Investor Day Windmill Hill, Sussex 24 th September 2009 education, leisure and activity travel group
INVESTOR DAY PRESENTATION § Introduction – John Coleman § Financial Overview – Bob Baddeley § Education – Martin Davies § Hotel Breaks – Nick Cust § Adventure – Bob Baddeley § Camping – Steve Whitfield § Q&A education, leisure and activity travel group
CHAIRMAN JOHN COLEMAN education, leisure and activity travel group
INTRODUCTION § IMS released on 23 rd September § No new material information will be released today § The Group continues to perform well, given the current economic environment, and in line with management expectations § The Group continues to carefully manage its cash and borrowings § Year-end net debt is expected to be approximately £ 130 m § Education performing well: § Windmill Hill opened on time and on budget § Liddington acquisition first use of rights issue proceeds § Strong late bookings in Camping & Adventure § Hotel Breaks benefiting from improved supplier offers (lower room rates and train fares) § CEO recruitment process underway education, leisure and activity travel group
OUTLOOK § Group remains focused on cash generation and cost control across its businesses in expectation of continued challenging trading conditions § Opportunities for investment and growth – especially in Education § Education is 62% booked for 2009/10 § Hotel Breaks will benefit from less challenging comparatives § Adventure in the process of being restructured § Camping will continue to manage capacity, occupancy and yield tightly education, leisure and activity travel group
GROUP FINANCE DIRECTOR BOB BADDELEY education, leisure and activity travel group
ACTION TAKEN TO MANAGE COSTS AND CASH § Camping mobile-home net capital expenditure (£ 5 m) below depreciation (£ 7 m), 440 new units vs 950 originally proposed § Superbreak’s call centre resource reduced by a third § Explore restructured - staffing reduced by 35% aimed at maintaining operating margins § Earlier full payment and/or larger deposits from Camping customers § Full year dividend cut by 50% education, leisure and activity travel group
FINANCES § Net Debt at 30 September 2009 expected to be c. £ 130 m § Long-term committed credit facilities in place § Sufficient headroom against covenants to counter possible weaker trading conditions § Forex exposure for current year substantially covered at favourable rates - 2010 exposure 60% hedged § Interest costs are 80% fixed education, leisure and activity travel group
INVESTMENT IN EDUCATION § Plc investment in Education Division in 2008/09 will achieve ROCE > WACC § The Group uses IRR as the measure of performance for PGL Centres as opposed to ROCE: § Site maturity can take up to 3 years so Years 1 & 2 ROCE will be depressed due to development cycle § Caythorpe Court, which opened in 2006 with 400 beds, is expected to achieve an IRR well in excess of 20% from an investment of £ 13. 8 m § PGL centres at Windmill Hill and Liddington are expected to achieve IRRs of over 20% education, leisure and activity travel group
EDUCATION DIVISION MARTIN DAVIES education, leisure and activity travel group
DIVISION OVERVIEW § High margins § A market-leading position § Very high barriers to entry § Strong demand conditions § Under supply § Weak competitor proposition in activity centres § Visible income education, leisure and activity travel group
GROWING MARKET § Market for residential education centres has grown at ca. 10% p. a. in last five years, driven by reduction in funding of LEA centres and Governments Out of Classroom Learning directive § Growth in educational school trips due to decline in schools doing own ‘DIY’ trips and some increase in proclivity to do trips with an expanded syllabus § School ski market believed to be static (and subject more to vagaries of Easter/half term timing) – unclear educational value § Overall UK market estimated at £ 350 m- £ 400 m (but greater if UK based trips added) § Potential is large: NST/PGL have only 5 k core repeaters amongst 27 k UK schools education, leisure and activity travel group
PGL CENTRES § § § § Albatros, Côte d'Argent Barton Hall, South Devon Beam House, North Devon Boreatton Park, Shropshire Caythorpe Court, Lincolnshire Château de Grande Romaine Château du Tertre Club Mimosa, Languedoc Coast Court Farm, Wye Valley Domaine de Segries, Ardèche Dalguise, Perthshire Hameau-les-Ages, Dordogne Hillcrest, Wye Valley La Fosca, Costa Brava Le Pré Catelan, Opal Coast § § § § Liddington, Wiltshire Little Canada, Isle of Wight Llwyn Filly, Brecon Beacons Loch Ranza, Isle of Arran Lou Valagran, Ardèche Marchants Hill, Surrey Osmington Bay, Dorset Shorefield Country Park, Hampshire Tregoyd House, Brecon Beacons Whitecliff Bay, Isle of Wight Whitemead, Forest of Dean Windmill Hill, East Sussex Winmarleigh Hall, Lancashire education, leisure and activity travel group
CURRENT PERFORMANCE (1) • Sales intake for 2008/09 currently 7% above last year on a likefor-like basis • PGL centres growing at 12% for 2008/09 and 4% next year • Overall 100% booked for 2009 and 87% for 2010 (with over £ 31. 9 m in forward bookings in PGL centres) • Education less impacted by the recession education, leisure and activity travel group
CURRENT PERFORMANCE (2) § Windmill Hill in Sussex opened May 15 th § already 95% booked for 2010 § on course to achieve Group target IRR § PGL’s UK adventure centre capacity now at 7, 000 beds § Potential to grow UK bed stock at 5 -10% per annum § NST synergies now above plan education, leisure and activity travel group
LIDDINGTON § 100+ acre site with outdoor activity field, floodlit pitch, two lakes, parking etc. § Good access via motorway to London § Access to 17. 8 m population and 27% of schools in 2 hours drive time. § Ready to trade with minimal capex § Potential for significant bed stock expansion at low cost § Planned investment of £ 3. 2 m over 2010 – 2012 § Target IRR in excess of 20% § Caythorpe Court opened in 2006 –total investment of £ 13. 8 m now achieves target IRR education, leisure and activity travel group
SIGNIFICANT FURTHER OPPORTUNITIES Potential areas in which to add new outdoor education centres North East & Scottish Borders N. and E. London (M 25) Ireland (subject to research validation) West London & M 4 Corridor IOW/choice coastal sites education, leisure and activity travel group
RATIONALE FOR ACQUISITIONS Consolidation § “Winners” will provide out of classroom products for wide age range § Opportunity to increase the size of the business to match reputation § Benefits in overhead reduction, market pricing, market segmentation, gross margin and sales team PGL Brand Synergies People § Chance to develop second tier management and acquire additional expertise § § To meet all schools’ residential out of classroom learning needs Potential for investment in partnership for long term stability § Opportunity to broaden offer to 18+ market via Studytours brand Gap Year product Strategic Partnerships Broadening of brand proposition Horizontal integration § Opportunity to work with language schools to sweat asset base during low season education, leisure and activity travel group
SUMMARY § § § Profitable and cash generative business Established market leader Generic brand Growth markets Superb reputation Loyal customer base with significant repeat revenues Visible income Consolidation platform Quality asset backing including strong freehold property Management team with a record of success Opportunity to grow education, leisure and activity travel group
HOTEL BREAKS NICK CUST education, leisure and activity travel group
HOTEL BREAKS DIVISION § As at 19 th September sales intake for 2008/09 at -2% yoy § Bookit demonstrating counter cyclical characteristics § West End benefiting from ‘professionalising’ and uplifting web presence § Superbreak struggling with ‘bed bank’ overseas hotels but UK volumes strong education, leisure and activity travel group
HOTEL BREAKS DIVISION Superbreak § Overseas: § Bed bank bubble has burst § Our decline in line with non-aligned competitors § Still delivers full margin § 11% of divisional turnover education, leisure and activity travel group
HOTEL BREAKS DIVISION Superbreak § UK: § Volumes running consistently ahead of values § No pressure on gross margin from hotels § Travel agents increased from 46% to 55% in 2 years § National Express discount rail fares in place until 31 October 2010 § Packaging our key differentiating factor education, leisure and activity travel group
HOTEL BREAKS DIVISION Bookit § Growing distribution through other channels § Lower hotel prices, plentiful availability, modest hotel commission increases § Dutch customers very value focussed § Simple websites divided by length of stay § High brand recognition within a small country § Bungalows 30% of sales mix in 2008, 32% in 2009 – replicate hotel commission increases education, leisure and activity travel group
HOTEL BREAKS DIVISION West End Theatre Bookings § Strong strategic fit with Superbreak and NST § Exclusively low prices and unlimited supply § New distribution channels: § Airmiles, concierges, inbound, web § Better buying decisions – less commitments § Customers buying affordable treats education, leisure and activity travel group
ADVENTURE BOB BADDELEY education, leisure and activity travel group
OVERVIEW § Diverse portfolio of brands: EXPLORE!; DJOSER nl; THE TRAVELPLUS GROUP; REGAL § Provides value added services: hard to recreate individually § Industry structure: fragmented, highly competitive, high knowledge requirement, high margin/costs § Flexible product dimension: ‘open’ and ‘closed’ groups, small groups, individuals and families § Business characteristics: low fixed costs, minimum commitments, constant innovation § Sales for 2008/09 currently +4% but -20% for 2009/10 education, leisure and activity travel group
EXPLORE! RESTRUCTURING § Demand adversely affected by higher prices due to the weakness of sterling, although certain softer-currency destinations, such as Turkey, are performing reasonably well § In the recessionary environment, discretionary nature and relatively high absolute prices have led to weaker demand than our other divisions § Move towards later booking pattern over the summer § 50 heads taken out (c. 40% of staff) § Business will be profitable on passenger numbers 30% lower than 2007/8 (currently c. 20% down) § Adventure Division remains profitable education, leisure and activity travel group
EUROPEAN BUSINESSES Djoser § Good late bookings § Benefiting from the recent decision by the Dutch government to scrap the airport departure tax at Schiphol § Able to pass on reductions in airline fuel surcharges and supplier costs while maintaining margins Travelplus § German language-trip and gap-year specialist § Trading well and up both in volume and revenue terms § The business is benefiting from the fact that the trips it offers are less easily deferred, of educational benefit and often paid for by parents education, leisure and activity travel group
CAMPING STEVE WHITFIELD education, leisure and activity travel group
OVERVIEW Eurocamp and Keycamp § Market leading brands § Quality value for money product with flexibility and choice § High satisfaction levels and loyalty § Strong pan-European sales and marketing § Large segmented databases § Disciplined capacity planning and yield management § Cash generative (capex < depreciation) Eurocamp Independent § Pitch and ferry reservation service Easycamp / Ecamp § Value based holidays in site owned Mobile Homes § Low risk model well placed for growth education, leisure and activity travel group
PROSPECTS § Later booking profile § Focus on maximizing occupancy and yields § Strength of the euro has increased the sterling equivalent yields from Dutch and German bookings § High season demand will exceed supply § Low season sales more challenging as customers forego second breaks in favour of their main holiday education, leisure and activity travel group
BROADENING THE OFFER § Safari tents, introduced on a test basis this summer, are proving popular. § Good initial response to our UK camping offer, which we launched in May in partnership with the National Trust and Forest Holidays. education, leisure and activity travel group
Q&A education, leisure and activity travel group
APPENDICES education, leisure and activity travel group
INTERIM DIVISIONAL RESULTS *Before amortisation of acquired intangible assets, impairment of goodwill and exceptional restructuring costs. **Before amortisation of acquired intangible assets, IAS 39 revaluation of interest and currency derivatives, impairment of goodwill and exceptional restructuring costs. education, leisure and activity travel group
CREDIT FACILITIES • £ 265 m Five year facility committed to 2013 - £ 40 m Term Loan - £ 225 m RCF, Bonding and Ancillary Facility - still require £ 37. 6 m in CAA, ABTA, IATA and other bonds • Initial Margin 325 bps + LIBOR - ratchet down to 250 bps + LIBOR below 2 x EBITDA leverage • Costs c. £ 4. 8 m at 31 st March - Annual amortisation cost of £ 1. 2 m education, leisure and activity travel group
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