Dalata Hotel : 2021 Half Year Report

HY 2021 Interim Results

Emerging Strong as Recovery Commences

Occupancy levels improving month on month

Dermot Crowley to assume role of CEO on 31 October

ISE: DHG LSE: DAL

Dublin and London | 1 September 2021: Dalata Hotel Group plc ("Dalata" or the "Group"), the largest hotel operator in Ireland with a growing presence in the United Kingdom, announces its results for the six month period ended 30 June 2021.

	Results Summary			H1 2021		H1 2020			Variance
	€million
Revenue	39.6	80.8		(51.0%)
Segments EBITDAR1	6.7	15.6		(57.1%)
Adjusted EBITDA1	1.4	10.1		(85.8%)
Loss before tax	(37.8)	(70.9)		46.6%
Basic loss per share (cents)	(13.6)	(34.0)		60.0%
Adjusted basic loss per share1 (cents)	(14.5)	(13.1)		(10.7%)
	Group key performance indicators			H1 2021		H1 2020			Variance
Occupancy %	19.9%	34.3%
Average room rate1 (€)	81.99	95.28		(13.9%)
RevPAR1 (€)	16.28	32.69		(50.2%)

PROTECTING OUR PEOPLE, CASH AND BUSINESS

• Hotels now fully re-opened having remained operational for essential services throughout the period in line with government restrictions
• Positive Adjusted EBITDA of €1.4 million driven by strong operational management
• Cash outflow2 of €24 million for the first six months
• Proactive working capital management and government support schemes allowed us to protect employment within the Group and preserve cash during periods of low occupancies
• Maintained engagement with our employees enabling the business to effectively ramp up with an engaged workforce as economies re-open

WELL-POSITIONED FOR THE RECOVERY

• Increasing demand for staycations since hotels fully re-opened for leisure in May (UK) and June (ROI)
• Group occupancy3 of 44% in June 2021 - increasing to 58% in July and 68% in August
• Strong customer satisfaction scores since re-opening

STRONG BALANCE SHEET PROVIDES SECURITY, FLEXIBILITY AND THE ENGINE FOR FUTURE GROWTH

• Robust balance sheet backed by €1.2 billion in property, plant and equipment (no significant change to property valuations since 31 December 2020)
• Liquidity remains strong with cash and undrawn committed debt facilities of €270 million at 30 June 2021
• Gearing remains conservative with Net Debt to Value1 of 27% (31 December 2020: 23%)

REMAINING FOCUSED ON LONG-TERM GROWTH

• Current pipeline of over 2,600 rooms in prime locations which will see UK footprint surpass Dublin by 2025
• Opening of new Maldron Hotel Glasgow City in August 2021; further six hotels on track to open by May 2022
• Reputation with current and prospective landlords has been enhanced

1. See Supplementary Financial Information which contains definitions and reconciliations of Alternative Performance Measures
   ("APM") and other definitions.
2. Cash outflow of €24 million excludes impact of net receipt of loans and movements in exchange rates.
3. Excludes the Ballsbridge Hotel in Dublin as it is not currently trading and the new Maldron Hotel Glasgow City in the UK which

opened in August 2021.

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HY 2021 Interim Results

STRATEGIC AND OPERATING HIGHLIGHTS

RE-OPENING DELIVERS STRONG RECOVERY

• Dalata hotels have fully re-opened with trading improving markedly during the summer period. Our strategy to retain our core teams throughout the pandemic ensured a swift and smooth re-opening.
• The Group earned positive Adjusted EBITDA despite hotels only open for essential services for the majority of the period. The impact of reduced trading was mitigated through pro-active cost control measures and the utilisation of government supports.
• Really encouraging occupancy for the Group of 44% in June, 58% in July and 68% in August as the recovery starts to take hold across all our markets. Occupancies at our Dublin and London hotels will remain lower until the return of international travel and large events, but this has been partially offset by staycations.

RETENTION OF CORE TEAMS CRITICAL TO BUSINESS SUCCESS

• We continued to stay in constant contact with our people through our employee app and providing learning and development opportunities with over 44,000 courses completed on Dalata Online during the first six months of 2021. This ensured our people were well prepared and motivated when returning to work. This in turn allows us continue to provide our guests with the excellent Dalata experience they are accustomed to. Our hotels are achieving strong customer satisfaction scores since re-opening.
• We have renewed the accreditation of our Dalata Keep Safe Programme with Bureau Veritas, a world leader in Health and Safety testing, inspection and certification. This gives our guests, employees and suppliers the comfort that we are operating our hotels safely in line with best practice health and safety protocols.

MAINTAINING STRONG CULTURE AND VALUES

• The Board has appointed Dermot Crowley to succeed Pat McCann as CEO on 31 October 2021 following a rigorous selection process. Dermot has played a key role in the development of the business since 2012 and is committed to continuing to grow the business and protecting and enhancing the Dalata culture.
• Following Dermot's appointment as CEO, Carol Phelan was promoted to CFO. Since joining the business in 2014, Carol has been key member of the management team developing the finance and treasury function post IPO.
• The Board, through the Nomination committee, is continuing to address the question of Board composition. It is expected that a new non-executive director will be appointed before the end of 2021.
• ESG performance remains a top priority for management. We have accelerated our ESG initiatives despite the challenges from Covid-19 and are currently developing a 3-year ESG Strategy plan that will be launched by Q1 2022. Dalata achieved 36 gold and 8 silver awards with Green Tourism in 2021, representing significant progress on our 2019 scores.

GROWTH STRATEGY REMAINS COMPELLING

• We opened our first hotel in Scotland, the 300-room Maldron Hotel Glasgow City in August. The hotel management team is made up of existing Dalata employees who will ensure that the Dalata culture and operating model are adopted from the outset.
• We are excited to open a further six hotels in Bristol, Manchester, Glasgow and Dublin between December this year and May 2022, totalling over 1,500 rooms. We have started the construction of Maldron Hotel Shoreditch in London. The remaining pipeline of four hotels, including one hotel in Ireland and three in the UK, are at the pre-construction phase. Our Acquisitions and Development team are continuously looking at opportunities to add to this pipeline.
• Dalata's robust balance sheet, backed by €1.2 billion of hotel assets, and strong financial position with cash and undrawn committed debt facilities of €293 million at the end of August, ensures the Group is well-positioned to avail of future opportunities for leases.
• We remain confident that our enhanced reputation as a strong reliable covenant will provide us with an advantage in securing new opportunities as we expand our pipeline in the future.

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HY 2021 Interim Results

UPDATED LTIP PERFORMANCE CONDITION

In line with guidance from the Investment Association, the Group deferred the finalisation of the performance condition target ranges in respect of the 2021 share awards granted on 3 March 2021, in light of the uncertainty concerning future market conditions due to the impact of Covid-19. The Group confirms that the performance condition measures and targets in respect of the 2021 share awards made on 3 March 2021 are as set out below:

	Performance condition			Threshold	Maximum
		Weighting	(25% vesting)	(100% vesting)
TSR1	50%	Median	Upper quartile
Free cash flow per share (FCPS)2	50%	€0.35	€0.47

1. Total shareholder return (TSR) is measured against a bespoke comparator group of 20 listed peer companies in the travel and leisure sector. For performance between the median and upper quartile, vesting is determined by assessing between which two ranked companies Dalata's TSR falls and calculating vesting on a linear basis between the two companies.
2. Basic free cash flow per share (FCPS)34achieved in the year ending 31 December 2023. The adoption of FCPS instead of EPS (as initially set out in the annual report) follows careful consideration of the needs of the business as it recovers from the disruption of the pandemic and continues the execution of its growth strategy. We intend to consult with shareholders on this and other matters concerning the implementation of remuneration policy later this year.

OUTLOOK

Following the full re-opening of the hospitality industry in May in the UK and June in Ireland, Covid-19 restrictions continue to be relaxed as the rollout of vaccines in both countries reaches an advanced stage with more than 60% of the entire population fully vaccinated in both countries. The UK has lifted many of the legal restrictions introduced to curb the spread of Covid-19. In Ireland non-essential international travel was permitted from 19 July but restrictions on large events remain in place. The Irish Government has published a road map on the easing of the remaining Covid-19 restrictions with most restrictions expected to be lifted by 22 October.

As expected, there was strong domestic demand for hotel stays once restrictions were lifted with occupancies improving month on month and hitting 68% in August. It is expected the improved trading environment will deliver an increase in earnings with Adjusted EBITDA for July and August projected to be approximately €24 million. In addition, the Group had combined cash resources and undrawn debt facilities of €293 million at the end of August 2021.

While the emergence of new variants remains a threat, the progress being made on the rollout of vaccines across Europe and globally is very encouraging. The outlook for the near term remains uncertain at present. A strong recovery in domestic leisure is underway and we expect domestic corporate business to further recover this month given the progressive easing of restrictions. The timing of the recovery of international leisure and corporate travel is somewhat uncertain but the ongoing global rollout of vaccines is a very positive influencing factor. The recovery of international travel is important for our Dublin and London hotels.

The Group will continue to implement measures to combat the impact of Covid-19 on the business. In addition, our Acquisitions and Development team are assessing distressed opportunities as they arise. Our reputation as a strong reliable covenant has been enhanced through the course of the pandemic and we are confident that this will place Dalata in a stronger position to secure further growth opportunities.

The Group's asset backing and strong liquidity ensure it is well-positioned to withstand any remaining Covid-19 restrictions in 2021 and participate in the recovery of global tourism. The hospitality sector has historically shown tremendous resilience to recover from other demand shocks and crises. As a result, the Board remain confident that

3 See Supplementary Financial Information which contains definitions and reconciliations of Alternative Performance Measures " APM") and other definitions.

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HY 2021 Interim Results

Dalata is well placed to benefit with its strong balance sheet, young, well-invested portfolio and experienced and motivated teams at hotels and central office.

Pat McCann, Dalata Hotel Group CEO, commented:

"I am pleased to report our hotels have successfully re-opened to all guests in recent months. As a sense of normality returns to society, the demand for domestic leisure has increased across Ireland and the UK. Our people have skilfully managed the re-opening and are once again providing our guests with an exceptional experience.

As I reflect on my time at Dalata, I am incredibly proud of what we have achieved as a Group. Through good times and bad, the dedication and resilience shown by our teams has been admirable. This has never been tested to such a great degree as during the course of the last 18 months. Our values and beliefs have shone a light to guide us through this difficult time and we will come out the other side more confident than ever in our abilities and in how we operate our business. Our skilled and wonderful people will drive the business to new heights in the future.

It gives me great pleasure to be handing over the reins of the business to Dermot Crowley on 31 October 2021. Dermot has been instrumental in the development of the business and execution of our strategy since he joined in 2012 and has been selected by the Board to succeed me as CEO. I have known Dermot for over twenty years, and I am confident he will lead Dalata through the next phase of growth while maintaining the wonderful culture and people focus that we have built together at Dalata.

As I prepare to step aside from my time at Dalata, I will be watching its progress with great enthusiasm. The Group has all the attributes to be a great success into the future, with superb people at its core. We are entering a period of great opportunity in the hotel industry. Dalata has a wonderful reputation with stakeholders across all areas of the business and is strongly positioned to take advantage of future opportunities in new and existing markets. I have full confidence in the Dalata team as it embarks on this pursuit".

Dermot Crowley, Dalata Hotel Group CEO Designate, commented:

"I am honoured to have been chosen by the Board to succeed Pat as CEO. I have known Pat for over 20 years, during which he has given me great guidance and support which I hugely appreciate. I plan to continue to uphold the strong culture and values we have built together at Dalata.

The roll out of vaccines in both Ireland, the UK and globally has been very encouraging to date. International travel in Ireland returned on 19 July and restrictions were relaxed in the UK earlier in the summer. This is an important development as our hotels in Dublin and London require the return of international travel for occupancies to recover more substantially.

The Irish and UK governments have provided tremendous supports to the hospitality industry over the last 18 months which have greatly helped us in weathering this crisis and protecting employment. As the hospitality industry begins to recover and these supports unwind, it is important to bear in mind that it will take some time for the industry to fully recover. One key support has been the reduced VAT rate of 9% in Ireland which should be extended further to support the industry and the large number of jobs that depend on it.

Our HR team have been instrumental in building a strong framework around how we recruit, retain and develop our people. Our Dalata Academy and the wealth of training opportunities available within the organisation allows our people to constantly grow and develop, making Dalata a great place to work in the hospitality industry in both Ireland and the UK. I am delighted to reveal that 2021 will see our largest ever graduate intake.

ESG considerations continue to be front and centre of everything we do at Dalata and we have made further progress in this area in the last six months. We believe that embedding sustainability across all areas of the business will give us a competitive advantage in the future. Following a rigorous tendering process, we have partnered with a leading ESG Advisory firm to support the development of our 3-year ESG Strategy plan which will be launched by Q1 2022. Our ESG strategy plan will be aligned with best practice and will bring together and complement our current actions and objectives. We are also committed to setting climate targets that align with TCFD (Task Force on

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HY 2021 Interim Results

Climate-Related Financial Disclosures). I am delighted that our hotels received 36 gold and 8 silver awards with Green Tourism in 2021 representing significant progress on our previous results. This provides us with a solid platform across all hotels from which we can build and improve.

Our financial position remains very strong and we have protected our cash through strong operational management, cutting non-essential costs and availing of government supports. Our asset backed balance sheet has continued to serve us well and will give us great flexibility and security as we look at opportunities that begin to arise.

I am delighted that we have opened our first hotel in Scotland with the Maldron Hotel Glasgow City on 3 August. This 300-room hotel is ideally located on Renfrew Street in the city centre. The project was successfully managed by our Acquisitions and Development team in conjunction with our development partners, before handing over to the management team at the hotel. As is the case with all our new hotels, the senior management team was promoted from within the Group, highlighting our ability to provide our people with opportunities to grow and develop within Dalata while de-risking the execution of our growth plans.

We will add a further six hotels to the Dalata portfolio between December 2021 and May 2022. This includes our first ever hotel in Bristol, two hotels in Manchester city centre, a Clayton Hotel in Glasgow to complement our existing Maldron hotel in the city and two hotels in Dublin. These new openings along with the future openings planned for 2023 and 2024 are transforming our portfolio. Our teams will continue to work on sourcing and securing additional projects to add to our pipeline in the future".

ENDS

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