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
Holidaybreak plcAgenda Bob Ayling (Chairman) Bob Baddeley (Group Finance Director) Carl Michel (Group Chief Executive) Q&A
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
Holidaybreak plcPreliminary Results 2007 FINANCE DIRECTOR’S REVIEW BOB BADDELEY
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).
Preliminary Results 2007Income Statement *Stated before amortisation of intangible assets acquired via business combinations of £2.5m (2006: £1.0m).
Preliminary Results 2007Divisional Results *Stated before amortisation of intangible assets acquired via business combinations of £2.5m (2006: £1.0m).
Preliminary Results 2007Operating Margins* *Stated before amortisation of intangible assets acquired via business combinations of £2.5m (2006: £1.0m).
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.
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
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
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
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%
Holidaybreak plcPreliminary Results 2007 CEO REVIEW CARL MICHEL
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
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
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 20
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
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
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’
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
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
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