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Preliminary Results 2007. 29 November 2007. Holidaybreak plc Agenda. Bob Ayling (Chairman) Bob Baddeley (Group Finance Director) Carl Michel (Group Chief Executive) Q&A . Holidaybreak plc Highlights. Good performance Dividend per share +10%

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Preliminary Results 2007

29 November 2007


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Holidaybreak plcAgenda

Bob Ayling (Chairman)

Bob Baddeley (Group Finance Director)

Carl Michel (Group Chief Executive)

Q&A


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Holidaybreak plcHighlights

  • Good performance

  • Dividend per share +10%

  • Transformational year with new 4th trading division

  • Sales mix of group is now:

    • Hotel Breaks (34%);

    • Adventure Travel (21%);

    • Camping (24%); and

    • Education (21%)*

  • Mix will continue to evolve

  • Focus on delivering long-term, sustainable value

  • Current trading in line with expectations

* Based on last full year audited results at PGL and NST


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Preliminary Resultsfor the year ended 30 September 2007

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Holidaybreak plcPreliminary Results 2007

FINANCE DIRECTOR’S REVIEW

BOB BADDELEY


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Preliminary Results 2007Financial Highlights

  • Profit before tax* +21% to £40.0m (2006: £33.1m)

  • Headline EPS* +21%

  • Dividend +10%

  • £138.6m net investment on acquisitions

*Stated before amortisation of intangible assets acquired via business combinations of £2.5m (2006: £1.0m).


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Preliminary Results 2007Income Statement

*Stated before amortisation of intangible assets acquired via business combinations of £2.5m (2006: £1.0m).


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Preliminary Results 2007Divisional Results

*Stated before amortisation of intangible assets acquired via business combinations of £2.5m (2006: £1.0m).


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Preliminary Results 2007Operating Margins*

*Stated before amortisation of intangible assets acquired via business combinations of £2.5m (2006: £1.0m).


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Preliminary Results 2007Impact of Acquisitions

  • Period from date of acquisition to 30 September 2007

  • NST acquired on 30 September 2007

*Stated before amortisation of intangible assets acquired via business combinations of £0.8m.


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Preliminary Results 2007Cash Flow

  • Net debt increased by £143.4m, following acquisitions of:

    - PGL £ 97.6m

    - NST £ 38.9m

    - WETB £ 2.1m

    - Net of cash acquired

  • Interest cover (pre-amortisation) 11.5 X (2006: 16.0 X)

  • Average interest rate on loans 5.3% inclusive of margin

    - Currently 6.89% (£) and 5.04% (€)

    - Capped at 7.3% (£) and 5.3% (€), including margin



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Preliminary Results 2007Balance Sheet (1)


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Preliminary Results 2007Balance Sheet (2)

  • Acquired intangibles £23.9m (2006: £2.1m)

    - Annual amortisation £2.5m

  • Bank facilities £255.0m

    - Adequate headroom even at peak utilisation period

  • Deferred tax on acquisitions £31.6m

    - Corresponding increase in goodwill


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Preliminary Results 2007Capital Expenditure & Disposals

  • 2007 capex (net of disposals) of £12.9m (2006: £4.6m)

  • 2008 Camping capex to be at historic levels – c.1,000 mobile-homes to be replaced

    - anticipated net spend £10.0m

  • 2008 Group capex increase to c.£19.0m

    - incl. £4.0m on IT

    - incl. £3.0m on maintenance capex in Education Division


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Preliminary Results 2007Financial Summary

  • Margins well above travel industry norms

  • All divisions cash generative

    - But capex to be higher in 2008

  • Healthy return on invested capital

    - ROACE 21%


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Holidaybreak plcPreliminary Results 2007

CEO REVIEW

CARL MICHEL


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Preliminary Results 2007Strategic Developments

  • PGL/NST fits with the strategic framework announced last year

  • Healthy pipeline of other deal opportunities in Europe and UK

    -Product extensions

    - New sales areas

  • Organic growth opportunities in each division

  • All areas looking to increase ‘value added’ – to add to differentiation and defensibility


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Strategic FrameworkProgress this year

  • BUILD ON CORE COMPETENCES

    - West End Theatre Bookings leverages Superbreak’s London strength and

    enhances our ability to ‘bundle’

  • DEVELOP A MULTIPATH APPROACH- Able to make two key acquisitions

    - Organic development – Own a Holiday Home

  • PURSUE SUSTAINABLE FASTER GROWTH- Both carpe diem/TravelWorks and PGL have grown at over 10% with margins above industry norms

    - New division has raised the average growth rate of the Group

  • DIVERSIFY SALES MIX

    - While sales remain focused on the UK, the Education Division is less influenced by consumer spending shifts. Parents view trips as non-discretionary spending


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Preliminary Results 2007Corporate Activity

….

Continuing to review a number of opportunities

In last 15 months, acquired 8 businesses for a total investment of c.£145m

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Preliminary Results 2007HOTEL BREAKS

HOTEL BREAKS

  • EBITA of £17.0m (+1.0%) on sales of £139m (+13.3%). Margins were held back by investment in web/IT

  • Acquisition of West End Theatre Bookings at the end of January – increased scale allows us to buy out some entire West End theatre performances

  • Growth in ‘bundled’ sales from 30% to over 40% - substantially higher transaction values

  • Overseas hotels – have reached our target of 5,000 hotels and substantially increased our presence outside of Europe and in secondary destinations

  • Progress on all websites – with user-generated content, really simple syndication, Google Local, video-streaming

  • Target audience remains couples aged 40-70

  • Bookit has done well with hotelletje.nl – its small hotels website – now accounting for over 15% of their turnover


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Preliminary Results 2007ADVENTURE TRAVEL

ADVENTURE TRAVEL

  • EBITA of £6.6m (+11.9%) on sales up 18.0% at £90.0m

  • Launch of new specialist Explore brochures – Archaeology and Eclipse/Astronomy – seeking to capitalize on trend to more niche ‘value added’ interests

  • Families product continues to grow strongly in both UK (12% of sales) and Holland (18% of sales)

  • New Explore website launched with more of a community feel – weblogs, podcasts, destination information

  • Americas and Asia performed well, Middle East/Egypt down around 20% but decline ended in late summer

  • carpe diem and TravelWorks (German businesses acquired in September 2006) performing ahead of expectations, with particularly good growth in work experience and high school exchange programmes


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Preliminary Results 2007CAMPING

CAMPING

  • EBITA of £11.7m (-6.3%) on sales of £102.8m (-2.6%)

  • Capacity down 4% (mobile-homes –2%, tents –12%)

  • Particularly strong growth in Irish market. Most markets performed well

  • Mobile-home occupancy increased to 100 days this year (up 4 days on last year)

  • Late UK booking market good, thanks in part to bad summer weather but also due to successfully holding back some high season capacity

  • Cost savings next year through decision to close distribution depot in Middlewich

  • Successful start to ‘Own a Holiday Home’


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Preliminary Results 2007EDUCATION

EDUCATION

  • EBITA of £8.5m on sales of £26.1m reflecting partial year ownership

  • PGL performing ahead of the expectations we had at the time of the acquisition

  • On budgeted revenues for 2007/08, this is now the second largest division ahead of Adventure and Camping

  • New division reduces our reliance on more discretionary consumer travel expenditure

  • Division has unusually good visibility in terms of forward revenues – PGL is 86% and NST is 70% booked for 2008. (UK school adventure centres are already 97% booked for 2008 and 24% for 2009)

  • Divisional management now driving through the synergies identified at the time of acquisition from PGL and NST

  • Considerable potential to deliver long-term value as we look at other opportunities in the sector


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Strategic FrameworkTargets for next year

  • BUILD ON CORE COMPETENCES

    - Look for more synergies within and across divisions

    - PGL-run Activity Stations for Camping Division sites

    - More use of customer address lists

    - Safety management excellence

  • DEVELOP A MULTIPATH APPROACH

    - Continue to source sensible bolt-on acquisitions (e.g. Select Sites on 01.10.07)

    - Organic opportunity – Explore Independent – to launch in Spring 2008

  • PURSUE SUSTAINABLE FASTER GROWTH

    - Ongoing strategic review to identify areas with faster growth potential

    - Look to increase defensibility by focus on more value added

  • DIVERSIFY SALES MIX

    -Potential for acquisitions to speed up the change


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Preliminary Results 2007OUTLOOK

  • Overall outlook encouraging – overall group sales up 6%. Satisfactory trading outcome anticipated

    - Sales intake for Hotel Breaks up 12%

    - Education Division revenues up 9%

    - Sales intake up 5% in Adventure - with recovery in Middle East

    - Camping down 1% on capacity down 5% (-0.4% in mobile-homes, -20% in tents)

  • Business is resilient – we remain confident despite forecast slowdown in economic growth

    - Hotel Breaks has historically done well in times of tight spending as our value to hoteliers increases

    - Adventure Travel average age is 50 – customers less exposed to credit issues

    - Camping – will be seen by families as less costly than a long haul trip

    - Education – less of a discretionary spend item

  • Opportunities likely to arise to make further acquisitions at sensible valuations

  • More to play for



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