REG - On the Beach Group - Preliminary Results
05/12/2023 07:15
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RNS Number : 6988V On the Beach Group PLC 05 December 2023
5 December 2023
On the Beach Group plc
("On the Beach", "OTB", the "Company" or the "Group")
PRELIMINARY RESULTS FOR YEAR ENDED 30 SEPTEMBER 2023 ('FY23')
Financial Overview
2023 2022
Adjusted¹ GAAP Adjusted¹ GAAP(7)
Group TTV(2) 1,070.4 - 849.4 -
Group revenue 170.2 143.4
Revenue as Agent(3) 112.1 92.9
Revenue as Principal(4) 58.1 50.5
Group gross profit 114.0 94.9
Gross profit as Agent 106.4 89.1
Gross profit as Principal 7.6 5.8
Group profit before tax(5) 23.6 12.9 14.2 2.2
Basic earnings per share(6) 11.6p 6.4p 6.4p 1.0p
1 Adjusted measures are non-GAAP measures, a full explanation of the
adjustments is included in the glossary. The prior period is restated for the
effects of the discontinued operations.
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 2022 and 30 September 2023.
Adjusted revenue is revenue before exceptional items of £nil (2022: £1.0m)
and fair value losses on forward currency contracts of £0.8m (2022: gains of
£0.8m).
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 2022 and 30 September 2023.
5 Group adjusted profit before tax excludes amortisation of acquired
intangibles of £5.2m (2022: £5.5m), share-based payments cost of £1.2m
(2022: £4.7m) fair value losses on forward currency contracts of £0.8m
(2022: gains of £0.8m) and exceptional items of £3.5m (2022: £2.6m). A full
explanation of the adjustments is included in the glossary.
6 Adjusted earnings per share is Group adjusted profit after tax for
continuing operations divided by the average number of shares in issue during
the period. Earnings per share is Group profit after tax for continuing
operations divided by the average number of shares in issue during the period.
7 The prior period is restated for the effects of the discontinued
operations
Overview of the year
• Revenue of £170.2m was £26.8m (18.7%) higher than FY22:
- The Group delivered record TTV and Revenue in the year, as the market
returned to a more normal pattern after a number of years of disruption.
- There was strong demand for holidays across its core addressable market
and strategic expansion areas, with growth across both passenger numbers and
ABVs.
- Summer 23 performance was especially pleasing, with passenger numbers
for those holidays departing between May and October up 13% on the prior year.
- The Group continues to focus on improving the operational efficiency of
its cost base, with marketing costs reducing as a % of revenue vs the prior
year, and admin expenses as a % of revenue in line with the prior year.
• Exceptional cancellations in the prior year relating to the impact
of COVID-19 and supplier disruption have not repeated in the current year,
FY23: £nil, (FY22: £1.3m). Costs incurred in respect of wildfires and other
similar events in the year have been included in the underlying result.
• Adjusted profit before tax was £23.6m (FY22: £14.2m) reflecting
strong revenue growth in the OTB segment along with a reduction in marketing
spend as a % of revenue. Statutory profit before tax of £12.9m (FY22:
£2.2m).
Cash and liquidity
• The Group remains in a very strong financial position with
combined cash balances of £184.4m (2022: £133.9m):
- Group cash, excluding amounts held in trust, of £75.8m (30 September
2022: £64.5m).
- Customer prepayments held in a ring-fenced trust account of £108.6m (30
September 2022: £69.4m).
• Net finance income in the year has increased to £2.6m (2022:
finance cost of £0.5m) due to a £3.8m increase in bank interest receivable.
• The Group recently won a legal claim which it brought in October
2021 against Ryanair in respect of refunds owed by Ryanair to the Group for
flights that had been cancelled or had been subject to a major change where
customers had chosen a refund (the "Refunds Claim"), and the court awarded
£2m to the Group, plus interest and costs. The Group intends to pursue
Ryanair for further sums due in similar circumstances which accrued after
issue of the Refunds Claim. Given the date of summary judgment was after the
balance sheet date the proceeds of this action, along with costs recovered,
will be included within exceptional items in FY24.
• The Group is currently awaiting the announcement of ATOL reforms.
We understand that there has been further delay to the announcement of
proposed reforms which is now not expected until 2024, however the Group
remains well placed regardless of the outcome.
Current Trading and Outlook
• Our FY23 growth has continued into the new financial year with YTD
TTV as at 2 Dec +26%.
• Our forward book is at record levels and Group Winter '23 YTD TTV
is +34%.
• We approach our key booking period in Q2 with significant
momentum.
• Our platform and proposition are stronger than ever and we are
taking share in adjacent markets.
• Current trends and strategy give us confidence that Summer '24
will be significantly ahead of Summer '23.
• Reinstatement of dividend from FY24 reflecting the Group's
continuing cash generative position and in line with its capital allocation
framework
Shaun Morton, Chief Executive Officer of On the Beach Group plc, commented:
"I am pleased with the Group's incredibly strong performance this year,
delivering record TTV and exceeding the £1bn revenue milestone for the first
time - a huge achievement testament to the hard work across all our teams in
the business. In line with our broader strategy, our firm focus and
investments towards our marketing campaign has delivered our highest ever top
three brand consideration score.
"Last year we differentiated ourselves from other mainstream holiday companies
as the first to offer free lounge and fast track on bookings and this
continues to grow customer satisfaction. The investment we have put into our
proprietary technology has enhanced our flight, hotel and front-end platform
capability and thanks to this upgraded front-end, we have improved the user
experience leveraging technology, automation and AI via our new website and
customer app. This has all helped drive growth in both the core business and
expansion segments.
"This year we have seen the majority of consumers protect - not sacrifice -
their holiday, a trend that our research shows will continue. We are already
seeing this with strong momentum into the new financial year with TTV up 26%
for the first nine weeks of FY24 and Winter FY23 bookings up 34%.
"We approach our key booking period in Q2 with significant momentum and this
gives us confidence that Summer '24 will be significantly ahead of Summer
'23."
Analyst Webinar
A briefing for sell-side equity analysts will be held today at 10.30am at FTI
Consulting, 200 Aldersgate, Aldersgate Street, London, EC1A 4HD. For those
unable to attend in person, there will be a conference call facility (no
video), details of which can be obtained from FTI Consulting.
For further information:
On the Beach Group plc via FTI Consulting
Shaun Morton, Chief Executive Officer
Jon Wormald, Chief Financial Officer
FTI Consulting Tel: +44 (0)20 3727 1000
Alex Beagley onthebeach@fticonsulting.com
Fiona Walker
Harriet Jackson
Rafaella de Freitas
Hannah Butler
About On the Beach
On the Beach Group plc is one of the UK's largest online beach holidays
retailers, with significant opportunities for growth. Its innovative
technology, low-cost base and strong customer-value proposition provides a
structural challenge to legacy tour operators and online travel agents, as it
continues disrupting the online retail of beach holidays. Its 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 financial statements and investor
presentation is available on www.onthebeachgroupplc.com
(http://www.onthebeachgroupplc.com)
Chief Executive's review
On the Beach Group plc is one of the UK's largest online beach holidays
retailers, with significant opportunities for growth. We operate in a sector
where consumers are seeking convenience, choice, value, and a personalised
experience with financial protection. Our proprietary technology, coupled with
a low-cost, asset light and cash generative operating model provides a
structural challenge to tour operators.
This has been a record year for On the Beach, achieving Group TTV for the year
of £1.1bn, exceeding the £1bn milestone for the first time. I am incredibly
proud of my team and our performance in FY23 is testament to their efforts.
In line with our strategy to capture share as demand for beach holidays
recovers, the Group successfully increased booking volumes and Average Booking
Values ("ABV") in its core addressable market, whilst delivering a 74%
increase in B2C TTV for long-haul bookings and a 32% increase in premium 5*
TTV.
Performance has been underpinned by leveraging the benefits of continued
investments in our proprietary technology platform, brand and customer
proposition. Alongside access to greater seat and bed capacity, I am confident
that the activities we have undertaken over the last 12 months have laid
further strong foundations for the Group for the year ahead.
Following our strong second half and full year performance, we exited FY23
with the momentum of a record forward order book and demonstrable progress in
strategic expansion areas, which we are excited to build upon in FY24.
People
Our people continue to be the driving force behind the business and deserve
credit for our record performance this year. We've successfully embedded
hybrid and flexible working as 'the way we work', and it's enabling us to
recruit from a wider talent pool. This is important in helping us to attract
and retain talent in a tight labour market, where people are seeking a greater
degree of flexibility.
Our business continues to support employees in all aspects of their lives,
promoting a healthy work-life balance, enabling flexible working, creating a
collaborative working environment and a high-performance culture, where
they're fully supported and encouraged to realise their full potential.
We continually review policies and benefits to ensure that they're competitive
and relevant for our people, and in FY24 we'll be introducing a number of new
and updated policies that are focused on Wellbeing and Family Friendly,
including; the option to buy additional days leave, increased employer pension
contributions and enhanced family friendly leave. These policies, individually
and in aggregate, will help ensure we remain competitive in the marketplace
for both hiring and retaining key talent, and will offer the support our
valued employees need.
We were delighted to achieve an Engagement Index score of 7.6 in our Annual
Engagement Survey. This shows that our people are enjoying life at On the
Beach, but we won't rest on our laurels. We'll use the data and insight from
this survey to develop action plans that make sure we keep a sharp focus on
supporting and driving high performance and ensure On the Beach is always a
place where people are supported and encouraged to reach their potential.
Trading
The Group significantly increased investment in the first half of the year
across brand, technology and its customer proposition, to support strong sales
growth for summer 2023 departures, to continue to build momentum for the
second half of the year and to grow our market share. Investment in these
areas was weighted to H1 to enable us to capitalise on peak bookings and build
momentum into H2.
Trading momentum continued into the second half, which resulted in record TTV,
+26% year on year, driven by growth in volumes and ABV. Despite remaining
early into FY24, bookings for Summer 24 are also significantly ahead of where
they were at the equivalent time in the prior year.
Addressable market
Over the last few years, we have outlined our strategy to continue to grow the
Group's share of short haul beach holidays sold online (Value), whilst
penetrating new markets, including premium and long-haul beach holidays sold
online, and beach holidays sold through our B2B channel.
Value
We have experienced a significant year on year improvement in volumes and ABV
in our core addressable market, with B2C TTV growth on 3* holidays of 32% Year
on Year ('YOY').
Having been subject to a protracted cost of living crisis, the UK consumer is
now experiencing deflation in energy bills and lower inflation in food costs.
Since May, real wage growth has turned positive and discretionary income data
indicates four consecutive months of growth YOY.
However, against this backdrop, we are aware that the cost-of-living crisis is
certainly not over. Many consumers are experiencing financial difficulties,
for example those with exposure to higher mortgage rates or rising rental
costs. Despite this backdrop, research shows that summer family beach holidays
are increasingly viewed as sacrosanct. Our YOY volume data for Summer 23,
Winter 23/24 and early stage data for Summer 24 indicates a positive
trajectory, with 3* volumes for S24 ahead of Summer 23. We expect volumes in
the 3* value market to exceed pre-pandemic levels in FY24.
Premium
The premium market continues to perform strongly with B2C TTV growth in 5*
holidays of +32% YOY. The premium market has shown greater resilience to
cost-of-living pressures, recovering earlier. Attracting these customers that
typically book earlier is giving greater visibility of the season ahead and
delivering higher revenue per booking. FY23 Group premium TTV is now 126%
greater than its level in FY19.
The strategic actions the Group has taken to enhance its proposition and
access more premium hotels, positions it well to continue to outperform in
this market. The Group estimates premium to be of a similar size to the value
market in terms of passengers, but approximately two and a half times larger
in absolute value, and the revenue margin opportunity on each individual
booking is also significantly greater.
On the Beach continues to invest in the proposition, which supports higher
searches for 5* hotels. The Group is focused on growing TTV in this market in
FY24 and we believe there is a significant incremental revenue opportunity to
be gained in the medium term by attracting premium customers to the brand.
Long-Haul
The Group is successfully scaling its long-haul offering and OTB is now a
brand firmly associated with long-haul as well as short haul beach holidays.
Scheduled air connectivity has been enhanced again this year with the addition
of new key carriers, improving the breadth and depth of customer choice for
both Westbound and Eastbound long haul flying, and increasing the number of
destinations we can offer to our customers.
B2C long-haul TTV was up 74% in FY23 versus the prior year and we experienced
12 months of consistent growth in Sales on prior periods. Group long-haul TTV
mix was up to 8% of TTV in FY23, which represents significant growth compared
to 2% Group TTV in FY19. The largest destinations (Dubai, Mexico and Dominican
Republic) are performing well, whilst destinations newer to the Group (US,
Phuket, Mauritius, Maldives) continue to gather momentum.
There remains a significant organic growth opportunity in long haul. OTB has a
low single digit share of a large B2C long haul market. The majority of OTB's
continued growth is from its existing LH destinations, and there is
significant headroom for further penetration in these destinations. In
addition, there is opportunity for further growth from new destinations, both
from existing and recently added long-haul carriers.
B2B
The Group appointed a new CEO, Andy Freeth, at Classic in November 2022 to
drive continued growth across Classic Collection Holidays and Classic Package
Holidays. Both B2B businesses are recognised brands operating in a market with
opportunities to grow. The Group has partnerships with the majority of the
UK's travel agent and homeworking groups and is a trusted operator in the B2B
space, having won a number of recent industry awards, voted for by travel
agents.
This has been a challenging year for high street retail, which has experienced
a sluggish recovery from the pandemic. The competitive landscape for our B2B
businesses has also become more crowded, as tour operators and low‑cost
airlines compete for share of high street agent and homeworker business. As a
result of this market backdrop, B2B growth has been slower than expected. In
both businesses, however we have been able to define and drive certain
destinations and product lines where growth has been strong.
The Group took action towards the end of FY23 to integrate B2B back-office
functions into the Group, thereby reducing overheads to improve overall
profitability. Notwithstanding recent market headwinds, the B2B channel and
share opportunity remains significant, with online penetration lagging other
consumer verticals. The strategy for Classic continues to be to build on its
foundations, deepening partnerships with independent high street agents.
Agents are increasingly risk averse post-Covid, with a trend away from tour
operating and back to retailing.
We expect a return to B2B profitability in FY24, underpinned by the synergies
already realised across the Group, a focus on product and destinations where
we can win with a digital first approach.
Strategy
As I set out in more detail below, in FY23, we introduced four strategic
pillars which straddle functional teams across the Group to accelerate
progress in penetrating all relevant market segments.
Investment in our brand
In line with previous years and with strategy, we invested significantly in
OTB's brand and proposition in FY23 to continue to gain share in all segments.
FY23 performance was supported by our largest ever offline marketing campaign,
'The most wonderful time of the year'. This marketing effort also delivered
the Group's highest ever top 3 brand consideration score, despite a more
aggressive competitive environment.
The group is the first mainstream holiday company to offer free lounge and
fast track on bookings. Following a successful launch last year, in which we
delivered encouraging TTV growth, we have increased our investment into lounge
and fast track, alongside continued innovation in developing a wider suite of
further perks.
Being known for perks significantly benefits OTB. It offers a key point of
differentiation from other holiday companies, makes our offline marketing
campaigns more effective, strengthens the brand, attracts new customers, and
improves our customer's overall holiday experience, which increases the
likelihood of repeat purchase.
Finally, from a customer perspective we have continued to ensure the contact
centre has been well resourced and supported. We are investing in automation
and live chat which will improve customer experience and reduce costs to serve
in future periods. FY23 was a record year and a higher proportion of customers
are seeking reassurance between booking and travelling on holiday as we emerge
from the pandemic. There were also periods of disruption to navigate,
including Rhodes wildfires, NATS air traffic control issues and the Morrocco
earthquake.
Our teams worked hard to assist customers experiencing issues during each of
these incidents, and to ensure we provided the best experience possible. I'd
like to thank the service teams for their tireless efforts in helping our
customers.
Investment in technology
In April 2023, our Chief Product Officer, Kasia Michalska was appointed Chief
Product & Technology Officer for Group, with the Engineering and Product
teams directly reporting into her. The appointment was a significant
opportunity to bring product, technology and data teams in closer alignment.
The technology teams have made strong progress over the last two years in
developing our scheduled flight supply with airlines that serve a core group
of east and west bound long haul destinations. There is significant runway for
growth in many of the existing long haul destinations and we continue to add
more destinations as new airlines are onboarded. We believe the long haul
market offers a significant opportunity for the group where our technology
creates a competitive advantage to disrupt a largely offline market.
The teams have also worked collaboratively with our airport partners through
the complex task of delivering the broadest perks platform in the industry.
This is a key point of differentiation given other peers either do not have
the scale and volumes to appeal to the airports, or have too much volume (tour
operators / airlines with a number of outbound flights) at busy times of the
day.
As in previous years, we have significantly invested in our proprietary
technology to support continued growth and a much larger volume of holiday
bookings. This includes re-architecture of our core platform which allows us
to significantly improve site speed and reliability. The upgraded hotel
platform processes billions of searches with a high booking success rate. The
upgraded data acquisition platform improves availability and accuracy.
Migration to the cloud this year has facilitated greater speed of development
and increased security. Utilising cloud native technology has allowed teams to
improve performance and reduce the complexity of running our services. The
new, fast and reliable packaging service has reduced package search time and
improved the customer experience.
The re architecture of our platform and migration to the cloud not only
improves performance of our systems and their reliability but also gives us
access to a richer pool of tech talent.
Finally, we've also been investing in improving our customer experience via
the new site and our customer app. The introduction and development of our new
customer facing app has enabled faster iterations and ongoing experimentation,
which have gradually increased our conversion rate. These investments have
enabled the Group to drive continued growth in both the core business and
expansion markets. Crucially, the investments support a much larger, scalable
business, and we expect further operating leverage in future periods.
Investment in supply
Alongside investments in brand, proposition, and technology, the Group has
invested in supply to support growth. This includes improved flight
connectivity and deeper relationships with our supply partners, with direct
bookings in FY23 at 91%.
The Group offers seats from a diversified group of low-cost carriers that fly
to short haul East and West Mediterranean locations and has developed
relationships with destination specific carriers that serve Turkey, which
experienced a significant uplift in demand in FY23.
We believe that by having our own relationships with our hotel partners, we
can guarantee our customers the best prices and an enhanced hotel experience.
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.
We also maintain significant relationships and volumes with our key bedbank
partners, which allows access to competitive prices in the tail of product
outside of our top selling hotels.
In FY23 we have gathered more data on our hotel supplier's sustainability
position. The Global Sustainable Tourism Council (GSTC) has harmonised various
sustainability certifications into one set of criteria, setting the industry
standard.
We partnered with Bioscore, a GSTC member and identified 1,870 hotels (37% of
our top selling 5,000 hotels) that operate sustainable practices that meet
GSTC standards and could therefore validly be labelled as "Sustainable". Of
our Top 500 hotels 44% meet GSTC standards. Where we are finding gaps, we are
engaging with hotels to encourage them to qualify for accreditation via
Bioscore.
Strategic pillars
Our new four strategic pillars which straddle functional teams across the
Group to accelerate progress in penetrating all relevant market segments are:
1. Storytellers: We will build rich, visually led and socially integrated
experiences that really bring our holidays to life and build excitement from
the outset
2. Matchmakers: We will use technology to evolve search, making it easier
and more enjoyable for consumers to find what, not just where, they are
looking for
3. Fixers: We will give our customers hiccup free holidays, using industry
leading self-service, automation and AI-enabled contact centres, all delivered
via our mobile app
4. Perkers: We will deliver holidays that start sooner with our
anticipation building exclusive perks.
The pillars speak to a continuation of our broader Group strategy to penetrate
our addressable market, but also help summarise the strategic direction of how
we intend to grow in each market, for each of our teams and wider
stakeholders.
Our investment into talent, technology, brand, proposition, customer
experience and supply enables this strategy, which has contributed to our
record performance in FY23 and sets us up for success in FY24.
Looking ahead, given continued momentum in our expansion areas as well as the
recent positive signs of recovery in our core value customer base, we will be
building upon our strategic pillars in the coming months and are excited by
what we can achieve across the Group in FY24.
Regulatory reform and litigation
We believe that holistic and comprehensive regulatory reform of the travel
industry is critical and urgent 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.
For most customers in the UK who are booking their annual beach package
holiday, this will likely be the biggest investment they will make throughout
the year, unless they are moving house or changing their car. A recent study
found that households spend a quarter of their disposable income on holidays.
It is therefore critical that competition in the market is healthy to ensure
value, choice, flexibility and consumer protection.
However, 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, poses a serious threat to fair competition and choice for
consumers. Low cost airlines ('LCA') are using anti-competitive behaviours to
stop consumers booking through online travel agents, harming consumers in the
process.
These increasingly sophisticated anti-competitive behaviours include blocking
OTA bookings, reducing or removing seats to certain destinations, making them
completely unbookable by OTAs or consumers unless booked directly with the
airline; harming the consumer experience with onerous verifications only
applied to bookings made with an OTA; and false and misleading smear campaigns
that cast doubt in the minds of consumers about the validity and benefits of
booking package holidays with OTAs.
OTB published a White Paper on these where consumers surveyed for the paper
agreed. Nearly half believe that LCAs treat their customers badly because they
know that they can get away with it and 84% say that they are worried that a
lack of regulation means airlines will be able to charge more and provide
worse service in the future.
We continue to challenge Ryanair on its anti-competitive behaviour and
withholding of refunds through ongoing litigation. We recently successfully
sued Ryanair for £2m of outstanding flight refunds. This common-sense outcome
should not have taken a protracted and expensive legal process to resolve.
Both OTAs and LCAs have called for regulatory intervention and the CMA has the
power to exercise a review of the market to preserve competition and protect
customers. We continue to encourage the Government and Regulators and other
online travel business to ensure the CMA steps in to take action to protect
holidays for everyone.
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, but will be delayed, We expect to hear further
feedback from the CAA in FY24.
Current trading and outlook
Our FY23 growth has continued into the new financial year with YTD TTV as at 2
Dec +26%
Our forward book is at record levels and Group winter '23 YTD TTV is +34%.
We approach our key booking period in Q2 with significant momentum.
Our platform and proposition are stronger than ever and we are taking share in
adjacent markets.
Current trends and strategy give us confidence that summer '24 will be
significantly ahead of summer '23.
Reinstatement of dividend from FY24 reflecting the Group's continuing cash
generative position and in line with its capital allocation framework
Shaun Morton
Chief Executive Officer
4 December 2023
Chief Financial Officer Report
The Group's financial performance for the year ended 30 September 2023
("FY23") is reported in accordance with UK-adopted international accounting
standards and applicable law.
The Group organised its operations during the year 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). As of 30 September 2023 the
International segment was discontinued as explained later in this report.
Prior periods have been restated accordingly.
The Group acts as agent across the OTB, International and CPH segments as it
is not the primary party responsible for providing the components that make up
the customers' booking. As a result, revenue is accounted for on a booked
rather than travelled basis.
For the CCH segment, revenue is accounted for on a travelled basis, as
principal, and is therefore reported on a gross basis.
Group overview
2023 2022
Adjusted¹ GAAP Adjusted¹ GAAP(7)
Group TTV(2) 1,070.4 - 849.4 -
Group revenue 170.2 143.4
Revenue as Agent(3) 112.1 92.9
Revenue as Principal(4) 58.1 50.5
Group gross profit 114.0 94.9
Gross profit as Agent 106.4 89.1
Gross profit as Principal 7.6 5.8
Group profit before tax(5) 23.6 12.9 14.2 2.2
Basic earnings per share(6) 11.6p 6.4p 6.4p 1.0p
(1 ) Adjusted measures are non-GAAP measures, a full explanation
of the adjustments is included in the glossary. The prior period is restated
for the effects of the discontinued operations.
(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 2022 and 30 September 2023.
Adjusted revenue is revenue before exceptional items of £nil (2022: £1.0m)
and fair value losses on forward currency contracts of £0.8m (2022: gains of
£0.8m).
(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 2022 and 30 September 2023.
(5 ) Group adjusted profit before tax excludes amortisation of
acquired intangibles of £5.2m (2022: £5.5m), share-based payments cost of
£1.2m (2022: £4.7m) fair value losses on forward currency contracts of
£0.8m (2022: gains of £0.8m) and exceptional items of £3.5m (2022: £2.6m).
A full explanation of the adjustments is included in the glossary.
(6 ) Adjusted earnings per share is Group adjusted profit after
tax for continuing operations divided by the average number of shares in issue
during the period. Earnings per share is Group profit after tax for continuing
operations divided by the average number of shares in issue during the period.
(7 ) The prior period is restated for the effects of the
discontinued operations
Overview of the year
• Revenue of £170.2m was £26.8m (18.7%) higher than FY22:
− The Group delivered record TTV and Revenue in the year, as the market
returned to a more normal pattern after a number of years of disruption.
− There was strong demand for holidays across its core addressable
market and strategic expansion areas, with growth across both passenger
numbers and ABVs.
− Summer 23 performance was especially pleasing, with passenger numbers
for those holidays departing between May and October up 13% on the prior year.
− The Group continues to focus on improving the operational efficiency
of its cost base, with marketing costs reducing as a % of revenue vs the prior
year, and admin expenses as a % of revenue in line with the prior year.
• Exceptional cancellations in the prior year relating to the impact
of COVID-19 and supplier disruption have not repeated in the current year,
FY23: £nil, (FY22: £1.3m). Costs incurred in respect of wildfires and other
similar events in the year have been included in the underlying result.
• Adjusted profit before tax was £23.6m (FY22: £14.2m) reflecting
strong revenue growth in the OTB segment along with a reduction in marketing
spend as a % of revenue. Statutory profit before tax of £12.9m (FY22:
£2.2m).
Cash and liquidity
• The Group remains in a very strong financial position with
combined cash balances of £184.4m (2022: £133.9m):
− Group cash, excluding amounts held in trust, of £75.8m (30 September
2022: £64.5m).
− Customer prepayments held in a ring-fenced trust account of £108.6m
(30 September 2022: £69.4m).
• Net finance income in the year has increased to £2.6m (2022:
finance cost of £0.5m) due to a £3.8m increase in bank interest receivable.
• The Group recently won a legal claim which it brought in October
2021 against Ryanair in respect of refunds owed by Ryanair to the Group for
flights that had been cancelled or had been subject to a major change where
customers had chosen a refund (the "Refunds Claim"), and the court awarded
£2m to the Group, plus interest and costs. The Group intends to pursue
Ryanair for further sums due in similar circumstances which accrued after
issue of the Refunds Claim. Given the date of summary judgment was after the
balance sheet date the proceeds of this action, along with costs recovered,
will be included within exceptional items in FY24.
• The Group is currently awaiting the
announcement of ATOL reforms. We understand that there has been further delay
to the announcement of proposed reforms which is now not expected until 2024,
however the Group remains well placed regardless of the outcome.
.
OTB performance
2023 Adjusted¹ £m 2023 GAAP £m 2022 Adjusted¹ £m 2022 GAAP¹ £m
TTV 983.8 - 762.7 -
Revenue 106.1 87.1
Gross profit 104.2 87.1
Online marketing costs (26.0) (27.0)
Offline marketing costs (14.6) (11.9)
Gross profit after marketing costs 63.6 48.2
Overheads (32.3) (25.9)
Depreciation and amortisation (9.9) (6.7)
Exceptional operating costs (3.3) (1.3)
Share-based payments (1.1) (4.7)
Amortisation of acquired intangibles (4.2) (4.4)
Operating profit 22.2 12.8 15.4 5.2
EBITDA 32.1 26.9 22.1 16.3
(1 ) Adjusted measures are non-GAAP measures, a full explanation
of the adjustments is included in the glossary. The prior period is restated
for the effects of the discontinued operations.
Revenue has increased to £106.1m (FY22: £87.1m). This is as a result of a
full year without any material impact from COVID-19, along with continued
success in our core market and our strategic focus areas. We have seen
significant growth across both premium and long-haul markets, and the
increased ABV in these areas has contributed to an increased margin per
booking of £209 (2022: £192).
Average booking values have increased by 14% vs FY22 reflecting the continued
growth in both long-haul and premium holidays. This has resulted in an
increase in TTV to £984m (FY22: £763m).
Revenue of £106.1m is stated net of a £5.1m investment in holiday perks for
customers travelling with On The Beach. This has been expanded in the year as
part of our strategic pillar "Perkers" which has helped to drive revenue
growth and repeat booking rates. This has been achieved through the expansion
of our free airport lounge and fast track offers across a wider range of
departure dates.
FY23 was supported by our largest ever offline marketing campaign. This saw a
transfer of spend from our online marketing activities into offline
investment, with total marketing costs as a % of revenue having fallen versus
the prior year. Total marketing costs are now below our historic run rate of
40% of revenue.
2023 Adjusted¹ £m 2023 GAAP £m 2022 Adjusted¹ £m 2022 GAAP¹ £m
Overheads % TTV 3.3% - 3.4% -
Overheads % revenue 30% 30%
Total marketing % revenue 38% 45%
(1 ) Adjusted measures are non-GAAP measures, a full explanation
of the adjustments is included in the glossary. The prior period is restated
for the effects of the discontinued operations.
Overheads as a % of revenue are consistent at 30% (FY22: 30%) with
inflationary pressures in respect of wages and salaries being offset by
savings made elsewhere.
Adjusted EBITDA has increased to £32.1m (FY22 restated: 22.1m). A full
explanation of adjusted measures are included in the glossary.
Classic Collection Holidays segment performance
2023 Adjusted¹ £m 2023 GAAP £m 2022 Adjusted¹ £m 2022 GAAP £m
TTV 58.7 - 55.6 -
Revenue 58.1 50.5
Gross profit 7.6 5.8
Gross profit after marketing costs 5.8 4.8
Overheads (6.8) (5.2)
Depreciation and amortisation (0.3) (0.3)
Exceptional operating costs (0.2) -
Share-based payments (0.1) -
Amortisation of acquired intangibles (1.0) (1.1)
Operating loss (1.3) (2.6) (0.4) (1.8)
EBITDA (1.0) (1.3) (0.1) (0.4)
(1 ) Adjusted measures are non-GAAP measures, a full explanation
of the adjustments is included in the glossary. The prior period is restated
for the effects of the discontinued operations.
As a principal (rather than an agent) Classic Collection accounts for revenue
on a 'travelled' basis and reports revenue on a gross basis. Both TTV and
Revenue increased this year as consumer confidence in travel increased.
Revenue increased to £58.1m (FY22: £50.5m) and operating losses were £2.6m
(FY22 £1.8m). Overheads increased by £1.6m in part due to investment in
headcount across sales and marketing teams to deliver on the strategic growth
plan.
Sales on a booked, rather than travelled, basis were £58.7m (FY22: £55.6m).
Long haul continued to perform well representing 22% of total sales in the
year and is expected to be a high growth area for the business in FY24.
Classic Package Holidays segment performance
2023 Adjusted¹ £m 2023 GAAP £m 2022 Adjusted¹ £m 2022 GAAP £m
TTV 28.0 - 31.1 -
Revenue 6.0 5.8
Gross profit 2.1 2.0
Gross profit after marketing costs 1.5 1.0
Overheads (1.4) (1.5)
Depreciation and amortisation - (0.2)
Operating profit / (loss) 0.1 0.1 (0.3) (0.7)
EBITDA 0.1 0.1 (0.1) (0.5)
(1 ) Adjusted measures are non-GAAP measures, a full explanation
of the adjustments is included in the glossary. The prior period is restated
for the effects of the discontinued operations.
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 £6.0m (FY22: £5.8m), and the operating profit was
£0.1m (FY22: operating loss of (£0.7m)). The platform being increasingly
used by online agents and home workers allowed for marketing cost control and
a reduction in spend from £1.0m to £0.6m. The focus continues to be on
developing the proposition to ensure that we are serving the trade and
holidaymakers with market leading product at competitive prices.
Exceptional Items
Exceptional items in the year amounted to £3.5m, being £2.0m of legal and
professional fees and £1.5m of restructuring costs. In the prior year
exceptional operating costs totalled £1.3m, with £2.5m of legal and
professional fess being partially offset by the release of £1.2m of
provisions. A further £1.3m of exceptional cancellation costs were incurred
in the prior year.
Legal and professional fees principally related to ongoing litigation with
Ryanair. Costs awarded following the successful judgement in November 2023
relating to refunds have not yet been finally determined and therefore no
recovery has been included.
Restructuring costs relate to the consolidation of certain group functions
between CCH and OTB in order to harmonise processes and deliver operational
synergies.
Financing
In December 2022, the Group refinanced its credit facilities with Lloyds Bank
and NatWest and entered into a new facility for £60m expiring in December
2025.
Details of the current facility limits and maturity dates are as follows:
Existing facilities £ Issued Expiry Drawn at 30 September 2023
RCF - Lloyds Bank £30m Dec 2022 Dec 2025 Nil
RCF - NatWest £30m Dec 2022 Dec 2025 Nil
Total facilities £60m
Share-based payments
The Group has a number of LTIP schemes in place which vest subject to
continued employment and performance criteria. In accordance with IFRS 2, the
Group has recognised a non-cash charge of £1.2m (FY22: £4.7m).
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. The change
in the year is a result of a reduction in the number of awards in the year as
well as the change in expectations for non-market based performance
conditions. Given the volatility and size of these charges they are added back
to provide comparability to prior periods.
Taxation
The Group tax charge of £2.3m represents an effective rate of 19% (FY22: 25%)
which is lower than the standard UK rate of 25% (FY22: higher than the
standard rate of 19%). An increase in the UK corporation rate from 19% to 25%
(effective 1 April 2023) was substantively enacted on 24 May 2021.
Cash flow
FY23 £m FY22 £m
Profit before tax from continuing operations 12.9 2.2
Loss before tax from discontinued operations (0.5) (0.1)
Depreciation and amortisation 15.3 12.8
Net finance (income) / costs (2.6) 0.5
Share based payments 1.2 4.7
Movement in working capital (4.1) 1.3
Corporation tax (0.2) 0.5
Cash generated from operating activities 22.0 21.9
Other cash flows
Capitalised development expenditure (12.0) (10.6)
Capitalised intangible assets - (0.5)
Capital expenditure net of proceeds - (1.3)
Net finance income / (costs) 2.8 (0.3)
Payment of lease liabilities (1.5) (0.7)
Total net cash flows 11.3 8.5
Opening cash balance 64.5 56.0
Closing cash at bank 75.8 64.5
Closing trust balance 108.6 69.4
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. As a result the available
credit facilities are only utilized for a short period, in FY23 being between
January and June.
Net cash inflows were £11.3m (2022: £8.5m). This is due to increased
profitability in the period, partially offset by working capital investment to
support the continuing growth of the business.
Not included in the Group's cash position is £108.6m (FY22: £69.4m) of
customer prepayments held in a trust account to be released once the customer
has travelled. The Civil Aviation Authority ("CAA") is currently consulting on
reform of the ATOL scheme including the assessment of funding arrangements.
The consultation process is still ongoing and we expect to hear more in 2024.
The Group remains in a strong financial position with sufficient cash reserves
to continue to invest in its continuing success.
Discontinued Operations
During the year, following a strategic review, the Board took the decision to
close the International business which comprised the standalone e-beach sites
in Norway and Sweden. Since launch in 2015, the intended growth of this
segment has been restricted by a number of factors including COVID-19, the
failure of a number of local airlines such as Norwegian, Primera and Ving and
the infrequent scheduling of other low-cost carriers. The Board remain
confident that the core proposition is scaleable across additional geographic
markets.
During the year the International segment contributed revenue of £0.9m and an
operating loss of £0.5m.
Capital Allocation
The Board has considered and approved a revised capital allocation policy for
the Group. The primary objective is to invest in organic growth whilst
maintaining capital discipline. The Board has signalled its intention to
re-introduce a dividend for FY24 given the return to normal market conditions
and a sustainable cash generative business model.
Dividend
The Board is not recommending a final dividend in respect of FY23.
Jon Wormald
Chief Financial Officer
4 December 2023
Financial Statements
Consolidated income statement and statement of comprehensive income
Year ended 30 September 2023
Note 2023 Restated* 2022 £'m
£'m
Revenue 4,5 170.2 143.4
Cost of sales (54.2) (48.5)
Expected credit losses 15 (2.0) -
Gross profit 114.0 94.9
Administrative expenses 6 (103.7) (92.2)
Group operating profit 10.3 2.7
Finance costs 8 (1.5) (0.8)
Finance income 8 4.1 0.3
Net finance income/(costs) 2.6 (0.5)
Profit before taxation 12.9 2.2
Taxation 9 (2.3) (0.5)
Profit from continuing operations 10.6 1.7
Loss from discontinued operations 10 (0.5) (0.1)
Profit for the year 10.1 1.6
Other comprehensive income:
Net (loss)/gain on cash flow hedges (0.6) 0.6
Net gain on fair value hedges 0.7 -
Total comprehensive income for the year 10.2 2.2
Attributable to equity holders of the parent
Profit from continuing operations 10.6 1.7
Loss from discontinued operations (0.5) (0.1)
Other comprehensive income 0.1 0.6
Total comprehensive income for the year 10.2 2.2
Basic and diluted earnings per share from continuing operations attributable
to the equity shareholders of the Company:
Basic earnings per share 11 6.4p 1.0p
Diluted earnings per share 11 6.3p 1.0p
Adjusted basic earnings per share** 11 11.6p 6.4p
Adjusted diluted earnings per share ** 11 11.5p 6.4p
Basic and diluted earnings per share from total operations attributable to the
equity Shareholders of the Company:
Basic earnings per share 11 6.1p 0.9p
Diluted earnings per share** 11 6.0p 0.9p
Adjusted profit measure**
Adjusted PBT (before amortisation of acquired intangibles, exceptional items 6 23.6 14.2
and share-based payments)**
*( ) The prior period is restated for the effects of the
discontinued operations (see note 10).
** This is a non-GAAP measure, refer to notes listed above.
Consolidated balance sheet
At 30 September 2023
Assets Note 2023 2022
£'m £'m
Non-current assets
Intangible assets 12 73.7 74.3
Property, plant and equipment 13 8.3 9.1
Deferred tax 20 2.6 3.4
Other assets 15 - 0.6
Total non-current assets 84.6 87.4
Current assets
Trade and other receivables 15 165.3 122.4
Derivative financial instruments 23 0.9 3.2
Trust account 16 108.6 69.4
Cash at bank 75.8 64.5
Total current assets 350.6 259.5
Total assets 435.2 346.9
Equity
Share capital 21 1.7 1.7
Share premium 22 89.6 89.6
Retained earnings 22 205.9 194.5
Capital contribution reserve 22 0.5 0.5
Merger reserve 22 (129.5) (129.5)
Total equity 168.2 156.8
Non-current liabilities
Trade and other payables 17 2.6 3.0
Total non-current liabilities 2.6 3.0
Current liabilities
Corporation tax payable 1.7 0.2
Trade and other payables 17 261.2 186.6
Provisions 17 0.4 0.3
Derivative financial instruments 23 1.1 -
Total current liabilities 264.4 187.1
Total liabilities 267.0 190.1
Total equity and liabilities 435.2 346.9
The financial statements were approved by the Board of Directors and
authorised for issue.
Jon Wormald Chief Financial Officer
4 December 2023 On the Beach Group plc. Reg no 09736592
Consolidated statement of cash flows
Year ended 30 September 2023
Note 2023 Restated*
£'m 2022
£'m
Profit before taxation
From continuing operations 12.9 2.2
From discontinued operations 10 (0.5) (0.1)
Adjustments for:
Depreciation 6 2.7 2.0
Amortisation of intangible assets 6 12.6 10.8
Finance costs 8 1.5 0.8
Finance income 8 (4.1) (0.3)
Share-based payments 24 1.2 4.7
Loss on disposal of property, plant and equipment 13 - -
26.3 20.1
Changes in working capital:
Increase in trade and other receivables (39.9) (29.6)
Increase in trade and other payables 75.0 61.3
Increase in trust account (39.2) (30.4)
(4.1) 1.3
Cash flows from operating activities
Cash used in operating activities 22.2 21.4
Tax (paid)/received (0.2) 0.5
Net cash inflow from operating activities 22.0 21.9
Cash flows from investing activities
Purchase of property, plant and equipment 13 (0.1) (1.3)
Proceeds from disposal of assets 0.1 -
Purchase of intangible assets 12 - (0.5)
Development expenditure 12 (12.0) (10.6)
Interest received 8 4.1 0.3
Net cash outflow from investing activities (7.9) (12.1)
Cash flows from financing activities
Interest paid on borrowings 8 (1.3) (0.6)
Payment of lease liabilities 18 (1.5) (0.7)
Net cash outflow from financing activities (2.8) (1.3)
Net increase in cash at bank and in hand 11.3 8.5
Cash at bank and in hand at the beginning of the year 64.5 56.0
Cash at bank and in hand at the end of the year 75.8 64.5
* The prior period is restated for the effects of the discontinued
operations (see note 10).
Consolidated statement of changes in equity
Year ended 30 September 2023
Share capital Share premium Merger reserve Capital contribution reserve Retained earnings Total
£'m £'m £'m £'m £'m £'m
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
Share-based charge including tax - - - - 1.2 1.2
Total comprehensive income for the year - - - - 10.2 10.2
Balance at 30 September 2023 1.7 89.6 (129.5) 0.5 205.9 168.2
Notes to the consolidated financial statements
Year ended 30 September 2023
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 given on
page ••.
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 2023 or 2022 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 2023. Statutory accounts for 2022
have been delivered to the Registrar of Companies, and those for 2023 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
Revolving Credit Facility ('RCF'). On 7 December 2022, the Group increased its
facility from £50m to £60m, expiring in December 2025. At the same time the
Group cancelled its CLBILS facility of £25m, which was due to expire in May
2023. The RCF has financial covenants in place, which are tested quarterly.
As at 30 September 2023, cash (excluding cash held in trust which is
ringfenced and not factored into the going concern assessment) was £75.8m (30
September 2022: cash of £64.5m).
Cash received from customers for bookings that have not yet travelled is held
in a ringfenced trust account and is not withdrawn until the customer returns
from their holiday except where a flight is purchased. Cash held in trust at
30 September 2023 was £108.6m.
The Directors have assessed a going concern period through to March 2025 and
have modelled a number of scenarios considering factors such as airline
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 40% lower than historic levels, although
profitability would be affected, the Group would be able to continue
operating. The impact of climate change has not yet been reflected in these
estimates and assumptions due to the level of uncertainty about the impact of
climate change on these estimates and assumptions.
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 2022; the following amended standards have
been implemented, however, they have not had a significant impact on the
Group's consolidated financial statements:
• Amendments to IFRS 3 - Reference to Conceptual Framework
• Amendments to IAS 16 - Property, Plant and Equipment: Proceeds
before Intended Use
• Amendments to IAS 37 - Onerous Contracts - Costs of Fulfilling a
Contract
• AIP IFRS 1 First-time Adoption of International Financial
Reporting Standards - Subsidiary as a first-time adopter
• AIP IFRS 9 Financial Instruments - Fees in the '10 per cent' test
for derecognition of financial liabilities
• AIP IAS 41 Agriculture - Taxation in fair value measurements
International Tax Reform - Pillar Two Model Rules - Amendments to IAS 12
introduced a mandatory temporary exception to the requirements of IAS 12 under
which a company does not recognise or disclose information about deferred tax
assets and liabilities related to the proposed OECD/G20 BEPS Pillar Two model
rules. The Group has applied the temporary exception in the Group's
consolidated financial statements.
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 2023 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:
• IFRS 17 Insurance Contracts
• Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS
Practice Statement 2
• Definition of Accounting Estimates - Amendments to IAS 8
• Deferred Tax related to Assets and Liabilities arising from a
Single Transaction - Amendments to IAS 12
International Tax Reform - Pillar Two Model Rules - Amendments to IAS 12
introduced a mandatory temporary exception to the requirements of IAS 12 under
which a company does not recognise or disclose information about deferred tax
assets and liabilities related to the proposed OECD/G20 BEPS Pillar Two model
rules. The Group has applied the temporary exception in the Group's
consolidated financial statements.
d) Climate-related matters
The Group considers climate-related matters in estimates and assumptions where
appropriate, this includes areas such as:
• Impairment of non-financial assets: The value-in-use may be
impacted by the changes in climate-related regulations or a change in the
demand of certain holiday destinations as a result of extreme weather or
natural disasters.
• Deferred tax asset recoverability: The forecasts used in assessing
whether the Group has sufficient future taxable income could be impacted by
climate-related regulation or change in consumer demand for travelling abroad.
The Group's business model allows for flexibility, through being asset-light,
this means the Group can respond quickly to changes in customer demand for
certain locations. The Group is closely monitoring changes and developments in
both climate-related legislation and extreme weather events.
e) Discontinued operations
Discontinued operations are excluded from the results of continuing operations
and are presented as a single amount of profit or loss after tax from
discontinued operations in the consolidated income statement and statement of
comprehensive income.
Additional disclosures are provided in note 10. All other notes to the
financial statements include amounts for continuing operations, unless
indicated otherwise.
f) 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.
g) 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 are reversed only if the reasons for the
impairment have ceased to apply.
h) 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.
i) 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.
i. 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 assets 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. An expected credit loss is calculated using a provision matrix,
which is initially based on the Group's historical observed default rates that
is calibrated for changes in the forward-looking estimates.
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.
ii. 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 ('RCF')
Borrowings from the RCF are recognised initially at fair value and net of
directly attributable transaction costs. After initial recognition, the RCF is
subsequently measured at amortised cost using the EIR method.
iii. 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 23 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.
Fair value hedges
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, the Group elects to identify the
spot-element of forward contracts as the hedging instrument. The documentation
also identifies 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 the
hedging instrument is recognised in the statement of profit or loss as other
expense. 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 other expense. The
change in the fair value of the forward element of the forward contracts is
recognised in other comprehensive income.
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.
j) 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 three reportable segments:
i. 'OTB' - activity via UK websites (www.onthebeach.co.uk
(http://www.onthebeach.co.uk) , www.sunshine.co.uk
(http://www.sunshine.co.uk) and www.onthebeachtransfers.co.uk
(http://www.onthebeachtransfers.co.uk) ).
ii. 'CCH' - activity via the Tour Operator, Classic Collection Holidays
Limited and subsidiaries.
iii. 'CPH' - activity via the Classic Package Holidays online business to
business portal.
k) 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 describe 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 through purchases from
customers 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 (note 17).
Revenue earned from sales through the OTB segment is stated net. Revenue
earned from sales through CPH are stated net, with the commission payable to
agents recognised in the cost of sales.
As principal
The Group acts as principal when it is the primary party responsible for
providing the components that make up the customer's booking and it controls
the components before transferring to the customer for the CCH segment.
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.
l) 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 a reduction in
cost of sales (corresponding increase in commission received), and as such is
considered part of the Group's net revenue, for the year ended 30 September
2023 override income was £3.4m. 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 that 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.
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 meets 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 and 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 asset. 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 24.
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 11).
s) Financing income and expenses
Financing expenses comprises interest payable and interest on 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). Financing income comprises interest receivable on funds invested.
Interest income and interest payable is recognised in profit or loss as it
accrues, using the effective interest method. 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'.
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 due to the risk that a booking may be cancelled (see note 2k).
aa) Non-statutory measures
One of the Groups KPI's 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/or expected infrequency of events
giving rise to them, merit separate presentation to allow shareholders a
better understanding of the financial performance in the period. These
adjustments include amortisation of acquired intangibles and exceptional
items. In addition, share-based payments charge is excluded in order to
provide comparability to prior periods due to fluctuations in the charge.
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 that 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 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 that 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 2023, the proportion of development costs that have been capitalised
is higher than prior year as the development team are focusing on key
strategic development objectives. Management have assessed each project to
determine whether the project is technically feasible, intended to be
completed and used, whether there is available resources to complete it, and
whether there is probable economic benefits from each project.
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 a sufficient level of future taxable profits to
support the deferred tax asset of £6.3m (2022: £8.2m) recognised (note 20).
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 20.
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 (2022: £0.2m). On this basis, the Group has determined
that it cannot recognise deferred tax assets on these tax losses carried
forward.
Critical accounting estimates
Recoverability of airline debtor
In relation to flights cancelled during the financial year, the Group has
considered the recoverability of amounts paid to airlines in lieu of flights
that have been cancelled, which as at 30 September 2023 is a receivable
balance of £1.2m - see note 15.
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 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:
i. the merchant (airline) was unable or unwilling to provide the
purchased services; or
ii. the cardholder is entitled to a refund under the merchant's
cancellation policy. Where a flight has been cancelled, the Group has
recognised a net receivable for the expected recoverable amount in accordance
with the considerations above. Management have calculated the provision for
airline refunds owed based on factors such as age, flight supplier and payment
method. If the Group was to increase the provision by five percentage points
('ppts') this would have resulted in a decrease of £0.2m in the airline
receivable of £1.2m.
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 2k of these financial
statements.
For the year ended 30 September 2023
OTB CCH CPH Total
£'m £'m £'m £'m
Revenue before fair value FX losses
Revenue as agent 106.9 - 6.0 112.9
Revenue as principal - 58.1 - 58.1
Total revenue before fair value FX losses 106.9 58.1 6.0 171.0
Fair value FX losses (0.8) - - (0.8)
Total revenue 106.1 58.1 6.0 170.2
For the year ended 30 September 2022*
OTB CCH CPH Total
£'m £'m £'m £'m
Revenue before exceptional items
Revenue as agent 86.9 - 6.2 93.1
Revenue as principal - 50.5 - 50.5
Total revenue before exceptional items 86.9 50.5 6.2 143.6
Exceptional cancellations** (0.6) - (0.4) (1.0)
Fair value FX gains 0.8 - - 0.8
Total revenue 87.1 50.5 5.8 143.4
* The results for the year ended 30 September 2022 have been restated
to exclude the results of the discontinued operation included in that period
(note 10).
** 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.
Details of receivables arising from contracts with customers are set out in
note 15.
5. Segmental report
As explained in note 2j, the management team considers the reportable segments
to be 'OTB', 'CCH' and 'CPH'. All segment revenue, operating profit and assets
and liabilities are attributable to the Group from its principal activities.
All revenues are derived in the United Kingdom.
OTB and CPH recognise revenue as agent on a net basis. CCH recognises revenue
as a principal on a gross basis.
2023 2022*
OTB CCH CPH Total OTB CCH CPH Total
£'m £'m £'m £'m £'m £'m £'m £'m
Revenue
Revenue before exceptional cancellations 106.9 58.1 6.0 171.0 86.9 50.5 6.2 143.6
Exceptional cancellations** - - - - (0.6) - (0.4) (1.0)
Fair value FX (losses)/gains (0.8) - - (0.8) 0.8 - - 0.8
Total revenue 106.1 58.1 6.0 170.2 87.1 50.5 5.8 143.4
Adjusted EBITDA 32.1 (1.0) 0.1 31.2 22.1 (0.1) (0.1) 21.9
Share-based charge (1.1) (0.1) - (1.2) (4.7) - - (4.7)
Exceptional items (3.3) (0.2) - (3.5) (1.9) (0.3) (0.4) (2.6)
Fair value FX (losses)/gains (0.8) - - (0.8) 0.8 - - 0.8
EBITDA 26.9 (1.3) 0.1 25.7 16.3 (0.4) (0.5) 15.4
Depreciation and amortisation (14.1) (1.3) - (15.4) (11.1) (1.4) (0.2) (12.7)
Group operating profit/(loss) 12.8 (2.6) 0.1 10.3 5.2 (1.8) (0.7) 2.7
Finance costs (1.5) (0.8)
Finance income 4.1 0.3
Profit before taxation 12.9 2.2
Non-current assets
Goodwill 31.6 4.6 4.0 40.2 31.6 4.6 4.0 40.2
Other intangible assets 27.9 5.6 0.2 33.7 27.4 6.6 0.1 34.1
Property, plant and equipment 5.5 2.5 - 8.0 6.3 2.8 - 9.1
* The results for the year ended 30 September 2022 have been restated
to exclude the results of the discontinued operation included in that period
(note 10).
** 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.
6. Operating profit
a) Operating expenses
Expenses by nature including exceptional items and impairment charges:
Restated*
2023 2022
£'m £'m
Marketing 40.6 38.3
Depreciation 2.7 2.0
Staff costs (including share-based payments) 28.4 27.9
IT hosting, licences and support 6.2 4.5
Office expenses 0.9 0.7
Credit/debit card charges 3.9 3.2
Insurance 2.2 1.6
Professional services 1.2 0.9
Other 1.5 1.0
Administrative expenses before exceptional items and amortisation of 87.6 80.1
intangible assets
Exceptional items 3.5 1.3
Amortisation of intangible assets 12.6 10.8
Exceptional items and amortisation of intangible assets 16.1 12.1
Administrative expenses 103.7 92.2
* The prior period is restated for the effects of the discontinued
operations (see note 10).
b) Exceptional items
Exceptional items in the year ended 30 September 2023 of £3.5m represents
£2.0m of non-trade legal and professional fees relating to ongoing litigation
and £1.5m of redundancy costs as a result of the consolidation of certain
Group functions between OTB and CCH.
Total exceptional items for the year ended 30 September 2022 includes £2.6m
due to the impact of travel disruption, £1.3m relates to exceptional
cancellations, other exceptional operating costs of £1.3m includes £2.5m of
legal and professional fees incurred in the year offset by the release of
£1.2m of provisions.
c) Services provided by the Company auditor
During the year, the Group obtained the following services from the operating
Company's auditor.
2023 2022
£'m £'m
Audit of the parent company financial statements 0.1 0.1
Amounts receivable by the Company's auditor and its associated in respect of:
- Audit of financial statements of subsidiaries pursuant to legislation 0.4 0.3
- Review of interim financial statements - -
- Other assurance services - -
0.5 0.4
d) Adjusted profit before tax
Management measures the overall performance of the Group by reference to
adjusted profit before tax, a non-GAAP measure, as it provides comparability
of the Group's performance year on year:
Restated*
2023 2022
£'m £'m
Profit before taxation 12.9 2.2
Exceptional items 3.5 2.6
Fair value FX losses/(gains) 0.8 (0.8)
Amortisation of acquired intangibles** 5.2 5.5
Share-based payments charge*** 1.2 4.7
Adjusted profit before tax 23.6 14.2
* The prior period is restated for the effects of the discontinued
operations (see note 10).
** 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 decreased to £1.2m (2022: £4.7m) as a result of a reduction in
the number of awards in the year and the change in the expectations for
non-market-based performance conditions. The year ending 30 September 2022
also included a catch-up charge following the introduction of an
underpin/minimum award. 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:
2023 2022
£'m £'m
Wages and salaries 31.7 27.2
Defined contribution pension cost 1.0 0.7
Social security costs 3.3 2.9
Share-based payment charge 1.2 4.7
37.2 35.5
Staff costs above include £8.8m (2022: £7.5m) employee costs capitalised as
part of software development.
The share-based payment charge has decreased to £1.2m (2022: £4.7m) as a
result of a reduction in the number of awards in the year and the change in
the expectations for non-market based performance conditions. The year ending
30 September 2022 also included a catch-up charge following the introduction
of an underpin/minimum award.
b) Employee numbers
Average monthly number of people (including Executive Directors) employed:
By reportable segment: 2023 2022
No. No.
OTB 522 463
CCH 148 134
CPH 11 22
681 619
The average monthly number of employees for the discontinued operations was
four (2022: four).
c) Directors' emoluments
The remuneration of Directors was as follows:
2023 2022
£'m £'m
Aggregate emoluments 1.8 1.0
Defined contribution pension 0.1 -
Share-based payment charges 0.4 0.8
2.3 1.8
Remuneration was paid by On the Beach Limited, a subsidiary company of the
Group.
The remuneration of the highest paid Director was as follows:
2023 2022
£'m £'m
Aggregate emoluments 0.6 0.6
Share-based payment charges 0.3 0.8
0.9 1.4
d) Key management compensation
Key management comprised the ten members of the Executive Team (2022: eight).
Remuneration of all key management (including Directors) was as follows:
2023 2022
£'m £'m
Wages and salaries 4.2 5.1
Short-term non-monetary benefits 0.2 -
Share-based payment charges 1.2 3.4
5.6 8.5
e) Retirement benefits
Included in pension contributions payable by the Group of £1.0m (2022:
£0.7m) is £25,800 (2022: £10,700) of contributions that the Group made to a
personal pension scheme in relation to one Executive Director.
8. Finance income and finance costs
a) Finance costs
2023 2022
£'m £'m
Rolling credit facility interest/fees 1.3 0.6
Interest on lease liabilities 0.2 0.2
Finance costs 1.5 0.8
b) Finance income
2023 2022
£'m £'m
Bank interest receivable 4.1 0.3
Finance income 4.1 0.3
9. Taxation
2023 2022
£'m £'m
Current tax on profit for the year 1.6 0.4
Adjustments in respect of prior years (0.1) -
Total current tax 1.5 0.4
Deferred tax on profits for the year
Origination and reversal of temporary differences 1.0 0.3
Adjustments in respect of prior years (0.2) (0.2)
Total deferred tax 0.8 0.1
Total tax charge 2.3 0.5
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 operations are as follows.
2023 2022
£'m £'m
Profit on ordinary activities before tax 12.9 2.2
Profit on ordinary activities multiplied by a blended rate of corporation tax 2.8 0.4
of 22% (2022: 19%)
Effects of:
Impact of difference in current and deferred tax rates (0.6) (0.5)
Adjustments in respect of prior years (0.3) (0.2)
Expenses not deductible 0.4 0.8
Total taxation charge 2.3 0.5
The tax charge for the year is based on the effective rate of corporation tax
for the period of 19% (2022: 25%). 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 2023 have been
calculated based on this rate.
10. Loss from discontinued operations
On 30 September 2023, the Group made the decision to cease its current
operations outside of the UK. The results of the discontinued operations are
analysed below. The comparative figures have been restated to show separately
the results of the discontinued operation included in that period. The
'International' segment is no longer presented in the segment note.
2023 2022
£'m £'m
Loss for the year from discontinued operations
Revenue 0.9 0.7
Administrative expenses (1.4) (0.8)
Loss before tax (0.5) (0.1)
Loss from discontinued operations (0.5) (0.1)
Earnings per share
Basic EPS (0.3p) (0.1p)
Adjusted EPS (0.3p) (0.1p)
Cash flows from discontinued operations
Net cash flows from operating activities (0.5) (0.1)
Net cash flows from discontinued operations (0.5) (0.1)
No impact on cash flows from investing or financing activities.
There are no assets relating to discontinued operations held for sale at 30
September 2023.
11. 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.
Earnings per share for continuing operations Basic weighted average number of ordinary shares (m) Total earnings £'m Pence per share
Year ended 30 September 2023
Basic EPS 166.5 10.6 6.4p
Diluted EPS 167.8 10.6 6.3p
Adjusted basic EPS 166.5 19.3 11.6p
Adjusted diluted EPS 167.8 19.3 11.5p
Basic weighted average number of ordinary shares (m) Total earnings* £'m Pence per share
Year ended 30 September 2022
Basic EPS 165.9 1.7 1.0p
Diluted EPS 166.7 1.7 1.0p
Adjusted basic EPS 165.9 10.6 6.4p
Adjusted diluted EPS 166.7 10.6 6.4p
* The prior period has been restated to exclude the results of
discontinued operations
Earnings per share for total operations Basic weighted average number of Ordinary Shares (m) Total earnings £'m Pence per share
Year ended 30 September 2023
Basic EPS 166.5 10.1 6.1p
Diluted EPS 167.8 10.1 6.0p
Basic weighted average number of Ordinary Shares (m) Total earnings £'m Pence per share
Year ended 30 September 2022
Basic EPS 165.9 1.6 0.9p
Diluted EPS 166.7 1.6 0.9p
Adjusted earnings after tax is calculated using the Group's effective tax rate
as follows:
2023 2022
£'m £'m
Profit for the year after taxation 10.6 1.7
Adjustments (net of tax at the effective rate)*
Exceptional items 2.8 1.9
Fair value FX losses/(gains) 0.7 (0.6)
Amortisation of acquired intangibles 4.2 4.1
Share based payment charges** 1.0 3.5
Adjusted earnings after tax 19.3 10.6
* The effective tax rate for the year ending 30 September 2023 was 19%
(2022: 25%), see note 9 for details.
** The share based payment charges are in relation to options which are
not yet exercisable
2023 2022
£'m £'m
Weighted average number of shares for basic earnings per share 166.5 165.9
Dilution from share options 1.3 0.8
Weighted average number of shares for diluted earnings per share 167.8 166.7
12. Intangible assets
Brand Goodwill Website and development costs Website technology Customer relationships Agent relationships Total
£'m £'m £'m £'m £'m £'m £'m
Cost
At 1 October 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
Additions - - 12.0 - - - 12.0
Disposals - - (0.5) - - - (0.5)
At 30 September 2023 35.9 40.2 42.7 22.8 2.1 4.4 148.1
Accumulated amortisation
At 1 October 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
Charge for the year 2.5 - 7.4 2.0 0.4 0.3 12.6
Disposals - - (0.5) - - - (0.5)
At 30 September 2023 22.4 - 25.5 22.8 2.1 1.6 74.4
Net book amount
At 30 September 2023 13.5 40.2 17.2 - - 2.8 73.7
At 30 September 2022 16.0 40.2 12.6 2.0 0.4 3.1 74.3
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 useful economic life Acquisition At 30 September 2023 At 30 September 2022
£'m £'m
On the Beach 5 On the Beach Travel Limited 10.0 12.1
Sunshine.co.uk 5 Sunshine.co.uk Limited 0.6 0.7
Classic Collection 10 Classic Collection Limited 2.9 3.2
13.5 16.0
Goodwill
Goodwill acquired in a business combination is allocated on acquisition to the
cash-generating unit ('CGU') that is expected to benefit from that business
combination. The carrying amount of goodwill has been allocated as follows:
Reportable segment CGU Acquisition At 30 September 2023 At 30 September 2022
£'m £'m
OTB OTB On the Beach Travel Limited 21.5 21.5
OTB OTB 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 and a
single CGU, as they are internally reported and managed as one entity.
Goodwill acquired through Sunshine.co.uk has been allocated to the 'OTB' CGU.
Goodwill acquired through the Classic collection acquisition has been
allocated to the 'CCH' and 'CPH' CGUs.
The Group has not recognised an impairment to the goodwill for the year ending
30 September 2023 (2022: £nil).
'OTB' CGU
The Group performed its annual impairment test as at 30 September 2023 on the
'OTB' 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 five-year period. The forecasts are then
extrapolated in perpetuity based on an estimated growth rate of 2% (2022: 2%),
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 14.6% (2022: 13.5%).
'CCH' CGU
The Group performed its annual impairment test as at 30 September 2023 on the
'CCH' 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 five-year period. The forecasts are then
extrapolated in perpetuity based on an estimated growth rate of 2% (2022: 2%).
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 14.6% (2022:
13.%).
'CPH' CGU
The Group performed its annual impairment test as at 30 September 2023 on the
'CPH' 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 five-year period. The forecasts are then
extrapolated in perpetuity based on an estimated growth rate of 2% (2022: 2
percent). This is deemed appropriate based on the Directors' best estimate of
the future prospects of the business. Management estimates discount rates
using pre-tax rates that reflect current market assessments of the time value
of money and the risks specific to the CGU. The discount rate applied is 14.6%
(2022: 13.5%)
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 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 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 16% 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 changes in customer behaviour
The Group does not consider that any CGU has been automatically impaired as a
result of either the rising cost of living or changes in customer behaviour in
respect of climate related matters with booking volumes increasing for the
year ending 30 September in comparison to the prior year. All CGUs remain
viable long term trading 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 either of these
factors. The Group is satisfied that sufficient headroom exists to support the
asset value.
Website and development costs
The Group capitalises development projects where they satisfy the requirements
for capitalisation in accordance with the IAS 38 and expense projects that
relate to ongoing maintenance and support.
Capitalised development costs are not treated as a realised loss for the
purpose of determining the Company's distributable profits as the costs meet
the conditions requiring them to be treated as an asset in accordance with IAS
38.
Additions in the year relate to the development of software and the purchase
of 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 2023
this was £0.9m (2022: £1.3m).
13. Tangible assets
Freehold property £'m Right-of-use asset (note 17) £'m Fixtures, fittings and equipment £'m Total £'m
Cost
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 1 October 2022 2.3 5.1 7.4 14.8
Additions - 1.0 0.1 1.1
Modification of lease - 0.9 - 0.9
Disposals - - (1.4) (1.4)
At 30 September 2023 2.3 7.0 6.1 15.4
Accumulated deprecation
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 1 October 2022 0.2 1.7 3.8 5.7
Charge for the year 0.1 1.4 1.2 2.7
Disposals - - (1.3) (1.3)
At 30 September 2023 0.3 3.1 3.7 7.1
Net book amount
At 30 September 2023 2.0 3.9 2.2 8.3
At 30 September 2022 2.1 3.4 3.6 9.1
The depreciation expense of £2.7m for the year ended 30 September 2023 and
the depreciation expense of £2.0m for the year ended 30 September 2022 have
been recognised within administrative expenses.
14. 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%
* In the prior year, the Group undertook 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
simplify 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.
15. Trade and other receivables
Amounts falling due within one year: 2023 £'m 2022 £'m
Trade receivables - net 147.4 100.8
Other receivables and prepayments 17.9 21.6
165.3 122.4
For trade receivables, impairment analysis is performed at each reporting date
to calculate the expected credit losses. The provision rates are based on
historical default rates, see note 23 for details of credit risk.
Prepayments greater than one year are nil (2022: £0.6m).
For the year ended 30 September 2023, other receivables includes £1.2m
receivable in respect of amounts due from airlines as a result of supplier
cancellations (2022: £2.8m). Other receivables and prepayments includes
£7.4m of advanced payments to suppliers, and £6.0m of rebates due from
suppliers. The expected credit losses in respect to these balances is not
material. Other receivables and prepayments for the year ending 30 September
2022 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.
Expected credit losses for trade receivables
Set out below is the movement in the allowance for expected credit losses of
trade receivables:
£'m
At 1 October 2022 0.5
Provision for expected credit losses 2.0
Utilised in year (1.5)
At 30 September 2023 1.0
16. 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.
17. Trade, other payables and provisions
2023 £'m 2022 £'m
Non-current
Lease liabilities (note 18) 2.6 3.0
Current
Trade payables 236.4 158.3
Accruals and other payables 17.0 19.9
Contract liabilities 5.9 7.5
Lease liabilities (note 18) 1.9 0.9
Provision 0.4 0.3
264.2 189.9
Accruals and other payables includes £8.6m (2022: £14.9m) for products or
services received but not yet invoiced at the year-end date, £6.5m relates to
amounts due to non-trade suppliers.
Contract balances
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 for the CCH segment.
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.
A contract liability is recognised if a payment is received from a customer
before the Group delivers its performance obligations. Contract liabilities
are recognised as revenue when the Group delivers its performance obligations.
Set below is the amount of revenue recognised from:
2023 £'m 2022 £'m
Amounts included in contract liabilities at the beginning of the year 6.6 5.3
Performance obligations satisfied in previous years 0.8 0.2
Provisions
Cancellations £'m Total £'m
At 1 October 2022 0.3 0.3
Arising during the year 0.4 0.5
Utilised (0.3) -
Unused amounts reversed - -
Unwinding of discount and changes in the discount rate - -
At 30 September 2023 0.4 0.7
Current 0.4 0.7
Non-current - -
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
supplier disruption and customer requested cancellations.
18. Leases
The Group as a lessee
The Group has leases for its head office and IT equipment, the lease term for
the building is ten years and lease terms for the IT equipment are between
three and five years. For the year ending 30 September 2023, the Group was
subject to a rent review for the lease of the building, this resulted in the
revaluation of the lease liability and a corresponding increase in the
right-of-use asset. 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 13).
Amounts recognised in profit or loss
The following lease-related expenses were recognised under IFRS 16 in the
profit or loss:
2023 £'m 2022 £'m
Depreciation expense of right-of-use assets 1.4 0.6
Interest expense on lease liabilities 0.2 0.2
Total amount recognised in profit or loss 1.6 0.8
Set out below are the carrying amounts of lease liabilities (included trade
and other payables) and the movements during the period:
2023 £'m 2022 £'m
As at 1 October 3.9 2.9
Additions 1.0 1.5
Modification of lease 0.9 -
Accretion of interest 0.2 0.2
Payments (1.5) (0.7)
As at 30 September 4.5 3.9
Current (note 17) 1.9 0.9
Non-current (note 17) 2.6 3.0
The Group had total cash outflows for leases of £1.5m in 2023 (2022: £0.7m).
The above table satisfies the requirements of IAS 7.44A to present a net debt
reconciliation.
19. Borrowings
Bank facility
On 7 December 2022, the Group refinanced its credit facilities with Lloyds and
NatWest. This included cancelling its previous facilities of £75m with Lloyds
Bank and entering into a new facility for £60m, expiring in December 2025.
The purpose of the facility is to meet the day-to-day working capital
requirements of the Group. At the point of refinancing there was nothing drawn
down.
The total facility is £60m and has two elements as follows:
• £30m facility with Lloyds; and
• £30m facility with NatWest.
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 facility prior to 7 December 2022 included the following key
financial 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; and
ii. that the ratio of total net debt to adjusted EBITDA shall not exceed
2:1
The terms of the new facility following 7 December 2022 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.
The Group did not breach the covenants during the period.
The RCF is available for other credit uses including currency hedging
liabilities and corporate credit cards. At 30 September 2023, the liabilities
recognised in trade and other payables for the other credit uses was £4.9m,
leaving £55.1m of the Lloyds/NatWest facility available for use. Card
facilities with other providers remain available for use.
The amount drawn down in cash at 30 September 2023 was £nil and there has
been nothing drawn down post balance sheet date.
20. Deferred tax
Intangible assets £'m Property, plant and equipment £'m Share-based payments £'m Losses and unused tax relief £'m Tax assets/ (liabilities) £'m
2023
Assets - - 0.4 6.3 6.7
Liabilities (4.0) (0.1) - - (4.1)
Total (4.0) (0.1) 0.4 6.3 2.6
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
Intangible assets £'m Capital allowances £'m Acquired property £'m Share-based payments £'m Losses and unused tax relief £'m Total £'m
30 September 2021 (6.3) (0.1) (0.2) 0.7 9.5 3.6
Recognised in income 1.1 - - 0.1 (1.3) (0.1)
Recognised in equity - - - (0.1) - (0.1)
30 September 2022 (5.2) (0.1) (0.2) 0.7 8.2 3.4
Recognised in income 1.2 0.2 - (0.3) (1.9) (0.8)
Recognised in equity - - - - - -
30 September 2023 (4.0) 0.1 (0.2) 0.4 6.3 2.6
The deferred tax asset includes an amount of £6.3m (2022: £8.2m), 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 availability of sufficient taxable temporary differences
and the probability that sufficient taxable profit will be available to allow
all or part of the 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 14.
− The Group has considered the approved budgeted information covering a
five-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 12. 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 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.
21. Share capital
Allotted, called up and fully paid 2023 £'m 2022 £'m
166,640,480 ordinary shares @ £0.01 each (2022: 166,258,172 ordinary shares @ 1.7 1.7
£0.01 each)
The Group issued 382,308 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.
22. 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 contribution reserve arose as a result of the redemption of
preference shares in the year ended 30 September 2015.
23. 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 2023 £'m 2022 £'m
Derivative financial assets designated as hedging instruments
Forward exchange contracts 2 0.9 3.2
Financial assets at amortised cost
Trust account 108.6 69.4
Cash at bank 75.8 64.5
Trade and other receivables (note 15) 157.9 116.9
Total financial assets 343.2 254.0
Financial liabilities
Derivatives designated as hedging instruments
Forward exchange contracts 2 (1.1) -
Financial liabilities at amortised cost
Trade and other payables (note 17) (263.8) (189.6)
Provisions (0.4) (0.3)
Total financial liabilities (26532) (189.9)
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 and NatWest Banks. The borrowing limits
under the facility is £60m per month, subject to covenant compliance; at
year-end nothing was drawn down on this facility (2022: £nil). For details of
the revolving credit facility, see note 19.
The following table provides the fair values of the Group's financial assets
and liabilities:
Financial assets FV Level 2023 £'m 2022 £'m
Forward exchange contracts 2 (0.2) 3.2
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 £'m Level 2 £'m Level 3 £'m
Forward Contracts
As at 30 September 2023 - (0.2) -
As at 30 September 2022 - 3.2 -
The forward contracts have been fair valued at 30 September 2023 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 the 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 and interest income, 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 2023 €'m 2022 €'m
Cash 28.5 12.0
Trade payables (195.6) (137.0)
Trade receivables 2.8 3.0
Forward exchange contracts 163.4 129.5
Balance sheet exposure (0.9) 7.5
US Dollar 2023 $'m 2022 $'m
Cash 2.0 4.0
Trade payables (23.0) (8.1)
Trade receivables - 0.3
Forward exchange contracts 21.4 12.7
Balance sheet exposure 0.4 8.9
Swedish Krona 2023 Kr'm 2022 Kr'm
Cash 28.8 25.0
Trade receivables 1.0 1.5
Forward exchange contracts - -
Balance sheet exposure 29.8 26.5
Norwegian Krona 2023 Kr'm 2022 Kr'm
Cash 2.1 2.4
Trade receivables - -
Forward exchange contracts - -
Balance sheet exposure 2.1 2.4
Danish Krona 2023 Kr'm 2022 Kr'm
Cash - 0.1
Balance sheet exposure - 0.1
Moroccan Dirham 2023 MAD'm 2022 MAD'm
Cash 1.8 0.2
Forward exchange contracts (3.5) (0.9)
Balance sheet exposure (1.7) (0.7)
United Arab Emirates Dirham 2023 AED'm 2022 AED'm
Trade payables (0.1) -
Balance sheet exposure (0.1) -
Swiss Franc 2023 CHF'm 2022 CHF'm
Cash 0.1 -
Trade payables - -
Balance sheet exposure 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% change taking place at the
beginning of the financial period and held constant throughout the reporting
period:
2023 £'m 2022 £'m
Euro
Weakening - 10% 0.9 (1.7)
Strengthening - 10% (0.9) 1.7
US Dollar
Weakening - 10% - (0.2)
Strengthening - 10% - 0.2
Swedish Krona
Weakening - 10% 0.2 0.2
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 18 months
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:
2023 2022
Euro Foreign currency €'m Notional value £'m Carrying amount £'m Foreign currency €'m Notional value £'m Carrying amount £'m
30 September
Less than 3 months 79.2 69.3 (0.5) 56.2 48.1 1.3
3 to 6 months 16.8 14.7 (0.1) 11.6 10.0 0.3
6 to 12 months 68.4 59.9 0.1 53.1 46.3 1.2
12+ months 3.9 3.4 - 2.3 2.1 -
Total 168.3 147.3 (0.5) 123.2 106.5 2.8
2023 2022
USD Foreign currency $'m Notional value £'m Carrying amount £'m Foreign currency $'m Notional value £'m Carrying amount £'m
30 September
Less than 3 months 8.9 7.1 0.1 3.9 3.1 0.4
3 to 6 months 6.6 5.3 0.1 1.8 1.5 0.1
6 to 12 months 5.9 4.7 0.2 1.8 1.6 -
12+ months 0.1 0.1 - - - -
Total 21.5 17.2 0.4 7.5 6.2 0.5
2023 2022
MAD Foreign currency MAD 'm Notional value £'m Carrying amount £'m Foreign currency MAD 'm Notional value £'m Carrying amount £'m
30 September
Less than 3 months 0.9 0.1 (0.1) 0.2 - -
3 to 6 months 0.2 - - - - -
6 to 12 months 0.1 - - - - -
Total 1.2 0.1 (0.1) 0.2 - -
The impact of the hedging instruments on the statement of financial position
is as follows:
Notional amount £'m Carrying amount £'m Line in the statement of financial position Change in fair value £'m
As at 30 September 2023
Foreign exchange forward contracts 164.5 (0.2) Derivative financial instruments (2.0)
As at 30 September 2022
Foreign exchange forward contracts 112.6 3.2 Derivative financial instruments 1.3
Credit risk
Credit risk refers to the risk that the 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 £'m Past due 0-90 days £'m Past due >90 days £'m Total £'m
At 30 September 2023 146.7 0.4 0.3 147.4
At 30 September 2022 100.1 0.7 - 100.8
The ageing of other receivables at the balance sheet date was:
Not past due £'m Past due 0-90 days £'m Past due >90 days £'m Total £'m
At 30 September 2023 10.5 - - 10.5
At 30 September 2022 16.1 - - 16.1
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 £4.8m has
been recognised for airline receivables past due greater than 12 months. The
Group has recognised a net receivable for the expected recoverable amount in
note 15.
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 £'m Contractual cash flows £'m Within 1 year £'m 1 to 5 years £'m > 5 years £'m
At 30 September 2023
Trade payables 236.4 236.4 236.4 - -
Lease liabilities 4.5 4.7 1.8 2.9 -
Contract liabilities 5.9 5.9 5.9 - -
Other payables 17.0 17.0 17.0 - -
263.8 264.0 261.1 2.9 -
At 30 September 2022
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
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 19) and equity of the Group as disclosed in note 21.
The Group is not subject to any externally imposed capital requirements.
24. Share-based payments
The following table illustrates the number of, and movements in, share options
granted by the Group.
LTIP No. of share options (thousands) CSOP & RSA No. of share options (thousands) Total No. of share options (thousands)
Outstanding at the beginning of the year 2,964 1,617 4,581
Granted during the year 2,295 - 2,295
Lapsed during the year (547) - (547)
Exercised during the year (129) (226) (355)
Forfeited during the year (684) (346) (1,030)
Outstanding at the year-end 3,899 1,045 4,944
Exercisable 186 351 537
LTIP
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 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 at 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.
During the current year, the Group awarded nil-cost options to certain key
employees within the business. The vesting of these awards will be subject to
continued employment, however the Remuneration Committee have the ability to
adjust the level of vesting as deemed appropriate.
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 (years) Risk free rate (%) Dividend yield (%) Non- vesting conditions (%) Fair value at grant date (£)
22 December 2021 (no conditions) 435,500 4.630 Nil 0% 3.0 0.73% 0.74% - 4.520
22 December 2021 (no conditions) 44,000 2.450 Nil 0% - 0.73% 0.74% - 2.395
22 December 2021 (EBITDA dependent) 22,000 2.450 Nil 43% - 0.73% 0.74% - 2.395
25 February 2022 (Relative TSR dependent) 275,591 2.750 Nil 46% 3.0 1.20% - - 1.710
25 February 2022 (Absolute TSR dependent) 275,591 2.750 Nil 46% 3.0 1.20% - - 1.470
25 February 2022 (TTV condition dependent) 551,183 2.750 Nil 0% 3.0 1.20% - - 2.749
27 July 2022 (Relative TSR dependent) 4,883 2.750 Nil 46% 3.0 1.20% - - 0.717
27 July 2022 (Absolute TSR dependent) 4,883 2.750 Nil 46% 3.0 1.20% - - 0.613
27 July 2022 (TTV condition dependent) 9,766 2.750 Nil 0% 3.0 1.20% - - 1.156
24 February 2023 (no conditions) 2,221,629 1.610 Nil 0% 3.0 3.93% - - 1.610
30 June 2023 (no conditions) 73,274 0.960 Nil 0% 0.5 4.93% - - 0.960
Expected volatility is estimated by considering historic average share price
volatility at the grant date.
Restricted Share Award (nil-cost option) and CSOP
There have been no new RSA or CSOP awarded in the current year. Of the 2022
RSA awards, 290,398 vested on 31 December 2022. The remaining 2022 RSA awards
will vest on 31 December 2023 subject to continued employment, employee
personal performance and Company performance.
Award date No. of shares Share price at grant date (£) Exercise price (£) Expected volatility (%) Option Life (years) Risk free rate (%) Dividend yield (%) Non- vesting conditions (%) Fair value at grant date (£)
2022 RSA 793,135 2.450 Nil N/A 2.0 1.20% - Nil 2.450
2022 RSA 290,398 2.450 Nil N/A 1.0 1.20% - Nil 2.450
2022 RSA 33,164 2.750 Nil N/A 2.0 1.20% - Nil 2.750
2022 RSA 87,887 1.156 Nil N/A 1.5 1.20% - Nil 1.156
The following has been recognised in the income statement during the year:
2023 £'m 2022 £'m
LTIP 0.5 3.2
RSA 0.7 1.5
Total share scheme charge 1.2 4.7
25. Commitments and contingencies
a) Capital commitments
No new capital commitments.
b) Contingencies
In September 2010, proceedings were initiated in Ireland against On the Beach
Limited by Ryanair alleging infringement of, inter alia, its intellectual
property rights. The case lay dormant for over 3 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. The Court decided that
Ryanair was guilty of inordinate and inexcusable delay but decided that the
balance of justice lay in favour of allow the case to proceed. The legal
process is ongoing but no trial date has yet been set. 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.
26. 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).
27. Events after the reporting period
On 31 October 2023, the High Court ruled in favour of the Group in respect of
the legal claim brought against Ryanair for refunds owed by Ryanair to the
Group for flights that had been cancelled or had been subject to a major
change where customers had chosen a refund, the Group was awarded £2m plus
costs which was received on 4 December 2023. This is a non-adjusting post
balance sheet event and therefore no accounting entries have been recognised
in the current year.
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 2023.
• Major airline failure: The collapse of a major airline
could have a material adverse effect on the Group's business. 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. 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 impact's the
Group's ability to fulfil consumer demand for holidays. For a number of
low-cost airlines the Group does not have agreements in place and instead acts
as the customer's agent. Certain airlines seek to block bookings or charge
customers more for choosing to book through a travel agent. The Group is one
of several online travel agents involved in litigation with Ryanair in
connection with Ryanair's efforts to prevent OTAs from booking and selling its
flights. The legal process is ongoing. 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. In
order to ensure a healthy and competitive market that protects consumers'
interests, the Group is engaging with Government and regulators on the market
power of airlines. The Group may take seats on certain key routes to mitigate
flight supply risk, although this may involve some limited risk. If the
programme is cancelled or the seats cannot be sold profitably, the Group may
incur material costs.
• Recoverability of airline refunds: Where a customer's holiday is
cancelled, the Group provides a full cash refund within 14 days as required
under the Package Travel Regulations (PTRs). Where a flight is cancelled,
airlines have an obligation to refund the cost of cancelled flights. Some
airlines takes months to refund, put obstacles in the way of claiming these
monies, or refuse outright to do so.
• 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: The Group operates
in a fast-moving environment. In order to meet our strategic objectives, our
technology platforms must be agile and scalable. If we cannot keep up with
growing demand and/or do not innovate then 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 material deterioration in consumer
confidence can lead to reduced demand for beach holidays. A weak pound makes
holidays and consumer spending abroad more expensive. Environmental and
sustainability concerns are increasingly becoming a factor in consumer choices
and demand could be impacted by consumers choosing 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. Even in a recessionary environment the business is cash-generative,
and mitigating actions can be taken if needed.
• Acquisition and organic growth risk: Failing to achieve our
strategic organic growth target due to market competition, insufficient
working capital or poor execution could prevent the Group from achieving its
strategic goals. Failure to achieve our strategic growth target for
acquisitions due to insufficient opportunities being identified, poor due
diligence or poor integration, or insufficient cash resources, could result in
erosion of shareholder value. Our focus has been on organic growth
opportunities and we expect this to continue into FY24.
Statement of Directors' Responsibilities
The responsibility statement below has been prepared in connection with the
Group's Annual Report & Accounts for the year ended 30 September 2023.
Certain parts thereof are not included within this announcement. The Directors
confirm, 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.
Jon Wormald
Chief Financial Officer
4 December 2023
Glossary of Alternative Performance Measures ('APMs')
APM Definition Reconciliation to closest GAAP measure
Adjusted earnings per share ('EPS') for continuing operations Adjusted basic EPS is calculated on the weighted average number of ordinary Adjusted profit after tax (£'m) 2023 Restated
shares in issue, using the adjusted profit after tax. Adjusted earnings after
(note 8)
tax is based on profit after tax adjusted for amortisation of acquired
2022
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 restructuring and legal and professional
costs. Exceptional items for 2022 consists of exceptional cancellations as a
result of Covid-19 and supplier disruption in 2022 and legal and professional
services. 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.
Profit for the year 10.6 1.7
Share-based payments (net of tax) 1.0 3.5
Exceptional items (net of tax) 2.8 1.9
Fair value FX losses/(gains) (net of tax) 0.7 (0.6)
Amortisation of acquired intangibles (net of tax) 4.2 4.1
Adjusted profit after tax 19.3 10.6
Basic weighted average number of ordinary shares (m) 166.5 165.9
Adjusted EPS (p) 11.6 6.4
Adjusted profit before tax Adjusted profit before tax is based on profit before tax adjusted for Adjusted profit before tax (£'m) 2023 Restated
amortisation of acquired intangibles, share-based payments and exceptional
(note 8)
items. Amortisation of acquired intangibles are linked to the historical
2022
acquisitions of businesses. Share-based payments represents the non-cash
costs, which fluctuates year on year. Exceptional items consists of
restructuring and legal and professional costs. Exceptional items for 2022
consists of exceptional cancellations as a result of Covid-19 and supplier
disruption in 2022 and legal and professional services. 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.
Profit before tax 12.9 2.2
Amortisation of acquired intangibles 5.2 5.5
Share-based payments 1.2 4.7
Exceptional items 3.5 2.6
Fair value FX losses/(gains) 0.8 (0.8)
Adjusted profit before tax 23.6 14.2
APM Definition Reconciliation to closest GAAP measure
B2B TTV B2B Total Transaction Value ('TTV') is a non-GAAP measure representing the B2B (£'m) 2023 2022
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.
** Bookings where revenue has been recognised on a travelled basis as a
principal.
CCH revenue 58.1 50.5
CPH revenue 6.0 5.8
B2B revenue 64.1 56.3
Costs* and amendments 23.5 35.5
Booked in previous year and travelled in year** (20.9) (13.7)
Booked but not yet travelled** 20.0 8.6
B2B TTV 86.7 86.7
CCH adjusted EBITDA CCH adjusted EBITDA is based on CCH operating profit/(loss) before CCH adjusted EBITDA (£'m) 2023 2022
depreciation, amortisation and the impact of exceptional items. Amortisation
of acquired intangibles are linked to the historical acquisitions of
businesses. Exceptional items consists of restructuring costs. Exceptional
items for 2022 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 operating loss (2.6) (1.8)
Exceptional items 0.2 0.3
Share-based payment 0.1 -
Depreciation and amortisation 0.3 0.3
Amortisation of acquired intangibles 1.0 1.1
Adjusted CCH EBITDA (1.0) (0.1)
CCH adjusted operating loss CCH adjusted operating lodd is based on CCH operating loss before amortisation CCH adjusted operating loss (£'m) 2023 2022
of acquired intangibles, share-based payments and exceptional items
Exceptional items consists of restructuring costs. Exceptional items for 2022
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 operating loss (2.6) (1.8)
Exceptional items 0.2 0.3
Share-based payments 0.1 -
Amortisation of acquired intangibles 1.0 1.1
CCH adjusted operating loss (1.3) (0.4)
CCH EBITDA CCH EBITDA is based on CCH operating profit before depreciation CCH EBITDA (£'m) 2023 2022
and amortisation.
CCH operating loss (2.6) (1.8)
Depreciation and amortisation 1.3 1.4
CCH EBITDA (1.3) (0.4)
APM Definition Reconciliation to closest GAAP measure
CCH TTV CCH TTV is a non-GAAP measure representing the cumulative total transaction CCH TTV EBITDA (£'m) 2023 2022
value of sales booked each month before cancellations and adjustments.
* As a principal revenue is recognised on a travelled basis.
Revenue 58.1 50.5
Amendments 1.5 10.2
Booked in previous year and travelled in year* (20.9) (13.7)
Bookings made but not yet travelled* 20.0 8.6
CCH TTV 58.7 55.6
CPH adjusted EBITDA CPH adjusted EBITDA is based on CPH operating loss before depreciation, Adjusted CPH EBITDA (£'m) 2023 2022
amortisation and 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 operating loss 0.1 (0.7)
Depreciation and amortisation - 0.2
Exceptional items - 0.4
Adjusted CPH EBITDA 0.1 (0.1)
CPH EBITDA CPH EBITDA is based on CPH CPH EBITDA (£'m) 2023 2022
operating profit before depreciation
and amortisation.
CPH operating profit/(loss) 0.1 (0.7)
Depreciation and amortisation - 0.2
CPH EBITDA 0.1 (0.5)
CPH adjusted operating profit/(loss) CPH adjusted operating profit/(loss) is based on CPH operating loss before the CPH adjusted gross profit (£'m) 2023 2022
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.
CPH operating profit/(loss) 0.1 (0.7)
Exceptional items - 0.4
CPH adjusted operating profit/(loss) 0.1 (0.3)
CPH TTV CPH TTV is a non-GAAP measure representing the cumulative total transaction CPH TTV (£'m) 2023 2022
value of sales booked
each month before cancellations
and adjustments.
* Costs relate to the gross costs for bookings made on an agent basis.
Revenue 6.0 5.8
Costs* and amendments 22.0 25.3
CPH TTV 28.0 31.1
APM Definition Reconciliation to closest GAAP measure
Exceptional items Exceptional items are certain Exceptional items (£'m) 2023 2022
costs/income that derive from events or transactions that fall outside of the
normal activities of the Group. For 2023, this consists of restructuring,
legal and professional costs. For 2022, this 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 Group and allow comparability to
prior years.
Exceptional cancellations - 1.3
Exceptional operating costs 3.5 1.3
Exceptional items 3.5 2.6
Group TTV Group TTV is a non-GAAP measure representing the cumulative total transaction Group TTV (£'m) 2023 Restated
value of sales booked each month before cancellations and adjustments.
(note 8)
2022
* Costs relate to the gross costs for bookings made on an agent basis.
** Bookings where revenue has been recognised on a travelled basis as a
principal.
Group revenue 170.2 143.4
Costs* and amendments 901.1 711.1
Booked in previous year and travelled in year** (20.9) (13.7)
Booked but not yet travelled** 20.0 8.6
Group TTV 1,070.4 849.4
Group adjusted revenue Group adjusted revenue as an agent is revenue adjusted for the impact of fair Group adjusted revenue (£'m) 2023 2022
value FX losses in 2023, for 2022, gross profit is adjusted for Covid-19 and
supplier disruption offset by fair value FX gains.
Group revenue 170.2 143.4
Exceptional cancellations - 1.0
Fair value FX losses/(gains) 0.8 (0.8)
Group adjusted revenue 171.0 143.6
Group adjusted gross profit Group adjusted gross profit is gross profit adjusted for the impact of fair Group adjusted gross profit (£'m) 2023 Restated
value FX losses in 2023, for 2022, gross profit is adjusted for Covid-19 and
(note 8)
supplier disruption offset by fair value FX gains.
2022
Gross profit as an agent 106.4 89.1
Gross profit as a principal 7.6 5.8
Group gross profit 114.0 94.9
Exceptional cancellations - 1.3
Fair value FX loss/(gain) 0.8 (0.8)
Group adjusted gross profit 114.8 95.4
APM Definition Reconciliation to closest GAAP measure
Long haul TTV Long haul TTV is a non-GAAP measure representing the cumulative total Long haul TTV (£'m) 2023 2022
transaction value of sales booked each month before cancellations and
adjustments.
* Costs relate to the gross costs for bookings made on an agent basis.
** Bookings where revenue has been recognised on a travelled basis as a
principal.
Group revenue 170.2 143.4
Costs* and amendments 901.1 711.1
Booked in previous year and travelled in year** (20.9) (13.7)
Booked but not yet travelled** 20.0 8.6
Short haul TTV (988.3) (795.9)
Long haul TTV 82.1 53.5
OTB adjusted EBITDA OTB adjusted EBITDA is based on OTB operating loss before depreciation, OTB adjusted EBITDA (£'m) 2023 2022
amortisation, impact of exceptional items and the non-cash cost of the
share-based payment schemes. Exceptional items consists of restructuring and
legal and professional costs. Exceptional items for 2022 consists of
exceptional cancellations as a result of Covid-19 and supplier disruption in
2022 and legal and professional services. 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 operating profit 12.8 5.2
Exceptional items 3.3 1.9
Fair value FX losses/(gains) 0.8 (0.8)
Share-based payments 1.1 4.7
Depreciation and amortisation 9.9 6.7
Amortisation of acquired intangibles 4.2 4.4
OTB adjusted EBITDA 32.1 22.1
OTB adjusted revenue OTB adjusted revenue is revenue adjusted for the impact of fair value FX OTB adjusted revenue (£'m) 2023 2022
losses in 2023, for 2022, gross profit is adjusted for Covid-19 and supplier
disruption offset by fair value FX gains. 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 revenue 106.1 87.1
Exceptional cancellations - 0.6
Fair value FX losses/gains 0.8 (0.8)
OTB adjusted revenue 106.9 86.9
APM Definition Reconciliation to closest GAAP measure
OTB adjusted operating profit OTB adjusted operating profit is based on OTB operating profit/(loss) before OTB adjusted operating profit (£'m) 2023 2022
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 restructuring and legal and professional
costs. Exceptional items for 2022 consists of exceptional cancellations as a
result of Covid-19 and supplier disruption in 2022 and legal and professional
services. 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 operating profit 12.8 5.2
Exceptional items 3.3 1.9
Fair value FX losses/gains 0.8 (0.8)
Share-based payments 1.1 4.7
Amortisation of acquired intangibles 4.2 4.4
OTB adjusted operating profit 22.2 15.4
OTB marketing as % revenue OTB revenue after marketing cost is revenue after 'OTB' online and offline OTB revenue after marketing cost (£'m) 2023 2022
marketing costs.
OTB revenue 106.1 87.1
OTB online marketing costs (26.0) (27.0)
OTB offline marketing costs (14.6) (11.9)
OTB adjusted revenue after marketing costs 65.4 48.2
OTB marketing as % revenue 38% 45%
OTB EBITDA OTB EBITDA is based on OTB operating profit before depreciation and OTB EBITDA (£'m) 2023 2022
amortisation.
OTB operating profit 12.8 5.2
Depreciation and amortisation 14.1 11.1
OTB EBITDA 26.9 16.3
APM Definition Reconciliation to closest GAAP measure
OTB adjusted EBITDA as a percentage of adjusted revenue OTB adjusted EBITDA as a percentage of adjusted revenue is based on the OTB OTB adjusted EBITDA as a percentage of adjusted revenue 2023 2022
adjusted EBITDA divided by the revenue generated in the OTB business before
the impact of exceptional cancellations. Exceptional items consists of
restructuring and legal and professional costs. Exceptional items for 2022
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 by virtue of their size and in order to
reflect management's view of the performance of the Segment.
Revenue (£'m) 106.1 87.1
Exceptional cancellations (£'m) - 0.6
Fair value FX losses/gains (£'m) 0.8 (0.8)
OTB adjusted revenue (£'m) 106.9 86.9
OTB adjusted EBITDA (£'m) 32.1 22.1
OTB adjusted EBITDA as a percentage of adjusted revenue 30% 25%
OTB TTV OTB TTV is a non-GAAP measure representing the cumulative total transaction OTB TTV (£'m) 2023 2022
value of sales booked
each month before cancellations
and adjustments
* Costs relate to the gross costs for bookings made on an agent basis.
OTB revenue 106.1 87.1
Costs* and amendments 877.6 675.6
OTB TTV 983.7 762.7
Overheads % revenue Overheads as a percentage of revenue is based on the OTB revenue divided by Overheads % revenue 2023 2022
the overheads for OTB. OTB overheads is the administrative expenses excluding
the depreciation and amortisation.
OTB revenue (£'m) 106.1 86.9
Overheads (£'m) (32.3) (25.9)
Overheads % revenue 31% 30%
Overheads % TTV Overheads as a percentage of TTV is based on the OTB TTV divided by the Overheads % TTV 2023 2022
overheads for OTB. OTB overheads is the administrative expenses excluding
marketing costs, depreciation and amortisation.
OTB TTV (£'m) 983.7 762.7
Overheads (£'m) (32.3) (25.9)
Overheads % TTV 3.3% 3.4%
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