THE UK’S LEADING ONLINE RETAILER OF BEACH HOLIDAYS H1 19 RESULTS PRESENTATION May 2019
AGENDA H1 19 Market Dynamics CAUTIONARY STATEMENT H1 19 Financial Performance Paul Meehan - CFO This presentation may contain certain forward-looking statements with respect to the financial condition, results, operations and businesses of the Company. Forward looking statements are sometimes, but not always, identified by their use of a date in the future or Evolution of Key Drivers such words as ‘anticipates’, ‘aims’, ‘due’, ‘will’, ‘could’, ‘may’, ‘should’, ‘expects’, ‘believes’, ‘intends’, ‘plans’, Simon Cooper – CEO ‘targets’, ‘goal’ or ‘estimates’. These forward-looking statements involve risk and uncertainty because they relate to events and depend on Q & A circumstances that may or may not occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements, including factors outside the Company's control. The forward-looking statements reflect the knowledge and information available at the date of preparation of this presentation and will not be updated during the year. Nothing in this presentation should be construed as a profit forecast . 2
Paul Meehan Chief Financial Officer H1 19 Market Dynamics H1 19 Financial Performance
H1 19 Market Dynamics OTB H1 19 YOY Bookings Profile - OTB Solid performance in H1 despite soft UK market due to Brexit uncertainties, 25% Q1 Q2 particularly in February & March Q3 Trading 20% Background market has been trading at c.(10)% YOY in 2019 and independent 15% Easter market data confirms that 16% of holidaymakers were deferring their holiday LY purchase due to Brexit uncertainty 10% Key period of Brexit Efficient online marketing spend has supported profit growth 5% uncertainty 0% Continued investment in our largest offline campaign to date driving record levels of brand awareness and branded traffic, with branded and free traffic increasing -5% to 68% in H1 (H1 2018 62%) -10% -15% International Market down c(10%) YOY Easter TY Trading in Sweden was adversely affected by the failure of Primera in October 2018 which was 25% of seat supply H1 19 YOY Bookings Profile – International Online marketing spend has been relatively lower YoY, resulting in a high share of 40% Core UK orders YOY % by week Q1 Q2 Q3 Trading branded traffic and repeat purchase rates underpinning a breakeven performance in Scandinavia 20% In recent weeks International bookings have recovered to prior year levels whilst 0% marketing efficiency has been maintained -20% Other -40% Good progress integrating long haul carriers, with Emirates and British Airways completed -60% Launched Classic Package Holidays in March and the operation (support and -80% Failure of Primera leading to shortage of seat supply distribution) will be scaled in H2 Appointed Richard Pennycook as Non-Executive Chair 4
Profit and Loss Account – OTB Segment H1 19 EBITDA growth of +10% H1 19 H1 18 Change OTB growth year on year £m £m % Revenue +1% Revenue 44.6 44.2 1% Revenue after marketing +12% Online Marketing costs (14.9) (18.0) EBITDA +10% Offline Marketing costs (4.1) (3.4) Total Marketing (19.0) (21.4) 11% Online marketing spend decreased from 41% to 33% Revenue after marketing costs 25.6 22.8 12% Variable costs (2.7) (2.4) 21% increase in Offline spend to drive record levels of Fixed costs (4.5) (3.6) brand awareness EBITDA 18.4 16.8 10% Overheads increased to 16% of revenue reflecting: EBITDA % 41% 38% Investment in new Digital HQ in Manchester Online Marketing % 33% 41% Package Travel Directive costs Total Marketing % 43% 48% Further Investment in IT Variable costs % revenue 6% 6% OTB EBITDA % increased 300 bps to 41% Fixed costs % revenue 10% 8% Total Overheads % revenue 16% 14% H118 has been restated under IFRS15, reducing revenue by £0.2m 5
Profit and Loss Account – International H1 19 EBITDA +£1.4m YOY H1 19 H1 18 Change Trading in Sweden adversely affected by the failure of £m £m % Primera in October 2018; as 25% of seat supply this led to a shortage of seats Revenue 0.4 0.9 (56%) Online Marketing costs (0.4) (1.5) Online marketing spend has been lower YoY resulting in Offline Marketing costs - (0.6) a high share of branded traffic and repeat purchase Total Marketing (0.4) (2.1) rates underpinning a breakeven performance in Revenue after marketing costs - (1.2) Scandinavia Variable costs (0.1) (0.2) Fixed costs (0.1) (0.2) In recent weeks International bookings have recovered EBITDA (0.2) (1.6) to prior year levels whilst marketing efficiency has been maintained As seat capacity returns to normal levels for the summer we will invest more heavily in marketing to grow share and bookings 6
Profit and Loss Account – Classic Collection H1 19 EBITDA contribution of (£0.1m) Pro forma H1 19 H1 18 Change Classic Collection Holidays (CCH) £m £m % Acquired Classic Collection Holidays on 15 August 2018 Revenue 18.5 20.1 (8%) As a principal rather than an agent, CCH reports on a Gross Profit 2.5 2.6 travelled basis Gross Profit after marketing costs 2.0 2.0 - Variable costs (0.6) (0.6) CCH contributed EBITDA of (£0.1m) in H1, H1 18 (pre- Fixed costs (1.5) (1.6) acquisition) EBITDA of (£0.2m) EBITDA (0.1) (0.2) - H2 forward bookings reflect a level of consumer uncertainty, with bookings down slightly YOY Classic Package Holidays (CPH) Classic Package Holidays was launched in March and the operation (support and distribution) will be scaled in Q3 H1 losses of (£0.5m) in CPH relate to the resource allocated to build and launch the proposition 7
Profit and Loss Account – Group Adjusted profit before tax +14% YOY Adjusted profit before tax increased by 14% to £15.7m H1 19 H1 18 Change £m £m % Adjusted profit after tax increased by 16% to £12.6m Exceptional costs include dual property costs as a result of OTB EBITDA exc Share Based Payments 18.4 16.8 10% International EBITDA (0.2) (1.6) the move to our Digital HQ in Manchester CPH EBITDA (0.5) - Amortisation increases reflecting increased investment in CCH EBITDA (0.1) - the technology platform Group EBITDA exc Share Based Payments 17.6 15.2 16% Depreciation and amortisation (2.0) (1.5) Adjusted EPS increased by 16% to 9.6p EBIT exc Share Based Payments 15.6 13.7 14% Interim Dividend per share of 1.3p, +18% Finance costs / Other income 0.1 0.1 Adjusted Profit Before Tax 15.7 13.8 14% Exceptional and one-off costs (0.5) (0.3) Share Based Payments (0.5) (0.7) Amortisation of acquired intangibles (2.8) (2.2) Profit Before Tax 11.9 10.6 12% Corporation Tax (2.3) (2.3) Profit After Tax 9.6 8.3 16% Adjusted Profit After Tax 12.6 10.9 16% Earnings per share Basic 7.3 6.3 16% Adjusted 9.6 8.3 16% Dividend per share (pence) 1.3 1.1 18% Effective tax rate 19% 22% 8
Balance sheet H1 19 H1 18 The business operates a trust account which protects £m £m customer monies until they have returned from their holiday. This trust effectively acts as a debtor to the Intangible assets 86.3 70.8 business Property, plant and equipment 7.6 2.0 Seasonal cash flow requirements are covered by a Investment property 0.8 - Total Non Current Assets 94.7 72.8 revolving credit facility which is drawn down as required H1 19 consolidates CCH into the Group (H1 18 excludes Trade and other receivables 189.3 156.3 CCH) Assets held for sale 0.2 - Trust Account 56.9 58.4 Cash 8.2 11.8 Total Current Assets 254.7 226.5 Trade and other payables (202.6) (164.3) Corporation tax payable (1.9) (1.7) Derivative financial instruments (4.0) (0.9) Total Current Liabilities (208.5) (166.9) NET CURRENT ASSETS 46.2 59.6 RCF drawn (9.5) (23.5) Deferred Taxation (6.6) (6.1) NET ASSETS 124.8 102.8 Net Debt (1.3) (11.7) Net Trade DR/CR (13.2) (7.9) 9
Cash Flow H1 19 H1 18 Operating cash outflow of £40.4m, (H1 18 - £36.8m) £m £m Working capital change YOY due to inclusion of CCH, incremental H1 outflow which unwinds in H2 Profit before taxation 11.9 10.6 Adjustments for: Increased capex spend relates to the new Digital HQ in Depreciation and amortisation 4.7 3.7 Manchester and refurbishment of the Operational HQ in Net finance income (0.1) (0.1) Cheadle (reported gross of £1.1m landlord contribution) Share based payments 0.5 0.7 17.0 14.9 Movement in working capital (57.2) (48.4) Corporation tax (0.2) (3.3) Operating cash flow (40.4) (36.8) Capitalised development spend (2.3) (1.7) Capital expenditure (3.4) (0.8) Free Cash Flow (46.1) (39.3) Adjusted Free Cash Flow* (45.6) (39.0) Acquisition of subsidiary, net of cash acquired - (3.0) RCF drawdown 9.5 23.5 Sale of Assets 0.3 - Interest 0.1 0.1 Dividends paid (2.9) (2.5) Net decrease in cash excl trust account (39.1) (21.2) Closing cash excl trust account 8.2 11.8 Closing trust account balance 56.9 58.4 *Adjusted for exceptional and one off costs of £0.5m (H1 18 £0.3m) Closing cash balance Total 65.1 70.2 10
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