THE UK’S LEADING ONLINE RETAILER OF BEACH HOLIDAYS FY19 RESULTS PRESENTATION
AGENDA CAUTIONARY STATEMENT FY19 Market Dynamics This presentation may contain certain forward-looking FY19 Financial Performance statements with respect to the financial condition, results, operations and businesses of the Company. Paul Meehan - CFO Forward looking statements are sometimes, but not always, identified by their use of a date in the future or such words as ‘anticipates’, ‘aims’, ‘due’, ‘will’, ‘could’, ‘may’, ‘should’, ‘expects’, ‘believes’, ‘intends’, ‘plans’, Evolution of Key Drivers ‘targets’, ‘goal’ or ‘estimates’. Simon Cooper – CEO These forward-looking statements involve risk and uncertainty because they relate to events and depend on 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 Q & A 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 FY19 Market Dynamics FY19 Financial Performance
Market Dynamics YOY Bookings Profile - OTB H2 H1 OTB Revenue growth of 1%, soft UK market impacted by: ‘ lates ’ market competitor discounting preceding Brexit deadline in H1 and continuing uncertainties throughout year TCG failure Key period of Sterling devaluation in H2 Brexit uncertainty Significant market discounting in period prior to failure of TCG Sterling devaluation Continuing improvements in online marketing efficiencies, record branded traffic share at 70% (2018 - 64%) TCG failure Despite market conditions, continued investment in talent and infrastructure that will support long term expansion opportunities YOY Bookings Profile – International International H1 trading in Sweden adversely affected by collapse of Primera H1 H2 Strong H2 Revenue growth of 43%, reduced EBITDA loss Other Long haul - integrations with Emirates, BA and Virgin, revenues doubled YoY Classic Package Holidays launched March, c1,500 agents now live Failure of TCG in Sept ‘19 gives rise to both a P&L impact in FY19 with an unprecedented opportunity to take additional market share at an increased rate in Failure of Primera leading to shortage of seat supply the medium term Bookings YOY Marketing as % of Revenue Break even 4
Presentation of GAAP and non-GAAP measures On 23 September 2019, Thomas Cook Group plc (“TCG”) FY19 FY18 Change ceased trading Adjusted GAAP Adjusted GAAP Adjusted GAAP £m £m £m £m % % There was a one-off exceptional cost associated with helping customers to organise alternative travel arrangements, and Group revenue 147.5 140.4 104.3 104.3 41% 35% Revenue as agent 92.5 85.4 90.9 90.9 2% (6%) lost margin on cancelled bookings Revenue as principal 55.0 55.0 13.4 13.4 310% 310% Group gross profit 99.1 92.0 92.6 92.6 7% (1%) The adjustment of £7.1m to revenue represents the lost Gross profit as agent 92.0 84.9 90.9 90.9 1% (7%) revenue associated with providing refunds and the costs Gross profit as principal 7.1 7.1 1.7 1.7 318% 318% associated with organising alternative travel arrangements Group profit before tax 34.6 19.4 33.6 26.1 3% (26%) Basic and diluted earnings per share 21.4p 12.0p 21.2p 16.5p 1% (27%) This amounts to £25.6m and is stated net of a chargeback Total dividend payable 3.3p 3.3p 3.3p 3.3p claim of £18.5m. (Net £7.1m). £0.6m of other exceptional operating costs relates to the incremental operational costs FY19 FY18 of managing the process and the loss of monies held by TCG TCG Other Total Total agents £m £m £m £m Revenue as agent (7.1) - (7.1) - The exceptional impact of the TCG failure has been excluded Revenue as principal - - - - from performance measures in this document as the Group revenue (7.1) - (7.1) - Directors consider this necessary to provide a fair, balanced Share based payments - (0.7) (0.7) (1.4) and understandable view of the performance of the Group Acquired intangibles amortisation - (5.5) (5.5) (4.6) Other exceptional operating costs (0.6) (1.3) (1.9) (1.5) A full reconciliation of all non-GAAP measures to the closest Group overheads (0.6) (7.5) (8.1) (7.5) equivalent GAAP measure is included in the Preliminary Group profit before tax (7.7) (7.5) (15.2) (7.5) Statement and Annual Report 5
Profit and Loss Account – OTB Segment EBITDA growth of +1% FY19 FY18 Change OTB growth year on year £m £m % Revenue +1% Revenue 90.3 89.3 1% Revenue after marketing +6% Online Marketing costs (29.8) (33.2) EBITDA +1% Offline Marketing costs (5.4) (4.1) Online marketing spend decreased from 37% to 33% Total Marketing (35.2) (37.3) 6% Revenue after marketing costs 55.1 52.0 6% 32% increase in Offline spend, record brand awareness Variable costs (7.2) (6.6) Fixed costs (9.7) (7.5) Total marketing spend decreased from 42% to 39% EBITDA 38.2 37.9 1% Overheads increased to 19% of revenue reflecting both the EBITDA % 42% 42% lower revenue growth and investments for long term benefit: Online Marketing % 33% 37% Investment in new Digital HQ in Manchester Total Marketing % 39% 42% Package Travel Directive costs Variable costs % revenue 8% 8% Fixed costs % revenue 11% 8% Further investment in IT Total Overheads % revenue 19% 16% Partial employee bonus based on achievement of non-financial targets OTB EBITDA % maintained at 42% 6
Profit and Loss Account – International EBITDA +£1.6m YOY FY19 FY18 Change H2 revenue growth of 43%, whilst maintaining marketing £m £m % efficiency H1 trading in Sweden adversely affected by the failure of Revenue 1.4 1.6 (13%) Primera, H1 bookings in Sweden down (35%) Online Marketing costs (1.4) (2.5) Offline Marketing costs - (0.5) Higher share of branded traffic and repeat purchase rates, Total Marketing (1.4) (3.0) resulting in more efficient online marketing costs Revenue after marketing costs - (1.4) Variable costs (0.2) (0.3) Revenue after marketing now at break-even Fixed costs (0.4) (0.5) EBITDA (0.6) (2.2) EBITDA growth of +£1.6m YOY 7
Profit and Loss Account – Classic Collection Holidays (Classic) EBITDA contribution of +£2.2m Pro forma FY19 FY18 FY18 Change Acquired August 2018 £m £m £m % As a principal rather than an agent, Classic reports gross revenue on a travelled basis Revenue 55.0 13.4 59.0 (7%) Gross Profit after marketing costs 6.3 1.6 6.7 (6%) Revenue decrease of (7%), new senior Variable costs (1.2) (0.1) (1.3) management team transitioning business towards Fixed costs (2.9) (0.4) (3.0) more luxury and tailor made travel EBITDA 2.2 1.1 2.4 (8%) Classic EBITDA of £2.2m Profit and Loss Account – Classic Package Holidays (CPH) EBITDA contribution of (£1.1m) FY19 FY18 CPH launched March 2019 £m £m EBITDA of (£1.1m) reflects resource allocated to build and launch the proposition Revenue 0.8 - Gross Profit after marketing costs 0.1 - c.1,500 agents now on-boarded Variable costs (0.2) - Focus in FY20 is to increase the numbers of agents Fixed costs (1.0) - EBITDA (1.1) - further and the volume of bookings per agent Market opportunity following failure of TCG 8
Profit and Loss Account – Group Adjusted* profit before tax +3% YOY Adjusted EBITDA growth of 5% FY19 FY18 Change Amortisation increases reflecting continued investment in £m £m % technology platform Revenue 147.5 104.3 41% Adjusted PBT increased by 3% to £34.6m Cost of Sales (48.4) (11.7) Gross Profit 99.1 92.6 7% Exceptional costs relate to: Admin expenses (60.4) (55.8) internal restructuring program and double property EBITDA 38.7 36.8 5% costs £1.3m Depreciation and amortisation (4.4) (3.2) EBIT 34.3 33.6 2% the net cost associated with the failure of TCG of Net finance income/(cost) 0.2 (0.1) £7.7m (£7.1m revenue and £0.6m operating costs) Adjusted Profit Before Tax 34.6 33.6 3% Effective tax rate of 19% Exceptional and one-off costs (9.0) (1.5) Share Based Payments (0.7) (1.4) Adjusted profit after tax increased by 1% to £28.0m Amortisation of acquired intangibles (5.5) (4.6) Profit Before Tax 19.4 26.1 (26%) Adjusted EPS increased by 1% to 21.4p Corporation Tax (3.6) (4.6) Total Dividend per share maintained at 3.3p Profit After Tax 15.7 21.5 (27%) Adjusted Profit After Tax 28.0 27.7 1% Earnings per share Basic 12.0 16.5 (27%) Adjusted 21.4 21.2 1% Dividend per share (pence) 3.3 3.3 0% * Adjusted measure excludes exceptional items, share based payments and brand amortisation 9
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