On the Beach continues to grow turnover and profits

On the Beach headquarters

Manchester-based beach holiday specialist, On the Beach, saw interim turnover soar with its latest results announcement today, generating a 12% improvement in pre-tax profits, despite the spectre of Brexit over holiday bookings.

The firm said sales in the six months to March 31, jumped 41% to £63.5m, while pre-tax profits rose from £10.6m to £11.9m.

Its total dividend has been recommended to rise by 18% to 1.3p per share.

It said its net debt, excluding monies held in Trust at March 31, of £1.3m, compared with £11.7m debt a year ago, reflects normal seasonal working capital requirements.

International revenue for the group decreased by 56% to £0.4m, compared with £0.9m last year. It said revenue was heavily impacted by the failure of Danish airline Primera in early October 2018.

This was offset by a 75% reduction in marketing spend. The international EBITDA loss of £0.2m was less than last year’s £1.6m figure.

On the Beach acquired Classic Package Holidays (CCH) on August 15, 2018, for a net consideration of £20m. It said as it is a principal, rather than an agent, CCH records revenue over the period of a customer’s holiday. Revenue in the period was £18.5m and EBITDA a £0.1m loss.

Chief executive Simon Cooper said: “On the Beach has delivered a solid performance in H1, despite continuing uncertainties around Brexit, with modest booking and revenue growth supported by the ongoing benefits of improved marketing efficiency which resulted in a growth in adjusted profits before tax of 14%.

“This performance has been delivered against a soft background market, particularly in the important first calendar quarter, when uncertainties regarding Brexit impacted consumer appetite for booking holidays.

“Independent market data shows that a significant proportion of consumers deferred their holiday purchase in the run up to the 29 March deadline and our understanding is that the background market has been trading down 10% YoY in 2019.”

He added: “There were a number of exciting operational developments in the first half, including the launch of Classic Package Holidays, providing a platform for travel agencies to book mainstream beach holidays; the integration of both Emirates and British Airways onto our platform to expand our long haul offering; and we completed our move to the group’s new Digital HQ in Manchester, together with the expansion of our operational HQ in Cheadle.

“Looking forward, we continue to remain cautious of the consumer environment until a Brexit resolution is found, but the resilient and flexible nature of our business model allows us to focus on profitable growth and gives us confidence in the group’s outlook. We will continue to evaluate opportunities to enhance our market share position.”