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THE UK’s LEADING OPERATOR OF SPECIALIST HOLIDAY
BUSINESSES
1st January 2004
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Holidaybreak plcCOMPANY STRUCTURE
Camping- Eurocamp- Keycamp- Eurocamp Independent- Perfect Places- Easycamp
Camping- Eurocamp- Keycamp- Eurocamp Independent- Perfect Places- Easycamp
Hotel Breaks- Superbreak- Hotel Breaks- Luxury Hotel Collection- London Travel Service- Airport Hotels- Hotelnet
Hotel Breaks- Superbreak- Hotel Breaks- Luxury Hotel Collection- London Travel Service- Airport Hotels- Hotelnet
Adventure- Explore Worldwide- RegalDive
Adventure- Explore Worldwide- RegalDive
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• One of only three quoted UK tour operators
• Seven years of growth in profits, eps and dividend - organic and
acquisition based
• Three operating divisions - different product, operations and
business models but important shared characteristics. All are
resilient and cash generative businesses, well placed to benefit
from current holiday sector trends
• 2003 turnover £259.5m, pre-tax profits £27.9m (before goodwill
amortisation and exceptional costs)
Holidaybreak plcOVERVIEW
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Holidaybreak plcOUR RECORD (1)
14.017.3
20.723.8
27.927.1
5.0
10.0
15.0
20.0
25.0
30.0
1998 1999 2000 2001 2002 2003
113.5142.4
164.5192.5
218.7
259.5
80.0100.0120.0140.0160.0180.0200.0220.0240.0260.0
1998 1999 2000 2001 2002 2003
Turnover£m
Profit Before Tax*£m
* Before goodwill amortisation and exceptional operating costs
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Holidaybreak plcOUR RECORD (2)
12.5 14.016.0
18.022.0
20.0
5.0
7.09.0
11.013.0
15.017.0
19.0
21.023.0
1998 1999 2000 2001 2002 2003
26.8 29.334.0
38.144.442.5
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
1998 1999 2000 2001 2002 2003
Earnings per Share*Pence
* Before goodwill amortisation and exceptional operating costs
DividendPence
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Holidaybreak plcBUSINESS STRENGTHS
• Market leaders
• Service and Product Quality
• Multi-channel distribution
• Healthy margins - well above travel industry norms
• Flexible cost structures and products
• Strong cash generation
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• Original and largest part of the Group- 49% of 2003 Group sales
• Two market leading brands- Eurocamp and Keycamp
• 16,000 mobile-homes and tents on high quality camp-sites in France, Italy andseven other countries
• Flexible self-drive holidays, any day to any day, with ferry etc, courier/children’s courier service, tailor-made packages - mainly direct sales
• Mid to upper income, family customer base: c.50% of customers non-UK (mainlyGerman and Dutch)
Camping DivisionOVERVIEW
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Camping DivisionCOMPETITIVE ENVIRONMENT
• We compete in the wider family summer holiday market, in
particular other self-catering holiday providers in the UK and
overseas
• Minimum 70% share of directly competitive market in all
territories - main competitors: Canvas Holidays, Haven Europe,
Holiday Life
• Small scale launch by TUI in the UK in 2004
• Substantial ‘no frills’ sector in Holland and, to a lesser extent in
other continental European markets - main competitors:
Vacansoleil, Vrij Uit, Vacanceselect (Easycamp launched in 2003)
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• Sector resilient with high levels of customer loyalty to both brands and holiday type
• Holidays must be attractive and good value - aim to deliver consistently high quality product and service standards
• Growth drivers :
- Trends from lower priced, lower margin tents to higher priced, higher margin mobile-homes plus upgrades
within mobile-home range
- Increased penetration of ‘mainstream’ self-catering markets
- Greater capacity and support for premium Eurocamp and Keycamp brands
- Easycamp : 2003 launch of ‘no frills’ product in Holland/Germany
Camping DivisionSTRATEGY
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• Acquired 1995 - 38% of 2003 Group sales• No commitment allocations - fixed margin on
selling price• Product offer:
- 1500 UK 3 - 5 star hotels
- Rail and theatre options
- 1000 overseas hotels, 175
destinations (9% of 2003 sales)
- Price guarantee on UK hotels
• Several distribution channels:- High street agents (50%)
- Internet (25%)
(75% commissionable‘click-throughs’)
- Direct (20%)
- Marketing partnerships (5%)
Hotel Breaks DivisionOVERVIEW
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Hotel Breaks DivisionCOMPETITIVE ENVIRONMENT
• Superbreak and other Holidaybreak brands account for c.80% of
all hotel leisure bookings through UK travel agents - main
competitors: High Life (Thistle), Embassy (Jarvis)
• Internet market much more fragmented and reliable figures not
available but Superbreak is a leading hotel booking site - main
competitors: Lastminute, Expedia, Active Hotels, Octopus
• Superbreak provides product for many online hotel booking sites
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• Favourable consumer trends
• Simple business model - resilient, cash generative and very flexible cost base
• Multi-channel distribution - internet a major growth driver but high street agents still a key element in distribution mix
• Constant search for new distribution opportunities and product extensions - further small bolt-on acquisitions possible
Hotel Breaks DivisionSTRATEGY
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• Explore Worldwide, acquired in 2000 - 85% of divisional sales (division = 13% of Group sales)
• UK market leader in worldwide adventure travel - over 300 small group tours to over 100 countries on seven continents - treks, wildlife, cultural and historical tours etc.
• Minimal fixed cost commitments - use scheduled flights
• RegalDive is the leading UK specialist scuba diving holiday provider - mainly Red Sea (charter flying) but other destinations (scheduled flights) a growth area
Adventure Holidays Division OVERVIEW
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• Adventure Travel is a fairly loosely defined sector overlapping with
other holiday types - walking, long-haul escorted tours, wildlife
holidays etc
• Main ‘head-to-head’ competitors are Exodus (First Choice) and The
Adventure Company (E-bookers) plus a number of smaller
businesses - Explore has an estimated 40%share of this sector
• RegalDive competes with DIY divers, various smaller specialists, and
non-specialist Red Sea operators. Soft period charter seats are sold
in the mainstream ‘lates’ market
Adventure Holidays Division COMPETITIVE ENVIRONMENT
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Adventure Holidays DivisionSTRATEGY
• Consumer demand for activity and ‘experience’ holidays gives sector excellent prospects - wide range of destinations mitigates effects of disruptive external events
• Resilient customer base - loyalty to Explore and Regal brands
• Strong commitment to Product and Distribution Development
• Bolt-on acquisitions a possibility to broaden product range and/or enhance marketing reach
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• PBT - £29.7m (+2.9%)
• EPS - 44.4p (+4.5%)
• Dividend - 22p (+10.0%)
• Net debt reduced by £9m
Camping Hotel-Breaks Adventure Group£m £m £m £m
Turnover 2003 128.4 97.8 33.3 259.5vs 2002 +17.6% +27.1% +2.1% +18.6%
Gross Profit 2003 40.7 19.8 9.2 69.7vs 2002 +5.2% +27.7% +9.5% +11.3%
PBIT 2003 18.9 11.0 1.9 31.8vs 2002 (0.6%) +41.1% (20.8%) +8.9%
Net Margin 2003 14.7% 11.3% 5.7% 12.2%2002 17.4% 10.1% 7.4% 13.3%
All stated before exceptional operating costs and goodwill amortisation
Financials 2003 RESULTS - OVERVIEW
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Financials2003 DIVISIONAL PERFORMANCE• Camping like for like sales down 6% (capacity: -4%)
– Weak early markets, strong recovery after end of Iraq war
– Integration of EuroSites following £29.9m acquisition in Sept 2002
– Hot summer may have deterred some late bookings but customer satisfaction levels high
• Hotel Breaks had another excellent year - sales up 27% year on year– Growth in all main distribution channels (agents, direct, internet)
– Acquisition of Bridge Britain/London Travel Service (£2m)
– Favourable conditions on demand and supply sides
• Adventure held back by geopolitical events (sales up 2.1%)– Good first quarter but deterioration as Iraq war approached
– Terrorist incidents and threats, SARS and regional conflicts
– Other regions (e.g. South America, Europe, South Africa) performed well
– Load factors and gross margin levels maintained
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Financials FLEXIBILITY & CASH GENERATION• Low fixed cost ratios except in Camping where one year
contracts , very early booking patterns (c.45% pre-Christmas) and pitch options provide significant flexibility
• Annual capex requirement for Camping (+/-£23m in 2003: depreciation +/-£18m) can be varied if capacity requirement changes (ROCE on mobile-homes: c.33%)
• Operating margins well above travel industry norms
• Strong operating cash flow from all divisions - Camping very seasonal
• Interest cover c.6.5 times in 2003 - will increase rapidly, debt capacity for acquisitions available
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Strategy - Travel Industry TrendsKEY STRUCTURAL INFLUENCES
TRAVELRigid,
vertically integrated
tour operating
model under threat
Geopolitical Uncertainty
Strengthening EuroWeakening Dollar
Consumer holiday trends- shorter more frequent- later bookings- more independent/tailor made/flexible- holidays with purpose
InternetLow cost airlines
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Structural ChangesIMPACT ON HOLIDAYBREAK
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Camping and Hotel Breaks relatively ‘safe’holiday choices. Adventure has exposurebut many alternative destinations.
Low-costAirlines
Positive for Camping and Hotel Breaks. No impact on Adventure.
InternetComplements existing distribution channels for specialist holiday businesses. Key growth driver for Hotel Breaks
Geopolitical uncertainty
Consumer TrendsHolidaybreak businesses give flexibility, choice and alternatives to standard packagesCamping still an early booking business.
VerticalIntegration
Holidaybreak businesses not verticallyintegrated
Euro still ‘mid-range’. Natural hedge for Camping due to Euro revenues. Weak dollar positive for Adventure.
Stronger Euro Weakening Dollar
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Holidaybreak plcGROUP STRATEGY
• All divisions will generate organic growth
• Exploit and adapt to key consumer and supply side trends
• Active product and distribution development programmes
• Small ‘bolt-on’ acquisitions to act as
a catalyst and open up new opportunities
• Larger scale ‘fourth leg’ acquisition also a possibility– at right value
– not mainstream package tour operating
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(As at 4 December 2003)
• Camping sales 20% behind 2003 to date– Mainstream market up to 30%down for summer 2004– Eurosites now integrated into Eurocamp and Keycamp– Capacity: -8% planned– New year bookings expected to be much stronger than equivalent ‘war build
up’ period in 2003
• Hotel Breaks 2004 sales 37% up on 2003– Internet still growing strongly– Official accommodation provider for Visit London– Launch of European Beach Breaks programme
• Adventure 2004 sales 8% up on 2003– Sales rebound in affected regions (e.g. India, Thailand, Egypt)– New product developments (Cycle, Rail)– Cautiously optimistic
Holidaybreak plcCURRENT TRADING AND PROSPECTS
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• Strong cash generative businesses
- Resilient performance in 2003
- Well placed to benefit from holiday sector brands
• Strategy of seeking steady organic growth supplemented by appropriate acquisitions at right value (debt capacity available)
• Record shows 10-15% EPS and dividend growth. This remains our aspiration
• Encouraging start to 2004 by Hotel Breaks and Adventure. Post New Year bookings a key indicator for Camping
• Market update 10 February 2004 (AGM)
Holidaybreak plcOVERVIEW & SUMMARY