On The Beach Group Plc · LSE:OTB
On The Beach — H1 2018 Earnings Presentation
28 slides from On The Beach's earnings presentation, May 2018
Slide 1: H118 Results Presentation – May 2018
The UKs leading online retailer of beach holidays H118 Results Presentation – May 2018
Slide 2: Agenda
Agenda Paul Meehan H118 Highlights and Market Dynamics CFO Paul Meehan Financial Performance H118 CFO Simon Cooper Evolution of Key Drivers CEO Summary and Outlook Q and A Cautionary statement This presentation may contain certain forward-looking statements with respect to the financial co
Slide 3: H118 Highlights
H118 Highlights OTB continues to disrupt the retailing of beach holidays through innovative technology and value proposition 24% YOY increase in daily unique visitors to site with incremental investment to grow Sunshine share Structural Market Growth & Market Flight supply constriction post Mona
Slide 4: H118 Market Dynamics
H118 Market Dynamics The failure of Monarch airlines led to a supply / demand imbalance that has improved throughout H1 YOY booking growth and seat prices for Oct – March travel Monarch failed on the 2/10/17 80.0% As shown in the chart opposite, the lack of seats in the market for 70.0% winter d
Slide 5: Profit and Loss Account – UK Segment
Profit and Loss Account – UK Segment H118 EBITDA growth +17% P&L UK Segment UK growth year on year Six months ended 31 March (£m) H1 FY18 H1 FY17 Change % Revenue +18% Revenue 44.4 37.5 18% Revenue after marketing +19% Marketing costs excluding offline (18.0) (15.2) EBITDA +17% Offline (3.4)
Slide 6: Profit and Loss Account – International
Profit and Loss Account – International H118 Revenue growth +50% - Investment continues in Sweden to build scale and brand P&L International Segment Revenue increased by 50% to £0.9m driven by Six months ended 31 March (£m) H1 FY18 H1 FY17 Change % growth in both Sweden and Norway Revenue 0.9 0.6
Slide 7: Profit and Loss Account – Group
Profit and Loss Account – Group Adjusted profit before tax +15% increase YOY P&L Total Six months ended 31 March (£m) H1 FY18 H1 FY17 Change % Adjusted profit before tax increased by 15% to £14.0m EBITDA UK segment excluding share based payments 17.0 14.5 17% Adjusted profit after tax increased
Slide 8: Cash Flow
Cash Flow Cash flow Working capital movement relates to the seasonality H1 FY18 H1 FY17 of the business with c.50% of bookings travelling Opening Cash Balance Total 71.6 51.7 between June and August when Trust cash unwinds Opening Cash Balance Trust 38.5 25.6 Opening Cash Balance excluding Trust b
Slide 9: Balance sheet
Balance sheet Balance Sheet All customer monies are paid into a trust account H1 FY18 H1 FY17 which is effectively a debtor to the business Tangible Assets 2.0 0.9 Seasonal cash flow requirements are covered by a Intangible Assets - IT development 4.4 3.6 revolving credit facility which is drawn
Slide 10: UK KPIs: H113 to H118
UK KPIs: H113 to H118 Traffic Growth ( ‘000 Daily Unique Visitors) Revenue per Daily Unique Visitor (£) 30000 £1.50 25000 20000 £1.00 15000 10000 £0.50 5000 0 £0.00 H113 H114 H115 H116 H117 H118 H113 H114 H115 H116 H117 H118 Revenue (£m) Revenue after Marketing Spend (£m) £50.0 £20.0 £40.0 £15.0 £30
Slide 11: Key Drivers of Growth
Key Drivers of Growth
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 Retention – we have implemented reward schemes to our teams are Technology platform incentivised for the long term Recruitment – The business will
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 booking unique visitor Deals functionality Continued innovation ‒ Rebuilt deals engine powers new destination agnostic search funct
Slide 14: Volume / Margin Opportunity
Leverage Direct & Differentiated Supply Driving an increasing % of exclusivity continues to present a huge margin / volume 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
Slide 15: Drive an Efficient Increase in Share
Drive an Efficient Increase in Share We continue to invest in proprietary tools to allow us to grow traffic share efficiently Econometric Modelling Multi-channel strategy supported by attributed in house bid modelling allows efficient share growth Efficiencies in online spend allow for increased
Slide 16: Drive Operational Leverage
Drive Operational Leverage We are ready for legislative changes in July 2018 whilst maintaining our 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 cost
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 Repeat purchase rate monthly Sweden FY15 – H118 attractive for international expansion 30.00% Driving improvement in 3 KPIs wi
Slide 18: Evaluate acquisition opportunities
Evaluate acquisition opportunities Opportunities exist to add significant value through acquisition Core - UK International - Expansion Leverage OTB technology to personalise customer proposition ‒ Drive conversion As core UK plus: Leverage OTB direct supply position ‒ Drive revenue growth ‒ R
Slide 19: Summary
Summary We have delivered a strong performance in H118 and invested for growth in H2 Structural Market Growth & Market Building share of a growing addressable market with increasing efficiency Share Growth Personalise Customer Out innovating through agility and investment in talent and technolog
Slide 20: Appendix
Fem : Flights +Hotel Flight Only | Hetel Cnly Deal Finder Departing From London Airports Jan 201 7 nights Your Party 2tors Blog Holiday Extr ATOL Protected Flights + Hotel >*[fy Flight Only > | Hotel Only fj | Deal Finder 3% Departing From Departure Date Nights Your Party London Airports ¥| |janz017
Slide 21: OTB history
OTB history 2015 Ebeach.se launched IPO 2013-14 2016 Investment into Launched drive to Passenger offline advertising contract exclusive numbers and direct product contracting 1600000 Online share of 21% short haul beach 2009-11 2013 Technology team recruited, 2nd round 1400000 complete platform rebu
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: Barriers to Success
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 Package Online1 Tour operator short haul volumes (m pax) TUI 10 Thomas Cook 9 Jet2holidays 8 Monarch Holidays 7 Olympic
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 Western European package holiday market (€bn) than the UK €bn TTV Online Penetration Rate 90% 20.00 16.5 80% Low c
Slide 26: 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 £1,300 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 27: Cash Flow - Seasonality
Cash Flow - Seasonality Peak booking trading period between January and June and travelled June and August Booked by month % FY17 Booked by Month Revenue recognised on a booked basis 16.0% 14.0% Calendar Q4 is quiet 12.0% 10.0% Traffic volumes increase following Christmas as customers start to
Slide 28: 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 Funding of Low Deposits FY17 investment into working capital as bookings are achieved in Jan - - June, with cash unwinding Millions 09/16 10/16 11/16 12/16 01/17 0