PPHE Hotel Group Company Profile and 2014 Results March 2015

IMPORTANT NOTICE By attending the meeting where this presentation is made, or by reading this document, you agree to be bound by the limitations set out below. This presentation does not constitute an offer or invitation for the sale or purchase of any securities of PPHE Hotel Group Limited (PPHE) or any of the businesses or assets described in it. The information in this presentation, which does not purport to be comprehensive, has been provided by PPHE and has not been independently verified. While this information has been prepared in good faith, no representation or warranty, express or implied, is or will be made and, save in the case of fraud, no responsibility or liability is or will be accepted by PPHE and any of its subsidiaries (the Group) or by any of their respective directors, officers, employees, agents or advisers in relation to the accuracy or completeness of this presentation or any other written or oral information made available to any interested party or its advisers and any such liability is expressly disclaimed. No information set out or referred to in this presentation shall form the basis of any contract. This presentation has been delivered to interested parties for information only. The recipient agrees to keep confidential any written or oral information contained herein or otherwise made available in connection with the Group. This presentation must not be copied, reproduced, distributed or passed to others at any time. The recipient has further agreed to return all documents and other material held by it relating to the Group referred to in the presentation upon request. PPHE gives no undertaking to provide the recipient with access to any additional information or to update this presentation or to deliver an updated presentation in the future or to update any additional information, or to correct any inaccuracies in it which may become apparent, and it reserves the right, without giving reasons, at any time and in any respect, to terminate negotiations with any prospective purchaser. This presentation is being distributed on the basis that each person in the UK to whom it is issued is reasonably believed to be such a person as is described in Article 19 (Investment professionals), Article 48 (Certified high net worth individuals), Article 49 (High net worth companies, unincorporated associations etc.), Article 50 (Certified sophisticated investors), or Article 50A (Self-certified sophisticated investors) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, or is a person to whom this presentation may otherwise lawfully be distributed. Persons who do not fall within such descriptions may not act or rely upon the information contained in it. The contents of this document have not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000. Reliance on this document for the purposes of engaging in any investment activity may expose you to a significant risk of losing all of the property or other assets invested or of incurring additional liability. Any person who is in doubt should consult an authorised person specialising in advising on investments of this nature. Any recipient of this presentation in jurisdictions outside the UK should inform themselves about and observe any applicable legal requirements. This presentation does not constitute an offer to sell or an invitation to purchase securities in PPHE in any jurisdiction. In particular, this presentation should not be distributed, directly or indirectly, by any means (including electronic transfer) in or into Canada, Australia, Japan, the United States or the Republic of South Africa or to any citizens, nationals or residents thereof, or to any corporation, partnership or other entity created or organized under the laws of those jurisdictions or to any “US Person” as defined in Regulation S under the US Securities Act of 1933 (as amended). Any such distribution could result in a violation of relevant securities laws of such jurisdictions. This presentation should not be considered as the giving of investment advice or any recommendation by PPHE or any other member of the Group or by any of their respective officers, directors, employees, agents or advisers. Each person to whom this presentation is made available must make his or its own independent assessment of PPHE and the Group after making such investigation and taking such advice as he or it may consider necessary or appropriate. In particular, this presentation does not replace a review of any financial or other information published by PPHE via a Regulatory Information Service and ongoing reports. Any opinions, forecasts or estimates in this presentation constitute a judgment as at the date of this presentation. There can be no assurance that future results or events will be consistent with any such opinions, forecasts or estimates. Matters discussed in this document may constitute forward-looking statements. Forward-looking statements are generally identifiable by the use of the words "may", "will", "should", "plan", "expect", "anticipate", "estimate", "believe", "intend", "project", "goal" or "target" or the negative of these words or other variations on these words or comparable terminology. Forward-looking statements reflect the current views of PPHE with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. Forward-looking statements involve a number of known and unknown risks, uncertainties and other factors that could cause PPHE's or its industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forwardlooking statements. All enquiries relating to this presentation should be directed to Chen Moravsky, Deputy Chief Executive Officer & Chief Financial Officer, PPHE Hotel Group Limited at [email protected].

2

PPHE Hotel Group | Company Profile

Key Strengths 1•

Integrated and entrepreneurial approach – hotel development, design, construction, ownership and operation

2•

Profitable niche – expanding "affordable luxury" with upscale hotels in major gateway cities and regional centres

3•

Global partnership – powerful distribution network through the Carlson partnership

4•

Pipeline – significant portfolio and brand growth potential through organic and external expansion

5•

Financial track record – driving top line growth and delivering industry leading profit margins

6•

Management team – highly experienced, streamlined and closely involved senior management team

7•

Flexible partnership solutions – aligned with stakeholders to tailor the right agreement for each hotel or hotel project

Park Plaza Westminster Bridge London

art’otel amsterdam

Park Plaza Wallstreet Berlin Mitte

3

PPHE Hotel Group | Company Profile

Summary

Financial Highlights

4

•

2014 Revenue up 10.5% to €270.4 million, LFL revenue increased by 6.1% to €253.2 million

•

2014 RevPAR up 12.0% to €113.6

•

2014 EBITDA up 14.6% to €94.8 million, LFL EBITDA increased by 14.5% to €933.6 million

•

2014 Normalised profit before tax of €32.9 million while 2014 reported profit before tax of €41.6 million

•

2014 Normalised earnings per share €0.79 while 2014 reported basic/ diluted earnings per share of €1.00

•

Proposed final dividend of 10.0 pence per share

PPHE Hotel Group | Company Profile

PPHE Hotel Group

1989

6

Acquisition of first hotel

Countries

38

8,338

Hotels

Rooms in operation

1,375

2,500+

Rooms under development

Employees

Park Plaza Westminster Bridge London

art’otel amsterdam

Park Plaza Histria Pula

5

PPHE Hotel Group | Company Profile

Our Business Types Ownership

Projects

•We aim to own hotels in key gateways cities in Europe where capital value is likely to appreciate over time.

•We have a proven track record that on completion of our projects we create an upside in property value and benefit from operating revenues.

6

PPHE Hotel Group | Company Profile

Operating Leases

Joint Ventures & Associates

Management & Franchise

•We manage all aspects of the operation of the hotel, from sales and marketing to reservations and food and beverage to human resources. The benefit of such agreements is that this model is capital light.

•This business type enables us to establish a presence in key markets and emerging markets. By securing longterm management contracts the Group benefits from fee-based income.

•We have management contracts in place for all of owned, coowned and leased hotels. In addition, we have entered into several management and / or franchise contracts with third parties.

Strategy Delivering stabilised annual return on shareholder capital

Leveraging partnership with Carlson to further grow revenues

Maintaining high EBITDA margin

Realise growth potential Improving overall performance through innovative revenue generation and marketing initiatives

Improving guest experience through consistent service delivery and product enhancements Driving growth by expanding hotel portfolio through a variety of business models

7

PPHE Hotel Group | Company Profile

Current Portfolio Hotel locations

Contract mix 8,338 rooms in operation

1,375 rooms in pipeline

United Kingdom London (6 hotels & 4 projects) Cardiff Leeds Nottingham

2,790 rooms in operation

1,198 rooms in pipeline

The Netherlands Amsterdam (4 hotels) Utrecht Eindhoven

1,117 rooms in operation

Germany Berlin (5 hotels) Cologne Dresden Nuremberg (project)

1,423 rooms in operation

Other Croatia (5 hotels) Budapest Tel Aviv

3,008 rooms in operation

6 Countries

4 4 16 6

177 rooms in pipeline

12

Part owned

Wholly owned Operating leases Management and franchise agreements New hotel projects (all ownership of 50% or more)

8

PPHE Hotel Group | Company Profile

Development pipeline Project

1

Location

Operating structure

No of rooms

Status

Park Plaza Arena Pula1

Pula, Croatia

Owned and management contract

175

Expected to open 2015

Park Plaza Nuremberg

Nuremberg, Germany

Owned and management contract

177

Expected to open 2015

Park Plaza Riverbank London extension and reconfiguration

London, United Kingdom

Owned and management contract

184

Expected to be completed 2015

Park Royal London project

London, United Kingdom

Owned and management contract

168

Expected to open 2016

Project near London Waterloo Station

London, United Kingdom

Owned and management contract

494

Expected to open 2016

art’otel london hoxton

London, United Kingdom

Joint venture and management contract

352

Expected to open 2019

Following extensive renovations, Hotel Park (which is part of the Arenaturist group) will be rebranded to Park Plaza Arena Pula, and this is therefore not a new hotel for the Group.

9

PPHE Hotel Group | Company Profile

PORTFOLIO OF BRANDS

• Park Plaza® Hotels & Resorts • art’otel® • Arenaturist

PPHE Hotel Group – brands Park Plaza® Hotels & Resorts • PPHE Hotel Group has an exclusive perpetual territorial licence from Carlson for EMEA • 22 hotels, 5,843 rooms (in EMEA), 1,198 rooms (4 hotels) in the pipeline

art’otel® • 7 hotels, 1,058 rooms, 352 rooms (1 hotel) in the pipeline

Park Plaza Vondelpark, Amsterdam

• Contemporary collection of lifestyle hotels • With each hotel dedicated to a signature artist

Arenaturist • 7 hotels, 6 holiday apartment complexes, 8 campsites including 4 Park Plaza branded and fully renovated hotels • Operated with a significant minority interest by PPHE Hotel Group 11

PPHE Hotel Group | Company Profile

Park Plaza County Hall, London

Leveraging Carlson Relationship Central reservation and distribution system

Carlson Worldwide Headquartered in Minneapolis, MN

Club Carlson rewards programmes for guests, planners and businesses

Powerful online and mobile platforms

1,350 hotels (in operation and under development) In 105 countries and territories1 #1 Ranked Travel management company1 150 countries and territories Carlson Wagonlit Travel (CWT)2

Look to book travel agent programme

Global sales network

Global footprints cross selling and marketing

1 2

As of Q2 2014 As of Q4 2013

12

PPHE Hotel Group | Company Profile

Operating Performance

Operating Key Performance Indicators 2010-2014

Occupancy (in %)

RevPAR (in €)

Average Room Rate (in €)

113.6 83.7 130.9 110.7

119.2

101.3 101.4

135.6 125.5

92.6 85.7

80.7

77.4

2010

14

77.7

2011

77.4

2012

2013

2014

PPHE Hotel Group | Company Profile

2010

2011

2012

2013

2014

2010

2011

2012

2013

2014

Operational Highlights 2014 Successful divestment

25-year milestone

Entered into 50:50 joint venture for two hotels in Berlin, Germany, while continuing to manage these hotels under long-term management contracts

Celebrated our 25-year journey since Eli Papouchado, the Company’s Chairman, acquired the first hotel that is Park Plaza Eindhoven today

art’otel refinancing

Building 1,023 rooms

Completed €24.0 million refinancing for art’otel amsterdam which opened in 2013

Construction commenced at three hotels in London and one in Nuremberg

London Waterloo £80.0m development loan

Record guest satisfaction

Secured £80.0 million loan to develop new hotel near London Waterloo Station

Appointed Deputy CEO

Record service levels

Promoted Chen Moravsky to Deputy CEO to assist with the Company’s next stage of growth

Delivered record service levels as rated by our guests, of 8.62 on a scale of 1-10

Opened 4th Park Plaza in Croatia

Record employee satisfaction

Opened the fully refurbished Park Plaza Belvedere Medulin in Croatia with 427 rooms, our fourth Park Plaza hotel in this market

15

Achieved a record guest satisfaction level of 8.36 on a scale of 1-10

PPHE Hotel Group | Company Profile

Recorded an all-time high employee satisfaction score of 83.5% on a scale of 1-100

Financial Performance and Position

Financial Key Performance Indicators 2010-2014

Total Revenue (in € million)

EBITDAR (in € million)

EBITDA (in € million) 94.8

270.4

105.2

242.1 244.8

96.8

202.4

85.6

93.4

82.7

65.0

75.0

139.8 46.5

2010

17

2011

2012

2013

2014

PPHE Hotel Group | Company Profile

2010

37.6

2011

2012

2013

2014

2010

2011

2012

2013

2014

Financial Key Performance Indicators 2010-2014

Normalised Profit before Tax (in € million)

Normalised Earnings per Share (in €)

Dividend per Share (in £) 0.19

32.9 0.79 0.14 24.1

0.59

21.9

13.6

0.33

18

0.06

0.16

6.1 2010

0.12

0.54

2011

2012

2013

2014

PPHE Hotel Group | Company Profile

2010

2011

2012

2013

2014

2011

2012

2013

2014

Total Revenue Growth €’000

280,000 270,000 9.7

(6.2)

7.5

270.4

New openings

Reported 2014

260,000 14.6

250,000 240,000

244.8

10.5% Revenue Growth 230,000 220,000 210,000 200,000 Reported 2013

19

Growth

PPHE Hotel Group | Company Profile

FX impact

Divestments

RevPAR Growth €

€ 120.0 € 115.0 2.6

€ 110.0

1.0

113.6

New openings

Reported 2014

4.2 € 105.0 € 100.0

4.4 101.4

12.0% RevPAR Growth

€ 95.0 € 90.0 € 85.0 € 80.0 Reported 2013

20

Growth

PPHE Hotel Group | Company Profile

FX impact

Divestments

EBITDA Growth €’000

100,000 95,000

3.5 90,000

(1.0)

1.2

€94.8

New openings

Reported 2014

8.4

85,000 80,000

82.7

75,000

14.6% EBITDA Growth

70,000 65,000 60,000 55,000 50,000 Reported 2013

21

Growth

PPHE Hotel Group | Company Profile

FX impact

Divestments

Return on Capital Employed €m

Owned Properties Under In develop- Operating operation ment leases Capital employed

Joint ventures and associates Under develop- Management and In operation ment central costs Reported

191.2

14.6

2.5

28.9

17.3

69.4

323.9

Adjusted EBITDA Normalised profit before tax

94.7

-

2.1

3.4

-

(5.4)

94.8

31 December2014 Normalised profit before tax

34.4

(1.2)

1.7

3.8

0.1

(5.9)

32.9

31 December 2013

27.4

(1.3)

0.4

2.6

0.2

(7.4)

21.9

22

PPHE Hotel Group | Company Profile

Financial Leverage

Loan to Value Properties at Book Value at 31 December 20141

Loan to Value Properties at Fair Value1,2

Equity funded 33% (€268m) Bank funded 67% (€555m)

Bank funded 56% (€555m)

Equity funded 44% (€436m)

Property includes the balance of Property, Plant and Equipment (EUR 823 million), bank funding equals the total long and short term borrowings (EUR 555 million). 2 The fair value represents the last independent valuation carried out on properties either for the 2011 prospectus, or subsequently for bank lending purposes. Development properties are valued at cost. 1

23

PPHE Hotel Group | Company Profile

Outlook

24

•

2015 and 2016 will see a renovation program covering 10 hotels which will impact trading performance

•

Development programme will provide the foundations for growth in 2016 and going forward

•

The Company continues discussions regarding release of value from its hotel assets whilst retaining operational control

•

PPHE Hotel Group well positioned to deliver its target of 10,000 hotel rooms by 2019

•

2015 has begun well

PPHE Hotel Group | Company Profile

Appendix

2014 Income Statement¹ FY 2014

FY 2013

Change

270,442

244,761

+10.5

(165,259)

(151,576)

+9.0

105,183

93,185

+12.9

(10,385)

(10,483)

-0.9

94,798

82,702

+14.6

(24,405)

(23,862)

+1.8

EBIT

70,393

58,840

+19.6

Profit before tax

41,649

27,310

+52.5

Profit for the period

41,413

27,659

+49.7

1.00

0.67

+49.3

€’000

Total Revenues Operating expenses EBITDAR Rental expenses EBITDA Depreciation and amortisation

Reported earnings per share 1

€’000

%

Certain amounts here do not correspond to the annual Consolidated statements as at 31 December 2013 due to the retrospective application of an accounting policy change.

26

PPHE Hotel Group | Company Profile

Group Revenue in December 2014 €’000 €270,442 €5,320 2.0%

€9,479 3.5%

€915 0.3%

Room revenue

F&B revenue €72,656 26.9%

Minor operating €182,072 67.3%

Fee income (outside group)

Other

27

PPHE Hotel Group | Company Profile

Full Year Revenue Contribution Segments €m1

300 242.1

250

244.8

270.4

202.8 200 139.8

150

Management & Holdings Germany

100

Netherlands

80.3

United Kingdom 50

0

2009

2010

2011

2012

2013

2014

8.0

7.7

7.8

10.6

7.9

10.2

Germany

23.5

27.7

30.2

32.6

32.8

28.5

Netherlands

19.8

22.8

24.8

37.8

42.4

53.7

United Kingdom

29.0

81.6

140.0

161.1

161.7

178.0

Management & Holdings

1

Certain amounts here do not correspond to the annual Consolidated statements as at 31 December 2013 due to the retrospective application of an accounting policy change.

28

PPHE Hotel Group | Company Profile

Full Year EBITDA Contribution Segments €m1

100

94.8 85.5

82.7

80 65.1 60 37.6

40

20

Management & Holdings Germany

16.3

Netherlands United Kingdom

0

-20

2009

2010

2011

2012

2013

2014

Management & Holdings

2.1

5.8

10.8

14.2

14.6

14.5

Germany

-3.7

-0.3

-1.0

-0.5

-

0.4

Netherlands

6.5

7.6

7.8

12.3

11.4

15.6

11.4

24.5

47.5

59.5

56.7

64.3

United Kingdom 1

Certain amounts here do not correspond to the annual Consolidated statements as at 31 December 2013 due to the retrospective application of an accounting policy change.

29

PPHE Hotel Group | Company Profile

Operating Key Performance Indicators 2010-2014

Guest Satisfaction

Employee Satisfaction (scale 1-100%

Service Performance (scale 1-10)

8.36

8.62

83.5

83.3 82.9

8.30 8.30 82.1

8.27

8.23

81.0

2010

30

8.48

2011

2012

2013

2014

PPHE Hotel Group | Company Profile

2010

2011

8.39

2012

2013

2014

8.50

8.38

2010 2011 2012 2013 2014

Hospitality Food & Beverages – example concepts

Chino Latino is a modern Pan-Asian cuisine restaurant with a Latin cocktail bar, located in the UK (3) and Germany (1)

31

Located at our flagship art’otel amsterdam, 5&33 incorporates a destination bar, restaurant and gallery

PPHE Hotel Group | Company Profile

Located at Park Plaza Victoria London, TOZI is an Italian restaurant with a shared dining concept

Board of Directors

32

Eli Papouchado (77) Non-Executive Chairman

Boris Ivesha (69) President & Chief Executive Officer

Chen Moravsky (44) Deputy Chief Executive Officer & Chief Financial Officer

Kevin McAuliffe (57) Non-Executive Director & Senior Independent Director

Elisha Flax (53) Non-Executive Director

Nigel Jones (55) Non-Executive Director

PPHE Hotel Group | Company Profile

Largest Shareholders Number of issued shares

41,630,792

Held in treasury by PPHE Hotel Group

1,862,000

Number of issued shares (excluding treasury)

39,768,792

Largest shareholders

Number of shares

Percentage of issued share capital (excluding treasury)

Red Sea Group¹

18,552,714

44.56%

Molteno Limited¹

7,990,027

19.19%

Total Red Sea Group and Molteno Limited

26,542,741

63.75%

¹ Mr Papouchado, the Chairman, is deemed interested in the shares held by the Red Sea Group and Mr Ivesha, the CEO, is deemed interested in shares held by Molteno Limited

33

PPHE Hotel Group | Company Profile

List of Hotels Current portfolio Hotels included in the Group Location

Ownership interest

No. of rooms

Since

London

100%

395

2005

- Club & Residence London

100%

66

2005

Park Plaza Riverbank London TM

Plaza on the River

Park Plaza Sherlock Holmes London

London

100%

119

2001

Park Plaza Victoria London

London

100%

299

2001

Park Plaza Westminster Bridge London London

100%¹

1,019

2010

Park Plaza Leeds

Leeds

100%

187

2003

Park Plaza Nottingham

Nottingham

100%

178

2002

¹ Such percentage reflects 100% of the voting rights in the Company

34

PPHE Hotel Group | Company Profile

List of Hotels Current portfolio Hotels included in the Group Location

Ownership interest

No. of rooms

Since

Park Plaza Amsterdam Airport

Amsterdam

100%

342

2010

Park Plaza Victoria Amsterdam

Amsterdam

100%

306

1993

art’otel amsterdam

Amsterdam

100%

107

2013

Park Plaza Vondelpark, Amsterdam

Amsterdam

100%

138

2006

Park Plaza Eindhoven

Eindhoven

100%

104

1989

Park Plaza Utrecht

Utrecht

100%

120

1995

art’otel berlin kudamm

Berlin

50%

133

2006

art’otel berlin mitte

Berlin

50%

109

2000

Sub Total

35

PPHE Hotel Group | Company Profile

3,622

List of Hotels (cont.) Current portfolio Hotels under operating leases Location

Ownership interest

No. of rooms

Since

art’otel berlin city center west

Berlin

-

152

2001

Park Plaza Prenzlauer Berg Berlin

Berlin

-

155

2000

Park Plaza Wallstreet Berlin Mitte

Berlin

-

167

2006

art’otel budapest

Budapest

-

165

2000

art’otel cologne

Cologne

-

218

2010

art’otel dresden

Dresden

-

174

2000

Sub Total

36

PPHE Hotel Group | Company Profile

1,031

List of Hotels (cont.) Current portfolio Hotels operated by the Group in which the Group has a non-controlling interest or no interest Location Arenaturist

Istria, Croatia

Park Plaza County Hall London

London

Sub Total

37

PPHE Hotel Group | Company Profile

Ownership interest

No. of rooms

Since

15-20%

2,814

2008

-

398

2008

3,212

List of Hotels (cont.) Current portfolio Hotels under franchise agreements Location

Ownership interest

No. of rooms

Since

Park Plaza Cardiff

Cardiff

-

129

2005

Park Plaza Orchid Tel Aviv

Tel Aviv

-

194

2007

Park Plaza Trier

Trier

-

150

2003

Sub total

Total (all hotels)

38

PPHE Hotel Group | Company Profile

473

8,338

Case Study: Park Plaza Westminster Bridge, London

• One of the largest hotels in London with 1,019 bedrooms • PPHE Hotel Group acquired control of Park Plaza Westminster Bridge in 2008 • Financed acquisition through the sale of 535 units to third party investors • Fully opened in September 2010, first full operational year in 2011

• Currently 90% occupied, contributing approximately 35% of total consolidated revenue in 2013 • Full service hospitality offering:

39

–

Award winning meeting and event venue (Westminster Ballroom)

–

State of the art conferencing facilities

–

Destination bars and restaurants

–

Europe’s only Mandara Spa

PPHE Hotel Group | Company Profile

Correspondence Chen Moravsky

Deputy Chief Executive Officer & Chief Financial Officer 12 David Mews London, W1U 6EG UNITED KINGDOM

T: +44 20 7034 4808 T: +31 20 717 8603 M: +44 77 7038 1064 M: +31 6 5113 6255 E: [email protected] pphe.com