On the Beach Group PLC · LSE:OTB
On the Beach — FY2019 Earnings Presentation
30 slides from On the Beach's earnings presentation, December 2019
Slide 1: The UK's Leading Online Retailer of Beach Holidays - FY19 Results
THE UK’S LEADING ONLINE RETAILER OF BEACH HOLIDAYS FY19 RESULTS PRESENTATION
Slide 2: Agenda and Cautionary Statement
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
Slide 3: Paul Meehan, CFO: FY19 Market Dynamics and Financial Performance
Paul Meehan Chief Financial Officer FY19 Market Dynamics FY19 Financial Performance
Slide 4: Market Dynamics
Market Dynamics YOY Bookings Profile - OTB H1 H2 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 Si
Slide 5: Presentation of GAAP and non-GAAP measures
Presentation of GAAP and non-GAAP measures FY19 FY18 Change On 23 September 2019, Thomas Cook Group plc (“TCG”) Adjusted GAAP Adjusted GAAP Adjusted GAAP ceased trading £m £m £m £m % % There was a one-off exceptional cost associated with helping Group revenue 147.5 140.4 104.3 104.3 41% 35% cust
Slide 6: Profit and Loss Account – OTB Segment
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) Offline Marketing costs (5.4) (4.1) EBITDA +1% Total Marketing (35.2) (37.3) 6% Online
Slide 7: Profit and Loss Account – International
Profit and Loss Account – International EBITDA +£1.6m YOY FY19 FY18 Change H2 revenue growth of 43%, whilst maintaining marketing £m £m % efficiency Revenue 1.4 1.6 (13%) H1 trading in Sweden adversely affected by the failure of Online Marketing costs (1.4) (2.5) Primera, H1 bookings in Sweden d
Slide 8: Profit and Loss Account – Classic Collection Holidays and CPH
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 Revenue 55.0 13.4 59.0 (7%) gross revenue on a travelled basis Gross Profit after mar
Slide 9: Profit and Loss Account – Group
Profit and Loss Account – Group Adjusted* profit before tax +3% YOY Adjusted EBITDA growth of 5% FY19 FY18 Change £m £m % Amortisation increases reflecting continued investment in technology platform Revenue 147.5 104.3 41% Cost of Sales (48.4) (11.7) Adjusted PBT increased by 3% to £34.6m Gro
Slide 10: Balance sheet
Balance sheet FY19 FY18 Trade receivables includes £18.5m of chargebacks relating to £m £m Thomas Cook bookings Intangible assets 85.1 88.2 £12.3m Provision relates to TCG exceptional costs Tangible assets 7.0 5.3 The business operates a trust account which protects Total Non Current Assets 92
Slide 11: Cash Flow
Cash Flow FY19 FY18 Change Cash generated from operating activities of £26.5m (2018 - £m £m % £33.4m), 89% conversion (2018 – 95%), reflecting changes to Profit before taxation 19.4 26.1 (26%) the Trust Adjustments for: Increased capitalised development spend reflects investment Depreciation and
Slide 12: Segmental P&L
Segmental P&L FY19 FY18 Change OTB Int'l Classic* CPH** Group OTB Int'l Classic* CPH** Group OTB Int'l Classic* CPH** Group £m £m £m £m £m £m £m £m £m £m % % % % % Revenue 90.3 1.4 55.0 0.8 147.5 89.3 1.6 13.4 - 104.3 1% (17%) 310% 41% Gross Profit 90.3 1.4 7.1 0.3 99.0 89.3 1.6 1.7 - 92.6 1% (17%)
Slide 13: OTB KPIs: FY14 to FY19
OTB KPIs: FY14 to FY19 Revenue (£m) Marketing spend to revenue % Offline marketing % revenue £100 Online marketing % revenue 60% £80 50% £60 40% 30% £40 20% £20 10% £0 0% FY14 FY15 FY16 FY17 FY18 FY19 FY14 FY15 FY16 FY17 FY18 FY19 Revenue after Marketing Spend (£m) Fixed and Variable Costs as % Reve
Slide 14: Simon Cooper, CEO: Evolution of Key Drivers
Simon Cooper Chief Executive Officer Evolution of Key Drivers
Slide 15: OTB Growth Strategy
A OTB GROWTH STRATEGY a Our vision is to build Europe’s leading online beach holiday 3 — Ss retailer via a single platform, multi brand strategy To reach the widest possible audience of beach holidaymakers DRIVE DIFFERENTIATE SUPPLY LONG SHORT HAUL HAUL INSPIRE HOLIDAYMAKERS PERSONALISE EXPERIENCES
Slide 16: Our core: Invest in talent and technology
Our core: Invest in talent and technology to extend core platform capabilities 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: – Opening
Slide 17: Our core: Drive brand
Our core: Drive brand We continue to drive brand awareness through investment in online and offline marketing activity Multi-channel strategy supported by attributed in house bid modelling Brand and free traffic as a % of total traffic allows efficient share growth 85% 80% 75% Overall spend on o
Slide 18: Our core: Differentiate supply
Our core: Differentiate supply Driving an increasing % of exclusivity continues to present a huge margin / volume opportunity Direct contracting function continues to perform in line with expectations Direct contracting - share of monthly arrivals ‒ ~75% hotels directly contracted, >50% of revenue
Slide 19: Our core: Personalise experiences
Our core: Personalise experiences Our ambition is to drive a fully personalised and optimised cross-device experience for all users on all devices Continued innovation supports improving RPUV App usage as % all traffic FY18 – FY19 ‒ Smartphone 67% of total traffic 30% ‒ 7% YOY increase in smartpho
Slide 20: Our core: Inspire holidaymakers
Our core: Inspire holidaymakers Our Holiday Finder technology has been evolved and is now our primary search path Holiday finder functionality Package Travel Directive came into effect on the July 18 ‒ Rebuilt deals engine powers new destination agnostic search ‒ Customers compare deals across des
Slide 21: Expansion opportunities: B2B
Expansion opportunities: B2B Our B2B online portal, Classic Package Holidays, now available in c.1,500 travel agents across the UK Almost 40% of market - more than 5 million holidaymakers book short Number of activated agents haul beach packages each year through an intermediary 1600 1400 ‒ CPH po
Slide 22: Expansion opportunities: Long haul
Expansion opportunities: Long haul We continue to make significant progress selling long haul beach product 4 million holidaymakers in the UK book long haul packages each year with Long haul sales as % of total an ABV of £1,000pp+ 4.5% ‒ OTB site handles millions of searches pa for long haul desti
Slide 23: Expansion opportunities: International
Expansion opportunities: International Sweden showed strong and efficient growth in H2 Sweden YOY Bookings and marketing spend as % revenues FY19 ‒ H1 Sweden revenues adversely affected by failure of Primera ‒ Strong revenue performance in H2 250% ‒ Strengthening brand share and repeat purchase dr
Slide 24: Appendix
Appendix
Slide 25: OTB History
2016 2018 Acquired CCH OTB History Launched drive to contract exclusive product 2019 Launched CPH 2015 2018 2019 Building Ebeach.se Recruited new long haul launched CTO. Digital HQ to capability IPO Manchester Passenger numbers 2017 22% 2013-14 Acquired and 1600000 Investment into replatformed Onlin
Slide 26: Addressable Market
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 booking LEVERAGE
Slide 27: 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 27
Slide 28: Estimated Market Share
Estimated Market Share Huge opportunities exist to build significant share of our core and adjacent markets particularly post TC collapse 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 H
Slide 29: 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 16% As an agent OTB revenue is recognised on a booked basis (gross 14% margin / commissions) 12% 10% Calendar Q4 is quiet period 8% 6
Slide 30: 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 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 travel 30