par Covivio Hotels (EPA:COVH)
Covivio Hotels - 2024 Half-year financial report
FINANCIAL INFORMATION
HALF-YEAR 2024
Contents
FINANCIAL INFORMATION 1
HALF-YEARLY 2024 1
1. ACTIVITY REPORT AT 30 JUNE 2024 5
1.1. Net financial income 10
1.2. Portfolio at 30 June 2024 13
1.3. EPRA indicators 17
1.4. Related companies 17
1.5. Risks and uncertainties 18
1.6. 2024 outlook 21
1.7. Transition tables 22
2. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AT 30 JUNE 2024 25
2.1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AT 30 JUNE 2024 26
2.1.1 STATEMENT OF FINANCIAL POSITION 26
2.1.2 STATEMENT OF NET INCOME 27
2.1.3 STATEMENT OF COMPREHENSIVE INCOME 28
2.1.4 STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY 29
2.1.5 STATEMENT OF CASH FLOWS 30
GENERAL PRINCIPLES 31
2.2.1.1. Accounting standards 31
2.2.1.2. Estimates and judgments 31
2.2.1.3. Taking into account the effects of climate change 32
2.2.1.4. Operating segments (IFRS 8) 32
2.2.1.5. IFRS 7 – Reference table 32
FINANCIAL RISK MANAGEMENT 33
2.2.2.1. Marketing risk for properties under development 33
2.2.2.2. Liquidity risk 33 2.2.2.3. Interest rate risk 34
2.2.2.4. Financial counterparty risk 34 2.2.2.5. Lease counterparty risk 34
2.2.2.6. Risk related to changes in the value of the portfolio 34
2.2.2.7. Foreign exchange risk 35
2.2.2.8. Risk related to changes in the value of shares and bonds 35
2.2.2.9. Tax environment 35
SCOPE OF CONSOLIDATION 37
2.2.3.1. Accounting principles relating to the scope of consolidation 37
2.2.3.2. Change in holding rate and change in consolidation method 38
2.2.3.3. List of consolidated companies 39
2.2.3.4. Control assessment 41
SIGNIFICANT EVENTS OF THE PERIOD 42
2.2.4.1. Business update 42 2.2.4.2. Vauban protocol 42 2.2.4.3. Asset disposals 42
2.2.4.4 Sale of shares 42
2.2.4.5. Financing and reimbursement 42
NOTES TO THE STATEMENT OF FINANCIAL POSITION 43
2.2.5.1. Portfolio 43
2.2.5.2. Financial assets 48
2.2.5.3. Investments in equity affiliates and joint ventures 49
2.2.5.4. Deferred taxes at closing 50
2.2.5.5. Short-term loans 50
2.2.5.6. Inventories and work in progress 51
2.2.5.7. Trade receivables 51
2.2.5.8. Tax and other receivables 52
2.2.5.9. Prepaid expenses 53
2.2.5.10. Cash and cash equivalents 53
2.2.5.11. Shareholders’ equity 53
2.2.5.12. Statement of liabilities 54
2.2.5.13. Provisions for risks and charges 59
2.2.5.14. Other liabilities 60
2.2.5.15. Recognition of financial assets and liabilities 60
2.2.5.16. Accruals 61
NOTES TO THE STATEMENT OF NET INCOME 62
2.2.6.1. Accounting principles 62
2.2.6.2. Operating income 62
2.2.6.3. Net income from disposals 64
2.2.6.4. Change in the fair value of properties 64
2.2.6.5. Cost of net financial debt 64 2.2.6.6. Net financial income 65
2.2.6.7. Current and deferred taxes 65
OTHER INFORMATION 68
2.2.7.1. Personnel expenses 68
2.2.7.2. Earnings per share and diluted earnings per share 68
2.2.7.3. Related-party transactions 69
2.2.7.4. Executive remuneration 69
SEGMENT REPORTING 70
2.2.8.1. Accounting principles relating to operating segments - IFRS 8 70
2.2.8.2. Tangible and intangible fixed assets 70
2.2.8.3. Investment properties / properties held for sale 70
2.2.8.4. Financial liabilities 71
2.2.8.5. Income statement by operating segment 72
POST-CLOSING EVENTS 74
3. STATUTORY AUDITORS’ REPORT ON THE INTERIM FINANCIAL INFORMATION 75
COVIVIO HOTELS 75
Period from 1 January 2024 to 30 June 2024 75
Statutory Auditors’ report on the interim financial information 2024 75
4. STATEMENT BY THE PERSON RESPONSIBLE 77
1. ACTIVITY REPORT AT 30 JUNE 2024
Hotel market: good first-half performance
H1 2024 performance in Europe improved on 2023. At the end of May 2024, RevPAR (revenue per available room) was up 4% on average, as the European market kept up its momentum, bolstered by the increase in occupancy rates and average prices. The best performances were recorded in Southern Europe, notably Spain and Italy, which were up 15% and 8%, respectively. Germany continued to catch up, posting a 4% increase in RevPAR. Meanwhile, France posted more moderate RevPAR growth at 1%, impacted by the postponement of travel plans in the run-up to the Paris Olympics.
These trends are set to continue through June, with performance boosted by Euro 2024 in Germany but declining in Paris in pre-Olympics period.
Memorandum of understanding signed by Covivio Hotels and AccorInvest
In June 2024, Covivio Hotels and AccorInvest signed a memorandum of understanding to consolidate the ownership of jointly owned hotel operating and property companies, in accordance with the terms defined at the start of exclusive negotiations in November 2023. The transaction is expected to be closed in the final quarter of 2024. The memorandum concerns the acquisition by Covivio Hotels of 24 hotel operating companies[1] - allowing the consolidation of these hotels, which will be owned and operated by Covivio Hotels – in exchange for the transfer to AccorInvest of title to 10 other hotels, which will then be owned and operated by AccorInvest. The agreed value of the property companies transferred to AccorInvest is €208 million[2], while the value of the operating companies acquired by Covivio Hotels is €266 million3. Based on 2023 figures, the assets transferred to AccorInvest represent annual rental income of €11 million, while the operating companies acquired by Covivio Hotels generate EBITDA of around €31 million.
The deal enables Covivio Hotels to acquire operating companies in major tourist areas with considerable potential for value creation through repositioning and management optimisation. Some of these hotels will continue to operate under Accor brands (under management or franchise agreements), while others will be rebranded.
The agreement also concerns the hotels held under joint ventures by Covivio Hotels, which is also the indirect owner and asset manager of another 60 hotels leased to AccorInvest and held through two joint ventures created in 2010 and 2019, respectively. One of these is 80% owned by Crédit Agricole Assurances and 20% by Covivio Hotels, and the other is owned by Caisse des Dépôts et Consignations, Société Générale Assurances, and Covivio Hotels. The memorandum provides for the acquisition by Covivio Hotels and its partners of 19 operating companies held by these two joint ventures (thereby enabling them to be consolidated as properties owned and operated by Covivio Hotels and its partners) in exchange for the transfer to AccorInvest of six other hotels, which will then be owned by AccorInvest.
These consolidation transactions for Covivio Hotels and the joint ventures represent a total of €393 million1 for the hotel property companies sold by Covivio Hotels and its partners, equivalent to that of the operating companies owned and operated by the companies whose shares will be acquired. Upon completion, Covivio Hotels and its partners will have consolidated ownership of 43 hotels and AccorInvest 16.
This hotel exchange transaction will allow Covivio Hotels to reposition a large part of its portfolio and increase its ability to directly influence performance, thereby exploiting a major source of potential growth.
€77 million in new disposal commitments signed
Covivio Hotels signed new disposal commitments totalling €77 million Group Share (€83 million at 100%) during the first half, including four hotels in Germany (€31 million), one hotel in Spain (€17 million) and 13 assets in France (€30 million), including three Accor-branded hotels.
The commitments were signed at a margin of around 11% over end-2023 appraisal values, reflecting strong investor appetite for the hotel industry.
Slight increase in like-for-like values
At the end of June 2024, Covivio Hotels held a portfolio worth €5,821 million (€6,432 million at 100%), characterised by:
- high-quality locations: the average grade given for "location" by customers on Booking.com is 8.9/10;
- a diversified portfolio in terms of country (12 countries, none representing more than 33% of the total portfolio) and segment (68% economy/midscale and 32% upscale);
- long-term leases with the major hotel operators: 16 operators with an average firm residual lease term of
11.8 years.
Group Share (€ millions, excluding duties) | Value 2023 | Value H1 2024 |
Hotel lease properties | 4 434 | 4 464 |
Hotel Operating properties | 1 337 | 1 357 |
Total Hotels | 5 771 | 5 821 |
Non-Stratégic (Retail) | 51 | 45 |
Total Covivio Hotels | 5 822 | 5 866 |
1 LfL : Like-for-like |
0.6% | 5.8% | 5.9% |
0.0% | 6.2% | 6.3% |
0.5% | 5.9% | 6.0% |
10.7% | N/A | N/A |
0.4% | 5.8% | 6.0% |
H1 LfL Yield Yield H1 change1 20232 20242
2 Yield excluding duties
At like-for-like scope, the hotel portfolio was up 0.5% over six months. This change is primarily attributable to the stabilisation of capitalisation rates and continued revenue growth driven by the good performance of variablerevenue hotels and fixed-rent indexation.
The hotel portfolio has a 6.0% average yield excluding transfer duties.
1 Including transfer taxes.
Hotel portfolio breakdown at 30/06/2024
Revenue growth: +5% like-for-like
The good first-half performance by the hotel market resulted in hotel portfolio revenue growth of 5.2% like-for-like, with revenues totalling €153.7 million compared to €150.1 million at 30 June 2023.
Income | Income | Income | Income | Change | Change | |
€ million | H1 2023 | H1 2023 | H1 2024 | H1 2024 | Group Share | Group Share LFL |
100% | Group Share | 100% | Group Share | (%) | (%) (*) | |
Lease properties - Variable | 32.3 | 32.3 | 35.6 | 35.6 | 10.0% | 9.3% |
Lease properties - Fixed Operating properties - EBITDA | 93.5 | 87.1 | 96.2 | 89.5 | 2.7% -6.6% | 4.4% 2.9% |
31.6 | 30.7 | 29.6 | 28.7 | |||
Total revenues Hotels | 157.4 | 150.1 | 161.4 | 153.7 | 2.4% | 5.2% |
Non-strategic (Retail) | 1.9 | 1.9 | 1.7 | 1.7 | -9.5% | -9.3% |
Total revenues Covivio Hotels | 159.3 | 152.0 | 163.1 | 155.4 | 2.2% | 5.0% |
(*) On a like for like basis
Hotel lease properties (81% of hotels revenue)
- Variable-rent hotels (23% of the hotels revenue): the portfolio is mainly let to AccorInvest, in France and Belgium, and also includes the variable-rent portion of the minimum guaranteed rent leased assets located in Spain, Italy, and the UK. The 9.3% like-for-like year-on-year increase was driven by the excellent performance from hotels in Southern Europe.
- Fixed-rent hotels (58% of the hotel revenue): rents up 4.4% like-for-like, mainly due to rental indexation (up
5.6% in France, 3.8% in Germany, and 3.6% in Spain).
The occupancy rate remained at 100% across the hotel portfolio.
Hotel operating properties (19% of hotel revenue)
Most of these hotels are located in Germany (mainly Berlin) and France. Like-for-like EBITDA for operating properties rose 2.9% year-on-year, mainly driven by good hotel performances in Germany. In addition, the hotels located in Bruges are subject to a work programme.
Successful refinancing, competitive debt cost, and strengthened liquidity
Two new financing arrangements totalling €729 million were secured during the first half of the year, enabling the company to refinance upcoming debt payments. In particular, in May 2024 Covivio Hotels carried out a €500 million Green Bond issue with nine-year maturity and a 4.125% coupon (148 bp spread over mid-swap rate). The fixed rate of the issue was largely swapped for a floating rate in order to leverage the Group’s hedging position.
Covivio Hotels net debt rose from €2,260 million Group Share at 31 December 2023 to €2,373 million. Over the same period, the average interest rate improved by 11 bps, falling from 2.43% to 2.32% at the end of June 2024, while the average maturity increased from 3.6 to 5.1 years. Covivio Hotels had a strengthened debt coverage ratio of 96% at the end of June 2024 (compared with 89% at the end of 2023), with a high hedging maturity of 6.0 years.
At 30 June 2024, the loan-to-value ratio (LTV) stood at 36.1%. The interest coverage ratio (ICR) was 5.94x, a further improvement compared to the end of 2023 (5.38x).
Covivio Hotels held cash (including undrawn credit lines) of €616 million at 30 June 2024.
As part of its annual review, S&P Global Ratings confirmed Covivio Hotels’ BBB+ stable outlook rating, in line with the overall Covivio rating. This confirmation recognises the solidity of the company’s operational and financial profile. S&P also upgraded Covivio Hotels’ stand-alone rating from BB+ to BBB-.
Recurring net income growth of 7% in H1 2024
H1 2024 recurring net income (EPRA Earnings) came to €119.5 million, up 6.6% from €112.1 million a year earlier, boosted by revenue growth. EPRA Earnings per share amounted to €0.81, up 6.6% from €0.76 the previous year. EPRA NTA (net tangible assets) stood at €3,505 million, compared with €3,550 million at the end of 2023. This amounted to €23.7 per share, down 1.3% compared to the end of 2023, despite the impact of the dividend payment. Taking into account the fair value adjustment of interest rate hedges and fixed-rate debt, the EPRA NDV (net disposal value) was €3,472 million, from €3,512 million at end-December 2023, down 1.1%. It stands at €23.4/share.
1.1. Net financial income
1.1.1. General principles
The interim condensed consolidated financial statements were prepared in compliance with international accounting standard IAS 34 Interim Financial Reporting, as adopted by the European Union. The rules and methods applied are identical at 31 December 2023.
1.1.2. Statement of interim net income
Group Share revenues
On a Group Share basis, Covivio Hotels Group Share revenue totalled €155.4 million for the first half-year of 2024, up by 2.2% compared to June 2023. On a like-for-like basis, hotel fixed rents were up by 4.4%, hotel variable rents by 9.3% and EBITDA from hotel operating properties increased by 2.9% compared to June 2023. This increase is linked to the momentum in Southern Europe of the activity observed during the half-year and the end of the lockdown measures in Europe.
(In € million) | Revenues H1 2023 100% | Revenues H1 2023 COVH QP | Revenues H1 2024 100% | Revenues H1 2024 COVH QP | Revenues T1 2024 COVH QP | Revenues T2 2024 COVH QP | Change (%) COVH QP | Change COVH QP (%) LfL 1 | % of revenues |
Lease properties - Variable | 32,3 | 32,3 | 35,6 | 35,6 | 14,3 | 21,3 | 10,0% | 9,3% | 23,1% |
Lease properties - Fixed | 93,5 | 87,1 | 96,2 | 89,5 | 44,9 | 44,6 | 2,7% | 4,4% | 58,2% |
Operating properties - EBITDA | 31,6 | 30,7 | 29,6 | 28,7 | 5,2 | 23,5 | -6,6% | 2,9% | 18,6% |
Total revenues Hotels | 157,4 | 150,1 | 161,4 | 153,7 | 64,4 | 89,3 | 2,4% | 5,2% | 100,0% |
Non-strategic (Retail) | 1,9 | 1,9 | 1,7 | 1,7 | 0,9 | 0,9 | -9,5% | -9,3% | n.a. |
Total | 159,3 | 152,0 | 163,1 | 155,4 | 65,3 | 90,2 | 2,2% | 5,0% | n.a. |
1: Like for Like = like-for-like scope
Operating income, Group Share
Operating income, Group Share amounted to €153.1 million at 30 June 2024, compared with €90.1 million at 30 June 2023. This change is mainly due to the change in the fair value of investment properties (+€57 million).
Net financial income, Group Share
Financial income mainly consists of:
- The cost of net financial debt for -€27.6 million, down €1.8 million compared to June 2023, in line with the decrease in the cost of debt;
- The financial expense on lease liabilities (-€7.8 million), generated by the application of IFRS 16, which consists of restating leases in the same way as finance leases;
- The positive change in the fair value of financial assets and liabilities for €19 million, taking into account changes in interest rates;
- Foreign exchange income related to our British, Polish, Hungarian and Czech portfolios for €0.4 million compared to €0.4 million at 30 June 2023.
1.1.3. EPRA Earnings
EPRA Earnings amounted to €119.5 million at 30 June 2024. It is up by 6.6% compared to 2023. Per share, the EPRA
Earnings amounted to €0.81 at 30 June 2024, compared with €0.76 on the same date in 2023, i.e. an increase of 6.6%.
30/06/2024 |
133,3 -18,4 -3,5 0,8 -19,0 0,0 0,0 5,4 -3,8 6,1 0,0 17,8 2,5 0,7 -2,5 119,5 |
0,81 |
134 973 |
30/06/2023
Net income Group Share 62,1 - Variation in asset values 39,1 - Income from asset disposals 0,3 - impairment GW Operating Properties 1,9
- Variations in the value of financial instruments -8,3
- foreign exchange loss on CAPEX Hungary 0,0
- Provision for Operating Properties taxes -7,3
- Interest expense on lease liabilities of more than 100 years 5,1
- Rental charges for leases of more than 100 years -3,7
- Deferred tax -1,9
- Taxes on disposals 0,0
- Depreciation of properties managed as Operating Properties 20,7
- IFRIC 21 adjustment 2,1
- Fees and amortisation of loan costs for early repayment 0,1 - Adjustment of Epra Earnings of equity-accounted companies 2,0
EPRA Earnings 112,1
Average number of shares in circulation 148 135 050
1.1.4. Half-yearly consolidated statement of financial position at 30 June 2024
The simplified consolidated balance sheet (Group Share) at 30 June 2024 is as follows:
30/06/2024 3 324 |
2 836 82 294 206 179 6 920 |
30/06/2024 1 190 4 252 207 71 |
16 201 362 463 158 6 920 |
Assets 31/12/2023Liabilities 31/12/2023
Tangible and intangible assets 1 190
Investment property 4 425
Investments in equity affiliates 205
Financial assets 72Shareholders’ equity3,387 Deferred tax assets 23Borrowings 2 361 Financial instruments 178Financial instruments 69 Assets held for sale 162Rental liability 289 Cash 101Deferred liabilities 206 Others 104Others 146
Total 6 458 6 458
Tangible and intangible assets were stable under the double effect of depreciation and fixed assets in progress (-€20.5 million and € 17.7 million respectively) and the exchange rate variation on the portfolio in the UK (+€2.4 million).
Investment properties decreased (-€170.7 million) over the period mainly as a result of:
- Signing of the agreement with AccorInvest for an asset swap (-€208 million);
- The change in the fair value of real estate assets, for an amount of +€17 million;
- The increase in the value of the pound sterling and the Hungarian Forint, which impacted the value of our foreign portfolio for +€16 million and -€3.8 million respectively.
Assets held for sale also varied due to the signing of the agreement with AccorInvest and the disposals made over the period.
Cash is made up of cash and marketable securities for €463 million, in connection with the new bond issue (€500 million).
On the liabilities side, shareholders’ equity fell from €3,551 million at 31 December 2023 to €3,494 million at 30 June 2024. This change is mainly due to the impact of:
- positive income for the period of +€133 million
- the payment of the 2023 dividend for a net amount of -€193 million - the change in the conversion reserve for -€6 million
A detailed explanation of the various line items is provided in the notes to the consolidated half-year financial statements.
1.1.5. Debt structure
At 30 June 2024, the net financial debt amounted to €2,373 million Group Share.
As a Group Share, net financial debt represents 36.1% of total assets revalued in value including transfer taxes, attributable to owners of the parent and 39.1% of total assets in value excluding transfer taxes attributable to owners of the parent, excluding restatement of commitments.
Features of the debt
The average interest rate on debt was 2.32% (compared to 2.43% at 31 December 2023).
Debt maturity
The average maturity of the debt is 5.1 years at 30 June 2024, vs 3.6 years at 31 December 2023.
Hedging
At 30 June 2024, the debt active hedging spot rate, Group Share, was 96.1%.
The net valuation of hedging instruments amounted to €119 million, Group Share, at 30 June 2024. The change in the value of hedging instruments over the period had an impact on the income statement of €19 million, Group Share, due to changes in interest rates.
1.2. Portfolio at 30 June 2024
The portfolio of Covivio Hotels is valued at €6,478 million, excluding transfer taxes, i.e. €5,866 million Group Share excluding transfer taxes.
The portfolio of Covivio Hotels breaks down as follows:
Portfolio, Group Share (In € million) | Values ED 31/12/2023 | Values ED 30/06/2024 |
Hotel lease properties | 4 434 | 4 464 |
Hotel Operating properties | 1 337 | 1 357 |
Total Hotels | 5 771 | 5 821 |
Non-Strategic (Retail) | 51 | 45 |
Total Covivio Hotels | 5 822 | 5 866 |
(1) LfL: Like-for-Like scope. |
5,8% | 5,9% |
6,2% | 6,3% |
5,9% | 6,0% |
N/A | N/A |
5,8% | 6,0% |
∆ H1 2024 Yield ED Yield ED H1
(1) 2023(2) 2024(2)
(2) Yield HD: Yield excluding duties.
(2) For variable income categories, returns are calculated on a rolling year basis (from H2 2023 to H1 2024).
On a like-for-like scope, the Hotel real estate portfolio showed strong resilience, posting values up +0.5% over six months. This change is mainly due to the stabilisation of capitalisation rates and an increase in revenues, due to the growth in hotel performances and the indexation of rents.
The hotel portfolio has a 6.0% average yield excluding transfer taxes.
Since 2005, the evolution of the Covivio Hotels portfolio has been as follows (in € million):
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 H1
2024
Hotels Health Retail premises
Breakdown of rents
Covivio Hotels has excellent visibility over its future cash flows, given the signing of firm long-term leases with tenants who have a solid credit rating and are leaders in their industries.
Annualised rents
Annualised rents and revenues from hotels operating properties amounted to €340.4 million at 30 June 2024 (excluding retail), broken down as follows:
Geographic area
(In € million) | Number of rooms | Number of assets | Annualised revenue H1 2023 Group Share | Annualised revenue H1 2024 100% | Annualised revenue H1 2024 Group Share | Var. (in %) | As a % of revenues |
Paris | 3 526 | 14 | 36,5 | 43,5 | 35,8 | -2,0% | 10% |
Inner rim | 678 | 5 | 6,0 | 10,5 | 5,8 | -2,4% | 2% |
Outer rim Total Paris Regions GMR | 2 706 6 910 4 747 | 28 47 45 | 11,1 | 16,1 | 11,4 | 2,6% | 3% |
53,6 | 70,1 | 53,0 | -1,1% | 16% | |||
26,0 | 35,3 | 26,9 | 3,6% | 8% | |||
Other French Regions Total France Germany | 4 316 15 973 6 160 | 61 153 55 | 9,3 | 14,0 | 8,8 | -4,9% | 3% |
88,9 | 119,4 | 88,8 | -0,1% | 26% | |||
33,5 | 35,5 | 34,6 | 3,3% | 10% | |||
UK | 1 826 | 9 | 36,4 | 35,7 | 35,7 | -1,9% | 10% |
Spain | 3 376 | 17 | 39,2 | 42,1 | 42,1 | 7,5% | 12% |
Belgium | 1 990 | 10 | 16,2 | 19,0 | 17,0 | 4,9% | 5% |
Others | 2 528 | 15 | 40,3 | 44,5 | 44,5 | 10,3% | 13% |
Total Hotel lease properties | 31 853 | 259 | 254,5 | 296,2 | 262,7 | 3,2% | 77% |
France | 1 210 | 9 | 20,3 | 19,6 | 19,6 | -3,2% | 6% |
Germany | 3 503 | 8 | 40,1 | 42,5 | 40,3 | 0,5% | 12% |
Others | 1 234 | 8 | 15,6 | 17,7 | 17,7 | 14,0% | 5% |
Total Hotel Operating properties | 5 947 | 25 | 75,9 | 79,8 | 77,7 | 2,3% | 23% |
Total Hotels | 37 800 | 284 | 330,4 | 376,1 | 340,4 | 3,0% | 100% |
Non-strategic (Retail) | 0 | 39 | 1,2 | 1,6 | 1,6 | 34,2% | 0% |
Total | 37 800 | 323 | 331,6 | 377,7 | 342,0 | 3,1% | 100% |
Breakdown by tenant
Accor | Nb de chambres | Nb d’actifs | Revenus annualisés S1 2023 PdG | Revenus annualisés S1 2024 100% | Revenus annualisés S1 2024 PdG | Var. (%) | En % des revenus |
1 700 | 6 | 74,8 | 97,7 | 77,8 | 4% | 23% | |
IHG | 2 855 | 16 | 41,4 | 43,2 | 43,2 | 4% | 13% |
B&B | 14 018 | 157 | 41,3 | 57,5 | 43,6 | 6% | 13% |
RHG | 1 919 | 5 | 4,1 | 5,6 | 5,6 | 37% | 2% |
Marriott | 1 326 | 5 | 25,5 | 25,0 | 24,4 | -4% | 7% |
NH | 3 022 | 19 | 50,2 | 55,6 | 55,6 | 11% | 16% |
Hotusa | 553 | 2 | 8,4 | 8,9 | 8,9 | 6% | 3% |
Barcelo | 497 | 2 | 7,9 | 8,1 | 8,1 | 2% | 2% |
Club Med | 372 | 1 | 4,9 | 5,3 | 5,3 | 8% | 2% |
AC Hotels | 0 | 0 | 4,8 | 5,8 | 5,8 | 20% | 2% |
Melia | 534 | 3 | 5,3 | 6,7 | 6,7 | 27% | 2% |
Motel One | 712 | 3 | 4,7 | 5,0 | 4,8 | 3% | 1% |
Meininger | 591 | 3 | 6,9 | 7,2 | 7,2 | 5% | 2% |
Sunparks | 877 | 2 | 7,9 | 8,2 | 8,2 | 4% | 2% |
Autres | 8 824 | 60 | 31,7 | 36,2 | 35,1 | 11% | 10% |
Total Hôtels | 37 800 | 284 | 319,8 | 376,1 | 340,4 | 6% | 100% |
Non stratégique (commerces) | 0 | 39 | 3,9 | 1,6 | 1,6 | -59% | 0% |
Total | 37 800 | 323 | 323,7 | 377,7 | 342,0 | 6% | 100% |
1.2.1. Lease schedule
The firm residual duration of leases decreased by 0.4 years compared to 31 December 2023, i.e. a firm residual term of 11.8 years at the end of June 2024 (new Roca leases, etc.).
Rents break down as follows by lease end date:
In € million, Group Share | By date of 1st lease break option | As % of the total | By lease end date | As % of the total |
2024 2025 | 6,8 | 3% 2% | 1,6 | 1% 2% |
5,9 | 5,2 | |||
2026 | 10,9 | 4% | - | 0% |
2027 | 2,2 | 1% | 2,2 | 1% |
2028 | - | 0% | - | 0% |
2029 | 32,3 | 12% | 27,6 | 11% |
2030 | 19,7 | 7% | 19,7 | 7% |
2031 | 5,3 | 2% | 9,9 | 4% |
2032 | 8,8 | 3% | 8,8 | 3% |
2033 | 11,8 | 5% | 15,3 | 6% |
Beyond | 159,0 | 61% | 172,4 | 66% |
Total | 262,7 | 100% | 262,7 | 100% |
Non-strategic (Retail) | 1,6 | 1,6 |
1.2.2. Summary of expert appraisals
At 30 June 2024, the breakdown of the portfolio in value (Group Share) among the real estate appraisers is as follows:
1.2.3. Occupancy rate
The financial occupancy rate measures the ratio between the annualised rents of occupied premises and the annualised rents if the premises were fully let.
The physical occupancy rate indicates the number of m² occupied compared to marketable m².
These two rates were stable at 100% for hotels at 30 June 2024.
1.3. EPRA indicators
At 30 June 2024, EPRA NTA NAV stood at €3,505 million (or €23.7 per share), a fall of 1.3% compared with 31 December 2023. EPRA NDV NAV was €3,472 million (i.e. €23.4 per share), down 1.1% over six months. New indicators: Description
EPRA Net reinstatement Value (EPRA NRV) | ▪ Replenishment NAV | ||||
(EPRA NRV) | ▪ Similar to the current EPRA NAV, plus transfer taxes | ||||
EPRA Net Tangible Assets (EPRA NTA) | NRV NAV | ||||
(EPRA NTA) | ▪ excluding intangible goodwill, transfer taxes ▪ excluding deferred taxes on assets not intended to remain permanently on the balance sheet ▪ Close to the current EPRA | ||||
EPRA Net Disposal Value (EPRA NDV) | ▪ Represents the value in the event of liquidation of the company | ||||
(EPRA NDV) | ▪ Triple Net NAV ▪ excluding goodwill and optimisation of transfer taxes | ||||
Detail per share Consolidated shareholders’ equity (Group Share) EPRA NRV EPRA NTA EPRA NDV Number of shares at closing | 31/12/2023 22,9 26,4 24 23,7 148 141 452 | 30/06/2024 Variation (in %) 22,4 -1,9% 26 -1,6% 23,7 -1,3% 23,4 -1,2% 148 141 452 | |||
1.4. Related companies
The main related-party transactions that took place in the first half of 2024 are detailed in Section 2.2.7.3 of the notes to the half-year consolidated financial statements.
1.5. Risks and uncertainties
Covivio Hotels invites its readers to refer to Chapter 2 of its 2023 Universal Registration Document (URD) in which the main risks and control systems put in place by the company have been identified.
The rating of risks is the result of a combined analysis of their potential negative impact (on the company’s valuation, its results, its image and/or on the continuity of its activity) and their probability of occurrence. Once quantified, the gross impact and probability are adjusted for the control systems in place to determine the net risk.
Following the review of risks, those whose level could change in the second half of 2024, via an increase in their net impact and/or their net probability, are presented below. The mechanisms for managing these risks (unchanged) are described in the 2023 URD available on the Covivio Hotels website. The other risks are unchanged to date.
1.5.1. Risks linked to the environment in which Covivio Hotels operates
Unfavourable evolution of the real estate market: fall or stagnation of values and rents Values
The total assets of Covivio Hotels at the end of 2024 (€7.2 billion in consolidated figures) mainly consisted of the appraisal value of the buildings, which amounted to €6.2 billion (i.e. over 86%). Any change in the value of buildings has a direct impact on the balance sheet total.
The value of the Covivio Hotels portfolio depends on changes in the real estate markets in which the Group operates. Both rent levels and market prices (and consequently the capitalisation rates used for comparison purposes by appraisers) may be subject to fluctuations due to the economic and financial environment. Covivio Hotels recognises its investment properties at fair value in accordance with the option offered by IAS 40.
Thus, a decrease in appraisal values is likely to affect the revalued net asset value of Covivio Hotels and, possibly, its share price.
In the first half of 2024, the value of the hotel portfolio changed on a like-for-like basis by +0.5% (compared to -3.9% in 2023).
Increased borrowing rates may result in higher financing costs for potential investors and buyers, which may discourage some of them from carrying out real estate transactions or acquisitions. This may reduce demand on the market and exert downward pressure on the value of Covivio Hotels’ assets.
The real estate market is dynamic and reacts to various economic and financial factors. An increase in interest rates may lead to adjustments in capitalisation rates depending on the perception of risks and expected returns. Investors may demand higher yields to offset increased borrowing costs, which may result in higher capitalisation rates.
However, it should be noted that the impact of the increase in revenues expected by Covivio Hotels should limit the negative effect of an increase in rates.
For information purposes, the table below shows the sensitivity of the valuation of lease assets at 30 June 2024 to yield rates (corresponding to the normative annualised rent / appraised value of assets excluding duties):
Decrease in capitalisation rate Data as of Increase in capitalisation rate
1 point | 0.75 point | 0.5 point | 0.25 point | 30/06/2024 | 0.25 point | 0.5 point | 0.75 point | 1 point | |
Capitalisation rate | 4,9% | 5,1% | 5,4% | 5,6% | 5,9% | 6,1% | 6,4% | 6,6% | 6,9% |
Portfolio value (in €M) * | 5 536 | 5 265 | 5 019 | 4 795 | 4 591 | 4 403 | 4 230 | 4 070 | 3 921 |
Variation in value (in €M) | 945 | 674 | 428 | 205 | -188 | -361 | -521 | -669 | |
Variation (in %) | 20,6% | 14,7% | 9,3% | 4,5% | -4,1% | -7,9% | -11,3% | -14,6% |
* Total investment properties, excluding development portfolio and rights of use.
The sensitivity of covenants to changes in appraisal values is presented in Section 1.5.2 “Financial risks”.
Impact of changes in the discount rate on the change in the fair value of real estate assets:
On the basis of a significant sample of the portfolio of hotel leases, the sensitivity of the value of the portfolio to changes in the discount rate can be assessed as follows:
• If the discount rate drops 25 bps (-0.25 points), the market value excluding taxes of the real estate assets will increase by about 1.9%, or €85 million;
• If the discount rate increases by 25 bps (+0.25 points), the market value excluding taxes of the real estate assets will decrease by about 1.8%, or €82 million.
Revenues
The European tourism activity was very dynamic in the first half of the year, with a continued increase in average prices and occupancy rates in line with (or even higher than) those of 2023. Group Share revenues for the first half of the year amounted to €155.4 million (+5% on a like-for-like basisvs H1 2023). Nevertheless, the Company remains sensitive to its share of variable income (assets whose rents are likely to change in line with the revenue of hotels as well as the rents of hotels held in Operating Properties) representing 41% of its revenue as of 30 June 2024.
Thus, in the event of a deterioration in the environment, Covivio Hotels could, in addition to a decline in its revenues, suffer value adjustments that could be amplified by the increase in rates.
The Company also benefits from long-term leases, enabling it to have little exposure to the risk of vacancies in the coming years.
The table below shows the sensitivity of the fair value of investment properties to changes in rents. The capitalisation rate was constant at 5.9% (data attributable to the Group’s Share).
Decrease in annualised rents Data as of Increase in annualised rents
10,0% | 7,5% | 5,0% | 2,5% | 30/06/2024 | 2,5% | 5,0% | 7,5% | 10,0% | |
Annualised rents | 242 | 249 | 255 | 262 | 269 | 276 | 282 | 289 | 296 |
Portfolio value (in €M) * | 4 132 | 4 246 | 4 361 | 4 476 | 4 591 | 4 706 | 4 820 | 4 935 | 5 050 |
Variation in value (in €M) | -459 | -344 | -230 | -115 | 115 | 230 | 344 | 459 | |
Variation (in %) | -10,0% | -7,5% | -5,0% | -2,5% | 2,5% | 5,0% | 7,5% | 10,0% |
* Total investment properties, excluding development portfolio and rights of use.
Increase in capitalisation rates | 0,50% | 1,0% |
Decrease in rents | Portfolio Variation* (in €M) | Portfolio Variation* (in €M) |
-5% 4 000 -13% 3 692 -20%
-10% 3 771 -18% 3 462 -25%
* Variation compared to the portfolio at 30 June 2024.
The impacts of changes in values on the Company’s covenants are presented in Section 1.5.2 “Financial Risks”.
1.5.2. Financial risks
Unfavourable change in interest and exchange rates
Borrowings
Covivio Hotels could suffer an increase in its financial expenses on its share of unhedged debt and be more generally limited in its ability to implement its short/medium-term investment strategy.
With an average rate of 2.32%, Covivio Hotels’ debt stood at €2.4 billion, Group Share at the end of June 2024. Its average active hedging rate was 96.1%.
The figures below show the sensitivity of Covivio Hotels’ EPRA earnings to a rise in interest rates.
A 25 bps increase in the three-month Euribor rate would have an impact of -€0.1 million on EPRA Earnings.
A 50 bps increase in the three-month Euribor rate would have an impact of -€0.3 million on EPRA Earnings.
A 100 bps increase in the three-month Euribor rate would have an impact of -€0.5 million on EPRA Earnings.
Foreign Exchange
A variation in the exchange rate between the pound sterling and the euro could have negative consequences on the result of Covivio Hotels and more specifically on the amount of rents received insofar as 13% of its portfolio is located in the UK.
Non-compliance with banking covenants (LTV, ICR) related to decreases in values and/or revenues
The risks related to changes in values and rents are detailed in the developments dedicated to the risk “Unfavourable evolution of the real estate market: fall or stagnation of values and rents” (see above).
In the event of breaching a covenant, Covivio Hotels would theoretically have to repay all of its drawn debt. In practice, however, this risk appears unlikely, as banks generally prefer to renegotiate the financial conditions of the borrowers concerned, as seen during the 2008 financial crisis.
The most restrictive LTV (Loan to Value) covenant applying to Covivio Hotels is 60%, for an effective ratio of 39.1% (banking LTV) at 30 June 2024. As a result, the company could suffer a 34% fall in the value of its assets before reaching its LTV covenant.
The most restrictive ICR (Interest Coverage Ratio) covenant of Covivio Hotels is 200% for an effective ratio of 594% at 30 June 2024.
1.6. 2024 outlook
As the hotel real estate leader in the main European markets, Covivio Hotels plans to take advantage of a growing market and the valuation potential of its portfolio, primarily through the recently announced consolidation transaction on the hotels let to AccorInvest (20% of the portfolio).
1.7. Transition tables
1.7.1. Transition tables
1.7.1.1. Transition table of the portfolio
Portfolio (as of 30/06/2024) €5 866 M
Use rights on investment properties | +€248 M |
Use rights on operating properties | +€43 M |
Equity affiliates > 30% | -€158 M |
Non-accrued goodwill of operating property | -€205 M |
Real Estate Assets Group Share | €5 794 M |
The companies’ fully consolidated noncontrolling interest | +€280 M |
100% Real estate assets - IFRS accounts | €6 074 M |
1.7.1.2. Transition table for EPRA indicators
Shareholders’ equity Group - IFRS
€3 324 M
Accounts
Fair value of operating property assets net of deferred taxes | €159 M |
Non-optimised transfer rights | €242 M |
Fair value of financial instruments | -€120 M |
Deferred tax (including IFRS adjustments) | €246 M |
EPRA NRV | €3 852 M |
Non-optimised transfer rights | -€196 M |
Goodwill and intangible assets | -€115 M |
Deferred tax on non-core assets | -€36 M |
EPRA NTA | €3 505 M |
Optimisation of the transfer rights | -€47 M |
Intangible assets | €0 M |
Fair value of fixed-rate debt (excluding cred | €103 M |
Fair value of financial instruments | €120 M |
Deferred tax liabilities | -€210 M |
EPRA NDV | €3 472 M |
The fair value of fixed-rate debt is measured at the risk-free rate and excluding credit spreads.
1.7.1.3. Transition table of rental income
(In € million) | Revenues 30/06/2024 IFRS Accounts | Non-controlling interest | Rental income HY 2024 Group Share Covivio Hotels |
Hotels | €161 M | -€8 M | €154 M |
Retail premises | €2 M | €0 M | €2 M |
Total Rental Income | €163 M | -€8 M | €155 M |
Managed hotel EBITDA | €30 M | -€1 M | €29 M |
1.7.1.4. Transition table of EPRA Earnings
Net income
Non-controlling Net Income, EPRA
(In € million) 100% Restatements
interest Group Share Earnings
IFRS Accounts
0,8 1,7 | 124,7 30,4 -8,3 |
17,8 | -2,4 |
-3,8 | 4,1 |
16,5 | 148,5 |
-3,5 | 0,0 |
-18,4 | 0,0 |
0,0 | 0,0 |
0,8 | 0,0 |
-4,5 | 148,5 |
0,0 | -27,6 |
5,4 | -2,4 |
-19,0 | 0,0 |
0,0 | 0,4 |
0,0 | 0,0 |
-2,5 | 6,1 |
0,7 | 0,0 |
-20,0 | 125,0 |
6,1 | 0,0 |
0,0 -5,5 |
130,7 29,6 | -6,7 -1,0 | 124,0 28,7 |
-8,7 | 0,4 | -8,3 |
-20,6 | 0,4 | -20,2 |
8,0 | 0,0 | 7,9 |
138,9 | -6,8 | 132,0 |
3,5 | 0,0 | 3,5 |
20,9 | -2,5 | 18,4 |
-0,0 | 0,0 | -0,0 |
-0,8 | 0,0 | -0,8 |
162,4 | -9,4 | 153,1 |
-29,9 | 2,3 | -27,6 |
-7,8 | 0,0 | -7,8 |
20,7 | -1,7 | 19,0 |
0,4 | 0,0 | 0,4 |
-0,7 | 0,7 | 0,0 |
8,6 | 0,0 | 8,6 -0,7 |
153,7 | -8,7 | 145,0 |
-6,1 | -0,1 | -6,1 |
-5,6 0,1 -5,5 |
Net Rental Income
Managed hotel income
Operating costs
Depreciation of operating assets
Net change in provisions and other
OPERATING RESULT
Income from asset disposals
Result of value adjustments
Income from disposal of securities
Result of changes in scope
OPERATING INCOME
Cost of net financial debt
Interest expense on rental liabilities
Value adjustment of derivative instruments
Discounting and exchange result
Net change in financial and other provisions
Share in income of equity affiliates
Early amortisation of loan issue costs
NET INCOME BEFORE TAX
Deferred tax liabilities
Corporate taxes
NET INCOME FOR THE PERIOD 142,0 -8,7 133,3 -13,8 119,5
1.7.1.5. Managed hotel income
Group Share data (In € million) | 30/06/2023 | 30/06/2024 | Variation |
Transfers of operating expenses | -0 | -0 | |
Hotel rental income | 2,9 | 3,0 | 0,1 |
Accommodation | 89,0 | 91,5 | 2,5 |
Catering | 31,1 | 31,1 | -0,0 |
Sundry sales | 9,5 | 9,0 | -0,5 |
Revenues | 132,9 | 134,6 | 1,7 |
Cost of sales | -28,1 | -28,7 | -0,6 |
Personnel costs | -43,2 | -47,9 | -4,7 |
A & G (Administration & General) | -7,5 | -6,1 | 1,4 |
S & M (Sales & Marketing) | -5,2 | -5,4 | -0,2 |
Other operating expenses | -10,1 | -7,1 | 3,1 |
Gross operating profit (GOP) | 37,5 | 39,4 | 1,9 |
Management fees | -1,9 | -3,7 | -1,8 |
Property taxes and others | -3,3 | -3,8 | -0,5 |
Insurance | -0,8 | -0,8 | -0,1 |
Consultancy fees | -0,6 | -2,3 | -1,7 |
EBITDAR | 30,9 | 28,8 | -2,1 |
Letting | -0,3 | -0,1 | 0,2 |
EBITDA | 30,7 | 28,7 | -1,9 |
Depreciation and provisions | -19,5 | -20,2 | -0,7 |
Current net operating income | 11,2 | 8,5 | -2,6 |
Non-recurring income | 1,2 | -2,6 | -3,8 |
Net operating income | 12,7 | 6,0 | -6,7 |
Cost of net financial debt | -7,3 | -7,3 | 0,1 |
Interest charges on rental liabilities | -1,2 | -1,2 | -0,0 |
Change in the fair value of financial instruments | 0,0 | 0,0 | 0,0 |
Other financial income and expenses | 0,0 | -0,0 | -0,0 |
Pre-tax income (loss) | 4,2 | -2,6 | -6,8 |
Deferred tax liabilities | 1,7 | 1,9 | 0,2 |
Corporate taxes | -1,6 | -1,5 | 0,1 |
Consolidated net income | 4,3 | -2,2 | -6,5 |
Minority interests | 0,0 | 0,0 | -0,0 |
Net income Group Share | 4,3 | -2,2 | -6,5 |
2. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AT 30 JUNE 2024
2.1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AT 30 JUNE 2024
2.1.1 STATEMENT OF FINANCIAL POSITION
Assets
(In € thousand) | Note 2.2.5 | 30/06/2024 | 31/12/2023 | |
Intangible assets | 1.2 | 117 350 | ||
Goodwill | 116 527 | |||
Other intangible fixed assets | 262 | 227 | ||
Tangible assets | 1.2 | |||
Operating properties | 1 072 107 | 1 083 629 | ||
Other tangible fixed assets | 14 664 | 15 799 10 266 4 655 245 | ||
Assets in progress | 23 625 | |||
Investment properties | 1.3 | 4 484 567 | ||
Non-current financial assets | 2.2 | 58 326 | 59 453 204 590 23 952 | |
Investments in equity affiliates | 3.2 | 207 115 | ||
Deferred tax assets | 4 | 16 160 | ||
Long-term derivative instruments | 12.5 | 140 363 | 120 349 | |
TOTAL NON-CURRENT ASSETS | 6 133 716 | 6 290 861 | ||
Assets held for sale | 1.3 | 362 031 | 161 915 23 793 2 444 | |
Loans and receivables | 5 | 24 785 | ||
Inventories and work in progress | 6 | 2 368 | ||
Short-term derivative instruments | 12.5 | 60 444 | 57 285 | |
Trade receivables | 7.2 | 95 376 | 42 721 | |
Tax receivables | 8 | 21 795 | 21 082 | |
Other receivables | 8 | 12 933 | 11 377 | |
Prepaid expenses | 9 | 5 159 | 3 447 | |
Cash and cash equivalents | 10.2 | 471 596 | 108 780 | |
TOTAL CURRENT ASSETS | 1 056 487 | 432 844 | ||
TOTAL ASSETS | 7 190 202 | 6 723 705 |
Liabilities
2.1.2 STATEMENT OF NET INCOME
2.1.3 STATEMENT OF COMPREHENSIVE INCOME
30/06/2024 | 30/06/2023 | |
142 050 | 62 178 | |
-5 658 | 10 193 | |
-5 658 | 10 193 | |
0 | 0 | |
-5 658 | 10 193 | |
136 392 | 72 371 | |
127 675 | 72 299 | |
8 717 | 72 | |
136 392 | 72 371 |
(In € thousand)
Currency translation differences
Other comprehensive income that can be reclassified to profit or loss
Other comprehensive income that cannot be reclassified to profit or loss
OTHER ITEMS OF COMPREHENSIVE INCOME COMPREHENSIVE INCOME FOR THE PERIOD
of which attributable to owners of the parent company of which attributable to non-controlling interests
TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE PERIOD
2.1.4 STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
2.1.5 STATEMENT OF CASH FLOWS
(In € thousand) | Note 2.2 | 30/06/2024 | 31/12/2023 |
x x x x x x | |||
Consolidated net income (including minority interests) | 142 050 | -25 311 | |
Net depreciation, amortisation and provisions (excluding those related to current assets) | 21 491 | 43 201 | |
Unrealised gains and losses relating to changes in fair value | 5.12.5 & 6.4 | -41 594 | 264 495 |
Income and expenses calculated on stock options and related share-based payments | -42 | 14 | |
Other calculated income and expenses | 6.6 | 786 | -10 271 |
Gains or losses on disposals | 6.3 | -3 443 | -320 |
Share of income from companies accounted for under the equity method | 5.3.2 | -8 643 | 2 020 |
Cash flow after tax and cost of net financial debt | 110 606 | 273 828 | |
Cost of net financial debt and interest charges on rental liabilities | 6.5 & 5.12.6 | 35 373 | 74 217 |
Tax charge/income (including deferred taxes) | 6.7.2 | 11 636 | -34 586 |
Cash flow before tax and cost of net financial debt | 157 615 | 313 460 | |
Taxes paid | -4 394 | -9 424 | |
Variation in WCR on continuing operations (including employee benefits liabilities) | 5.7.2 | -19 752 | 20 087 |
NET CASH FLOW FROM OPERATING ACTIVITIES | 133 469 | 324 123 | |
Impact of changes in the scope | -45 | -41 | |
Disbursements related to acquisition of tangible and intangible fixed assets | 5.1.2 | -22 436 | -37 816 |
Proceeds from the disposal of tangible and intangible fixed assets | 5.1.2 | 15 697 | 23 954 |
Dividends received (companies accounted for under the equity method, non-consolidated securities) | 5.3.2 | 6 119 | 5 083 |
Change in loans and advances granted | 5.2.2 | 1 144 | 3 065 |
Investment grants received | 0 | 0 | |
NET CASH FLOW FROM INVESTMENT ACTIVITIES | 454 | -5 754 | |
Impact of changes in the scope | 0 | 0 | |
Amounts received from shareholders in connection with capital increases: | |||
Paid by non-controlling interests of consolidated companies | 4.1.4 | 0 | -494 |
Purchases and sales of treasury shares Dividends paid during the reporting period: | 0 | 62 | |
Dividends paid to parent company shareholders Dividends paid to non-controlling interests of consolidated companies | 4.1.4 4.1.4 | -192 573 | -185 171 |
-2 276 | -6 885 | ||
Proceeds related to new borrowings | 5.12.2 | 592 606 | 624 294 |
Repayments of borrowings (including finance lease agreements) | 5.12.2 | -169 703 | -682 617 |
Net interest paid (including finance lease agreements) | -33 720 | -77 461 | |
Other cash flow from financing activities | 5.12.5 | -17 | 667 |
NET CASH FLOW FROM FINANCING ACTIVITIES | 194 317 | -327 603 | |
Impact of changes in the exchange rate | 83 | 934 | |
CHANGE IN NET CASH | 328 322 | -8 300 | |
Opening cash position | 108 685 | 116 985 | |
Closing cash position | 437 007 | 108 685 | |
Change in cash and cash equivalents | 5.10.2 & 5.12.2 | 328 322 | -8 300 |
2.2. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
GENERAL PRINCIPLES
2.2.1.1. Accounting standards
The consolidated financial statements of the Covivio Hotels group at 30 June 2024 have been prepared in accordance with the international financial reporting standard IAS 34 “Interim Financial Reporting”. As these are condensed financial statements, they do not include all the information required by IFRS and should be read in conjunction with Covivio Hotels’ financial statements for the fiscal year ended 31 December 2023.
The financial statements were approved by the Management on 11 July 2024.
• Accounting principles and methods used
The accounting principles applied to the consolidated financial statements as at 30 June 2024 are identical to those used for the consolidated financial statements as at 31 December 2023, with the exception of new standards and amendments whose application is mandatory from 1 January 2024 and which were not applied early by the Group.
The following amendments, which are mandatory as of 1 January 2024, did not have any impact on the Group’s consolidated financial statements:
• Amendments to IAS 1 “Presentation of the financial statements - Classification of liabilities as current or non-current”. Non-current liabilities with prepayment clauses. These amendments specify how a company should classify, in the statement of financial position, debts and other liabilities whose settlement date is uncertain. Under these amendments, these debts or other liabilities must be classified as either current or non-current liabilities. The application of these amendments did not lead to significant changes in the presentation of the interim financial statements.
• Amendment IFRS 16 "Leaseback in a sale and leaseback transaction" The IFRS-IC has published a decision illustrating the application of IFRS requirements on the initial recognition of a saleleaseback with variable rents. This amendment complements the previous IFRIC decision. The application of these amendments did not lead to significant changes in the presentation of the interim financial statements.
• Amendment to IAS 7 & IFRS 7 "Supplier financing arrangements". These amendments introduced requirements for disclosures by a company about its supplier financing arrangements. These new requirements require the Company to provide users with financial statements to assess the impact of its supplier financing arrangements on its liabilities and cash flows, and to understand the effects of such arrangements on its exposure to liquidity risk and the way in which it could be affected if it were no longer able to use these agreements. The application of these amendments did not lead to significant changes in the presentation of the interim financial statements.
2.2.1.2. Estimates and judgements
The financial statements have been prepared in accordance with the historic cost convention, with the exception of investment properties and certain financial instruments, which were recognised in accordance with the fair value convention. In accordance with the conceptual framework for IFRS, preparation of the financial statements requires making estimates and using assumptions that affect the amounts shown in these financial statements.
The significant estimates made by the Covivio Hotels group in preparing the financial statements mainly relate to:
• the valuations used for testing impairment, in particular assessing the recoverable value of goodwill and intangible fixed assets;
• measurement of the fair value of investment properties;
• measurement of the fair value of derivative financial instruments;
• measurement of provisions.
Due to the uncertainties inherent in any valuation process, the Covivio Hotels group reviews its estimates based on regularly updated information. The future results of the transactions in question may differ from these estimates.
In addition to the use of estimates, Group management makes use of judgements to define the appropriate accounting treatment of certain business activities and transactions when the IFRS standards and interpretations in effect do not precisely address the accounting issues involved.
2.2.1.3. Taking into account the effects of climate change
In 2021, Covivio announced a new carbon trajectory and raised its ambitions to achieve a 40% reduction in greenhouse gas emissions by 2030. This objective, which concerns all Scopes 1, 2 and 3, covers all activities in Europe and the entire life cycle of assets: materials, construction, restructuring and operation. Covivio is aiming for Net Zero Carbon from 2030 on its Scopes 1 and 2.
Covivio Hotels continued its momentum in terms of environmental certification: the proportion of assets with HQE, BREAM, LEED or other specific hotel labels, in operation and/or under construction, reached 94% in mid-2024, in line with the objective of 100% by the end of 2025. At Group level, Covivio has also set itself ambitious targets for reducing the energy consumption of buildings for more than ten years. This strategy actively contributes to achieving the new carbon trajectory. It is accompanied by a strengthened commitment to low-carbon construction and renovation. In addition, in accordance with the European Regulation, Covivio Hotels published at the end of 2023 its eligibility and alignment rates for the second year of application of the Taxonomy Regulation (Chapter 3 of the Universal Registration Document), including this year the Biodiversity target for the hotel operating activity.
In addition, in its financing component and in line with the Group’s greening strategy, Covivio Hotels decided to adopt a Green Financing Framework in June 2023 and suggested that bondholders transform all their bonds into Green bonds.
Finally, in order to better understand the risks and opportunities related to climate change, every year Covivio publishes a report incorporating the recommendations of the TCFD (Taskforce on Climate Financial related Disclosures) and regularly analyses the climate resilience of its portfolio. In June 2023, the Group published its second Climate Report, available on its website.
The inclusion of the effects of climate change had no material impact on the judgements made and the main estimates required to prepare the financial statements.
2.2.1.4. Operating segments (IFRS 8)
The operating segments of the Covivio Hotels group are detailed in Section 2.2.8.1.
2.2.1.5. IFRS 7 – Reference table
Liquidity risk § 2.2.2.2
Financial expense sensitivity § 2.2.2.3
Counterparty risk § 2.2.2.4
Covenants § 2.2.5.12.7
Market risk § 2.2.2.6
Sensitivity of the fair value of investment properties § 2.2.5.1.3
Exchange rate risk § 2.2.2.7.
FINANCIAL RISK MANAGEMENT
The operating and financial activities of the company are exposed to the following risks:
2.2.2.1. Marketing risk for properties under development
The Group is involved in property development. As such, it is exposed to various risks, in particular risks related to construction costs, late delivery and the marketing of the asset. There were no building projects under development as of 30 June 2024.
2.2.2.2. Liquidity risk
Liquidity risk is managed in the medium and long term with multi-year cash management plans and, in the short term, by using confirmed and undrawn lines of credit. At 30 June 2024, Covivio Hotels’ available cash and cash equivalents amounted to €928 million, including €449 million in confirmed credit lines, €472 million in short-term investments and cash equivalents and €7 million in granted unused overdraft facilities.
The graph below shows the maturities of borrowings (in € million) including interest expenses as at 30 June 2024.
Covivio Hotels group debt totalled €2,879.7 million as at 30 June 2024 (see 2.2.5.12).
The interest payable up to the extinguishing of all the debt, estimated based on the outstanding amount as at 30 June 2024 and the average interest rate on debt, totalled €303 million.
Covivio Hotels has been active in the management of its long-term liquidity with the issuance of a 9-year bond for €500 million to secure the refinancing of its 2025 bond maturity (€350 million) and the partial redemption of medium-term debt maturities. The refinancing of its Spanish portfolio was also secured for
€229 million with a maturity of seven years.
Details of the debt maturities are provided in note 2.2.5.12.3, and a description of the banking covenants and accelerated payment clauses included in the loan agreements is presented in note 2.2.5.12.7.
2.2.2.3. Interest rate risk
The Group’s exposure to the risk of changes in market interest rates is linked to its floating rate and longterm financial debt.
To the extent possible, bank debt is almost systematically hedged via financial instruments (see 2.2.5.12.5). As at 30 June 2024, after taking interest rate swaps into account, an average of 96.1% of the Group’s debt was actively hedged, and the bulk of the remainder was covered by interest rate caps, which resulted in the following sensitivity to changes in interest rates:
• the impact of an increase of 100 bps on the rates at 30 June 2024 is -€0.5 million on cost of net debt Group Share for 2024;
• the impact of an increase of 50 bps on the rates at 30 June 2024 is -€0.3 million on the cost of debt Group Share for 2024;
• the impact of a decrease of 50 bps on the rates at 30 June 2024 is +€0.3 million on the cost of net debt Group Share in 2024.
2.2.2.4. Financial counterparty risk
Given Covivio Hotels group’s contractual relationships with its financial partners, the company is exposed to counterparty risk. If one of its counterparties is not in a position to honour its undertakings, the Group’s net income could suffer an adverse effect.
This risk primarily involves the hedging instruments entered into by the Group and which would have to be replaced by a hedging transaction at the current market rate in the event of a default by the counterparty.
The counterparty risk is limited by the fact that the Covivio Hotels group is a borrower, from a structural standpoint. The risk is therefore mainly restricted to the investments made by the Group and to its counterparties in derivative product transactions. The company continually monitors its exposure to financial counterparty risk. The company’s policy is to deal only with top-tier counterparties, while diversifying its financial partners and its sources of funding.
Counterparty risk is included in the measurement of cash instruments. At 30 June 2023, the amount is -€4.0 million compared to -€3.6 million at 31 December 2023.
2.2.2.5. Lease counterparty risk
Covivio Hotels group’s rental income is fairly concentrated among a group of principal tenants (Accor, B&B, IHG, NH etc.) who generate the bulk of annual rental income.
The Covivio Hotels group is not significantly exposed to the risk of insolvency, since its tenants are selected based on their creditworthiness and the economic prospects of their market segments. The operating and financial performance of the main tenants is regularly reviewed. In addition, tenants grant the Group financial guarantees when leases are signed.
In the first half of 2024, the Group’s revenue continued to grow.
2.2.2.6. Risk related to changes in the value of the portfolio
Changes in the fair value of investment properties are recognised in the income statement. Changes in property values can thus have a material impact on the operating performance of the Group.
The investment policy of the Covivio Hotels group seeks to minimise the impact of the various stages of the cycle by choosing investments that:
• have long-term leases and high-quality tenants, to soften the impact of a reduction in market rental income and the resulting decline in real estate prices;
• are located in major European cities.
The ownership of real estate assets intended for leasing exposes the Covivio Hotels group to the risk of fluctuation in the value of real estate assets and lease payments.
Despite the uncertainty created by the economic downturn, this exposure is limited to the extent that the rentals invoiced are derived from rental agreements, the term and diversification of which mitigate the effects of fluctuations in the rental market.
Rental income is indexed to rent indexation indices, to changes in Accor revenues and to the likelihood of the application of major underperformance clauses on the portfolio in the United Kingdom for the hotels concerned.
The sensitivity of the fair value of investment properties to changes in rental values and/or capitalisation rates is analysed in § 2.2.5.1.3.
2.2.2.7. Foreign exchange risk
The Group operates both inside and outside the Euro zone following the acquisition of hotel real estate assets in the United Kingdom, Poland, the Czech Republic and Hungary. The Group protected itself against fluctuations in the pound sterling by financing part of the acquisition in the UK with a foreign currency loan and a currency swap.
Impact of a decrease in the GBP/EUR exchange rate on the shareholders’ equity
30/06/2024 (in £M) | 2.4% real increase in the GBP/EUR exchange rate | 5% decrease 10% decrease in the in the GBP/EUR GBP/EUR exchange exchange rate (in €M) rate (in €M) | ||
Portfolio | 14,9 | -31,0 | -61,8 | |
Debt | 270 | -3,2 | 6,6 | 13,3 |
Cross currency swap | 250 | -5,7 | 11,8 | 23,7 |
Shareholders’ equity impact | 5,9 | -12,5 | -24,9 | |
(-) corresponds to a loss; (+) corresponds to a gain. |
2.2.2.8. Risk related to changes in the value of shares and bonds
The Group is exposed to risks for two classes of shares (see § 2.2.5.2.2 and § 2.2.5.3.2):
• available-for-sale securities measured at fair value. This fair value is the market price when the securities are traded on a regulated market;
• shares of companies accounted for under the equity method are measured at their value in use. Value in use is determined based on independent assessments of the real estate assets and financial instruments.
The Covivio Hotels group made an inaugural bond issue in September 2018, a bond issue in July and November 2021 and a new bond issue of €500 million in May 2024, the characteristics of which are presented in § 2.2.5.12.4.
2.2.2.9. Tax environment
The Group does not observe any major changes in the tax environment in France and in other countries impacting the results of the period to 30 June 2024.
Stemming from a project by the OECD and the European Commission, the “PILLAR 2” international tax reform aims to guarantee a minimum effective taxation of 15% of groups with revenue of at least €750 million, and will be applicable from the 2024 fiscal year.
To date, there are still a certain number of uncertainties regarding the implementation of the rules relating, in particular, to the scope of application (in particular for companies that apply the SIIC regime or equivalent) and the calculation methods.
As of 30 June 2024, clarifications are still expected from the bodies representing the reform. No provisions for tax relating to the PILLAR 2 rules were recognised in the SIIC scope.
2.2.2.9.1. Tax risks
Due to the complexity and formalism that characterise the tax environment in which Covivio Hotels conducts its activities, the Group is exposed to tax risks. After consulting our advisors, if a tax treatment presents a risk of adjustment, a provision is made.
There is no provisioned tax risk at 30 June 2024, for which the effects would be likely to significantly affect Covivio Hotels’ results or financial position.
2.2.2.9.2. Deferred taxes
The impact of deferred tax liabilities therefore mainly relates to investments to which the SIIC regime does not apply (Belgium, Czech Republic, Germany, Hungary, Ireland, Italy, Netherlands, Poland, Portugal, Spain, United Kingdom). In the case of Spain, all Spanish companies have opted for the SOCIMI regime exemption. However, there are deferred tax liabilities related to assets held by the companies prior to opting for SOCIMI treatment.
Deferred tax mainly arises from fair value measurement of the overseas portfolio and from the Operating Properties business (German rate: 15.825%, French rate: 25.83%). Please note that the hotel businesses are taxed at a rate of between 30.18% and 32.28% in Germany and that deferred tax liabilities for this business have also been recognised at this rate.
For the UK, 9 of the 12 companies have entered the UK REIT exemption from 1 January 2024. There is therefore no longer any deferred tax on this part of the portfolio.
SCOPE OF CONSOLIDATION
2.2.3.1. Accounting principles relating to the scope of consolidation
✓ Consolidated subsidiaries and structured entities – IFRS 10
These financial statements include the financial statements of Covivio Hotels and the financial statements of the entities (including structured entities) that it controls and its subsidiaries. The Covivio Hotels group has control when it:
• has power over the issuing entity;
• is exposed or is entitled to variable returns due to its ties with the issuing entity;
• has the ability to exercise its power in such a manner as to affect the amount of returns that it receives.
The Covivio Hotels group must reassess whether it controls the issuing entity when facts and circumstances indicate that one or more of the three factors of control listed above have changed.
A structured entity is an entity structured in such a way that the voting rights or similar rights do not represent the determining factor in establishing control of the entity; this is particularly the case when the voting rights only involve administrative tasks and the relevant business activities are governed by contractual agreements.
If the Group does not hold a majority of the voting rights in an issuing entity in order to determine the power exercised over an entity, it analyses whether it has sufficient rights to unilaterally manage the issuing entity’s relevant business activities. The Group takes into consideration any facts and circumstances when it evaluates whether the voting rights that it holds in the issuing entity are sufficient to confer power to the Group, including the following:
• the number of voting rights that the Group holds compared to the number of rights held respectively by the other holders of voting rights and their distribution;
• the potential voting rights held by the Group, other holders of voting rights or other parties;
• the rights under other contractual agreements;
• the other facts and circumstances, where applicable, which indicate that the Group has or does not have the ability to manage relevant business activities at the moment when decisions must be made, including voting patterns during previous shareholders’ meetings.
Subsidiaries and structured entities are fully consolidated.
✓ Equity affiliates – IAS 28
An equity affiliate is an entity in which the Group has significant control. Significant control is the power to participate in decisions relating to the financial and operational policy of an issuing entity without, however, exercising control or joint control on these policies.
The results and the assets and liabilities of equity affiliates are accounted for in these consolidated accounts according to the equity method.
✓ Partnerships (joint control) – IFRS 11
Joint control means the contractual agreement to share the control exercised over a company, which only exists in the event where the decisions concerning relevant business activities require the unanimous consent of the parties sharing the control.
✓ Joint ventures
A joint venture is a partnership in which the parties which exercise joint control over the entity have rights to its net assets.
The results and the assets and liabilities of joint ventures are recognised in these consolidated financial statement according to the equity method.
✓ Joint operations
A joint operation is a partnership in which the parties exercising joint control over the operation have rights to the assets, and obligations for the liabilities relating to it. Those parties are called joint operators.
A joint operator must recognise the following items relating to its interest in the joint operation:
• its assets, including its proportionate share of assets held jointly, where applicable;
• its liabilities, including its proportionate share of liabilities undertaken jointly, where applicable;
• the income that it derived from the sale of its proportionate share in the yield generated by the joint operation;
• its proportionate share of income from the sale of the yield generated by the joint operation;
• the expenses that it has committed, including its proportionate share of expenses committed jointly, where applicable.
The joint operator accounts for the assets, liabilities, income and expenses pertaining to its interests in a joint operation in accordance with the IFRS that apply to these assets, liabilities, income and expenses. No Group company is considered to constitute a joint operation.
2.2.3.2. Change in holding rate and change in consolidation method
There was no change in the scope of consolidation during the first half of 2024.
2.2.3.3. List of consolidated companies
Entries and exits from the consolidation scope are presented in the table below at the beginning or end of each business segment.
Consolidation % interest % interest
185 Companies Country Business sector
SCA Covivio Hotels HoldCo Iris Dahlia HoldCo Phoenix Rocky 1 Rocky 2 Rocky 3 Rocky 4 Rocky 5 Rocky 6 Rocky 7 Rocky 8 Rocky 9 Rocky 10 Rocky 11 SCI Hôtel Porte Dorée Foncière B4 Hôtel Invest SARL Loire Foncière Otello SNC Hôtel René Clair Foncière B2 Hôtel Invest OPCI B2 Hôtel Invest Foncière B3 Hôtel Invest Covivio Hôtels Gestion Immobilière Roco Italy Holdco SRL Dei Dogi Venice Propco SRL (Roco Italy) Bellini Venice Propco SRL (Roco Italy) Palazzo Gaddi Florence Propco SRL (Roco Italy) Palazzo Naiadi Rome Propco SRL (Roco Italy) New York Palace PropCo Ltd (Roco Hungary) SC Czech AAD, SRO (Roco Czech Republic) Sardobal Investment (B&B Poland) Redewen Investment (B&B Poland) Noxwood Investment (B&B Poland) Cerstook Investment (B&B Poland) Forsmint Investment (B&B Poland) Oxford Spires Hotel Ltd (Rocky operation) Oxford Thames Limited (Rocky operation) Blythswood Square Hotel Glasgow Holdco Ltd (Rocky operation) George Hotel Investments Holdco Ltd (Rocky operation) Grand Central Hotel Company Holdco Ltd (Rocky operation) Lagonda Leeds Holdco Ltd (Rocky operation) Lagonda Palace Holdco Ltd (Rocky operation) Lagonda Russell Holdco Ltd (Rocky operation) Lagonda York Holdco Ltd (Rocky operation) Oxford Spires Hotel Holdco Ltd (Rocky operation) Oxford Thames Holdco Ltd (Rocky operation) Roxburghe Investments Holdco Ltd (Rocky operation) The St David’s Hotel Cardiff Holdco Ltd (Rocky operation) Wotton House Properties Holdco Ltd (Rocky operation) Blythswood Square Hotel Glasgow Ltd (Rocky – Propco operation) George Hotel Investments Ltd (Rocky – Propco operation) Grand Central Hotel Company Ltd (Rocky – Propco operation) Lagonda Leeds PropCo Ltd (Rocky – Propco operation) Lagonda Palace PropCo Ltd (Rocky – Propco operation) Lagonda Russell PropCo Ltd (Rocky – Propco operation) Lagonda York PropCo Ltd (Rocky – Propco operation) Roxburghe Investments Propco Ltd (Rocky – Propco operation) The St David’s Hotel Cardiff Ltd (Rocky – Propco operation) Wotton House Properties Ltd (Rocky – Propco operation) Rocky Covivio Limited HEM Diestelkade Amsterdam BV (LHI 2 operation) Delta Hotel Amersfoort BV Hôtel Amsterdam Noord Hôtel Amersfoort NH Amsterdam Center Hôtel HLD Stadhouderskade Amsterdam BV MO Lux 1 SARL LHM Holding Lux SARL LHM PropCo Lux SARL H Invest Lux H Invest Lux 2 Murdelux SARL FDM Rocatiera Bardiomar Trade Center Hotel B&B Invest Spain SLU Portmurs B&B Invest Lux 1 B&B Invest Lux 2 B&B Invest Lux 3 Mo First Five B&B Invest Lux 4 MO Dreilinden, Niederrad MO Berlin et Koln Ringer B&B Invest Lux 5 Ulysse Belgique Ulysse Trefonds Foncière No Bruxelles Grand Place Foncière No Bruxelles Aéroport Foncière No Bruges Centre Foncière Gand Centre Foncière Gand Opéra Foncière IB Bruxelles Grand-Place Foncière IB Bruxelles Aéroport Foncière IB Bruges Centre Foncière Antwerp Centre Foncière Bruxelles Expo Atomium Sunparks Oostduinkerke Foncière Vielsam Sunparks Trefonds Foncière Kempense Meren Opco Hotel Stadt Berlin Betriebs (Park-Inn) – Rock Berlin III (Propco Mercure Potsdam) – Rock Opco Hotel Potsdam Betriebs (Mercure Potsdam) – Rock Dresden II (propco Ibis Hotel Dresden) – Rock | France France France France France France France France France France France France France France France France France France France France France France France Italy Italy Italy Italy Italy Hungary Czech Rep. Poland Poland Poland Poland Poland United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom Netherlands Netherlands Netherlands Netherlands Netherlands Netherlands Luxembourg Luxembourg Luxembourg Luxembourg Luxembourg Luxembourg Spain Spain Spain Spain Portugal Germany Germany Germany Germany Germany Germany Germany Germany Germany Belgium Belgium Belgium Belgium Belgium Belgium Belgium Belgium Belgium Belgium Belgium Belgium Belgium Belgium Belgium Belgium Germany Germany Germany Germany | Multi-business Operating Properties Operating Properties Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Operating Properties Hotels Hotels Hotels Hotels Operating Properties Hotels Hotels Hotels Hotels Hotels Hotels Operating Properties Operating Properties Operating Properties Operating Properties | Parent company FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC | - 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 50,20 100,00 100,00 100,00 50,20 50,20 50,20 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 90,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 84,60 100,00 94,00 94,00 100,00 93,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 94,90 94,90 94,90 94,90 | - - - 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 50,20 100,00 100,00 100,00 50,20 50,20 50,20 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 90,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 84,60 100,00 94,00 94,00 100,00 93,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 94,90 94,90 94,90 94,90 |
method in 2024 2024 2023
Dresden II (propco Ibis Hotel Dresden) – Rock Dresden IV (propco Ibis Hotel Dresden) - Rock Opco BKL Hotelbetriebsgesellschaft (Dresden II to IV) – Rock Dresden V (propco Pullman Newa Dresden) – Rock Opco Hotel Newa Dresden Betriebs (Pullman) – Rock Leipzig I (propco Westin Leipzig) – Rock Opco HotelgesellschaftGerberst. Betriebs (Westin Leipzig) - Rock Leipzig II (propco Radisson Blu Leipzig) – Rock Opco Hotel Deutschland Leipzig Betriebs (Radisson Blu) – Rock Erfurt I (propco Radisson Blu Erfurt) – Rock Opco Hotel Kosmos Erfurt (Radisson Blu) – Rock Opco Grand Hotel Berlin Betriebs (Westin Berlin) – Rock Berlin II (Propco Park Inn Alexanderplatz) – Rock Berlin I (Propco Westin Grand Berlin) – Rock SOHO 2 SAS OPCO Rosace SCI Rosace SLIH HIR SLIH HG SLIH HDB SLIH GHB SLIH CP SLIH AD Société nouvelle de l’hôtel Plaza SAS (opco Nice) (Roco France) Constance Nice – M Hermitage Holdco Ruhl Côte d’Azur SLIH – Société Lilloise Investissement Immobilier Hôtelier SA OPCO 2 Bruges NV (Opco Belgium) Airport Garden Hotel NV Exco Hôtel Invest Hôtel FDM M Lux Dresden Dev SARL Rock Lux opco Constance Lux 1 Constance Lux 2 Rock-Lux Lagonda Leeds Opco Ltd (Opco UK) Lagonda York Opco Ltd (Opco UK) Wotton House Properties Opco Limited (Opco UK) Honeypool (Holding Hilton Dublin) Thornmont Ltd (Propco Hilton Dublin) Kilmainham Property Holdings (Hilton Dublin) Iris Holding France OPCI Iris Invest 2010 Foncière Iris SAS Sables d’Olonne SAS Iris investor Holding Gmbh Iris General partner Gmbh Iris Berlin Gmbh Iris Bochum & Essen Gmbh Iris Frankfurt Gmbh Iris Verwaltungs Gmbh & co KG Iris Nurnberg Gmbh Iris Stuttgart Gmbh Narcisse Holding Belgique Foncière Bruxelles Tour Noire Foncière Louvain Foncière Bruxelles Centre Gare Tulipe Holding Belgique Iris Tréfonds Foncière Louvain Centre Foncière Liège Foncière Bruxelles Aéroport Foncière Bruxelles Sud Foncière Bruge Station OPCI Camp Invest SAS Campeli SCI Dahlia Jouron (Phoenix Belgium) Foncière Bruxelles Sainte Catherine (Phoenix) Foncière Gand Cathédrale (Phoenix) Foncière IGK (Phoenix) Kombon SAS (Phoenix) OPCI Otelli (Phoenix) CBI Orient (Phoenix) CBI Express (Phoenix) | Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany France France France France France France France France France France France France France France France Belgium Belgium Belgium Belgium Luxembourg Luxembourg Luxembourg Luxembourg Luxembourg Luxembourg United Kingdom United Kingdom United Kingdom Ireland Ireland Ireland France France France France Germany Germany Germany Germany Germany Germany Germany Germany Belgium Belgium Belgium Belgium Belgium Belgium Belgium Belgium Belgium Belgium Belgium France France France Belgium Belgium Belgium Belgium France France France France | Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Operating Properties Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels Hotels | FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC FC EM/EA EM/EA EM/EA EM/EA EM/EA EM/EA EM/EA EM/EA EM/EA EM/EA EM/EA EM/EA EM/EA EM/EA EM/EA EM/EA EM/EA EM/EA EM/EA EM/EA EM/EA EM/EA EM/EA EM/EA EM/EA EM/EA EM/EA EM/EA EM/EA EM/EA EM/EA EM/EA EM/EA EM/EA | 94,90 94,90 94,90 94,90 94,90 94,90 94,90 94,90 94,90 94,90 94,90 94,90 94,90 94,90 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 94,90 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 19,90 19,90 19,90 19,90 19,90 10,00 19,90 19,90 19,90 18,90 19,90 19,90 19,90 19,90 19,90 19,90 19,90 19,90 19,90 19,90 19,90 19,90 19,90 19,90 19,90 20,00 33,33 33,33 33,33 33,33 33,33 31,15 31,15 31,15 | 94,90 94,90 94,90 94,90 94,90 94,90 94,90 94,90 94,90 94,90 94,90 94,90 94,90 94,90 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 94,90 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 100,00 19,90 19,90 19,90 19,90 19,90 10,00 19,90 19,90 19,90 18,90 19,90 19,90 19,90 19,90 19,90 19,90 19,90 19,90 19,90 19,90 19,90 19,90 19,90 19,90 19,90 20,00 33,33 33,33 33,33 33,33 33,33 31,15 31,15 31,15 |
Company | Country | Business sector | Consolidation method in 2024 | % interest 2024 | % interest 2023 |
The registered office of the parent company Covivio Hotels and its main fully consolidated French subsidiaries is in Rue de Madrid – 75008 Paris. The registered office of its main Luxembourg subsidiaries is located at 21 avenue de la Gare, L-1611 Luxembourg.
There are 185 companies in the Covivio Hotels Group, including 150 fully consolidated companies and 34 equity affiliates.
2.2.3.4. Assessment of control
✓ OPCI Foncière B2 Hôtel Invest (consolidated structured entity)
OPCI Foncière B2 Hôtel Invest, 50.2% owned by Covivio Hotels as at 30 June 2024, is fully consolidated.
Governance decisions at the OPCI are taken by a majority of the six members of the Board of Directors (Covivio Hotels has three representatives including the Chairman, who has a casting vote in the event of a tie).
Considering the rules of governance that grant Covivio Hotels powers giving it the ability to affect asset yields, the company is fully consolidated.
SIGNIFICANT EVENTS OF THE PERIOD
Significant events during the period were as follows:
2.2.4.1. Business update
The first part of 2024 marks a continuity of activity, with occupancy rates rising and average prices well above the level of 2019. This continued growth is reflected in:
• an increase in rental income on the variable portion of rents for +€3.3 million;
• the -€2.0 million decrease in the EBITDA of hotels under management is mainly related to the end of the guaranteed minimum on a hotel in Roissy (-€1 million) and the closure of a hotel in Brugge for renovation work.
2.2.4.2. Vauban protocol
An agreement with AccorInvest was signed on 20 June 2024 and should cover the disposal of 10 assets (€208 million) at the end of the year. In return, Covivio Hotels will receive 24 hotel operating companies already held by the Group.
The agreement also applies to hotels held in joint ventures (two joint ventures). Covivio Hotels and these partners will acquire 19 business assets in exchange for the sale of 6 assets.
2.2.4.3. Asset disposal
During the first half of 2024, Covivio Hotels sold two hotels for €19.8 million net of expenses.
Covivio Hotels signed commitments for two hotels in France (€15.8 million) and four retails (€5.8 million). As of 30 June 2024, an agreement had also been signed for four hotels in Germany for €30.5 million.
2.2.4.4 Disposal of securities
During the first half of 2023, Covivio Hotels signed a preliminary sale agreement on shares of the company Bardiomar (owning an hotel in Spain) for €75 million. A deposit of €1.5 million was received from the future buyer.
In accordance with IFRS 5, the company’s assets and liabilities have been downgraded to other assets and liabilities held for sale for €7.7 million as assets, in addition to the reclassification of real estate assets (€75 million) and €6.5 million in liabilities. The transaction should be finalised at the beginning of the second half of 2024 following the go-ahead from the Barcelona municipal authorities.
2.2.4.5. Financing and reimbursement
Covivio Hotels subscribed on 15 May 2024 to a green bond of €500 million with a maturity of 9 years. Covivio Hotels made a partial redemption of £130 million (€150 million) out of the £400 million subscribed in 2018.
Over the half-year, Covivio Hotels also issued commercial paper for €96 million.
NOTES TO THE STATEMENT OF FINANCIAL POSITION
2.2.5.1. Portfolio
2.2.5.1.1. Accounting principles relating to tangible and intangible assets
✓ Business combinations (IFRS 3) and goodwill from acquisitions
An entity must determine whether a transaction or event constitutes a business combination within the meaning of the definition of IFRS 3, which stipulates that a business is an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a return directly to investors in the form of dividends, lower costs or other economic advantages.
In this case, the acquisition cost is set at the fair value on the date of the exchange of the assets and liabilities and equity instruments issued for the purpose of acquiring the entity. Goodwill is recognised as an asset for the surplus of the acquisition cost on the portion of the buyer’s interest in the fair value of the assets and liabilities acquired, net of any deferred taxes. Negative goodwill is recorded in the income statement.
To determine whether a transaction constitutes a business combination, the Group considers whether an integrated set of businesses is acquired in addition to real estate. The criteria the Group uses may be the number of assets and the existence of a process such as asset management or sales and marketing units.
The prospective additional costs are appraised at fair value at the acquisition date. They are definitely appraised in the 12 months following the acquisition. The subsequent change of these additional costs is recorded in the income statement.
After its initial recognition, the goodwill is subject to an impairment test at least once a year. Impairment testing consists of comparing the net book value of tangible and intangible fixed assets and related goodwill with the valuation of the hotels in the “Operating Properties” activity carried out by real estate appraisers.
If the Group concludes that the transaction is not a business combination, then it recognises the transaction as an acquisition of assets and applies the standards appropriate to acquired assets.
Costs of an acquisition classified as a business combination are recognised in expenses in accordance with
IFRS 3 under “Income from changes in scope” in the income statement, while acquisition costs not classified as a business combination are booked as part of the asset value of the acquired assets.
✓ Investment properties (IAS 40)
Investment properties are real estate properties held for purposes of leasing within the context of operating leases or long-term capital appreciation (or both).
Investment properties represent the majority of the Group’s portfolio.
Buildings which are operating properties are recognised as tangible fixed assets at amortised cost.
Under the option offered by IAS 40, investment properties are assessed at their fair value. Changes in fair value are recorded in the income statement. Investment property is not amortised.
The Covivio Hotels portfolio is appraised by independent experts who are members of AFREXIM (in particular Cushman, BNP Paribas Real Estate, CBRE, BPCE Expertise, MKG) on a half-yearly basis, with two appraisals, one on 30 June and the other on 31 December.
The assets were estimated at values excluding and including duties, and rents at market value. They are accounted for at their net market value.
The methodology changes according to the type of asset:
o Valuation of hotel real estate
The value of hotel real estate was determined by discounting future annual net income on the basis of the following principles:
• most of the cash flow forecasts were valued over ten years;
• cash flow is determined on the basis of rental income, which is in turn dependent on hotel real estate revenues, and direct investments by Covivio Hotels are deducted from cash flow;
• rental income is calculated by applying a fixed rate to hotel revenues. Rates vary depending on the brand and the asset location;
• discount and capitalisation rates are determined on the basis of risk-free interest rates plus a risk premium related to the property.
o Valuation of Club Méditerranée in Portugal
The resort was valued by capitalising the rental income that it is likely to generate.
o Valuation of non-material activities
The restaurants (Courtepaille) were valued by capitalising the rental income they are likely to generate (having regard to the estimated level of the standardised rent that the asset is likely to carry) as well as by discounting all the rental income over the residual term of the lease.
The resulting values are also cross-checked with the initial yield rate, monetary values per m2 of comparable transactions and transactions carried out by the Group.
IFRS 13 “Fair Value Measurement” establishes a fair value hierarchy that categorises the inputs used in valuation techniques into three levels:
• level 1: the valuation refers to quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
• level 2: the valuation refers to valuation methods using inputs that are observable for the asset or liability, either directly or indirectly, in an active market;
• level 3: the valuation refers to valuation methods using inputs that are unobservable in an active market.
The fair value measurement of investment properties requires the use of different valuation methods using unobservable or observable inputs to which some adjustments have been applied. Accordingly, the Group’s portfolio is all categorised at level 3 according to the IFRS 13 fair value hierarchy.
✓ Assets under development (IAS 40)
Assets under construction are recognised according to the general fair-value principle, except where it is not possible to determine this fair value on a reliable and ongoing basis. In such cases, the asset is carried at cost.
As a result, development programmes and extensions or remodelling of existing assets that are not yet commissioned are recognised at their fair value, and are treated as investment properties whenever the administrative and technical fair-value reliability criteria – i.e. administrative, technical and commercial criteria – are met.
In accordance with revised IAS 23, the borrowing cost during a period of construction and renovation is included in the cost of the assets. The capitalised amount is determined on the basis of fees paid for specific borrowings and, where applicable, for financing from general borrowings based on the weighted average rate of the particular debt.
✓ Right-of-use (IFRS 16)
In application of IFRS 16, when a movable or immovable asset is held under a lease, the lessee is required to recognise a right-of-use asset and a rental liability, at amortised cost.
Right-of-use assets are included in the items under which the corresponding underlying assets are presented, if they belonged thereto, namely the items Operating properties, Other tangible fixed assets and Investment properties.
The lessee depreciates the right-of-use on a straight-line basis over the term of the lease, except for rights relating to investment properties, which are measured at fair value.
✓ Tangible fixed assets (IAS 16)
Pursuant to the preferred method proposed by IAS 16, managed hotels under the Operating Properties business line (Own Occupied Buildings - occupied or operated by Group teams) are carried at historical cost less accumulated depreciation and any potential impairment. They are amortised over their expected useful life according to a components-based approach.
The hotels operated as Operating Properties are depreciated according to their period of use:
Buildings | 50 to 60 years |
General facilities and building improvements | 10 to 30 years |
Equipment and furniture | 3 to 20 years |
If the appraisal values of the Operating Properties are less than the net book value, impairment is recognised, as a priority on the value of the fund, then on the value of the tangible fixed assets.
✓ Non-current assets held for sale (IFRS 5)
In accordance with IFRS 5, when Covivio Hotels decides to dispose of an asset or group of assets, it classifies them as assets held for sale if:
• the asset or group of assets is available for immediate sale in its current condition, subject only to normal and customary conditions for the sale of such assets;
• its or their sale is likely within one year and marketing for the property has begun.
For Covivio Hotels, only assets corresponding to the above criteria and/or for which a preliminary sale agreement has been signed are classified as assets held for sale.
If a preliminary sale agreement exists on the account closing date, the price of the commitment net of expenses constitutes the fair value of the asset held for sale.
2.2.5.1.2. Table of changes in fixed assets
(In € thousand) 31/12/2023 | Increases/ Charges | Disposals | Change in fair value | Transfers | Change in exchange rate | 30/06/2024 |
Intangible fixed assets 117 578 | -788 | 0 | 0 | -1 | 0 | 116 789 |
Goodwill 117 350 | -823 | 0 | 0 | 0 | 0 | |
116 527 | ||||||
Other intangible fixed assets 228 | 35 | 0 | 0 | -1 | 0 | 262 |
Gross amounts 2 172 | 99 | -8 | 0 | -1 | 0 | 2 262 |
Depreciation -1 944 | -64 | 8 | 0 | 0 | 0 | -2 000 |
Tangible fixed assets 1 109 694 | -2 721 | -4 | 0 | 1 051 | 2 375 | 1 110 395 |
Operating properties 1 083 629 | -15 709 | 0 | 0 | 1 817 | 2 370 | 1 072 107 |
Gross amounts 1 484 103 | 2 343 | 0 | 0 | 1 139 | 2 556 | 1 490 141 |
Depreciation -400 474 | -18 052 | 0 | 0 | 678 | -186 | -418 034 |
Other tangible fixed assets 15 799 | -1 286 | -4 | 0 | 155 | 0 | 14 664 |
Gross amounts 140 459 | 1 243 | -327 | 0 | -2 967 | 0 | 138 407 |
Depreciation -124 659 | -2 529 | 323 | 0 | 3 122 | 0 | -123 744 |
Assets in progress 10 266 | 14 275 | 0 | 0 | -921 | 5 | 23 625 |
Investment properties 4 655 245 | 5 132 | -16 280 | 19 548 | -194 710 | 15 632 | 4 484 567 |
Investment properties 4 655 245 | 5 132 | -16 280 | 19 548 | |||
-194 710 | 15 632 | 4 484 567 | ||||
Leases (1) 243 373 | 0 | 0 | -269 | 1 067 | 3 899 | 248 070 |
Assets held for sale 161 915 | 308 | 0 | 1 359 | 198 449 | 0 | 362 031 |
Assets held for sale 155 450 | 308 | 0 | 1 359 | 197 167 | 0 | 354 284 |
Other assets held for sale 6 465 | 0 | 0 | 0 | 1 282 | 0 | 7 747 |
Total 6 044 433 | 1 931 | -16 284 | 20 907 | 4 789 | 18 008 | 6 073 783 |
(1) The “Leases” section details the right-of-use assets on investment property and the “Transfers” column concerns the indexation of leases as well as the reclassification of the right of an asset held for sale.
• Intangible fixed assets
Goodwill on hotels operated as Operating Properties decreased by €0.8 million due to the impairment realised in connection with the appraisal value of one building in France and one in Germany.
At 30 June 2024, goodwill sensitivity tests were carried out. A decrease of 2.5% in appraisal values would result in additional impairment of €1.1 million and a decrease of 5% in values would result in additional impairment of €2.7 million.
• Tangible fixed assets
The portfolio of hotels held as operating properties totalled €1,110.4 million at 30 June 2024. They are recognised in the “Tangible fixed assets” line item. In accordance with IFRS, the owner-occupied buildings do not meet the definition of investment property and are measured and recognised at amortised cost.
The column increases and depreciation of tangible fixed assets (-€2.7 million) mainly consists of:
- depreciation and amortisation for the period for -€20.5 million of assets already present at 31 December 2023;
- work carried out in Belgium (€12.1 million), Germany (€2.4 million), France (€1.2 million) and
the renewal of equipment in hotels in operation (€1.4 million);
The “transfers” column (€1.1 million) mainly includes the indexation of long-term leases treated in accordance with IFRS 16.
• Investment properties and assets held for sale
Under IFRS, investment properties and assets held for sale are measured in accordance with the fair value principle. A reclassification of other assets held for sale was carried out in connection with the agreement to sell the shares of a company in Spain holding an asset.
The increases in investment properties (€5.1 million) mainly consist of:
- the impact of rent-free periods net of linearisations for €1.9 million;
- work for €1.9 million in Spain, €0.8 million on B&B hotels in France and €1.2 million on Accor hotels.
Disposals of €16.3 million relate to the sale of two hotels.
The change in fair value increased by €20.9 million over the period and is linked to the slight increase in appraisal values over the half-year and new commitments signed.
The foreign exchange impact of €15.6 million over the half-year is mainly due to the increase in the pound sterling (€19.9 million) less the decrease in the Hungarian Forint (-€3.8 million).
The amount of the “Disbursements related to acquisition of tangible and intangible fixed assets” line item in the Statement of Cash Flows totalled -€22.4 million. It corresponds to the total of the “Increases” column, ignoring the impact of charges (-€21.5 million) in the table of changes in fixed assets i.e. +€21.2 million (excluding rights of use) restated for the change in trade payables on fixed assets (+€1.0 million) and the impact of the step rental schemes and rent relief included in the appraisal values (-€1.9 million).
2.2.5.1.3. Appraisal parameter
The Group has not identified the best use of an asset as being different from its current use. Consequently, the application of IFRS 13 did not lead to a modification of the assumptions used for the valuation of assets. In accordance with IFRS 13, the tables below provide details of the ranges of unobservable inputs by business segment (level 3) used by real estate appraisers:
Yield rate Appraisal
Yield rate DCF discount Average
Grouping of comparable assets Level (weighted value
(min. – max.) rate discount rate
average) (in €M)
Germany | Level 3 | 4.6% - 6.0% | 5,3% | 5.1% - 7.6% | 6,5% | 624 |
Belgium | Level 3 | 6.1% - 9.0% | 7,6% | 8.4% - 11.3% | 9,9% | 206 |
Spain | Level 3 | 4.2% - 7.4% | 5,1% | 6.1% - 9.3% | 7,0% | 629 |
France | Level 3 | 4.4% - 7.3% | 5,2% | 6.0% - 10.0% | 7,1% | 1 681 |
Netherlands | Level 3 | 0.0% - 0.0% | 0,0% | 7.3% - 10.3% | 7,9% | 159 |
Level 3 6.5% - 10.0% 7,1% 8.6% - 12.1% 9,1%
As of 31 December 2023, the data was as follows:
Yield rate Appraisal
Grouping of comparable Yield rate DCF discount Average
Level (weighted value
assets (min. – max.) rate discount rate
average) (in €M)
Germany | Level 3 | 4.6% - 6.0% | 5,3% | 5.1% - 7.5% | 6,5% | 627 |
Belgium | Level 3 | 6.1% - 8.8% | 7,5% | 8.4% - 10.7% | 9,6% | 205 |
Spain | Level 3 | 4.2% - 7.4% | 5,3% | 6.1% - 9.3% | 7,3% | 636 |
France | Level 3 | 4.4% - 8.3% | 5,2% | 6.0% - 8.8% | 7,0% | 1 668 |
Netherlands | Level 3 | 5.0% - 6.3% | 5,6% | 7.0% - 8.3% | 7,6% | 159 |
Impact of changes in the yield rate on the change in the fair value of real estate assets:
Weighted
Yield
(In € million) average yield Yield +25 bps
-25 bps
• If the yield rate excluding taxes drops 25 bps (-0.25 points), the market value excluding taxes of the real estate assets will increase by €203.2 million;
• If the yield rate excluding taxes increases by 25 bps (+0.25 points), the market value excluding taxes of the real estate assets will decrease by -€186.6 million.
Impact of changes in the discount rate on the change in the fair value of real estate assets:
On the basis of a significant sample of the portfolio of hotel leases, the sensitivity of the value of the portfolio to changes in the discount rate can be assessed as follows:
• If the discount rate drops 25 bps (-0.25 points), the market value excluding taxes of the real estate assets will increase by about 1.9%, or €85 million;
• If the discount rate increases by 25 bps (+0.25 points), the market value excluding taxes of the real
estate assets will decrease by about 1.8%, or €82 million.
2.2.5.2. Financial assets
2.2.5.2.1. Accounting principles related to financial assets
✓ Other financial assets
Other financial assets are made up of investments in non-consolidated companies.
These securities are recognised upon acquisition at cost plus transaction costs. They are then recognised at fair value in the income statement on the closing date. The fair value is arrived at on the basis of recognised valuation techniques (reference to recent transactions, discounted future cash flows, etc.).
Non-consolidated securities are valued at their fair value and changes in value are recorded either in shareholders’ equity or in the income statement, depending on the option chosen by the Group for each of these securities in accordance with IFRS 9.
Dividends received are recognised when they have been approved by vote.
✓ Loans
At each closing date, loans are recorded at their amortised cost. Moreover, impairment is recognised and recorded on the income statement when there is an objective indication of impairment as a result of an event occurring after the initial recognition of the asset.
2.2.5.2.2. Table of financial assets
(In € thousand) | 31/12/2023 | Increase | Decrease | 30/06/2024 |
Ordinary loans(1) | 56 722 | 78 | -1 213 | 55 587 |
Total loans and current accounts | 56 722 | 78 | -1 213 | 55 587 |
Advances and advanced payments on purchases of securities(2) | 2 530 | 8 | 0 | 2 538 |
Non-consolidated securities(3) | 201 | 0 | 0 | 201 |
Total other financial assets | 2 731 | 8 | 0 | 2 739 |
Total | 59 453 | 86 | -1 213 | 58 326 |
(1) Ordinary loans mainly consist of subordinated loans to equity affiliates for €50.9 million, to an unconsolidated company (€0.7 million) and guarantee deposits paid to municipalities in Spain (€4.6 million).
(2) Prepayment on equity investments to acquire shares in a company in Portugal that will hold a hotel.
(3) Investment in an unconsolidated company.
2.2.5.3. Investments in equity affiliates and joint ventures
2.2.5.3.1. Accounting principles related to investments
Investments in equity affiliates and joint ventures are accounted for by the equity method. According to this method, the Group’s investment in equity affiliates or joint ventures is initially accounted for at cost, increased or reduced by the changes, subsequent to the acquisition, in the share of the net assets of the affiliates. The goodwill related to equity affiliates is included in the book value of the investment, if it is not impaired. The share in the earnings for the period is shown in the line item “Share in income of equity affiliates”.
The financial statements of equity affiliates and joint ventures are prepared for the same accounting period as for the parent company, and adjustments are made, where relevant, to adapt the accounting methods to those of the Covivio Hotels group.
2.2.5.3.2. Table of investments in equity affiliates and joint ventures
(In € thousand) | % held | 30/06/2024 | 31/12/2023 | Share of net income | Dividend payments |
IRIS HOLDING France | 19,90% | 22 442 | 21 446 32 309 21 013 21 162 71 891 25 187 11 582 | 997 1 439 1 304 1 102 3 165 -139 776 | -0 -635 -1 313 -0 -2 910 -1 097 -163 |
OPCI IRIS INVEST 2010 | 19,90% | 33 113 | |||
OPCI CAMPINVEST | 19,90% | 21 004 | |||
SCI DAHLIA | 19,90% | 22 264 | |||
OPCI OTELI (Phoenix) | 31,15% | 72 147 | |||
KOMBON (Phoenix) | 33,33% | 23 951 | |||
JOURON (Phoenix) | 33,33% | 12 194 | |||
Total | 207 115 | 204 590 | 8 643 | -6 119 |
Investments in equity affiliates totalled €207.1 million as at 30 June 2024, compared with €204.6 million as at 31 December 2023. The change in profit (-€8.6 million) includes changes in the fair value of buildings (-
€3.6 million) and financial instruments (-€0.2 million).
A memorandum of understanding has been signed with AccorInvest to consider the acquisition of 19 hotel going concerns of which the portfolio companies already hold the premises against the sale of six hotels in the portfolio. The transaction should be completed at the end of 2024.
As a reminder, the OPCI Iris Invest 2010 and Iris Holding France holding companies were set up in 2010 and hold a portfolio of thirty-two Accor hotels in France, Belgium and Germany and a B&B Hotels portfolio of thirteen hotels in France and one hotel in Belgium.
The OPCI Campinvest holding company was formed in 2011 and owns a portfolio of 19 Campanile hotels in France.
SCI Dahlia, formed in 2011, held a portfolio of seven Accor hotels in France. Following the change of operator in 2022, two hotels were transferred to the B&B Hotels brand.
The Phoenix portfolio was acquired in July 2019 and now includes twenty-three Accor hotels in France, two Accor hotels in Belgium and two B&B Hotels.
2.2.5.3.3. Breakdown of the shareholding structure of the main equity affiliates and joint ventures
IRIS HOLDING OPCI IRIS OPCI OPCI OTELI KOMBON SAS JOURON SPRL
SCI DAHLIA
France INVEST 2010 CAMPINVEST (Phoenix) (Phoenix) (Phoenix)
Covivio Hotels group
Covivio Hotels Non-Group third parties | 19,9% | 19,9% | 19,9% | 20,0% | 31,15% | 33,33% | 33,33% |
PREDICA | 80,1% | 80,1% | 68,8% | 80,0% | |||
PACIFICA | 11,3% | ||||||
SOGECAP | 31,15% | 33,33% | 33,33% | ||||
CAISSE DÉPÔT CONSIGNATION | 37,7% | 33,33% | 33,33% |
2.2.5.3.4. Main financial information on equity affiliates and joint ventures
Total non-current Total current Total non-
Balance liabilities liabilities Financial Rental Cost of net Consolidated
( current Cash
In € thousand) sheet total excluding excluding payables income financial debt net income
IRIS HOLDING France OPCI IRIS INVEST 2010 OPCI CAMPINVEST SCI DAHLIA OPCI OTELI KOMBON SAS JOURON SPRL | 244 779 278 303 161 396 188 467 336 912 140 453 45 852 | 179 880 157 460 131 289 160 042 288 511 137 460 12 760 | 46 512 30 916 21 492 17 064 19 782 2 211 4 322 | 24 498 0 0 0 0 12 488 6 881 | 2 995 5 256 1 971 1 528 3 954 946 541 | 104 361 106 650 53 877 75 619 101 348 55 167 1 847 | 6 482 8 395 5 279 4 597 9 983 3 624 1 227 | -1 017 -737 25 -1 055 -2 343 -1 464 -22 | 5 011 7 231 6 552 5 509 10 162 -418 2 327 |
assets financial debt financial debt
2.2.5.4. Deferred taxes at closing
Given the regimes applicable in France (SIIC regime), Spain (SOCIMI regime) and the UK (REIT regime), the potential tax savings on tax losses carried forward from real estate activities in these countries are not counted.
(In € thousand) | Amount at 31 December 23 | Increases | Decreases | Amount at 30 June 24 | |
By profit / (loss) for the period | Other movements and transfers | By profit / Change in (loss) for the exchange period rate | |||
DTA on temporary differences DTA on fixed asset FV DTA on FV cash instruments DTA on losses carried forward DTA/DTL offset | 558 -1 157 9 22 534 | -1 060 -2 355 -4 -1 714 | 3 926 -1 916 -5 -2 474 | -217 0 0 0 0 0 34 0 | 3 208 -5 428 0 18 380 |
21 944 2 008 | -5 133 | -468 -2 008 | -183 0 | 16 160 0 | |
DTA total | 23 952 | -5 133 | -2 476 | -183 0 | 16 160 |
(In € thousand) | Amount at 31 December 23 | Increases | Decreases | Amount at 30 June 24 | |
By profit / (loss) for the period | Other movements and transfers | By profit / Change in (loss) for the exchange period rate | |||
DTL on temporary differences DTL on fixed asset FV DTL on FV cash instruments DTA on losses carried forward DTA/DTL offset | 10 596 198 960 917 -2 197 | -695 752 367 507 | -8 070 9 524 -5 -1 917 | -217 0 0 0 0 0 0 0 | 1 614 209 236 1 279 -3 607 |
208 276 2 008 | 931 0 | -468 -2 008 | -217 0 | 208 522 0 | |
DTL total | 210 284 | 931 | -2 476 | -217 0 | 208 522 |
Impact on the income statement -6 064
In accordance with IAS 12, deferred tax assets and liabilities are offset for each tax entity when they involve taxes paid to the same tax authority.
Deferred tax liabilities linked to unrealised gains on fixed assets relate to the Hotels segment for €123 million and the Operating Properties segment for €84.1 million.
The Hotel sector fell from €123 million to €130.6 million, mainly due to the slight increase in appraisal values on portfolios abroad.
2.2.5.5. Short-term loans
(In € thousand) | 31/12/2023 | Increase | Decrease | 30/06/2024 |
Short-term loans | 8 955 | 914 | -2 255 | 7 614 |
Accrued interest on swaps | 14 838 | 17 168 | -14 835 | 17 171 |
Total | 23 793 | 18 082 | -17 090 | 24 785 |
2.2.5.6. Inventories and work in progress
The Covivio Hotels group’s inventories and work-in-progress derive wholly from the hotel operations of the Operating Properties business.
(In € thousand) | 30/06/2024 | 31/12/2023 | Variation |
Inventories of raw materials and other supplies | 2 368 | 2 246 | 121 |
Merchandise inventories | 0 | 198 | -198 |
Total inventories and work-in-progress | 2 368 | 2 444 | -77 |
2.2.5.7. Trade receivables
2.2.5.7.1. Accounting principles related to trade receivables
Trade receivables consist of operating lease receivables and receivables from hotels under operation. These items are measured at amortised cost. In the event that the recoverable value is lower than the net book value, the Group may be required to account for an impairment charge through profit or loss.
✓ Receivables from operating lease transactions
For operating-lease receivables, a provision for impairment is made at the first non-payment. The impairment rates applied by Covivio Hotels are as follows:
• no provisions are set aside for existing or vacated tenants whose receivables are less than three months overdue;
• 50% of the amount of the receivable for existing tenants whose receivables are between three and six months overdue;
• 100% of the total amount of the receivable for existing tenants whose receivables are more than six months overdue;
• 100% of the total amount of the receivable for departed tenants whose receivables are more than three months overdue.
The arithmetical impairments arising from the rules above are reviewed on a case-by-case basis to factor in any specific situations. Receivables may also be booked as impaired even before a non-payment situation arises.
✓ Receivables of hotels under operation
Receivables of hotels under operation are impaired according to payment deadlines.
The receivables and theoretical impairments arising from the rules above are reviewed on a case-by-case basis in order to factor in any specific situations.
2.2.5.7.2. Table of trade receivables
Charges to be reinvoiced mainly comprise the rendering of charges on the portfolio of Operating Properties in Germany.
Gross trade receivables, with a balance of €76.5 million at 30 June 2024, mainly comprise:
• trade receivables in the Operating Properties segment amounted to €42.2 million (an increase of €26.1 million compared to December 2023) in line with the June estimate. By way of comparison, at 30 June 2023, these receivables amounted to €45 million;
• trade receivables from the Hotels segment for €34.3 million (compared with €41 million at 30 June 2023) of which:
▪ €4.2 million in deferred rent not yet due in Spain and € 1.1 million in deferred rent not yet due in Italy, Hungary and the Czech Republic;
▪ €4.5 million of unpaid receivables in France, fully impaired; ▪ unpaid June 2024 receipts and prepaid rent.
Impairment of trade receivables amounted to €5.4 million. They mainly concern retail in France for €4.1 million.
Invoices to be issued for €19.4 million include the re-invoicing of the full-year property tax for €12 million.
Breakdown of trade receivables due:
(In € thousand) | Past due receivables | |||||
Total | Receivables not yet due | Past due receivables | 1-90 days | between 90 From 181 days and 180 days to 1 year days | >1 year | |
Trade receivables and related accounts Impairment of trade receivables | 76 452 -5 446 | 44 931 -91 | 31 521 | 22 905 0 | 2 165 920 0 -770 | 5 532 -4 586 |
The line “Change in working capital requirements on continuing operations” on the Cash Flow Statement consists of:
(In € thousand) | 30/06/2024 | 31/12/2023 |
Impact of changes in inventories and work in progress | 80 | -96 |
Impact of changes in trade & other receivables | -53 945 | 13 548 |
Impact of changes in trade & other payables | 34 114 | 6 635 |
Variation in WCR on continuing operations | -19 752 | 20 087 |
The changes in trade payables are also explained by the recovery in activity in the Operating Properties segment.
2.2.5.8. Tax and other receivables
(In € thousand) | 30/06/2024 | 31/12/2023 | Variation |
Tax receivables (IS) | 5 277 | 5 707 | -430 |
Other tax receivables | 16 517 | 15 375 | 1 142 |
Other receivables | 7 896 | 10 321 | -2 425 |
Security deposits received | 4 050 | 0 | 4 050 |
Current accounts | 987 | 1 056 | -69 |
Total tax receivables and other receivables | 34 728 | 32 459 | 2 269 |
Other tax receivables (€16.5 million) mainly concern VAT receivables for (€10 million).
The other receivables item (€7.9 million) mainly concerns the Operating properties business (€4.2 million), in particular the call for funds of Le Méridien expenses (€2.9 million) for the first half of 2024 and €3.7 million for leased properties.
Current accounts have fallen and are exclusively from Foncière Loisirs Vielsam (€0.9 million).
2.2.5.9. Prepaid expenses
(In € thousand) | 30/06/2024 | 31/12/2023 | Variation |
Prepaid expenses | 5 159 | 3 447 | 1 712 |
Total prepaid expenses | 5 159 | 3 447 | 1 712 |
Prepaid expenses relate to the Operating Properties business for €2.6 million and hotel leases for €2.5 million.
2.2.5.10. Cash and cash equivalents
2.2.5.10.1. Accounting principles related to cash and cash equivalents
Cash and cash equivalents include cash, short-term deposits, and money-market funds. These are shortterm, highly liquid assets that are easily convertible into a known cash amount, and for which the risk of a change in value is negligible.
2.2.5.10.2. Statement of cash and cash equivalents
(In € thousand) | 30/06/2024 | 31/12/2023 |
Cash equivalents | 374 347 | 1 503 |
Cash at bank | 97 249 | 107 277 |
Gross cash | 471 596 | 108 780 |
At 30 June 2024, the portfolio of money market securities consisted mainly of traditional money market funds (Level 2).
• Level 1 of the portfolio corresponds to instruments whose price is listed on an active market for an identical instrument;
• Level 2 corresponds to instruments whose fair value is determined using data other than the prices mentioned for Level 1 and observable directly or indirectly (i.e. price-related data).
2.2.5.11. Shareholders’ equity
2.2.5.11.1. Accounting principles related to shareholders’ equity
✓ Treasury shares
If the Group buys back its own equity instruments (treasury shares), these are deducted from shareholders’ equity. No profit or loss is recognised in the income statement when Group Shareholders’ equity is purchased, sold, issued or cancelled.
2.2.5.11.2. Change in shareholders’ equity
The statement of changes in shareholders’ equity and movements in the share capital are presented in note 1.1.4.
The Combined General Meeting of 17 April 2024 approved the payment of an ordinary dividend of €193 million, i.e. a dividend of €1.30 per share.
The -€5.7 million change in currency translation differences recorded directly under net position mainly comprises the following:
- effect of fluctuations in the pound sterling for +€9.3 million (the closing rate was €1.179760 compared to €1.151930 at opening);
- effect of fluctuations in the Hungarian forint for +€4.2 million;
- effect of fluctuations in the Czech koruna for -€0.9 million;
- impact of net investments abroad (IAS 21 and IFRS 9) on Covivio Hotels for -€1.9 million, broken down into:
o exchange differences linked to long-term borrowings and loans by Covivio Hotels denominated in GBP (+€10.1 million),
o the change in fair value of the cross-currency swap as a result of the currency movement (-
€8.2 million).
At 30 June 2024, the share capital consisted of 148,141,452 fully paid-up shares with a par value of €4.00.
Shares Treasury Shares
Transaction issued shares outstanding
This half-year, there was no movement on the liquidity agreement.
2.2.5.12. Statement of liabilities
2.2.5.12.1. Accounting principles related to the statement of liabilities
Financial liabilities include borrowings and other interest-bearing debt.
At initial recognition, financial liabilities are measured at fair value, minus the transaction costs directly attributable to the issue of the liability. They are then recognised at amortised cost based on the effective interest rate. The effective rate includes the nominal rate and actuarial amortisation of issue expenses and issue and redemption premiums.
Financial liabilities of less than one year are posted under “Current financial liabilities”.
Companies belonging to the Covivio Hotels group hold real estate assets via finance lease agreements: finance leases (Operating Properties) or long-term leases / construction leases. In this case, the liability recognised as counterparty to the asset is initially recorded at the lower of the fair value of the real estate asset and the present value of minimum lease payments. This debt is amortised as the contracts expire and give rise to the recognition of a financial expense.
The rental liability related to long-term leases/construction leases is presented on the line Short-term or longterm rental liabilities in the balance sheet and the financial expense in the item Interest charges on rental liabilities.
✓ Derivatives and hedging instruments
The Covivio Hotels group uses derivatives to hedge its floating rate debt against interest rate risk (hedging of future cash flows) and exchange rate risk.
Derivative financial instruments are recorded on the balance sheet at fair value. The fair value is calculated using valuation techniques that use mathematical calculations based on recognised financial theories and parameters that incorporate the prices of market-traded instruments. This valuation is carried out by an external service provider.
Given the characteristics of its debt, Covivio Hotels does not qualify for hedge accounting. All derivative instruments are accounted for at fair value, and changes are reflected in the income statement, with the exception of the portion of the cross-currency swap hedging exchange rate risk, which is described as net foreign investment hedging.
2.2.5.12.2. Debt tables
(In € thousand) | Other 31/12/2023 Increase Decrease Transfers changes 1 278 335 0 -160 980 4 0 | 30/06/2024 |
Bank loans | 1 117 359 | |
Bonds | 949 000 500 000 0 0 0 | 1 449 000 |
(1) Other borrowings Commercial paper | 4 336 0 -0 0 0 213 000 96 000 0 0 0 2 444 671 596 000 -160 980 4 0 4 | 4 336 309 000 |
Subtotal interest-bearing loans | 2 879 695 | |
Accrued interest Deferral of loan expenses Creditor banks | 29 174 -14 592 34 589 | |
Total Borrowings (Lt/St) | 2 928 866 | |
of which Long-term of which Short-term | 2 457 859 471 007 | |
Valuation of financial instruments | -117 580 | |
of which Assets of which Liabilities | -200 807 83 228 | |
Total borrowings and derivatives | 2 811 287 |
(1) These are loans to partnerships from shareholders other than Covivio Hotels. At 30 June 2024, the balance of €4.3 million mainly consisted of companies in the Operating Properties portfolio in Germany.
In the first half of 2024, the Covivio Hotels group subscribed to a new bond issue for an amount net of fees of €495 million and issued new commercial paper for €96 million.
The line “inflows related to new borrowings” in the cash flow statement (+€592.6 million) corresponds to the column Increase in interest-bearing borrowings (+€585.8 million) and the increase in the loan in pound sterling (+€5.1 million) restated for lease liabilities (-€1.6 million).
The “Repayment of borrowings” line of the cash flow statement (-€169.7 million) corresponds to the column decrease in interest-bearing borrowings (-€161.0 million), restated for currency translation differences (-€6.2 million) and the impacts of lease liabilities (-€2.1 million).
Net financial debt is presented below:
30/06/2024 | 31/12/2023 | |||
Gross cash (a) | 4.2.5.10.2 | 471 596 | 108 780 | |
Debit balances and bank overdrafts from continuing operations (b) | 4.2.5.12.2 | -34 589 | -95 | |
Net cash and cash equivalents (c) = (a) - (b) | 437 007 | 108 685 | ||
Of which available cash | 471 596 | 108 780 | ||
Total interest-bearing loans | 4.2.5.12.2 | 2 879 695 | 2 444 670 | |
Accrued interest | 4.2.5.12.2 | 29 174 | 22 387 | |
Gross debt (d) | 2 908 869 | 2 467 057 | ||
Amortisation of financing costs (e) | -14 592 | -12 362 | ||
Net debt (d) - (c) + (e) | 2 457 270 | 2 346 010 |
2.2.5.12.3. Bank loans
The table below outlines the characteristics of the borrowings taken out by the Covivio Hotels group and the amount of the associated guarantees (principal amount over €100 million):
Appraisal Outstanding Initial
Date of
(In € thousand) Secured debt value debt at nominal Maturity
signature 30 June 2024 30 June 2024
£400 million (2018) – ROCKY | 318 535 | 24/07/2018 | 475 145 | 24/07/2026 | |
€178 million (2020) - PARKINN AP BERLIN | 173 461 | 30/12/2019 | 178 000 | 30/12/2029 | |
€150 million (2023) – OPCI B2 HI (B&B) | 149 000 | 20/10/2023 | 150 000 | 20/10/2030 | |
>€100 M | 1 557 400 | 640 996 | |||
<€100 M | 1 696 321 | 442 798 | |||
TOTAL COLLATERALISED | 3 253 721 (1) | 1 083 794 | |||
€599 million (2021) - Bond issue €500 million (2024) - Bond issue NEU CP Covivio Hotels programme €350 million (2018) - Bond issue >€100 M <€100 M | 0 2 729 714 | 599 000 500 000 309 000 350 000 1 758 000 33 571 | 27/07/2021 23/05/2024 24/09/2018 | 599 000 500 000 350 000 | 27/07/2029 23/05/2033 24/09/2025 |
TOTAL UNENCUMBERED | 2 729 714 | 1 791 571 | |||
Other liabilities | 4 336 | ||||
Grand total | 5 983 435 | 2 879 701 |
(1) Value excluding duties of collateralised assets (mortgages or pledges of securities of companies holding them).
The borrowings are valued after their initial recognition at cost, amortised based on the effective interest rate. The average interest rate on debt of the consolidated debt of Covivio Hotels at 30 June was 2.32% (versus 2.43% at 31 December 2023).
Collateralised fixed assets represented 54.4% of total fixed assets. This collateral is provided for the same term as the underlying financing.
Breakdown of borrowings at their par value according to the time left to maturity and by interest-rate type:
(In € thousand) Fixed-rate long-term financial liabilities Bank borrowings and finance leases Total Borrowings and bonds Bonds Total debts represented by securities Other borrowings Floating-rate financial debt Bank borrowings and finance leases Total Borrowings and bonds | Outstandings at 30 June 2024 1 533 224 79 889 79 889 1 449 000 1 449 000 4 336 1 346 470 1 037 470 1 037 470 | Maturity to -1 year 0 0 0 0 0 0 410 883 101 883 101 883 | Outstandings at 30 June 2025 1 533 224 79 889 79 889 1 449 000 1 449 000 4 336 935 594 935 594 935 594 | Maturity from 2 to 5 years 434 224 79 889 79 889 350 000 350 000 4 336 627 473 627 473 627 473 | Maturity +5 years 1 099 000 0 0 1 099 000 1 099 000 0 308 114 308 114 308 114 |
Commercial paper 309 000 309 000 0 0
309 000 309 000 0
2 879 695 410 883
2.2.5.12.4. Bonds
The characteristic features of bonds are as follows:
Issue date Issue amount (in €M) Partial reimbursement (in €M) Nominal amount following partial redemption (in €M) Nominal amount of a bond (in €) Nominal amount of a bond after partial redemption (in €) Number of units issued Nominal rate Maturity | 24/09/2018 350 0 350 100 000 100 000 3 500 1,875% 24/09/2025 | 27/07/2021 02/11/2021 599 0 599 100 000 100 000 5 990 1,000% 27/07/2029 | 23/05/2024 500 0 500 100 000 100 000 5 000 4,125% 23/05/2033 |
Features
The bond debt in the consolidated financial statements stood at €1,449 million at 30 June 2024.
The fair value of these bonds at 30 June 2024 was €1,351.8 million compared with €858.3 million at 31
December 2023, after the new €500 million bond issue in May 2024.
The difference between the net book value and the fair value of fixed-rate debt (valued at the risk-free rate, excluding loan spreads) was -€97.2 million at 30 June 2024. The impact of the loan spread would be +€6.8 million.
2.2.5.12.5. Derivatives
Derivative financial instruments consist mainly of rate hedging instruments put in place as part of the Group’s interest rate hedging policy. These derivative instruments are recognised at their fair value and changes are recorded in the income statement, as they are not eligible for hedge accounting under IFRS 9.
(In € thousand) | 31/12/2023 Net | Restructuring payments | Shareholders’ P&L impact equity impact | 30/06/2024 Net |
Financial instruments | 105 110 | 0 | 20 686 -8 217 | 117 580 |
Total | 105 110 | 0 | 20 686 -8 217 | 117 580 |
Cash instruments – Liabilities Cash instruments – Assets | 83 228 200 807 |
In accordance with IFRS 13, the fair values include the counterparty default risk (CDA/DVA) for -€4.0 million as at 30 June 2024 compared with -€3.6 million as at 31 December 2023.
The “Unrealised gains and losses relating to changes in fair value” line in the Statement of Cash Flows (€41.6 million), which makes it possible to calculate cash flows from operating activities, incorporates the impact of changes in the value of cash instruments (-€20.7 million) and the change in the value of Investment Properties (-€20.9 million).
The -€8.2 million impact on shareholders’ equity corresponds to the change over the period in the exchange rate on cross-currency swaps used to hedge our UK investments.
Breakdown of hedging instruments by maturity of notional values:
(In € thousand) | 30/06/2024 | less than 1 year | 1 to 5 years | more than 5 years |
Fixed hedge Fixed rate receiver swap | 1 114 289 | 0 | 354 289 | 760 000 |
Fixed rate payer swap | 2 197 748 | 0 | 913 798 | 1 283 950 |
Total swaps | 1 083 460 | 0 | 559 510 | 523 950 |
Optional hedge Cap purchase | 92 063 | 573 | 42 190 | 49 300 |
Floor purchase | 28 000 | 0 | 28 000 | 0 |
Floor sale | 52 300 | 0 | 3 000 | 49 300 |
3 484 399 | 573 | 1 341 277 | 2 142 550 |
Forward hedging instruments are not included in this table.
Hedging balance at 30 June 2024:
Outstandings at 30 June 2024
Gross borrowings and financial debt | 1 533 224 | 1 346 470 |
Creditor banks | 34 589 | |
Net financial liabilities before hedging Fixed hedge: swaps Option hedge: caps | 1 533 224 0 0 | 1 381 059 -1 083 460 -92 063 |
2.2.5.12.6. Rental liabilities
At 30 June 2024, the balance of rental liabilities amounted to €294.1 million in accordance with IFRS 16. Interest expenses on these rental liabilities was -€7.8 million in respect of the half year.
Change in exchange rate | 30/06/2024 |
4 257 | 288 166 |
26 | 5 915 |
4 283 | 294 081 |
Other
(In € thousand) 31/12/2023 Increase Decrease changes
The increase in rental liabilities is linked to lease indexations (€1.5 million) and the increase in the pound sterling over the period (€4.3 million).
It should be noted that Bardiomar’s rental liabilities are still reclassified as liabilities held for sale at 30 June 2024 (€5.7 million).
Maturities of rental liabilities:
(In € thousand) | Total at 30 June 2024 | less than 1 year | 1 to 5 years | 5 to 25 years | more than 25 years | Total Lt |
Hotels | 248 119 | 5 204 | 15 564 | 49 373 | 177 979 | 242 915 |
Operating Properties | 45 962 | 712 | 1 182 | 4 578 | 39 491 | 45 251 |
Total rental liabilities | 294 081 | 5 915 | 16 745 | 53 951 | 217 470 | 288 166 |
2.2.5.12.7. Bank covenants
The liabilities of the Covivio Hotels group have bank covenants attached, relating to the consolidated accounts of the borrower. If these covenants are breached, early debt repayment may be triggered. These covenants are drawn up in Group Share.
The most stringent LTV covenant was 60% as at 30 June 2024.
The most stringent ICR covenant was 200% as at 30 June 2024.
The bank covenants of the Covivio Hotels group are fully complied with as of 30 June 2024 and stand at 39.1% for the LTV Group Share and 594% for the ICR Group Share.
No financing has an accelerated payment clause contingent on Covivio Hotels’ rating, which is currently BBB+, stable outlook (Standard & Poor’s rating confirmed on 19 April 2024).
Under the financing raised by Covivio Hotels and allocated to specific portfolios, these consolidated covenants usually go hand-in-hand with LTV “Scope” covenants relating to the portfolios funded. These LTV “Scope” covenants typically have less stringent thresholds than the consolidated covenants. Their purpose is mainly to supervise the use of financing by correlating it with the value of the underlying assets provided as collateral.
2.2.5.13. Provisions for risks and charges
2.2.5.13.1. Accounting principles related to provisions for risks and charges
✓ Retirement commitments
The retirement commitments are accounted for in accordance with revised IAS 19. Provisions are recorded on the balance sheet for the liabilities arising from defined benefits pension schemes for existing staff at the closing date. They are calculated according to the projected credit units method based on valuations made at each closing date. The past service cost corresponds to the benefits granted, either when the company adopts a new defined benefits scheme, or when it changes the level of benefits of an existing scheme. When new benefits are granted upon adoption of a new scheme or change in an existing scheme, the past service cost is immediately recognised in the income statement.
Conversely, when the adoption of a new scheme or change in an existing scheme gives rise to the vesting of benefits after its implementation date, the past service costs are recognised as an expense on a straightline basis over the average remaining period until the benefits become fully vested. Actuarial gains and losses result from the effects of changes in actuarial assumptions and experience adjustments (differences between actuarial assumptions and what has actually occurred). The change in these actuarial gains and losses is recognised in “Other items” of comprehensive income.
The expense recognised in operating income includes the cost of the services rendered during the year, amortisation of past service costs and the effects of any reduction or liquidation of the scheme; the cost of discounting is recognised in net financial income. The valuations are made taking into account the Collective Agreements applicable in each country and in keeping with the various local regulations. For each employee, the retirement age is the social security eligibility age.
2.2.5.13.2. Table of provisions
The other provisions mainly concern a dispute in connection with a claim for eviction compensation from a former tenant (€3 million), disputed by Covivio Hotels.
2.2.5.14. Other liabilities
(In € thousand) | 30/06/2024 | 31/12/2023 | Variation |
Other long-term liabilities | 9 317 | 9 334 | -17 |
Payables | 61 832 | 48 387 | 13 445 |
Trade payables on fixed assets | 6 133 | 7 088 | -955 |
Advances and advanced payments received, accrued credit | n 21 136 | 12 465 | 8 671 |
Current taxes | 10 266 | 9 513 | 754 22 012 -12 |
Other short-term liabilities | 52 017 | 30 005 | |
Current accounts – liabilities | 114 | 126 | |
Total | 160 815 | 116 917 | 43 898 |
Other long-term liabilities consist solely of security deposits received, €8.8 million of which were on assets in the hotel portfolio in Spain and €0.4 million from the Operating Properties business.
Trade payables concern the Hotel Lease properties business for €16.9 million and the Operating Properties business for €45.0 million, in line with the June estimate. In comparison, trade payables for the Operating Properties business amounted to €46 million at 30 June 2023 and €19 million for Hotel leases.
Trade payables for fixed assets mainly concern the hotel lease business for €5.6 million and are stable. The advances and down payments received include in particular the advances received on Operating
Properties for €13.2 million and 2024 variable rents billed in advance (€2.8 million).
Other short-term debts (€52 million) mainly include social security debts from the Operating Properties business for €16 million, the full-year land debt for €17 million as well as the deposit of €3.1 million received on the preliminary sale agreement for a hotel in Spain and the down payment received for the sale of shares for a Spanish company (€1.5 million).
2.2.5.15. Recognition of financial assets and liabilities
Amount given in the assessed Statement
30/06/2024 of Financial Position:
Item concerned in the Net (in €k)
(In € thousand) Fair Value Fair Value Fair Value(in €k)
statement of financial position Amortised through
through cost shareholders
profit or loss
’ equity
Long-term securities (non-current) Non-current financial assets 2 739 2 739 2 739
Loans and receivables | Non-current financial assets | 55 587 | 55 587 | 55 587 | ||
Loans and receivables | Trade receivables | 95 374 | 95 374 | 95 374 | ||
Assets at fair value | Derivatives at fair value | 200 807 | 0 | 200 807 | 200 807 | |
Assets at fair value | Cash equivalents | 374 347 | 374 347 | 374 347 | ||
Total financial assets | 728 854 | 153 700 | 0 | 575 154 | 728 854 | |
Liabilities at amortised cost | Financial payables | 2 879 695 | 2 879 695 | 2 774 827 | ||
Liabilities at fair value | Derivatives at fair value | 83 228 | 0 | 83 228 | 83 228 | |
Liabilities at amortised cost | Security deposits | 9 317 | 9 317 | 9 317 | ||
Liabilities at amortised cost | Payables | 67 965 | 67 965 | 67 965 | ||
Total financial liabilities | 3 040 205 | 2 956 977 | 0 | 83 228 | 2 935 337 |
(1) The difference between the net book value and the fair value of fixed-rate debt (valued at the risk-free rate, excluding loan spreads) was -€104.9 million.
(-€97.2 million for borrowings detailed in 2.2.5.12.4 and -€7.7 million for the Group’s other fixed-rate debt).
The impact of the loan spreads would be -€6.8 million.
The table below presents the financial instruments at fair value broken down by level:
• Level 1: financial instruments listed in an active market
• Level 2: financial instruments whose fair value is evaluated through comparisons with observable market transactions on similar instruments or based on an evaluation method whose variables include only observable market data;
• Level 3: financial instruments whose fair value is determined entirely or partly by using an evaluation method based on an estimate that is not based on market transaction prices on similar instruments.
2.2.5.16. Accruals
(In € thousand) | 30/06/2024 | 31/12/2023 | Variation |
Prepaid income and other accounts | 9 206 | 17 738 | -8 532 |
Total accruals | 9 206 | 17 738 | -8 532 |
The prepaid income is divided between the hotel lease business (€5.5 million) and the Operating Properties business (€3.7 million).
The change is explained by the use of work compensation received on two UK assets (-€2.6 million) and rent invoiced in advance for the hotel lease activity (-€5.8 million).
NOTES TO THE STATEMENT OF NET INCOME
2.2.6.1. Accounting principles
✓ Rental income
According to the presentation of the income statement, rental income is treated as revenues. Service charges are now shown on a specific line of the statement of net income (management and administration revenues) below net rental income.
As a general rule, invoicing is quarterly. The rental income of investment properties is recognised on a straight-line basis over the term of the ongoing leases. Any benefits granted to tenants (rent-free periods, step rental leases, rent waivers in exchange for additional rent to be received in future years) are spread on a straight-line basis over the lease term in accordance with IFRS 16.
Most of the rental income for the period is comprised of rental income billed during the period. For hotel real estate managed by the Accor Group, such receipts are calculated as a percentage of revenues for the fiscal year. Other hotel portfolios are subject to an additional billing via a variable rent added to the minimum guaranteed rent and calculated as a percentage of the hotel revenue.
✓ Revenues from hotels under management (Operating Properties)
Revenues from hotel and real estate assets under management correspond to the amount of sales of products and services related to ordinary activities. It breaks down into the provision of various hospitality services (accommodation, catering and other services).
All revenues from hotels under management are measured at the fair value of the counterparty received or to be received, net of discounts, rebates and reductions, VAT and other taxes.
2.2.6.2. Operating income
2.2.6.2.1. Rental income
Variation
Rents (In € thousand) 30/06/2024 30/06/2023
(in €k) Variation (in %)
The rental income consists of rental and similar income (e.g. occupancy fees and entry rights) invoiced for investment properties during the period. Rent exemptions, step rental schemes and entry rights are spread out over the fixed term of the lease.
The change in revenue from the Hotels business (+€5.8 million) is mainly due to:
- The increase in variable rent portfolios (+€3.3 million);
- Rents and other indexation effects (+€3 million);
- Impact of the disposal of hotels (-€0.2 million)
2.2.6.2.2. Real estate expenses
Variation(in
(In € thousand) 30/06/2024 30/06/2023
%)
Rental income | 133 531 | 127 726 | 4,5% |
Rental charges not recovered | -191 | 80 | n/a |
Taxes and duties | -14 000 | -14 076 | -0,5% |
Income from rebilling of taxes and duties | 12 219 | 12 511 | -2,3% |
Expenses on Buildings | -1 666 | -1 894 | -12,0% |
Net bad debt expenses | 757 | -716 | n/a |
Expenses on properties essentially consist of Property Management fees to Covivio group subsidiaries in the amount of €1.5 million.
The change in net bad debt expenses mainly concerns the reversal of deferred payments in Spain (+€1 million) less a new impairment on retail assets in France (-€0.3 million).
2.2.6.2.3. EBITDA of hotels under management
(In € thousand) | 30/06/2024 | 30/06/2023 | Variation (in %) |
Revenues from hotels under management | 138 038 | 136 196 | 1,4% |
Operating expenses of hotels under management | -108 406 | -104 607 | 3,6% |
EBITDA OF HOTELS UNDER MANAGEMENT | 29 632 | 31 589 | -6,2% |
OTHER ACTIVITY INCOME | -0 | 47 | -100,0% |
Detailed results for this activity are presented in § 2.2.8.6.
The EBITDA of hotels under management decreased by -€2.0 million mainly due to the end of the guaranteed minimum on a hotel in Roissy (-€1 million) and the closure for renovation work on a hotel in Brugge.
It does not include the corporate structure costs of this activity. The latter are presented in overheads.
2.2.6.2.4. Net operating costs
These consist of head office expenses and operating costs (including Operating Properties business), net of revenues from management and administration activities.
(In € thousand) | 30/06/2024 | 30/06/2023 | Variation (in %) |
Management and administration income | 2 267 | 2 630 | -13,8% |
Activity Fees | -501 | -670 | -25,2% |
Structure costs | -10 489 | -10 949 | -4,2% |
Total net operating costs | -8 724 | -8 990 | -3,0% |
Management and administration income mainly comprises asset management fees charged to equity affiliates or partners. They are up mainly due to the increase in variable rents over the period.
Business expenses are mainly made up of building appraisal costs and asset management fees. Overhead costs include:
• network costs for €3.6 million, including €2.8 million with Covivio;
• personnel expenses for €1.6 million.
Note that personnel expenses before allocation to Income from disposals totalled €2.0 million.
2.2.6.2.5. Depreciation of operating assets and net allowances to provisions and other
(In € thousand) | 30/06/2024 | 30/06/2023 | Variation |
Depreciation of operating assets Net change in provisions and other | -20 646 | -23 606 | 2 961 |
7 951 | 15 255 | -7 304 |
The decrease in depreciation of assets in operation is mainly due to:
• the amortisation of hotels in operation for €24.2 million over the half-year;
• net reversals of exceptional impairments in Germany on three hotels in operation for €3.6 million.
The “Net change in provisions and other” item is mainly composed of re-invoicing to tenants of construction leases (€6.6 million). As the rental expense is cancelled by the application of IFRS 16, the income from reinvoicing to tenants/operators is not presented as expenses on buildings because this would lead to a net income on this item and distort the real estate expenses ratio.
The change in the item is mainly due to the reversal of the provision for taxes on the Operating Properties portfolio in Germany in 2023 (€7.7 million).
2.2.6.3. Net income from disposals
During the fiscal year, the Covivio Hotels group generated sales for a total amount of €19.8 million, net of expenses, including the disposals of two hotels. The appraisal values of these two assets stood at €16.2 million at 31 December 2023.
2.2.6.4. Change in the fair value of properties
(In € thousand) | 30/06/2024 | 30/06/2023 |
Hotels - Lease properties | 27 418 | -41 051 -3 104 |
Other activities (non-material) | -5 199 | |
Operating Properties | -1 312 | 112 |
Total change in fair value of properties | 20 907 | -44 043 |
The change in the fair value of properties is discussed in Section 2.2.5.1.2.
The change in value of -€1.3 million on Operating Properties corresponds to the valuation of land in Germany.
2.2.6.5. Cost of net financial debt
(In € thousand) | 30/06/2024 | 30/06/2023 | Variation (in €k) | Variation (in %) |
Interest income on cash transactions | 4 392 | 1 150 | 3 242 | 281,9% |
Interest expense on financing operations | -48 853 | -37 279 | -11 574 | 31,0% |
Depreciation of ancillary costs and loan premiums | -1 993 | -1 936 | -57 | 3,0% |
Net expenses on hedges | 16 521 | 7 437 | 9 084 | 122,1% |
Cost of net financial debt | -29 934 | -30 628 | 694 | -2,3% |
The cost of net financial debt decreased by €0.7 million mainly due to the decrease in average debt and its cost.
2.2.6.6. Net financial income
(In € thousand) | 30/06/2024 | Variation (in 30/06/2023 €k) | Variation (in %) |
Cost of net financial debt | -29 934 | -30 628 694 | -2,3% |
Interest expense on rental liabilities | -7 840 | -7 517 -323 | 4,3% |
Changes in the fair value of financial instruments | 20 686 | 7 839 12 847 | n.p. |
Discounting and exchange result | 408 | 367 40 | n.p. |
Exceptional depreciation of loan issue costs | -715 | -57 -658 -29 995 12 600 | 1161,6% |
Total net financial income/(charges) | -17 394 | n.p. |
The interest charge on rental liabilities relates to the application of IFRS 16. It mainly comprises long-term leases conferring ad rem rights in the United Kingdom. Against that, rental charges are no longer recognised in the income statement.
The exceptional amortisation of loan issuance costs for the period is mainly related to the partial redemption of the loan in pound sterling.
The increase in interest rates generated a change in the valuation of financial instruments of €20.7 million at 30 June 2024. If we include the change in value of the Cross Currency Swap recognised in shareholders’ equity (-€8.2 million), the change in financial instruments would be €12.5 million.
The “Other calculated income and expenses” line in the Statement of Cash Flows for -€0.8 million primarily consists of the amortisation of borrowing costs (+€2.0 million in regular and +€0.7 million in non-recurring costs), and the reversal of the spreading of rent-free periods (-€2.2 million).
2.2.6.7. Current and deferred taxes
2.2.6.7.1. Accounting principles for current and deferred taxes
✓ SIIC tax regime (French companies)
Opting for the SIIC tax regime in France involves the immediate liability for an exit tax at the reduced rate of 19% on unrealised capital gains relating to assets and securities of entities not subject to corporate income tax (CIT). The exit tax is payable over four years, in four instalments, starting with the year the option is taken up. In return, the company is exempted from income tax on the SIIC business and is subject to distribution obligations.
• Exemption of SIIC revenues
The revenues of the SIIC are exempt from taxes concerning:
- income from the leasing of assets,
- capital gains realised on asset disposals, investments in companies having opted for the tax treatment or companies not subject to corporation tax in the same business, as well as the rights under a lease contract and real estate rights under certain conditions, - dividends of SIIC subsidiaries.
• Distribution obligations
The distribution obligations associated with exemption profits are the following:
- 95% of the earnings derived from asset leasing,
- 70% of the capital gains from disposals of assets and shares in subsidiaries having opted for the tax treatment or subsidiaries not subject to corporation tax for two years, - 100% of dividends from subsidiaries that have opted for the tax treatment.
The Exit Tax liability is discounted on the basis of the initial payment schedule determined from the first day the relevant entities adopted SIIC status.
The liability initially recognised is discounted and an interest charge is applied at each closing, allowing the liability to reflect the net discounted value as at the closing date. The discount rate used is based on the yield curve, given the deferred payment.
There is no exit tax liability in Covivio Hotels’ financial statements at 30 June 2024.
✓ Ordinary law regime and deferred taxes
Deferred taxes result from temporary differences in taxation or deduction and are calculated using the liability method, and on all temporary differences in the company financial statements, or resulting from consolidation adjustments. The valuation of the deferred tax assets and liabilities must reflect the tax consequences that would result from the method by which the company seeks to recover or settle the book value of its assets and liabilities at the end of the fiscal year. Deferred taxes are applicable to Covivio Hotels group entities that are not eligible for the SIIC tax regime.
A net deferred tax asset is recognised in the case of deferrable tax losses in the likely event that the entity in question, not eligible for the SIIC regime, will have taxable future profits against which the tax losses may be applied.
In the case where a French company intends to opt directly or indirectly for SIIC tax treatment in the near future, an exception under the ordinary law regime is applied by anticipating the application of the reduced rate (Exit Tax) in the valuation of deferred taxes.
✓ SOCIMI regime (Spanish companies)
The Spanish companies held by Covivio Hotels opted for the SOCIMI tax regime, effective on 1 January 2017. Opting for the SOCIMI regime does not trigger an exit tax upon making the option. However, the capital gains on the period outside of the SOCIMI regime during which assets were held are taxable when disposing of said assets.
The rental income from the leasing of assets and proceeds from disposals of assets held under the SOCIMI regime are exempt, provided 80% of rental profits and 50% of asset disposal profits are distributed. These gains are determined by allocating the gains taxable in the period outside the SOCIMI regime on a straightline basis over the whole period of ownership.
✓ REIT regime (UK companies)
Nine companies in the UK have opted for the REIT exemption regime from 1 January 2024. Opting for the REIT regime does not trigger an exit tax upon taking the option.
The rental income from the leasing of assets held under the REIT regime are exempt, provided 90% of rental profits are distributed.
2.2.6.7.2. Taxes and rates applied by geographic area
Deferred Taxes Deferred tax
(In € thousand) Total tax
payable liabilities
rate
France | 0 | -2 283 | -2 283 | 25,83% |
Belgium | -1 242 | -741 | -1 983 | 25,00% |
Luxembourg | -443 | -114 | -557 | 24,94% |
Netherlands | -777 | 7 | -770 | 25,80% |
Portugal | -380 | -972 | -1 352 | 22,50% |
Germany -1 470 818 -652 15,83%(1)
Spain 0 54 54 25,00%
United Kingdom -415 -1 716 -2 132 25,00%
Ireland -98 89 -9 33,00%(2) Poland -86 -2 -88 9,00%
Italy | -247 | -1 206 | -1 453 | 27,90% (3) |
Hungary | -91 | 0 | -91 | 9,00% |
Czech Republic | -323 | 2 | -321 | 21,00% |
(-) corresponds to a tax expense; (+) corresponds to tax income.
(1) In Germany, the tax rate on property goodwill is 15.83%, however, for companies in the hotel operations business line, tax rates vary between 30.18% and 32.28%.
(2) In Ireland, the tax rate is 12.5% for property companies, 25% on holdings and 33% on capital gains.
(3) In Italy, the tax rate is 24%, to which is added a regional corporate tax rate (resident and non-resident) whose standard rate is 3.9%.
2.2.6.7.3. Deferred tax income and expense
(In € thousand) 30/06/2024 30/06/2023 Variation
France | -2 283 | 546 | -2 829 |
Belgium | -741 | 0 | -742 |
Luxembourg | -114 | -246 | 132 |
Netherlands | 7 | 363 | -356 |
Portugal | -972 | -650 | -322 |
Germany | 818 | 2 544 | -1 725 |
Spain | 54 | -39 | 93 |
United Kingdom | -1 716 | -799 | -918 |
Ireland | 89 | 89 | 0 |
Poland | -2 | 55 | -56 |
Italy | -1 206 | -517 | -689 |
Czech Republic | 2 | 99 | -97 |
Hungary | 0 | 584 | -584 |
(-) corresponds to a tax expense; (+) corresponds to tax income.
Deferred tax expenses at 30 June 2024, amounting to -€6.1 million, are broken down between the Hotel business (-€8.1 million) and the Operating Properties business (+€2.0 million).
The change of -€8.1 million is mainly due to the increase in the values of Operating Properties and the reversal of deferred tax assets following the improvement of results in Italy and the UK.
OTHER INFORMATION
2.2.7.1. Personnel expenses
In the statement of net income, personnel expenses for the period are included in the Structure costs items for €1.7 million. These are down by €0.8 million.
Personnel expenses are also present in the EBITDA of hotels under management for €35.3 million for the Operating Properties business. They were down by €1.1 million compared to 30 June 2023, in line with the stability of the workforce and the increase in revenue from Accommodation and Restaurants. Personnel expenses are also included in the item expenses on sales for €0.3 million.
At 30 June 2024, the headcount of fully consolidated companies (excluding companies in the Operating Properties business line) was 23 people. This headcount is split between France (18 people), Spain (two people) and Luxembourg (three people).
The average headcount at 30 June 2024 for the Operating Properties business was 1,322 people, which was stable compared to June 2023 (1,325 people).
2.2.7.2. Earnings per share and diluted earnings per share
✓ Earnings per share (IAS 33)
Basic earnings per share are calculated by dividing the income attributable to holders of ordinary Covivio Hotels shares (the numerator) by the average weighted number of ordinary shares outstanding (the denominator) over the period.
To calculate the diluted earnings per share, the average number of shares outstanding is adjusted to reflect the conversion of all potential dilutive ordinary shares.
The dilutive effect is calculated using the treasury stock method. The number calculated using this method is added to the average number of shares outstanding and becomes the denominator. To calculate the diluted earnings, the income attributable to the holders of ordinary Covivio Hotels shares is adjusted by:
• all dividends or other items under potentially dilutive ordinary shares that were deducted to arrive at the income attributable to the holders of ordinary shares;
• interest recognised during the period under potentially dilutive ordinary shares;
• any change in the income and expenses resulting from the conversion of the dilutive potential ordinary shares.
30/06/2024 30/06/2023
133 333 | 62 106 |
148 133 765 | 148 135 962 |
7 687 | 5 490 |
148 133 765 | 148 135 962 |
0,90 | 0,42 |
0,90 | 0,42 |
Net income Group Share(in €k)
Average number of undiluted shares Average number of treasury shares
Average number of diluted shares
2.2.7.3. Related-party transactions
The information below corresponds to the main related parties, namely i) Covivio and its subsidiaries and ii) equity affiliates.
Details of related-party transactions (in € thousand):
Partner Type of partner Operating Net financial Balance Comments
income income sheet
Covivio Hotels Gestion | Manager | -1 994 | Remuneration of Management | ||
Covivio Property | Group service provider | -1 069 | Board Property fees | ||
Covivio | Group service provider | -3 011 | Network costs | ||
Covivio SGP | Manager OPCI B2 INVEST HOTEL | -99 | Consultancy services and management agreement | ||
Covivio Immobilien GmbH | Group service provider | -650 | Property fees and Network costs | ||
Covivio Italy | Group service provider | -126 | Property fees and Network costs | ||
IRIS (OPCI + Holding), OPCI Campinvest, SCI Dahlia and Phoenix | Equity affiliates | 2 064 | 1 543 | 50 750 | Asset and property fees, Loans |
2.2.7.4. Executive remuneration
2.2.7.4.1. Remuneration of executives and directors
During this half-year, no compensation was recognised for the members of the Supervisory Board and the Audit Committee.
2.2.7.4.2. Remuneration of the Manager and the limited partners
The Managing Partner, Covivio Hotels Gestion, received €1.0 million excluding taxes for its work in respect of 2024. The terms of this remuneration are governed by Article 11 of the Articles of Association of Covivio Hotels.
During the first half of 2024, €1.0 million in preferred dividends was paid to the limited partner, Covivio Hotels Gestion in respect of the 2024 fiscal year. This preferred dividend was recognised under operating expenses in accordance with IFRS, which specify that preferred dividends must be treated as management commissions.
SEGMENT REPORTING
2.2.8.1. Accounting principles relating to operating segments – IFRS 8
Covivio Hotels holds a wide range of real estate assets to collect rental income and benefit from appreciation in the assets held. Segment reporting has been structured by customer type and asset type. As a result, the operating segments are as follows:
• Hotels: assets primarily leased to Accor, IHG, B&B, Motel One, NH Hotels, Pierre & Vacances and Club Med;
• Operating Properties: hotels operated by Covivio Hotels, either directly or through a management agreement with a hotel operator.
Non-material businesses (retail and corporate) have been consolidated in the hotel segment.
These segments are reported on separately and analysed regularly by Covivio Hotels group management in order to make decisions on the resources to allocate to the segment and to assess their performance.
The financial data presented for the segment reporting follows the same accounting rules as for the consolidated accounts.
2.2.8.2. Tangible and intangible fixed assets
30/06/2024 - In € thousand | Hotels | Operating Properties | Total | ||
France | Rest of world | France | Rest of world | ||
Goodwill Intangible fixed assets Operating properties Other fixed assets Assets in progress | 0 0 0 10 0 | 0 17 0 29 0 | 40 452 158 196 896 7 557 12 289 | 76 075 87 875 211 7 068 11 336 | 116 527 262 1 072 107 14 664 23 625 |
TOTAL | 10 | 46 | 257 352 | 969 776 | 1 227 184 |
31/12/2023 - In € thousand | Hotels | Operating Properties | Total | ||
France | Rest of world | France | Rest of world | ||
Goodwill Intangible fixed assets Operating properties Other fixed assets Assets in progress | 0 0 0 10 1 | 0 18 0 40 0 | 40 955 100 201 183 7 879 7 606 | 76 395 109 882 446 7 870 2 659 | 117 350 227 1 083 629 15 799 10 266 |
TOTAL | 11 | 59 | 257 723 | 969 479 | 1 227 272 |
2.2.8.3. Investment properties / properties held for sale
30/06/2024 - In € thousand | Hotels | Operating Properties | Total |
Rest of France world | Rest of France world | ||
Investment properties Assets held for sale Other assets held for sale | 1 501 429 2 983 138 230 064 124 220 0 7 747 | 0 0 0 0 0 0 | 4 484 567 354 284 7 747 |
TOTAL | 1 731 493 3 115 105 | 0 0 | 4 846 598 |
31/12/2023 - In € thousand | Hotels | Operating Properties | Total |
Rest of France world | Rest of France world | ||
Investment properties Assets held for sale Other assets held for sale | 1 649 310 2 988 884 58 515 96 935 0 6 465 | 17 051 0 0 0 0 0 | 4 655 245 155 450 6 465 |
TOTAL | 1 707 825 3 092 284 | 17 051 0 | 4 817 160 |
* The €17 million relating to the valuation of the Plaza Nice fund was reclassified in the hotel sector as of 1 January 2024.
2.2.8.4. Financial liabilities
30/06/2024 - In € thousand | Hotels | Operating P roperties | TOTAL |
Long-term interest-bearing loans | 1 742 589 | 715 270 | 2 457 859 |
Short-term interest-bearing loans | 460 853 | 10 154 | 471 007 |
Long and short-term rental liabilities | 248 415 2 451 858 | 45 666 771 090 | 294 081 |
Total LT and ST loans | 3 222 948 |
31/12/2023 - In € thousand | Hotels | Operating P roperties | TOTAL |
Long-term interest-bearing loans | 1 498 569 | 700 386 | 2 198 955 |
Short-term interest-bearing loans | 252 719 | 3 117 | 255 836 |
Long and short-term rental liabilities | 243 404 | 45 355 | 288 759 |
Total LT and ST loans | 1 994 692 | 748 858 | 2 743 550 |
In May 2024, a bond issue was subscribed for €500 million for a maturity of 9 years.
New drawdowns on NEU CP contracts were made for €96 million, maturing in 2025. A partial redemption of £130 million was also made on 19 May 2024.
2.2.8.5. Income statement by operating segment
In accordance with IFRS 12, inter-segment transactions are presented separately in the segment income statement.
POST-CLOSING EVENTS
None.
3. STATUTORY AUDITORS’ REPORT ON THE INTERIM FINANCIAL INFORMATION
MAZARS Tour Exaltis 61, rue Henri Regnault 92075 Paris-La Défense cedex SA with a Management Board and Supervisory Board with capital of €8,320,000 784 824 153 RCS Nanterre Statutory Auditors Member of the Compagnie Régionale de Versailles et du Centre | ERNST & YOUNG et Autres Tour First TSA 14444 92037 Paris-La Défense cedex SAS with variable capital 438 476 913 RCS Nanterre Statutory Auditors Member of the Compagnie Régionale de Versailles et du Centre |
Covivio Hotels
Period from 1 January 2024 to 30 June 2024
Statutory Auditors’ report on the interim financial information 2024
To the shareholders,
In compliance with the assignment entrusted to us by your shareholders’ meetings, and in accordance with Article L. 451-1-2 III of the French Monetary and Financial Code, we have carried out:
• the limited review of the accompanying condensed half-yearly consolidated financial statements of Covivio Hotels for the period from 1 January 2024 to 30 June 2024;
• the verification of the information given in the half-year management report.
These condensed half-yearly consolidated financial statements were prepared under the responsibility of your management. Our role is to express a conclusion on these financial statements based on our limited review.
I - Conclusion on the financial statements
We conducted our limited review in accordance with professional standards applicable in France.
A limited review consists mainly of interviewing the members of management in charge of accounting and financial aspects and implementing analytical procedures. This work is less extensive than that required for an audit conducted in accordance with professional standards applicable in France. Consequently, the assurance that the financial statements, taken as a whole, are free from material misstatements obtained through a limited review is a moderate assurance, less than that obtained through an audit.
Based on our limited review, nothing has come to our attention that causes us to believe that the condensed interim consolidated financial statements are not in compliance with IAS 34 - IFRS as adopted by the European Union on interim financial information.
II - Specific verification
We have also verified the information provided in the half-year management report on the condensed half-year consolidated financial statements subject to our limited review.
We have no matters to report as to its fair presentation and consistency with the interim condensed consolidated financial statements.
Paris-La Défense, 24 July 2024
The Statutory Auditors
KPMG SA ERNST & YOUNG et Autres
Sandie Tzinmann Jean-Roch Varon Pierre Lejeune
4. STATEMENT BY THE PERSON RESPONSIBLE
STATEMENT OF THE PERSON RESPONSIBLE FOR THE DOCUMENT
I hereby certify, to the best of my knowledge, that the condensed financial statements for the past halfyear have been prepared in accordance with applicable accounting standards and give a true and fair view of the assets, financial position and results of the company and of all consolidated companies, and that the accompanying half-year management report presents a true and fair view of the significant events that have occurred during the first six months of the financial year, their impact on the financial statements, the main transactions between related parties and a description of the main risks and uncertainties for the remaining six months of the financial year.
Paris, 24 July 2024
Mr Tugdual Millet
Chairman of COVIVIO HOTELS GESTION
Managing partner
Person responsible for the financial information