On The Beach Group Plc · LSE:OTB
On The Beach — H1 2017 Earnings Presentation
29 slides from On The Beach's earnings presentation, May 2017
Slide 1: Interim Results for the 6 months ended 31 March 2017
The UKs leading online retailer of beach holidays Interim Results for the 6 months ended 31 March 2017
Slide 2: Agenda
Agenda Paul Meehan H117 Highlights & Market Dynamics CFO Paul Meehan H117 Financial Performance CFO Simon Cooper Evolution of Key Drivers CEO Summary and Outlook Q and A 2
Slide 3: H117 Highlights
H117 Highlights OTB continues to disrupt the retail of beach holidays through innovative technology and value proposition 10% YOY increase in daily unique visitors to site in H117 Structural Market Growth & Market Hotelier pricing policies leading to later booking pattern for peak and Western Me
Slide 4: H117 Market Dynamics
H117 Market Dynamics Peak pricing policies are leading to a later booking pattern for peak summer departures H1 YOY % increase in bookings Tour operator share for early bookings supported by ‒ Rates agreed pre S16 for early S17 sales ‒ % of currency hedged pre Brexit Pricing policy for peak stay
Slide 5: Profit & Loss Account – UK Segment
Profit & Loss Account – UK Segment H1 17 EBITDA growth of 23% YOY P&L UK Segment UK YTD growth year on year: Six months ended 31 March (£m) H1 FY17 H1 FY16 Change % Revenue +7% Revenue 37.5 35.0 7.1% Revenue after Marketing + 17% EBITDA +23% Marketing costs excluding offline (15.2) (16.2) Of
Slide 6: Profit and Loss Account - International
Profit and Loss Account - International Investment continues in Sweden to build scale and brand P&L International Segment Objective in new source markets remains to Six months ended 31 March (£m) H1 FY17 H1 FY16 Change % deliver a positive return within 3 full years of launch Revenue 0.6 0.5 20.0%
Slide 7: Profit and Loss Account - Group
Profit and Loss Account - Group Adjusted profit before tax +28.4% increase YOY P&L Total Six months ended 31 March (£m) H1 FY17 H1 FY16 Change % EBITDA UK segment excluding share based payments 14.5 11.6 25.0% EBITDA International segment (1.0) (1.0) Amortisation of acquired intangibles and Group
Slide 8: Cash Flow
Cash Flow Cash is invested in areas that drive growth Cash Flow H1 FY17 H1 FY16 Opening Cash Balance Total 51.7 34.8 Opening Cash Balance Trust 25.6 23.9 Working capital movement relates to the seasonality Opening Cash Balance excluding trust balance 26.1 10.9 of the business with c50% of bookings
Slide 9: Balance Sheet
Balance Sheet Balance Sheet H1 FY17 H1 FY16 Tangible Assets 0.9 0.9 All customer monies are paid into a trust account which is Intangible Assets - IT development 3.6 3.0 effectively a debtor to the business Intangible Assets - Acquired Intangibles 37.7 42.0 Intangible Assets Goodwill 21.5 21.5 S
Slide 10: KPIs: H113 to H117
KPIs: H113 to H117 Traffic Growth ( ‘000 Daily Unique Visitors) Revenue per Daily Unique Visitor (£) 30000 £1.50 25000 £1.30 20000 £1.10 15000 10000 £0.90 5000 £0.70 0 £0.50 H113 H114 H115 H116 H117 H113 H114 H115 H116 H117 Revenue (£m) Revenue after Marketing Spend (£m) £20.0 £40.0 £15.0 £30.0 £20.
Slide 11: Key Drivers of Growth
SBABTA ABTAN KOB3, On: Flights + Hotel >f Flight Only > Hotel Only ff | Deal Finder 4 Destination Deparingtrom Depa ighes Your Party Grable dey Return sjan2017 Select —¥| | London ir ¥ | 241 Cheap Holidays Fig st holidays from £99pp ford to go amay this year wits Onthe Seach, We oer a fortastc range
Slide 12: Innovate through investment in talent & technology
Innovate through investment in talent & technology Continued investment into in-house technology extends our ability to out innovate the competition Continued investment in our technology capability allows us to Technology platform innovate at an increasing pace Service management, monitoring and
Slide 13: Personalise Customer Proposition
Personalise Customer Proposition Our ambition is to drive a fully personalised cross-device experience for all users on all devices Revenue per Revenue per Conversion Split testing booking unique visitor Enhanced split test capability drives improvements to revenue per UV ‒ Large volumes of traffi
Slide 14: Volume / Margin Opportunity
Leverage Direct & Differentiated Supply Driving an increasing % of exclusivity presents a huge opportunity Direct contracting - share of monthly arrivals Investment made to scale our supply function ‒ Scale and disintermediation drives margin growth 90.0% 80.0% 70% 70.0% Direct contracting funct
Slide 15: Drive an Efficient Increase in Share
Drive an Efficient Increase in Share Superior customer proposition delivers increased margins and offline investment strengthens brand Efficiencies in online spend allow for increased investment offline Growing share efficiently Online spend as % of Revenue 50.8% 50.2% 46.3% 40.5% A multi-channe
Slide 16: Drive Operational Leverage
Drive Operational Leverage We continue to drive further operational leverage of a lightweight cost base OTB vs Tour Operators £ Fixed / Variable CPB OTB fixed and variable cost per booking is well below tour operator 250 7X 8X competitors OTB OTB 200 OTB fixed and variable costs as a % of revenu
Slide 17: Expand Model into New Source Markets
Expand Model into New Source Markets We remain encouraged with the improvement to KPIs being achieved in Sweden Scandinavia has a number of characteristics which made it Branded UVs and share H115 – H117 attractive for international expansion 350000 10.2% 19.4% 30.4% FY17 market slow to start bu
Slide 18: Evaluate acquisition opportunities
Evaluate acquisition opportunities Opportunities exist to add significant value through acquisition Core - UK Expansion Leverage OTB technology to personalise customer proposition As core UK plus: ‒ Drive conversion Leverage OTB direct supply position ‒ Remove execution risk ‒ Drive revenue gr
Slide 19: Summary & Outlook
Summary & Outlook We have delivered a strong H1 performance and reiterate confidence in our full year expectations Structural Market Growth & Market Building share of a growing addressable market with increasing efficiency Share Growth Personalise Customer Improving the throughput of innovation
Slide 20: Appendix
Holiday extr .co.uk Flights + Hotel > fj Hotel Only {fj Deal Finder 3% Flight Only > Departing From Departure Date Nights Your Party hit B % Book with confidence Save money Deposits from £20pp 24/7 in-resort sup Eze Flights +Hotel | Flight Only | Hotel Only | Deal Finder Departing From London Airpor
Slide 21: OTB history
OTB history 2015 Ebeach.se launched IPO 2013-14 2016 Investment into Exclusive flight Passenger offline advertising programme numbers and direct launched contracting 1400000 20% Share of online short haul beach 2009-11 2013 17% Technology team recruited, 2nd round 1200000 complete platform rebuild p
Slide 22: Business Model
Business Model ADDRESSABLE MARKET STRUCTURAL MARKET Short haul beach OTB share of GROWTH & MARKET Online Unique visitors holidays dynamically market traffic SHARE GROWTH penetration packaged PERSONALISE CUSTOMER £ Revenue per Conversion Revenue per PROPOSITION & booking unique visitor LEVERAGE £ REV
Slide 23: 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 NARROW Product BROAD Range Specialist Generalist 23
Slide 24: Market - UK
Market - UK The market is resilient and online penetration is increasing Overall short haul beach holiday volumes are resilient and online Short haul beach online versus offline (UK) penetration continues to increase 16,000 Short haul beach offline Short haul beach online ‒ Approximately 12m holid
Slide 25: Market - Europe
Market - Europe Similar trends in Europe to the core UK market represent an attractive expansion opportunity for OTB Online penetration in Europe is low but growing at a faster rate 2014 Western European package holiday market (€bn) than the UK €bn TTV Online Penetration Rate 90% 20.00 16.5 80%
Slide 26: Competitive Landscape & Barriers to Success
Competitive Landscape & Barriers to Success On the Beach sells high margin tour operator style product with a lightweight OTA style fixed cost base FOCUS EXPERTISE AGILITY SCALE BRAND UK Short Haul Beach Online - Estimated Market Share Tour operator short haul volumes (m pax) 10 TUI 9 Thomas Cook 8
Slide 27: Cash Flow – Flow of funds
Cash Flow – Flow of funds On The Beach provides clear and comprehensive consumer protection Trust account – funds flow for a £1,200 holiday The trust account is designed to ensure all Checkout Booking Immediately Holiday Return customer payments are protected until after stage stage after booking
Slide 28: Cash Flow - Seasonality
Cash Flow - Seasonality Peak booking trading period between January and June and travelled June and August Booked by month % FY16 Booked by month Revenue recognised on a booked basis 18.0% 15.5% 16.0% 14.0% The period prior to Christmas is quiet 12.0% 11.1% 10.4% 10.0% 9.6% 10.0% 8.2% 8.1% Tra
Slide 29: Cash Flow: Cash Profile
Cash Flow: Cash Profile Facility used to fund low deposits during peak trading periods between January and June Annual cash cycle sees 0.00 investment into working capital Millions 09/15 10/15 11/15 12/15 01/16 02/16 03/16 04/16 05/16 06/16 07/16 08/16 09/16 -2.00 as bookings are achieved in Jan F