FY16 Preliminary Results Presentation December 2016

Transcription

1 FY16 Preliminary Results Presentation December 2016

2 Agenda Simon Cooper CEO FY16 Highlights Wendy Parry CFO Financial Performance FY16 Simon Cooper CEO Evolution of Key Drivers Summary and Outlook Q and A 2

3 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 supports increasing % of direct contracting and fixed and variable cost per booking dropped from 16.0% to 14.6% of Revenue EBITDA % revenue at 35.8% in FY16 up from 32.0% in FY15 3

4 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

5 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 FY15 affected by disallowed shareholder interest Note: Effective tax rate is based on corporation tax divided by retained earnings excluding deal fees and amortisation of intangibles 5

6 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 revolving credit facility 6

7 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

8 Business Highlights OTB is disrupting the retail of beach holidays through innovative technology and customer value proposition Structural Market Growth & Market Share Growth A number of external events disrupted the overall holiday market OTB continued to grow share of market, growing daily unique visitors to site by 12.6% YOY Optimise Customer Proposition Continued investment in technology and talent increased the pace of innovation 77% increase in smartphone bookings YOY with 96% increase YOY in visitors logging in to site Leverage Revenue Focus on profitable growth drove revenue per booking up 7.5% YOY Direct contracts achieving up to 70% of forward arrivals by month Drive Efficient Share Growth & Strengthen Brand Efficiencies in online marketing reduced spend as a % of revenue to 44.7% (FY %) Offline investment continues to increase awareness of our brand nationally Drive Operational Leverage & Expand Internationally 47% YOY growth in Underlying Group PBT Strong growth in Sweden with Norway launch planned for December

9 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 NARROW Margin Product Range LOW BROAD Specialist Generalist 9

10 Market FY16 The market backdrop in FY16 was unsettled by multiple external events Overall short haul beach holiday volumes are resilient and online penetration continues to increase Dynamic packaging offers greater value and flexibility and steals share from traditional package Short haul beach online versus offline (UK) 16,000 Short haul beach offline Short haul beach online 14,000 +5% 12,000 10,000 +7% 2 8, was disrupted by multiple external events 6,000 4,000 2, Traditional package versus dynamic package 25% % 15% 10% 5% 0% -5% Traditional Package Dynamically Packaged % 10

11 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 Jet2holidays Cosmos Holidays Olympic Holidays On The Beach % Travel Republic 4 Low Cost Holidays 3 JET2 Love Holidays Easyjet Holidays Other OTA Other tour operator

12 Key Drivers of Growth

13 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 innovate at an increasing pace Team is currently 75 specialists Evolution to an ever more agile way of working Technology platform architecture Service management, monitoring and alerting Management information system Technology platform New features building on our existing platform CMS Basket CRM Services Geolocation myotb Recommendat ion engine Deals app Backoffice App API app Flights app Hotels app Currency App Manage Your Booking Search Service Personalisation Order Processing Data aggregation Data acquisition 13

14 Optimise Customer Proposition Our ambition is to drive a fully personalised cross-device experience for all users on all devices Revenue per booking Conversion Revenue per unique visitor Logged in visitors FY16 vs FY15 4,500,000 4,000,000 3,500,000 Increases to Revenue per UV driven through multiple projects: 3,000,000 2,500,000 Device level 2,000,000 1,500,000 Log in and cross device optimisation 1,000, ,000 Real time personalisation - FY15 FY16 Off site personalisation Traffic shaping Smartphone Bookings FY16 vs FY15 120, , % Increase in mobile RPUV The features we are developing are supported by the infrastructure that has been built into the heart of our platform over a number of years 80,000 60,000 40,000 20,000 - FY15 FY16 14

15 Jan 14 Mar 14 May 14 Jul 14 Sep 14 Nov 14 Jan 15 Mar 15 May 15 Jul 15 Sep 15 Nov 15 Jan 16 Mar 16 May 16 Jul 16 Sep 16 Nov 16 Jan 17 Mar 17 May 17 Jul 17 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 hotels performs ahead of expectations Future opportunities include: Product: Expand product offering to address long haul and luxury segments Exclusivity: See over Direct contracting - share of monthly arrivals FY14 to FY % 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 70% Investments made to technology to optimise point of sale margin Revenue per product type FY15 vs FY16 Hotels (3rd party) Hotels (direct contract) Transfers (direct contract) Flights Other 15

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 We can drive incremental volume and higher margin at point of sale With exclusive programme of flying By driving UK OTA rate and total exclusivity in hotels HIGH >10% Total UK exclusivity TARGET AREA By ringfencing last room availability 10% UK OTA exclusivity Whilst maintaining a risk-free model Ringfenced last room availability 6% UK OTA rate exclusivity 3-4% Standard direct contracts disintermediate 3 rd parties LOW Long tail 3 rd party stock 16

17 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 marketing to drive share Growing share cost effectively % 49.9% 50.7% 48.6% 44.7% Online Marketing spend as % of Revenue A multi-channel strategy supported by sophisticated in house bid modelling and attribution tool allows efficient share growth Advantage maintained through continued Investment into: Cross device attribution through login Econometric attribution of offline advertising Revenue per daily UV Marketing cost per daily UV EBITDA per daily UV Data management platform integration 0.00 FY12 FY13 FY14 FY15 FY16 % Revenue spent on online marketing monthly evolution 75% 70% FY14 FY15 FY16 65% 60% 55% 50% 45% 40% 35% Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 17

18 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 First / All Mentions Beach Holidays Thomson 18% 31% Repeat booking volumes and % of overall business 160, , % 18.0% 25.6% 32.5% 37.1% Repeat as % of all bookings Thomas Cook On the Beach First Choice 16% 15% 19% 29% 120, ,000 80,000 60,000 58% CAGR Travel Republic First mention Low Cost Holidays All mentions 0% 10% 20% 30% 40% 50% 60% 40,000 20,000 0 FY12 FY13 FY14 FY15 FY16 13

19 Drive Operational Leverage We continue to drive further operational leverage of a lightweight cost base OTB fixed and variable cost per booking is well below tour operator competitors OTB fixed and variable costs as a % of revenue are reducing through operational leverage Fixed / Variable Cost Per Booking X OTB 8X OTB OTB TUI TC Fixed / Variable costs as % Revenue FY12 to FY % 20.00% 15.00% 10.00% 5.00% 0.00% FY12 FY13 FY14 FY15 FY16 19

20 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 attractive for our international expansion Driving improvement in 3 KPIs will determine success in new source markets Our objective in Sweden remains to deliver a positive return within 3 years of launch Cost per UV FY16 YOY % FY15 FY16 Traffic and brand growth in Sweden FY16 YOY % 19.6% Branded share % 50% Brand UVs Non-Brand UVs 0 FY15 FY16 20

21 Summary & Outlook We have enjoyed a strong start to the new FY and performance is in line with the Board s expectations Structural Market Growth & Market Share Growth Addressable market growth with increasing online penetration Risk capacity in market being downsized Optimise Customer Proposition Continue to invest in our technology talent and infrastructure to out innovate the competition Leverage Revenue Target increasing % of direct supply and drive exclusivity Ringfence peak season capacity in key Western Mediterranean destinations Drive Efficient Share Growth & Strengthen Brand Increased offline investment to further drive brand awareness Auction dynamics have improved post LCTG failure Drive Operational Leverage & Expand Internationally Drive significant PBT growth in the UK Leverage capabilities to breakeven in Sweden and launch in Norway 21

22 Appendix

23 OTB history Passenger numbers Share of online short haul beach Technology team recruited, web development and support insourced, complete platform rebuild Investment to launch offline advertising and scale direct contracting nd round private equity investment 2015 Ebeach.se launched IPO 28 th September Drive flight and hotel exclusivity, grow offline share 17% 20% First version website launched, paid search visibility increased Executive and senior management team recruited CMO, CFO, CTO End 2011 Tech and MI platforms relaunched end % 16% Excess charter supply Growing online penetration Simple, outsourced DP technology ,000 passengers First round private equity investment 9% 13% FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16

24 Business Model (3 year CAGR) STRUCTURAL MARKET GROWTH & MARKET SHARE GROWTH ADDRESSABLE MARKET Short haul beach holidays dynamically packaged Online penetration OTB share of market traffic Unique visitors +15% OPTIMISE CUSTOMER PROPOSITION & LEVERAGE REVENUE Revenue per booking Conversion Revenue per unique visitor +7% +23% Revenue DRIVE EFFICIENT SHARE GROWTH & STRENGTHEN BRAND Unique visitors Marketing spend per unique visitor Marketing as % of Revenue -3% SCALE DRIVES OPERATIONAL LEVERAGE OTB s business model is centred on driving efficient growth in market share while maintaining and improving both conversion and revenue per booking Our strategic initiatives are focused on driving the performance of all of these levers EBITDA growth is the cumulative effect of improvements in performance of all of the levers individually Fixed and Variable Costs EBITDA -5% +27% 24

25 Cash Flow Flow of funds On The Beach provides clear and comprehensive consumer protection The trust protects all customer payments until after the provision of holiday services Trust account funds flow for a 1,200 holiday Checkout stage Booking stage Immediately after booking Holiday build up Return date All customer receipts are paid into the trust account in full before the holiday departure date 600 Hotel ATOL Trust Fund (Protected) Customer returns from holiday These payments are held in the trust account until the service is provided On The Beach does not therefore use customer pre-payments to fund its business operations CUSTOMER 1,214.85* 550 Flights 50 Coach Transfer Customer Pays Deposit Receive flight balance 28 days post booking Receive full balance 14 days before departure If booked more than 45 days in advance of departure, customers can secure booking with a deposit which is a percentage of flight cost plus hotel deposit Transfer to On the Beach of flight sales value on receipt into trust from customer Transfer to On the Beach of flight sales value on receipt into trust from customer Transfer to On the Beach of balance of sales value OTB MPB SUPPLIER Airline paid in full by On the Beach on booking Hotel, Bed bank and ancillary supplier paid * 1,200 holiday for 2 people via low deposit scheme includes 2 bags and assumes a direct debit card fee each balance payment, so in the example it is paid three times 25

26 Cash Flow - Seasonality Peak booking trading period between January and June and travelled June and August Booked by month Revenue is recognised on a booked basis The period prior to Christmas is quiet, particularly November and December Traffic volumes ramp up immediately following Christmas as customers start to research and book their holidays for the following summer period Travelled by month Peak departure months are July and August Funds Flow Invest in marketing and low deposits to drive bookings but margin and cash are earned on a travelled basis % FY16 Booked by month 18.0% 15.5% 16.0% 14.0% 12.0% 11.1% 10.4% 10.0% 9.6% 10.0% 8.2% 8.1% 8.0% 7.2% 5.8% 5.6% 6.0% 4.3% 4.1% 4.0% 2.0% 0.0% Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep % FY16 Travelled by month 18.0% 16.3% 16.0% 15.1% 13.8% 14.0% 12.1% 11.7% 12.0% 9.7% 10.0% 8.0% 7.2% 6.0% 4.8% 4.0% 2.4% 2.3% 2.7% 1.8% 2.0% 0.0% Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Source: Company Information 26

27 Millions Millions Cash Flow: Seasonality and cash profile Facility used to fund low deposits during peak trading periods between January and June /15 10/15 11/15 12/15 01/16 02/16 03/16 04/16 05/16 06/16 07/16 08/16 09/ Funding of Low Deposits FY16 Annual cash cycle sees investment into working capital as bookings are achieved in Jan - June, with cash unwinding from the trust as customers travel Facility available in FY16 was 35m, maximum drawdown was 13.5m Bank Balance Profile FY /15 10/15 11/15 12/15 01/16 02/16 03/16 04/16 05/16 06/16 07/16 08/16 09/ Source: Company Information 27