Q Interim Management Statement

Transcription

1 Q Interim Management Statement

2 Key messages and agenda for today 1 Delivering sustainable profitable growth 2 Delivering further financial improvement 3 Delivering a step change in profitable growth 2

3 Key messages and agenda for today 1 Delivering sustainable profitable growth Harriet Green Group CEO 2 Delivering further financial improvement 3 Delivering a step change in profitable growth 3

4 1 2 3 DELIVERING SUSTAINABLE PROFITABLE GROWTH Delivering sustainable profitable growth Improving Delivering Sustaining + 220m + 131m New product revenue Revenue up to 9,300m including Egypt 12 months ended m EBIT up to 274m underlying 12 months ended (EBIT improved by 10m to (56)m 3 months ended ) cumulative to m Cost out & profit improvement cumulative to m Disposals announced 18 months earlier than FY15 target Proceeds to further reduce debt + 1,200m New product revenue target cumulative to FY17 440m + Wave 2 Cost out & profit improvement target Wave 1 cumulative to FY15 Wave 2 cumulative to FY18 4

5 1 2 3 DELIVERING SUSTAINABLE PROFITABLE GROWTH Delivering on targets and KPIs Targets FY 12 Actual FY 13 Actual Actual FY 14 Target FY 15 Target New Product Revenue 1-94m 131m > 300m > 700m Web Penetration 1 34% 36% 36% >40% >50% Cost Out / Profit Improvement (run-rate) 60m 194m 232m > 340m > 440m KPIs Sales CAGR 1, % >2.5% >3.5% Underlying Gross Margin Improvement 1,3-0.8% 0.8% >1.2% >1.5% UK underlying EBIT Margin 1 0.1% 2.2% 2.3% >3.5% >5% Cash Conversion 1,4 11% 48% 25% >55% >70% 1 Measured on a last 12 months basis (LTM) 2 Compound annual growth rate from FY13 to FY15 including new product revenue 3 Underlying gross margins, adjusted for disposals and shop closures on a like-for-like basis 4 Cash conversion defined as net cash from operating activities less interest paid as a percentage of underlying EBITDA 5

6 1 2 3 DELIVERING SUSTAINABLE PROFITABLE GROWTH More new product momentum Incremental new product revenue growth ( m) Q1 2014: + 131m new product revenue + 42% concept hotel summer bookings + 12% City break summer bookings 6

7 1 2 3 DELIVERING SUSTAINABLE PROFITABLE GROWTH Competitive advantage through quality product that is quality assured Exclusive hotel products Quality assured Concept Hotels Operated under our own brands basis point margin premium over other hotels Partnership Hotels Operated with world leading hoteliers +150 basis point margin premium over other hotels For example: Defined quality standards and improvement plans for all products Winter Sun New destinations in Cape Verde, Caribbean, Cuba and Dubai 7

8 1 2 3 DELIVERING SUSTAINABLE PROFITABLE GROWTH Competitive advantage through quality product that is quality assured continued Flexible, trusted products Quality assured City Breaks Holidays in city locations, often flexibly packaged and sold online Flexible Online Product Other (excl. City) component and flexibly packaged sales Defined quality standards and improvement plans for all products 8

9 1 2 3 DELIVERING SUSTAINABLE PROFITABLE GROWTH Integrating IT to deliver one operating system, one inventory, one web Localised management and investment of IT Fragmented IT systems and inventories Unconnected customer relationship management ( CRM ) One System One Inventory One Web One Group IT organisation in place under leadership of Tomasz Smaczny Transformation in progress to deliver one operating system with one inventory, enabling Group-wide realtime yield management One Group-wide CRM system delivering greater customer satisfaction through more personalised offers, improved service and greater efficiency Multiple web platforms Successfully migrated web sites in UK, Germany and Netherlands onto a OneWeb platform, with more to follow 9

10 1 2 3 DELIVERING SUSTAINABLE PROFITABLE GROWTH Accelerating our omni-channel high tech, high touch distribution Web penetration 36%; positive lead indicators DreamCapture now live in all stores delivers seamless omni-channel experience based on personalised, highly relevant content customer has power to decide through which channel to engage with our brands ensures consistent product and brand experience across all touch points and devices ultimately will enable better understanding of customers and their needs, contributing to incremental business 10

11 1 2 3 DELIVERING SUSTAINABLE PROFITABLE GROWTH More cost out and profit improvement Wave 1 continued delivery Wave 1 cumulative benefits are 232m in Fully risk weighted Internally discounted for execution risk As previously announced, increases to Wave 1 target will be published at H1 14, to reflect risk weighting changes Wave 2 to come Similar potential as Wave 1 Further detail to be provided at H1 14 Wave 1 m UK Turnaround Group-wide cost out Integrated air travel strategy Organisational structure Product, infrastructure, technology, and other Total targeted benefits Expected costs to achieve Income statement Cash flow (Opex) FY 12 Actual FY 13 Actual Actual FY14 Target FY15 Target 30 Cash flow (Capex)

12 Key messages and agenda for today 1 Delivering sustainable profitable growth 2 Delivering further financial improvement Michael Healy Group CFO 3 Delivering a step change in profitable growth 12

13 1 2 3 DELIVERING FURTHER FINANCIAL IMPROVEMENT Revenue & EBIT by quarter Revenue and EBIT highly weighted on Q4 Share of Revenue 18% 17% 25% 40% Revenue, bn EBIT, m FY12 FY13 FY14 1 (92) (66) (56) (29) (159) (132) Q1 Q2 Q3 Q4 13

14 1 2 3 DELIVERING FURTHER FINANCIAL IMPROVEMENT Financial overview three months ended 31 December Like for like EBIT improves by 10m m Q Q change Like-for-like change Revenue 1,656 1,671 (15) (36) Gross margin 22.1% 21.9% 0.2% 0.3% Underlying EBIT (56) (66) Free cash flow (879) (761) (118) (118) Net debt (1,286) (1,559) Liquidity headroom

15 1 2 3 DELIVERING FURTHER FINANCIAL IMPROVEMENT EBIT by business three months ended 31 December Like for like EBIT growth of 10m UK Continental Europe Airlines Germany Northern Europe Group 1 Unchanged + 5m Unchanged + 3m + 10m EBIT % (13.8)% (14.6)% (3.2)% (2.4)% 3.5% 3.4% 7.0% 8.1% (3.9)% (3.4)% (22) (17) (67) (67) (66) (56) Q1 13 LFL Q1 13 LFL Q1 13 LFL Q1 13 LFL Q1 13 LFL (1) Including Corporate costs of (5)m in and (7)m in Q1 13 LFL 15

16 1 2 3 DELIVERING FURTHER FINANCIAL IMPROVEMENT Year on year EBIT improvement three months ended 31 December Strong EBIT improvement, driven by cost savings m (10) 28 (4) (56) (66) (9) 5 (75) FY13 Q1 Egypt LFL Excl. Egypt LFL Gross Margin Increase 1 Overhead Cost Out 1 Strategic Opex Investment Other FY14 Q1 (1) Cost Out of 38m including 10m in Gross Margin and 28m in operating expenses 16

17 1 2 3 DELIVERING FURTHER FINANCIAL IMPROVEMENT Cash flow three months ended 31 December Cash outflow reflects change in payment terms and increased investment Q1 13 Change m m m m EBITDA (14) (29) 15 Working capital (763) (665) (98) Tax (14) (12) (2) Pensions & other 1 (1) 2 Operating cash flow (790) (707) (83) Exceptional Items (18) (15) (3) Capital expenditure (45) (21) (24) Net interest paid (26) (18) (8) Free cash flow (879) (761) (118) Disposals 6 (3) 9 New equity Other Net Cash Flow (871) (763) (108) 17

18 1 2 3 DELIVERING FURTHER FINANCIAL IMPROVEMENT Financial overview last 12 months Like for like EBIT improves by 78m m LTM Dec 13 LTM Dec 12 Change Like for like Change Revenue 9,300 9, (30) Gross Margin 22.1% 22.2% (0.1)% 0.5% Underlying EBIT Free Cash flow (64) (106) Net debt (1,286) (1,559) Liquidity headroom

19 1 2 3 DELIVERING FURTHER FINANCIAL IMPROVEMENT EBIT by business last 12 months Like for like EBIT growth of 78m UK Continental Europe Airlines Germany Northern Europe Group m + 8m + 18m + 11m + 78m EBIT % 0.5% 2.3% 1.7% 1.9% 2.5% 3.7% 8.3% 9.1% 2.1% 2.9% Q1 13 LFL Q1 13 LFL Q1 13 LFL Q1 13 LFL Q1 13 LFL (1) Including Corporate costs of (36)m in LTM and (24)m in Q1 13 LTM LFL 19

20 1 2 3 DELIVERING FURTHER FINANCIAL IMPROVEMENT Cash flow last 12 months Free cash flow improvement of 42m LTM to 31 Dec 13 LTM to 31 Dec 12 Change m m m m EBITDA Working capital (17) (76) 59 Tax (34) (30) (4) Pensions & other (15) (19) 4 Operating cash flow Exceptional Items (123) (90) (33) Capital expenditure (174) (127) (47) Net interest paid (139) (120) (19) Free cash flow (64) (106) 42 Disposals (25) 170 (195) New equity Other (31) 2 (33) Net Cash Flow

21 1 2 3 DELIVERING FURTHER FINANCIAL IMPROVEMENT Net debt Underlying net debt reduction of 36m m , ,286 1,559 9m Cabin refurbishment 8m IT Transformation 7m Other FY13 Q1 Recap. 1 Disposals FX impact Lease reclass 2 PY cash mgt actions Q1 Extra Capex Other LFL Underlying improvement FY14 Q1 (1) Includes Gross equity proceeds ( 431m), Recapitalisation costs ( 73m of which 37m capitalised), financing fee amortisation ( 16m) (2) Leases previously treated as operating, now classified as finance leases 21

22 1 2 3 DELIVERING FURTHER FINANCIAL IMPROVEMENT Cash conversion is four times the level of Q1 13 m Q1 13 Cash conversion ratio % Free cash flow (64) (106) > 55 Capital expenditure c. 35 FCF before Capex EBITDA Cash conversion 25% 6% Q1 13 H1 14 FY14 Note: Cash conversion ratio is defined as free cash flow after exceptional items and before capital expenditure as a percentage of EBITDA 22

23 1 2 3 DELIVERING FURTHER FINANCIAL IMPROVEMENT Disposals to date m Status 1 Revenue and EBIT figures are FY12 for North America and FY13 for other disposals 2 The NATS investment generated cash flow of 3m per annum 3 Net cash benefits of around 80m expected for Essential Travel, Elegant Resorts, Gold Medal and NATS in Q2-Q Gross proceeds Revenue 1 EBIT 1 Completion 3 North America Completed (22) Q3 13 Other small disposals Completed 1 N/A N/A Q2/Q3 13 Egypt & Lebanon Completed Neilson Completed UK Corporate FX Completed Essential Travel Completed Q2 14 Elegant Resorts Signed Q2 14 Gold Medal Signed Q2 14 NATS 2 Signed 38 N/A N/A Q2/Q3 14 Total (9) 23

24 1 2 3 DELIVERING FURTHER FINANCIAL IMPROVEMENT Current trading and outlook Q1 EBIT like-for-like up 10m despite Egypt Strong new product revenue growth Continued delivery of cost out On track to deliver to our targets 24

25 Key messages and agenda for today 1 Delivering sustainable profitable growth 2 Delivering further financial improvement 3 Delivering a step change in profitable growth Harriet Green Group CEO 25

26 1 2 3 DELIVERING A STEP CHANGE IN PROFITABLE GROWTH Delivering a step change in profitable growth Profitable growth New product revenue FY15 > 700m Web penetration FY15 >50% Cost out & profit improvement FY15 Wave 1 440m Delivering a step change in profitable growth New product revenue FY17 > 1,200m Web penetration more digital Cost out & profit improvement FY18 similar to Wave 1 more disclosure at H Thomas Cook Business System Profitable growth through trusted, personalised products Top-to-bottom leadership and relentless performance management Customer at the heart High tech, High touch: a digital business Efficient structures, systems and processes through lean & innovation Opportunity to realise significantly more value and set a new benchmark in profitability 26

27 1 2 3 DELIVERING A STEP CHANGE IN PROFITABLE GROWTH We re delivering on our strategy of sustainable profitable growth We re delivering further financial improvement Opportunity to deliver a step change in profitable growth This is just the start 27

28 Q&A 28

29 1 2 3 Appendix 29

30 1 2 3 APPENDIX Group income statement Reported Reported Like-for-like Reported Reported Like-for-like m Q1 13 change LTM 31 Dec 13 LTM 31 Dec 12 change Revenue 1,656 1,671 (36) 9,300 9,080 (30) Gross profit (4) 2,059 2, EBIT (56) (66) Separately disclosed items & other (70) (23) (47) (321) (384) 63 Net finance costs (35) (34) (1) (147) (127) (20) Loss Before Tax (161) (123) (38) (194) (309)

31 1 2 3 APPENDIX Revenue by business m Q1 13 m Growth % Growth % Like for like Excl. Egypt 1 UK & Ireland (7.6)% (6.3)% (4.1)% Continental Europe % 0.3% 6.2% Airlines Germany % (0.5)% 2.8% Northern Europe (0.3)% (1.1)% 6.1% Corporate (90) (87) (3.8)% (3.8)% (3.8)% Continuing Operations 1,656 1,669 (0.8)% (2.1)% 2.6% India - - n/a n/a n/a Egypt - 2 n/a n/a n/a Total 1,656 1,671 (0.9)% (2.1%) 2.6% (1) Like-for-like growth adjusted for the impact of the political situation in Egypt 31

32 1 2 3 APPENDIX EBIT by business m Q1 13 m Change LFL EBIT margin change Excl. Egypt 1 Q1 13 UK & Ireland (67) (67) (14.6)% (13.7)% Continental Europe (17) (22) (2.4)% (3.1)% Airlines Germany % 3.5% Northern Europe % 7.0% Corporate (5) (7) Continuing Operations (56) (66) (3.4)% (3.9)% India n/a n/a Egypt n/a n/a Total (56) (66) (3.4)% (3.9)% (1) Like for like change adjusted for the impact of the political situation in Egypt 32

33 1 2 3 APPENDIX Separately disclosed items m Cash Non-cash Total Q1 13 Restructuring (18) - (18) (15) Refinancing (3) Revaluations - (42) (42) - Onerous contracts (9) 1 (8) - Amortisation of intangibles - (3) (3) (3) Pensions/Other (3) EBIT related items (27) (39) (66) (24) Finance costs - (5) (5) 2 Total (27) (44) (71) (22) 33

34 1 2 3 APPENDIX Reconciliation of like for like to underlying numbers Underlying refers to trading results after adjusting for separately disclosed items that are significant in understanding the on-going results. Like for like reflects the comparison in the underlying results after removing identifiable non-recurring items in the prior year. A reconciliation of like for like to underlying numbers for EBIT and gross margin is as follows: EBIT Gross Margin EBIT Gross Margin Q1'14 Q1'13 Change Q1'14 Q1'13 Change LTM Dec 13 LTM Dec 12 Change 1. Impact of provision releases in Northern Europe and Airlines Germany where the underlying liability for aircraft related and other costs no longer exists. 2. Reflects the impact of Thomas Cook India which was disposed of in H Reflects the impact of Thomas Cook Egypt & Lebanon which was disposed of in Q Net impact of the disposal/closure of individual businesses comprising Explorers Hotel, HCV, FX Bureaux and store closures. LTM Dec 13 LTM Dec 12 Change Underlying (56) (66) % 21.9% 0.2% % 22.2% (0.1)% India disposal % 0.0% (8) 8 (0.3)% 0.3% Egypt disposal 3 (0) 0 (0.1)% 0.1% (1) 1 (0.1)% 0.1% Other discontinued operations 4 0 (0) 0.1% -0.1% (2) 2 (0.1)% 0.1% Provision releases % 0.0% (10) % 0.0% Currency impact (0) 0 (0.1)% 0.1% 15 (15) (0.1)% 0.1% Like for like (56) (66) % 21.8% 0.3% % 21.6% 0.5% 34

35 1 2 3 APPENDIX Finance costs m Actual m Actual Q1 13 m Bank and bond interest Commitment fees 1 1 Letters of credit & bonding costs 5 4 Other interest costs 1 3 Finance costs before aircraft financing Interest income (1) (1) Net Finance costs before aircraft financing Aircraft financing 6 5 Fee amortisation 1 1 Underlying finance costs