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Annual Review
2013/14
Center Parcs
is all about
family time
Center Parcs targets the premium end of the UK family
short break market, offering an escape from the stresses
and strains of modern life. With recent trends showing an
increase in family short breaks, particularly in the UK, the
Center Parcs concept is as relevant today than at any point
in its 27 year history in the UK market.
We have invested heavily in ensuring that we continue to
deliver high quality accommodation and facilities, combined
with an unrivalled array of activities that cater for the most
discerning of families, as well the most changeable of British
weather. And theres nothing prescriptive about a short
break at Center Parcs, with each family free to choose to do
as little or as much as they like.
Center Parcs remains a unique proposition for families in
the UK market and proves more popular every year with
a longstanding run of growth in terms of visitor numbers,
revenue and profits, as well as guest feedback scores and
consistently high levels of returning guests.
Contents
10
Corporate Responsibility
13
17
22
The Year
in Numbers
Occupancy (%)
2013/14
2012/13
97.2
97.2
5.9
6.0
1.7
1.7
39.6
39.9
Revenue (m)
314.6
303.5
146.8
140.0
20.6
18.6
153.67
148.36
149.38
144.22
81
79
Guest satisfaction
(% of guests ranking their break
as excellent or good)
96
96
98
99
25
23
Overview and
Key Performance
Indicators
Overview and
Key Performance
Indicators
Revenue
Revenue for the period was 314.6
million (2012/13: 303.5 million).
Adjusted EBITDA
Occupancy
Occupancy is the average number
of units of accommodation occupied
as a percentage of the total number
available. Occupancy for the period
was 97.2% (2012/13: 97.2%).
The average number of units of
accommodation was 3,421 during
the period (2012/13: 3,416).
RevPAL
(Rent per available
lodge night)
RevPAL is the average daily rent
(excluding VAT) achieved based on the
total accommodation income divided
by the total available number of units
of accommodation nights.
RevPAL for the period was 149.38
(2012/13: 144.22).
Forward bookings
Forward occupancy at 24 April 2014
at existing 4 Villages was 41%
(2012/13: 40%). This gives good
forward visibility of future occupancy
levels.
Guest satisfaction
We track guest satisfaction using
questionnaires completed by guests
online. 96 % (2012/13: 96%) of
respondents rank their break at
Center Parcs as excellent or good.
Employee Turnover
The average labour turnover for the
business during the period was 25%
(2012/13: 23%).
Chief
Executives
Review
Our People
We continually recognise that
our people are at the heart of our
business; delivering what is important
to us and our guests.
Product Innovation
Continued
Capital Investment
In the coming year, we expect to
invest a further 40 million of
capital, including 13 million on
upgrading our accommodation. We
are aiming to refurbish 162 units of
accommodation during the year which
will mean that, by the year end,
84% of accommodation will have
been upgraded.
Our commitment to improving
our guest and leisure facilities
will continue. For example, we will
refurbish the changing rooms in
the Aqua Sana at Sherwood Forest.
Design work will also commence
on improving the swimming pool
facilities at the other Villages.
To reinforce our commitment to
sustainability, we will invest in a
Combined Heat and Power unit
at Longleat Forest and we will be
Martin Dalby
Chief Executive Officer
10
Group
Financial
Review
Financial Review
Financial
highlights
Net revenue up 3.7%
to 314.6 million
EBITDA (before owners
costs) up 4.9% to
146.8 million
Cash generated from
operating activities of
146.2 million
Capital investment of
39.6 million in the
original four Villages
Profit before tax of
20.6 million
11
Year to 24 April
2014 m
Year to 25 April
2013 m
Revenue
314.6
303.5
Cost of sales
(31.3)
(31.4)
Gross profit
283.3
272.1
(136.5)
(132.1)
146.8
140.0
(1.5)
(1.7)
EBITDA
145.3
138.3
Depreciation
(28.8)
(25.4)
Amortisation
(2.2)
(1.8)
114.3
111.1
0.4
0.3
(94.1)
(92.8)
20.6
18.6
Taxation
(4.0)
0.6
16.6
19.2
Administrative expenses
Adjusted EBITDA
Owners costs
Operating profit
Finance income
Finance expense
12
Revenue
Group
Financial
Review
continued
Cost of sales
Cost of sales of 31.3 million in
the year was virtually unchanged in
comparison to the prior year (31.4
million) as a result of good
cost management.
Administrative expenses
Administrative expenses were 136.5
million in the year, an increase of 4.4
million in comparison to the prior
year. This rise was mainly as a result
of increases in payroll, insurance and
energy costs.
Adjusted EBITDA
As a result of the factors outlined
above, adjusted EBITDA grew by
6.8 million or 4.9% in comparison
to the prior year. Consistent with
the revenue trends, all Villages saw
increased adjusted EBITDA.
Depreciation
and amortisation
Depreciation and amortisation
increased by 3.8 million during the
year, driven by the ongoing significant
levels of capital expenditure in recent
years, particularly on upgrading units
of accommodation.
Cash inflow
The Group continues to be highly cash
generative, with a net cash inflow
from operating activities during the
year of 146.2 million (2012/13:
140.9 million).
This year has seen 34.5 million spent
on capital projects and 80.1 million
on interest payments. Cash balances
increased by 29.5 million to 58.2
million during the year.
Borrowings
At 24 April 2014 the borrowings of
the Group totalled 1,021.7 million,
being 1,020.0 million of secured
financing raised during the 2011/12
financial year and a mortgage of 1.7
million on the Groups head office.
The secured borrowings were issued
in three tranches with differing
interest rates and expected maturity
dates. The earliest expected maturity
date relates to the Tranche A1
borrowings of 300 million, which
have an expected maturity date of
28 February 2017. The Tranche A2
borrowings of 440 million have
13
Corporate
Responsibility
14
Corporate Responsibility
Our Villages are built deep within
the forest, enabling our guests to
enjoy acres of unspoilt woodland
where they can interact directly with
nature. This close link with the natural
environment means we have always
been committed to the protection of
our surroundings.
However, our responsibilities go
far beyond this. As a sustainable
business, we seek to benefit and
improve the communities in which we
operate, by sourcing local services
and produce, where ever possible.
We aim to minimise our impact on
the environment and encourage
biodiversity when caring for
Center Parcs forests but also
the wider surroundings.
We understand the importance of a
sustainable community too and work
closely with our employees, local
suppliers, communities and charities
across the UK to improve the way
we operate.
Sustainability
The Center Parcs experience is
built around enabling our guests to
enjoy the natural environment. It is
therefore vital that we protect it.
Through the rigorous adherence to our
Environmental Management System,
(which is independently audited under
ISO14001), we continue to make
Hoval Ltd.
15
Corporate Responsibility
continued
Our People
Community
We have an extremely close
relationship with the communities
surrounding our Villages and support
the local communities by sourcing
local services and produce where ever
possible. Our volunteer programme
allows our employees to spend a
working day on a local community
project helping schools, community
centres and nature projects. We have
also supported the local schools
through donations, work experience
and skills development.
During the construction of Woburn
Forest, the Senior Management team
volunteered time with The Greensand
Trust helping to prepare a natural play
area at Maulden Wood, close to
the Village.
16
Corporate Responsibility
continued
Charities
Center Parcs has started a two year
partnership with ChildLine and The
Wildlife Trusts to support children
and the natural environment; both
of which are at the heart of a Center
Parcs break. Guests will be able to
make a donation when booking a
Break Donations
We have offered break donations
to a variety of charities supporting
children and families going through
difficult times.
During the year we donated short
breaks to charities, such as MakeA-Wish Foundation UK, the Rainbow
Trust Childrens Charity and more
specialist charities including The
Lily Foundation and Nicolas Fund
providing much needed holidays for
seriously ill children and their families.
17
Ownership and
Management
Structure
18
Our History
Our Ownership
Ownership and
Management
Structure
92.4%
Funds advised by
Lexington Partners
UK Limited
5.9%
Management
1.7%
Our Management
The Center Parcs business is managed
in the UK by the Board of Directors
which comprises representatives
of its principal shareholder, the
Blackstone Group, together with
three executive members.
Day to day operational management
is the responsibility of the Operating
Board which is made up of two
executive members and five members
of senior management.
19
Martin Dalby
Paul Inglett
Martin Robinson
Finance Director
Chairman
20
Ownership and
Management
Structure
continued
Andrea Valeri
Peter Stoll
Michael Pegler
Farhad Karim
Farhad Karimis a Managing Director
in the Blackstone Real Estate Group
based in London.
Before joining Blackstone in 2011, he
was a partner at Simpson Thacher &
Bartlett LLP, where he worked on the
acquisition, financing, and disposition
of complex real estate investments
including in the hospitality, logistics,
office, residential, and retail sectors
in Asia, Europe, and the United States.
Tania Daguere-Lindbck
Tania is a Managing Director in the
Blackstone Private Equity Group and
is based in London.
Since joining Blackstone in 2004,
she has been involved in Blackstones
investments in Sulo, ICS and Pulse.
Before joining Blackstone, she worked
at Goldman Sachs in the Mergers &
Acquisitions division in London
and Paris.
21
Martin Dalby, Chief Executive Officer and Paul Inglett, Finance Director are members
of the Operating Board along with the following members of senior management:
Paul Kent
Judi Leavor
HR Director
Colin Whaley
Don Camilleri
Woburn Construction Director
Don graduated as a civil engineer and
held a number of senior engineering
positions in the UK and overseas.
Graham White
22
Principal
Risks and
Uncertainties
23
Business continuity
Supply chain
Employees
24
Brand
The Center Parcs brand could be adversely
affected by a serious incident, accident or similar
occurrence or just a slow decline in the brands
appeal to consumers. The business mitigates
the risk of a serious incident, accident or similar
occurrence by maintaining industry-leading health
and safety systems and standards of training.
The risk of a slow decline in the brands appeal is
managed through continuous product innovation,
marketing campaigns and brand development.
Fraud
Center Parcs operates five sites across the UK.
Risk of fraud exists in misappropriation of assets,
including banking, theft of stock and theft of cash
takings. The business mitigates this risk through
the management structure and regular financial
review with, and extensive use of, business
systems. Regular external audits are also carried
out on the business.
Competition
The Center Parcs brand is synonymous with high
quality short breaks in a forest environment but
Center Parcs competes for the discretionary
expenditure of potential guests, who could
choose to take short breaks at other destinations
or participate in other recreational activities.
This risk is mitigated by the strength of the
Center Parcs brand and continual investment
in the accommodation and central facilities
(including retail and restaurants) coupled with the
innovation amongst the leisure activities and our
responsiveness to guest surveys.
25
Financial Risks
Currency risk
Liquidity risk
The business holds sufficient levels of cash to
enable it to meet its medium-term working capital
and debt service obligations. Rolling forecasts
of liquidity requirements are prepared and
monitored and surplus cash is invested in interest
bearing accounts.
Credit risk
Center Parcs borrows from well-established
institutions with high credit ratings. Cash balances
are held on deposit with a number of
UK banking institutions.