1 Q2 2002 and Interim Results Presentation London Stock Exchange: EBR Nasdaq: EBKR (ADR) FINAL US...
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Transcript of 1 Q2 2002 and Interim Results Presentation London Stock Exchange: EBR Nasdaq: EBKR (ADR) FINAL US...
1
Q2 2002 and Interim Results Presentation
London Stock Exchange: EBR
Nasdaq: EBKR (ADR)
FINAL US GAAP Investor Presentation 11 August, 2002
2
Except for the historical information contained herein, the matters discussed in this news release are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in such forward looking statements. Potential risks and uncertainties include, without limitation, the company’s ability to manage and integrate the operations of its subsidiaries across Europe, to significantly increase online revenues and sales volumes, to maintain and develop relationships with travel suppliers, strategic partners, computer reservation systems and providers of negotiated fares, to compete with airlines and other online companies in the sale of discounted fares, to respond to potential adverse changes in the company’s gross mark up or commission rates, to comply with new and existing regulations affecting electronic commerce and travel sales in the jurisdictions in which the company does business, to respond to unforeseen events affecting the travel industry, to attract and retain customers, to develop customer recognition of the company’s brand, and to protect the company’s intellectual property rights in the company’s brand, name, and information systems. These and other risk factors are described in detail in the company’s listing particulars dated 17 April 2001, as supplemented by the company's supplementary listing particulars dated 20 April 2001, and the company's Annual Report on Form 20-F for the year ended 31 December 2001 that was filed with the US Securities and Exchange Commission on 27 June 2002.
Disclaimer
3
Highlights for second quarter
•Gross sales rise by 50% organically to $104m maintaining No.1 position in Europe.
•Margin improves year on year from 9.5% to 10.6%.
•Indian back office investment for future cost savings continues - $0.8m of operating expenditure this quarter.
•Loss after tax (excluding stock compensation) reduces by 80% year over year to $2.3m.
•Net cash balance grows again to $36.6m (Q1 2002: $32.1m).
•Management team strengthened with key appointments.
4
Q2 2002 and Interim Financial Results
Nigel Addison SmithChief Financial Officer
Financial review
5
Our 50% year on year gross sales rise was all organic
30.9
39.0 40.543.6
61.8
69.3 69.7
56.9
86.7
104.0
0
20
40
60
80
100
120
Q1 2000 Q2 2000 Q3 2000 Q4 2000 Q1 2001 Q2 2001 Q3 2001 Q4 2001 Q1 2002 Q2 2002
$m
Gross sales = the total transaction value of all products sold
6
19
27
21
38
46
-4
-10
0
10
20
30
40
50
Q1 2001 vs Q12000
Q2 2001 vs Q22000
Q3 2001 vs Q32000
Q4 2001 vs Q42000
Q1 2002 vs Q12001
Q2 2002 vs Q22001
% ORGANIC GROWTH RATE for gross sales
Organic growth has accelerated
2001 2002
(Effect of September11)
7
Our average transaction value is the best in the business
658695 703
769787
687
788 801
736 746
0
100
200
300
400
500
600
700
800
900
Q1 2000 Q2 2000 Q3 2000 Q4 2000 Q1 2001 Q2 2001 Q3 2001 Q4 2001 Q1 2002 Q2 2002
$m
Our high spend customers are a big advertising opportunity
Expedia - £250 ($362)
Lastminute - £262 ($380)
8
Record revenue
3.03.5
3.84.2
6.36.6
7.9
7.1
9.7
11.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
Q1 2000 Q2 2000 Q3 2000 Q4 2000 Q1 2001 Q2 2001 Q3 2001 Q4 2001 Q1 2002 Q2 2002
$m
9
28%
21%
17%
14% 14%
12%
7%
10%
6% 6%
11%10%
14%13%
10%
8%
6%
9%
6%5%
3%2% 2%
1%2%
1% 1% 1% 1% 1%
42%
32%
34%
28%
26%
22%
14%
20%
13% 12%
Q1 2000 Q2 2000 Q3 2000 Q4 2000 Q1 2001 Q2 2001 Q3 2001 Q4 2001 Q1 2002 Q2 2002
Marketing and sales
G&A
Technology
Total
Our conservative cost culture is showing results
Operating expenditure as % of gross sales – excluding stock compensation, depreciation, amortisation
9/11
10
And our cash continues to grow
43.8
40.9
33.8
29.2
32.1
36.6
0
5
10
15
20
25
30
35
40
45
50
Q1 2001 Q2 2001 Q3 2001 Q4 2001 Q1 2002 Q2 2002
$m
Net cash at bank or in hand
11
Total operating expenses decrease year on year despite growth
17.9
0.61.3
12.4 12.6
0
2
4
6
8
10
12
14
16
18
20
Q2 2001 Q1 2002 Q2 2002
India and interline start-up operating expenses
Total operating expenses including depreciation and amortisation, excluding India and Interline start-up costsand stock compensation expense
$m
12
EBITDA loss falls to $1.3 million All loss accounted for by start up costs
EBITDA (excluding stock compensation and exceptional items)
-9.9
-8.9
-9.8
-8
-9.4
-8.1
-2.2
-4.2
-1.7-1.3
-12
-10
-8
-6
-4
-2
0
Q1 00 Q2 00 Q3 00 Q4 00 Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02
$m
13
Summary – Quarterly financials
($m) Q2 2002 % Q2 2001 Q1 2002
Gross sales 103.8 50% 69.3 86.7
Gross profit 11.0 67% 6.6 9.7
Gross profit (%) of gross sales 10.6% 9.5% 11.2%
Total operating expenses (excl stock compensation and exceptional items)
13.9 21% 17.5 13.0
EBITDA (excl stock compensation and exceptional items)
(1.3) 84% (8.1) (1.7)
Pre-Tax Loss excl stock compensation (2.4) 79% (11.5) (3.1)
Net Cash at Bank or in Hand 36.6 (10%) 40.9 32.1
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Nigel Addison Smith – Chief Financial Officer
Philip Dale - Chief Information Officer
John Donaldson – Non-Executive Director
Previously
Finance Director Air 2000
Group Financial Controller First Choice Holidays plc
KPMG
Previously
CTO Priceline.com Europe, VP Development US
Sabre/AMR Corp
SITA
Previously
Chief Executive Officer Thomas Cook Holdings Limited
American Express
Aer Lingus
We have strengthened our management team with experts inrunning large travel organisations
15
We are using technology to increase high margin non-air sales
Dynamic packaging.
Gives customers control. The future of online travel.
Advanced hotel booking engine
Will encourage customers to book hotel with flight.
Projects due in Q3
16
Technology summary
Project Benefit Timescale
Dynamic packaging- Advanced revenue management system
Increased travel spend + margin Due Q3 2002Advanced due Q4
New hotel booking engine- Cross sell
Improved hotel sales + cross sell with flights Due Q3 2002Advanced due Q4
Mid Office - Centralised browser based- Automation of online product sales- Improved call centre efficiency
Cost reduction Due Q3 2002
Back OfficeOnline accounting system
Cost reductionImproved business information
Due Q4 2002
CRME.piphany - personalised Myebookers
Targeted marketingImproved conversion
Due Q4 2002
Corporate Travel site- SMS messaging support, rules support
High growth market Due Q4 2002
Latebookers-2 hour ticketing- supported by night time marketing
Increased sale of distressed sales Due Q3 2002
Site redesign Increased conversion Due Q3 2002
Opaque fares High value fares, high margins Due Q3 2002
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India’s start-up phase has progressed well and gives usa unique advantage over online travel peers
Email sales and telesales
41%
Air and land product8%
Customer relations20%
Other (online support, information analysis)
10%
Ticketing6%
Finance7%
IT8%
Currently serving : UK, Irish, French, German and Finnish markets. Will be extended.
Potential to service other travel companies
70 Seat Dublin facility rolling out as second pan-European multi-lingual hub
Indian back office
350 staff so far
250 seat 24/7
Pan-European fulfilment centre
Dark fibre connection
% of staff by function
18
Achieving scale
• Our aim is to reach $1.5bn sales within 2 years
• Why?- The market will hold 3 major players- Scale in buying- Cost efficiencies of infrastructure
• How?- Continued strong organic growth- Acquisitions
• Profile? - $200m-$900m gross sales
- Approx 50 companies fit profile- All earnings enhancing
19
Conclusion
A strong quarter
• Organic growth up.
• EBITDA breakeven excluding start up costs.
Positive outlook
• Trading good in Q3 so far.
• Strengthened management, new technology.
• India and Ireland - lowest cost per transaction.