PPHE HOTEL GROUP ANNUAL REPORT AND 2019 ACCOUNTS ANNUAL REPORT AND ACCOUNTS 2019 THE VALUE WE CREATE INVESTMENT OUR PROPOSITION PURPOSE Asset value growth Creating valuable memories for We develop our own assets and have grown our EPRA NAV per our guests and value for our assets, share by 300% over the past people and local communities. decade. EPRA NAV per share at 31 December 2019 was £25.46 WHO WE ARE Operating earnings PAGE 4 PAGE 8 PAGE 10 Adjusted EPRA earnings per share We are an international hospitality group About us Chairman’s 30 years of for the 12 months to 31 December 2019 at 128 pence with a strong prime real estate portfolio statement PPHE Hotel Group consisting of 45 properties under operation Healthy leverage in five countries, that transforms an asset’s Net bank debt leverage ratio of 29.4% as at 31 December 2019 potential into value and profits. and our growth since IPO has been funded without diluting shareholders WHAT WE DO THE Progressive dividend policy We have a clear strategy to drive Dividend has grown with a 16.6% growth and create long‑term value while CAGR over the past five years recognising and developing opportunities VALUE (excluding special dividend of £1 per share in 2016). The total to help our assets reach their full potential. ordinary dividend for the year We delight our guests every day, through WE ended 31 December 2019 is 37 pence per share, representing engaging service and quality products CREATE a year-on-year growth of 5.7% in inviting places. Attractive pipeline PAGE 12 PAGE 22 Attractive development pipeline HOW WE DO IT President & Driving in Hoxton London, New York City, Chief Executive organic growth Belgrade and Zagreb By valuing our people, being led by an Officer’s statement entrepreneurial Board and through investing in our portfolio, opportunities with upside potential and local communities. PAGE 24 PAGE 28 PAGE 32 Holmes Arena Kažela Pipeline Hotel London Campsite for the future STRATEGIC REPORT STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDICES HIGHLIGHTS THE VALUE WE CREATE £357.7m £122.9m £40.7m TOTAL EBITDA NORMALISED REVENUE PROFIT BEFORE TAX We create memorable guest 122.9 experiences by owning, developing and 113.2 107.3 94.1 80.1 operating hotels and resorts in dynamic, vibrant cities and leisure destinations. 2015 2016 2017 2018 2019 Our properties are managed by £1.7bn £25.46 800+ experienced teams living our values every day, creating unique experiences. PROPERTY EPRA NAV PIPELINE PER SHARE ROOMS We create stakeholder value at every step of the value chain as our properties provide attractive returns, strong cash flow generation and long-term capital appreciation. STRATEGIC REPORT CORPORATE GOVERNANCE 135 Consolidated statement of cash flows 4,700+ £128.5 £103.6 2 Financial highlights 90 Non-Executive Deputy Chairman’s 137 Notes to consolidated financial 4 About us: creating value Corporate Governance Statement statements 6 Strategic canvas 92 Board of Directors TEAM MEMBERS AVER AGE REVPAR 8 Chairman’s statement 94 Leadership Team APPENDICES ROOM RATE 10 30 years of PPHE Hotel Group 96 Corporate Governance 175 Subsidiaries included in the Group 12 President & Chief Executive 111 Nomination Committee report 178 Jointly controlled entities Officer’s statement 113 Audit Committee report 178 Current and committed projects 18 Our business model and priorities 116 Directors’ Remuneration report 179 Glossary 20 The value we create 122 Directors’ report IBC Contacts 36 Strategy at a glance 38 Managing risk FINANCIAL STATEMENTS 42 Principal risks and uncertainties 128 Independent auditors’ report 47 Viability statement 131 Consolidated statement 48 Key performance indicators of financial position 50 Chief Financial Officer’s review 132 Consolidated income statement 62 Deputy Chief Executive Officer & 133 Consolidated statement of Chief Operating Officer introduction comprehensive income 64 Business review 134 Consolidated statement of changes 73 Stakeholder engagement in equity 80 Responsible business PPHE HOTEL GROUP ANNUAL REPORT AND ACCOUNTS 2019 1 STRATEGIC REPORT STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDICES FINANCIAL HIGHLIGHTS FINANCIAL HIGHLIGHTS TOTAL REVENUE DIVIDEND PER SHARE £m Pence 37 341.5 357.7 35 325.1 272.5 24 CAGR 13.1% 20 21 CAGR 16.6% 218.7 £357.7m 2015 2016 2017 2018 2019 37p 2015 2016 2017 2018 2019 EBITDA OPERATING HIGHLIGHTS £m 122.9 113.2 107.3 OCCUPANCY 94.1 CAGR 11.3% % 84.3 79.4 80.6 80.1 76.0 77.3 £122.9m 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 NORMALISED PROFIT BEFORE TAX 80.6% £m 40.7 37.7 AVERAGE ROOM RATE 31.7 32.1 29.8 CAGR 8.1% £ 120.2 123.1 128.5 109.1 111.0 £40.7m 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 ADJUSTED EPRA EPS £128.5 Pence 128 115 104 96 97 REVPAR £ CAGR 7.3% 97.7 103.6 92.0 92.9 84.4 128p 2015 2016 2017 2018 2019 £103.6 2015 2016 2017 2018 2019 Read more – pages 48 and 49 PPHE HOTEL GROUP ANNUAL REPORT AND ACCOUNTS 2019 PPHE HOTEL GROUP ANNUAL REPORT AND ACCOUNTS 2019 2 3 STRATEGIC REPORT STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS APPENDICES ABOUT US: CREATING VALUE BUSINESS MODEL VALUE SPLIT HOTELS AND RESORTS HOTELS AND RESORTS BY GEOGRAPHY1 BY GEOGRAPHY BY OWNERSHIP TYPE (Excludes managed, operated, leased, (Includes franchises, excludes campsites (Includes franchises, excludes campsites At PPHE Hotel Group, we are focused WE (RE)FINANCE TO FUND WE franchised and co-owned hotels) and pipeline) and pipeline) FURTHER PURCHASE on creating value for stakeholders INVESTMENTS through developing, owning and operating hospitality real estate with upside potential. Creating We own or co-own most of our portfolio and our proven business model is centred around delivering asset value appreciation, stakeholder generating attractive operating returns and creating valuable value memories for our guests. We are proud of our track record. Our experienced senior leadership team identifies and acquires £969m £145m 10 hotels 8 hotels 18 hotels 2 hotels properties which we believe have significant upside potential. United Kingdom Croatia hotels 3,681 rooms 1,271 rooms 6 resorts 242 rooms We then embark on transforming these assets through (re) and resorts United Kingdom Germany 5,925 rooms Co-owned and Hungary Freehold developing, redesigning and continuously improving operating WE BRAND £297m £99m PROPERTIES The Netherlands Croatia 6 hotels 7 hotels 6 hotels 5 hotels performance through our in-house management platform, and WE AND IMPROVE DEVELOP campsites 1,073 rooms 6 resorts 1,623 rooms 1,010 rooms in doing so create significant value along every part of the value OPERATING The Netherlands Long leasehold PERFORMANCE 2,775 rooms Managed, chain. Through refinancing our properties, we are able to release £94m £99m Croatia operated, capital for new investments, enabling further Germany Assets under leased or and Hungary development2 sustainable growth. franchised 1 The fair values were determined on the basis of independent external valuations prepared in the summer of 2019. Read more – page 18 and 19 2 Includes the development sites in Hoxton, London and nearby Waterloo Station. Independent hospitality real estate owner and operator with brand flexibility and access to global brands and distribution network PRIME LOCATIONS Within the Group we have the ability and flexibility to select the right brand to complement our hospitality assets. We have an exclusive ® Well-maintained, prime assets, with proximity to major demand generators within leading capital cities, urban markets and perpetual licence with Radisson Hotel Group to operate the upper upscale Park Plaza brand in Europe, the Middle East and Africa ® ® ® and resort destinations. which complements our wholly-owned upper upscale lifestyle brand, art’otel and Arena Hotels & Apartments and Arena Campsites brands which are operated by Arena Hospitality Group, our Croatian listed subsidiary. inspiring service, stylish Central reservation guestrooms and versatile meeting and distribution facilities, which are complemented system by award-winning restaurants and bars. Our portfolio of vibrant Radisson Hotel Group Park Plaza city-centre hotels and tranquil Radisson Hotel Group has seven Park Plaza is an upscale and beachside resorts in Croatia Powerful online and already presents a wide choice distinctive hotel brands with more mobile platforms upper upscale contemporary than 1,400 hotels in operation and hotel brand featuring individually of locations and accommodation, Park Plaza Westminster Bridge London Park Plaza London Waterloo Park Plaza London Riverbank Holmes Hotel London development in destinations across designed hotels in vibrant and we are committed, with our Opposite Big Ben on the thriving South Bank Close proximity to Waterloo Station Between Waterloo Station and Nine Elms/ On Chiltern Street, close to Marylebone Village, the globe. Its portfolio of hotel city-centre locations and select partner Radisson Hotel Group, American Embassy Marylebone Station and Baker Street Station brands includes: Radisson Radisson RewardsTM resort destinations. The Park Plaza to bringing Park Plaza to even 1,019 rooms 494 rooms 646 rooms 118 rooms Collection™, Radisson Blu®, programme with brand is renowned for creating more locations. Radisson®, Radisson RED®, Park 24 million members memorable moments through Plaza® and Park Inn® by Radisson®. Country Inn & Suites by Radisson. Radisson Hotel Group is part of Jin Global sales, Jiang and together they form the marketing world’s second largest hotel group