2023
FINANCIAL PERFORMANCE
€million
|
2023
|
20222
|
|
|
|
Revenue
|
607.7
|
515.7
|
Hotel
EBITDAR1
|
252.3
|
205.7
|
Hotel variable lease
costs
|
(3.7)
|
(3.8)
|
Hotel
EBITDA1
|
248.6
|
201.9
|
Other income
(excluding gain on disposal of property, plant and
equipment)
|
1.5
|
1.4
|
Central
costs
|
(21.1)
|
(16.5)
|
Share-based payments
expense
|
(5.9)
|
(3.4)
|
Adjusted
EBITDA1
|
223.1
|
183.4
|
Adjusting
items3
|
(2.9)
|
28.7
|
Group
EBITDA1
|
220.2
|
212.1
|
Depreciation of
property, plant and equipment and amortisation
|
(33.4)
|
(29.1)
|
Depreciation of
right-of-use assets
|
(30.7)
|
(27.5)
|
Operating
profit
|
156.1
|
155.5
|
Interest on lease
liabilities
|
(42.8)
|
(38.1)
|
Other interest and
finance costs
|
(7.8)
|
(7.7)
|
Profit before
tax
|
105.5
|
109.7
|
Tax
charge
|
(15.3)
|
(13.0)
|
Profit for the
year
|
90.2
|
96.7
|
|
|
|
Earnings per share
(cents) – basic
|
40.4
|
43.4
|
Adjusted earnings
per share1
(cents) –
basic
|
41.7
|
31.7
|
Hotel EBITDAR
margin1
|
41.5%
|
39.9%
|
Group KPIs (as
reported)
|
|
|
|
|
|
RevPAR
(€)
|
114.67
|
102.23
|
Occupancy
|
80.0%
|
75.8%
|
Average room rate
(ARR) (€)
|
143.36
|
134.80
|
|
|
|
‘Like for
like’ Group KPIs1
|
|
|
|
|
|
RevPAR
(€)
|
116.69
|
105.17
|
RevPAR growth on
2022
|
11%
|
|
Occupancy
|
81.0%
|
77.3%
|
Average room rate
(ARR) (€)
|
143.99
|
136.12
|
Half-yearly
‘like for like’ Group KPIs1
|
H1
2023
|
H2
2023
|
|
|
|
RevPAR
(€)
|
112.09
|
121.21
|
RevPAR growth on
equivalent period in 2022
|
23%
|
2%
|
Occupancy
|
79.7%
|
82.4%
|
Average room rate
(ARR) (€)
|
140.66
|
147.15
|
Summary of hotel performance
The Group delivered
strong Adjusted EBITDA1
of €223.1 million in
2023, up 22% from €183.4 million in 2022. Strong revenue conversion
at existing hotels resulted in year-on-year growth of €38.6 million
and hotel additions in 2022 and 20234
contributed a
further €23.3 million of growth. Covid related government support
totalling €15.2 million was included in 2022 Adjusted
EBITDA1.
The Group achieved
revenue of €607.7 million for the year, representing an increase of
18% compared to 2022. This increase was driven by strong underlying
performance at the existing hotels (growth of €50.9 million) as
well as recent additions to the portfolio. The ten hotels added to
the portfolio during 2022 and 2023, together contributed a
year-on-year increase of €45.7 million. This was partially offset
by the disposal of Clayton Crown Hotel, London in June 2022, which
generated revenue of €2.2 million in that year.
‘Like for like’
Group RevPAR1
for
the year was €116.69, up from €105.17 (+11%) in 2022 as the
existing portfolio returned to strong occupancy levels above 80%
and achieved average room rate1
growth of 6%.
The strong start to 2023, as the hotels benefitted from the
recovery in Q1 2023 versus Q1 2022 (which had some
Covid restrictions), was followed by ongoing recovery in corporate
demand and pricing, together with sustained leisure demand in our
markets. During 2023, the year-on-year growth rate moderated from
‘like for like’ RevPAR1
growth of 23%
in H1 2023 to 2% in H2 2023 when compared to the equivalent period
in 2022. In Ireland, the market was impacted by the increase in the
VAT rate of an additional 4.5% from 1 September 2023, a lower
number of stadium events in Dublin in Q4 2023 and lower demand
around the Christmas period. Hotel room supply in Ireland remains
constrained with a significant number of rooms being used for the
provision of emergency accommodation.
On
a ‘like for like’ basis1,
food and beverage revenues grew by €8.4 million to €101.6 million
(2022: €93.2 million). Food and
beverage revenue stabilised during 2023 and the Group made
significant gains in profitability supported by the rollout of the
Dalata Signature Range.
The Group continues
to proactively manage its cost base and respond to inflation. On a
‘like for like’ basis1,
hotel operating costs, defined as revenue less Hotel
EBITDA1,
increased by €12.3 million (+5%) to €296.2 million in 2023. Costs
were higher in the first half of 2023, with the comparative period
in 2022 impacted by Covid restrictions, while costs in the second
half of 2023 were lower than the equivalent period in
2022.
The Group’s ongoing
commitment to reduce energy consumption (down by 12% year-on-year
per room sold) and a reduction in gas and electricity pricing
resulted in gas and electricity costs decreasing by €3.4 million to
€23.4 million in 2023 versus 2022 on a ‘like for like’
basis1.
The Group has either purchased or entered into fixed pricing
contracts until June 2025 for approximately 90% of its projected
gas and electricity consumption until December 2024 and 70%
thereafter. Based on expected consumption levels, we estimate gas
and electricity costs of approximately €26 million for 2024 (2023:
€28 million).
The Group has made
significant progress on innovation projects this year to protect or
enhance profitability and customer and employee experience. Hotel
payroll for the second half of 2023 was in line with the equivalent
period in 2022 on a ‘like for like’ basis1
despite the
significant increases in minimum wage rates in Ireland and living
wage rates in the UK. On similar business levels, the Group has
increased productivity, achieving a 10% decrease in hours worked in
the accommodation and food and beverage departments of ‘like for
like’ hotels1
in the second half
of 2023. This was underpinned by the focus on innovation projects,
notably the rooms accommodation efficiency project and the roll out
of the Dalata Signature Range. Also, direct bookings through our
brand websites are increasing and we are ambitious to improve this
further supported by the refresh of our brands in 2024.
The Group remains
focused on driving innovation and efficiencies across the business
to offset the impact of rising costs, particularly in payroll
following increases in minimum wage rates again in 2024 in Ireland
and the UK. The rates increased by 15% and 27% respectively from
2019 to 2023. Despite this and significantly more elevated energy
costs in recent years, the Group’s Hotel EBITDAR
margin1
for 2023 was in line
with 2019 levels on a ‘like for like’ basis1.
The Group’s 'like for like’ Hotel EBITDAR margin1
of 42.3% in 2023 was
60 basis points ahead of 2022 levels (41.7%) and 380 basis points
ahead excluding Covid-19 related government support. With minimum
wage increases of 12% and 10% in Ireland and the UK in 2024 and
payroll costs representing 41% of the Group’s operating costs in
2023, it will be an ongoing challenge to protect margin
percentages. However, Dalata’s focus and successes to date mean we
are well positioned to continue to respond.
€million
|
Revenue
|
Operating
costs
|
Adjusted
EBITDA1
|
Year ended 31
December 2022
|
515.7
|
(332.3)
|
183.4
|
Movement at ‘like
for like’ hotels1
|
50.9
|
(12.3)
|
38.6
|
Hotels added to the
portfolio during either year4
|
45.7
|
(22.4)
|
23.3
|
2022 Covid-19
government support (now lapsed)
|
-
|
(15.2)
|
(15.2)
|
Movement in other
income and group expenses
|
-
|
(6.6)
|
(6.6)
|
Hotel
disposals
|
(2.2)
|
2.5
|
0.3
|
Effect of
FX
|
(2.4)
|
1.7
|
(0.7)
|
Year ended 31
December 2023
|
607.7
|
(384.6)
|
223.1
|
PERFORMANCE
REVIEW | SEGMENTAL ANALYSIS
The following
section analyses the results from the Group’s portfolio of hotels
in Dublin, Regional Ireland, the UK and Continental Europe. In
2022, the operating performance of Clayton Hotel Düsseldorf was
disclosed within the Dublin segment due to being a single asset and
its immateriality in the context of the overall Group. Following
the addition of Clayton Hotel Amsterdam American in October 2023,
the Group’s Continental Europe portfolio is now material enough to
be presented separately. As a result, the 2022 operating
performance for Dublin has been amended to exclude Clayton Hotel
Düsseldorf.
-
Dublin Hotel Portfolio
€million
|
2023
|
2022
|
|
|
|
Room
revenue
|
216.9
|
190.1
|
Food and beverage
revenue
|
51.3
|
45.3
|
Other
revenue
|
17.9
|
15.2
|
Revenue
|
286.1
|
250.6
|
Hotel
EBITDAR1
|
135.9
|
118.5
|
Hotel EBITDAR margin
%1
|
47.5%
|
47.3%
|
|
|
|
Performance
statistics (‘like for like’)5
|
2023
|
2022
|
|
|
|
RevPAR
(€)
|
132.89
|
119.98
|
Occupancy
|
84.0%
|
80.9%
|
Average room rate
(ARR) (€)
|
158.28
|
148.26
|
|
|
|
Dublin owned
and leased portfolio
|
31
Dec 2023
|
31 Dec
2022
|
Hotels at year
end
|
17
|
17
|
Room numbers at year
end
|
4,439
|
4,437
|
The Dublin portfolio
consists of eight Maldron hotels, seven Clayton hotels, The Gibson
Hotel and The Samuel Hotel. Ten hotels are owned and seven are
operated under leases. The Group acquired two rooms at Clayton
Hotel Liffey Valley during the year.
The Dublin portfolio
delivered Hotel EBITDAR1
of €135.9 million
for the year, representing growth of 15% compared to Hotel
EBITDAR1
in the prior year of
€118.5 million (which included Covid-19 related government support
totalling €9.2 million). The two new hotels opened during 2022, The
Samuel Hotel and Maldron Hotel Merrion Road, contributed an
increase of €4.9 million. ‘Like for like’ Hotel EBITDAR
margin1
was 47.6% in 2023,
360 basis points ahead of 2022 levels (excluding Covid-19 related
government support).
Revenue for the
Dublin portfolio totalled €286.1 million in 2023, up €35.5 million
(14%) on the prior year. ‘Like for like’ hotels5
contributed €26.4
million of this increase, while the two new hotels opened during
2022 added a further €9.1 million.
‘Like for like’
Dublin RevPAR5
for the year was
€132.89, up from €119.98 (+11%) in 2022. The ‘like for like’ Dublin
hotels5
returned to high
occupancy levels achieving 84% in 2023, supported by the recovery
in the first quarter. Average room rate1
grew by 7% on a
‘like for like’ basis5.
The Dublin hotels benefitted from a strong return of corporate
demand with conference and corporate business exceeding 2019 levels
on a ‘like for like’ basis5.
There were also a number of events in the city which drove strong
leisure demand such as the Champions Cup rugby final in May 2023
and the Aer Lingus College Football Classic in August 2023. Demand
was softer in the final quarter due to the lack of the Autumn Rugby
Internationals as a result of the 2023 Rugby World Cup. There was
also a 4.5% increase in the VAT rate effective from 1 September
2023. Despite this, for the second half of 2023, ‘like for like’
RevPAR5
was in line with the
2022 equivalent levels.
During 2023, the
Dublin market also benefitted from strong visitor numbers with the
volume of passengers travelling through Dublin Airport broadly in
line with 2019 levels and employment levels in the city remains
high with a strong presence from foreign direct investment. Hotel
room supply remains constrained with a significant number of rooms
being used for the provision of emergency accommodation and
external estimates suggest approximately 10% of the total room
supply in Dublin is currently out of use.
On a ‘like for like’
basis5,
food and beverage revenues grew by €4.6 million to €48.3 million
(2022: €43.7 million), supported by recovery in the first quarter.
We are increasing earnings from our food and beverage outlets
through competitive pricing and driving efficiencies to enhance
profitability. ‘Like for like’5
food and beverage
departmental margin increased to 30% in 2023 (+710 bps on
2022).
2.
Regional Ireland Hotel Portfolio
€million
|
2023
|
2022
|
|
|
|
Room
revenue
|
73.2
|
63.8
|
Food and beverage
revenue
|
30.3
|
28.1
|
Other
revenue
|
8.8
|
7.9
|
Revenue
|
112.3
|
99.8
|
Hotel
EBITDAR1
|
37.0
|
31.7
|
Hotel EBITDAR margin
%1
|
33.0%
|
31.8%
|
|
|
|
Performance
statistics
|
2023
|
2022
|
|
|
|
RevPAR
(€)
|
107.44
|
93.60
|
Occupancy
|
79.5%
|
74.6%
|
Average room rate
(ARR) (€)
|
135.13
|
125.48
|
|
|
|
Regional
Ireland owned and leased portfolio
|
31
Dec 2023
|
31 Dec
2022
|
Hotels at year
end
|
13
|
13
|
Room numbers at year
end
|
1,867
|
1,867
|
The Regional Ireland
portfolio comprises seven Maldron hotels and six Clayton hotels
primarily located in the cities of Cork, Galway and Limerick. 12
hotels are owned and one is operated under a lease.
The Regional Ireland
portfolio generated Hotel EBITDAR1
of €37.0 million in
2023, which was an increase of €5.3 million compared to 2022. Hotel
EBITDAR1
of €31.7 million in
2022 included Covid-19 related government support of €4.7
million. Hotel EBITDAR margin1
was 33.0% in 2023,
590 basis points ahead of 2022 levels (excluding Covid-19 related
government support).
Revenue exceeded
€100 million for the first time, growing by €12.5 million to €112.3
million in 2023 (2022: €99.8 million).
Room revenue growth
of 15% benefitted from a continued increase in the number of
international travellers visiting Ireland as airline capacity
returns to pre-pandemic levels. Occupancy was strong at 79.5% in
2023, up from 74.6% in 2022, supported by a large growth in tour
group and corporate business. The hotels continued to grow rates
across all customer categories with average room
rates1
increasing by 8% on
2022 levels. Domestic leisure demand also
remained robust although travel patterns are normalising. Trade
remained strong in the second half of 2023 with
RevPAR1
growth of 7%, led by
pricing. Similar to Dublin, the provision of emergency
accommodation for refugees is reducing hotel room supply in
Regional Ireland.
Food and beverage
revenues grew by 8% from €28.1 million in 2022 to €30.3 million in
2023, supported by recovery in the first quarter. Strong focus on
driving efficiencies resulted in food and beverage departmental
margin increasing to 27% in 2023 (+700 bps on 2022).
3.
UK Hotel Portfolio
Local currency
- £million
|
2023
|
2022
|
|
|
|
Room
revenue
|
127.3
|
101.0
|
Food and beverage
revenue
|
26.5
|
22.3
|
Other
revenue
|
8.0
|
7.0
|
Revenue
|
161.8
|
130.3
|
Hotel
EBITDAR1
|
62.2
|
45.8
|
Hotel EBITDAR margin
%1
|
38.4%
|
35.2%
|
|
|
|
Performance
statistics (‘like for like’)6
|
2023
|
2022
|
|
|
|
RevPAR
(£)
|
86.11
|
77.95
|
Occupancy
|
77.8%
|
73.7%
|
Average room rate
(ARR) (£)
|
110.68
|
105.79
|
|
|
|
UK
owned and leased portfolio
|
31
Dec 2023
|
31 Dec
2022
|
Hotels at year
end
|
18
|
16
|
Room numbers at year
end
|
4,242
|
3,962
|
The UK hotel
portfolio comprises 12 Clayton hotels and six Maldron hotels with
four hotels situated in London, 11 hotels in regional UK, focussed
on the large cities of Manchester, Glasgow, Birmingham and Bristol,
and three hotels in Northern Ireland. Seven hotels are owned, nine
are operated under long-term leases and two hotels are effectively
owned through a 99-year lease and 122-year lease. Clayton Hotel
London Wall (89 rooms) and Maldron Hotel Finsbury Park (191 rooms)
both commenced trading under Dalata ownership in July
2023.
The UK portfolio
delivered Hotel EBITDAR1
of £62.2 million in
2023, growing £16.4 million (+36%) from £45.8 million in 2022
(which included Covid related government support of £1.1 million).
This growth reflects an uplift of £10.7 million relating to the
full year impact of the four hotels added to the portfolio during
2022 and two London hotels added during 20234.
‘Like for like’ Hotel EBITDAR margin1
was 39.4% for 2023,
260 basis points ahead of 2022 levels (excluding Covid-19 related
government support).
The four hotels
added to the portfolio during 2022 performed strongly, achieving a
Rent Cover1
of 1.7x despite
being only open for an average of 20 months at 31 December
2023.
Revenue for the UK
portfolio totalled £161.8 million in 2023, up £31.5 million (24%)
on the prior year. ‘Like for like’6
hotels contributed
£10.4 million of this increase, while the six new hotels added
during 2022/2023 added a further £23.0 million. These uplifts were
partially offset by the sale of Clayton Crown Hotel in June 2022
which reduced revenues by £1.9 million.
‘Like for like’
occupancy6
was strong at 77.8%
in 2023, up from 73.7% in 2022. Our London hotels, which had been
slower to recover from the Covid-19 pandemic, rebounded strongly
from the ongoing recovery in inbound leisure travel and corporate
business during 2023 with RevPAR1
17% ahead of 2022
levels on a ‘like for like’ basis6.
‘Like for like’ RevPAR6
at our regional UK
and Northern Ireland hotels was 9% ahead of 2022 levels driven by
sustained domestic demand, particularly within the corporate
category. Trade remained strong in the second half of 2023 with
‘like for like’ UK RevPAR6
growth of
3%.
‘Like for
like’6
food and beverage
revenue for the year grew by £1.6 million (9%) to £19.9 million
(2022: £18.3 million), supported by recovery in the first quarter.
‘Like for like’6
food and beverage
departmental margin increased to 28% in 2023 (+400 bps on
2022).
4.
Continental Europe Hotel Portfolio
€million
|
2023
|
2022
|
|
|
|
Room
revenue
|
16.4
|
9.8
|
Food and beverage
revenue
|
4.9
|
2.4
|
Other
revenue
|
1.7
|
0.7
|
Revenue
|
23.0
|
12.9
|
Hotel
EBITDAR1
|
7.7
|
2.0
|
Hotel EBITDAR margin
%1
|
33.6%
|
15.1%
|
|
|
|
Continental
Europe leased portfolio
|
31
Dec 2023
|
31 Dec
2022
|
Hotels at year
end
|
2
|
1
|
Room numbers at year
end
|
566
|
393
|
The Continental
Europe hotel portfolio includes Clayton Hotel Düsseldorf (393
rooms) which was added to the portfolio in February 2022 and was
disclosed within the Dublin portfolio in previous reporting periods
due to its size in the context of the overall Group. In October
2023, the Group added the leasehold interest in the Hard Rock Hotel
Amsterdam American (173 rooms) which was subsequently rebranded as
Clayton Hotel Amsterdam American. Both hotels are operated under
leases.
Clayton Hotel
Düsseldorf performed well during the year, despite the challenging
backdrop of the German economy. The Group continues to integrate
the hotel into the Dalata portfolio and is already seeing tangible
benefits of our revenue management approach and relationships as
the hotel outperformed in RevPAR1
growth against its
compset1.
The Group is also pleased with the performance of Clayton Hotel
Amsterdam American since its integration into the portfolio. Both
hotels in this region were cash positive for the year or period of
trading since being added to the portfolio.
Central costs
and share-based payment expense
Central costs
totalled €21.1 million during the year (2022: €16.5 million). This
included the positive impact of an insurance provision write-back
and discount unwind of €1.3 million (2022: €0.7 million). Excluding
the impact of this, the increase of €5.2 million primarily relates
to payroll costs due to additional headcount and pay increases post
pandemic era restrictions to support the growth of the Group and
increases in performance-related remuneration for executive
directors. The Group also incurred additional costs in relation to
strategic marketing projects to support the brand refresh and
consolidation of digital marketing and will continue to invest in
the refresh of its employer and consumer brands in 2024.
The Group’s
share-based payment expense represents the accounting charge for
the Group’s LTIP and SAYE share schemes and increased to €5.9
million in 2023 (2022: €3.3 million) primarily based on the Group’s
assessment of non-market performance conditions of active LTIP
award schemes. The Group also recognised an additional charge of
€0.9 million during the year on foot of the vesting of awards
granted in March 2020.
Adjusting
items to EBITDA
€million
|
2023
|
2022
|
|
|
|
Reversal of previous
periods revaluation losses through profit or loss
|
2.0
|
21.2
|
Gain on disposal of
Clayton Crown Hotel, London
|
-
|
3.9
|
Income from the sale
of Merrion Road residential units
|
-
|
42.6
|
Release of costs
capitalised for Merrion Road residential units
|
-
|
(41.0)
|
Hotel acquisition
costs
|
(4.4)
|
-
|
Hotel pre-opening
expenses
|
(0.5)
|
(2.7)
|
Net reversal of
previous impairment charges of fixtures, fittings and
equipment
|
-
|
0.6
|
Net reversal of
impairment of right-of-use assets
|
-
|
4.1
|
Adjusting
items1
|
(2.9)
|
28.7
|
The Group recorded a
net revaluation gain of €94.1 million on the revaluation of its
property assets at 31 December 2023 of which €2.0 million was
recorded as the reversal of previous period revaluation losses
through profit or loss (2022: €21.2 million). There were no
revaluation losses through profit or loss in the year (2022: €nil).
Further detail is provided in the ‘Property, plant and equipment’
section (note 15) of the financial statements.
On 3 July 2023, the
Group acquired the long leasehold interest and trade of Apex Hotel
London Wall, now trading as Clayton Hotel London Wall, for a total
cash consideration of £53.4 million (€62.1 million).
Acquisition-related costs, primarily stamp duty, of £3.3 million
(€3.8 million) were charged to administrative expenses in profit or
loss in respect of this business combination. Further detail is
provided in the ‘Business combinations’ section (note 13) of the
financial statements.
On 3 October 2023,
the Group acquired 100% of the share capital of American Hotel
Exploitatie BV which holds the operational lease of the Hard Rock
Hotel Amsterdam American, now trading as Clayton Hotel Amsterdam
American, for a total cash consideration of €28.3 million (net
working capital liabilities of €1.2 million were also assumed on
acquisition). Acquisition-related costs of €0.6 million were
charged to administrative expenses in profit or loss in respect of
this business combination. Further detail is provided in the
‘Business combinations’ section (note 13) of the financial
statements.
The Group incurred
€0.5 million of pre-opening expenses during the year (2022: €2.7
million). These expenses are related to the opening of Maldron
Hotel Finsbury Park, London in July 2023.
In 2022, the Group
completed the sale to Irish Residential Properties REIT (plc)
(‘I-RES’) of the Merrion Road residential units which had been
developed by the Group on the site of the former Tara Towers Hotel.
Total sales proceeds of €42.6 million were recognised as income in
profit or loss for the year ended 31 December 2022. The related
capitalised contract fulfilment costs of €41.0 million were
released from the statement of financial position to profit or loss
and recognised within costs for the year ended 31 December 2022.
Further detail is provided in the ‘Contract fulfilment costs’
section (note 17) of the financial statements.
Depreciation
of right-of-use assets
Under IFRS 16, the
right-of-use assets are depreciated on a straight-line basis to the
end of their estimated useful life, typically the end of the lease
term. The depreciation of right-of-use assets increased by
€3.2 million to €30.7 million for the year ended 31 December 2023,
primarily due to the full year impact of six leased hotels added to
the portfolio during 20227,
and the impact of the lease of Clayton Hotel Amsterdam American,
which was added in October 2023.
Depreciation
of property, plant and equipment and amortisation
Depreciation of
property, plant and equipment and amortisation increased by €4.4
million to €33.4 million in 2023. The increase primarily
relates to the acquisition of two London hotel assets during
the year, fixtures and fittings acquired with the leasehold
addition of Clayton Hotel Amsterdam American and the full year
impact of the depreciation of Maldron Hotel Merrion Road, Dublin
which opened in August 2022.
Finance
Costs
€million
|
2023
|
2022
|
|
|
|
Interest expense on
bank loans and borrowings
|
15.6
|
7.9
|
Impact of interest
rate swaps
|
(6.9)
|
(0.2)
|
Other finance
costs
|
1.3
|
2.4
|
Net foreign exchange
(gain)/loss on financing activities
|
(0.2)
|
0.2
|
Finance costs before
capitalised interest and excluding lease liability
interest
|
9.8
|
10.3
|
Capitalised
interest
|
(2.0)
|
(2.5)
|
Finance costs
excluding lease liability interest
|
7.8
|
7.8
|
Interest on lease
liabilities
|
42.8
|
38.1
|
Finance
costs
|
50.6
|
45.9
|
Weighted average
interest cost, including the impact of hedges
|
|
|
- Sterling
denominated borrowings
|
3.2%
|
3.6%
|
- Euro denominated
borrowings
|
4.2%
|
2.5%
|
Finance costs
related to the Group’s loans and borrowings (before capitalised
interest) amounted to €9.8 million in 2023, decreasing from €10.3
million in 2022. Lower banking margins on the Group’s term loan and
RCF drawn amounts, which are set with reference to the Net Debt to
EBITDA covenant levels, lower commitment fee charges, which are
calculated as a percentage of margin, and lower average borrowings
were mostly offset by the impact of IFRS 9 accounting adjustments
recorded in 2022 which reduced finance costs in the prior year and
a higher variable interest cost on RCF drawn amounts.
During the year,
interest on loans and borrowings of €2.0 million was capitalised to
assets under construction, relating to the construction of Maldron
Hotel Shoreditch, London.
Interest on lease
liabilities for the year increased from €38.1 million in 2022 to
€42.8 million in 2023 primarily due to the full year impact of six
leased hotels added to the portfolio during 20227,
and the impact of the lease of Clayton Hotel Amsterdam American,
which was added in October 2023.
Tax
charge
The tax charge for
the year ended 31 December 2023 of €15.3 million mainly relates to
current tax in respect of profits earned in Ireland during the
year. The deferred tax charge of €0.5 million primarily relates to
deferred tax arising on revaluations of land and buildings through
profit and loss. The Group’s effective tax rate increased from
11.8% in 2022 to 14.5% in 2023, mainly due to the impact of
non-taxable gains, such as the reversal of previous periods
revaluation losses through profit and loss, during the prior year
that reduced the effective tax rate in that year. At 31 December
2023, the Group has deferred tax assets of €18.1 million in
relation to cumulative tax losses and interest carried forward
which can be utilised to reduce corporation tax payments in future
periods.
Earnings per
share (EPS)
The Group’s profit
after tax of €90.2 million for the year (2022: €96.7 million)
represents basic earnings per share of 40.4 cents (2022: 43.4
cents). The Group’s profit after tax decreased by 7% year on year,
mainly due to the impact of net property revaluation movements
through profit and loss recorded in 2022, which increased profits
in that year. Excluding the impact of adjusting
items1,
adjusted basic earnings per share1
grew by 32% to 41.7
cents in 2023 (2022: 31.7 cents). Adjusting
items1
in 2023 primarily
related to acquisition costs of €4.4 million and the reversal of
previous period revaluation losses through profit or loss of €2.0
million.
STRONG
CASHFLOW GENERATION
The Group continues
to generate strong Free Cashflow1
to fund future
acquisitions, development expenditure and shareholder returns. In
2023, Free Cashflow1
totalled €133.4
million, up 5% on 2022 which benefitted from reduced levels of
corporation tax and refurbishment capital expenditure payments. At
31 December 2023, the Group’s Debt and Lease Service
Cover1
remains strong at
3.0x with cash and undrawn committed debt facilities of €283.5
million (31 December 2022: cash and undrawn debt facilities of
€455.7 million).
Free
Cashflow1
|
2023
|
2022
|
|
|
|
Net cash from
operating activities
|
171.4
|
207.9
|
Other interest and
finance costs paid
|
(8.7)
|
(12.3)
|
Refurbishment
capital expenditure paid1
|
(26.1)
|
(15.9)
|
Fixed lease
payments
|
(53.5)
|
(47.4)
|
Add back
acquisition-related costs
|
4.4
|
-
|
Add back pre-opening
costs
|
0.5
|
2.7
|
Exclude impact from
net tax payments/(deferrals) under Debt Warehousing
scheme
|
34.9
|
(8.5)
|
Exclude impact of
2022 corporation tax payments made during 2023
|
10.5
|
-
|
Free
Cashflow1
|
133.4
|
126.5
|
Weighted average
shares outstanding - basic (million)
|
223.3
|
222.9
|
Free Cashflow
per Share1
(cent)
|
59.7c
|
56.8c
|
During the year, the
Group paid corporation tax totalling €23.8 million, compared to a
corporation tax refund of €1.2 million received in 2022. This
increase reflects both an increase in the Group’s taxable profit
levels as well as the normalisation of the timing of
payments. Preliminary corporation tax is typically paid in
the year the charge arises however due to the pandemic impact on
tax liabilities, the payment of the 2022 corporation tax
liabilities of €10.5 million did not fall due until 2023
when the 2023
preliminary tax payment was also made.
In April 2023, the
Group fully repaid the tax deferrals under the Irish government’s
Debt Warehousing scheme of €34.9 million (2022: repaid Irish VAT
and payroll tax liabilities totalling €2.5 million). Deferrals
under the Debt Warehousing scheme ended in May 2022 and as such no
further amounts were deferred during the year (2022: deferred Irish
VAT and payroll tax liabilities totalling €11.0
million).
The Group made
refurbishment capital expenditure payments totalling €26.1 million
during the year (4.3% of 2023 revenues), compared to payments of
€15.9 million in 2022 (3.1% of 2022 revenues). Completion of
refurbishment projects was impacted by supply chain disruptions,
which reduced the value of payments during 2022. The Group
allocates approximately 4% of revenue to refurbishment capital
expenditure projects.
At 31 December 2023,
the Group has future capital expenditure commitments totalling
€20.6 million, of which €9.6 million relates to the development of
Maldron Hotel Shoreditch, London. The remaining balance of €11.0
million primarily relates to future capital expenditure commitments
at our existing hotels.
BALANCE
SHEET | STRONG ASSET BACKING PROVIDES SECURITY, FLEXIBILITY AND THE
ENGINE FOR FUTURE GROWTH
€million
|
31
Dec 2023
|
31 Dec
2022
|
Non-current
assets
|
|
|
Property, plant and
equipment
|
1,684.8
|
1,427.4
|
Right-of-use
assets
|
685.2
|
658.1
|
Intangible assets
and goodwill
|
54.1
|
31.1
|
Other non-current
assets8
|
32.5
|
33.5
|
Current
assets
|
|
|
Trade and other
receivables and inventories
|
30.7
|
32.6
|
Cash and cash
equivalents
|
34.2
|
91.3
|
Other current
assets8
|
6.5
|
4.9
|
Total
assets
|
2,528.0
|
2,278.9
|
Equity
|
1,392.9
|
1,222.8
|
Loans and borrowings
at amortised cost
|
254.4
|
193.5
|
Lease
liabilities
|
698.6
|
651.8
|
Trade and other
payables
|
86.4
|
119.0
|
Other
liabilities9
|
95.7
|
91.8
|
Total equity
and liabilities
|
2,528.0
|
2,278.9
|
The Group’s balance
sheet position remains robust through financial discipline with
property, plant and equipment of €1.7 billion in excellent
locations and cash and undrawn debt facilities of €283.5 million,
supported by a Net Debt to EBITDA after rent1
of 1.3x.
Property,
plant and equipment
Property, plant and
equipment amounted to €1,684.8 million at 31 December 2023. The
increase of €257.4 million since 31 December 2022 is
driven
by additions of €118.3 million,
acquisitions through business combinations of €68.2 million,
revaluation movements on property assets of €94.1 million, a
foreign exchange gain on the retranslation of Sterling-denominated
assets of €7.3 million and capitalised borrowing and labour costs
of €2.3 million, partially offset by a depreciation charge of €32.8
million for the year.
73% of the Group’s
property, plant and equipment is located in Dublin and London. The
Group revalues its property assets, at owned and effectively owned
trading hotels, at each reporting date using independent external
valuers. The principal valuation
technique utilised is discounted cash flows which utilise
asset-specific risk-adjusted discount rates and terminal
capitalisation rates. The independent external valuation also has
regard to relevant recent data on hotel sales activity
metrics.
Weighted
average terminal capitalisation rate
|
2023
|
2022
|
|
|
|
Dublin
|
7.40%
|
7.56%
|
Regional
Ireland
|
9.06%
|
8.75%
|
UK
|
6.77%
|
6.97%
|
Group
|
7.47%
|
7.61%
|
Revaluation uplifts
of €94.1 million were recorded on our property assets in the year
ended 31 December 2023. €92.1 million of the net gains are recorded
as an uplift through the revaluation reserve. €2.0 million of the
net revaluation uplifts are recorded through profit or loss
reversing revaluation losses from prior periods.
Additions
through acquisitions and capital expenditure
€million
|
2023
|
2022
|
Total acquisitions
and development capital expenditure
|
163.1
|
23.8
|
Total refurbishment
capital expenditure1
|
23.4
|
16.1
|
Additions to
property, plant and equipment
|
186.5
|
39.9
|
Acquisitions and
development capital expenditure during the year mainly related to
the:
-
Acquisition of 107 year
long-leasehold interest (effective freehold) of the newly rebranded
Clayton Hotel London Wall - £53.4 million (€62.1
million)
-
Acquisition of freehold interest
and development capital expenditure at Maldron Hotel Finsbury Park,
London - £49.5 million (€56.9 million), which included directly
attributable transaction costs of £0.4 million (€0.5
million)
-
Construction of Maldron Hotel
Shoreditch, London, which is expected to open in Q3 2024 - £14.1
million (€16.2 million)
-
Purchase of building conversion
opportunity at 28 St. Andrew Square, Edinburgh - £13.3 million
(€15.3 million), which included directly attributable transaction
costs of £0.8 million (€0.9 million)
-
Fixtures, fittings and equipment
acquired with the leasehold addition of Clayton Hotel Amsterdam
American - €6.1 million
The Group incurred
€23.4 million of refurbishment capital expenditure during the year
which mainly related to the refurbishment of 565 bedrooms across
the Group, enhancements to food and beverage infrastructure, health
and safety upgrades and energy efficient plant upgrades. The
Group allocates approximately 4% of revenue to refurbishment
capital expenditure.
Right-of-use
assets and lease liabilities
At 31 December 2023,
the Group’s right-of-use assets amounted to €685.2 million and
lease liabilities amounted to €698.6 million.
€million
|
Lease
liabilities
|
Right-of-use
assets
|
|
|
|
At 31 December
2022
|
651.8
|
658.1
|
Acquisitions through
business combinations
|
43.4
|
43.4
|
Additions
|
0.4
|
0.4
|
Depreciation charge
on right-of-use assets
|
-
|
(30.7)
|
Interest on lease
liabilities
|
42.8
|
-
|
Remeasurement of
lease liabilities
|
7.8
|
7.8
|
Lease
payments
|
(53.5)
|
-
|
Translation
adjustment
|
5.9
|
6.2
|
At
31 December 2023
|
698.6
|
685.2
|
Right-of-use assets
are recorded at cost less accumulated depreciation and impairment.
The initial cost comprises the initial amount of the lease
liability adjusted for lease prepayments and accruals at the
commencement date, initial direct costs and, where applicable,
reclassifications from intangible assets or accounting adjustments
related to sale and leasebacks.
Lease liabilities
are initially measured at the present value of the outstanding
lease payments, discounted using the estimated incremental
borrowing rate attributable to the lease. The lease liabilities are
subsequently remeasured during the lease term following the
completion of rent reviews, a reassessment of the lease term or
where a lease contract is modified. The weighted average lease life
of future minimum rentals payable under leases is 29.5 years (31
December 2022: 29.8 years). The Group acquired the following leases
during the year:
-
18 year remaining lease for Clayton
Hotel Amsterdam American in October 2023 – €41.0
million
-
107 year remaining ground lease for
Clayton Hotel London Wall in July 2023 – £2.0 million (€2.3
million)
During the year
ended 31 December 2023, a lease amendment, which was not included
in the original lease agreement was made to one of the Group’s
leases. This has been treated as a modification of lease
liabilities and resulted in an increase in lease liabilities and
the carrying value of the right-of-use asset of €4.5 million.
Following agreed rent reviews and rent adjustments, which formed
part of the original lease agreements, certain of the Group’s
leases were reassessed during the year. This resulted in an
increase in lease liabilities and related right-of-use assets of
€3.3 million.
Over 90% of lease
contracts at currently leased hotels include rent review caps which
limit CPI/RPI-related payment increases to between 3% - 4% per
annum.
Further information
on the Group’s leases including the unwind of right-of-use assets
and release of interest charge is set out in note 16 to the
financial statements.
Loans and
borrowings
As at 31 December
2023, the Group had loans and borrowings at amortised cost of
€254.4 million and undrawn committed debt facilities of €249.3
million. Loans and borrowings increased from 31 December 2022
(€193.5 million) mainly due to loan drawdowns during the
year.
At
31 December 2023
|
Sterling
borrowings
£million
|
Euro
borrowings
€million
|
Total
borrowings €million
|
Term Loan
|
176.5
|
-
|
203.1
|
Revolving
credit facility:
|
|
|
|
- Drawn in
Sterling
|
44.9
|
-
|
51.6
|
- Drawn in
Euro
|
-
|
4.0
|
4.0
|
External loans
and borrowings drawn at 31 December 2023
|
221.4
|
4.0
|
258.7
|
Accounting
adjustment to bring to amortised cost
|
|
|
(4.3)
|
Loans and
borrowings at amortised cost at 31 December 2023
|
|
|
254.4
|
The Group’s debt
facilities consist of a €200.0 million term loan facility and a
€304.9 million revolving credit facility (‘RCF’), both with a
maturity date of 26 October 2025. The Group’s other revolving
credit facility of €59.5 million matured on 30 September
2023.
The Group’s
covenants comprising Net Debt to EBITDA (as defined in the Group’s
bank facility agreement which is equivalent to Net Debt to EBITDA
after rent1)
and Interest Cover1
were tested on 31
December 2023. At 31 December 2023, the Net Debt to EBITDA covenant
limit is 4.0x and the Interest Cover minimum is 4.0x. The Group
complied with its covenants as at 31 December 2023.
The Group limits its
exposure to foreign currency by using Sterling debt to act as a
natural hedge against the impact of Sterling rate fluctuations on
the Euro value of the Group’s UK assets. The Group is also exposed
to floating interest rates on its debt obligations and uses hedging
instruments to mitigate the risk associated with interest rate
fluctuations. This is achieved by entering into interest rate swaps
which hedge the variability in cash flows attributable to the
interest rate risk. The term debt interest is fully
hedged until 26 October 2024 with interest rate swaps in place to
fix the SONIA benchmark rate to c. 1.0% on Sterling-denominated
borrowings. The variable interest rates on the Group’s revolving
credit facilities were unhedged at 31 December 2023.
See
Supplementary Financial Information which contains definitions and
reconciliations of Alternative Performance Measures (‘APM’) and
other definitions.
2 The 2022
comparative figures include presentation amendments with no impact
to basic or diluted earnings per share. For further details, please
refer to note 2 of the financial statements.
3 Adjusting
items in 2023 include the net property revaluation gain of €2.0
million following the valuation of property assets (2022: net
revaluation gain of €21.2 million) less acquisition costs of €4.4
million (2022: nil). Further detail on adjusting items is provided
in the section titled ‘Adjusting items to EBITDA’.
4 The Group
added ten hotels between January 2022 and October 2023. The Group
added six hotels in the UK (Clayton Hotel Manchester City Centre,
Maldron Hotel Manchester City Centre, Clayton Hotel Bristol City
and Clayton Hotel Glasgow City in 2022 and Maldron Hotel Finsbury
Park, London and Clayton Hotel London Wall in 2023), two hotels in
Dublin (The Samuel Hotel and Maldron Hotel Merrion Road, Dublin in
2022) and two hotels in Continental Europe (Clayton Hotel
Düsseldorf in 2022 and Clayton Hotel Amsterdam American in
2023).
5 The reference
to ‘like for like’ hotels in Dublin for performance statistics
comparing to 2022 excludes The Samuel Hotel which is newly opened
since April 2022 and Maldron Hotel Merrion Road which is newly
opened since August 2022.
6 The reference
to ‘like for like’ hotels in the UK for performance statistics
comparing to 2022 excludes Clayton Hotel Manchester City Centre,
Maldron Hotel Manchester City Centre, Clayton Hotel Bristol City
and Clayton Hotel Glasgow City as these only opened during 2022 and
Maldron Hotel Finsbury Park and Clayton Hotel London Wall which
began trading during 2023. Clayton Crown Hotel, London is also
excluded as it was sold in June 2022.
7 The six
leased hotels added to the portfolio during 2022 were Clayton Hotel
Manchester City Centre, Maldron Hotel Manchester City Centre,
Clayton Hotel Düsseldorf, Clayton Hotel Bristol City, The Samuel
Hotel, Dublin and Clayton Hotel Glasgow City.
8 Other
non-current assets comprise deferred tax assets, investment
property, non-current derivative assets and other receivables
(which include costs of €4.1 million associated with future lease
agreements for hotels currently being constructed or in planning
(31 December 2022: €1.1 million)). Other current assets comprise
current derivative assets.
9
Other liabilities comprise deferred tax liabilities, provision for
liabilities and current tax liabilities.
PRINCIPAL
RISKS AND UNCERTAINTIES
Since the last
report on principal risks in August 2023, there have been ongoing
developments in our risk environment. The principal risks and
uncertainties now facing the Group are:
External,
economic and geopolitical factors – Dalata operates in an open
market, and its activities and performance are influenced by
uncertainty resulting from broader geopolitical and economic
factors outside the Group’s control. Nonetheless, these factors can
directly or indirectly impact the Group’s strategy, future labour
and direct cost base, performance, and the economic environments in
which the Group operates.
The Board and
executive management team continuously focus on the impact of
external factors on our business performance. The Group has an
experienced management team with functional expertise in relevant
areas, supported by modern and resilient information systems that
provide up-to-date information to the Board.
Health, safety
and security - The Group operates multiple
hotels in Ireland, the UK and Continental Europe. Given the nature
of these operations, health, safety, and security concerns will
always remain a key priority for the Board and executive
management. There is a risk that a material operational health and
safety-related event, for example, a fire, food safety event or
public health event resulting in loss of life, injury or
significant property damage, occurs at a hotel and is not
adequately managed.
We have a
well-established health, safety and security framework in our
hotels. There is ongoing capital investment in hotel life, fire and
safety systems and servicing and identified risks are remediated
promptly. External health and safety and food safety audits are
conducted by statutory external bodies, new hotels are built to
high health and safety standards, and all refurbishments include
health and safety as a principal consideration.
Innovation
- The hospitality
market has seen ongoing change and innovation in its structure and
how it delivers on guest expectations. Technological advances in
guest bookings, pricing and service delivery in hospitality will
continue. There is a risk that the Group does not consider and act,
where necessary, to respond to changes in our markets and customer
behaviour and adapt to changes in the broader hospitality
market.
Innovation is a core
objective for senior leadership, with ongoing executive management
focus on developing hotel trends. The Group performs detailed
research on customer wants and needs within our hotels, and reviews
market trends with feedback from customers and teams on initiatives
taken. The Group allocates resources to develop and implement
business efficiencies and innovation and embraces enhanced use of
business systems, new technologies and information to support
innovation.
Developing,
recruiting and retaining our people – Our strategy is to develop our
management and operational expertise, where possible, from within
our existing teams. This expertise can be deployed throughout our
business, particularly at management levels in our new hotels. We
must also recruit and retain well-trained and motivated people to
deliver our desired customer service levels at our hotels. There is
a risk that we cannot implement our management development strategy
as planned or recruit and retain sufficient resources to operate
our business effectively.
The Group invests in
extensive development programmes, including hotel management and
graduate development programmes across various business-related
areas. These programmes are continually reviewed to reflect growing
business needs and competencies. The Group is also focusing on the
ongoing development of retention strategies (such as employee
benefits, workplace culture, training, employee development
programmes, progression opportunities and working
conditions).
Cyber
security, data and privacy – In the current environment,
all businesses face heightened information security risks
associated with increasingly sophisticated cyber-attacks,
ransomware attacks and those targeting data held by companies.
There is an ongoing risk that the Group’s information systems are
subject to a material cyber event that could have the potential for
data loss or theft, denial of service or associated negative
impact.
The ongoing security
of our information technology platforms is crucial to the Board.
The Group has invested in a modern, standardised technology
platform supported by trusted IT partners. Our Information Security
Management System is based on ISO27001 and audited twice annually.
An established data privacy and protection structure, including
dedicated specialist resources, is operational across our
business.
Expansion and
development strategy – The Group’s strategy is to
expand its activities in the UK and European markets, adopting a
predominately capital-light and long-term leasing model or by
directly financing a project, enabled by the Group’s financial
position. There is a risk that as the development programme
continues, fewer viable opportunities could become available, or
opportunities that do arise could have a higher risk profile.
Changes in the cost of financing, yields and the availability of
investment funds could also impact the strategy.
The Group has
extensive acquisitions and development expertise within its central
office function to identify opportunities and leverage its
relationships, funding flexibility and financial position as a
preferred partner. The Board scrutinises all development projects
before commencement and is regularly updated on the progress of the
development programme. Agreed financial criteria and due diligence
are completed for all projects, including specific site selection
criteria, detailed city analysis and market
intelligence.
Our culture
and values –
The rollout of our business model is dependent on the retention and
growth of our strong culture. There is a risk that the Group's
continued expansion, in terms of the number of hotels and countries
where we operate, may dilute the culture that has been a key to the
Group’s success.
We have defined
Group values that are embedded in how we, as a Group and
individuals, behave, which are set out in the Group’s Code of
Conduct. These are supported by internal structures that support
and oversee expected behaviours. We also use wide-ranging measures
to assess and monitor our culture, which are reviewed with the
Board and management teams.
Climate
change, ESG and decarbonisation strategy – The Board is keenly aware of
the risks to society associated with climate change and
environmental matters. We are also aware that being a socially
responsible business supports our strategic objectives and benefits
society and the communities in which we operate. There is a risk
that we will not meet stakeholder expectations in this regard,
particularly concerning target setting, environmental performance
reporting and corporate performance.
The ESG Committee
actively supports the Board in overseeing the development and
implementation of the Group’s strategy and targets in this area. A
climate change and decarbonisation strategy is in place across our
businesses, with published environmental targets.
Statement of Directors’ Responsibilities
in
respect of the Annual Report and the Financial
Statements
The Directors are
responsible for preparing the annual report and the consolidated
and Company financial statements, in accordance with applicable law
and regulations.
Company law
requires the Directors to prepare consolidated and Company
financial statements for each financial year. Under that law, the
Directors are required to prepare the consolidated financial
statements in accordance with IFRS as adopted by the European Union
and applicable law including Article 4 of the IAS Regulation. The
Directors have elected to prepare the Company financial statements
in accordance with IFRS as adopted by the European Union as applied
in accordance with the provisions of the Companies Act
2014.
Under company law,
the Directors must not approve the financial statements unless they
are satisfied that they give a true and fair view of the assets,
liabilities and financial position of the Group and Company and of
the Group’s profit or loss for that year. In preparing the
consolidated and Company financial statements, the Directors are
required to:
-
select suitable accounting policies
and then apply them consistently;
-
make judgements and estimates that
are reasonable and prudent;
-
state whether applicable accounting
standards have been followed, subject to any material departures
disclosed and explained in the financial statements;
-
assess the Group’s and Company’s
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern; and
-
use the going concern basis of
accounting unless they either intend to liquidate the Group or
Company or to cease operations, or have no realistic alternative
but to do so.
The Directors are
also required by the Transparency (Directive 2004/109/EC)
Regulations 2007 and the Transparency Rules of the Central Bank of
Ireland to include a management report containing a fair review of
the business and a description of the principal risks and
uncertainties facing the Group.
The Directors are
responsible for keeping adequate accounting records which disclose
with reasonable accuracy at any time the assets, liabilities,
financial position and profit or loss of the Company and which
enable them to ensure that the financial statements of the Company
comply with the provisions of the Companies Act 2014. The Directors
are also responsible for taking all reasonable steps to ensure such
records are kept by the Company’s subsidiaries which enable them to
ensure that the financial statements of the Group comply with the
provisions of the Companies Act 2014 and Article 4 of the IAS
Regulation. They are responsible for such internal control as they
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error, and have general responsibility for safeguarding
the assets of the Company and the Group, and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities. The Directors are also responsible for
preparing a Directors’ Report that complies with the requirements
of the Companies Act 2014.
The Directors are
responsible for the maintenance and integrity of the corporate and
financial information included on the Group’s and Company’s website
www.dalatahotelgroup.com. Legislation in the Republic of Ireland
concerning the preparation and dissemination of financial
statements may differ from legislation in other
jurisdictions.
Responsibility statement as required by the Transparency Directive
and UK Corporate Governance Code.
Each of the
Directors, whose names and functions are listed in the Board of
Directors section of this Annual Report, confirm that, to the best
of each person’s knowledge and belief:
-
The consolidated financial
statements, prepared in accordance with IFRS as adopted by the
European Union, and the Company financial statements, prepared in
accordance with IFRS as adopted by the European Union as applied in
accordance with the provisions of the Companies Act 2014, give a
true and fair view of the assets, liabilities, and financial
position of the Group and Company at 31 December 2023 and of the
profit of the Group for the year then ended;
-
The Directors’ Report contained in
the Annual Report includes a fair review of the development and
performance of the business and the position of the Group and
Company, together with a description of the principal risks and
uncertainties that they face; and
-
The Annual Report and financial
statements, taken as a whole, provides the information necessary to
assess the Group’s performance, business model and strategy and is
fair, balanced and understandable and provides the information
necessary for shareholders to assess the Company’s position and
performance, business model and strategy.
On behalf of the
Board
John
Hennessy
Chair
|
Dermot
Crowley
Director
|
28 February
2024
|
|
Consolidated statement of profit or loss and other comprehensive
income
for
the year ended 31 December 2023
|
|
2023
€’000
|
2022
€’000
|
|
Note
|
|
Restated (Note 2)
|
Continuing
operations
|
|
|
|
Revenue
|
3
|
607,698
|
515,728
|
Cost of
sales
|
|
(214,509)
|
(183,766)
|
Gross profit
from hotel operations
|
|
393,189
|
331,962
|
|
|
|
|
Income from
residential development activities
|
2,
17
|
-
|
42,532
|
Cost of
residential development activities
|
2,
17
|
-
|
(40,998)
|
Gross profit
from residential development activities
|
|
-
|
1,534
|
Total gross
profit
|
|
393,189
|
333,496
|
|
|
|
|
Administrative
expenses
|
5
|
(238,530)
|
(183,206)
|
Other
income
|
6
|
1,484
|
5,237
|
Operating
profit
|
|
156,143
|
155,527
|
|
|
|
|
Finance
costs
|
7
|
(50,611)
|
(45,870)
|
Profit before
tax
|
|
105,532
|
109,657
|
|
|
|
|
Tax
charge
|
11
|
(15,310)
|
(12,932)
|
Profit for the
year attributable to owners of the Company
|
|
90,222
|
96,725
|
|
|
|
|
Other
comprehensive income
|
|
|
|
Items that will not be reclassified to profit or loss
|
|
|
|
Revaluation of
property
|
15
|
92,098
|
188,185
|
Related deferred
tax
|
26
|
(10,451)
|
(21,223)
|
|
|
81,647
|
166,962
|
Items that are or may be reclassified subsequently to profit or
loss
|
|
|
|
Exchange
gain/(loss) on translating foreign operations
|
|
11,396
|
(28,145)
|
(Loss)/gain on net
investment hedge
|
|
(6,343)
|
17,482
|
Fair value
movement on cash flow hedges
|
25
|
1,753
|
12,093
|
Cash flow hedges –
reclassified to profit or loss
|
25
|
(6,949)
|
(179)
|
Related deferred
tax
|
26
|
1,299
|
(2,929)
|
|
|
1,156
|
(1,678)
|
|
|
|
|
Other
comprehensive income for the year, net of tax
|
|
82,803
|
165,284
|
|
|
|
|
Total
comprehensive income for the year attributable to owners of the
Company
|
|
173,025
|
262,009
|
|
|
|
|
Earnings per
share
|
|
|
|
Basic earnings per
share
|
32
|
40.4
cents
|
43.4
cents
|
Diluted earnings
per share
|
32
|
39.9
cents
|
43.2
cents
|
Consolidated statement of financial position
at 31
December 2023
|
|
2023
€’000
|
2022
€’000
|
Assets
|
|
|
|
Non-current
assets
|
|
|
|
Intangible assets
and goodwill
|
14
|
54,074
|
31,054
|
Property, plant
and equipment
|
15
|
1,684,831
|
1,427,447
|
Right-of-use
assets
|
16
|
685,193
|
658,101
|
Investment
property
|
|
2,021
|
2,007
|
Derivative
assets
|
25
|
-
|
6,825
|
Deferred tax
assets
|
26
|
24,136
|
21,271
|
Other
receivables
|
18
|
6,418
|
3,387
|
Total
non-current assets
|
|
2,456,673
|
2,150,092
|
|
|
|
|
Current
assets
|
|
|
|
Derivative
assets
|
25
|
6,521
|
4,892
|
Trade and other
receivables
|
18
|
28,262
|
30,263
|
Inventories
|
19
|
2,401
|
2,342
|
Cash and cash
equivalents
|
20
|
34,173
|
91,320
|
Total current
assets
|
|
71,357
|
128,817
|
Total
assets
|
|
2,528,030
|
2,278,909
|
|
|
|
|
Equity
|
|
|
|
Share
capital
|
21
|
2,235
|
2,229
|
Share
premium
|
21
|
505,079
|
504,910
|
Capital
contribution
|
21
|
25,724
|
25,724
|
Merger
reserve
|
21
|
81,264
|
81,264
|
Share-based
payment reserve
|
21
|
8,417
|
5,011
|
Hedging
reserve
|
21
|
4,891
|
8,788
|
Revaluation
reserve
|
21
|
461,181
|
379,534
|
Translation
reserve
|
21
|
(12,182)
|
(17,235)
|
Retained
earnings
|
|
316,328
|
232,541
|
Total
equity
|
|
1,392,937
|
1,222,766
|
|
|
|
|
Liabilities
|
|
|
|
Non-current
liabilities
|
|
|
|
Loans and
borrowings
|
24
|
254,387
|
193,488
|
Lease
liabilities
|
16
|
686,558
|
641,444
|
Deferred tax
liabilities
|
26
|
84,441
|
71,022
|
Provision for
liabilities
|
23
|
6,656
|
7,165
|
Other
payables
|
22
|
348
|
239
|
Total
non-current liabilities
|
|
1,032,390
|
913,358
|
|
|
|
|
Current
liabilities
|
|
|
|
Lease
liabilities
|
16
|
12,040
|
10,347
|
Trade and other
payables
|
22
|
86,049
|
118,818
|
Current tax
liabilities
|
|
2,659
|
11,606
|
Provision for
liabilities
|
23
|
1,955
|
2,014
|
Total current
liabilities
|
|
102,703
|
142,785
|
Total
liabilities
|
|
1,135,093
|
1,056,143
|
Total equity
and liabilities
|
|
2,528,030
|
2,278,909
|
On behalf of the
Board:
John
Hennessy
Chair
|
Dermot
Crowley
Director
|
Consolidated statement of changes in equity
for
the year ended 31 December 2023
|
Attributable to owners of the Company
|
|
Share capital
|
Share premium
|
Capital contribution
|
Merger reserve
|
Share-based payment reserve
|
Hedging reserve
|
Revaluation reserve
|
Translation reserve
|
Retained earnings
|
Total
|
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
At 1 January
2023
|
2,229
|
504,910
|
25,724
|
81,264
|
5,011
|
8,788
|
379,534
|
(17,235)
|
232,541
|
1,222,766
|
Comprehensive
income:
|
|
|
|
|
|
|
|
|
|
|
Profit for the
year
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
90,222
|
90,222
|
Other
comprehensive income
|
|
|
|
|
|
|
|
|
|
|
Exchange gain on
translating foreign operations
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
11,396
|
-
|
11,396
|
Loss on net
investment hedge
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(6,343)
|
-
|
(6,343)
|
Revaluation of
properties (note 15)
|
-
|
-
|
-
|
-
|
-
|
-
|
92,098
|
-
|
-
|
92,098
|
Fair value
movement on cash flow hedges (note 25)
|
-
|
-
|
-
|
-
|
-
|
1,753
|
-
|
-
|
-
|
1,753
|
Cash flow hedges –
reclassified to profit or loss (note 25)
|
-
|
-
|
-
|
-
|
-
|
(6,949)
|
-
|
-
|
-
|
(6,949)
|
Related deferred
tax (note 26)
|
-
|
-
|
-
|
-
|
-
|
1,299
|
(10,451)
|
-
|
-
|
(9,152)
|
Total
comprehensive income for the year
|
-
|
-
|
-
|
-
|
-
|
(3,897)
|
81,647
|
5,053
|
90,222
|
173,025
|
|
|
|
|
|
|
|
|
|
|
|
Transactions
with owners of the Company:
|
|
|
|
|
|
|
|
|
|
|
Equity-settled
share-based payments (note 9)
|
-
|
-
|
-
|
-
|
5,910
|
-
|
-
|
-
|
-
|
5,910
|
Transfer from
share-based payment reserve to retained earnings
|
-
|
-
|
-
|
-
|
(2,504)
|
-
|
-
|
-
|
2,504
|
-
|
Vesting of share
awards and options (note 9)
|
6
|
169
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
175
|
Dividends paid
(note 21)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(8,939)
|
(8,939)
|
|
|
|
|
|
|
|
|
|
|
|
Total
transactions with owners of the Company
|
6
|
169
|
-
|
-
|
3,406
|
-
|
-
|
-
|
(6,435)
|
(2,854)
|
At
31 December 2023
|
2,235
|
505,079
|
25,724
|
81,264
|
8,417
|
4,891
|
461,181
|
(12,182)
|
316,328
|
1,392,937
|
Consolidated statement of changes in equity
for
the year ended 31 December 2022
|
Attributable to owners of the Company
|
|
Share capital
|
Share premium
|
Capital contribution
|
Merger reserve
|
Share-based payment reserve
|
Hedging reserve
|
Revaluation reserve
|
Translation reserve
|
Retained earnings
|
Total
|
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
At 1 January
2022
|
2,229
|
504,895
|
25,724
|
81,264
|
3,085
|
(197)
|
212,572
|
(6,572)
|
134,413
|
957,413
|
Comprehensive
income:
|
|
|
|
|
|
|
|
|
|
|
Profit for the
year
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
96,725
|
96,725
|
Other
comprehensive income
|
|
|
|
|
|
|
|
|
|
|
Exchange loss on
translating foreign operations
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(28,145)
|
-
|
(28,145)
|
Gain on net
investment hedge
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
17,482
|
-
|
17,482
|
Revaluation of
properties (note 15)
|
-
|
-
|
-
|
-
|
-
|
-
|
188,185
|
-
|
-
|
188,185
|
Fair value
movement on cash flow hedges (note 25)
|
-
|
-
|
-
|
-
|
-
|
12,093
|
-
|
-
|
-
|
12,093
|
Cash flow hedges –
reclassified to profit or loss (note 25)
|
-
|
-
|
-
|
-
|
-
|
(179)
|
-
|
-
|
-
|
(179)
|
Related deferred
tax (note 26)
|
-
|
-
|
-
|
-
|
-
|
(2,929)
|
(21,223)
|
-
|
-
|
(24,152)
|
Total
comprehensive income for the year
|
-
|
-
|
-
|
-
|
-
|
8,985
|
166,962
|
(10,663)
|
96,725
|
262,009
|
|
|
|
|
|
|
|
|
|
|
|
Transactions
with owners of the Company:
|
|
|
|
|
|
|
|
|
|
|
Equity-settled
share-based payments (note 9)
|
-
|
-
|
-
|
-
|
3,329
|
-
|
-
|
-
|
-
|
3,329
|
Transfer from
share-based payment reserve to retained earnings
|
-
|
-
|
-
|
-
|
(1,403)
|
-
|
-
|
-
|
1,403
|
-
|
Vesting of share
awards and options (note 9)
|
-
|
15
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
15
|
Total
transactions with owners of the Company
|
-
|
15
|
-
|
-
|
1,926
|
-
|
-
|
-
|
1,403
|
3,344
|
At
31 December 2022
|
2,229
|
504,910
|
25,724
|
81,264
|
5,011
|
8,788
|
379,534
|
(17,235)
|
232,541
|
1,222,766
|
Consolidated statement of cash flows
for
the year ended 31 December 2023
|
2023
€’000
|
2022
€’000
|
Cash flows
from operating activities
|
|
|
Profit for the
year
|
90,222
|
96,725
|
Adjustments
for:
|
|
|
Depreciation of
property, plant and equipment
|
32,791
|
28,426
|
Depreciation of
right-of-use assets
|
30,663
|
27,503
|
Amortisation of
intangible assets
|
650
|
610
|
Net revaluation
movements through profit or loss
|
(2,025)
|
(21,166)
|
Net impairment
reversal of fixtures, fittings and equipment
|
-
|
(624)
|
Net impairment
reversal of right-of-use assets
|
-
|
(4,101)
|
Gain on disposal
of property, plant and equipment
|
-
|
(3,877)
|
Income from sale
of Merrion Road residential units
|
-
|
(42,532)
|
Release of costs
capitalised for Merrion Road residential units
|
-
|
40,998
|
Share-based
payments expense
|
5,910
|
3,329
|
Interest on lease
liabilities
|
42,751
|
38,101
|
Other interest and
finance costs
|
7,860
|
7,769
|
Tax
charge
|
15,310
|
12,932
|
|
224,132
|
184,093
|
|
|
|
(Decrease)/increase in trade
and other payables and provision for liabilities
|
(33,625)
|
37,168
|
Decrease/(increase) in current
and non-current receivables
|
4,562
|
(13,912)
|
Decrease/(increase) in
inventories
|
110
|
(677)
|
Tax
(paid)/refunded
|
(23,800)
|
1,188
|
Net cash from
operating activities
|
171,379
|
207,860
|
|
|
|
Cash flows
from investing activities
|
|
|
Purchase of
property, plant and equipment
|
(120,277)
|
(40,315)
|
Contract
fulfilment cost payments
|
(1,965)
|
(4,045)
|
Proceeds received
from sale of Merrion road residential units
|
-
|
41,868
|
Costs paid on
entering new leases and agreements for leases
|
(1,825)
|
(9,810)
|
Proceeds from sale
of Clayton Crown Hotel
|
-
|
24,258
|
Acquisitions of
undertakings through business combinations, net of cash
acquired
|
(90,294)
|
-
|
Purchase of
intangible assets
|
(7)
|
(202)
|
Net cash (used
in)/from investing activities
|
(214,368)
|
11,754
|
|
|
|
Cash flows
from financing activities
|
|
|
Interest paid on
lease liabilities
|
(42,751)
|
(38,101)
|
Other interest and
finance costs paid
|
(8,726)
|
(12,233)
|
Receipt of bank
loans
|
120,648
|
11,973
|
Repayment of bank
loans
|
(64,374)
|
(117,838)
|
Repayment of lease
liabilities
|
(10,747)
|
(9,324)
|
Proceeds from
vesting of share awards and options
|
175
|
15
|
Dividends
paid
|
(8,939)
|
-
|
Net cash used
in financing activities
|
(14,714)
|
(165,508)
|
Net
(decrease)/increase in cash and cash equivalents
|
(57,703)
|
54,106
|
Cash and cash
equivalents at the beginning of the year
|
91,320
|
41,112
|
Effect of
movements in exchange rates
|
556
|
(3,898)
|
Cash and cash
equivalents at the end of the year
|
34,173
|
91,320
|
Notes to the consolidated financial statements
forming
part of the consolidated financial statements
1 Material accounting policies
General
information and basis of preparation
Dalata Hotel Group
plc (the ‘Company’) is a Company domiciled in the Republic of
Ireland. The Company’s registered office is Termini, 3 Arkle Road,
Sandyford Business Park, Dublin 18. The consolidated financial
statements of the Company for the year ended 31 December 2023
include the Company and its subsidiaries (together referred to as
the ‘Group’). The financial statements were authorised for issue by
the Directors on 28 February 2024.
The consolidated
financial statements have been prepared in accordance with IFRS, as
adopted by the EU. In the preparation of these consolidated
financial statements the accounting policies set out below have
been applied consistently by all Group companies.
The preparation of
financial statements in accordance with IFRS as adopted by the EU
requires the Directors to make estimates and assumptions that
affect the reported amounts of assets and liabilities, as well as
disclosure of contingent assets and liabilities, at the date of the
financial statements, and the reported amounts of revenues and
expenses during the reporting year. Such estimates and judgements
are based on historical experience and other factors, including
expectation of future events, that are believed to be reasonable
under the circumstances and are subject to continued re-evaluation.
Actual outcomes could differ from those estimates.
In preparing these
consolidated financial statements, the key judgements and estimates
impacting these consolidated financial statements were as
follows:
Significant
judgements
-
Carrying value of property measured
at fair value (note 15).
Key sources of
estimation uncertainty
-
Carrying value of property measured
at fair value (note 15);
and
-
Carrying value of goodwill and
right-of-use assets including assumptions underpinning value in use
(‘VIU’) calculations in the impairment tests (notes
12,
14,
16).
Measurement
of fair values
A number of the
Group’s accounting policies and disclosures require the measurement
of assets and liabilities at fair value. When measuring the fair
value of an asset or liability, the Group uses observable market
data as far as possible, with non-financial assets being measured
on a highest and best-use basis. Fair values are categorised into
different levels in a fair value hierarchy based on the inputs used
in the valuation techniques as follows:
Level
1: quoted
prices (unadjusted) in active markets for identical assets or
liabilities.
Level
2: inputs
other than quoted prices included in Level 1 that are observable
for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
Level
3: inputs
for the asset or liability that are not based on observable market
data (unobservable inputs).
Further
information about the assumptions made in measuring fair values is
included in note 27 – Financial instruments and
risk management (in relation to financial assets and financial
liabilities) and note 15 – Property, plant and
equipment.
(i) Going
concern
The year ended 31
December 2023 saw the Group trade strongly and continue the
execution of its growth strategy. The strong trade, the full year
impact of hotels added during 2022 and the addition of three hotels
during 2023 has led to an increase in Group revenue from hotel
operations from €515.7 million to €607.7 million, as well as net
cash generated from operating activities in the year of €171.4
million (2022: €207.9 million).
The Group remains
in a very strong financial position with significant financial
headroom. The Group has cash and undrawn loan facilities of €283.5
million (2022: €455.7 million).
The Group is in
full compliance with its covenants at 31 December 2023. In
accordance with the amended and restated facility agreement entered
into by the Group on 2 November 2021 with its banking club, the
Group’s banking covenants have reverted to Net Debt to EBITDA and
Interest Cover from 30 June 2023. This replaces the Net Debt to
Value covenant and liquidity minimum covenants which were
temporarily in place up to 30 June 2023. At 31 December 2023, the
Net Debt to EBITDA covenant limit is 4.0x and the Interest Cover
minimum is 4.0x. The Group’s Net Debt to EBITDA, as defined in the
Group's bank facility agreement which is equivalent to Net Debt to
EBITDA after rent, for the year ended 31 December 2023 is 1.3x (APM
(xv)) and Interest Cover is 19.5x (APM (xvi)).
Current base
projections show compliance with all covenants at all future
testing dates and significant levels of headroom.
The Directors have
considered the above, with all available information, and the
current liquidity and financial position in assessing the going
concern of the Group. On this basis, the Directors have prepared
these consolidated financial statements on a going concern basis.
Furthermore, they do not believe there is any material uncertainty
related to events or conditions that may cast significant doubt on
the Group’s ability to continue as a going concern.
(ii) Statement
of compliance
The consolidated
financial statements have been prepared in accordance with
International Financial Reporting Standards (‘IFRS’) and their
interpretations issued by the International Accounting Standards
Board (‘IASB’) as adopted by the EU and those parts of the
Companies Act 2014 applicable to companies reporting under IFRS and
Article 4 of the IAS Regulation.
The following
standards and interpretations were effective for the Group for the
first time from 1 January 2023:
-
Amendments to IAS 1
Presentation of
Financial Statements and
IFRS Practice Statement 2: Disclosure of Accounting
policies (issued on 12
February 2021).
-
Amendments to IAS 8
Accounting
Policies, Changes in Accounting Estimates and Errors: Definition of
Accounting Estimates (issued
on 12 February 2021).
-
Amendments to IAS 12
Income
taxes: International Tax
Reform – Pillar Two Model Rules
-
Amendments to IAS 12
Income
Taxes: Deferred Tax related
to Assets and Liabilities arising from a Single Transaction (issued
on 7 May 2021).
-
IFRS 17 Insurance Contracts (issued
on 18 May 2017) including Amendments to IFRS 17 (issued on 25 June
2020).
-
Amendments to IFRS 17
Insurance
Contracts: Initial
Application of IFRS 17 and IFRS 9 – Comparative Information (issued
on 9 December 2021).
With the exception
of the above amendments to IAS 12 Income
Taxes, the
above standards, amendments and interpretations have no material
impact on the consolidated financial statements of the
Group.
Accounting
policies
The accounting
policies applied in these consolidated financial statements are
consistent with those applied in the consolidated financial
statements as at and for the year ended 31 December 2022, apart
from the amendments to IAS 12.
Amendments to IAS
12, effective for reporting periods beginning on or after 1 January
2023, clarify that the initial recognition exemption of deferred
tax assets and liabilities does not apply to transactions that give
rise to equal and offsetting temporary differences. The amendments
require separate presentation of deferred tax assets and
liabilities arising on right-of-use assets and corresponding lease
liabilities recognised under IFRS 16. The comparative gross
deferred tax assets and deferred tax liabilities for 2022 have been
restated in the deferred tax note in accordance with these
amendments. The IAS 12 offsetting principle has been applied for
deferred tax balances shown on the face of the Consolidated
Statement of Financial Position. The changes to the deferred tax
liabilities and deferred tax assets offset such that the net impact
on the face of the Consolidated Statement of Financial Position at
31 December 2022 and the net impact on retained earnings was nil.
(note 2).
Prior period
restatement
Certain
comparative amounts in the Consolidated Statement of Profit or Loss
and Other Comprehensive Income have been re-presented as a result
of a prior period restatement (note 2).
Standards
issued but not yet effective
The following
amendments to standards have been endorsed by the EU, are available
for early adoption and are effective from 1 January 2024. The Group
has not adopted these amendments to standards early, and instead
intends to apply them from their effective date as determined by
the date of EU endorsement. The potential impact of these
amendments to standards on the Group is under review:
-
Amendments to IAS 1
Classification
of Liabilities as Current or Non-Current, and Non-current Liabilities with
Covenants.
-
Amendments to IFRS 16
Lease Liability
in a Sale and Leaseback.
The following
standards and interpretations are not yet endorsed by the EU. The
potential impact of these standards on the Group is under
review:
-
Amendments to IAS 7
Statement of
Cash Flows and IFRS 7
Financial
Instruments: Disclosures:
Supplier Finance Arrangements. IASB effective date 1 January
2024
-
Amendments to IAS 21
Lack of
exchangeability. IASB
effective date 1 January 2025.
-
Amendments to IFRS 10
Consolidated
Financial Statements and
IAS28 Investments in Associates
and Joint Ventures for sale or contribution of Assets between an
Investor and its Associate or Joint Venture. Effective date deferred
indefinitely.
(iii)
Functional and presentation currency
These consolidated
financial statements are presented in Euro, being the functional
currency of the Company and the majority of its subsidiaries. All
financial information presented in Euro has been rounded to the
nearest thousand or million and this is clearly set out in the
financial statements where applicable.
(iv) Basis of
consolidation
The consolidated
financial statements include the financial statements of the
Company and all of its subsidiary undertakings.
Business
combinations
The Group accounts
for business combinations using the acquisition method when control
is transferred to the Group.
The consideration
transferred in the acquisition is generally measured at fair value,
as are the identifiable net assets acquired. Any goodwill that
arises is tested at least annually for impairment. Any gain on a
bargain purchase is recognised in profit or loss immediately.
Transaction costs are expensed as incurred, except if related to
the issue of debt or equity securities.
When an
acquisition does not represent a business, it is accounted for as a
purchase of a group of assets and liabilities, not as a business
combination. The cost of the acquisition is allocated to the assets
and liabilities acquired based on their relative fair values, and
no goodwill is recognised. Where the Group solely purchases the
freehold interest in a property, this is accounted for as an asset
purchase and not as a business combination on the basis that the
asset(s) purchased do not constitute a business. Asset purchases
are accounted for as additions to property, plant and
equipment.
Subsidiaries
Subsidiaries are
entities controlled by the Group. The Group controls an entity when
it is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those
returns through its power over the entity. The financial statements
of subsidiaries are included in the consolidated financial
statements from the date that control commences until the date that
control ceases. Intra-group balances and transactions, and any
unrealised income and expenses arising from intra-group
transactions, are eliminated.
(v) Revenue
recognition
Revenue represents
sales (excluding VAT) of goods and services net of discounts
provided in the normal course of business and is recognised when
services have been rendered.
Revenue is derived
from hotel operations and includes the rental of rooms, food and
beverage sales, car park revenue and leisure centre membership in
leased and owned hotels operated by the Group. Revenue is
recognised when rooms are occupied and food and beverages are sold.
Car park revenue is recognised when the service is provided.
Leisure centre membership revenue is recognised over the life of
the membership.
Management fees
are earned from hotels managed by the Group. Management fees are
normally a percentage of hotel revenue and/or profit and are
recognised when earned and recoverable under the terms of the
management agreement. Management fee income is included within
other income.
Rental income from
investment property is recognised on a straight-line basis over the
term of the lease and is included within other income.
(vi) Sales
discounts and allowances
The Group
recognises revenue on a gross revenue basis and makes various
deductions to arrive at net revenue as reported in profit or loss.
These adjustments are referred to as sales discounts and
allowances.
(vii) Income
from residential development activities
Income in respect
of a contract with a customer for the sale of residential property
is recognised when the performance obligations inherent in the
contract are completed. In 2022, the income related to the contract
for the sale of the Merrion Road residential units which the Group
developed as part of the overall development of the new Maldron
Hotel Merrion Road on the site of the former Tara Towers hotel.
Where there is variable consideration in the form of withheld
retention receipts included in the transaction price, income is
recognised for this variable consideration to the extent that it is
highly probable it is receivable and is measured based on the most
likely outcome.
Income from
residential development activities has been presented within gross
profit, separately from revenue from hotel operations (note
2).
(viii)
Government grants and government assistance
Government grants
represent the transfers of resources to the Group from the
governments in Ireland and the UK in return for past or future
compliance with certain conditions relating to the Group’s
operating activities. Income-related government grants are
recognised in profit or loss on a systematic basis over the periods
in which the Group recognises, as expenses, the related costs for
which the grants are intended to compensate. The Group accounts for
these government grants in profit or loss via offseting against the
related expenditure.
Government
assistance is action by a government which is designed to provide
an economic benefit specific to the Group or subsidiaries who
qualify under certain criteria. Government assistance received by
the Group includes a waiver of commercial rates for certain hotel
properties and also the deferral of payment of payroll taxes and
VAT liabilities and has been disclosed in these consolidated
financial statements.
(ix)
Leases
At inception of a
lease contract, the Group assesses whether a contract is, or
contains, a lease. If the contract conveys the right to control the
use of an identified asset for a period of time in exchange for
consideration, it is recognised as a lease.
To assess the
right to control, the Group assesses whether:
-
the contract involves the use of an
identified asset;
-
the Group has the right to obtain
substantially all of the economic benefits from the use of the
asset; and
-
the Group has the right to direct
the use of the asset.
A lease liability
is initially measured at the present value of the lease payments
that are not paid at the commencement date, discounted using the
interest rate implicit in the lease or, if that rate cannot be
readily determined, the Group’s incremental borrowing rate. The
Group uses its incremental borrowing rate as the discount rate,
which is defined as the estimated rate of interest that the lessee
would have to pay to borrow, over a similar term and with a similar
security, the funds necessary to obtain an asset of a similar value
to the right-of-use asset in a similar economic environment. The
incremental borrowing rate is calculated for each individual
lease.
The estimated
incremental borrowing rate for each leased asset is derived from
country-specific risk-free interest rates over the relevant lease
term, adjusted for the finance margin attainable by each lessee and
asset-specific adjustments designed to reflect the underlying
asset’s location and condition.
Lease payments
included in the measurement of the lease liability comprise the
following:
-
fixed payments (including
in-substance fixed payments) less any lease incentives
receivable;
-
variable lease costs that depend on
an index or a rate, initially measured using the index or rate as
at the commencement date;
-
amounts expected to be payable
under a residual value guarantee;
-
the exercise price under a purchase
option that the Group is reasonably certain to exercise;
and
-
penalties for early termination of
a lease unless the Group is reasonably certain not to terminate
early.
Variable lease
costs linked to future performance or use of an underlying asset
are excluded from the measurement of the lease liability and the
right-of-use asset. The related payments are recognised as an
expense in the period in which the event or condition that triggers
those payments occurs and are included in administrative expenses
in profit or loss.
The lease
liability is subsequently measured by increasing the carrying
amount to reflect interest on the lease liability (using the
effective interest method) and by reducing the carrying amount to
reflect lease payments.
The Group
remeasures the lease liability where lease payments change due to
changes in an index or rate, changes in expected lease term or
where a lease contract is modified. When the lease liability is
remeasured, a corresponding adjustment is made to the carrying
amount of the right-of-use asset or is recorded in profit or loss
if the carrying amount of the right-of-use asset has been reduced
to zero.
The right-of-use
asset is initially measured at cost, which comprises the initial
amount of the lease liability adjusted for any lease payments made
at or before the commencement date, plus any initial direct costs
incurred and an estimate of any costs to dismantle and remove the
underlying asset or to restore the underlying asset or the site on
which it is located, less any lease incentives received.
The right-of-use
asset is subsequently depreciated using the straight-line method
from the commencement date to the earlier of the end of the useful
life of the right-of-use asset, or a component thereof, or the end
of the lease term. Right-of-use assets are reviewed on an annual
basis or whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. The Group applies IAS
36 Impairment
of Assets to determine whether a
cash-generating unit with a right-of-use asset is impaired and
accounts for any identified impairments through profit or loss. The
right-of-use asset is periodically reduced by impairment losses, if
any, and adjusted for certain remeasurements of the lease
liability. The Group also applies IAS 36 Impairment
of Assets to any cash-generating units,
which have right-of-use assets which were previously impaired, to
assess whether previous impairments should be reversed. A reversal
of a previous impairment charge is accounted for through profit or
loss and only increases the carrying amount of the right-of-use
asset to a maximum of what it would have been if the original
impairment charges had not been recognised in the first
place.
The Group applies
the fair value model in IAS 40 Investment
Property to
right-of-use assets that meet the definition of investment
property.
The Group has
elected not to recognise right-of-use assets and lease liabilities
for short-term leases of fixtures, fittings and equipment that have
a lease term of 12 months or less and leases of low-value assets.
Assets are considered low value if the value of the asset when new
is less than €5,000. The Group recognises the lease payments
associated with these leases as an expense on a straight-line basis
over the lease term.
(x)
Share-based payments
The grant date
fair value of equity-settled share-based payment awards and options
granted to employees is recognised as an expense, with a
corresponding increase in equity, over the vesting period of the
awards and options.
This incorporates
the effect of market-based conditions, where applicable, and the
estimated fair value of equity-settled share-based payment awards
issued with non-market performance conditions.
The amount
recognised as an expense is adjusted to reflect the number of
awards and options for which the related service and any non-market
performance conditions are expected to be met, such that the amount
ultimately recognised is based on the number of awards that met the
related service and non-market performance conditions at the
vesting date. The amount recognised as an expense is not adjusted
for market conditions not being met.
On vesting of the
equity-settled share-based payment awards and options, the
cumulative expense recognised in the share-based payment reserve is
transferred directly to retained earnings. An increase in ordinary
share capital and share premium, in the case where the price paid
per share is higher than the cost per share, is recognised
reflecting the issuance of shares as a result of the vesting of the
awards and options.
The dilutive
effect of outstanding awards is reflected as additional share
dilution in calculating diluted earnings per share.
(xi)
Tax
Tax charge or
credit comprises current and deferred tax. Tax charge or credit is
recognised in profit or loss except to the extent that it relates
to a business combination or items recognised directly in other
comprehensive income or equity.
Current tax is the
expected tax payable or receivable on the taxable income or loss
for the year using tax rates enacted or substantively enacted at
the reporting date and any adjustment to tax payable in respect of
previous years.
Deferred tax is
recognised in respect of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes
and amounts used for taxation purposes except for the initial
recognition of goodwill and other assets and liabilities that do
not affect accounting profit or taxable profit at the date of
recognition and at the time of the transaction, do not give rise to
taxable and deductible temporary differences.
Deferred tax is
measured at the tax rates that are expected to be applied to the
temporary differences when they reverse, based on the laws that
have been enacted or substantively enacted by the reporting
date.
Deferred tax
assets and liabilities are offset if there is a legally enforceable
right to offset current tax liabilities and assets, and they relate
to income taxes levied by the same tax authority on the same
taxable entity, or on different entities, but they intend to settle
current tax liabilities and assets on a net basis or their tax
assets and liabilities will be realised simultaneously.
Deferred tax
liabilities are recognised where the carrying value of land and
buildings for financial reporting purposes is greater than their
tax cost base.
Deferred tax
assets are recognised for unused tax losses, unused tax credits and
deductible temporary differences to the extent that it is probable
future taxable profits will be available against which the
temporary difference can be utilised.
Deferred tax
assets are reviewed at each reporting date and are reduced to the
extent that it is no longer probable that the related tax benefit
will be realised. Such reductions are reversed when the probability
of future taxable profits improves.
(xii) Earnings
per share (‘EPS’)
Basic earnings per
share is calculated based on the profit or loss for the year
attributable to owners of the Company and the basic weighted
average number of shares outstanding. Diluted earnings per share is
calculated based on the profit or loss for the year attributable to
owners of the Company and the diluted weighted average number of
shares and potential shares outstanding.
Shares are only
treated as dilutive if their dilution results in a decreased
earnings per share or increased loss per share.
Dilutive effects
arise from share-based payments that are settled in shares.
Conditional share awards to employees have a dilutive effect when
the average share price during the period exceeds the exercise
price of the awards and the market or non-market conditions of the
awards are met, as if the current period end were the end of the
vesting period. When calculating the dilutive effect, the exercise
price is adjusted by the value of future services that have yet to
be received related to the awards.
(xiii)
Property, plant and equipment
Land and buildings
are initially stated at cost, including directly attributable
transaction costs, (or fair value when acquired through business
combinations) and subsequently at fair value.
Assets under
construction include sites where new hotels are currently being
developed and significant development projects at hotels which are
currently operational. These sites and the capital investment made
are recorded at cost. Borrowing costs incurred in the construction
of major assets or development projects which take a substantial
period of time to complete are capitalised in the financial period
in which they are incurred. Once construction is complete and the
hotel is operating, the assets will be transferred to land and
buildings and fixtures, fittings and equipment at cost. The land
and buildings element will subsequently be measured at fair value.
Depreciation will commence when the assets are available for
use.
Fixtures, fittings
and equipment are stated at cost, less accumulated depreciation and
any impairment provision.
Cost includes
expenditure that is directly attributable to the acquisition of
property, plant and equipment unless it is acquired as part of a
business combination under IFRS 3 Business
Combinations, where the deemed cost is its
acquisition date fair value. In the application of the Group’s
accounting policy, judgement is exercised by management in the
determination of fair value of land and buildings at each reporting
date, residual values and useful lives.
Depreciation is
charged through profit or loss on the cost or valuation less
residual value on a straight-line basis over the estimated useful
lives of the assets which are as follows:
Buildings
|
50
years
|
Fixtures, fittings
and equipment
|
3 – 15
years
|
Land is not
depreciated.
|
|
Residual values
and useful lives are reviewed and adjusted if appropriate at each
reporting date.
Land and buildings
are revalued by qualified valuers on a sufficiently regular basis
using open market value (which reflects a highest and best-use
basis) so that the carrying value of an asset does not materially
differ from its fair value at the reporting date. External
revaluations of the Group’s land and buildings have been carried
out in accordance with the Royal Institution of Chartered Surveyors
(RICS) Valuation Standards and IFRS 13 Fair Value
Measurement.
Surpluses on
revaluation are recognised in other comprehensive income and
accumulated in equity in the revaluation reserve, except to the
extent that they reverse impairment losses previously charged to
profit or loss, in which case the reversal is recorded in profit or
loss. Decreases in value are charged
against other comprehensive income and the revaluation reserve to
the extent that a previous gain has been recorded there, and
thereafter are charged through profit or loss.
Fixtures, fittings
and equipment are reviewed for impairment when events or changes in
circumstances indicate that the carrying value may not be
recoverable. Assets that do not generate independent cash flows are
combined into cash-generating units. If carrying values exceed
estimated recoverable amounts, the assets or cash-generating units
are written down to their recoverable amount. Recoverable amount is
the greater of fair value less costs to sell and VIU. VIU is
assessed based on estimated future cash flows discounted to their
present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and risks specific to
the asset.
The Group also
applies IAS 36 Impairment
of Assets to any cash-generating units,
with fixtures, fittings and equipment which were previously
impaired and which are not revalued, to assess whether previous
impairments should be reversed. A reversal of a previous impairment
charge is accounted for through profit or loss and only increases
the carrying amount of the fixtures, fittings and equipment to a
maximum of what it would have been if the original impairment
charges had not been recognised in the first place.
(xiv)
Investment property
Investment
property is held either to earn rental income, or for capital
appreciation, or for both, but not for sale in the ordinary course
of business.
Investment
property is initially measured at cost, including transaction
costs, (or fair value when acquired through business combinations)
and subsequently revalued by professional external valuers at their
respective fair values. The difference between the fair value of an
investment property at the reporting date and its carrying value
prior to the external valuation is recognised in profit or
loss.
The Group’s
investment properties are valued by qualified valuers on an open
market value basis in accordance with the Royal Institution of
Chartered Surveyors (RICS) Valuation Standards and IFRS 13
Fair Value
Measurement.
(xv)
Goodwill
Goodwill
represents the excess of the fair value of the consideration for an
acquisition over the Group’s interest in the net fair value of the
identifiable assets, liabilities and contingent liabilities of the
acquiree. Goodwill is the future economic benefits arising from
other assets in a business combination that are not individually
identified and separately recognised.
Goodwill is
measured at its initial carrying amount less accumulated impairment
losses. The carrying amount of goodwill is tested annually for
impairment, or more frequently if events or changes in
circumstances indicate that it might be impaired. For the purposes
of impairment testing, assets are grouped together into the
smallest group of assets that generate cash inflows from continuing
use that are largely independent of the cash inflows of other
assets or groups of assets (the ‘cash-generating unit’).
The goodwill
acquired in a business combination, for the purpose of impairment
testing, is allocated to cash-generating units that are expected to
benefit from the synergies of the combination.
The recoverable
amount of a cash-generating unit is the greater of its VIU and its
fair value less costs to sell. In assessing VIU, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects a current market assessment of
the time value of money and the risks specific to the
asset.
An impairment loss
is recognised in profit or loss if the carrying amount of a
cash-generating unit exceeds its estimated recoverable amount.
Impairment losses recognised in respect of cash-generating units
are allocated first to reduce the carrying amount of any goodwill
allocated to the units and then to reduce the carrying amount of
the other assets in the units on a pro-rata basis. Impairment
losses of goodwill are not reversed once recognised.
The impairment
testing process requires management to make significant judgements
and estimates regarding the future cash flows expected to be
generated by the cash-generating unit. Management evaluates and
updates the judgements and estimates which underpin this process on
an ongoing basis.
The impairment
methodology and key assumptions used by the Group for testing
goodwill for impairment are outlined in notes 12
and
14.
The assumptions
and conditions for determining impairment of goodwill reflect
management’s best estimates and judgements, but these items involve
significant inherent uncertainties, many of which are not under the
control of management. As a result, accounting for such items could
result in different estimates or amounts if management used
different assumptions or if different conditions occur in the
future.
(xvi)
Intangible assets other than goodwill
An intangible
asset is only recognised where the item lacks a physical presence,
is identifiable, non-monetary, controlled by the Group and expected
to provide future economic benefits to the Group.
Intangible assets
are measured at cost (or fair value when acquired through business
combinations), less accumulated amortisation and impairment
losses.
Intangible assets
are amortised over the period of their expected useful lives by
charging equal annual instalments to profit or loss. The useful
life used to amortise intangible assets relates to the future
performance of the asset and management’s judgement as to the
period over which economic benefits will be derived from the asset.
The estimated total useful life of the Group’s intangible assets is
5 years.
(xvii)
Inventories
Inventories are
stated at the lower of cost (using the first-in, first-out (FIFO)
basis) and net realisable value. Inventories represent assets that
are sold in the normal course of business by the Group and
consumables.
(xviii)
Contract fulfilment costs
Contract
fulfilment costs are stated at the lower of cost or recoverable
amount. Contract fulfilment costs represent assets that are to be
sold by the Group but do not form part of the primary trading
activities. Costs capitalised as contract fulfilment costs include
costs incurred in fulfilling the specific contract. The costs must
enhance the asset, be used in order to satisfy the obligations
inherent in the contractual arrangement and should be recoverable.
Costs which are not recoverable are written off to profit or loss
as incurred. Contract fulfilment costs are released to profit or
loss on completion of the sale to which the contract
relates.
(xix) Cash and
cash equivalents
Cash and cash
equivalents comprise cash balances and call deposits with
maturities of three months or less, which are carried at amortised
cost.
(xx) Trade and
other receivables
Trade and other
receivables are stated initially at their fair value and
subsequently at amortised cost, less any expected credit loss
provision. The Group applies the simplified approach to measuring
expected credit losses which uses a lifetime expected loss
allowance for all trade receivables. Bad debts are written off to
profit or loss on identification.
(xxi) Trade
and other payables
Trade and other
payables are initially recorded at fair value, which is usually the
original invoiced amount. Fair value for the initial recognition of
payroll tax liabilities is the amount payable stated on the payroll
submission filed with the tax authorities. Fair value for the
initial recognition of VAT liabilities is the net amount of VAT
payable to, and recoverable from, the tax authorities. Trade and
other payables are subsequently carried at amortised cost using the
effective interest method. Liabilities are derecognised when the
obligation under the liability is discharged, cancelled or
expired.
(xxii) Finance
costs
Finance costs
comprise interest expense on borrowings and related financial
instruments, commitment fees and other costs relating to financing
of the Group.
Interest expense
on loans and borrowings is recognised using the effective interest
method. The effective interest rate of a financial liability is
calculated on initial recognition of a financial liability. In
calculating interest expense, the effective interest rate is
applied to the amortised cost of the liability.
If a financial
liability is deemed to be non-substantially modified (less than 10
percent different) (see policy (xxvii)), the amortised cost of the
liability is recalculated by discounting the modified cash flows at
the original effective interest rate and the resulting modification
gain or loss is recognised in finance costs in profit or loss. For
floating-rate financial liabilities, the original effective
interest rate is adjusted to reflect the current market terms at
the time of the modification.
Finance costs
incurred for qualifying assets, which take a substantial period of
time to construct, are added to the cost of the asset during the
period of time required to complete and prepare the asset for its
intended use or sale. The Group uses two capitalisation rates being
the weighted average interest rate after the impact of hedging
instruments for Sterling borrowings which is applied to UK
qualifying assets and the weighted average interest rate for Euro
borrowings which is applied to Republic of Ireland qualifying
assets. Capitalisation commences on the date on which the Group
undertakes activities that are necessary to prepare the asset for
its intended use. Capitalisation of borrowing costs ceases when the
asset is ready for its intended use.
Finance costs also
include interest on lease liabilities.
(xxiii)
Foreign currency
Transactions in
currencies other than the functional currency of a Group entity are
recorded at the rate of exchange prevailing on the date of the
transactions. Monetary assets and liabilities denominated in
foreign currencies at the reporting date are retranslated into the
respective functional currency at the relevant rates of exchange
ruling at the reporting date. Foreign exchange differences arising
on translation are recognised in profit or loss.
The assets and
liabilities of foreign operations are translated into Euro at the
exchange rate ruling at the reporting date. The income and expenses
of foreign operations are translated into Euro at rates
approximating the exchange rates at the dates of the
transactions.
Foreign exchange
differences arising on the translation of foreign operations are
recognised in other comprehensive income and are included in the
translation reserve within equity.
(xxiv)
Provisions and contingent liabilities
A provision is
recognised in the statement of financial position when the Group
has a present legal or constructive obligation as a result of a
past event, and it is probable that an outflow of economic benefits
will be required to settle the obligation. If the effect is
material, provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and, where appropriate, the
risks specific to the liability.
The provision in
respect of self-insured risks includes projected settlements for
known claims and incurred but not reported claims.
Where it is not
probable that an outflow of economic benefits will be required, or
the amount cannot be estimated reliably, the obligation is
disclosed as a contingent liability, unless the probability of an
outflow of economic benefits is remote. Possible obligations, whose
existence will only be confirmed by the occurrence or
non-occurrence of one or more future events, are also disclosed as
contingent liabilities unless the probability of an outflow of
economic benefits is remote.
(xxv) Ordinary
shares
Ordinary shares
are classified as equity. Incremental costs directly attributable
to the issuance of ordinary shares are recognised as a deduction
from equity, net of any tax effects. Merger relief is availed of by
the Group where possible.
(xxvi) Loans
and borrowings
Loans and
borrowings are recognised initially at the fair value of the
consideration received, less directly attributable transaction
costs. Subsequent to initial recognition, loans and borrowings are
stated at amortised cost with any difference between cost and
redemption value being recognised in profit or loss over the period
of the borrowings on an effective interest rate basis. Directly
attributable transaction costs are amortised to profit or loss on
an effective interest rate basis over the term of the loans and
borrowings. This amortisation charge is recognised within finance
costs. Commitment fees incurred in connection with loans and
borrowings are expensed as incurred to profit or loss.
(xxvii)
Derecognition of financial liabilities
The Group removes
a financial liability from its statement of financial position when
it is extinguished (when its contractual obligations are
discharged, cancelled, or expire).
The Group also
derecognises a financial liability when the terms and the cash
flows of a modified liability are substantially different. The
terms are substantially different if the discounted present value
of the cash flows under the new terms, discounted using the
original effective interest rate, including any fees paid to
lenders net of any fees received, is at least 10 percent different
from the discounted present value of the remaining cash flows of
the original financial liability, discounted at the original
effective interest rate, (the ‘10% test’). In addition, a
qualitative assessment is carried out of the new terms in the new
facility agreement to determine whether there is a substantial
modification.
If the financial
liability is deemed substantially modified, a new financial
liability based on the modified terms is recognised at fair value.
The difference between the carrying amount of the financial
liability derecognised and consideration paid is recognised in
profit or loss.
If the financial
liability is deemed non-substantially modified, the amortised cost
of the liability is recalculated by discounting the modified cash
flows at the original effective interest rate and the resulting
modification gain or loss is recognised in profit or loss. Any
costs and fees directly attributable to the modified financial
liability are recognised as an adjustment to the carrying amount of
the modified financial liability and amortised over its remaining
term by re-computing the effective interest rate on the
instrument.
(xxviii)
Derivative financial instruments
The Group’s
borrowings expose it to the financial risks of changes in interest
rates. The Group uses derivative financial instruments such as
interest rate swap agreements to hedge these exposures.
Interest rate
swaps convert part of the Group’s Sterling denominated borrowings
from floating to fixed interest rates. The Group does not use
derivatives for trading or speculative purposes.
Derivative
financial instruments are recognised at fair value on the date a
derivative contract is entered into plus directly attributable
transaction costs and are subsequently re-measured at fair value.
Derivatives are carried as assets when the fair value is positive
and as liabilities when the fair value is negative.
The full fair
value of a hedging derivative is classified as a non-current asset
or non-current liability if the remaining maturity of the hedging
instrument is more than twelve months and as a current asset or
current liability if the remaining maturity of the hedging
instrument is less than twelve months.
The fair value of
derivative instruments is determined by using valuation techniques.
The Group uses its judgement to select the most appropriate
valuation methods and makes assumptions that are mainly based on
observable market conditions (Level 2 fair values) existing at the
reporting date.
The method of
recognising the resulting gain or loss depends on whether the
derivative is designated as a hedging instrument, and if so, the
nature of the item being hedged.
(xxix) Cash
flow hedge accounting
Cash flow hedge
accounting is applied in accordance with IFRS 9 Financial
Instruments. For those derivatives
designated as cash flow hedges and for which hedge accounting is
desired, the hedging relationship is documented at its inception.
This documentation identifies the hedging instrument, the hedged
item or transaction, the nature of the risk being hedged and its
risk management objectives and strategy for undertaking the hedging
transaction. The Group also documents its assessment, both at hedge
inception and on a semi-annual basis, of whether the derivatives
that are used in hedging transactions are highly effective in
offsetting changes in cash flows of hedged items.
Where a derivative
financial instrument is designated as a hedge of the variability in
cash flows of a recognised asset or liability, the effective part
of any gain or loss on the derivative financial instrument is
recognised in other comprehensive income and accumulated in equity
in the hedging reserve. Any ineffective portion is recognised
immediately in profit or loss as finance income or costs. The
amount accumulated in equity is retained in other comprehensive
income and reclassified to profit or loss in the same period or
periods during which the hedged item affects profit or
loss.
Hedge accounting
is discontinued when the hedging instrument expires or is sold,
terminated, exercised, or no longer qualifies for hedge accounting
or the designation is revoked. At that point in time, any
cumulative gain or loss on the hedging instrument recognised in
equity remains in equity and is recognised when the forecast
transaction is ultimately recognised in profit or loss. However, if
a hedged transaction is no longer anticipated to occur, the net
cumulative gain or loss accumulated in equity is reclassified to
profit or loss.
(xxx) Net
investment hedges
Where relevant,
the Group uses a net investment hedge, whereby the foreign currency
exposure arising from a net investment in a foreign operation is
hedged using borrowings held by a Group entity that is denominated
in the functional currency of the foreign operation.
Foreign currency
differences arising on the retranslation of a financial liability
designated as a hedge of a net investment in a foreign operation
are recognised directly in other comprehensive income in the
foreign currency translation reserve, to the extent that the hedge
is effective. To the extent that the hedge is ineffective, such
differences are recognised in profit or loss. When the hedged part
of a net investment is disposed of, the associated cumulative
amount in equity is reclassified to profit or loss.
(xxxi)
Adjusting items
Consistent with
how business performance is measured and managed internally, the
Group reports both statutory measures prepared under IFRS and
certain alternative performance measures (‘APMs’) that are not
required under IFRS. These APMs are sometimes referred to as
‘non-GAAP’ measures and include, amongst others, Adjusted EBITDA,
Free Cashflow per Share, and Adjusted EPS.
The Group believes
that the presentation of these APMs provides useful supplemental
information which, when viewed in conjunction with the financial
information presented under IFRS, provides stakeholders with a
meaningful understanding of the underlying financial and operating
performance of the Group.
Adjusted measures
of profitability represent the equivalent IFRS measures adjusted to
show the underlying operating performance of the Group and exclude
items which are not reflective of normal trading activities or
distort comparability either year on year or with other similar
businesses.
2 Prior period restatements
Restatement of
the Consolidated Statement of Profit or Loss and Other
Comprehensive Income
During 2022, the
Group completed the sale to Irish Residential Properties REIT (plc)
(‘I-RES’) of the Merrion Road residential units which had been
developed by the Group on the site of the former Tara Towers Hotel.
Proceeds from the sale of these units were presented as revenue in
the Consolidated Financial Statements for the year ended 31
December 2022. The related costs were presented as cost of
sales.
The Financial
Reporting Supervision Unit of IAASA subsequently reviewed the
presentation and, in their judgement, determined that, whilst
inextricably linked to the normal activity of hotel development,
the residential unit development was not part of the Group’s
ordinary activities and therefore should not be presented as
Revenue as defined by IFRS 15 Revenue
Recognition.
As there is no
IFRS that covers this specific type of transaction (i.e. the
transaction to build and sell residential units to a third party
where they had been developed in conjunction with a hotel for own
use) the Group had looked to the hierarchy in IAS 8.11 to select
the most relevant and reliable accounting policy. IFRS 15 would be
the standard typically used for the sale of inventories, therefore
the Group determined that IFRS 15 would be the most appropriate
standard to be used, by analogy, for the forward sale of the
residential units and the ultimate completion of that
sale.
The comparative
figures as presented in the Consolidated Statement of Profit or
Loss and Other Comprehensive Income have been amended for the
following presentation corrections.
|
|
|
2022
€’000
Restated
|
Decrease in
revenue
|
|
|
(42,532)
|
Increase in income
from residential development activities
|
|
|
42,532
|
Decrease in cost
of sales
|
|
|
40,998
|
Increase in cost
of residential development activities
|
|
|
(40,998)
|
Total impact
on profit before tax
|
|
|
-
|
As this is a
correction to the presentation of the above items within the
Consolidated Statement of Profit or Loss and Other Comprehensive
Income only, there are no corrections required to basic or diluted
earnings per share nor are there any corrections to the
Consolidated Statement of Financial Position at the beginning of
the current or prior year.
Restatement of
the deferred tax note
Amendments to IAS
12, effective for reporting periods beginning on or after 1 January
2023, clarify that the initial recognition exemption of deferred
tax assets and liabilities does not apply to transactions that give
rise to equal and offsetting temporary differences. The IAS 12
amendments require separate presentation of deferred tax assets and
liabilities arising on right-of-use assets and corresponding lease
liabilities recognised under IFRS 16, in the deferred tax note,
with retroactive effect from 1 January 2022. These are offset on an
individual entity basis and presented net in the statement of
financial position.
The comparative
gross deferred tax assets and deferred tax liabilities for 2022
have been restated in the deferred tax note in accordance with
these amendments. The changes to the deferred tax liabilities and
deferred tax assets offset such that the net impact on the face of
the Consolidated Statement of Financial Position at 31 December
2022 and the net impact on retained earnings was nil (note
26).
|
|
|
2022
€’000
Restated
|
Increase in
deferred tax assets
|
|
|
36,235
|
Increase in
deferred tax liabilities
|
|
|
(36,235)
|
Total net
impact on deferred tax note
|
|
|
-
|
3 Operating segments
The Group’s
segments are reported in accordance with IFRS 8 Operating
Segments.
The segment information is reported in the same way as it is
reviewed and analysed internally by the chief operating decision
makers, primarily, the Executive Directors.
In the 2022
financial statements, the results of Clayton Hotel Düsseldorf were
disclosed as part of the Dublin segment due to their immateriality
in the context of group results (less than 3% of total segmental
revenue). Due to additions to the Group’s Continental Europe
portfolio in 2023, the Continental Europe segment is now to be
presented separately below. The 2022 results of Clayton Hotel
Düsseldorf have been reflected in the Continental Europe segment
below to improve comparability.
The Group segments
its leased and owned business by geographical region within which
the hotels operate being Dublin, Regional Ireland, the UK and
Continental Europe. These comprise the Group’s four reportable
segments.
Dublin,
Regional Ireland, the UK and Continental Europe segments
These segments are
concerned with hotels that are either owned or leased by the Group.
As at 31 December 2023, the Group owns 28 hotels (31 December 2022:
27 hotels) and has effective ownership of two further hotels which
it operates (31 December 2022: one hotel). It also owns the
majority of one further hotel it operates (31 December 2022: one
hotel). The Group also leases 19 hotel buildings from property
owners (31 December 2022: 18 hotels) and is entitled to the
benefits and carries the risks associated with operating these
hotels.
The Group’s
revenue from leased and owned hotels is primarily derived from room
sales and food and beverage sales in restaurants, bars and
banqueting. The main costs arising are payroll, cost of goods for
resale, commissions paid on room sales, utilities, other operating
costs, and, in the case of leased hotels, variable lease costs
(where linked to turnover or profit) payable to lessors.
|
2023
€’000
|
2022
€’000
Restated
|
Revenue
|
|
|
Dublin
|
286,130
|
250,586
|
Regional
Ireland
|
112,317
|
99,752
|
UK
|
186,292
|
152,481
|
Continental
Europe
|
22,959
|
12,909
|
Total
revenue
|
607,698
|
515,728
|
Segmental revenue
for each of the geographical locations represents the operating
revenue (room revenue, food and beverage revenue and other hotel
revenue) from leased and owned hotels situated in the Group’s four
reportable segments.
The year ended 31
December 2023 saw the Group trade strongly and continue the
execution of its growth strategy. The strong trade, the full year
impact of hotels added during 2022 and the addition of three hotels
during 2023 has led to an increase in Group revenue from hotel
operations from €515.7 million to €607.7 million.
|
2023
€’000
|
2022
€’000
Restated
|
Segmental
results - EBITDAR
|
|
|
Dublin
|
135,883
|
118,505
|
Regional
Ireland
|
37,018
|
31,689
|
UK
|
71,658
|
53,574
|
Continental
Europe
|
7,707
|
1,955
|
EBITDAR for
reportable segments
|
252,266
|
205,723
|
|
|
|
Segmental
results – EBITDA
|
|
|
Dublin
|
133,750
|
116,485
|
Regional
Ireland
|
36,889
|
31,576
|
UK
|
71,082
|
52,955
|
Continental
Europe
|
6,915
|
892
|
EBITDA for
reportable segments
|
248,636
|
201,908
|
|
|
|
Reconciliation
to results for the year
|
|
|
Segmental results
– EBITDA
|
248,636
|
201,908
|
Other income
(excluding gain on disposal of property, plant and
equipment)
|
1,484
|
1,360
|
Central
costs
|
(21,102)
|
(16,509)
|
Share-based
payments expense
|
(5,910)
|
(3,329)
|
Adjusted
EBITDA
|
223,108
|
183,430
|
|
|
|
Adjusting
items
|
|
|
Reversal of
previous periods revaluation losses through profit or
loss
|
2,025
|
21,166
|
Net reversal of
previous impairment charges of right-of-use assets
|
-
|
4,101
|
Net reversal of
previous impairment charges of fixtures, fittings and
equipment
|
-
|
624
|
Income from sale
of Merrion Road residential units
|
-
|
42,532
|
Release of costs
capitalised for Merrion Road residential units
|
-
|
(40,998)
|
Gain on disposal
of property, plant and equipment
|
-
|
3,877
|
Hotel pre-opening
expenses
|
(497)
|
(2,666)
|
Acquisition-related
costs
|
(4,389)
|
-
|
Group
EBITDA
|
220,247
|
212,066
|
|
|
|
Depreciation of
property, plant and equipment
|
(32,791)
|
(28,426)
|
Depreciation of
right-of-use assets
|
(30,663)
|
(27,503)
|
Amortisation of
intangible assets
|
(650)
|
(610)
|
Interest on lease
liabilities
|
(42,751)
|
(38,101)
|
Other interest and
finance costs
|
(7,860)
|
(7,769)
|
Profit before
tax
|
105,532
|
109,657
|
Tax
charge
|
(15,310)
|
(12,932)
|
Profit for the
year attributable to owners of the Company
|
90,222
|
96,725
|
Group EBITDA
represents earnings before interest on lease liabilities, other
interest and finance costs, tax, depreciation of property, plant
and equipment and right-of-use assets and amortisation of
intangible assets.
Adjusted EBITDA is
presented as an alternative performance measure to show the
underlying operating performance of the Group excluding items which
are not reflective of normal trading activities or distort
comparability either year on year or with other similar businesses.
Consequently, Adjusted EBITDA represents Group EBITDA
before:
-
Net property revaluation movements
through profit or loss (note 5);
-
Net reversal of previous impairment
charges of right-of-use assets (note 16);
-
Net reversal of previous impairment
charges of fixtures, fittings, and equipment (note
15);
-
Income from sale of Merrion Road
residential units (note 17);
-
Release of costs capitalised for
Merrion Road residential units (note 17);
-
Gain on disposal of property, plant
and equipment (note 6,
15);
-
Hotel pre-opening expenses, which
relate primarily to payroll expenses, sales and marketing costs and
training costs of new staff, that are incurred by the Group in
advance of new hotel openings (note 5); and
-
Acquisition-related costs
(note 5).
The line item
‘central costs’ includes costs of the Group’s central functions
including operations support, technology, sales and marketing,
human resources, finance, corporate services and business
development. Also included in central costs is the unwinding of the
discount on insurance provisions of €0.3 million (2022: €0.7
million) and the reversal of prior period insurance provisions of
€0.9 million (2022: €Nil) (note 23). Share-based payments
expense is presented separately from central costs as this expense
relates to employees across the Group (note 9).
‘Segmental results
– EBITDA’ for Dublin, Regional Ireland, the UK and Continental
Europe represents the ‘Adjusted EBITDA’ for each geographical
location before central costs, share-based payments expense and
other income. It is the net operational contribution of leased and
owned hotels in each geographical location.
‘Segmental results
– EBITDAR’ for Dublin, Regional Ireland, the UK and Continental
Europe represents ‘Segmental results – EBITDA’ before variable
lease costs.
Disaggregated
revenue information
Disaggregated
segmental revenue is reported in the same way as it is reviewed and
analysed internally by the chief operating decision makers,
primarily, the Executive Directors. The key components of revenue
reviewed by the chief operating decision makers are:
-
Room revenue which relates to the
rental of rooms in each hotel. Revenue is recognised when the hotel
room is occupied, and the service is provided;
-
Food and beverage revenue which
relates to sales of food and beverages at the hotel property.
Revenue is recognised at the point of sale; and
-
Other revenue includes revenue from
leisure centres, car parks, meeting room hire and other revenue
sources at the hotels. Leisure centre revenue is recognised over
the life of the membership while the other items are recognised
when the service is provided.
Revenue review by segment – Dublin
|
2023
€’000
|
2022
€’000
Restated
|
Room
revenue
|
216,948
|
190,056
|
Food and beverage
revenue
|
51,263
|
45,304
|
Other
revenue
|
17,919
|
15,226
|
Total
revenue
|
286,130
|
250,586
|
Revenue review by segment – Regional Ireland
|
2023
€’000
|
2022
€’000
|
Room
revenue
|
73,218
|
63,784
|
Food and beverage
revenue
|
30,336
|
28,107
|
Other
revenue
|
8,763
|
7,861
|
Total
revenue
|
112,317
|
99,752
|
Revenue review by segment – UK
|
2023
€’000
|
2022
€’000
|
Room
revenue
|
146,584
|
118,157
|
Food and beverage
revenue
|
30,491
|
26,167
|
Other
revenue
|
9,217
|
8,157
|
Total
revenue
|
186,292
|
152,481
|
Revenue review by segment – Continental Europe
|
2023
€’000
|
2022
€’000
Restated
|
Room
revenue
|
16,353
|
9,820
|
Food and beverage
revenue
|
4,935
|
2,395
|
Other
revenue
|
1,671
|
694
|
Total
revenue
|
22,959
|
12,909
|
Other
geographical information
|
2023
|
|
2022
|
|
Republic of Ireland
|
UK
|
Continental Europe
|
Total
|
|
Republic of Ireland
|
UK
|
Continental Europe
|
Total
|
|
€’000
|
€’000
|
€’000
|
€’000
|
|
€’000
Restated
|
€’000
|
€’000
Restated
|
€’000
Restated
|
Revenue
|
|
|
|
|
|
|
|
|
|
Owned
hotels
|
276,188
|
92,682
|
-
|
368,870
|
|
241,972
|
81,400
|
-
|
323,372
|
Leased
hotels
|
122,259
|
93,610
|
22,959
|
238,828
|
|
108,366
|
71,081
|
12,909
|
192,356
|
Total
revenue
|
398,447
|
186,292
|
22,959
|
607,698
|
|
350,338
|
152,481
|
12,909
|
515,728
|
|
|
|
|
|
Republic of Ireland
|
UK
|
Continental Europe
|
Total
|
|
Republic of Ireland
|
UK
|
Continental Europe
|
Total
|
|
€’000
|
€’000
|
€’000
|
€’000
|
|
€’000
Restated
|
€’000
|
€’000
Restated
|
€’000
Restated
|
EBITDAR
|
|
|
|
|
|
|
|
|
|
Owned
hotels
|
118,632
|
37,284
|
-
|
155,916
|
|
102,398
|
31,409
|
-
|
133,807
|
Leased
hotels
|
54,269
|
34,374
|
7,707
|
96,350
|
|
47,796
|
22,165
|
1,955
|
71,916
|
Total
EBITDAR
|
172,901
|
71,658
|
7,707
|
252,266
|
|
150,194
|
53,574
|
1,955
|
205,723
|
|
|
|
|
|
Republic of Ireland
|
UK
|
Continental Europe
|
Total
|
|
Republic of Ireland
|
UK
|
Continental Europe
|
Total
|
|
€’000
|
€’000
|
€’000
|
€’000
|
|
€’000
Restated
|
€’000
|
€’000
Restated
|
€’000
Restated
|
Other
information
|
|
|
|
|
|
|
|
|
|
Variable lease
costs
|
2,262
|
576
|
792
|
3,630
|
|
2,133
|
619
|
1,063
|
3,815
|
Depreciation of
property, plant and equipment
|
20,500
|
11,732
|
559
|
32,791
|
|
18,753
|
9,643
|
30
|
28,426
|
Depreciation of
right-of-use assets
|
16,036
|
11,225
|
3,402
|
30,663
|
|
15,108
|
10,017
|
2,378
|
27,503
|
Interest on lease
liabilities
|
17,797
|
21,048
|
3,906
|
42,751
|
|
17,194
|
18,134
|
2,773
|
38,101
|
Assets and
liabilities
|
2023
|
|
2022
|
|
Republic of Ireland
|
UK
|
Continental Europe
|
Total
|
|
Republic of Ireland
|
UK
|
Continental Europe
|
Total
|
|
€’000
|
€’000
|
€’000
|
€’000
|
|
€’000
Restated
|
€’000
|
€’000
Restated
|
€’000
Restated
|
Assets
|
|
|
|
|
|
|
|
|
|
Intangible assets
and goodwill
|
18,826
|
11,823
|
23,425
|
54,074
|
|
19,469
|
11,585
|
-
|
31,054
|
Property, plant
and equipment
|
1,100,355
|
577,936
|
6,540
|
1,684,831
|
|
1,035,055
|
391,959
|
433
|
1,427,447
|
Right-of-use
assets
|
296,774
|
306,381
|
82,038
|
685,193
|
|
307,832
|
305,865
|
44,404
|
658,101
|
Investment
property
|
1,625
|
396
|
-
|
2,021
|
|
1,575
|
432
|
-
|
2,007
|
Other non-current
receivables
|
3,287
|
3,131
|
-
|
6,418
|
|
3,103
|
284
|
-
|
3,387
|
Other current
assets
|
35,033
|
23,388
|
6,415
|
64,836
|
|
76,180
|
45,823
|
1,922
|
123,925
|
|
|
|
|
|
|
|
|
|
|
Total assets
excluding derivatives and deferred tax assets
|
1,455,900
|
923,055
|
118,418
|
2,497,373
|
|
1,443,214
|
755,948
|
46,759
|
2,245,921
|
|
|
|
|
|
|
|
|
|
|
Derivative
assets
|
|
|
|
6,521
|
|
|
|
|
11,717
|
Deferred tax
assets
|
|
|
|
24,136
|
|
|
|
|
21,271
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
|
|
2,528,030
|
|
-
|
|
|
2,278,909
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Loans and
borrowings
|
4,000
|
250,387
|
-
|
254,387
|
|
-
|
193,488
|
-
|
193,488
|
Lease
liabilities
|
300,157
|
310,697
|
87,744
|
698,598
|
|
303,968
|
300,336
|
47,487
|
651,791
|
Trade and other
payables
|
55,063
|
24,985
|
6,349
|
86,397
|
|
93,667
|
22,093
|
3,297
|
119,057
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities excluding provision for liabilities and tax
liabilities
|
359,220
|
586,069
|
94,093
|
1,039,382
|
|
397,635
|
515,917
|
50,784
|
964,336
|
|
|
|
|
|
|
|
|
|
|
Provision for
liabilities
|
|
|
|
8,611
|
|
|
|
|
9,179
|
Current tax
liabilities
|
|
|
|
2,659
|
|
|
|
|
11,606
|
Deferred tax
liabilities
|
|
|
|
84,441
|
|
|
|
|
71,022
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
|
1,135,093
|
|
|
|
|
1,056,143
|
|
|
|
|
|
|
|
|
|
|
Revaluation
reserve
|
386,450
|
74,731
|
-
|
461,181
|
|
328,896
|
50,638
|
-
|
379,534
|
The above
information on assets, liabilities and revaluation reserve is
presented by region as it does not form part of the segmental
information routinely reviewed by the chief operating
decision makers.
Loans and
borrowings are categorised according to their underlying currency.
The amortised cost of loans and borrowings was €254.4 million at 31
December 2023 (31 December 2022: €193.5 million). Drawn loans and
borrowings consist of Euro Revolving Credit Facility (“RCF”)
borrowings of €4.0 million (2022: €Nil) and Sterling denominated
borrowings of £221.4 million (€254.7 million) which are classified
as liabilities in the UK (31 December 2022: £176.5 million (€199.0
million)). All of the Sterling borrowings act as a net investment
hedge as at 31 December 2023 (31 December 2022: £176.5 million
(€199.0 million)) (note 24).
4 Statutory and other information
|
2023
|
2022
|
|
€’000
|
€’000
|
Depreciation of
property, plant and equipment
|
32,791
|
28,426
|
Depreciation of
right-of-use assets
|
30,663
|
27,503
|
Variable lease
costs: land and buildings
|
3,630
|
3,815
|
Hotel pre-opening
expenses
|
497
|
2,666
|
Hotel pre-opening
expenses relate to costs incurred by the Group in advance of
opening new hotels. In 2023, this related to Maldron Hotel Finsbury
Park, London, a new hotel that opened during 2023. In 2022, this
related to seven hotels, that opened throughout 2022. These costs
primarily relate to payroll expenses, sales and marketing costs and
training costs of new staff.
Variable lease
costs relate to lease payments linked to performance which are
excluded from the measurement of lease liabilities as they are not
related to an index or rate or are not considered fixed payments in
substance.
Auditor’s
remuneration
|
2023
|
2022
|
|
€’000
|
€’000
|
Audit of Group,
Company and subsidiary financial statements
|
470
|
395
|
Other assurance
services
|
32
|
32
|
Other non-audit
services
|
37
|
-
|
Tax
services
|
-
|
35
|
|
539
|
462
|
Auditor’s
remuneration for the audit of the Company financial statements was
€20,000 (2022: €15,000). Other assurance services primarily relate
to the review of the interim condensed consolidated financial
statements.
Directors’
remuneration
|
2023
|
2022
|
|
€’000
|
€’000
|
Salary and other
emoluments
|
3,575
|
2,242
|
Gains on vesting
of awards granted under the 2020 LTIP
|
230
|
-
|
Fees
|
496
|
511
|
Pension costs –
defined contribution
|
72
|
66
|
Transactions with
past directors
|
225
|
131
|
Good leaver
vesting of shares granted under Share Scheme 2020 for former
directors
|
-
|
15
|
|
4,598
|
2,965
|
Transactions with
past directors in 2023 relate to gains associated with the shares
issued on vesting of awards under the 2020 LTIP. This gain
represents the difference between the quoted share price per
ordinary share and the exercise price on the vesting date
(note
9).
Retired director
Stephen McNally received payment in lieu of annual leave upon
cessation of employment on 28 February 2022, this sum is included
in payments of €0.1 million to past directors reported in
2022.
Good leaver
vesting of shares granted under Share Scheme 2020 for former
directors in 2022 relates to 6,359 shares issued to two former
directors. The weighted average share price at the date of exercise
for the options exercised was €2.28
Details of the
directors’ remuneration, interests in conditional share awards and
compensation of former directors are set out in the Remuneration
Committee report.
5 Administrative expenses
|
2023
|
2022
|
|
€’000
|
€’000
|
Other
administrative expenses
|
126,155
|
102,408
|
Depreciation and
amortisation (note 14,15,16)
|
64,104
|
56,539
|
Commercial
rates
|
14,924
|
12,013
|
Utilities –
electricity and gas
|
27,783
|
31,656
|
Reversal of
previous periods revaluation losses through the profit or loss
(note 15)
|
(2,025)
|
(21,166)
|
Net reversal of
previous impairment charges (note 15,16)
|
-
|
(4,725)
|
Variable lease
costs (note 16)
|
3,630
|
3,815
|
Acquisition-related
costs
|
4,389
|
-
|
Hotel pre-opening
expenses
|
497
|
2,666
|
Reversal of prior
period insurance provisions (note 23)
|
(927)
|
-
|
|
238,530
|
183,206
|
Other
administrative expenses include costs related to payroll, marketing
and general administration.
Commercial rates
for the year ended 31 December 2023 are €14.9 million, net of a
waiver of €0.3 million. As a result of the impact of Covid-19,
commercial rates for the year ended 31 December 2022 of €12.0
million were net of a waiver of €3.0 million (note
10).
Net property
revaluation movements through profit or loss relate to the net
reversal of revaluation losses of €2.0 million through
profit or loss
(note 15).
6 Other income
|
2023
|
2022
|
|
€’000
|
€’000
|
Gain on disposal
of property, plant and equipment
|
-
|
3,877
|
Income from
managed hotels
|
1,099
|
968
|
Rental income from
investment property
|
385
|
392
|
|
1,484
|
5,237
|
On 21 June 2022,
the Group completed the sale of Clayton Crown Hotel, London, for
net proceeds of £20.7 million (€24.1 million). As a result, the
hotel property and related fixtures, fittings and equipment of
£17.4 million (€20.2 million) were derecognised from the statement
of financial position. A gain on disposal of £3.3 million (€3.9
million) was recognised in profit or loss for the year ended 31
December 2022 (note 15).
Income from
managed hotels represents the fees and other income earned from
services provided in relation to partner hotels which are not owned
or leased by the Group.
Rental income from
investment property relates to the following properties:
-
Two commercial properties which are
leased to third parties for lease terms of 25 and 30
years;
-
A sub-lease of part of Clayton
Hotel Cardiff, which is leased to a third party for a lease term of
20 years, with 9 years remaining at 31 December 2023;
and
-
A sub-lease of part of Clayton
Hotel Düsseldorf, which is leased to a third party for a rolling
lease term.
The fair value of
the investment properties at 31 December 2023 is €2.0 million
(2022: €2.0 million).
7 Finance costs
|
2023
|
2022
|
|
€’000
|
€’000
|
Interest on lease
liabilities (note 16)
|
42,751
|
38,101
|
Interest expense
on bank loans and borrowings
|
15,665
|
7,937
|
Cash flow hedges –
reclassified from other comprehensive income
|
(6,949)
|
(179)
|
Other finance
costs
|
1,332
|
2,351
|
Net foreign
exchange (gain)/loss on financing activities
|
(180)
|
168
|
Interest
capitalised to property, plant and equipment (note
15)
|
(2,008)
|
(2,151)
|
Interest
capitalised to contract fulfilment costs (note
17)
|
-
|
(357)
|
|
50,611
|
45,870
|
The Group uses
interest rate swaps to convert the interest rate on part of its
debt from floating rate to fixed rate (note 25). The cash flow
hedge amount reclassified from other comprehensive income is shown
separately within finance costs and primarily represents the
additional interest received or paid by the Group as a result of
the interest rate swaps. As at 31 December 2023, the Group has
recognised derivative assets, in relation to these interest rate
swaps, of €6.5 million (31 December 2022: €11.7 million). The
derivative assets are due to the Group’s fixed interest rates being
forecast to be lower than the variable interest rates forward curve
applicable on sterling borrowings. Margins on the Group’s
borrowings are set with reference to the Net Debt to EBITDA
covenant levels and ratchet up or down accordingly.
Other finance
costs include commitment fees and other banking and professional
fees. Net foreign exchange gains or losses on financing activities
relate principally to loans which did not form part of the net
investment hedge (note 25).
Interest on loans
and borrowings amounting to €2.0 million was capitalised to assets
under construction on the basis that these costs were directly
attributable to the construction of qualifying assets (note 15)
(2022: €2.2 million). There was no interest on loans and borrowings
capitalised for contract fulfilment costs in 2023 (2022: €0.4
million) (Note 17). The capitalisation rates
applied by the Group, which were reflective of the weighted average
interest cost in respect of Euro denominated borrowings and
Sterling denominated borrowings for the relevant capitalisation
period, were 4.2% (2022: 2.5%) and 3.2% (2022: 3.6%)
respectively.
8 Personnel expenses
The average number
of persons (full-time equivalents) employed by the Group (including
Executive Directors), analysed by category, was as
follows:
|
2023
|
2022
|
Administration
|
886
|
707
|
Other
|
3,110
|
2,694
|
|
3,996
|
3,401
|
Full-time
equivalents split by geographical region was as follows:
|
2023
|
2022
|
Dublin (including
the Group’s central functions)
|
1,854
|
1,653
|
Regional
Ireland
|
978
|
910
|
UK
|
1,013
|
808
|
Continental
Europe
|
151
|
30
|
|
3,996
|
3,401
|
The aggregate
payroll costs of these persons were as follows:
|
2023
|
2022
|
|
€’000
|
€’000
|
Wages and
salaries
|
140,674
|
120,895
|
Social welfare
costs
|
14,187
|
11,788
|
Pension costs –
defined contribution
|
1,702
|
1,799
|
Share-based
payments expense
|
5,910
|
3,329
|
Severance
costs
|
-
|
97
|
|
162,473
|
137,908
|
Payroll costs of
€0.5 million (2022: €0.4 million) relating to the Group’s internal
development employees were capitalised as these costs are directly
related to development, lease and other construction work completed
during the year ended 31 December 2023.
There were no wage
subsidies received by the Group from the Irish and UK governments
during the year ended 31 December 2023. During the year ended 31
December 2022, the Group availed of wage subsidies of €10.5 million
from the Irish government (note 10).
9 Share-based payments expense
The total
share-based payments expense for the Group’s employee share schemes
charged to profit or loss during the year was €5.9 million (2022:
€3.3 million), analysed as follows:
|
2023
|
2022
|
|
€’000
|
€’000
|
Long Term
Incentive Plans
|
5,580
|
3,242
|
Share Save
schemes
|
330
|
87
|
|
5,910
|
3,329
|
Details of the
schemes operated by the Group are set out below:
Long Term
Incentive Plans
During the year
ended 31 December 2023, the Board approved the conditional grant of
1,552,080 ordinary shares (‘the Award’) pursuant to the terms and
conditions of the Group’s 2017 Long Term Incentive Plan (‘the 2017
LTIP’). The Award was granted to senior employees across the Group
(120 in total). Vesting of the Award is based on two independently
assessed performance targets, 50% based on total shareholder return
(‘TSR’) and 50% based on Free Cashflow Per Share (‘FCPS’). The
performance period of this award is 1 January 2023 to 31 December
2025.
Threshold
performance for the TSR condition, which is a market-based
condition, is a performance measure against a bespoke comparator
group of 21 listed peer companies in the travel and leisure sector,
with threshold 25% vesting if the Group’s TSR over the performance
period is ranked at the median compared to the TSR of the
comparator group. If the Group’s TSR performance is at or above the
upper quartile compared to the comparator group, the remaining 75%
of the award will vest, with pro-rata vesting on a straight-line
basis for performance in between these thresholds.
Threshold
performance (25% vesting) for the FCPS condition, which is a
non-market-based performance condition, is based on the achievement
of FCPS of €0.498, as disclosed in the Group’s 2025 audited
consolidated financial statements, with 100% vesting for FCPS of
€0.608 or greater. The FCPS based awards will vest on a
straight-line basis for performance between these points. FCPS
targets may be amended in restricted circumstances if an event
occurs which causes the Remuneration Committee to determine an
amended or substituted performance condition would be more
appropriate and not materially more or less difficult to satisfy.
Participants are also entitled to receive a dividend equivalent
amount in respect of their awards.
In addition to the
above, the Board approved the conditional grant of 22,719 shares
pursuant to the terms and conditions of the 2017 LTIP in May 2023.
Performance criteria in relation to this additional award is the
same as that originally set out for the awards granted on 2 March
2022.
Movements in the
number of share awards are as follows:
|
2023
|
2022
|
|
Awards
|
Awards
|
Outstanding at the
beginning of the year
|
4,837,170
|
4,344,481
|
Granted during the
year
|
1,574,799
|
1,443,764
|
Forfeited during
the year
|
(52,901)
|
(128,294)
|
Lapsed unvested
during the year
|
(1,733,533)
|
(822,781)
|
Exercised during
the year
|
(535,634)
|
-
|
Outstanding at
the end of the year
|
4,089,901
|
4,837,170
|
|
2023
|
2022
|
|
Awards
|
Awards
|
Grant
date
|
|
|
March
2020
|
-
|
2,022,523
|
March
2021
|
1,099,661
|
1,115,183
|
December
2021
|
-
|
255,700
|
March
2022
|
1,427,175
|
1,443,764
|
March
2023
|
1,540,346
|
-
|
May
2023
|
22,719
|
-
|
Outstanding at
the end of the year
|
4,089,901
|
4,837,170
|
Awards
vested
During the year
ended 31 December 2023, the Company issued 281,734 ordinary shares
on foot of the vesting of awards granted in March 2020 under the
terms of the 2017 LTIP. In order to ensure a like-for-like
assessment with the basis on which the targets were set at the
start of 2020, the Company assessed EPS performance a) excluding
the number of shares issued as part of the placing in September
2020 and b) including the impact of the interest charge that would
have accrued if the placing was excluded. Adjusted EPS performance
was accordingly determined to be €0.458, resulting in a vesting
outcome of 37.27% for the portion of the award based on adjusted
performance (i.e. 18.64% of the overall award). This resulted in an
additional charge of €0.9 million recognised in the year ended 31
December 2023.
The Company also
considered shareholder guidance in relation to 'windfall gains'.
The LTIP awards granted in 2020 were granted at a price of €2.4375,
which compares to a price of €5.9775 for the 2019 awards. The
Company did not make a reduction on the award to reflect this lower
share price during the performance period but committed to
reviewing the outcome at vesting.
The Company judged
that it would be appropriate to exercise its discretion to reduce
the level of vesting by 25% from 18.64% to 14%. This has been
accounted for as a modification under IFRS 2 Share-based
Payment. As
a result, no adjustment has been made to the calculation of the
share-based payment charge in relation to this reduced level of
vesting and the Group continued to recognise the full cost of the
related share-based payment charge in profit or loss.
In total, 281,734
ordinary shares were issued in relation to the vesting of the March
2020 awards. The weighted average share price at the date of
exercise of these awards was €4.22.
During the year
ended 31 December 2023, the Company issued 253,900 ordinary shares
on foot of the vesting of awards granted in December 2021. This
award was conditional on relevant employees being in employment at
31 March 2023. The weighted average share price at the date of
exercise for these awards was €4.54.
Measurement of
fair values
The fair value, at
the grant date, of the TSR-based conditional share awards was
measured using a Monte Carlo simulation model. Non-market-based
performance conditions attached to the awards were not taken into
account in measuring fair value at the grant date.
The valuation and
key assumptions used in the measurement of the fair values of
awards at the grant date were as follows:
|
March 2023
|
March 2022
|
March 2021
|
Fair value at
grant date for TSR-based awards
|
€2.93
|
€2.60
|
€2.40
|
Fair value at
grant date for FCPS-based awards
|
€4.29
|
€3.89
|
€3.83
|
Share price at
grant date
|
€4.30
|
€3.90
|
€3.84
|
Exercise
price
|
€0.01
|
€0.01
|
€0.01
|
Expected
volatility for TSR-based awards
|
54.83%
p.a.
|
53.0%
p.a.
|
52.01%
p.a.
|
Performance
period
|
3
years
|
3 years
|
3 years
|
Risk-free
rate
|
2.78%
|
(0.31%)
|
(0.76%)
|
Dividend
equivalents accrue on awards that vest up to the time of vesting
under the LTIP schemes, and therefore the dividend yield has been
set to zero to reflect this. Such dividend equivalents will be
released to participants in the form of additional shares on
vesting subject to the satisfaction of performance criteria. In the
absence of available market-implied and observable volatility, the
expected volatility has been estimated based on the historic share
price over a three-year period.
All active awards
include FCPS-related performance conditions which are
non-market-based performance conditions that do not impact the fair
value of the award at the grant date, which equals the share price
less exercise price. Instead, an estimate is made by the Group as
to the number of shares which are expected to vest based on
satisfaction of the FCPS-related performance condition, where
applicable, and this, together with the fair value of the award at
grant date, determines the accounting charge to be spread over the
vesting period. The estimate of the number of shares which are
expected to vest over the vesting period of the award is reviewed
in each reporting period and the accounting charge is adjusted
accordingly.
Share Save
schemes
The Remuneration
Committee of the Board of Directors approved the granting of share
options under the UK and Ireland Share Save schemes (the ‘Schemes’)
for all eligible employees across the Group from 2016 to 2022. Each
Scheme is for three years and employees may choose to purchase
shares over the six month period following the end of the three
year period at the fixed discounted price set at the start of the
three year period. The share price for the Schemes has been set at
a 25% discount for Republic of Ireland based employees and 20% for
UK based employees in line with the maximum amount permitted under
tax legislation in both jurisdictions.
During the year
ended 31 December 2023, 47,488 ordinary shares were issued on
maturity of the share options granted as part of the Share Save
scheme in 2019. The weighted average exercise price at the date of
exercise for options exercised during the year ended 31 December
2023 was €3.57.
Movements in the
number of share options and the related weighted average exercise
price (‘WAEP’) are as follows:
|
2023
|
2022
|
|
Options
|
WAEP
€ per share
|
Options
|
WAEP
€ per share
|
Outstanding at the
beginning of the year
|
1,695,307
|
2.53
|
1,859,309
|
2.59
|
Granted during the
year
|
-
|
-
|
253,795
|
2.68
|
Forfeited during
the year
|
(167,520)
|
2.78
|
(411,438)
|
2.71
|
Exercised during
the year
|
(47,488)
|
3.46
|
(6,359)
|
2.28
|
Outstanding at
the end of the year
|
1,480,299
|
2.39
|
1,695,307
|
2.53
|
The weighted
average remaining contractual life for the share options
outstanding at 31 December 2023 is 0.8 years (31 December 2022: 1.8
years).
10 Government grants and government assistance
Government
grants
During the year
ended 31 December 2023, the Group availed of the Temporary Business
Energy Support Scheme (TBESS) for energy costs in the Republic of
Ireland. These grants, which totalled €0.7 million, have been
offset against the related costs in administrative expenses in
profit or loss (2022: €1.2 million).
During the year
ended 31 December 2022, the Group availed of payroll-related grants
for EWSS (Employment Wage Subsidy Scheme) of €10.5 million and
other grant schemes related to income (including the Covid
Restrictions Support Schemes and the Failte Ireland Tourism
Accommodation Providers Continuity Scheme) totalling €2.9 million.
No such grants were available in 2023.
Government
assistance
In the UK, the
Group benefitted from a commercial rates waiver of £0.2 million
(€0.3 million) for the year ended 31 December 2023 (2022: £1.0
million (€1.2 million)). Additionally, under the Energy Business
Relief Scheme, the Group benefitted from discounted energy prices
of £0.2 million (€0.2 million) for the year ended 31 December 2023
(2022: £0.7 million (€0.8 million)).
The Group did not
avail of any commercial rates waiver in Ireland during the year
ended 31 December 2023 (2022: €1.8 million).
Under the
warehousing of tax liabilities legislation introduced by the
Financial Provisions (Covid-19) (No. 2) Act 2020 and Finance Act
2020 (Act 26 of 2020) and amended by the Finance (Covid-19 and
Miscellaneous Provisions) Act 2021, Irish VAT liabilities of €11.7
million and payroll tax liabilities of €23.2 million were deferred
as at 31 December 2022. These liabilities were paid in full during
the year ended 31 December 2023.
11 Tax charge
|
2023
|
2022
|
|
€’000
|
€’000
|
Current
tax
|
|
|
Irish corporation
tax charge
|
15,377
|
11,654
|
Irish corporation
tax – losses incurred in 2020 carried back to 2019
|
-
|
(1,457)
|
Foreign
corporation tax charge
|
33
|
7
|
Over provision in
respect of prior years
|
(560)
|
(136)
|
|
14,850
|
10,068
|
Deferred tax
charge (note 26)
|
460
|
2,864
|
|
15,310
|
12,932
|
The tax assessed
for the year differs from the standard rate of corporation tax in
Ireland for the year. The differences are explained
below.
|
2023
|
2022
|
|
€’000
|
€’000
|
Profit before
tax
|
105,532
|
109,657
|
|
|
|
Tax on profit at
standard Irish corporation tax rate of 12.5%
|
13,192
|
13,707
|
|
|
|
Effects
of:
|
|
|
Income taxed at a
higher rate
|
1,131
|
-
|
Expenses not
deductible for tax purposes
|
1,556
|
606
|
Impact of
revaluation gains not subject to tax
|
(108)
|
(2,054)
|
Foreign losses
taxed at higher rate
|
(1,137)
|
(262)
|
Over provision in
respect of current tax in prior periods
|
(560)
|
(136)
|
Over provision in
respect of deferred tax in prior periods
|
(893)
|
(548)
|
Impact of
differing rates between current tax and deferred tax
|
991
|
465
|
Foreign tax losses
not recognised as deferred tax assets
|
-
|
442
|
Gain on disposal
not subject to tax
|
-
|
(485)
|
Other
differences
|
1,138
|
1,197
|
|
15,310
|
12,932
|
The Group has
recognised a tax charge of €15.3 million for the year ended 31
December 2023 (2022: €12.9 million). The tax charge primarily
relates to current tax in respect of profits earned in Ireland
during the year of €15.4 million (2022: €11.7 million).
The deferred tax
charge for the year ended 31 December 2023 of €0.5 million (2022:
€2.9 million) primarily relates to deferred tax arising on
revaluations of land and buildings through profit and loss. The
2022 deferred tax charge primarily related to the reversal of
impairments of the fair value of land and buildings and the carry
back of losses incurred in 2020, in respect of which a deferred tax
asset had previously been recognised at 31 December 2021, against
prior periods, generating cash refunds.
During the year
ended 31 December 2021, the UK government substantively enacted an
increase in the corporation tax rate from 19% to 25%, with effect
from 1 April 2023. The UK deferred tax assets and liabilities which
were forecasted to reverse after 1 April 2023 were remeasured at
the 25% corporation tax rate during 2021. As the 25% corporation
tax rate came into effect during the year ended 31 December 2023,
all UK deferred tax assets and liabilities are recognised at the
25% tax rate as at 31 December 2023.
12 Impairment
At 31 December
2023, as a result of the carrying amount of the net assets of the
Group being more than its market capitalisation, the Group tested
each cash generating unit (‘CGU’) for impairment as this was deemed
to be a potential impairment indicator. Impairment arises where the
carrying value of the CGU (which includes, where relevant, revalued
properties and/or right-of-use assets, allocated goodwill,
fixtures, fittings and equipment) exceeds its recoverable amount on
a value in use (‘VIU’) basis.
At 31 December
2023, the market capitalisation of the Group (€1,032 million) was
lower than the net assets of the Group (€1,393 million) (market
capitalisation is calculated by multiplying the share price on that
date by the number of shares in issue). Market capitalisation can
be influenced by a number of different market factors and
uncertainties. In addition, share prices reflect a discount due to
lack of control rights. The Group as a whole is not considered to
be a CGU for the purposes of impairment testing and instead each
hotel operating unit is considered as a CGU as it is the smallest
identifiable group of assets that generates cash inflows that are
largely independent of the cash inflows from other assets or groups
of assets.
At 31 December
2023, the recoverable amounts of the Group’s CGUs were based on
VIU, determined by discounting the estimated future cash flows
generated from the continuing use of these hotels. VIU cash flow
projections are prepared for each CGU and then compared against the
carrying value of the assets, including goodwill, properties,
fixtures, fittings and equipment and right-of-use assets, in that
CGU. The Group has not yet committed to a decarbonisation pathway
and therefore the impact on cashflows of any possible commitment is
not included.
The VIU estimates
were based on the following key assumptions:
-
Cash flow projections are based on
operating results and forecasts prepared by management covering a
ten year period in the case of freehold properties. This period was
chosen due to the nature of the hotel assets and is consistent with
the valuation basis used by independent external property valuers
when performing their hotel valuations (note 15). For CGUs with right-of-use assets, the lease
term was used;
-
Revenue and EBITDA for 2024 and
future years are based on management’s best estimate projections as
at 31 December 2023. Forecasted revenue and EBITDA are based on
expectations of future outcomes taking into account the
macro-environment, current earnings, past experience and adjusted
for anticipated revenue and cost growth;
-
Cash flow projections assume a
long-term compound annual growth rate post 2028 of 2% (2022: 2%) in
EBITDA for CGUs in the Republic of Ireland, 2% in the UK (2022:
2.5%) and 2% in Continental Europe (2022: 2%);
-
Cash flows include an average
annual capital outlay on maintenance for the hotels dependent on
the condition of the hotel or typically 4% of revenues but assume
no enhancements to any property;
-
In the case of CGUs with freehold
properties, the VIU calculations also include a terminal value
based on terminal (year ten) capitalisation rates consistent with
those used by the external property valuers which incorporates a
long-term growth rate of 2% (2022: 2%) for Irish and 2% (2022:
2.5%) for UK properties;
-
The cash flows are discounted using
a risk adjusted discount rate specific to each property. Risk
adjusted discount rates of 8.5% to 11.35% for Dublin assets (31
December 2022: 8.5% to 11.25%), 10% to 12.75% for Regional Ireland
assets (31 December 2022: 9.75% to 12.5%), 7.4% to 11.5% for UK
assets (31 December 2022: 7.5% to 13%), 7.5% to 8% for Continental
Europe assets (31 December 2022: 8.25%) have been used;
and
-
The values applied to each of these
key assumptions are derived from a combination of internal and
external factors based on historical experience of the valuers and
of management and taking into account the stability of cash flows
typically associated with these factors.
Following the
impairment assessments carried out on the Group’s CGUs at 31
December 2023, the recoverable amount was not deemed lower than the
carrying amount for any of the Group’s CGUs. No impairment charge
relating to right-of-use assets (note 16), allocated goodwill
(note 14)
and fixtures, fittings and equipment (note 15) has therefore been
recognised in profit or loss for the year ended 31 December
2023.
At 31 December
2023, impairment reversal assessments were carried out on the
Group’s CGUs where there had been a previous impairment of
fixtures, fittings and equipment. Following this assessment, no
impairment reversals of previous impairments were noted (2022: €4.1
million on right-of-use assets and €0.6 million on fixtures,
fittings and equipment).
If the 2024 EBITDA
forecasts used in cashflow in VIU estimates for impairment testing
as at 31 December 2023 had been forecast 10% lower,
there would still have been no impairment for the year ended 31
December 2023 for right-of-use assets and fixtures, fittings and
equipment and allocated goodwill.
13 Business combinations
Acquisition of
Clayton Hotel London Wall
On 3 July 2023,
the Group acquired the long leasehold interest and trade of Apex
Hotel London Wall, now trading as Clayton Hotel London Wall, for
cash consideration of £53.4 million (€62.1 million).
The Group became
party to a ground lease as part of the acquisition and recognised
lease liabilities and right-of-use assets of £2.0 million (€2.3
million). The ground lease has a remaining life of 107 years. This
exceeds the estimated useful life of the building as at the
acquisition date and hence the building is accounted for as an
owned hotel.
The fair value of
the identifiable assets and liabilities acquired were as
follows:
|
3 July 2023
Fair value
|
3 July 2023
Fair value
|
|
£’000
|
€’000
|
Recognised
amounts of identifiable assets acquired and liabilities
assumed
|
|
|
Non-current
assets
|
|
|
Hotel
property
|
51,366
|
59,742
|
Fixtures, fittings
and equipment
|
2,034
|
2,365
|
Right-of-use
asset
|
2,017
|
2,346
|
Current
assets
|
|
|
Net working
capital liabilities
|
(21)
|
(24)
|
Non-current
liabilities
|
|
|
Lease
liability
|
(1,997)
|
(2,323)
|
Current
liabilities
|
|
|
Lease
liability
|
(20)
|
(23)
|
Total
identifiable net assets
|
53,379
|
62,083
|
Total cash
consideration
|
53,379
|
62,083
|
The acquisition
method of accounting has been used to consolidate the business
acquired in the Group’s consolidated financial statements. No
goodwill has been recognised on acquisition as the fair value of
the net assets acquired equated to the consideration
paid.
Acquisition-related costs of
£3.3 million (€3.8 million) were charged to administrative expenses
in profit or loss in respect of this business
combination.
Acquisition of
Clayton Hotel Amsterdam American
On 3 October 2023,
the Group acquired 100% of the share capital of American Hotel
Exploitatie BV which holds the operational lease of the Hard Rock
Hotel Amsterdam American, now trading as Clayton Hotel Amsterdam
American, for cash consideration of €28.3 million and assumed net
working capital liabilities of €1.2 million.
The remaining
lease term is 18 years, with two 5-year tenant extension options.
This resulted in the recognition of a lease liability of €41.0
million and a right-of-use asset of €41.0 million.
The fair value of
the identifiable assets and liabilities acquired were as
follows:
|
3 October 2023
Fair value
|
|
€’000
|
Recognised
amounts of identifiable assets acquired and liabilities
assumed
|
|
Non-current
assets
|
|
Right-of-use
asset
|
41,036
|
Fixtures, fittings
and equipment
|
6,065
|
Deferred tax
asset
|
10,587
|
Current
assets
|
|
Trade and other
receivables
|
974
|
Stock
|
98
|
Cash
|
8
|
Non-current
liabilities
|
|
Deferred tax
liability
|
(10,587)
|
Lease
liability
|
(40,066)
|
Current
liabilities
|
|
Trade and other
payables
|
(1,962)
|
Lease
liability
|
(970)
|
Accruals
|
(264)
|
Total
identifiable net assets
|
4,919
|
Total cash
consideration
|
28,344
|
Goodwill
|
23,425
|
Goodwill of €23.4
million has been recognised due to the acquisition of Clayton Hotel
Amsterdam American, as the consideration exceeded the fair value of
the identifiable net assets acquired.
The goodwill
acquired as part of this transaction comprises certain intangible
assets that cannot be separately identified. This includes future
trading and the future growth opportunities the business provides
to the Group’s operations due to the geographical location of the
hotel, access to the Amsterdam market, which restricts new hotel
developments, and the skills and experience of an assembled
workforce.
Acquisition-related costs of
€0.6 million were charged to administrative expenses in profit or
loss in respect of this business combination.
Impact of new
acquisitions on trading performance
The
post-acquisition impact of the acquisitions completed during 2023
on the Group’s profit for the financial year ended 31 December 2023
was as follows:
|
2023
|
|
€’000
|
Revenue
|
7,671
|
Loss before tax
and acquisition-related costs
|
(1,044)
|
The Group has
limited access to the pre-acquisition books and records of the
acquired businesses, and as such it is impracticable to determine
the impact to the Group if the acquisitions had occurred on 1
January 2023.
These two
transactions have added to the scale of the Group with the
acquisition of Clayton Hotel London Wall and Clayton Hotel
Amsterdam American increasing the geographical spread of the Group
in line with the Group’s strategy of expanding across larger UK
cities and further entry into Continental Europe.
14 Intangible assets and goodwill
|
Goodwill
|
Other
intangible
assets
|
Total
|
|
€’000
|
€’000
|
€’000
|
Cost or
valuation
|
|
|
|
Balance at 1
January 2023
|
79,106
|
2,797
|
81,903
|
Additions
|
23,425
|
7
|
23,432
|
Effect of
movements in exchange rates
|
238
|
-
|
238
|
Balance at 31
December 2023
|
102,769
|
2,804
|
105,573
|
|
|
|
|
Balance at 1
January 2022
|
79,716
|
2,517
|
82,233
|
Additions
|
-
|
280
|
280
|
Effect of
movements in exchange rates
|
(610)
|
-
|
(610)
|
Balance at 31
December 2022
|
79,106
|
2,797
|
81,903
|
|
|
|
|
Accumulated
amortisation and impairment losses
|
|
|
|
Balance at 1
January 2023
|
(48,947)
|
(1,902)
|
(50,849)
|
Amortisation of
intangible assets
|
-
|
(650)
|
(650)
|
Balance at 31
December 2023
|
(48,947)
|
(2,552)
|
(51,499)
|
|
|
|
|
Balance at 1
January 2022
|
(48,947)
|
(1,292)
|
(50,239)
|
Amortisation of
intangible assets
|
-
|
(610)
|
(610)
|
Balance at 31
December 2022
|
(48,947)
|
(1,902)
|
(50,849)
|
|
|
|
|
Carrying
amounts
|
|
|
|
|
|
|
|
At
31 December 2023
|
53,822
|
252
|
54,074
|
At 31 December
2022
|
30,159
|
895
|
31,054
|
Goodwill
Goodwill is
attributable to factors including expected profitability and
revenue growth, increased market share, increased geographical
presence, the opportunity to develop the Group’s brands and the
synergies expected to arise within the Group after
acquisition.
Additions to
goodwill during 2023 include €23.4 million attributable to the
acquisition of Clayton Hotel Amsterdam American (note
13) (2022:
€Nil).
As at 31 December
2023, the goodwill cost figure includes €11.8 million (£10.3
million) which is attributable to goodwill arising on acquisition
of foreign operations denominated in sterling. Consequently, such
goodwill is subsequently retranslated at the closing rate. The
retranslation at 31 December 2023 resulted in a foreign exchange
gain of €0.2 million and a corresponding increase in goodwill. The
comparative retranslation at 31 December 2022 resulted in a foreign
exchange loss of €0.6 million.
|
Number of cash-generating units
|
|
|
|
At 31 December 2023
|
2023
|
2022
|
Carrying amount of goodwill allocated
|
|
€’000
|
€’000
|
Moran Bewley Hotel
Group (i)
|
7
|
24,725
|
24,500
|
Other acquisitions
(i)
|
3
|
1,327
|
1,314
|
2007 Irish hotel
operations acquired (ii)
|
3
|
4,345
|
4,345
|
Clayton Hotel
Amsterdam American (iii)
|
1
|
23,425
|
-
|
|
14
|
53,822
|
30,159
|
The above table
represents the number of CGUs to which goodwill was allocated at 31
December 2023.
Annual
goodwill testing
The Group tests
goodwill annually for impairment and more frequently if there are
indications that goodwill might be impaired. Due to the Group’s
policy of revaluation of land and buildings, and the allocation of
goodwill to individual CGUs, impairment of goodwill can occur for
CGUs where the Group owns the freehold as the Group realises the
profit and revenue growth and synergies which underpinned the
goodwill. As these materialise, they are recorded as revaluation
gains to the carrying value of the property and consequently,
elements of goodwill may be required to be written off if the
carrying value of the CGU (which includes revalued property and
allocated goodwill) exceeds its recoverable amount on a VIU basis.
The impairment of goodwill is recorded through profit or loss
though the revaluation gains on property are taken to reserves
through other comprehensive income provided there were no previous
impairment charges through profit or loss.
Following an
impairment review of the CGUs containing goodwill at 31 December
2023, no goodwill was required to be impaired (2022:
€Nil).
Future
under-performance in any of the Group’s major CGUs may result in a
material write-down of goodwill which would have a substantial
impact on the Group’s results and equity.
(i) Moran
Bewley Hotel Group and other single asset acquisitions
For the purposes
of impairment testing, goodwill has been allocated to each of the
hotels acquired as CGUs. The freehold interest in the property is
owned by the Group and therefore these hotel properties are valued
annually by independent external valuers. As such the recoverable
amount of each CGU is based on a fair value less costs of disposal
estimate, or where this value is less than the carrying value of
the asset, the VIU of the CGU is assessed.
Costs of
acquisition of a willing buyer which are factored in by external
valuers when calculating the fair value price of the asset are
significant for these assets (2023: Ireland 9.96%, UK 6.8%, 2022:
Ireland 9.96%, UK 6.8%). Purchasers’ costs are a key difference
between VIU and fair value less costs of disposal as prepared by
external valuers.
At 31 December
2023, the recoverable amounts of the ten CGUs were based on VIU,
determined by discounting the future cash flows generated from the
continuing use of these hotels. Following the impairment
assessment carried out at 31 December 2023, there was no impairment
relating to the CGUs. Note 12 details the assumptions used
in the VIU estimates for impairment testing.
(ii) 2007
Irish hotel operations acquired
For the purposes
of impairment testing, goodwill has been allocated to each of the
CGUs representing the Irish hotel operations acquired in 2007.
Eight hotels were acquired at that time but only four of these
hotels had goodwill associated with them. The goodwill related to
one of these CGUs was fully impaired (€2.6 million) during the year
ended 31 December 2020. The remaining three of these hotels are
valued annually by independent external valuers, as the freehold
interest in the property is now also owned by the Group. Where
hotel properties are valued annually by independent external
valuers, the recoverable amount of each CGU is based on a fair
value less costs of disposal estimate, or where this value is less
than the carrying value of the asset, the VIU of the CGU is
assessed. The recoverable amount at 31 December 2023 of each of
these CGUs which have associated goodwill is based on VIU. VIU is
determined by discounting the future cash flows generated from the
continuing use of these hotels. Following the impairment assessment
carried out at 31 December 2023, there was no impairment of
goodwill relating to these CGUs.
Costs of
acquisition of a willing buyer which are factored in by external
valuers when calculating the fair value price of the assets are
significant for these assets (2023: 9.96%, 2022: 9.96%).
Purchaser’s costs are a key difference between VIU and fair value
less costs of disposal as prepared by external valuers. Note
12 details the
assumptions used in the VIU estimates.
The key judgements
and assumptions used in estimating the future cash flows in the
impairment tests are subjective and include projected EBITDA (as
defined in note 3), discount rates and the
duration of the discounted cash flow model. Expected future cash
flows are inherently uncertain and therefore liable to change
materially over time (note 12).
(iii) Clayton
Hotel Amsterdam American
Goodwill of €23.4
million has been recognised due to the acquisition of Clayton Hotel
Amsterdam American, as the consideration exceeded the fair value of
the identifiable net assets acquired.
The goodwill
acquired as part of this transaction comprises certain intangible
assets that cannot be separately identified. This includes future
trading and the future growth opportunities the business provides
to the Group’s operations due to the geographical location of the
hotel, access to the Amsterdam market, which restricts new hotel
developments, and the skills and experience of an assembled
workforce.
For the purposes
of impairment testing, goodwill has been allocated to the CGU,
representing Clayton Hotel Amsterdam American’s operations,
acquired in 2023. The recoverable amount at 31 December 2023 of
this CGU is based on VIU. VIU is determined by discounting the
estimated future cash flows generated from the continuing use of
the hotel. Following the impairment assessment carried out at 31
December 2023, there was no impairment of goodwill relating to this
CGU.
Other
intangible assets
Other intangible
assets of €0.3 million at 31 December 2023 (2022: €0.9 million)
primarily represent a software licence agreement entered into by
the Group in 2019. This software licence will run to 31 May 2024
and is being amortised on a straight-line basis over the life of
the asset.
The Group reviews
the carrying amounts of other intangible assets annually to
determine whether there is any indication of impairment. If any
such indicators exist, then the asset’s recoverable amount
is estimated.
At 31 December
2023, there were no indicators of impairment present and the
Directors concluded that the carrying value of other intangible
assets was not impaired at 31 December 2023.
15 Property, plant and equipment
|
Land and buildings
|
Assets under construction
|
Fixtures, fittings and equipment
|
Total
|
|
€’000
|
€’000
|
€’000
|
€’000
|
At
31 December 2023
|
|
|
|
|
Valuation
|
1,478,636
|
-
|
-
|
1,478,636
|
Cost
|
-
|
101,703
|
187,951
|
289,654
|
Accumulated
depreciation (and impairment charges) *
|
-
|
-
|
(83,459)
|
(83,459)
|
Net carrying
amount
|
1,478,636
|
101,703
|
104,492
|
1,684,831
|
|
|
|
|
|
At
1 January 2023, net carrying amount
|
1,281,344
|
64,556
|
81,547
|
1,427,447
|
Acquisitions
through business combinations
|
59,742
|
-
|
8,430
|
68,172
|
Additions through
capital expenditure
|
50,351
|
33,892
|
34,038
|
118,281
|
Capitalised labour
costs
|
120
|
142
|
66
|
328
|
Capitalised
borrowing costs (note 7)
|
-
|
2,008
|
-
|
2,008
|
Revaluation gains
through OCI
|
92,098
|
-
|
-
|
92,098
|
Reversal of
revaluation losses through profit or loss
|
2,020
|
-
|
-
|
2,020
|
Depreciation
charge for the year
|
(12,769)
|
-
|
(20,022)
|
(32,791)
|
Translation
adjustment
|
5,730
|
1,105
|
433
|
7,268
|
At
31 December 2023, net carrying amount
|
1,478,636
|
101,703
|
104,492
|
1,684,831
|
|
|
|
|
|
The equivalent
disclosure for the prior year is as follows:
|
|
|
|
|
At
31 December 2022
|
|
|
|
|
Valuation
|
1,281,344
|
-
|
-
|
1,281,344
|
Cost
|
-
|
64,556
|
153,879
|
218,435
|
Accumulated
depreciation (and impairment charges) *
|
-
|
-
|
(72,332)
|
(72,332)
|
Net carrying
amount
|
1,281,344
|
64,556
|
81,547
|
1,427,447
|
|
|
|
|
|
At
1 January 2022, net carrying amount
|
1,088,847
|
79,094
|
75,961
|
1,243,902
|
|
|
|
|
|
Additions through
capital expenditure
|
31
|
18,732
|
21,165
|
39,928
|
Reclassification
from assets under construction to land and buildings and fixtures,
fittings and equipment for assets that have come into
use
|
28,627
|
(31,796)
|
3,169
|
-
|
Capitalised labour
costs
|
52
|
32
|
79
|
163
|
Capitalised
borrowing costs (note 7)
|
1,088
|
1,063
|
-
|
2,151
|
Disposals
|
(19,008)
|
-
|
(1,204)
|
(20,212)
|
Revaluation gains
through OCI
|
188,185
|
|
|
188,185
|
Reversal of
revaluation losses through profit or loss
|
21,234
|
-
|
-
|
21,234
|
Reversal of
previous impairment charges of fixtures, fittings and
equipment
|
-
|
-
|
624
|
624
|
Depreciation
charge for the year
|
(11,237)
|
-
|
(17,189)
|
(28,426)
|
Translation
adjustment
|
(16,475)
|
(2,569)
|
(1,058)
|
(20,102)
|
At
31 December 2022, net carrying amount
|
1,281,344
|
64,556
|
81,547
|
1,427,447
|
* Accumulated
depreciation of buildings is stated after the elimination of
depreciation, revaluation, disposals and impairments.
The carrying value
of land and buildings (revalued at 31 December 2023) is €1,478.6
million (2022: €1,281.3 million). The value of these assets under
the cost model is €959.9 million (2022: €855.4 million). In 2023,
unrealised revaluation gains of €92.1 million have been reflected
in other comprehensive income and in the revaluation reserve in
equity (2022: €188.2 million). Reversal of previous periods
revaluation losses of €2.0 million have been reflected in
administrative expenses through profit or loss (2022: €21.2
million).
Included in land
and buildings at 31 December 2023 is land at a carrying value of
€521.9 million (2022: €463.7 million) which is not depreciated.
There are €13.5 million of fixtures, fittings and equipment which
have been depreciated in full but are still in use at 31 December
2023 (31 December 2022: €3.3 million).
Acquisitions
through business combinations relate to the acquisition of Clayton
Hotel London Wall of £53.4 million (€62.1 million) and Clayton
Hotel Amsterdam American of €6.1 million during the year
(note 13).
Additions to
assets under construction during the year end 31 December 2023
primarily relate to development expenditure incurred on the
construction of Maldron Hotel Shoreditch in London and the purchase
of a building conversion opportunity in Edinburgh.
Other additions
through capital expenditure primarily relate to the acquisition of
and further investment in Maldron Hotel Finsbury Park, London,
which totalled £49.5 million (€56.9 million).
Capitalised labour
costs of €0.3 million (2022: €0.2 million) relate to the Group’s
internal development team and are directly related to asset
acquisitions and other construction work completed in relation to
the Group’s property, plant and equipment.
Impairment
assessments were carried out on the Group’s CGUs at 31 December
2023. No impairment charge has been recorded as the recoverable
amount was deemed higher than the carrying amount for all the
Group’s CGUs.
At 31 December
2023, impairment reversal assessments were carried out on the
Group’s CGUs where there had been a previous impairment of
fixtures, fittings and equipment. Following this assessment, no
impairment reversals of previous impairments were necessary (2022:
€4.7 million) (note 12).
At 31 December
2023, property, plant and equipment, including fixtures, fittings
and equipment in leased properties, with a carrying amount of
€1,368.3 million (2022: €1,217.0 million) were pledged as security
for loans and borrowings.
On 21 June 2022,
the Group completed the sale of Clayton Crown Hotel, London, for
net proceeds of £20.7 million (€24.1 million). As a result, the
hotel property and related fixtures, fittings and equipment of
£17.4 million (€20.2 million) were derecognised from the statement
of financial position. A gain on disposal of £3.3 million (€3.9
million) was recognised in profit or loss for the year ended 31
December 2022 (note 6).
The Group operates
the Maldron Hotel Limerick and, since the acquisition of Fonteyn
Property Holdings Limited in 2013, holds a secured loan over that
property. The loan is not expected to be repaid. Accordingly, the
Group has the risks and rewards of ownership and accounts for the
hotel as an owned property, reflecting the substance of the
arrangement.
The value of the
Group’s property at 31 December 2023 reflects open market
valuations carried out as at 31 December 2023 by independent
external valuers having appropriate recognised professional
qualifications and recent experience in the location and value of
the property being valued. The external valuations performed were
in accordance with the Royal Institution of Chartered Surveyors
(RICS) Valuation Standards.
Measurement of
fair value
The fair value
measurement of the Group’s own-use property has been categorised as
a Level 3 fair value based on the inputs to the valuation technique
used. At 31 December 2023, 31 properties were revalued by
independent external valuers engaged by the Group (31 December
2022: 29).
The principal
valuation technique used by the independent external valuers
engaged by the Group was discounted cash flows. This valuation
model considers the present value of net cash flows to be generated
from the property over a ten year period (with an assumed terminal
value at the end of year 10). Valuers’ forecast cash flow included
in these calculations represents the expectations of the valuers
for EBITDA (driven by average room rate (‘ARR’) (calculated as
total revenue divided by total rooms sold) and occupancy) for the
property and also takes account of the expectations of a
prospective purchaser. It also includes their expectation for
capital expenditure which the valuers, typically, assume as
approximately 3%-4% of revenue per annum, dependent on the extent
of hotel facilities. This does not always reflect the profile of
actual capital expenditure incurred by the Group. On specific
assets, refurbishments are, by nature, periodic rather than annual.
Valuers’ expectations of EBITDA are based off their trading
forecasts (benchmarked against competition, market and actual
performance). The expected net cash flows are discounted using risk
adjusted discount rates. Among other factors, the discount rate
estimation considers the quality of the property and its location.
The final valuation also includes a deduction of full purchaser’s
costs based on the valuers’ estimates at 9.96% for assets located
in the Republic of Ireland (31 December 2022: 9.96%) and 6.8% for
assets located in the UK (31 December 2022: 6.8%).
The valuers use
their professional judgement and experience to balance the
interplay between the different assumptions and valuation
influences. For example, initial discounted cash flows based on
individually reasonable inputs may result in a valuation which
challenges the price per key metrics (value of hotel divided by
room numbers) in recent hotel transactions. This would then result
in one or more of the inputs being amended for preparation of a
revised discounted cash flow. Consequently, the individual inputs
may change from the prior period or may look individually unusual
and therefore must be considered as a whole in the context of the
overall valuation.
It was noted by
the independent valuers that climate risk and ESG considerations
have had little or no impact on valuations at 31 December
2023.
The significant
unobservable inputs and drivers thereof are summarised in the
following table:
Significant
unobservable inputs
|
31 December 2023
|
|
Dublin
|
Regional Ireland
|
UK
|
Total
|
|
Number of hotel assets
|
RevPar
(Revenue per available room)
|
|
|
|
|
€75-€100/£75-£100
|
-
|
-
|
2
|
2
|
€100-€125/£100-£125
|
2
|
7
|
4
|
13
|
>€125/£125
|
8
|
5
|
3
|
16
|
|
10
|
12
|
9
|
31
|
Terminal (Year
10) capitalisation rate
|
|
|
|
|
<8%
|
7
|
-
|
5
|
12
|
8%-10%
|
3
|
8
|
4
|
15
|
>10%
|
-
|
4
|
-
|
4
|
|
10
|
12
|
9
|
31
|
Price per
key*
|
|
|
|
|
<
€150k/£150k
|
1
|
9
|
4
|
14
|
€150k-€250k/£150k-£250k
|
1
|
2
|
1
|
4
|
€250k-€350k/£250k-£350k
|
5
|
1
|
2
|
8
|
>
€350k/£350k
|
3
|
-
|
2
|
5
|
|
10
|
12
|
9
|
31
|
|
31 December 2022
|
|
Dublin
|
Regional Ireland
|
UK
|
Total
|
|
Number of hotel assets
|
RevPar
(Revenue per available room)
|
|
|
|
|
<
€75/£75
|
1
|
6
|
5
|
12
|
€75-€100/£75-£100
|
4
|
5
|
3
|
12
|
€100-€125/£100-£125
|
4
|
1
|
-
|
5
|
|
9
|
12
|
8
|
29
|
Terminal (Year
10) capitalisation rate
|
|
|
|
|
<8%
|
7
|
2
|
2
|
11
|
8%-10%
|
3
|
8
|
4
|
15
|
>10%
|
-
|
2
|
1
|
3
|
|
10
|
12
|
7
|
29
|
Price per
key*
|
|
|
|
|
<
€150k/£150k
|
1
|
9
|
5
|
15
|
€150k-€250k/£150k-£250k
|
1
|
3
|
-
|
4
|
€250k-€350k/£250k-£350k
|
7
|
-
|
1
|
8
|
>
€350k/£350k
|
1
|
-
|
1
|
2
|
|
10
|
12
|
7
|
29
|
* Price
per key represents the valuation of a hotel divided by the number
of rooms in that hotel.
The significant
unobservable inputs are:
-
Valuers’ forecast cash
flows.
-
Risk adjusted discount rates and
terminal (Year 10) capitalisation rates are specific to each
property;
Dublin
assets:
-
Risk adjusted discount rates range
between 8.50% and 11.35% (31 December 2022: 8.50% and
11.25%).
-
Weighted average risk adjusted
discount rate is 9.40% (31 December 2022: 9.56%).
-
Terminal capitalisation rates range
between 6.50% and 9.35% (31 December 2022: 6.50% and
9.25%).
-
Weighted average terminal
capitalisation rate is 7.40% (31 December 2022: 7.56%).
Regional
Ireland:
-
Risk adjusted discount rates range
between 10.0% and 12.75% (31 December 2022: 9.75% and
12.50%).
-
Weighted average risk adjusted
discount rate is 11.06% (31 December 2022: 10.75%).
-
Terminal capitalisation rates range
between 8.0% and 10.75% (31 December 2022: 7.75% and
10.50%).
-
Weighted average terminal
capitalisation rate is 9.06% (31 December 2022: 8.75%).
UK:
-
Risk adjusted discount rates range
between 7.40% and 11.50% (31 December 2022: 7.50% and
13.00%).
-
Weighted average risk adjusted
discount rate is 8.77% (31 December 2022: 9.47%).
-
Terminal capitalisation rates range
between 5.40% and 9.50% (31 December 2022: 5.00% and
10.50%).
-
Weighted average terminal
capitalisation rate is 6.77% (31 December 2022: 6.97%).
The estimated fair
value under this valuation model may increase or decrease
if:
-
Valuers’ forecast cash flow was
higher or lower than expected; and/or
-
The risk adjusted discount rate and
terminal capitalisation rate was lower or higher.
Valuations also
had regard to relevant price per key metrics from hotel sales
activity.
The property
revaluation exercise carried out by the Group’s external valuers is
a complex exercise, which not only takes into account the future
earnings forecast for the hotels, but also a number of other
factors, including and not limited to, market conditions,
comparable hotel sale transactions, inflation and the underlying
value of an asset. As a result, it is not possible, for the Group
to perform a quantitative sensitivity for a change in the property
values. A change in an individual quantitative variable would not
necessarily lead to an equivalent change in the overall outcome and
would require the application of judgement of the valuers in terms
of how the variable change could potentially impact on overall
valuations.
16 Leases
Group as a
lessee
The Group leases
property assets, which includes land and buildings and related
fixtures and fittings, and other equipment, relating to vehicles,
machinery and IT equipment. Information about leases for which the
Group is a lessee is presented below:
Right-of-use
assets
|
Property assets
|
Other equipment
|
Total
|
|
€’000
|
€’000
|
€’000
|
Net book value
at 1 January 2023
|
657,790
|
311
|
658,101
|
|
|
|
|
Acquisitions
through business combinations
|
43,382
|
-
|
43,382
|
Additions
|
-
|
375
|
375
|
Depreciation
charge for the year
|
(30,570)
|
(93)
|
(30,663)
|
Remeasurement of
lease liabilities
|
7,808
|
-
|
7,808
|
Translation
adjustment
|
6,190
|
-
|
6,190
|
Net book value
at 31 December 2023
|
684,600
|
593
|
685,193
|
Net book value
at 1 January 2022
|
491,832
|
37
|
491,869
|
|
|
|
|
Additions
|
195,167
|
330
|
195,497
|
Depreciation
charge for the year
|
(27,447)
|
(56)
|
(27,503)
|
Remeasurement of
lease liabilities
|
10,441
|
-
|
10,441
|
Reversal of
previous impairment charges
|
4,101
|
-
|
4,101
|
Translation
adjustment
|
(16,304)
|
-
|
(16,304)
|
Net book value
at 31 December 2022
|
657,790
|
311
|
658,101
|
Right-of-use
assets comprise leased assets that do not meet the definition of
investment property.
Lease
liabilities
|
2023
|
2022
|
|
€’000
|
€’000
|
Current
|
10,347
|
10,049
|
Non-current
|
641,444
|
471,877
|
Lease
liabilities at 1 January
|
651,791
|
481,926
|
|
|
|
Additions
|
375
|
185,061
|
Acquisitions
through business combinations
|
43,382
|
-
|
Interest on lease
liabilities (note 7)
|
42,751
|
38,101
|
Lease
payments
|
(53,498)
|
(47,425)
|
Remeasurement of
lease liabilities
|
7,808
|
10,427
|
Translation
adjustment
|
5,989
|
(16,299)
|
Lease
liabilities at 31 December
|
698,598
|
651,791
|
|
|
|
Current
|
12,040
|
10,347
|
Non-current
|
686,558
|
641,444
|
Lease
liabilities at 31 December
|
698,598
|
651,791
|
Acquisitions
through business combinations during the year ended 31 December
2023 relate to:
-
In July 2023, the Group acquired
the ground lease of the Apex Hotel London Wall, which was
subsequently re-branded Clayton Hotel London Wall, with 107 years
remaining on the lease. This resulted in the recognition of a lease
liability of €2.3 million (£2.0 million) and a right-of-use asset
of €2.3 million (£2.0 million).
-
In October 2023, the Group acquired
100% of the share capital of American Hotel Exploitatie BV which
held the operational lease of the Hard Rock Hotel Amsterdam
American, now trading as Clayton Hotel Amsterdam American. The
lease term remaining is 18 years, with two 5-year tenant extension
options. This resulted in the recognition of a lease liability of
€41.0 million and right-of-use asset of €41.0 million.
Additions during
the year ended 31 December 2022 related to:
-
In February 2022, the Group entered
into a 35 year lease of Maldron Hotel Manchester City Centre. This
resulted in the recognition of a lease liability of €32.3 million
(£27.1 million) and a right-of-use asset of €37.2 million (£31.3
million), which included lease prepayments and initial direct costs
of €4.9 million (£4.2 million).
-
In February 2022, the Group entered
a new operating lease of Clayton Hotel Düsseldorf, Germany with a
lease term of 20 years, and two 5 year tenant extension options.
This resulted in the recognition of a lease liability of €49.6
million and right-of-use asset of €50.1 million, which included
€0.5 million of initial direct costs.
-
In March 2022, the Group entered
into a 35 year lease of Clayton Hotel Bristol City. This resulted
in the recognition of a lease liability of €32.4 million (£27.0
million) and a right-of-use asset of €35.3 million (£29.4 million),
which included lease prepayments and initial direct costs of €2.9
million (£2.4 million).
-
In April 2022, the Group entered
into a 35 year lease of The Samuel Hotel, Dublin. This resulted in
the recognition of a lease liability of €37.9 million and a
right-of-use asset of €38.3 million, which included initial direct
costs of €0.4 million.
-
In July 2022, the Group entered
into a new lease for its central office headquarters with a lease
term of 15 years and a break option after 10 years. This resulted
in the recognition of a lease liability of €3.3 million and a
right-of-use asset of €3.3 million.
-
In October 2022, the Group entered
into a 35 year lease of Clayton Hotel Glasgow. This resulted in the
recognition of a lease liability of €29.6 million (£25.6 million)
and a right-of-use assets of €31.0 million (£26.9 million), which
included initial direct costs of €1.4 million (£1.3
million).
The weighted
average incremental borrowing rate for leases acquired or newly
entered into during the year ended 31 December 2023 is 8.8% (2022:
7.5%).
During the year
ended 31 December 2023, a lease amendment, which was not included
in the original lease agreement was made to one of the Group’s
leases. This has been treated as a modification of lease
liabilities and resulted in an increase in lease liabilities and
the carrying value of the right-of-use asset of €4.5
million.
Following agreed
rent reviews and rent adjustments, which formed part of the
original lease agreements, certain of the Group’s leases were
reassessed during the year. This resulted in an increase in lease
liabilities and related right-of-use assets of €3.3
million.
During the year
ended 31 December 2022, lease amendments, which were not included
in the original lease agreements were made to three of the Group’s
leases. These were treated as a modification of lease liabilities
and resulted in a decrease in lease liabilities of €2.8 million and
a €2.8 million decrease in the carrying value of the right-of-use
assets. Following agreed rent reviews and rent adjustments, which
formed part of the original lease agreements, certain of the
Group’s leases were reassessed during the year. This resulted in an
increase in lease liabilities and related right-of-use assets of
€13.4 million. In addition, the termination of one of the Group’s
leases resulted in a decrease in lease liabilities and related
right-of-use assets of €0.2 million.
Variable lease
costs which are linked to an index rate or are considered fixed
payments in substance are included in the measurement of lease
liabilities. These represent €61.2 million of lease liabilities at
31 December 2023 (31 December 2022: €63.8 million).
Non-cancellable
undiscounted lease cash flows payable under lease contracts are set
out below:
|
|
At 31 December 2023
|
|
Republic of Ireland
|
Continental Europe
|
UK
|
Total
|
|
€’000
|
€’000
|
£’000
|
€’000
|
During the year
2024
|
26,283
|
8,780
|
19,588
|
57,603
|
During the year
2025
|
26,475
|
8,827
|
19,660
|
57,924
|
During the year
2026
|
24,577
|
8,827
|
19,753
|
56,133
|
During the year
2027
|
24,419
|
8,827
|
20,211
|
56,502
|
During the years
2028
|
24,500
|
8,827
|
20,327
|
56,717
|
During the years
2029 – 2038
|
235,934
|
88,268
|
211,761
|
567,872
|
During the years
2039 – 2048
|
147,009
|
27,948
|
230,195
|
439,838
|
From 2049
onwards
|
71,432
|
-
|
168,646
|
265,490
|
|
580,629
|
160,304
|
710,141
|
1,558,079
|
|
|
At 31 December 2022
|
|
Republic of Ireland
|
Continental Europe
|
UK
|
Total
|
|
€’000
|
€’000
|
£’000
|
€’000
|
Year ended 31
December 2023
|
26,517
|
3,537
|
19,267
|
51,777
|
During the year
2024
|
24,096
|
4,386
|
19,208
|
50,139
|
During the year
2025
|
23,986
|
4,433
|
19,280
|
50,157
|
During the year
2026
|
24,089
|
4,433
|
19,373
|
50,365
|
During the year
2027
|
24,369
|
4,433
|
19,831
|
51,161
|
During the years
2028
|
24,467
|
4,433
|
19,945
|
51,387
|
During the years
2029 – 2038
|
235,808
|
44,330
|
207,880
|
514,521
|
During the years
2039 – 2048
|
147,003
|
13,669
|
226,213
|
415,723
|
From 2049
onwards
|
71,432
|
-
|
152,399
|
243,259
|
|
601,767
|
83,654
|
703,396
|
1,478,489
|
Sterling amounts
have been converted using the closing foreign exchange rate of
0.86905 as at 31 December 2023 (0.88693 as at 31 December
2022).
The actual cash
flows will depend on the composition of the Group’s lease portfolio
in future years and is subject to change, driven by:
-
commencement of new
leases;
-
modifications of existing leases;
and
-
reassessments of lease liabilities
following periodic rent reviews.
It excludes leases
on hotels for which an agreement for lease has been
signed.
The weighted
average lease life of future minimum rentals payable under leases
is 29.5 years (31 December 2022: 29.8 years). Lease liabilities are
monitored within the Group’s treasury function.
For the year ended
31 December 2023, the total fixed cash outflows relating to
property assets and other equipment amounted to €53.5 million (31
December 2022: €47.4 million).
Unwind of
right-of-use assets and release of interest charge
The unwinding of
the right-of-use assets as at 31 December 2023 and the release of
the interest on the lease liabilities as at 31 December 2023
through profit or loss over the terms of the leases have been
disclosed in the following tables:
|
|
Depreciation of right-of-use assets
|
|
Republic of Ireland
|
Continental Europe
|
UK
|
Total
|
|
€’000
|
€’000
|
£’000
|
€’000
|
During the year
2024
|
16,185
|
4,437
|
9,877
|
31,987
|
During the year
2025
|
16,092
|
4,749
|
9,866
|
32,194
|
During the year
2026
|
14,109
|
4,749
|
9,521
|
29,814
|
During the year
2027
|
13,634
|
4,749
|
9,301
|
29,085
|
During the year
2028
|
13,461
|
4,749
|
9,147
|
28,735
|
During the year
2029
|
13,240
|
4,474
|
8,487
|
27,480
|
During the years
2030-2039
|
121,287
|
44,492
|
83,002
|
261,288
|
During the years
2040-2049
|
63,889
|
9,639
|
82,892
|
168,910
|
From 2050
onwards
|
24,877
|
-
|
44,167
|
75,700
|
|
296,774
|
82,038
|
266,260
|
685,193
|
|
|
Interest on lease liabilities
|
|
Republic of Ireland
|
Continental Europe
|
UK
|
Total
|
|
€’000
|
€’000
|
£’000
|
€’000
|
During the year
2024
|
17,723
|
6,534
|
18,511
|
45,557
|
During the year
2025
|
17,167
|
6,249
|
18,441
|
44,636
|
During the year
2026
|
16,630
|
6,054
|
18,364
|
43,815
|
During the year
2027
|
16,174
|
5,844
|
18,265
|
43,035
|
During the year
2028
|
15,680
|
5,618
|
18,133
|
42,163
|
During the year
2029
|
15,152
|
5,374
|
17,989
|
41,226
|
During the years
2030-2039
|
117,821
|
35,356
|
166,772
|
345,079
|
During the years
2040-2049
|
54,650
|
1,531
|
116,420
|
190,143
|
From 2050
onwards
|
9,475
|
-
|
47,235
|
63,827
|
|
280,472
|
72,560
|
440,130
|
859,481
|
Sterling amounts
have been converted using the closing foreign exchange rate of
0.86905 as at 31 December 2023.
The actual
depreciation and interest charge through profit or loss will depend
on the composition of the Group’s lease portfolio in future years
and is subject to change, driven by:
-
commencement of new
leases;
-
modifications of existing
leases;
-
reassessments of lease liabilities
following periodic rent reviews; and
-
impairments and reversals of
previous impairment charges of right-of-use assets.
Impairment
assessments were carried out on the Group’s CGUs at 31 December
2023. No impairment charge has been recorded as the recoverable
amount was deemed higher than the carrying amount for all the
Group’s CGUs (31 December 2022: impairment reversals of €4.1
million) (note 12).
Leases of
property assets
The Group leases
properties for its hotel operations and office space. The leases of
hotels typically run for a period of between 25 and 35 years and
leases of office space for 10 years.
Some leases
provide for additional rent payments that are based on a percentage
of the revenue/EBITDAR that the Group generates at the hotel in the
period. The Group sub-leases part of two of its properties to a
tenant under an operating lease.
Variable
lease costs based on revenue
These variable
lease costs link rental payments to hotel cash flows and reduce
fixed payments. Variable lease costs which are considered fixed in
substance are included as part of lease liabilities and not in the
following table.
Variable lease
costs based on revenue for the year ended 31 December 2023 are as
follows:
|
Variable lease costs element
|
Estimated impact on variable lease costs of 5% increase in
revenue/EBITDAR
|
|
€’000
|
€’000
|
Leases with lease
payments based on revenue
|
3,630
|
782
|
Variable lease
costs based on revenue for the year ended 31 December 2022 are as
follows:
|
Variable
lease costs element
|
Estimated impact on variable lease costs of 5% increase in
revenue/EBITDAR
|
|
€’000
|
€’000
|
Leases with lease
payments based on revenue
|
3,815
|
519
|
Extension
options
As at 31 December
2023, the Group, as a hotel lessee, has two hotels which each have
two 5-year extension options. The Group assesses at lease
commencement whether it is reasonably certain to exercise the
options and reassesses if there is a significant event or change in
circumstances within its control. At 31 December 2023, the Group
has assessed that it is not reasonably certain that the options
will be exercised. The relative magnitude of optional lease
payments to lease payments is as follows:
|
Lease liabilities recognised (discounted)
|
Potential future lease payments not included in lease liabilities
(discounted)
|
|
€’000
|
€’000
|
Hotel
leases
|
87,850
|
13,274
|
Termination
options
The Group holds a
termination option in an office space lease. The Group assesses at
lease commencement whether it is reasonably certain not to exercise
the option and reassesses if there is a significant event or change
in circumstances within its control. At 31 December 2023, the Group
has assessed that it is not reasonably certain that the option will
not be exercised. The relative magnitude of optional lease payments
to lease payments is as follows:
|
Lease liabilities recognised (discounted)
|
Potential future lease payments not included in lease liabilities
(discounted)
|
|
€’000
|
€’000
|
Office
building
|
3,579
|
1,372
|
Leases not
yet commenced to which the lessee is committed
The Group has
multiple agreements for lease at 31 December 2023 and details of
the non-cancellable lease rentals and other contractual obligations
payable under these agreements are set out hereafter. These
represent the minimum future lease payments (undiscounted) in
aggregate that the Group is required to make under the agreements.
An agreement for lease is a binding agreement between external
third parties and the Group to enter into a lease at a future date.
The dates of commencement of these leases may change based on the
hotel opening dates. The amounts payable may also change slightly
if there are any changes in room numbers delivered through
construction.
|
At 31 December 2023
|
At 31 December 2022
|
|
€’000
|
€’000
|
Agreements for
lease
|
|
|
Less than one
year
|
9,503
|
-
|
One to two
years
|
5,745
|
10,178
|
Two to three
years
|
7,991
|
5,629
|
Three to five
years
|
16,389
|
15,737
|
Five to fifteen
years
|
86,181
|
81,307
|
Fifteen to twenty
five years
|
92,658
|
87,473
|
After twenty five
years
|
107,305
|
109,229
|
Total future
lease payments
|
325,772
|
309,553
|
Included in the
above table are future lease payments for agreements for lease,
with a lease term of 35 years with the expected opening dates as
follows: Maldron Hotel Cathedral Quarter Manchester (Q2 2024),
Maldron Hotel Liverpool City (Q2 2024), Maldron Hotel Brighton (Q3
2024) and Maldron Hotel Croke Park, Dublin (H1 2026).
Other
leases
The Group has
applied the short-term and low-value exemptions available under
IFRS 16 where applicable and recognises lease payments associated
with short-term leases or leases for which the underlying asset is
of low-value as an expense on a straight-line basis over the lease
term. Where the exemptions were not available, right-of-use assets
have been recognised with corresponding lease
liabilities.
|
2023
|
2022
|
|
€’000
|
€’000
|
Expenses relating
to short-term leases recognised in administrative
expenses
|
174
|
204
|
Expenses relating
to leases of low-value assets, excluding short-term leases of
low-value assets, recognised in administrative expenses
|
365
|
237
|
|
539
|
441
|
For the year ended
31 December 2023, cash outflows relating to fixtures, fittings and
equipment, for which the Group has availed of the IFRS 16
short-term and low-value exemptions, amounted to €0.5 million (31
December 2022: €0.4 million).
Group as a
lessor
Lease income from
lease contracts in which the Group acts as lessor is outlined
below:
|
2023
|
2022
|
|
€’000
|
€’000
|
Operating lease
income (note 6)
|
385
|
392
|
The Group leases
its investment property and has classified these leases as
operating leases because they do not transfer substantially all of
the risks and rewards incidental to ownership of these assets to
the lessee. Operating lease income from sub-leasing right-of-use
assets for the year ended 31 December 2023 amounted to €0.2 million
(31 December 2022: €0.2 million).
The following
table sets out a maturity analysis of lease payments, showing the
undiscounted lease payments receivable:
|
2023
|
2022
|
|
€’000
|
€’000
|
|
|
|
Less than one
year
|
364
|
375
|
One to two
years
|
303
|
335
|
Two to three
years
|
303
|
335
|
Three to four
years
|
262
|
335
|
Four to five
years
|
248
|
293
|
More than five
years
|
767
|
1,102
|
Total
undiscounted lease payments receivable
|
2,247
|
2,775
|
Sterling amounts
have been converted using the closing foreign exchange rate of
0.86905 as at 31 December 2023 (31 December 2022:
0.88693).
17 Contract fulfilment costs
|
2023
|
2022
|
|
€’000
|
€’000
|
At 1
January
|
-
|
36,255
|
Costs incurred in
fulfilling contract in the year
|
-
|
4,386
|
Capitalised
borrowing costs (note 7)
|
-
|
357
|
Release of costs
to profit or loss on sale
|
-
|
(40,998)
|
At
31 December
|
-
|
-
|
During 2022
contract fulfilment costs related to the Group’s contractual
agreement with Irish Residential Properties REIT plc (‘I-RES’),
entered into on 16 November 2018, for I-RES to purchase a
residential development on completion of its construction by the
Group (comprising 69 residential units) on the site of the former
Tara Towers Hotel.
The Group
completed the sale of these residential units to I-RES on 11 August
2022. Income and the associated costs were recognised on this
contract in profit or loss when the performance obligation in the
contract was met. Based on the terms of the contract, this was the
legal completion of the contract which occurred on practical
completion of the development project, 11 August 2022. As a result,
the income was recognised at a point in time when the performance
obligation was met, rather than over time.
The income from
the sale of the residential units was €42.5 million of which €41.8
million was received on completion. €0.7 million has been withheld
as a retention payment and included in contract assets
(note
18).
The full receipt of these funds is expected in 2024.Total sales
proceeds of €42.5 million were recognised as income from
residential development activities in profit or loss for the year
ended 31 December 2022.
The related
capitalised contract fulfilment costs of €41.0 million were
released from the statement of financial position to profit or loss
and recognised within cost of residential development activities in
profit of loss for the year ended 31 December 2022.
18 Trade and other receivables
|
2023
|
2022
|
|
€’000
|
€’000
|
Non-current
assets
|
|
|
Other
receivables
|
2,328
|
2,314
|
Prepayments
|
4,090
|
1,073
|
|
6,418
|
3,387
|
|
|
|
Current
assets
|
|
|
Trade
receivables
|
10,830
|
13,816
|
Prepayments
|
9,251
|
8,003
|
Contract
assets
|
4,612
|
4,465
|
Accrued
income
|
3,069
|
2,309
|
Other
receivables
|
500
|
1,670
|
|
28,262
|
30,263
|
|
|
|
Total
|
34,680
|
33,650
|
Non-current
assets
Included in
non-current other receivables at 31 December 2023 is a rent deposit
of €1.4 million paid to the landlord on the sale and leaseback of
Clayton Hotel Charlemont (31 December 2022: €1.4 million). This
deposit is repayable to the Group at the end of the lease term.
Also included is a deposit paid as part of another hotel property
lease contract of €0.9 million (2022: €0.9 million) which is
interest-bearing and refundable at the end of the lease
term.
Included in
non-current prepayments at 31 December 2023 are costs of €4.1
million (31 December 2022: €1.1 million) associated with future
lease agreements for hotels which are currently being constructed
or in planning. The increase at 31 December 2023 is as a result of
a rise in expenses related to projects due to complete in 2024.
When these leases are signed, these costs will be reclassified to
right-of-use assets.
Current
assets
Current other
receivables at 31 December 2023 of €0.5 million (2022: €1.7
million) have decreased by €1.2 million as the amounts for
government grants relating to the Temporary Energy Business Support
Scheme (TBESS) for energy costs were received in full during 2023
and the scheme has now ceased (note 10).
Included in
current contract assets is €0.7 million (2022: €0.7 million) which
relates to a retention payment, details of which are included
in note 17.
Trade receivables
are subject to the expected credit loss model in IFRS 9
Financial
Instruments. The Group applies the IFRS 9
simplified approach to measuring expected credit losses which uses
a lifetime expected loss allowance for all trade receivables. To measure the
expected credit losses, trade receivables have been grouped based
on shared credit risk characteristics and the number of days past
due.
Aged analysis
of trade receivables
|
Gross receivables
|
Expected
credit loss
|
Impairment provision
|
Net
receivables
|
|
2023
|
Rate
|
2023
|
2023
|
|
€’000
|
2023
|
€’000
|
€’000
|
Not past
due
|
5,984
|
0.0%
|
-
|
5,984
|
Past due < 30
days
|
2,804
|
0.0%
|
-
|
2,804
|
Past due 30 – 60
days
|
1,337
|
0.0%
|
-
|
1,337
|
Past due 60 – 90
days
|
147
|
0.0%
|
-
|
147
|
Past due > 90
days
|
883
|
36.8%
|
(325)
|
558
|
|
11,155
|
|
(325)
|
10,830
|
|
Gross receivables
|
Expected
credit loss
|
Impairment provision
|
Net receivables
|
|
2022
|
Rate
|
2022
|
2022
|
|
€’000
|
2022
|
€’000
|
€’000
|
Not past
due
|
6,840
|
0.0%
|
-
|
6,840
|
Past due < 30
days
|
3,207
|
0.0%
|
-
|
3,207
|
Past due 30 – 60
days
|
1,596
|
0.0%
|
-
|
1,596
|
Past due 60 – 90
days
|
1,046
|
0.0%
|
-
|
1,046
|
Past due > 90
days
|
1,746
|
35.5%
|
(619)
|
1,127
|
|
14,435
|
|
(619)
|
13,816
|
Management does
not expect any significant losses from trade receivables that have
not been provided for as shown above, contract assets, accrued
income or other receivables. Details are included in the credit
risk section in note 27.
19 Inventories
|
2023
|
2022
|
|
€’000
|
€’000
|
Goods for
resale
|
1,882
|
1,863
|
Consumable
stores
|
519
|
479
|
|
2,401
|
2,342
|
Inventories
recognised as cost of sales during the year amounted to €33.6
million (2022: €30.7 million).
20 Cash and cash equivalents
|
2023
|
2022
|
|
€’000
|
€’000
|
Cash at bank and
in hand
|
34,173
|
91,320
|
|
34,173
|
91,320
|
21 Capital and reserves
Share capital
and share premium
At 31
December 2023
|
Number
|
€’000
|
Authorised
share capital
|
10,000,000,000
|
100,000
|
Ordinary shares of
€0.01 each
|
|
|
|
|
|
|
Number
|
€’000
|
Allotted,
called-up and fully paid shares
|
223,454,844
|
2,235
|
Ordinary shares of
€0.01 each
|
|
|
|
|
|
Share
premium
|
|
505,079
|
At 31
December 2022
|
Number
|
€’000
|
Authorised
share capital
|
|
|
Ordinary shares of
€0.01 each
|
10,000,000,000
|
100,000
|
|
|
|
|
Number
|
€’000
|
Allotted,
called-up and fully paid shares
|
|
|
Ordinary shares of
€0.01 each
|
222,871,722
|
2,229
|
|
|
|
Share
premium
|
|
504,910
|
All ordinary
shares rank equally with regard to the Company’s residual
assets.
During the year
ended 31 December 2023, the Company issued 535,634 shares of €0.01
per share at par, following the vesting of Awards granted in
relation to the 2020 LTIP scheme and the December 2021 LTIP issue
(note 9).
During the year ended 31 December 2023, 47,488 ordinary shares were
issued on maturity of the share options granted as part of the
Share Save scheme in 2019. The weighted average exercise price at
the date of exercise for options exercised during the year ended 31
December 2023 was €3.57 (2022: €2.28).
Dividends
On 6 October 2023,
an interim dividend of 4 cents per share was paid at a total cost
of €8.9 million (year ended 31 December 2022: €Nil).
On 28 February
2024, the Board proposed a final dividend of 8 cents per share.
Based on shares in issue at 31 December 2023, the amount of
dividends proposed is €17.9 million. This proposed dividend is
subject to approval by the shareholders at the Annual General
Meeting. The payment date for the final dividend will be 1 May 2024
to shareholders registered on the record date 25 April 2024. These
consolidated financial statements do not reflect this
dividend.
Nature and
purpose of reserves
(a) Capital
contribution and merger reserve
As part of a Group
reorganisation in 2014, the Company became the ultimate parent
entity of the then existing Group, when it acquired 100% of the
issued share capital of DHGL Limited in exchange for the issue of
9,500 ordinary shares of €0.01 each. By doing so, it also
indirectly acquired the 100% shareholdings previously held by DHGL
Limited in each of its subsidiaries. As part of that
reorganisation, shareholder loan note obligations (including
accrued interest) of DHGL Limited were assumed by the Company as
part of the consideration paid for the equity shares in DHGL
Limited.
The fair value of
the Group (as then headed by DHGL Limited) at that date was
estimated at €40.0 million. The fair value of the shareholder loan
note obligations assumed by the Company as part of the acquisition
was €29.7 million and the fair value of the shares issued by the
Company in the share exchange was €10.3 million.
The difference
between the carrying value of the shareholder loan note obligations
(€55.4 million) prior to the reorganisation and their fair value
(€29.7 million) at that date represents a contribution from
shareholders of €25.7 million which has been credited to a separate
capital contribution reserve. Subsequently, all shareholder loan
note obligations were settled in 2014, in exchange for shares
issued in the Company.
The insertion of
Dalata Hotel Group plc as the new holding company of DHGL Limited
in 2014 did not meet the definition of a business combination under
IFRS 3 Business
Combinations, and, as a consequence, the
acquired assets and liabilities of DHGL Limited and its
subsidiaries continued to be carried in the consolidated financial
statements at their respective carrying values as at the date of
the reorganisation. The consolidated financial statements of Dalata
Hotel Group plc were prepared on the basis that the Company is a
continuation of DHGL Limited, reflecting the substance of the
arrangement.
As a consequence,
a merger reserve of €10.3 million (negative) arose in the
consolidated statement of financial position. This represents the
difference between the consideration paid for DHGL Limited in the
form of shares of the Company, and the issued share capital of DHGL
Limited at the date of the reorganisation which was a nominal
amount of €95.
In September 2020,
the Company completed a placing of new ordinary shares of €0.01
each in the share capital of the Company. 37.0 million ordinary
shares were issued at €2.55 each which raised
€92.0 million after costs of €2.4
million. The Group availed of merger relief to simplify future
distributions and as a result, €91.6 million was recognised in the
merger reserve being the difference between the nominal value of
each share (€0.01 each) and the amount paid (€2.55 per share) after
deducting costs of the share placing of €2.4 million.
(b)
Share-based payment reserve
The share-based
payment reserve comprises amounts equivalent to the cumulative cost
of awards by the Group under equity-settled share-based payment
arrangements, being the Group’s Long Term Incentive Plans and the
Share Save schemes. On vesting, the cost of awards previously
recognised in the share-based payments reserve is transferred to
retained earnings. Details of the share awards, in addition to
awards which vested during the current year, are disclosed
in note 9 and in the Remuneration
Committee report.
(c) Hedging
reserve
The hedging
reserve comprises the effective portion of the cumulative net
change in the fair value of hedging instruments used in cash flow
hedges, net of deferred tax.
(d)
Revaluation reserve
The revaluation
reserve relates to the revaluation of land and buildings in line
with the Group’s policy to fair value these assets at each
reporting date (note 15), net of deferred
tax.
(e)
Translation reserve
The translation
reserve comprises all foreign currency exchange differences arising
from the translation of the financial statements of foreign
operations, as well as the effective portion of any foreign
currency differences arising from hedges of a net investment in a
foreign operation (note 27).
22 Trade and other payables
|
2023
|
2022
|
|
€’000
|
€’000
|
Non-current
liabilities
|
|
|
Other
payables
|
348
|
239
|
|
348
|
239
|
|
|
|
Current
liabilities
|
|
|
Trade
payables
|
16,724
|
17,645
|
Accruals
|
45,839
|
45,821
|
Contract
liabilities
|
13,459
|
14,265
|
Value added
tax
|
4,957
|
15,040
|
Payroll
taxes
|
3,641
|
26,047
|
Tourist
taxes
|
1,429
|
-
|
|
86,049
|
118,818
|
|
|
|
Total
|
86,397
|
119,057
|
Accruals at 31
December 2023 include €6.2 million related to amounts not yet
invoiced for capital expenditure and costs incurred on entering new
leases and agreements for lease (31 December 2022: €9.1
million).
Value added
tax and payroll taxes
Under the
warehousing of tax liabilities legislation introduced by the
Financial Provisions (Covid-19) (No. 2) Act 2020 and Finance Act
2020 (Act 26 of 2020) and amended by the Finance (Covid-19 and
Miscellaneous Provisions) Act 2021, Irish VAT liabilities of €11.7
million and payroll tax liabilities of €23.2 million were deferred
as at 31 December 2022. These liabilities were paid in full during
the year ended 31 December 2023 (note 10).
Tourist
taxes
Tourist taxes of
€1.4 million are tax liabilities due relating to the Clayton Hotel
Amsterdam American (2022: €Nil). The tourist tax is a charge on
overnight visitors staying in hotels in the city charged at a rate
of 12.5%.
23 Provision for liabilities
|
2023
|
2022
|
|
€’000
|
€’000
|
Non-current
liabilities
|
|
|
Insurance
provision
|
6,656
|
7,165
|
|
|
|
Current
liabilities
|
|
|
Insurance
provision
|
1,955
|
2,014
|
|
8,611
|
9,179
|
The reconciliation
of the movement in the provision during the year is as
follows:
|
2023
|
2022
|
|
€’000
|
€’000
|
At 1
January
|
9,179
|
8,188
|
Provisions made
during the year – charged to profit or loss
|
2,500
|
2,500
|
Utilised during
the year
|
(1,815)
|
(859)
|
Impact of
discounting – credited to profit or loss
|
(326)
|
(650)
|
Reversed to profit
or loss during the year
|
(927)
|
-
|
At
31 December
|
8,611
|
9,179
|
This provision
relates to actual and potential obligations arising from the
Group’s insurance arrangements where the Group is self-insured. The
Group has third party insurance cover above specific limits for
individual claims and has an overall maximum aggregate payable for
all claims in any one year. The amount provided is principally
based on projected settlements as determined by external loss
adjusters. The provision also includes an estimate for claims
incurred but not yet reported and incurred but not enough
reported.
The utilisation of
the provision is dependent on the timing of settlement of the
outstanding claims. The Group expects the majority of the insurance
provision will be utilised within five years of the period end
date, however, due to the nature of the provision, there is a level
of uncertainty in the timing of settlement as the Group generally
cannot precisely determine the extent and duration of the claim
process. The provision has been discounted to reflect the time
value of money.
The self-insurance
programme commenced in July 2015 and increasing levels of claims
data is becoming available. Claim provisions are assessed in light
of claims experience and amended accordingly to ensure provisions
reflect recent experience and trends. There has been a reversal of
€0.9m in the year ended 31 December 2023 of provisions made in
prior periods (2022: €Nil).
24 Loans and borrowings
Non-current
liabilities
|
2023
|
2022
|
|
€’000
|
€’000
|
Bank
borrowings
|
254,387
|
193,488
|
Total loans
and borrowings
|
254,387
|
193,488
|
The amortised cost
of loans and borrowings at 31 December 2023 is €254.4 million (31
December 2022: €193.5 million). The drawn loan facility at 31
December 2023 is €258.7 million (31 December 2022: €199.0 million).
This consists of Sterling term borrowings of £176.5 million (€203.1
million) at 31 December 2023 (2022: £176.5 million (€199.0
million)), Sterling Revolving Credit Facility (‘RCF’) borrowings of
£44.9 million (€51.6 million) and Euro RCF borrowings of €4.0
million. The drawn RCF borrowings at 31 December 2023 were
primarily utilised to fund business combinations (note
13)
completed during
the year ended 31 December 2023.
The undrawn loan
facilities as at 31 December 2023 were €249.3 million (2022: €364.4
million). The decrease in the undrawn facilities during the year
ended 31 December 2023 relates to the drawn RCF borrowings at 31
December 2023 of €55.6 million (2022: €Nil) and the expiry of €59.5
million of RCF on 30 September 2023.
As at 31 December
2023, the Group’s debt facilities consist of a €200.0 million term
loan facility and a €304.9 million RCF, both with a maturity date
of 26 October 2025.
In accordance with
the amended and restated facility agreement entered into by the
Group on 2 November 2021 with its banking club, the Group’s banking
covenants have reverted to Net Debt to EBITDA, as defined in the
Group’s bank facility agreement which is equivalent to Net Debt to
EBITDA after rent (APM (xv)), and Interest Cover (APM (xvi)) from
30 June 2023. This replaces the Net Debt to Value covenant and
liquidity minimum covenants which were temporarily in place up to
30 June 2023. At 31 December 2023, the Net Debt to EBITDA covenant
limit is 4.0x and the Interest Cover minimum is 4.0x. The Group’s
Net Debt to EBITDA for the year ended 31 December 2023 is 1.3x and
Interest Cover is 19.5x. The Group is in compliance with its
banking covenants as at 31 December 2023.
At 31 December
2023, property, plant and equipment, including fixtures, fittings
and equipment in leased properties, with a carrying amount of
€1,368.3 million (2022: €1,217.0 million) were pledged as security
for loans and borrowings (note 15).
Reconciliation
of movements of liabilities to cash flows arising from financing
activities for the year ended 31 December 2023.
|
Liabilities
|
Equity
|
|
Loans and borrowings
|
Lease liabilities
|
Trade and other payables
|
Derivatives (net)
|
Share capital
|
Share premium
|
Total
|
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
Balance as at
31 December 2022
|
193,488
|
651,791
|
119,057
|
(11,717)
|
2,229
|
504,910
|
1,459,758
|
Changes from
financing cash flows
|
|
|
|
|
|
|
|
Vesting of share
awards and options
|
-
|
-
|
-
|
-
|
6
|
169
|
175
|
Other interest and
finance costs paid
|
(14,414)
|
-
|
(1,261)
|
6,949
|
-
|
-
|
(8,726)
|
Receipt of bank
loans
|
120,648
|
-
|
-
|
-
|
-
|
-
|
120,648
|
Repayment of bank
loans
|
(64,374)
|
-
|
-
|
-
|
-
|
-
|
(64,374)
|
Interest on lease
liabilities
|
-
|
(42,751)
|
-
|
-
|
-
|
-
|
(42,751)
|
Repayment of lease
liabilities
|
-
|
(10,747)
|
-
|
-
|
-
|
-
|
(10,747)
|
Total changes
from financing cash flows
|
41,860
|
(53,498)
|
(1,261)
|
6,949
|
6
|
169
|
(5,775)
|
|
|
|
|
|
|
|
|
Liability-related
other changes
|
|
|
|
|
|
|
|
The effect of
changes in foreign exchange rates
|
3,448
|
5,989
|
(480)
|
-
|
-
|
-
|
8,957
|
Changes in fair
value
|
-
|
-
|
-
|
(1,753)
|
-
|
-
|
(1,753)
|
Interest expense
on bank loans and borrowings
|
15,665
|
-
|
-
|
-
|
-
|
-
|
15,665
|
Other movements in
loans and borrowings
|
(74)
|
-
|
1,152
|
-
|
-
|
-
|
1,078
|
Other movements in
trade and other payables
|
-
|
-
|
(32,071)
|
-
|
-
|
-
|
(32,071)
|
Additions to lease
liabilities during the year
|
-
|
375
|
-
|
-
|
-
|
-
|
375
|
Acquisition of
lease liabilities through business combinations
|
-
|
43,382
|
-
|
-
|
-
|
-
|
43,382
|
Interest on lease
liabilities
|
-
|
42,751
|
-
|
-
|
-
|
-
|
42,751
|
Remeasurement of
lease liabilities
|
-
|
7,808
|
-
|
-
|
-
|
-
|
7,808
|
Total
liability-related other changes
|
19,039
|
100,305
|
(31,399)
|
(1,753)
|
-
|
-
|
86,192
|
Balance as at
31 December 2023
|
254,387
|
698,598
|
86,397
|
(6,521)
|
2,235
|
505,079
|
1,540,175
|
Dividends paid of
€8.9 million are excluded from financing cash flows in the above
table and have no impact on opening or closing
liabilities.
Reconciliation
of movements of liabilities to cash flows arising from financing
activities for the year ended 31 December 2022.
|
Liabilities
|
Equity
|
|
Loans and borrowings
|
Lease liabilities
|
Trade and other payables
|
Derivatives (net)
|
Share capital
|
Share premium
|
Total
|
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
Balance as at
31 December 2021
|
313,533
|
481,926
|
84,688
|
197
|
2,229
|
504,895
|
1,387,468
|
Changes from
financing cash flows
|
|
|
|
|
|
|
|
Vesting of share
awards and options
|
-
|
-
|
-
|
-
|
-
|
15
|
15
|
Other interest and
finance costs paid
|
(9,974)
|
-
|
(2,438)
|
179
|
-
|
-
|
(12,233)
|
Receipt of bank
loans
|
11,973
|
-
|
-
|
-
|
-
|
-
|
11,973
|
Repayment of bank
loans
|
(117,838)
|
-
|
-
|
-
|
-
|
-
|
(117,838)
|
Interest on lease
liabilities
|
-
|
(38,101)
|
-
|
-
|
-
|
-
|
(38,101)
|
Repayment of lease
liabilities
|
-
|
(9,324)
|
-
|
-
|
-
|
-
|
(9,324)
|
Total changes
from financing cash flows
|
(115,839)
|
(47,425)
|
(2,438)
|
179
|
-
|
15
|
(165,508)
|
|
|
|
|
|
|
|
|
Liability-related
other changes
|
|
|
|
|
|
|
|
The effect of
changes in foreign exchange rates
|
(12,290)
|
(16,299)
|
(787)
|
(10)
|
-
|
-
|
(29,386)
|
Changes in fair
value
|
-
|
-
|
-
|
(12,083)
|
-
|
-
|
(12,083)
|
Interest expense
on bank loans and borrowings
|
7,937
|
-
|
-
|
-
|
-
|
-
|
7,937
|
Other movements in
loans and borrowings
|
147
|
-
|
-
|
-
|
-
|
-
|
147
|
Other movements in
trade and other payables
|
-
|
-
|
37,594
|
-
|
-
|
-
|
37,594
|
Additions to lease
liabilities during the year
|
-
|
185,061
|
-
|
-
|
-
|
-
|
185,061
|
Interest on lease
liabilities
|
-
|
38,101
|
-
|
-
|
-
|
-
|
38,101
|
Remeasurement of
lease liabilities
|
-
|
10,427
|
-
|
-
|
-
|
-
|
10,427
|
Total
liability-related other changes
|
(4,206)
|
217,290
|
36,807
|
(12,093)
|
-
|
-
|
237,798
|
Balance as at
31 December 2022
|
193,488
|
651,791
|
119,057
|
(11,717)
|
2,229
|
504,910
|
1,459,758
|
Net debt is
calculated in line with banking covenants and includes external
loans and borrowings drawn and owed to the banking club as at 31
December 2023 (rather than the amortised cost of the loans and
borrowings) less cash and cash equivalents. The below table also
includes a reconciliation to net debt and lease
liabilities.
Reconciliation
of movement in net debt for the year ended 31 December
2023
|
Sterling facility
|
Sterling facility
|
Euro facility
|
Total
|
|
£’000
|
€’000
|
€’000
|
€’000
|
Loans and
borrowings – drawn amounts
|
|
|
|
|
At 1 January
2023
|
176,500
|
199,001
|
-
|
199,001
|
Cash
flows
|
|
|
|
|
Facilities drawn
down
|
72,882
|
84,648
|
36,000
|
120,648
|
Loan
repayments
|
(28,015)
|
(32,374)
|
(32,000)
|
(64,374)
|
Non-cash
changes
|
|
|
|
|
Effect of foreign
exchange movements
|
-
|
3,448
|
-
|
3,448
|
At
31 December 2023
|
221,367
|
254,723
|
4,000
|
258,723
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
|
|
At 1 January
2023
|
|
|
|
91,320
|
Movement during
the year
|
|
|
|
(57,147)
|
At
31 December 2023
|
|
|
|
34,173
|
Net debt at 31
December 2023
|
|
|
|
224,550
|
|
|
|
|
|
Reconciliation
of net debt and lease liabilities
|
|
|
|
|
Net debt at 31
December 2023
|
|
|
|
224,550
|
|
|
|
|
|
Lease liabilities
as at 1 January 2023
|
|
|
|
651,791
|
Acquisitions
through business combinations
|
|
|
|
43,382
|
Additions
|
|
|
|
375
|
Interest on lease
liabilities
|
|
|
|
42,751
|
Lease
payments
|
|
|
|
(53,498)
|
Remeasurement of
lease liabilities
|
|
|
|
7,808
|
Translation
adjustment
|
|
|
|
5,989
|
Lease
liabilities at 31 December 2023 (note 16)
|
|
|
|
698,598
|
Net debt and
lease liabilities at 31 December 2023
|
|
|
|
923,148
|
Reconciliation
of movement in net debt for the year ended 31 December
2022
|
Sterling facility
|
Sterling facility
|
Euro facility
|
Total
|
|
£’000
|
€’000
|
€’000
|
€’000
|
Loans and
borrowings – drawn amounts
|
|
|
|
|
At 1 January
2022
|
266,500
|
317,156
|
-
|
317,156
|
Cash
flows
|
|
|
|
|
Facilities drawn
down
|
10,000
|
11,973
|
-
|
11,973
|
Loan
repayments
|
(100,000)
|
(117,838)
|
-
|
(117,838)
|
Non-cash
changes
|
|
|
|
|
Effect of foreign
exchange movements
|
-
|
(12,290)
|
-
|
(12,290)
|
At
31 December 2022
|
176,500
|
199,001
|
-
|
199,001
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
|
|
At 1 January
2022
|
|
|
|
41,112
|
Movement during
the year
|
|
|
|
50,208
|
At
31 December 2022
|
|
|
|
91,320
|
Net debt at 31
December 2022
|
|
|
|
107,681
|
|
|
|
|
|
Reconciliation
of net debt and lease liabilities
|
|
|
|
|
Net debt at 31
December 2022
|
|
|
|
107,681
|
|
|
|
|
|
Lease liabilities
as at 1 January 2022
|
|
|
|
481,926
|
Additions
|
|
|
|
185,061
|
Interest on lease
liabilities
|
|
|
|
38,101
|
Lease
payments
|
|
|
|
(47,425)
|
Remeasurement of
lease liabilities
|
|
|
|
10,427
|
Translation
adjustment
|
|
|
|
(16,299)
|
Lease
liabilities at 31 December 2022 (note 16)
|
|
|
|
651,791
|
Net debt and
lease liabilities at 31 December 2022
|
|
|
|
759,472
|
25 Derivatives
The Group has
entered into interest rate swaps with a number of financial
institutions in order to manage the interest rate risks arising
from the Group’s borrowings (note 24). Interest rate swaps are
employed by the Group to partially convert the Group’s Sterling
denominated borrowings from floating to fixed interest
rates.
As at 31 December
2023, the Group holds four interest rate swaps which became
effective on 26 October 2023 and will mature on 26 October 2024.
These swaps hedge the SONIA benchmark rate on the Sterling term
denominated borrowings of £176.5 million, fixing the SONIA
benchmark rate between 0.95% and 0.96%.
The interest rate
swaps that became effective on 26 October 2023 replaced four
interest rate swaps which previously hedged the Sterling term
denominated borrowings until their maturity date on 26 October 2023
as follows:
-
Two interest rate swaps with an
effective date of 3 February 2020 which hedged the SONIA benchmark
rate on £101.5 million of the Sterling denominated borrowings for
the period to the original maturity of the term borrowings on 26
October 2023. These swaps fixed the SONIA benchmark rate to
1.39%.
-
Two interest rate swaps with an
effective date of 26 October 2018 and a maturity date of 26 October
2023 which hedged the SONIA benchmark rate on £75.0 million of the
entirety of the Sterling denominated borrowings. These swaps fixed
the SONIA benchmark rate to 1.27% on a notional of £63.0 million
and to 1.28% on a notional of £12.0 million of Sterling denominated
borrowings.
As at 31 December
2023, the interest rate swaps cover 100% of the Group’s term
Sterling denominated borrowings of £176.5 million for the period to
26 October 2024. The extended year of the term debt, to 26 October
2025, is currently unhedged. All derivatives have been designated
as hedging instruments for the purposes of IFRS 9.
Fair
value
|
2023
|
2022
|
|
€’000
|
€’000
|
Non-current
assets
|
|
|
Derivative
assets
|
-
|
6,825
|
|
|
|
Current
assets
|
|
|
Derivative
assets
|
6,521
|
4,892
|
Total
derivative assets
|
6,521
|
11,717
|
|
2023
|
2022
|
|
€’000
|
€’000
|
Included in
other comprehensive income
|
|
|
Fair value gain on
interest rate swaps
|
1,753
|
12,093
|
Reclassified to
profit or loss (note 7)
|
(6,949)
|
(179)
|
|
(5,196)
|
11,914
|
The amount
reclassified to profit or loss primarily represents the additional
interest received by the Group as a result of the interest rate
actual SONIA rates being higher than the swap
rates.
26 Deferred tax
|
|
|
|
2023
|
2022
|
|
€’000
|
€’000
|
|
|
|
Deferred tax
assets
|
24,136
|
21,271
|
Deferred tax
liabilities
|
(84,441)
|
(71,022)
|
Net deferred
tax liabilities
|
(60,305)
|
(49,751)
|
|
2023
|
2022
|
|
€’000
|
€’000
|
Movements in
year
|
|
|
At 1 January – net
liability
|
(49,751)
|
(22,735)
|
Charge for year –
to profit or loss (note 11)
|
(460)
|
(2,864)
|
Charge for year –
to other comprehensive income
|
(9,152)
|
(24,152)
|
Acquired net
deferred tax liabilities
|
(942)
|
-
|
At
31 December – net liability
|
(60,305)
|
(49,751)
|
Amendments to IAS
12, effective for reporting periods beginning on or after 1 January
2023, clarify that the initial recognition exemption of deferred
tax assets and liabilities does not apply to transactions that give
rise to equal and offsetting temporary differences. The IAS 12
amendments require separate presentation of deferred tax assets and
liabilities arising on right-of-use assets and corresponding lease
liabilities recognised under IFRS 16, with retroactive effect from
1 January 2022 (note
2). The
impact of the amendments increases the gross deferred tax
liabilities recognised in respect of ROU assets from €3.8 million
to €61.1 million (2022: €3.5 million to €39.7 million) and the
gross deferred tax assets recognised in respect of lease
liabilities from €4.9 million to €62.2 million (2022: €2.6 million
to €38.8 million). The changes to the deferred tax liabilities and
deferred tax assets offset such that the net impact on the face of
the Consolidated Statement of Financial Position and the net impact
on retained earnings is nil. The deferred tax assets and
liabilities related to leases are offset on an individual entity
basis and presented net in the statement of financial
position.
The majority of
the deferred tax liabilities result from the Group’s policy of
ongoing revaluation of land and buildings. Where the carrying value
of a property in the financial statements is greater than its tax
base cost, the Group recognises a deferred tax liability. This is
calculated using applicable Irish and UK corporation tax rates. The
use of these rates, in line with the applicable accounting
standards, reflects the intention of the Group to use these assets
for ongoing trading purposes. Should the Group dispose of a
property, the actual tax liability would be calculated with
reference to rates for capital gains on commercial
property.
The net deferred
tax liabilities have increased from €71.0 million at 31 December
2022 to €84.4 million at 31 December 2023. This relates primarily
to an increase in taxable gains recognised on properties held
through other comprehensive income and other temporary differences
on assets through profit or loss during the year ended 31 December
2023.
A deferred tax
asset of €18.1 million (2022: €17.7 million) has been recognised in
respect of cumulative tax losses and interest carried forward at 31
December 2023 of €73.7 million (31 December 2022: €75.4 million).
The tax losses can be carried forward indefinitely for offset
against future taxable profits and cannot be carried back for
offset against profits earned in earlier periods.
The increase in
the deferred tax asset recognised on tax losses and interest
carried forward from €17.7 million at 31 December 2022 to €18.1
million at 31 December 2023, relates to the increase in foreign tax
losses and interest recognised during the year ended 31 December
2023 partially offset by losses utilised in Ireland. The increase
in the deferred tax asset recognised despite the decrease in the
gross tax losses and interest carried forward is because a greater
proportion of the losses are recognised at higher foreign tax rates
in 2023. The Group utilised Irish tax losses carried forward of
€6.2 million (tax impact €0.8 million) against profits arising
during the year ended 31 December 2023.
Included within
the €73.7 million tax losses and interest carried forward at 31
December 2023, is a balance of €30.8 million (31 December 2022:
€27.1 million) relating to interest expenses carried forward in the
UK. In the UK, there is a limit on corporation tax deductions taken
each year for interest expense incurred. The unused interest
expense carried forward by the UK Group companies at 31 December
2023 can be carried forward indefinitely and offset against future
taxable profits.
A deferred tax
asset has been recognised in respect of Irish and foreign tax
losses and interest, to the extent that it is probable that, after
the carry back of tax losses to earlier periods, there will be
sufficient taxable profits in future periods to utilise the carried
forward tax losses and interest.
In considering the
available evidence to support the recognition of the deferred tax
asset, the Group takes into consideration the impact of both
positive and negative evidence including historical financial
performance, projections of future taxable income and the enacted
tax legislation.
In preparing
forecasts to determine future taxable profits, there are a number
of positive factors underpinning the recoverability of the deferred
tax assets:
-
Prior to the Covid-19 pandemic, the
Group displayed a history of profit growth every year. When normal
trading resumed in 2022 the Group returned to profitability and
currently forecasts that taxable profits will continue to be earned
in future years against which losses can be offset
-
The Group is confident that it is
well positioned to take advantage of opportunities that will arise
during 2024 and into the future, including the opening of a large
pipeline of new hotels which will contribute particularly to the
utilisation of UK tax losses, which can be carried forward and
utilised on a Group basis. The Group added three hotels in 2023
(two in the UK and one in the Netherlands). The Group has six new
hotels in the pipeline (five in the UK, one in Ireland), which will
contribute to future growth.
-
The absence of expiry dates for
carrying forward foreign and Irish tax losses.
The Group also
considered the relevant negative evidence in determining the
recoverability of deferred tax assets:
-
The quantum of profits required to
be earned to utilise the tax losses carried forward;
and
-
Forecasts of future taxable
profitability are subject to inherent uncertainty which is
heightened due to the ongoing impact of operating cost increases,
in particular payroll costs, and external geopolitical and economic
factors outside of the Group’s control.
Based on the
Group’s financial projections, the deferred tax asset of €0.4
million in respect of gross Irish tax losses carried forward of
€2.8 million is estimated to be recovered in full by the year
ending 31 December 2024. The deferred tax asset of €17.7 million in
respect of gross foreign tax losses and interest expense carried
forward of €71.4 million is estimated to be recovered in full by
the year ending 31 December 2030, with the majority being recovered
by the end of the year ending 31 December 2027.
The total tax
losses on which deferred tax is not recognised at 31 December 2023
is €9.1 million (2022: €12.9 million). The tax effect of these
unrecognised tax losses at 31 December 2023 is €2.3 million (2022:
€3.3 million). These specific losses are not permitted to be group
relieved and there is uncertainty over sufficient future profits
arising in the respective Group companies to utilise the losses not
recognised.
Deferred tax
arises from temporary differences relating to:
|
Net balance at 1 January
|
Recognised in profit or loss
|
Recognised in OCI
|
Acquired net deferred tax liabilities
|
Net deferred tax
|
Deferred tax assets
|
Deferred tax liabilities
|
|
2023
|
2023
|
2023
|
2023
|
2023
|
2023
|
2023
|
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
Property, plant
and equipment
|
(63,563)
|
(2,954)
|
(10,451)
|
(942)
|
(77,910)
|
1,081
|
(78,991)
|
Leases
|
(969)
|
2,109
|
-
|
-
|
1,140
|
62,243
|
(61,103)
|
Tax losses and
interest carried forward
|
17,710
|
385
|
-
|
-
|
18,095
|
18,095
|
-
|
Hedging
reserve
|
(2,929)
|
-
|
1,299
|
-
|
(1,630)
|
-
|
(1,630)
|
Deferred tax
(liabilities)/assets
|
(49,751)
|
(460)
|
(9,152)
|
(942)
|
(60,305)
|
81,419
|
(141,724)
|
Offsetting of
temporary differences related to ROU assets and lease liabilities
on individual entity basis
|
-
|
-
|
-
|
-
|
-
|
(57,283)
|
57,283
|
Net deferred tax
(liabilities)/assets per statement of financial position
|
(49,751)
|
(460)
|
(9,152)
|
(942)
|
(60,305)
|
24,136
|
(84,441)
|
|
Net balance at 1 January
|
Recognised in profit or loss
|
Recognised in OCI
|
Acquired deferred tax liabilities
|
Net deferred tax
|
Deferred tax assets
|
Deferred tax liabilities
|
|
2022
|
2022
|
2022
|
2022
|
2022
|
2022
|
2022
|
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
|
|
|
|
|
|
Restated
|
Restated
|
Property, plant
and equipment
|
(38,424)
|
(3,916)
|
(21,223)
|
-
|
(63,563)
|
1,025
|
(64,588)
|
Leases
|
(1,287)
|
318
|
-
|
-
|
(969)
|
38,771
|
(39,740)
|
Tax losses and
interest carried forward
|
16,976
|
734
|
-
|
-
|
17,710
|
17,710
|
-
|
Hedging
reserve
|
-
|
-
|
(2,929)
|
-
|
(2,929)
|
-
|
(2,929)
|
Deferred tax
(liabilities)/assets
|
(22,735)
|
(2,864)
|
(24,152)
|
-
|
(49,751)
|
57,506
|
(107,257)
|
Offsetting of
temporary differences related to ROU assets and lease liabilities
on individual entity basis
|
-
|
-
|
-
|
-
|
-
|
(36,235)
|
36,235
|
Net deferred tax
(liabilities)/assets per statement of financial position
|
(22,735)
|
(2,864)
|
(24,152)
|
-
|
(49,751)
|
21,271
|
(71,022)
|
The Group has
multiple legal entities across the UK and Ireland that will not
settle current tax liabilities and assets on a net basis and their
assets and liabilities will not be realised on a net basis.
Therefore, deferred tax assets and liabilities are recognised on an
individual entity basis and are not offset on a Group or
jurisdictional basis.
27 Financial instruments and risk management
Risk
exposures
The Group is
exposed to various financial risks arising in the normal course of
business. Its financial risk exposures are predominantly related to
the creditworthiness of counterparties and risks relating to
changes in interest rates and foreign currency exchange
rates.
The Group uses
financial instruments throughout its business: loans and borrowings
and cash and cash equivalents are used to finance the Group’s
operations; trade and other receivables, trade and other payables
and accruals arise directly from operations; and derivatives are
used to manage interest rate risks and to achieve a desired profile
of borrowings. The Group uses a net investment hedge with Sterling
denominated borrowings to hedge the foreign exchange risk from
investments in certain UK operations. The Group does not trade in
financial instruments.
The following
tables show the carrying amount of Group financial assets and
liabilities including their values in the fair value hierarchy for
the year ended 31 December 2023. The tables do not include fair
value information for financial assets and financial liabilities
not measured at fair value if the carrying amount is a reasonable
approximation of fair value. A fair value disclosure for lease
liabilities is not required.
|
Financial assets measured at fair value
|
Financial assets measured at amortised cost
|
Total carrying amount
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
2023
|
2023
|
2023
|
2023
|
2023
|
2023
|
2023
|
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
Financial
assets
|
|
|
|
|
|
|
|
Derivatives
(note 25) -
hedging instruments
|
6,521
|
-
|
6,521
|
|
6,521
|
|
6,521
|
Trade and other
receivables excluding prepayments (note 18)
|
-
|
21,339
|
21,339
|
|
|
|
|
Cash at bank and
in hand (note 20)
|
-
|
34,173
|
34,173
|
|
|
|
|
|
6,521
|
55,512
|
62,033
|
|
|
|
|
|
Financial liabilities measured at
fair value
|
Financial liabilities measured at amortised cost
|
Total carrying amount
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
2023
|
2023
|
2023
|
2023
|
2023
|
2023
|
2023
|
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
Financial
liabilities
|
|
|
|
|
|
|
|
Bank loans
(note 24)
|
-
|
(254,387)
|
(254,387)
|
|
(254,387)
|
|
(254,387)
|
Trade and other
payables and accruals (note 22)
|
-
|
(62,911)
|
(62,911)
|
|
|
|
|
|
-
|
(317,298)
|
(317,298)
|
|
|
|
|
The following
tables show the carrying amount of Group financial assets and
liabilities including their values in the fair value hierarchy for
the year ended 31 December 2022. The tables do not include fair
value information for financial assets and financial liabilities
not measured at fair value if the carrying amount is a reasonable
approximation of fair value. A fair value disclosure for lease
liabilities is not required.
|
Financial assets measured at fair value
|
Financial assets measured at amortised cost
|
Total carrying amount
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
2022
|
2022
|
2022
|
2022
|
2022
|
2022
|
2022
|
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
Financial
assets
|
|
|
|
|
|
|
|
Derivatives
(note 25) -
hedging instruments
|
11,717
|
-
|
11,717
|
|
11,717
|
|
11,717
|
Trade and other
receivables excluding prepayments (note 18)
|
-
|
24,574
|
24,574
|
|
|
|
|
Cash at bank and
in hand (note 20)
|
-
|
91,320
|
91,320
|
|
|
|
|
|
11,717
|
115,894
|
127,611
|
|
|
|
|
|
Financial liabilities measured at
fair value
|
Financial liabilities measured at amortised cost
|
Total carrying amount
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
2022
|
2022
|
2022
|
2022
|
2022
|
2022
|
2022
|
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
Financial
liabilities
|
|
|
|
|
|
|
|
Bank loans
(note 24)
|
-
|
(193,488)
|
(193,488)
|
|
(193,488)
|
|
(193,488)
|
Trade and other
payables and accruals (note 22)
|
-
|
(63,705)
|
(63,705)
|
|
|
|
|
|
-
|
(257,193)
|
(257,193)
|
|
|
|
|
Fair value
hierarchy
The Group measures
the fair value of financial instruments based on the degree to
which inputs to the fair value measurements are observable and the
significance of the inputs to the fair value measurements.
Financial instruments are categorised by the type of valuation
method used. The valuation methods are as follows:
-
Level 1: Quoted prices (unadjusted)
in active markets for identical assets or liabilities.
-
Level 2: Inputs other than quoted
prices included in Level 1 that are observable for the financial
instrument, either directly (i.e. as prices) or indirectly (i.e.
derived from prices).
-
Level 3: Inputs for the financial
instrument that are not based on observable market data
(unobservable inputs).
The Group’s policy
is to recognise any transfers between levels of the fair value
hierarchy as of the end of the reporting period during which the
transfer occurred. During the year ended 31 December 2023, there
were no reclassifications of financial instruments and no transfers
between levels of the fair value hierarchy used in measuring the
fair value of financial instruments.
Estimation of
fair values
The principal
methods and assumptions used in estimating the fair values of
financial assets and liabilities are explained
hereafter.
Cash at bank
and in hand
For cash at bank
and in hand, the carrying value is deemed to reflect a reasonable
approximation of fair value.
Derivatives
Discounted cash
flow analyses have been used to determine the fair value of the
interest rate swaps, taking into account current market inputs and
rates (Level 2).
Receivables/payables
For the
receivables and payables with a remaining term of less than one
year or on demand balances, the carrying value net of impairment
provision, where appropriate, is a reasonable approximation of fair
value. The non-current receivables and payables carrying value is a
reasonable approximation of fair value.
Bank
loans
For bank loans,
the fair value was calculated based on the present value of the
expected future principal and interest cash flows discounted at
interest rates effective at the reporting date. The carrying value
of floating rate interest-bearing loans and borrowings is
considered to be a reasonable approximation of fair value. There is
no material difference between margins available in the market at
year end and the margins that the Group was paying at the year
end.
(a) Credit
risk
Exposure to
credit risk
Credit risk is the
risk of financial loss to the Group arising from granting credit to
customers and from investing cash and cash equivalents with banks
and financial institutions.
Trade and
other receivables
The Group’s
exposure to credit risk is influenced mainly by the individual
characteristics of each customer. The Group is due €0.5 million
(2022: €0.5 million) from a key institutional landlord under a
contractual agreement where the landlord reimburses the Group for
certain amounts spent on capital expenditure in that specific
property. Non-current receivables include rent deposits of €2.3
million (2022: €2.3 million) owed by two landlords at the end of
the lease term (note 18). Other than this, there is
no concentration of credit risk or dependence on individual
customers due to the large number of customers. Management has a
credit policy in place and the exposure to credit risk is monitored
on an ongoing basis. Outstanding customer balances are regularly
monitored and reviewed for indicators of impairment (evidence of
financial difficulty of the customer or payment default). The
maximum exposure to credit risk is represented by the carrying
amount of each financial asset.
The ageing profile
of trade receivables at 31 December 2023 is provided in note
18. Management
does not expect any significant losses from trade receivables,
apart from those provided for in note 18, contract assets, accrued
income or other receivables.
Cash and cash
equivalents
Cash and cash
equivalents comprise cash at bank and in hand and give rise to
credit risk on the amounts held with counterparties. The maximum
credit risk is represented by the carrying value at the reporting
date. The Group’s policy for investing cash is to limit risk of
principal loss and to ensure the ultimate recovery of invested
funds by limiting credit risk.
The Group reviews
regularly the credit rating of each bank and, if necessary, takes
action to ensure there is appropriate cash and cash equivalents
held with each bank based on their credit rating. During the year
ended 31 December 2023, cash and cash equivalents were held in line
within predetermined limits depending on the credit rating of the
relevant bank or financial institution.
The carrying
amount of the following financial assets represents the Group’s
maximum credit exposure. The maximum exposure to credit risk at
year end was as follows:
|
Carrying amount
|
Carrying amount
|
|
2023
|
2022
|
|
€’000
|
€’000
|
Trade
receivables
|
10,830
|
13,816
|
Other
receivables
|
2,828
|
3,984
|
Contract
assets
|
4,612
|
4,465
|
Accrued
income
|
3,069
|
2,309
|
Cash at bank and
in hand
|
34,173
|
91,320
|
|
55,512
|
115,894
|
(b) Liquidity
risk
Liquidity risk is
the risk that the Group will encounter difficulty in meeting the
obligations associated with its financial liabilities. In general,
the Group’s approach to managing liquidity risk is to ensure as far
as possible that it will always have sufficient liquidity, through
a combination of cash and cash equivalents, cash flows and undrawn
credit facilities to:
-
Fund its ongoing
activities;
-
Allow it to invest in hotels that
may create value for shareholders; and
-
Maintain sufficient financial
resources to mitigate against risks and unforeseen
events.
The year ended 31
December 2023 saw the Group trade strongly and continue the
execution of its growth strategy. The strong trade, the full year
impact of hotels added during 2022 and the addition of three hotels
during 2023 has led to an increase in Group revenue from hotel
operations from €515.7 million to €607.7 million, as well as net
cash generated from operating activities in the year of €171.4
million (2022: €207.9 million).
The Group remains
in a very strong financial position with significant financial
headroom. The Group is in full compliance with its covenants at 31
December 2023. The key covenants relate to Net Debt to EBITDA, as
defined in the Group’s bank facility agreement which is equivalent
to Net Debt to EBITDA after rent, (see APM (xv) in Supplementary
Financial Information section) and Interest Cover (see APM (xvi) in
Supplementary Financial Information section). As per the amended
and restated facility agreement of 2 November 2021, the Group was
tested under Net Debt to Value and minimum liquidity covenants at
31 December 2022 but reverted to the Net Debt to EBITDA (as defined
in the Group’s bank facility agreement which is equivalent to Net
Debt to EBITDA after rent) and Interest Cover covenants for testing
from 30 June 2023. The Net Debt to EBITDA covenant limit is 4.0
times and the Interest Cover minimum is 4.0 times. At 31 December
2023, Net Debt to EBITDA after rent for the Group is 1.3x and
Interest Cover is 19.5 times (note 24).
During the year
ended 31 December 2023, the Group incurred expenditure in
completing the acquisitions of Clayton Hotel London Wall and
Clayton Hotel Amsterdam American (note 13), the freehold interest of the
newly built Maldron Hotel Finsbury Park, London, and a building
conversion opportunity in Edinburgh. The Group utilised a mixture
of funds generated from Free Cashflow and RCF borrowings to finance
these acquisitions. RCF borrowings increased to €55.6 million as at
31 December 2023 (31 December 2022: €Nil) and cash at bank and in
hand decreased to €34.2 million as at 31 December 2023 (31 December
2022: €91.3 million) which partially relates to the expenditure
incurred on completion of these acquisitions during the year
(note 24).
The Group monitors
its Debt and Lease Service Cover (see APM (xiii) in Supplementary
Financial Information section), which is 3.0 times for the year
ended 31 December 2023 (31 December 2022: 3.1 times), in order to
monitor gearing and liquidity taking into account both bank and
lease financing. The Group have prepared financial projections and
subjected them to scenario testing which also supports ongoing
liquidity risk assessment and management. Further detail of this is
disclosed in the Viability Statement.
The following are
the contractual maturities of the Group’s financial liabilities at
31 December 2023, including estimated undiscounted interest
payments. In the below table, bank loans are repaid in line with
their maturity dates, even though the Group has the flexibility to
repay and draw the RCF throughout the term of the facilities which
would improve its liquidity position. The non-cancellable
undiscounted lease cashflows payable under lease contracts are set
out in note 16.
|
Contractual cashflows
|
|
Carrying value
|
Total
|
6 months
|
6 – 12
|
1 – 2
|
2 – 5
|
|
2023
|
2023
|
or less
|
months
|
years
|
years
|
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
Bank
loans
|
(254,387)
|
(281,042)
|
(8,347)
|
(7,978)
|
(264,717)
|
-
|
Trade and other
payables and accruals
|
(62,911)
|
(62,911)
|
(62,563)
|
-
|
(348)
|
-
|
|
(317,298)
|
(343,953)
|
(70,910)
|
(7,978)
|
(265,065)
|
-
|
The equivalent
disclosure for the prior year is as follows:
|
Contractual cashflows
|
|
Carrying value
|
Total
|
6 months
|
6 – 12
|
1 – 2
|
2 – 5
|
|
2022
|
2022
|
or less
|
months
|
years
|
years
|
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
€’000
|
Bank
loans
|
(193,488)
|
(221,630)
|
(3,977)
|
(4,042)
|
(8,041)
|
(205,570)
|
Trade and other
payables and accruals
|
(63,705)
|
(63,705)
|
(63,466)
|
-
|
(239)
|
-
|
|
(257,193)
|
(285,335)
|
(67,443)
|
(4,042)
|
(8,280)
|
(205,570)
|
(c) Market
risk
Market risk is the
risk that changes in market prices and indices, such as interest
rates and foreign exchange rates, will affect the Group’s income or
the value of its holdings of financial instruments. The objective
of market risk management is to manage and control market risk
exposures within acceptable parameters, while optimising the
return.
(i) Interest
rate risk
The Group is
exposed to floating interest rates on its debt obligations and uses
hedging instruments to mitigate the risk associated with interest
rate fluctuations. The Group has entered into interest rate swaps
(note 25)
which hedge the variability in cash flows attributable to interest
rate risk. All such transactions are carried out within the
guidelines set by the Board. The Group seeks to apply hedge
accounting to manage volatility in profit or loss.
The Group
determines the existence of an economic relationship between the
hedging instrument and the hedged item based on the reference
interest rates, maturities and notional amounts. The Group assesses
whether the derivative designated in each hedging relationship is
expected to be effective in offsetting changes in cash flows of the
hedged item using the hypothetical derivative method.
As at 31 December
2023, the interest rate swaps cover 100% of the Group’s term
Sterling denominated borrowings of £176.5 million for the period to
26 October 2024. The extended year of the term debt, to 26 October
2025, is currently unhedged.
The interest rate
profile of the Group’s interest-bearing financial liabilities as
reported to the management of the Group is as follows:
|
Nominal amount
|
|
2023
|
2022
|
|
€’000
|
€’000
|
Variable rate
instruments
|
|
|
Financial
liabilities – borrowings
|
258,723
|
199,001
|
Effect of interest
rate swaps
|
(203,095)
|
(199,001)
|
|
55,628
|
-
|
These
interest-bearing financial liabilities do not equate to amortised
cost of loans and borrowings and instead represent the drawn
amounts of loans and borrowings which are owed to external
lenders.
The weighted
average interest rate for 2023 was 3.20% (2022: 3.61%), of which
1.46% (2022: 2.38%) related to margin.
The interest
expense for the year ended 31 December 2023 has been sensitised in
the following tables for a reasonably possible change in variable
interest rates.
In relation to the
upward sensitivity, the Group believes that a reasonable change in
the Sterling variable interest rate would be an uplift in the SONIA
rate plus spread to 5.3% and for the Euro variable interest rate an
uplift in the EURIBOR rate to 3.9%.
In relation to the
downward sensitivity, the Group has used an interest rate of zero
as there is a floor embedded in the loan facilities, which prevents
the Group from benefiting from any reduction in rates sub-zero,
however, it results in an additional interest cost for the Group on
hedged loans.
At 31 December
2023, all Sterling term borrowings (£176.5 million) up to 26
October 2024 were hedged with interest rate swaps. The Group does
not currently hedge its variable interest rates on its Sterling RCF
or Euro RCF.
The following
table shows the sensitised weighted average interest rates where
the variable rate is sensitised upwards or downwards. The weighted
average interest rate includes the impact of hedging on hedged
portions of the underlying loans. Changes in SONIA rates have had a
minimal impact due to the majority of Sterling borrowings being
hedged (note 24). The impact on profit or
loss is shown hereafter. This analysis assumes that all other
variables, in particular foreign currency exchange rates, remain
constant.
|
2023 actual weighted average variable benchmark rate
|
Sensitised weighted average as a result of upward
sensitivity
|
Sensitised weighted average as a result of downward
sensitivity
|
|
|
|
|
Euro variable
rate
|
3.02%
|
3.93%
|
0.00%
|
Sterling variable
rate
|
1.72%
|
1.74%
|
1.14%
|
|
2022 actual weighted average variable benchmark rate
|
Sensitised weighted average as a result of upward
sensitivity
|
Sensitised weighted average as a result of downward
sensitivity
|
|
|
|
|
Sterling variable
rate
|
1.23%
|
2.02%
|
1.08%
|
Cash flow
sensitivity analysis for variable rate instruments
|
Effect on profit or loss
|
|
Increase in rate
|
Decrease in rate
|
|
€’000
|
€’000
|
2023
|
|
|
(Increase)/decrease in
interest on loans and borrowings
|
(71)
|
1,487
|
Decrease/(increase) in tax
charge
|
9
|
(186)
|
(Decrease)/increase
in profit
|
(62)
|
1,301
|
|
|
|
2022
|
|
|
(Increase)/decrease in
interest on loans and borrowings
|
(2,551)
|
484
|
Decrease/(increase) in tax
charge
|
319
|
(60)
|
(Decrease)/increase in
profit
|
(2,232)
|
424
|
Contracted
maturities of estimated interest payments from swaps
The following
table indicates the periods in which the cash flows associated with
the interest rate swaps are expected to occur and the carrying
amounts of the related hedging instruments for the year ended 31
December 2023. A positive cash flow in the below table indicates
the variable rate for interest rate swaps, based on current forward
curves, is forecast to be higher than fixed rates. The below
amounts only refer to the undiscounted interest forecasted to be
incurred under the interest rate swap assets.
|
31 December 2023
|
|
Carrying amount
|
Total
|
12 months or less
|
More than 1 year
|
|
€’000
|
€’000
|
€’000
|
€’000
|
Interest rate
swaps
|
|
|
|
|
Assets
|
6,521
|
7,573
|
7,573
|
-
|
The following
table indicates the periods in which the cash flows associated with
cash flow hedges are expected to impact profit or loss and the
carrying amounts of the related hedging instruments for the year
ended 31 December 2023. A positive cash flow in the table indicates
the variable rate for interest rate swaps, based on current forward
curves, is forecast to be higher than fixed rates. The below
amounts only refer to the undiscounted interest forecasted to be
incurred under the interest rate swap assets.
|
31 December 2023
|
|
Carrying amount
|
Total
|
12 months or less
|
More than 1 year
|
|
€’000
|
€’000
|
€’000
|
€’000
|
Interest rate
swaps
|
|
|
|
|
Assets
|
6,521
|
7,573
|
7,573
|
-
|
The following
table indicates the periods in which the cash flows associated with
the interest rate swaps are expected to occur and the carrying
amounts of the related hedging instruments for the year ended 31
December 2022:
|
31 December 2022
|
|
Carrying amount
|
Total
|
12 months or less
|
More than 1 year
|
|
€’000
|
€’000
|
€’000
|
€’000
|
Interest rate
swaps
|
|
|
|
|
Assets
|
11,717
|
12,672
|
7,050
|
5,622
|
The following
table indicates the periods in which the cash flows associated with
cash flow hedges are expected to impact profit or loss and the
carrying amounts of the related hedging instruments for the year
ended 31 December 2022:
|
31 December 2022
|
|
Carrying amount
|
Total
|
12 months or less
|
More than 1 year
|
|
€’000
|
€’000
|
€’000
|
€’000
|
Interest rate
swaps
|
|
|
|
|
Assets
|
11,717
|
12,672
|
7,050
|
5,622
|
(ii) Foreign
currency risk
As per the Risk
Management section of the annual report, the Group is exposed to
fluctuations in the Euro/Sterling exchange rate.
The Group is
exposed to transactional foreign currency risk on trading
activities conducted by subsidiaries in currencies other than their
functional currency and to foreign currency translation risk on the
retranslation of foreign operations to Euro.
The Group’s policy
is to manage foreign currency exposures commercially and through
netting of exposures where possible. The Group’s principal
transactional exposure to foreign exchange risk relates to interest
costs on its Sterling borrowings. This risk is mitigated by the
earnings from UK subsidiaries which are denominated in
Sterling.
The Group’s gain
or loss on retranslation of the net assets of foreign currency
subsidiaries is taken directly to the translation
reserve.
The Group limits
its exposure to foreign currency risk by using Sterling debt to
hedge part of the Group’s investment in UK subsidiaries. The Group
financed certain acquisitions and developments in the UK by
obtaining funding through external borrowings denominated in
Sterling. These borrowings amounted to £221.4 million (€254.7
million) at 31 December 2023 (2022: £176.5 million (€199.0
million)) and are designated as net investment hedges. The net
investment hedge was fully effective during the year.
This enables gains
and losses arising on retranslation of those foreign currency
borrowings to be recognised in Other Comprehensive Income,
providing a partial offset in reserves against the gains and losses
arising on translation of the net assets of those UK
operations.
Sensitivity
analysis on transactional risk
The Group
performed a sensitivity analysis on the impact on the Group’s
profit after tax and equity had foreign exchange rates been
different. The Group has reviewed the historical average monthly
Euro/Sterling foreign exchange rates for the previous fifteen
years. The lowest average foreign exchange rate of 0.71 has been
used in calculating the impact of Euro weakening against Sterling
as it is reflective of a period of market volatility due to strong
economic growth. On the upward sensitivity, due to volatility in
the market, the Group have used a Euro/Sterling foreign exchange
rate of 1 (parity) in the sensitivity.
|
Profit
|
Equity
|
|
Strengthening of Euro
|
Weakening of
Euro
|
Strengthening of Euro
|
Weakening of
Euro
|
|
€’000
|
€’000
|
€’000
|
€’000
|
Decrease/(increase) in
interest costs on Sterling loans
|
1,138
|
(1,885)
|
1,138
|
(1,885)
|
Impact on tax
charge
|
(142)
|
236
|
(142)
|
236
|
Increase/(decrease)
in profit
|
996
|
(1,649)
|
|
|
Increase/(decrease)
in equity
|
|
|
996
|
(1,649)
|
(d) Capital
management
The Group’s policy
is to maintain a strong capital base to preserve investor, creditor
and market confidence and to sustain future development of the
business. Management monitors the return on capital to ordinary
shareholders.
The Board of
Directors seeks to maintain a balance between the higher returns
that might be possible with higher levels of borrowings and the
advantages and security afforded by a sound capital position. The
Group’s target is to achieve a pre-tax leveraged internal rate of
return of at least 15% on investments and typically a rent cover of
1.85 times in year three for leased assets.
Typically, the
Group monitors capital using a ratio of Net Debt to EBITDA after
rent which excludes the effects of IFRS 16, in line with its
banking covenants. This is calculated based on the prior 12-month
period. The Net Debt to EBITDA after rent as at 31 December 2023 is
1.3 times (31 December 2022: 0.8 times).
The Group also
monitors Net Debt and Lease Liabilities to Adjusted EBITDA which,
at 31 December 2023, is 4.1x (31 December 2022: 4.1x) (APM
(viii)).
The Group’s
approach to capital management has ensured that it continues to
maintain a very strong financial position and an appropriate level
of gearing.
28 Commitments
Section 357
Companies Act 2014
Dalata Hotel Group
plc, as the parent company of the Group and for the purposes of
filing exemptions referred to in Section 357 of the Companies Act
2014, has entered into guarantees in relation to the liabilities
and commitments of the Republic of Ireland registered subsidiary
companies which are listed below:
Suvanne Management
Limited
|
Candlevale
Limited
|
Carasco Management
Limited
|
DHG Arden
Limited
|
Heartside
Limited
|
Merzolt
Limited
|
Palaceglen
Limited
|
Pondglen
Limited
|
Songdale
Limited
|
Lintal Commercial
Limited
|
Amelin Commercial
Limited
|
Pillo Hotels
Limited
|
DHG Burlington
Road Limited
|
Loadbur
Limited
|
Dalata Support
Services Limited
|
DHG Cordin
Limited
|
Bernara Commercial
Limited
|
Leevlan
Limited
|
Adelka
Limited
|
Fonteyn Property
Holdings Limited
|
DS Charlemont
Limited
|
DHG Dalton
Limited
|
DHG Barrington
Limited
|
DHG Glover
Limited
|
Fonteyn Property
Holdings No. 2 Limited
|
DHG Harton
Limited
|
DHG Eden
Limited
|
DHG Indigo
Limited
|
Galsay
Limited
|
DHG Fleming
Limited
|
Williamsberg
Property Limited
|
|
Capital
commitments
The Group has the
following commitments for future capital expenditure under its
contractual arrangements.
|
2023
|
2022
|
|
€’000
|
€’000
|
Contracted but not
provided for
|
20,569
|
24,875
|
This relates
primarily to the construction of a new hotel in Shoreditch, London
(€9.6 million) which is contractually committed. It also includes
committed capital expenditure at other hotels in the
Group.
The Group has
further commitments in relation to fixtures, fittings and equipment
in some of its leased hotels. Under certain lease agreements, the
Group has committed to spending a percentage of turnover on capital
expenditure in respect of fixtures, fittings and equipment in the
leased hotels over the life of the lease. The Group has estimated
this commitment to be €77.3 million (31 December 2022: €71.2
million) spread over the life of the various leases with the
majority ranging in length from 18 years to 34 years. The turnover
figures used in this estimate are based on 2024 budgeted
revenues.
29 Related party transactions
Under IAS
24 Related
Party Disclosures, the Group has related party
relationships with Shareholders and the Executive Directors of the
Company.
Remuneration
of key management
Key management is
defined as the Directors of the Company and does not extend to any
other members of the Executive Management Team. The compensation of
key management personnel is set out in the Remuneration Committee
report. In addition, the share-based payments expense for key
management in 2023 was €0.9 million (2022: €0.8
million).
There are no other
related party transactions requiring disclosure in accordance with
IAS 24 in these consolidated financial statements.
30 Subsequent events
On 28 February
2024, the Board proposed a final dividend of 8 cents per share.
Based on shares in issue at 31 December 2023, the amount of
dividends proposed is €17.9 million. This proposed dividend is
subject to approval by the shareholders at the Annual General
Meeting. The payment date for the final dividend will be 1 May 2024
to shareholders registered on the record date 25 April 2024. These
consolidated financial statements do not reflect this
dividend.
On 16 February
2024, the Group signed an agreement for lease with the landlord of
Clayton Hotel Manchester Airport to extend the current lease term
from the remaining 61 years to 200 years in total. The new lease is
conditional on the receipt of a grant of planning permission for a
216 bedroom extension to be developed by the
Group.
31 Subsidiary undertakings
A list of all
subsidiary undertakings at 31 December 2023 is set out
below:
|
|
|
Ownership
|
Subsidiary undertaking
|
Country of Incorporation
|
Activity
|
Direct
|
Indirect
|
DHG Glover
Limited1
|
Ireland
|
Holding
company
|
100%
|
-
|
DHG Fleming
Limited1
|
Ireland
|
Financing
company
|
100%
|
-
|
DHG Harton
Limited1
|
Ireland
|
Holding
company
|
100%
|
-
|
DHGL
Limited1
|
Ireland
|
Holding
company
|
-
|
100%
|
Dalata
Limited1
|
Ireland
|
Holding
company
|
-
|
100%
|
Hanford Commercial
Limited1
|
Ireland
|
Hotel and
catering
|
-
|
100%
|
Anora Commercial
Limited1
|
Ireland
|
Hotel and
catering
|
-
|
100%
|
Ogwell
Limited1
|
Ireland
|
Hotel and
catering
|
-
|
100%
|
Caruso
Limited1
|
Ireland
|
Hotel and
catering
|
-
|
100%
|
C I Hotels
Limited1
|
Ireland
|
Hotel and
catering
|
-
|
100%
|
Tulane Business
Management Limited1
|
Ireland
|
Hotel and
catering
|
-
|
100%
|
Dalata Support
Services Limited1
|
Ireland
|
Hotel
management
|
-
|
100%
|
Fonteyn Property
Holdings Limited1
|
Ireland
|
Hotel
management
|
-
|
100%
|
Fonteyn Property
Holdings No. 2 Limited1
|
Ireland
|
Hotel and
catering
|
-
|
100%
|
Suvanne Management
Limited1
|
Ireland
|
Hotel and
catering
|
-
|
100%
|
Carasco Management
Limited1
|
Ireland
|
Hotel and
catering
|
-
|
100%
|
Amelin Commercial
Limited1
|
Ireland
|
Hotel and
catering
|
-
|
100%
|
Lintal Commercial
Limited1
|
Ireland
|
Hotel and
catering
|
-
|
100%
|
Bernara Commercial
Limited1
|
Ireland
|
Property
investment
|
-
|
100%
|
Pillo Hotels
Limited1
|
Ireland
|
Dormant
company
|
-
|
100%
|
Loadbur
Limited1
|
Ireland
|
Hotel and
catering
|
-
|
100%
|
Heartside
Limited1
|
Ireland
|
Hotel and
catering
|
-
|
100%
|
Pondglen
Limited1
|
Ireland
|
Hotel and
catering
|
-
|
100%
|
Candlevale
Limited1
|
Ireland
|
Hotel and
catering
|
-
|
100%
|
Songdale
Limited1
|
Ireland
|
Hotel and
catering
|
-
|
100%
|
Palaceglen
Limited1
|
Ireland
|
Hotel and
catering
|
-
|
100%
|
Adelka
Limited1
|
Ireland
|
Property holding
company
|
-
|
100%
|
Leevlan
Limited1
|
Ireland
|
Hotel and
catering
|
-
|
100%
|
DHG Arden
Limited1
|
Ireland
|
Hotel and
catering
|
-
|
100%
|
DHG Barrington
Limited1
|
Ireland
|
Hotel and
catering
|
-
|
100%
|
DHG Cordin
Limited1
|
Ireland
|
Hotel and
catering
|
-
|
100%
|
DS Charlemont
Limited1
|
Ireland
|
Hotel and
catering
|
-
|
100%
|
Galsay
Limited1
|
Ireland
|
Hotel and
catering
|
-
|
100%
|
Merzolt
Limited1
|
Ireland
|
Hotel and
catering
|
-
|
100%
|
DHG Burlington
Road Limited1
|
Ireland
|
Hotel and
catering
|
-
|
100%
|
DHG Eden
Limited1
|
Ireland
|
Hotel and
catering
|
-
|
100%
|
DHG Dalton
Limited1
|
Ireland
|
Property holding
company
|
-
|
100%
|
Williamsberg
Property Limited1
|
Ireland
|
Hotel and
catering
|
-
|
100%
|
DHG Indigo
Limited1
|
Ireland
|
Holding
company
|
-
|
100%
|
DHG Belfast
Limited2
|
N
Ireland
|
Hotel and
catering
|
-
|
100%
|
DHG Derry
Limited2
|
N
Ireland
|
Hotel and
catering
|
-
|
100%
|
DHG Derry
Commercial Limited2
|
N
Ireland
|
Dormant
company
|
-
|
100%
|
DHG Brunswick
Limited2
|
N
Ireland
|
Hotel and
catering
|
-
|
100%
|
Dalata UK
Limited3
|
UK
|
Holding
company
|
-
|
100%
|
Dalata Cardiff
Limited3
|
UK
|
Hotel and
catering
|
-
|
100%
|
Trackdale
Limited3
|
UK
|
Hotel and
catering
|
-
|
100%
|
Islandvale
Limited3
|
UK
|
Dormant
company
|
-
|
100%
|
Crescentbrook
Limited3
|
UK
|
Hotel and
catering
|
-
|
100%
|
Hallowridge
Limited3
|
UK
|
Hotel and
catering
|
-
|
100%
|
Rush (Central)
Limited3
|
UK
|
Property holding
company
|
-
|
100%
|
Hotel La Tour
Birmingham Limited3
|
UK
|
Hotel and
catering
|
-
|
100%
|
SRD (Trading)
Limited3
|
UK
|
Hotel and
catering
|
-
|
100%
|
SRD (Management)
Limited3
|
UK
|
Hotel and
catering
|
-
|
100%
|
DHG Finsbury Park
Limited3
|
UK
|
Hotel and
catering
|
-
|
100%
|
DHG Castle
Limited3
|
UK
|
Hotel and
catering
|
-
|
100%
|
DHG Phoenix
Limited3
|
UK
|
Property holding
company
|
-
|
100%
|
Hintergard
Limited4
|
Jersey
|
Property holding
company
|
-
|
100%
|
Dalata Deutschland
Holding GmbH5
|
Germany
|
Holding
company
|
-
|
100%
|
Dalata Deutschland
Hotelbetriebs GmbH5
|
Germany
|
Hotel and
catering
|
-
|
100%
|
American Hotel
Exploitatie B.V. 6
|
Netherlands
|
Hotel and
catering
|
-
|
100%
|
DHG Amsterdam
B.V. 6
|
Netherlands
|
Holding
company
|
-
|
100%
|
-
The registered address of these companies is Termini, 3 Arkle
Road, Sandyford Business Park, Dublin 18, D18C9C5.
-
The registered address of these companies is Butcher Street,
Londonderry, County Derry BT48 6HL, UK.
-
The registered address of these companies is St Mary Street,
Cardiff, Wales, CF10 1GD, UK.
-
The registered address of this company is 12 Castle Street,
St Helier Jersey, JE2 3RT.
-
The registered address of this company is
Thurn-und-Taxis-Platz 6, 60313 Frankfurt am Main,
Germany.
-
The registered address of this company is Leidsekade 97, 1017
PN Amsterdam, Netherlands.
During the 2023
year the registered address for the Irish subsidiary undertakings
was changed from 4th
Floor, Burton
Court, Burton Hall Drive, Sandyford, Dublin 18 to Termini, 3 Arkle
Road, Sandyford Business Park, Dublin 18.
32 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 available to ordinary
shareholders 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 2023 and 31 December
2022.
|
2023
|
2022
|
Profit
attributable to shareholders of the parent (€’000) – basic and
diluted
|
90,222
|
96,725
|
Adjusted profit
attributable to shareholders of the parent (€’000) – basic and
diluted
|
93,213
|
70,557
|
Earnings per share
– Basic
|
40.4
cents
|
43.4
cents
|
Earnings per share
– Diluted
|
39.9
cents
|
43.2
cents
|
Adjusted earnings
per share – Basic
|
41.7
cents
|
31.7
cents
|
Adjusted earnings
per share – Diluted
|
41.2
cents
|
31.5
cents
|
Weighted average
shares outstanding – Basic
|
223,299,760
|
222,867,676
|
Weighted average
shares outstanding – Diluted
|
226,396,287
|
223,849,560
|
The difference
between the basic and diluted weighted average shares outstanding
for the year ended 31 December 2023 is due to the dilutive impact
of the conditional share awards granted in 2020, 2021, 2022 and
2023. For the year ended 31 December 2022, the difference between
basic and diluted EPS is due to the dilutive impact of the
conditional share awards granted in 2020, 2021 and 2022.
Adjusted earnings
per share (basic and diluted) are presented as alternative
performance measures to show the underlying performance of the
Group excluding the tax adjusted effects of items considered by
management to not reflect normal trading activities or distort
comparability either year on year or with other similar businesses
(note 3).
|
2023
|
2022
|
|
€’000
|
€’000
|
Reconciliation
to adjusted profit for the year
|
|
|
Profit before
tax
|
105,532
|
109,657
|
|
|
|
Adjusting
items (note 3)
|
|
|
Net property
revaluation movements through profit or loss
|
(2,025)
|
(21,166)
|
Net reversal of
previous impairment charges of right-of-use assets
|
-
|
(4,101)
|
Net reversal of
previous impairment charges of fixtures, fittings and
equipment
|
-
|
(624)
|
Income from sale
of Merrion Road residential units
|
-
|
(42,532)
|
Release of costs
capitalised for Merrion Road residential units
|
-
|
40,998
|
Gain on disposal
of property, plant and equipment
|
-
|
(3,877)
|
Hotel pre-opening
expenses
|
497
|
2,666
|
Acquisition-related
costs
|
4,389
|
-
|
Adjusted
profit before tax
|
108,393
|
81,021
|
Tax charge
(note 11)
|
(15,310)
|
(12,932)
|
Adjusting
items in tax charge
|
|
|
Tax adjustment for
adjusting items
|
130
|
2,468
|
Adjusted
profit for the year
|
93,213
|
70,557
|
33 Approval of the financial statements
The financial
statements were approved by the Directors on 28 February
2024.
Supplementary
Financial Information
Alternative
Performance Measures (‘APMs’) and other definitions
The Group reports
certain alternative performance measures (‘APMs’) that are not
defined under International Financial Reporting Standards (‘IFRS’),
which is the framework under which the consolidated financial
statements are prepared. These are sometimes referred to as
‘non-GAAP’ measures.
The Group believes
that reporting these APMs provides useful supplemental information
which, when viewed in conjunction with the IFRS financial
information, provides stakeholders with a more comprehensive
understanding of the underlying financial and operating performance
of the Group and its operating segments.
These APMs are
primarily used for the following purposes:
-
to evaluate
underlying results of the operations; and
-
to discuss and
explain the Group’s performance with the investment analyst
community.
The APMs can have
limitations as analytical tools and should not be considered in
isolation or as a substitute for an analysis of the results in the
consolidated financial statements which are prepared under IFRS.
These performance measures may not be calculated uniformly by all
companies and therefore may not be directly comparable with
similarly titled measures and disclosures of other
companies.
The definitions of
and reconciliations for certain APMs are contained within the
consolidated financial statements. A summary definition of these
APMs together with the reference to the relevant note in the
consolidated financial statements where they are reconciled is
included below. Also included below is information pertaining to
certain APMs which are not mentioned within the consolidated
financial statements but which are referred to in other sections of
this report. This information includes a definition of the APM, in
addition to a reconciliation of the APM to the most directly
reconcilable line item presented in the consolidated financial
statements. References to the consolidated financial statements are
included as applicable.
-
Adjusting items
Items which are not
reflective of normal trading activities or distort comparability
either year on year or with other similar businesses. The adjusting
items are disclosed in note 3 and note 32 to the consolidated
financial statements. Adjusting items with a cash impact are set
out in APM xi below.
-
Adjusted EBITDA
Adjusted EBITDA is
an APM representing earnings before interest on lease liabilities,
other interest and finance costs, tax, depreciation of property,
plant and equipment and right-of-use assets and amortisation of
intangible assets, adjusted to show the underlying operating
performance of the Group and excludes items which are not
reflective of normal trading activities or which distort
comparability either year on year or with other similar
businesses.
Reconciliation:
Note 3
-
EBITDA and Segmental EBITDA
EBITDA is an APM
representing earnings before interest on lease liabilities, other
interest and finance costs, tax, depreciation of property, plant
and equipment and right-of-use assets and amortisation of
intangible assets. Also referred to as Group EBITDA.
Reconciliation:
Note 3
Segmental EBITDA
represents ‘Adjusted EBITDA’ before central costs, share-based
payments expense and other income for each of the reportable
segments: Dublin, Regional Ireland, the UK and Continental Europe.
It is presented to show the net operational contribution of leased
and owned hotels in each geographical location. Also referred to as
Hotel EBITDA.
Reconciliation:
Note 3
-
EBITDAR and Segmental EBITDAR
EBITDAR is an APM
representing earnings before interest on lease liabilities, other
interest and finance costs, tax, depreciation of property, plant
and equipment and right-of-use assets, amortisation of intangible
assets and variable lease costs.
Segmental EBITDAR
represents Segmental EBITDA before variable lease costs for each of
the reportable segments: Dublin, Regional Ireland, the UK and
Continental Europe. It is presented to show the net operational
contribution of leased and owned hotels in each geographical
location before lease costs. Also referred to as Hotel
EBITDAR.
Reconciliation:
Note 3
-
Adjusted earnings per share (EPS) (basic and
diluted)
Adjusted EPS (basic
and diluted) is presented as an APM to show the underlying
performance of the Group excluding the tax adjusted effects of
items considered by management to not reflect normal trading
activities or which distort comparability either year on year or
with other similar businesses.
Reconciliation: Note 32
-
Net Debt
Net Debt is
calculated in line with banking covenants and includes external
loans and borrowings drawn and owed to the banking club as at year
end (rather than the amortised cost of the loans and borrowings),
less cash and cash equivalents.
Reconciliation:
Refer below
-
Net Debt and Lease Liabilities
Net Debt (see
definition vi) plus Lease Liabilities at year end.
Reconciliation:
Refer below
-
Net Debt and Lease Liabilities to Adjusted EBITDA
Net Debt and Lease
Liabilities (see definition vii) divided by the ‘Adjusted EBITDA’
(see definition ii) for the year. This APM is presented to show the
Group’s financial leverage after including the accounting estimate
of lease liabilities following the application of IFRS 16
Leases.
Reconciliation:
Refer below
-
Net Debt to Value
Net Debt (see
definition vi) divided by the valuation of property assets as
provided by external valuers at year end. This APM is presented to
show the gearing level of the Group.
Reconciliation:
Refer below
Reconciliation
of Net Debt APMs - definitions (vi), (vii), (viii), (ix)
|
|
Reference in
financial statements
|
31
Dec 2023
€’000
|
31 Dec
2022
€’000
|
Loans and borrowings
at amortised cost
|
|
Statement of
financial position
|
254,387
|
193,488
|
Accounting
adjustment to bring to amortised cost
|
|
|
4,336
|
5,513
|
External loans and
borrowings drawn
|
|
Note 24
|
258,723
|
199,001
|
Less cash and cash
equivalents
|
|
Statement of
financial position
|
(34,173)
|
(91,320)
|
Net Debt (APM
vi)
|
A
|
Note 24
|
224,550
|
107,681
|
Lease Liabilities -
current and non-current
|
|
Statement of
financial position
|
698,598
|
651,791
|
Net Debt and
Lease Liabilities (APM vii)
|
B
|
Note 24
|
923,148
|
759,472
|
Adjusted EBITDA (APM
ii)
|
C
|
Note 3
|
223,108
|
183,430
|
Net Debt and
Lease Liabilities to Adjusted EBITDA (APM viii)
|
B/C
|
|
4.1x
|
4.1x
|
Valuation of
property assets as provided by external valuers1
|
D
|
|
1,545,314
|
1,337,088
|
Net Debt to
Value (APM ix)
|
A/D
|
|
14.5%
|
8.1%
|
1 Property
assets valued exclude assets under construction and fixtures,
fittings and equipment in leased hotels.
-
Lease Modified Net Debt to Adjusted EBITDA
Lease Modified Net
Debt, defined as Net Debt (see definition vi) plus eight times the
Group’s lease cash flow commitment, divided by ‘Adjusted EBITDA’
(see definition ii) for the year. The Group’s lease cash flow
commitment is based on its non-cancellable undiscounted lease cash
flows payable under existing lease contracts for the next financial
year as presented in note 16.
Reconciliation:
Refer below
Reconciliation
of Lease Modified Net Debt to Adjusted EBITDA APM - definition
(x)
|
|
Reference in
financial statements
|
31
Dec 2023
€’000
|
31 Dec
2022
€’000
|
Non-cancellable
undiscounted lease cash flows payable under lease contracts in the
next financial year
|
A
|
Note 16
|
57,603
|
51,777
|
Modified Lease
Debt
|
B=A*8
|
|
460,824
|
414,216
|
Net Debt (APM
vi)
|
C
|
|
224,550
|
107,681
|
Lease Modified Net
Debt
|
D=B+C
|
|
685,374
|
521,897
|
Adjusted EBITDA (APM
ii)
|
E
|
Note 3
|
223,108
|
183,430
|
Lease Modified
Net Debt to Adjusted EBITDA (APM x)
|
D/E
|
|
3.1x
|
2.8x
|
-
Free Cashflow
Net cash from
operating activities less amounts paid for interest, finance costs,
refurbishment capital expenditure, fixed lease payments and after
adding back the cash paid in respect of items that are deemed
one-off and thus not reflecting normal trading activities or
distorting comparability either year on year or with other similar
businesses (see definition i). This APM is presented to show the
cash generated from operating activities to fund acquisitions,
development expenditure, repayment of debt and
dividends.
Reconciliation:
Refer below
-
Free Cashflow per Share (FCPS)
Free Cashflow (see
definition xi) divided by the weighted average shares outstanding -
basic. This APM forms the basis for the performance condition
measure in respect of share awards made after 3 March
2021.
FCPS for LTIP
performance measure purposes has been adjusted to exclude the
impact of items that are deemed one-off and thus not reflecting
normal trading activities or distorting comparability either year
on year or with other similar businesses. The Group takes this
approach to encourage the vigorous pursuit of opportunities, and by
excluding certain one-off items, drive the behaviours we seek from
the executives and encourage management to invest for the long-term
interests of shareholders.
Reconciliation:
Refer below
-
Debt and Lease Service Cover
Free Cashflow (see
definition xi) before payment of lease costs, interest and finance
costs divided by the total amount paid for lease costs, interest
and finance costs. This APM is presented to show the Group’s
ability to meet its debt and lease commitments.
Reconciliation:
Refer below
Reconciliation
of APMs (xi), (xii), (xiii)
|
|
Reference in
financial statements
|
2023
€’000
|
2022
€’000
|
|
|
|
|
|
Net cash from
operating activities
|
|
Statement of cash
flows
|
171,379
|
207,860
|
Other interest and
finance costs paid
|
|
Statement of cash
flows
|
(8,726)
|
(12,233)
|
Refurbishment
capital expenditure paid
|
|
|
(26,050)
|
(15,836)
|
Fixed lease payments:
|
|
|
|
|
- Interest paid on
lease liabilities
|
|
Statement of cash
flows
|
(42,751)
|
(38,101)
|
- Repayment of lease
liabilities
|
|
Statement of cash
flows
|
(10,747)
|
(9,324)
|
|
|
|
83,105
|
132,366
|
Exclude adjusting items with a cash effect:
|
|
|
|
|
Net impact from tax
deferrals from government Covid-19 support
schemes1
|
|
Note 22
|
34,917
|
(8,531)
|
2022 corporation tax
payment in 20232
|
|
|
10,451
|
-
|
Acquisition-related
costs
|
|
Note 3
|
4,389
|
-
|
Pre-opening
costs
|
|
Note 3
|
497
|
2,666
|
Free Cashflow
(APM xi)
|
A
|
|
133,359
|
126,501
|
Weighted average
shares outstanding – basic
|
B
|
Note 32
|
223,299,760
|
222,867,676
|
Free Cashflow
per Share (APM xii) – cents
|
A/B
|
|
59.7
|
56.8
|
Total lease costs
paid3
|
|
|
57,373
|
48,537
|
Other interest and
finance costs paid
|
|
Statement of cash
flows
|
8,726
|
12,233
|
Total lease costs,
interest and finance costs paid
|
C
|
|
66,099
|
60,770
|
Free Cashflow before
lease and finance costs
|
D=A+C
|
|
199,458
|
187,271
|
Debt and Lease
Service Cover (APM xiii)
|
D/C
|
|
3.0x
|
3.1x
|
1 During the year, the Group paid deferred VAT and payroll
tax liabilities totalling €34.9 million under the Debt Warehousing
scheme in the Republic of Ireland. This non-recurring initiative
was introduced under Irish government Covid-19 support schemes and
allowed the temporary retention of an element of taxes collected
between March 2020 and May 2022 to assist businesses who
experienced cashflow and trading difficulties during the
pandemic.
2 During the year, the Group paid €10.5 million of Irish
corporation tax relating to the 2022 financial year due to
available payment schedule following pandemic losses.
3 Total lease
costs paid comprises payments of fixed and variable lease costs
during the year.
-
Normalised Return on Invested Capital
Adjusted EBIT after
rent divided by the Group’s average normalised invested capital.
The Group defines normalised invested capital as total assets less
total liabilities at the year end and excludes the accumulated
revaluation gains/losses included in property, plant and equipment,
loans and borrowings, cash and cash equivalents, derivative
financial instruments and taxation related balances. The Group also
excludes the impact of deferred VAT and payroll tax liabilities
which were payable at prior year end as these were quasi-debt in
nature, and the investment in the construction of future assets.
The Group’s net assets are adjusted to reflect the average level of
acquisition investment spend and the average level of working
capital for the accounting period. In most years, the average
normalised invested capital is the average of the opening and
closing normalised invested capital for the year.
Adjusted EBIT after
rent represents the Group’s operating profit for the year restated
to remove the impact of adjusting items (see definition i) and to
replace depreciation of right-of-use assets with fixed lease costs
and amortisation of lease costs.
The Group presents
this APM to provide stakeholders with a meaningful understanding of
the underlying financial and operating performance of the
Group.
Reconciliation:
Refer below
Reconciliation
of APM (xiv)
|
|
Reference in
financial statements
|
2023
€’000
|
2022
€’000
|
|
|
|
|
|
Operating
profit
|
|
Statement of
comprehensive income
|
156,143
|
155,527
|
Add
back/(less):
|
|
|
|
|
Total adjusting
items as per the financial statements
|
|
Note 3
|
2,861
|
(28,636)
|
Depreciation of
right-of-use assets
|
|
Note 3
|
30,663
|
27,503
|
Movement in
amortisation of intangible assets if IAS 17 still
applied
|
|
|
5
|
(46)
|
Fixed lease costs
(see glossary)
|
|
|
(53,531)
|
(46,330)
|
Amortisation of
lease costs
|
|
|
(813)
|
(757)
|
Adjusted EBIT
after rent
|
A
|
|
135,328
|
107,261
|
|
|
|
|
|
|
|
|
|
|
Net assets at
balance sheet date
|
|
Statement of
financial position
|
1,392,937
|
1,222,766
|
|
|
|
|
|
Add
back
|
|
|
|
|
Loans and
borrowings
|
|
Statement of
financial position
|
254,387
|
193,488
|
Deferred tax
liabilities
|
|
Statement of
financial position
|
84,441
|
71,022
|
Current tax
liabilities
|
|
Statement of
financial position
|
2,659
|
11,606
|
Deferred VAT and
payroll tax liabilities
|
|
Note 22
|
-
|
34,790
|
|
|
|
|
|
Less
|
|
|
|
|
Revaluation uplift
in property, plant and equipment1
|
|
Note 15
|
(518,770)
|
(425,974)
|
Cash and cash
equivalents
|
|
Statement of
financial position
|
(34,173)
|
(91,320)
|
Deferred tax
assets
|
|
Statement of
financial position
|
(24,136)
|
(21,271)
|
Derivative
assets
|
|
Statement of
financial position
|
(6,521)
|
(11,717)
|
Invested
capital
|
B
|
|
1,150,824
|
983,390
|
Average invested
capital
|
C
|
|
1,067,107
|
993,715
|
Return on Invested
Capital
|
A/C
|
|
12.7%
|
10.8%
|
|
|
|
|
|
Assets under
construction at year end
|
D
|
Note 15
|
(101,703)
|
(64,556)
|
Normalised
invested capital
|
B-D
|
|
1,049,121
|
918,834
|
Average
normalised invested capital
|
E
|
|
983,978
|
921,890
|
Normalised
Return on Invested Capital (APM xiv)
|
A/E
|
|
13.8%
|
11.6%
|
1 Includes the
combined net revaluation uplift included in property, plant and
equipment since the revaluation policy was adopted in 2014 or in
the case of hotel assets acquired after this date, since the date
of acquisition. The carrying value of land and buildings, revalued
at 31 December 2023, is €1,478.6 million (31 December 2022:
€1,281.3 million). The value of these assets under the cost model
is €959.9 million (31 December 2022: €855.4 million). Therefore,
the revaluation uplift included in property, plant and equipment is
€518.8 million (31 December 2022: €426.0 million). Refer to note 15
to the financial statements.
-
Net Debt to EBITDA after rent (banking covenant)
Net Debt (see
definition vi) divided by EBITDA after rent for the year. EBITDA
after rent is defined as Adjusted EBITDA (see definition ii) less
fixed lease costs (see definition in glossary) calculated in line
with banking covenants which specify the inclusion of pre-opening
expenses and exclusion of share-based payment expense.
This APM is
presented to show the Group’s financial leverage before the
application of IFRS 16 Leases,
in line with banking covenants.
Reconciliation:
Refer below
-
Interest Cover (banking covenant)
EBITDA after rent
(see definition xv) divided by interest and other finance costs
paid or payable during the year. The calculation excludes
professional fees paid or payable during the year in line with
banking covenants.
Reconciliation:
Refer below
Reconciliation
of banking covenants APMs (xv), (xvi)
|
|
Reference in
financial statements
|
2023
€’000
|
2022
€’000
|
|
|
|
|
|
Operating
profit
|
|
Statement of
comprehensive income
|
156,143
|
155,527
|
|
|
|
|
|
Add
back/(less):
|
|
|
|
|
Total adjusting
items as per the financial statements
|
|
Note 3
|
2,861
|
(28,636)
|
Depreciation of
property, plant and equipment
|
|
Note 3
|
32,791
|
28,426
|
Depreciation of
right-of-use assets
|
|
Note 3
|
30,663
|
27,503
|
Amortisation of
intangible assets
|
|
Note 3
|
650
|
610
|
Share-based payment
expense
|
|
Note 3
|
5,910
|
3,329
|
Fixed lease costs
(see glossary)
|
|
|
(53,531)
|
(46,330)
|
Pre-opening
costs
|
|
Note 3
|
(497)
|
(2,666)
|
EBITDA after
rent
|
A
|
|
174,990
|
137,763
|
Net Debt (APM
vi)
|
B
|
Note 24
|
224,550
|
107,681
|
Net Debt to
EBITDA after rent (APM xv)
|
B/A
|
|
1.3x
|
0.8x
|
Interest and other
finance costs paid
|
|
Statement of
cashflows
|
8,726
|
12,233
|
Interest and other
finance costs accrued but not yet paid
|
|
|
258
|
-
|
Interest and other
finance costs per banking covenants
|
C
|
|
8,984
|
12,233
|
Interest Cover
(APM xvi)
|
A/C
|
|
19.5x
|
11.3x
|
-
Hotel EBITDA (after rent) from leased portfolio
‘Segmental EBITDAR’
(see definition iv) from leased hotels less the sum of variable
lease costs and fixed lease costs relating to leased hotels. This
excludes variable lease costs and fixed lease costs relating to
effectively, or majority owned hotels. This APM is presented to
show the net operational contribution from the Group’s leased hotel
portfolio after lease costs.
Reconciliation:
Refer below
-
Rent Cover
‘Segmental EBITDAR’
(see definition iv) from leased hotels divided by the sum of
variable lease costs and fixed lease costs relating to leased
hotels. This excludes variable lease costs and fixed lease costs
that do not relate to fully leased hotels. This APM is presented to
show the Group’s ability to meet its lease commitments through the
net operational contribution from its leased hotel
portfolio.
Reconciliation:
Refer below
Reconciliation
of APMs (xvii), (xviii)
|
|
Reference in
financial statements
|
2023
€’000
|
2022
€’000
|
|
|
|
|
|
‘Segmental EBITDAR’
from leased hotels
|
A
|
Note 3
|
96,350
|
71,916
|
|
|
|
|
|
Variable lease
costs
|
|
Note 3
|
3,630
|
3,815
|
Fixed lease
costs
|
|
|
53,531
|
46,330
|
Total variable and
fixed lease costs
|
|
|
57,161
|
50,145
|
Exclude variable and
fixed lease costs not relating to fully leased hotels
|
|
|
(2,576)
|
(2,642)
|
Variable and fixed
lease costs from leased hotels
|
B
|
|
54,585
|
47,503
|
Hotel EBITDA
(after rent) from leased portfolio (APM xvii)
|
A-B
|
|
41,765
|
24,413
|
Rent Cover
(APM xviii)
|
A/B
|
|
1.8x
|
1.5x
|
-
Modified EBIT
For the purposes of
the annual bonus evaluation, EBIT is modified to remove the effect
of fluctuations between the annual and budgeted EUR/GBP exchange
rate and other items which are considered, by the Remuneration
Committee, to fall outside of the framework of the budget target
set for the year. Foreign exchange movements represent the
difference on converting EBIT from UK hotels at actual foreign
exchange rates during 2023 versus budgeted foreign exchange rates.
The budgeted EUR/GBP exchange rate was 0.90 in 2023 (2022:
0.90).
Reconciliation:
Refer below
Reconciliation
of APM (xix)
|
|
Reference in
financial statements
|
2023
€’000
|
2022
€’000
|
|
|
|
|
|
Operating
profit
|
|
Statement of
comprehensive income
|
156,143
|
155,527
|
Remove impact
of:
|
|
|
|
|
Adjusting
items
|
|
Note 3
|
2,861
|
(28,636)
|
Foreign exchange
movements
|
|
|
(1,766)
|
(2,720)
|
Modified EBIT
(APM xix)
|
|
|
157,238
|
124,171
|
Glossary
Revenue per available room (RevPAR)
Revenue per
available room is calculated as total rooms revenue divided by the
number of available rooms, which is also equivalent to the
occupancy rate multiplied by the average daily room rate achieved.
This is a commonly used industry metric
which facilitates comparison between companies.
Average Room Rate (ARR) - also Average Daily Rate (ADR)
ARR is calculated as
rooms revenue divided by the number of rooms sold. This
is a commonly used industry metric
which facilitates comparison between companies
‘Like for like’ hotels
‘Like for like’ or
‘LFL’ analysis excludes hotels that newly opened or ceased trading
under Dalata during the comparative periods. For newly acquired,
previously operating hotels, where pre-acquisition data is
available, these hotels are included on a ‘like for like’ basis for
analysis. ‘Like for like’ metrics are commonly used industry
metrics and provide an indication of the underlying
performance.
Segmental EBITDAR margin
Segmental EBITDAR
margin represents ‘Segmental EBITDAR’ as a percentage of revenue
for the following Group segments: Dublin, Regional Ireland, the UK
and Continental Europe. Also referred to as hotel EBITDAR
margin.
Effective tax rate
The Group’s tax
charge for the year divided by the profit before tax presented in
the consolidated statement of comprehensive income.
Fixed lease costs
Fixed costs incurred
by the lessee for the right to use an underlying asset during the
lease term as calculated under IAS 17 Leases.
Hotel assets
Hotel assets
represents the value of property, plant and equipment per the
consolidated statement of financial position at 31 December
2023.
Refurbishment capital expenditure
The Group typically
allocates approximately 4% of revenue to refurbishment capital
expenditure to ensure the portfolio remains fresh for its customers
and adheres to brand standards.
Balance Sheet Net Asset Value (NAV) per Share
Balance Sheet NAV
per Share represents net assets per the consolidated statement of
financial position divided by the number of shares outstanding at
year end.
Competitive Set (compset)
A Competitive Set
(compset) is a group of hotels that a hotel property competes
against for business. These hotels are typically located in the
same geographic area and offer similar services and
amenities.