TIDMAHCG
RNS Number : 3445Y
Action Hotels PLC
08 September 2015
Action Hotels plc
Interim financial statements for the six months ended 30 June
2015
Action Hotels plc ("Action Hotels", the "Company" or the
"Group"), 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 2015.
Financial Highlights
-- Total reported revenue increased by 11% to $21.7m (30 June 2014: $19.5m)
-- Adjusted Gross Operating Profit (AGOP) increased by 11% to $11.0m (30 June 2014: $9.9m)
-- Adjusted EBITDA (1) increased 24% from the same period in
2014 and adjusted EBITDA margin increased 12%
-- EBITDA grew to $5.2m (30 June 2014: $4.7m)
-- Property asset values increased by $20.9m to $293.6m since 31
Dec 2014, resulting in a net asset value (NAV) of $178.2m at 30
June 2015 (31 December 2014: $185.9m)
-- Interim dividend of GBP 0.74p, 3% higher than the same period last year
Operating Highlights
-- Strong occupancy levels being maintained on a like-for-like
basis of 76.7% (30 June 2014: 78.4%)
-- Like-for-like RevPAR (2) increased 1.3% to $85.42 on a
currency neutral basis from H1 2014 (30 June 2014: $84.32)
-- Exceptional operational and financial performances from the
two hotels in Kuwait, ibis Salmiya and ibis Sharq, with occupancies
exceeding 88%
-- Addition to development pipeline of a 130 room hotel in Saudi
Arabia, introducing Accor's Mercure brand into Action Hotels' brand
stable
-- Acquisition of the 73-room ibis Budget Melbourne Airport -
already operational and trading, due for completion in Q4 2015
-- Net growth of 484 rooms in H1 2015 to 1,488 rooms, a 48% increase from H1 2014
-- Committed 203 new rooms during H1 2015 into the development
pipeline, which now stands at 1,405 rooms and nine hotels
Alain Debare, Action Hotels CEO said:
"We are very pleased with the continuing growth of Action
Hotels. Our half-year adjusted EBITDA at $6.1m reflects the
continued solid performance from the mature hotels and the
improvements we have made at various properties. We are also
pleased to report a considerable growth of 48% in the number of
operating rooms with the openings of ibis Seef (Bahrain) and
Premier Inn Sharjah (UAE). On the development side of our business,
we continued to invest into the portfolio to accelerate its
growth.
"We have had a good start to 2015 and anticipate our results to
be in line with our expectations. Looking forward, we remain very
focused on delivering strong returns and generating value for our
shareholders as we pursue the execution of the pipeline and explore
further growth opportunities."
Commenting on the results, Sheikh Mubarak A.M. Al Sabah, Founder
and Chairman of Action Hotels said:
"Following our positive end of year results for 2014, it is my
pleasure to announce another solid six months of growth for Action
Hotels. Our operational hotels continue to deliver strong
performances as we see a continued demand for quality,
internationally branded economy and mid-market hotels. With this in
mind I am pleased to declare an interim dividend for 2015.
"The Group has seen significant growth with two recent openings
and we have also announced new additions to the group with the
acquisition of the ibis Budget Melbourne airport and the addition
of Mercure Riyadh. We are continuously exploring new hotel
opportunities on both a freehold and leasehold basis and we look
forward to updating the market with new additions to the 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
Investec Bank plc (NOMAD & Broker) Tel: +44 (0) 20 7597
4000
Chris Treneman / David Anderson /
Josh Levy
Camarco (Press enquiries) Tel: +44 (0) 20 3757
4980
Billy Clegg / 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 operates 8
hotels with 1,488 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 EBITDAR is defined as adjusted EBITDA before
rent.
4. 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 Six months % change
ended 30 ended 30 June
June 2015 2014
Revenue $21.7m $19.5m +11%
Occupancy (2) 76.7% 78.4% -2.2%
Average daily rate (ADR) (2) $111.4 $107.6 +3.5%
Revenue per available room
(RevPAR) (2) $85.4 $84.3 +1.3%
Consolidated revenues for the six months ended 30 June 2015 were
$21.7m, 11% higher than last year by $2.2m primarily driven by the
opening of new hotels combined with improved performance at
operating hotels. 34% of revenues generated during the period were
from Kuwait, 34% from Oman, 14% from Australia, 9% from Jordan and
9% from Bahrain.
Occupancy was maintained at a solid 76.7% slightly down on the
same period last year due to the 2015 Ramadan period falling into
the first six months of the year.
RevPAR and ADR on a like-for-like and currency neutral basis
increased by 1.3% and 3.5% respectively, driven by effective
revenue management in the stabilised operational hotels.
Kuwait continues to report exceptional operational and financial
performances. The two hotels in Kuwait, ibis Salmiya and ibis
Sharq, saw occupancies exceeding 88% following high demand from
business and government. Management expect this trend to continue,
even more so with the recent announcement of increased airport
capacity as demand outstrips supply.
Fully funded hotel pipeline
The Group's fully funded pipeline currently consists of nine
hotels with a total of 1,405 rooms expected to be completed by
2017.
The Company announced in April 2015 the addition of a second
hotel in Saudi Arabia to the pipeline and the Group's first
partnership with Accor Hotels' Mercure brand, Mercure Riyadh Olaya.
This 130-bedroom four star hotel has been signed on a 20 year
operating lease agreement and is being developed by the conversion
of an existing office building in a prime location in Riyadh,
Saudi.
Three hotels with more than 500 rooms are expected be completed
by the end of 2015. Most notably, ibis Brisbane, which will be the
largest hotel in Action Hotel's portfolio and the largest ibis
branded hotel in Australia. These three properties will bring the
total completed rooms in the portfolio to over 2,000 by December
2015 and will become operational by Q1 2016, significant progress
towards the Company's stated IPO objective of 2,516 rooms by 2016
and goal of 5,000 rooms by 2020.
Financial Performance
Six months Six months % change
ended 30 June ended 30 June
2015 2014
Total revenue $21.7m $19.5m +11.3%
AGOP $11.0m $9.9m +11.1%
EBITDAR (3) $7.4m $6.3m +17.5%
EBITDA (1) $6.1m $4.9m +24.5%
EBITDA (1) margin 28% 25% +12%
Reported (loss) / profit
before tax $(556k) $91k
Adjusted EBITDA, after lease costs and central costs, amounted
to $6.1m, a 24% increase over the same period last year. EBITDA
margin increased by 12% to 28% (30 June 2014: 25%) driven by
increased performance and control of overhead costs.
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Profit before tax during the period was impacted by higher
pre-opening expenses of $0.9m being two new hotels, higher
depreciation charge from the larger freehold portfolio and
increased finance costs from increased debt, resulting in a loss
before tax of $0.5m.
Investment and financing
The growth in additional rooms is being funded from cash and
debt available to the Group through the refinancing of various
hotel assets. The Board is monitoring the debt levels to ensure
that each hotel has the ability to service its obligations whilst
maximising shareholders equity.
Net asset value was $178m at 30 June 2015 (30 June 2014: $186m)
following an increase in aggregate debt levels to $140.9m to fund
the hotels in the Group's pipeline (31 December 2014: $109.9m). The
Board expect the increase in value to be reflected when the hotels
are completed.
Six months Year ended % change
ended 30 31 December
June 2015 2014
Net asset value $178.2m $185.9m -3.8%
Adjusted NAV 4 $190.6m $194.8m -2.2%
Adjusted NAV 4 per share $1.29 $1.31 -1.5%
Adjusted NAV per share for the period ended 30 June 2015 was
$1.29 (31 December 2014: $1.31p per share).
Interim Dividend
The Group is pleased to announce an interim dividend for the six
month period ended 30 June 2015 of GBP 0.74p per share which is
expected to be paid on 30 November 2015. The Company's ordinary
shares are expected to be marked ex-entitlement to such dividend on
17 September 2015 and the dividend will be payable to all
shareholders on the Company's share register at the close of
business on 18 September 2015.
Outlook
The Group has had a good start to 2015 with continued demand in
its markets. The second half of 2015 is an important period for the
Group as three hotels with a total of 544 rooms are expected to be
completed by the end of 2015. The Board anticipates the Group's
full year results to be in line with their expectations.
Action Hotels plc
Condensed Consolidated Interim Income Statement
For the six months ended 30 June 2015
Notes Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
USD'000 USD'000 USD'000
Restated
Revenue 21,671 19,463 37,572
Cost of sales (5,573) (5,168) (10,040)
----------------- ----------- ------------
Gross profit 16,098 14,295 27,532
----------------- ----------- ------------
General and administrative
expenses (13,983) (12,337) (21,453)
Operating profit 2,115 1,958 6,079
Adjusted EBITDA 6,111 4,926 11,262
Depreciation and amortisation (3,098) (2,781) (4,466)
Restructuring and listing
costs 6 - (187) (187)
Pre-opening expenses (898) - (530)
Operating profit 2,115 1,958 6,079
Finance income 293 33 585
Finance costs (2,964) (1,900) (4,438)
(Loss) / profit before tax (556) 91 2,226
----------------- ----------- ------------
Tax charge (123) (187) (332)
----------------- ----------- ------------
(Loss) / profit for the period
attributable to owners of
the company (679) (96) 1,894
----------------- ----------- ------------
(Loss) / profit per share
attributable to owners of
the company:
Basic and diluted (cents) 7 (0.5) (0.1) 1.3
Action Hotels plc
Condensed Consolidated Interim Statement of Comprehensive
Income
For the six months ended 30 June 2015
Unaudited Unaudited Audited
Six Months Six months Year
ended ended ended
30 June 30 June 31 December
2015 2014 2014
USD'000 USD'000 USD'000
Restated
(Loss) / profit for the period (679) (96) 1,894
Items that will not be reclassified
subsequently to profit and loss:
Gains on property revaluations - - 21,771
Tax charge relating to property
revaluations 194 - (54)
Items that may be subsequently
reclassified to profit or loss:
Exchange differences on translation
of foreign operations (3,964) 5,199 (5,614)
Other comprehensive (loss) / income
for the period net of tax (3,770) 5,199 16,103
----------- ----------- ------------
Total comprehensive (loss) / income
for the period attributable to
owners of the parent (4,449) 5,103 17,997
=========== =========== ============
Action Hotels plc
Condensed Consolidated Interim Statement of Financial
Position
For the six months ended 30 June 2015
Notes Unaudited Unaudited Audited
At 30 At 30 At 31 December
June June 2014
2015 2014 USD'000
USD'000 USD'000
Restated
Non-current assets
Intangible assets 11,534 12,908 12,170
Investment properties 13,082 - 13,506
Property, plant and equipment 8 293,677 247,222 272,739
318,293 260,130 298,415
--------- --------- ---------------
Current assets
Cash and bank balances 7,739 21,538 6,734
Trade and other receivables 9,339 9,293 4,972
Receivables due from related parties 9 2,873 6,718 3,992
Inventories 190 136 132
20,141 37,685 15,830
--------- --------- ---------------
Total assets 338,434 297,815 314,245
========= ========= ===============
Current liabilities
Trade and other payables 7,964 8,479 8,340
Payables due to related parties 9 2,315 242 625
Bank borrowings 10 19,026 9,633 15,646
29,305 18,354 24,611
--------- --------- ---------------
Net current (liabilities) / assets (9,164) 19,331 (8,781)
--------- --------- ---------------
Non-current liabilities
Loans due to related parties 9 - 60 -
Bank borrowings 10 121,949 94,521 94,255
Provision for end of service indemnity 671 546 620
Deferred tax liability 8,271 9,379 8,770
--------- --------- ---------------
130,891 104,506 103,645
--------- --------- ---------------
Total liabilities 160,196 122,860 128,256
========= ========= ===============
Net assets 178,238 174,955 185,989
========= ========= ===============
EQUITY
Share capital 11 24,102 24,102 24,102
Share premium 11 124,479 124,479 124,479
Revaluation reserve 71,583 49,866 71,389
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Merger and other reserves 12 (8,456) 6,321 (4,492)
Retained loss (33,470) (29,813) (29,489)
--------- --------- ---------------
Total equity attributable to owners
of the Company 178,238 174,955 185,989
========= ========= ===============
Action Hotels plc
Condensed Consolidated Interim Statement of Changes in
Equity
For the six months ended 30 June 2015
Merger
and other
reserves
Revaluation (Note Retained
Share capital Share premium reserve 12) earnings Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
------------- ------------- ----------- ---------- --------- ---------
At 31 December 2014 (Audited) 24,102 124,479 71,389 (4,492) (29,489) 185,989
Total comprehensive income/(loss)
for for the period - - 194 (3,964) (679) (4,449)
Dividend paid - - - - (3,302) (3,302)
At 30 June 2015 (Unaudited) 24,102 124,479 71,583 (8,456) (33,470) 178,238
============= ============= =========== ========== ========= =========
At 31 December 2013* 24,102 124,479 49,672 1,122 (28,866) 170,509
Total comprehensive income/(loss)
for the period - - - 5,199 (96) 5,103
Deferred tax adjustments - - 194 - - 194
Dividend paid - - - - (851) (851)
------------- ------------- ----------- ---------- --------- ---------
At 30 June 2014* 24,102 124,479 49,866 6,321 (29,813) 174,955
============= ============= =========== ========== ========= =========
* As reported within the consolidated financial statements for
the year ended 31 December 2014
Action Hotels plc
Condensed Consolidated Interim Statement of Cash Flows
For the six months ended 30 June 2015
Unaudited Unaudited Audited
6 months 6 months Year ended
ended 30 ended 30 31 December
June June 2014
2015 2014
USD'000 USD'000 USD'000
Restated
Cash flows from operating activities:
Net profit/(loss) for the period (679) (96) 1,894
Adjustments for:
Finance costs 2,964 1,900 4,438
Finance income (293) (33) (585)
Tax charge 123 187 332
Depreciation of property, plant and
equipment 2,842 2,491 3,927
Amortisation of intangible assets 256 290 539
Provision for end of service benefits 240 219 210
Revaluation of investment property - - (1,490)
Restructuring and listing costs - - 187
----------- ---------- -------------
Operating cash flows before payment
of employees' end of service benefits
and movements in working capital: 5,453 4,958 9,452
Payment of employees end of service
benefits (178) (162) (67)
(Increase) /decrease in receivables (4,476) (2,782) 1,477
Decrease in related party receivables
- trading 1,054 1,087 9,550
(Increase) in inventory (61) (26) (26)
(Decrease)/ Increase in payables (354) (7,611) (7,715)
Increase in related party payables 1,736 76 534
Net cash generated/ (used in) from
operating activities 3,174 (4,460) 13,205
----------- ---------- -------------
Cash flow from investing activities
Interest received 293 13 15
Repayment of related party receivables
- non trade - 6,623 -
Purchase of investment property - - (12,405)
Transfers to restricted cash (621) (667) (1,185)
Capital expenditure from restricted
cash 1,134 74 -
Purchases of property, plant and equipment (28,701) (18,996) (33,804)
-------------
Net cash used in investing activities (27,895) (12,953) (47,379)
----------- ----------
Cash flow from financing activities
Repayment of borrowings - Bank loans (18,956) (7,297) (13,276)
Drawdown of borrowings - Bank loans 52,398 2,794 17,840
Finance costs paid (2,940) (1,900) (4,438)
Tax paid - - (118)
Dividend paid (3,302) (851) (2,517)
Restructuring and listing costs paid - - (187)
----------- ---------- -------------
Net cash generated/ (used in) from
financing activities 27,200 (7,254) (2,696)
----------- ---------- -------------
Net increase/ (decrease) in cash and
cash equivalents 2,479 (24,667) (36,870)
----------- ---------- -------------
Cash and cash equivalents at the beginning
of the period 4,975 42,028 42,028
Effect of foreign exchange changes (801) 3,651 (183)
Unrestricted Cash and cash equivalents
at end of the period 6,653 21,012 4,975
Restricted cash 1,086 526 1,759
----------- ---------- -------------
Total Cash and cash equivalents 7,739 21,538 6,734
=========== ========== =============
Action Hotels plc
Notes to the Condensed Consolidated Interim Financial
Information
For the six months ended 30 June 2015
General information
Action Hotels plc ("the Company") is a public company limited by
shares and is incorporated in Jersey under the Companies (Jersey)
Law 1991. The address of the registered office is 1(st) Floor, 17
Bond Street, St Helier, Jersey, JE2 3NP, Channel Islands. The
principal activities of the Company and its subsidiaries
(collectively known as "the Group") are owning, developing and
operating hotels in the Middle East. The Group's principal
administrative subsidiary, Action Hotels Limited, is domiciled in
the Dubai International Financial Centre, which is its principal
place of business.
The half year results and condensed consolidated financial
statements for the six months ended 30 June 2015 ("the interim
financial statements") comprise the results for the Group.
These consolidated condensed interim financial statements were
approved for issue on 7 September 2015.
These consolidated condensed interim financial statements have
been reviewed, not audited.
1. 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
financial statements for the year ended 31 December 2014, which
have been prepared in accordance with International Financial
Reporting Standards ('IFRS') and IFRIC interpretations.
Going Concern
The Group has reported accumulated losses of USD 33,470,000
(2014 Audited: USD 29,489,000) as at 30 June 2015, and as of that
date, the Group's current liabilities exceed its current assets by
USD 9,164,000 (2014 Audited: USD 8,781,000). Total assets continue
to exceed total liabilities by USD 178,238,000 (2014 Audited: USD
185,989,000).
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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.
2. Accounting policies
The accounting policies adopted are consistent with those of the
financial statements for the year ended 31 December 2014, except as
described below.
(a) The following new standards, amendments to standards and
interpretations are mandatory for the first time for the financial
year beginning 1 January 2015, but do not have a material impact to
the Group or are not currently relevant for the Group.
-- IAS 19,'Employee benefits', amendments regarding defined
benefit plans (effective from 1 February 2015);
-- Annual improvements 2010 - 2012. These include changes to,
IFRS 2, 'Share based payments'; IFRS 3, 'Business Combinations';
IFRS 8, 'Operating segments'; 'IAS 16, 'Property plant and
equipment' and IAS 24, 'Related Party Disclosures'; and
-- Annual improvements 2011 - 2013. These include changes to,
IFRS 3, 'Business Combinations'; IFRS 13, 'Fair Value Measurement';
and IAS 40, 'Investment Property', effective from January -
February 2015.
3. Accounting policies continued
(b) The following new standards, amendments to standards and
interpretations have been issued, but are not effective for the
financial year beginning 1 January 2015 and have not been early
adopted:
-- IFRS 9, 'Financial instruments', (effective 1 January 2018), subject to EU endorsement;
-- IFRS 11 'Joint arrangements', amendments relating to
acquisition of an interest in a joint operation, (effective 1
January 2016), subject to EU endorsement;
-- IFRS 14 'Regulatory deferral accounts', (effective 1 January
2016), subject to EU endorsement;
-- IFRS 15 'Revenue from contracts with customers', (effective 1
January 2017), subject to EU endorsement;
-- IFRS 10 'Consolidated Financial Statements' and IAS 28
'Investments in Associates and Joint Ventures, amendments on
investment entities applying the consolidation exception,
(effective 1 January 2016), subject to EU endorsement;
-- IAS 1, 'Presentation of financial statements', amendments on
the disclosure initiative, (effective 1 January 2016), subject to
EU endorsement;
-- IAS 16, 'Property, Plant and Equipment, amendments relating
to method of depreciation, (effective 1 January 2016), subject to
EU endorsement;
-- IAS 16, 'Property, Plant and Equipment', and IAS 41,
'Agriculture', amendments, regarding bearer plants (effective 1
January 2016), subject to EU endorsement;
-- Amendments to IAS 27, 'Separate financial statements' on the
equity method, (effective 1 January 2016), subject to EU
endorsement;
-- IAS 38, 'Intangible Assets', amendments relating to method of
amortisation (effective 1 January 2016), subject to EU endorsement;
and
-- Annual improvements 2014 - 2015. These include changes to,
IFRS 5, 'Non-current assets held for sale and discontinued
operations' regarding methods of disposal; IFRS 7, 'Financial
instruments: Disclosures', (with consequential amendments to IFRS
1) regarding servicing contracts; IAS 19, 'Employee benefits'
regarding discount rates; and IAS 34, 'Interim financial reporting'
regarding disclosure of information effective from 1 July 2016.
4. Critical judgements 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 condensed 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 consolidated financial
statements for the year ended 31 December 2014, with the exception
of changes in estimates that are required in determining the
provision for income taxes.
5. Business and geographical segments
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker
at the reporting date. 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 for the purposes of allocating resources and assessing
performance of the Group.
The Group's operating segments are its individual hotels. These
have been aggregated into two reportable segments, as each
operating segment within these reportable segments provide similar
hospitality services to a common customer base using similar
methods.
The Group's reportable segments are the operational hotels in
the Middle East and in Australia, hotels under construction and
undeveloped land sites which are managed and reported to the Board
as separate distinct business units.
5. Business and geographical segments continued
Segmental revenue and results
The following is an analysis of the Group's revenue and results
by reportable segments:
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)
============
Six months ended 30 June 2014 (Restated) Middle East Australia Consolidated
USD'000 USD'000 USD'000
Revenue 16,004 3.459 19,463
Adjusted EBITDA - hotel operations 7,327 1,248 8,575
Central management and other costs (6,617)
------------
Operating profit 1,958
Finance income 33
Finance cost (1,900)
Profit before tax 91
============
Year ended 31 December 2014 (Audited) Middle East Australia Consolidated
USD'000 USD'000 USD'000
Revenue 30,626 6,946 37,572
Adjusted EBITDA - hotel operations 11,217 2,408 13,625
Central management and other costs (7,546)
------------
Operating profit 6,079
Finance income 585
Finance cost (4,438)
Profit before tax 2,226
============
The revenue of each segment for each period arises wholly from
external sales.
5. Business and geographical segments continued
Segmental assets
Unaudited Unaudited Audited
At 30 At 30 At 31 December
June June 2014
2015 2014
USD'000 USD'000 USD'000
Restated
Middle East hotel operations 222,315 166,555 226,628
Australia hotel operations 29,884 36,641 32,985
Hotels under construction 68,441 39,402 46,422
Undeveloped land sites 8,715 35,440 3,932
Not allocated 9,079 19,777 4,278
---------------- ------------ ---------------
338,434 297,815 314,245
================ ============ ===============
For the purposes of monitoring segment performance and
allocating resources between segments, the Group's management
monitors the tangible, intangible and financial assets attributable
to each segment.
Assets classed as not allocated 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.
Geographical information - Revenue
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The place of domicile for the Group's head office is the Dubai
International Financial Centre. The table below shows the revenue
from external customers split between those attributed to the place
of domicile, Kuwait and all other foreign countries.
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended 31
30 June 30 June December
2015 2014 2014
USD'000 USD'000 USD'000
Dubai International Financial Centre - - -
Kuwait 7,404 7,185 13,513
Rest of the world 14,267 12,278 24,059
--------- --------- ---------
21,671 19,463 37,572
========= ========= =========
5. Business and geographical segments continued
Geographical information - Non-current assets
The place of domicile for the Group's head office is the Dubai
International Financial Centre. The table below shows the
non-current asset split between those attributed to the place of
domicile and all foreign countries.
Unaudited Unaudited Audited
At 30 At 30 At 31 December
June June 2014
2015 2014
USD'000 USD'000 USD'000
Dubai International Financial Centre 1,769 545 13,085
Kuwait 57,971 65,436 70,567
Rest of the world 258,553 194,149 214,763
------------- --------- ---------------
318,293 260,130 298,415
============= ========= ===============
6. Restructuring and listing costs
For the year ended 31 December 2013, The Group classified costs
in connection with its restructuring in the period up to and
shortly following the public offering and its admission to trading
on the AIM division of the London Stock Exchange separately. The
costs expensed in the consolidated income statement totalled US$
187,000 in the period June 2014.
7. Earnings per share
Basic and diluted loss per share is calculated by dividing the
loss attributable to equity holders of the company by the weighted
average number of ordinary shares in issue during the year.
There are no dilutive potential ordinary shares in Action Hotels
plc.
Unaudited Unaudited Audited
Period ended Period ended Year ended
30 June 30 June 31 December
2015 2014 2014
Restated
(Loss) / profit for the period (USD'000) (679) (96) 1,894
Weighted average number of ordinary
shares in Action Hotels plc 147,637,195 147,637,195 147,637,195
Basic and diluted (loss) / profit
per share (cents) (0.005) (0.001) 0.013
============= ============= ============
7. Earnings per share continued
Unaudited Unaudited Audited
Period ended Period ended Year ended
30 June 30 June 31 December
2015 2014 2014
Restated
(Loss) / profit for the period (USD'000) (679) (96) 1,894
Weighted average number of ordinary
shares in Action Hotels plc 147,637,195 147,637,195 147,637,195
Dilution impact of share options
and share warrants 3,062,687 3,443,072 3,265,914
Diluted number of ordinary shares
for the purpose of diluted loss per
share 150,699,882 151,080,267 150,903,109
Basic and diluted (loss) / profit
per share (cents) (0.005) (0.001) 0.013
============= ============= ============
8. Property, plant and equipment
Operational Hotels
---------------------------------
Fixture,
Fittings & Hotels under Undeveloped
Land Buildings Equipment construction land Other FF&E Vehicles Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Cost or
valuation:
At 1 January
2015
(Audited) 87,579 121,568 28,972 46,422 3,932 1,664 68 290,205
Additions - 484 1,884 17,244 8,715 374 - 28,701
Transfer - - - 3,918 (3,918) - - -
Foreign
currency
translation (3,351) 640 (487) (2,178) (14) (122) (1) (5,513)
------- --------- ------------- ------------- -------------- ----------- --------- --------
At 30 June
2015
(Unaudited) 84,228 122,692 30,369 65,406 8,715 1,916 67 313,393
======= ========= ============= ============= ============== =========== ========= ========
At 1 January
2014
(Restated) 86,712 77,391 22,306 33,570 21,505 122 39 241,645
Additions 88 3,119 3,643 - 12,146 - - 18,996
Transfer - (9,659) 3,551 6,108 - - - -
Foreign
currency
translation 931 756 245 (276) 1,789 - - 3,445
------- --------- ------------- ------------- -------------- ----------- --------- --------
At 30 June
2014
(Unaudited) 87,731 71,607 29,745 39,402 35,440 122 39 264,086
======= ========= ============= ============= ============== =========== ========= ========
Accumulated
depreciation:
At 1 January
2015
(Audited) - 5,908 11,458 - - 82 18 17,466
Charge for the
period - 785 1,971 - - 80 6 2,842
Foreign
currency
translation - (416) (128) - - (47) (1) (592)
------- --------- ------------- ------------- -------------- ----------- --------- --------
At 30 June
2015
(Unaudited) - 6,277 13,301 - - 115 23 19,716
======= ========= ============= ============= ============== =========== ========= ========
At 1 January
2014
(Restated) - 4,545 9,504 62 - 47 5 14,163
Charge for the
period - 671 1,807 - - 7 6 2,491
Foreign
currency
translation - (13) 285 (62) - - - 210
------- --------- ------------- ------------- -------------- ----------- --------- --------
At 30 June
2014
(Unaudited) - 5,203 11,596 - - 54 11 16,864
======= ========= ============= ============= ============== =========== ========= ========
Net book
value:
------- --------- ------------- ------------- -------------- ----------- --------- --------
At 30 June
2015
(Unaudited) 84,228 116,415 17,068 65,406 8,715 1,801 44 293,677
------- --------- ------------- ------------- -------------- ----------- --------- --------
At 30 June
2014
(Unaudited) 87,731 66,404 18,149 39,402 35,440 68 28 247,222
======= ========= ============= ============= ============== =========== ========= ========
8. Property, plant and equipment continued
Hotels in operation and under construction are carried at fair
value as determined by an independent valuer. The capitalisation
method has been used by the independent professionally qualified
valuers, which is explained as follows.
The capitalisation method represents a method of determining the
value of the asset by calculating the net present value of expected
future earnings. The valuation method adopted is based on inputs
not based on observable data (that is, unobservable inputs - level
3).
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At 30 June 2015, 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
214,078,000 (2014: USD 188,219,000). The revaluation surplus is
disclosed in the Consolidated Statement of Changes in Equity. The
revaluation surplus cannot be distributed due to legal
restrictions.
Undeveloped land with a carrying value of USD 3,918,000 relating
to Action Hotel Sohar has been transferred to "Hotels under
construction". Total assets in the course of construction as at 30
June 2015 for this hotel amounted to USD 4,638,000 (2014: USD Nil).
The remaining assets in the course of construction related to
Elizabeth Street USD 33,606,000 (2014: 24,302,000) and Premier Inn
Sharjah USD 27,163,000 (2014: 22,120,000)
The land, buildings and fixtures and fittings of operational
hotels and hotels under construction with a carrying amount of USD
283,117,000 (2013: USD 267,175,000) have been pledged to secure
borrowings of the Group. The Group is not allowed to pledge these
assets as security for other borrowings or to sell them to another
entity.
9. Related party transactions
The Group has 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 (formerly described as "Partner"):
Unaudited Unaudited Audited
At 30 At 30 At 31 December
June June 2014
2015 2014
USD'000 USD'000 USD'000
Due from related parties 2,873 6,718 3,992
Due to related parties (2,315) (242) (625)
Loan due to related parties (60) -
--------- --------- ---------------
558 6,416 3,367
========= ========= ===============
9. Related party transactions continued
Due from related parties
Unaudited Unaudited Audited
At 30 At 30 At 31 December
June June 2014
2015 2014
USD'000 USD'000 USD'000
Action Real Estate Co. K.S.C.C. - 4,637 -
IPO subscription receivable - 55 -
Bronzia Company (Oman) 936 940 870
Action Group Holding company K.S.C.C 1,204 - 2,192
Action Realty Australia Pty Ltd 507 485 448
74-80 Fitzgerald Road Australia Pty
Ltd - - 187
Waterfront Project Australia Pty Ltd - 200 189
Fitzgerald Road Australia - 198 -
Magna Properties Pty Co. W.L.L. - 47 -
Jarabury Australia Pty Ltd - 43 41
Mintabury Australia Pty Ltd - 42 40
Sheikh Mubarak Abdullah Al Mubarak
Al Sabah 64 19 -
Action Business Center 79 16 -
Gordon Luck (Altona) Australia - 9 -
Action Group Australia - 3 -
Other 83 24 25
--------- --------- ---------------
2,873 6,718 3,992
--------- --------- ---------------
Due to related parties
Unaudited Unaudited Audited
At 30 At 30 At 31 December
June June 2014
2015 2014
USD'000 USD'000 USD'000
Action Group Holding - Oman 84 40 78
Lausanne Travel Co. - 2 -
Action Real Estate - Kuwait 641 5 288
Sheikh Mubarak Abdullah Al Mubarak
Al Sabah (DHCC JV) 1,522 - -
Action Group Australia - 62 259
Bronzia Company (Oman) 68 73 -
Nehme Group of Companies - 60 -
2,315 242 625
--------- --------- ---------------
9. Related party transactions continued
Expenditure incurred on services provided by related parties
Unaudited Unaudited Audited
At 30 At 30 At 31 December
June June 2014
2015 2014
USD'000 USD'000 USD'000
Action Group Holding - Kuwait 49 51 100
Action Group Australia Company - 22 54
Action Real Estate - Kuwait 1,514 - -
Lausanne for Travel and Tourism - W.L.L. - 92 203
1,563 165 357
--------- --------- ---------------
Expenditure incurred by related parties on behalf of the Group
and subsequently recharged
Unaudited Unaudited Audited
At 30 At 30 At 31 December
June June 2014
2015 2014
USD'000 USD'000 USD'000
Action Group Holding - Kuwait 15 23 66
Action Group Holding - Oman 36 - -
Action Real Estate - Kuwait 125 42 87
176 65 153
--------- --------- ---------------
Expenditure incurred by the Group on behalf of the related
parties and subsequently recharged
Unaudited Unaudited Audited
At 30 At 30 At 31 December
June June 2014
2015 2014
USD'000 USD'000 USD'000
Action Group Holding - Kuwait 403 - -
Sheikh Mubarak Abdulla Mubarak Al Sabah 64 - -
467 - -
--------- --------- ---------------
9. Related party transactions continued
Remuneration of Key Management Personnel
Unaudited Unaudited Audited
At 30 At 30 At 31 December
June June 2014
2015 2014
USD'000 USD'000 USD'000
Salaries and consultancy fees 287 382 694
Other benefits 11 14 34
298 396 728
--------- --------- ---------------
10. Bank borrowings
Unaudited Unaudited Audited
At 30 At 30 At 31 December
June June 2014
2015 2014
USD'000 USD'000 USD'000
Bank loans:
Current (including overdraft) 19,026 9,633 15,646
Non-current 121,949 94,521 94,255
140,975 104,154 109,901
--------- --------- ---------------
Unaudited Unaudited Audited
At 30 At 30 At 31 December
June June 2014
2015 2014
USD'000 USD'000 USD'000
Opening amount 109,901 108,316 108,316
Proceeds of new borrowings 52,398 1,925 17,839
Repayments of borrowings (21,324) (6,087) (16,254)
Closing amount 140,975 104,154 109,901
--------- --------- ---------------
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The group has sufficient headroom to enable it to conform to
covenants on its existing borrowings. The Group has undrawn
financing facilities of USD 48,472,000 as at 30 June 2015 (2014:
USD 1,688,000).
Bank facilities are secured by the Group's counter indemnities
for guarantees issued on their behalf, the Group's corporate
guarantees, letter of undertakings, certain property, plant and
equipment, movable assets, insurance policy, leasehold rights for
land and personal guarantees from certain directors or
shareholders.
The carrying amounts of borrowings approximate their fair
value.
11. Share capital and Share premium account
Share capital
Number of Share capital
shares USD'000
Balance at 31 December 2014 and 1 January 2015
(Audited) 147,637,195 24,102
Issued during period - -
----------- -------------
Balance at 30 June 2015 (Unaudited) 147,637,195 24,102
=========== =============
Balance at 1 January 2014 (Audited) 147,637,195 24,102
Issued during period - -
----------- -------------
Balance at 30 June 2014 (Audited) 147,637,195 24,102
=========== =============
Share premium
Share premium
USD'000
Balance at 1 January 2015 (Audited) 124,479
Issued during the period -
-------------
Balance at 30 June 2015 (Audited) 124,479
=============
Balance at 1 January 2014 (Audited) 124,479
Issued during the period -
-------------
Balance at 30 June 2014 (Audited) 124,479
=============
On incorporation the Company had 1,000 GBP1 ordinary shares,
which on 8 November 2013 were split into 10,000 ordinary shares of
nominal value of 10p. On 9 December 2013 the Company issued a
further 99,990,000 shares and performed a share for share exchange
with its shareholder in return for 100% of the beneficial interest
in and voting control over the issued share capital of Action
Hotels Limited.
On 23 December 2013 the Company issued 47,637,195 new ordinary
shares at GBP0.64 as part of its listing on the AIM market of the
London Stock Exchange.
12. Merger and other reserves
Statutory Voluntary Share-based payment
reserve reserve Retranslation reserve reserve Merger reserve Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
--------- ---------- --------------------- ------------------- -------------- -------
At 31 December 2014
(Audited) 2,960 2,802 (5,201) 596 (5,649) (4,492)
Total comprehensive income
for the period - - (3,964) - - (3,964)
--------- ---------- --------------------- ------------------- -------------- -------
At 30 June 2015
(Unaudited) 2,960 2,802 (9,165) 596 (5,649) (8,456)
========= ========== ===================== =================== ============== =======
At 31 December 2013* 2,960 2,802 413 596 (5,649) 1,122
Total comprehensive income
for the period - - 5,199 - - 5,199
At 30 June 2014 (Audited) 2,960 2,802 5,612 596 (5,649) 6,321
========= ========== ===================== =================== ============== =======
* As reported within the consolidated financial statements for
the year ended 31 December 2014
13. Dividends
A Final dividend of GBP 0.96 (US$ 1.54) per share for the year
2014 was paid on 1 June 2015, totalling US$ 3,302,000.
14. 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 financial statements as at 31 December
2014. There have been no changes in the risk management department
or in any risk management policies since the year end.
15. Income Taxes
In certain of the jurisdictions that the Group operates in,
foreign ownership of its assets or business is either prohibited or
could lead to additional tax liabilities. Management is confident
that the corporate structure put in place as part of the Company's
admission to the AIM division of the London Stock Exchange
mitigates the risks posed in this respect. Management has therefore
concluded that no material tax exposure exists in these
jurisdictions.
Should the Group's business in these jurisdictions become
subject to tax under the current structure, Management estimate
that USD 123,000 of income tax would potentially be assessed on the
Group for the year ended 30 June 2015.
16. Fair value measurements of non-current assets
The change in fair value measurements of investment properties
and hotels in operation or construction for the six months ended 30
June 2015 was immaterial in comparison to the carrying value of
these assets. Therefore no fair value adjustments have been made to
the carrying value of these assets.
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
2014 and the Directors of the Group review the valuation process
undertaken and consider whether it remains appropriate.
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, plant 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 by the
independent valuers 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.
16. Fair value measurements of non-current assets continued
At
30 June
2015
Discount rate: owned asset 11% - 11.5%
Exit yield 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.
17. Commitments on properties under construction
At 30 June 2015, the Group had entered into contractual
commitments on construction costs of hotels under construction
amounting to USD 35,242,000 (2013: USD 45,000,000).
18. Operating lease arrangements
Unaudited Unaudited Audited
6 months 6 months ended Year
ended 30 June ended
30 June 2014 31 December
2015 2014
USD'000 USD'000 USD'000
Lease payments under operating leases
recognised as an expense in the period 1,306 1,430 2,762
========= =============== ============
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