The UK’s Leading Operator of Specialist Holiday Businesses

The UK’s Leading Operator of Specialist Holiday BusinessesThe UK’s Leading Operator of Specialist Holiday Businesses1

The UK’s Leading Operator ofThe UK’s Leading Operator of Specialist Holiday BusinessesSpecialist Holiday Businesses

PRELIMINARY RESULTS 2004


Holidaybreak plcPRELIMINARY RESULTS 2004

Bob Ayling (Chairman) - Overview

Bob Baddeley (Finance Director) - Finance review

Richard Atkinson (Chief Executive)- Group strategy - Divisional performance review- Prospects

Questions



Results in line with market expectations

Rapid growth in Hotel Breaks and Adventure divisions

Camping continues to trade profitably and deliver attractive margins

Cash generated

Dividend reflects Board’s confidence in future prospects

2005 sales currently 8% up on 2004



FINANCE DIRECTOR’S REVIEW

BOB BADDELEY


Preliminary Results 2004FINANCIAL HIGHLIGHTS

Turnover up 8.5% to £281.6m (2003: £259.5m)

Profit before tax £28.0m (2003: £27.9m)

Dividend up 10%

Net debt reduced by £10.8m

2005 capital expenditure c.£7.0m lower than 2004

24 % ROIC (2003: 24%)


Preliminary Results 2004PROFIT &LOSS ACCOUNT

All stated before goodwill and exceptional costs

2004 2003

£m £mTurnover 281.6 259.5 +8.5%Gross Profit 72.3 69.7 +3.8%Operating Profit 31.4 31.8 -1.3%Profit before Tax 28.0 27.9 +0.6%Earnings per Share 44.0p 44.4p -0.9%Dividend per Share 24.2p 22.0p +10.0%Dividend cover 1.8x 2.0x


Exceptional Costs- Relocation of Keycamp (£1.6m)- Internal reorganisation (£1.0m)

Goodwill Impairment (£5.3m)- Relates to Eurosites acquisition (2002)

Preliminary Results 2004EXCEPTIONALS


Preliminary Results 2004DIVISIONAL RESULTS

All stated before goodwill and exceptional costs

Hotel Breaks Adventure Camping Group£m £m £m £m

Turnover 2004 120.9 37.4 123.2 281.6v 2003 +23.6% +12.3% -4.0% +8.5%

Gross Profit 2004 25.4 10.6 36.3 72.3v 2003 +28.5% +15.2% -10.8% +3.8%

PBIT 2004 14.5 3.2 13.7 31.4v 2003 +31.6% +65.3% -27.2% -1.3%


Net assets increased to £36.5m (2003 : £35.2m)

Net debt reduced to £12.5m- Gearing 33.8% (2003 : 66.3%)

Eurosites acquisition- Goodwill impairment (£5.3m)- VAT recoverable (€3.5m)

Holidaybreak plcBALANCE SHEET


Reduced capital expenditure (net)- 21% lower in 2004 (£13.5m)- Will be £7.0m lower in 2005

Mobile-homes- Capacity reduced in 2005 by 11% c. 9,600- Replacement expenditure of £5.3m (2004 : £11.4m)- Continue to achieve net book value on disposal: 1,400 units

sold in 2004, generating £4.3m proceeds in 2004- Extending life

Preliminary Results 2004CAPITAL EXPENDITURE & DISPOSALS


Net debt reduced by £10.8m

Mobile-home capex largely financed through new HP

Interest cover 9.4 times (2003 : 8.2x)- Pre-goodwill and exceptionals

Currency and interest rate hedging in place

Headroom in bank facilities - seasonality

Preliminary Results 2004CASH FLOW


Preliminary Results 2004CASH FLOW SEASONALITY

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Low fixed costs in Hotel Breaks and Adventure

Double digit margins – well above travel industry norms

All divisions cash generative

Healthy return on invested capital

Low gearing

Holidaybreak plcFINANCIAL SUMMARY



CHIEF EXECUTIVE’S REVIEW

RICHARD ATKINSON


Holiday taking and expenditure increasing

Consumer demand:- Holidays shorter and taken more often- Activity/special interest- Demographics- Control and flexibility

Market change:- Internet- Inexpensive and accessible flights- Later booking

Holidaybreak plcMARKET OVERVIEW


Balanced portfolio of specialist holiday businesses

Market leadership

Concentrate on margins and cash generation

Organic growth

Complementary acquisitions

Holidaybreak plcGROUP STRATEGY


Group’s biggest profit earner in 2004

Strongly cash generative

Short-break holiday demand increasing

250+ hotel suppliers, 3,000+ hotels (UK and overseas)- Gives hotels cost effective distribution at attractive yields whilst

supporting price integrity- No commitment room allocations : fixed selling margin

Multi-channel distribution- Supplies 80% of all leisure hotel bookings made in UK travel agents - Superbreak.com increasing share of internet - Direct and partnership marketing increasingly important

Hotel BreaksOVERVIEW


1.7m bookings (pax) in 2004 (2003: 1.4m)- Turnover up 24% (impact of Bridge Britain acquisition c.3%)

European breaks growth increased as year progressed (+21%) - Successful launch of Beach Breaks - Continuing into 2005

New promotional partnerships – Visit London, Legoland, P&O, W H Smith, Ticketmaster

2005 sales at +10% year on year

Hotel capacity readily available - Portfolio increasing- Terms of trade unchanged- Building long term relationships

Hotel BreaksPERFORMANCE & OUTLOOK


Increasing demand for active and special interest holidays - Diminished geopolitical concerns

UK market leader in ‘soft’ adventure and scuba diving holidays - Difficult or impossible to replicate: adding unique value to the customer

experience

Tight control of tour load factors underpins margin and profitability - No flight commitments (except RegalDive)

New product development an important growth driver - Family, Adventure Breaks, Cycle, Rail, Walking & Trekking

Distribution range extending - Internet: on-line bookings now available

AdventureOVERVIEW


41,800 bookings (pax) in 2004 (2003 : 37,400) - Turnover up 12% - momentum built as year progressed- Higher tour load factors, improved margin (5.7% to 8.4%)- Out of favour destinations (India, Egypt, China) ‘bounce back ‘

Strong recovery by RegalDive- 15% of sales, 11% of operating profit

2005 sales at +34% year on year - First quarter very strong – volumes and load factors

Product development continues - 400+ tours to 107 countries - New product launch - Explore ‘On Foot’

AdventurePERFORMANCE & OUTLOOK


Self-catering holidays in good quality accommodation- Desirable locations with excellent leisure amenities - Flexibility, independence, informality, added value services

Market leading brands (Eurocamp and Keycamp)

- High levels of customer satisfaction and repeats

Profitable, high margin, cash generative business

Focused on profit turnround in 2005

Restructure - more focused organisation

- New appointments- Keycamp relocation

Medium term strategy- Keycamp/Eurocamp differentiation- Distribution brands: Easycamp, Ugogo.com- Stronger, more diverse communication of product benefits- Cost control and yield management

CampingOVERVIEW


141,600 bookings/570,000 pax (2003: 144,400 bkgs/ 580,000 pax) - Turnover 4% below 2003- Late booking trend continued

Camp-site occupancy down 4% compared to 2003 - Shift in demand away from Mediterranean destinations

Yield improvement and unit cost reduction- 2005 capacity reduced by 11% (tents and mobiles), lower capex- 2005 sales at –5% year on year- Keycamp relocation (£1m annualised saving)- General/marketing overhead savings (£1m)

Increased resource for IT/e-commerce development - Rollout of on-line bookings to all brands/territories - Launch of Ugogo.com

Camping PERFORMANCE & OUTLOOK


Holidaybreak plcGROUP PROSPECTS

2005 trading currently in line with expectations

Hotel Breaks and Adventure continue to grow

Camping – tightly controlled to meet financial requirements

Opportunities for both organic and acquisition based growth

Holidaybreak will continue to trade at very good margins, generate cash and provide an attractive dividend for its shareholders


The UK’s Leading Operator ofThe UK’s Leading Operator of Specialist Holiday BusinessesSpecialist Holiday Businesses



BACKGROUND INFORMATION


Preliminary Results 2004BALANCE SHEET

2004 2003

£m £mFixed Assets 70.6 72.0Goodwill 36.2 44.2Net Current Liabilities (51.7) (53.0)Deferred Tax (6.1) (4.6)Net Debt (12.5) (23.4)Net Assets 36.5 35.2


Preliminary Results 2004CAPITAL EXPENDITURE & DISPOSALS

£m Mobile- Camping Other Totalhomes Equipment Assets

Opening NBV 57.0 7.0 8.0 72.0Additions 11.4 4.8 1.6 17.8Disposals (3.2) (0.7) (0.2) (4.1)Depreciation (8.5) (5.2) (1.4) (15.1)Closing NBV 56.7 5.9 8.0 70.6


Preliminary Results 2004MOVEMENT IN NET DEBT

2004 2003£m £m

Operating Cash Flow 46.3 47.4Acquisitions - (2.3)Capital Expenditure (Net) (13.5) (17.1)Interest (4.0) (3.7)Tax (7.5) (6.0)Dividends (10.7) (9.4)Shares issued (net of purchases) 0.2 0.1Reduction in net debt 10.8 9.0


Preliminary Results 2004FACILITY UTILISATION

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Bonding &Guarantees

Ring-fenceddeposits

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Term loans

£m


Hotel BreaksBUSINESS MODEL

Accommodation

Ancillaries

Agents

Customer

SUPERBREAK

- Efficient cost distribution

at reasonable yields for

suppliers

- High service levels,

convenience and value

for customers and agents

VALUE ADDED DISTRIBUTION


CLASSIC TOUR OPERATING MODEL

AdventureBUSINESS MODEL

Accommodation

Tour Content

Customers

EXPLORE

- Tour origination and operation- High value added- Very difficult for DIY customer to replicate

Transport


HYBRID MODEL – PART TOUR OPERATOR, PART PRINCIPAL

CampingBUSINESS MODEL

Transport Operators

Customers

Camp-sitesEUROCAMP/KEYCAMP- On site service- Accommodation- Access to best sites- Strongly branded- Effective distribution

Equipment Suppliers


Ugogo.comLAUNCHING 6/12/04

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The UK’s Leading Operator of Specialist Holiday Businesses