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The European specialist holiday groupThe European specialist holiday group1
The European The European specialist holiday groupspecialist holiday group
PRELIMINARY RESULTS 2005
The European specialist holiday groupThe European specialist holiday group2
Holidaybreak plcPRELIMINARY RESULTS 2005
• Bob Ayling (Chairman)- Overview
• Bob Baddeley (Finance Director)- Finance review
• Carl Michel (Chief Executive)- Divisional overview- Group strategy and opportunities
Q & A
The European specialist holiday groupThe European specialist holiday group3
Holidaybreak plcPRELIMINARY RESULTS 2005
- Best ever performance in terms of headline PBT and free cashflow
- Results in line with expectations
- Hotel Breaks and Adventure Travel Divisions now 2/3rds of Group sales
- Newly acquired Dutch businesses perform well
- Camping continues to deliver strong cash on reducedcapacity
- Current trading in line with expectations
The European specialist holiday groupThe European specialist holiday group4
Holidaybreak plcPRELIMINARY RESULTS 2005
FINANCE DIRECTOR’S REVIEW
BOB BADDELEY
The European specialist holiday groupThe European specialist holiday group5
Preliminary Results 2005FINANCIAL HIGHLIGHTS
• Turnover + 7.6% to £303.0m (2004: £281.6m)
• Profit before tax +14.3% to £32.0m (2004: £28.0m)
• Dividend + 10%
• Net debt increased by £10.4m
• 23% ROIC (2004: 24%)
The European specialist holiday groupThe European specialist holiday group6
Preliminary Results 2005PROFIT &LOSS ACCOUNT
* All stated before goodwill amortisation and impairment and (in 2004 only) exceptional costs
2005 2004
£m £mTurnover 303.0 281.6 +7.6%Operating Profit * 35.8 31.4 +14.0%Profit before Tax * 32.0 28.0 +14.3%Earnings per Share * 48.8p 44.0p +10.9%Dividend per Share 26.6p 24.2p +10.0%Dividend cover * 1.8x 1.8x -
The European specialist holiday groupThe European specialist holiday group7
Preliminary Results 2005DIVISIONAL RESULTS
Hotel Breaks Adventure Camping Group£m £m £m £m
Turnover 2005 126.7 62.6 113.7 303.0v 2004 +4.7% +67.3% -7.7% +7.6%
PBIT 2005 17.7 5.1 13.0 35.8v 2004 +22.0% +62.6% -5.4% 14.1%
The European specialist holiday groupThe European specialist holiday group8
Preliminary Results 2005DIVISIONAL RESULTS -ACQUISITIONS
£m
Total Transaction Value: Bookit 31.6Turnover: Bookit 5.9
Djoser 19.1
25.0Operating Profit: Bookit 2.8
Djoser 1.4
4.2
Period from date of acquisition to 30 September 2005
The European specialist holiday groupThe European specialist holiday group9
• Net debt increased by £10.4m, after acquisitions of BRC &
Djoser (£39.0m)
• Interest cover (pre-goodwill) 9.3 times (2004 : 9.4x)
• Currency and interest rate hedging in place
• Refinanced Bank Facilities to take advantage of market
conditions
Preliminary Results 2005CASH FLOW
The European specialist holiday groupThe European specialist holiday group10
Preliminary Results 2005FREE CASH FLOW – by Division
2005 2004£m £m
Hotel Breaks 14.9 16.9Adventure 12.7 2.8Camping 21.9 8.9Interest & tax (11.4) (11.6)
Group 38.1 17.0
Free cash flow = Operating cash flow after net capex, interest & tax
The European specialist holiday groupThe European specialist holiday group11
• Net debt increased to £22.9m- £39.0m (net) spent on acquisitions
- Gearing 60% (2004 :34%)
• Goodwill on acquisitions- Djoser £16.4m
- Bookit £22.3m
• £8.7m impairment of Eurosites Goodwill
Holidaybreak plcBALANCE SHEET
The European specialist holiday groupThe European specialist holiday group12
• 2005 reduced capital expenditure (net of disposals)
• 2006 capex expected to be at similar levels
• Mobile-homes capacity reduced in 2005 by 11% to 9,708
• Freehold properties – sales and purchase
Preliminary Results 2005CAPITAL EXPENDITURE & DISPOSALS
The European specialist holiday groupThe European specialist holiday group13
• Low fixed costs in Hotel Breaks and Adventure Travel
• Double digit margins – well above travel industry norms
• All divisions cash generative
• Healthy return on invested capital
Holidaybreak plcFINANCIAL SUMMARY
The European specialist holiday groupThe European specialist holiday group14
Holidaybreak plcPRELIMINARY RESULTS 2005
CHIEF EXECUTIVE’S REVIEW
CARL MICHEL
The European specialist holiday groupThe European specialist holiday group15
Holidaybreak plcPRELIMINARY RESULTS 2005
DIVISIONAL OVERVIEW
The European specialist holiday groupThe European specialist holiday group16
• Portfolio of specialist businesses, all market leaders in their sectors
• Increasingly European
• Increasingly online
• Well placed to grow
• Emphasis on cash, margins and profitability
Holidaybreak plcOVERVIEW
The European specialist holiday groupThe European specialist holiday group17
Holidaybreak plcHOTEL BREAKS
• 2.45m customers (2004: 1.70m)– Including 0.65m from Bookit, the #1 Dutch player
• London impacted by 7/7
• Bookit developing differentiated content (bungalows and small hotels)
• Business increasingly moving online (Bookit already at 85%, Superbreak at 25%)
• Strongly cash generative – no capacity commitments
The European specialist holiday groupThe European specialist holiday group18
• 60,000 customers (2004: 41,000) – including 15,000 from Djoser, the #1 Dutch player
• Business model remains flexible– skill is in raising tour load factors
• Broader portfolio reduces destination risk
• Brand being extended – family, walking, cycle – 80 tours added (+20%) for current year
• Increasingly online– Explore now at 25%
– Djoser 65%
Holidaybreak plcADVENTURE TRAVEL
The European specialist holiday groupThe European specialist holiday group19
• 523,000 customers (2004: 570,000)
• European business – one third of sales non-UK
• Strong repeat business– high call conversions
– customer satisfaction high
• Developing online capability
• Capital expenditure tightly controlled
• Highly cash generative
• For 2006, right-size the business – taking out further 16% capacity to reflect weaker low season
demand and shifts in consumer preferences
Holidaybreak plcCAMPING
The European specialist holiday groupThe European specialist holiday group20
Holidaybreak plcCURRENT TRADING
• Hotel Breaks– Down 4% reflecting weakness in London market
• Adventure Travel– Up 9%
• Camping– Down 12% on capacity reduced by 16%
The European specialist holiday groupThe European specialist holiday group21
Holidaybreak plcPRELIMINARY RESULTS 2005
THE CHANGING MARKET PLACE
The European specialist holiday groupThe European specialist holiday group22
• Consumers increasingly aspirational – willing to travel further
• Greater confidence in buying – consumers able to unbundle and buy own components
– e.g. more low cost flights plus camping
• Fragmentation of holiday time – more short breaks
• Continuing channel shift to online
Holidaybreak plcCHANGES IN THE CUSTOMER ENVIRONMENT
The European specialist holiday groupThe European specialist holiday group23
• Hotels – Main online leisure competitors are Octopus (Cendant) and
Hotelconnect– Growth in hotel groups own sites, with trend to further
concentration– Other intermediaries (Opodo, Hotels.com, Lastminute) not as
leisure focused
• Adventure Travel– Little direct competition due to strong sector growth and
fragmented nature of market
• Camping – Main competitor is Cendant– Huge self catering market
Holidaybreak plcCHANGES IN THE COMPETITIVE ENVIRONMENT
The European specialist holiday groupThe European specialist holiday group24
• Fewer school age families– need to extend camping to other consumer groups esp. in low
season
• Later booking– important to have good availability and the systems to support
such flexibility
• Online travel agents marketing spend– focus for us is on search engine spend and white labels, not on
trying to outspend on advertising
Holidaybreak plcINDUSTRY TRENDS
The European specialist holiday groupThe European specialist holiday group25
Holidaybreak plcPRELIMINARY RESULTS 2005
WHERE WE GO NOW
The European specialist holiday groupThe European specialist holiday group26
• Attractive market positions
• Strong reasons why customers choose to buy from us
• Some unique & distinctive competencies
• Numerous distinct and exciting opportunities to grow our businesses
Holidaybreak plcFIRST IMPRESSIONS
The European specialist holiday groupThe European specialist holiday group27
• Market leader in all UK/Dutch businesses
• Superbreak leader in retail trade sold short breaks
• Good packaging – reduces prospect of ‘disintermediation’
• Strong trade relationships = entry barriers
Holidaybreak plcATTRACTIVE MARKET POSITIONS
The European specialist holiday groupThe European specialist holiday group28
• Hotel Breaks – well established relationships with UK hoteliers, best rates and availability
• Adventure Travel – tremendous breadth of product and complex itineraries that are hard to replicate. Significant brand awareness
• Camping – best sites, best emplacements on site, range of accommodation, operational back up in depth. Trusted brands
Holidaybreak plcSTRONG REASONS WHY CUSTOMERS CHOOSE TO BUY FROM US
The European specialist holiday groupThe European specialist holiday group29
• Unique competencies– Hotel Division: low cost efficient distribution, high service to
trade– Adventure Travel: constructing complicated itineraries,
developing new products, raising tour load factors– Camping: efficiency in operations
• Other competencies
– Reputation with customers (Camping, Explore, Djoser, Bookit) and trade (Superbreak)
– Innovation (Explore, Superbreak)– Pan-European Marketing (Camping)
Holidaybreak plcSOME UNIQUE & DISTINCTIVE COMPETENCIES
The European specialist holiday groupThe European specialist holiday group30
• Online – all businesses are adding functionality and improved design to
raise look-to-book ratio
• Product extensions– e.g Walking tours (Explore), chalets (Camping), small hotels
(Bookit)
• European acquisitions– ‘national’ model has better customer appeal and higher margins
Holidaybreak plcNUMEROUS DISTINCT AND EXCITING OPPORTUNITIES TO GROW
The European specialist holiday groupThe European specialist holiday group31
• Business Development– identifying, prioritising and resourcing of emerging customer
requirements
• Emphasis on IT– new appointments in Camping and Explore. Now looking at
better ways to share best practice/develop synergies
• Europe– look at extending our footprint into other national markets, if
sensible opportunities arise
Holidaybreak plcFIRST STEPS………
The European specialist holiday groupThe European specialist holiday group32
Holidaybreak plcPRELIMINARY RESULTS 2005
BACKGROUND INFORMATION
The European specialist holiday groupThe European specialist holiday group33
Preliminary Results 2005DIVISIONAL RESULTS – excl. ACQUISITIONS
Hotel Breaks Adventure Camping Group£m £m £m £m
Turnover 2005 120.8 43.5 113.7 278.02004 120.9 37.4 123.2 281.6
Operating Profit 2005* 14.9 3.7 13.0 31.62004* 14.5 3.2 13.7 31.4
* All stated before goodwill amortisation
The European specialist holiday groupThe European specialist holiday group34
Preliminary Results 2005BALANCE SHEET
2005 2004
£m £mFixed Assets 62.9 70.6Goodwill 62.3 36.2Net Current Liabilities (57.8) (51.7)Deferred Tax (6.1) (6.1)Net Debt (22.9) (12.5)Net Assets 38.4 36.5
The European specialist holiday groupThe European specialist holiday group35
Preliminary Results 2005MOVEMENT IN NET DEBT
2005 2004£m £m
Operating Cash Flow 52.0 46.3Acquisitions (39.0) -Capital Expenditure (Net) (2.5) (13.5)Interest (4.4) (4.0)Tax (7.0) (7.5)Dividends (11.7) (10.7)Shares issued (net of purchases) 2.2 0.2(Increase) reduction in net debt (10.4) 10.8
The European specialist holiday groupThe European specialist holiday group36
Preliminary Results 2005CAPITAL EXPENDITURE & DISPOSALS
£m Mobile- Camping Other Totalhomes Equipment Assets
Opening NBV 56.7 5.9 8.0 70.6Additions 4.3 2.3 6.0 12.6Disposals (4.0) 0 (2.6) (6.6)Depreciation (8.4) (3.5) (1.8) (13.7)Closing NBV 48.6 4.7 9.6 62.9