Education, leisure and activity travel group education, leisure and activity travel group Investor...

education, leisure and activity travel groupeducation, leisure and activity travel group

Investor DayWindmill Hill, Sussex

24th September 2009


Introduction – John Coleman

Financial Overview – Bob Baddeley

Education – Martin Davies

Hotel Breaks – Nick Cust

Adventure – Bob Baddeley

Camping – Steve Whitfield

Q&A

INVESTOR DAY PRESENTATION


CHAIRMAN

JOHN COLEMANJOHN COLEMAN


INTRODUCTION

IMS released on 23rd 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 £130m 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


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


GROUP FINANCE DIRECTOR

BOB BADDELEYBOB BADDELEY


ACTION TAKEN TO MANAGE COSTS AND CASH

Camping mobile-home net capital expenditure (£5m) below depreciation (£7m), 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%


Net Debt at 30 September 2009 expected to be c. £130m

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

FINANCES


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 £13.8m

PGL centres at Windmill Hill and Liddington are expected to achieve IRRs of over 20%


EDUCATION DIVISION

MARTIN DAVIESMARTIN DAVIES


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


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 £350m- £400m (but greater if UK based trips added)

Potential is large: NST/PGL have only 5k core repeaters amongst 27k UK schools


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


CURRENT PERFORMANCE (1)

• Sales intake for 2008/09 currently 7% above last year on

a like-for-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 £31.9m in forward bookings in PGL centres)

• Education less impacted by the recession


CURRENT PERFORMANCE (2)

Windmill Hill in Sussex opened May 15th

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


100+ acre site with outdoor activity field, floodlit pitch, two lakes, parking etc.

Good access via motorway to London

Access to 17.8m 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 £3.2m over 2010 – 2012

Target IRR in excess of 20% Caythorpe Court opened in 2006 –total investment of £13.8m now achieves target IRR

LIDDINGTON


SIGNIFICANT FURTHER OPPORTUNITIES

West London &M4 Corridor

Ireland (subject to research validation)

North East & ScottishBorders N. and E.

London (M25)

IOW/choice coastal sites

Potential areas in which to add new outdoor education centres


Consolidation “Winners” will provide out of classroom products for wide age range

PGL Brand Opportunity to increase the size of the business to match reputationSynergies Benefits in overhead reduction, market pricing, market

segmentation, gross margin and sales team

People Chance to develop second tier management and acquire additional

expertise

Strategic Partnerships To meet all schools’ residential out of classroom learning needs Potential for investment in partnership for long term stability

Broadening of brand proposition Opportunity to broaden offer to 18+ market via Studytours brand

and Gap Year product

Horizontal integration Opportunity to work with language schools to sweat asset base

during low season

RATIONALE FOR ACQUISITIONS


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

SUMMARY


HOTEL BREAKS

NICK CUSTNICK CUST


HOTEL BREAKS DIVISION

As at 19th 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


HOTEL BREAKS DIVISIONSuperbreak

Overseas:

Bed bank bubble has burst

Our decline in line with non-aligned competitors

Still delivers full margin

11% of divisional turnover


HOTEL BREAKS DIVISIONSuperbreak

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


HOTEL BREAKS DIVISIONBookit

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


HOTEL BREAKS DIVISIONWest 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


ADVENTURE

BOB BADDELEYBOB BADDELEY


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


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


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 marginsTravelplus 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


CAMPING

STEVE WHITFIELDSTEVE WHITFIELD


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

OVERVIEW


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

PROSPECTS


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.

BROADENING THE OFFER


Q&AQ&A


APPENDICESAPPENDICES


Education Hotel Breaks Adventure Camping Group

£m £m £m £m £m

Revenue 2009 44.1 64.5 44.3 0.3 153.2

2008 39.5 75.5 40.4 0.6 156.0

EBITA* 2009 (2.6) 5.6 (0.8) (13.4) (11.2)

2008 (3.0) 7.3 0.5 (14.8) (10.0)

Operating profit (loss) 2009 (3.8) 5.3 (10.8) (13.4) (22.7)

2008 (5.1) 6.8 0.3 (14.8) (12.8)

Group loss before tax ** 2009 (18.1)

2008 (14.9)

Group loss per share ** 2009 (30.3p)

2008 (22.2p)

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.


• £265m Five year facility committed to 2013 - £40m Term Loan- £225m RCF, Bonding and Ancillary Facility- still require £37.6m in CAA, ABTA, IATA and other bonds

• Initial Margin 325bps + LIBOR- ratchet down to 250bps + LIBOR below 2x EBITDA leverage

• Costs c.£4.8m at 31st March- Annual amortisation cost of £1.2m

CREDIT FACILITIES

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