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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| On The Beach Group Plc | LSE:OTB | London | Ordinary Share | GB00BYM1K758 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 3.20 | 2.09% | 156.20 | 156.00 | 156.80 | 158.00 | 152.20 | 152.20 | 732,090 | 14:42:37 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Travel Agencies | 170.2M | 10.1M | 0.0606 | 25.97 | 262.29M |
From Apr 2019 to Apr 2024
TIDMOTB
RNS Number : 7945E
On the Beach Group PLC
11 May 2017
11 May 2017
On the Beach Group plc
("On the Beach", the "Company" or the "Group")
INTERIM RESULTS FOR SIX MONTHSED 31 MARCH 2017
33.8% Growth in GROUP PROFIT BEFORE TAX
Financial & Operational Highlights
Group
-- Group revenue increased 7.3% to GBP38.1m (H1 2016: GBP35.5m) with a later booking pattern for peak departures
-- Group profit before tax up 33.8% to GBP9.9m (H1 2016: GBP7.4m) -- Adjusted group profit before tax(1) up 28.4% to GBP12.2m (H1 2016: GBP9.5m) -- Basic and diluted earnings per share increased 22.0% to 6.1p (H1 2016: 5.0p) -- Adjusted earnings per share up 27.1% to 7.5p (H1 2016: 5.9p) -- Net debt at half year reduced to GBP2.3m (H1 2016: GBP6.6m debt) -- Interim dividend declared of 0.9p per share (H1 2016: Nil)
-- On 9 May, post half year end, we completed the acquisition of Sunshine.co.uk Limited, an online travel agent based in the UK, for a net consideration of GBP12.0m
(1) Adjusted Group profit before tax is profit before tax before amortisation of acquired intangibles of GBP2.1m (H1 2016: GBP2.1m) and share based payments GBP0.2m (H1 2016: nil)
UK
-- UK revenue up 7.1% to GBP37.5m (H1 2016: GBP35.0m)
-- UK revenue after marketing costs up 16.9% to GBP19.4m (H1 2016: GBP16.6m) and up 21.1% to GBP20.1m (H1 2016: GBP16.6m) excluding incremental offline expenditure(2) incurred at end of H1 of GBP0.7m
-- UK EBITDA up 23.3% to GBP14.3m (H1 2016: GBP11.6m) -- Daily unique visitors(3) increased by 9.5% to 27.5m (H1 2016: 25.1m) -- Branded and free traffic increased to 56.7% of overall traffic (H1 2016: 54.6%) -- % revenue spent on online marketing decreased to 40.4% (H1 2016: 46.3%)
(2) Incremental offline marketing expenditure incurred at the end of H1, for which management consider that no benefit would have accrued in H1
(3) Daily UVs: Number of individuals, as defined by an IP address, visiting pages from the onthebeach.co.uk website during a 24 hours period
International
-- International revenue increased 20% in Sweden to GBP0.6m (H1 2016: GBP0.5m) with strengthening growth throughout H1
-- International EBITDA loss of GBP(1.0)m, in line with H1 2016 -- Launch of second international market in Norway during H1
Simon Cooper, Chief Executive of On the Beach Group plc, commented:
"On the Beach has delivered a solid performance in H1, with booking growth strengthening towards the end of the period and continuing into H2. In the Group's AGM Trading Update, management outlined the view that H2 performance would be stronger than H1, with more favourable YOY comparators in H2 and because H1 was impacted by the later timing of the low cost carriers' seat release as well as key hotel partners in the Western Mediterranean holding back capacity to sell in the late market. All of these assumptions played out in the first half and have continued in H2. Given these market dynamics, we took a proactive decision to balance volume and revenue growth. This position remains under constant review to ensure that business performance is optimised.
Strategically, the changing market dynamics are presenting a number of exciting opportunities for On the Beach to leverage its scale and technological capability and we are delighted to have recently completed the acquisition of Sunshine.co.uk to further strengthen our market leading position. Given the resilient and flexible nature of our business model the Board remains confident in delivering a full year result in line with management's expectations."
Analyst Meeting
A meeting for analysts will be held today at the offices of FTI Consulting, 200 Aldersgate, London, EC1A 4HD commencing at 09:30am.
For further information:
On the Beach Group plc via FTI Consulting Simon Cooper, Chief Executive Officer Paul Meehan, Chief Financial Officer FTI Consulting Tel: +44 (0)20 3727 Jonathon Brill 1000 Alex Beagley Fiona Walker
About On the Beach
On the Beach is one of the UK's largest online retailers of beach holidays with a c.20% share of the online short haul beach holiday market. The Group has multiple opportunities to generate further growth and has a vision to become Europe's leading online retailer of beach holidays. On the Beach provides a significant structural challenge to legacy tour operators and travel agents as the Group continues its journey to disrupt the online retail of beach holidays with its scalable, flexible, innovative technology, combined with a strong customer value proposition and a low cost base. The business model is customer-centric, asset light, profitable and cash generative.
www.onthebeachgroupplc.com
Chief Executive's Review
Summary of Operating Performance
On the Beach continues to be a dynamic, entrepreneurial and ambitious business delivering value for money beach holidays that are personalised to the customers' individual needs. The Group maintains a daily focus to improve the quality of its customer proposition and the value that it provides to its growing customer base.
In a market with changing dynamics and booking profile, we have continued to grow market share in H1, with daily unique visitors to site in the UK increasing 9.5% to 27.5m (H1 2016: 25.1m). We have focused on driving this growth efficiently with improvements to our bespoke bid management capability driving online marketing expenditure as a percentage of revenue down to 40.4% (H1 2016: 46.3%) and our revenue after marketing costs increased 16.9% to GBP19.4m (H1 2016: GBP16.6m). Our continued growth has been delivered by executing a focused strategy to optimise our customer proposition to increase conversion and improve margin while driving an efficient increase in our market traffic share, providing further evidence of our ability to gain market share from traditional tour operators.
Strategy and growth
The Group has a mission to make it simple for customers to plan, find and book their perfect beach holiday and a vision to be Europe's leading online retailer of beach holidays.
On the Beach has delivered significant growth within a growing market over the last three years by evolving a strategy based around the following drivers:
1. Out-innovating through agility and investment in talent and technology
-- Improvements to agile working methodologies continue to increase throughput of benefits-delivering features and functionality
-- Continued evolution of core platform to support future innovations
2. Driving an efficient increase in market traffic share
-- Daily unique visitor growth of 9.5% in H1 and significant market share growth -- Branded and free traffic increased to 56.7% of overall traffic to site (H1 2016: 54.6%)
-- Reduction in percentage of revenue spent on online marketing (H1 2017: 40.5% vs H1 2016: 46.3%)
-- Second year of full national TV advertising campaign
3. Optimising and personalising our multi device customer proposition
-- 5.0m logged sessions in H1 2017, a 40% YOY increase (H1 2016: 3.6m) -- Responsive site now serves 52.7% of UK traffic on smartphone (H1 2016: 42.4%) -- Repeat purchase rate has increased to 40.3% (H1 2016: 37.4%)
4. Leveraging increased revenue through direct and differentiated supply
-- Direct contracting has averaged 66% of all hotel buying (H1 2016: 57%)
-- Further progress made to increase percentage of exclusive flight and hotel supply throughout FY17 and beyond whilst maintaining risk-free model
5. Expanding our model into new source markets and products and driving operational leverage
-- Fixed and variable cost as a percentage of revenue reduced to 13.6% (H1 2016: 14.3%)
-- Branded share of traffic on ebeach.se increased to 30.4% (H1 2016: 19.4%) and repeat purchase rate continues to improve
-- Launched Norway website (ebeach.no) at the end of 2016
We have continued to invest in our people and our platform which allows us to innovate at an increasing pace and, in doing so, stay ahead of the competition.
Recent market trends
The Group has witnessed continued reduction in capacity to the Eastern Mediterranean and a corresponding increase in seat capacity to the Western Mediterranean. This shift in market dynamics has led to a number of noteworthy trends, including:
-- Oversupply of seats to key Western Mediterranean destinations has continued to drive down flight prices YOY
-- Weakness of Sterling versus Euro combined with hotel inflation in the Western Mediterranean has increased hotel prices YOY
-- The above offsetting impacts have led to holiday prices being flat YOY with the exception of peak season pricing;
o historically, widely available early booking discounts have encouraged an early booking pattern for peak season with many hotels selling out well in advance of peak;
o this year most early discounts have been removed, leading to a different booking profile for peak season. This means that there is significantly more availability YOY and this is supporting a stronger booking pattern for H2 2017
-- Tour operators' share of sales in the early market were supported by FX hedging and hotel rates for early sales contracted prior to summer 2016, to coincide with the release of summer 17 brochures in spring 2016. These advantages are unwinding as c.40% of currency was hedged pre EU referendum and hoteliers are restricting access to lower rates for peak season.
As a result, some of the Group's larger competitors held a significant transient advantage and many of our key hotelier partners have changed their pricing policies. The Group has continued to drive share of market traffic in a cost effective manner, while extending its offline investment to help to build momentum into the second half of the financial year.
Current Trading & Outlook
The hotel pricing policies that supported strong growth in H1 2016 but suppressed growth in H2 2016, combined with the disruptive activity of Low Cost Travel Group prior to their failure, look set to have an equal and opposite effect on H1 / H2 2017, with significantly softer comparators in H2 2017, and recent trading gives us confidence that the trends seen in H1 are reversing. The business has enjoyed a strong start to H2 supported by greater availability of competitively priced peak season hotel product and strong branded traffic share.
Although the start of 2017 was slow in Sweden, the level of bookings growth towards the end of H1 has continued into H2 giving us confidence that we can achieve strong full year revenue growth in the region. We also launched ebeach.no in Norway at the end of 2016 and progress in this market is in line with management's expectations.
We are efficiently executing our strategy of investing in our brand, supply and technology and we continue to realise the benefits of operational leverage from our low fixed cost base. The current market dynamics are presenting the Group with multiple opportunities to leverage its scale and technological capability to strengthen its market leading position, such as the recently completed acquisition of Sunshine.co.uk, and the Board continues to evaluate opportunities to enhance the Group's market share position.
Financial Review
The Group organises its operations into two principal financial reporting segments, being UK (the "UK Segment"), the Group's established market and International (the "International Segment"), the Group's developing market. In each of the UK Segment and the International Segment, the Group realises 93% of revenue from dynamically packaged holidays with the remainder single element products such as flights or hotels.
UK Segment performance
Hot Features
Premium
GBPm H1 2017 H1 2016 Change
%
Revenue 37.5 35.0 7.1%
------------------------------- ------- ------- -------
Revenue after marketing costs 19.4 16.6 16.9%
------------------------------- ------- ------- -------
Variable costs (2.0) (1.9)
Overhead costs (3.1) (3.1)
EBITDA 14.3 11.6 23.3%
------------------------------- ------- ------- -------
EBITDA % revenue 38.1% 33.1%
------------------------------- ------- ------- -------
Revenue and marketing costs
Revenue increased by 7.1% to GBP37.5m (H1 2016: GBP35.0m) with On the Beach's agile business model allowing the Group to react to rapid changes in consumer demand. The acts of terrorism in recent years, have continued to impact Egypt and the Eastern Mediterranean resulting in continuing stronger demand for holidays in the Western Mediterranean and a shortening of lead times.
Marketing expenses (excluding offline) for the first half as a percentage of revenue decreased to 40.5% (H1 2016: 46.3%) with total expenditure of GBP15.2m (H1 2016: GBP16.2m) driving an efficient increase in our share through the sophistication of our in house bid modelling and attribution tools. We have increased expenditure in H1 on the Group's offline TV advertising to GBP2.9m (H1 2016: GBP2.2m) with a fully national campaign and a TV sponsorship.
UK segment EBITDA
Operational leverage continues to improve and as a result there has been a fall in costs as a percentage of revenue overall:
H1 2017 H1 2016
-------------------------- ------- -------
Variable costs % revenue 5.3% 5.4%
Overhead costs % revenue 8.3% 8.9%
Total 13.6% 14.3%
-------------------------- ------- -------
Variable costs, which comprise mainly contact centre wages and credit card fees, are closely linked to booking volumes and we continue to gain from the benefits of scale. Continued operational leverage and the revenue benefit of direct relationships reduced overhead costs as a percentage of revenue to 8.3% (H1 2016: 8.9%).
EBITDA increased 23.3% to GBP14.3m (H1 2016: GBP11.6m). EBITDA as a percentage of revenue increased from 33.1% to 38.1%.
International Segment performance
GBPm H1 2017 H1 2016 Change
%
Revenue 0.6 0.5 20.0%
------------------------------- ------- ------- ------
Revenue after marketing costs (0.9) (0.8)
------------------------------- ------- ------- ------
Variable costs (0.1) (0.1)
Overhead costs - (0.1)
EBITDA (1.0) (1.0) 0.0%
------------------------------- ------- ------- ------
The Group has focused on growing share both online and offline supported by a TV campaign in December. We also launched a site in Norway mid-way through H1.
Losses in the first half were GBP1.0m (H1 2016: GBP1.0m) and are derived almost entirely from the marketing investment required to drive branded awareness and share of traffic which will in turn improve efficiency.
Group adjusted profit before tax and retained earnings
The Group reports adjusted profit before tax, amortisation of acquired intangibles and deal costs to allow better interpretation of the underlying trend in profit before tax.
GBPm H1 2017 H1 2016 Change
%
Adjusted Group operating profit
before amortisation(1) 12.3 9.6 28.1%
Finance costs (0.1) (0.2)
Finance income - 0.1
-------------------------------------- ------- ------- -------
Adjusted Group Profit before
tax 12.2 9.5 28.4%
-------------------------------------- ------- ------- -------
Share based payments (0.2) -
Amortisation of acquired intangibles (2.1) (2.1)
Profit before taxation 9.9 7.4 33.8%
-------------------------------------- ------- ------- -------
Taxation (2.0) (0.9)
-------------------------------------- ------- ------- -------
Profit for the half year 7.9 6.5 21.5%
-------------------------------------- ------- ------- -------
(1) Includes amortisation of development costs of GBP1m but excludes amortisation of acquired brand and website technology intangible assets of GBP2.1m (H1 2016: GBP2.1m) and share based payments of GBP0.2m
Finance costs
The Group has in place a revolving credit facility of up to GBP35.0m with Lloyds. The drawdown on 31 March 2017 was GBP9.0m (H1 2016: GBP11.5m) and the peak drawdown for the period was GBP11.0m. Borrowing limits vary under the RCF to reflect the seasonal requirements of the Group and as a result of the flexible payment options given to customers.
Taxation
The Group tax charge of GBP2.0m represents an effective rate(1) of 19.6% (H1 2016: 19.7%) which was lower than the average standard UK rate of 20% (H1 2016: 20%). The current tax charge is affected by a deferred tax credit of GBP0.4m (2016 H1: GBP1.0m) which is released in line with the amortisation of GBP2.1m on the valuation of acquired intangibles on the investment by Inflexion in October 2013.
(1) Effective tax rate is calculated as taxation charge excluding deferred tax credits, divided by adjusted group profit before tax
Cash flow and net debt
GBPm H1 2017 H1 2016 FY16 ------------------------------------ --------- -------- ------------------- EBITDA 13.3 10.6 23.3 Share based payment charges 0.2 - 0.1 Capitalised development expenditure (1.3) (1.2) (2.4) Movement in working capital (34.8) (22.5) 0.6 Capital expenditure (0.4) (0.6) (0.6) ------------------------------------ --------- -------- ------------------- Adjusted operating cash flow (1) (23.0) (13.7) 21.0 ------------------------------------ --------- -------- -------------------
(1) Adjusted operating cash flow is stated as net cash (outflow)/inflow from operating activities before tax paid, before deal costs paid and after deducting capital expenditure on PPE and intangible assets,
On an annual basis the Group operates a highly cash generative business model and makes no stock commitment. The cash flow profile of the Group is seasonal with approximately 50% of customers travelling in the period June to August and hence the cash flows (excluding any cash held in the trust) experience a trough prior to June through to August and a peak following this. The movement in the trust account balance for the half year is GBP23.0m (H1 2016: GBP15.0m).
Dividend
The Board has declared an interim dividend of 0.9 pence per share. The interim dividend will be paid on 30 June 2017 to members on the register at the close of business on 2 June 2017.
Simon Cooper
CEO
11 May 2017
Paul Meehan
CFO
11 May 2017
On the Beach Group Plc
INTERIM RESULTS FOR THE 6 MONTHSED 31 MARCH 2017
CONDENSED CONSOLIDATED INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME
For the 6 months ended 31 March 2017
6 months 6 months Year ended
ended 31 ended 30 September
March 2017 31 March 2016
2016
Note GBP'000 GBP'000 GBP'000
unaudited unaudited audited
Revenue 2 38,066 35,504 71,321
Administrative expenses before
amortisation 3 (25,026) (25,181) (48,528)
------------ ---------- --------------
Group operating profit before
amortisation 13,040 10,323 22,793
Amortisation of intangible
assets (3,124) (2,924) (5,971)
------------ ---------- --------------
Group operating profit 9,916 7,399 16,822
============ ========== ==============
Finance costs (78) (125) (100)
Finance income 31 65 230
------------ ---------- --------------
Net finance (costs)/income (47) (60) 130
Profit before taxation 9,869 7,339 16,952
Taxation 4 (1,986) (840) (2,645)
Profit for the period/year 7,883 6,499 14,307
------------ ---------- --------------
Other comprehensive income - - -
Total comprehensive income for
the period/year 7,883 6,499 14,307
============ ========== ==============
Attributable to:
Equity holders of the parent 7,883 6,499 14,307
============ ========== ==============
Basic and diluted earnings per share attributable to
the equity Shareholders of the Company:
From profit for the year 5 6.1p 5.0p 11.0p
Adjusted earnings per share 5 7.5p 5.9p 13.0p
Adjusted profit measure
Adjusted PBT (before amortisation
of acquired intangibles) 3 12,150 9,462 21,315
------------ ---------- --------------
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 March 2017
At 31 At 31 At 30
March March September
2017 2016 2016
Note unaudited unaudited audited
Assets GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets 7 62,828 66,493 64,662
Property, plant and equipment 884 895 747
----------------- -------------------- --------------------
Total non-current assets 63,712 67,388 65,409
Current assets
Trade and other receivables 111,752 92,581 29,933
Cash and cash equivalents 8 55,260 43,700 51,632
Derivative financial instruments - 3,128 1,683
----------------- -------------------- --------------------
Total current assets 167,012 139,409 83,248
Total assets 230,724 206,797 148,657
================= ==================== ====================
Equity
Share capital 10 1,304 1,304 1,304
Retained earnings 217,598 204,514 212,427
Capital contribution reserve 500 500 500
Merger reserve (132,093) (132,093) (132,093)
----------------- -------------------- --------------------
Total equity 87,309 74,225 82,138
Non-current liabilities
Deferred tax 6,607 7,657 7,007
----------------- -------------------- --------------------
Total non-current liabilities 6,607 7,657 7,007
Current liabilities
Corporation tax payable 3,609 3,290 3,647
Loans and overdrafts 9 9,000 11,493 -
Trade and other payables 123,201 110,132 55,865
Derivative financial instruments 998 - -
----------------- -------------------- --------------------
Total current liabilities 136,808 124,915 59,512
Total liabilities 143,415 132,572 66,519
----------------- -------------------- --------------------
Total equity and liabilities 230,724 206,797 148,657
================= ==================== ====================
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Merger Capital Retained Total
For the year ended capital premium reserve contribution Earnings
30 September 2016 reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------- ---------------- ---------- -------------------- ---------- ----------------
Balance at 30
September
2015 195,652 13,856 (132,093) 550 (10,239) 67,726
Capital reduction (194,348) (13,856) - (50) 208,254 -
Share based payment
charges - - - - 105 105
Total comprehensive
profit for the year - - - - 14,307 14,307
Balance at 30
September
2016 1,304 - (132,093) 500 212,427 82,138
------------- ---------------- ---------- -------------------- ---------- ----------------
Share Share Merger Capital Retained Total
For the 6 months capital premium reserve contribution Earnings
ended 31 March 2016 reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------- ---------------- ---------- -------------------- ---------- ----------------
Balance at 30
September
2015 195,652 13,856 (132,093) 550 (10,239) 67,726
Capital reduction
(see note 10) (194,348) (13,856) - (50) 208,254 -
Total comprehensive
income for the
period - - - - 6,499 6,499
Balance at 31 March
2016 (unaudited) 1,304 - (132,093) 500 204,514 74,225
------------- ---------------- ---------- -------------------- ---------- ----------------
Share Share Merger Capital Retained Total
For the 6 months capital premium reserve contribution Earnings
ended 31 March 2017 reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------- ---------------- ---------- -------------------- ---------- ----------------
Balance at 30
September
2016 1,304 - (132,093) 500 212,427 82,138
Share based payment
charges 158 158
Dividends paid
during
the period (2,870) (2,870)
Total comprehensive
income for the
period - - - - 7,883 7,883
Balance at 31 March
2017 (unaudited) 1,304 - (132,093) 500 217,598 87,309
------------- ---------------- ---------- -------------------- ---------- ----------------
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the 6 months ended 31 March 2017
6 months 6 months
ended ended Year ended
31 March 31 March 30 September
2017 2016 2016
unaudited unaudited audited
GBP'000 GBP'000 GBP'000
Profit before taxation 9,869 7,339 16,952
Adjustments for:
Depreciation 220 205 397
Amortisation of intangible assets 3,124 2,924 5,971
Finance costs 78 125 100
Finance income (31) (65) (230)
Share based payments 158 - 105
---------- -------------------- -------------------
13,418 10,528 23,295
Changes in working capital:
Increase/decrease in trade and
other receivables (81,819) (62,850) 247
Increase in trade and other payables 69,988 55,271 1,999
Increase in trust account (22,996) (14,939) (1,661)
---------- -------------------- -------------------
(34,827) (22,518) 585
Cash outflow before deal costs
from operating activities (21,409) (11,990) 23,880
Deal costs paid - (3,010) (3,010)
---------- -------------------- -------------------
Cash outflow from operating activities
before tax (21,409) (15,000) 20,870
Tax paid (2,424) (685) (2,780)
Net cash (outflow)/inflow from
operating activities (23,833) (15,685) 18,090
---------- -------------------- -------------------
Cash flows from investing activities
Purchase of property, plant and
equipment (357) (552) (617)
Purchase of intangible assets (1,290) (1,210) (2,407)
Interest received 31 65 230
Net cash outflow from investing
activities (1,616) (1,697) (2,794)
---------- -------------------- -------------------
Cash flows from financing activities
Proceeds from borrowings 9,000 11,500 -
Interest paid (49) (133) (100)
Dividends paid to shareholders (2,870) - -
Net cash inflow/(outflow) from
financing activities 6,081 11,367 (100)
---------- -------------------- -------------------
Net increase/(decrease) in cash
and cash equivalents (19,368) (6,015) 15,196
Cash at beginning of year 26,052 10,856 10,856
--------------------
Cash at end of year 6,684 4,841 26,052
========== ==================== ===================
Notes to the condensed consolidated interim financial statements
1. Basis of preparation
This condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU. The annual financial statements of the Group are prepared in accordance with International Reporting Standards (IFRSs) as adopted by the EU. As required by the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority, the condensed set of financial statements has been prepared applying the accounting policies and presentation that were applied in the preparation of the company's published consolidated financial statements for the year ended 30 September 2016.
The Group's last annual consolidated financial statements have been prepared in accordance with IFRS as adopted by the European Union.
The comparative figures for the year ended 30 September 2016 are an abridged version of the Group's last annual financial statements and, together with other financial information contained in these interim results, do not constitute statutory financial statements of the Group as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for the year ended 30 September 2016 has been delivered to the Registrar of Companies. The auditor has reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under s498(2) or (3) of the Companies Act 2006.
These interim financial statements were authorised for issue by the Group's Board of Directors on 10 May 2017
The financial information for the six months ended 31 March 2017 has been reviewed by KPMG, the Company's external auditor. Their report is included within this announcement.
Going concern
The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future.
Accounting estimates and judgements
In preparing these interim financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 30 September 2016.
2. Segmental analysis
The management team consider the reportable segments to be "UK" and "International". All segment revenue, operating profit, assets and liabilities are attributable to the group from its principal activities as on online travel agent.
6 months ended March 2017
(unaudited)
------------------------------------
UK International Total
GBP'000 GBP'000 GBP'000
Income
Revenue 37,450 616 38,066
----------------------------------------- --------- -------------- ---------
Marketing expenditure excluding offline (15,113) (1,140) (16,253)
Incremental offline expenditure (678) - (678)
Other offline expenditure (2,242) (365) (2,607)
Revenue after marketing costs 19,417 (889) 18,528
EBITDA 14,306 (1,046) 13,260
Depreciation and amortisation (3,268) (76) (3,344)
----------------------------------------- --------- -------------- ---------
Segment operating profit/(loss) 11,038 (1,122)
Group operating profit 9,916
----------------------------------------- --------- -------------- ---------
Finance costs (78)
Finance income 31
----------------------------------------- --------- -------------- ---------
Profit before taxation 9,869
========================================= ========= ============== =========
Non-current assets
----------------------------------------- --------- -------------- ---------
Goodwill 21,544 - 21,544
Other intangible assets 41,015 269 41,284
Property, plant and equipment 884 - 884
----------------------------------------- --------- -------------- ---------
Total 63,443 269 63,712
6 months ended March 2016
(unaudited)
---------------------------------------
UK International Total
GBP'000 GBP'000 GBP'000
Income
Revenue 34,991 513 35,504
----------------------------------------- ----------- --------------- ---------
Marketing expenditure excluding offline (16,201) (1,081) (17,282)
Incremental offline expenditure - - -
Other offline expenditure (2,242) (265) (2,507)
Revenue after marketing costs 16,548 (833) 15,715
EBITDA 11,573 (1,046) 10,527
Depreciation and amortisation (3,054) (74) (3,128)
----------------------------------------- ----------- --------------- ---------
Segment operating profit/(loss) 8,519 (1,120)
Group operating profit 7,399
----------------------------------------- ----------- --------------- ---------
Finance costs (125)
Finance income 65
----------------------------------------- ----------- --------------- ---------
Profit before taxation 7,339
========================================= =========== =============== =========
Non-current assets
----------------------------------------- ----------- --------------- ---------
Goodwill 21,547 - 21,547
Other intangible assets 44,724 222 44,946
Property, plant and equipment 895 - 895
----------------------------------------- ----------- --------------- ---------
Total 67,166 222 67,388
Year ended 30 September
2016
---------
UK International Total
GBP'000 GBP'000 GBP'000
Income
Revenue 70,177 1,144 71,321
----------------------------------------- ----------- --------------- ---------
Marketing expenditure excluding offline (31,304) (2,238) (33,542)
Incremental offline expenditure - - -
Other offline expenditure (2,842) (268) (3,110)
Revenue after marketing costs 36,031 (1,362) 34,669
EBITDA 24,992 (1,802) 23,190
Depreciation and amortisation (6,257) (111) (6,368)
Segment operating profit/(loss) 18,735 (1,913)
Group operating profit 16,822
Finance costs (100)
Finance income 230
----------------------------------------- ----------- --------------- ---------
Profit before taxation 16,952
========================================= =========== =============== =========
Non-current assets
----------------------------------------- ----------- --------------- ---------
Goodwill 21,544 - 21,544
Other intangible assets 42,853 265 43,118
Property, plant and equipment 747 - 747
----------------------------------------- ----------- --------------- ---------
Total 65,144 265 65,409
3. Profit for the period
a. Operating expenses
Expenses by nature including impairment charges:
6 months 6 months Year ended
ended 31 ended 31 30 September
March 2017 March 2016 2016
unaudited unaudited audited
GBP'000 GBP'000 GBP'000
Marketing 19,538 19,789 36,652
Depreciation 220 205 397
Staff costs 3,066 2,859 6,708
IT hosting, licences & support 476 420 878
Credit / Debit Card Charges 864 775 1,519
Other 862 1,133 2,374
------------ ------------ ------------------
Total Administrative expenses 25,026 25,181 48,528
Amortisation of intangible assets 3,124 2,924 5,971
------------ ------------ ------------------
Total expenses 28,150 28,105 54,499
============ ============ ==================
b. Adjusted PBT
Management measures the overall performance of the Group by reference to Adjusted PBT, a non-GAAP measure:
6 months 6 months Year ended
ended 31 ended 31 30 September
March 2017 March 2016 2016
unaudited unaudited audited
GBP'000 GBP'000 GBP'000
Profit before taxation 9,869 7,339 16,952
Amortisation of acquired intangibles 2,123 2,123 4,258
Share based payments charge 158 - 105
Adjusted PBT* 12,150 9,462 21,315
============ ============ ==============
*this is a non GAAP measure
This adjusted profit measure is applied by management to understand the earnings trend of the group and is the measure by which management assess the operating performance of the group.
4. Taxation
6 months 6 months Year ended
ended ended 30 September
31 March 31 March 2016
2017 2016
unaudited unaudited audited
GBP'000 GBP'000 GBP'000
Analysis of charge in year
Current tax on profit for the
year/period 2,387 1,870 4,318
Adjustments in respect of prior - - -
years
---------- ---------- --------------
Total current tax 2,387 1,870 4,318
Deferred tax on profits for
the year
Origination and reversal of
temporary differences (401) (404) (776)
Impact of change in tax rate - (626) (897)
Total deferred tax (401) (1,030) (1,673)
---------- ---------- --------------
Total tax charge 1,986 840 2,645
========== ========== ==============
The differences between the total taxation shown above and the amount calculated by applying the standard UK corporation taxation rate to the profit before taxation on continuing operations are as follows. The Group earns its profits primarily in the UK therefore the rate used for taxation is the standard rate for UK corporation tax.
6 months 6 months Year ended
ended ended 31 30 September
31 March March 2016 2016
2017
unaudited unaudited audited
GBP'000 GBP'000 GBP'000
Profit/(loss) on ordinary activities
before tax 9,869 7,339 16,952
Profit/(loss) on ordinary activities
multiplied by the rate of corporation
tax in the UK of 20% (31 March
2016: 20%, 30 September 2016:
20%) 1,974 1,468 3,390
Effects of:
Other expenses not deductible - (2) 152
Impact of change in tax rate 12 (626) (897)
Adjustments in respect of prior - - -
years/periods
---------- ------------ --------------
Total taxation charge 1,986 840 2,645
========== ============ ==============
5. Earnings per share
6 months 6 months
ended ended Year ended
31 March 31 March 30 September
2017 2016 2016
unaudited unaudited audited
GBP'000 GBP'000 GBP'000
Profit after tax for the year/period 7,883 6,499 14,307
---------- ---------- --------------
Basic weighted average number
of Ordinary Shares (m) 130 130 130
Basic earnings per share (in
pence per share) 6.1p 5.0p 11.0p
Adjusted basic earnings per share
Adjusted basic earnings per share are calculated by dividing adjusted earnings after tax of On the Beach Group plc by the weighted average number of shares:
6 months 6 months
to 31 to 31 Year ended
March March 30 September
2017 2016 2016
unaudited unaudited audited
GBP'000 GBP'000 GBP'000
Adjusted earnings (before deferred
tax movements relating to the amortisation
of acquired intangibles and share
based payments) 9,749 7,621 16,922
---------- ---------- -------------------
Number of ordinary shares 130 130 130
Adjusted earnings per share (in pence
per share) 7.5p 5.9p 13.0p
Adjusted earnings is calculated as follows:
6 months 6 months
ended ended Year ended
31 March 31 March 30 September
2017 2016 2016
unaudited unaudited audited
GBP'000 GBP'000 GBP'000
Profit after tax 7,883 6,499 14,307
Deferred tax movements relating to
amortisation of acquired intangibles (415) (1,001) (1,748)
Amortisation of acquired intangibles 2,123 2,123 4,258
Share based payment charges 158 - 105
Adjusted earnings 9,749 7,621 16,922
6. Dividends
An interim dividend has been declared for the 6 months ended 31 March 2017 of 0.9p per share (H1 2016: Nil per share).
7. Intangible assets
Brand Goodwill Website Website Total
& development technology
costs
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- --------- --------------- ------------ --------
Cost
At 1 October 2016 30,079 21,544 3,802 22,513 77,938
Additions - - 1,290 - 1,290
At 31 March 2017 30,079 21,544 5,092 22,513 79,228
-------- --------- --------------- ------------ --------
Accumulated amortisation
At 1 October 2016 6,015 - 504 6,757 13,276
Charge for the year 1,003 - 994 1,127 3,124
-------- --------- --------------- ------------ --------
At 31 March 2017 7,018 - 1,498 7,884 16,400
-------- --------- --------------- ------------ --------
Net book amount
At 31 March 2017 23,061 21,544 3,594 14,629 62,828
======== ========= =============== ============ ========
Brand Goodwill Website Website Total
& development technology
costs
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- --------- --------------- ------------ --------
Cost
At 1 October 2015 30,079 21,544 5,023 22,513 79,159
Additions - - 1,191 - 1,191
-------- --------- --------------- ------------ --------
At 31 March 2016 30,079 21,544 6,214 22,513 80,350
Accumulated amortisation
At 1 October 2015 4,010 - 2,419 4,504 10,933
Charge for the year 1,003 - 794 1,127 2,924
-------- --------- --------------- ------------ --------
At 31 March 2016 5,013 - 3,213 5,631 13,857
Net book amount
At 31 March 2016 25,066 21,544 3,001 16,882 66,493
-------- --------- --------------- ------------ --------
Brand Goodwill Website Website Total
& development Technology
Costs
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- --------- --------------- ------------ --------
Cost
At 1 October 2015 30,079 21,544 5,023 22,513 79,159
Additions - - 2,407 - 2,407
Disposals - - (3,628) - (3,628)
At 30 September 2016 30,079 21,544 3,802 22,513 77,938
-------- --------- --------------- ------------ --------
Accumulated amortisation
At 1 October 2015 4,010 - 2,419 4,504 10,933
Charge for the year 2,005 - 1,713 2,253 5,971
Disposals - - (3,628) - (3,628)
At 30 September 2016 6,015 - 504 6,757 13,276
-------- --------- --------------- ------------ --------
Net book amount
At 30 September 2016 24,064 21,544 3,298 15,756 64,662
======== ========= =============== ============ ========
Upon acquisition of the Group by OTB Topco, the On the Beach brand was identified as a separately identifiable asset and the website technology, resulting in a GBP2.1m amortisation charge for the 6 month period ended 31 March 2017
8. Cash and cash equivalents
6 months 6 months Year ended
ended ended 31 30 September
31 March March 2016 2016
2017
unaudited unaudited audited
GBP'000 GBP'000 GBP'000
Cash & Cash Equivalents
Cash 6,684 4,841 26,052
Trust account 48,576 38,859 25,580
55,260 43,700 51,632
========== ============ ==============
Trust accounts are restricted cash held separately and only accessible at the point the customer has travelled.
9. Financial instruments
The following table provides the fair values of the Group's financial assets and liabilities:
6 months 6 months Year
ended 31 ended 31 ended
March 2017 March 2016 30 September
2016
FV Level unaudited unaudited audited
GBP'000 GBP'000 GBP'000
Financial Assets
Derivative financial
instruments 2 - 3,128 1,683
- 3,128 1,683
============ ============ ==============
Financial Liabilities
Rolling credit facility 2 (9,000) (11,493) -
Derivative financial
instruments 2 (998) -
(9,998) (11,493) -
============ ============ ==============
Derivative financial instruments
The Group operates internationally and is therefore exposed to foreign currency transaction risk, primarily on purchases denominated in Euros and US Dollars. The Group's policy is to mitigate foreign currency transaction exposures where possible and the Group uses financial instruments in the form of forward foreign exchange contracts to hedge future highly probable foreign currency cash flows.
Rolling credit facility
The Group entered into a Lloyds Facility on 18 September 2015 with Lloyds and was renewed in November 2016 to expire in September 2018. A revolving credit facility is available under the terms of the Second Lloyds Facility in an aggregate amount of up to GBP30,000,000. As a result of the acquisition of Sunshine.co.uk Limited, on 9 May, the facility was increased to GBP35,000,000 and extended to December 2018.
The borrowing limits under the facility will vary monthly throughout the period of the Second Lloyds Facility to reflect the seasonal borrowing requirements of the Group, ranging from GBP2,000,000 in one month to the full GBP35,000,000 in another month.
It is to be repaid in monthly instalments which vary in accordance with the Group's seasonal requirements. No early repayment fees are payable.
The margin contained in the Facility is dependent on gross leverage ratio and the rate per annum ranges from 1.10%. to 1.90% for the utilised facility and 0.39% to 0.67% for the non-utilised facility.
The terms of the facility include the following financial covenants:
(i) that the ratio of total debt to EBITDA in respect of any relevant period shall not exceed 2:1 (with a one-off increase to a ratio of 2.5:1); and
(ii) that the ratio of EBITDA to finance charges in respect of any relevant period shall not be less than 5:1.
There have been no changes to the fair value methodology and categorisation for financial assets and liabilities since the year-end.
Fair value estimation
When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.
(i) Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
(ii) Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices)
(iii) Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)
If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The fair values noted above are approximates of the carrying amounts of the instruments
There is no difference between the carrying value and fair value of cash and cash equivalents, trade and other receivables and trade and other payables.
10. Share capital
Capital reduction
In the prior year, as contemplated in the prospectus dated 23 September 2015 for Company's IPO and pursuant to a resolution of the shareholders of the Company passed on 21 September 2015, the Company has completed a reduction of capital, cancellation of share premium account and cancellation of capital redemption reserve (the "Reduction & Cancellation").
The Reduction & Cancellation was formally approved by the High Court of Justice, Chancery Division, on 18 November 2015. Following registration of the order of the High Court with Companies House, the Reduction & Cancellation became effective on 18 November 2015.
Following the Reduction & Cancellation, the issued share capital of the Company consists of 130,434,763 ordinary shares of GBP0.01 each, as at 18 November 2015.
The effect of the Reduction & Cancellation is to create distributable reserves to support the Board's future dividend policy.
11. Principal risks and uncertainties
There are a number of potential risks and uncertainties which could have a material impact on the Company's performance over the remaining six months of the financial year and could cause actual results to differ materially from expected and historical results. The directors do not consider that the principal risks and uncertainties have changed since the publication of the Annual Report for the year ended 30 September 2016. These risks and how the Company seeks to mitigate these risks are set out on pages 14 to 20 of the 2016 Annual Report and Accounts which can be found at www.onthebeachgroupplc.com.
The Group is one of several online travel agents involved in litigation with Ryanair in connection with Ryanair's efforts to prevent OTAs from booking and selling its flights. The legal process is ongoing but remains at an early stage. The position remains as disclosed in our Prospectus, save that (with regard to paragraph 13.6 on page 185), OTB has issued a motion to compel delivery of full and proper particulars. This has resulted in a further delay to the anticipated timescales set out in the Prospectus. Litigation is unpredictable and if Ryanair were to prevail, this could have a material impact on the Group's business.
12. Subsequent Events
On 9 May 2017, On the Beach Group's subsidiary On the Beach Travel Ltd acquired the entire issued share capital of Sunshine.co.uk Limited, an online travel agent based in the UK ("Sunshine"), for a net consideration of GBP12.0m.
The consideration will be funded from the Group's existing cash resources and bank facilities in the form of an extension to the Group's existing working capital revolving credit facility with Lloyds Bank plc. The consideration will be split with 75% paid on completion and the remaining 25% in December.
Sunshine reported gross assets of GBP18.6m and EBITDA of GBP1.6m in its latest statutory audited accounts for the thirteen month period to 30 September 2016.
Management have not yet determined the fair value of the assets acquired.
RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
-- The condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the EU; and
-- The interim management report includes a fair review of the information required by DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first 6 months of the current financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
-- The interim management report includes a fair review of the information required by DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months the current financial year and that have materially affected the financial position or performance of the entity during that period, and any changes in the related party transactions described in the last annual report that could do so.
This responsibility statement was approved by the Board on 10 May 2017 and is signed on its behalf by:
Paul Meehan
CFO
11 May 2017
INDEPENT REVIEW REPORT TO ON THE BEACH GROUP PLC
Introduction
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2017 which comprises the condensed consolidated income statement and statement of comprehensive income, the condensed consolidated statement of financial position, the condensed consolidated statement of changes in equity, the condensed consolidated statement of cash flows and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with the terms of our engagement to assist the company in meeting the requirements of the Disclosure guidance and transparency rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA"). Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2016 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA.
_________________
Will Baker
for and on behalf of KPMG LLP
Chartered Accountants
8 Princes Parade
Liverpool
L3 1QH
11 May 2017
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SFUESSFWSEFI
(END) Dow Jones Newswires
May 11, 2017 02:01 ET (06:01 GMT)
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