REG - On the Beach Group - Preliminary Results
09/12/2021 07:00
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RNS Number : 0458V On the Beach Group PLC 09 December 2021
9 December 2021
On the Beach Group plc
("On the Beach", "OTB", the "Company" or the "Group")
PRELIMINARY RESULTS FOR YEAR ENDED 30 SEPTEMBER 2021 ("FY21")
READY FOR 2022
Financial Overview
2021 2020
Adjusted GAAP Adjusted GAAP
Group revenue £30.5m £21.2m £71.2m £33.7m
Revenue as Agent((1)) £24.0m £14.7m £54.3m £16.8m
Revenue as Principal((2)) £6.5m £6.5m £16.9m £16.9m
Group gross profit £23.3m £14.4m £53.4m £16.0m
Gross profit as Agent £22.7m £13.8m £50.8m £13.5m
Gross profit as Principal £0.6m £0.6m £2.6m £2.6m
Group (loss)/profit before tax((3)) (£18.4m) (£36.7m) £0.6m (£46.3m)
Basic (loss)/earnings per share((4)) (9.7p) (19.0p) (0.5p) (27.6p)
((1) )As an agent, revenue is accounted on a "booked" rather than
"travelled" basis (unlike tour operators and airlines) and the Group is
reporting bookings taken between 1 October 2020 and 30 September 2021.
Adjusted revenue is revenue before exceptional items of £9.3m (2020:
£37.5m).
((2) )As a principal, revenue is accounted on a "travelled" basis and
reported on a gross basis and the Group is reporting bookings which departed
between 1 October 2020 and 30 September 2021.
((3) )Group adjusted profit / loss before tax is profit / loss before
tax, amortisation of acquired intangibles of £5.5m (2020: £5.5m), share
based payments cost of £2.8m (2020: credit of £0.6m) and exceptional items
of £10.0m (2020: £42.0m). A full explanation of the adjustments is included
in the glossary.
((4) )Adjusted earnings per share is Group adjusted profit after tax
divided by the average number of shares in issue during the period. Earnings
per share is Group profit after tax divided by the average number of shares in
issue during the period.
Summary of financial performance
· Revenue of £21.2m was down 37% vs FY20 due to:
o Booking volumes remained low throughout the complete UK lockdown 4 Jan 2021
to 17 May 2021;
o Dampened consumer confidence through the calendar year due to complex and
inconsistent rules coupled with prohibitively expensive testing costs;
o The decision made by the Group in May 2021 to suspend new bookings for
holidays departing before 1 September 2021.
· The Group continues to adjust for COVID-19 related
cancellations, expected cancellations and amendments. After making an
adjustment to add back the impact of cancellations, adjusted revenue was
£30.5m (FY20: £71.2m).
· Total exceptional items in the period of £10.0m (FY20:
£42.0m) represents the estimated impact of COVID-19. This is primarily the
result of COVID-19 related cancellations, expected cancellations and
associated administrative expenses.
· Group raised £24.9m (net of fees) through a placing in July
2021 to:
o provide greater resilience, flexibility and firepower through the downturn
by restoring the Group's cash position to a similar position to where it was
following the placing in May 2020;
o ensure that, ahead of an expected recovery of the international travel
market in calendar year 2022, the Group will have sufficient funding available
to increase marketing spend and to support the necessary short-term investment
in working capital to capitalise upon that demand.
· Extended the £25m CLBILS facility to May 2023 and reset
covenants for the period up to September 2022.
· Access to a £75m Revolving Credit Facility ('RCF') which has
not been drawn since 22 May 2020.
· Cash at 30 September 2021 was £56m excluding customer monies
held in a ring-fenced trust account of £39m. The Group continues to refund
customers in advance of receiving refunds from airlines for cancelled flights
and it does not issue refund credit notes.
Strategic progress
· Investment in brand:
o 'Ready when you are' TV campaign aligning with customer sentiment in period
of low / no travel during usual peak booking period.
o No refund credit notes; all refunds in cash.
o Extend off-sale for holidays from 30 June to 31 August 2021.
o Industry first free Covid test offer.
o 'New Normal Booking Pledge' to offer additional reassurance and transparency
for customers.
· Investment in technology:
o During periods of lower trading, continue to focus on enhancing the core
capabilities of platform (flights, beds, packaging, front end, payments and
back-office).
o Re-architected our core booking paths, enabling quicker future development
and the addition of diverse sites from all geographies.
o Built new capabilities to support long haul and scheduled airlines, allowing
new suppliers to be added at pace.
· Investment in supply:
o Secured additional direct relationships with quality inventory in key
destinations that were previously on exclusive contracts with competitors.
Current trading and outlook
· Our investment in brand, combined with a softening of
government restrictions stimulated bookings in the final weeks of the year.
· However, booking volumes have been and will continue to be
significantly influenced by the evolution of the COVID-19 pandemic and
responses from UK and European Government policy.
· It is too early to say what impact the Omicron variant will
have on restrictions and demand but the Group has well-rehearsed plans in
place to deal with any ensuing disruption.
· In light of the continued market uncertainties, the Group is
maintaining its suspension of full year guidance until such time that the
overall impact of COVID-19 on the Group becomes clearer.
· The Group exits 2021 with strong liquidity, high brand
awareness and is ready for 2022
· The Board will provide a further update on trading on the date
of the AGM on 25 February 2022.
Simon Cooper, Chief Executive of On the Beach Group plc, commented:
"The disruption caused by COVID-19 has lasted longer than anyone would have
anticipated and the travel industry has been, and continues to be, one of the
hardest hit. Whilst our trading performance has clearly suffered, our
successful Placing this year is testament to the support from our shareholders
who see the long term value of On the Beach and it ensures we are well
positioned as the market starts to normalise.
"Looking after our customers remains central to our thinking where we have
invested across our digital platforms, brand and supply. We are also proud of
our industry leading initiatives of free Covid tests and our New Normal
Booking Pledge which has enabled us to sustain high levels of brand awareness
and customer trust through times of weak consumer demand.
"The shape of recovery for the sector remains uncertain due to the continued
COVID-19 evolution and subsequent governmental responses. The flexible, asset
light nature of our business model and use of our ring-fenced trust account,
alongside the work the team has done over the last year, means we are ready
for 2022. I would once again like to thank everyone at On the Beach who has
risen to the challenge, acting with speed, professionalism and resilience."
Analyst Conference Call
A conference call for sell-side equity analysts will be held today at 9.45am,
the details of which can be obtained through FTI Consulting.
For further information:
On the Beach Group plc via FTI Consulting
Simon Cooper, Chief Executive Officer
Shaun Morton, Chief Financial Officer
FTI Consulting Tel: +44 (0)20 3727 1000
Alex Beagley onthebeach@fticonsulting.com
Fiona Walker
Sam Macpherson
Rafaella de Freitas
About On the Beach
With over 20% share of online sales in the short haul beach holiday market, we
are one of the UK's largest online beach holiday retailers. We have
significant opportunities for growth and a long-term mission to become
Europe's leading beach holiday retailer via a single platform multi-brand
strategy. By using our innovative technology, low-cost base and strong
customer-value proposition to provide a structural challenge to legacy tour
operators and online travel agents, we continue our journey to disrupt the
online retail of beach holidays. Our model is customer-centric, asset light,
profitable and cash generative.
Cautionary statement
This announcement may contain certain forward-looking statements with respect
to the financial condition, results, operations and businesses of the Company.
Forward looking statements are sometimes, but not always, identified by their
use of a date in the future or such words as 'anticipates', 'aims', 'due',
'will', 'could', 'may', 'should', 'expects', 'believes', 'intends', 'plans',
'targets', 'goal' or 'estimates'. These forward-looking statements involve
risk and uncertainty because they relate to events and depend on circumstances
that may or may not occur in the future. There are a number of factors that
could cause actual results or developments to differ materially from those
expressed or implied by these forward-looking statements, including factors
outside the Company's control. The forward-looking statements reflect the
knowledge and information available at the date of preparation of this
announcement and will not be updated during the year. Nothing in this
announcement should be construed as a profit forecast.
This statement together with the interim financial statements and investor
presentation is available on www.onthebeachgroupplc.com
(http://www.onthebeachgroupplc.com/) .
Chief Executive's review
The Group continues to be a dynamic, entrepreneurial and ambitious business.
We deliver value-for-money personalised beach holidays to our customers and
maintain a daily focus to improve the quality of our customer proposition and
the value that we provide to our growing customer base.
Our low-cost operating model, in a primarily digital sector, where consumers
are seeking increased convenience, choice, and a personalised experience with
financial protection, positions us to emerge from the pandemic favourably.
This has been another unique and difficult year for the global travel industry
where the impact of the pandemic has been deeper and longer lasting than most
would have expected. Our performance has suffered from a materially lower than
normal level of bookings and the reversal of revenue generated for bookings
received in the year that have subsequently been cancelled.
Against this challenging market backdrop, we have continued to strengthen our
balance sheet by successfully raising a further £24.9m from shareholders who
see the long term opportunity of the business, giving us an even greater
platform to emerge from the pandemic in a position of strength. Over the
period, we have continued to invest in our people and technology, optimise our
supply and reinvigorate our brand.
I am confident that the activities we have undertaken over the last 12 months
have laid strong foundations for the Group in the year ahead as holidaying
begins to return to pre-pandemic levels, and I am incredibly proud of my
colleagues who have delivered so much in often challenging situations.
People
Our people have continued to rise to the widespread challenges that the crisis
has presented. Staff across all business departments have worked productively
and professionally at home.
We have continued to support colleagues with a diverse range of initiatives to
promote mental health and wellbeing, helping retain a connection to our staff
in other departments and across the Group as a whole, while our offices have
remained closed.
We have not relied extensively on the Government furlough scheme and instead
have looked to recruit more staff across all core functions, including
technology, brand, finance and customer service.
We are excited that a move to hybrid working means all of our colleagues can
once again be in the same dedicated office, Aeroworks, which will help us
collaborate better across departments. Hybrid working will enable us to
recruit from a wider talent pool and allow our staff to continue to benefit
from greater flexibility.
We have significantly improved our colleague benefits and development
opportunities, and have added strength to our senior management team across
Data, Product and Marketing, with the appointment of a Director of Data, a
Director of Product and a Chief Marketing Officer.
Finally, as a big thanks to our staff who continue to respond with speed,
professionalism and resilience to the crisis, we have raised the entry salary
across the business to £20,000, thereby elevating the skill set of the new
talent we attract and improving the overall quality of service to our
customers.
Market conditions
Whilst FY21 was not expected to return to a normal year for travel, the
industry and the UK population did not foresee an extended lockdown and travel
ban for the first six months of calendar year 2021. In a normal year, holiday
bookings would peak in January for travel from March through to September.
However, it became increasingly clear before entering a third lockdown on 4
January 2021, that market conditions for the remainder of the first half would
be more challenging than anticipated at the start of the financial year.
Although the vaccine rollout in the UK has been successful, the Government
remained cautious about reopening borders for leisure travel. The traffic
light system, determining the different requirements and restrictions to be
imposed by destination, led to a significant amount of uncertainty for
consumers over the summer season, including:
· which destinations will be in each category, and whether they
are likely to change;
· the cost of testing prior to departure in the UK and in resort;
· the ability of the local infrastructure to cope with the
requirements and the resulting potential delays;
· what requirements there may be if people test positive for
COVID-19 whilst in resort and the cost of this; and
· local rules and restrictions in resort, such as curfews and
masks.
Following the Government's announcement in May 2021 on the traffic light
system for leisure travel, where most destinations were classified 'amber', On
the Beach made the strategic decision to extend its off- sale period for
holidays from 30 June to 31 August 2021.
In addition to the Group's focus on growing its market share in the long term,
the Board's decision was based on consumer feedback from both research and
search / sales data, showing a market wide lack of appetite for booking
amber destinations, as well as the likely loss of customer goodwill for
holidays that might be booked only to be cancelled or re-arranged.
On the Beach restarted selling holidays to travel from early September 2021,
when it became clearer that overall confidence to book a holiday had
increased, with On the Beach research finding 53% of Brits felt confident
about booking a holiday for the remainder of calendar year 2021 (up from 34%
in July 2021).
For many customers seeking to go abroad, the financial and administrative
implications of PCR tests remain a key booking barrier, with one in three
people citing that as their main concern, second only to concerns that the
holiday would not go ahead as planned.
On the Beach therefore announced on 8 September 2021 the decision to provide
customers with free Covid tests for bookings made between 8 and 30 September
for holidays in 2021 to Spain, Greece, the Spanish and Greek Islands.
Following the success of the promotion, free Covid tests were more recently
made available for bookings made in October and November.
Our 'New Normal Booking Pledge' offers additional reassurance and
transparency to help our customers with their holiday planning. Both
initiatives, combined with a further softening of government restrictions
stimulated bookings in the final weeks of the year. The increased awareness of
brand and strengthening in trading over this period sets the business up well
for 2022 as the market starts to normalise.
Strategy for growth
On the Beach continues to target significant medium and long term growth in
its core and adjacent markets by evolving a strategy based on the following
strategic pillars:
1. Invest in talent and technology
- Optimise the conditions that enable us to attract, develop and
retain a diverse group of talent
- Enhance our platform capabilities to attract the widest possible
audience of beach holidaymakers
- Leverage our data capabilities to improve user level
personalisation
2. Become a brilliant digital brand
- Deliver a truly differentiated customer proposition
- Deliver a superior customer experience from the moment of booking
to increase repeat purchase and brand advocacy
3. Optimise our direct and differentiated supply
- Develop key partnerships through our ability to manage
relationships, retail opaquely and pay promptly
- Build our in house capability to increase flight connectivity
- Grow our multi-channel capability to offer partners the widest
range of distribution
4. Grow our share of B2B beach
- Drive mainstream growth through Classic Package Holidays
- Evolve Classic Collection to include long haul, itineraries and
boutique hotels
5. Diversify into adjacent beach holiday markets
- Grow share of long haul beach holidaymakers
- Seek value enhancing opportunities in new and existing
international markets
6. Champion customer-centric change
- Help to shape industry regulation that is fit for purpose
- Ensure the market works in the best interests of the consumer
Investment in our Brand
The pandemic has caused reputational damage to all in our sector. Our decisive
action has enabled us to take steps that better protected our reputation
versus our rivals, but we were not immune from the issues presented by a
unique set of circumstances at various points over the last 18 months. This
included, but was not limited to, an unprecedented volume of customer
enquiries, difficulties in collecting refunds from low cost carriers and a
high degree of uncertainty regarding future travel.
Throughout the year, our marketing focus has been on reputational repair and
reinvigorating the brand. Never before has our unique business model better
enabled us to do the right thing by our customers, consumers and the industry
as a whole. Our strategy has been to act innovatively putting consumers at the
heart of our decision making, setting us apart from our rivals and enabling us
to maintain our brand metrics with a fraction of the spend.
In December 2020, we launched a 'Ready when you are' TV campaign which aligned
with consumer sentiment in a period of low / no travel during our usual peak
booking period.
Technology developments delivered in record time enabled us to better serve
customers needing to amend bookings, and our finance ops team worked
tirelessly in order that we could refund customers at scale within 14 days.
We made the decision not to offer customers refund credit notes but to refund
in cash, and our white paper on the topic helped hold the industry to account
as we looked to highlight consumers' right to refund as the pandemic
continued.
As disruption, cancellations and unexpected costs continued to blight holidays
booked, we took the radical decision to stop selling holidays that we were not
confident would be delivered.
Lastly, as we look to help restore consumer confidence and get people back on
holiday again, we created our free Covid test offer - On the Beach's largest
ever promotion at a cost of over £1million - which meant we could reduce
the holiday hassle administration as well as saving our customers money.
Investment in Technology
We have continued to add to add to our technology talent, in particular to
software engineering, design, product, infrastructure and security.
We have continued to invest in remote working and greater use of cloud, to
empower colleagues to self-serve, work securely from anywhere at any time and
drive speed to market.
Our technology teams have taken the opportunity to capitalise on periods of
lower trading to continue to focus on enhancing the core capabilities of our
platform (flights, beds, packaging, front end, payments and back-office).
We have re-architected our core booking paths, enabling quicker future
development and the addition of diverse sites from all geographies.
We have built new capabilities to support long haul and scheduled airlines,
allowing new suppliers to be added at pace.
As part of our overall strategy, there has been a focus on optimising our data
platform with a view to driving increasingly sophisticated user-level
personalisation and maximising customer lifetime value.
Investment in Supply
We continue to believe that only by having our own relationships with our
hotel partners can we guarantee our customers both a good hotel experience and
the best prices. COVID-19 has presented the opportunity to secure direct
relationships with quality inventory in key destinations that were previously
on exclusive contracts with competitors.
Throughout the pandemic and the widespread disruption this caused, it was
clear without direct contracting capability we could not possibly have
delivered the same level of service, either when airspace closed or when it
reopened. Our direct contact with all key partners allowed us to better manage
through the chaos.
We supported hoteliers during the pandemic, maintained a full-strength team
and paid our partners and suppliers on time. This has not only welcomed us to
new opportunities but it has also given us maximum flexibility with suppliers.
Perhaps most importantly as we turn our focus to the future, our ring-fencing
of customer prepayments allows On the Beach to maintain its favourable payment
terms to all partners.
Many others in the market, including tour operators and bedbank peers, have
not been able to honour their commitments under the financial pressure of
COVID-19. We have cancelled and amended tens of thousands of bookings, working
in collaboration with our suppliers to avoid cancellation charges and to
ensure smooth operational processes. This is only possible with strong
directly contracted relationships. The net result is that our directly
contracted share has continued to grow and we exit HY21 with a c.90% share.
We continue to believe that our ability to pay promptly, access preferential
package rates with hotel suppliers and access B2C and B2B channels are
fundamental to growing levels of direct and differentiated supply.
Expansion Areas
Business-to-business (B2B)
In 2018, we expanded into a new B2B channel via the acquisition of Classic
Collection Holidays (CCH). This increased the size of the Group's addressable
market by a further c.8m holidaymakers, who book beach packages each year
through an intermediary.
Since the acquisition, the Group has continued to invest behind the strategic
development of both the existing CCH brand and our new Classic Package
Holidays brand.
Both Classic brands have maintained high service standards throughout the
pandemic, receiving recognition from the trade for excellence, which has
enhanced their reputation and positions both favourably as demand continues to
recover.
Classic Package Holidays (CPH)
Significant progress was made in activating travel agents to sell CPH holidays
and increasing usage up to February 2020. The brand, launched in 2019, already
has the capability to sell packages via its portal to over 2,500 agents.
Partly as a result of the pandemic, there are some challenges for new entrants
and smaller independent operators but with Thomas Cook exiting the market in
2019 and other tour operators focusing on direct sales, there is an
opportunity to drive both number and usage of high street and independent
travel agents that sell CPH holidays.
Classic Collection Holidays (CCH)
Pre-pandemic, the Group invested in the product portfolio of CCH to include
longer haul beach and tailor-made itineraries via travel agents for its end
customers. Over the last 18 months, CCH has continued to extend and tailor the
offering.
In line with our strategy, the Classic brands have now launched a long haul
offering and are building a dedicated Group long haul function which will
cover B2B and B2C, value vs luxury and standard vs bespoke.
The proportion of CCH booked holidays that are long haul has increased from
1.4% in September 2019 to 16.4% in September 2021.
Long Haul
There are 4 million holidaymakers in the UK who book long haul packages each
year. Pre-pandemic, the On the Beach site handled 10m searches per annum for
long haul destinations.
There is a significant opportunity post pandemic to drive a growing share of
bookings to longer haul destinations in Classic and the core On the Beach
brand, by building out our scheduled air connectivity and portfolio of
directly contracted beach hotels.
We continue to develop new technological capabilities to allow airlines to be
added at pace and we are developing relationships with hotels in destination,
both East and Westbound. Our new group long haul function in Classic will
handle more complex long haul enquiries on behalf of the Group when demand
returns.
International expansion
The Board will continue to evaluate international opportunities that increase
the Group's scale and deliver further value for shareholders.
Championing Change in Travel Industry Regulation
What On the Beach is calling for
We believe that holistic and comprehensive reform is required in the
regulation of the travel industry, in order to create a competitive and
thriving travel market which works well for consumers, creates a level playing
field for those operating within it, and which reduces or eliminates exposure
for taxpayers against the risk of business failure.
Why this change is necessary
The failures of Monarch and Thomas Cook in 2017 and 2019 respectively
highlighted the exposure of consumers and taxpayers to the considerable cost
of airline failures and highlighted the need for reform in financial
protection for airlines. The Airline Insolvency Review that followed Monarch's
failure identified a number of reforms required and while this was included in
the 2019 Queen's Speech, progress was derailed by the pandemic and Brexit, and
it is not clear when this is likely to be addressed.
During the pandemic, as travel operators scrambled to preserve cash, consumers
were mistreated by having refunds refused or significantly delayed, and many
were forced to accept vouchers or refund credit notes, when they were entitled
to a cash refund in a timely manner, thus creating consumer detriment and
reduced competition.
Although consumer sentiment has recently improved, consumer confidence for
international leisure travel remains fragile and there continues to be some
uncertainty regarding the shape and timing of the recovery. This recovery is
dependent on the industry regaining the trust of consumers that they will be
treated fairly.
For most consumers in the UK who are booking their annual beach package
holiday, this will likely be the biggest investment they will make in a year,
unless they are moving house or changing their car. It is therefore critical
that competition in the market is healthy to ensure they get the best value,
choice, flexibility and consumer protection.
However, a number of market dynamics, most notably the market power of the few
airlines operating popular leisure routes from the UK, and how that power
manifests itself to the detriment of consumers, pose a serious threat to fair
competition and choice for consumers.
ATOL reform
The CAA is consulting on reform of the ATOL scheme including the assessment of
funding arrangements and the protection of consumer money. The consultation
process is still ongoing and we expect to hear initial feedback from the CAA
in December 2021, with a further consultation process in 2022. Proposals
include mandatory ring-fencing of consumer funds, which would mean a
fundamental change for the travel industry for those not already operating
trust accounts. On the Beach is supportive of trust accounts, to protect the
interests of customers and taxpayers, and if this is the direction the CAA
decides to pursue, On the Beach is well-placed for the relevant reforms.
What next?
On the Beach will continue to engage with Government, Parliament and
regulators on the changes it believes are required to secure a healthy and
competitive market that protects the interests of consumers.
Regulatory focus thus far has been focused on package organisers and not on
airlines. Given the failures and significant delays by airlines to refund
cancelled flights, and given the misuse of market power, On the Beach will be
championing the need for this to be reviewed and addressed.
Current trading and outlook
Booking volumes have been and will continue to be significantly influenced by
the evolution of the COVID-19 pandemic and responses from UK and European
Government policy. As I write this review, it is too early to say what impact
the Omicron variant will have on restrictions and demand but we have
well-rehearsed plans in place to deal with any ensuing disruption. The Group
exits 2021 with strong liquidity, high brand awareness and is ready for 2022.
The Board remains confident in the resilience and flexibility of the business
model and believes the business is well-positioned to grow market share over
the medium term as demand for holidays recovers.
In light of the continued market uncertainties, the Group is maintaining its
suspension of full year guidance until such time that the overall impact of
COVID-19 on the Group becomes clearer.
The Board will provide a further update on trading on the date of the AGM on
25 February 2022.
Simon Cooper
Chief Executive Officer
9 December 2021
Financial Review
Group overview
2021 2020
Adjusted GAAP Adjusted GAAP
Group revenue £30.5m £21.2m £71.2m £33.7m
Revenue as Agent((1)) £24.0m £14.7m £54.3m £16.8m
Revenue as Principal((2)) £6.5m £6.5m £16.9m £16.9m
Group gross profit £23.3m £14.4m £53.4m £16.0m
Gross profit as Agent £22.7m £13.8m £50.8m £13.5m
Gross profit as Principal £0.6m £0.6m £2.6m £2.6m
Group (loss)/profit before tax((3)) (£18.4m) (£36.7m) £0.6m (£46.3m)
Basic (loss)/earnings per share((4)) (9.7p) (19.0p) (0.5p) (27.6p)
((5) )As an agent, revenue is accounted on a "booked" rather than
"travelled" basis (unlike tour operators and airlines) and the Group is
reporting bookings taken between 1 October 2020 and 30 September 2021.
Adjusted revenue is revenue before exceptional items of £9.3m (2020:
£37.5m).
((6) )As a principal, revenue is accounted on a "travelled" basis and
reported on a gross basis and the Group is reporting bookings which departed
between 1 October 2020 and 30 September 2021.
((7) )Group adjusted profit / loss before tax is profit / loss before
tax, amortisation of acquired intangibles of £5.5m (2020: £5.5m), share
based payments cost of £2.8m (2020: credit of £0.6m) and exceptional items
of £10.0m (2020: £42.0m). A full explanation of the adjustments is included
in the glossary.
((8) )Adjusted earnings per share is Group adjusted profit after tax
divided by the average number of shares in issue during the period. Earnings
per share is Group profit after tax divided by the average number of shares in
issue during the period.
COVID-19 pandemic impact
Certain items, including the ongoing exceptional impact of the COVID-19
pandemic, have been excluded from performance measures in this statement as
the Board considers this necessary to provide a fair, balanced and
understandable view of the performance of the Group. A full reconciliation of
all non-GAAP measures to the closest equivalent GAAP measure is included in
the glossary. Whilst the underlying result has still been significantly
impacted by the COVID-19 pandemic, the Board believe that adjusting for the
items shown in the table below provides a clearer reflection of the Group's
performance in the period. The Group organised package holidays for customers
which have since been cancelled, or are likely to be cancelled, due to
continued airspace closures and government restrictions on leisure travel.
The Group has not estimated the financial impact of, or made an adjustment
for, the significant reduction in booking volumes as a result of the COVID-19
pandemic. A summary of the adjustments between Adjusted and GAAP measures,
split between the COVID-19 impact and other costs, is shown below.
2021 2020
Adjusted COVID-19 Other GAAP Adjusted COVID-19 Other GAAP
£m £m £m £m £m £m £m £m
Group revenue((1)) 30.5 (9.3) - 21.2 71.2 (37.5) - 33.7
Revenue as Agent 24.0 (9.3) - 14.7 54.3 (37.5) - 16.8
Revenue as Principal 6.5 - 6.5 16.9 - - 16.9
Cost of sales((2)) (7.2) 0.4 - (6.8) (17.8) 0.1 - (17.7)
Group overheads (41.7) (1.1) (8.3) (51.1) (52.8) (4.3) (5.2) (62.3)
Share Based Payments - - (2.8) (2.8) - - 0.6 0.6
Acquired Intangibles Amortisation - - (5.5) (5.5) - - (5.5) (5.5)
Other exceptional operating costs((3)) - (1.1) - (1.1) - (4.3) (0.3) (4.6)
Group profit/(loss) before tax (18.4) (10.0) (8.3) (36.7) 0.6 (41.7) (5.2) (46.3)
A full explanation of all adjusted performance measures is included in the
Glossary.
Overview of the year
· Revenue of £21.2m was down 37% vs FY20 due to:
o Booking volumes remained low throughout the complete UK lockdown 4 Jan
2021 to 17 May 2021.
o Dampened consumer confidence through the calendar year due to complex and
inconsistent rules coupled with prohibitively expensive testing costs.
o The decision made by the Group to suspend new bookings for holidays
departing before 1 September 2021.
· The Group continues to adjust for COVID-19 related cancellations,
expected cancellations and amendments. After making an adjustment to add back
the impact of cancellations, adjusted revenue was £30.5m (FY20: £71.2m).
· Total exceptional items in the period of £10.0m (FY20: £42.0m)
represents the estimated impact of COVID-19. This is primarily the result of
COVID-19 related cancellations, expected cancellations and associated
administrative expenses.
Continued and evolving response to the pandemic
As the country started to emerge from the pandemic, the Group took a
customer-led approach. This has included:
· Taking the bold decision to remove July and August departures
from sale while rules and restrictions remained changeable and complex.
· Free COVID tests on selected holiday bookings made from September
2021 in an industry first initiative.
· Introducing a 'New Normal' booking pledge to give consumers the
confidence to book. This included free pre-trip cancellation cover on all
package holidays, waiving our amendment fees where destinations are impacted
by COVID-19, and a guarantee that we will always refund in cash rather than
vouchers or credit notes.
· This has enabled the Group to sustain high levels of brand
awareness through times of weak consumer demand and to continue to build
consumer trust both in travel and the brand.
Cash and liquidity
· Given the extended disruption to international travel from the UK
throughout 2021 and the ongoing trading environment across the sector, in July
2021, Group raised £24.9m, net of fees (the 'Placing'), to:
o provide the Group with greater resilience, flexibility and firepower
through the current downturn by restoring the Group's cash position to a
similar position to where it was following the placing in May 2020;
o ensure that, ahead of an expected recovery of the international travel
market in calendar year 2022, the Group will have sufficient funding available
to increase marketing spend and to support the necessary short-term investment
in working capital to capitalise upon that demand; and
o ensure that, even in more pessimistic scenarios where international travel
continues to be significantly impacted due to the pandemic, the Group is able
to protect its strong market position and position itself to gain market share
when there is an eventual recovery.
· The headroom from the Placing allows the Group to simultaneously
increase investment in its digital platforms; continue to drive brand through
investment in online and offline marketing activity and improve conversion
with attractive low deposit schemes. A disciplined approach to investment will
be maintained, in line with the Group's track record.
· In addition, the Group extended the £25m CLBILS facility to May
2023 and reset covenants for the period up to September 2022.
· The Group has access to a £75m Revolving Credit Facility ('RCF')
which has not been drawn since 22 May 2020.
· Cash at 30 September 2021 was £56m excluding customer monies
held in a ring-fenced trust account of £39m. The Group continues to refund
customers in advance of receiving refunds from airlines for cancelled flights
and it does not issue refund credit notes.
Details of the current facility limits and maturity dates are as follows:
Facilities £m Issued Expiry Drawn at 30 September 2021
Original RCF £50m Apr 2020 Dec 2023 £nil
New CLBILS facility £25m May 2020 May 2023 £nil
Total facility £75m £nil
The Group organises its operations into four principal financial reporting
segments, being OTB (onthebeach.co.uk and sunshine. co.uk), International
(ebeach.se, ebeach.no and ebeach.dk), CCH (Classic Collection Holidays) and
CPH (Classic Package Holidays).
OTB Performance
2021 2021 2020 2020
Adjusted GAAP Adjusted GAAP
£m £m £m £m
Revenue 22.1 13.0 50.4 15.9
Online Marketing costs (5.5) (5.5) (14.2) (14.2)
Offline Marketing costs (6.1) (6.1) (8.7) (8.7)
Revenue after marketing costs 10.5 1.4 27.5 (7.0)
Overheads (16.6) (16.6) (16.9) (16.9)
Depreciation and amortization (5.9) (5.9) (5.5) (5.5)
Exceptional operating costs - (0.7) - (4.5)
Share based payments - (2.8) - 0.6
Amortisation of acquired intangibles - (4.4) - (4.4)
Operating (loss)/profit (12.0) (29.0) 5.1 (37.7)
EBITDA (6.1) (18.7) 10.6 (27.8)
See glossary for reconciliation to nearest GAAP measure
Revenue decreased by 18% to £13.0m (FY20: £15.9m). The reduction in revenue
is due to a lack of opportunity and demand for travel during the year.
The summer holiday booking peak, which traditionally occurs in January, did
not take place this year due to tightening restrictions over the Christmas
period followed by a complete and indefinite lockdown announced on 4 January
2021. In addition, the Group's decision in May 2021 to withdraw from sale
holidays departing prior to 1 September 2021 impacted booking volumes, but
also reduced the opportunity for significant business disruption, holiday
cancellations and customer dissatisfaction through summer.
As a result, adjusted revenue, which is grossed up for revenue on bookings
taken during the period but subsequently cancelled, decreased by (56%) to
£22.1m (FY20: £50.4m).
Offline marketing spend of £6.1m, relates to three distinct campaigns through
the year:
· The 'Everything's Better on the Beach', and 'We're Ready When You
Are' brand campaign, which went live on Christmas Day;
· 'Summer off Sale', where we put consumers before cash. This was
possible due to the Group's unique business model, which is not reliant on
generating customer cash as working capital;
· 'Free COVID tests' in an industry first to start to build back
consumer confidence in an industry that had been dented by a significant
period of complexity, costly testing and disruption.
As a result of these campaigns, even during a period of exceptionally low
demand, brand awareness in September 2021 was ahead of September 2019.
Online marketing spend, which flexes with holiday search demand, was 42%
(FY20: 89%) of revenue. This reduction is due to a lower proportion of
bookings made being subsequently cancelled. Adjusting for these cancellations
online marketing cost efficiency was similar to the previous year at 25%
(FY20: 28%).
2021 2021 2020 2020
Adjusted GAAP Adjusted GAAP
Overheads as a % of revenue 75% 127% 34% 106%
The severe market conditions and resulting cancellations have resulted in
increased operating leverage in the year. Overheads as a percentage of
adjusted revenue have increased to 75% (FY20: 34%).
Fixed costs have also increased due to ongoing investments in people and
technology as well as continued regulatory cost pressures such as insurance
and other costs related to being a UK Plc.
As a result of the market dynamics explained above operating losses have
decreased to £29.0m (FY20: £37.7m).
Classic Collection Holidays segment performance
2021 2021 2020 2020
Adjusted GAAP Adjusted GAAP
£m £m £m £m
Revenue 6.5 6.5 16.9 16.9
Gross profit 0.6 0.6 2.6 2.6
Gross Profit after marketing costs 0.2 0.2 1.6 1.6
Overheads (3.3) (3.3) (3.5) (3.5)
Depreciation and amortisation (0.2) (0.2) (0.1) (0.1)
Amortisation of acquired intangibles - (1.1) - (1.1)
Exceptional operating costs - (0.4) - (0.1)
Operating loss (3.3) (4.8) (2.0) (3.2)
EBITDA (3.1) (3.5) (1.9) (2.0)
See glossary for reconciliation to nearest GAAP measure.
As a principal (rather than an agent) Classic accounts for revenue on a
"travelled" basis and reports revenue on a gross basis. As very few customers
were able to travel during the year, results have been impacted significantly.
Revenue decreased by 62% to £6.5m (FY20: £16.9m) and operating losses
increased to £4.8m (FY20: £3.2m). However the forward order book is healthy.
The management team continues to develop the overall proposition and has
launched new boutique, tailor-made and long haul programmes during the year.
Throughout the pandemic, Classic has been recognised for delivering excellent
customer service and has this year launched the 'acclaimed' programme which is
designed to foster even stronger relationships with travel agents.
Classic Package Holidays segment performance
2021 2021 2020 2020
Adjusted GAAP Adjusted GAAP
£m £m £m £m
Revenue 1.8 1.7 3.6 0.8
Cost of sales (1.3) (0.9) (3.5) (3.3)
Gross profit 0.5 0.8 0.1 (2.5)
Gross Profit after marketing costs 0.1 0.4 (0.1) (2.8)
Overheads (1.8) (1.8) (1.4) (1.4)
Depreciation and amortisation (0.2) (0.2) (0.2) (0.2)
Operating (loss) (1.9) (1.6) (1.7) (4.4)
EBITDA (1.7) (1.4) (1.5) (4.2)
See glossary for reconciliation to nearest GAAP measure
CPH provides an online B2B platform that enables high street travel agents to
sell dynamically packaged holidays to their customers. Revenue for the period
was £1.7m (FY20: £0.8m), and the operating loss was £1.6m (FY20: £4.4m).
The CPH trading result has been significantly impacted by COVID-19 due to a
drop in demand and temporary closure of high street shops for much of the
year.
The brand was created in 2019, and despite the pandemic, has continued to make
significant strategic progress. CPH product is now available in 2,500 high
street travel agents and c.3,500 hotels are now available across both short
and long haul destinations. At the year end, forward orders were more than
double what they were as at 30 September 2019 and represented holidays with a
total sales value of £9.5m.
Share based payments
The Group has an LTIP scheme in place which vests based on performance
criteria. In accordance with IFRS 2, the Group has recognised a non-cash
charge of £2.8m (FY20: credit £0.6m). The FY20 credit related to the
reversal of benefits accrued for the 2018 incentive scheme which, as a result
of COVID-19, did not vest in full.
On 22 December 2020 the Remuneration Committee approved the introduction of an
underpin/minimum award for the nil cost awards originally granted on 9 July
2019. This removal of a non-market based condition has resulted in a catch up
charge to the FY21 income statement of £2.0m that reflects the scheme
progress to date. These awards vested on 30 September 2021.
Taxation
The Group tax credit of £6.5m represents an effective rate of 18% (FY20: 19%)
which is lower than the standard UK rate of 19% (FY20: 19%).
During the period, a Corporation Tax rebate of £4.2m was received and no
payments on account have been made due to the loss making position of the
Group.
Cash Flow
£m FY21 FY20
Loss before tax (36.7) (46.3)
Depreciation and amortisation 11.9 11.4
Net finance costs / (income) 0.9 0.4
Share based payments 2.8 (0.6)
Net loss / (gain) on disposal of property, plant and equipment 0.1 -
Movement in working capital 18.0 (39.7)
Corporation tax 4.2 (0.2)
Cash generated from operating activities 1.2 (75.0)
Other Cash Flows
Capitalised development expenditure (4.6) (4.0)
Capital expenditure net of proceeds (0.5) (1.0)
Net finance (costs) / income (0.9) (0.4)
Payment of lease liabilities (0.6) (0.4)
Cash flows excl share proceeds and dividends paid (5.4) (80.8)
Proceeds from issue of share capital 24.9 65.1
Dividends paid - (2.6)
Total net cash flows 19.5 (18.3)
Opening cash balance 36.5 54.8
Closing cash at bank 56.0 36.5
Closing trust balance 39.0 25.8
The cash flow profile of the Group is seasonal with approximately 50% of
customers travelling in the period June to August and therefore in a normal
year the cash flows (excluding any cash held in the trust account) experience
a trough prior to June and a peak following this.
Net cash outflows excluding share proceeds and dividends were £5.4m which is
£75.4m lower than last year (outflow of £80.8m). This is due to reduced
losses and a partial unwind of the working capital position at 30 September
2020 and in particular amounts due from airlines which have been substantially
recovered in the period.
Not included in the Group's cash position is £39m (FY20:£25.8m) of customer
prepayments held in a trust account to be released once the customer has
travelled.
As a result of the share placings in FY20 and FY21, and the extension of
banking facilities to December 2023, the Group has sufficient cash reserves to
continue to invest ahead of an expected recovery of the international travel
market in calendar year 2022.
Dividend
As announced on 15 June 2021, no interim dividend was declared during FY21. In
view of the performance in light of the pandemic and the planned investment in
technology, people, brand and customer proposition in FY22, the Board is not
recommending a final dividend in respect of FY21.
Shaun Morton
Chief Financial Officer
9 December 2021
Consolidated Income Statement and Statement of Comprehensive Income
Year ended 30 September 2021 2021 2020
Note £'m £'m
Revenue 4,5 21.2 33.7
Cost of sales (6.8) (17.7)
Gross profit 14.4 16.0
Administrative expenses 6 (50.2) (61.9)
Group operating loss (35.8) (45.9)
Finance costs (1.0) (0.8)
Finance income 0.1 0.4
Net finance costs (0.9) (0.4)
Loss before taxation (36.7) (46.3)
Taxation 8 6.5 7.5
Loss for the year (30.2) (38.8)
Other comprehensive income:
Net (loss)/gain on cash flow hedges (0.1) 0.1
Total comprehensive loss for the year (30.3) (38.7)
Attributable to:
Equity holders of the parent (30.3) (38.7)
Basic and diluted earnings per share attributable to the equity Shareholders
of the Company:
Basic loss per share 9 (19.0p) (27.6p)
Diluted loss per share 9 (19.0p) (27.6p)
Adjusted loss per share * 9 (9.7p) (0.5p)
Adjusted profit measure *
Adjusted (LBT)/PBT (before amortisation of acquired intangibles, exceptional 6 (18.4) 0.6
items and share based payments) *
* This is a non GAAP measure, refer to notes. The adjusted loss per share
presented is both basic and diluted.
Consolidated Balance Sheet
At 30 September 2021
2021 2020
Assets Note £'m £'m
Non-current assets
Intangible assets 10 74.1 79.6
Property, plant and equipment 8.3 9.9
Investment property - 0.6
Total non-current assets 82.4 90.1
Current assets
Trade and other receivables 11 94.9 104.7
Deferred tax 3.6 -
Derivative financial instruments - 0.5
Corporation tax receivable 0.8 4.5
Trust account 12 39.0 25.8
Cash at bank 56.0 36.5
Total current assets 194.3 172.0
Total assets 276.7 262.1
Equity
Share capital 1.7 1.6
Share premium 89.6 64.8
Retained earnings 187.6 215.0
Capital contribution reserve 0.5 0.5
Merger reserve (129.5) (129.5)
Total equity 149.9 152.4
Non-current liabilities
Deferred tax - 2.6
Trade and other payables 13 2.5 3.8
Total non-current liabilities 2.5 6.4
Current liabilities
Trade and other payables 13 119.4 92.4
Provisions 13 4.6 10.9
Derivative financial instruments 0.3 -
Total current liabilities 124.3 103.3
Total liabilities 126.9 109.7
Total equity and liabilities 276.7 262.1
Consolidated Statement of Cash Flows
Year ended 30 September 2021
2021 2020
Note £'m £'m
Loss before taxation (36.7) (46.3)
Adjustments for:
Depreciation 6 1.8 1.9
Amortisation of intangible assets 6 10.1 9.5
Finance costs 1.0 0.8
Finance income (0.1) (0.4)
Share based payments 2.8 (0.6)
Gain on termination of lease 14 (0.1) -
Loss on disposal of property, plant and equipment 14 0.2 -
(21.0) (35.1)
Changes in working capital:
Decrease/(Increase) in trade and other receivables 11 9.9 (7.4)
Increase/(decrease) in trade and other payables 13 21.3 (50.6)
(Increase)/decrease in trust account (13.2) 18.3
18.0 (39.7)
Cash flows from operating activities
Cash used in operating activities (3.0) (74.8)
Tax received/(paid) 4.2 (0.2)
Net cash outflow from operating activities 1.2 (75.0)
Cash flows from investing activities
Purchase of property, plant and equipment (0.5) (1.2)
Proceeds from disposal of assets held for sale - 0.2
Purchase of intangible assets 10 (4.6) (4.0)
Interest received 0.1 0.4
Net cash outflow from investing activities (5.0) (4.6)
Cash flows from financing activities
Proceeds from issue of share capital 26.0 65.1
Costs related to shares issued paid (1.1) -
Equity dividends paid - (2.6)
Interest paid on borrowings (0.9) (0.6)
Interest paid on lease liabilities (0.1) (0.2)
Payment of lease liabilities 14 (0.6) (0.4)
Net cash inflow from financing activities 23.3 61.3
Net increase in cash at bank and in hand 19.5 (18.3)
Cash at bank and in hand at beginning of year 36.5 54.8
Cash at bank and in hand at end of year 56.0 36.5
Consolidated Statement of Changes in Equity
Year ended 30 September 2021
Share capital Share premium Merger reserve Capital contribution reserve Retained earnings Total
£'m £'m £'m £'m £'m £'m
Balance at 30 September 2019 1.3 - (129.5) 0.5 256.9 129.2
Share based credit including tax - - - - (0.6) (0.6)
Shares issued during the year 0.3 67.0 - - - 67.3
Costs related to shares issued - (2.2) - - - (2.2)
Dividends paid during the year - - - - (2.6) (2.6)
Total comprehensive income for the year - - - - (38.7) (38.7)
Balance at 30 September 2020 1.6 64.8 (129.5) 0.5 215.0 152.4
Share based charge including tax - - - - 2.9 2.9
Shares issued during the year 0.1 25.9 - - - 26.0
Costs related to shares issued - (1.1) - - - (1.1)
Total comprehensive loss for the year - - - - (30.3) (30.3)
Balance at 30 September 2021 1.7 89.6 (129.5) 0.5 187.6 149.9
Notes to the Consolidated Financial Statements
Year ended 30 September 2021
1 General Information
On the Beach Group plc is a public limited company which is listed on the
London Stock Exchange and is domiciled and incorporated in the United Kingdom
under the Companies Act 2006. The address of the registered office is located
at Aeroworks, 5 Adair Street, Manchester, M1 2NQ
2 Accounting Policies
a) Basis of preparation
The consolidated financial statements presented in this document have been
prepared in accordance with:
- International Accounting Standards in conformity with the requirements of
the Companies Act 2006; and
- International Financial Reporting Standards ('IFRSs') adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union.
The Company's financial statements have been prepared in accordance with
Financial Reporting Standard 102 "The Financial Reporting Standard applicable
in the United Kingdom and the Republic of Ireland" ("FRS 102") and as applied
in accordance with the provisions of the Companies Act 2006. The Company has
taken advantage of the exemption provided under section 408 of the Companies
Act 2006 not to publish its individual income statement and related notes.
These financial statements are presented in pounds sterling (£'m) because
that is the currency of the primary economic environment in which the Group
operates.
b) Going concern
The Group covers its daily working capital requirements by means of cash and a
£50m Revolving Credit Facility ("RCF") expiring December 2023. In addition,
the Group has a CLBILS facility of £25m.
As at 30 September 2021 cash (cash, excluding cash held in trust which is
ringfenced and not factored into the going concern assessment) was £56.0m (30
September 2020: cash of £36.5m).
Given the extended disruption to international travel from the UK throughout
2021 and the ongoing trading environment across the sector, the Group took a
number of actions to improve overall liquidity, including on 7 July 2021
raising £24.9m net of fees through issuing new shares, to ensure that it is
well placed to operate and to trade once travel restrictions are eased.
On 25 May 2021, the Group took further action to ensure that the facility was
fit for purpose. This included exercising a one year extension of the £25m
CLBILs element of the facility, now expiring in May 2023, and resetting
covenants until September 2022 to ensure the facility can be accessed through
this period. This incremental liquidity has provided the Group with greater
resilience and flexibility through the extended downturn in the market, and
will enable the Group to exit the pandemic period in a strong position.
Where holidays are cancelled as a result of the COVID-19 pandemic the Group is
committed to refunding customers in cash rather than vouchers. These cash
refunds are fully funded from the trust account (where refunds are for hotel
and transfer payments) or are a pass-through from airlines.
Cash received from customers for bookings that have not yet travelled is held
in a ring fenced trust account and is not withdrawn until the customer returns
from their holiday. Cash held in trust at 30 September 2021 was £39.0m. The
trust account is described in note 12.
The Directors have assessed a going concern period through to March 2023 and
have modelled a number of scenarios considering factors such as airline and
hotelier resilience, employee absence and customer behaviour / demand. The
Directors have also considered the impact of climate risk in these scenarios
concluding that it is not expected to have a significant impact over the going
concern period. Further detail of the Group's assessment of the impact of
climate risk is provided within the 'Principal risks and Uncertainties'
section of this report. The Directors modelled what they consider to be a
remote downside scenario of no travel or bookings until March 2023. In this
scenario the Directors have assumed that variable marketing spend, which is
within their control, is significantly reduced. Even in this scenario, the
Group would have positive cash and no requirement to draw down on its current
facilities both during the going concern review period, and in the subsequent
period prior to expiry of facilities.
Given the assumptions above, the mitigating actions available and within the
Group's control and that in no scenario is there any requirement to access the
RCF or CLBILs facility, the Directors remain confident in their response to
the pandemic and will continue to operate in an agile way adapting to any
applicable government guidance. Therefore, it is considered appropriate to
continue to adopt the going concern basis in preparing these financial
statements.
c) New standards, amendments and interpretations
A number of new standards and amendments to standards are effective for annual
periods beginning after 1 January 2020; the following amended standards have
been implemented however they have not had a significant impact on the Group's
consolidated financial statements:
• Amendments to References to Conceptual Framework in IFRS Standards;
• Definition of a Business (Amendments to IFRS 3); and
• Definition of material - amendments to IAS 1 and IAS 8.
d) Segment reporting
IFRS 8 requires operating segments to be reported in a manner consistent with
the internal reporting provided to the chief operating decision maker. The
chief operating decision maker, who is responsible for allocating resources
and assessing performance of the operating segments, has been identified as
the management team, including the Chief Executive Officer and Chief Financial
Officer. For management purposes, the Group is organised into segments based
on location, and information is provided to the management team on these
segments for the purposes of resource allocation and segment performance
management and monitoring.
The management team considers there to be four reportable segments:
(i) "OTB" - activity via UK websites (www.onthebeach.co.uk, www.sunshine.co.uk
and www.onthebeachtransfers.co.uk)
(ii) "International" - activity via Swedish, Norwegian and Danish websites
(www.eBeach.se, www.eBeach.no and www.eBeach.dk)
(iii) "CCH" - activity via the Tour Operator, Classic Collection Holidays
Limited and subsidiaries
(iv) "CPH" - activity via the Classic Package Holidays online business to
business portal
e) Revenue recognition
IFRS 15 Revenue from Contracts with Customers is a principle-based model of
recognising revenue from customer contracts. It has a five-step model that
requires revenue to be recognised when control over goods and services are
transferred to the customer. The standard requires the Group to exercise
judgement, taking into consideration all of the relevant facts and
circumstances when applying each step of the model to contracts with their
customers. The following paragraphs describes the types of contracts, when
performance obligations are satisfied, and the timing of revenue recognition.
Further details of the disaggregation of revenue are disclosed in note 4.
As agent:
The Group acts as agent when it is not the primary party responsible for
providing the components that make up the customers booking and it does not
control the components before they are transferred to customers. Revenue
comprises the fair value of the consideration received or receivable in the
form of commission. Service fees/commissions are earned from the consumer
through purchases of travel products such as flight tickets or hotel
accommodation from third party suppliers. Revenue in the form of commission or
service fees recognised when the performance obligation of arranging and
facilitating the customer to enter into individual contracts with suppliers is
satisfied, usually on delivery of the booking confirmation.
Given the level of cancellations the Group has experienced, the commission is
considered to represent variable consideration and the transaction price of
commission income determined using the expected value method, such that
revenue is recognised only to the extent that it is highly probable that there
will not be a significant reversal of revenue recognised in future periods.
The sum of the range of probabilities of cancellations in different scenarios
based on historical trends and best estimate of future expectations is used to
calculate the extent to which the variable consideration is reduced and a
corresponding refund liability (presented as a cancellation provision)
recognised in provisions.
Revenue earned from sales through CPH are stated net, with the commission
payable to agents recognised in the cost of sales.
As principal:
The Group acts as principal when it is the primary party responsible for
providing the components that make up the customer's booking and it controls
the components before transferring to the customer.
Revenue represents amounts received or receivable for the sale of package
holidays and other services supplied to the customers. Revenue is recognised
when the performance obligation of delivering an integrated package holiday is
satisfied, usually over the duration of the holiday.
Revenue is stated net of discounts, rebates, refunds and value added tax.
3 Critical accounting estimates and judgements
The Group's accounting policies have been set by management. The application
of these accounting policies to specific scenarios requires reasonable
estimates and assumptions to be made concerning the future. These are
continually evaluated based on historical experience and expectations of
future events. The resulting accounting estimates will, by definition, seldom
equal the related actual results. Under IFRS estimates or judgements are
considered critical where they involve a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities from
period to period. This may be because the estimate or judgement involves
matters which are highly uncertain or because different estimation methods or
assumptions could reasonably have been used.
Critical accounting judgements
Revenue from contracts with customers
The Group applied the following key judgements on the agent vs principal
status of each segment as well as the number of performance objections in
each.
Performance obligations
Revenue in the OTB, International and CPH segments is recognised based on
there being a single performance obligation to at the point of booking. This
is to arrange and facilitate the customer entering into individual contracts
with principal suppliers providing holiday related services including flights,
hotels and transfers. For the OTB, International and CPH segments, there is
not a significant integration service and responsibility for providing the
services remains with the principal suppliers.
The Group has concluded that under IFRS 15 for revenue in the CCH segment, a
package holiday constitutes the delivery of one distinct performance
obligation which includes flights, accommodation, transfers and other
holiday-related services. In formulating this conclusion, management has
assessed that it provides a significant integration service to collate all of
the elements within a customer's specification to produce one integrated
package holiday. Management has further analysed the recognition profile and
concluded that under IFRS 15, revenue and corresponding cost of sales should
be recognised over the period a customer is on holiday.
Agent vs Principal
Determining whether an entity is acting as a principal or as an agent requires
judgement and has a significant effect on the timing and amount (gross or net
basis) of revenue by the Group. As an agent, revenue is recognised at the
point of booking on a net basis. As a principal, revenue is recognised on a
gross basis over the duration of the holiday.
In line with IFRS 15, management have concluded that revenue in the OTB,
International and CPH segments will continue to be treated as an agent on the
basis that the performance obligation is to arrange for another entity to
provide the goods or services. This assessment has given consideration that
there is no inventory risk and limited discretion in establishing prices.
Revenue in the CCH segment will continue to be treated as a principal on the
basis that CCH have the primary responsibility for fulfilling the package
holiday for the customer.
Capitalised website development costs
Determining the amounts to be capitalised involves judgement and is dependent
upon the nature of the related development; namely whether it is capital (as
relating to the enhancement of the website) or expenditure (as relating to the
ongoing maintenance of the website) in nature. In order to capitalise a
project, the key judgement management have made is in determining the
project's ability to produce future economic benefits. In the year ending 30
September 2021, the proportion of development costs that have been capitalised
is lower than pre-pandemic reporting periods due to the development team
undertaking more operational tasks that have been specific to the Group's
response to COVID-19.
Deferred tax asset
Deferred tax assets are recognised for unused tax losses to the extent that it
is probable that taxable profit will be available against which the losses can
be utilised. Management judgement is required to determine the amount of
deferred tax assets that can be recognised, based upon the likely timing and
the level of future taxable profits, together with future tax planning
strategies. The Group has concluded that the deferred assets will be
recoverable using the estimated future taxable income based on the approved
projections and plans for the Group.
Critical accounting estimates
COVID-19
The recognition of costs and provisions relating to disruption caused by the
COVID-19 pandemic is an area of significant estimation. These adjustments
relate primarily to lost revenue resulting from the cancellation of bookings
in the financial year and beyond. The estimation includes the loss of revenues
caused by the cancellation and refund of bookings, off-set by extent to which
related holiday costs can be recovered. Key areas of estimation include:
COVID cancellation provision
The extent to which holidays will be impacted by the pandemic, either directly
due travel restrictions or indirectly due to reductions in flying schedules.
Management have estimated that up to 20% of forward bookings as at the balance
sheet date will be cancelled within FY22, giving rise to an estimated
liability of £4.1m, shown in note 13. In estimating this cancellation rate
management have considered:
(i) season; as historically summer cancellations are lower than the preceding
winter;
(ii) flight supplier load factors; and
(iii) experience of summer FY21 during the pandemic but taking into
consideration the current levels of vaccination rate.
The level of forward bookings beyond summer 2022 is not significant and any
changes to this assumption would not have a material impact. If the group was
to increase the percentage of cancellations by 5ppts then the provision
required would increase by 23%.
Prepayments with suppliers
In the normal course of business the Group will advance payments to certain
hotel suppliers for holidays booked. A risk assessment is made based on a
review of each significant suppliers financial stability with varying %
provisions applied to different risk levels. If the Group was to increase its
% provision applied by 5ppts across all specific risk categories not already
fully provided, this would have resulted in a decrease of £0.1m in the
prepayments of £5.3m shown in Note 11.
Recoverability of airline debtor
In relation to flights cancelled during the financial year, the Group has
considered the impact of the pandemic on the recoverability of amounts paid to
airlines in lieu of flights which have been cancelled which as at 30 September
2021 is a receivable balance of £3.3m - see note 11.
The Group has a legal right to a refund; the airline has an obligation to
refund in the event that the flight is cancelled. European Regulations provide
strict guidelines for the compensation of travellers whose flights are
delayed, cancelled, or overbooked while travelling in or to EU countries. The
rules apply to any flights that originate in an EU country. Where an airline
is not forthcoming with a refund owed the Group exercises its chargeback
rights are as governed by the card scheme rules. The Group has a right to make
a chargeback when:
(i) the merchant (airline) was unable or unwilling to provide the purchased
services; or
(ii) the cardholder is entitled to a refund under the merchant's cancellation
policy.
Where a flight has been cancelled, the Group has recognised a net receivable
for the expected recoverable amount in accordance with the considerations
above. Management have calculated the provision for airline refunds owed based
on factors such as age, flight supplier and payment method.
Impact of COVID-19
A summary of the adjustments between Adjusted and GAAP measures, split between
the COVID-19 impact and other costs, is shown below:
2021
Adjusted Impact of COVID-19 GAAP
£'m £'m £'m
Group revenue
Revenue as Agent 24.0 (9.3) 14.7
Revenue as Principal 6.5 - 6.5
Group Cost of Sales (7.2) 0.4 (6.8)
Group overheads (50.0) (1.1) (51.1)
Group loss before tax (26.7) (10.0) (36.7)
The total exceptional items in the year ended 30 September 2021 of £10.0m
represents the estimated cost of COVID-19 to trading in the period. This is
primarily the cost of COVID-19 related cancellations or expected cancellations
of £8.9m. Exceptional operating costs of £1.1m includes legal and
professional fees and supplier provisions.
The total exceptional items in the year ended 30 September 2020 of £41.7m
represents the estimated cost of COVID-19 to trading in the period. This is
primarily the cost of COVID-19 related cancellations or expected cancellations
of £37.4m. The adjustment also includes a provisions against amounts due from
suppliers of £2.2m, exceptional development spend of £0.7m and legal and
professional fees of £1.4m. £0.7m of redundancy costs were offset by £0.7m
of contributions in relation to the Coronavirus Job Retention Scheme.
Impairment of intangible assets and goodwill
Intangible assets are reviewed for impairment if events or changes in
circumstances indicate that the carrying amount may not be recoverable.
Goodwill is reviewed for impairment on an annual basis. When a review for
impairment is conducted, the recoverable amount is determined based on the
higher of value in use and fair value less costs to sell. The value in use
method requires the Group to determine appropriate assumptions (which are
sources of estimation uncertainty) in relation to the cash flow projections
based on the latest budget, the long-term growth rate to be applied to these
cash flow projections and the risk-adjusted pre-tax discount rate used to
discount the assumed cash flows to present value.
The Group has concluded that the carrying value of the intangibles and
goodwill is appropriate (after considering certain sensitivities which are set
out in Note 10).
4 Revenue
In line with IFRS 15, the Group is required to disaggregate its revenue to
show the main drivers of its revenue streams. Revenue is accounted for at the
point the Group has satisfied its performance obligations, details of the
revenue performance obligations are set out in note 2e of these financial
statements.
For the year ended 30 September 2021
OTB Int'l CCH CPH Total
£'m £'m £'m £'m £'m
Revenue before exceptional cancellations
Sales as agent 22.1 0.1 - 1.8 24.0
Sales as principal - - 6.5 - 6.5
Total Revenue before exceptional cancellations 22.1 0.1 6.5 1.8 30.5
Exceptional cancellations* (9.1) (0.1) - (0.1) (9.3)
Total Revenue 13.0 - 6.5 1.7 21.2
For the year ended 30 September 2020
OTB Int'l CCH CPH Total
£'m £'m £'m £'m £'m
Revenue before exceptional cancellations
Sales as agent 50.4 0.3 - 3.6 54.3
Sales as principal - - 16.9 - 16.9
Total Revenue before exceptional cancellations 50.4 0.3 16.9 3.6 71.2
Exceptional cancellations* (34.5) (0.2) - (2.8) (37.5)
Total Revenue 15.9 0.1 16.9 0.8 33.7
*Exceptional cancellations in the year ended 30 September 2021 and 30
September 2020 relate to the impact of COVID-19 (see note 3)
5 Segmental report
As explained in note 2d, the management team considers the reportable segments
to be ''OTB'', "International", ''CCH'' and "CPH". All segment revenue,
operating profit assets and liabilities are attributable to the Group from its
principal activities.
OTB, International and CPH recognise revenue as agent on a net basis. CCH
recognises revenue as a principal on a gross basis.
2021 2020
OTB Int'l CCH CPH Total OTB Int'l CCH CPH Total
£'m £'m £'m £'m £'m £'m £'m £'m £'m £'m
Income
Revenue before exceptional cancellations 22.1 0.1 6.5 1.8 30.5 50.4 0.3 16.9 3.6 71.2
Exceptional cancellations* (9.1) (0.1) - (0.1) (9.3) (34.5) (0.2) - (2.8) (37.5)
Total Revenue 13.0 - 6.5 1.7 21.2 15.9 0.1 16.9 0.8 33.7
Adjusted EBITDA (6.1) (0.2) (3.1) (1.7) (11.1) 10.6 (0.3) (1.9) (1.5) 6.9
Share based (charge)/credit (2.8) - - - (2.8) 0.6 - - - 0.6
Impact of COVID-19 (9.8) (0.1) (0.4) 0.3 (10.0) (38.7) (0.2) (0.1) (2.7) (41.7)
Other exceptional costs - - - - - (0.3) - - - (0.3)
EBITDA (18.7) (0.3) (3.5) (1.4) (23.9) (27.8) (0.5) (2.0) (4.2) (34.5)
Depreciation and amortisation (10.3) (0.1) (1.3) (0.2) (11.9) (9.9) (0.1) (1.2) (0.2) (11.4)
Group operating loss (29.0) (0.4) (4.8) (1.6) (35.8) (37.7) (0.6) (3.2) (4.4) (45.9)
Finance costs (1.0) (0.8)
Finance income 0.1 0.4
Loss before taxation (36.7) (46.3)
Non-current assets
Goodwill 31.6 - 4.6 4.0 40.2 31.6 - 4.6 4.0 40.2
Other intangible assets 26.0 0.1 7.7 0.1 33.9 30.1 0.1 8.9 0.3 39.4
Property, plant and equipment 5.8 - 2.5 - 8.3 8.1 - 1.8 - 9.9
Investment property - - - - - - - 0.6 - 0.6
*Exceptional cancellations in the year ended 30 September 2021 and 30
September 2020 relate to the impact of COVID-19.
6 Operating profit
a) Operating expenses
Expenses by nature including exceptional items and impairment charges:
2021 2020
£'m £'m
Marketing 10.9 22.8
Depreciation 1.8 1.9
Staff costs (including share based payments) 18.5 14.6
IT hosting, licences & support 2.5 2.4
Office expenses 0.8 0.8
Credit / debit card charges 0.5 1.7
Insurance 1.6 1.6
Other 2.4 2.0
Administrative expenses before exceptional items & amortisation of 39.0 47.8
intangible assets
-
Impact of COVID-19 1.1 4.3
Other exceptional items - 0.3
Amortisation of intangible assets 10.1 9.5
Exceptional items and amortisation of intangible assets 11.2 14.1
Administrative expenses 50.2 61.9
b) Exceptional items
2021 2020
Adjusted Impact of COVID-19 GAAP Adjusted Impact of COVID-19 Other exceptional items GAAP
£'m £'m £'m £'m £'m £'m £'m
Group revenue
Revenue as Agent 24.0 (9.3) 14.7 54.3 (37.5) - 16.8
Revenue as Principal 6.5 - 6.5 16.9 - - 16.9
Group Cost of Sales (7.2) 0.4 (6.8) (17.8) 0.1 - (17.7)
Group overheads
Administrative expenses (49.1) (1.1) (50.2) (57.3) (4.3) (0.3) (61.9)
Net finance costs (0.9) - (0.9) (0.4) - - (0.4)
Group loss before tax (26.7) (10.0) (36.7) (4.2) (41.7) (0.3) (46.3)
The total exceptional items in the year ended 30 September 2021 of £10.0m
represents the estimated cost of COVID-19 to trading in the period. This is
primarily the cost of COVID-19 related cancellations or expected cancellations
of £8.9m. Exceptional operating costs of £1.1m includes legal and
professional fees and supplier provisions.
The exceptional items in the year ended 30 September 2020 of £41.7m
represents the estimated cost of COVID-19 to trading in the period. This is
primarily the cost of COVID-19 related cancellations or expected cancellations
of £37.4m. The adjustment also includes a provisions against amounts due from
suppliers of £2.2m, exceptional development spend of £0.7m and legal and
professional fees of £1.4m. Other exceptional items of £0.3m relate to legal
and professional fees.
c) Services provided by the company auditor
During the year, the Group obtained the following services from the operating
company's auditor.
2021 2020
£'m £'m
Audit of the parent company financial statements 0.1 0.1
Amounts receivable by the Company's auditor and its associated in respect of:
- Audit of financial statements of subsidiaries pursuant to legislation 0.3 0.2
- Review of interim financial statements - -
- Other assurance services - -
0.4 0.3
d) Adjusted (LBT)/PBT
Management measures the overall performance of the Group by reference to
Adjusted (LBT)/PBT, a non-GAAP measure as it gives a meaningful year on year
comparison of the Group's performance:
2021 2020
£'m £'m
Profit before taxation (36.7) (46.3)
Impact of COVID-19 10.0 41.7
Other exceptional costs - 0.3
Total exceptional items 10.0 42.1
Amortisation of acquired intangibles* 5.5 5.5
Share based payments charge** 2.8 (0.6)
Adjusted (LBT)/PBT (18.4) 0.6
* These charges relate to amortisation of brand, website technology and
customer relationships recognised on the acquisition of subsidiaries and are
added back as they fall outside of the normal activities of the Group.
**The share based payment charge represents the expected cost of shares
vesting under the Group's Long Term Incentive Plan. These charges are added
back to the adjusted profit measure as they do not necessarily relate to the
performance of the Group in the current financial year.
On 10 December 2020 the remuneration committee approved the introduction of an
underpin/minimum award for the nil cost awards originally granted 9 July 2019
to key management. This removal of a non-marked based condition has resulted
in a catch up charge to the income statement of £2.0m that reflects the
scheme progress to date.
7 Employees and Directors
a) Payroll costs
The aggregate payroll costs of these persons were as follows:
2021 2020
£'m £'m
Wages and salaries 18.0 17.9
Defined contribution pension cost 0.4 0.3
Social security costs 1.9 1.8
Share-based payment charge/(credit) 2.8 (0.6)
23.1 19.4
Staff costs above include £4.6m (2020: £4.0m) employee costs capitalised as
part of software development. During the year £0.2m was claimed in relation
to the Coronavirus Job Retention Scheme (2020: £0.7m). This has been netted
off against other exceptional costs in relation to COVID 19.
b) Employee numbers
Average monthly number of people (including Executive Directors) employed:
2021 2020
By reportable segment: No. No.
UK 365 419
Int'l 6 10
CCH 115 116
CPH 8 5
494 550
c) Directors' emoluments
The remuneration of Directors was as follows: 2021 2020
£'m £'m
Aggregate emoluments 0.5 0.9
Defined contribution pension - -
Share-based payment charges 0.1 0.1
0.6 1.0
Remuneration was paid by On the Beach Limited, a subsidiary company of the
Group.
The remuneration of the highest paid director was as follows:
2021 2020
£'m £'m
Aggregate emoluments 0.3 0.3
Share-based payment charges 0.1 0.1
0.4 0.4
d) Key management compensation
Key management comprised the seven members of the executive team.
Remuneration of all key management (including directors) was as follows:
2021 2020
£'m £'m
Wages and salaries 1.7 1.6
Short-term non-monetary benefits - -
Share-based payment charges 2.1 0.1
3.8 1.7
e) Retirement benefits
Included in pension contributions payable by the Group of £0.4m (2020:
£0.3m) is £1,300 (2020: £42,000) of contributions that the Group made to a
personal pension scheme in relation to one Executive Director.
8 Taxation
2021 2020
£'m £'m
Current tax on loss for the year (0.4) (4.0)
Adjustments in respect of prior years (0.1) -
Total current tax (0.5) (4.0)
Deferred tax on profits for the year
Origination and reversal of temporary differences (6.1) (3.5)
Adjustments in respect of prior years 0.1 -
Total deferred tax (6.0) (3.5)
Total tax credit (6.5) (7.5)
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 operating are as follows.
2021 2020
£'m £'m
Profit on ordinary activities before tax (36.7) (46.3)
Profit on ordinary activities multiplied by the effective rate of corporation (7.0) (8.8)
tax in the UK of 19% (2020: 19%)
Effects of:
Impact of difference in current and deferred tax rates 0.1 1.3
Adjustments in respect of prior years (0.0) -
Expenses not deductible 0.3 -
Total taxation credit (6.5) (7.5)
The tax charge for the year is based on the effective rate of UK corporation
tax for the period of 19% (2020: 19%). An increase in the UK corporation rate
from 19% to 25% (effective 1 April 2023) was substantively enacted on 24 May
2021. The deferred tax assets and liabilities at 30 September 2021 have been
calculated based on these rates.
9 Earnings per share
Basic earnings per share are calculated by dividing the profit attributable to
equity holders of On the Beach Group plc by the weighted average number of
ordinary shares issued during the year.
Diluted earnings per share is calculated by dividing the profit attributable
to equity holders of On the Beach Group plc by the weighted average number of
Ordinary Shares issued during the period plus the weighted average number of
Ordinary Shares that would be issued on the conversion of all dilutive
potential ordinary shares into Ordinary Shares.
Adjusted earnings per share figures are calculated by dividing adjusted
earnings after tax for the year by the weighted average number of shares.
Basic weighted average number of Ordinary Shares Total earnings Pence per share
(m) £'m
Year ended 30 September 2021
Basic EPS 159.3 (30.2) (19.0p)
Diluted EPS* 159.3 (30.2) (19.0p)
Adjusted EPS 159.3 (15.4) (9.7p)
Year ended 30 September 2020
Basic EPS 140.2 (38.8) (27.6p)
Diluted EPS* 140.2 (38.8) (27.6p)
Adjusted EPS 140.2 (0.7) (0.5p)
*There was no difference in the weighted average number of shares used for the
calculation of basic and diluted loss per share as the effect of all
potentially dilutive shares outstanding was anti-dilutive.
Adjusted earnings after tax is calculated as follows:
2021 2020
£'m £'m
Profit for the year after taxation (30.2) (38.8)
Adjustments (net of tax at 19%)
Impact of exceptional COVID-19 cancellations 8.1 33.8
Other exceptional costs - 0.3
Amortisation of acquired intangibles 4.5 4.5
Share based payment charges* 2.2 (0.5)
Adjusted earnings after tax (15.4) (0.7)
* The share based payment charges are in relation to options which are not yet
exercisable.
10 Intangible assets
Brand Goodwill Website & development Costs Website technology Customer relationships Total
£'m £'m £'m £'m £'m £'m
Cost
At 1 October 2019 35.9 40.2 11.6 22.8 6.5 117.0
Additions - - 4.0 - - 4.0
At 30 September 2020 35.9 40.2 15.6 22.8 6.5 121.0
Additions - - 4.6 - - 4.6
At 30 September 2021 35.9 40.2 20.2 22.8 6.5 125.6
Accumulated amortisation
At 1 October 2019 12.7 - 4.7 13.6 0.9 31.9
Charge for the year 2.4 - 4.0 2.4 0.7 9.5
At 30 September 2020 15.1 - 8.7 16.0 1.6 41.4
Charge for the year 2.4 - 4.6 2.4 0.7 10.1
At 30 September 2021 17.5 - 13.3 18.4 2.3 51.5
Net book amount
At 30 September 2021 18.4 40.2 6.9 4.4 4.2 74.1
At 30 September 2020 20.8 40.2 6.9 6.8 4.9 79.6
Goodwill
Goodwill acquired in a business combination is allocated on acquisition to the
CGUs that are expected to benefit from that business combination. The carrying
amount of goodwill has been allocated as follows:
As at 30 September 2021 As at 30 September 2020
Reportable segment CGU Acquisitions £'m £'m
OTB OTB On the Beach Travel Limited 21.5 21.5
OTB Sunshine Sunshine.co.uk Limited 10.1 10.1
CCH CCH Classic Collection Limited 4.6 4.6
CPH CPH Classic Collection Limited 4.0 4.0
40.2 40.2
Impairment of goodwill
On the Beach and Sunshine are considered to be one reportable segment, as they
are internally reported and managed as one entity, but for impairment review
purposes they are treated as separate CGU's as they have independent cash
inflows. Goodwill acquired through Sunshine.co.uk has been allocated to the
"Sunshine" cash generating unit. Goodwill acquired through the Classic
collection acquisition has been allocated to the "CCH" and "CPH" cash
generating units.
"OTB" CGU
The Group performed its annual impairment test as at 30 September 2021 on the
"OTB" cash generating unit ("CGU"). The recoverable amount of the CGU has been
determined based on the value in use calculations using cash flow projections
derived from financial budgets and projections covering a three-year period.
The initial two years are based on the latest budget, year three is
extrapolated at a growth rate of 2 percent (2020: 2 percent); the forecasts
are then extrapolated in perpetuity based on an estimated growth rate of 2
percent (2020: 2 percent), this being the Directors' best estimate of the
future prospects of the business. This is deemed appropriate because the CGU
is considered to be a long-term business. Management estimates discount rates
using pre-tax rates that reflect current market assessments of the time value
of money and the risks specific to this CGU. The discount rate applied is 10
percent (2020: 11 percent).
The main assumptions on which the forecast cash flows were based include the
level of sales and administrative expenses within the business and have been
set by the Directors based on their past experience of the business and its
industry, together with their expectations of the market. The level of sales
depends upon the size of the markets in which the Group operates together with
the Directors' estimations of its market share and competitive pressures,
including the level of supplier overrides.
"Sunshine" CGU
The Group performed its annual impairment test as at 30 September 2021 on the
"Sunshine" cash generating unit ("CGU"). The recoverable amount of the CGU has
been determined based on the value in use calculations using cash flow
projections derived from financial budgets and projections covering a
three-year period. The initial two years are based on the latest budget, year
three is extrapolated at a growth rate of 2 percent (2020: 2 percent); the
forecasts are then extrapolated in perpetuity based on an estimated growth
rate of 2 percent (2020: 2 percent), this being the Directors' best estimate
of the future prospects of the business. This is deemed appropriate because
the CGU is considered to be a long-term business. Management estimates
discount rates using pre-tax rates that reflect current market assessments of
the time value of money and the risks specific to this CGU. The discount rate
applied is 10 percent (2020: 11 percent).
The main assumptions on which the forecast cash flows were based include the
level of sales and administrative expenses within the business and have been
set by the Directors based on their past experience of the business and its
industry, together with their expectations of the market. The level of sales
depends upon the size of the markets in which the Group operates together with
the Directors' estimations of its market share and competitive pressures,
including the level of supplier overrides.
"CCH" CGU
The Group performed its annual impairment test as at 30 September 2021 on the
"CCH" cash generating unit ("CGU"). The recoverable amount of the CGU has been
determined based on the value in use calculations using cash flow projections
derived from financial budgets and projections covering a three year period.
The initial two years are based on the latest budget, year three is
extrapolated at a 2 percent growth rate (2020: 2 percent), the forecasts are
then extrapolated in perpetuity based on at a 2 percent growth rate (2020: 2
percent). This is deemed appropriate based on the Directors' best estimate of
the future prospects of the business. Management estimates discount rates
using pre-tax rates that reflect current market assessments of the time value
of money and the risks specific to the CGU. The discount rate applied is 10
percent (2020: 11 percent).
The main assumptions on which the forecast cash flows were based include the
level of sales and administrative expenses within the business and have been
set by the Directors based on their past experience of the business and its
industry, together with their expectations of the market. The level of sales
depends upon the size of the markets in which the Group operates together with
the Directors' estimations of its market share and competitive pressures,
including the level of supplier overrides.
"CPH" CGU
The Group performed its annual impairment test as at 30 September 2021 on the
"CPH" cash generating unit ("CGU"). The recoverable amount of the CGU has been
determined based on the value in use calculations using cash flow projections
derived from financial budgets and projections covering a three-year period.
The initial two years are based on the latest budget, year three is
extrapolated at a growth rate of 5 percent (2020: 2 percent), the forecasts
are then extrapolated in perpetuity based on a 2 percent growth rate (2020: 2
percent). This is deemed appropriate based on the Directors' best estimate of
the future prospects of the business. Management estimates discount rates
using pre-tax rates that reflect current market assessments of the time value
of money and the risks specific to the CGU. The discount rate applied is 10
percent (2020: 11 percent).The main assumptions on which the forecast cash
flows were based include the level of sales and administrative expenses within
the business and have been set by the Directors based on their past experience
of the business and its industry, together with their expectations of the
market. The level of sales depends upon the size of the markets in which the
Group operates together with the Directors' estimations of its market share
and competitive pressures, including the level of supplier overrides.
The "international" CGU has been internally developed and as such, has no
goodwill.
Administrative expenses are dependent upon the net costs to the business of
purchasing services. Expenses are based on the current cost base of the Group
adjusted for variable costs.
Impact of COVID-19 on impairment considerations
The Group does not consider that any CGU has been automatically impaired as a
result of the pandemic. All CGUs remain viable trading long term assets which
the Group expects to continue to generate positive cashflows. Inherent in the
impairment test is a period of disruption followed by a gradual recovery.
Sensitivities have been applied to both the extent / period of disruption and
the Group is satisfied that sufficient headroom exists to support the asset
value.
Climate-related risks
The Group is in the process of conducting a materiality assessment of
climate-related risks and will adjust the key assumptions used in value-in-use
calculations and sensitivity to changes in assumptions should a change be
required.
Development costs
The Group capitalises development projects where they satisfy the requirements
for capitalisation in accordance with the IAS 38 and expense projects that
relate to ongoing maintenance and support.
Capitalised development costs are not treated as a realised loss for the
purpose of determining the Company's distributable profits as the costs meet
the conditions requiring them to be treated as an asset in accordance with IAS
38.
Additions in the year relate to the development of software. The amortisation
period for website development costs is 3 years straight line. Domain names
are amortised over 10 years. Amortisation has been recognised within operating
expenses.
Research and development costs that are not eligible for capitalisation have
been recognised in administrative expenses in the period incurred, in 2021
this was £1.4m (2020: £1.3m). £0.3m of the expensed costs in the current
year were due to projects no longer viable due to the impact of COVID-19
(2020: £0.7m).
Sensitivity to changes in assumptions
Sensitivity analysis has been completed on key assumptions in isolation and in
combination, and the headroom taken is significant. The key assumptions are
discount factor, long term growth rates and short term trading
volumes/cashflows. Sensitivities have been applied on all of these
assumptions. Management considers that no reasonably possible changes in
assumptions would reduce a CGU's headroom to nil.
11 Trade and other receivables
2021 2020
Amounts falling due within one year: £'m £'m
Trade receivables - net 79.5 58.9
Other receivables and prepayments 15.4 45.9
94.9 104.7
For the year ended 30 September 2021, other receivables includes £3.3m
receivable in respect of amounts due from airlines as a result of exceptional
COVID-19 cancellations. Other receivables and prepayments includes £5.3m of
advanced payments to suppliers.
For the year ended 30 September 2020, other receivables includes £34.3m
receivable in respect of amounts due from airlines as a result of exceptional
COVID-19 cancellations. Substantially all of the amount has been fully
recovered in the current year with the balance having been provided for. Other
receivables and prepayments includes £2.2m of advanced payments to suppliers.
12 Trust Account
Trust accounts are restricted cash held separately and only accessible once
the Trust rules are met as approved by our Trustees and the Civil Aviation
Authority, this is at the point the customer has travelled or the booking is
cancelled and refunded.
13 Trade, other payables and provisions
2021 2020
£'m £'m
Non-current
Lease liabilities (note 14) 2.5 3.8
Current
Trade payables 104.3 80.2
Accruals and other payables 14.8 11.8
Lease liabilities (note 14) 0.4 0.4
Provision 4.6 10.9
126.6 107.1
Trade payables includes £0.9m (2020: £9.0m) in respect of refunds owed to
customers, with the related receivable from the airlines recognised in trade
receivables. Where the refunds are not received from the airline the Group has
a legally enforceable right to offset the recognised amounts. The Group has
opted to show the figures gross due to no option to settle on a net basis or
realise the asset and settle the liability simultaneously.
Covid-19 cancellations Other Covid-19 related provisions Total
£'m £'m £'m
At 1 October 2020 (10.0) (0.8) (10.8)
Arising during the year (1.8) (0.3) (2.1)
Utilised 7.6 0.5 8.1
Unused amounts reversed 0.1 0.1 0.2
Unwinding of discount and changes in the discount rate - - -
At 30 September (4.1) (0.5) (4.6)
Current (4.1) (0.5) (4.6)
Non-current - - -
Covid-19 cancellations
A provision is recognised in respect of expected future cancellations in
relation to bookings taken before 30 September 2021. We expect this provision
to be utilised over the next year. Assumptions used to calculate the provision
for cancellations were to the extent to which holidays will be impacted by the
pandemic and he level of revenue that will be reversed as a result of the
cancellations, see note 3.
Other Covid-19 related provisions
A provision has been recognised for specific suppliers, we expect this
provision to be utilised over the next year. Assumptions used to calculate the
other Covid-19 related provisions were the extent to which holidays will be
impacted by the pandemic, see note 3.
14 Leases
The Group as a lessee
For the year ending 30 September 2020, the Group had lease contracts for two
properties, both with a lease term of 10 years. On 29 April 2021, the Group
exercised the termination clause on the lease of one of the properties, on
this date the Group performed a reassessment of the lease liability resulting
in a £0.1m gain on termination.
With the exception of short-term leases and leases of low-value underlying
assets, each lease is reflected on the balance sheet as a right-of-use asset
and a lease liability. The Group classifies its right-of-use assets in a
consistent manner to its property, plant and equipment.
Each lease generally imposes a restriction that, unless there is a contractual
right for the Group to sublet the asset to another party, the right-of-use
asset can only be used by the Group.
Amounts recognised in profit or loss
The following lease-related expenses were recognised under IFRS 16 in the
profit or loss:
2021 2020
£'m £'m
Depreciation expense of right-of-use assets 0.5 0.5
Interest expense on lease liabilities 0.1 0.2
Gain on termination of lease (0.1) -
Total amount recognised in profit or loss 0.5 0.7
Set out below are the carrying amounts of lease liabilities (included trade
and other payables) and the movements during the period:
2021 2020
£'m £'m
As at 1 October 4.2 4.5
Accretion of interest 0.1 0.2
Payments (0.6) (0.4)
Reassessment of lease term (0.8) -
As at 30 September 2.9 4.2
Current (note 13) 0.4 0.4
Non-current (note 13) 2.5 3.8
The Group had total cash outflows for leases of £0.6m in 2021 (£0.4m in
2020). The above table satisfies the requirements of IAS 7.44A to present a
net debt reconciliation.
15 Borrowings
Bank Facility
The Group has a revolving credit facility with Lloyds Bank plc. The purpose of
the facility is to meet the day to day working capital requirements of the
Group.
The total facility is £75m and has two elements as follows:
· Core facility of £50m expiring December 2023; and
· CLBILS facility of £25m expiring May 2023 (extended to May
2023 on 25 May 2021).
The interest rate payable on the core facility is equal to LIBOR plus a
margin. The margin contained within the facility is dependent on net leverage
ratio and the rate per annum is 3.75% for the facility or any unpaid sum. The
interest rate payable on the CLBILS facility is equal to the base rate plus a
margin. The margin contained within the facility is 2.30% per annum for the
facility or any unpaid sum.
On 25 May 2021 covenant tests were amended up to and including 30 September
2022 to account for the impact of COVID-19 on the Group's results, tests
return to normal from 1 October 2022.
The terms of the facility following 1 October 2022 include the following
covenants:
(i) that the ratio of adjusted EBITDA to net finance charges in respect of any
relevant period shall not be less than 5:1;
(ii) that the ratio of total net debt to adjusted EBITDA shall not exceed 2:1
The terms of the facility prior to 1 October 2022 include the following key
financial covenants:
i) LTM minimum EBITDA: June 21 £11.6m loss:
September 21 £18.4m loss; December 21 £20.4m loss; March 22 £1.2m loss
ii) EBITDA/Net debt ratio; June 22 2.5:1 ; September
22 2.25:1
The RCF is available for other credit uses including currency hedging
liabilities and corporate credit cards. At 30 September 2021, the liabilities
for these other credit uses was £2.1m, leaving £73m of the Lloyds facility
available for use. Card facilities with other providers remain available for
use.
The amount drawn down in cash at 30 September 2021 was £nil and there has
been nothing drawn down post balance sheet date.
16 Related party transactions
No related party transactions have been entered into during the year.
Transactions with key management personnel have been disclosed in note 7(d).
Principal risks and uncertainties
The Board has carried out a robust assessment of the principal risks facing
the company, including those that would threaten its business model, future
performance, solvency or liquidity. A summary of the nature of the risks
currently faced by the Group is set out below. A more detailed explanation of
the risks currently faced by the Group and how the Company seeks to mitigate
those risks can be found in the risk management section of the Group's Annual
Report and Accounts for the year ended 30 September 2021.
· Consumer demand: A recession or reduced economic growth can lead to
reduced job security and a reduction in consumer leisure spending. A weak
pound makes holidays more expensive. High-profile corporate failures reduce
consumer confidence to make 'big ticket' purchases. Terrorist attacks,
war/acts of force and civil unrest undermine consumer confidence. COVID-19 has
shifted consumer behaviour with many people choosing not to book a holiday or
delaying booking. Ryanair has sought to degrade the customer experience for
customers of OTAs which could reduce customer demand for the Group's holidays.
Climate change could impact demand e.g. if customers choose to travel less
frequently.
· Flight supply: A lack of flight supply/capacity impacts the Group's
ability to fulfil consumer demand for holidays. Where the Group does not have
an agreement in place with an airline, such airline may not wish to accept
bookings from the Group's customers and might seek to impede the Group's
access to flight data and bookability. Certain airlines use technological and
other means to prevent the Group's bookings or to apply a price difference to
make the Group's bookings more expensive, which could make the Group's
offering less extensive or more expensive which could have a material
adverse effect on the Group. The Group is one of several OTAs against which
Ryanair has brought litigation in Ireland in connection with Ryanair's efforts
to prevent OTAs from booking and selling its flights. The legal process, which
began in 2010, is ongoing but remains at an early stage. The case lay dormant
for over 3 years with no material developments in that period, and as a result
the Group is seeking to strike out the claim on the basis of inordinate and
inexcusable delay. Other airlines could seek to emulate Ryanair's claim
against OTAs. Litigation is unpredictable and if Ryanair were to prevail, this
could have a material impact on the Group's business. Ryanair's aggression
towards OTAs like OTB has escalated since the start of the pandemic, e.g.
Ryanair has sought to block bookings and degrade the customer experience for
customers of OTAs. In order to mitigate flight supply risk, the Group may take
allocations of seats on certain key routes, which may involve some limited
risk. If the Group cannot sell the seats profitably or the programme is
cancelled, this could lead to material costs for the Group.
· Supplier failure: In the event of a major airline failure, the Group
must replace the customer's flight arrangements, or refund the customer in
full for the holiday, with no ability to claim back the costs from the failed
airline or any bond or effective insurance or the ATOL scheme/CAA (which
protects consumers, not package organisers). Whilst the Group can usually
recover flight costs it is owed via chargeback claims, this creates a cash
flow impact.
· Competition risk: The Group operates in a very competitive market. If
competitors offer a more compelling proposition, this could have a material
adverse effect on the Group's financial position and prospects. COVID-19 has
seen the rise of refund credit notes in lieu of cash refunds which could
increase competition risk as they create captive consumers for those
organisers issuing the credit notes, thereby potentially reducing the demand
for the Group's offering. In order to provide the most competitive range of
holiday options, and in view of the dominance by certain airlines on certain
flight routes, the Group must have the ability to book the widest range of
airlines available. If flight supply risk increases, so would competition
risk. Our customers care about climate and ESG issues and if our competitors
are perceived to be doing more to meet consumer needs in this area, we could
be less attractive to consumers.
· Package organiser liability: The Group is responsible for the proper
performance of the package holidays it sells, therefore it can be held liable
for death/personal injury or illness suffered by customers that are the fault
of any of the suppliers. In the event of a catastrophic injury/fatality, or
multiple injuries, the cost could run into millions of pounds. The Group must
also provide replacement travel services or a refund where a supplier cancels
a holiday element, and provide accommodation where customers are stranded. In
the current climate, less people are going on holiday which reduces personal
injury claims. We do however anticipate claims in respect of refunds for
cancelled holidays as a result of the disruption. Conditions in the insurance
markets continue to be extremely difficult due to COVID-19 pressures, and
travel is one of the most affected industries, meaning an increase in
insurance costs.
· Recoverability of airline refunds: The pandemic brought about a new
risk in relation to the recoverability of refunds with some airlines not
refunding flight costs in a timely manner or not refunding the flight costs at
all because the flight still went ahead, despite restrictions on customers'
ability to travel. During the pandemic, many airlines were not complying with
legal obligations to refund flight costs within 7 days of the flight being
cancelled. As such the Group had to refund many customers in advance of
getting the monies from the airlines. Since last year, most airlines have got
quicker at refunding, albeit we are still awaiting refunds for some cancelled
flights.
· Regulatory breach: The Group's business is highly regulated and is
subject to a complex regime of laws, rules and regulations concerning travel
and aviation, online commerce, financial services, consumer rights and data
protection. A breach of these laws could have serious financial and
reputational implications for the Group. Unfavourable changes to or
interpretation of existing laws could adversely affect the Group's business
and financial performance. Regulation on climate related reporting is
developing at pace and the Group will need to ensure it takes appropriate
action to ensure compliance with legal and regulatory obligations in this
area.
· Damage to brand/reputation: The Group relies on the strength of its
brand to attract customers to its website and to secure bookings. Failure to
maintain and protect our brand, or any events or circumstances which give rise
to adverse publicity (including the conduct of airlines), could cause
brand/reputation damage, lead to a loss of goodwill and reduced customer
demand to book with the Group. COVID-19 had impacted our reputation and during
FY21, we have been focused on taking steps to repair that damage and
reinvigorate the brand. Our customers are becoming increasingly concerned
about ESG matters and if consumers feel that the Group is not taking enough
action in this area, it could negatively affect the perception of our brand.
· IT systems and data security: The Group is exposed to security
threats and the associated risk of breach whereby a third party could
illegally gain access to our customers' or employees' personal data, resulting
in damage to brand, material fines and litigation. The Group's growth strategy
is to build Europe's leading beach holiday retailer via a single platform,
multi-brand strategy. Our IT platforms must be scalable, robust and reliable.
If our systems can't keep up with growing demand, this could affect our
ability to deliver growth.
· Business interruption: The risk that a pandemic, terrorism-related
event or other business interruption causes significant business interruption
to the Group and/or its suppliers' ability to trade and/or manage the
business, e.g. an event preventing head office access, website or systems
downtime or restrictions on taking or making payments. Physical impacts of
climate change such as flooding and forest fires could increase the risk of a
significant business interruption.
· People risk: The Group's ability to achieve its strategic objectives
is dependent on certain key personnel, plus its ability to attract and retain
skilled staff. The North West, where the Group's HQ is located, is an area
where there is a high degree of competition for talent. If the Group cannot
attract and retain staff, or if a member of key personnel were unable to
perform their role, this could have a material impact on the Group's growth.
Competition for talent has increased during the year. Unemployment levels are
at historic lows and there are more job vacancies than pre-pandemic. Extended
periods of disruption and restrictions due to COVID-19 could result in an
erosion of resilience/ morale, incentive schemes failing to pay out, and/or
talent seeking to exit the travel industry.
Responsibility statement
The responsibility statement below has been prepared in connection with the
Group's Annual Report & Accounts for the year ended 30 September 2021.
Certain parts thereof are not included within this announcement. We confirm
that to the best of our knowledge and belief:
· The consolidated financial statements, prepared in accordance with
International Financial Reporting Standards as adopted in the European Union,
give a true and fair view of the assets, liabilities, financial position, cash
flows and loss of the Company and Group; and
· The management report, which is incorporated into the strategic
report, includes a fair review of the development and performance of the
business and the position of the Company and Group, together with a
description of the principal risks and uncertainties it faces.
This responsibility statement was approved by the Board on 10 December 2020
and is signed on its behalf by:
Shaun Morton
Chief Financial Officer
9 December 2021
Glossary of Alternative Performance Measures (APMs)
APM Definition Reconciliation to closest GAAP measure
Adjusted CCH EBITDA Adjusted CCH EBITDA is based on CCH operating profit before depreciation, Adjusted CCH EBITDA (£'m) 2021 2020
amortisation and the impact of exceptional items. Exceptional items consists
of exceptional cancellations as result of COVID-19 in 2021 and 2020, and other
exceptional items that derive from events or transactions that fall outside of
the normal activities of the Group. These costs / income are excluded by
virtue of their size and in order to reflect management's view of the
performance of the Segment.
CCH operating loss (4.8) (3.2)
Impact of exceptional cancellations 0.4 0.1
Other exceptional items - -
Depreciation and amortisation 0.2 0.1
Amortisation of acquired intangibles 1.1 1.1
Adjusted CCH EBITDA (3.1) (1.9)
Adjusted CPH EBITDA Adjusted CPH EBITDA is based on CPH operating profit before depreciation, Adjusted CPH EBITDA (£'m) 2021 2020
amortisation and the impact of exceptional items. Exceptional items consists
of exceptional cancellations as result of COVID-19 in 2021 and 2020, and other
exceptional items that derive from events or transactions that fall outside of
the normal activities of the Group. These costs / income are excluded by
virtue of their size and in order to reflect management's view of the
performance of the Segment.
CPH operating loss (1.6) (4.4)
Depreciation and amortisation 0.2 0.2
Exceptional items (0.3) 2.7
Adjusted CPH EBITDA (1.7) (1.5)
Adjusted EPS Adjusted EPS is calculated on the weighted average number of Ordinary share in Adjusted EPS 2021 2020
issue, using the adjusted profit after tax.
Adjusted profit after tax (15.4) (0.7)
Basic weighted average number of Ordinary Shares (m) 159.3 140.2
Adjusted EPS (p) (9.7) (0.5)
Adjusted International EBITDA Adjusted International EBITDA is based on International operating loss before Adjusted International EBITDA (£'m) 2021 2020
depreciation, amortisation and the impact of exceptional items. Exceptional
items consists of exceptional cancellations as result of COVID-19 in 2021 and
2020, and other exceptional items that derive from events or transactions that
fall outside of the normal activities of the Group. These costs / income are
excluded by virtue of their size and in order to reflect management's view of
the performance of the Segment.
International operating loss (0.4) (0.6)
Depreciation and amortisation 0.1 0.1
Exceptional items 0.1 0.2
Adjusted International EBITDA (0.2) (0.3)
Adjusted OTB EBIT Adjusted OTB EBIT is based on OTB operating loss before the impact of Adjusted OTB operating profit (£'m) 2021 2020
exceptional items, amortisation of acquired intangibles and the non-cash cost
of the share based payment schemes. Exceptional items consists of exceptional
cancellations as result of COVID-19 in 2021 and 2020, and other exceptional
items that derive from events or transactions that fall outside of the normal
activities of the Group. These costs / income are excluded by virtue of their
size and in order to reflect management's view of the performance of the
Segment.
OTB operating loss (29.0) (37.7)
Exceptional items 9.8 39.0
Share based payments 2.8 (0.6)
Amortisation of acquired intangibles 4.4 4.4
Adjusted OTB EBIT (12.0) 5.1
Adjusted OTB EBITDA Adjusted OTB EBITDA is based on OTB operating loss before depreciation, Adjusted OTB EBITDA (£'m) 2021 2020
amortisation, impact of exceptional items and the non-cash cost of the share
based payment schemes. Exceptional items consists of exceptional cancellations
as result of COVID-19 in 2021 and 2020, and other exceptional items that
derive from events or transactions that fall outside of the normal activities
of the Group. These costs / income are excluded by virtue of their size and in
order to reflect management's view of the performance of the Segment.
OTB operating loss (29.0) (37.7)
Exceptional items 9.8 39.0
Share based payments 2.8 (0.6)
Depreciation and amortisation 5.9 5.5
Amortisation of acquired intangibles 4.4 4.4
Adjusted OTB EBITDA (6.1) 10.6
Adjusted profit after tax Adjusted Profit after Tax is based on Profit after Tax adjusted for the impact Adjusted profit after tax (£'m) 2021 2020
of exceptional items, amortisation of acquired intangibles and the non-cash
cost of the share based payment schemes. Exceptional cancellations consist of
cancellations as result of COVID-19 in 2021 and 2020. These costs / income are
excluded by virtue of their size and in order to reflect management's view of
the performance of the Group.
Profit for the year (30.2) (38.8)
Share based payments (net of tax) 2.2 (0.5)
Impact of exceptional cancellations (net of tax) 8.1 33.8
Other exceptional items (net of tax) - 0.3
Amortisation of acquired intangibles (net of tax) 4.5 4.5
Adjusted profit after tax (15.4) (0.7)
Adjusted profit before tax Adjusted Profit before Tax is based on Profit before Tax adjusted for the Adjusted profit before Tax (£'m) 2021 2020
impact of exceptional items, amortisation of acquired intangibles and the
non-cash cost of the share based payment schemes. Exceptional cancellations
consist of cancellations as result of COVID-19 in 2021 and 2020. These costs /
income are excluded by virtue of their size and in order to reflect
management's view of the performance of the Group.
Profit before tax (36.7) (46.3)
Amortisation of acquired intangibles 5.5 5.5
Share Based Payments 2.8 (0.6)
Impact of exceptional cancellations 10.0 41.7
Other exceptional items - 0.3
Adjusted profit before tax (18.4) 0.6
CCH EBITDA CCH EBITDA is based on CCH operating profit before depreciation and CCH EBITDA (£'m) 2021 2020
amortisation.
CCH operating loss (4.8) (3.2)
Depreciation and amortisation 1.3 1.2
CCH EBITDA (3.5) (2.0)
CPH EBITDA CPH EBITDA is based on CPH operating profit before depreciation and CPH EBITDA (£'m) 2021 2020
amortisation.
CPH operating loss (1.6) (4.4)
Depreciation and amortisation 0.2 0.2
CPH EBITDA (1.4) (4.2)
Exceptional items Exceptional items are certain costs / income that derive from events or Exceptional items (£'m) 2021 2020
transactions that fall outside of the normal activities of the Group. These
costs / income are excluded from various performance measures by virtue of
their size and in order to better reflect management's view of the performance
of the Group.
Impact of COVID-19 10.0 41.7
Other exceptional items - 0.3
Exceptional items 10.0 42.0
International EBITDA International EBITDA is based on International operating loss before International EBITDA (£'m) 2021 2020
depreciation and amortisation.
International operating loss (0.4) (0.6)
Depreciation and amortisation 0.1 0.1
International EBITDA (0.3) (0.5)
International revenue after marketing costs International revenue after marketing costs is based on International revenue International revenue after marketing costs (£'m) 2021 2020
after all marketing costs
Revenue - 0.1
Marketing costs (0.1) (0.2)
International revenue after marketing costs (£'m) (0.1) (0.1)
Operating cash conversion Operating cash converstion is EBITDA divided by cash generated from operating Operating cash conversion (£'m) 2021 2020
activities. These cash flows are excluded from various performance measures by
virtue of their size and in order to better reflect management's view of the
performance of the Group.
Loss before taxation (36.7) (46.3)
Depreciation 1.8 1.9
Amortisation 10.1 9.5
Net finance (income)/costs 0.9 0.4
Share based payments 2.8 (0.6)
Net loss/(gain) on disposal of PPE 0.1 -
EBITDA (21.0) (35.1)
Movement in working capital 31.2 (58.0)
Movement in trust account (13.2) 18.3
Cash generated from operating activities (3.0) (74.8)
Operating profit before amortisation and exceptional items Operating profit before amortisation and exceptional items is based on Group Operating profit before amortisation and exceptional items (£'m) 2021 2020
operating profit, adjusting for amortisation of acquired intangibles and the
impact of exceptional items. Exceptional items consists of exceptional
cancellations as result of COVID-19 in 2021 and 2020, and other exceptional
items that derive from events or transactions that fall outside of the normal
activities of the Group.
Loss before taxation (36.7) (46.3)
Exceptional items 10.0 42.0
Amortisation of intangibles 10.1 9.5
Operating profit before amortisation and exceptional items (16.5) 5.2
OTB adjusted revenue after marketing cost OTB adjusted revenue after marketing cost is revenue after "OTB" online and OTB revenue after marketing cost (£'m) 2021 2020
offline marketing costs.
OTB adjusted revenue 22.1 50.4
OTB online marketing costs (5.5) (14.2)
OTB offline marketing costs (6.1) (8.7)
Total OTB marketing (11.6) (22.9)
OTB adjusted revenue after marketing costs 10.5 27.5
OTB EBITDA OTB EBITDA is based on OTB operating profit before depreciation and OTB EBITDA (£'m) 2021 2020
amortisation.
OTB operating loss (29.0) (37.7)
Depreciation and amortisation 10.3 9.9
OTB EBITDA (18.7) (27.8)
OTB EBITDA as a percentage of adjusted revenue OTB EBITDA as a percentage of adjusted revenue is based on the adjusted OTB OTB EBITDA as a percentage of adjusted revenue 2021 2020
EBITDA divided by the revenue generated in the OTB business before the impact
of exceptional cancellations. Exceptional cancellations relate to COVID-19 in
2021 and 2020.
Revenue 13.0 15.9
Exceptional cancellations 9.1 34.5
Adjusted revenue 22.1 50.4
Adjusted OTB EBITDA (6.1) 10.6
OTB EBITDA as a percentage of adjusted revenue (28%) 21%
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