Adjusting items to EBITDA 


EURmillion                                                     Six months ended 30 June     Six months ended 30 June 2020 
                                                             2021 
 
Net property revaluation movements through profit or loss              2.5                     (27.3) 
Remeasurement gain on right-of-use assets                              0.3                     - 
Hotel pre-opening expenses                                             (0.4)                   - 
Impairment of fixtures, fittings and equipment at leased hotels        -                       (1.1) 
Impairment of right-of-use assets                                      (0.3)                   (7.4) 
Impairment of goodwill                                                 -                       (3.2) 
Accounting loss on sale and leaseback of Clayton Hotel Charlemont      -                       (1.6) 
Adjusting items1                                                       2.1                     (40.6)

Adjusted EBITDA is presented as an alternative performance measure to show the underlying operating performance of the Group. Consequently, 'adjusting items' items which are not reflective of normal trading activities or distort comparability either period on period or with other similar businesses are excluded.

The Group recorded a net revaluation gain through profit or loss of EUR2.5 million on the revaluation of its property assets for the first six months of 2021 which represents revaluation losses through profit or loss of EUR1.1 million and the reversal of previous revaluation losses recognised through profit or loss of EUR3.6 million. Further detail is provided in the 'Property, plant and equipment' section.

In the period ended 30 June 2021, the Group agreed a rent amendment with the landlord for one of its hotels resulting in a remeasurement of the lease liability. As a result of this modification, the lease liability has decreased by EUR1.1 million. As the right-of-use asset had previously been impaired, the modification resulted in the right-of-use asset being reduced by EUR0.8 million to EURnil. The difference has been recognised as a remeasurement gain on right-of-use assets in profit or loss.

The Group also incurred EUR0.4 million of pre-opening expenses, primarily in relation to Maldron Hotel Glasgow City which opened in August and The Samuel Hotel, Dublin which is expected to open in Q1 2022.

As a result of the ongoing impact of Covid-19 on expected trading, particularly on near term profitability, assets related primarily to our leased properties including goodwill, fixtures, fittings and equipment and right-of-use assets were assessed for impairment based on their discounted cash flows. The impact on near term cash flows has led to an impairment through profit or loss totalling EUR0.3 million on the right-of-use asset of one leased hotel.

Depreciation of right-of-use assets

Under IFRS 16, the right-of-use assets are depreciated on a straight-line basis to the end of their estimated useful life, most typically the end of the lease term. The depreciation of right-of-use assets decreased by EUR0.8 million to EUR9.8 million due principally to the impairments of the right-of-use assets recorded during 2020 which have reduced the depreciation charge accordingly, offset by the full period impact of Clayton Hotel Charlemont, Dublin which was leased from April 2020.

Depreciation of property, plant and equipment

The depreciation of property, plant and equipment remained in line with the prior period at EUR13.4 million for the first six months of 2021. The decrease in depreciation arising from the sale and leaseback of Clayton Hotel Charlemont, Dublin in April 2020 was offset by the additional charge on the new conference centre at Clayton Hotel Cardiff Lane, Dublin and the Group's element of the renovation works at Clayton Hotel Burlington Road, Dublin, both of which were completed after 30 June 2020.

Finance Costs 


EURmillion                                      Six months ended 30 June 2021 Six months ended 30 June 2020 
 
Interest expense on bank loans and borrowings      4.9                           4.2 
Impact of interest rate swaps                      1.3                           0.9 
Other finance costs                                1.0                           0.7 
Net exchange gain on financing activities          -                             (0.1) 
Capitalised interest                               (1.2)                         (0.6) 
Finance costs excluding the impact of IFRS 16      6.0                           5.1 
Interest on lease liabilities                      11.8                          10.9 
Finance costs                                      17.8                          16.0

Interest on lease liabilities increased by EUR0.9 million primarily due to the full period impact of the lease on Clayton Hotel Charlemont, Dublin from April 2020.

The Group also incurred higher margins on loans as shown by the increase to the Group's weighted average interest cost in respect of Euro denominated borrowings and Sterling denominated borrowings for the year, which were 2.4% (2020: 1.4%) and 3.6% (2020: 2.9%) respectively. These increases were partially offset by additional capitalised interest on the site in Shoreditch, London (acquired in August 2019) and the new Maldron Hotel and residential units at Merrion Road in Dublin.

Tax charge

As the Group incurred a loss before tax in the first six months of 2021, the Group has recognised a tax credit of EUR7.4 million in the six month period ended 30 June 2021 primarily relating to the net value of tax losses which will be available to offset against future taxable profits. The value of the tax losses incurred in the current period is EUR5.8 million. The Group also recognised a tax credit of EUR1.9 million in the current period relating to the remeasurement of UK deferred tax assets and liabilities, which are forecast to be realised at the corporation tax rate of 25%. During the current period, the UK government substantively enacted an increase in the corporation tax rate from 19% to 25%, with effect from 1 April 2023.

Loss per share (EPS)

The Group's loss per share for the first six months of 2021 continued to be impacted by the Covid-19 pandemic restrictions. This resulted in a basic loss per share of 13.6 cents and an adjusted basic loss per share of 14.5 cents for the six months ended 30 June 2021. 


Cents (EUR)                          Six months ended 30 June 2021 Six months ended 30 June 2020 
 
Loss per share - basic             (13.6)                        (34.0) 
Loss per share - diluted           (13.6)                        (34.0) 
Adjusted loss per share - basic1   (14.5)                        (13.1)

Proactive cash flow management leaves the Group well positioned

The Group continues to maintain a strong liquidity position with significant financial resources. At the end of June 2021, the Group had cash resources of EUR40.9 million and undrawn committed debt facilities of EUR229.0 million.

The Group's proactive approach to cash flow management limited the cash outflow to EUR24 million (as defined above) for the first six months ended 30 June 2021. This principally comprises committed and essential capital expenditure of EUR3.6 million, contract fulfilment cost payments of EUR3.0m, costs paid on entering new leases and agreements for lease of EUR0.6 million, fixed rent payments of EUR15.7 million and interest and finance cost payments of EUR7.0 million offset by an inflow from net operating cash of EUR5.6 million from trade and working capital.

The Group has continued the measures adopted during 2020 to mitigate the impact of Covid-19 on cash including proactive working capital management and a rolling review of costs across all areas of the Group. The Group continues to benefit from government support initiatives in both Ireland and the UK. These have taken the form of government grants and assistance and the deferral of VAT and payroll tax liabilities.

At 30 June 2021, the Group has capital expenditure commitments totalling EUR29.6 million which relates primarily to the new Maldron Hotel and residential units at Merrion Road in Dublin. This project is expected to be completed in 2022 at which point the Group will legally complete the agreed contract to sell the residential units for up to EUR42.4 million to Irish Residential Properties REIT plc ("IRES"), the overall value depending on how Part V obligations (Social and Affordable housing allocation) are settled with Dublin City Council. Those funds will then be received. Following the period end, the Group signed a new agreement on 2 July 2021 in relation to the new-build hotel development of the Maldron Hotel Shoreditch, London. The estimated cost of the project is GBP25.0 million (EUR29.1 million).

Projected lease payments payable under current lease contracts as at 30 June 2021 are EUR17.5 million for the six months ending 31 December 2021 and EUR31.2 million for the year ending 31 December 2022. In addition to this, the Group has committed to non-cancellable lease rentals and other contractual obligations payable under the agreements for lease which have not yet commenced. These payments are projected to amount to EUR7.6 million for the six months ending 31 December 2021 and EUR18.0 million for the year ending 31 December 2022. The timing and amounts payable are subject to change depending on the date of commencement of these leases and final bedroom numbers.

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September 01, 2021 02:00 ET (06:00 GMT)