Q1 2016 Results 11 February 2016
Agenda Highlights - Peter Fankhauser CEO Financial results Current trading and outlook Page 2
Highlights First quarter improved in line with expectations Q1 underlying operating loss improved by 11% to 49 million Demand for differentiated holidays continues to grow Sales of holidays to own-brand hotels up by 24% in the first quarter Current trading resilient despite very challenging market conditions Signs of customer confidence returning following geopolitical shocks We acted quickly to anticipate changes in customer demands Rebalanced capacity towards the Western Mediterranean and long haul Our strategic plans are delivering Implementation of the New Operating Model on track
Agenda Highlights Financial results - Michael Healy Group CFO Current trading and outlook Page 4
Financial overview continued improvement Like-for-like revenue is 1% ahead of last year Gross Margin increase of 20 basis points Underlying EBIT has improved by c.11% ( 6m) m Q1 16 Q1 15 Change Like-for-like Change Revenue 1,409 1,519 (110) 16 Gross Margin 22.2% 21.6% 0.6% 0.2% Underlying EBIT (49) (53) 4 6 EBIT margin (LTM)* 4.1% 3.9% 0.2% 0.3% Loss from operations (78) (73) (5) (3) Net Debt (at 31 December) (1,195) (1,262) 67 23 * LTM refers to last twelve months position Page 5
Group Revenue bridge Like-for-like Revenue is 16m (1%) higher than last year 1,519 (100) Like-for-like change + 16m EUR/GBP 9% lower SEK/GBP 10% lower (26) 1,393 (23) (36) (13) 30 40 18 1,409 Q1 15 Translation Fuel Q1 15 LfL Turkey Tunisia Egypt Spain Major Long Haul Other Q1 16 Page 6
Group EBIT bridge Like-for-like EBIT improvement of 6m due to strong performance in UK and Northern Europe Like-for-like change + 6m (53) EUR/GBP 9% lower SEK/GBP 10% lower (2) (55) 13 8 (6) (8) (1) (49) Q1 15 Translation Q1 15 LfL UK Northern Europe Continental Europe Condor Corporate Q1 16 Page 7
Net debt Underlying like-for-like net debt reduction of 23m Total change 67m Like-for-like change 23m (188)m 440m (89)m (1,262)m 92m 2m (50)m (1,218)m (135)m (5)m (1,195)m 31 Dec 2014 New Equity FX movements Non-cash items 31 Dec 2014 LfL Operating Cashflow Capex Exceptionals Net Interest Paid Other Trading 31 Dec 2015 Page 8
Agenda Highlights Financial results Current trading and outlook - Peter Fankhauser CEO Page 9
Current trading Winter 2015/16 Summer 2016 Trading in line with expectations with 82% of programme sold, broadly the same as last year Strong pricing overall with ASP s +4%, driven by better quality holidays and growth in winter sun Good performance in UK and Northern Europe Competitive pressures in Germany remain 29% of programme sold, two percentage points lower than last year Strong start disrupted by recent external shocks, leading to a later booking pattern Signs of recovery in recent weeks Positive pricing in UK and Nordics offset by weakness in Germany Based on cumulative bookings to 7 February 2016 Page 10
Summary and outlook Continuing to perform in a challenging environment Flexible model and disciplined capacity management helping to optimise margins Underlying demand for our holidays remain strong Driven by a focus on quality and customer service Well positioned to deliver further growth in line with expectations Providing the recent recovery in customer confidence is sustained Page 11
Q&A Page 12
Financial calendar Annual General Meeting - 23 February 2016 Pre-close Trading Update 22 March 2016 H1 Interim Results - 19 May 2016 Q3 2016 Results - 28 July 2016 Pre-close Trading Update 27 September 2016 2016 Full Year Results 23 November 2016 Page 13
Group income statement 3 months to 31 December 2015 m Q1 16 Q1 15 LfL Like-for-like Change Revenue 1,409 1,393 16 Gross Profit 313 306 7 Overheads (362) (361) (1) EBIT (49) (55) 6 Separately Disclosed Items (EBIT) (29) (20) (9) Profit/Loss from Operations (78) (75) (3) Net Finance costs (34) (36) 2 Separately Disclosed Items (Finance Charges) (4) (6) 2 Profit / (Loss) before Tax (116) (117) 1 Page 14
Separately disclosed items 3 months to 31 December 2015 3 months to December 2015 3 months to December 2014 m Cash Non-cash P&L Cash Non-cash P&L Restructuring (9) (1) (10) (9) - (9) Onerous contracts and legal disputes - (10) (10) - (9) (9) Other - (9) (9) - (2) (2) EBIT related items (9) (20) (29) (9) (11) (20) Finance related charges - (4) (4) - (7) (7) Total (9) (24) (33) (9) (18) (27) Page 15
Reconciliation of like for like to underlying numbers 3 months to 31 December 2015 Underlying refers to trading results after adjusting for separately disclosed items that are significant in understanding the ongoing results. Like for like reflects the comparison in the underlying results after removing identifiable non-recurring items in the prior year. m Q1 16 m Revenue Gross Margin EBIT Q1 15 m Change m Q1 16 % Q1 15 % Change % Q1 16 m Q1 15 m Underlying 1,409 1,519 (110) 22.2% 21.6% 0.6% (49) (53) 4 Fuel (26) 26 0.4% (0.4)% 0 0 Currency impact (100) 100 0.0% 0.0% (2) 2 Like-for-Like 1,409 1,393 16 22.2% 22.0% 0.2% (49) (55) 6 Change m Page 16
FX and fuel hedging (1 February 2016) Winter 2015/16 Price Summer 2016 Price 2016 Price Winter 2016/17 Price EUR 97% 79% 85% 56% USD 99% 92% 95% 82% Jet Fuel 91% $715 91% $611 91% $672 90% $576 Jet Fuel GBP equivalent (i) (i) Hedged jet fuel costs translated at hedged USD to GBP rate in FY16 equates to 471/tonne (including into plane costs), (FY15: 540/tonne). This represents a projected saving of 100m for FY16 versus FY15 Transactional USD exposures against EUR, GBP and DKK have been hedged in line with Fuel hedges. A 1% variance in 2016 would have a 0.6m impact Transactional EUR exposures against GBP and SEK hedged in line with policies. A 1% variance in 2016 would have a 1.3m impact. 471 It is our policy not to hedge EUR and SEK profits and so FY16 profits will not be hedged. At current rates (ii), the impacts of fluctuations in those currencies can be summarised as: Every 1% move in Euro has a 0.9m impact on EBIT Every 1% SEK movement has a 1.6m impact on EBIT (ii) Spot rates as at 1 February 2016 Page 17