Last checked at 9 Aug 2019 07:00
This announcement contains inside information for the purposes of article 7 of the Market Abuse Regulation (EU) No 596/2014
9 August 2019
On the Beach Group plc
("On the Beach", "OTB", the "Company" or the "Group")
Trading Update
On the Beach Group plc (LSE: OTB.L), the UK's leading online retailer for beach holidays, today issues an update on current trading.
Current Trading
On the Beach operates a flexible model incorporating dynamic rather than currency hedged pricing for the packages that it provides its customers. With the increased likelihood of a no deal Brexit, Sterling has significantly devalued against the euro since the beginning of May and this accelerated at the end of July, continuing into August. Whilst the Group has seen a strengthening of demand in H2, this weakening of Sterling leads to a significant increase in OTB prices versus full risk competitors with currency hedges. As OTB remains focused on profitable growth, these relative price increases make it difficult for the Group to gain share of market while maintaining margins.
As a result, the Group anticipates delivering a full year performance below the Board's expectations.
Strategic Progress
Despite the difficult market conditions in FY19, the Group has continued to increase investment in both talent and infrastructure in the areas that we believe offer the most significant expansion opportunities. As a result, we have made excellent progress towards delivering our strategy.
·; Following our head office move into Manchester in November 2018, to underpin our objective to recruit and retain the very best digital talent, we have accelerated the pace at which we are adding digital headcount to our teams. We have also reorganised the technology and product functions to allow us to better scale and increase the pace at which we evolve our platform to support our strategic objectives.
·; We acquired Classic Collection Holidays in August 2018 to support our objective to offer our competitively priced beach holidays to a wide range of intermediaries through an online portal. Classic Package Holidays was launched at the end of March 2019 and is now live with over 1,000 agents. We expect that by the end of FY19, more than 1,500 agents will be using the platform and are confident that this new channel will deliver a meaningful contribution to Group performance in FY20.
·; We continue to directly integrate scheduled long haul carriers into our platform. British Airways and Emirates are live on site and further integrations will be completed imminently. We will enter FY20 with all key airline partners integrated whilst we continue to build our portfolio of directly contracted hotels. In FY19 we have grown long haul revenues by more than 100% and are excited about the medium term opportunities that these new destinations offer.
·; Our international platforms will deliver significant revenue growth in H2 FY19 with a substantial improvement in marketing efficiencies and therefore a reduced EBITDA loss.
·; We continue to actively explore acquisition opportunities and are delighted that Adam Hansen will join us later in August from Rothschild as Corporate Development Director.
Simon Cooper, Chief Executive of On the Beach Group plc, commented:
"In what is a difficult general economic climate, we remain confident in the resilience and flexibility of our business model, focusing on profitable growth and an ability to capitalise on any structural changes in the market. In FY19 we have invested significantly in our infrastructure, talent and technology to ensure that we build strong foundations to support our strategic objectives."
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 Sam Macpherson
| 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 online travel agents, we continue our journey to disrupt the online retail of beach holidays. Our model is customer-centric, asset light, profitable and cash generative.
Cautionary statement
This announcement may contain certain forward-looking statements with respect to the financial condition, results, operations and businesses of the Company. Forward looking statements are sometimes, but not always, identified by their use of a date in the future or such words as 'anticipates', 'aims', 'due', 'will', 'could', 'may', 'should', 'expects', 'believes', 'intends', 'plans', 'targets', 'goal' or 'estimates'. These forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements, including factors outside the Company's control. The forward-looking statements reflect the knowledge and information available at the date of preparation of this announcement and will not be updated during the year. Nothing in this announcement should be construed as a profit forecast.