Dalata Hotel Group plc

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you are recommended to seek your own personal financial advice immediately from your stockbroker, bank manager, solicitor, accountant or other
independent financial adviser authorised under the UK Financial Services and Markets Act 2000 (as amended) (“FSMA”) who specialises in advising on
the acquisition of shares and other securities in the UK (or if you are resident in Ireland) is duly authorised under the European Communities (Markets
in Financial Instruments) Regulations 2007 (Nos.1-3) or the Investment Intermediaries Act 1995 (as amended), or otherwise duly qualified in your
jurisdiction.
This Document has been drawn up in accordance with the AIM Rules for Companies (the “AIM Rules”) and the ESM Rules for Companies (the “ESM Rules”).
This Document comprises an admission Document in relation to AIM, a market operated by the London Stock exchange (“AIM”), and ESM, a market operated
by the Irish Stock Exchange (“ESM”). It has been drawn up in accordance with the AIM Rules and the ESM Rules and has been issued in connection with the
proposed admission to trading of the ordinary shares (“Ordinary Shares”) of Dalata Hotel Group p.l.c. (the “Company” or “Dalata”) to AIM and ESM. Application
will be made for the Ordinary Shares to be admitted to trading on AIM and the ESM and it is expected that dealings in the Ordinary Shares will commence on
19 March 2014.
This Document does not comprise a prospectus for the purposes of the Prospectus (Directive 2003/71/EC) Regulations 2005 (as amended) of Ireland or
within the meaning of section 85 of FSMA and does not constitute an offer of transferable securities to the public in Ireland or, within the meaning of
section 102B of FSMA, the United Kingdom or elsewhere.
This Document does not constitute or include an offer to any person to sell or to subscribe for, or the solicitation of an offer to buy or to subscribe for, Ordinary
Shares in any jurisdiction. This Document is not for distribution in or into the United States of America, Canada, Australia or Japan or their respective territories
or possessions. This Document has not been approved or dis-approved by the US Securities and Exchange Commission, any State securities commission in the
United States or any other US regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of the Ordinary
Shares or the accuracy or adequacy of this Document. The Ordinary Shares have not been, and will not be, registered under the United States Securities Act, 1933,
as amended (the “Securities Act”) or qualified for sale under the laws of any state of the United States of America or under the applicable securities laws of any
province or territory of Canada, Australia, the Republic of South Africa or Japan and may not be offered or sold in the United States of America except pursuant
to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and, subject to certain exceptions, may not be offered
or sold within any of Canada, Australia, the Republic of South Africa or Japan or to any national, resident or citizen of any of the United States of America, Canada,
Australia, the Republic of South Africa or Japan or their respective territories or possessions. No person is authorised to give any information or to make any
representation not contained in this Document in connection with the issue or sale of the Ordinary Shares and any information or representation not so contained
must not be relied upon as having been authorised by or on behalf of the Company. Neither the delivery of this Document nor any offer, sale or delivery made in
connection with the issue or sale of the Ordinary Shares shall, under any circumstance, constitute a representation that there has been no change or development
likely to involve a change in the condition (financial or otherwise) of the Company or the Group since the date hereof or create any implication that the information
contained therein is correct as of any date subsequent to the date hereof or the date as of which that information is stated herein to be given.
The Ordinary Shares are being offered outside of the United States in reliance on Regulation S under the US Securities Act of 1933, as amended (the “US Securities
Act” and “Regulation S”) and within the United States to qualified institutional buyers (each a “QIB”) as defined in Rule 144A (“Rule 144A”) under the
US Securities Act that are also qualified purchasers (each a “QP”) as defined in section 2(a)(51) of the US Investment Company Act of 1940 as amended
(the “US Investment Company Act”) and the related rules thereunder in reliance on Rule 144A or pursuant to another exemption from, or in a transaction not
subject to, the registration requirements of the US Securities Act and applicable state securities laws and under circumstances that will not require the company to
register under the US Investment Company Act. Prospective purchasers are hereby notified that sellers of the Ordinary Shares may be relying on the exemption
from the provisions of section 5 of the US Securities of 1940 Act (as amended) provided by Rule 144A. For a description of certain further restrictions on offers,
sales and transfers of the Ordinary Shares and the distribution of this Document, see section 18 in Part IV of this Document.
AIM and the ESM are both markets designed primarily for emerging or smaller companies to which a higher investment risk tends to be attached than
to larger or more established companies. AIM and ESM securities are not admitted to the Official List of the UK Listing Authority or the Official List
of the Irish Stock Exchange (together, the “Official Lists). A prospective investor should be aware of the risks of investing in such companies and should
make the decision to invest only after careful consideration and, if appropriate, consultation with an independent financial adviser. The AIM Rules and
the ESM Rules are less demanding than those of the Official Lists and it is emphasised that no application is being made for admission of the Ordinary
Shares to the Official Lists. Each AIM company is required pursuant to the AIM Rules to have a nominated adviser. The nominated adviser is required
to make a declaration to the London Stock Exchange in the form set out in Schedule 2 to the AIM Rules for nominated advisers. The London Stock
Exchange has not itself examined or approved the contents of this Document. Each ESM company is required pursuant to the ESM Rules to have an ESM
adviser. The ESM adviser is required to make a declaration to the Irish Stock Exchange in the form set out in Schedule 2 to the ESM Rules for nominated advisers.
The Irish Stock Exchange has not itself examined or approved the contents of this Document. Your attention is drawn to the Risk Factors set out in Part II of
this Document which should be read in its entirety. The whole of this Document should be read in light of these risk factors.
Dalata Hotel Group p.l.c.
(Incorporated and registered in Ireland under the Irish Companies Acts with registered number 0534888)
A1 – 5.1.1,
Placing of 106,000,000 new Ordinary Shares at a price of €2.50 per Ordinary Share
5.1.2, 5.1.4
and
Admission to trading on AIM and ESM
Nominated Adviser, ESM Adviser and Broker
Davy
SHARE CAPITAL IMMEDIATELY FOLLOWING THE PLACING AND ON ADMISSION
Issued and fully paid
122,000,000
Ordinary Shares
€0.01
Davy’s responsibilities as the Company’s nominated adviser, ESM adviser and broker under the AIM Rules and the ESM Rules are owed solely to the London
Stock Exchange and the Irish Stock Exchange and are not owed to the Company or any Director of Dalata or to any person in respect of that person’s decision to
acquire shares in the Company in reliance on any part of this Document. The Directors of Dalata, whose names appear on page 3 of this Document, accept
responsibility, both individually and collectively, for the information contained in this Document including responsibility for compliance with the AIM Rules and
the ESM Rules. To the best of the knowledge and belief of the Directors (who have taken all reasonable care to ensure that such is the case) the information
contained in this Document is in accordance with the facts, and this Document makes no omission likely to affect the import of such information. No representation
or warranty, express or implied, is made by Davy as to the contents of this Document for which the Directors are solely responsible.
Davy, which is regulated in Ireland by the Central Bank of Ireland, has been appointed as nominated adviser (pursuant to the AIM Rules), ESM adviser (pursuant
to the ESM Rules) and broker to the Company. Davy is acting exclusively for the Company in connection with arrangements described in this Document and is
not acting for any other person and will not be responsible to any person for providing the protections afforded to customers of Davy or for advising any other
person in connection with the arrangements described in this Document. In accordance with the AIM Rules and the ESM Rules, Davy has confirmed to the London
Stock Exchange and the Irish Stock Exchange that it has satisfied itself that the Directors have received advice and guidance as to the nature of their responsibilities
and obligations to ensure compliance by the Company with the AIM Rules and the ESM Rules. Davy accepts no liability whatsoever for the accuracy of any
information or opinions contained in this Document or for the omission of any material information, for which it is not responsible. Copies of this Document will
be available on the Company’s website at www.dalatahotelgroup.com from the date of Admission.
A1 – 1.1, 1.2
A3 – 1.1, 1.2
CONTENTS
Page
Directors, Secretary, Registered Office and Advisers
3
Admission Statistics, Expected Timetable of Principal Events,
Forward-Looking Statements and Other Information
4
Part I
Information on the Group
7
Part II
Risk Factors
Part III
(A)
(B)
Part IV
25
Accountants’ Report on Dalata Hotel Group p.l.c. for the period from
4 November 2013 (the date of incorporation) to 31 January 2014
35
Accountants’ Report on the consolidated group historical financial
information for the three years ended 31 December 2013
40
Additional Information
66
Definitions
102
2
DIRECTORS, SECRETARY AND ADVISERS
Directors:
John Hennessy
Pat McCann
Dermot Crowley
Stephen McNally
Alf Smiddy
Margaret Sweeney
Robert Dix
Non Executive Chairman (Irish)
Chief Executive Officer (Irish)
Deputy CEO, Business Development and
Finance (Irish)
Deputy CEO (Irish)
Non Executive Director (Irish)
Non Executive Director (Irish)
Non Executive Director (Irish)
Company Secretary:
Sean McKeon
Registered Office:
4th Floor, Burton Court
Burton Hall Drive
Sandyford
Dublin 18
Ireland
Nominated Adviser,
ESM Adviser and Broker:
Davy
Davy House
49 Dawson Street
Dublin 2
Ireland
Legal advisers to the Company:
A&L Goodbody
IFSC
North Wall Quay
Dublin 1
Ireland
Legal advisers to the
Nominated Adviser,
ESM Adviser and Broker:
William Fry
Fitzwilton House
Wilton Place
Dublin 2
Ireland
Reporting Accountants and
auditors:
KPMG
1 Stokes Place
St Stephen’s Green
Dublin 2
Ireland
Registrar:
Computershare Investor Services (Ireland) Limited
Heron House
Corrig Road
Sandyford Industrial Estate
Dublin 18
Ireland
Principal Bank:
Ulster Bank
George’s Quay
Dublin 2
Ireland
Company Website
www.dalatahotelgroup.com
3
A3 – 10.1
ADMISSION STATISTICS
Placing Price
€2.50
Number of Ordinary Shares prior to the Placing*
16,000,000
Number of Placing Shares
106,000,000
Placing Shares as a percentage of the Enlarged Issued Share Capital
86.9%
Number of Ordinary Shares in issue following Admission
122,000,000
Gross proceeds of the Placing
€265 million
Market capitalisation at the Placing Price upon Admission
€305 million
AIM/ESM Symbol
DAL/DHG
ISIN code
IE00BJMZDW83
Note:
For reference purposes only, the following exchange rates were prevailing on 13 March 2014 (the latest practicable date prior to the
publication of this Document): €1:£0.83536.
*
Assuming conversion of Existing Loan Notes. Conversion of Existing Loan Notes to take effect on Admission.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Publication of this Admission Document
14 March 2014
Admission effective and dealings commence on AIM and ESM
19 March 2014
CREST member accounts credited (where applicable)
19 March 2014
Expected latest date for despatch of definitive share certificates (where applicable)
26 March 2014
Note:
Each of the dates in the above timetable are subject to change without further notice at the discretion of the Company and Davy. All
times are Dublin times unless otherwise stated.
4
A3 – 4.7
FORWARD-LOOKING STATEMENTS
This Document includes forward-looking statements. These forward looking statements include, but are not
limited to, all statements other than statements of historical fact contained in this Document, including,
without limitation, those regarding the Company’s future financial position and results of operations,
strategy, plans, objectives, goals and targets, and future developments in the market or markets in which the
Company participates or is seeking to participate.
In some cases, forward-looking statements can be identified by terminology such as “anticipate”, “believe”,
“continue”, “could”, “envisaged”, “estimate”, “expect”, “forecast”, “intend”, “may”, “plan”, “potential”,
“predict”, “project”, “should”, or “will” or the negative of such terms or other comparable terminology. Such
forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause
actual results, performance or achievements, or industry results, to be materially different from any future
results, performance or achievements expressed or implied by such forward-looking statements.
Such forward-looking statements are based on numerous assumptions regarding the Company’s present and
future business strategies and the environment in which the Company will operate in the future. Important
factors that could cause the Company’s actual results, performance or achievements to differ materially from
those in the forward-looking statements include, but are not limited to, those specifically described in Part II
of this Document entitled “Risk Factors’’. If one or more of these risks or uncertainties materialises, or if
underlying assumptions prove incorrect, the Company’s actual results may vary materially from those
expected, estimated or projected. Given these risks and uncertainties, potential investors should not place any
reliance on forward-looking statements.
These forward-looking statements speak only as at the date of this Document. Both the Directors and the
Company expressly disclaim any obligation or undertaking to release publicly any updates or revisions to
any forward-looking statements or risk factors contained herein to reflect any change in the Company’s
expectations with regard thereto or any change in events, conditions or circumstances on which any such
statement is based other than as required by the AIM Rules, the ESM Rules or by the rules of any other
securities regulatory authority, whether as a result of new information, future events or otherwise.
5
OTHER INFORMATION
NOTICE TO NEW HAMPSHIRE RESIDENTS ONLY
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENCE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED
STATUTES ANNOTATED, 1955, AS AMENDED (“RSA 421-B’’), WITH THE STATE OF NEW
HAMPSHIRE NOR THE FACT THAT THE ORDINARY SHARES ARE EFFECTIVELY
REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE
CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF THE STATE OF NEW
HAMPSHIRE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND
NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR
EXCEPTION IS AVAILABLE FOR THE SHARES OR A TRANSACTION MEANS THAT THE
SECRETARY OF STATE OF THE STATE OF NEW HAMPSHIRE HAS PASSED IN ANY WAY
UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL
TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE OR CAUSE
TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY
REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.
AVAILABLE INFORMATION
The Company has agreed that, for so long as any Ordinary Shares are “restricted securities’’ within the
meaning of Rule 144(a)(3) under the Securities Act, the Company will, during any period in which it is
neither subject to Section 13 or 15(d) of the US Securities Exchange Act of 1934 nor exempt from reporting
pursuant to Rule 12g3-2(b) thereunder, provide to any holder or beneficial owner of such restricted securities
or to any prospective purchaser of such restricted securities designated by such holder or beneficial owner,
upon the request of such holder, beneficial owner or prospective purchaser, the information required to be
provided by Rule 144A(d)(4) under the Securities Act.
ENFORCEABILITY OF JUDGMENTS
The Company is a public limited company incorporated under the laws of Ireland. All of the directors and
executive officers of the Company are non-residents of the United States, and all or a substantial portion of
the assets of the Company and such persons are located outside the United States. As a result, it may not be
possible for investors to effect service of process within the United States upon the Company or such persons
or to enforce against any of them in the US court judgments obtained in the US courts, including judgments
predicated upon the civil liability provisions of the securities laws of the United States or any State or
territory within the United States.
6
PART I
INFORMATION ON THE GROUP
1.
INTRODUCTION
Dalata is the largest hotel operator in Ireland, operating 40 hotels with over 6,100 rooms. All of the hotels in
the Group’s portfolio are located in Ireland, other than the Maldron Hotel Cardiff. Dalata operates 12 hotels
under lease agreements, 1 hotel under a long term operating agreement and 27 hotels under short term
management agreements.
The Directors believe that the Irish hotel sector represents an attractive investment opportunity at present due
to a number of factors, including:
•
The outlook for the market is positive due to increasing numbers of visitors coming to Ireland and
improved domestic consumer sentiment;
•
New supply is likely to be limited as debt finance remains tight for businesses in Ireland and there is
a significant gap between hotel replacement costs and asset values in a number of locations; and
•
An increased number of hotel assets are expected to come to market in 2014 and 2015. The Directors
believe that there are opportunities for performance improvements in a number of hotel assets
expected to come to market.
Dalata is seeking admission to trading on AIM and ESM to raise equity to fund its strategy to acquire a
portfolio of hotel assets in Ireland comprising both assets currently leased by the Group as well as bolt on
opportunities. The net proceeds of the Placing will be used to fund the acquisition of a portfolio of hotels
throughout Ireland and to pay down existing debt. Net debt as of 31 December 2013 was €4.1 million.
2.
HISTORY AND BACKGROUND
A1 – 5.1.5,
Dalata was founded in June 2007 by Pat McCann with investment from TVC Holdings plc and clients of
Davy Property Holdings. Pat McCann was previously Chief Executive of Jurys Doyle Hotel Group from
2000 to 2006. Since 2007, Dalata has recruited a number of former senior executives from the former Jurys
Doyle Hotel Group and has built a centralised management team with expertise across all areas of the hotel
business. On 9 August 2007 Dalata acquired a group of companies from Choice Hotels Ireland that held
leases and management agreements for 11 hotels. In August 2008 Dalata rebranded its leased hotels under
its own Maldron Hotels brand. Dalata currently operates 13 three and four star hotels under the Maldron
Hotel Brand, with 12 of these hotels located in Ireland and 1 in the UK.
In March 2009 Dalata Management Services (“DMS”) was set up in order to provide hotel operational and
management expertise to receivers and banks. DMS provides a complete hotel management solution
focusing on the implementation of the operational and physical asset changes and the introduction of the
appropriate systems and controls to maximise the return on the hotel. Hotels operated by DMS typically
continue to trade under their own brand names as partner hotels within the Group.
3.
STRATEGY
Dalata’s strategy is to leverage the Group’s core asset management, hotel operation and development
competencies to grow its business through a mix of owned, leased and managed hotel assets. The Group
plans to acquire a portfolio of hotel assets comprising both assets currently leased by the Group as well as
bolt-on opportunities. In addition, the Group plans to provide hotel management solutions to third party
hotels under both leases and management agreements.
7
6.1.1, [6.1.2]
The key elements of the Group’s strategy are as follows:
Acquisition of Hotels
Dalata intends to acquire a portfolio of approximately 16-25 Irish hotel assets and will target the following
types of hotels:
•
Hotels within the existing leased portfolio;
•
Other hotels that may become available on an opportunistic basis; and
•
Hotel development opportunities in central Dublin where the Directors believe there is a shortage of
supply.
Dalata intends to enhance the value of these hotels through its expertise in revenue management, operational
capability, sales, marketing, purchasing, IT, property development, project management and financial
management.
Operation of Third Party Hotels on Long Leases and Management Agreements
The Group plans to leverage its experience and knowledge of the Irish hotel market to secure long term
leases and management agreements for hotels owned by third parties in Ireland. In addition, the Group will
continue to provide short/medium term management solutions for banks and receivers.
4.
COMPETITIVE STRENGTHS
A1 – 6.5
The Directors believe that the key strengths of the Group are as follows:
Largest hotel operator in Ireland
The Group has a portfolio of 40 hotels, 39 of which are located throughout Ireland. This is a significantly
higher number than any other Irish operator and provides the Group with significant scale benefits
e.g. purchasing, centralised sales and marketing and standardised group operating processes. In addition, the
Directors believe that the geographic spread of the existing portfolio gives Dalata an understanding of each
of the regional markets in Ireland and enables it to better evaluate the trading prospects of potential
acquisition targets.
Depth of central management team
The scale of the Group’s existing operations relative to Irish competitors has allowed Dalata to develop a
broad, centrally-based executive management team and support staff which have the capacity to operate a
large portfolio of hotels and integrate additional acquisitions. Dalata has recruited experienced executives
with specialised experience in the sale and purchase of hotel property assets in the Irish market.
Track Record
Dalata has a track record of consistently improving the performance of hotels that it operates. In addition,
the Dalata management team had a successful track record at Jurys Doyle Hotel Group plc, where the share
price increased by c. 140% while Pat McCann was CEO.
Reputation
The senior management team has extensive hotel sector experience. Pat McCann served as National
President of the Irish Hotels Federation (IHF) from 1996 to 1998 and Stephen McNally (Deputy CEO) has
been elected as the IHF’s 38th President for the 2014 to 2016 term. The Directors believe that this will offer
the Group advantages in securing future hotel management agreements and attracting and retaining key
talent.
8
The Maldron brand
The Maldron brand is positioned in the 3-4 star market segment, which the Directors believe is the most
attractive segment in the Irish hotel industry and offers significant profit growth potential.
Scale in the Dublin Market
Dalata operates 11 hotels in Dublin. Dalata’s scale in the Dublin market and presence in key city centre
locations enables the Group to maximise its occupancy and rates across all its Dublin properties.
Relationships with banks and other hotel vendors
The Group, through its third party hotel operation business, has an on-going relationship with the Irish
banking sector, receivers and other hotel vendors. The Directors believe that these relationships place the
Group in a strong position to acquire hotel assets once they become available.
5.
BUSINESS AND OPERATIONS
Dalata is the largest hotel operator in Ireland, operating 40 hotels with over 6,100 rooms. All of the hotels in
the Group’s portfolio are located in Ireland, other than Maldron Hotel Cardiff. Dalata operates 12 hotels
under lease agreements, 1 hotel under an operating agreement and 27 hotels under short term management
agreements.
Current portfolio
Lease Agreements
Hotel
Rooms
Maldron Hotel Cardiff Lane (Dublin)
Term
expiry
date
304
Main Hotel
December 2039
Extension
August 2040
Suites
December 2039 – August 2040
Maldron Hotel Parnell Square (Dublin)
126
July 2032
92
May 2031
Maldron Hotel Tallaght (Dublin)
119
December 2029
Maldron Hotel Galway
113
December 2033
Maldron Hotel Cork
101
October 2030
Maldron Hotel Limerick
143
July 2031
Maldron Hotel Portlaoise
90
July 2036
Maldron Hotel Wexford
108
December 2035
Maldron Hotel Cardiff (Wales)
216
May 2046
Maldron Dublin Airport Hotel*
247
January 2024
Ballsbridge Hotel (Dublin)
392
March 2018
185
–––––––
2,236
March 2018
Maldron Hotel Smithfield (Dublin)
Clyde Court Hotel (Dublin)
–––––––
TOTAL
% Dublin
65%
Note:
* Maldron Hotel Dublin Airport is not a leasehold interest. The hotel is operated under a long term operating agreement with the
landlord.
9
Management Agreements
Hotel
Rooms
Maldron Hotel Belfast (Northern Ireland)
104
Maldron Hotel Citywest (Dublin)
129
Best Western Plus Academy Plaza Hotel (Dublin)
304
Breaffy House Resort (Co Mayo)
226
Cavan Crystal Hotel
85
Citywest Hotel, Conference, Leisure & Golf Resort (Co Dublin)
770
Clayton Hotel Galway
195
Diamond Coast Hotel (Co Sligo)
92
Portlaoise Heritage Hotel (Co Laois)
110
Shamrock Lodge Hotel (Co Westmeath)
51
The Belvedere Hotel (Dublin)
92
The Heritage Golf & Spa Resort (Co Laois)
98
The Millrace Hotel (Co Wexford)
60
Whites of Wexford
157
Westlodge Hotel (Co Cork)
90
Clarion Hotel Sligo
162
Arklow Bay Hotel (Co Wicklow)
92
Clonmel Park Hotel (Co Tipperary)
99
Springhill Court Hotel (Kilkenny)
85
Nuremore Hotel & Country Club (Co Monaghan)
72
Fels Point Hotel Tralee (Co Kerry)
165
Pillo Hotel Ashbourne (Co Meath)
148
Pillo Hotel Galway
90
Hotel Ballina (Co. Mayo)
87
Radisson Hotel (Co Limerick)
154
Anner Hotel (Co Tipperary)
95
Creggan Court (Co Westmeath)
70
––––––––
3,882
––––––––
TOTAL
% Dublin
33%
Leased Hotels
The Group operates 12 hotels under lease agreements and 1 hotel under a long term operating agreement.
10 of the leased hotels are under long term leases (weighted average lease duration of greater than 20 years)
and operate under the Maldron brand. Two of the hotels, The Ballsbridge Hotel, Dublin and Clyde Court
Hotel, Dublin are operated under their own brands on short term leases. The Maldron Hotel Dublin Airport
is operated under a 10 year operating agreement with the landlord.
While the lease structure may vary from hotel to hotel, a typical lease is based on a five year rent review. The
rent on review generally adjusts to the higher of open market value or the existing rent. A brief description
of each of the hotels operated under lease agreements is set out below:
10
Maldron Hotel Cardiff Lane, Dublin
The Maldron Hotel Cardiff Lane is a 4 star hotel located in the Grand Canal Dock area of Dublin city. It is
close to a number of major attractions including the Bord Gáis Energy Theatre, Convention Centre, O2 Arena
and Aviva Stadium. The hotel was acquired as part of the Choice hotel portfolio in 2007 and currently has
c. 26 years remaining on its lease agreement. The hotel contains 304 rooms, restaurant, bar, leisure facilities
and 5 conference rooms.
Maldron Hotel Parnell Square, Dublin
The Maldron Hotel Parnell Square is a 3 star hotel located in Dublin city centre, in close proximity to
O’Connell Street and Croke Park stadium as well as a number of Dublin’s tourist attractions. The hotel was
acquired as part of the original Choice portfolio and has c. 18 years remaining on its lease agreement. The
hotel contains 126 rooms as well as a bar/restaurant and 2 conference rooms.
Maldron Hotel Smithfield, Dublin
The Maldron Hotel Smithfield is a 3 star hotel located close to Dublin city centre and a number of tourist
attractions including the Jameson Distillery, the Guinness Storehouse, Christchurch Cathedral and Phoenix
Park. The hotel was acquired as part of the original Choice portfolio and has c. 17 years remaining on its
lease agreement. The hotel has 92 rooms as well as a bar/restaurant and 2 conference rooms.
Maldron Hotel Tallaght, Dublin
The Maldron Hotel Tallaght is a 3 star hotel located in South Dublin, c. 12 kilometres from the city centre.
The Group operated this hotel from 2008 to 2013 under a management agreement and subsequently entered
into a lease agreement in 2013 when the hotel was acquired by Green REIT plc as part of a larger transaction.
The hotel has c. 15 years remaining on its lease agreement, with a landlord break clause in year 10. The hotel
contains 119 rooms, a leisure centre, bar, restaurant, 9 conference rooms and a 300 person capacity function
room.
Maldron Hotel Cork
The Maldron Hotel Cork is a 3 star hotel located in Cork city centre. It was acquired as part of the original
Choice Portfolio and has c. 17 years remaining on its lease agreement. The hotel contains 101 rooms,
a leisure centre, bar, restaurant and 2 conference rooms.
Maldron Hotel Galway
The Maldron Hotel Galway is a 3 star hotel located in Oranmore, c. 10 kilometres from Galway city centre
and in close proximity to a number of business parks. The hotel was acquired as part of the original Choice
portfolio in 2007 and has c. 20 years remaining on its lease agreement. The hotel contains 113 rooms,
a leisure centre, bar, restaurant and conference rooms.
Maldron Hotel Limerick
The Maldron Hotel Limerick is a 3 star hotel located on the outskirts of Limerick city. The hotel was
acquired as part of the original Choice portfolio in 2007. In September 2011, the Group entered into a sale
and purchase agreement with Bank of Scotland, the purpose of which was to acquire debt owed by the
landlord at the Maldron Hotel Limerick. As security for such debt, the landlord had provided a security
package over this hotel to Bank of Scotland (Ireland), the benefit of which security is now held by the Group.
Consequently, the Group now has indirect control over the landlord’s interest in the Maldron Hotel Limerick
by virtue of this security arrangement. The hotel contains 143 rooms, a leisure centre, bar, restaurant and
9 conference rooms.
Maldron Hotel Portlaoise
The Maldron Hotel Portlaoise is a 3 star hotel located 3 kilometres from Portlaoise town centre, just off the
M7/M8 motorway between Dublin and Cork. The hotel was acquired as part of the original Choice portfolio
11
in 2007 and has c. 22 years remaining on its lease agreement. The hotel contains 90 rooms, a leisure centre,
bar/restaurant and 8 conference rooms.
Maldron Hotel Wexford
The Maldron Hotel Wexford is a 3 star hotel located c. 4 kilometres from Wexford town centre. The hotel
was acquired as part of the original Choice portfolio in 2007 and has c. 22 years remaining on its lease
agreement. The hotel contains 108 rooms, a leisure centre, bar/restaurant and 4 conference rooms.
Maldron Hotel Cardiff, Wales
The Maldron Hotel Cardiff is a 3 star hotel located in Cardiff City Centre. The Group has leased the hotel
since it commenced trading in May 2011 and has c. 32 years remaining on its lease agreement. The hotel
contains 216 rooms, bar, restaurant and 8 conference rooms.
Maldron Hotel Dublin Airport
The Maldron Hotel Dublin Airport is a 4 star hotel located within walking distance of Dublin airport. The
hotel contains 247 rooms, gym facilities, bar, restaurant and 9 meeting rooms. The Maldron Hotel Dublin
Airport is operated under a 10 year operating agreement (with landlord break clauses at the end of years 7,
8 and 9) whereby the licence fee payable is a percentage of turnover, subject to a guaranteed minimum
amount.
The Ballsbridge Hotel, Dublin
The Ballsbridge Hotel is a three star hotel located in Ballsbridge, Dublin, c. 2 kilometres from the city centre.
The hotel contains 392 rooms, bar, restaurant, conference rooms and a function room. The Group entered
into a 1 year lease for this hotel in January 2012. The Group continued to operate the hotel under that lease
until December 2013 when it entered into a lease with a term of 5 years from April 2013. Under the terms
of this lease the landlord has a break option at the end of 24 and 42 months.
Clyde Court Hotel, Dublin
The Clyde Court Hotel is a 4 star hotel located in Ballsbridge, c. 2 kilometres from the city centre. The hotel
contains 185 rooms, bar, restaurant, conference rooms and a function room. The Group entered into a 1 year
lease for this hotel in January 2012. The Group continued to operate the hotel under that lease until
December 2013 when it entered into a lease with a term of 5 years from April 2013. Under the terms of this
lease the landlord has a break option at the end of 24 and 42 months.
Management Agreements
In March 2009, the Group began to provide hotel operation and management expertise to receivers and
banks. Dalata provides a complete hotel management solution focusing on the implementation of the
operational and physical asset changes and the introduction of appropriate systems and controls to maximise
the return on the hotel. Hotels operated under management agreements will typically continue to trade under
their own brand names as partner hotels within the Group.
The Group currently operates 27 hotels under management agreements, 23 are currently in receivership and
are operated under agreements which cease upon the sale of the hotel. The remaining 4 hotels are operated
under short term agreements (less than 5 years) directly for hotel owners of which 2 have been entered into
since January 2013. As hotels are sold by receivers to third party investors, the Directors believe that the
Group’s position as Ireland’s largest hotel operator will place it in a strong position to secure further
management agreements.
To date in 2014, the Group has secured 7 new hotels under management agreements (Fels Point Hotel Tralee,
Pillo Hotel Ashbourne, Pillo Hotel Galway, Hotel Ballina, Radisson Blu Hotel Limerick, Anner Hotel
Thurles and Creggan Court Hotel Athlone). In addition, management agreements have been terminated for
1 hotel (Midleton Park Hotel) as a result of the sale of that hotel. There are agreements in place by receivers
in relation to the sale of 3 of the current hotels: Citywest Resort, Millrace Hotel and the Anner Hotel Thurles.
12
The sale of the Millrace Hotel is anticipated to complete in Q1 2014, the sale of the Anner Hotel Thurles is
anticipated to complete in Q2 2014 and the timing of the Citywest Resort sale is uncertain. The hotel
management agreements will terminate on completion of the relevant sale contracts. The Group is currently
tendering for the management of 3 further hotels.
The fees payable to the Group under these management agreements are typically structured as either fixed
fees or variable fees based on revenues and/or EBITDAR.
Acquisition of Pillo Hotels Limited
Of the 7 new hotels under management agreements which Dalata has secured to date in 2014, 6 of these were
secured on foot of the acquisition by Dalata of Pillo Hotels Limited (“PHL”). PHL is an Irish company
providing hotel management services.
On 28 February 2014, DHGL Limited entered into a share purchase agreement with Ion Equity Nominees
Limited (“Ion”) and PHL pursuant to which DHGL Limited acquired the entire issued share capital of PHL
from Ion. The consideration payable by DHGL Limited to Ion under the terms of the agreement was €1.00.
In addition, DHGL Limited agreed to pay €238,503 to Ion, being the principal amount outstanding under a
non-interest bearing loan between PHL (as borrower) and Ion (as lender). The terms of the agreement
provide that this amount is to be paid as follows: (i) a lump sum payment of €163,503 paid to Ion on
completion of the acquisition (this payment was made on 28 February 2014), and (ii) the aggregate balance
on the outstanding loan amount is payable by way of a “management fee” (calculated in accordance with the
terms of the agreement as a percentage of the monthly fees actually received by the Group under the hotel
management agreements in respect of which PHL is currently providing hotel management services) payable
in each calendar month from 1 May 2014 to 31 December 2014. Any amount outstanding on the aggregate
balance of the outstanding loan amount at the end of this period shall be waived by Ion.
Central Operating Platform
Dalata seeks to enhance the value of the hotels in its portfolio through operational improvements introduced
by a team of specialists operating across all areas of hotel operations. The Group’s philosophy is to delegate
responsibility (individual hotel managers have full profit and loss accountability) and to support local
management in achieving their targets.
On taking over the operation of a hotel, the integration phase over 4 to 6 weeks typically involves an
intensive review of the business across all functional disciplines and the implementation of standard
processes for managing and reporting on the key variables, including room revenue pipeline, yield
management, payroll and productivity management, the conference and banqueting business pipeline and
profitability forecasting. This phase also involves an audit of the compliance culture at the hotel and
resolution of any issues identified across employee relations, health and safety, legal and environmental.
For hotel properties established in the Group, a process of continuous monitoring and analysis supports local
hotel management to achieve targets.
Revenue Management
The central revenue management team monitors room bookings on a daily and weekly basis and supports
the local hotel revenue manager in making decisions on pricing and room allocations across the various
market segments. Responsibility for the pricing decision rests with local hotel management but the central
revenue management team provides support through analysis, critique and benchmarking of outcomes and
strategies. The central revenue management team provide on-going training to the local hotel revenue
managers.
Central Sales and Marketing
The central sales and marketing team supports the local hotel sales manager through input on strategy and
tactics in the preparation of the sales and marketing plan and participation in initiatives that leverage the
Group’s platform. These include international representation at trade shows, national advertising and
13
promotion campaigns, and providing a one-stop-shop solution for tour operators, travel agents and
conference organisers.
The central team supports the local sales manager with content management of the local hotel website,
design of online campaigns and management of social media interaction.
Group Purchasing
The Group contracts centrally with suppliers for major consumables, resulting in significant purchasing
efficiencies for the hotels within its portfolio. Regular tendering processes provide assurance in relation to
value and quality.
Central Reservations
The central reservations team provides back-up to the hotels to maximise the conversion of telephone and
online bookings. All national advertising campaigns feature a booking line and the hotels can divert
telephone traffic to the central team at busy times. This team also supports the online livechat facility on the
hotel’s websites. The reservations centre is highly metrics driven with daily monitoring of call types,
conversion rates, rooms sold and yield. The sales agents are trained through familiarisation with the
individual hotel properties and encouraged to cross-sell and upsell through the hotel portfolio.
Central Finance
The Group deploys a uniform standard of accounts across all hotels based on the Uniform System of
Accounts for the Lodging Industry (published by the American Hotel and Lodging Educational Institute).
This supports an annual budgeting process which is monitored through continuous forecasting of
profitability at weekly intervals. Central finance monitors weekly revenue and payroll outcomes against
short-term targets and distributes benchmarking data for hotel peer groups across a range of performance
metrics.
The central accounting team receives, reviews and consolidates the monthly management accounts of the
leased hotels and is responsible for group cash flow management. The team also receives and reviews
the monthly management accounts of the partner hotels before submitting them with commentaries to the
owners or receivers as well as managing their financing needs.
In addition, there is a team of 6 regional financial controllers who visit the hotels in their region on a weekly
basis. They provide financial management support to the hotel General Manager, review the weekly and
monthly financial reports produced at the hotel as well as monitoring controls.
Human Resources
The Group operates a decentralised human resource model with local level HR managers supported by a
central Group HR function. The Directors consider training and development of staff to be very important to
develop the next generation of hotel managers. The Group has commenced a management development
programme which is designed for high performing supervisors / middle managers who have the potential to
take on key management roles in the Group. The training program is run in conjunction with Leap
Leadership and is largely delivered by in-house resources. A graduate training programme also commenced
in early 2014.
Branding
Dalata operates 13 hotels under the Maldron Brand, 11 of which are 3 star hotels with the remainder being
4 star. The brand proposition is based on the following attributes:
•
Modern accommodation that is spacious and comfortable;
•
Value for money with competitive rates;
•
High service levels with a good food offering; and
•
Well located hotels, close to transport links, local amenities and tourist attractions.
14
Dalata is also developing an umbrella brand proposition for its partner hotels.
5.
INVESTMENT STRATEGY
Dalata intends to acquire a portfolio of approximately 16–25 Irish hotel assets and will target the following
types of hotels:
•
Hotels within the existing leased portfolio;
•
Other hotels that may become available on an opportunistic basis; and
•
Hotel development opportunities in central Dublin where the Directors believe there is a shortage of
supply.
The Directors believe the Group is well placed to secure hotels which meet its investment criteria due to its
experience in the purchase and sale of hotel assets, knowledge of the Irish hotel industry and established
relationships with vendors and hotel owners. Dalata has assembled an acquisition and development team
with significant experience in the acquisition, disposal and development of hotels. The acquisitions team
previously negotiated several of Ireland’s most significant hotel disposals as well as the expansion of the
Jurys Inn brand between 2000 and 2007.
Dalata intends to target hotels for acquisition which meet some or all of the following criteria:
•
A pre-determined IRR hurdle rate;
•
More than 75 rooms;
•
Turnover of more than €4 million;
•
Prime/good secondary locations;
•
Focus on larger cities: Dublin, Belfast, Cork and Galway;
•
Target market segment of three and four star hotels; and
•
Clearly identifiable profit improvement opportunities.
Dalata intends to use modest leverage of circa 40% to improve the return of its investments.
6.
INDUSTRY OVERVIEW
Irish economy
Ireland recently experienced a challenging economic environment and a period of fiscal adjustment
following a prolonged period of over-reliance on construction and property-related activity to help fund
increased Irish government expenditure and the generation of economic growth. Irish GDP experienced a
severe contraction between 2008 and 2010, falling by 3.5% in 2008, 7.6% in 2009 and 1.0% in 2010. An
inability to borrow on the international markets ultimately resulted in the then Irish government agreeing in
November 2010 to an EU/IMF bailout programme. As part of the EU/IMF programme, the Irish government
committed to a €15 billion fiscal adjustment to cut the budget deficit to below 3% by 2015. Ireland
successfully exited the bailout programme in December 2013.
The Irish economy returned to growth in the first quarter of 2011, with GDP growing by 2.2% in 2011
followed by a further 0.2% in 2012. GDP for 2013 is estimated to have grown by 1.0%, with growth of 2.5%
forecast for 2014. Following year-on-year increases between 2008 and 2012, unemployment was at 12.3%
in January 2014, its lowest point since 2009, and down from an average rate of 14.7% in 2012. Domestic
demand is estimated to have grown by 0.9% in 2013, the first increase in this aggregate since the crisis began.
Levels of foreign direct investment in Ireland have continued to be strong throughout the crisis. In 2013 the
IDA (a government agency responsible for attracting foreign direct investment) announced the creation of
over 13,000 jobs by its client companies, the highest level in over a decade. Among the leading investments
15
secured during the year were Deutsche Bank, Twitter, EMC, eBay, Salesforce, Novartis, Facebook, Zurich,
Symantec, De Puy, Yahoo, Sanofi and Indeed.com.
The Irish Hotel sector
The availability of generous capital allowances and cheap finance led to a decade of intensive capital
investment within the Irish hotel sector. This resulted in an oversupply of hotel rooms in certain areas around
the country. The Irish hotel sector was heavily impacted by the Irish and global economic slowdown and
experienced a significant reduction in revenues between 2008 and 2010. Irish hotel sector RevPAR (revenue
per available room) declined by 36% between 2007 and 2010. Due to excessive levels of gearing in the
sector, many viable hotel properties found themselves in financial distress as a result of the fall in revenues.
Irish RevPAR began to recover in 2012, growing by 6.8%, with growth of 5.2% estimated for 2013. This is
driven by improving fundamentals in the Irish economy as well as an increasing number of overseas visitors.
There were c. 7 million overseas visitors to the Republic of Ireland in 2013, an increase of 7% over 2012.
This represents the highest number of visitors since 2008 but is still significantly less than the 2007 peak of
8 million. Levels of foreign direct investment in the Republic of Ireland have continued to be strong
throughout the economic downturn which drove increased corporate visitors. In 2013, the IDA announced
the creation of over 13,000 jobs by its client companies, the highest level in over a decade. Dublin’s growing
reputation as a significant European corporate city is supported by the large number of EMEA headquarters
located in the city.
Since 2006 very few new hotels have been built in Dublin due to high site prices in the years to 2008 and
the banking crisis thereafter. At the same time there have been a significant number of new projects
completed in Dublin which the Directors believe have generated additional demand for room nights in the
city such as the Convention Centre, Dublin Airport Terminal 2, Aviva Stadium and Bord Gáis Energy
Theatre. The combination of limited increases in supply and additional demand generators initially led to a
recovery in occupancy levels followed by strong growth in average room rates. As a result RevPAR in Dublin
began to recover in 2011, growing by 10.4%. This was followed by growth of 11.8% in 2012, 11.1% in 2013
and forecasted growth of 6.1% in 2014. Occupancy levels in Dublin for 2013 were 78.8%, the third highest
level of occupancy among European capital cities, behind London and Paris.
The domestic market also experienced a recovery in visitor numbers in 2013. Data for Q3 2013 show that
domestic trips increased by 5% compared with Q3 2012 with the total number of hotel nights by domestic
consumers for Q3 2013 increasing by 6.3%. The recovery in the domestic market has been driven by
improvements in the labour market and in consumer sentiment. Irish unemployment has fallen from a peak
of c. 15% in early 2012 to 12.3% in January 2014.
There are c. 835 hotels in the Republic of Ireland. Of this, c. 151 (18%) of hotels and c. 18,530 (32%) of
rooms are located in the Dublin region. The number of hotels in the Republic of Ireland peaked at 915 in
2009, and has since fallen by 9%. Approximately 4% of Irish hotels are 5 star, 33% are 4 star, 44% are 3 star,
16% are 2 star and 4% are 1 star.
16
Competition
The Irish hotel operator market is highly fragmented, with only Dalata having a market share of over 5%
(based on total number of rooms). The top 12 operators control 30.8% of the total market. The table below
shows the 12 largest hotel operators in the Republic of Ireland.
Dalata
Carlson Rezidor
Bewleys Moran
Tifco
Hilton
Choice Hotels
BDL
Jurys Inns
Whites Hotel Group
Travelodge
Cara Hotel Group
Prem Group
No. Hotels
No. Rooms
% Share
38
11
6
9
5
6
11
5
8
10
5
9
––––––––
123
5,798
1,665
1,656
1,180
1,172
1,130
1,049
937
800
765
756
740
––––––––
17,648
10.1%
2.9%
2.9%
2.1%
2.0%
2.0%
1.8%
1.6%
1.4%
1.3%
1.3%
1.3%
––––––––
30.8%
835
57,293
100.0%
––––––––
––––––––
Total (Top 12)
Republic of Ireland (Total)
Source: AMPM Database.
––––––––
––––––––
––––––––
––––––––
The large international hotel brands have not established a strong position in the Republic of Ireland. Outside
of Dublin, the only international brands to have retained any presence are Carlson Rezidor (Radisson and
Park Inn) and Travelodge.
Hotel Sector Transactions
It was estimated in 2012 that one third of all hotels in the Republic of Ireland were in financial distress. As
at December 2013, the National Asset Management Agency (“NAMA”) had 108 hotels in its portfolio. The
number of hotel transactions in the Republic of Ireland has begun to increase from the very low levels of
2009-2011 when there were 13 transactions in total. This increased to 22 in 2012 and 32 in 2013. However,
given the number of hotels estimated to be in financial distress, the Directors believe a significant number of
hotels will come on the market in 2014 and 2015 at prices which will represent attractive investment
opportunities for the Group.
7.
REASONS FOR ADMISSION TO AIM AND ESM
The Board believes that Admission will support the future development of the Group by allowing the
Company to access the capital markets enabling it to raise equity to take advantage of expected future
acquisition and development opportunities and will facilitate the Group raising its profile with its customers
and financiers as well as recruiting, retaining and incentivising key employees.
17
8.
SUMMARY FINANCIAL INFORMATION
The table below, the contents of which have been extracted without material adjustment from the financial
information in Part III.
Income statement
Revenue
EBITDA
Operating Profit
Profit/(Loss) before tax
Balance Sheet
Non current assets
Current assets
Current liabilities
Non-current liabilities
2011
€’000
2012
€’000
2013
€’000
34,851
1,907
1,530
(2,946)
54,143
3,498
3,189
(1,494)
60,617
5,340
4,933
73
8,577
6,056
(16,265)
(46,061)
––––––––
(47,693)
8,647
9,763
(17,898)
(50,207)
––––––––
(49,695)
12,927
11,520
(12,970)
(61,725)
––––––––
(50,248)
–––––––– –––––––– ––––––––
Net liabilities
*
EBITDA is earnings before interest, tax, depreciation and amortisation.
*
Net liabilities of €50.2 million at 31 December 2013 includes €54.7 million of unsecured loan notes and interest thereon. These
liabilities attached to the Existing Loan Notes will convert to equity on Admission.
Further financial information on the Group is set out in Part III of this document. Prospective investors
should read the whole of this document and not just the information summarised above.
9.
CURRENT TRADING AND PROSPECTS
Since the beginning of the year, Dalata has secured an additional 7 hotel management agreements, entered
into a new operating agreement at the Maldron Dublin Airport Hotel and ceased operating 1 of its managed
hotels. RevPAR in the leased portfolio has grown in line with expectations.
The Directors expect the performance of the current hotel portfolio for the remainder of the year to be in line
with expectations.
10.
THE PLACING
Pursuant to the Placing Agreement, further details of which are provided at section 13.1 of Part IV, Davy has
agreed with the Company, on and subject to the terms set out therein and as agent for the Company, to use
reasonable endeavours to procure investors to subscribe for 106,000,000 new Ordinary Shares at the Placing
Price.
Subject to the fulfilment of the conditions set out in the Placing Agreement (in respect of the shares issued
pursuant to the Placing Agreement) it is expected that the new Ordinary Shares will begin trading on AIM
and ESM on 19 March 2014. The new Ordinary Shares issued will represent 86.9% of the Enlarged Issued
Share Capital on Admission and the Placing will raise €255 million (net of expenses and commissions).
Settlement of the Placing is expected to occur on 19 March 2014. CREST accounts of Placing participants
holding their new Ordinary Shares in uncertificated form will be credited on or around 19 March 2014 and
Placing participants holding their new Ordinary Shares in certificated form will be despatched share
certificates on or around 26 March 2014. The Placing shares will be issued credited as fully paid and will,
when issued, rank pari passu with the Existing Issued Share Capital, including the right to receive all
dividends and other distributions thereafter declared, made or paid.
Pursuant to the Existing Shareholder and Board/SMT Offer, certain of the holders of the Existing Issued
Share Capital and certain members of the Board and senior management team of Dalata will, conditional
upon Admission, subscribe approximately €8 million for 3,200,000 new Ordinary Shares at the Placing
Price.
18
A1 – 12.1,
12.2
11.
USE OF PROCEEDS
A3 – 3.4, 8.1
The net proceeds of the Placing amounting to approximately €255 million (being gross proceeds of €265
million less the estimated total expenses associated with the Placing of €10 million).
The net proceeds of the Placing will be used to acquire a portfolio of approximately 16-25 hotels throughout
Ireland. The Group plans to acquire a selection of currently leased assets as well as other assets coming to
market with good fundamentals and unfulfilled earnings potential. In addition the proceeds will be used to
pay down existing debt. Net debt as of 31 December 2013 was €4.1 million (excludes shareholder loan notes
and related accrued interest).
For the purposes of information, the Existing Loan Notes (to include all amounts of principal and interest
thereon) shall be converted into Ordinary Shares effective upon Admission and so no amount of the proceeds
of the Placing will be applied in repayment of any Existing Loan Notes or the payment of any interest
thereon.
12.
DIRECTORS
Following Admission, the Board will comprise of 3 Executive Directors and 4 Non-Executive Directors.
Details of the Director’s terms of appointment are set out in section 10 of Part IV of this Document. Profiles
of the individual Directors of Dalata are set out below:
John Hennessy (Age 58) (Non Executive Chairman)
John Hennessy SC is a practising barrister, specialising in commercial, insolvency and company law and
professional negligence.
He is a Chartered Director and is non-executive Chairman of CPL Resources plc. He is also a non-executive
director of H&K Global Systems and sits on the boards of a number of voluntary and non-profit making
organisations. John is a fellow of the Institute of Chartered Accountants in Ireland and of the Chartered
Institute of Arbitrators. He is also an accredited mediator.
Pat McCann (Age 62) (Chief Executive Officer)
Pat started his career in the hotel business in 1969 with Ryan Hotels plc. Having worked with Ryans in both
Ireland and the UK he left the company in 1989 to join Jurys Hotel Group plc as General Manager of its
flagship hotel in Dublin. He progressed within Jurys to become Operations Director of the company in 1994
and, subsequently, had responsibility for the integration of the Doyle Hotel Group following the acquisition
of that company by Jurys in 1999. In 2000, he became chief executive of Jurys Doyle Hotel Group plc, a
position he held until 2006 when that company was acquired by a private consortium. Pat then worked as an
independent hospitality and leisure consultant until August 2007 when the opportunity arose to become an
initial promoter of Dalata.
Pat has held a number of non-executive positions within the hospitality and other industries, including state
and public company entities. He was formerly a director of EBS Building Society and Greencore Group plc.
In April 2011 he was appointed a director of Quinn International Property Management Limited by
Mr Kieran Wallace, Share Receiver. In July 2011 he was appointed a Director of Euro Care Healthcare
Limited (private hospital) by Mr Kieran Wallace, Share Receiver.
He has served as National President of the Irish Hotels Federation, was a Member of the National Tourism
Council (Ireland) from 1996 to 1998, and a Member of the Irish Tourism Review Group (2003).
Stephen McNally (Age 49) (Deputy Chief Executive)
Stephen completed his hotel studies in Rockwell Hotel and Catering School. He has extensive hotel
experience having worked with Ramada Hotels in the UK and Germany, completing the Ramada
management development programme, before joining Jurys Hotel Group plc in 1989. During his seventeen
years with the company, which subsequently became Jurys Doyle Hotel Group plc, he managed the
company’s hotels in the UK and Ireland, and ultimately headed up operations for the entire hotel group,
19
including its properties in the USA - a total of thirty-three properties. In August 2007 he became director and
deputy chief executive of Dalata where he has overall responsibility for the Group’s hotel operations.
Stephen was appointed President of the Irish Hotels Federation in February 2014.
Dermot Crowley (Age 47) (Deputy Chief Executive, Finance & Development)
Dermot is a fellow of the Institute of Chartered Accountants in Ireland, having qualified in 1991. Dermot
worked in Ireland and overseas with PricewaterhouseCoopers, Procter & Gamble, Forte Hotels and Renault
Ireland before joining Jurys Doyle Hotel Group plc. as Head of Development in 2000. During his six year
period at Jurys Doyle, he oversaw the development of 15 new Jurys Inns and Hotels in Ireland, the UK and
the US. He also oversaw the disposal of 8 hotels in Ireland for a combined total of €450m. Dermot was a
director at Ion Equity from 2006 to 2012 where he worked on a number of acquisitions as well as managing
the Topaz property portfolio and setting up Pillo Hotels. Dermot joined Dalata in December 2012 where he
has overall responsibility for finance & development.
Dermot has extensive experience in the financing, development, acquisition and disposal of hotels. He is
leading Dalata’s plans to acquire new hotels as well as seeking further opportunities to manage and lease
hotels and is in continuous contact with owners, banks and potential investors.
Alf Smiddy (Age 51) (Non Executive Director)
Alf is a chartered accountant by profession, having worked with PricewaterhouseCoopers in Cork and
Dublin, and also in the Irish and international beverage and hospitality sector for over 25 years. He was
Chairman & Managing Director of Beamish & Crawford plc in Ireland, and on the board of the UK division
of its parent company, Scottish & Newcastle plc (a FTSE 100 company) until the takeover of the group for
€12 billion by an international beverage conglomerate in 2008. He also served as a non executive director at
T&S Taverns Ltd (trading as the Moran & Bewleys Hotel Group) between 2009 and 2013.
Alf is a director of a number of businesses across a range of sectors including financial services, marketing
and technology, tourism and hospitality, agriculture and food, health and safety, and retail. These include the
Kilkenny Group, Quintas Financial Services, The Chris Mee Group and Granite Consulting. He also runs his
own company and works with leadership teams and boards in the private and public sectors in Ireland on
organisational strategy, marketing and business development, financial management and human resource
leadership.
He is a member of the Institute of Chartered Accountants in Ireland, a Fellow of the Irish Marketing Institute,
and has a Masters in Executive Leadership from the University of Ulster and Boston College.
Margaret Sweeney (Age 53) (Non Executive Director)
Margaret qualified as a Chartered Accountant with KPMG in 1985 and worked with the firm for 15 years.
She has held a number of senior positions including CEO of Dublin Airport Authority plc and Postbank
Ireland Limited and has worked in Ireland and overseas with international shareholders, business partners
and funders. She has been a non executive director on a number of boards in Ireland and internationally
including Aer Rianta International plc, Flughafen Dusseldorf GmbH, Birmingham International Airport,
Hamburg Airport, Shannon College of Hotel Management and Teagasc (Irish Agriculture and Food
Development Authority).
She currently sits on the boards of a number of companies in the financial services, technology and health
sectors and is a member of the governing body of Dublin City University. She is a Fellow of the Institute of
Chartered Accountants in Ireland and holds the Diploma in Company Direction from the Institute of
Directors. Margaret served as President of Dublin Chamber of Commerce in 2008-2009.
Robert Dix (Age 61) (Non Executive Director)
Robert was a partner in KPMG Ireland where he headed up the Transaction Services division until his
retirement from the firm in 2008. He is currently a board director of a number of companies including a
number of companies within the Quinn Finance Group, Allianz p.l.c., Siteserv plc and Opportune Capital
Limited.
20
He also runs his own company Sopal Limited, where he provides advice to organisations on capital markets,
corporate governance and strategic planning issues.
He is a graduate of Trinity College Dublin and is a fellow of the Institute of Chartered Accountants in Ireland.
13.
SENIOR MANAGEMENT
Seán McKeon (Age 46) (Chief Financial Officer/Company Secretary)
Seán joined the Group as Chief Financial Officer and Company Secretary in 2007. He is a member of the
Institute of Chartered Accountants in Ireland and has an MBA from the UCD Micheal Smurfit Graduate
School of Business. He trained with Gilroy Gannon, Chartered Accountants, in Sligo and has worked in
Ireland and overseas with several leading companies including Diageo, Dunnes Stores, Roches Stores,
Keelings and Aer Rianta International. In addition to managing investor and banking relationships, and
handling corporate finance and legal affairs for the Group, Seán is active across the hotel portfolio driving
performance metrics and reporting on financial management standards at property and Group level.
Shane Casserly (Age 45) (Head of Development and Strategy)
Shane joined the Group from Ion Equity in February 2014. He joined Ion in 2007 from Jurys Doyle Hotel
Group where he was primarily responsible for identifying new sites for Jurys Inn in the UK. He took over
as head of development in 2006. Prior to this he had held a number of senior positions within Microsoft
Europe and also worked for Supervalu/Centra. Within Ion Equity he worked closely with Topaz Energy on
network development. Shane is a fellow of the Institute of Chartered Accountants in Ireland and a graduate
from University College Cork.
Conal O’Neill (Age 44) (Group Operations Manager)
Conal joined the Group from Ion Equity in February 2014. At Ion, he worked on a number of hotel related
initiatives, including serving as CEO of Pillo Hotels. Prior to joining Ion Equity, Conal worked with the Jurys
Doyle Hotel Group plc for fifteen years. He was appointed Group General Manager (UK North) in 2003,
heading up the Jurys Doyle hotel operations in the north of England, Scotland and Northern Ireland. During
this time he oversaw the successful opening of Jurys Inn properties in Newcastle, Glasgow, Leeds,
Nottingham and Milton Keynes. His experience also includes Dromoland Castle Hotel and the Ramada
Renaissance Hotel, Geneva.
Patrice Lennon (Age 35) (Head of Sales and Marketing)
Patrice joined the Group from Maldron Hotel Cardiff Lane, having worked as Sales and Marketing Manager
with that hotel since opening in 2005. She previously worked with Jurys Doyle Hotel Group in a variety of
roles in Jurys Hotel Ballsbridge, the Towers Hotel and the Burlington Hotel. Patrice now heads up the Group
Sales and Marketing team with key responsibility for all marketing and e-commerce activity, tour operator
contracting and strategic planning with the hotels in completing the necessary sales and marketing activities
to achieve revenues across all business segments. Patrice is a graduate of Dublin Institute of Technology and
University College Dublin.
Martha Mannion (Age 35) (Group Revenue Manager)
Martha joined the Group in January 2008 and has responsibility for all aspects of room revenue management
within the Group, including distribution, yield and rate management, as well as leisure club sales activity.
She previously worked with Jurys Doyle Hotel Group plc in the UK and Ireland, progressing to Deputy
General Manager of Jurys Inn Manchester and subsequently General Manager of Jurys Inn Galway. Martha
is a graduate from Galway-Mayo Institute of Technology.
21
14.
EMPLOYEES
As at 13 March 2013 (being the latest practicable date prior to the publication of this Document), the Group
had 993 full-time employees (including the Executive Directors), of which 435 were temporary employees.
The breakdown of the employees by activity for each of the financial years ended 31 December 2011,
31 December 2012 and 31 December 2013 was as follows:
Average Number of Employees
2011
2012
2013
————
————
————
69
97
113
344
548
596
————
————
————
413
645
709
By activity
Administrative
Other
————
————
————
The split of employees between full time and temporary for each of the financial years ended 31 December
2011, 31 December 2012 and 31 December 2013 was as follows:
Average Number of Employees
2011
2012
2013
————
————
————
238
366
390
175
279
319
————
————
————
413
645
709
Full time
Temporary
————
15.
————
————
LOCK-IN AND ORDERLY MARKET AGREEMENTS
A3 – 7.3
At Admission, the Directors, certain members of senior management and certain investors through Davycrest
Nominees will have entered into lock-in agreements in respect of an aggregate of 11,285,600 Ordinary
Shares, representing approximately 9.25% of the Enlarged Issued Share Capital.
Each of the Directors has, and certain members of senior management have undertaken not to sell, transfer
or otherwise dispose of any Ordinary Shares or any interest in Ordinary Shares held immediately following
Admission, or acquired in the period of 12 months following Admission, for a period of 12 months from the
date of Admission (the “Lock-in Period”) (except in limited circumstances including a takeover, death or
pursuant to court orders). In addition, each of the Directors has, and certain members of senior management
have undertaken that they will effect all sales, transfers or other disposals of Ordinary Shares in such orderly
manner as Davy may reasonably require, to maintain an orderly market in trading in the shares of the
Company.
Certain investors through Davycrest Nominees have undertaken not to dispose of their respective
shareholdings in the Existing Issued Share Capital during the Lock-in Period. In addition, for a further period
of 12 months after the expiration of the Lock-in Period, certain investors through Davycrest Nominees have
undertaken that they will effect all sales, transfers or other disposals of their existing shares in such orderly
manner as Davy may reasonably require, to maintain an orderly market in trading in the shares of the
Company.
16.
DIVIDEND POLICY
A1 – 20.7
The Company does not intend to pay dividends until the proceeds of the Placing have been substantially
invested. Once the Placing has been substantially invested it is the intention of the Board to commence the
payment of dividends as soon as is practicable, bearing in mind the financial resources that is required for
the development of the Group, and to pursue a progressive but prudent dividend policy thereafter.
17.
SHARE INCENTIVE ARRANGEMENTS
The Board believes that it is important that employees of the Group (including Executive Directors) are
appropriately incentivised and rewarded, with the success of the Group dependent to a significant degree on
the future performance of the executive management team. Accordingly, on 3 March 2014, a duly appointed
22
committee of the Board adopted the LTIP (subject to receipt of consent from the Company’s existing
shareholders) which allows the Company to grant awards to employees of the Group over Ordinary Shares.
For each award, the Remuneration Committee will determine the Company's performance conditions that
must be satisfied in order for the award to vest. Performance conditions will be measured over a period of
at least three financial years. Awards will normally vest no earlier than the third anniversary of the award
grant date. For all awards granted during the first three years of the LTIP, only total shareholder return
performance conditions will apply. For all subsequent awards granted, the performance conditions will be
based on 50 per cent. total shareholder return and 50 per cent. earnings per share performance conditions.
The Plan will be administered by the Remuneration Committee. No more than 5 per cent. of the issued
ordinary share capital of the Company may be issued or reserved for issuance under the LTIP over any tenyear period. No individual may be granted awards having a market value as at the award date in excess of
100 per cent. of his or her remuneration in any 12 month period.
Further details of the LTIP are set out in section 11 of Part IV of this Document.
18.
CORPORATE GOVERNANCE
A1 – 16.4
Companies admitted to trading on the ESM or AIM are not required to comply with the UK Corporate
Governance Code. However, the Board is focused on sound corporate governance. The Company has
therefore committed to comply with the principal provisions of the UK Corporate Governance Code together
with the terms of the Irish Corporate Governance Annex insofar as they are appropriate given the size of the
Company and its Group. The Board also intends that the Company and Group will comply with the main
principles of the Quoted Companies’ Alliance Corporate Governance Code for small and mid-size quoted
companies. The Group’s investment policy, strategy, budgets and corporate actions are prepared and finalized
by the Board. It is intended that Board meetings will be held at least quarterly and at other times as and when
required. The Board has established a remuneration committee, an audit committee and a nominations
committee in order to ensure independent consideration and review of various corporate governance matters.
On Admission, the Board will comprise 7 Directors, including 3 executive Directors and 4 non-executive
Directors including the Chairman. Each of the non-executive Directors (including the Chairman) is regarded
as independent. The Board intends to meet regularly to consider strategy, performance and the framework of
internal controls.
The audit committee will be chaired by Robert Dix and will also include Alf Smiddy. The chief financial
officer may also be invited to attend meetings of the committee. It will meet at least three times each year
and will be responsible for ensuring that the financial performance of the Group is properly monitored and
reported on and for meeting with the auditors and reviewing findings of the audit with the external auditor.
It is authorised to seek any information it properly requires from any service provider of the Company and
may ask questions of any such service provider. It will meet with the auditors at least once a year and will
also be responsible for considering and making recommendations regarding the identity and remuneration of
such auditors.
The audit committee will also consider the Group’s approach to health, safety and operational risk and, in
particular, will recommend to the Board a health and safety policy for adoption by it, verify that procedures
are in place to comply with applicable health and safety legislation and consider health and safety issues that
may have strategic, business and reputational implications for the Company and the Group.
The remuneration committee will be chaired by Margaret Sweeney and will also include John Hennessy and
Robert Dix. Its function is to consider and recommend to the Board the framework for the remuneration of
the chief executive officer, chairman, company secretary, chief financial officer, executive Directors and such
other officers as it is designated to consider and, within the terms of the agreed policy will, consider and
recommend to the Board the total individual remuneration package of each executive director including
bonuses, incentive payments and share options or other share awards. It will review the design of all
incentive plans for approval by the Board and Shareholders and, for each such plan, recommend whether
awards are made and, if so, the overall amount of such awards, the individual awards to executive Directors
and the performance targets to be used. No Director will be involved in decisions concerning his/her own
remuneration.
23
A1 – 17.1
The nomination committee will be chaired by Alf Smiddy and will also include Margaret Sweeney, John
Hennessy and Pat McCann. The nomination committee will consider the selection and re-appointment of
Directors. It will identify and nominate candidates for all Board vacancies and review regularly the structure,
size and composition (including the skills, knowledge and experience) of the Board and make
recommendations to the Board with regard to any changes.
The Directors intend to comply with Rule 21 of the AIM Rules and the ESM Rules relating to share dealings
by Directors of the Company, and will take all reasonable steps to ensure compliance with Rule 21 by the
Company’s applicable employees. The Company has adopted a share dealing code for its directors, officers
and employees to facilitate compliance with Rule 21 with effect from Admission.
19.
TAXATION
Information regarding Irish and United Kingdom taxation is set out in section 19 of Part IV of this
Document. All information in relation to taxation in this document is intended only as a general guide to the
current tax position in Ireland and the United Kingdom relative to the subscription for and holding of
Ordinary Shares. Shareholders should, in all cases, satisfy themselves as to their own tax position by
consulting their own tax advisers.
20.
TRENDS
Save as set out in this Document, there are no known trends, uncertainties, demands, commitments or events
that are reasonably likely to have a material effect on the Group’s prospects for the current financial year.
21.
ADMISSION, SETTLEMENT AND DEALINGS
Application has been made to the London Stock Exchange and the Irish Stock Exchange for the Ordinary
Shares to be admitted to trading on AIM and ESM respectively. It is expected that Admission will take place,
and that dealings in the Ordinary Shares on AIM and ESM will commence at 8.00 a.m. on 19 March 2014.
22.
DEALING ARRANGEMENTS
CREST is a paperless settlement procedure enabling securities to be evidenced otherwise than by a
certificate and transferred otherwise than by way of a written instrument. The Directors have applied for the
Ordinary Shares to be admitted to CREST with effect from Admission and CREST has agreed to such
admission. Accordingly, settlement of transactions in Ordinary Shares following Admission will take place
within the CREST system if the relevant Shareholder so wishes. The Articles provide for the transfer of
shares in dematerialised form in CREST.
CREST is a voluntary system and Shareholders who wish to receive and/or retain share certificates may do
so.
23.
FURTHER INFORMATION
Your attention is drawn to the additional information set out in Parts II to IV of this Document.
24.
RISK FACTORS
The AIM and ESM markets are designed primarily for emerging or smaller companies to which a
higher investment risk than that associated with larger or more established companies tends to be
attached. A prospective investor should be aware of the potential risks of investing in such companies
and should make the decision to invest only after careful consideration and, if appropriate,
consultation with an independent financial adviser being, in the case of persons resident in the United
Kingdom, a person authorised under FSMA and, in the case of persons resident in Ireland, a person
authorised or exempted under the European Communities (Markets in Financial Instruments)
Regulations 2007 (Nos.1-3) or the Investment Intermediaries Act 1995 of Ireland.
Your attention is drawn to the Risk Factors set out in Part II of this Document.
24
PART II
RISK FACTORS
Any investment in the Ordinary Shares is subject to a number of risks. Accordingly, prior to making any
investment decision, prospective investors should carefully consider all the information contained in this
Document and, in particular, the risk factors described below.
This Document also contains forward looking statements that involve risks and uncertainties. See “Forward
Looking Statements” in the introduction to this Document. The Group’s actual results could differ materially
from those anticipated in these forward looking statements as a result of certain factors, including the risks
faced by the Group described below and elsewhere in this Document. Additional risks and uncertainties not
currently known to the Board, or that the Board currently deems immaterial, may also have an adverse effect
on the Group’s financial condition, business, prospects and/or results of operations. In such a case, the
market price of Ordinary Shares could decline and investors may lose all or part of their investment. Investors
should consider carefully whether an investment in the Ordinary Shares is suitable for them in light of the
information in this Document and their personal circumstances. If investors are in any doubt about any action
they should take, they should consult a competent independent professional adviser who specialises in
advising on the acquisition of listed securities. The order in which risks are presented is not necessarily an
indication of the likelihood of the risks actually materialising, of the potential significance of the risks or of
the scope of any potential harm to the Group’s financial condition, business, prospects and results of
operations.
In addition to the other information set out in this Document, the following specific factors should be
considered carefully in evaluating whether to make an investment in the Group. The risks associated with
holding Ordinary Shares include (but may not be limited to) the following identifiable risks which,
individually or in aggregate, could have a material adverse effect on the Group and Shareholders. The value
of Ordinary Shares may go down as well as up.
An investment in the Company is only suitable for investors who are capable of evaluating the risks
and merits of such an investment and who have sufficient resources to bear any loss which might result
from such an investment. If you are in any doubt about the contents of this document and what action
you should take, you should consult your stockbroker, bank manager, solicitor or other independent
financial adviser (being in the case of persons resident in the United Kingdom, an organisation or firm
authorised pursuant to FSMA) immediately and, in the case of persons resident in Ireland, a person
authorised or exempted under the European Communities (Markets in Financial Instruments)
Regulations 2007 (Nos.1-3) or the Investment Intermediaries Act 1995 of Ireland.
The risks identified below are those which the Directors believe to be material in the context of the Group
but these risks may not be the only risks faced by the Group. Additional risks, including those that the
Directors are unaware of or currently deem immaterial, may also result in decreased income, increased
expenses or other events that could result in a decline in the value of Ordinary Shares.
RISKS RELATING TO THE GROUP’S BUSINESS
The Group faces competition for new hotels and it may not be successful in identifying or acquiring hotels
that meet its criteria
The Group’s growth strategy is based on its ability to identify and acquire hotels. In order to implement
the Group’s growth strategy, the Group needs to be able to identify and acquire hotels that meet its
acquisition criteria and that are compatible with this growth strategy. The Group faces competition for hotel
assets, from both international and local acquirers, some of which may have a different view on value or
potential returns than the Group. Accordingly, the Group may not be successful in acquiring hotel assets on
satisfactory terms.
25
A1 – 4
A3 -2
The Group’s growth strategy depends on the current owners of hotel assets being willing to sell these
assets
A significant element of the Group’s strategy is to acquire a portfolio of Irish hotel assets. This strategy is
dependent on the current owners of Irish hotel assets, including banks, receivers, NAMA and other third
parties, being willing to sell these assets in the short to medium term. If the current owners elect not to sell
or delay the sale of hotel assets resulting in an insufficient number of assets coming for sale then the Group
will be unable to acquire the intended hotel portfolio.
The Group is exposed to a variety of risks relating to securing and retaining third party leases and
management agreements
A part of the Group’s strategy depends on its ability to continue to operate third party hotels under both lease
agreements and management agreements. A number of the Group’s hotels are operated under agreements
which either cease upon a sale of the property or are short term in nature. The Group may lose a significant
proportion of these hotels in the near future or it may not be able to renew existing agreements on similarly
favourable terms. In addition, competition with other hotel operators may generally reduce the number of
suitable opportunities offered to the Group and increase the bargaining position of property owners seeking
to engage a manager. The terms of new management agreements may not be as favourable as current
arrangements.
A number of the Group’s management agreements are not evidenced in writing
Some of the Group’s hotel management agreements are based on verbal agreements with the receiver/hotel
owner and are not evidenced in writing. While the Group is satisfied that there was an intention to create a
legal relationship between the parties in these cases and the principal commercial terms are clear, the
existence and commercial terms of these agreements may not be enforceable by the courts in the event of a
dispute.
Loss of scale
Dalata currently operates 27 hotels under management agreements, 22 of which are currently in receivership
and are operated under management agreements that cease on the sale of the relevant hotel or the end of the
short term management period (where not renewed). A loss of a substantial number of hotels currently
operated under management agreements over a short space of time that are not replaced by new management
agreements would have negative implications for the Group’s scale of operations and could have an adverse
effect on the Group’s financial condition and results of operations.
The Group is dependent on a range of external stakeholders and business partners
The Group is dependent upon the performance, behaviours and reputation of a wide range of business
partners and external stakeholders including, but not limited to, owners, contractors, lenders, suppliers,
vendors, agents, third-party intermediaries and other business partners. Further, the number and complexity
of interdependency with stakeholders is evolving. Breakdown in relationships, stakeholder behaviours or
adverse reputations could impact on the Group’s performance and competitiveness, guest experiences or the
reputation of the Group and its brands.
The Group’s operating results depend on the reputation and awareness of the Maldron brand
The Group believes that brand awareness, image and loyalty are critical to its ability to achieve and maintain
high average occupancy and room rates and also for its plans to expand. The reputation and awareness of the
Maldron brand may be affected by a number of factors, including factors outside of the Group’s control such
as changes in customer preferences and customer perception. An event that materially damages the
reputation or awareness of the Maldron brand and/or a material failure to sustain the appeal of the brand to
the Group’s customers could have a material adverse effect on the value of the brand and subsequent
revenues therefrom.
26
Rapid growth of the Group may strain its managerial and operational resources and control systems
The rapid growth of the Group’s hotel portfolio potentially exposes the Group to a number of operational
and/or control risks requiring significant management attention. Management of the Group’s growth will
require, among other things, the following:
•
successful adoption of the Group’s business culture as well as best policies and practices, together
with continued development of financial and management controls and information technology
systems and their implementation and integration in new locations;
•
management of increased marketing activities and costs relating to the acquisition of additional
hotels;
•
efficient co-ordination of sales, distribution and marketing functions; and
•
training employees when acquiring additional hotels in new locations.
The success of hotels added to the Group’s portfolio of hotels will depend, in part, on the Group’s ability to
realise the anticipated benefits from integrating these additional hotels with existing operations. The Group’s
inability to successfully manage the impact of rapid growth on its operational and managerial resources and
control systems could have a material adverse effect on the Group’s business, financial condition and results
of operations.
Integration of additional hotels may be difficult and may inhibit the Group’s operations and financial
results
The Group may be exposed to losses as a result of difficulties in integrating existing businesses with
operations at new hotel properties, which the Group has the opportunity to acquire or manage. The issues
associated with the integration of existing businesses and new operations include, among other things
coordinating sales, distribution and marketing functions and integrating information systems. Delays or
unforeseen expenses in combining operations, as well as the diversion of the attention of the Group’s
management from its existing operations to integration efforts, may prevent the Group from realising the
profits which the new properties were expected to generate and could have a material impact on the Group’s
business and revenues.
The Group’s key senior personnel and management have been and remain material to its growth
The Group believes that its growth is partially attributable to the efforts and abilities of the members of its
senior management team. If one or more of the members of this team were unable or unwilling to continue
in their present position, the Group might not be able to replace them easily, which could have a material
adverse effect on the Group’s business, financial condition and results of operations. If the Group is unable
to retain its executive management team or other key personnel, or attract new qualified personnel to support
the growth of its business, this could have a material adverse effect on the Group’s business, financial
condition and results of operations.
The Group may face industrial disputes or other disruptions that could interfere with its operations
The Group is subject to the risk of industrial disputes and adverse employee relations, and these disputes and
adverse relations could disrupt the Group’s business operations and materially adversely affect the Group’s
business, financial condition or results of operations. Although the Group has not had any material industrial
disputes in the past, no assurance can be given that there will not be industrial disputes and/or adverse
employee relations in the future that could have a material adverse effect on the Group’s operations.
The Group is exposed to certain risks in relation to information technology and systems
The Group is reliant on certain technologies and systems for the running of its business. As a result of any
system failures, data viruses, computer “hackers’’ or other causes, the Group may experience operational
problems with its information systems. Any material disruption or slowdown of the Group’s information
systems, especially any failures relating to its reservation systems, could cause valuable information to be
lost or operations to be delayed, which in turn could have a material adverse effect on the Group’s business,
27
financial condition and results of operations. As part of the Group’s operations, the Group and each of its
hotels maintain personal data, such as credit card, identification, address and other information, of the
Group’s guests on their databases. Any failure by the Group to put in place and maintain adequate processes
and controls to ensure the confidentiality of this information, thereby leading to an unauthorised disclosure
of private data, may have damaging effects on the reputation and performance of the Group.
Changing technology and systems pose inherent risks to the Group
The Group relies heavily upon certain technologies and systems (including IT systems) for business
purposes. It places particular reliance on those systems, and in particular the reservations system discussed
further below, which are highly integrated with business operational processes. Notwithstanding the
availability of disaster recovery processes, disruption to those technologies or systems could have a negative
impact on the efficacy of the business. In addition, the Group may have to make substantial investments in
new technologies or systems in order to remain competitive. Any failure on the part of the Group to do so
may result in the Group suffering a competitive disadvantage. If the Group selects systems that are
unsuccessful or insufficiently aligned with the Group’s business needs, the Group could lose existing
customers, fail to attract new customers or incur significant losses.
The Group is reliant on reservations systems, the failure of which could impact adversely on the Group’s
operations and ability to compete
The Group’s business derives substantially from its ability to manage bedroom inventory and store guest
bookings, rates and profiles through the Portfolio, Opera and Hotelinx Property Management System (PMS)
Applications which it licenses from various third party licensors. If these applications were to fail or if the
third party licensor breached the terms of the license, the Group’s ability to log bookings could be impeded
and the Group’s revenues adversely affected. Furthermore, a failure to adequately update or maintain these
applications by the third party licensor could reduce the Group’s competitiveness on the open market.
A number of the Group’s hotel management agreements contain change of control provisions
A number of the Group’s hotel management agreements contain provisions which require the consent of the
hotel owner upon a change in the corporate control of the Group company which is a party to the relevant
hotel management agreements. In some of those instances, completion of the Placing may be regarded as
giving rise to a change of control. Where consent is required but is not obtained the hotel owner may be
entitled to terminate the hotel management agreement. A termination of management agreements could have
an adverse effect on the Group’s financial condition and results of operations.
A number of the Group’s hotel lease agreements contain change of control provisions
The lease agreements pursuant to which the Group holds an interest in two of the leased hotels contain
change of control provisions which require the consent of the relevant landlord upon a change in the control
of the Group company that is a party to those agreements. These provisions are not definitive, but the Group’s
view is that the provisions would be interpreted narrowly and would not be triggered by either the
reorganisation of the Group which saw Dalata installed as the Group holding company or the Placing. As
such, the prior written consent of the landlord has not been sought. However, it may be arguable that these
events would trigger the provisions, thereby imposing an obligation on the Group to obtain the relevant
consents, of which the Group could potentially be in breach.
Irish Competition Authority investigation into potentially anti-competitive practices in the hotel sector
The Group has received, and responded to, a questionnaire from the Irish Competition Authority about
certain practices in the hotel sector relating to, in particular, agency and wholesale sales and bookings. The
Group responded with a detailed response having taken external legal advice. The Group does not know
what, if any, further actions or consequences will arise, but such consequences could range from the Irish
Competition Authority taking no further action to initiating civil and/or criminal proceedings, which could
include penalties, with the possibility of change in the way in which the Group conducts its business. At this
stage, it is unclear what, if anything, will arise from the Competition Authority’s investigation.
28
The Group is exposed to risks as a result of existing and changing regulations in Ireland and the United
Kingdom
The Group is subject to regulatory requirements in key areas such as accounting, tax, corporate governance,
health and safety, licencing, food safety, environmental, corruption, employment law, disability access, data
privacy and information protection. Changes in these or any of the other regulatory regimes to which the
Group is subject may require substantial changes to the manner in which the Group operates its business and
may inhibit the Group’s use or transmission of customer data. Non-compliance by the Group with changing
regulatory demands may leave the Group open to fines, prosecution, loss of a licence to operate or
reputational damage.
The Group’s insurance policies may not be comprehensive
Historically, the Group has maintained insurance at levels determined by the Group to be appropriate in light
of the cost of cover and the risk profiles of the business in which the Group operates. However, the Group
may not be able to obtain insurance that covers losses that are due to external risks, such as acts of terrorism
or flooding. In addition, the scope of coverage the Group can obtain may be limited as may the Group’s
ability to obtain coverage at reasonable rates. With respect to losses for which the Group is covered by its
policies, it may be difficult and may take time to recover such losses from insurers. In addition, the Group
may not be able to recover the full amount from the insurer. No assurance can be given that the Group’s
current insurance coverage would be sufficient to cover all potential losses, in particular relating to hotels
operated under management agreements, regardless of the cause, nor can any assurance be given that an
appropriate coverage would always be available at acceptable commercial rates.
The Group is reliant on licences in order to carry on certain of its activities
The Group operates in a regulated sector of the economy and each of its hotels is licensed to sell alcohol.
There can be no guarantee that these licences will be renewed in the future, nor that the Group will be able
to obtain licences for any new hotels. Failure to obtain or hold or the loss of any licences or non-compliance
with any licence could have a significant effect on the Group’s business, financial condition or results of
operations.
The hotel sector is subject to various regulations and registration requirements
As with the operation of any hotel group there are various regulations and registration requirements to be
adhered to in areas such as environmental licences, food safety regulations, fire safety regulations etc. While
generally across the Group all such required licences and registrations are in place, there are some isolated
deficiencies which are currently being addressed by the Group. These include the failure by the Maldron
Hotel Cardiff, Wales to register with the local authority in respect of its food safety obligations, as a result
of which no inspections have been carried out by the local authority (an application for registration has since
been made to the local authority); and the fact that the Maldron Hotel Cork and the Maldron Hotel Galway
have not obtained licences to discharge to sewer. Failure to comply with regulations and registration
requirements could have a significant effect on the Group business, financial condition or results of
operations.
The value of the Group’s future property portfolio may fluctuate as a result of factors outside the Group’s
control
The Group plans to use the proceeds of the Placing to acquire a portfolio of hotel property assets. Property
investments are subject to varying degrees of risks. Values can be affected (among other things) by changing
demand, changes in general economic conditions, changing supply within a particular area of competing
space and attractiveness of property relative to other investment choices. The value of the Group’s property
portfolio may also fluctuate as a result of other factors outside the Group’s control, such as changes in
regulatory requirements and applicable laws (including in relation to taxation and planning), political
conditions, the condition of financial markets, potentially adverse tax consequences, interest and inflation
rate fluctuations and higher accounting and control expenses. The Group’s performance could be adversely
affected by a downturn in the property market in terms of capital values.
29
Property investments are relatively illiquid
Hotels such as those in which the Group plans to invest are relatively illiquid and planning regulations may
further reduce the numbers and types of potential purchasers should the Group decide to sell certain hotels
in the future. Such illiquidity may affect the Group’s ability to vary its portfolio or dispose of or liquidate
part of its portfolio in a timely fashion and at satisfactory prices in response to changes in economic, property
market or other conditions. This could have an adverse effect on the Group’s financial condition and results
of operations.
The Group is exposed to risks in relation to future upward only rent reviews and/or expiry of rent
abatements
The majority of the leases to which the Group is party are subject to upward only rent reviews, occurring in
5 yearly cycles. These upward only rent review clauses typically require that the revised rent be the higher
of the passing rent under the lease and the open market rent. In most cases, the current open market rent
would be estimated to be less than the passing rent paid by the Group. However, continued growth of the
Irish economy may result in increases in the open market rent, which could lead to the Group’s various
landlords triggering such rent review clauses. In addition, certain of the rent abatements contained in the
leases to which the Group is party are due to expire in the short to medium term. An increase in rents arising
from upward only rent reviews and expiring rent abatements could result in a reduction of the Group’s
competitiveness and adverse effects on the Group’s financial condition and results of operations.
The Group will borrow to fund its future growth
The Group may be required to borrow to fund expansion and the extent of the borrowings and the terms
thereof will depend on the Group’s ability to obtain credit facilities and the lenders’ estimate of the stability
of the Group’s cash flow. Any delay in obtaining or failure to obtain suitable or adequate financing from time
to time may impair the Group’s ability to expand its hotel portfolio, which is likely to impact negatively on
the Group’s business, financial condition and results of operations.
The incurring of debt by the Group could have a significant impact by:
•
increasing the Group’s vulnerability to downturns in the hotel real estate market and the economy
generally;
•
exposing the Group, or increasing its exposure, to interest rate risk;
•
requiring the Group to dedicate a substantial portion of cash flow to service debt;
•
limiting, through financial and restrictive covenants, the Company’s ability to pay dividends or
otherwise make loans within the Group, invest in hotel assets or financial instruments, sell assets,
borrow additional funds, issue equity, engage in transactions with affiliates;
•
subjecting the Group’s assets to security interests or creating liens or guarantees; and/or
•
placing the Group at a competitive disadvantage to less highly leveraged competitors.
Failure to satisfy obligations under any future financing arrangements could give rise to default risk and
require the Group to re-finance its borrowings
The use of borrowings presents the risk that the Group may be unable to service interest payments and
principal repayments or comply with other requirements of its facility agreements. Any failure to satisfy debt
obligations could result in a default under the terms of future financing arrangements, thereby having a
materially adverse effect upon the Group’s financial condition.
30
RISKS RELATED TO THE HOTEL INDUSTRY
The Group is subject to certain risks common to the hotel industry, certain of which are beyond its control
The Group’s operations and the results of its operations are subject to a number of factors that could
adversely affect the Group’s business, many of which are common to the hotel industry and beyond the
Group’s control, including the following:
•
a downturn in international market conditions or the national, regional and/or local political, economic
and market conditions in Ireland and the UK may diminish the demand for leisure and business travel;
•
increases in interest rates could affect the Group’s ability to negotiate future acquisitions on
favourable terms;
•
the impact of extreme weather conditions, impediments to means of transportation, natural disasters,
travel-related accidents, outbreaks of diseases or health concerns, acts of terrorism, rising fuel costs
or other factors that may affect travel patterns and reduce the number of business and leisure
travellers;
•
increased competition in the towns and cities in which the Group has hotels;
•
changes in travel patterns or in the structure of the travel industry, including any increase in taxes on
air travel;
•
increases in operating expenses as a result of inflation, increased personnel costs, higher utility costs
(including energy costs), increased taxes and insurance costs, as well as unanticipated costs as a result
of acts of nature and their consequences and other factors that may not be offset by increased room
rates;
•
changes in governmental laws and regulation, including those relating to employment, the preparation
and sale of food and beverages, smoking, health and alcohol licensing laws and environmental
concerns, fiscal policies and zoning ordinances and the related costs of compliance; and
•
the current reduced rate of VAT which applies to the hospitality sector may also be revised.
The impact of any of these factors (or a combination of them) may adversely affect room rates and
occupancy levels in the Group’s hotels, or otherwise cause a reduction in the Group’s income. Such factors
(or a combination of them) may also adversely affect the value of the Group’s hotels and in either such case
would have a material adverse effect on the Group’s business, financial conditions and results of operations.
The Group is exposed to the risk of events that adversely impact domestic or international travel
The Group’s room rates and occupancy levels could be adversely affected by events such as actual or
threatened acts of terrorism or war, epidemics, travel-related accidents, travel-related industrial action,
increased transportation and fuel costs, increased transport related taxes and natural disasters resulting in
reduced worldwide travel or other local factors impacting individual hotels. Terrorist incidents such as the
events of 11 September 2001, the London bombings of July 2005 and the war in Iraq in 2003 significantly
affected international travel and consequently global demand for hotel rooms. Further incidents or
uncertainties of this type may have an adverse impact on the Group’s operations and financial results.
A significant proportion of the Group’s operating expenses are fixed, which may impede the Group from
quickly reacting to changes in revenue
As is common across the hotel industry, a significant proportion of the Group’s operating expenses are fixed
and not linked to the performance of its hotels, and certain of the Group’s other operating expenses, including
heating, information technology and telecommunications and similar expenses, are also to a large extent
fixed. As such, the Group’s operating results are vulnerable to short term changes in its revenues. The
Group’s inability to react quickly to changes in its revenue by reducing the Group’s operating expenses could
have a material adverse effect on the Group’s business, financial condition and results of operations.
31
Environmental and/or health and safety compliance costs and liabilities may have a material adverse
effect on the Group’s financial condition and operations
As an owner and operator of hotels, the Group is subject to a variety of European Union, national and local
laws and regulations concerning environmental and/or health and safety (“EHS’’) matters. While the
Directors believe that the Group is in compliance in all material respects with EHS laws and regulations
currently applicable to it, there can be no assurance that the Group will not be found to be in breach of EHS
laws and regulations. The failure to comply with present or future EHS laws and regulations could result in
regulatory action, the imposition of fines or third party claims which could in turn have a material adverse
effect on the Group’s results of operation, its financial condition and/or its reputation. In addition,
compliance with new EHS laws and regulations could require the Group to incur significant expenditure that
could have a material adverse effect on the Group’s results of operation, financial condition or operations.
The Group is exposed to the risk of litigation from its guests, customers, actual and potential partners,
suppliers, employees, regulatory authorities and/or the owners of hotels leased or managed by the Group
The Group is exposed to the risk of litigation from its guests, customers, actual and potential partners,
suppliers, employees, regulatory authorities, franchisees and/or the owners of hotels leased or managed by
the Group for breach of legal, contractual or other duties. Although as stated in section 14 of Part IV of this
Document headed “Litigation’’, the Group is not involved in any governmental investigation, legal
proceedings or arbitration which may have, or have during the 12 months preceding the date of this
document, a significant effect on the Group’s financial position or profitability and so far as the Directors are
aware no such investigation, proceedings are pending or threatened, no assurance can be given that disputes
which could have such effect would not arise in the future. Exposure to litigation or fines imposed by
regulatory authorities may affect the Group’s reputation even though the monetary consequences may not be
significant.
RISKS RELATING TO THE ORDINARY SHARES
Investment considerations
An investment in the Company is suitable only for investors who are capable of evaluating the risks and
merits of such investment, who understand that there is potential risk of capital loss and that there may be
limited liquidity in the underlying investments of the Company and in the Ordinary Shares, for whom an
investment in the Ordinary Shares constitutes part of a diversified investment portfolio, who fully understand
and are willing to assume the risks involved in investing in the Company and who have sufficient resources
to bear any loss (which may be equal to the whole amount invested) which might result from such
investment.
A prospective investor should be aware that the value of an investment in the Company is subject to normal
market fluctuations and other risks inherent in investing in securities. There is no assurance that any
appreciation in the value of the Ordinary Shares will occur or that the investment objectives of the Group
will be achieved and the Ordinary Shares may not be suitable as investments. The value of investments and
the income derived therefrom may fall as well as rise and investors may not recoup the original amount
invested in the Company.
There is no guarantee that any appreciation in the value of the Company’s assets will occur and investors
may not get back the full value of their investment.
Liquidity and possible price volatility of the Ordinary Shares
An active trading market for the Ordinary Shares may not develop and the trading price for Ordinary Shares
may fluctuate significantly. Prior to the Placing, there has been no public market for any of the Ordinary
Shares. The Placing Price may not be indicative of the price at which the Ordinary Shares will trade
following completion of the Placing. In addition, there can be no assurance that an active trading market for
the Ordinary Shares will develop, or, if it does develop, that it will be sustained following completion of the
Placing, or that the market price of the Ordinary Shares will not decline below the Placing Price. Admission
to AIM and ESM should not be taken as implying that there will be a liquid market for the Ordinary Shares.
32
It may be more difficult for an investor to realise his investment in the Company than in a company whose
shares are admitted to listing on the Official List of the UK Listing Authority or of the Irish Stock Exchange.
The trading price of the Ordinary Shares will also be subject to significant volatility and may go down as
well as up in response to, among other factors: investor perceptions of the Group and the Group’s business
plans; variations in the Group’s operating results; changes in pricing policy made by the Group or the
Group’s competitors; changes in senior management personnel; and general economic and other factors.
Dividends
There can be no assurance as to the level of future dividends. The declaration, payment and amount of any
future dividends of the Company are subject to the discretion of the Board; and will depend upon, among
other things, the Group’s earnings, financial position, cash requirements and availability of profits (and
making up losses) as well as the provisions of relevant laws or generally accepted accounting principles from
time to time.
Dilution of Shareholders’ interest as a result of additional equity fund raising
The Group may need to raise additional funds in the future to finance the expansion of its operations. If
additional funds are raised through the issuance of new equity of the Company other than on a pro rata basis
to existing shareholders, the percentage ownership of the shareholders may be reduced. Shareholders may
experience subsequent dilution in their existing shareholding and an equity fundraising could have an
adverse effect on the market price of the Ordinary Shares as a whole.
Shareholders outside Ireland and the United Kingdom may not be able to participate in future equity
offerings
Irish company law provides for pre-emptive rights in respect of equity offerings for cash to be granted to a
company’s existing Shareholders, unless such rights are disapplied by shareholder resolution. However,
Shareholders in certain jurisdictions (including in the United States) may not be entitled to exercise these
rights unless the rights and Ordinary Shares are registered under their applicable laws (for example, in the
United States pursuant to a registration statement under the US Securities Act or where an exemption from
the registration requirements of the US Securities Act is available). The Company cannot at this point predict
whether it would seek such registrations and intends to evaluate, at the time of any rights offering, the costs
and potential liabilities associated with such registrations or qualifying for an exemption, as well as the
indirect benefits to the Company of enabling Shareholders in those jurisdictions to exercise rights and any
other factors it considers appropriate at the time and then to make a decision as to whether to file such a
registration statement. The Company cannot assure investors that any registration statement would be filed
as to enable US or other Shareholders outside of Ireland and the United Kingdom exercise of such holders’
pre-emptive rights or participation in a rights offer.
Irish law governs the rights of holders of Ordinary Shares and these rights may differ from the rights of
Shareholders in other jurisdictions
The Company is incorporated under the laws of Ireland. The rights of holders of Ordinary Shares are
governed by Irish law, including the Companies Acts, and by the Articles of Association and certain laws of
the EU. These rights differ in certain respects from the rights of shareholder corporations incorporated in
other jurisdictions, including in the United States. As a result, it may be difficult for investors outside Ireland
to serve process on or enforce foreign judgments against the Company. In particular, Irish law significantly
limits the circumstances under which Shareholders in Irish companies may bring derivative actions. In
addition, Irish law does not afford appraisal rights to dissenting Shareholders in the form typically available
to Shareholders of a US corporation.
Exchange rate fluctuations may expose an investor whose currency is not the euro to foreign exchange
rate risk
The Ordinary Shares will be priced in euro on their primary trading market and any dividends to be paid in
respect of them will be denominated in euro. Any investment in Ordinary Shares by an investor whose
principal currency is not the euro exposes the investor to foreign currency exchange risk. Any depreciation
33
of the euro in relation to such foreign currency will reduce the value to the investment in the Ordinary Shares
or any dividends in foreign currency terms.
Higher levels of risk usually attach to an investment in ESM/AIM-listed securities and these can be less
liquid than an investment in shares listed on the Official Lists of the Irish Stock Exchange and London
Stock Exchange
An investment in shares traded on ESM and AIM is viewed as involving a higher degree of risk than
investment in companies whose shares are listed on the Official Lists of the Irish Stock Exchange and of the
London Stock Exchange (the Official Lists). As the ESM and AIM are not regulated markets, a listing on
the ESM and AIM carries with it fewer technical obligations than a listing on the Official Lists. There are,
for instance, fewer circumstances in which the Company would be required to seek shareholder approval for
transactions and less onerous requirements may be imposed in relation to the disclosure of the financial
history of any asset holding companies that are acquired. Actual or perceived prejudice may be suffered by
investors to the extent that the Company takes advantage of the increased flexibility available to it by virtue
of an ESM and AIM listings.
34
PART III (A)
ACCOUNTANTS’ REPORT ON DALATA HOTEL GROUP P.L.C.
FOR THE PERIOD FROM 4 NOVEMBER 2013
(THE DATE OF INCORPORATION)
TO 31 JANUARY 2014
The Directors
Dalata Hotel Group p.l.c.
Burton Court
Burton Hall Drive
Sandyford
Dublin 18
13 March 2014
Dear Sir or Madam
Dalata Hotel Group p.l.c. (‘Dalata’) (the ‘Company’)
We report on the financial information set out in Part III (A) (“the financial information”) for the period from
4 November 2013 (date of incorporation) to 31 January 2014. This consolidated financial information has
been prepared for inclusion in the combined ESM Admission Document and AIM Admission Document of
Dalata dated 19 March 2014 (the ‘Document’) on the basis of the accounting policies set out in Note 3 to
the financial information. This report is required by Paragraph (a) of Schedule Two of the ESM Rules for
Companies and paragraph (a) of Schedule Two of the AIM Rules for Companies and is given for the purpose
of complying with those paragraphs and for no other purpose.
Responsibilities
The Directors of the Company are responsible for preparing the consolidated financial information on the
basis of preparation set out in Note 2 to the financial information.
It is our responsibility to form an opinion on the consolidated financial information and to report our opinion
to you.
Save for any responsibility arising under Paragraph (a) of Schedule Two of the ESM Rules for Companies
and paragraph (a) of Schedule Two of the AIM Rules for Companies to any person as and to the extent there
provided, to the fullest extent permitted by law, we do not assume any responsibility and will not accept any
liability to any other person for any loss suffered by any such other person as a result of, arising out of, or
in connection with this report or our statement, required by and given solely for the purposes of complying
with Schedule Two of the ESM Rules for Companies and Schedule Two of the AIM Rules for Companies,
consenting to its inclusion in the Admission Document.
Basis of opinion
We conducted our work in accordance with Standards for Investment Reporting issued by the Auditing
Practices Board of the United Kingdom and Ireland. Our work included an assessment of evidence relevant
to the amounts and disclosures in the consolidated financial information. It also included an assessment of
the significant estimates and judgments made by those responsible for the preparation of the consolidated
financial information and whether the accounting policies are appropriate to the entity’s circumstances,
consistently applied and adequately disclosed.
We planned and performed our work so as to obtain all the information and explanations which we
considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the
35
A1 – 20.1, 20.3,
20.5.1
consolidated financial information is free from material misstatement whether caused by fraud or other
irregularity or error.
Opinion on financial information
In our opinion, the financial information gives, for the purposes of the Admission Document dated 19 March
2014, a true and fair view of the state of affairs of the Company as at 31 January 2014 in accordance with
the basis of preparation set out in Note 3 to the financial information.
Declaration
For the purposes of Paragraph (a) of Schedule Two of the ESM Rules and Paragraph (a) of Schedule Two of
the AIM Rules for Companies, we are responsible for this report as part of the Document and declare that
we have taken all reasonable care to ensure that the information contained in this report is, to the best of our
knowledge, in accordance with the facts and contains no omission likely to affect its import. This declaration
is included in the Document in compliance with Schedule Two of the ESM Rules for Companies and
Schedule Two of the AIM Rules for Companies.
Yours faithfully
KPMG
Chartered Accountants
Dublin, Ireland
36
The financial information in respect of Dalata Hotel Group p.l.c. for and as at 31 January 2014 has been
prepared by the Directors on the basis set out in Note 2.
Income Statement
The Company did not trade during the period from incorporation (4 November 2013) to 31 January 2014 and
received no income and incurred no expenditure. Consequently, during this period the Company made
neither a profit nor loss.
The Company has no other recognised gains or losses, nor any cash flows during this period and accordingly
no statement of changes in equity or statement of cash flows is presented.
Balance Sheet
As at 31 January 2014
Note
Current assets
Cash and cash equivalents
7
––––––––
7
––––––––
7
––––––––
Total assets
Equity
Called up share capital
Retained earnings
4
7
–
––––––––
7
––––––––
––––––––
Total equity
Total equity and liabilities
1.
2014
€
7
Description of business
On 4 November 2013, Rockmelon p.l.c. was incorporated under the laws of the Republic of Ireland. It
changed its name to Dalata Hotel Group p.l.c. (the “Company”) on 15 January 2014.
In February 2014, a reorganisation took place. See Note 7 for further details.
The financial information set out above in respect of the Company as at 31 January 2014 has been prepared
by the Directors on the basis set out in Note 2.
2.
Basis of preparation
This financial information has been prepared in accordance with the International Financial Reporting
Standards as adopted by the European Union (‘EU IFRS’), which were effective for the reported accounting
periods.
The financial information presents the financial records of the Company on the date of incorporation (being
4 November 2013).
This financial information is presented in euro, which is the functional currency of the Company and also
the presentation currency for the Group’s financial reporting. Unless otherwise indicated, the amounts are
presented in euro.
This financial information is prepared on the historical cost basis.
The preparation of the financial information in conformity with IFRS requires management to make
judgements, estimates and assumptions that affect the application of policies and reported amounts of assets
and liabilities, income and expenses. The judgements, estimates and associated assumptions are based on
37
historical experience and various other factors that are believed to be reasonable under the circumstances.
Actual results could differ materially from these estimates.
The Directors believe that the Company has adequate resources to continue in operational existence for the
foreseeable future and that it is appropriate to continue to prepare our financial information on a going
concern basis.
As a company seeking admission, the Company is required to prepare and present in this Document the last
three years (or such shorter period that the issuer has been in operation) of audited historical financial
information in a form consistent with the accounting policies to be adopted by the Company’s next published
annual financial statements. Accordingly, the Directors have prepared financial information for the Company
for the period on the date of incorporation (being 4 November 2013) on the basis expected to be applicable,
in so far as this is currently known, for the first set of consolidated financial statements of the Company
expected to be prepared for the period ended 31 December 2014, except where otherwise required or
permitted by IRFS 1 (First time adoption of International Financial Reporting Standards).
3.
Accounting policies
Share capital
Ordinary Shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares
and share options are recognised as a deduction from equity, net of any tax effect.
New standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations are effective for annual periods
beginning after 1 January 2014, which have not been applied in preparing this financial information. These
standards are as follows:
•
IFRS 10: Consolidated financial statements. Effective date: 1 January 2014;
•
IFRS 11: Joint arrangements. Effective date: 1 January 2014;
•
IFRS 12: Disclosure of interests in other entities. Effective date: 1 January 2014;
•
IAS 27: Separate financial statements. Effective date: 1 January 2014;
•
IAS 28: Investments in associates and joint ventures. Effective date: 1 January 2014;
•
Offsetting Financial Assets and Liabilities (Amendment to IAS 32). Effective date: 1 January 2014;
•
Investment Entities (Amendments to IFRS 10, IFRS 12, IAS 27). Effective date: 1 January 2014;
•
Recoverable Amount Disclosures for Non-Financial Assets (Amendment to IAS 36). Effective date:
1 January 2014;
•
Novation of Derivatives and Continuation of Hedge Accounting (Amendment to IAS 39). Effective
date: 1 January 2014.
The Group does not plan to adopt these standards early and is currently in the process of considering their
impact on the Group.
38
4.
Share capital
2014
€
Authorised
100,000,000 ordinary shares of €1 each
100,000,000
––––––––––
Allotted, called up and fully paid equity
7 ordinary shares of €1 each
7
––––––––––
7
––––––––––
On incorporation (4 November 2013) the issued share capital of the Company was €7 divided into 7 ordinary
shares of €1 each and the authorised share capital €100,000,000 divided into 100,000,000 ordinary shares of
€1 each.
As at the date of this financial information, the current issued share capital is €7, made up of 7 ordinary
shares of €1 each. All of these shares were fully paid up on that date.
5.
Indebtedness
As at the date of this financial information, the Company has no guaranteed, secured, unguaranteed or
unsecured debt and no indirect or contingent indebtedness.
6.
Related Party Transactions
As at 13 March 2014 (being the latest practicable date prior to the issue of this Admission Document), save
for the activities described in Note 7, the Company has not entered into any related party transactions since
its incorporation.
7.
Post Balance Sheet Events
In February 2014, a reorganisation was completed, the purpose of which was to establish a structure to
support potential public trading of shares in the Group.The reorganisation involved the Company become the
new parent company of the Group. To give effect to the reorganisation, on 20 February 2014, the Company
entered into a share exchange agreement with the former shareholders of DHGL Limited, namely Davy
Property Holding, TVC Holdings plc and Pat McCann, whereby those shareholders agreed to transfer the
entire issued share capital in DHGL Limited to the Company in return for the issue of new shares in the
Company.
The reorganisation also involved the novation to the Company of DHGL Limited’s loan notes, which were
held by Davy Property Holdings, TVC Holdings plc and Pat McCann.
On 21 February 2014 the Company, DHGL Limited and each of the holders of the loan notes entered into
certain deeds of novation whereby the Company agreed to assume and perform all of the issuers obligations,
including accrued interest, under and in respect of the loan notes. It is anticipated that, subject to listing,
these loan notes will be converted to equity in the Company.
Following the reorganisation, the Group comprises Dalata Hotel Group p.l.c., DHGL Limited and its
subsidiaries. The consolidated financial statements of Dalata Hotel Group p.l.c. will be prepared on the basis
of the Company being a continuation of the existing DHGL Limited group, since this reflects the substance
of the arrangement. Therefore, book value accounting will be used in those financial statements and Dalata
Hotel Group p.l.c. will present its financial information as if reorganisation had occurred before the start of
the earliest period presented.
Save as disclosed above, there have been no significant events since 31 January 2014.
39
PART III (B)
ACCOUNTANTS’ REPORT ON THE CONSOLIDATED GROUP
HISTORICAL FINANCIAL INFORMATION
FOR THE THREE YEARS ENDED 31 DECEMBER 2013
The Directors
Dalata Hotel Group p.l.c.
Burton Court
Burton Hall Drive
Sandyford
Dublin 18
13 March 2014
Dear Sirs:
DHGL Limited and its subsidiary undertakings (together the “Group”)
We report on the consolidated historical financial information set out in Part III (B) for the three years ended
31 December 2013 (‘the historical financial information’). This historical financial information has been
prepared for inclusion in the combined ESM Admission Document and AIM Admission Document of Dalata
Hotel Group p.l.c. dated 19 March 2014 (the ‘Document’) on the basis of the accounting policies set out in
Note 3 to the historical financial information. This report is required by Paragraph (a) of Schedule Two of
the ESM Rules for Companies and paragraph (a) of Schedule Two of the AIM Rules for Companies and is
given for the purpose of complying with those paragraphs and for no other purpose.
Responsibilities
The Directors of DHGL Limited are responsible for preparing the historical financial information in
accordance with International Financial Reporting Standards as adopted by the European Union.
It is our responsibility to form an opinion on the historical financial information and to report our opinion to
you.
Save for any responsibility arising under Paragraph (a) of Schedule Two of the ESM Rules for Companies
and paragraph (a) of Schedule Two of the AIM Rules for Companies to any person as and to the extent there
provided, to the fullest extent permitted by law, we do not assume any responsibility and will not accept any
liability to any other person for any loss suffered by any such other person as a result of, arising out of, or
in connection with this report or our statement, required by and given solely for the purposes of complying
with Schedule Two of the ESM Rules for Companies and Schedule Two of the AIM Rules for Companies,
consenting to its inclusion in the Admission Document.
Basis of opinion
We conducted our work in accordance with Standards for Investment Reporting issued by the Auditing
Practices Board in the United Kingdom and Ireland. Our work included an assessment of evidence relevant
to the amounts and disclosures in the financial information. It also included an assessment of the significant
estimates and judgments made by those responsible for the preparation of the historical financial information
and whether the accounting policies are appropriate to the entity’s circumstances, consistently applied and
adequately disclosed.
We planned and performed our work so as to obtain all the information and explanations which we
considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the
40
historical financial information is free from material misstatement whether caused by fraud or other
irregularity or error.
Opinion
In our opinion, the financial information gives, for the purposes of the Document, a true and fair view of the
state of affairs of the Group as at 31 December 2011, 2012 and 2013 and of its profits, cash flows, other
comprehensive income, and changes in equity for the years ended 31 December 2011, 2012 and 2013 in
accordance with International Financial Reporting Standards as adopted by the European Union.
Declaration
For the purposes of Paragraph (a) of Schedule Two of the ESM Rules and Paragraph (a) of Schedule Two of
the AIM Rules for Companies, we are responsible for this report as part of the Document and declare that
we have taken all reasonable care to ensure that the information contained in this report is, to the best of our
knowledge, in accordance with the facts and contains no omission likely to affect its import. This declaration
is included in the Document in compliance with Schedule Two of the ESM Rules for Companies and
Schedule Two of the AIM Rules for Companies.
Yours faithfully
KPMG
Chartered Accountants
Dublin, Ireland
41
The consolidated financial information set out below in respect of DHGL Limited as at and for the three
years ended 31 December 2011, 31 December 2012 and 31 December 2013 has been prepared by the
Directors on the basis set out in Note 2.
Consolidated Statement of Comprehensive Income
For the Year Ended 31 December
Notes
Continuing operations
Revenue
Cost of sales
2011
€’000
2012
€’000
2013
€’000
4
Operating profit – continuing operations
Finance costs
Interest on bank loans and borrowings
Interest on unsecured shareholder loan notes
Finance income
34,851
(13,312)
––––––––
21,539
(20,009)
––––––––
1,530
54,143
(21,027)
––––––––
33,116
(29,927)
––––––––
3,189
60,617
(23,011)
––––––––
37,606
(32,673)
––––––––
4,933
5
5
5
Profit (loss) before tax
Income tax charge
6
(703)
(3,803)
30
––––––––
(2,946)
(175)
––––––––
(3,121)
(598)
(4,145)
60
––––––––
(1,494)
(460)
––––––––
(1,954)
(341)
(4,519)
–
––––––––
73
(650)
––––––––
(577)
(24)
––––––––
(24)
––––––––
(3,145)
(48)
––––––––
(48)
––––––––
(2,002)
24
––––––––
24
––––––––
(553)
Gross profit
Administration expenses
Loss for the financial year
Other comprehensive income
Exchange difference arising on translating
foreign operations
Other comprehensive loss for the year net of tax
––––––––
Total comprehensive loss for the year
––––––––
The accompanying notes are an integral part of this consolidated financial information.
42
––––––––
Consolidated Statement of Financial Position
As at 31 December
Notes
Non-Current Assets
Goodwill
Property, plant and equipment
Deferred tax asset
Trade and other receivables
8
9
17
11
10
11
12
Total Current Assets
15
6,867
1,638
142
–
––––––––
8,647
6,867
4,990
170
900
––––––––
12,927
258
3,384
2,414
––––––––
6,056
––––––––
14,633
434
4,023
5,306
––––––––
9,763
––––––––
18,410
535
6,045
4,940
––––––––
11,520
––––––––
24,447
–
4
(24)
(47,673)
––––––––
(47,693)
–
4
(72)
(49,627)
––––––––
(49,695)
–
4
(48)
(50,204)
––––––––
(50,248)
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
13
31,497
31,497
31,497
13
13
14,564
–
––––––––
46,061
18,710
–
––––––––
50,207
23,228
7,000
––––––––
61,725
9,000
7,081
184
––––––––
16,265
––––––––
62,326
––––––––
14,633
8,000
9,624
274
––––––––
17,898
––––––––
68,105
––––––––
18,410
2,000
10,958
12
––––––––
12,970
––––––––
74,695
––––––––
24,447
––––––––
Total Non-Current Liabilities
Current Liabilities
Loans and borrowings
Trade and other payables
Current taxation payable
6,867
1,576
134
–
––––––––
8,577
––––––––
Total Equity
Non-Current Liabilities
Unsecured shareholder loan notes
Accrued interest on unsecured
shareholder loan notes
Loans and borrowings
2013
€’000
––––––––
Total Assets
Equity
Ordinary share capital
Reverse acquisition reserve
Translation reserve
Retained earnings
2012
€’000
––––––––
Total Non-Current Assets
Current Assets
Inventory
Trade and other receivables
Cash and cash equivalents
2011
€’000
13
14
Total Current Liabilities
Total Liabilities
––––––––
Total Equity and Liabilities
––––––––
––––––––
The accompanying notes are an integral part of this consolidated financial information.
43
––––––––
––––––––
Consolidated Statement of Cash Flows
For the Year Ended 31 December
Note
Operating activities
Loss for the financial period
Adjustments to reconcile profit to net cash
provided by operating activities:
Depreciation
Net finance costs
Income tax charge/(credit)
9
5
6
Increase/(decrease) in trade and other payables
(Increase)/decrease in trade and other receivables
(Increase)/decrease in inventories
Income tax (paid)/received
14
11
10
Net cash provided by operating activities
Investing activities
Purchase of property, plant and equipment
Interest received
9
5
Net cash provided by/(used in) financing
activities
2012
€’000
(3,121)
(1,954)
377
4,476
175
––––––––
1,907
––––––––
––––––––
––––––––
(693)
1
––––––––
(692)
(371)
2
––––––––
(369)
––––––––
(3,759)
–
––––––––
(3,759)
––––––––
(703)
(12,500)
10,500
––––––––
(598)
(1,000)
–
––––––––
(341)
–
1,000
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
3,118
2,414
2,543
(639)
(176)
(367)
––––––––
4,859
(1,598)
2,892
2,414
5,306
The accompanying notes are an integral part of this consolidated financial information.
44
407
4,860
650
––––––––
5,340
––––––––
(704)
Cash and cash equivalents at the end
of the period
(577)
––––––––
1,531
(704)
(46)
3
––––––––
2,691
(2,703)
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning
of the period
309
4,683
460
––––––––
3,498
2013
€’000
––––––––
––––––––
Net cash provided by/(used in) investing activities
Financing activities
Interest on bank loans
Repayment of bank borrowings
Receipt of bank borrowings
2011
€’000
1,334
(2,922)
(101)
(917)
––––––––
2,734
659
(366)
5,306
4,940
Consolidated Statement of Changes in Equity
Share
capital
€’000
Balances at 1 January 2011
Transactions with shareholders
of the Company:
Impact of reverse acquisition
Comprehensive income/(loss):
Loss for the year
Currency translation difference
Balances at 31 December 2011
Comprehensive income/(loss):
Loss for the year
Currency translation difference
Balances at 31 December 2012
Comprehensive income/(loss):
Loss for the year
Foreign currency translation
Balances at 31 December 2013
Reverse
Share acquisition Translation
premium
reserve
reserve
€’000
€’000
€’000
–
4
–
–
–
(4)
4
–
Retained
Earnings
€’000
(44,552)
–
Total
Equity
€’000
(44,548)
–
–
–
–
–
(3,121)
(3,121)
–
–
–
(24)
–
(24)
–––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
–
–
4
(24) (47,673) (47,693)
–––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
–
–
–
–
(1,954)
(1,954)
–
–
–
(48)
–
(48)
–––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
–
–
4
(72) (49,627) (49,695)
–––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
–
–
–
–
(577)
(577)
–
–
–
24
–
24
–––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
–
–
4
(48) (50,204) (50,248)
–––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
The accompanying notes are an integral part of this consolidated financial information.
45
1.
Description of business
The consolidated financial information of DHGL Limited (formerly Dalata Hotel Group Limited) (the
“Company”) comprises the Company and its subsidiaries (together referred to as the “Group” and
individually as Group entities).
The principal activity of the Group is the operation of hotels. DHGL Limited is incorporated in Dublin,
Ireland.
2.
Basis of preparation
The consolidated financial information has been prepared on the historical cost basis of accounting.
The accounting policies set out below have been applied consistently to all periods presented within the
financial information and have been applied consistently by all Group companies.
The consolidated financial information has been prepared in accordance with the requirements of the
Prospectus Directive Regulation and Listing Rules, and in accordance with this basis of preparation. The
financial information has been prepared in accordance with International Financial Reporting Standards as
adopted by the EU (‘EU IFRS’).
Preparation of financial information pursuant to EU IFRS requires a number of judgemental assumptions and
estimates to be made. These impact on the income and expenses contained within the statement of
comprehensive income and the reported assets and liabilities in the statement of financial position, as well
as disclosures of contingent assets and liabilities at the date of the financial information. Such estimates and
judgements are based on historical experience and other factors, including expectation of future events that
are believed to be reasonable under the circumstances and are subject to continual re-evaluation. Actual
outcomes could differ from these estimates.
Key judgements impacting this financial information are:
•
Goodwill impairment review assumptions (see Note 8).
•
Bad debt provisions (see Note 16).
Measurement of fair values
A number of the Group’s disclosures require the measurement of fair values. When measuring the fair value
of an asset or liability the Group uses market observable data as far as possible. Fair values are categorised
into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Further information about the assumptions made in measuring fair values is included in Note 16 – Financial
Instruments and Risk Management.
3.
Significant accounting principles, accounting estimates and judgements
The accounting principles set out in the following paragraphs have, unless otherwise stated, been
consistently applied to all periods presented in the consolidated financial information and for all entities
included in the consolidated financial information.
(a)
Going concern
The directors have given careful consideration to the Group’s ability to continue as a going concern.
At 31 December 2013 the Group had total bank borrowings of €9 million and shareholder borrowings
of €54.7 million. At that date, the Group had cash and cash equivalents of €4.9 million and a deficit
46
on consolidated shareholders’ equity of €50.2 million. The deficit on consolidated shareholders’
equity includes an impairment of goodwill (a historic non cash charge) of €35.2 million and
€23.2 million of interest accrued on shareholder loan notes.
The €54.7 million of loan notes and related accrued interest will be repayable only in the event of a
realisation (which is a share sale or asset disposal or a listing of the company’s share capital). In order
to broaden the range of strategic options available to the Group, the board is actively seeking to
strengthen the Group’s statement of financial position by raising additional equity capital. In the event
that this endeavour is successful, it is likely that a restructuring of the loan note liability will take
place. The fundraising is anticipated to involve a new Group holding company, Dalata Hotel Group
plc. If the Group’s plan to raise equity is successful this will result in the loan notes and related
accrued interest being converted into equity of the new Group holding company at a value reflecting
the underlying fair value of the business at that date.
In August 2013, the Group refinanced its Term Loan facility with Ulster Bank. The new facility will
mature on 31 December 2015. The net bank debt to EBITDA ratio was 0.8 times at 31 December 2013
(0.8 times at 31 December 2012).
The directors’ evaluation of the Company’s and the Group’s ability to continue to trade as a going
concern is based on detailed analysis of its trading prospects and cash flow projections. The directors
expect that the Group will be in a position to meet its liabilities as they fall due for a period of at least
twelve months from the date of approval of this financial information.
On this basis the directors consider it is appropriate for us to prepare this financial information on a
going concern basis. This financial information does not include any adjustment that would result
from the going concern basis of preparation being inappropriate.
(b)
Statement of compliance
The consolidated financial information has been prepared in accordance with International Financial
Reporting Standards (IFRSs) and their interpretations issued by the International Accounting
Standards Board (IASB) as adopted by the EU.
The standards and interpretations that were required to be applied for the first time in the year ended
31 December 2013 are set out below. The only impact on the financial information in the current year
from these standards is the inclusion of certain additional IAS 1 and IFRS 13 disclosure requirements.
•
Presentation of items of other comprehensive income (amendments to IAS 1);
•
IFRS 13: Fair value measurement;
•
IAS 19: Employee benefits (amended 2011);
•
Annual improvements to IFRSs 2009-2011 cycle.
Standards that are not yet required to be applied, but can be early adopted are set out below. None of
these standards are expected to have a material impact on the financial information.
•
IFRS 10: Consolidated financial statements. Effective date: 1 January 2014;
•
IFRS 11: Joint arrangements. Effective date: 1 January 2014;
•
IFRS 12: Disclosure of interests in other entities. Effective date: 1 January 2014;
•
IAS 27: Separate financial statements. Effective date: 1 January 2014;
•
IAS 28: Investments in associates and joint ventures. Effective date: 1 January 2014;
•
Offsetting Financial Assets and Liabilities (Amendment to IAS 32). Effective date: 1 January
2014;
47
(c)
•
Investment Entities (Amendments to IFRS 10, IFRS 12, IAS 27). Effective date: 1 January
2014;
•
Recoverable Amount Disclosures for Non-Financial Assets (Amendment to IAS 36). Effective
date: 1 January 2014;
•
Novation of Derivatives and Continuation of Hedge Accounting (Amendment to IAS 39).
Effective date: 1 January 2014.
Functional and presentation currency
This consolidated financial information is presented in Euro, being the functional currency of the
Company. All financial information presented in Euro has been rounded to the nearest thousand,
except where otherwise stated.
(d)
Basis of consolidation
This consolidated financial information includes the financial statements of the Company and all of
its subsidiary undertakings.
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power,
directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits
from its activities. In assessing control, potential voting rights that are currently exercisable or
convertible are taken into account. The financial statements of subsidiaries are included in the
consolidated financial statements from the date that control commences until the date that control
ceases.
Intra-group balances and transactions, and any unrealised income and expenses arising from
intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised
losses are eliminated in the same way as unrealised gains, but only to the extent that there is no
evidence of impairment.
(e)
Revenue recognition
Revenue represents sales (excluding VAT and similar taxes) of goods and services net of discounts
provided in the normal course of business and recognised when services have been rendered.
Revenue is derived from hotel operations and includes the rental of rooms, food and beverage sales,
and leisure centre sales and membership in leased and acquired hotels operated under the Group’s
brand names. Revenue is recognised when rooms are occupied and food and beverages are sold.
Leisure centre revenue is recognised over the life of the membership.
Management fees are earned from hotels managed by the Group under contracts with the hotel
owners. Management fees are normally a percentage of hotel revenue and/or profit and are recognised
when earned and realised or realisable under the terms of the contract.
(f)
Sales discounts
The Group recognises revenue on a gross revenue basis and makes various deductions to arrive at net
revenue as reported in the statement of comprehensive income. These adjustments are referred to as
sales discounts.
(g)
Lease payments
Payments made under operating leases are recognised in the statement of comprehensive income on
a straight-line basis over the term of the lease.
(h)
Tax
Tax expense comprises current and deferred tax. Tax expense is recognised in the statement of
comprehensive income except to the extent that it relates to items recognised directly in equity, in
which case it is recognised in equity.
48
Current tax is the expected tax payable on the taxable income for the year using tax rates and laws
that have been enacted or substantively enacted at the reporting date, and any adjustment to tax
payable in respect of previous years.
Deferred tax is recognised by providing for temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and amounts used for taxation purposes.
Deferred tax is not recognised for the following temporary differences: those differences arising from
the initial recognition of assets or liabilities in a transaction that is not a business combination and that
affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries to
the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred
tax is not recognised for taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences
when they reverse, based on the laws that have been enacted or substantively enacted by the reporting
date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current
tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same
taxable entity, or on different entities, but they intend to settle current tax liabilities and assets on a
net basis or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised to the extent that it is probable future taxable profits will be
available against which the temporary difference can be utilised. Deferred tax assets are reviewed at
each reporting date and are reduced to the extent that it is no longer probable that the related tax
benefit will be realised.
(i)
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and accumulated
impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset.
Property, plant and equipment is depreciated to a residual value over the estimated useful lives which
are as follows:
Hotel buildings
Fixtures, fittings and equipment
50 years
5 – 10 years
Depreciation is charged to the statement of comprehensive income on a straight line basis over the
estimated useful life. Residual value is reassessed annually.
Individual items of property, plant and equipment are reviewed for impairment when events or
changes in circumstances indicate that the carrying value may not be recoverable. Assets that do not
generate independent cash flows are combined into cash generating units. If carrying values exceed
estimated recoverable amount, the assets or cash generating units are written down to their
recoverable amount. Recoverable amount is the greater of fair value less cost to sell and value in use.
Value in use is assessed based on estimated future cash flows discounted to their present value using
a pre-tax discount rate that reflects current market assessments of the time value of money and risks
specific to the asset.
(j)
Intangible assets
Intangible assets are stated at cost less accumulated depreciation and impairment losses.
Amortisation is charged to the statement of comprehensive income on a straight line basis over the
estimated useful life.
(k)
Goodwill
Goodwill represents the excess of the cost of an acquisition over the Group’s interest in the net fair
value of the identifiable assets, liabilities and contingent liabilities of the acquiree. When the excess
is negative (a bargain purchase gain) it is recognised immediately in the statement of comprehensive
income.
49
Goodwill is measured at cost less accumulated impairment losses. In respect of equity accounted
investees, the carrying amount of goodwill is included in the carrying amount of the investment.
The carrying amount of goodwill is reviewed at each reporting date to determine if there is an
indication of impairment. For the purpose of impairment testing, assets are grouped together into the
smallest group of assets that generates cash inflows from continuing use that are largely independent
of the cash inflows of other assets or groups of asset (the ‘cash-generating’ unit). The goodwill
acquired in a business combination, for the purpose of impairment testing, is allocated to
cash-generating units that are expected to benefit from the business combination.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair
value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects a current market assessment of the time
value of money and the risks specific to the asset.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds
its estimated recoverable amount. Impairment losses are recognised in the statement of
comprehensive income. Impairment losses recognised in respect of cash-generating units are allocated
first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the
carrying amount of the other assets in the Group on a pro-rata basis.
(l)
Inventories
Inventories are stated at the lower of cost and net realisable value.
(m)
Trade and other receivables
Trade and other receivables are stated at their nominal amount less any allowance for doubtful
amounts. An allowance is made when collection of the full amount is no longer considered probable.
(n)
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with maturities of three months
or less.
Cash equivalents are short-term highly liquid investments with an original maturity of three months
or less from the date of acquisition that are readily convertible to known amounts of cash and subject
to insignificant risk of changes in value.
In the statement of cash flows cash and cash equivalents are shown net of short-term overdrafts which
are repayable on demand.
(o)
Finance income and costs
Finance income comprises interest income on funds invested. Interest income is recognised as it
accrues in the statement of comprehensive income, using the effective interest method.
Finance costs comprise interest expense on borrowings. All borrowing costs are recognised in the
statement of comprehensive income using the effective interest method.
(p)
Foreign currency
Transactions in currencies other than the functional currency of Group entities are recorded at the rate
of exchange prevailing on the date of the transactions. Monetary assets and liabilities denominated in
foreign currencies at the reporting date are retranslated into the respective functional currency at the
relevant rates of exchange ruling at the reporting date.
Foreign exchange differences arising on translation are recognised in the statement of comprehensive
income.
The assets and liabilities of foreign operations are translated into Euro at the exchange rate ruling at
the reporting date. The income and expenses of foreign operations are translated into Euro at rates
50
approximating the exchange rates at the dates of the transactions. Foreign exchange differences
arising on the translation of foreign operations are recognised in the translation reserve within equity,
and are shown as other comprehensive income in the statement of comprehensive income.
(q)
Provisions and contingent liabilities
A provision is recognised in the statement of financial position when the Group has a present legal or
constructive obligation as a result of a past event, and it is probable that an outflow of economic
benefits will be required to settle the obligation. If the effect is material, provisions are determined by
discounting the expected future cash flows at a pre-tax rate that reflects current market assessment of
the time value of money and the risks specific to the liability.
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot
be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of an
outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed
by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent
liabilities unless the probability of an outflow of economic benefits is remote.
(r)
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary
shares are recognised as a deduction from equity, net of any tax effects.
Ordinary dividends declared as final dividends are recognised as a liability in the period in which they
are approved by shareholders. Interim dividends are recognised as a liability when declared.
(s)
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value, less attributable transaction costs.
Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any
difference between cost and redemption value being recognised in the statement of comprehensive
income over the period of the borrowings on an effective interest rate basis.
4.
Operating segments
The segments are reported in accordance with IFRS 8 Operating Segments. The segment information is
reported in the same way as it is reviewed and analysed internally by the chief operating decision makers,
primarily the CEO, and Board of Directors.
The Group operates in two segments – Leased hotels and Managed hotels:
Leased hotels
Under Dalata lease agreements, Dalata leases hotel buildings from property owners and is entitled to the
benefits and carries the risks associated with operating the hotel. The Group drives revenue primarily from
room sales and food and beverage sales in restaurants, bars and banqueting. The main costs arising under the
lease agreement are costs relating to rent paid to the lessor and other operating costs. The hotel acquired
following the Fonteyn acquisition (see Note 7) is also included within this category.
Managed hotels
Under management agreements, the Group provides management services for third party hotel proprietors.
Revenue
Leased
Managed
2011
€’000
2012
€’000
2013
€’000
31,248
3,603
––––––––
34,851
50,474
3,669
––––––––
54,143
55,447
5,170
––––––––
60,617
––––––––
Total revenue
51
––––––––
––––––––
The line item ‘Leased’ represents the operating revenue (Room revenue, Food and Beverage Revenue and
other hotel revenue) from leased hotels.
The line item ‘Managed’ represents the fees and other income earned from services provided in relation to
managed hotels.
Segmental results – EBITDA
Leased – EBITDA
Managed – EBITDA
2011
€’000
2012
€’000
2013
€’000
281
3,603
––––––––
3,884
2,419
3,669
––––––––
6,088
––––––––
3,449
5,170
––––––––
8,619
––––––––
3,884
(1,979)
––––––––
1,905
(377)
(4,474)
––––––––
(2,946)
(175)
––––––––
(3,121)
6,088
(2,590)
––––––––
3,498
(309)
(4,683)
––––––––
(1,494)
(460)
––––––––
(1,954)
8,619
(3,279)
––––––––
5,340
(407)
(4,860)
––––––––
73
(650)
––––––––
(577)
––––––––
EBITDA for reportable segments
Reconciliation to results for the year
Segments EBITDA
Central costs
Group EBITDA
Depreciation
Net finance costs
Profit/(loss) before tax
Tax
––––––––
Loss for the year
EBITDA represents earnings before interest, tax, depreciation and amortisation.
––––––––
––––––––
The line item ‘Leased – EBITDA’ represents the net operational contribution of leased hotels less related
costs.
The line item ‘Managed – EBITDA’ represents the fees and other income earned from services provided in
relation to managed hotels. All of this activity is managed corporately and specific individual costs are not
allocated to this segment.
The line item ‘Central costs’ reconciles the EBITDA for the two segments to total Group EBITDA and
includes costs of the Group’s central functions including operations support, technology, sales and
marketing, human resources, finance, corporate services and business development.
Geographical information
Revenue
Republic of Ireland
United Kingdom
2011
€’000
2012
€’000
2013
€’000
32,766
2,085
––––––––
34,851
50,063
4,080
––––––––
54,143
55,756
4,861
––––––––
60,617
8,577
–
––––––––
8,577
8,114
533
––––––––
8,647
12,417
510
––––––––
12,927
––––––––
Total revenue
Non-current assets
Republic of Ireland
United Kingdom
––––––––
52
––––––––
––––––––
––––––––
––––––––
5.
Net Finance Income/(Costs)
2011
€’000
Recognised in profit or loss
Finance cost:
Interest on bank loans and borrowings
Interest expense on unsecured shareholder loan notes
Finance cost
Finance income:
Interest income on bank deposits
Foreign exchange gain
Finance income
6.
2013
€’000
(703)
(3,803)
––––––––
(4,506)
––––––––
(598)
(4,145)
––––––––
(4,743)
––––––––
(341)
(4,519)
––––––––
(4,860)
––––––––
1
29
––––––––
30
––––––––
(4,476)
2
58
––––––––
60
––––––––
(4,683)
–
–
––––––––
–
––––––––
(4,860)
––––––––
Net finance income/(cost)
2012
€’000
––––––––
––––––––
Income Tax
2011
€’000
Current tax expense
Irish income tax
Under/(over) provision in respect of prior years
Deferred tax credit
188
2
(15)
––––––––
175
––––––––
Total current tax expense
2012
€’000
471
(3)
(8)
––––––––
460
––––––––
2013
€’000
682
(4)
(28)
––––––––
650
––––––––
The tax assessed for the year is higher than the standard rate of income tax in Ireland for the year. The
differences are explained below:
2011
€’000
Loss before tax
Irish standard tax rate (12.5%)
Taxes on loss at the Irish standard rate
Income taxed at a higher rate
Expenses not deductible for tax purposes
Losses carried forward
Under/(over) provision in respect of prior periods
Other
(2,946)
12.5%
(368)
1
487
–
2
53
––––––––
175
––––––––
Total income tax expense
7.
2012
€’000
(1,494)
12.5%
(187)
1
548
101
(3)
–
––––––––
460
––––––––
2013
€’000
73
12.5%
9
–
550
95
(4)
–
––––––––
650
––––––––
Acquisition of Fonteyn Property Holdings Limited
On 30 August 2013, the Company acquired 100% of the share capital of Fonteyn Property Holdings Limited,
which itself had a 100% subsidiary, Fonteyn Property Holdings No.2 Limited. These two companies
(referred to as “Fonteyn”) had originally been incorporated in 2011 as special purpose vehicles. The
Company did not control Fonteyn prior to its acquisition in 2013.
Fonteyn had previously purchased a distressed loan in 2011 from a financial institution which was secured
on the Maldron Limerick Hotel property, a hotel operated by the Group under a lease arrangement.
The Group accounted for this transaction as an asset acquisition. The consideration paid was €3 and the book
value of net liabilities acquired was €2,216,000. Fonteyn had recorded the secured loan referred to above at
a book value of €nil at the date of the acquisition. Repayments of this secured loan are not anticipated.
53
From a Group perspective, as a consequence of the acquisition of Fonteyn, the Group has effective control
and, in substance, the risks and rewards of ownership, of the Maldron Hotel Limerick property. Accordingly,
the principal accounting impact of the acquisition in the 2013 consolidated financial information is to reflect
the acquisition of the Maldron Hotel Limerick property (see Note 9) for a purchase price of €2,216,000. It
is expected that the Group will obtain legal title to the property in due course.
8.
Goodwill
Cost
At beginning and end of year
Impairment
At beginning and end of year
Carrying amount
At beginning and end of year
2011
€’000
2012
€’000
2013
€’000
42,059
42,059
42,059
(35,192)
––––––––
(35,192)
––––––––
(35,192)
––––––––
––––––––
––––––––
––––––––
6,867
6,867
6,867
In 2007, Dalata Limited acquired a number of Irish hotel operations through the purchase of a 100% interest
in Anora Commercial Limited and Hanford Commercial Limited (which in turn held 100% interests in
Ogwell Limited, Caruso Limited and CI Hotels Limited) for consideration of €41.5 million. The goodwill
arising represented the excess of costs and consideration over the fair value of the identifiable assets less
liabilities acquired and amounted to €42.1 million. The goodwill was subsequently impaired and the carrying
value of goodwill at the beginning and end of the year amounted to €6.867 million.
The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill
might be impaired. For the purposes of impairment testing goodwill has been allocated to the Group of cash
generating units (CGUs) representing the Irish hotel operations acquired in 2007. The recoverable amount
of the Group of CGUs is based on a value in use calculation. Value in use is determined by discounting the
future cash flows generated from the continuing use of these hotels. The value in use was based on the
following key assumptions:
•
Cash flow projections are based on current operating results and budgeted forecasts prepared by
management covering a ten year period.
•
Revenue for the first year of the projections is based on budgeted figures for 2014.
•
Cash flow projections assume a long term compound annual growth rate of 3% in sales revenues.
•
Cashflows include an average annual capital outlay on maintenance for the hotels of 2% of revenues
but assume no enhancements to any property.
•
The value in use calculations also include a terminal value based on an industry earnings multiple
model which incorporates a long term growth rate of 2%.
•
The cash flows are discounted using a risk adjusted discount rate of 15.67%. The discount rate was
estimated based on past experience and the risk adjusted Group weighted average cost of capital.
The values applied to each of these key assumptions are derived from a combination of internal and external
factors based on historical experience and taking into account the stability of cashflows typically associated
with these factors.
At 31 December 2013, the recoverable amount was determined to be significantly higher than the carrying
amount of the Group of CGUs. The directors concluded that the carrying value of goodwill is not impaired
at 31 December 2013.
54
9.
Property, Plant and Equipment
Cost:
At 1 January 2011
Additions
At 31 December 2011
Additions
At 31 December 2012
Additions
Buildings
€’000
Fixtures,
fittings &
equipment
€’000
Total
€’000
–
–
––––––––
–
––––––––
–
––––––––
–
––––––––
2,216
––––––––
2,216
2,988
693
––––––––
3,681
––––––––
371
––––––––
4,052
––––––––
1,543
––––––––
5,595
––––––––
2,988
693
––––––––
3,681
––––––––
371
––––––––
4,052
––––––––
3,759
––––––––
7,811
––––––––
–
–
––––––––
–
––––––––
–
––––––––
–
––––––––
–
––––––––
–
––––––––
2,216
1,728
377
––––––––
2,105
––––––––
309
––––––––
2,414
––––––––
407
––––––––
2,821
––––––––
2,774
1,728
377
––––––––
2,105
––––––––
309
––––––––
2,414
––––––––
407
––––––––
2,821
––––––––
4,990
–
––––––––
–
––––––––
–
––––––––
1,638
––––––––
1,576
––––––––
1,260
––––––––
––––––––
At 31 December 2013
Accumulated depreciation:
At 1 January 2011
Charged in year
At 31 December 2011
Charged in year
At 31 December 2012
Charged in year
At 31 December 2013
––––––––
Carrying amount: 31 December 2013
Carrying amount: 31 December 2012
Carrying amount: 31 December 2011
Carrying amount: 1 January 2011
––––––––
––––––––
1,638
––––––––
1,576
––––––––
1,260
––––––––
Additions to buildings of €2,216,000 in 2013 reflect the inclusion of the Maldron Hotel Limerick property,
as a consequence of the acquisition of Fonteyn Property Holdings Limited (see Note 7). It is expected that
the Group will obtain legal title to the property in due course.
10.
Inventories
Goods for resale
Consumable stores
2011
€’000
2012
€’000
2013
€’000
180
78
––––––––
258
364
70
––––––––
434
361
174
––––––––
535
––––––––
55
––––––––
––––––––
11.
Trade and other receivables
Non-current assets
Other receivables
2011
€’000
2012
€’000
2013
€’000
–
––––––––
–
–
––––––––
–
––––––––
900
––––––––
900
––––––––
1,421
1,963
––––––––
3,384
––––––––
3,384
1,991
2,032
––––––––
4,023
––––––––
4,023
3,328
2,717
––––––––
6,045
––––––––
6,945
––––––––
Current assets
Trade receivables
Prepayments
Net trade and other receivables
––––––––
––––––––
––––––––
2011
€’000
2012
€’000
2013
€’000
5,306
–
––––––––
5,306
4,940
–
––––––––
4,940
Other, non current, receivables consists of a deposit required as part of a hotel property lease contract.
The deposit is refundable at the end of the lease term.
12.
Cash and cash equivalents
Cash at bank and in hand
Bank overdraft
2,444
(30)
––––––––
2,414
––––––––
13.
––––––––
––––––––
2011
€’000
2012
€’000
2013
€’000
9,000
––––––––
9,000
8,000
––––––––
8,000
––––––––
2,000
––––––––
2,000
––––––––
31,497
14,564
–
––––––––
46,061
31,497
18,710
–
––––––––
50,207
31,497
23,228
7,000
––––––––
61,725
55,061
58,207
Interest bearing loans and borrowings
Repayable within one year
Bank borrowings
––––––––
Repayable after one year
Unsecured shareholder loan notes
Accrued interest on unsecured loan notes
Bank borrowings
––––––––
––––––––
Total interest bearing loans and borrowings
––––––––
––––––––
––––––––
––––––––
63,725
Bank borrowings
At 31 December 2013, the total amount due in respect of this term loan facility amounted to €9 million.
The facility was extended in 2013 and will mature on 31 December 2015.
The bank borrowings are secured by a floating charge over all of the Group’s present and future assets. As at
31 December 2013, the borrowings incur interest at variable rates. Details of the rates applicable and
maturity analysis are set out in Note 16.
Unsecured shareholder loan notes
On 7 August 2007, Dalata Limited issued fixed rate unsecured loan notes to its shareholders which had a
value of €31,496,850. The fixed rate unsecured loan notes are repayable at par together with accrued interest
immediately prior to a realisation. A realisation is defined in the shareholders’ agreement as an asset sale or
56
share sale (involving a change of business control), or a listing. The loan notes may be redeemed at par
together with accrued interest, by the Company, on or after the fifth anniversary of the date of issue with the
prior consent of at least 75% of the loan note holders. As no realisation has occurred by 31 December 2013
or was expected as at 31 December 2013 to take place in the following year, the loan notes and accrued
interest have been classified as non-current liabilities as at 31 December 2013. Interest is accrued at a fixed
rate of 9% per annum, compounded annually.
As part of the Group reorganisation in 2011, loan notes of €31.5 million and accrued interest at that time of
€11.4 million were transferred from Dalata Limited to the Company in exchange for a receivable of the same
amount. All obligations relating to the loan notes were transferred to the Company.
14.
Trade and other payables
Trade payables
Accrued liabilities
Value added tax
Payroll taxes
2011
€’000
2012
€’000
2013
€’000
2,934
3,586
351
210
––––––––
7,081
3,263
5,437
548
376
––––––––
9,624
4,316
5,487
702
453
––––––––
10,958
Number
€
75,000,000
25,000,000
100
750
250
100
––––––––
1,100
––––––––
15.
––––––––
––––––––
Share capital and reserves
At 31 December 2013, 2012, 2011
Authorised Share Capital
Ordinary Shares of €0.00001 each
‘A’ ordinary shares of €0.00001 each
Ordinary redeemable shares of €1 each
Number of allotted, called-up and fully paid up shares
Ordinary Shares of €0.00001 each
‘A’ ordinary shares of €0.00001 each
Ordinary redeemable shares of €1 each
Amount of allotted, called-up and fully paid up shares
Ordinary Shares of €0.00001 each
‘A’ ordinary shares of €0.00001 each
Ordinary redeemable shares of €1 each
All shares rank pari passu to each other in all respects.
16.
––––––––
2011
Number
2012
Number
7,499,999
2,000,000
–
7,499,999
2,000,000
–
7,499,999
2,000,000
–
2011
€
2012
€
2013
€
75
20
–
––––––––
95
75
20
–
––––––––
95
75
20
–
––––––––
95
––––––––
––––––––
2013
Number
––––––––
Financial instruments and risk management
The following tables show the carrying amount of Group financial assets and liabilities including their values
in the fair value hierarchy. The tables do not include fair value information for financial assets and financial
liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.
57
Loans and
receivables
€’000
2011
Trade and other receivables (Note 11)
Cash and cash equivalents (Note 12)
Trade and other payables (Note 14)
Unsecured shareholder loan notes
including accrued interest (Note 13)
Bank loans – variable (Note 13)
Bank loans – fixed (Note 13)
2012
Trade and other receivables (Note 11)
Cash and cash equivalents (Note 12)
Trade and other payables (Note 14)
Unsecured shareholder loan notes
including accrued interest (Note 13)
Bank loans – variable (Note 13)
2013
Trade and other receivables (Note 11)
Cash and cash equivalents (Note 12)
Trade and other payables (Note 14)
Unsecured shareholder loan notes
including accrued interest (Note 13)
Bank loans – variable (Note 13)
3,384
2,414
–
–
–
–
––––––––
5,798
Liabilities at
amortised
cost
€’000
–
–
(7,081)
Total
carrying
amount
€’000
3,384
2,414
(7,081)
Level 1
€’000
–
–
–
(46,061)
(46,061)
–
(5,000)
(5,000)
–
(4,000)
(4,000)
–
–––––––– –––––––– ––––––––
(62,142)
(56,344)
–
Fair value
Level 2
Level 3
€’000
€’000
–
–
–
–
–
–
Total
€’000
–
–
–
–
(14,288)
(14,288)
–
–
–
(4,300)
–
(4,300)
–––––––– –––––––– ––––––––
(4,300)
(14,288)
(18,588)
–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
4,023
5,306
–
–
–
––––––––
9,329
–
–
(9,624)
4,023
5,306
(9,624)
–
–
–
–
–
–
(50,207)
(50,207)
–
(8,000)
(8,000)
–
–––––––– –––––––– ––––––––
(67,831)
(58,502)
–
–
–
––––––––
–
–
–
–
–
–
–
(26,235)
(26,235)
–
–
–––––––– ––––––––
(26,235)
(26,235)
–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
6,945
4,940
–
–
–
––––––––
11,885
–
–
(10,958)
6,945
4,940
(10,958)
–
–
–
–
–
–
(54,725)
(54,725)
–
(9,000)
(9,000)
–
–––––––– –––––––– ––––––––
(74,683)
(62,798)
–
–
–
––––––––
–
–
–
–
–
–
–
(40,000)
(40,000)
–
–
–––––––– ––––––––
(40,000)
(40,000)
–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
Estimation of fair values
The principal methods and assumptions used in estimating the fair values of financial assets and liabilities
are explained below.
Cash and cash equivalents including the short-term bank deposits
For short term bank deposits and cash and cash equivalents, all of which have a remaining maturity of less
than three months, the carrying value is deemed to reflect a reasonable approximation of fair value.
Trade and other receivables/payables
For the receivables and payables with a remaining term of less than one year or demand balances, the
carrying value less impairment provision, where appropriate, is a reasonable approximation of fair value. The
non-current receivables are interest-bearing at deposit rates and the carrying value is a reasonable
approximation of fair value.
Bank loans
For bank loans and borrowings the fair value is calculated based on the present value of the expected future
principal and interest cash flows discounted at interest rates effective at the reporting date and adjusted for
movements in credit spreads. The Group’s bank loans are at variable rates and facilities were renewed in
2013. The carrying amount of principal owed at 31 December 2013 is a reasonable approximation to the fair
value.
58
Shareholders’ loans and accrued interest
The fair value of the shareholders’ loans and accrued interest is based on the estimated fair value of the
underlying business, which is based on profitability and market multiples for comparable businesses in the
hotels, leisure and entertainment sector, plus or minus net debt/cash.
Risk exposures
The Group and company’s operations expose each to various financial risks that include credit risk, liquidity
risk and market risk. The Group has a risk management program in place which seeks to limit the impact of
these risks on the financial performance of the Group. It is the policy of the Group to manage these risks in
a non-speculative manner. The Group does not utilise derivative financial instruments to hedge economic
exposures.
This note presents information about the Group’s exposure to each of the above risks and the objectives,
policies and processes for measuring and managing the risks. Further quantitative and qualitative disclosures
are included throughout this note.
(a)
Credit risk
Exposure to credit risk
Credit risk arises from granting credit to customers and from investing cash and cash equivalents with
banks and financial institutions.
Trade and other receivables
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each
customer. There is no concentration of credit risk or dependence on individual customers.
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing
basis. The maximum exposure to credit risk is represented by the carrying amount of each financial
asset.
Cash and short term bank deposits
The Group is exposed to credit risk from the counterparties with whom it places its bank deposits. The
Group is satisfied that the credit risk associated with its deposits is not significant.
The carrying amount of financial assets, net of impairment provisions, represents the Group’s
maximum credit exposure. The maximum exposure to credit risk at year end was as follows:
Trade receivables (Note 11)
Other receivables (Note 11)
Prepayments and accrued income (Note 11)
Cash and cash equivalents (Note 12)
Carrying
amount
2011
€’000
Carrying
amount
2012
€’000
Carrying
amount
2013
€’000
1,421
–
1,963
2,414
––––––––
5,798
1,991
–
2,032
5,306
––––––––
9,329
3,328
900
2,717
4,940
––––––––
11,885
––––––––
––––––––
––––––––
Trade receivables
The Group and Company have detailed procedures for monitoring and managing the credit risk
related to their trade receivables. Trade receivables are monitored by review of aged debtor reports by
Company management. The maximum exposure to credit risk on trade receivables at the reporting
date was as follows:
59
Aged analysis of trade receivables
2011
Not past due
Past due < 30 days
Past due 30 – 60 days
Past due 60 – 90 days
Past due > 90 days
Class of
receivables
€’000
Bad debt
provision
€’000
Net
receivables
€’000
532
538
115
164
150
––––––––
1,499
–
–
(3)
(11)
(64)
––––––––
(78)
532
538
112
153
86
––––––––
1,421
558
701
321
161
352
––––––––
2,093
–
–
(14)
(2)
(86)
––––––––
(102)
558
701
307
159
266
––––––––
1,991
1,066
812
386
432
943
––––––––
3,639
–
–
(26)
(43)
(242)
––––––––
(311)
1,066
812
360
389
701
––––––––
3,328
––––––––
2012
Not past due
Past due < 30 days
Past due 30 – 60 days
Past due 60 – 90 days
Past due > 90 days
––––––––
2013
Not past due
Past due < 30 days
Past due 30 – 60 days
Past due 60 – 90 days
Past due > 90 days
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
––––––––
Management does not expect any significant losses of receivables that have not been provided for as
shown above.
(b)
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall
due. The Group’s approach to managing liquidity is to ensure as far as possible that it will always have
sufficient liquidity to meet its liabilities when due. At 31 December 2013, Group management
consider that there is sufficient working capital for its regular trading activity. Further disclosures in
respect of the Group’s ability to act as a going concern are set out in Note 3.
Details of the Group’s debt and facilities are set out below:
2011
€’000
Bank loan – variable interest rate
Bank loan – fixed interest rate
Unsecured loan notes
Accrued interest on unsecured loan notes
(5,000)
(4,000)
(31,497)
(14,564)
––––––––
(55,061)
––––––––
60
2012
€’000
(8,000)
–
(31,497)
(18,710)
––––––––
(58,207)
––––––––
2013
€’000
(9,000)
–
(31,497)
(23,228)
––––––––
(63,725)
––––––––
Bank loans
The bank loan facility at 31 December 2013 was €9 million. Interest is charged at variable rates.
The applicable interest rates at 31 December 2013 were 3.8% (on €8 million of loans) and 5.6%
(on €1 million of loans). The Group had no undrawn bank loan facilities at 31 December 2013.
The repayment schedule based on the facility at 31 December 2013 has been used to analyse the
contractual maturities in the table below.
Unsecured shareholder loan notes
On 7 August 2007, Dalata Limited issued fixed rate unsecured loan notes to its shareholders which
had a value of €31,496,850. The fixed rate unsecured loan notes are repayable at par together with
accrued interest immediately prior to a realisation. A realisation is defined in the Shareholders
Agreement as an asset sale or share sale (involving a change of business control), or a listing. The loan
notes may be redeemed at par together with accrued interest, by the Company, on or after the fifth
anniversary of the date of issue with the prior consent of at least 75% of the loan note holders. As no
realisation has occurred by 31 December 2013, or was expected as at 31 December 2013 to take place
in the following year, the loan notes and accrued interest have been classified as non-current liabilities
as at 31 December 2013. Interest is accrued at a fixed rate of 9% per annum, compounded annually.
As part of the Group reorganisation in 2011, loan notes of €31.5 million and accrued interest at that
time of €11.4 million were transferred from Dalata Limited to the Company in exchange for a
receivable of the same amount. All obligations relating to the loan notes were transferred to the
Company.
Overdraft facilities
The Group has an unused bank overdraft facility of €1,000,000 (2012: €1,000,000; 2011: €1,000,000).
Contractual maturities
The following are the contractual maturities of the Group financial liabilities, including estimated
interest payments.
Carrying Contractual
amount
Cashflows
2011
2011
€’000
€’000
2011
Secured bank loan (variable)
Secured bank loan (fixed interest)
Unsecured loan notes including
accrued interest
Trade and other payables
2012
Secured bank loan (variable)
Unsecured loan notes including
accrued interest
Trade and other payables
2013
Secured bank loans (variable)
Unsecured loan notes including
accrued interest
Trade and other payables
6 months
or less
2011
€’000
6 – 12
months
2011
€’000
1–2
years
2011
€’000
2–5
years
2011
€’000
More than
5 years
2011
€’000
–
–
(5,000)
(4,000)
(5,877)
(4,450)
(110)
(150)
(5,767)
(4,300)
–
–
–
–
(46,061)
(7,081)
––––––––
(62,142)
(50,206)
(7,081)
––––––––
(67,614)
–
(7,081)
––––––––
(7,341)
–
–
––––––––
(10,067)
–
–
––––––––
–
–
–
––––––––
–
(8,000)
(8,000)
(8,000)
–
–
–
–
(50,207)
(9,624)
––––––––
(67,831)
(54,726)
(9,624)
––––––––
(72,350)
–
(9,624)
––––––––
(17,624)
–
–
––––––––
–
(54,726)
–
––––––––
(54,726)
–
–
––––––––
–
–
–
––––––––
–
(9,000)
(9,598)
(181)
(2,157)
(7,260)
–
–
(54,725)
(10,958)
––––––––
(74,683)
(59,650)
(10,958)
––––––––
(80,206)
–
(10,958)
––––––––
(11,139)
–
–
––––––––
(2,157)
(59,650)
–
––––––––
(66,910)
–
–
––––––––
–
–
–
––––––––
–
(50,206)
–
––––––––
(50,206)
–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
For the purposes of the above tables, further interest accrual for a period of 1 year has been assumed
on the unsecured loan notes. Given the indefinite term of the loan notes it is not possible to estimate
61
their contractual cash flows precisely. However, for the purpose of this analysis it has been included
as falling due between 1 and 2 years.
(c)
Market risk
Market risk is the risk that changes in market prices and indices, such as foreign exchange rates, and
interest rates will affect the Group and Company’s income or the value of its holdings of financial
instruments.
Foreign exchange rate risk
The Group is exposed to translation foreign exchange rate risk on its hotel operation in Cardiff, Wales.
The Group monitors this exposure and manages it on an ongoing basis. The Group believes that this
foreign exchange rate exposure will not have a material effect on the Group’s income or the value of
its holdings of financial instruments and, accordingly, a sensitivity analysis has not been prepared.
Interest rate risk
The Group is exposed to interest rate risk on its variable interest rate borrowings. The Group monitors
this exposure and manages it on an ongoing basis. The Group statement of financial position contains
both interest-bearing assets and interest-bearing liabilities.
Cash flow sensitivity analysis
An increase of 20 basis points in interest rates at the reporting date would have had the following
effect on the net interest expense. This analysis assumes that all other variables remain constant.
Interest rate risk
Cash and cash equivalents
Borrowings (variable)
Before tax
Tax impact
After tax
Profit or
Loss
2011
€’000
Profit or
Loss
2012
€’000
Profit or
Loss
2013
€’000
5
(10)
––––––––
(5)
1
––––––––
(4)
11
(16)
––––––––
(5)
1
––––––––
(4)
9
(18)
––––––––
(9)
1
––––––––
(8)
––––––––
––––––––
––––––––
2011
€’000
2012
€’000
2013
€’000
119
15
––––––––
134
134
8
––––––––
142
142
28
––––––––
170
A decrease of 20 basis points in interest rates at the reporting date would have had an equal but
opposite effect to the amounts shown above, on the basis that all other variables remain constant.
17.
Deferred tax
At beginning of year
Credit for year (note 6)
––––––––
At end of year
––––––––
––––––––
Deferred tax arises from temporary differences between the carrying values and tax written down values of
property, plant and equipment, and tax losses. Deferred tax has only been recognised for losses that are
expected to be used in the foreseeable future and, accordingly, a deferred tax asset of €330,000 (2012:
€280,000; 2011: €398,000) has not been recognised in this financial information.
62
18.
Commitments
Operating leases
Non-cancellable operating lease rentals payable are set out below. These represent the minimum future lease
payments in aggregate that the Group is required to make under existing lease arrangements.
Less than one year
Between one and five years
After five years
2011
€’000
2012
€’000
2013
€’000
10,388
47,830
242,880
––––––––
301,098
10,058
43,726
203,632
––––––––
257,416
16,248
64,991
200,585
––––––––
281,824
––––––––
––––––––
––––––––
The Company has undertaken to guarantee the obligations of its subsidiary Dalata Cardiff Limited in relation
to the lease of the Maldron Hotel Cardiff for a period of 35 years of which there are 33 years remaining.
Capital expenditure commitments
The Group has the following commitments for future capital expenditure under its contractual arrangements.
Contracted but not provided
2011
€’000
2012
€’000
2013
€’000
–
––––––––
–
–
––––––––
–
602
––––––––
602
––––––––
19.
––––––––
––––––––
Related party transactions
Under IAS 24, Related Party Disclosures, the Company has a related party relationship with certain
shareholders and directors of the Company.
(a)
Transactions with related parties
In accordance with the shareholders agreement, fees of €52,500 (2012: €40,000; 2011: €40,000) were
paid to TVC Holdings plc. in respect of non-executive director services. Similarly, fees of €20,000
(2012: €20,000; 2011: €20,000) for services provided to the board were paid to Davy who act on
behalf of the majority of the loan note holders. Also fees of €20,000 (2012: €20,000; 2011: €20.000)
for services provided to the board were paid to Kieran Ryan & Co who have representation on the
board of directors. Balances of €35,792 (2012: €210,000; 2011: €200,000) to TVC Holdings plc, €Nil
(2012: €10,000; 2011: €Nil) to Davy and €5,000 (2012: €5,000; 2011: €Nil) to Kieran Ryan & Co
were payable at 31 December 2013. Additional fees of €200,000 were payable to TVC Holdings plc
in respect of professional services provided during 2011.
Sanjay Limited and Citywest Resort Limited are related parties as they are entities under the control
of directors of the Company.
During 2013 the Group received fees of €281,209 (2012: €317,090; 2011: €328,181) from Sanjay
Limited for services provided, and fees of €12,681 (2012: €15,563; 2011: €10,213) from Citywest
Resort Limited for services provided. At 31 December 2013, the following amounts were owed in the
normal course of business to the Group by these parties: Sanjay Limited €55,643 (2012: €7,358;
2011: €8,555); Citywest Resort Limited €17,048 (2012: €1,449; 2011: €12,609).
Prior to its acquisition by the Group (see Note 7) on 30 August 2013, Fonteyn Property Holdings
Limited was a related party as it was under the control of directors of the Company.
In the period to 30 August 2013, the Group received fees of €403,182 (year ended 31 December 2012:
€213,858; year ended 31 December 2011: €73,666) from Fonteyn Property Holdings Limited for
services provided.
63
(b)
Remuneration of key management
The compensation of key management personnel (the directors) is as follows:
Salary and other emoluments
Fees
Pension
2011
€’000
2012
€’000
2013
€’000
381
20
14
––––––––
415
523
20
22
––––––––
565
798
49
32
––––––––
879
––––––––
20.
––––––––
––––––––
Post balance sheet events
In January 2014 the Group entered a ten year agreement with the Dublin Airport Authority to operate the
former Clarion Dublin Airport Hotel which has been rebranded as a Maldron Hotel. Also, in January 2014
the Group purchased 14 rooms at Maldron Hotel Cardiff Lane, representing 5% of the total rooms.
In February 2014, the Group entered into an agreement to acquire the entire issued share capital of Pillo
Hotels Limited, a company with management contracts for six hotels in Ireland, for an amount not to exceed
€238,503. Also in February 2014, the Group entered into a management agreement relating to Fels Point
Hotel, Tralee, Co. Kerry.
In order to broaden the range of strategic options available to the Group, the board is actively seeking to
strengthen the Group’s statement of financial position by raising additional equity capital. On 14 January
2014, the shareholders resolved to change the Company name from Dalata Hotel Group Limited to DHGL
Limited in order to facilitate future changes to the Group’s corporate structure.
In February 2014, the Group completed a reorganisation, the purpose of which was to establish a structure
to support potential public trading of shares in the Group. The reorganisation involved the company
becoming a wholly owned subsidiary of a new parent company, Dalata Hotel Group plc. To give effect to the
reorganisation, on 20 February 2014, Dalata Hotel Group plc entered into a share exchange agreement with
the former shareholders of DHGL Limited, namely Davy Property Holdings, TVC Holdings plc and
Pat McCann, whereby those shareholders agreed to transfer the entire issued share capital in DHGL Limited
to Dalata Hotel Group p.l.c. in return for the issue of new shares in Dalata Hotel Group p.l.c.
The reorganisation also involved the novation to Dalata Hotel Group p.l.c. of the company’s loan notes,
which were held by Davy Property Holdings, TVC Holdings plc and Pat McCann. On 21 February 2014, the
company, Dalata Hotel Group plc and each of the holders of the loan notes entered into certain deeds of
novation whereby Dalata Hotel Group p.l.c. agreed to assume and perform all of the issuer’s obligations,
including accrued interest, under and in respect of the loan notes.
Save as disclosed above, there have been no significant events since 31 December 2013.
21.
Details of Group entities
A list of all subsidiary undertakings at 31 December 2013 is set out below:
Country of
Incorporation
Dalata Limited
Hanford Commercial Limited*
Anora Commercial Limited*
Loadbur Limited*
Dalata UK Limited**
Dalata Cardiff Limited**
Ogwell Limited*
Caruso Limited*
CI Hotels Limited*
Ireland
Ireland
Ireland
Ireland
Activity
Holding company
Hotel and catering
Hotel and catering
Share scheme
management***
Holding company
Hotel and catering
Hotel and catering
Hotel and catering
Hotel and catering
UK
UK
Ireland
Ireland
Ireland
64
Ownership
Direct
Indirect
100%
–
–
–
100%
100%
–
100%
–
–
–
–
100%
–
100%
100%
100%
100%
Country of
Incorporation
Dalata Management Services Limited*
Tulane Business Management Limited*
Dalata Support Services Limited*
Fonteyn Property Holdings Limited*
Fonteyn Property Holdings
No. 2 Limited*
Ireland
Ireland
Ireland
Ireland
Activity
Hotel management
Hotel and catering
Hotel and management
Hotel and asset
management
Ireland
Asset management
Ownership
Direct
Indirect
100%
–
100%
–
100%
–
100%
–
–
100%
*
The registered address of these companies is 4th Floor, Burton Court, Burton Hall Drive, Sandyford, Dublin 18.
** The registered address of this company is St Mary Street, Cardiff, CF10 1GD, United Kingdom.
*** This company has not yet commenced trading.
65
PART IV
ADDITIONAL INFORMATION
1.
RESPONSIBILITY
The Company and the Directors, whose names and functions appear on page 3 of this Document, accept
responsibility for the information contained in this Document. To the best of the knowledge and belief of the
Company and the Directors (who have each taken all reasonable care to ensure that such is the case), the
information contained in this Document is in accordance with the facts and contains no omission likely to
affect its import. All Directors accept individual and collective responsibility for compliance with the AIM
Rules and the ESM Rules.
2.
THE COMPANY
2.1
The Company was incorporated in Ireland with registered number 534888 on 4 November 2013 as a
company limited by shares under the name Rockmelon p.l.c. On 15 January 2014 it changed its name
to Dalata Hotel Group p.l.c.
2.2
The principal legislation under which the Company operates are the Irish Companies Acts 1963 –
2013 and the regulations made thereunder. The liability of the Company’s members is limited.
2.3
The Company is domiciled in Ireland. The registered and head office of the Company is at Burton
Court, Burton Hall Drive, Sandyford, Dublin 18, Ireland (telephone number 353 1 206 9400) and the
Company’s website is www.dalatahotelgroup.com
2.4
The financial year end of the Company is 31 December.
3.
SUBSIDIARIES
The Company is the holding company of the Group. The Company has the following subsidiaries, all of
which are directly or indirectly 100 per cent. owned by it:
Country of
incorporation
Company name
Principal activity
DHGL Limited
DHGL Limited is a holding company for the Group’s
operating companies. It is the employer in respect of the
Group’s central office staff (circa 30 people). DHGL
Limited provides certain services to the Group
Companies and charges for services and costs incurred in
accordance with the principles of the Group’s transfer
pricing policy.
Ireland
Dalata Limited
Dalata Limited is a holding company for a number of the
Group’s hotel operating companies (Hanford
Commercial Limited, Anora Commercial Limited,
Ogwell Limited, Caruso Limited and CI Hotels Limited).
Prior to a reorganisation of the Group structure in 2011,
Dalata Limited was the Group’s holding company.
Ireland
Dalata Management
Services Limited
Dalata Management Services Limited provides hotel
management services to third party asset owners in the
Republic of Ireland.
Ireland
66
A1 – 5.1.1,
5.1.2, 5.1.3
A1 – 7.1, 7.2
Country of
incorporation
Company name
Principal activity
Dalata Support
Services Limited
Dalata Support Services Limited is the contracting entity
in respect of the majority of third party supply contracts
entered into by the Group for the supply of goods
services to the hotels operated by the Group. Dalata
Support Services Limited receives revenue through
commission on these contracts.
Ireland
Hanford Commercial
Limited
Hanford Commercial Limited is a hotel operating
company which operates three hotels directly, namely the
Maldron Cardiff Lane, the Maldron Wexford and the
Maldron Limerick. Hanford Commercial Limited is also
the sole shareholder in three subsidiary companies:
Ogwell Limited, Caruso Limited (which are also hotel
operators) and Loadbur Limited (which has never
traded/operated).
Ireland
Anora Commercial
Limited
Anora Commercial Limited is a hotel operating company
which operates two hotels directly, namely the Maldron
Smithfield and the Maldron Parnell Square. Anora
Commercial Limited is also the sole shareholder in CI
Hotels Limited (which is also a hotel operator).
Ireland
Ogwell Limited
Ogwell Limited is the operator of the Maldron Hotel
Cork.
Ireland
Caruso Limited
Caruso Limited is the operator of the Maldron Hotel
Galway.
Ireland
CI Hotels Limited
CI Hotels Limited is the operator of the Maldron Hotel
Portlaoise.
Ireland
Dalata UK Limited
Dalata UK Limited is the holding company for the
Group’s business in the UK and is the provider of hotel
management services in respect of properties located in
the UK.
United Kingdom
Dalata Cardiff Limited
Dalata Cardiff Limited is the operator of the Maldron
Hotel Cardiff.
United Kingdom
Tulane Business
Management Limited
Tulane Business Management Limtied is a hotel
operating company which operates four hotels directly,
namely the Ballsbridge Hotel, the Clyde Court Hotel, the
Maldron Hotel Tallaght and the Maldron Hotel Dublin
Airport.
Ireland
Fonteyn Property
Holdings Limited
Fonteyn Property Holdings Limited provides hotel
management services to third party asset owners in the
Republic of Ireland.
Ireland
Fonteyn Property
Holdings
No. 2 Limited
The principal activity of Fonteyn Property Holdings No. 2
Limited is trading in distressed debt. In 2011 it acquired a
loan facility from Bank of Scotland Ireland which is
secured on the Maldron Hotel Limerick.
Ireland
67
Country of
incorporation
Company name
Principal activity
Loadbur Limited
Loadbur Limited was incorporated in connection with an
employee share scheme which was never activated. It was
intended that it would hold any shares allotted in
connection with the scheme as nominee for and on behalf
of the beneficiaries of the scheme. However the scheme
was never activated and Loadbur Limited has never
operated/traded.
Ireland
Pillo Hotels Limited
Pillo Hotels Limited provides hotel management services
to third party asset owners in the Republic of Ireland.
Ireland
4.
SHARE CAPITAL OF THE COMPANY
4.1
The issued share capital of the Company as at the close of business on 13 March 2014 (being the latest
practicable date prior to the publication of this document), and as expected to be immediately
following Admission (assuming 106,000,000 Ordinary Shares are issued pursuant to the Placing and
following conversion of the Existing Loan Notes into Ordinary Shares on Admission), is as follows:
Class
As at the date of this document
Ordinary Shares
After Admission
Ordinary Shares
Authorised
Number
Nominal
Value
per share
Issued and
paid up
number
Nominal
Value
aggregate
10,000,000,000
€0.01
4,000,000
€40,000
10,000,000,000
€0.01
122,000,000
€1,220,000
A1 – 20.8, 21.1.1
A3 – 4.1, 4.4
Share Capital of the Company
4.2
Between the date of incorporation of the Company and the date of this Document, there have been the
following changes in the authorised and issued share capital of the Company:
Authorised Share Capital
(a)
On incorporation, the authorised share capital of the Company was €100,000,000 divided into
100,000,000 Ordinary Shares of €1 each.
(b)
On 20 February 2014, the authorised but unissued 99,960,095 Ordinary Shares of €1 each in
the capital of the Company were subdivided into 9,996,009,500 Ordinary Shares of €0.01 each.
(c)
On 20 February 2014, the issued 25,966 Ordinary Shares of €1 each registered in the name of
Davy Property Holdings were subdivided into 2,596,600 Ordinary Shares of €0.01 each.
(d)
On 20 February 2014, the issued 12,669 Ordinary Shares of €1 each registered in the name of
TVC Holdings plc were subdivided into 1,266,900 Ordinary Shares of €0.01 each.
(e)
On 20 February 2014, the issued 1,266 Ordinary Shares of €1 each registered in the name of
Pat McCann were subdivided into 126,600 Ordinary Shares of €0.01 each.
(f)
On 20 February 2014, 1 issued Ordinary Share of €1 registered in the name of Dermot Crowley
and held on trust for Davy Property Holdings was subdivided into 100 Ordinary Shares of
€0.01 each.
(g)
On 20 February 2014, 1 issued Ordinary Share of €1 registered in the name of Stephen
McNally and held on trust for Davy Property Holdings was subdivided into 100 Ordinary
Shares of €0.01 each.
68
A3 – 9.1
(h)
On 20 February 2014, 1 issued Ordinary Share of €1 registered in the name of Stephen Clarke
and held on trust for Davy Property Holdings was subdivided into 100 Ordinary Shares of
€0.01 each.
(i)
On 20 February 2014, 1 issued Ordinary Share of €1 each registered in the name of Sean
McKeon and held on trust for Davy Property Holdings was subdivided into 100 Ordinary
Shares of €0.01 each.
Accordingly, at Admission the authorised share capital of the Company will be €100,000,000 divided
into 10,000,000,000 Ordinary Shares of €0.01 each.
Issued Share Capital
(a)
On incorporation, the issued share capital of the Company was €7 divided into 7 Ordinary
Shares of €1 each credited as fully paid.
(b)
On 14 February 2014, the Company allotted and issued 39,898 Ordinary Shares of €1 each and
the shares were credited as fully paid up.
(c)
On 20 February 2014, the issued 25,966 Ordinary Shares of €1 each registered in the name of
Davy Property Holdings were subdivided into 2,596,600 Ordinary Shares of €0.01 each.
(d)
On 20 February 2014, the issued 12,669 Ordinary Shares of €1 each registered in the name of
TVC Holdings plc were subdivided into 1,266,900 Ordinary Shares of €0.01 each.
(e)
On 20 February 2014, the issued 1,266 Ordinary Shares of €1 each registered in the name of
Pat McCann were subdivided into 126,600 Ordinary Shares of €0.01 each.
(f)
On 20 February 2014, 1 issued Ordinary Share of €1 registered in the name of Dermot Crowley
and held on trust for Davy Property Holdings was subdivided into 100 Ordinary Shares of
€0.01 each.
(g)
On 20 February 2014, 1 issued Ordinary Share of €1 registered in the name of Stephen
McNally and held on trust for Davy Property Holdings was subdivided into 100 Ordinary
Shares of €0.01 each.
(h)
On 20 February 2014, 1 issued Ordinary Share of €1 each registered in the name of Stephen
Clarke and held on trust for Davy Property Holdings was subdivided into 100 Ordinary Shares
of €0.01 each.
(i)
On 20 February 2014, 1 issued Ordinary Shares of €1 registered in the name of Sean McKeon
and held on trust for Davy Property Holdings was subdivided into 100 Ordinary Shares of
€0.01 each.
(j)
On 20 February 2014, the Company acquired the entire issued share capital of DHGL Limited
in consideration of the issue by the Company of 9,500 Ordinary Shares of €0.01 each in the
capital of the Company to the shareholders of DHGL Limited. The shares were issued and paid
up in full.
(k)
On 13 March 2014, Davy Property Holdings transferred 2,596,600 Ordinary Shares of €0.01
each to Davycrest Nominees.
(l)
On 13 March 2014, each of Dermot Crowley, Stephen McNally, Stephen Clarke and Sean
McKeon entered into declarations of trust with Davycrest Nominees in respect of the 100
issued Ordinary Shares of €1 each registered in each of their names and previously held on trust
for Davy Property Holdings as set out in (f) to (i) above.
The percentage of immediate dilution of Shareholders’ interests as a result of the issue of New
Ordinary Shares issued pursuant to the Placing will be 86.9 per cent.
69
4.3
Reorganisation of the Dalata Hotel Group
A3 – 4.2, 4.6
In preparation for the Placing and Admission, the Group undertook certain corporate organisational
steps to reorganise the Group’s corporate structure (the Reorganisation). The Reorganisation
involved the former holding company of the Group, DHGL Limited becoming a wholly owned
subsidiary of the Company. To give effect to the Reorganisation, on 20 February 2014 the Company
entered into a share exchange agreement with the former shareholders of DHGL Limited, namely Pat
McCann, TVC Holdings plc and Davy Properties Holdings whereby those shareholders agreed to
transfer the entire issued share capital in DHGL to the Company in return for the issue of new shares
in the Company.
The Reorganisation also involved the novation to the Company of certain loan notes held by Davy
Property Holdings, TVC Holdings plc and Pat McCann (the Noteholders) to the Company. The loan
notes comprise of €31,496,850 9% fixed rate loan notes which were originally constituted by Dalata
Limited by instrument dated 7 August 2007 (the Loan Notes). On the 21 February 2014, the Company
and each of the Noteholders respectively entered into certain deeds of novation whereby the Company
agreed to assume and perform all of the issuer’s obligations under and in respect of the outstanding
Loan Notes. On 21 February 2014, the Company and the Noteholders amended the terms of the Loan
Notes to provide that upon and subject to Admission all amounts of the principal amount outstanding
under the Loan Notes shall be automatically converted into an agreed number of Ordinary Shares.
4.4
On 14 March 2014 the Shareholders passed resolutions as follows:
Ordinary Resolution
That the directors be and are hereby generally and unconditionally authorised to exercise all the
powers of the Company for the purposes of Section 20 of the Companies (Amendment) Act, 1983 to
allot relevant securities (within the meaning of Section 20 of the said Act) up to an aggregate nominal
amount of €1,586,667 inclusive of approximately 33.3% of the aggregate nominal value of the issue
share capital of the Company immediately following Admission. The authority hereby conferred shall
expire at close of business on the later of: (i) 14 March 2015; and (ii) on the date of the next annual
general meeting following Admission, unless previously varied, revoked or renewed, provided that the
Company may before such expiry make an offer or agreement which would or might require equity
securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of
such offer or agreement as if the power hereby conferred had not expired.
Special Resolution
That the directors be and are hereby empowered pursuant to Section 23 and Section 24(1) of the
Companies (Amendment) Act, 1983 to allot equity securities (within the meaning of the said Section
23) for cash pursuant to the authority conferred on the directors by Resolution 1 above as if Section
23(1) of the said Act did not apply to any such allotment provided that this power shall be limited to:
(a)
the allotment of equity securities in connection with any rights issue in favour of ordinary
shareholders (other than those holders with registered addresses outside the State to whom an
offer would, in the opinion of the directors, be impractical or unlawful in any jurisdiction)
and/or any persons having a right to subscribe for or convert securities into ordinary shares in
the capital of the Company (including without limitation any holders of options under any of
the Company’s share option schemes for the time being) where the equity securities
respectively attributable to the interests of such ordinary shareholders or such persons are
proportionate (as nearly as may be) to the respective number of ordinary shares held by them
or for which they are entitled to subscribe or convert into, subject to such exclusions or other
arrangements as the directors may deem necessary or expedient to deal with any regulatory
requirements, legal or practical problems in respect of overseas shareholders, fractional
entitlements or otherwise;
(b)
the allotment of Placing Shares being the equity securities to be issued by the Company (other
than pursuant to any such issue as referred to in paragraph (a) above) under and in accordance
with the Placing Agreement and the Existing Shareholder and Board/SMT Offer; and
70
(c)
the allotment of such aggregate number of equity securities (other than pursuant to any such
issue as is referred to in paragraphs (a) or (b) above) the aggregate nominal value of which shall
not exceed five percent (5%) of the aggregate nominal value of the issued ordinary share capital
in the Company immediately following the Admission,
and such power (unless otherwise specified in such special resolution or varied or abrogated by special
resolution passed at an intervening extraordinary general meeting) shall expire at the earlier of: (i) the
date of the next annual general meeting of the Company after the date of adoption of these Articles or
(ii) 31 August, 2015 unless previously varied, revoked or renewed, provided that the Company may
before such expiry make an offer or agreement which would or might require equity securities to be
allotted after such expiry and the Directors may allot equity securities in pursuance of such offer or
agreement as if the power conferred hereby had not expired.
4.5
Save as disclosed in section 4.9 of this Part IV, no share or loan capital of the Company is under option
or agreed, conditionally or unconditionally, to be put under option.
4.6
Save for the issue of the Placing Shares pursuant to the Placing and other than as set out in section 11
of this Part IV (LTIP) and save as disclosed in section 4.9 of this Part IV, there is no present intention
to issue either, fully or partially paid up for cash or otherwise any shares in the capital of the Company
or any of its subsidiaries.
4.7
Except as set out in section 4.9 of this Part IV, no persons have preferential subscription rights in
respect of any authorised but unissued share or loan capital of the Company or any of its subsidiaries.
4.8
Except as set out in section 4.9 of this Part IV, the Company has no convertible debt securities,
exchangeable debt securities or debt securities with warrants in issue.
4.9
The holders of the Existing Loan Notes have agreed with the Company that conditional upon and with
effect from Admission all amounts due under the Existing Loan Notes shall be converted into
12,000,000 Ordinary Shares representing 9.8% of the Enlarged Issued Share Capital.
4.10 The ISIN number of the Company’s securities is IE00BJMZDW83.
5.
MEMORANDUM AND ARTICLES OF ASSOCIATION
A1 – 21.2.1,
5.1
The following is a summary of the Memorandum and Articles of Association of the Company to be
effective on Admission. Any shareholder requiring further detail than that provided in the summary is
advised to consult the Memorandum and Articles of Association which are available at the address
specified in section 2.3 of this Part IV.
21.2.2 A3 – 4.5
5.2
Under the memorandum of Association, the principal objects of the Company are to carry on business
as a holding company. The objects of the Company are set out in full in clause 3 of the Memorandum
of Association.
5.3
The Articles have been adopted conditional upon and with effect from Admission. The Articles
contain the following provisions:
Issuing Shares
A1 – 21.2.3
Subject to the provisions of the Irish Companies Acts, and without prejudice to any rights attached to
any existing shares or class of shares, any share may be issued with such rights or restrictions as the
Company may by ordinary resolution determine or as the Directors may determine pursuant to any
power conferred on them by the Articles.
Subject to the Articles and to the provisions of the Irish Companies Acts, the unissued shares of the
Company (whether forming part of the original or any increased capital) are at the disposal of the
Board. On the allotment and issue of any shares, the Directors may impose restrictions on the transfer
or disposal of such shares as may be considered by the Directors to be in the best interests of the
Company.
71
Pre-emption rights in respect of equity offerings for cash under the Companies Acts may be disapplied
by shareholder resolution. See section 4.4 of this Part IV in respect of certain shareholder resolutions
that have disapplied pre emption rights for Shareholders in certain circumstances.
Lien and Forfeiture
The Company has a first and paramount lien on every share (not being a fully paid share) for all
monies payable to the Company (whether presently payable or not) in respect of that share. Subject
to the terms of allotment, the Board of the Company may make calls on the Shareholders in respect
of any monies unpaid on their shares. The Board may give not less than 14 clear days’ notice requiring
payment of the amount due. If a payment is not made when due and payable, the person from whom
such amount is due shall be liable to pay interest on the amount unpaid from the day it became due
until it is paid (at the rate fixed by the terms of the allotment or in the notice of the call, or at an
appropriate rate (as defined by the Acts) if no such rate is fixed). If that notice is not complied with,
a further notice (giving a further 14 clear days’ notice) may be sent by the Board. If this further notice
is not complied with, any share in respect of which it was sent may, at any time before the payment
required by the notice has been made, be forfeited by a resolution of the Board. The forfeiture shall
include all dividends or other monies payable in respect of the forfeited share which are outstanding
in respect of the forfeited share.
Variation of Share Capital and Variation of Rights
•
Increase of capital: The Company from time to time by ordinary resolution may increase the
share capital by such sum, to be divided into shares of such amount, as the resolution shall
prescribe.
•
Consolidation, sub-division and cancellation of capital: The Company, by ordinary resolution,
may consolidate and divide all or any of its share capital into shares of larger amount; subject
to the provisions of the Acts, subdivide its shares, or any of them, into shares of smaller
amount, so however that in the sub-division the proportion between the amount paid and the
amount, if any, unpaid on each reduced share shall be the same as it was in the case of the share
from which the reduced share is derived (and so that the resolution whereby any share is subdivided may determine that, as between the holders of the shares resulting from such subdivision, one or more of the shares may have, as compared with the others, any such preferred,
deferred or other rights or be subject to any such restrictions as the Company has power to
attach to unissued or new shares); or cancel any shares which, at the date of the passing of the
resolution, have not been taken or agreed to be taken by any person and reduce the amount of
its authorised share capital by the amount of the shares so cancelled.
•
Reduction of capital: The Company, by special resolution, may reduce its share capital, any
capital redemption reserve fund or any share premium account in any manner subject to certain
procedures and restrictions set out in legislation. Unless otherwise provided by the terms of
issue and without prejudice to the rights attached to any preference share to participate in any
return of capital, the rights, privileges, limitations and restrictions attached to any preference
share shall be deemed not to be varied, altered or abrogated by a reduction in any share capital
ranking as regards participation in the profits and assets of the Company pari passu with or
after that preference share.
•
Variation of Rights: Whenever the share capital is divided into different classes of shares, the
rights attached to any class may be varied or abrogated with the consent in writing of the
holders of three-fourths in nominal value of the issued shares of that class or with the sanction
of a special resolution passed at a separate general meeting of the holders of the shares of the
class and may be so varied or abrogated either whilst the Company is a going concern or during
or in contemplation of a winding-up.
72
Ordinary Shares
Ordinary Shares carry a right to attend and vote at any general meeting of the Company, a right to
participate in a winding up and a right to receive a dividend.
Preference Shares
Preference shares may be issued with such rights and privileges (save as for voting rights), and subject
to such restrictions and limitations, as the Directors of the Company shall determine in the resolution
approving the issue of such Preference Share.
Transfer of Shares
•
Form of instrument of transfer: Subject to such of the restrictions of the Articles and to such of
the conditions of issue of transfer as may be applicable, the shares of any Shareholder may be
transferred by instrument in writing in any usual or common form or any other form which the
Directors may approve. Title to any shares in the Company may be evidenced without a share
certificate or certificates, and title to any shares in the Company may be transferred by means
of a computer-based system and procedure (or any other appropriate system and procedures)
which, inter alia, enable title to shares to be transferred without a written instrument, in each
case in accordance with regulations made from time to time under Section 239 of the 1990 Act
or in accordance with any other statutory provisions or regulations having similar effect. The
instrument of transfer of any share shall be executed by or on behalf of the transferor. The
transferor shall be deemed to remain the Holder of the share until the name of the transferee is
entered in the register in respect thereof.
•
The Directors in their absolute discretion and without assigning any reason therefor may
decline to register:
1.
any transfer of a share which is not fully paid;
2.
any transfer to or by a minor or person with a mental disorder (as defined by the Mental
Health Act 2001);
3.
any transfer by any person to whom a Transfer Notice (as defined in Article 5(f)(i) of the
Articles) has been given under Article 5(f)(i) of the Articles; or
4.
any share which is a Restricted Share (as defined in Article 66 of the Articles) under
Article 66 of the Articles;
provided that the refusal to register the transfer does not prevent dealings in the shares from
taking place on an open and proper basis.
•
The Directors may decline to recognise any instrument of transfer unless:
1.
the instrument of transfer is accompanied by the certificate of the shares to which it
relates and such other evidence as the Directors may reasonably require to show the right
of the transferor to make the transfer (save where the transferor is a Stock Exchange
Nominee (as defined in Article 1 of the Articles));
2.
the instrument of transfer is in respect of one class of share only;
3.
the instrument of transfer is in favour of not more than four transferees;
4.
the instrument of transfer is lodged at the Office or at such other place as the Directors
may appoint;
5.
the Directors are satisfied that all applicable consents, authorisations, permissions or
other approvals or any governmental body or agency in Ireland or any other applicable
jurisdiction required to be obtained under relevant law prior to such transfer have been
obtained; and
73
6.
the Directors are satisfied that the transfer would not violate the terms of any agreement
to which the Company (or any of its subsidiaries) and the transferor are part or subject.
•
The Directors may decline to register any transfer of shares in uncertificated form only in such
circumstances as may be permitted or required by the CREST Regulations.
•
The Directors may refuse to register a transfer of shares in the capital of the Company if the
transfer is in favour of any person, as determined by the Directors, to whom a sale or transfer
of shares, or whose direct, indirect or beneficial ownership of shares, would or might (i) cause
the Company to become an “investment company” under the US Investment Company Act
(including because the holder of the shares is not a “qualified purchaser” as defined in the US
Investment Company Act) or to lose an exemption or status thereunder to which it might
otherwise be entitled; (ii) cause the Company to be required to register under the US Exchange
Act or any similar legislation; (iii) cause the Company not to be considered a “foreign private
issuer” as such term is defined in Rule 3b 4(c) under the US Exchange Act; (iv) result in a
person holding shares in violation of the transfer restrictions set forth in any offering
memorandum published by the Company, from time to time; (v) result in any shares being
owned, directly or indirectly, by Benefit Plan Investors or Controlling Persons other than, in the
case of Benefit Plan Investors, Shareholders that acquire the shares on or prior to Admission
with the written consent of the Company, and, in the case of Controlling Persons, Shareholders
that acquire the shares with the written consent of the Company; (vi) cause the assets of the
Company to be considered “plan assets” under the Plan Asset Regulations; (vii) cause the
Company to be a “controlled foreign corporation” for the purposes of the Code; (viii) result in
shares being owned by a person whose giving, or deemed giving, of the representations as to
ERISA and the Code set forth in the Articles is or is subsequently shown to be false or
misleading; or (ix) otherwise result in the Company incurring a liability to taxation or suffering
any pecuniary, fiscal, administrative or regulatory or similar disadvantage (any such person a
“Non Qualified Holder”). In addition, if it comes to the notice of the Company that any shares
are owned directly, indirectly or beneficially by any Non Qualified Holder, the Board may,
under the Articles, serve a notice upon such Non Qualified Holder requiring such Non
Qualified Holder to transfer the Ordinary Shares to an eligible transferee within 14 days of such
notice; and, if the obligation to transfer is not met, the Company may compulsorily transfer the
Ordinary Shares in a manner consistent with the restrictions set forth in the Articles.
Dividends and other Distributions
•
Declaration of dividends: Subject to the provisions of the Irish Companies Acts, the Company
by ordinary resolution may declare dividends in accordance with the respective rights of the
Shareholders, but no dividend shall exceed the amount recommended by the Directors.
•
Scrip dividends: The Directors may, if authorised by an ordinary resolution of the Company,
offer any holders of ordinary shares the right to elect to receive ordinary shares, credited as
fully paid, instead of cash in respect of the whole (or some part, to be determined by the
Directors) of any dividend specified by the ordinary resolution. The additional ordinary shares
when allotted shall rank pari passu in all respects with the fully-paid ordinary shares then in
issue except that they will not be entitled to participation in the relevant dividend.
•
Interim and fixed dividends: Subject to the provisions of the Irish Companies Acts, the
Directors may declare and pay interim dividends if it appears to them that they are justified by
the profits of the Company available for distribution. If the share capital is divided into different
classes, the Directors may declare and pay interim dividends on shares which confer deferred
or non-preferred rights with regard to dividends as well as on shares which confer preferential
rights with regard to dividends, but subject always to any restrictions for the time being in force
(whether under the Articles of Association, under the terms of issue of any shares, or under any
agreement to which the Company is a party or otherwise) relating to the application, or the
priority of application, of the Company’s profits available for distribution or to the declaration
or as the case may be the payment of dividends by the Company. Subject as aforesaid, the
74
Directors may also pay at intervals settled by them any dividend payable at a fixed rate if it
appears to them that the profits available for distribution justify the payment. Provided the
Directors act in good faith they shall not incur any liability to the holders of shares conferring
preferred rights for any loss they may suffer by the lawful payment of an interim dividend on
any shares having deferred or non-preferred rights.
•
Payment of dividends: Except as otherwise provided by the rights attached to shares, all
dividends shall be declared and paid according to the amounts paid up on the shares on which
the dividend is paid. Subject as aforesaid, all dividends shall be apportioned and paid
proportionately to the amounts paid or credited as paid on the shares during any portion or
portions of the period in respect of which the dividend is paid; but, if any share is issued on
terms providing that it shall rank in priority for dividend as from a particular date, such share
shall rank in priority for dividend accordingly. For the purposes of this Article, no amount paid
on a share in advance of calls shall be treated as paid on a share.
•
If several persons are registered as joint holders of any share, any one of them may give
effectual receipts for any dividend or other moneys payable on or in respect of the share.
•
Any dividend may at the discretion of the Directors and at the sole risk of the person or persons
entitled thereto be paid in any currency and in such manner as may be approved by the
Directors from time to time.
•
Deductions from dividends: The Directors may deduct from any dividend or other moneys
payable to any member in respect of a share any moneys presently payable by him to the
Company in respect of that share.
•
Dividends in specie: A general meeting declaring a dividend may direct, upon the
recommendation of the Directors, that it shall be satisfied wholly or partly by the distribution
of assets (and, in particular, of paid up shares, debentures or debenture stock of any other
company or in any one or more of such ways) and the Directors shall give effect to such
resolution.
•
Payment of dividends by post or electronic funds transfer system: Any dividend or other
moneys payable in respect of any share may be paid (whether in euro or any other currency)
by cheque or warrant sent by post, or by electronic payment method which the Board may from
time to time decide, in each case at the risk of the person or persons entitled thereto, to the
registered address of the Holder or, where there are joint holders, to the registered address of
that one of the joint holders who is first named on the Register or to such person and to such
address as the holder or joint holders may in writing direct.
•
Dividends not to bear interest: No dividend or other moneys payable by the Company on or in
respect of any shares shall bear interest against the Company unless otherwise provided by the
rights attached to the shares.
•
The Shareholders at a general meeting may vote to direct, upon the recommendation of the
Directors, that dividends be paid wholly or partly by the distribution of assets (and, in
particular, of paid up shares, debentures or debenture stock of any other company or in any one
or more of such ways).
General Meetings
The Company shall hold in each year a general meeting as its annual general meeting in addition to
any other meeting in that year and shall specify the meeting as such in the notices calling it. Not more
than 15 months shall elapse between the date of one annual general meeting and that of the next. The
Directors may convene general meetings. Extraordinary general meetings may also be convened on
such requisition, or in default may be convened by such requisitionists, and in such manner as may be
provided by the Acts. All general meetings of the Company shall be held in Ireland unless otherwise
determined by ordinary resolution of the members.
75
Quorum
No business other than the appointment of a chairman shall be transacted at any general meeting
unless a quorum is present at the time when the meeting proceeds to business. Two members present
in person or by proxy shall be a quorum.
Voting Rights
1.
Votes of Members: Votes may be given either personally or by proxy. Subject to any rights or
restrictions for the time being attached to any class or classes of shares, on a show of hands
every member present in person and every proxy shall have one vote, so, however, that no
individual shall have more than one vote, and on a poll every Member shall have one vote for
every share carrying voting rights of which he is the Holder. The Chairman shall be entitled to
a casting vote where there is an equality of votes.
2.
Resolutions: Resolutions are categorised as either ordinary or special resolutions. The essential
difference between an ordinary resolution and a special resolution is that a bare majority of
more than 50% of the votes cast by members voting on the relevant resolution is required for
the passing of an ordinary resolution, whereas a qualified majority of more than 75% of the
votes cast by members voting on the relevant resolution is required in order to pass a special
resolution. Matters requiring a special resolution include for example:
1.
altering the objects of the Company;
2.
altering the articles of association of the Company and/or the rights attaching to any of
its shares; and
3.
approving a change of the Company’s name.
Distribution of Assets on Winding Up
In the event that the Company is wound up and the assets available for distribution among the
members as such are insufficient to repay the whole of the paid up, or credited as paid up, share
capital, the assets shall be distributed so that, as nearly as may be, the losses will be borne by the
members in proportion to the capital paid up or credited as paid up at the commencement of the
winding up on the shares held by them respectively. If, however, the assets available for distribution
among the members are more than sufficient to repay the whole of the share capital as paid up or
credited as paid up at the commencement of the winding up, the excess shall be distributed among the
members in proportion to the capital at the commencement of the winding up paid up or credited as
paid up on the said share held by them respectively.
Unclaimed Dividends
If the Directors so resolve, any dividend which has remained unclaimed for 12 years from the date of
its declaration shall be forfeited and cease to remain owing by the Company. The payment by the
Directors of any unclaimed dividend or other moneys payable in respect of a share into a separate
account shall not constitute the Company a trustee in respect thereof. Any dividend, interest or other
sum payable which remains unclaimed for one year after having been declared may be invested or
otherwise made use of by the Directors for the benefit of the Company until claimed.
Untraced Shareholders
The Company may sell any shares in the Company on behalf of a holder of such shares, or person
entitled by transmission to such shares, if, during the previous 12 years:
1.
at least three cash dividends have become payable on the shares;
2.
no cash dividend payable on the shares has been claimed;
76
3.
the Company has not received at any time during the relevant period any communication, so
far as the Company at the end of the relevant period is then aware, from the holder of, or person
entitled by transmission to, the shares;
4.
the Company has caused advertisements giving notice of its intention to sell the shares to be
published in a leading daily Irish newspaper and another in a newspaper circulating in the area
of the address shown in the register of the holder of, or person entitled by transmission to, the
untraced shares, and (in either such case) a period of three months has elapsed from the date of
publication of the advertisement; and
5.
the relevant stock exchange has been notified of the proposed sale.
Purchase of Own Shares
Subject to and in accordance with the provisions of the Irish Companies Acts and without prejudice
to any relevant special rights attached to any class of shares the Company may purchase all or any of
its shares of any class so that any shares so purchased may be selected in any manner whatsoever and
cancelled or held by the Company as treasury shares. The Company shall not make a purchase of
shares in the company unless the purchase has first been authorised by a special resolution of the
Company and by a special resolution passed at a separate general meeting of the holders of each class
of shares or a resolution passed by a majority representing three-fourths in nominal value of the issued
shares of any class or classes at a separate general meeting of the holders of Company’s loan stock (if
any), which, at the date on which the purchase is authorised by the Company in general meeting
entitle them, either immediately or at any time subsequently, to convert all or any of the shares or loan
stock of that class held by them into equity share capital of the Company.
Directors
Unless otherwise determined by the Company in a general meeting, the number of Directors shall not
be more than ten nor less than two. A Director is not required to hold shares in the Company. Two
Directors present at a Directors’ meeting shall be a quorum.
As at the date of this Document, the Directors are as set out on page 3 of this Document. Any further
Directors will be appointed pursuant to the Articles.
Under the Articles, at each annual general meeting of the Company one-third of the Directors are
required to retire from office, and those required to retire are determined by reference to those longest
in office since last re-appointment. Retiring Directors may be re appointed.
No person other than a retiring Director may be appointed as a Director at any general meeting unless
(i) such person has been recommended by the Directors or (ii) notice has been given to the Company
by a voting member of the intention to propose a person for appointment as a director stating the
particulars required to be included in the Company’s register of Directors and the written consent of
that person in respect of his willingness to be appointed not less than forty two nor more than sixty
Clear Days before the date appointed for the meeting, provided that such notices are received by the
Company in time to include details of the proposed director in the notice of general meeting.
Any Director of the Company who holds any executive office or who serves on any committee, or who
otherwise performs services which in the opinion of the Directors are outside the scope of the ordinary
duties of a Director, may be paid such extra remuneration by way of salary, commission or otherwise
as the Directors may determine.
The ordinary remuneration of the Directors shall be determined from time to time by the Board.
The Directors of the Company may provide benefits, whether by way of pensions, gratuities, or
otherwise, for any Director, former Director or other officer or former officer of the Company, or to
any person who holds or has held any employment with the Company or with any body corporate
which is or has been a subsidiary or associated company of the Company or a predecessor in business
of the Company or of any such subsidiary or associated company, and to any member of his family or
77
any person who is or was dependent on him and may set up, establish, support, alter, maintain and
continue any scheme for providing all or any of such benefits and for such purposes any Director
accordingly may be, become or remain a member of, or rejoin, any scheme and receive and retain for
his own benefit all benefits to which he may be or become entitled thereunder. The Directors of the
Company may pay out of the funds of the Company any premiums, contributions or sums payable by
the Company under the provisions of any such scheme in respect of any of the persons or class of
persons above referred to who are or may be or become members thereof.
Subject to the provisions of the Acts, and provided that he has disclosed to the Directors the nature
and extent of any material interest of his, a Director notwithstanding his office:
(a)
may be a party to, or otherwise interested in, any transaction or arrangement with the Company
or any subsidiary or associated company thereof or in which the Company or any subsidiary or
associated company thereof is otherwise interested;
(b)
may be a Director or other officer of, or employed by or provide services to or have an interest
in any investment manager to the Company from time to time;
(c)
may be a Director or other officer of, or employed by, or a party to any transaction or
arrangement with, or otherwise interested in, any body corporate promoted by the Company or
in which the Company or any subsidiary or associated company thereof is otherwise interested;
and
(d)
shall not be accountable, by reason of his office, to the Company for any benefit which he
derives from any such office or employment or from any such transaction or arrangement or
from any interest in any such body corporate and no such transaction or arrangement shall be
liable to be avoided on the ground of any such interest or benefit.
Save as otherwise provided by these Articles, a Director shall not vote at a meeting of the Directors
or a committee of Directors on any resolution concerning a matter in which he has, directly or
indirectly, an interest which is material or a duty which conflicts or may conflict with the interests of
the Company. A Director shall not be counted in the quorum present at a meeting in relation to any
such resolution on which he is not entitled to vote.
A Director shall be entitled (in the absence of some other material interest than is indicated below) to
vote (and be counted in the quorum) in respect of any resolutions concerning any of the following
matters, namely:
(a)
the giving of any security, guarantee or indemnity to him in respect of money lent by him to
the Company or any of its subsidiary or associated companies or obligations incurred by him
or by any other person at the request of or for the benefit of the Company or any of its
subsidiary or associated companies;
(b)
the giving of any security, guarantee or indemnity to a third party in respect of a debt or
obligation of the Company or any of its subsidiary or associated companies for which he
himself has assumed responsibility in whole or in part and whether alone or jointly with others
under a guarantee or indemnity or by the giving of security;
(c)
any proposal concerning any offer of shares or debentures or other securities of or by the
Company or any of its subsidiary or associated companies for subscription, purchase or
exchange in which offer he is or is to be interested as a participant in the underwriting or sub
underwriting thereof;
(d)
any proposal concerning any other company in which he is interested, directly or indirectly and
whether as an officer or shareholder or otherwise howsoever, provided that he is not the holder
of or beneficially interested in 5% or more of the issued shares of any class of such company
or of the voting rights available to members of such company (or of a third company through
78
which his interest is derived) any such interest being deemed to be a material interest in all
circumstances;
(e)
any proposal concerning the adoption, modification or operation of a superannuation fund or
retirement benefits scheme under which he may benefit and which has been approved by or is
subject to and conditional upon approval for taxation purposes by the appropriate Revenue
authorities;
(f)
any proposal concerning the adoption, modification or operation of any scheme for enabling
employees (including full time executive Directors if any) of the Company and/or any
subsidiary thereof to acquire shares in the Company or any arrangement for the benefit of
employees of the Company or any of its subsidiaries under which the Director benefits or may
benefit; or
(g)
any proposal concerning the giving of any indemnity of the type referred to under the heading
“Indemnity of Officers” in this section 5.3 of this Part IV (Additional Information) or the
discharge of the cost of any insurance cover which the Directors propose to purchase or
maintain for the benefit of persons (including Directors) pursuant to the Articles.
In the event of any question arising as to the entitlement of any Director to vote at a Board Meeting,
the matter shall be decided by the chairman of the meeting.
The Company, by ordinary resolution of which extended notice of at least 28 days has been given in
accordance with the provisions of the Companies Acts, may remove any Director before the expiry of
his period of office notwithstanding anything in the Articles or in any agreement between the
Company and such Director. This does not prevent such a person from claiming compensation or
damages in respect of the termination.
Borrowing Powers
The Directors may exercise all the powers of the Company to borrow or raise money and to mortgage
or charge its undertaking, property, assets and uncalled capital or any part thereof and, subject to Part
III of the Companies (Amendment) Act 1983, to issue debentures, debenture stock and other
securities, whether outright or as collateral security for any debt, liability or obligation of the
Company or of any third party, without any limitation as to amount.
Indemnity of Officers
Subject to the provisions of, and so far as may be permitted by, the Companies Acts, every Director,
auditor, secretary or other officer of the Company shall be entitled to be indemnified by the Company
against all costs, charges, losses, expenses and liabilities incurred by him in the execution and
discharge of his duties or in relation thereto including any liability incurred by him in defending any
proceedings, civil or criminal, which relate to anything done or omitted or alleged to have been done
or omitted by him as an officer or employee of the Company and in which judgment is given in his
favour (or the proceedings are otherwise disposed of without any finding or admission of any material
breach of duty on his part) or in which he is acquitted or in connection with any application under any
statute for relief from liability in respect of any such act or omission in which relief is granted to him
by the Court.
Disclosure of Shareholder Interests
Part IV of the Irish Companies Act 1990 makes provision for the disclosure of interests in shares in
Irish public limited companies. This Act requires notification of interests in, and changes in interests
of, 5 per cent or more of the relevant share capital (or of any class of relevant share capital) of an Irish
public limited company. The notification obligation arises where there is a change in the percentage
of shares in which a person has an interest from below to above the five per cent threshold, or from
above to below that threshold, or where 5 per cent is exceeded both before and after the transaction
but the percentage level, in whole numbers, changes (fractions of a percentage being rounded down
79
to the next whole number). “Relevant share capital’’ is defined, broadly, as issued share capital
carrying full voting rights.
The obligation to notify must be performed within the period of five clear business days from the date
upon which the obligation arises. The notification to the relevant company must be in writing and
must specify the share capital to which it relates; the number of shares comprised in that share capital
in which the person making the notification knows he was interested immediately after the time when
the obligation arose, or in a case where the person no longer has a notifiable interest in shares
comprised in the share capital, state that he no longer has an interest; identify the notifier and give his
address and, except where the notice is stating that the notifier no longer has a notifiable interest in
the shares, give details of the registered holder of the shares and the number of shares held by such
holder. Where a person fails to comply with the notification requirements described above, no right
or interest of any kind whatsoever in respect of the shares concerned, held by such person, shall be
enforceable by such person, whether directly or indirectly, by action or legal proceeding. However,
such person may apply to the High Court of Ireland to have the rights attaching to the shares
concerned reinstated.
The AIM Rules and ESM Rules require an AIM or ESM company (as the case may be) to issue a
notification without delay of any relevant changes, being changes to the legal or beneficial interest,
whether direct or indirect, to the holding of a significant shareholder, a significant shareholder being
3 per cent. or more of any class of an AIM security and five per cent or more of any class of an ESM
security respectively, and any increase or decrease of such holding through any single percentage.
In addition to any other right or power under the Companies Acts, the Directors may at any time and
from time to time if, in their absolute discretion, they consider it to be in the interests of the Company
to do so, give a notice to any member requiring such person(s) to notify the Company in writing
within such period as may be specified in such notice of full and accurate particulars of his/its interest
in Ordinary Shares held by the member and the nature of such interest. The Directors may (before or
after the receipt of any written particulars) require any such particulars to be verified by statutory
declaration.
If any member is in default in supplying to the Company the information required by the Company
within the prescribed period or if the Company determines that the member has not complied with his
obligations, the Directors in their absolute discretion may at any time following 14 days from the
expiry of the prescribed period serve a restriction notice on the member. The restriction notice shall
direct that in respect of the Ordinary Shares in respect of which the default has occurred, the member
shall not be entitled to attend, speak or vote either personally, by representative or by proxy at any
general meeting of the Company or at any separate general meeting of the class of shares concerned
or to exercise any other right conferred by membership in relation to any such meeting. Where the
shares in respect of which there has been a default represent at least 0.25 per cent. of the class of
shares concerned, the restriction notice shall additionally direct that dividends or other amount
payable on such shares will be withheld by the Company and that no transfer of those shares shall be
registered until the default is rectified. A restriction notice may be cancelled in certain circumstances
by the Directors.
6.
SETTLEMENT
The Company will apply for the Ordinary Shares to be admitted to CREST with effect from Admission.
Settlement of transactions in Ordinary Shares following Admission will take place within CREST. CREST
is a paperless settlement procedure enabling securities to be evidenced otherwise than by a share certificate
and transferred without executing written stock transfer forms. The system is designed to reduce the costs of
settlement and facilitate the processing of settlements and the updating of registers through the introduction
of an electronic settlement system. Ordinary Shares may be held in electronic form and evidence of title to
Ordinary Shares will be established on an electronic register maintained by the Registrar. Settlement of
transactions in Ordinary Shares following Admission may take place within the CREST system if any
Shareholder so wishes.
80
With effect from Admission, the Articles will permit the holding of Ordinary Shares in CREST. Temporary
documents of title will not be issued. CREST is a voluntary system and holders of Ordinary Shares who wish
to receive and retain share certificates will be able to do so.
7.
DIRECTORS’ AND OTHER INTERESTS
7.1
The interests of the Directors and the persons connected with them (all of which are beneficial save where
otherwise stated) in the issued share capital of the Company as at close of business on 13 March 2014
(being the latest practicable date prior to publication of this Document) and as expected to be immediately
following Admission (assuming 106,000,000 Ordinary Shares are issued pursuant to the Placing):
Ordinary Shares
at date of this
document
Percentage of
Existing
Issued Share
Capital
as at the
date of this
document
126,902
100
31,859
–
–
–
–
–
3.17%
0.00%
0.80%
–
–
–
–
–
Name
Pat McCann(i)
Dermot Crowley(ii)
Stephen McNally(iii)
Sean McKeon
John Hennessy
Margaret Sweeney
Alf Smiddy
Robert Dix
(i)
Ordinary
Shares Percentage of
following Enlarged issued
Admission Share Capital
627,200
80,100
167,218
40,000
12,000
10,000
33,600
30,000
0.51%
0.07%
0.14%
0.03%
0.01%
0.01%
0.03%
0.03%
Pat McCann is the legal and beneficial owner of 126,902 Ordinary Shares of €0.01 each and €998,635 of Existing Loan
Notes which will convert into 380,298 Ordinary Shares on Admission.
(ii) Dermot Crowley holds the legal ownership of 100 Ordinary Shares of €0.01 each in the capital of the Company on trust
for Davycrest Nominees.
(iii) Stephen McNally holds the legal ownership of 100 Ordinary Shares of €0.01 each in the capital of the Company on trust
for Davycrest Nominees and is beneficially interested in 31,759 Ordinary Shares of €0.01 each and €249,975 of Existing
Loan Notes which will convert into 95,359 Ordinary Shares on Admission.
7.2
As described in section 11 of this Part IV, the Company has made awards in respect of 754,154
Ordinary Shares pursuant to the terms of the LTIP. Details of the nil cost LTIP awards granted to
certain of the Directors are set out below:
Number of Ordinary Shares
Pat McCann
Dermot Crowley
Stephen McNally
128,000
80,000
80,000
7.3
Save as disclosed in sections 7.1 and 7.2 of this Part IV, no Director has any interest in the Company’s
share capital. No Director or member of a Director’s family has a related financial product referenced
to the Company’s share capital.
7.4
As at 13 March 2014 (being the last practicable date prior to publication of this document) and save as
disclosed in section 9 of this Part IV, the Directors are not aware of any person or persons who,
directly or indirectly, jointly or severally, exercise or could exercise control over the Company.
7.5
There are no outstanding loans granted or guarantees provided by any company in the Group to or for
the benefit of any of the Directors.
7.6
Save as otherwise disclosed in this document, no Director has any interest, whether direct or indirect,
in any transaction which is or was unusual in its nature or conditions or significant to the business of
the Group taken as a whole and which was effected by the Company or any other member of the
Group during the current or immediately preceding financial year, or during any earlier financial year
which remains in any respect outstanding or unperformed.
81
A1 – 18.3
7.7
In so far as is known to the Company, and except as provided for by the Scheme, there are no
arrangements the operation of which may, at a date subsequent to the date of this Document, result in
a change of control of the Company.
8.
ADDITIONAL INFORMATION ON THE DIRECTORS
8.1
The details of those companies and partnerships outside the Group of which the Directors are
members or are or have been a member of the administrative, management or supervisory bodies at
any time within the five years prior to the date of this document, are as follows:
Director
Current
Previous
John Hennessy
Cpl Resources Public Limited
Company
The Institute Of Accounting
Technicians In Ireland Limited
H & K Global Systems
New Era Equity Release Company 2
Limited
Pat McCann
DHGL Limited
Sanjay Limited
Citywest Resort Limited
Tulane Business Management Limited
Fonteyn Property Holdings Limited
Fonteyn Property Holdings No 2
Limited
Dalata Limited
Caruso Limited
Ogwell Limited
CI Hotels Limited
Anora Commercial Limited
Hanford Commercial Limited
Dalata UK Limited
Loadbur Limited
Dalata Management Services Limited
Dalata Support Services Limited
Dalata Cardiff Limited
Quinn International Property
Management Limited
Quinn Group Hotels Limited
Slieve Russell Hotel Limited
Slieve Russell Hotel Property Limited
Quinn Group Properties Limited
C.R.D. Catering (City) Limited
Quinn Hotels Praha, a.s.
Shamrock Investment Properties
Praha, a.s.
Quinn Group Luxembourg Hotels Sari
Quinn Group Luxembourg Property
Sari
Quinn Hospitality Ireland Limited
Quinn Hospitality Ireland
Operations 1 Limited
Quinn Hospitality Ireland
Operations 2 Limited
Quinn Hospitality Ireland
Operations 3 Limited
Quinn Hospitality Ireland
Operations 4 Limited
Joe McCann Menswear Limited
Greencore Group plc
Irish Heart Foundation (Foras Croi
na h-Eireann)
Palms Consulting Limited
EBS Building Society
Barge Public House Limited
Messers Maguire Property Limited
Messers Maguire Public House
Limited
Molesworth Street Hotel Limited
Quinn Group Family Properties
Limited
Quinn’s Drumcondra Property Limited
Quinn’s Q Bar Property Limited
Quinns Cat & Cage Public House
Limited
Quinns Public House Drumcondra
Limited
Quinns Q Bar Limited
Whitfield Property Management
Company Limited
Euro Care Developments Limited
Euro Care Property Management
Limited
82
A1 – 18.4
Director
Current
Pat McCann
(continued)
Quinn Hospitality Ireland
Operations 5 Limited
Quinn Finance Holding
Quinn Finance
Euro Care Healthcare Limited
Euro Care Infrastructure Limited
Mentrida Limited
Caruso Limited
Ogwell Limited
CI Hotels Limited
Anora Commercial Limited
Hanford Commercial Limited
Dalata Limited
Dalata UK Limited
Dalata Management Services Limited
Sanjay Limited
DHGL Limited
Dalata Support Services Limited
Citywest Resort Limited
Dalata Cardiff Limited
Tulane Business Management Limited
Fonteyn Property Holdings Limited
Fonteyn Property Holdings No 2
Limited
Stephen
McNally
Previous
SERLS Hotel Services Limited
Dermot
Crowley
Felcom Limited
Dermot Crowley Coatings Ltd
Caruso Limited
Ogwell Limited
CI Hotels Limited
Anora Commercial Limited
Hanford Commercial Limited
Dalata Limited
Loadbur Limited
Dalata Management Services Limited
DHGL Limited
Dalata Support Services Limited
Dalata UK Limited
Dalata Cardiff Limited
Tulane Business Management Limited
Fonteyn Property Holdings Limited
Fonteyn Property Holdings No 2
Limited
Pillo Hotels Limited
Duvet 1 Property Management
Limited
Pillo UK Limited
Alf Smiddy
Clydaville Investments Limited
Alf Smiddy & Co. Limited
Professional Granite Consulting
Limited
Leitra Investments Limited
Chris Mee Holdings Limited
Lds Holdings Limited
Cumann Trachtala Corcaighe (The
Cork Chamber Of Commerce)
Whites Cross Eggs Limited
Riverview Eggs Limited
T & S Taverns Limited
Comhlacht Eolas International
Limited
Cork Airport Authority Public Limited
Company
React Energy Public Limited
Company (formerly Kedco Public
Limited Company)
83
Director
Current
Previous
Robert Dix
Allianz Public Limited Company
Allianz – Irish Life Holdings Public
Limited Company
Siteserv Public Limited Company
Quinn Finance
Zindol
Quinn Energy (Ballakelly) Limited
Quinn Energy Supply Limited
Quinn Energy (Cashla) Limited
Vulture Yacht Charters Limited
Rolleville Investments Limited
Telos Capital Advisors Limited
Tangerier Limited
Ballybrit Clayton Management
Company Limited
Quinn Hospitality Ireland Limited
Quinn Hospitality Ireland
Operations 1 Limited
Quinn Hospitality Ireland
Operations 2 Limited
Quinn Hospitality Ireland
Operations 3 Limited
Quinn Hospitality Ireland
Operations 4 Limited
Quinn Hospitality Ireland
Operations 5 Limited
Siteserv Holdings Limited
Quinn Finance Holding
Allglass Windscreen Replacement
Limited
Allglass Windscreen Southside
Limited
Opportune Capital Limited
Allglass Windscreens Nationwide
Limited
Allglass Windscreen Services Limited
Slieve Russell Hotel Property Limited
Slieve Russell Hotel Limited
Quinn Group Hotels Limited
The Working Capital Company
Limited
Echo Water Limited
Echo Water Holdings Limited
Auto Claims Solutions Limited
Inishtearacht Properties Limited
Lets Do It Global Limited
Savara Limited
Lisloughrey Hotel Management
Limited
Key Capital Real Estate Limited
Tapp Apps Limited
Tapp Apps Holdings Limited
Brownes Hotel And Restaurant
Company
Brownes Investment Company
Inchcape Finance (Ireland) Limited
Grafton Recruitment Limited
84
8.2
Director
Current
Previous
Margaret
Sweeney
Derrylahan Limited
Realex Financial Services Limited
Bramshott Europe Fund Public
Limited Company
Bramshott Management Limited
Women For Election Limited
The Airports App Company Limited
The Dublin Neurological Institute
Bramshott General Partner Inc
Dublin Chamber Of Commerce
(Incorporated)
Nannycatch Beck Limited
Loft Beck Limited
One Direct (Ireland) Limited
Dublin Airport Authority Public
Limited Company
Aer Rianta International Cuideachta
Phoibli Theoranta
Monaer (Cork) Limited
Halamar Developments Limited
Turckton Developments Limited
Daa Operations Limited
Horizon Logistic Parks Management
Company Limited
Daa Finance Public Limited Company
Dublin Wireless Cluster Limited
Shannon Aviation Fuels Limited
Aer Rianta International (Aircraft
Services) Limited
Design Services International Limited
International Management & Training
Services Limited
As at the date of this Document none of the Directors has:
•
any unspent convictions in relation to indictable offences;
•
had any bankruptcy order made against him or entered into any individual voluntary
arrangements;
•
been a director of a company which has been placed in receivership, compulsory liquidation,
creditors’ voluntary liquidation, administration, been subject to a voluntary arrangement with
its creditors generally or any class of its creditors whilst he was a director of that company or
within the 12 months after he ceased to be a director of that company;
•
been a partner in any partnership which has been placed in compulsory liquidation,
administration or been the subject of a partnership voluntary arrangement whilst he was a
partner in that partnership or within the 12 months after he ceased to be a partner in that
partnership;
•
been the owner of any assets or a partner in any partnership which has been placed in
receivership whilst he was a partner in that partnership or within the 12 months after he ceased
to be a partner in that partnership;
•
been publicly criticised by any statutory or regulatory authority (including recognised
professional bodies); or
•
been disqualified by a court from acting as a director of any company or from acting in the
management or conduct of the affairs of a company.
85
9.
SUBSTANTIAL SHAREHOLDERS
A1 – 18.1, 18.2
As at close of business on 13 March 2014 (being the latest practicable date prior to publication of this
document) and in so far as is known to the Company, the following persons are, directly or indirectly,
interested in 3% or more of the issued share capital of the Company and (assuming the conversion of the
Existing Loan Notes on Admission and that 106,000,000 Ordinary Shares are issued pursuant to the Placing):
Shareholder
Ordinary
Shares
before
Admission
Percentage of
Ordinary
Shares
before
Admission
Ordinary
Shares
following
Admission
Percentage of
Enlarged
Issued
Share
Capital
Davycrest Nominees(i)
TVC Holdings plc(ii)
Marketfield Asset Management
2,603,182
1,269,916
–
65.08%
31.75%
–
15,743,600
11,080,000
5,200,000
12.91%
9.08%
4.26%
Note:
None of the Company’s major shareholders, as listed above, have different voting rights attaching to shares held by them in the
Company.
(i)
Davycrest Nominees and its investors are together the owners of €20,471,985 of Existing Loan Notes which will convert into
7,809,618 Ordinary Shares on Admission.
(ii) TVC Holdings plc is also the owner of €9,986,332 of Existing Loan Notes which will convert into 3,810,084 Ordinary Shares
on Admission.
10.
DIRECTORS SERVICE CONTRACTS AND LETTERS OF APPOINTMENT
10.1 Executive Directors’ service contracts
At the date of this Document, there are 3 executive directors (the “Executive Directors”), each of
whom is employed by the Company or a Group Company. The Executive Directors Service Contracts
will be amended and restated on Admission. The terms of the Executive Director’s service contracts,
effective as at Admission, are summarised below:
Name
Title
Contract Date
Salary
Notice by Company
Pat McCann
Chief Executive Officer
9 August 2007
€320,000
24 weeks except as
below
Dermot Crowley
Deputy Chief Executive, 24 October 2013
Business Development
and Finance
€200,000
6 months except as
below
Stephen McNally
Deputy Chief Executive
€200,000
24 weeks except as
below
9 August 2007
Service contracts
A service agreement was entered into between DHGL Limited and Mr. McCann on 9 August 2007
(which will be amended and restated on Admission) pursuant to which Mr. McCann was appointed
Group Chief Executive Officer. Employment is terminable by either party giving 24 weeks’ notice.
Mr. McCann is entitled to a base salary of €320,000 per annum and is eligible to be paid a
discretionary annual bonus as determined by the Remuneration Committee and subject to terms and
conditions imposed by the Company. The service agreement allows the Company to terminate
Mr. McCann’s employment by making a lump sum payment in lieu of notice consisting of the base
salary that would have been payable during his contractual notice period. Standard ‘cause’ provisions
are included which allow the Company to terminate without notice or the obligation to make a
payment in lieu of notice. Mr. McCann’s service agreement includes post-termination restrictions on
competing activity and on solicitation of customers or employees which are effective for a period of
12 months after termination.
A service agreement was entered into between DHGL Limited and Mr. McNally on 9 August 2007
(which will be amended and restated on Admission) pursuant to which Mr. McNally was appointed
86
Deputy Chief Executive. Employment is terminable by either party giving 24 weeks’ notice.
Mr. McNally is entitled to a base salary of €200,000 per annum and is eligible to be paid a
discretionary annual bonus as determined by the Remuneration Committee and subject to terms and
conditions imposed by the Company. Mr. McNally is also entitled to a company car or a car allowance
in lieu. The service agreement allows the Company to terminate Mr. McNally’s employment by
making a lump sum payment in lieu of notice consisting of the base salary that would have been
payable during his contractual notice period. Standard ‘cause’ provisions are included which allow
the Company to terminate without notice or the obligation to make a payment in lieu of notice.
Mr. McNally’s service agreement includes post-termination restrictions on competing activity and on
solicitation of customers or employees which are effective for a period of 12 months after termination.
A service agreement was entered into between DHGL Limited and Mr. Crowley on 24 October 2013
(which will be amended and restated on Admission) pursuant to which Mr. Crowley was appointed
Deputy Chief Executive. Employment is terminable by either party giving 6 months’ notice.
Mr. Crowley is entitled to a base salary of €200,000 per annum and is eligible to be paid a discretionary
annual bonus as determined by the Remuneration Committee and subject to terms and conditions
imposed by the Company. Mr. Crowley is also entitled to a company car or a car allowance in lieu. The
service agreement allows the Company to terminate Mr. Crowley’s employment by making a lump sum
payment in lieu of notice consisting of the base salary that would have been payable during his
contractual notice period. Standard ‘cause’ provisions are included which allow the Company to
terminate without notice or the obligation to make a payment in lieu of notice. Mr. Crowley’s service
agreement includes post-termination restrictions on competing activity and on solicitation of customers
or employees which are effective for a period of six months after termination.
Termination provisions
Other than entitlement to notice and a payment in lieu of notice, the Executive Directors are not
entitled to compensation on termination of their respective contracts.
Benefits
Under the terms of the service contracts with each of the Executive Directors (with the exception of
Pat McCann, in respect of whom no contribution is made by the Group), the Group must pay an
amount equivalent to 10 per cent. of the relevant Director’s annual basic salary into the Group pension
scheme. Each of the Executive Directors is entitled to benefits under the group risk benefit scheme
which includes death in service cover of 4 times salary and disability benefit of 66.67% of salary (less
social welfare disability benefit).
Restrictive Covenants
The Executive Directors’ service contracts contain 12 month (6 month in the case of Dermot Crowley)
post termination restrictive covenants against (i) competing with the Company or any Group
Company; and (ii) against soliciting, employing or engaging (or seeking to employ or engage) any
person who has at any time during the period of one year immediately preceding the date of
termination of his employment been an officer, executive, manager, or consultant to the Group or any
Group Company.
10.2 Non-Executive Directors’ letter of appointment
At the date of this Document, there are 4 Non-Executive Directors, each of whom was appointed with
effect from 27 February 2014. The terms of the Non-Executive Director’s appointment letters are
summarised below:
Name
Appointment Date
Fee
John Hennessy
Alf Smiddy
Margaret Sweeney
Robert Dix
27 February 2014
27 February 2014
27 February 2014
27 February 2014
€75,000
€42,000
€42,000
€42,000
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Notice by Company
One month except as below
One month except as below
One month except as below
One month except as below
Service contracts
Each of the Non-Executive Directors has been appointed pursuant to the terms of a “Letter of
Non-Executive Director Appointment” dated 27 February 2014. Appointment is for an initial term of
three years, upon and subject to the articles of association, and continuation of appointment is
contingent on satisfactory performance. Appointment is terminable by either party giving one month’s
written notice. Standard ‘cause’ provisions are included which allow the Company to terminate
without notice.
The Chairman will be paid a fee of €75,000 per annum and each of the other Non Executive Directors
will be paid a fee of €42,000 per annum. In addition, the Company will reimburse all reasonable and
documented expenses incurred in the performance of the Non-Executive Directors’ duties.
11.
LONG TERM INCENTIVE PLAN (LTIP)
A1 – 17.3, 21.1.5,
21.1.6
Overview
The LTIP was approved by a duly appointed committee of the Board of Directors on 3 March 2014 and
approved by the Company’s existing shareholders on 14 March 2014. It allows the Company to grant equity
awards over its Ordinary Shares to full-time executive directors and employees of the Group, (known as the
Participants). Vesting of awards will generally be conditional on the Company attaining specified
performance targets over a period of at least three financial years. Those targets will be aligned with the
Company’s long term business strategy.
The LTIP is designed to reward, retain and incentivise full-time executive directors and employees of the
Group and to align the interests of Participants in the LTIP with those of shareholders and in so doing, to
focus attention on long term growth in shareholder value of Dalata.
Administration
The remuneration committee of the Board (“the Remuneration Committee”) will administer the LTIP. It will
select the individuals who are to receive awards under the LTIP and the terms of each award.
Eligibility
The Remuneration Committee may grant awards to Full Time Executive Directors, and employees of the
Group. An individual to whom an award is granted is referred to in this summary as a “Participant”.
Awards
Awards made under the LTIP will be in the form of a conditional right to acquire Ordinary Shares pursuant
to the LTIP. Such rights to acquire Ordinary Shares are not subject to pre-emption entitlements of other
Shareholders.
Timing of Award Grants
Awards may not be granted during a period in which directors and other insiders of Dalata are restricted from
dealing in securities of the Company.
Overall Share Limits
No more than 5% of the issued ordinary share capital of Dalata may be issued or reserved for issuance under
the LTIP and any other executive or discretionary share scheme operated by Dalata over any ten year period.
Individual Annual Limit
No individual may be granted awards having a market value as at the award date in excess of 100% of his
or her remuneration in any 12 month period.
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Vesting/Performance Conditions
For each award, the Remuneration Committee will determine Dalata’s performance conditions that must be
satisfied in order for the award to vest. Performance conditions will be measured over a period of three
financial years. Awards will normally vest no earlier than the third anniversary of the award grant date.
For all awards granted during the first three years of the LTIP, only total shareholder return performance
conditions will apply. For all subsequent awards granted, the performance conditions will be based on 50%
total shareholder return and 50% earnings per share performance conditions.
In relation to the earnings per share performance conditions, 25% of an award shall vest on earnings
per share growth of an increase in CPI plus 3% per annum over the relevant performance period. 100% of
an award shall vest on an earnings per share growth of an increase in CPI plus 7% per annum over the
relevant performance period. For earnings per share performance between these thresholds an award shall
vest increasing on a linear scale.
In relation to the total shareholder return performance conditions, 25% of an award shall vest for total
shareholder return performance equal to the median total shareholder return of certain comparative
companies measured over the performance period. 100% of an award shall vest for total shareholder return
performance equal to the 75th percentile or greater per annum of the median total shareholder return
performance of certain comparative companies measured over the performance period. For total shareholder
return performance between these thresholds, an award shall vest increasing on a linear scale. The
comparative companies shall be determined by the Remuneration Committee and shall be no fewer than
10 and selected for the reason that these companies all operate in Europe and are engaged in businesses that
either have similarities or are related to Dalata’s business.
The Remuneration Committee may adopt different or vary the existing performance conditions without
shareholder approval where the new performance conditions will, in the reasonable opinion of the
Remuneration Committee, be no less challenging having regard to the circumstances prevailing at the time,
than the performance conditions described above.
Lapse of Awards
An award shall lapse when a Participant ceases to be a director or employee of any member of the Group,
on the bankruptcy of the Participant, on a winding-up of the Company, on the expiry of the relevant
performance period without the performance conditions having been satisfied or the date on which it
becomes apparent that any such condition has become incapable of being satisfied, or on such earlier date
as the Remuneration Committee may prescribe when granting an award under the LTIP.
Cessation of Employment
Generally, an award will lapse immediately if the Participant’s employment with the Group ends. However,
if the reason for the employment ending is death, injury or disability, redundancy, the company by which the
Participant is employed ceasing to be a member of the group, the transfer of the undertaking or partundertaking in which the Participant is employed to an entity other than a member of the Group, cessation
of service in accordance with contractual requirements, or any other circumstances at the discretion of the
Remuneration Committee, the award will vest on the date it would have vested if a Participant had not ceased
employment subject to the Performance Conditions being satisfied at the end of the performance period and
the pro rating of the award to reflect the reduced period of time between the commencement of the
performance period and the Participant’s cessation of employment as a proportion of the total performance
period. Alternatively, the Remuneration Committee may determine the number of award shares to vest at the
time of the Participant’s cessation of employment, based on the satisfaction of the applicable performance
conditions as of that date.
Takeover
If there is a takeover of the Company, all awards will automatically become vested in proportion to the time
elapsed in the performance period to reflect the reduced period of time between the commencement of the
performance period and the accelerated vesting date and vesting will be subject to the fulfilment of the
89
performance conditions, but in the event of a change of control, only the total shareholder return performance
conditions shall apply. The Remuneration Committee can decide not to pro rate an award if it regards it is
inappropriate to do so in the particular circumstances.
Reconstruction or Winding Up
If there is a voluntary winding up or reconstruction of the Company, any award held by a Participant may at
the discretion of the Remuneration Committee become unconditional, and vest on a pro rata basis subject to
any conditions or limitations as the Remuneration Committee may at its discretion determine. In the event
that no such determination is made, the award shall lapse.
Variation of share capital
In the event of any variation in the ordinary share capital of the Company by way of capitalisation of profits
or reserves or by way of rights or any consolidation or sub-division or reduction of capital or otherwise, the
LTIP limit, the definition of Shares and the number and the nominal value of Ordinary Shares subject to an
award may be adjusted in such manner as the Remuneration Committee determines is appropriate.
Voting, dividend and other rights
Awardholders will have no voting or dividend rights in respect of the Ordinary Shares subject to Awards until
the awards vest.
Ordinary Shares allotted under the LTIP will rank pari passu with the existing Ordinary Shares with the
exception of rights attaching by reference to a record date prior to the date of issue or vesting of the relevant
award. Applications will be made to the relevant Stock Exchange for all such Ordinary Shares to be admitted
to trading.
Awards not Transferable
Awards are generally not transferable.
Alternative Award Structures
The Board may establish or otherwise further plans based on the LTIP, but modified to take account of local
tax, exchange control or securities laws in overseas territories.
Tax Withholding
The Company may recover tax and social security from Participants in such manner as the Remuneration
Committee thinks fit including withholding Shares when the award vests and selling same, deducting the
necessary amount from the Participant’s remuneration or requiring the Participant to account directly to the
Company for such tax and social security.
Amending the LTIP
The Board may amend the LTIP in such manner as may be thought fit, provided that no amendment may be
made if it would adversely affect in any material way rights already acquired by awardholders without the
approval of the majority of the awardholders affected, and no amendment to the material advantage of
awardholders may be made to the LTIP without the approval of the Shareholder by way of ordinary
resolution.
The Board may however make minor amendments to benefit the administration of the LTIP, to take account
of a change in the applicable legislation in any country or territory or to obtain or maintain favourable tax,
exchange control or regulatory treatment for awardholders or any Group company.
12.
RELATED PARTY TRANSACTIONS
A1 – 19
Details of related party transactions entered into by members of the Group during the period covered by the
historical financial information are set out in note 19 to the Accountants Report contained in Part III(B) of
this Document. Furthermore, in the period since 1 January 2014 to 13 March 2014 (being the latest
90
practicable date prior to the publication of this document), the Group has not entered into any material
transactions with related parties other than the transactions described below.
Section 4.3 of Part IV of this document sets out the steps taken to reorganise the Group’s corporate structure.
This involved the novation to the Company of the Loan Notes (comprising of €31,496,850 in principal of
9% fixed rate loan notes originally constituted by Dalata Limited) held by the Noteholders including Pat
McCann and indirectly, Stephen McNally. On 21 February 2014, the Company and the Noteholders
amended the terms of the Loan Notes to provide that upon and subject to Admission all amounts of the
principal amount outstanding under the Loan Notes shall be automatically converted into an agreed number
of Ordinary Shares.
13.
MATERIAL CONTRACTS
A1 – 22
The following contracts, not being contracts entered into in the ordinary course of business, are all of the
contracts that have been entered into by the Company and its subsidiaries in the two years immediately
preceding the date of this Document and which are, or may be, material to Group, or are all of the contracts
which have been entered into by the Company and its subsidiaries and contain any provisions under which
any member of the Group has any entitlement which is material to the Group:
13.1 Placing Agreement
The Company has entered into a Placing Agreement with Davy and the Directors whereby Davy has
agreed to use all reasonable endeavours to procure subscribers for up to 106,000,000 Ordinary Shares
to be issued by the Company at the Placing Price. The Company and the Directors have given
warranties and representations to Davy subject to limitations as to the time in which claims may be
brought and the amount that can be recovered. Under the Placing Agreement, Davy will receive an
advisory commission of €250,000 and a commission equal to 3.25 per cent of the aggregate value at
the Placing Price of the Placing Shares placed with new investors. The Company has agreed to pay all
other costs, charges, fees and expenses of, or incidental to, the satisfaction of the conditions under the
Placing Agreement, the Placing, the application for Admission and the issue of the Placing Shares and
related arrangements (together with any VAT chargeable thereon). If Admission has not occurred by
8.00 a.m. on 3 April 2014 the agreement will cease to have any further force or effect. In addition,
Davy can rescind the agreement prior to completion of the Placing in certain circumstances including
a breach of the warranties given by the Company and the Directors.
13.2 Nominated Adviser, ESM Adviser and Broker Agreement
On 14 March 2014, the Company and Davy entered into a Nominated Adviser, ESM Adviser and
Broker Agreement pursuant to which Davy has agreed to act as Nominated Adviser, ESM Adviser and
Broker to the Company for the purposes of the AIM Rules, the ESM Rules and following Admission.
Pursuant to the agreement, Davy will receive a retainer fee of €35,000 per annum (exclusive of VAT).
The Company shall be entitled to terminate the agreement if Davy shall cease to be registered as a
nominated adviser or broker or if Davy commits a material breach of its obligations thereunder.
13.3 Lock-In Agreements
The Company and Davy have entered into lock-in agreements with Davycrest Nominees investors
(the “Davy Investors”), and all members of the Board and certain members of senior management (the
“Lock-In Parties”) (the “Lock-In Agreements”). Pursuant to the terms of the Lock-In Agreements, the
Lock-In Parties have undertaken, subject to certain customary exceptions, not to transfer, sell or
encumber, assign, grant any options over, pledge, loan, market or otherwise dispose of their respective
shareholding in the Company or any interest therein (but in the case of Davy Investors solely in
respect of the shares in the Company held prior to Admission) for a period of 12 months following
Admission.
In addition, for a further period of 12 months after the expiration of such 12 month lock-in period,
each of the Lock-In Parties (in the case of the Davy Investors, solely the shareholding held prior to
Admission) undertakes that it will effect all sales, transfers or other disposals of its shares in such
91
orderly manner as Davy may reasonably require, to maintain an orderly market in trading in the
shares, warrants or other securities, as the case may be, of the Company.
The restrictions on disposal set out in the Lock-In Agreements are subject to a number of customary
exceptions, including (i) any buy back by the Company of shares on identical terms to the terms
offered to all shareholders, (ii) pursuant to a compromise or arrangement between the Company and
its members which is agreed to by the members and (where required) sanctioned by the court,
(iii) pursuant to a scheme of reconstruction or arrangement of the Company, (iv) where the prior
written consent of both the Board and Davy has been obtained, and (v) pursuant to a court order or
where required by law or a competent authority.
13.4 Registrar Agreement
Pursuant to the Registrar Agreement dated 14 March 2014, Computershare Investor Services (Ireland)
Limited (the “Registrar”) has been appointed to act as the Company’s registrar and to perform various
services in connection with the registration of the Ordinary Shareholders and certain related matters.
Under the Registrar Agreement the Registrar shall be entitled to a fee of €2.00 per shareholder account
subject to a minimum annual fee of €3,500 and to additional fees in respect of other services,
including processing transfers, allotments and dividends and attending at shareholder meetings. There
is no maximum amount payable under the Registrar Agreement. The Registrar will also be entitled to
recover reasonable disbursement costs. The Registrar Agreement is for a fixed term of three years, and
thereafter will continue until terminated by either party giving not less than 6 months’ notice.
14.
LITIGATION
A1 – 20.8
14.1 No member of the Group is or has been engaged in any governmental, legal or arbitration proceedings
(including any such proceedings, which are pending or threatened, of which the Board is aware),
during the 12 months preceding the date of this document, which may have, or have had in the recent
past, a significant effect on the financial position or profitability of the Group.
15.
COMPLIANCE AND RELATED ISSUES
15.1 Insurance
A recent review of the nature and extent of insurance cover has been undertaken in conjunction with
the Group’s insurance brokers. Certain recommendations have arisen from this review which the
Board is giving consideration to in the context of the Group’s risk management policy.
15.2 Licensing
Certain fire safety issues at two of the Group’s leased hotels have delayed the renewal of the public
dance and music and singing licences in respect of these hotels. Steps are being taken to remedy these
issues with works expected to be substantially completed in the near future.
15.3 Intellectual Property
The Group uses a number of trademarks, some of which it has registered to date. Ongoing evaluation
is taking place as to whether further registrations are appropriate. The Group does not believe that the
current absence of any registrations is material to its business or operations.
15.4 Domain Names
Two of the domain names used by the Group have not, since the related assets were transferred to the
Group, been registered in the name of the Group. Steps are being taken to have the registrations in
respect of these domain names transferred to the Group where practicable.
15.5 Data Protection Breaches
Hanford Commercial Limited t/a Maldron Hotel Wexford was on 14 October 2013 prosecuted by the
ODPC in relation to direct marketing breaches. These breaches constituted an offence under the
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European Communities (Electronic Communications Networks and Services) (Privacy and Electronic
Communications) Regulations 2011. The prosecution resulted in a fine of €200 being imposed on
Hanford Commercial Limited. In addition, Hanford Commercial Limited was required to pay the
prosecutions costs arising in connection with the prosecution. The specific failings in the Group’s data
protection policies that led to these breaches have since been remedied.
15.6 Data Protection, Transfer of Personal Data
At the time of the Group’s acquisition of the hotel operating business at one of the leased hotels
certain personal data was, for technical reasons, transferred to the Group. Express customer consent
was not obtained at the time of the transfer. This is not expected to result in any adverse consequences
for the Group as the data will not be used to correspond with any customers other than those that have
future bookings in place.
15.7 Irish Competition Authority
The Group has received, and responded to, a questionnaire from the Irish Competition Authority about
certain practices in the hotel sector relating to, in particular, agency and wholesale sales and bookings.
The Group responded with a detailed response having taken external legal advice. The Group does not
know what, if any, further actions or consequences will arise, but such consequences could range from
the Irish Competition Authority taking no further action to initiating civil and/or criminal proceedings,
which could include penalties, with the possibility of change in the way in which the Group conducts
its business. At this stage, it is unclear what, if anything, will arise from the Competition Authority’s
investigation.
15.8 Regulations and Registration Requirements in the Hotel Sector
As with the operation of any hotel group there are various regulations and registration requirements
to be adhered to in areas such as environmental licences, food safety regulations, fire safety
regulations etc. While generally across the Group all such required licences and registrations are in
place, there are some specific instances where registration has not yet occurred but which are currently
being addressed by the Group. These include the failure by the Maldron Hotel Cardiff, Wales to
register with the local authority in respect of its food safety obligations, as a result of which no
inspections have been carried out by the local authority (an application for registration has since been
made to the local authority); and the fact that the Maldron Hotel Cork and the Maldron Hotel Galway
have not obtained licences to discharge to sewer.
16.
WORKING CAPITAL
The Directors are of the opinion that, having made due and careful enquiry, the working capital available to
the Group will be sufficient for its present requirements, that is, for at least twelve months from Admission.
17.
SUBSCRIPTION AND SALE
17.1 The Ordinary Shares are being offered and sold:
(a)
in the United Kingdom, to persons (i) who have professional experience in matters relating to
investments and who meet the definition of “investment professionals” in Article 19(5) of the
Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended)
(the “Order”) or who meet Article 49 of the Order, and (ii) are “qualified investors” as defined
in section 86 of the FSMA;
(b)
in Ireland “qualified investors” as defined in regulation 2(1) of the Prospectus (Directive
2003/71/EC) Regulations 2005 of Ireland (as amended);
(c)
in Ireland and elsewhere to any other persons to whom they may otherwise be lawfully offered
and sold
(together all such persons being referred to as “relevant persons”).
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17.2 This Document must not be acted on or relied on, (a) in the United Kingdom and Ireland, by persons
who are not relevant persons and, (b) in France, Germany, the Netherlands or in any other jurisdiction
in the EEA which has implemented the Prospectus Directive, by persons who are not Qualified
Investors. Any investment or investment activity to which this Document relates is available only to,
(1) in the United Kingdom and Ireland, relevant persons and, (2) in France, Germany, the Netherlands
and in any other jurisdiction in the EEA which has implemented the Prospectus Directive, Qualified
Investors, and other persons who are permitted to subscribe for the Ordinary Shares pursuant to an
exemption from the Prospectus Directive and other applicable legislation, and will only be engaged
in with such persons.
17.3 The Ordinary Shares have not been and will not be registered under the Securities Act and, subject to
certain exceptions, may not be offered or sold within the United States. The Ordinary Shares are being
offered and sold outside of the United States in reliance on Regulation S. The Placing Agreement
provides that Davy may directly or through its US broker-dealer affiliates arrange for the offer and
resale of Ordinary Shares within the United States only to qualified institutional buyers in reliance on
Rule 144A. In addition, until 40 days after the commencement of the offering of the Ordinary Shares
an offer or sale of Ordinary Shares within the United States by any dealer (whether or not participating
in the offering) may violate the registration requirements of the Securities Act if such offer or sale is
made otherwise than in accordance with Rule 144A.
18.
TRANSFER RESTRICTIONS
Each purchaser of Ordinary Shares within the United States pursuant to Rule 144A, by accepting delivery
of this Document, will be deemed to have represented, agreed and acknowledged that:
18.1 It is (a) “qualified institutional buyer” within the meaning of Rule 144A (a “QIB’’); (b) acquiring such
Ordinary Shares for its own account or for the account of a QIB; and (c) aware, and each beneficial
owner of such Ordinary Shares has been advised, that the sale of such Ordinary Shares to it is being
made in reliance on Rule 144A.
18.2 It understands that such Ordinary Shares have not been and will not be registered under the Securities
Act and may not be offered, sold, pledged or otherwise transferred except (a) in accordance with Rule
144A to a person that it and any person acting on its behalf reasonably believe is a QIB purchasing
for its own account or for the account of a QIB, (b) in an offshore transaction in accordance with Rule
903 or Rule 904 of Regulation S or (c) pursuant to an exemption from registration under the Securities
Act provided by Rule 144 thereunder (if available), in each case in accordance with any applicable
securities laws of any State of the United States.
18.3 It understands that such Ordinary Shares (to the extent they are in certificated form), unless otherwise
determined by the Company in accordance with applicable law, will bear a legend substantially to the
following effect:
THIS ORDINARY SHARE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
US SECURITIES ACT OF 1933 (THE “SECURITIES ACT’’) OR WITH ANY SECURITIES
REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED
STATES AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT (1) IN ACCORDANCE WITH RULE 144A UNDER THE SECURITIES ACT (“RULE
144A’’) TO A PERSON THAT THE HOLDER AND ANY PERSON ACTING ON ITS BEHALF
REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER, (2) IN AN OFFSHORE
TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S
UNDER THE SECURITIES ACT OR (3) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER
(IF AVAILABLE), IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES. NO REPRESENTATION CAN BE MADE
AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 UNDER THE
94
SECURITIES ACT FOR RESALES OF THIS ORDINARY SHARE. NOTWITHSTANDING
ANYTHING TO THE CONTRARY IN THE FOREGOING, THE ORDINARY SHARE MAY NOT
BE DEPOSITED INTO ANY UNRESTRICTED DEPOSITARY RECEIPT FACILITY IN
RESPECT OF THE ORDINARY SHARE ESTABLISHED OR MAINTAINED BY A
DEPOSITARY BANK.
18.4 The Company, the Registrar, Davy and its affiliates, and others will rely upon the truth and accuracy
of the foregoing acknowledgements, representations and agreements. If it is acquiring any Ordinary
Shares for the account of one or more QIBs, it represents that it has sole investment discretion with
respect to each such account and that it has full power to make the foregoing acknowledgements,
representations and agreements on behalf of each such account.
Prospective purchasers are hereby notified that sellers of the Ordinary Shares may be relying
on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A.
19.
TAXATION
A3 – 4.11
IRISH TAXATION
The following is a general summary of the main Irish tax considerations applicable to certain Shareholders
who are the owners of Ordinary Shares. It is based on existing Irish law and our understanding of the
practices of the Irish Revenue Commissioners on the date of this document. Legislative, administrative or
judicial changes may modify the tax consequences described below. The statements do not constitute tax
advice and are intended only as a general guide. Furthermore, this information applies only to Ordinary
Shares that are held as capital assets and does not apply to all categories of shareholders, such as dealers in
securities, trustees, insurance companies, collective investment schemes or shareholders who have, or who
are deemed to have, acquired their shares by virtue of an office or employment. This summary is not
exhaustive and Shareholders and prospective investors should consult their own tax advisors as to the tax
consequences in Ireland, or other relevant jurisdictions of this offering, including the acquisition, ownership
and disposition of our shares.
19.1 Capital Gains Tax (“CGT’’)
The Shares constitute chargeable assets for Irish CGT purposes and, accordingly, Shareholders who
are resident or ordinarily resident in Ireland, depending on their circumstances, may be liable to Irish
tax on capital gains on a disposal of Shares. The Irish CGT rate is currently 33 per cent. An Irish
resident individual, who is a Shareholder who ceases to be an Irish resident for a period of less than
five years and who disposes of Ordinary Shares during that period, may in certain circumstances be
liable, on a return to Ireland, to CGT on any gain realised.
A Shareholder which is a company may qualify for the participation exemption from Irish CGT if
certain conditions are satisfied.
19.2 Taxation of Dividends
Irish resident Shareholders who are individuals will be subject to income tax, social security and the
universal social charge depending on their circumstances on the aggregate of the net dividend received
and the withholding tax deducted. The withholding tax deducted (currently at 20%) will be available
as a credit against the individual’s income tax liability. A Shareholder may claim to have the
withholding tax refunded to him to the extent that it exceeds his income tax liability. An Irish resident
Shareholder which is a company will not be subject to Irish corporation tax on dividends received
from the Company and tax will not be withheld at source by the Company provided the appropriate
declaration is validly made. A company which is a close company, as defined under Irish legislation,
may be subject to a corporation tax surcharge on such dividend income to the extent that it is not
distributed within the appropriate time frame; however, it may be possible for the Company and the
Shareholder company to make a joint election to ignore the dividend for close company purposes.
Shareholders who are Irish approved pension funds or Irish approved charities are generally exempt
95
from tax on their dividend income and will not have tax withheld at source by the Company from
dividends, provided the appropriate declaration is validly made.
UK resident Shareholders (including both individuals and companies) should not be subject to Irish
tax on dividends received. Irish withholding taxes should not be deducted from dividends paid to UK
resident Shareholders provided the appropriate declarations are validly made. However, UK resident
corporate Shareholders who are controlled by Irish residents, or UK resident individual Shareholders
who remain ordinarily resident in Ireland, may continue to be taxed in Ireland.
19.3 Irish Capital Acquisitions Tax
Capital Acquisitions Tax (CAT) covers both gift tax and inheritance tax. Irish CAT may be chargeable
on an inheritance or a gift of Shares as such shares would be considered Irish property,
notwithstanding that the gift or inheritance is between two non-Irish resident and non-ordinarily Irish
resident individuals. The current rate of CAT is 33 per cent. Shareholders should consult their tax
advisors with respect to the CAT implications of any proposed gift or inheritance of Shares.
19.4 Stamp Duty
Transfers or sales of Shares are currently subject to ad valorem stamp duty. This is generally payable
by the purchaser. The Irish rate of stamp duty on shares is currently 1 per cent of the greater of the
market value of, or consideration paid for, the shares.
As part of policy changes included in the 2014 Budget, an exemption from stamp duty is being
introduced in respect of the transfer of shares admitted to trading on the ESM market of the Irish Stock
Exchange. This change is subject to a commencement order before it comes into effect.
UK TAXATION
This summary only covers the principal UK tax consequences for the absolute beneficial owners of
Ordinary Shares and any dividends paid in respect of them, in circumstances where the dividends paid
are regarded for UK tax purposes as that person’s own income (and not the income of some other
person), and who are resident in the UK for tax purposes. In addition, the summary (i) only addresses
the tax consequences for holders who hold the Ordinary Shares as capital assets; (ii) does not address
the tax consequences which may be relevant to certain other categories of holders, for example,
dealers, charities, registered pension schemes, insurance companies, or collective investment
schemes; (iii) assumes that the holder does not control or hold directly or indirectly, either alone or
together with one or more associated or connected persons, 10 per cent. or more of the Ordinary
shares and/or voting power of the Company; (iv) assumes that there will be no register in the United
Kingdom in respect of the Ordinary Shares and that the sole register will be maintained in Ireland;
and (v) assumes that the Ordinary Shares will not be paired with shares issued by any company
incorporated in the United Kingdom.
The following paragraphs are intended as a general guide only, do not constitute tax advice and are
based on the Company’s understanding of current UK tax law and HM Revenue & Customs practice,
each of which is subject to change, possibly with retrospective effect.
Prospective investors who are in doubt about their tax position should consult their own appropriate
independent professional adviser.
19.5 Taxation of Chargeable Gains
A disposal of Ordinary Shares by a Shareholder who is resident in the UK may, subject to the
Shareholders, circumstances and any available exemption or relief, give rise to a chargeable gain
(or allowable loss) for the purposes of UK taxation of chargeable gains.
UK resident Shareholders within the charge to corporation tax on chargeable gains will be subject to
UK corporation tax (current rate 23%, reducing to 21% with effect from 1 April 2014) on the proceeds
96
received less the sum of the base cost of their Shares plus indexation allowance and incidental selling
expenses.
For UK resident Shareholders who are subject to capital gains tax, such as individuals, trustees and
personal representatives, an annual exemption is available, such that capital gains tax is chargeable
only on gains arising from all sources during the tax year in excess of this figure. The annual
exemption is Stg£10,900 for individuals for the tax year 2013-2014. Capital gains tax chargeable will
be at the current rate of 18 per cent (for basic rate taxpayers) and 28 per cent (for higher and additional
rate taxpayers) during the tax year 2013-2014.
A Shareholder who is not UK resident will not be subject to UK tax on a gain arising on a disposal
of Dalata Shares unless (i) the Shareholder carries on a trade, profession or vocation in the UK
through a branch, agency or permanent establishment and, broadly, holds the Dalata Shares for the
purposes of the trade, profession, vocation, branch, agency or permanent establishment or (ii) the
shareholder falls within the anti-avoidance rules applying to individuals who are temporarily not
resident in the UK.
Similar to the position with UK dividends, a UK resident Shareholder who is UK resident but non-UK
domiciled may elect to be taxed on the capital gain only when it is remitted to the UK. Detailed
UK tax advice should be obtained before considering whether to adopt the remittance basis of UK
taxation.
19.6 Dividends
No UK tax will be withheld by the Company when it pays a dividend.
A UK resident individual Shareholder who is liable to income tax at the basic rate will be subject to
tax on the gross dividend at the rate of 10 per cent.
A UK resident individual Shareholder who is a higher rate taxpayer will be liable to income tax on
the gross dividend at the rate of 32.5 per cent. Shareholders subject to the additional rate of tax will
be liable to income tax on the gross dividend at the rate of 37.5 per cent.
A UK resident individual Shareholder who holds less than 10 per cent of the issued shares in the
Company will be entitled to a tax credit, currently at the rate of 1/9th of the cash dividend paid (equal
to 10 per cent of the aggregate of the net dividend and related tax credit). The individual is treated as
receiving for tax purposes gross income equal to the cash dividend plus the tax credit. The tax credit
is set against the individual’s tax liability on that gross income. After taking account of any available
tax credit, a basic rate taxpayer’s liability will be eliminated (since the 10 per cent tax credit is deemed
to cover all that is due for a basic rate taxpayer), a higher rate taxpayer will pay tax at an effective rate
of 25 per cent and an additional rate taxpayer will pay tax at an effective rate of 30.56 per cent. UK
resident Shareholders who do not pay income tax or whose liability to income tax on the dividend and
related tax credit is less than the tax credit (including pension funds, charities and certain individuals)
are not entitled to claim repayment of any part of the tax credit associated with the dividend from
HM Revenue & Customs.
UK resident individual Shareholders who hold their shares in an Individual Savings Account are
exempt from tax on dividends paid by the Company.
A UK resident corporate Shareholder will in principle be subject to corporation tax on any dividend
received from the Company, currently 23 per cent for companies paying the main rate of corporation
tax, but subject to possible exemption under the rules for the taxation of corporate distributions
depending on whether the dividend falls within qualifying exempt classes. Shareholders are advised
to seek specific tax advice on this when completing UK corporation tax returns.
UK resident Shareholders will not have any Irish tax withheld from dividends paid by the Company
(whether individual or corporate shareholders) provided relevant declarations are validly made. A UK
resident individual Shareholder who is non-UK domiciled can elect to be taxed on the dividend only
97
when it is remitted to the UK. This is a complex area of UK taxation and specific detailed advice
should be obtained before taking any action in this regard. For example, if you are regarded as a
“long-term’’ resident (ie resident in the UK for 7 of the last 9 tax years) you will be required to pay
an annual charge of Stg£30,000 to enable the remittance basis of taxation to be used (this increases to
Stg£50,000 for those who have been UK resident for at least 12 of the previous 14 years).
19.7 UK Stamp Duty and Stamp Duty Reserve Tax (“SDRT’’)
No stamp duty or SDRT will be payable by a Shareholder on the allotment, issue or registration of
Dalata Shares.
Since the Company is incorporated outside of the UK no SDRT should apply to agreements to transfer
the Dalata Shares provided that the Dalata Shares will not be registered on any register kept in the UK
and are not paired with shares issued by a body corporate incorporated in the UK. Legal instruments
transferring the Dalata Shares should not be within the scope of UK stamp duty provided that such
instruments are executed outside of the UK and do not relate to any matter or thing done or to be done
in the UK. Where such an instrument is chargeable to stamp duty in both the UK and Ireland and has
been duly stamped in one of those countries it is deemed to be stamped in the other country up to the
amount of duty it bears but must be stamped for any excess.
The above comments are intended as a guide to the general UK stamp duty and SDRT position.
Special rules apply to persons such as market intermediaries, charities, persons connected with
depositary arrangements or clearance services and to certain sale and repurchase and stock borrowing
arrangements.
20.
MANDATORY BIDS, SQUEEZE-OUT AND BUY-OUT RULES
20.1 Mandatory bids
Following Admission, the Company will be a public limited company incorporated in Ireland and its
Ordinary Shares will be admitted to trading on AIM and ESM. As a result, Dalata will be subject to
the provisions of the Irish Takeover Rules. The Irish Takeover Rules regulate acquisitions of the
Company’s securities.
Rule 5 of the Irish Takeover Rule prohibits the acquisitions of securities or rights over securities in a
company, such as the Company, in respect of which the Irish Takeover Panel has jurisdiction to
supervise, if the aggregate voting rights carried by the resulting holding of securities the subject of
such rights would amount to 30% or more of the voting rights of that company. If a person holds
securities or rights over securities which in aggregate carry 30% or more of the voting rights, that
person is also prohibited from acquiring securities carrying 0.05% or more of the voting rights, or
rights over securities, in a 12 month period. Acquisitions by and holdings of concert parties must be
aggregated. The prohibition does not apply to purchases of securities or rights over securities by a
single holder of securities (including persons regarded as such by under the Irish Takeover Rules) who
already holds securities, or rights over securities, which represent in excess of 50% of the voting
rights.
Rule 9 of the Irish Takeover Rule provides that where a person acquires securities which, when taken
together with securities held by concert parties, amount to 30% of more of the voting rights of a
company, that person is required under Rule 9 to make a general offer – a “mandatory offer’’ – to the
holders of each class of transferable, voting securities of the Company to acquire their securities. The
obligation to make a Rule 9 mandatory offer is also imposed on a person (or persons acting in concert)
who holds securities conferring 30% or more of the voting rights in a company and which increases
that stake by 0.05% or more in any 12 month period. Again, a single holder of securities (including
persons regarded as such under the Irish Takeover Rules) who holds securities conferring in excess of
50% of the voting rights in a company may purchase additional securities without incurring an
obligation to make a Rule 9 mandatory offer. There have been no mandatory takeover bids nor any
public takeover bids by third parties in respect of the share capital of the Company in the last financial
year or in the current financial year to date.
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A3 – 4.9
20.2 Squeeze-out and buy-out rules
Under the Companies Acts, if an offeror were to acquire 80 per cent of the issued share capital of a
company within four months of making a general offer to shareholders, it could then compulsorily
acquire the remaining 20 per cent. In order to effect the compulsory acquisition, the offeror would
send a notice to outstanding shareholders telling them that it would compulsorily acquire their shares.
Unless determined otherwise by the High Court of Ireland, the offeror would execute a transfer of the
outstanding shares in its favour after the expiry of one month. Consideration for the transfer would be
paid to the company, which would hold the consideration on trust for the outstanding shareholders.
Where an offeror already owned more than 20 per cent of the Company at the time that the offeror
made an offer for the balance of the shares, compulsory acquisition rights would only apply if the
offeror acquired at least 80 per cent of the remaining shares that also represented at least 75 per cent
in number of the holders of those shares.
The Companies Acts also give minority shareholders a right to be bought out in certain circumstances
by an offeror who has made a takeover offer. If a takeover offer related to all of the issued share
capital, and at any time before the end of the period within which the offer could be accepted, the
offeror held or had agreed to acquire not less than 80 per cent of the issued share capital, any holder
of shares to which the offer related who had not accepted the offer could, by a written communication
to the offeror, require it to acquire those shares. The offeror would be required to give any
shareholders notice of their right to be bought out within one month of that right arising.
20.3 Substantial Acquisition Rules
The Substantial Acquisition Rules are designed to restrict the speed at which a person may increase a
holding of voting securities (or rights over such securities) of a company which is subject to the Irish
Takeover Rules, including the Company. The Substantial Acquisition Rules prohibit the acquisition
by any person (or persons acting in concert with that person) of shares or rights in shares carrying
10% or more of the voting rights in the Company within a period of 7 calendar days if that acquisition
would take that person’s holding of voting rights to 15% or more but less than 30% of the voting rights
in the Company.
20.4 Irish Merger Control Legislation
Under Irish merger control legislation, any person or entity proposing to acquire direct or indirect
control of the Company through the acquisition of Ordinary Shares or otherwise must, subject to
various exceptions and if certain financial thresholds are met or exceeded, provide advance notice of
such acquisitions to the Irish Competition Authority which notification would be available on the Irish
Competition Authority’s website. The financial thresholds to trigger mandatory notification are,
subject to certain exceptions, (a) the world-wide turnover of each of two or more of the undertakings
involved in the merger or acquisition is not less than €40,000,000, and (b) each of two or more of the
undertakings involved in the merger or acquisition carries on business in any part of the island of
Ireland, and (c) the turnover in the State of any one of the undertakings involved in the merger or
acquisition is not less than €40,000,000. Failure to notify properly is an offence under Irish law. The
Competition Act 2002, as amended, defines “control” as existing if, by reason of securities, contracts
or any other means, decisive influence is capable of being exercised with regard to the activities of a
company. Under Irish law, any transaction subject to the mandatory notification obligation set out in
the legislation (or any transaction which has been voluntarily notified to the Irish Competition
Authority) will be void, if put into effect before the approval of the Irish Competition Authority is
obtained or before the prescribed statutory period following notification of such transaction lapses
without the Irish Competition Authority having made an order.
21.
NO SIGNIFICANT CHANGE
A1 – 20.9
There has been no significant change in the financial or trading position of the Group since 31 December
2013, being the date to which the last audited financial information has been published (see Part III).
99
22.
CONSENTS
KPMG has given and has not withdrawn its consent to the issue of this document and the inclusion herein
of its report in Part III of this document and the references to such report and to its name in the form and
context in which they appear.
Davy, which is regulated by the Central Bank of Ireland, has given and has not withdrawn its written consent
to the issue of this document with the inclusion herein of the references to its name in the form and context
in which it appears.
23.
GENERAL
23.1 The total costs and expenses relating to Admission and payable by the Company are estimated to
amount to approximately €10 million excluding value added tax.
A3 – 8.1
23.2 The liability of members of the Company is limited to the amount, if any, unpaid on their shares held
by them in the capital of the Company.
23.3 Save as disclosed in this document, the Directors are unaware of any exceptional factors which have
influenced the Company’s activities.
23.4 Save as disclosed in this document, the Directors are not aware of any patents or other intellectual
property rights, licenses or particular contracts which are or may be of fundamental importance to the
Company’s business.
23.5 There are no investments by the Group in progress which are significant.
23.6 KPMG Chartered Accountants, whose registered address is 1 Stokes Place, St. Stephen’s Green,
Dublin 2, a partnership whose members are Chartered Accountants, is Dalata’s auditor and audited
the accounts of Dalata for the financial years ended 31 December 2011, 31 December 2012 and
31 December 2013.
23.7 As at the date of this Document, the Group employs 993 employees, including the Executive
Directors.
23.8 Save as disclosed in this document, no person (excluding the Company’s professional advisers to the
extent disclosed elsewhere in this document and trade suppliers) in the 12 months preceding the
Company’s application for Admission received, directly or indirectly, from the Company or has
entered into any contractual arrangements to receive, directly or indirectly, from the Company on or
after Admission any of the following:
1.2
fees totalling either £10,000, €14,000 or more;
1.3
securities in the Company with a value of either Stg £10,000, €14,000 or more; or
1.4
any other benefit with a value of either Stg £10,000, €14,000 or more at the date of Admission.
23.9 This document has not been approved by the Central Bank of Ireland or the Financial Conduct
Authority of the UK.
23.10 No new Ordinary Shares are being made available, in whole or in part, to the public in conjunction
with the application for Admission.
23.11 Dalata Hotel Group p.l.c. Shares will be in registered form, and capable of being held in uncertificated
form, and will be admitted to listing on AIM and ESM.
23.12 Where information has been sourced from a third party this information has been accurately
reproduced. So far as the Company is aware and is able to ascertain from information published by
that third party, no facts have been omitted which would render the reproduced information inaccurate
or misleading.
100
A1 – 2.1, 20.4.1
23.13 There is no fixed date on which any Shareholders’ entitlements to dividends arises.
Dated: 19 March 2014
101
DEFINITIONS
The following definitions apply throughout this Document, unless the context requires otherwise:
“Acts” or “Companies Acts”
the Companies Acts 1963 – 2013;
“Admission”
admission of the Ordinary Shares to trading on AIM and ESM
becoming effective in accordance with the AIM Rules and the ESM
Rules respectively;
“Admission Document” or
“Document”
this document dated 19 March 2014;
“AIM”
the market of that name operated by the London Stock Exchange;
“AIM Rules”
the rules for AIM companies and their nominated advisers, issued
by the London Stock Exchange in relation to AIM traded securities;
“Articles” or “Articles of Association” the articles of association of the Company;
“Board” or “Directors”
the board of directors of the Company, whose names are set out on
page 3 of this document including a duly constituted committee of
the Directors;
“Business Day”
a day, other than a Saturday, Sunday or public holiday when banks
are normally open for the transaction of normal banking business in
Dublin;
“Choice Portfolio”
The portfolio of 11 hotels acquired from Choice Hotels Ireland in
2007;
“Combined Code”
the UK Corporate Governance Code published by the Financial
Reporting Council in September 2012 (as amended);
“the Company”
Dalata Hotel Group p.l.c.;
“CREST”
the relevant system for the paperless settlement of trades and the
holding of uncertificated securities operated by Euroclear UK &
Ireland Limited in accordance with the CREST Regulations;
“CREST Regulations”
the Companies Act 1990 (Uncertificated Securities) Regulations
1996 (SI No. 68 of 1996);
“Davy”
J&E Davy, trading as Davy including its affiliate Davy Corporate
Finance and other affiliates, or any of its subsidiary undertakings;
“EEA”
the European Economic Area;
“Enlarged Issued Share Capital”
the entire of the issued share capital of the Company immediately
following Admission (including all Ordinary Shares issued on
conversion of the Existing Loan Notes) and the Placing Shares
being in aggregate 122,000,000 Ordinary Shares;
“EBITDA”
earnings before interest, tax, depreciation and amortisation;
“ESM”
the Enterprise Securities Market operated and regulated by the Irish
Stock Exchange;
“ESM Rules”
the rules for ESM companies and their ESM advisers, issued by the
Irish Stock Exchange in relation to ESM traded securities;
102
“EU”
the European Union;
“Existing Issued Share Capital”
16,000,000 Ordinary Shares being the number of fully paid up
Ordinary Shares in issue as at 13 March 2014 (being the latest
practicable date prior to the publication of this Document);
“Existing Loan Notes”
€31,496,850 9% fixed rate loan notes 2007 originally issued by
Dalata Limited, and were assumed by and novated to the Company
on 21 February 2014;
“Existing Shareholder and
Board/SMT Offer”
means an offer made by the Company dated 5 March 2014 to
existing Shareholders, the Board and certain members of the senior
management team of Dalata to subscribe for Ordinary Shares at the
Placing Price;
“FSMA”
Financial Services and Markets Act 2000 (UK);
“Group” or “Dalata”
the Company and its subsidiaries;
“Ireland”
the island of Ireland, and the word “Irish” shall be construed
accordingly;
“Irish Stock Exchange”
The Irish Stock Exchange Limited;
“Irish Takeover Rules”
the Irish Takeover Panel Act, 1997 Takeover Rules, 2013;
“Issued Share Capital”
such Ordinary Shares as are in issue from time to time;
“LTIP”
the Dalata Hotel Group p.l.c. Long Term Incentive Plan 2014;
“London Stock Exchange”
London Stock Exchange p.l.c.;
“NAMA”
the National Asset Management Agency of Ireland;
“Official List(s)”
the official list maintained by the UKLA and/or the official list
maintained by the Irish Stock Exchange, as the context may require;
“Ordinary Shares”
the ordinary shares of €0.01 each in the capital of the Company;
“Placing”
the placing of 106,000,000 new Ordinary Shares described in
section 10 of Part I of this Document;
“Placing Shares”
the 106,000,000 new Ordinary Shares to be allotted and issued by
the Company pursuant to the Placing;
“Placing Agreement”
the conditional agreement dated 14 March 2014 between Davy, the
directors and the Company, relating to, inter alia, the Placing (other
than the Existing Shareholder and Board/SMT Offer), details of
which are set out in section 13.1 of Part IV of this Document;
“Placing Price”
the price €2.50 per Placing Share;
“Prospectus Directive”
EU Directive 2003/71/EC (as amended);
“Qualified Investor”
“qualified investor” as that term is defined in article 2(1)(e) of the
Prospectus Directive;
“Registrar”
the Company’s registrars, being Computershare Investor Services
(Ireland) Limited, at Heron House, Corrig Road, Sandyford
Industrial Estate, Dublin 18;
“Shareholders”
holders of Ordinary Shares;
103
“UK” or “United Kingdom”
the United Kingdom of Great Britain and Northern Ireland;
“UKLA”
UK Listing Authority, which is the Financial Services Authority
acting in its capacity as the competent authority pursuant to Part VI,
FSMA;
“uncertificated” or “in
uncertificated form”
shares recorded on the register of members of the Company as
being held in uncertificated form in CREST and title to which, by
virtue of the CREST Regulations, may be transferred by means of
an instruction issued in accordance with the rules of CREST;
“USA” or “United States”
the United States of America, its territories and possessions, any
state of the United States of America, the District of Columbia and
all other areas subject to the jurisdiction of the United States of
America.
104
105
106
sterling 163036