On The Beach Group Plc · LSE:OTB
On The Beach — H1 2020 Earnings Presentation
27 slides from On The Beach's earnings presentation, Jun 30, 2020
Slide 1: H1 20 Results Presentation
H1 20 RESULTS PRESENTATION 30 June 2020
Slide 2: Agenda and Cautionary Statement
AGENDA CAUTIONARY STATEMENT H1 20 Trading Update & Covid-19 This presentation may contain certain forward-looking H1 20 Financial Performance statements with respect to the financial condition, results, operations and businesses of the Company. Paul Meehan - CFO Forward looking statements are someti
Slide 3: Paul Meehan, Chief Financial Officer
Paul Meehan Chief Financial Officer H1 20 Trading Update & Covid-19 H1 20 Financial Performance
Slide 4: Trading to 31st January 2020
Trading to 31st January 2020 Following the collapse of the Thomas Cook Group (TCG), OTB more than doubled offline marketing spend to drive brand awareness and priced competitively to gain share The reduction in seat capacity particularly for winter departures and for the Canaries led to signific
Slide 5: Trading post COVID-19 outbreak
Trading post COVID-19 outbreak Feb 20 – Mar 20 H1 20 Group bookings excl CCH February and March would normally represent 40% of sales in H1 100% As a result of the impact of COVID-19 on Feb / Mar performance, H1 97% revenue (before COVID-19 cancellations) declined (22%) in H1 and 90% 91% EBITDA
Slide 6: Covid-19 - Early actions taken to manage risk and conserve cash
Covid-19 - Early actions taken to manage risk and conserve cash Management implemented a number of measures to minimise the impact of COVID-19 on cash flow As demand reduced, lower click volumes and reduced cost per click dropped marketing costs to almost nil Cost control and WC Removed low depo
Slide 7: Covid-19 - Liquidity actions taken to manage risk and conserve cash
Covid-19 - Liquidity actions taken to manage risk and conserve cash Management implemented a number of measures to minimise the impact of COVID-19 on cash flow Reached an agreement with Lloyds Bank to: 8 April ‘20 – Extended £50m ― extend the £50m RCF limit to all months of each year; RCF ― extend
Slide 8: Profit and Loss Account – Group
Profit and Loss Account – Group H1 20 H1 19 Change Adjusted EBITDA down (70%), and adjusted PBT reduced by (85%) to £2.3m £m £m % ― OTB reports on booked not flown revenues Statutory Revenue 21.4 63.5 (66%) COVID-19 cancellations 31.4 - ― Strong sales growth in first 4 months Adjusted Revenue 52.8
Slide 9: Profit and Loss Account – OTB Segment
Profit and Loss Account – OTB Segment H1 20 H1 19 Change Adjusted Revenue for the period was £34.4m, and adjusted EBITDA was £m £m % £6.2m Statutory Revenue 5.2 44.6 (88%) Covid-19 revenue adjustment of £29.2m. This relates to the revenue COVID-19 cancellations 29.2 - Adjusted Revenue 34.4 44.6
Slide 10: Profit and Loss Account – International
Profit and Loss Account – International H1 20 H1 19 Change Adjusted Revenue for the period was £0.3m, and adjusted EBITDA was £m £m % (£0.2m) Statutory Revenue 0.1 0.4 (75%) Covid-19 revenue adjustment of £0.2m. This relates to the revenue COVID-19 cancellations 0.2 - Adjusted Revenue 0.3 0.4 (2
Slide 11: Profit and Loss Account – Classic Collection Holidays (Classic)
Profit and Loss Account – Classic Collection Holidays (Classic) H1 20 H1 19 Change As a principal (rather than an agent) Classic accounts for revenue on a £m £m % "travelled" basis and reports revenue on a gross basis, therefore no Revenue 15.5 18.5 (16%) adjustment has been made to reflect cancel
Slide 12: Profit and Loss Account – Classic Package Holidays (CPH)
Profit and Loss Account – Classic Package Holidays (CPH) H1 20 H1 19 Change CPH provides an online B2B platform that enables high street travel £m £m % agents to sell dynamically packaged holidays to their customers Statutory Revenue 0.6 - Covid-19 revenue adjustment of £2.0m. This relates to th
Slide 13: Balance sheet
Balance sheet H1 20 H1 19 £m £m £28.6m provision relates to Covid-19 exceptional costs Seasonal cash flow requirements are covered by a revolving credit facility Intangible assets 82.4 86.3 Tangible assets 11.3 12.8 (RCF) which is drawn down as required. The maximum drawdown in the Total Non Cur
Slide 14: Cash Flow
Cash Flow H1 20 H1 19 Change £m £m % The cash flow profile of the Group is seasonal with approximately 50% of customers travelling in the period June to August and therefore in a EBIT (34.2) 11.9 - normal year the cash flows (excluding any cash held in the Trust) Adjustments for: Depreciation and
Slide 15: Simon Cooper, Chief Executive Officer
Simon Cooper Chief Executive Officer Evolution of Key Drivers
Slide 16: OTB Growth Strategy
To reach the widest possible audience of beach holidaymakers LONG SHORT OTB GROWTH STRATEGY DIFFERENTIATE SUPPLY HAUL HAUL INSPIRE HOLIDAYMAKERS PERSONALISE EXPERIENCES Our vision is to build Europe’s leading online beach holiday retailer via a single platform, multi brand strategy To support the in
Slide 17: Our core: Invest in talent and technology to extend core platform capabilities
Our core: Invest in talent and technology to extend core platform capabilities Extend platform capabilities to quickly take advantage of gaps in market Technology platform BAU: Support ongoing Covid-related activities and automate of high volume tasks Extend data acquisition capability: Create a
Slide 18: Our core: Drive brand
Our core: Drive brand Maintain and re-invigorate our brand awareness and prepare for internationalisation COVID lockdown period BAU: Deliver prompt and efficient multichannel customer Brand and free traffic as a % of total traffic communications 90% Drive brand: TCG failure 85% ― Brand and free
Slide 19: Our core: Differentiate supply
Our core: Differentiate supply Rapidly increase access to exclusive supply Direct contracting - share of monthly arrivals 100% BAU: Assist with customers in resort when airspace closes and reopens 80% Manage key relationships: Manage and maintain key relationships and 60% seek new partnerships 4
Slide 20: Our core: Inspire holidaymakers & personalise experiences
Our core: Inspire holidaymakers & personalise experiences Redesign and extend the OTB experience to meet the wide and varying demands of holidaymakers Rapid test & learn: Redesign, prototype and user test a new end to end App usage as % all traffic FY18 – FY20 experience 30% International ready:
Slide 21: Expansion opportunities: Long haul
Expansion opportunities: Long haul The landscape will change for OTB’s long haul offering Long haul sales as % total sales 15% Expand airline network: Most of our existing airlines will survive with or 13% without state aid 11% 9% ― An opportunity will exist to add further carriers 7% ― Identify a
Slide 22: Appendix
Appendix
Slide 23: Business Model
Business Model ADDRESSABLE MARKET STRUCTURAL MARKET Short haul beach Online OTB share of GROWTH & MARKET SHARE holidays dynamically X penetration X market traffic = Unique visitors GROWTH packaged X PERSONALISE CUSTOMER Revenue per Revenue per PROPOSITION & Conversion X Conversion = Unique visitor b
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: Estimated Market Share
Estimated Market Share Opportunities exist to build share of our core and adjacent markets post TC collapse and Covid-19 impacts CORE MARKET: Short Haul Beach – Online (8m pax) EXPANSION: Short and Long Haul Beach – Offline (8m pax) TUI Jet 2 Thomas Cook On the Beach Love Holidays Easyjet Holidays O
Slide 26: OTB Cash Flow - Seasonality
OTB Cash Flow - Seasonality OTB peak booking trading period between January and June and travelled between May and September Booked by month OTB % Booked by month – FY19 16% As an agent OTB revenue is recognised on a booked basis (gross margin 14% / commissions) 12% 10% Volumes increase followin
Slide 27: OTB Cash Flow: Cash Profile
OTB Cash Flow: Cash Profile Facility used to fund low deposits during peak trading periods between January and June Bank balance profile – FY19 Annual cash cycle sees investment into 60 working capital as bookings are achieved in 50 Jan - June, with cash unwinding from the 40 trust as customers tr