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The Mantra Group Ltd share price is down despite record revenue

Shares in Mantra Group Ltd (ASX: MTR) are slightly down today to $3.86, despite the Australian accommodation operator announcing revenue was up 2.8% to $366.2 million for the half-year ending December 31, 2017.

Mantra Group Ltd’s portfolio includes 136 properties and more than 124,000 hotel rooms across Australia, New Zealand, Hawaii and Indonesia.

Mantra cites its $10 million revenue increase as the result of continued growth in domestic and international travel, with the group selling 1.97 million rooms in the first half of the financial year – the highest ever for the period.

Results show Mantra acquired several new hotels in the period including the Mantra Sydney Airport Hotel and 7 properties in the Art Series Hotel Group portfolio – the latter which saw the company incur $0.7 million in transaction costs associated with a business combination.

Mantra also incurred costs of $2.0m in respect of the proposed acquisition by AccorHotels, these costs included professional services fees and expenses linked to the long-term incentive plan which was modified by the Scheme Implementation Agreement.

These exceptional items saw the statutory NPAT sink 17% lower than the previous period, but the underlying figure was still 6.3% down from the underlying NPAT for the same period last year which could signal higher than normal costs elsewhere in the business given Mantra still managed a revenue rise.

Shares in Mantra Group have been on an upward swing in the last 12 months, with a $3.07 share price at this time last year.

Mantra historically books stronger results in the first half, but the influx of tourists flocking to the Commonwealth Games will likely assist to drive results favourably for the second half.

The proposed acquisition by AccorHotels should play out as follows;.

  • Under the terms of the Scheme, Mantra Group shareholders will be entitled to receive $3.96 cash per share.
  • Mantra Group has the discretion to pay shareholders a special dividend of up to a maximum of 23.5c per share which will be deducted from the $3.96 headline value.
  • In this context, Mantra Group will not be declaring a dividend in respect of the half year.

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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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