Performance Highlights

Transcription

1 Performance Highlights Prepared for Sample Hotel Period Jun 2017 Created on 9th August 2017

2 Executive Summary OBSERVATIONS Comparing Jun 2017 with the same month last year Jun REVENUE Total Revenue 504,100 (Jun 2016: 385,633) Positive trend upwards. Average monthly revenue for the past 6 months is 313,542 PROFITABILITY EBIT Margin % 51.61% (Jun 2016: 48.97%) Positive trend upwards. Strategies to improve profitability include: increasing price, increasing sales volume, reducing cost of sales and reducing operating expenses. ACTIVITY Activity Ratio 1.64 times (Jun 2016: 2.44 times) Negative trend downwards. Strategies to improve the activity ratio include seeking ways to optimise the balance sheet, ie. by reducing the investment in working capital, selling-off any unused assets or by increasing sales using the same asset base. EFFICIENCY Return on Capital Employed 84.86% (Cost of Capital 7.5%) ROCE% is greater than the cost of capital (7.5%). When this is the case the business is creating value, when it is less than the cost of capital, value is destroyed. WORKING CAPITAL Cash Conversion Cycle days (Jun 2016: days) Positive trend downwards. Strategies to improve cash conversion include: collecting debt faster, reducing inventory levels, billing work in progress faster and paying creditors slower. CASH FLOW Free Cash Flow 127,740 (Jun 2016: - 152,837) Free Cash Flow is positive. After paying its operating expenses and investing for future growth (capital expenditures) the business has generated cash. This cash is available to be paid back to the suppliers of capital. MARGINAL CASH FLOW Net Variable Cash Flow 61.57% (Jun 2016: 60.89%) Net variable cash flow is positive. The business will generate cash from each additional 1 of products or services that the business sells. Page 2

3 Financials PROFIT & LOSS Jun 2017 Jun 2016 Variance % Revenue 504, , % Cost of Sales 74,451 73, % Gross Profit 429, , % Expenses 157, , % Operating Profit 272, , % Other Income - Other Expenses 11,866 7, % Earnings Before Interest & Tax 260, , % Interest Income - Interest Expenses - Earnings Before Tax 260, , % Tax Expenses - Earnings After Tax 260, , % Adjustments - Net Income 260, , % Dividends - Retained Income 260, , % BALANCE SHEET Jun 2017 Jun 2016 Variance % Assets Cash & Equivalents 941, , % Accounts Receivable 148, , % Inventory - Work in Progress - Other Current Assets 258, , % Total Current Assets 1,348, , % Fixed Assets 75,205 14, % Intangible Assets - Investment or Other Non-Current Assets 3,217,474 1,848, % Total Non-Current Assets 3,292,679 1,863, % Total Assets 4,641,382 2,626, % Liabilities Short Term Debt - Accounts Payable 279, , % Tax Liability 137, , % Other Current Liabilities 494, , % Total Current Liabilities 911, , % Long Term Debt - Deferred Taxes - Other Non-Current Liabilities - Total Non-Current Liabilities - Total Liabilities 911, , % Equity Retained Earnings 2,936,516 1,122, % Current Earnings 793, , % Other Equity - Total Equity 3,729,736 1,919, % Total Liabilities & Equity 4,641,382 2,626, % Page 3

4 KPI Results RESULT TARGET TREND IMPORTANCE A PROFITABILITY JUN 2017 vs JUN 2016 Total Revenue 504, , % Critical Gross Profit Margin 85.23% 79.70% 4.29% High Profitability Ratio 51.61% 40.57% 2.64% Critical Net Profit After Tax Margin 51.61% 40.57% 2.64% Medium Average Daily Rate Critical RevPar Critical GoPar Critical B ACTIVITY Activity Ratio 1.64 times 2.00 times times Medium Rooms Available 2,790 2,790 - Low Rooms Occupied 2,506 2,609 - Critical Occupancy % 89.82% 93.50% - Critical C EFFICIENCY Manning Cost * 56,680 58, % High Manning Cost per Occupied Room) * High Manning Cost % * 11.24% 15.01% -3.86% High Commission Cost * 13,380 19,003 - High Commission Cost % * 3.51% 4.95% - High Commission Cost per Occupied Room * High Breakfast Cost per Occupied Room * High Utility Costs per Occupied Room * High D IHG Holidex Fees per Occupied Room * Medium Marketing Fees per Occupied Room * Medium Reservation Fees per Occupied Room * Medium Royalty Fees per Occupied Room * Medium Priority Club Fees per Occupied Room * Medium E LIQUIDITY Current Ratio 1.48:1 2.00:1 0.40:1 Medium F CASH FLOW Cash on Hand 941,706 10, % High Net Variable Cash Flow 61.57% 0.00% 0.68% High Page 4

5 KPI Results RESULT TARGET TREND IMPORTANCE G GROWTH JUN 2017 vs JUN 2016 Revenue Growth 41.41% 7.46% 33.98% Critical Gross Profit Growth 51.53% 9.10% 42.06% Medium EBIT Growth 94.50% 14.52% 70.18% High * For this metric, a result below target is favourable Page 5

6 KPI Results This chart shows KPIs grouped into performance perspectives - such as profitability, cash flow, growth, efficiency. Occupancy % Rooms Occupied Rooms Available Activity Ratio Manning Cost Activity Manning/OR Manning Cost % Commission Cost 11 OFF TRACK Commission Cost % Commission/OR Efficiency Bfast Cost/OR Utilities/OR Jun 2017 Sort: By Perspective 63% 19 ON TRACK Holidex/OR IHG Mark Fees/OR Res Fees/OR Liquidity Royalties/OR Priority Club/OR Current Ratio GoPar RevPar Average Daily Rate Net Profit After Tax % Profitability Ratio Profitability Gross Profit % Revenue 30 KPIs Growth EBIT Growth Cash Flow Revenue Growth Gross Profit Growth Cash on Hand Net Variable Cash Flow Page 6

7 Low KPI Results This chart shows KPIs sorted by degree of importance. KPIs are classified as either low, medium, high or critical importance. Priority Club/OR Net Profit After Tax % Royalties/OR Res Fees/OR Bfast Cost/OR Cash on Hand Commission Cost Commission Cost % Commission/OR High Jun 2017 Sort: By Importance EBIT Growth Gross Profit % Manning Cost Manning Cost % Manning/OR Net Variable Cash Flow Utilities/OR Mark Fees/OR Holidex/OR Gross Profit Growth Medium 11 OFF TRACK 63% 19 ON TRACK Average Daily Rate GoPar Current Ratio Activity Ratio 30 KPIs Critical Occupancy % Profitability Ratio Revenue Revenue Growth RevPar Rooms Available Rooms Occupied Page 7

8 Revenue Analysis Jun 2017 Budget This Month Last Year 504, , ,633 Last 3 Months vs Budget Revenue Mix (Jun 2017) This Month Budget Top 2 Revenue Accounts 750K Room Sales 380,994 Ancillary Sales 123, K 504K 334K 356K 250K Apr 2017 May Jun Cumulative Revenue (2017) Year-To-Date Actual Year-To-Date Budget Year-To-Date Last Year 2,046,005 2,027,785 1,992,603 Projection based on previous 12 months ( 4,198,132) This Year Last Year 5M 2.5M Jan 2017 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Page 8

9 Profitability Revenue Breakeven Point Margin of Safety 504,100 46, ,782 Represents all income associated with the normal business operations The breakeven point is the revenue level at which the company will commence to make a profit Represents the margin between the actual revenue level and the breakeven point. The amount by which revenues can drop before losses begin to be incurred. The higher the margin of safety, the lower the risk of incurring losses. Revenues and Costs 700, , , ,000 REVENUE Breakeven REVENUE 504,100 TOTAL EXPENSES 232,090 BREAKEVEN POINT 46, ,000 MARGIN OF SAFETY 457, , ,000 VARIABLE COSTS FIXED COSTS VARIABLE EXP.41 PER 1 OF REV FIXED COSTS 27,521 Profitability can be further improved by improving price, volume, cost of sales and operating expense management. TOP 2 REVENUE ACCOUNTS Room Sales 380,994 Ancillary Sales 123,105 TOP 10 EXPENSE & COS ACCOUNTS Undistributed Expenses - POM Other Costs 47,090 Rooms Expenses - Staff Costs 38,717 Undistributed Expenses - S&M Other Costs 29,409 Rooms Expenses - Other Costs 27,580 Fixed Expenses - Rates 26,536 Undistributed Expenses - A&G Other Costs 18,752 Undistributed Expenses - S&M Staff Costs 17,992 Undistributed Expenses - Utilities 16,904 Undistributed Expenses - POM Staff Costs 6,605 Rooms Expenses - Breakfast Cost 6,116 Page 9

10 Profitability Last 3 Months Jun 2017 % of Revenue Mar 2017 Apr 2017 May 2017 Gross Profit 429, % 229, , ,536 Operating Profit 272, % 125, , ,033 Earnings Before Interest & Tax 260, % 114, , ,747 Earnings After Tax 260, % 114, , ,747 % Margins 100% Gross Profit % Op. Profit % Net Profit After Tax % 75% 50% 25% Jul 2016 Aug Sep Oct Nov Dec Jan 2017 Feb Mar Apr May Jun Total Revenue vs Expenses Current Month Revenue 504,100 vs Total Expenses 157, ,000 Revenue Total Expenses 500, ,000 Jul 2016 Aug Sep Oct Nov Dec Jan 2017 Feb Mar Apr May Jun Earnings After Tax This Year vs Last Year Jun ,144. Jun , ,000 This Year Last Year 250, , , ,000 50,000 Jan 2017 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Page 10

11 Cash Flow Operating Cash Flow Free Cash Flow Net Cash Flow 34, , ,740 Operating cash flow is simply the cash generated by the operating activities of the business. Operating activities include the production, sales and delivery of the company's product and/or services as well as collecting payment from its customers and making payments to suppliers. Free cash flow is the cash generated by the business, after paying its expenses and investing for future growth. It is the cash left after subtracting capital expenditure from operating cash flow. The term "free cash flow" is used because this cash is free to be paid back to the suppliers of capital. Net cash flow is the cash left after subtracting expenditures from financing activities from the free cash flow. This includes the cash impact from financing activities. Financing activities include the inflow of cash from investors such as banks or shareholders, as well as the outflow of cash to shareholders as dividends. Cash Received Cash Spent 250, , ,000 add: Revenue Cost of Sales 504,100-74,451 add: Expenses Other Income Cash Tax Paid - 169,505 53,255 add: add: Change in Accounts Payable Change in Other Current Liabilities - 103, ,130 Change in Accounts Receivable Change in Inventory Change in Work in Progress - 68,571 Change in Other Current Assets OPERATING CASHFLOW 27,957 34,510 Change in Fixed Assets (ex. Depn and Amort) Change in Intangible Assets Change in Investment or Other Non-Current Assets FREE CASHFLOW 93, ,740 add: Net Interest (after tax) Change in Other Non-Current Liabilities add: Dividends Change in Retained Earnings and Other Equity Adjustments NET CASHFLOW 127,740 Net Cashflow = Change in Cash on Hand 127,739 ( Opening: 813,966 Opening: Closing: 941,706 ) - Change in Debt ( ) Closing: Page 11

12 Cash Flow Last 3 Months Jun 2017 Mar 2017 Apr 2017 May 2017 Operating Cash Flow 34, , , ,493 Free Cash Flow 127,740 75, ,871-10,722 Net Cash Flow 127,740 75, ,871-10,722 Cash on Hand 941, , , ,966 Operating Cash Flow Current Month 34,510. Prior Month 203, ,000 Operating Cash Flow 300, , ,000 Jul 2016 Aug Sep Oct Nov Dec Jan 2017 Feb Mar Apr May Jun Free Cash Flow Current Month 127,740. Prior Month - 10, ,000 Free Cash Flow 100, , ,000 Jul 2016 Aug Sep Oct Nov Dec Jan 2017 Feb Mar Apr May Jun Cash on Hand vs Accounts Receivable Current Month Cash on Hand 941,706 vs Accounts Receivable 148,102 1,000,000 Cash on Hand Accounts Receivable 750, , ,000 Jul 2016 Aug Sep Oct Nov Dec Jan 2017 Feb Mar Apr May Jun Page 12

13 Growth Revenue Growth EBIT Growth Asset Change 41% 95% 1.65% A measure of the percentage change in Revenue for the period. A measure of the percentage change in EBIT for the period. A measure of the percentage change in Total Assets for the period. Change in Key Drivers (from prior month) Revenue Up 41.4% Cost of Sales Up 2% Expenses Up 30.8% Receivable Days Up 2 days Inventory Days - Payable Days Down -63 days GROWTH FROM Jan 2017 to Jun 2017 * 200,000 EFFICIENCY GAINS QUALITY GROWTH EARNINGS BEFORE INTEREST & TAX 100,000 DECLINE STRESS 2,500,000 2,750,000 3,000,000 3,250,000 3,500,000 TOTAL OPERATING INVESTMENT * EBIT 260,144; Total Operating Investment 3,729,736 Size of the circle shows the recency of the result. Vertical position of the circle shows the growth in EBIT Horizontal position of the circle shows the growth in Operating Page 13

14 KPIs Explained Activity Ratio 1.64 times A measure of the efficiency or effectiveness with which the business manages its resources or assets. This measure indicates the speed with which Net Operating Assets (Equity + Debt) are converted or turned into sales. This can be improved by optimising balance sheet efficiency, ie. by reducing the investment in working capital, selling-off any unused assets or by seeking ways to maximise the use of assets. For this period, the activity ratio is less than the target of 2.00 times. Activity Ratio = Annualised Revenue / Total Invested Capital Average Daily Rate Average Daily Rate = 'Room Sales' / Rooms Occupied Breakfast Cost per Occupied Room 2.44 Breakfast Cost per Occupied Room = 'Rooms Expenses - Breakfast Cost' / Rooms Occupied Cash on Hand 941,706 A measure of the cash and cash equivalents in actual possession by the company at a particular time. At the end of this period the company held 941,706 of cash and cash equivalents. Cash on Hand is above the required target of 10,000. Cash on Hand = Cash & Equivalents Commission Cost 13,380 Commission Cost % 3.51% Commission Cost % = Commission Cost / 'Room Sales' * 100 Commission Cost per Occupied Room 5.34 Commission Cost per Occupied Room Commission Cost per Occupied Room = Commission Cost / Rooms Occupied Current Ratio 1.48:1 A measure of liquidity. This measure compares the totals of the current assets and current liabilities. The higher the current ratio, the greater the 'cushion' between current obligations and the business's ability to pay them. Generally a current ratio of 2 or more is an indicator of good short-term financial strength. In other words, the current assets of the business should be at least double the current liabilities. For this period, the current ratio was 1.48:1, up from 1.08:1 last period and below the minimum target of 2.00:1. Current Ratio = Total Current Assets / Total Current Liabilities Page 14

15 KPIs Explained EBIT Growth 94.50% A measure of the percentage change in EBIT for the period. A combination of growth in revenues and growth in profits presents a balanced measure of growth For this period, EBIT growth of 94.50% exceeded the target growth of 14.52%. EBIT Growth = (Earnings Before Interest & Tax - Prior Earnings Before Interest & Tax) / Prior Earnings Before Interest & Tax GoPar Gross Operating Profit per Available Room GoPar = ('Room Sales' + 'Ancillary Sales' - 'Ancillary Expenses' - 'Rooms Expenses - Breakfast Cost' - 'Rooms Expenses - Other Costs' - 'Rooms Expenses - Staff Costs' - 'Undistributed Expenses - A&G Other Costs' - 'Undistributed Expenses - S&M Other Costs' - 'Undistributed Expenses - A&G Staff Costs' - 'Undistributed Expenses - S&M Staff Costs' - 'Undistributed Expenses - POM Other Costs' - 'Undistributed Expenses - Utilities' - 'Undistributed Expenses - POM Staff Costs') / Rooms Available Gross Profit Growth 51.53% A measure of the percentage change in gross profit for the period. For this period, gross profit growth of 51.53% exceeded the target of 9.10%. Gross Profit Growth = (Gross Profit - Prior Gross Profit) / Prior Gross Profit Gross Profit Margin 85.23% A measure of the proportion of revenue that is left after deducting all costs directly related to the sales. For each 100 in sales the business retains after deducting the cost of sales. The gross profit serves as the source for paying operating expenses. The gross profit margin can be further improved by improving price, volume and cost of sales management. For this period, the gross profit margin % is above the required target of 79.70%. Gross Profit Margin = Gross Profit / Revenue Holidex Fees per Occupied Room.36 Holidex Fees per Occupied Room Holidex Fees per Occupied Room = Holidex Fees / Rooms Occupied Manning Cost 56,680 Manning Cost = ('Rooms Expenses - Staff Costs' + 'Undistributed Expenses - A&G Staff Costs' + 'Undistributed Expenses - S&M Staff Costs' + 'Undistributed Expenses - POM Staff Costs') Manning Cost % 11.24% Manning Cost % = ('Rooms Expenses - Staff Costs' + 'Undistributed Expenses - A&G Staff Costs' + 'Undistributed Expenses - POM Staff Costs' + 'Undistributed Expenses - S&M Staff Costs') / ('Room Sales' + 'Ancillary Sales') * 100 Page 15

16 KPIs Explained Manning Cost per Occupied Room) Manning Cost per Occupied Room Manning Cost per Occupied Room) = ('Rooms Expenses - Staff Costs' + 'Undistributed Expenses - A&G Staff Costs' + 'Undistributed Expenses - POM Staff Costs' + 'Undistributed Expenses - S&M Staff Costs') / Rooms Occupied Marketing Fees per Occupied Room -.76 Marketing Fees per Occupied Room Marketing Fees per Occupied Room = Marketing Fees / Rooms Occupied Net Profit After Tax Margin 51.61% A measure of the proportion of revenue that is left after all expenses have been paid. The business makes of net profit for every 100 it generates in revenue. For this period, the Net Profit After Tax margin is above the required target. A higher result indicates that the business is better prepared to handle down-turns. Net Profit After Tax Margin = Earnings After Tax / Revenue Net Variable Cash Flow 61.57% A measure of the additional cash that will either be generated or used up by the next 100 of products or services that the business sells. If the Net Variable Cash Flow is positive then for every additional 100 of revenue the business will generate cash. If the Net Variable Cash Flow is negative then for every additional 100 of revenue the business will require additional cash funding. For this period, the Net Variable Cash Flow exceeded the target of 0.00%. The Net Variable Cash Flow is 61.57% of gross revenue. Each additional 100 of Revenue will generate of cash. Net Variable Cash Flow = (Annualised Revenue - Annualised Variable COS - Annualised Variable Expenses - Operating Working Capital) / Annualised Revenue Occupancy % 89.82% Occupancy % = Rooms Occupied / Rooms Available * 100 Priority Club Fees per Occupied Room 2.59 Priority Club Fees per Occupied Room Priority Club Fees per Occupied Room = Priority Club Fees / Rooms Occupied Profitability Ratio 51.61% A measure of the proportion of revenue that is left after deducting all expenses. This excludes finance costs and tax expenses. The business makes of EBIT for every 100 it generates of revenue. The profitability ratio can be further improved by improving price, volume, cost and expense management. For this period, the Profitability ratio is above the required target of 40.57%. Profitability Ratio = Earnings Before Interest & Tax / Revenue Page 16

17 KPIs Explained Reservation Fees per Occupied Room 1.53 Reservation Fees per Occupied Room Reservation Fees per Occupied Room = Reservation Fees / Rooms Occupied Revenue Growth 41.41% A measure of the percentage change in revenue for the period. Management should ensure that revenues increase at rates higher than general economic growth rates (ie. inflation). For this period, revenue growth of 41.41% exceeded the target growth of 7.46%. Revenue Growth = (Revenue - Prior Revenue) / Prior Revenue RevPar Revenue per Available Room RevPar = 'Room Sales' / Rooms Available Rooms Available 2,790 Rooms Occupied 2,506 Royalty Fees per Occupied Room 7.60 Royalty Fees per Occupied Room Royalty Fees per Occupied Room = Royalty Fees / Rooms Occupied Total Revenue 504,100 A measure of the total amount of money received by the company for goods sold or services provided. The business has earned total revenues of 504,100. Strategies to improve revenue may include increasing prices, increasing the volume of sales through marketing initiatives or finding alternative sources of income. For this period, the revenue earned is above the required target of 390,013. Utility Costs per Occupied Room 6.75 Utility Costs per Occupied Room = 'Undistributed Expenses - Utilities' / Rooms Occupied Page 17