REG - Dalata Hotel Group - 2016 Preliminary Financial Results <Origin Href="QuoteRef">DHG.I</Origin> - Part 4
28/02/2017 07:06
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Dalata Hotel Group plc
Notes to the condensed consolidated financial statements
6 Investment property
2016 2015
E'000 E'000
Cost or valuation
At beginning of period 37,285 1,248
Transfer to property, plant and equipment (note 5) (36,032) -
Acquisitions through business combinations 1,431 585
Other additions - cost - 35,098
Capitalised transaction costs - 799
Gain/(loss) from fair value adjustments 497 (445)
Translation adjustment 64 -
_______ _______
3,245 37,285
_______ _______
Investment properties with a carrying value of E3.2 million were pledged as security for loans and borrowings at 31
December 2016. Gains or losses arising from fair value adjustments are included within administrative expenses.
Investment property comprises:
· Two commercial properties which were acquired on 29 August 2014 as part of the Maldron Hotel Pearse Street
acquisition. The investment properties are leased to third parties for lease terms of 25 and 30 years, with 14 and 10 years
remaining.
· Commercial properties which were acquired on 13 February 2015 as part of the Pillo Hotel Galway acquisition. The
investment properties are leased to third parties for lease terms of 20 years, with 15 years remaining and a break clause
in two years.
· A commercial property acquired as part of the acquisition of the freehold of Clayton Hotel Cardiff on 25 October
2016. The restaurant of this hotel is leased to a third party for a lease term of 20 years, with 16 years remaining.
The freehold interest in the Clarion Hotel Cork was acquired on 2 November 2015 for a total cash consideration of E35.1m
plus direct transaction costs of E0.8m. As at 31 December 2015, this investment property was leased to a third party for a
lease term of 35 years, with 24 years remaining. On 11 March 2016, the Group acquired the leasehold interest of the
Clarion Cork hotel as part of a wider Choice Hotel Group acquisition (see note 3) and became the operator of that hotel.
Consequently, this property was transferred to property, plant and equipment in the condensed consolidated financial
statements for the year ended 31 December 2016.
Changes in fair values are recognised in administrative expenses in profit or loss.
The value of the Group's investment properties at 31 December 2016 reflect an open market valuation carried out in December
2016 by independent external valuers having appropriately recognised professional qualifications and recent experience in
the location and category of property being valued. The valuations performed were in accordance with the Valuation
Standards of the Royal Institution of Chartered Surveyors.
The fair value measurement of the Group's investment property has been categorised as Level 3 fair value based on the
inputs to the valuation technique used.
The valuation technique adopted is the investment method of valuation. This method is based on a review of the current
passing rent, open market rent and comparable investment sales. The valuations use a yield specific to each property and
ranged from 6.8% to 11.5% (2015: 6.5%).
Dalata Hotel Group plc
Notes to the condensed consolidated financial statements
6 Investment property (continued)
The estimated fair value under this valuation model would increase or decrease if:
· Rent was higher or lower than expected; or
· The yield used as the capitalisation rate was higher or lower.
7 Interest-bearing loans and borrowings
2016 2015
E'000 E'000
Repayable within one year
Bank borrowings 16,800 16,800
Less: deferred issue costs (1,066) (830)
15,734 15,970
Repayable after one year
Bank borrowings 266,936 252,728
Less: deferred issue costs (2,255) (2,560)
264,681 250,168
Total interest-bearing loans and borrowings 280,415 266,138
Dalata Hotel Group plc
Notes to the condensed consolidated financial statements
7 Interest-bearing loans and borrowings (continued)
Net debt is calculated in line with the Group's loan facility agreements. As a result, at 31 December 2016 it excludes
amortised debt costs of E3.3 million (2015: E3.4 million) and interest rate swap liabilities of E3.4 million (2015: E0.9
million).
Reconciliation of movement in net debt
Sterling Sterling Euro
facility facility facility Total
£'000 E'000 E'000 E'000
Interest-bearing loans and borrowings (excluding amortised debt costs)
At 1 January 2016 132,352 180,328 89,200 269,528
New facilities drawn down 42,000 49,910 7,697 57,607
Effect of foreign exchange - (26,599) - (26,599)
Capital repayment - - (16,800) (16,800)
At 31 December 2016 174,352 203,639 80,097 283,736
Cash and cash equivalents
At 1 January 2016 149,155
Movement during the year (68,075)
At 31 December 2016 81,080
Net debt at 31 December 2016 202,656
Net debt at 1 January 2016 120,373
On 17 December 2014, the Group entered into a multi-currency loan facility of E318 million (comprising of a E142 million
Euro facility and a £132 million Sterling facility) with a syndicate of financial institutions. On 3 February 2015, the
company drew down E282 million (comprising of a E106 million Euro facility and a £132 million Sterling facility) through
five year term loan facilities with a maturity of 3 February 2020. The total loan facility of E318 million included a E20
million revolving credit facility and a standby facility of E16 million which was not drawn and has since expired.
On 6 May 2016, the Group entered into a new multicurrency loan facility of E80.0 million with a maturity date of 3 February
2020 and increased the revolving credit facility from E20.0 million to E30.0 million. On 9 June 2016 under this facility,
the Group drew down £18.0 million (E22.9 million) and E7.7 million. On 24 October 2016, the Group drew down a further £24.0
million (E27.0 million).
The revolving credit facilities of E30.0 million were not drawn since entering the facility and remained undrawn as at 31
December 2016. E22.2 million of the other loan facilities were undrawn at 31 December 2016.
Dalata Hotel Group plc
Notes to the condensed consolidated financial statements
7 Interest-bearing loans and borrowings (continued)
The loans bear interest at variable rates based on 3 month Euribor/Libor plus applicable margins. The Group has entered
into certain derivative financial instruments to hedge interest rate exposure on a portion of these loans. The 2016 actual
weighted average interest rate paid including the impact of interest rate swaps was 3.25%. The loans are secured on the
Group's hotel assets. Under the terms of the loan facility agreement, an interest rate floor is in place which prevents the
Group from receiving the benefit of sub-zero benchmark Libor and Euribor rates.
8 Subsequent events
There were no events subsequent to 31 December 2016 which would require an adjustment to or a disclosure thereon in these
condensed financial statements.
9 Earnings per share
Basic earnings per share is computed by dividing the profit for the year available to ordinary shareholders by the weighted
average number of ordinary shares outstanding during the year. Diluted earnings per share is computed by dividing the
profit for the year by the weighted average number of ordinary shares outstanding and, when dilutive, adjusted for the
effect of all potentially dilutive shares. The following table sets out the computation for basic and diluted earnings per
share for the years ended 31 December 2016 and 31 December 2015:
2016 2015
E'000 E'000
Profit attributable to shareholders of the parent (E'000) - basic and diluted 34,923 21,626
Adjusted profit attributable to shareholders of the parent (E'000) - basic and diluted 49,040 37,004
Earnings per share - Basic 19.09 cents 14.55 cents
Earnings per share - Diluted 18.93 cents 14.47 cents
Adjusted earnings per share - Diluted 26.58 cents 24.76 cents
Weighted average shares outstanding - Basic 182,966,666 148,648,310
Weighted average shares outstanding - Diluted 184,499,060 149,427,201
The difference between the basic and diluted weighted average shares outstanding for the year ended 31 December 2016 is due
to the dilutive impact of the conditional share awards granted in 2014, 2015 and 2016.
Adjusted diluted earnings per share is presented as an alternative performance measure to show the underlying performance
of the Group excluding the tax adjusted effects of revaluation movements, goodwill impairment and items considered by
management to be non-recurring or unusual in nature (see note 2). Acquisition costs have been excluded to give a more
meaningful measure given the scale of acquisitions in 2015 and 2016.
Dalata Hotel Group plc
Notes to the condensed consolidated financial statements
9 Earnings per share (continued)
2016 2015
E'000 E'000
Reconciliation to adjusted profit for the period
Profit before tax 44,111 28,457
Adjusting items (see note 2)
Impairment of goodwill 10,325 199
Acquisition-related costs 2,671 15,802
Stock exchange listing costs 1,293 -
Net revaluation movements through profit or loss (241) 1,576
Net impact of Ballsbridge site sale - (1,947)
______ ______
Adjusted profit before tax 58,159 44,087
Tax (9,188) (6,831)
Tax adjustment for adjusting items 69 (252)
______ ______
Adjusted profit for the period 49,040 37,004
______ ______
10 Board approval
This announcement was approved by the Board on 27 February 2017.
This information is provided by RNS
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