On The Beach Group Plc · LSE:OTB
On The Beach — H1 2016 Earnings Presentation
27 slides from On The Beach's earnings presentation, May 19, 2016
Slide 1: Interim Results for the six months ended 31 March 2016
The UKs leading online retailer of beach holidays Interim Results for the six months ended 31 March 2016
Slide 2: Agenda
Agenda Simon Cooper H116 Highlights CEO Wendy Parry Financial Performance H116 CFO Simon Cooper Evolution of Key Drivers CEO Summary and Outlook Q and A 2
Slide 3: H116 highlights
H116 highlights OTB continues to disrupt the retail of beach holidays through innovative technology and customer value proposition 17% YOY increase in daily unique visitors to site in H116 Structural Market Growth & Market Noticeable shift in consumer appetite away from the Eastern Mediterranean
Slide 4: Business Model
Business Model ADDRESSABLE MARKET +17% STRUCTURAL MARKET Short haul beach OTB share of GROWTH & MARKET Online Unique visitors holidays dynamically market traffic SHARE GROWTH penetration packaged +4% OPTIMISE CUSTOMER £ Revenue per Conversion Revenue per PROPOSITION & booking unique visitor LEVERAGE
Slide 5: 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 OTB HIGH £MPB Basket Value /Margin Opportunity LOW £177 TOUR OPERATORS GENERALISED OTAS PRODUCT ADVANTAGES PRODUCT DISADVANTAGES £MPB 5 x higher than OTA £MPB
Slide 6: Profit & Loss Account – UK Segment
Profit & Loss Account – UK Segment H116 EBITDA growth of 37% YOY P&L UK Segment YTD growth year on year: Revenue +21% Six months ended 31 March (£m) H1 FY16 H1 FY15 Change % EBITDA +37% Revenue 35.0 28.9 21.1% Efficient increase in our market traffic share Marketing costs excluding offline (
Slide 7: Profit and Loss Account - International
Profit and Loss Account - International Investment continues in Sweden to build scale and brand P&L International Segment Success in international markets will be profitable performance within 2-3 years of launch at scale Six months ended 31 March (£m) H1 FY16 H1 FY15 Change % Revenue 0.51 0.24 11
Slide 8: Profit and Loss Account - Group
Profit and Loss Account - Group Underlying profit before tax +53.2% increase YOY P&L Total External financing costs reduced significantly Six months ended 31 March (£m) H1 FY16 H1 FY15 Change % through renegotiation of facilities post IPO EBITDA UK segment 11.6 8.5 36.5% EBITDA International segme
Slide 9: Balance Sheet
Balance Sheet Balance Sheet H1 2016 H1 2015 Tangible Assets 0.9 0.7 All customer monies are paid into a trust account which is Intangible Assets - IT development 3.0 2.3 effectively a debtor to the business Intangible Assets - Acquired Intangibles 42.0 46.2 Intangible Assets Goodwill 21.5 21.5 Tot
Slide 10: Cash Flow
Cash Flow Cash is invested in areas that drive growth Cash Flow H1 2016 H1 2015 Opening Cash Balance Total 34.8 31.0 Opening Cash Balance Trust 23.9 20.5 Working capital movement relates to the seasonality Opening Cash Balance excluding trust balance 10.9 10.5 of the business with c.50% of booking
Slide 11: Key Drivers of Growth
Key Drivers of Growth
Slide 12: Innovate through in house technology
Innovate through in house technology Continued investment into in-house technology extends our ability to out innovate the competition Continued investment in our technology capability will allow us to Technology platform architecture innovate at an increasing pace Service management, monitoring a
Slide 13: Optimise Customer Proposition
Optimise Customer Proposition Our ambition is to drive a fully personalised cross-device experience for all users on all devices Revenue per Revenue per Device level RPUV H115 vs H116 Conversion booking unique visitor £2.50 £2.00 Increases to Revenue per UV driven through multiple projects: £1.50
Slide 14: Leverage £ Revenue
Leverage £ Revenue We are well positioned to scale our supply function to achieve significant incremental net margin contribution Investment made in FY15 to scale our supply function Direct contracting - share of hotel sales Q114 to date ‒ All shuttle transfers directly contracted 70.0% ‒ Contract
Slide 15: Sales Volume and Margin Opportunity
Target exclusivity Driving an increasing % of exclusivity presents a huge margin opportunity Independent hoteliers want to spread their distribution across Hotels: Incremental margin opportunity multiple source markets and between tour operators, OTAs and Incremental Margin direct Opportunity B2
Slide 16: Drive Efficient Share Growth
Drive Efficient Share Growth Superior customer proposition delivers increased margins and fuels market share growth The business has invested c.50% of revenue in marketing to drive Growing share cost effectively share growth Marketing 46.0% 49.9% 50.7% 48.6% 46.3% spend as % of Revenue Growth in
Slide 17: Strengthen Brand
Strengthen Brand Continued investment offline has strengthened awareness of our brand FY16 offline campaign was fully national Prompted Brand Awareness 2013-2016 Prompted awareness of our brand has increased to 46% post 50% campaign 45% 40% We continue to close the gap on tour operators 35% 30
Slide 18: Drive Operational Leverage
Drive Operational Leverage We continue to drive further operational leverage of a lightweight cost base £ Fixed / Variable Cost Per Booking OTB fixed and variable cost per booking is well below tour operator 250 7X 8X competitors OTB OTB Tour operators fixed and variable cost per booking is in e
Slide 19: Expand Internationally
Expand Internationally We continue to deliver growth in Sweden Sweden has the following characteristics Non branded cost per UV H115 vs H116 High online penetration £1.60 Propensity to travel to the same beach destinations as UK £1.40 Expanding LCC penetration £1.20 -27% Dominated by legac
Slide 20: Summary & Outlook
Summary & Outlook We have enjoyed a strong first half and performance is in line with the Board’s expectations Structural Market Growth & Market Continue to grow our share of market with increasing efficiency Share Growth Optimise Customer Maintain the throughput of innovation to personalise the
Slide 21: Appendix
Hacienda Puerta del Sol Golf Hotel & Spa Hacienda Puerta det Sol £330.59°" Golf Hotel & Spa £303.55"" Hacienda Puerta de! Sol Golt Hote! & Spa 00.95°" | Hacienda Puerta del Sot £222.99" | Hacienda Puerta del Sol eS Golf Hotel & Spa. a Golf Hotel & Spa £230.59°° Keke iba Carlota Beach Hote! £320.99°"
Slide 22: Market Growth & Market Share Growth
Market Growth & Market Share Growth Our addressable market is growing and OTB continues to grow share of market Overall short haul beach holiday volumes are growing Short haul beach online versus offline (UK) 16000 Short haul beach offline 14000 Short haul beach online Online penetration continu
Slide 23: Competitive Landscape and Barriers to Success
Competitive Landscape and 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 Online - Estimated Market Share Tour operator short haul volumes (m pax) 10 0.5m OTB gain 2011
Slide 24: 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 £1,200 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 25: Cash Flow - Seasonality
Cash Flow - Seasonality Peak booking trading period between January and June (65%) and travelled June and August (51%) Booked by month % FY15 Booked by month Revenue is recognised on a booked basis 16.0% 14.1% 14.0% The period prior to Christmas is quiet, particularly November and 12.0% 10.9% 10
Slide 26: Cash Flow: Seasonality and cash profile
Cash Flow: Seasonality and cash profile Facility used to fund low deposits during peak trading periods between January and June (2.0) Annual cash cycle sees (4.0) investment into working capital as bookings are achieved in Jan (6.0) Funding of Low Deposits FY15 - June, with cash unwinding from the
Slide 27: Expand Internationally
Expand Internationally 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 2014 Western European package holiday market (€bn) than the UK €bn TTV Online Penetration Rate 90% 20.00 16.5