TIDMPPH
RNS Number : 9438S
PPHE Hotel Group Limited
28 June 2018
THIS ANNOUNCEMENT DOES NOT CONSTITUTE A PROSPECTUS OR PROSPECTUS
EQUIVALENT DOCUMENT AND NEITHER THIS ANNOUNCEMENT NOR ANYTHING
HEREIN FORMS THE BASIS FOR ANY OFFER TO PURCHASE OR SUBSCRIBE FOR
ANY ORDINARY SHARES OR OTHER SECURITIES IN THE COMPANY NOR SHALL IT
FORM THE BASIS FOR ANY CONTRACT OR COMMITMENT WHATSOEVER.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR").
PPHE HOTEL GROUP LIMITED
Notification of transfer to a Premium Listing
PPHE Hotel Group Limited ("PPHE Hotel Group" or the "Company"
and, together with its subsidiaries the "Group") announces that it
is proposing to transfer the listing category of its ordinary
shares of nil par value (the "Ordinary Shares") from a Standard
Listing (shares) to a Premium Listing (commercial company) on the
official list of the UK Listing Authority in accordance with Rule
5.4A of the Listing Rules issued by the Financial Conduct Authority
(the "Proposed Transfer").
The provision of 20 business days' notice (which period
commenced by way of today's announcement) is required to effect the
Proposed Transfer. No shareholder approval is required in
connection with the Proposed Transfer. It is anticipated that the
Proposed Transfer will take effect at 8.00 a.m. on 30 July 2018
("Admission"), conditional on the approval of the UK Listing
Authority ("UKLA").
Summary and rationale
-- The Company's entire issued ordinary share capital was
admitted to the Standard Listing segment of the Official List in
June 2011
-- Since that time the Company has taken advantage of the
flexible framework that has applied to it to significantly grow its
operations via acquisition and development opportunities
The Company's board of directors (the "Board") is now of the
opinion that a Premium Listing would be the most appropriate
listing segment for the Company, as it believes a Premium Listing
is perceived by investors to be the highest quality listing
category by investors.
The Board therefore believes a Premium Listing will:
-- Provide access to a greater pool of liquidity through a wider potential investor base;
-- Provide a more appropriate platform for the continued growth
of the Group and further raise its profile and status;
-- Increase the profile of the Group in the UK and
internationally, thereby helping it to attract new investors;
-- Facilitate potential inclusion in the FTSE Indices (subject
to passing liquidity and free float thresholds); and
-- Provide a more rigorous Corporate Governance regime for the
benefit of Shareholders, although the Company already adopts many
of the Corporate Governance requirements of a Company listed on the
Premium Segment of the Official List
Boris Ivesha, President & Chief Executive Officer PPHE Hotel
Group, commented:
"Since our AIM IPO in 2007, we have significantly expanded our
business and particularly through investments in new development
projects and renovation programmes. Our growth track record is
supported by recent valuations undertaken by Savills, reporting an
increase in property value of approximately GBP639 million compared
to book value (as at 30 April 2018). The Board therefore believes
that now is the right time to seek the Proposed Transfer. The Board
believes that a Premium Listing will bring several benefits for
shareholders, including an increased profile for the Company and
access to a wider international and institutional investor
base".
Enquiries:
PPHE Hotel Group Limited
Tel: +31 (0) 20
Robert Henke, Executive Vice President of Corporate 717 8600
Affairs
and Customer Experience Tel: +44 (0)20 7034
Lisa Woodman, Director of Corporate Communications 4800
finnCap Ltd
Matt Goode / Emily Watts (Corporate Finance) Tel: + 44 (0)20
Andrew Burdis (ECM) 7220 0500
Berenberg
Tel: +44 (0)20 3207
Ben Wright / Mark Whitmore / James Brooks 7800
Hudson Sandler Financial Public Relations
Tel: +44 (0)20 7796
Wendy Baker/ Sophie Lister 4133
Notes to editors
The Company is a Guernsey registered company and through its
subsidiaries (the Group), jointly controlled entities and
associates, owns, leases, operates, franchises and develops
full-service upscale, upper upscale and lifestyle hotels in major
gateway cities, regional centres and select resort destinations,
predominantly in Europe.
The majority of the Group's hotels operate under the Park
Plaza(R) or art'otel(R) brands. The Group has an exclusive licence
from the Radisson Hotel Group, one of the world's largest hotel
groups, to develop and operate Park Plaza(R) Hotels & Resorts
in Europe, the Middle East and Africa.
The art'otel(R) brand is wholly owned by the Group.
The Group has a controlling ownership interest (51.97% of the
share capital) in Arena Hospitality Group, one of Croatia's
best-known hospitality groups.
The Group's portfolio of owned, leased, managed and franchised
hotels comprises 39 hotels in operation offering approximately
9,000 rooms. The Group's development pipeline includes two new
hotels in London that are expected to add an additional 500 rooms
by the end of 2022.
Company websites:
www.pphe.com
www.arenahospitalitygroup.com
For reservations:
www.parkplaza.com
www.artotels.com
www.arenaturist.com
For images and logos visit www.vfmii.com/parkplaza
Introduction
The Group is an international hospitality company which owns and
develops hotels and resorts, operates the Park Plaza(R) brand in
EMEA and owns the art'otel(R) brand. All of the Group's hotels
operate under the Park Plaza(R) or art'otel(R) brands, with the
exception of some within the Arena Hospitality Group. The Group has
an exclusive license from the Radisson Hotel Group, one of the
world's largest hotel groups, to develop and operate Park Plaza(R)
hotels in Europe, the Middle East and Africa. The art'otel(R) brand
is wholly owned by the Group. The Group has a controlling ownership
interest (51.97% of the share capital) in Arena Hospitality Group
d.d., one of Croatia's best-known hospitality groups whose shares
are traded on the Zagreb Stock Exchange.
The Group's portfolio of owned, leased, managed and franchised
hotels comprises 39 hotels offering a total of approximately 9,000
rooms and eight campsites, offering approximately 6,000 units. The
Group's development pipeline includes two new hotels in London,
which are expected to add an additional 500 rooms by the end of
2022.
Background to and reasons for the transfer to Premium
Listing
The Company's entire issued ordinary share capital was admitted
to trading on AIM in 2007. On 30 June 2011, the Company's entire
issued ordinary share capital was admitted to the Standard Listing
segment of the Official List and to trading on the Main Market for
listed securities of London Stock Exchange plc and trading of the
Ordinary Shares on AIM was simultaneously cancelled.
The Company has been able to move quickly to take advantage of
acquisition, disposal and development opportunities within the
framework of the rules that apply to it as a result of the Standard
Listing. The Company remains ambitious and growth-focused, however
the increase in the size of the Group in terms of assets, profits
and market capitalisation allow greater flexibility for the Group
under the framework of the rules that will apply to it as a result
of a Premium Listing than would historically have been the
case.
The Company's board of directors (the "Board") is now of the
opinion that a Premium Listing would be the most appropriate
listing segment for the Company, in order to provide access to a
greater pool of liquidity through a wider potential investor base.
The Board believes a Premium Listing is perceived to be the UK's
highest quality listing by investors and as such the Company hopes
to leverage this reputational enhancement to attract future
investment and business going forward.
The Company has therefore made the necessary applications and
requested that the UK Listing Authority approve the Proposed
Transfer with effect from 8.00 a.m. on 30 July 2018. As at 28 June
2018, the Company had 44,225,706 Ordinary Shares in issue,
including 1,888,070 treasury shares (the "Treasury Shares"). All
Ordinary Shares will be subject to the Proposed Transfer.
Effect of the transfer to Premium Listing
No changes to the Company's business have been, or are proposed
to be made, in connection with the Proposed Transfer.
Following the Proposed Transfer, certain additional provisions
of the Listing Rules will formally apply to the Company. These
provisions, set out under Chapters 6 to 13 (inclusive) of the
Listing Rules, relate to the following matters:
-- the application of certain requirements that are specific to
companies with a premium listing (Chapter 6);
-- the application of the Premium Listing Principles as set out
in Listing Rule 7.2.1AR (Chapter 7);
-- the requirement to appoint a sponsor in certain circumstances (Chapter 8);
-- the requirement to comply with various continuing
obligations, including compliance with all relevant provisions of
the UK Corporate Governance Code (or provide an explanation for any
non-compliance, if applicable, in its annual report and accounts)
(Chapter 9);
-- the requirement to announce, or obtain shareholder approval
for, certain transactions (depending on their size and nature) and
for certain transactions with 'related parties' of the Company
(Chapters 10 and 11);
-- certain restrictions in relation to the Company dealing in
its own securities and treasury shares (Chapter 12); and
-- various specific contents requirements that will apply to
circulars issued by the Company to its shareholders (Chapter
13).
Working capital
In the opinion of the Company, the Group has sufficient working
capital available for the Group's requirements for at least the
next 12 months from the date of this announcement.
Corporate Governance
The current composition of the Board is as follows:
Eli Papouchado - Non-Executive Chairman
Boris Ivesha - President and Chief Executive Officer
Daniel Kos - Chief Financial Officer & Executive
Director
Kevin McAuliffe - Non-Executive Deputy Chairman
Nigel Jones - Non-Executive Director and Senior Independent
Director
Dawn Morgan - Non-Executive Director
The Board is committed to and recognises the importance of
maintaining a high standard of corporate governance. Following a
review of the requirements of the UK Corporate Governance Code (the
"Code") conducted in light of the Proposed Transfer; the Board has
implemented the following steps to further strengthen its
compliance with the Code:
-- As announced on 12 June 2018, Kevin McAuliffe has been
appointed the Non-Executive Deputy Chairman of the Company and in
this role he will fulfil the responsibilities of providing
leadership of the Board and ensuring effectiveness on all aspects
of its duties and roles. Kevin was formerly the Senior Independent
Director of the Company, a position which he has now
relinquished;
-- Nigel Jones has been appointed the Senior Independent
Director of the Company, taking over the role previously performed
by Kevin McAuliffe;
-- The Board updated its Nomination, Remuneration and Audit Committee terms of reference; and
-- The Board has adopted new internal policies and procedures to
govern the Company's ongoing compliance with the rules, regulations
and guidance relevant to a premium listing
As a result of these changes, the Company expects to be in
compliance with the recommendations set out in the Code immediately
prior to the Proposed Transfer, save for the following matters
where the Company is currently not compliant:
-- Eli Papouchado, Non-Executive Chairman was not considered to
be independent on appointment as Chairman.
-- The role of providing leadership of the Board and ensuring
effectiveness on all aspects of its role is usually the
responsibility of the chairman but is fulfilled by Kevin McAuliffe,
Non-Executive Deputy Chairman.
-- Three of the Non-Executive Directors are considered to be
independent by the Board, although both Kevin McAuliffe and Nigel
Jones have served on the board for more than ten years. More than
half of the Board, excluding the Chairman, comprise independent
non-executive directors as determined by the Board, although for
smaller companies, below the FTSE 350, the requirement is for a
minimum of two independent non-executive directors. The Company
therefore currently meets this more limited requirement.
-- There is no formal evaluation of the performance of the
board, committees and individual directors and the Chairman's
performance is not formally appraised. The Company has not engaged
with an external consultant to facilitate such evaluation, although
smaller companies below the FTSE 350 are exempt from the
requirement to have an externally facilitated evaluation every
three years. Following the Proposed Transfer, the Company intends
to conduct a Board performance evaluation at least every three
years.
-- There has been no formal evaluation by the nomination
committee of the balance of skills, experience, independence and
knowledge on the board to establish whether there is a skills
gap.
-- A diversity policy has not been adopted.
-- There is no long-term viability statement included in the 2017 Annual Report and Account.
The Annual Report and Accounts in respect of the year ended 31
December 2017 which was published on 28 February 2018, describes
how throughout the financial year ended 31 December 2017 the
Company applied the principles of the Code to the extent considered
appropriate taking into account the size of the Company and the
nature of its business. The Company acknowledges that a revised
final version of the Code is expected to be published by early
Summer 2018 and will apply to accounting periods beginning on or
after 1 January 2019.
Directors Shareholdings
The interests (all of which are beneficial) of the Company's
directors (the "Directors") and senior managers of the Company and,
so far is known to the Directors or senior managers (as the case
may be) or could with reasonable diligence be ascertained by them,
persons connected with them in the share capital of the Company as
at the date of this document and on Admission, are or are expected
to be as follows:
% of Issued Share
Capital (excluding
Director Number of Ordinary Shares Treasury Shares)
Eli Papouchado(1) : 19,852,714 46.89
Boris Ivesha (2) 6,690,027 15.80
(1) Eli Papouchado is deemed to be interested in the following
Ordinary Shares:
(a) 17,630,297 Ordinary Shares held by Euro Plaza Holdings B.V.
("Euro Plaza"). Euro Plaza is an indirect wholly-owned Dutch
incorporated subsidiary of A.P.Y. Investments & Real Estate Ltd
("APY"). As at the date hereof, 98% of the shares in APY are held
by Eli Papouchado as trustee of an endowment created under Israeli
law which he formed in 1998 (the "Endowment"). The primary
beneficiaries of the Endowment are Eli Papouchado and his sons,
Yoav Papouchado and Avner Papouchado, and the secondary
beneficiaries are the children of Yoav and Avner. The remaining 2%
of the shares in APY are held by Yoav and Avner Papouchado
respectively (1% each). APY and its subsidiaries are part of an
international constructions, hotel and real estate group (the "Red
Sea Group") that was founded by Eli Papouchado. The Ordinary Shares
held by Euro Plaza have been pledged to secure guarantees given by
Euro Plaza of certain banking facilities provided to another
company in the Red Sea Group, as disclosed on 13 December 2013.
(b) 22,417 Ordinary Shares held by Red Sea Club Limited ("Red
Sea Club"), an intermediate subsidiary of APY and holding company
of Euro Plaza.
(c) 2,200,000 Ordinary Shares held by A.A. Papo Trust Company
Limited ("A.A. Papo"), a company which is wholly-owned by Eli
Papouchado, acting in its capacity as the sole trustee of an
endowment whose main beneficiary is Eli Papouchado's daughter,
Eliana Papouchado.
(2) Boris Ivesha is deemed to be interested in 6,690,027
Ordinary Shares held by Walford Investments Holdings Limited
("Walford") which is wholly-owned by Clermont Corporate Services
Limited ("Clermont"), as trustee of certain trusts established for
the benefit of Boris Ivesha (the president and chief executive
officer of the Company) and his family.
UK Takeover Code
As the Company has its registered office in Guernsey and its
Ordinary Shares are admitted to trading on the Main Market of the
London Stock Exchange, it is subject to the UK Takeover Code, with
which the Company complies.
Eli Papouchado, Euro Plaza, Red Sea Club and A.A. Papo and other
parties related to him (together the "Red Sea Parties") and Boris
Ivesha, Walford and other parties related to him (together the
"Ivesha Parties") are deemed to be acting in concert for the
purposes of Rule 9 of the Takeover Code. Together they hold more
than 50% of the Company's voting rights and (for so long as they
continue to be treated as acting in concert) may accordingly
increase their aggregate interests in Ordinary Shares without
incurring any obligation under Rule 9 to make a general offer,
although individual members of the concert party will not be able
to increase their percentage interest in Ordinary Shares through or
between a Rule 9 threshold without Takeover Panel consent.
Shareholder Agreement
The Red Sea Parties and the Ivesha Parties are party to a
shareholders agreement dated 14 March 2013 (as amended on 29(th)
April 2015, 31 March 2016 and 16(th) November 2016 (respectively))
(the "Shareholders Agreement"). Pursuant to the Shareholders
Agreement, it has been agreed that for so long as, inter alia, the
combined interests of the Ivesha Parties and the Red Sea Parties in
PPHE Hotel Group (including, respectively, any interests held by
family members, and trusts for the benefit of family members, of
Boris Ivesha and Eli Papouchado, and any undertakings controlled by
such family members of trusts) are not less than 38% and the Red
Sea Parties' interest in PPHE Hotel Group is at least 26.5% of the
total number of Ordinary Shares then in issue (excluding, in both
cases, Ordinary Shares held in treasury), (i) on any resolution to
be considered at a general meeting of the shareholders of PPHE
Hotel Group, all Ordinary Shares held by the Ivesha Parties shall
be voted in a manner which is consistent with the votes cast by, or
on behalf of, the Red Sea Parties in respect of that resolution
("Voting Undertaking"); and (ii) neither the Ivesha Parties nor the
Red Sea Parties shall transfer to a third party any Ordinary Shares
held by them without the prior written consent of the other
(provided the number of Ordinary Shares being transferred is in
excess of a particular threshold).
Relationship Agreements
In accordance with Listing Rule 6.5, the Company has entered
into new relationship agreements with (1) Euro Plaza and Eli
Papouchado and (2) Walford and Clermont, which shall become
effective upon Admission (the "Relationship Agreements"). Euro
Plaza is ultimately controlled by Eli Papouchado, acting in his
capacity as trustee of the Endowment. Eli Papouchado, acting in
such capacity (and also in his personal capacity so as to procure
compliance by A.A. Papo), is therefore a party to the relationship
agreement between Euro Plaza and the Company. Red Sea Club, APY,
each of the intermediate holding companies of Euro Plaza and A.A,
Papo are all "associates" of Euro Plaza and/or Eli Papouchado.
Walford is ultimately controlled by Clermont Corporate Services
Limited, a professional corporate trustee in its capacity as
trustee of certain trusts established for the benefit of Boris
Ivesha (the president and chief executive officer of the Company)
and his family.
The Relationship Agreements will regulate aspects of the ongoing
relationship between the Company, Euro Plaza, Eli Papouchado,
Walford, Clermont and their respective associates (as defined by
the Listing Rules). In particular, the Relationship Agreements will
address the mandatory independence obligations as required under
the Listing Rules, including (amongst other things) that:
-- transactions and arrangements with a controlling shareholder
(and/or any of its associates) will be conducted at arm's length
and on normal commercial terms;
-- neither the controlling shareholder nor any of its associates
will take any action that would have the effect of preventing the
listed company from complying with its obligations under the
Listing Rules; and
-- neither the controlling shareholder nor any of its associates
will propose or procure the proposal of a shareholder resolution,
which is intended or appears to be intended to circumvent the
proper application of the Listing Rules.
The Relationship Agreements further confirm that:
-- neither Euro Plaza, Eli Papouchado, Walford, Clermont nor
their respective associates (as defined by the Listing Rules) can
take any action that would result in the composition of the Board
ceasing to comprise of the higher of two independent directors or
the number of independent directors required in order to comply
with the Code (to the extent that the Company has decided to comply
with such requirement rather than not to comply and to explain the
reasons for such non-compliance);
-- the Company is capable at all times of carrying on its
business independently of Euro Plaza, Eli Papouchado, Walford,
Clermont and their respective associates (as defined by the Listing
Rules); and
-- neither Euro Plaza, Eli Papouchado, Walford, Clermont nor
their respective associates (as defined by the Listing Rules) can
take any action to procure any amendment to the Company's articles
of incorporation which would be inconsistent with, undermine or
breach any provision of the Relationship Agreements or the Listing
Rules or which would otherwise affect the Company's ability to
carry on its business independently of Euro Plaza, Eli Papouchado,
Walford, and/or their respective associates (as defined by the
Listing Rules).
By virtue of the Voting Undertaking agreed between the Ivesha
Parties and the Red Sea Parties (as described above), the Company
reasonably considers that each of its controlling shareholders will
comply with the independence obligations as required under the
Listing Rules.
Pursuant to the Relationship Agreements Euro Plaza has the
right, for so long as it controls at least 30% of the issued share
capital of the Company, to appoint two Directors, falling to one
Director where its percentage holding is between 10% and 30%
Walford has the right to appoint one Director for so long as it
controls at least 10% of the issued share capital of the Company.
In addition, whilst Eli Papouchado and Boris Ivesha are members of
the Board they will be deemed the appointees of Euro Plaza and
Walford respectively. Neither Euro Plaza, Walford, nor their
associates can take any action that would result in the composition
of the Board ceasing to comprise of the higher of, at least two
Independent Directors or the number of independent directors
required to comply with the Code (to the extent that the Company
has decided to comply with such requirement rather than not to
comply and to explain the reasons for such non-compliance). Euro
Plaza has granted the Group a right of first refusal to manage all
hotels situated within the territory governed by the Territorial
Licence Agreement as at the date of Admission. This right does not
apply to any hotels owned by Euro Plaza or any of its associates
prior to the date of Admission or that were acquired subject to
prior agreements in existence as at the date of Admission. Each of
Euro Plaza and Walford has also agreed not to solicit senior
managers of the Company.
Further Listing Rule Requirements
Independent Business
The Group's business is that of owning, leasing, operating,
franchising and developing hotels. This business is operated by the
Group in an independent capacity and that, since its listing on AIM
in 2007 the Company has carried on an independent business as its
main activity. In particular, the vast majority of the Group's
consolidated revenues derive from the portfolio of properties that
it owns and operates. The small residual balance of revenue arise
from (i) management fees in respect of the Groups' management of
art'otel berlin mitte and Park Plaza Berlin Kudamm, which are held
through joint venture interests, (ii) Park Plaza County Hall, in
which the Group has a minority interest and also operates the hotel
and (iii) the Group's franchise arrangements (where the Group grant
third parties the right to use the Park Plaza or art'otel
brand).
Independence from controlling shareholder
The Group has historically worked closely with the Red Sea Group
in relation to new hotel developments and refurbishments. In
particular, the Red Sea Group has provided consultancy and
construction services in relation to such developments. Although
such relationship and services have been beneficial to the Group
over the years, the Group is of the view that such services are
widely available in the market and it could easily be sourced from
third parties if the Group needed to do so. None of the Group's
day-to-day operating revenue derives from, nor is dependent on its
relationship with the Red Sea Group.
As described in detail above, the Company has entered into the
Relationship Agreements.
Control of the business
As detailed above, the Company's main business activity is
owning, leasing, operating, franchising and developing hotels. The
Company exercises control over this business in a number of
different ways. The Group has day-to-day operational control over a
hotel where the Group has a mandate to run the day-to-day business
(i.e. where the Group has a management contract). Additionally, the
Company has controlling ownership interests in the majority of its
assets, and in this respect no decisions or actions can be taken
without its consent or involvement. No activity can be carried out
in these assets without the Group's knowledge or control.
Furthermore, in respect of the large majority of the Group's assets
there are no underlying contractual arrangements which may prevent
the Group from exercising operational control (the only exceptions
being the 50:50 joint ventures in respect of two of the Group's
German hotels and the Group's two franchised hotels).
Constitutional arrangements
The Company has in place a constitution that allows it to comply
with the rules and regulations relevant to a premium listing and,
pursuant to the policies adopted by the Company, the Board shall be
responsible for ensuring that the Company continues to comply with
such requirements.
The Company is a Guernsey incorporated company. Guernsey law and
the practice relating to companies is not the same as the laws
applicable to a public limited company incorporated under the UK
Companies Act 2006, and a number of differences exist between
English and Guernsey law, including, by way of example, that there
are no provisions of Guernsey law which confer rights of
pre-emption in respect of the allotment of shares. The Company has
therefore incorporated in its Articles of Incorporation rights
which are at least equivalent to the rights provided for in LR
9.3.11R (as qualified by LR 9.3.12R); and is satisfied that
conferring such rights is not incompatible with the law of the
country of its incorporation.
Project Management Contracts in respect of Existing Projects
The Group actively engages in the development of properties into
new hotels and the refurbishment and/or extension of its existing
portfolio of hotels. The Group has in the past contracted, and
currently contracts, with GC Project Management Limited ("GC"), for
project management services in respect of its projects. In
particular, the Group recently completed an extensive refurbishment
of its Park Plaza Victoria Amsterdam hotel using the project
management services of GC. The Group currently has 6 project
management agreements with GC for its various projects (the
"Project Management Contracts"), including, the extension of, and
conversion of suites in, Park Plaza London Riverbank and the
upgrading of the public areas in such hotel, the complete
refurbishment of Park Plaza Vondelpark, Amsterdam, the construction
of its new art'otel london hoxton, the extensive refurbishment
programme of Park Plaza Sherlock Holmes London, the refurbishment
programme for its Park Plaza Victoria London hotel and potential
development of a new hotel to be built adjacent to its Park Plaza
London Park Royal hotel. Each such agreement provides for a capped
amount payable by the Group to GC in respect of each such
project.
All future transactions with Euro Plaza, its associates
(including GC) and all other related parties will be assessed in
accordance with the requirements of Listing Rule 11 and such
applicable requirements will be complied with at the time of such
future transactions.
Pre-Construction and Maintenance Contract
The Group actively considers many potential acquisitions that,
were they to proceed, would involve a high degree of construction
work in order to deliver a hotel that meets the Group's quality
standards and return on investment criteria. Therefore, the Group
has in the past contracted, and is presently contracting, with GC
in respect of the provision of preliminary services in relation to
the Group's potential hotel development projects and maintenance
services in relation to the Group's existing sites. In deciding
which properties to acquire and what price to pay for those
properties, PPHE frequently uses GC to undertake preliminary
assessment services, including appraisal work and provide initial
estimates of the construction costs. PPHE considers that its
partnership with GC gives it an ability to respond quickly to
opportunities. Further, GC provides ad hoc maintenance work when
required to the Group's various sites. The Group has historically
had a very successful working relationship with GC and wishes this
relationship to continue.
Accordingly, Park Plaza Hotels (UK) Services Limited, a wholly
owned subsidiary of the Company, has entered into an agreement with
GC for the provision of pre-construction and maintenance services
by GC to the Group (the "Pre-Construction and Maintenance
Contract").
Pursuant to the Pre-Construction and Maintenance Contract:
-- if the Group wishes to embark on a new construction,
development or refurbishment project it can choose (but is under no
obligation) to instruct GC to provide preliminary assessment
services in connection with such project. The scope of such
services is set out in the Pre-Construction and Maintenance
Contract.
-- GC shall, in relation to each of the Group's sites, provide
advice on an ad-hoc consultancy basis as required by the Group in
relation to maintenance issues in respect of its existing hotels;
and
-- all services provided by GC to the Group under the
Pre-Construction and Maintenance Contract are provided for a fixed
annual retainer of GBP60,000 (paid in equal monthly
instalments).
The Group has from time to time received passenger services from
Sunshine Aviation Limited, a member of the Red Sea Group, which
owns a business corporate jet (the "Aircraft"). As the Group's
operations have expanded in Europe, particularly following the
acquisition of Arena, the Group has from time to time hired the
Aircraft from the Red Sea Group. Following a review of the Group's
expected future use of the Aircraft, the Board decided to enter
into an agreement to acquire it for a total consideration of
US$2.34 million. Accordingly, the Group has entered into a sale and
purchase agreement with Sunshine Aviation Limited to acquire the
Aircraft (the "Aircraft SPA"). Delivery of the Aircraft (and
therefore completion of the acquisition) is required to occur at
any time before six months from the date of the Aircraft SPA.
GC and Sunshine Aviation Limited are related parties of the
Company by virtue of them being associates of Euro Plaza, which
along with other members of the Red Sea Group, holds approximately
47% of the issued share capital of the Company. As set out above,
the Company's Chairman (Eli Papouchado) is the founder of the Red
Sea Group.
Under the Relationship Agreement entered into between Euro
Plaza, Eli Papouchado and the Company, transactions between the
Company and Euro Plaza (and its associates, which include GC) are
required to be on arm's length terms.
The Independent Directors consider that the Project Management
Contracts, the Pre-Construction and Maintenance Contract and the
Aircraft SPA have been entered into on arm's length terms and are
in the best interests of the Company and its shareholders as a
whole.
Valuation of the Group's properties
Valuation for freehold and long leasehold assets in the UK and
the Netherlands
As part of the Proposed Transfer, the Group commissioned a
valuation exercise in respect of its hotels located in the UK and
the Netherlands (these properties account for 78% of the Group's
total asset value as further detailed below).
The freehold and leasehold interests in the UK and Dutch
properties held within the Group were independently valued as at 1
June 2018, which valuation was finalised on 28 June 2018, by
Savills Advisory Services Limited ("Savills Advisory Services"),
acting in the capacity of External Valuers as defined in the RICS
Red Book. The valuations accord with the requirements of IFRS 13,
SSAP 19 and the 2017 Edition of the RICS Valuation - Global
Standards (incorporating the International Valuation Standards)
(the "RICS Red Book"). A copy of the valuation report is set out in
the Appendix to this announcement.
Savills Advisory Services reported that the aggregate of the
market value of the 15 properties held by the Group in the UK and
the Netherlands, amounted to GBP1,310 million (based on an exchange
rate of EUR1.14 to GBP1 as at 15 April 2018). The valuations show
an increase in value across the 15 properties, of approximately
GBP639 million compared to their book value as at 30 April 2018
(unaudited) with all of the 15 hotels valued at a premium to their
book value as at 30 April 2018 (unaudited). The valuations were
arrived at predominantly by reference to market evidence for
comparable property in the Group's consolidated financial
statements.
Valuation of the Group's properties where the Group has an
ownership interest
The table below sets out the historical book value of the
Group's assets (being all of the Group's 39 hotels and eight
campsites) as at 31 December 2017 (audited) and 30 April 2018
(unaudited) and the Group's total asset value(1, 2 and 3) as at 1
June 2018, in each case in Pounds Sterling:
Book value Book value(1)
The Group's
total asset
value(1,
GBP (audited) (unaudited) 2 and 3)
31-Dec-17 30-Apr-18 1-Jun-18
Total assets 1,158,442,190 1,214,526,229 1,670,380,268
Lease liabilities(2) (182,961,576) (182,961,576)
------------------ ------------------ ------------------
Total 975,480,614 1,031,564,653 1,670,380,268
================== ================== ==================
1 The calculations of the book value as at 30 April 2018
(unaudited) and the Group's total asset value as at 1 June 2018 use
an exchange rate of EUR1.14 to GBP1 and HRK 8.42 to GBP1.
2 For the Group's total asset value, the leasehold properties
were valued after deduction of lease expenses. Accordingly, assets
are netted with lease liabilities in order to present like-for-like
total book value and Group total asset value.
3 The Group's total asset value means the fair value of the
Group's properties in the UK and the Netherlands as at 1 June 2018
(see the Savills Advisory Services valuation report dated 28 June
2018 set out in the Appendix to this announcement) and the book
value of Arena's properties in Croatia, Germany and Hungary (as at
30 April 2018).
The most significant change in book value between 31 December
and 30 April 2018 relates to the acquisition of the remaining 50%
interest in a joint venture interest holding property in Hoxton,
London. The previously held 50% interest was accounted for as a
joint venture interest and with the acquisition of the remaining
50% interest this value, including the related acquisition price,
was reclassified to properties in the Group's consolidated
financial statements.
The Company confirms that no material change has occurred to the
value of the properties valued in the valuation report prepared by
Savills Advisory Services set out in the Appendix to this
announcement since 1 June 2018 being the valuation date for that
valuation report.
Investment in Arena
In addition, the book value as at 31 December 2017 of the
Group's 51.97% equity investment (assets net of liabilities and
minority interests) in Arena was GBP105.8 million. The market value
of the Group's investment in Arena, which is listed on the Zagreb
Stock Exchange, was GBP132.0 million (based on Arena's closing
mid-market share price on 27 June 2018).
Appointment of sponsor
finnCap Ltd is acting as sponsor to the Company. finnCap Ltd has
given and has not withdrawn its written consent to the inclusion in
this announcement of the references to its name in the form and
context in which they are included. finnCap is currently financial
adviser and joint broker to the Company.
Financial information incorporated by reference
The financial information listed below is incorporated by
reference into this announcement and is available on the Company's
website, www.pphe.com.
Information incorporated Reference document Page number
by reference in reference
into this announcement document
Annual Report Directors' report Pages 86-88
and Accounts Independent auditor's report Pages 90-92
2017 Consolidated income statement Page 94
Consolidated statement of comprehensive Page 95
income Page 96
Consolidated statement of changes Page 93
in equity Pages 97-98
Consolidated balance sheet Pages 99-144
Consolidated cash flow statement
Notes to the consolidated financial
statements
--------------------------------------------- ------------------
Annual Report Directors' report Pages 80-82
and Accounts Independent auditor's report Pages 84-86
2016 Consolidated income statement Page 88
Consolidated statement of comprehensive Page 89
income Page 90
Consolidated statement of changes Page 87
in equity Pages 91-92
Consolidated balance sheet Pages 93-136
Consolidated cash flow statement
Notes to the consolidated financial
statements
--------------------------------------------- ------------------
Annual Report Directors' report Pages 67-69
and Accounts Independent auditor's report Pages 71
2015 Consolidated income statement Page 73
Consolidated statement of comprehensive Page 74
income Page 75
Consolidated statement of changes Page 72
in equity Pages 76-77
Consolidated balance sheet Pages 78-119
Consolidated cash flow statement
Notes to the consolidated financial
statements
--------------------------------------------- ------------------
Consent
Savills Advisory Services has given and has not withdrawn its
written consent to the inclusion in this announcement of the
valuation report in the Appendix to this announcement and the
references thereto and to its name in the form and context in which
they are included. Savills Advisory Services has no material
interest in the Company.
Definitions
"Listing Rules" means the listing rules made by the UK Listing
Authority under Section 75A of the Financial Services and Markets
Act 2000;
"Official List" means the Official List of the UK Listing
Authority;
"Premium Listing" means a premium listing (commercial company)
requiring compliance with Chapter 6 of the Listing Rules and the
other requirements of the Listing Rules that expressed to apply to
such a listing;
"Standard Listing" means a listing which is not a Premium
Listing and which requires compliance with Chapter 14 of the
Listing Rules; and
"UK Corporate Governance Code" means the UK Corporate Governance
Code published in April 2016 by the Financial Reporting
Council.
Appendix
Property Valuation prepared by Savills Advisory Services
28 June 2018
PPHE Hotel Group Limited finnCap Ltd
1(st) and 2(nd) Floors 60 New Broad Street
Elizabeth House London EC2M 1JJ
Les Ruettes Brayes United Kingdom
St Peter Port
Guernsey GY1 1EW
Channel Islands
Dear Sirs
PPHE HOTEL GROUP LIMITED
VALUATION OF 15 HOTEL PROPERTIES IN THE UK AND NETHERLANDS
1. Instructions
In accordance with the instructions from PPHE Hotel Group
Limited (the "Company"), confirmed by us in writing on 31 May 2018,
we have inspected the 15 properties, held by the Company, and
described below (the "Properties"). We have made all relevant
enquiries in order to provide our opinion of the Market Value (as
defined below) of each Property, as at 1 June 2018 (the "Valuation
Date"), of the freehold, and leasehold interests, as fully fitted,
equipped and operational entities having regard to trading
potential (as defined below), on the terms defined herein (the
"Valuations").
This valuation report ("Valuation Report") has been delivered
for inclusion within a transfer announcement (the "Transfer
Announcement") prepared by the Company in connection with its
trading on the main market for listed securities on the London
Stock Exchange.
2. The Properties
The 15 Properties that we have valued are listed in paragraph 5
of this Valuation Report and are briefly described at paragraph 8
of this Valuation Report. Each Property has been valued
individually and not as part of a portfolio.
3. Basis of Valuation
Our valuations have been carried out in accordance with the RICS
Valuation - Global Standards 2017 incorporating the IVSC
International Valuation Standards (the "RICS Red Book") issued June
2017 and effective from 1 July 2017, in particular in accordance
with the requirements of VPS 3 entitled Valuation reports. They
have been undertaken by Independent Valuers, as defined in the
Standards.
The valuations have been prepared on the basis of Market Value,
the definition of which is defined in IVS paragraph 30.1 as
follows:
"The estimated amount for which an asset or liability should
exchange on the valuation date between a willing buyer and a
willing seller in an arm's length transaction after proper
marketing and where the parties had each acted knowledgeably,
prudently and without compulsion."
We can confirm that this report complies with the International
Valuation Standards as well as the Red Book.
The valuation figures included in the report are our opinion of
Market Value should the properties be offered for sale as at the
date of valuation whereas the figures which appear in the Company's
consolidated accounts are shown at cost to the Company in
accordance with IFRS.
4. Status of Valuer
This valuation has been prepared by Tim Stoyle FRICS and Ross
Connelly MRICS, both of whom are RICS Registered Valuers. We
confirm that they have the knowledge, skills and understanding to
undertake this valuation competently and are acting as External
Valuers.
We are required by RICS regulations to disclose the
following:
-- This firm currently provides no other property advisory
services for PPHE Hotel Group Limited other than valuation
services;
-- In the financial year ending 31 December 2017, the total fees
earned from PPHE Hotel Group Limited, and connected parties, was
less than 5% of the turnover of Savills Advisory Service and
related companies.
5. Valuations
On the basis outlined in this Valuation Report, we are of the
opinion that the aggregate Market Value of the respective freehold
and long leasehold interests in each Property, as fully fitted,
equipped and operational entities having regard to trading
potential on the terms defined herein, as at the Valuation Date, is
as stated below.
The aggregate of the individual Market Values as at the
Valuation Date is GBP1,310,000,000 (ONE BILLION THREE HUNDRED AND
TEN MILLION POUNDS).
Our valuations are exclusive of any VAT.
The valuations are set out as follows:
Hotel Tenure Date of Inspection Market Value Market Value
(GBP) (EUR)
UK PROPERTIES
Park Plaza Westminster
Bridge London Freehold 14 May 2018 340,000,000
Park Plaza Riverbank
London Long Leasehold 8 May 2018 261,750,000
Park Plaza Victoria
London Freehold 4 May 2018 166,100,000
Park Plaza Sherlock
Holmes
London Long Leasehold 4 May 2018 26,600,000
Park Plaza Waterloo Long Leasehold 4 May 2018 84,100,000
Park Plaza Park Royal Long Leasehold 8 May 2018 32,900,000
5 December
Park Plaza Leeds Freehold 2017 21,000,000
4 December
Park Plaza Nottingham Long Leasehold 2017 15,000,000
Hoxton Development Freehold 24 April 2018 82,500,000
Sub Total GBP1,029,950,000
Hotel Tenure Date of Inspection Market Value Market Value
(GBP) (EUR)
EUROPEAN PROPERTIES
Park Plaza Victoria
Amsterdam Freehold 14 May 2018 166,800,000
Park Plaza
Vondelpark
Amsterdam Freehold 15 May 2018 31,800,000
Park Plaza Schiphol
Amsterdam
Airport Freehold 14 May 2018 34,950,000
Park Plaza Utrecht Long Leasehold 14 May 2018 25,800,000
Park Plaza Eindhoven Freehold 14 May 2018 12,300,000
Art'otel Amsterdam Freehold 14 May 2018 46,150,000
Sub Total GBP279,886,000 EUR317,800,000
Aggregate of Values GBP1,310,000,0
00
Total freehold GBP866,764,000
Total leasehold GBP443,072,000
___________
Notes:
* Based upon an exchange rate of GBP1.13546 to EUR1
(1) art'otel London Hoxton is currently not a trading hotel.
The valuation figures included in the report are our opinions of
Market Value should the properties be offered for sale as at the
date of valuation, whereas the figures which appear in the
Company's consolidated accounts are shown at historical cost, less
depreciation in accordance with IFRS Property, Plant and Equipment.
Below table reflects the Company's consolidated book values as at
31 December 2017 (audited financial statements) and as at 30 April
2018 (unaudited management accounts).
31 December 2017 30 April 2018
(audited) (unaudited)
Property, plant and equipment GBP1,158.4 million GBP1,214.5 million
Finance lease liabilities GBP(182.9) million GBP(182.9) million)
Net book value property, plant GBP975.5 million GBP1,031.6 million
and equipment
Per the Group's 31 December 2017 audited financial statements,
approximately GBP355.4 million of property, plant and equipment is
attributable to the properties included in Arena Hospitality Group
(a 52% subsidiary of the Group, listed on the Zagreb Stock
Exchange) and the third party income units in Park Plaza
Westminster Bridge, which both are not covered by this valuation
report.
When excluding the development site of Hoxton (not part of
Property, Plant and equipment as per the Company's 31 December 2017
audited financial statements) the difference between values
attributable to the Group's interest in the Properties in: (a) the
Company's audited consolidated balance sheet as at 31 December
2017: and (b) the Valuation Report, is approximately GBP607.3
million.
Per the Group's unaudited management accounts as at 30 April
2018, approximately GBP360.5 million of property, plant and
equipment is attributable to the properties included in Arena
Hospitality Group and the third party income units in Park Plaza
Westminster Bridge, which both are not covered by this Valuation
Report.
When including the development site in Hoxton (acquired in March
and now part of Property, Plant and Equipment) the difference
between values attributable to the Group's interest in the
Properties in: (a) the Group's unaudited management accounts as at
30 April 2018: and (b) the Valuation Report, is approximately
GBP638.8 million.
The reason for the difference is the different basis of
valuation described above, which reflects the passage of time (and
relevant depreciation) since the relevant acquisition.
6. Transaction Costs
No allowance has been made for any expenses of realisation nor
for taxation which might arise in the event of a disposal of any of
the Properties such as Capital Gains Tax or Value Added Tax or any
other tax liability.
7. Assumptions and Sources of Information
7.1 Tenure and Tenancies
Nine of the 15 Properties are held freehold, and the other six
properties are held long leasehold.
We have not been provided with up to date Reports on Title for
all assets.
All restrictions on title, encumbrances, covenants and other
matters which we have been made aware of, have been considered in
the context of the vacant possession value where the impact of
restrictions may take on greater significance. If there is a
material impact on the vacant possession value, then this could in
turn affect the investment value.
7.2 Fixtures Fittings and Equipment
The hotels that are trading have been valued inclusive of all
fixtures fittings and equipment necessary to continue trading.
7.3 Accommodation and Measurement
We have not undertaken full measured surveys of the Properties
in accordance with the sixth edition of the Code of Measuring
Practice issued by the RICS. Information regarding number of
bedrooms and facilities for each Hotel has been provided by the
Company.
7.4 Trading Information
We have been provided with management accounts for each Hotel
for the periods 2015 to 2017 together with YTD 2018 actual trade
with budgets for the remainder of the year. In addition we have had
the opportunity to interview senior staff including the Hotel
general managers with a view to discussing and understanding the
operational performance of the Hotels in detail. Where hotels are
not yet or only recently open, we have been provided with a five
year trade forecast from the Company.
7.5 Building Structure
This Valuation Report is not a structural survey and we
therefore provide our Valuations on the assumption that the
Properties are of sound design and construction, and free from
inherent defects. We have not inspected any covered or inaccessible
areas, nor was any detailed inspection carried out of woodwork or
structural members. We did not carry out any investigation to
determine whether or not high alumina cement, calcium chloride
additives, asbestos or other potentially deleterious or hazardous
materials have been used in the construction of the Properties or
have since been incorporated in the Properties.
7.6 Services, Plant and Equipment
No detailed inspection or tests have been carried out by us on
any of the services or items of equipment at the Properties,
therefore no warranty can be given with regard to their
serviceability, efficiency, safety or adequacy for their
purpose.
7.7 Environmental Investigations
We were not instructed to undertake an environmental audit and
therefore are unable to warrant that the Properties will not be
adversely affected by the provisions and implementation of the
Environmental Protection Act 1990, the Environment Act 1995 or any
legislation or regulation applicable in The Netherlands and
Germany. We have not investigated whether the sites are or have in
the past been contaminated and we are therefore unable to warrant
that the Properties are free from any defect or risk in this
respect. This Valuation Report is therefore based on the assumption
that the land at each property is not contaminated and any
specialist investigation would not disclose the presence of any
adverse conditions on the Property sites or within the buildings.
We have been provided with a number of environmental reports and
desktop surveys which we have reviewed. There is nothing that has
been drawn to our attention within any of these documents provided
to us that would cause us to alter any of our reported opinions of
Market Value.
7.8 Town Planning and Statutory Enquiries
We have made informal enquiries of the relevant statutory
authorities in respect of planning and other matters.
The Property constituting the new development of art'otel London
Hoxton has been valued on the assumption that all necessary
planning permissions and consents have been granted.
7.9 Mortgages etc.
No account has been taken of any mortgages, debentures or other
security, which may now or in the future exist over any of the
Properties.
8. The Properties
The portfolio comprises 14 hotel properties and one proposed
hotel led development. Nine of the properties are held freehold and
6 are held on a long leasehold basis. The properties are all held
for owner investment purposes and are located throughout the UK and
the Netherlands.
The six Properties located in London comprise three trading
4-star deluxe standard hotels and a set of five star standard
serviced suites, adjoining Park Plaza Riverbank London. These
Properties are situated in strong central London locations.
All the Properties located in London offer high quality
overnight accommodation with high quality ancillary services
including bar, restaurant, fitness suite and conference facilities,
expected for a 4-star hotel product.
The proposed art'otel London Hoxton development site is located
on the north east City of London fringe, an increasingly popular
and developing area of London. Planning consent was obtained in
2015 and the site is wholly owned by Park Plaza Hotels.
The Properties located in The Netherlands include three trading
city centre located 4-star hotels, being Park Plaza Victoria
Amsterdam, Park Plaza Utrecht and Park Plaza Eindhoven. Art'otel
Amsterdam is a 5-star hotel located adjacent Park Plaza Victoria.
Park Plaza Victoria was recently subject to a substantial
renovation. Park Plaza Vondelpark Amsterdam is less central and is
due to be renovated in 2017. The Company acquired Park Plaza
Amsterdam Airport in 2010 and the hotel is conveniently located
close to Schiphol Airport.
9. Approach to Valuation
In undertaking our valuations we have had regard to the
information available to us, including our own due diligence
enquiries and market research which includes development pipeline
and the competitive landscape relating to each asset.
In order to arrive at our Valuations we have combined a profits
method of valuation with a discounted cash flow (DCF) method for
the projected net earnings for the trading Properties discounted
back to present day values using an appropriate discount rate. The
cash flows have been taken over a 10 year period with the discount
rate adopted reflecting investor's target rate of return. Note, we
have valued the leasehold properties to the end of the lease term
rather than into perpetuity.
Under this approach our operational projections have been
undertaken on the basis of a hypothetical Reasonably Efficient
Operator (REO) of the business, which is the basis upon which a
potential purchaser would, in our opinion, be likely to base an
offer.
The DCF calculations have been undertaken within Savills own
Excel model. We have cross checked the values on a price per
bedroom based upon comparable evidence where available and also on
a multiple (years purchase) against 2017 actual profits/EBITDA.
We have valued each hotel individually and separately considered
the value as a combined portfolio. Added value could be realised as
a portfolio sale, or in small clusters of similar assets.
In addition we have adopted a stabilised FF&E Reserve
equating to 4% of total revenue in line with that adopted by the
group. Where capital expenditure has been identified for a
particular hotel we have made a one-off capital deduction from our
valuation and otherwise we have assumed that additional capex will
be funded through the FF&E reserve and repairs and maintenance
budgets.
We have considered our Valuations subject to assumed market
level management charges. We are of the opinion that should the
hotels be marketed for sale, the bids offered by investors and
hotel operators will be similar, as each must consider the other in
the process.
The proposed art'otel London Hoxton, Park Plaza Vondelpark
Amsterdam are development projects. Accordingly, the valuation has
been based on a development appraisal taking into account the
anticipated total development value and then deducting the
construction costs, fees, finance and making an allowance for
profit.
10. Exclusions
Whilst our Valuations include the normal items of trade
fixtures, fittings, furniture and furnishings necessary for the
continuance of the business, it excludes consumable stocks.
We have excluded from our consideration any special purchaser
who, due to special interest or circumstances, may wish to purchase
the Property or the business of the relevant Hotel.
Whilst we have had regard to the general effects of taxation on
Market Value, we have not taken into account any liability for tax
which may arise on a disposal, whether actual or notional, and
neither have we made any deduction for Capital Gains Tax, Value
Added Tax or any other tax liability.
The Market Values in this Valuation Report are exclusive of VAT.
We have not undertaken any enquiries to ascertain whether or not a
sale of any Property would attract VAT.
This Valuation Report is based on the technical, legal and
financial information provided to us and we have relied on this
information in formulating our Valuations.
11. Responsibility
This Valuation Report is provided for the purpose of inclusion
in a Transfer Announcement and may be referred to in announcements
connected thereto. The basis of valuation might be inappropriate
for other purposes and may not be otherwise used without our prior
written consent.
Neither the whole nor any part of this Valuation Report nor any
reference thereto may be included in any other published document,
circular or statement, nor published in any way without our written
approval of the form and context in which it is to appear.
We confirm that we have given and have not withdrawn our consent
to the inclusion of this Valuation Report in the Transfer
Announcement and the references thereto and to our name in the form
and context in which they are included in the Transfer
Announcement.
Yours faithfully
For and on behalf of Savills Advisory Services Limited
TIM STOYLE FRICS ROSS CONNELLY MRICS
RICS Registered Valuer RICS Registered Valuer
Director- Head of Hotel Valuation Associate Director-Hotel
General Assumptions
Our reports and valuations are carried out on the basis of the
following General Assumptions:
1.1. Tenure and Tenancies
That the properties are not subject to any unusual or especially
onerous restrictions, encumbrances or outgoings contained in the
Freehold Title. We will not inspect the Title Deeds or Land
Registry Certificate and shall rely upon information provided by
you or your solicitor relating to both tenure and tenancy data.
That the occupational tenant is capable of meeting its
obligations, and that there are no arrears of rent or undisclosed
breaches of covenant
1.2. Condition and Repair
That the building is structurally sound, and that there are no
structural, latent or other material defects, including rot and
inherently dangerous or unsuitable materials or techniques, whether
in parts of the building we have inspected or not, that would cause
us to make allowance by way of capital repair. Our inspection of
the property and this report do not constitute a building
survey.
That in the construction or alteration of the building no use
was made of any deleterious or hazardous materials or techniques,
such as high alumina cement, calcium chloride additives, woodwool
slabs used as permanent shuttering and the like (other than those
points referred to above). We will not carry out any investigations
into these matters.
That the property is not adversely affected, nor is likely to
become adversely affected, by any highway, town planning or other
schemes or proposals, and that there are no matters adversely
affecting value that might be revealed by a local search, replies
to usual enquiries, or by any statutory notice.
That the building has been constructed and is used in accordance
with all statutory and bye-law requirements, and that there are no
breaches of planning control. Likewise, that any future
construction or use will be lawful.
That the property is connected or capable of being connected
without undue expense, to the public services of gas, electricity,
water, telephones and sewerage.
1.3. Environmental Risks
That the property has not suffered any land contamination in the
past, nor is it likely to become so contaminated in the foreseeable
future. We have not carried out any soil tests or made any other
investigations in this respect, and we cannot assess the likelihood
of any such contamination.
That there are no adverse site or soil conditions, that the
property is not adversely affected by the Town and Country Planning
(Assessment of Environmental Effects) Regulations 1988, that the
ground does not contain any archaeological remains, nor that there
is any other matter that would cause us to make any allowance for
exceptional delay or site or construction costs in our
valuation.
1.4. Development Property
In situations where a property is in the course of development,
we reflect its physical condition and the costs remaining to be
spent at the valuation date. In the preparation of our appraisal,
we consider the costs estimates provided by the professional
advisors involved in the project.
General Conditions
Our reports and valuation are carried out on the basis of the
following General Conditions:
1. We have made no allowance for any Capital Gains Tax or other
taxation liability that might arise upon a sale of the
property.
2. Our valuation is exclusive of VAT (if applicable).
3. Excluded from our valuation is any additional value
attributable to goodwill, or to fixtures and fittings which are
only of value in situ to the present occupier.
4. Energy Performance Certificates (EPCs) are required for the
sale, letting, construction or alteration of non-domestic
residential buildings over 538 sq ft (50 sq m) in England, Scotland
and Wales. The effect of EPCs on value is as yet unknown, given
that the market has yet to respond to their introduction.
Therefore, we have not considered the property's EPC rating in
forming our opinion of value. However, should this position alter,
we reserve the right to reconsider our opinion of value.
5. Our valuations are prepared in accordance with the latest
edition of the RICS Valuation - Professional Standards ("the Red
Book") on the basis of Market Value, unless instructed otherwise.
Any such deviation is expressly stated in our terms of
engagement.
6. Each property has been valued individually and no allowance
has been made, either positive or negative, should it form part of
a larger disposal. The total stated is the aggregate of the
individual Market Values.
7. No allowance has been made for rights, obligations or
liabilities arising under the Defective Premises Act 1972, and it
has been assumed that all fixed plant and machinery and the
installation thereof complies with the relevant UK and EEC
legislation.
8. That we have been supplied with all information likely to
have an effect on the value of the property and that the
information supplied to us and summarised in this report is both
complete and correct.
9. Our valuation(s) is based on market evidence which has come
into our possession from numerous sources. That from other agents
and valuers is given in good faith but without liability. It is
often provided in verbal form. Some comes from databases such as
the Land Registry or computer databases to which Savills
subscribes. In all cases, other than where we have had a direct
involvement with the transactions, we are unable to warrant that
the information on which we have relied is correct although we
believe it to be so.
10. The files which we hold relating to all of our property
valuations may be subject to monitor and audit by the RICS under
its conduct and disciplinary regulations.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCSEMFDAFASEEM
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