Investor Day Windmill Hill, Sussex

Transcription

1 Investor Day Windmill Hill, Sussex 24 th September 2009

2 INVESTOR DAY PRESENTATION Introduction John Coleman Financial Overview Bob Baddeley Education Martin Davies Hotel Breaks Nick Cust Adventure Bob Baddeley Camping Steve Whitfield Q&A

3 CHAIRMAN JOHN COLEMAN

4 INTRODUCTION IMS released on 23 rd September No new material information will be released today The Group continues to perform well, given the current economic environment, and in line with management expectations The Group continues to carefully manage its cash and borrowings Year-end net debt is expected to be approximately 130m Education performing well: Windmill Hill opened on time and on budget Liddington acquisition first use of rights issue proceeds Strong late bookings in Camping & Adventure Hotel Breaks benefiting from improved supplier offers (lower room rates and train fares) CEO recruitment process underway

5 OUTLOOK Group remains focused on cash generation and cost control across its businesses in expectation of continued challenging trading conditions Opportunities for investment and growth especially in Education Education is 62% booked for 2009/10 Hotel Breaks will benefit from less challenging comparatives Adventure in the process of being restructured Camping will continue to manage capacity, occupancy and yield tightly

6 GROUP FINANCE DIRECTOR BOB BADDELEY

7 ACTION TAKEN TO MANAGE COSTS AND CASH Camping mobile-home net capital expenditure ( 5m) below depreciation ( 7m), 440 new units vs 950 originally proposed Superbreak s call centre resource reduced by a third Explore restructured - staffing reduced by 35% aimed at maintaining operating margins Earlier full payment and/or larger deposits from Camping customers Full year dividend cut by 50%

8 FINANCES Net Debt at 30 September 2009 expected to be c. 130m Long-term committed credit facilities in place Sufficient headroom against covenants to counter possible weaker trading conditions Forex exposure for current year substantially covered at favourable rates exposure 60% hedged Interest costs are 80% fixed

9 INVESTMENT IN EDUCATION Plc investment in Education Division in 2008/09 will achieve ROCE > WACC The Group uses IRR as the measure of performance for PGL Centres as opposed to ROCE: Site maturity can take up to 3 years so Years 1 & 2 ROCE will be depressed due to development cycle Caythorpe Court, which opened in 2006 with 400 beds, is expected to achieve an IRR well in excess of 20% from an investment of 13.8m PGL centres at Windmill Hill and Liddington are expected to achieve IRRs of over 20%

10 EDUCATION DIVISION MARTIN DAVIES

11 DIVISION OVERVIEW High margins A market-leading position Very high barriers to entry Strong demand conditions Under supply Weak competitor proposition in activity centres Visible income

12 GROWING MARKET Market for residential education centres has grown at ca.10% p.a. in last five years, driven by reduction in funding of LEA centres and Governments Out of Classroom Learning directive Growth in educational school trips due to decline in schools doing own DIY trips and some increase in proclivity to do trips with an expanded syllabus School ski market believed to be static (and subject more to vagaries of Easter/half term timing) unclear educational value Overall UK market estimated at 350m- 400m (but greater if UK based trips added) Potential is large: NST/PGL have only 5k core repeaters amongst 27k UK schools

13 PGL CENTRES Albatros, Côte d'argent Barton Hall, South Devon Beam House, North Devon Boreatton Park, Shropshire Caythorpe Court, Lincolnshire Château de Grande Romaine Château du Tertre Club Mimosa, Languedoc Coast Court Farm, Wye Valley Domaine de Segries, Ardèche Dalguise, Perthshire Hameau-les-Ages, Dordogne Hillcrest, Wye Valley La Fosca, Costa Brava Le Pré Catelan, Opal Coast Liddington, Wiltshire Little Canada, Isle of Wight Llwyn Filly, Brecon Beacons Loch Ranza, Isle of Arran Lou Valagran, Ardèche Marchants Hill, Surrey Osmington Bay, Dorset Shorefield Country Park, Hampshire Tregoyd House, Brecon Beacons Whitecliff Bay, Isle of Wight Whitemead, Forest of Dean Windmill Hill, East Sussex Winmarleigh Hall, Lancashire

14 CURRENT PERFORMANCE (1) Sales intake for 2008/09 currently 7% above last year on a likefor-like basis PGL centres growing at 12% for 2008/09 and 4% next year Overall 100% booked for 2009 and 87% for 2010 (with over 31.9m in forward bookings in PGL centres) Education less impacted by the recession

15 CURRENT PERFORMANCE (2) Windmill Hill in Sussex opened May 15 th already 95% booked for 2010 on course to achieve Group target IRR PGL s UK adventure centre capacity now at 7,000 beds Potential to grow UK bed stock at 5-10% per annum NST synergies now above plan

16 LIDDINGTON 100+ acre site with outdoor activity field, floodlit pitch, two lakes, parking etc. Good access via motorway to London Access to 17.8m population and 27% of schools in 2 hours drive time. Ready to trade with minimal capex Potential for significant bed stock expansion at low cost Planned investment of 3.2m over Target IRR in excess of 20% Caythorpe Court opened in 2006 total investment of 13.8m now achieves target IRR

17 SIGNIFICANT FURTHER OPPORTUNITIES Potential areas in which to add new outdoor education centres North East & Scottish Borders Ireland (subject to research validation) N. and E. London (M25) West London & M4 Corridor IOW/choice coastal sites

18 RATIONALE FOR ACQUISITIONS Consolidation Winners will provide out of classroom products for wide age range PGL Brand Opportunity to increase the size of the business to match reputation Synergies Benefits in overhead reduction, market pricing, market segmentation, gross margin and sales team People Chance to develop second tier management and acquire additional expertise Strategic Partnerships To meet all schools residential out of classroom learning needs Potential for investment in partnership for long term stability Broadening of brand proposition Opportunity to broaden offer to 18+ market via Studytours brand and Gap Year product Horizontal integration Opportunity to work with language schools to sweat asset base during low season

19 SUMMARY Profitable and cash generative business Established market leader Generic brand Growth markets Superb reputation Loyal customer base with significant repeat revenues Visible income Consolidation platform Quality asset backing including strong freehold property Management team with a record of success Opportunity to grow

20 HOTEL BREAKS NICK CUST

21 HOTEL BREAKS DIVISION As at 19 th September sales intake for 2008/09 at -2% yoy Bookit demonstrating counter cyclical characteristics West End benefiting from professionalising and uplifting web presence Superbreak struggling with bed bank overseas hotels but UK volumes strong

22 HOTEL BREAKS DIVISION Superbreak Overseas: Bed bank bubble has burst Our decline in line with non-aligned competitors Still delivers full margin 11% of divisional turnover

23 HOTEL BREAKS DIVISION Superbreak UK: Volumes running consistently ahead of values No pressure on gross margin from hotels Travel agents increased from 46% to 55% in 2 years National Express discount rail fares in place until 31 October 2010 Packaging our key differentiating factor

24 HOTEL BREAKS DIVISION Bookit Growing distribution through other channels Lower hotel prices, plentiful availability, modest hotel commission increases Dutch customers very value focussed Simple websites divided by length of stay High brand recognition within a small country Bungalows 30% of sales mix in 2008, 32% in 2009 replicate hotel commission increases

25 HOTEL BREAKS DIVISION West End Theatre Bookings Strong strategic fit with Superbreak and NST Exclusively low prices and unlimited supply New distribution channels: Airmiles, concierges, inbound, web Better buying decisions less commitments Customers buying affordable treats

26 ADVENTURE BOB BADDELEY

27 OVERVIEW Diverse portfolio of brands: EXPLORE!; DJOSER nl; THE TRAVELPLUS GROUP; REGAL Provides value added services: hard to recreate individually Industry structure: fragmented, highly competitive, high knowledge requirement, high margin/costs Flexible product dimension: open and closed groups, small groups, individuals and families Business characteristics: low fixed costs, minimum commitments, constant innovation Sales for 2008/09 currently +4% but -20% for 2009/10

28 EXPLORE! RESTRUCTURING Demand adversely affected by higher prices due to the weakness of sterling, although certain softer-currency destinations, such as Turkey, are performing reasonably well In the recessionary environment, discretionary nature and relatively high absolute prices have led to weaker demand than our other divisions Move towards later booking pattern over the summer 50 heads taken out (c.40% of staff) Business will be profitable on passenger numbers 30% lower than 2007/8 (currently c.20% down) Adventure Division remains profitable

29 EUROPEAN BUSINESSES Djoser Good late bookings Benefiting from the recent decision by the Dutch government to scrap the airport departure tax at Schiphol Able to pass on reductions in airline fuel surcharges and supplier costs while maintaining margins Travelplus German language-trip and gap-year specialist Trading well and up both in volume and revenue terms The business is benefiting from the fact that the trips it offers are less easily deferred, of educational benefit and often paid for by parents

30 CAMPING STEVE WHITFIELD

31 OVERVIEW Eurocamp and Keycamp Market leading brands Quality value for money product with flexibility and choice High satisfaction levels and loyalty Strong pan-european sales and marketing Large segmented databases Disciplined capacity planning and yield management Cash generative (capex < depreciation) Eurocamp Independent Pitch and ferry reservation service Easycamp / Ecamp Value based holidays in site owned Mobile Homes Low risk model well placed for growth

32 PROSPECTS Later booking profile Focus on maximizing occupancy and yields Strength of the euro has increased the sterling equivalent yields from Dutch and German bookings High season demand will exceed supply Low season sales more challenging as customers forego second breaks in favour of their main holiday

33 BROADENING THE OFFER Safari tents, introduced on a test basis this summer, are proving popular. Good initial response to our UK camping offer, which we launched in May in partnership with the National Trust and Forest Holidays.

34 Q&A

35 APPENDICES

36 INTERIM DIVISIONAL RESULTS Education Hotel Breaks Adventure Camping Group m m m m m Revenue EBITA* 2009 (2.6) 5.6 (0.8) (13.4) (11.2) 2008 (3.0) (14.8) (10.0) Operating profit (loss) 2009 (3.8) 5.3 (10.8) (13.4) (22.7) 2008 (5.1) (14.8) (12.8) Group loss before tax ** 2009 (18.1) 2008 (14.9) Group loss per share ** 2009 (30.3p) 2008 (22.2p) *Before amortisation of acquired intangible assets, impairment of goodwill and exceptional restructuring costs. **Before amortisation of acquired intangible assets, IAS 39 revaluation of interest and currency derivatives, impairment of goodwill and exceptional restructuring costs.

37 CREDIT FACILITIES 265m Five year facility committed to m Term Loan - 225m RCF, Bonding and Ancillary Facility - still require 37.6m in CAA, ABTA, IATA and other bonds Initial Margin 325bps + LIBOR - ratchet down to 250bps + LIBOR below 2x EBITDA leverage Costs c. 4.8m at 31 st March - Annual amortisation cost of 1.2m