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THE UK’s LEADING OPERATOR OF SPECIALIST HOLIDAY BUSINESSES

NOVEMBER 2002. THE UK’s LEADING OPERATOR OF SPECIALIST HOLIDAY BUSINESSES. Holiday break plc OVERVIEW. One of only three quoted UK tour operators Three operating divisions - Camping, Hotel Breaks and Adventure Holidays

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THE UK’s LEADING OPERATOR OF SPECIALIST HOLIDAY BUSINESSES

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  1. NOVEMBER 2002 THE UK’s LEADING OPERATOR OF SPECIALIST HOLIDAY BUSINESSES

  2. Holidaybreak plcOVERVIEW • One of only three quoted UK tour operators • Three operating divisions - Camping, Hotel Breaks and Adventure Holidays • 2001 turnover £192.5m - pre-tax profits £23.8m (£21.6m after goodwill amortisation and exceptional operating costs) • Consistent growth record - five years of growth in profits, eps and dividend • Aiming to grow organically and through further acquisitions • Acquired Eurosites from MyTravel plc on 30th September 2002 • Further profits and dividend growth in 2002

  3. Turnover Profit Before Tax* £m £m COMPOUND GROWTH17% COMPOUND GROWTH15% **12 months pro-forma *12 months pro-forma * Before goodwill amortisation and exceptional operating costs Holidaybreak plcOUR RECORD (1)

  4. Earnings per Share* Dividend Pence Pence COMPOUND GROWTH12% COMPOUND GROWTH12.5% **12 months pro-forma * Before goodwill amortisation and exceptional operating costs Holidaybreak plcOUR RECORD (2)

  5. Holidaybreak plcTOPICS COVERED • UK travel industry overview • Our businesses • Common characteristics of Group companies • Financial information • Current trading and prospects

  6. UK Holiday SectorCONSUMER TRENDS • Consumers - more knowledgeable, more demanding, less brand loyal • Independent and tailor-made holidays increasingly favoured • Increase in multiple holiday taking and short breaks (domestic and overseas) • ‘Grey’ market increasing in importance • Other growth areas are long-haul and activity/ special interest • Late booking trends partly driven by bargain hunting and partly by lifestyle changes and more frequent travel

  7. UK Holiday SectorINDUSTRY DEVELOPMENTS • Four major players in UK: Thomson (TUI/Preussag), My Travel (Airtours), Thomas Cook (C&N) and First Choice - 70% share of inclusive holidays sold and own 45% of high street agents. Further consolidation likely. • Vertical integration strategy exposed by recent industry trends • Many specialist operators and independent agents continue to thrive • Low cost airlines (Easyjet, Ryanair, Go etc) have challenged existing industry model and changed consumer behaviour • Distribution channels fragmenting - internet, teletext, TV channels, Off the page

  8. Holidaybreak plcPOSITIONING AND STRATEGY • Quality market leading businesses in sectors with good growth potential • Avoid volatile, low margin, short-haul package holiday market • Organic growth combined with ‘bolt-on’ acquisitions to existing divisions and acquisition of travel businesses in new sectors • Characteristics of Group businesses provide an excellent platform for growth and acquisition template

  9. Original and largest part of the Group - 54% of 2001 sales Three market leading brands - Eurocamp and Keycamp - Acquisition of Eurosites (Sept 2002) Pre-sited mobile-homes and tents on quality, third party owned camp-sites in France, Italy and seven other countries - flexible contracts c.50% of customers non-UK (mainly German and Dutch) Holidaybreak plcCAMPING DIVISION

  10. Courier and children’s activity service Tailor made packages - any day to any day Self-drive holidays - ferry inclusive from UK Mainly direct sell but some retail agent sales. Internet increasingly important Mid to upper income, family customer base Holidaybreak plcCAMPING DIVISION

  11. Acquired 1995 - 30% of 2001 sales Superbreak and Hotel Breaks the main brands Breaks in 1400 UK hotels (200 in London) No commitment allocations Price guarantee to customers Rail inclusive and theatre breaks available Holidaybreak plcHOTEL BREAKS

  12. 60% of sales through UK travel agents - sector share 65% Direct and internet sales growing fast (nearly 40%) Two on-line internet booking sites - Superbreak.com (UK and Eurobreaks) and Hotelnet.co.uk (worldwide) Accommodation only European cities programme recently launched (450 hotels/40 cities) Holidaybreak plcHOTEL BREAKS

  13. Explore Worldwide and Regal Diving acquired in 2000 - 16% of 2001 sales Explore is the UK market leader in worldwide adventure travel and largest European operator Small groups with own tour leader - 100 countries Scheduled flights Sells direct and through overseas GSAs Holidaybreak plcADVENTURE

  14. Regal is the leading UK operator of scuba diving holidays All levels catered for - Red Sea (Egypt - 80% of sales). Maldives, Caribbean, Far East growing fast Charter flights to Red Sea, scheduled flights to other destinations Sells direct and through specialist dive shops/centres Holidaybreak plcADVENTURE

  15. Holidaybreak plcCOMMON CHARACTERISTICS • Market Leading businesses - Eurocamp, Keycamp, Superbreak, Explore Worldwide and Regal • Growth opportunities - in all divisions • Healthy margins - much higher than sector norm • Low fixed cost commitments - flexible business models • Strongly cash generative - especially Hotel Breaks and Adventure

  16. Common CharacteristicsMARKET LEADERSHIP

  17. Common CharacteristicsGROWTH PROSPECTS

  18. Common CharacteristicsHEALTHY OPERATING MARGINS • Adventure margin in 2000 shows part year only, following acquisitions • Holidaybreak margins are well above industry norms and compare favourably with charter air package operators

  19. Common CharacteristicsLOW FIXED COSTS

  20. Common CharacteristicsCASH GENERATION

  21. Holidaybreak plcFINANCIALS • 2001 ROCE 21.7% (2000 : 20.4%) • Pre-acquisition annual capex (mainly Camping) requirement (+ £15m net) - depreciation + £12m • 2001 interest cover 8.6 times - will increase in 2002 • Net currency exposure limited • Strong operational cash flow but seasonal • Headroom within banking facilities for further acquisitions

  22. All stated before exceptional operating costs and goodwill amortisation Holidaybreak plc2001 PROFIT & LOSS ACCOUNT PRELIMINARY RESULTS

  23. Holidaybreak plcHALF-YEAR RESULTS • £5.9m loss* entirely normal (2001 : £6.7m*) *Before tax and goodwill amortisation • Hotel breaks - substantial growth at the top line - margin improvement • Adventure - pleasing sales performance following post September 11th disruption - reduced margins due to load factor pressures • Camping - similar loss to 2001 • Interest charge down • Substantial net debt reduction

  24. Holidaybreak Performance & Prospects2002 TRADING UPDATE - 04/09/02 • Camping sales 6% up • Hotel Breaks over 30% up, margins improved • Adventure sales 3% up, but margins have suffered • Confident that ‘upper end of market expectations’ will be met • Preliminary Results announcement December 5th 2002 • Generally positive outlook for 2003 although some caution due to political and economic uncertainties

  25. Holidaybreak Performance & ProspectsOUTLOOK FOR 2003 - 30/09/02 • Holidaybreak businesses and sector in which they operate have generally proved resilient in the past • Camping sales currently level with 2002 - early in booking cycle • Hotel Breaks sales 35% ahead - UK consumer demand still healthy • Adventure sales up 9% - Middle East situation causing some concern • Strong first half anticipated

  26. Acquisition of EurositesTRANSACTION DETAILS • Eurosites brand plus Dutch, German and Danish sales agencies • 2,770 mobile-homes (av age: 3.6 years) and 1,399 tents plus equipment (H/break: 7,372 mobiles and 6,698 tents) • Eurosites in 2002: - Sales £27.1m and estimated operating profits of £3.7m - 35,000 bookings (c.150,000 pax) - Used 86 camp-sites in France, Italy, Spain, Germany, Holland and Luxembourg of which 54 were also used by Eurocamp and/or Keycamp • Distribution agreement with MyTravel UK retail (Going Places/Travelworld) • Database of 150,000 customers and c.1m enquirers

  27. Acquisition of EurositesBENEFITS (1) • Relatively new mobile-home fleet • Holidaybreak now the only serious player in tent holidays • Ability to manage sector capacity levels to ensure healthy occupancy at sensible prices • Access to pitches • Cost efficiencies - elimination of duplicated costs/ economies of scale

  28. Acquisition of EurositesBENEFITS (2) • Purchasing benefits - transport operators, camp-sites, manufacturers etc • Enhanced UK retail distribution • Eurosites the only substantial direct competitor in Germany and Denmark • Office in Copenhagen will be retained and used for all Holidaybreak brands

  29. Acquisition of EurositesSTRATEGY AND INTEGRATION • Operate Eurosites as stand alone business for summer 2003 • Immediately combine overseas operation • Transfer UK business operation from Accrington to Northwich at end of 2002 • Similar transfers in Germany and Holland (but keep office in Denmark) • Various options for 2004 - continue with current positioning - reposition Eurosites brand - consolidate into Eurocamp and Keycamp - combination of the above

  30. HolidaybreakplcSUMMARY • Quality market leading businesses in attractive sectors with good prospects for growth and also good defensive qualities • Consistent record of earnings and dividend growth - strongly cash generative • Further profits growth in 2002 expected • Holidaybreak well placed to benefit from current holiday sector trends - very strong cash generation a key characteristic of the business • Recent acquisition of Eurosites is significantly earnings enhancing • We view the future with confidence

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