Financial Analysis and Acquisition Impact: PPHE Hotel Group and ABHL

This report provides a comprehensive financial analysis of the proposed acquisition of Andrew Brownsword Hotel Group Ltd (ABHL) by PPHE Hotel Group Ltd. It begins with an executive summary, followed by an overview of the financial analysis, including competitor analysis, horizontal and vertical analysis of financial statements, and a detailed ratio analysis covering profitability, liquidity, and asset management. The report delves into the cost of capital for both PPHE and ABHL, including the weighted average cost of capital (WACC) and the capital structure rationale. Furthermore, it assesses the purchase price acquisition analysis, its potential impact on PPHE, and conducts a share valuation using the Free Cash Flow Model. The report concludes with an evaluation of the share price movement and the overall implications of the acquisition, supported by financial data presented in the appendix, offering valuable insights into the financial feasibility and strategic alignment of the acquisition.

Running head: ACQUISITION ANALYSIS
Acquisition Analysis
Name of the Student:
Name of the University:
Author’s Note:

1FINANCIAL ANALYSIS
Table of Contents
Financial Analysis...........................................................................................................................4
Horizontal and Vertical Analysis.................................................................................................5
Ratio Analysis..............................................................................................................................7
Cost of Capital.................................................................................................................................9
PPHE Ltd Cost of Capital............................................................................................................9
ABHL Capital Cost....................................................................................................................10
Capital Structure Rationale........................................................................................................11
Purchase Price Acquisition Analysis.............................................................................................11
Acquisition Impact on PPHE Hotel Company Ltd........................................................................12
Share Valuation.............................................................................................................................14
Conclusion.....................................................................................................................................16
References......................................................................................................................................17
Appendix........................................................................................................................................19

2FINANCIAL ANALYSIS
Executive Summary
The financial acquisition analysis of the PPHE Hotel Group and Andrew Brownsword Hotel
group Ltd was done for the purpose of the analysis of the consolidation. The operations of both
the company was found to be identical with both the companies serving in the hotel and
hospitality industry. The financial analysis of the company including the analysis of the
profitability of the company and the various other factors that directly affects the operations of
the company were taken into consideration for the purpose of the analysis of the company.
Operations of the PPHE Hotel Group Ltd is spread globally in the leading cities of the Europe
where the company is having a £1.6 billion portfolio. The profitability condition, liquidity
aspects, asset management done by the company and the investor’s relation for the company
were some of the crucial aspect that were taken into consideration for the purpose of the analysis.
The Andrew Brownsword Hotel Group is a renowned hotel group company having a wide range
of collection of the various property in the property portfolio of the company was taken into
consideration for the company. The cost of capital for both the PPHE Hotel Group Company and
Andrew Brownsword Hotel was taken into consideration for the purpose of the analysis of the
company. The weighted average cost of capital or both the company was taken into
consideration for the company by including the weight of debt for the company and the weight of
equity for the company. The value of equity and debt for both the company was also considered
for the analysis of WACC. The CAPM equation was used for determining the cost of equity for
both the companies. ABHL is not a public company and the PPHE Hotel Group will be acquiring
the same for acquiring the company for the synergy that is analysed by the acquiring company.
The share price evaluation for the company was done for the company through the process of
evaluating the share price of the company with the Free Cash Flow Model and the per share

3FINANCIAL ANALYSIS
valuation for the company. The effect on the financial statements of the PPHE Company was
also analysed for the company considering the consolidation of the financial statement for both
the company. The share price movement of the company was also evaluated for the company
considering the movement of the market share price of the company and the underlying value of
the PPHE.

4FINANCIAL ANALYSIS
Financial Analysis
The financial analysis of the company shows the process of evaluation of the business
projects, budgets and various bother business entities for assessing the performance of the
company and the sustainability of the various factors of the company. PPHE Hotel Group Ltd is
an international hospitality reals estate company having a £1.6 billion portfolio under the
property portfolio of the company. The operations of the company is primarily distributed in the
leading cities of Europe, urban market and resort destinations. The company was founded in the
year 1989 and is a listed public company in the London Stock Exchange with its ticker symbol
PPH. The revenue for the company was around £325.1 million in the year 2017 and the net
income in the same year was around £32.1 million. The company is having a wide base of
employee of around 2600 employees in the company. The property portfolio of the PPHE Hotel
Company consists of around 46 properties with approximately 8,800 rooms and around 6,000 of
campsite pitches. Andrew Brownsword Hotel owned and managed by the founders of the
company Andrew Brownsword and Christina. The company is having thirteen properties in the
countryside setting and city centre locations. Each of the property owned by the Andrew
Brownsword Hotel is unique property and having a distinctive characteristics embracing the
heritage property they have in their property portfolio.
The financial analysis of the company can be done with the help of the analysis of the
various companies operating in the same industry. The financial analysis of the company will be
conducted with the market cap of the company. The respective operating income of the company
or the Earnings before interest tax and depreciation for the companies (Appendix 2). The
Enterprise value/ EBITDA, Enterprise Value/Sales and Price to Earnings for the respective
Companies was performed for assessing the valuation of the company (Appendix 1). The trend

5FINANCIAL ANALYSIS
in the tourism industry is the key factor that will comprise the movement of the share prices of
the company. The rise in competition in the European Tourism Industry with the increasing
services rendered by the various company has been the key reason for the declining margins of
the company1.
Company MCAP Sales
EV/
Sales
EV/
EBITDA P/E
PPHE 71,97,40,000 33,21,60,000 3.4 10.5 18.8
ABHL 6,46,18,227 1,44,06,000 4.3 9.3 X
Orascom Development Holding AG 50,52,10,000 24,44,45,245 4.2 x 12.3
Radisson Hospitality AB 62,48,20,000 83,49,10,000 1.0 11.8 38.0
Scandic Hotels Group AB 75,55,60,000
1,45,00,00,00
0 0.9 9.5 13.4
Orbis SA 88,04,60,000 29,30,70,000 3.4 15.8 12.6
Easyhotel (EZH) 11,64,43,000 84,20,000 12.1 44.3 160
Millennium & Copthorne Hotels plc (MLC)
1,59,60,00,00
0 88,00,00,000 2.6 8.5 12.9
Dalata Hotel Group PLC 91,43,70,000 32,12,70,000 3.5 12.2 15.0
Peers Average 68,21,85,153 50,58,15,156 4.0 17.0 37.7
Industry Average 3.3 10.6 12.64
Table 1: Hotel Industry Analysis
(Source: Statista.com 2019).
Competitor Analysis
The competitor analysis for the hotel group was done by comparing the various
companies performance in terms of market share held by each of the company and the respective
sales done by the company. The PPHE company is having a substantial market share in the
industry ith about 12% of the total market share enjoyed by the company and the revenue
1 http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/psdata.html

6FINANCIAL ANALYSIS
enjoyed by the company on the basis of overall industrial revenue was around 7.59% for the
company. However on the other hand side it is key to note that companies like Scandic Hotel
Groups and Radisson Hospitality also had a market share of about 12% and 10% but had a
significant influence on the overall revenue of the company. The revenue percentage enjoyed by
the above companies were 33.17% and 19.07% making them the most dominant player in the
industry.
Company Market Share (%) Sales(%)
PPHE 12% 7.59%
ABHL 1% 0.33%
Orascom Development Holding AG 8% 5.58%
Radisson Hospitality AB 10% 19.07%
Scandic Hotels Group AB 12% 33.11%
Orbis SA 14% 6.69%
Easyhotel (EZH) 2% 0.19%
Millennium & Copthorne Hotels plc (MLC) 26% 20.10%
Dalata Hotel Group PLC 15% 7.34%
Industry Average 100% 100%
Table 2: Hotel Industry Analysis
(Source: Statista.com 2019).
Horizontal and Vertical Analysis
The horizontal analysis of the PPHE financial statements were done thereby assessing the
profitability and the trend shown by the company in the year 2017 and 2016. The application of
the horizontal analysis will allow us to evaluate the performance of the company and various
accounts of the company. The horizontal analysis of both the PPHE Hotel Group and Andrew
Brownsword Hotel was done in order to analyse the performance of the company. The profit for
the company had decreased in the trend period analysed for the company (Jong 2017). The profit
for the PPHE Hotel Group in the reported year 2016 was around 38,157 and was 29,949 in the
year 2017 (Appendix 4). The margins for the company has decreased consistently for the

7FINANCIAL ANALYSIS
company where the expenses of the company rose consistently for the company. The profit for
the year for the PPHE Company has decreased consistently for the company. The rising
competition, increasing expenses for the company and the inconsistent increase in the revenue of
the company in contrast to the expenses of the company.
In the case of Andrew Brownsword Hotel, the revenue of the company has fallen in the
trend period for the company. The expenses for the company also showed an increasing trend in
the financial years 2016 and 2017 thereby affecting the profitability of the company. The
revenue of the ABHL Company has fallen by around 19.56% for the company. The profit of the
company was around 14.17 million in the year 2016 which felt down to around -0.86 million in
the year 2017. It is crucial to note that the majority of the revenue or the income and expenses of
the company showed a movement in the band of 20% (Appendix 5). The administrative expenses
of the company was the key expenses of the company, which significantly affected the
profitability margin of the company acting as fixed expenses, which have to be incurred by the
company. Thus, it is crucial for the company to have an optimal sales and revenue thereby
analysing the various business factors such as demands, services and the growth opportunities for
the company and effectively and efficiently utilizing the assets of the company.
Particula
rs
PPHE Hotels ABHL
2017 2016 2017 2016
Turnover
€
32,51,18,000.00
€
27,24,70,000.00
£
1,44,06,392.00
£
1,79,09,655.00
Net
Profit
€
2,99,49,000.00
€
3,81,57,000.00
-£
8,61,666.00
£
1,41,77,149.00
Table 3: Revenue and Net Profit Comparison
(Source: Appendix 4 & 5)

8FINANCIAL ANALYSIS

9FINANCIAL ANALYSIS
Figure 1: Graphical Analysis of PPHE and ABHL Hotel
(Source: Appendix 4 & 5)
Vertical Analysis is common method used for the purpose of the analysis of the financial
statements of the company where each line of the item is stated as a percentage of base figure for
the company. Vertical analysis of both the companies was performed by taking the base account
as revenue for the purpose of the analysis of the companies. The key advantage of applying the
vertical analysis for the company is that it will help in easy comparison of the various accounts
of the company for the purpose of the analysis of the company (Appendix 6).
Ratio Analysis
The ratio analysis of both the companies was performed thereby assessing the various
factors and conditions for the company. The ratio analysis of the PPHE Hotel Group Ltd and
ABHL Company was done thereby assessing the profitability, liquidity, and Asset management
and investors relations for the companies (Appendix 3). The Financial analysis of the company
1 2
0
50000000
100000000
150000000
200000000
250000000
300000000
350000000
Profitability of PPHE Hotels
Turnover Net Profit
2017 2016
-5000000
0
5000000
10000000
15000000
20000000
Profitability of ABHL
Turnover Net Profit

10FINANCIAL ANALYSIS
can be better conducted with the help of the ratio analysis where the key accounts of the
company will be taken into consideration for analysing the financial performance and the
financial positions of the companies (Ey.com 2019).
Profitability Ratios: The profitability of the company of the PPHE Hotel Group was done
thereby assessing the performance of the company in the trend period 2015-17. The gross profit
of the PPHE Company was around 40.47% in the year 2015, which saw a sharp decline in the
year 2016 and 2017 falling to about 37.79% and 35.69% for the company. The net profit of the
company has fallen down from 13.37% to 9.21% in the year 2015-17. The operating profit of the
company has also fallen down from 27.93% in the year 2015 to 22.46% (Appendix 8). The
revenue for the company has increased for the company in the financial trend period but the rise
in expenses for the company has been much larger than the rise in expenses for the company. On
the other hand, the gross profit margin of the ABHL Company was around 48.71% in the year
2015, which increased to around 50.33% in the year 2017. However, the net profit and operating
profit margin for the company has fallen for the company in the trend period analysed for the
company. The fall in the profitability could be well attributed to the falling revenue of the
company (Appendix 9).
Efficiency Ratios: The efficiency ratio shows the efficiency shown by the management of the
companies for the management of the various assets and resources of the company. The total
asset turnover ratio and inventory turnover ratio for the PPHE Company in the trend period
declined slightly indicating that the management of the company may not be utilizing the assets
of the company to their full extent (Appendix 8). The debtor turnover ratio for the PPHE
Company on the other side showed a consistent increase reflecting better collection of
outstanding amount by the companies. On the other hand, side the activity ratio for the ABHL

11FINANCIAL ANALYSIS
Company declined sharply for the company but the inventory turnover ratio for the company
showed a consistent improvement for the ABHL Company (Appendix 9).
Liquidity Ratio: The liquidity condition for both the company was assessed to be improving for
the both the companies (Appendix 9). The improving liquidity ratio for the companies shows that
the companies are maintaining sufficient current asset in contrast to the current obligations of the
company (Appendix 8).
Cost of Capital
PPHE Ltd Cost of Capital
The cost of capital for the PPHE Company was derived using the CAPM equation where
CAPM: Risk Free Rate of Return+ Beta*(Return on Market-Risk Free Rate of Return). The risk
free rate of return taken for the analysis was around 1.17% for the company. The expected return
on market for the company was taken at 5.55%. The country risk premium of 1.2% for the
investment in the UK region was also considered while evaluating the cost of capital for the
company (FT 2016). The beta of the company was around 0.52 times for the company indicating
a less volatile stock with respect to the benchmark index. The cost of equity for the company was
evaluated to be around 6.0% (Appendix 1).
The weighted average cost of capital for the company was evaluated after taking the
value of debt and the value of equity for the company and the respective cost associated for the
company. The taxation rate was also evaluated for both the companies, which was applied for
determining the weighted average cost of capital for the company. The weighted average cost of
capital for the PPHE Company in accordance with the Dividend Growth model was also taken
into consideration for the company where the growth rate of the revenue was taken into

12FINANCIAL ANALYSIS
consideration for the purpose of the analysis of the WACC. The WACC as per the DGM Model
was around 5.4% and WACC as per the CAPM was evaluated to be around 3.9%. The average
WACC for the company was estimated to be around 4.7% for the company. The discount rate
that will be used for the purpose of the analysis of the ABH Company was around 11%.
PPHE Ltd Dividend Capitalisation
Model (DGM)
Capital Asset Pricing
Model (CAPM)
WACC 4.6% 3.4%1
Ke=Er 7.7% 4.8%
Table 4: WACC and Cost of Equity
Source: (Appendix 1 & 2)
The minimum required rate of return by the equity shareholders of the company is greater
than 8% and the risk or the beta of the project or investment should also be taken into care for the
purpose of the analysis. The discount rate of 11% has been taken as the minimum required rate
of return for the acquisition of the ABHL Company after assessing the various factors and the
associated risk within the company.
ABHL Capital Cost
The cost of capital for the ABHL Company was done thereby evaluating the same with
the help of the CAPM model and the relevant factors were taken into consideration for
determining the same (Investing.com 2016). In accordance with the CAPM the required return
from the ABHL Company is higher due to the higher beta and higher risk associated with the
company (Appendix 12).
PPHE Ltd Capital Asset Pricing
Model (CAPM)
WACC 5.9%
Ke=Er 6.0%

13FINANCIAL ANALYSIS
Table 5: WACC and Cost of Equity
Source: (Appendix 1 & 2)
Capital Structure Rationale
The optimal capital structure that should be used by the PPHE Company for the purpose
of the acquiring the ABHL Company would be the application of the mix of debt and equity. The
debt of the company has been reduced for the company in the financial trend period for the year
2015-17. The optimal mix of debt and equity would ensure that he cost of capital for the
company stays at an optimal stage and the financial risk of the company also stays at a minimum
level for the company.
Purchase Price Acquisition Analysis
The valuation of the company that will be paid by the PPHE Hotel Group for the
purchase of the ABHL Company. The financial analysis of the company was done thereby
assessing the Enterprise Value of the company and comparing the valuation of the company with
the earnings or the cash flows of the company. Through the assessment of the ABHL Company
with the earnings of the company it can be seen that the company is currently overvalued with
respect to the earnings of the company (Bloomberg 2016).
ABHL
EBITDA 3Y Average 66,39,185
SALES 1,44,06,000
EV/EBITDA industry average 10.6
EV/Sales industry average 3.3
EV (EBITDA) 7,03,75,365
EV (Sales) 4,69,63,560
Net Debt -31,24,500

14FINANCIAL ANALYSIS
Shares 6,42,92,008
Share price (EBITDA) 1.0
Share price (Sales) 0.7
Table 6: ABHL Financial Analysis
(Source: Appendix 2)
The valuation of the share price of the ABHL Company was done by also taking the Free
Cash Flow Approach for the purpose of the analysis of the company on a per share basis for the
company. The free cash flow for the company from the period 2013-2018 was taken into
consideration for the purpose of the analysis of the company. The growth rate considered for the
revenue of the company was taken around 5% for the company and the discount rate taken into
consideration for the purpose of the analysis was around 11% for the company. The terminal
growth rate taken for the company was around 2% for the company. A discounted cash flow of
all the value derived for the company in the forecasted trend period was done for assessing the
total value of the company (Appendix 14).
Acquisition Impact on PPHE Hotel Company Ltd
Considering the impact of the PPHE Hotel Company Ltd for acquiring the ABHL
Company was done by taking the key accounts of the company and consolidating the same in the
books of accounts for the company. The target company is comparatively of a smaller size for
the PPHE Company thereby the financial impact on the financials of the company is expected to
be less for the company. Pro-forma Consolidated Financial Statement for the company is
prepared by taking the assets and liabilities of the company. We considering the most recent
currency conversion figure for this analysis and transformation of the financial statement of the
company. 1€ = 0.88 £; as per the assumption from the recent currency rates available and was
taken for the conversion of the currency into the home currency.

15FINANCIAL ANALYSIS

16FINANCIAL ANALYSIS
Particulars PPHE Hotel Group ABHL
Converted Value for
ABHL Total
Fixed Assets
£
1,54,00,46,000.00
€
6,91,95,285.00
£
6,08,91,850.80
£
1,60,09,37,850.80
Current Assets
£
31,98,32,000.00
€
2,54,36,489.00
£
2,23,84,110.32
£
34,22,16,110.32
Current
Liabilities
£
9,31,04,000.00
€
29,51,547.00
£
25,97,361.36
£
9,57,01,361.36
Debts
£
66,69,36,000.00
€
-
€
-
£
66,69,36,000.00
Book Value
£
1,84,74,52,599.76
Table 7: Consolidated Accounts
(Source: Appendix 3)
The profitability, liquidity and management of the accounts of the company will not be
materially impacted after the acquisition of the ABHL Company. The consolidation will help the
company in increasing the market share on a global wide basis having a wide range of customer
Fixed Assets Current Assets Current Liabilities Debts
£-
£200,000,000.00
£400,000,000.00
£600,000,000.00
£800,000,000.00
£1,000,000,000.00
£1,200,000,000.00
£1,400,000,000.00
£1,600,000,000.00
£1,800,000,000.00
Consolidated Financial Statement
Total

17FINANCIAL ANALYSIS
base. The operations of the PPHE Company will get wider and the expertise and efficiency of the
management of the company can be used for bringing operational efficiency ad sustainability in
the business of the company.
Key Financial Data of PPHE Hotel Group
(Source: PPHE HOTEL Share Price (PPH) - London Stock Exchange)
Share Valuation
The current share price of the company needs to be analysed and evaluated with the
various earnings factors of the company based on the earnings multiplier method, DCF Methods
and various other approach taken into consideration. The share price of the company has given a

18FINANCIAL ANALYSIS
sound return in the one year of time frame for the company where the share price of the company
ahs given around 64.65% return in the form of growth in the value of the stock. The revenue and
the operating margin for the company has been stable which is the key aspect of long term
sustainable growth rate for the company.

19FINANCIAL ANALYSIS
PPHE EV, GBP
Share price,
GBP
NA
1,85,50,33,00
0 33
EV/EBITDA
1,82,58,75,61
0 51
EV/Sales
1,28,78,49,99
5 38
P/E
1,35,84,57,19
6 21
DCF
2,68,44,19,07
8 51
Weighted
average
1,77,25,09,95
6 40

20FINANCIAL ANALYSIS
Conclusion
The financial acquisition analysis of the PPHE Hotel Group and Andrew Brownsword Hotel
group Ltd was done for the purpose of the analysis of the consolidation. The operations of both
the company was found to be identical with both the companies serving in the hotel and
hospitality industry. The ratio analysis of the PPHE Hotel Group Ltd and ABHL Company was
done thereby assessing the profitability, liquidity, and Asset management and investors relations
for the companies. The cost of capital for the PPHE Company was derived using the CAPM
equation and the share price analysis of the company was also done for the company using the
11% discount rate for the purpose of the analysis of the company. On an overall the company
should acquire the ABHL Company as the same will help the company in having a global
diversified base of operations for the company. The financial condition of the ABHL Company
was unstable but operational efficiency and growth opportunity in the hospitality industry can
bring a major turnaround in the financial performance and position of the company.

21FINANCIAL ANALYSIS
References
"PPHE HOTEL Share Price (PPH) - London Stock Exchange". Londonstockexchange.Com,
2019, https://www.londonstockexchange.com/exchange/prices-and-markets/stocks/summary/
company-summary/GG00B1Z5FH87GGGBXSSQ3.html?lang=en.
Andrew Brownsword Hotels. (2019). Andrew Brownsword Hotels - AA Hotel Group of the Year
2017-18. [online] Available at: https://www.brownswordhotels.co.uk/ [Accessed 12 Feb. 2019].
Bloomberg (2016) Bloomberg global finance and market database, [Online], Available at:
www.bloomberg.com [29 Mar 2016]
Ey.com. (2019). [online] Available at:
https://www.ey.com/Publication/vwLUAssets/The_Hospitality_Sector_in_Europe/$FILE/
EY_The_Hospitality_Sector_in_Europe.pdf [Accessed 12 Feb. 2019].
FT (2016) Financial Times global finance and market database, [Online] Available: www.ft.com
Google Finance (2016) Stock market database, [Online]. Available at:
http://www.google.com/finance
Investing.com (2016) Financial Portal. [Online] Available at:
http://www.investing.com/rates-bonds
Pphe.com. (2018). Dividends. [online] Available at:
https://www.pphe.com/investors/shareholder-centre/dividends [Accessed 12 Feb. 2019].
Pphe.com. (2019). [online] Available at:
https://www.pphe.com/~/media/Files/P/PPHE-Corp/documents/Downloadcenter/2017/PPHE-
Hotel-Group-2017-Annual-Report.pdf [Accessed 12 Feb. 2019].

22FINANCIAL ANALYSIS
Statista.com. (2019). Outlook of the hotel market sentiment rankings 2009-2015 | Statistic.
[online] Statista. Available at: https://www.statista.com/statistics/186917/sentiment-ranking-on-
the-global-hotel-market-outlook-since-2009/ [Accessed 12 Feb. 2019].

23FINANCIAL ANALYSIS
Appendix
1) ABHL Financial Analysis
ABHL
EBITDA 3Y Average 6,639,185
SALES 14,406,000
EV/EBITDA industry average 10.6
EV/Sales industry average 3.3
EV (EBITDA) 70,375,365
EV (Sales) 46,963,560
Net Debt -3,124,500
Shares 64,292,008
Share price (EBITDA) 1.0
Share price (Sales) 0.7
2) PPHE Financial Analysis
PPHE
EBITDA 107,304,000
SALES 325,100,000
EV/EBITDA peers average 17
EV/Sales peers average 4
EV (EBITDA)
1,825,875,61
0
EV (Sales)
1,287,849,99
5
Net Debt 408,091,000
Shares 44,225,706
Share price (EBITDA) 50.5
Share price (Sales) 38.3

24FINANCIAL ANALYSIS
3) Financial Statements of PPHE Hotel Group and Andrew Brownsword Hotel Ltd
Key Financial Ratios of the Business
PPHE Hotel Group
Particulars 2017 2016 2015
€"000 €"000 €"000
Sales € 325,118.00 € 272,470.00 € 218,669.00
G.Profit € 116,026.00 € 102,979.00 € 88,497.00
N. Profit € 29,949.00 € 38,157.00 € 29,242.00
EBIT € 73,016.00 € 68,805.00 € 61,079.00
COGS € 209,092.00 € 169,491.00 € 130,172.00
Total Asset € 1,540,046.00 € 1,317,910.00 € 957,318.00
Total Current Assets € 319,832.00 € 195,603.00 € 71,703.00
Stock € 2,701.00 € 2,412.00 € 999.00
Debtors € 13,392.00 € 12,576.00 € 9,154.00
Current Liabilities € 93,104.00 € 173,004.00 € 59,875.00
Total Equity € 440,938.00 € 330,202.00 € 267,904.00
Long term Borrowings € 666,936.00 € 642,120.00 € 440,110.00
Interest Expense € 31,966.00 € 27,220.00 € 24,221.00

25FINANCIAL ANALYSIS
4) Horizontal Analysis of PPHE Hotel Group Ltd
PPHE Hotel Group
Statement of Profit and Loss Account
Particulars 2017 2016
Changes in
Balances
% Change
in
Balances
€"000 €"000
Revenues
€
3,25,118.0
0
€
2,72,470.0
0
€
52,648.00 19.32%
Operating expenses
€
2,09,092.0
0
€
1,69,491.0
0
€
39,601.00 23.36%
EBITDAR
€
1,16,026.0
0
€
1,02,979.0
0
€
13,047.00 12.67%
Rental expenses
€
8,722.00
€
8,844.00
-€
122.00 -1.38%
EBITDA
€
1,07,304.0
0
€
94,135.00
€
13,169.00 13.99%
Depreciation and amortisation
€
34,288.00
€
25,330.00
€
8,958.00 35.37%
EBIT
€
73,016.00
€
68,805.00
€
4,211.00 6.12%
Financial expenses
€
31,966.00
€
27,220.00
€
4,746.00 17.44%
Financial income
€
1,815.00
€
2,559.00
-€
744.00 -29.07%
Other expenses
€
1,503.00
€
27,195.00
-€
25,692.00 -94.47%
Other income
€
1,351.00
€
33,700.00
-€
32,349.00 -95.99%
Net expenses for financial liability in
respect of Income Units sold to private
investors
€
10,666.00
€
10,680.00
-€
14.00 -0.13%
Share in result of associate and joint
ventures
€
350.00
€
1,750.00
-€
1,400.00 -80.00%
Profit before tax
€
31,697.00
€
38,219.00
-€
6,522.00 -17.06%
Income tax expense
€
1,748.00
€
62.00
€
1,686.00 2719.35%
Profit for the year
€
29,949.00
€
38,157.00
-€
8,208.00 -21.51%

26FINANCIAL ANALYSIS
5) Horizontal Analysis of ABHL Company.
Andrew Brownsword Hotel Ltd
Statement of Profit and Loss Account
Particulars 2017 2016 Changes in Balances
% Change in
Balances
Turnover
£
1,44,06,392.00
£
1,79,09,655.00
-£
35,03,263.00 -19.56%
Cost of sales
£
71,55,543.00
£
90,33,718.00
-£
18,78,175.00 -20.79%
Gross profit
£
72,50,849.00
£
88,75,937.00
-£
16,25,088.00 -18.31%
Administrative expenses
£
82,06,528.00
£
87,33,876.00
-£
5,27,348.00 -6.04%
Operating income
-£
9,55,679.00
£
1,42,061.00
-£
10,97,740.00 -772.72%
Interest Receivable and
Similar Income
£
23,042.00
£
21,017.00
£
2,025.00 9.64%
Exceptional Expenses
£
56,132.00
£
57,47,759.00
-£
56,91,627.00 -99.02%
Exceptional Income
£
4,93,684.00
£
2,10,18,193.00
-£
2,05,24,509.00 -97.65%
Profit Before Tax
-£
4,95,085.00
£
1,54,33,512.00
-£
1,59,28,597.00 -103.21%
Income tax expense
£
3,66,581.00
£
12,56,363.00
-£
8,89,782.00 -70.82%
Profit for the period
-£
8,61,666.00
£
1,41,77,149.00
-£
1,50,38,815.00 -106.08%

27FINANCIAL ANALYSIS
6) Vertical Analysis of PPHE Hotel Group Ltd
PPHE Hotel Group
Statement of Profit and Loss Account
Particulars 2017
Perc
ent 2016
Perc
ent
Revenues
€
3,25,118.00
100.
00%
€
2,72,470.0
0
100.
00%
Operating expenses
€
2,09,092.00
64.3
1%
€
1,69,491.0
0
62.2
1%
EBITDAR
€
1,16,026.00
35.6
9%
€
1,02,979.0
0
37.7
9%
Rental expenses
€
8,722.00
2.68
%
€
8,844.00
3.25
%
EBITDA
€
1,07,304.00
33.0
0%
€
94,135.00
34.5
5%
Depreciation and amortisation
€
34,288.00
10.5
5%
€
25,330.00
9.30
%
EBIT
€
73,016.00
22.4
6%
€
68,805.00
25.2
5%
Financial expenses
€
31,966.00
9.83
%
€
27,220.00
9.99
%
Financial income
€
1,815.00
0.56
%
€
2,559.00
0.94
%
Other expenses
€
1,503.00
0.46
%
€
27,195.00
9.98
%
Other income
€
1,351.00
0.42
%
€
33,700.00
12.3
7%
Net expenses for financial liability in respect of Income
Units sold to private investors
€
10,666.00
3.28
%
€
10,680.00
3.92
%
Share in result of associate and joint ventures
€
350.00
0.11
%
€
1,750.00
0.64
%
Profit before tax
€
31,697.00
9.75
%
€
38,219.00
14.0
3%
Income tax expense
€
1,748.00
0.54
%
€
62.00
0.02
%
Profit for the year
€
29,949.00
9.21
%
$
38,157.00
14.0
0%

28FINANCIAL ANALYSIS
7) Vertical Analysis of Andrew Brownsword Hotel Ltd
Andrew Brownsword Hotel Ltd
Statement of Profit and Loss Account
Particulars 2017
Percen
t 2016
Percen
t
Turnover
£
1,44,06,392.00
100.00
%
£
1,79,09,655.00
100.00
%
Cost of sales
£
71,55,543.00 49.67%
£
90,33,718.00 50.44%
Gross profit
£
72,50,849.00 50.33%
£
88,75,937.00 49.56%
Administrative expenses
£
82,06,528.00 56.96%
£
87,33,876.00 48.77%
Operating income
-£
9,55,679.00 -6.63%
£
1,42,061.00 0.79%
Interest Receivable and Similar
Income
£
23,042.00 0.16%
£
21,017.00 0.12%
Exceptional Expenses
£
56,132.00 0.39%
£
57,47,759.00 32.09%
Exceptional Income
£
4,93,684.00 3.43%
£
2,10,18,193.00
117.36
%
Profit Before Tax
-£
4,95,085.00 -3.44%
£
1,54,33,512.00 86.17%
Income tax expense
£
3,66,581.00 2.54%
£
12,56,363.00 7.02%
Profit for the period
-£
8,61,666.00 -5.98%
£
1,41,77,149.00 79.16%

29FINANCIAL ANALYSIS
8) Ratio Analysis of PPHE Hotel Group Ltd.
Key Financial Ratios of the Business
PPHE Hotel Group
Particulars 2017 2016 2015
€"000 €"000 €"000
Sales € 3,25,118.00 € 2,72,470.00 € 2,18,669.00
G.Profit € 1,16,026.00 € 1,02,979.00 € 88,497.00
N. Profit € 29,949.00 € 38,157.00 € 29,242.00
EBIT € 73,016.00 € 68,805.00 € 61,079.00
COGS € 2,09,092.00 € 1,69,491.00 € 1,30,172.00
Total Asset € 15,40,046.00 € 13,17,910.00 € 9,57,318.00
Total Current Assets € 3,19,832.00 € 1,95,603.00 € 71,703.00
Stock € 2,701.00 € 2,412.00 € 999.00
Debtors € 13,392.00 € 12,576.00 € 9,154.00
Current Liabilities € 93,104.00 € 1,73,004.00 € 59,875.00
Total Equity € 4,40,938.00 € 3,30,202.00 € 2,67,904.00
Long term Borrowings € 6,66,936.00 € 6,42,120.00 € 4,40,110.00
Interest Expense € 31,966.00 € 27,220.00 € 24,221.00
Profitability Ratios
Gross Profit Margin 35.69% 37.79% 40.47%
Net Profit Margin 9.21% 14.00% 13.37%
Operating Profit Margin 22.46% 25.25% 27.93%
Efficiency Ratio
Total Asset turnover ratio 0.2111 0.2067 0.2284
Inventory turnover ratio 81.78838255 99.37906772 122.1698733
Debtor Turnover Ratio 25.03989526 25.07777266 18.0345567
Liquidity Ratio
Current Ratio 3.435212236 1.130627038 1.197544885
Liquid ratio 3.406201667 1.116685163 1.180860125
Gearing Ratio 1.51254 1.94463 1.64279
Interest Coverage Ratio 2.284176938 2.527736958 2.521737335
9) Ratio Analysis of ABHL Company
Key Financial Ratio of ABHL Company

30FINANCIAL ANALYSIS
Andrew Brownsword Hotel Ltd
Particulars 2017 2016 2015
Sales
£
1,44,06,392.00 £ 1,79,09,655.00 £ 1,88,08,229.00
G.Profit
£
72,50,849.00
£
88,75,937.00 £ 91,60,897.00
N. Profit -£ 8,61,666.00 £ 1,41,77,149.00 £ 2,99,876.00
EBIT -£ 9,55,679.00
£
1,42,061.00 £ 2,86,331.00
COGS
£
71,55,543.00
£
90,33,718.00 £ 96,47,332.00
Total Asset
£
6,91,95,285.00 £ 6,89,54,451.00 £ 5,37,91,557.00
Total Current Assets
£
2,54,36,489.00 £ 2,81,06,774.00 £ 65,73,081.00
Stock
£
1,57,346.00
£
1,39,014.00 £ 1,90,982.00
Debtors
£
13,77,585.00 £ 2,06,96,045.00 £ 11,40,094.00
Current Liabilities
£
29,51,547.00
£
22,15,628.00 £ 24,86,246.00
Total Equity
£
6,46,18,227.00 £ 6,54,79,893.00 £ 5,13,02,744.00
Long term Borrowings
£
16,25,511.00
£
12,58,930.00 £ 2,567.00
Interest Expense £ - £ -
£
464.00
Profitability Ratios
Gross Profit Margin 50.33% 49.56% 48.71%
Net Profit Margin -5.98% 79.16% 1.59%
Operating Profit Margin -6.63% 0.79% 1.52%
Efficiency Ratio
Total Asset turnover
ratio 0.2082 0.2597 0.3497
Inventory turnover ratio 48.289533 54.7504697 42.68882084
Debtor Turnover Ratio 1.305303387 1.64036829 17.77345826
Liquidity Ratio
Current Ratio 8.618019296 12.68569182 2.643777406
Liquid ratio 8.564709625 12.62294934 2.566961998
Gearing Ratio 0.02516 0.01923 0.00005

31FINANCIAL ANALYSIS
Interest Coverage Ratio 0 0 617.0926724
10) Taxation Rate of PPHE Company and Revenue Distribution.
Country Revenue Tax rate Share
Weighted Average Tax
Rate
Netherlands 47.323 25.00% 0.15 3.7%
Germany 30.72 29.00% 0.10 2.8%
UK 185.78 20.00% 0.58 11.6%
Croatia 56.303 18.00% 0.18 3.2%
Group 320.126 21.3% 100% 21.3%
11) Cost of Equity and WACC for PPHE Company.
PPHE WACC m GBP
Ve 705.4
Vd 1006
Ve+Vd 1711.4
TAX 21.3%
Kd 3.10%
DIVend 0.24
DIVbeg 0.2
DIVend/DIVbeg 1.20
^1/3 1.06
g(CAGR) 6.3%
Ke(DGM) 7.7%
WACC (DGM) 4.6%
Rf 1.29%
Beta 0.52
CRP 1.2%
ERP 5.55%
Ke (CAPM) 4.8%
WACC (CAPM) 3.4%
WACC Average 4.0%
12) Cost of Equity and WACC for ABHL Company.

32FINANCIAL ANALYSIS
ABHL WACC th GPB
Equity 64618
Liab short 2951
Vd 1625
D/E 0.07
beta unlevered 0.71
Tax 19.25%
Beta 0.75
ERP 5.55%
CRP 0.69%
rf 1.27%
Ke 6.0%
CDS 2.60%
Kd 3.9%
WACC 5.9%
13) Financial Position of PPHE and ABHL Company.
ABHL GBP PPHE GBP
Net Assets 6,46,18,227 Net Assets 1,44,69,42,000
Shares 6,42,92,008 Shares 4,42,25,706
Share Price 1.01 Share Price 32.7
Net Debt -31,24,500 Net Debt 40,80,91,000
Debt 45,77,058 Debt 70,50,00,000
Cash 77,01,558 Cash 24,10,21,000
EV 6,14,93,727 EV 1,85,50,33,000

33FINANCIAL ANALYSIS
14) Share Valuation of ABHL Group Ltd.
GBP mln
201
3
201
4
201
5
201
6
201
7 2018 2019
202
0
202
1
202
2
202
3
202
4
202
5
Revenue
17.
214
18.
726
18.
808
17.
909
14.4
06
13.9
82 14.583
15.
210
15.
864
16.
547
17.
258
18.
000
18.3
60
Delta
Revenue
0.0
67
1.5
14
0.0
82
-
0.8
99
-
3.50
3
-
0.42
4 0.601
0.6
27
0.6
54
0.6
82
0.7
12
0.7
42
0.36
0
GR
Revenue
0.3
9%
8.8
0%
0.4
4%
-
4.7
8%
-
19.5
6%
-
2.94
% 4.30%
4.3
0%
4.3
0%
4.3
0%
4.3
0%
4.3
0%
2.00
%
EBITDA
1.3
44
2.1
57
2.1
53
17.
007
0.75
7
3.66
3 3.937
4.5
63
4.9
18
5.2
95
5.6
95
6.1
20
6.24
2
EBITDA/
Rev
7.8
%
11.
5%
11.
4%
95.
0%
5.3
%
26.2
% 27.0%
30.
0%
31.
0%
32.
0%
33.
0%
34.
0%
34.0
%
DA
2.0
66
1.9
86
1.8
67
1.5
85
1.27
5
1.40
5 1.312
1.3
69
1.4
28
1.4
89
1.5
53
1.6
74
1.70
7
EBIT
-
0.7
23
0.1
71
0.2
86
15.
422
-
0.51
8
2.25
8 2.625
3.1
94
3.4
90
3.8
06
4.1
42
4.4
46
4.53
5
EBIT/Rev
-
4.2
%
0.9
%
1.5
%
86.
1%
-
3.6
%
16.2
% 18.0%
21.
0%
22.
0%
23.
0%
24.
0%
24.
7%
24.7
%
Delta
WCR
-
0.1
48
0.3
75
0.0
51
-
0.5
72
0.25
4
-
0.15
2 0.215
0.2
25
0.2
34
0.2
44
0.2
55
0.2
66
0.12
9
DWCR/
DRev
-
2.2
01
0.2
48
0.6
22
0.6
36
-
0.07
3
0.35
8 0.358
0.3
58
0.3
58
0.3
58
0.3
58
0.3
58
0.35
8
CAPEX 0.583
0.6
08
0.6
35
0.6
62
0.6
90
0.7
20
0.73
4
Capex/
Rev 4% 4% 4% 4% 4% 4% 4%
TAX
20.
00%
20.
00%
20.
00%
20.
00%
19.2
5%
19.2
5%
19.25
%
19.
25%
19.
25%
19.
25%
19.
25%
19.
25%
19.2
5%
Dr
11.00
%
11.
0%
11.
0%
11.
0%
11.
0%
11.
0%
11.0
%
Discount 0.90
0.8
1
0.7
3
0.6
6
0.5
9
0.5
3 0.48
FCFF 3.064 3.5 3.8 4.1 4.4 4.8 4.76

34FINANCIAL ANALYSIS
65 46 45 62 10 4
Discount
ed FCFF 2.761
2.8
93
2.8
12
2.7
30
2.6
48
2.5
72
2.29
5
Terminal
Value
52.9
34
PV TV
25.4
96
EV 44.207
Shares
6,42,9
2,008
Share
Price 0.7
TA
47.
669
47.
218
40.
887
43.5
85
42.3
0229
44.121
2869
46.
019
47.
997
50.
061
52.
214
54.
459
55.5
482
Rev/TA
0.3
9
0.4
0
0.4
4 0.33 0.33 0.33
0.3
3
0.3
3
0.3
3
0.3
3
0.3
3 0.33
ND
-
31,24,
500

35FINANCIAL ANALYSIS
15) Overall Summary
PPHE EV, GBP
Share price,
GBP
NA
1,85,50,33,00
0 33
EV/EBITDA
1,82,58,75,61
0 51
EV/Sales
1,28,78,49,99
5 38
P/E
1,35,84,57,19
6 21
DCF
2,68,44,19,07
8 51
Weighted
average
1,77,25,09,95
6 40
ABHL EV, GBP
Share price,
GBP
NA 6,14,93,727 1.0
EV/EBITDA 7,03,75,365 1.0
EV/Sales 4,69,63,560 0.7
P/E 8,10,29,353 1.3
DCF 4,42,06,898 0.7
Weighted
average 5,82,95,365 0.9

36FINANCIAL ANALYSIS
16) Key Financial Data of PPHE Ltd.