REG - On the Beach Group - Preliminary Results
08/12/2022 07:00
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RNS Number : 0432J On the Beach Group PLC 08 December 2022
8 December 2022
On the Beach Group plc
("On the Beach", "OTB", the "Company" or the "Group")
PRELIMINARY RESULTS FOR YEAR ENDED 30 SEPTEMBER 2022 ('FY22')
Financial Overview
2022 2021 2019
Adjusted (1) GAAP Adjusted (1) GAAP Adjusted (1) GAAP
Group TTV(2) £856.1m - £238.3 m - £741.4m -
Group revenue £144.3m £144.1m £30.5m £21.2m £147.5m £140.4m
Revenue as Agent(3) £93.8m £93.6m £24.0m £14.7m £92.5m £85.4m
Revenue as Principal(4) £50.5m £50.5m £6.5m £6.5m £55.0m £55.0m
Group gross profit £96.1m £95.6m £23.3m £14.4m £99.1m £92.0m
Gross profit as Agent £90.0m £89.8m £22.7m £13.8m £92.0m £84.9m
Gross profit as Principal £6.1m £5.8m £0.6m £0.6m £7.1m £7.1m
Group profit/(loss) before tax(5) £14.1m £2.1m (£18.4m) (£36.7m) £34.5m £19.3m
Basic earnings/(loss) per share(6) 6.3p 0.9p (9.7p) (19.0p) 21.3p 11.9p
(1 ) Adjusted measures are non-GAAP measures, a full explanation of
the adjustments is included in the glossary.
(2 ) Group Total Transaction Value ('TTV') is a non-GAAP measure
representing the cumulative total transaction value of sales booked each month
before cancellations and amendments.
(3 ) 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 2021 and 30 September 2022.
Adjusted revenue is revenue before exceptional items of £1.0m and fair value
gains on forward currency contracts of £0.8m (2021: £9.3m, 2019: £7.1m).
(4 ) 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 2021 and 30 September 2022.
(5 )Group adjusted profit / loss before tax is profit / loss before
tax, amortisation of acquired intangibles of £5.5m (2021: £5.5m, 2019:
£5.5m), share-based payments cost of £4.7m (2021: £2.7m, 2019: £0.7m) fair
value gains on forward currency contracts of £0.8m and exceptional items of
£2.6m (2021: £10.0m, 2019: £9.0m). A full explanation of the adjustments is
included in the glossary.
(6 )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 £144.1m was £122.9m higher than FY21:
− Demand for booking holidays in FY21 was severely impacted by a
series of lockdowns and complex rules and requirements for travel.
− Whilst the first four months of FY22 were similarly disrupted by
the outbreak of the Omicron variant of Covid-19, travel restrictions were
removed and travel was simplified for most of the year.
• Notwithstanding the emergence of Omicron and the disrupted airline
schedules this summer, revenue was up 3% vs FY19:
− Average booking values were 31% higher than FY19 supported by a
greater mix of long haul, B2B and more premium beach holidays.
− As a result, the TTV of holidays booked in the year increased by 15%
vs FY19.
− As well as adding more quality hotel product, during the year, the
Group invested £4.8m in holiday perks including airport lounge access,
security fast track and free Covid-19 tests. Revenue is presented net of these
investments.
− The TTV of holidays that departed in summer 2022 was 19% ahead of FY19.
• The Group has made adjustments for exceptional cancellations, both
directly and indirectly related to the pandemic. After making an adjustment to
add back the impact of cancellations of £1.0m (2021: £9.3m) and deduct
exceptional FX gains of £0.8m, adjusted revenue was £144.3m (FY21: £30.5m).
Cash and liquidity
• Thanks to significant shareholder support, the flexible business
model and the disciplined way in which customer money is handled, the Group
has continued to invest in the brand and technology throughout the pandemic
and ahead of a full recovery of the travel industry.
• The Group is in a very strong financial position with combined cash
balances of £133.9m:
− Group cash, excluding amounts held in trust, of £64.5m (30
September 2021: £56m).
− Customer prepayments held in a ring-fenced trust account of £69.4m
(30 September 2021: £39m).
• In December 2022, the Group refinanced its credit facilities with
Lloyds Bank and NatWest. This included cancelling all current facilities and
entering into a new facility for £60m expiring in December 2025.
• Unlike many other businesses in the sector, due to the disciplined
way in which cash is managed, recent increases in interest rates will not
materially increase the cost of financing the Group's activities
• Through the disrupted summer of flight cancellations, OTB has
continued to provide prompt cash refunds for cancelled holidays. Certain
airlines continue to frustrate the refund process and owe the Group a
significant amount of money for cancelled flights. Legal proceedings to
recover these monies are ongoing.
Current trading and outlook
• The first quarter of our financial year (calendar Q4) has
historically been the quietest trading period for the Group.
• Over the last 6 weeks, there has been a continuation of key trends,
including growth across premium, long-haul and B2B expansion areas, set
against more subdued trading in sales of 3* holidays for FY23.
• Notwithstanding the widely reported macroeconomic headwinds, the
Group has begun FY23 with a healthier overall forward order book than the
equivalent period in FY20 (before the onset of the Covid-19 pandemic).
• Whilst it is unclear how the cost of living crisis will impact
consumer behaviour in 2023, the Board is confident that the foundations laid
over the past 12 months, including investment in brand, technology and
customer proposition, position the Group favourably for another year of growth
in FY23.
CEO Succession Planning
As per a separate announcement today, Simon Cooper, the Group's Founder and
Chief Executive Officer will step down from his role within the next 12 months
and the Board is pleased to announce that Shaun Morton, currently the Group's
Chief Financial Officer has been selected by the Board to replace Simon as
Group CEO. Upon stepping down as CEO, Simon will remain on the Board as
non-executive Founder Director.
Other Board changes
David Kelly is the longest-serving Non-Executive Director on the Board, he
will have served nine years by September 2024 and as such, the Committee has
been considering succession arrangements for David's roles on the Board. With
effect from 27 January 2023, Elaine O'Donnell will become the Senior
Independent Director and Justine Greening will become the Chair of the
Remuneration Committee. David will continue his role as a Non-Executive
Director as well as supporting Elaine and Justine in their new roles. This
disclosure is made pursuant to Listing Rule 9.6.11(3).
Simon Cooper, Chief Executive of On the Beach Group plc, commented:
"2022 has been a year of strategic progress for the Group. Despite a number of
well-documented headwinds faced by the entire industry, including the
disruption caused by Omicron in the key booking period of January, the Group
reported double digit growth in Group Sales, returned to profitability and
exited the year in a strong cash position. This success is largely as a result
of the investments we have made in the last 12 months across our brand,
technology and customer proposition.
During the year we developed a truly differentiated customer proposition,
successfully positioning the brand to appeal to customers looking at 5*
bookings across both short and long haul which led to the Group capturing a
greater share in the premium segment of the market. Our industry-first,
customer-focused initiatives, including our free lounge and fast-track
security offers have enhanced our customer experience and set us apart from
our peers. We are looking forward to expanding this premium offer alongside
growing our long haul and B2B offerings which significantly expands our total
addressable market.
Looking ahead, the visibility of the UK outbound travel industry remains
unclear given the tough macroeconomic environment. Whilst winter and
specifically January remains a key trading period for us, we have started the
new financial year with a healthy forward order book for Summer 2023.
Pleasingly, 2023 will also be the first year our industry is free from refund
credit notes and vouchers which will significantly enhance our captive
audience and I am confident that the investments we have made this year leave
us ideally placed for the year ahead.
I would like to take this opportunity to thank the team for their continuous
hard work throughout this year, responding with speed, professionalism, and
resilience. As we announced today, we have commenced a leadership succession
plan where I am confident that after working closely with Shaun on the
strategic direction and initiatives of the group over the last few years, he
is the right person to lead the business through its next phase of growth."
Analyst Webinar
A webinar for sell-side equity analysts will be held today at 9.30am, the
details of which can be obtained through FTI Consulting.
For further information:
On the Beach Group
plc
via FTI Consulting
Simon Cooper, Chef 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 challenging 12 months for the travel industry, disrupted
in the first half of the year by the Omicron variant, and in the second half
by staff shortages across the supply chain. Despite these exceptional
circumstances, FY22 Group TTV* was 15% ahead of FY19.
Since the onset of Covid-19, the Group has consistently outlined its strategic
intention to capture market share as trading normalises and demand for beach
holidays recovers.
I am confident that the activities we have undertaken over the last 12 months
have laid strong foundations for the Group for the year ahead and am
incredibly proud of my colleagues who have delivered so much in often
challenging situations.
*( ) Total transaction value of holidays booked in the year
before cancellations and amendments.
People
Our people have continued to rise to the widespread challenges that the
financial year has presented. All staff across all business departments have
continued to work productively from the office or remotely.
This year we have set out a hybrid working framework. Key objectives include
supporting our colleagues by promoting a healthy work life balance, enabling
flexible working, staying connected both within teams and cross department,
and ultimately to create an appealing environment where our staff can deliver
to the best of their abilities. Hybrid working is enabling us to recruit from
a wider talent pool and is an important tool to attract and retain talent in a
tight labour market where colleagues are seeking a greater degree of
flexibility.
We have added further strength to our senior management team in FY22, with the
appointment of a Director of People in June 2022 who is helping drive and
deliver these objectives.
We have continued to support colleagues with a diverse range of initiatives to
promote mental health and wellbeing, helping to retain a connection to our
people across departments and the Company as a whole.
Our staff continue to respond with speed, professionalism and resilience to
the challenges faced by the sector. We raised the entry salary across the
business to £20,000 p.a. with effect from 1 October 2021, thereby elevating
the skill set of the new talent we attract and improving the overall quality
of service to our customers. This also ensured that our lowest paid staff are
paid in excess of the Real Living Wage, and will help to narrow our gender pay
gap.
In October 22, against a backdrop of an escalating cost of living crisis, we
awarded a payrise of £1,500 to all colleagues with annual salaries at or
below £30,000 p.a., three months earlier than our usual pay review. This is
to support our staff through difficult winter months with higher energy and
living costs. It also aligns with the suggested voluntary increase by the
Living Wage Foundation of the Real Living Wage, which rose by 10% in September
2022 (also earlier than scheduled). The Group is proud that it continues to
voluntarily pay its lowest-paid colleagues a salary in excess of the Real
Living Wage, despite another challenging year of disrupted trading.
Market conditions
Whilst FY21 was a particularly difficult year for travel, the industry and the
UK population did not foresee the level of disruption experienced throughout
FY22. Three months of H1FY22 were severely affected by Covid-19 and the summer
season in H2FY22 was beset by acute staff shortages across the sector.
The Omicron variant heavily impacted Group trading in November and December
2021, and into the key booking period of early January 2022. Consumer demand
remained materially below H1FY19 levels until restrictions were eased in
mid-January.
In H2FY22, Group TTV was 25% ahead of H2FY19, despite the indirect
consequences of the war in Ukraine and ongoing disruption across the travel
supply chain as the sector continued to recover from the pandemic. Over the
full year, FY22 Group TTV was 15% ahead of FY19 and Group revenue was 3% ahead
of FY19.
Group TTV relates to new bookings. The sales of many other operators over the
same period will be flattered by a proportion of their bookings rolled over
from previous periods or booked using vouchers or refund credit notes
('RCNs').
The Group has never issued vouchers or RCNs in lieu of refunds. Where
customers have been refunded using vouchers or RCNs from other operators, they
are then captive to that operator, narrowing our addressable audience this
year. The Group believes that our enhanced proposition and reputation will
allow us to target these customers in FY23 when the playing field is levelled.
The Group has materially invested in its brand, technology, and customer
proposition throughout the year. This includes offering a differentiated
customer experience with premium lounges and fast track security, increasing
headcount in technology and customer service areas, and investing in offline
marketing to drive awareness of the brand. These investments, combined with
improved access to a broader hotel portfolio have resulted in FY22 growth in
5* holiday sales of 82% vs FY19, and contributing to total FY22 Average
Booking Value ('ABV') growth of 31% vs FY19.
On the Beach also continues to make good progress in B2B and long haul. B2B
TTV1 was 45% ahead of FY19. Long- haul TTV2 was 255% up vs FY19.
Partly due to continued rising costs of living, the lates market for value
holidays has remained subdued in H2FY22 and as a result, sales of 3* holidays
for FY22 was 18% below FY19. The Group is committed to maintaining its focus
on this important segment and growing its share of value holidays.
(1 ) B2B TTV is a non-GAAP measure representing the cumulative total
transaction value of sales booked each month before cancellations and
adjustments for the CCH and CPH segments
(2 ) Long haul TTV is a non-GAAP measure representing the cumulative
total transaction value of sales booked each month before cancellations and
adjustments for long haul holidays across the Group
Strategy
As I set out in more detail below, throughout the year, we have continued to
focus on investment into areas of strategic value including technology, brand
and supply as well as a continued focus on expanding our portfolio of beach
holidays and our addressable audience, specifically through our expansion
areas of premium, B2B and long haul.
Investment in our brand
Throughout the pandemic, we have continued to pursue our strategy of
materially investing in both customer proposition and brand. By investing
strategically in both areas, the Group aims to continue to capture share in
its core value segment and increase penetration of the premium, long- haul,
and B2B segments.
We invested circa £5m in FY22 across a range of promotions designed to evolve
the customer offer from seamless booking service to differentiated holiday
experience. By differentiating our holidays and offering a more memorable
experience from the point of booking to arriving home from travel, we expect
to increase loyalty, repeat rates and customer lifetime value. The promotions
have contributed to the success we have had this year in growing Group sales
relative to FY19. We expect the investment to also payback in FY23 and future
periods in terms of continued growth in market share.
During the beginning of FY22, as we looked to restore consumer confidence and
help get people back on holiday again, we ran our free Covid-19 test offer
which meant we could reduce the holiday hassle administration as well as
saving our customers money.
The Group subsequently took the early decision in FY22 to invest in airport
fast track for all customers. This has provided a key point of differentiation
relative to peers and airlines, particularly across a summer where airports
have been severely disrupted by staff shortages and typical queue times have
been significantly longer than normal.
In conjunction with the fast track offer, we significantly invested in free
lounge access for customers booking premium holidays in summer 2022. This is a
promotion that, despite the operational complexity, we were uniquely placed to
offer given our scale, depth and breadth of the Group's offering across UK
departure airports.
By positioning the brand to appeal to customers seeking these perks with their
holiday, together with improved access to a broader hotel portfolio, the Group
has achieved significant growth in premium 5* bookings.
The success of the free Covid-19 tests, fast track and lounge promotions in
differentiating the proposition and capturing share of the premium segment, is
testament to the efforts of many of our colleagues across the business,
particularly in marketing, technology and supply, but also in our support and
back-office functions. In an era of hybrid working, successfully rolling out
these promotions at pace, demonstrates the strength of cross departmental team
collaboration across the Group.
Alongside enhancements to the proposition, the Group doubled investment in
FY22 offline media spend (vs FY19). Branded traffic has much higher conversion
than traffic from paid search and other channels.
We aim to continue to pursue our strategy of differentiating the customer
experience and building the brand in future periods. Our recent progress on
both fronts also provides a strong platform to capture share growth as the
value segment recovers.
In early FY22 we took decisive action to increase headcount across our
customer service teams, to protect the Group from an increase in volume of
enquiries as international travel restrictions were eased.
However, like all operators across the sector, we were subject to an
exceptionally high level of disruption in the second half of the year. Certain
airlines and airports fared better than others in anticipating the release of
pent-up demand, however many have been caught out, either by not staffing up
sufficiently or indirectly as the entire supply chain has been impacted.
This has led to operational challenges for the industry and, we believe, has
contributed to a softening of demand in the lates market.
I would like to take this opportunity to thank colleagues in customer service
and across the business for working tirelessly in seeking to address backlogs
and serving customers in these exceptional circumstances.
The supply imbalance is easing once again as volumes travelling decrease in
the autumn and winter months. We believe that the improvements made to our
processes and the enhancements in our overall package to attract and retain
customer service staff, will enable us to continue to put our customers at the
heart of everything we do and lay the optimal foundations to cope if any such
issues recur in summer FY23.
Investment in technology
We have continued to add to our technology talent, in particular to software
engineering, design, product, infrastructure and security.
Across the year, the team have facilitated the successful roll out of
enhancements to the proposition, including free lounge and fast track, as well
as evolving our platform which will allow us to take advantage of
opportunities both in our core market and identified expansion areas.
We have continued to invest in hybrid 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 continued to focus on enhancing the core
capabilities of our platform (flights, beds, packaging, front end, payments
and back-office).
We have re-developed the front end of the site to enhance conversion and
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 low-cost carriers, long haul and
scheduled airlines, allowing new suppliers to be added to serve existing and
new destinations.
As part of our overall strategy, there remains 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 by having our own relationships with our hotel
partners, we can guarantee our customers both a good hotel experience and the
best prices. Covid-19 presented the opportunity to secure direct relationships
with quality inventory in key destinations that were previously on exclusive
contracts with competitors.
Throughout the financial year, we have been leveraging our existing
capabilities to further optimise our hotel supply. Direct bookings with hotel
partners now represent over 89% of all volumes. By disintermediating bedbanks
and increasing our share of direct contracting, we can drive lower prices for
our customers and higher margins for the Group, relative to peers more reliant
on third-party product.
In addition to the economic benefits, direct contracting enables the Group to
build and develop closer relationships with hotel and customers. This is
critical in periods of disruption, where our customers want us to solve their
problems quickly. It has been clear without direct contracting capability, we
could not possibly have delivered the same level of service.
The Group has been one of the few operators in the market with a prompt
payment model. Certain other operators across the sector have been stretched
by unprecedented liquidity challenges over the last two plus years, which
means in many cases they were not able to pay in accordance with their own
payment terms.
Our operating model and reputation in the market has allowed us to strengthen
existing hotel relationships as well as developing new ones, which has
significantly contributed to further growth in premium, long haul and B2B
markets.
The Group maintains access to a diversified group of low-cost carriers that
fly to short haul East and West
Mediterranean locations and has taken the opportunity to develop relationships
with destination specific carriers that serve Turkey, which itself has
experienced a significant uplift in traffic this year.
The Group has made strong progress over the last two years in developing its
scheduled flight supply with airlines that serve a core group of east and west
bound long-haul destinations.
There is significant runway for growth and margin enhancement in many of these
long-haul destinations we now offer by replicating our success in core
short-haul markets and building out our portfolio of directly contracted
product.
We continue to believe that our ability to pay promptly, distribute opaquely
and access B2C and B2B channels are fundamental to growing levels of direct
and differentiated supply.
Expansion areas
Premium
In FY21 and FY22, alongside successful efforts to access previously exclusive
hotel product, the Group took strategic actions to enhance its proposition,
both of which have enabled us to penetrate the premium segment of the market.
The Group's core addressable market is short-haul value holidays sold online.
In the value segment of the market, which is typically 1-4* holidays sold for
less than £700pp, the Group competes against other online travel agents and
to some extent, tour operators. The tour operator product, however, is more
skewed towards higher price point 4 and 5* holidays with higher average
booking values than the Group's.
If the market is split into 'value' short-haul beach holidays less than £700
per person and 'premium' holidays greater than £700 per person, we estimate
the latter segment is a similar size in terms of passengers, but approximately
two and a half times larger in terms of absolute value. Capturing 1% of the
premium market will therefore contribute two and a half times as an
incremental 1% share of the value market.
Given the higher average booking value of premium, the revenue margin
opportunity on each individual booking is also greater. The Group now has
access to a large addressable segment of the market which was previously
unavailable, and each incremental booking has a higher revenue per booking
opportunity than the value segment. Revenue per booking is higher in the
premium segment even after being offset by investment into perks, which will
continue to payback as the Group's sales mix shifts to more premium product.
For these reasons, there remains a huge opportunity to continue to penetrate
the premium market as demonstrated by the recent progress this financial year.
B2B overview
In 2018, we expanded into a new B2B channel via the acquisition of Classic
Collection. This increased the size of the Group's addressable market by a
further circa eight million 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 Classic Collection Holidays (CCH) brand and
our new Classic Package Holidays (CPH) brand. CCH sells luxury and tailor-
made premium product primarily to travel agents and has a small proportion of
direct sales to consumer. CPH provides an online B2B platform that enables
high street travel agents to sell dynamically packaged holidays to their
customers.
2022 was a record year for the Classic businesses. As travel re-emerged from
almost two years of restrictions in February, Classic Collection and Classic
Package were both well-positioned to deliver growth. Despite the slow restart
post Omicron and the number of captive customers of competitors who had rolled
cancelled holidays from Covid-19 disrupted periods, the combined Classic
businesses delivered 45% growth in TTV vs 2019.
In October 2022, Andy Freeth was appointed as the new CEO of Classic
Collection Holidays and Classic Package Holidays. Andy has a huge amount
experience in tour operating and leading B2B businesses through fast paced
growth. Andy is an experienced CEO who is excited to be coming on board and is
keen to support Classic's ambitious future growth plans. I would like to also
take this opportunity to thank Oliver Garner, Classic's previous CEO for his
contribution to the Group. Oliver has been a fantastic member of the
leadership team at OTB for eight years and an inspirational leader of Classic
since its acquisition in 2018.
Classic Package Holidays (CPH)
Partly as a result of the pandemic, a number of barriers exist for new
entrants and smaller independent operators looking to dynamically package
holidays for their customers, including increased regulation, liability
insurance and technological complexity.
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.
Whilst the year was heavily disrupted, the Group has continued to make
progress in developing the offering and growing sales after its initial launch
in 2019/20 was hampered by Covid-19. The business was able to carry more than
40,000 passengers in the year and is well set to increase this in 2023.
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.
The Classic brands have now launched a long-haul offering and have a dedicated
Group long-haul function.
Most recently, the leadership team at Classic have undertaken an extensive
rebranding exercise launching a new look and feel for both CCH and CPH.
Long haul
There are four million holidaymakers in the UK who book long-haul packages
each year. Pre-pandemic, the OTB site handled millions of searches per annum
for long-haul destinations.
Historically, Group long-haul sales were dominated by tour operator capacity.
However, the long-haul market has always been dominated by scheduled airlines,
which we had no or very limited access to. During the pandemic, we focused on
developing our flight connectivity with British Airways and Virgin Atlantic
westbound, and Emirates eastbound.
We have sought to combine access to relevant airfares with new expertise to
contract hotels directly, and then use our brand and buying power to break
into the market.
Our long-haul offering has benefitted from the improvements we have made to
the customer proposition this financial year, with the introduction of free
lounge for premium bookings and fast track for all bookings. Our growing B2B
distribution also supports further growth in long-haul share. Certain
long-haul hotels are now in the Group's top sellers list.
There is a significant opportunity post pandemic to drive a growing share of
bookings to longer-haul destinations in Classic and the core OTB brand.
Alongside developing our hotel contracting in our other key destinations, we
continue to optimise our flight sourcing, which will help us break into new
destinations. We are also enhancing the website and specialist expertise in
the team, to increase conversion, margin and grow our overall long-haul
proposition.
International
The Board has and will continue to evaluate UK and international opportunities
that both increase the Group's scale and deliver further value for
shareholders.
Regulatory landscape
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 and 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 whilst 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, consumer
laws were broken and 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,
creating customer 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. The recovery of
the travel sector is dependent on the industry regaining the trust of
customers that they will be treated fairly.
For most customers in the UK who are booking their annual beach package
holiday, this will likely be the biggest investment they will make that 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 for
consumers.
ATOL reform
The CAA is consulting on reform of the ATOL scheme including the assessment of
funding arrangements and the protection of customer money. The consultation
process is still ongoing and we expect to hear further feedback from the CAA
in December 2022 or early 2023. Proposals include mandatory ring-fencing of
customer 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's 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 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 in the market, On the Beach will be championing the
need for this to be reviewed and addressed.
Current trading and outlook
The first quarter of our financial year (calendar Q4) has historically been
the quietest trading period for the Group.
Over the last 6 weeks, there has been a continuation of key trends, including
growth across premium, long-haul and B2B expansion areas, set against more
subdued trading in sales of 3* holidays for FY23.
Notwithstanding the widely reported macroeconomic headwinds, the Group has
begun FY23 with a healthier overall forward order book than the equivalent
period in FY20 (before the onset of the Covid-19 pandemic).
Whilst it is unclear how the cost of living crisis will impact consumer
behaviour in 2023, the Board is confident that the foundations laid over the
past 12 months, including investment in brand, technology and customer
proposition, position the Group favourably for another year of growth in FY23.
Simon Cooper
Chief Executive Officer
7 December 2022
Financial review
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).
Group overview
2022 2021 2019
Adjusted¹ GAAP Adjusted ¹ GAAP Adjusted ¹ GAAP
Group TTV(2) £856.1m - £238.3m - £741.4m -
Group revenue £144.3m £144.1m £30.5m £21.2m £147.5m £140.4m
Revenue as Agent(3) £93.8m £93.6m £24.0m £14.7m £92.5m £85.4m
Revenue as Principal(4) £50.5m £50.5m £6.5m £6.5m £55.0m £55.0m
Group gross profit £96.1m £95.6m £23.3m £14.4m £99.1m £92.0m
Gross profit as Agent £90.0m £89.8m £22.7m £13.8m £92.0m £84.9m
Gross profit as Principal £6.1m £5.8m £0.6m £0.6m £7.1m £7.1m
Group profit/(loss) before tax(5) £14.1m £2.1m (£18.4m) (£36.7m) £34.5m £19.3m
Basic earnings/(loss) per share(6) 6.3p 0.9p (9.7p) (19.0p) 21.3p 11.9p
(1 )Adjusted measures are non-GAAP measures, a full explanation of the
adjustments is included in the glossary.
(2 )Group Total Transaction Value ('TTV') is a non-GAAP measure
representing the cumulative total transaction value of sales booked each month
before cancellations and amendments.
(3 )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 2021 and 30 September 2022.
Adjusted revenue is revenue before exceptional items of £1.0m and fair value
gains on forward currency contracts of £0.8m (2021: £9.3m, 2019: £7.1m).
(4 )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 2021 and 30 September 2022.
(5 )Group adjusted profit / loss before tax is profit / loss before
tax, amortisation of acquired intangibles of £5.5m (2021: £5.5m, 2019:
£5.5m), share-based payments cost of £4.7m (2021: £2.7m, 2019: £0.7m) fair
value gains on forward currency contracts of £0.8m and exceptional items of
£2.6m (2021: £10.0m, 2019: £9.0m). A full explanation of the adjustments is
included in the glossary.
(6 )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.
Impact of the pandemic and associated disruption
Certain costs 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.
The Board believes that adjusting for these items provide a clearer reflection
of the Group's performance in the current and prior periods. The Group has
organised package holidays for customers which were cancelled either as a
direct result of the pandemic and more recently due to capacity constraints
and operational challenges with airlines and at airports.
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 or resulting disruption.
Overview of the year
• Revenue of £144.1m was £122.9m higher than FY21:
− Demand for booking holidays in FY21 was severely impacted by a
series of lockdowns and complex rules and requirements for travel.
− Whilst the first four months of FY22 were similarly disrupted by
the outbreak of the Omicron variant of Covid-19, travel restrictions were
removed and travel was simplified for most of the year.
• Notwithstanding the emergence of Omicron and the disrupted airline
schedules this summer, revenue was up 3% vs FY19:
− Average booking values were 31% higher than FY19 supported by a
greater mix of long haul, B2B and more premium beach holidays.
− As a result, the TTV of holidays booked in the year increased by 15%
vs FY19.
− As well as adding more quality hotel product, during the year, the
Group invested £4.8m in holiday perks including airport lounge access,
security fast track and free Covid-19 tests. Revenue is presented net of these
investments.
− The TTV of holidays that departed in summer 2022 was 19% ahead of
FY19.
• The Group has made adjustments for exceptional cancellations, both
directly and indirectly related to the pandemic. After making an adjustment to
add back the impact of cancellations of £1.0m (2021: £9.3m) and deduct fair
value FX gains of £0.8m, adjusted revenue was £144.3m (FY21: £30.5m).
Cash and liquidity
• Thanks to significant shareholder support, the flexible business
model and the disciplined way in which customer money is handled, the Group
has continued to invest in the brand and technology throughout the pandemic
and ahead of a full recovery of the travel industry.
• The Group is in a very strong financial position with combined
cash balances of £133.9m:
− Group cash, excluding amounts held in trust, of £64.5m (30
September 2021: £56m).
− Customer prepayments held in a ring-fenced trust account of £69.4m
(30 September 2021: £39m).
• In December 2022, the Group refinanced its credit facilities with
Lloyds Bank and NatWest. This included cancelling all current facilities and
entering into a new facility for £60m expiring in December 2025.
• Unlike many other businesses in the sector, due to the disciplined
way in which cash is managed, recent increases in interest rates will not
materially increase the cost of financing the Group's activities.
• Through the disrupted summer of flight cancellations, OTB has
continued to provide prompt cash refunds for cancelled holidays. Certain
airlines continue to frustrate the refund process and owe the Group a
significant amount of money for cancelled flights. Legal proceedings to
recover these sums are ongoing.
.
OTB performance
2022 2022 2021 2021 2019 2019
Adjusted GAAP Adjusted GAAP Adjusted GAAP
£m £m £m £m £m £m
TTV 762.7 - 204.2 - 671.5 -
Revenue 86.9 87.1 22.1 13.0 90.3 83.3
Online marketing costs (27.0) (27.0) (5.5) (5.5) (29.8) (29.8)
Offline marketing costs (11.9) (11.9) (6.1) (6.1) (5.4) (5.4)
Revenue after marketing costs 48.0 48.2 10.5 1.4 55.1 48.1
Overheads (25.9) (25.9) (16.6) (16.6) (16.2) (16.2)
Depreciation and amortisation (6.7) (6.7) (5.9) (5.9) (4.6) (4.6)
Exceptional operating costs - (1.3) - (0.7) - (1.2)
Share-based payments - (4.7) - (2.8) - (0.7)
Amortisation of acquired intangibles - (4.4) - (4.4) - (4.4)
Operating (loss)/profit 15.4 5.2 (12.0) (29.0) 34.3 21.0
EBITDA 22.1 16.3 (6.1) (18.7) 38.9 30.0
Adjusted measures are non-GAAP measures, a full explanation of the adjustments
is included in the glossary.
Revenue has increased to £87.1m (FY21: £13.0m, FY19: £83.3m). This is
significantly ahead of FY21 and 5% higher than FY19. This performance is
despite the early part of the financial year, which includes the traditional
peak booking month of January being impacted by the emergence of the Omicron
variant of Covid-19. In addition, there has been a significant reduction in
the addressable market due to vouchers issued or alternative arrangements made
for cancelled holidays. Also note that, unlike tour operators, all revenue
recognised represents new bookings made during the financial year and paid for
in cash rather than vouchers.
Average booking values have increased by 31% vs FY19 due to an increase in the
mix of bookings where customers are spending more than £700pp on their
holidays. This includes an increase in bookings into more premium product in
both short and long-haul destinations. This has resulted in an increase in TTV
to £762.7m (FY21: £204.2m, FY19: £671.5m).
Revenue of £87.1m is stated net of a £4.8m investment in 'holiday perks' for
customers travelling with On the Beach. This included providing free Covid-19
tests, access to premium airport lounges and airport security fast track.
These perks, many of which are a first for the industry, enhance customer
experience and enable the business to clearly communicate value and
differentiation through brand media channels.
Following the success of free Covid tests in September 2021, a new brand
campaign was launched to support the introduction of our holiday perks. This
campaign, combined with sponsorship of Magic Breakfast with Ronan and Harriet,
are the main components of the £11.9m investment in offline marketing during
the year.
Online marketing spend represented 31% of adjusted revenue compared to 33% in
FY19. It is our expectation that as we continue to invest in the brand, online
marketing costs will become more efficient as more traffic is attracted
through brand and direct channels, reducing reliance on non-brand PPC.
Overheads as % of revenue
2022 2022 2021 2021 2019 2019
Adjusted GAAP Adjusted GAAP Adjusted GAAP
Overheads % TTV 3.5% - 8.1% - 2.4% -
Overheads % revenue 30% 30% 75% 127% 18% 19%
See glossary for reconciliation to nearest GAAP measure.
Adjusted measures are non-GAAP measures, a full explanation of the adjustments
is included in the glossary.
Overheads as a % of revenue have reduced to 30% (FY21: 75%, FY19: 18%). This
increase compared to FY19 is due to a reduction in margins and an increase in
fixed costs.
The reduction in margin is due to investments made in the proposition. This
includes investments in price to ensure we remain competitive and investments
in the proposition such as premium airport lounge access.
Fixed costs have increased due to ongoing investments in people and technology
as well as continued regulatory cost pressures such as insurance.
Adjusted EBITDA has increased to £22.1m (FY21: loss £6.1m).
Classic Collection Holidays segment performance
2022 2022 2021 2021 2019 2019
Adjusted GAAP Adjusted GAAP Adjusted GAAP
£m £m £m £m £m £m
TTV (booked) 55.6 - 23.2 - 55.0 -
Revenue (travelled) 50.5 50.5 6.5 6.5 55.0 55.0
Gross profit 6.1 5.8 0.6 0.6 7.2 7.2
Gross profit after marketing costs 5.1 4.8 0.2 0.2 6.3 6.3
Overheads (5.2) (5.2) (3.3) (3.3) (4.1) (4.1)
Depreciation and amortisation (0.3) (0.3) (0.2) (0.2) (0.2) (0.2)
Amortisation of acquired intangibles - (1.1) - (1.1) - (1.1)
Exceptional operating costs - - - (0.4) - 0.7
Operating profit/(loss) (0.4) (1.8) (3.3) (4.8) 2.0 0.2
EBITDA (0.1) (0.4) (3.1) (3.5) 2.2 1.5
Adjusted measures are non-GAAP measures, a full explanation of the adjustments
is included in the glossary..
As a principal (rather than an agent) Classic accounts for revenue on a
'travelled' basis and reports revenue on a gross basis. Both TTV and Revenue
increased significantly this year as there was greater opportunity for people
to travel.
Revenue increased to £50.5m (FY21: £6.5m, FY19: £55.0m) and operating
losses reduced to £1.8m (FY21: loss (£4.8m), FY19: profit £0.2m).
Bookings from high street travel agents have recovered more slowly than
online, due to a gradual return to normal high street footfall and staff
shortages in higher touch retail stores. Despite these headwinds, Sales on a
booked, rather than travelled basis, were £55.6m which is ahead of
pre-pandemic levels. Revenue, reported in the period customers travel,
recovered to £50.5m which was significantly ahead of FY21 and only 8% behind
FY19.
Particularly encouraging was the performance of the new long haul proposition
launched during the pandemic. Long haul product represented 23% of total sales
in the year and expect this to be a high growth area for the business in FY23.
Due to increased revenue, adjusted EBITDA losses reduced to £0.1m compared to
£3.1m in FY21.
Classic Package Holidays segment performance
2022 2022 2021 2021 2019 Adjusted 2019 GAAP
Adjusted GAAP Adjusted GAAP £m £m
£m £m £m £m
TTV 31.1 - 10.2 - 4.8 -
Revenue 6.2 5.8 1.8 1.7 0.8 0.7
Cost of sales (3.8) (3.8) (1.3) (0.9) (0.5) (0.5)
Gross profit 2.4 2.0 0.5 0.8 0.3 0.2
Gross profit after marketing costs 1.4 1.0 0.1 0.4 0.1 -
Overheads (1.5) (1.5) (1.8) (1.8) (1.2) (1.2)
Depreciation and amortisation (0.2) (0.2) (0.2) (0.2) - -
Operating (loss) (0.3) (0.7) (1.9) (1.6) (1.1) (1.2)
EBITDA (0.1) (0.5) (1.7) (1.4) (1.1) (1.2)
Adjusted measures are non-GAAP measures, a full explanation of the adjustments
is included in the glossary..
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 £5.8m (FY21: £1.7m), and the operating loss was
£0.7m (FY21: (£1.6m)). As with CCH the CPH trading result has been impacted
by the high street recovering more slowly than online. However, there has been
some mitigation to this as the platform is being increasingly used by online
agents and home workers.
Marketing costs increased by £0.6m to £1.0m to support the relaunch of the
brand and platform as the industry emerges from two years of disruption. We
continue to develop both the platform and the proposition to ensure that we
are serving the trade and holidaymakers with market leading product at
competitive prices.
Financing
During the period the Group had in place a revolving credit facility of £75m
with Lloyds Bank. The drawdown at 30 September 2022 was nil (FY21: nil). On 7
December 2022, the Group refinanced its credit facilities with Lloyds Bank and
NatWest. This included cancelling all current facilities and entering into a
new facility for £60m expiring in December 2025.
Details of the current facility limits and maturity dates are as follows:
Cancelled facilities £ Issued Expiry Drawn at 30 September 2022
RCF £50m Apr 2020 Dec 2023 £nil
CLBILS £25m May 2020 May 2023 £nil
Total cancelled facilities £75m £nil
New facilities
RCF - Lloyds Bank £30m Dec 2022 Dec 2025 n/a
RCF - NatWest £30m Dec 2022 Dec 2025 n/a
Total new facilities £60m
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 £4.7m (FY21: £2.8m).
The share-based payment charge represents a non-cash charge for the expected
cost of shares vesting under the Group's Long-Term Incentive Plan. On 21
December 2021 the Remuneration Committee approved the introduction of an
underpin/minimum award for the nil cost awards originally granted 9 July 2019.
This removal of a non-market -based condition has resulted in a charge to the
income statement of £1.9m that reflects the scheme progress to date. These
charges are added back to provide comparability to prior periods due to
fluctuations in the charges.
Taxation
The Group tax charge of £0.5m represents an effective rate of 25% (FY21: 18%)
which is greater than the standard UK rate of 19% (FY21: 19%).
During the period a corporation tax rebate of £0.5m was received and no
payments on account have been made.
Cash flow
FY22 FY21
£m £m
Profit / (loss) before tax 2.1 (36.7)
Depreciation and amortisation 12.8 11.9
Net finance costs / (income) 0.5 0.9
Share-based payments including tax 4.7 2.8
Net loss / (gain) on disposal of property, plant and equipment - 0.1
Movement in working capital 1.3 18.0
Corporation tax 0.5 4.2
Cash generated from operating activities 21.9 1.2
Other cash flows
Capitalised development expenditure (10.6) (4.6)
Capitalised intangible assets (0.5) -
Capital expenditure (1.3) (0.5)
Net finance (costs) / income (0.3) (0.9)
Payment of lease liabilities (0.7) (0.6)
Cash flows excl share proceeds and dividends paid 8.5 (5.4)
Proceeds from issue of share capital - 24.9
Total net cash flows 8.5 19.5
Opening cash balance 56.0 36.5
Closing cash at bank 64.5 56.0
Closing trust balance 69.4 39.0
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 inflows excluding share proceeds and dividends were £8.5m which is
£13.9m higher than last year (outflow of £5.4m). This is due to increased
profitability in the period.
Not included in the Group's cash position is £69.4m (FY21: £39m) 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 2025 the Group has sufficient cash reserves to
continue to invest in the brand, people and proposition.
Dividend
The Board is not recommending a final dividend in respect of FY22.
Shaun Morton
Chief Financial Officer
7 December 2022
Consolidated Income Statement and Statement of Comprehensive Income
Year ended 30 September 2022
Note 2022 2021
£'m £'m
Revenue 4,5 144.1 21.2
Cost of sales (48.5) (6.8)
Gross profit 95.6 14.4
Administrative expenses 6 (93.0) (50.2)
Group operating profit/(loss) 2.6 (35.8)
Finance costs 8 (0.8) (1.0)
Finance income 8 0.3 0.1
Net finance costs (0.5) (0.9)
Profit/(loss) before taxation 2.1 (36.7)
Taxation (charge)/credit 9 (0.5) 6.5
Profit/(loss) for the year 1.6 (30.2)
Other comprehensive income/(loss):
Net gain/(loss) on cash flow hedges 0.6 (0.1)
Total comprehensive income/(loss) for the year 2.2 (30.3)
Attributable to:
Equity holders of the parent 2.2 (30.3)
Basic and diluted earnings/(loss) per share attributable to the equity
Shareholders of the Company:
Basic earnings/(loss) per share 10 0.9p (19.0p)
Diluted earnings/(loss) per share 10 0.9p (19.0p)
Adjusted earnings/(loss) per share* 10 6.3p (9.7p)
Adjusted profit measure*
Adjusted PBT/(LBT) (before amortisation of acquired intangibles, exceptional 6 14.1 (18.4)
items and share-based payments)*
*( ) This is a non-GAAP measure, refer to notes listed above. The
adjusted earnings/(loss) per share presented is both basic and diluted.
The notes form part of the financial statements.
Consolidated Balance Sheet
At 30 September 2022
Restated note 2(d)
Note 2022 2021
£'m £'m
Assets
Non-current assets
Intangible assets 11 74.3 74.1
Property, plant and equipment 12 9.1 8.3
Deferred tax 19 3.4 3.6
Other assets 14 0.6 -
Total non-current assets 87.4 86.0
Current assets
Trade and other receivables 14 122.4 94.9
Derivative financial instruments 22 3.2 -
Corporation tax receivable - 0.8
Trust account 15 69.4 39.0
Cash at bank 64.5 56.0
Total current assets 259.5 190.7
Total assets 346.9 276.7
Equity
Share capital 20 1.7 1.7
Share premium 21 89.6 89.6
Retained earnings 21 194.5 187.6
Capital contribution reserve 21 0.5 0.5
Merger reserve 21 (129.5) (129.5)
Total equity 156.8 149.9
Non-current liabilities
Trade and other payables 16 3.0 2.5
Total non-current liabilities 3.0 2.5
Current liabilities
Corporation tax payable 0.2 -
Trade and other payables 16 186.6 119.4
Provisions 16 0.3 4.6
Derivative financial instruments 22 - 0.3
Total current liabilities 187.1 124.3
Total liabilities 190.1 126.8
Total equity and liabilities 346.9 276.7
The financial statements were approved by the Board of Directors and
authorised for issue.
Shaun Morton
Chief Financial Officer
7 December 2022
On the Beach Group plc. Reg no 09736592
Consolidated Statement of Cash Flows
Year ended 30 September 2022
Note 2022 2021
£'m £'m
Profit/(loss) before taxation 2.1 (36.7)
Adjustments for:
Depreciation 6 2.0 1.8
Amortisation of intangible assets 6 10.8 10.1
Finance costs 8 0.8 1.0
Finance income 8 (0.3) (0.1)
Share-based payments 23 4.7 2.8
Gain on termination of lease 12 - (0.1)
Loss on disposal of property, plant and equipment 12 - 0.2
20.1 (21.0)
Changes in working capital:
(Increase)/decrease in trade and other receivables 14 (29.6) 9.9
Increase in trade and other payables 16 61.3 21.3
(Increase) in trust account (30.4) (13.2)
1.3 18.0
Cash flows from operating activities
Cash used in operating activities 21.4 (3.0)
Tax received 0.5 4.2
Net cash inflow/(outflow) from operating activities 21.9 (3.0)
Cash flows from investing activities
Purchase of property, plant and equipment 12 (1.3) (0.5)
Purchase of intangible assets 11 (0.5) -
Development expenditure 11 (10.6) (4.6)
Interest received 8 0.3 0.1
Net cash outflow from investing activities (12.1) (5.0)
Cash flows from financing activities
Proceeds from issue of share capital - 26.0
Costs related to shares issued paid - (1.1)
Interest paid on borrowings 8 (0.6) (0.9)
Interest paid on lease liabilities 8 - (0.1)
Payment of lease liabilities 17 (0.7) (0.6)
Net cash (outflow)/inflow from financing activities (1.3) 23.3
Net increase in cash at bank and in hand 8.5 19.5
Cash at bank and in hand at beginning of year 56.0 36.5
Cash at bank and in hand at end of year 64.5 56.0
The notes form part of the financial statements.
Consolidated Statement of Changes in Equity
Year ended 30 September 2022
Share Share Merger Capital Retained Total
capital
premium reserve contribution earnings £'m
£'m
£'m £'m reserve £'m
£'m
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
Share-based charge including tax - - - - 4.7 4.7
Total comprehensive income for the year - - - - 2.2 2.2
Balance at 30 September 2022 1.7 89.6 (129.5) 0.5 194.5 156.8
The notes form part of these financial statements.
Notes to the Consolidated Financial Statements
Year ended 30 September 2022
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 UK adopted International Accounting Standards in
conformity with the requirements of the Companies Act 2006.
The financial information set out herein does not constitute the Company's
statutory accounts for the years ended 30 September 2022 or 2021 but is
derived from those accounts. The financial information has been prepared using
accounting policies consistent with those set out in the annual report and
accounts for the year ended 30 September 2022. Statutory accounts for 2021
have been delivered to the Registrar of Companies, and those for 2022 will be
delivered in due course. The auditors have reported on those accounts; their
report was unqualified, did not include a reference to any matters to which
the auditors drew attention by way of emphasis without qualifying their
report, and did not contain any statements under Section 498(2) or (3) of the
Companies Act 2006.
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
Revolving Credit Facility ('RCF'). On 7 December 2022, the Group refinanced
its credit facilities with Lloyds and NatWest Banks. This included cancelling
its current facility of £50m and CLBILS facility of £25m and entering into a
new facility of £60m expiring in December 2025.
As at 30 September 2022 cash (excluding cash held in trust which is ringfenced
and not factored into the going concern assessment) was £64.5m (30 September
2021 cash of £56.0m).
Where holidays are cancelled the Group is committed to refunding customers in
cash rather than vouchers. 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 2022 was £69.4m.
The Directors have assessed a going concern period through to March 2024 and
have modelled a number of scenarios considering factors such as airline and
hotelier resilience, cost of living, inflation, interest rates and customer
behaviour / demand. The Group has performed an assessment of the impact of
climate risk, as part of the Director's assessment of the Group's ability to
continue as a going concern. 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 have modelled a
reasonably possible downside scenario to sensitise the base case. In this
scenario the Directors have assessed the impact to cash and revenue in an
environment where bookings are 20% lower than historic levels, although
profitability would be affected, the Group would be able to continue
operating.
The Directors modelled what they consider to be a remote downside scenario of
no travel or bookings until March 2024. 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 during the
going concern review period.
The Directors have considered possible levels of customer default in light of
the cost of living crisis. At the date of signing default levels remain low.
The Directors remain confident that the business has adequate controls and
processes in place to recover outstanding balances from customers.
Given the assumptions above, the mitigating actions available and within the
Group's control, the Directors remain confident that the Group continue to
operate in an agile way adapting to any continued travel disruption.
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 2021; the following amended standards have
been implemented; however, they have not had a significant impact on the
Group's consolidated financial statements:
Interest Rate Benchmark Reform - Phase 2: Amendments to IFRS 9, IAS 39, IFRS
7, IFRS 4 and IFRS 16
The amendments provide temporary reliefs which address the financial reporting
effects when an interbank offered rate (IBOR) is replaced with an alternative
nearly risk-free rate (RFR). These amendments had no impact on the
consolidated financial statements of the Group.
Covid-19 Related Rent Concessions beyond 30 June 2021: Amends to IFRS 16
On 28 May 2020, the IASB issued Covid-19-Related Rent Concessions - amendment
to IFRS 16 Leases. The amendments provide relief to lessees from applying
IFRS 16 guidance on lease modification accounting for rent concessions arising
as a direct consequence of the Covid-19 pandemic. As a practical expedient, a
lessee may elect not to assess whether a Covid-19 related rent concession from
a lessor is a lease modification. The amendment was intended to apply until 30
June 2021, but as the impact of Covid-19 continued, the IASB extended the
period of application to 30 June 2022. The Group has not received Covid-19
related rent concessions during the period of application.
Standards issued but not yet effective
Certain new financial reporting standards, amendments and interpretations have
been published that are not mandatory for the 30 September 2022 reporting
period and have not been early adopted by the Group. The Group is currently
assessing the impact of the following standards, amendments and
interpretations:
• Reference to the Conceptual Framework - Amendments to IFRS 3
• Property, Plant and Equipment: Proceeds before Intended Use -
Amendments to IAS 16
• Onerous Contracts - Costs of Fulfilling a Contract - Amendments to
IAS 37
• IFRS 9 Financial Instruments - Fees in the '10 per cent' test for
derecognition of financial liabilities
d) Reclassification of deferred tax assets
In April 2022, the Group received a letter from the Financial Reporting
Council (FRC) as part of its regular review and assessment of the quality of
corporate reporting in the UK. The letter included a request for further
information on the Group's Annual Report and Accounts for the year ended 30
September 2021. The review conducted by the FRC was performed solely on the
Group's published Annual Report and Accounts and does not provide any
assurance that the Annual Report and Accounts are correct in all material
respects. The review did not benefit from a detailed knowledge of the business
or an understanding of the underlying transactions entered into. FRC letters
are written on the basis that the FRC accepts no liability for reliance on
them by the Company or any third party.
Following completion of the correspondence with the FRC, the Directors have
concluded that the deferred tax asset of £3.6m reported in the balance sheet
as at 30 September 2021 should have been presented as a non-current asset in
line with the requirements of IAS 1.56, rather than as a current asset.
Therefore, the comparatives for the balance sheet as at 30 September 2021 have
been restated to correct the error identified. As a result, total current
assets reduced by £3.6m to £190.7m and total non-current assets increased by
£3.6m to £86.0m. There was no impact on net assets, earnings or cash flows.
e) Basis of consolidation
The Group's consolidated financial statements consolidate the financial
statements of On the Beach Group plc and all of its subsidiary undertakings.
i. Subsidiaries are entities controlled by the Company
Control exists when the Company has power over the investee, the company is
exposed, or has rights to variable returns from its involvement with the
subsidiary and the company has the ability to use its power of the investee to
affect the amount of investor's returns.
ii. Transactions eliminated on consolidation
Intragroup balances, and any gains and losses or income and expenses arising
from intragroup transactions, are eliminated in preparing the consolidated
financial information. Gains arising from transactions with jointly controlled
entities are eliminated to the extent of the Group's interest in the entity.
Losses are eliminated in the same way as gains, but only to the extent that
there is no evidence of impairment.
f) Goodwill
Goodwill arising on the acquisition of subsidiary undertakings and trade and
assets represents the excess of the cost of acquisition over the fair value of
the identifiable assets and liabilities at the date of acquisition. Goodwill
is initially recognised as an asset at cost and is subsequently remeasured at
cost less any accumulated impairment losses. Goodwill which is recognised as
an asset is reviewed for impairment at least annually. Any impairment is
recognised immediately in the income statement and is not subsequently
reversed. On disposal of a subsidiary the attributable amount of goodwill is
included in the determination of the profit or loss on disposal.
For the purposes of impairment testing, goodwill is allocated to the
cash-generating units expected to benefit from the combination. If the
recoverable amount is less than the carrying amount of the unit, the
impairment loss is allocated to first reduce the amount of goodwill allocated
to the unit and then the other assets in the unit. An impairment loss
recognised for goodwill is not reversed in a subsequent period.
An impairment loss recognised for goodwill is not reversed. Impairment losses
recognised for other assets is reversed only if the reasons for the impairment
have ceased to apply.
g) Foreign currency
Transactions in foreign currencies are translated to the respective functional
currencies of Group entities at the foreign exchange rate ruling at the date
of the transaction. Monetary assets and liabilities denominated in foreign
currencies at the balance sheet date are retranslated to the functional
currency at the foreign exchange rate ruling at that date.
Foreign exchange differences arising on translation are recognised in the
income statement.
h) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of
one entity and a financial liability or equity instrument of another entity.
iii. Financial assets
Financial assets are classified, at initial recognition, and subsequently
measured at amortised cost, fair value through other comprehensive income
(OCI), and fair value through profit or loss. In order for a financial asset
to be classified and measured at amortised cost, the financial asset is under
a 'hold to collect' business model and it needs to give rise to cash flows
that are 'solely payments of principal and interest' (SPPI) on the principal
amount outstanding. The Group considers financial asset in default when
contractual payments are 90 days past due.
Trade and other receivables
Trade and other receivables are recognised initially at fair value. Subsequent
to initial recognition, they are measured at amortised cost using the
effective interest method, less any impairment losses. Gains and losses are
recognised in profit or loss when the asset is derecognised, modified or
impaired.
Cash at bank
Cash at bank comprises cash balances and call deposits. Bank overdrafts that
are repayable on demand and form an integral part of the Group's cash
management are included as a component of cash at bank for the purpose only of
the cash flow statement.
Trust account
All ATOL protected customer monies are held in a trust account until after the
provision of the holiday service. The trust account is governed by a deed
between the Group, the Civil Aviation Authority Air Travel Trustees and
independent trustees (Travel Trust Services Limited), which determines the
inflows and outflows from the account.
All ATOL protected customer receipts are paid into the trust account in full
before the holiday departure date. These payments are held in the trust
account until the service is provided-for flights on payment to the supplier
and for hotels and ancillaries on the customer's return from holiday. The
Group therefore does not use customer prepayments to fund its business
operations. Due to the restrictions on accessing the funds in the trust
account, customer monies held in the trust account are presented separately to
cash at bank. Cash flows in respect of the trust account are presented as
operating cash flows on the basis that they are linked to the Group's
revenue-producing activities as an online travel agent.
iv. Financial liabilities
Financial liabilities are classified, at initial recognition, as financial
liabilities at fair value through profit or loss, loans and borrowings,
payables, or as derivatives designated as hedging instruments in an effective
hedge, as appropriate.
Trade and other payables
Trade and other payables are recognised initially at fair value and net of
directly attributable transaction costs. Subsequent to initial recognition
they are measured at amortised cost using the effective interest method. Gains
and losses are recognised in profit or loss when the liabilities are
derecognised as well as through the Effective Interest Rate ('EIR')
amortisation process.
Revolving credit facility
All financial liabilities are recognised initially at fair value and net of
directly attributable transaction costs. After initial recognition,
interest-bearing loans and borrowings are subsequently measured at amortised
cost using the EIR method. Gains and losses are recognised in profit or loss
when the liabilities are derecognised as well as through the EIR amortisation
process.
v. Derivative financial instruments, including hedge accounting
The Group enters into forward foreign exchange contracts to manage exposure to
foreign exchange rate risk. Further details of these derivative financial
instruments are disclosed in note 22 of these financial statements. Such
derivative financial instruments are initially recognised at fair value on the
date on which a derivative contract is entered into and are subsequently
remeasured at fair value.
All derivative financial instruments are assessed against the hedge accounting
criteria set out in IFRS 9. On initial designation of the derivative as a
hedging instrument, the Group formally documents the relationship between the
hedging instrument and hedged item. This includes identification of the
hedging instrument, the hedged item, the risk management objectives and
strategy in understanding the hedge transaction and the hedged risk, together
with the methods that will be used to assess the effectiveness of the hedging
relationship.
The Group makes an assessment, both at the inception of the hedge relationship
as well as on an ongoing basis, of whether the hedging instruments are
expected to be highly effective in offsetting the changes in the fair value of
the respective hedged items attributable to the hedged risk.
Derivatives are initially recognised at the fair value on the date a
derivative contract is entered into and are subsequently remeasured at each
reporting date at their fair value. The change in the fair value of a hedging
instrument is recognised in the statement of profit or loss as part of the
Group's net revenue. The change in the fair value of the hedged item
attributable to the risk hedged is recorded as part of the carrying value of
the hedged item and is also recognised in the statement of profit or loss as
part of the Group's net revenue.
Cash flow hedges
For derivatives that are designated as cash flow hedges and where the hedge
accounting criteria are met, the effective portion of changes in the fair
value is recognised in other comprehensive income. The gain or loss relating
to the ineffective portion is recognised immediately in profit or loss as part
of finance costs. Amounts accumulated in equity are recognised in profit or
loss when the income or expense on the hedged item is recognised in profit or
loss.
i) 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:
vi. 'OTB' - activity via UK websites (www.onthebeach.co.uk
(file:///C%3A/Users/hannah.brock/Downloads/www.onthebeach.co.uk) ,
www.sunshine.co.uk
(file:///C%3A/Users/hannah.brock/Downloads/www.sunshine.co.uk) and
www.onthebeachtransfers.co.uk
(file:///C%3A/Users/hannah.brock/Downloads/www.onthebeachtransfers.co.uk) )
vii. 'International' - activity via Swedish, Norwegian and Danish websites
(www.eBeach.se (file:///C%3A/Users/hannah.brock/Downloads/www.eBeach.se) ,
www.eBeach.no (file:///C%3A/Users/hannah.brock/Downloads/www.eBeach.no) and
www.eBeach.dk (file:///C%3A/Users/hannah.brock/Downloads/www.eBeach.dk) )
viii. 'CCH' - activity via the Tour Operator, Classic Collection Holidays
Limited and subsidiaries
ix. 'CPH' - activity via the Classic Package Holidays online business to
business portal
j) 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 of
these financial statements.
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 customer
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 the OTB and International segments are
presented on an agent basis, and therefore are stated net. Revenue earned from
sales through CPH are stated net, with the commission payable to agents
recognised in 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.
Revenue earned from sales through the CCH are presented on an principal basis,
and therefore are stated gross.
k) Override income
The Group has agreements with suppliers which give rise to rebate income. This
income relates to segments where revenue is accounted for on an agent basis,
therefore the income received from suppliers relates to reduction in cost of
sales (corresponding increase in commission received), and as such is
considered part of the Group's net revenue. The Group has some agreements
whereby receipt of the income is conditional on the Group achieving agreed
volume targets.
For agreements not linked to volume targets, override income is recognised
when earned by the Group, which occurs when all obligations conditional for
earning income have been discharged, and the income can be measured reliably
based on the terms of the contract, which is usually once the booking has been
confirmed with the supplier.
For agreements where volume targets are in place, income is recognised once
the target has been achieved. For volume targets which span the year end, the
Group is required to make estimates in determining the amount and timing of
recognition of override. In determining the amount of volume-related
allowances recognised in any period, management estimate the probability that
the Group will meet contractual target volumes, based on current and forecast
performance.
Amounts due but not yet recovered relating to override income are recognised
within trade and other receivables.
l) Dividend distribution
Final dividend distribution to the Group's shareholders is recognised as a
liability in the Group's financial statements in the period in which the
dividends are approved by the Group's shareholders.
m) Business combinations
All business combinations are accounted for by applying the acquisition
method. Business combinations are accounted for using the acquisition method
as at the acquisition date, which is the date on which control is transferred
to the Group.
For acquisitions, the Group measures goodwill at the acquisition date as:
• the fair value of the consideration transferred; plus
• the recognised amount of any non-controlling interests in the
acquiree; plus
• the fair value of the existing equity interest in the acquiree;
less
• the net recognised amount (generally fair value) of the
identifiable assets acquired and liabilities assumed.
Costs related to the acquisition, other than those associated with the issue
of debt or equity securities, are expensed as incurred. Any contingent
consideration payable is recognised at fair value at the acquisition date. If
the contingent consideration is classified as equity, it is not re-measured
and settlement is accounted for within equity. Otherwise, subsequent changes
to the fair value of the contingent consideration are recognised in the income
statement.
n) Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation
and accumulated impairment losses.
Depreciation is charged to the income statement on a straight-line basis over
the estimated useful lives of each part of an item of property, plant and
equipment. Land is not depreciated. The estimated useful lives are as follows:
Fixtures, fittings and equipment 3-10 years
Buildings freehold 50 years
Depreciation methods, useful lives and residual values are reviewed at each
balance sheet date.
The gain or loss arising on the disposal or retirement of an asset is
determined as the difference between the sales proceeds and the carrying
amount of the asset and is recognised in income.
o) Intangible assets
i. Research and development
Expenditure on research activities is recognised in the income statement as an
expense as incurred. Expenditure on development activities directly
attributable to the design and testing of identifiable and unique software
products are capitalised if the product or process meet the following
criteria:
• The completion of the development is technically and commercially
feasible to complete;
• Adequate technical resources are sufficiently available to
complete development;
• It can be demonstrated that future economic benefits are probable;
and
• The expenditure attributable to the development can be measured
reliably.
Development activities involve a plan or design for the production of new or
substantially improved products or processes. Directly attributable costs that
are capitalised as part of the software product, website or system include
employee costs. Other development expenditures that do not meet these criteria
as well as ongoing maintenance are recognised as an expense as incurred.
Development costs for software, websites and systems are carried at cost less
accumulated amortisation and are amortised over their useful lives (not
exceeding five years) at the point in which they come into use.
ii. Software licenses and domain names
Acquired intangible assets are capitalised at the cost necessary to bring the
asset to its working condition. The Group have applied the guidance published
by the IFRS Interpretations Committee (IFRIC) in respect of Cloud-computing
arrangements. The guidance requires that cloud computing arrangements are
reviewed to determine if they are within the scope of IAS 38 Intangible
Assets, IFRS 16 Leases, or a service contract. This is to determine if the
Group has control of the software intangible asset. Control is assumed if the
Group has the right to take possession of the software and run it on its own
or a third party's computer infrastructure or if the Group has exclusive
rights to use the software whereby the supplier cannot make the software
available to other customers.
Costs for software licenses and domain names are carried at cost less
accumulated amortisation and are amortised over their useful lives at the
point in which they come into use.
iii. Brand
Upon acquisition of the Group by OTB Topco, the On the Beach brand was
identified as a separately identifiable asset. Acquisitions of Sunshine.co.uk
and Classic Collection Holidays Limited resulted in the brand of each being
identified and recognised separately from goodwill at fair value.
iv. Amortisation
Amortisation is charged to the income statement on a straight-line basis over
the estimated useful lives of intangible assets unless such lives are
indefinite. Intangible assets with an indefinite useful life and goodwill are
systematically tested for impairment at each balance sheet date. Other
intangible assets are amortised from the date they are available for use. The
estimated useful lives are as follows:
Website technology: 10 years
Website & development costs: 3 years
Brand: 10-15 years
Agent relationships: 15 years
Customer relationships: 5 years
v. Customer and agent relationships
Upon the acquisition of Classic Collection Holidays Limited, customer
relationships were identified as a separately identifiable assets. Classic
Collection's revenue is driven by a very high volume of repeat customers due
to its bespoke holiday packages and the target market. Repeat customers are
from two broad segments - independent travel agents and direct customers and
individuals booking directly. There is a defined margin and attrition profile
differential between the two customer groups and as such two separate assets
were identified.
p) Impairment of non-financial assets
At each balance sheet date, the Group reviews the carrying amounts of its
tangible and intangible assets to determine whether there is any indication
that those assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss (if any). Where the asset does not generate
cash flows that are independent from other assets, the group estimates the
recoverable amount of the cash generating unit to which the asset belongs. The
recoverable amount of an asset or cash-generating unit is the greater of its
value in use and its fair value less costs to sell.
Goodwill is required to be tested for impairment annually, or more frequently
where there is an indication that the goodwill may be impaired. The goodwill
acquired in a business combination, for the purpose of impairment testing, is
allocated to cash-generating units, or ('CGU'). Subject to an operating
segment ceiling test, for the purposes of goodwill impairment testing, CGUs to
which goodwill has been allocated are aggregated so that the level at which
impairment is tested reflects the lowest level at which goodwill is monitored
for internal reporting purposes. Goodwill acquired in a business combination
is allocated to groups of CGUs that are expected to benefit from the synergies
of the combination.
In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset.
For the purpose of impairment testing, assets that cannot be tested
individually are grouped together into the smallest group of assets that
generates cash inflows from continuing use that are largely independent of the
cash inflows of other assets or groups of assets (the 'cash-generating unit').
An impairment loss is recognised if the carrying amount of an asset or its CGU
exceeds its estimated recoverable amount. Impairment losses are recognised in
profit or loss. Impairment losses recognised in respect of CGUs are allocated
first to reduce the carrying amount of any goodwill allocated to the units,
and then to reduce the carrying amounts of the other assets in the unit (group
of units) on a pro rata basis.
q) Leases
The Group assesses at contract inception whether a contract is, or contains, a
lease. That is, if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for consideration.
Group as a lessee
The Group applies a single recognition and measurement approach for all
leases, except for short-term leases and leases of low-value assets. The Group
recognises lease liabilities to make lease payments and right-of-use assets
representing the right to use the underlying assets.
i. Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease
(i.e. the date the underlying asset is available for use). Right-of-use assets
are measured at cost, less any accumulated depreciation and impairment losses,
and adjusted for any remeasurement of lease liabilities. The cost of
right-of-use assets includes the amount of lease liabilities recognised,
initial direct costs incurred, and lease payments made at or before the
commencement date less any lease incentives received. The recognised
right-of-use assets are depreciated on a straight-line basis over the shorter
of the lease term and the estimated useful lives of the assets, as follows:
Buildings 10 years
IT equipment 3-5 years
The right-of-use assets are also subject to impairment. The Group's
right-of-use assets are included as a separate category in property, plant and
equipment.
ii. Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities
measured at the present value of lease payments to be made over the lease
term. In calculating the present value of lease payments, the Group uses the
incremental borrowing rate at the lease commencement date where the interest
rate implicit in the lease is not readily determinable.
After the commencement date, the amount of lease liabilities is increased to
reflect the accretion of interest and reduced for the lease payments made. In
addition, the carrying amount of lease liabilities is remeasured if there is a
modification, a change in the lease term, a change in the lease payments (e.g.
changes to future payments resulting from a change in an index or rate used to
determine such lease payments) or a change in the assessment of an option to
purchase the underlying asset.
The Group's lease liabilities are included in trade and other payables.
r) Employee benefits
i. Pension scheme
The Group operates a defined contribution pension scheme. A defined
contribution scheme is a post-employment benefit plan under which the Company
pays fixed contributions into a separate entity and will have no legal or
constructive obligation to pay further amounts. Obligations for contributions
to defined contribution pension plans are recognised as an expense in the
income statement in the years during which services are rendered by employees.
ii. Share-based payment transactions
Employees (including senior executives) of the Group receive remuneration in
the form of share-based payments, whereby employees render services as
consideration for equity instruments (equity-settled transactions).
Equity-settled transactions
The cost of equity-settled transactions is determined by the fair value at the
date when the grant is made using an appropriate valuation model, further
details of which are given in note 23.
That cost is recognised in employee benefits expense (note 7a), together with
a corresponding increase in equity (other capital reserves), over the period
in which the service and, where applicable, the performance conditions are
fulfilled (the vesting period). The cumulative expense recognised for
equity-settled transactions at each reporting date until the vesting date
reflects the extent to which the vesting period has expired and the Group's
best estimate of the number of equity instruments that will ultimately vest.
The expense or credit in the statement of profit or loss for a period
represents the movement in cumulative expense recognised as at the beginning
and end of that period.
Service and non-market performance conditions are not taken into account when
determining the grant date fair value of awards, but the likelihood of the
conditions being met is assessed as part of the Group's best estimate of the
number of equity instruments that will ultimately vest. Market performance
conditions are reflected within the grant date fair value. Any other
conditions attached to an award, but without an associated service
requirement, are considered to be non-vesting conditions. Non-vesting
conditions are reflected in the fair value of an award and lead to an
immediate expensing of an award unless there are also service and/or
performance conditions.
No expense is recognised for awards that do not ultimately vest because
non-market performance and/or service conditions have not been met. Where
awards include a market or non-vesting condition, the transactions are treated
as vested irrespective of whether the market or non-vesting condition is
satisfied, provided that all other performance and/or service conditions are
satisfied.
The dilutive effect of outstanding options is reflected as additional share
dilution in the computation of diluted earnings per share (further details are
given in note 10).
s) Financing income and expenses
Financing expenses comprises interest payable and lease liabilities recognised
in profit or loss using the effective interest method, unwinding of the
discount on provisions, and net foreign exchange losses that are recognised in
the income statement (see foreign currency accounting policy). Borrowing costs
that are directly attributable to the acquisition, construction or production
of an asset that takes a substantial time to be prepared for use are
capitalised as part of the cost of that asset. Financing income comprises
interest receivable on funds invested and dividend income.
Interest income and interest payable is recognised in profit or loss as it
accrues, using the effective interest method. Dividend income is recognised in
the income statement on the date the entity's right to receive payments is
established. Foreign currency gains and losses are reported on a net basis.
t) Exceptional items
Exceptional items are material items of income and expense which, because of
the nature and expected infrequency of events giving rise to them, merit
separate presentation to allow shareholders to understand better the elements
of financial performance in the year, so as to facilitate comparison with
prior years and to assess better trends in financial performance.
u) Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax
is recognised in the income statement except to the extent that it relates to
items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable or receivable on the taxable income or
loss for the year, using tax rates enacted or substantively enacted at the
balance sheet date, and any adjustment to tax payable in respect of previous
years.
Deferred tax is provided on temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts
used for taxation purposes. The following temporary differences are not
provided for: the initial recognition of goodwill; the initial recognition of
assets or liabilities that affect neither accounting nor taxable profit other
than in a business combination, and differences relating to investments in
subsidiaries to the extent that they will probably not reverse in the
foreseeable future. The amount of deferred tax provided is based on the
expected manner of realisation or settlement of the carrying amount of assets
and liabilities, using tax rates enacted or substantively enacted at the
balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the temporary
difference can be utilised.
v) Share capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares are shown in equity as a deduction
from the proceeds.
w) Share premium and other reserves
The amount subscribed for the ordinary shares in excess of the nominal value
of these new shares is recorded in 'share premium'. The amount subscribed for
the preference shares in excess of the nominal value of these new preference
shares is recorded in 'other reserves'.
Costs that directly relate to the issue of ordinary shares are deducted from
share premium net of corporation tax.
The merger reserve represents the amount subscribed for the ordinary shares in
excess of the nominal value of the shares issued in exchange for the
acquisition of subsidiaries.
x) Earnings per share
The Group presents basic and diluted earnings per share ('EPS') data for its
ordinary shares. Basic EPS is calculated by dividing the profit attributable
to ordinary shareholders by the weighted average number of ordinary shares
outstanding during the period. For diluted EPS, the weighted average number of
ordinary shares is adjusted to assume conversion of all dilutive potential
ordinary shares.
y) Capital management
The Group's objectives when managing capital are to safeguard the Group's
ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital. In order to maintain or
adjust the capital structure, the Group may adjust the amount of dividends
paid to shareholders, return capital to shareholders, issue new shares or sell
assets to reduce debt.
z) Provisions
A provision is recognised in the balance sheet when the Group has a present
legal or constructive obligation as a result of a past event, that can be
reliably measured and it is probable that an outflow of economic benefits will
be required to settle the obligation.
The Group recognises a refund liability (presented as a cancellation
provision) for the commission that is considered to represent variable
consideration (see note 2j).
aa) Non statutory measures
One of the Groups KPIs is adjusted profit before tax. When reviewing
profitability, the Directors use an adjusted profit before taxation ('PBT') in
order to give a meaningful year-on-year comparison. Whilst we recognise that
the measure is an alternative (non-Generally Accepted Accounting Principles
('non-GAAP')) performance measure which is also not defined within IFRS, this
measure is important and should be considered alongside the IFRS measures.
Adjusted PBT is calculated by adjusting for material items of income and
expenditure where because of the nature and expected infrequency of events
giving rise to them, merit separate presentation to allow shareholders a
better understanding of the financial performance in the period.
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.
i. 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.
ii. 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 accordance with IFRS 15, revenue for the OTB, International and CPH
segments is recognised 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 is
recognised 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 2022, the proportion of development costs that have been capitalised
is higher than the years ending 30 September 2020 and 2021 as the development
team are focusing on key developments rather than operational tasks to respond
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 of
future taxable profits, together with future tax planning strategies. Using
approved budgets and forecasts covering a four-year period, management
concluded that there would be sufficient level of future taxable profits to
support the deferred tax asset of £8.2m (2021: £9.5m) recognised (note 19).
Whilst the forecasts include inherent estimation uncertainty, the Group
determined that there would be sufficient taxable income generated to realise
the benefit of the deferred tax assets and no reasonably possible change to
key assumptions would result in a material reduction in forecast headroom of
tax profits.
The key management judgement required was determining the expected timing of
recovery to profit and therefore the period over which the deferred tax asset
would be realised. In determining the timing of recovery, all available
evidence was considered, including approved budgets, forecasts and analysis of
historical operating results. These forecasts are consistent with those
prepared and used internally for business planning and impairment purposes.
The Group performed sensitivity analyses on these forecasts that were
consistent with those detailed for impairment testing in note 19.
The Group has £0.2m of tax losses carried forward from subsidiaries that have
a history of losses, these losses may not be used to offset taxable income
elsewhere in the Group. On this basis, the Group has determined that it cannot
recognise deferred tax assets on these tax losses carried forward.
Critical accounting estimates
Covid-19 and supplier disruption
Covid-19 has continued to impact the current financial year, with the outbreak
of the Omicron variant of Covid-19 causing disruption between October 2021
and January 2022. Following the removal of travel restrictions in February
2022, travel was further affected by the disrupted airline schedules. The
recognition of costs and provisions relating to the travel disruption has been
an area of significant estimation. These adjustments relate primarily to lost
revenue resulting from the cancellation of bookings in the financial year. The
estimation includes the loss of revenues caused by the cancellation and refund
of bookings, offset by the extent to which related holiday costs can be
recovered.
For the year ending 30 September 2021, the Group recognised a cancellation
provision to estimate the extent to which forward bookings would be cancelled
in FY22. During the current year this provision has been utilised and any
unused amounts reversed, see note 16 for details. The Group has not included a
provision for forward bookings affected by Covid-19 as at 30 September 2022.
i. Recoverability of airline debtor
In relation to flights cancelled during the financial year, the Group has
considered the impact of the pandemic and supplier disruption on the
recoverability of amounts paid to airlines in lieu of flights which have been
cancelled which as at 30 September 2022 is a receivable balance of £2.8m -
see note 14.
The Group has a legal right to a refund; the airline has an obligation to
refund in the event that the flight is cancelled. Where an airline is not
forthcoming with a refund owed the Group exercises its chargeback rights are
as governed by the card scheme rules. Alternatively, the Group may take legal
action to recover the sums owed (e.g. under the right of redress provided by
Regulation 29 of the Package Travel and Linked Travel Arrangements Regulations
2018, or via an unjust enrichment claim). The Group has a right to make a
chargeback when:
− the merchant (airline) was unable or unwilling to provide the
purchased services; or
− 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.
If the Group were to increase its provision by 5 percentage points ('ppts'),
this would have resulted in a decrease of £0.2m in the receivable balance of
£2.8m.
ii. Impact of Covid-19 and supplier disruption
The estimation required for determining the impact of Covid-19 and supplier
disruption includes calculating the loss of revenues caused by the
cancellation and refund of bookings, offset by extent to which related holiday
costs can be recovered. A summary of the adjustments between Adjusted and
GAAP measures, split between the Covid-19 impact and other costs, is shown
below:
Impact of travel disruption
£'m
Group revenue
Revenue as Agent (1.0)
Revenue as Principal -
Group cost of sales (0.3)
Group overheads (1.3)
Group profit before tax (2.6)
The total exceptional items in the year ended 30 September 2022 of £2.6m
represents the £4.7m cost of Covid-19 and supplier disruption to trading in
the period which has been offset by the release of £4.6m of provisions from
the previous year, and legal and professional fees of £2.5m incurred in the
year.
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 2i of these financial
statements.
For the year ended 30 September 2022
OTB Int'l CCH CPH Total
£'m £'m £'m £'m £'m
Revenue before exceptional items
Sales as agent 86.9 0.7 - 6.2 93.8
Sales as principal - - 50.5 - 50.5
Total revenue before exceptional items 86.9 0.7 50.5 6.3 144.3
Exceptional cancellations* (0.6) - - (0.4) (1.0)
Fair value FX gains 0.8 - - - 0.8
Total revenue 87.1 0.7 50.5 5.8 144.1
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
*( )Exceptional cancellations in the year ended 30 September 2022
relates to the impact of COVID-19 in the year and travel disruption arising
following the removal of travel restrictions. Exceptional cancellations in the
year ended 30 September 2021 relate to the impact of COVID-19 (see note 3).
Details of receivables arising from contracts with customers are set out in
note 14.
5. Segmental report
As explained in note 2i, 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.
2022 2021
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 86.9 0.7 50.5 6.2 144.3 22.1 0.1 6.5 1.8 30.5
Exceptional cancellations* (0.6) - - (0.4) (1.0) (9.1) (0.1) - (0.1) (9.3)
Fair value FX gains 0.8 - - - 0.8 - - - - -
Total Revenue 87.1 0.7 50.5 5.8 144.1 13.0 - 6.5 1.7 21.2
Adjusted EBITDA 22.1 - (0.1) (0.1) 21.9 (6.1) (0.2) (3.1) (1.7) (11.1)
Share-based charge (4.7) - - - (4.7) (2.8) - - - (2.8)
Exceptional items (1.9) - (0.3) (0.4) (2.6) (9.8) (0.1) (0.4) 0.3 (10.0)
Fair value FX gains 0.8 - - - 0.8 - - - - -
EBITDA 16.3 - (0.4) (0.5) 15.4 (18.7) (0.3) (3.5) (1.4) (23.9)
Depreciation and amortisation (11.1) (0.1) (1.4) (0.2) (12.8) (10.3) (0.1) (1.3) (0.2) (11.9)
Group operating profit/(loss) 5.2 (0.1) (1.8) (0.7) 2.6 (29.0) (0.4) (4.8) (1.6) (35.8)
Finance costs (0.8) (1.0)
Finance income 0.3 0.1
Profit/(loss) before taxation 2.1 (36.7)
Non-current assets
Goodwill 31.6 - 4.6 4.0 40.2 31.6 - 4.6 4.0 40.2
Other intangible assets 27.4 - 6.6 0.1 34.1 26.0 0.1 7.7 0.1 33.9
Property, plant and equipment 6.3 - 2.8 - 9.1 5.8 - 2.5 - 8.3
*( )Exceptional cancellations in the year ended 30 September 2022
relate to the impact of COVID-19 and supplier disruption. Exceptional
cancellations for 30 September 2021 relate to the impact of COVID-19.
6. Operating profit
a) Operating expenses
Expenses by nature including exceptional items and impairment charges:
2022 2021
£'m £'m
Marketing 38.7 10.9
Depreciation 2.0 1.8
Staff costs (including share-based payments) 28.0 18.5
IT hosting, licences & support 4.5 2.5
Office expenses 0.7 0.8
Credit / debit card charges 3.2 0.5
Insurance 1.6 1.6
Professional services 1.0 0.7
Other 1.2 1.8
Administrative expenses before exceptional items & amortisation of 80.9 39.0
intangible assets
Exceptional items 1.3 11.1
Amortisation of intangible assets 10.8 10.1
Exceptional items and amortisation of intangible assets 12.1 11.2
Administrative expenses 93.0 50.2
b) Exceptional items
2022 2021
Adjusted Impact of travel disruption Fair value FX gains GAAP Adjusted Impact of COVID-19 GAAP
£'m £'m £'m £'m £'m £'m £'m
Group revenue
Revenue as Agent 93.8 (1.0) 0.8 93.6 24.0 (9.3) 14.7
Revenue as Principal 50.5 - - 50.5 6.5 - 6.5
- - -
Group cost of sales (48.2) (0.3) - (48.5) (7.2) 0.4 (6.8)
- - -
Group overheads - - -
Administrative expenses (91.8) (1.3) - (93.0) (49.1) (1.1) (50.2)
Net finance costs (0.5) - - (0.5) (0.9) - (0.9)
Group profit/(loss) before tax 3.9 (2.6) 0.8 2.1 (26.7) (10.0) (36.7)
The total exceptional items in the year ended 30 September 2022 of £1.8m
includes £2.6m due to the impact of travel disruption offset by £0.8m of
fair value FX gains. The impact of travel disruption represents £4.7m cost of
Covid-19 and supplier disruption to trading in the period which has been
offset by the release of £4.6m of provisions from the previous year, and
legal and professional fees of £2.5m incurred in the year.
The 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.
c) Services provided by the company auditor
During the year, the Group obtained the following services from the operating
company's auditor.
2022 2021
£'m £'m
Audit of the parent company financial statements 0.1 0.1
Amounts receivable by the Company's auditor and its associates in respect of:
- Audit of financial statements of subsidiaries pursuant to legislation 0.3 0.3
- Review of interim financial statements - -
- Other assurance services - -
0.4 0.4
d) Adjusted profit/(loss) before tax
Management measures the overall performance of the Group by reference to
adjusted profit/(loss) before tax, a non-GAAP measure as it gives a meaningful
year-on-year comparison of the Group's performance:
2022 2021
£'m £'m
Profit/(loss) before taxation 2.1 (36.7)
Exceptional items 1.8 10.0
Amortisation of acquired intangibles* 5.5 5.5
Share-based payments charge** 4.6 2.8
Adjusted profit/(loss) before tax 14.1 (18.4)
*( ) These charges relate to amortisation of brand, website
technology and customer relationships recognised on the acquisition of
subsidiaries and are added back as they are inherently linked to historical
acquisitions of businesses.
**( ) The share-based payment charge represents the expected cost of
shares vesting under the Group's Long Term Incentive Plan. The share-based
payment charge has increased to £4.7m (2021: £2.8m) as a result of a
significant increase in the number of awards in the year and the change in the
expectations for non-market based performance conditions. In addition, on 21
December 2021 the remuneration committee approved the introduction of an
underpin/minimum award for the nil cost awards originally granted 9 July 2019.
This removal of a non-market based condition has resulted in a catch-up charge
to the income statement of £1.9m (2021: £2.0m) that reflects the scheme
progress to date. These charges are added back to provide comparability to
prior periods due to fluctuations in the charges.
7. Employees and Directors
a) Payroll costs
The aggregate payroll costs of these persons were as follows:
2022 2021
£'m £'m
Wages and salaries 27.2 18.0
Defined contribution pension cost 0.7 0.4
Social security costs 2.9 1.9
Share-based payment charge 4.7 2.8
35.5 23.1
Staff costs above include £7.5m (2021: £4.6m) employee costs capitalised as
part of software development. During the year £nil was claimed in relation to
the Coronavirus Job Retention Scheme (2021: £0.2m).
Share-based payments includes a catch-up charge of £1.9m (2021: £2.0m)
following the Remuneration Committee approving the introduction of an
underpin/minimum award on 21 December 2021 for the nil cost awards originally
granted 9 July 2019. This removal of a non-market based condition has resulted
in the catch-up charge to the income statement that reflects the scheme
progress to date.
b) Employee numbers
Average monthly number of people (including Executive Directors) employed:
By reportable segment: 2022 2021
No. No.
UK 463 365
Int'l 4 6
CCH 134 115
CPH 22 8
623 494
c) Directors' emoluments
The remuneration of Directors was as follows:
2022 2021
£'m £'m
Aggregate emoluments 1.0 0.5
Defined contribution pension - -
Share-based payment charges 0.8 0.1
Directors' emoluments 1.8 0.6
Remuneration was paid by On the Beach Limited, a subsidiary company of the
Group.
The remuneration of the highest paid Director was as follows:
2022 2021
£'m £'m
Aggregate emoluments 0.6 0.3
Share-based payment charges 0.8 0.1
1.4 0.4
d) Key management compensation
Key management comprised the eight members of the Executive Team.
Remuneration of all key management (including Directors) was as follows:
2022 2021
£'m £'m
Wages and salaries 5.1 1.7
Short-term non-monetary benefits - -
Share-based payment charges 3.4 2.1
Key management compensation 8.5 3.8
e) Retirement benefits
Included in pension contributions payable by the Group of £0.7m (2021:
£0.4m) is £10,700 (2021: £1,300) of contributions that the Group made to a
personal pension scheme in relation to one member of the Executive Team.
8. Finance income and finance costs
a) Finance costs
2022 2021
£'m £'m
Rolling credit facility interest / non-utilisation fees 0.6 0.9
Interest on lease liabilities 0.2 0.1
Finance costs 0.8 1.0
b) Finance income
2022 2021
£'m £'m
Bank interest receivable 0.3 0.1
Finance income 0.3 0.1
9. Taxation
2022 2021
£'m £'m
Current tax on profit/(loss) for the year 0.4 (0.4)
Total current tax 0.4 (0.4)
Deferred tax on profits for the year
Origination and reversal of temporary differences 0.3 (6.1)
Adjustments in respect of prior years (0.2) -
Total deferred tax 0.1 (6.1)
Total tax charge/(credit) 0.5 (6.5)
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:
2022 2021
£'m £'m
Profit/(loss) on ordinary activities before tax 2.1 (36.7)
Profit/(loss) on ordinary activities multiplied by the statutory rate of 0.4 (7.0)
corporation tax in the UK of 19% (2021: 19%)
Effects of:
Impact of difference in current and deferred tax rates (0.5) 0.2
Adjustments in respect of prior years (0.2) -
Expenses not deductible 0.8 0.3
Total taxation charge/(credit) 0.5 (6.5)
The effective rate tax rate for the period is 25% (2021: 18%). 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 2022 have been calculated based on these rates.
10. 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 basic earnings per share figures are calculated by dividing adjusted
earnings after tax for the year by the weighted average number of shares.
Adjusted diluted earnings per share figures are calculated by dividing
adjusted earnings after tax for the year by the weighted average number of
shares plus the weighted average number of Ordinary Shares that would be
issued on the conversion of all dilutive potential ordinary shares into
Ordinary Shares.
Basic weighted average number of Ordinary Shares Total earnings Pence per share
(m) £'m
Year ended 30 September 2022
Basic EPS 165.9 1.6 1.0p
Diluted EPS 166.7 1.6 1.0p
Adjusted basic EPS 165.9 10.5 6.3p
Adjusted diluted EPS 166.7 10.5 6.3p
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)
*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/(loss) after tax is calculated using the tax rate of 25% on
the basis that this is the Group's effective tax rate:
2022 2021
£'m £'m
Profit/(loss) for the year after taxation 1.6 (30.2)
Adjustments (net of tax at 25%)
Exceptional items 1.3 8.1
Amortisation of acquired intangibles 4.1 4.5
Share-based payment charges* 3.5 2.2
Adjusted earnings/(loss) after tax 10.5 (15.4)
* The share-based payment charges are in relation to options which are not yet
exercisable.
11. Intangible assets
Brand Goodwill Website & development Costs Website technology Customer relationships Agent relationships Total
£'m £'m £'m £'m £'m £'m £'m
Cost
At 1 October 2020 35.9 40.2 15.6 22.8 2.1 4.4 121.0
Additions - - 4.6 - - - 4.6
At 30 September 2021 35.9 40.2 20.2 22.8 2.1 4.4 125.6
Additions - - 11.0 - - - 11.0
At 30 September 2022 35.9 40.2 31.2 22.8 2.1 4.4 136.6
Accumulated amortisation
At 1 October 2020 15.1 - 8.7 16.0 0.9 0.7 41.4
Charge for the year 2.4 - 4.6 2.4 0.4 0.3 10.1
At 30 September 2021 17.5 - 13.3 18.4 1.3 1.0 51.5
Charge for the year 2.4 - 5.3 2.4 0.4 0.3 10.8
At 30 September 2022 19.9 - 18.6 20.8 1.7 1.3 62.3
Net book amount
At 30 September 2022 16.0 40.2 12.6 2.0 0.4 3.1 74.3
At 30 September 2021 18.4 40.2 6.9 4.4 0.7 3.5 74.1
Brand
The brand intangibles assets consist of three brands which were separately
identified as intangibles on the acquisition of the respective businesses. The
carrying amount of the brand intangible assets:
Brand Remaining amortisation period Acquisition At 30 September 2022 At 30 September 2021
£'m £'m
On the Beach 4 years On the Beach Travel Limited 12.1 14.1
Sunshine.co.uk 5 years Sunshine.co.uk Limited 0.7 0.8
Classic Collection 6 years Classic Collection Limited 3.2 3.5
16.0 18.4
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:
CGU Acquisitions At 30 September 2022 At 30 September 2021
£'m £'m
Reportable segment
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 CGUs 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. The Group has not recognised an impairment to the
goodwill for the year ending 30 September 2022 (2021: £nil).
'OTB' CGU
The Group performed its annual impairment test as at 30 September 2022 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
four-year period. The forecasts are then extrapolated in perpetuity based on
an estimated growth rate of 2 per cent (2021: 2 per cent), 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 13.5 per cent (2021: 11 per cent).
'Sunshine' CGU
The Group performed its annual impairment test as at 30 September 2022 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
four-year period. The forecasts are then extrapolated in perpetuity based on
an estimated growth rate of 2 per cent (2021: 2 per cent), 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 13.5 per cent (2021: 11 per cent)
'CCH' CGU
The Group performed its annual impairment test as at 30 September 2022 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 four-year period.
The forecasts are then extrapolated in perpetuity based on an estimated growth
rate of 2 per cent (2021: 2 per cent). 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 13.5 per cent (2021: 11 per cent).
'CPH' CGU
The Group performed its annual impairment test as at 30 September 2022 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
four-year period. The forecasts are then extrapolated in perpetuity based on
an estimated growth rate of 2 per cent (2021: 2 per cent). 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 13.5 per cent (2021: 11 per
cent).
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.
Key assumptions used in value-in-use calculations and sensitivity to changes
in assumptions
The main assumptions on which the forecast cash flows used for the CGUs were
based include:
• Consumer demand - management considered historic performance both
pre-pandemic (year ending 30 September 2019) and during the pandemic (years
ending 30 September 2020 and 2021) as well as the size of the market, current
market share, competitive pressure, consumer confidence and appetite under the
cost of living crisis. The Directors have used their past experience of the
business and its industry, together with their expectations of the market.
• Impact of new marketing and planned improvements on booking
conversion - whilst the spend on incentives and improvements is within the
Group's control, the impact on increasing bookings requires assessment of
consumer demand and competitive pressures using industry and market knowledge.
The calculation of value in use for all CGUs is most sensitive to the
following assumptions:
• Revenue: the level of sales is based on expected customer demand,
average booking values and booking conversion; however, a material
deterioration in consumer demand can lead to reduced demand for holidays as
well as disruption to its operations from unpredictable domestic and
international events which can significantly impact the level of sales. A
decrease in bookings of 20% for each CGU would not result in an impairment.
• Discount rates: Discount rates represent the current market
assessment of the risks specific to each CGU, taking into consideration the
time value of money and individual risks of the underlying assets that have
not been incorporated in the cash flow estimates. The discount rate
calculation is based on the specific circumstances of the Group and its
operating segments and is derived from its weighted average cost of capital
(WACC). A rise in the discount rate to 14% for all CGUs would not result in an
impairment.
• Growth rates used to extrapolate cash flows beyond the forecast
period: the Group operates in a fast-moving marketplace so management
recognises that the speed of technological change and the possibility of new
entrants can have a significant impact on growth rate assumptions. A reduction
in long-term growth rates by 10ppts for each CGU would not result in an
impairment.
Sensitivity analysis has been completed in isolation and in combination.
Management considers that no reasonably possible changes in assumptions would
reduce a CGU's headroom to nil.
Impact of cost of living crisis
The Group does not consider that any CGU has been automatically impaired as a
result of the rising cost of living. All CGUs remain viable trading long-term
assets which the Group expects to continue to generate positive cashflows.
Inherent in the impairment test and sensitivity analysis is the impact of
customer demand being affected by the rising costs of living. 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.
Website and development costs
The Group capitalises development projects where they satisfy the requirements
for capitalisation in accordance with 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 and the purchase
of software licences and domain names. The amortisation period for website and
development costs is three years straight line. Domain names are amortised
over ten 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 2022
this was £1.3m (2021: £1.4m).
12. Tangible assets
Freehold property Right-of-use asset (note 17) Fixtures, fittings and equipment Total
£'m £'m £'m £'m
Cost
At 1 October 2020 1.7 5.3 7.1 14.1
Additions - - 0.5 0.5
Transfer from investment property 0.6 - - 0.6
Disposals - (1.7) (0.5) (2.2)
At 1 October 2021 2.3 3.6 7.1 13.0
Additions - 1.5 1.3 2.8
Disposals - - (1.0) (1.0)
At 30 September 2022 2.3 5.1 7.4 14.8
Accumulated amortisation
At 1 October 2020 - 1.6 2.6 4.2
Charge for the year 0.1 0.5 1.2 1.8
Disposals - (1.0) (0.3) (1.3)
At 1 October 2021 0.1 1.1 3.5 4.7
Charge for the year 0.1 0.6 1.3 2.0
Disposals - - (1.0) (1.0)
At 30 September 2022 0.2 1.7 3.8 5.7
Net book amount
At 30 September 2022 2.1 3.4 3.6 9.1
At 30 September 2021 2.2 2.5 3.6 8.3
The depreciation expense of £2.0m for the year ended 30 September 2022 and
the depreciation expense of £1.8m for the year ended 30 September 2021 have
been recognised within administrative expenses.
13. Investments
The parent company, On the Beach Group plc, is incorporated in the UK and
directly holds a number of subsidiaries. The registered address for each
subsidiary is Aeroworks, 5 Adair Street, Manchester, M1 2NQ.
The table below shows details of the wholly owned subsidiaries of the Group.
Subsidiary Nature of business Proportion of ordinary shares held by the Group
On the Beach Topco Limited* Holding Company 100%
On The Beach Limited Internet travel agent 100%
On The Beach Beds Limited In-house bedbank 100%
On The Beach Bid Co Limited* Holding Company 100%
On the Beach Travel Limited Holding Company 100%
On the Beach Trustees Limited Employee trust 100%
On the Beach Holidays Limited Dormant 100%
Sunshine.co.uk Limited Internet travel agent 100%
Sunshine Abroad Limited Dormant 100%
Classic Collection Holidays Limited Tour Operator 100%
Classic Collection Aviation Limited Transport Broker 100%
Classic Collection Holiday, Travel & Leisure Limited Dormant 100%
Saxon House Properties Limited Property Management 100%
Classic Package Holidays Limited Travel agent 100%
*During the year, the Group has undertaken a project to simplify the group
structure, on 30 September 2022 On the Beach Topco Limited and On the Beach
Bidco were placed into Members Voluntary Liquidation. The Group chose to
simply the group structure to reduce duplication of processes, reduce
complexity of the structure without affecting the control of the Group's
assets and reduce additional costs associated with the subsidiaries.
There are no restrictions on the Company's ability to access or use the assets
and settle the liabilities of the Company's subsidiaries.
14. Trade and other receivables
Amounts falling due within one year: 2022 2021
£'m £'m
Trade receivables - net 100.8 79.5
Other receivables and prepayments 21.6 15.4
Total trade and other receivables 122.4 94.9
For the year ended 30 September 2022 , other receivables includes £2.8m
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, £3.9m of rebates due from suppliers and
£2.2m receivable in relation to value added tax. The expected credit losses
in respect to these balances is not material.
Prepayments greater than one year are £0.6m (2021: Nil).
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.
15. 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.
16. Trade, other payables and provisions
2022 2021
£'m £'m
Non-current
Lease liabilities (note 17) 3.0 2.5
Current
Trade payables 158.3 104.3
Accruals and other payables 27.4 14.8
Lease liabilities (note 17) 0.9 0.4
Provision 0.3 4.6
Total trade, other payables and provisions 189.9 126.6
Trade payables includes £0.4m (2021: £0.9m) 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.
Accruals and other payables includes £14.9m (2021: £14.2m) for products or
services received but not yet invoiced at the year-end date.
COVID-19 cancellations Other COVID-19 related provisions £'m Cancellations Total
£'m £'m £'m
At 1 October 2021 4.1 0.5 - 4.6
Arising during the year - - 0.3 0.3
Utilised (2.0) (0.1) - (2.1)
Unused amounts reversed (2.1) (0.4) - (2.5)
Unwinding of discount and changes in the discount rate - - - -
At 30 September 2022 - - 0.3 0.3
Current - - 0.3 0.3
Non-current - - - -
COVID-19
The COVID-19 cancellations and other COVID-19 related provisions have been
utilised against the costs associated with COVID-19 and supplier disruption in
the year.
Cancellations
A provision has been recognised in respect of expected future cancellations
for supplier and customer cancellations on the forward order book for future
departures. The Group expect this provision to be utilised over the next year.
The provision is based on historical trends and best estimate of future
expectation, there is inherent uncertainty in terms of the level and timing of
future cancellations which will depend on various factors including potential
further supplier disruption.
17. Leases
The Group as a lessee
For the year ending 30 September 2022, the Group entered into leases for IT
equipment, the lease terms for IT equipment are between three and five years.
The Group has a lease for its head office which has a term of ten years. 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.
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 (see note 12).
Amounts recognised in profit or loss
The following lease-related expenses were recognised under IFRS 16 in the
profit or loss:
2022 2021
£'m £'m
Depreciation expense of right-of-use assets 0.6 0.5
Interest expense on lease liabilities 0.2 0.1
Gain on termination of lease - (0.1)
Total amount recognised in profit or loss 0.8 0.5
Set out below are the carrying amounts of lease liabilities (included trade
and other payables) and the movements during the period:
2022 2021
£'m £'m
As at 1 October 2.9 4.2
Additions 1.5 -
Accretion of interest 0.2 0.1
Payments (0.7) (0.6)
Reassessment of lease term - (0.8)
As at 30 September 3.9 2.9
Current (note 16) 0.9 0.4
Non-current (note 16) 3.0 2.5
The Group had total cash outflows for leases of £0.7m in 2022 (£0.6m in
2021). The above table satisfies the requirements of IAS 7.44A to present a
net debt reconciliation.
18. 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.
During the year the Group had a total facility of £75m comprising two
elements, as follows:
− Core facility of £50m expiring December 2023; and
− CLBILS facility of £25m expiring May 2023.
The interest rate payable on the core facility is equal to SONIA plus a
margin. The margin contained within the facility is dependent on net leverage
ratio and the rate per annum ranges from 2.00% to 4.25% for the facility or
any unpaid sum. The interest rate payable on the CLBILS facility is equal to
the Bank of England base rate plus a margin. The margin contained within the
facility is 2.30% per annum for the facility or any unpaid sum.
The facility included 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: 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 2022, the liabilities
for these other credit uses was £7.4m, leaving £68m 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 2022 was £nil and there has
been nothing drawn down post balance sheet date.
On 7 December 2022, the Group refinanced its credit facilities with Lloyds and
NatWest Banks. This included cancelling its current facilities and entering
into a new facility for £60m expiring in December 2025.
The interest rate payable is equal to SONIA plus a margin. The margin
contained within the facility is dependent on net leverage ratio and the rate
per annum ranges from 2.00% to 2.75% for the facility or any unpaid sum.
The terms of the new facility include the following covenants:
i. the ratio of adjusted EBITDA to net finance charges in respect of any
relevant period shall not be less than 5:1; and
ii. the ratio of total net debt to adjusted EBITDA shall not exceed 2.5:1.
19. Deferred tax
Intangible assets Property, plant and equipment Share-based payments Losses and Tax assets/ (liabilities)
unused tax
£'m £'m £'m
relief £'m
£'m
2022
Assets - - 0.7 8.2 8.9
Liabilities (5.2) (0.3) - - (5.5)
Total (5.2) (0.3) 0.7 8.2 3.4
2021
Assets - - 0.7 9.5 10.2
Liabilities (6.3) (0.3) - - (6.6)
Total (6.3) (0.3) 0.7 9.5 3.6
Intangible assets Property, plant and equipment Share-based payments Losses and Total
unused tax
£'m £'m £'m
relief £'m
£'m
30 September 2020 (6.2) (0.1) 0.2 3.5 (2.6)
Accelerated depreciation for tax purposes (0.1) (0.2) - - 6.2
Losses available for offsetting against future income - - - 6.0 6.0
Share-based payments recognised in income - - 0.4 - 0.4
Share-based payments recognised in equity - - 0.1 - 0.1
30 September 2021 (6.3) (0.3) 0.7 9.5 3.6
Losses utilised against taxable income - - - (1.3) (1.3)
Accelerated depreciation for tax purposes 1.1 - - - 1.1
Share-based payments recognised in income 0.1 0.1
Share-based payments recognised in equity - - (0.1) - (0.1)
30 September 2022 (5.2) (0.3) 0.7 8.2 3.4
The deferred tax asset includes an amount of £8.2m (2021: £9.5m) which
relates to carried forward tax losses. Deferred tax assets are recognised for
tax losses carried forward only to the extent that realisation of the related
tax benefit is probable. Deferred tax assets are reviewed at each reporting
date to assess the probability that sufficient taxable profit will be
available to allow all or part of deferred tax asset to be utilised. The Group
determined that there would be sufficient taxable income generated to realise
the benefit of the deferred tax assets, and no reasonably possible change to
key assumptions would result in a material reduction in forecast headroom of
tax profits (see note 3 for details).
In determining the recognition of deferred tax assets arising from the carry
forward of unused tax losses, the Group considered the following:
The Group considered the location of the taxable entities, the loss-making
companies are all located in the United Kingdom, for a full list of
subsidiaries see note 13.
The Group has considered the approved budgeted information covering a
four-year period that is consistent with the forecasts used for the Group's
review of impairment, going concern and viability assessments. For details of
the assumptions used and sensitivity analysis performed for the forecasts, see
note 11. Whilst the forecasts include inherent estimation uncertainty, the
Group determined that there would be sufficient taxable income generated to
realise the benefit of the deferred tax assets and no reasonably possible
change to key assumptions would result in a material reduction in forecast
headroom of tax profits. On this basis the Group concluded that there is not a
significant risk of a material adjustment to the carrying amount of the
deferred tax asset.
Based on the budgeted information, the Group made a significant judgement on
the timing of utilising the unused tax losses, as detailed in note 3. The
Group determined that the unused tax losses will be utilised across the years
ending 30 September 2023 and 2024. There is no expiry in respect of the
deferred tax assets.
The Group has £0.2m that are available indefinitely for offsetting against
future taxable profits of the companies in which the losses arose. Deferred
tax assets have not been recognised in respect of these losses as they may not
be used to offset taxable profits elsewhere in the Group, they have arisen in
subsidiaries that have been loss-making for some time, and there are no other
tax planning opportunities or other evidence of recoverability in the near
future.
20. Share capital
Allotted, called up and fully paid 2022 2021
£'m £'m
166,258,172 ordinary shares @ £0.01 each (2021: 165,399,366 @ £0.01 each) 1.7 1.7
The Group issued 858,806 ordinary shares with a nominal value of £0.01. The
holders of ordinary shares are entitled to receive dividends as declared from
time to time and are entitled to one vote per share at meetings of the Group.
21. Reserves
The analysis of movements in reserves is shown in the statement of changes in
equity.
Details of the amounts included in other reserves are set out below.
The merger reserve arose on the purchase of On the Beach TopCo Limited in the
year ended 30 September 2015.
During the year ended 30 September 2018, the Group issued 607,747 shares with
a nominal value of £0.01 each to form part of the acquisition of Classic. The
consideration value of the shares issued was £2.6m. The excess above the
nominal value of the shares was credited to the merger reserve.
The capital redemption reserve arose as a result of the redemption of
preference shares in the year ended 30 September 2015.
22. Financial instruments
Details of significant accounting policies and methods adopted, including
criteria for recognition, the basis of measurement and the basis on which
income and expenses are recognised, in respect of each class of financial
asset, financial liability and equity instrument are disclosed in the
statement of accounting policies.
At the balance sheet date the Group held the following:
Financial assets FV Level 2022 2021
£'m £'m
Derivative financial assets designated as hedging instruments
Forward exchange contracts 2 3.2 -
Financial assets at amortised cost
Trust account 69.4 39.0
Cash at bank 64.5 56.0
Trade and other receivables (note 14) 116.9 89.5
Total financial assets 254.0 184.5
Financial liabilities
Derivatives designated as hedging instruments
Forward exchange contracts 2 - (0.3)
Financial liabilities at amortised cost
Trade and other payables (note 16) (189.6) (122.0)
Provisions (0.3) (4.6)
Total financial liabilities (189.9) (126.9)
Derivative financial instruments
The Group enters into derivative financial instruments with various financial
institutions which are valued using present value calculations. The valuation
methods incorporate various inputs, including the foreign exchange spot and
forward rates, yield curves of the respective currencies and currency basis
spreads between the respective currencies.
Revolving credit facility
In order to fund seasonal working capital requirements the Group has a
revolving credit facility with Lloyds Bank plc. The borrowing limits under
the facility is £75m per month, subject to covenant compliance; at year end
the facility was nil (2021: nil). On 7 December 2022, the Group refinanced its
credit facilities with Lloyds and Natwest Banks. This included cancelling its
current facilities and entering into a new facility for £60m expiring in
December 2025. For details of the revolving credit facility, see note 18. The
following table provides the fair values of the Group's financial assets and
liabilities:
FV Level 2022 2021
£'m £'m
Forward exchange contracts 2 3.2 (0.3)
There is no difference between the carrying value and fair value of cash and
cash equivalents, trade and other receivables, and trade and other payables.
a) Measurement of fair values
The table below analyses financial instruments carried at fair value, by
valuation method. The different levels have been defined as follows:
i. Level 1: quoted prices (unadjusted) in active markets for identical
assets or liabilities
ii. Level 2: inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly (i.e., as prices)
or indirectly (i.e., derived from prices)
iii. Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs)
Level 1 Level 2 Level 3
£'m £'m £'m
Forward Contracts
As at 30 September 2022 - 3.2 -
As at 30 September 2021 - (0.3) -
The forward contracts have been fair valued at 30 September 2022 with
reference to forward exchange rates that are quoted in an active market, with
the resulting value discounted back to present value.
b) Financial risk management
The Group's principal financial liabilities, other than derivatives, comprise
revolving credit facility, and trade and other payables. The main purpose of
these financial liabilities is to finance the Group's operations. The Group's
principal financial assets include trade receivables, and cash at bank that
derive directly from its operations.
In the course of its business the Group is exposed to market risk (including
foreign exchange risk and interest rate risk), credit risk, liquidity risk and
technology risk. The Group's overall risk management strategy is to minimise
potential adverse effects on the financial performance and net assets of the
Group. These policies are set and reviewed by senior finance management and
all significant financing transactions are authorised by the Board of
Directors.
c) Market risk
Market risk is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in market prices.
The Group's key financial market risks are in relation to foreign currency
rates. Foreign currency risk results from the substantial cross-border element
of the Group's trading and arises on sales and purchases that are denominated
in a currency other than the functional currency of the business. Group cash
resources are matched with the net funding requirements sourced from three
sources namely internally generated funds, loan facilities and bank funding
arrangements.
The foreign currency risk is managed at Group level by the purchase of foreign
currency contracts for use as a commercial hedge. During the course of the
period there has been no changes to the market risk or manner in which the
Group manages its exposure. The Group is exposed to interest rate risk that
arises principally through the Group's revolving credit facility.
Liquidity risk, credit risk and capital risk is considered below. The
executive team is responsible for implementing the risk management strategy to
ensure that appropriate risk management framework is operating effectively,
embedding a risk mitigation culture throughout the Group. The Board are
provided with a consolidated view of the risk profile of the Group. All major
exposures are identified and mitigating controls identified and implemented.
Regular management reporting and assessment of the effectiveness of controls
provide a balanced assessment of the key risks and the effectiveness of
controls.
The Group does not speculate with derivatives or other financial instruments.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in market interest
rates. The Group's exposure to the risk of changes in market interest rates is
only through the revolving credit facility which is subject to fluctuations in
SONIA.
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of
an exposure will fluctuate because of changes in foreign exchange rates. The
majority of the Group's purchases are sourced from outside the United Kingdom
and as such the Group is exposed to the fluctuation in exchange rates
(currencies are principally sterling, US dollar, euro and Swedish krona). The
Group places forward cover on the net foreign currency exposure of its
purchases. The Group foreign currency requirement is reviewed twice weekly and
forward cover is purchased to cover expected usage.
The carrying amount of the Group's foreign currency denominated monetary
assets and monetary liabilities at the reporting date are as follows:
Euro 2022 2021
€'m €'m
Cash 12.0 33.2
Trade payables (137.0) (87.2)
Trade receivables 3.0 5.2
Forward exchange contracts 129.5 39.6
Balance sheet exposure 7.5 (9.2)
US dollar 2022 2021
$'m $'m
Cash 4.0 2.7
Trade payables (8.1) (4.7)
Trade receivables 0.3 0.2
Forward exchange contracts 12.7 (2.0)
Balance sheet exposure 8.9 (3.8)
Swedish krona 2022 2021
Kr 'm Kr 'm
Cash 25.0 17.6
Trade receivables 1.5 1.0
Forward exchange contracts - -
Balance sheet exposure 26.5 18.6
Norwegian Krone 2022 2021
Kr 'm Kr 'm
Cash 2.4 0.7
Trade payables - (0.1)
Forward exchange contracts - -
Balance sheet exposure 2.4 0.6
Danish krone 2022 2021
Kr 'm Kr 'm
Cash 0.1 0.1
Trade receivables - -
Balance sheet exposure 0.1 0.1
Moroccan dirham 2022 2021
MAD 'm MAD 'm
Cash 0.2 0.6
Forward exchange contracts (0.9) (0.5)
Balance sheet exposure (0.7) 0.1
Foreign currency sensitivity
The following table details the Group sensitivity to a percentage change in
pounds sterling against these currencies with regards to equity. The
sensitivity analysis of the Group's exposure to foreign currency risk at the
reporting date has been determined based on a 10 per cent change taking place
at the beginning of the financial period and held constant throughout the
reporting period:
2022 2021
£'m £'m
Euro
Weakening - 10% (1.7) (0.5)
Strengthening - 10% 1.7 0.5
US dollar
Weakening -10% (0.2) -
Strengthening - 10% 0.2 -
Swedish krona
Weakening -10% 0.2 0.1
Strengthening - 10% (0.2) (0.2)
The Group uses forward exchange contracts to hedge its foreign currency risk
against sterling. The forward contracts have maturities of less than one year
after the balance sheet date. Hedge ineffectiveness can arise from differences
in timing of cash flows of the hedged item and hedging instrument, the
counterparties' credit risk differently impacting the fair value movements of
the hedging instrument and hedged item.
As a matter of policy the Group does not enter into derivative contracts for
speculative purposes. The details of such contracts at the year-end, by
currency, were:
2022 2021
EUR Foreign currency Notional value Carrying amount Foreign currency Notional value Carrying amount
€'m £'m £'m €'m £'m £'m
30 September
Less than 3 months 56.2 48.1 1.3 8.6 7.6 (0.1)
3 to 6 months 11.6 10.0 0.3 3.9 3.4 (0.1)
6 to 12 months 53.1 46.3 1.2 49.4 42.6 (0.1)
12+ months 2.3 2.1 - - - -
Total 123.2 106.5 2.8 61.9 53.6 (0.3)
2022 2021
USD Foreign currency Notional value Carrying amount Foreign currency Notional value Carrying amount
$'m £'m £'m $'m £'m £'m
30 September
Less than 3 months 3.9 3.1 0.4 1.8 1.3 -
3 to 6 months 1.8 1.5 0.1 2.3 1.7 -
6 to 12 months 1.8 1.6 - 1.5 1.1 -
Total 7.5 6.2 0.5 5.6 4.1 -
2022 2021
MAD Foreign currency Notional value Carrying amount Foreign currency Notional value Carrying amount
MAD 'm £'m £'m MAD 'm £'m £'m
30 September
Less than 3 months 0.2 - - - - -
Total 0.2 - - - - -
The impact of the hedging instruments on the statement of financial position
is as follows:
Notional amount Carrying amount Line in the statement of financial position Change in fair value
£'m £'m £'m
As at 30 September 2022
Foreign exchange forward contracts 112.6 3.2 Derivative financial instruments 1.3
As at 30 September 2021
Foreign exchange forward contracts 57.7 (0.3) Derivative financial instruments (0.2)
Credit risk
Credit risk refers to the risk that counterparty will default on its
contractual obligations resulting in financial loss to the Group. Credit risk
arises from cash balances and derivative financial instruments, as well as
credit exposures to customers, including outstanding receivables, financial
guarantees and committed transactions. Credit risk is managed separately for
treasury and operating related credit exposures. Customer credit risk is
managed by the Group's business units which each have policies, procedures and
controls relating to customer credit risk management. Outstanding trade
receivables balances are regularly reviewed to monitor any changes in credit
risk with concentrations of credit risk considered to be limited given that
the Group's customer base is large and unrelated.
Trade receivables and other receivables
The ageing of trade receivables at the balance sheet date was:
Not past due Past due 0-30 days Past due >30 days Total
£'m £'m £'m £'m
As at 30 September 2022 100.1 0.7 - 100.8
As at 30 September 2021 79.4 0.1 0.3 79.8
The ageing of other receivables at the balance sheet date was:
Not past due Past due 0-180 days Past due >180 days Total
£'m £'m £'m £'m
As at 30 September 2022 16.1 - - 16.1
As at 30 September 2021 6.9 - 3.2 10.1
In line with IFRS 9, the Group applies the simplified approach for the
impairment of trade and other receivables and therefore does not track changes
in credit risk, instead a loss allowance is recognised based on lifetime
expected credit losses at each reporting date. The Group uses a provision
matrix to measure expected credit losses based on historical cancellation and
recovery rates and considers forward-looking factors, including the impact of
rising cost of living and inflation rates. Other receivables includes a
receivable in respect of amounts due from airlines as a result of exceptional
cancellations, a provision of £4.4m has been recognised for airline
receivables past due greater than 180 days. The Group has recognised a net
receivable for the expected recoverable amount in note 14.
Financial instruments and cash deposits
As part of credit risk, the Group is subject to counterparty risk in respect
of the cash and cash equivalents held on deposit with banks and foreign
currency financial instruments. The Group generally deposits cash and
undertakes currency transactions with highly rated banks, the Group considers
that its cash and cash equivalents have low credit risk based on the external
credit ratings of the counterparties.
No collateral or credit enhancements are held in respect of any financial
derivatives. The maximum exposure to credit risk at each reporting date is the
fair value of financial assets and trade receivables.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its
financial obligations as they fall due. It is Group policy to maintain a
balance of funds, borrowing, committed bank loans and other facilities
sufficient to meet anticipated short-term and long-term financial
requirements. In applying the policy the Group continuously monitors forecast
and actual cash flows against the maturity profiles of financial assets and
liabilities. It is Group policy to ensure that a specific level of committed
facilities is always available based on forecast working capital requirements.
Cash forecasts identifying the Group's liquidity requirements are produced and
are sensitised for different scenarios including, but not limited to,
decreases in profit margins and weakening of sterling against other functional
currencies.
The following are the contractual maturities of financial liabilities:
Financial liabilities at amortised cost Carrying amount Contractual cash flows Within 1 year 1 to 5 years > 5 years
30 September 2022 £'m £'m £'m £'m £'m
Trade payables 158.3 158.3 158.3 - -
Lease liabilities 3.9 4.2 1.1 2.9 0.2
Other payables 27.4 27.4 27.4 - -
189.6 189.9 186.8 2.9 0.2
30 September 2021
Trade payables 104.3 104.3 104.3 - -
Lease liabilities 2.9 3.4 0.5 2.1 0.8
Other payables 14.8 14.8 14.8 - -
122.0 122.5 119.6 2.1 0.8
Capital management
It is the Group's policy to maintain an appropriate equity capital base so as
to maintain investor, creditor and market confidence and to sustain the future
development of the business.
The capital structure of the Group consists of the net cash (borrowings
disclosed in note 18) and equity of the Group as disclosed in note 20.
The Group is not subject to any externally imposed capital requirements.
23. Share-based payments
The following table illustrates the number of, and movements in, share options
granted by the Group.
LTIP CSOP & RSA Total
No. of share options (thousands) No. of share options (thousands) No. of share options (thousands)
Outstanding at the beginning of the year 3,357 664 4,021
Granted during the year 1,188 1,205 2,393
Lapsed during the year - - -
Exercised during the year (791) (69) (860)
Forfeited during the year (790) (183) (973)
Outstanding at the year end 2,964 1,617 4,581
Exercisable 653 112 765
LTIP
The LTIP scheme started on 26 May 2016 and the Group has awarded nil-cost
options under the scheme each year since then. The vesting of 30% of the award
will be dependent on a relative Total Shareholder Return ('TSR') performance
condition measure over the performance period and the vesting of 70% of the
award will be dependent on the satisfaction of an Earnings per Share ('EPS')
target. For the 2017-2019 schemes the EPS target is measured at the end of the
three-year performance period commencing on the first day of the financial
period in which they are awarded in. For the 2020 and 2021 LTIP schemes the
EPS target is measured across a three year performance period, to the end of
year ending September 2022 / 2023 respectively. For the 2020 schemes, the
Group awarded nil-cost options to certain key management within the business.
The vesting of these awards will be dependent on EBITDA over a three-year
performance period.
During the prior year, 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-market based condition resulted
in a catch-up charge to the income statement of £2.0m that reflects the
scheme progress to date. The performance conditions for the shares to vest was
achieved on 30 September 2020, all of the shares vested in FY21. The Group
also awarded nil-cost options to certain key employees within the business.
The vesting of these awards will be dependent on set departmental targets.
During the current year, the Group awarded nil-cost options to certain key
employees within the business. The vesting of these awards will be dependent
on absolute TSR, relative TSR and Total Transaction Value ('TTV') targets at
the end of a three-year period. On 21 December 2021, the Remuneration
Committee approved the introduction of an underpin/minimum award for the nil
cost awards originally granted 9 July 2019. This removal of a non-market based
condition has resulted in a catch-up charge to the income statement of £1.9m
that reflects the scheme progress to date, all of these shares vested in FY22.
The fair value of equity-settled share-based payments has been estimated as at
date of grant using the Black-Scholes model.
Award date No. of options awarded Share price at grant date Exercise price Expected volatility Option Life Risk free rate Dividend yield Non-vesting conditions Fair value at grant date
(£) (%) (£) (years) (%) (%) (%) (£)
5 February 2021 (TSR dependent) 300,401 3.550 Nil 59% 3.0 0.03% 0.00% 0.0 2.050
5 February 2021 (EPS dependent) 700,935 3.550 Nil 0% 3.0 0.03% 0.00% 0.0 3.540
22 December 2021 (no conditions) 435,500 4.630 Nil 0% 3.0 0.73% 0.74% 0.0 4.520
22 December 2021 (no conditions) 44,000 2.450 Nil 0% 0.0 0.73% 0.74% 0.0 2.395
22 December 2021 (EBITDA dependent) 22,000 2.450 Nil 43% 0.0 0.73% 0.74% 0.0 2.395
25 February 2022 (Relative TSR dependent) 275,591 2.750 Nil 46% 3.0 1.20% 0.00% 0.0 1.710
25 February 2022 (Absolute TSR dependent) 275,591 2.750 Nil 46% 3.0 1.20% 0.00% 0.0 1.470
25 February 2022 (TTV condition dependent) 551,183 2.750 Nil 0% 3.0 1.20% 0.00% 0.0 2.749
27 July 2022 (Relative TSR dependent) 4,883 2.750 Nil 46% 3.0 1.20% 0.00% 0.0 0.717
27 July 2022 (Absolute TSR dependent) 4,883 2.750 Nil 46% 3.0 1.20% 0.00% 0.0 0.613
27 July 2022 (TTV condition dependent) 9,766 2.750 Nil 0% 3.0 1.20% 0.00% 0.0 1.156
Expected volatility is estimated by considering historic average share price
volatility at the grant date.
Restricted Share Award (nil-cost option) and CSOP
The RSA scheme started on 27 October 2017, the Group awarded nil-cost options
to key employees excluding Executive Directors. The awards will vest after
three years, on 27 October 2020, subject to continued employment, but with no
other performance conditions. The prior year awards will vest on 3 December
2022 subject to continued employment, employee personal performance and
company performance.
The number of shares subject to the CSOP Awards has been determined by
reference to the mid-market price of a share on date of award. In order to
optimise the post-tax value of the LTIP for participants, the Company has
granted market-value options as defined under UK tax legislation ('CSOP
Options') to the participants.
Type No. of shares Share price at grant date Exercise price Expected volatility Option Life Risk free rate Dividend yield Non-vesting conditions Fair value at grant date
(£) (%) (£) (years) (%) (%) (%) (£)
2021 RSA 20,000 3.680 Nil N/A 1.0 0.03% 0.00% Nil 3.680
2021 RSA 314,695 3.680 Nil N/A 3.0 0.03% 0.00% Nil 3.680
2022 RSA 793,135 2.450 Nil N/A 2.0 1.20% 0.00% Nil 2.450
2022 RSA 290,398 2.450 Nil N/A 1.0 1.20% 0.00% Nil 2.450
2022 RSA 33,164 2.750 Nil N/A 2.0 1.20% 0.00% Nil 2.750
2022 RSA 87,887 1.156 Nil N/A 1.5 1.20% 0.00% Nil 1.156
The following has been recognised in the income statement during the year:
2022 2021
£'m £'m
LTIP 3.2 2.1
RSA 1.5 0.7
Total share scheme charge 4.7 2.8
24. Commitments and contingencies
a) Capital commitments
No new capital commitments.
b) Contingencies
In September 2010, proceedings were initiated against On the Beach Limited by
Ryanair alleging infringement of, inter alia, its intellectual property
rights. The case lay dormant for over three years with no material
developments in that period, and as such the Group sought to strike out the
claim on the basis of inordinate and inexcusable delay. Therefore, whilst the
legal process is ongoing, the amount of the claim by Ryanair is unquantified
as at the date of this document. The Group expects that final resolution of
the dispute might take some time.
25 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 2022.
• Major airline 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). Although the Group can
usually recover flight costs it is owed via chargeback claims or by taking
legal action, this has an impact on cash flow.
• 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 online travel agents ('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 is ongoing but remains at an early stage. 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. On the Beach has commenced legal action against Ryanair to prevent
it from blocking the Group's bookings and degrading the experience for its
customers. The proceedings are ongoing and there are no material updates to
report in relation to that litigation. 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.
• 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,(e.g. during a national lockdown).
This often meant the Group had to refund customers in advance of getting the
monies from the airlines. In the second half of year, we saw ongoing
disruption resulting in a large number of cancelled flights. Whilst there has
been a delay in recovering refunds for some of those flights, overall, most
airlines have got quicker at making refunds.
• Data & security: A major security breach, whether stemming from
human error, deliberate action or a technology failure, could lead to
unauthorised access or to misuse of our technology, customer data, employee
data, commercially sensitive information and disruption to core business
operations. This could result in significant financial loss, significant fines
and reputational damage.
• Innovation, transformation and scalability: To meet our strategic
operations in the fast-moving marketplace that the Group operates in, our IT
platforms must be agile and scalable. If we cannot keep up with growing
demand, and fail to adapt our technologies to changing customer attitudes,
this will impact growth and the service we can offer to our customers.
• Disruption to operations: The Group faces the risk of disruption
to its operations from a wide range of unpredictable domestic and
international events, ranging from smaller localised disruptions impacting
systems and operations at office locations, incidents at holiday destinations,
or major incidents affecting the whole Group such as a pandemic or natural
disaster, which could impact our ability to trade and/or manage our business.
As a package organiser under the Package Travel Regulations, we have a number
of responsibilities including finding replacements/providing refunds where
flights are cancelled or there is a major change to a customer's holiday and
providing accommodation when customers are stranded.
• People: Our employees are a key asset and it is critical that we
are attracting and retaining the right talent. The North West, where the
Group's HQ is located, is an area where there is a particularly high degree of
competition for talent. If the Group cannot attract and retain staff, or if a
member of key personnel were unable to carry out their role, this could have a
material effect on the Group's growth.
• Customer 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 and consumer spending abroad more expensive. High-profile
corporate failures reduce consumer confidence to make 'big ticket' purchases.
Climate change could impact demand e.g. if customers choose to travel less
frequently.
• Brand and consumer proposition: The Group relies on the
strength of its brand and reputation to set it apart from competitors and
attract customers to its website and secure bookings. Failure to maintain and
protect our brand, or events or circumstances which give rise to adverse
publicity, could damage our brand/reputation, leading to a loss of goodwill
and reduced customer demand
• Non-compliance with laws and regulations: The Group's business is
highly regulated and is subject to a complex regime of laws, rules and
regulations concerning travel and aviation, online commercial 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.
• Customer health & safety: 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 suppliers. In the event of a catastrophic injury/fatality, or
multiple injuries, the cost could run into millions of pounds.
• Financial risk and liquidity: The risk that the Group has
insufficient liquidity, does not have appropriate access to funds, there are
negative movements in the market, or we cannot meet our obligations as they
fall due.
• Acquisition risk: Failing to achieve our strategic growth target
for acquisitions due to insufficient opportunities being identified, poor due
diligence or poor integration, or insufficient cash resources for acquisition,
could result in erosion of shareholder value.
Statement of Director's Responsibilities
The responsibility statement below has been prepared in connection with the
Group's Annual Report & Accounts for the year ended 30 September 2022.
Certain parts thereof are not included within this announcement. The Directors
confirm that to the best of their knowledge and belief:
• That the consolidated financial statements, prepared in accordance
with international accounting standards in conformity with the requirements of
the Companies Act 2006, give a true and fair view of the assets, liabilities,
financial position and profit of the Parent Company and undertakings included
in the consolidation taken as a whole;
• That the Annual Report, including the strategic report, includes a
fair review of the development and performance of the business and the
position of the Company and undertakings included in the consolidation taken
as a whole, together with a description of the principal risks and
uncertainties that they face; and
• That they consider the Annual Report, taken as a whole, is fair,
balanced and understandable and provides the information necessary for
shareholders to assess the company's position, performance, business model and
strategy.
Shaun Morton
Chief Financial Officer
7 December 2022
Glossary of Alternative Performance Measures
APM Definition Reconciliation to closest GAAP measure
Adjusted basic earnings/(loss) per share ('EPS') Adjusted basic EPS is calculated on the weighted average number of ordinary
shares in issue, using the adjusted profit after tax.
Adjusted EPS 2022 2021
Adjusted earnings after tax is based on profit/(loss) after tax adjusted for Profit/(loss) for the year 1.6 (30.2)
amortisation of acquired intangibles, share-based payments and exceptional Share-based payments (net of tax) 3.5 2.2
items. Impact of exceptional items (net of tax) 1.3 8.1
Amortisation of acquired intangibles (net of tax) 4.1 4.5
Amortisation of acquired intangibles are linked to the historical acquisitions Adjusted profit/(loss) after tax (£'m) 10.5 (15.4)
of businesses. Basic weighted average number of Ordinary Shares (m) 165.9 159.3
Adjusted basic EPS (p) 6.3 (9.7)
Share-based payments represents the non-cash costs which fluctuates year on
year.
Exceptional items consists of exceptional cancellations as a result of
Covid-19 and supplier disruption in 2022 offset by fair value gains from FX
forward contracts. Exceptional items for 2021 consists of exceptional
cancellations as a result of Covid-19. These costs / income are excluded by
virtue of their size and in order to reflect management's view of the
performance of the Group and allow comparability to prior years.
Adjusted profit/(loss) Adjusted profit/(loss) before tax is based on profit/(loss) before tax
before tax adjusted for amortisation of acquired intangibles, share-based payments and
exceptional items. Adjusted profit/(loss) before tax (£'m) 2022 2021
Profit/(loss) before tax 2.1 (36.7)
Amortisation of acquired intangibles are linked to the historical acquisitions Amortisation of acquired intangibles 5.5 5.5
of businesses. Share-based payments 4.7 2.8
Exceptional items 1.8 10.0
Share-based payments represents the non-cash costs which fluctuates year on Adjusted profit/(loss) before tax 14.1 (18.5)
year.
Exceptional items consists of exceptional cancellations as a result of
Covid-19 and supplier disruption in 2022 offset by fair value gains from FX
forward contracts. Exceptional items for 2021 consists of exceptional
cancellations as a result of Covid-19. These costs / income are excluded by
virtue of their size and in order to reflect management's view of the
performance of the Group and allow comparability to prior years.
B2B TTV B2B Total Transaction Value ('TTV') is a non-GAAP measure representing the
cumulative total transaction value of sales booked each month before
cancellations and adjustments. B2B TTV (£'m) 2022 2021
CCH revenue 50.5 6.5
CPH revenue 5.8 1.7
B2B revenue 56.3 8.2
Costs** and amendments 35.5 21.5
Booked in previous year and travelled in year* (13.7) (5.4)
Booked in year but not yet travelled* 8.6 9.1
B2B TTV 86.7 33.4
* Bookings where revenue has been recognised on a travelled basis as a
principal.
** Costs relate to the gross costs for bookings made on an agent basis.
CCH adjusted EBITDA CCH Adjusted EBITDA is based on CCH operating profit/(loss) before
depreciation, amortisation and the impact of exceptional items.
CCH Adjusted EBITDA (£'m) 2022 2021
Amortisation of acquired intangibles are linked to the historical acquisitions CCH operating loss (1.8) (4.8)
of businesses. Exceptional items 0.3 0.4
Depreciation and amortisation 0.3 0.2
Exceptional items consists of exceptional cancellations as a result of Amortisation of acquired intangibles 1.1 1.1
Covid-19 and supplier disruption in 2022 and exceptional cancellations as a CCH Adjusted EBITDA (0.1) (3.1)
result of Covid-19 in 2021. These costs / income are excluded by virtue of
their size and in order to reflect management's view of the performance of the
Segment and allow comparability to prior years.
CCH adjusted gross profit CCH Adjusted gross profit is based on CCH gross profit before the impact of
exceptional items. Exceptional items consists of exceptional cancellations as
a result of Covid-19 and supplier disruption in 2022. These costs / income are CCH adjusted gross profit (£'m) 2022 2021
excluded by virtue of their size and in order to reflect management's view of CCH gross profit 5.8 0.6
the performance of the Segment and allow comparability to prior years. Exceptional items 0.3 -
CCH adjusted gross profit 6.1 0.6
Marketing costs (1.0) (0.4)
CCH adjusted gross profit after marketing costs 5.1 0.2
CCH EBITDA CCH EBITDA is based on CCH operating profit before depreciation and
amortisation.
CCH EBITDA (£'m) 2022 2021
CCH operating loss (1.8) (4.8)
Depreciation and amortisation 1.4 1.3
CCH EBITDA (0.4) (3.5)
CCH TTV CCH TTV is a non-GAAP measure representing the cumulative total transaction
value of sales booked each month before cancellations and adjustments.
CCH TTV (£'m) 2022 2021
CCH revenue 50.5 6.5
Amendments 10.2 13.0
*As a principal revenue is recognised on a travelled basis Booked in previous year and travelled in year (13.7) (5.4)
Bookings made but not travelled* 8.6 9.1
CCH TTV 55.6 23.2
CPH adjusted EBITDA CPH Adjusted EBITDA is based on CPH operating loss before depreciation,
amortisation and the impact of exceptional items. Exceptional items consists
of exceptional cancellations as result of Covid-19 and supplier disruption in CPH adjusted EBITDA (£'m) 2022 2021
2022 and exceptional cancellations as a result of Covid-19 in 2021. These CPH operating loss (0.6) (1.6)
costs / income are excluded by virtue of their size and in order to reflect Depreciation and amortisation 0.2 0.2
management's view of the performance of the Segment and allow comparability to Exceptional items 0.4 (0.3)
prior years. CPH adjusted EBITDA (0.1) (1.7)
CPH EBITDA CPH EBITDA is based on CPH operating profit before depreciation and
amortisation.
CPH EBITDA (£'m) 2022 2021
CPH operating loss (0.7) (1.6)
Depreciation and amortisation 0.2 0.2
CPH EBITDA (0.5) (1.4)
CPH adjusted gross profit CPH Adjusted gross profit is based on CPH gross profit before the impact of
exceptional items. Exceptional items consists of exceptional cancellations as
result of Covid-19 and supplier disruption in 2022. These costs / income are CPH adjusted gross profit (£'m) 2022 2021
excluded by virtue of their size and in order to reflect management's view of CPH gross profit 2.0 0.8
the performance of the Segment and allow comparability to prior years. Exceptional items 0.4 (0.3)
CPH adjusted gross profit 2.4 0.5
Marketing costs (1.0) (0.4)
CPH adjusted gross profit after marketing costs 1.4 0.1
CPH TTV CPH TTV is a non-GAAP measure representing the cumulative total transaction
value of sales booked each month before cancellations and adjustments.
CPH TTV (£'m) 2022 2021
CPH revenue 5.8 1.7
Costs* and amendments 25.3 8.5
*Costs relate to the gross costs for bookings made on an agent basis. CPH TTV 31.1 10.2
Exceptional items Exceptional items are certain costs / income that derive from events or
transactions that fall outside of the normal activities of the Group. For 2022
this consists of exceptional cancellations as a result of Covid-19 and Exceptional items (£'m) 2022 2021
supplier disruption in 2022 offset by fair value gains from FX forward Impact of Covid-19 and supplier disruption 2.6 10.0
contracts. For 2021, this consists of exceptional cancellations as a result of Fair value FX gains (0.8) -
Covid-19. These costs / income are excluded by virtue of their size and in Exceptional items 1.8 10.0
order to reflect management's view of the performance of the Group and allow
comparability to prior years.
Group TTV Group TTV is a non-GAAP measure representing the cumulative total transaction
value of sales booked each month before cancellations and adjustments.
Group TTV (£'m) 2022 2021 2019
Group revenue 144.1 21.2 140.3
Costs** and amendments 717.1 208.4 592.3
* Bookings where revenue has been recognised on a travelled basis as a Booked in previous year and travelled in year* (13.7) (5.4) (5.2)
principal. Bookings made but not yet travelled 8.6 14.1 14.0
Group TTV 856.1 238.3 741.4
** Costs relate to the gross costs for bookings made on an agent basis.
Group adjusted revenue Group adjusted revenue is revenue adjusted for the impact of lost revenue as a
result of Covid-19 and supplier disruption in 2022 offset by fair value FX
gains. For 2021 revenue is adjusted for the impact of lost revenue as a result Group adjusted revenue (£'m) 2022 2021 2019
of Covid-19. These costs / income are excluded by virtue of their size and in Group revenue 144.1 21.2 140.4
order to reflect management's view of the performance of the Group and allow Exceptional items 0.2 9.3 7.1
comparability to prior years. Group adjusted revenue 144.3 30.5 147.5
Group adjusted revenue as an agent Group adjusted revenue as an agent is revenue adjusted for the impact of lost
revenue as a result of Covid-19 and supplier disruption in 2022 offset by fair
Group adjusted revenue as an agent (£'m) 2022 2021 2019
value FX gains. For 2021 revenue is adjusted for the impact of lost revenue as Group revenue 144.1 21.2 140.4
a result of Covid-19. For 2019 revenue is adjusted for the impact of the Revenue as a principal (50.5) (6.5) (55.0)
failure of Thomas Cook Group. These costs / income are excluded by virtue of Revenue as an agent 93.6 14.7 85.4
their size and in order to reflect management's view of the performance of the Exceptional items 0.2 9.3 7.1
Group and allow comparability to prior years. Group adjusted revenue 93.8 24.0 92.5
Group adjusted gross profit Group adjusted gross profit is gross profit adjusted for the impact of
Covid-19 and supplier disruption in 2022 offset by fair value FX gains. For
Group adjusted gross profit (£'m) 2022 2021 2019
2021 gross profit is adjusted for the impact of Covid-19. For 2019 gross Gross profit as an agent 89.8 13.8 84.9
profit is adjusted for the impact of the failure of Thomas Cook Group. These Gross profit as a principal 5.8 0.6 7.1
costs / income are excluded by virtue of their size and in order to reflect Group gross profit 95.6 14.4 92.0
management's view of the performance of the Group and allow comparability to Exceptional items 0.5 8.8 7.1
prior years. Group adjusted gross profit 96.1 23.2 99.1
Long haul TTV Long haul TTV is a non-GAAP measure representing the cumulative total
transaction value of sales booked each month before cancellations and
adjustments. Long haul TTV (£'m) 2022 2021
Group revenue 144.1 21.2
Costs** and amendments 717.1 213.3
Booked in previous year and travelled in year* (13.7) (5.4)
* Bookings where revenue has been recognised on a travelled basis as a Booked made but not yet travelled* 8.6 9.1
principal. Short haul TTV (802.6) (220.1)
Long haul TTV 53.5 18.2
** Costs relate to the gross costs for bookings made on an agent basis.
OTB adjusted EBITDA OTB Adjusted EBITDA is based on OTB operating loss before depreciation,
amortisation, impact of exceptional items and the non-cash cost of the
share-based payment schemes. OTB adjusted operating profit (£'m) 2022 2021
OTB operating profit/(loss) 5.2 (29.0)
Exceptional items consists of exceptional cancellations as a result of Exceptional items 1.1 9.8
Covid-19 and supplier disruption in 2022 and exceptional cancellations as a Share-based payments 4.7 2.8
result of Covid-19 in 2021. These costs / income are excluded by virtue of Depreciation and amortisation 6.7 5.9
their size and in order to reflect management's view of the performance of the Amortisation of acquired intangibles 4.4 4.4
Segment and allow comparability to prior years by virtue of their size and in OTB adjusted EBITDA 22.1 (6.1)
order to reflect management's view of the performance of the Segment.
OTB adjusted revenue OTB adjusted revenue is revenue adjusted for the impact of lost revenue as a OTB adjusted revenue (£'m) 2022 2021
result of Covid-19 and supplier disruption in 2022 and the result of Covid-19 OTB revenue 87.1 13.0
in 2021. These costs / income are excluded by virtue of their size and in Exceptional cancellations 0.6 9.1
order to reflect management's view of the performance of the Segment and allow Fair value FX gains (0.8) -
comparability to prior years by virtue of their size and in order to reflect OTB adjusted revenue 86.6 22.1
management's view of the performance of the Segment.
OTB adjusted operating profit OTB adjusted operating profit is based on OTB operating profit/(loss) before
the impact of exceptional items, amortisation of acquired intangibles and the
non-cash cost of the share-based payment schemes. OTB adjusted operating profit (£'m) 2022 2021
OTB operating profit/(loss) 4.9 (29.0)
Amortisation of acquired intangibles are linked to the historical acquisitions Exceptional items 1.1 9.8
of businesses. Share-based payments 4.7 2.8
Amortisation of acquired intangibles 4.4 4.4
Share-based payments represents the non-cash costs which fluctuates year on OTB adjusted operating profit/(loss) 15.1 (12.0)
year.
Exceptional items consists of exceptional cancellations as a result of
Covid-19 and supplier disruption in 2022 and exceptional cancellations as a
result of Covid-19 in 2021. These costs / income are excluded by virtue of
their size and in order to reflect management's view of the performance of the
Segment and allow comparability to prior years by virtue of their size and in
order to reflect management's view of the performance of the Segment.
OTB online marketing as % revenue OTB adjusted revenue after marketing cost is revenue after 'OTB' online and
offline marketing costs.
OTB revenue after marketing cost (£'m) 2022 2021
OTB adjusted revenue 87.1 22.1
OTB online marketing costs (27.0) (5.5)
OTB adjusted revenue after online marketing 60.1 16.6
OTB online marketing as % revenue 31% 25%
OTB EBITDA OTB EBITDA is based on OTB operating profit before depreciation and
amortisation.
OTB EBITDA (£'m) 2022 2021
OTB operating profit/(loss) 5.2 (29.0)
Depreciation and amortisation 11.1 10.3
OTB EBITDA 16.3 (18.7)
OTB EBITDA as a percentage of adjusted revenue OTB EBITDA as a percentage of adjusted revenue is based on the adjusted OTB
EBITDA divided by the revenue generated in the OTB business before the impact
of exceptional cancellations. Exceptional items consists of exceptional OTB EBITDA as a percentage of adjusted revenue 2022 2021
cancellations as result of Covid-19 and supplier disruption in 2022 and Revenue 87.1 13.0
exceptional cancellations as a result of Covid-19 in 2021. These costs / Exceptional cancellations 0.6 9.1
income are excluded by virtue of their size and in order to reflect Fair value FX gains (0.8)
management's view of the performance of the Segment and allow comparability to Adjusted revenue 86.9 22.1
prior years by virtue of their size and in order to reflect management's view Adjusted OTB EBITDA 22.1 (6.1)
of the performance of the Segment. OTB EBITDA as a percentage of adjusted revenue 25% (28%)
OTB TTV OTB TTV is a non-GAAP measure representing the cumulative total transaction
value of sales booked each month before cancellations and adjustments.
OTB TTV (£'m) 2022 2021
OTB revenue 86.1 13.0
Costs* and amendments 675.6 191.1
OTB TTV 762.7 204.2
*Costs relate to the gross costs for bookings made on an agent basis.
Overheads % revenue Overheads as a percentage of revenue is based on the OTB adjusted revenue
divided by the overheads for OTB. OTB overheads is the administrative expenses
excluding the depreciation and amortisation. Overheads % revenue (£'m) 2022 2021
OTB adjusted revenue 86.9 22.1
Overheads (25.9) (16.5)
Overheads % revenue 30% 75%
Overheads % TTV Overheads as a percentage of TTV is based on the OTB TTV divided by the
overheads for OTB. OTB overheads is the administrative expenses excluding the
depreciation and amortisation. Overheads % revenue (£'m) 2022 2021
OTB TTV 762.7 204.2
Overheads (25.9) (16.5)
Overheads % TTV 3.4% 8.1%
Adjusted profit/(loss)
before tax
Adjusted profit/(loss) before tax is based on profit/(loss) before tax
adjusted for amortisation of acquired intangibles, share-based payments and
exceptional items.
Amortisation of acquired intangibles are linked to the historical acquisitions
of businesses.
Share-based payments represents the non-cash costs which fluctuates year on
year.
Exceptional items consists of exceptional cancellations as a result of
Covid-19 and supplier disruption in 2022 offset by fair value gains from FX
forward contracts. Exceptional items for 2021 consists of exceptional
cancellations as a result of Covid-19. These costs / income are excluded by
virtue of their size and in order to reflect management's view of the
performance of the Group and allow comparability to prior years.
Adjusted profit/(loss) before tax (£'m) 2022 2021
Profit/(loss) before tax 2.1 (36.7)
Amortisation of acquired intangibles 5.5 5.5
Share-based payments 4.7 2.8
Exceptional items 1.8 10.0
Adjusted profit/(loss) before tax 14.1 (18.5)
B2B TTV
B2B Total Transaction Value ('TTV') is a non-GAAP measure representing the
cumulative total transaction value of sales booked each month before
cancellations and adjustments.
* Bookings where revenue has been recognised on a travelled basis as a
principal.
** Costs relate to the gross costs for bookings made on an agent basis.
B2B TTV (£'m) 2022 2021
CCH revenue 50.5 6.5
CPH revenue 5.8 1.7
B2B revenue 56.3 8.2
Costs** and amendments 35.5 21.5
Booked in previous year and travelled in year* (13.7) (5.4)
Booked in year but not yet travelled* 8.6 9.1
B2B TTV 86.7 33.4
CCH adjusted EBITDA
CCH Adjusted EBITDA is based on CCH operating profit/(loss) before
depreciation, amortisation and the impact of exceptional items.
Amortisation of acquired intangibles are linked to the historical acquisitions
of businesses.
Exceptional items consists of exceptional cancellations as a result of
Covid-19 and supplier disruption in 2022 and exceptional cancellations as a
result of Covid-19 in 2021. These costs / income are excluded by virtue of
their size and in order to reflect management's view of the performance of the
Segment and allow comparability to prior years.
CCH Adjusted EBITDA (£'m) 2022 2021
CCH operating loss (1.8) (4.8)
Exceptional items 0.3 0.4
Depreciation and amortisation 0.3 0.2
Amortisation of acquired intangibles 1.1 1.1
CCH Adjusted EBITDA (0.1) (3.1)
CCH adjusted gross profit
CCH Adjusted gross profit is based on CCH gross profit before the impact of
exceptional items. Exceptional items consists of exceptional cancellations as
a result of Covid-19 and supplier disruption in 2022. These costs / income are
excluded by virtue of their size and in order to reflect management's view of
the performance of the Segment and allow comparability to prior years.
CCH adjusted gross profit (£'m) 2022 2021
CCH gross profit 5.8 0.6
Exceptional items 0.3 -
CCH adjusted gross profit 6.1 0.6
Marketing costs (1.0) (0.4)
CCH adjusted gross profit after marketing costs 5.1 0.2
CCH EBITDA
CCH EBITDA is based on CCH operating profit before depreciation and
amortisation.
CCH EBITDA (£'m) 2022 2021
CCH operating loss (1.8) (4.8)
Depreciation and amortisation 1.4 1.3
CCH EBITDA (0.4) (3.5)
CCH TTV
CCH TTV is a non-GAAP measure representing the cumulative total transaction
value of sales booked each month before cancellations and adjustments.
*As a principal revenue is recognised on a travelled basis
CCH TTV (£'m) 2022 2021
CCH revenue 50.5 6.5
Amendments 10.2 13.0
Booked in previous year and travelled in year (13.7) (5.4)
Bookings made but not travelled* 8.6 9.1
CCH TTV 55.6 23.2
CPH adjusted EBITDA
CPH Adjusted EBITDA is based on CPH operating loss before depreciation,
amortisation and the impact of exceptional items. Exceptional items consists
of exceptional cancellations as result of Covid-19 and supplier disruption in
2022 and exceptional cancellations as a result of Covid-19 in 2021. These
costs / income are excluded by virtue of their size and in order to reflect
management's view of the performance of the Segment and allow comparability to
prior years.
CPH adjusted EBITDA (£'m) 2022 2021
CPH operating loss (0.6) (1.6)
Depreciation and amortisation 0.2 0.2
Exceptional items 0.4 (0.3)
CPH adjusted EBITDA (0.1) (1.7)
CPH EBITDA
CPH EBITDA is based on CPH operating profit before depreciation and
amortisation.
CPH EBITDA (£'m) 2022 2021
CPH operating loss (0.7) (1.6)
Depreciation and amortisation 0.2 0.2
CPH EBITDA (0.5) (1.4)
CPH adjusted gross profit
CPH Adjusted gross profit is based on CPH gross profit before the impact of
exceptional items. Exceptional items consists of exceptional cancellations as
result of Covid-19 and supplier disruption in 2022. These costs / income are
excluded by virtue of their size and in order to reflect management's view of
the performance of the Segment and allow comparability to prior years.
CPH adjusted gross profit (£'m) 2022 2021
CPH gross profit 2.0 0.8
Exceptional items 0.4 (0.3)
CPH adjusted gross profit 2.4 0.5
Marketing costs (1.0) (0.4)
CPH adjusted gross profit after marketing costs 1.4 0.1
CPH TTV
CPH TTV is a non-GAAP measure representing the cumulative total transaction
value of sales booked each month before cancellations and adjustments.
*Costs relate to the gross costs for bookings made on an agent basis.
CPH TTV (£'m) 2022 2021
CPH revenue 5.8 1.7
Costs* and amendments 25.3 8.5
CPH TTV 31.1 10.2
Exceptional items
Exceptional items are certain costs / income that derive from events or
transactions that fall outside of the normal activities of the Group. For 2022
this consists of exceptional cancellations as a result of Covid-19 and
supplier disruption in 2022 offset by fair value gains from FX forward
contracts. For 2021, this consists of exceptional cancellations as a result of
Covid-19. These costs / income are excluded by virtue of their size and in
order to reflect management's view of the performance of the Group and allow
comparability to prior years.
Exceptional items (£'m) 2022 2021
Impact of Covid-19 and supplier disruption 2.6 10.0
Fair value FX gains (0.8) -
Exceptional items 1.8 10.0
Group TTV
Group TTV is a non-GAAP measure representing the cumulative total transaction
value of sales booked each month before cancellations and adjustments.
* Bookings where revenue has been recognised on a travelled basis as a
principal.
** Costs relate to the gross costs for bookings made on an agent basis.
Group TTV (£'m) 2022 2021 2019
Group revenue 144.1 21.2 140.3
Costs** and amendments 717.1 208.4 592.3
Booked in previous year and travelled in year* (13.7) (5.4) (5.2)
Bookings made but not yet travelled 8.6 14.1 14.0
Group TTV 856.1 238.3 741.4
Group adjusted revenue
Group adjusted revenue is revenue adjusted for the impact of lost revenue as a
result of Covid-19 and supplier disruption in 2022 offset by fair value FX
gains. For 2021 revenue is adjusted for the impact of lost revenue as a result
of Covid-19. These costs / income are excluded by virtue of their size and in
order to reflect management's view of the performance of the Group and allow
comparability to prior years.
Group adjusted revenue (£'m) 2022 2021 2019
Group revenue 144.1 21.2 140.4
Exceptional items 0.2 9.3 7.1
Group adjusted revenue 144.3 30.5 147.5
Group adjusted revenue as an agent
Group adjusted revenue as an agent is revenue adjusted for the impact of lost
revenue as a result of Covid-19 and supplier disruption in 2022 offset by fair
value FX gains. For 2021 revenue is adjusted for the impact of lost revenue as
a result of Covid-19. For 2019 revenue is adjusted for the impact of the
failure of Thomas Cook Group. These costs / income are excluded by virtue of
their size and in order to reflect management's view of the performance of the
Group and allow comparability to prior years.
Group adjusted revenue as an agent (£'m) 2022 2021 2019
Group revenue 144.1 21.2 140.4
Revenue as a principal (50.5) (6.5) (55.0)
Revenue as an agent 93.6 14.7 85.4
Exceptional items 0.2 9.3 7.1
Group adjusted revenue 93.8 24.0 92.5
Group adjusted gross profit
Group adjusted gross profit is gross profit adjusted for the impact of
Covid-19 and supplier disruption in 2022 offset by fair value FX gains. For
2021 gross profit is adjusted for the impact of Covid-19. For 2019 gross
profit is adjusted for the impact of the failure of Thomas Cook Group. These
costs / income are excluded by virtue of their size and in order to reflect
management's view of the performance of the Group and allow comparability to
prior years.
Group adjusted gross profit (£'m) 2022 2021 2019
Gross profit as an agent 89.8 13.8 84.9
Gross profit as a principal 5.8 0.6 7.1
Group gross profit 95.6 14.4 92.0
Exceptional items 0.5 8.8 7.1
Group adjusted gross profit 96.1 23.2 99.1
Long haul TTV
Long haul TTV is a non-GAAP measure representing the cumulative total
transaction value of sales booked each month before cancellations and
adjustments.
* Bookings where revenue has been recognised on a travelled basis as a
principal.
** Costs relate to the gross costs for bookings made on an agent basis.
Long haul TTV (£'m) 2022 2021
Group revenue 144.1 21.2
Costs** and amendments 717.1 213.3
Booked in previous year and travelled in year* (13.7) (5.4)
Booked made but not yet travelled* 8.6 9.1
Short haul TTV (802.6) (220.1)
Long haul TTV 53.5 18.2
OTB adjusted EBITDA
OTB Adjusted EBITDA is based on OTB operating loss before depreciation,
amortisation, impact of exceptional items and the non-cash cost of the
share-based payment schemes.
Exceptional items consists of exceptional cancellations as a result of
Covid-19 and supplier disruption in 2022 and exceptional cancellations as a
result of Covid-19 in 2021. These costs / income are excluded by virtue of
their size and in order to reflect management's view of the performance of the
Segment and allow comparability to prior years by virtue of their size and in
order to reflect management's view of the performance of the Segment.
OTB adjusted operating profit (£'m) 2022 2021
OTB operating profit/(loss) 5.2 (29.0)
Exceptional items 1.1 9.8
Share-based payments 4.7 2.8
Depreciation and amortisation 6.7 5.9
Amortisation of acquired intangibles 4.4 4.4
OTB adjusted EBITDA 22.1 (6.1)
OTB adjusted revenue
OTB adjusted revenue is revenue adjusted for the impact of lost revenue as a
result of Covid-19 and supplier disruption in 2022 and the result of Covid-19
in 2021. These costs / income are excluded by virtue of their size and in
order to reflect management's view of the performance of the Segment and allow
comparability to prior years by virtue of their size and in order to reflect
management's view of the performance of the Segment.
OTB adjusted revenue (£'m) 2022 2021
OTB revenue 87.1 13.0
Exceptional cancellations 0.6 9.1
Fair value FX gains (0.8) -
OTB adjusted revenue 86.6 22.1
OTB adjusted operating profit
OTB adjusted operating profit is based on OTB operating profit/(loss) before
the impact of exceptional items, amortisation of acquired intangibles and the
non-cash cost of the share-based payment schemes.
Amortisation of acquired intangibles are linked to the historical acquisitions
of businesses.
Share-based payments represents the non-cash costs which fluctuates year on
year.
Exceptional items consists of exceptional cancellations as a result of
Covid-19 and supplier disruption in 2022 and exceptional cancellations as a
result of Covid-19 in 2021. These costs / income are excluded by virtue of
their size and in order to reflect management's view of the performance of the
Segment and allow comparability to prior years by virtue of their size and in
order to reflect management's view of the performance of the Segment.
OTB adjusted operating profit (£'m) 2022 2021
OTB operating profit/(loss) 4.9 (29.0)
Exceptional items 1.1 9.8
Share-based payments 4.7 2.8
Amortisation of acquired intangibles 4.4 4.4
OTB adjusted operating profit/(loss) 15.1 (12.0)
OTB online marketing as % revenue
OTB adjusted revenue after marketing cost is revenue after 'OTB' online and
offline marketing costs.
OTB revenue after marketing cost (£'m) 2022 2021
OTB adjusted revenue 87.1 22.1
OTB online marketing costs (27.0) (5.5)
OTB adjusted revenue after online marketing 60.1 16.6
OTB online marketing as % revenue 31% 25%
OTB EBITDA
OTB EBITDA is based on OTB operating profit before depreciation and
amortisation.
OTB EBITDA (£'m) 2022 2021
OTB operating profit/(loss) 5.2 (29.0)
Depreciation and amortisation 11.1 10.3
OTB EBITDA 16.3 (18.7)
OTB EBITDA as a percentage of adjusted revenue
OTB EBITDA as a percentage of adjusted revenue is based on the adjusted OTB
EBITDA divided by the revenue generated in the OTB business before the impact
of exceptional cancellations. Exceptional items consists of exceptional
cancellations as result of Covid-19 and supplier disruption in 2022 and
exceptional cancellations as a result of Covid-19 in 2021. These costs /
income are excluded by virtue of their size and in order to reflect
management's view of the performance of the Segment and allow comparability to
prior years by virtue of their size and in order to reflect management's view
of the performance of the Segment.
OTB EBITDA as a percentage of adjusted revenue 2022 2021
Revenue 87.1 13.0
Exceptional cancellations 0.6 9.1
Fair value FX gains (0.8)
Adjusted revenue 86.9 22.1
Adjusted OTB EBITDA 22.1 (6.1)
OTB EBITDA as a percentage of adjusted revenue 25% (28%)
OTB TTV
OTB TTV is a non-GAAP measure representing the cumulative total transaction
value of sales booked each month before cancellations and adjustments.
*Costs relate to the gross costs for bookings made on an agent basis.
OTB TTV (£'m) 2022 2021
OTB revenue 86.1 13.0
Costs* and amendments 675.6 191.1
OTB TTV 762.7 204.2
Overheads % revenue
Overheads as a percentage of revenue is based on the OTB adjusted revenue
divided by the overheads for OTB. OTB overheads is the administrative expenses
excluding the depreciation and amortisation.
Overheads % revenue (£'m) 2022 2021
OTB adjusted revenue 86.9 22.1
Overheads (25.9) (16.5)
Overheads % revenue 30% 75%
Overheads % TTV
Overheads as a percentage of TTV is based on the OTB TTV divided by the
overheads for OTB. OTB overheads is the administrative expenses excluding the
depreciation and amortisation.
Overheads % revenue (£'m) 2022 2021
OTB TTV 762.7 204.2
Overheads (25.9) (16.5)
Overheads % TTV 3.4% 8.1%
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