Quarter ended December 31, 2013 High Yield report
Key Highlights Quarterly Recurring EBITDA in line with guidance provided to markets and above market on revenue and booking growth showing the advantages of the unified Flight Booking Engine, cars and hotels platforms, investment on innovation and international expansion Number of bookings growing by 14% YoY Revenue Margin growing at 20% YoY Recurring EBITDA growing at 11% YoY 1
In thousands In thousands In thousands High yield report Quarter ended December 31, 2013 Volume growth Quarterly bookings evolution 2,500 edreams ODIGEO has achieved 14% growth in volumes in Q3 versus last year and 15% growth on a YTD basis. 2,000 1,500 1,000 500 1,926 Booking number Q3 Dec.12 2,202 Booking number Q3 Dec.13 On a segment basis: Sustained bookings growth in Core segment by 9% Significant bookings growth in Expansion segment by 26% notably in UK and other countries YTD bookings evolution YTD bookings breakdown by segment 8,000 6,000 4,000 2,000 6,300 Booking number YTD Dec.12 7,261 Booking number YTD Dec.13 5,000 4,000 3,000 2,000 1,000 Note: Core relates to Bookings from France, Spain, Italy. Expansion relates to Bookings from UK, Germany, Nordics and Other countries Source: Management accounts 4,025 Core 4,402 2,275 Booking number Quarter ended December 2012 Booking number Quarter ended December 2013 2 2,859 Expansion
In million In million High yield report Quarter ended December 31, 2013 Revenue margin Quarterly revenue margin evolution 140 120 100 80 60 40 20 82.8 Revenue margin Q3 Dec.12 99.3 Revenue margin Q3 Dec.13 Revenue margin growing faster than volumes YoY in Q3. Increase in service fees more than compensates the reduction in GDS incentives per booking resulting from the change in mix (GDS vs Direct connect) Increase in revenue margin in both Core and Expansion segments 71% customer revenue, 24% supplier and 6% adsales and metasearch. Adsales and metasearch growing strongly from 2% to 6% of revenue in Q3 vs last year YTD revenue margin evolution YTD revenue margin breakdown per product 350 300 250 200 150 100 50 268.1 311.9 Non flight 20% YTD 2012 Non flight 19% YTD 2013 Revenue margin YTD Dec.12 Revenue margin YTD Dec.13 Flight 80% Flight 81% 3
In million In million High yield report Quarter ended December 31, 2013 Recurring EBITDA Quarterly Recurring EBITDA evolution 40 35 30 25 20 15 10 5 YTD Recurring EBITDA evolution 100 90 80 70 60 50 40 30 20 10 24.0 26.7 Recurring EBITDA Q3 Dec.12 Recurring EBITDA Q3 Dec.13 80.4 88.9 Recurring EBITDA YTD Dec.12 Recurring EBITDA YTD Dec.13 11% increase in Q3 recurring EBITDA, in line with guidance provided, stabilizing around 10% Results in 10% growth on YTD basis YoY EBITDA growth on Q3 results from : Increased revenue margin (+20%) Increased variable costs (+21%) due to: Higher acquisition costs notably triggered by the volumes growth and international expansion Higher merchant costs driven by the increased percentage of full agent of record Increase in fixed costs (+33%) resulting mainly from higher personnel and IT costs arising in Q3 versus last year Increase of almost 60 engineers since last year, as per management plan, to accelerate innovation. During integration and training phase, still not adding to software development Note: Recurring EBITDA is profit before taxes, finance income and expense, D&A, compensation and expenses related to the formation of the Group, and other income and expense items considered by management not to be reflective of ongoing operations Source: Consolidated financial statements 4
Income statement Highlights (In million) Gross bookings (1) Revenue margin Variable costs (2) Fixed costs (2) Recurring EBITDA Non recurring items EBITDA Depreciation & amortisation Incl. impairment EBIT Financial result Associates result Income tax Q3 Dec.12 Q3 Dec.13 Var 947.0 965.5 2% 82.8 99.3 20% (45.5) (55.0) 21% (13.3) (17.6) 33% 24.0 26.7 11% (1.8) (2.1) 19% 22.3 24.6 11% (5.6) (19.1) 241% 16.7 5.6 (67)% (14.3) (15.7) 10% (0.0) N.A. (1.7) (0.6) (64)% YTD Dec.12 YTD Dec.13 Var 3,119.3 3,261.0 5% 268.1 311.9 16% (148.2) (178.8) 21% (39.5) (44.2) 12% 80.4 88.9 11% (8.1) (7.6) (6)% 72.3 81.2 12% (17.4) (31.7) 83% 55.0 49.5 (10)% (45.5) (47.0) 3% (0.0) N.A. (7.2) (11.7) 62% Higher non recurring items driven by LTI plan (see appendix) D&A increase related mainly to impairment ( 12.2 million), mostly on Go Voyages brand Financial result increase mostly due to higher interests and amortization of financing costs on the 2018 notes versus previous senior debt driving 1.6 million of additional interests Lower income tax mostly resulting from the reversal of deferred tax liabilities related to the impairment of Go Voyages brand Net result 0.7 (10.8) N.A. 2.2 (9.1) N.A. (1) Gross bookings as per new definition. Please refer to appendix for further information (2) Variable costs and fixed costs as defined in the Appendix 5
Balance sheet Highlights (In million) Goodwill Other fixed assets Total fixed assets Total working capital Deferred tax Dec 2012 873.9 327.1 1,201.0 (254.0) (61.0) Mar 13 876.1 320.2 1,196.4 (320.6) (56.2) Dec 13 879.9 309.7 1,189.6 (229.5) (59.9) Compared to last year, changes in the balance sheet mainly reflect: Increase in Goodwill following the acquisition of Liligo Decrease in other fixed assets by 17.4 million mostly due to the impairment of the Go Voyages brand Provisions Other long term assets / (liabilities) Other short term assets / (liabilities) (14.4) 6.6 0.2 (16.3) 12.3 0.1 (18.5) 11.8 0.1 Decrease in negative working capital Increase in financial debt (more nominal debt and less capitalized expenses) Financial debt Cash and cash equivalent Net financial debt Subordinated Convertible Shareholder Bonds Net assets (472.0) 86.8 (385.2) (99.9) 393.2 (495.0) 159.0 (336.0) (103.2) 11.6 376.4 (503.6) 87.9 (415.7) (113.8) 364.2 Accrual in Convertible Subordinated Shareholder Bonds Increase in other long term assets / liabilities due to the termination of former senior debt hedging contract in January 2013 ( 6.4 million) Cash and cash equivalent Net of overdrafts 79.8 159.0 83.4 6
in million High yield report Quarter ended December 31, 2013 Working capital Highlights Quarterly working capital Dec.12 Mar.13 Jun.13 Sep.13 Dec.13 (50) (100) (212.9) (192.6) (249.8) (232.8) (150) (281.0) (200) (36.9) (41.1) (250) (37.3) (229.5) (38.4) (254.0) (300) (39.6) (270.1) (288.2) (350) (320.6) Working capital Non current deferred income edreams ODIGEO benefits from a negative working capital due to its high proportion of business achieved through full agent of record Decrease in negative working capital vs December 2012 by 24.5 million due to: The decrease in working capital (excluding deferred income) by 20.3 million mainly related to: The decrease in BSP payable mostly due to late payment in December 2012 of German and Nordics BSP ( 11.0 million) The negative impact on working capital of the change in supply strategy on hotels ( 6.4 million) The decrease in charter business (total impact of 5.9 million) Other effects ( 3.0 million) The decrease in non current deferred income due to the recognition of 4.2 million of revenue related to the Amadeus signing bonus over the period 7
Cash flow statement Highlights (In million) Q3 Dec. 2012 Q3 Dec. 2013 YTD Dec. 2012 YTD Dec. 2013 Quarterly change in working capital vs last year in Q3 reflects : Recurring EBITDA Non recurring items Non operating / non cash items Change in working capital Income tax paid Net cash from operating activities Net capex Shares issuance Financial expenses (net) Debt issuance/ (repayment) Cash flow from financing 24.0 26.7 (1.8) (2.1) 1.1 1.6 (17.5) (37.2) (7.8) (5.5) (2.0) (16.5) (3.8) (17.2) 0.0 (13.8) (9.6) (0.0) (0.1) (13.9) (9.7) 80.4 88.9 (8.1) (7.6) 3.8 5.1 (49.3) (90.7) (10.7) (8.6) 16.2 (13.1) (12.4) (28.4) 0.0 (33.1) (32.4) (10.4) (0.2) (43.5) (32.6) Higher seasonal decrease in regular gross bookings (approximately 4 million negative impact on 2013) The lower increase in percentage full agent of record (circa 9 million negative impact) The December 2012 implementation of an indepth working capital analysis ( 5 million) Other effects ( 1.7 million) Increase in capex reflecting Liligo Acquisition ( 13.5 million) Net increase / (decrease) in cash* Cash Beginning of period* Foreign exchange rate changes Cash End of period* (19.6) (43.5) 100.0 127.3 (0.6) (0.4) 79.8 83.4 (39.8) (74.1) 119.1 159.0 0.5 (1.5) 79.8 83.4 Lower financial expenses: 2019 notes interest expense of 9 million paid in 2012 and 2013 3 months of former senior debt paid in 2012 ( 4.7 million *Net of bank overdrafts 8
x LTM Recurring EBITDA In million High yield report Quarter ended December 31, 2013 Net debt information Net debt excl. capitalization of financing costs (100) (200) (300) (400) (500) Quarterly ratios of net debt excl. capitalization of financing costs (1) (2) (3) (4) (5) Dec.12 Mar.13 Jun.13 Sept.13 Dec.13 (413.4) (354.4) (375.9) (386.2) (432.2) Dec.12 Mar.13 Jun.13 Sept.13 Dec.13 (2.1) (3.8) (1.5) (1.7) (1.7) (3.3) (3.4) (3.4) (2.0) (3.7) Net debt (excl. capitalized financing costs) / LTM Recurring EBITDA Net senior secured debt (excl. capitalized financing costs) / LTM Recurring EBITDA Undrawn revolving credit facilities end of Q3 2013 December 2013 net debt higher by 18.8 million vs last year mainly due to: Higher accrued interest (+ 10.2 million) reflecting 2018 Notes Higher amount of principal (+ 10.3 million) Other effects ( 1.6 million) Deleveraging of 0.1x vs same quarter of last year despite Liligo acquisition. Absent Liligo acquisition, deleveraging would have been 0.2x vs same quarter last year 9
x LTM EBITDA High yield report Quarter ended December 31, 2013 Covenants TOTAL DEBT COVER RATIO (TOTAL NET DEBT / LTM EBITDA) Total Net Debt (*) LTM EBITDA 3.53x 6 5 4 3 2 1 1.97x 5.50x 3.53x Dec.13 Headroom Ratio cap *IFRS net debt is calculated after deducting the financing fees capitalised Note : Covenants figures presented above are unaudited 10
Conclusion and outlook Exploitation of the common Flight Booking Engine and international expansion delivering results Continued focus on delivering on Management Agenda communicated to the market PhoCusWright is currently forecasting the European online travel market to grow between 89% p.a. over the next two years, while emerging regions such as APAC and LatAm are forecasted to grow at faster rates More specifically, according to PhoCusWright, the European OTA travel market is forecasted to grow at a CAGR of 11% between 2013 and 2015 We believe revenue margin growth somewhere between European Online Travel Market Growth and European OTA Travel Market growth is reasonable As observed over the past 2 years, we expect variable costs to continue to slightly increase given the costs related to customer acquisition and building brand awareness in the short to medium term in new geographies. As also observed over the last 2 years, we expect fixed costs to continue to slightly decline as a percentage of revenue over time, given that international expansion requires relatively limited additional fixed costs. Overall, this should support relatively stable EBITDA margins vs. current levels Full year Capex guidance for the organic business at 22 million due to slower recruitment of engineers than envisaged and lower hardware and software capex than anticipated. Total Capex guidance including Liligo.com acquisition at 35.5 million 11
Appendix
Consolidated financial statements Profit & Loss The Profit and Loss accounts presented here show quarterly information for the October December period and year to date information for the AprilDecember period for 2012/2013 and 2013/2014 Non recurring expenses primarily include non cash items as well as employee termination agreements Financial result is prepared under IFRS and includes mainly interest paid or accrued as well as the amortization of the financial expenses Income taxes primarily correspond to the change in deferred taxes as well as income tax computation Note: Quarterly results are not audited 13
Consolidated financial statements Balance Sheet Note: Quarterly results are not audited 14
Consolidated financial statements Cash Flow Note: Quarterly results are not audited 15
Net debt analysis Dec12 Mar13 Jun13 Sep13 Dec13 Senior Debt 2019 Notes 2018 Notes Revolving Credit Facilities Accrued interest Other debts (finance lease, overdrafts, etc.) Cash and cash equivalents Net debt excluding capitalization of financing costs Financing costs and amortizations Capitalization of financing costs Net debt as per balance sheet (314.7) (175.0) (175.0) (175.0) (175.0) (175.0) (325.0) (325.0) (325.0) (325.0) (3.0) (11.6) (13.2) (11.6) (13.2) (7.5) (1.8) (2.1) (1.9) (6.9) 86.8 159.0 139.4 127.4 87.9 (413.4) (354.4) (375.9) (386.2) (432.2) 28.2 18.4 17.8 17.2 16.5 3.4 3.3 3.2 3.0 (385.2) (332.6) (354.8) (365.8) (412.7) 16
Non recurring items Q3 Dec12 Q3 Dec13 Transaction related compensation Transaction related expenses LTI plan Other non recurring items Non recurring items 1,1 1,4 0,6 0,7 1,8 2,1 YTD Dec12 YTD Dec13 Transaction related compensation Transaction related expenses LTI plan Other non recurring items Non recurring items 0,6 3,8 5,0 3,7 2,6 8,1 7,6 17
Fixed vs variable costs Jun12 Sep12 Dec12 Mar13 Jun13 Sep13 Dec13 Revenue margin Variable costs Fixed costs Recurring EBITDA 93.0 92.3 82.8 104.8 102.9 109.7 99.3 (51.1) (51.6) (45.5) (62.0) (57.4) (66.4) (55.0) (13.0) (13.2) (13.3) (14.7) (13.6) (13.0) (17.6) 28.9 27.5 24.0 28.2 31.8 30.3 26.7 18
Gross bookings Quarterly gross bookings evolution Former definition Quarterly gross bookings evolution New definition Total amount paid by our customers for travel products and services booked through us under the merchant model (including the part that is passed on to, or transacted by, the travel supplier), including taxes, fees and other charges and excluding VAT. Total amount paid by our customers for travel products and services booked through us (including the part that is passed on to, or transacted by, the travel supplier), including taxes, service fees and other charges and excluding VAT. Gross Bookings include the gross value of transactions booked under both agency and principal models as well as transactions made via our white label distribution and sourcing partners or any transaction where we act as pure intermediary whereby we serve as a clickthrough and pass the reservations made by the customer to the relevant travel supplier. 19