Shareholder Update – Making Progress, The Next Phase

Malcolm Simmonds – HIP Plc Investor Relations

Dear Shareholder,

Welcome to our latest shareholder update which encapsulates the corporate highlights from recent months. We are pleased to be able to confirm that HIP Plc has made great progress in 2018 as the Company looks to source, fund and develop a portfolio of leisure destinations across the UK. In February this year we purchased our first operating venue, Ashtour Limited, an adventure golf course and driving range in Croydon, South London.

Ashtour has been a popular leisure venue since opening in 2003 and the Management Team see a number of opportunities to enhance the facility in order to boost revenues. Additionally, having partnered with a number of leisure companies, two in particular are moving ahead with expansion plans, with the first locations set to open in 2019.

New Executive Management Team

As we progress from the development to the delivery of our strategy, the decision was taken to strengthen the Management Team. As a consequence, the Board confirmed my appointment as Chief Administration Officer leading the HIP Plc Investment Relations Team (email: invest@hipplc.com Tel: +44 (0) 203 858 7790).
Michael Simmonds assumed the role of Chief Executive Officer with special responsibility for fundraising, having previously been Chief Operating Officer, whilst Martin Eberhardt remains Chairman, concentrating on execution of group policy.

In addition, James Holmes was appointed as Managing Director and is responsible for the overall strategy. Mr Holmes is a major shareholder in Holmes Investment Properties through his company, Grosvenor Square Investments. The opportunity to have a significant shareholder directly within the management of the business is important to the Board, ensuring we remain focused on growth and shareholder value.

Updated Company Structure

Shown below is the new Company structure, highlighting the newly established Ashtour Division along with David Lloyd Adventure Parks (Adrenaline World) and Everyone Entertained Ltd, two businesses in which HIP Plc has substantial holdings.

Corporate Structure

The key reason that HIP Plc’s prime focus is on the leisure sector is its huge potential and fast growth.

Leisure is attracting one and a half times more discretionary spend than retail and the sector is growing twice as fast. The UK leisure market was valued at £117bn by Deloitte in 2016, which accounted for 7.4% of GDP and has grown 5% annually since 2010.
View Article >>

Brits are forecast to spend £129 billion on leisure activities this year, a 17% increase compared to five years ago and increasing to £141bn UK spend by 2022
View Article >>

The leisure property sector could become one of the biggest beneficiaries of the UK property investment market in the near term due to the shortage of prime stock available in other commercial property sectors.
View Article >>

Major investment in Ashtour site in London

In February 2018, HIP Plc purchased the Ashtour site, an Adventure Golf Course and Driving Range. Trading as the World of Golf, Croydon, the centre is situated on Long Lane, Addiscombe, in the London Borough of Croydon.

This long-running business delivers consistent profits at an EBITDA level and the major upgrades announced by the HIP Plc Management Team should lead to a better experience for all customers and enhanced profitability.

Firstly, we will be introducing TopTracer, a technology that traces a golf ball then overlays it, through a computer screen, onto a digital golf course. By adding TopTracer tracking technology, golfers can play a “virtual” on-screen golf course whilst physically playing the range.

We will also completely renovate the Adventure Golf Course, creating a Jurassic Adventure, complete with animatronic dinosaurs to entertain children and adults alike. The new course will have water features, caverns, landscaping as well as eighteen holes of fun and magical golf for everyone.

These will be exciting and valuable additions as TopTracer typically delivers a significant uplift in revenue for driving ranges. Furthermore, Jurassic Golf will create additional colour, movement and theatre which will bring back friends and families time and again. Our Ashtour site in South London is already a very successful business, and these two great innovations will accelerate its earnings.

First #EveryoneEntertained Venue to Open in 2019

One of HIP Plc’s key partnerships is with Everyone Entertained Ltd, in which we have a 30% shareholding. The Management Team of Everyone Entertained Ltd, led by Grant Wright, Managing Director, has signed Heads of Terms on a site in the North East of England. The application for Planning Permission is progressing and a 25-year lease is due to be finalised shortly.

The process of upgrading and expanding the centre will then begin in earnest, with a planned opening at the start of summer 2019. #EveryoneEntertained is a new brand of multi-activity leisure centres that will appeal to everyone. With at least eight different activities, designed to keep families and children active, it offers fun for everyone, all under one roof.

Company Pipeline

Over the course of the next 5-6 years we aim to develop a minimum of 12 leisure centres with Everyone Entertained and David Lloyd’s Adventure Parks, significantly enhancing the Company’s balance sheet.

We have a flexible investment and expansion strategy designed to maximise and capitalise on opportunities as and when they arise in the evolving market. We are currently focused on sourcing sites which meet specific geographic and demographic criteria, as well as other identifiers, that provide a profitable leisure operation thus enhancing value and returns to shareholders.

Shareholder and Investor Support

We are hugely grateful for your continued support. Our focus is to build a long term, sustainable business and in the process deliver shareholder value.

We aim to regularly update the market and our investors through announcements, the website www.hipplc.com and regular updates such as this newsletter.

On a final note, some shareholders were assisted with their investment in HIP Plc by Infiniti and some concern has been expressed since Infiniti are no longer available. We would like to reassure those shareholders that Infiniti have no involvement with your investment.

If you have any questions or require assistance, please do not hesitate to contact the HIP Plc Investor Relations Team on +44 (0) 203 858 7790 or invest@hipplc.com.

Yours Sincerely,

Malcolm Simmonds

Investor Relations