Download - Investor presentation February 2018
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easyHotel plc
Investor presentation February 2018
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• This presentation (this "presentation") is for general information only and is the property of easyHotel plc ("easyHotel"). Making this presentation available in no circumstances whatsoever implies the existence of a commitment or contract by or with easyHotel, or any of its affiliated entities, or any of its or their respective subsidiaries, directors, officers, representatives, employees, advisers or agents ("Affiliates") for any purpose.
• This presentation as well as any other related documents or information do not purport to be all inclusive or to contain all the information that you may need. There is no obligation of any kind on easyHotel or its Affiliates to update this presentation. No representation or warranty, express or implied, is or will be made in relation to, and no responsibility or liability is or will be accepted by easyHotel or its Affiliates as to, or in relation to, the accuracy, reliability, or completeness of any information contained in this presentation and easyHotel (for itself and on behalf of its Affiliates) hereby expressly disclaims any and all responsibility or liability (other than in respect of a fraudulent misrepresentation) for the accuracy,reliability and completeness of such information.
• All projections, estimations, forecasts, budgets and the like in this presentation are illustrative exercises involving significant elements of judgement and analysis and using assumptions, judgements and analyses which may or may not prove to be correct. The actual outcome may be materially affected by changes in e.g. economic and/or other circumstances. Therefore, in particular, but without prejudice to the generality of the foregoing, no representation or warranty is given as tothe achievability or reasonableness or any projection of the future, budgets, forecasts, management targets or estimates, prospects or returns. You should not do anything (including entry into any transaction of any kind) or forebear to do anything on the basis of this presentation. Before entering into any arrangement, commitment or transaction you should take steps to ensure that you understand the arrangement, commitment or transaction and have made an independent assessment of the appropriateness of the arrangement, commitment or transaction in light of your own objectives and circumstances, including the possible risks and benefits of entering into such an arrangement, commitment or transaction.
• No information, representations or opinions set out or expressed in this presentation will form the basis of any contract.
• This presentation is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction.
• The information and opinions contained in this document are provided as at the date of this presentation and are subject to change without notice.
Disclaimer
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Market Outperformance
• Market outperformance continues
in owned hotels: RevPAR +10.9%3
• New openings above
85% occupancy
Delivering Growth (FY2017 results)
• Revenue +39.7%
• Adjusted EBITDA +48.3%
• PBT before one-offs +43.0%
Accelerated Development
• 7 hotels1/ 717 new rooms opened
• 941 Owned2 & Leased rooms
under development
• 1,798 Franchised rooms
committed
Highlights
1 Includes Liverpool (opened in November 2017) and Newcastle (opened in December 2017)2 Includes projects announced as at date of presentation3 Performance for YTD December 2017
Deal Highlights
• Pipeline of 8 hotels and
1,122 rooms under
negotiation
• Up to £83m funding
targeted (equity and debt)
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Strategy at the Heart of our Business Model
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A Market Opportunity
• Owned & leased potential for c.12,000 rooms
in UK and Europe*
• Franchised potential for c.15,000 rooms in UK
& Europe*
• Over 2,500 owned & leased rooms under
negotiation with over 1,000 rooms approved
by the Board
• Further c.1,300 franchised rooms under
negotiation
Customer Understanding
• Budget hotels are chosen because of location
and price
• Consumers choose them because they’re close
to where they need to be
• Customer needs are relatively simple: a great
bed, well trained, friendly staff and well-designed
rooms
• A brand that is easy and simple to do business
with
The easyHotel strategy
* Directors’ estimate
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Leased
£2-4k EBITDA* per room
Investment up to £5k per room
High returns cash on cash
Franchised
£600-1,000+ fee* per room
No capital investment
High margin
Increased brand presence
Owned
£8-10k EBITDA* per room
Investment £60-70k per room
12-13% ROCE*
The easyHotel strategy (cont.)
Delivering Shareholder Returns
Blended ROCE of 15%
Maximising Revenues
• We don’t have restaurants in our hotels – we
use every available space to sell bedrooms
• We offer a consistent, good quality room at a
low price. As a result, our occupancies are high
• Revenues are maximised via the revenue
management and eCommerce strategy
• Successful implementation of hotel
management system
* Target at maturity
*
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Occupancy
2017 201686.7% 82.1%
ADR
2017 2016
£41.9 £40.0
Segmentation analysis
FY2017 FY2016 Growth
£’000 £’000 %
Revenue 6,604 4,728 +39.7
Adjusted EBITDA 3,240 2,571 +26.0
Profit before tax & one-offs 2,633 2,015 +30.7
FY2017 FY2016 Growth
£’000 £’000 %
Revenue 1,812 1,296 +39.8
Adjusted EBITDA 1,042 636 +63.8
Profit before tax & one-offs 1,042 666 +56.5
Occupancy
2017 2016
77.7% 74.5%
ADR
2017 2016£49.4 £42.6
Ow
ne
dFra
nc
his
ed
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Performance analysis
FY2017 FY2016 Growth
£’000 £’000 %
Adjusted EBITDA (1,982) (1,656) +19.7
% of revenue 23.6% 27.5% -3.9pts
Profit before tax & one-offs (2,026) (1,528) +32.6
FY2017 FY2016 Growth
£’000 £’000 %
Revenue 8,416 6,024 +39.7
Adjusted EBITDA 2,300 1,551 +48.3
Profit before tax & one-offs 1,649 1,153 +43.0
Co
rpo
rate
Tota
l
Adjusted EBITDA+48.3%
Corporate costs % of revenue
reduced 3.9pts
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Committed pipeline financed
Current commitments
• 761 Owned rooms – Barcelona, Sheffield, Leeds, Ipswich, Cardiff & Milton Keynes• 180 Leased rooms – Oxford• Refurbishment of Croydon and Glasgow
Equity raise
• October 2016, equity placing of £38.0m (before expenses)
Bank Debt raised
• Five-year facility of £12.0m bearing interest at Libor +2.50% refinancing previous £7.2m bank facility
• Euro-denominated mortgage facility of €8.3m bearing interest at EURIBOR +2.25% for development of new Barcelona hotel
Owned development
£39.2m
Leased development
£1.1m
Refurbishment
£1.5m
Spain financing
£6.9m
Net pipeline Commitments
£34.9m
Cash at 30 Sep 2017
£33.3m
£1.6m shortfall financed from
future operating cash surpluses
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Current trading and outlook
• Owned hotel portfolio significantly outperformed the competitive set with RevPAR change
+10.9%1 compared to the competitive set
• Recently opened hotels in Newcastle and Liverpool; both hotels trading in line with strong
performance of hotels opened during last financial year
• Hotels in Leeds, Sheffield, Ipswich and Barcelona comprising 517 rooms to open later in 2018
• Cardiff, Milton Keynes and Oxford comprising 424 rooms opening in 2019
• Old Street: planning permission being sought
• The planned and committed hotel openings during the year ending 30 September 2018 and
2019 are expected to make a significant contribution to system sales, revenue and adjusted
EBITDA going forward
• Trading for the year ending 30 September 2018 is in line with Board expectations
1 Performance for YTD December 2017
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North-west historic city
• Located in city centre• 109 rooms • New build on turnkey
basis • At legals• Potential opening 2019
South-west historic city Northern coastal town
Midlands historic city South-west major city
• In the heart of the city• 114 rooms• New build • At legals• Potential opening 2019
• On seafront• 120 rooms • New build on turnkey
basis • At legals• Potential opening 2019
• In the heart of the city• 120 rooms • New build on turnkey
basis• At legals• Potential opening 2019
• Close to main train station
• 129 rooms • New build • Deal agreed in principle• Potential opening 2019
* Current estimate - There can be no certainty any of the future projects will be acquired on the terms set out above
6 Potential UK Projects Investment Value £39m: 692* rooms
• 8 further projects currently being evaluated for 1,285 rooms
East of England
• Close to city centre• Historic city• 100 rooms • New build lease • At legals• Potential opening 2019
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FranceSpain
• Close to major airport• 200 rooms • New build lease• At legals• Potential opening 2020
• Close to main train station
• 230 rooms • New build freehold• Deal agreed
• Potential opening 2020
* Current estimate - There can be no certainty any of the future projects will be acquired on the terms set out above
2 Potential European Projects Investment Value £21m: 430* rooms
• Actively reviewing development projects & acquisitions in key Western European
countries
• Growing hotel development team for European expansion
• Objective to balance European and UK development in medium term
• Board continues to review single hotel developments and chain acquisitions in the
UK and Europe
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Opened Committed and funded Targeted
Dec 2017 2018 2019 Future pipeline
Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms
Owned 6 598 4 517 2 244 6 822
Leased 1 104 - - 1 180 2 300
Franchised 19 1,641 6 498 2 600 7* 700*
Total 26 2,343 10 1,015 5 1,024 15 1,822
Cumulative Total
26 2,343 36 3,358 41 4,382 56 6,204
Hotel openings
* Committed franchised projects only, a further c.1,300 franchise rooms are currently under negotiation
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Financing the pipeline
Intent to raise up to £83m of new financing to fund medium-term target hotel
development pipeline
Financing would comprise the following:
2018 - Additional equity:
• Conditional placing to raise £50m (before expenses)
2018 - Additional debt:
• Additional UK corporate debt of £10m to be raised
Future - Potential additional debt:
• Accordion facility of £23m
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Potential debt summary
Amount Secured Drawdown
UK Corporate £12m 2016 2016
Barcelona mortgage £7m 2017 2017/2018
UK Corporate £10m 2018* 2019
Accordion facility £23m 2018** 2019/2020
Total potential debt £52m
* Term sheet agreed, to be finalised after placing
** Accordion facility would be agreed in principle in 2018 with a firm commitment to be confirmed at a later date
Committed
New
New
Intent is to raise a mortgage on the potential Spanish project at a later date
(50-60% leverage, similar to existing mortgage on Barcelona hotel development)
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The placing
• Conditional placing to raise £50m (before expenses), subject to shareholder approval
• Placing shares to rank pari passu with existing ordinary shares
• ICAMAP, 29.9% shareholder, intends to subscribe £29m
o ICAMAP’s resultant shareholding of 38.7% requires approval by Takeover Panel
and independent shareholders
o ICAMAP will enter into a relationship agreement with easyHotel
o ICAMAP will have the right to appoint one non-executive director to the Board;
Harm Meijer proposed director
• Directors participation in placing of £0.1m
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Summary
easyHotel continues to outperform the market
Significant market opportunity exists for further growth
Target pipeline of 1,122 rooms
Additional capital of up to £83m targeted
Board expects investment of new capital to be earnings enhancing in the medium term
1
2
3
4
5
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Appendix
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Appendix A: Profit and Loss
FY 2017 FY 2016
£’000 £’000
System sales 29,672 21,315
Revenue 8,416 6,024
Cost of sales (3,258) (2,151)
Gross profit 5,158 3,874
Administrative expenses (4,478) (2,833)
Analysed as:
Adjusted EBITDA 2,300 1,551
Non-recurring costs (398) 187
Hotel pre-opening and development costs (218) (89)
Depreciation and amortisation (831) (447)
Share based payments (172) (161)
681 1,041
Profit from operations 681 1,041
Net finance income/(costs) 180 49
Profit before taxation 860 1,090
Taxation (217) (213)
Profit for the year 643 877
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Appendix B: Balance Sheet
FY 2017 FY 2016
£’000 £’000
Non-Current Assets
Intangible assets 1,014 149
Property, plant and equipment 51,143 30,463
Long-term deposits 636 -
Total non-current assets 52,793 30,612
Current Assets
Trade and other receivables 2,724 1,243
Cash and cash equivalents 33,255 13,659
Total current assets 35,979 14,902
Total assets 88,772 45,514
Non-Current Liabilities
Trade and other payables 378 86
Bank borrowings 11,666 -
Deferred tax liability 351 194
Total non-current liabilities 12,395 280
Current Liabilities
Trade and other payables 5,805 4,706
Bank borrowings 360 7,200
Corporation taxation 31 119
Total current liabilities 6,196 12,025
Total liabilities 18,591 12,305
Total net assets 70,181 33,209
Equity
Share capital 1,005 625
Share premium 64,776 28,591
Merger reserve 2,750 2,750
EBT reserve (1,067) (1,067)
Currency translation reserve (80) -
Retained earnings 2,797 2,310
Total equity 70,181 33,209
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Appendix C: Cash Flow Statement
FY 2017 FY 2016
£’000 £’000
Profit before taxation for the year 860 1,090
Adjustments for:
Loss / (profit) on disposal of property, plant and equipment 240 (283)
Depreciation of property, plant and equipment 831 447
Share based payments 172 162
Finance income (207) (249)
Finance expense 91 200
Operating cash flows before movement in working capital 1,987 1,367
Increase/(decrease) in net trade and other payables 521 (454)
Cash generated from operations 2,508 913
Corporate tax paid (149) (22)
Net cash flows from operating activities 2,359 891
Finance income 195 156
Finance expense (338) (200)
Net cash generated from operations 2,216 847
Purchase of property, plant and equipment (22,709) (9,228)
Proceeds from property, plant and equipment - 590
VAT on investing activities (416) (1,008)
Net cash used in investing activities (23,125) (9,646)
Inflow from equity raise 36,564 -
Repayment of loans (7,560) -
Net proceeds from new loans 11,890 -
Dividend paid (328) (270)
Net cash utilised by financing activities 40,566 (270)
Net increase/(decrease) in cash and cash equivalents 19,657 (9,069)
Cash and cash equivalents at the beginning of the period 13,659 22,636
Exchange impact on cash and cash equivalents (61) 92
Cash and cash equivalents at the end of the period 33,255 13,659
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Appendix D: Hotel listing
Hotel location Rooms Country Ownership
Dubai Jebel Ali 216 UAE Franchisee
Frankfurt 132 Germany Franchisee
Amsterdam Arena 131 The Netherlands Franchisee
Berlin Hackescher Markt 125 Germany Franchisee
Den Haag 109 The Netherlands Franchisee
Rotterdam City Centre 107 The Netherlands Franchisee
Brussels 107 Belgium Franchisee
London Victoria 105 United Kingdom Franchisee
Amsterdam Zaandam 96 The Netherlands Franchisee
Amsterdam City 80 The Netherlands Franchisee
London Heathrow 82 United Kingdom Franchisee
Sofia 57 Bulgaria Franchisee
Budapest Oktogon 59 Hungary Franchisee
Luton 68 United Kingdom Franchisee
London Paddington 47 United Kingdom Franchisee
London South Kensington 34 United Kingdom Franchisee
Zurich 33 Switzerland Franchisee
Edinburgh 29 United Kingdom Franchisee
Basel 24 Switzerland Franchisee
Old Street 92 United Kingdom Owned
Glasgow 124 United Kingdom Owned
Manchester 115 United Kingdom Owned
Croydon 103 United Kingdom Owned
Birmingham 86 United Kingdom Owned
Liverpool 78 United Kingdom Owned
Newcastle 104 United Kingdom Owned
26 Hotels 2,343 8 Countries and 17 cities 19 Franchised, 7 Owned
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easyHotel Amsterdam Arena
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easyHotel Amsterdam Zaandam
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easyHotel Birmingham
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easyHotel Brussels
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easyHotel Liverpool
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easyHotel Manchester