Pphe Hotel Regulatory News (PPH)

10 Sep 2007 07:02

Park Plaza Hotels Limited10 September 2007 10 September 2007 PARK PLAZA HOTELS LIMITED ("Park Plaza" or the "Group") Unaudited Proforma results for the six months ended 30 June 20071 Park Plaza Hotels Limited is an owner and operator of 24 full-service four-stardeluxe hotels and trendy boutique hotels in Europe and the Middle East. Highlights Unaudited Proforma Financial Statistics for six months ended 30 June 2007(1) Six months ended 30 June 2007 Six months ended 30 June 2006 Euros (except percentages) Euros (except percentages) (Unaudited) (Unaudited)Occupancy(2) 79.9% 76.4%Average Room Rate(2) 118.5 113.4Revpar(2) 94.7 86.7Total Revenue 46.7 million 40.4 millionEBITDA(3) 12.0 million 10.8 million • Strong first half performance, primarily reflecting good results from our UK and Dutch hotels; • Successful listing of shares on AIM and fundraising of £85m in July; • Good progress on committed hotel development projects: - Park Plaza County Hall (London) on schedule for November opening - planning permission granted for an additional 82 rooms at the Park Plaza Westminster, scheduled to open in 2010 Commenting on the results, Boris Ivesha, Chief Executive of Park Plaza said, "Weare very pleased to report a strong first half performance in our first set ofresults as a public company, primarily reflecting good results from our UK andDutch hotels. During the half we made good progress on our committed pipelineof projects that will more than double the number of rooms in our portfolio overthe next four years. We were extremely pleased to welcome new institutional investors to the Companythrough our successful AIM listing in July. The £85 million raised through theplacing gives us the financial flexibility to capitalise on growth opportunitiesbeyond our committed projects. We remain confident of the growth potential ofthe Group." 1. Park Plaza Hotels Limited was incorporated on 14 June 2007, but had nooperations during the period ended 30 June 2007 as the merger of Euro Sea Groupand acquisition of Park Plaza Group did not take place until 17 July 2007. Allfigures in this statement, therefore, relate to unaudited proforma financialperformance except where otherwise indicated. The unaudited proforma financialinformation should be read in conjunction with the notes on page 9. 2. Figures relate to hotel operations only. 3. Earnings before interest, tax, depreciation and amortisation. Enquiries: Park Plaza Hotels Tel: +44 (0)20 7034 4800Boris Ivesha/Chen Moravsky Hudson Sandler Tel: +44 (0)20 7796 4133Jessica Rouleau / Wendy Baker CHIEF EXECUTIVE'S INTERIM STATEMENT Overview We are very pleased to report a strong first half performance, primarilyreflecting good results from our UK and Dutch hotels. The first six months of2007 were busy for Park Plaza Hotels. We advanced committed hotel projects inLondon and Dutch and franchise arrangements for a further 12 hotels. Managementalso devoted a significant amount of time to the successful listing of theCompany's shares on AIM in July, which raised £85 million through a placing withnew institutional investors. The Company's strategy is to grow both organically and through the acquisitionand development of new hotels in the affordable luxury segment of the market.Management expects our current pipeline of committed projects to more thandouble the number of rooms in our portfolio over the next four years, while theproceeds from the placing will provide the financial flexibility to capitaliseon growth opportunities beyond those to which we are already committed. Financial Performance All of the financial information in this release and discussed below is on anunaudited proforma basis. The discussion below should be read in conjunctionwith the information and explanation of the pro forma adjustments and relatednotes on page 9 of this release. Total revenue increased by almost 16% to Euro 46.7 million (2006: Euro 40.4million), driven by good performances in the UK and The Netherlands. Our hotelmanagement operation and hotels in the UK drove an almost 11% increase in EBITDAto Euro 12.0 million (2006: Euro 10.8 million). This result was achieved inspite of slower than expected market improvements in Germany and Hungary and therefurbishments at the art'otel Kudamm and Park Plaza Vondel. Theserefurbishment projects led to the closure of 90 rooms whilst work was beingcarried out. The loss before tax reduced to Euro 1.1 million (2006: loss of Euro 6.9million), as a result of strong operating performance and a reduction in one-offfinancing expenses. This led to a loss per share of --0.03c (2006: loss of-0.15c). Post IPO, Park Plaza has a robust proforma balance sheet with Euro 98 millionnet debt and cash balances of Euro 127 million, providing the Company with asolid financial platform from which to grow its portfolio beyond currentcommitted projects. The Group achieved good Revpar growth, with a 9% increase to Euro 94.7 (2006:Euro 86.7). The UK hotels achieved strong Revpar growth to Euro 142.4, a 22%increase over 2006 (2006: Euro 116.3). This result was driven by both improvedoccupancy and average room rates (ARR). In The Netherlands, Revpar increased toEuro 109.4 (2006: Euro 103.0), as a result of an improvement in ARR of almost7%. Our hotels in Berlin, Dresden and Budapest saw a small reduction in Revparto Euro 49.4 (2006: Euro 50.1). Dividends As we indicated at the time of our listing, the Group intends to retain itsearnings for use in, and to grow, the business and does not envisage paying anydividends for at least the first 18 months following Admission. The Board willkeep this policy under review in light of the growth opportunities available tothe Group. Review of Operations Overview Park Plaza is both an owner and operator of hotels. This integrated approachenables the Group to take advantage of and maximise returns on differentopportunities. Our 24 properties (4,128 rooms) operate under two brands: ParkPlaza, over which we have exclusive rights in 56 countries in Europe and theMiddle East and art'otel, a brand to which the Company owns the worldwiderights. Our brands appeal to different target customers. Park Plaza hotels arepositioned in the mid-scale to upscale segment of the full-service market andtend to be located in the heart of business and tourist centres. The art'otelbrand is built on the concept of individually themed hotels, each of whichfocuses on well-known, modern artists. These hotels, which operate in thefour-star segment of the market, tend to appeal to a sophisticated clientelewith an interest in art and culture. Through our strategic partnership with Carlson, one of the world's largesttravel and hospitality companies, Park Plaza has access to Carlson's powerfulreservation and distribution system, airline partnerships, loyalty cards andcross-selling opportunities. This allows us to benefit from the economies ofscale, extensive operating experience and significant negotiating power ofCarlson, while retaining the flexibility and speed of reaction associated withmuch smaller organisations. Our Markets The UK, The Netherlands and Germany are currently the principal markets in whichPark Plaza operates. Overview of Hotel Operating Results for the Six Months to 30 June 2007 The following is a discussion of certain summary operating statistics for ParkPlaza's owned/co-owned, operated and managed hotels for the periods indicated.These data have been extracted from Park Plaza's unaudited management accountsand may therefore not be comparable to Park Plaza's audited results over theperiods shown or to be expected for the full 2007 fiscal year or any futureperiod. UK Hotel Operations: Key Operating Statistics Six months to 30 June 2007 Six months to 30 June 2006 • (Unaudited) • (Unaudited) Occupancy 83.5% 74.9%Average Room Rate 170.6 155.2Revpar 142.4 116.3Total Revenue 18.2 million 15.7 millionEBITDA 5.3 million 4.1 million The London market, where Park Plaza currently owns or co-owns four hotels,experienced good growth during the first six months of 2007. All our Londonhotels achieved Revpar growth of over 20% as a result of increased market shareand better rates. The London hospitality sector has remained buoyant over thelast few years and London visitor numbers growth has been sustained.Improvements in pricing continue to be generated in the segment of the market inwhich Park Plaza operates. The Netherlands Hotel Operations: Key Operating Statistics Six months to 30 June 2007 Six months to 30 June 2006 • (Unaudited) • (Unaudited) Occupancy 87.3% 87.0%Average Room Rate 125.3 118.4Revpar 109.4 103.0Total Revenue 11.3 million 10.0 millionEBITDA 3.9 million 3.4 million Amsterdam is currently one of the best performing hotel markets in Europe interms of occupancy, with very strong demand generated by both corporate andleisure guests. The market is driven by the strength of the local economy, thecity's international economic importance and its appeal to the leisure market.Four-star hotels in the city turned in a strong performance yet again during thefirst six months of 2007, with mid single digit Revpar growth, driven primarilyby increased rates. Although Amsterdam's occupancy rates declined slightly, thePark Plaza Victoria maintained stable occupancy, increasing both rates andmarket share. Park Plaza Vondel, acquired as a three-star property in 2006, hada slightly weaker performance than last year as a result of room closures duringthe current refurbishment to transform it into a four-star property. Work isdue to be completed by the end of March 2008. Germany and Hungary Hotel Operations: Key Operating Statistics Six months ended 30 June 2007 Six months ended 30 June 2006 • (Unaudited) • (Unaudited) Occupancy 72.7% 70.7%Average Room Rate 67.9 70.9Revpar 49.4 50.1Total Revenue 14.0 million 12.0 millionEBITDA -0.7 million 0.5 million Notwithstanding significant improvements during the World Cup in June 2006,Germany has been a challenging market for a number of years. During the firsthalf of 2007, Berlin hotels achieved increases in occupancy rates butexperienced equivalent decreases in ARR, resulting in a stable Revpar. Our Berlin hotels mainly followed this market trend in the first half of 2007.As a result, we are taking a number of steps to improve performance. We havetaken action to change the business mix of Park Plaza Berlin from leisure tocorporate customers and we expect this to generate improvements in Revpar nextyear. art'otel Berlin Mitte's performance suffered following the opening ofPark Plaza Wallstreet nearby, and we are planning a renovation starting inNovember to improve its standards to meet the requirements of this highlycompetitive market. art'otel City Centre West (Berlin) lost market share inthe half as our focus on improving ARR led to reductions in occupancy rates.At art'otel Kudamm, we completed a major renovation in August, which we expectto show benefits in 2008. The Budapest market suffered in the first half of 2007 from an increase insupply of high quality rooms, and the performance of art'otel Budapest wasweaker than in the prior year as a result. Management and Holdings Operation Six months ended 30 June 2007 Six months ended 30 June 2006 • (Unaudited) • (Unaudited) Total Revenue 3.2 million 2.8 millionEBITDA 3.5 million 2.8 million Revenues from our managed and franchised hotels rose to Euro 3.2 million (2006:Euro 2.8 million). EBITDA in our Management and Holdings operation rose to Euro3.5 million (2006: Euro 2.8 million). This figure includes EBITDA from thesemanaged and franchised hotels, as well as EBITDA generated from intra-groupmanagement fees. Portfolio developments During the first half of 2007 we started the refurbishment of the Park PlazaVondel in Amsterdam. To date, 60% of the rooms have undergone completerefurbishment as have meeting rooms and the business area in one of the threebuildings. This phase will be completed by mid September, enabling the hotel toreturn to normalised operations. The complete refurbishment of the remainder ofthe hotel's rooms and public areas is expected to be completed by the end of thefirst quarter of 2008. This major refurbishment will reposition the Vondel as afour-star hotel and is expected to drive improved performance and occupancylevels. In early November, we expect to start the refurbishment of 60 rooms andall the public areas at the Park Plaza Mandarin in Eindhoven. art'otel Berlin Mitte will undergo a renovation starting in November in order tocontinue its leadership in this highly competitive market. The refurbishment ofthe art'otel Ku'damm in Berlin was completed at the end of August, providingthis 133 room hotel located in the heart of the city with a completemodernisation of all its rooms, the installation of sound proof windows and anew look lobby, bar and public areas. During the period we have also advanced the implementation of a new yieldmanagement system, which allows us to take account of demand from both theCarlson Reservation System and our own internet bookings in real time. Thissystem will enable us to maximise room rates. The project is running on timeand to budget and is expected to be fully rolled out by the end of this year. Development pipeline During the first half of 2007 we have continued to work toward our goal of morethan doubling the number of hotel rooms in our portfolio by 2010. This will beaccomplished through the completion of five committed projects in London,Amsterdam and Germany. In London, the Park Plaza County Hall, a managedproperty with 395 rooms, remains on schedule for opening in November. Duringthe period we undertook an extensive marketing campaign, which has resulted in asignificant level of interest and bookings from corporate and leisure customers. Work on the Park Plaza Westminster Bridge property, in which the Company has a33% ownership interest, continues to plan. This new concept apart-hotel beingdeveloped close to Waterloo railway station, is scheduled to open in 2010. Theproject is being financed through the sale of its 953 rooms and as of the firstweek of September 2007, 70% have been pre- sold. We are also pleased toannounce that planning permission was recently granted to add circa 82 rooms tocurrent plans. Once completed, the Company will also receive fee income tomanage this hotel. Outlook Overall, our hotels continue to perform in line with our expectations. Ourdevelopment pipeline of committed projects is progressing to plan and to budgetand we remain confident of the growth potential of the Group beyond theseopportunities. Following our admission to AIM, we are now better placed toreview all appropriate opportunities to further expand the Group's portfolio.Our integrated business model, strong brands and relationship with Carlsonprovide us with an excellent platform from which to take advantage of theopportunities in our growing target markets. Owned / co-owned Hotels - Selected Unaudited Operational and Financial Statistics * The following table provides certain summary operating statistics for ParkPlaza's owned/co-owned, operated and managed hotels for the periods indicated.These data have been extracted from Park Plaza's unaudited management accountsand may therefore not be comparable to Park Plaza's audited results over theperiods shown or to be expected for the full 2007 fiscal year or any futureperiod. No. of Occupancy ADR Revpar rooms Jan-Jun Jan-Jun Jan - Jan-Jun Jan-Jun Jan - Jan-Jun Jan- Jan - Dec Dec Dec Jun 2007 2006 2006 2007 2006 2006 2007 2006 2006 • • • • • •Park Plaza 306 95% 95% 95% 147 142 143 139 136 137Victoria Amsterdam Vondel Park Plaza 143 78% 77% 81% 102 96 94 79 74 76(Amsterdam) Park Plaza Utrecht 120 81% 83% 83% 108 92 96 87 76 79(Utrecht) Park Plaza 102 86% 80% 78% 102 95 92 87 76 72Mandarin Eindhoven Park Plaza 394 80% 68% 76% 151 148 144 121 101 109Riverbank(London) Plaza on the River 66 76% 58% 72% 285 247 268 217 143 192(London) Park Plaza 299 88% 85% 88% 168 147 149 148 125 131Victoria(London) Park Plaza 119 88% 82% 86% 181 160 162 159 131 140Sherlock Holmes(London) * Park Plaza was incorporated on 14 June 2007, but had no operations during theperiod under review as the merger of Euro Sea Group and acquisition of ParkPlaza Group did not take place until 17 July 2007. All figures, therefore,relate to unaudited proforma financial performance. The unaudited proformafinancial information should be read in conjunction with the notes on page 9. Owned / co-owned Hotels - Selected Unaudited Operational and Financial Statistics * The following table provides certain summary operating statistics for ParkPlaza's owned/co-owned, operated and managed hotels for the periods indicated.These data have been extracted from Park Plaza's unaudited management accountsand may therefore not be comparable to Park Plaza's audited results over theperiods shown or to be expected for the full 2007 fiscal year or any futureperiod. Total Revenue GOP EBITDA Jan-Jun Jan-Jun Jan - Dec Jan-Jun Jan-Jun Jan - Dec Jan-Jun Jan-Jun Jan - Dec 2007 2006 2006 2007 2006 2006 2007 2006 2006 • '000 • '000 • '000 • '000 • '000 • '000 • '000 • '000 • '000Park Plaza Victoria 5,480 4,740 9,934 2,415 2,058 4,526 1,923 1,675 3,682(Amsterdam) Vondel Park Plaza 1,929 1,884 4,283 697 941 2,118 353 516 1,729(Amsterdam) Park Plaza (Utrecht) 1,675 1,469 2,943 805 625 1,295 689 526 1,106 Park Plaza Mandarin 2,166 1,906 2,689 1,085 855 1,766 919 700 1,463(Eindhoven) Park Plaza 8,094 7,306 15,866 3,148 2,642 6,229 1,699 1,444 4,089Riverbank(London) Plaza on the River 1,421 925 2,545 952 540 1,761 829 444 1,537(London) Park Plaza Victoria 6,209 5,336 7,126 2,884 2,470 11,070 2,193 1,844 3,894(London) Park Plaza Sherlock 2,495 2,086 4,563 1,109 880 2,074 565 368 1,024Holmes(London) * Park Plaza was incorporated on 14 June 2007, but had no operations during theperiod under review as the merger of Euro Sea Group and acquisition of ParkPlaza Group did not take place until 17 July 2007. All figures, therefore,relate to unaudited proforma financial performance. The unaudited proformafinancial information should be read in conjunction with the notes on page 9. UNAUDITED PRO-FORMA FINANCIAL INFORMATION The following unaudited pro forma financial information of the Group has beenprepared to show the effect on the consolidated balance sheet of the Group at 30June 2007, as if the Placing and the acquisition of the Euro Sea Group (whichfor accounting purposes is treated as a merger) and the acquisition of the ParkPlaza Group, had occurred at that date, and the effect on the consolidatedstatement of operations for the period ended 30 June 2007 as if the acquisitionof the Euro Sea Group (which for accounting purposes is treated as a merger) andthe acquisition of the Park Plaza Group had occurred at 31 December 2006. The unaudited pro forma financial information has been prepared on a basisconsistent with the Company's accounting policies and reflects the adjustmentsdescribed below. This information is prepared for illustrative purposes onlyand, because of its nature, addresses a hypothetical situation and it does notrepresent the Group's actual financial position nor its actual results ofoperations. The principal adjustments made, are as follows: • The receipt of the net proceeds and issuance of Shares pursuant to the placing. • A fee payable by the company on completion of the Placing to GSI of approximately Euro 3 million in consideration for GSI agreeing to amend the facility agreement amongst certain members of the Group and GSI. • The acquisition of Euro Sea Group (which for accounting purposes is treated as a merger) in consideration for the issuance of shares which will be recorded at the book value of net assets acquired. • The acquisition of Park Plaza Group, being PPHE Holdings, PHH (the holding company of the entities which own and operate the Park Plaza Vondel), Golden Wall (the entity which has entered into the Territorial License Agreement) and the minority shareholding in Riverbank (10%, being the holding company of the entities which own and operate the Park Plaza Riverbank), Grandis (10%, being the holding company of the entities which own and operate the Park Plaza Sherlock Holmes) and Victoria Hotel (5%, being the holding company of the entities which own and operate the Park Plaza Victoria) in consideration for the issuance of a certain number of shares. • The acquisition of the worldwide rights to the art'otel brand name in consideration for Euro 4 million to be settled by the issuance of shares at Admission. • The elimination of all inter-company transactions and balances. • The disposal at their carrying values of the assets and liabilities of certain companies. • The disposal at a gain of approximately Euro 9.3 million of one of the companies that owns a hotel in Hungary. • The recognition of a deferred tax asset in the amount of Euro 525,000 on 31 December 2006 in respect of Euro Sea Group's tax loss carry-forward. • Other adjustments related to the reorganisation which includes the disposals of certain companies and a dividend distribution by Euro Sea Group of approximately Euro 9.9 million. UNAUDITED PROFORMA CONSOLIDATED STATEMENTS OF OPERATIONS Period end 30 June 2007 2006 €000mm €000mm Revenues:Hotel operations 43.5 37.6Management fees 2.0 1.7Franchise fees 1.2 1.1 Total revenues 46.7 40.4 Cost of revenues (30.2) (24.7) Gross profit 16.6 15.8 Depreciation and amortisation (4.7) (4.7)Other operating expenses (4.6) (5.0) Profit from operations 7.3 6.1Financial expenses, net (8.4) (12.2)Shares in profits of associate (0.1) - Profit (loss) before income (1.1) (6.1)taxesIncome taxes, net (0.0) (0.8) Profit (loss) for the year (1.1) (7.0) EBITDA (*) 12.0 10.8EBITDAR (**) 17.3 14.9 (*) Earnings before interest, tax depreciation and amortization. (**) Earnings before interest, tax depreciation, amortization and rent (hotelrental). UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET 30.06.2007 €000mm ASSETS Non-current assetsProperty, plant and equipment 175.5Investment in associates 9.9Prepaid leasehold payments 27.5Prepayment tangible fixed assets 0.8Intangible fixed assets 52.2Other financial assets 12.0 Total non-current assets 278.0 Current assetsInventories 0.5Receivables and other current 3.1assetsTrade accounts receivable 10.7Short-term deposits 1.9Cash and short-term deposits 126.7 Total current assets 143.0 TOTAL ASSETS 421.0 UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET (CONT.) 30.06.2007 €000mm LIABILITIES Non- current liabilitiesBank loans 196.2Other financial 2.6liabilitiesDeferred income tax 0.8liability Total non-current 199.6liabilities Current liabilitiesTrade accounts payable 5.3Payable and other current 15.8liabilitiesRelated parties 2.3Bank loans and overdrafts 26.0 Total current liabilities 49.3 Total liabilities 249.0 EQUITY Issued capital, share 185.2premium and capitalreservesAccumulated deficit (13.2) Total equity 172.0 TOTAL EQUITY AND 421.0LIABILITIES UNAUDITED CONSOLIDATED FINANCIAL INFORMATION Park Plaza Hotels Limited was incorporated and registered in Guernsey on 14 June2007, but had no operations during the period ended 30 June 2007 as the mergerof Euro Sea Group and acquisition of Park Plaza Group did not take place until17 July 2007. No figures for the comparative period exist, as the company wasincorporated subsequent to that period. BALANCE SHEET 30 June 2007ASSETS €000s Cash at bank - Total assets - EQUITY Share capital -Total equity - UNAUDITED CONSOLIDATED FINANCIAL INFORMATION STATEMENT OF CHANGES IN EQUITY Share Retained Total capital earnings equity • '000 • '000 • '000 At incorporation on 14 June 2007 - - - Issue of share capital - - - At 30 June 2007 - - - UNAUDITED CONSOLIDATED FINANCIAL INFORMATION CASH FLOW STATEMENT For the period from incorporation on 14 June 2007 to 30 June 2007 • '000 Loss or net income for the period - Cash flow from operations - Financing activities Issue of share capital - Cash flows from financing activities - Net increase in cash - Cash at incorporation - Cash at 30 June 2007 - UNAUDITED CONSOLIDATED FINANCIAL INFORMATION NOTES 1. General Park Plaza Hotels Limited (the "Company") was incorporated and registered inGuernsey on 14 June 2007. The Company was established as a holding company that issued Shares to theshareholders of Euro Sea Group and Park Plaza Group in consideration for theirinterests in Euro Sea Group and Park Plaza Group, see Note 5b. The Company, upon placing and admission, through its subsidiaries s owns,operates and manages hotels in Europe, Middle East and Africa under two primarybrands: Park Plaza and art'otel. The financial statements of the Company were approved for issuance by the Boardof Directors on 7th September 2007. 2. Basis of preparation The financial information has been prepared as at the date of incorporation 14June 2007, in accordance with International Financial Reporting Standards and ispresented in Euros. An income statement has not been prepared as there were no revenues or expensesin the period after the date of incorporation until 30 June 2007. The Group intends to prepare its annual financial statements for periods ending31 December, with the first such financial statements being for the period fromincorporation to 31 December 2007. 3. Taxation The Company is subject to taxation under the law of Guernsey. The Company hasqualified for exempt status which will result in no Guernsey taxation uponincome it receives, including interest and dividends received, and capital gainsfrom the disposal of investments. 4. Share Capital a) The authorised share capital of the Company is represented by anunlimited number of Ordinary Shares with no par value. At 14 June 2007 • '000 Issued and no par value 2 Ordinary Shares - b) Redemption The Shares do not carry a right to redemption by shareholders. 5. Post balance sheet events Concurrent with the Placing and Admission to trading on AIM, the followingtransactions have been consummated: a) Issuance of shares The Company has offered 15,450,000 Shares and found admission to AIM a marketoperated by the London stock Exchange. NOTES (CONT.) 5. Post balance sheet events (cont.) b) Merger of Euro Sea Group and acquisition of Park Plaza Group (1) Merger of the Euro Sea Group The Euro Sea Group represents a group of companies under common control of thecontrolling shareholder of the Company. These companies are principally engagedin the development, construction, management and operation of hotels in Europe.See Note 6 for a list of the companies to be included in the merger. The Euro Sea Group will be merged into the Company in consideration for theissuance of Shares to the controlling shareholder. As the merger will not be abusiness combination within the scope of International Financial ReportingStandard 3, the Company will account for the merger in a manner similar to apooling of interests. Accordingly, the net assets of Euro Sea Group that will bemerged into the Company will be recorded at their book value in the accounts ofEuro Sea Group. Prior to the merger, Euro Sea Group is going to sell some of its subsidiariesand to distribute dividend of approximately • 23.5 million to its previousshareholders. (2) Acquisition of Park Plaza Group by Euro Sea This transaction relates to the acquisition at fair value of Park Plaza Groupbeing Park Plaza Holdings B.V., ParkVondel B.V., Golden Wall Investment Ltd. andthe minority shareholdings in Riverbank (10%), Grandis (10%) and Victoria B.V.(5%). These entities are principally engaged in holding hotels and providingmanagement services and franchises, for hotels in Europe, the Middle East andAfrica. See Note 6 for a schedule of the companies to be included in theacquisition. The total consideration for the acquisition is • 60,9 million to be settled byissuance of 30% of the Shares. This acquisition is to be accounted for under thepurchase method and the Company is required to perform an exercise to assess thefair value of the assets acquired and liabilities assumed and allocate theconsideration accordingly. Any consideration not allocated to identifiableassets will be recorded as goodwill. (3) Acquisition of art'otel Rights This transaction relates to the acquisition of the worldwide rights to use theart'otel brand name for an unlimited period of time. The consideration is to besettled by issuance of such number of Shares which at a price equivalent to thePlacing price per Share is equal to • 4 million. (4) Share option plan It is the intention of the Board to adopt prior to Admission a "Share OptionPlan", under which options may be granted over Shares to employees and directorsof the Company, its subsidiaries and jointly owned companies. The principalterms of the proposed draft Share Option Plan are as follows: i. Options granted immediately following Admission shall have anexercise price per Share of the Placing Price. For options which are not grantedimmediately following Admission, the exercise price per Share will not be lessthan the closing market price of a Share on the day preceding the date of grant. NOTES (CONT.) 5. Post balance sheet events (cont.) (4) Share option plan (cont.) ii. At any time, the total number of Shares issued and/or availablefor grant (in a ten- year period) under the Share Option Plan or under any otheremployee share scheme which the Company may establish in the future may notexceed 5% of the Company's issued share capital at that time, For the purpose ofthis calculation, any option granted under the Share Option Plan immediatelyfollowing Admission are disregarded. iii. Options granted under the Share Option Plan will generallybecome exercisable either three years after the date of the date or after suchother period as the Company's Remuneration Committee may specify on the relevantoption certificate. Unexercised options lapse 10 years after the date of grant. NOTES (CONT.) 6. Schedule of Companies merged and acquired Direct and indirect Principal activity Country of incorporation holdings %Euro Sea Group:EuroSea Hotels N.V Hotel operation and Amsterdam 100 managementThe Mandarin Hotel B.V. Hotel operation The Netherlands 100Suf Holdings B.V. Holding company The Netherlands 100Victory Enterprises I B.V. Holding company The Netherlands 100Victory Monument B.V. Holding company The Netherlands 50V.H.R.I. B.V. Holding company The Netherlands 50V.H.R.M.S. B.V. Hotel operation The Netherlands 50Utrecht Victoria Hotel B.V. Hotel operation The Netherlands 50Victoria Hotel C.V. Hotel operation The Netherlands 50Riverbank Hotel Operator Ltd. Hotel operation The U.K. 45Riverbank Hotel Holding B.V. Hotel operation The Netherlands 45Victoria London Hotel Holding B.V. Hotel operation The Netherlands 45Victoria Park Plaza Operator Ltd. Hotel operation The U.K. 45Victoria Pub Holdings B.V. Hotel operation The Netherlands 45Sherlock Holmes Park Plaza Ltd. Management The U.K. 45Grandis Netherlands Holding B.V. Management The Netherlands 45Maralbray Limited Hotel operation The U.K. 33.3Park Plaza Group: Park Plaza Hotels Europe Holdings Holding company Amsterdam 100B.V.Park Plaza Hotels Europe B.V. Management Amsterdam 100Park Plaza Hotels (Germany) Services Management Berlin 100GmbHPark Plaza Hotels Europe (Germany) B.V Management Amsterdam 100Sugarhill Investments B.V. Holding company Amsterdam 100Park Plaza Germany Holdings GmbH Holding company Berlin 100Park Plaza Berlin Hotel operation Berlin 100Hotelbetriebsgesellschaft GmbHPark Plaza Dresden Hotel operation Berlin 100Hotelbetriebsgesellschaft GmbHPark Plaza Wallstrasse Hotel operation Berlin 100Hotelbetriebsgesellschaft GmbHArt'otel Berlin Mitte / Park Plaza Hotel operation Berlin 100Betriebsgesellschaft GmbHArt'otel Berlin City Center West GmbH Hotel operation Berlin 100Art'otel Dresden / Park Plaza Hotel operation Berlin 100Betriebsgesellschaft GmbHArt'otel Budapest Szallodauzemelteto Hotel operation Budapest 100KftPark Vondel Hotel Holding B.V. Hotel operation The Netherlands 100ParkVondel Hotel Real Estate B.V. Holding company The Netherlands 100ParkVondel Hotel Management B.V. Holding company The Netherlands 100Golden Wall Investments Limited Finance company BVI 100Riverbank Hotel Operator Ltd. Hotel operation The U.K. 10Riverbank Hotel Holding B.V. Hotel operation The Netherlands 10Victoria London Hotel Holding B.V. Hotel operation The Netherlands 5Victoria Park Plaza Operator Ltd. Hotel operation The U.K. 5Victoria Pub Holdings B.V. Hotel operation The Netherlands 5Sherlock Holmes Park Plaza Ltd. Management The U.K. 10Grandis Netherlands Holding B.V. Management The Netherlands 10 This information is provided by RNS The company news service from the London Stock Exchange