Mantra Group Limited (ASX Code: MTR) ABN 69 137 639 395 2017 Annual General Meeting 22 November 2017 Chairman s Address Peter Bush Good Morning, and welcome to the 2017 Mantra Group Annual General Meeting. I am pleased to announce that in FY17 the business continued to perform strongly in all operating segments and in line with market guidance, demonstrating the Board and Management s commitment to delivering ongoing Security Holder value. The Group provided a final fully franked dividend of 6 cents per share bringing the total fully franked dividend for FY17 to 11 cents per share. We grew the portfolio by 6 new properties in the fiscal year and have added an additional 3 properties since 30 June, namely Mantra Sydney Airport Hotel, FV by Peppers in Brisbane and Mantra MacArthur Hotel, Canberra. I am also pleased to announce that the acquisition of the Art Series Hotel Group completed this morning, delivering 7 unique CBD hotels into Mantra s growing portfolio. Bob s presentation that will follow will provide details of new properties scheduled to enter the portfolio in the second half of FY18 and the properties secured and expected to be completed in FY19 and beyond. I would now like to provide some information around the Scheme Implementation Agreement announced to market on 12 October 2017. Following a period of due diligence and negotiations with AccorHotels, Mantra Group entered into a Scheme Implementation Agreement with AccorHotels for the proposed acquisition of the Mantra Group business which resulted in the announcement to market on 12 October 2017. The Scheme Implementation Agreement contemplates the acquisition by AccorHotels of all the shares in Mantra Group and remains subject to a number of customary conditions including the approval of Mantra s Shareholders and the Federal Court of Australia, as well as regulatory approvals including from Australia s Foreign Investment Review Board and the Australian Competition and Consumer Commission (ACCC). 1
By way of update on those regulatory approvals, a submission was made to the ACCC shortly after the transaction was announced to market. The ACCC has confirmed that it will undertake a public review process as part of its consideration of the transaction. The condition relating to the approval by the New Zealand Commerce Commission has been waived, as per the announcement made to market on 10 November 2017. We will provide further updates to Shareholders regarding the satisfaction of regulatory conditions as and when we have material developments to disclose. We are still working towards the indicative timing referred to in the market announcement on 12 October 2017. This timing remains subject to the progress of regulatory approvals and other matters relating to the Scheme. If anyone has questions, the Board and I will be available after this meeting to respond to questions. On behalf of the Board, I thank our Owners, loyal Guests, Investors, Shareholders and all stakeholders for their support of Mantra Group during FY17. I also thank my fellow non-executive Directors, CEO, Bob East, the Executive Team and the broader Mantra Group Team Members for their significant commitment and contribution during FY17. 2
CEO Address Bob East Good Morning Ladies and Gentlemen I am delighted as CEO of Mantra Group to welcome you to the 4 th Annual General Meeting of the Company and thank you for your attendance. Mantra Group has had another successful year, achieving its financial forecast. During FY17 growth and development delivered strategic aligned properties in key destinations. I am also pleased to announce that settlement of the Art Series Hotel Group acquisition, this morning, further enhances Mantra Group s portfolio and product offering with 7 unique and iconic hotels in key CBD locations. Key drivers of performance of the business in FY17 include: Increased keys in buildings under management by 10%; Secured additional tenure in existing properties under management; Refurbished room inventory and product across the portfolio; Consolidated all brands (Peppers, Mantra and BreakFree) onto one global website mantrahotels.com; Launched the my kind of wonderful brand campaign as well as the mantra+ loyalty program; Continued investment in Team Member training and career development aimed at retention and attraction of quality candidates. My presentation that follows will provide information on Mantra s FY17 performance, market conditions and domestic and international traveller patterns. Currently it is business as usual at Mantra Group and Management and Team Members remain focussed on driving its core business to deliver earnings and key strategies aimed at delivering ongoing Security Holder value. I would also like to thank: Owners, loyal Guests, Investors and all stakeholders for their commitment and support of the Mantra Group; My fellow Board Members for their support; Finally and importantly, Mantra s Team Members whose commitment has again exceeded expectation contributing to the ongoing success of Mantra Group and who, I am confident, will continue to do so into the next phase in the journey of the success of this business. I look forward to the year ahead in which the business is expected to continue to deliver Security Holder value. 3
IMPORTANT NOTICE AND DISCLAIMER Important notice and disclaimer This document is a presentation of general background information about the activities of Mantra Group Limited (Mantra Group) current at the date of the presentation, 22 November 2017. The information contained in this presentation is of general background and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice, when deciding if an investment is appropriate. Mantra Group, its related bodies corporate and any of their respective officers, directors and employees (Mantra Group Parties), do not warrant the accuracy or reliability of this information, and disclaim any responsibility and liability flowing from the use of this information by any party. To the maximum extent permitted by law, the Mantra Group Parties do not accept any liability to any person, organisation or entity for any loss or damage suffered as a result of reliance on this document. Forward looking statements This document contains certain forward looking statements and comments about future events. Forward looking statements can generally be identified by the use of forward looking words such as, expect, anticipate, likely, intend, should, could, may, predict, plan, propose, will, believe, forecast, estimate, target and other similar expressions within the meaning of securities laws of applicable jurisdictions. Indications of, and guidance on, future earnings or financial position or performance are also forward looking statements. Forward looking statements involve inherent risks and uncertainties, both general and specific, and there is a risk that such predictions, forecasts, projections and other forward looking statements will not be achieved. Forward looking statements are provided as a general guide only, and should not be relied on as an indication or guarantee of future performance. Forward looking statements involve known and unknown risks, uncertainty and other factors which can cause Mantra Group s actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward looking statements and many of these factors are outside the control of Mantra Group. As such, undue reliance should not be placed on any forward looking statement. Past performance is not necessarily a guide to future performance and no representation or warranty is made by any person as to the likelihood of achievement or reasonableness of any forward looking statements, forecast financial information or other forecast. Nothing contained in this presentation nor any information made available to you is, or shall be, relied upon as a promise, representation, warranty or guarantee as to the past, present or the future performance of Mantra Group. Non-IFRS financial information Mantra Group uses certain measures to manage and report on its business that are not recognised under Australian Accounting Standards. These measures are referred to as non-ifrs financial information. Mantra Group considers that this non-ifrs financial information is important to assist in evaluating Mantra Group s performance. The information is presented to assist in making appropriate comparisons with current periods and to assess the operating performance of the business. All non-ifrs financial information is reconciled to IFRS financial information. All dollar values are in Australian dollars (A$) unless otherwise stated.
MARKET 3
Travel by Australians YE June 17 OVERNIGHT SPEND $62.6B 7% OVERNIGHT TRIPS $93.7M 5% NIGHTS 338M 4% Source: Tourism Research Australia 4
International Performance YE June 17 EXPENDITURE $40.6B 7% VISITORS 8.5M 9% Source: Tourism Australia 5
MANTRA GROUP HIGHLIGHTS
HIGHLIGHTS 7
HIGHLIGHTS - UNDERLYING *Underlying EBITDAI is EBITDAI excluding acquisition transaction costs of $1.7m expensed during the year. Underlying NPAT also excludes reversal of impairment of $1.4m and certain deferred tax adjustments of $1.2m. 8
HIGHLIGHTS STRONG TRACK RECORD Strong growth on all key metrics since listing in June 2014 Year ended Keys under management Room nights Underlying EBITDAI $m Underlying NPAT $m Underlying EPS Cents per share June 2014 11,500+ 2,400,000+ 61.3 (0.3) (0.3) June 2015 13,000+ 2,700,000+ 73.1 36.2 14.2 June 2016 15,000+ 3,300,000+ 89.8 41.3 15.3 June 2017 16,500+ 3,675,000+ 101.2 47.2 15.9 Three year CAGR 13.1% 14.1% 18.2% N/C* N/C* *N/C not calculated ** Underlying NPAT excludes transaction costs of $1.7m (FY2016: $7.3m) incurred in respect of business combinations, the reversal of impairment of $1.4m (FY2016: $2.1m) and an impairment related deferred tax expense of $1.2m (FY2016: benefit of $1.0m). 9
PROJECTS Mantra+ mantrahotels.com TEAM 21 Rising Stars 122 Emerging Leaders 86.3% Satisfaction Women in Mantra & Diversity ASSET & OWNERS 1425 Rooms refurbished Common areas, restaurants & meeting spaces Tenure 10
Employer of Choice Accommodation Chain of the year 2017 11
NEW PROPERTIES FY18 12
Property: Mantra Sydney Airport Hotel Location: Sydney, NSW Model: HMR Keys in building: 136 Opened: July 2017 Segment: CBD 13
Property: Mantra Macarthur Hotel Location: Canberra, ACT Model: LEASE Keys in building: 176 Opened: October 2017 Segment: CBD 14
Property: Location: Model: Keys in building: FV Brisbane, QLD MLR 969 (across 3 towers with the 3 rd tower to open H1FY2020) Opened: Stage 1 November 2017 Segment: CBD 15
Property: The Watson Location: Adelaide, SA Model: LEASE & MLR Keys in building: 219 Opened: November 2017 Segment: CBD 16
Property: The Olsen Location: South Yarra, VIC Model: LEASE Keys in building: 224 Opened: November 2017 Segment: CBD 17
Property: The Blackman Location: Melbourne, VIC Model: LEASE Keys in building: 209 Opened: November 2017 Segment: CBD 18
Property: The Cullen Location: Prahran, VIC Model: LEASE Keys in building: 119 Opened: November 2017 Segment: CBD 19
Property: The Larwill Location: Melbourne, VIC Model: LEASE Keys in building: 96 Opened: November 2017 Segment: CBD 20
Property: The Chen Location: Box Hill, VIC Model: LEASE & MLR Keys in building: 614 Opened: November 2017 Segment: CBD 21
Property: The Johnson Location: Spring Hill, QLD Model: LEASE & MLR Keys in building: 276 Opened: November 2017 Segment: CBD 22
PROPERTIES SCHEDULED TO ENTER PORTFOLIO 23
Property: Peppers Silo Hotel Location: Launceston, TAS Model: HMR Keys in building: 108 Opening: H2FY2018 Segment: CR&D 24
Property: Mantra Albury Location: Albury, NSW Model: HMR Keys in building: 158 Opening: H2FY2018 Segment: CR&D 25
Property: Mantra Southport Sharks Location: Gold Coast, QLD Model: MSA Keys in building: 100 Opening: H2FY2018 Segment: CORPORATE 26
Property: Mantra on City Road Location: Southbank, VIC Model: LEASE & MLR Keys in building: 469 Opening: H2FY2018 Segment: CBD 27
Property: Mantra 900 Hay Street Location: Perth, WA Model: LEASE Keys in building: 250 Opening: H1FY2020 Segment: CBD 28
Property: Mantra Epping Location: Epping, VIC Model: HMR Keys in building: 212 Opening: H1FY2020 Segment: CR&D 29
Property: Peppers Queenstown Location: Queenstown, New Zealand Model: HMR Keys in building: 260 Opening: H1FY2020 Segment: CR&D 30
Property: Peppers Southbank Melbourne Location: Melbourne, VIC Model: LEASE Keys in building: 164 Opening: H2FY2020 Segment: CBD 31
Property: Mantra Sky Hotel Tekapo Location: Lake Tekapo, New Zealand Model: MA Keys in building: 100 Opening: H2FY2020 Segment: CR&D 32
Property: Mantra Wallaroo Shores Location: Wallaroo, SA Model: MA Keys in building: 100 Opening: H2FY2020 Segment: CR&D 33
Property: Mantra M-City Location: Clayton, VIC Model: LEASE & MLR Keys in building: 250 Opening: H1FY2021 Segment: CBD 34
Scheme of Arrangement with Accor Hotels 35
APPENDIX 36
HIGHLIGHTS - STATUTORY 37
FY2017 NEW PROPERTIES Six new properties added in FY2017 performing in line with expectations ALA MOANA HOTEL BY MANTRA, HONOLULU MANTRA RESIDENCES AT SOUTHPORT CENTRAL, GOLD COAST PEPPERS KINGS SQUARE, PERTH 38
FY2017 NEW PROPERTIES Six new properties added in FY2017 performing in line with expectations MANTRA THE OBSERVATORY, PORT MACQUARIE MANTRA CLUB CROC, AIRLIE BEACH TRIBE PERTH, WEST PERTH 39
YEAR ON YEAR RESULTS OVERVIEW FY2017 ($m) FY2016 ($m) Change ($m) Change (%) Total revenue 689.0 606.1 82.9 13.7 Statutory results EBITDAI 1 99.5 82.6 16.9 20.5 NPAT 45.6 37.2 8.4 22.7 NPATA 48.3 39.9 8.4 21.2 COMMENTS Strong FY2017 performance with occupancy, ARR and RevPAR increasing 1.8%, 3.6% and 5.5% respectively Total revenue increased by 13.7% to $689m from $606.1m Underlying Results EBITDAI 1,2 101.2 89.8 11.4 12.7 NPAT 2 47.2 41.3 5.9 14.2 NPATA 2 49.9 44.0 5.9 13.3 Other key statistics Rooms available ( 000) 4,650 4,234 416 9.8 Statutory EBITDAI increased by $16.9m (20.5%) to $99.5m Strong revenue growth driven by: Six property acquisitions completed in the period contributed $59.5m Organic growth of $23.4m Occupancy (%) 79.5 78.1 1.4 1.8 Average room rate ($) 175.24 169.14 6.1 3.6 RevPAR ($) 139.38 132.14 7.24 5.5 1 EBITDAI Earnings Before Interest, Taxation, Depreciation, Amortisation and Impairment 2 Underlying EBITDA is EBITDAI excluding transaction costs of $1.7m (FY2016: $7.3m) incurred in respect of business combinations. Underlying NPAT & NPATA also excludes the reversal of impairment of $1.4m (FY2016: $2.1m) and an impairment related deferred tax expense of $1.2m (FY2016: benefit of $1.0m). 3 Organic excludes properties added in FY2017 40
STATUTORY CASH FLOW Cash flows from operating activities FY2017 Actual ($m) FY2016 Actual ($m) Change ($m) Receipts from customers 738.8 655.6 83.2 Payments to suppliers (646.4) (568.7) (77.7) 92.4 87.0 5.4 Net interest and tax payments (28.2) (27.2) 0.9 Transaction costs of business combinations Net cash inflow from operating activities Net cash outflow from investing activities Net cash (outflow)/ inflow from financing activities Net increase in cash and cash equivalents (0.9) (5.3) (4.4) 63.3 54.4 8.9 (97.2) (126.3) (29.1) (19.4) 105.8 (125.2) (53.3) 34.0 (87.2) COMMENTS Cash flow from operating activities of the Group for FY2017 continued to be strong Operating cash inflows increased by $8.9m to $63.3m in FY2017 primarily as a result of strong trading results and decreased transaction costs associated with business combinations offset by increased tax payments Net cash outflow from investing activities totalled $97.2m following the acquisition of six properties in FY2017 (pcp: eleven) Net cash flow from financing activities decreased by $125.2m to an outflow of $19.4m. In FY2016, the cash inflow resulted from the equity raising completed in May 2016 to fund the acquisition of Ala Moana Hotel. 41
BALANCE SHEET AND CREDIT METRICS Statutory balance sheet 30 Jun 17 Actual $m 30 Jun 16 Actual $m Cash and cash equivalents 62.9 117.1 Other current assets 67.2 60.0 Current assets 130.2 177.1 PPE 157.7 121.9 Intangible assets 513.4 469.4 Other non-current assets 5.1 0.7 Total non-current assets 676.1 591.9 Total assets 806.3 769.0 Trade and other payables 52.6 44.8 Other liabilities 45.0 44.6 Total current liabilities 97.6 89.3 Borrowings 135.3 125.1 Other non-current liabilities 95.4 91.5 COMMENTS Strong balance sheet and cash position leaves the Group sufficient facilities to fund the Art Series Hotel Group acquisition out of current available funds Intangible assets have increased by $44.0m (9.4%) since 30 June 2016 following the acquisition of six properties. Useful life of intangible assets is reassessed each year. The Group is well within debt covenants under banking facilities Credit metrics 30 Jun 17 Actual $m 30 Jun 16 adjusted* $m Borrowings ($m) 135.3 125.1 Cash and cash equivalents ($m) 62.9 62.3 Net total indebtedness ($m) 72.4 62.8 Net debt /LTM Underlying EBITDAI 0.7x 0.7x Total non-current liabilities 230.7 216.6 Total liabilities 328.3 306.0 FY2017 LTM Underlying EBITDAI/LTM Net finance cost 21.7x 17.4x Net assets 477.9 463.1 *Cash balance adjusted to remove cash used to purchase Ala Moana in July 2016 42