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easyHotel PLC   -  EZH   

Final Results

Released 07:32 24-Jan-2020

RNS Number : 8055A
easyHotel PLC
24 January 2020
 

 

 24 January 2020

easyHotel plc

 ("easyHotel", "the Group" or "the Company")

FINAL RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2019

easyHotel, the owner, developer and operator of super budget branded hotels, today announces its final results for the financial year ended 30 September 2019.

Financial highlights

Year ended 30 September (£m)

2019

2018

Total system sales

47.6

37.3

Revenue

17.6

11.3

Adjusted EBITDA

4.20

2.96

Profit/(loss) before tax

(3.57)

0.87

Basic earnings / (loss) per share (pence)

(2.7)

0.5

Total dividend per share (pence)

0.08

0.22

 

·    Adjusted EBITDA growth of 42.1% reflects the strength of our super budget proposition and continuing market outperformance in a challenging market environment.

·    Adjusted EBITDAR margin decreased by 1.9%pts to 27.7% (2018: 29.6%) mainly reflecting increased use of OTA to drive revenue and brand growth and also investment in central resources to support our future growth ambitions.

·    Loss before tax of £3.57m (2018: profit of £0.87m) includes a £3.0m non-cash impairment to our Ipswich hotel, and £1.4m costs associated with the change in ownership structure in the latter part of the year.

·    Cash generated from operations increased to £3.25m (2018: £2.86m).

·    Gross bank debt of £17.6m (2018: £16.5m) and cash and cash equivalents of £11.7m (2018: £41.4m).

·    Asset backed balance sheet with net assets of £115.3m (2018: £119.6m).

·    The board has not recommended payment of a final dividend in order to focus investment on growing the Group's estate.

Business highlights

·    Like-for-like owned hotels RevPAR1 was up 4.6% delivering market outperformance for the fourth consecutive year.

·    Like-for-like franchised hotels RevPAR was down 1.7%, but with an improved performance during the second half of the year (H1 decline of 3.5%).

·    Six new owned and franchised hotels opened during the year2, totalling 607 rooms, which are trading broadly in line with management's expectations.

·    Our first owned hotel development site secured in Paris with a second site, easyHotel Nice, acquired and opened post financial year-end.

·    2,006 rooms are currently in the development pipeline, including an owned hotel investment pipeline of some £40m.

·    Significant investment in the digital and operating platforms to support brand and business growth.

·    Recommended cash offer by Citrus UK Bidco Limited who now hold 69% of the Company's issued share capital.

·    It is intended to market the office space at Old Street for sale (inviting offers in excess of £15m) to realise best value for shareholders from this non-strategic asset.

·    With the support of its major new and existing shareholders, the board believes the Company will be able to achieve its strategic vision for the business more quickly and effectively.

·    Longer term funding of debt and equity to be used to meet accelerated European development plans.

 

RevPAR refers to Revenue Per Available Room

2 Six new hotel openings were: Lisbon (Oct’18), Bernkastel-Kues (Jan’19), Ipswich (Jan’19), Milton Keynes (Jun’19), Amsterdam Schiphol (Jul’19) and Zurich (Sept’19)

 

 

Commenting, Scott Christie, Interim Chief Executive Officer at easyHotel, said:

"easyHotel has demonstrated the strength and resilience of its super-budget model, continuing to outperform a challenging market on a like-for-like basis over the course of the year. The Group has made good progress against its strategy for growth, with six new owned and franchised hotel openings and the successful reopening of our flagship hotel in Old Street, London, following refurbishment.  

"Looking to the year ahead, whilst the uncertain political and economic landscape will continue to impact consumer sentiment, we remain confident that the easyHotel brand will continue to outperform the sector as consumers seek out the best value for money.

"We are excited by the development pipeline and the potential for the brand in Europe. With strong supportive shareholders behind us, the significant investments we have made in the business will ensure we have the resources to continue to expand and enhance the business and deliver the board's ambitious strategy for targeted growth."

 

Enquiries:

 

easyHotel plc

 

Scott Christie, Interim Chief Executive Officer

www.easyhotel.com

Harm Meijer, Non-executive Chairman

http://ir.easyhotel.com

 

 

Investec (Nominated Adviser and Broker)

+44 (0) 20 7597 5970

David Anderson

 

 

Houston (Financial PR)

+44 (0) 20 3701 7660

Kate Hoare / Laura Stewart

 

Notes to Editors:

www.easyhotel.com http://ir.easyhotel.com

easyHotel is the owner, developer, operator and franchisor of branded hotels. Its strategy is to target the super budget segment of the hotel industry by marketing "clean, comfortable and safe" hotel rooms to its customers.

Operating hotels

easyHotel has an estate of 40 hotels with 3,759 rooms, comprising 27 franchised hotels (2,332 rooms) and 13 owned hotels (1,427 rooms).

Owned hotels:

United Kingdom: Old Street (London), Glasgow, Croydon, Birmingham, Manchester, Liverpool, Newcastle*, Leeds, Sheffield, Ipswich, Milton Keynes.

Spain: Barcelona

France: Nice

Franchise locations:

United Kingdom: Edinburgh, London Heathrow, Central London, Luton, Reading and Belfast.

Europe: Belgium (Brussels), Bulgaria (Sofia), Germany (Berlin, Frankfurt, Bernkastel-Kues), Hungary (Budapest), The Netherlands (Amsterdam: City, Arena & Zaandam, Amsterdam Schiphol Airport, Rotterdam, The Hague, The Hague Scheveningen Beach, Maastricht), Portugal (Lisbon), Switzerland (Basel, Zurich).

International: UAE (Dubai).

Hotel development pipeline

The Company's committed development pipeline of owned and franchised hotels currently consists of:

Owned hotels:

United Kingdom: Cardiff, Oxford*, Blackpool, Cambridge* and Bristol#.

Europe: Ireland (Dublin), France (Paris-Charles de Gaulle Airport*).

 

Franchise hotels:

Europe: Spain (Malaga), Switzerland (Zurich, Basel).

*Hotels under an operating lease.

#Subject to planning permission.

 

 

Chief Executive Officer's review

Given the political and economic uncertainty faced by the UK during the year under review and its impact on consumer confidence,  I am pleased that the Group's owned hotels have continued to outperform the market on a like-for-like basis, reflecting the strength and positioning of our super budget model.  In particular, since its re-opening in June 2019, the refurbished 89-room easyHotel Old Street has performed strongly, demonstrating that a stylish, new-format easyHotel in an attractive key city location can provide a compelling offering for our customers.

easyHotel has continued to make good progress in its strategy for growth. Six new owned and franchised hotels were opened during the year.  These included owned hotels in Ipswich and Milton Keynes and franchised hotels in Lisbon, Bernkastel-Kues, Zurich and Amsterdam Schiphol Airport. 

We continue to be encouraged by the success of our owned hotel in Barcelona, which opened in September 2018 and which reinforces our focus on expansion of the owned hotel estate in mainland Europe.

STRATEGY AND BUSINESS MODEL

The growing strength of the brand's simple super budget offering is well aligned to the needs of today's discerning and value conscious traveller and the year has seen the Group make further progress as we continue to build momentum against our growth plans. 

Our owned hotels outperformed the market for the fourth successive year, delivering like-for-like RevPAR up 4.6%.  The Group's franchised hotels have performed less strongly, reflecting the weaker UK regional hotel market and a mixed European performance on a country-by-country basis. However, we did see some performance improvement during the second half of the financial year resulting in franchised RevPAR down 1.7% overall.

In support of the expansion of our owned and franchised portfolio of hotels, we have continued to drive improvements in our revenue management strategy to maximise sales. The year saw the start of the roll out of a new PMS system (Opera by ORACLE) with planned enhancements to build our direct revenue share.  This is enabling us to improve our customer booking experience and will be supported by the investments we are making in our CRM platform and digital marketing initiatives to drive improved returns from more targeted promotional activity.

The long-term structural growth drivers in the international branded budget hotel sector remain strong and during the year we have made further expansion plans. In the UK, where the Group already has a significant established owned hotel presence and a strong pipeline to deliver further hotels, the Group intends to selectively focus future owned hotel development on primary cities only.  Wider regional UK expansion plans remain important to the business but will be focussed on franchised development. 

We will significantly increase our focus on Europe, where we believe the opportunity to develop our portfolio in key cities is significant. The Group's new European development team has been working hard to pursue a number of owned and franchised development opportunities in key primary tourist destinations with an initial focus on France and Spain.  The success of our flagship hotel in Barcelona provides us with confidence in a strategy of expanding the easyHotel owned hotel network through investment in centrally located, high quality hotels in major European cities.  The Group's balance sheet strength and cash generation underpins the funding for future owned hotel growth in these markets. Expansion across mainland Europe beyond these key locations will be achieved through an increased focus on franchised development, enabling the Group to broaden its presence without the need for direct capital investment, and our ongoing investment in the brand and our network is continuing to support the development of new franchisee partnerships.

During the year, the Company's shares were subject to a recommended cash offer by Citrus UK Bidco Limited, a company owned by a consortium comprising Cadim Fonds Inc (part of Ivanhoé Cambridge) and long-term major shareholder, ICAMAP Investments S.à.r.l.  As a result of this offer, Citrus UK Bidco Limited and its concert parties now hold 68.77% of the Company's issued share capital.  The board believes that, with the support of its major new and existing shareholders, the Company will be able to achieve its strategic vision for the business more quickly and effectively and deliver an exciting future for easyHotel, its employees, franchisees and guests.

TRADING REVIEW

The Group has continued to outperform its hotel markets in the UK during the period, despite a weakening trading environment, with owned like-for-like RevPAR up 4.6%.

The UK mid-scale and economy segment of the hotel market continued to be impacted by political and economic uncertainty, with RevPAR down 0.7% for the period according to STR Global. Although the London market has continued to perform strongly, with RevPAR growing by 4.5%, the regional UK market's RevPAR has remained weak, down some 2.8%, with a number of regions experiencing double digit RevPAR declines during the calendar year.

Whilst European markets continued to outperform the UK on the whole, our like-for-like franchise performance was mixed on a country-by-country basis with RevPAR down 1.7% in the period.  An improving trend in like-for-like franchised RevPAR was, however, achieved during the second half of the financial year.

Against this backdrop, the Group delivered a 27.5% growth in total system sales to £47.6m (2018: £37.3m) with company revenues up 56.0% to £17.6m (2018: £11.3m).

This performance drove a 42.1% increase in adjusted EBITDA to £4.20m (2018: £2.96m). Losses before tax of £3.57m included a £3.0m non-cash impairment to the value of our Ipswich hotel which opened in January 2019 and costs of £1.4m incurred in relation to the offer made during the period for the Company's shares.

Hotel Openings

During the period the Group expanded its portfolio of super budget hotels across the UK and Europe.

In the UK, openings included new owned hotels in Ipswich (89 rooms) and Milton Keynes (124 rooms) and the reopening of the newly refurbished easyHotel Old Street (89 rooms).  The self-contained 15,500 sq.ft. offices refurbished at Old Street were successfully leased to flexible office provider, Knotel.  The Group intends to market the office space at Old Street for sale (inviting offers in excess of £15m) at this time whilst market conditions are favourable, to realise best value for shareholders from this asset which is not part of our core business.

Four further franchised hotels were also opened in Lisbon (101 rooms), Bernkastel-Kues (100 rooms), Zurich (39 rooms) and Amsterdam Schiphol Airport (154 rooms).

These new hotel openings added a further 607 rooms to the network, bringing the Group's total portfolio at the period end to 1,340 owned hotel rooms and 2,332 franchised hotel rooms.

Since the year-end the Group has also completed the acquisition of the 87-room Palais des Congrés in Nice, with the hotel opening for trading immediately on completion, bringing the total number of owned hotel rooms to 1,427.

DEVELOPMENT REVIEW

We believe that the opportunity to successfully develop our owned hotel portfolio in key gateway European cities is significant and by increasing both our resource and exposure to mainland Europe, we plan to focus our UK owned hotel pipeline on selected cities, whilst accelerating our presence in key continental European locations.  Franchised hotels will be used to build the estate elsewhere in the UK and Europe.

The board believes there is potential for approximately 12,000 easyHotel additional owned hotel rooms and 15,000 franchised easyHotel rooms across the UK and continental Europe.

Owned Hotel Pipeline

The Group continued to expand its pipeline of owned hotels during the period. In the UK, this included a 145-bedroom easyHotel Bristol development (subject to planning permission). In Europe, the Group has secured its first two hotels in France. These are the proposed 209-room easyHotel at Paris-Charles de Gaulle Airport (for which planning permission has now been granted) and, post year-end, the 87-room Palais des Congrés in Nice which was acquired as a trading asset.

A 116 room hotel in Cardiff is also expected to open during the current financial year ending 30 September 2020 and a further 749 rooms are expected to open in the following financial year.

The Group currently has an owned hotel investment pipeline of some £40m comprising a total of 1,010 owned hotel rooms.

Franchised Hotel Development Pipeline

In addition to the four recently opened franchised hotels mentioned above, during the period the Group also signed new franchise agreements to develop further hotels in Derby (110 rooms) and Tel Aviv, Israel (667 rooms).

New franchised hotels are due to open in spring 2020 in Malaga (145 rooms) and in summer 2020 in Zurich (34 rooms), with further franchised hotels in Zurich, Derby and Tel Aviv scheduled for opening during the 2021 and 2022 financial years.  The total number of franchised hotel rooms in the Group's development pipeline is 996.

CAPABILITY, ORGANISATION AND CULTURE

It is essential that we continue to build the capability of the business to enable it to grow at speed and to optimise the financial and operational performance of our trading assets. 

Our colleagues, franchise partners, hotel guests and investors are all instrumental in achieving success in our business.  easyHotel has a strong culture, with everything we do underpinned by our four simple values: We Care For You; We Make Things Simple; We're Always The Best Value For Money; and We Do What We Say. We believe in supporting our franchisees for the benefit of their business and ours, providing our teams with opportunities to build a great career, delighting our customers with a truly super budget stay and giving our shareholders a great return on their investment. 

During the year, the senior management team was significantly reorganised and strengthened. 

At the year end the Group employed 141 colleagues (2018: 90).

Previous Chief Financial Officer, Marc Vieilledent, who remains a key member of the easyHotel executive team, is now leading our strategically important developments in mainland Europe.  He was succeeded as Chief Financial Officer in October 2018 by Gary Burton.

In addition, we have recruited experienced new senior managers to lead our revenue management and marketing teams.  They bring with them significant experience and the business is already benefitting from their contributions.

TECHNOLOGY AND DIGITAL MARKETING

Our hotels benefit from our day-to-day hotel management expertise, whilst having access to some of the world's most powerful marketing, distribution and revenue management systems. During the period we invested significantly in enhancing these systems and recruited people to work in the business who can optimise the significant benefits which such systems can bring. 

The roll out of our new management and booking engine, Opera (an ORACLE system), was started during the year and will be completed during the first half of the current financial year.  This will enable us, in due course, to introduce features within our hotels such as automated check-in kiosks and to make further enhancements to our website and app beyond the upgrades already made during the year, including our new membership programme clubBedzzz.  We are working hard to drive revenues and brand awareness through targeted marketing initiatives and improvements in every stage of our customers' experience - online and at our hotels. By offering our customers a good night's sleep at a super price and a quick and easy way to make a booking, we believe that we will attract new customers and encourage significant repeat visits.

BOARD CHANGES

As well as the change of Chief Financial Officer early in the period as mentioned above, there have been a number of other more-recent changes to the board.

On 1 October 2019, our past independent Non-Executive Chairman, Jonathan Lane OBE, stepped down from the board.  Jonathan had served on the board since the Company's IPO in 2014 and we thank him for his valuable contribution to the business.  Harm Meijer was subsequently appointed Non-Executive Chairman of the board.

On 21 November 2019, it was confirmed that Chief Executive, Guy Parsons, had taken the decision to step down from the company. Guy's successor, François Bacchetta, will join the business in Spring  2020. In the meantime, and to ensure a smooth transition, I will continue in the role of Interim Chief Executive Officer. François, as easyJet's Country Director for France and Italy, has significant experience of operating in the European travel market and, importantly, has an excellent understanding of the 'easy' brand.  He also brings experience of managing online trading including digital marketing and delivering growth strategies within the European market.

On the 21 November 2019, the board also announced the appointments to the board with immediate effect of Michael Neuman, as representative of corporate Director, Cadim Fonds Inc (part of the Ivanhoé Cambridge group), and Non-executive Director, Charles Persello.

Michael, a qualified Member of the Royal Institute of Charted Surveyors, joined Ivanhoé Cambridge in 2014 as a Director of investments, Europe and currently serves as vice president, investments, Europe. Prior to his current role, Michael had worked as a senior investment and asset manager for Unibail Rodamco.  Charles, a Director at ICAMAP Advisory, has over eight years' commercial real estate experience previously working at Unibail-Rodamco, both in retail development in France and subsequently in asset management in Germany. Their wealth of European property and financial experience will be invaluable to the Company as easyHotel continues its journey to fulfil its potential as a leading European budget hotel company.

OUTLOOK

The UK hotel market has been challenging over the course of the year under review, with business confidence weak and consumer confidence impacted by political and economic uncertainties.  Despite this backdrop, easyHotel's business has continued to grow and to outperform the overall market.  The refurbished Old Street hotel and the new hotels we have opened are trading positively and provide confidence that our new format rooms are attractive to our guests and that, as a team, we have the skills and resources in place to select hotel developments that will produce good long-term returns for our shareholders.

Looking to the year ahead, the political and economic landscape will continue to impact consumer confidence. However, the board remains confident that the easyHotel brand will continue to outperform the sector as consumers seek out best value for money and we extend our reach beyond the UK into mainland Europe more proactively.

We are excited about the development pipeline and the potential for the brand in Europe. The Group made significant investments during the last financial year in order to ensure the organisation has the resources it needs to continue to expand and enhance the business and deliver the board's ambitious strategy for targeted growth.   We are confident about the size of the opportunity available to the brand and the readiness of the business to leverage recent investments in infrastructure and in-house expertise to deliver against the board's vision.  Moreover, we have strong shareholders able to support our growth strategy as we look to accelerate our European development to be funded in the longer term through debt and equity.

I want to take this opportunity to thank all of my colleagues and our many franchisees and other partners for making this business the success it is. I am confident that, together, we can continue to deliver on the clear and focussed strategic objectives we have set for ourselves.

 

Scott Christie

Interim Chief Executive Officer
 

Chief Financial Officer's review

easyHotel continues to deliver good financial performance with like-for-like owned hotel RevPAR of +4.6%, outperforming the overall UK market3 that was down 0.7%.

Total system sales were up 27.5% to £47.6m, total revenue up 56.0% to £17.6m and total like-for-like owned hotel revenue up 1.7% to £7.0m.

Adjusted EBITDA was up 42.1% to £4.20m (2018: £2.96m).  Cash generated from operations was up 13.7% to £3.3m (2018: £2.9m) and basic loss per share was 2.7p (2018: profit per share of 0.5p), impacted by a £3.0m non-cash impairment of our Ipswich hotel and £1.4m of exceptional costs in respect of the offer made in the latter part of the year by Citrus UK Bidco Limited for the Company's shares.  If these costs are excluded, basic earnings per share would have been 0.4p (unaudited).

Trading

Total system sales were up 27.5% to £47.6m (2018: £37.3m) following the opening of six hotels (607 rooms: 394 franchised hotel rooms and 213 owned hotel rooms).

Total revenue was up 56.0% to £17.6m (2018: £11.3m).  Total owned revenue was up 64.2% to £15.5m (2018: £9.4m) and total franchise revenue up 8.6% to £1.96m (2018: £1.8m).

Owned hotel like-for-like RevPAR was up 4.6% driven by higher Average Daily Rates (ADRs) from hotels maturing and an increased focus on optimising RevPAR.

Total owned hotel revenue growth was supported by 12 months of trading in Barcelona, Sheffield and Leeds, continued market outperformance of like-for-like owned hotels and new hotel openings in Ipswich and Milton Keynes.  Offsetting this, revenue was negatively impacted by the temporary closure of Old Street, which underwent a major refurbishment from December 2018 until June 20194.

Franchise like-for-like RevPAR was down 1.7% with an improved performance during the second half of the period and reducing a first half performance that was down 3.5%.

Total average occupancy across all hotels was 77.7% (2018: 82.4%) with an ADR of £50.20 (2018: £50.49).  ADR improved generally in owned hotels but was lower overall as a result of a dilution impact caused by the temporary closure of Old Street and addition of new hotels in regional towns (Ipswich and Milton Keynes), although benefitting from a full 12 months trading of Barcelona that performed very strongly throughout the period.

Adjusted EBITDA

Adjusted EBITDA (before exceptional items and share based payments) increased by 42.1% to £4.20m (2018: £2.96m) with adjusted EBITDAR5 margin of 27.7% that decreased by 1.9%pts (2018: 29.6%).

An increase in the use of online-travel-agents (OTAs) in the period supported the continued delivery of like-for-like revenue outperformance in challenging market conditions but impacted EBITDAR margin percentages.

Central costs reduced as a proportion of revenue but increased by £1.0m in absolute terms.  This was driven by an investment in management (that included establishing a European development team), rent from the relocated head office (previously within the Old Street hotel property) and higher professional fees supporting the growing estate and expansion into Europe.

 

3 Market source: Midscale & Economy (MSE) segment from the UK Performance Monitor report, produced by STR Global

4 Old Street reopened with a 15,500 sq ft self-contained office and an 89 room hotel

5 Adjusted EBITDAR margin is adjusted EBITDA as previously disclosed excluding rent expense

 

Profit before tax

A loss before tax of £3.57m (2018: profit of £0.87m) was driven by a £3.0m non-cash impairment of our Ipswich hotel, as a result of significant cost overruns. Other adjusting items of £1.75m included £1.43m of expenses resulting from the change in capital arising from the offer made for the Company's shares.

Depreciation and amortisation (excluding the £3.0m impairment) increased 88.5% to £2.8m (2018: £1.5m), in line with the increase in the number of owned hotels (also including a full year of depreciation charge for Old Street, that was temporarily closed for 6 months).

Total pre-opening costs were slightly lower, as compared with the prior year, with more hotel openings in the year benefiting from a lower average cost of opening.

Share based payments reported a net credit in the year of £0.11m (2018: charge of £0.28m). The change of control as a result of the offer triggered vesting and exercise of share options and employees share plans.

Taxation

The effective tax rate for the period, excluding the £1.4m of exceptional expenses associated with the offer and the £3.0m impairment of our Ipswich hotel, was 19% (2018: 26%), benefitting from the finalisation of capital allowance claims in respect of earlier periods.

Earnings per share and dividend

The loss for the year was £3.78m (2018: profit of £0.65m), with basic loss per share of 2.7p (2018: profit 0.5p).  The board has not recommended payment of a final dividend in order to focus investment of the Group's available resources on growing the hotel estate.  An interim dividend of 0.08p (2018: 0.07p) was paid on 28 June 2019.

Cash flow and Balance Sheet

Net cash flows from operating activities was £3.1m (2018: £2.8m).  Total cash and cash equivalents on 30 September 2019 were £11.7m (2018: £41.4m).

Net cash used in investment activities was £33.2m (2018: £47.4m).  Net cash generated from financing activities was £0.5m (2018: £52.7m including cash generated by the placing of new ordinary shares in March 2018).

The Group ended the financial year with net assets of £115.3m (2018: £119.6m), of which £11.7m comprised cash and cash equivalents (2018: £41.4m).  At year end, total bank borrowings were £17.6m (2018: £16.5m) and 369,724 ordinary shares in the Company were held by the Employee Benefit Trust (2018: 1,125,000).

Gary Burton

Chief Financial Officer

 

 

Consolidated statement of comprehensive income

 

for the year ended 30 September 2019

 

 

 

 

 

 

 

 

 

 

Note

2019

2018

£

£

 

System sales1

 

47,649,199

37,313,925

 

 

 

 

 

 

Revenue

3

17,555,596

11,253,872

 

Cost of sales

 

(9,117,015)

(5,231,963)

 

Gross profit

 

8,438,581

6,021,909

 

Administrative expenses

 

(11,885,171)

(5,337,832)

 

Operating profit

 

(3,416,590)

684,077

 

Analysed as:

 

 

 

 

Adjusted EBITDA2

 

4,204,157

2,958,733

 

Depreciation, impairment and amortisation

 

(5,794,421)

(1,502,313)

 

Hotel pre-opening and development costs

4

(182,355)

(246,971)

 

Share based payments

 

108,599

(276,565)

 

Other adjusting items

4

(1,752,570)

(248,807)

 

 

 

(3,416,590)

684,077

 

Finance income

6

261,712

304,893

 

Finance expense

7

(419,227)

(116,808)

 

(Loss) / profit before taxation

 

(3,574,105)

872,162

 

Taxation

 

(206,075)

(225,658)

 

(Loss) / profit for the year

 

(3,780,180)

646,504

 

Exchange (loss) / gain arising on retranslation of foreign operations

 

(130,037)

63,323

 

Total comprehensive income attributable to equity holders of the Company

 

(3,910,217)

709,827

 

Earnings per share for profit attributable to the ordinary equity holders of the Company

 

 

 

 

Basic (pence)

8

                       (2.7)

                       0.5

 

Diluted (pence)

8

(2.7)

0.5

 

 

 

 

 

1

System sales is the full amount that the customer pays for the use of all the hotels under the easyHotel brand (owned of £15,499,319 (2018: £9,075,454) and franchised of £32,077,090 (2018: £28,100,955) of which £1,983,487 was within statutory revenue (2018: £2,040,902)), together with initial sign on fees of £72,790 (2018: £137,516) paid by new franchisees.

2

Adjusted EBITDA represents earnings before interest, taxation, depreciation and amortisation adjusted for pre-opening costs related to the development of hotels, organisational restructuring costs, share based payments and other adjusting items. Adjusted EBITDA is shown on the face of the consolidated statement of comprehensive income as it reflects the profits from underlying operations only and is the best indicator of easyHotel's financial performance.

 

 

 

 

 

 

Consolidated statement of financial position

 

 

as at 30 September 2019

 

 

 

 

 

Company number 09035738

 

 

 

 

 

 

 

2019

2019

2018

2018

 

£

£

£

£

 

Assets

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

Property, plant and equipment

 

102,446,177

 

96,259,366

 

 

Investment properties

 

   12,553,442

 

-

 

 

Intangible assets

 

    1,109,928

 

1,151,131

 

 

Long-term deposits

 

      637,610

 

643,080

 

 

Total non-current assets

 

 

116,747,157

 

       98,053,577

 

Current assets

 

 

 

 

 

 

Trade and other receivables

 

12,231,341

 

4,022,560

 

 

Cash and cash equivalents

 

11,714,706

 

41,390,018

 

 

Total current assets

 

 

23,946,047

 

       45,412,578

 

Total assets

 

 

140,693,204

 

     143,466,155

 

Liabilities

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

Trade and other payables

 

     743,913

 

756,826

 

 

Bank borrowings

 

16,733,958

 

15,749,566

 

 

Deferred tax liability

 

     442,696

 

418,349

 

 

Total non-current liabilities

 

 

17,920,567

 

       16,924,741

 

Current liabilities

 

 

 

 

 

 

Trade and other payables

 

6,484,761

 

6,057,925

 

 

Bank borrowings

 

   838,808

 

710,413

 

 

Corporate taxation

 

   130,186

 

131,560

 

 

Total current liabilities

 

 

7,453,755

 

6,899,898

 

Total liabilities

 

 

25,374,322

 

23,824,639

 

Total net assets

 

 

115,318,882

 

119,641,516

 

Equity

 

 

 

 

 

 

Equity attributable to owners of the Company

 

 

 

 

 

Share capital

 

1,459,545

 

1,459,545

 

Share premium

 

113,114,938

 

113,114,938

 

Merger reserve

 

2,750,001

 

2,750,001

 

Employee Benefit Trust (EBT) reserve

 

(1,038,115)

 

(1,067,405)

 

Currency translation reserve

 

(145,672)

 

(15,635)

 

Retained earnings

 

(821,815)

 

3,400,072

 

Total equity

 

 

115,318,882

 

119,641,516

 

 

 

 

Consolidated statement of cash flows

 

 

for the year ended 30 September 2019

 

 

 

 

 

 

2019

2018

£

£ 

Cash flows from operating activities

 

 

Profit before taxation for the year

(3,574,105)

872,162

Adjustments for:

 

 

Depreciation, impairment and amortisation

5,794,421

1,502,313

Share based payment (credit) / charge

(108,599)

276,565

Finance income

(261,712)

(304,893)

Finance expense

419,227

116,808

Operating cash flows before movements in working capital

2,269,232

2,462,955

(Increase) / decrease in trade and other receivables

(745,798)

183,560

Increase in trade and other payables

1,730,068

214,702

Cash generated from operations

3,253,502

2,861,217

Corporation tax paid

(173,662)

(71,123)

Net cash flows from operating activities

3,079,840

2,790,094

Investing activities

 

 

Purchase of property, plant and equipment

(25,018,172)

(46,379,646)

Purchase of intangible assets

(395,438)

-

Increase in trade and other receivables

(8,201,809)

-

VAT on investing activities

381,660

(1,017,152)

Net cash used in investing activities

(33,233,759)

(47,396,798)

Financing activities

 

 

Proceeds from issue of ordinary share capital

-

50,000,000

Exercise of share options

29,290

-

Capitalised costs related to issue of ordinary share capital

-

(1,206,308)

Interest received

279,466

346,627

Interest paid

(639,567)

(488,050)

Dividends paid

(333,108)

(320,006)

Proceeds in bank loan

1,846,040

4,769,921

Repayment of bank loan

(710,413)

(360,000)

Net cash generated from / (utilised by) financing activities

471,708

52,742,184

Net (decrease) / increase in cash and cash equivalents

(29,682,211)

8,135,480

Cash and cash equivalents at the beginning of the year

41,390,018

33,255,253

Exchange gains / (losses) on cash and cash equivalents

6,899

(715)

Cash and cash equivalents at the end of the year

11,714,706

41,390,018

 

 

 

 

 

 

 

 

 

Consolidated statement of changes in equity

 

 

for the year ended 30 September 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note

Share

Share

Merger

EBT

Currency
translation

Retained

Total

capital

premium

reserve

reserve

reserve

earnings

£

£

£

£

£

 

£

 

At 30 September 2017

 

1,005,000

64,775,791

2,750,001

(1,067,405)

(78,958)

2,797,009

70,181,438

Profit for the year

 

-

-

-

-

646,504

646,504

FX translation movement

 

-

-

-

-

63,323

-

63,323

Total comprehensive income for the year

 

-

-

-

-

63,323

646,504

709,827

Share based payment charge

 

-

-

-

-

-

276,565

276,565

Dividends paid

9

-

-

-

-

(320,006)

(320,006)

Issue of shares

 

454,545

48,339,147

-

-

-

-

48,793,692

At 30 September 2018

 

1,459,545

113,114,938

2,750,001

(1,067,405)

(15,635)

3,400,072

119,641,516

Profit for the year

 

-

-

-

-

(3,780,180)

(3,780,180)

FX translation movement

 

-

-

-

-

(130,037)

-

(130,037)

Total comprehensive income for the year

 

-

-

-

-

(130,037)

(3,780,180)

(3,910,217)

Share based payment charge

 

-

-

-

-

-

(108,599)

(108,599)

Exercise of share options

 

-

-

-

29,290

-

29,290

Dividends paid

9

-

-

-

-

-

(333,108)

(333,108)

At 30 September 2019

 

1,459,545

113,114,938

2,750,001

(1,038,115)

(145,672)

(821,815)

115,318,882

 

 

 

 

 

 

 

 

 

                                       

 

 

 

 

 

 

Additional Notes

1.          General Information

easyHotel plc is incorporated in England and Wales under the Companies Act. The address of the registered office is 52 Grosvenor Gardens, London SW1W 0AU.

 

The nature of the Group's operations and its principal activities are the owner, developer, operator and franchisor of super budget easyHotel branded hotels.

2.   Basis of preparation

The financial information presented in this preliminary announcement has been prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and as adopted by the EU and those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The principal accounting policies adopted in the preparation of the financial information in this preliminary announcement are consistent with those that the company has applied in its financial statements for the year ended 30 September 2019, and are  unchanged from those used in the company's financial statements for the year ended 30 September 2018 with the exception of the adoption of IFRS15 Revenue and IFRS9 Financial Instruments, which have had no material impact on the figures presented.

 

The financial information does not constitute the Company's statutory accounts, within the meaning of Section 435 of the Companies Act 2006, for the years ended 30 September 2019 or 30 September 2018 but is derived from those accounts. The auditors have reported on those accounts; their reports were unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports and did not contain statements under the Companies Act 2006, s498(2) or (3).

 

Statutory accounts for 2018 have been delivered to the Registrar of Companies and those for 2019, prepared under IFRS, will be delivered in due course.

.

 

3.   Revenue

 

 

 

2019

2018

£

£

Revenue arises from:

 

 

Owned hotel revenue

15,399,656

9,075,454 

Franchised hotel revenue

1,965,213

1,810,918 

Rental income

99,663

Other income

91,064

367,500 

 

17,555,596

11,253,872

 

 

 

 

4.   Operating profit and adjusted EBITDA1

 

 

 

 

2019

2018

£

£

The following have been included in arriving at operating profit before tax:

 

 

Depreciation and impairment of PPE

5,300,738

1,233,611

Amortisation and impairment of intangible assets

493,684

268,702

Payments under operating leases

665,003

359,766

         

 

 

 

2019

2018

£

£

Other Adjusting items from reportable segments include:

 

 

Other adjusting items include:

 

 

Recruitment fees

(199,908)

(124,540)

Legal and other costs

(62,375)

(124,213)

Abortive fees

(56,698) 

(54)

Citrus UK Bidco bidding offer costs

(1,433,589)

                            -  

Total Adjusting items

(1,752,570)

(248,807)

 

 

Hotel pre-opening and development: 2

 

 

Pre-opening operational costs

(182,355)

(246,971)

Total hotel pre-opening and development costs

(182,355)

(246,971)

 

 

 

1 Adjusted EBITDA is shown on the face of the consolidated statement of comprehensive income as it reflects the profits from underlying operations only and is the best indicator of easyHotel's financial performance.

2 Hotel pre-opening and development costs relate to expenses incurred or income received in running a property prior to commencement of trading as a hotel or otherwise.

 

 

 

 

 

 

 

 

 

 

 

5.   Segment information

 

 

 

 

 

 

 

 

Central office

Owned properties

Franchising

Investment

Total

£

£

£

£

£

30 September 2019

 

 

 

 

 

Profit & Loss

 

 

 

 

 

Total revenue from external customers

-

15,490,720

1,965,213

99,663

17,555,596

Adjusted EBITDA

(4,073,008)

6,699,237

1,478,664

99,264

4,204,157

(Loss) / profit before taxation

(6,142,393)

1,071,382

1,397,685

99,221

(3,574,105)

Finance income

261,712

-

-

-

261,712

Finance cost

(419,227)

-

-

-

(419,227)

Depreciation and amortisation

(489,024)

(5,254,646)

(50,708)

(43)

(5,794,421)

 

 

 

 

 

 

Balance Sheet

 

 

 

 

 

Segment assets

5,446,379

117,539,515

4,471,814

13,235,497

140,693,204

Segment liabilities

11,175,610

14,052,980

145,731

25,374,322

 

 

 

 

 

 

30 September 2018

 

 

 

 

 

Profit & Loss

 

 

 

 

 

Total revenue from external customers

 

            9,442,954

1,810,918 

11,253,872 

Adjusted EBITDA

(3,063,176)

            4,622,604

1,399,305

2,958,733 

(Loss) / profit before taxation

(3,400,461)

            2,873,319

1,399,305

872,162 

Finance income

304,893 

-

304,893 

Finance cost

(116,808)

-

(116,808)

Depreciation and amortisation

(1,502,313)

(1,502,313)

 

 

 

 

 

 

Balance Sheet

 

 

 

 

 

Segment assets

 2,217,633

        138,975,913

2,272,609 

143,466,155

Segment liabilities

 660,838

21,455,702

1,708,099

23,824,639

 

 

Geographical information

 

 

 

 

 

2019

2018

 

£

£

Revenue by location

 

 

 

United Kingdom

 

12,657,931

9,575,363

Europe

 

4,856,381

1,619,136

Rest of the world

 

41,284

59,372

 

 

17,555,596

11,253,871

Total non-current assets by location

 

 

 

United Kingdom

 

91,002,733

82,618,030

Europe

 

25,744,424

15,435,546

Total

 

 116,747,157 

98,053,576

 

 

 

 

 

 

 

 

 

 

 

6.   Finance income

 

 

 

2019

2018

£

£

Finance income

 

 

Interest income on financial assets measured at amortised cost

215,442

358,074

Foreign exchange gain/ (loss)

46,270

(53,181)

Total finance income recognised in profit or loss

261,712

304,893

 

 

 

7.   Finance expense

 

 

 

2019

2018

£

£

Finance expense

 

 

Interest expense on financial liabilities measured at amortised cost

773,940

509,891

Amount capitalised 1

(354,713)

(393,083)

Total finance expense recognised in profit or loss

419,227

          116,808

 

 

 

1 Interest expense attributable to construction works has been capitalised to property, plant and equipment. The interest rate that applies to this capitalised interest is 3.25%

 

 

 

 

 

8.   Earnings per share

 

 

 

 

2019

2018

 

 

Number

Number

 

Weighted average number of ordinary shares in issue, excluding those held by the Employee Benefit Trust, used as the denominator in calculating basic earnings per share

144,829,546

126,896,794

 

Options granted under the Employee Share Save Plan

335,766

142,913

 

Weighted average number of ordinary share and potential ordinary shares used as the denominator in calculating diluted earnings per share

145,165,312

127,039,707

 

 

 

 

 

9.   Dividends

 

 

 

Interim cash dividend of 0.08p per ordinary share (£114,482) was paid by the Group during the period under review (2018: £101,380).

 
 

No final cash dividend has been proposed by the Group during the period under review (2018: £218,626).

 

 

10. Capital commitments

At the year end, the group had capital commitments of £11.4m in respect of the construction of two hotels, and was also obliged to complete the acquisition of the new hotel in Nice using funds already placed in escrow for this purpose as at the balance sheet date

11. Events after the reporting date

On the 1st of October 2019 easyHotel France SAS, a 100% owned subsidiary of the group, acquired an operating hotel in Nice, France. The purchase, for total consideration of €7.5m (plus associated fees) was made after year end, and the funds required were held as a deposit by a French notary at the balance sheet date and have been included in the 2019 year end figures under other receivables.

 

 


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