Capital Market Presentation, April 2019 This presentation is not the - - PowerPoint PPT Presentation

Capital Market Presentation, April 2019

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This presentation is not the Company’s offer of securities to the public and should not be interpreted as an offer of securities to the public. The presentation constitutes the Company’s principal and marketing presentation. The information included in this presentation and any other information that shall be delivered during this presentation (hereinafter: “the Information”) does not constitute a recommendation or an opinion of an investment or tax

• consultant. The Information is only a condensed information. Investment in securities in general and in the Company

in particular, carries risk. You should take into account that past data does not necessarily indicate future

• performance. Purchase of the Company’s securities requires an in-depth review of the information published by the

Company and a legal, accounting, taxation and economic analysis thereof. Data regarding: (i) Summary of the number of hotels according to ownership / rent / management, broken down by sectors; (ii) Average daily income per room and average occupancy rates in the chain’s hotels in Cyprus; (iii) A graphic presentation of the contribution of hotels, in different geographical areas, to the Company’s EBITDA in 2018; as well as – (iv) A quarterly analysis of financial data for identical properties; - which were provided in Slides 13, 15, 16, 19 and 22, are provided in this presentation for the first time as additional information for investors.

Significant Events During and After the Report Period

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IPO

• In February 2018, the Company completed the IPO of its shares in the amount of about ILS

507.4 million.

• On February 12, 2018 and on March 12, 2018, 156,426 and 36,163 unregistered options

respectively were allocated to 83 offerees.

• On June 26, 2018, the Company issued ILS 255.840 thousand par value in bonds (Series B)

to the public.

• On October 23, 2018. the Company carried out an expansion of ILS 200.000 thousand par

value in bonds (Series B) to the public.

• In January 2019, the Company carried out early redemption of its bonds (Series A) at the

amount of ILS 89.5 million.

JURYS INN Transaction

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• n August 31, 2018, the operational activities of the

36 hotels under the Jurys Inn brand was consolidated for the first time

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APOLLO

In August 2018, the Company completed a portfolio purchase of 13 hotels in The Netherlands under the APOLLO brand, (ownership- 3 hotels, long term leasehold- 1 hotel, lease- 8 hotels and management-1 hotel) for a total cost of about EUR 154 million.

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4 LONDON HOTELS

In March 2019, the Group signed a lease agreement for 4 hotels in central London (1,311 rooms) for a period of 30 years (including the

• ption period). At annual rent of about £55 million.

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THE MIDLAND HOTEL

By Leonardo Royal Hotel

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JURYS INN EDINBURGH

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Leonardo Royal Hotel Southampton

Royal Munich

Value of the hotel upon opening in 2011 – EUR 67 million. In June 2018, the Company concluded a Sale & Lease Back Transaction for the amount of EUR 157 million. The minimal rent was signed for about EUR 7.2 million.

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Leonardo Haifa Leonardo Negev U Coral Beach Club Eilat …

Contribution to the Community

• Establishment of the

“Lev Fattal” Motel for children with cancer and their families in Haifa (Rambam)

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• The Company intends

to establish 5 motels for children with cancer and their families in medical centers throughout Israel over 10 years.

• The Company employ about

80 employees with disabilities in a variety of positions.

• The Company adopts

nonprofit organizations such as: “Hakav Hame'ahed”, “Leket Israel”, “Larger than Life”, “Ezra Lemarpeh”.

• Financial contributions in

2018 amounted to a total

• f ILS 1,117 million.

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Tourism in Israel and Abroad

1 Data from the UN World Tourism Organization (UNWTO) 2 Data from CBS

698 764 809 855 911 930 892 952 997 1043 1095 1141 1193 1241 1329 1403 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Number of International Tourists (in millions) 1

1.1 1.5 1.9 1.8 2.1 2.6 2.3 2.8 2.8 2.9 3 2.9 2.8 2.9 3.6 4.1 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

+273%

2018 2003 Rooms in Israeli Hotels (in thousands) 54.4 49.7

9.4% +

Entry of Tourists into Israel(in millions) 2

Fattal Group Calling Card

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1 As of December 31, 2018, this includes a future hotel in Israel , 16 future hotels in Europe , 2 future hotels in the UK and 2 future hotels in Cyprus.

The Company was founded in 1998 by Mr. David Fattal The largest and leading hotel chain in Israel The chain grows abroad

23 21 41 37 10 8 4 3 11 10 55 40 36 36

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7 5 4 1 20 40 60 80 100 120 12.18 12.17 12.18 12.17 12.18 12.17 12.18 12.17 לארשיהפוריא הינטירב דנלריאורחא תולעבתוריכשלוהינ

3 5 44 46 81 101 38 40

Israel Europe Britain Other Ownership lease Management

203

Hotels

18 Countries

As of the signing date of the financial statements:

38,892

Rooms

13.04% + 18.6% + 9.1% +

International Distribution 1

14 Belgium (2) Hungary (1) Austria (1) The Netherlands (15) Italy (4) Spain (9) Switzerland (3) Germany (64) Poland (2) Czech Republic (2) The UK, Wales and Scotland (47) Cyprus (5) Israel (41) Greece (2) 1

1 As of the signing date of the financial statements. Including future hotels.

Northern Ireland and Ireland (5)

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1 Including hotels held at 50%.

68% 73% 72% 75% 77% 78% 63% 67% 81% 89% 83%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2016 2017 2018

Average Occupancy Rates in the Chain 1

Israel

Europe

The UK and Ireland

Other

Average Daily Revenue Per Room 1 (ADR 2)

(ILS)

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879 882 909 499 483 529 381 445 512 488 579

• 100

200 300 400 500 600 700 800 900 1,000 2016 2017 2018

1 Including hotels held at 50%. 2 The ratio between the hotel’s total revenue and the occupied rooms in the hotel. The figure does not include hotels under management.

Israel

Europe

The UK and Ireland

Other

Revenue of the Fattal Hotels Chain 1-2 (ILS million)

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994 1,306 1,527 1,137 1,284 1,631 29 90 617 65 96

• 200

400 600 800 1,000 1,200 1,400 1,600 1,800 2016 2017 2018

2,745 3,871

1 Including a relative share of hotels held at 50%. 2 It should be noted that as of May 1, 2017, the Company recognizes the full incomes of Protal Hotels, this following a new agreement with the partner in Protal to transition from a

management agreement to a lease agreement.

2,160

Israel

Europe

The UK and Ireland

Other

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274 332 402 467 501 640 7 29 267 25 41

• 100

200 300 400 500 600 700 2016 2017 2018

EBITDAR (ILS million) 1,2

748 1,350 887

1 Including a relative share of hotels held at 50%. 2 It should be noted that as of May 1, 2017, the Company recognizes the full incomes of Protal Hotels, this following a new agreement with the partner in Protal to transition from a management agreement to a lease agreement.

Israel

Europe

The UK and Ireland

Other

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1 Including a relative share of hotels held at 50%. 2 It should be noted that as of May 1, 2017, the Company recognizes the full incomes of Protal Hotels, this following a new agreement with the partner in Protal to transition from a management agreement to a lease agreement.

201 228 271 281 302 374

• 4

15 139

• 16

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• 50
• 50

100 150 200 250 300 350 400 2016 2017 2018

EBITDA (ILS million) 1,2

478 561 811

17% 45% 33% 17% 37% 4% 3%

EBITDA 2018

לארשידנלריאו הינטירבהינמרגדנלוהרחא

Israel

Europe The UK and Ireland

Other

The Netherlands Other Germany The UK and Ireland Israel

Revenue from Identical Properties of the Fattal Chain 1-5 (NIS million)

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1 Including a relative share of hotels held at 50%. 2 Data regarding revenue of all the hotels that were fully active (i.e. that no significant physical changes were made in them) in the relevant cross section periods, while

cancelling out hotels that were purchased during that period.

3 Does not include managed hotels that the Company’s incomes thereof derive from management fees. 4 It should be noted that as of May 1, 2017, the Company recognizes the full incomes of Protal Hotels, this following a new agreement with the partner in Protal to transition

from a management agreement to a lease agreement.

5 It should be noted that the Leonardo Royal Edinburgh Hotel was closed for several months during 2017 due to renovations.

1,294 1,453 1,190 1,312 57 68

• 200

400 600 800 1,000 1,200 1,400 1,600 2017 2018

2,541 2,833

11.5% Israel

Europe

The UK and Ireland

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329 377 473 518 21 26

• 100

200 300 400 500 600 2017 2018

EBITDAR (ILS million) 1-5

823 921

1 Including a relative share of hotels held at 50%. 2 Data regarding EBITDA and EBITDAR of all the hotels that were fully active (i.e. that no significant physical changes were made in them) in the relevant cross section periods, while cancelling out hotels that were

purchased during that period.

3 Does not include managed hotels that the Company’s incomes thereof derives from management fees. 4 It should be noted that as of May 1, 2017, the Company recognizes the full incomes of Protal Hotels, this following a new agreement with the partner in Protal to transition from a management agreement to a

lease agreement.

5 It should be noted that the Leonardo Royal Edinburgh Hotel was closed for several months during 2017 due to renovations. 6 In June 2018, the Sale & Lease Back Transaction was concluded regarding the Royal Munich Hotel and it transitioned from a fully owned framework to a lease framework.

225 252 288 305

• 10

40 90 140 190 240 290 340 2017 2018

EBITDA (ILS million) 1-6

522 569

9% 11.9% Israel

Europe

The UK and Ireland

Quarterly EBITDA – 2018

(ILS million) 1-6

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25 91 76 60 33 100 88 84

• 1

4 6 7

• 20

20 40 60 80 100 120 Q1 Q2 Q3 Q4

57 195 170 151

Quarterly Revenue – 2018

(ILS million) 1-5

288 395 404 366 273 344 349 346 11 18 21 17

50 100 150 200 250 300 350 400 450 Q1 Q2 Q3 Q4

572 757 774 729

1 Including a relative share of hotels held at 50%. 2 Data regarding EBITDA and revenue of all the hotels that were fully active as of January 1, 2017. 3 Does not include managed hotels that the Company’s revenue thereof derives from management fees. 4 It should be noted that as of May 1, 2017, the Company recognizes the full incomes of Protal Hotels, this following a new agreement with the partner in Protal to transition from a management agreement to a lease

agreement.

5 It should be noted that the Leonardo Royal Edinburgh Hotel was closed for several months during 2017 due to renovations. 6 In June 2018, the Sale & Lease Back Transaction was concluded regarding the Royal Munich Hotel and it transitioned from a fully owned framework to a lease framework.

Israel

Europe

The UK and Ireland

Consolidated Balance (in ILS million)

23 12/2018 12/2017 Current property 1,672 971 Long Term Receivables 605 72 Property, plant and equipment 5,151 3,917 Long Term Investments and Other Property 997 1,398 Intangible Assets 464 4 Total Properties 8,889 6,362 Short Term Credit 464 428 Other Current Liabilities 1,008 577 Loans and Bonds – Long Term 3,392 2,750 Deferred Taxes 335 282 Others 470 224 Total Liabilities 5,669 4,261 Shareholders’ Equity 3,220 2,101 Total Liabilities and Equity 8,889 6,362

Profit and Loss Report (in ILS million)

24 1-12/18 1-12/17 1-12/16 Revenues from Hospitality Services and Others 3,766 2,586 1,846 Total Operating Expenses 2,446 1,731 1,169 Operating income before rent, depreciation and reductions (EBITDAR) 1,320 855 677 Total Rent 599 366 266 Operating income before depreciation and amortization (EBITDA) 721 489 411 Depreciation 213 149 138 Other Operating Expenses (Incomes), Net 44 30 ( 2 ) Profit before Financing 464 310 275 Financial Expenses, Net 125 50 82 Group’s Share in the Subsidiaries’ Earnings 3 7 7 Tax Expenses 99 70 61 Net Income 242 197 139 Net Earnings Attributed to Shareholders of the company 239 193 135 Net Earnings Attributed to Non- controlling Interests 3 4 4

Changes in Relevant Exchange Rates for the FS

Current Day

• Base Day

12.18

• 12.17

12.17

• 12.16

Dollar (US) 8.1% 9.83%

• Euro

3.35% 2.69% Pound Sterling 2.38% N/A

Impact of the Exchange Rate

• The Company has credit in foreign currency that impacts

the financing expenses.

• The Company has broad activity in foreign currency that

impacts its shareholders’ equity.

• The Company finances its activity in Europe with hedges

credit (in foreign currency or ILS). This hedging has an impact on the its shareholders’ equity.

Foreign Currency Average Exchange Rate for the Period Change 1-12.2018 1-12.2017 Euro 4.25 4.06 4.46% Pound Sterling 4.80 4.63 3.53%

Cash Flow Report (in ILS million)

25 1-12/18 1-12/17 1-12/16 Cash Flows from Operating Activities

362 354 224

Cash Flows from Investment Activities

(1,164) (1,221) (257)

Cash Flows from Financing Activities

1,052 981 96

Financial Relationship Figures

12/2018 12/2017 12/2016 Ratio of Equity to Total Assets

36.2% 33% 43%

Ratio of Net Financial Debt to EBITDA1

3.87 4.45 4.25

1 For definitions of the terms “Net Financial Debt” and “EBITDA”, see Section 16.3.1 in the Company’s Board of Directors Report

dated December 31, 2018, which was included in the Company’s annual statement for the same date.

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Significant Events During and After the Report Period (Continued)

Impact of the Implementation of IFRS 16 as of January 1, 2019

• The Company estimates that the impact of the initial application of the New Standard

at January 1, 2019 will lead to an increase in the total of the Company's assets and liabilities in a range of ILS 9.5 – 10 billion and a decrease in the balance of the Company’s shareholders' equity in a rage of ILS 280 – 340 million (based upon the leases that were in effect as of January 1, 2019).

• The aforementioned changes are before the impact of the London transaction in

March 2019 as described above. The Company estimates that implementation of the standard following the London transaction would lead to an additional increase in the Company’s total assets and liabilities in a range between ILS 3.3 and 3.8 billion and without an impact upon the Company’s balance of shareholders’ equity.

• Implementation of the aforementioned standard shall also have an impact on the

Company P&L Report, so that rental fees are cancelled and that depreciation and financing expenses are recorded. The net profit is expected to decrease in a range between ILS 150 and 160 million, this due to depreciation and financing expenses in the initial years being higher than the annual rental fees. The reversal of the negative impact will expected after the mid-period of the rental period.

The Company’s Strategy

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Strengthening the activity in areas of demand in Israel and Europe, while maintaining high rates of return Maintaining stable leveraging of the Company over time while emphasizing a strong cash flow The expansion in Western and Central Europe constitutes the Company’s primary engine of growth in recent years and in the coming years.

Continued expansion, particularly in Western and Central Europe, via purchasing

• f hotels and via rental and management

agreements. Delux, 3 or 4 star business hotels in major cities. Strengthening of the Leonardo, NYX, APOLLO and JURYS brands and beginning the merger of brands. Cooperative ventures in order to reduce risk and increase possibilities for expansion.

Europe (including The UK and Ireland) Israel

Continued improvement of the hotels and strengthening of the Group’s brand in Israel. Utilizing business opportunities to improve the profitability alongside reduction of the risk.

Mediterranean Basin

The Company intends to continue expanding in vacationing hotels in the Mediterranean Basin

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The Company’s Strategy )Continued(

Expansion of the Company’s Activity to Related Areas

• f hotel Industry

JOURNEY VENTURES An investment fund in technology companies in the area of “Travel Tech” in the tourism and hoteling sectors FATTAL TERMINAL A luxury parlor for passengers that includes private hospitality rooms, meeting rooms, a Duty Free and more

ROOMS Shared work spaces that offer work stations, private offices and meeting rooms for rent

MASTER Offers a unique hospitality experience of luxury apartments with a level of service

• f a hotel

HOSTELS

Thank you for listening!