in Ireland, the UK and the United States Down by
Less than 1% Compared to 2002;
Pre-tax Profits Amounted to €45.8 million
|LONDON, February 26, 2004
Preliminary Reults of Jurys Doyle Hotel Group PLC for the 12 months Ended December 31, 2003
During 2003 we continued to focus attention on the momentum and strategic direction of the Group by expanding our portfolio of properties in major population centres. Jurys Inn Newcastle opened for business in February 2003 and Jurys Inn Glasgow opened in August 2003. Both of these Jurys Inns have performed well to date and this is very encouraging as we move forward. Our new Jurys Inn in Leeds opens tomorrow and this will be followed by the opening of the new Jurys Inn Chelsea within the next few months.
The overall occupancy level across our hotel operations in Ireland, the UK and the United States in 2003 was down by less than 1% compared to the 12 months of 2002. Nevertheless, from a peer performance viewpoint, independent research indicates that we again outperformed our industry competitor set in the Dublin, London and Washington markets.
The Jurys Inns portfolio produced another good result in 2003. The strength of the Jurys Inns brand reflects the combination of excellent locations and an original product offering in terms of hotel quality and value for money".
Continuing, Mr. McCann said: Construction is progressing on our new Jurys Inns developments in Parnell Street (Dublin), Heathrow and Southampton and we are nearing completion of our new 4-star Jurys Hotel Boston. We are also delighted to announce plans for a new 250 bedroom Jurys Inn in Nottingham which will open in late 2005".
Concluding, Mr. McCann said: "The opening of these new Jurys Inns and
Jurys Hotel Boston is a significant advancement of our development strategy
and evidence of the excellent scope for Jurys Doyle to increase our presence
in major cities where we can expand our brand."
Jurys Doyle Hotel Group plc - Preliminary Results for the 12 months ended 31 December 2003
Results for 2003:
The Directors of Jurys Doyle Hotel Group are pleased to report a satisfactory performance for the 12 months ended 31 December 2003.
As the prior audited period consisted of the 8 months ended 31 December 2002 the 2002 comparative figures stated below, in brackets, are the unaudited pro-forma financial results for the 12 months ended 31 December 2002.
Turnover for the year ended 31 December 2003 amounted to €253.773 million (2002: €268.138 million) and the Group reported an operating profit, before profit on disposal of hotels, of €56.027 million (2002: €72.550 million). Profit before taxation for the year amounted to €45.842 million (2002: €52.918 million). Basic earnings per share amounted to 60.4 cent (2002: 67.5 cent).
During 2003, we disposed of two of our 3-star 'full service' hotels in Dublin, the Jurys Green Isle and the Jurys Tara, which realised a combined pre-tax profit of €3.600 million. Interest expense amounted to €13.785 million in 2003 (2002: €20.714 million), net of financial income of €3.066 million on foreign currency contracts used to manage the Group's exposure on translation of sterling and US dollar earnings. The tax charge in 2003 amounted to €7.934 million which included taxation of €747,000 arising from the profit on hotel disposals. This equates to an effective Group tax charge of 17.3%. Net assets at 31 December 2003 were €662.675 million and net debt amounted to €337.086 million. At the same date, the ratio of net debt to shareholders' funds was 51% and net asset value per share amounted to €10.53.
The outcome for 2003 was achieved against the background of a challenging trading environment for the hotel industry in our three markets. In the earlier part of the year the business was impacted by the relative weakness in the global economy, geo-political uncertainty and the impact of the SARS health alert on long-haul airline traffic into the important London market.
In addition, the appreciation of the euro against sterling (up 10%) and the US dollar (up 25%) during 2003 also resulted in lower euro translated profits, as compared to the prior year, reflecting the Group's substantial business interests in the United Kingdom and the United States. The impact of euro appreciation for the year ended 31 December 2003 was to reduce Group turnover by €16.58 million and, but for this, the Group would have reported modest growth in turnover of just under 1%. Similarly, euro appreciation reduced operating profit by €5.2 million, or 7%.
However, the impact of euro appreciation on profit before taxation was limited to approximately €920,000 due to the benefit of lower euro translated interest costs and the inclusion of financial income on foreign currency contracts referred to above.
In the second half of 2003, we experienced an improvement in trading in some, but not all, of our markets. In particular, trading conditions improved within our hotel operations in the UK and the United States and within our Jurys Inns portfolio in Ireland and the UK. In these circumstances, and taking the full year into account, the Group's performance was satisfactory and we have continued to perform better than many of our industry peers. This is evidenced by our continued out performance in occupancy levels in key market segments as compared to our competitor set. Whereas much of the international hotel industry experienced reduced occupancy levels, a reduction in achieved room rates and decreased profits during 2003 our experiences have been different in a number of areas.
The overall occupancy level across our hotel operations in Ireland, the UK and the United States in 2003 was down by less than 1% against the 12 months of 2002. However, independent research indicates that our occupancy levels continued to out-perform our competitor set in the Dublin, London and Washington markets. Our hotels as a whole in the UK and the United States reported small increases in their overall achieved room rates but these were offset by a small reduction in achieved room rate in our Irish hotels. As a consequence, and taking occupancy levels and achieved room rates into account across our hotel operations, we did not realise any growth in the key profit driver of revenue per available room (revpar). This factor, together with increased operating and payroll costs during 2003 and the reduction in trading profit contribution in the Irish hotel operation arising from hotel disposals in 2002 and 2003 resulted in a reduction in trading profits (in local currency) in each of our hotel operations in Ireland, the UK and the United States.
Our Jurys Inns portfolio performed well in 2003 across the enlarged portfolio of thirteen properties in Ireland and the UK. There were a number of particularly encouraging performances. In Dublin, our two Jurys Inns at Christchurch and Custom House reported good growth in trading profit in 2003, as compared to the twelve months to 31 December 2002, on the strength of good growth in revenue per available room. In the UK, there were also a number of good performances, as reported in sterling, especially from the recently opened hotels. Jurys Inn Croydon, which opened in February 2002, reported strong growth in trading profit in 2003 and delivered ahead of expectations. Jurys Inn Newcastle and Jurys Inn Glasgow, which opened in February 2003 and August 2003 respectively, also performed very well with reported trading profit ahead of expectations. The inclusion of these new Jurys Inns in Croydon, Newcastle and Glasgow contributed to strong growth in trading profit in 2003 across our Jurys Inns portfolio in the UK as compared to the previous 12 months.
Developments During 2003:
Our strategy remains focused on the development of a balanced portfolio of 4 and 5-star hotels and 3-star Jurys Inns in major population centres in Ireland and the UK and hotels in the north-east region of the United States. The success of our strategy is evidenced by the continued success of the Jurys Inns brand which has performed very well in challenging trading conditions. The development activity in 2003 reflected the continued execution of this strategy of expansion and the reshaping of our hotel portfolio in order to improve investment returns across the Group.
In January 2003, we announced plans for the opening of our third Jurys Inn in Dublin. Located at Parnell Street, construction is nearing completion on this 253 bedroom property which is scheduled to open in summer 2004.
Jurys Inn Newcastle opened for business on 14 February 2003. This 274 bedroom property is the largest hotel in Newcastle and has been very positively received in the local hospitality market. It already achieves the ultimate distinction of 100% occupancy on a regular basis - a notable achievement for a large new hotel in any city.
In February 2003, we also announced an investment of €34 million in the development of a new 364 bedroom Jurys Inn at London Heathrow Airport which is scheduled to open in early 2005. Construction is well underway and its opening will represent our fourth Jurys Inn in the London area and will bring our total market presence in London, including our three 4-star hotels, to seven properties representing almost 1,600 bedrooms.
In June 2003, we announced plans for a new Jurys Inn in Southampton which will consist of 257 bedrooms and is due to open in 2005. It will be the focal point of a new development overlooking East Park in the city centre.
Our new Jurys Inn at Glasgow opened for business on 22 August 2003 - some five weeks ahead of schedule. This 321 bedroom property is the largest hotel in Scotland and we are very encouraged by the initial customer response and the profit result for the period to 31 December 2003.
During 2003, in line with the Group's strategy of reshaping the profile of our hotel assets and driving improved investment returns across our property portfolio, the Group sold two Dublin based 3-star 'full service' hotels - the 90 bedroom Jurys Green Isle Hotel and the 113 bedroom Jurys Tara Hotel as going concerns. Whereas both of these hotels performed well within their market segments they did not fit into the Group's strategic plan and, as a consequence, we accepted attractive offers for them. The total cash consideration, amounting to €25.2 million, was well above their combined carrying values and a pre-tax profit of €3.6 million was realised on these disposals. The proceeds are being re-invested in our Jurys Inns development programme which will generate superior investment returns.
Developments in 2004:
Our development programme for 2004 has started well and reaffirms our strategy of focusing on the 4-star and 3-star 'budget plus' sectors of the hotel market. We are continuing with the expansion of the Jurys Inns brand in the UK and we are delighted to announce today plans for a new 250 bedroom Jurys Inn at Nottingham. Scheduled to open in late 2005, this hotel will be located in the city centre close to Nottingham Railway Station and is ideally situated to service the 600,000 people living in the greater Nottingham area and the 3 million people located within a 1 hour drive of the city. It will be built as part of a multi-use development which will include 165,000 square feet of office and residential space together with car parking. The new Jurys Inn Leeds opens tomorrow, 27 February, and we are confident that this new 248 bedroom hotel will perform well.
Looking forward, we are making good progress with the construction of Jurys Inn Chelsea and with our new 4-star Jurys Boston Hotel in the United States - both of which will open within the next six months.
On 16 February 2004, we announced the disposal of one of our 4-star hotels in Ireland, Jurys Limerick Hotel, for €9.75 million in cash. This 95 bedroom hotel will continue to be operated as a going concern by its new owners. However, given our concentration on larger sized hotels it did not fit with our strategic plan and, therefore, we decided that it would be preferable to concentrate our activities in Limerick on further developing the business of our Jurys Inn Limerick which has been in operation since 1997.
Reflecting the Group's strategy of expansion through a mixture of leasing and full ownership - thereby achieving the twin objectives of continued expansion and enhanced returns to shareholders - we are leasing a number of the new developments. Jurys Inn Newcastle is leased and the new Jurys Inns in Parnell Street (Dublin), Southampton and Nottingham will also be leased. It is intended that the other new Jurys Inns developments in Leeds, Chelsea and Heathrow will be owned by the Group.
Strategy and Trading Update:
Taking into account the strategic developments during 2003, and during 2004 to date, by the end of 2005 Jurys Doyle will have added almost 2,400 new bedrooms across one new Jurys Hotel and eight new Jurys Inns since 1 January 2003 and we will have disposed of almost 300 bedrooms which did not fit with our long term strategy. This represents a net additional 2,100 bedrooms - equivalent to an increase of 35% on the total bedrooms in the Group at the start of 2003.
Our business strategy has served us well and we believe it will continue to do so. We experienced improved trading conditions in the second half of 2003 in some of our markets. This improvement - particularly in our hotel operations in the UK and the United States and within our Jurys Inns division in Ireland and the UK - has continued into the early months of 2004 and, therefore, we are cautiously optimistic about the business outlook for the Group in terms of modest pre-tax profit growth in 2004. In that context, we believe that when the improvement in trading is more firmly established on a broader basis, with a sustained recovery in all our markets without any external setbacks, we will be moving into that growth phase with an excellent portfolio and market position.
The Board of Directors is proposing a final dividend of 15.56 cent per share which, in addition to the interim dividend paid of 8.14 cent per share, brings the total dividend for 2003 to 23.70 cent per share. This compares to the total dividend paid of 15.33 cent per share for the 8 months ended 31 December 2002 - an underlying annualised increase of 3%.
If declared, the final dividend will be paid on 21 April 2004 to holders of ordinary shares whose names appear on the Company's register at the close of business on 5 March 2004.
The dividend calendar is as follows:
The Annual Report and Accounts for 2003 will be dispatched to shareholders on 19 March 2004. The Annual General Meeting of the Company will take place on 21 April 2004 at Jurys Ballsbridge Hotel, Dublin.
Jurys Doyle Hotel Group Plc
Pat McCann, Chief Executive
|Also See||The Art of the Deal in a Tough Environment: Saunders’ Boston Success Story / June 2002|
|Jurys Hotel Group Acquires Doyle Hotel Group; Will Create Ireland's Largest Hotel Chain / April 1999|