interim results presentation – may 2011. holidaybreak plc interim results 2011 slide 1...

Interim Results presentation – May 2011

Holidaybreak plc Interim Results 2011 Slide 2

Introduction• Strong performance from Education (96% booked for

2011) • PGL UK centres 99% booked for 2011• Strong start to 2012 – 39% booked; PGL UK centres at

63%

• Excellent trading performance from Meininger; 2 new sites this year

• Resilient performance in tough operating conditions

• Traditional travel businesses affected by political disruption (Adventure) and a weak consumer market (Hotel Breaks)

• Focus on cash generation, margin and cost control

• Expect to meet management expectations for the full year; interim dividend increased by 5%

Holidaybreak plc Interim Results 2011

Neil BrightGroup Finance Director


Group results

1 Before amortisation of other intangible assets acquired via business combinations of £0.7m (2010: £0.9m), separately disclosed items of £1.1m (2010: £nil) and, for loss per share, the tax effect thereof of £0.2m (2010: £0.2m)

2 Before IAS 39 mark-to-market revaluations of financial derivatives of £4.2m credit (2010: £1.4m charge) and, for loss per share, the tax effect thereof of £1.1m charge (2010: £0.5m credit)

Headline results

H1 2011 H1 2010

Revenue £139.6m £150.2m

Operating loss 1 £12.4m £11.0m

Loss before tax 1,2 £19.2m £17.7m

Loss per share 1,2 20.0p 19.1p

Interim dividend 3.35p 3.20p

Net debt £148.8m £129.2m


Divisional results

1 Education includes share of Meininger post tax profit of £0.3m (2010: £nil)

2 Before amortisation of other intangible assets acquired via business combinations of £0.7m (2010: £0.9m) and separately disclosed items of £1.1m (2010: £nil).

Education

£m

Adventure

£m

HotelBreaks

£m

Camping

£m

Group

£m

Revenue 2011 41.0 38.8 59.7 0.1 139.6

v2010 -3.0 -2.1 -5.4 -0.1 -10.6

Operating (loss) profit1,2 -2.3 -2.0 4.2 -12.3 -12.4

v2010 0.2 -1.4 -0.3 0.1 -1.4


Movement in net debtH1 2011

£mH1 2010

£m

EBITDA (excluding share of associates)

-10.3 -7.6

Share based payments charge 0.2 0.3

Working capital movement 11.9 23.3

Net capex -7.4 -4.8

Operating cash flow -5.6 11.2

Tax (paid) refunded -4.8 0.5

Interest -6.5 -5.1

Free cash flow -16.9 6.6

Currency and non-cash movements -1.4 2.3

Acquisitions and intangibles -30.8 -

(Increase) decrease in net debt -49.1 8.9


Net debt & facility utilisation

• Net debt at 31 March was £148.8m (2010: £129.2m)

• At 31 March we are approaching peak facility utilisation- minimum cash headroom of £40m in first half- net debt is now reducing as normal

• Capex increased in H1 due to the timing of spend- full year guidance of £17.1m


Balance sheet2011

£m2010

£m

Intangibles 165.0 166.7

Property, plant and equipment 202.6 200.3

Investment in associates* 31.5 -

Net current liabilities -126.0 -126.4

Cash and cash equivalents 51.1 51.2

Short term borrowings -15.3 -4.7

Long term borrowings -184.6 -175.7

Deferred tax -30.0 -31.4

Net assets 94.3 80.0

* Acquisition of a 50% stake in Meininger for £31.1m in December 2010


Interest & currency hedges• 16% of Bank debt is at floating interest rates

• Effective average interest rate c.8.2% due to hedging instruments

• 21% of Group EBITA in € zone

• Other net exposure- c. €51m- c. $21m

• 91% of Group’s € and 99% of Group’s $ requirements for 2011 bought at average rates of €1.17 and $1.58


Financial summary• Revenue -7.1%

- Distorted by timing of Easter and geopolitical events

• Headline operating loss -£1.4m vs last year- -£0.4m vs. last year, pre Middle East and North Africa impact

• Net debt increased by £19.6m to £148.8m- After £30.8m acquisition in Meininger- Minimum headroom £40m in first half- Sufficient financial headroom to continue to invest in Education

• Interim dividend increased 5% to 3.35p


Martin DaviesGroup Chief Executive


Operational summary• Core strategy is working; Education share of the Group

increasing

• European sales mix strengthening

• Strong trading visibility for FY11

• Sales mix across Group moving to higher margin products

• Meininger trading above plan on all KPIs

• Adventure disrupted by geopolitical events

• Hotel Breaks mitigating difficult trading environment with tight control of cost base

• Camping continues to experience later booking trends.


Education• Sales intake currently -1% reflecting a decline in

lower margin products; 96% booked overall, UK centres at 99%

• High visibility enables us to improve gross margin through maximising yields and profitability of owned centres

• PGL is benefiting from LEA consolidation

• NST trading well, encouraging signs for 2012

• Education is 39% booked for 2012;PGL centres at 63%


Meininger: creating a European leader

• 50% stake bought on 16 December for £30.8m− Option to acquire remaining 50% over next 2-3 years

• New Salzburg site (opened mid April) and Berlin (June 2011) increases bed capacity by 23% to 4,550

• 4 sites secured for 2011/12, increasing capacity by a further 1,600 beds

• Pipeline of attractive sites – Brussels & Amsterdam in 2012/13


Education Division: progress on strategy

Slide 15

• Roll out Meininger product to key school trip destinations outside Germany

• Focus on targeting large German education travel market currently underserved by German education specialists

Secondary school study tours at c.€270m (UK at c.£180m) Meininger leading provider of bespoke trip accommodation NST/EST working with Meininger to develop tour operator products to

German schools market

Primary school adventure centre market underexploited

Already started to deliver inbound PGL product via relationship with Meininger

Significant opportunities exist to offer PGL concept to German schoolsVision

No. 1 educational travel provider in Europe


Adventure

• Sales intake currently at -3% due to external events

• Trading was strong prior to MiddleEast and North Africa events

• Performance negativelyaffected by these events Estimate full year profit impact of

£1.5m including £1m in H1

• Capacity adjustments made to focus on most profitabletours and destinations


Hotel Breaks• Sales intake currently at -9%; -6% excluding lost airport

hotel contracts

• Strong focus on tight control of costs across the division

• Change in sales mix driving improvement in margin performance

• Superbreak’s retail travel agent sales lower than last year due to tough operating conditions across market

• Superbreak’s B2C channel showing strong growth from Superbreak.com

• Bookit adversely affected by the weak Dutch consumer market


Camping• Sales intake at -5%, versus -3% capacity

• Difficult trading conditions in the UK and the Netherlands; Germany performing well

• Trend towards later bookings continues

• Focus on maintaining high margins by maximising yields and occupancyacross the various sales markets

• Mobile-home life extension programme working well


Outlook• Strong visibility at Education

• Excited about Meininger growth opportunities

• Focus on cash management and cost control at traditional travel businesses

• Expect to perform in line with expectations for the full year

• Encouraging signs for 2012; Education 39% booked, PGL UK centres at 63%


Appendices


Trading update

Year on year sales intake (%)Year to date at

21 May 2011Year to date at

12 Feb 2011

% of revenue booked at 21

May 2011

EDUCATION & ADVENTURE

-2% Level

Education -1% Level 96%

PGL UK centres Level Level 99%

Adventure -3% -1%

HOTEL BREAKS -9% -9%

CAMPING -5% -4% 82%

GROUP -4% -3% 85%

MEININGER 16% 25%

Capacity changes: PGL UK centres at -1% and Camping at -3%

Meininger’s performance reflects the anniversary of the Frankfurt site which opened in April 2010


Capital expenditure

2011 capital

expenditure

HY1 HY2 Full

Year

Education 4.1 1.8 5.9

Adventure 0.3 0.8 1.1

Hotel Breaks 0.4 1.0 1.4

Camping 4.0 6.3 10.3

CAPEX 8.8 9.9 18.7

Camping disposals -1.4 -0.2 -1.6

NET CAPEX 7.4 9.7 17.1

Net Camping 2.6 6.1 8.7


Meininger Site Location No. of

bedsNo. of rooms

Opening date

1 Berlin Hallesches Ufer Germany

2 Berlin Tempelhofer Ufer Germany

3 Munich Germany

4 Cologne Germany

5 London UK

6 Vienna City Austria

7 Berlin Prenzlauer Berg Germany

8 Hambug Germany

9 Berlin central station Germany

10 Frankfurt Germany

Total capacity at H1 2011 3,707 1,022

11 Salzburg Austria May 2011

12 Berlin Oranienburgerstr. Germany H2 2011

Additional capacity at end 2011 843 219

13 Vienna Downtown Austria H1 2012

14 Vienna Schiffamt Austria H1 2012

15 Berlin Airport Germany H1 2012

16 Frankfurt Airport Germany H1 2012

Additional capacity at end 2012 1,644 559

17 Brussels Belgium H2 2013

18 Amsterdam Netherlands H2 2013

Total expected capacity at end 2013 7,000 2,200


Interest hedges

• Put in place 2007-2008

• 16% of bank debt is floating

• Effective average interest rate is 8.2% at revised margin and bank base rate at 24 May 2011

• IAS Valuation at 31 March was -£6.7m

Amount£m

Product FixedRate

CapRate

Kick-inRate

EndRate

€50.0m 5 yr collar 4.50% 3.00% 15/01/2012

€40.4m 5 yr collar 6.50% 6.17% 30/09/2012

€10.0m 5 yr swap 3.98% 21/10/2013

€40.0m 5 yr swap 4.355% 17/10/2013


DisclaimerThis document contains forward-looking statements with respect to the operations, performance and financial condition of Holidaybreak. By their nature, these statements are subject to risks, assumptions and uncertainties that could cause actual results to differ materially from those expressed or implied because they relate to future events.

Unless otherwise required by applicable law, regulation or accounting standard, we do not undertake to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise.

The financial information referenced in this presentation does not contain sufficient detail to allow a full understanding of the results of Holidaybreak. For more detailed information, please see the full year results announcement for the year ended 30 September 2010 which can be found on the Investor Relations section of the Holidaybreak website – www. holidaybreak.co.uk

Interim Results presentation – May 2011

interim results presentation – may 2011. holidaybreak plc interim results 2011 slide 1...

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