THIS ANNOUNCEMENT DOES NOT CONSTITUTE A PROSPECTUS OR PROSPECTUS EQUIVALENT DOCUMENT AND NEITHER THIS ANNOUNCEMENT NOR ANYTHING HEREIN FORMS THE BASIS FOR ANY OFFER TO PURCHASE OR SUBSCRIBE FOR ANY ORDINARY SHARES OR OTHER SECURITIES IN THE COMPANY NOR SHALL IT FORM THE BASIS FOR ANY CONTRACT OR COMMITMENT WHATSOEVER.
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR").
PPHE HOTEL GROUP LIMITED
Notification of transfer to a Premium Listing
PPHE Hotel Group Limited ("PPHE Hotel Group" or the "Company" and, together with its subsidiaries the "Group") announces that it is proposing to transfer the listing category of its ordinary shares of nil par value (the "Ordinary Shares") from a Standard Listing (shares) to a Premium Listing (commercial company) on the official list of the UK Listing Authority in accordance with Rule 5.4A of the Listing Rules issued by the Financial Conduct Authority (the "Proposed Transfer").
The provision of 20 business days' notice (which period commenced by way of today's announcement) is required to effect the Proposed Transfer. No shareholder approval is required in connection with the Proposed Transfer. It is anticipated that the Proposed Transfer will take effect at 8.00 a.m. on 30 July 2018 ("Admission"), conditional on the approval of the UK Listing Authority ("UKLA").
Summary and rationale
· The Company's entire issued ordinary share capital was admitted to the Standard Listing segment of the Official List in June 2011
· Since that time the Company has taken advantage of the flexible framework that has applied to it to significantly grow its operations via acquisition and development opportunities
The Company's board of directors (the "Board") is now of the opinion that a Premium Listing would be the most appropriate listing segment for the Company, as it believes a Premium Listing is perceived by investors to be the highest quality listing category by investors.
The Board therefore believes a Premium Listing will:
· Provide access to a greater pool of liquidity through a wider potential investor base;
· Provide a more appropriate platform for the continued growth of the Group and further raise its profile and status;
· Increase the profile of the Group in the UK and internationally, thereby helping it to attract new investors;
· Facilitate potential inclusion in the FTSE Indices (subject to passing liquidity and free float thresholds); and
· Provide a more rigorous Corporate Governance regime for the benefit of Shareholders, although the Company already adopts many of the Corporate Governance requirements of a Company listed on the Premium Segment of the Official List
Boris Ivesha, President & Chief Executive Officer PPHE Hotel Group, commented:
"Since our AIM IPO in 2007, we have significantly expanded our business and particularly through investments in new development projects and renovation programmes. Our growth track record is supported by recent valuations undertaken by Savills, reporting an increase in property value of approximately £639 million compared to book value (as at 30 April 2018). The Board therefore believes that now is the right time to seek the Proposed Transfer. The Board believes that a Premium Listing will bring several benefits for shareholders, including an increased profile for the Company and access to a wider international and institutional investor base".
Enquiries:
PPHE Hotel Group Limited |
|
Robert Henke, Executive Vice President of Corporate Affairs and Customer Experience Lisa Woodman, Director of Corporate Communications |
Tel: +31 (0) 20 717 8600 Tel: +44 (0)20 7034 4800 |
finnCap Ltd |
|
Matt Goode / Emily Watts (Corporate Finance) Andrew Burdis (ECM) |
Tel: + 44 (0)20 7220 0500 |
Berenberg |
|
Ben Wright / Mark Whitmore / James Brooks |
Tel: +44 (0)20 3207 7800 |
Hudson Sandler Financial Public Relations |
|
Wendy Baker/ Sophie Lister |
Tel: +44 (0)20 7796 4133 |
Notes to editors
The Company is a Guernsey registered company and through its subsidiaries (the Group), jointly controlled entities and associates, owns, leases, operates, franchises and develops full-service upscale, upper upscale and lifestyle hotels in major gateway cities, regional centres and select resort destinations, predominantly in Europe.
The majority of the Group's hotels operate under the Park Plaza® or art'otel® brands. The Group has an exclusive licence from the Radisson Hotel Group, one of the world's largest hotel groups, to develop and operate Park Plaza® Hotels & Resorts in Europe, the Middle East and Africa.
The art'otel® brand is wholly owned by the Group.
The Group has a controlling ownership interest (51.97% of the share capital) in Arena Hospitality Group, one of Croatia's best-known hospitality groups.
The Group's portfolio of owned, leased, managed and franchised hotels comprises 39 hotels in operation offering approximately 9,000 rooms. The Group's development pipeline includes two new hotels in London that are expected to add an additional 500 rooms by the end of 2022.
Company websites:
www.pphe.com
www.arenahospitalitygroup.com
For reservations:
www.parkplaza.com
www.artotels.com
www.arenaturist.com
For images and logos visit www.vfmii.com/parkplaza
Introduction
The Group is an international hospitality company which owns and develops hotels and resorts, operates the Park Plaza® brand in EMEA and owns the art'otel® brand. All of the Group's hotels operate under the Park Plaza® or art'otel® brands, with the exception of some within the Arena Hospitality Group. The Group has an exclusive license from the Radisson Hotel Group, one of the world's largest hotel groups, to develop and operate Park Plaza® hotels in Europe, the Middle East and Africa. The art'otel® brand is wholly owned by the Group. The Group has a controlling ownership interest (51.97% of the share capital) in Arena Hospitality Group d.d., one of Croatia's best-known hospitality groups whose shares are traded on the Zagreb Stock Exchange.
The Group's portfolio of owned, leased, managed and franchised hotels comprises 39 hotels offering a total of approximately 9,000 rooms and eight campsites, offering approximately 6,000 units. The Group's development pipeline includes two new hotels in London, which are expected to add an additional 500 rooms by the end of 2022.
Background to and reasons for the transfer to Premium Listing
The Company's entire issued ordinary share capital was admitted to trading on AIM in 2007. On 30 June 2011, the Company's entire issued ordinary share capital was admitted to the Standard Listing segment of the Official List and to trading on the Main Market for listed securities of London Stock Exchange plc and trading of the Ordinary Shares on AIM was simultaneously cancelled.
The Company has been able to move quickly to take advantage of acquisition, disposal and development opportunities within the framework of the rules that apply to it as a result of the Standard Listing. The Company remains ambitious and growth-focused, however the increase in the size of the Group in terms of assets, profits and market capitalisation allow greater flexibility for the Group under the framework of the rules that will apply to it as a result of a Premium Listing than would historically have been the case.
The Company's board of directors (the "Board") is now of the opinion that a Premium Listing would be the most appropriate listing segment for the Company, in order to provide access to a greater pool of liquidity through a wider potential investor base. The Board believes a Premium Listing is perceived to be the UK's highest quality listing by investors and as such the Company hopes to leverage this reputational enhancement to attract future investment and business going forward.
The Company has therefore made the necessary applications and requested that the UK Listing Authority approve the Proposed Transfer with effect from 8.00 a.m. on 30 July 2018. As at 28 June 2018, the Company had 44,225,706 Ordinary Shares in issue, including 1,888,070 treasury shares (the "Treasury Shares"). All Ordinary Shares will be subject to the Proposed Transfer.
Effect of the transfer to Premium Listing
No changes to the Company's business have been, or are proposed to be made, in connection with the Proposed Transfer.
Following the Proposed Transfer, certain additional provisions of the Listing Rules will formally apply to the Company. These provisions, set out under Chapters 6 to 13 (inclusive) of the Listing Rules, relate to the following matters:
· the application of certain requirements that are specific to companies with a premium listing (Chapter 6);
· the application of the Premium Listing Principles as set out in Listing Rule 7.2.1AR (Chapter 7);
· the requirement to appoint a sponsor in certain circumstances (Chapter 8);
· the requirement to comply with various continuing obligations, including compliance with all relevant provisions of the UK Corporate Governance Code (or provide an explanation for any non-compliance, if applicable, in its annual report and accounts) (Chapter 9);
· the requirement to announce, or obtain shareholder approval for, certain transactions (depending on their size and nature) and for certain transactions with 'related parties' of the Company (Chapters 10 and 11);
· certain restrictions in relation to the Company dealing in its own securities and treasury shares (Chapter 12); and
· various specific contents requirements that will apply to circulars issued by the Company to its shareholders (Chapter 13).
Working capital
In the opinion of the Company, the Group has sufficient working capital available for the Group's requirements for at least the next 12 months from the date of this announcement.
Corporate Governance
The current composition of the Board is as follows:
Eli Papouchado - Non-Executive Chairman
Boris Ivesha - President and Chief Executive Officer
Daniel Kos - Chief Financial Officer & Executive Director
Kevin McAuliffe - Non-Executive Deputy Chairman
Nigel Jones - Non-Executive Director and Senior Independent Director
Dawn Morgan - Non-Executive Director
The Board is committed to and recognises the importance of maintaining a high standard of corporate governance. Following a review of the requirements of the UK Corporate Governance Code (the "Code") conducted in light of the Proposed Transfer; the Board has implemented the following steps to further strengthen its compliance with the Code:
· As announced on 12 June 2018, Kevin McAuliffe has been appointed the Non-Executive Deputy Chairman of the Company and in this role he will fulfil the responsibilities of providing leadership of the Board and ensuring effectiveness on all aspects of its duties and roles. Kevin was formerly the Senior Independent Director of the Company, a position which he has now relinquished;
· Nigel Jones has been appointed the Senior Independent Director of the Company, taking over the role previously performed by Kevin McAuliffe;
· The Board updated its Nomination, Remuneration and Audit Committee terms of reference; and
· The Board has adopted new internal policies and procedures to govern the Company's ongoing compliance with the rules, regulations and guidance relevant to a premium listing
As a result of these changes, the Company expects to be in compliance with the recommendations set out in the Code immediately prior to the Proposed Transfer, save for the following matters where the Company is currently not compliant:
· Eli Papouchado, Non-Executive Chairman was not considered to be independent on appointment as Chairman.
· The role of providing leadership of the Board and ensuring effectiveness on all aspects of its role is usually the responsibility of the chairman but is fulfilled by Kevin McAuliffe, Non-Executive Deputy Chairman.
· Three of the Non-Executive Directors are considered to be independent by the Board, although both Kevin McAuliffe and Nigel Jones have served on the board for more than ten years. More than half of the Board, excluding the Chairman, comprise independent non-executive directors as determined by the Board, although for smaller companies, below the FTSE 350, the requirement is for a minimum of two independent non-executive directors. The Company therefore currently meets this more limited requirement.
· There is no formal evaluation of the performance of the board, committees and individual directors and the Chairman's performance is not formally appraised. The Company has not engaged with an external consultant to facilitate such evaluation, although smaller companies below the FTSE 350 are exempt from the requirement to have an externally facilitated evaluation every three years. Following the Proposed Transfer, the Company intends to conduct a Board performance evaluation at least every three years.
· There has been no formal evaluation by the nomination committee of the balance of skills, experience, independence and knowledge on the board to establish whether there is a skills gap.
· A diversity policy has not been adopted.
· There is no long-term viability statement included in the 2017 Annual Report and Account.
The Annual Report and Accounts in respect of the year ended 31 December 2017 which was published on 28 February 2018, describes how throughout the financial year ended 31 December 2017 the Company applied the principles of the Code to the extent considered appropriate taking into account the size of the Company and the nature of its business. The Company acknowledges that a revised final version of the Code is expected to be published by early Summer 2018 and will apply to accounting periods beginning on or after 1 January 2019.
Directors Shareholdings
The interests (all of which are beneficial) of the Company's directors (the "Directors") and senior managers of the Company and, so far is known to the Directors or senior managers (as the case may be) or could with reasonable diligence be ascertained by them, persons connected with them in the share capital of the Company as at the date of this document and on Admission, are or are expected to be as follows:
Director |
Number of Ordinary Shares |
% of Issued Share Capital (excluding Treasury Shares) |
Eli Papouchado(1): |
19,852,714 |
46.89 |
Boris Ivesha (2) |
6,690,027 |
15.80 |
(1) Eli Papouchado is deemed to be interested in the following Ordinary Shares:
(a) 17,630,297 Ordinary Shares held by Euro Plaza Holdings B.V. ("Euro Plaza"). Euro Plaza is an indirect wholly-owned Dutch incorporated subsidiary of A.P.Y. Investments & Real Estate Ltd ("APY"). As at the date hereof, 98% of the shares in APY are held by Eli Papouchado as trustee of an endowment created under Israeli law which he formed in 1998 (the "Endowment"). The primary beneficiaries of the Endowment are Eli Papouchado and his sons, Yoav Papouchado and Avner Papouchado, and the secondary beneficiaries are the children of Yoav and Avner. The remaining 2% of the shares in APY are held by Yoav and Avner Papouchado respectively (1% each). APY and its subsidiaries are part of an international constructions, hotel and real estate group (the "Red Sea Group") that was founded by Eli Papouchado. The Ordinary Shares held by Euro Plaza have been pledged to secure guarantees given by Euro Plaza of certain banking facilities provided to another company in the Red Sea Group, as disclosed on 13 December 2013.
(b) 22,417 Ordinary Shares held by Red Sea Club Limited ("Red Sea Club"), an intermediate subsidiary of APY and holding company of Euro Plaza.
(c) 2,200,000 Ordinary Shares held by A.A. Papo Trust Company Limited ("A.A. Papo"), a company which is wholly-owned by Eli Papouchado, acting in its capacity as the sole trustee of an endowment whose main beneficiary is Eli Papouchado's daughter, Eliana Papouchado.
(2) Boris Ivesha is deemed to be interested in 6,690,027 Ordinary Shares held by Walford Investments Holdings Limited ("Walford") which is wholly-owned by Clermont Corporate Services Limited ("Clermont"), as trustee of certain trusts established for the benefit of Boris Ivesha (the president and chief executive officer of the Company) and his family.
UK Takeover Code
As the Company has its registered office in Guernsey and its Ordinary Shares are admitted to trading on the Main Market of the London Stock Exchange, it is subject to the UK Takeover Code, with which the Company complies.
Eli Papouchado, Euro Plaza, Red Sea Club and A.A. Papo and other parties related to him (together the "Red Sea Parties") and Boris Ivesha, Walford and other parties related to him (together the "Ivesha Parties") are deemed to be acting in concert for the purposes of Rule 9 of the Takeover Code. Together they hold more than 50% of the Company's voting rights and (for so long as they continue to be treated as acting in concert) may accordingly increase their aggregate interests in Ordinary Shares without incurring any obligation under Rule 9 to make a general offer, although individual members of the concert party will not be able to increase their percentage interest in Ordinary Shares through or between a Rule 9 threshold without Takeover Panel consent.
Shareholder Agreement
The Red Sea Parties and the Ivesha Parties are party to a shareholders agreement dated 14 March 2013 (as amended on 29th April 2015, 31 March 2016 and 16th November 2016 (respectively)) (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 PPHE Hotel Group (including, respectively, any interests held by family members, and trusts for the benefit of family members, of Boris Ivesha and Eli Papouchado, and any undertakings controlled by such family members of trusts) are not less than 38% and the Red Sea Parties' interest in PPHE Hotel Group is at least 26.5% of the total number of Ordinary Shares then in issue (excluding, in both cases, Ordinary Shares held in treasury), (i) on any resolution to be considered at a general meeting of the shareholders of PPHE Hotel Group, all Ordinary 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 ("Voting Undertaking"); and (ii) neither the Ivesha Parties nor the Red Sea Parties shall transfer to a third party any Ordinary Shares held by them without the prior written consent of the other (provided the number of Ordinary Shares being transferred is in excess of a particular threshold).
Relationship Agreements
In accordance with Listing Rule 6.5, the Company has entered into new relationship agreements with (1) Euro Plaza and Eli Papouchado and (2) Walford and Clermont, which shall become effective upon Admission (the "Relationship Agreements"). Euro Plaza is ultimately controlled by Eli Papouchado, acting in his capacity as trustee of the Endowment. Eli Papouchado, acting in such capacity (and also in his personal capacity so as to procure compliance by A.A. Papo), is therefore a party to the relationship agreement between Euro Plaza and the Company. Red Sea Club, APY, each of the intermediate holding companies of Euro Plaza and A.A, Papo are all "associates" of Euro Plaza and/or Eli Papouchado. Walford is ultimately controlled by Clermont Corporate Services Limited, a professional corporate trustee in its capacity as trustee of certain trusts established for the benefit of Boris Ivesha (the president and chief executive officer of the Company) and his family.
The Relationship Agreements will regulate aspects of the ongoing relationship between the Company, Euro Plaza, Eli Papouchado, Walford, Clermont and their respective associates (as defined by the Listing Rules). In particular, the Relationship Agreements will address the mandatory independence obligations as required under the Listing Rules, including (amongst other things) that:
· transactions and arrangements with a controlling shareholder (and/or any of its associates) will be conducted at arm's length and on normal commercial terms;
· neither the controlling shareholder nor any of its associates will take any action that would have the effect of preventing the listed company from complying with its obligations under the Listing Rules; and
· neither the controlling shareholder nor any of its associates will propose or procure the proposal of a shareholder resolution, which is intended or appears to be intended to circumvent the proper application of the Listing Rules.
The Relationship Agreements further confirm that:
· neither Euro Plaza, Eli Papouchado, Walford, Clermont nor their respective associates (as defined by the Listing Rules) can take any action that would result in the composition of the Board ceasing to comprise of the higher of two independent directors or the number of independent directors required in order to comply with the Code (to the extent that the Company has decided to comply with such requirement rather than not to comply and to explain the reasons for such non-compliance);
· the Company is capable at all times of carrying on its business independently of Euro Plaza, Eli Papouchado, Walford, Clermont and their respective associates (as defined by the Listing Rules); and
· neither Euro Plaza, Eli Papouchado, Walford, Clermont nor their respective associates (as defined by the Listing Rules) can take any action to procure any amendment to the Company's articles of incorporation which would be inconsistent with, undermine or breach any provision of the Relationship Agreements or the Listing Rules or which would otherwise affect the Company's ability to carry on its business independently of Euro Plaza, Eli Papouchado, Walford, and/or their respective associates (as defined by the Listing Rules).
By virtue of the Voting Undertaking agreed between the Ivesha Parties and the Red Sea Parties (as described above), the Company reasonably considers that each of its controlling shareholders will comply with the independence obligations as required under the Listing Rules.
Pursuant to the Relationship Agreements Euro Plaza has the right, for so long as it controls at least 30% of the issued share capital of the Company, to appoint two Directors, falling to one Director where its percentage holding is between 10% and 30% Walford has the right to appoint one Director for so long as it controls at least 10% of the issued share capital of the Company. In addition, whilst Eli Papouchado and Boris Ivesha are members of the Board they will be deemed the appointees of Euro Plaza and Walford respectively. Neither Euro Plaza, Walford, nor their associates can take any action that would result in the composition of the Board ceasing to comprise of the higher of, at least two Independent Directors or the number of independent directors required to comply with the Code (to the extent that the Company has decided to comply with such requirement rather than not to comply and to explain the reasons for such non-compliance). Euro Plaza has granted the Group a right of first refusal to manage all hotels situated within the territory governed by the Territorial Licence Agreement as at the date of Admission. This right does not apply to any hotels owned by Euro Plaza or any of its associates prior to the date of Admission or that were acquired subject to prior agreements in existence as at the date of Admission. Each of Euro Plaza and Walford has also agreed not to solicit senior managers of the Company.
Further Listing Rule Requirements
Independent Business
The Group's business is that of owning, leasing, operating, franchising and developing hotels. This business is operated by the Group in an independent capacity and that, since its listing on AIM in 2007 the Company has carried on an independent business as its main activity. In particular, the vast majority of the Group's consolidated revenues derive from the portfolio of properties that it owns and operates. The small residual balance of revenue arise from (i) management fees in respect of the Groups' management of art'otel berlin mitte and Park Plaza Berlin Kudamm, which are held through joint venture interests, (ii) Park Plaza County Hall, in which the Group has a minority interest and also operates the hotel and (iii) the Group's franchise arrangements (where the Group grant third parties the right to use the Park Plaza or art'otel brand).
Independence from controlling shareholder
The Group has historically worked closely with the Red Sea Group in relation to new hotel developments and refurbishments. In particular, the Red Sea Group has provided consultancy and construction services in relation to such developments. Although such relationship and services have been beneficial to the Group over the years, the Group is of the view that such services are widely available in the market and it could easily be sourced from third parties if the Group needed to do so. None of the Group's day-to-day operating revenue derives from, nor is dependent on its relationship with the Red Sea Group.
As described in detail above, the Company has entered into the Relationship Agreements.
Control of the business
As detailed above, the Company's main business activity is owning, leasing, operating, franchising and developing hotels. The Company exercises control over this business in a number of different ways. The Group has day-to-day operational control over a hotel where the Group has a mandate to run the day-to-day business (i.e. where the Group has a management contract). Additionally, the Company has controlling ownership interests in the majority of its assets, and in this respect no decisions or actions can be taken without its consent or involvement. No activity can be carried out in these assets without the Group's knowledge or control. Furthermore, in respect of the large majority of the Group's assets there are no underlying contractual arrangements which may prevent the Group from exercising operational control (the only exceptions being the 50:50 joint ventures in respect of two of the Group's German hotels and the Group's two franchised hotels).
Constitutional arrangements
The Company has in place a constitution that allows it to comply with the rules and regulations relevant to a premium listing and, pursuant to the policies adopted by the Company, the Board shall be responsible for ensuring that the Company continues to comply with such requirements.
The Company is a Guernsey incorporated company. Guernsey law and the practice relating to companies is not the same as the laws applicable to a public limited company incorporated under the UK Companies Act 2006, and a number of differences exist between English and Guernsey law, including, by way of example, that there are no provisions of Guernsey law which confer rights of pre-emption in respect of the allotment of shares. The Company has therefore incorporated in its Articles of Incorporation rights which are at least equivalent to the rights provided for in LR 9.3.11R (as qualified by LR 9.3.12R); and is satisfied that conferring such rights is not incompatible with the law of the country of its incorporation.
Project Management Contracts in respect of Existing Projects
The Group actively engages in the development of properties into new hotels and the refurbishment and/or extension of its existing portfolio of hotels. The Group has in the past contracted, and currently contracts, with GC Project Management Limited ("GC"), for project management services in respect of its projects. In particular, the Group recently completed an extensive refurbishment of its Park Plaza Victoria Amsterdam hotel using the project management services of GC. The Group currently has 6 project management agreements with GC for its various projects (the "Project Management Contracts"), including, the extension of, and conversion of suites in, Park Plaza London Riverbank and the upgrading of the public areas in such hotel, the complete refurbishment of Park Plaza Vondelpark, Amsterdam, the construction of its new art'otel london hoxton, the extensive refurbishment programme of Park Plaza Sherlock Holmes London, the refurbishment programme for its Park Plaza Victoria London hotel and potential development of a new hotel to be built adjacent to its Park Plaza London Park Royal hotel. Each such agreement provides for a capped amount payable by the Group to GC in respect of each such project.
All future transactions with Euro Plaza, its associates (including GC) and all other related parties will be assessed in accordance with the requirements of Listing Rule 11 and such applicable requirements will be complied with at the time of such future transactions.
Pre-Construction and Maintenance Contract
The Group actively considers many potential acquisitions that, were they to proceed, would involve a high degree of construction work in order to deliver a hotel that meets the Group's quality standards and return on investment criteria. Therefore, the Group has in the past contracted, and is presently contracting, with GC in respect of the provision of preliminary services in relation to the Group's potential hotel development projects and maintenance services in relation to the Group's existing sites. In deciding which properties to acquire and what price to pay for those properties, PPHE frequently uses GC to undertake preliminary assessment services, including appraisal work and provide initial estimates of the construction costs. PPHE considers that its partnership with GC gives it an ability to respond quickly to opportunities. Further, GC provides ad hoc maintenance work when required to the Group's various sites. The Group has historically had a very successful working relationship with GC and wishes this relationship to continue.
Accordingly, Park Plaza Hotels (UK) Services Limited, a wholly owned subsidiary of the Company, has entered into an agreement with GC for the provision of pre-construction and maintenance services by GC to the Group (the "Pre-Construction and Maintenance Contract").
Pursuant to the Pre-Construction and Maintenance Contract:
· if the Group wishes to embark on a new construction, development or refurbishment project it can choose (but is under no obligation) to instruct GC to provide preliminary assessment services in connection with such project. The scope of such services is set out in the Pre-Construction and Maintenance Contract.
· GC shall, in relation to each of the Group's sites, provide advice on an ad-hoc consultancy basis as required by the Group in relation to maintenance issues in respect of its existing hotels; and
· all services provided by GC to the Group under the Pre-Construction and Maintenance Contract are provided for a fixed annual retainer of £60,000 (paid in equal monthly instalments).
The Group has from time to time received passenger services from Sunshine Aviation Limited, a member of the Red Sea Group, which owns a business corporate jet (the "Aircraft"). As the Group's operations have expanded in Europe, particularly following the acquisition of Arena, the Group has from time to time hired the Aircraft from the Red Sea Group. Following a review of the Group's expected future use of the Aircraft, the Board decided to enter into an agreement to acquire it for a total consideration of US$2.34 million. Accordingly, the Group has entered into a sale and purchase agreement with Sunshine Aviation Limited to acquire the Aircraft (the "Aircraft SPA"). Delivery of the Aircraft (and therefore completion of the acquisition) is required to occur at any time before six months from the date of the Aircraft SPA.
GC and Sunshine Aviation Limited are related parties of the Company by virtue of them being associates of Euro Plaza, which along with other members of the Red Sea Group, holds approximately 47% of the issued share capital of the Company. As set out above, the Company's Chairman (Eli Papouchado) is the founder of the Red Sea Group.
Under the Relationship Agreement entered into between Euro Plaza, Eli Papouchado and the Company, transactions between the Company and Euro Plaza (and its associates, which include GC) are required to be on arm's length terms.
The Independent Directors consider that the Project Management Contracts, the Pre-Construction and Maintenance Contract and the Aircraft SPA have been entered into on arm's length terms and are in the best interests of the Company and its shareholders as a whole.
Valuation of the Group's properties
Valuation for freehold and long leasehold assets in the UK and the Netherlands
As part of the Proposed Transfer, the Group commissioned a valuation exercise in respect of its hotels located in the UK and the Netherlands (these properties account for 78% of the Group's total asset value as further detailed below).
The freehold and leasehold interests in the UK and Dutch properties held within the Group were independently valued as at 1 June 2018, which valuation was finalised on 28 June 2018, by Savills Advisory Services Limited ("Savills Advisory Services"), acting in the capacity of External Valuers as defined in the RICS Red Book. The valuations accord with the requirements of IFRS 13, SSAP 19 and the 2017 Edition of the RICS Valuation - Global Standards (incorporating the International Valuation Standards) (the "RICS Red Book"). A copy of the valuation report is set out in the Appendix to this announcement.
Savills Advisory Services reported that the aggregate of the market value of the 15 properties held by the Group in the UK and the Netherlands, amounted to £1,310 million (based on an exchange rate of €1.14 to £1 as at 15 April 2018). The valuations show an increase in value across the 15 properties, of approximately £639 million compared to their book value as at 30 April 2018 (unaudited) with all of the 15 hotels valued at a premium to their book value as at 30 April 2018 (unaudited). The valuations were arrived at predominantly by reference to market evidence for comparable property in the Group's consolidated financial statements.
Valuation of the Group's properties where the Group has an ownership interest
The table below sets out the historical book value of the Group's assets (being all of the Group's 39 hotels and eight campsites) as at 31 December 2017 (audited) and 30 April 2018 (unaudited) and the Group's total asset value1, 2 and 3 as at 1 June 2018, in each case in Pounds Sterling:
£ |
Book value (audited) |
|
Book value1 (unaudited) |
|
The Group's total asset value1, 2 and 3 |
|
31-Dec-17 |
|
30-Apr-18 |
|
1-Jun-18 |
|
|
|
|
|
|
Total assets |
1,158,442,190 |
|
1,214,526,229 |
|
1,670,380,268 |
Lease liabilities2 |
(182,961,576) |
|
(182,961,576) |
|
|
|
|
|
|
|
|
Total |
975,480,614 |
|
1,031,564,653 |
|
1,670,380,268 |
1 The calculations of the book value as at 30 April 2018 (unaudited) and the Group's total asset value as at 1 June 2018 use an exchange rate of €1.14 to £1 and HRK 8.42 to £1.
2 For the Group's total asset value, the leasehold properties were valued after deduction of lease expenses. Accordingly, assets are netted with lease liabilities in order to present like-for-like total book value and Group total asset value.
3 The Group's total asset value means the fair value of the Group's properties in the UK and the Netherlands as at 1 June 2018 (see the Savills Advisory Services valuation report dated 28 June 2018 set out in the Appendix to this announcement) and the book value of Arena's properties in Croatia, Germany and Hungary (as at 30 April 2018).
The most significant change in book value between 31 December and 30 April 2018 relates to the acquisition of the remaining 50% interest in a joint venture interest holding property in Hoxton, London. The previously held 50% interest was accounted for as a joint venture interest and with the acquisition of the remaining 50% interest this value, including the related acquisition price, was reclassified to properties in the Group's consolidated financial statements.
The Company confirms that no material change has occurred to the value of the properties valued in the valuation report prepared by Savills Advisory Services set out in the Appendix to this announcement since 1 June 2018 being the valuation date for that valuation report.
Investment in Arena
In addition, the book value as at 31 December 2017 of the Group's 51.97% equity investment (assets net of liabilities and minority interests) in Arena was £105.8 million. The market value of the Group's investment in Arena, which is listed on the Zagreb Stock Exchange, was £132.0 million (based on Arena's closing mid-market share price on 27 June 2018).
Appointment of sponsor
finnCap Ltd is acting as sponsor to the Company. finnCap Ltd has given and has not withdrawn its written consent to the inclusion in this announcement of the references to its name in the form and context in which they are included. finnCap is currently financial adviser and joint broker to the Company.
Financial information incorporated by reference
The financial information listed below is incorporated by reference into this announcement and is available on the Company's website, www.pphe.com.
Information incorporated by reference into this announcement |
Reference document |
Page number in reference document |
Annual Report and Accounts 2017 |
Directors' report Independent auditor's report Consolidated income statement Consolidated statement of comprehensive income Consolidated statement of changes in equity Consolidated balance sheet Consolidated cash flow statement Notes to the consolidated financial statements |
Pages 86-88 Pages 90-92 Page 94 Page 95 Page 96 Page 93 Pages 97-98 Pages 99-144 |
Annual Report and Accounts 2016 |
Directors' report Independent auditor's report Consolidated income statement Consolidated statement of comprehensive income Consolidated statement of changes in equity Consolidated balance sheet Consolidated cash flow statement Notes to the consolidated financial statements |
Pages 80-82 Pages 84-86 Page 88 Page 89 Page 90 Page 87 Pages 91-92 Pages 93-136 |
Annual Report and Accounts 2015 |
Directors' report Independent auditor's report Consolidated income statement Consolidated statement of comprehensive income Consolidated statement of changes in equity Consolidated balance sheet Consolidated cash flow statement Notes to the consolidated financial statements |
Pages 67-69 Pages 71 Page 73 Page 74 Page 75 Page 72 Pages 76-77 Pages 78-119 |
Consent
Savills Advisory Services has given and has not withdrawn its written consent to the inclusion in this announcement of the valuation report in the Appendix to this announcement and the references thereto and to its name in the form and context in which they are included. Savills Advisory Services has no material interest in the Company.
Definitions
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"Premium Listing" means a premium listing (commercial company) requiring compliance with Chapter 6 of the Listing Rules and the other requirements of the Listing Rules that expressed to apply to such a listing;
"Standard Listing" means a listing which is not a Premium Listing and which requires compliance with Chapter 14 of the Listing Rules; and
"UK Corporate Governance Code" means the UK Corporate Governance Code published in April 2016 by the Financial Reporting Council.
Appendix
Property Valuation prepared by Savills Advisory Services
28 June 2018
PPHE Hotel Group Limited finnCap Ltd
1st and 2nd Floors 60 New Broad Street
Elizabeth House London EC2M 1JJ
Les Ruettes Brayes United Kingdom
St Peter Port
Guernsey GY1 1EW
Channel Islands
Dear Sirs
PPHE HOTEL GROUP LIMITED
VALUATION OF 15 HOTEL PROPERTIES IN THE UK AND NETHERLANDS
1. Instructions
In accordance with the instructions from PPHE Hotel Group Limited (the "Company"), confirmed by us in writing on 31 May 2018, we have inspected the 15 properties, held by the Company, and described below (the "Properties"). We have made all relevant enquiries in order to provide our opinion of the Market Value (as defined below) of each Property, as at 1 June 2018 (the "Valuation Date"), of the freehold, and leasehold interests, as fully fitted, equipped and operational entities having regard to trading potential (as defined below), on the terms defined herein (the "Valuations").
This valuation report ("Valuation Report") has been delivered for inclusion within a transfer announcement (the "Transfer Announcement") prepared by the Company in connection with its trading on the main market for listed securities on the London Stock Exchange.
2. The Properties
The 15 Properties that we have valued are listed in paragraph 5 of this Valuation Report and are briefly described at paragraph 8 of this Valuation Report. Each Property has been valued individually and not as part of a portfolio.
3. Basis of Valuation
Our valuations have been carried out in accordance with the RICS Valuation - Global Standards 2017 incorporating the IVSC International Valuation Standards (the "RICS Red Book") issued June 2017 and effective from 1 July 2017, in particular in accordance with the requirements of VPS 3 entitled Valuation reports. They have been undertaken by Independent Valuers, as defined in the Standards.
The valuations have been prepared on the basis of Market Value, the definition of which is defined in IVS paragraph 30.1 as follows:
"The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm's length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion."
We can confirm that this report complies with the International Valuation Standards as well as the Red Book.
The valuation figures included in the report are our opinion of Market Value should the properties be offered for sale as at the date of valuation whereas the figures which appear in the Company's consolidated accounts are shown at cost to the Company in accordance with IFRS.
4. Status of Valuer
This valuation has been prepared by Tim Stoyle FRICS and Ross Connelly MRICS, both of whom are RICS Registered Valuers. We confirm that they have the knowledge, skills and understanding to undertake this valuation competently and are acting as External Valuers.
We are required by RICS regulations to disclose the following:
§ This firm currently provides no other property advisory services for PPHE Hotel Group Limited other than valuation services;
§ In the financial year ending 31 December 2017, the total fees earned from PPHE Hotel Group Limited, and connected parties, was less than 5% of the turnover of Savills Advisory Service and related companies.
5. Valuations
On the basis outlined in this Valuation Report, we are of the opinion that the aggregate Market Value of the respective freehold and long leasehold interests in each Property, as fully fitted, equipped and operational entities having regard to trading potential on the terms defined herein, as at the Valuation Date, is as stated below.
The aggregate of the individual Market Values as at the Valuation Date is £1,310,000,000 (ONE BILLION THREE HUNDRED AND TEN MILLION POUNDS).
Our valuations are exclusive of any VAT.
The valuations are set out as follows:
Hotel |
Tenure |
Date of Inspection |
Market Value (£) |
Market Value (€) |
|
|
|
UK PROPERTIES |
|
|
|
|
Park Plaza Westminster Bridge London |
Freehold |
14 May 2018 |
340,000,000 |
|
Park Plaza Riverbank London |
Long Leasehold |
8 May 2018 |
261,750,000 |
|
Park Plaza Victoria London |
Freehold |
4 May 2018 |
166,100,000 |
|
Park Plaza Sherlock Holmes London |
Long Leasehold |
4 May 2018 |
26,600,000 |
|
Park Plaza Waterloo |
Long Leasehold |
4 May 2018 |
84,100,000 |
|
Park Plaza Park Royal |
Long Leasehold |
8 May 2018 |
32,900,000 |
|
Park Plaza Leeds |
Freehold |
5 December 2017 |
21,000,000 |
|
Park Plaza Nottingham |
Long Leasehold |
4 December 2017 |
15,000,000 |
|
Hoxton Development |
Freehold |
24 April 2018 |
82,500,000 |
|
Sub Total |
|
|
£1,029,950,000 |
|
Hotel |
Tenure |
Date of Inspection |
Market Value (£) |
Market Value (€) |
EUROPEAN PROPERTIES |
|
|
|
|
Park Plaza Victoria Amsterdam |
Freehold |
14 May 2018 |
|
166,800,000 |
Park Plaza Vondelpark Amsterdam |
Freehold |
15 May 2018 |
|
31,800,000 |
Park Plaza Schiphol Amsterdam Airport |
Freehold |
14 May 2018 |
|
34,950,000 |
Park Plaza Utrecht |
Long Leasehold |
14 May 2018 |
|
25,800,000 |
Park Plaza Eindhoven |
Freehold |
14 May 2018 |
|
12,300,000 |
Art'otel Amsterdam |
Freehold |
14 May 2018 |
|
46,150,000 |
|
|
|
|
|
Sub Total |
|
|
£279,886,000 |
€317,800,000 |
|
|
|
|
|
Aggregate of Values |
|
|
£1,310,000,000 |
|
Total freehold £866,764,000
Total leasehold £443,072,000
___________
Notes:
* Based upon an exchange rate of £1.13546 to €1
(1) art'otel London Hoxton is currently not a trading hotel.
The valuation figures included in the report are our opinions of Market Value should the properties be offered for sale as at the date of valuation, whereas the figures which appear in the Company's consolidated accounts are shown at historical cost, less depreciation in accordance with IFRS Property, Plant and Equipment. Below table reflects the Company's consolidated book values as at 31 December 2017 (audited financial statements) and as at 30 April 2018 (unaudited management accounts).
|
31 December 2017 (audited) |
30 April 2018 (unaudited) |
Property, plant and equipment |
£1,158.4 million |
£1,214.5 million |
Finance lease liabilities |
£(182.9) million |
£(182.9) million) |
|
|
|
Net book value property, plant and equipment |
£975.5 million |
£1,031.6 million |
Per the Group's 31 December 2017 audited financial statements, approximately £355.4 million of property, plant and equipment is attributable to the properties included in Arena Hospitality Group (a 52% subsidiary of the Group, listed on the Zagreb Stock Exchange) and the third party income units in Park Plaza Westminster Bridge, which both are not covered by this valuation report.
When excluding the development site of Hoxton (not part of Property, Plant and equipment as per the Company's 31 December 2017 audited financial statements) the difference between values attributable to the Group's interest in the Properties in: (a) the Company's audited consolidated balance sheet as at 31 December 2017: and (b) the Valuation Report, is approximately £607.3 million.
Per the Group's unaudited management accounts as at 30 April 2018, approximately £360.5 million of property, plant and equipment is attributable to the properties included in Arena Hospitality Group and the third party income units in Park Plaza Westminster Bridge, which both are not covered by this Valuation Report.
When including the development site in Hoxton (acquired in March and now part of Property, Plant and Equipment) the difference between values attributable to the Group's interest in the Properties in: (a) the Group's unaudited management accounts as at 30 April 2018: and (b) the Valuation Report, is approximately £638.8 million.
The reason for the difference is the different basis of valuation described above, which reflects the passage of time (and relevant depreciation) since the relevant acquisition.
6. Transaction Costs
No allowance has been made for any expenses of realisation nor for taxation which might arise in the event of a disposal of any of the Properties such as Capital Gains Tax or Value Added Tax or any other tax liability.
7. Assumptions and Sources of Information
7.1 Tenure and Tenancies
Nine of the 15 Properties are held freehold, and the other six properties are held long leasehold.
We have not been provided with up to date Reports on Title for all assets.
All restrictions on title, encumbrances, covenants and other matters which we have been made aware of, have been considered in the context of the vacant possession value where the impact of restrictions may take on greater significance. If there is a material impact on the vacant possession value, then this could in turn affect the investment value.
7.2 Fixtures Fittings and Equipment
The hotels that are trading have been valued inclusive of all fixtures fittings and equipment necessary to continue trading.
7.3 Accommodation and Measurement
We have not undertaken full measured surveys of the Properties in accordance with the sixth edition of the Code of Measuring Practice issued by the RICS. Information regarding number of bedrooms and facilities for each Hotel has been provided by the Company.
7.4 Trading Information
We have been provided with management accounts for each Hotel for the periods 2015 to 2017 together with YTD 2018 actual trade with budgets for the remainder of the year. In addition we have had the opportunity to interview senior staff including the Hotel general managers with a view to discussing and understanding the operational performance of the Hotels in detail. Where hotels are not yet or only recently open, we have been provided with a five year trade forecast from the Company.
7.5 Building Structure
This Valuation Report is not a structural survey and we therefore provide our Valuations on the assumption that the Properties are of sound design and construction, and free from inherent defects. We have not inspected any covered or inaccessible areas, nor was any detailed inspection carried out of woodwork or structural members. We did not carry out any investigation to determine whether or not high alumina cement, calcium chloride additives, asbestos or other potentially deleterious or hazardous materials have been used in the construction of the Properties or have since been incorporated in the Properties.
7.6 Services, Plant and Equipment
No detailed inspection or tests have been carried out by us on any of the services or items of equipment at the Properties, therefore no warranty can be given with regard to their serviceability, efficiency, safety or adequacy for their purpose.
7.7 Environmental Investigations
We were not instructed to undertake an environmental audit and therefore are unable to warrant that the Properties will not be adversely affected by the provisions and implementation of the Environmental Protection Act 1990, the Environment Act 1995 or any legislation or regulation applicable in The Netherlands and Germany. We have not investigated whether the sites are or have in the past been contaminated and we are therefore unable to warrant that the Properties are free from any defect or risk in this respect. This Valuation Report is therefore based on the assumption that the land at each property is not contaminated and any specialist investigation would not disclose the presence of any adverse conditions on the Property sites or within the buildings. We have been provided with a number of environmental reports and desktop surveys which we have reviewed. There is nothing that has been drawn to our attention within any of these documents provided to us that would cause us to alter any of our reported opinions of Market Value.
7.8 Town Planning and Statutory Enquiries
We have made informal enquiries of the relevant statutory authorities in respect of planning and other matters.
The Property constituting the new development of art'otel London Hoxton has been valued on the assumption that all necessary planning permissions and consents have been granted.
7.9 Mortgages etc.
No account has been taken of any mortgages, debentures or other security, which may now or in the future exist over any of the Properties.
8. The Properties
The portfolio comprises 14 hotel properties and one proposed hotel led development. Nine of the properties are held freehold and 6 are held on a long leasehold basis. The properties are all held for owner investment purposes and are located throughout the UK and the Netherlands.
The six Properties located in London comprise three trading 4-star deluxe standard hotels and a set of five star standard serviced suites, adjoining Park Plaza Riverbank London. These Properties are situated in strong central London locations.
All the Properties located in London offer high quality overnight accommodation with high quality ancillary services including bar, restaurant, fitness suite and conference facilities, expected for a 4-star hotel product.
The proposed art'otel London Hoxton development site is located on the north east City of London fringe, an increasingly popular and developing area of London. Planning consent was obtained in 2015 and the site is wholly owned by Park Plaza Hotels.
The Properties located in The Netherlands include three trading city centre located 4-star hotels, being Park Plaza Victoria Amsterdam, Park Plaza Utrecht and Park Plaza Eindhoven. Art'otel Amsterdam is a 5-star hotel located adjacent Park Plaza Victoria. Park Plaza Victoria was recently subject to a substantial renovation. Park Plaza Vondelpark Amsterdam is less central and is due to be renovated in 2017. The Company acquired Park Plaza Amsterdam Airport in 2010 and the hotel is conveniently located close to Schiphol Airport.
9. Approach to Valuation
In undertaking our valuations we have had regard to the information available to us, including our own due diligence enquiries and market research which includes development pipeline and the competitive landscape relating to each asset.
In order to arrive at our Valuations we have combined a profits method of valuation with a discounted cash flow (DCF) method for the projected net earnings for the trading Properties discounted back to present day values using an appropriate discount rate. The cash flows have been taken over a 10 year period with the discount rate adopted reflecting investor's target rate of return. Note, we have valued the leasehold properties to the end of the lease term rather than into perpetuity.
Under this approach our operational projections have been undertaken on the basis of a hypothetical Reasonably Efficient Operator (REO) of the business, which is the basis upon which a potential purchaser would, in our opinion, be likely to base an offer.
The DCF calculations have been undertaken within Savills own Excel model. We have cross checked the values on a price per bedroom based upon comparable evidence where available and also on a multiple (years purchase) against 2017 actual profits/EBITDA.
We have valued each hotel individually and separately considered the value as a combined portfolio. Added value could be realised as a portfolio sale, or in small clusters of similar assets.
In addition we have adopted a stabilised FF&E Reserve equating to 4% of total revenue in line with that adopted by the group. Where capital expenditure has been identified for a particular hotel we have made a one-off capital deduction from our valuation and otherwise we have assumed that additional capex will be funded through the FF&E reserve and repairs and maintenance budgets.
We have considered our Valuations subject to assumed market level management charges. We are of the opinion that should the hotels be marketed for sale, the bids offered by investors and hotel operators will be similar, as each must consider the other in the process.
The proposed art'otel London Hoxton, Park Plaza Vondelpark Amsterdam are development projects. Accordingly, the valuation has been based on a development appraisal taking into account the anticipated total development value and then deducting the construction costs, fees, finance and making an allowance for profit.
10. Exclusions
Whilst our Valuations include the normal items of trade fixtures, fittings, furniture and furnishings necessary for the continuance of the business, it excludes consumable stocks.
We have excluded from our consideration any special purchaser who, due to special interest or circumstances, may wish to purchase the Property or the business of the relevant Hotel.
Whilst we have had regard to the general effects of taxation on Market Value, we have not taken into account any liability for tax which may arise on a disposal, whether actual or notional, and neither have we made any deduction for Capital Gains Tax, Value Added Tax or any other tax liability.
The Market Values in this Valuation Report are exclusive of VAT. We have not undertaken any enquiries to ascertain whether or not a sale of any Property would attract VAT.
This Valuation Report is based on the technical, legal and financial information provided to us and we have relied on this information in formulating our Valuations.
11. Responsibility
This Valuation Report is provided for the purpose of inclusion in a Transfer Announcement and may be referred to in announcements connected thereto. The basis of valuation might be inappropriate for other purposes and may not be otherwise used without our prior written consent.
Neither the whole nor any part of this Valuation Report nor any reference thereto may be included in any other published document, circular or statement, nor published in any way without our written approval of the form and context in which it is to appear.
We confirm that we have given and have not withdrawn our consent to the inclusion of this Valuation Report in the Transfer Announcement and the references thereto and to our name in the form and context in which they are included in the Transfer Announcement.
Yours faithfully
For and on behalf of Savills Advisory Services Limited
|
|
TIM STOYLE FRICS RICS Registered Valuer Director- Head of Hotel Valuation |
ROSS CONNELLY MRICS RICS Registered Valuer Associate Director-Hotel |
General Assumptions
Our reports and valuations are carried out on the basis of the following General Assumptions:
1.1. Tenure and Tenancies
That the properties are not subject to any unusual or especially onerous restrictions, encumbrances or outgoings contained in the Freehold Title. We will not inspect the Title Deeds or Land Registry Certificate and shall rely upon information provided by you or your solicitor relating to both tenure and tenancy data.
That the occupational tenant is capable of meeting its obligations, and that there are no arrears of rent or undisclosed breaches of covenant
1.2. Condition and Repair
That the building is structurally sound, and that there are no structural, latent or other material defects, including rot and inherently dangerous or unsuitable materials or techniques, whether in parts of the building we have inspected or not, that would cause us to make allowance by way of capital repair. Our inspection of the property and this report do not constitute a building survey.
That in the construction or alteration of the building no use was made of any deleterious or hazardous materials or techniques, such as high alumina cement, calcium chloride additives, woodwool slabs used as permanent shuttering and the like (other than those points referred to above). We will not carry out any investigations into these matters.
That the property is not adversely affected, nor is likely to become adversely affected, by any highway, town planning or other schemes or proposals, and that there are no matters adversely affecting value that might be revealed by a local search, replies to usual enquiries, or by any statutory notice.
That the building has been constructed and is used in accordance with all statutory and bye-law requirements, and that there are no breaches of planning control. Likewise, that any future construction or use will be lawful.
That the property is connected or capable of being connected without undue expense, to the public services of gas, electricity, water, telephones and sewerage.
1.3. Environmental Risks
That the property has not suffered any land contamination in the past, nor is it likely to become so contaminated in the foreseeable future. We have not carried out any soil tests or made any other investigations in this respect, and we cannot assess the likelihood of any such contamination.
That there are no adverse site or soil conditions, that the property is not adversely affected by the Town and Country Planning (Assessment of Environmental Effects) Regulations 1988, that the ground does not contain any archaeological remains, nor that there is any other matter that would cause us to make any allowance for exceptional delay or site or construction costs in our valuation.
1.4. Development Property
In situations where a property is in the course of development, we reflect its physical condition and the costs remaining to be spent at the valuation date. In the preparation of our appraisal, we consider the costs estimates provided by the professional advisors involved in the project.
General Conditions
Our reports and valuation are carried out on the basis of the following General Conditions:
1. We have made no allowance for any Capital Gains Tax or other taxation liability that might arise upon a sale of the property.
2. Our valuation is exclusive of VAT (if applicable).
3. Excluded from our valuation is any additional value attributable to goodwill, or to fixtures and fittings which are only of value in situ to the present occupier.
4. Energy Performance Certificates (EPCs) are required for the sale, letting, construction or alteration of non-domestic residential buildings over 538 sq ft (50 sq m) in England, Scotland and Wales. The effect of EPCs on value is as yet unknown, given that the market has yet to respond to their introduction. Therefore, we have not considered the property's EPC rating in forming our opinion of value. However, should this position alter, we reserve the right to reconsider our opinion of value.
5. Our valuations are prepared in accordance with the latest edition of the RICS Valuation - Professional Standards ("the Red Book") on the basis of Market Value, unless instructed otherwise. Any such deviation is expressly stated in our terms of engagement.
6. Each property has been valued individually and no allowance has been made, either positive or negative, should it form part of a larger disposal. The total stated is the aggregate of the individual Market Values.
7. No allowance has been made for rights, obligations or liabilities arising under the Defective Premises Act 1972, and it has been assumed that all fixed plant and machinery and the installation thereof complies with the relevant UK and EEC legislation.
8. That we have been supplied with all information likely to have an effect on the value of the property and that the information supplied to us and summarised in this report is both complete and correct.
9. Our valuation(s) is based on market evidence which has come into our possession from numerous sources. That from other agents and valuers is given in good faith but without liability. It is often provided in verbal form. Some comes from databases such as the Land Registry or computer databases to which Savills subscribes. In all cases, other than where we have had a direct involvement with the transactions, we are unable to warrant that the information on which we have relied is correct although we believe it to be so.
10. The files which we hold relating to all of our property valuations may be subject to monitor and audit by the RICS under its conduct and disciplinary regulations.
