education, leisure and activity travel groupeducation, leisure and activity travel group
Investor DayWindmill Hill, Sussex
24th September 2009
education, leisure and activity travel groupeducation, leisure and activity travel group
Introduction – John Coleman
Financial Overview – Bob Baddeley
Education – Martin Davies
Hotel Breaks – Nick Cust
Adventure – Bob Baddeley
Camping – Steve Whitfield
Q&A
INVESTOR DAY PRESENTATION
education, leisure and activity travel groupeducation, leisure and activity travel group
CHAIRMAN
JOHN COLEMANJOHN COLEMAN
education, leisure and activity travel groupeducation, leisure and activity travel group
INTRODUCTION
IMS released on 23rd 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
education, leisure and activity travel groupeducation, leisure and activity travel group
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
education, leisure and activity travel groupeducation, leisure and activity travel group
GROUP FINANCE DIRECTOR
BOB BADDELEYBOB BADDELEY
education, leisure and activity travel groupeducation, leisure and activity travel group
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%
education, leisure and activity travel groupeducation, leisure and activity travel group
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
- 2010 exposure 60% hedged
Interest costs are 80% fixed
FINANCES
education, leisure and activity travel groupeducation, leisure and activity travel group
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%
education, leisure and activity travel groupeducation, leisure and activity travel group
EDUCATION DIVISION
MARTIN DAVIESMARTIN DAVIES
education, leisure and activity travel groupeducation, leisure and activity travel group
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
education, leisure and activity travel groupeducation, leisure and activity travel group
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
education, leisure and activity travel groupeducation, leisure and activity travel group
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
education, leisure and activity travel groupeducation, leisure and activity travel group
CURRENT PERFORMANCE (1)
• Sales intake for 2008/09 currently 7% above last year on
a like-for-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
education, leisure and activity travel groupeducation, leisure and activity travel group
CURRENT PERFORMANCE (2)
Windmill Hill in Sussex opened May 15th
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
education, leisure and activity travel groupeducation, leisure and activity travel group
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 2010 – 2012
Target IRR in excess of 20% Caythorpe Court opened in 2006 –total investment of £13.8m now achieves target IRR
LIDDINGTON
education, leisure and activity travel groupeducation, leisure and activity travel group
SIGNIFICANT FURTHER OPPORTUNITIES
West London &M4 Corridor
Ireland (subject to research validation)
North East & ScottishBorders N. and E.
London (M25)
IOW/choice coastal sites
Potential areas in which to add new outdoor education centres
education, leisure and activity travel groupeducation, leisure and activity travel group
Consolidation “Winners” will provide out of classroom products for wide age range
PGL Brand Opportunity to increase the size of the business to match reputationSynergies 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
RATIONALE FOR ACQUISITIONS
education, leisure and activity travel groupeducation, leisure and activity travel group
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
SUMMARY
education, leisure and activity travel groupeducation, leisure and activity travel group
HOTEL BREAKS
NICK CUSTNICK CUST
education, leisure and activity travel groupeducation, leisure and activity travel group
HOTEL BREAKS DIVISION
As at 19th 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
education, leisure and activity travel groupeducation, leisure and activity travel group
HOTEL BREAKS DIVISIONSuperbreak
Overseas:
Bed bank bubble has burst
Our decline in line with non-aligned competitors
Still delivers full margin
11% of divisional turnover
education, leisure and activity travel groupeducation, leisure and activity travel group
HOTEL BREAKS DIVISIONSuperbreak
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
education, leisure and activity travel groupeducation, leisure and activity travel group
HOTEL BREAKS DIVISIONBookit
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
education, leisure and activity travel groupeducation, leisure and activity travel group
HOTEL BREAKS DIVISIONWest 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
education, leisure and activity travel groupeducation, leisure and activity travel group
ADVENTURE
BOB BADDELEYBOB BADDELEY
education, leisure and activity travel groupeducation, leisure and activity travel group
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
education, leisure and activity travel groupeducation, leisure and activity travel group
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
education, leisure and activity travel groupeducation, leisure and activity travel group
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 marginsTravelplus 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
education, leisure and activity travel groupeducation, leisure and activity travel group
CAMPING
STEVE WHITFIELDSTEVE WHITFIELD
education, leisure and activity travel groupeducation, leisure and activity travel group
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
OVERVIEW
education, leisure and activity travel groupeducation, leisure and activity travel group
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
PROSPECTS
education, leisure and activity travel groupeducation, leisure and activity travel group
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.
BROADENING THE OFFER
education, leisure and activity travel groupeducation, leisure and activity travel group
APPENDICESAPPENDICES
education, leisure and activity travel groupeducation, leisure and activity travel group
Education Hotel Breaks Adventure Camping Group
£m £m £m £m £m
Revenue 2009 44.1 64.5 44.3 0.3 153.2
2008 39.5 75.5 40.4 0.6 156.0
EBITA* 2009 (2.6) 5.6 (0.8) (13.4) (11.2)
2008 (3.0) 7.3 0.5 (14.8) (10.0)
Operating profit (loss) 2009 (3.8) 5.3 (10.8) (13.4) (22.7)
2008 (5.1) 6.8 0.3 (14.8) (12.8)
Group loss before tax ** 2009 (18.1)
2008 (14.9)
Group loss per share ** 2009 (30.3p)
2008 (22.2p)
INTERIM DIVISIONAL RESULTS
*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.
education, leisure and activity travel groupeducation, leisure and activity travel group
• £265m Five year facility committed to 2013 - £40m 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 31st March- Annual amortisation cost of £1.2m
CREDIT FACILITIES
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