On The Beach Group Plc · LSE:OTB
On The Beach — FY2017 Earnings Presentation
28 slides from On The Beach's earnings presentation, November 2017
Slide 1: FY17 Preliminary Results Presentation
The UKs leading online retailer of beach holidays FY17 Preliminary Results Presentation – November 2017
Slide 2: Agenda
Agenda Simon Cooper FY17 Highlights and Market Dynamics CEO Paul Meehan Financial Performance FY17 CFO Simon Cooper Evolution of Key Drivers CEO Summary and Outlook Q and A 2
Slide 3: FY17 Highlights
FY17 Highlights OTB continues to disrupt the retailing of beach holidays through innovative technology and value proposition 13% YOY increase in daily unique visitors to site Structural Market Growth & Market Hotelier pricing policies drove greater availability and demand throughout H2 Share Gro
Slide 4: FY17 Market Dynamics
FY17 Market Dynamics As predicted, headwinds lightened in H2 and trading strengthened 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 H1 hotel pricing policies increased the price of pe
Slide 5: Profit & Loss Account – UK Segment
Profit & Loss Account – UK Segment FY17 EBITDA growth of 30% YOY P&L UK Segment UK growth year on year: Year ending 30 September (£m) FY17 FY16 Change % Revenue +17% increase Revenue 81.9 70.2 16.7% H2 LfL Growth +21% Marketing costs excluding offline (33.5) (31.4) Revenue after Marketing +
Slide 6: Profit and Loss Account - International
Profit and Loss Account - International Strong H2 Revenue growth in Sweden P&L International Segment Objective in new source markets remains to Year ending 30 September (£m) FY17 FY16 Change % deliver a positive return within 3 full years of launch Revenue 1.7 1.1 48.0% Marketing costs excluding o
Slide 7: Profit and Loss Account - Group
Profit and Loss Account - Group Adjusted profit before tax +33.8% increase YOY P&L Total Year ending 30 September (£m) FY17 FY16 Change % Adjusted Profit before tax increase by 33.8% to £28.5m EBITDA UK segment excluding share based payments 33.2 25.2 31.7% Exceptional Costs of £2.7m (£2.2m Net
Slide 8: Cash Flow
Cash Flow Continued strong cash conversion Cash Flow FY17 FY16 Operating cashflow £24.6m (79%) Opening Cash Balance Total 51.7 34.8 Opening Cash Balance Trust 25.6 23.9 Adjusted for: Opening Cash Balance excluding trust balance 26.1 10.9 £ 3.2m Sunshine.co.uk working capital on acquisition*
Slide 9: Balance Sheet
Balance Sheet Balance Sheet All customer monies are paid into a trust account which is FY17 FY16 effectively a debtor to the business Tangible Assets 1.4 0.7 Intangible Assets - IT development 3.9 3.3 Intangible Assets - Acquired Intangibles 37.0 39.8 Seasonal cash flow requirements are covered
Slide 10: KPIs: FY13 to FY17
KPIs: FY13 to FY17 Traffic Growth ( ‘000 Daily Unique Visitors) Revenue per Daily Unique Visitor (£) 80,000 £1.20 60,000 £1.10 40,000 £1.00 20,000 £0.90 - £0.80 FY13 FY14 FY15 FY16 FY17 FY13 FY14 FY15 FY16 FY17 Group Revenue (£m) Revenue after Marketing Spend (£m) £50.0 £85.0 £40.0 £30.0 £65.0 £20.0
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 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 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 presents a huge opportunity Direct contracting - share of monthly arrivals Investment made to scale our supply function ‒ Scale and disintermediation drives margin growth 80.0% 70.0% 70% 60.0% 50.0% 40.0% Direct contr
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 50.7% 48.6% 44.7% 40.9% 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 ROI in Sweden – Revenue as % of marketing spend attractive for international expansion 100% 100% 80% FY17 market slow to start
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 Leverage OTB direct supply position As core UK plus: ‒ Drive revenue growth C
Slide 19: Summary
Summary We have delivered a strong performance in FY17 and the start of FY18 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 technology Propos
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 Launched drive to Passenger offline advertising contract exclusive numbers and direct product contracting 1400000 20% Online share of short haul beach 2009-11 2013 17% Technology team recruited, 2nd round 1200000 complete platform
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