Full Year Results 2010 30 November 2010 Holidaybreak plc

Full Year Results 201030 November 2010

Holidaybreak plc

Holidaybreak plc Full Year Results 2010 Slide 2

• Good results which demonstrate solid profit growth, stringent cost control and strong operating margin performance

• Net debt reduced by £38.4m following a strong focus on cash management

• Continued focus on growing the Education Division

• Acquisition of stake in student and school tour accommodation group Meininger

Introduction


• Consideration for 50% stake is €36.5m (£30.9m); option to acquire remaining shares over 2-3 years

• Major development into pan-European educational travel

• Unique provider of bespoke accommodation for the school tours market

• Existing long-term, successful relationship with NST

• Strong growth model - potential to roll out product to other key school trip destinations

Acquisition of Meininger

Holidaybreak: leading the educational travel market


Group results

John Coleman, Chairman


2010 20092

£m £m

Revenue 461.7 473.4

Headline operating profit1 43.7 43.1

Headline operating margin19.5% 9.1%

Headline PBT130.7 28.2

Headline EPS (pence)134.0 36.8

DPS (pence) 11.1 11.1

2010 20092

£m £m

Revenue 461.7 473.4

Headline operating profit1 43.7 43.1

Headline operating margin19.5% 9.1%

Headline PBT130.7 28.2

Headline EPS (pence)134.0 36.8

DPS (pence) 11.1 11.1

1 Stated before amortisation of acquired intangible assets of £1.8m (2009: £3.5m), impairment of goodwill of £nil (2009: £9.6m) and separately disclosed items of £1.2m (2009: £1.6m). Headline PBT and headline EPS are also stated before IAS 39 mark-to-market revaluations of financial derivatives of £1.7m (2009: £8.3m) and, for headline EPS, the tax effect thereof of £1.0m (2009: £3.6m).

2 Restated following adoption of amendments to IAS 38 ‘Intangible assets’ and IFRS 2 ‘Share-based payments’.

Group results


Education Adventure Hotel Breaks Camping

£m £m £m £m

Revenue 2010 121.1 97.4 135.8 107.4

v 2009 -1.0% -0.5% -3.9% -4.0%

Headline operating profit1 2010 15.8 4.7 11.5 11.7

v 20092+16.3% +11.9% -7.8% -9.0%

Headline operating margins1 2010 13.0% 4.8% 8.5% 10.9%

v 20092+190bps +50bps -40bps -60bps

Education Adventure Hotel Breaks Camping

£m £m £m £m

Revenue 2010 121.1 97.4 135.8 107.4

v 2009 -1.0% -0.5% -3.9% -4.0%

Headline operating profit1 2010 15.8 4.7 11.5 11.7

v 20092+16.3% +11.9% -7.8% -9.0%

Headline operating margins1 2010 13.0% 4.8% 8.5% 10.9%

v 20092+190bps +50bps -40bps -60bps

1 Stated before amortisation of acquired intangible assets of £1.8m (2009: £3.5m), impairment of goodwill of £nil (2009: £9.6m) and separately disclosed items of £1.2m (2009: £1.6m).


Divisional results


2010 20092

£m £m

EBITDA1 59.6 58.1Working capital movement 16.8 (5.7)Operating cash flow 76.4 52.4Capex (net) and intangibles (16.8) (30.5)Tax (1.0) (4.5)Interest (11.4) (13.4)Free cash flow 46.8 4.0Acquisitions - (0.8)Dividends (7.8) (5.5)Shares issued - 31.2Currency and non-cash differences (0.6) (5.7)Decrease in debt 38.4 23.2

2010 20092

£m £m

EBITDA1 59.6 58.1Working capital movement 16.8 (5.7)Operating cash flow 76.4 52.4Capex (net) and intangibles (16.8) (30.5)Tax (1.0) (4.5)Interest (11.4) (13.4)Free cash flow 46.8 4.0Acquisitions - (0.8)Dividends (7.8) (5.5)Shares issued - 31.2Currency and non-cash differences (0.6) (5.7)Decrease in debt 38.4 23.2

1 Stated before impairment of goodwill of £nil (2009: £9.6m) and IFRS 2 charge re: share-based payments of £0.7m (2009: £0.5m)


Movement in net debt


2010 20091

£m £mIntangibles 165.6 168.5Property, plant and equipment 191.1 190.5Net current liabilities (114.7) (88.3)Cash and cash equivalents 56.4 51.9Short term borrowings (15.1) (14.7)Long term borrowings (141.0) (175.3)Deferred tax (30.0) (31.4)Net assets 112.3 101.0

2010 20091

£m £mIntangibles 165.6 168.5Property, plant and equipment 191.1 190.5Net current liabilities (114.7) (88.3)Cash and cash equivalents 56.4 51.9Short term borrowings (15.1) (14.7)Long term borrowings (141.0) (175.3)Deferred tax (30.0) (31.4)Net assets 112.3 101.0

Balance sheet



• Net debt at 30 September was £99.7m (2009: £138.1m)

• Margin on bank borrowings reduced from 300bps to 250bps [w.e.f. 03/11/10]

• Peak facility utilisation took place in December and January during the 2010 financial year

• Interest is after £4.7m for hedges due to expire between January 2012 and October 2013

Net debt and facility utilisation


• Increased focus on working capital management

• Camping mobile-home net capital expenditure at £3.2m below depreciation of £7.2m, investing in 450 new units

• Substantial reduction in corporate tax payments in 2010 compared to 2009

• Prudent dividend policy

Cost control and cash management


• Revenue: -2.5%

• Headline PBT: +8.9%

• Headline operating margin: 9.5%

• Net debt at 30 September 2010: £99.7m

• Able to fund investment in Education from existing resources

Financial summary


Group Chief Executive’s Review

Martin Davies


Group Strategy


Core skills in the Group

• Expertise in delivering lifelong learning, exploratory and active travel experiences

• First hand delivery of unique and valued products, with high customer loyalty

• Core capabilities in school and adult groups, families, safety management and yield and asset management


Sector positioning

Value-added Leisure•Tour leaders,

first hand delivery• Increasing demand•Richer experience

Camping

Adventure

Commodity Leisure•Mainstream tour

operators•Disintermediation threat•Low growth

Superbreak

Bookit

Out-of classroom Learning

•Value-added•Non-leisure drivers

•Social and political drivers

PGL

NST Travelplus – High School

Education & Personal Development•Value-added•Non-leisure drivers

Language travel Travelworks

Meininger


Strength of business model

Brand strength

Product control

Defensibility

Competitive advantage

Business Model

Sect

or

posi

tion

Strong

Str

ong

Weaker

Weaker

Slide 16Holidaybreak plc Full Year Results 2010

PGL

NST

Superbreak

Bookit

Camping

Djoser Explore

High School

TravelworksLanguage

Meininger


Clear priorities

GrowEducation

Grow International Presence

GrowEarnings

How we look as a group

• Take core skills into new markets and products

• Common sense of purpose

• Strong business models in niche positions

• Strong complementary skills in exploratory and life-enriching travel

Where we compete

How we build shareholder value

How we compete

WHERE WE ARE NOW WHERE WE ARE GOING

• Strong cash flow• Strong profit margins• Resilient to recession

• Earnings growth• Increased quality of

earnings• Progressive dividends• Sensible approach to debt

• Leading, attractive and profitable travel niches

• More educational and personal development revenue; positive social and political trends

• More revenue from existing and new overseas markets

• Distinctive, unique businesses

• Entrepreneurial management teams

• Ownership of unique and valuable PGL centres

• Control of and exclusive access to valuable products and resources

• Strengthened competitive advantage


Meininger: Highlights• 50% stake at €36.5m (£30.9m)

• Option to acquire remaining 50% over next 2-3 years; price dependent upon performance of business

• For the year ended 30 Sept 2010: Unaudited revenue of €23.2m (£19.7m)

Unaudited statutory EBIT of €8.3m (£7.0m) and adjusted EBIT of €7.3m (£6.2m)

• €7.8m of forward bookings for 2011

• High growth business model – bed capacity has grown by 60% in last 3 years to 3,800 beds


Meininger: Next piece of the jigsaw

• Fits with our core competencies in property, hospitality and safety management for children and school groups

• Increases non-UK revenue mix and educational share of the Group

• Suitable accommodation for school groups is limited; Meininger fills the gap, providing flexible bed and room structures


“PGL in the city”

• 28 sites in out of town locations• Bespoke accommodation; activities; health

& safety• Tour operator model • Target school groups aged 8 to 12• Very early booking profile

• 10 sites in city centre tourist locations• Bespoke accommodation; health &

safety • Accommodation only model • Target school groups aged 13 to 18• Early booking profile


Meininger: Creating a European leader

• Expand offering to other key European school trip destinations; 5 sites contracted for 2011

• Access to German schools - potential to take our products to Germany

• Potential for further development in school tours & activities in other European markets

No. 1 educational travel provider in Europe


Divisional Performance


Performance

• Not materially affected by economic environment; parents prioritise expenditure on school trips

• NST achieved strong margin growth as less profitable tours were removed from the programme

• PGL invested £5.8m in its education centres (mainly Liddington). Expect to spend £1.2m on Liddington in 2011

• 100% re-booking from schools at Liddington

Strategy

• Continue organic expansion at PGL and market share gains at NST

Education


AdventurePerformance

• Strong recovery from recession; benefited from Explore’s 2009 cost reduction programme

• Explore successful in margin control, tighter capacity management and cost control

• Travelplus saw growth in its high school product

• Djoser held up well in a difficult Dutch market

Strategy

• Focus product development on lifelong learning experiences where there are strong drivers for growth


Hotel BreaksPerformance

• Demand in the UK and Netherlands affected by economic environment and extreme winter weather

• Invested in a new Superbreak website with improved reservations system

• WETB benefited from attractive theatre ticket deals

Strategy

• Superbreak remains focused on growing B2C market; increasing packaged product mix and improving overseas product

• Bookit continues to invest in its IT capabilities and will develop its inbound London product offering


CampingPerformance

• Pan-European distribution and natural hedging: strong peak sales performance - high demand from Germany, Switzerland and Poland mitigated shortfalls from the Netherlands

• Capacity will be reduced by c.4% in 2011. Expect to spend £8.2m, net of disposals, on replacement mobile-homes and other camping equipment

Strategy

• Mobile-home life extension programme will improve cash generation in medium term

• Continue to focus on better customer segmentation to improve low season sales


Group sales intake is 1% below last year

•Education and Adventure is 2% higher than last year

•PGL centres are 88% booked

•Hotel Breaks is 8% below last year

•Camping is 6% below last year on 4% lower capacity.

Current trading


• Group sales intake is in line with management expectations

• Continued focus on cost control and cash generation

• Resilient performance in a difficult economic environment

• Major development into European educational travel through acquisition of Meininger

Summary and outlook


Q & A


Appendices


• 15% of Bank debt is at floating interest rates

• Effective average interest rate, 8.73%, at revised margin and bank rate at 30 November

• 22% of Group EBITA in € zone

• Other net exposure- c. €53m- c. $20m

• 72% of Group’s € and 78% of Group’s $ requirements for 2011 hedged at average rates of €1.18 and $1.56

Interest & currency hedges


• £255m Five year facility committed to 2013 - £30m Term Loan- £225m RCF, Bonding and Ancillary Facility- £30m in CAA, ABTA bonds

• Margin LIBOR + 250bps- margin ratchet at lower levels of debt

• Costs c.£3.0m at 30 September- Annual amortisation cost of £1.2m

Banking facilities


This document contains forward-looking statements with respect to the operations, performance and financial condition of Holidaybreak. By their nature, these statements are subject to risks, assumptions and uncertainties that could cause actual results to differ materially from those expressed or implied because they relate to future events.

Unless otherwise required by applicable law, regulation or accounting standard, we do not undertake to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise.

The financial information referenced in this presentation does not contain sufficient detail to allow a full understanding of the results of Holidaybreak. For more detailed information, please see the full year results announcement for the year ended 30 September 2010 which can be found on the Investor Relations section of the Holidaybreak website – www. holidaybreak.co.uk

Disclaimer

Full Year Results 201030 November 2010

Holidaybreak plc

Documents

Full Year Results 2010 30 November 2010 Holidaybreak plc