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The UK’s Leading Operator of Specialist Holiday Businesses

The UK’s Leading Operator of Specialist Holiday Businesses. PRELIMINARY RESULTS 2004. Holidaybreak plc PRELIMINARY RESULTS 2004. Bob Ayling (Chairman) - Overview Bob Baddeley (Finance Director) - Finance review Richard Atkinson (Chief Executive) Group strategy

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The UK’s Leading Operator of Specialist Holiday Businesses

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  1. The UK’s Leading Operator of Specialist Holiday Businesses PRELIMINARY RESULTS 2004

  2. Holidaybreak plcPRELIMINARY RESULTS 2004 Bob Ayling (Chairman) - Overview Bob Baddeley (Finance Director) - Finance review Richard Atkinson (Chief Executive) • Group strategy • Divisional performance review • Prospects Questions

  3. Holidaybreak plcPRELIMINARY RESULTS 2004 Results in line with market expectations Rapid growth in Hotel Breaks and Adventure divisions Camping continues to trade profitably and deliver attractive margins Cash generated Dividend reflects Board’s confidence in future prospects 2005 sales currently 8% up on 2004

  4. Holidaybreak plcPRELIMINARY RESULTS 2004 FINANCE DIRECTOR’S REVIEW BOB BADDELEY

  5. Preliminary Results 2004FINANCIAL HIGHLIGHTS Turnover up 8.5% to £281.6m (2003: £259.5m) Profit before tax £28.0m (2003: £27.9m) Dividend up 10% Net debt reduced by £10.8m 2005 capital expenditure c.£7.0m lower than 2004 24 % ROIC (2003: 24%)

  6. Preliminary Results 2004PROFIT &LOSS ACCOUNT All stated before goodwill and exceptional costs

  7. Preliminary Results 2004EXCEPTIONALS Exceptional Costs • Relocation of Keycamp (£1.6m) • Internal reorganisation (£1.0m) Goodwill Impairment (£5.3m) • Relates to Eurosites acquisition (2002)

  8. Preliminary Results 2004DIVISIONAL RESULTS All stated before goodwill and exceptional costs

  9. Holidaybreak plcBALANCE SHEET Net assets increased to £36.5m (2003 : £35.2m) Net debt reduced to £12.5m - Gearing 33.8% (2003 : 66.3%) Eurosites acquisition - Goodwill impairment (£5.3m) - VAT recoverable (€3.5m)

  10. Preliminary Results 2004CAPITAL EXPENDITURE & DISPOSALS Reduced capital expenditure (net) • 21% lower in 2004 (£13.5m) • Will be £7.0m lower in 2005 Mobile-homes • Capacity reduced in 2005 by 11% c. 9,600 • Replacement expenditure of £5.3m (2004 : £11.4m) • Continue to achieve net book value on disposal: 1,400 units sold in 2004, generating £4.3m proceeds in 2004 - Extending life

  11. Preliminary Results 2004CASH FLOW Net debt reduced by £10.8m Mobile-home capex largely financed through new HP Interest cover 9.4 times (2003 : 8.2x)- Pre-goodwill and exceptionals Currency and interest rate hedging in place Headroom in bank facilities - seasonality

  12. Preliminary Results 2004CASH FLOW SEASONALITY

  13. Holidaybreak plcFINANCIAL SUMMARY Low fixed costs in Hotel Breaks and Adventure Double digit margins – well above travel industry norms All divisions cash generative Healthy return on invested capital Low gearing

  14. Holidaybreak plcPRELIMINARY RESULTS 2004 CHIEF EXECUTIVE’S REVIEW RICHARD ATKINSON

  15. Holidaybreak plcMARKET OVERVIEW Holiday taking and expenditure increasing Consumer demand: • Holidays shorter and taken more often • Activity/special interest • Demographics • Control and flexibility Market change: • Internet • Inexpensive and accessible flights • Later booking

  16. Holidaybreak plcGROUP STRATEGY Balanced portfolio of specialist holiday businesses Market leadership Concentrate on margins and cash generation Organic growth Complementary acquisitions

  17. Hotel BreaksOVERVIEW Group’s biggest profit earner in 2004 Strongly cash generative Short-break holiday demand increasing 250+ hotel suppliers, 3,000+ hotels (UK and overseas) • Gives hotels cost effective distribution at attractive yields whilst supporting price integrity • No commitment room allocations : fixed selling margin Multi-channel distribution - Supplies 80% of all leisure hotel bookings made in UK travel agents - Superbreak.com increasing share of internet - Direct and partnership marketing increasingly important

  18. Hotel BreaksPERFORMANCE & OUTLOOK 1.7m bookings (pax) in 2004 (2003: 1.4m) - Turnover up 24% (impact of Bridge Britain acquisition c.3%) European breaks growth increased as year progressed (+21%) - Successful launch of Beach Breaks - Continuing into 2005 New promotional partnerships – Visit London, Legoland, P&O, W H Smith, Ticketmaster 2005 sales at +10% year on year Hotel capacity readily available • Portfolio increasing • Terms of trade unchanged • Building long term relationships

  19. AdventureOVERVIEW Increasing demand for active and special interest holidays - Diminished geopolitical concerns UK market leader in ‘soft’ adventure and scuba diving holidays - Difficult or impossible to replicate: adding unique value to the customer experience Tight control of tour load factors underpins margin and profitability - No flight commitments (except RegalDive) New product development an important growth driver - Family, Adventure Breaks, Cycle, Rail, Walking & Trekking Distribution range extending - Internet: on-line bookings now available

  20. AdventurePERFORMANCE & OUTLOOK 41,800 bookings (pax) in 2004 (2003 : 37,400)- Turnover up 12% - momentum built as year progressed - Higher tour load factors, improved margin (5.7% to 8.4%) - Out of favour destinations (India, Egypt, China) ‘bounce back ‘ Strong recovery by RegalDive - 15% of sales, 11% of operating profit 2005 sales at +34% year on year- First quarter very strong – volumes and load factors Product development continues - 400+ tours to 107 countries - New product launch - Explore ‘On Foot’

  21. CampingOVERVIEW Self-catering holidays in good quality accommodation- Desirable locations with excellent leisure amenities - Flexibility, independence, informality, added value services Market leading brands (Eurocamp and Keycamp)- High levels of customer satisfaction and repeats Profitable, high margin, cash generative business Focused on profit turnround in 2005 Restructure - more focused organisation- New appointments- Keycamp relocation Medium term strategy - Keycamp/Eurocamp differentiation- Distribution brands: Easycamp, Ugogo.com- Stronger, more diverse communication of product benefits- Cost control and yield management

  22. CampingPERFORMANCE & OUTLOOK 141,600 bookings/570,000 pax (2003: 144,400 bkgs/ 580,000 pax)- Turnover 4% below 2003 - Late booking trend continued Camp-site occupancy down 4% compared to 2003- Shift in demand away from Mediterranean destinations Yield improvement and unit cost reduction - 2005 capacity reduced by 11% (tents and mobiles), lower capex - 2005 sales at –5% year on year - Keycamp relocation (£1m annualised saving) - General/marketing overhead savings (£1m) Increased resource for IT/e-commerce development - Rollout of on-line bookings to all brands/territories - Launch of Ugogo.com

  23. Holidaybreak plcGROUPPROSPECTS 2005 trading currently in line with expectations Hotel Breaks and Adventure continue to grow Camping – tightly controlled to meet financial requirements Opportunities for both organic and acquisition based growth Holidaybreak will continue to trade at very good margins, generate cash and provide an attractive dividend for its shareholders

  24. The UK’s Leading Operator of Specialist Holiday Businesses

  25. Holidaybreak plcPRELIMINARY RESULTS 2004 BACKGROUND INFORMATION

  26. Preliminary Results 2004BALANCE SHEET

  27. Preliminary Results 2004CAPITAL EXPENDITURE & DISPOSALS

  28. Preliminary Results 2004MOVEMENT IN NET DEBT

  29. Preliminary Results 2004FACILITY UTILISATION £m

  30. Hotel BreaksBUSINESS MODEL Agents Customer Ancillaries SUPERBREAK- Efficient cost distribution at reasonable yields for suppliers - High service levels, convenience and value for customers and agents Accommodation VALUE ADDED DISTRIBUTION

  31. AdventureBUSINESS MODEL Accommodation Tour Content Transport Customers • EXPLORE • - Tour origination and operation • - High value added • Very difficult for DIY • customer to replicate CLASSIC TOUR OPERATING MODEL

  32. CampingBUSINESS MODEL Transport Operators Camp-sites Customers Equipment Suppliers • EUROCAMP/KEYCAMP- On site service • Accommodation • Access to best sites • Strongly branded • Effective distribution HYBRID MODEL – PART TOUR OPERATOR, PART PRINCIPAL

  33. Ugogo.comLAUNCHING 6/12/04

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