The 39-year history and the road ahead for the Rodon Mount Hotel & Resort

Investor Balram Chainrai has taken the lead in acquiring up to 100% of the Rodon Mount Hotel & Resort in Agros, following the unanimous adoption by the Board of Directors of Agros Development Company “Proodos” Public Ltd of the evaluation report of the independent expert on the public offer submitted.

It is recalled that, according to the PwC report, the proposed consideration of €3.00 per share appears to be fair and reasonable at the date of the public offer (10 December, 2024).

The Board of Directors' decision was based, among other things, on the finding that the proposed consideration is 140% higher than the average closing price of the company's share in the last 12 months prior to the official announcement of the public offer.

However, the company's Board of Directors clarified that shareholders should obtain their own professional advice in relation to their decision to accept the public offer or not, clarifying that, in any case, the public offer by the proposer constitutes a proposal and does not aim in any way to prejudice the shareholders of the company under acquisition to accept it, and that the responsibility for making the decision ultimately lies with them.

The hotel's opening in 1986 and the renovations since then

The information that emerged from PwC's evaluation report of the proposed consideration regarding the submission of a mandatory public offer by Balram Chainrai to the shareholders of the hotel's owner company was interesting, with information, among other things, on the hotel’s history, financial situation, assets and composition of the share capital.

Agros Development Company “Proodos” Public Ltd is a public company operating in the sectors of tourism and real estate development, and which was established in Cyprus on 20 February, 1979.

The company was initially established as a private limited company, while in 1985 it was converted from a private to a public company.

Its shares were listed on the Cyprus Stock Exchange on 29 March, 1996 under the code "AGRO".

The company's main activity is the ownership and management of the Rodon Mount Hotel & Resort, which is located in Agros, while it has also invested in real estate, owning 18 fields and plots of land also located in Agros.

The hotel consists of a basement, ground floor and two floors in the west and central wings, while the east wing consists of five floors with 154 rooms (150 guest rooms and four support rooms).

The 150 rooms of the Rodon consist of 117 ‘standard’ rooms, 15 ‘family’ rooms, 10 ‘executive’ rooms, six rooms for people with mobility difficulties, a ‘presidential’ room and a ‘honeymoon’ room.

The hotel's facilities and support areas include four support rooms, swimming pools, multi-purpose courts, a gym, shop, restaurant, cafes and bars.

The hotel began operating around 1986, when the first phase of its construction was completed. Subsequently, expansions of the hotel took place around 1989, 1992 and in the period 2016-2018. The Rodon reopened in June 2018 after the completion of a significant part of the first phase of its planned renovation and upgrade.

Phase A was completed during 2019 and Phase B of the planned renovation and upgrade of the hotel was completed in 2020. Phase C began in January 2021 and was completed in October 2021.

For this purpose, bank financing of €750,000 was secured and disbursed in 2021, which was used for the renovation.

It is noted that the company suspended the operation of the hotel for the period 10 January, 2021-10 May, 2021, as a measure adopted by the Republic of Cyprus to limit the spread of the COVID-19 pandemic in Cyprus and internationally, during which period the renovation took place.

Following the lifting of the measures by the Republic of Cyprus on 10 May, 2021, the Board of Directors of the company decided to reopen the hotel on 14 May, 2021. From that date onwards, the hotel operated normally without any interruption.

The major shareholders of the Rodon

The authorised share capital of the owner company of the Rodon amounts to €10,260,000 divided into 6,000,000 shares worth €1.71 each.

As of the date of the public offer document, the company's issued share capital amounts to €6,139,268 divided into 3,590,215 shares of value €1.71 each.

The company has the organisational form of an independent entity, without belonging to any group, while the company's shares are fully listed on the Cyprus Stock Exchange (CSE).

As of the date of the public offer document (23 January, 2025), the offeror (Balram Chainrai) directly held 35.35% of the share capital of the company.

The company's major shareholders are:

• Balram Chainrai : 35.35% (as of 17 February, 2025 his direct participation amounted to 36.14%),
• Universal Life insurance Public Co Ltd: 17.30%
• Apeition Foundation: 15.98%
• Marios Choiromerides: 7.34%

Increased revenues
Based on the annual financial statements, the company's total revenues for the year 2023 amounted to €4.2 million, marking an increase of 17% compared to 2022.

This increase is mainly due to the significant increase in occupancy rates (75% in 2023 compared to 62% in 2022), while total revenues per room increased from €10,542 to €11,957.

During the first half of 2024, the company's total revenues amounted to €1.5 million, marking a decrease compared to the corresponding period in 2023, of around 17% (first half of 2023: €1.8 million), mainly due to reduced occupancy.

The company's gross profit for the year 2023 amounted to €1.7 million, recording an increase of 27% compared to 2022, while the gross profit margin increased from 37% in 2022 to 40% in 2023.

This increase mainly benefits from a proportionally smaller increase in the cost of consumable raw materials and materials and in the cost of electricity and fuel, in relation to the increase in income.

During the first half of 2024, the company's gross profit amounted to €395,000, marking a decrease compared to the corresponding period of 2023, of 37%, as the first half of 2023 had amounted to €624,000.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) for 2023 amounted to €1.2 million, representing an increase of 35% compared to 2022, while the EBITDA margin increased from 25% in 2022 to 29% in 2023.

This increase is mainly due to the increase in gross profit and a proportionally smaller increase in operating expenses.

During the first half of 2024, the EBITDA amounted to €183,000 compared to €425,000 in the same period of 2023, recording a decrease of 57%.

The company's profits for 2023 amounted to €630,786 in 2023 from €416,998 in 2022, while losses of €72,139 were recorded for the first half of 2024.

The hotel's market value is at €12 million-€14 million.

Based on the unaudited interim financial statements for the six-month period ended 30 June, 2024, non-current assets mainly include the following:

• Land and buildings: They concern the Rodon hotel with a net book value of €11.6 million as of 30 June, 2024. It is noted that the market value of the hotel ranges between €12 million - €14.1 million , according to independent appraisers' reports.
• Machinery and equipment: (30 June, 2024: €763,000) : Includes machinery, equipment and installations (€505,000) and furniture, fixtures and office equipment (€258,000), according to the company's fixed assets register.

The company's current assets mainly include the following:

• Inventories (€88,000 as of 30 June, 2024): Consisting mainly of food, beverages, alcoholic beverages and cleaning supplies, according to the company's inventory register.
• Trade and other receivables ( €136,000 ): Consisting mainly of receivables from hotel customers (€54,000), receivables from travel agents (€36,000) and receivables from the Government (€16,000).
• Properties for development and sale : Includes 18 plots of land with a net book value of €656,000 as of 30 June, 2024. It is noted that the market value of the plots ranges between €1.6 million - €2 million, according to independent appraisers' reports.

Regarding the company's obligations, these include:

• Borrowings (€3.7 million as of 30 June, 2024): This concerns two bank loans that the company has with Eurobank Cyprus Ltd.
• Deferred tax liabilities (€1.2 million as of 30 June, 2024): They mainly include deferred taxation on the surplus from the revaluation of the company's land and buildings, temporary tax differences between depreciation and capital allowances and the tax effect on losses carried forward.
• Trade and other creditors (€363,000 as of 30 June, 2024): Consisting mainly of hotel creditors (€138,000), defense and GHS contributions (€63,000), VAT (€51,000) and social security contributions (€24,000). Equity attributable to the company's shareholders amounted to €8.17 million as of 30 June, 2024, €8.25 million as of 31 December, 2023 and €7.91 million as of 31 December, 2022.

(Source: InBusinessNews)