On The Beach Group Plc · LSE:OTB
On The Beach — FY2016 Earnings Presentation
27 slides from On The Beach's earnings presentation, December 2016
Slide 1: FY16 Preliminary Results Presentation
FY16 Preliminary Results Presentation December 2016
Slide 2: Agenda
Agenda Simon Cooper FY16 Highlights CEO Wendy Parry Financial Performance FY16 CFO Simon Cooper Evolution of Key Drivers CEO Summary and Outlook Q and A 2
Slide 3: Profit & Loss Account – UK Segment
Profit & Loss Account – UK Segment FY16 EBITDA growth of 25.5% in the UK Strong growth year on year: Revenue +12.3% EBITDA +25.5% Efficient increase in our market traffic share with marketing spend excluding offline as a % of revenue falling to 44.7% Investment in place in supply function
Slide 4: Profit and Loss Account - International
Profit and Loss Account - International Investment continues in Sweden to build scale and brand Success in international markets defined as profitable performance within 2-3 years of launch at scale OTB has invested to grow its share of market both online and offline 4
Slide 5: Profit and Loss Account - Group
Profit and Loss Account - Group Underlying profit before tax +47% increase YOY External financing costs reduced significantly through renegotiation of facilities post IPO Shareholder loan interest and amortisation of acquired intangibles below underlying profit before tax Effective tax rate in
Slide 6: Balance Sheet
Balance Sheet All customer monies are paid into a trust account which is effectively a debtor to the business Net cash position has increased from £10.9m to £26.1m Bank loans repaid in full out of the Group’s existing cash balances post IPO Seasonal cash flow requirements are covered by a re
Slide 7: Cash Flow
Cash Flow Strong cash conversion at 90% The Board recommends a dividend of 2.2p per share and thereafter intends to adopt a progressive dividend policy £3m of deal costs accrued in FY15 relating to the IPO were paid in the first half of FY16 Source: Company Information 7
Slide 8: Business Highlights
Business Highlights OTB is disrupting the retail of beach holidays through innovative technology and customer value proposition Structural Market A number of external events disrupted the overall holiday market Growth & Market OTB continued to grow share of market, growing daily unique visitors
Slide 9: 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 9
Slide 10: Market FY16
Market FY16 The market backdrop in FY16 was unsettled by multiple external events Overall short haul beach holiday volumes are resilient and online Short haul beach online versus offline (UK) penetration continues to increase 16,000 Short haul beach offline Short haul beach online +7% 14,000 +5%
Slide 11: 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 TUI 9 Thomas Cook
Slide 12: Key Drivers of Growth
Key Drivers of Growth
Slide 13: 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 Continued investment in our technology capability will allow us to Technology platform architecture innovate at an increasing pace Service management
Slide 14: 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 Logged in visitors FY16 vs FY15 Conversion booking unique visitor 4,500,000 4,000,000 3,500,000 3,000,000 Increases to Revenue per UV driven thro
Slide 15: Leverage Increased £ Revenue
Leverage Increased £ Revenue We have scaled our supply function to achieve significant incremental net margin contribution Investment made in FY14 and FY15 to scale our supply function Direct contracting - share of monthly arrivals FY14 to FY17 80.0% Direct contracting hotels performs ahead of e
Slide 16: Sales Volume and Margin Opportunity
Target exclusivity Driving an increasing % of exclusivity presents a huge margin opportunity Independent hoteliers want to spread their distribution Hotels: Incremental volume / margin opportunity B2B airlines need a distribution partner without aircraft HIGH Total UK We can drive incremental
Slide 17: Drive Efficient Market Share Growth
Drive Efficient Market Share Growth Superior customer proposition delivers increased margins and fuels market share growth The business has historically invested c.50% of growing revenue in Growing share cost effectively marketing to drive share Online 44.7% Marketing 46.0% 49.9% 50.7% 48.6% £1.40
Slide 18: Strengthen Brand
Strengthen Brand Continued investment offline has strengthened awareness of our brand FY16 offline campaign was fully national Prompted Brand Awareness FY13 to FY16 50% Repeat purchase volume and rates continues to increase 40% 30% 20% 10% 0% FEB '13 APR '14 DEC '14 FEB '15 DEC '15 FEB '16 Repea
Slide 19: 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 200 OTB fixed and variable costs as a % of revenue are red
Slide 20: Expand model internationally
Expand model internationally We remain encouraged with the improvement to KPIs being achieved in Sweden Sweden has the a number of characteristics which make it Cost per UV FY16 YOY attractive for our international expansion £1.60 £1.40 Driving improvement in 3 KPIs will determine success in new
Slide 21: Summary & Outlook
Summary & Outlook We have enjoyed a strong start to the new FY and performance is in line with the Board’s expectations Structural Market Addressable market growth with increasing online penetration Growth & Market Risk capacity in market being downsized Share Growth Optimise Customer Continue
Slide 22: 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 23: OTB history
OTB history 2015 Ebeach.se launched 2013-14 IPO 28th Investment to September launch offline 2015 advertising and scale direct 2016 contracting Drive flight and Passenger hotel exclusivity, numbers grow offline share 2009-11 2013 Technology team recruited, 2nd round 1400000 Share of online private we
Slide 24: Business Model (3 year CAGR)
Business Model (3 year CAGR) ADDRESSABLE MARKET +15% STRUCTURAL MARKET Short haul beach OTB share of GROWTH & MARKET Online Unique visitors holidays dynamically market traffic SHARE GROWTH penetration packaged +7% OPTIMISE CUSTOMER £ Revenue per Conversion Revenue per PROPOSITION & booking unique vi
Slide 25: 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 protects all customer payments Checkout Booking Immediately Holiday Return until after the provision of holiday services stage stage after booking b
Slide 26: Cash Flow - Seasonality
Cash Flow - Seasonality Peak booking trading period between January and June and travelled June and August Booked by month % FY16 Booked by month Revenue is recognised on a booked basis 18.0% 15.5% 16.0% 14.0% The period prior to Christmas is quiet, particularly November and 12.0% 11.1% December
Slide 27: 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 0.00 Millions 09/15 10/15 11/15 12/15 01/16 02/16 03/16 04/16 05/16 06/16 07/16 08/16 09/16 -2.00 Annual cash cycle sees investment into working capital -4.00 as bookings