PPHE Hotel Group Limited

Good morning and welcome to the PPHE Hotel Group Limited four-year results investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and they can be submitted anytime just by using the Q&A tab that's situated in the top right corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review the questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll. And now I'd like to hand you over to CEO Greg Hegarty. Good morning, sir.

Good morning and thank you. Good morning, everyone. And welcome to our 2024 full year annual results presentation. I'm Greg Hegarty, co-CEO of the PPHE Hotel Group. And I'm pleased to be joined today by Daniel Koss, our CFO, and Robert Henke, our EVP commercial. 2024 has been an exciting year for PPHE. as we near completion of our £300 million pipeline, delivering four new hotels across four European capitals. So without showing you too much, I think it'll be good to, before we dive into those numbers, I think it'll be good to show you a short video of our up and coming new hotel in Rome and our key investments.

Thank you, Alessandra, for showing that video. As Greg said, this has been an exciting year for PPHE Hotel Group. So allow me to introduce PPHE to those that are new to the story. PPHE is a hospitality real estate company. We're FTSE 250 listed and we currently have a portfolio of 51 properties in operation. The vast majority of those are city center hotels. We also have a number of resorts as well as eight campsites in Croatia. What we do as property owners, we have our properties valued annually by external valuators. So in our books that historical costs, but they're valued against market values. And we're currently sitting at 2.2 billion pounds. What makes PPHE unique in the hospitality real estate segment is that we own, develop and operate hotels. Whereas a lot of our peers tend to focus on just development or owning assets, or maybe operational, sort of agreements for hotels, we manage all of this in our own group. Our vision is to not only grow the real estate side of our business by acquiring and developing properties, repositioning assets, but we also want to grow our in-house management platform and Greg will touch on that a bit later in the presentation. So what sets us apart as sort of owners and operators of assets? There's a number of factors that differentiate us. So first of all, the business model, as I said, typically We operate in one pillar, we operate across all three, keeping all that value within the group. So investors in PPHE have exposure to each element of the value chain, but also the benefits and upside that comes with that. We have a strong preference for developing assets either ground up, so we tend to buy land sites and have ground up developments, But we've also in our history have bought into offices and converted those into hotels or we acquired hotels in need of investment. So we buy a hotel with what we call repositioning potential. So we buy an asset, we invest and relaunch the property in a different market class, generating different returns. So that's where our shareholders benefit. Our key markets are all within Europe. So we have eight countries that we currently have a presence in. And our most important markets from a property point of view are London and Amsterdam, as well as a presence in Croatia, which is strong, and then Germany. And we have seen in the video that we're about to enter Italy as our eighth marketplace. The second part that makes us unique is our capital structure. So our company went public in 2007 and we haven't diluted shareholders since, despite delivering a number of growth phases for the group. How we've been doing this for the past 35 years since our business started is by constantly recycling capital. So we typically buy an asset. We've taken out loans sometimes, and then after a few years, once the property is more established and stable, we refinance, extract some of the capital and reinvest in the next opportunity. Or we have partnered, for example, with JV Partners, bringing us extra capital to fund our future growth. The last part of our pillar is the unique element of our management platform. So it's a one-stop shop that we operate. So in our business, we have all disciplines in-house. to develop, acquire, but then also operate and commercially drive the performance of each of the assets. And we'll go through a bit more detail later. From a commercial perspective, we use a lot of Radisson's brands, some of those on their exclusive agreements, and some of those are very competitive arrangements. So we tap into the different segments in the hotel market, from upscale to luxury, and we have the commercial brands to drive the performance. In a nutshell, This is a fairly dark slide, but this summarizes what we do. We buy, we build, we operate, we extract capital and invest in the next cycle of growth, driving the shareholder returns. In terms of the portfolio geographic spread, as I said, London and Amsterdam are our most important capital city markets. We are currently active in seven capitals, so London, Amsterdam, soon Rome, But we also have a presence in Berlin, in Belgrade, in Zagreb and in Budapest. So we are currently active in 16 cities altogether, as well as some resort destinations in Croatia and a mountain resort in Austria. So more than 70% of our property values sits in London and Amsterdam, which are very high barrier to enter markets. So it's very difficult these days to establish a strong foothold in markets like London and Amsterdam because of planning regulations or hotel stops. We are in the unique position that we have a strong foothold in those places already. and more than 75% of our asset value of the 2.2 billion pounds is on a freehold basis. The remainder tends to be along leaseholds in the form of ground-based structures, which are typically over 800 years. As I said at the beginning, our 2.2 billion pound portfolio is in our books at historical cost minus depreciation, whereas the valuators use a DCF model and you can see the discount rates on this slide. So typically in city centres, the discount rate they use is 7.75 or 7.8, going up to about 11 percentage points in the resort locations. What we'll focus on next is the management arm of our business. Greg, do you want to cover this?