On The Beach Group Plc · LSE:OTB
On The Beach — H1 2019 Earnings Presentation
27 slides from On The Beach's earnings presentation, May 14, 2019
Slide 1: The UK's Leading Online Retailer of Beach Holidays: H1 19 Results
THE UK’S LEADING ONLINE RETAILER OF BEACH HOLIDAYS H1 19 RESULTS PRESENTATION May 2019
Slide 2: Agenda and Cautionary Statement
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 n
Slide 3: Paul Meehan, Chief Financial Officer
Paul Meehan Chief Financial Officer H1 19 Market Dynamics H1 19 Financial Performance
Slide 4: H1 19 Market Dynamics
H1 19 Market Dynamics OTB H1 19 YOY Bookings Profile - OTB Solid performance in H1 despite soft UK market due to Brexit uncertainties, 25% particularly in February & March Q1 Q2 Q3 Trading 20% Background market has been trading at c.(10)% YOY in 2019 and independent 15% Easter market data confir
Slide 5: Profit and Loss Account – OTB Segment
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) Offline Marketing costs (4.1) (3.4) EBITDA +10% Total Marketing (19.0) (21.4)
Slide 6: Profit and Loss Account – International
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 marketi
Slide 7: Profit and Loss Account – Classic Collection
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%) Gross Profit 2.5 2.6 As a principal rather than an agent, CCH rep
Slide 8: Profit and Loss Account – Group
Profit and Loss Account – Group Adjusted profit before tax +14% YOY H1 19 H1 18 Change Adjusted profit before tax increased by 14% to £15.7m £m £m % Adjusted profit after tax increased by 16% to £12.6m OTB EBITDA exc Share Based Payments 18.4 16.8 10% Exceptional costs include dual property co
Slide 9: Balance sheet
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 Property, plant and equipment 7.6 2.0 business Investment property 0.8 - Se
Slide 10: Cash Flow
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, Profit before taxation 11.9 10.6 incremental H1 outflow which unwinds in H2 Adjustments for: Increased capex spend relates to the new Digital HQ in Depreciation an
Slide 11: Segmental P&L
Segmental P&L H1 19 H1 18 Change OTB Int'l CCH* CPH** Group OTB Int'l Group OTB Int'l Group £m £m £m £m £m £m £m £m % % % Revenue 44.6 0.4 18.5 - 63.5 44.2 0.9 45.1 1% (56%) 41% Gross Profit before marketing 44.6 0.4 2.5 - 47.5 44.2 0.9 45.1 1% (56%) 5% Online Marketing costs (14.9) (0.4) (0.1) - (1
Slide 12: OTB KPIs: H114 to H119
OTB KPIs: H114 to H119 Revenue (£m) Marketing spend to revenue % Offline marketing % revenue £50 60% Online marketing % revenue £40 50% £30 40% 30% £20 20% £10 10% £0 0% H114 H115 H116 H117 H118 H119 H114 H115 H116 H117 H118 H119 Revenue after Marketing Spend (£m) Fixed and Variable Costs as % Reven
Slide 13: Simon Cooper, CEO: Evolution of Key Drivers
Simon Cooper Chief Executive Officer Evolution of Key Drivers
Slide 14: Huge opportunities exist to build significant share of our core and adjacent markets
Huge opportunities exist to build significant share of our core and — OFFLINE adjacent markets ~~ af Oo S = v ONLINE + et & oo ‘ & Drive TRAFFIC | Personalise through branded & _ offering to drive e) direct channels | CONVERSION INNOVATE THROUGH LONG HAUL INVESTMENT IN TALENT INTERNATIONAL & TECHNOL
Slide 15: Our core: Innovate through investment in talent & technology
Our core: Innovate through investment in talent & technology Relocating our headquarters should allow us to double the pace of innovation across the next 3 years Technology platform Recruitment • The pace at which we are recruiting digital talent has increased through • The opening of our new Digi
Slide 16: Our core: Drive traffic through branded and direct channels
Our core: Drive traffic through branded and direct channels We continue to invest in proprietary tools to allow us to grow traffic share efficiently Multi-channel strategy supported by attributed in house Econometric Modelling bid modelling allows efficient share growth Overall spend on marketin
Slide 17: Our core: Personalise offering to drive conversion
Our core: Personalise offering to drive conversion Our ambition is to drive a fully personalised and optimised cross-device experience for all users on all devices Continued innovation supports improving RPUV Quantitative testing ‒ Smartphone 67% of total traffic ‒ 35% YOY increase in smartphone c
Slide 18: Our core: Drive revenue through direct & differentiated supply
Our core: Drive revenue through direct & differentiated supply Driving an increasing % of exclusivity continues to present a huge margin / volume opportunity Direct contracting function performed in line with Direct contracting - share of monthly arrivals expectations 80% ‒ >70% of hotels directly
Slide 19: Our core: Inspire customers who are destination agnostic
Our core: Inspire customers who are destination agnostic Our technology now allows holidaymakers to search all destinations simultaneously Deals functionality Package Travel Directive came into effect on the 1/7/18 ‒ Rebuilt deals engine powers new destination agnostic search functionality ‒ Custo
Slide 20: Expansion opportunities
Expansion opportunities Huge opportunities exist to build share of adjacent markets International Offline ‒ Revenues recovering to prior year levels throughout H1 in ‒ More than 6 million holidaymakers book short and long haul Sweden post Primera failure beach packages each year through offline
Slide 21: Appendix
Appendix
Slide 22: OTB History
OTB History 2016 2018 Acquired CCH Launched drive to contract exclusive 2019 Launched CPH product 2015 2018 2019 Building Ebeach.se Recruited new long haul launched CTO. Digital HQ capability IPO to Manchester Passenger numbers 2017 22% 2013-14 Acquired and 1600000 Investment into replatformed Onlin
Slide 23: Business Model
Business Model ADDRESSABLE MARKET Short haul beach STRUCTURAL MARKET GROWTH Online OTB share of & MARKET SHARE GROWTH holidays dynamically X penetration X market traffic = Unique visitors packaged X PERSONALISE CUSTOMER Revenue per Revenue per PROPOSITION & Conversion booking X Conversion = Unique v
Slide 24: Disruptive retailer of beach package holidays
Disruptive retailer of beach package holidays On the Beach has the product advantages of a tour operator with the model advantages of an OTA Tour Operator OTA HIGH Cost Base LOW HIGH Risk LOW HIGH Margin LOW Product NARROW BROAD Range Specialist Generalist 24
Slide 25: Market Share
Market Share Huge opportunities exist to build significant share of our core and adjacent markets CORE MARKET: Short Haul Beach – Online (7m pax) EXPANSION: Short and Long Haul Beach – Offline (6m pax) TUI Jet 2 Thomas Cook On the Beach Love Holidays Easyjet Holidays Other tour operator Other OTA EX
Slide 26: OTB Cash Flow - Seasonality
OTB Cash Flow - Seasonality OTB Peak booking trading period between January and June and travelled June and August Booked by month Booked by month FY18 FY17 As an agent OTB revenue is recognised on a booked 16% basis (gross margin / commissions) 14% 12% As a principal CCH revenue recognised on a
Slide 27: Cash Flow: Cash Profile
Cash Flow: Cash Profile Facility used to fund low deposits during peak trading periods between January and June Bank balance profile FY18 Annual cash cycle sees investment 50 into working capital as bookings are achieved in Jan - June, with 40 cash unwinding from the trust as 30 customers travel 2