InvestorDay2007Prese ntation

Slide1: 

Investor Day Caythorpe Park 28th September 2007

Slide2: 

Corporate Overview – Carl Michel Education (PGL) – Martin Davies Q&A Hotel Breaks – Nick Cust / Mark Wray Q&A Adventure – Simon Tobin Q&A Camping – Steve Whitfield Q&A INVESTOR DAY PRESENTATION

Slide3: 

Corporate Overview

Slide4: 

Build on core competences: leverage synergies Develop a multi-path approach Pursue sustainable faster growth Secure strong positions in higher margin businesses Diversify sales mix STRATEGIC GOALS

Slide5: 

Turnover (£m) Operating profit before exceptional items (£m) * Based on: Holidaybreak FY results to 30 September 2006; PGL 12 months to 22 February 2007. Before After PRO FORMA DIVISIONAL SPLIT*

Slide6: 

Consolidation amongst major tour operators Thomas Cook and TUI Travel now listed on FTSE Will lead to only modest pruning of retail estates Ability to control margins still to be tested Online growth slowing down Consumers more ‘savvy’; prefer building trust-based relationships Affiliates being squeezed HMG really pushing the Outdoor Learning agenda Fragmentation of tastes throws up new niche opportunities Green lobby and political responses will become much more prevalent for wider tourism market MARKET TRENDS

Slide7: 

Education (PGL)

Slide9: 

PGL operates in three areas Outdoor education and adventure for schools School Tours School Ski Trips Market High Margins A market-leading position Very high barriers to entry Strong demand conditions Under supply Visible income OVERVIEW

Slide10: 

Outdoor Education and Adventure Drivers Competition PGL is the clear market leader in this sector PGL operates predominantly at the Key Stage Two level for 8 – 12 year olds Estimated market growth of c. 7% over from 2005 - 2010 In excess of 800 registered operators in the outdoor sector. Over 60% are not for profit (i.e. LEAs) Market historically dominated by LEAs Funding pressure and teacher expectations means LEA provision is decreasing Administration and fear of litigation means teachers are less willing to organise Experienced commercial providers sought Brand recognition and values important Demand at peak outstrips supply Government support for outdoor learning Other operators: - Acorn - Travelclass - Kingswood - NST - Manor Adv. The market is also served by 99 LEA centres In addition there are a further 50 registered centres usually run and managed by the owner OUR MARKETS Size

Slide11: 

School Tours Drivers Competition Market trend of more foreign travel Core age range – 11 – 16 years Majority of operators in this sector are growing at c. 3% per annum Static real growth Risk management and government approval issues impacting the outdoor education market also apply Admin / risk management costs will drive business towards the larger, more professional operators Brand awareness and trust is key Barriers to entry will become even higher PGL sees an opportunity to professionalise the market, taking share from smaller operators and DIY Other operators include NST and STS Further consolidation would offer larger players scale and more comprehensive product ranges OUR MARKETS Size

Slide12: 

Ski Drivers Competition The market has been in decline since the late 1980s The majority of LEAs do not see the educational benefits of such trips, hence the industry is focused on school holiday periods Opportunity to reposition as an educational product Due to the declining nature of the market, PGL’s strategy is to increase market share and build margin STG Ski bound 4 other mid size operators There are also numerous other smaller players and DIY comprising the remainder of market supply OUR MARKETS Size

Slide13: 

Investment in facilities and infrastructure to extend market position and potentially improve margins Identify additional sites Develop range of services and customer relationships GROWTH STRATEGY Increase size of business to match PGL reputation Developing second tier management and potentially acquire additional expertise Understanding opportunities in the marketplace Known acquisition targets

Slide14: 

Increase capacity Acquisition Increase capacity of existing sites Partner sites Maximise gross margin Concentrate on 500+ centres Migrate customers to new, larger centres Premium price at peak Improve off peak and shoulder fill Improve facilities to raise tariffs Maximise on site income Grow school tours and ski market share Acquisition Capture share from DIY market NPD Grow centre based accommodation GROWTH STRATEGY

Slide15: 

Develop holidays business New product development Build infrastructure to cater for growing family market Group partnerships Consumer marketing investment Maintain, influence compliance and credibility Lead BAHA’s influence Ensure PGL is in vanguard of all LEA and DFES groups and working parties Recycle property asset base Sell underperforming assets Sell non trading property GROWTH STRATEGY

Slide16: 

Consolidation PGL currently focuses on UK residential centres for key stage 2 (8-12) “Winners” will provide out of classroom products for wide age range PGL Brand Opportunity to increase the size of the business to match reputation Synergies Potential benefits in overhead reduction, market pricing, market segmentation, gross margin 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 A significant school tours business will deliver a core of 12-18yr olds Economic Model A significant tours operation will generate cash during winter RATIONALE FOR ACQUISITIONS

Slide17: 

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

Slide18: 

Q&A

Slide19: 

Hotel Breaks

Slide21: 

Wide distribution platform: Market Overview * Superbreak - 40% online - 35% online - 60% agent / telephone - 65% agent / telephone * Source – The Listening Company (methods of booking foreign travel) Maintaining gross margins / good relationships Distancing ourselves from ‘bed banks’ Adding ‘unique’ product to package with hotels Changing product mix Packaged content increased from 27% (05/06) to 40%+ (06/07) Purchase of West End Theatre Bookings Rail initiatives New Web Content team (includes non hotel contractors) OVERVIEW

Slide22: 

Overseas hotels Expansion of hotel product: 2,400 → 4,000 Challenges Traditional cities (e.g. Prague) Margin erosion and commitments on Beach Appeal to UK travel agents Expansion of medium/long haul destinations Introduction of transfers – Autumn 2007 Continued focus on packages (ex air) A balance for UK events + circumstances Bookit Expansion of hotel product: Hotelletje Integration of websites through Weekendjeweg.nl Expansion beyond Benelux (Citytripper) Bungalows Expansion in South of France Other hard walled accommodation Vouchers Own photographic imagery INTERNATIONAL

Slide23: 

IT investment More stable technical platform – migration of mainframe in late 2008 New website design; holiday reviews; theatre video streaming; voucher redemption Content Management System Own photographic imagery and video Differentiation of web offering complementing product Superbreak becoming more defensible Bookit – product creation (15% of Dutch households) West End Theatre More packaging Better margin Ongoing review of acquisition opportunities Embassy / Highlife West End Theatre GROWTH PROSPECTS

Slide24: 

Q&A

Slide25: 

Adventure

Slide27: 

OVERVIEW Travel experiences for individuals and groups Expanding portfolio Value added: hard to recreate individually Consumers: on trend, altruistic, experience seeking, ‘middle youth’ 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

Slide28: 

BRANDS AND PRODUCTS EXPLORE! Worldwide, Family Adventures, Cycling, Beyond, School Adventures, Short Breaks, Special Interest InStyle, Rail journey, Antarctic and Expedition cruising DJOSER nl Worldwide, Family Adventures (Junior), Walking and Cycling, Special Interest THE TRAVELPLUS GROUP Carpe Diem: Language Travel Travelworks: Work & Travel, Volunteer, Internships and high school placements REGAL Diving Red Sea and Worldwide, Shore and Liveaboards

Slide29: 

BUSINESS MIX AND MARKET Adventure small groups Family Adventures +20%; Cycling +40%; Special Interest doubles; Antarctic & rail journeys grow Destination mix alters annually Middle East & Egypt affected; Europe softens; South America, North & Central Asia, South & West Africa grows Learning, volunteer work & gap travel Sector seeing strong growth in UK and European markets Market trends Overseas holidays to grow 16% from 2006 – 2012 Long haul to reach 10.8m holidays by 2011 (+29%) 41% of adult population will be single in 2011 Fastest growth in Independent Holidays Technology creates a changing consumer mindset ‘Middle Youth’ not ‘Middle Age’ Green Issues – carbon offsetting, conservation, eco-awareness APD – despite increase, air travel has never been cheaper Luxury market grows – quality and authenticity, active days and comfortable nights

GROWTH PROSPECTS: 

GROWTH PROSPECTS Organic initiatives Djoser brand across N. Europe New and continuing product development in Special Interest sectors Travelworks (work & volunteer travel) to launch in Austria Schools Adventures expands: potential to work with PGL New distribution opportunities: Spirit of Adventure, Habitat for Humanity Explore to launch ‘Independent’ holiday proposition in 2008 Acquisitions Opportunities exist for consolidation in markets and in specialist sectors Targets in Europe to enhance existing distribution / add new product or expertise Macro trends support growth Fragmented sector – consolidation opportunities Geopolitical events / natural disasters can have short term effect Leverage sector market leadership in UK and Northern Europe Real opportunities for cross-marketing of products across the group. Flexible model allows for innovation and speed of response Investment in technology and in house travel expertise

Slide31: 

Q&A

Slide32: 

Camping

Slide34: 

Eurocamp and Keycamp Market leading brands Quality 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 Eurocamp Independent Pitch and ferry reservation service Acquisition of Select Sites (Oct 1st) Easycamp Value based holidays in site owned Mobile Homes Low risk model well placed for growth Own a Holiday Home Sales of Mobile Homes for residential use in France Leverage customer databases and brand strength OVERVIEW

Slide35: 

Regional trends Annual review of demand profile Flexibility to respond Tents in decline (10%-20% p.a.) Operational flexibility within the season Mobile Home capacity now broadly in line with market demand Over 8000 Mobile Homes Choice of styles and sizes Look and feel of different models Increase in larger, more luxurious Mobile Homes Decking and air conditioning Quality Important for repeats and recommendations Justifies price premiums Disposal considerations Stable capacity 1000 replacements = ~ £10m net Capital Expenditure CHANGING PRODUCT MIX

Slide36: 

New destinations New accommodation types Adding value Children’s Courier services Soccer Service Activity services Exploiting PGL synergies Activity product for camping in 2008 Purchasing Recruitment Managing stable core business Cash generative with strong profits, high margins and excellent return on capital Maintaining market leading position Invest in new accommodation Exploit technology to access new customers and drive down selling cost Innovate and develop new product options PROSPECTS

Slide37: 

Q&A