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Highlights
Financial KPIs1,2
Total revenue
EBITDA
Property value
£414.6m
2022: £330.1m
2019: £357.7m
£ 128.2m
2022: £94.6m
2019: £122.9m
£2.2bn
2022: £2.0bn
2019: £1.7bn
Adjusted EPRA EPS
Normalised profit before tax
EPRA NRV per share
118p
2022: 50p
2019: 128p
£37.5m
2022: £8.3m
2019: £40.7m
£26.72
2022: £25.17
2019: £25.93
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t a i n a b le PROPERTIES
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GOVERNANCE
Resilient SUPPL Y C H A I N
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Operating KPIs1,2
Occupancy
Average room rate
RevPAR
72.4%
2022: 60.0%
2019: 80.6%
£ 166.8
2022: £160.4
2019: £128.5
£ 120.7
2022: £96.2
2019: £103.6
• Commitment to set emission reduction
targets through the Science-Based
Target initiative
• Pursuit of building environmental
certifications for our properties
• Assessment of climate change impacts
on our business and our properties
• Improvement of our waste
management practices
• Support of local communities and
charity organisations to increase
our social value contribution
• Increase in employee retention,
wellbeing and engagement
• Raise ESG awareness among stakeholders
1 Details of Alternative Performance Measures (APMs) can be found in the APM glossary on page 207.
2 Highlights presented in this section include the actual performance from 2023 and 2022 as a prior-year
comparative, and from 2019 as a pre-pandemic full year comparative.
Learn more – See our ESG Strategy on pages 66 to 83
Business highlights
Post balance sheet events
• Record revenue and EBITDA exceeding expectations with
• Promoted Greg Hegarty to Co-CEO, to be responsible for
day-to-day managing of the Group and defining and implementing
the long-term strategy, further enhancing succession
• Signing of our second Radisson RED branded property (in Berlin,
opening Q2 2024)
• Progressive dividend strategy back on track, with final dividend
proposed at 20p per share which, including a 16p interim
dividend paid, makes the total dividend over 2023 36p per share
full recovery to pre-pandemic levels
• Continued to rebuild occupancies and increasing average
room rates, with mix between leisure and corporate and
event bookings beginning to normalise
• Reported EPRA NRV increased to £26.72 per share
• Fully opened premium upper upscale lifestyle art’otel London
Battersea Power Station and soft launch of art’otel Zagreb
• Our first Radisson RED branded property in Belgrade signed
(opened February 2024)
• On track with £300m+ development pipeline with H1 2024
art’otel openings ahead in London Hoxton and Rome
• Received planning consent to develop a 179-room hotel in
predominantly subterranean space of Park Plaza Victoria
London property to maximise asset potential
• Secured equity with existing partner for acquiring hotel
properties, which are to be managed by our European
Hospitality Management Platform
• Improved shareholder returns with increased dividend
• Appointed Independent Deputy Chairman to lead
Board governance
• Booking momentum continuing into February 2024,
which supports the Board’s confidence in the outlook
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PPHE Hotel GroupAnnual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report
Scaling
Our investment case
new heights
in hospitality
Contents
p14
We create memorable
guest experiences by
owning, developing
and operating hotels
and resorts in
dynamic, vibrant
cities and leisure
destinations.
President & CEO’s Review
We are very pleased
to have delivered a
full recovery across
the business in 2023.
p20
At a glance
We are an integrated
hospitality real estate
Group with a £2.2bn
portfolio of primarily
freehold and long-
leasehold assets
in prime locations
in Europe.
p6
2
Strategic report
About us
4
6
10
14
16
20
26
28
30
38
40
48
62
66
80
84
94
At a glance
Attractive brands
Our investment case
Chairman’s Statement
President & CEO’s Review
Business model
Strategy at a glance
Strategy in action
Key performance indicators
Financial Review
Business Review
Stakeholder engagement
ESG report
TCFD reporting
Our approach to risk management
Viability statement
Corporate governance
95
Introduction to Governance
98
Board of Directors
100
Executive Leadership Team
102 Corporate Governance
115 Nomination Committee report
122 Audit Committee report
129
ESG Committee report
131 Remuneration Committee report
142 Directors’ report
Financial statements
147
Independent auditors’ report
150 Consolidated statement of
financial position
151 Consolidated income statement
152 Consolidated statement of
comprehensive income
153 Consolidated statement of
changes in equity
154 Consolidated statement of cash flows
156 Notes to consolidated financial statements
Appendices
202 Subsidiaries included in the Group
205 Jointly controlled entities
205 Current renovation, repositioning
and pipeline projects
206 Glossary
207 Alternative Performance
Measures glossary
208 Contacts
Stakeholder engagement
Strategy in action
p30
PPHE Hotel Group
is one of the leading
hospitality real
estate companies in
the upscale, upper
upscale and lifestyle
segments in key
European markets.
2023 ended on a
high, reporting fully
recovered record
results and strong
performance across
our main markets.
p40
Strong topline growth
We contribute to the
economies of our
local communities,
and we drive up
environmental
performance.
p62
ESG report
p66
Throughout 2023,
teams in the business
have worked diligently
to set and refine
defined targets to
achieve the strategic
objectives of our
ESG Strategy.
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PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report U
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About us
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Creating valuable
memories for our guests
Tozi Cafe, art’otel London Battersea Power Station
and value for our assets,
people and local communities.
Our vision
To deliver a best-in-class performance
through building further scale and depth
in our real estate portfolio and growing
the platform with our integrated ‘Buy,
Build, Operate’ model.
Who we are
We are an international hospitality
group, with a strong prime real estate
portfolio consisting of 51 properties in
eight countries, that transforms an
asset’s potential into value and profits.
What we do
We have a clear strategy to drive
growth and create long-term value.
We recognise, and progressively
pursue, the opportunities for our
assets to reach their full potential.
We delight our guests every day,
through engaging service and
quality products in inviting places.
How we do it
By valuing our people, being led by an
entrepreneurial Executive Leadership
Team and through investing in our
portfolio, opportunities with upside
potential and in local communities.
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PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report
At a glance
Understanding our business
We are an integrated hospitality real estate
group with a £2.2bn portfolio of primarily prime
freehold and long‑leasehold assets in Europe.
£27m
Other3
£366m
Under
development2
£1,014m
United
Kingdom
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Other:4 3 hotels,
1 resort, 496 rooms
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United Kingdom
hotels, 4,206 rooms
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Freehold hotels, resorts and
Long-leasehold (ground rent)
36 hotels, 7 resorts, 8 campsites
9,625 rooms, 5,781 pitches
6
Managed, operated,
leased or franchised
hotels, 1,174 rooms
Value
split by
geography1
Hotels and
resorts by
geography
Hotels and
resorts by
ownership type
£361m
Croatia
£92m
Germany
£318m
The Netherlands
22
Croatia:
8 hotels,
6 resorts,
8 campsites,
2,744 rooms
5,781 pitches
7
Germany
hotels,
1,106
rooms
6
The
Netherlands
hotels,
1,073 rooms
(Excludes managed, operated, leased,
franchised and unconsolidated hotels)
(Includes franchises)
(Includes franchises)
1 The fair values were determined on the basis of independent external valuations prepared in December 2023.
2 Properties under development include: New York, art’otel London Hoxton, Westminster Bridge Road (London), art’otel Rome Piazza Sallustio and Radisson RED Belgrade.
3 Other includes Arena FRANZ Ferdinand hotel in in Nassfeld, Austria and non-operating headquarters assets.
4 Other includes the art’otel Rome Piazza Sallustio, Arena FRANZ Ferdinand hotel in Nassfeld, Austria, Radisson RED Belgrade and the leased hotel in Budapest, Hungary.
Our culture
Entrepreneurial
Our team members share our purpose of
creating valuable memories for our guests
and value for our assets. Our purpose
and values underpin our overall Company
blueprint: to place the guest experience
at the heart of everything we do.
People-oriented
We’re firm believers that inspiring
our team members is the key to
inspiring our guests. This is why
we focus on making PPHE a fun
and inclusive working environment,
which is supported by great leadership.
Creators
We refer to our team members as
Creators. By valuing our Creators, and
by continuously investing in opportunities
and our portfolio, we create valuable
memories for our guests and value for
our assets, people and communities.
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Holmes Hotel London
How we create value
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Capital
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release
Hospitality
real estate
exposure
Real estate
development
exposure
Operating
platform
exposure
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PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report
At a glance – continued
Our international reach
8
51
Countries
Total properties
9,600
Total rooms
5,800
Campsite pitches
United Kingdom
The UK represents our largest
market in terms of revenue
generation and property values,
which is due to our unrivalled
footprint in central London (9 hotels
with 3,700+ rooms). Additional
properties are located in Cardiff,
Leeds and Nottingham. Our pipeline
includes three development sites.
art’otel | PARK PLAZA | HOLMES HOTEL
Read more on pages 10, 50 to 52
The Netherlands
Our Company was founded
in the Netherlands, where we
retain an enviable position with
three properties in the heart
of Amsterdam and one each in
Lijnden, Utrecht and Eindhoven.
art’otel | PARK PLAZA
Read more on pages 10, 54 and 55
Croatia
Luxury resorts, upper upscale
hotels, self-catering apartments,
glamping and camping properties
– we offer an extensive leisure
portfolio along Croatia’s pristine
and popular coastline. We have
recently opened our first property
in Croatia’s capital, Zagreb, and
have further development potential
across our portfolio in this market.
RADISSON COLLECTION | art’otel |PARK
PLAZA | ARENA HOTELS & APARTMENTS |
ARENA CAMPSITES
Germany
Stretching from West to East,
our properties are located in
key corporate travel destinations
such as Cologne and Nuremberg,
as well as in the leisure orientated
cities of Berlin and Trier.
Italy
2024 will mark the year of our first
property opening in Italy. Located
in the heart of Rome, our premium
lifestyle art’otel is expected to
open in summer.
art’otel | PARK PLAZA | RADISSON RED
art’otel
Read more on pages 10 and 11, 56 and 57
Read more on pages 10 and 11, 58 and 59
Read more on pages 10 and 60
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UK
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Germany
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Austria
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Hungary
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Croatia
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Serbia
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Italy
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Austria
Our leisure property in Austria perfectly
complements our offering in Germany
and Croatia; for attracting guests from
Germany and for synergies with team
members from Croatia.
Hungary
Located in a prime location in the
heart of Budapest on the Danube,
our property provides stunning
views of the city and its famous
chain bridge.
Serbia
Marking our entry into Serbia,
our first Radisson RED branded
property is located minutes away
from the old town of Belgrade.
ARENA HOTELS & APARTMENTS
Read more on pages 11 and 60
PARK PLAZA
RADISSON RED
Read more on pages 10 and 60
Read more on pages 11 and 60
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Attractive brands
As independent property owners, our approach is to select the brand for each of our
properties which we believe will generate most value. We work with a number of distinct
and appealing brands from premium lifestyle to upper upscale and upscale.
An upper upscale, contemporary hotel brand featuring individually
designed hotels in vibrant city centre locations and select resort
destinations. Renowned for creating memorable moments, Park
Plaza caters to both leisure and business travellers with stylish
guest rooms and versatile meeting facilities which are perfectly
complemented by award-winning restaurants and bars.
Feel the authentic parkplaza.com
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A place to dream and be inspired, art’otel is a hotel like no
other. A contemporary collection of upper upscale, lifestyle
hotels, each inspired by a signature artist, forming a cultural,
gastronomic and social hub in the most creative areas of
the most interesting cities, attracting international, domestic
and local guests. art’otel is an arts and premium lifestyle hotel
devoted to creating and presenting original work.
Be bold. Be creative. Be original. artotel.com
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This award-winning premium boutique hotel is located on iconic
Chiltern Street and is surrounded by fashion boutiques, cafés
and restaurants. The hotel has been inspired by Baker Street’s
most famous resident, Sherlock Holmes, and is a witty blend
of heritage and playfulness, filled with a stylish mix of antiques,
curiosities and artefacts that are bound to intrigue even the
busiest of guests.
For curious minds holmeshotel.com
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Arena Hotels & Apartments is a collection of hotels and
self-catering apartment complexes offering relaxed and
comfortable accommodation within beachfront locations
across the historic settings of Pula and Medulin in Istria,
Croatia. Arena Hotels & Apartments features contemporary
and warm design/interiors accompanied by welcoming and
friendly service, offering a holiday full of opportunities for
exploration and relaxation complemented by a food and
drink offering with a touch of local flavour.
arenahotels.com
Arena Campsites are located in exclusive beachfront sites
across the southern coast of Istria, Croatia. Situated within
close proximity of the historic towns of Pula and Medulin,
each campsite provides a distinctive offering and relaxed
environment from which guests can experience Istria’s areas
of natural beauty and enjoy outdoor activities all year round.
arenacampsites.com
PARTNER BRANDS
In 2022, we extended our long-standing partnership with Radisson
Hotel Group (‘Radisson’) and this enabled us to launch the Grand
Hotel Brioni Pula, a Radisson Collection Hotel, in May 2022. In 2023,
we continued to build on this, and Radisson has now firmly integrated
our art’otel brand into their brand architecture. As a result,
Radisson is expected to take an active development interest in
art’otel in markets where we don’t envision investing. This will
result in greater choice for art’otel guests to choose from and
increased brand awareness. In addition, we announced the
signing of our first two Radisson RED branded properties. Radisson
RED Belgrade opened in February 2024 and Radisson RED Berlin
Kudamm is expected to open in Q2 2024.
radissonhotels.com
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PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report
Attractive brands – continued
Restaurants
A selection of some of our
restaurant & bar brands
&
bars
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JOIA is a restaurant, bar and rooftop
restaurant created by two Michelin
starred Portuguese chef Henrique
Sa Pessoa located on the 14th, 15th and
16th floors of art’otel London Battersea
Power Station. JOIA, means “jewel”
in Portuguese, the menu comprises of
Petiscos (small tapas) with large to share
such as the signature Arroz de Marisco.
joiabattersea.com
TOZI is a Venetian – Italian restaurant
and bar concept in London Victoria and
Amsterdam. In 2022 TOZI brand evolved
into an Italian take on a Grand Cafe and
Counter in Battersea Power Station.
The Cicchetti concept (sharing plates)
is across all outlets, ideal to be enjoyed
amongst friends and family.
tozirestaurantsandbars.com
ARCA, the sister restaurant &
bar of JOIA Battersea is located
in the heart of Amsterdam.
ARCA celebrates Portuguese
cuisine with Asian influences
both in the food and cocktails.
arcaamsterdam.com
YEZI is a brand new concept launched
at the end of 2023. This relaxed fine
dining restaurant and bar experience
in the heart of Zagreb, Croatia is a
unique approach to Asian Cuisine.
Inspired by the traditional Asian
tea-house style of eating, drinking
and socialising, YEZI focuses on the
art of dim sum, mixology, tea and
European patisserie.
yezirestaurant.com
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PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023Strategic report
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We create memorable guest
experiences by owning,
developing and operating hotels
and resorts in dynamic, vibrant
cities and leisure destinations.
Our properties are managed
by experienced teams, living our
values every day, creating unique
experiences. We create stakeholder
value at every step of the value
chain as our properties provide
attractive returns and long-term
capital appreciation.
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Park Plaza Westminster Bridge London
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1.
2.
The business model
Integrated developer, owner and operator
Focus on equity value
Unique approach to capital structure
• Our ‘buy, build, operate’ business
model provides exposure and
returns across the entire
hospitality real estate value chain
• Strong preference for assets
with development and/or
repositioning potential
• Diversified real estate portfolio
focused on pre-eminent European
cities and resort locations
• Driving equity value growth through
development, property repositioning
and operational excellence
• Value created by capital recycling
through raising funds (both third
party equity and debt) at asset level,
without diluting PPHE shareholders
• Multiple sources of capital providing
a hedge against market fluctuations
3.
4.
Hospitality
management platform
All disciplines under one roof
Our Board and
management team
Track record and shareholder alignment
• Scalable platform offering growth
through management of owned
and third party properties
• A multi-disciplined Board and
an experienced executive team,
with a strong track record
• Unique and recently extended
strategic relationship with
Radisson Hotel Group, enabling
brand diversification
• Long-term management
agreements, providing base
fee income with performance-
based incentive mechanisms
• Entrepreneurial mindset is the
cornerstone of the Company’s DNA
• Strong shareholder alignment with
founder Board members holding
43% of the shares
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PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report
Chairman’s Statement
Introduction
2023 was an important year of financial
and strategic progress for the Group. We
delivered a full recovery to pre-pandemic
levels, driven by continued strong room
rates and improving occupancy rates
across our portfolio of well-invested
hotels, resorts and campsites. We also
entered a very exciting phase, as we
near completion of our extensive
development pipeline. Together, these
provide extremely strong foundations
for our performance and future
growth going into 2024 and beyond.
Throughout the year, we acted where
possible to manage the impact of ongoing
macro-economic, geo-political and wider
cost pressures on our business. The 2023
performance is a testament to this and our
team members, who remain at the heart
of everything we do. Their dedication to
delivering memorable guest experiences
is steadfast.
Park Plaza Westminster Bridge London
PPHE’s unique ‘Buy, Build, Operate’
business model is also central to our
success, positioning the Group strongly
across its key markets and segments,
and supporting our growth strategy,
our strong financial performance and
our outlook upgrade at the half-year point
of 2023. Furthermore, our long-standing
relationship with Radisson Hotel Group,
and the recent extension of our partnership,
support our multi-brand approach and
our future growth and opportunities.
Extensive pipeline nears completion
Many years of hard work on construction
and refurbishment projects in our £300+
million development pipeline are coming
to fruition. In 2023, we opened two
contemporary upper upscale lifestyle
hotels – art’otel London Battersea Power
Station and art’otel Zagreb, Croatia.
In February 2024, we opened our first
Radisson RED in Belgrade, representing
our second hotel under our extended
partnership with Radisson Hotel Group.
A further repositioning and rebranding
programme is underway in Berlin, and
we plan to launch Radisson RED Berlin
Kudamm in Q2 2024.
Eli Papouchado
Chairman
“The highlight of 2024 will
be the opening of our
much anticipated and
highly impressive London
Hoxton development,
following three years
of construction.”
art’otel London Hoxton
The highlight of 2024 will be the opening of our
much anticipated and highly impressive art’otel
London Hoxton development, following three
years of construction. This will increase our
presence in the attractive London market,
bringing the total number of rooms we operate
in the capital to over 3,700. In addition, our
new art’otel in Rome, marking our entry in
Italy, will open in H1 2024. These recent and
upcoming openings in Belgrade, Zagreb,
London Hoxton and Rome are targeted to
generate at least £25 million of EBITDA for
the Group upon stabilisation of trading.
Sustainability in focus
During the year, our sustainability-dedicated
teams expanded further, and we worked
with retained external specialist consultancies
to advise on carbon footprint and reporting
to stakeholders, to ramp up our efforts in
this important area. This included measures
to increase transparency and stakeholder
accountability for our Sustainability Strategy,
including informing the Science-Based Targets
initiative of our work to set robust net zero
targets, and be held accountable to them.
We are pushing to gather more data in various
areas including water consumption, waste
and creation of social value by monetary,
work-hour and in-kind donations. This will
allow us to set baselines, and set targets
with the kind of robust metrics that allow
stakeholder accountability.
Further details around our new strategy,
targets and KPIs are set out on pages 66
to 83 of our Annual Report.
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PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report Chairman’s Statement – continued
The Board
We were delighted to welcome
Greg Hegarty to the Board in May.
His appointment provides important
operational expertise given his tenure
with the Group to date. It is also in line
with the Board’s commitment to refreshing
its expertise while developing and preserving
internal talent. Further enhancing our
succession planning, Greg was promoted
to a Co-CEO role in February 2024, being
responsible for creating and implementing
the Group’s operational strategies,
including Operations, People & Culture
and Commercial, while driving PPHE’s
corporate vision and growth strategy.
In December 2023, the Board appointed
Ken Bradley, as a Deputy Chairman,
providing an independent view and
support on the governance duties of
the Board. The Board remains focused
on engaging with shareholders and
implementing best-practice Corporate
Governance to secure the best possible
future for the Group.
Enhanced shareholder value
The Board has a long-standing
commitment to shareholder value.
We completed our £3.7 million share
buy-back programme in March 2023,
which enhanced capital returns to
shareholders. Our strong financial
performance and the business momentum
during H1 enabled the Board to announce
a return to its historic capital return policy
of distributing approximately 30% of
adjusted EPRA earnings. This resulted
in a total dividend for the year of
36 pence per share.
The Board continues to prioritise its
progressive dividend policy, and we
look forward to continuing to deliver
consistent shareholder returns.
A future of great promise
We started 2024 with positive trading
momentum and a significant amount of
confidence for the future. Leisure and
business travel continue to be in demand
across our key markets, and while headwinds
persist globally, we do not see this demand
changing materially going forward.
The Group will continue to focus on pulling
the strategic levers it can and build on the
successes it achieved over the last year.
We look forward to updating all stakeholders
further on our progress in the coming
months and years.
Eli Papouchado
Chairman
art’otel Zagreb
Governance highlights from the Non-Executive Deputy Chairman
Board composition
• Succession of the outgoing
Non-Executive Deputy Chairman
following his departure effective from
the Annual General Meeting 2023.
• Completion of onboarding of the
Non-Executive Director, whose
appointment was completed in
December 2022.
• Appointment of the Deputy Chief
Executive Officer to the Board.1
Board evaluation
We conduct an annual evaluation of
the Board’s effectiveness. Once every
three years, this is conducted externally,
most recently by Independent Audit
Limited in 2021. We report annually on
our evaluation, as well as performance
against the recommendations made
in the previous year. Please see the
Corporate Governance Report on
page 95.
Ken Bradley
Non-Executive Deputy Chairman
to the Board of Directors
Corporate Governance highlights 2023
For ease of reference, here is an
‘at a glance’ summary of Corporate
Governance in 2023. The full Corporate
Governance section is available for your
reference at page 95.
Shareholder engagement
Board and executive management are
keen to maximise shareholder engagement
activities. A full report is available on
page 96. We have conducted investor
roadshows, and ensured as much time is
available for senior executive leadership
to be available to shareholders to discuss
their priorities.
Remuneration
We have reviewed our disclosures made
in our Remuneration Report in the light
of stakeholder feedback. Transparency,
and a clear alignment to the values,
culture and purpose set by the Board,
and an appropriate reward for the
creation of shareholder value, are
our ongoing priorities in disclosures.
Please see the full report on page 131
for more information.
Please see the Nomination
Committee Report on page 115
Workforce engagement
As with shareholders, workforce
engagement is a key priority for both
Board and executive management.
A full report is available on page 96.
Our ‘Let’s Connect’ sessions, Team
Member Forums and network of ESG
Ambassadors are ensuring we are
doing as much as possible to engage
in dialogue, as reflected in engagement
scores in pulse surveys.
Leadership role
The Board has collectively, and in
each Director’s individual area of
expertise, sought to implement
stakeholder feedback. We ensure
that these are translated into the
business’s strategy through:
• maintaining an ESG Committee of the
Board composed of the Non-Executive
Directors to oversee publication of
the ESG Strategy and performance
against targets
• strategy meetings with executive
management scheduled monthly
For more information, please see the
Corporate Governance Report on page 95
Sustainability and ESG
We have a duty to create value for
society as a whole.
Following the publication of our ESG
Strategy in 2022, we have a full report
on progress towards our strategic
objectives and the detailed targets
we have set to achieve them. The
ESG Report is on page 66.
Mandatory TCFD reporting in 2021
and 2022 continues in 2023. We are
anticipating CSRD and IFRS S1 and
IFRS S2 updates to future reporting
on climate change related disclosures.
A summary report is published on
page 80, and a full report is published
on pphe.com.
Ken Bradley
Non-Executive Deputy Chairman
to the Board of Directors
1 The Deputy CEO was subsequently
appointed as Co-CEO on 8 February 2024.
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President & CEO’s Review
JOIA, art’otel London, Battersea Power Station
Grand Hotel Brioni Pula, a Radisson Collection Hotel
“Our performance this year has
further illustrated the strength
and resilience of our unique
business model and proposition.”
Boris Ivesha
President & Chief Executive Officer
Boris Ivesha
President & Chief Executive Officer
A full recovery
We are very pleased to have delivered a
full recovery across the business in 2023
with a financial performance significantly
ahead of that expected at the outset of
the year, achieved despite the macro
headwinds experienced across the
sector during the year.
This was thanks to a combination of our
strong financial and strategic progress,
due to the hard work and dedication of
our team members across our markets.
2023 in review
The positive momentum in 2022 following
the ongoing international easing of previous
pandemic-related restrictions on travel,
continued into the 2023 financial year
and was sustained throughout 2023.
Our teams should be proud of the
progress made across all of the markets
and segments in which we operate. Our
outperformance versus expectations
enabled us to upgrade our outlook during
the year, resulting in FY 2023 revenue of
£414.6 million and EBITDA of £128.2 million.
Initially, we saw strong rate growth
across the leisure segment in particular.
This helped us to part mitigate the
well-documented inflationary cost
pressures, and was followed by an
ongoing narrowing of the occupancy
gap versus 2019 levels, as we focused on
building this back up to pre-COVID levels.
We saw this most notably in the UK and
the Netherlands, which were the first
of our markets to reopen fully in 2022.
Elsewhere, our assets in Croatia delivered
a solid performance, including throughout
the peak summer season, following
significant investments in recent years to
upgrade many of our unique hotels and
campsites there. Our new Grand Hotel
Brioni Pula traded its first full year and
made a good contribution. In Germany,
our smallest region, recovery was slower
than in our other markets but improved
as the year progressed.
Our performance this year has
further illustrated the strength and
resilience of our unique business model
and proposition. Our confidence in our
abilities and positioning in the market
continues to grow, as we own, operate
and manage a wide variety of different
brands and assets that cater fully to
the needs of our valued guests.
Strong momentum delivered
throughout the year
Reported total revenue increased by
25.6% to £414.6 million (2022: £330.1 million)
and EBITDA improved 35.5% to £128.2 million
(2022: £94.6 million), resulting in an EBITDA
margin of 30.9% (2022: 28.7%).
Revenue growth was driven by both
strong rates, which increased to £166.8
(2022: £160.4) as well as improving
occupancy to 72.4% (2022: 60.0%), which
was 89.8% of 2019 levels. This resulted
in a 25.5% improvement in RevPAR to
£120.7 (2022: 96.2), 116.5% of 2019 levels.
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Our property portfolio was predominantly
valued by Savills and Zane at £2.2 billion
as at 31 December 2023. EPRA NRV per
share increased by 6.2% to £26.72 per
share (2022: £25.17 per share). The
adjusted EPRA earnings per share
was 118 pence (2022: 50 pence).
Delivery of our £300+ million
development pipeline
We are in a very exciting phase of the
Group’s development which will see the
culmination of many years of work to
upgrade and extend our property portfolio
as well as our geographic footprint. We
are now in the final stages of delivering
our £300+ million development pipeline,
which has included the construction of new
hotels and the upgrade and repositioning
of existing properties.
During the year, we successfully opened
two new hotels. Our first UK art’otel at
London Battersea Power Station officially
opened February 2023. This hotel is
managed by our hospitality management
platform under a long-term management
agreement. In October, we opened art’otel
Zagreb, our first hotel in the city centre
of the Croatian capital. Radisson RED
Belgrade, our first Radisson RED hotel,
opened in February 2024. Our flagship
new property, art’otel London Hoxton,
started to take bookings for 2024 during
Q4, and is set for a soft opening in April
2024. Meanwhile, the new art’otel in Rome
is due to open during H1 2024 following
an extensive repositioning project.
Upon stabilisation of trading, the Zagreb,
Belgrade, London Hoxton and Rome
hotel openings are together targeted
to generate at least £25 million EBITDA
to the Group’s portfolio.
art’otel Zagreb
We continued to enhance our long-
standing and well-established relationship
with Radisson Hotel Group, which was
expanded during 2022 to enable both
companies to invest fully in and further
grow the reaches of their portfolio of
brands which together include brands
such as Park Plaza, art’otel, Radisson
Collection, Radisson Blu and Radisson
RED. Alongside the forthcoming opening
of our first Radisson RED properties, our
recently launched Grand Hotel Brioni Pula,
a Radisson Collection Hotel, traded its first
full summer season in 2023, and we were
very pleased with its progress, performance
and feedback from our guests.
“Upon stabilisation of
trading, the Zagreb,
Belgrade, London Hoxton
and Rome hotel openings
are together targeted
to generate at least
£25 million EBITDA to
the Group’s portfolio.”
We further cemented our partnership
with Radisson at the International Hospitality
Investment Forum in May 2023, when
Radisson fully incorporated art’otel
into their brand architecture, and we
look forward to seeing what more this
innovative partnership can deliver for
PPHE and Radisson and our respective
brand portfolios over the coming months
and years.
In addition, we continue to progress
three longer-term development projects
in London and one property repositioning
project in Berlin, Germany.
Further details on our development
pipeline are set out in the Business Review.
Continuous investment in our teams
Our people continue to be the
backbone of our operations. Having
rebuilt our teams after the pandemic,
our long-term approach is centred on
investing in our people from the point of
recruitment onwards, and positioning
PPHE as a best-in-class employer. This
includes talent attraction and retention
initiatives and employee engagement
and wellbeing programmes.
2023 saw the return of ‘business as
usual’ for the Group, in line with the
resumption of normal operations and a
strong focus on future growth. We hired
hundreds of new recruits through our
partnerships with the Department for
Work and Pensions, charities, universities
and colleges, as well as through our
internship and apprenticeship schemes,
our ‘Recommend a Friend’ scheme and
our Hospitality Career Centre. For the
opening of art’otel London Battersea
Power Station alone, we created 200
new jobs, and have hundreds more in
the pipeline for the opening of art’otel
London Hoxton in 2024.
Our company values
Trust
Respect
Teamwork
Enthusiasm
Commitment
Care
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art’otel London Hoxton
This meant the reactivation and in many
cases upgrading of our leading people-
focused policies and practices, including
new and improved benefits and wellbeing
packages, learning and development,
and the amplification of diversity
and inclusion initiatives.
ESG highlights
During 2023, we doubled down on our
ESG efforts, to enhance our contributions
to the environment and society around
us in all our markets. We expanded our
internal resources, hiring new talent and
specialist consultancies where required,
to bring in industry-leading experience
and expertise.
We have submitted our notification to
the Science-Based Targets Initiative (SBTi).
This sets out our intention to set robust
targets for achieving net zero by 2040.
This also involves setting interim targets.
We have mapped our full carbon emissions,
including working with specialists to
achieve a detailed footprint of Scope 3
emissions, which will be key to achieving
ambitious goals.
We want to have net positive impact on
society as a whole, so we are looking at
how we can ensure best practice as an
employer and developer of our workforce,
and a contributor to our local communities.
Further detail on our new strategy, targets
and KPIs are set out on pages 66 to 83 of
our Annual Report and Accounts 2023,
and I look forward to regularly updating all
our stakeholders on our progress against
our goals over the coming months and years.
Commitment to shareholder returns
Given our consistently strong performance
during the course of 2023, we continued
to look for ways to deliver enhanced value
for our shareholders.
We engaged with investors – particularly
during the second half of the year – to gauge
their views as to the best mechanisms
to return value to shareholders. This
resulted in a 16 pence per share interim
dividend being announced and paid
following the Interim Results, which
represented a 13 pence per share
increase year-on-year.
With the final dividend proposed at
20 pence per share, the total dividend
paid is 36 pence per share.
Looking ahead
We have an exciting year ahead in 2024,
with highly anticipated new property
launches in Belgrade, London and Rome.
We launched Radisson RED Belgrade in
February and we are launching two
art’otels in Hoxton, London, and in Rome.
These new openings are targeted to
deliver at least £25 million of incremental
EBITDA to the Group upon stabilised trading.
We also remain ambitious in our plans
for future growth as we continue to
identify opportunity and find new,
entrepreneurial ways to continue to
deliver value for our shareholders.
Park Plaza Westminster Bridge London
PPHE has committed up to €50 million
in cash and/or assets to a European
Hospitality Real Estate Fund founded
by the Group. The Fund’s cornerstone
investor, Clal Insurance (“Clal”), has
committed to invest up to €75 million,
however, capped at any time at 49% of
the contributed equity. Throughout the
year, the Group engaged with investment
bankers to raise the remaining equity
for the European Hospitality Real Estate
Fund (“the Fund”), however the significant
changes in the interest rate market
during this period meant that the Group
was not successful in signing up new
investors up to the date of these results.
If further investors haven’t joined the
Fund by 13 March 2024 (unless mutually
extended), the Fund will carry on as a
joint venture with Clal. The Group may
top up its own equity contribution (currently
at up to €50 million) to €78 million,
representing 51%, to give the total joint
venture a c.€150 million equity value.
With full equity subscription combined
with a targeted 50% bank leverage, the
investment potential of the joint venture
will then be around €300 million. The
Fund has an investment period of
24 months from March 2023, which
can be extended by an additional
12 months (subject to consent).
The booking demand experienced in
2023 has continued momentum into
2024, with overall forward booking
levels consistent with those at this point
in 2023. As previously reported, the mix
of corporate and leisure bookings has
begun to normalise, with growing demand
for meetings and events and an emphasis
on rebuilding occupancy.
We anticipate that cost inflation will remain
in 2024, but will continue to be manageable.
Utility cost hedges are expected to positively
impact margins and the Group continues
to manage labour-related cost pressures.
Hedges are also already in place to mitigate
any impact of rising interest rates.
Based on the above, we are confident
in the Group’s future prospects for
what is expected to be milestone year
in our history and beyond.
Boris Ivesha
President & Chief Executive Officer
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Our values
Trust
Respect
Teamwork
Enthusiasm
Commitment
Care
How we create value
Engagement with our stakeholders has
enabled us to better understand what is
considered material to them and better
position our business model and strategy.
Read more about our materiality assessment in the ESG report on page 66
Our purpose
Creating valuable memories for our guests and
value for our assets, people and local communities.
Key sources of value
Diverse prime property portfolio
Our real estate portfolio consists of
properties in the heart of strategic
gateway cities and resort destinations.
Multi-brand approach
We select the right brand for each
property, using our own as well as
those from the Radisson Hotel Group.
In-house hospitality
management platform
Our expert team of hospitality
specialists manage our own
properties as well as those
of third parties.
International network
Our strong international network
cultivated in the past 30+ years
includes banks, contractors,
suppliers and strategic partners.
Our people and culture
Our strong track record of
creating memorable guest
experiences is consistently
delivered by our team members.
Financial strength and
non-dilutive capital approach
Our portfolio has grown from a single
property into a £2.2 billion portfolio
without diluting shareholders since IPO,
and we enjoy a strong cash position.
The value we create
Team members
We offer rewarding international
employment opportunities for our
team members with continuous
investment in training programmes.
83%
Employee engagement score
measured through surveys
Guests
We offer memorable hospitality
experiences in vibrant destinations with
our high quality products and services.
86.4%
Guest satisfaction
rating score
36p
Total ordinary dividend
for the year, per share
16m
Radisson Rewards™
global loyalty programme
has over 16 million
members worldwide
Investors
Our shareholders benefit from
the attractive industry dynamics
of the markets in which we operate
as well as our flexible business model,
developments and operations. This
drives both capital appreciation
and income from dividend.
Affiliates
Our partnership with Radisson
Hotel Group gives us access to global
distribution systems, powerful online
and mobile platforms, and global sales,
marketing and buying power. As part
of the Radisson Rewards Programme
members account for a significant part
of Park Plaza hotels annual occupancy.
Local communities
We care about our neighbourhoods and
make positive contributions to our local
communities and the people who work
and/or live there through fundraising
activities, employment opportunities,
volunteering, and local resourcing
partnerships and charities.
Suppliers
As an owner/operator, long-term
sustainability and ethical operations
are high on our agenda, including, supply
chain management and the development
of long-term relationships with strategic
partners, many of whom are local.
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Sustainable PROPERTIESGOVERNANCEGOVERNANCEStrong LOCAL COMMUNITIESForward-looking PEOPLEResilient SUPPLY CHAINRECYCLECapital and value releaseOPERATEOperating platform exposureOperatorOwnerPPHE Hotel GroupBUYHospitality real estate exposureBUILDReal estate development exposure Sustainable PROPERTIESGOVERNANCEGOVERNANCEStrong LOCAL COMMUNITIESForward-looking PEOPLEResilient SUPPLY CHAINRECYCLECapital and value releaseOPERATEOperating platform exposureOperatorOwnerPPHE Hotel GroupBUYHospitality real estate exposureBUILDReal estate development exposurePPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report Strategy at a glance
Strategic blocks
2023 performance
2024 priorities
Related risks and opportunities
KPIs
Our vision
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M
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Property:
• Soft launch of art’otel Zagreb (office to hotel conversion)
• Progressed development projects in London, Rome
and Belgrade
• Secured planning to develop 179-room subterranean
hotel in London
• Regular property site visits to lower utility consumption
in our hotels
Property:
• Complete investment at art’otel Zagreb
(meeting rooms and rooftop terrace)
• Complete and launch development pipeline
projects in London, Rome and Belgrade
• Complete CAPEX investments at Radisson RED Berlin
• Drive detailed design stage for two development sites
in London (Westminster Bridge Road and Park Royal)
• Environmental assessment of construction sites to
• Drive detailed design stage for development of
achieve highest standard of certification
179-room subterranean hotel in London
• Pursue new growth opportunities
Operations:
• Continued to rebuild the teams and focused on learning
and development and improved productivity
Operations:
• Continue to focus on learning and development
• Drove the commercial recovery of all properties in their
and improved productivity
respective markets
• Continued to mitigate supply chain disruptions
• Continued to drive efficiencies through technology
implementations and efficiency programmes
• Drive the commercial performance of all properties
in their respective markets and support the
maturity of newly launched properties
• Continue to drive operational efficiencies through
technology implementations and efficiency programmes
• Further optimise existing, and introduce new,
energy saving initiatives
• Optimising our food and beverage offering
•
Implement new supplier sourcing policies and
increase engagement with suppliers on ESG matters
Property:
• Continued to drive maturity of Grand Hotel Brioni Pula,
Property:
• Drive performance of recently invested
a Radisson Collection Hotel (opened Mid 2022)
in leisure properties
• Completed CAPEX investments at Arena Nassfeld hotel
and phase two investments at Arena Stoja Campsite
• Develop detailed plans for next CAPEX
investments in Pula and Medulin
• Pursue new growth opportunities
Operations:
• Continued to focus on rebuilding the teams and improving
the overall guest experience
• Continued to drive the performance of all properties
• Focused on mitigating supply chain disruptions
• Continued to drive efficiencies through technology
implementations
Operations:
• Continue to focus on improving the overall
guest experience
• Continue to drive the performance of all properties
• Continue to drive efficiencies through technology
implementations
• Further optimise existing, and introduce new,
energy saving initiatives
Operations:
• Full opening and launch of art’otel London Battersea
Power Station, which is managed by the Group’s
hospitality management platform
• Further leveraged the extended partnership with Radisson
Hotel Group, with increased collaboration on our art’otel
brand and utilisation of Radisson Collection (in Croatia)
and Radisson RED (in Belgrade and Berlin)
• Delivered elevated art’otel brand experience in London
and Zagreb
• Preparations for launch of new art’otels in London
and Rome
• Continued to drive efficiencies for the managed
properties through centralisation and introduction
of new technologies
• Continued to implement new ESG Strategy
• Appointed Responsible Business Ambassadors
at every property
• Continued to drive recruitment programmes to
create jobs and opportunities for local communities
• Completed organisational review leading to
operational efficiencies
Operations:
• Full opening of art’otel Zagreb
• Launch first two Radisson RED properties
in Belgrade and Berlin
• Launch of new art’otels in London and Rome
• Continue to develop art’otel brand proposition
and brand activation
• Continue to drive efficiencies for the managed
properties through centralisation and
introduction and adoption of new technologies
• Continue to drive the new ESG Strategy
• Continue to drive learning and
development programmes
• Continue to implement changes following
the 2023 organisational review
Property:
• Development project delivery – page 90
• Funding and liquidity – page 90
• ESG – stakeholder perception – page 93
Operations:
• Talent attraction, engagement and retention – page 93
• Market dynamics – page 89
• Economic climate – page 89
• Operational disruption – page 92
• Technology disruption – page 91
• Cyber threat – page 91
• Data privacy – page 91
• Serious health, safety and security incidents – page 92
Property:
• Development project delivery – page 90
• Funding and liquidity – page 90
• ESG – stakeholder perception – page 93
Operations:
• Talent attraction, engagement and retention – page 93
• Market dynamics – page 89
• Economic climate – page 89
• Operational disruption – page 92
• Technology disruption – page 91
• Cyber threat – page 91
• Data privacy – page 91
• Serious health, safety and security incidents – page 92
Operations:
• Market dynamics – page 89
• Economic climate – page 89
• Talent attraction, engagement and retention – page 93
• Operational disruption – page 92
• Technology disruption – page 91
• Cyber threat – page 91
• Data privacy – page 91
• Serious health, safety and security incidents – page 92
• ESG – stakeholder perception – page 93
Property:
• Successfully deliver openings
and repositioning projects
• EPRA NRV
• EPRA EPS
• Net return on
shareholder capital
• Disclosure of Scope 1, 2,
and 3 carbon emissions
in TCFD report
• Carbon net zero
no later than 2050
Operations:
• EBITDA and EBITDA margin
• RevPAR
• Recruitment and retention
• Employee engagement
• Guest rating score
• Health and safety
assessment scores
Property:
• Successfully deliver openings
and repositioning projects
• EPRA NRV
• EPRA EPS
• Net return on
shareholder capital
• Disclosure of Scope 1, 2,
and 3 carbon emissions
in TCFD report
• Carbon net zero
no later than 2050
Operations:
• EBITDA and EBITDA margin
• RevPAR
• Recruitment and retention
• Employee engagement
• Guest rating score
• Health and safety
assessment scores
Operations:
• EBITDA
• Successful launch
of new openings
• Growth in portfolio
• Growth in fee-based
income through third
party or joint venture
management agreements
• Monitoring of gender
pay gap for the UK
and the Netherlands
Identifying metrics for
diversity and inclusion
•
Our strategic
framework is built
across a series of
distinct objectives,
supported by PPHE’s
pillars and enablers,
which allow us to
achieve our vision of
delivering a best-in-
class performance
through building
further scale and
depth in our real estate
portfolio and growing
the platform with our
integrated ‘Buy, Build,
Operate’ model.
Read more on page26
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Strategy in action
PPHE Hotel Group is one of the leading
hospitality real estate companies in the
upscale, upper upscale and lifestyle
segments in key European markets.
We are committed to sustained growth,
both by investing in our owned estate
and by developing strong relationships
with strategically aligned partners.
Development vision
In our strategy to drive
long-term value, we take a
disciplined, focused approach
to capital deployment. We aim
to optimise the value of our
existing portfolio and, where
appropriate, extract value
to fund new development
opportunities in order to
drive sustainable long-term
growth. We are disciplined
in selecting and progressing
an investment opportunity,
only targeting real estate with
upside potential which fits our
long-term growth strategy
and above all creates strong
shareholder value.
art’otel London Hoxton
Radisson RED Berlin Kudamm
Development opportunities
Looking to the future,
we expect to have a bigger
and stronger presence in
London and key European
cities. Through our controlling
ownership interest in Arena
Hospitality Group (“Arena”),
one of Croatia’s best-known
hospitality groups, we will be
exploring growth opportunities
in Central and Eastern Europe,
both in city centres and select
resort destinations.
Expanding
Owner/operator approach
Because we own or part own most of our properties,
our partners tell us that working with us leads to a deeper
understanding of hotel ownership and operation, better
performance and better relationships. We operate a flexible
partnership approach that complements service excellence,
value added operations and bottom-line leadership.
in city
centre
locations
Delivering our pipeline
Read more in the section on the
delivery of our pipeline, which
is filled with exciting properties,
from ground-up developments
in London’s buzzing Hoxton/
Shoreditch to property
repositioning programmes
in Rome, Belgrade and Berlin.
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Annual Report and Accounts 2023
PPHE Hotel Group
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PPHE Hotel GroupAnnual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report
D*Face, art’otel London Hoxton
“Being the Signature
Artist for the art’otel
London Hoxton is a
dream come true.
I’ve painted over 100
murals and had gallery
and museum shows
around the world, so
to have my artwork
adorn a landmark
building in my home
town, particularly
in an area of London
that was essentially
the launching platform
of my career over
two decades ago –
the significance of
the opportunity is
not lost on me.”
D*Face
Artist at art’otel London Hoxton
Strategy in action – continued
Capital cities and well-connected secondary
cities are a core part of our strategy. Since our
inception in 1989, we have focused on owning,
developing and operating hotels in cities which
have a balanced mix of leisure and business travel
demand. Today, our city centre portfolio spans
from London to Amsterdam, from Berlin to
Belgrade and from Budapest to Zagreb, with
additional properties in other regional cities.
Read more on pages 8 and 9
R
C O
,
E
UPPE
1.
Strategic
priority
R
U
P
S
C
A
L
E, CITY CENT
R
S
L
E
T
O
H
E
t
r
a
e
h
e
h
t
n
i
s
t
s
e
u
g
r
u
o
g
n
i
t
t
u
P
y
t
i
c
e
h
t
f
o
art’otel London Battersea Power Station
We typically develop landsites or convert
offices or hotels in need of an upgrade
into upper upscale properties. Our
internal teams painstakingly analyse the
market dynamics and consumer trends
to then create and launch an appealing
proposition tailored to the opportunity,
realising the property’s full potential.
We are brand agnostic and will select or
create the appropriate commercial brand
for each property as well as for the spa,
wellness and restaurant and bar concepts.
2023 and 2024 mark another exciting year
for us as the projects in our development
pipeline are coming to fruition.
We kickstarted 2023 with the full launch
of art’otel London Battersea Power
Station, which was recognised as one
of London’s hottest openings of the year.
This hotel is managed on behalf of the
property’s owners by our in-house
hospitality management platform under
a long-term operating agreement.
This opening marked the entry for art’otel in the London market,
paving the way for art’otel London Hoxton which is set to open
in the first half of 2024. art’otel London Hoxton is a jointly owned
property, developed from the ground up, and this hotel will be
managed by us on completion.
Looking ahead
With so many of our pipeline projects nearing completion,
2024 will be a very exciting year for our Group! However,
our ambitions don’t just stop there.
Not only is our dedicated development and acquisitions team
on the lookout for further growth opportunities, we have an
additional four projects in our medium- to long-term pipeline.
This includes a development opportunity at one of our existing
hotels in London Victoria, where we have been granted planning
consent to develop a 179-room subterranean hotel, plus a
development site with planning for a 465-room hotel in West
London. Additional landsites include Westminster Bridge Road
in London and Chelsea in New York.
In October 2023, we soft-launched art’otel Zagreb, our
first hotel in Croatia’s capital. This office-to-hotel conversion
complements our strong leisure and outdoor portfolio in
Croatia, and strengthens our presence in key capital cities
across Central and Eastern Europe.
In recent years, we have successfully transformed existing
properties, where we have invested over and above our
typical CAPEX programmes and subsequently repositioning the
properties in a different market segment, aimed at attracting
more discerning travellers. Current repositioning programmes
underway entail two conversions of existing properties to the
upscale Radisson RED brand, namely Radisson RED Belgrade
and Radisson RED Berlin Kudamm.
In addition, we are thrilled to enter the final stages of the
repositioning programme of a former hotel in Rome to
art’otel Rome Piazza Sallustio.
32
33
PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report
Strategy in action – continued
Grand Hotel Brioni Pula,
a Radisson Collection Hotel
E I S U R E A
N
D
L
2.
Strategic
priority
Y
T
I
L
A
T
HOSPI
O
U
T
D
O
O
R
Memorable
PPHE’s strategy includes diversifying its portfolio
beyond city centres. And our offering today
encompasses premium resorts, upper upscale
and upscale hotels, self-catering apartments,
camping and glamping, set in spectacular seaside
locations in Croatia and in the Austrian Alps.
In these markets, we cater to leisure travellers seeking
relaxation and recreation, and we recognise the importance
of offering varied vacation experiences. By strengthening
our presence in these segments of the market, we aim to meet
the demand for unique and memorable vacation destinations,
contributing to the Group’s growth and resilience.
Read more on pages 56 and 57
Park Plaza Belvedere Medulin
Grand Hotel Brioni
Pula, a Radisson
Collection Hotel
Since 2008, we have been actively involved in owning, developing
and operating leisure properties, starting in Croatia and more
recently in Austria. Our portfolio is vast but the market opportunity
is even greater. In recent years, we have significantly invested
in upgrading an existing diverse portfolio in Croatia, resulting
in a vastly improved product, with accompanying services and
amenities and superior value creation for stakeholders.
In 2022, we proudly relaunched the jewel in the crown, Grand
Hotel Brioni Pula, a Radisson Collection Hotel, following a two-year
redevelopment programme. This followed on from earlier
investments transforming five existing hotels to Park Plaza
properties, one property to a TUI Blue hotel and significant
investments in three of our eight campsites.
Investments in 2023 included the second phase of the repositioning
programme of Arena Stoja Campsite as well as an investment into
the Arena Nassfeld hotel in the Austrian Alps, which now offers
guests extensive wellness and leisure facilities including outdoor
and indoor swimming pools.
Our growth strategy is focused around further upgrading some
of our owned properties, further realising their potential, and
to expand our network through ownership and partnerships,
leveraging on our well-established hospitality management platform.
Relaxation
Arena One 99 Glamping
Visit arenacampsites.com
34
35
PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report
Strategy in action – continued
Holmes Hotel London
O
H
M
R
O
F
S P I TALIT
Y
3.
Strategic
priority
M
A
N
A
G
E
M
T
ENT PLA
Expert teams
The Group’s award-winning in-
house hospitality management
platform is fully scalable and
designed to grow through
managing fully or jointly owned
real estate, providing best-in-
class property management
and a flexible contract structure
for asset owners.
n
o
i
t
a
t
S
r
e
w
o
P
a
e
s
r
e
t
t
a
B
n
o
d
n
o
L
l
e
t
o
’
t
r
a
Our specialist hospitality operating platform
today manages 51 properties, across eight
countries and different segments of the
market, with a gross portfolio value of over
£2.2 billion.
Our expert team works with leading brands
and is focused on driving the optimum result
for each of the properties under management,
creating memorable guest experiences,
curating highly engaged teams and generating
accretive returns for owners.
Read more on page 61
Some facts
• £2.2 billion hospitality assets under management, including
51 city centre hotels, leisure resorts, glamping properties
and 15+ destination restaurants and bars
• Currently active in eight countries in Europe
• Present in 16 destinations, from prime locations in capital
cities such as Amsterdam, Berlin, Belgrade, Budapest, London,
Rome and Zagreb, to provincial cities and leisure destinations
• Trusted partner which manages, and has managed, assets on
behalf of private investors and financial institutions, some of
the world’s leading investment banks and pension funds
Scalable
platform
Hospitality Management Platform
• Award-winning management company, with strong company
culture and highly engaged team members
• Several hundred experienced hospitality specialists located
across four service hubs (London, Amsterdam, Berlin and
Pula, Croatia)
• All disciplines in-house for driving innovation and continuous
improvement for all assets under management
• Centralised divisions for housekeeping, recruitment and
customer service, providing a plug-and-play solution for owners
• Proprietary learning and development platform and access
Park Plaza London Riverbank
to third party training academy
Hospitality assets under management
£2.2bn
51Properties
Brands we prefer to work with
• Our owned art’otel premium lifestyle brand
• Radisson’s Upper Upscale Park Plaza brand, for which we
have the master franchise rights (in perpetuity) in EMEA
• Property-specific brands such as the premium lifestyle
•
Holmes Hotel London or private label TUI Blue
In our Leisure and Outdoor portfolio we use our owned Arena
Campsites and Arena Hotels & Apartments brands, which are
positioned in the mid-market and upscale segment of the market
• And, more recently we have started operating hotels as part
of the Luxury Radisson Collection and the Upscale Radisson
RED brands
PPHE Hotel Group
36
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PPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report
Key performance indicators
Financial KPIs1
Operating KPIs1
Property KPIs1
Total revenue £m
EBITDA £m
Occupancy %
Average room rate £
RevPAR £
EPRA NRV per share £
2023
2022
2021
2020
2019
141.4
101.8
414.6
330.1
2023
2022
2021 25.1
(10.1)
2020
128.2
2023
72.4
94.6
2022
60.0
2021
30.7
2020
28.0
357.7
2019
122.9
2019
80.6
2023
2022
2021
2020
2019
166.8
2023
160.4
2022
96.2
117.0
105.1
2021 35.9
2020
29.4
128.5
2019
103.6
120.7
2023
2022
2021
2020
2019
26.72
25.17
22.15
22.08
25.93
KPI definition
KPI definition
KPI definition
KPI definition
KPI definition
KPI definition
Total revenue includes all operating revenue
generated by the Group’s owned and leased
hotels, management fees, franchise fees and
marketing fees.
Earnings before interest, tax, depreciation
and amortisation.
Total rooms occupied divided by the available rooms.
Total room revenue divided by the number of
rooms sold.
Revenue per available room; total room revenue
divided by the number of available rooms.
Net Re-instatement Value on a fully diluted
basis adjusted to include properties and other
investment interests at fair value and to exclude
certain items not expected to crystallise in a
long-term investment property business model
divided by the dilutive number of shares.
Normalised profit before tax £m
Reported earnings per share pence
EBITDAR £m
Guest rating score %
Employee engagement %
Adjusted EPRA EPS pence
(47.5)
(89.8)
2023
37.5
2022 8.3
2021
2020
2019 40.7
(123)
(192)
53
24
2023
2022
2021
2020
2023
2022
2021 27.6
130.5
97.0
2023
2022
2021
86.4
2023
84.8
2022
83.0
81.0*
2023
118
2022
50
85.5
2021 Trial of new survey format
(44)
2021
(9.1)
2020
2020 Data not indicative
2020 Data not indicative
(123)
2019
80
2019
124.7
2019
83.6
2019
84.4*
2020
2019
128
KPI definition
KPI definition
KPI definition
KPI definition
KPI definition
KPI definition
Earnings for the year, adjusted to remove any
unusual or one-time influences.
Earnings for the year, divided by the weighted
average number of ordinary shares outstanding
during the year.
Earnings before interest, tax, depreciation,
amortisation and rental expenses.
1 Further details on the key financial, operating and property KPIs can be found in the Financial Review on pages 40 to 47.
38
Guest satisfaction and a strong reputation are
paramount to our long-term success. These are
measured through guest surveys completed by
guests and reviews posted online on travel review
websites and booking platforms. The guest rating
score reported is based on guest reviews posted
on external websites.
Previously measured through annual engagement
surveys, team members were encouraged to share
feedback about the Company, their jobs, their team
and their manager. Notwithstanding the high scores
achieved, we have changed our measurements
to be more regular and topical in the form of
pulse surveys.
Shareholders’ earnings from operational activities
with the Company’s specific adjustments. The main
adjustment is adding back the reported depreciation
charge, which is based on assets at historical cost
and replacing it with a charge calculated as 4% of
the Group’s total revenues, which represents the
Group’s expected average cost to upkeep the real
estate in good quality. The adjusted shareholders’
earnings from operational activities are divided by
the weighted average number of ordinary shares
outstanding during the year.
* Up until 2019, the Group measured employee
satisfaction through annual surveys. Post-
pandemic, it has implemented a new methodology
which captures employee engagement. As a result,
from 2022 onwards, the performance shown is not
comparable with earlier years.
39
PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report
Financial Review
Strong topline growth with
EBITDA margin improvement
Daniel Kos
Chief Financial Officer
& Executive Director
“Fully recovered results
provide the group with
strong cash flows and
NAV growth.”
Overview of 2023
2023 ended on a high, reporting fully
recovered, record results and strong
performance across our main markets.
Since 2019, results of the Group have
been distorted with the impacts of
COVID-19 restrictions around the world,
and 2023 marked the first year since with
a normal trading pattern. 2023 kicked off
with strong RevPAR increases compared to
2019, slightly above inflation reported over
the four-year period that passed. Inflation
did also affect many of our cost lines, most
noticeably in the costs of utilities and labour.
The Group successfully mitigated a
number of inflationary and sector-specific
issues through the implementation of
innovative solutions and forward planning.
We have invested in enhancing our energy
efficiency, and staffing is also much less
of a constraint for the Group due to its
proactive approach to investment in
people, automation and employer branding.
We reported EBITDA margins that are
behind on 2019, however lower utility
hedges in the near future are expected
to positively impact margin recovery.
We keep focusing on managing the
continued cost pressures we see on
the labour side, due to minimum wage
increases in all our territories.
Although 2023 showed sharp interest
rate increases, the Group’s results were
not affected by this as all our loans are near
fully hedged on fixed interest rates. These
hedges limit the majority of exposure
to interest rate risk on average to 2028.
Furthermore, there are no significant
loans up for refinance before 2026.
The elevated interest rate environment
also impacts the discount rates used in
property valuations, but despite increased
rates, valuations have again shown a small
improvement as improved trading and
outlooks more than offset yield expansion.
Throughout the year, we spent approximately
£126 million on capital expenditure, and
the Group is now nearing completion of a
heavy development cycle, where a record
pipeline of more than £300 million will
begin to contribute for the first time.
This pipeline is estimated to grow EBITDA
by at least £25 million once fully stabilised.
Operational performance
Revenue
Total revenue was up 25.6% at
£414.6 million and was 15.9% ahead
of 2019 levels. RevPAR was £120.7, up
25.5%, and was 16.5% ahead of 2019
levels. This reflected some further
growth in average room rate up 4.0%
versus 2022 and 29.8% versus 2019,
alongside a consistent recovery in
occupancy levels to 72.4%, compared with
60.0% in 2022 and 80.6% in 2019. Overall,
RevPAR levels led to a total room revenue
of £300.1 million, up 26.2% versus 2022
and up 19.7% of room revenue in 2019.
The 2023 trading comparison with 2022
normalised month-on-month throughout
the year. Where the first comparative
quarter of 2022 was still heavily impacted
by COVID-19 (thus showing significant
year-on-year growth), the latter part of
2022 actually showed a fully recovered
and strong trading comparable.
Financial results
Key financial statistics for the financial year ended 31 December 2023.
Total revenue
Room revenue
EBITDAR
EBITDA
EBITDA margin
Reported PBT
Normalised PBT
Reported EPS
Occupancy
Average room rate
RevPAR
EPRA NRV per share
Adjusted EPRA earnings per share
Year ended
31 December
2023
Year ended
31 December
2022
Year ended
31 December
2019
£414.6 million
£300.1 million
£130.5 million
£128.2 million
30.9%
£28.8 million
£37.5 million
53p
72.4%
£166.8
£120.7
£26.72
118p
£330.1 million
£237.8 million
£97.0 million
£94.6 million
28.7%
£11.5 million
£8.3 million
24p
60.0%
£160.4
£96.2
£25.17
50p
£357.7 million
£250.6 million
£124.7 million
£122.9 million
34.4%
£38.5 million
£40.7 million
80p
80.6%
£128.5
£103.6
£25.93
128p
Q1 2023 saw a strengthening of demand
for leisure, corporate travel and meeting
events across all our markets. Our
rate-led strategy supported topline
growth which helped to mitigate inflationary
headwinds, with average room rate up
15.9% versus Q1 2022 and 24.6% ahead
of Q1 2019 levels. Occupancy levels
continued to improve and track closer to
2019 levels in the UK and the Netherlands,
with slower recovery in Germany. Overall,
Q1 2023 occupancy was 950 bps behind
Q1 2019.
In Q3, a quarter heavily impacted by the
seasonal trading in Croatia, total revenue
was up 8.8% versus Q3 2022 and up
16.5% versus Q3 2019, driven primarily
by strong occupancy growth to 77.5%
(Q3 2022: 70.8%). Average room rate
remained solid, up 0.8% versus Q3 2022,
despite the strong comparative
performance in Q3 2022 which was
boosted by a record summer 2022
trading in Croatia and several significant
events in London, including the State
Funeral of Her Majesty The Queen.
The performance in Q4 continued to be
solid, with further occupancy recovery.
Compared to Q4 2022 revenue was up 7.2%
(up 15% versus Q4 2019). Room rate was
marginally down on Q4 2022 and up 25.1%
versus Q4 2019. Occupancy increased to
72.8% (Q4 2022: 72.1%).
EBITDA, profit and earnings per share
The Group reported EBITDA of
£128.2 million (2022: £94.6 million and
2019: £122.9 million). The EBITDA margin
continued to improve year-on-year to
30.9%, compared with 28.7% in 2022 and
34.4% in 2019. Broader cost inflation,
particularly for utilities and labour,
impacted full pre-COVID margin recovery
over the last 12 months. The Board
anticipates that cost inflation will remain
topical in 2024, particularly with the
recently announced minimum wage
increases, however forward energy
cost hedges will start flowing through
at substantially lower levels than those
fixed for 2023.
Normalised profit before tax improved to
£37.5 million (2022: £8.3 million). Reported
profit before tax improved by £17.3 million
to £28.8 million (2022: £11.5 million).
Reported profit before tax was negatively
affected by non-cash revaluations of –
amongst others – hedging derivatives and
lease liabilities. A table of normalisation
adjustments is provided below.
This momentum continued into the second
quarter, supported by the Coronation,
taking place in London, where total revenue
was up 36.9% year-on-year and up 19.8%
versus Q2 2019. Average room rate grew
by 14.8% versus Q2 2022 and was up 35.6%
versus Q2 2019. Occupancy continued to
rebuild to 70.8% (58.8% in Q2 2022 and
77.1% in Q2 2019).
Normalised profit
£ million
Reported profit before tax
Loss on buy-back of units in Park Plaza
Westminster Bridge London from private investors
Non-cash revaluation of finance lease
Non-cash changes in fair value of Park Plaza
County Hall London Income Units
Pre-opening expenses and other
non-recurring expenses
Capital loss on disposal of fixed assets and inventory
Non-cash changes in fair value of financial instruments
Normalised profit before tax
12 months ended
31 December
2023
12 months ended
31 December
2022
28.8
11.5
3.3
3.9
(1.6)
1.4
–
1.7
37.5
1.5
3.7
(0.3)
1.4
0.1
(9.6)
8.3
40
41
PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report Reported basic/diluted earnings per
share for the period were 53 pence
(2022: 24 pence). Depreciation in the year
was £45.1 million (2022: £40.0 million).
Depreciation is recorded in accordance
with IFRS, however, internally we consider
the Group’s ongoing average capital
expenditure (CAPEX) over the lifespan
of our hotels as a more relevant measure
in determining profit, which in the hospitality
industry is calculated as approximately
4% of total revenue. Our EPRA earnings
number (see page 44) is calculated using
the 4% rate instead of the reported non-cash
depreciation charge.
Real estate performance
Valuations
The Group is an integrated developer,
owner and operator of hotels, resorts
and campsites and its business model
is real estate driven. We generate
returns and drive increased value for
all our stakeholders by developing the
assets that we own and operating our
properties to their full potential. Certain
EPRA performance measurements are
disclosed to aid investors in analysing the
Group’s performance and understanding
the value of its assets and earnings from
a property perspective.
In December 2023, the Group’s
properties (with the exception of
operating leases and managed and
franchised properties) were once again
independently valued predominantly
by Savills (in respect of properties in
the Netherlands, UK and Germany)
and by Zagreb nekretnine Ltd (Zane)
(in respect of properties in Croatia).
Based on their valuations, we have
calculated the Group’s EPRA NRV,
EPRA NTA and EPRA NDV. The EPRA
NRV as at 31 December 2023, set out
in the table on page 43, amounts to
£1,136.4 million (2022: £1,078.7 million),
which equates to £26.72 per share
(2022: £25.17 per share).
Financial Review – continued
The EPRA NRV was positively impacted
by the profit in the year of £22.4 million
and positively impacted by marginally
increased property valuations of
£50.8 million (based on constant currency).
This year the valuations were negatively
affected by an increase in the discount
rates used, mainly as a result of the higher
interest rate environment. The value
effect of these increased rates, however,
were more than offset by the increased
underlying results of the hotels used in the
valuations, with expectations on improving
margin embedded in the profit forecasts.
The table below provides additional
information regarding the discount
and cap rates used.
Cash flow and EPRA earnings
In 2023, the Group had a positive
operational cash flow of £126.1 million,
due to its record fully recovered trading.
Cash used for debt service increased
to £82.2 million (2022: £68.0 million), of
which £46.4 million (2022: £41.8 million)
is due to interest expenses, £31.7 million
(2022: £21.3 million) due to loan amortisations
and £4.1 million (2022: £4.9 million) due to
lease amortisations.
Investment cash flows reported an
outflow of £121.5 million, of which about
86.5% was due to development projects
and £15.0 million regarding our usual
maintenance CAPEX projects. Most
noticeable was the £80.6 million CAPEX
related to our development projects in
Hoxton London and art’otel Rome Piazza
Sallustio. These hotels are due to open
in the current financial year, hence
construction CAPEX is expected to
significantly decrease from the third
quarter onwards.
The Group has a healthy balance sheet,
no significant refinancing until 2026
and a total cash position of £150.4 million,
with access to a further £30 million of
undrawn facilities.
The Group reported adjusted EPRA
earnings of £50.1 million, up 137%
(2022: £21.2 million), and adjusted
EPRA earnings per share of 118 pence,
up 136% (2022: 50 pence, 2019: 128 pence
per share).
Actualised trading versus assumption in 2022 valuations
Discount rates
Cap rates
2023 Valuations 2022 Valuations 2023 Valuations 2022 Valuations
5.25%–8.00%
5.25%–7.00%
5.50%–6.75%
6.00%–9.00%
7.75%–10.50%
7.75%–9.50%
8.00%–9.25%
8.00%–11.00%
7.75%–10.50%
8.25%–9.75%
8.25%–9.25%
8.00%–11.00%
5.25%–8.00%
5.75%–7.25%
5.75%–6.75%
6.00%–9.00%
United Kingdom
The Netherlands
Germany
Croatia
Valuation comparison
EPRA performance measurement
EPRA summary
EPRA NRV (Net Re-instatement Value)
EPRA NTA (Net Tangible Assets)
EPRA NDV (Net Disposal Value)
EPRA earnings
Adjusted EPRA earnings
EPRA NRV
£ million
NAV per the financial statements
Effect of exercise of options
Diluted NAV, after the exercise of options1
Includes:
Revaluation of owned properties in
operation (net of non-controlling interest)2
Revaluation of the joint venture
interest held in two German properties
(net of non-controlling interest)
Fair value of fixed interest rate debt
Deferred tax on revaluation of properties
Real estate transfer tax3
Excludes:
Fair value of financial instruments
Deferred tax
Intangibles as per the IFRS balance sheet
NAV
Fully diluted number of shares
(in thousands)1
NAV per share (in £)
Summary of EPRA Performance indicators
Year ended 31 December 2023 Year ended 31 December 2022
Per Share
£25.17
£24.44
£24.06
77p
50p
Per Share
£26.72
£26.02
£25.17
139p
118p
£ million
1,078.7
1,047.2
1,030.9
32.7
21.1
£ million
1,136.4
1,106.6
1,070.4
59.0
50.1
31 December 2023
EPRA NRV
314.6
–
314.6
EPRA NTA4
314.6
–
314.6
EPRA NDV
314.6
–
314.6
EPRA NRV
315.1
3.0
318.1
31 December 2022
EPRA NTA4
315.1
3.0
318.1
EPRA NDV
315.1
3.0
318.1
794.6
794.6
794.6
746.9
746.9
746.9
6.1
–
–
19.1
14.2
(16.2)
–
1,136.4
42,527
26.72
6.1
–
–
–
14.2
(16.2)
10.7
1,106.6
42,527
26.02
6.1
(5.9)
(39.0)
–
–
–
–
1,070.4
42,527
25.17
6.8
–
–
18.7
21.1
(9.3)
–
1,078.7
42,846
25.17
6.8
–
–
–
21.1
(9.3)
12.8
1,047.2
42,846
24.44
6.8
(9.2)
(31.7)
–
–
–
–
1,030.9
42,846
24.06
1 The fully diluted number of shares excludes treasury shares but includes 163,221 outstanding dilutive options (as at 31 December 2022: 150,223).
2 The fair values of the properties were determined on the basis of independent external valuations prepared in December 2023.
3 EPRA NTA and EPRA NDV reflect fair value net of transfer costs. Transfer costs are added back when calculating EPRA NRV.
4 NTA is calculated under the assumption that the Group does not intend to sell any of its properties in the long run.
NRV per share
£25.17
£1.19
£0.53
£(0.28)
£0.111
£26.72
Real estate performance £million
1,078.7
50.8
22.4
(11.9)
(3.6)
1,136.4
2023 versus 2022 valuation – Total portfolio +2.3%
United Kingdom
The Netherlands
Germany
Croatia
+2.0%
+5.5%
-6.5%
+4.0%
EPRA NRV as of
31 December 2022
Revaluation
done in 2023
Earnings
in 2023
Dividend
distributiion
Other (Forex, derivatives,
dilution and other movement)
EPRA NRV as of
31 December 2023
1 Positive movement due to lower diluted number of shares.
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Financial Review – continued
EPRA earnings
Earnings attributed to equity holders of the parent company
Reported depreciation and amortisation
Revaluation of Park Plaza County Hall London Income Units
Changes in fair value of financial instruments
Non-controlling interests in respect of the above3
EPRA earnings
Weighted average number of ordinary shares outstanding
EPRA earnings per Share (in pence)
Company specific adjustments:1
Capital loss on buy-back of Income Units in Park Plaza Westminster Bridge London
Remeasurement of lease liability4
Disposals and Other non-recurring expenses (including pre-opening expenses)7
Adjustment of lease payments5
One-off tax adjustments6
Maintenance CAPEX2
Non-controlling interests in respect of Maintenance CAPEX and the adjustments above3
Company adjusted EPRA earnings1
Company adjusted EPRA earnings per Share (in pence)
Reconciliation Company adjusted EPRA earnings to normalised PBT:
Company adjusted EPRA earnings1
Reported depreciation and amortisation
Non-controlling interest in respect of reported depreciation3
Maintenance CAPEX2
Non-controlling interests in respect of Maintenance CAPEX and the adjustments above3
Adjustment of lease payments5
One-off tax adjustments6
Profit attributable to non-controlling interests3
Reported tax
Normalised profit before tax
12 months ended
31 December
2023
£ million
12 months ended
31 December
2022
£ million
22.4
45.1
(1.6)
1.7
(8.6)
59.0
42,541,186
139
3.3
3.9
1.4
(2.3)
(2.5)
(16.6)
3.9
50.1
118
50.1
(45.1)
8.6
16.6
(3.9)
2.3
2.5
4.7
1.7
37.5
10.2
40.0
(0.3)
(9.6)
(7.6)
32.7
42,522,523
77
1.5
3.7
1.5
(2.2)
(5.8)
(13.2)
3.0
21.2
50
21.2
(40.0)
7.6
13.2
(3.0)
2.2
5.8
4.7
(3.4)
8.3
1 The ‘Company specific adjustments’ represent adjustments of non-recurring or non-trading items.
2 Calculated as 4% of revenues, which represents the expected average maintenance capital expenditure required in the operating properties.
3 Non-controlling interests include the non-controlling shareholders in Arena, third party investors in Income Units of Park Plaza Westminster Bridge London and the
non-controlling shareholders in the partnership with Clal that was entered into in June 2021 and March 2023.
4 Non-cash revaluation of finance lease liability relating to minimum future CPI/RPI increases.
5 Lease cash payments which are not recorded as an expense in the Group’s income statement due to the implementation of IFRS 16.
6 Mainly relates to deferred tax asset on carry forward losses recorded in 2023.
7 Mainly relates to pre-opening expense and net profit and loss on disposal of property, plant and equipment.
Other EPRA measurements
Given that the Group’s asset portfolio is
comprised of hotels, resorts and campsites
which are also operated by the Group, a few
of EPRA’s performance measurements,
which are relevant to real estate companies
with passive rental income, have not been
disclosed as they are not relevant or
non-existent. Those EPRA performance
measurements include EPRA Net Initial Yield
(NIY), EPRA ‘Topped-up’ NIY, EPRA Vacancy
Rate and EPRA Cost Ratios.
Capital structure
Call impact minorities and future
As part of our strategy, we unlock capital
on the back of our assets in many different
ways. We do this by raising debt, raising
equity through several different forms of
partnerships or sometimes by entering into
100+ year ground rent structures. This
funding strategy gives us access to capital
on the back of the fair value of our assets
and also balances the liquidity and interest
rate risk attached to our capital structure.
Our partnerships, such as the third party
unit holders in Park Plaza Westminster
Bridge London, the third party shareholders
in our listed Croatian subsidiary or the
individual professional partners we work
with on several assets, provide us with
long-term equity and therewith sharing
of the risks and returns on each asset.
The 100+ year ground rent structures
give us long-term access to capital, with
no covenants, no recourse to the Group
and no refinance risk or interest rate
exposure. These structures are typically
linked to inflation, although, these are
often capped at around 4–5% annually.
Finally, our asset-backed mortgages are
mostly entered into with long-standing
banking partners, with a five- to ten-year
maturity and with a fixed rate or a variable
rate with hedging arrangements. Our
mortgages have covenants around the
value of assets (Loan to Value) and trading
(interest or debt service cover ratios).
The level of debt raised on trading assets
is typically around 50% of the value of
these assets and appropriate buffers
are kept towards the covenants on the
loan. Furthermore, most of our loans
are amortised annually around 2.5%
of the nominal amount over the term.
The current net bank debt leverage
(EPRA LTV) percentage is 33.4%
Although our mortgages are exposed to
interest rate risks, most of these were
entered into years ago, averaging at
3.5% interest (98% fixed) and with an
average remaining maturity of 4.0 years.
In early 2022, the Group entered into
multiple forward starting hedges (starting
when loans roll over or refinance in 2024
and 2026) for approximately £380 million,
around 1.4%–1.9% swap rate, significantly
below current market levels. The loans
on trading assets are non-recourse.
European Hospitality Real Estate Fund
Consistent with PPHE’s long-standing
approach to building shareholder
value through the careful stewardship of
its own balance sheet and partnership
with third party capital providers,
we launched our inaugural European
Hospitality Real Estate Fund (the ‘Fund’)
in March 2023 to support the Group’s
long-term growth ambitions. Hotels
acquired by the Fund will be operated by
PPHE’s hospitality management platform,
building further scale in the platform.
PPHE has committed up to €50 million in
cash and/or assets to the Fund and the
Fund’s cornerstone investor, Clal Insurance,
has committed to invest up to €75 million
(however, capped at 49% of the equity
contributed at any time). In March 2023,
our property in Rome (soon to open as
art’otel Rome Piazza Sallustio) was
contributed as a seed asset.
Throughout the year the Group engaged
with investment bankers to raise the
remaining equity for the Fund, however,
the significant changes in the interest
rate market during this period has meant
that the Group was not successful in
signing up new investors.
Amortisation profile
Capital structure
s
n
o
i
l
l
i
M
225
200
175
150
125
100
75
50
25
0
2024
2025
2026
2027
2028
2029
2030+
£ Regular amortisation
£ Refinance
€ Regular amortisation
€ Refinance
$ Refinance
PURE EQUITY
PURE DEBT
Equity shareholders 44%
Equity minority 14%
Income Units sold to private investors 5%
Long-term ground rents (>100 years) 9%
Net bank debt 28%
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PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report Financial Review – continued
Net debt leverage/EPRA LTV reconciliation
Group as
reported
under IFRS
£’million
Adjustments
to arrive at
EPRA Group
LTV
£’million
Group
EPRA LTV
before NCI
adjustment
£’million
Proportionate
Consolidation
(Non-
controlling
interest)
£’million
Combined
EPRA LTV
£’million
Include:
Borrowings
(short-/long-term)
Exclude:
Cash & cash
equivalents and
restricted cash
Net Debt (a)
Include:
PP&E
Right-of-use assets
Lease liabilities
Liability to income
units in Westminster
Bridge hotels
Intangible assets
Investments in
Joint ventures1
Other assets and
liabilities, net
Total Property
Value (b)
893.0
(167.7)
725.3
–
–
–
893.0
(202.4)
690.6
(167.7)
725.3
36.6
(165.8)
(131.1)
559.5
1,412.8
229.2
(277.4)
762.4
(229.2)
277.4
2,175.2
–
–
(511.8)
–
–
1,663.4
–
–
(114.3)
10.7
114.3
–
–
10.7
5.4
11.4
16.8
–
(0.9)
(7.8)
–
9.8
9.0
(9.9)
(4.0)
(13.9)
8.5
(5.4)
1,256.5
932.3
2,188.8
(512.0)
1,676.8
EPRA LTV (a/b)
57.7%
–
33.1%
–
33.4%
Adjustments to
reported EPRA NRV:
Real estate
transfer tax
Total Property
Value after
adjustments (c)
–
21.9
21.9
(2.8)
19.1
1,256.5
954.2
2,210.7
(514.8)
1,695.9
Total Equity (c-a)
531.2
954.2
1,485.4
(349.0)
1,136.4
1 Proportionate consolidation was not applied to the joint venture as it is considered as not material.
If further investors have not joined the
Fund by 13 March 2024 (unless mutually
extended), the Fund will carry on as a joint
venture with Clal. Furthermore, the Group
has the option to top up its own equity
contribution (currently at up to €50 million)
to €78 million to give the total joint venture
a c.€150 million equity value. With full equity
subscription combined with a targeted
50% bank leverage, the investment potential
of the joint venture will then be around
€300 million. The Fund has an investment
period of 24 months from March 2023,
which can be extended by an additional
12 months (subject to consent).
Capital Expenditure/
Development pipeline update
With an expansion CAPEX of £110.6 million,
we remained focused on implementing
our strategy, progressing our development
pipeline, and expanding our footprint into
new, highly attractive markets.
The construction phase of our new hotel
in Hoxton London (art’otel London Hoxton)
is nearing completion and handover of
certain areas had commenced in Q1 2024
enabling our operational teams to start
preparing the hotel for its expected
opening in Q2 2024.
We opened our first art’otel in Croatia in Q3
2023, art’otel Zagreb. This was an office-to-
hotel conversion project in Zagreb city
centre at a total investment of £18 million
Similarly, the first Radisson RED property
to be operated by the Group, and the
second to open under the extended
Radisson partnership, opened for
bookings in Q4 2023, following an
extensive repositioning (previously
known as Arena 88 Rooms Hotel).
In Rome, the Group had embarked on a
full repositioning and construction of the
former Londra & Cargill Hotel located in
the city centre in July 2022. Works are
underway to reposition this hotel into
a 99-room premium art’otel, which is
expected to open in the first half of 2024.
We are constantly working on improving
our existing portfolio and looking for
interesting opportunities to acquire further
On the above £300+ million pipeline, the
Group has a remaining commitment of
approximately £60 million.
assets to broaden the Group’s portfolio.
The diagram below provides a summary of
the investments done in the past ten years.
Investments in property split between expansion/redevelopment and maintenance in £m
250
200
150
100
50
0
215.4
65.6
23.0
115.5
97.1
110.6
85.2
99.1
85.0
62.2
10.2
2014
8.8
2015
12.2
2016
14.1
2017
21.1
19.2
14.9
6.6
9.8
15.0
2018
2019
2020
2021
2022
2023
Maintenance
Expansion
Maintenance CAPEX profile has historically been 4% of revenue on average.
Year-on-year cash flow £million
126.1
163.6
(121.5)
21.5
62.1
150.4
(14.9)
(4.3)
Dividend
The strength of trading during the first half
of 2023 and the Board’s confidence in the
outlook enabled it to recommend a return
to the Company’s historical capital returns
policy of distributing approximately 30% of
adjusted EPRA earnings while continuing
to support investment in future growth
opportunities. Given the continued share
price discount relative to the Company’s
EPRA NRV per share, the Board consulted
with shareholders about the most
appropriate and effective mechanism
for such distributions to take place,
including dividends, share buy-backs,
tender offers or a combination of these.
During this exercise, a broad range of
opinions and preferences were expressed
by shareholders. Having listened carefully
to all the viewpoints provided, the Group
took the decision to pay an interim dividend
of 16 pence per share for the period
ended 30 June 2023, which represented
a year-on-year increase of 13 pence per
share (H1 2022: 3 pence per share).
Further to the above, and in line with
the Board’s confidence in the Group’s
performance and the strength of its
development pipeline being delivered,
the Board has proposed a final dividend
payment of 20 pence per share. When
combined with the interim ordinary
dividend, it will bring the total dividend
for the year to 36 pence per share.
The Board will continue to regularly
review its capital returns policy.
(82.2)
Debt
Service2
Reported
Cash
31 December
2022
Investment
in properties
and new
acquisitions1
Operating
Cash flow
(EBITDA
and
working
capital)
New
Facilities
and movement
in restricted
cash
Funds
received
from joint
venture
partner
Dividend
and share
buy-back
Other
items
(including FX)
Reported
Cash
31 December
2023
Undrawn
facilities
as at
31 December
2023
Daniel Kos
Chief Financial Officer & Executive Director
30.0
1 £15.0 million reflects regular CAPEX.
2
Including leases and unit holders in Park Plaza Westminster Bridge London.
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“I am pleased to share our 2023 Business
Review, which covers in detail the full-year
performances of our assets across all our
international markets.”
Demand among leisure and corporate
visitors alike remained resilient and
grew consistently during 2023. This
was despite persistent macro-economic
challenges and wider concerns about
consumer confidence, as people around the world
sought to travel and meet in person at levels close
to and in many cases exceeding those of 2019
(which was the last full pre-pandemic year).
Our strategic progress was similarly
broad-based, with openings across all of
our key markets successfully completed
to plan. Our newly opened art’otel at
London Battersea Power Station was a
particular highlight and has traded well in
a well-known and highly desirable destination.
We were also pleased to open art’otel
Zagreb, our first city-centre hotel in
Croatia, as well as our first Radisson RED
branded property in Belgrade, Serbia.
As our £300+ million development pipeline
nears completion, we have continued
to find innovative ways to drive further
growth and shareholder returns in the
years ahead. This includes the equity
partnership with Clal, which gives us,
when leveraged, access to an investment
potential of between €200 and €300 million
(based on leverage assumption of 50%
and including PPHE’s participation) for
new property acquisitions, and an asset
optimisation including securing planning
to convert subterranean space at Park
Plaza Victoria London into a 179-room
hotel concept.
As activity grew throughout the year, our
teams once again worked extremely hard
to deliver a memorable guest experience
for all our guests, resulting in high levels
of guest satisfaction. We continued to
prioritise recruitment, learning and
development, engagement and retention.
Our long-term approach and investment
in our people has positioned us strongly
in the market and this remains a key
focus. Our talented and dedicated teams
remain critical to the long-term success
of the Group, and I would like to reiterate
my gratitude to them.
Greg Hegarty
Co-CEO
“As activity grew
throughout the year,
our teams once again
worked extremely hard
to deliver a memorable
guest experience for all our
guests, resulting in high
levels of guest satisfaction.”
United Kingdom
Value of UK
property portfolio
Total
revenue
The Netherlands
Value of the Dutch
property portfolio
Total
revenue
£1,014m
£234.9m
£318m
£63.3m
Germany
Croatia
Value of German
property portfolio
Total
revenue
Value of Croatian
property portfolio
Total
revenue
£92m
£22.8m
£361m
£78.1m
I look forward to keeping shareholders
updated on our performance and
strategic progress over the coming
months. In the meantime, please read
on for our 2023 Business Review.
Greg Hegarty
Co-CEO
Investment in new technologies and
systems remained a key priority as we
sought new ways to innovate and enhance
our service offering, and create efficiencies
in our processes. This included the
continued use of automation and robotics
across several business functions, alongside
the implementation of two highly regarded
revenue management systems to optimise
pricing and forecasting. We also further
upgraded our Digital Services suite of
products, including online check-in and
digital keys, to create a more seamless
guest journey.
“I look forward to keeping
shareholders updated
on our performance and
strategic progress over
the coming months.”
While leveraging the additional Radisson
brands in line with our expanded
partnership, each with their distinct
personas and market positioning
(Radisson RED and Radisson Collection),
we continued to expand and evolve our
offering, within both our restaurant and
bar concepts. During the year, we opened
a number of new destination restaurants
and bars, including Portuguese-inspired
JOIA on the 15th floor at art’otel London
Battersea Power Station, following our
successful collaboration with Executive
Chef Henrique Sá Pessoa at art’otel
Amsterdam. TOZI Grand Café also
opened on the ground floor, inspired by
the elegance of Europe’s famous grand
cafés and celebrating authentic Italian
dishes, and TOZI Counter – a casual outlet
specialising in fresh Italian sandwiches,
pastries and specialty coffees – is located
adjacent to TOZI Grand Café. Furthermore,
in November 2023 we opened our first
YEZI restaurant, at our new art’otel in
Zagreb, which provides a relaxed
fine-dining experience inspired by
the traditional Asian tea house.
48
PPHE Hotel Group
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Total value of the
UK property portfolio1
£1,014m
(2022: £991m)
art’otel London Hoxton
Business Review – continued
United Kingdom
Property portfolio
The Group’s well-invested property
portfolio consists of approximately
3,350 rooms in operation in the upper
upscale segment of the London hotel
market. In addition, the Group will be soft
opening the 357-room art’otel London
Hoxton in April 2024 and it has a further
three development sites in London, which
could add up to over 800 rooms.
Four of the Group’s London hotels are in
the popular South Bank area of London,
with further properties in Victoria,
Marylebone, Battersea and Park Royal.
There are also three properties located
in the UK regional cities of Nottingham,
Leeds and Cardiff2.
The Group has an ownership interest in
ten properties: Park Plaza Westminster
Bridge London, Park Plaza London
Riverbank, Park Plaza London Waterloo,
Park Plaza County Hall London2, Park
Plaza Victoria London, Park Plaza London
Park Royal, art’otel London Hoxton, Holmes
Hotel London, Park Plaza Leeds and Park
Plaza Nottingham. Park Plaza Cardiff2
operates under a franchise agreement.
The Group operates art’otel London
Battersea Power Station2 hotel under
a long-term management agreement
through its hospitality platform.
Street art
Hoxton and Shoreditch:
London’s creative home
to street art and
cutting-edge galleries.
357
Rooms
Music venues
The area is abound
with live music
venues, hip bars, and
electric restaurants.
Old Street Station
Financial performance
Reported in Pound Sterling (£)
UK
Total revenue
EBITDAR
EBITDA
Occupancy
Average room rate
RevPAR
Room revenue
EBITDA margin
Year ended
31 Dec
2023
Year ended
31 Dec
2022
£234.9m £190.1m
£76.6m £56.8m
£56.2m
£76.3m
83.6%
£190.8
£159.6
£192.3
£130.3
£183.8m £149.9m
29.6%
32.5%
Year ended
31 Dec
2019
% change
% change
23.6% £207.4m
£71.0m
35.0%
35.7%
£70.7m
67.8% 1,590 bps
£152.4
(0.8)%
22.5%
£133.7
22.6% £152.7m
13.3%
7.9%
7.9%
87.7% (405) bps
25.2%
19.4%
20.4%
34.1% (160) bps
290 bps
1
Independent valuation by Savills in December 2023 and excluding the London development sites art’otel
London Hoxton and Westminster Bridge Road.
2 Revenues derived from these hotels are accounted for in Management and Holdings, and their values
and results are excluded from the data provided in this section.
art’otel London Hoxton
In April 2024, vibrant Hoxton will welcome its newest
resident: art’otel London Hoxton. The hotel is perfectly
placed to fully immerse guests in East London’s thriving art
scene and the City of London is just a short 10-minute walk
or mini Tube ride away. The stylish and playful hotel features
original works from Signature Artist D*Face, whose works
fill our walls and halls, as well as two original Banksy’s. The
full offering includes several destinations restaurants and
bars, some with 360-degree views of London’s skyline, an art
gallery, auditorium, rooftop gym, indoor pool, spa and ample
relaxation and event spaces. It’s no wonder this art’otel has
already been touted the hottest new design hotel in London.
Spitalfields market
One of London’s oldest markets,
Spitalfields Market showcases
hand-crafted and hard-to-find
pieces that make every trip
special and memorable.
60
Suites
50
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Business Review – continued
United Kingdom continued
Portfolio performance
The United Kingdom remains the
Group’s largest region in terms
of revenue generated and property
value. Throughout the year, the portfolio
performed strongly across the Group’s
main segments of leisure, corporate
and meetings. This was predominantly
achieved through a further growth
in room rate alongside a significant
recovery in occupancy. Booking
activity was supported by a number
of events in London, including the
Coronation of King Charles III in May,
and a return to business travel.
Total reported revenue was up 23.6%
to £234.9 million (2022: £190.1 million).
Reported RevPAR was £159.6
(2022: £130.3), driven by a stable
average room rate of £190.8, down
0.8% (2022: £192.3), and a further
improvement in occupancy to 83.6%
(2022: 67.8%).
EBITDA was £76.3 million
(2022: £56.2 million).
Development pipeline
The Group’s flagship project, art’otel
London Hoxton, is now in the final stages
of development ahead of soft opening
in April 2024. Located in the vibrant
Shoreditch area in East London, this
premium lifestyle hotel will comprise
357 rooms and suites, five floors of
5,900m2 office space, wellness facilities,
a gym and swimming pool, and an art
gallery space. The hotel’s Signature
Artist is London-born British street
artist D*Face, who is recognised globally
as one of his generation’s most prolific
contemporary urban artists, blending art,
design and graffiti. The General Manager
has been appointed along with a support
function to prepare the hotel for launch.
art’otel London Hoxton
“We have experienced
strong recovery in the UK
market and have an exciting
pipeline for the future.”
The Group also has three longer-term
development projects in London. The first
is a site adjacent to Park Plaza London Park
Royal (in West London), the second site is at
79–87 Westminster Bridge Road, close to
the Group’s Park Plaza London Waterloo
and Westminster Bridge properties, and
the third development project is the potential
to create a 179-bedroom subterranean
hotel at the Group’s Park Plaza London
Victoria property. The Park Royal and
Park Plaza London Victoria sites both
have planning consent.
Hospitality management platform projects
In February 2023, the Group fully opened
– to critical acclaim – the UK’s first art’otel,
located within the Battersea Power Station
development. The property features 164
bedrooms, a Venetian inspired Italian TOZI
restaurant and bar, a skyline destination
restaurant, JOIA, and a spectacular
rooftop swimming pool. The hotel also
offers a gym, spa, event facilities, and an
art gallery with regular art programmes
throughout the hotel. Jaime Hayon is the
hotel’s interior designer and Signature
Artist, and two Michelin starred Portuguese
chef Henrique Sá Pessoa is the JOIA
restaurant Concept Chef. This hotel is
managed by the Group under a long-term
operating agreement and as a result,
its financial performance is not included
in the performance reported in this
segment. Management fees are accounted
for in the Management and Central
Services segment.
The United Kingdom hotel market*
RevPAR was up 14.5% at £92.4, driven by
a 8.7% increase in average room rate to
£119.5 and a 5.3% increase in occupancy
to 77.3%.
In London, RevPAR increased by 17.1% to
£156.2 compared with 2022, reflecting
a 8.8% increase in occupancy to 79.8%,
and a 7.6% increase in average room
rate to £195.7.
* Source STR European Hotel Review, December 2023.
art’otel London Battersea Power Station
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The Netherlands
Property portfolio
The Group has an ownership interest in
three hotels in the centre of Amsterdam
(Park Plaza Victoria Amsterdam, art’otel
Amsterdam and Park Plaza Vondelpark,
Amsterdam), and a fourth property
located near Schiphol Airport (Park
Plaza Amsterdam Airport). It also owns
Park Plaza branded hotels in Utrecht
and Eindhoven.
Portfolio performance
As in the United Kingdom, the Group’s
Dutch properties performed strongly
throughout the year, driven by a
combination of rate growth and
occupancy recovery.
Total revenue (in local currency) was up
49.6% at €72.8 million (2022: €48.7 million).
RevPAR increased to €141.4 (2022: €95.5),
reflecting the 3.0% uplift in average
room rate to €171.6 (2022: €166.6),
and the significant improvement
in occupancy to 82.4% (2022: 57.3%).
EBITDA improved by €9.4 million to
€22.5 million (2022: €13.1 million).
The Dutch hotel market*
RevPAR increased by 25.4% to €108.3
compared with 2022. Occupancy
increased by 13.4% to 71.3%, and the
average room rate was €151.9, 10.6%
higher than in 2022.
In Amsterdam, our main market in the
Netherlands, RevPAR increased by 29.3%
to €134.2. Occupancy levels increased by
16.6% to 74.8%, and the average daily room
rate increased by 10.9% to €179.4.
* Source STR European Hotel Review, December 2023.
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Dutch property portfolio1
£318m
(2022: £307m)
Financial performance
The Netherlands
Total revenue
EBITDAR
EBITDA
Occupancy
Average room rate
RevPAR
Room revenue
EBITDA margin
Reported in Pound Sterling2 (£)
Reported in local currency Euro (€)
Year ended
31 Dec
2019
% change
% change
Year ended
31 Dec
2023
Year ended
31 Dec
2022
£63.3m £41.6m
£19.6m £11.2m
£11.2m
£19.6m
82.4%
£149.1
£122.8
£142.2
£81.5
£48.1m £31.9m
26.9%
52.3%
75.2%
75.4%
57.3% 2,510 bps
4.9%
50.7%
50.7%
410 bps
30.9%
Year ended
31 Dec
2023
Year ended
31 Dec
2022
€72.8m €48.7m
€22.6m €13.1m
€22.5m €13.1m
Year ended
31 Dec
2019
% change
% change
49.6%
72.1%
72.3%
57.3% 2,510 bps
3.0%
48.0%
48.0%
410 bps
€166.6
€95.5
€37.4m
26.9%
€61.4m
€17.2m
€17.1m
18.6%
31.5%
31.5%
86.2% (385) bps
20.3%
15.0%
20.4%
305 bps
€142.6
€122.9
€46.0m
27.9%
82.4%
€171.6
€141.4
€55.4
30.9%
£53.8m
£15.0m
£15.0m
17.7%
30.5%
30.5%
86.2% (385) bps
19.5%
14.1%
19.5%
305 bps
£124.8
£107.6
£40.3m
27.9%
Independent valuation by Savills in December 2023.
1
2 Average exchange rate from Euro to Pound Sterling for the period ended 31 December 2023 was 1.151 and for the period ended 31 December 2022 was 1.172
representing a 1.8% decrease.
54
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Park Plaza Victoria Amsterdam
“The Group’s
Dutch properties
performed strongly
throughout the year,
driven by a combination
of rate growth and
occupancy recovery.”
art’otel Amsterdam,
Arca restaurant
ARCA provides a casual Portuguese
sharing-plates experience, infused with
modern flavours and Asian inspirations.
Listed in the Michelin Guide 2022
arcaamsterdam.com
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Total value of the
Croatian property portfolio1
£361m
(2022: £334m)
Business Review – continued
Croatia
Property portfolio
The Group’s subsidiary, Arena Hospitality
Group d.d. (‘Arena’), owns and operates a
Croatian portfolio compromising more
than 8,500 rooms and accommodation
units across eight hotels, six resorts and
eight campsites. With the exception of
art’otel Zagreb, all these properties are
located in Istria, Croatia’s most prominent
tourist region. Four of these properties
are Park Plaza branded, one property is
art’otel branded, and Grand Hotel Brioni is
a Radisson Collection hotel. The remainder
of our portfolio operates as part of the
Arena Hotels & Apartments and Arena
Campsites brands. The Group opened
its first art’otel in Zagreb in Q4 2023.
Portfolio performance
The Group’s Croatian operations are
predominately seasonal, with most of the
properties closed during the first and last
quarter of the year. From around Easter
time, business activity intensifies while
hotels, resorts and campsites are fully
open and trading for the peak summer
season in June, July and August. Most
properties are then closed in late
September/mid-October for winter.
The region continued to benefit from the
maturing of properties following significant
repositioning investment programmes to
upscale market positions across the
portfolio. Revenue growth was primarily
from hotels and apartments, especially
from Grand Hotel Brioni Pula due to its
first full-year trading since it opened in
May 2022. In addition, campsites performed
well and delivered year-on-year revenue
growth, building on the record performance
in 2022. This performance was achieved
despite reduced air travel capacity to
and from Pula airport, adverse weather
conditions (with torrential rains during the
summer season) and the full re-opening of
other global tourist markets compared
with 2022, providing tourists with more
travel options.
Total revenue (in local currency) was up
10.6% to €89.9 million (2022: €81.3 million)
and was 28.3% above revenue in 2019. This
was driven by an 11.7% increase in average
room rate to €161.3 (2022: €144.4) with
occupancy decreasing 240 bps to 52.7%
(2022: 55.1%). Consequently, RevPAR
grew to €85.0, mainly due to the higher
average room rate.
Financial performance
Croatia
Total revenue
EBITDAR
EBITDA
Occupancy3
Average room rate3
RevPAR3
Room revenue3
EBITDA margin
Year ended
31 Dec
2019
% change
% change
Year ended
31 Dec
2023
Year ended
31 Dec
2019
% change
% change
Reported in Pound Sterling2 (£)
Reported in local currency Euro (€)4
Year ended
31 Dec
2023
Year ended
31 Dec
2022
£78.1m £69.2m
£22.4m £23.3m
£20.4m £21.4m
12.8%
(3.9)%
(4.7)%
55.1% (240) bps
13.8%
8.8%
17.9%
30.9% (480) bps
52.7%
£140.2
£73.8
£123.2
£67.8
£42.6m £36.1m
26.1%
£61.1m
£19.4m
£18.2m
27.8%
15.2%
12.0%
63.1% (1,040) bps
53.8%
£91.1
28.4%
£57.5
27.3%
£33.5m
29.8% (370) bps
Year ended
31 Dec
2022
€89.9m €81.3m
€27.2m
€25.7m
€25.1m
€23.5m
52.7%
€161.3
€85.0
€144.4
€79.5
€49.0m €42.3m
10.6%
(5.6)%
(6.4)%
55.1% (240) bps
11.7%
6.9%
15.8%
30.9% (475) bps
26.1%
€70.1m
€22.2m
€20.8m
28.3%
16.0%
12.8%
63.1% (1,040) bps
54.9%
29.4%
28.2%
29.7% (360) bps
€104.1
€65.7
€38.2m
1 Independent valuation by Zagreb nekretnine Ltd in December 2023.
2 Average exchange rate from Euro to Pound Sterling for the period ended 31 December 2023 was 1.151 and for the period ended 31 December 2022 was 1.172
representing a 1.8% decrease.
3 The room revenue, average room rate, occupancy and RevPAR statistics include all accommodation units at hotels and self-catering apartment complexes and exclude
campsites and mobile homes.
4 Since 1 January 2023, the Group’s Croatian portfolio performance has been reported in euros, following Croatia’s admission to the eurozone.
Grand Hotel Brioni Pula, a Radisson Collection Hotel
A landmark, luxury upper upscale hotel
in an iconic cliff-top location providing
panoramic views of the Adriatic and
Brijuni islands.
The hotel was relaunched in May 2022
following a €35 million investment to
reposition the property as a Radisson
Collection Hotel. The hotel was declared
the ‘Best Hotel in Croatia’ at the prestigious
Croatian Tourism Days 2023, organised
by the Ministry of Tourism and Sports,
the Croatian Tourist Board and the
Croatian Chamber of Economy.
Rooms and facilities: 227 rooms over
seven floors, restaurants and bars,
conference centre, indoor pool, as well
as an extensive wellness centre with
saunas, relaxation rooms and gym.
art’otel Zagreb
EBITDA was €23.5 million, which was 12.8% above 2019, however,
it was 6.4% lower than 2022 (2022: €25.1 million), primarily due to
the impact of significantly higher utilities costs, up 71.0% year-on-
year, and increased payroll expenses.
Asset management projects
Following phase one of renovations at Arena Stoja Campsite
in 2022, phase two was completed ahead of the 2023 summer
season. This €8.3 million investment included a new arrival
and entrance area for the campsite, an extensive renovation
of its main restaurant and coffee shop, along with major
infrastructure upgrades, further strengthening the
campsite’s offering and appeal.
In Croatia, we are taking a more cautious approach to new
developments and postponing larger projects, such as the
conversion of the Hotel Riviera, Pula into a premium offering,
until such time that we can be sure that new investments meet
our targeted return hurdle rate. Our planned investment in
Hotel Riviera in Pula is temporarily paused due to construction
cost inflation associated with the project.
Development projects
In October 2023, the Group opened art’otel Zagreb following a
€18 million investment to convert an iconic office building in the
heart of the city centre, known to be one of the best examples of
Zagreb’s Art Deco architecture. Located just off Zagreb’s main
square (Ban Jelačić Square), the hotel features 110 rooms, a
rooftop bar with a panoramic view of the city (opening in 2024),
pan-Asian destination restaurant and bar YEZI, four meeting
spaces, a spa and an indoor pool. The hotel’s Signature Artist
is the late Boris Bućan, one of Croatia’s best-known artists. His
artwork is layered within the very fabric of the hotel for guests
to enjoy during their stay – it is a poignant last collection of his
life’s creativity. The hotel has been well received since its launch
in October 2023, and contributed nine weeks of performance
to the results.
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Total value of the German
property portfolio1
£92m(2022: £100m)
Business Review – continued
Germany
Property portfolio
The Group’s portfolio includes four
properties in Berlin and one hotel each in
Cologne, Nuremberg and Trier. Hotels with
an ownership interest include Park Plaza
Berlin Kudamm3 (relaunching in Q2 2024 as
Radisson RED Berlin Kudamm), Park Plaza
Nuremberg, art’otel Berlin Mitte3, Park
Plaza Berlin and art’otel Cologne. Park
Plaza Wallstreet Berlin Mitte operates
under an operating lease and Park Plaza
Trier3 operates under a franchise agreement.
Portfolio performance
Germany is the Group’s smallest region
and as previously reported, operations
had a slower start to the year than other
regions, with both rate and occupancy
growth impacted by market dynamics in
the region. However, trading improved
as the year progressed.
Market conditions in Germany saw a
continued rebuilding in guest numbers.
While this took longer than anticipated,
revenue grew significantly year-on-year
as a result of an increase in occupancy
and average rate. This was supported by
the various fairs and events which were
hosted in Cologne, Nuremburg and Berlin
throughout the period.
Despite the improved revenue performance,
the bottom line was impacted by inflation
related to rising costs in utilities, food,
and service contracts, as well as the
ending of government grants for
payroll and operating costs.
Total revenue (in local currency) was up
26.0% at €26.2 million (2022: €20.8 million).
Occupancy continued to recover to 62.3%
(2022: 53.0%) and average room rate grew
by 7.1% to €138.4 (2022: €129.3). As a result,
RevPAR increased by 25.9% to €86.2
(2022: €68.5).
However, EBITDA was €6.3 million
(2022: €7.5 million), impacted by inflationary
increases in the cost of goods and services
and higher labour costs. In 2022, EBITDA
benefited from non-recurring government
grants of €2.9 million.
Asset management projects
In Berlin, Park Plaza Berlin Kudamm was
closed in November 2023 for a six-month
refurbishment programme, which includes
a complete refurbishment of all public areas
and guest rooms. The hotel is expected to
reopen as Radisson RED Berlin Kudamm
in Q2 2024.
The German hotel market*
The German market experienced a 18.5%
increase in RevPAR to €74.2, resulting
from a 11.5% improvement in occupancy
to 64.8% and a 6.2% increase in average
room rate to €114.5.
In Berlin, RevPAR increased by 16.4% to €85.8
and occupancy increased by 8.3% to 71.3%.
Average room rate increased 7.5% to €120.3.
* Source STR European Hotel Review, December 2023.
Financial performance
Germany
Total revenue
EBITDAR
EBITDA
Occupancy
Average room rate
RevPAR
Room revenue
EBITDA margin
Reported in Pound Sterling2 (£)
Reported in local currency Euro (€)
Year ended
31 Dec
2023
Year ended
31 Dec
2022
£22.8m £17.7m
£6.4m
£6.4m
53.0%
£110.3
£58.4
£19.5m £15.2m
£5.5m
£5.5m
62.3%
£120.3
£74.9
% change
28.4%
(14.2)%
(14.2)%
930 bps
9.0%
28.2%
28.2%
35.9% (1,190) bps
24.0%
Year ended
31 Dec
2019
£24.2m
£7.0m
£7.0m
% change
(6.1)%
(21.6)%
(21.6)%
79.4% (1,715) bps
24.3%
£96.7
(2.5)%
£76.8
(2.5)%
£20.0m
28.8% (480) bps
Year ended
31 Dec
2023
Year ended
31 Dec
2022
€26.2m €20.8m
€7.5m
€7.5m
53.0%
€129.3
€68.5
€22.5m €17.8m
€6.3m
€6.3m
62.3%
€138.4
€86.2
% change
26.0%
(15.7)%
(15.7)%
930 bps
7.1%
25.9%
25.9%
35.9% (1,190) bps
24.0%
Year ended
31 Dec
2019
€27.7m
€8.0m
€8.0m
% change
(5.4)%
(21.0)%
(21.0)%
79.4% (1,715) bps
25.2%
(1.8)%
(1.8)%
28.8% (480) bps
€110.5
€87.8
€22.9m
art’otel Berlin Mitte
Radisson RED Berlin Kudamm
Park Plaza Nuremburg
art’otel Berlin Mitte
Independent valuation by Savills in December 2023.
1
2 Average exchange rate from Euro to Pound Sterling for the period ended 31 December 2023 was 1.151 and for the period ended 31 December 2022 was 1.172,
representing a 1.8% decrease.
3 Revenues derived from these hotels are accounted for in Management and Central Services performance and their values and results are excluded from the data
provided in this section.
Park Plaza Wallstreet Berlin Mitte
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Other markets
Reported in Pound Sterling (£)
Year ended
31 Dec
2023
Year ended
31 Dec
2022
% change
£7.9m
£(0.5)m
£(0.5)m
44.4%
£129.8
£57.7
£6.1m
£6.3m
£(0.6)m
£(0.6)m
23.9%
N/A
N/A
34.3% 1,010 bps
33.5%
£97.2
72.7%
£33.4
32.3%
£4.6m
reconfiguration of the hotel layout and
its interior design. The hotel is on track
to reopen during H1 2024 as the upper
upscale 99-room lifestyle art’otel Rome
Piazza Sallustio.
Belgrade, Serbia
The former Arena 88 Rooms Hotel
in Belgrade city centre was closed in
March 2023 to undergo a £2.6 million
refurbishment programme. This was
completed early 2024 with the hotel
reopening in February 2024 as Radisson
RED Belgrade, the Group’s first Radisson
RED branded property and the second
hotel to be operated and marketed by the
Group under its extended partnership
with Radisson. The hotel has 88 rooms
and includes a gym, an all-day restaurant,
flexible event spaces, including game
areas and a co-working area, and a
rooftop bar with views of the historic
city centre.
Budapest, Hungary
In March 2023, the property in Budapest
was rebranded Park Plaza Budapest
(formerly art’otel Budapest). This followed
an investment programme in 2022 to
redesign and upgrade the public areas.
The hotel continued to see an improvement
in performance during the year.
Radisson RED Belgrade
Management and central services
Our performance
Revenues in this segment are primarily
related to management, sales, marketing
and franchise fees, and other charges for
central services. This includes properties
operated by the Group’s hospitality
management platform, such as art’otel
London Battersea Power Station.
For the year ended 31 December 2023,
the segment showed a significant
improvement due to the recovery.
Management, Group central services
and licence, sales and marketing fees are
calculated as a percentage of revenues
and profit, and therefore are affected
by underlying hotel performance.
These are predominantly charged
within the Group and therefore
eliminated upon consolidation.
art’otel London Battersea Power Station
Management revenue
Central Services revenue
Revenues within the consolidated Group
External and reported revenue
EBITDA
Listed Company
–
–
–
–
£(2.2)m
Reported in Pound Sterling (£)
Year ended 31 Dec 2023
Development
Projects
–
–
–
–
£(1.0)m
Management
Platform
£34.2m
–
£(27.7)m
Arena Hospitality
Group
–
£14.1m
£(12.9)m
£6.5m
£12.1m
£1.2m
£(1.9)m
Reported in Pound Sterling (£)
Year ended 31 Dec 2022
Listed Company
Development
Projects
Management
Platform
Arena Hospitality
Group
Management revenue
Central Services revenue
Revenues within the consolidated Group
External and reported revenue
EBITDA
–
–
–
–
–
–
–
£(3.9)m
–
£(0.4)m
£24.9m
–
£(20.7)m
£4.2m
£5.5m
–
£12.6m
£(11.7)m
£0.9m
£(1.2)m
Total
£34.2m
£14.1m
£(40.6)m
£7.7m
£7.0m
Total
£24.9m
£12.6m
£(32.4)m
£5.1m
£0.0 m
Financial performance
Total revenue
EBITDAR
EBITDA
Occupancy
Average room rate
RevPAR
Room revenue
Italy, Hungary, Serbia and Austria
This includes recently acquired
properties in Italy, Serbia and Austria
and a hotel operated in Budapest,
Hungary. The Group’s properties
in Austria and Budapest were open
throughout the year. However, the
properties in Belgrade (Serbia) and
Rome (Italy) were closed all year due
to ongoing investment programmes
to reposition these properties.
Nassfeld, Austria
The Arena FRANZ Ferdinand hotel in
Nassfeld performed well in its first year as
a year-round operation (144 rooms). This
followed recent investments to refurbish
the hotel and upgrade the amenities,
such as air-conditioning throughout the
property and the addition of wellness
areas, including an indoor and outdoor
swimming pool. Following completion of
the investment, we started to reposition
the hotel to capture both the summer
and winter seasons. The hotel was open
for almost nine months of the year, with
average rates increasing substantially
year-on-year.
Rome, Italy
The multi million investment in the
repositioning of the former Londra &
Cargill Hotel is nearing completion. The
property, which is in a prime location in
the city of Rome, was closed in July 2022
for major refurbishment works, including
60
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PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report Stakeholder engagement
As our business grows, it provides long-term, sustainable
value to a variety of financial and community stakeholders.
By creating beautiful, world-class hotels across our destinations,
we deliver our guests great experiences. We contribute to the economies
of our local communities, and we drive up environmental performance.
We are committed to engaging with all our stakeholders for every aspect of our strategy. For example, the ESG
Strategy communicated on pages 66 to 79 is based on a double materiality assessment of stakeholders’ ESG priorities.
This section gives a summary of some of the ways we have engaged with key stakeholder groups in 2023.
Guests
art’otel London Battersea Power Station
Stakeholder priorities
• A hotel experience that delivers the
best the destination can offer
• To enjoy our hotels in a responsible way
through a proactive approach to reducing
carbon, plastics and other waste
• Multiple, easy communication channels
throughout the guest journey
• Consistency in service and product
across the portfolio
• Unique, memorable experiences
• A personalised approach
• Rewarding their loyalty
How we engaged in 2023
Guest experience is a top priority, so we
ensure we engage fully with each guest’s
needs before, during and after their stay.
Before the stay:
Guests are encouraged to contact us
through various channels to advise us of
any needs or requests they might have.
During the stay:
Hotel teams are always available for
guest needs, but we are proud of
the Digital Guest Experience, which
allows guests to check-in and out, use
smartphones as room-keys, and book
spa services and order room service
from in-room interactive services.
62
Nothing can replace in-person service,
so we maintain a Service of Hospitality
programme to ensure the best possible
guest experience.
We have rolled out new ways of ensuring
our staff have digital information to
enhance guest experience. Not only does
this speed up, and ensure consistency
and monitoring of, our service to guests,
it has hugely reduced the demand for
paper in daily operations.
After the stay:
Surveys are sent after each guest stay,
where a valid email address is on record.
Guest reviews are proactively monitored
and responded to, and we maintain a
dedicated customer service centre.
Social media listening and social
media engagement
In 2023, we received 90,731 online reviews
and 43,714 Guest survey responses. We
were highest rated in: Service, Location,
and Food and Beverage. We also scored
93.7 when we asked if guests would
recommend us.
Investors
Stakeholder priorities
• Transparency and accountability to
ensure what we do drives long-term,
sustainable returns on investment
• Good Corporate Governance
• Reduced carbon emissions
• Diversity, Equity and Inclusion
at leadership level
How we engaged in 2023
Our senior leadership follow up on
our full-year and half-year results
announcements with an Investor
Road Show. This allows full and frank
discussion of the results, and the plans
for the future, ensuring that the
leadership of the business is fully
accountable to its investor base.
Should any given investor be unable
to attend a road show session, video
presentations about the results are
recorded and made available online.
Team members
Showing is always more effective than
telling, so we have regular investor lunches
at our hotels. We also conduct site visits to
show progress on development projects,
and explain our pipeline.
We also ensure that we remain
available on an ad-hoc basis, so we
make periodic presentations, and
have investor calls throughout the
year. The Senior Independent Director
is always available to shareholders.
We maintain online information channels
through LinkedIn messaging of news,
results and developments, and an
e-mail newsletter to investors, who
can subscribe to alerts from PPHE.com.
Third party analyst coverage is also available
through brokers and paid-for publications.
Arca team, art’otel Amsterdam
art’otel Zagreb
We also formed a network of ESG
Ambassadors in all our hotels, who
will support the implementation of our
agenda. This ensures everyone can help
take ownership, drive local initiatives,
and stay informed about our progress.
We maintain Team Member Forums at
our hotels, which are a great supplement
to Let’s Connect sessions, where senior
leadership present updates on the business,
and receive feedback. The Team Member
Forums allow for comments, suggestions,
and requests for change to be fed up to
senior leadership, and are a vital part of
ensuring ongoing communication between
the business and our team members.
Forum members are elected by their
peers, with a representative from each
department in the hotel or regional office.
They meet monthly. A Regional Forum,
with a representative from each location,
meets with the Executive Vice-President
of Operations for the region quarterly.
Stakeholder priorities
• Working for an employer that cares
about their wellbeing and development
• Contributing to environmental and
social progress
• A great place to work: safe, flexible,
diverse and inclusive
• A job to be proud of
• Health, physical and mental
• Being rewarded for loyalty and dedication
Careers that grow, progress and develop
•
• Learning at work
• Feeling respected, valued and heard
How we engaged in 2023
2023 saw the launch of our monthly ESG
newsletter, to inform everyone working
in the business about the company’s ESG
Strategy and update them on progress
towards our targets.
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Communities
Stakeholder priorities
• Creation of good, skilled jobs
for local people
• Care for our local environment
through clean air, biodiversity,
and waste reduction
• Engagement with non-profit
organisations
• Support for civil society locally –
schools, hospitals, homelessness
charities and the like
• Attracting consumers to local businesses
• Attracting investment
How we engaged in 2023
Our teams have provided financial and
in-kind donations to their chosen local
non-profit organisations. Examples of
this include the partnerships with Oasis
Academy and Clean Conscience. Oasis
Academy supports the development
of young people in London, while Clean
Conscience collects used furniture and
toiletries from our hotels and donates
them to people in need, diverting these
items from landfill.
Our hotels have also hosted various
events to support homeless shelters by
providing meals and financial support.
An instance of this is the collaboration
with StreetSmart, a charity with the
mission to tackle homelessness in the UK,
for which we have raised funds by adding
an optional donation to restaurant bills.
Furthermore, we have expanded these
collaborations by hiring staff through
the charity with 79 people hired in 2023.
In 2023 we connected with local government,
with the aim to create stronger partnerships
to work towards clean air and net zero targets.
Tozi, Park Plaza Vondelpark, Amsterdam
Affiliates
Stakeholder priorities
• A strong business partnership through
shared stewardship of brand standards
• Safeguarding brand reputation for
environmental and social issues
How we engaged in 2023
We regularly engage with Radisson
to ensure ESG alignment.
Brand standards audits ensure customers
can rely on high product standards.
Suppliers
Stakeholder priorities
• Sustainable procurement
How we engaged in 2023
We engaged many of our
suppliers to understand
how they can support us in
improving environmental
sustainability and social
responsibility across our
supply chain.
We looked at the ways
non-profit organisations
can support us in ensuring
high standards in commodity
procurement, for example,
ensuring sustainable
fish supplies.
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Environmental, Social and Governance
Throughout 2023, teams in the business have worked
diligently to set and refine defined targets to achieve
the strategic objectives of our ESG Strategy.
We are working on
delivering on the
ESG priorities of all of
our stakeholders and
publicly communicating
the information both customers and
shareholders have requested to assist
them with their own ESG strategies.
This year has seen us take important
measures to maximise best practice,
and to communicate the actions we take
effectively to stakeholders. We are
working on a deep-dive assessment
and analysis of our Scope 3 carbon
emissions over a 12-month period of full
operations, in order to assist with setting
baselines for measurable Scope 3 carbon
reduction targets. Overall, we have 35 ESG
targets divided between: our Properties,
our People, our Local Communities and
our Supply Chain. In order to manage
implementation, we have recruited a
full-time ESG manager to monitor and
report to the Executive Leadership Team
on our performance benchmarked against
competitors and progress on achieving
our strategic objectives. We additionally
have third party support from the
Zero Carbon Company, the Energy &
Environment Alliance for advice on
delivery of strategic objectives.
Inbar Zilberman
Chief Corporate & Legal Officer
“Environmental, Social
and Governance targets
are a high priority for
our stakeholders. We are
setting robust targets,
and aiming for maximum
transparency.”
Park Plaza London Waterloo Team Member
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ESG Strategy targets
Our ESG Strategy is based on the
principle of double materiality, which
allows us to determine what issues are
most important to our stakeholders;
the environmental and social impact of
our business operations; and the impact
of environmental and social changes on
the long-term success of the business.
Our targets each align to a strategic
objective designed to meet stakeholder
expectations. These are aligned with the
United Nations Sustainable Development
Goals (SDGs).
Although we can relate our activities
to most of them, those that we feel like
we can contribute the most to are:
PPHE Human Resources Team
#3
Good Health
and Well-being
#8
Decent work and
economic growth
#11
Sustainable cities
and communities
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#12
Responsible
consumption
and production
#13
Climate action
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Our ESG Strategy
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Links to UN SDGs
Strategic Objectives
Each target furthers the achievement
of a defined Strategic Objective. The
Strategic Objectives have been set to meet
stakeholder priorities, and to ensure that
each element of the strategy is part of a
mutually supporting framework. They have
been designed so that, where possible,
achievement of one Strategic Objective
furthers others and the strategy overall.
We were supported by the consultancy
Luminous in the materiality assessment,
and subsequent development of the
strategy. We use other third parties to
assist us. For example, the Zero Carbon
Company helps us with our detailed
Scope 3 carbon footprint, and the Energy
& Environment Alliance (EEA) is assisting us
finding third party assurance for robust
building certifications.
As part of our effort to reduce carbon
emissions, we have sent a commitment
letter to the Science-Based Targets
Initiative (SBTi). This informs them of our
intention to set a net zero target, and to
commit to long-term and interim targets
which we will request that they verify.
Once we receive this third party validation
of our net zero targets, we will be required
by SBTi to meet interim targets, and will
therefore be publicly accountable on our
progress, metrics and achievement of
milestones. The next steps will be setting
and communicating the two targets to
SBTi for their validation within two years.
On our objectives to attract and retain
talent and promote Diversity, Equity
and Inclusion, we have established
detailed targets for workforce
engagement, wellbeing and awareness
of the Company’s ESG activities. ESG
Ambassadors now exist in every
property to ensure that centralised
initiatives are properly communicated
throughout the business, whilst local
initiatives are properly communicated
to the Executive Leadership Team.
Strategic Objective
Strategic Pillar
ESG Priority
Achieve net zero by 2040
Adapt to climate change
Attract and retain talent
Communicate our ESG efforts to stakeholders
Enhance biodiversity
Ensure waste management best practice
Promote Diversity, Equity and Inclusion
Promote ESG across our supply chain
Environmental
Environmental
Social
Governance
Environmental, Social
Environmental, Social
Social, Governance
Environmental, Social
Ensure good stewardship of water resources
Environmental, Social
Support local communities
Environmental, Social
On supply chain management, we are
ensuring that risks pertaining to certain
industries in terms of environmental
impact, and unacceptable working
practices and labour exploitation, are
covered in detail in sourcing policies.
“Biodiversity, social value,
waste and water baseline
data is being collected in
order to set numerical
targets by stakeholder
recognised metrics.”
Reporting
In 2023, we have disclosed our
Company information through a variety
of frameworks, such as CDP (formerly
known as Carbon Disclosure Project),
WDI (Workforce Disclosure Initiative)
and we are preparing to publish under
the GRI (Global Reporting Initiative)
framework.
This year the International Sustainability
Standards Board (ISSB) published two new
standards for sustainability disclosures:
IFRS S1 ‘General Requirements for
Disclosure of Sustainability-related
Financial Information’, and IFRS S2
‘Climate-related Disclosures’. Being
a listed company on the London Stock
Exchange, PPHE will be in scope of both
these new standards and required to
report from 2025. IFRS1 will broadly
follow the Sustainability Accounting
Standards Board (SASB) standard and
IFRS2 the Task Force on Climate-Related
Financial Disclosures (TCFD). More detail
on this can be found in the TCFD Report
Summary on page 80.
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Energy and carbon emissions
In 2023, we completed a detailed mapping
of our carbon footprint across the portfolio
for a 12-month period where our hotels
were operating in such a way as to permit
a representative sample of data.
Resilient SUPPL Y C H A I N
Working with the hospitality industry’s Zero Carbon
Company to obtain, analyse and publish this data was
labour intensive, but allows us to set accurate baselines for
carbon consumption, and roadmaps to reduction. From
the data, we are able to design engineering plans, including
anticipated capital expenditure requirements, which allow
us to update our properties in such a way as to further our
net zero goals. They also allow us to review our supply chain
to reduce and remove carbon emissions from Scope 3.
Sustainable
Table 1. Carbon footprint of PPHE Hotel Group (2023)
(calculations supplied by Zero Carbon Company)
Emission scope
Scope 1
Scope 2
Scope 3
Total
tCO2e
(Market)
10,529
3,300
62,597
76,426
% of Total
(Market)
tCO2e
(Location)
% of Total
(Location)
14%
4%
82%
100%
10,529
16,321
62,597
89,447
12%
18%
70%
100%
To ensure that our hotels achieve high
standards of environmental performance
we have committed to ensuring that all
new-build hotels, repositioning projects and
refurbishments obtain an environmental
certification by a recognised building
certification scheme. In the UK, we have
done this by pursuing new Building
Research Establishment Environmental
Assessment Methodology (‘BREEAM’)
certifications. Four of our hotels are
already certified via the BREEAM standard:
Park Plaza London Waterloo, Park Plaza
London Riverbank, Park Plaza Park Royal
London and art’otel Battersea Power
Station London. Our two ongoing
construction projects, art’otel London
Hoxton and art’otel Rome Piazza Sallustio,
are being constructed with the aim to be
awarded BREEAM certification in 2024. In
the rest of our European portfolio, we are
exploring both BREEAM and other possible
environmental certifications relevant to the
specific countries in which we operate (such
as Deutsche Gesellschaft für Nachhaltiges
Bauen (DGNB) in Germany).
All hotels in all regions (with the exception
of Radisson RED in Belgrade) are supplied
by 100% renewable electricity. This is
achieved in the UK through Renewable
Energy Guarantees of Origin (REGOs)
and in the rest of Europe through
Guarantees of Origin (GoOs). Our
engineering team is conducting studies
to phase out gas and further electrify
our properties. An example of this
commitment are the investments made
into Park Plaza Victoria London in 2023,
where we spent around £2 million to
replace the air conditioning system in
all guest rooms. Additionally, we will also
upgrade the boiler systems, bringing even
further reductions in gas consumption.
The efforts around the environmental
performance of our hotels are also
reflected in the certifications that they
have been awarded, which are shown
in Table 2.
Park Plaza London Riverbank Engineer
Properties
We are members of, certified to or supporters
of a number of labels recognised by the Global
Sustainable Tourism Council:
Table 2: Environmental sustainability and social responsibility certifications
The Netherlands United Kingdom Germany
Green Key
Green Globe
Green Tourism
Gold
Park Plaza Westminster
Bridge London
art’otel Berlin Mitte
art’otel Cologne
Park Plaza
Amsterdam Airport
Park Plaza Victoria
Amsterdam
art’otel Amsterdam
Green Key
Gold
Park Plaza Eindhoven
Park Plaza Vondelpark
Amsterdam
Park Plaza Utrecht
Park Plaza Nottingham
Park Plaza County
Hall London
Park Plaza London
Waterloo
Park Plaza London
Riverbank
Silver
Park Plaza
Victoria London
Park Plaza Leeds
Holmes Hotel London
Park Plaza Berlin Kudamm
Park Plaza Berlin
Park Plaza Wallstreet
Berlin Mitte
Park Plaza Nuremberg
Croatia
Travelife
Gold
Park Plaza Belvedere
Medulin
TUI BLUE Medulin
Park Plaza Histria Pula
Blue Flag
Park Plaza Histria Pula
Grand Hotel Brioni Pula
Green Key
Park Plaza Histria Pula
Ai Pini Medulin
Park Plaza Punta
Verudela Pula
Verudela Beach Pula
art’otel Zagreb
Arena Grand Kažela
Campsite Medulin
Park Plaza Arena Pula
Arena One 99 Glamping
Grand Hotel Brioni Pula
Splendid Pula
Horizont Pula
Park Plaza
Belvedere Medulin
Arena Hotel
Holiday Medulin
Hotel TUI Blue Medulin
Arena Stoja
Campsite Pula
Arena Medulin Campsite
Arena Stupice Campsite
Arena Tašalera Campsite
Arena Runke Campsite
Arena Indije
Campsite Banjole
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Our guests can participate in our efforts
towards better water stewardship through
the Ecological Programme. Launched
in 2022, the programme allows guests
staying for a minimum of two nights to opt
out of all housekeeping services, helping
us reduce the amount of water, energy
and detergent used to wash linens. In return,
the hotel donates €/£1 per night to our
nominated charity ‘Just a Drop’, which
provides water hygiene and sanitation to
communities in developing countries, while
guests can choose from a range of rewards.
In 2023 we have donated £103,000 to Just
a Drop. These funds have helped Just a
Drop implement projects in communities
in Cambodia, Zambia, Nicaragua and
Kenya. The projects have supported 742
people in the Mumbwa District in Zambia
and our support to these projects directly
contributes to the SDGs ‘Clean water and
sanitation’, ‘Good health and well-being’,
and ‘Sustainable cities and communities’.
742
People supported
in the Mumbwa
District, Zambia
Waste
One of our ambitions in this area is to
send zero waste to landfill from all of
our properties, given the adverse
environmental impacts that this
method of waste disposal generates.
We have also engaged in conversations
with our waste management providers,
who are supporting us to improve our
waste management practices (for example,
through training of staff working in
waste loading bays and reduction of
waste collection journeys) and to ensure
the accuracy in the waste diversion data,
with the aim to start reporting on this
data in the 2024 Annual Report.
We have introduced measures to
decrease the usage of paper and plastics:
key materials that contribute to high
waste and low overall sustainability.
Beehive at Park Plaza London Waterloo
Just a Drop Yimwaa Primary School Kenya supported by PPHE
We are also looking at climate risk across
our portfolio, with our latest analysis
included in the 2023 TCFD Report. While
climate change in and of itself remains an
‘emerging risk’ under the rubric of our
enterprise risk management system,
multiple ‘principal risks’ include a climate
change element, or the impact and/or
likelihood of these risks materially increases
due to climate change. Please see our
Enterprise Risk Management section
on page 84 for further information.
Water
Water stewardship was a high priority
for multiple stakeholder groups in our
2022 ESG materiality assessment. We
use technology in our plumbing systems
to regulate and restrict water flow, and we
are collecting water usage data for analysis
in order to identify further reduction
opportunities. Each of our properties
automatically collects water consumption
data and inputs it into our data management
tool for accurate, daily reporting.
The TCFD Report contains an analysis
of all the identified climate risks under
different scenarios for each of the
geographies where we operate (see
page 80). However, to ensure that
our business is future-proofed against
these climate risks, we have established
a target to conduct an in-depth analysis
of these also at the level of each property
by the end of 2025.
Analysis conducted as part of TCFD
reporting has identified the water
stress profile of our areas of operation.
None of our properties is located in a
region classified as under ‘extreme’ water
stress, however London and Berlin are
both designated as areas of ‘high’ water
stress. The design and operation of our
properties and capital expenditure plans
on refurbishment accordingly take into
account the need to minimise water usage.
Measures to reduce usage and waste of key raw materials
Paper
Plastic
• Digital check-in/out and digital
• Single-use plastic targeted for
keys for guests;
• ‘Smart rooms’ in several of our hotels;
• QR codes replacing restaurant menus
and guest directories;
• Software platform for hotel operations,
removal from hotel rooms by 2026;
• Single-use plastic containers for bathroom
amenities to be replaced with larger
dispensers by the end of 2024 for both
Park Plaza and art’otel;
• Plastic wrapping in slippers removed
from some of our hotels;
• Plastic and packaging identified as
high priority for reduction in supplier
engagement activities scheduled for 2024.
which allowed us to transition from
paper to digital solutions for most
activities, such as housekeeping
and maintenance;
• Electronic invoicing to replace paper
(where guests allow).
Other updates in our waste reduction
practices include:
• Use of biodegradable toiletries
and detergents extended;
• Waste compactors installed where
possible to reduce the volume of waste
collected, ultimately reducing the
number of waste collections per week.
Biodiversity
The local communities in which we
operate are one of our four strategic
pillars. While much of our portfolio
occupies vibrant city centres, though in
the Croatian region, we are proud to be
a steward of protected wildlife areas and
a national park. These urban and rural
areas present contrasting challenges for
biodiversity improvement. Besides making
our spaces more visibly appealing to our
guests, investing in biodiversity also
contributes to improved air quality in
urban centres. To support this ambition,
we have a target to have our hotels
contributing to at least one biodiversity
project in each region by the end of 2025.
Where this is not possible on site, due to
limited available space, we will look to
support biodiversity projects managed
locally (for example, supporting local
authorities or voluntary organisations in
activities like the creation of green spaces
or the restoration of ecosystems). Park
Plaza London Waterloo and Park Plaza
Nottingham already have biodiversity
projects in place, with beehives installed
on both of their buildings. Each harvest
at Park Plaza London Waterloo yields
almost 30kg of honey, which is used
in their desserts and cocktails.
In Croatia, three of Arena Hotel Group’s
(Arena) campsites covering 570,000m2
are located within the boundaries of
the Protected Nature of Southern Istria.
These areas constitute an important
network of connected habitats, and
our operations are fully aligned with
EU and national provisions governing
biodiversity conservation. Furthermore,
Arena has a horticulture team with more
than 30 members who provide care to
green areas. Arena has been awarded
with the Blue Flag Gold for over 15 years
of ongoing commitment to preserving
three beaches in the Verudela Peninsula.
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Strong
Social Value
We consider being a responsible corporate citizen
an important aspect of our operations. Therefore,
many of our hotels support local communities in
various ways, through both financial and in-kind
donations. Here are just some examples:
• Some of our hotels are supporting the charity Clean Conscience,
which allows companies to donate surplus assets to non-profit
organisations. In particular, in 2023 the Park Plaza Waterloo
and Park Plaza Riverbank hotels have donated unused furniture,
soap and toiletries for a total value of over £10,000
£10,000+
donated
• Through our Ecological Programme, all our Park Plaza
and art’otel hotels support the charity ‘Just a Drop’,
which provides clean water, sanitation and hygiene
projects to communities in South-East Asia, Africa
and Latin America. in 2023 alone, PPHE has raised
over £103,000 for projects delivered by Just a Drop
£103,000
raised for projects delivered by Just a Drop
• Our hotels in Amsterdam support refugees
through Lijnden Business Park and
homeless shelters
As part of our efforts to support
our local communities, in 2024 we
will launch an initiative to provide
every PPHE employee with one day of
volunteering per year (in addition to their
annual leave entitlement). This will allow
us to strengthen our partnership with
local charities and NGOs, providing an
additional stream of support to them
besides financial support, provision
of Meetings and Events (M&E) spaces,
and donation of money, furniture and
other goods.
The quantification of these donations
supports our target to start measuring
social value in 2023. Although these are
only partial figures, from 2024 we will be
able to start measuring and reporting on
social value across a wider range of the
portfolio. This will also allow us to use 2024
as a baseline year to then set future social
value ambitions.
The opening of art’otel Battersea Power
Station London, Radisson Red Belgrade
and art’otel Zagreb in late 2023 has created
around 270 jobs in the respective locations,
with more expected for 2024 with the opening
of art’otel Rome Piazza Sallustio and art’otel
London Hoxton.
270
jobs created
Local communities
Just a Drop Yimwaa Primary School Kenya
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To ensure that our ESG efforts go
beyond our own organisation, we are
at work on updated sourcing policies
that incorporate higher standards
around environmental sustainability
and social responsibility.
During the year, we have engaged with many
of our suppliers to understand how they can
support PPHE’s ambition to become a more
sustainable business. The new policies will be
devised in 2024, with their implementation
planned for 2025.
Resilient
As a UK-listed company, we are working
towards making our impact on environment,
economy and society up and down the
supply chain is a net positive one. We
are undertaking work to understand
this impact better.
We set out in our statutory Modern
Slavery Act 2015 statement how we
approach human rights and labour
standards in our supply chain. This
involves looking at the risk profile of
products and services. We assess the
likelihood of exploitation or coercion of
workforces involved in the production
of our facilities. Our new policies will
enable us to be more accountable by
setting out specific measures taken
to address risk where it exists.
The global fisheries industry provides
an example of how we take this risk-
based approach to both human rights
and environmental issues. Workers at
sea are automatically at higher risk of
exploitation, because they are unable
to leave their workplace, and their
employer controls their working and
living environments. We are factoring
this into new policy documents.
We are also engaging with specific suppliers
to understand the sustainability of fish
stocks to ensure that our menus do not
contribute to over-fishing.
Supply chain
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As one of the pillars of our ESG Strategy,
the importance of our people is reflected in
some various targets that we have set for our
organisation. These include ambitions around
employee wellbeing, engagement rate, learning
and development, retention rate, and Diversity,
Equity and Inclusion (DE&I).
Resilient SUPPL Y C H A I N
Forward-looking
Investment in People
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Career walk-in centre hires 2023
People
Diversity, Equity & Inclusion (DE&I)
In 2024 we will introduce mandatory DE&I training for all
managers, to ensure they are all aware of the challenges
and opportunities arising from having a diverse workforce
as well as other initiatives to support our DE&I agenda.
The work towards the rollout of a DE&I programme started
in 2023 in our hotels in the Netherlands. We have worked with
an external consultant to undertake an analysis to define a
roadmap of actions for the immediate future. This will ensure
that we make each and every employee and guest feel like they
are valued regardless of their differences, ultimately bringing
a diverse, equitable and inclusive environment for everyone
in our hotels.
Workforce engagement
At PPHE, we want to ensure that everyone knows they can
speak up and that their feedback will be taken on board.
In 2023, our pulse surveys reported that employee
engagement rate for the UK and the Netherlands sits
at 83%, exactly meeting our Company target and placing
us above the industry average of 81%.
From August to October 2023, our
Head of Compliance visited all the hotels
in the UK and the Netherlands, to deliver
in-person sessions on business ethics to
the General Managers and their Heads of
Department. These sessions were aimed
to raise awareness around issues such
as our whistleblowing policy, harassment
in the workplace, safe personal data
handling and more.
ESG communications and training
None of our targets can be achieved
without the enthusiastic support of
our people, so keeping people informed
and engaged is key. An ESG newsletter
was launched in October 2023, which
included a high-level overview of the
ESG Strategy, and is sent to employees
regularly with updates on progress
against our targets and ongoing initiatives.
To ensure that our ESG vision is
shared and communicated at all levels
in the organisation, we have created a
network of ESG Ambassadors spanning
all properties (the hotels and regional
offices in the UK and the Netherlands).
Their role is to support delivery of the
strategy and be responsible for the
two-way communication between Team
Members in hotels and regional offices
and the Executive Leadership Team on
what we are achieving, and how we do it.
Good ESG is self-reinforcing
Work to engage employees in driving
community engagement, DE&I and
environmental targets will increase
engagement, job satisfaction and
employee retention.
Highlights
83%
Employee engagement
62
Charity
partnerships
hires
61
Netherlands
interns
23
UK apprentices
183
Promotions
78
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PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report
TCFD
The listing rules (LR 9.8.6R) require the Company to include
a Task force on Climate-related Financial Disclosures
(TCFD) statement in the Annual Report.
This summary includes climate-
related financial disclosures
consistent with the TCFD
recommendations and
recommended disclosures.
Reporting on our climate-related risks
and opportunities
This section gives a report on the
governance, strategy and risk-management
of climate change within the organisation.
It also discloses a summary of our targets
and information as to the metrics by
which our carbon output is calculated
across Scopes 1, 2 and 3. These pages
ensure we meet reporting obligations
under Streamlined Energy and Carbon
Reporting regulations (SECR) as well as the
four pillars of TCFD in the Annual Report
and Accounts. We additionally publish a
standalone TCFD Report on our website.
For reasons of space, greater detail on
our carbon metrics broken down into
regional operations are included in that
document, but not in this summary.
Building on the work done in 2022, in
2023 we expanded and added detail to
our ESG Strategy, with a list of targets
that involves all areas of our business.
An important milestone is the submission
of our commitment letter to SBTi, which
marks our intention to set science-based
targets on the road to achieving net zero
by 2040. We are now in the process of
creating our capital expenditure plan to
understand where investments will be
needed to reach this ambitious target.
This year we have also continued our
partnership with the Zero Carbon Forum
and the Energy and Environment Alliance,
who provided us with invaluable expertise
to support our emission reduction ambitions.
Governance
Climate change and the transition to
a low-carbon economy are included in
our Enterprise Risk Management (‘ERM’)
framework as emerging risks. In doing so,
we ensure that climate-related risks are
embedded into our risk management and
business strategy, allowing us to respond
promptly to these risks. Furthermore,
this also ensures that the transition to
a low-carbon economy is fully integrated
in our business strategy.
The Board has responsibility for the Group’s
long-term success, and responding to the
challenges that climate change poses is part
of this process. Our governance structure
incorporates ESG measures into executive
remuneration (see Remuneration Report
on page 131). We are working to include
further ESG KPIs into the balance scorecard.
The Chief Corporate & Legal Officer,
Inbar Zilberman, reports to the Board and
is the Executive Leadership Team member
responsible for ESG and climate-related
matters. She oversees compliance with
TCFD reporting requirements and ESG
arrangements, practices and procedures.
In 2023, this included the analysis of our
stakeholders’ priorities and the work on
our ESG targets, which have shaped our
organisation’s ESG ambitions.
Our Audit Committee oversees and
advises the Board on the Group’s risk
exposure, risk appetite and future
approach to risk. As part of this, it assists
in monitoring financial and non-financial
climate-related risks and is responsible for
tracking changes in this area that could
alter the risk profile. Between October and
November 2023, routine functional risk
updates were conducted with all internal
departments by the Head of Internal Audit
and Risk, supported by the ESG Manager
for climate-related risks. ERM reports are
made to the Audit Committee. This process
raised no new comments or concerns
about climate-related risks.
Our ESG Committee is tasked with
developing and evaluating climate-related
policies for the Group. The Committee
discusses updates on climate-related
issues with the Executive Leadership
Team, approved the strategy and targets
developed by the Chief Corporate & Legal
Officer, and reviews the TCFD disclosure
in February each year. It also oversees the
ESG Strategy, and ensures stakeholders
are consulted on ESG-related activities
and monitors how these are reported
to internal and external stakeholders.
To ensure that environmental
sustainability and social responsibility
are embedded in our day-to-day
operations, in 2023 we rolled out an
awareness campaign for employees
about the Group’s efforts on ESG. This
has taken the form of a newsletter, ESG
Ambassadors in the hotels, and training
on ESG made available to all employees.
With these tools, we want to foster a
culture that allows us to act responsibly
throughout the whole of our operations.
Strategy
We recognise that climate change is
a complex issue and acknowledge our
responsibility to minimise our impact
on the environment. Therefore, we
are committed to reducing our carbon
footprint, and environmental impact in
general. Our ESG Strategy and the detailed
targets it contains will be instrumental for
us to achieve this ambition. As a company
that develops, owns/co-owns and manages
many of our properties, we are uniquely
positioned to integrate sustainability into
our business from the point of development
through to day-to-day operations. We
believe that embedding sustainability in
each and every step of our operations
can offer long-term value for the Group
and all our stakeholders.
This is an ever-changing area, due
to the constant evolution of climate
understanding, technology and the
government’s commitments to reduce
carbon emissions throughout the whole
economy. With the latter expected to
lead to further changes in the policy
landscape across our industry, climate
risk assessment is critical to ensure
our business strategy is sustainable
in the long term.
Climate Scenario Analysis
Building on the 2022 analysis, in 2023
we conducted further research on the
risks that climate change poses to our
business. This has taken into account
more extensive scientific knowledge
available, as well as the extreme weather
events that occurred throughout 2023,
leading to a more solid basis for the
assessment of our exposure to climate
risks. In light of this updated assessment,
we concluded that our risk impact and
likelihood scores remain the same as for
last year. However, this year’s improved
approach to horizon scanning for emerging
risks will be replicated in the years to come,
enabling us to capture variations in climate-
related risks in more detail.
Due to the uncertainty related to
climate change, both in its impacts and
the policies that regulate the response
to it, it is extremely difficult to predict the
consequences that this will have on the
business for decades to come. Hence,
we did not set an end boundary to our
long-term scenario, as we deemed it
reasonable to have this cover the
future beyond 2030 as a whole. The
tables below show the analysis of our
residual transition and physical risks.
We have considered the risks and how
the impacts change over time in each
of the below scenarios:
• Below 2°C: high levels of transitional
risks but limited physical risks
• 2–3°C: the highest level of transitional
risks with some physical risks
• Above 3°C: limited transitional risks
but the highest level of physical risks
Time horizons
Given the long-term implications of climate
change, the risks were considered across
three time horizons:
• Short term: 2024–2026
• Medium term: 2027–2030
• Long term: beyond 2030
Table 1: Assessment of residual transition risks
Financial impact*
Moderate
Unlikely
Timeline
Likelihood
Short/Medium Unlikely
Transition risk
Negative perception of the Group
by stakeholders with regard to
climate-related matters
Carbon pricing increasing input costs Medium/Long
Minor
Climate change increasing input costs Short/Medium Almost certain Minor
Short/Medium Almost certain Minor
New climate-related regulations
impacting cost of existing operations
and new developments and dampening
existing property portfolio value
Cost and disruption of updating
physical infrastructure to phase
out non-renewable energy sources
Increasing influence of climate-
related matters on customer
preferences and market demand
Short/Medium Almost certain Minor
Short/Medium Almost certain Moderate
* Minor: <£1.2 million; Moderate: £1.2–6 million; Major: £6–24 million. All refer to annual impact.
Table 2: Assessment of residual physical risks
Physical risk
Increased mean temperatures
and likelihood of heatwaves
Water stress
Sea level rise
Floods
Forest fires
Timeline
Short/Medium Almost certain Minor
Likelihood
Financial impact*
Medium/Long Almost certain Minor
Almost certain Minor
Long
Major
Short/Medium Very unlikely
Major
Short/Medium Very unlikely
* Minor: <£1.2 million; Moderate: £1.2–6 million; Major: £6–24 million. All refer to annual impact.
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PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report Transition risks
We identified and assessed six transition
risks, as listed in Table 1. The risk profile
for these differs mostly based on the
geography in which our properties
are located. For example, customer
expectations around climate-related
matters will be more influential in some
countries than in others, with the same
applying to the regulatory landscape.
Physical risks
The physical risks we deemed material
for our business are shown in Table 2.
However, the relevance of these risks
varies significantly across our properties.
For example, forest fires are mostly a
concern for our properties in Croatia,
while sea level rise and floods more so
for our properties in Amsterdam. On
the other hand, a risk such as Increased
mean temperatures and likelihood of
heatwaves is relevant for each and
every property in our portfolio.
For each of these physical and transitional
risks we have control and mitigation
measures, including for example
insurance and crisis management plans.
Climate-related opportunities
While climate change mostly poses risks
to our business and to the hospitality
industry as a whole, we always seek to also
identify the opportunities this might bring.
For our business, these typically lie in our
ability to adapt to climate change more
quickly than our competitors, by offering
more sustainable products and services
to our guests, and constantly increasing
the energy efficiency of our operations.
Risk management
Having a detailed risk management
process in place is critical to our success.
We have an Enterprise Risk Management
(ERM) system, which is integrated into
the strategy of each corporate function.
While climate-related risks are included
in our ERM framework as emerging risks,
these are also present in other risk
registers, as climate change can affect
multiple areas of our business. This is
TCFD – continued
vital to our business planning, as it helps
us identify actual and emerging risks
and the necessary control actions.
The four key elements that form our risk
management framework and ensure
we make informed decisions are: a risk
-reward strategy, good risk governance,
a defined risk management process,
and risk assurance. Enterprise risk
assessments are reviewed quarterly.
The assessments and reviews evaluate
the potential financial costs of each risk.
Metrics and targets
With climate change posing a significant
threat to the whole hospitality industry, it
is essential that every organisation in this
sector strives towards more sustainable
and transparent operations. Therefore,
PPHE is strongly committed to reducing
our carbon footprint. In 2023 we have
added increased detail to our carbon
balance sheet, with a breakdown by
individual country where we operate.
The complete tables for each region are
included in the standalone TCFD Report.
This step was instrumental for our Group
to work towards set science-based
targets and our net zero ambition.
Some of the targets around our
environmental performance are
the following:
• Net zero by 2040;
• Ensure that our buildings obtain
building sustainability certifications;
• Procure renewable energy for power
where available;
• Conduct climate risk assessments
at the property level;
• Send zero waste to landfill where possible;
• Have each property supporting
biodiversity projects.
Streamlined energy and carbon
reporting (SECR)
The requirements of SECR, imposed by
the 2018 Regulations on quoted companies
and on large unquoted companies and
large LLPs, apply to reports for financial
years starting on or after 1 April 2019.
82
This SECR report contains energy and
transport consumption, emissions
along with requirements of intensity
ratio, methodologies and a narrative on
energy efficiency action. Where Guernsey-
registered businesses are not subject
to UK requirements, disclosures made
under the UK Government Environmental
Reporting Guidelines (March 2019) should
be considered voluntary and as a matter
of good Corporate Governance. This
disclosure for the period 1 January 2023
– 31 December 2023 includes:
• Global energy use (gas, electricity and
transport, including UK offshore area,
combustion of fuel, process emissions,
fugitive emissions) and associated
greenhouse gas (GHG) emissions;
• Intensity ratio;
• Previous year’s figures for energy
use and GHG emissions;
• Methodologies used in calculation
of disclosures;
• Information about energy efficiency
action taken in the organisation’s
financial year.
Energy efficiency actions
The most significant investments in energy
efficiency in 2023 were made in Park Plaza
Victoria London, where we replaced the
air conditioning system in all guest rooms,
leading to notable savings in both electricity
and gas use. A boiler upgrade as part of
this project is projected to yield 14%
further reduction in gas consumption.
2023 has seen the rollout of the findings
of a pilot ‘Save While You Sleep’ study
conducted in one hotel in 2022 across the
Group, maximising energy efficiency in
offpeak hours. This has included a more
structured awareness campaign for all
our employees, which focusses on energy
consumption and carbon emissions
(through meetings with hotel staff and
the ESG newsletter). This is expected to
spread knowledge across the teams on
the importance of curbing our energy
consumption, which should lead to more
responsible usage and identification of
further areas of improvement.
Intensity ratios
The intensity ratios we calculated are
tonnes of CO2e/total revenue (£m),
kilogrammes of CO2e/room, and kgCO2e/
occupied room. As shown in the table
above, in 2023 these intensity ratios for
the whole Group were 43.5 tCO2e/£m,
3.5 kgCO2e/room, and 6.0 kgCO2e/
occupied room. Note that the intensity
ratios for the whole Group were calculated
based on a weighted average of the rooms
in each country. PPHE provides relevant
data to third parties who use this to
calculate our emissions. No formal
assurance was provided.
Quantification and reporting methodology
The Group has taken guidance from the
UK Government Environmental Reporting
guidelines (March 2019), the GHG Reporting
Protocol – Corporate Standard, and from
the UK Government GHG Conversion
Factors for Company Reporting document
for calculating carbon emissions. Energy
usage information (gas and electricity) has
been obtained directly from our energy
suppliers and half-hourly (HH) data,
where applicable, for the HH supplies
(there was no estimation profiling
required). For supplies where a complete
12-month energy usage was not available,
flat profile estimation techniques were
used to complete the annual consumption.
Transport mileage data was obtained
from expense claims submitted for
our company cars and grey fleet. CO2e
emissions were calculated using the
appropriate emission factors from
the UK Government GHG conversion
information. Mileage or fuel usage of
transport was not available, instead fuel
expenses and forecourt prices were used.
The Company has followed the GHG
Protocol – Corporate Standard along
with emission factors and other relevant
information from the UK Government
GHG Conversion Factors for Carbon
Reporting guidelines. While we have
utilised all verifiable data available to us,
in the rare occasions where this was not
possible we have estimated data by using
approved approaches as recommended
in the SECR guidelines such as direct
comparison, pro-rata extrapolation
or benchmarking.
Scope 1 emissions relate to the direct
combustion of gaseous and transportation
fuels by the Company.
Scope 2 emissions relate to the indirect
emissions associated with purchased
electricity used in our hotels and offices.
Scope 3 emissions are indirect emissions
associated with the products and services
we purchase. Although we do not have
direct control over these emissions,
we are actively working with our supply
chain to plan how we can lower them to
work towards achieving net zero by 2040.
Out of scope emissions: all fuels with
biogenic content (such as ‘Diesel and
petrol (average biofuel blend)’) should
have the ‘outside of scopes’ emissions
reported to ensure a complete picture
of an organisation’s emissions is created.
However, these are not required to be
included in the organisation’s total emissions.
PPHE Hotel Group has no out of scope
emissions to report.
Scope 2 emissions related to the emissions
released into the atmosphere associated
with the consumption of purchased
electricity, heat, steam and cooling. These
can be calculated using the location based
or market based methods. While the
former uses the average emission factor
of the grid in the specific location where
energy consumption takes place, the latter
takes into account the specific contractual
instruments companies use to purchase
their energy.
The 2023 SECR tables are below.
Table 3: Summary of UK-only energy consumption
and carbon emissions
Scope category
Scope 1
Scope 2
(location-based)
Scope 2
(market-based)
Scope 3
Total
Energy
consumption
(kWh)
26,650,126
Emissions
(tCO2e)
5,058
29,577,455
6,146
29,577,455
n/a
56,227,581
0
45,682
50,739
Table 4: Summary of Group-wide energy consumption
and carbon emissions (all regions)
Scope category
Scope 1
Scope 2
Scope 3
Total
Energy
consumption
(kWh)
41,545,209
71,818,253
n/a
113,363,463
Emissions
(tCO2e)
10,529
16,321*
62,597
89,447
* Location based emissions.
Table 5: PPHE’s carbon intensity metrics
for 2022 and 2023 UK only
Scope 1 and 2
emissions (tCO2e)
Revenue (£m)
tCO2e/£m
Rooms
kgCO2e/room
Occupancy rate
Occupied rooms
kgCO2e/
occupied room
2023
2022
5,058
282.6
17.90
1,356,891
3.7
83.0%
1,126,037
10,2658
214.8
47.80
1,299,395
7.9
67.2%
872,736
4.5
11.8
Table 6: PPHE’s carbon intensity metrics for 2022
and 2023 – Group-wide (all regions)
2023
2022
Scope 1 and 2
emissions
(tCO2e)
Revenue (£m)
tCO2e/£m
Rooms
kgCO2e/room
Occupancy rate
Occupied rooms
kgCO2e/
occupied room
13,829
460.2
43.5
3,919,745
3.5
63%
2,462,732
21,645
354.0
72.6
3,833,253
5.6
54%
2,074,379
6.0
10.4
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PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report Risk management
Our Risk Environment
As well as monitoring these climate related
threats, we see significant opportunity in
improving our environmental and social
impact through the delivery of our ESG
Strategy (see pages 66 to 79).
The hospitality sector has seen several
high-profile cyber-attacks in 2023. We
partner with expert organisations to
ensure we are well placed to prevent and
detect malicious activity. We also continue
to invest in enhancing our resilience
through building our incident response
and recovery capability.
In 2024 we enter an exciting period of
operational growth with several new
openings across the Group. This will
intensify the persistent challenge of
attracting and retaining team members
which we will continue to tackle through
proactive employee engagement and
wellbeing initiatives as well as programmes
to drive a diverse and inclusive culture.
Beyond these openings we are securing
new capital to support the pursuit of
our ambitious long-term growth plans.
We are prepared for managing the
risks that are inherent to any plans
for accelerated growth.
With risk informed leadership we
continue to perform and grow against
a backdrop of geo-political and macro-
economic uncertainty. The actions taken
in recent years to reinforce our financial
and operational resilience have enabled
the Group to succeed during challenging
times and seize new opportunities as
our risk environment changes.
Our Executive Leadership continues
to monitor and respond to the impact
of major global risk drivers such as
ongoing geo-political tension and conflicts
which can influence economic conditions,
supply chains, customer behaviours and
social cohesion.
We also recognise areas of emerging
risk and opportunity such as the growing
influence of Artificial Intelligence (“AI”).
While our Executive Leadership Team
embraces new technologies to improve
the efficiency of our hotel management
platform and the overall guest experience,
the associated risks of using AI in business
have been reviewed and actions taken
to raise awareness of these risks across
the Group.
There is greater urgency in the
international response to the climate
crisis, to drive radical decarbonisation of
the global economy. We evaluate both the
physical and transitional climate related
risks as part of our current risk profile
and assess the impact these threats
could have on our existing principal risks
as they become more probable and with
a greater impact. A summary of climate
related risk can be seen in our TCFD
Summary page 81.
Principal risks – at a glance
We define our principal risks as those which could have the greatest impact on our business and represent the most significant
threats to the achievement of our objectives in the year ahead. To be considered a principal risk the potential downside or residual
impact must be assessed as ‘Major’ or above, equating to a negative financial impact or falling asset values greater than 5% of annual
EBITDA (under normal operating conditions).
Principal Risks for 2024
Inherent Risk
Assessment
Residual Risk
Assessment
Oversight
responsibility Page reference
1
2
3
4
Adverse economic climate
Significant development project delays
or unforeseen cost increases
Difficulty in attracting, engaging and
retaining a suitably skilled workforce
Technology disruption – prolonged failure of core technology
Funding and liquidity risk
5
6 Cyber threat – undetected /
unrestricted cyber security incidents
Data privacy – risk of data breach
7
8 Operational disruption
9
Negative stakeholder perception of the Group with regard
to Environmental, Social and Governance (ESG) matters
10 Market dynamics – significant decline in market demand
11 Serious threat to guest, team member or
third party health, safety and security
High
High
High
High
High
Very High
Very High
High
High
High
High
Trend from
previous year
High
High
Medium
Medium
Medium
Medium
Medium
Medium
Medium
CFO
CCLO and
Co-CEO
Co-CEO
CFO
CFO
CFO
CCLO
Co-CEO
CCLO
Page 89
Page 90
Page 93
Page 91
Page 90
Page 91
Page 91
Page 92
Page 93
Page 89
Medium
EVP Commercial
Affairs
Medium
Co-CEO
Page 92
During 2023 the residual risk assessment for the threat of Fraud was reduced as the Group’s internal control environment continued
to mature. The residual risk no longer meets our definition of a principal risk for disclosure and the risk has been removed from the list
above. The inherent assessment is still considered to be high, and the risk and associated controls continue to be monitored closely.
Our Risk Management Framework
R I S K- R E WA R D
S T R AT E GY
Sets the tone for our strategic approach to risk and articulates
the general appetite to risk-taking and tolerance.
R I S K
G O V E R N A N C E
Roles, responsibilities and reporting structure are defined in a
Risk Policy.
S
E
TIV
C
E
J
B
GIC O
E
AT
R
T
S
S
N
CISIO
E
D D
E
M
R I S K
M A N A G E M E N T
P R O C E S S
R I S K
A S S U R A N C E
R
FO
K-IN
RIS
R e p ort
I
d
e
n
tif
y
T
r
e
a
t
A s s e s s
Current and emerging risk identification, assessment,
treatment, reporting and monitoring.
Assurance that risks are both identified and well managed is
obtained from various internal and external sources.
art’otel London Hoxton
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PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report Risk management – continued
Our Risk-Reward Strategy
Our Risk-Reward Strategy, which articulates our risk appetite across various business activities, is aligned to our strategic
objectives. It has been reviewed by the Board and remains unchanged. Risk appetite is cascaded throughout the Group
through our policies and procedures.
Risk Appetite Levels
Definition
Business Activities
Key sources of value
and strategic enablers
Active
Neutral
We will actively seek to take calculated risks in
this area in pursuit of our strategic objectives, as
long as the associated benefits significantly
outweigh the risk impact and the risk remains
within our tolerances. We will apply appropriate
safeguards when pursuing these opportunities.
We will take on a limited increased exposure to
risk in pursuit of our strategic objectives if the
associated benefits outweigh the risk impact and
the risk remains within our tolerances. We will
apply appropriate safeguards when pursuing
these opportunities.
Averse
We will act to protect the business from
increased risk exposure in these areas.
• Acquisitions and development opportunities
• Diversification of property portfolio
Diverse prime property
portfolio
• Development projects (Construction)
• Working with third parties
• Funding
• Technological change / development
• Commercial and promotional activity
• Environmental impact
• Responsible and ethical sourcing
• Human Rights
• Operational continuity
• Data privacy
• Compliance
• Financial and tax reporting
• Financial control
Financial strength and
non-dilutive capital
approach
International network
Multi-brand approach
Meaningful ESG impact
for the benefit of all
stakeholders
Our people and culture
In-house hospitality
management platform
Our Risk Governance and Risk Management Process
GOVERNANCE
Executive Leadership – Risk Forum
• Agree the Risk Policy and Framework
and formulate a risk-reward strategy
(risk appetite) for proposal to the Board.
• Challenge the robustness and completeness
of the full-year and half-year updates to the
Group’s risk registers, including key actions.
Audit Committee
• Keep under review the effectiveness of the
Group’s procedures for the identification,
assessment and reporting of risks, assisting
the Board in monitoring the Group’s risk
management systems.
• Oversee internal and external assurance
• Report PPHE’s Principal Risks for Board
requirements.
Board
• Ultimately responsible for risk management
including approval of the Group risk profile;
the Group Risk Policy & Framework; the Risk
and Reward Strategy; and the statement on
risk management in the Annual Report.
approval and inclusion in the Annual Report.
• Ensure effective monitoring of emerging
risk and progress against key risk actions.
ESG Committee
• Keep under review specific ESG and Climate-
related risk assessment.
PROCESS
ENTERPRISE RISK ASSESSMENT
Consolidation of underlying functional and subsidiary risks into a single view of risk reported
to the Board. The enterprise assessment underpins the Group’s principal risk disclosure.
CURRENT RISKS
Existing threats to the achievement of our business objectives
Regular risk updates from functional management to identify, assess
and respond to current risks. Key steps include:
EMERGING RISKS
Future threats that cannot be accurately assessed at the current time
but could have a material impact on the business in the future through
either heightening existing risks or becoming new stand-alone risks.
• assessment of the severity of each risk using the Group risk assessment
criteria. Consideration is given to the effectiveness of the current
controls / mitigating activity;
• establishing clear actions with nominated accountability where
further mitigation is required to contain or reduce risks to a more
acceptable level;
• regular risk reporting to Executive Leadership to support informed
decision-making and prioritisation of resources; and
• reporting the Enterprise risk profile to the Audit Committee quarterly.
Horizon scanning for emerging risk is considered at each functional
risk workshop and each Executive Level Risk Forum with a view to
improving our response plans and exploit potential opportunities.
Emerging risk trends are reported alongside the current enterprise
risk assessment to the Audit Committee quarterly.
When identifying emerging risk, we consider several drivers of
change including:
• shifts in market dynamics;
• social, geo-political, macro-economic and environmental factors;
• technological trends; and
•
legal and regulatory developments.
FUNCTIONAL AND SUBSIDIARY RISK ASSESSMENTS
Management identifying, assessing and managing the risks and controls across all business functions.
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Emerging risk
Our Executive Leadership Team consider emerging threats and
risk drivers that could have a material impact on the business in
the future, with a view to improving our response plans and
exploit potential opportunities. The near-term threats may
already influence our principal risk assessments and the
prioritisation of our risk actions.
Market
Further pressures on hospitality labour
markets e.g. changing immigration laws in UK
Market demand influenced by increasing
guest/consumer concern regarding
environmental factors
Growing competition in London market
from increasing room supply
Social, Geo-political, Macro-economic, Environmental
Economic pressures – Inflation, interest rate and
market volatility
Escalation of ongoing geo-political tension and conflicts
Political change/instability
Social inequality
Global supply-chain disruptions e.g. attacks in the Red Sea
Climate change crisis
Biodiversity crisis
Emerging threats
and risk drivers
Technology
Increasing influence of Artificial Intelligence on
business – disruption or missed opportunities
Evolving cyber threat – new threat vectors
and increased activity from criminal and
state sponsored cyber attackers
Financial, Legal and Regulatory
Acceleration of climate related regulatory change
Rising sustainability regulations dampening
property values
Challenge to keep pace with a rapidly changing
Future uncertainty of cost and availability for
technology environment
refinancing debt
Principal risks
The tables below detail our principal risks for the year ahead.
The reported risks are those we consider could have the
greatest impact on our business and represent the most
significant threats to the achievement of our objectives. This
is not an exhaustive list of all risks identified and monitored
through our risk management process, which includes the
consolidation of underlying functional and subsidiary risk
registers into a single view of risk reported to the Board. Our
risk level is decided through an assessment of the likelihood of
the risk and its impact should it materialise. Our assessments
are weighted towards impact to encourage prioritisation of
high impact risks.
Strategic Blocks
Sources of value
1 Core, upper upscale, city centre hotels
4 Diverse prime property portfolio
7 International network
2 Leisure and outdoor hospitality
5 Multi-brand approach
8 Our people and culture
3 Hospitality management platform
6 In-house hospitality management platform
9 Financial strength and non-dilutive capital approach
Movement from last year:
Unchanged
Increased
Reduced
MARKET AND MACROECONOMIC ENVIRONMENT
Risk Appetite: Neutral
Principal Risk Description
Residual Risk Outlook and Risk Response for 2024
Adverse economic climate
Economic stress fuelled by the volatile geo-political
environment could mean a continuation of steep
inflation and unstable interest rates impacting
growth and profit margins.
High
Acting to protect our margins in the face of steep inflation remained a key focus
throughout 2023. While inflation and interest rates are expected to stabilise, we still
consider an adverse economic climate to be a significant risk to monitor and manage
in the year ahead as several of the emerging threats we have identified could influence
the scale and impact of this risk area.
Related strategic blocks:
1, 2, 3
Related sources of value:
7, 8, 9
In addition to our long established controls, 2024 will see:
• Close monitoring of economic and market forces
• Budgetary control and frequent forecasting across all regions and property type
• A drive to develop process automation for labour intensive processes, freeing
resource to focus on delivering greater value to the business
• Projects to drive efficiency of operational teams
• Continued focus on control of food and beverage costs
• Energy consumption reduction initiatives
Market dynamics – significant
decline in market demand
Uncertainty in future market demand could arise due
to volatile macro-economic or geo-political conditions,
or significant incidents which impact global travel.
Related strategic blocks:
1, 2, 3
Related sources of value:
4, 5
Medium
Our overall residual assessment of this risk has reduced as confidence grows due to
positive booking momentum, increased occupancies and average daily rates being
maintained. Demand for Meetings and Events (‘M&E’) also looks stronger over the
medium and longer term.
There will remain some uncertainty as market strength is linked to changes in the
economic climate and geo-political environment. We are proactive in driving demand to
our properties and responding to market movements. Our key mitigating actions include:
• Fully leveraging the revenue management technologies introduced during 2023
• Focussed promotional initiatives to drive demand in advance and tactical campaigns
for ‘need’ periods
• Leveraging our partnerships and promotional opportunities with third
party distribution partners and booking channels
• Continuing our close collaboration with Radisson Hotel Group and leveraging their
reach for promotional campaigns
• Leveraging the Radisson Rewards programme which consists of 11+ million members.
•
• Delivering our planned activities across key source markets and market segments,
Increasing our focus on digital marketing and online advertising
including tradeshows, hosted events and sales missions
Imminent/Short Time Horizon – Some Impact
already seen or impact to our business could
be expected within 2 years
Future Time Horizon – Impact to our
business could be expected beyond 2 years
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FUNDING AND INVESTMENT
Risk Appetite: Neutral
TECHNOLOGY AND INFORMATION SECURITY
Risk Appetite: Averse
Principal Risk Description
Residual Risk Outlook and Risk Response for 2024
Principal Risk Description
Residual Risk Outlook and Risk Response for 2024
Funding and liquidity risk
The impact of failing to proactively manage funding and
liquidity risk could include a breach of debt covenants,
cash restrictions, loss of stakeholder confidence and
less favourable terms when refinancing in the future.
Related strategic blocks:
1, 2
Related sources of value:
7, 9
Medium
Against the backdrop of interest rate movements and general economic pressures, our
funding and liquidity risk continues to be managed to an acceptable level due to the
Group’s strong trading performance, steady property valuations and fixed rates on
most of our loans.
We will continue to contain this risk with our established treasury monitoring and
reporting controls which include:
• Board approved treasury policy
• Monthly forward covenant testing
• Monthly treasury monitoring and reporting to the Board
• Proactive and regular liaison with our lenders
As highlighted in our emerging risk summary, the value of our property portfolio could
be impacted over time by sustainable building regulations, unless there is sufficient
investment in upgrading our assets to meet the requirements.
Long-term capital expenditure plans have been developed to mitigate this threat.
DEVELOPMENT PROJECTS
Risk Appetite: Neutral
Principal Risk Description
Residual Risk Outlook and Risk Response for 2024
Significant development project delays or
unforeseen cost increases
Various factors, such as supply chain disruption,
labour market pressures and steep increases in
cost of materials can influence the delivery of major
construction projects resulting in additional cost
or delays in new openings.
Related strategic blocks:
1, 2
Related sources of value:
4, 7
High
The delivery of major projects remains a high risk area and is subject to focused
oversight from senior leadership and our in-house Technical Services team, with
key controls including:
• Regular project meetings with our contractors to identify and tackle any approaching
issues which could impact the overall cost, targeted delivery schedule or the expected
quality standards
Independent monitoring of projects by appointed third party experts
•
Throughout 2024 we would expect this risk to reduce as major long-term developments
are delivered and new openings become operational.
Cyber threat – undetected /
unrestricted cyber security incidents
The Group could be subject to a serious cyber-attack
resulting in significant disruption to operations and
financial loss from falling revenues, cost of recovery,
reputation loss and significant fines in the event of
a related data breach.
Medium
Although we expect the inherent risk of cyber-attack to remain very high, our residual
risk assessment has been reduced this year to reflect the implementation of new and
enhanced security controls and the continued investment into protecting the business
from this significant threat.
Newly established controls in place for the year ahead and further planned
progress includes:
Related strategic blocks:
1, 2, 3
Related sources of value:
6
• Compliance to the official Payment Card Industry Data Security Standard (PCI DSS)
• AI powered network monitoring & detecting and autonomously responding to threats
• Continuous vulnerability scanning and remediation
• Enhanced back-up and recovery solution, including ransomware recovery
• Focused team member awareness campaigns and training programmes
•
• Enhanced filtering of malicious phishing sites
•
• Targeted risk analysis/profiling and security incident tabletop exercises
Increase in external penetration testing
Increased targeted phishing training
Data privacy – risk of data breach
The Group could experience a serious data privacy
breach which could result in investigation, significant
fines in accordance with the GDPR and subsequent
reputational damage.
Related strategic blocks:
1, 2, 3
Related sources of value:
6, 8
Medium
We remain focused on mitigating the high inherent regulatory risk associated
with the processing of personal data, which is essential to the successful operations
of our business.
Activity planned for 2024 includes:
•
Implementation of a new governance, risk and compliance tool for data privacy
and information security
• An internal awareness campaign and updated training programmes, as part of
onboarding the new tool
• Review and update of documented data protection and privacy procedures
• Update of data inventory
• Monitoring databases containing Personally Identifiable Information, with data owners
• Renewing and updating data privacy risk assessments and other documentation
required under GDPR
Technology disruption
A prolonged failure in our core technology
infrastructure could present a significant threat
to the continuation of our business operations,
particularly where failures impact hotel
management and reservation systems.
Related strategic blocks:
1, 2, 3
Related sources of value:
6
Medium
The availability and performance of our core technology is key to the success of our
business operations, and we have continued with investment into strengthening our
networks, implementing our DR solution, and improving connectivity.
In 2024 we will continue to improve our resilience through:
• Continued projects to enhance network resilience and security
• Network monitoring and enhanced vulnerability scanning
• Enhanced back-up and recovery solution
• Targeted testing of back-up and recovery plans
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SAFETY & CONTINUITY
Risk Appetite: Averse
PEOPLE
Risk Appetite: Averse
Principal Risk Description
Residual Risk Outlook and Risk Response for 2024
Principal Risk Description
Residual Risk Outlook and Risk Response for 2024
Medium
Our strength and resilience have been key to the continued success of our business in
recent years.
In 2024 we will continue to prepare for significant disruptive incidents through:
• Regularly training team members in our established crisis plans and procedures
• Review of our approach to Business Continuity Management to ensure we have
prepared proportionate responses to the most significant threats which could
impact the continuity of our critical services and operations
• Working closely with key suppliers to identify and mitigate any potential issues which
could impact the continuity of their service
Difficulty in attracting, engaging and
retaining a suitably skilled workforce
Difficulties in maintaining an engaged and
suitably skilled workforce could impact our
service standards, drive up operating costs,
disrupt operations and impact the overall
delivery of our key strategic objectives.
Related strategic blocks:
1, 2, 3
Related sources of value:
6, 8
Medium
While the successful management of this risk remains fundamental to our success,
our overall residual risk assessment has reduced to Medium.
Throughout 2023 we have not experienced any staffing issues that would restrict
operations. Some improvement has also been noted in retention rates.
2024 presents new resourcing challenges with the opening of new hotels and we will
continue to manage this risk proactively with new initiatives including:
• Creation of a new Employee Experience team to develop deeper understanding
of employee needs and sentiment and tasked with group initiatives on developing
retention, wellbeing, and engagement
• Employer value proposition development to attract candidates and drive retention
•
• Creation of expanded Learning & Development team with focus on technical skills
Investment in new HR technology landscape, improving people analytics
•
and management development
Internal communication strategy and use of related technologies for further
employee voice enablement
• Full employment policy review
• Talent management and succession planning to promote intra-company mobility
options Regular talent reviews and learning need analysis
• Physical health and well-being initiatives and investment
Operational disruption
Major global events such as pandemic, war or
environmental disasters could result in widespread
disruption, impacting our guests, our supply chain,
and our hotel operations.
We could also experience more localised disruption
to our operations from incidents at our hotels or in
the immediate vicinity, for example floods, extreme
weather, social unrest, or terrorism.
Related strategic blocks:
1, 2, 3
Related sources of value:
6, 7, 8
Serious Health, Safety and Security Incidents
The Group could experience significant health and
safety, food safety or physical security incidents.
A failure to take reasonable steps to prevent such
incidents, or a failure to respond appropriately, could
impact our reputation, disrupt our operations and
result in significant loss of guest, team member and
stakeholder confidence.
Related strategic blocks:
1, 2, 3
Related sources of value:
6, 8
Medium
In the year ahead we will continue to drive our high standards to provide a safe stay for
our guests and a safe working environment for our team members.
Our established controls include:
In-house and supplier food safety audit programme
• Regular risk assessments
• Security and fire safety procedures
• Health & Safety audit programmes
•
• Team member training programmes
• Mental health and wellbeing training
• Centralised incident reporting
• Proactive gathering of intelligence and advice on potential security risks through
regular liaison with local police and security services
We will also monitor the ongoing consultation in respect of Martyn’s Law but are
confident that our existing procedures will meet the new requirements proposed
as part of the UK’s Terrorism (Protection of Premises) Bill.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
Risk Appetite: Averse
Principal Risk Description
Residual Risk Outlook and Risk Response for 2024
Negative stakeholder perception of the
Group with regard to Environmental,
Social and Governance matters
With ESG being a key concern for our stakeholders,
a perception that the Group does not apply best
practice Corporate Governance principles or does
not act responsibly to protect the environment and
the communities we operate in, could impact our
performance by damaging our appeal to customers,
investors, and other business partners. It could also
affect our ability to retain and attract talent.
A failure to comply with the upcoming regulatory
changes to governance and ESG reporting could
further heighten this area of risk.
Related strategic blocks:
1, 2, 3
Related sources of value:
8
Medium
We have made considerable progress in formalising and communicating our
ESG strategic approach and priorities.
Our report on pages 66 to 79 details our ESG strategic objectives which are focused
on the priorities of our stakeholders.
Activity in 2024 will include:
• Work on a series of tasks aimed at delivering against our ESG targets, which
are designed to further the achievement of our published strategic objectives
• The ESG Manager monitoring the adoption of the ESG targets with the assigned
owners and providing regular progress reports to the ESG Committee
• New ESG reporting requirements being integrated into the compliance reporting
undertaken by the Head of Compliance, seeking third party support where
necessary at the request of the ESG Committee
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PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report Viability statement
Introduction to Governance
The recovery after COVID-19 combined
with the war in Ukraine, caused inflation in
all our territories to increase significantly,
and utility prices to reach unprecedented
levels. On the back of this high inflation,
central banks worldwide have increased
interest rates to levels not seen since
the Global Financial Crisis. The high
inflationary environment is expected to
continue into 2024. The Group’s loan
portfolio currently has limited exposure
to rising interest rates, as almost all the
Group’s loan portfolio has a fixed rate of
interest. Furthermore the first significant
refinancing of these fixed rate loans is
due only from 2026 onwards. To partially
hedge the exposure of these refinancing
loans in 2026, the Group entered into
forward starting hedges in early 2022,
totalling around £190 million.
To assess the Group’s viability, the Board
conducted a robust assessment of the
current and emerging risks facing the
Group and how they could impact the
strategy, performance and liquidity
of the Group. The Board considered
detailed cash flow projections for the
next three-year period to 31 December
2026, constructed on a base case and
a downside case basis.
In terms of trading, our base case last
year assumed full pre-COVID-19 recovery
in 2023, with EBITDA levels at or around
2019 EBITDA levels, which we have now
achieved. In our base case for 2024 and
onwards we have prudently assumed
a 2.5% EBITDA growth. We assume this
approach as prudent, given that the
new openings taking place in 2024 are
expected to impact the EBITDA with
at least an additional £25 million from
stabilised trading of these hotels
(c. 20% EBITDA growth versus 2023). The
downside case assumes 15% less EBITDA
compared with the base case for each
of the three years in the model, which
could be caused by long-term declining
room rates and the impact this could
have on profit conversion. The estimates
in both scenarios have a high degree of
uncertainty, as the period of estimates
extend significantly beyond the current
booking lead times. The downside case
will not require covenant waivers and no
mandatory prepayments on loan facilities.
As discussed above, the Group is refinancing
three significant loan facilities that are
maturing in 2026. The first one is the
outstanding facility with Barings bank
(April 2026, £87.0 million), the second one
is the facility with Aareal bank funding the
Dutch hotels and one UK hotel (June 2026,
€159.3 million and £15.6 million) and the last
one is the Aareal facility in Park Plaza London
Riverbank (June 2026, £100.7 million).
Given the relatively low LTV levels of these
loans (currently below 50%), the strong
relationships the Group has with its
banks and the historic track record
of refinancing, the Board is confident
that the outstanding loans will be rolled
forward into new term facilities.
The downside scenario also should not
result in cash traps under the current
loan facility agreements, however should
this be required, the Group’s freely
available cash resources in that scenario
are sufficient to continue without taking
restructuring measures. The Board
continually monitors the three-year
base case and downside case cash flow
forecasts, which take into consideration
different trading assumptions and the
Company’s long-term strategy.
Having reviewed both the base case
and downside case, the Directors have
determined that the Group is likely to
continue in business for the period under
review without implementing any further
protective measures to the operational
structure. The Group’s viability does not
depend on additional liquidity and has a
strong cash flow generative trading. The
Board concluded that three years would
be an appropriate timeframe over which
to assess the Group’s longer-term viability
given the limited levels of planning certainty
to this period and the significant new
pipeline that will be delivered in this period.
The above considerations form the
basis of the Board’s assessment of the
viability of the Group over a three-year
period to 31 December 2026 while taking
account of the Group’s current position,
the principal risks and how these are
managed, as detailed in the Strategic
Report, the Group Strategy and the
Group’s financial plans and forecasts.
Based on this assessment, the Directors
confirm that they have a reasonable
expectation that the Group will be able
to continue in operation and meet its
liabilities as they fall due over the three-
year period to 31 December 2026.
94
Ken Bradley
Non-Executive Deputy Chairman
to the Board of Directors
“We are delighted
to welcome
Greg Hegarty
to the Board.”
Letter from the Non-Executive
Deputy Chairman
The Board of PPHE Hotel Group is
pleased to present the Corporate
Governance report for the year
ended 31 December 2023.
I wish to express my gratitude to Kevin
McAuliffe, our outgoing Non-Executive
Deputy Chairman, for his dedication and
contribution to the Group over the years.
He has been an integral and valued Board
member in helping the Group grow and
succeed. Following Kevin’s departure
we’ve taken measures, in accordance
with our Board Succession Plan, to
ensure that our regularly refreshed,
independent Directors are able to bring
diverse experience and oversight to help
both challenge and guide our executives.
In 2023, the Group pursued the ESG
Strategy announced in the 2022 Annual
Report. The Strategy was created out of
an assessment of stakeholder priorities, in
line with the double-materiality methodology,
and we recognise the importance of
continuing engagement to ensure those
stakeholders are brought on the journey
with us. I have taken over from Kevin
as the Board member responsible for
workforce engagement.
We are delighted to welcome Greg Hegarty
to the Board. Greg’s importance to the
business as its Deputy Chief Executive
Officer and Chief Operating Officer
speak for themselves, and we view his
election at the Annual General Meeting
as a positive step forward in ensuring
executive management is aligned to
shareholder value.
2023 was Marcia Bakker’s first full year as
a Board Director. Her onboarding process
is laid out in the report of the Nomination
Committee on page 119. Marcia’s work
in 2023 has been valuable in keeping
our independent oversight fresh and
maintaining the independence of the Board
with diverse expertise and backgrounds.
95
This report sets out how we have
complied with and applied the principles
and provisions of the 2018 Corporate
Governance Code (the ‘Code’) throughout
the year. We are also looking ahead to the
updated Code, and will ensure we are in
compliance with the updated provisions
as they come into effect.
Leadership role
The Board combines executives with
proven track records and expertise in
leading the business with independent
oversight from individuals with diverse
expertise. This allows for dynamic and
entrepreneurial leadership within a
framework of prudent and effective
controls against risk. Our Strategy Report,
Risk Management Report and TCFD Report
Summary set out in more detail how we
have achieved consistent success in 2023.
Every month, the Board and the Executive
Leadership Team conduct calls to ensure
that the Board is fully informed of, and
able to have the necessary input into,
performance and strategy at a detailed
level. After this call, the Non-Executive
Directors meet separately to scrutinise
the Board and Executive Leadership Team
in order to ensure that they can conduct
independent oversight and analysis.
By following this timetable, different
perspectives are aired about the strategy,
based on sounds and detailed knowledge
of the strategy and the rationale behind it.
This provides space for frank discussion
of risks and opportunities.
Board evaluation
Every year, the Board assesses and
evaluates the performance of the Board as
a whole and each individual Director. There
is a three-year cycle of Board evaluations,
with an external review of the Board and its
Committees carried out every three years.
The most recent external assessment was
by Independent Audit Limited in 2021. We
report on the annual internal evaluations
as well as progress against previous years’
findings on page 109.
PPHE Hotel GroupAnnual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic reportPPHE Hotel GroupAnnual Report and Accounts 2023 Introduction to Governance – continued
Board composition
Two significant changes took place in
2023: firstly, as previously mentioned,
our Non-Executive Deputy Chairman
stepped down from the Board after 16
years. The role of Chairman of the Board
is held by Eli Papouchado, who, as a valued
founder of the business, and indispensable
source of expertise, experience and
direction, has served in that role for
a period greater than nine years. In the
light of the requirements of the Code,
it is necessary that some of the functions
of the Chair in providing independent
oversight are discharged by Directors
whose independence meets the requirements
of the Code. Since Kevin’s departure at the
Annual General Meeting, we have followed
our Succession Plan, and I have taken on
the role of Non-Executive Deputy Chair,
ensuring independent oversight of Board
activities. Nigel Keen, as Senior Independent
Director, and Chair of the Remuneration
Committee, has additionally assisted in
ensuring independent oversight.
The second change to the Board’s
composition is that Greg Hegarty,
who was at the time of his election to
the Board was Deputy Chief Executive
Officer and Chief Operating Officer. Greg
was elected at the AGM by shareholders.
This is a welcome addition for us, as Greg’s
dedication to the business and invaluable
strategic leadership in his executive roles
have been of vital importance for some
time. It is important, therefore, that he
joins the Board to ensure good Corporate
Governance. In 2024, Greg also became
the Co-CEO of the Group.
Aerial view, art’otel London Hoxton
ESG
The Board oversees ESG within the
business as part of its commitment to
long-term, sustainable value generation
for all stakeholders. We also have an
ESG Committee of the Board to assist
in ensuring that oversight of the ESG
Strategy occurs regularly, and that the
Board as a whole is upskilled in areas
such as carbon literacy. We have received
training from the hospitality industry’s
Zero Carbon Forum, with a further session
scheduled in 2024. Having launched our
ESG Strategy in the 2022 Annual Report, we
have spent 2023 embedding it throughout
our organisation, and we have finalised
detailed targets, which provide measurable
key performance indicators against each
identified strategic objective to which we
can be held accountable. We have sent a
letter to the Science-Based Targets Initiative
(SBTi) to invite them to verify our interim
and long-term net zero targets. The
Committee continues to review upcoming
changes to reporting requirements in
ESG to ensure that we are maximising
stakeholder information and accountability.
Shareholder engagement
At the Annual General Meeting held on
23 May 2023, proposals to re-elect the
Senior Independent Director, as well
as authority to disapply pre-emption
rights, were passed with less than 90%
of independent shareholder approval.
We have actively engaged to seek the
reasons for any votes against or
withheld and we believe that active
dialogue with representatives of
independent shareholders throughout
the year has allowed us to address
their concerns. In particular, within
the Remuneration Report at page 139,
we have sought to maximise the detail
in transparency and accountability for
remuneration decisions.
We are grateful for our investors’ ongoing
support and guidance to help us to make
progress in these areas, which has
helped us enter the FTSE 250.
Our successful investor roadshow
programme, led by our Co-CEO, Chief
Financial Officer and Executive Vice-
President Commercial Affairs, continued
throughout the year. Feedback received
during roadshows is reported by Chief
Financial Officer and Executive Director
Daniel Kos to the Board for discussion at
quarterly Board meetings, following which
our Senior Independent Director reaches
out to shareholders to continue the dialogue.
Finally, we are seeking to maximise the
availability for Nigel Keen, in his capacity as
Senior Independent Director, to continue
to ensure shareholders feel they can bring
strategic or oversight matters to the
attention of the relevant Board member.
Workforce engagement
Our ESG Strategy contains multiple
workforce engagement strategic objectives,
including maximising retention and
engagement scores (as measured by our
twice-yearly Pulse Surveys). Good workforce
relations are key to delivering our value
proposition as a hospitality business, so we
ensure that management not only uses ‘Let’s
Talk’ (the Pulse Surveys) and ‘Let’s Connect’,
(the regional town hall meetings), but other
frameworks such as the Employee Forum
to maintain good two-way communication.
The Board ensures it maintains strong
workforce engagement by conducting
site visits (see page 111). Kevin McAuliffe’s
role as the Board member responsible for
workforce engagement has been taken
up by me as the successor non-executive
deputy chairman.
Ensuring that we maintain Key Performance
Indicators on workforce engagement will
allow all stakeholders to monitor our
progress in this area.
Conclusion
Long-term, sustainable value is created
under good Corporate Governance. We
have worked hard this year to ensure
that we have maximised the information
in the public domain, as transparency
is key to stakeholder confidence. By
publishing our ESG targets and adding
new performance measures to the
Remuneration Report, I believe 2023
has been a success story in governance
and oversight, and one I look forward
to repeating in 2024.
Ken Bradley
Non-Executive Deputy Chairman to the Board of Directors
Statement of Compliance Companies Act 2006 s.172
As a matter of good Corporate Governance, as Directors of PPHE
Hotel Group, we make this statement required as by section 172
of the UK Companies Act 2006 and the Financial Reporting Council
Corporate Governance Code 2018.
Each Director of PPHE Hotel Group listed on pages 98 and 99 understands
their duties, and acts in a way that, in their judgement, promotes the success
of the Company for the benefit of all stakeholders, with due regard for the
varying interests of different stakeholder groups. The duties of the Directors
of the Company, separately and collectively, include a duty to identify and
engage with identified stakeholder groups, and ensure the interests of those
groups are taken into account in decision-making. Decisions shall incorporate
input from identified stakeholders, and be taken with due regard and
consideration for the likely impact on them.
The Board’s decisions are guided by what is most likely to promote the
success of the Company in the long term through creating sustainable
value for shareholders and contributing to wider society as a whole.
We report in detail on our stakeholder engagement activities in the
following sections of this Annual Report and Accounts:
• Stakeholder Engagement (pages 62 to 65)
• ESG and TCFD (pages 66 to 83) and
• Directors’ Report (pages 142 to 146)
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PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report Board of Directors
Board and committee membership
Audit Committee
Nomination Committee
C Chair
ESG Committee
Remuneration Committee
Eli Papouchado
Yoav Papouchado
Boris Ivesha
Greg Hegarty
Daniel Kos
Non-Executive Chairman
As Founder Eli has been
Chairman of the Group since
its formation. He has a wealth
of experience spanning
decades in the construction,
design, development,
financing, acquisition and
management of hotels.
Eli has been a major
contributor to growth and
successful delivery of over
£1 billion in hotel assets.
External appointments:
N/A
Board Committees:
N/A
Independent: No
Year of first appointment:
2007
Alternate Director to
Non-Executive Chairman
President &
Chief Executive Officer
Yoav Papouchado, Chairman
of Red Sea Hotels Limited
(‘Red Sea’), PPHE’s controlling
shareholder, has over 30
years of experience of real
estate developments and
data centres worldwide,
developed through his long
tenure at Red Sea. Yoav is also
a member of the Supervisory
Board, and Deputy Chairman
of the Supervisory Board
of Arena Hospitality Group,
the Company’s subsidiary
listed on the Zagreb
Stock Exchange.
External appointments:
Chairman, Red Sea Hotels
Limited; President, Gear
Construction; Deputy
President of the
Supervisory Board,
Arena Hospitality Group.
Board Committees:
N/A
Independent: No
Year of first appointment:
2020
Boris has been President
of the Group since 1991.
He brought the Park Plaza
brand to the Group in 1994
in collaboration with the
Red Sea Group, and has
been the major influencer
in expanding the Group’s
portfolio over the years.
Boris has over 50 years
of experience in the
hotel industry.
Boris is the Chairman of the
Supervisory Board of the
Arena Hospitality Group.
External appointments:
Chairman of the
Supervisory Board of the
Arena Hospitality Group.
Board Committees:
N/A
Independent: No
Year of first appointment:
2007
Co-CEO*
Greg was appointed to the
Board, with shareholders
confirming his appointment,
at the 2023 Annual General
Meeting. On 8 February 2024,
Greg became Co-CEO.
Greg has spent a long career
in hospitality, holding a
Master’s Degree in Business
Administration (MBA). He has
worked in senior management
in several global hospitality
brands such as GLH Hotels
and BDL Hotels. As well as
being a Fellow of the Institute
of Hospitality and a Master
Innholder, Greg has achieved
the following awards:
Acorn Award: 2004
Esprit General Manager
of the Year: 2005.
External appointments: N/A
Board Committees:
N/A
Independent: No
Year of first appointment:
2023
* On 8 February 2024, Greg
became Co-CEO. His title
prior to that date was
Deputy Chief Executive
Officer and Chief
Operating Officer.
Chief Financial Officer &
Executive Director
Daniel has worked with the
Group for over ten years
of which the last five
years have been as Chief
Financial Officer and
Executive Director.
As Chief Financial Officer,
Daniel is responsible for
the Group’s finance, IT and
procurement strategy. Daniel
has over 20 years of finance
experience in the field of audit
and corporate finance and
has been involved in several
large complex M&A deals,
large (re)financing projects
and several transactions on
the public markets in London
and Zagreb.
Daniel is a Certified Public
Accountant with significant
international experience
across many different
industries.
External appointments: N/A
Board Committees:
N/A
Independent: No
Year of first appointment:
2018
Ken Bradley
Non-Executive
Deputy Chairman
Committee membership
C C
Ken joined the board as a
Non-Executive Director on
4 September 2019. He spent
over 20 years with the Royal
Bank of Scotland Group in a
range of management roles
with a focus on corporate and
institutional banking and risk.
Ken’s last position at Royal
Bank of Scotland Group
involved him overseeing the
whole Guernsey arm of the
business. In 2009 Ken moved
to Barclays Wealth where
he spent eight years leading
their banking and trust
business in Guernsey and
had wider fiduciary banking
responsibilities in other
locations. Ken also has an
MBA from Warwick Business
School and has completed
the Institute of Directors
certificate and diploma
in Company Direction.
External appointments:
Director of a private
fiduciary company and
a small finance company.
Board Committees:
Nomination Committee
(Chair), Audit Committee,
Remuneration Committee,
ESG Committee (Chair).
Independent: Yes
Year of first appointment:
2019
Nigel Keen
Stephanie Coxon
Marcia Bakker
Kevin McAuliffe
Non-Executive Director
& Senior Independent
Director
Committee membership
C
Nigel joined the board as a
Non-Executive Director on
20 February 2020. He is a
qualified Chartered Surveyor,
with over 35 years of property
expertise from site acquisition
through to asset management.
Nigel headed-up the property
teams at Tesco where he
became Construction Director,
and The John Lewis Partnership,
where he was Property
Director, and served on
the Waitrose Board.
Nigel is a Non-Executive
Director of the construction
company RG Carter. Nigel
chairs the Audit Committee.
He is also Deputy Chairman
at the Maudsley Mental
Health Charity.
External appointments:
Non-Executive Director,
RG Carter; Deputy
Chairman, Maudsley
Mental Health Charity.
Board Committees:
Nomination Committee,
Audit Committee,
Remuneration Committee
(Chair).
Independent: Yes
Year of first appointment:
2018
Non-Executive Director
Non-Executive Director
Committee membership
C
Stephanie joined the
board as a Non-Executive
Director on 7 August 2020.
She is a qualified chartered
accountant, with over
15 years of capital market
expertise. Stephanie was a
capital markets director at
PwC where her role included
advising asset managers on
listing investment funds and
real estate investment trusts
(UK, Guernsey and Jersey)
on the London Stock
Exchange. She also advised
on ongoing obligations,
Corporate Governance,
accounting policies and
reporting processes.
External appointments:
Non-Executive Director on:
Apax Global Alpha Limited,
JLEN Environmental Assets
Group Limited, International
Public Partnerships Limited.
Board Committees:
Nomination Committee,
Audit Committee (Chair),
Remuneration Committee,
ESG Committee.
Independent: Yes
Year of first appointment:
2020
Committee membership
Marcia is a certified public
accountant with over 20
years of experience in audit,
finance, executive search
and leadership advisory. She
has a broad background in
finance with a speciality in
financial reporting and was
part of the IFRS and Financial
Instrument competence
centre at KPMG. During
the last ten years, she
has combined her finance
background with executive
search and succession
planning for various
corporate clients.
External appointments:
Former member of
the Board of ISVW
(Internationale School
van de Wijsbegeerte)
until November 2023.
Board Committees:
Audit Committee,
Nomination Committee,
Remuneration Committee,
ESG Committee.
Independent: Yes
Year of first appointment:
2022
Non-Executive
Deputy Chairman
(until 23 May 2023)
Committee membership
C
Kevin served for 16 years
on the Board of PPHE
Hotel Group, and retired
at our Annual General
Meeting in May this year. He
is a former member of the
Society of Trust and Estate
Practitioners and a Director
of various regulated
investment companies.
From 1999, he worked with the
Carey Group, joining as Chief
Executive in 1999, before
serving as its Chairman until
his retirement.
He served as Head of
Advisory Services for Paribas
International Private Banking
and Managing Director of
Paribas Suisse in Guernsey
from 1992 to 1999, and as
Finance Director of Ansbacher
Offshore Banking Group,
before being appointed as
Chief Executive Officer of
Ansbacher’s Guernsey bank
and trust company business in
1994. Kevin held posts in three
different departments in the
States of Guernsey between
1973 and 1980, and is a
member of the Supervisory
Board of the Arena
Hospitality Group.
External appointments:
Supervisory Board Member,
Arena Hospitality Group;
Director of CKLB International
Management Limited and CM
Management Limited.
Board Committees:
Nomination Committee
Independent: No
Year of first appointment:
2007
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Executive Leadership Team
The Co-CEO chairs a monthly meeting
of our Executive Leadership Team.
The Executive Leadership Team is composed of
the Executive Vice-Presidents of the Company,
and manages day-to-day operations of the
Group’s businesses, under the supervision
of the Board. The Board maintains a schedule
of matters reserved to the Board, and sets
the financial parameters of the Executive
Leadership Team’s activities.
Executive Leadership Team remit:
• Recommendations to the Board for strategic
priorities, and formulation of forward-
looking strategy.
• Design, construction and maintenance
of our portfolio of properties.
• Performance management through
KPIs, strategic objectives and budget.
• Health, safety and security.
• Customer engagement, product
development and brand standards.
• Asset management and capital investment
(within parameters set by the Board).
• Procurement and cost efficiency.
• ESG.
• Reputation and stakeholder management.
• Risk management.
• People, culture and values.
• Talent and succession.
• Information technology and cyber.
Boris Ivesha
President & Chief
Executive Officer
Boris has been President
of the Group since 1991.
He brought the Park Plaza
brand to the Group in 1994
in collaboration with the
Red Sea Group, and has
been the major influencer
in expanding the Group’s
portfolio over the years.
Boris has over 50 years
of experience in the
hotel industry.
Boris is the Chairman of the
Supervisory Board of the
Arena Hospitality Group.
Greg Hegarty
Daniel Kos
Inbar Zilberman
Robert Henke
Daniel Pedreschi
Michelle Wells
Jamie Kerr
Co-CEO
Greg was appointed to the
Board, with shareholders
confirming his appointment,
at the 2023 Annual General
Meeting. On 8 February 2024,
Greg became Co-CEO.
Greg has spent a long career
in hospitality, holding a
Masters’ Degree in Business
Administration (MBA). He has
worked in senior management
in several global hospitality
brands such as GLH Hotels
and BDL Hotels. As well as
being a Fellow of the Institute
of Hospitality and a Master
Innholder, Greg has achieved
the following awards:
Acorn Award: 2004
Esprit General Manager
of the Year: 2005.
Chief Financial Officer
& Executive Director
Daniel has worked with
the Group for over ten
years of which the last five
years have been as Chief
Financial Officer and
Executive Director.
As Chief Financial Officer,
Daniel is responsible for
the Group’s finance, IT and
procurement strategy. Daniel
has over 20 years of finance
experience in the field of audit
and corporate finance and
has been involved in several
large complex M&A deals,
large (re)financing projects
and several transactions on
the public markets in London
and Zagreb.
Daniel is a certified public
accountant with significant
international experience
across many different
industries.
Regional Vice
President Operations,
The Netherlands
Michelle has held a number
of management positions at
PPHE Hotel Group over a
period of 12 years, originally
joining as General Manager,
Park Plaza Sherlock Holmes
London in 2007. Michelle
moved to the role of General
Manager of sister hotel Park
Plaza County Hall London in
2014 and then onto Park
Plaza London Victoria in 2016.
Promoted to the newly
created role of Vice President
Operations the Netherlands
in 2019, Michelle oversees all
operational, revenue, finance,
marketing and sales strategic
objectives for the region on
behalf of six properties.
Michelle brings a strong
operational and commercial
background to the business
and educational qualifications
including the highly acclaimed
completion of the General
Manager Programme in
strategic management at
Cornell University in the
United States, as well as
being a Master Innholder
and a holder of the Freedom
of the City of London.
Executive Vice President
Restaurant & Bars
Jamie joined the Group
in 2022 as Executive Vice
President of Restaurants
& Bars. Jamie has an
extensive track record
in hospitality operations,
having most recently
opened Mama Shelter
Shoreditch (London) as
General Manager. Previously,
he held General Manager
roles with Soho House
Group, and entertainment
sales roles with Firmdale
Hotels, along with running
restaurants with notable
chefs such as Gordon
Ramsay and Mark Hix.
Jamie oversees the division’s
outputs and development,
which includes the
established and successful
TOZI Restaurant & Bar, Chino
Latino and ARCA brands, and
the introduction of JOIA – the
flagship restaurant, bar and
rooftop at art’otel London
Battersea Power Station.
Jamie also leads and develops
the new concepts going into
art’otel London Hoxton.
Chief Corporate
& Legal Officer
Executive Vice President
Commercial Affairs
Regional Vice President
Operations, The UK
Daniel is the Regional Vice
President Operations, The
United Kingdom for PPHE
Hotel Group and oversees
all UK hotels, restaurants
and bars in collaboration
with each individual
General Manager, as well as
focusing on new properties
developments and the general
PPHE Hotel Group strategy.
Daniel has been with the
Company since 2009,
originally taking the position
of Hotel Manager at Park
Plaza Westminster Bridge
London and in 2011 he moved
to the General Manager
position. In October 2013
Daniel took on the additional
role of supporting the
Central Reservations Office
as a General Manager next
to his existing responsibilities.
With over 20 years’
experience, Daniel’s passion
for hospitality and attention
to detail have always been key
drivers in his career. Daniel
strives to find improvements
to always keep ahead of the
competition and enhance our
position in the industry.
Inbar is a key member of
the Executive Leadership
Team and PPHE’s C-Suite
and she joined PPHE Hotel
Group in 2010. Inbar leads
and manages the Group’s
corporate initiatives and
corporate expansion as well
as multi-jurisdictional legal,
corporate finance, M&A,
Corporate Governance,
insurance and compliance,
and ESG functions.
Inbar brings an expertise
in negotiations and deal
execution and heads
the Group’s business
development and expansion
team, exploring, identifying
and negotiating new projects
in the Group’s regions of
operation, from deal
structuring, acquisition,
financing and planning/
construction set up.
Prior to joining the Group,
Inbar was in the corporate
finance team at the law firm
Berwin Leighton Paisner LLP
(now Bryan Cave Leighton
Paisner LLP) in London and
formerly a partner at the law
firm Bach, Arad, Scharf & Co.
Inbar holds an LLB from Tel
Aviv University and an LLM
from LSE. She is a qualified
solicitor in England, Wales
and Israel.
Robert is Executive Vice
President Commercial
Affairs for PPHE Hotel Group
and oversees all commercial
activities (including Sales,
Distribution, Reservations,
Customer Service, Revenue,
Digital Marketing and CRM) as
well as Brand Marketing,
Guest Experience and
Communications (including
brand strategy, brand
development, management
of the group’s strategic
partnership with the
Radisson Hotel Group and
corporate communications).
He has more than 20 years’
experience in international
hospitality and first joined
the Group in 2001, when he
was involved in the opening
of the Group’s hotels in the
United Kingdom and the
successful implementation
of Radisson Hotel Group’s
marketing programmes
and systems.
He re-joined the Group in
2007 and since then has
significantly developed
the central commercial
organisation, creating
and leading a multi-
disciplined, international
team of specialists.
Robert has lived and worked
in Aruba, Los Angeles and
London, and is based at the
Group’s head office in
Amsterdam. Prior to joining
PPHE Hotel Group, he held
international Marketing
positions at Golden Tulip
Worldwide and Hilton Hotels
Corporation. He holds a
Bachelor Degree in Hotel
Management Business
Administration from
Hotelschool The Hague,
with a major in marketing.
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Structure
and capital
• Determine the corporate
structure of the Group
• Set the management
and control framework
• Determine rules and
procedures for
dealing in the
Company’s securities
• Structure and
governance of
subsidiaries
Financial reporting
and controls
• Approve financial and
management reports
• Control of dividend policy
and implementation
• Capital and operating
budget management
• Major capital
project oversight
Risk management
and internal controls
• Review effectiveness of
risk and control processes
• Set the Group’s risk appetite
• Report on risk management
(see page 84)
• Oversee and review internal
reporting channels, including
whistleblowing reports
Board responsibilities
Strategy and
management
• Define and set the
Company’s strategy
for creating value for
all stakeholders,
including society as
a whole, through
sustainable success
over the long term
• Monitor and review
performance against
strategic objectives
• Oversee resourcing,
ensuring the tools are
available for management
and the Group as a
whole to meet the
Group’s objectives and
measure performance
against them
Performance
• Regularly review the
performance of the
Group in light of its
business strategy,
objectives, business
plans and budgets,
and ensure that any
necessary corrective
action is taken
Stakeholder
engagement
• Build and maintain
successful relationships
with a wide range of
stakeholders, created
on trust, transparency
and mutual respect
• Understand what
matters to key
stakeholders
• Ensure the Board
engages with
stakeholders directly
• Oversee executive
engagement with
stakeholders
Environmental, Social
and Governance
• Set targets for carbon reduction and other
environmental KPIs
• Aim for carbon net zero
• Oversee ESG Strategy delivery (see pages 66 and 129)
Society and workforce culture:
• Promote a guest-focused culture in line with the
strategy, valuing integrity, transparency and respect
• Embed a culture that rewards personal and team
performance aligned to our strategic and financial
objectives to maintain and attract top talent
• Ensure sustainable value-creation for shareholders
and for society as a whole
Business ethics:
• Control and prevention of corporate offences
• Effective management of data protection and privacy
• Conflict of interest management
• Maintain policies for good governance and ethical dealing
• Compliance with Financial Reporting Council’s Corporate
Governance Code 2018
• Ensure that workforce policies and practices are both
ethical and consistent with the Company’s values and
long-term objectives, management is capable and
effective and sound planning is in place
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PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report Corporate Governance – continued
Division of responsibilities
The Financial Reporting Council’s Corporate Governance Code 2018 (the Code) requires a clear separation of powers and
responsibilities between the members of the Board. As the Chair of the PPHE Hotel Group Board does not meet the requirements
of Provision 9 of the Code, this table demonstrates how the Board ensures that its independence and objectivity is maintained
through the work of the Senior Independent Director and other non-executive members. The role of each member of the
Board carries separate duties and accountabilities, and collectively they ensure effective communication with stakeholders .
Chief Executive Officer
Boris Ivesha
Role
It is the duty of the CEO
to conduct day-to-day
management of the Group
and the implementation of
theBoard’s strategy and
policy on the Board’s
behalf. The CEO provides
the executive leadership
the business needs.
The CEO is assisted by the
C-Suite, comprising the
Co-CEO, the Chief Financial
Officer and the Chief
Corporate & Legal Officer.
Additionally, the Executive
Leadership Team (see pages
100 and 101) supports this
role, and is accountable to it.
Responsibilities
• Effective management
• Strategic implementation in
line with the culture, values
and purpose of the business
• Accountability to Chairman
for achieving key objectives
• Reporting on strategic
development
• Oversight of Executive
Leadership Team
• Talent development
• Performance management
of Executive Leadership
Team
• Resource management for
Executive Leadership Team
Senior Independent Director
Nigel Keen
Role
It is the duty of the Senior
Independent Director to lead
the Non-Executive Directors
in their oversight and
scrutiny roles, and provide
support and encouragement
to them. He must also provide
a sounding board for the
Chairman and serve as an
intermediary for the other
Directors and shareholders.
Responsibilities
• Shareholder engagement,
including providing a channel
for shareholder feedback on
executives and governance
issues in the Company
• Support of the Chairman
in delivering strategic
leadership of the Board
• Evaluating the effectiveness
of the Chairman on behalf
of the other Directors
• Support annual Board
evaluation
• Challenging the Board
where relevant to help in
developing proposals on
strategy and objectives
• As Chair of the Remuneration
Committee ensures, with
the Deputy Chairman and
the members of the
Remuneration Committee,
that there is a clear
relationship between
remuneration and
performance, measured
with clear reference to
the long-term success
of the Company
Non-Executive Chair
Eli Papouchado
Role
As founder of the business,
the Chair is responsible for
its long-term, sustainable
health, leadership and
strategic direction through
oversight and scrutiny. The
Chair also has the duty of
setting the Board’s agenda,
and ensuring the Board is
effective in its role.
Non-Executive Deputy Chair
Ken Bradley
Role
As Chair of the ESG and
Nomination Committees,
Mr. Bradley has overseen the
transition and succession
arrangements following the
retirement of the outgoing
Non-Executive Deputy Chair,
Kevin McAuliffe. He has also
taken on some aspects of this
role, with a view to ensuring
continuity of oversight and
independence required by
Provision 9 of the Code.
As Chair of the ESG Committee,
he is responsible for ensuring
the appropriate governance
structure and functioning
of the Board, as well as
conducting the annual Board
effectiveness evaluation.
Responsibilities
• Oversees Corporate
Governance for the Board
and ensures appropriate
and tailored standards are in
force to comply with the Code
• As Chair of the Nomination
Committee, monitoring
the induction programme
in place for new Non-
Executive Directors
• Supporting the Chairman in
ensuring the Directors are
receiving and have access to
clear and timely information as
needed to make key decisions
• Oversees annual Board and
Committee evaluations and
puts in place a plan to act on
the results of the evaluation
• Consulting with Remuneration
Committee about executive
remuneration
• Acting as designated Non-
Executive Director for
workforce engagement
Responsibilities
• Strategic leadership
of the Board
• Setting the agenda
• Determining strategic
priorities
• Setting key objectives
• Establishing and maintaining
the Company’s purpose,
values and culture
• Promoting a culture of
openness and debate
in Board meetings
• Ensure Directors are
adequately resourced
to discharge their duties
• Ensure Directors have
access to clear, timely
and prompt information
for key decision-making
• Stakeholder engagement,
including communicating
and championing the views
of stakeholders to the
Board Monitoring progress
against strategic priorities
• Regular contact with the
Executive Leadership
Team and relevant function
heads to ensure that the
Board is properly informed
for oversight purposes,
and the Executive
Leadership Team is
properly resourced to
discharge their duties
Statement of Compliance
For the year ended 31 December 2023, the Board believes that the Company has applied all the principles of, and complied with all
provisions of, the Code, except as set out in this Governance Statement as required by the Financial Conduct Authority’s (FCA’s) Listing
Rules (which include the ‘comply or explain’ requirement). We comply with Corporate Governance requirements pursuant to the
FCA’s Disclosure Guidance and Transparency Rules by virtue of information included in this Governance section of the Annual Report.
The relevant documents can be found online at:
• www.frc.org.uk, for the Code; and
• www.handbook.fca.org.uk, for the FCA’s Disclosure Guidance and Transparency Rules sourcebook as well as Listing Rules.
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Balance of independent Non-Executive Directors
The Code requires that at least half of the
Board, excluding the Chair, be made up
of independent Non-Executive Directors,
and that no one individual or group should
be allowed to dominate decision-making.
After due consideration was given
to all factors that are likely to impair,
or appear to impair, the independent
judgement of each Director, the Board
concluded the following:
There are four independent Non-Executive
Directors: Ken Bradley, Nigel Keen,
Stephanie Coxon and Marcia Bakker.
Kevin McAuliffe, who retired from the
Board in May 2023, was not independent
within the meaning of the Code because
of his tenure.
The Alternate Director and Executive
Board members are not independent,
including the new appointment in 2023,
Greg Hegarty.
Directors of the Company
(1 January 2023 – 23 May 2023)
Independent Non-Executive Directors 4
Non-Executive Directors (non-independent) 1
Executive Directors (non-independent) 2
Chair or Alternative Director
(non-independent) 1
Directors of the Company
(23 May 2023 – 31 December 2023)
Independent Non-Executive Directors 4
Executive Directors (non-independent) 3
Chair or Alternate Directors
(non-independent) 1
Corporate Governance
At 31 December 2023, the Board
was composed of eight Directors (with
an alternate for the Chairman). Three
Directors are Executive Directors,
and five are Non-Executive Directors
(including the Chairman). The Executive
Directors are: the President and Chief
Executive Officer, Boris Ivesha; the
Co-CEO, Greg Hegarty; and the Chief
Financial Officer, Daniel Kos. The
Chairman, Eli Papouchado, is not
considered independent, as he is
a Red Sea Party (please see page 144
for a definition of Red Sea Party in the
Directors’ Report as required by the
Disclosure and Transparency Rules).
All Board members are subject to
annual re-election by shareholders
at the Annual General Meeting.
Appointment of a new Director
Greg Hegarty was appointed to the Board
and was elected by shareholders as a
Director at the 2023 Annual General
Meeting. Greg’s appointment was in line
with the succession planning programme
maintained by the Nomination Committee
of the Board, and was permitted following
the appointment of Marcia Bakker as
Non-Executive Director in 2022, as this
ensured the correct balance of Executive
and Non-Executive Directors. Greg’s
expertise and dynamic management have
been of vital importance to the business,
and the Board believed that it required an
executive of his calibre and importance to
the success of the business to be a member.
Greg’s appointment was subject to the
formal requirements of the succession
plan as reported on by the Chair of the
Nomination Committee on page 118. He
brings vital knowledge, experience and
skills to the Board, and his appointment
is timely to ensure a regular refresh
of personnel.
Board activities in 2023
Strategy, operational performance and risks
• Regularly received operational
updates from the Executive
Leadership Team
• Regularly reviewed potential
growth and development
• Launched our European Hospitality
Real Estate Fund with joint venture
partners Clal insurance to
encourage other investors to
provide capital for pipeline projects
• Regularly reviewed principal risks
• Regularly reviewed the results of,
and evaluated the performance
of, the internal audit
• Reviewed the results of, and
evaluated the performance of,
the external audit
Succession and talent
• Reviewed and considered
management incentive plans and
remuneration policies for Non-
Executive Directors, Executive
Directors and senior management
• Reviewed gender balance of the
Company and senior management,
and Board Diversity Policy
• Considered succession planning
for Board and senior management
• Regularly reviewed structure, size
and composition of the Board
• Received and considered the results
of the review of the effectiveness of
the Board and its composition
(including skills, knowledge,
experience and diversity)
Financial performance
• Regularly received updates from
the Chief Financial Officer and
Head of Internal Audit and Risk
• Regularly reviewed details of the
Group’s performance against budget
and the Group’s financial position,
including cash flow forecasts
• Reviewed and approved the
full- and half-yearly results and
associated announcements
and the trading updates
• Considered interim and final dividend
recommendations and declarations
• Reviewed compliance with
banking facilities
Stakeholder engagement and governance
• Received regular reports from
the Chair of each Committee
• Received regular reports and
updates from the Company
Secretary and from the Chief
Corporate & Legal Officer
• Reviewed governance standards
of the Group and its subsidiaries
• Reviewed and approved updates
to the Group’s Whistleblowing Policy
and routinely reviewed the reports
arising from its operation
• Reviewed and approved updates
to the Significant and Related Party
Transactions Policy
• Responded to investors collectively
in announcements following votes
at the Annual General Meeting,
and individually in exchange
of correspondence
Board policies and matters reserved
to the Board
Our Board reserves to itself governance
of the Company in line with statutory
obligations and fiduciary duties. In particular,
the Board maintains a number of powers
(Reserved Powers) which are not delegated
to Committees of the Board or to the
executive management team. These include:
• Statutory obligations and public disclosure
• Strategic matters and financial reporting
• Oversight of management and
personnel matters
• Risk assessment and management,
including reporting
• Monitoring, governance and control
• Other matters having material effects
on the Company
Transparency and accountability
is maintained by processes and
procedures set out in documents
reserved to the Board including:
• Articles of Incorporation
• Schedules of Matters Reserved
for the Board
• Board Committee terms of reference
Each Director may obtain independent
professional advice at the Company’s
expense in the furtherance of their duties
as a Director. The Board and the Committees
of the Board have access to legal support
from the Chief Corporate & Legal Officer,
external law firms, and other specialist
consultancies, such as remuneration
consultants and recruitment specialists.
Where recruitment consultants have
advised on executive remuneration,
or recruitment specialists on Board
appointments, these are identified
as appropriate. No such recruitment
specialists were required in 2023.
The Board reviews all governance policies
and terms of reference periodically to
ensure the policies remain current and
appropriate to the needs of the Board
and Company.
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Conflicts of Interest
The Board and all team members are
required to comply with two policies:
the Conflicts of Interest Policy and the
Significant and Related Party Transactions
Policy. These policies are reviewed annually,
and compliance training is regularly
refreshed. The policies require that
anyone with a potential conflict of interest
promptly and without delay observes a
formal procedure for reporting it, and
having it reviewed by the Board with
support from the Chief Corporate & Legal
Officer. A Director affected by a conflict
of interest is not permitted to participate
in formal discussions and decision-making
involving the interest at stake. The Board
does not believe there to be any inherent
conflicts of interest other than ones
already disclosed by each Director. Any
statutory duties under Guernsey law that
are in addition to the Conflicts of Interest
Policy are complied with by the Directors.
Exercising oversight and ensuring
adequate time to carry out duties
The annual timetable for Board meetings
and meetings of the Board Committees
allows for ample time to discuss and
debate matters. There is a timetable set
for the submission of papers prior to
meeting so that Directors have ample time
to familiarise themselves with the agenda,
and prepare for the meetings. The agenda
is set by the Chair so that there is ample
time for discussion and debate, and all
Directors are expected to contribute in
all meetings to ensure proper oversight
and diversity of perspectives and
opinions. Non-Executive Directors are
required to demonstrate that they have
sufficient time to fulfil their duties, and
are accountable to the Chair and Senior
Independent Director for this. The Chair
of the Nomination Committee monitors
external appointments for all Board
members to ensure sufficient capacity.
Oversight requires all Board and
Committee members to ensure they
have considered (and where relevant
and lawful), solicited the views of relevant
stakeholders regarding the issues to be
discussed at meetings.
Resourcing the Board to ensure it meets
its objectives and measures performance
against them
At all times, all Directors have access to the
Chief Corporate & Legal Officer to ensure
that they have appropriate, legally informed
advice on all governance matters.
Chief Corporate & Legal Officer and
Company Secretarial Support
The Chief Corporate & Legal Officer
and the Company Secretary, Suntera
Global (formerly Carey Commercial
Limited*), provide important support
functions to the Board and its members.
As a member of the C-Suite, the Chief
Corporate & Legal Officer is required
to ensure that internal governance
arrangements below Board level for the
workforce are aligned to the directions
of the Board and the risk appetite of the
Company as determined by the Board.
Responsibilities of the Chief Corporate
& Legal Officer to the Board
• Ensures compliance with the Financial
Conduct Authority’s Listing Rules (LR)
and Disclosure Guidance and
Transparency Rules (DTR)
• Responsible for information flow to the
Board (via the Company Secretary)
• Advises and supports the Chair and
Board on all governance matters
• Ensures all Directors have access to
the advice and services of internal
lawyers and external, independent
professional legal advice at the
Company’s expense in furtherance
of their duties
Responsibilities of Company Secretary to
the Board (Suntera Global)*
• Provides compliance support with
respect to The Companies (Guernsey)
Law, 2008 (as amended or replaced
from time to time)
• Maintains the Board and Committee
meetings diary and agendas
• Ensures the Board receives
accurate, timely and clear
information prior to meetings
• Ensures that prior to Board meetings,
Directors receive all necessary
information to facilitate open,
constructive discussion and debate
• Oversees and advises the Board on
• Ensures the Board is adequately
resourced for effective and efficient
function (alongside Chief Corporate
& Legal Officer)
the Company’s Corporate Governance
practices, policies and procedures
with respect to statutory and other
Corporate Governance frameworks
• Ensures the Board is adequately
resourced for effective and
efficient function
• Supports the ESG Committee of the
Board in the formulation and execution
of the Group’s ESG Strategy
* Carey Commercial Limited announced it had become part of Suntera Global on 16 May 2023.
Board evaluation
The Board evaluates its performance and
the effectiveness of Board Directors and
Board Committees on an annual basis.
Every three years, this annual evaluation
is conducted by an external evaluator. In
2021, this external evaluation was conducted
by Independent Audit Limited. This company
has no connection with the Board or
members of the Executive Leadership
Team. In 2022, the internal evaluation was
conducted by the Non-Executive Deputy
Chairman. In 2023, the Chair of the ESG
Committee and Nomination Committee
conducted the internal evaluation.
The purpose of the evaluation is to
establish the effectiveness of the Board,
the Directors and the Committees of
the Board in discharging the functions
required of them by law, by good
Corporate Governance practice and by
the internal frameworks of the Company.
It includes consideration of the tenure of
each Director, and their skills, experience
and length of service. It also includes an
assessment of each Director’s external
responsibilities to ensure that they are
able to commit sufficient time to discharge
their duties effectively.
The evaluation covered the full scope of
the Board and each Committee’s work,
providing recommendations, suggestions
and an overall assessment of effectiveness.
A summary is included in the table below.
Annual Committee assessment
Each Board Committee is assessed
annually to ensure that it is functioning in
line with the relevant terms of reference
and mandates set by the Code. Annual
review of governance documents is a
requirement of best practice.
2023 Board Evaluation Summary (with updates on 2022 outcomes)
2023 identified focus area 2023 outcome
(1) Objectives,
Strategy & Remit
(2) Performance
Measurement
& Management
• Information flow is good, and improving
• Strategy away day well-received and recommended for 2024
• Engagement on ‘Project Elevate including NED engagement
was very useful
• High standard of financial information provided
• Open culture noted and improving
• High levels of interaction and trust
• Requests for clarification and further information
received promptly
(3) Relations with
Executive
Management
& Boardroom
• Strong and improving relationships
• NED meeting following up on Board’s monthly call
with management could be more structured
• Oversight of HR changes – talent management
(4) Risk Management
and succession planning is an identified priority for 2024,
building on new appointment
• Progress in this area noted in 2023
• Increase in resources for Internal Audit and Risk
function viewed as performing well
• Strong embedding of risk management culture led by executive
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Update on 2022 priority areas and 2023 outcomes
Committees
Audit
Committee
Priorities identified in 2022 Annual Report Update
• Evaluating the potential impact
of the Department for Business,
Energy and Industrial Strategy (BEIS)
consultation document on audit and
Corporate Governance reform
• Continue to oversee the assurance
plan over financial internal controls
and work with the Head of Internal
Audit and Risk to develop assurance
plan for non-financial internal controls
• See Audit Committee Report
on page 122
• The Audit Committee reviewed
its own approach to Corporate
Governance FRC Audit
committees and the External
Audit: Minimum Standard
• Non-financial controls
overseen, with a focus on ESG
Remuneration
Committee
• Review of Remuneration Policy
• A review of Directors’ fees
Nomination
Committee
• Succession planning
• Completion of the Board induction
programme for Marcia Bakker,
including UK and Arena Hospitality
Group site visits
ESG Committee • Oversight of ESG Strategy
implementation and progress
reporting, including on progress
towards net zero target
and structure to ensure best
practice and maximum
transparency and
accountability
• See Nomination Committee
Report on page 115
• Induction for Marcia
Bakker completed
• Succession plan for
Non-Executive Deputy
Chairman implemented
• See ESG Report on page 129
• Strategic targets implemented
• Data collection for baseline to
set additional targets for
water and waste implemented
• Net zero commitment letter
sent to SBTi
• Board evaluation felt strong
leadership required to embed
targets in the business
Board meetings – Establishing and promoting
a culture of debate and diversity
The Board values diversity of opinion
and differing viewpoints in executing
its responsibilities. The Chairman
ensures that time is made available for
all opinions to be heard. In particular,
the Board values a clear separation of
responsibilities between the Executive
Leadership Team and the leadership
provided by the Board. This ensures
proper oversight, informed debate
and diversity of thought. Each member
of the Executive Leadership Team
oversees certain defined departments
of the business and reports on the
progress of these areas to the Board as
and when relevant. The Company believes
that this structure ensures effective
communication between the Board and
the Executive Leadership Team of the
Company’s business, and that no small
group of individuals dominates the
Board’s decision-making.
Any concern expressed by Directors
about the Company or its subsidiaries,
or a proposed action, is recorded in
the minutes of the meeting. Additionally,
the Senior Independent Director takes
responsibility for ensuring that all
viewpoints are available to the Board.
Communication between the Board
and the Executive Leadership Team
Management, including the Executive
Leadership Team, reports to the
Chief Executive, whom the Board has
made responsible for oversight and
performance management. The Chief
Executive reports to the Board on this.
The Executive Leadership Team had
monthly business update calls with the
Non-Executive Directors in 2023. Further,
the Non-Executive Directors conduct
sub-meetings following the business
update calls without others in attendance
to ensure good oversight, and have
established a permanent forum to ensure
that information-flows and transparency
were well-maintained. This enables
the Board to effectively carry out its
duties and make swift decisions. Open
communication between the Non-Executive
Directors and Executive Leadership Team
has been found to be very effective as it
allows the Non-Executive Directors to
engage directly to ensure that management
takes corrective actions in a timely manner.
Culture and values
The Board sets the culture and values
of the business, and works to engage
with all stakeholders to communicate
and promote the culture and values. This
requires the Board to review annually
policies which maintain the culture and
values and facilitate the business ethics
of the Company. Policies set out the
behaviours required of people working
within our Board, management and
operations, and aim to empower people
by providing them a framework and
guidance. When reviewing policies, the
Board takes account of developments
in the law, in stakeholder expectation,
and best practice to ensure a strong
framework optimised to the specific
needs of the business.
Through the ESG Committee, the Board
has committed to rigorous targets in
environmental and social performance.
These are set out in detail in the ESG
section and in the report of the ESG
Board meetings: Procedures
Notices
The notices of Board meetings, agendas and supporting
documents are formally circulated to the Board in advance of
Board meetings as part of the Board papers. Therefore,
Directors have the opportunity to request that any agenda items
be added that they consider appropriate for discussion.
At the beginning of each meeting, each Director must disclose
the nature and extent of any conflict of interest arising generally
or in relation to any matter to be discussed. Directors must also
disclose their shareholdings and any changes to those that have
occurred.
(1) Strategy
(2) Management updates from:
• Executive Directors
• Executive Leadership Team
(3) Updates on Corporate Governance by Non-Executive Deputy
Chairman (supported by the Chief Corporate & Legal Officer)
Chief Corporate & Legal Officer
Regular Executive Leadership Team attendance of Board
meetings is part of our succession plan (talent development).
Review of any
conflicts arising
Standing agenda
items
Non-members
in regular
attendance
Board succession
planning
Committee. Important ESG Policies
remain reserved to the Board, such as the
Conflicts of Interest Policy, the Significant
and Related Parties Transactions Policy,
and the Whistleblowing Policy. These are
reviewed and refreshed annually.
The Board takes steps to monitor the
culture within the organisation. The
following tools allow the Board to keep
abreast of workforce culture:
Workforce engagement
Kevin McAuliffe, whilst in the role of
Non-Executive Deputy Chairman had
the responsibility of acting as the Board
member with responsibility for workforce
engagement under the terms set out in
Provision 5 of the Code. Following his
retirement, this responsibility has been
transferred under the terms of our
succession plan to Ken Bradley, the
new Non-Executive Deputy Chairman.
• Pulse Surveys
• Online guest reviews
• Social media
• Employer review sites
• Compliance training records
• Hotel audits
Data from these sources is available at
Board level to monitor the health of the
culture within the business. Aligning
culture to the values and purpose of
the business is key to success.
Our team members’ loyalty and dedication
is vital to the long-term, sustainable
success of the business. They understand
our passion to create the best possible
experiences for our guests. This is
reflected in the ESG targets to further
workforce engagement and employee
development in order to attract and
retain talent at all levels.
Board site visits
In 2023 we visited several of the London
hotels including the newly opened art’otel
London Battersea Power Station, the
development site in Hoxton and Victoria
including the subterranean space which was
subsequently granted planning permission.
Pulse Surveys
Some team members prefer to offer
their feedback anonymously, rather than
face-to-face. Let’s Talk, our Pulse Surveys,
allow us to monitor employee engagement
and other important matters, such as
employee awareness of ESG.
Pulse Surveys took place online on an
anonymous basis and were conducted
by an external partner. The overall
responses to the engagement
questions were positive.
Board and Committee meetings
In accordance with the Code, the
Company has established the following
Committees in order to support the
Board and carry out work on its behalf:
• Audit Committee
• Nomination Committee
• Remuneration Committee
In line with investor priorities, and to
ensure good governance, the Company
has established the following Committee:
• ESG Committee
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Strategy. Purpose. Culture. Communications.
Our Board
Sets the strategy and commercial vision, leading with integrity, promoting culture.
Evaluates management, overseeing resources and talent pipeline, engaging with key stakeholders.
Board and Committee membership
Nomination
Committee
Audit
Committee
Remuneration
Committee
ESG
Committee
Develops. Plans.
Evaluates.
Nominates.
Transparency.
Accuracy.
Monitors. Aligns.
Values.
Culture.
Talent proposition.
Future plans.
Safeguards.
Sustains.
Oversees current needs
and evaluates, plans for the
future, monitors, advises,
nominates candidates.
Report available on page 115
Ensures the Board has a
balance of skills, knowledge,
diversity and experience.
• Board and Committee
composition
• Board nominations
• Succession planning
for Directors
• Succession planning
for senior management
Oversees risk management,
internal controls, audit
functions and financial systems.
Report available on page 122
Monitors the integrity of the
Group’s financial statements
and internal controls of
the Company.
• Monitors and reviews the
integrity of the Group’s
half-year and full-year
financial results, and the
financial reporting process
• Oversees risk management
and reviews the
effectiveness of the
Group’s systems of internal
controls and risks
• Oversees ethics and
compliance for the Company
• Reviews and oversees the
Group’s internal and
external audit functions
Oversees alignment
of remuneration and
workforce policies to the
long-term success of the
Company and its values.
Report available on page 131
Responsible for Remuneration
Policy and for setting salary
and bonus levels for senior
management and employee
benefit structures.
• Remuneration Policy
• Sets targets and incentive
schemes
• Executive Leadership Team
and senior management
remuneration review
Oversees the approach to
sustainability and adding
value for our people, our
places and our planet.
Report available on page 129
Responsible for reviewing
the TCFD Report, and
proposing strategy and
targets to the Board.
• TCFD reporting
• Oversees the Group’s
environmental and
social impact
• Sustainability and ethics
• Liaising with ESG
specialists/ consultants
• Oversight of ESG Strategy
including carbon net zero
through KPIs
Eli Papouchado
Yoav Papouchado
Boris Ivesha
Daniel Kos
Greg Hegarty
Kevin McAuliffe
Ken Bradley
Nigel Keen
Stephanie Coxon
C
Marcia Bakker
Alternate Director
Retired May 2023
C
C
C
ESG Committee
Audit Committee
Nomination Committee
Remuneration Committee
C Chair
Board and Committee meeting calendar 2023
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
N
B
B
A
A
E
N
R
B
B
A
E
N
R
B
B
A
E
N
R
B
A
E
N
R
Terms of reference for each Board Committee are available on the Company’s website.
B Quarterly
Board
meeting
B Ad-hoc
Board
meeting
A Audit
Committee
meeting
E
ESG
Committee
meeting
N Nomination
Committee
meeting
R Remuneration
Committee
meeting
Annual
General
Meeting
Committee
Meeting
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Nomination Committee Report
Board and Committee meeting attendance 2023
Name
Eli Papouchado
Yoav Papouchado
Boris Ivesha
Daniel Kos
Greg Hegarty
Kevin McAuliffe
Ken Bradley
Nigel Keen
Stephanie Coxon
Marcia Bakker
Quarterly
Board
Meetings
Audit
Committee
Meetings
ESG
Committee
Meetings
Nomination
Committee
Meetings
Remuneration
Committee
Meetings
1/4
2 (as alt)
4/4
4/4
2/2
2/2
4/4
4/4
4/4
4/4
N/A
N/A
N/A
N/A
N/A
N/A
6/6
6/6
6/6
6/6
N/A
N/A
N/A
N/A
N/A
N/A
4/4
N/A
4/4
4/4
N/A
N/A
N/A
N/A
N/A
2/2
5/5
5/5
4/5
5/5
N/A
N/A
N/A
N/A
N/A
N/A
4/4
4/4
4/4
4/4
Ad-hoc
Board
Meetings
1/3
2 (as alt)
2/3
3/3
1/1
2/2
3/3
3/3
2/3
3/3
Committee
Meetings
N/A
N/A
2/3
3/3
N/A
1/1
5/5
N/A
3/3
N/A
Ken Bradley
Chair of the Nomination Committee
Membership of the Nomination Committee
and meeting attendance
Name of Director
Ken Bradley (Chair)
Stephanie Coxon
Kevin McAuliffe
Nigel Keen
Marcia Bakker
Meetings attended and
eligible to attend
5/5
4/5
2/2
5/5
5/5
Dear Stakeholder
I am pleased to present my first report
to you as Non-Executive Deputy Chair
of the Group, as well as the head of
its Nomination Committee.
I would like to thank Kevin McAuliffe
for his long service and legacy. Kevin’s
succession was conducted in line with the
succession planning maintained by the
Committee. Chairing the ESG Committee
(see report on page 129), I have sought
to ensure that talent development and
future leadership are included in our
ESG targets, which ensures a diverse
leadership into the future in line with
the culture and values of the business.
Succession planning
The responsibilities demanded of a
company’s Chair and also the Deputy Chair
require that they hold the executives to
account and provide strong leadership
for independent Directors to oversee,
question, and ultimately provide shareholder
confidence in the long-term sustainability
of the business model. I am pleased to
support Eli Papouchado in these duties.
Our roadmap towards meeting diversity
targets is a combination between our
talent development and internal pipeline
for Board appointments, and our process
for appointment of external Directors
where appropriate.
Board composition
We aspire for the Board to be regularly
refreshed to ensure diversity and
independence. All Board Directors are
subject to annual election or re-election
by shareholders, which takes place at
the Annual General Meeting (‘AGM’).
Our Non-Executive Directors are
independent from the business, and
regularly refreshed to ensure diversity
and independent challenge to the team.
Our Executive Directors are responsible
for the day-to-day running of the business.
In 2023, as part of long-term succession
planning, we announced the appointment
of Greg Hegarty, the Co-CEO to the Board,
with his election at the 2023 AGM.
Alongside the Board induction provided
to Greg, we have continued with the
induction programme for our most
recently appointed Non-Executive
Director, Marcia Bakker (see page 119).
Looking ahead
The culture and values of the organisation
depend on the right individuals occupying
key positions and delivering long-term
sustainable value to stakeholders. The
Nomination Committee’s task is to ensure
that the best possible leadership is in
place to manage the business and meet
challenges on the horizon. Post balance
sheet, we announced Greg Hegarty’s
appointment as Co-CEO.
I am confident that the changes we have
made in 2023 deliver strong, confidence-
inspiring leadership, in line with stakeholder
feedback and requirements, and I am
very happy to present this Nomination
Committee Report.
Ken Bradley
Chair of the Nomination Committee
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Nomination Committee evaluation
As at 31 December 2023, the Nomination
Committee was composed of four,
independent, Non-Executive Directors.
Between 1 January 2023 and 23 May
2023, it comprised those individuals,
as well as the (non-independent) Non-
Executive Deputy Chair, Kevin McAuliffe.
Each Director is individually, and the
Board is collectively, subject to an annual
evaluation. This evaluation considers
the independence of each Director. No
member of the Nomination Committee is
considered to have a personal financial
interest in matters to be decided by the
Committee. All Non-Executive Directors
with the exception of the Chair and the
outgoing Non-Executive Deputy Chairman
were appointed after 2018. We consider
this an important element of ensuring that
we respect the Corporate Governance
Code provisions relating to tenure and
regular refreshing of the Board. The Chair
and our Executive Directors represent
the voice of experience in consistent
delivery of value to stakeholders. Our
Non-Executive Directors are independent
from the business, and regularly
refreshed to ensure diversity and
independent challenge to the team.
Board succession planning
Board succession planning is an ongoing
process to ensure that the plan can be
implemented for changes to the Board
that occur without notice as well as
those foreseen well in advance. Given
the changes to the composition of the
Board that took place in late 2022 and
throughout 2023, it has been necessary
to revise the succession plan accordingly.
We work to maintain and develop a
pipeline of suitable internal candidates,
who can therefore be prepared to take on
the responsibilities of Board-level leadership.
We also keep prepared plans for external
appointments in the event that these
should be necessary and/or desirable.
Relevant considerations include:
• Tenure of existing Board members with
a view to preserving the independence
of independent Directors, and ensuring
at least 50% of the Board (excluding the
Chair) remains independent;
• Internal talent development and review:
ensuring that any list of candidates
from the executive management team
suitable for consideration for Board
appointment in the future meets the
skills matrix requirements and diversity
requirements of the Board;
• Ensuring that external candidates to
fulfil Board vacancies are drawn from
a short list composed of broadly
diverse candidates. This allows for
the best candidate to be selected
regardless of their protected
characteristics, whilst ensuring
that women and ethnically diverse
candidates are not unfairly excluded
from the process by unconscious bias.
art’otel Zagreb
Nomination Committee’s activities and focus 2023
Committee Function
Board & Committee
composition
Actions in 2023
• Reviewed the composition of the Board to support the strategy, values and culture of the
business (see Figures 1, 2 and 3)
Board nominations
Succession planning for Board
and Executive Leadership Team
Diversity and talent
management
Workforce engagement
• Conducted the Board evaluation using the outputs of the external evaluation conducted in 2021
by Independent Audit Limited, and the internal evaluation completed in 2022 by the Non-Executive
Deputy Chair
• Considered the Committee’s own performance and constitution to ensure that it is operating at
maximum effectiveness
• Reviewed the Board Diversity Policy and other Diversity, Equity and Inclusion policies and procedures
• Completed the Director onboarding programme for Marcia Bakker and Greg Hegarty, the most
recently appointed Non-Executive and Executive Directors respectively
• Greg Hegarty, the Co-CEO, was appointed to the Board in 2023
• He was subsequently appointed Co-CEO on 8 February 2024
• Completed handover from the outgoing Non-Executive Deputy Chair
• Implemented changes to Non-Executive Director roles to incorporate functions previously
undertaken by the Non-Executive Deputy Chair
• Reviewed and updated succession planning for
(a) Board members; and
(b) Executive Leadership Team.
• Prioritised diversity in both Board and Executive Leadership succession plans
• Incorporated organisation-wide Diversity, Equity and Inclusion targets into the ESG Strategy
• Conducted site visits to London hotels, including the newly opened art’otel Battersea Power
Station London, the development site at art’otel London Hoxton and Park Plaza London Victoria
to review the site of planned changes at basement level
• Transferred Board member responsibility for workforce engagement from Kevin McAuliffe
to Ken Bradley
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Transparency and accountability are key to stakeholder confidence in governance structures.
We have provided an illustration of our succession planning process in the following diagrams:
Figure 1: Board succession planning process
1
Identification of
skills, experience
and expertise of
Board members
2
Compilation of a
Board skills matrix
3
Skills gap analysis
4
Board evaluation
5
Conclusion
on requirement
for new appointment
Yes
(See Figure 2)
No
(return to stage 1)
Figure 2: Succession planning process if new Director is required (as required by Principle J of the Corporate Governance Code)
Update Board
skills matrix
following Board
evaluation
Review Board
composition and
Board diversity
with Parker
Review and FTSE
Women Leader
requirements
Review pipeline
candidates list
against gap
analysis on skills
matrix, and
diversity criteria
Determine if
any pipeline
candidates
should be taken
forward to
short list and
if external
recruitment
specialist(s)
required
Use Board skills
matrix, diversity
review and gap
analysis to write
brief to external
recruitment
specialist (if
required)
Ensure short list
of candidates
fulfils both skills
and diversity
criteria
Assess
candidates
by formal,
rigorous and
transparent
criteria
Appoint
Appointment of new
Executive Director to the Board
The Committee’s review of Board
composition concluded that in line
with the long-term succession plan,Greg
Hegarty should be appointed to the Board.
It was an opportunity to increase Board
oversight over executive leadership by
bringing a further executive into Board
meetings, and therefore making the role
accountable to the duties and responsibilities
Board membership requires.
The Board felt that governance and
executive oversight would be improved
by Greg’s addition to the Board, which in
turn would benefit from his long-standing
commitment to excellent leadership of
the business. This decision was swiftly
followed by promoting Greg to Co-CEO,
announced on 8 February 2024 (post
balance sheet).
118
Executive Leadership Team succession planning
2023 saw good consistency in the Executive
Leadership Team. In October 2023, as part of
our organisational review ’Project Elevate’,
James Goulding became our Vice President
Human Resources & Talent Technology, a
vital role for culture and values within the
leadership team. We were very pleased to
see James take up this position, which he
combines with his responsibilities for HR
leadership in the UK region.
Project Elevate itself is an ongoing
organisational review with Deloitte to
ensure our organisational structures
align with our business requirements,
our extended multi-brand partnership
with Radisson Hotel Group and to support
our exciting new pipeline of several new
openings across European capital cities.
There is a range of recommendations
from Project Elevate in the sphere of
people and culture, which James is
translating into real and impactful
initiatives, aimed at improving our
overall HR service to the regions and
hotels, supporting all our team members,
as well as supporting teams in other
areas of the business on their own
Project Elevate initiatives.
with the business, and apply her extensive
experience and expertise in accounting and
executive search roles to use in oversight
positions. A timeline of her induction
programme is included at Figure 3.
In terms of our consistency in developing
and retaining talent in executive leadership,
2023 has been a significant success story.
Looking ahead, within our ESG Strategy,
‘People’ is one of the four pillars, with
targets for development and diversity,
equity and inclusion. Now that we can be
assessed against KPIs for our targets in
this area, we have improved transparency
and accountability for all stakeholders.
Board induction
Our two newest Directors serving on the
Board were appointed in December 2022
and elected at the May 2023 Annual General
Meeting respectively. Both were provided
with a bespoke induction plan, according to
requirements. As an external appointment,
Marcia Bakker required an extensive
induction programme to familiarise herself
Greg Hegarty’s long familiarity with the
business meant that his induction was
more focused on training to fulfil the
responsibilities of a Director. Norton Rose
Fulbright completed training in directors’
duties. The contents of the training included:
• Regulatory frameworks applying
to PPHE as a Guernsey-registered,
London premium listed entity
• Controlling shareholder rules
• Market abuse regulations – in the
EU and UK following Brexit
• Key continuing obligations for directors
Directors’ induction is a formalised
process owned by the Executive
Leadership Team (the Chief Compliance
& Legal Officer) and the Board (the Chair
of the Nomination Committee).
Figure 3: Marcia Bakker induction programme
Appointment
First interview
with the
Chair of the
Nomination
Committee
regarding
induction
requirements
January 2023
Second
interview with
the Nomination
Committee
Chair to
identify any
gaps and if
additional
information
is required
December 2022
Training from
external
lawyers
on legal
obligations
December 2022
Attended
Board and
Committee
meetings as
observer
December 2022
Site visit to
Amsterdam
Corporate
Office and
Amsterdam
hotels
December 2022
Presentations
received from
I.T. Finance and
Commercial
Affairs
December 2022
Meeting with
the Director
of Financial
Planning and
Analysis
January 2023
Review of key
statutory
documents
March 2023
Meeting with
Finance team
to discuss
operation of
internal
finance
March 2023
March/April 2023
September 2023
UK Region
hotel visits
Review of
induction
by Chief
Corporate
& Legal Officer
to confirm
completion
UK Corporate
Office site visit,
plus London
hotel and
London
development
site visits
119
PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report
Nomination Committee Report – continued
Until our Annual General Meeting in
May 2023, Kevin McAuliffe also acted as
Deputy Chair to support the requirement
for oversight. My take-up of his role has
been designed to ensure that the Code’s
requirement for independent oversight
is met through means other than those
prescribed in Provision 9.
We are sensitive to stakeholder feedback,
about Corporate Governance or Code
non-compliance. We maintain continuous
engagement with shareholders, to
provide the requisite transparency
and accountability. In 2023, we reviewed
stakeholder engagement at both Board
and Executive Leadership level, to
promote further shareholder meetings.
The Nomination Committee and the
Board as a whole remains convinced that
experience and continuity on the Board
is essential to safeguarding the resilience
of the business and identifying growth
opportunities in the interests of all our
stakeholders and society as a whole.
The Nomination Committee has therefore
made the following decisions:
• that any deviation from the Code is
subject to continuing review to ensure
it has a robust justification that can be
clearly and transparently explained to
shareholders to their satisfaction, as
in this case; and
• that Mr Papouchado be recommended
for reappointment as Chair in 2024.
Board diversity
The Nomination Committee takes
responsibility for diversity, equity and
inclusion, and maintains a Board Diversity
Policy covering all diversity characteristics
protected by the Equality Act 2010 which
is reviewed annually by the Nomination
Committee and proposed for annual
adoption by the Board. As part of this,
we annually consider the gender balance
of those in senior management and their
direct reports. Our Board and Executive
Leadership Team consist of both men
and women and include talented and
committed individuals whose business
experience, geography, age, gender
and ethnicity are varied.
The 2022 Board Diversity Policy contained
significant updates as set out in the 2022
Annual Report. Our new Board appointment
in 2023 was made on merit, through
objective criteria, and in pursuit of good
Corporate Governance objectives. Greg
Hegarty was appointed in line with the
Board succession plan, and reflected his
status and importance in the governance
of the business as a whole. As such, we
are pleased that our long-term succession
plan is being implemented properly, with
our internal talent development operating
to ensure strong continuity in leadership.
The Board Diversity Policy will provide the
structure and process for any future
appointments process.
The benefits of diversity are that the Board
is able to provide the Executive Leadership
Team with a wide range of experiences
and perspectives. The more diverse
the background of Board members, the
broader the range of ideas that can bring
innovation to our Company’s mission.
Ensuring diversity of experience, viewpoint
and skill set on the Board is the priority,
but reaching the FTSE Women Leaders
and Parker Review targets is incorporated
into the recruitment process by including
them in instructions to any specialist
recruiters instructed as part of the
search for new Directors, as per Principle
J of the Code. It is our aim to ensure that
any short list of candidates contains at
least one candidate to assist us in
reaching our targets.
The Board and senior management are a
unified voice for the Company’s strategic
growth weaved together by individual
Directors each with their own experience,
skill set, expertise and background.
In accordance with the Code, the work of
the Nomination Committee includes giving
consideration to issues of diversity, equity
and inclusion, including the mix of gender
and ethnicity of those in senior management
and their direct reports.
Independence & tenure of the Chair
Provisions 9 and 10 of the Code set out
criteria for the Chair of the Board which
guarantee independence, by restricting
the circumstances under which the Chief
Executive may serve as Chair of the Board,
and by setting out tenure restrictions and
remuneration criteria which risk a material
impact on the independence of the Chair.
Our Non-Executive Chair’s tenure means
we are not compliant with the letter of
Provision 9 of the Code. it is important
to set out to shareholders why this is the
case, and what arrangements are in place
to ensure that the purpose of protecting
their interests through an independent
Chair is achieved by other means.
The Nomination Committee is in support
of the determination of the full Board
that our reasons for this departure
from the Code are robust, and that the
risk to the interests of stakeholders in
our Corporate Governance is minimal. Eli
Papouchado is one of the founders of the
Company, and through his personal stake
and investment in the Company (see the
Directors’ Report on page 142) is fully
incentivised to prioritise the long-term,
sustainable interest of shareholders and
other stakeholders. Mr Papouchado has
guided the Company from its inception,
and has proven and documented
experience in demonstrating objective
judgement in an independent manner
in the interest of shareholders. His
critical eye over executive management
is of vital importance to the success of
the Company, and we see no reason to
deviate from this presently. The business
relies on the Chair’s unique vision, wealth
of knowledge, network and intuition earned
through his many successes spanning
more than six decades in construction,
design, development, financing, acquisition
and management of leading hotels.
Diversity disclosures
No. of Board
members
Percentage
of the Board
No. of senior
positions on
the Board
(CEO, CFO,
SID & Chair)
No. in
executive
management
Percentage
of executive
management
Reporting on gender identity or sex1
Men2
Women
Other categories
Not specified /
prefer not to say
6
2
–
–
Reporting on ethnic background
White British or
other white
(including minority
white groups)
Mixed / multiple
ethnic groups
Asian / Asian British
Black / African /
Caribbean /
Black British
Other ethnic group,
including Arab
Not specified /
prefer not to say
6
–
–
–
–
2
75%
25%
–
–
75%
–
–
–
–
25%
4
–
–
–
2
–
–
–
–
2
6
2
–
–
7
–
–
–
–
1
75%
25%
–
–
88%
–
–
–
–
12%
1 Please refer to pages 98 to 101 Members of the Board and members of executive management are
considered two separate populations. The individuals counted in the Board and executive management
columns are identified respectively in those tables.
2 Alternate Director not included. At all times in 2023, there were six men serving on the Board, as the service
of Kevin McAuliffe and Greg Hegarty did not overlap.
Disclosures in the table above are made in line with reporting requirements set out
in the Listing Rules (LR9 Annex 2).
120
121
PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report Stephanie Coxon
Chair of the Audit Committee
Membership of the Audit Committee
and meeting attendance
Name of Director
Stephanie Coxon
(Chair)
Nigel Keen
Ken Bradley
Marcia Bakker
Meetings attended and
eligible to attend
6/6
6/6
6/6
6/6
Audit Committee Report
Dear Stakeholder,
I am pleased to present the Company’s
Audit Committee Report for the year
ended 31 December 2023. As Chair of the
Committee, I have prepared this report
to set out the activities of the Committee
in 2023, and how we have discharged our
duties. The 2023 Annual Report is drafted
to ensure that taken as a whole, all
information published to the market is
fair, balanced and understandable. We
welcome feedback from all stakeholders
on our reporting to ensure that it is
compliant and serves their needs.
The Audit Committee performs a crucial
role in providing independent oversight
over the financial reporting process,
internal audit processes and the Company’s
risk management and internal controls.
It provides expert scrutiny to ensure
the Company’s performance is correctly
verified by the external auditors and that
the reporting of this to our stakeholders
is fair, balanced and understandable. It is
the Audit Committee’s duty to review the
viability of the business, and to provide
assurance to stakeholders on the process
by which our collective assessment of the
good health of the business in the short,
medium and long terms has been undertaken.
As a Board we maintain the highest
standards as set out in the UK Corporate
Governance Code. Conscious of the
requirements that the external audit
should be put out to tender at least
every ten years, the Board, led by
the Audit Committee, conducted a
competitive tender process this year
reflecting on Kost Forer Gabbay &
Kasierer’s position as the Company’s
auditor for the past 18 years. The
Board’s decision will be announced
in due course. This appointment will
be put before shareholders at the
upcoming Annual General Meeting
for their approval.
Looking ahead to 2024, we anticipate
working through the revised
Corporate Governance Code and
looking to ensure the Company is
ready ahead of implementation date.
122
In addition to the update to the Code, we
have taken note of other developments in
the ESG field. In particular, the European
Union Corporate Sustainability Reporting
Directive (CSRD) as well as the IFRS S1 and
S2 reporting frameworks will from 2025
require detail in our governance, targets
and strategic planning regarding ESG
matters. will also supersede our current
TCFD reporting framework, which remains
in effect for 2023. We have set out in the
TCFD Report on page 80 how we have
approached climate-related risks this year,
and in the risk management section on
page 84 how other material ESG risks
are assessed, monitored and controlled.
I would like to thank my fellow Audit
Committee members for their work,
as well as those others who have
assisted the Committee in 2023.
The role of the Audit Committee
The Audit Committee plays a key role
in assisting the Board to:
• observe its responsibility of ensuring
that the Group’s financial systems
provide accurate and up-to-date
information on its financial position;
• ensure the Group’s published
consolidated financial statements
and related announcements
represent an accurate and fair
reflection of its financial position;
• manage and monitor the Company’s
risk, both financial and non-financial;
• ensure that appropriate accounting
policies, internal financial controls and
compliance procedures are in place; and
• review and assess the quality of the
external audit process as well as the
external auditor’s independence
(including leading the process for
appointing new external auditors).
The Audit Committee receives and reviews
information from the Deputy Chief Executive
Officer, the Chief Financial Officer, the
Chief Corporate & Legal Officer, the Head
of Internal Audit and Risk, the internal
legal, compliance, audit and risk teams
and the external auditors regularly
throughout the year in order to allow
it to carry out its functions.
Audit Committee’s Activities and Focus 2023
Committee Function
Actions in 2023
Monitor the Group’s
financial statements
• Reviewed the Interim Report and Financial Statements for the period
ended 30 June 2023, published on 31 August 2023
Monitor and review
the effectiveness of
the Group’s system
of internal controls
and risks
Oversee ethical
dealings and
compliance for
the Group
• Reviewed the form and content of the 2023 Annual Report and Accounts
to ensure that the document was fair, balanced and understandable
• Reviewed correspondence and engaged with the Financial Reporting
Council’s Corporate Reporting Review Team on their review of the
2022 Annual Report and Accounts
• Received regular updates on the internal audit and Enterprise Risk
Management (‘ERM’), including:
• the financial control framework; and
• risk incidents and mitigating actions
• Received regular updates on and reviewed emerging risks
• Updated principal risk schedule and ERM framework
• Conducted internal assessment of the Audit Committee’s performance
to monitor its effectiveness
• Set the internal audit plan for FY23 and other third party commission
assurance engagements, and monitored the progress throughout the year
• Financial assurance and additional deep-dive audit as highlighted in the
audit plan and / or the ERM. In 2023, the Audit Committee reviewed a
number of assurance reports throughout the year, across seven
different areas of financial process and control and in relation to the
topic of business continuity and operational resilience
• Monitored and reviewed the effectiveness of internal audit function
• Considered the structure of internal audit
• Continue to assess appropriateness of reporting from subsidiaries
• Reviewed the adequacy of a number of key policies for the effective
and ethical governance of the Group, including:
• the Significant & Related Party Transaction Policy; and
• the Whistleblowing and Anti-Bribery & Corruption Policies
In preparing the tender for the new external auditor, reviewed the
Policy for the Approval of Non-Audit Services
•
• Reviewed the financial management information being presented
to the Board to make sure it is fit for purpose
• Met with finance teams for update on internal controls, risk
management and reporting matters
• Reviewed the FRC’s Audit Committees and the External Audit:
Minimum Standard and ensured the Audit Committee is performing
all responsibilities outlined
Review the Group’s
external audit
function
• Considered the audit and interim planning report from the external auditors
• Considered the annual and interim findings report from the external auditors
• Ensured continued engagement with the external auditors during the
external audit process
• Met with subsidiary auditors to discuss the status of the subsidiary audits
• Evaluated the performance of the external auditor
Conducting the
tender process
for appointment
of a new external
auditor
• Set out and led the audit tender process
• Reviewed audit firm long list (including challenger audit firms)
• Drafted the audit tender request for proposal
• Reviewed and evaluated the audit firms’ written proposals
• Conducted and evaluated in person presentations from the audit firms
Suntera Global carries out Company
Secretary services to ensure the Audit
Committee has the policies, processes,
information, time and resources needed
to function effectively and efficiently.
The Audit Committee regularly reports
to the Board on how it has discharged
its responsibilities.
The Audit Committee’s terms of reference
can be found on the Company’s website.
FRC review
In August 2023, the Company received a
request for information from the Financial
Reporting Council (FRC) following their
review of the Company’s Annual Report
and Accounts to 31 December 2022.
The FRC asked questions in the areas
of financial liability in respect of Income
Units sold to investors; accounting policy
applied to restricted deposits and cash;
and requirements of IAS 1 (presentation
of financial statements) in relation to sources
of significant estimation uncertainty. We
have provided a detailed response into
the queries and have adopted the minimal
recommended changes and enhancing
our relevant disclosures in the 2023
Annual Report and Accounts. The FRC’s
review was concluded in December 2023.
The FRC’s review is intended to consider
compliance with reporting requirements
and is conducted by staff of the FRC who
have an understanding of the relevant
legal and accounting framework, although
lack detailed knowledge of the Company’s
business or understanding of the underlying
transactions entered into. The FRC’s
review provides no assurance that the
Company’s reports and financial statements
are correct in all material respects. The
FRC’s role is not to verify the information
provided but to consider compliance with
reporting requirements.
The letters from the FRC are written on
the basis that the FRC accepts no liability
for reliance on them by the Company or
any third party, including but not limited
to investors and shareholders.
123
PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report Audit Committee Report – continued
Effectiveness of the Audit Committee
The Committee is assessed annually
for its effectiveness. The evaluation
is designed to assess the Committee’s
effectiveness and compliance with
the requirements of the Code and
FRC Guidance on Audit Committees,
as well as other applicable standards.
The conclusion of the evaluations was that
the Audit Committee is effective and is
compliant with the Corporate Governance
Code. Areas of focus were identified and
incorporated into the objectives of the
Committee set out in the table above.
Relevant skills and experience
The Audit Committee is comprised entirely
of independent Non-Executive Directors,
each having relevant skills and experience
as prescribed by the Code and each
bringing an independent mind-set to their
role. The Audit Committee, as a whole, has
the competence relevant to the sectors in
which the Company operates and the Chair,
among others within the membership, have
recent and relevant financial experience.
For further details please see the Directors’
biographies on pages 98 and 99.
The composition of the Audit Committee
is regularly considered by the Board and
the Nomination Committee. The Board
is satisfied that the Audit Committee is
properly structured and can properly
discharge its duties, including considering
the nature of the Group’s business and
the sector in which it operates.
Audit Committee schedule and resources
The Audit Committee meetings are
scheduled a week ahead of the Board
meeting to allow for any work arising
from the Audit Committee meeting
to be carried out and reported to
the Board as appropriate.
The Audit Committee members had
access to ask questions or request
ad-hoc meetings from the Executive
Leadership Team, key members of the
corporate teams, the external auditors,
external auditors of the subsidiaries
and any other member of the Company
as they requested.
The Audit Committee receives monthly
financial, IT, operational performance and
strategic updates from the Chief Financial
Officer, Deputy Chief Executive Officer,
Chief Corporate & Legal Officer and the
Regional Vice Presidents.
The Audit Committee Chair also receives
monthly updates on non-financial reporting
areas, such as enterprise risk, internal
audit matters and updates on the financial
control framework from the Head of Internal
Audit and Risk, who reports directly to the
Audit Committee. The Audit Committee is
satisfied that it had access to the resources
necessary to discharge its responsibilities
in 2023.
Relationship with the Board
The Audit Committee was provided
with adequate time in Board meetings to
resolve any matters of conflict between
the Board and Audit Committee. Had any
such disagreement remained unresolved,
the Audit Committee has the right to
report the issue to the shareholders as
part of the report on its activities in the
Annual Report. Accordingly, the Audit
Committee reports that there were no
such unresolved disagreements and
matters presented by the Audit Committee
were discussed in full, and to resolution
at the Board meetings in 2023.
External audit and external auditors
Kost Forer Gabbay & Kasierer, a member
of Ernst & Young Global, are the Company’s
external auditors. The Audit Committee
considers the appointment, re-appointment
and removal of the external auditors,
reviews their terms of appointment and
negotiates fees on behalf of the Board
prior to making recommendations through
the Board to the shareholders to consider
at each Annual General Meeting.
The Audit Committee annually
assesses, and reports to the Board
on, the independence, objectivity and
performance of the external auditors
and the quality of the audit process,
with a recommendation on whether
to propose to the shareholders that
the external auditor be re-appointed.
Kost Forer Gabbay & Kasierer were re-
appointed for one year at the Company’s
Annual General Meeting in 2023.
The Directors note the recommendation
of the UK Statutory Auditors and Third
Country Auditors Regulations 2016 and
the FRC Audit Committee and the External
Audit: Minimum Standard (May 2023),
which require the audit contract should
be put to tender every ten years. We also
note the recommendation of the FRC
Guidance for Audit Committees that
audit partner rotation should take place
every five years. Please see page 126
for further details of the recent formal
audit tender process.
Overseeing external auditors
In addition to the Audit Committee meeting
formally with the external auditors, the
Chair of the Audit Committee meets with
them on an informal basis. These informal
meetings have been held to ensure the
Chair is kept up-to-date with the progress
of their work and that their formal reporting
meets the Audit Committee’s needs.
124
In Q4, the external auditors presented
their proposed audit plan to the Audit
Committee for discussion. The objective
of this was to ensure that the focus of
their audit aligned to the Group’s key risks
and strategy. The Audit Committee also
arranged for the external auditors to
present their findings to them following
their annual audit, which provided the
Audit Committee with a forum to raise
queries and questions. The findings of the
Audit Committee were then discussed with
the Board and other relevant management
functions. Following this analysis, and
additional meetings with the external
auditors, the Audit Committee can confirm
that it is satisfied with the Group’s external
audit functions and the integrity of its
financial and narrative statements.
When the external auditors present their
interim review and final audit findings, the
Audit Committee request that management
are not present for part of the meeting
to ensure that the external auditors are
able to speak freely and share any views
without management being present.
This also allows the Audit Committee to
understand how the external auditors
had been professionally sceptical in their
procedures and discuss any areas which
they have challenged management on. The
External Audit team was headed up by a
new engagement partner and new team,
as such this led to a healthy amount of
professional scepticism. In particular
around the account disclosures, internal
controls and accounting treatment of the
European Hospitality Real Estate Fund.
During the year the Audit Committee
have asked the external auditors to
look at the following:
The key audit matters raised by the
external auditors are included in their
audit opinion on pages 147 to 149.
• Investment in joint ventures – as part
of the incorporation of the European
Hospitality Real Estate Fund we asked
the auditors to provide their views on
management’s interpretation of the
IFRS accounting treatment of the joint
venture and asset transfer to ensure
there was no surprises when it came to
the year end accounts, further details
on the accounting treatment can be
found in the Consolidated Financial
Statements in Note 5(b)(iii);
• Internal controls – we asked the
external auditors to provide specific
feedback on the Group’s internal
controls and how the Groups internal
controls compared to similar hospitality
groups. The external auditors provided
their feedback as part of the final audit
closing meeting with positive results; and
• Related party transactions – given the
development of art’otel London Hoxton
is nearing completion with GC
Management we asked the auditors to
provide written feedback in their final
audit findings document. The external
auditors confirmed that all material
related party transactions are
appropriately disclosed and recorded
in the consolidated financial statements.
Review of the external auditors
The Audit Committee reviewed the
independence and objectivity of the
external auditors and reported to the
Board that it considered that the external
auditors’ independence and objectivity
were maintained.
This review included discussions with the
external auditors at various meetings,
reliance on the external auditor’s own
internal controls for compliance with
independence rules and ensuring
compliance with the Non-Audit Services
Policy (as further described below). When
evaluating the independence of the external
auditors, the Audit Committee also took
into consideration the quality of the audit
produced, the constitution of the audit
team being used by Kost Forer Gabbay
& Kasierer, communications between
management and the external audit team
and generally how the external audit team
interacts with and challenges management.
The Audit Committee performed a
comprehensive evaluation on the
performance of the external auditors
during the year. The feedback showed
an overall level of satisfaction. The
Committee noted that there was a change
125
in the audit partner and team, and as such
recommended that appropriate time was
spent ensuring the new team had access
to management and the Audit Committee
Chair to allow them to get up to speed with
the Group.
Policy on engaging external auditors
to supply non-audit services
The Audit Committee monitors the
Group’s relationship with its external
auditors considering what impact
the provision of non-audit services
may have on the auditors’ independence
and objectivity.
The Company has adopted a policy on the
engagement of the external auditors to
supply non-audit services. The policy sets
out the circumstances and financial limits
within which the auditors may be permitted
to provide certain non-audit services,
whether a tender process is considered
for non-audit services and any information
which must be considered to ensure that
the non-audit services do not impair the
objectivity and independence of the
auditors. The policy is in line with the
recommendations set out in the FRC’s
Guidance on Audit Committees and the
requirements of the FRC’s Revised Ethical
Standard (2019). The Audit Committee
regularly reviews this policy for necessary
changes in response to changes in related
standards and regulatory requirements
and monitors compliance with this policy.
The audit fees due to the external auditors
amounted to £320,173 (2022: £300,007).
Total non-audit fees amounted to £62,568
(2022: £61,452) consisting of the interim
review of the Group’s half-year financial
results. Although this is considered to be
a non-audit service, the objective of the
interim review is aligned with the audit. The
Audit Committee considered the provision
of the non-audit service during the 2023
year and was comfortable that the nature
and extent of non-audit services provided
did not present a threat to the external
auditors’ objectivity or independence.
PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report Audit Committee Report – continued
Audit tender process
The Directors note the regulatory
requirements quoted above on audit
tender and rotation intervals. Noting that
the 2023 financial year will be Kost Forer
Gabbay & Kasierer’s tenth year of
appointment as the Company’s external
auditors (18th year of an Ernst & Young
Global member firm), during 2023 financial
year, the Company undertook a formal
tender process. A description of this
process and its alignment to the
recommendations of the FRC ‘Audit
Committee and the External Audit:
Minimum Standard’ (May 2023) follows.
The Audit Committee conducted meetings
with a number of candidate audit firms to
ascertain whether they had the requisite
resources and capabilities, with key criteria
being audit quality and the technical
capability of each firm. The Audit
Committee sought to have as diverse
a pool of candidate firms as possible
(including challenger audit firms) to allow
for sufficient competition and choice.
Figure 1: Process for conducting tender for external auditors
Following this, the Audit Committee
applied transparent and objective criteria
to create a short list of three firms who
were invited to tender, as they were
considered by the Audit Committee to be
independent of the Company and suitably
qualified to conduct an effective audit
process. No firms selected declined to
participate. The Audit Committee considered
the detailed written proposals from each
of the three candidate firms. The Audit
Committee then conducted a series of
interviews with the candidate firms. The
key criteria considered by the Audit
Committee in reaching its tender decision
included those of audit quality, international
hospitality audit experience, audit approach,
potential for value add and fees. The
Audit Committee considers the candidate
selection process to be fair and objective.
All Audit Committee members were
involved throughout the tender process.
The audit tender process is near completion
and an announcement will be made once
the board have approved the audit firm.
The audit firm chosen will be included in
the AGM notice for shareholders to vote
on for the upcoming 2024 AGM.
Internal audit
The Company has an internal audit and
risk management function which reports
directly to the Audit Committee Chair.
This reporting line ensures the internal
audit function maintains appropriate
independence from the Executive
Leadership Team and senior management.
The Head of Internal Audit and Risk
maintains a dotted line reporting function
to the Chief Financial Officer who is an
Executive Board member.
The Audit Committee follows the Financial
Reporting Council’s Guidance on Risk
Management, Internal Control and Related
Financial and Business Reporting.
The Audit Committee monitors and
reviews the effectiveness of the internal
audit function and meets with the Head
of Internal Audit and Risk on a monthly
basis to review the progress of the
internal audit programme, among other
things. The Audit Committee meets with
the Head of Internal Audit and Risk at
each Audit Committee meeting and does
so without the presence of the Board and
the Executive Leadership Team, unless
(1)
Draft tender criteria
reviewed to ensure
that the criteria are
transparent, non-
discriminatory, and
do not exclude new
audit providers
from the process
(2)
Ensure that a sufficient
number of firms are
invited to tender to
ensure adequate
competition and choice
(3)
Send out Requests for
Proposals (RFPs) to
potential auditors
(4)
Short list candidate
firms – short list of
three to provide
written proposals
(5)
Allow time for
candidate firms to
access necessary
information including
access to management
and the Audit
Committee Chair
(6)
Audit Committee to
review and evaluate
written audit proposals
(7)
Conduct in-person
presentations from the
audit firm candidates
(8)
Select two firms for
recommendation to the
Board based on
technical competence,
ability to challenge,
audit quality and
independence
(9)
Recommend two
candidate firms to
Board with justification
for one preferred
candidate firm
(10)
Review process.
Board decision on
award of tender
specifically invited by the Chair, to discuss
matters relating to its remit and any
issues arising from the internal audits.
On an annual basis the Audit Committee
meets with the Head of Internal Audit and
Risk to review the risk appetite statement,
current risk profile of the Group and to
agree the work plan for the year ahead.
The Audit Committee also reviews whether
the Head of Internal Audit and Risk has
the proper resources to enable them to
satisfactorily complete such work plans.
The resourcing of this team was reviewed
in 2023 to reassess if there is enough
capacity in the team. The conclusion was
that more resources would be needed
to deliver on the 2023 internal audit plan;
as such two internal audit specialists
were recruited during the year.
Throughout the year, the internal auditor
reports on the progress of the internal
audit work plan and action point status.
The Audit Committee regularly reviews
reports and considers the Board’s
response to any major findings, providing
support, if necessary, for any follow-up
action required and ensures that the
team obtains free and unrestricted
access to all Group activities, records,
property and personnel necessary to
fulfil its agreed objectives.
In line with the 2023 internal audit work
plan, the Audit Committee instructed
the Head of Internal Audit and Risk to
perform work focused on the following:
• Business Continuity and Operational
Resilience
• Hotel Cash Management
• Unit Holder Payments
• Fixed Asset Accounting
• Travel and Expense Management
• Treasury and Cash Management
• Reserve to Cash Processes
• Inventory Management
Expert third party assurance was also
instructed in respect of cyber security
prevention and detection.
All these areas were highlighted in the
enterprise risk management system or
form part of the Financial Assurance
Programme. The Audit Committee
undertakes an annual review of the
Internal Audit and Risk function for
effectiveness. Additionally, it implemented
new automated processes in 2023 to
improve working practices and
communication between the team and
the risk owners. The Audit Committee is
satisfied that the quality, experience and
expertise of the internal audit function
was appropriate for the business.
Financial controls
The Financial Control Framework maps
financial controls across the business
and identifies control owners. The control
owners are asked to confirm compliance
with the expected controls through
self-certification. Financial Assurance
has been the primary focus of the
deep-dive work of the Internal Audit
and Risk function in 2023.
Enterprise Risk Management (ERM)
The Board is responsible for risk
management with guidance from the
Audit Committee. A standing agenda
item in every Audit Committee meeting
is consideration of the Company’s risk
register, with the main focus on key risks.
The Audit Committee monitors the
Company’s risk management system
and controls to review their effectiveness.
The process for evaluating the effectiveness
of the ERM system and controls requires
the output of the system to be benchmarked
against similar organisations, using publicly
available information. It is also benchmarked
against reports and publications from
appropriate professional bodies and
institutions. The formal assurance
process takes place annually.
The Group’s risk profile and mitigating
activities are also regularly monitored
by the Audit Committee, who are kept
apprised of emerging business risks and
concerns. Informed by these activities,
the Group risk appetite strategy is set
by the Board at the recommendation
of the Audit Committee.
Risks which are inherent to all businesses
either by region, standard business activity,
nature of our industry, climate, climate
change and measures to limit carbon or
due to social and geo-political causes are
also reviewed by the Audit Committee
with the aim of implementing appropriate
controls and monitoring systems. When
reviewing risks, the Audit Committee
takes into account material external
socio-economic and geo-political matters.
The internal audit and risk function
continues to work with the various business
functions in order to formulate: (i) functional
level risk registers; and (ii) an emerging risk
profile. The Audit Committee oversees the
ERM function and continuously reviews and
challenges the output. To ensure the ERM
function’s independence and objectivity,
the Head of Internal Audit and Risk reports
directly to the Audit Committee.
The Head of Internal Audit and Risk has
undertaken work with the ESG Manager
for the Group to ensure that the ERM
system appropriately records climate risk.
The climate risk work undertaken with the
ESG Manager involves review of existing
climate risks, review of changes and
upcoming legislation, and corresponding
re-assessment of the climate risks to the
business. This process has been overseen
by the Audit Committee and for further
details on these risks please see the TCFD
Report on page 80.
The detailed assessment of the
principal risk, emerging risks and
uncertainties facing the Group is
included on pages 84 to 94.
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• Climate change / ESG – The Audit
Committee makes its own assessment
of the risks and opportunities posed by
climate change and other ESG matters
independent of the oversight of these
matters by the ESG Committee of the
Board. The Audit Committee will require
performance reports against KPIs for
the Strategic Objectives and will
continue to assess whether third
party assurance is required.
In addition, the other significant issues
generally considered relate to the
complexity of the financial statements
due to the size of the Group and the
multiple legal entities.
Minimum Standards for Audit Committees
During 2023, the Audit Committee
reviewed its terms of reference against
the requirements of the ‘Minimum
Standard for Audit Committees and
External Audit’ issued by the FRC (the
“Standard”). The Audit Committee is of
the view that an early adoption of the
Standard would enhance the Audit
Committee’s terms of reference but also
the internal processes put in place by the
Company in relation to auditor evaluation
and reporting. The Audit Committee also
considered the requirements of the
Standard when undertaking the audit
tender during the year.
Following the review, the Audit Committee
concluded that the terms of reference
and internal processes remain fit for
purpose. An annual assessment of the
terms of reference and internal processes
against the Standard will be conducted to
identify any potential shortcomings.
Financial reporting
The Audit Committee has reviewed
the Annual Report and Accounts. In
its opinion, taken as a whole, it is fair,
balanced and understandable and
provides the information necessary for
stakeholders to assess the Company’s
position and performance, business
model and strategy.
The Audit Committee reviews draft annual
and interim reports. The Audit Committee
discusses with the Chief Executive Officer,
Deputy Chief Executive Officer, Chief
Financial Officer and external auditors
the significant accounting policies,
estimates and judgements applied in
preparing these reports.
The overall responsibility for approving
annual and interim statements and
other governance statements is carried
out by the Board, in accordance with
the Schedule of Matters Reserved for
the Board.
In relation to the 2023 Annual Report
and Accounts, the significant issues
considered, and where the Audit
Committee challenged the Executive and
senior management, were the following:
• Information security – The Audit
Committee continues to monitor the
information security risks. The Audit
Committee meets regularly with the IT
Security Manager and Head of Internal
Audit and Risk to receive updates on
technology risk environment, ongoing
systems controls and monitoring and
emerging risks in this area. This informs
the Audit Committee on what third
party assurance is instructed during
the year.
• Viability / Going concern – As a result
of law and best practice, ensuring
this is a standing item of focus for the
Audit Committee. The Audit Committee
considered the appropriateness
of the viability and going concern
assessment recommended to the
Directors that they collectively make
and sign the statements on page 146.
• Impairment testing – The Group’s
impairment review requires significant
judgement in estimating the recoverable
amount of its intangible assets, property,
plant and equipment and the IFRS 16
right-of-use asset. The Audit Committee
reviews the independent property
valuations and a paper prepared by
management which outlines their
approach to impairment reviews.
The Audit Committee had a robust
conversation with the Chief Financial
Officer on the methodology used to
determine the impairment reviews.
• Alternative Performance Measures
(APMs) – The Audit Committee in
reviewing the Annual Report and
Accounts has challenged management
on their use and definitions of APMs.
Ken Bradley
Chair of the ESG Committee
Membership of the ESG Committee
and meeting attendance
Name of Director
Ken Bradley (Chair)
Stephanie Coxon
Marcia Bakker
Meetings attended and
eligible to attend
4/4
4/4
4/4
ESG Committee Report
Dear Stakeholder,
In 2023, we have sought to follow up on
our materiality assessment of our impact
on environmental, social and governance
issues of importance to our stakeholders,
and the impact on us of a changing
environment, Corporate Governance
and social landscape. This assessment is
known as a ‘double materiality’ assessment
as it takes into account both our impact
on environment and society as a business,
and the impact changes to the environment
and social changes have on our long-term
success. This ensures we are looking
ahead and are aware of risks and exploring
new opportunities for the benefit of all
stakeholders. We have worked hard
to set targets internally, which will
enable us to be accountable to our
stakeholders on environmental,
social and governance performance.
Continuation of the Committee
The Committee takes the view that in
the long term, the responsibilities of
the Committee will converge with those
of our other Board Committees, leading to
a point where a separate ESG Committee
is no longer required. We aspire that ESG
and non-financial reporting are completely
integrated into the strategy and financial
reporting of the business. As we continue
the work of benchmarking, setting robust
targets, and ensuring accountability against
rigorous standards, in the short to medium
term, the ESG Committee will remain as a
stand-alone body.
Strategic oversight
We are very pleased to announce new
ESG targets in our strategy. Targets can
only be set once we are satisfied we have
the correct data for our baseline position,
and whilst this work is ongoing in some
areas, for example, in waste management
we have hit a milestone in committing to the
Science-Based Targets Initiative (SBTi) that
we will have verified, science-based targets
for net zero before the end of 2025.
Our oversight and the way we are held
accountable by the market lie in good
data. We are reporting more detailed
carbon data this year than previously,
having worked to improve the emissions
factors for Scope 3 carbon.
We are confident that our investment in
efficient technologies, in switching from
gas to electricity, and purchasing certified
renewable electricity will drive down
Scope 1 and 2 emissions in line with
net zero ambitions, but Scope 3 is less
under our control, and relies on dynamic
cooperation with our supply chain partners.
Strategic outcomes
Double materiality will be a regulatory
requirement in future, however, our
early adoption has allowed us to focus
strategically on where we can have
the greatest positive impact for our
stakeholders. The appointment of a
full-time ESG Manager reporting directly
to the Group Corporate & Legal Officer
ensures that there is dedicated resource
to keep us working towards our strategic
objectives. The ESG Ambassador network
allows everyone working in the hotels
and offices to be fully engaged with
our strategic approach and to feel
they are working to a common goal.
I commend the ESG Report found on
page 66 to you, which demonstrates the
value we have created in this area in 2023.
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Remuneration Committee Report
Governance
Good governance is the foundation stone
of stakeholder confidence in the business
and its long-term sustainability. We therefore
consider it important that performance
against ESG non-financial metrics forms
part of remuneration.
Social targets
Alongside carbon reductions, we have
other environmental responsibilities to
stakeholders, such as biodiversity in our
property portfolio, and reducing stress
on limited resources like water and waste
management facilities. We also have
important social responsibilities, such
as ensuring adequate labour standards
in our supply chain, and ensuring we
are engaging with our teams to be an
employer of our choice.
ESG Committee’s 2023 activities and focus
Function
Actions in 2023
Performance of
the Committee
Oversight of
Climate-related
risk and reporting
Diversity, Equity
and Inclusion (DEI)
ESG Strategy
• Reviewed the Committee terms of reference
• Received carbon literacy training
• Sent letter to SBTi to commit to verifying science-based targets
• Reviewed the climate risk assessment undertaken for TCFD
reporting Approved TCFD Report for publication
• Horizon scanning for best practice in DEI practices and reporting
• Review of targets set internally for accountability through metrics
• Oversight of development of ESG Strategy, including data-gathering
projects and scrutiny of value add from membership of Industry forums
company on the London Stock
Exchange, investor expectation is
that we keep a high standard of
governance. This is in line with our goal
of effective, transparent and accountable
Corporate Governance. Accordingly,
we have engaged with stakeholders
in producing this remuneration report,
both through individual engagement
with me in my capacity as Chair of the
Committee and Senior Independent
Director, and with the Board as a whole.
I am pleased to present the report
for 2023.
2023 performance
2023 has been a year to celebrate for
the Company. The Group has delivered
a full recovery across the business in
2023 following three years of operating in
challenging times of worldwide pandemic.
2023 has seen the business performing
significantly ahead of expectations despite
the macro headwinds experienced across
the sector during the year.
We have also seen significant
development of our pipeline with the
bringing of our art’otel brand to London
in the opening of art’otel Battersea Power
Station London, and in preparations for
the opening of art’otel London Hoxton
expected in 2024, which mean the fruition
of years of hard work on the pipeline.
Among others, these two new properties
in some of the most exciting areas of the
UK capital are the culmination of the hard
work of everyone in the Company, from
those setting the strategic direction,
to those responsible for delivering
the customer experience from day
one of the new hotel’s operation.
Workforce remuneration
The Remuneration Committee considers
remuneration across the whole workforce.
The Company reviewed employee pay
and considered workforce pay increases.
These are set out in the tables on page
139. Executive remuneration decisions
are taken by the Committee with increases
to the wider workforce in mind.
In an environment of high inflation
and cost-of-living pressures, we have
structured pay awards and other
benefits to favour lower-paid workers.
We benchmark pay across the market,
and look to inflation projections to ensure
that pay is competitive and addresses
employee needs.
We also look at non-pay benefits to
assist workers. in 2023, we introduced
Benefithub – tools to get discounts on
groceries, and online advice on accessing
state benefits, debt counselling and
financial wellbeing advice. Employees
are now entitled to two meals a day,
seven days a week. We have introduced
earned-wage access – the ability to draw
down 40% of earned wages in any pay
period – which helps prevent indebtedness.
Travel allowances in the Netherlands are
at the maximum level permitted, and
the Netherlands also made two loyalty
payments to staff in 2023. We have also
expanded our Cycle-to-Work and Season
Ticket Loan schemes.
The Annual Pay Review exercise for 2023
produced the following results for the UK
and Netherlands regions, which are the
operative comparator regions for executive
pay within the Group. The pay award in each
Region is in line with local inflationary,
legislative and market conditions.
UK: Pay has been increased in line with
the National Minimum Wage (NMW) with
adjustments made for all pay bands in a
decreasing scale. Employees currently
paid the NMW received an increase of
9.5%. The average pay award across all
brackets sits at 7.3%.
Netherlands: Pay has been increased in
line with the HORECA Collective Labour
Agreement for 2024 with an average
pay award of 10.2%. Please see below
the % increase per pay scale. Salaries
for employees that are currently being
paid above the salary scales received
an increase of an average rate of 4%.
Nigel Keen
Chair of the
Remuneration Committee
Membership of the Remuneration Committee
and meeting attendance
Name of Director
Nigel Keen (Chair)
Stephanie Coxon
Ken Bradley
Marcia Bakker
Meetings
attended
4
4
4
4
Eligible to
attend
4
4
4
4
Dear Stakeholder,
It is my pleasure to present the
Remuneration Report for the year
ended 31 December 2023. The report
will be presented for an advisory vote
of shareholders at the forthcoming
Annual General Meeting. The current
Remuneration Policy has been approved
by the shareholders through an advisory
vote in the 2021 Annual General Manager
for the years 2022-2024.
As a Guernsey-incorporated company,
the Company is subject to The Companies
(Guernsey) Law, 2008, rather than the
UK Companies Act 2006. Nonetheless,
we recognise that as a premium-listed
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ESG
We have this year set ESG targets to which
the business is accountable to shareholders
and other stakeholders. The Committee
is very happy to note progress in 2023:
the business has made a commitment to
Science-Based Targets to net zero, and is
collecting data to permit measurement of
social value. We have made real progress
in reducing costs and emissions through
investment to improve efficiency. The
Committee is therefore satisfied that 2023
has been a year of strong performance
on ESG, which will play forward into 2024.
Remuneration policy implementation in 2024
Base salary
The base salaries of the Co-CEO and the
CFO are increased as of 1 January 2024 at
3% of their 2023 base salary (less than the
wider workforce) with the CEO’s base salary
increasing by 7.3% in line with local place of
employment. This increase reflects the fact
that the CEO base pay is still significantly
below his peer group. Further, the Co-CEO
received a £5,000 per annum increase in
line with his appointment to the Board.
This reflects the additional responsibility
he has taken on as a member of the board.
The Committee reviewed this against the
retention priority and other factors, and
concluded that the base pay remains at
a reasonable and desirable level when
considered as part of remuneration as
a whole. This conclusion was based on
workforce pay levels as a whole.
Pension
The Committee has, year-on-year, sought
to align pension contributions to the
workforce as a whole. Executive Directors’
pension allowances are based on local
rules depending on place of employment,
and can be taken as a contribution to the
Group Personal Pension Plan, as a cash
supplement or a combination of the two.
Pension contributions will remain aligned
to workforce pensions, and continue to
align with governance requirements that
only basic salary shall be pensionable.
Bonus performance measures
For 2024, performance measures
remain largely unchanged from 2023.
For the annual bonus, 70% of the bonus
will be based on financial criteria, with
the remaining 30% based on individual
strategic objectives, including ESG
measures. The annual bonus for
2024 shall include a share award
as well as a cash award in keeping
with the Remuneration Policy.
LTIP
No LTIP is expected to be awarded in 2024.
Remuneration outcome in 2023
The Company’s full recovery and
exceptional performance are reflected
in the full achievement of the incentive
targets set for 2023:
Base salary
As outlined in our report for 2022, the
CEO’s base salary had increased from
£500,000 in 2022 to £550,000 as of
1 January 2023. The CFO’s base salary
had an increase at 1 November 2022
to £479,736 and remained at this level
throughout 2023. Greg Hegarty joined
the Board following his appointment on
23 May 2023. His base salary throughout
2023 is £496,125.
Pension
Furthering the work reported on in 2022,
the Committee requires outcomes on
pensions to be aligned to the workforce.
This continues year-on-year trends.
Executive Directors’ pension allowances
are based on local rules depending on
place of employment, and can be taken
as a contribution to the Group Personal
Pension Plan, as a cash supplement or
a combination of the two.
The pension contributions for the
President & CEO and Co-CEO were 5%
of their respective base salary in 2023
(aligned to or below the Group’s wider
workforce in their country of employment,
with the UK wider workforce being at
an average of 5.27% and the NL wider
workforce being at an average of 6.9%).
The CFO’s pension contributions are in
line with the Netherlands wider workforce.
132
2023 annual bonus
The 2023 annual bonus was assessed
against financial criteria and personal
objectives, with success assessed
70% on financial metrics, 30% on non-
financial metrics. Performance against
the various measures was strong, with
all the performance criteria deemed
to have been achieved.
Financial metrics
Revenue
Gross operating
profit targets
Non-financial metrics
Guest satisfaction
Employee engagement
ESG targets
Performance against the financial targets
significantly exceeded the maximum
target set. The non-financial targets
were comprised of four individual targets,
two of which were ESG related accounting
for 15% of the total bonus. These targets
including measurements relating to
employees’ well-being and overall satisfaction
as well as measurements for reduced
energy consumption and energy saving
across the hotels. The Committee judged
that the individual strategic and ESG
measures had been met in full.
In 2023, the Group operated a modest
annual bonus programme with a
capped bonus potential well under the
maximum amount permitted under the
Remuneration Policy, with the annual
bonus awarded to Executive Directors
ranging from 28%-31% of the annual base
salary. The CEO, Co-CEO and the CFO
have each been awarded £157,000 as
an overall 2023 annual bonus. No share
awards have been awarded for 2023.
LTIP
No LTIP is awarded for 2023, and no
prior awards vested in 2023.
I look forward to shareholder support
at the 2024 Annual General Meeting.
Nigel Keen
Chair of the Remuneration Report
Remuneration Committee membership and meeting attendance
The Committee is composed of four independent Non-Executive Directors. No member of the Remuneration Committee is considered
to have a personal financial interest in matters to be decided by the Committee. As the Chair, I satisfy the independence and service
requirements of Provision 32 of the Corporate Governance Code.
The CEO, Co-CEO, CFO and Chief Corporate & Legal Officer are invited to attend meetings as appropriate depending on the items on
the agenda. The Committee considers their views when reviewing the remuneration of Executive Directors and other senior executives;
however, no Directors are involved in the consideration of their own remuneration and only members of the Committee have the
right to vote at Committee meetings.
The Committee seeks independent advice as appropriate.
Remuneration Committee’s 2023 activities and focus
Function
Remuneration Policy
Executive Director and
senior management
remuneration review
Set targets and
incentive schemes
Workforce remuneration
and benefits policies
Actions in 2023
• Reviewed the Remuneration Policy against the following criteria:
• Link to strategy and success against business performance metrics
• Furtherance of long-term sustainability of value creation for shareholders
• Link to ESG performance metrics
• Reviewed Executive Director basic pay
• Reviewed Executive Director pensions; benefits; incentives and shareholding for alignment
to workforce, culture and objectives
• Reviewed C-Suite remuneration
• Reviewed and considered incentive schemes
• Reviewed gender pay gap and senior executive to average worker pay ratios.
Role of the Remuneration Committee
The key responsibilities of the Committee include:
• putting in place and periodically reviewing the Policy for the remuneration of the Chairman, Executive Directors and senior
management to ensure fair and responsible rewards and incentives with a clear and proportionate link to corporate and
individual performance;
• ensuring that the Policy is clear, transparent, predictable, simple and therefore suitable for publication for the purpose
of shareholder inspection and informing the advisory vote at the Annual General Meeting;
• within the terms of the Policy, determining the individual remuneration of each Executive Director and C-Suite, ensuring
implementation of the Policy does not create formulaic results, but that outcomes are instead clearly proportionate to
objective performance and within the reasonable expectation of shareholders;
• reviewing remuneration levels, including pension arrangements, bonuses and other benefits across the Group to ensure
alignment between executive remuneration and the workforce as a whole and between remuneration and creation of
shareholder value;
• reviewing the alignment of incentives and rewards with culture, taking these into account when setting the policy for
Executive Director remuneration;
• consulting with the CEO in setting the levels of remuneration for the C-Suite;
• approving the design of, and determining targets for and conditions attached to, any long-term incentive schemes operated
by the Group, including pension arrangements, bonuses and other benefits; and
• the engagement and determining the independence of any external remuneration advice that might be considered necessary
from time to time.
The Committee’s terms of reference are annually reviewed to ensure compliance with the Code and ongoing strategic alignment
with the Company, with the latest updated terms of reference approved in 2023 and available on our website.
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2022-2024 Remuneration Policy
Introduction
The Remuneration Policy came into effect
on 1 January 2022 (the ‘Policy’) for a
period of three years. The Committee is
tasked with keeping the Policy under
review, and ensuring that it is suitable to
be presented to shareholders for their
advisory vote, which took place at the
Annual General Meeting in April 2022.
The Policy was designed with the interests
of employees, shareholders and other
stakeholders in mind, and was proposed
mindful of the impact of the Company’s
operations on the community and the
environment. The Committee and the
Board considered the Company’s
reputation and relationships with the
places in which the Company operates
before proposing the Policy. 2024 will be
the final year of operation for the existing
Policy, and a new Policy will be presented
to shareholders for an advisory vote at
the Annual General Meeting in 2025.
Purpose of the Policy
• Promote the long-term sustainable
success of the Company and support
its strategy
• Ensure that the Company’s
remuneration structures are aligned
to the Company’s purpose, strategy
and entrepreneurial culture
• Provide an appropriate balance to
utilise remuneration to attract, retain
and motivate the Company’s leadership
to drive the strategic vision of the
Group successfully
Policy table
(1) Base salary 1. Purpose and link to strategy
2. Operation
To provide a market competitive salary that will retain, attract and
incentivise executives with the right expertise who are instrumental
in driving and growing the business and delivering the Company’s
strategic goals.
The salary payable to Executive Directors will normally be capped
at the upper quartile of the relevant market benchmark for the
role under review. This maximum salary represents the highest
end of the range at which the Committee would expect the base
salary to be set, rather than the actual amount to be paid.
There is no separate cap on the annual increase to base
salaries. However, the Committee will normally determine
the appropriate level of increase for Executive Directors
taking into account the general level of increase for the
broader workforce, but on occasion may need to make a more
significant increase to recognise additional responsibilities,
or an increase in the scale or scope of the role.
(2) Benefits
1. Purpose and link to strategy
3. Maximum potential value
To provide market competitive benefits consistent with role.
We do not consider it appropriate to set a maximum benefits
value as this may change periodically and by region.
2. Operation
Benefits vary between regions and would typically include
annual leave, wellbeing day, occupational sick pay, health
screening, personal accident insurance, and participation
in all employee share schemes. In the UK, these would include
in addition medical insurance and life assurance, and in the
Netherlands, car allowances. In line with business requirements,
other expenses may be paid, such as relocation expenses,
together with related tax liabilities
(3) Pension
1. Purpose and link to strategy
2. Operation
To attract and retain talent by enabling long-term pension saving.
Executives can choose to participate in a defined contribution
arrangement, or may receive a cash equivalent. A salary supplement
may also be paid as part of a pension allowance arrangement.
(4) Annual
bonus plan
1. Purpose and link to strategy
To incentivise and reward the delivery of near-term business
targets and objectives.
2. Operation
The annual bonus scheme is a discretionary scheme and is reviewed
prior to the start of each financial year to ensure that it appropriately
supports the business strategy. Performance measures and
stretching targets are set by the Committee. Bonuses are normally
paid in cash but may also be awarded in deferred share awards.
Actual bonus amounts are determined by assessing performance
against the agreed targets typically after year end. The results are
then reviewed by the Committee to ensure that any bonus paid
accurately reflects the underlying performance of the business.
Where share awards are granted as part of the annual bonus plan,
they are held by the individual for one year subject to clawback
provisions. Circumstances include: a material misstatement, serious
misconduct, a material failure of risk management, restatement of
prior year results, corporate failure, or serious reputational damage
to any Group company.
3. Maximum potential value
150% of base salary.
4. Performance metrics
Performance measures are selected to focus executives on
strategic priorities, providing alignment with shareholder
interests and are reviewed annually. Weightings and targets
are reviewed and set at the start of each financial year.
The Committee may at its discretion adjust the outcome under
the formulaic measures where it considers it is appropriate
to do so to better reflect overall Company performance.
(5) Long-term
share
incentive plan
1. Purpose and link to strategy
3. Maximum potential value
The LTIP scheme adopted in 2022 allows for a framework for the
award of market value options, salary-related options, deferred
bonus awards and performance share awards to all employees. The
long-term and phased vesting of these awards, along with the ability
of the Committee to apply additional holding periods, are designed to:
• drive and reward sustainable performance over the long-term;
• align the interests of executives and shareholders; and
• support talent retention.
The aggregate market value (as determined by the Committee
at or prior to the award date) of shares in respect of which
performance share awards and/or restricted stock awards
are made to an employee in any financial year are capped at
150% of the employee’s annual base salary at the award date.
2. Operation
4. Performance metrics
The long-term incentive plan allows for the award of the following
options which are subject to the rules of the LTIP:
• market value options – options that are linked to the market value
of the shares in the Company;
• salary-related options – whereby employees agree to a reduction
in their base salary in exchange for the right to acquire shares at
nil-cost. These options normally vest after 12 months subject to
an additional six-month holding period; and
• performance share awards – options which are granted subject
to specified performance targets.
Notwithstanding the extent to which any performance target is satisfied,
the number of vested award shares may be adjusted by the Committee
to ensure that the number of vested award shares is appropriate taking
into account the underlying business performance of the Group.
These awards are subject to the rules of the scheme which may
include: long-term vesting periods prescribed by the Committee
upon grant; good-leaver and bad-leaver provisions allowing the
Committee to exercise discretion as to when it might be appropriate
for an award to vest in spite of the relevant employee leaving the
Group; post-vesting holding periods determined by the Committee
at the time of the award; and share capital dilution limits.
The plan allows dividends or dividend equivalents to accrue, subject
to the Remuneration Committee’s discretion.
The performance measures applied to LTIP awards are
reviewed annually to ensure they remain relevant to strategic
priorities and aligned to shareholder interests. Weightings and
targets are reviewed and set prior to each award. Performance
measures will include long-term performance targets, of which
financial and/or share price-based metrics will comprise at least
two-thirds of the award. Quantifiable non-financial metrics, key
to business performance, will be used for any balance.
Any material changes to the performance measures from year
to year would be subject to prior consultation with the Company’s
controlling shareholders. The Committee may adjust the number
of shares realised if it considers such adjustment is justified
based on: (a) the performance of the Company, any business
area or team; (b) the conduct, capability or performance of the
participant; or (c) the occurrence of unforeseen events or of
events outside the participant’s control.
Notes to the Policy table
The Committee may make minor amendments to the Policy set out above (for regulatory, exchange control, tax or administrative purposes, or to take account of a change
in legislation). As the Company is registered in Guernsey, shareholders’ approval is not required in connection with the Policy.
The Executive Directors may request, and the Company may grant, salary and bonus sacrifice arrangements.
The LTIP rules permit the substitution or variance of performance conditions to produce a fairer measure of performance as a result of an unforeseen event or transaction.
They include discretions for upwards adjustment to the number of shares to be realised in the event of a takeover, and scheme of arrangement or voluntary winding up.
Non-significant changes to the performance metrics may be made by use of discretion under the performance conditions. Awards are normally satisfied in shares,
although there is flexibility to settle in cash.
The Committee reserves the right to make remuneration payments and payments for loss of office (including exercising any discretions available to it in connection with
such payments) that are not in line with the Policy table set out above where the terms of the payment were set out and approved prior to the date the Policy came into
effect. For these purposes, ‘payments’ include the Committee determining and paying short-term and long-term incentive awards of variable remuneration.
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Non-Executive Directors’ fees
Base fee
The Non-Executive Director fees are
decided by the Board in accordance
with the Company’s articles of
incorporation. This fee is the same
for each Non-Executive Director.
Chairman fee
In the case of the Chairman and Deputy
Chairman, both receive a set fee which is
set by the Remuneration Committee and
agreed by the Board. The Chairman’s fee
is determined by taking into account the
time commitment and responsibilities of
the role, as well as the role holder’s skills,
gravitas and qualifications to lead the
Board. No Director may participate in
the decision-making relating to their
own remuneration.
Additional fees
Non-Executive Directors are paid a
set additional fee for being Senior
Independent Director, a member of
a Board Committee and for chairing
a Board Committee.
This fee is the same for each Non-
Executive Director, with exception
of the Deputy Chair who attracts
an additional fee for the role and
the Senior Independent Director who
attracts an additional fee for the role.
Appointment term and other matters
The Non-Executive Deputy Chairman
was appointed to a term ending at the
Annual General Meeting in 2028. All other
Non-Executive Directors are appointed
to terms ending at the Annual General
Meeting in 2028 ( all are subject to annual
re-election), unless terminated sooner.
All Directors retire and are offered
re-election each year at the Annual
General Meeting.
Non-Executive Directors are not entitled
to bonuses, benefits or pension scheme
contributions or to participate in any
share scheme operated by the Company.
In addition to any remuneration payable,
a Non-Executive Director may be paid
reasonable travel, hotel and other
expenses properly incurred in
discharging the Director’s duties.
Fees cease immediately in the event
the Non-Executive Director ceases
to be a Director.
Directors are entitled to the benefits
afforded by the Group’s Directors
and Officers Insurance.
Maximum potential value
Prescribed by the Articles of Association
of the Company.
Term and termination
Boris lvesha has a contract which may
be terminated on 12 months’ notice by
the Group or on six months’ notice by
Boris lvesha. Daniel Kos has a contract
which may be terminated on six months’
notice by the Group or on three months’
notice by Daniel Kos. Greg Hegarty has
a contract which may be terminated
on 12 months’ notice by the Group or
on six months’ notice by Greg Hegarty.
There are provisions for earlier
termination by the Group in certain
specific circumstances.
Each Non-Executive Director has specific
terms of appointment. The Chairman’s
letter of appointment provides for an
indefinite term terminable on three
months’ prior notice by either side or
immediately upon the Board passing
a resolution to remove the Chairman
as a Director.
The Non-Executive Directors’ terms
of appointment currently end at the
Annual General Meeting held in 2024.
All the Non-Executive Directors’
appointment letters (including the
Chairman’s) are subject to termination
by either side on three months’ notice.
Other than salary and benefits in
relation to the notice period, the letters
of appointment contain provisions for
termination by the Group in certain
specific circumstances. The letters of
appointment are available for inspection
at the Company’s registered office.
The dates of the Directors’ contracts
are as follows1:
Director
Eli Papouchado
Boris Ivesha
Date of appointment Term of appointment
26-Jun-07
14-Jun-07
Indefinite
Indefinite
Daniel Kos
27-Feb-18
Indefinite
Greg Hegarty
Kevin McAuliffe
Ken Bradley
Nigel Keen
Stephanie Coxon
Marcia Bakker
23-May-23
15-Jun-07
04-Sep-19
20-Feb-20
07-Aug-20
06-Dec-22
Indefinite
Ended at AGM 2023
Annual General Meeting 2028
Annual General Meeting 2028
Annual General Meeting 2028
Annual General Meeting 2028
Subject to annual
re-election
Yes
Yes
Yes
Yes
N/A
Yes
Yes
Yes
Yes
Notice period
3 months
12 months from Group; 6 months
from Boris Ivesha to the Group
6 months from Group; 3 months
from Daniel Kos to the Group
6 months
N/A
3 months
3 months
3 months
3 months
The Committee retains discretion
to make appropriate remuneration
decisions outside the standard
Remuneration Policy to meet the
individual circumstances when an
interim appointment is made to a fill an
Executive Director role on a short-term
basis. For Non-Executive Directors, the
Board would consider the appropriate
fees for a new appointment taking into
account the existing level of fees paid
to the Non-Executive Directors, the
experience and ability of the new
Non-Executive Director and the time
commitment and responsibility of the role.
The Executive Directors’ service
contracts do not contain specific
provision for compensation in the event
of removal at an Annual General Meeting.
In the event of early termination, some
Directors may be eligible for payments
in lieu of notice. When determining exit
payments, the Committee would take
account of a variety of factors, including
individual and business performance, the
obligation for the Director to mitigate loss
(for example, by gaining new employment),
the Director’s length of service and any
other relevant circumstances, such as
ill health. A departing Director may also
be entitled to a payment in respect of
statutory rights. The Committee would
distinguish between types of leaver in
respect of incentive plans. ‘Good leavers’
(death, ill health, agreed retirement,
redundancy or any other reason at
the discretion of the Committee) may be
considered for a bonus payment having
completed the full year, and part-year
bonus payments may be paid and LTIP
awards may vest at the usual time taking
into account performance conditions
and pro-rating for time in employment
during the performance period, unless
the Committee determines otherwise.
The LTIP rules include discretion, in
exceptional circumstances, for
acceleration of the realisation date and
upwards adjustment to the number of
shares to be realised for ‘good leavers’
in such a situation. In all other leaver
circumstances, the Committee would
decide the approach taken, which would
ordinarily mean that leavers would not be
entitled to consideration for a bonus and
LTIP awards would lapse. Any vested LTIP
award that is subject to a holding period
at the time of the executive’s cessation of
employment will not lapse except in the
case of the executive’s gross misconduct.
The Committee reserves the right to make
any other payments in connection with a
Director’s cessation of office or
employment where the payments are
made in good faith in discharge of an
existing legal obligation (or by way of
damages for breach of such an obligation)
or by way of settlement of any claim
arising in connection with the cessation
of a Director’s office or employment.
In addition, the Committee reserves
the right, acting in good faith, to pay
fees for outplacement assistance and/or
the Director’s legal and/or professional
advice fees in connection with his or her
cessation of office or employment.
The appointment of each of the Non-
Executive Directors is for an initial period
of three years, or for the period between
the date of appointment and the Annual
General Meeting in 2024, whichever is
the shorter. The appointment of each
Non-Executive Director is renewable for
further terms, and is terminable by the
Non-Executive Director (as applicable)
or the Company on three months’ notice.
No contractual payments would be due
on termination. There are no specific
provisions for compensation on early
termination for the Non-Executive
Directors, with the exception of
entitlement to compensation equivalent
to three months’ fees (as applicable)
or, if less, the balance of appointment,
in the event of removal at an Annual
General Meeting.
Reward packages for new Executive
Directors will be consistent with the above
Remuneration Policy. Fixed remuneration
elements would be paid only from the
date of employment and any bonus will
be pro-rated to reflect the proportion
of the year employed. The maximum level
of variable remuneration is as stated
in the Policy table on pages 134 and 135.
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PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report 2023 Annual Remuneration Report
2023 Annual Remuneration Report
This report will be submitted as an
advisory vote to shareholders at
the 2024 Annual General Meeting.
Directors’ remuneration for 2024
In 2024, we will be seeking shareholder
approval under an advisory vote of the
Remuneration Report which summarises
the remuneration outcomes for 2023.
As we have seen the business return
to profitability this year, we believe that
the Remuneration Policy applicable for
2022–2024 continues to ensure that
the Company is able to attract, retain
and incentivise management with
a framework which supports the
long-term success of the Company
and encourages actions which align
with the values, purpose and culture
of the Company. The Policy will be again
subject to shareholder approval in 2025.
The Committee will continue to review
shareholder feedback on remuneration
with regard to its implementation in 2024.
Major considerations are likely to be: (a)
macro-economic conditions, including
high inflation; and (b) increased availability
of ESG KPIs due to implementation of the
ESG Strategy as set out on pages 66 to 83.
Outcomes in respect of 2023
Directors’ remuneration in 2023 was
awarded in line with the Remuneration
Policy, which was approved by shareholders
at the 2022 AGM. Overall, the Committee
is satisfied that the policy has operated
as it was intended this year.
Single total figure of remuneration (audited)
The following table details Directors’
remuneration for the 2023 financial
year (with 2022 comparative figures).
Total remuneration for PPHE Hotel Group Board 2023
Name
Position
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Base salary
and fees2
Bonus
Pension
contributions
LTIP
Other benefits
Total1
Boris Ivesha
President & CEO
550,000 500,000 157,500
–
27,500
50,000
Greg Hegarty3
Deputy CEO & COO4
496,125
– 157,500
N/A
23,625
N/A
Daniel Kos
CFO
479,736 448,091 157,500 531,050
16,076
14,295
Eli Papouchado
Non-Executive Chairman
200,000 200,000
Kevin McAuliffe5
Non-Executive Deputy Chairman
39,656 100,000
Ken Bradley
Non-Executive Director6
62,158
59,900
Nigel Keen
Senior Independent Director
61,300
61,300
Stephanie Coxon
Non-Executive Director
Marcia Bakker
Non-Executive Director
59,900
59,900
59,900
2,568
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,008,775 1,431,759 472,500 531,050
67,201
64,295
–
–
–
N/A
N/A
N/A
N/A
N/A
N/A
–
–
–
–
N/A
N/A
N/A
N/A
N/A
N/A
15,135
13,311 750,135 563,311
3,860
– 681,110
–
–
N/A
N/A
N/A
N/A
N/A
N/A
– 653,312 993,436
N/A 200,000 200,000
N/A
N/A
39,656 100,000
62,158
59,900
N/A
61,300
61,300
N/A
59,900
59,900
N/A
59,900
2,568
2023 annual bonus
The 2023 annual bonus was assessed
against financial criteria and personal
objectives, with success assessed 70%
on financial metrics, 30% on non-financial
metrics. Performance against the
various measures was strong, with
all the performance criteria deemed
to have been achieved.
Financial metrics are revenue and gross
operating profits. Non-financial metrics are
guest satisfaction, employee engagement
and ESG targets. Performance against the
financial targets significantly exceeded
the maximum target set. The non-financial
targets were comprised of four individual
targets, two of which were ESG related
accounting for 15% of the total bonus.
These targets including measurements
relating to employees’ well-being and
overall satisfaction as well as measurements
for reduced energy consumption and
energy saving across the hotels. The
Committee judged that the individual
strategic and ESG measures had been
met in full.
In 2023, the Group operated a modest
annual bonus programme with a capped
bonus potential well under the maximum
amount permitted under the Remuneration
Policy, with the annual bonus awarded to
Executive Directors ranging from 28%-31%
of the annual base salary. The CEO, Co-
CEO and the CFO have each been awarded
£157,000 as an overall 2023 annual bonus.
No share awards have been awarded for
2023.
Stakeholder engagement
The Committee is obliged to consider
shareholder interest in all remuneration
matters. Additionally, it is good corporate
practice to ensure that workforce
engagement is included in determining
the outcome of remuneration practice.
We have set out in our table below the
ratio of total CEO remuneration to
those of the average employee, using
quartile comparators.
The Remuneration Committee has engaged
with shareholders and their representatives
to review the outcome of the advisory vote
at the Annual General Meeting. We have
sought to understand where and why
shareholder have chosen to withhold their
votes or to vote against the acceptance of
the 2022 Remuneration Report. As a result
of this process, this report contains the
following additional details:
• An explanation of the process of
aligning executive remuneration
to that of the wider workforce
• A year-on-year percentage
change of remuneration
• Further information about the
non-financial metrics by which
bonus calculations are made
Approach to remuneration of newly appointed Director
Greg Hegarty’s long service in the
Executive Leadership Team means his
remuneration package was established
before his appointment to the Board,
and the Committee takes the view that
his remuneration should reflect the
enhanced responsibilities as a Board
Director. In order to ensure fairness,
we have applied the same processes
and reasoning to his remuneration as
we have to the other Executive Directors,
exercising discretion where necessary to
ensure that transitional arrangements do
not unfairly negatively affect his overall
package, whilst continuing to abide by the
principles we have laid out for the proper
remuneration of Executive Directors in
line with the Policy and the principles of
transparent, fair and accountable
Corporate Governance.
–
18,995
13,311 2,567,471 2,040,415
Salary of President & CEO compared with average workforce remuneration
Notes
1 All fees are shown in GBP. Daniel Kos’s salary is paid in EUR, and converted for comparison purposes at a rate of €1.15:£1.
2 Base salary / fees represent all amounts received by the Director from the Company for the financial year.
3 Greg Hegarty was elected to the Board on 23 May 2023. The remuneration included in the table above for 2023 is in respect of his total remuneration during 2023.
4 Greg Hegarty was appointed Co-CEO in February 2024 post balance sheet. His title reflects his title throughout FY 2023.
5 Kevin McAuliffe retired from the Board on 23 May 2023 at the Annual General Meeting. His fees are pro-rated accordingly.
6 Ken Bradley was appointed Non-Executive Deputy Chair in December 2023. His position throughout 2023 until that point was Non-Executive Director.
Total
Ratio of CEO total to average employee
Total CEO
remuneration
£750,135
Average
employee
(25th percentile)
23,082
32:1
Average
employee
(50th percentile)
27,035
28:1
Average
employee
(75th percentile)
32,409
23:1
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Additional disclosures –
Directors and Company Secretary share interests
Boris Ivesha
Daniel Kos
Greg Hegarty
Eli Papouchado
Kevin McAuliffe
Ken Bradley
Nigel Keen
Stephanie Coxon
Marcia Bakker
Shares
beneficially
owned as at
31 December
2022
4,636,974
4,308
–
13,760,260
–
–
–
–
–
Shares
beneficially
owned as at
31 December
2023
4,636,974
30,000
–
13,760,260
–
–
–
–
–
Options fully
vested to
acquire shares
as at
31 December
2023
–
25,000
52,308
–
–
–
–
–
–
Conditional LTIP share
awards subject to
performance conditions
2022 Award
(vesting after
31 December
2024)
–
22,000
22,000
–
–
–
–
–
–
Total
conditional LTIP
awards
–
22,000
22,000
–
–
–
–
–
–
• Shares beneficially owned include those of connected persons and include shares held in trust, which are subject to deferral
or holding periods
• Total conditional LTIP awards include LTIP awards to Executive Directors representing the maximum number of shares that may
vest under 2021, 2022 and 2023 LTIP awards based on the performance conditions associated with each award
Relative spend on pay
The following table shows the Group’s aggregate actual spend on pay (for all employees) and dividends in respect of the current
and previous financial year.
In 2022, the annual bonus of the CFO included a 23,000 Share Award.
In 2020, under Pandemic conditions, the directors sacrificed a portion of their salary and were not entitled to variable benefits.
Notes to the table:
1 Boris Ivesha waived his rights for annual bonus in years 2019-2022.
2
3
4 Kevin McAuliffe retired from the Board at the AGM on 17 May 2023.
5 Ken Bradley was appointed to the Board on 4 September 2019.
6 Nigel Keen was appointed to the Board on 20 February 2020.
7 Nigel Jones retired from the Board on 19 May 2020.
8 Stephanie Coxon was appointed to the Board on 7 August 2020.
9 Dawn Morgan resigned from the Board on 30 September 2020.
10 Marcia Bakker was appointed to the Board on 6 December 2022.
Payments to past Directors
Kevin McAuliffe retired as a Director at the Annual General Meeting held on 17 May 2023.
Payments for loss of office
There were no payments for loss of office during the year.
Annual General Meeting voting
At last year’s Annual General Meeting, the following votes were received on the resolution to receive and consider the Directors’
Report on Remuneration for the year ended 31 December 2022.
Votes For
Votes Against
Votes Withheld
Total Votes
Votes
24,141,922
1,709,611
3,096
25,854,602
%
92.92%
7.08%
Dividend
Aggregate employee remuneration
2023
11,896,668
136,547,587
2022
1,277,865
113,816,616
Change
831%
20%
The Committee was pleased with the level of support received for our Remuneration Report and Directors’ Remuneration Policy.
As always, we are committed to taking into consideration the views of our shareholders each year in our approach to and disclosure
of remuneration.
Percentage change in remuneration
The following analysis summarises the annual change in remuneration for each individual Director over five years in comparison
to the annual change in average employee remuneration.
Remuneration Committee and advisors
The President and Chief Executive Officer and the Company Secretary attended Committee meetings at the invitation of the
Committee Chair (but were not present for discussions on their own remuneration).
Director's remuneration
Executive Directors
Boris Ivesha1
Greg Hegarty
Daniel Kos2
Non-Executive Directors
Eli Papouchado
Kevin McAuliffe4
Ken Bradley5
Nigel Keen6
Nigel Jones7
Stephanie Coxon8
Dawn Morgan9
Marcia Bakker10
2020 vs 2019
2021 vs 20203
2022 vs 2021
2023 vs 2022
2023 total
The members of the Committee have no financial interest and no potential conflicts of interest, other than as shareholders, in the
matters to be decided and no day-to-day involvement in the running of the business.
29%
N/A
3%
33%
29%
32%
54%
(100%)
218%
(100%)
N/A
2%
N/A
164%
0%
0%
8%
5%
N/A
8%
N/A
N/A
33%
N/A
(34%)
0%
(60%)
4%
0%
N/A
0%
N/A
N/A
£750,135
£681,110
£653,312
£200,000
£39,656
£ 62,158
£61,300
N/A
£59,900
N/A
£59,900
(19%)
N/A
3%
(25%)
(30%)
133%
N/A
(69%)
N/A
(51%)
N/A
140
In carrying out its duties, the Committee considers any relevant legal requirements, the recommendations in the UK Corporate
Governance Code and the Listing Rules of the London Stock Exchange and associated guidance and investor guidelines on executive
remuneration. In 2023, the Committee did not seek external support from remuneration consultants or advisers.
The Board approves the remuneration of the Non-Executive Directors.
141
PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report Directors’ Report
The Directors present their report
and the audited financial statements
of the Company for the year ended
31 December 2023.
The Strategic Report and Directors’
Report together are the Management
Report for the purposes of Rule 4.1.8R
of the DTR. Section 248(2) of The Companies
(Guernsey) Law, 2008 requires the
principal activities to be stated in the
Directors’ Report. The following matters
have been included in the Strategic
Report but are incorporated by
reference into this Directors’ Report.
Appointment and replacement of Directors
Pursuant to the Articles, the Board has
the power to appoint any person to be a
Director. All Directors are required to
submit to annual election by shareholders
at the Annual General Meeting. At every
Annual General Meeting, a minimum of
one-third of the Directors (or the number
nearest to and less than one-third in the
event that the number of Directors is not
three or any multiple of three) shall retire
from office. If there are fewer than three
Directors on the board, they shall all
retire. No person, other than a Director
retiring at a general meeting, shall, unless
recommended by the Directors, be eligible
Topic
Section of the Report
Fair view of the
Company’s business
Principal risks and uncertainties Risk Management
Strategic Report
Strategy
Business model
Strategic Report
Strategic Report
Important events
impacting the business
Strategic Report – Chairman’s Statement,
CEO’s statement
Likely future developments
Strategic report
Financial key
performance indicators
Non-financial key
performance indicators
Environmental matters
Company’s employees
Key performance indicators
Environmental, Social and Governance
Environmental, Social and Governance, Task Force
on Climate-Related Financial Disclosures (TCFD)
Stakeholder Engagement and Environmental,
Social and Governance
Social, community and
human rights issues
Stakeholder Engagement and
Environmental, Social and Governance
S172 and relationship with
suppliers, customers and others
Stakeholder Engagement and
Introduction to Governance
Greenhouse Gas Emissions
Task Force on Climate-Related
Financial Disclosures (TCFD)
Directors’ induction and training Nomination Committee Report
The following matters have been included in the Corporate Governance Report
but are incorporated by reference into this Directors’ Report:
Diversity report of
Board membership
(ethnicity and gender)
Nomination Committee Report
Page
5
84
5
15
16
5
38
66
66 to 83
62 to 79
62 to 79
99
80
119
121
for election at a general meeting as a
Director unless notice has been received
from such person. In accordance with the
Code and good Corporate Governance
practice, the entire Board will stand for
re-election at the forthcoming Annual
General Meeting.
Pursuant to the Articles, Euro Plaza
Holdings B.V. (‘Euro Plaza’) may:
• nominate two Non-Executive Directors
to the Board for so long as Euro Plaza
and its associates directly or indirectly
control at least 30% of the issued
shares in the Company; and
• nominate one Non-Executive Director
to the Board for so long as Euro Plaza
and its associates control at least 10%
but less than 30% of the issued shares
of the Company.
Pursuant to the Articles, Molteno Limited
may nominate one Non-Executive Director
to the Board for so long as Molteno Limited
and its associates directly or indirectly
control at least 10% of the issued shares
in the Company.
The shareholders may, by ordinary
resolution, resolve to remove any
Director before the expiration of his
or her period of office and appoint
a replacement Director.
Share capital
The issued share capital of the
Company together with the details
of the movements in the Company’s
share capital during the year are
shown in Note 10 to the consolidated
financial statements.
Shares
There is currently only one class of
share in issue (being ordinary shares)
which all carry the same rights as one
another. There are no shares in the
Company which carry special rights
with regard to control of the Company.
The following limitations on voting rights
of shareholders apply:
• The Board may suspend the voting
rights attached to any shares owned
directly, indirectly or beneficially by
a Non-Qualified Holder (as defined
in the Articles)
• The Directors may at any time make
calls upon the shareholders in respect
of any unpaid shares. No shareholder
is entitled to vote unless all calls due
from him have been paid
The following deadlines for exercising
voting rights apply:
• A written resolution will state a date by
which the resolution must be passed.
The Law imposes a default lapse date of
28 days from circulation of the written
resolution if no lapse date is specified
• In the case of resolutions passed at
general meetings of shareholders,
voting rights may only be exercised
at the time the resolution is proposed
at the meeting
Any arrangements by which the financial
rights to shares are held by a person
other than the registered shareholder
would be by agreement between the
shareholder and the beneficiary. The
Company is not obliged to recognise any
such trust arrangements and shall pay
any dividends to the registered shareholder.
With the prior approval of the shareholders
by ordinary resolution, the Board may
exercise all powers of the Company to
allot and issue, grant rights to subscribe
for, or to convert any securities into,
an unlimited number of shares of each
class in the Company.
Unless such shares are to be wholly or
partly paid otherwise than in cash or are
allotted or issued pursuant to an employee
share scheme, any shares to be allotted
and issued must first be offered to the
existing shareholders on the same or
more favourable terms.
The Company may from time to time
acquire its own shares subject to the
requirements of UK and Guernsey
legislation ( for example The Companies
(Guernsey) Law, 2008, the Listing Rules
and the Takeover Code (The Law). The
Law requires the prior approval of
any share buy-back by way of ordinary
resolution of the shareholders and
a certification by the Board that the
Company satisfies the solvency test
set out in the Law.
Articles
The Articles may be amended at any
time by passing a special resolution
of the shareholders pursuant to the
Law. A special resolution is passed by
a majority of not less than 75% of the
votes of the shareholders entitled
to vote and voting in person or by
attorney or by proxy at a meeting
or by 75% of the total voting rights of
eligible members by written resolution.
Substantial share interest
The table provided on page 143 shows
shareholders holding 5% or more of the
issued share capital (excluding treasury
shares) as at 19 January 2024. No further
interests have been disclosed to the
Company in accordance with DTR 5 in the
period between the end of the financial
year and 5th February 2024.
Number of issued shares
Shares held in treasury
by the Group
Number of issued shares
(excluding treasury)
44,347,410
1,984,110
42,363,300
Percentage
of the issued
Ordinary
Share
capital
(excluding
treasury
shares)
10.95%
Number of
Ordinary
Shares
4,636,974
12,207,843
28.82%
22,417
0.05%
1,530,000
18,397,234
3.61%
43.43%
Concert
Party member
Boris Ivesha:
Red Sea Parties:
Euro Plaza
Red Sea Club
Limited
AA Papo Trust
Company
Limited1
Total
1 A.A. Papo Trust Company Limited is the trustee of
a second endowment created by Eli Papouchado
under Israeli law in 2008. Eli Papouchado was the
owner of these 1,530,000 Ordinary Shares and
granted those shares to the second endowment
in 2015. The primary beneficiary of the second
endowment is Eli’s daughter, Eliana, and the
secondary beneficiaries are Eli Papouchado
and his divorcee, Sigal Gross.
Percentage of
the issued
Ordinary
Share capital
(excluding
treasury
shares)
Number of
Ordinary
Shares
4,344,788
10.26%
3,493,945
8.25%
2,961,757
6.99%
Shareholder
Aroundtown
Property
Holdings
Clal Insurance
Enterprises
Holdings
Harel Insurance
Investments
and Financial
Services
142
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PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report Controlling shareholders
The Company’s immediate controlling
shareholders are Euro Plaza Holdings B.V.
and Boris Ivesha. Euro Plaza is ultimately
controlled by Eli Papouchado, acting in his
capacity as trustee of an endowment
created under Israeli law (‘the Endowment’).
As required under Listing Rule 9.2.2 R(1),
the Company has entered into separate
relationship agreements with:
(i)
Euro Plaza and Eli Papouchado
(acting in his capacity as trustee
of the Endowment); and
(ii) Boris Ivesha, which as a concert
party hold 43.25% of the issued
share capital of the Company.
The Company has complied with the
undertakings in Listing Rule 6.5.4R and
Listing Rule 9.2.2ADR(1) since admission
to the Premium Listing segment. So far as
the Company is aware, these undertakings
have also been complied with by Euro Plaza,
Eli Papouchado, acting in his capacity as
trustee of the Endowment and Boris
Ivesha or his previous shareholding
vehicles since admission.
In accordance with the relationship
agreements entered into the Company’s
controlling shareholders, each of Euro
Plaza and Boris Ivesha is entitled to
appoint representatives to the Board
of the Company. Mr Eli Papouchado is
cleared to be the representative of Euro
Plaza and Mr Boris Ivesha is cleared to act
as representative for these purposes.
Rule
DTR 4.1.11R(6) Note 29 of the
Disclosure
DTR 4.1.11R(1)
DTR 4.1.11R(2)
DTR 4.1.11R(5)
Consolidated Financial
Statements sets out
the financial risk on
page 196.
Important post-balance
sheet events are included
in Note 30 of the
Consolidated Financial
Statements on page 201.
Likely future
developments are
referenced in the
Strategic Report.
The wordlwide
operations of the
Company are shown
on pages 8 and 9.
Pursuant to DTR 7.2.8,
the annual review of the
Board Diversity Policy is
found in the report of the
Nomination Committee
at page 121.
Article 19 of the Market Abuse Regulation
The interests of each Director disclosed
to the Company under Article 19 of the
Market Abuse Regulation as at the end
of the financial year are set out above
and on page 140. There have been no
changes in the interests of each Director
in the period between the end of the
financial year and 5 February 2024.
Boris Ivesha holds 4,636,974 ordinary
shares, which constitutes 10.95% of the
issued share capital (excluding treasury
shares) of the Company.
DTR 7.2.8
Directors’ Report – continued
DTR disclosures
Eli Papouchado is deemed to be
interested in 13,760,260 ordinary shares,
which constitutes 32.47% of the issued
share capital (excluding treasury shares)
of the Company:
• 12,207,843 ordinary shares held
by Euro Plaza;
• Euro Plaza is an indirect wholly owned
subsidiary of A.P.Y. Investments & Real
Estate Ltd (‘APY’). 98% of the shares
in APY are held by Eli Papouchado;
• 22,417 ordinary shares held by Red Sea
Club Limited, a subsidiary of APY; and
• 1,530,000 ordinary shares held by A.A.
Papo Trust Company Limited, which is
wholly owned by Eli Papouchado.
Eli Papouchado, Euro Plaza, APY and A.A.
Papo Trust Company Limited and other
parties related to him (together the
‘Red Sea Parties’) and Boris Ivesha and
other parties related to him (together
the ‘Ivesha Parties’) are a party to a
shareholders agreement dated 14 March
2013 (as amended from time to time) (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 the Company
are not less than 30% and the Red Sea
Parties’ interest in the Company is at
least 20% of the share capital then in issue
(excluding, in both cases, shares held in
treasury), on any shareholder resolution
all 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. As a result, the Red Sea
Parties are all considered to be
interested in the shares in which
the Ivesha Parties are interested.
Share repurchase
At the AGM held on 23 May 2023,
the Company obtained shareholder
authorisation for the buy-back of up to
2,235,876 ordinary shares of nil par value,
being approximately 10% of the issued
share capital of the Company (Buy-Back
Authority). This authority renewed and
replaced the authority granted at the
AGM held on 17 May 2022. The Buy-Back
Authority will expire 15 months after the
resolution was passed on 23 May 2023
unless modified or terminated earlier by
shareholder vote at a General Meeting.
The buy-back programme announced on
29 June 2022 and extended on 18 November
2022 concluded on 7 March 2023. During
the period 1 January to 7 March 2023 a
total of 138,611 shares were purchased.
Listing Rule 9.8.4R
The following table is disclosed pursuant
to Listing Rule 9.8.4R. The table sets out
only those sections of Listing Rule 9.8.4R
which are applicable to the Company.
The information required to be disclosed
can be located in the Annual Report at
the references set out below:
Section
Information
Location
4
10
11
14
Details of
long-term
incentive
schemes
Contracts of
significance
Provision of
services by
a controlling
shareholder
Controlling
shareholder
statement
Consolidated
financial
statements
note: 11.
Consolidated
financial
statements
note: 12.
Consolidated
financial
statements
note: 28.
Directors’
report
UK Streamlined Energy and Carbon Reporting
In line with market practice for UK listed
businesses, our Streamlined Energy and
Carbon Reporting, UK Scope 1, Scope 2
and Scope 3 emissions, intensity ratio
and yearly comparisons are provided
in the TCFD Report at page 80, including
information as to quantification and
reporting methodology.
Energy efficiency action
For energy efficiency actions, please
see the ESG section (including the TCFD
Report) on pages 80 to 84.
TCFD
The Company has included in its annual
financial report climate-related financial
disclosures consistent with the TCFD
Recommendations and Recommended
Disclosures. Additional disclosures are
made in a standalone TCFD Report
published on the company’s website.
Additional details pertaining to metrics
and targets and intensity ratios are
published in the standalone document.
The standalone TCFD report contains
substantial detail on carbon emissions
in each separate country of operation
which are summarised in this document
as emissions for the consolidated group
as a whole.
Auditors
Kost Forer Gabbay & Kasierer, a member
of Ernst & Young Global, have acted
as auditors in the 2023 financial year
before the issue of a new audit tender.
The Audit Tender process is described
in the report of the Audit Committee
on page 122. The tender process is in
line with the requirements set out in the
Financial Reporting Council’s document
“Audit Committees and the External Audit:
Minimum Standard” which was published
in 2023. The process requires the Audit
Committee to make a recommendation
to the Board. The re-appointment or
new appointment of an audit firm will be
included in the agenda of the Company’s
Annual General Meeting, and announced
in due course.
Going concern
The Board has an obligation under the
Code to state whether it believes that
the Company and the Group will be able
to continue in operation and meet their
liabilities as they fall due over a specified
period determined by the Board, taking
account of the current position and the
principal risks of the Company and the
Group. The Board believes it is taking
all appropriate steps to support the
sustainability and growth of the Group’s
activities The Viability Statement on
page 94 and the report of the Audit
Committee contain the necessary
information to determine viability
over a three-year time horizon.
In determining the assumptions used
in cash flow forecasts, the Directors
considered various third party market
predictions and considered the current
principal and emerging risks facing the
Group while focusing specifically on
macro-economic market disruptions
and inflation, and the impact this could
have on future performance and liquidity
of the Group.
Based on these cash flow forecasts, the
Directors confirm they have a reasonable
expectation that the Group has adequate
resources to continue in operational
existence for at least 12 months from the
date of signing these financial statements.
This, taken together with their conclusions
in Note 1 to the consolidated financial
statements, has led the Directors to
conclude that it is appropriate to prepare
the 2023 consolidated financial statements
on a going concern basis.
144
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PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report Directors’ Report – continued
Independent Auditors’ Report to the members of PPHE Hotel Group Limited
Financial risk management
objectives and policies
In addition, Note 29 to the consolidated
financial statements includes the Company’s
objectives, policies and processes for
managing its capital, its financial risk
management objectives, details of its
financial instruments and hedging
activities, and its exposure to credit
risk and liquidity risk.
Directors’ responsibilities
The Directors are required to prepare
the Annual Report and the consolidated
financial statements for each financial
year to give a true and fair view of the
state of affairs of the Company and
the undertakings included in the
consolidation taken as a whole as at
the end of the financial year, and of
the profit or loss for that year.
In preparing the consolidated financial
statements, the Directors should:
• select suitable accounting policies
and apply them consistently;
• make judgements and estimates that
are reasonable;
• state whether applicable accounting
standards have been followed, subject
to any material departures disclosed
and explained in the consolidated
financial statements; and
prepare the consolidated financial
statements on a going concern basis
unless it is inappropriate to presume that
the Company will continue in business.
•
The Directors confirm that they have
complied with the above requirements
in preparing the consolidated financial
statements. The Directors are responsible
for keeping proper accounting records
which disclose with reasonable accuracy
at any time the financial position of the
Company and enable them to ensure that
the consolidated financial statements
have been properly prepared in accordance
with the Law. The Directors are responsible
for safeguarding the assets of the Group
and hence for taking reasonable steps
for the prevention and detection of
fraud and other irregularities.
Directors’ declaration
So far as each of the Directors, who is a
Director at the time the Directors’ Report
is approved, is aware, there is no relevant
audit information of which the Company’s
auditors are unaware and each has taken
all the steps he or she ought to have taken
as a Director to make himself or herself
aware of any relevant audit information
and to establish that the Company’s
auditors are aware of that information.
Directors’ responsibility statement
Each of the Directors named on pages 98
and 99 as of the time of the publication,
confirms to the best of his or her
knowledge that:
(i)
the consolidated financial statements,
which have been prepared in accordance
with International Financial Reporting
Standards (IFRS) as adopted by the
European Union, give a true and fair
view of the assets, liabilities, financial
position and profit and loss of the
Company and the undertakings included
in the consolidation taken as a whole;
(ii) the Strategic Report includes a
fair review of the development
and performance of the business
and the position of the Company
and the undertakings included in
the consolidation taken as a whole,
together with a description of the
principal risks and uncertainties that
they face, and provides information
necessary for shareholders to
assess the Company’s performance,
business model and strategies; and
(iii) the Directors consider that the
Annual Report and Accounts, taken
as a whole, are fair, balanced and
understandable and provide the
information necessary for shareholders
to assess the Company’s position
and performance, business model
and strategy.
Signed on behalf of the Board by
Boris Ivesha
President & Chief Executive Officer
28 February 2024
Daniel Kos
Chief Financial Officer & Executive Director
28 February 2024
Report on the audit of the consolidated
financial statements
Opinion
We have audited the consolidated
financial statements of PPHE Hotel
Group Limited (the ‘Group’), which
comprises the consolidated statement
of financial position as at 31 December
2023, and the consolidated income
statement, consolidated statement of
comprehensive income, consolidated
statement of changes in equity and
consolidated statement of cash flows
for the year then ended, and notes to
the consolidated financial statements,
including accounting policy information.
In our opinion, the accompanying
consolidated financial statements:
• give a true and fair view of the financial
position of the Group as at
31 December 2023 and of its financial
performance and its cash flows for
the year then ended;
• have been properly prepared in
accordance with International Financial
Reporting Standards (IFRS) as adopted
by the European Union; and
• have been prepared in accordance
with the requirements of the
Companies (Guernsey) Law, 2008.
Key audit matters 2023
Decentralised operations
As discussed in Notes 1(b) and 27 to the
consolidated financial statements, the
Group comprises more than 100 legal
entities, grouped in four reportable
segments. The geographical decentralised
structure, multiplicity of IT systems and
number of Group entities (components)
increase the complexity of the Group’s
control environment and thus affects
our ability as Group auditor to obtain an
appropriate level of understanding of
these components. Also, in our role as
Group auditor, it is essential that we obtain
an appropriate level of understanding of
the significant components in the Group
and the audit work performed by the
component’s auditors.
How our audit addressed the matter
We have evaluated the Group’s internal
controls, including the centralised
monitoring controls that exist at both
Group and segment level. The Group
has developed an internal control
framework with control activities that
are required to be implemented by the
components. Management continually
reviews its systems and procedures
for improvements and harmonisation
across the Company.
Basis for opinion
We conducted our audit in accordance
with International Standards on Auditing
(ISAs). Our responsibilities under those
standards are further described in the
‘Auditor’s responsibilities for the audit of
the consolidated financial statements’
section of our report. We are independent
of the Company in accordance with the
International Code of Ethics for Professional
Accountants (including International
Independence Standards) (IESBA Code),
including the UK FRC’s Ethical Standard
as applied to listed public interest entities,
and we have fulfilled our other ethical
responsibilities in accordance with these
requirements. We believe that the audit
evidence we have obtained is sufficient
and appropriate to provide a basis for
our opinion.
Key audit matters
Key audit matters are those matters
that, in our professional judgment, were
of most significance in our audit of the
consolidated financial statements for
the year ended 31 December 2023. These
matters were addressed in the context
of our audit of the consolidated financial
statements as a whole, and in forming our
opinion thereon, and we do not provide
a separate opinion on these matters. For
the key matter below, our description of
how our audit addressed the matter is
provided in that context.
We have fulfilled the responsibilities
described in the ‘Auditor’s responsibilities
for the audit of the consolidated financial
statements’ section of our report, including
in relation to this matter. Accordingly,
our audit included the performance
of procedures designed to respond to
our assessment of the risks of material
misstatement of the consolidated
financial statements. The results of
our audit procedures, including the
procedures performed to address
the matter below, provide the basis for
our audit opinion on the accompanying
consolidated financial statements.
146
147
PPHE Hotel GroupAnnual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic reportPPHE Hotel GroupAnnual Report and Accounts 2023 Independent Auditors’ Report to the members of PPHE Hotel Group Limited – continued
During our audit, we have specifically
focused on risks in relation to the
decentralised structure and, as a result,
we have extended our involvement in
audit work performed by the components’
auditors. Among other audit procedures,
we organised site visits, meetings and
conference calls with components’
auditors. We have also requested
components’ auditors to specifically
address certain risks and attention areas
defined at Group level, by requiring all
teams to perform specific audit procedures
in order to ensure a consistent approach
in areas that were deemed most relevant
from a Group audit perspective to mitigate
the risks identified by the Group auditor.
We also performed tests on consolidation
adjustments and manual journal entries,
at both Group and component level to
obtain an understanding of significant
entries made.
Other information included in the Group’s
2023 Annual Report
Other information consists of the
information included in the 2023 Annual
Report, other than the consolidated
financial statements and our auditor’s
report thereon. Management is
responsible for the other information.
Our opinion on the consolidated financial
statements does not cover the other
information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the
consolidated financial statements,
our responsibility is to read the other
information and in doing so, consider
whether the other information is
materially inconsistent with the
consolidated financial statements or
our knowledge obtained in the audit
or otherwise appears to be materially
misstated. If, based on the work we
have performed, we conclude that
there is a material misstatement of
this other information, we are required
to report that fact. We have nothing to
report in this regard.
Responsibilities of management and the Audit
Committee for the financial statements
Management is responsible for the
preparation and fair presentation of
the consolidated financial statements in
accordance with IFRS as adopted by the
European Union and for such internal
control as management determines is
necessary to enable the preparation of
financial statements that are free from
material misstatement, whether due to
fraud or error.
In preparing the consolidated financial
statements, management is responsible
for assessing the Group’s ability to
continue as a going concern, disclosing,
as applicable, matters related to going
concern and using the going concern
basis of accounting unless management
either intends to liquidate the Group or
to cease operations or has no realistic
alternative but to do so.
The Audit Committee is responsible
for overseeing the Group’s financial
reporting process.
Auditor’s responsibilities for the audit of the
consolidated financial statements
Our objectives are to obtain reasonable
assurance about whether the consolidated
financial statements as a whole are free
from material misstatement, whether
due to fraud or error, and to issue an
auditor’s report that includes our opinion.
Reasonable assurance is a high level of
assurance, but is not a guarantee that an
audit conducted in accordance with ISAs
will always detect a material misstatement
when it exists. Misstatements can arise
from fraud or error and are considered
material if, individually or in the aggregate,
they could reasonably be expected to
influence the economic decisions of users
taken on the basis of these consolidated
financial statements.
As part of an audit in accordance with
ISAs, we exercise professional judgment
and maintain professional scepticism
throughout the audit. We also:
• identify and assess the risks of material
misstatement of the consolidated
financial statements, whether due to
fraud or error, design and perform
audit procedures responsive to those
risks and obtain audit evidence that is
sufficient and appropriate to provide
a basis for our opinion. The risk of not
detecting a material misstatement
resulting from fraud is higher than for
one resulting from error, as fraud may
involve collusion, forgery, intentional
omissions, misrepresentations, or
the override of internal control;
• obtain an understanding of internal
control relevant to the audit in order
to design audit procedures that are
appropriate in the circumstances, but
not for the purpose of expressing an
opinion on the effectiveness of the
Group’s internal control;
• evaluate the appropriateness of
accounting policies used and the
reasonableness of accounting
estimates and related disclosures
made by management;
We also provide the Audit Committee with
a statement that we have complied with
relevant ethical requirements regarding
independence and communicated with
them all relationships and other matters
that may reasonably be thought to bear
on our independence and, where
applicable, related safeguards.
From the matters communicated with
the Audit Committee, we determine those
matters that were of most significance
in the audit of the consolidated financial
statements of the current period and
are therefore the key audit matters. We
describe these matters in our auditor’s
report unless law or regulation precludes
public disclosure about the matter or
when, in extremely rare circumstances,
we determine that a matter should not
be communicated in our report because
the adverse consequences of doing
so would reasonably be expected to
outweigh the public interest benefits
of such communication.
Report on other legal and Regulatory Requirements:
Pursuant to Section 9.8.10 (1) and (2) of
the Listing Rules of the Financial Conduct
Authority, we were engaged to review
management’s statement pursuant to
Section 9.8.6 R (6) of the Listing Rules of
the Financial Conduct Authority that
relate to provisions 6 and 24 to 29 of the
UK Corporate Governance Code and the
Management Board’s statement pursuant
to Section 9.8.6 R (3) of the Listing Rules in
the United Kingdom in the financial year
2023 included in the ‘Viability statement’
on page 94 and in the section ‘Going
concern’ on page 145. We have no
exceptions to report.
The partner in charge of the audit
resulting in this independent auditors’
report is Itsik Morovits.
ITSIK MOROVITS
(For and on behalf of Kost Forer Gabbay & Kasierer,
member of Ernst & Young Global)
Tel Aviv, Israel
28 FEBRUARY 2024
• conclude, on the appropriateness of
management’s use of the going concern
basis of accounting and based on the
audit evidence obtained, whether a
material uncertainty exists related
to events or conditions that may cast
significant doubt on the Group’s ability
to continue as a going concern. If we
conclude that a material uncertainty
exists, we are required to draw attention
in our auditor’s report to the related
disclosures in the consolidated financial
statements or, if such disclosures are
inadequate, to modify our opinion. Our
conclusions are based on the audit
evidence obtained up to the date of our
auditor’s report. However, future events
or conditions may cause the Group to
cease to continue as a going concern;
• evaluate the overall presentation,
structure and content of the
consolidated financial statements,
including the disclosures, and whether
the consolidated financial statements
represent the underlying transactions
and events in a manner that achieves
fair presentation; and
• obtain sufficient appropriate audit
evidence regarding the financial
information of the entities or business
activities within the Group to express
an opinion on the consolidated financial
statements. We are responsible for
the direction, supervision and
performance of the Group audit.
We remain solely responsible for
our audit opinion.
We communicate with the Audit Committee
regarding, among other matters, the
planned scope and timing of the audit and
significant audit findings, including any
significant deficiencies in internal control
that we identify during our audit.
148
149
PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report Consolidated Statement of Financial Position
for the year ended 31 December 2023
Consolidated Income Statement
for the year ended 31 December 2023
As at 31 December
2023
£’000
2022
£’000
Note
Assets
Non-current assets:
Intangible assets
Property, plant
and equipment
Right-of-use assets
Investment in joint ventures
Other non-current assets
3
4
17
5
6
Restricted deposits
and cash
12(b)
Deferred income tax asset
25
10,665
12,805
1,412,830
1,335,184
229,215
225,443
5,438
4,961
39,646
47,245
10,385
13,833
9,272
12,909
1,722,012
1,647,819
Current assets:
Restricted deposits
and cash
Inventories
Trade receivables
Other receivables
and prepayments
Cash and cash equivalents
12(b)
7
8
9
6,909
3,288
9,229
3,181
17,880
18,533
23,260
17,866
150,416
163,589
201,753
212,398
Total assets
1,923,765
1,860,217
Note
10
13
14
15
16
25
18
13
Equity and liabilities
Equity:
Issued capital
Share premium
Treasury shares
Foreign currency
translation reserve
Hedging reserve
Accumulated earnings
Attributable to equity
holders of the parent
Non-controlling interests
Total equity
Non-current liabilities:
Borrowings
Provision for concession fee
on land
Financial liability in respect
of Income Units sold to
private investors
Other financial liabilities
Deferred income taxes
Current liabilities:
Trade payables
Other payables and
accruals
Borrowings
Total liabilities
Total equity and liabilities
As at 31 December
2023
£’000
2022
£’000
–
133,469
(6,873)
13,903
7,801
166,281
314,581
216,592
531,173
–
133,177
(5,472)
20,039
10,950
156,364
315,058
188,187
503,245
845,199
817,631
5,233
5,331
114,287
280,200
5,878
1,250,797
121,084
265,494
5,922
1,215,462
14,809
13,565
79,149
47,837
141,795
1,392,592
1,923,765
80,844
47,101
141,510
1,356,972
1,860,217
The accompanying notes are an integral part of the consolidated
financial statements. Date of approval of the financial statements:
28 February 2024. Signed on behalf of the Board by Boris Ivesha
and Daniel Kos.
Boris Ivesha
President & Chief Executive Officer
Daniel Kos
Chief Financial Officer & Executive Director
Revenues
Operating expenses
EBITDAR
Rental expenses
EBITDA
Depreciation and amortisation
EBIT
Financial expenses
Financial income
Other expenses
Other income
Net expenses for financial liability in respect of Income Units sold to private investors
Share in results of joint ventures
Profit before tax
Income tax (expense) benefit
Profit for the year
Profit attributable to:
Equity holders of the parent
Non-controlling interests
Note
19
20
17
3, 4, 17
21
22
23(a)
23(b)
24
5
25
As at 31 December
2023
£’000
414,598
(284,090)
130,508
(2,332)
128,176
(45,068)
83,108
(36,145)
4,758
(13,046)
4,416
(14,156)
(113)
28,822
(1,677)
27,145
2022
£’000
330,091
(233,087)
97,004
(2,421)
94,583
(40,006)
54,577
(37,257)
1,516
(6,791)
9,992
(10,783)
202
11,456
3,356
14,812
22,415
4,730
27,145
10,159
4,653
14,812
Basic and diluted profit per share (in Pound Sterling)
26
0.53
0.24
The accompanying notes are an integral part of the consolidated financial statements.
150
151
PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2023
Consolidated Statement of Changes in Equity
for the year ended 31 December 2023
Profit for the year
Other comprehensive income (loss) to be recycled through profit and loss in subsequent periods:1
Profit (loss) from cash flow hedges
Foreign currency translation adjustments of foreign operations
Other comprehensive income (loss)
Total comprehensive income
Total comprehensive income (loss) attributable to:
Equity holders of the parent
Non-controlling interests
1 There is no other comprehensive income that will not be reclassified to the profit and loss in subsequent periods.
The accompanying notes are an integral part of the consolidated financial statements.
As at 31 December
2023
£’000
27,145
(5,007)
(8,463)
(13,470)
13,675
13,812
(137)
13,675
2022
£’000
14,812
21,133
22,000
43,133
57,945
37,732
20,213
57,945
In £’000
Balance as at 1 January 2023
Profit for the year
Other comprehensive income
(loss) for the year
Total comprehensive income
(loss)
Share-based payments
Share buy-back
Dividend distribution2
Dividend distribution
by a subsidiary
Exercise of options
Transactions with non-
controlling interests
(see Note 5)
Balance as at
31 December 2023
Balance as at 1 January 2022
Profit for the year
Other comprehensive
income for the year
Total comprehensive income
Share-based payments
Share buy-back
Dividend distribution2
Exercise of options
Transactions with non-
controlling interests
(see Note 5)
Balance as at
31 December 2022
Issued
capital1
Share
premium
Treasury
shares
Foreign
currency
translation
reserve
Hedging
reserve
Accumulated
earnings
Attributable
to equity
holders of
the parent
Non-
controlling
interests
Total
equity
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
133,177
–
(5,472)
–
20,039
–
10,950
–
156,364
22,415
315,058
22,415
188,187
4,730
503,245
27,145
–
–
442
–
–
–
(6,027)
(2,576)
–
(8,603)
(4,867)
(13,470)
–
–
(1,621)
–
(6,027)
–
–
–
(2,576)
–
–
–
22,415
93
–
(11,897)
13,812
535
(1,621)
(11,897)
(137)
87
–
–
13,675
622
(1,621)
(11,897)
–
(150)
–
220
–
–
–
–
–
–
–
70
(1,436)
–
(1,436)
70
–
–
(109)
(573)
(694)
(1,376)
29,891
28,515
133,469
131,229
–
–
–
2,056
–
–
(108)
(6,873)
(3,482)
–
–
–
(2,098)
–
108
13,903
3,806
–
16,191
16,191
–
–
–
–
7,801
(434)
–
166,281
147,350
10,159
314,581
278,469
10,159
216,592
168,742
4,653
531,173
447,211
14,812
11,382
11,382
–
–
–
–
–
10,159
–
–
(1,278)
–
27,573
37,732
2,056
(2,098)
(1,278)
–
15,560
20,213
81
–
–
–
43,133
57,945
2,137
(2,098)
(1,278)
–
–
–
42
2
133
177
(849)
(672)
133,177
(5,472)
20,039
10,950
156,364
315,058
188,187
503,245
1 No par value.
2 The dividend distribution comprises a final dividend for the year ended 31 December 2022 of 12.0 pence per share (31 December 2021: nil pence per share)
and an interim dividend of 16.0 pence per share paid in 2023 (2022: 3.0 pence per share).
The accompanying notes are an integral part of the consolidated financial statements.
152
153
PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report Consolidated Statement of Cash Flows
for the year ended 31 December 2023
Cash flows from operating activities:
Profit for the year
Adjustment to reconcile profit to cash provided by operating activities:
Financial expenses and expenses for financial liability in respect of Income Units sold
to private investors
Financial income
Income tax expense (benefit)
Loss on buy-back of Income Units sold to private investors
Re-measurement of lease liability
Revaluation of Park Plaza County Hall London Units
Capital loss on sale of fixed assets, net
Share in results of joint ventures
Share appreciation rights revaluation
Fair value movement derivatives through profit and loss
Depreciation and amortisation
Share-based payments
Changes in operating assets and liabilities:
Increase in inventories
Increase in trade and other receivables
Increase in trade and other payables
Cash paid and received during the period for:
Interest paid
Interest received
Taxes paid
Taxes received
Net cash provided by operating activities
Cash flows from investing activities:
Investments in property, plant and equipment
Investments in intangible assets
Loan to joint venture
Decrease (increase) in restricted cash
Net cash used in investing activities
As at 31 December
2023
£’000
2022
£’000
Note
27,145
14,812
21,24
22
25
23
23
23
23
5
23, 5(b)(i)
23
3, 4, 17
4
3
50,301
(4,758)
1,677
3,266
3,852
(1,600)
29
113
(2,816)
4,553
45,068
622
100,307
(152)
(1,803)
1,795
(160)
(50,104)
3,721
(2,558)
–
(48,941)
78,351
(115,090)
(779)
(888)
960
(115,797)
48,040
(1,516)
(3,356)
1,499
3,704
(300)
47
(202)
119
(9,692)
40,006
2,137
80,486
(1,228)
(16,118)
20,772
3,426
(43,520)
1,728
(311)
87
(42,016)
56,708
(90,870)
(386)
(403)
(4,695)
(96,354)
Cash flows from financing activities:
Proceeds from loans and borrowings
Buy-back of Income Units previously sold to private investors
Interest rate cap
Dividend payment
Dividend payment by a subsidiary to non-controlling shareholders
Repayment of loans and borrowings
Repayment of leases
Net proceeds from transactions with non-controlling interest
Purchase of treasury shares
Exercise of options settled in cash
Net cash provided by financing activities
Increase (decrease) in cash and cash equivalents
Net foreign exchange differences
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Non-cash items:
Lease additions and lease re-measurement
Outstanding payable on investments in property, plant and equipment
Receivables in respect of transaction with non-controlling interests
The accompanying notes are an integral part of the consolidated financial statements.
Note
29(a)
As at 31 December
2023
£’000
2022
£’000
65,265
(5,609)
(4,080)
(11,897)
(1,436)
(31,717)
(4,095)
21,471
(1,621)
70
26,351
(11,095)
(2,078)
163,589
150,416
106,879
(4,887)
–
(1,278)
–
(31,087)
(4,890)
(672)
(2,098)
–
61,967
22,321
4,466
136,802
163,589
11,166
13,934
7,044
14,499
5,786
–
154
155
PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report Notes to Consolidated Financial Statements
for the year ended 31 December 2023
Note 1 General
The consolidated financial statements of
PPHE Hotel Group Limited (the ‘Company’)
and its subsidiaries (together the ‘Group’)
for the year ended 31 December 2023
were authorised for issuance in
accordance with a resolution of
the Directors on 28 February 2024.
The Company was incorporated in
Guernsey on 14 June 2007 and is listed
on the Premium Listing segment of the
Official List of the UK Listing Authority
(the UKLA) and the shares are traded
on the Main Market for listed securities
of the London Stock Exchange.
a. Description of the Group business:
The Group is an international hospitality
real estate group, which owns, co-owns
and develops hotels, resorts and
campsites, operates the Park Plaza®
brand in EMEA and owns and operates
the art’otel® brand.
The Group has interests in hotels in
the United Kingdom, the Netherlands,
Germany, Hungary, Serbia, Italy and
Austria and hotels, self-catering
apartment complexes and campsites
in Croatia.
Assessment of going concern and liquidity:
b.
As part of their ongoing responsibilities,
the Directors have recently undertaken
a thorough review of the Group’s cash
flow forecast and potential liquidity
risks. Detailed budgets and cash flow
projections, which take into account the
current trading environment and the
industry-wide cost pressures, have been
prepared for 2024 and 2025, and show
that the Group’s hotel operations are
expected to be cash generative during
this period. Furthermore, under those
cash flow projections it is expected
that the Group will comply with its loan
covenants. Having reviewed those
cash flow projections, the Directors
have determined that the Company is
likely to continue in business for at least
12 months from the date of approval of
the consolidated financial statements.
Note 2 Accounting policies
a. Basis of preparation
The consolidated financial statements
of the Group have been prepared on a
historical cost basis, except for derivative
financial instruments and investments in
marketable securities which are measured
at fair value. The consolidated financial
statements are presented in Pound
Sterling and all values are rounded to
the nearest thousand (£’000) except
where otherwise indicated.
Statement of compliance
The consolidated financial statements
of the Group have been prepared in
accordance with International Financial
Reporting Standards (IFRS) which
comprise standards and interpretations
issued by the International Accounting
Standards Board (IASB) and International
Financial Reporting Standards
Interpretations Committee (IFRIC) and
adopted by the European Union.
The accounting policies used in preparing
the consolidated financial statements for
the years ended 31 December 2023 and
2022 are set out below. These accounting
policies have been consistently applied to
the periods presented, except where
otherwise indicated.
b.
Significant accounting judgements, estimates
and assumptions
The preparation of the Group’s consolidated
financial statements requires management
to make judgements, estimates and
assumptions that affect the reported
amounts of revenues, expenses, assets
and liabilities, and the disclosure of
contingent liabilities, at the reporting
date. However, uncertainty about
these assumptions and estimates
could result in outcomes that require
a material adjustment to the carrying
amount of the asset or liability affected
in future periods.
Judgements
In the process of applying the Group’s
accounting policies, management has
made the following judgements, which
have the most significant effect on the
amounts recognised in the consolidated
financial statements.
Financial liability in respect of Income
Units sold to private investors
In 2010, the construction of Park
Plaza Westminster Bridge London was
completed and the hotel opened to paying
customers. Out of 1,019 rooms, 535
rooms (‘Income Units’) were sold at that
time to private investors under 999-year
lease agreements. The sales transactions
are accounted for as a transaction in
which the investors, in return for the
upfront consideration paid for the Income
Units, receive 999 years of net income
from a specific revenue-generating
portion of an asset (contractual right
to a stream of future cash flows) (see
more details in Note 2(e)).
Management applied the following
professional judgment in determining
the accounting treatment for the
amounts received upfront.
As the liability to pay future cash flows
includes a component that is based on
the future net operating income (NOI)
generated by the room, management
considered whether this component
meets the definition in IFRS 9 of an
embedded derivative which needs to be
accounted for separately. According to
IFRS 9, if the changes in value arise from
a non-financial variable that is specific
to a party to the contract, then the
component does not meet the definition
of a derivative. As the NOI is generated
by a specific room and the NOI can
be affected by non-financial factors,
management concluded that this
component does not meet the
definition of an embedded derivative.
Based on its analysis of IFRS 9 and
relevant professional publications,
management considers a floating-rate
liability as an instrument with variable
cash flow amounts arising from changes
in market variables. Due to the variability
of the periodic NOI cash flows, which
reflect primarily market conditions such
as occupancy and the price charged for
the room, management views the liability
in respect of Income Units as a floating-
rate financial liability. Pursuant to IFRS 9.
B5.4.5 in respect of floating-rate financial
instruments, changes in future estimated
cash flows from the Income Units are
recognised prospectively in the period
in which they occur. As the Company is
not exposed to any risk nor receives any
benefit in respect of future changes in
NOI, management is of the view that
the application of IFRS 9.B5.4.5 is the
appropriate accounting treatment. It also
reflects the economics of the transaction
with the investors in the Income Units.
Estimates and assumptions
Management did not identify any critical
estimates included in the Group’s
consolidated financial statements
for which there is a significant risk of
resulting in a material adjustment to
the carrying amounts of assets and
liabilities within the next financial year.
Foreign currency translation
c.
The functional currency of the Company
is Pound Sterling. The consolidated
financial statements are also presented
in Pound Sterling.
Each entity of the Group determines
its own functional currency and items
included in the financial statements of
each entity are measured using that
functional currency.
Exchange differences in respect of loans
denominated in foreign currency which
were granted by the Company to its
subsidiaries are reflected in the foreign
currency translation reserve in equity,
as these loans are, in substance, a part
of the Group’s net investment in the
foreign operation.
The following exchange rates in relation
to Pound Sterling were prevailing at
reporting dates:
Financial instruments
e.
i) Financial assets
Initial recognition and measurement
Financial assets are classified, at initial
recognition, as subsequently measured
at amortised cost or fair value through
profit or loss.
As at 31 December
2023 In
Pound
Sterling
0.869
0.002
0.786
2022 In
Pound
Sterling
0.885
0.002
0.830
Euro
Hungarian Forint
US Dollar
Percentage increase (decrease) in
exchange rates at year end compared
to the previous year:
The Group initially measures a financial
asset at its fair value plus, in the case of
a financial asset not at fair value through
profit or loss, transaction costs.
Subsequent measurement
For purposes of subsequent
measurement, financial assets are
classified in two categories:
• financial assets at amortised cost
(debt instruments); and
As at 31 December
• financial assets at fair value through
2023 In %
versus
Pound
Sterling
(1.8)
2.8
(5.2)
2022 In %
versus
Pound
Sterling
5.6
(3.5)
12.2
Euro
Hungarian Forint
US Dollar
d. Property, plant and equipment
Property, plant and equipment are
measured at cost, less accumulated
depreciation and impairment losses.
Depreciation is calculated using the
straight-line method, over the shorter
of the estimated useful life of the assets
or the lease term as follows:
Hotel buildings
Furniture and equipment
Years
50 to 95
2 to 25
profit or loss.
Financial assets at amortised cost
(debt instruments)
The Group measures financial assets
at amortised cost if both of the following
conditions are met:
• the financial asset is held within a
business model with the objective of
holding financial assets in order to
collect contractual cash flows; and
• the contractual terms of the financial
asset give rise on specified dates to
cash flows that are ‘solely payments
of principal and interest’ (SPPI) on the
principal amount outstanding.
Financial assets at amortised cost are
subsequently measured using the
effective interest rate (EIR) method and
are subject to impairment. Gains and
losses are recognised in profit or loss
when the asset is derecognised, modified
or impaired.
The Group’s financial assets at amortised
cost include trade receivables and loans
to joint ventures.
156
157
PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report Notes to Consolidated Financial Statements
for the year ended 31 December 2023 – continued
Financial assets at fair value
through profit or loss
Financial assets at fair value through
profit or loss include financial assets held
for trading. Financial assets are classified
as held for trading if they are acquired for
the purpose of selling or repurchasing in
the near term. Derivatives, including
separated embedded derivatives,
are also classified as held for trading
unless they are designated as effective
hedging instruments. Financial assets
that are debt instruments may be
designated at fair value through profit
or loss on initial recognition if doing so
eliminates, or significantly reduces,
an accounting mismatch.
Financial assets at fair value through
profit or loss are carried in the statement
of financial position at fair value with net
changes in fair value recognised in the
income statement.
This category includes derivative
instruments and listed equity investments.
Dividends on listed equity investments and
Income Units (Note 6).
Impairment of financial assets
For trade receivables the Group applies
a simplified approach in calculating the
expected credit loss (ECL). Therefore, the
Group does not track changes in credit
risk, but instead recognises a loss
allowance based on lifetime ECLs at
each reporting date.
The Group considers a financial asset to
be in default when internal or external
information indicates that the Group is
unlikely to receive the outstanding
contractual amounts in full. A financial
asset is written off when there is no
reasonable expectation of recovering
the contractual cash flows.
ii) Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at
initial recognition, as financial liabilities
at fair value through profit or loss,
as measured at amortised cost (loans
and borrowings and payables) or as
derivatives designated as hedging
instruments in an effective hedge,
as appropriate.
All financial liabilities are recognised
initially at fair value and, in the case
of loans and borrowings and payables, net
of directly attributable transaction costs.
The Group’s financial liabilities include
trade and other payables, loans
and borrowings including bank
overdrafts, and derivative
financial instruments.
Subsequent measurement
The measurement of financial liabilities
depends on their classification, as
described below:
Financial liabilities at fair value through
profit or loss
Financial liabilities at fair value through
profit or loss include financial liabilities
held for trading.
Financial liabilities are classified as
held for trading if they are incurred
for the purpose of repurchasing in the
near term. This category also includes
derivative financial instruments
entered into by the Group that are
not designated as hedging instruments
in hedge relationships as defined by
IFRS 9. Separated embedded derivatives
are also classified as held for trading
unless they are designated as effective
hedging instruments.
Gains or losses on liabilities held
for trading are recognised in the
income statement.
Financial liability in respect of Income
Units sold to private investors
In 2010, the construction of Park
Plaza Westminster Bridge London was
completed and the hotel opened to paying
customers. Out of 1,019 rooms, 535
rooms (‘Income Units’) were sold at that
time to private investors under 999-year
lease agreements. The sales transactions
are accounted for as a transaction in
which the investors, in return for the
upfront consideration paid for the Income
Units, receive 999 years of net income
from a specific revenue-generating
portion of an asset (contractual right to a
stream of future cash flows). The amounts
received upfront are accounted for as a
floating rate financial liability pursuant to
IFRS 9. B5.4.5 and are being recognised
as income over the term of the lease
(i.e. 999 years). Changes in future
estimated cash flows from the Income
Units are recognised prospectively in
the period in which they occur. Since
November 2014, the Company has
bought back 52 Income Units from
private investors. Upon buy-back of a
unit, the financial liability relating to that
unit is derecognised and any difference
between the purchase price and the
liability derecognised is recorded in
profit and loss.
The entire hotel is accounted for at
cost less accumulated depreciation.
The replacement costs for the Income
Units are fully reimbursed by the private
investors. An amount of 4% of revenues is
paid by the investors on an annual basis
(‘FF&E reserve’) and is accounted for in
profit and loss. The difference between
the actual depreciation cost and the FF&E
reserve is a timing difference which is
recorded in the statement of financial
position as a receivable or liability to the
investor in each respective year.
Derecognition
A financial liability is derecognised
when the obligation under the liability
is discharged or cancelled or expires.
Inventories
f.
Inventories include china, food and
beverages and are valued at the lower
of cost and net realisable value. Cost
includes purchase cost on a first-in,
first-out basis.
fair value in offsetting the exposure to
changes in the hedged item’s fair value
or cash flows attributable to the hedged
risk. Such hedges are expected to be
highly effective in achieving offsetting
changes in fair value or cash flows and
are assessed on an ongoing basis to
determine that they actually have
been highly effective throughout
the financial reporting periods for
which they were designated.
Management fees
Management fees are earned from
hotels managed by the Group, under
long-term contracts with the hotel
owner. Management fees include a
base fee, which is generally a percentage
of hotel revenue, and an incentive fee,
which is based on the hotel’s profitability.
Revenue is recognised when earned
and realised or realisable under the
terms of the agreement.
g.
Derivative financial instruments
and hedge accounting
The Group uses derivative financial
instruments such as interest rate swaps
to hedge its risks associated with interest
rate fluctuations. Such derivative financial
instruments are initially recognised at fair
value on the date on which a derivative
contract is entered into and are subsequently
re-measured at fair value. Derivatives are
carried as assets when the fair value is
positive and as liabilities when the fair
value is negative.
Any gains or losses arising from changes
in fair value on derivatives that do not
qualify for hedge accounting are taken
directly to the income statement.
For the purpose of hedge accounting,
hedges are classified as cash flow hedges
when hedging the exposure to variability
in cash flows that is either attributable
to a particular risk associated with a
recognised asset or liability or a highly
probable forecast transaction.
At the inception of a hedge relationship,
the Group formally designates and
documents the hedge relationship to
which the Group wishes to apply hedge
accounting and the risk management
objective and strategy for undertaking
the hedge. The documentation includes
identification of the hedging instrument,
the hedged item or transaction, the
nature of the risk being hedged and how
the Group will assess the effectiveness
of changes in the hedging instrument’s
The effective portion of the gain or
loss on the hedging instrument in a
cash flow hedge is recognised directly
in other comprehensive income, while
the ineffective portion is recognised in
profit or loss. Amounts taken to other
comprehensive income are transferred
to the income statement when the hedged
transaction affects profit or loss, such
as when the hedged financial income or
financial expense is recognised.
h. Revenue from contracts with customers
Revenue from contracts with customers
is recognised when control of the goods
or services are transferred to the
customer at an amount that reflects
the consideration to which the Group
expects to be entitled in exchange
for those goods or services.
Owned, co-owned and leased hotels
Revenues are primarily derived from
hotel operations, including the rental of
rooms, food and beverage sales and
other services from owned, co-owned
and leased hotels operated under the
Group’s brand names. Revenue is
recognised when rooms are occupied,
food and beverages are sold and services
are performed.
Campsites and mobile homes
Revenues are primarily derived from
short-term rentals of campsite pitches
and mobile homes operated under the
Group’s brand names. Revenue is
recognised when campsite pitches
and/or mobile homes are occupied.
Franchise and reservation fees
Franchise and reservation fees are
received in connection with a licence
of the Group’s brand names, under
long-term contracts with the hotel
owner. The Group charges franchise
and reservation fees as a percentage
of hotel revenue. Revenue is recognised
when earned and realised or realisable
under the terms of the agreement.
Marketing fees
Marketing fees are received in connection
with the sales and marketing services
offered by the Group, under long-term
contracts with the hotel owner. The Group
charges marketing fees as a percentage
of hotel revenue. Revenue is recognised
when earned and realised or realisable
under the terms of the agreement.
Customer loyalty programme
The Group participates in the Radisson
RewardsTM customer loyalty programme
to provide customers with incentives to
buy room nights. This customer loyalty
programme is owned and operated by
the Radisson Hotel Group and therefore
the entity retains no obligations in respect
of the award credits other than to pay
Radisson Hotel Group for the award credits
purchased and granted to customers. The
customers are entitled to utilise the awards
as soon as they are granted.
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for the year ended 31 December 2023 – continued
The Group purchases these award
credits from Radisson Hotel Group and
issues these to its customers in order
to enhance its customer relationships
rather than to earn a margin from the
sale of these award credits. The Group
concluded that it is acting as principal
in this transaction and, in substance, is
earning revenue from supplying these
awards to its customers. The Group
measures these revenues at fair
value and recognises these gross
from the costs of participating in
the programme.
Contract balances
Trade receivables-contract assets
A receivable represents the Group’s
right to an amount of consideration that
is unconditional (i.e. only the passage of
time is required before payment of the
consideration is due).
Advance payments received
– contract liabilities
A contract liability is the obligation
to transfer goods or services to a
customer for which the Group has
received consideration (or an amount of
consideration is due) from the customer.
If a customer pays consideration before
the Group transfers goods or services to
the customer, a contract liability (advance
payments received) is recognised when
the payment is made or the payment is
due (whichever is earlier). Contract
liabilities are recognised as revenue when
the Group performs under the contract.
i.
Alternative Performance Measures
EBITDAR
Earnings before interest (Financial income
and expenses), tax, depreciation and
amortisation, impairment loss, rental
expenses, share in results of joint ventures
and exceptional items presented as other
income and expense.
EBITDA
Earnings before interest (Financial
income and expenses), tax, depreciation
and amortisation, impairment loss,
share in results of joint ventures and
exceptional items presented as other
income and expense.
EBIT
Earnings before interest (Financial income
and expenses), tax, share in results of joint
ventures and exceptional items presented
as other income and expense.
Leases
j.
The Group as lessee
The Group applies a single recognition
and measurement approach for all leases,
except for short-term leases and leases
of low-value assets. The Group recognises
lease liabilities to make lease payments
and right-of-use assets representing
the right to use the underlying assets.
Right-of-use assets
Right-of-use assets are measured at cost,
less any accumulated depreciation and
impairment losses, and adjusted for any
re-measurement of lease liabilities. The
cost of right-of-use assets includes the
amount of lease liabilities recognised,
initial direct costs incurred, and lease
payments made at or before the
commencement date less any lease
incentives received. Right-of-use assets
are depreciated on a straight-line basis
over the shorter of the lease term and
the estimated useful lives of the assets,
as follows:
Land
Hotel buildings
Offices and storage
Furniture and equipment
Years
50 to 200
5 to 95
1 to 12
2 to 25
Lease liabilities
At the commencement date of the lease,
the Group recognises lease liabilities
measured at the present value of lease
payments to be made over the lease term.
The lease payments include the expected
payments of penalties for terminating the
lease, if the lease term reflects the Group
exercising the option to terminate.
In calculating the present value of lease
payments, the Group uses its incremental
borrowing rate at the lease commencement
date because the interest rate implicit
in the lease is not readily determinable.
The carrying amount of lease liabilities
is re-measured if there is a modification,
a change in the lease term, a change in
the lease payments (e.g. changes to future
payments resulting from a change in an
index or rate used to determine such lease
payments) or a change in the assessment of
an option to purchase the underlying asset.
The Group’s lease liabilities are included
in Other financial liabilities (see Note 16).
Variable lease payments that depend
on an index or rate:
On the commencement date, the Company
uses the index or rate prevailing on the
commencement date to calculate the
future lease payments.
For leases in which the Company is
the lessee, the aggregate changes in
future lease payments resulting from
a change in the index or rate (including
changes following a market rent review)
are discounted (without a change in the
discount rate applicable to the lease
liability) and recorded as an adjustment
of the lease liability and the right-of-use
asset, only when there is a change
in the cash flows resulting from the
change in the index or rate (that is,
when the adjustment to the lease
payments takes effect).
Variable lease payments:
Variable lease payments that do not
depend on an index or interest rate but
are based on performance or usage are
recognised as rent expense as incurred
when the Company is the lessee, and are
recognised as income as earned when
the Company is the lessor.
Lease extension and termination options:
A non-cancellable lease term includes
both the periods covered by an option
to extend the lease when it is reasonably
certain that the extension option will be
exercised and the periods covered by
a lease termination option when it is
reasonably certain that the termination
option will not be exercised.
Short-term leases and leases
of low-value assets
The Group applies the short-term lease
recognition exemption to its short-term
leases of furniture and equipment
(i.e. those leases that have a lease term of
12 months or less from the commencement
date and do not contain a purchase option).
It also applies the lease of low-value assets
recognition exemption to leases of office
equipment that are considered to be low
value. Lease payments on short-term
leases and leases of low-value assets are
recognised as expense on a straight-line
basis over the lease term.
Employee benefits
k.
Share-based payments
The Board has adopted a share option plan,
under which employees and Directors of
the Group receive remuneration in the
form of share-based payment transactions,
whereby employees render services as
consideration for equity instruments
(equity-settled transactions).
The cost of equity-settled transactions
with employees is measured by reference
to the fair value at the date on which they
are granted. The fair value is determined
by using an appropriate pricing model,
further details of which are given in
Note 11.
Pension
The Group has a defined contribution
pension plan where the employer is
liable only for the employer’s part of
the contribution towards an individual’s
pension plan.
The Group will have no legal obligation
to pay further contributions. The
contributions in the defined contribution
plan are recognised as an expense and
no additional provision is required in
the consolidated financial statements.
Provisions
l.
Provisions are recognised when the
Group has a present obligation (legal or
constructive) as a result of a past event,
it is probable that an outflow of resources
embodying economic benefits will be
required to settle the obligation and
a reliable estimate can be made of the
amount of the obligation.
m. Borrowing costs for qualifying assets
Borrowing costs directly attributable
to the acquisition, construction or
production of an asset that necessarily
takes a substantial period of time to get
ready for its intended use or sale are
capitalised as part of the cost of the asset.
All other borrowing costs are expensed in
the period in which they occur. Borrowing
costs consist of interest and other costs
that an entity incurs in connection with
the borrowing of funds.
n. Taxation
Deferred income tax
Deferred income tax is provided using the
liability method on temporary differences
at the reporting date between the tax
bases of assets and liabilities and their
carrying amounts for financial reporting
purposes. Deferred tax liabilities are
recognised for all taxable temporary
differences, except in respect of taxable
temporary differences associated with
investments in subsidiaries, associates
and jointly controlled entities, where the
timing of the reversal of the temporary
differences can be controlled and it is
probable that the temporary differences
will not reverse in the foreseeable future.
Deferred tax assets are recognised to
the extent that it is probable that taxable
profit will be available against which the
deductible temporary differences and
the carry forward of unused tax losses
can be utilised.
The carrying amount of deferred income
tax assets is reviewed at each reporting
date and reduced to the extent that it is
no longer probable that sufficient taxable
profit will be available to allow all or part
of the deferred income tax asset to be
utilised. Unrecognised deferred income
tax assets are re-assessed at each
reporting date and are recognised to
the extent that it has become probable
that future taxable profit will allow the
deferred tax asset to be recovered.
Deferred tax assets and liabilities are
measured at the tax rates that are
expected to apply in the year when the
asset is realised or the liability is settled,
based on tax rates (and tax laws) that
have been enacted or substantively
enacted at the reporting date.
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Notes to Consolidated Financial Statements
for the year ended 31 December 2023 – continued
Disclosure of Accounting Policies –
Amendments to IAS 1 and IFRS
Practice Statement 2
The amendments to IAS 1 and IFRS
Practice Statement 2 Making Materiality
Judgements provide guidance and
examples to help entities apply materiality
judgements to accounting policy
disclosures. The amendments aim to
help entities provide accounting policy
disclosures that are more useful by
replacing the requirement for entities
to disclose their ‘significant’ accounting
policies with a requirement to disclose
their ‘material’ accounting policies and
adding guidance on how entities apply the
concept of materiality in making decisions
about accounting policy disclosures.
The amendments have had an impact on
the Group’s disclosures of accounting
policies, but not on the measurement,
recognition or presentation of any items
in the Group’s financial statements.
Deferred Tax related to Assets and
Liabilities arising from a Single
Transaction – Amendments to IAS 12
The amendments to IAS 12 Income
Tax narrow the scope of the initial
recognition exception, so that it no longer
applies to transactions that give rise to
equal taxable and deductible temporary
differences such as leases and
decommissioning liabilities.
The amendments had no impact on the
Group’s consolidated financial statements
as the Group is not in scope of the Pillar
Two model rules as its annual revenues
are less than €750 million.
Deferred tax assets and deferred tax
liabilities are offset, if a legally enforceable
right exists to set off current tax assets
against current tax liabilities and the
deferred taxes relate to the same taxable
entity and the same taxation authority.
o. Government grants
Government grants are recognised
where there is reasonable assurance
that the grant will be received and all
attached conditions will be complied with.
When the grant relates to an expense
item, it is recognised as income on a
systematic basis over the periods that
the related costs, for which it is intended
to compensate. The income from the
government grants is netted off against
the operating expenses account in the
income statement.
p. Changes in accounting policies and disclosures
The Group applied for the first time
certain standards and amendments,
which are effective for annual periods
beginning on or after 1 January 2023.
Several other amendments and
interpretations apply for the first time
in 2023, but do not have an impact on
the consolidated financial statements
of the Group. The Group has not
early adopted any other standard,
interpretation or amendment that
has been issued but is not yet effective.
Definition of Accounting Estimates –
Amendments to IAS 8
The amendments to IAS 8 clarify the
distinction between changes in accounting
estimates, changes in accounting policies
and the correction of errors. They also
clarify how entities use measurement
techniques and inputs to develop
accounting estimates.
The amendments had no impact
on the Group’s consolidated
financial statements.
International Tax Reform—Pillar Two
Model Rules – Amendments to IAS 12
The amendments to IAS 12 have been
introduced in response to the OECD’s
BEPS Pillar Two rules and include:
• a mandatory temporary exception
to the recognition and disclosure
of deferred taxes arising from
the jurisdictional implementation
of the Pillar Two model rules; and
• disclosure requirements for affected
entities to help users of the financial
statements better understand an
entity’s exposure to Pillar Two income
taxes arising from that legislation,
particularly before its effective date.
The mandatory temporary exception
– the use of which is required to be
disclosed – applies immediately. The
remaining disclosure requirements
apply for annual reporting periods
beginning on or after 1 January 2023,
but not for any interim periods ending
on or before 31 December 2023.
The amendments had no impact on the
Group’s consolidated financial statements
as the Group is not in scope of the Pillar
Two model rules as its revenue is less than
€750 million/year.
Standards issued but not yet applied
q.
Standards issued but not yet effective,
or subject to adoption by the European
Union, up to the date of issuance of the
consolidated financial statements are
listed below. This listing of standards
issued are those that the Group
reasonably expects to have an impact
on disclosures, financial position or
performance when applied at a future
date. The Group intends to adopt these
standards when they become mandatory.
The following standards have been
issued by the IASB and are not yet
effective or are subject to adoption
by the European Union:
Amendments to IAS 1: Classification of
Liabilities as Current or Non-current
In January 2020 and October 2022,
the IASB issued amendments to
paragraphs 69 to 76 of IAS 1 to specify
the requirements for classifying
liabilities as current or non-current.
The amendments clarify:
• What is meant by a right to defer settlement
• That a right to defer must exist at the
end of the reporting period
• That classification is unaffected by
the likelihood that an entity will exercise
its deferral right
• That only if an embedded derivative in
a convertible liability is itself an equity
instrument would the terms of a liability
not impact its classification
In addition, a requirement has been
introduced to require disclosure when a
liability arising from a loan agreement is
classified as non-current and the entity’s
right to defer settlement is contingent on
compliance with future covenants within
12 months.
The amendments are effective for annual
reporting periods beginning on or after
1 January 2024 and must be applied
retrospectively. The Group is currently
assessing the impact the amendments
will have on current practice and
whether existing loan agreements
may require renegotiation.
Amendments to IAS 21: The Effects
of Changes in Foreign Exchange Rates
In August 2023, the IASB issued
‘Amendments to IAS 21: Lack of
Exchangeability (Amendments to IAS
21, “The Effects of Changes in Foreign
Exchange Rates”)’ (‘the Amendments’)
to clarify how an entity should assess
whether a currency is exchangeable
and how it should measure and
determine a spot exchange rate
when exchangeability is lacking.
The Amendments set out the
requirements for determining the
spot exchange rate when a currency
lacks exchangeability. The Amendments
require disclosure of information that
will enable users of financial statements
to understand how a currency not
being exchangeable affects or is
expected to affect the entity’s
financial performance, financial
position and cash flows.
The Amendments apply for annual
reporting periods beginning on or
after 1 January 2025. Earlier adoption
is permitted.
The Company believes that the
Amendments are not expected to have
a material impact on its consolidated
financial statements.
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for the year ended 31 December 2023 – continued
Note 3 Intangible assets
Cost:
Balance as at 1 January 2023
Additions
Reclassification
Adjustment for exchange rate differences
Balance as at 31 December 2023
Accumulated amortisation:
Balance as at 1 January 2023
Amortisation
Reclassification
Adjustment for exchange rate differences
Balance as at 31 December 2023
Net book value as at 31 December 2023
Cost:
Balance as at 1 January 2022
Additions
Disposals
Adjustment for exchange rate differences
Balance as at 31 December 2022
Accumulated amortisation:
Balance as at 1 January 2022
Disposals
Amortisation
Adjustment for exchange rate differences
Balance as at 31 December 2022
Net book value as at 31 December 2022
Park Plaza®
Hotels &
Resorts
management
rights (a)1
£’000
Park Plaza®
Hotels &
Resorts
franchise
rights (a)2
£’000
art’otel®
franchise
rights (b)
£’000
Other
intangible
assets (c)
£’000
21,195
–
–
(390)
20,805
16,393
1,048
–
(302)
17,139
3,666
20,063
–
–
1,132
21,195
14,507
–
1,029
857
16,393
4,802
21,667
–
–
(399)
21,268
16,827
1,055
–
(311)
17,571
3,697
20,510
–
–
1,157
21,667
14,909
–
1,037
881
16,827
4,840
3,849
–
–
(72)
3,777
2,226
189
–
(41)
2,374
1,403
3,643
–
–
206
3,849
1,925
–
185
116
2,226
1,623
3,859
771
(58)
(71)
4,501
2,319
391
(58)
(50)
2,602
1,899
3,291
386
(15)
197
3,859
1,876
(15)
340
118
2,319
1,540
Total
£’000
50,570
771
(58)
(932)
50,351
37,765
2,683
(58)
(704)
39,686
10,665
47,507
386
(15)
2,692
50,570
33,217
(15)
2,591
1,972
37,765
12,805
a. Acquisition of Park Plaza® Hotels & Resorts management and franchise rights and lease rights
(1) Management rights – rights held by the Group relating to the management of Park Plaza® Hotels & Resorts in Europe, the Middle
East and Africa. The management rights are included in the consolidated financial statements at their fair value as at the date of
acquisition and are being amortised over a 20-year period based on the terms of the existing contracts and management
estimation of their useful life. The remaining amortisation period is 3.5 years.
(2) Franchise rights relating to the brand ‘Park Plaza® Hotels & Resorts’ are included in the consolidated financial statements at their
fair value as at the date of acquisition and are being amortised over a 20-year period based on management’s estimation of their
useful life. The remaining amortisation period is 3.5 years.
b. Acquisition of art’otel® rights
In 2007, the Group acquired from CCS Capital Concept Services Gmbh (the ‘vendor’) the worldwide rights to use the art’otel® brand
name for an unlimited period of time. The rights are being amortised over a 20-year period based on management’s estimation of
their useful life. The remaining amortisation period is 3.5 years. In December 2020, the Group acquired certain rights which were
assigned to the vendor under the original agreement for a cash consideration of €0.3 million (£0.2 million) and 80,000 shares of the
Company. The additional rights are amortised based on management’s estimation of their useful life.
c. Other intangible assets
These mainly include the brand name and internal domain obtained in the acquisition of Arena, which are being amortised over
20 years based on management’s estimation of their useful life, and software which are amortised over 4 years.
Impairment
d.
In 2023, there were no indicators of impairment.
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for the year ended 31 December 2023 – continued
Note 4 Property, plant and equipment
Cost:
Balance as at 1 January 2023
Additions during the year
Disposal
Buy-back of Income Units sold to private investors
Reclassification2
Adjustment for exchange rate differences
Balance as at 31 December 2023
Accumulated depreciation and impairment:
Balance as at 1 January 2023
Provision for depreciation
Disposal
Reclassification
Buy-back of Income Units sold to private investors
Adjustment for exchange rate differences
Balance as at 31 December 2023
Net book value as at 31 December 2023
Cost:
Balance as at 1 January 2022
Additions during the year
Disposal
Buy-back of Income Units sold to private investors
Reclassification2
Adjustment for exchange rate differences
Balance as at 31 December 2022
Accumulated depreciation and impairment:
Balance as at 1 January 2022
Provision for depreciation
Disposal
Reclassification
Buy-back of Income Units sold to private investors
Adjustment for exchange rate differences
Balance as at 31 December 2022
Net book value as at 31 December 2022
Land
£’000
362,830
–
–
873
–
(5,358)
358,345
17,099
321
–
–
–
(509)
16,911
341,434
348,614
–
–
427
(22)
13,811
362,830
15,669
316
–
–
–
1,114
17,099
345,731
Hotel
buildings
£’000
Property &
assets under
construction
£’000
Income Units
sold to private
investors1
£’000
Furniture,
fixtures and
equipment
£’000
779,763
23,289
(423)
6,316
9,607
(7,872)
810,680
125,289
18,487
(420)
915
878
(1,260)
143,889
666,791
717,296
13,337
(94)
3,082
24,119
22,023
779,763
106,255
15,420
(94)
15
402
3,291
125,289
654,474
154,027
91,209
–
–
(11,992)
(357)
232,887
–
–
–
–
–
–
–
232,887
45,725
72,856
–
–
33,985
1,461
154,027
–
–
–
–
–
–
–
154,027
134,719
1,276
–
(7,847)
–
–
128,148
23,765
1,181
–
–
(1,417)
–
23,529
104,619
137,902
623
–
(3,806)
–
–
134,719
23,237
1,190
–
–
(662)
–
23,765
110,954
222,883
9,800
(399)
658
2,217
(1,786)
233,373
152,885
15,219
(352)
(1,083)
539
(934)
166,274
67,099
268,129
8,050
(372)
297
(58,082)
4,861
222,883
136,505
13,936
(325)
(15)
260
2,524
152,885
69,998
Total
£’000
1,654,222
125,574
(822)
–
(168)
(15,373)
1,763,433
319,038
35,208
(772)
(168)
–
(2,703)
350,603
1,412,830
1,517,666
94,866
(466)
–
–
42,156
1,654,222
281,666
30,862
(419)
–
–
6,929
319,038
1,335,184
1 This includes 459 rooms (2022: 483) in Park Plaza Westminster Bridge London, for which the cash flows, derived from the net income generated by these Income Units,
2
were sold to private investors (see Note 2(e)). The proceeds from the purchases have been accounted for as a variable rate financial liability (see Note 15).
In 2023 the reclassification mainly relates to the completion of the construction of art’otel Zagreb and the refurbishment of Park Plaza Budapest. In 2022 the amount
mainly includes a reclassification of c.£64.2 million from Furniture, fixtures and equipment to Property & assets under construction on account of additions that relate
to the construction of art’otel London Hoxton until December 2021 and a reclassification of c.£30.0 million due to the completion of the construction of Grand Hotel Brioni
Pula from Property & assets under construction to Furniture, fixtures and equipment and Hotel buildings.
a.
For information regarding liens, see Note 12
Impairment
b.
In 2023, there were no indicators for impairment.
c. Capitalised borrowing costs
On 7 April 2020, the Group entered into a building contract to develop art’otel London Hoxton on a site located by Old Street,
Rivington Street, Great Eastern Street and Bath Place, London EC1, which is expected to be completed in H1 2024 (see Note 28(c)(i)).
The cumulative expenditure for this project as at 31 December 2023 was £199.8 million (2022: £125.4 million). The amount of
borrowing costs capitalised related to this project during the year ended 31 December 2023 was £8.1 million (2022: £3.5 million).
The rate used to determine the amount of borrowing costs eligible for capitalisation was 5.2%, which is the effective interest rate
of the specific borrowing.
Additional borrowing costs were capitalised as part of the refurbishment of the property in Rome Italy which is expected to reopen in
H1 2024. The amount of borrowing costs capitalised related to this project during the year ended 31 December 2023 was €0.9 million
(£0.8 million). The rate used to determine the amount of borrowing costs eligible for capitalisation was 3.8%, which is the effective
interest rate of the specific borrowing.
Note 5 Investment in joint ventures and subsidiaries with significant non-controlling interests
a.
Investment in joint ventures
Loans to joint ventures1
Share of net assets under equity method
Investment in joint ventures
1 The loans to joint ventures amount includes a euro loan bearing an interest of Euribor +2.5% per annum.
The share in net profit amounts to £113 thousand (2022: net loss of £202 thousand).
As at 31 December
2023
£’000
6,515
(1,077)
5,438
2022
£’000
5,573
(612)
4,961
Summarised financial information of subsidiary with material non-controlling interests
b.
(i) Signature Top Ltd
Long-term partnership for 49% of Park Plaza London Riverbank and art’otel London Hoxton development project
On 23 June 2021, a wholly owned subsidiary of PPHE Hotel Group entered into a sale and purchase agreement with Clal Insurance
(‘Clal’), one of Israel’s leading insurance and long-term savings companies. As part of this agreement, Clal became a minority partner
and owner of 49% of the shares of Signature Top Ltd, a wholly owned subsidiary of the Group (‘Signature Top’) which indirectly holds
the real estate and operations of both the 646-room Park Plaza London Riverbank (‘Riverbank’) and the 357-room art’otel London
Hoxton development project (‘Hoxton’), which is scheduled to open in 2024.
As part of this agreement, Clal was granted five million share appreciation rights (SAR) of the Company which has a seven-year
maturity with a strike price of £16 per share and a cap of £21 per share. The SAR will vest as follows:
• 500,000 SAR Units shall vest and become exercisable on the first anniversary of the completion of the sale and purchase
agreement (‘Completion’)
• 500,000 SAR Units shall vest and become exercisable on the date being 18 months after Completion
• The remaining four million SAR Units shall vest and become exercisable on the second anniversary of Completion
Upon exercise, the Company will have a right to determine whether an amount equal to the SAR Value as of the date of the exercise
will be satisfied by a payment of cash or by the issuance of the Company’s shares.
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for the year ended 31 December 2023 – continued
The SAR instrument, which is included in Level 2 in the fair value hierarchy, was valued internally at an amount of £2.7 million
(2022: £5.5 million) using the Black–Scholes model and is included in current liabilities under Other payables and accruals in the
Group’s consolidated balance sheet. The following lists the inputs used for the fair value measurement:
Dividend yield
Expected volatility of the share price
Risk-free interest rate
Years to expiration
3.138%
24.82%
3.657%
4.5 years
During the reporting period, the expected construction costs of art’otel London Hoxton have increased mainly due to the interest to
be incurred throughout the construction phase. On 27 April 2023, both the Group and Clal mutually agreed that the sharing of these
cost referred to above with a cap of £25.7 million, which is the expected amount of the overruns, would be funded by 65% from the
Group and 35% from Clal. In 2023 the parties contributed £16.0 million. The excess consideration of £2.2 million paid by the Group was
recognised as a reduction in the equity of the parent company. The Group has chosen to recognise this amount in accumulated earnings.
As at 31 December 2023, the Group owned 51% (2022: 51%) of Signature Top Ltd. The amount of accumulated non-controlling
interests as at 31 December 2023 amounts to £98,518 thousand (2022: £89,393 thousand) and the income and comprehensive
income allocated to the non-controlling interests in 2023 amounts to £3,449 thousand (2022: £2,465 thousand) and £1,281 thousand
(2022: £12,077 thousand) respectively.
Below is selected financial information relating to the long-term partnership with Clal, as at 31 December 2023 and 2022, and for the
years ended 31 December 2023 and 31 December 2022.
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Revenue
EBITDA
Profit for the period
Total comprehensive income
2023
£’000
456,094
26,577
260,928
20,686
46,273
14,862
7,040
2,614
2022
£’000
382,778
13,437
202,940
10,840
37,196
10,968
5,030
24,646
(ii) Arena Hospitality Group d.d.
As at 31 December 2023, the Group owned approximately 53.8% (2022: 53.2%) of Arena Hospitality Group d.d. (‘Arena’). During 2023,
the Company purchased 20,000 shares of Arena for a consideration of €0.6 million (£0.6 million) and Arena purchased 16,467 of its
own shares for a consideration of €0.5 million (£0.5 million). The difference between the adjustment of the non-controlling interests
and the net consideration paid of approximately €0.5 million (£0.4 million) was recorded in retained earnings. As a result of those
transactions, the Group’s share in Arena increased to 53.8%.
The amount of accumulated non-controlling interests as at 31 December 2023 amounts to £95,496 thousand (2022: £98,794 thousand)
and the income and comprehensive income allocated to the non-controlling interests in 2023 amounts to £1,775 thousand
(2022: £2,188 thousand) and loss of £495 thousand (2022: profit of £8,136 thousand) respectively.
Below is selected financial information relating to Arena, as of 31 December 2023 and 2022, and for the years ended 31 December
2023 and 2022.
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Revenue
EBITDA
Profit for the period
Total comprehensive loss
As at 31 December
2023
£’000
382,010
49,645
180,281
44,787
109,927
24,371
3,776
(1,093)
2022
£’000
373,543
69,204
192,894
38,755
93,469
26,616
4,543
17,242
(iii) European Hospitality Real Estate Fund
In March 2023, the Group launched a new European Hospitality Real Estate Fund (‘the Fund’) with a target size of up to €250 million.
Clal Insurance (‘Clal’), one of Israel’s leading insurance and long-term savings companies, participated as a cornerstone investor,
committing up to €75 million (limited to 49% of total participation). The Group also committed to invest up to €50 million in the Fund.
As part of the agreement signed with Clal, it was decided to incorporate the Fund under Signature Top II Ltd (‘Signature Top II’), a UK
incorporated company, with a 51% ownership by the Group and 49% by Clal, until additional investors join. At the inception of the Fund,
PPHE contributed the shares of Società Immobiliare Alessandro De Gasperis S.r.l., the owner of the Londra & Cargill Hotel in Rome,
Italy (‘Londra’), valued at €29.3 million (£25.8 million), for its 51% participation in Signature Top II. Clal made an initial cash contribution
of €28.1 million (£24.8 million), payable at the Group’s request, for its 49% participation. As of the reporting date, Clal transferred
€20 million out of the €28.1 million and the additional €8.1 million was transferred after the reporting date. The Group has assessed
the transaction and determined that it exercises control over Signature Top II. Consequently, the change in the ownership interest
of Londra does not trigger a change of control and is therefore accounted for as an equity transaction in accordance with IFRS 10
Consolidated Financial Statements. The excess of consideration received over the carrying amount of the non-controlling interests
(net of £0.8 million in transaction costs) amounting to £0.4 million is recognised in the parent company’s equity. The Group has chosen
to recognise this amount in accumulated earnings. Additionally, £0.7 million was reclassified from the foreign currency translation
reserve and hedging reserve to accumulated earnings.
Throughout the year the Group engaged with investment bankers to raise the remaining equity for the Fund, however the significant
changes in the interest rate market during this period has resulted that the Group was not successful in signing up new investors. If
further investors do not join the Fund by 13 March 2024 (unless mutually extended), the Fund will carry on as a joint venture with Clal.
The Group may top up its own equity contribution (currently at up to €50 million) to €78 million to give the total joint venture a circa
€150 million equity value. With full equity subscription combined with a targeted 50% bank leverage, the investment potential of the
joint venture will then be around €300 million.
As at 31 December 2023, the Group owned 51% of Signature Top II. The amount of accumulated non-controlling interests as at
31 December 2023 amounts to £22,578 thousand and the loss and comprehensive loss allocated to the non-controlling interests in
2023 amounts to £495 thousand and £923 thousand respectively.
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for the year ended 31 December 2023 – continued
Note 6 Other non-current assets
c. As at 31 December, the ageing analysis of trade receivables is as follows:
Income Units in Park Plaza County Hall London1
Rent security deposits
Derivative financial instruments (see Note 29(a))
Other non-current assets
As at 31 December
2023
£’000
17,700
363
21,300
283
39,646
2022
£’000
16,100
358
30,539
248
47,245
1 On 14 July 2017, the Group acquired an ownership interest in Park Plaza County Hall London through its purchase of 44 aparthotel units and the associated shares in
the management company of the hotel, South Bank Hotel Management Company Limited. The purchase price was £16.0 million. In October 2017, an additional two units
were purchased for £0.7 million. Upon initial recognition, the investment was designated in the consolidated financial statements at fair value through profit and loss. In
return for the consideration paid, the Company receives 999 years of net income from specific revenue-generating units of the hotel (contractual right to a stream of
future cash flows). This investment is managed and its performance is evaluated by the Group management on a fair value basis in accordance with the Group investment
strategy. As the cash flows from this investment are not solely payments of principal and interest, under IFRS 9 the investment is classified and measured at fair value
through profit or loss. The fair value of the Income Units as of the reporting date was £17.7 million based on an independent valuation prepared by Savills using a cap
rate of 7.25%.
Note 7 Trade receivables
a. Composition:
Trade receivables
Less – allowance for doubtful debts
As at 31 December
2023
£’000
18,417
(537)
17,880
2022
£’000
19,214
(681)
18,533
Trade receivables are non-interest bearing. The Group’s policy provides an average of 30 days’ payment terms.
b. Movements in the allowance for doubtful accounts were as follows:
2023
Trade receivables
Allowance for doubtful debts
2022
Trade receivables
Allowance for doubtful debts
Note 8 Other receivables and prepayments
Prepaid expenses
VAT
Related parties
Funds to be received from Clal (see Note 5 (iii))
Derivative financial instruments short term
Escrow account1
Others
Total
£’000
Not past due
£’000
< 30 days
£’000
31 to 60 days
£’000
61 to 90 days
£’000
18,417
(537)
17,880
9,788
7,082
9,788
7,082
697
697
148
148
Total
£’000
Not past due
£’000
< 30 days
£’000
31 to 60 days
£’000
61 to 90 days
£’000
19,214
(681)
18,533
8,824
7,633
1,317
8,824
7,633
1,317
474
474
Past due
> 90 days
£’000
702
(537)
165
Past due
> 90 days
£’000
966
(681)
285
As at 31 December
2023
£’000
8,066
6,120
65
7,044
1,677
–
288
23,260
2022
£’000
7,296
4,706
100
–
–
4,666
1,098
17,866
As at 1 January 2023
Write-off
Additions
Exchange rate differences
As at 31 December 2023
As at 1 January 2022
Write-off
Additions
Exchange rate differences
As at 31 December 2022
1 Funds for the acquisition of 12 Park Plaza Westminster Bridge London units that were transferred to an escrow account. In 2023, the acquisition was finalised.
Note 9 Cash and cash equivalents
Cash at banks earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods
of between one day and three months, depending on the immediate cash requirements of the Group, and earn interest at the
respective short-term deposit rates.
2023
£’000
(681)
261
(124)
7
(537)
(890)
320
(85)
(26)
(681)
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for the year ended 31 December 2023 – continued
Note 10 Equity
a.
Share capital
The authorised share capital of the Company is represented by an unlimited number of ordinary shares with no par value.
2020 PPHE Executive Share Option Plan
The Board has adopted a ‘2020 PPHE Executive Share Option Plan’, under which employees of the Company and its subsidiaries
receive remuneration in the form of share-based compensation. The plan has the following principal terms:
As at 31 December 2023, the number of ordinary shares issued was 44,347,410 (2022: 44,347,410), 1,984,110 of which were held
as treasury shares (2022: 1,909,042).
The Company’s shares are admitted to the Premium Listing segment of the Official List of the UK Listing Authority and to trading
on the Main Market for listed securities of the London Stock Exchange.
b. Treasury shares
During 2023, the Company issued 63,502 of its ordinary shares from its treasury account for a consideration of £70 thousand
in order to satisfy an exercise of options. As a result, the cost of the treasury shares in excess of the consideration received
(£150 thousand ) was charged to the share premium account.
On 28 June 2022, the Company’s Board of Directors approved the commencement of a share buy-back programme to buy up to
a maximum of 300,000 ordinary shares for an aggregate consideration (excluding expenses) of up to a maximum of £1.7 million.
On 18 November 2022, this share buy-back programme was further extended to buy up to a maximum of 500,000 ordinary shares
for an aggregate consideration (excluding expenses) of up to a maximum of £3.7 million. In 2022 and 2023, the Company completed
a purchase of 295,707 shares under this programme for a total consideration of £3.7 million, representing an average price of
1,257 pence per share.
The total number of treasury shares as at 31 December 2023 is 1,984,110 (2022: 1,909,042).
c. Nature and purpose of reserves
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial
statements of foreign operations.
Hedging reserve
This reserve comprises the gain or loss on a hedging instrument in a cash flow hedge that is determined to be an effective hedge.
Note 11 Share-based payments
The Company operates two option plans for the benefits of employees of the Group: the first was adopted in 2007 and the second
was adopted in 2020.
2007 Option Plan
The 2007 Plan has two types of options: Option A and Option B. The exercise price of both options will not be less than the closing
price of a share on the dealing day immediately preceding the grant date (as published in the Daily Official List of the London Stock
Exchange). Option A vests over a period of three years from the grant date and Option B vests at the end of three years from the
grant date. Unexercised options expire ten years after the grant date. The plan does not include any performance conditions.
As at 31 December 2023, there were 190,500 exercisable options outstanding under the 2007 Option Plan. These options were
granted to employees of the Company in past years. No further grants can be made under this plan.
a. The plan has four types of options:
• Option A: market value options – options that are linked to the market value of the shares in the Company.
• Option B: salary related options – whereby employees agree to a reduction in their base salary in exchange for the right to acquire
shares at nil-cost. These options normally vest after 12 months subject to an additional six-month holding period.
• Option C: deferred bonus awards – allowing the award of the number of shares determined by the Remuneration Committee in lieu
of some or all of the annual bonus.
• Option D: performance share awards – options which are granted subject to specified performance targets. Notwithstanding
the extent to which any performance target is satisfied, the number of vested award shares may be reduced by the Committee
to ensure that the number of vested award shares is appropriate taking into account the underlying business performance
of the Group.
These awards are subject to the rules of the PPHE Executive Incentive Plan 2020 which may include: long-term vesting periods
prescribed by the Committee upon grant; good-leaver and bad-leaver provisions allowing the Committee to exercise discretion
as to when it might be appropriate for an award to vest in spite of the relevant employee leaving the Group; post vesting holding
periods determined by the Committee at the time of the award; performance conditions; and share capital dilution limits. The plan
allows dividends or dividend equivalents to accrue, subject to the Committee’s discretion.
b.
c.
At any time, the total number of shares issued and/or available for grant (in a ten-year period) under the 2007 Share Option Plan,
the 2020 PPHE Executive Incentive Plan and under any other employee share scheme which the Company may establish in the
future may not exceed 5% of the Company’s issued share capital at that time.
In June 2022, the Remuneration Committee approved a Long-Term Incentive Plan (LTIP) conditional grant of 93,000 options
with a nil exercise price (Option D under the 2020 Option Plan). The grant is subject to performance conditions determined
by the Remuneration Committee in accordance with the 2020 Option Plan rules and the Company’s Remuneration Policy and
has a vesting period of 36 months starting 1 January 2022 with a 24-months’ holding period. Furthermore, the Remuneration
Committee approved an annual bonus plan for 2022 which included an award to members of the Executive Leadership Team
of 99,000 options with a nil exercise price (Option C under the 2020 Option Plan). This award was subject to certain performance
criteria which have been met for 2022. Those options have an immediate vesting and are subject to a holding period of 12 months
post grant.
The following lists the inputs to the binomial model used for the fair value measurement of the 93,000 options granted:
Dividend yield
Expected volatility of the share prices
Risk-free interest rate
Expected life of share options
Weighted average share price at the grant date
Fair value per option
1.0%
45.58%
1.9327%
5 years
1,455.0 pence
1,398.0 pence
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for the year ended 31 December 2023 – continued
The following lists the inputs to the binomial model used for the fair value measurement of the 99,000 options:
Dividend yield
Expected volatility of the share prices
Risk-free interest rate
Expected life of share options
Weighted average share price at the grant date
Fair value per option
1.0%
45.58%
1.9327%
3 years
1,455.0 pence
1,440.0 pence
Pledges, collateral and securities
Note 12 Pledges, contingent liabilities and commitments
a.
Substantially all of the Group’s assets and all of the rights connected or related to the ownership of the assets (including shares
of subsidiaries and restricted deposits) are pledged in favour of banks and financial institutions as security for loans received.
For most of the loans, specific assets are pledged as the sole security provided.
b. Restricted cash
Under certain facility agreements, funds need to be held in restricted deposit accounts in order to pay the debt service for a
subsequent period. The total deposits held amount to £17.3 million and are presented as restricted in the financial statements.
The expected life of the share options is based on historical data, current expectations and empirical data. It is not necessarily indicative
of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility of similar listed companies
over a period similar to the life of the options is indicative of future trends, which may not be reflective of the actual outcome.
d.
The expense arising from equity-settled share-based payment transactions during 2023 was £442 thousand (2022: £1,965
thousand). Total exercisable options at 31 December 2023 were 343,721 (2022: 150,223).
Movements during the year
The following table illustrates the number (No.) and weighted average exercise prices (EP) of, and movements in, share options during
2022 and 2023:
Outstanding as at 1 January 2023
Options forfeited during the year
Options exercised in the year1
Options granted during the year
Outstanding as at 31 December 2023
Outstanding as at 1 January 2022
Options forfeited during the year
Options exercised in the year
Options granted during the year
Outstanding as at 31 December 2022
No. of options A
(2007 Option
Plan)
No. of options A
(2020 Option
Plan)
No. of options B
(2020 Option
Plan)
No. of options C
(2020 Option
Plan)
No. of options D
(2020 Option
Plan)
220,500
–
(30,000)
–
190,500
265,500
–
(45,000)
–
220,500
227,000
–
–
–
227,000
250,500
(23,500)
–
–
227,000
51,223
–
(4,502)
–
46,721
69,867
–
(18,644)
–
51,223
99,000
–
(29,000)
–
70,000
–
–
–
99,000
99,000
93,000
–
–
–
93,000
–
–
–
93,000
93,000
EP
£8.32
–
£1.10
–
£9.05
£10.51
£13.00
£1.65
–
£8.32
1 Out of the options exercised in the year 33,502 were cashless.
As at 31 December 2023, the number of exercisable options was 534,221 (2022: 370,723) with an EP of £10.62 (2022: £7.54).
The weighted average remaining contractual life for the share options outstanding as at 31 December 2023 is 6.5 years
(2022: 7.3 years).
Commitments
c.
(i) Management and franchise agreements
1.
The Group entered into a Territorial Licence Agreement (the ‘Master Agreement’) with Radisson Hotel Group (‘Radisson’). Under
the Master Agreement, the Group, among other rights, is granted an exclusive licence to use the brand ‘Park Plaza® Hotels &
Resorts’ in 56 territories throughout Europe, the Middle East and Africa in perpetuity (the ‘Territory’).
The Master Agreement also allows the Group to use, and license others to use, the Radisson systems within the Territory, which
right includes the right to utilise the Radisson systems’ international marketing and reservations facilities and to receive other
promotional assistance. The Group pays Radisson a fee based on a percentage of the hotels’ gross room revenue, which fees
are recognized in the income statement as incurred.
2.
Within the terms of the management agreements, the hotels were granted by the Group a licence allowing them to use, throughout
the term of the management agreements, the ‘Park Plaza® Hotels & Resorts’ and ‘art’otel®’ brand names. See Note 2(h) regarding
the accounting for management and franchise fees received.
(ii) Construction contract commitment
As at 31 December 2023, the Group had capital commitments amounting to £29.6 million for the construction of the development
of art’otel London Hoxton and £9.2 million for the refurbishment of Londra & Cargill Hotel in Rome, Italy.
(iii) Guarantees
1.
In January 2013, the Company sold to Red Sea Hotels Limited (‘Red Sea’) all of the Company’s shares in its subsidiary, Leno Finance
Limited (‘Leno’), the company through which the Company owned an interest in the site in Pattaya, Thailand (the ‘Project’), and
certain related loans and receivables, for a total consideration of Thai Baht 600 million.
Under the terms of the United Overseas Bank (UOB) credit facilities received for the construction of the Project, the Company
is obliged to provide certain financial support in the event of a cost overrun or funding shortfall in relation to the Project, to
satisfy the payment of unpaid interest or fees until completion of the Project and, in certain circumstances, may be required to
purchase serviced apartments after completion of the Project for a maximum of Thai Baht 600 million to fund any amounts that
are outstanding under the UOB credit facilities. In addition, the Company undertook to take all necessary acts to ensure the
completion of the Project as planned. Red Sea has agreed to indemnify the Company in respect of these continuing obligations
(except for the obligation to purchase serviced apartments after completion where there is a continuing event of default) and as
security Red Sea has pledged the shares held by it in Bali Hai Company Limited (the Thai subsidiary of Leno that owns and develops
the Project) (‘Bali Hai’) and certain affiliated Thai companies.
On 20 December 2023, the Company has entered into a deed of release with UOB in respect of obligations under the sponsor
support deed. The deed of release is subject to conditions subsequent which are expected to be satisfied by 15 March 2024 failing
which the deed of release will be revoked.
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Notes to Consolidated Financial Statements
for the year ended 31 December 2023 – continued
2.
The Company guarantees cost overruns and the practical completion of the art’otel London Hoxton development under
the £180 million construction financing facility agreement granted by Bank Hapoalim B.M and in relation to the long-tem
partnership with Clal. As of 31 December 2023, the additional estimated contingent obligation to cover future cost
overruns amounts to £9.7 million of which the Company’s share is £6.3 million (Note 5b(i)).
Note 13 Borrowings
The borrowings of the Group are composed as follows:
As at 31 December 2023
Fixed interest rate
Weighted average interest rate
Variable interest rate
Weighted average interest rate
Total
Weighted average interest rate
€ denominated
£’000
£ denominated
£’000
$ denominated
£’000
HRK
denominated
£’000
318,272
2.32%
4,346
7.01%
322,618
2.38%
558,192
4.01%
3,783
6.94%
561,975
4.03%
–
–
11,797
8.91%
11,797
8.91%
–
–
–
–
–
–
Total
£’000
876,464
19,926
896,390
3.50%
Maturity analysis 2023
Total borrowings
Capitalised transaction costs and other adjustments
Outstanding
amount
Year 1
Year 2
Year 3
Year 4
Year 5 Thereafter
896,390
(3,354)
48,681
(844)
62,178
(844)
363,289
(844)
61,223
(822)
181,228
–
179,791
–
For securities and pledges, see Note 12.
As at 31 December 2022
Fixed interest rate
Weighted average interest rate
Variable interest rate
Weighted average interest rate
Total
Weighted average interest rate
€ denominated
£’000
£ denominated
£’000
$ denominated
£’000
270,203
2.41%
35,284
6.07%
305,487
2.52%
420,635
3.61%
90,990
7.28%
511,625
4.26%
–
–
15,896
8.28%
15,896
8.28%
HRK
denominated
£’000
36,540
1.44%
–
–
36,540
1.44%
Total
£’000
727,378
142,170
869,548
3.60%
Maturity analysis 2022
Total borrowings
Capitalised transaction costs and other adjustments
Outstanding
amount
Year 1
Year 2
Year 3
Year 4
Year 5 Thereafter
869,548
(4,816)
47,901
(800)
32,651
(800)
61,685
(800)
365,509
(800)
46,199
(800)
315,603
(816)
For securities and pledges, see Note 12.
Finance agreements entered in the years 2023 and 2022:
a.
Park Plaza Hotels (UK) Limited facility
On 1 November 2023, Park Plaza Hotels (UK) Limited, a wholly owned subsidiary of the Company, entered into a revolving facility
agreement with Santander UK Plc for up to £30 million which replaced the previous Coronavirus Large Business Interruption Loan
Scheme (CLBILS) facility entered in November 2020. The facility is provided on a three-year term and bears an interest rate margin
on drawn amounts of 2.5% plus Sonia during year one, with the margin increasing to 3% in years two and three.
Arena Grand Kažela campsite refinance
On 9 November 2022, Arena had entered into a new loan agreement with PRIVREDNA BANKA ZAGREB in Croatia for the purpose of
refinancing its existing €10.2 million loan used for the development of Arena Grand Kažela Campsite. The facility is in a total amount
of €18.5 million (£16.4 million), maturing in 2036 at a fixed interest rate of 2.95%.
Financing for the refurbishment of art’otel in Budapest
On 3 October 2022, Arena, through its wholly owned subsidiary SW Szállodaüzemeltet Korlátolt, entered into a new loan agreement
with Erste & Steiermärkische Bank d.d. for the purpose of financing the CAPEX investments in art’otel Budapest. The facility is in a
total amount of €2 million (£1.8 million), maturing in 2031 at a fixed interest rate of 3.5%.
Financing for Arena Stoja Campsite
On 10 May 2022, Arena entered into a new loan agreement with Croatian Bank for Reconstruction and Development (HBOR). Arena
intends to use this facility to purchase 75 upscale mobile homes for the Arena Stoja Campsite. The facility is in a total amount of
€2.9 million (£2.5 million), maturing in 2028 at a fixed interest rate of 1.5%.
Financing for development of art’otel in Zagreb, Croatia
On 30 March 2022, Arena, through its wholly owned subsidiary Ulika d.o.o., entered into a new loan agreement with Erste &
Steiermärkische Bank d.d. for the purpose of financing the development of its premium lifestyle art’otel in Zagreb, Croatia.
The facility is in a total amount of €12.6 million (£10.8 million), maturing in 2034 at a fixed interest rate of 2.2%.
Financing of Londra & Cargill Hotel in Rome, Italy
On 22 February 2022, Londra Cargill Parent S.r.l, a wholly owned subsidiary of the Company, entered into a €25 million (£21 million)
facility with UniCredit S.p.A. (the ‘Facility’). The Facility consists of two tranches: Tranche A in the amount of €17.25 million is available
for immediate drawdown upon signing the Facility agreement and Tranche B in the amount of €7.75 million will be available for drawdown
upon completion of the hotel refurbishment and meeting certain conditions. The term of the Facility is four years and it will bear an
interest rate of six month Euribor, which was fixed by an interest rate swap at a rate of 0.6065%, plus a margin of 3.2%.
Given that there is an economic relationship between the hedged item and the hedging instrument as the terms of the interest rate
swap match the terms of the loan (i.e., notional amount, maturity and payment), the Group has established a hedge ratio of 1:1 for the
hedging relationships as the underlying risk of the interest rate swap is identical to the hedged risk component. As at 31 December
2023, the interest rate swap had a fair value of £0.7 million and is included in other non-current assets. The change in the fair value
of the interest rate swap in the amount of £0.5 million for the year ended 31 December 2023 is recorded as other comprehensive
income. The interest rate swap is valued using valuation techniques for swap models, using present value calculations. The models
incorporate various inputs, including the credit quality of counterparties, and interest rate curves. The fair value measurement is
Level 2 of the fair value hierarchy.
176
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PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report Notes to Consolidated Financial Statements
for the year ended 31 December 2023 – continued
• Under the loan agreement granted by
Santander UK Plc to Park Plaza Hotels
(UK) Limited, the borrower must ensure
that at all times its tangible net worth
exceeds £300 million. In addition, the
borrower must: (i) ensure that the UK
borrowings to aggregate UK asset value
does not at any time exceed 60%; (ii) ensure
that on each test date, the UK interest
cover ratio for the borrower and its
subsidiaries is greater than 1.25; (iii)
ensure that the drawn amount under
this facility to the unencumbered market
value of Park Plaza London Waterloo
(determined in accordance with the
most recent valuation) does not at any
time exceed 65%; and (iv) maintain minimum
liquidity of £3 million at all times.
• Under the £1.6 million loan granted by
Santander UK Plc to PPHE Living Limited
dated 29 January 2020, the interest
coverage ratio (ICR) for each 12-month
period must not be less than 125%. In
addition, the borrower must ensure that
the outstanding loan does not exceed 65%
of the value of the borrower’s freehold
property at Acton Lane (based on the
most recent valuation).
b.
The following financial covenants must be complied
with by the relevant Group companies:
• Under the two Aareal facilities, for Park
Plaza London Riverbank (the ‘Riverbank
hotel‘) and all six of the Group’s Dutch
hotels and Grandis (the ‘Dutch hotels
and Grandis’), the borrowers must
ensure that the aggregate amount
of the outstanding facilities does not
exceed 62.2% of the value of the Dutch
hotels and Grandis and 60% of the value
of the Riverbank hotel as set out in the
most recent valuation (loan-to-value).
In addition, the borrowers must ensure
that, on each interest payment date,
the Debt Service Coverage Ratio
(DSCR) is not less than 115%.
• Under the AIG Asset Management
(Europe) Limited facility for Park
Plaza Westminster Bridge London,
the borrower must ensure that the
aggregate amount of the outstanding
facility does not exceed 70% of the value
of the hotel as set out in the most recent
valuation (loan-to-value). In addition, the
borrower must ensure that, on each
interest payment date, the historical
and projected DSCR are not less than
140%. The floating rate leg of this loan
of £3.8 million (as at 31 December 2023)
has an associated interest rate cap,
hedging the risk of the all-in rate
exceeding 3.5%.
• Under the facility arranged by
Cornerstone Real Estate Advisers
Europe LLP, a member of the MAFF
Mutual Financial Group, for Park Plaza
Victoria London, the borrower must
ensure that the aggregate amount of
the outstanding facility does not exceed
75% of the value of the hotel as set out
in the most recent valuation (loan-to-
value). In addition, the borrower must
ensure that, on each interest payment
date, the historical and projected
DSCR are not less than 180%.
• Under the Bank Hapoalim Loan for
three of the Group’s UK hotels and
the 46 units owned within Park Plaza
County Hall London, the borrowers
must ensure that the aggregate amount
of the outstanding loan does not exceed
65% of the value of the properties and
units secured (loan-to-value).
• In March 2019, W29 Owner LLC entered
into a loan agreement with Bank Hapoalim
New York for an amount of US$22.15 million
where PPHE Hotel Group is a guarantor.
Under this agreement, PPHE Hotel
Group must ensure that it maintains
an aggregate net worth of at least
US$33 million and have liquid assets
with a market value of at least
US$5 million. Since March 2019, W29
Owner LLC has paid US$7.15 million out
of the loan principal and the maturity
date of the loan was extended a few
times with the latest one, signed in
September 2023, extending the
maturity date to 13 September 2024.
• Under the Bank Hapoalim Loan relating
to art’otel London Hoxton, the borrower
must ensure that the aggregate amount
of the outstanding facility does not
exceed 75% of the value of the hotel
as set out in the most recent valuation
from the earlier of (i) one year after
practical completion; or (ii) 7 April 2024
onwards. The borrower must also
ensure that the DSCR is not less than
1.2 on each quarter test date starting
from either 7 April 2025 or one year
after practical completion. Any breach
of the aforementioned covenants is
subject to an equity cure option. In
addition, on each test date, the total
equity of PPHE Hotel Group must not
be less than: (i) £150 million; and (ii) 20%
of its asset value. After the reporting
date, the borrower entered into an
amendment to the loan agreement which
included an update to stagger the DSCR
covenant as follows. The borrower must
ensure that: the DSCR is not less than
1.1 on each quarter test date from
31 December 2025 to 30 September
2026 and 1.2 for the following quarter
test dates.
178
• Under the club deal with Erste Banka
d.d. and Zagrebačka Banka d.d signed
in December 2020 for the purpose of
financing the refurbishment of Hotel
Brioni Pula in the total amount of
€24.0 million the borrower, Arena
Hospitality Group d.d. has to comply
with the following covenants calculated
based on stand alone financial statements,
tested once a year using audited financial
statements for the preceding year:
DSCR 1 is equal to or greater than 3.5.
DSCR 2 is equal or greater than 1.2. Net
leverage ratio is equal to or lower than
4.5. Additionally, the borrower undertakes
to maintain the ratio between the net
financial debt increased by the exposure
under guarantees for bank borrowings
and EBITDA to the maximum of 6.0 until
the end of the loan repayment. The
amount of the loan cannot exceed 70%
of the property used as collateral.
• Under the OTP Banka d.d. loan signed
in July 2020 for the purpose of
financing the purchase and subsequent
refurbishment of Guest House Hotel
Riviera Pula in the total amount of
€10.0 million the borrower, Arena
Hospitality Group d.d. has to comply
with the following stand alone
covenants, tested once a year using
audited financial statements for the
preceding year: net leverage ratio is
equal to or lower than 4.5. The equity
ratio has to be at least 55%. The loan
consists of two equal tranches in the
amount of €5.0 million each. The loan
has a deposit build up mechanism,
subject to certain conditions.
• Under the UniCredit S.p.A. facility for
Società Immobiliare Alessandro De
Gasperis S.r.l., signed on 22 February
2022, the borrower must ensure
throughout the entire term of the loan
that the outstanding amount of the
loan does not exceed 60% of the value
of the property. Furthermore, from
the earlier of (i) 30 June 2024, and (ii) the
first interest payment date falling after
12 months following the completion of
the property renovation (the ‘first test
date‘), the borrower undertakes to
ensure that the ratio between (i) the
EBITDA of the borrower relating to the
12 month period preceding the relevant
test date and (ii) the finance costs for
the same applicable period (ICR) and
the ratio between (i) the net operating
profit of the borrower generated in the
12 month period preceding each test
date and (ii) the principal amount of all
facilities outstanding under this facilities
agreement at that test date are higher
than 2.0 and 7.5% respectively for
the first test date and higher than
2.5 and 9% respectively for each test
date thereafter.
• Under the Deutsche Hypothekenbank
AG facility, for Park Plaza Nuremberg
the borrower must ensure throughout
the entire term of the loan that the
outstanding amount of the loan does
not exceed 65% of the value of the
property used as collateral and that
the DSCR is not less than 1.35.
• Under the Deutsche Hypothekenbank
AG facility for ACO Hotel Holding B.V.
and ABK Hotel Holding B.V., the
borrower must ensure throughout
the entire term of the loan that the
outstanding amount of the loan does
not exceed 70% of the value of the
properties used as collateral and
that the DSCR is not less than 1.10.
• Under the Zagrebaka Banka d.d. joint
€32.0 million and HRK 205.0 million
facilities, the borrower, Arena
Hospitality Group d.d. must ensure
that at year end, based on audited
stand alone financial statements of
the borrower, the DSCR is equal to or
greater than 120% during the life of the
loan and that the Net Debt/EBITDA (‘net
leverage ratio’) is equal to or lower than
5.5 at year end 2019, is equal to or lower
than 4.5 at year end 2021 and for each
succeeding calendar year during the
remaining life of the loan.
• Under the Zagrebaka Banka d.d.
€10.0 million and HRK 60.0 million
facilities, the borrower, Arena
Hospitality Group d.d. must ensure
that at year end, based on audited
consolidated financial statements of
the borrower, the DSCR is equal to or
greater than 120% during the life of the
loan and that the net leverage ratio is
equal to or lower than 4.5 at year end
2021 and for each succeeding calendar
year during the remaining life of the loan.
Additionally, the borrower undertakes
to maintain the ratio between the net
financial debt increased by the exposure
under guarantees for bank borrowings
and EBITDA to the maximum of 6.0.
Moreover, under the HRK 60 million
facility, the amount of the loan cannot
exceed 70% of the value of the properties.
• Under the Erste Banka d.d. €2.5 million
facility, the borrower, Arena Hospitality
Group d.d. has to comply with the following
covenants calculated based on stand
alone financial statements, tested once
a year using audited financial statements
for the preceding year: DSCR 1 is equal
to or greater than 3.5. DSCR 2 is equal
or greater than 1.2. The net leverage
ratio is equal to or lower than 4.5.
Additionally, the borrower undertakes
to maintain the ratio between the net
financial debt increased by the exposure
under guarantees for bank borrowings
and EBITDA to the maximum of 6.0 until
the end of the loan repayment. The
equity ratio has to be at least 30%.
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PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report Notes to Consolidated Financial Statements
for the year ended 31 December 2023 – continued
1.2 throughout the life of the loan.
Net leverage ratio is equal to or lower
than 4.5 at each year end during the
remaining life of the loan. Additionally,
the guarantor undertakes to maintain
the ratio between the net financial debt
increased by the exposure under
guarantees for bank borrowings and
EBITDA to the maximum of 6.0 until the
end of the loan repayment. The amount
of the loan cannot exceed 100% of the
property used as collateral. The equity
ratio has to be at least 30%. Ulika d.o.o.,
as borrower, needs to maintain a
DSCR equal to or greater than 1.3
from 2026 onwards.
• Under the OTP Bank Nyrt loan signed
in October 2022 for the purpose of
refurbishment of art’otel Budapest, in
the amount of €2 million, the borrower
has to comply with the following
covenant: annual debt service cover
ratio is equal to or greater than
1.2 during the life of the loan.
Pursuant to bank loan agreements with
certain subsidiaries, these subsidiaries
are required to retain their cash balances
for use in their hotel operations and are
restricted from transferring the cash to
other entities in the Group without a prior
approval from the lenders.
As at 31 December 2023, the Group is in
compliance with all of its banking covenants.
The Group expects that it will comply with
its loan covenants also going forward.
• Under the AIK Banka a.d. facility for
the purpose of financing the purchase
of 88 Rooms Hotel in Belgrade, Serbia,
in the total amount of €4.2 million the
borrower (Arena 88 Rooms Holding
d.o.o.) has to ensure that the value of
the purchased asset is not lower by
more than 35% when compared with
the value of the asset as defined during
2020 by an external reputable valuator.
• Under the Zagrebaka banka d.d. loan
signed in September 2021 as part of
HBOR’s programme for insurance of
liquidity portfolio for exporters related
with COVID-19 measurements in amount
€20 million (£16.8 million) the borrower,
Arena Hospitality Group d.d. must
ensure that DSCR is equal or greater
than 3.5 and that the ratio between
financial debt and EBITDA is lower
than 4.5 starting at December 2023
and onwards. Additionally, the
borrower undertakes to maintain
the ratio between the net financial
debt increased by the exposure under
guarantees and EBITDA to the maximum
of 6.0 at the end of 2023 and onwards.
Covenants are calculated based on
audited annual stand alone financial
statements. Also, during the loan period
the borrower is not able without bank
confirmation to proceed with payments
of dividends or loans to third parties.
• Under the Erste Group Bank AG loan
signed in November 2021, for the
purpose of financing the purchase of
hotel FRANZ Ferdinand Mountain Resort
in Nassfeld, Austria, in the total amount
€10.5 million, Arena Franz Ferdinand
GmbH as the borrower has to comply
with following stand alone hard
covenants: projected DSCR is equal or
greater than 1.15 at year end 2021
and historical DSCR equal or greater
than 1.15 from year end 2023 onwards.
The amount of the loan cannot exceed
75% of the property used as collateral
starting year end 2021 to year end
2023. The borrower also has to comply
with the following soft covenants:
from year end 2024 onwards DSCR
(projected and historical) should be
equal to or greater than 1.35. The
amount of the loan cannot exceed 65%
of the property used as collateral at the
year end 2024 until year end 2026, and
60% from the year end 2026 and onwards.
• Under the Privredna banka d.d.
loan signed in November 2022 for the
purpose of refinancing investments
done in Arena Kazela Campsite in
previous years, in the total amount
of €18.5 million, the borrower, Arena
Hospitality Group d.d. has to comply
with following covenants: the DSCR is
equal to or greater than 1.2 during the
life of the loan based on audited stand
alone financial statements, the net
leverage ratio based on audited stand
alone financial statements is equal to or
lower than 4.5 from 2022 and for each
succeeding calendar year during the
remaining life of the loan. Additionally,
the borrower undertakes to maintain
the ratio between the net financial debt
increased by the exposure under
guarantees and EBITDA to the maximum
of 6.0 until the end of the loan repayment.
Moreover, the amount of the loan
cannot exceed 70% of the value of
the properties used as collateral.
• Under the HRVATSKA BANKA ZA
OBNOVU I RAZVITAK loan signed in
May 2022 for the purpose of financing
the purchase of mobile homes in
Arena Stoja Campsite, in the total
amount of €2.9 million, the borrower,
Arena Hospitality Group d.d. has to
comply with the equity ratio being
at least 30% calculated based on
stand alone financial statements.
• Under the ERSTE&STEIERMÄRKISCHE
BANK d.d. loan signed in March 2022 by
Ulika d.o.o. as borrower for the purpose
of financing investment in the hotel in
Zagreb, in the amount of €12.6 million,
Arena as guarantor has to comply with
following covenants tested once a year
using audited stand alone financial
statements for the preceding year:
DSCR 1 is equal to or greater than
3.5. DSCR 2 is equal or greater than
180
Note 14 Provisions
Provision for concession fee on land
In accordance with the provisions of the Tourist and Other Construction Land Not Appraised During the Transition and Privatisation
Process Act from 2010 (the ‘TLA’), Arena submitted requests to the Republic of Croatia and the relevant municipality for the award
of tourist land concessions in relation to land areas in eight campsites and three tourist resorts in Croatia. The TLA failed to produce
the desired impact or to resolve the issues of the ownership/use of the tourist land. This in turn caused far-reaching consequences
in the form of lack of investments into tourist land, reduced the international competitiveness of Croatian tourism due to lack of
development and reduced income for the state and local municipalities. The Croatian government therefore adopted a new legislation
to deal with, inter alia, the so-called tourist land and proprietary relationships between the owner of such land and the owner of the
facilities built thereon.
In May 2020, the new Non-Appraised Construction Land Act (the ‘NCLA’) replaced the TLA and all initiated requests based on the TLA
were suspended. Pursuant to the NCLA, the ownership of the land underneath the facilities in the campsites that were assessed into
the share capital of Arena is now also legally recognised as ownership of Arena, while the Republic of Croatia will be the sole owner of the
other land in the camps. In respect to the tourist resorts, the ownership of the land underneath the facilities that have been assessed
into the share capital of Arena is now also recognised as ownership of Arena, together with the land surrounding such facilities that
makes (together with the relevant facilities) the technological and functional unity. Tourist land in the tourist resorts which was not
assessed into the share capital of Arena and which serves the standard usage of the resorts shall be owned by a local municipality.
In relation to the land in campsites owned by the Republic of Croatia and the land in tourist resorts owned by the local municipalities,
Arena will ex lege be deemed long-term (50 years) lessee and will conclude the lease agreement with the state/local municipalities once
the procedure envisaged by the NCLA is complete. However, the government has still not adopted the secondary level regulation that
would govern the rent payable by the lessees for such lease, nor have the procedures required for the implementation of the Act and
actual registration of the ownership over the respective part of land in campsites/tourist resorts been completed. Thus, instead of
concession fees, NCLA prescribes the obligation to pay rental fees for the tourist land which was not assessed into the share capital
of Arena. However, administrative proceedings before the competent authority that are required for the implementation of the Act
and actual registration of the ownership over the respective part of land in campsites and tourist resorts, have not been completed.
In 2023, the government had carried out public consultations on the draft proposals of the secondary level regulations that would
govern the rent payable by the lessees, i.e., on the draft proposal of the Regulation on determination of the unit rent amount for
tourist land on which the hotel and tourist resort is built and the method of calculating the rent and other fees and the mandatory
content of the lease agreement, and on the draft proposal of the Regulation on determining of the initial amount of the unit rental
price for tourist land in the camp, the method of calculating the rent and other fees and the mandatory content of the lease agreement.
Both Regulations were adopted by the Government in February 2024. Given that the Regulations that now govern the rent payable
by the lessees were adopted after 31 December 2023, Arena made an assessment of the concession/rental fees in the most prudent
manner based on the most up to date available information, including the above-mentioned government’s proposals referred to
public consultation. The concession/rental fee, which amounted to £1.6 million in 2023, was recorded in the statement of financial
position under other payables and accruals. There was no payment of concession/rental fee during 2023 or 2022.
Management is still assessing the impact of this new regulation on the Company’s financial statements.
Balance as at 1 January
Exchange rate differences
Balance as at 31 December
2023
£’000
5,331
(98)
5,233
2022
£’000
5,057
274
5,331
181
PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report Notes to Consolidated Financial Statements
for the year ended 31 December 2023 – continued
Note 15 Financial liability in respect of Income Units sold to private investors
Total liability
Due from investors for reimbursement of capital expenditure
2023
£’000
132,995
(18,708)
114,287
2022
£’000
139,754
(18,670)
121,084
This liability originated from the proceeds received from the sale to private investors of the future 999-year cash flows, derived
from certain Income Units in Park Plaza Westminster Bridge London. Furthermore, as the investors are required to fund all CAPEX
to be made in connection with these rooms, a receivable is recorded in each period for any excess of depreciation expense over the
amounts paid by the investors on account of CAPEX. This receivable is offset from the liability to the investors.
This liability is amortised over the term of the agreement, that being 999 years.
Note 16 Other financial liabilities
Lease liabilities (see Note 17)
Retention liability1
Other
As at 31 December
2023
£’000
273,274
4,536
2,390
280,200
2022
£’000
261,544
2,691
1,259
265,494
1 Retention in relation to the building contract with Gear Construction UK Limited for the design and construction of the art’otel London Hoxton hotel (see Note 28).
Note 17 Leases
Group as a lessee
The Group has lease contracts for various items which mainly includes hotels, including land, offices and storage buildings. Leases of
land have lease terms between 125 and 199 years while hotel buildings, offices and storage have lease terms between 2 and 95 years.
The Group’s obligations under its leases are secured by the lessor’s title to the leased assets.
The Group also has certain leases with lease terms of 12 months or less and leases with low value. The Group applies the ‘short-term
lease’ and ‘lease of low-value assets’ recognition exemptions for these leases.
Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period:
Cost:
Balance as at 1 January 2023
Additions during the year
Disposal
Re-measurement of right-of-use assets
Adjustment for exchange rate differences
Balance as at 31 December 2023
Accumulated depreciation and impairment:
Balance as at 1 January 2023
Provision for depreciation
Disposal
Adjustment for exchange rate differences
Balance as at 31 December 2023
Net book value as at 31 December 2023
Cost:
Balance as at 1 January 2022
Additions during the year
Re-measurement of right-of-use assets
Adjustment for exchange rate differences
Balance as at 31 December 2022
Accumulated depreciation and impairment:
Balance as at 1 January 2022
Provision for depreciation
Adjustment for exchange rate differences
Balance as at 31 December 2022
Net book value as at 31 December 2022
Land
£’000
Hotel
buildings
£’000
Offices
and other
£’000
Furniture,
fixtures and
equipment
£’000
102,684
–
–
6,626
(414)
108,896
130,648
185
–
4,375
(13)
135,195
5,897
669
16,434
3,212
(3)
6,563
102,333
(70)
19,576
115,619
88,454
–
13,028
1,202
102,684
5,384
504
9
5,897
96,787
129,032
215
705
696
130,648
13,331
2,761
342
16,434
114,214
9,248
–
(58)
–
(20)
9,170
3,643
858
(19)
(11)
4,471
4,699
8,640
50
501
57
9,248
2,737
878
28
3,643
5,605
23,873
165
–
–
–
24,038
15,036
2,438
17,474
6,564
23,873
–
–
–
23,873
12,626
2,410
–
15,036
8,837
Total
£’000
266,453
350
(58)
11,001
(447)
277,299
41,010
7,177
(19)
(84)
48,084
229,215
249,999
265
14,234
1,955
266,453
34,078
6,553
379
41,010
225,443
The amount of borrowing costs capitalised during the year ended 31 December 2023 was £185 thousand (2022: £215 thousand).
182
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PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report Notes to Consolidated Financial Statements
for the year ended 31 December 2023 – continued
Impairment
In 2023, there were no indicators of impairment.
Set out below are the carrying amounts of lease liabilities (included under Other financial liabilities and Other payables) and the
movements during the period:
As at 1 January
Additions
Disposals
Accretion of interest1
Payments
Re-measurement of lease liability recorded in other expenses
Re-measurement of lease liability adjusted against right-of-use assets
Exchange rate differences recorded in profit and loss
Adjustments for foreign exchange differences
As at 31 December
Current
Non-current
2023
£’000
267,051
165
(31)
10,445
(14,355)
3,852
11,001
(882)
117
277,363
4,089
273,274
2022
£’000
251,618
50
–
9,952
(14,627)
3,704
14,234
1,662
458
267,051
5,507
261,544
1 The amount of borrowing costs capitalised during the year ended 31 December 2023 was £185 thousand (2022: £215 thousand).
Set out below is a split of the lease liabilities, cash payments and effect in the income statement between lease agreements for
a period longer than 40 years (‘long-term leases’) and leases for a period of up to 40 years (‘short-term leases’).
Lease liabilities
Fixed lease payments
Accretion of interest
Depreciation
Lease liabilities
Fixed lease payments
Accretion of interest
Depreciation
Year ended 31 December 2023
£’000
Long-term
leases (>40)
Short-term
leases (<40)
244,437
9,408
9,629
3,857
32,926
4,947
816
3,320
Year ended 31 December 2022
£’000
Long-term
leases (>40)
Short-term
leases (<40)
234,050
9,031
8,968
3,774
33,001
5,596
984
2,779
Total
277,363
14,355
10,445
7,177
Total
267,051
14,627
9,952
6,553
Details regarding certain long-term lease agreements are as below:
(a)
On 29 January 2020, the Group through its subsidiary Arena, entered into a 45-year lease for the development and operation of
a contemporary branded hotel in Zagreb, Croatia. The development, which is subject to obtaining the necessary permits, involves
the conversion of an iconic building in a prime location in the historic heart of the city. This 110-room hotel was opened in Q4 2023
and included a destination restaurant and bar, wellness and spa facilities, fitness centre, event space and parking. The annual
rent amounts to €430 thousand.
(b) Grandis has a land leasehold interest, expiring in 2095, of Holmes Hotel London. Based on the latest rent review that was signed
on 29 September 2022, the annual rent amounts to £1,250 thousand.
Grandis has an option to extend the lease to a total of 125 years, expiring in 2121. The Company also has an option to terminate
the lease in 2059.
(c)
Riverbank Hotel Holding B.V. has a land leasehold interest, expiring in 2125, for Park Plaza London Riverbank, subject to rent
review every five years, based on CPI. Based on the latest rent review, with effect from 10 May 2020, the annual rent amounts to
£1,135 thousand.
(d) On 18 June 2012, Park Royal Hotel Holding B.V. (‘Park Royal’) completed the purchase of the freehold property at 628 Western
Avenue, Park Royal, London (the ‘Site’), which was a development site on one of the main thoroughfares into London, for
£6.0 million. Simultaneously, Park Royal completed the sale of the Site at a price of £7.0 million and the leaseback of the Site at an
initial rent of £306 thousand per year for 170 years, subject to rent review every five years, based on CPI with a cap of 5%. Based
on the latest rent review, with effect from 15 June 2022, the annual rent amounts to £417 thousand.
(e)
On 20 July 2017, Waterloo Hotel Holding B.V. completed the sale of Park Plaza London Waterloo for £161.5 million subject to
a leaseback for 199 years. The initial rent of £5.6 million per year will have annual inflation adjustments subject to a cap of 4%
and collar of 2%.
The following are the amounts recognised in profit or loss:
Depreciation expense
Interest expense on lease liabilities
Expense relating to low-value assets and short-term leases (included in operating expenses)
Expense relating to low-value assets and short-term leases (included in rent expenses)
Variable lease payments (included in rent expenses)
Total amount recognised in profit or loss
As at 31 December
2023
£’000
7,177
10,260
227
583
1,749
19,996
2022
£’000
6,553
9,737
169
877
1,544
18,880
The Group had total cash outflows for leases of £15,327 thousand in 2023 (2022: £15,673 thousand). The future cash outflows
relating to leases that have commenced are disclosed in Note 29c.
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Notes to Consolidated Financial Statements
for the year ended 31 December 2023 – continued
The following provides information on the Group’s variable lease payments, including the magnitude in relation to fixed payments in
2023 and 2022:
Note 18 Other payables and accruals
Fixed rent
Variable rent with minimum payment
Variable rent only1
Fixed rent
Variable rent with minimum payment
Variable rent only1
1 Relates mainly to the concession fee on land (see Note 14).
As at 31 December 2023
Fixed payments
£’000
13,173
1,182
–
Variable
payments
£’000
–
–
1,749
As at 31 December 2022
Fixed payments
£’000
13,369
1,258
–
Variable
payments
£’000
–
–
1,544
Total
£’000
13,173
1,182
1,749
Total
£’000
13,369
1,258
1,544
Current portion of lease liabilities (Note 17)
Current portion of share appreciation rights (Note 5(b))
Employees
VAT and taxes
Accrued interest
Corporate income taxes
Accrued expenses
Advance payments received
Accrued rent
Variable income payment to holders of Income Units
Related parties1
Other
As at 31 December
2023
£’000
4,089
2,703
5,120
13,748
3,361
136
22,228
9,260
6,354
4,166
7,984
–
79,149
2022
£’000
5,507
5,519
4,640
14,514
3,128
130
26,808
8,238
4,402
4,137
3,712
109
80,844
Lease extension and termination options:
The Group has leases that include extension and termination options. These options provide flexibility in managing the leased assets
and align with the Group’s business needs. The Group exercises significant judgement in deciding whether it is reasonably certain
that the extension and termination options will be exercised.
Set out below are details of potential future undiscounted lease payments for periods covered by extension options that were not
included in the measurement of the Company’s lease liabilities. As of the end of the reporting period the Group does not expect to
exercise any termination option.
Lease payments applicable in extension option periods which as of the end of the reporting period are
not reasonably certain to be exercised
Up to
five years
£’000
More than
five years
£’000
5,676
4,019
1 Majority of this balance (£7,909 thousand) relates to an accrual for costs of the building contract with Gear Construction UK Limited for the design and construction of
the art’otel London Hoxton that were paid after the reporting date (see Note 28).
Note 19 Revenues
Room revenue from owned hotels1
Room revenue from leased hotels2
Campsites and mobile homes
Food and beverage
Minor operating (including room cancellation)
Management fee (see Note 12(c)(i))
Franchise and reservation fee (see Note 12(c)(i))
Marketing fee
Other
As at 31 December
2023
£’000
291,953
8,127
23,659
74,106
8,364
3,056
2,814
1,048
1,471
414,598
2022
£’000
232,735
5,058
22,592
56,711
7,401
2,183
1,466
718
1,227
330,091
1 Room revenue from owned hotels includes also revenue from hotels that are under a <100 long-term lease.
2 Room revenue from leased hotels includes the revenue from Park Plaza Budapest and Park Plaza Wallstreet Berlin Mitte which are under 20-year lease contracts.
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for the year ended 31 December 2023 – continued
Note 20 Operating expenses
As at 31 December
Note 23 Other income and expenses
a. Other expenses
Salaries and related expenses
Franchise, reservation and commissions expenses (see Note 12(c)(i))
Food and beverage
Insurance and property taxes
Utilities
Administration costs
Maintenance
Laundry, linen and cleaning
Supplies
IT expenses
Communication, travel and transport
Marketing expenses
Government grants payroll
Government grants fixed costs
Defined contribution pension premiums
Other expenses
Note 21 Financial expenses
Interest and other finance expenses on bank loans
Interest on lease liabilities
Foreign exchange differences, net
Other
Note 22 Financial income
Income from Park Plaza County Hall London Units
Interest on bank deposits
Foreign exchange differences, net
Interest and other financial income from jointly controlled entities (see Note 28(b))
Other
2023
£’000
131,048
31,960
20,872
16,343
20,888
8,820
8,153
6,740
6,354
2,238
2,712
2,939
250
172
5,249
19,352
284,090
2022
£’000
109,412
28,419
16,471
19,156
11,570
7,905
6,839
5,472
4,573
2,195
1,939
1,864
(183)
(2,461)
4,588
15,328
233,087
As at 31 December
2023
£’000
25,385
10,260
–
500
36,145
2022
£’000
24,815
9,737
2,012
693
37,257
As at 31 December
2023
£’000
1,006
2,480
918
354
–
4,758
2022
£’000
887
375
–
117
137
1,516
Capital loss on buy-back of Income Units previously sold to private investors
Revaluation of interest rate swap (see Note 29(a))
Re-measurement of lease liability1
Loss on disposal of fixed assets
Other non-recurring expenses (including pre-opening expenses)
Revaluation of share appreciation rights (see Note 5(b)(i))
1 This amount represents re-measurement of the Waterloo lease liability based on the 2% collar (see Note 17).
b. Other income
Revaluation of share appreciation rights (see Note 5(b)(i))
Revaluation of interest rate swap (see Note 29(a))
Revaluation of Income Units Park Plaza County Hall London (see Note 6)
Note 24 Net expenses for financial liability in respect of Income Units sold to private investors
Variable return (see Note 2(e))
Reimbursement of depreciation expenses (see Note 2(e))
Note 25 Income taxes
a. Tax benefit (expense) included in the income statement
Current taxes
Adjustments in respect of current income tax of previous year
Deferred taxes
As at 31 December
2023
£’000
3,266
4,553
3,852
29
1,346
–
13,046
As at 31 December
2023
£’000
2,816
–
1,600
4,416
2022
£’000
1,499
–
3,704
47
1,422
119
6,791
2022
£’000
–
9,692
300
9,992
As at 31 December
2023
£’000
15,311
(1,155)
14,156
2022
£’000
11,947
(1,164)
10,783
As at 31 December
2023
£’000
(2,760)
(8)
1,091
(1,677)
2022
£’000
(394)
87
3,663
3,356
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for the year ended 31 December 2023 – continued
b. The following are the major deferred tax (liabilities) and assets recognised by the Group and changes therein during the period:
d. Tax laws applicable to the Group companies:
Balance as at 1 January 2023
Amounts charged to income statement
Adjustments for exchange rate differences
Balance as at 31 December 2023
Balance as at 1 January 2022
Amounts charged to income statement
Adjustments for exchange rate differences
Balance as at 31 December 2022
Tax loss
carry forward
and timing
difference on
provisions
£’000
Property, plant
and equipment
and intangible
assets
£’000
Tax incentives
£’000
12,928
8,744
(167)
21,505
8,334
4,134
460
12,928
(11,134)
(7,653)
140
(18,647)
(11,009)
274
(399)
(11,134)
5,193
–
(96)
5,097
5,660
(745)
278
5,193
Total
£’000
6,987
1,091
(123)
7,955
2,985
3,663
339
6,987
The above deferred taxes have been set off when they relate to the same jurisdictions and presented in the consolidated financial
statements as follows:
Deferred tax assets
Deferred tax liabilities
c. Reconciliation between tax benefit (expense) and the product of accounting profit multiplied by the Group’s tax rate is as follows:
Profit before income taxes
Expected tax at the tax rate of the United Kingdom 25% (2022: 19%)
Adjustments in respect of:
Effects of other tax rates
Non-deductible expenses
Disallowed interest for which deferred tax asset was not recorded
Temporary differences for which no deferred tax was recorded
Non-taxable income
Unrecognised current year tax losses
Recognition of deferred tax asset on losses from previous years
Other differences
Income tax benefit (expense) reported in the income statement
As at 31 December
2023
£’000
13,833
(5,878)
7,955
2022
£’000
12,909
(5,922)
6,987
As at 31 December
2023
£’000
28,822
(7,206)
10,240
(627)
(11,078)
(5,014)
484
(2,966)
14,377
113
(1,677)
2022
£’000
11,456
(2,177)
1,265
(199)
(3,922)
4,307
431
(1,695)
5,171
175
3,356
(i) The Company is subject to taxation under the laws of Guernsey. The Company is therefore taxed at the standard rate of 0%.
(ii) Foreign subsidiaries are subject to income taxes in their country of domicile in respect of their income, as follows:
1. Taxation in the Netherlands: corporate income tax rate is 25.8%.
2.
Taxation in the United Kingdom: corporate income tax rate for domiciled companies and for non-domiciled companies
is 25% (2022: 19%).
3. Taxation in Germany: aggregated corporate tax rate and trade income rate is 29.7%.
4. Taxation in Hungary: corporate income tax rate is 9%.
5. Taxation in Croatia: corporate income tax rate is 18%.
6. Taxation in Italy: aggregated corporate tax rate (IRES) and local tax (IRAP) rate is 27.9%.
7. Taxation in Austria: corporate income tax rate is 25%.
8. Taxation in Serbia: corporate income tax rate is 15%.
Corporate tax rate in the UK – In March 2021, the UK government adopted the Spring Budget 2021 which included an increase
in the UK corporate tax rate from 19% to 25% from 1 April 2023.
Losses carried forward for tax purposes
e.
The Group has carried forward losses for tax purposes estimated at approximately £198.2 million (2022: £212.1 million). Movement in
2023 mainly relates to the utilisation of losses in the amount of approximately £26 million net of creation of new losses in the amount
of approximately £11.9 million.
The Group did not establish deferred tax assets in respect of losses amounting to £118.6 million (2022: £163.5 million). Movement in
2023 mainly relates to the recognition of deferred tax assets in the amount of approximately £56.8 million net of creation of new
losses in the amount of approximately £11.9 million.
The carried forward losses relate to individual companies in the Group, each in its own tax jurisdiction. When analysing the recoverability
of these losses the Group assesses the likelihood that these losses can be utilised against foreseeable future trading profits while
considering the limitations and the nature of the available losses. In this analysis the Group concluded that for the majority of these
companies it is not probable that future profits will be achieved that can be offset against these losses, mainly due to the nature of
their trade (i.e. holding companies or tax exempt activities). Based on this uncertain profitability, the Company determined that it
could not recognise deferred tax assets for most of the losses. The Company is performing this analysis on an ongoing basis.
Tax incentives
f.
In May 2019, based on confirmation from the Ministry of Economy and pursuant to the Investment Promotion and Development
of Investment Climate Act in Croatia, Arena became eligible to claim incentive allowances. Investments eligible for incentives are
investments done in Arena One 99 Glamping Campsite, Arena Grand Kažela Campsite, Hotel Brioni and Verudela Beach self-catering
apartment complexes, among others.
Arena has the right to use the investment tax credits until 2027. The execution of the investment project is subject to supervision by
the relevant institutions throughout the period of use of the tax credits and Arena will need to present regular annual reports to the
tax authority in which it will evidence that the conditions for the use of the tax credits are met.
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Notes to Consolidated Financial Statements
for the year ended 31 December 2023 – continued
Note 26 Earnings per share
The following reflects the income and share data used in the basic earnings per share computations:
Profit attributable to equity holders of the parent
Weighted average number of ordinary shares outstanding (in thousands)
As at 31 December
2023
£’000
22,415
42,365
2022
£’000
10,159
42,523
Geographical information
Non-current assets1
190,420
72,311
1,007,301
249,910
86,306
46,462
1,652,710
The
Netherlands
£’000
Germany
£’000
United
Kingdom
£’000
Croatia
£’000
Other1
£’000
Adjustments2
£’000
Consolidated
£’000
1 Non-current assets for this purpose consist of property, plant and equipment, right-of-use assets and intangible assets.
2 This includes the non-current assets of Management and Central Services.
Potentially dilutive instruments, 173,054 in 2023, had an immaterial effect on the basic earnings per share (2022: 399,294).
Note 27 Segments
For management purposes, the Group’s activities are divided into Owned Hotel Operations and Management and Central Services
Activities (for further details see Note 12(c)(i)). Owned Hotel Operations are further divided into five reportable segments: the
Netherlands, Germany, Croatia and the United Kingdom. Other includes individual hotels in Hungary, Serbia, Italy and Austria.
The operating results of each of the aforementioned segments are monitored separately for the purpose of resource allocations
and performance assessment. Segment performance is evaluated based on EBITDA, which is measured on the same basis as for
financial reporting purposes in the consolidated income statement.
Year ended 31 December 2023
The
Netherlands
£’000
Germany
£’000
63,302
–
63,302
19,580
22,759
–
22,759
5,466
United
Kingdom
£’000
234,912
400
235,312
76,276
Croatia
£’000
78,123
257
78,380
20,409
Other1
£’000
7,859
–
7,859
(528)
Management
and Central
Services
£’000
Adjustments2
£’000
Consolidated
£’000
7,643
40,626
48,269
6,973
–
(41,283)
(41,283)
–
414,598
–
414,598
128,176
(45,068)
(36,145)
4,758
(14,156)
(8,630)
(113)
28,822
Revenue
Third party
Inter-segment
Total revenue
Segment EBITDA
Depreciation,
amortisation
Financial expenses
Financial income
Net expenses for liability
in respect of Income Units
sold to private investors
Other income
(expenses), net
Share in result
of joint ventures
Profit before tax
1
Includes art’otel Budapest in Hungary, 88 Rooms Hotel in Belgrade, Serbia, Londra & Cargill Hotel in Rome, Italy, and FRANZ Ferdinand Mountain Resort in
Nassfeld, Austria.
2 Consist of inter-company eliminations.
Year ended 31 December 2022
The
Netherlands
£’000
Germany
£’000
41,573
–
41,573
11,163
17,724
16
17,740
6,368
United
Kingdom
£’000
190,105
302
190,407
56,218
Croatia
£’000
69,237
168
69,405
21,426
Other1
£’000
6,344
–
6,344
(629)
Management
and Central
Services
£’000
Adjustments2
£’000
Consolidated
£’000
5,108
32,365
37,473
37
–
(32,851)
(32,851)
330,091
–
330,091
94,583
(40,006)
(37,257)
1,516
(10,783)
3,201
202
11,456
Revenue
Third party
Inter-segment
Total revenue
Segment EBITDA
Depreciation,
amortisation
Financial expenses
Financial income
Net expenses for liability
in respect of Income Units
sold to private investors
Other income
(expenses), net
Share in result
of joint ventures
Profit before tax
1
Includes art’otel Budapest in Hungary, 88 Rooms Hotel in Belgrade, Serbia, Londra & Cargill Hotel in Rome, Italy, and FRANZ ferdinand Mountain Resort in
Nassfeld, Austria.
2 Consist of inter-company eliminations.
Geographical information
Non-current assets1
194,833
72,537
949,931
241,312
59,307
55,512
1,573,432
The
Netherlands
£’000
Germany
£’000
United
Kingdom
£’000
Croatia
£’000
Other1
£’000
Adjustments2
£’000
Consolidated
£’000
1 Non-current assets for this purpose consist of property, plant and equipment, right-of-use assets and intangible assets.
2 This includes the non-current assets of Management and Central Services.
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for the year ended 31 December 2023 – continued
Note 28 Related parties
a. Balances with related parties
Loans to joint ventures (see Note 5a)
Short-term receivables
Payable to GC Project Management Limited
Payable to Gear Construction UK Limited (see Notes 16 and 18)
b. Transactions with related parties
Cost of transactions with GC Project Management Limited
Cost of transactions with Gear Construction UK Limited
Rent income from sub-lease of office space
Management fee revenue from jointly controlled entities
Interest income from jointly controlled entities
As at 31 December
2023
£’000
6,515
65
(75)
(12,445)
2022
£’000
5,573
100
(185)
(6,218)
As at 31 December
2023
£’000
(670)
(55,069)
56
872
354
2022
£’000
(300)
(47,872)
67
822
118
c.
(i)
Significant other transactions with related parties
Construction of the art’otel London Hoxton – Following the approval by the independent shareholders, on 7 April 2020 the Group
entered into a building contract with Gear Construction UK Limited (‘Gear’) for the design and construction of the art’otel London
Hoxton hotel on a ‘turn-key’ basis (the ‘building contract’). Under the building contract Gear assumes the responsibility for the
design and construction of the main works for the design and build of art’otel London Hoxton for a lump sum of £160 million
(exclusive of VAT) (the ‘Contract Sum’). Of this amount, circa £24.6 million is based on provisional sums, primarily in respect of
FF&E and fit out of the hotel which are detailed and set out as provisional sums in the building contract. This might cause the total
amount payable to Gear UK under the building agreement to be greater or less than the Contract Sum. On top of the Contract
Sum, the Group novated certain existing contracts relating to the project to Gear at cost subject to a cap of £6 million (exclusive
of VAT). Gear is required to complete the works to be executed under the building contract by 2024.
Gear makes monthly applications for payments in line with the building contract and following construction industry contractual
norms. The applications will be valued by AECOM acting as the Employer’s agent and providing cost management services, who is
appointed by the Employer but has a duty to act fairly in accordance with the terms of the contract. The Employer’s agent will also
be responsible for assessing any applications by Gear for extensions of time, variations or additional scope of work or additional
loss and/or expense under the building agreement.
Gear’s obligations and liabilities under the building contract are supported by a corporate guarantee from Red Sea Hotels
Limited, an associate of Euro Plaza Holdings B.V. and therefore a related party of the Company, in the amount of 10% of the
Contract Sum (the ‘corporate guarantee’). The corporate guarantee expires on the later of: (i) the expiry of the two-year defects
rectification period which follows practical completion of the works; and (ii) the issue of the latent defect insurer’s approval or
final technical audit report.
(ii)
Sub-lease of office space – A member of the Group has agreed to sub-lease a small area of office space to members or affiliates
of the Red Sea Group at its County Hall corporate office in London. The rent payable by the Red Sea Group to PPHE Hotel Group
is based on the cost at which the landlord is leasing such space to PPHE Hotel Group.
(iii) Pre-Construction and Maintenance Contract – The Group frequently uses GC Project Management Limited (GC) to undertake
preliminary assessment services, including appraisal work, and provide initial estimates of the construction costs. Further,
GC provides ad-hoc maintenance work when required to the Group’s various sites. Accordingly, the Group has entered into
an agreement with GC for the provision of pre-construction and maintenance services by GC to the Group for a fixed annual
retainer of £60,000.
(iv) Transactions in the ordinary course of business, in connection with the use of hotel facilities (such as overnight room stays and
food and beverages) are being charged at market prices. These transactions occur occasionally.
(v)
Londra & Cargill project management agreement – The Group entered into a series of agreements with GC Project Management
Limited for the provision of project management services and site supervision services to the Group in respect of the redevelopment
of Hotel Londra & Cargill in Rome, Italy, commencing in 2022 and completing in 2024 for a fee capped at £920,000 to be paid in
monthly instalments for the duration of the project.
Summary of the remuneration for Executive and Non-Executive Directors for the year ended 31 December 2023:
Chairman and Executive Directors1
Non-Executive Directors
Base salary
and fees
£’000
Bonus
£’000
Pension
contributions
£’000
Other
benefits
£’000
1,726
283
2,009
473
–
473
67
–
67
19
–
19
Total
£’000
2,285
283
2,568
1 Figures Include the annual remuneration of Greg Hegarty, Deputy CEO & COO, who joined the Board following the 2023 Annual General Meeting which was held in May 2023.
Summary of the remuneration for Executive and Non-Executive Directors for the year ended 31 December 2022:
Chairman and Executive Directors
Non-Executive Directors
Base salary
and fees
£’000
1,148
284
1,432
Bonus
£’000
531
–
531
Pension
contributions
£’000
Other
benefits
£’000
64
–
64
13
–
13
Total
£’000
1,756
284
2,040
Directors’ interests in employee share incentive plan
As at 31 December 2023, the Executive Directors held share options to purchase 121,308 ordinary shares (2022: 70,000). 50,000
options were fully exercisable with an exercise price of £14.30 (2022: 25,000) and 27,308 options were fully exercisable with a £nil
exercise price (2022: 23,000). No share options were granted to Non-Executive Directors of the Board.
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Notes to Consolidated Financial Statements
for the year ended 31 December 2023 – continued
Note 29 Financial instruments risk management objectives and policies
The Group’s principal financial instruments, other than derivatives, comprise bank borrowings, cash and cash equivalents and
restricted deposits. The main purpose of these financial instruments is to finance the Group’s operations. The Group has various
other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations.
As at 1
January
2023
£’000
Re-
measurement
through profit
and loss
£’000
Re-
measurement
against right-
of-use assets
£’000
Cash
flows
£’000
Re-
measurement
against equity
£’000
Foreign
exchange
movement
£’000
New
leases/
loans,
net
£’000
Movement
through
profit and
loss
£’000
Re-
classification
and other
movements
£’000
As at 31
December
2023
£’000
Non-current
interest-bearing
loans and
borrowings
Non-current
lease liability
Financial liability
in respect of
Income Units
sold to private
investors
Non-current
Derivative
financial
instruments
Current
Derivative
financial
instruments
Current share
appreciation
rights
Current interest-
bearing loans
and borrowings
Current lease
liability1
817,631
261,544
–
–
–
–
3,852
11,001
121,084
(5,609)
–
(30,539)
–
4,553
–
4,080
–
5,519
–
(2,816)
47,101 (31,717)
–
–
–
–
–
–
–
–
–
–
4,645
41
–
–
–
–
–
(1,243)
–
–
–
–
–
(5,720) 65,265
–
(31,977)
845,199
156
165
(882)
(2,562)
273,274
–
–
–
–
(1,188)
114,287
–
(21,300)
(2,403)
1,677
–
2,703
As at 1
January
2022
£’000
Re-
measurement
through profit
and loss
£’000
Re-
measurement
against right-
of-use assets
£’000
Cash
flows
£’000
Re-
measurement
against equity
£’000
Foreign
exchange
movement
£’000
New
leases/
loans,
net
£’000
Movement
through
profit and
loss
£’000
Re-
classification
and other
movements
£’000
As at 31
December
2022
£’000
729,284
245,274
–
–
–
–
3,704
14,234
124,551
(4,887)
–
457
(109)
(9,692)
4,860
540
–
–
–
119
38,840 (31,087)
–
–
–
–
–
–
16,091 106,879
–
(34,623)
817,631
307
50
1,662
(3,687)
261,544
–
–
–
–
(21,002)
(71)
–
–
–
–
–
3,187
–
–
–
–
–
–
–
–
–
1,420
121,084
(122)
(30,539)
(4,860)
–
4,860
5,519
941
35,220
47,101
6,344
(4,890)
1,150,150 (40,973)
–
(5,869)
–
14,234
–
(21,002)
151
–
19,665 106,929
–
2,603
3,902
5,507
2,110 1,227,847
Non-current
interest-bearing
loans and
borrowings
Non-current
lease liability
Financial liability
in respect of
Income Units
sold to private
investors
Derivative
financial
instruments
Non-current
share
appreciation
rights
Current share
appreciation
rights
Current
interest-bearing
loans and
borrowings
Current lease
liability1
5,507
(4,095)
1,227,847 (37,341)
–
5,589
–
11,001
–
4,645
(39)
–
(6,805) 65,430
–
(38)
2,716
4,089
(2,562) 1,267,766
The main risks arising from the Group’s financial instruments are cash flow interest rate risk, credit risk and liquidity risk. The Board
of Directors reviews and agrees on policies for managing each of these risks which are summarised below. The Group’s accounting
policies in relation to derivatives are set out in Note 2.
844
32,852
47,837
1
Includes accrued interest on deferred lease payments.
1
Includes accrued interest on deferred lease payments.
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for the year ended 31 December 2023 – continued
Interest rate risk
a.
The Group’s exposure to the risk for changes in market interest rates relates primarily to the Group’s long-term debt obligations
with a floating interest rate.
The Group’s policy is to manage its interest costs using fixed-rate debt. To manage its interest costs, the Group enters into interest
rate swaps, in which the Group agrees to exchange, at specified intervals, the difference between fixed and variable rate interest
amounts calculated by reference to an agreed-upon notional principal amount. Furthermore, the Group uses fixed interest rate
debts. For this reason the Group’s cash flow is not significantly sensitive to possible changes in market interest rates. Possible
changes in interest rates do, however, affect the Group’s equity as the fair value of the swap agreements changes with interest
rate changes. These swaps are designated to hedge underlying debt obligations.
The Company has entered into interest rate swap contracts with unrelated financial institutions in order to reduce the effect of
interest rate fluctuations or risk of certain real estate investment’s interest expense on its variable rate debt. The Company is
exposed to credit risk in the event of non-performance by the counterparty to these financial instruments. Management believes
the risk of loss due to non-performance to be minimal and therefore decided not to hedge this.
The accounting treatment for the interest rate swaps and whether they qualify as accounting hedges under IFRS 9 is determined
separately for each contract. If the contract qualifies as accounting hedge then the unrealised gain or loss on the contract is
recorded in the consolidated statement of comprehensive income. If the contract does not qualify as accounting hedge then the gain
or loss on the contract is recorded in the consolidated income statement. The fair value of the interest rate swaps is determined by
taking into account the present interest rates compared to the contracted fixed rate over the life of the contract. The valuation
models incorporate various market inputs such as interest rate curves and the fair value measurement is classified to Level 2 of the
fair value hierarchy.
For the year ended 31 December 2023, the Company recorded a loss of £4.5 million (2022: profit of £9.7 million) in Other expenses in
the consolidated income statement and an unrealised loss of £5.0 million (2022: profit of £21.1 million) in the consolidated statement
of comprehensive income representing the change in the fair value of these interest rate swaps during the period. The aggregate
fair value of the interest rate swap contracts was £23.0 million as at 31 December 2023 (2022: £30.5 million) and is included in Other
receivables and prepayments and Other non-current financial assets on the consolidated statements of financial position.
Interest rate sensitivity
The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and
borrowings affected, after the impact of hedge accounting. With all other variables held constant, the Group’s profit before tax is
affected through the impact on floating rate borrowings, as follows:
and other receivables since a loss allowance for expected credit losses is recorded in respect of all trade and other receivables.
The result of these actions is that the Group’s exposure to bad debts is not significant.
With respect to credit risk arising from other financial assets of the Group, which comprise cash and cash equivalents, the Group’s
exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these
instruments. The Group has limited concentration risk in respect of its cash at banks.
Liquidity risk
c.
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts and
bank loans. The Group’s policy is to arrange medium-term bank facilities to finance its construction operation and then to convert
them into long-term borrowings when required.
The Group continues to hold a strong liquidity position with an overall consolidated cash balance of £150.4 million as at
31 December 2023.
The table below summarises the maturity profile of the Group’s financial liabilities as at 31 December 2023 and 2022 based
on contractual undiscounted payments.
As at 31 December 2023
Interest-bearing loans and borrowings1
Financial liability in respect of Income
Units sold to private investors2
Lease liability3
Trade payables
Other liabilities
Less than 3
months
£’000
3 to 12 months
£’000
20,131
59,145
3,828
3,145
15,067
45,793
87,964
11,483
9,944
–
30,061
110,633
Less than 3
months
£’000
3 to 12 months
£’000
19,319
56,534
3,285
3,248
13,565
37,707
77,124
9,855
9,919
–
37,630
113,938
Year 2
£’000
91,352
15,311
14,508
–
Year 3 to 5
£’000 > 5 years £’000
Total
£’000
659,588
195,015
1,025,231
45,933
42,322
–
114,287
885,424
–
20,612
1,215,338
190,842
955,343
15,067
96,466
2,282,949
121,171
747,843
As at 31 December 2022
Year 2
£’000
59,962
13,140
13,498
–
–
86,600
Year 3 to 5
£’000 > 5 years £’000
Total
£’000
545,414
322,947
1,004,176
39,420
39,848
–
–
624,682
121,084
890,068
–
18,062
1,352,161
186,784
956,581
13,565
93,399
2,254,505
Increase in floating interest rate1
1%
2%
5%
Effect on profit before tax £’000
GBP
38
76
189
EUR
43
87
217
US Dollar
118
236
590
Interest-bearing loans and borrowings1
Financial liability in respect of Income
Units sold to private investors2
Lease liability3
Trade payables
Other liabilities
1 The assumed movement in floating interest rate for the interest rate sensitivity analysis is based on the currently observable market environment, showing a
significantly higher volatility than in prior years.
b. Credit risk
The Group trades only with recognised, creditworthy third parties. It has policies in place to ensure that sales are made to customers
with an appropriate credit history. The Company’s policies ensure that sales to customers are settled through advance payments,
in cash or by major credit cards (individual customers). Since the Group trades only with recognised third parties, there is no requirement
for collateral for debts with third parties. Furthermore, the Group has no dependency on any of its customers. The receivable
balances are monitored on an ongoing basis. Management monitors the collection of receivables through credit meetings and weekly
reports on individual balances of receivables. The maximum credit exposure equals the carrying amount of the trade receivables
1 See Note 13 for further information.
2 Presented according to discounted amount due to the variability of the payments over the balance of the 999-year term.
3 Lease liability includes four leases with upward rent reviews based on future market rates in one lease and changes in the CPI/RPI in the other lease and, thus, future
payments have been estimated using current market rentals and current United Kingdom-based CPIs/RPIs, respectively, except Park Plaza London Waterloo where the
amounts included 50 years of future payments regarding the lease of Park Plaza London Waterloo instead of 199 years as stated in the lease agreement. Also, the
amounts do not take into account the collar of 2%. The Group’s management believes that the amount included in the above table reflects the relevant cash flow risks to
which the Group would be reasonably exposed in the ordinary course of business.
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PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report Notes to Consolidated Financial Statements
for the year ended 31 December 2023 – continued
d. Capital management
The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital
ratios in order to support its business and maximise shareholder value.
These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity-
specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.
If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.
The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions. The Group monitors
capital using a gearing ratio, which is net bank debt divided by total capital plus net bank debt. The Group’s policy is to keep the gearing
ratio between 50% and 60%. The Group includes within net bank debt interest-bearing bank loans and borrowings, less cash and cash
equivalents and other liquid assets. Capital includes equity less the hedging reserve.
Interest-bearing bank loans and borrowings
Less – cash and cash equivalents
Less – long-term restricted cash
Less – short-term restricted cash
Net debt
Equity
Hedging reserve1
Total capital
Capital and net debt
Gearing ratio
2023
£’000
893,036
(150,416)
(10,385)
(6,909)
725,326
531,173
(15,396)
515,777
1,241,103
58,4%
2022
£’000
864,732
(163,589)
(9,272)
(9,229)
682,642
503,245
(20,398)
482,847
1,165,489
58,6%
1
Includes the hedging reserve that Is allocated to the Non-controlling interests.
Fair value of financial instruments
e.
The fair values of the financial assets and liabilities are included in the amount at which the instrument could be exchanged in
a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions
were used to estimate the fair values:
As at 31 December 2023, the Group held the following financial instruments measured at fair value:
Liabilities
Share appreciation rights
Assets
Interest rate swaps used for hedging
Income Units in Park Plaza County Hall London
31 December
2023
£’000
2,703
31 December
2023
£’000
22,977
17,700
Level 1
£’000
–
Level 1
£’000
–
–
As at 31 December 2022, the Group held the following financial instruments measured at fair value:
Liabilities
Share appreciation rights
Assets
Level 2
£’000
2,703
Level 2
£’000
22,977
17,700
Level 2
£’000
5,519
Level 2
£’000
30,539
16,100
Level 3
£’000
–
Level 3
£’000
–
–
Level 3
£’000
–
Level 3
£’000
–
–
31 December
2022
£’000
5,519
31 December
2022
£’000
30,539
16,100
Level 1
£’000
–
Level 1
£’000
–
–
The fair values of cash and cash equivalents, trade receivables, trade payables, and other current assets and liabilities approximate
their carrying amounts largely due to the short-term maturities of these instruments. The fair value of floating interest rate liabilities
also approximates their carrying amount as the periodic changes in interest rates reflect the movement in market rates.
Interest rate swaps used for hedging
Income Units in Park Plaza County Hall London
The fair value of loans from banks and other financial liabilities is estimated by discounting future cash flows using rates currently
available for debt on similar terms, credit risk and remaining maturities.
Fair value hierarchy
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by a valuation technique
based on the lowest level input that is significant to the fair value so determined:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: other techniques for which all inputs which have significant effect on the recorded fair value are observable, either directly
or indirectly.
Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.
The Group enters into derivative financial instruments with financial institutions with investment grade credit ratings. Derivatives
are valued using valuation techniques for swap models, using present value calculations. The models incorporate various
inputs, including the credit quality of counterparties, and interest rate curves. The Group also granted share appreciation
rights of the Company to Clal (see Note 5b) which is valued by using the Black–Scholes model. In addition, the Group also holds
46 Income Units in Park Plaza County Hall London which were valued by external valuator using a discounted cash flow technique.
During 2023 and 2022, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into or out of
Level 3 fair value measurements.
The carrying amounts and fair values of the Group’s financial instruments other than those whose carrying amount approximates
their fair value are as follows:
Financial liabilities
Bank borrowings
Carrying amount 31 December
2022
£’000
2023
£’000
Fair value 31 December
2023
£’000
2022
£’000
893,036
864,732
860,244
811,179
Note 30 Subsequent events
a. Tourist land regulations in Croatia
On 9 February 2024 the final regulation concerning tourist land was passed by the Croatian Government (see Note 14).
Final dividend
b.
The Board is proposing a final dividend payment of 20 pence per share (2022: 12 pence per share). Subject to shareholder approval
at the Annual General Meeting.
200
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Appendices
202
205
205
206
207
208
Subsidiaries included in the Group
Jointly controlled entities
Current renovation, repositioning and pipeline projects
Glossary
Alternative Performance Measures
Contacts
Subsidiaries included in the Group
Principal activity
Hotel operation
Holding company
Holding company
Holding company
Holding company
Name of company
1 Westminster Bridge Plaza Management Company Limited
A40 Data Centre B.V.
A40 Office B.V.
ABK Hotel Holding B.V.
ACO Hotel Holding B.V.
Amsterdam Airport Hotel Holding B.V.
Holding company
(formerly known as Victoria Schiphol Holding B.V.)
Hotel operation
Amsterdam Airport Hotel Operator B.V.
Holding company
Arena 88 Rooms Holding d.o.o.
Hotel operation
Arena 88 Rooms d.o.o.
Hotel operation
ARENA FRANZ Ferdinand GmbH
Hotel operation
Arena Hospitality Group d.d.
Management
Arena Hospitality Management d.o.o.
Hotel operation
art’amsterdam Hotel Operator B.V.
Hotel operation
art’otel Berlin City Center West GmbH
Hotel operation
art’otel köln betriebsgesellschaft mbH
Holding company
Art’otel (I.L.) Management Services Limited (under liquidation)
Holding company
Aspirations (Limited)
Holding company
Bora B.V. (formerly known as WH/DMREF Bora B.V.)
Bora Finco B.V.
Holding company
County Hall Hotel Holdings B.V. (formerly known as PPHE Arena Holding B.V.) Holding company
Holding company
Dvadeset Osam d.o.o. (formerly known as W2005/Dvadeset Osam d.o.o.)
Hotel operation
Eindhoven Hotel Operator B.V.
Holding company
Euro Sea Hotels N.V.
Holding company
Germany Real Estate B.V.
Finance company
Golden Wall Investments Limited
Holding company
Grandis Netherlands Holding B.V.
Holding company
Hotel Club Construction B.V. (formerly Hotel Maastricht B.V.)
Holding company
Hotel Leeds Holding B.V.
Holding company
Hotel Nottingham Holding B.V.
Hoxton Hotel Operator Limited
Hotel operation
Leeds Hotel Operator Limited (formerly Nottingham Park Plaza Hotel
Operator Limited)
Leno Investment Limited
Hotel operation
Holding company
Name of company
Londra Cargill Parent S.r.l.
Marlbray Limited
Mazurana d.o.o.
North Lambeth Holding B.V.
Nottingham Hotel Operator Limited
Oaks Restaurant Operator Limited
Park Plaza Berlin Hotelbetriebsgesellschaft mbH (in liquidation)
Park Plaza County Hall London Ltd
Park Plaza Germany Holdings GmbH
Park Plaza Hospitality Services (UK) Limited
Park Plaza Hotels (Germany) Services GmbH
Park Plaza Hotels (UK) Limited
Park Plaza Hotels (UK) Services Limited
Park Plaza Hotels Berlin Wallstrasse GmbH
Park Plaza Hotels Europe (Germany) B.V.
Park Plaza Hotels Europe B.V.
Park Plaza Hotels Europe Holdings B.V.
Park Plaza Nürnberg GmbH
Park Royal Hotel Holding B.V. (formerly known as Club A40 Holding B.V.)
Park Royal Hotel Operator Limited (formerly known as Club A40 Hotel
Operator Limited)
Parkvondel Hotel Holding B.V.
Parkvondel Hotel Operator B.V.
Parkvondel Hotel Real Estate B.V.
PPHE Art Holding B.V.
PPHE Coop B.V.
PPHE Germany B.V.
PPHE Germany Holdings GmbH
PPHE Headco Limited
PPHE Holdings Limited
PPHE Hotel Group Limited
PPHE Hoxton B.V.
PPHE Living Limited
PPHE Management (Croatia) B.V.
PPHE Netherlands B.V. (formerly Maastricht Hotel Holding B.V.)
PPHE NL Region B.V.
PPHE Nürnberg Operator Hotelbetriebsgesellschaft mbH
PPHE Support Services Limited
PPHE UK Holding B.V. (formerly Club Euro Hotels B.V.)
PPHE USA B.V.
Principal activity
Holding company
Holding company
Holding company
Holding company
Hotel operation
Hotel operation
Hotel operation
Holding company
Holding company
Hotel operation
Hotel operation
Holding company
Management
Hotel operation
Holding company
Management
Holding company
Hotel operation
Holding company
Hotel operation
Holding company
Hotel operation
Holding company
Holding company
Holding company
Holding company
Holding company
Holding company
Holding company
Holding company
Holding company
Holding company
Holding company
Holding company
Holding company
Hotel operation
Hotel operation
Holding company
Holding company
Country of
incorporation
Italy
United Kingdom
Croatia
Netherlands
United Kingdom
United Kingdom
Germany
United Kingdom
Germany
United Kingdom
Germany
United Kingdom
United Kingdom
Germany
Netherlands
Netherlands
Netherlands
Germany
Netherlands
United Kingdom
Netherlands
Netherlands
Netherlands
Netherlands
Netherlands
Netherlands
Germany
United Kingdom
United Kingdom
Guernsey
Netherlands
United Kingdom
Netherlands
Netherlands
Netherlands
Germany
United Kingdom
Netherlands
Netherlands
Direct and
indirect
holdings %
100
100
53.8
100
100
100
53.8
11.5
53.8
100
53.8
100
100
53.8
100
100
100
53.8
100
100
100
100
100
100
100
100
53.8
100
100
100
51
100
100
100
100
53.8
100
100
100
Country of
incorporation
United Kingdom
Netherlands
Netherlands
Netherlands
Netherlands
Netherlands
Netherlands
Serbia
Serbia
Austria
Croatia
Croatia
Netherlands
Germany
Germany
Israel
Guernsey
Netherlands
Netherlands
Netherlands
Croatia
Netherlands
Netherlands
Netherlands
British Virgin Islands
Netherlands
Netherlands
Netherlands
Netherlands
United Kingdom
United Kingdom
Guernsey
Direct and
indirect
holdings %
55.1
100
100
53.8
53.8
100
100
53.8
53.8
53.8
53.8
53.8
100
53.8
53.8
100
51
100
100
100
100
100
100
53.8
100
100
100
100
100
51
100
100
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PPHE Hotel GroupAnnual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic reportPPHE Hotel GroupAnnual Report and Accounts 2023 Appendices – continued
Name of company
Principal activity
Holding company
Holding company
Holding company
Holding company
Hotel operation
Hotel operation
Hotel operation
Holding company
Holding company
Holding company
Hotel operation
Holding company
Holding company
Holding company
Hotel operation
Holding company
Hotel operation
Holding company
Holding company
Hotel operation
Holding company
Hotel operation
Holding company
PPHE USA Holding B.V.
PPHE West 29th Street USA Inc
PPWL Parent B.V.
Riverbank Hotel Holding B.V.
Riverbank Hotel Operator Limited
Sherlock Holmes Hotel Shop Limited
Sherlock Holmes Park Plaza Limited
Signature Sub BV
Signature Top Ltd
Signature Top II Ltd
Società Immobiliare Alessandro De Gasperis S.r.l.
South Bank Hotel Management Company Ltd
Suf Holding B.V.
Sugarhill Investments B.V.
SW Szállodaüzemeltetö Kft
The Mandarin Hotel B.V.
TOZI Restaurant Operator Limited
Ulika d.o.o.
Utrecht Hotel Holding B.V.
Utrecht Hotel Operator B.V.
Victoria Amsterdam Hotel Holding B.V.
Victoria Amsterdam Hotel Operator B.V.
Victoria London (Real Estate) B.V.
Victoria London B.V. (formerly known as Club Luton Hotel Holding B.V.
Holding company
and Club Ealing Hotel Holding B.V.)
Holding company
Victoria Monument B.V.
Hotel operation
Victoria Park Plaza Operator Limited
Holding company
W29 Development LLC
W29 Owner LLC
Holding company
Waterloo Hotel Holding B.V. (formerly known as Hercules House Holding B.V.) Holding company
Waterloo Hotel Operator Limited (formerly known as Hercules House
Operator Limited)
Westminster Bridge Hotel Operator Limited
Westminster Bridge London (Real Estate) B.V.
Westminster Bridge London B.V.
Hotel operation
Hotel operation
Holding company
Holding company
Country of
incorporation
Netherlands
Delaware
Netherlands
Netherlands
United Kingdom
United Kingdom
United Kingdom
Netherlands
United Kingdom
United Kingdom
Italy
United Kingdom
Netherlands
Netherlands
Hungary
Netherlands
United Kingdom
Croatia
Netherlands
Netherlands
Netherlands
Netherlands
Netherlands
Netherlands
Netherlands
United Kingdom
Delaware
Delaware
Netherlands
United Kingdom
United Kingdom
Netherlands
Netherlands
100
100
100
51
51
100
100
51
51
51
51
11.5
100
53.8
53.8
100
100
53.8
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Direct and
indirect
holdings %
Jointly controlled entities
Name of company
art’otel berlin mitte/Park Plaza Betriebsgesellschaft mbH1
Park Plaza Betriebsgesellschaft mbH1
PPBK Hotel Holding B.V. (formerly known as ABK Hotel Holding B.V.)1
ABM Hotel Holding B.V.1
1
Indirectly held through Arena Hospitality Group d.d.
Current renovation, repositioning and pipeline projects
Principal activity
Hotel operation
Hotel operation
Holding company
Holding company
Country of
incorporation
Germany
Germany
Netherlands
Netherlands
Direct and
indirect
holdings %
50
50
50
50
Project
Location
Scope
Status
Belgrade, Serbia
London, United Kingdom
Berlin, Germany
Radisson RED Belgrade (former 88 Rooms Hotel)
art’otel London Hoxton
Radisson RED Berlin Kudamm
(former Park Plaza Berlin Kudamm)
Rome, Italy
art’otel Rome Piazza Sallustio
London, United Kingdom
Development project London Victoria
Development site Park Royal London
London, United Kingdom
Development site Westminster Bridge Road, London London, United Kingdom
art’otel in New York City
Guest House Hotel Riviera, Pula
Repositioning
Asset optimisation
New development
New development
New York City, United States New development
Istria, Croatia
Repositioning
Expected to open H1 2024
In design process
In design process
Planning submitted
Temporarily paused
Temporarily paused
Repositioning
New development
Repositioning
Opened February 2024
Expected to open Q2 2024
Expected to open Q2 2024
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PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report Glossary
The Annual General Meeting of PPHE Hotel Group.
Annual General
Meeting
Annual Report
and Accounts
Arena Campsites Are located in eight beachfront sites across the Southern coast
The Annual Report of PPHE Hotel Group in relation to the year
ended 31 December 2023.
Arena Hospitality
Group
Arena Hotels &
Apartments
art’otel®
Board
of Istria, Croatia. They operate under the Arena Hospitality
Group umbrella, of which PPHE Hotel Group is a controlling
shareholder. www.arenacampsites.com
Arena Hospitality Group is also referred to as ‘Arena’ and
is one of the most dynamic hospitality groups in Central and
Eastern Europe, currently offering a portfolio of 30 owned,
co-owned, leased and managed properties with more
than 10,000 rooms and accommodation units in Croatia,
Germany, Hungary, Serbia and Austria. PPHE Hotel Group has
a controlling ownership interest in Arena Hospitality Group.
www.arenahospitalitygroup.com
A collection of hotels and self-catering apartment complexes
offering relaxed and comfortable accommodation within
beachfront locations across the historical settings of Pula
and Medulin in Istria, Croatia. They operate under the Arena
Hospitality Group umbrella, of which PPHE Hotel Group is a
controlling shareholder.
A lifestyle collection of hotels that fuse exceptional architectural
style with art-inspired interiors, located in cosmopolitan centres
across Europe. PPHE Hotel Group is owner of the art’otel® brand
worldwide. www.artotel.com
Eli Papouchado (Non-Executive Chairman), Yoav Papouchado
(Alternate Director), Boris Ivesha (President & Chief Executive
Officer), Greg Hegarty (Co-Chief Executive Officer), Daniel Kos
(Chief Financial Officer & Executive Director), Kevin McAuliffe
(Non-Executive Deputy Chairman), Nigel Keen (Non-Executive
Director & Senior Independent Director), Ken Bradley
(Non-Executive Director), Stephanie Coxon (Non-Executive
Director), Marcia Bakker (Non-Executive Director).
Capital expenditure Purchases of property, plant and equipment, intangible assets,
Company
Derivatives
Direct channels
associate and joint venture investments, and other financial assets.
PPHE Hotel Group Limited, a Guernsey incorporated Company
listed on the Main Market of the London Stock Exchange plc.
Financial instruments used to reduce risk, the price of which
is derived from an underlying asset, index or rate.
Methods of booking hotel rooms (both digital and voice) not
involving third-party intermediaries.
Employee
engagement survey
EPRA (European
Public Real Estate
Association)
EPS
EU
Euro/EUR €
Exceptional items
Exchange rates
Dividend per share Proposed/approved dividend for the year divided by the weighted
average number of outstanding shares after dilution at the end of
the period.
We ask our team members to participate in a survey to measure
employee engagement.
The EPRA reporting metrics analyse performance (value, profit
and cash flow) given that we have full ownership of the majority
of our properties.
Earnings per share.
The European Union.
The currency of the European Economic and Monetary Union.
Items that are disclosed separately because of their size or nature.
The exchange rates used were obtained from the local national
banks’ website.
Furniture, fittings and equipment.
A form of business organisation in which a company which already
has a successful product or service (the franchisor) enters into
a continuing contractual relationship with other businesses
(franchisees) operating under the franchisor’s trade name
and usually with the franchisor’s guidance, in exchange for a fee.
An owner who uses a brand under licence from PPHE Hotel Group.
The difference between the consideration given for a business
and the total of the fair values of the separable assets and
liabilities comprising that business.
Franchisee
Goodwill
FF&E
Franchise
GRS
Guernsey
Hotel revenue
Income Units
Like-for-like
Like-for-like
hotels including
renovation
LSE
Guest Rating Score is the online reputation score used by
ReviewPro – an industry leader in guest intelligence solutions.
The Island of Guernsey.
Revenue from all revenue-generating activity undertaken by
managed and owned and leased hotels, including room nights,
food and beverage sales.
Cash flows derived from the net income generated by rooms in
Park Plaza Westminster Bridge London, which have been sold
to private investors.
Results achieved through operations that are comparable with
the operations of the previous year. Current year’s reported
results are adjusted to have an equivalent comparison with
previous years’ results in the same period, with similar
seasonality and the same set of hotels.
Like-for-like hotels plus hotels under renovation during the
current and/or previous financial year compared.
London Stock Exchange. PPHE Hotel Group’s shares are traded
on the Premium Listing segment of the Official List of the UK
Listing Authority.
Number of owned hotel properties at the end of the period.
Number of
properties
Number of rooms Number of rooms in owned hotel properties at the end of the period.
Online travel agent Online companies whose websites permit consumers to book
Park Plaza Hotel
Park Plaza® Hotels
& Resorts
Pipeline
various travel related services directly over the Internet.
One hotel from the Park Plaza® Hotels & Resorts brand.
Upper upscale hotel brand. PPHE Hotel Group is master franchisee
of the Park Plaza® Hotels & Resorts brand owned by Radisson Hotel
Group. PPHE Hotel Group has the exclusive right to develop the
brand across 56 countries in Europe, the Middle East and Africa.
www.parkplaza.com
Hotels/rooms that will enter the PPHE Hotel Group system at
a future date.
The currency of the United Kingdom.
Pound Sterling/
GBP £
PPHE Hotel Group PPHE Hotel Group is also referred to as ‘the Group’ and is an
international hospitality real estate group. Through its subsidiaries,
jointly controlled entities and associates, the Group owns, co-owns,
develops, leases, operates and franchises hospitality real estate.
The Group’s primary focus is full-service upscale, upper upscale and
lifestyle hotels in major gateway cities and regional centres, as well as
hotel, resort and campsite properties in select resort destinations.
Created in early 2018, one of the largest hotel companies in the
world. Hotel brands owned by Radisson Hotel Group are Radisson
Collection™, Radisson Blu®, Radisson®, Radisson RED®, Radisson
Individuals, Park Plaza®, Park Inn® by Radisson, Country Inn &
Suites® by Radisson, and Prizeotel. The portfolio of Radisson Hotel
Group includes more than 1,250 hotels in operation and under
development, located in more than 95 countries and territories,
operating under global hotel brands. Jin Jiang International
Holdings is the majority shareholder of Radisson Hotel Group.
www.radissonhotelgroup.com
The hotel rewards programme of Radisson Hotel Group,
including Park Plaza® Hotels & Resorts and art’otel®. The
programme is owned by Radisson Hotel Group. Gold Points®
is the name of the currency earned through the Radisson
RewardsTM programme. www.radissonrewards.com
PPHE Hotel Group’s Responsible Business strategy is a genuine,
active and responsible commitment to our environment and society.
Number of rooms franchised, managed, owned or leased by
PPHE Hotel Group.
A company over which the Group exercises control.
Radisson Hotel
Group
Radisson
RewardsTM
Responsible
Business
Room count
Subsidiary
EPRA Net
Re-instatement
Value (EPRA NRV)
per share
EPRA Net Disposal
Value (EPRA NDV)
EPRA Net Disposal
Value (EPRA NDV)
per share
EPRA Net Tangible
Assets (EPRA NTA)
EPRA Net Tangible
Assets (EPRA NTA)
per share
EPRA LTV
Gearing Ratio
Debt Service
Coverage Ratio
(DSCR)
Interest Cover
Ratio (ICR)
Loan-to-value
ratio (LTV)
Market share
Net debt
Normalised profit
before tax
Occupancy
Average room
rate (ARR)
RevPAR
EPRA NRV divided by the fully diluted number of shares at the
end of the period.
Recognised equity, attributable to the parent company’s
shareholders on a fully diluted basis adjusted to include
properties, other investment interests, deferred tax, financial
instruments and fixed interest rate debt at disposal value.
EPRA NDV divided by the fully diluted number of shares at the
end of the period.
Recognised equity, attributable to the parent company’s
shareholders on a fully diluted basis adjusted to include
properties and other investment interests at fair value and
to exclude intangible assets and certain items not expected
to crystallise based on the Company’s expectations for
investment property disposals in the future.
EPRA NTA divided by the fully diluted number of shares at the
end of the period.
Net debt based on proportionate consolidation divided by the
sum of the market value of the properties and the net working
capital and excluding certain items not expected to crystallise
in a long-term investment property business model (deferred
tax on timing differences and financial instruments) based on
proportionate consolidation.
Net bank debt divided by the sum of total equity excluding
hedging reserve and net bank debt.
EBITDA, less net expenses for financial liability in respect of
Income Units sold to private investors and lease payments,
divided by the sum of interest on bank loans and yearly bank
loans redemption.
EBITDA, less net expenses for financial liability in respect of
Income Units sold to private investors and lease payments,
divided by interest on bank loans.
Interest-bearing liabilities after deducting cash and cash
equivalents as a percentage of the properties’ market value
at the end of the period.
The amount of total sales of an item or group of products by a
company in a particular market. It is often shown as a percentage,
and is a good indicator of performance compared to competitors
in the same market sector.
Borrowings less cash and cash equivalents long-term and
short-term restricted cash.
Profit before tax adjusted to remove unusual or onetime
influences which are not part of the Group’s regular operations.
Total occupied rooms divided by net available rooms or RevPAR
divided by ARR.
Total room revenue divided by the number of rooms sold.
Revenue per available room. Total rooms revenue divided
by net available rooms or ARR x occupancy %.
Weighted average
number of shares
outstanding
during the year
Working capital
The weighted average number of outstanding shares taking into
account changes in the number of shares outstanding during
the year.
The sum of inventories, receivables and payables of a trading
nature, excluding financing and taxation items.
Alternative Performance Measures
In order to aid stakeholders and investors in analysing the
Group’s performance and understanding the value of its assets
and earnings from a property perspective, the Group have
disclosed the following Alternative Performance Measures which
are commonly used in the Real Estate and the Hospitality sectors.
EBIT
EBITDA
EBITDA margin
EBITDAR
Earnings (loss) per
share
Basic earnings per
ordinary share
Adjusted EPRA
earnings
Adjusted EPRA
earnings per share
EPRA earnings
EPRA earnings
per share
EPRA Net Asset
Value (EPRA NAV)
EPRA Net
Re-instatement
Value (EPRA NRV)
Earnings before interest (Financial income and expenses), tax,
share in results of joint ventures and exceptional items
presented as other income and expense.
Earnings before interest (Financial income and expenses), tax,
depreciation and amortisation, impairment loss, share in results
of joint ventures and exceptional items presented as other
income and expense.
EBITDA divided by total revenue.
Earnings before interest (Financial income and expenses), tax,
depreciation and amortisation, impairment loss, rental expenses,
share in results of joint ventures and exceptional items presented
as other income and expense.
Basic earnings (loss) per share amounts are calculated by
dividing the net profit (loss) for the year by the weighted average
number of ordinary shares outstanding during the year. Diluted
earnings (loss) per share amounts are calculated by dividing the
net profit (loss) for the year by the weighted average number of
ordinary shares outstanding during the year plus the weighted
average number of ordinary shares that would be issued on the
conversion of all the dilutive potential ordinary shares into
ordinary shares.
Profit available for PPHE Hotel Group equity holders divided
by the weighted average number of ordinary shares in issue
during the year.
EPRA earnings with the Company’s specific adjustments.
The main adjustments include removal of unusual or onetime
influences which are not part of the Group’s regular operations
and adding back the reported depreciation charge, which is
based on assets at historical cost, and replacing it with a charge
calculated as 4% of the Group’s total revenues, representing
the Group’s expected average cost to upkeep the real estate
in good quality.
Adjusted EPRA earnings divided by the weighted average
number of ordinary shares outstanding during the year.
Shareholders’ earnings from operational activities adjusted
to remove changes in fair value of financial instruments and
reported depreciation.
EPRA earnings divided by the weighted average number
of ordinary shares outstanding during the year.
Recognised equity, attributable to the parent company’s
shareholders, including reversal of derivatives, deferred tax
asset for derivatives, deferred tax liabilities related to the
properties and revaluation of operating properties.
Recognised equity, attributable to the parent company’s
shareholders on a fully diluted basis adjusted to include
properties and other investment interests at fair value
and to exclude certain items not expected to crystallise in
a long-term investment property business model (deferred
tax on timing differences and financial instruments).
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PPHE Hotel GroupPPHE Hotel GroupAnnual Report and Accounts 2023Annual Report and Accounts 2023AppendicesFinancial statementsCorporate governanceStrategic report Contacts
Registrar
Link Market Services (Guernsey) Limited
Mont Crevelt House
Bulwer Avenue
St. Sampson
Guernsey GY2 4LH
Channel Islands
Company Secretary
Carey Commercial Limited
1st and 2nd Floors
Elizabeth House
Les Ruettes Brayes
St. Peter Port
Guernsey GY1 1EW
Channel lslands
Financial advisers and brokers
J.P. Morgan Cazenove
25 Bank Street
Canary Wharf
London E14 5JP
United Kingdom
Jefferies International Limited
Vintners Place
68 Upper Thames Street
London EC4V 3BJ
Investec Plc
30 Gresham Street
London EC2V 7QP
United Kingdom
Public relations
Hudson Sandler LLP
25 Charterhouse Square
London EC1M 6AE
United Kingdom
Useful links Company websites
pphe.com
arenahospitalitygroup.com
For reservations
radissonhotels.com
parkplaza.com
artotel.com
arenahotels.com
arenacampsites.com
Strategic partner
radissonhotelgroup.com
Directors
Eli Papouchado
Yoav Papouchado
Boris lvesha
Greg Hegarty
Daniel Kos
Ken Bradley
Nigel Keen
Stephanie Coxon
Marcia Bakker
PPHE Hotel Group
Motion Building
Floor 9
Radarweg 60
1043 NT Amsterdam
The Netherlands
T: +31 (0)20 717 8602
E: info@pphe.com
E: dkos@pphe.com
Contacts
Greg Hegarty
Daniel Kos
Inbar Zilberman
Robert Henke
(Non-Executive Chairman)
(Alternate Director)
(President & Chief Executive Officer)
(Co-Chief Executive Officer)
(Chief Financial Officer & Executive Director)
(Non-Executive Deputy Chairman)
(Non-Executive Director & Senior Independent Director)
(Non-Executive Director)
(Non-Executive Director)
(Co-Chief Executive Officer)
(Chief Financial Officer & Executive Director)
(Chief Corporate & Legal Officer)
(Executive Vice President Commercial Affairs)
Administrator
Carey Commercial Limited
1st and 2nd Floors
Elizabeth House
Les Ruettes Brayes
St. Peter Port
Guernsey GY1 1EW
Channel lslands
Auditors to the Company and reporting accountants
Kost Forer Gabbay & Kasierer
144 Menachem Begin Road
Tel-Aviv 6492102
Israel
Legal advisers to the Company as to Guernsey law
Carey Olsen (Guernsey) LLP
Carey House
P.O. Box 98
Les Banques
St. Peter Port
Guernsey GY1 4BZ
Channel lslands
Registered Office
1st and 2nd Floors
Elizabeth House
Les Ruettes Brayes
St. Peter Port
Guernsey GY1 1EW
Channel lslands
208
Forward-looking statements
This document may contain certain “forward-looking statements” which reflect the Company’s and/or the
Directors’ current views with respect to financial performance, business strategy and future plans, both with
respect to the Group and the sectors and industries in which the Group operates. Statements which include the
words “expects”, “intends”, “plans”, “believes”, “projects”, “anticipates”, “will”, “targets”, “aims”, “may”, “would”,
“could”, “continue” and similar statements are of a future or forward-looking nature. All forward-looking
statements address matters that involve risks and uncertainties. Accordingly, there are or will be important
factors that could cause the Group’s actual results to differ materially from those indicated in these statements.
Any forward-looking statements in this document reflect the Group’s current views with respect to future
events and are subject to risks, uncertainties and assumptions relating to the Group’s operations, results
of operations and growth strategy. These forward-looking statements speak only as of the date on which they
are made. Subject to any legal or regulatory obligations, the Company undertakes no obligation publicly to update
or review or revise any forward-looking statement, whether as a result of new information, future developments
or otherwise. All subsequent written and oral forward-looking statements attributable to the Group or
individuals acting on behalf of the Group are expressly qualified in their entirety by this paragraph. Nothing in
this document should be considered as a profit forecast.
Consultancy, design and production
www.luminous.co.uk
Design and production
www.luminous.co.uk
PPHE Hotel GroupAnnual Report and Accounts 2023 PPHE Hotel Group
Motion Building
Floor 9
Radarweg 60
1043 NT Amsterdam,
The Netherlands
T: +31 (0)20 717 8602
E: info@pphe.com
pphe.com