- Growth momentum in operating performance slowed by the first
effects of the Covid-19 crisis
- Financing secured
- Change Up strategic plan underway
Regulatory News:
Pierre & Vacances-Center Parcs
(Paris:VAC):
I. Main highlights
Impact of Covid-19 health crisis on the Group’s activities
and financings
In application of the health emergency measures decided by
government authorities in the countries where Pierre &
Vacances-Center Parcs is located, the Group closed virtually all of
the sites it operates over the period spanning from mid-March to
early June.
For the first half of the financial year (1 October to 31
March), lost earnings in terms of accommodation revenue stood at
€31 million due to the halt to activity over the last two weeks of
March. Third quarter revenue will be the worst hit, with two months
of no activity and a very gradual recovery in June.
In this backdrop, exceptional measures were implemented to
reduce costs and preserve cash: flexibility of staff costs through
partial unemployment, adapting on-site spending, rental payments
suspended over the closure period. In addition, negotiations are
underway with property-owner investors concerning the impact of the
crisis on the financial terms of the lease.
The Group also mobilised all of its financing sources in order
to overcome the period of lacking tourism revenues. On 31 March
2020, available cash therefore totalled €253 million. In addition,
and given uncertainty related to the pace of the recovery in
activity, the Group was granted a €240 million state-backed loan by
its pool of banks. In addition, banking and bond lenders
unanimously agreed to renounce the Group’s commitment to respect
its financial ratio on 30 September 2020 and provided additional
room to manoeuvre for the ratio to respect on 30 September 2021.
Elsewhere, the maturity on the €200 million revolving credit line,
initially maturing in March 2021, was prolonged by 18 months.
The fact that the Group was granted these financial arrangements
and the state-backed loan illustrates the confidence our financial
partners have in our ability to manage this difficult period and to
capture the growth expected in demand from family customers for
local tourism holidays once the lockdown period ends.
Change Up strategic plan
On 29 January 2020, the Pierre & Vacances-Center Parcs Group
presented its strategic plan for 2024, Change Up.
This plan aims to boost organic growth in the Group's businesses
by optimising current operating assets, and to implement a
selective development process based on strict profitability
criteria.
The financial targets of this plan are as follows:
- Average annual growth in accommodation
revenue of 6% (or 4.7% same-structure growth),
- Current operating margin from the tourism
business lines of 5% in 2022 and 9% in 2024.
- Cash generation of around €350 million for
the period of the plan, underpinned by savings of €50 million.
For further information on the Change Up plan, please refer to
the press release and presentation of 29 January 2020, available on
the Group website: www.groupepvcp.com
The Group’s operating performance on 15 March 2020, prior to the
announcement of measures related to the health crisis, were ahead
of the targets set in the Change Up plan. Same-structure tourism
revenue was up 6.7% (vs. +4.7% expected on an average annual
basis), driven by the Center Parcs division, which benefited from
the first effects of renovation works at the domains.
The plan’s deployment also continued during the lockdown
period:
- operationally, through renovation works at
the Center Parcs domains in the Netherlands, Belgium and
Germany,
- socially, through the
information/consultation process of the Social and Economic
Committee for the structure transformation project, which was
completed on 14 April 2020, when the Committee gave its opinions.
On 10 June, the French Regional Company, Competitions, Consumption,
Work and Employment Board (DIRECCTE) also validated the job
safeguard plan (PSE), which is a prior requirement for its
implementation.
- the cost-cutting plan is currently being
rolled out (securing savings expected for the duration of the plan
and first savings achieved on marketing spend).
II. Revenue and net income for the first
half of 2019/2020 (1 October 2019 to 31 March 2020)
Note:
The financial elements and sales indicators commented on in this
press release stem from operating reporting, which is more
representative of the performances and economic reality of the
contribution of each of the Group’s businesses i.e. :
- excluding the impact of IFRS16 application
for all the financial statements, a standard applied to the primary
consolidated financial states for the first time for this current
half-year period;
- with the presentation of joint undertakings
in proportional consolidation (i.e. excluding application of IFRS
11) for profit and loss items (with no change relative to the
presentation of the Group’s historical operating reporting)
A reconciliation table with the primary financial statements is
present in the appendix to this press release.
2.1. Revenue
€ millions
2019/2020 according to
operating reporting
2018/2019 according to
operating reporting
Change
Change Like-for-like*
Tourism
547.4
543.5
+0.7%
Pierre & Vacances Tourisme Europe
226.8
243.5
-6.9%
Center Parcs Europe**
320.6
299.9
+6.9%
o/w accommodation revenue
367.1
367.6
-0.1%
+6.7%
Pierre & Vacances Tourisme Europe
155.8
170.1
-8.4%
+2.0%
Center Parcs Europe**
211.3
197.5
+7.0%
+10.2%
Property development
148.6
194.7
-23.7%
Total H1
696.0
738.1
-5.7%
* Adjusted for the impact of:
- the closure of the sites as of mid-March 2020 (adjusted for
accommodation revenue generated during the same period in 2018/19,
or €31 million)
- in the PVTE division, a net reduction in the network operated
related to:
- for mountain resorts: the impact of the non-renewal of leases,
partly offset by the opening of 2 new residences in Meribel and
Avoriaz;
- for the Adagio residences: the impact of site renovations
(non-commercialised stock), partly offset by the annualised
operation of 3 residences and the delivery of a residence in
Paris.
- for the CPE division, net growth in the network operated,
primarily related to resumed operation of the Center Parcs Ailette,
closed for renovation during Q1 2018/2019 and the Center Parcs
Allgau, partly operated during Q1 of the previous year.
- one additional holiday day in Q1 2019/20 vs. Q2/2018/19.
** including Villages Nature Paris (€13.4m over H1 2019/2020, of
which €9.4m in accommodation revenue)
H1 2019/2020 revenue from the tourism businesses totalled
€547.4 million, up +0.7% relative to H1
2018/2019.
This stability stemmed from:
- excellent operating performances for all
brands, achieved over the half-year period prior to the crisis,
with growth in accommodation turnover of 6.7%;
- the impact of the Covid-19 crisis, which
resulted in lost accommodation revenue of €31 million (€15 million
for the Pierre et Vacances Tourisme Europe division and €16 million
for the Center Parcs Europe division) related to the closure of
virtually all our sites over the second half of March.
Growth in accommodation revenue of 6.7% excluding Covid-19 was
primarily driven by the rise in net average letting rates and
concerned both:
- Center Parcs Europe: +10.2%
like-for-like.
Growth seen in the first quarter (+9.3%)
increased during Q2 (+11.5%). Growth in activity concerned both the
domains located in the Netherlands, Germany and Belgium (+11.1%)
over the half-year period and the French domains (+8.9%, o/w +7.4%
for the Center Parcs domains, and +19.7% for Villages Nature
Paris).
- Pierre & Vacances Tourisme Europe:
+2.0% like-for-like.
This performance was driven by mountain
residences (+3.2%), which benefited from higher net average letting
rates of almost 8% and an average occupancy rate of 93% in Q2, and
from all the seaside destinations (+3.2%). Activity at the Adagio
residences was stable over the period.
- Revenue from property development
H1 2019/2020 property development revenue totalled €148.6
million, driven primarily by the contribution from the PV premium
residences in Méribel (€30 million) and Avoriaz (€7 million),
Center Parcs Lot-et-Garonne (€16 million), Senioriales residences
(€23 million) and renovation operations at Center Parcs domains
(€58 million).
H1 2018/2019 revenue included the contribution of renovation
operations at the Center Parcs domains for an amount of €127.5
million (primarily related to the shift from 2017/2018 to 2018/2019
of the signing of block sales of property renovation programmes in
Belgium and the Netherlands).
Property reservations recorded in the first half of the
year with individual investors, still little affected at this stage
by the sharp slowdown in the property market related to the
Covid-19 crisis, represented business volume of €125.4 million vs.
€132.2 million in the year-earlier period.
2.2 Results
The Group’s earnings on 31 March 2020, structurally
loss-making in the first half due to the seasonal nature of
business, do not reflect the Group’s growth momentum, which has
been penalised by the first effects of the Covid-19 crisis.
€ millions
H1 2020
H1 2019 proforma*
Revenue
696.0
738.1
Current operating profit (loss)
-125.6
-111.5
Tourism
-116.7
-104.3
Property development
-9.0
-7.2
Financial items
-10.5
-10.2
Other operating income and expense
-10.6
-3.9
Equity associates
-0.6
-1.3
Taxes
1.6
5.9
Net Profit (loss) for the
period
-145.8
-121.0
Group share
-145.8
-121.0
Non-controlling interests
0.0
0.0
* Adjusted for the impact of the IAS 23 Interpretation published
in December 2018 (+€0.1m on net profit)
The current operating loss amounted to €125.6million (vs.
-€111.5 million in H1 2018/2019). Growth momentum in financial
performances, started over the first months of the year, came to a
brutal halt due to the closure of virtually all sites over the
second half of March. Lost earnings in terms of accommodation
revenue was estimated at €31 million over the first half, whereas
the full effect of cost-cutting measures implemented to ease the
impact of the crisis will be noted as of the second half of the
year. The impact of the crisis on current operating profit in the
first half was therefore estimated at €30 million. Excluding
this effect, current operating result from the tourism activities
grew by 17% relative to the first half of the previous year,
generated primarily by like-for-like growth in revenue (+€24
million), and marketing savings (estimated at +€4 million). These
gains helped offset the seasonal nature of new seaside destinations
in Spain and maeva.com (-€3 million), the impact of temporary
closures of sites being renovated (-€2 million) and costs related
to inflation in expenses (estimated at -€5 million).
Other operating income and expense included mainly the
first costs for restructuring and site withdrawals as part of the
roll-out of the Change Up plan.
The net loss for the period
was €145.8 million vs. -€121.0 million in the first half of
2018/2019, in the context of the emerging health crisis.
2.3. Statement of financial position items
- Simplified statement of financial position
€ millions
31/03/2020
30/09/2019
Change
Goodwill
158.9
158.9
0.0
Net fixed assets
381.2
377.7
3.5
Finance lease assets
88.9
97.7
-8.8
TOTAL USES
629.0
634.3
-5.3
Equity
105.0
251.4
-146.4
Provisions for risks and charges
83.5
76.2
7.3
Net financial debt
301.2
130.9
170.3
Debt related to finance lease assets
96.3
97.7
-1.4
WCR and others
43.0
78.1
-35.1
TOTAL RESOURCES
629.0
634.3
-5.3
Net financial debt
Net financial debt (bank/bond debt less net cash) generated by
the Group on 31 March 2020 broke down as follows:
€ millions
31/03/2020
30/09/2019
Change
31/03/2019
Change
Bank/bond debt
269.4
244.4
25.0
250.3
19.1
Cash (net of overdrafts/drawn revolving
credit lines)
31.8
-113.5
145.3
-6.6
38.4
Available cash
-252.8
-114.8
-138.0
-53.4
-199.3
Drawn credit lines and
overdrafts
284.6
1.3
283.3
46.8
237.7
Net financial debt
301.2
130.9
170.3
243.7
57.5
Net financial debt on 31 March 2020 (€301.2 million)
corresponded primarily to:
- the ORNANE bond issued in December 2017 for a nominal amount of
€100 million;
- Euro PP bond loans issued respectively in July 2016 for a
nominal amount of €60 million and in February 2018 for a nominal
amount of €76 million;
- bridging loans contracted by the Group under the framework of
property programme financing destined to be sold off for €18.4
million;
- credit lines drawn down in the backdrop of the health crisis
for an amount of €234 million (€200 million revolving and €34
million in confirmed lines);
- drawn overdrafts of €50.6 million;
- net of available cash for €252.8 million.
III. Outlook
Following the latest government announcements, our activities
are gradually resuming in all the countries where we are located.
For each of our sites, a detailed stimulus plan has been carefully
drawn up for the operating, health and commercial aspects:
- On the operating front, the Center Parcs domains re-opened at
the end of May in the Netherlands and in Germany, as of 8 June in
Belgium and all of our sites in France open between 5 and 12 June
and as of 22 June in Spain;
- On the health front, the Group has implemented strict
protocols, certified by specialised companies;
- On the sales front, our reservation and cancellation terms
currently offer maximum flexibility with very low or symbolic
upfront-payments and reimbursements right up to within a few days
of the holiday.
The Group has major assets to meet increased demand for
family-based and local tourism. As such, the net reservation flows
recorded since the government announcements of 28 May are more than
50% higher than those of the same period in the previous year,
thereby showing the relevance and appeal of our brands’ offers.
The Group is also continuing to roll out its Change Up plan
by:
- boosting revenue in the tourism activities (growth of 6.7%
before the crisis), underpinned especially by renovation of the
Center Parcs domains;
- consultation by employee representatives and validation of the
Job Safeguard Plan, prior to implementing a new operating
organisation as of 15 June 2020;
- securing cost reductions expected for the duration of the plan
and the first savings achieved on marketing spend.
The second half of the year, over which the Group structurally
generates its earnings in view of the seasonal nature of business,
especially in the fourth quarter, is set to suffer significantly
from the effects of the health crisis:
- In the third quarter, with more than two months of site
closures and a gradual re-opening in June (estimated at 30% of the
level seen in June 2019), the Group could record a loss of close to
€300 million in revenue (with an impact potentially limited to
-€130 million for underlying operating profit in view of the
savings made (partial unemployment, on-site costs variabilisation)
and depending on rental negotiations underway).
- For the fourth quarter, the period set to contribute the most
to the Group’s performances, trends are encouraging: the portfolio
of reservations currently stands at more than 50% of the revenue
budgeted for the fourth quarter, or a 10-15 point lag depending on
the brand relative to the rate reached in the previous year, with
the gap narrowing significantly as the weeks go by since the
governments’ announcements for the end to the lockdown.
The Group has secured financing to get through this period, with
a state-backed loan helping to finance operating losses caused by
the crisis, and confirms its confidence in its sustainable
profitability strategy based on its business model and
fundamentals.
Appendix: Reconciliation table
Note:
As stated above, operating reporting is more representative of
the performances and economic reality of the contribution of each
of the Group’s businesses, i.e. :
- excluding the impact of applying IFRS16 for
all the financial statements, with the standard applied to the
primary consolidated financial statements for the first time during
this current half-year period.
- with the presentation of joint undertakings
in proportional consolidation (i.e. excluding application of IFRS
11) for profit and loss items (with no change relative to the
presentation of the Group’s historical operating reporting)
The reconciliation table with the primary financial statements
is therefore set out below:
Income statement
(€ millions)
H1 2020 operating
reporting
IFRS 11 adjustments
Impact of IFRS 16
H1 2020 IFRS
Revenue
696.0
- 31.0
- 36.4
628.7
External purchases and services
-591.2
+26.5
+222.9*
- 341.8
Operating income and expenses
-204.0
+7.7
+3.6
-192.7
Depreciation, amortisation, provisions
-26.4
+2.0
-135.6
-160.0
Current operating profit
- 125.6
+5.2
+54.5
- 65.9
Other operating income and expense
- 10.6
0.2
0.0
- 10.4
Financial items
- 10.5
+1.5
- 68.5
- 77.5
Equity associates
- 0.6
- 6.7
- 0.9
- 8.2
Income tax
1.6
- 0.2
+0.9
2.3
PROFIT (LOSS) FOR THE PERIOD
- 145.8
0.0
- 14.0
- 159.8
* of which cost of sales: +€35.8m, Rents: +€187.1m
(€ millions)
H1 2019 operating
reporting
Impact IAS 23
H1 2019 proforma operating
reporting
IFRS 11 adjustments
H1 2019 Proforma IFRS
Revenue
738.1
738.1
- 30,.9
707.2
Current operating profit
- 111.6
+0.1
- 111.5
+4.2
- 107.4
Other operating income and expense
- 3.9
- 3.9
0.0
- 3.9
Financial items
- 10.2
- 10.2
+1.3
- 8.9
Equity associates
-1.3
- 1.3
-5.9
- 7.2
Income tax
5.9
5.9
+0.4
+6.3
PROFIT (LOSS) FOR THE PERIOD
- 121.1
+0.1
- 121.0
0.0
- 121.1
Statement of financial
position
(€ millions)
H1 2020 operating
reporting
Impact of IFRS 16
H1 2020 IFRS
Goodwill
158.9
0.0
158.9
Net fixed assets
381.2
- 1.7
379.5
Lease/right of use assets
88.9
+2,378.7
2,467.6
Uses
629.0
+2,377.0
3,006.0
Share capital
105.0
- 402.3
- 297.3
Provisions for risks and charges
83.5
+3.5
87.0
Net financial debt
301.2
0.0
301.2
Debt related to lease assets / lease
obligations
96.3
+2,821.4
2,917.7
WCR and others
43.0
- 45.7
-2.7
Uses
629.0
+2,377.0
3,006.0
Cash flow statement
(€ millions)
H1 2020 operating
reporting
Impact of IFRS 16
H1 2020 IFRS
Cash flows after interest and tax
-130.3
+118.6
-11.7
Change in working capital requirement
-11.4
+32.3
21.0
Flows from operations
-141.7
+150.9
9.3
Net investments related to operations
-22.2
0.0
-22.2
Net financial investments
-5.0
0.0
-5.0
Acquisition of subsidiaries
-0.2
0.0
-0.2
Flows allocated to investments
-27.4
0.0
-27.4
Operating cash flows
-169.1
+150.9
-18.1
Flows allocated to financing
23.8
-150.9
-127.1
CHANGE IN CASH
-145.3
0.0
-145.3
IFRS 11 adjustments:
For its operating reporting, the
Group continues to integrate joint operations under the
proportional integration method, considering that this presentation
is a better reflection of its performance. In contrast, joint
ventures are consolidated under equity associates in the
consolidated IFRS accounts.
Impact of IFRS16:
IFRS 16 “Leases” must be applied for the years open as of 1
January 2019, namely FY 2019/2020 for the Pierre &
Vacances-Center Parcs Group.
The Group has opted for the simplified retrospective transition
method, with a retrospective calculation of right-of-use assets.
Choosing this method implies that previous periods will not be
restated.
As set out in the Note relative to Accounting Principles in the
appendix to the Group’s consolidated financial statements,
application of IFRS 16 results in:
- Recognition in the balance sheet of all leases, with no
distinction between operating leases and finance leases, with the
recording of:
- an asset representing the right-of-use for the asset leased
throughout the duration of the lease contract;
- a liability representing the obligation of future lease
payments.
The lease expense is cancelled in return for
the reimbursement of the debt and the recognition of financial
interest. The right-of-use asset is the object of straight-line
depreciation over the duration of the lease.
- Cancelling, in the financial statements, a share of revenue and
the capital gain for disposals undertaken under the framework of
property operations with third-parties (given the Group’s
right-of-use rights). In view of the Group’s business model based
on two distinct businesses, as followed and presented in its
operating reporting, this adjustment does not reflect or measure
the underlying performance of the Group’s property activity, and
for this reason, in its financial communication, the Group
continues to present property operations as they stem from its
operating reporting.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200624005682/en/
Investor Relations and Strategic Operations Emeline Lauté
+33 (0) 1 58 21 54 76 info.fin@groupepvcp.com
Press Relations Valérie Lauthier +33 (0) 1 58 21 54 61
valerie.lauthier@groupepvcp.com
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