Quarterly Report • Jun 30, 2017
Quarterly Report
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for the Period from November 1, 2016 to April 30, 2017
Bohuš Hlavatý
Compared to prior seasons, we experienced a rather favorable weather this past winter. Snow conditions were great, even at the beginning of the season, which reflected on the growth of the visit rate in our resorts in both Slovakia and Poland. During Christmas holidays and the 'Golden week' our hotels were yet again fully occupied. Among the Tatra attractions Tatra Ice Dome at Hrebienok with a Gothic motive, ice sculptures and a regular music program was the most popular one again this past season. The number of skier days in the mountain resorts rose yearover-year by 13.3%. In total our revenues grew 8.5%, and our operating profit before depreciation improved 24.5%. Net income increased by 101.4% to EUR 11.040 mil. The unique product on the Slovak market - Smart season pass, the loyalty program GOPASS, and growing online ski pass sales also contributed to the positive results. The results clearly show that our clients registered in our loyalty program are more satisfied with the offered products and services that are customized for them. With these special deals aimed to satisfy clients' unique needs we are able to offer higher quality services at attractive rates. We see our cooperation with all the lodging operators who utilized our 'Ski pass on the pillow' service as a successful one, as well as our cooperation with district tourist organizations. We believe that this setup will continue to work also in the upcoming summer season. By the end of the year we still have extensive capital investments ahead of us in both Tatra and Polish resorts, leisure parks, and real estate projects, which are expected to positively impact our results in periods to come.
June 26, 2017
Ing. Bohuš Hlavatý CEO and Chairman of the Board of Directors Tatry mountain resorts, a. s.
Tatry mountain resorts, a.s. (TMR, the Company) is a joint stock company with its headquarters in Liptovský Mikuláš, registered at the Bratislava Stock Exchange (BSSE), the Prague Stock Exchange (PSE), and the Warsaw Stock Exchange (WSE). TMR with its subsidiaries (the Group) is the biggest entity in tourism in Slovakia with emerging operations in Poland and the Czech Republic. TMR's operations are divided into three key segments: Mountains & Leisure, Hotels, and Real Estate. The main segment - Mountains & Leisure is further divided into the following subsegments: Mountain Resorts, Leisure Parks, Dining, and Sports Services & Stores. In Slovakia the Group owns and/or operates in the High Tatras: the Vysoké Tatry resort with the ski areas of Tatranská Lomnica and Starý Smokovec and the ski area of Štrbské Pleso in the High Tatras, which TMR co-manages. In the High Tatras the Group also owns and operates hotels: Grandhotel Praha Tatranská Lomnica****, Grandhotel Starý Smokovec****, Hotel FIS***, Mountain hotel Hrebienok, and Hotel Kukučka****. In the Low Tatras TMR owns and operates Aquapark Tatralandia, which includes the lodging facility Holiday Village Tatralandia; then mountain resort Jasná Nízke Tatry; and hotels: Wellness hotel Grand Jasná****, Tri Studničky Hotel****, Hotel Srdiečko**, Chalets Jasná de Luxe****, and Hotel Rotunda. At the same time TMR owns and leases out Hotel Liptov**, Hotel Ski & Fun**, Kosodrevina Lodge, and lodging facility Otupné. TMR indirectly via CAREPAR a.s. (19%) owns 9.5% in Melida, a.s., which since the winter season 2012/13 leases and operates the Špindlerův Mlýn resort in the Czech Republic. In Poland TMR owns the mountain resort Szczyrkowsky Ośrodek Narciarski S.A. (Szczyrk), a 75% share in Legendia - Silesian Amusement Park (Legendia - Śląskie Wesołe Miasteczko), and 7.3% in an educational- entertainment project through a Polish company Korona Ziemi Sp. z o.o.
At the Annual General Meeting (AGM) held in April 2017 the Board of Directors presented the investment plan for the current calendar year with an estimated budged of EUR 83 mil.
This year TMR is focusing its investment activity mainly on the Polish mountain resort Szczyrk and Silesian Amusement Park Legendia, where it plans to invest 57 mil. EUR. In Legendia attractions have been renovated; the entry gate has been modernized; new ticket offices, stores, and a stylish café have been added; and the park got a new brand, LEGENDIA. Also the pedestrian zone got recoated; new greenery has been planted; and a new attraction has been added - Lech Coaster - which will open to public from July 2017.
Investments in the Szczyrk resort will directed mainly into infrastructure. Outdated transportation systems will be replaced with new and modern ones, and transportation will get more efficient. Through the modernization the resort will gradually gain a variety of dining services, ski equipment rentals, sports stores, i.e. the full base service, which will boost Szczyrk's image as a major ski resort. Thus, before the season the resort will get a new 10-person gondola; two 6-person chair lift cableways; and a blue ski track. The project includes a construction of snowmaking and a retention water reservoir.
TMR will invest another EUR 26 mil. in Slovakia in the resorts of Vysoké Tatry, Jasná Nízke Tatry and Aquapark Tatralandia. Key investments include the completed cableway at Krupová-Kosodrevina; new snowmaking; two new snow-grooming vehicles; and the completion of Hotel Pošta****. Works on the first stage of the project Jasná - Center East are underway, as well. A two-story building will be a haven for ski instructors, a ski locker room for the visitors; it will provide dining services with a view of Mt. Chopok, connected with the ticket office, info center, and a sports store. In Tatralandia a new family attraction - a fun park Tatrapolis is being built with exhibitions of 12 metal miniature world famous structures. In the High Tatras' Grandhotel**** Praha in Tatranská Lomnica renovation
2 The reported yoy revenue decrease is caused by a change in accounting for sales in real estate projects, which in 1H 2015/16 were recognized as revenues and in 1H 2016/17 as
3 Even though Silesian Amusement Park was closed during the winter season, it continued to incur operating expenses for pre-season maintenance and preparation.
consolidated total revenues of EUR 50.738 mil. (46.780), an increase of EUR 3.958 mil. (+8.5%) year-over-year. Out of that, sales accounted for EUR 50,428 mil. (46.419).
The number of skier days1 in Mountain Resorts increased yoy to 1.500 mil. (1.324) - an increase of 13.3%. The average revenue per visitor in Mountain Resorts increased by 4.7% to EUR 17.33 (16.56).
For the observed period Leisure Parks recorded a 2.8% growth in the number of visitors to 216 ths. (210), while its average revenue per visitor was 6.6% higher, reaching EUR 12.40 (11.64). KPIs do not include Legendia - Silesian Amusement Park, as it was closed during the winter season. As for ancillary services, in the dining facilities on the slope and in Tatralandia the average client spending was 12.8% higher than last year at EUR 4.22 (3.75). Sports Services & Stores reported a 5.9% higher spending per visitor at EUR 2.16 (2.04).
As for Hotels' KPIs, average occupancy of the hotel portfolio fell by 2.1 percentage points to 51.5% (53.6), whilst majority of the hotels improved their occupancy rates. Average daily rate per room (ADR) on the portfolio level increased by 7.3% to EUR 82.93 (77.32), whilst majority posted an improvement in its average rate. The number of rooms in the owned and managed hotels for the observed period totaled 753 (704). In the observed period TMR began to operate 45 rooms of Hotel Kukučka and two chalets with 4 apartments were added to Chalets Jasná Otupné.
The main segment, Mountains & Leisure, which accounted for 77.3% of total revenues, posted revenues of EUR 39.224 mil. (32.564), a 20.5% increase yoy. Mountain Resorts' revenues were positively impacted by growth in the visit rate, mainly in the Szczyrk resort, growth in the average revenue per visitor, and online ski pass sales, especially season tickets, closing the half-year period at EUR 26.221 mil. (21.516), with a growth of +21.9%. Leisure Parks' revenues posted an increase of 15.8% reaching EUR 3.031 mil. (2.617); they were generated solely by Aquapark Tatralandia since Silesian Amusement Park was closed during the period. Dining revenues posted an improvement of 20.9% with EUR 6.596 mil. (5.456), with the biggest boost by restaurants in the High Tatras. Sports Services & Stores, correlated somewhat with the performance of Mountain Resorts, recorded a 13.5% increase in revenues, totaling EUR 3.376 mil. (2.975), mainly thanks to the improved visit rate in the Tatra resorts and thanks to the higher average spending per visitor for these ancillary services.
The second segment, Hotels, boosted total revenues with its 22.4% share and grew 16.6% to EUR 11.374 mil. (9.759). The results of the Hotels segment can be explained by taking over the operation of Hotel Kukučka and by the growth in ADR on the portfolio level. Effective marketing and sales tailored to clients' needs also contributed. The results were again supported by full capacity of the hotels, especially in peak periods, such as New Year's and "Golden week" (the period after Christmas till Epiphany). With hotel stays domestic guests prevailed.
In the Real Estate segment during the observed six-month period TMR reported revenues of EUR 139 ths. (1.219 mil.)2 from the lease of the accommodation capacities - Kosodrevina Lodge, Hotel Ski & Fun, Hotel Liptov, and Lodging Otupné.
Earnings before interest, tax, depreciation, and amortization (EBITDA) increased EUR 4.183 mil. yoy, +24.5% to EUR 21.256 mil. (17.073). Consumption of material and goods increased yoy 9.6%, whereas operating and personnel expenses were down 3.5%. The growth of EBITDA was achieved especially by the sale of bungalows Holiday Village Tatralandia, by Mountain Resorts, costs of which are mostly fixed; as well as Hotels and efficient management. Operating profitability expressed as EBITDA margin improved to 41.9% (36.5).
Most segments and subsegments of TMR posted an increase in EBITDA: Mountain Resorts (+36.2%), Leisure Parks (+49.4%,)3 , Dining (+5.5%), Sports Services & Stores (+2.7%), Hotels (+15.3%), and Real Estate (-47.5%).
Operating profit (EBIT) soared 48.9% to EUR 15.615 mil. (10.490) yoy, whereas depreciation and amortization decreased to EUR 5.642 mil. (6.583).
TMR's consolidated net profit reached EUR 11.040 mil. (5.482), an increase of 101.4%. Interest expense incurred from the issue of two tranches of bonds totaling EUR 180 mil. and from drawing of bank loans increased yoy to EUR 5.650 mil. (5.414). Income tax was reported at EUR +19 ths. (-9) for the reported period. Total comprehensive income after revaluation of available-for-sale securities to fair value and currency translation differences reached EUR 11.470 mil. (5.022). Earnings per share were EUR 1.691 (0.852).
works are wrapping up on the last Classic rooms. This year Hotel FIS*** at Štrbské Pleso is undergoing a major renovation of 62 rooms. TMR also plans to widen the terrace of Hotel FIS***, as well as the terrace in the restaurant part of Mountain hotel Hrebienok**, modernize the interior of the entry station of the cableway to Lomnický Peak, and to build a new pier in the boat harbor at Štrbské Lake.
At the same time TMR will be undergoing numerous minor investments, such as asphalting the parking lot at Krupová, adjustment to tracks and snowmaking, and operating investments in the hotels, restaurants, and sports stores. Other expenditures will be spent on project documents for investment projects of the following years.
TMR has created an online platform called "What kind of Tatras do we want" in order to encourage a wider public debate about further development of the Tatra region. The initiative is not focused only on the field of tourism but aims to add more topics to the discussion such as development of transport and infrastructure, human capital and cultural wealth of the Tatras.
The Company fully recognizes corporate responsibility in relation to environment and nature. Thus, it joined and is actively supporting the national ecological project called Tatra knights. TMR believes that responsible entrepreneurship involves responsible approach to next generations through ecological awareness from the age of early students to young adults. The Tatra knights project contained two parts. The first one was for elementary and high school students who had to accomplish set ecological tasks. The second part was attended by TMR employees who will execute three winning student projects in the new future.
In December TMR leased and started to operate 45 rooms of Hotel Kukučka**** together with its restaurant in Tatranská Lomnica.
In December TMR also organized the First Tatra Christmas collection of gifts in Grandhotel Praha, which concluded with a charity concert.
TMR launched the winter season with Tatra Ice Dome on November 25 at Hrebienok. The skiing season in the High Tatras was kicked off with the first skiing on November 26 at Štrbské Pleso. On December 3 Winter Music Opening - World Cruise Edition opened the season in the Low Tatras. Visitors of the Tropical Paradise in Aquapark Tatralandia welcomed the New Year 2017 in the swimming pools with clear, sea, and thermal water. During the event Tatry Ice Master at Hrebienok during three days ice sculptors from nine countries revived 45 tons of ice and turned them into 30 unique ice sculptures. Fans of fresh "manchester" could enjoy the Fresh Track product in Jasná. Štrbské Pleso, and Tatranská Lomnica and ride with a guide before the official track operating hours. As part of the 75th anniversary of the operation of the cableway to Lomnicky Peak there were five night cableway rides available with a tour to the cableway's original engine room and Encian Gallery. In Jasná celebrities played soccer, competed on the surf wave and on skis during Celebrity Winter Cup. Visitors could enjoy culinary experiences during the fourth annual Von Roll Culinary Week.
In February families with children enjoyed the multi-genre festival Snow Dogs in the High Tatras. The midterm school break were accompanied by the world championship in plastic bags downhill ride - Speed bag race. Also this year TMR offered the unique Full Moon Dinner at the top of Mt. Chopok in the restaurant Rotunda and the regular Tatra Dinner Experiences in the Von Roll Lukova restaurant with a snow-grooming vehicle ride as well as in the Start restaurant in Tatranská Lomnica. Fans of extreme experiences could enjoy freezing March temperatures during Snow camp and thus enjoy extreme conditions of winter camping at Skalnate pleso. At the beginning of March the adrenaline freeride race - CGC Jasna Adrenaline took place in Jasná. Skiers had fun welcoming the spring in the 50's style during Bikini skiing, this year titled "Made in Germany".Demänovka ratrak stage party was popular mainly among après-ski fans. The Smart season pass club members enjoyed the Hero season trophy race in giant slalom in Jasná and Tatranská Lomnica. In April visitors had a unique opportunity to ride to Mt. Chopok in an Easter egg with an accompanying program. Tatra May festival took place at the end of April and the beginning of May with a full program, spring grilling at Skalnate pleso and at Hrebienok. Liptov Aréna Tatralandia together with the fashion icon Lydia Eckhardt organized a pre-show of the great fashion show Dreams.
TMR again launched the presale of Smart Pass - a season pass for the following season at discounted rates via the Gopass e-shop.
The Annual General Meeting (AGM) of TMR was held on April 28, 2017 in Grandhotel Praha****, Tatranská Lomnica c in Vysoké Tatry. Shareholders approved Individual Financial Statements as of 31/10/2016; and adopted the proposal to divide the net profit for the fiscal year 2015/16 in the amount of EUR 4.814 mil. in such a way that 10% will be used to replenish the reserve fund and the remainder in the amount of EUR 4.333 mil. will remain in the Company as retained earnings. KPMG Slovensko spol. s.r.o. was reelected as TMR's auditor. Also, shareholders reelected a Supervisory Board member, Roman Kudláček, whose prior term had expired.
As part of the Business plan for the current financial year the Board of Directors presented a financial plan with annual consolidated revenues of EUR 90.0 mil., equal to a 10.8% increase year-over-year. Earnings before interest, taxes, depreciation, and amortization (EBITDA) are planned for EUR 29.0 mil., a 15.5% increase compared to last year's EBITDA. For more details on TMR's General Meeting visit http://tmr.sk/ investor-relations/regulated-information/general-meetings.
The winter season 2016/17 could be summarized as a successful one in terms of snow conditions and temperatures enabling snowmaking. For the observed six-month period from November 1, 2016 to April 30, 2017 the TMR Group (Tatry mountain resorts, a.s. and its subsidiaries) achieved
1 The visit rate in Mountain Resorts in the winter season is measured in terms of skier days sold, i.e. the number of persons that visited a mountain resort during any part of the day or night for the purpose of skiing, snowboarding, or other downhill slide. E.g., a 4-day ticket means four skier days in Mountain Resorts.
gain on sale.
As at the end of the first half-year 2016/17 the value of current liquid funds (Cash and cash equivalents) totaled EUR 4.245 mil. (EUR 5.613 mil. as of 30/04/2016) as opposed to EUR 7.493 mil. at the end of the previous financial year 2015/16. The total amount of the Company's loans and borrowings for the last six-month period increased to EUR 246.881 mil. (214.818) as opposed to EUR 229.804 mil. at the FY end. The debt-to-equity ratio came to 210.2% (198.3), and the total level of debt slightly rose yoy to 67.8% (66.5) in comparing to 68.4% at the FY end.
The accounting value of total assets increased since the FY end by EUR 24,591 mil. to EUR 400.292 mil. (354.914). Current assets increased for the six months to EUR 75,228 mil. (42.039) versus EUR 67,336 mil. at the FY end. Fixed assets increased since the FY end by EUR 24.269 mil.. to EUR 307.402 mil. (272.352).
Cash flow generated from operating activities for the given half-year period equal EUR 9.235 mil. (11.464 ). Cash flow from investing activities was reported in the amount of EUR -23.896 mil. (-5.257), out of which capital expenditures added up to EUR -29.318 mil. (-5.682). Cash flow from financing activities reached EUR 11.413 mil. (-8.813).
| Key Operating Results* | Revenues | EBITDA | EBITDA marža | ||||||
|---|---|---|---|---|---|---|---|---|---|
| v €'000 | 1H 2016/17 |
1H 2015/16 |
Change yoy (%) |
1H 2016/17 |
1H 2015/16 |
Change yoy (%) |
1H 2016/17 |
1H 2015/16 |
Change yoy |
| Mountains & Leisure | 39 224 | 32 564 | 20,5% | 17 734 | 13 574 | 30,6% | 45,2% | 41,7% | 3,5% |
| Mountain Resorts | 26 221 | 21 516 | 21,9% | 14 385 | 10 563 | 36,2% | 54,9% | 49,1% | 5,8% |
| Leisure Parks | 3 031 | 2 617 | 15,8% | 660 | 442 | 49,4% | 21,8% | 16,9% | 4,9% |
| Dining | 6 596 | 5 456 | 20,9% | 1 912 | 1 814 | 5,4% | 29,0% | 33,2% | -4,2% |
| Sports Services & Stores | 3 376 | 2 975 | 13,5% | 776 | 756 | 2,7% | 23,0% | 25,4% | -2,4% |
| Hotels | 11 374 | 9 759 | 16,6% | 3 092 | 2 681 | 15,3% | 27,2% | 27,5% | -0,3% |
| Real Estate | 139 | 4 457 -96,9% | 429 | 818 -47,5% 308,7% | 18,3% 290,4% | ||||
| Total | 50 738 | 46 780 | 8,5% | 21 256 | 17 073 | 24,5% | 41,9% | 36,5% | 5,4% |
| Selected Consolidated Unaudited Results (IFRS) | ||
|---|---|---|
| in €'000 | 1H 2016/17 | 1H 2015/16 |
| Sales | 50 428 | 46 419 |
| Other Operating Revenues | 310 | 361 |
| Total Revenues | 50 738 | 46 780 |
| Consumption of Material and Goods | -7 860 | -7 170 |
| Personnel and Operating Costs | -22 170 | -22 962 |
| Other Gain/ Loss | 547 | 425 |
| EBITDA | 21 256 | 17 073 |
| EBITDA Margin | 41,9% | 36,5% |
| Depreciation & Amortization | -5 642 | -6 583 |
| EBIT | 15 615 | 10 490 |
| Interest Income | 662 | 677 |
| Interest Expense | -5 650 | -5 414 |
| Income from Financial Instruments, net | 395 | -262 |
| Pre-tax Income | 11 021 | 5 491 |
| Income Tax | 19 | -9 |
| Net Profit | 11 040 | 5 482 |
| Revaluation of available-for-sale securities to fair value | 25 | -6 |
| Currency Translation Differences | 405 | -454 |
| Total Comprehensive Income | 11 470 | 5 022 |
| EPS (€) | 1,691 | 0,817 |
| April 30 | April 30 | October 31 | |
|---|---|---|---|
| Financial Position in €'000 (unaudited) | Total Assets | 2015/16 | 2015/16 |
| Non-current Assets | 400 292 | 354 914 | 375 701 |
| Fixed Assets | 325 064 | 312 875 | 308 365 |
| Other Non-current | 307 402 | 272 352 | 283 133 |
| Current Assets | 17 663 | 40 523 | 25 232 |
| Liquid Assets | 75 228 | 42 039 | 67 336 |
| Equity | 4 245 | 5 613 | 7 493 |
| Liabilities | 117 473 | 108 355 | 106 003 |
| Non-current Liabillities | 282 821 | 246 560 | 269 697 |
| Current Liabilities | 258 578 | 226 459 | 239 197 |
| Total Debt | 24 243 | 20 101 | 30 500 |
| Celkový dlh | 246 881 | 214 818 | 229 804 |
Cash Flows in €'000
| 01/11 - 30/04 | 01/11 - 31/10 | ||
|---|---|---|---|
| Cash Flows in €'000 | 2016/17 | 2015/16 | 2015/16 |
| Net Cash from Operating Activities | 9 235 | 11 464 | 28 600 |
| Net Cash from Investing Activities | -23 896 | -5 257 | -25 752 |
| Net Cash from Financing Activities | 11 413 | -8 813 | -3 574 |
| Net Increase in Cash and Cash Equivalents | -3 248 | -2 606 | -726 |
outside the Eurozone - the Czech Republic, Poland, Ukraine, Russia, etc. Variable interest rates on bank loans may negatively impact the level of interest expense in case of increase in EURIBOR and WIBOR as of the pay date, based on which these interest rates are set.
As TMR issued bonds in 2013/14 in total of EUR 180 mil., TMR significantly increased its level of debt. At the same time, by decreasing share capital from EUR 221 mil. to EUR 47 mil. as of 22-10-2013, TMR's capital structure changed considerably in terms of the debt-to-equity ratio. This level of debt may cause TMR difficulties in obtaining other external financing in the future to finance future investments into its resorts or acquisitions. The ability to repay liabilities from these bonds also significantly increases liquidity risk.
By acquiring the 75% interest in Silesian Amusement Park TMR committed to invest EUR 30 mil. into the modernization of the park during next five years, which may add to increased
level of debt and liquidity risk of the Company.
For more information regarding risks refer to Risk Factors and Risk Management and Note 34 of Consolidated Financial Statements in the Annual Report 2015/16, available at www.tmr.sk.
The average number of TMR employees for the first half of 2015/16 is 1,124, which is 4.3% less than for the same period last year.
By the end of FY 2016/17 Management expects to achieve a 10.8% growth in annual revenues, or EUR 90.0 mil. and a yoy EBITDA growth of 15.5% to EUR 29.0 mil. Having successfully completed the winter season, Management now believes the financial targets are achievable. TMR's results till the end of FY 2016/17, i.e. till October 31, 2017, will be impacted by the summer season in the mountain resorts, leisure parks - Aquapark Tatralandia and Legendia - Silesian Amusement Park, in TMR hotels, as well as in the ancillary services. Any impact of potentially unfavorable weather will be offset by the all-year operation of successful Tropical Paradise in Tatralandia. The gradual execution of the investment plan of the modernization of Legendia should positively impact the year-end results. The mostly-awaited season driver in Legendia is Lech Coaster. The mountain tourist summer season in the Tatras officially began on June 16 with the official opening of summer attractions - boat rides at Štrbské pleso, Drakopark Chopok, as well as the new amusement park with metal miniatures, Tatrapolis in Tatralandia.
For the first half of 2016/17 the Group did not observe any transactions with related parties or any changes in such transactions that would have a significant impact on the Group's financial position or results.
The Company results mainly depend on visit rate of the TMR resorts. The visit rate depends on several factors, out of which some can and others cannot be controlled by Management. The vacation choices of TMR's clients also depend on the business cycle of the economy and the level of their discretionary income. According to NBS, in 2016 Slovak economy grew dynamically, by 3.3%, although at a slower pace due to lower utilization of EU funding. A slight decline to 3.1% is estimated also for 2017. In the following periods the GDP growth is expected to be steep again. Household consumption and exports are expected to rise, also thanks to the new car manufacturing. A positive labor market development; investments supported by quantitative easing and by gradual utilization of the EU funds are also predicted.4 In Poland the GDP growth slowed down from 3.8% in 2015 to 2.7% in 2016. The decline was caused mainly by a low volume of public investments. In 2017 the public investments activity is expected to come back again, although the growth of private
investments is still at risk. The growth of Polish economy in 2017 is estimated at 3.2%.5 Since majority of visitors to TMR's resorts and hotels come from various countries, each of which has its own unique macroeconomic profile, operations of TMR can be heavily affected by worsening of the economic and geopolitical situation on these markets.
Weather unfavorable for summer tourist activities may negatively impact cableway sales in the mountain resorts till the end of the financial year. An unfavorable summer weather may also negatively impact the visit rate in the Polish Legendia, and thus also the return on investments from the park's modernization project. In Aquapark Tatralandia this risk is eliminated thanks to the guarantee of tropical weather in Tropical Paradise, as well as thanks to thermal springs in outdoor pools.
As for competition in Mountain Resorts in the summer season, TMR is the leader in Slovakia in terms of the market share and the range of services. On the European market the Company faces monopolistic competition with a large number of competitors. TMR utilizes its high quality services, reasonable prices in comparing to alpine resorts, patriotism, and locality with the goal of attracting visitors. Moreover, TMR capitalizes on its competitive advantage of natural monopoly in terms of the strategic location in the highest mountain range in the region to the East and North.
In Leisure Parks TMR is also among the top two players in the local market, as well as in the Polish market, although visitation of leisure parks also depends on the travel distance for the given visitor. The Company's profitability also depends on the occupancy rate of its own and managed hotels and lodging facilities in the resorts. TMR works to improve key performance indicators in Hotels- average daily rate (ADR) and occupancy - by constantly increasing the hotels' quality through renovations, services expansion, and organizing of marketing events.
In the Real Estate segment revenues depend on sale and/ or lease of residences, lodging facilities, and commercial space in TMR's real estate projects. Further growth of the segment in sale and/or lease of land, residences and commercial space depends on the situation on the real estate market in the Tatra region.
Management utilizes a well-defined marketing strategy to manage the abovementioned risks.
As for the main financial risks, the Company revenues are impacted by volatility of exchange rates in relation to euro since majority of TMR's foreign clients come from countries
4 View of the Banking committee of NBS on the Medium term prediction P4Q-2015, P4Q-2016. www.nbs.sk 5 European Bank for Reconstruction and Development. Regional Economic Prospects in EBRD Countries of Operations: May 2017
() - the numbers in brackets represent values for the same period previous year compared to the current data on the year-over-year basis
1H - First half of TMR's financial year, the period from 1 November till 30 April
ADR - Average daily rate per room
AGM - Annual General Meeting
BSSE - the Bratislava Stock Exchange
EBITDA - Earnings before interest, taxes, depreciation and amortization; the key financial performance indicator of TMR
EBRD - European Bank for Reconstruction and Development FY - Financial year of TMR, the period from November 1 to October 31
GDP - Gross Domestic Product
KPIs - Key performance indicators. In Mountains & Leisure KPIs include: visit rate and average revenue per visitor for the given period. In Hotels they include: occupancy and average daily rate per room (ADR).
mil. - millions
p.p. - percentage points
PSE - the Prague Stock Exchange
Skier days - the measure of visit rate in the mountain resorts of TMR in the winter season, counting the number of persons that visited a mountain resort during any part of the day or night for skiing, snowboarding, or other kind of downhill ride. E.g., a 4-day ski pass sold means four skier days.
SPV - Special purpose vehicle company
ths. - thousands
WSE - the Warsaw Stock Exchange
Yoy - year-over-year
| Closing Price of TMR Stock | BSSE (EUR) | WSE (PLN) | PSE (CZK) |
|---|---|---|---|
| 30.4.2017 | 24,70 | 113 | 670 |
| 30.4.2016 | 23,70 | 107 | 640 |
In thousands of EUR
| In thousands of EUR | 1.11.2016 – 30.4.2017 |
1.11.2015 – 30.4.2016 |
|---|---|---|
| Sales | 50,428 | 46,419 |
| Other operating revenues | 310 | 361 |
| Total revenues | 50,738 | 46,780 |
| Consumption of material and goods | -7,860 | -7,170 |
| Purchased services | -10,258 | -12,637 |
| Personnel expenses | -11,257 | -9,716 |
| Other operating expenses | -654 | -609 |
| Gain on sale of assets | 547 | 425 |
| Gain on revaluation of investment property | - | - |
| Reversal of value adjustments to receivables | - | - |
| Earnings before interest, tax, depreciation and amortization (EBITDA)* | 21,256 | 17,073 |
| Depreciation and amortization | -5,642 | -6,583 |
| Goodwill impairment losses | - | - |
| Earnings before interest, tax (EBIT) | 15,614 | 10,490 |
| Interest income | 662 | 677 |
| Interest expenses | -5,650 | -5,414 |
| Gain/(loss) on financial instruments, net | 395 | -262 |
| Profit/(loss) before tax | 11,021 | 5,491 |
| Income tax | 19 | -9 |
| Profit | 11,040 | 5,482 |
| Attributable to: | ||
| - Holders of interest in the parent company's equity | 11,340 | 5,714 |
| - Non-controlling interest | -300 | -232 |
| Other comprehensive income | ||
| - items with no possible subsequent reclassification to gain/(loss): | ||
| Revaluation of tangible assets upon transfer to investment property | - | - |
| - items with possible subsequent reclassification to gain/(loss): | ||
| Revaluation of available-for-sale securities to fair value | 25 | -6 |
| Foreign currency translation reserve | 405 | -454 |
| Total comprehensive income | 11,470 | 5,022 |
| Attributable to: | ||
| - Holders of interest in the parent company's equity | 11,805 | 5,254 |
| - Non-controlling interest | -335 | -232 |
| Earnings per share (in EUR) | 1.691 | 0.852 |
| Number of shares | 6,707,198 | 6,707,198 |
* EBITDA represents profit from recurring activities of the Group before tax, interest, depreciation and amortization adjusted for other income and expenses which are listed under EBITDA.
The notes presented on page 6 form an integral part of the Condensed Interim Consolidated Financial Statements.
Tatry mountain resorts, a.s. and Subsidiary Companies
Condensed Interim Consolidated Financial Statements for the period from 1 November 2016 to 30 April 2017
prepared in accordance with the International Financial Reporting Standards ("IFRS") in the wording adopted by the EU
items without subsequent reclassification into profit/(loss):
| Revaluation of tangible assets upon transfer to investment | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| items with possible subsequent reclassification into property profit/(loss): - |
- | - | - | - | - | - | - | - | - |
| Revaluation of available-for-sale securities to fair value | - | - | - | 25 | - | - | 25 | - | 25 |
| Foreign currency translation reserve | - | - | - | - | 440 | - | 440 | -35 | 405 |
| Total comprehensive income for the period | - | - | - | 25 | 440 | 11,340 | 11,805 | -335 | 11,470 |
| Transactions with owners posted directly into equity Contributions to the fund |
- | - | - | - | - | - | - | - | - |
| Effect of acquisition of a subsidiary | - | - | - | - | - | - | - | - | - |
| Total transactions with owners | - | - | - | - | - | - | - | - | - |
| Balance as at 30 April 2017 | 46,950 | 30,430 | 4,449 | 171 | -135 | 33,935 | 115,800 | 1,673 | 117,473 |
| Total controlling Non interest Equity attributable to holders of interest in the parent company's equity Retained earnings Foreign currency translation reserve Funds from revaluation |
106,003 2,008 103,995 22,595 -575 |
11,040 - -300 - 11,340 - 11,340 - - |
|---|---|---|
| - - |
||
| 146 | ||
| - - |
||
| Legal reserve fund |
4,449 | |
| - - |
||
| Share | 30,430 | |
| premium | ||
| Share capital |
46,950 | - - |
| Transfer of retained earnings into the legal reserve fund Other comprehensive income, after tax Profit for the current period |
||
| Tatry mountain resorts, a.s. and subsidiary companies Consolidated Statement of Changes in Equity In thousands of EUR |
Balance as at 1 November 2016 |
The notes presented on page 6 form an integral part of the Condensed Interim Consolidated Financial Statements.
Consolidated Statement of Changes in Equity (continued)
| Share capital |
Share premium |
Legal reserve fund |
Funds from revaluation |
Foreign currency translation reserve |
Retained earnings |
Equity attributable to holders of interest in the parent |
controlling Non interest |
Total | |
|---|---|---|---|---|---|---|---|---|---|
| In thousands of EUR | company's equity |
||||||||
| Balance as at 1 November 2015 | 46,950 | 30,430 | 4,449 | 146 | -493 | 19,535 | 101,016 | 2,315 | 103,331 |
| Transfer of retained earnings into the legal reserve fund Profit for the current period |
- - |
- - |
- - |
- - |
- - |
5,714 - |
- 5,714 |
- -232 |
- 5,482 |
| Revaluation of tangible assets upon transfer to investment items without subsequent reclassification into profit/(loss): items with possible subsequent reclassification into Other comprehensive income, after tax property - - |
- | - | - | - | - | - | - | - | - |
| Revaluation of available-for-sale securities to fair value Foreign currency translation reserve profit/(loss): |
- - |
- - |
- - |
-6 - |
- -454 |
- - |
-6 -454 |
- - |
-6 -454 |
| Total comprehensive income for the period | - | - | - | -6 | -454 | 5,714 | 5,254 | -232 | 5,022 |
| Transactions with owners posted directly into equity Effect of acquisition of a subsidiary Contributions to the fund |
- - |
- - |
- - |
- - |
- - |
- - |
- - |
- - |
- - |
| Total transactions with owners Balance as at 30 April 2016 |
- 46,950 |
- 30,430 |
- 4,449 |
- 140 |
- -947 |
25,249 - |
- 106,271 |
- 2,083 |
- 108,354 |
The notes presented on page 6 form an integral part of the Condensed Interim Consolidated Financial Statements.
Tatry mountain resorts, a.s. and subsidiary companies
Consolidated Cash Flow Statement
In thousands of EUR
OPERATING ACTIVITIES Profit 11,040 5,482 Adjustments relating to: Gain on disposal of property, plant and equipment and intangible assets Depreciation and amortization 5,642 6,583 Foreign currency differences (Release) / creation of value adjustments to receivables Loss / (profit) from financial instruments, net (non -monetary part) (Profit) / Loss from revaluation of investments in property Net interest expense / (income) 4,988 4,737 Gross change in provisions Income tax Change in trade receivables, other receivables and other assets Change in inventories Change in trade payables and other liabilities Cash flow from operating activities before tax 9,226 11,437 Income tax paid Cash flow from operating activities 9,235 11,464 INVESTMENT ACTIVITIES
| 1.11.2016 – 30.4.201 7 |
1.11.2015 – 30.4.201 6 |
|---|---|
| -547 | -425 |
| - 6 |
-454 |
| - | - |
| -289 | 158 |
| 3 | - |
| -39 | - 1 |
| -19 | 25 |
| -5,537 | 2,542 |
| -2,205 -3,805 |
1,335 -3,461 |
| 9 | 27 |
| -29,318 | -5,682 |
| -8,269 | - |
| - | |
| - | - |
| - | - |
| 5 | - |
| -23,896 | -5,257 |
| -537 | -420 |
| - | |
| -3,821 | -20,607 |
| - | - |
| - | - |
| -8,908 | -8,674 |
| -8,813 | |
| -3,248 | -2,606 |
Acquisition of property, plant and equipment and intangible assets Proceeds from disposal of property, plant and equipment and intangible assets 547 425 Loans provided Repayment of loans provided 13,139 Procurement of financial investments Proceeds from disposal of financial investments Interest receivable Cash flow from investment activities
FINANCIAL ACTIVITIES
Repayment of liabilities from financial leasing Financial leasing received 1,498 Repayment of received loans and borrowings Proceeds from loans received 23,181 20,888 Repayment of the liability from decrease of the share capital Issued bonds Interest paid Cash flow from financing activities 11,413
Net increase/(decrease) of cash and cash equivalents Cash and cash equivalents at the beginning of the year 7,493 8,219 Cash and cash equivalents at end of the year 4,245 5,613
The notes presented on page 6 form an integral part of the Condensed iInterim Consolidated Financial Statements .
During the reporting period the Group completed the construction and started operations of a new 15-seater cable way, with valley station in Krupová (Krupová – Kosodrevina), on the southern side of Chopok. The Group continued to finalize construction of Hotel Pošta and continued with modernization of fun-park in Chorzow (Slaskie Wesole Miasteczko). The Group began initial works for development and construction of three new cable ways in Szcyrk resort.
During the reporting period the Group continued in realization of a second stage of real estate investment project Chalety Otupné (Chalety Otupné 2), started initial works for construction of third stage of Chalety Otupné (Chalety Otupné 3) and continued with development of apartments for sale in Hotel Pošta. All these projects are intended for future sale or operation directly by the group. Value of these investments is recognized in the financial statements in Inventories.
During the reporting period the Group did not realized any new investments.
On 13 June 2017 the Group paid out a coupon on the TMR 1 bonds in the amount of EUR 1,575 thousand. The Group founded a new subsidiary- Tatry mountain resorts CR, a.s., on 5 May 2017. The Group has a 100% ownership in the subsidiary and the company was founded for possibility of further expansion on foreign markets.
| Bohuš Hlavatý | Jozef Hodek | Tomáš Kimlička | Marián Vojtko |
|---|---|---|---|
| Chairman of the | Member | Person in charge | Person in charge |
| Board of Directors | Board of Directors | of financial statements | of accounting |
Separate Statement of Profit and Loss and Other Comprehensive Income
| In thousands of EUR | 1.11.2016 – 30.4.2017 |
1.11.2015 – 30.4.2016 |
|---|---|---|
| Sales | 48,734 | 45,592 |
| Other operating revenues | 252 | 338 |
| Total revenues | 48,986 | 45,930 |
| Consumption of material and goods | -7,684 | -7,092 |
| Purchased services | -9,233 | -11,732 |
| Personnel expenses | -10,607 | -9,371 |
| Other operating expenses | -475 | -598 |
| Gain on disposal of assets | 547 | 425 |
| Gain on revaluation of investment property | - | - |
| Reversal of value adjustments to receivables | - | - |
| Earnings before interest, tax, depreciation and amortization (EBITDA)* | 21,534 | 17,562 |
| Depreciation and amortization | -4,974 | -5,984 |
| Goodwill impairment losses | - | - |
| Earnings before interest, tax (EBIT) | 16,560 | 11,578 |
| Interest income | 1,233 | 745 |
| Interest expenses | -5,604 | -5,439 |
| Gain/(loss) on financial instruments, net | 258 | -184 |
| Profit before tax | 12,447 | 6,700 |
| Income tax | -11 | -9 |
| Profit | 12,436 | 6,691 |
| Other comprehensive income | ||
| Revaluation of available-for-sale securities to fair value | 26 | - |
| Total comprehensive income | 12,462 | 6,691 |
| Earnings per share (in EUR) | 1.854 | 0.998 |
| Number of shares | 6,707,198 | 6,707,198 |
* EBITDA represents profit from recurring activities of the Group before tax, interest, depreciation and amortization adjusted for other income and expenses which are listed under EBITDA.
The notes presented on page 6 form an integral part of the Condensed Interim Separate Financial Statements.
Condensed Interim Individual Financial Statements for the period from 1 November 2016 to 30 April 2017
prepared in accordance with the International Financial Reporting Standards ("IFRS") in the wording adopted by the EU
| In thousands of EUR | 30.4.201 7 |
31.10.201 6 |
|---|---|---|
| Assets | ||
| Goodwill and other intangible assets | 7,135 | 7,151 |
| Property, plant and equipment | 272,886 | 259,627 |
| Investment property | 6,554 | 6,554 |
| Loans granted | 10,822 | 7,542 |
| Other receivables | 2,311 | 7,829 |
| Investments in associates | 14,717 | 14,641 |
| Total non -current assets |
314,425 | 303,344 |
| Inventories | 7,699 | 5,551 |
| Trade receivables | 2,355 | 2,524 |
| Assets held for sale | - | - |
| Loans granted | 36,929 | 31,042 |
| Other receivables | 21,008 | 20,037 |
| Financial investments | 2,283 | 2,259 |
| Cash and cash equivalents | 616 | 5,946 |
| Other assets | 1,442 | 1,062 |
| Total current assets | 72,332 | 68,421 |
| Total assets | 386,757 | 371,765 |
| Equity | ||
| Share capital | 46,950 | 46,950 |
| Share premium | 30,430 | 30,430 |
| Profit/loss for the current period | 12,436 | 4,814 |
| Retained earnings and other funds | 28,737 | 23,897 |
| Total equity | 118,553 | 106,091 |
| Liabilities | ||
| Loans and borrowings | 44,940 | 3 7,254 |
| Provisions | 157 | 157 |
| Other non -current liabilities |
- | - |
| Issued bonds | 178,696 | 178,680 |
| Deferred tax liability | 20,523 | 20,523 |
| Total non -current liabilities |
244,316 | 236,614 |
| Loans and borrowings | 7,586 | 6,711 |
| Trade payables | 6,666 | 6,794 |
| Provisions | 217 | 217 |
| Issued bond liabilities | 2,722 | 6,022 |
| Other current liabilities | 6,697 | 9,316 |
| Total current liabilities | 23,888 | 29,060 |
| Total liabilities | 268,204 | 265,674 |
| Total equity and liabilities | 386,757 | 371,765 |
The notes presented on page 6 form an integral part of the Condensed Interim Separate Financial Statements. Tatry mountain resorts, a.s.
Separate Statement of Changes in Equity
| Share capital |
Share premium |
Legal reserve fund |
Funds from revaluation |
Retained earnings |
Total | |
|---|---|---|---|---|---|---|
| In thousands of EUR | ||||||
| Balance as at 1 November 2016 | 46,950 | 30,430 | 4,449 | 145 | 24,117 | 106,091 |
| Transfer of retained earnings into the legal reserve fund Profit for the period |
- - |
- - |
- - |
- - |
- 12,436 |
- 12,436 |
| Revaluation of tangible assets on transfer of investments in property items with possible subsequent reclassification into profit/(loss): items without subsequent reclassification into profit/(loss): Other components of comprehensive income, after tax - - |
- | - | - | - | - | - |
| Revaluation of available-for-sale securities at fair value | - | - | - | 26 | - | 26 |
|---|---|---|---|---|---|---|
| Total comprehensive income for the period | - | - | - | 26 | 12,436 | 12,462 |
| Transactions with owners posted directly into equity Contributions to the fund |
- | - | - | - | - | - |
| Total transactions during the year | - | - | - | - 171 |
- | - |
| Balance as at 30 April 2017 | 46,950 | 30,430 | 4,449 | 36,553 | 118,553 |
| Tatry mountain resorts, a.s. | |
|---|---|
| Separate Statement of Changes in Equity (continued) |
|---|
| Share capital |
Share premium |
Legal reserve fund |
Funds from revaluation |
Retained earnings |
Total | |
|---|---|---|---|---|---|---|
| In thousands of EUR | ||||||
| Balance as at 1 November 2015 | 46,950 | 30,430 | 4,448 | 145 | 19,303 | 101,276 |
| Transfer of retained earnings into the legal reserve fund Profit for the period |
- - |
- - |
- - |
- - |
- 6,691 |
- 6,691 |
| Revaluation of tangible assets on transfer of investments in property items without subsequent reclassification into profit/(loss): Other components of comprehensive income, after tax - |
- | - | - | - | - | - |
| items with possible subsequent reclassification into profit/(loss): Revaluation of available-for-sale securities at fair value - |
- | - | - | -5 | - | -5 |
| Total comprehensive income for the period | - | - | - | -5 | 6,691 | 6,686 |
| Transactions with owners posted directly into equity Contributions to the fund |
- | - | 1 | - | -1 | - |
| Total transactions during the year | - | - | - | - | - | - |
| Balance as at 30 April 2016 | 46,950 | 30,430 | 4,449 | 140 | 25,993 | 107,962 |
The notes presented on page 6 form an integral part of the Condensed Interim Separate Financial Statements.
Tatry mountain resorts, a.s.
Separate Cash Flow Statement
| In thousands of EUR | 1.11.2016 – 30.4.2017 |
1.11.2015 – 30.4.2016 |
|---|---|---|
| OPERATING ACTIVITIES | ||
| Profit | 12,436 | 6,691 |
| Adjustments relating to: | ||
| Gain on disposal of property, plant and equipment and intangible assets | -547 | -425 |
| Depreciation and amortization | 4,974 | 5,984 |
| Foreign currency differences | - | - |
| (Release) / creation of value adjustments to receivables | - | - |
| Loss / (profit) from financial instruments, net (non -monetary part) |
-289 | 158 |
| (Profit) / Loss from revaluation of investments in property | - | - |
| Net interest expense / (income) | 4,370 | 4,694 |
| Gross change in provisions | - | - |
| Income tax | 10 | - 9 |
| Change in trade receivables, other receivables and other assets | 4,609 | -1,444 |
| Change in inventories | -2,148 | 1,355 |
| Change in trade payables and other liabilities | -2,747 | -3,418 |
| Cash flow from operating activities before tax | 20,668 | 13,586 |
| Income tax paid | 9 | 27 |
| Cash flow from operating activities | 20,677 | 13,613 |
| INVESTMENT ACTIVITIES | ||
| Acquisition of property, plant and equipment and intangible assets | -18,217 | -2,432 |
| Proceeds from disposal of property, plant and equipment and intangible assets |
547 | 425 |
| Cost of acquisition of subsidiaries | -76 | - |
| Loans provided | -31,361 | -2,737 |
| Repayment of loans provided | 23,265 | 5,429 |
| Expenses for acquisition of financial investments | - | - |
| Income from the sale of financial investments | - | - |
| Interest receivable | 162 | - |
| Cash flow from investment activities | -25,680 | 685 |
| FINANCIAL ACTIVITIES | ||
| Repayment of liabilities from financial leasing | -537 | -420 |
| Financial leasing received | 1,498 | - |
| Repayment of received loans and borrowings | -3,530 | -23,930 |
| Loans and borrowings received | 11,129 | 15,530 |
| Repayment of liability from reduction of share capital | - | - |
| Bonds Issued | - | - |
| Interest paid | -8,887 | -8,699 |
| Dividends paid | - | - |
| Cash flow from financing activities | -327 | -17,519 |
| Net increase/(decrease) of cash and cash equivalents | -5,330 | -3,221 |
| Cash and cash equivalents at the beginning of the year | 5,946 | 8,064 |
| Cash and cash equivalents at end of the year | 616 | 4,843 |
The notes presented on page 6 form an integral part of the Condensed Interim Separate Financial Statements .
Selected Notes to the Condensed Interim Separate Financial Statements
During the reporting period the Company completed the construction and started operations of a new 15-seater cable way, with valley station in Krupová (Krupová – Kosodrevina), on the southern side of Chopok. The Company continued to finalize construction of Hotel Pošta and continued with modernization of fun-park in Chorzow (Slaskie Wesole Miasteczko). The Company began initial works for developmnet and construction of three new cable ways in Szcyrk resort.
During reporting period the Company continued in realization of a second stage of real extate investment project Chalety Otupné (Chalety Otupné 2), started initial works for construction of third stage of Chalety Otupné (Chalety Otupné 3) and continued with development of apartments for sale in Hotel Pošta. All these projects are intended for future sale or operation directly by the Company. Value of these investments is recognized in the financial statements in Inventories.
During the reporting period the Company did not realized any new investments.
On 13 June 2017 the Company paid out a coupon on the TMR 1 bonds in the amount of EUR 1,575 thousand. The Company founded a new subsidiary- Tatry mountain resorts CR, a.s., on 5 May 2017. The Company has a 100% ownership in the subsidiary and the subsidiary was founded for possibility of further expansion on foreign markets.
.................................................................................................................................................................................... Bohuš Hlavatý Jozef Hodek Tomáš Kimlička Marián Vojtko Chairman of the Member Person in charge Person in charge Board of Directors Board of Directors of financial statements of accounting
The Condensed interim consolidated and separate financial statements were prepared in accordance with relevant regulations, and they provide a true and accurate description of assets, liabilities, financial situation, and comprehensive income of TMR and its subsidiaries included in the consolidation. The Half-Year Report has not been audited. The Interim Report includes a true performance review of the Group.
Demänovská Dolina, June 30, 2017
Bohuš Hlavatý Jozef Hodek
Chairman of the Board of Directors, CEO Member of the Board of Directors, CFO
TATRY MOUNTAIN RESORTS, a.s., e-mail: [email protected], www.tmr.sk, tel.: 0850 606 202
foto: Marek Hajkovský
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