Accor - 2009 Annual Results
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Accor - 2009 Annual Results

PARIS // PRNewswire-FirstCall // -- 2009 Operating Profit Before Tax(1) of EUR448 Million, at the Upper End of the EUR400-450 Million Target

Dividend of EUR1.05 per share recommended at the June 29, 2010 Annual Meeting

Prepaid Services: resilient EBITDAR margin despite a difficult economic and business environment

Hotels: limited decline in EBITDAR margin thanks to greater than expected cost-savings

- Operating profit before tax and non-recurring items: EUR448
million, at the upper end of the announced EUR400-450 million target,
despite the EUR39 million negative impact from the devaluation of the
Venezuelan bolivar
- Limited 1.5 point decline in EBITDAR margin to 28.0%
- Net loss of EUR282 million due to the impact of impairment losses and
restructuring costs totaling EUR514 million
- Solid financial position, with a funds from operations/adjusted net
debt ratio of 20.0%(2); EUR2.5 billion in unused confirmed lines of

2009 Results

(in EUR millions) 2008(4) 2009 Change Change
(reported) (like-for-like)(3)
Revenue 7,722 7,065 - 8.5% - 7.9%
EBITDAR 2,290 1,976 - 13.7% - 12.5%
EBITDAR margin 29.7% 28.0% -1.7 pts -1.5 pts
Operating profit before tax 875 448 - 48.9% - 38.0%
and non-recurring items
Operating profit before 603 328 - 45.6% n/a
non-recurring items, net of
Net loss, Group share 575 (282) n/a n/a

1: Operating profit before tax and non-recurring items
2: Adjusted funds from operations to adjusted net debt is calculated
with net debt adjusted for the 8% discounting of future minimum
lease payments.
3: Excluding changes in scope of consolidation and exchange rates
4: Impact of the retrospective application of IFRIC 13 - Customer Loyalty
Programs from January 1, 2008

- Operating profit before tax and non-recurring items of EUR448 millions

Consolidated revenue totaled EUR7,065 million in 2009, representing a decline of 7.9% at comparable scope of consolidation and exchange rates (like-for-like) and of 8.5% as reported. Reported revenue was adversely impacted by a difficult economic environment as well as by asset disposals (which reduced growth by 3.5%) and the negative 1.4% currency effect.

  • The slight 1.4% like-for-like increase in Prepaid Services revenue (down 3.6% as reported), including operating revenue rise of 3.9% like-for-like reflected its strong, sustainable growth fundamentals, in spite of the year's exceptionally severe global crisis. Financial revenue was down 15.0% like-for-like by the fall in interest rates.
  • Hotels revenue contracted by 10.1% like-for-like and 9.8% on a reported basis, highlighting the greater resilience of the Economy segment in Europe and reflecting a slight upturn in business at year- end. In all, revenue declined by 6.1% in the Economy segment, 11.5% in Upscale and Midscale hotels, and 13.8% in the US Economy segment, which has yet to show any signs of a recovery.

Consolidated EBITDAR amounted to EUR1,976 million, for an EBITDAR margin of 28.0%, down 1.7 points as reported and 1.5 points like-for-like compared with 2008.

  • Prepaid Services showed a limited 0.3 point like-for-like decline in EBITDAR margin to 41.8%, confirming its resilience despite rising unemployment and falling interest rates. Adjusted for financial revenue, EBITDAR margin rose by 1.2 points like-for-like. EBITDAR margin on issue volume amounted to 3.2% in Europe and 3.3% in Latin America.
  • EBITDAR margin in the Hotels business contracted by 2.6 points like-for-like to 29.1%. Like-for-like margin declines were limited in Upscale and Midscale hotels (down 2.5 points, of which 4.1 points in the first half and 1.0 point in the second) and in the Economy segment (down 1.7 points, of which 2.3 points in the first half and 1.1 point in the second) thanks to the deployment of significant cost-cutting plans during the year, which reduced operating costs by EUR165 million, versus a target of EUR150 million, and support costs by EUR87 million, versus a target of EUR80 million. Response ratios stood at 53.3% in the Upscale and Midscale segment and 37% in the Economy segment. EBITDAR margin in the US Economy Hotels business continued to decline, losing 6.6 points like-for-like during the year in a still deeply unfavorable economy.

Operating profit before tax and non-recurring items amounted to EUR448 million for the year, at the upper end of the target announced in August 2009, despite the EUR39 million negative impact from the devaluation of the Venezuelan bolivar. This represented a 38.0% decline like for-like, of which 44.5% in the first half and 32.7% in the second.

  • A loss for the year, heavily impacted by impairment losses and restructuring costs

The net loss, Group share came to EUR282 million for the year, reflecting the following factors:

  • EUR387 million in impairment losses, of which write-downs of EUR113 million on Motel 6 goodwill and EUR100 million on Kadeos Intangible assets.
  • EUR127 million in restructuring costs.

The loss per share stood at EUR1.27, compared with earnings of EUR2.60 per share in 2008, based on the weighted average 223 million shares outstanding during the year.

Before taking into account the above-mentioned non-recurring items, operating profit before

non-recurring items, net of tax amounted to EUR328 million, versus EUR603 million in 2008. Operating profit before non-recurring items, net of tax per share came to EUR1.47, down 46% from 2008.

At the Annual Meeting on June 29, 2010, shareholders will be asked to approve the payment of a dividend of EUR1.05 per share, compared with EUR1.65 the year before. This would represent a payout of more than 70% of 2009 operating profit before tax and non-recurring items.

  • A solid financial position

Net debt stood at EUR1,624 million at December 31, 2009. Cash outflows for the year included two non-recurring items: the acquisition of an additional 15% interest in Groupe Lucien Barriere for EUR271 million and the payment of EUR242 million to the French State in settlement of tax assessments on Compagnie Internationale des Wagons Lits. Adjusted for these two items, cash flow for the year would have been break-even.

Recurring cash flow items include:

  • EUR327 million in renovation and maintenance expenditure, in line with objectives and down EUR161 million from 2008 thanks to disciplined capital expenditure management.
  • EUR495 million in expansion expenditure (excluding the Groupe Lucien Barriere put), representing a decline of EUR596 million Over the year compared to 2008.
  • EUR363 million in proceeds from disposals of assets, primarily stemming from sustained implementation of the Group asset- right strategy (216 hotels were sold in 2009 for EUR290 million), despite the particularly unfavorable real estate market during the year.
  • EUR396 million in dividends paid in 2009.

As of December 31, 2009, Accor had EUR2.5 billion in unused, confirmed lines of credit and no major refinancing needs before 2012.

The main financial ratios attest to the solidity of the Group's financial position. Gearing stood at 50% at December 31, 2009, while the ratio of funds from operations before non-recurring items to adjusted net debt[1] came to 20.0%.

Return on capital employed (ROCE)[2] amounted to 10.5% at December 31, 2009, versus 14.1% a year earlier.

  1. Funds from operations before non-recurring items corresponds to cash flow from operating activities before non-recurring items and changes in working capital requirement. The ratio of funds from operations before non-recurring items to adjusted net debt is calculated according to a method used by the main rating agencies, with net debt adjusted for the 8% discounting of future minimum lease payments and funds from operations adjusted for interest expense on these payments.
  2. Corresponding to EBITDA expressed as a percentage of fixed assets at cost plus working capital

Sustained deployment of the asset-right strategy in a depressed real estate market

A total of 216 hotels were restructured in 2009, leading to a EUR360 million reduction in adjusted net debt over the year.

In particular, 157 hotelF1 properties representing 12,174 rooms were sold and leased back in the second half, a major transaction that enabled Accor to reduce its adjusted net debt by EUR214 million in 2009.

As of December 31, 2009, 60% of the rooms in the hotel base were held under variable-rent leases, management contracts or franchise agreements.

In February 2010, the Group announced the further sale of five hotels, comprising more than 1,100 rooms in four European countries. Undertaken with the Invesco Real Estate hotel investment fund, the transaction covered the sale and variable leaseback of two Novotel and two Mercure units and the sale and management-back of one Pullman property. The EUR154 million disposal will have a EUR93 million impact on adjusted net debt in 2010.

A dynamic hotel expansion drive, aligned with new market realities

To optimize earnings, Accor is focusing its expansion capital expenditure on the Economy Hotels outside the US segment and emphasizing asset-light operating structures in the Upscale and Midscale segment.

Of the more than 27,300 new rooms opened in 2009, for example, more than 80% were in the Economy and Midscale segments and 81% concerned asset-light ownership structures based on variable-rent leases, management contracts or franchise agreements. Most of the rooms were opened in high potential regions, such as Asia (35%) and Europe (32%).

As of December 31, 2009, there were around 103,000 rooms in the pipeline, of which half were in the Economy or Budget segments and more than 85% were held under asset-light structures.

2010 trends and outlook

- Hotels

With the exception of Economy Hotels in the US, occupancy rates continued to stabilize in January 2010, in line with the December 2009 trend. In the Upscale and Midscale segment in Europe, occupancy rate rose 0.3 points over the month, compared with an increase of 0.4 points in December and a decline of 2.8 points in November. In Economy Hotels in Europe, the rate was down 2.2 points in January, versus declines of 1.6 points in December and 5.2 points in November. Average room rates generally stabilize three to nine months after occupancy rates.

- Prepaid Services

The sustained rise in unemployment, particularly in Europe, is expected to further impact growth in operating revenue, notably in the first half. The environment should be more favorable in emerging markets, where the increase in people in work is expected to drive stronger revenue growth.

Financial revenue, on the other hand, will continue to be held back by declining interest rates in the first half, before stabilizing in the second half.

Upcoming events

  • April 20: First-quarter revenue
  • June 29: Extraordinary Shareholders' Meeting

Accor, a major global group and the European leader in hotels, as well as the global leader in services to corporate clients and public institutions, operates in nearly 100 countries with 150,000 employees. It offers to its clients over 40 years of expertise in two core businesses:

  • Hotels, with the Sofitel, Pullman, MGallery, Novotel, Mercure, Suitehotel, Adagio, ibis, all seasons, Etap Hotel, Formule 1, hotelF1 and Motel 6 brands, representing 4,100 hotels and nearly 500,000 rooms in 90 countries, as well as strategically related activities, Thalassa sea&spa, Lenotre, CWL.
  • Services, with 33 million people in 40 countries benefiting from Accor Services products in employee and constituent benefits, rewards and incentives, and expense management.




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