easyHotel plc, the owner, developer, operator and franchisor of “super budget” branded hotels, has announced its results for the year ended 30 September 2014.
Commenting on the results, Simon Champion, Chief Executive Officer said: “The Group has made good progress during the year with strong performance from our owned hotels and across our franchised hotels. Current trading is healthy and we remain confident on the outlook for 2015, particularly given our recent refurbishment investment at Old Street and other initiatives that are underway.
“easyHotel is a strong brand with international recognition. Our expansion plans are taking shape and we are confident that we can secure owned properties for conversion in key European gateway cities, as well as expand the franchised estate. Our focus remains on delivering a high return on capital for shareholders, as well as providing excellent value for our customers”.
Financial Highlights
- 2014 trading in line with management expectations
- System sales up 14% to £17.3m (2013: £15.2m)
- Revenue up 34% to £3.5m (2013: £2.6m)
- Profit before tax from segment operations up 15% to £2.0m (2013: £1.7m)
- Overall profit from operations of £1.3m (2013: £1.3m) excluding one off costs and share based payments
- Occupancy, ADR and RevPAR ahead of Board’s expectations
- Net assets of £32.8m (2013: £3.4m), including cash of £24.3m (2013: £0.9m)
- Three year NatWest loan facility of £8.7m arranged in December 2013 at 1.92% above LIBOR (£7.2m drawn at 30 September 2014)
- Basic earnings per share of 1.2 pence
Business Highlights
- Successful AIM listing in June 2014 raising £24m of capital to invest in development and operation of owned hotels
- Owned hotel rooms increased by 195 in the year to 287, with expansion at Old Street, London and second owned hotel opened in Glasgow in January 2014
- Significant strengthening of central operational team
- Successfully open third owned hotel, easyHotel Croydon, in November 2014 (103 rooms)
- 20 easyHotels now operating in 13 cities within 9 countries
- Two Franchise hotels scheduled to open H1 2015
- Four further pipeline Benelux hotels subject to planning and financing
Chairman’s Review
Summary
It is my pleasure to announce our first set of results as an AIM-listed company. 2014 was a transformational year for easyHotel, with the successful admission of our shares to trading on AIM in June 2014, which raised £24m net of costs, the opening of our second owned hotel in Glasgow in January 2014 and a third owned hotel in Croydon, completed shortly after the year end.
Our strategy to invest the proceeds from the IPO fundraising in “super budget” owned hotels with 100-150 rooms in key UK and European gateway cities, based on high returns on capital has been well received by investors. We are now focused on securing properties which meet our strict return on capital criteria and will update the market on this in due course.
Our current portfolio of owned hotels continues to perform well and our new hotel in Croydon opened in mid November 2014. Our high room occupancy rates and low cost base result in a robust high margin business. The strength of the easyHotel brand means that all of our own hotel customers and many of our franchise hotel customers book direct through the easyHotel website, which results in low customer acquisition costs. The brand is recognised in many countries and the brand values are well understood by our customers.
Expansion strategy
Our initial focus for investment, in the United Kingdom (UK), is to complement our three existing owned hotels. There are a number of cities, including London, which have high room rates and a good mix of leisure and business customers, where we have started to identify existing buildings that can be developed into hotels.
We have started to consider markets in Europe, where property prices are generally lower. There are a number of markets that appear highly attractive for the “super budget” proposition with both lower property prices and high room rates. During the period, we also carefully considered a strategic acquisition opportunity which would have accelerated our growth in Europe. Ultimately the Board decided not to proceed and easyHotel incurred fees of £0.2m in relation to the transaction. The Board remain open to considering strategic opportunities that create value for our shareholders.
The brand continues to receive many franchise enquiries in other parts of the world. We are now actively looking for franchise partners to increase easyHotel’s franchise presence outside Europe.
Jan Åstrand
Executive Chairman