The proposal to acquire outstanding interests in its Croatian resort businesses is an intriguing complement to PPHE’s focus on European gateway cities and completes its tidying of ownership issues, allowing it to capitalise on opportunities now afforded by full control of its estate. Although capital intensive, ownership offers scope for potential asset appreciation. We will update our forecasts once key financials of the proposed transaction have been clarified. Meanwhile, company results for 2015 are due imminently
PPHE is looking to buy the remaining 80% of its Croatian joint venture, which operates as Arenaturist, a long-established hospitality group consisting of seven hotels (four under the Park Plaza brand), six holiday apartment complexes and eight campsites, all in prime seaside locations in the south of Istria. The business has been managed by PPHE since 2008.
Pending completion expected in mid-April, full payment terms and financial prospects have yet to be quantified by management. While 2015 EBITDA is reported as c £12.4m, the lack of guidance about related year-end debt prevents our EV/EBITDA assessment. In addition, we understand that analysis of the finances of publicly traded core activity Arenaturist d.d. is not meaningful, given the significance to the joint venture of other private businesses. However, we are encouraged that for the current year Arenaturist d.d. management expects further progress on a maintained estate, ie a 5% increase in EBITDA (in 2015 HRK107m or c £10.4m).