Langton Capital – 2016-05-24 – Buybacks, EasyHotel, Hogg Robinson, Brexit & other:
A Day in the Life:
I’m in two minds about warning beepers.
I mean I don’t appreciate being beeped at when I haven’t got a seatbelt on and I’m not moving more than 10ft because I have to open the garden gate but I do appreciate being reminded when I’ve left the lights on.
Well I would, wouldn’t I because the last time I actually did leave them on in anger I was about to fly off for a week’s holiday from Leeds Bradford Airport and arriving back to a flat battery is not something that I want to repeat too often.
It did, however, partially restore my faith in human nature as the courtesy bus driver let us use his jump leads but only, he reluctantly admitted, because he had a bet on and he was going for a new PB of four chumps who’d left their lights that he could help start their cars in one day.
And another thing that annoys me is the fridge. I mean it bleeps and squawks if you leave the door open for more than 10 seconds or so but, if you’ve just spilt some milk and have to clean a couple of the shelves then how are you meant to manage that through a shut door?
Anyway, we’re a fifth of the way through the week with a long weekend to come. On to the news.
RECENT WEBSITE ARTICLES:
• Market getting tougher? See here
• Main features London hotels, slowing markets, Restaurant Group etc. Link to index page – here
• Ongoing tweets found – here
PUB, RESTAURANT & DRINKS PRODUCER NEWS:
• Stock Spirits’ shareholders have voted in favour of Western Gate’s proposed new board members, Alberto da Ponte and Randy Pankevicz. Management refuses to accept them as independent, however, and will therefore seek to bring in an additional two board members. Western Gate’s Luis Amaral responded: ‘We see no reason why the company should use company resources to appoint a further two non-executive directors in addition to the two elected today by shareholders. ISS, Glass Lewis, PIRC and Heidrick & Struggles consider Randy and Alberto to be independent.’
• Stock Spirits: ‘Today’s AGM result has delivered a clear mandate for change to address the performance and strategy issues which have been highlighted, and we would like the Board’s focus to be on this.’
• Enterprise Inns yesterday bought back 103k of its own shares for cancellation at around 97p per share
• Here’s something to think about, the market cap of Just Eat is £3.0bn. Forecast revenues this year? £350m.
• London 24hr tube to commence on Central & Victoria lines from 19 Aug. On Piccadilly, Jubilee & Northern lines in the autumn. TFL says it will support c2k jobs, boost London economy by c£360m.
• ICEAW / Grant Thornton confidence survey finds business confidence slipped in Q1. Was positive 11.4, now only 0.8. The survey suggests ‘domestic sales growth continues to soften’. It says that exports are growing but, though turnover growth has stabilised, it is at a slower pace than a year ago. It announces ‘profit growth declines further as businesses are only able to achieve modest growth in the prices they charge.’ This will not come as new news to the majority of hospitality operators. It says ‘capital investment and R&D growth remains weak due to uncertainty in the wider economy’ and adds ‘employment growth is lower than a year ago, and it is expected to soften further, while salary growth stays broadly in line with the last year.’
• ICEAW survey suggests ‘confidence in the Service sector and Construction has fallen sharply this quarter into line with the Production sector.’
• The Craft Beer Co. has sold its 5 millionth pint of craft beer and founder Martin Hayes says the group might be adding a new site ‘in the coming months’.
• MCA reports that Telepizza has signed its first UK master franchisee partner, the Karali Group, as it aims to roll out 300 stores over the next 10 years. Karali Group is one of the UK’s largest Burger King franchisees and intends to open 80 new stores over the next decade, with the first slated to open in the latter half of this year.
• A ‘reckless restaurant owner has been jailed for six years for the manslaughter of a customer who had an allergic reaction to traces of peanuts in his takeaway. Mohammed Zaman, of Aylesham Court, Huntington, switched almond powder for a cheaper ground nut mix, which contained peanuts.
• Coca-Cola has halted the production of soft drinks in Venezuela as the country suffers from an escalating food and energy shortage.
• Debit cards will overtake cash as the UK’s predominant payment method in five years’ time, according to trade body Payments UK. Some 14.5 billion payments will be made on debit cards in 2021 compared to 13 billion cash payments, if current growth rates are sustained, and cash could account for just one in four payments by as soon as 2025.
• Alder Ridge Vineyard’s 2013 Blanc de Noirs has won a silver medal at the International Wine Challenge 2016.
• EasyHotel reports H1 numbers to end-March. Says system sales +10.4% at £9.66m, total revenues £2.59m (+11.6%).
• EasyHotel says H1 revenues ‘slightly ahead of Board expectations’. Sees ‘like-for-like revenue for owned hotels increased by 8.0%’
• EasyHotel H1: Adjusted EBITDA +10.9% at £0.58m, PBT £0.14m (from £0.37m) ‘reflecting increased pre-opening costs’. Co pays an interim dividend of 0.11p (2015: nil).
• EasyHotel H1: 5 new company owned projects in progress, construction underway in Liverpool & Manchester. Three new franchise hotels also under construction, Brussels, Amsterdam & Bar Dubai.
• EasyHotel H1: CEO Guy Parsons reports ‘trading in the first half of financial year 2015/16 was slightly ahead of the Board’s expectations’. This was because ‘owned hotels started to benefit from the new revenue management strategy.’ Mr Parsons adds ‘this momentum has continued into the beginning of the second half, traditionally the busiest trading months of the year for hoteliers, and full year trading is on track to meet the Board’s expectations.’
• EasyHotel H1: CEO says ‘the Board remains focused on operational efficiency whilst ensuring the Company has the right infrastructure and resources in place to execute the growth strategy. The Company’s committed owned and franchise pipeline is currently expected to add more than 1,000 rooms to the network over the next two years.’
• EasyHotel sees growth opportunities, is considering fund raising options. CEO Mr Parsons concludes ‘with more opportunities, both owned and franchise, available than had been expected the Board is considering its funding options to take full advantage of these opportunities. The Board remains confident that it can secure properties in major and regional UK cities as well as key European gateway cities whilst leveraging the strong brand to increase easyHotel’s presence in the growing branded super budget hotel segment.’
• China has become one of the UK’s top 10 most valuable inbound markets, according to new figures for 2015 which show visits from the country rising by 46%. The ONS figures reveal spend by Chinese visitors rose by 18% to £586m as budget hotels such as Travelodge increasingly look to cater to the booming market, while other growth areas include the UAE, the US, and Spain. VisitBritain director Patricia Yates said: ‘Tourism is a fiercely competitive global industry so it is fantastic to see Britain competing strongly in our most valuable source markets such as the US as well as in the markets that are crucial for our future such as China.’
• Business travel co Hogg Robinson has reported FY numbers to end March. Revenues down 4% at £318m
• Hogg Rob FY: Operating profit +12% at £39.3m, PBT +15% at £26.7m. EPS 7.2p vs 6.6p last year, dividend 2.51p against 2.32p
• Hogg Rob FY. Says it is seeing ‘similar conditions to last year in the UK and North American travel markets’. CEO David Radcliffe says ‘Hogg Robinson Group made good progress during the year.’ He says ‘looking forward, the Board has confidence for the year ahead with the Company focused on making further earnings progress. With net debt to EBITDA below our target range, we now have the opportunity to refresh our view on appropriate capital structure, taking into account the potential benefits of increased investment in the business and whether there is scope to enhance returns to shareholders.’
• Ryanair is ready to cut fares by as much as 12% in order to boost its share of the European market.
• More than two-thirds of business travellers believe there is a psychological effect on either them or their families when travelling to areas perceived as ‘unsafe’.
• Spotify revenue grew 80% to €1.95bn (£1.5bn) last year, although losses deepened as the industry leader continues to make a net loss. Spotify’s net loss for 2015 was €173m. Apple launched its own music streaming service in 2015, while other rivals include Rhapsody and Deezer.
FINANCE & MARKETS:
• IMF reports that Greece’s financial targets are unrealistically high, should be revised down. Not clear what the Germans think about that. IMF says there is little political support for deep cuts. Well there’s a surprise. Not clear what the Germans think about that, either.
• New London mayor Sadiq Khan is said to be backing away from his 50% affordable housing pledge. Moody’s had said it was credit negative. Mr Khan says now it is just a ‘strategic long-term target’.
• World markets: UK mixed yesterday and Europe down. The US was also in the red & Far Eastern markets are mostly lower in Tues trade
• Oil price slips a little further, now trading at around $48.20 per barrel
• Early consumer confidence indicators for the Eurozone in May show a small pickup. Still negative at minus 7 vs minus 9.3 in April
Yester-tweet – Yesterday in a Nutshell: Live Tweets on Website:
Some of the early tweets:
• Half of the British population has been on a night out without drinking in the past half year, according to CGA Peach data
• NPD’s Pub Tracker figures show the pub sector grew visits from families faster than the foodservice market in the year to March
• AB InBev is kicking off a £5bn auction for some of Europe’s foremost lagers this week, including Pilsner and Lech.
• Aldi to source £600m in craft beers. Will stock 18 UK brewed craft beers in its UK stores
• A poll of 2,000 people by Deliveroo shows that 27% of the UK’s workforce never eat lunch, while 40% eat at their desk.
• Around £15 added to families’ monthly fuel bills as a result of a rise in the price of diesel and petrol
• The number of people visiting Britain in the first quarter of 2016 hit a record high of 7.36 million trips – up 6% year on year.
• The number of trips abroad by UK residents rose by 9.4% to 65.7 million holidays last year
• Eurostar has reported a “challenging” Q1 on the back of recent terror attacks in Europe. Demand has been ‘dampened’.
• Breathless Brexit scare stories baffle Brits (sources). Referendum still a month away.
• More evidence of evolution. Water sommeliers, non-drinking nights out, Aldi focusing on craft beers etc. It’s a battlefield out there!
• Innovation & stealing one-another’s lunch. Signs of a market where growth is hard to come by? Very possibly.
• USA hotel cycle. See earlier tweet. Looked OK in April but misleading. First 2wks of month helped by early Easter, rest of it not so good
• Various bodies telling us inbound visitor numbers hitting records yet MERL says London tough. Are worried visitors eschewing crowds?
• Soy prices high. Important input cost. Also hog prices on the up, good proxy for white meats but red meat prices falling