FY15 Preliminary Results Presentation 9 th December 2015
Agenda Simon Cooper FY15 Highlights CEO Wendy Parry Financial Performance FY15 CFO Evolution of Key Drivers Simon Cooper Summary and Outlook CEO Q and A 2
FY15 Highlights OTB is disrupting the retail of beach holidays through innovative technology and customer value proposition Overall short haul beach market continues to grow and online penetration is increasing Structural Market 14% YOY increase in daily unique visitors to site to 54.4m (FY14: 47.7m) Growth & Market Share Growth 27% YOY increase in total transaction value to £453.6m (FY14: £358.3m) By continual optimisation of the customer proposition OTB has doubled its market traffic share since Optimise Customer FY12 whilst driving improvements to both conversion and margin Proposition OTB is delivering real-time individual user level personalisation to an increasing % of visitors 37% YOY increase in Revenue to £62.5m (FY14: £45.6m) Leverage £ Revenue 20% YOY increase in Revenue per Unique Visitor from £0.96 to £1.15 Direct contracting averaged 45% of all hotel buying in FY15 with exit rate of 51% Efficiencies in online marketing reduced spend to 48.6% of revenue for FY15 (FY14: 50.7%) Drive Efficient Share 54.8% of traffic to site from brand and direct sources (FY14: 50.6%) Growth & Strengthen Brand OTB apps achieved almost 400,000 downloads and contributed 3.7% of total traffic in Sept 15 Fixed costs as % of Revenue continue to drop despite significant investment into direct contracting Drive Operational 45% YOY growth in EBITDA to £20m at 32% of Revenue and 47% growth in underlying PBT Leverage & Expand Internationally Bookings in Sweden have grown at 250% YOY and Norway site is launched Source: Company information 3 Note: Financials are based on audited IFRS accounts
Business Model ADDRESSABLE MARKET +14% STRUCTURAL MARKET Short haul beach OTB share of Online GROWTH & MARKET Unique visitors holidays dynamically market traffic penetration SHARE GROWTH packaged +20% +4% +16% OPTIMISE CUSTOMER £ Revenue per Revenue per Conversion PROPOSITION & booking unique visitor LEVERAGE £ REVENUE +37% Revenue DRIVING EFFICIENT Marketing Marketing SHARE GROWTH & spend per Unique visitors investment unique visitor STRENGTHENING BRAND Fixed and Variable Costs OTB’s business model is centred on driving efficient growth in market share whilst maintaining and improving both conversion and £ revenue per booking SCALE DRIVES Our strategic initiatives are focused on driving the performance of all of these levers +45% OPERATIONAL LEVERAGE EBITDA growth is the cumulative effect of improvements in performance of all of the EBITDA levers individually Source: Management Information 4 Note: Financials for OTB are based on audited accounts for FY15 when compared to FY14
Disruptive retailer of beach package holidays On the Beach has the product advantages of a tour operator with the model advantages of an OTA OTB HIGH £MPB Basket Value /Margin Opportunity LOW £163 TOUR OPERATORS GENERALISED OTAS PRODUCT ADVANTAGES PRODUCT DISADVANTAGES £MPB 5 x higher than OTA £MPB often £30-50 Specialised offering Generalised offering Multiple elements Single element, commodity High basket values purchase Higher margin opportunity Low basket values ATOL Financial protection Lower margin opportunity relative High margin tour to multiple-element operator product with GENERALISED OTAS TOUR OPERATORS a low cost OTA model MODEL ADVANTAGES MODEL DISADVANTAGES Cost base 3-5 x OTA Cost base £20-40 per booking Majority offline sales Majority online sales Legacy technologies Technology led businesses High fixed cost base Low fixed cost base Limited product coverage Broad product coverage Limited product flexibility OTB Cost base LOW HIGH £27 Source: Company information 5
Profit & Loss Account – UK Segment FY15 EBITDA growth of 45% YOY YTD growth year on year: P&L UK Segment Year ending 30 Sep (£m) FY12A FY13A FY14A FY15A TTV +27% Revenue +37% TTV 230.1 280.8 358.3 453.6 - growth % 22.0% 27.6% 26.6% EBITDA +45% Revenue 30.9 37.5 45.6 62.5 Efficient increase in our market traffic share Marketing costs excluding offline (14.2) (18.7) (23.1) (30.4) with marketing spend excluding offline as a % of revenue falling to 48.6% Offline (1.0) (1.7) Total Marketing (14.2) (18.7) (24.1) (32.1) - % of Revenue (excluding offline) 46.0% 49.9% 50.7% 48.6% Despite additional investment to support the Revenue after marketing costs 16.7 18.8 21.5 30.4 growth in direct contracting of £0.6m overhead Variable costs (3.3) (3.2) (3.5) (4.9) as % of revenue fell from 8.6% to 8.2% Overhead costs (3.5) (3.4) (3.9) (5.1) Holding Company costs (0.2) (0.2) (0.3) (0.4) EBITDA 9.7 12.0 13.8 20.0 Holding Company costs have increased £0.1m - growth % 23.7% 15.0% 44.9% due to additional costs to fulfil the - % of Revenue 31.4% 32.0% 30.3% 32.0% requirements of a plc Daily Unique Visitors '000 36,439 40,278 47,672 54,410 Bookings '000 232 271 326 384 EBITDA % revenue at 32% after significant Conversion 0.64% 0.67% 0.68% 0.71% investment for growth in offline and direct Revenue per Booking 133.2 138.4 139.9 162.8 contracting in FY14 Revenue per daily UV 0.85 0.93 0.96 1.15 Variable cost % Revenue (1) 10.7% 8.5% 7.7% 7.8% Overhead cost % Revenue (2) 11.3% 9.1% 8.6% 8.2% (1) Variable costs % revenue include wages in the contact centre, card costs and communications divided by revenue (2) Overhead costs % revenue is overhead costs excluding depreciation divided by revenue Source: Company Information Note: Financials are based on audited IFRS accounts 6
Profit and Loss Account - International Investment in Sweden to build scale and brand P&L International Segment Success in international markets will be Year ending 30 Sep (£m) FY12A FY13A FY14A FY15A profitable performance within 2-3 years of launch at scale TTV 0.9 0.1 1.6 5.6 After a soft launch in FY14, in FY15 OTB has Revenue 0.1 - 0.1 0.7 invested to grow its share of market both online and offline whilst driving Marketing costs excluding offline (0.1) (0.1) (0.7) (1.8) improvements to conversion and non Offline (0.4) branded cost per UV Total Marketing (0.1) (0.1) (0.7) (2.2) Revenue after marketing costs - (0.1) (0.6) (1.5) Improvements delivered to site to support Variable costs - - - (0.1) the Swedish launch are expected to increase Overhead costs - - (0.1) (0.2) efficiency of future market rollout EBITDA - (0.1) (0.7) (1.8) Bookings 1,725 190 1,231 4,736 Source: Company Information 7 Note: Financials are based on audited IFRS accounts International only
Profit and Loss Account - Group Underlying profit before tax +46.5% increase YOY Shareholder loan interest and amortisation P&L Total of acquisition intangibles below underlying Year ending 30 Sep (£m) FY12A FY13A FY14A FY15A Profit after tax EBITDA UK segment 9.7 12.0 13.8 20.0 EBITDA International segment - (0.1) (0.7) (1.8) Future cash conversion combined with the Group EBITDA 9.7 11.9 13.1 18.2 reduction of debt will reduce financing costs Depreciation and amortisation (1) (1.1) (1.1) (1.3) (1.8) EBIT 8.6 10.8 11.8 16.4 Effective tax rate in FY14 and FY15 was External Financing costs (0.1) 0.2 (1.6) (1.6) affected by disallowed shareholder interest Non trading costs (0.5) (0.5) (0.3) (0.3) under the ATCA which will no longer be Profit Before Tax 8.0 10.5 9.9 14.5 there in FY16 as shareholder debt was repaid Corporation Tax (1.7) (2.3) (1.8) (2.9) by issue of shares Profit after Tax Underlying 6.3 8.2 8.1 11.6 Shareholder Interest (4.0) (4.8) (7.0) (7.8) Deal Fees - - (3.4) (4.9) To ensure alignment with investors the Amortisation of acquired intangibles - - (4.3) (4.3) Board will implement an executive / senior Deferred tax on amortisation of acquired intangibles - - 0.9 0.9 management LTIP which targets EPS Retained Earnings 2.3 3.4 (5.7) (4.5) overperformance and share price growth Effective tax rate 42.5% 40.4% 62.1% 43.3% Source: Company Information Note: Financials are based on audited IFRS accounts Note: Effective tax rate is based on corporation tax divided by retained earnings excluding deal fees and amortisation of intangibles 8
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