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7/31/2019 Danubius Hotels Group Annual Report 2011
1/74
DANUBIUS HOTELS GROUP
ANNUAL REPORT
2011
7/31/2019 Danubius Hotels Group Annual Report 2011
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Contents
Statement by the Chairman
Quality in focus -2011
The Board of Directors
The Supervisory Board
Tourism in 2011
Report of the Board of Directors
Report of the Supervisory Board
Independent Auditors Report
Consolidated statement of financial position
Consolidated income statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Report on the 2012 business targets
1
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Statement by the Chairman for AGM -
Annual Report 2011
Dear Shareholders,
It is no surprise that 2011 proved to be another extremely challenging year, against the background of
the continuing crisis in the Eurozone and the economic problems in Hungary.
Nevertheless Danubius Group increased revenues, more than maintained
its operating profit and reduced borrowings; all due to extremely tight
management of our activities. Our investment policy of the last decade to
achieve geographical diversification through the acquisition of health spa
businesses in the region continued to sustain the groups results. This policy
will also provide important opportunities for development in the future.
Hungary has been caught up in the European financial crisis and is currently
negotiating with the European Union and the IMF on a range of issues. From
the viewpoint of the tourism industry, it is important that Hungary concludes
its negotiations on financial aid as soon as possible as uncertainty always
raises question marks in the minds of potential tourists and conference organisers. Having said this, the fourth
quarter of 2011 produced some positive signs as, helped by the weaker Hungarian forint, both sales revenue
and EBITDA were ahead of the previous year. Nevertheless, the underlying problem of the imbalance of supply
and demand in Budapest continued the prolonged and aggressive rates war which required an everyday fight
from our sales people to hold on to market share. In addition, rising energy prices eroded some of the benefits
achieved from various cost-cutting programmes implemented by management over the last three years,
including the recent steps in 2011 of further reducing headcount, establishing new clusters Budapest and
rationalising structures in the head office and some countryside hotels.
Against these continuing efforts to improve the efficiency of our business, it was especially disappointing
to learn of the demise of MALEV in February 2012. Whilst several of the budget airlines have quickly stepped
into the breach, the transition away from a scheduled national carrier is bound to be painful and will further
complicate the competitive position of Hungary in the global tourism market. MICE business and leisure
groups will certainly be affected but, even now, it is too early to be sure of the full implications.
Turning to the operational results for 2011, our Company continued to prove resilient to extremely testing
business conditions and I would highlight the following aspects:
Revenues increased by 2%, more than HUF 1 billion compared to 2010, mainly thanks to the strong
fourth quarter and weaker Forint.
Group occupancy increased by 0.7% compared to 2010, whilst in Hungary the occupancy increase was
1.1% despite an increasingly competitive market.
The operating profits and cashflow of the subsidiaries in Czech Republic, Slovakia and Romania played
an important role in offsetting difficult trading conditions in Hungary.
In spite of the HUF 260 million one-off charge for restructuring, the operational profit of the group
improved by 37%.
The net cash provided by our operating activities increased from HUF 4.3 billion in 2010 to HUF 4.6 billion in
2011, due largely to effective management of working capital.
The overall level of Group borrowings decreased considerably by EUR 7.7 million from the beginning ofthe year, however interest costs increased due to high EURIBOR prime rates. Management exercised
tight control over l iquidity.
2
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Statement by the Chairman for AGM -
Annual Report 2011
Due to the extreme volatility of the forint in the fourth quarter, the largely unrealised foreign exchange
loss for the year amounted to HUF 1.9 billion compared to HUF 0.5 billion in 2010.
As a result of the financial results, our loss af ter tax increased from HUF 1.0 billion in 2010 to HUF 2.3
billion, but, despite this,
shareholders equity grew by just over 1%, due to translation gains on investments in subsidiaries.
Against this background, I would like to mention four developments which can have a positive influence
on our future business:
First, the Companys results have been boosted over recent months by the relatively weaker forint and
Czech Crown. If this continues in 2012, then our revenues and margins will benefit.
Secondly, I already mentioned the diversification of our business and I would like to illustrate the
importance of this with some figures. In 2011, 42% of revenue arose in the health spas outside Hungary
and this figure rises above 60% if the Hungarian spas are included. Of course the Budapest market
remains central to our activities, but it is an important advantage that the company is not as dependent
on it as it was years ago. Marienbad and Sovata had particularly successful years and the Hungarian
spa business performed ahead of 2010. Life was more difficult in Piestany where Slovakias membership
of the Euro has intensified competitive pressures.
A third factor is that not all markets are slow. The Russian market has continued to boom in Marienbad,
with Russian guests now outnumbering German guests, and Russian guest nights in Hungary grew
39%. Poland and Turkey are also in the first tier of the healthier European economies and Hungarian
guest nights from these countries were up 27% and 16% respectively on 2010. We will see in due
course whether the Governments overtures to China bear fruit, but Chinese guest nights in Hungary
were also up 37% on 2010. Occupancy in 2011 compared with 2010 was up in all countries, except
Slovakia, but, looking forward, it is absolutely clear that we must accelerate our drive into new markets.
and finally a huge opportunity is presented by the constant advance of technology. Not just internet
and social media, but smart phones and other mobile devices which are being used more and more to
research, make enquiries and book hotels. Whilst the big brands may have an advantage in such
developments, in Hungary and our spa business we have much non-branded competition and a great
chance to take a lead.
In order to capitalise fully on these opportunities, it remains the case that further investment will berequired in our properties. We have been able to complete substantial projects in Marienbad, the new
Maria Spa, in Piestany, the renewed Balneotherapy section and in Sovata, a new wellness and spa area.
In Hungary the climate for investment and crucially for funding investment has continued to be more difficult.
We continue to look hard for the right solutions to funding the investment needs of our hotels but it will
remain essential that, when we are able to invest, we invest wisely and in a way that will ensure a proper
return on that investment.
During the last year, I can inform you that CP Holdings increased its overall direct and indirect interest
in the Company from 81.40% to 81.72% today, which ensures a 78.03% voting right.
Given the 2011 results and the exacting business conditions which continue to face the Group, the Board
is not proposing the payment of a dividend this year.
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ANNUAL REPORT2011
Statement by the Chairman for AGM -
Annual Report 2011
As I have already indicated, I expect that tough business conditions wil l continue in 2012, particularly
in Hungary, where the economic situation is likely to lead to a further tightening of domestic demand.
We must hope that the polit icians across Europe are able to stabi lise the economic situation, so lessening
uncertainty and starting the process of rebuilding confidence in markets. I would like to thank the
management and all employees of Danubius Group for their perseverance, hard work and loyalty throughout
the last year. In Hungary, we are particularly grateful for the continued commitment of our people during
a period of organisational change. Sir Bernards grandson and one of your directors, Alexei Schreier, has
now been appointed Joint Managing Director of CP Holdings Limited and this is a further signal of the
wholehearted commitment of the Schreier family and all at CP Holdings to the Danubius Hotels Group,
its management and employees.
As we look back on 2011, we can take particular pride in the results of our health spa hotels and
the qual ity of our treatments and customer service which allow us to build further on our position as
the leading spa hotel chain in Europe. In Budapest, our team has shown huge enthusiasm in an
extraordinarily competitive market. Across the Company, we know that our people will continue to deliver
these outstanding efforts during 2012. We will concentrate on improving all those aspects of our business
over which we have control and, like many other businesses, look forward to the start of a gradual economic
recovery. We are fortunate that our business is underpinned by our unique asset base and this will hold us
in good stead for the future.
Sir Bernard Schreier
Chairman of the Board
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Mission Statement
Our mission at Danubius Hotels Group, through listening to our
guests, is to meet and exceed constantly their expectations.
Quality is put at the heart of everything we do, whether at
Health Spa Resorts or City Hotels.
We give our associates the utmost of attention, knowledge and
training.
Quality in focus
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ANNUAL REPORT2011
Mission Statement
We build and strengthen our leadership in operat ing Health
Spa Resorts in European destinations.
We create value through innovative international investments and
management with social responsibility, efficient and environment
friendly operations.
Quality in focus
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The Board of Directors
Chairman of the Board;
Chairman of
CP Holdings Limited and subsidiaries;
Vice President of Bank Leumi Plc.
Director of CP Holdings Limited
Director of CP Holdings Limited
Sir Bernard Schreier Alexei Schreier
Iris Gibbor John Smith
Deputy Chairman of Danubius Hotels
Group from 2007;
Director of CP Holdings
Limited and subsidiaries
Robert Levy
Chief Executive Officer
of CP Holdings Limited from 2007;
Director of subsidiaries
Sndor Betegh
Chief Executive Officer
of Danubiusfrom 1990 till 2006
Dr. Imre Dek
Senior Vice President
of Danubius from 1990,Chief Executive Officer
from 2006
Jnos Tbis
Vice President,
Finance of Danubiusas of 1991
Dr. Istvn Fluck
General Vice President ofFEMTEC,
Medical Director and
Chief Physician of
Budapest Spa Zrt.
Jzsef Lszl
Manager ofSAS Skandinavian Airlines
in Budapest until 1998;
honorary docent
Ing. Lev Novobilsky
General Manager ofLcebn Lzne a.s.
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The Supervisory Board
Tibor Antalpter
Chairman of the Supervisory Board
from 2002;
Ambassador of the Republic of Hungary
to London from 1990 to 1995
Dr. Gbor Bor
Chief Executive Officer of
Investor Holding Zrt.
and Interag Holding Zrt.
Dr. Andrs Glszcsy
Retired minister
Lszl Polgr
Auditor, forensic auditor
in taxation
and accounting
ANNUAL REPORT2011
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Tourism in 2011
In 2011, the public accommodation establishments registered a slight decline due to lower domestic demand.
The number of guests was higher by 1.5% while the number of guest-nights were 0.6% lower compared to previous
year. The number of domestic guests decreased by 2.4% while the number of guest-nights lowered by 4.3%
compared to last year. The number of foreign guests increased by 6%, while the number of guest-nights was up by
only 3.2% compared to 2010. Accommodation establishments showed a 3% increase in revenue at current prices.
In 2011, 3.7 million foreign guests spent 9.9 million nights in public accommodation establishments. Concerning
major source markets lower number of tourists arrived from Germany, France and Italy, while there was an
increase in case of Czech Republic, USA, Australia and United Kingdom.
In the course of this period, public accommodation establishments recorded 3.9 million domestic guests and
9.5 million domestic guest-nights, the numbers of tourist arrivals decreased by 3,000, the numbers of guest-
nights decreased by 157 thousand compared to 2010. In hotels, having a two-third stake from domestic arrivals,
the number of guest-nights increased by 3% compared with a year earlier, while boarding houses suffered a
significant, 25% decline.
The number of tourist arrivals and guest-nights increased considerably in the wellness hotels.
In 2011, room occupancy in hotels was 46.5% on average, within this, 5 star units reached occupancy rate of
63.5%, while 4 star units reached an occupancy of 53.5%. In 2011 the occupancy rate in spa hotels was 54%.
In the reference period, the number of guest-nights at Lake Balaton was lower by 6.4% in case of guests from
foreign countries, and lower by 9.1% in case of domestic guests compared to previous year.
9
Increase of the number of hotel rooms in the
period 2000-2011
20 000
10 000
0
5-star
2000 New rooms built between 20012011
2538
1 805
8
174
12818
19
402
1 602
4-star 3-star
Increase of the number of hotel rooms in
the period 2000-2011
2000 New rooms built between 20012011
23%
77%
Distribution of guestnights in commercial accommodations in 2011Domestic
Gernany
Austria
Great-Britain
USA
Italy
Spain
Other foreign countries
51%
11%
26%
4%2%
3%2%
1%
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Tourism in 2011
In Budapest in contrast to Balaton because of the pick up in foreign demand the numbers of guest-nights
increased by 4.5%.
In the observed period, public accommodation establishments had gross revenues of HUF 245 billion. Within
this, accommodation revenues amounted to HUF 136 billion. Total revenue increased by 3% compared to 2010.
The gross average room rate was HUF 15,842, the revenue per available room in hotels (gross REVPAR) was
HUF 5,812. In the last year the forint was weaker in average by HUF 4 than in 2010.
In the high tourist season (July), the number of accommodation establishments operating in our country was
2,892, the number of available bed places was same than in 2010
Source: Hungarian Central Statistical Office
Change of guestnights in hotels (2011/2010)
15%
10%
5%
0%
5%
10%
15%
20%Domestic Germany Austria Great-
BritainUSA Italy Spain Other
foreigncountries
Total
Cost and balance of tourism-according to the current account balance (EUR million)
5000
4000
3000
2000
1000
0
Balance
Cost
2010 2011
Balance: 2 229 Balance: 2 248
Revenue: 4 051 Revenue: 4 030
-4,3%
-6,6%
1,3% 1,2%
6,2%
-1,0% -0,6%
15,4%
7,3%
ANNUAL REPORT2011
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Tourism in 2011
Tourism in 2011, Czech Republic
The Czech Statistical Office reported that during the whole year 2011 compared to previous year, there was
a higher number of guests by 5,7% and a number of overnight stays by 3,5%. Foreign tourists arrived 7,9% up
and their number of overnight stays rose by 8,1%. There were also more residents guests by 3,4% in collective
accommodation establishments but their number of nights went down by 1,1%. An average number of overnight
stays is in a long term reducing; this was remarkable in 2011 too. Guests spent in average 3,0 nights in surveyed
accommodation establishments.
From the point of regions, the highest increase in the number of guests was reported in Capital Prague and
Stredocesky region (both equally by 8,2%); a decrease of guests interest in accommodation was shown in
Pardubicky region only (by 4,4%). In total number of overnight stays, there was the highest growth in Prague and
Vysocina region (by 9,0%). In five from fourteen regions guests stayed less nights than in 2010 in Pardubicky
(by 8,4%), Jihocesky (by 3,6%), Plzensky (by 1,8%), Zlinsky and Kralovehradeckem (both by 1,9%).
Czech Statistical Office
Tourism in 2011, Slovakia
According to data by the Slovakian statistical office revenues from the tourism sector went up by 3,6% in 2011.
The number of accommodation facilities has dropped by 3,7% whilst the capacity of accommodation went up by
0,7% at national level. The number of guests visiting the commercial accommodation places was up by 5,3% (last
year it was a an increase by 0,3%). The domestic demand shows a small accession (+2,2%) while the foreign one
indicates a notable increase by 10,1%. In Slovakia the majority (59%) of guests are domestic similary to the the
previous years. The number of guestnights in 2011 increased by 1,5%.
Those arriving from the neighbouring countries (54,9% ) represents the greatest proportion among the foreign
guests here (the Czech Republic is still on the top of the foreign guests list by 33% and this figure showed an
increase in 2011 , visitors from Poland 12%, fom Hungary and Austria 4-4%). The German demand shows a growth
in Slovakia, and at the same time US, Chinese, Russian South Korean, Finnish and Spanish demand indicates an
increase too in 2011. Compared to previous year, in 2011 the number of foreign visitors from Europe rose by
9,5%, from Asia by 14% and from America by 20%.
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Report of the Board of Directors
This report contains consolidated financial statements for the period ended 31 December 2011 as prepared by
the management in accordance with International Financial Reporting Standards as adopted by the EU (EU IFRS).
Sales revenue in the fourth quarter improved by 11%, resulting in improved EBITDA both in the quarter and in
full year in spite of the significant one-off effect of headcount reduction measures made in Q4.
HIGHLIGHTS
1 The presentation currency of the Group is HUF. The EUR amounts are provided as a convenience translation using average f/x rates of the
respective periods.
In 2011 total net sales revenues were HUF 44.0 billion, a 2% increase compared to last year, mainly thanks
to the improvement of Hungarian market in Q4, together with the full year pick up in our Czech and Romanian
markets. In EUR terms there was a slight 1% increase in revenue at Group level. Group occupancy in 2011
was 60.7% compared to 60.0% in 2010.
In 2011 both EBITDA and operating performance improved, mainly due to weakening of forint against euro.
Segmental performance in 2011 was the following:
Hungarian segments revenue for 2011 increased by 1% to HUF 25.3 billion as the occupancy of hotels grew
by 1.1% from 57.2% to 58.3%, however the average room rate dropped by 3%. In spite of the one-off cost
of headcount reductions the operating loss for the year lessened, due to further cost savings.
Czech hotels contributed an impressive revenue increase of 10% in 2011. The operating profit of HUF 622
million in 2011 was also an improvement of 8% compared to the profit of HUF 574 million in 2010. Half of
the revenue increase was due to 4% stronger crown on average compared to the forint, which had also
a cost increasing effect in HUF terms.
Slovakian segments operating revenue increased slightly in 2011 to HUF 9.0 billion; the operating result for
2011 was a profit of HUF 134 million, the same as it was in 2010.
In 2011 the total revenue of Romanian segment grew by 11% to HUF 1.6 billion, due to a pick up in
occupancy and price increase, in addition operating profit was HUF 260 million, compared to HUF 203 million
last year.
The Financial result in 2011 was a significant loss of HUF 2.8 billion compared to a loss of HUF 1.3 billion in 2010,
due mainly to unrealised FX differences. In 2011 HUF 1.9 billion FX loss (mostly unrealised) was recognised on
monetary assets and liabilities, while in 2010 recognised FX loss was HUF 0.5 billion. Interest expenses increased
by 18% to HUF 1.0 billion in 2011 from HUF 0.85 billion in 2010, due to the increase in 3 month EURIBOR rates.
ON THE YEAR 2011 PERFORMANCE OF DANUBIUS GROUP
Danubius Hotels Group(IFRS)
HUF million EUR million1
FY 2011 FY 2010 Ch % FY 2011 FY 2010 Ch %
Net sales revenues 43,952 42,921 2 157.4 155.8 1
EBITDA 4,901 4,853 1 17.6 17.6 -
Operating profit/(loss) 489 356 37 1.8 1.3 36Financial results (2,828) (1,309) 116 (10.1) (4.8) 113
Loss before tax (2,339) (953) 145 (8.4) (3.5) 142
Operating cash flow 4,577 4,269 7 16.4 15.5 6
CAPEX 4,255 2,514 69 15.2 9.1 67
HUF/EUR 279.2 275.4 1 n.a.
ANNUAL REPORT2011
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Report of the Board of Directors
Loss before tax in 2011 was HUF 2.3 billion, compared to a loss of HUF 1.0 billion in 2010.
Net cash provided by operating activities in 2011 was HUF 4.6 billion, 7% improvement compared to 2010,
due to better operational performance.
During 2011 capital expenditure and investments amounted to HUF 4.3 billion compared to HUF 2.5 billion
in 2010, due to considerable spending on spa facilities in Slovakia, Czech Republic and Romania.
Since Danubius is committed to increased efficiency as a key factor of improved performance, average Group
headcount in 2011 further decreased and was 4,487 compared to 4,646 in 2010.
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Report of the Board of Directors
FIGURES AND RATIOS IN HOTEL BUSINESS 2011
FINANCIAL OVERVIEW
Hungarian Segment
Total sales revenue and other operating income of 2011 improved by 1% to HUF 25.3 billion, thanks to the
higher revenue of fourth quarter which was mainly driven by the weak forint against euro.
Room revenue of Hungarian hotels in 2011 was HUF 12.9 billion, no material change compared to 2010 due
to the combined result of occupancy increase from 57.2% to 58.3% and the decrease of average room rate
Hungarianhotels
Czechhotels
Slovakianhotels
Romanianhotels
Number of rooms 5,345 807 1,298 400
Occupancy 58.3% 78.8% 60.5% 57.7%
Average rate (HUF) 12,301 19, 909 12,183 7,969
Number of staff 2,364 604 1,187 244
Average number of staff / rooms 0.43 0.75 0.91 0.61
Profit of rooms department (HUF million) 9,885 3,702 2,852 576
Profit of F&B (HUF million) 1,610 275 469 300
Profit of spa department (HUF million) 458 926 1,765 114
Profit of other minor departments (HUF million) 1 110 116 120
Departmental profit 11,954 5,013 5,202 1,110
Profit margin 51.3% 62.9% 58.8% 68.0%
Distribution of the number of rooms available
Hungary
67%
Romania
5%Slovakia
18%
Czech Republic
10%
Distribution of hotel revenues
Hungary
56%
Romania
4%
Slovakia
21%
Czech Republic
19%
HUNGARYHUF million EUR million
FY 2011 FY 2010 Ch % FY 2011 FY 2010 Ch %
Net sales revenues 25,322 25,189 1 90.7 91.46 (1)
EBITDA 1,416 1,449 (2) 5.1 5.3 (4)
Operating loss (527) (554) (5) (1.9) (2.0) (6)
Financial results (2,593) (1,232) 110 (9.3) (4.5) 108
Loss before tax (3,120) (1,785) 75 (11.2) (6.5) 72
CAPEX 1,239 784 58 4.4 2.8 56
ANNUAL REPORT2011
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Report of the Board of Directors
Capital expenditures were HUF 1.24 billion in 2011, including spending on Hilton Budapest, DHSR Aqua and
Hotel Marina compared to HUF 0.8 billion spent in 2010.
Overall the loss before tax of Hungarian segment was HUF 3.1 billion in 2011, compared to a loss of HUF
1.8 billion in 2010.
Czech Segment
Total sales revenue and other operating income increased by 10% to HUF 8.0 billion in 2011 compared to 2010,
almost half of the increase was due to the weakening of forint against Czech crown. Out of total revenue pick-up
room revenue increased by 8%, while F&B and Spa revenue increased by 15% and 10%, respectively. Marienbad
hotels occupancy is the highest within the group and this year increased to 78.8% from 77.0% last year, however
the average room rate achieved (ARR) decreased slightly to CZK 1,753 from CZK 1,766 mainly due
to strengthening of crown against EUR. The average length of stay was 9.4 days in 2011, no material change
compared to 2010. The number of guest nights was 361,833 in 2011 compared to 338,797 and the drop
in German and domestic guests was more than compensated by increasing number of guests arriving
from Russian markets.
The amount of material expenses and services used in 2011 was HUF 3.6 billion, up by 13%, excluding the
translational effect of 4%, it is in line with the inflation and the increase in the number of guests served. Within
this energy costs increased by 9% to HUF 703 million, maintenance expenses increased by 36% to HUF 601 million,
because of the major expenditure on the Maria Spa project. Total personnel expenses in 2011 were HUF 2.3 billion,
up by 7% of which 4% is due to translational effect.
In 2011 the operational performance of Czech hotels improved considerably by 8% compared to 2010.
CZECHHUF million
FY 2011 FY 2010 Ch %
Total revenue and income 7,986 7,273 10
EBITDA 1,554 1,508 3
Operating profit 622 574 8
Financial results (101) 4 n.a.
Profit before tax 521 578 (10)
CAPEX 1,617 853 90
HUF/CZK average 11.35 10.90 4
CZK/EUR average 24.60 25.27 (3)
Distribution of guestnights in our Czech hotels
Russia
34%
Germany
34%
Ukraine
3%
Czech Republic
19%
Israel
3%
Other
2%
Other Europian
3%Kazakhstan
2%
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Report of the Board of Directors
Due to the combined effect of the increase of 3 months EURIBOR and the decrease in the outstanding amount
of bank loans, interest expense for 2011 was HUF 51 million, compared to HUF 46 million in 2010. As the result
of slight weakening of CZK in 2011 against EUR, a HUF 51 million foreign exchange loss was recognised in profit
and loss on monetary assets and liabilities denominated in EUR, compared to a gain of HUF 49 million in 2010.
Capital expenditure in 2011 amounted to HUF 1.6 billion, up by 90%, including significant spending on
Maria and Vltava spa facilities.
Overall, the profit before tax of Czech operations for 2011 decreased by 10% to HUF 521 million compared
to HUF 578 million.
Slovakian Segment
The functional currency of the Slovakian subsidiary is Euro as of 1 January 2009. Total sales revenue and other
operating income in FY 2010 decreased by 2% to HUF 9.0 billion, mainly due to the stronger forint against euro.Room revenue in EUR increased by 2% in 2009 as the average room rate (ARR) increased to EUR 41.8 from EUR
40.3 while the occupancy decreased from 62.7% to 62.2%. The number of rooms sold decreased from 299,336
to 296,203 in FY 2010. The number of guestnights in FY 2010 was 480,045 compared to 477,515 in FY 2009,
the average length of stay in financial year of 2010 was 10,0 days, the same level of last year. The number of
German guests decreased by 15% compared to FY 2009, together with the decrease of guests from neighbouring
countries like Austria and Czech Republic, however the number of guests arriving from Israel and Kuwait increased
considerably by 23% and 26%, respectively. Comparative FY 2009 revenue included HUF 94 million (EUR 0.3
million) one-off gain on the sale of a land, while there was no sale of fixes assets in financial year of 2010.
The amount of material expenses and services used in FY 2010 was HUF 3.3 billion, down by 1%, within this,
energy cost decreased by 12% to HUF 709 million, mainly due to the implementation of energy savings systemsand maintenance expenses were HUF 217 million compared to HUF 212 million in FY 2009. Personnel expenses
SLOVAKIAHUF million
FY 2011 FY 2010 Ch %
Total revenue and income 9,026 9,003 0
EBITDA 1,440 1,455 (1)
Operating profit 134 134 0
Financial results (138) (96) 43
Profit before tax (4) 37 n.a.
CAPEX 947 458 107
HUF/EUR 279.21 275.41 1
Distribution of guestnights in our Slovakian hotels
Germany
20%
Austria
2%
Czech Republic
8%
Israel
11%
Other
10%
Other Asian countries
6%
Slovakia
43%
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Report of the Board of Directors
for FY 2010 were HUF 3.4 billion, a decrease of 3% in HUF terms, reflecting partly the stronger HUF and headcount
reduction measures.
Due to the decrease of 3 months EURIBOR and the lower average level of borrowings the interest expenses for
FY 2010 amounted to HUF 100 million, compared to HUF 152 million in FY 2009.
Capital expenditure during financial year of 2010 was HUF 458 million compared to the HUF 293 million in FY 2009.
Overall, the profit before tax of Slovakian operations for FY 2010 was HUF 37 million compared to a profit of
HUF 210 million in FY 2009.
Romanian Segment
Total sales revenue and other operating income for 2011 was HUF 1.6 billion, up by 11% in HUF terms compared
to last year. In 2011 occupancy was 57.7%, an increase of 1.0% compared to last year, in addition average room
rate (ARR) improved significantly from RON 105 to RON 121. In 2011 room departmental profit improved by 19%.
The number of guests during the year of 2011 increased to 43,957 from 36,754 primarily due to the increasing
number of leisure and conference tourists.
Due to the combined effect of inflation and the increase in occupancy, total material expenses and services
used in 2011 were HUF 660 million, up by 9% compared to last year. Within this, energy cost was HUF 183 million,
up by 25% compared to 2010, due to higher energy need of new spa facilities, and maintenance expenses
decreased by 27% to HUF 36 million. Personnel expenses increased by 8%, due to minimum wage requirements
and higher number of staff required by new spa facilities.
ROMANIA HUF million
FY 2011 FY 2010 Ch %
Total revenue and income 1,618 1,456 11
EBITDA 491 442 11
Operating profit 260 203 29
Financial results 4 15 (71)
Profit before tax 264 217 22
CAPEX 452 425 6
HUF/RON average rate 65.85 65.41 1
RON/EUR average rate 4.24 4.21 1
Distribution of guestnights in our Romanian hotels
Germany
1%
Hungary
10%
Moldavia
11%
Other
2%
Romania
76%
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APPENDIX II - AUDITEDCONSOLIDATED STATEMENT OF INCOME PREPARED IN ACCORDANCE WITH IFRS (HUF million)
Year ended 31 2011 Year ended 31 2010
Room revenue 21,368 20,914
Food and beverage revenue 13,160 12,719
Spa revenue 5,926 5,801
Other departmental revenue 2,084 2,056
Revenue from wineries 161 132
Revenue from security services 806 774
Other income 447 525
Total operating revenue and other income 43,952 42,921
Cost of goods purchased for resale 444 447
Material costs 9,414 8,965
Services used 9,779 9,612
Material expenses and services used 19,637 19,024
Wages and salaries 11,600 11,704
Other personnel expenses 1,458 1,197
Taxes and contributions 3,650 3,595
Personnel expenses 16,708 16,496
Depreciation and amortisation 4,412 4,497
Other expenses 2,611 2,522
Changes in inventories of finished goods and w.i.p. 119 74
Work performed and capitalised (24) (48)
Total operating expenses 43,463 42,565
Profit from operations 489 356
Interest income 41 77
Interest expense (985) (850)
Foreign currency loss (1,884) (536)
Financial loss (2,828) (1,309)
Loss before tax (2,339) (953)
Current tax expense 100 338
Deferred tax expense / (benefit) (83) (409)
Loss for the year (2,356) (882)
Attributable to:
Owners of the Company (2,387) (933)
Non-controlling interest 31 51
Basic and diluted earnings per share (HUF per share): (302) (118)
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APPENDIX III AUDITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (HUF million)
22
ANNUAL REPORT2011
Year ended 31 2011 Year ended 31 2010
Loss for the year (2,356) (882)
Other comprehensive income
Foreign currency translation differencies for foreign operations 3, 045 1,501
Changes of fair values of hedge derivatives (71) -
Total other comprehensive income 2,974 1,501
Total comprehensive income for the period 618 619
Attributable to:
Owners of the Company 289 530
Non-controlling interest 329 89
Total comprehensive income for the period 618 619
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APPENDIX IV - AUDITEDCONSOLIDATED STATEMENT OF CASH FLOWS PREPARED IN ACCORDANCE WITH IFRS (HUF million)
1 Represents the amount of cash and cash equivalents less the amount of bank overdrafts
APPENDIX V
SUBSEQUENT EVENTS
There has not been any matter or circumstance occurring subsequent to the end of the reporting period thathas significantly affected, or may significantly affect, the operations of the Group, the result of those operations
or the state of affairs of the Group in future periods.
23
Year ended 31 2011 Year ended 31 2010
Profit from operations 489 356
Depreciation and amortisation 4,412 4,497
Change of provisions 145 (163)
Impairment of receivables and write-off of inventories 4 130
Changes in working capital
(Increase)/ decrease of accounts receivable and other current assets (123) (377)
(Increase)/ decrease of inventory 82 89
Increase / (decrease) of accounts payable and other current liabilities 903 882
Interest paid (936) (1,076)
Income tax paid (399) (69)
Net cash provided by operating activities 4,577 4,269
Purchase of property, plant and equipment and intangibles (4,255) (2,514)
Interest received 31 82
Net cash used in investing activities (4,224) (2,432)
Receipt of long-term bank loans 1,774 3,282
Repayment of long-term bank loans (4,162) (3,200)
Net cash provided by financing activities (2,388 82
Net increase (decrease) in cash held (2 035) 1,919
Cash and cash equivalents at the beginning of the period, net 3,965 1,981
Effect of exchange rate fluctuations on cash held 181 65
Cash and cash equivalents at the end of the period, net 2,111 3,965
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