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RNS
On the Beach Group PLC  -  OTB   

INTERIM RESULTS

Released 07:00 10-May-2018

RNS Number : 5715N
On the Beach Group PLC
10 May 2018
 

10 May 2018

 

 

On the Beach Group plc

("On the Beach", the "Company" or the "Group")

 

INTERIM RESULTS FOR SIX MONTHS ENDED 31 MARCH 2018

 

19% GROWTH IN GROUP REVENUE AND 15% Growth in ADJUSTED GROUP PBT

 

Financial & Operational Highlights

 

Group

 

 

6 months to
31 March 2018

6 months to
31 March 2017

Change

Group revenue

 

£45.3m

£38.1m

+19%

Adjusted Group profit before tax(1)

 

£14.0m

£12.2m

+15%

Group profit before tax

 

£10.8m

£9.9m

+9%

Basic and diluted earnings per share

 

6.5p

6.1p

+7%

Adjusted earnings per share(2)

 

8.5p

7.4p

+15%

Interim dividend declared

1.1p

0.9p

+22%

 

•     Group revenue increased 19% to £45.3m (H1 2017: £38.1m)

•     Adjusted Group profit before tax(1) up 15% to £14.0m (H1 2017: £12.2m) including the estimated impact of £1.1m for lost bookings due to winter seat availability and seat pricing following the Monarch failure

•     Net debt at 31 March 2018 of £11.6m (H1 2017: £2.3m debt) reflecting normal seasonal working capital requirements and £12m for the funding of Sunshine acquisition.

•     Monarch reimbursement asset of £5m recovered in full. FY17 provision of £7m has been fully utilised.

•     Interim dividend declared of 1.1p per share (H1 2017: 0.9p)

 

(1)       Adjusted Group profit before tax is profit before tax before amortisation of acquired intangibles of £2.1m (H1 2017: £2.1m), share based payments £0.7m (H1 2017: £0.2m) and litigation costs of £0.3m (H1 2017: nil)

(2)       Adjusted earnings per share is Group adjusted profit after tax(1) divided by the average number of shares in issue during the period

UK

•     UK revenue up 19% to £44.4m (H1 2017: £37.5m)

•     UK revenue after marketing costs up 19% to £23.0m (H1 2017: £19.4m)

•     Estimated impact of £1.1m for lost bookings due to winter seat availability and seat pricing following the Monarch failure

•     Adjusted UK EBITDA(3) up 17% to £17.0m (H1 2017: £14.5m) 

•     Strong booking and share growth supported by some modest and tactical discounting

•     Daily unique visitors(4) increased by 23.9% to 34.1m (H1 2017: 27.5m)

•     Branded and free traffic increased to 62% of overall traffic (H1 2017: 56.7%)

•     Percentage of revenue spent on online marketing increased to 40.6% (H1 2017: 40.4%), with an accelerated investment in the Sunshine.co.uk brand to drive traffic growth and to offset Sunshine's historic under-investment in paid search

 

(3)       Adjusted EBITDA excludes litigation costs and share based payments. See note 2 for the reconciliation to the nearest GAAP measure.

(4)       Daily UVs: Number of individuals, as defined by an IP address, visiting pages from the onthebeach.co.uk or sunshine.co.uk websites during a 24 hours period

 

 

International

•     International revenue increased by 51% (H1 2017: 20%), with Sweden enjoying its strongest period of trading since launch, supported by an increased investment in Sweden and Norway to accelerate growth

•     Launch of third international market in Denmark planned for May 2018

•     International EBITDA loss of £(1.6)m (H1 2017 £(1.0)m)

 

 

Simon Cooper, Chief Executive of On the Beach Group plc, commented:

"On the Beach has delivered a solid performance in H1, with strong booking and share growth supported by some modest and tactical discounting. Booking growth strengthened towards the end of the period and has continued into H2.

"As referenced in our AGM update on 8 February 2018, the flight capacity constriction following Monarch's collapse has driven an increase in seat prices and a corresponding reduction in bookings. The position regarding flight capacity continues to recover as incremental capacity has been scheduled which alleviates this constriction.

"Given the resilient and flexible nature of our business model, the Board remains confident in delivering a full year result in line with management's expectations, taking into account the one-off impact of flight capacity constraints as a result of the Monarch failure and the accelerated investment to support International growth.

"To support our continued desire to attract and retain the best digital talent, we have signed a lease on a new digital HQ in Manchester which has the capacity to support our growth ambitions. Fit out work will begin shortly and we are scheduled to occupy this exciting new space by the end of 2018."  

 

Analyst Meeting

A meeting for analysts will be held today at the offices of FTI Consulting, 200 Aldersgate, London, EC1A 4HD commencing at 09:30am. 

 

 

For further information: 

 

On the Beach Group plc

Simon Cooper, Chief Executive Officer

Paul Meehan, Chief Financial Officer

 

via FTI Consulting 

FTI Consulting 

Jonathon Brill

Alex Beagley

Fiona Walker

Charlotte Cobb

 

Tel: +44 (0)20 3727 1000

 

About On the Beach

 

With over 20% share of online sales in the short haul beach holiday market, we are one of the UK's largest online beach holiday retailers. We have significant opportunities for growth and a long-term mission to become Europe's leading online retailer of beach holidays. By using our innovative technology, low-cost base and strong customer-value proposition to provide a structural challenge to legacy tour operators and travel agents, we continue our journey to disrupt the online retail of beach holidays. Our model is customer-centric, asset light, profitable and cash generative.

 

www.onthebeachgroupplc.com

 

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

 

Chief Executive's Review

Summary of Operating Performance

 

On the Beach continues to be a dynamic, entrepreneurial and ambitious business delivering value for money beach holidays that are personalised to our customers' individual needs. The Group maintains a daily focus to improve the quality of its customer proposition and the value that it provides to its growing customer base.

 

We have continued to grow market share in H1, with daily unique visitors to site(4) in the UK increasing 23.9% to 34.1m (H1 2017: 27.5m). In light of our expectation of a strong recovery in demand we have continued to invest in both online and offline marketing activity to build trading momentum into the start of H2. The phasing of our offline marketing investment has been significantly different YOY with a heavier weight of investment at the end of the period. This has driven online marketing expenditure as a percentage of revenue to 40.6% (H1 2017: 40.4%), delivering a revenue after marketing costs increase of 18.6% to £23.0m (H1 2017: £19.4m). Our continued growth has been delivered by executing a focused strategy to optimise our customer proposition to increase conversion rates and improve margin while driving an efficient increase in our market traffic share, further enhancing our ability to gain market share from traditional tour operators.

 

(4) Daily UVs: Number of individuals, as defined by an IP address, visiting pages from the onthebeach.co.uk or sunshine.co.uk websites during a 24 hour period

 

Strategy and growth

 

The Group has a mission to make it simple for customers to plan, find and book their perfect beach holiday and a vision to be Europe's leading online retailer of beach holidays.

 

On the Beach has delivered significant growth within a growing market over the last three years by evolving a strategy based around the following drivers:

 

1. Out-innovating through agility and investment in talent and technology

·  Improvements to agile working methodologies continue to increase throughput of benefits-delivering features and functionality

·  Continued evolution of core platform to support future innovations

 

2. Driving an efficient increase in market traffic share

·      Daily unique visitor growth of 23.9% in H1 and significant market share growth

·      Branded and free traffic increased to 62.0% of overall traffic to site (H1 2017: 56.7%)

·      Percentage of revenue spent on online marketing (H1 2018: 40.5% vs H1 2017: 40.5%)

·      Third year of full national TV advertising campaign and second year of Benidorm TV programme sponsorship

3. Optimising and personalising our multi device customer proposition

·      5.8m logged sessions in H1 2018, a 16% increase (H1 2017: 5.0m)

·      Responsive site now serves 60.7% of UK traffic on smartphone (H1 2017: 52.7%)

·      Repeat purchase rate increased to 42.9% (H1 2017: 40.3%)

 

4. Leveraging increased revenue through direct and differentiated supply

·      68% of all hotel buying through direct contracting (H1 2017: 66%)

·      Further progress made to increase percentage of rate and access of exclusive hotel supply throughout FY18 and beyond whilst maintaining risk-free model

5. Expanding our model into new source markets and products and driving operational leverage

·      Fixed and variable cost as a percentage of revenue 12.9% (H1 2016: 12.5%) reflecting completion of integration of the Sunshine brand

·      Branded and free visits to ebeach.se and ebeach.no continue to increase and repeat purchase rate continues to improve to 23% (H1 2017: 18%)

·      Denmark website (ebeach.dk) launches during May 2018

 

We have continued to invest in our people and our platform which allows us to innovate at an increasing pace and, in doing so, stay ahead of the competition. To support our continued desire to attract the best digital talent, we have recently signed a lease on a new digital HQ in Manchester which has the capacity to support our growth ambitions. Fit out work will begin shortly and we are scheduled to occupy this exciting new space by the end of 2018.

 

Recent market trends

 

As referenced in our AGM update on 8 February 2018, the flight capacity constriction post Monarch's collapse drove an increase in seat prices and corresponding reduction in bookings. This short term flight supply constriction had a detrimental impact on trading in H1 whilst airlines rescheduled capacity to fill the demand left by Monarch. Supply is now returning to a more normal pattern, together with a return in demand for peak departures and since the period end we have seen a notable improvement in trading.

Marketing

In light of our expectation of a strong recovery in demand we have continued to invest in both online and offline marketing activity to build trading momentum into the start of H2. The phasing of our offline investment is significantly different YOY with a heavier weight of the investment in the end of the half. This investment has delivered strong momentum into the start of H2.

Sunshine.co.uk

Following the integration of Sunshine onto the OTB platform we have driven strong revenue growth through H1. We have continued to invest the majority of this incremental revenue to drive traffic growth and to offset Sunshine's historic underinvestment in paid search marketing. Sunshine volumes are also helping to support volume growth with key hotelier partners.

Board changes

 

As announced separately today, Richard Segal has informed the Board of his intention to step down as Non-Executive Chairman, a position he has held since October 2013. Richard has led the Group through a period of strong change and growth, as both a private and listed business, and the Board expresses its deep gratitude for his contribution and guidance during that time.

 

After a period of transition Richard will be succeeded by Lee Ginsberg, currently Senior Independent Non-Executive Director, at a date yet to be confirmed. At that time, David Kelly will become Senior Independent Director. Lee and David have both been on the Board of the Company throughout its life as a listed entity. The Nomination Committee has commenced the process for recruiting a new non-executive director.

Current Trading & Outlook

 

We are efficiently executing our strategy of investing in our people, brand, supply and technology and we continue to realise the benefits of operational leverage from our low fixed cost base.  A number of the technological developments that we have been working on throughout H1 will be fully rolled out in H2 and we expect will deliver significant benefits.

Given the resilient and flexible nature of our business model and the expectation that demand for peak summer departures will continue to improve, the Board remains confident in delivering a full year result in line with management's expectations, taking into account the one-off impact of flight capacity constraints as a result of the Monarch failure and the accelerated investment to support International growth.

The current market dynamics are presenting the Group with many opportunities to leverage its scale and technological capability to strengthen its market leading position, such as the recently completed acquisition of Sunshine.co.uk, and the Board continues to evaluate opportunities to enhance the Group's profitability and market share position.

 

Financial Review

 

The Group organises its operations into two principal financial reporting segments, being UK (the "UK Segment"), the Group's established market and International (the "International Segment"), the Group's developing market. In each of the UK Segment and the International Segment, the Group realises 93% of revenue from dynamically packaged holidays with the remainder single element products such as flights or hotels.

UK Segment performance

 

£m

H1 2018

H1 2017

Change %

Revenue

44.4

37.5

18.5%

Revenue after marketing costs

23.0

19.4

18.6%

Variable costs

(2.4)

(2.0)

 

Overhead costs

(3.6)

(2.9)

 

Adjusted UK EBITDA*

17.0

14.5

17.2%

Adjusted UK EBITDA* % revenue

38.3%

38.7%

 

 

* Adjusted EBITDA excludes litigation costs and share based payments. See note 2 for the reconciliation to the nearest GAAP measure. 

UK segment revenue and marketing costs

 

Revenue increased by 18.5% to £44.4m (H1 2017: £37.5m) with On the Beach's agile business model allowing the Group to react to rapid changes in consumer demand. The acts of terrorism in recent years, have continued to impact Egypt but we have seen a return of demand to the Eastern Mediterranean in H1 2018, together with continuing strong demand for holidays in the Western Mediterranean. 

 

Marketing expenses (excluding offline) for the first half as a percentage of revenue were 40.6% (H1 2017: 40.5%) with total expenditure of £18.0m (H1 2017: £15.2m) reflecting both the accelerated investment in the Sunshine brand to offset the historic underinvestment in paid search marketing and a continued investment overall to drive traffic to build trading momentum for H2. We have increased expenditure in H1 on the Group's offline TV advertising to £3.4m (H1 2017: £2.9m) with a fully national campaign and a continuation of the Benidorm television programme sponsorship on ITV.

 

UK segment Adjusted EBITDA*

 

Whilst we continue to benefit from scale and improve operational leverage, the combination of Sunshine.co.uk (historically a lower margin, lower Adjusted EBITDA* % business) into On the Beach impacts overall blended cost ratios and Adjusted EBITDA* %, whilst we grow and invest in the business as part of the enlarged Group:

 

 

H1 2018

H1 2017

Variable costs % revenue 

5.3% 

5.3%

Overhead costs % revenue

8.1%

7.7%

Total

13.4%

13.0%

 

Adjusted EBITDA* increased 17.2% to £17.0m (H1 2017: £14.5m). Adjusted EBITDA* as a percentage of revenue was 38.3% (H1 2017 38.7%).

 

*Adjusted EBITDA excludes litigation costs and share based payments. See note 2 for the reconciliation to the nearest GAAP measure.

 

International Segment performance

 

£m

H1 2018

H1 2017

Change %

Revenue

0.9

0.6

50.0%

Revenue after marketing costs

 (1.2)

 (0.9)

 

Variable costs

 (0.2)

     (0.1)

 

Overhead costs

(0.2)

 -

 

International EBITDA

(1.6)

(1.0)

 

 

The Group has focused on growing international share both online and offline supported by a TV campaign in December. We also launched a site in Denmark in May 2018.

 

Losses in the first half were £1.6m (H1 2017: £1.0m) and are derived almost entirely from the marketing investment required to drive branded awareness and share of traffic which will in turn improve efficiency.

 

Adjusted group profit before tax and retained earnings

The Group reports adjusted group profit before tax and amortisation of acquired intangibles to allow better interpretation of the underlying trend in profit before tax.

£m

H1 2018

H1 2017

Change %

Adjusted Group operating profit before amortisation(6)

13.9

12.3

13.0%

Finance costs

(0.1)

(0.1)

 

Finance income

0.2

-

 

Adjusted Group Profit before tax

14.0

12.2

14.8%

 

 

 

 

Litigation costs

(0.3)

-

 

Share based payments

(0.7)

(0.2)

 

Amortisation of acquired intangibles

(2.2)

(2.1)

 

Profit before taxation

10.8

9.9

9.1%

Taxation

(2.3)

(2.0)

 

Profit for the half year

8.5

7.9

7.6%

 

(6) Includes amortisation of development costs of £1m but excludes amortisation of acquired brand and website technology intangible assets of £2.2m (H1 2017: £2.1m) and share based payments of £0.7m (H1 2017:£0.2m).

 

Finance costs

The Group has in place a revolving credit facility of up to £35.0m with Lloyds. The drawdown at 31 March 2018 was £23.5m (H1 2017: £9.0m) and the peak drawdown for the period was £23.5m.  Borrowing limits vary under the RCF to reflect the seasonal requirements of the Group and as a result of the flexible payment options given to customers.

 

Share based payments

The Group has an LTIP scheme in place and there have now been four sets of awards granted, which vest based on performance criteria between September 2018 and September 2020.  In accordance with IFRS 2, the group has recognised a non-cash charge of £0.7m (H1 2017: £0.2m).

Taxation

The Group tax charge of £2.3m represents an effective rate of 21.3% (H1 2017: 19.6%) which was higher than the average standard UK rate of 19% (H1 2017: 20%).  The current tax charge is affected by a deferred tax credit of £0.4m (2017 H1: £0.4m) which is released in line with the amortisation of £2.1m on the valuation of acquired intangibles on the investment by Inflexion in October 2013.

Cash flow and net debt

£m

H1 2018

H1 2017

FY17

Adjusted EBITDA*

15.4

13.5

            31.2

Capitalised development expenditure

 (1.7)

 (1.3)

            (2.7)

Movement in working capital

  (48.5)

  (34.8)

               (3.4)

Capital expenditure

 (0.8)

 (0.4)

         (0.5) 

Adjusted operating cash flow (7)

  (35.6)

  (23.0)

24.6

 

(7) Adjusted operating cash flow is stated as net cash (outflow)/inflow from operating activities before tax paid and after deducting capital expenditure on PPE and intangible assets.

* Adjusted EBITDA excludes litigation costs and share based payments. See note 2 for the reconciliation to the nearest GAAP measure.

 

 

On an annual basis the Group operates a highly cash generative business model and makes no stock commitment. The cash flow profile of the Group is seasonal with approximately 50% of customers travelling in the period June to August and hence the cash flows (excluding any cash held in the trust) experience a trough prior to June through to August and a peak following this. The movement in the trust account balance for the half year is £19.9m (H1 2017: £23.0m). At 30 September 2017 the Group recognised a £5.0m reimbursement asset as well as a £7.0m provision in respect of the failure of the Monarch Airlines Group. The £5.0m receivable was recovered in full by the end of H1 FY18. The £7.0m provision which represented the cost the Group incurred to fulfil its obligations to customers under the ATOL regulations to arrange refunds or alternative flights relating to the failure has been fully utilised. No further provision is required.  

 

Dividend

The Board has declared an interim dividend of 1.1p per share (H1 2017 0.9p). The interim dividend will be paid on 29 June 2018 to members on the register at the close of business on 1 June 2018. 

 

Simon Cooper

CEO  

10 May 2018
 

Paul Meehan

CFO

10 May 2018            

On the Beach Group Plc

INTERIM RESULTS FOR THE 6 MONTHS ENDED 31 MARCH 2018

CONDENSED CONSOLIDATED INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME

For the 6 months ended 31 March 2018

 

 

6 months ended 31 March 2018

 

6 months ended 31 March 2017

 

 

 

Note

 

 

 

Year ended 30 September 2017

 

 

 

£'000

 

£'000

 

£'000

 

 

 

unaudited

 

unaudited

 

audited

 

 

 

 

 

 

 

 

Revenue

2

 

45,314

 

38,066

 

83,555

Administrative expenses before amortisation and exceptional costs

3

 

(31,182)

 

(25,026)

 

(53,298)

 

Group operating profit before amortisation of intangible and exceptional costs

 

 

14,132

 

13,040

 

30,257

 

 

 

 

 

 

 

 

Exceptional costs

 

 

-

 

-

 

(2,667)

Amortisation of intangible assets

 

 

(3,430)

 

 

(3,124)

 

(6,442)

Group operating profit

 

 

10,702

 

9,916

 

21,148

 

 

 

 

 

 

 

 

Finance costs

 

 

(145)

 

(78)

 

(177)

Finance income

 

 

201

 

31

 

97

Net finance costs/(income)

 

 

56

 

(47)

 

(80)

 

 

 

 

 

 

 

 

Profit before taxation

 

 

10,758

 

9,869

 

21,068

Taxation

4

 

(2,272)

 

(1,986)

 

(3,068)

 

 

 

 

 

 

 

 

Profit for the year

 

 

8,486

 

7,883

 

18,000

 

 

 

 

 

 

 

 

Total comprehensive income for the period

 

 

8,486

 

7,883

 

18,000

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

Equity holders of the parent

 

 

8,486

 

7,883

 

18,000

  

 

 

 

 

 

 

 

Basic and diluted earnings per share attributable to the equity Shareholders of the Company:

 

 

 

 

 

 

 

Basic and diluted earnings per share

5

 

6.5p

 

6.1p

 

13.8p

 

 

 

 

 

 

 

 

Adjusted basic earnings per share *

5

 

8.5p

 

7.4p

 

17.6p

 

 

 

 

 

 

 

 

Adjusted profit measure

 

 

 

 

 

 

 

Adjusted group PBT (before amortisation of acquired intangibles, exceptional costs, share based payments and litigation costs) *

3

 

14,016

 

12,150

 

28,515

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* This is a non GAAP measure, refer to note 3 & 5

The company has no other comprehensive income in the current or prior year

 

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 March 2018

 

 

At 31 March 2018

 

At 31 March 2017

 

At 30 September 2017

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

unaudited

 

unaudited

 

audited

Assets

Note

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

Intangible assets

6

70,820

 

62,828

 

72,512

Property, plant and equipment

 

1,960

 

884

 

1,396

Total non-current assets

 

72,780

 

63,712

 

73,908

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Trade and other receivables

 

156,880

 

111,752

 

56,508

Cash and cash equivalents

7

70,210

 

55,260

 

71,569

Total current assets

 

227,090

 

167,012

 

128,077

Total assets

 

299,870

 

230,724

 

201,985

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

Share capital

 

1,304

 

1,304

 

1,304

Retained earnings

 

233,579

 

217,598

 

226,849

Capital contribution reserve

 

500

 

500

 

500

Merger reserve

 

(132,093)

 

(132,093)

 

(132,093)

Total equity

 

103,290

 

87,309

 

96,560

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

Deferred tax

 

6,118

 

6,607

 

6,441

Total non-current liabilities

 

6,118

 

6,607

 

6,441

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Corporation tax payable

 

1,705

 

3,609

 

2,406

Trade and other payables

 

164,355

 

123,201

 

89,453

Loans and overdrafts

8

23,500

 

9,000

 

-

Provisions

9

-

 

-

 

7,000

Derivative financial instruments

8

902

 

998

 

125

Total current liabilities

 

190,462

 

136,808

 

98,984

 

 

 

 

 

 

 

Total liabilities

 

196,580

 

143,415

 

105,425

Total equity and liabilities

 

299,870

 

230,724

 

201,985

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

For the 6 months ended 31 March 2018

 

                 

 

 

 

Share capital

Share premium

Merger reserve

Capital contribution reserve

Retained earnings

Total

For the year ended 30 September 2017

 

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 30 September 2016

 

1,304

-

(132,093)

500

212,427

82,138

Share based payment charges

 

-

-

-

-

465

465

Dividends paid during the year

 

-

-

-

-

(4,043)

(4,043)

Total comprehensive income for the period

-

-

-

-

18,000

18,000

Balance at 30 September 2017

 

1,304

-

(132,093)

500

226,849

96,560

 

 

 

 

 

 

 

 

 

 

Share capital

Share premium

Merger reserve

Capital contribution reserve

Retained earnings

Total

For the 6 months ended 31 March 2017

 

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 30 September 2016

 

1,304

-

(132,093)

500

212,427

82,138

Share based payment charges

 

-

-

-

-

158

158

Dividends paid during the year

 

-

-

-

-

(2,870)

(2,870)

Total comprehensive income for the period

-

-

-

-

7,883

7,883

Balance at 31 March 2017 (unaudited)

 

1,304

-

(132,093)

500

217,598

87,309

 

 

 

 

 

 

 

 

 

 

Share capital

Share premium

Merger reserve

Capital contribution reserve

Retained earnings

Total

For the 6 months ended 31 March 2018

 

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 30 September 2017

 

1,304

-

(132,093)

500

226,849

96,560

Share based payment charges

 

-

-

-

-

723

723

Dividends paid during the year

 

-

-

-

-

(2,479)

(2,479)

Total comprehensive income for the period

-

-

-

-

8,486

8,486

Balance at 31 March 2018 (unaudited)

 

1,304

-

(132,093)

500

233,579

103,290

 

CONSOLIDATED STATEMENT OF CASHFLOWS

For the 6 months ended 31 March 2018

 

 

 

 

 

 

 

 

 

 

6 months ended 31 March 2018

 

 

Year ended 30 September 2017

 

 

unaudited

 

unaudited

 

audited

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit before taxation

 

10,758

 

9,869

 

21,068

Adjustments for:

 

 

 

 

 

 

Depreciation

 

283

 

220

 

442

Amortisation of intangible assets

 

3,430

 

3,124

 

6,442

Finance costs

 

145

 

78

 

177

Finance income

 

(201)

 

(31)

 

(97)

Share based payments

 

723

 

158

 

465

 

 

15,138

 

13,418

 

28,497

Changes in working capital:

 

 

 

 

 

 

Increase in trade and other receivables

 

(100,371)

 

(81,819)

 

(9,589)

Increase in trade and other payables

 

71,679

 

69,988

 

10,950

Increase in trust account

 

(19,884)

 

(22,996)

 

(4,729)

 

 

(48,576)

 

(34,827)

 

(3,368)

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

Cash (consumed)/generated from operating activities

 

(33,438)

 

(21,409)

 

25,129

Tax paid

 

(3,293)

 

(2,424)

 

(5,110)

Net cash (outflow)/inflow from operating activities

 

(36,731)

 

(23,833)

 

20,019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

Purchase of property, plant and equipment

 

(847)

 

(357)

 

(475)

Purchase of intangible assets

 

(1,739)

 

(1,290)

 

(2,651)

Interest received

 

201

 

31

 

97

Acquisition of subsidiary, net of cash acquired

 

(3,000)

 

-

 

(5,795)

Net cash inflow/(outflow) from investing activities

 

(5,385)

 

(1,616)

 

(8,824)

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from borrowings

 

23,500

 

9,000

 

 -

Equity dividends paid

 

(2,479)

 

(2,870)

 

(4,043)

Interest paid

 

(145)

 

(49)

 

(177)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash inflow/(outflow) from financing activities

 

20,876

 

6,081

 

(4,220)

 

 

 

 

 

 

 

Net (decrease)/increase in cash at bank and in hand

 

(21,240)

 

(19,368)

 

6,975

Cash at bank and in hand at beginning of year

 

33,027

 

26,052

 

26,052

Cash at bank and in hand at end of year

 

11,787

 

6,684

 

33,027

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

 

1.   Basis of preparation

This condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU. The annual financial statements of the Group are prepared in accordance with International Reporting Standards (IFRSs) as adopted by the EU. As required by the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority, the condensed set of financial statements has been prepared applying the accounting policies and presentation that were applied in the preparation of the company's published consolidated financial statements for the year ended 30 September 2017.

The Group's last annual consolidated financial statements have been prepared in accordance with IFRS as adopted by the European Union.

The comparative figures for the year ended 30 September 2017 are an abridged version of the Group's last annual financial statements and, together with other financial information contained in these interim results, do not constitute statutory financial statements of the Group as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for the year ended 30 September 2017 has been delivered to the Registrar of Companies. The auditor has reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under s498(2) or (3) of the Companies Act 2006.

These interim financial statements were authorised for issue by the Group's Board of Directors on 8 May 2018

The financial information for the six months ended 31 March 2018 has been reviewed by KPMG, the Company's external auditor. Their report is included within this announcement.

Going concern

The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. The Groups current revolving credit facility expires in December 2018. The Group expects to renew this facility within the next few months. The lending profile of the facility will be consistent with the current facility.

Accounting estimates and judgements

In preparing these interim financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 30 September 2017.

Standards issued but not yet effective

As of the date of authorisation of these interim financial statements, the following standards were in issue but not yet effective:

·      IFRS 9 'Financial Instruments' was endorsed for adoption by the EU in November 2016 and is effective for accounting periods beginning on or after 1 January 2018.

·      IFRS 15 'Revenues from Contracts with Customers' is effective for periods beginning on or after 1 January 2018.

·      IFRS 16 'Leases' is effective for periods beginning on or after 1 January 2019 subject to EU endorsement

There has been no changes to management's opinion since the 2017 Annual report. We will continue to work towards quantifying the expected impact of the changes and will provide you with an update in the 2018 annual report.

2

Segmental report

 

The management team consider the reportable segments to be "UK" and "International". All segment revenue, operating profit, assets and liabilities are attributable to the group from its principal activities as on online travel agent.

Sunshine.co.uk Limited is disclosed within the "UK" segment.

 

6 months ended 31 March 2018

 

 

(unaudited)

 

 

UK

International

Total

 
 

 

£'000

£'000

£'000

 

Income

 

 

 

 

Revenue

44,386

928

45,314

 

Marketing expenditure excluding offline

(18,009)

(1,563)

(19,573)

 

Incremental offline expenditure

(430)

-

(430)

 

Other offline expenditure

(2,919)

(570)

(3,489)

 

Revenue after marketing costs

23,027

(1,206)

21,822

 

Adjusted EBITDA

17,035

(1,557)

15,478

 

Litigation costs & share based payments

(1,063)

-

(1,063)

 

EBITDA

15,972

(1,557)

14,415

 

Depreciation & amortisation

(3,972)

(81)

(3,713)

 

Segment operating profit/(loss)

12,340

(1,638)

10,702

 

 

 

 

 

 

Group operating profit/(loss)

12,340

(1,638)

10,702

 

 

 

 

 

 

Finance costs

 

 

(145)

 

Finance income

 

 

201

 

Profit before taxation

 

 

10,758

 

 

 

 

 

 

Non-current assets

 

 

 

 

Goodwill

31,624

-

31,624

 

Other intangible assets

38,993

203

39,196

 

Property, plant and equipment

1,960

-

1,960

 

 

 

 

 

 

6 months ended 31 March 2017

 

 

 

 

 

 

 

UK

International

Total

 

 

 

 

 

 

 

£'000

£'000

£'000

 

 

Income

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

37,450

616

38,066

 

 

Marketing expenditure excluding offline

 

 

 

 

(15,113)

(1,140)

(16,253)

 

 

Incremental offline expenditure

 

 

 

 

(678)

-

(678)

 

 

Other offline expenditure

 

 

 

 

(2,242)

(365)

(2,607)

 

 

Revenue after marketing costs

 

 

 

 

19,417

(889)

18,528

 

 

Adjusted EBITDA

 

 

 

 

14,464

(1,046)

13,418

 

 

Share based payments

 

 

 

 

(158)

-

(158)

 

 

EBITDA

 

 

 

 

14,306

(1,046)

13,260

 

 

Depreciation and amortisation

 

 

 

 

(3,268)

(76)

(3,344)

 

 

Segment operating profit/(loss)

 

 

 

 

11,038

(1,122)

9,916

 

 

Group operating profit

 

 

 

 

-

-

9,916

 

 

 

 

 

 

 

 

 

 

 

 

Finance costs

 

 

 

 

 

 

(78)

 

 

Finance income

 

 

 

 

 

 

31

 

 

Profit before taxation

 

 

 

 

 

 

9,869

 

 

 

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

 

 

Goodwill

 

 

 

 

21,544

-

21,544

 

 

Other intangible assets

 

 

 

 

41,015

269

41,284

 

 

Property, plant and equipment

 

 

 

 

884

-

884

 

 

 

 

 

 

 

 

Year ended 30 September 2017

 

 

 

 

 

UK

International

Total

 

 

 

 

 

 

 

 

 

£'000

£'000

£'000

Income

 

 

 

 

 

 

 

Revenue

 

 

 

 

81,595

1,960

83,555

Marketing expenditure excluding offline

 

 

 

 

-

-

(36,109)

Offline expenditure

 

 

 

 

(2,920)

(365)

(3,284)

Revenue after marketing costs

 

 

 

 

44,858

(1,573)

43,285

Adjusted EBITDA

 

 

 

 

33,160

(1,996)

31,164

Share based payments

 

 

 

 

(465)

-

(465)

EBITDA

 

 

 

 

32,695

(1,996)

30,699

Depreciation and amortisation

 

 

 

 

(6,729)

(155)

(6,884)

Segment operating profit/(loss)

 

 

 

 

25,966

(2,151)

23,815

Exceptionals

 

 

 

 

 

 

(2,667)

Group operating profit

 

 

 

 

 

 

21,148

 

 

 

 

 

 

 

 

Finance costs

 

 

 

 

 

 

(177)

Finance income

 

 

 

 

 

 

97

Profit before taxation

 

 

 

 

 

 

21,068

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

Goodwill

 

 

 

 

31,624

-

31,624

Other intangible assets

 

 

 

 

40,636

252

40,888

Property, plant and equipment

 

 

 

 

1,396

-

1,396

 

3 Operating profit

 

 

 

 

a)

Operating expenses

 

 

 

 

 

 

Expenses by nature including exceptional items:

 

 

 

 

 

 

 

 

 

 

 

6 months ended 31 March 2018

 

6 months ended 31 March 2017

 

Year ended 30 September 2017

 

 

unaudited

 

unaudited

 

audited

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

Marketing

23,492

 

19,537

 

40,270

 

Depreciation

283

 

220

 

442

 

Staff costs

3,644

 

3,066

 

6,916

 

IT hosting, licences & support

608

 

476

 

1,054

 

Credit / debit card charges

844

 

864

 

2,168

 

Other

2,311

 

863

 

2,448

 

Total administrative expenses

31,182

 

25,026

 

53,298

 

 

 

 

 

 

 

 

Exceptional costs

-

 

-

 

2,667

 

Amortisation of intangible assets

3,430

 

3,124

 

6,442

 

Total exceptional and cost amortisation

3,430

 

3,124

 

9,109

 

Total expenses

34,612

 

28,150

 

62,407

                 

 

 

 

 

b)

Adjusted group PBT

 

 

 

 

 

 

 

 

Management measures the overall performance of the Group by reference to Adjusted Group PBT, a non-GAAP measure:

 

 

 

 

 

 

 

 

 

 

 

 

6 months ended 31 March 2018

 

6 months ended 31 March 2017

 

Year ended 30 September 2017

 

 

 

 

unaudited

 

unaudited

 

audited

 

 

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

 

 

Profit before taxation

10,758

 

9,869

 

21,068

 

 

 

Exceptional acquisition costs

-

 

-

 

667

 

 

 

Litigation costs

340

 

-

 

-

 

 

 

Monarch charge (net)

-

 

-

 

2,000

 

 

 

Amortisation of acquired intangibles

2,195

 

2,123

 

4,315

 

 

 

Share based payments charge

723

 

158

 

465

 

 

 

Adjusted group PBT

14,016

 

12,150

 

28,515

 

 

 

4

Taxation

 

6 months ended 31 March 2018

 

6 months ended 31 March 2017

 

Year ended 30 September 2017

 

 

unaudited

 

unaudited

 

audited

 

Analysis of charge in year

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

Current tax on profit for the year

2,597

 

2,387

 

4,956

 

Adjustments in respect of prior years *

-

 

-

 

(1,063)

 

Total current tax

2,597

 

2,387

 

3,893

 

 

 

 

 

 

 

 

Deferred tax on profits for the year

 

 

 

 

 

 

Origination and reversal of temporary differences

(325)

 

(401)

 

(825)

 

Impact of change in tax rate

-

 

-

 

-

 

Total deferred tax

(325)

 

(1,030)

 

(825)

 

Total tax charge

2,272

 

1,986

 

3,068

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The differences between the total taxation shown above the amount calculated by applying the standard UK corporation taxation rate to the profit before taxation on continuing operating are as follows. The Group earns its profits primarily in the UK therefore the rate used for taxation is the standard rate for UK corporation tax.

 

* The adjustment in respect of prior years is in relation to an agreed Advanced Thin Capitalisation Agreement (ATCA) for financial years ended 30 September 2014 and 2015.

 

                                     

 

 

6 months ended 31 March 2018

 

6 months ended 31 March 2017

 

Year ended 30 September 2017

 

unaudited

 

unaudited

 

audited

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

Profit on ordinary activities before tax

10,758

 

9,869

 

21,068

 

 

 

 

 

 

 

 

 

 

 

 

Effects of:

 

 

 

 

 

Other expenses not deductible

142

 

-

 

-

Adjustments in respect of prior years

-

 

-

 

(1,063)

Effect of rate changes on current tax

86

 

12

 

22

Effect of rate changes on deferred tax

-

 

-

 

-

Total taxation charge

2,272

 

1,986

 

3,068

 

The tax charge for the year is based on the effective rate of UK Corporation tax for the period of 19.5% (2016: 20%). A reduction in the UK corporation tax rate from 21% to 20% (effective from 1 April 2015) was substantially enacted on 2 July 2013. Further reductions to 19% (effective from 1 April 2017) on to 18% (effective 1 April 2020) were substantially enacted on 26 October 2015 and an additional reduction to 17% (effective 1 April 2020) was substantially enacted on 6 September 2016. This will reduce the Company's future current tax charge accordingly. The deferred tax liability at 31 March 2018 has been calculated based on these rates.

 

5

Earnings per share

 

Basic and diluted 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.

Adjusted earnings per share figures are calculated by dividing adjusted earnings after tax for the year by the weighted average number of shares.

Basic and diluted earnings per share are the same as there is no difference between the basic and diluted number of shares.

 

6 months ended 31 March 2018

 

6 months ended 31 March 2017

 

Year ended 30 September 2017

 

unaudited

 

unaudited

 

audited

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

Profit after tax for the year/period

8,486

 

7,883

 

18,000

Basic weighted average number of Ordinary Shares (m)

130.4

 

130.4

 

130.4

Basic earnings per share (in pence per share)

6.5p

 

6.1p

 

13.8p

 

Adjusted basic earnings per share

Adjusted basic earnings per share are calculated by dividing earnings after tax of On the Beach Group plc by the weighted average number of shares:

 

6 months ended 31 March 2018

 

6 months ended 31 March 2017

 

Year ended 30 September 2017

 

 

 

 

 

 

Adjusted earnings after tax

11,138

 

9,717

 

22,946

Basic weighted average number of Ordinary Shares (m)

130.4

 

130.4

 

130.4

Basic earnings per share (in pence per share)

8.5

 

7.4

 

17.6

 

 

Adjusted earnings after tax is calculated as follows:

 

6 months ended 31 March 2018

 

6 months ended 31 March 2017

 

Year ended 30 September 2017

 

 

unaudited

 

unaudited

 

audited

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

Profit for the year after taxation

8,486

 

7,883

 

18,000

 

Exceptional acquisition costs (net of tax at 19%)

-

 

-

 

540

 

Monarch net charge (net of tax at 19%)

-

 

-

 

1,620

 

Amortisation of acquired intangibles

2,196

 

2,123

 

4,315

 

Share based payment charges (net of tax at 19%) *

585

 

126

 

375

 

Litigation costs (net of tax at 19%)

275

 

 

 

 

 

Adjustments in respect of prior years

-

 

-

 

(1,063)

 

Deferred tax movements relating to amortisation of acquired intangibles

(404)

 

(415)

 

(841)

 

Adjusted earnings after tax

11,138

 

9,717

 

22,946

 

 

* The share based payment charges are in relation to options which are not yet exercisable.

 

6

Intangible fixed assets

 

                   

 

 

 

Brand

Goodwill

Website & development Costs

Website technology

Total

Cost

£'000

£'000

£'000

£'000

£'000

At 1 October 2017

31,535

31,624

6,558

22,513

92,230

Additions

-

-

1,739

-

1,739

Disposals

-

-

(2)

-

(2)

At 31 March 2018

31,535

31,624

8,295

22,513

93,967

 

 

 

 

 

 

Accumulated amortisation

 

 

 

 

 

At 1 October 2017

8,077

-

2,631

9,010

19,718

Charge for the year

1,073

-

1,235

1,123

3,431

Disposals

-

-

(2)

-

(2)

At 31 March 2018

9,150

-

3,864

10,133

23,147

 

 

 

 

 

 

Net book amount

 

 

 

 

 

At 31 March 2018

22,385

31,624

4,431

12,380

70,820

 

 

Brand

Goodwill

Website & development Costs

Website technology

Total

Cost

£'000

£'000

£'000

£'000

£'000

At 1 October 2016

30,079

21,544

3,802

22,513

77,938

Additions

-

-

1,290

-

1,290

At 31 March 2017

30,079

21,544

5,092

22,513

79,228

 

 

 

 

 

 

Accumulated amortisation

 

 

 

 

 

At 1 October 2016

6,015

-

504

6,757

13,276

Charge for the year

1,003

-

994

1,127

3,124

At 31 March 2017

7,018

-

1,498

7,884

16,400

 

 

 

 

 

 

Net book amount

 

 

 

 

 

At 31 March 2017

23,061

21,544

3,594

14,629

62,828

 

 

Brand

Goodwill

Website & development Costs

Website technology

Total

Cost

£'000

£'000

£'000

£'000

£'000

At 1 October 2016

30,079

21,544

3,802

22,513

77,938

Assets acquired on acquisition

1,456

10,080

105

-

11,641

Additions

-

-

2,651

-

2,651

At 30 September 2017

31,535

31,624

6,558

22,513

92,230

 

 

 

 

 

 

Accumulated amortisation

 

 

 

 

 

At 1 October 2016

6,015

-

504

6,757

13,276

Charge for the year

2,062

-

2,127

2,253

6,442

At 30 September 2017

8,077

-

2,631

9,010

19,718

 

 

 

 

 

 

Net book amount

 

 

 

 

 

At 30 September 2017

23,458

31,624

3,927

13,503

72,512

 

 

7     Cash and cash equivalents

 

Trust accounts are restricted cash held separately and only accessible at the point the customer has travelled.

 

 

6 months ended 31 March 2018

 

6 months ended 31 March 2017

 

Year ended 30 September 2017

 

unaudited

 

unaudited

 

audited

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

Cash at bank and in hand

11,787

 

6,684

 

33,027

Trust account

58,423

 

48,576

 

38,542

 

70,210

 

55,260

 

71,569

 

8

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:

 

 

 

 

 

 

 

 

 

 

 

 

FV Level

6 months ended 31 March 2018

 

6 months ended 31 March 2017

 

Year ended 30 September 2017

Financial assets

 

 

Unaudited

£'000

 

Unaudited

£'000

 

Audited

£000

 

 

 

 

 

 

 

 

 

 

Loans & Receivables

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

70,213

 

55,260

 

71,569

 

Trade and other receivables

 

 

156,880

 

111,752

 

55,671

 

 Total financial assets

 

 

227,093

 

70,212

 

127,240

 

 

 

 

 

 

 

 

 

 

Financial liabilities

 

 

 

 

 

 

 

 

Trade and other payables

 

 

(164,355)

 

(123,201)

 

(79,602)

 

Contingent consideration

 

-

 

-

 

(3,000)

 

Rolling credit facility

 

2

(23,500)

 

(9,000)

 

-

 

Forward exchange contracts used for hedging

2

(902)

 

(998)

 

(125)

 

 Total financial liabilities

 

 

(188,757)

 

(133,199)

 

(82,727)

 

 

 

 

 

 

 

 

 

 

                     

 

Derivative financial instruments

 

The Group operates internationally and is therefore exposed to foreign currency transaction risk, primarily on purchases denominated in Euros and US Dollars. The Group's policy is to mitigate foreign currency transaction exposures where possible and the Group uses financial instruments in the form of forward foreign exchange contracts to hedge future highly probable foreign currency cash flows.

Revolving credit facility

 

The Group entered into a revolving credit facility on 18 September 2015 with Lloyds and was renewed in November 2016 to expire in September 2018. A revolving credit facility is available under the terms of the facility in an aggregate amount of up to £30,000,000. As a result of the acquisition of Sunshine.co.uk Limited, on 9 May 2017, the facility was increased to £35,000,000 and extended to December 2018. The borrowing limits under the facility will vary monthly throughout the period of the facility to reflect the seasonal borrowing requirements of the Group, ranging from £2,000,000 in one month to the full £35,000,000 in another month. It is to be repaid in monthly instalments which vary in accordance with the Group's seasonal requirements. No early repayment fees are payable. The margin contained in the facility is dependent on gross leverage ratio and the rate per annum ranges from 1.10% to 1.90% for the utilised facility and 0.39% to 0.67% for the non-utilised facility. The terms of the facility include the following financial covenants: (i) that the ratio of total debt to EBITDA in respect of any relevant period shall not exceed 2:1 (with a one-off increase to a ratio of 2.5:1) and (ii) that the ratio of EBITDA to finance charges in respect of any relevant period shall not be less than 5:1. There have been no changes to the fair value methodology and categorisation for financial assets and liabilities since the year-end.

Fair value estimation

 

When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques 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)

If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The fair values noted above are approximates of the carrying amounts of the instruments 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.

9. Provision

On 2 October 2017, Monarch announced that it had ceased trading and entered administration. At the year ended 30 September 2017, the Group recognised a provision of £7,000,000. The amount recognised represented the cost the Group incurred to fulfil its obligations to customers under the ATOL regulations to arrange refunds or alternative flights. At the interim reporting date the full provision has been utilised. No further costs are expected.

Further, through chargebacks and holding Scheduled Airline Failure Insurance ('SAFI'), the Directors considered part of the provision could be mitigated and accordingly a £5,000,000 receivable relating to the amounts expected to be reclaimed from either chargebacks or insurance was recognised. The £5,000,000 receivable was recovered via chargebacks in March 2018.

10. Principal risks and uncertainties 

There are a number of potential risks and uncertainties which could have a material impact on the Company's performance over the remaining six months of the financial year and could cause actual results to differ materially from expected and historical results. The directors do not consider that the principal risks and uncertainties have changed since the publication of the Annual Report for the year ended 30 September 2017. These risks and how the Company seeks to mitigate these risks are set out on pages 17 to 25 of the 2017 Annual Report and Accounts which can be found at www.onthebeachgroupplc.com. 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 but remains at an early stage. The position remains as disclosed in our Prospectus, save that (with regard to paragraph 13.6 on page 185), OTB issued a motion to compel delivery of full and proper particulars in May 2017 and in response to this motion, Ryanair is proposing to make amendments to its original statement of claim. This has resulted in a further delay to the anticipated timescales set out in the Prospectus. Litigation is unpredictable and if Ryanair were to prevail, this could have a material impact on the Group's business.

RESPONSIBILITY STATEMENT

We confirm that to the best of our knowledge:

·      The condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the EU; and  The interim management report includes a fair review of the information required by DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first 6 months of the current financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

·      The interim management report includes a fair review of the information required by DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months the current financial year and that have materially affected the financial position or performance of the entity during that period, and any changes in the related party transactions described in the last annual report that could do so.

This responsibility statement was approved by the Board on 9 May 2018 and is signed on its behalf by:

 

Paul Meehan

CFO

10 May 2018

 

INDEPENDENT REVIEW REPORT TO ON THE BEACH GROUP PLC 

Conclusion 

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2018 which comprises the condensed consolidated statement of comprehensive income, statement of changes in equity and statement of cash flows and the statement of financial position and the related explanatory notes. 

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2018 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").   

Scope of review 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK.  A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  We read the other information contained in the half-yearly financial report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. 

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.  Accordingly, we do not express an audit opinion.   

Directors' responsibilities 

The half-yearly financial report is the responsibility of, and has been approved by, the directors.  The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA. 

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards as adopted by the EU.  The directors are responsible for preparing the condensed set of financial statements included in the half-yearly financial report in accordance with IAS 34 as adopted by the EU

Our responsibility 

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. 

 

The purpose of our review work and to whom we owe our responsibilities

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the DTR of the UK FCA.  Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached. 

 

Will Baker

for and on behalf of KPMG LLP 

Chartered Accountants 

8 Princes Parade

Liverpool

L3 1QH

10 May 2018 

 

 

 

 


This information is provided by RNS
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