unaudited)

Middle East

 

Australia

 

Consolidated

 

USD'000

 

USD'000

 

USD'000

Revenue

18,716

 

2,955

 

21,671

Adjusted EBITDA - hotel operations

8,105

 

950

 

9,055

Central management and other costs

 

 

 

 

(6,940)

Operating profit

 

 

 

 

2,115

Finance income

 

 

 

 

293

Finance cost 

 

 

 

 

(2,964)

Loss before tax

 

 

 

 

(556)

 

The revenue of each segment for each period arises wholly from external sales.

Adjusted EBITDA for hotel operations represent the profit earned by each segment without allocation of central administration costs including Directors' salaries, pre-opening costs, investment revenue and finance costs, and tax.

 

(b)        Segmental assets

 

 

30 June

2016

 

31 December

2015

 

USD'000

 

USD'000

 

(Unaudited)

 

(Audited)

 

 

 

 

Middle East hotel operations

251,671

 

234,268

Australia hotel operations

113,979

 

111,289

Hotels under construction

56,198

 

26,229

Undeveloped land sites

23,886

 

33,045

Not allocated

4,436

 

16,334

 

450,170

 

421,165

 

For the purposes of monitoring segment performance and allocating resources between segments, the Group's management monitor the tangible, intangible and financial assets attributable to each segment. Assets classed as under "not allocated" category represent the current assets attributable to the central management function of the business and mainly relate to head office cash balances and certain balances with related parties.

5          Segment information (continued)

(b)        Segmental assets (continued)

Other segmental information

 

 

30 June

2016

 

31 December

2015

 

USD'000

 

USD'000

 

(Unaudited)

 

(Audited)

 

 

 

 

Additions and contributions to property and equipment

 

 

 

Middle East hotel operations

12,988

 

9,522

Australia hotel operations

1,349

 

49,249

Hotels under construction

33,717

 

19,149

 

48,054

 

77,920

 

(c)       Geographical information - Revenue

 

The country of domicile for the Group's head office is United Arab Emirates (UAE); the table below shows the revenue from external customers split between those attributed to the country of domicile and all other foreign countries.

 

 

30 June

2016

 

30 June

2015

 

USD'000

 

USD'000

 

(Unaudited)

 

(Unaudited)

 

 

 

 

UAE

1,264

 

-

Kuwait

7,254

 

7,404

Oman

6,814

 

7,432

Bahrain

2,823

 

1,957

Jordan

1,683

 

1,923

Australia

5,725

 

2,955

 

25,563

 

 21,671

5     Segment information (continued)

 

(d)     Geographical information - Non-current assets

 

The country of domicile for the Group's head office is United Arab Emirates (UAE); the table below shows the non-current asset split between those attributed to the country of domicile and all foreign countries.

 

 

30 June

2016

 

31 December

2015

 

USD'000

 

USD'000

 

(Unaudited)

 

(Audited)

 

 

 

 

UAE

72,278

 

61,047

Kuwait

58,806

 

58,965

Oman

96,840

 

93,436

Bahrain

55,651

 

53,228

Jordan

19,282

 

19,424

Saudi Arabia

11,768

 

2,104

Australia

113,359

 

108,934

 

             427,984

 

397,138

 

6          Earnings per share

 

(a)         Basic earnings per share

 

Basic earnings per share is calculated by dividing the profit/(loss) attributable to the equity holders of the company by the weighted average number of ordinary shares in issue during the period.

 

 

30 June

2016

 

30 June

2015

 

(Unaudited)

 

(Unaudited)

 

 

 

 

Loss for the period (USD'000)

(3,940)

 

(679)

Weighted average number of shares

147,637,195

 

147,637,195

Basic earnings per share (USD)

(0.027)

 

(0.005)

6          Earnings per share (continued)

 

(b)        Diluted earnings per share

 

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares.

 

 

30 June

 2016

 

30 June

 2015

 

(Unaudited)

 

(Unaudited)

 

 

 

 

Loss for the period (USD'000)

(3,940)

 

(679)

Weighted average number of shares used for calculating

   basic earnings Hotels plc

147,637,195

 

147,637,195

Basic and diluted earnings per share (cents)

              (0.027)

 

(0.005)

 

 

 

 

 

The 5,179,116 options (2014: 5,179,116 options) are not included in the calculation of diluted earnings per share because they are antidilutive for the period ended 30 June 2016 and 2015. These options could potentially dilute basic earnings per share in future.

 

The 3,690,930 warrants (2015: 3,690,930 warrants) are not included in the calculation of diluted earnings per share because they are antidilutive for the period ended 30 June 2016 and 2015. These options could potentially dilute basic earnings per share in future.

 

7           Investment properties
 

 

30 June

 2016

 

31 December

 2015

 

USD'000

 

USD'000

 

(Unaudited)

 

(Audited)

 

 

 

 

At 1 January

33,440

 

13,506

Addition during the period

10,614

 

17,049

Transfer to property and equipment

(20,259)

 

-

Net gain from fair valuation

-

 

3,358

Exchange differences

91

 

(473)

 

23,886

 

33,440

 

Investment properties represent the Group's interest in land held for undetermined use situated in the UAE and Kuwait. Investment properties are carried at fair value. The valuation method adopted to determine the fair value is based on inputs not based on observable data (that is, unobservable inputs - level 3).

8             Property and equipment

 

 

Operational Hotels

 

 

 

 

 

 

 

 

 

Land

 

Buildings

 

Fixtures, fittings & equipment

 

Hotels under construction

 

Other FF&E

 

Vehicles

 

Total

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

USD'000

Cost or fair value:

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 January 2016 (Audited)

103,116

 

195,030

 

40,143

 

23,797

 

3,328

 

221

 

365,635

Additions

-

 

13,526

 

680

 

33,717

 

51

 

131

 

48,105

Transfers

-

 

-

 

157

 

(157)

 

-

 

-

 

-

Revaluation

-

 

-

 

-

 

(1,228)

 

-

 

-

 

(1,228)

Exchange differences

932

 

1,656

 

388

 

69

 

1

 

1

 

3,047

At 30 June 2016 (Unaudited)

104,048

 

210,212

 

41,368

 

56,198

 

3,380

 

353

 

415,559

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated depreciation:

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 January 2016 (Audited)

-

 

7,964

 

  13,267

 

-

 

951

 

86

 

22,268

Charge for the period

-

 

2,212

 

2,116

 

-

 

  34

 

53

 

4,415

Exchange differences

-

 

74

 

125

 

-

 

1

 

-

 

200

At 30 June 2016 (Unaudited)

-

 

10,250

 

15,508

 

-

 

986

 

139

 

26,883

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net book value:

 

 

 

 

 

 

 

 

 

 

 

 

 

At 30 June 2016 (Unaudited)

104,048

 

199,962

 

25,860

 

56,198

 

2,394

 

214

 

388,676

At 31 December 2015 (Audited)

103,116

 

187,066

 

26,876

 

23,797

 

2,377

 

135

 

343,367

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                 

8          Property and equipment (continued)

 

Leased assets

 

Buildings includes the following amounts where the Group is a lessee under a finance lease (note 18):

 

Leasehold building

              30 June 2016

 

USD'000

 

(Unaudited)

 

 

Cost

9,370

Accumulated depreciation

(233)

Net book amount

9,137

 

Hotels in operation and under construction are carried at fair value. The valuation method adopted to determine the fair value is based on inputs not based on observable data (that is, unobservable inputs - level 3).

 

At 30 June 2016, had the land and buildings of the Group been carried at historical cost less accumulated depreciation and impairment losses, their carrying amount would have been USD 284,661,000 (31 December 2015: USD 270,833,000). The revaluation surplus is disclosed in the consolidated statement of changes in equity. The revaluation surplus cannot be distributed due to legal restrictions.

 

Investment property with a carrying value of USD 20,259,000 relating to Novotel DHCC has been transferred to assets in the course of construction.

 

The land, buildings and fixtures and fittings of operational hotels and hotels under construction with a carrying amount of USD 346,947,000 (31 December 2015: USD 325,477,000) have been pledged to secure borrowings of the Group (note 10). The Group is not allowed to pledge these assets as security for other borrowings or to sell them to another entity.

 

During the period, the Group entered into an agreement to design, construct and develop a hotel in Australia. As part of the agreement, the Group received a grant to use the land for nominal consideration.

9           Related party balances and transactions

 

The Group entered into various transactions with related parties in the normal course of its business concerning financing and other related services. Prices and terms of payment are approved by the Group's management. All significant related party transactions and balances are listed below and are principally with entities under control of the Group's principal shareholder, Action Group Holding Co. KSCC:

 

 

USD'000

 

USD'000

 

(Unaudited)

 

             (Audited)

 

 

 

 

Due from related parties

6,104

 

2,361

Due to related parties

(636)

 

(529)

 

5,468

 

1,832

 

Due from related parties

 

Name of related parties

 

Relationship

 

30 June
2016

 

31 December 2015

 

 

 

 

USD'000

 

USD'000

 

 

 

 

(Unaudited)

 

(Audited)

 

 

 

 

 

 

 

Action Real Estate Co. Dubai

 

Shareholder

 

1,680

 

1,695

Action Realty Australia Pty Ltd

 

Others

 

449

 

418

Action Business Center Ltd

 

Others

 

160

 

158

Sheikh Mubarak Abdullah Al

    Mubarak Al Sabah

 

Shareholder

 

3,732

 

7

Others

 

Others

 

83

 

83

 

 

 

 

6,104

 

2,361

 

 

 

 

 

 

 

 

Interest is charged on amounts due from related parties in Australia at a rate of 6%. The total interest charge is of USD 23,000 (31 December 2015: USD 206,000).

 

Due to related parties

 

Name of related parties

Relationship

30 June
2016

 

31 December 2015

 

 

USD'000

 

USD'000

 

 

(Unaudited)

 

(Audited)

 

 

 

 

 

Action Group Holding Company

    K.S.C.C

Shareholder

368

 

326

Action Real Estate Co. K.S.C.C.

Others

189

 

178

Action Group Holding Company (Oman)

Others

79

 

25

 

 

636

 

529

9          Related party balances and transactions (continued)

 

Due to related parties (continued)

 

Expenditure incurred on services provided by related parties:

 

Name of related parties

Relationship

30 June

2016

 

30 June

2015

 

 

USD'000

 

USD'000

 

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

Action Group Holding Company

    K.S.C.C

 

Shareholder

                104

 

49

Action Real Estate Co. K.S.C.C.

Others

                    -

 

1,514

Action Business Center

Others

               38

 

                    -

 

 

                142

 

1,563

 

Expenditure incurred by related parties on behalf of the Group and subsequently recharged:

 

Name of related parties

Relationship

30 June 2016

 

 30 June 2015

 

 

USD'000

 

USD'000

 

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

Action Group Holding Company (Oman)

Others

                 48

 

15

Action Group Holding Company

    K.S.C.C

Shareholder

                  18

 

36

Action Real Estate Co. K.S.C.C.

Others

                 57

 

125

 

 

                123

 

176

 

Expenditure incurred by the Group on behalf of the related parties and subsequently recharged:

 

Name of related parties

Relationship

30 June 2016

 

30 June 2015

 

 

USD'000

 

USD'000

 

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

Action Group Holding Company (Oman)

Others

14

 

403

Action Real Estate Co. K.S.C.C.

Others

48

 

64

 

 

                   62

 

467

9          Related party balances and transactions (continued)

Related party guarantees

 

Further, one of the shareholders of the Group and the ultimate owner of the shareholder have provided performance guarantees on behalf of the Group for certain borrowings. These guarantees, issued in the normal course of business, are outstanding at the end of the period and no outflow of resources embodying economic benefits in relation to these guarantees is expected by the Group.

Transactions and agreements with related parties 

 

Remuneration of Key Management Personnel:

 

 

30 June
2016

 

30 June
 2015

 

USD'000

 

USD'000

 

(Unaudited)

 

(Unaudited)

 

 

 

 

Salaries and consultancy fees

              313

 

287

Share based Payments

               56

 

-

Other benefits

               18

 

11

 

             387

 

298

 

During the period, the Group entered into a conditional agreement with Sheikh Mubarak Al Sabah, to purchase his interest in Action Hotels FZ-LLC. An amount of USD 3.7 million paid as refundable advance against this agreement has been included in due from related parties above.

 

10         Borrowings

 

 

30 June
2016

 

31 December
2015

 

USD'000

 

USD'000

 

(Unaudited)

 

(Audited)

Secured

 

 

 

Borrowings

226,305

 

193,576

Less: non-current bank loans

(198,445)

 

(173,860)

Current borrowings

27,860

 

19,716

10         Borrowings (continued)

 

The table below analyses the bank loans into relevant maturity groupings based on the remaining period at the statement of financial position date to the contractual maturity date.

 

 

30 June
2016

 

31 December 2015

 

USD'000

 

USD'000

 

(Unaudited)

 

(Audited)

Due:

 

 

 

6 months or less

22,369

 

13,856

6 - 12 months

                    5,491

 

5,859

1 - 2 years

                  25,558

 

32,861

2 - 5 years

                  97,855

 

99,091

More than 5 years

                  75,032

 

41,909

 

                226,305

 

193,576

 

The annual interest rate on loans is as following:

 

 

30 June 2016

 

31 December 2015

 

USD'000

 

USD'000

 

(Unaudited)

 

(Audited)

 

 

 

 

Kuwaiti Dinar with an annual interest rate

3.73%

 

3.50%

Bahraini Dinar with an annual interest rate

4.49%

 

5.00%

Omani Riyal with an annual interest rate

4.66%

 

4.00%

United States Dollar with an annual interest rate

7.81%

 

7.04%

Australian Dollar with an annual interest rate

4.22%

 

4.73%

 

Bank facilities are secured by Hotel Properties, Group's corporate guarantees and letter of undertakings.

The short term bank borrowings in local currency is as follows:

 

Local

30 June

 2016

31 December 2015

30 June 2016

31 December 2015

Currency

Currency '000

In USD '000

 

 

 

 

 

US Dollar (USD)

8,857

10,806

18,305

10,806

Bahraini Dinar (BHD)

1,000

1,000

1,330

2,653

Kuwait Dinar (KWD)

250

250

1,824

824

Australian Dollar (AUD)

1,700

1,700

949

1,241

Omani Rial (OMR)

1,614

1,614

5,452

4,192

 

 

 

27,860

19,716

10                     Borrowings (continued)

 

The long term bank borrowings in local currency is as follows:

 

Local

30 June

2016

31 December 2015

30 June 2016

31 December 2015

Currency

             Currency '000

           In USD '000

 

 

 

 

 

US Dollar (USD)

46,234

18,486

21,822

18,486

   Bahraini Dinar (BHD)

9,150

9,150

32,580

24,277

   Kuwait Dinar (KWD)

8,750

8,750

28,027

28,830

   Australian Dollar (AUD)

71,816

71,816

62,688

52,417

   Omani Rial (OMR)

19,192

19,192

53,328

49,850

 

 

 

198,445

173,860

 

 

 

 

 

 

At 30 June 2016, the Group has banking facilities of USD 229,509,000 (31 December 2015: USD 223,161,000) with commercial banks. The facilities include short-term and long term loans. Unamortised arrangement fees and other transaction costs amount to USD 1,167,000 (31 December 2015: USD 1,488,000).

 

11         Share capital and share premium

 

 

Number of

 

USD'000

Share capital

shares

 

 

 

 

 

 

At 30 June 2015 (Unaudited)

147,637,195

 

24,102

At 31 December 2015 (Audited)

147,637,195

 

              24,102

At 30 June 2016 (Unaudited)

147,637,195

 

              24,102

 

 

USD'000

Share premium

 

At 30 June 2015 (Unaudited)

           124,479

At 31 December 2015 (Audited)

             124,479

At 30 June 2016 (Unaudited)

             124,479

 

The authorised share capital of the company is GBP 40 million divided into 400 million shares of 10 pence each. They entitle holders to participate in dividends and to share proceeds of winding up of the company in proportion to the number and of amounts paid on the shares held.

12                                 Other reserves

 

 

Statutory reserve

 

Voluntary reserve

 

Foreign currency translation reserve

 

Share-based payment reserve

 

Merger reserve

 

Total

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

 

 

 

 

 

 

 

 

 

 

 

At 1 January 2015 (Audited)

2,960

 

2,802

 

(5,201)

 

596

 

(5,649)

 

(4,492)

6

 

 

-

 

-

 

-

 

-

 

6

 

Share based payments

-

 

-

 

-

 

4

 

-

 

4

Total comprehensive income for the year

-

 

-

 

 

(5,811)

 

 

-

 

 

-

 

 

(5,811)

At 31 December 2015 (Audited)

2,966

 

2,802

 

  (11,012)

 

600

 

(5,649)

 

(10,293)

 

 

 

 

 

 

 

 

 

 

 

 

At 1 January 2016 (Audited)

2,966

 

2,802

 

(11,012)

 

600

 

(5,649)

 

(10,293)

Transfer to reserves

1,541

 

33

 

-

 

-

 

-

 

1,574

Share based payments

-

 

-

 

-

 

1

 

-

 

1

Total comprehensive income for the period

-

 

-

 

1,062

 

-

 

                                 -

 

1,062

At 30 June 2016 (Unaudited)

4,507

 

2,835

 

(9,950)

 

601

 

(5,649)

 

(7,656)

 

 

 

 

 

 

 

 

 

 

 

 

 

13         Dividends

 

The company declared final dividend amounting to USD 3.1 million (GBP 1.47p per share) in respect of year ended 31 December 2015 and was approved by the shareholders at their meeting on 18 May 2016. This dividend was paid during the period ended 30 June 2016.

 

An interim dividend of USD 1.4 million (GBP 0.76p per share) has been proposed by the board of directors and is expected to be paid subject to approval of the dividend by the shareholders. This interim dividend, amounting to USD 1.4 million, has not been recognised as a liability in these interim financial statements.

14         Fair value measurements of non-current assets

The change in fair value measurements of investment properties and hotels in operation for the six months ended 30 June 2016 is considered by the management to be immaterial.

 

The Directors' believe that these valuations, on the basis of current use, represent the highest and best use of the respective assets. The valuation technique has remained unchanged from 31 December 2015 and the Directors of the Group review the valuation process undertaken yearly and consider whether it remains appropriate.

14                                              Fair value measurements of non-current assets (continued)

 

The Group uses the following hierarchy for determining the fair value of assets and liabilities held at fair value by valuation technique:

 

  •         Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;

  •   Level 2: other techniques for which all inputs which have significant effect on the recorded fair value are  
            observable, either directly or indirectly; and

  •   Level 3: techniques which use inputs which have significant effect on the recorded fair value that are not 
            based on observable market data.

The fair value measurements of property and equipment and investment properties are classified as Level 3 in the fair value hierarchy in their entirety, due to the fact that significant unobservable inputs are used in arriving at an appropriate fair value.

The fair value measurement is sensitive to changes in unobservable inputs. The discount and yield rates used to establish a net present value for each separately valued property are as follows and if changed, could result in a materially different fair value.

 

 

At 30 June 2016

 

At 30 June 2015

 

(Unaudited)

 

(Unaudited)

 

 

 

 

Discount rate: owned asset

       10% - 12%

 

11% - 11.5%

Exit yield

           8% - 9%

 

8% - 8.75%

 

The future forecast results represent an unobservable input for each property. Each separate property valuation is directly dependent on the forecast results and hence a significant/ sustained decrease in expected future results would result in a similar proportional reduction in the fair value measurement related to the property.

 

15                                 Commitments

At 30 June 2016, the Group had entered into contractual commitments on construction costs of hotels under construction amounting to USD 142,266,000 (31 December 2015: USD 37,859,000).

16         Operating lease arrangements

The Group leases land, building and office space under various operating lease agreements. The remaining lease terms of the majority of the leases are between one to twenty years and are renewable at mutually agreed terms.

 

 

30 June

2016

 

30 June

2015

 

USD'000

 

USD'000

 

(Unaudited)

 

(Unaudited)

 

 

 

 

Lease payments under operating leases recognised as an expense in the period

1,376

 

1,306

 

At the balance sheet date, the future minimum lease payments payable under operating leases are as follows:

 

 

30 June

2016

 

31 December

2015

 

USD'000

 

USD'000

 

(Unaudited)

 

(Audited)

 

 

 

 

Within one year

3,018

 

2,677

Between two and five years inclusive

5,685

 

5,119

After 5 years

7,685

 

42

 

16,388

 

7,839

17         Seasonality of operations

Due to the seasonal nature of the hospitality business, higher revenues and operating profits are usually expected in the second half of the year than the first six months.

18         Finance lease liabilities

Effective 1 January 2016, the Group has leased a building with a carrying amount of USD 9.1 million under finance lease for an initial term of twenty years with an option to renew for a similar period.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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