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The European The European specialist holiday groupspecialist holiday group
PRELIMINARY RESULTS 2005
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Holidaybreak plcPRELIMINARY RESULTS 2005
• Bob Ayling (Chairman)- Overview
• Bob Baddeley (Finance Director)- Finance review
• Carl Michel (Chief Executive)- Divisional overview- Group strategy and opportunities
Q & A
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Holidaybreak plcPRELIMINARY RESULTS 2005
- Best ever performance in terms of headline PBT and free cashflow
- Results in line with expectations
- Hotel Breaks and Adventure Travel Divisions now 2/3rds of Group sales
- Newly acquired Dutch businesses perform well
- Camping continues to deliver strong cash on reducedcapacity
- Current trading in line with expectations
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Holidaybreak plcPRELIMINARY RESULTS 2005
FINANCE DIRECTOR’S REVIEW
BOB BADDELEY
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Preliminary Results 2005FINANCIAL HIGHLIGHTS
• Turnover + 7.6% to £303.0m (2004: £281.6m)
• Profit before tax +14.3% to £32.0m (2004: £28.0m)
• Dividend + 10%
• Net debt increased by £10.4m
• 23% ROIC (2004: 24%)
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Preliminary Results 2005PROFIT &LOSS ACCOUNT
* All stated before goodwill amortisation and impairment and (in 2004 only) exceptional costs
2005 2004
£m £mTurnover 303.0 281.6 +7.6%Operating Profit * 35.8 31.4 +14.0%Profit before Tax * 32.0 28.0 +14.3%Earnings per Share * 48.8p 44.0p +10.9%Dividend per Share 26.6p 24.2p +10.0%Dividend cover * 1.8x 1.8x -
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Preliminary Results 2005DIVISIONAL RESULTS
Hotel Breaks Adventure Camping Group£m £m £m £m
Turnover 2005 126.7 62.6 113.7 303.0v 2004 +4.7% +67.3% -7.7% +7.6%
PBIT 2005 17.7 5.1 13.0 35.8v 2004 +22.0% +62.6% -5.4% 14.1%
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Preliminary Results 2005DIVISIONAL RESULTS -ACQUISITIONS
£m
Total Transaction Value: Bookit 31.6Turnover: Bookit 5.9
Djoser 19.1
25.0Operating Profit: Bookit 2.8
Djoser 1.4
4.2
Period from date of acquisition to 30 September 2005
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• Net debt increased by £10.4m, after acquisitions of BRC &
Djoser (£39.0m)
• Interest cover (pre-goodwill) 9.3 times (2004 : 9.4x)
• Currency and interest rate hedging in place
• Refinanced Bank Facilities to take advantage of market
conditions
Preliminary Results 2005CASH FLOW
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Preliminary Results 2005FREE CASH FLOW – by Division
2005 2004£m £m
Hotel Breaks 14.9 16.9Adventure 12.7 2.8Camping 21.9 8.9Interest & tax (11.4) (11.6)
Group 38.1 17.0
Free cash flow = Operating cash flow after net capex, interest & tax
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• Net debt increased to £22.9m- £39.0m (net) spent on acquisitions
- Gearing 60% (2004 :34%)
• Goodwill on acquisitions- Djoser £16.4m
- Bookit £22.3m
• £8.7m impairment of Eurosites Goodwill
Holidaybreak plcBALANCE SHEET
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• 2005 reduced capital expenditure (net of disposals)
• 2006 capex expected to be at similar levels
• Mobile-homes capacity reduced in 2005 by 11% to 9,708
• Freehold properties – sales and purchase
Preliminary Results 2005CAPITAL EXPENDITURE & DISPOSALS
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• Low fixed costs in Hotel Breaks and Adventure Travel
• Double digit margins – well above travel industry norms
• All divisions cash generative
• Healthy return on invested capital
Holidaybreak plcFINANCIAL SUMMARY
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Holidaybreak plcPRELIMINARY RESULTS 2005
CHIEF EXECUTIVE’S REVIEW
CARL MICHEL
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Holidaybreak plcPRELIMINARY RESULTS 2005
DIVISIONAL OVERVIEW
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• Portfolio of specialist businesses, all market leaders in their sectors
• Increasingly European
• Increasingly online
• Well placed to grow
• Emphasis on cash, margins and profitability
Holidaybreak plcOVERVIEW
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Holidaybreak plcHOTEL BREAKS
• 2.45m customers (2004: 1.70m)– Including 0.65m from Bookit, the #1 Dutch player
• London impacted by 7/7
• Bookit developing differentiated content (bungalows and small hotels)
• Business increasingly moving online (Bookit already at 85%, Superbreak at 25%)
• Strongly cash generative – no capacity commitments
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• 60,000 customers (2004: 41,000) – including 15,000 from Djoser, the #1 Dutch player
• Business model remains flexible– skill is in raising tour load factors
• Broader portfolio reduces destination risk
• Brand being extended – family, walking, cycle – 80 tours added (+20%) for current year
• Increasingly online– Explore now at 25%
– Djoser 65%
Holidaybreak plcADVENTURE TRAVEL
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• 523,000 customers (2004: 570,000)
• European business – one third of sales non-UK
• Strong repeat business– high call conversions
– customer satisfaction high
• Developing online capability
• Capital expenditure tightly controlled
• Highly cash generative
• For 2006, right-size the business – taking out further 16% capacity to reflect weaker low season
demand and shifts in consumer preferences
Holidaybreak plcCAMPING
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Holidaybreak plcCURRENT TRADING
• Hotel Breaks– Down 4% reflecting weakness in London market
• Adventure Travel– Up 9%
• Camping– Down 12% on capacity reduced by 16%
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Holidaybreak plcPRELIMINARY RESULTS 2005
THE CHANGING MARKET PLACE
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• Consumers increasingly aspirational – willing to travel further
• Greater confidence in buying – consumers able to unbundle and buy own components
– e.g. more low cost flights plus camping
• Fragmentation of holiday time – more short breaks
• Continuing channel shift to online
Holidaybreak plcCHANGES IN THE CUSTOMER ENVIRONMENT
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• Hotels – Main online leisure competitors are Octopus (Cendant) and
Hotelconnect– Growth in hotel groups own sites, with trend to further
concentration– Other intermediaries (Opodo, Hotels.com, Lastminute) not as
leisure focused
• Adventure Travel– Little direct competition due to strong sector growth and
fragmented nature of market
• Camping – Main competitor is Cendant– Huge self catering market
Holidaybreak plcCHANGES IN THE COMPETITIVE ENVIRONMENT
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• Fewer school age families– need to extend camping to other consumer groups esp. in low
season
• Later booking– important to have good availability and the systems to support
such flexibility
• Online travel agents marketing spend– focus for us is on search engine spend and white labels, not on
trying to outspend on advertising
Holidaybreak plcINDUSTRY TRENDS
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Holidaybreak plcPRELIMINARY RESULTS 2005
WHERE WE GO NOW
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• Attractive market positions
• Strong reasons why customers choose to buy from us
• Some unique & distinctive competencies
• Numerous distinct and exciting opportunities to grow our businesses
Holidaybreak plcFIRST IMPRESSIONS
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• Market leader in all UK/Dutch businesses
• Superbreak leader in retail trade sold short breaks
• Good packaging – reduces prospect of ‘disintermediation’
• Strong trade relationships = entry barriers
Holidaybreak plcATTRACTIVE MARKET POSITIONS
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• Hotel Breaks – well established relationships with UK hoteliers, best rates and availability
• Adventure Travel – tremendous breadth of product and complex itineraries that are hard to replicate. Significant brand awareness
• Camping – best sites, best emplacements on site, range of accommodation, operational back up in depth. Trusted brands
Holidaybreak plcSTRONG REASONS WHY CUSTOMERS CHOOSE TO BUY FROM US
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• Unique competencies– Hotel Division: low cost efficient distribution, high service to
trade– Adventure Travel: constructing complicated itineraries,
developing new products, raising tour load factors– Camping: efficiency in operations
• Other competencies
– Reputation with customers (Camping, Explore, Djoser, Bookit) and trade (Superbreak)
– Innovation (Explore, Superbreak)– Pan-European Marketing (Camping)
Holidaybreak plcSOME UNIQUE & DISTINCTIVE COMPETENCIES
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• Online – all businesses are adding functionality and improved design to
raise look-to-book ratio
• Product extensions– e.g Walking tours (Explore), chalets (Camping), small hotels
(Bookit)
• European acquisitions– ‘national’ model has better customer appeal and higher margins
Holidaybreak plcNUMEROUS DISTINCT AND EXCITING OPPORTUNITIES TO GROW
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• Business Development– identifying, prioritising and resourcing of emerging customer
requirements
• Emphasis on IT– new appointments in Camping and Explore. Now looking at
better ways to share best practice/develop synergies
• Europe– look at extending our footprint into other national markets, if
sensible opportunities arise
Holidaybreak plcFIRST STEPS………
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Holidaybreak plcPRELIMINARY RESULTS 2005
BACKGROUND INFORMATION
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Preliminary Results 2005DIVISIONAL RESULTS – excl. ACQUISITIONS
Hotel Breaks Adventure Camping Group£m £m £m £m
Turnover 2005 120.8 43.5 113.7 278.02004 120.9 37.4 123.2 281.6
Operating Profit 2005* 14.9 3.7 13.0 31.62004* 14.5 3.2 13.7 31.4
* All stated before goodwill amortisation
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Preliminary Results 2005BALANCE SHEET
2005 2004
£m £mFixed Assets 62.9 70.6Goodwill 62.3 36.2Net Current Liabilities (57.8) (51.7)Deferred Tax (6.1) (6.1)Net Debt (22.9) (12.5)Net Assets 38.4 36.5
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Preliminary Results 2005MOVEMENT IN NET DEBT
2005 2004£m £m
Operating Cash Flow 52.0 46.3Acquisitions (39.0) -Capital Expenditure (Net) (2.5) (13.5)Interest (4.4) (4.0)Tax (7.0) (7.5)Dividends (11.7) (10.7)Shares issued (net of purchases) 2.2 0.2(Increase) reduction in net debt (10.4) 10.8
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Preliminary Results 2005CAPITAL EXPENDITURE & DISPOSALS
£m Mobile- Camping Other Totalhomes Equipment Assets
Opening NBV 56.7 5.9 8.0 70.6Additions 4.3 2.3 6.0 12.6Disposals (4.0) 0 (2.6) (6.6)Depreciation (8.4) (3.5) (1.8) (13.7)Closing NBV 48.6 4.7 9.6 62.9