TOTAL FINANCIAL
P R O T E C T I O N
TOTAL FINANCIAL
P R O T E C T I O N
Your package holiday is
ATOL and ABTA protected
1
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019 Welcome to On the Beach
With over 20% share
of online sales in the
short haul beach holiday
market, we are one of the
UK’s largest online beach
holiday retailers.
With significant opportunities for growth, we’re on a long-
term mission to become Europe’s leading online retailer of
beach holidays, so our story’s only really just begun.
Here at On the Beach we’re providing a structural challenge
to legacy tour operators as we continue our journey to
disrupt the online retail of beach holidays with our scalable,
flexible, innovative technology, a strong customer-value
proposition and a low-cost base.
Our model is customer-centric, asset light, profitable and
cash generative.
Visit us online at:
www.onthebeachgroupplc.com (Corporate)
www.onthebeach.co.uk (UK)
www.ebeach.se (Sweden)
www.ebeach.no (Norway)
www.ebeach.dk (Denmark)
www.sunshine.co.uk (UK)
www.classiccollection.co.uk (UK B2B)
www.classic-package.co.uk (UK B2B)
2
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019 Contents
Strategic Report
Governance
Financial Statements
06 Our History Timeline
07 At a Glance
09 Business Model
10 Report from the Chair of the
Board
13 OTB Growth Strategy
14 Chief Executive’s Report
17 Key Performance Indicators
18 Financial Review
24 Principal Risks and Uncertainties
31 Viability Statement
33 Corporate Social Responsibility
42 Our Values
43
Stakeholders
47 Chair’s Introduction
48 Directors’ Biographies
51 Corporate Governance Statement
58 Report of the Nomination
Committee
60 Report of the Audit Committee
66 Directors’ Remuneration Report
84 Other Statutory and Regulatory
Disclosures
88 Statutory Auditor’s Report to
the Members of On the Beach
Group plc
95 Statement of Directors’
Responsibilities in Respect of the
Annual Report and the Financial
Statements
97 Consolidated Income Statement
and Statement of Comprehensive
Income
98 Consolidated Balance Sheet
99 Consolidated Statement of
Cash Flows
100 Consolidated Statement of
Changes in Equity
101 Notes to the Consolidated
Financial Statements
138 Company Balance Sheet
139 Company Statement of Changes
in Equity
140 Notes to the Company Financial
Statements
142 Glossary of Alternative
Performance Measures (APMs)
145 Shareholder Information
3
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
4
44
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019 I
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Strategic Report
06 Our History Timeline
07 At a Glance
09 Business Model
10 Report from the Chair of the Board
13 OTB Growth Strategy
14 Chief Executive’s Report
17 Key Performance Indicators
18 Financial Review
24 Principal Risks and Uncertainties
31 Viability Statement
33 Corporate Social Responsibility
42 Our Values
43
Stakeholders
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019
5
5
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Strategic Report
Our History Timeline
2
0
1
6
On the Beach
achieves outstanding
profit growth against
a challenging
market backdrop.
2
0
1
7
On 9 May 2017,
On the Beach
completed the acquisition of
Sunshine.co.uk Limited, an online
travel agent based in the UK,
for a net consideration of £12m.
Launched its second international
platform in Norway under the
"ebeach.no" domain name.
On the Beach
Group plc was part of the
FTSE 250 from March 2018
until December 2018. Acquired
Classic Collection Holidays for a
net consideration of £20m in
August 2018. The business
extended its international
platform with the soft launch of
eBeach.dk in Denmark.
2
0
1
8
The business launched Classic
Package Holidays, an agent-only
online booking portal, extending
On the Beach product into the
offline market. 2019 also saw the
opening of a brand new Digital HQ
in Manchester, with complete
renovations of its Operational HQ in
Cheadle. Long haul carriers were
integrated supporting the Group’s long
haul ambitions.
2
0
1
9
2 0 1 4
On the Beach
continued to optimise
its technology
platform, grew its
direct contracting and
invested in TV
advertising.
2015
Launched its first
international platform
in Sweden under
the “ebeach.se”
domain name. On
28 September 2015,
On the Beach listed
on the London
Stock Exchange.
013
2
Inflexion Equity
Partners acquired a
majority stake in the
Group from
Livingbridge.
79% of the Group’s
bookings were made online.
On the Beach
launched its own proprietary
technology platform.
Livingbridge acquired
a majority stake in
the Group for
£36 million.
1
1
0
2
7
0
0
2
Established by CEO,
Simon Cooper;
On the Beach launched
its first website.
4
0
0
2
6
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019 At a Glance
Group Overview
2019
2018 (restated)(2)
Change
Adjusted(1)
GAAP
Adjusted(1)
GAAP
Adjusted(1)
GAAP
Group revenue
£147.5m
£140.4m
£104.3m
£104.3m
Revenue as agent
£92.5m
£85.4m
£90.9m
£90.9m
41%
2%
35%
(6%)
Revenue as principal
£55.0m
£55.0m
£13.4m
£13.4m
310%
310%
Group gross profit
£99.1m
£92.0m
£92.6m
£92.6m
Gross profit as agent
£92.0m
£84.9m
£90.9m
£90.9m
7%
1%
Gross profit as principal
£7.1m
£7.1m
£1.7m
£1.7m
318%
Group profit before tax
£34.6m
£19.4m
£33.6m
£26.1m
Basic earnings per share
21.4p
Total dividend payable
3.3p
12.0p
3.3p
21.2p
3.3p
16.5p
3.3p
3%
1%
-
(1%)
(7%)
318%
(26)%
(27)%
-
(1) Denotes a non-GAAP measure. An explanation of this measure and reconciliation to the closest GAAP measure is included in the APM Glossary on page 142
(2) Restated for adoption of IFRS 15. Refer to note 2c to the Consolidated Financial Statements on page 101.
Thomas Cook Group plc Impact
On 23 September 2019, Thomas Cook Group plc (“TCG”) announced that it had ceased trading and had entered compulsory
liquidation. There was a one-off exceptional cost associated with helping customers to organise alternative travel arrangements and
lost margin on cancelled bookings.
A summary of the adjustments between Adjusted and GAAP measures, split between the TCG impact and other costs, is shown
below:
Revenue as agent
Revenue as principal
Group revenue
Share based payments
Acquired intangibles amortisation
TCG
(£7.1m)
-
(£7.1m)
-
-
2019
Other
-
-
-
Total
(£7.1m)
-
(£7.1m)
(£0.7m)
(£0.7m)
(£5.5m)
(£5.5m)
Other exceptional operating costs
(£0.6m)
(£1.3m)
(£1.9m)
2018
Total
-
-
-
(£1.4m)
(£4.6m)
(£1.5m)
Group overheads
(£0.6m)
(£7.5m)
(£8.1m)
(£7.5m)
Group profit before tax
(£7.7m)
(£7.5m)
(£15.2m)
(£7.5m)
7
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS At a Glance
The adjustment of £7.1m to revenue represents the lost revenue associated with providing refunds and the costs associated with
organising alternative travel arrangements for customers. This totalled £25.6m and is stated net of a chargeback claim of £18.5m.
The £0.6m of other exceptional operating costs relates to the incremental operational costs of managing the process and the loss
of monies held by TCG agents.
Group revenue was up 35%, as a result of the full year contribution of Classic Collection (where revenue is reported gross, as
Principal). Group profit before tax was down (26%) reflecting the impact of the failure of TCG. As shown above, the impact of the
failure of TCG impacted revenue by £(7.1)m and profit before tax by £(7.7)m, with an adjusted Group revenue increase of 41%
and an adjusted Group profit before tax increase of 3%.
The exceptional impact of the TCG failure has been excluded from performance measures in this report. A full reconciliation of all
non-GAAP measures to the closest equivalent GAAP measure is included in the APM glossary on page 142.
The Directors believe that adjusting the income statement for the impact of the TCG failure provides a fair, balanced and
understandable view of the Group’s underlying performance in the year. The Group organised package holidays for affected
customers which included TCG flights. Had these flights not been available at the time of booking, customers would have booked
the package with an alternative flight.
Financial Highlights
Group
Strategic Highlights
Group
› Launched Classic Package Holidays (“CPH”) in March
2019.
› Continued to expand long haul offering and more than
doubled revenues in the year.
› Key management appointments including Stefan Nordin
as CTO, Adam Hansen in the newly formed role of
Corporate Development Director and Oliver Garner as
CEO of Classic and CPH.
› Opened new Digital HQ in central Manchester and
refurbished operational HQ in Cheadle
› Group gross profit decreased 1% and Group profit before
tax reduced by 26% reflecting the impact of the failure of
TCG.
› Adjusted Group gross profit(1) increased 7% to £99.1m
(FY18: £92.6m) reflecting revenue growth of 1% for
Onthebeach.co.uk and Sunshine.co.uk (“OTB”) and a full
year contribution from Classic Collection Holidays
(“Classic”).
› Group adjusted profit before tax(1) up 3% to £34.6m
(FY18 : £33.6m).
› Cash conversion(1) of 89% (FY18: 95%).
› Cash at Bank at year end of £54.8m (FY18: £47.3m).
Excluding the impact of refunds and costs of replacement
flights paid in relation to the TCG failure, Cash at Bank
would have been £62.0m.
› Proposed final dividend of 2.0p per share, dividend
maintained at 3.3p per share for the year (FY18: 3.3p per
share).
(1) Denotes a non-GAAP measure. An explanation of this measure and
reconciliation to the closest GAAP measure is included in the APM
Glossary on page 142.
8
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019
Business Model
STRUCTURAL
MARKET
GROWTH &
MARKET
SHARE
GROWTH
PERSONALISE
CUSTOMER
PROPOSITION
& LEVERAGE £
REVENUE
DRIVE
EFFICIENT
SHARE
GROWTH &
STRENGTHEN
BRAND
ADDRESSABLE MARKET
Short haul
beach holidays
dynamically
packaged
X
Online
penetration
X
OTB share of
market traffic
=
Unique
visitors
X
£ Revenue per
booking
X
Conversion
=
Revenue per
unique
visitor
=
Revenue
-
Unique
visitors
X
Marketing
spend per
unique visitor
=
Marketing
investment
-
Fixed and
Variable Costs
SCALE DRIVES
OPERATIONAL
LEVERAGE
OTB’s business model is centred on driving efficient growth in
market share while maintaining and improving both conversion and
£ revenue per booking
Our strategic initiatives are focused on driving the performance of
all of these levers
=
PBT
Profit growth is the cumulative effect of improvements in
performance of all of the levers individually
9
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS Report from the Chair of the Board
“
On the Beach is a
dynamic and evolving
business that has huge
opportunities for growth
and I am delighted
to have joined at this
exciting time in the
Group’s journey.
Richard Pennycook
Chair of the Board, On the Beach Group plc
”
Group gross profit £m
£92.0m
(1)%
Group profit before tax £m
£19.4m
(26)%
FY18: £92.6m
FY18: £26.1m
Adjusted Group gross profit £m
Adjusted profit before tax £m
£99.1m
+ 7%
£34.6m
+ 3%
FY18: £92.6m
FY18: £33.6m
I am pleased to present the annual report and accounts of the Group
for the year ended 30 September 2019.
Since my appointment as Chair of the Board on 1 April 2019, I
have enjoyed getting to know the business and spending time with
Simon Cooper and his senior management team. Their passion
and dedication is evident and I thank them for providing me with a
thorough and enthusiastic induction. On the Beach is a dynamic and
evolving business that has huge opportunities for growth and I am
delighted to have joined at this exciting time in the Group’s journey.
A Challenging Environment and a Significant Growth
Opportunity
The last year has presented a challenging environment with multiple
failures (most notably the collapse of Thomas Cook Group (“TCG”)
towards the end of the financial year), continuing uncertainty over
the timing and nature of the UK’s departure from the EU, and a
devaluation of Sterling against the Euro.
The collapse of TCG creates an unprecedented opportunity for the
Group to take market share at an increased rate. The Group has
therefore started to strategically increase its marketing investment
both online and offline to attract new customers.
10
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019 Strategic Progress
The Group has made significant progress against its strategic
objectives during the year. Simon Cooper, CEO, covers this in
greater detail in his report on pages 14 to 16.
During the year, On the Beach has continued to invest in areas
that will support long-term sustainable and scalable growth.
Highlights include:
› The appointment of Stefan Nordin as CTO in October 2018
and the subsequent reorganisation of the tech and product
functions. The new structure better enables the Group
to scale and increase the pace of evolution of its platform to
support its strategic objectives.
› The opening of a new Digital HQ in central Manchester and
the refurbishment of the operational HQ in Cheadle to
underpin the objective to recruit and retain the very best
talent. It is clear that this move has enabled the Group to
accelerate the pace at which it is growing digital headcount.
› Following the acquisition of Classic in August 2018, the
Group launched CPH in March 2019. This launch enables
the Group to offer competitively priced beach holidays to a
wide range of intermediaries through an online portal, and
the progress made to date is encouraging, with c.1,500
agents now live.
› The appointment of Adam Hansen as Corporate
Development Director in August 2019, which will support
our growth strategy as we continue to actively explore
acquisition opportunities.
› Significant investment in our People function, and the
execution of a new people strategy to align with strategic
objectives (see page 15). For the first time, the Group
has run an all-employee culture survey. This will support
the development of a cultural framework that ensures the
link between strategy, values and culture, which is
critical to ensure long-term sustainability for stakeholders
(see pages 15 to 16).
› The Group has continued to directly integrate scheduled
long haul carriers onto its platform, with most of the key
long haul airline partners now directly integrated and the
Group continues to build its portfolio of directly contracted
hotels. In FY19 we have grown long haul revenues by more
than 100% and are excited about the medium term
opportunities that these new destinations offer.
› Continued investment in online and offline marketing and
our brand continues to strengthen with a 14% growth
year-on-year in prompted brand awareness. We have
selected a new creative agency and our new advert will
launch in December 2019, with the aim of making the On
the Beach brand famous offline.
Board Changes
We have seen a number of Board changes during the year, all
of which were overseen by the Nomination Committee.
Lee Ginsberg stepped down as Chair of the Board on 30
November 2018 and resigned as a Director on 6 February
2019 in order to focus on other time commitments. Lee made
a valuable contribution to the Company since his appointment
ahead of the Group’s IPO in 2015 and on behalf of the Board, I
express my thanks and best wishes to him.
David Kelly acted as Interim Chair of the Board from 30
November 2018 until my appointment on 1 April 2019, during
which time, as Interim Chair of the Nomination Committee, he
oversaw the Committee’s search for a permanent Chair. On 1
April 2019, David resumed his position as Senior Independent
Director and Chair of the Remuneration Committee. I would
like to thank David for fulfilling this interim role and for his
continuing guidance and support to the Board.
On the recommendation of the Nomination Committee, the
Board appointed me to the role of Chair of the Board with
effect from 1 April 2019. The Report of the Nomination
Committee on pages 58 to 59 outlines the recruitment process
in further detail.
Under the supervision of the Nomination Committee, we have
undertaken an evaluation of the Board and its Committees
and the balance of skills and experience on the Board. As a
result of this exercise, the Committee concluded that it would
be beneficial to recruit a further Non-Executive Director to
complement the skills and experience of the current Directors
and the Committee is in the process of recruiting for the
vacancy. Further details are set out on page 59.
Change of Statutory Auditor
Last year, the Audit Committee made the decision to undertake
a tender of the external audit, given KPMG’s 11-year tenure.
The Audit Committee ran the tender process during early
2019 which concluded with the appointment of Ernst & Young
LLP (“EY”) on 7 March 2019. I express my thanks to Elaine
O’Donnell, Chair of the Audit Committee, and Paul Meehan,
CFO, for running such a rigorous and efficient tender process.
Corporate Governance Code
The Board is committed to the highest standards of corporate
governance, as outlined in detail in our Governance Report on
pages 46 to 95. The 2018 UK Corporate Governance Code
applies to the company with effect from 1 October 2019, and
we have undertaken significant amounts of work and planning
to ensure we are ready to comply with the new Code. In
particular, the Group has undertaken a culture survey, to enable
us to understand and assess the Group’s culture, and to ensure
that this is aligned with the Company’s purpose, values and
strategy. More details about this, as well as our employee and
wider stakeholder engagement, are on pages 33 to 43.
Final Dividend
The Board is pleased to recommend a final dividend of 2.0p per
share, totalling 3.3p per share for the year (2018: 3.3p).
AGM
Our AGM will be held at 11am on 6 February 2020 at the
Group’s digital headquarters at Aeroworks, 5 Adair Street,
Manchester, M1 2NQ. We look forward to welcoming
shareholders.
Richard Pennycook
Chair of the Board
27 November 2019
11
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
“ Nicola Contact Centre Manager
We aim to provide fantastic
customer service but also go
beyond that to ensure that the
whole customer experience
is great from start to finish,
making it as simple as possible
to book and enjoy a holiday.”
Favourite Beach: St Paul’s Bay, Rhodes
12
12
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019 OTB Growth Strategy
Our vision is to build Europe’s leading
online beach holiday retailer via a single
platform, multi brand strategy
UK
To reach the widest
possible audience of
beach holidaymakers
V E S
IN
T I N T A L E N T AND TEC
H
N
O
L
O
G
Y
BRAND
DIFFERENTIATE
LONG
SHORT
HAUL
HAUL
B2C
B2B
INSPIRE
PERSONALISE
EUROPE
T
O
E
X
TEND CORE C A P A B I L I T IE S
To support the integration
and revenue expansion of
beach focused brands
13
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Chief Executive Officer’s Report
“
In what has been a difficult
economic climate, I am pleased
with the Group’s performance
against strategic objectives
while delivering a 3%
increase in Group adjusted
profit before tax.
Simon Cooper
Chief Executive Officer
”
On the Beach continues to be a dynamic, entrepreneurial and
ambitious business. We deliver value-for-money personalised
beach holidays to our customers and maintain a daily focus to
improve the quality of our customer proposition and the value
that we provide to our growing customer base.
Our continued growth has been delivered by executing a
simple strategy, to personalise our customer proposition to
increase conversion and improve margin while driving an
efficient increase in our market traffic share. This underpins our
ability to gain market share from traditional tour operators and
other online travel agents (“OTAs”).
Growth
The Group has delivered a solid performance in the year with
significant progress made against strategic objectives.
Key highlights include:
› Driving an efficient increase in our share of market,
while investment into our brand has also increased
awareness with branded share of traffic at its
highest ever level of 70% of overall traffic (FY18:
64%).
› Smartphone traffic is now 69% of total traffic and
smartphone bookings have increased 31% year on
year.
Increasing the directness of our relationships with end
suppliers to achieve in excess of 70% of hotels sourced
directly.
›
› Continuing to provide the highest possible level of customer
service by investing in our service staff and function to
increase repeat purchase volumes by 7% year on year.
› Driving an increasing proportion of sales into exclusive
product while maintaining our lean cost base.
› Building and launching Classic Package Holidays (“CPH”),
which supports our strategic goal to gain share of the
offline market by providing third party agencies with an
online portal which allows access to a wide range of value
for money beach holiday product.
Market
We believe that overall demand in the year for short haul
beach holidays was affected by Brexit uncertainty and general
consumer confidence.
We have observed the following market trends:
› A continued return in appetite for customers to travel to
destinations in the Eastern Mediterranean, most notably
Turkey;
› Tour operator discounting in the lates market to fill risk
capacity, which became more aggressive in the eight weeks
prior to the collapse of TCG;
› A weakening of Sterling leading to a slowdown in bookings;
and
› A strong finish to the year with a strengthening of Sterling
and early sales for summer 2020.
14
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019
Investment in Brand
We have continued to invest in an efficient multi-channel
approach supported by our sophisticated bid management
capability and have enhanced our cross-device attribution
capability, giving us greater clarity on the return on marketing
investment of multi-device traffic.
The auction dynamics have remained relatively benign
throughout FY19 with transient periods of aggressive spending
by a range of competitors.
The increasing strength of our brand and efficiency in our
online marketing activity has allowed us to increase investment
into offline marketing and FY19 saw our largest ever offline
campaign. We have continued to optimise our in-house
econometric modelling to monitor the effectiveness of our
offline marketing spend and are delighted that prompted and
unprompted brand awareness are at their highest levels. We
are well advanced with creative and media plans for the FY20
campaign, which we expect to be our largest ever.
In the four years since launching iPhone, iPad and Android
apps, we have achieved more than two million downloads
and an increasing percentage of traffic and bookings comes
via our mobile apps. We have also invested to build booking
management capabilities and reminder functionality into our
apps so that customers can interact with us via the app before,
during and after their holidays.
Against the backdrop of the TCG collapse at the end of the
financial year, we have increased our investment in brand
marketing activity to ensure that we are well positioned to offer
holidays to all of those affected by the failure of TCG.
Investment in People
The Group moved into its digital headquarters in the centre
of Manchester in November 2018 and we have continued to
accelerate the pace at which we add digital talent. The contact
centre teams continue to be based in our Operational HQ in
Cheadle, which was refurbished in early 2019 and fitted with
50% more desk space to support growth. We will shortly
invest to refurbish the Classic office in Worthing.
In October, we welcomed our new Chief Technology Officer,
Stefan Nordin, into the business and we believe his prior
experience as CTO of Betsson Group will greatly assist us in
our ambition to double our digital capability over the next 3-5
years. Stefan has overseen a reorganisation of the Tech and
Product resource, growing the teams by approximately 50%
through FY19 and providing the foundations for us to add
further talent in FY20.
We have continued to invest in multi-skilling our customer-
facing staff and ensure that we can provide an even higher
level of customer support for all of our valued customers across
all brands. We are delighted that complaint ratios continue to
fall, Net Promoter Scores continue to improve and our repeat
purchase rates have increased significantly through FY19.
We have built a team of multi-skilled agent-facing staff to
support the launch and growth of the CPH brand. We have
also invested to broaden the senior management team in
Worthing to ensure that Classic is able to evolve its product
and sales strategies.
Following the failure of TCG, all teams across our business
responded exceptionally to ensure that customers were either
re-booked or refunded in the shortest possible time while
maintaining high quality customer care.
Investment in Supply
Despite the increasing proportion of sales into Eastern
Mediterranean and longer haul destinations, the investments
we have made into our supply resource and technologies
has helped us to deliver more than 70% of total hotel buying
through direct contracting in FY19. The increasing proportion
of directly contracted product has continued to support the
improved customer satisfaction scores as complaint ratios on
directly contracted product are significantly lower than third
party sourced product. Our continued focus to strengthen
our relationships with key overseas suppliers is giving us
increased access to exclusive rates, ring-fenced capacity and
OTA exclusivity while maintaining our no risk, lightweight
business model.
We have continued to add resource to build our portfolio of
directly contracted hotel product in existing destinations, such
as Greece, and in support of our long haul expansion in the
Caribbean, the Middle East and Indian Ocean. We have also
added talent to the hotel platform technology team to ensure
that we are well placed to deliver our longer term strategic
objectives.
In H2 2019, almost 35% of our hotel product was contracted
with some form of exclusivity with us delivering significant
incremental volume for our key partners and our focus will
be to continue to build on this base throughout 2020 and to
convert our differentiated supply position into incremental
margin. The collapse of TCG has created numerous
opportunities to expand our hotel portfolio and our team of
contractors are working hard to forge new partnerships with
former TCG exclusives. We continue to explore opportunities
to contract with partner airlines on a more strategic basis to
deliver incremental revenue.
We have also continued to invest significantly in our search
technologies to support our strategic objective. This drives an
increasing proportion of differentiated flight and hotel product
via our Holiday Finder booking path and allows us to build
innovative search tools for customers who are destination
agnostic.
In the aftermath of the failure of TCG, we continue to
explore innovative ways to backfill the lost flight capacity to
destinations where TCG had a substantial share.
15
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Chief Executive Officer’s Report
International
After the failure of Primera airlines at the start of H1, and the
subsequent weakness in performance in H1, we are pleased
to have delivered strong growth in Sweden and Norway in
H2 (+43% YOY). This growth was achieved with increasing
efficiency delivering a breakeven performance in revenue post
marketing spend. With a stable supply of seats across the
coming year, we are confident that the progress we have made
in H2 will allow us to drive significant and efficient growth in
Sweden while we continue to invest in Norway.
We continue to evaluate opportunities to enter further markets
outside of Scandinavia.
Strategy and Growth
The Group’s vision is to build Europe’s leading online beach
holiday retailer via a single platform multi brand strategy.
On the Beach continues to grow market share by evolving a
strategy based on the following strategic pillars:
1. Investing in talent and technology to extend core
capabilities
›
Continuing to invest in our people and our platform to
allow us to innovate at an increasing pace
Investing in our People function to ensure that we
drive optimum performance from a growing talent
base
Evolving platform capabilities to simplify the
integration of further brands
Refreshing company-wide values
2. Driving an efficient increase in traffic through branded
and direct channels
›
Investing in an efficient multi-channel approach
supported by our sophisticated bid management
capability
Increasing investment offline in conjunction with
econometric modelling capability to strengthen brand
awareness and to ensure marketing investment is
efficient
Driving performance improvements across all brands
3. Personalising our customer experience
›
›
›
›
Driving an increasingly simplified customer
experience
Showing the most relevant product to all site visitors
on all devices at the earliest possible opportunity
Enhancing personalisation logic through data science
and machine learning
Optimising our multifunctional app to increase
customer engagement
16
›
›
›
›
›
4. Leveraging increased revenue through direct and
differentiated supply
›
Building a programme of direct and differentiated
supply to leverage margin and gain market share
Building our in-house capability to increase visibility of
differentiated product
Leveraging our multi-brand capability to offer a range
of distribution options to preferred partners
5. Inspiring holidaymakers with destination agnostic
search technologies
›
›
Optimising destination agnostic search technologies
Leveraging capabilities to retail a wider range of
product from a wider range of suppliers
6. Reaching an ever wider audience of beach
holidaymakers through product, channel and
geographic extension
›
Expanding our long haul offering to monetise existing
search volumes
Growing share of B2B sales through the CPH online
agent-facing portal
Evolving the product portfolio of the Classic luxury
B2B brand
Leveraging our core capabilities to grow market share
in Scandinavia
Seeking value-enhancing M&A opportunities
›
›
›
›
›
›
Current Trading and Outlook
The first quarter of our financial year (calendar Q4) has
historically been the quietest trading period for the Group. The
failure of TCG has led to a material shift in market dynamics
as TCG had a 20% share of beach holiday passengers and
approximately 20% of the seat capacity to beach holiday
destinations. This has created a significant short-term lack of
seat capacity as well as an unprecedented opportunity in the
medium term to gain share.
Search demand has therefore been strong throughout the
period following the failure albeit the loss of seat capacity has
led to a supply/demand imbalance with a significant increase in
flight pricing, particularly for winter 19/20 departures and for
travel to Eastern Mediterranean destinations.
The Board strongly believes the correct course of action to
ensure that On the Beach is best-positioned to capture market
share, is to focus on price competitiveness and to increase the
visibility of all of the Group’s brands, with the expectation that
seat supply will normalise during FY20. Whilst the consumer
environment will continue to be challenging, we remain
confident in the ability of our resilient and flexible business
model to significantly increase our market share in the medium
term.
The Board will provide a further update on trading at our AGM
on 6 February 2020.
Simon Cooper
Chief Executive Officer
27 November 2019
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019
Key Performance Indicators
OTB Segment: Adjusted Revenue(1)
Marketing Spend as a Percentage of Adjusted Revenue(1)
Revenue is continuing to grow at 1.1%
Marketing % of adjusted revenue decreased to 33% (2018: 37%)
excluding offline and to 39% (2018: 42%) including offline
£89.3
£90.3(2)
£81.9
£70.2
£62.5
s
n
o
i
l
l
i
M
£100
£90
£80
£70
£60
£50
£40
£30
£20
£20
-
£45.6
£37.5
£30.9
60%
50%
40%
30%
20%
10%
0%
52.8%
50.7%
49.9%
45.9%
51.3%
48.6%
48.7%
44.6%
45.2%
40.9%
41.7%
37.1%
38.9%
33.0%
£40.0
£35.0
£30.0
£25.0
£20.0
£15.0
£10.0
£5.0
-
2012
2013
2014
2015
2016
2017
2018
2019
2012
2013
2014
2015
2016
2017
2018
2019
(2) Revenue before adjustment for the TCG failure was £83.3m
Online marketing spend (£m)
Offline marketing spend (£m)
Online spend as % of adjusted
revenue
Total spend as % of adjusted
revenue
International Segment: Revenue
Adjusted profit before tax(1)
Decrease in revenue of 13% in FY19
Adjusted profit before tax grows by 3% to £34.6m
(FY18: £33.6m)
s
n
o
i
l
l
i
M
2.0
1.5
1.0
0.5
-
(0.5)
(1.0)
(1.5)
(2.0)
(2.5)
1.7
1.6
1.4
1.1
0.7
(0.6)
(1.8)
(1.8)
(2.0)
(2.2)
s
n
o
i
l
l
i
M
£40
£35
£30
£25
£20
£15
£10
£5
£0
33.6
34.6
28.5
21.3
14.5
10.5
9.9
2015
2016
2017
2018
2019
2013
2014
2015
2016
2017
2018
2019
Revenue
EBITDA
(1) Denotes a non-GAAP measure. An explanation of this measure and reconciliation to the closest GAAP measure is included in the APM Glossary on page 142
17
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS Financial Review
“
Despite the impact of the TCG
failure, the Directors are pleased
to recommend a final dividend
of 2.0p, and therefore a total
dividend in line with last year,
demonstrating the Directors’
confidence in the business model
and strength of the
balance sheet.
Paul Meehan
Chief Financial Officer
”
The Group organises its operations into four principal financial
reporting segments, being OTB (onthebeach.co.uk and
sunshine.co.uk), International (ebeach.se, ebeach.no and
ebeach.dk), Classic (Classic Collection Holidays) and CPH
(Classic Package Holidays).
As a principal, Classic and its subsidiaries account for revenue
on a “travelled” basis and therefore report revenue on a gross
basis. In each of the OTB, International and CPH Segments, the
Group offers dynamically packaged holidays acting as an agent
rather than a principal.
The exceptional impact of the TCG failure has been excluded
from performance measures in this Report as the Directors
consider this necessary to provide a true, balanced and
understandable view of the performance of the Group. A
full reconciliation of all non-GAAP measures to the closest
equivalent GAAP measure is included in the APM glossary on
page 142.
The Directors believe that adjusting the income statement for
the impact of the TCG failure provides a clearer reflection of
the Group’s underlying performance in the year. The Group
organised package holidays for affected customers which
included TCG flights. Had these flights not been available at the
time of booking, customers would have booked the package
with an alternative flight. In addition, the proximity of the TCG
failure to the year end means that customers did not have the
opportunity to replace package holidays that were impacted.
18
OTB Financial Performance
OTB Revenue £m
OTB Adjusted Revenue £m
£83.3m
(7)%
FY18: £89.3m
£90.3m
+1%
FY18: £89.3m
OTB Adjusted Revenue after marketing
costs £m
OTB Operating Profit £m
£55.1m
+6%
FY18: £52.0m
£20.9m
(25)%
FY18: £27.7m
OTB Adjusted EBITDA(1) £m
OTB EBITDA % of revenue
£38.2m
+1%
FY18: £37.9m
42%
FY18: 42%
(1) Denotes a non-GAAP measure. An explanation of this
measure and reconciliation to the closest GAAP measure
is included in the APM Glossary on page 142
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019
Financial Review
OTB Performance
2019
Adjusted
£m
2019
GAAP
£m
2018
Adjusted
£m
2018(1)
GAAP
£m
Revenue
Revenue after
marketing costs
Variable costs
Fixed costs
Depreciation
and amortisation
Exceptional(2)
operating costs
Share based
payments
Amortisation
of acquired
Intangibles
90.3
55.1
(7.2)
(9.7)
(4.0)
-
-
-
Operating profit
EBITDA
EBITDA %
34.2
38.2
42%
83.3
48.1
(7.2)
(9.7)
(4.0)
(1.2)
(0.7)
(4.4)
20.9
29.3
35%
89.3
52.0
(6.6)
(7.5)
(3.0)
-
-
-
34.9
37.9
42%
89.3
52.0
(6.6)
(7.5)
(3.0)
(1.5)
(1.4)
(4.3)
27.7
35.0
39%
(1) Restated for adoption of IFRS 15. Refer to note 2c to the Consolidated
Financial Statements on page 101.
(2) Exceptional operating costs comprise the costs of dealing with the failure of
TCG and re-organisation costs.
An explanation of the adjusted and non-GAAP measures, and a reconciliation to
the closest GAAP measure, is included in the APM Glossary on page 142.
Performance Summary
Following the TCG collapse, OTB revenue for the year was down
7% and operating profit was down 25%. The failure of TCG
impacted revenue by £(7.0)m and operating profit by £(7.2)m.
Excluding the impact of TCG detailed above, and despite the
challenging market and the weakening of Sterling between
May and September 2019, OTB delivered an adjusted revenue
growth of 1% to £90.3m (FY18: £89.3m).
Adjusted revenue after marketing costs grew by 6% to £55.1m.
Online marketing expenses as a percentage of adjusted revenue
decreased to 33% (FY18: 37%) with total spend of £29.8m
(FY18: £33.2m). This reflects further optimisation of our online
spend together with a continued increase in the share of
branded and direct traffic.
We have again increased spending in the year on offline
advertising campaigns to £5.4m (FY18: £4.1m). This increased
investment continues to drive greater brand awareness.
Improvements to the customer journey, including the Holiday
Finder path, have been rolled out further during the year.
Package holiday bookings grew by 10% YOY and now account
for 88% of all bookings made on onthebeach.co.uk and sunshine.
co.uk.
We have also made significant progress with expanding our
long haul proposition. Long haul package holiday bookings
doubled this year and we expect to continue to see expansion
in this area as we integrate with more airlines and hotels in
long haul destinations.
EBITDA
Overhead as % of adjusted revenue
2019
Adjusted
%
2019
GAAP
%
2018
Adjusted
%
2018
GAAP
%
8%
9%
8%
8%
11%
11%
8%
8%
19%
20%
16%
16%
Variable costs %
adjusted revenue
Fixed costs %
adjusted revenue
Overheads %
adjusted revenue
An explanation of the adjusted and non-GAAP measures, and a reconciliation to
the closest GAAP measure, is included in the APM Glossary on page 142.
In spite of the market conditions leading to low revenue
growth, the Group has continued to invest in areas that will
support the long-term prospects of the Company. As a result,
overheads increased to 19% of adjusted revenue. This reflects
investment in our Digital HQ, talent acquisition & retention,
and additional costs incurred as a result of the implementation
of the Package Travel Regulations. A bonus will also be paid to
eligible employees based on achievement of the non-financial
targets.
Adjusted EBITDA of £38.2m (FY18: £37.9m) increased
by 1% and adjusted EBITDA as a percentage of adjusted
revenue remained at 42% (FY18: 42%). The closest GAAP
equivalent measure to Adjusted EBITDA is operating profit
which decreased to £20.9m (FY18: £27.7m). This decrease
is attributable to exceptional costs paid in the year of £8.2m
relating to the TCG failure and internal restructuring.
International Performance
Revenue
Revenue after marketing
costs
Variable costs
Fixed costs
2019
£m
2018
£m
Change
%
1.4
-
1.6
(1.4)
(13)%
(0.2)
(0.3)
(0.4)
(0.5)
Depreciation and amortisation
(0.1)
(0.2)
Operating loss
International EBITDA
(0.7)
(2.4)
(0.6)
(2.2)
19
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Financial Review
Performance Summary
› Revenue in H2 has grown 43% YOY. H1 revenues were
›
adversely affected by the failure of Primera in October 2018
resulting in a FY reduction in revenue of (13)% to £1.4m.
In H2 there was a significant recovery in booking
volumes, as capacity returned to the market.
› Revenue after marketing is now break-even.
› EBITDA losses for the year have reduced from (£2.2m)
to (£0.6m)
› The closest GAAP equivalent measure to International
EBITDA is operating loss which decreased to (£0.7m)
(2018: (£2.4m))
The International segment comprises websites in Sweden, Norway,
and Denmark operating under the ‘www.ebeach.se’, ‘www.ebeach.
no’, and ‘www.ebeach.dk domains’.
Classic Performance
2019
Adjusted
£m
2019
GAAP
£m
2018
Adjusted
£m
2018(2)
GAAP
£m
Pro-
forma(3)
£m
Revenue
55.0
55.0
13.4
13.4
59.0
Revenue after
marketing
costs
Variable costs
Fixed costs
Depreciation
and
amortisation
Amortisation
of acquired
Intangibles
Exceptional(1)
operating
costs
Operating
profit
Classic
EBITDA
6.3
6.3
1.6
1.6
6.7
(1.2)
(2.9)
(1.2)
(2.9)
(0.1)
(0.4)
(0.1)
(0.4)
(1.3)
(3.0)
(0.2)
(0.2)
-
-
(1.1)
(0.7)
-
-
-
2.0
0.2
1.1
2.2
1.5
1.1
-
(0.2)
(0.2)
-
0.9
1.1
-
-
2.2
2.4
(1) Exceptional operating costs comprise the costs of dealing with the failure of
TCG and re-organisation costs
(2) Restated for adoption of IFRS 15. Refer to note 2c to the Consolidated Financial
Statements on Page 101.
(3) Numbers are unaudited and taken from management accounts. FY18 Proforma
has been included to show performance on a full-year basis. The
Directors believe this provides a useful comparison and makes the results more
understandable.
An explanation of the adjusted and non-GAAP measures, and a reconciliation to the
closest GAAP measure, is included in the APM Glossary on page 142
Classic was acquired on 15 August 2018. Classic has provided On
the Beach with a “business to business” channel through which we
are starting to access the five million short haul beach holidays that
are booked offline each year.
20
As a principal (rather than an agent) Classic accounts for
revenue on a “travelled” basis and reports revenue on a
gross basis.
Revenue decreased by 7% to £55.0m while the new senior
management team transitioned the business towards
more luxury and tailor made travel. The performance in the
year also reflects the continuing challenges of high street
retail more generally.
CPH Performance
Revenue
Gross Profit after marketing
Variable costs
Fixed costs
Operating profit
CPH EBITDA
2019
Adjusted
£m
2019
GAAP
£m
0.8
0.1
(0.2)
(1.0)
(1.1)
(1.1)
0.7
-
(0.2)
(1.0)
(1.2)
(1.2)
CPH provides an online B2B platform that enables high
street travel agents to sell dynamically packaged holidays
to their customers.
Since launch in March 2019, CPH has established a
distribution network of c.1,500 travel agents. The primary
focus in FY20 is to further increase the numbers of agents
and the volume of bookings per agent.
Group Gross Profit
Group gross profit now comprises OTB, International,
Classic and CPH revenues and has fallen to £92.0m
(FY18: £92.6m) as a result of the failure of TCG. The
adjusted group gross profit has increased by 7% to
£99.1m. This is a result of growth in the OTB revenues of
1% and the increased contribution from the Classic and
CPH segments of £5.8m.
Group profit before taxation £m
Adjusted profit before tax £m
£19.4m
(26)%
FY18: £26.1m
£34.6m
3%
FY18: £33.6m
Profit for the year £m
Adjusted profit for the year £m
£15.7m
(27)%
FY18: £21.5m
£28.0m
1%
FY18: £27.7m
Basic EPS pence
Adjusted proforma EPS pence
12.0p
(27)%
FY18: 16.5p
21.4p
1%
FY18: 21.2p
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019
Profit Before Tax
Group profit before tax decreased by 26% to £19.4m (FY18:
£26.1m). The current year was impacted by the exceptional
costs relating to the TCG failure and an internal restructure
program.
The Group reports adjusted profit before tax to highlight the
impact of these one-off and other discrete items and to allow
better interpretation of the underlying performance of the
business.
Group profit before taxation
Amortisation of acquired
intangibles
2019
£m
19.4
5.5
2018
£m
26.1
4.6
Change
%
(26)%
Share based payments
Exceptional operating costs(1)
0.7
9.0
1.4
1.5
Adjusted profit before tax
34.6
33.6
3%
(1) Exceptional operating costs comprise the costs of dealing with the failure of
TCG, re-organisation costs and one-off property costs (FY18: Acquisition
costs and one-off property costs)
Finance Costs
The finance cost for the year was £0.3m (FY18: £0.3m). With
strong cash management, the maximum revolving credit facility
drawdown during the year was £19m. During the year, the
Group extended the revolving credit facility to 31 December
2022 and increased the facility from £28.5 million to £50
million to cover seasonal working capital requirements and
expansion plans.
Share-Based Payments
The Group makes annual awards under a long term incentive
plan (“LTIP”). In accordance with IFRS2, the Group has
recognised a non-cash charge of £0.7m (FY18: £1.4m).
Exceptional Operating Costs
Exceptional operating costs for the year were £9.0m (FY18:
£1.5m). These costs relate to:
› £1.3m relates to double property costs and an internal
restructuring program to ensure that we have the best
structure in place to deliver our strategic goals; and
› The net cost associated with the recent failure of TCG
of £7.7m (£7.1m revenue and £0.6m operating costs),
which represents the expected one-off costs associated
with helping customers to organise alternative travel
arrangements or providing refunds following the failure of
the airline and is stated net of a chargeback claim
of £18.5m.
Cash generated from operating activities £m
Operating cash conversion %
£26.5m
(21)%
89%
FY18: £33.4m
FY18: 95%
Dividend per share pence
Net external cash(3) £m
3.3p
£54.8m
FY18: 3.3p
FY18: £47.3m
Taxation
The Group tax charge of £3.7m represents an effective tax
rate of 19% (FY18: 18%) which was in line with the standard
UK rate of 19% (FY18: 19%).
Earnings per share
Basic earnings per share, calculated for the current and
comparative period, is based on the weighted average
number of shares in issue and has decreased by (27)% to
12.0 pence in FY19 (FY18: 16.5 pence).
The adjusted earnings per share based on adjusted earnings
increased 1% to 21.4 pence (FY18: 21.2 pence).
The table below shows the adjustment from actual earnings:
Profit for the year
Add backs:
2019
£m
2018
£m
Change
%
15.7
21.5
(27)%
Share based payments (net of
tax)
Exceptional and non-underlying
costs (net of tax)
Amortisation of acquired
intangibles
0.6
1.2
7.2
1.2
4.5
3.8
Adjusted profit for the year
28.0
27.7
1%
Number of ordinary shares in
issue
at year end; assumed to be
outstanding for the full year and
comparative period (millions)
Adjusted earnings per share
(pence)
131.2 131.0
-
21.4
21.2
1%
An explanation of the adjusted and non-GAAP measures, and a reconciliation to
the closest GAAP measure, is included in the APM Glossary on page 142
21
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Closing Cash was £54.8m (FY18: £47.3m).
Excluding the impact of refunds and costs of
replacement flights paid in relation to the TCG
failure, Cash at Bank would have been £62.0m.
Cash generated from operating activities was
£26.5m (FY18: £33.4m) and operating cash
conversion was 89% (FY18: 95%) reflecting
changes to the trust rules and supplier mix.
Dividend
The Directors recommend a final dividend of 2.0p
per share, totalling 3.3p per share for the year
(FY18: 3.3p per share). Subject to shareholders’
approval at the Annual General Meeting (‘AGM’)
on 6 February 2020, the dividend will be paid on
13 February 2020 to those shareholders who
appear on the register of members at the close of
business on 10 January 2020.
Paul Meehan
Chief Finance Officer
27 November 2019
Financial Review
Cash Flow and Net Debt
The Group continues to see strong cash conversion at 89% (FY18: 95%).
2019
£m
2018
£m
Change
Profit before taxation
19.4
26.1
(26)%
Depreciation
Amortisation
Net finance (income)/costs
Share based payment charges
1.1
8.7
(0.2)
0.7
0.5
7.2
0.1
1.4
EBITDA excluding share based
payment charges
29.7
35.3
(16)%
Movement in working capital
Movement in trust account
2.4
(5.6)
(1.7)
(0.2)
Cash generated from operating
activities
26.5
33.4
(21)%
Operating cash conversion %
89%
95%
Other Cash Flows
Corporation tax paid
(3.8)
(7.1)
Capitalised development
expenditure
Capital expenditure net of
proceeds
(5.1)
(3.8)
(3.0)
(2.2)
Contingent consideration
(2.7)
(3.0)
Acquisition of subsidiary net of
cash acquired
Net finance income/(costs)
Dividends paid
Net cash flows
Closing cash at bank
Closing trust account balance
Total
-
0.2
(4.6)
7.5
54.8
44.0
98.8
1.0
(0.1)
(3.9)
14.3
47.3
38.4
85.7
(48)%
15%
22
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019 I
S
T
R
A
T
E
G
C
R
E
P
O
R
T
G
O
V
E
R
N
A
N
C
E
I
F
I
N
A
N
C
A
L
S
T
A
T
E
M
E
N
T
S
Dan Head of Performance Marketing
culture here promotes a test and trial mind-set, which allows
us to experiment with new technologies and platforms that
“The autonomy that you get at On the Beach is fantastic. The
have the potential to revolutionise the business”
Favourite Beach: Agios Stefanos Beach, Mykonos
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019
23
23
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Principal Risks and Uncertainties
The Board believes that effective risk management is critical to
ensure that the Group can deliver on its strategic objectives and to
ensure long-term sustainable growth.
As such, the Directors have carried out a robust assessment of the principal risks and uncertainties facing the company, including
those which could threaten its business model, growth, future performance, solvency or liquidity. The principal risks and
uncertainties identified are detailed in this section. This is not exhaustive, and additional risks and uncertainties may prove to have
a material effect on the Group.
Link with Strategy
For each risk highlighted, we have specified the strategic pillars (as outlined in the CEO’s report) that these risks impact.
These are:
1 Investing in talent and technology to extend core capabilities.
2 Driving an efficient increase in traffic through branded and direct channels.
3 Personalising our customer experience.
4 Leveraging increased revenue through direct and differentiated supply.
5 Inspiring holidaymakers with destination agnostic search technologies.
6 Reaching an ever-wider audience of beach holidaymakers through product, channel and geographic expansion.
Consumer Demand
Impact
A recession or reduced economic growth can lead to reduced job security and a reduction in consumer leisure spending.
A weak pound makes holidays and consumer spending abroad more expensive.
High-profile corporate failures reduces consumer confidence to make ‘big ticket’ purchases, particularly well in advance.
Terrorist attacks, war/acts of force and civil unrest undermine consumer confidence and cause consumer behaviour to shift
suddenly (e.g. by choosing not to book a holiday, delaying booking or booking a different destination or a ‘staycation’).
Continued uncertainty over the Brexit outcome and the resulting economic position could lead to a material reduction in
consumer demand for holidays.
Emerging Risks / Change in the Year
Brexit uncertainty / the political turmoil in the UK and high-profile failures of household names such as Thomas Cook, have
heightened this risk considerably.
Key Mitigations
The Group’s flexible payment arrangements enable customers to spread the cost of their holiday. The Group’s ATOL and ABTA
bonding, together with its consumer trust account arrangements (where customer monies are held safely in a trust until they
travel), provide compelling reasons for customers to trust in the Group over other competitors.
In an environment of rapidly shifting consumer demand, the Group’s flexible and asset-light business model means it is well
placed to respond to sudden shifts in consumer demand.
Strategic pillars impacted
Direction of travel
1
2
4
6
24
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019
Flight Supply
Impact
As is the case with all online travel agents (“OTA”), a lack of flight supply/capacity impacts the Group’s ability to fulfil consumer
demand for holidays.
For a number of low-cost airlines, the Group does not have agreements in place and instead acts as the customer’s agent.
Certain airlines may not wish to accept bookings from the Group’s customers and might seek to impede the Group’s access to
flight data and bookability.
Certain airlines may use technological and other means to prevent the Group’s bookings or to apply a price difference to make
the Group’s bookings more expensive. This could make the Group’s offering less extensive or more expensive which could have
a material adverse effect on the Group.
The Group is one of several online travel agents involved in litigation with Ryanair in connection with Ryanair’s efforts to
prevent OTAs from booking and selling its flights. The legal process is ongoing but remains at an early stage. There have been
no developments since the last annual report, so this has caused a delay to the anticipated timescales set out in the prospectus.
Other airlines could seek to emulate Ryanair’s claim against OTAs. Litigation is unpredictable and if Ryanair were to prevail, this
could have a material impact on the Group’s business.
In order to mitigate flight supply risk, the Group may take allocations of seats on certain key routes, which may involve some
limited risk. If the Group cannot sell the seats profitably or the programme is cancelled, this could lead to material costs for the
Group.
Emerging Risks / Change in the Year
Thomas Cook’s collapse led to a reduction in flight capacity which will take time to be replaced. When replaced, there may be
fewer seats available to OTAs on a seat-only basis to dynamically package.
Key mitigations
The Group is successfully building relationships with a wider range of airlines, including preferential commercial terms and
rates. The Group’s focus on beach holidays means its customers are concentrated on certain routes and its scale means that
it can easily fill seats on these routes. This is attractive to airlines looking to fill seats on new routes (including those replacing
Thomas Cook capacity) and the Group is in commercial discussions with a number of airlines.
The Group’s proprietary technology is industry leading and enables it to ensure that its operations are robust.
Where allocations of flight seats are taken, this will be on routes where there is strong demand, and the Group will seek to build
flexibility into the contract to enable cancellation when demand is lower than expected.
Strategic pillars impacted
Direction of travel
1
4
6
25
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Principal Risks and Uncertainties
Supplier Failure
Impact
In the event of a major airline failure, the Group must replace the customer’s flight arrangements, or refund the customer in
full for the holiday, with no ability to claim back the costs from the failed airline or any bond or effective insurance or the ATOL
scheme/CAA (which protects consumers, not package organisers). This leads to loss of margin on cancelled bookings, and
incremental costs to arrange alternative flights.
The Group must refund customers within 14 days of cancellation, but it may take some weeks to recover monies via
chargeback claim, creating a cash flow impact.
Failure of a major bedbank or key hotel partner would cause operational disruption.
Emerging Risks / Change in the Year
Thomas Cook’s collapse crystallised this key risk for the Group, although it is possible that there will be further failures of smaller
airlines.
Key Mitigations
The Group has detailed and well-rehearsed plans in place to deal with a major airline failure, having dealt with many airline
failures, including Monarch and Thomas Cook failures. See pages 44 to 45 for a case study on how the Group planned for and
executed its major airline failure plan.
The Group has a working capital facility in place to ensure it has sufficient funds to refund/replace customer bookings.
The Group pays for flights using credit/debit cards which include chargeback rights, which enable the Group to recover the cost.
Strategic pillars impacted
Direction of travel
1
2
4
6
Competition Risk
Impact
The Group operates in a very competitive market. If competitors offer a more compelling proposition, this could have a material
adverse effect on the Group’s financial position and prospects. New entrants to the market increase competition.
Emerging Risks / Change in the Year
The collapse of Thomas Cook led to the loss of a key competitor.
Key Mitigations
The Group has a strong brand and offers a great value proposition to customers as well as flexible payment options. The
Group’s investment in marketing, talent and its infrastructure means it can compete to attract and convert customers.
Strategic pillars impacted
Direction of travel
1
2
4
6
26
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019
Package Organiser Liability
Impact
For all holiday bookings made after 1 July 2018, these are treated as “packages” and OTB/Sunshine/Classic/CPH (as applicable)
is the “package organiser” which means the Group is responsible for the proper performance of the package. The Group can
therefore be held liable for death/personal injury or illness suffered by customers that are the fault of any of the suppliers. In the
event of a catastrophic injury/fatality, or multiple injuries, the cost could run into millions of pounds.
Package organiser status brings with it other onerous responsibilities including finding replacements/providing refunds where
flights are cancelled (through airline insolvency or otherwise) or there is a major change to the customer’s holiday and providing
accommodation where customers are stranded.
For holiday bookings made prior to 1 July 2018, OTB and Sunshine did not act as package organiser and do not have legal
liability for claims for injury/illness arising out of these bookings. However, certain claimant solicitors will try to argue that these
were packages in any event.
Emerging Risks / Change in the Year
As OTB and Sunshine only became package organisers in July 2018, almost all of the claims we received in FY18 did not relate
to packages. By the end of FY19, almost all claims we have received are packages so our liability has naturally increased, as
expected.
Key Mitigations
For bookings made prior to 1 July 2018, OTB and Sunshine acted only as travel agent and not as principal or package organiser
and our processes, practices and paperwork firmly support this.
The Group has public liability insurance in place to cover its risks as a package organiser as well as thorough claims reporting,
investigation and handling processes. The Group has indemnities in place with most suppliers, to enable recovery.
The Group has a health and safety management system in place and works with its suppliers to ensure that customers’ health
and safety is monitored throughout the supply chain.
Strategic pillars impacted
Direction of travel
1
2
6
27
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Principal Risks and Uncertainties
Regulatory Breach
Impact
The Group’s business is highly regulated and is subject to a complex regime of laws, rules and regulations concerning travel and
aviation, online commerce, financial services, consumer rights and data protection. A breach of these laws could have serious
financial and reputational implications for the Group.
Unfavourable changes to or interpretation of existing laws could adversely affect the Group’s business and financial
performance.
Emerging Risks / Change in the Year
The CMA’s investigation into online hotel booking platforms concluded in 2019 and the CMA issued new guidelines to be
followed which the Group has complied with.
Key Mitigations
The Group has an internal legal team and external legal advisers to advise the Group on current and forthcoming legal
requirements and to manage legal and regulatory issues as they arise.
The Group reviews draft proposals for law reform and participates in industry steering, policy groups and advisory committees,
through which it is able to lobby on legislative change.
Strategic pillars impacted
Direction of travel
1
2
3
4
5
6
No change
Damage to Brand/Reputation
Impact
The Group is one of the UK’s largest online beach holiday retailers and relies on the strength of its brand to attract customers to
its website and to secure bookings. Failure to maintain and protect our brand, or any events or circumstances which give rise to
adverse publicity, could cause brand/reputation damage, lead to a loss of goodwill and reduced customer demand to book with
the Group, impacting traffic and revenue.
Emerging Risks / Change in the Year
Our prompted brand awareness reached 50% in February 2019 and we have invested the most we ever have in our offline
campaign to drive our brand.
Key Mitigations
We invest heavily in our brand, through a broad variety of online and offline marketing and PR campaigns, to build brand
awareness and consideration.
We have internal and external PR advisers to support us to manage any PR incidents.
Strategic pillars impacted
Direction of travel
1
2
3
4
5
6
No change
28
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019
Exchange Rate Fluctuations
Impact
The Group’s costs of sale are incurred in a different currency to that in which it sells. If the currency in which the Group is buying
changes unfavourably, this means the margin is uncertain/volatile or the booking could fall into a loss.
A weak pound makes holidays and consumer spending abroad more expensive. If the pound weakens, tour operators have a
competitive advantage over OTAs.
Emerging Risks / Change in the Year
The prospect of a no-deal Brexit has destablised currency markets, with a material weakening of Sterling against the Euro over
the summer 2019 period.
Key Mitigations
The Group sets prices at prevailing spot rates and places forward contracts based on orders. Hedge effectiveness and stability
of Euro rates is monitored regularly.
Where the pound strengthens, online travel agents have a competitive advantage over tour operators as their pricing will be
more competitive.
Strategic pillars impacted
Direction of travel
2
4
6
IT Systems and Data Security
Impact
The Group is exposed to risks of security breaches. A data security breach, in which a third party illegally gained access to our
customers’ or employees’ personal data, could result in damage to brand, material fines and litigation, which would impact
traffic, revenue and profit.
The Group’s growth strategy is to build Europe’s leading online beach holiday retailer via a single platform, multi-brand strategy.
Our IT platforms must be scalable, robust and reliable. If our systems can’t keep up with growing demand, this could affect our
ability to deliver growth.
The enactment of GDPR in May 2018 significantly increased the size of the fines that would be levied in the event of a data
breach.
Emerging Risks / Change in the Year
As M&A is part of our future strategy, the need for a scalable platform is even more critical.
Key Mitigations
We have stringent security in place which is regularly tested and audited. The Group is PCI DSS compliant and uses an external
quality security assessor to maintain best practice.
The scalability of our platform is a priority for our tech and product teams and we invest heavily in talent and technology in this
area.
Strategic pillars impacted
Direction of travel
1
2
3
4
5
6
29
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Principal Risks and Uncertainties
Business Interruption
Impact
A significant business interruption could impact on the Group’s ability to trade and/or manage the business, for example, an
event preventing head office access, website or systems downtime or restrictions on taking or making payments.
Emerging Risks / Change in the Year
Failure to comply with the new Strong Consumer Authentication (SCA) rules under the new PSD2 regulations could restrict the
Group’s ability to accept online payments.
Key Mitigations
The Group’s payment teams worked very closely with payment providers to ensure that the work required to adjust to the
implementation of SCA was scoped out and completed.
The Group has a business continuity and disaster recovery plan and robust back up and failover facilities.
Strategic pillars impacted
Direction of travel
2
3
55
No change
People Risk
Impact
The Group’s ability to achieve its strategic objectives is dependent on certain key personnel, plus its ability to attract and retain
skilled staff. The North West, where the Group’s Digital HQ is located, is an area where there is a high degree of competition for
digital talent.
The Group relies on key personnel and if those key personnel were unable to carry out their role, this could have a material
effect on the Group’s business.
Emerging Risks / Change in the Year
In FY19, we opened our new Digital HQ in central Manchester and refurbished our Operational HQ in Cheadle. This has
enabled us to much more easily attract and retain talent.
Brexit poses a risk as, if there is a restriction on the free movement of people, this will impact on the Group’s ability to attract
and retain EU staff which could in turn have a negative effect on the diversity of our staff.
Key Mitigations
We provide an excellent working environment for our employees, and a very positive, informal and open culture, which
contributes to our ability to recruit and retain staff.
The Group has various remuneration tools to recruit and retain employees, including base salary, bonus and share schemes
including a HMRC-approved Share Incentive Plan and a Long-Term Incentive Plan.
We have a succession plan in place and invest in leadership development to ensure we have a strong and diverse talent
pipeline.
On the Beach has a Tier 2 Sponsorship Licence to broaden our pool of talent and this would mitigate the risk if EU rules on
freedom of movement change.
Strategic pillars impacted
Direction of travel
1
2
3
4
5
6
30
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019
Viability Statement
Viability
In accordance with the provision of C.2.2. of the 2016 revision
of the UK Corporate Governance Code (the “Code”), the
Directors have assessed the prospects and viability of the
Group over a period significantly longer than 12 months from
the approval of the financial statements.
Assessment of Prospects
The Board has determined that a period of three years to 30
September 2022 is the most appropriate period to provide
its viability statement. The Group prepares rolling three-
year strategic plans and cash flows, so setting the viability
statement period at three years enables the assessment to
be made based on reasonable expectations in terms of the
reliability and accuracy of forecasts. The Directors believe
that projections which extend beyond three years become
significantly less meaningful given the dynamic and volatile
nature of the industry in which the Group operates.
The Group’s overall business model (illustrated on page 9)
and its strategy (as outlined in the CEO report) are central to
assessing its future prospects. As such, key factors likely to
affect the future development, performance and position of the
Group are:
› Technology platform & personalisation: continuous
investment is made in developing platform technologies
and personalisation techniques which lead to
improvements for consumers, suppliers and employees;
› Brand and marketing: our strong brand and efficient
marketing tools enables us to continue to take share of
market traffic;
› Differentiated supply: the Group can leverage increased
revenue through direct and differentiated supply; and
› People: the Group’s continued success and growth are
dependent on the ability to attract, retain and motivate a
highly skilled workforce, with a particular focus on digital
talent.
The Group’s prospects are assessed primarily through its
strategic planning process. The planning process is based on
three limbs which are:
› The preparation of cash flow forecasts to cover the period
for which we are assessing the potential impact of events
on the Group’s viability. The forecasts will be initially
based on previously approved financial statements and
then extrapolated to cover the period we are reviewing;
› A review of the specific sensitivities on those cash flow
forecasts relevant to the Group, with a view to highlighting
potential areas of stress for the business; and
› A review designed to estimate the impact of specific events
and or circumstances which could be reasonably expected
to occur, that have the potential to affect the viability of the
Group.
Once those scenarios have been identified, the Group then
considers the most effective means of mitigating the risks
they pose. This is achieved through reviewing the existing
procedures and controls already in practice that serve as key
mitigations to those risks, and also considering where those
controls and procedures could be revised or improved upon to
better protect the Group as a going concern.
Assessment of Viability
The output of the Group’s strategic and financial planning
process reflects the Board’s best estimate of the future
prospects of the business. To make the assessment of viability,
however, additional scenarios have been modelled over and
above those in the ongoing plan, based upon a number of the
Group’s principal risks and uncertainties which are documented
on pages 24 to 30.
These scenarios were overlaid into the plan to quantify the
potential impact of one or more of these crystallising over the
assessment period. While each of the Group’s principal risks
has a potential impact and has therefore been considered as
part of the assessment, only those that represent severe but
plausible scenarios have been modelled.
These were:
Scenario 1: Airline failure
Link to risk - supplier failure
Although the Group does not expect another airline failure
in the immediate future, the possibility remains that another
supplier could fail leading to a large exceptional cost to cover
the necessary refunds to customers and any other related
costs. This model has been thoroughly tested this year whilst
dealing with the TCG failure and the Group remains confident
that the short-term cash impact, before our chargeback claim
is processed, can be covered by existing cash reserves or if
necessary, utilising the Group’s banking facility.
The Group has reviewed the list of its airline suppliers and does
not consider any major airlines to be notable failure risks. In any
event the Group remains prepared for such a failure through
the combination of this hypothetical planning process and its
recent experience of dealing with actual airline failures.
Scenario 2: GDPR fine or other major one-off cost.
Link to risk - regulatory breach
A serious GDPR breach can attract a fine of €20m or 4% of
turnover, whichever is greater. For the Company, this would be
€20m (£17m). The Group takes data protection very seriously
and a series of controls and monitoring is in place to ensure
compliance, the impact of such a fine has been considered.
The Group has considered the cash headroom over the next
three years, and is comfortable that such a fine would not
jeopardise the viability of the Group.
31
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Viability Statement
The above scenarios are designed to allow the Group to review
the maximum impact that such situations could have, for
instance the maximum fine or the failure of a major supplier, in
order to consider situations which could threaten its viability
should they arise. However, as described above and in our
key mitigations sections, there are controls and monitoring
processes in place to allow us to observe the likelihood of these
scenarios occurring and also to ensure we are best prepared to
mitigate the impact on the business.
The planning process has indicated that through a mix of the
available reserves, the Group’s banking facility and real world
experience of dealing with similar situations in the past that
it would be capable of absorbing the potential impact on the
business and remain a viable going concern.
Viability Statement
Based on their assessment of prospects and viability above, the
Directors confirm that they have a reasonable expectation that
the Group will be able to continue in operation and meet its
liabilities as they fall due over the three-year period ending 30
September 2022.
Going Concern
The Directors also considered it appropriate to prepare the
financial statements on the going concern basis, as explained in
the Accounting Policies paragraph in note 2(b) to the Financial
Statements.
32
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019 Corporate Social Responsibility
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Everything’s Better
On the Beach
34 Our Customer
36 Our People
39 Our Community
40 Our Sustainability
42 Values
43 Stakeholders
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019
33
33
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Corporate Social Responsibility
Everything’s Better
On the Beach
We take great pride in our business and brand, and believe that everything’s better On the Beach.
Making this mantra a reality for our customers and meaningful for our colleagues is a top priority and we apply this belief to all
that we do. We adhere to the highest standards of corporate social responsibility, from the working environment that we create
and the way that we treat our people, to our contribution within the community, and in operating responsibly and with long-term
sustainability and value in mind.
Our Key Areas of Focus
› Our Customer
› Our People
› Our Community
› Our Sustainability
OUR CUSTOMER
Our purpose is to make it easy for people to find, book and enjoy their perfect beach holiday, and to deliver a great customer
experience.
What Our Customers Say About On the Beach
Charlotte
Follow
@OntheBeachUK thank you so much for all your
help. You have been amazing would definitely
recommend you! Your customer service has been
outstanding
3.33 am - 20 Mar 2019
I’ve just got to write to say “thank you” so much to On the
Beach for help they gave me with a problem I had. A lovely
lady called Kara helped me and couldn’t have been more
willing to assist with my query - I used to work in the travel
industry so I am aware that some problems can’t be sorted -
but with this, she was a star. Thank you Kara
A Great Customer Experience
We are relentless in our focus on providing customers with the very best care throughout their journey with us. We’re incredibly proud
of our industry-leading 4* customer review scores on Trust Pilot.
This year we further increased our focus on providing excellent customer service by including Net Promoter Score (“NPS”) - along with
our employee engagement score – as a key strategic measure, forming part of the management bonus scheme performance criteria and
thereby giving this even greater prominence throughout the business. In the past year our NPS has increased and we continue to find
new ways to give our customers the very best On the Beach experience.
Our customer service agents are dedicated to providing a great customer care and this year we introduced a new recognition scheme,
whereby agents build time off in lieu for going above and beyond, to encourage and reward this even further.
34
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019
Getting the Nation Swimming
We look to provide added value for our customers wherever
possible. This summer, after our research found that fewer than
half of British parents are confident swimmers and 68% are
reluctant to swim with their children on holiday, we set out to
help increase confidence in the water. Working with aquatics
experts, we created bespoke family swim sessions, available at
150 locations around the UK, to help our holidaymakers create
lasting memories in the pool or sea with our #AllSwimclusive
campaign.
Combining water safety tips, swimming confidence activities
and games to play as a family, we gave access to the sessions
– which were completely free of charge – to 500 families.
Promoting Body Confidence to our Customers
We recognise that beach holidays can sometimes be
positioned in the media and society alongside a myth
of ‘beach body readiness’, promoting unrealistic and
unhealthy expectations of flawlessness. We believe
that all bodies are beach ready and that we have a
responsibility to our customers not to contribute to these
damaging ideals.
After finding that low body confidence prevents a third
of women and a quarter of men in the UK from enjoying
their holiday to the fullest, we launched body positivity
campaigns - #ThisBikiniCan and #TheManBod - to
celebrate the differences that make our bodies unique
and beautiful in different ways, working with a series of
high profile and diverse influencers to help spread our
message.
35
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS Corporate Social Responsibility
OUR PEOPLE
Our teams grew by 20% this year and by the end of
September there were 551 employees in the Group. Our
workforce is composed of our customer-facing colleagues
based in our Cheadle Operational HQ, our development and
central business functions in our Digital HQ in Manchester and
Classic in Worthing.
These colleagues are behind our success: from designing,
developing and maintaining our websites and apps, to
providing outstanding customer service, building our brands
and ensuring that everything within the business runs like
clockwork. This year we have brought in colleagues with
the specific technical skillsets required to fulfill our strategic
business aims, these have included data architecture, technical
architecture, business intelligence and UX research roles.
Our redesigned and expanded graduate programme launched
in September, when 16 software engineering graduates joined
the Product Development team at our Digital HQ.
The graduates are a key part of our talent pipeline and will be
receiving a mix of technical and general business skills training
throughout the two-year programme, to develop them into fully
-rounded technology leaders of the future. The programme
kicks off with six weeks of training provided by Manchester-
based Coding School, Northcoders.
Colleague turnover has remained stable and in line with our
expectations over the year with a combined annualised attrition
rate for OTB of 30.6% and for Classic of 14.6%.
Working Environment
A cornerstone of our people strategy is providing a working
environment that motivates our teams and allows them to do
their best work, along with helping to attract the very best
talent. This year, in order to provide the space needed to fulfil
our growth plans in the coming years, On the Beach opened a
brand new Digital HQ in Manchester’s city centre, and carried
out a complete renovation of our Operational HQ in Cheadle.
Following extensive engagement with colleagues, these offices
were designed specifically with their feedback and input in
mind, creating spaces that allow us to get together, support
greater collaboration and innovation, and provide modern
working environments that we’re proud to work in each day.
Within the Digital HQ at Manchester’s Aeroworks building,
features such as an auditorium, bar and extensive open-plan
collaborative space have also allowed us to open the business
up to the community to host a range of events, as well as
communicate openly with colleagues.
Employee retention
rates increased by
26%
this year
36
Our Development team
has grown by
26%
since the opening of our
Digital HQ.
Development
In the past 12 months we’ve invested significantly in our
People team, which has doubled in size. A Head of People
was appointed in May to lead this area of the business and
implement and deliver our people strategy - which will create
long-term value for our colleagues and the Group as a whole
and is focused on:
› Optimising our organisational design
›
› Building an inclusive, high-performance culture
› Delivering a high-quality and scalable people service
Investing in diverse talent
2019 saw us launch a programme designed to support our
people managers and invest in all of those responsible for
leading and developing others within the business. Introduced
in August through Dive In, an off-site event attended by
60 managers from across the business, this programme
includes formal management training along with networking
opportunities to build a peer support community.
As strong and effective leadership is so integral to our
success, we have also invested in the development of our
senior leadership team. This year we kicked off a development
programme for them starting with a 360° feedback exercise to
build their awareness of their impact and perception within the
business.
Company Culture
Ensuring the link between strategy, values and culture is critical
in creating long-term sustainability in our working approach.
In anticipation of the 2018 Corporate Governance Code –
which applies to the Company from 1 October 2019 – we have
been especially focused on defining what a successful culture
at On the Beach looks like, and implementing a framework
to embed this within the business. This work began with
a Group-wide culture survey during June. With excellent
response rates across the board, the overall results were very
positive with lower cultural stress levels than average. The
results have informed a refresh of our company values and
we are now building on these with competency frameworks
and a new approach to managing performance to drive the
values and behaviours that support our strategic aims and that
we want to see more of. The approach will empower people
managers to have meaningful development conversations
with their teams by providing a structured system of values
led objective setting, supported by quarterly check-ins and
monthly one to ones.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019
Colleague Engagement and Feedback
Engaging colleagues and bringing them along on our journey
is key to achieving our vision of building Europe’s leading online
beach holiday retailer.
Pier Group, our employee engagement committee, is made
up of colleagues from every department, and is chaired by
our CEO. With meetings taking place every six weeks, they
provide a forum for colleagues to share feedback and ideas,
and for company news and initiatives to be communicated.
To measure engagement, we run Hive, our annual employee
survey which captures feedback on a range of topics, as well
as gauging overall engagement levels. Engagement scores
increased by 4% this year on 2018, and colleagues that would
recommend On the Beach as a place to work increased by
5% on the prior year, with an average score of 8/10.
Acting on this feedback is vital in demonstrating to colleagues
that when they talk to us, we listen. In response, improving
our benefits offering, investing in management training and
introducing more social events between our offices are just
some of the things we’ve implemented this year.
Several new benefits have been introduced, including Death
in Service, Cycle2Work Scheme and the Simplyhealth
Optimise Health Plan. This provides colleagues with a range
of healthcare benefits including cashback on everyday
healthcare costs, access to a GP 24 hours a day, free face-to-
face counselling, plus an Employee Assistance Line offering
confidential specialist advice 24 hours a day so our employees
feel well supported no matter where they are or what time it is.
In 2019 we also introduced the flu jab, offered free of charge
and on site to all colleagues.
Colleague Communications
This is an area of expertise that the business has invested in
over the past 18 months and a range of channels are in place to
support a communicative and collaborative culture, which not
only informs but promotes two-way dialogue and encourages
colleagues to share their thoughts, ideas and feedback.
This year we have extended our internal communications
capabilities, including hiring an additional Communications
Officer, allowing us to focus on providing yet more ways to
keep colleagues informed, engaged and listened to.
The Board has determined that the most effective way of
ensuring the employee voice is heard by the Board, is to have
one or more designated Non-Executive Director(s) responsible
for employee engagement. In the coming year, we will
implement this into our employee engagement structure.
Our quarterly magazine, Beach Life, is created by colleagues
for colleagues and shares the latest news and updates from
around the business and its brands, as well as features focused
on our teams to help bring us all closer together. It also
celebrates business triumphs to support our drive to succeed.
Encouraging Innovation
As a disruptive, tech-driven business, innovation is part of our
heritage and critical in our day to day work. We strive to seek
out new approaches, solutions and creative ideas. To support
this, for the past three years we have held an annual ‘hack
week’, in which our Development teams explore new projects,
try out creative approaches, and test new tools. It’s just one
of the ways that we foster creativity and support teams in
expanding their knowledge.
Investing in our Systems
This year we saw the successful launch of a new HR
management system, People HR, which provides leading-
edge and mobile-enabled technology to manage our HR data,
along with recruitment management, absence planning and
monitoring, and more. The tool has automated previously
manual processes, and provides improved workforce insights
and analytics that allow us to deliver our People strategy
in a way that our previous systems couldn’t support. The
system will also provide the technology to support our new
performance management approach from this autumn.
Wellbeing
We care deeply about our colleagues’ wellbeing, which is key
in not only retaining and attracting the very best talent, but is
also central to supporting the long-term sustainability of the
business and its people. As a result, our colleague benefits and
wellbeing package is something which we have invested in
significantly this year.
A regular all-company e-newsletter has launched to share
timely business news and updates, as well as introduce
our new starters to help keep us all working as a team and
collaborating effectively.
We hold quarterly, all-company, business updates, bringing
our teams together for face-to-face sessions with the
senior leadership team to hear about the latest Company
performance.
Throughout our office move and renovation, a range of
communications channels were introduced to keep everyone
informed throughout the process, as well as gather feedback
from colleagues and maintain engagement. This included a
dedicated microsite sharing video and photo content, news
updates and a calendar with key dates. A working group,
made up of departmental representatives, was also established
to provide an open and two-way communication channel
between teams within the business and this group met
regularly before, during and after the move.
Job Evaluation
This year we embarked on a job evaluation programme across
the Group in partnership with Willis Towers Watson, to create
a job banding system. Measuring all roles within the business,
this programme will support the business in transparent
decision making, ensuring a fair pay structure and providing
a clear career development path for colleagues. It will also be
used to underpin a planned review of our employment terms
and conditions in 2020.
37
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Corporate Social Responsibility
“It’s been phenomenal to see the response from On the
Beach, and so rewarding to see the 500,000th person
join the donor register in the very office that Andy
worked in for so many years.”
Louise Clague, Andy Clague’s wife
38
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019 OUR COMMUNITY
From providing opportunities for young people to supporting
charitable initiatives, making a meaningful contribution to the
communities in which we operate is something which we
are passionate about. Here are just a few of the community-
focused activities that we were involved in this year:
Charity
The business has a policy in place to support colleague
fundraising initiatives and events and we’ve been involved in
everything from bike rides to bake sales and golf tournaments
this year.
A key focus for us over the past 12 months though has been
the Stem Cell Donor Register, in memory of a much-loved
colleague, Andy Clague, who passed away after a two-year
battle with blood cancer in 2017. For people diagnosed with
this type of illness, a blood stem cell donation is their best –
and often only – chance of survival. As a result, this year we
have been working with blood cancer charity DKMS to help
encourage more people to join the Stem Cell Donor Register.
Donor registration events, held at both our Operational
and Digital Headquarters, saw an incredible response from
colleagues, with more than 160 (over 40% of our workforce at
the time) signing up to join the Stem Cell Donor Register and
helping DKMS to surpass the half a million registered donor
mark.
Andy’s wife, Louise Clague, said “It’s been phenomenal to
see the response from On the Beach, and so rewarding
to see the 500,000th person join the donor register in the
very office that Andy worked for so many years.“
We continue to support DKMS through PR activity and in
providing support and advice to other businesses in the
Northwest to run their own registration events.
Getting Manchester On the Beach
Having moved to the city centre in November, we set
about bringing the beach to Manchester to help create
a must-visit – and free – space for families to enjoy the
summer, complete with a giant sandpit, picnic areas,
deckchairs and playhouse. The space played host to a
full season of family-friendly activities between May and
September, helping to build brand relations and visibility
in the city.
A Part of the Digital Community
We host regular events at our Aeroworks office; from
the Northwest Ruby User Group and CRAP (Conversion
Rate, Analytics, Product) Talks, to Digital Her events to
support women in technology, user experience meet ups,
and blogger get-togethers which have raised our profile
in the region’s digital community as well as supported our
recruitment aims.
39
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS Corporate Social Responsibility
Supporting Women in Tech
As a tech business, we are part of an industry which faces
its own unique issues regarding gender and the shortage of
women embarking on further education and careers in the
fields of science, technology, engineering and mathematics
(STEM).
We are working closely with local community groups, including
Manchester Digital on their Digital Her campaign, which
focuses on inspiring and empowering girls to engage with
STEM – related subjects at GCSE and A-level and giving them
the confidence to explore careers in digital and technology
roles. A number of our female colleagues are acting as ‘real role
models’ for the campaign, sharing their route into the industry
and insight into their roles, and working with young girls to
make the tech industry more accessible and appealing.
On the Beach has played host to the campaign’s Real Role
Model Meetups, as well as running sessions at Digital Her’s
Inspire and Empower Roadshow at Manchester’s Etihad
Stadium.
OUR SUSTAINABILITY
Reducing our Environmental Impact
We take our responsibility regarding the environment seriously
and are committed to reducing our impact wherever possible.
This year we have reduced our paper output by moving
to ‘follow me’ printers, paperless payslips and making our
colleague magazine available online.
As part of a series of new benefits, we’ve focused on
encouraging the use of more sustainable public transport
with colleagues. This has included the introduction of the
Cycle2Work Scheme, as well as interest-free loans on tram and
train season tickets, making these options more affordable for
our teams.
Gender Pay Gap Report
The benefits of a diverse and inclusive leadership and
workforce are clear – both in terms of creating a thriving
company culture and long-term sustainability.
In March 2019, the Company published its second annual
Gender Pay Gap Report, looking at the difference in average
pay between all men and women within the Company as at
April 2018. The report found on average, hourly pay for a
woman to be 26.1% less than a man.
There continue to be two main contributing factors to the
Gender Pay Gap at On the Beach: the lower proportion of
women within the most senior roles and the higher numbers of
men within higher paid technology roles.
It is our aim going forwards to promote and recruit more
women into both senior and technology roles across the
business, which we believe will help lessen the gender pay
imbalance at On the Beach in the future.
40
Diversity and Inclusion
Creating a diverse and inclusive workplace - and a company
culture which supports this - is crucial for us as a business.
To build a successful strategy to achieve this, we first sought
to understand the make-up of our business by asking all
colleagues to provide ‘Equality & Diversity Data’ within their
personal People HR records. Collecting this information is
considered to be best practice because it gives employers
a powerful tool to measure success in creating a diverse
and inclusive workplace by giving us a clear picture and
understanding of the composition of our workforce.
Over 80% of colleagues provided their data and we have now
set up a new governance structure to shape and implement
our diversity and inclusion strategy and associated action plan
in line with this. Our Diversity and Inclusion Steering Group,
chaired by Bill Allen, our Chief Supply Officer, meets on a
monthly basis and is responsible for delivering the Diversity
& Inclusion Action Plan in line with business requirements and
feedback.
The Steering Group is fed into by our Diversity and Inclusion
Forum, a colleague engagement group focused entirely on this
topic, made up of 10 self-nominated colleagues from across
the business.
Priority initiatives planned for this autumn include the roll-out of
Unconscious Bias training to all colleagues and the introduction
of Colleague Inclusion Networks.
On the Beach has been granted a Tier 2 visa sponsorship
licence which gives us access to a truly global talent pool and
will contribute to the diversity of our colleagues.
Employment of Disabled Persons
The Group’s policies and procedures and Company
Handbook contain policies in relation to the employment of
disabled persons which are carefully adhered to. Selection
for employment, promotion, training and development (as
well as other benefits and awards) are made on the basis of
merit, aptitude and ability and the Group does not tolerate
discrimination in any form, including in relation to disabled
candidates.
The Group puts in place an Employee Wellbeing Plan (‘EWP’)
with any employees who need support with any health
conditions, physical or mental. Each EWP is designed to ensure
the Group is meeting all the needs of the relevant employee,
for example risk assessments, and details of all adjustments
which need to be made to accommodate the additional
needs of the relevant employees, e.g. disabled parking space,
step-free access and specific workstation needs. Moreover,
if any employees should become disabled during the course
of their employment there are policies in place to oversee the
continuation of their employment and to arrange training for
these employees.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019 Anti-Corruption and Bribery
On the Beach is committed to operating ethically and employees do not actively seek gifts or favours from any of our suppliers,
or from other persons or organisations that we associate with. We have top-level commitment to anti-bribery and corruption,
and ensure all employees behave professionally, fairly and with integrity in all our business dealings and relationships wherever
we operate, and implement and enforce effective systems to counter bribery. We are set up to fully support our employees,
should they need to raise concerns about unethical, criminal or dangerous activities within the Group, and as such provide a
confidential whistleblowing telephone line, through an independent and impartial organisation.
Modern Slavery Act
‘Modern Slavery’ is a crime which encompasses slavery, servitude, forced or compulsory labour and human trafficking. The
Group has a zero tolerance approach to any form of modern slavery. We are committed to acting with integrity and transparency
to help eradicate any modern slavery in our business and supply chain.
In accordance with the Modern Slavery Act 2015, the Group has a modern slavery statement which can be found on our
website www.onthebeachgroupplc.com/responsibility.
Greenhouse Gas Emissions
Because the Group’s business is primarily online, with no retail footprint, our carbon emmissions are small, as demonstrated by
the table below.
The Group’s footprint has grown relative to last year as we now have three offices. Digital HQ in Manchester, Operational HQ in
Cheadle and Classic in Worthing.
We have calculated our Scope 1 and 2 greenhouse gas emissions in accordance with the mandatory reporting requirements set
out in the Companies Act 2006 (Strategic Report and Director’s Reports) Regulations 2013
Greenhouse gas emissions by Scope
Scope 1
Gas consumption
Scope 2
Electricity consumption
Total emissions
Relative emissions, by Group revenue
Unit
2019
Quantity1
2018
Quantity2
Tonnes CO2e
128.06
88.18
Tonnes CO2e
Tonnes CO2e
Tonnes CO2e/£m
Group revenue
585.88
713.94
422.95
511.13
4.8
4.9
1
These figures include the combined CO2e totals for our Digital HQ, Operational HQ and Worthing office. The figure for our Operational HQ is based
on information from 1 June 2018 to 31 May 2019 but we consider that the actual energy consumption during the reported period would not be materially
different from the stated period.
2 These figures for our Operational HQ were based on information from 1 June 2017 to 31 May 2018 so did not correspond exactly to the FY18 reporting period,
but we consider that the actual energy consumption during the reporting period would not be materially different from the stated period.
41
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
Our Values
We have a clear vision:
We have a clear vision:
To build Europe’s leading online beach
To build Europe’s leading online beach
holiday retailer via a single platform,
holiday retailer via a single platform,
multi-brand strategy.
multi-brand strategy.
Nurturing a culture which supports us in achieving this vision is
Nurturing a culture which supports us in achieving this vision is
essential, and our company values provide the framework
essential, and our company values provide the framework
around which that culture is built and thrives.
around which that culture is built and thrives.
In the years since our company values were first established the
In the years since our company values were first established the
business has grown and changed: our teams have expanded,
business has grown and changed: our teams have expanded,
our product has extended and our strategy has evolved. To
our product has extended and our strategy has evolved. To
ensure that our company values reflect the business that On
ensure that our company values reflect the business that On
the Beach has become and aspires to be – and support us in
the Beach has become and aspires to be – and support us in
achieving our vision - in 2019 we embarked on an exercise to
achieving our vision - in 2019 we embarked on an exercise to
review and refresh those values.
review and refresh those values.
Taking into account feedback from our employee engagement
Taking into account feedback from our employee engagement
and culture surveys - along with conducting workshops with
and culture surveys - along with conducting workshops with
the Leadership team and consulting colleagues - our previous
the Leadership team and consulting colleagues - our previous
company values were evolved into a new, memorable and
company values were evolved into a new, memorable and
meaningful set. Launching with colleagues in December 2019,
meaningful set. Launching with colleagues in December 2019,
these are now being embedded across the business and
these are now being embedded across the business and
throughout every stage of the colleague lifecycle.
throughout every stage of the colleague lifecycle.
We are proud to have the following values at the heart of the business:
We are proud to have the following values at the heart of the business:
We’reBold
We’reBold
We set our sights high and we
We set our sights high and we
deliver. That means that we seek
deliver. That means that we seek
out new adventures near and far,
out new adventures near and far,
do things differently and have the
do things differently and have the
confidence to make bold choices.
confidence to make bold choices.
And we like to stand out from the
And we like to stand out from the
crowd too.
crowd too.
We’reOpen
We’reOpen
We pride ourselves on being great
We pride ourselves on being great
hosts: warm and welcoming, a bit like
hosts: warm and welcoming, a bit like
your favourite beach. We’re a down
your favourite beach. We’re a down
to earth and friendly bunch who work
to earth and friendly bunch who work
together with a shared sense of
together with a shared sense of
purpose - and a purposefully open
purpose - and a purposefully open
and inclusive attitude.
and inclusive attitude.
We’reDynamic
We’reDynamic
Travel is part of who we are and
Travel is part of who we are and
embedded in everything we do.
embedded in everything we do.
We don’t sit still and are always
We don’t sit still and are always
moving to stay ahead, learn
moving to stay ahead, learn
quickly and find creative ways of
quickly and find creative ways of
doing things. Fast, flexible and
doing things. Fast, flexible and
full of energy; that’s us.
full of energy; that’s us.
42
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019 Stakeholders
Stakeholder Engagement in 2019
The Board recognises its responsibility to take into consideration the needs and concerns of our stakeholders as part of its
discussion and decision-making process. Set out below are examples of how the Company has engaged with its various
different stakeholders during the year.
43
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS Stakeholder Case Study - Thomas Cook Collapse
Handling the Thomas Cook Collapse: Supporting Stakeholders in a Crisis
As an online travel agent, the failure of a key supplier has an impact on the business itself, as well as on our key stakeholders, requiring
robust crisis management and intricate contingency planning to be in place. On 23 September 2019, the compulsory liquidation of
Thomas Cook Group (“TCG”) - a significant airline partner of the Group – required a swift and effective response in order to minimise
any such impact.
Having previously been identified by the business as a potential risk, an in-depth planning process had been undertaken in advance to
ensure that the potential impacts on all stakeholders – as well as the financial and operational impacts on the business – had been fully
considered. When the risk became a reality, this meant that we were able to react quickly, helping to mitigate those risks.
Key Stakeholder Impacts
Investors
Financial impact from
company costs incurred
and impact on share price
Customers
Unable to take holiday, changes
to return travel plans or
difficulty in re-booking a future
holiday due to wider industry
impact, financial losses
Actions Taken
Stakeholder
Actions Taken
Key
stakeholder
impacts
Suppliers
Incurring direct losses
themselves, as well as
through On the Beach
bookings
Colleagues
Additional work and pressure,
along with the need to be kept
informed and provide accurate
information to customers
Investors
An RNS was issued to the London Stock Exchange at 7am on the morning of the failure
announcing that TCG was to enter into compulsory liquidation, including the news that there
would be a one-off exceptional cost as a result of helping customers organise alternative travel
arrangements. A conference call for analysts was held that same morning.
Management spoke to each of the nine covering sell side equity analysts separately on this day,
providing context and details as to how this will impact the Group both in the short and long-term.
The collapse of the tour operator also sparked key investor interest in the weeks following the
failure. Conversations with the top shareholders were held, with added context and detail as to
how this will not only impact the Group, but sector as a whole.
On the day and during the weeks following the collapse, management spoke to the key business
leisure journalists at the national, investment and trade publications to outline the business’
position within such an unprecedented situation. This resulted in a positive array of media
coverage which was supplemented by the commentary produced from the analysts as part of
their research notes and forecasts.
Furthermore, on the back of this market change, the Group recognised that there was the
opportunity to take additional market share at an increased rate. As part of the Pre Close Trading
Update on 22 October 2019, it was announced that the Group has started to strategically
increase its marketing investment both online and offline to attract new customers to onthebeach.
co.uk, sunshine.co.uk, Classic Collection and Classic Package Holidays.
44
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019 Stakeholder
Actions Taken
Suppliers
Customers
Colleagues
What our customers had to say
All suppliers and regulators were communicated with promptly early in the morning of the
collapse, and regularly thereafter, to outline actions being taken by the business and to provide
updates.
Policies and customer communications were prepared and agreed in advance, enabling us to
communicate with customers quickly the same morning of the collapse across a broad spectrum
of channels - from SMS messaging, email, social media, IVR and an on-site Q&A page.
Development work was carried out in advance to ensure that the technical capabilities were in
place to process and issue refunds promptly should a failure occur. On average, customers were
able to collect these refunds on the same day, accessible in their bank accounts within three to five
days.
Our operations teams worked around the clock to maximise the opportunity for customers to
continue to take their holiday, to re-book holidays and issue refunds when this wasn’t possible.
We provided support to customers in a host of ways – including repatriating those not covered by
the CAA repatriation programme, offering refunds on flight only TCG bookings and providing all
those with cancelled bookings with a goodwill On the Beach voucher.
Social media played an important part in our customer service response, with all messages
received via these channels – more than 10,000 in total – being responded to directly by a
member of the team.
Fantastic feedback was received in response to the service provided across the board.
A core crisis response team was established in advance to set up processes and carry out any
preparatory work needed. This team was brought together immediately following the failure
announcement and a series of regular video conferences, which took place several times daily,
allowed for regular ‘face to face’ meetings between our Digital HQ, Operational HQ and our
Worthing office.
A communication was issued first thing in the morning of the failure to notify all colleagues of the
news, the steps being taken by the business and how we would be looking after customers during
this time, with regular updates following.
Prior preparation meant that plans were in place for colleagues when the collapse took place and
they were able to take actions immediately, and have answers ready to respond to customers,
reducing associated stress and pressure.
Recognising the extraordinary efforts of our teams and maintaining morale was incredibly
important, with thanks given in colleague communications, as well as a range of activities
designed to maintain spirits, including company breakfasts and lunches, to give recognition to the
outstanding work being put in by teams.
I’m absolutely amazed at the response from On the Beach. Absolutely
FANTASTIC. Had a full refund by this afternoon and that was without me
contacting them. I take my hat off to all the staff, you’ve done amazing in
a very difficult situation with no stress to your customers. I won’t consider
ever booking with another company again. And thank you for the £75
voucher, a lovely kind gesture. Honestly, I’m so impressed.
45
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS Governance
47 Chairman’s Introduction
48 Directors’ Biographies
51 Corporate Governance Statement
58 Report of the Nomination Committee
60 Report of the Audit Committee
66 Directors’ Remuneration Report
84 Other Statutory and Regulatory Disclosures
88 Statutory Auditor’s Report to the Members of
On the Beach Group plc
95 Statement of Directors’ Responsibilities in Respect
of the Annual Report and the Financial
Statements
46
46
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019
Chair’s Introduction
I am pleased to present our corporate governance report, which
outlines the details of our corporate governance arrangements
and reports on the activities of the Nomination, Remuneration
and Audit Committees during the year.
as a Non-Executive Director on 6 February 2019. I took on
the role of Chair of the Board from 1 April 2019 and David
resumed his role as Senior Independent Director and continues
to chair the Remuneration Committee.
Compliance with UK Corporate Governance Code
This year the Company was subject to the 2016 edition of the
Financial Reporting Council UK Corporate Governance Code
(‘Code’). I am pleased to confirm that the Company complied
with the Code except for a small number of provisions that
are explained in more detail on page 51. The areas of non-
compliance relate to Board and Committee composition and
largely stem from the fact that the Board was a Director down
for a short period of time following Lee Ginsberg’s resignation
on 6 February 2019. The areas of non-compliance were either
remedied upon my appointment as Chair or will be remedied
once an additional Non-Executive Director has been appointed,
the search for which is underway.
The Board has spent time considering the changes brought in
by the 2018 UK Corporate Governance Code which will apply
to the Company for the financial year ending 30 September
2020. The new Code puts more emphasis on stakeholder
engagement, diversity and corporate culture, and we are
confident that next year we will be able to report that the
Company is compliant with this version of the Code.
As mentioned earlier, we intend to appoint a further non-
executive director to the Board and you can read more about
this in the Nomination Committee report on pages 58 to 59.
Board Evaluation
We have carried out a full, thorough and tailored internal Board
evaluation exercise this year. This covered the Board itself,
each of the Committees, and an evaluation of each individual
Director’s performance. Details are provided on pages 55 to
56.
An external Board evaluation exercise is currently being
planned and will be reported on next year.
Future Priorities
During the coming year, the Board will continue to focus on the
progress made against our strategic priorities and performance.
In addition, we will oversee the implementation of the new
Code, and ensure that the Company’s purpose, values and
strategy are aligned with the Company’s culture.
The report which follows this introduction will set out in detail
how the Company ensures compliance with the provisions of
the 2016 Code and its progress to preparing for compliance
with the 2018 Code.
Richard Pennycook
Chair of the Board
On the Beach Group plc
27 November 2019
Board Composition and Diversity
Through the Nomination Committee, we keep the composition
of the Board under review to ensure it is refreshed to reflect the
skills, experience and diversity required to remain effective.
Over the last 12 months there have been some changes to the
Board. Lee Ginsberg stepped down as Chair of the Board on
30 November 2018 to focus on other commitments and David
Kelly was appointed interim Chair from this date. Lee resigned
47
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
Board of Directors*
Simon Cooper
CHIEF EXECUTIVE OFFICER
Paul Meehan
CHIEF FINANCIAL OFFICER
Richard Pennycook
NON-EXECUTIVE CHAIR OF THE BOARD AND CHAIR OF
NOMINATION COMMITTEE
Appointed to Board:
17 August 2015
Independent:
No
Listed Company Appointments:
None
Committee Memberships:
Disclosure (Chair)
Appointed to Board:
16 January 2017
Independent:
No
Listed Company Appointments:
None
Committee Memberships:
Disclosure
Appointed to Board:
1 April 2019
Independent:
Yes
Listed Company Appointments:
Howden Joinery Group plc
Committee Memberships:
Nomination (Chair), Remuneration,
Audit and Disclosure
Simon Cooper is the founder and Chief
Executive Officer of On the Beach.
Simon began his career in the travel
industry while attending university
when he founded ski holiday company
‘On the Piste’ in 1996, which went on
to be purchased by Thomson (now TUI)
in 2008.
Simon has extensive travel experience,
with over 20 years in the industry,
and as the founder of On the Beach
he has a detailed understanding of
the business and all operations. He
led the company through both its IPO
process in 2015 and the acquisitions of
Sunshine.co.uk and Classic Collection
Holidays. As a seasoned entrepreneur
Simon brings key expertise in strategy
development and execution to the
Company.
Simon is also a Non-Executive Director
of CurrentBody.com Limited.
Prior to joining On the Beach, Paul was a
Director at Gala Coral Interactive (Gibraltar)
Ltd. (now part of GVC Holdings plc). Paul
joined Gala Interactive as Finance Director
in April 2012, where the new management
team successfully relaunched the online
gaming businesses in Gibraltar.
Richard Pennycook joined On the Beach
as Chair of the Board and Chair of the
Nomination Committee on 1st April 2019.
Richard brings extensive experience in
both private and public retail and consumer
businesses, including fast-growing online
businesses.
Paul was the Director responsible for the
online aspects of the merger between Gala
Coral Group Limited and Ladbrokes plc. He
previously held CFO positions in a number
of businesses in the UK, within the online
retail, gaming and technology industries.
Paul brings both financial and commercial
expertise within the B2C and B2B
environments, especially in business
transformation, mergers and acquisitions.
As a certified Accountant, Paul’s previous
experience means he brings knowledge of
both the online and technology industries
to the Company.
Richard is also Non-Executive Chairman
of Howden Joinery Group plc, a position
he has held since 2016, having joined
the Board as a Non-Executive Director in
2013. He was previously Non-Executive
Chairman of The Hut Group from 2012
to 2018, having worked with this fast-
growing technology unicorn in an advisory
capacity since 2008.
Prior to his Non-Executive career, Richard
was CEO of The Co-operative Group
from 2013 to 2017, and before this held
main Board roles at a number of public
companies, including Wm Morrison
Supermarkets plc, RAC plc, HP Bulmer
Holdings plc, Laura Ashley Holdings plc
and J D Wetherspoon plc.
48
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019 Elaine O’Donnell
NON-EXECUTIVE DIRECTOR AND
CHAIR OF AUDIT COMMITTEE
David Kelly
NON-EXECUTIVE DIRECTOR, CHAIR OF REMUNERATION
COMMITTEE AND SENIOR INDEPENDENT DIRECTOR
Appointed to Board:
3 July 2018
Independent:
Yes
Listed Company Appointments:
Games Workshop Group PLC
Studio Retail Group plc
Committee Memberships:
Audit (Chair), Nomination,
Remuneration
Appointed to Board:
28 August 2015
Independent:
Yes
Listed Company Appointments:
The Gym Group plc
Reach PLC
Committee Memberships:
Audit, Nomination, Remuneration
(Chair)
Through her other appointments Elaine
brings to the Board extensive experience
as a Non-Executive Director and Chair
of not only Audit, Nomination and
Remuneration committees but also as
Chair of the Board of the wholly owned
subsidiary Alliance Fund Managers (AFM).
Elaine is a Chartered Accountant and
brings online retail industry experience
to the Company, as well as experience in
regulated industries.
Elaine was previously a Partner at Ernst
& Young LLP where she specialised
in Corporate Finance, Mergers and
Acquisitions.
David joined On the Beach in August
2015 as Non-Executive Director and
Chair of the Remuneration Committee.
His previous experience spans a variety
of complementary sectors, and he brings
online travel industry knowledge from
positions at Lastminute.com, Holiday
Extras and Love Home Swap, along with a
broad ecommerce background having held
senior roles at Amazon, eBay and Qliro.
His current appointments also align with
his position at On the Beach as they
afford him extensive knowledge of both
Non-Executive Directorships and Chair of
Committee Roles. Specifically at On the
Beach, David has in-depth knowledge of
the business, being the Group’s longest
serving Non-Executive Director and the
Company’s Senior Independent Director.
Chair
Executive Directors
Non-executive Directors
40%
40%
20%
20%
40%
40%
Simon Cooper 15
Paul Meehan
2
Richard Pennycook 1
Elaine O’Donnell 1
David Kelly 4
Tenure in years
* Lee Ginsberg was a Director
during the year but resigned
on 6 February 2019.
49
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE “ Hannaan Junior UX Designer
There’s a real energy and curiosity that thrives
within the User Experience team and wider
business – we’re focused on finding innovative
ways to make the experience of booking beach
holidays exciting and seamless for our customers.”
Favourite Beach: Mitjaneta Beach, Spain
50
50
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019 Corporate Governance Statement
Details and explanations of the application of the principles
of corporate governance are set out in the following sections
of this Corporate Governance Statement.
Role of the Board
The Board is responsible for leading and controlling the
Group and has overall authority for the management and
conduct of the Group’s business, strategy and development.
The Board is also responsible for ensuring the maintenance
of a sound system of internal control and risk management
(including financial, operational and compliance controls and
for reviewing the overall effectiveness of systems in place)
and for the approval of any changes to the capital, corporate
and/or management structure of the Group.
The Executive Directors are supported by an Executive team
to whom the Board delegates the detailed implementation
of matters approved by the Board and the day-to-day
operational aspects of the business, who cascade this
responsibility throughout the Group. The Board has close
contact with the wider Executive team, who are regularly
invited to attend meetings of the Board to provide functional
presentations in relation to strategic matters of interest to
the Board.
Matters Reserved to the Board
The Board has reserved certain specific matters to itself for
decision. The full schedule of matters reserved to the Board
is available in the Corporate Governance section of the
Company’s website, or from the Company Secretary upon
request, but the key matters include:
› Approval of (and changes to) annual operating and
capital expenditure budgets;
› Extension of the Group’s activities into new business or
geographic areas;
› Changes to the Group’s capital or corporate structure,
including acquisitions and disposals;
› Financial reporting and controls;
›
Internal controls, including maintenance of a sound
system of internal control and risk management;
› Approval of major contracts and commitments;
› Communication with shareholders;
› Board membership and senior appointments;
› Remuneration;
› Delegation of authority to committees and below Board
level;
› Corporate governance matters; and
› Approval of policies adopted by the Group.
Introduction
This section explains key features of the Company’s governance
structure and how it complies with the UK Corporate
Governance Code published in 2016 by the Financial Reporting
Council (Code). This section also includes items required by the
Listing Rules and the Disclosure Guidance and Transparency
Rules. The Code is available on the Financial Reporting Council
website at www.frc.org.uk.
Compliance with the 2016 Code
The Company is committed to achieving and maintaining the
highest standards of corporate governance. During the financial
year ending 30 September 2019, the Company was compliant
with the Code except for:
› Provision B.1.2. For part of the year, the Company did not
comply with the requirement that at least half of the Board,
excluding the Chair, should compromise of independent
Non-Executive Directors. This non-compliance arose when
Lee Ginsberg stepped down as a Non-Executive Director on
6 February 2019 and was remedied upon Richard
Pennycook’s appointment as Chair on 1 April 2019.
› Provision C.3.1. The Company did not comply with the
requirement for the Audit Committee to have at least three
independent Non-Executive Directors (or two in the case
of smaller companies). Whilst the Audit Committee
currently has three independent Non-Executive Directors,
one of those is the Chair. Under the Code, the Chair
may only be a member of the Audit Committee in smaller
companies. Whilst the Company is not currently a
constituent of the FTSE 350, it was a constituent from
March 2018 to December 2018 and therefore is
technically not classed as a smaller company for
this financial year. We are also mindful that under the
2018 version of the UK Corporate Governance Code, the
Chair should not be a member of the Audit
Committee (regardless of whether the company is a
smaller company or not). Accordingly, the search for an
additional Non-Executive Director is underway (as
explained in more detail in the Nomination Committee
Report on page 58) and Richard Pennycook will
accordingly step down as a member of the Audit
Committee once the new Non-Executive Director has
been appointed.
› Provision D.2.1. The Company did not comply with
the requirement for the Remuneration Committee to
have at least three independent members. The
Chair can be a member of the Remuneration
Committee but is not permitted to chair it. Following Lee
Ginsberg’s resignation on 6 February 2019, there were
only two independent members of the Remuneration
Committee and David Kelly, who is Chair of the
Remuneration Committee, was appointed interim
Chair of the Board. Accordingly, from the date that
David Kelly was appointed interim Chair of the
Board (22 November 2018) until Richard Pennycook’s
appointment on 1 April 2019, the Company was not in
compliance with this provision of the Code.
51
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE
Corporate Governance Statement
BOARD
OF
DIRECTORS
Executive
Directors
Nomination
Committee
Remuneration
Committee
Audit
Committee
Disclosure
Committee
Executive
Team
Board Committees
The Board has delegated certain responsibilities to four Board Committees to assist it with discharging its duties. A summary of the
terms of reference for each Committee is set out below but the full terms of reference are available on the Company’s website and
from the Company Secretary upon request.
Committee
Role and terms of reference
Members
Report on page
Audit Committee
Reviews and reports to the Board
on the Group’s financial reporting,
internal control and risk management
systems, whistleblowing, internal
audit and the independence and
effectiveness of the Statutory Auditor.
Elaine O’Donnell (Chair)
David Kelly
Richard Pennycook (from 1 April 2019)
Lee Ginsberg (until 6 February 2019)
Remuneration
Committee
Responsible for all elements of
the remuneration of the Executive
Directors and the Chair, and other
members of senior management.
David Kelly (Chair)
Elaine O’Donnell
Richard Pennycook (from 1 April 2019)
Lee Ginsberg (until 6 February 2019)
Nomination
Committee
Reviews structure, size and
composition of the Board and makes
appropriate recommendations
to the Board
Richard Pennycook (Chair & member from 1
April 2019)
David Kelly
Elaine O’Donnell
Lee Ginsberg (Chair until 30 November 2018,
member until 6 February 2019)
Responsible for overseeing the
Company’s compliance with the
Market Abuse Regulation and making
decisions (with support of advisers)
on when information must be
disclosed to the market.
Simon Cooper (Chair)
Paul Meehan
Richard Pennycook (from 1 April 2019)
Lee Ginsberg (until 30 November 2018)
David Kelly (1 December 2018 until 31 March
2019)
Disclosure
Committee
52
60
66
58
N/A
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019 Board and Committee Meetings
Board meetings (and Audit Committee meetings, where appropriate) are scheduled to coincide with the Company’s financial reporting
calendar, including the announcement of full and half year-results, and the AGM.
The Company has a Board and Committee calendar, which is updated regularly and which sets out all matters to be covered by the
Board and Committees over a rolling twelve-month period, including strategy, standard business, matters directly linked with financial
reporting and results, corporate governance requirements and ongoing training for the Board.
Nine scheduled Board meetings were planned and held during the financial year. A number of other Board meetings, Committee
meetings and telephone conferences were also held during the year, as the need arose. The table below shows the actual number of
meetings attended and the maximum number of scheduled meetings the Directors could have attended.
Director
Board meetings
Audit Committee
Remuneration Committee
Nomination Committee
Richard Pennycook1
Simon Cooper
Paul Meehan
David Kelly
Elaine O’Donnell
Lee Ginsberg2
4/4
9/9
9/9
9/9
9/9
3/3
1 Richard Pennycook was appointed on 1 April 2019
2 Lee Ginsberg resigned on 6 February 2019
3/3
-
-
6/6
6/6
2/2
Division of Responsibilities
The roles of Chair and Chief Executive Officer are exercised by
different individuals. The division of responsibilities between
the Chair and the Chief Executive Officer has been defined,
formalised in writing, and approved by the Board.
Non-Executive Chairman
Richard Pennycook, as Non Executive Chair is responsible for:
› The leadership and effectiveness of the Board and setting
its agenda and ensuring sufficient time is available for
discussion of agenda items, in particular strategic issues;
› Ensuring that all Directors receive accurate, timely and clear
information on financial, business and corporate matters to
make sound Board decisions;
› Facilitating the effective contribution of Non-Executive
Directors;
› Ensuring constructive relations between Executive and
Non-Executive Directors;
› Ensuring effective communication with shareholders;
› Ensuring that the performance of individual Directors, the
Board as a whole and its Committees is evaluated at least
once a year.
2/2
-
-
6/6
6/6
2/2
1/1
-
-
5/5
5/5
3/3
Chief Executive Officer
Simon Cooper, as the Chief Executive Officer, is responsible
for managing the business and driving it forward, including the
responsibility for:
› The operations of the Group.
› Developing Group objectives and strategy, having regard
to the Group’s responsibilities to its shareholders,
customers, employees and other stakeholders;
› Following presentation to, and approval by, the Board,
for the successful implementation and achievement of
those strategies and objectives;
› Ensuring that the Group’s businesses are managed in line
with strategy and approved business plans, and comply
with applicable legislation and Group policy;
› Ensuring effective communication with shareholders; and
› Setting Group human resource policies, including
management development and succession planning for the
senior executive team.
Senior Independent Director
David Kelly was appointed as the Senior Independent Director
on 3 September 2018. The following additional responsibilities
fall within the remit of the Senior Independent Director:
acting as a sounding board for the Non-Executive
›
Chair and supporting him in ensuring the Board is
›
effective and that constructive relations are maintained;
acting as an intermediary for the other Directors when
necessary;
› being available to shareholders in order to understand their
issues and concerns in order to relay to the Board.
53
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE
Corporate Governance Statement
Non-Executive Directors
In addition to the Chair, the Company has two independent
Non-Executive Directors, who are appointed to bring
independence, impartiality, wide experience, special knowledge
and personal qualities to the Board. The Non-Executive
Directors provide a strong independent element on the Board
and are well placed to constructively challenge and help
develop proposals on strategy and succession planning.
Regularly, following the end of Board meetings the Chair
and Non-Executive Directors meet formally without the
Executive Directors present in order to provide evaluation on
the Executive Directors. Similarly, the Non-Executive Directors
meet to evaluate and appraise the Chair’s performance. These
regular appraisals are important to evaluate the knowledge and
skills of members of the Board.
Where Directors have a concern which cannot be resolved
about the Company or a proposed action, their concern would
be minuted by the Company Secretary following the relevant
Board or Committee meeting. No such concerns arose during
the financial year.
Company Secretary
The Company Secretary acts as secretary to the Board
and its Committees and her appointment and removal is a
matter for the Board as a whole. The Company Secretary is a
member of the senior leadership team and all Directors have
access to her advice and services. In certain circumstances,
Board Committees and individual Directors may wish to take
independent professional advice in connection with their
responsibilities and duties, and, in this regard, the Company
will meet the reasonable costs and expenses incurred and the
Company Secretary will assist in arranging such advice.
Insurance Cover
The Company has made arrangements for appropriate
insurance cover to be put in place in respect of legal action
against its Directors.
Board Composition and Independence
During the year the Board reviewed the overall balance of skills,
experience, independence and knowledge of the Board and
Committee members. Further details of this review are set out
in the Nomination Committee report on pages 58 to 59.
As required by the Code, at least 50% of the Board, excluding
the Chair, are independent Non-Executive Directors. The Board
is currently comprised of five members: the Non-Executive
Chair of the Board, two Executive Directors and two Non-
Executive Directors. Details of the skills and expertise of each
member of the Board is set out in the profiles on pages 48 and
49.
Non-Executive Directors are required to be independent in
character and judgement. The Board has determined that
all the Non-Executive Directors who served during the year
were independent and that, before and upon appointment as
Chair, Richard Pennycook met the criteria of independence as
outlined in the Code.
54
The Board also believes that each of the Non-Executives has
retained independence of character and judgement and has
not formed associations with management or others that may
compromise their ability to exercise independent judgement or
act in the best interests of the Group.
Appointments to the Board
The Nomination Committee, which is chaired by the Chair of
the Board and comprises all Non-Executive Directors, leads
the process for Board appointments, which are made on merit,
against objective criteria, and makes recommendations to the
Board.
The Board can appoint any person to be a Director, either to fill
a vacancy or as an addition to the existing Board. Any Director
so appointed shall hold office only until the next AGM and shall
then be eligible for election by the shareholders.
Non-Executive Directors are typically expected to serve two
three-year terms, although the Board may invite the Director
to serve for an additional period. Any term beyond six years is
subject to a rigorous review, taking into account the need for
progressive refreshment of the Board.
For further details of the work of the Nomination Committee,
including the appointment of Richard Pennycook as Chair of
the Board, please see the report of the Nomination Committee
on pages 58 to 59.
Diversity
The Group is committed to creating a diverse and inclusive
workplace. Please refer to page 40 for more details on our
diversity and inclusion strategy.
For any Board vacancies that arise, the recruitment process
will be led by the Nomination Committee who will ensure that
diversity, in all forms, is taken into consideration. See the report
of the Nomination Committee on page 59 for further details.
As at 30 September 2019, the average age of our employees
was 33 years old and the gender split between employees was
as follows:
Other employees
40%
60%
Senior Management
78%
22%
Directors of the Group
80%
20%
0%
20% 40% 60% 80% 100%
Male
Female
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019
AGM
Our Annual General Meeting will be held at 11am on 6
February 2020 at Aeroworks, 5 Adair Street, Manchester M1
2NQ. All shareholders will have the opportunity to attend and
vote, in person or by proxy, at the AGM. The notice of the AGM
is available on our corporate website and sets out the business
of the meeting and an explanatory note. Separate resolutions
are proposed in respect of each substantive issue.
All members of the Board will be present at the AGM and will
be able to answer any questions from shareholders.
Commitment and External Directorships
The Board is satisfied that all the Non-Executive Directors
are able to devote sufficient time to the Company’s business.
Non-Executive Directors are advised when appointed of
the time required to fulfil the role and asked to confirm that
they can make the required commitment. Each individual’s
commitment to their role is reviewed annually and any external
appointments or other significant commitments of the Directors
require the prior approval of the Board. Letters of appointment
for the Non-Executive Directors are available for inspection at
the AGM.
The Chair and the Non-Executive Directors hold external
directorship of listed businesses, and these are disclosed within
their profiles on pages 48 and 49. The CEO is a Non-Executive
Director of CurrentBody.com Limited.
The Board is comfortable that the external directorships do not
impact on the time that any director devotes to the Company
and in the Board’s view, these external directorships enhance
the collective experience of the Board.
Directors’ Conflicts of Interests
Directors have a statutory duty to avoid situations in which
they have or may have interests that conflict with those of the
Company, unless that conflict is first authorised by the Board.
This includes potential conflicts that may arise when a Director
takes up a position with another Company. The Company’s
Articles of Association enable the Board to authorise potential
conflicts of interest which may arise and to impose limits or
conditions, as appropriate, when giving any authorisation.
Any decision of the Board to authorise a conflict of interest is
only effective if it is agreed without the conflicted Director(s)
voting or without their vote(s) being counted. In making such a
decision, the Directors must act in a way that they consider is in
good faith, and will be the most likely to promote the success of
the Company.
The Company maintains a register of related parties and
register of Directors’ interests, which is reviewed by the Board
on a regular basis.
Development of Directors
The Company has an induction programme for all new
Directors joining the Board which was completed by Richard
Pennycook during the year. Each induction is tailored to the
relevant Director’s experience and background with the aim
of enhancing their understanding of the Group’s strategy,
business, operating divisions, employees, customers, suppliers
and advisers and the role of the Board in setting the tone of our
culture and the governance standards.
All Directors are kept informed of changes in relevant legislation
and regulations and of changing financial and commercial
risks, and the Chair continually reviews the training needs of
Directors according to their individual needs. This review is
ongoing and forms part of the annual appraisal process.
The Directors attend development days during the year
where they are provided with updates on developments and
training on certain areas in order to deepen and develop their
understanding of particular areas of the business. These
development days are in addition to the regular training
arranged by the Company Secretary. Directors also undertake
individual training which gives them the opportunity to
undertake a ‘deep dive’ into certain areas of the business.
Information and Support
All Directors have access to the Company Secretary, who
advises them on governance matters.
Directors receive and access their Board papers via an
electronic portal. The Chair and the Company Secretary work
together to ensure that Board papers are clear, accurate and of
sufficient quality to ensure the Board can discharge its duties.
Specific business-related presentations are given by senior
management as part of Board meetings where appropriate.
As well as the support of the Company Secretary, Directors
have access to the Company’s professional advisers where
considered necessary.
Board Evaluation
The Board is committed to, and understands the value and
importance of, the evaluation and appraisal of the performance
of the Board, its Committees, and of the individual Directors
and the Chair. The Board has carried out an internal evaluation
to review the composition, experience and skills to ensure that
the Board and its Committees continue to work effectively and
that the Directors are demonstrating a commitment to their
roles.
As part of the evaluation process, questionnaires were
completed by each Board member in order to compare
performance against the Code. The questionnaire covered
leadership, effectiveness, accountability, shareholder relations,
meetings and administration. The Board approved the agreed
questionnaires and then these were completed electronically.
Results were analysed and the Company Secretary prepared a
report for the Chair. This was tabled for discussion at a Board
meeting.
55
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE Corporate Governance Statement
The evaluation established that the Board and its
Committees were operating effectively and efficiently, with
good leadership and accountability. The Board dynamic
works well, with great dedication and commitment of each
of the Board members, and with the appropriate level of
support and challenge from Non-Executive Directors. No
major issues arose but the evaluation identified some actions
to be taken to further improve Board effectiveness.
During the year, the Senior Independent Director evaluated
the performance of the Chair and the Chair evaluated the
performance of each Director. In addition, the Non-Executive
Directors met independently from the Executive Directors to
discuss with the Chair the overall functioning of the Board
and the Chair’s contribution in making it effective.
The Executive Directors, along with the senior leadership
team, were appraised through an externally facilitated 360o
review process.
Following the above evaluations, the Directors concluded
that the Board and its Committees operate effectively and
that each Director continues to contribute and demonstrates
commitment to the role.
Investor Relations
The Company is committed to engaging and maintaining an active
dialogue with all of its shareholders. The Company has rolled out
an investor relations programme enabling dialogue and meetings
between the Executive Directors and institutional investors, fund
managers and analysts. At these meetings, a wide range of
relevant issues including strategy, performance, management and
governance are discussed within the constraints of information
which has already been made public.
The Board is aware that institutional shareholders may be in more
regular contact with the Company than other shareholders, but
care is exercised to ensure that any price-sensitive information is
released to all shareholders, institutional and private, at the same
time, in accordance with legal requirements.
Questions from individual shareholders are generally dealt with by
the Executive Directors.
All shareholders can access announcements, investor presentations
and the Annual Report on the Company’s corporate website
(www.onthebeachgroupplc.com).
The Chair of the Board, Richard Pennycook, is available to
shareholders if they have concerns which cannot be raised through
the normal channels or if such concerns have not been resolved.
Arrangements can be made to meet with him through the Company
Secretary.
Approved by the Board and signed on its behalf:
K Vickerstaff
Company Secretary
27 November 2019
56
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019 I
S
T
R
A
T
E
G
C
R
E
P
O
R
T
G
O
V
E
R
N
A
N
C
E
I
F
I
N
A
N
C
A
L
S
T
A
T
E
M
E
N
T
S
Ezgi Talent Manager
“
As the business grows, it’s essential
that we’re able to attract the right
people to help us realise our goals,
whilst maintaining our unique
culture at the same time. The Talent
team is involved at all stages of the
recruitment process, which means
we can really take the opportunity
to showcase exactly what On the
Beach has to offer and tailor the
experience for each candidate
throughout the journey.”
Favourite Beach: Agios Stefanos
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019
57
57
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE
Report of the Nomination Committee
Richard Pennycook
Chairman, Nomination Committee
I am pleased to introduce the report of the Nomination Committee for the year ended 30 September 2019.
Committee Membership
› The members of the Committee are as set out below.
› Lee Ginsberg was Chair of the Committee until November 2018. Lee was succeeded by David Kelly who acted as interim Chair of
the Committee until my appointment in April 2019. Lee stepped down as a member of the Committee in February 2019.
› All members of the Committee are considered to be independent.
Committee Meetings
› The Committee meets at least twice annually and at such other times as are necessary to discharge its duties.
› Committee Members do not participate in discussion or vote on matters on which they are conflicted.
› Meetings are attended by the Chief Financial Officer, Chief Executive, Company Secretary and other relevant attendees by invitation.
› The Committee met five times during the year and member attendance is shown below:
Richard Pennycook (Chair)
David Kelly
Elaine O’Donnell
Lee Ginsberg
Members from
April 2019
August 2015
July 2018
August 2015(1)
Meetings attended
1/1
5/5
5/5
3/3
(1) Lee Ginsberg stepped down on 6 February 2019.
Role of the Committee
› The Committee’s responsibilities are set out in its terms of reference which are reviewed annually and were recently updated in line
with the 2018 Code. The terms of reference can be found at the Company’s website at www.onthebeachgroupplc.com.
The Committee’s main responsibilities are:
› Keeping under review the size, balance and composition (evaluating the balance of skills, knowledge, experience and diversity) of
the Board and its Committees, and making recommendations to the Board on any desired changes;
› Overseeing the succession planning for the Board and executive team, including the identification and assessment of potential
candidates and making recommendations to the Board;
› Leading the process for Board appointments by identifying and nominating, for the approval of the Board, candidates to fill Board
vacancies as and when they arise and ensuring there is a formal and transparent procedure for any such appointment;
› Reviewing the time commitment required from the Non-Executive Directors; and
› Keeping under review the leadership needs of the Group in respect of both its Executive Directors and other senior management,
including an assessment of the time commitment expected and recognising the need for availability in the event of crises.
58
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019
Nomination Committee activities in 2019
Appointment of New Chair of the Board
Lee Ginsberg announced his intention to step down as
Chair of the Board in November 2018. David Kelly, as the
Senior Independent Director, was appointed interim Chair
of the Board and interim Chair of the Committee pending
appointment of a permanent Chair of the Board.
The Nomination Committee led the search for the new Chair
of the Board, beginning with preparation of a description of
the role and the capabilities required for it. The Company
appointed an external agency, The Up Group, to assist in
the search. The Up Group had previously been engaged in
relation to the search for a senior management role but they
have no connection otherwise with the Company.
A detailed search and selection process then followed. A wide
range of candidates were assessed against the agreed criteria
for the role, with a thorough process resulting in a shortlist
of preferred candidates, which was given final consideration
by the Committee. The Committee subsequently made
a recommendation to the Board, culminating with the
announcement of my appointment as Chair of the Board
with effect from 1 April 2019, on 26 March 2019, subject to
approval by shareholders at the forthcoming AGM.
Board Composition and Skills
The Board currently consists of the Non-Executive Chair, two
Executive Directors and two Non-Executive Directors.
During the year, a new skills matrix was created to highlight
the skills and experience of the Board members and to
identify where there were opportunities to further grow the
Board’s collective knowledge and to inform the Committee
of those skills it may wish to prioritise when preparing future
Non-Executive Director role briefs.
Having conducted the above skills exercise and looking at the
knowledge, experience, background and diversity currently
represented by the Board, the Committee considers that
the Board has a good blend of commercial and governance
experience and that the diverse range of skills and
backgrounds of the Directors prevents any undue individual or
collective influence. The Committee however is mindful that
the Chair of the Board should not be a member of the Audit
Committee under the Code and the Committee believes that
appointing an additional Non-Executive Director will ensure
the Board continues to have the skills and experience required
to support the development and delivery of the Company’s
strategy. Taking into consideration the output of the skills
matrix exercise, the Committee has drawn up a candidate
brief and a search is currently underway to appoint a new
Non-Executive Director.
The Committee also reviewed the length of service of its
Non-Executive Directors, all of whom have a tenure of less
than three years other than David Kelly, who was initially
appointed as a director in August 2015. In September 2018,
after careful consideration, the Board agreed (following the
Committee’s recommendation) to re-appoint David as Non-
Executive Director for an additional three-year term.
Succession Planning
Throughout the reporting period the Committee continued
to review the leadership talent pipeline and succession plans
for the Board, and senior management, and the designated
short and long-term caretakers for each Board and senior
role, focusing on resolving key areas of vulnerability. The
Committee takes an active interest in the quality and
development of talent and capabilities within the Group,
ensuring that appropriate opportunities are in place to
develop high-performing individuals.
Diversity
The Company fully recognises the benefit of diversity,
including gender and ethnic diversity, when the Committee is
searching for candidates for Board appointments.
Diversity (in all respects including in terms of socio-economic
background, race, ethnicity, gender, sexual orientation, age,
physical abilities, religious and political beliefs) is critical to
the future success of the business and the Committee fully
appreciates the benefit of a diverse Board in ensuring the
broadest range of views, constructive debate, challenge and
good decision making.
The Nomination Committee have again considered the
diversity of the Board during the year, noting that in order to
bring the widest range of perspectives to the Company, which
would in turn lead to increased creativity, innovation, debate,
understanding and ultimately better decision making as a
whole, diversity should remain a key factor in determining
appropriate nominations.
The Board agrees with the recommendations of the Women
on Boards Davies Review (published October 2015),
the FTSE Women Leaders Hampton-Alexander Review
(published November 2016) and the Report into Ethnic
Diversity of UK Boards Parker Review (published October
2017) and is committed to diversity on the Board. Whilst
noting the recommendations of the Reviews, the Company’s
policy is to appoint the best possible candidate considered on
merit and against objective criteria, rather than set objectives
on gender that may deflect from achieving this fundamental
target on each occasion. Subject to these requirements
the Committee has an ongoing commitment to seek a
more diverse representation at Board level and continued
monitoring of all aspects of diversity across the Board,
Committees and Company have and will continue to form
part of the Committee’s function.
Further details on diversity and inclusion are set out in the
CSR section of this report from page 40.
Board Evaluation & Re-election of Directors
Having considered the results of the Board evaluation and
the Director appraisal process as described on pages 55
to 56 and after evaluating the balance of skills, knowledge,
independence and experience of each Director, the
Committee has recommended that all Directors not appointed
since the last AGM stand for re-election at the 2020 AGM. As
I was appointed after the last AGM, I will seek election at the
forthcoming AGM.
Richard Pennycook
Chairman, Nomination Committee
27 November 2019
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ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE Report of the Audit Committee
Elaine O’Donnell
Chair of the Audit Committee
I am pleased to present the Audit Committee Report for 2019. This report is intended to provide shareholders with an insight into how
key topics were considered during the year, together with how the Committee discharged its responsibilities.
This year the Committee has overseen a competitive tender process for a new Statutory Auditor. As announced on 7 March 2019, Ernst
and Young LLP (“EY”) have been identified as the new Statutory Auditor. The appointment of EY as Statutory Auditor is a matter which
requires shareholder approval, and I would like to recommend that you support this appointment at the forthcoming AGM.
With the assistance of management and EY, the Committee has considered the main financial reporting issues, estimates and
judgements, and we believe that the information in the Annual Report is fair, balanced, and understandable and clearly explains progress
against our strategic and operating objectives. There has been no correspondence from the Financial Reporting Council during the
financial year.
We believe that rigorous internal controls and robust risk management processes are an essential part of delivering shareholder value.
The Committee has assisted the Board in performing a review of effectiveness of the processes and systems in place.
Elaine O’Donnell
Chair of the Audit Committee
Committee Membership
› The Committee is chaired by Elaine O’Donnell. The other members are David Kelly and Richard Pennycook. Lee Ginsberg also
served as a member of the Committee until he stepped down on 6 February 2019.
› Summary biographies of each member of the Committee are included on pages 48 to 49. All members of the Committee are
considered to be independent.
› The Board is satisfied that Elaine O’Donnell has extensive recent and relevant financial experience and that the Committee as a
whole has competence relevant to the Company’s sector.
› Whilst the Board believes the Committee to have the appropriate composition, skills and experience to discharge its responsibilities,
it is mindful that the Chair should not be a member of the Audit Committee under the Code. Accordingly, the search for an
additional Non-Executive Director is underway (as explained in more detail in the Nomination Committee Report on page 59) and
Richard Pennycook will accordingly step down from being a member of the Committee once the new Non-Executive Director has
been appointed.
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ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019
Committee Meetings
› Only members of the Committee are entitled to attend meetings; however, standing invitations are extended to the Chief
Financial Officer, Chief Executive, Company Secretary, Director of Finance and Statutory Auditor. In addition, the Committee also
invites other senior finance and business managers to attend certain meetings. This allows the Committee to be given a deeper level
of insight on certain business matters.
› During the year the Committee met with the Statutory Auditor without the Executive Directors being present.
› The agenda for each meeting reflected the annual reporting cycle of the Group and particular matters for the Committee’s
consideration.
› The attendance of individual Committee members at Committee meetings is shown in the table below.
Elaine O’Donnell (Chair)
David Kelly
Richard Pennycook
Lee Ginsberg
Member
Meetings
from
attended
July 2018
6/6
August 2015
6/6
3/3
April 2019
August 2015(1) 2/2
(1) Lee Ginsberg stepped down on 6 February 2019.
Main Responsibilities of the Committee
The main roles and responsibility of the Committee are set out in its terms of reference. The terms of reference are reviewed annually
by the Committee and proposed changes made to the Board. The current terms of reference can be found at the Company’s website at
www.onthebeachgroupplc.com. The Committee’s main responsibilities are:
Financial Reporting
To review the reporting of financial and other information to the shareholders of the Company and
monitor the integrity of the financial statements, including the application of key judgements in
determining reported outcomes to ensure that they are fair, balanced and understandable.
External Audit
To review the effectiveness and objectivity of the external audit process, assess the independence
of the Statutory Auditor and ensure appropriate policies and procedures are in place to protect such
independence.
Internal Audit
To review regularly the need for an internal audit function and to evaluate the effectiveness and
robustness of the current internal control systems.
Risk Management,
Internal Controls and
Compliance
To review and assess the adequacy of the systems of internal control and risk management and
monitor the risk profile of the business. Review the Group’s procedures for raising concerns.
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Report of the Audit Committee
How the Committee Discharged its Responsibilities in 2019
Financial Reporting
Accounting Judgements and Significant Accounting Matters
As part of the process of monitoring the integrity of the financial information presented in the half-year results and the Annual Report
and Accounts, the Committee reviewed the key accounting policies and judgements adopted by management to ensure that they
were appropriate. The significant areas of judgement identified by the Committee, in conjunction with management and the Statutory
Auditor, together with a number of areas that the Committee deemed significant in the context of the financial statements are set out
below:
Description of Focus Area
Audit Committee Action
Capitalised Website Development Costs
The Group incurs significant internal costs in respect of the
development of the Group’s websites. The accounting for
these costs, as either development costs which are capitalised
as intangible assets (for enhancement of the website) or
expensed as incurred (in respect of maintenance), involves
judgement.
The Audit Committee has reviewed management’s application
of the accounting policy adopted and the assessment of
whether current projects meet the criteria required for costs to
be capitalised and consider the approach and application of this
policy to be appropriate.
New Accounting Standards
IFRS 9 ‘Financial Instruments’ and IFRS 15 ‘Revenue from
Contracts with Customers’ have become effective for the year
ended 30 September 2019. In addition, IFRS 16 ‘Leases’ will
be effective for the year ending 30 September 2020.
During the financial year, the Committee received reports from
management in relation to the adoption of IFRS 9 and IFRS 15
and also the implementation programme for the adoption of
IFRS 16, including the proposed disclosures in relation to these
matters in this Annual Report.
Failure of Thomas Cook Group – Recognition of Cost and
Reimbursement Asset.
The accounting for the failure of Thomas Cook Group on 23
September 2019 involves judgement to estimate the value
of the potential liability in relation to the Group’s obligations
under the ATOL regulations and Package Travel Regulations.
In addition, the recognition and recoverability of a chargeback
asset is an area of judgement.
Following discussions with management and the Statutory
Auditor, the Committee approved the disclosures of the
accounting policies which include details of the impacts of
adopting IFRS 9, IFRS 15 and IFRS 16.
The Committee have reviewed the accounting and are
satisfied with the approach of management. The Committee
are satisfied with the accuracy of the potential liability and the
recognition of a chargeback asset.
Valuation of Goodwill, Intangibles and Investments
The estimated recoverable value is subjective due to inherent
uncertainty involved in forecasting and discounting future cash
flows.
The Committee have reviewed the accounting and are
satisfied with the approach of management. The Committee
are satisfied with the key assumptions used in the forecast,
including the use of sensitivities growth rates and discount
rates.
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ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019 Fair, Balanced and Understandable
The Committee considered whether the half-year results and the Annual Report and Accounts were fair, balanced and
understandable and whether the information provided was sufficient for a reader of the statements to understand the Group’s
position and performance, business model and strategy.
In arriving at its assessment the Committee has:
› Reviewed the Annual Report at several levels within the Group ensuring overall balance and consistency;
› Received an early review of the Annual Report to enable sufficient time for comment and review;
› Satisfied itself that there is a robust process in place to support the fair, balanced and understandable assessment; and
› Considered the Statutory Auditor’s review of the Annual Report.
The Directors’ statement on a fair, balanced and understandable Annual Report and Accounts is set out on page 95 of this Report.
Statutory Auditor
The Committee oversees the Group’s relationship with the Statutory Auditor. The Committee holds meetings with the Statutory
Auditor without management present with the purpose of understanding the Statutory Auditor’s views on the control and
governance environment and management’s effectiveness within it.
KPMG was appointed as Statutory Auditor to the Group in 2007. The Mandatory Firm Rotation (MFR) rules in the UK introduced
requirements that all EU Public Interest Entities (PIEs) must tender their audit contract at least every ten years and change or
rotate their auditor at least every twenty years. Audit tenure is measured from the point at which the Group became a PIE, being
28 September 2015, the date on which the Group became listed. The Group would therefore have been required to run a tender
process by 2025. However, due to the length of time that KPMG had been auditors to the Group (11 years), the Committee
announced in the Annual Report and Accounts for the year ended 30 September 2018 that it felt it would be in the best interests of
the Group to undertake a tender of the external audit.
Based on the output of a robust external audit tender process the Committee recommended, and the Board confirmed, the
appointment of EY as the new Statutory Auditor for the year ended 30 September 2019. The appointment of EY requires
shareholder approval and will be proposed to shareholders at the forthcoming AGM.
The tender process was led by a selection panel comprising of the Chair of the Audit Committee, the Chief Financial Officer, Group
Finance Director, Group Financial Controller and the Company Secretary.
EY reviewed KPMG’s audit files and met with key members of the Company’s senior management team to ensure a smooth
transition. Following their appointment, EY completed their review of the half-year results and then went on to complete the audit
for this financial year.
Effectiveness
On behalf of the Board, the Committee reviews the effectiveness of the Statutory Auditor on an ongoing basis to ensure the quality,
rigour and challenge of the external audit process is maintained.
During the year, the Committee reviewed the following:
› The quality of audit planning covering the approach, scope, and level of fees for the audit;
› Delivery and execution of the agreed external audit process for the 2019 financial year;
› Quality, knowledge and expertise of the EY audit engagement team;
› The competence with which EY handled and communicated the key accounting and audit judgements; and
› The communication and engagement between management, EY and the Committee.
The Committee confirmed the external audit process provided by EY had been delivered effectively. In particular, this was aided by
robust testing as part of the interim review.
Independence and Objectivity
In addition to the annual review of effectiveness, the Committee considered the independence and objectivity of EY through a
combination of:
›
› oversight of the non-audit services policy and fees paid; and
› oversight of policy on employing former auditors.
assurances provided by EY on the safeguards in place to maintain independence;
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ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE Report of the Audit Committee
Non-Audit Services
The Company’s Statutory Auditor may also be used to provide specialist advice where, as a result of their position as auditors, they
either must, or are, best placed to, perform the work in question. A formal policy is in place in relation to the provision of non-audit
services by the Statutory Auditor to ensure that there is adequate protection of their independence and objectivity.
The Company’s policy is that, except in exceptional circumstances, non-audit fees to the audit firm should not exceed 70% of the
amount of the audit fee for the current financial year (audit fee £185,000). In addition, all non-audit work in excess of £15,000 should
be the subject of a competitive tender.
Non-audit fees are monitored by the Committee and the Committee is satisfied that all non-audit work undertaken this year was in
line with our policy and did not detract from the objectivity and independence of the Statutory Auditors. The fees paid to EY in respect
of non-audit services during the year related to the review of interim Financial Statements and ATOL return and totalled £55,000,
representing 29.7% of the total audit fee.
Internal Audit
The Committee has again reviewed the need for an internal audit function during the year and considers that having no internal audit
function is appropriate on the grounds that:
› Procedures and routines are well established across the business; and
› There is a significant degree of senior oversight, particularly in respect of ongoing business performance, involving both the CEO
and CFO.
The Committee will, as part of its remit, continue to evaluate the effectiveness and robustness of the current system of control as the
Group grows as to whether an independent Internal Audit Department would be more appropriate and to set down the guidelines for
the operation of such a department.
Risk Management and Internal Control
The primary role of the Audit Committee in relation to risk management and internal controls is to review the effectiveness of risk
management systems and related internal controls to ensure that any issues that have arisen are properly dealt with, and that going
forward the systems are fit for purpose. The Committee performs its duties by:
› Reviewing annually the Group’s system of internal control; and
› Reviewing reports from the Statutory Auditor on any issues identified in the course of their work, including an internal control
report on control weaknesses, and ensuring that there is an appropriate response from management.
During the year, the Committee reviewed in detail the mitigation in place for the Group’s key risks and agreed a rolling programme to
give assurance to the Committee that effective mitigations were in place. Specific reviews included GDPR/data security compliance,
supplier failure planning, and a VAT review.
The Group has in place internal controls and risk management systems in relation to its financial reporting process and preparation of
consolidated accounts. These systems include policies and procedures to ensure that adequate accounting records are maintained and
transactions are recorded accurately and fairly to permit the preparation of financial statements in accordance with IFRS.
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ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019
The internal control systems include:
Component
Approach
Basis for Assurance
Risk Management
Financial Reporting
Budgeting and Reforecasting
Monitoring of Controls
Risks are highlighted through a number
of different reviews and culminate in
a risk register. The register identifies
the risk area, the probability of the risk
occurring, the impact if it does occur
and the actions being taken to manage
the risk to the desired level.
Consolidated Group management
accounts are produced monthly and
provide relevant, reliable and up-
to-date financial and non-financial
information to management and the
Board including an income statement,
balance sheet and cash flow statement.
The Group produces an annual budget
and quarterly reforecast against which
management monitor the key business
and financial activities towards
achieving the financial objectives each
month.
There are policies and procedures
in place to ensure the integrity and
accuracy of the accounting records and
to safeguard the Group’s assets.
The review by the Audit Committee
highlighted that effective risk
management and internal controls are
in place.
Updated by executive team twice a
year and reviewed and approved by
the Board annually.
Results are reviewed each month
by management, the executive
team and the Board. Results are
compared against expectations and
significant variances are explained by
management.
Performed using a bottom-up
approach with reviews performed by
the executive team and the Board.
The Committee has performed a
rigorous and robust review of internal
controls during the year including:
› Review of risk registers
› Assessment of compliance with
corporate governance code
› Basis and monitoring of capitalised
website development costs
Whistleblowing
A whistleblowing policy has been adopted which includes access to a whistleblowing telephone service run by an independent
organisation, allowing employees to raise concerns on an entirely confidential basis. The Committee receives regular reports on the
use of the service, any significant reports that have been received, the investigations carried out and any actions arising as a result.
Committee Effectiveness Review
The Committee has reviewed and considered the effectiveness of its performance during the year. The review included views
of members of the Committee and of regular attendees at the various meetings (including the Executive Directors). The review
indicated that the Committee continues to perform well.
Elaine O’Donnell
Chair of the Audit Committee
27 November 2019
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ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE Remuneration report
Annual Statement of the Chairman of the
Remuneration Committee
David Kelly
Chair, Remuneration Committee
Dear Shareholder,
As Chairman of the Remuneration Committee, I am pleased to
present the Company’s Remuneration Report for the year to 30
September 2019.
During the year, we operated within the Remuneration
Policy that was approved by shareholders at the 2019
AGM, a summary of which can be found in the next section
of this report. The Committee remains satisfied that the
policy continues to support the Company’s strategy for the
forthcoming year: to retain and motivate our management
team, to drive strong returns for our shareholders and to
promote the long-term success of the Company. Shareholders
will not therefore be asked to approve any revisions to the
policy at the 2020 AGM.
Performance and Reward for FY19
Notwithstanding that the last year has presented an extremely
challenging trading environment, the Company has delivered
a solid performance, with an increase in Group adjusted gross
profit of 7%, an increase in adjusted proforma EPS of 1% and
significant progress towards achieving strategic objectives.
The FY19 annual bonus for the Executive Directors was based
on both financial and non-financial targets that linked directly
to strategic and operational initiatives of the Company. Despite
the strong performance of the Company over the year, due to
the stretching nature of the threshold PBT target, no bonus in
respect of the financial target (70% weighting) is payable. The
achievement of performance conditions in relation to the non-
financial targets relating to customer satisfaction (net promoter
score) and employee engagement (as detailed on page 75)
resulted in an overall payment of 30% of base salary for both
the Chief Executive Officer and the Chief Financial Officer.
Simon Cooper has waived his entitlement to a bonus this year
in view of his considerable shareholding in the Company.
The LTIP awards granted in May 2017 were based on two
performance metrics: EPS (70% weighting) and absolute total
shareholder return (TSR) (30% weighting), measured over
the three-year period to 30 September 2019. Adjusted EPS
performance in 2019 was 21.4 pence and therefore 0% of this
element of the award vested. Exceptional value was created
for shareholders over the three-year performance period with
an annualised TSR of 21.8%. As a result, 76.3% of the TSR
element of the LTIP awards vested, meaning overall 22.9% of
the LTIP awards vested.
The Committee is satisfied that the FY19 bonus and the
2017 LTIP targets were sufficiently stretching and that the
resulting outcomes are appropriate in light of the Company’s
performance. Therefore, the Committee decided not to apply
any discretion to the incentive outcomes.
FY20 Remuneration Approach
Key decisions by the Remuneration Committee in respect of
FY20 include:
› Simon Cooper and Paul Meehan will both receive a salary
increase of 1.5% with effective from 1 January 2020.
These increases align directly with the general increase
that will be made to our broader UK employee population.
› The maximum bonus opportunity remains unchanged
at 100% of salary and the bonus will continue to be based
on Group adjusted PBT (70% weighting), and non-financial
targets (30% weighting). The forward-looking targets are
deemed to be commercially sensitive but full details will be
disclosed on a retrospective basis in next year’s Annual
Report and Accounts.
›
It is intended that LTIP awards will be granted during the
year up to a maximum of 200% of salary in line with the
current policy. The performance conditions will be based
70% on EPS performance and 30% on absolute TSR
measured over a three-year period.
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ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019
Corporate Governance Developments
The Committee has considered the new UK Corporate
Governance Code 2018 (the “Code”), which will apply to
the Company for the FY20 reporting year. The Committee
already oversees the remuneration arrangements for senior
management and pay and employment conditions throughout
the Group, and we have now formalised this practice in
the Committee’s amended Terms of Reference. We will
continue to ensure that share awards are subject to a total
vesting and holding period of five years. The Committee
will apply the post-vesting holding period for LTIP awards
irrespective of employment status and will further consider
the appropriateness of extending the application of the
shareholding requirement for a period post termination of
employment, as well as continuing to review compliance with
the new Code in all other areas, and will report accordingly in
the FY20 Remuneration Report.
Pension provision for future incoming Executive Directors will
be aligned with the wider workforce in line with the Code. The
Committee will oversee the Group’s plan to align Executive
Director’s pensions with the majority of the workforce, and will
provide an update in the FY20 Remuneration Report.
We are also committed to the disclosure of the CEO pay
ratio in the FY20 Annual Report, in line with the Companies
(Miscellaneous Reporting) Regulations 2018.
Key Activities of the Remuneration Committee
› Agreeing the performance against the targets and
payments for the FY18 annual bonus awards.
› Agreeing the performance against the targets and vesting
of the 2016 LTIP awards.
› Setting the performance targets for the Executive Directors
FY19 annual bonus.
› Agreeing the population, award levels and performance
targets for the FY19 LTIP awards.
Shareholder engagement
Last year we engaged with a significant proportion of
shareholders to discuss the changes we were proposing to
make to remuneration arrangements ahead of the publication
of the Annual Report. Although major shareholders
supported these changes, the Committee is mindful that
there was a significant minority vote (just over 20%) against
the approval of the Directors’ Remuneration Report at the
2019 AGM, primarily due to the salary increase of the Chief
Financial Officer.
The increase was awarded to reflect Paul Meehan’s strong
performance and the expansion of his role since his initial
appointment in 2017. The Remuneration Committee however
notes the concerns raised by some of the shareholders
and proxy organisations about the level of increase. The
Committee has reflected on this feedback when considering
remuneration arrangements for the Executive Directors for
the forthcoming financial year, and the salary increase for
both Executive Directors will be in line with that awarded to
the broader UK employee population in FY20.
We remain committed to ongoing engagement with our
shareholders to ensure an open and transparent dialogue
around executive remuneration arrangements.
Remuneration Report
This report has been prepared in accordance with The Large
and Medium-sized Companies and Groups (Accounts and
Reports) (Amendment) Regulations 2013, the UKLA Listing
Rules and the UK Corporate Governance Code. The report is
split into three parts:
› This Annual Statement.
› A summary of The Directors’ Remuneration Policy which
was approved by shareholders at the 2019 AGM and
which will continue to apply without amendment for the
› Agreeing the population and award levels for restricted
forthcoming year.
share awards.
› Approving new management incentive scheme for
Executive team (below Board).
› Approving the Directors’ Remuneration Report and the
Remuneration Policy for the FY18 Annual Report.
› Planning and executing a shareholder engagement exercise
in relation to the new remuneration policy put to
shareholders at the AGM in February 2019.
› Reviewing and responding to feedback from shareholders
and shareholder organisations on remuneration.
› Reviewing Group-wide pay and conditions and share plans.
› Reviewing base salaries of Executive Directors.
› Reviewing base salaries for Executive team.
› Reviewing feedback from 2019 AGM.
› Review performance of independent advisers and fees over
the year.
› Reviewing Gender Pay Gap calculations and reviewing
disclosures.
› Reviewing the various changes to the regulatory
environment, including the new Code.
› Reviewing and updating the Committee Terms of
Reference.
› The Annual Report on Remuneration which sets out
payments made to the Directors and details the link
between Company performance and remuneration for
the 2019 financial year. The Annual Report on
Remuneration together with this statement is subject to
an advisory shareholder vote at the 2020 AGM.
In summary, the Committee is committed to ensuring that
we are responsive to developments in best practice, as
well as a transparent approach in respect of executive pay.
Should you have any queries or comments on this Report,
or more generally in relation to the Company’s remuneration,
then please do not hesitate to contact me via the Company
Secretary.
I hope that you find the information in this report helpful and
informative, and I look forward to your continued support at
the Company’s Annual General Meeting
David Kelly
Chair of the Remuneration Committee
27 November 2019
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Summary of Remuneration Policy
Introduction
The Directors’ Remuneration Policy (the ‘Policy’) was approved by shareholders at the AGM on 7 February 2019 (81.80% of votes
cast being in favour) and became effective from that date. There are no proposals to amend the Directors’ Remuneration Policy at the
2020 AGM.
A summary of the policy (with updated references, where relevant) is included for reference to assist with the understanding of the
contents of this report. The full policy is detailed in our 2018 Annual Report, which can be found in the ‘Investors centre’ section under
‘Reports and presentations’ on the Company’s corporate website (www.onthebeachgroupplc.com).
The following tables summarise each element of remuneration and how it supports the Company’s short and long-term strategic
objectives.
Base Salary
Short and Long-Term Strategic Objectives
Provides a base level of remuneration to support recruitment
and retention of Executive Directors with the necessary
experience and expertise to deliver the Company’s strategy.
Opportunity
Base salaries will be set at an appropriate level within a
comparator group of listed companies of comparable size
and will normally increase in line with increases made to
the wider employee workforce. The Committee recognises
that Simon Cooper’s current base salary is below the
market level, but it has given regard to Simon’s considerable
shareholding in the Company, and the desire to focus the
remuneration structure on a long-term strategy.
Benefits
Short and Long-Term Strategic Objectives
Provides a competitive level of benefits.
Operation
Salaries are reviewed annually and any changes are normally
effective from 1 January in the financial year. The Committee
considers a number of factors when determining an appropriate
level of salary such as remuneration practices within the
Company and the economic environment.
Performance Metrics Used, Weighting and Time Period
Applicable
None.
Operation
The Executive Directors receive benefits which include family
private health cover. The Remuneration Committee recognises
the need to maintain suitable flexibility in the determination of
benefits to ensure it is able to support the objective of attracting
and retaining personnel.
Opportunity
The maximum will be set at the cost of providing the
benefits described.
Performance Metrics Used, Weighting and Time Period
Applicable
None.
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ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019 Pensions
Short and Long-Term Strategic Objectives
Paul Meehan currently receives an employer’s contribution
equal to 15% of his base salary. Due to his considerable
shareholding, Simon Cooper is not provided with pension
funding.
Operation
On recruitment, the Committee maintains the ability to
provide pension funding in the form of a salary supplement,
which would not form part of the salary for the purposes
of determining the extent of participation in the Company’s
incentive arrangements.
Opportunity
15% of base salary p.a. for existing Executive Directors. The
Committee intends to align the pension contribution with
the wider workforce for any Executive Directors recruited in
the future.
Performance Metrics Used, Weighting and Time Period
Applicable
None.
Annual Bonus Plan
Short and Long-Term Strategic Objectives
The Annual Bonus Plan provides a significant incentive to
the Executive Directors linked to achievement in delivering
goals that are closely aligned with the Company’s strategy
and the creation of value for shareholders.
Operation
Malus will apply up to the date of the bonus determination
and clawback will apply for two years from the date of bonus
determination.
Opportunity
The maximum bonus opportunity is 100% of base salary.
Performance Metrics Used, Weighting and Time Period
Applicable
Performance is measured over the financial year. The majority
of the annual bonus will be based on performance against
stretching PBT targets, with the balance based on non-financial
metrics which are aligned to the business strategy.
The Remuneration Committee is of the opinion that given the
commercial sensitivity arising in relation to the detailed financial
targets used for the annual bonus, disclosing precise targets in
advance would not be in shareholder interests. Actual targets,
performance achieved and awards made will be published at
the end of the performance periods so shareholders can fully
assess the basis for any pay-outs under the annual bonus.
The Remuneration Committee retains discretion in exceptional
circumstances to change performance measures and targets
and the weightings attached to performance measures
part-way through a performance year if there is a significant
and material event which causes the Committee to believe
the original measures, weightings and targets are no longer
appropriate. Discretion may also be exercised in cases where
the Remuneration Committee believe that the bonus outcome is
not a fair and accurate reflection of business performance.
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Long-Term Incentive Plan (LTIP)
Short and Long-Term Strategic Objectives
Awards are designed to incentivise the Executive Directors
to maximise total shareholder returns by successfully
delivering the Company’s objectives and to share in the
resulting increase in total shareholder value.
The use of:
› EPS ensures Executive Directors are focused on ensuring
the annual profit performance targeted by the Annual
Bonus Plan flows through to long-term sustainable EPS
growth.
› Absolute TSR measures the success of the
implementation of the Company’s strategy in delivering a
minimum level of return.
Operation
Awards are granted annually to Executive Directors in the form
of nil cost options. These will vest at the end of a three year
period subject to:
› The Executive Director’s continued employment at the date of
vesting; and
› Satisfaction of the performance conditions.
The Remuneration Committee may award dividend equivalents
on awards to the extent that these vest.
A further two-year holding period post vesting will apply. Malus
will apply for the period from grant to vesting with clawback
applying for the two-year period post vesting.
Opportunity
Maximum award of 200% of base salary. 25% of the award
will vest for threshold performance. 100% of the award
will vest for maximum performance. Straight line vesting
between these points.
Performance Metrics Used, Weighting and Time Period
Applicable
The performance conditions for awards are currently
split between EPS growth (70%) and TSR (30%). The
Remuneration Committee may change the balance of the
measures, or use different measures for subsequent awards,
as appropriate. No material change will be made to the type of
performance conditions without prior shareholder consultation.
The Remuneration Committee retains discretion in exceptional
circumstances to change performance measures and targets
and the weightings attached to performance measures part-
way through a performance period if there is a significant
and material event which causes the Committee to believe
the original measures, weightings and targets are no longer
appropriate. Discretion may also be exercised in cases where
the Remuneration Committee believe that the vesting outcome
is not a fair and accurate reflection of business performance.
HMRC Share Incentive Plan
Short and Long-Term Strategic Objectives
To encourage wide employee share ownership and thereby
align employees’ interests with shareholders.
Operation
The Company has a share incentive plan in which the Executive
Directors are eligible to participate (which is HMRC registered
and is open to all eligible staff).
Opportunity
UK scheme in line with HMRC limits as amended from time
to time.
Performance Metrics Used, Weighting and Time Period
Applicable
None.
70
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019 Shareholding Requirement
Short and Long-Term Strategic Objectives
To support long-term commitment to the Company and
the alignment of Executive Director interests with those of
shareholders.
Opportunity
200% of salary.
Non-Executive Director Fees
Operation
The Remuneration Committee has adopted formal shareholding
guidelines that will encourage the Executive Directors to
build up over a five-year period and then subsequently hold
a shareholding equivalent to a percentage of base salary.
Adherence to these guidelines is a condition of continued
participation in the equity incentive arrangements.
Performance Metrics Used, Weighting and Time Period
Applicable
None.
Short and Long-Term Strategic Objectives
Provides a level of fees to support recruitment and retention
of Non-Executive Directors with the necessary experience
to advise and assist with establishing and monitoring the
Company’s strategic objectives.
Operation
The Board as a whole is responsible for setting the
remuneration of the Non-Executive Directors, other than the
Chair whose remuneration is considered by the Remuneration
Committee and recommended to the Board.
Non-Executive Directors are paid a base fee and additional fees
for acting as Chair of Committees. The Chair of the Board does
not receive any additional fees for membership of committees.
Fees are typically reviewed every three years based on
equivalent roles in an appropriate comparator group used to
review salaries paid to the Executive Directors. Fees may be
reviewed more regularly than this in exceptional circumstances,
such as a significant increase in the size or complexity of the
business.
Non-Executive Directors do not participate in any variable
remuneration or benefits arrangements.
Performance Metrics Used, Weighting and Time Period
Applicable
None.
Opportunity
The base fees for Non-Executive Directors are set at a
market rate. In general, the level of fee increase for the Non-
Executive Directors will be set taking account of any change
in responsibility and will take into account the general rise in
salaries across the UK workforce.
The Company will pay reasonable expenses incurred by the
Chair and Non-Executive Directors.
71
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE
Annual Report on Remuneration
The Remuneration Committee’s Annual Report on remuneration for the year ended 30 September 2019 is set out below. The
Statutory Auditor is required to report on the following information up to and including the Statement of Director’s Shareholdings
requirement and Share Interests.
How Remuneration Links with Strategy
It is essential that a fair, competitive and attractive remuneration policy is in place in order to ensure the future success of the
Company. Our remuneration policy is designed to be fair and competitive, support the strategic objectives of the Company and
motivate the Executive Directors to deliver the short and long-term strategy as set out in the CEO’s report on pages 14 to 16. In the
diagram below, we summarise how the Company’s strategic priorities are aligned with the remuneration policy.
Strategic priority
1. Investing in talent and technology to extend core capabilities.
2. Driving an efficient increase in traffic through branded and direct channels.
3. Personalising our customer experience.
4. Leveraging increased revenue through direct and differentiated supply.
5. Inspiring holidaymakers with destination agnostic search technologies.
6. Reaching an ever-wider audience of beach holidaymakers through product, channel and geographic expansion.
Metric
Scheme
Measurement
period
Link with strategy
Profit Before Tax (PBT)
Annual bonus
1 year
Progress towards the following strategic priorities
drive an increase in profit:
1
2
3
4
5
6
Employee Engagement
Score (EES)
Annual bonus
1 year
Employee satisfaction is impacted by the following
strategic priorities:
1
Customer Satisfaction/
Net Promoter Score
(NPS)
Annual bonus
1 year
Customer satisfaction will be positively impacted
by the following strategic priorities:
1
3
5
6
Earnings Per Share
(EPS)
LTIP scheme
3 years
Progress towards the following strategic priorities
drive an increase in earnings over the longer term:
Absolute Total
Shareholder Return
(TSR)
LTIP scheme
3 years
1
2
3
4
5
6
Progress towards the following strategic priorities
drive earnings growth, and in turn should provide
returns for shareholders in the long-term through
share price growth and dividends:
1
2
3
4
5
6
72
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019
Single Total Figure of Remuneration
The tables below sets out the single total figure of remuneration and breakdown for each Executive and Non-Executive Director in
respect of the 2019 financial year. Comparative figures for the 2018 financial year have also been provided.
Figures provided have been calculated in accordance with the new UK disclosure requirements: the Large and Medium-Sized
Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013 (Schedule 8 to the Regulations).
Single total figure of remuneration for Executive Directors
Simon Cooper
Paul Meehan
2019
(£’000)
2018
(£’000)
2019
(£’000)
2018
(£’000)
Fixed Pay
Base Salary(1)
204
203
Benefits(2)
Pension
Total Fixed Pay
Bonus(3)
LTIP(4), (5)
Variable Pay
Total Variable Pay
Total Single Figure of Remuneration
1
1
206
-
99
99
305
2
-
205
-
111
111
316
310
2
45
357
93
185
278
635
253
3
42
298
-
-
-
298
Notes:
(1) Paul Meehan’s salary was increased to £310,000 with effect from 1 October 2018. Simon Cooper’s salary was not increased during FY19.
(2) Taxable benefits received were family medical insurance.
(3) Annual bonus payments for performance in the relevant financial year.
(4) The value of the LTIP for 2019 relates to the 2017 award, which had a three-year performance period ending 30 September 2019. Based on performance over this
period, the Remuneration Committee determined that 22.9% of the maximum award vested on 26 November 2019, equivalent to 22,776 nil-cost options in the case of
Simon Cooper and 42,705 nil-cost options in the case of Paul Meehan. The value of the award included above is therefore £98,847.84 in the case of Simon Cooper and
£185,339.70 in the case of Paul Meehan, based on the closing share price of 434 pence at the vesting date. In the case of Simon Cooper £56,068.08 of the £98,847.84
and in the case of Paul Meehan £99,502.65 of the £185,339.70 is attributable to share price appreciation over the period to the vesting date based on the original share
price of 201 pence used to determine the original number of awards on grant.
(5) The value of the LTIP for 2018 relates to the 2016 award, which had a three-year performance period ending 30 September 2018. Based on performance over this
period, the Remuneration Committee determined that 30% of the maximum award vested on 27 November 2018, equivalent to 27,522 nil-cost options for Simon
Cooper. The value of the award included above is therefore £110,638.44 based on the closing share price of 402 pence at the vesting date. £50,640.48 of this is
attributable to share price appreciation over the period to the vesting date based on the original share price of 218 pence used to determine the original number of
awards on grant.
73
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE
Annual Report on Remuneration
Single total figure of remuneration for Non-Executive Directors
Richard
Pennycook(1)
David Kelly(2)
Elaine O’Donnell
Lee Ginsberg(3)
2019
(£’000)
2018
(£’000)
2019
(£’000)
2018
(£’000)
2019
(£’000)
2018
(£’000)
2019
(£’000)
2018
(£’000)
Fixed
Pay
Fees
Benefits
Pension
67
-
-
Total Fixed Pay
67
Variable
Pay
Bonus
LTIP
Total Variable Pay
Total Single Figure of
Remuneration
-
-
-
67
-
-
-
-
-
-
-
-
95
-
-
95
-
-
-
50
57
12
65
61
-
-
-
-
-
-
-
-
-
-
50
57
12
65
61
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
95
50
57
12
65
61
Notes:
(1) From 1 April 2019, Richard Pennycook was appointed Non-Executive Chair of the Board and Chair of the Nomination Committee.
(2) From 1 December 2018 until 31 March 2019, David Kelly acted as interim Chair of the Board and interim Chair of the Nomination Committee, for which role he
received an additional fee of £32,667. David Kelly resumed his role as Senior Independent Director from 1 April 2019 and continued to Chair the Remuneration
Committee following Richard Pennycook’s appointment as Chair of the Board.
(3) Lee Ginsberg stepped down as Chair of the Board and Chair of the Nomination Committee on 1 December 2018 and stepped down from the Board on 6 February
2019.
74
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019
Additional Information Regarding Single Figure Table (audited)
The Remuneration Committee considers that performance conditions for all incentives are suitably demanding, having regard to the
business strategy, shareholder expectations, the markets in which the Group operates and external advice. To the extent that any
performance condition is not met, the relevant part of the award will lapse. There is no retesting of performance.
Bonus Awards (audited)
2019 annual bonus awards and performance targets
For the year ended 30 September 2019, the maximum potential bonus opportunity for both Executive Directors was 100% of
salary. The actual bonus payable to Simon Cooper was £61,200 and to Paul Meehan was £93,000 based on achievement of
the performance conditions set out below. However, Simon Cooper has waived his bonus this year in view of his considerable
shareholding in the Company. The Committee decided that, in view of the low-level payout of the bonus, and the fact that no bonus
has been paid since FY16, it was appropriate not to defer any of the bonus award into shares. The performance measures and targets
are set out below:
Performance metric
Weighting
Performance level
Actual bonus paid
Threshold
Target
Maximum
Actual
% of maximum
% of salary
Profit Before Tax
70%
£35.5m
£37.4m
£41.1m
£34.6
0%
Employee Engagement
Score
15%
Net Promoter Score
15%
Total
100%
6.3
40
6.6
48
7.0
55
7.1
58
100%
100%
0%
15%
15%
30%
The Committee concluded that the bonus outcomes appropriately reflected the broader performance context and, as a result,
no discretion was applied to the bonus outcome.
Long-Term Incentives Awarded in 2019 (audited)
The table below sets out the details of the Long-Term Incentive Plan awards granted in the 2019 financial year to Executive
Directors. Vesting will be determined according to the achievement of performance conditions as outlined below.
Director
LTIP
Value of
award
Face value of
award
(£’000)
Number
of shares
awarded
Exercise
price (£)
Percentage of
award vesting
at threshold
performance
Performance
period end
date
Performance
conditions
Simon
Cooper
LTIP – nil
cost option
100% of
salary
£204
41,087
Nil
25%
Paul
Meehan
LTIP – nil
cost option
200% of
salary
£620
124,874
Nil
25%
30 September
2021
EPS (70%)
11 February
2022
Absolute
TSR (30%)
30 September
2021
EPS (70%)
11 February
2022
Absolute
TSR (30%)
75
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE Annual Report on Remuneration
The awards were granted on 12 February 2019. The number of shares awarded was calculated using the closing share price on 28
September 2019, which was 496.5 pence.
The EPS condition applying to 70% of the awards is provided in the table below:
Performance tier
Cumulative EPS over the three financial
years FY19, FY20 and FY21(1)
% of EPS element capable of vesting
Below threshold
Less than 77.3 pence
Threshold
Maximum
77.3 pence
94.5 pence
0%
25%
100%
Between threshold and maximum
Between 77.3 and 94.5 pence
25% - 100% pro-rata on a straight line
basis
(1) Cumulative EPS means the sum of the actual adjusted earnings per share for FY19, FY20 and FY21.
The Absolute TSR condition applying to 30% of the awards is provided in the table below:
Performance tier
Below threshold
Threshold
Maximum
Annualised TSR over the three-year
performance period to 12 February
2022
% of TSR element capable of vesting
Less than 8%
8%
15% or above
0%
25%
100%
Between threshold and maximum
Between 8% and 15%
25% - 100% pro-rata on a straight line
basis
Absolute TSR is averaged over a one month period prior to the beginning and end of the performance period or such shorter period as
is available.
Long-Term Incentives Awarded in 2017 with Performance Period Ending in 2019
Simon Cooper and Paul Meehan were both granted awards on 26 May 2017 with a three-year performance period commencing on
1 October 2016 and ending on 30 September 2019. The awards vested on 26 November 2019. Performance under the awards was
based on EPS (70% weighting) and annualised TSR (30% weighting), as set out below.
The EPS condition applying to 70% of the awards is provided in the table below:
EPS for year ending 30 September 2019
Less than 24.48p
24.48p
29.92p or above
Vesting
0%
25%
100%
Between 24.48p and 29.92p
Straight line vesting between 25% and 100%
Actual EPS: 21.4p
0%
76
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019 The Absolute TSR condition applying to 30% of the awards is provided in the table below:
Annualised TSR of the Company over the three-year period
to 30 September 2019
Less than 15%
15%
25% or above
Vesting
0%
25%
100%
Between 15% and 25%
Straight line vesting between 25% and 100%
Actual TSR: 21.8%
76.3%
Based on the above performance outcomes, 22.9% of the awards vested on 26 November 2019 as detailed in the table below:
Executive
Maximum number
of shares under
award
Number of shares
vested
Value on vesting
date(1)
Face value of
awards vesting
(2)
Impact of
share price on
vesting(3)
Simon Cooper
99,502
Paul Meehan
186,567
22,776
42,705
£98,847.84
£45,779.76
£53,068.08
£185,339.70
£85,837.05
£99,502.65
No discretion was applied to the final vesting outcome shown above.
(1) Based on closing share price of 434 pence on the vesting date.
(2) Based on the number of shares vesting multiplied by the share price at the date of grant (201 pence)
(3) Based on the value at vesting less the face value of awards on vesting.
Statement of Directors’ Shareholdings and Share Interests (audited)
Director
Simon Cooper
Paul Meehan
Share plan awards
subject to performance
conditions(1)
Share plan awards
subject to continued
employment
Share plan
interests vested
but unexercised
Shares held
outright(2)
191,030
406,019
-
-
27,522(3)
11,330,950
-
22,222
No changes in the above Directors’ interests have taken place between 30 September 2019 and the date of this report.
Notes:
(1) Including the 2017 LTIP award for which the performance period ended on 30 September 2019.
(2) This information includes holdings of any connected persons.
(3) Simon Cooper’s 2016 LTIP award vested on 27 November 2018. Performance was based on EPS (70% weighting) and annualised TSR (30% weighting) over the
three-year period to 30 September 2018. 30% of the award vested, equivalent to 27,522 nil-cost options.
77
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE
Annual Report on Remuneration
The table below sets out details of the share options exercised by Executive Directors during the year:
Director
Share plan interests exercised during the year to 30 September 2019
Number of options exercised
Share price on date of exercise
Simon Cooper
Paul Meehan
-
-
N/A
N/A
The following information is unaudited.
The table below sets out the current shareholding and includes the shareholding requirement for the Executive Directors:
Director
Shareholding
requirement
Shares held for purpose of
shareholding requirement(1)
Number of
shares
% of salary(2)
Simon Cooper
200% of salary
11,358,472
21,236%
Paul Meehan(3)
200% of salary
22,222
27%
Shareholding
requirement met?
Yes
No
Notes:
(1) Shares included for the purposes of measuring the shareholding requirement include shares owned outright (including those by connected persons), vested but
unexercised share options and unvested shares subject to continued employment only (on a net of tax basis).
(2) The share price of 381.4 pence as at 30 September 2019 (the last business day of the financial year ending 30 September 2019) has been taken for the purpose of
calculating the current shareholding as a percentage of salary.
(3) Paul Meehan joined the Company as CFO on 16 January 2017 and has five years from this date to build up his shareholding requirement. His shareholding requirement
will be 150% from 16 January 2022 until 6 February 2024. This will rise to 200% on 7 February 2024 (the date falling five years after the 2019 policy change).
78
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019
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In line with IFRS 9, the Group applies the simplified approach for the impairment of trade receivables and therefore does not track
changes in credit risk. The Group uses a provision matrix to measure expected credit losses based on historical cancellation rates and
considers forward-looking factors. There has been £0.4m impairment charged to trade receivables in the current year (2018: £0.3m).
134
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019 Financial Instruments and Cash Deposits
As part of credit risk, the Group is subject to counterparty risk in respect of the cash and cash equivalents held on deposit with banks and
foreign currency financial instruments. The Group generally deposits cash and undertakes currency transactions with highly rated banks,
the Group considers that its cash and cash equivalents have low credit risk based on the external credit ratings of the counterparties.
No collateral or credit enhancements are held in respect of any financial derivatives. The maximum exposure to credit risk at each reporting
date is the fair value of financial assets and trade receivables.
Liquidity Risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. It is Group policy to maintain a
balance of funds, borrowing, committed bank loans and other facilities sufficient to meet anticipated short-term and long-term financial
requirements. In applying the policy the Group continuously monitors forecast and actual cash flows against the maturity profiles of
financial assets and liabilities. It is Group policy to ensure that a specific level of committed facilities is always available based on forecast
working capital requirements. Cash forecasts identifying the Group’s liquidity requirements are produced and are sensitised for different
scenarios including, but not limited to, decreases in profit margins and weakening of Sterling against other functional currencies.
The following are the contractual maturities of financial liabilities:
Financial liabilities at amortised cost
Sep-19
Trade payables
Other payables
Sep-18
Trade payables
Other payables
Contingent consideration
Carrying
amount
£’m
Contractual
cash flows
£’m
121.6
15.0
136.6
108.9
15.6
2.7
127.2
121.6
15.0
136.6
108.9
15.6
2.7
127.2
Within
1 year
£’m
121.6
15.0
136.6
108.9
15.6
2.7
127.2
Capital Management
It is the Group’s policy to maintain an appropriate equity capital base so as to maintain investor, creditor and market confidence and to
sustain the future development of the business.
The capital structure of the Group consists of the net cash (borrowings disclosed in note 20) and equity of the Group as disclosed in
note 22. The Group is not subject to any externally-imposed capital requirements.
25. Share-Based Payments
The following table illustrates the number of, and movements in, share options granted by the group
Outstanding at the beginning of the year
Granted during the year
Lapsed during the year
Vested during the year
Forfeited during the year
Outstanding at the year end
LTIP
No. of share
options
(000’s)
CSOP &
RSA
No. of share
options
(000’s)
Total
No. of share
options
(000’s)
1,481
1,248
(766)
(116)
(102)
1,745
292
195
-
-
(28)
459
1,773
1,443
(766)
(116)
(130)
2,204
135
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE Notes to the Consolidated Financial Statements
LTIP
The LTIP scheme started on 26 May 2016 and the Group has awarded nil-cost options under the scheme each year since
then. The vesting of 30% of the award will be dependent on a relative Total Shareholder Return (“TSR”) performance condition
measure over the performance period and the vesting of 70% of the award will be dependent on the satisfaction of an Earnings
per Share (“EPS”) target measured at the end of the performance period. For each award, there is a three-year performance
period commencing on the first day of the financial period in which they are awarded in.
During the year, the Group awarded nil-cost options to certain key management within the business. The vesting of these
awards will be dependent on EBITDA over a three-year performance period.
Exercise
price
Expected
volatility
Option
life
Risk free
rate
Dividend
yield
Non-
vesting
conditions
(%)
(years)
(%)
(%)
(%)
No. of
options
awarded
Share
price at
grant
date
(£)
189,985
2.595
443,297
2.595
180,728
4.120
421,698
4.120
61,400
3.910
143,268
3.910
(£)
Nil
Nil
Nil
Nil
Nil
Nil
30%
3.0
0.44%
2.00%
-
3.0
0.44%
2.00%
30%
3.0
0.07%
0.75%
-
3.0
0.07%
0.75%
30%
3.0
0.07%
0.79%
-
3.0
0.07%
0.79%
127,113
4.500
Nil
30%
3.0
0.54%
0.62%
296,596
4.500
Nil
-
3.0
0.54%
0.62%
132,923
4.440
Nil
42%
3.0
0.73%
0.73%
310,153
4.440
Nil
805,000
4.630
Nil
-
-
3.0
0.73%
0.73%
3.0
0.73%
0.73%
Fair
value at
grant
date
(£)
0.806
2.470
2.890
4.050
2.590
3.840
1.880
4.420
4.341
1.810
4.520
-
-
-
-
-
-
-
-
-
-
-
Award Date
26 May 2016 (TSR
dependent)
26 May 2016 (EPS
dependent)
26 May 2017 (TSR
dependent)
26 May 2017 (EPS
dependent)
31 May 2017 (TSR
dependent)
31 May 2017 (EPS
dependent)
20 December 2017
(TSR dependent)
20 December 2017
(EPS dependent)
12 February 2019 (TSR
dependent)
12 February 2019 (EPS
dependent)
9 July 2019 (EBITDA
dependent)
Expected volatility is estimated by considering historic average share price volatility at the grant date.
136
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019 Restricted Share Award (nil-cost option) and CSOP
The RSA scheme started on 27 October 2017, the Group awarded nil-cost options to key employees excluding Executive
Directors. The awards will vest on 27 October 2020 subject to continued employment, but with no other performance
conditions. A further award was made during the year. The awards will vest on 15 October 2021 subject to continued
employment but no other performance conditions.
The number of shares subject to the CSOP Awards has been determined by reference to the mid-market price of a share on
date of award. In order to optimise the post-tax value of the LTIP for participants, the Company has granted market-value
options as defined under UK tax legislation (“CSOP Options”) to the participants.
Type
Award
year
No. of
shares
RSA
2018
185,888
CSOP
2018
138,924
RSA
2019
86,873
CSOP
2019
108,110
Share price
at grant
date
(£)
4.273
4.273
4.265
4.265
Exercise
price
Expected
volatility
Option
life
Risk free
rate
Dividend
yield
(£)
Nil
4.273
Nil
4.265
(%)
N/A
N/A
N/A
N/A
(years)
(%)
(%)
3.0
3.0
3.0
3.0
0.55%
0.73%
0.55%
0.73%
0.50%
0.70%
0.50%
0.70%
The following has been recognised in the income statement during the year:
LTIP
RSA
Total share scheme charge
26. Commitments and Contingencies
a) Capital Commitments
No capital commitments during the year.
b) Operating Lease Commitments
One year
Two to five years
Over five years
Non-
vesting
conditions
(%)
Fair value
at grant
date
(£)
Nil
Nil
Nil
Nil
2019
£’m
0.1
0.6
0.7
4.200
Nil
4.170
Nil
2018
£’m
1.2
0.2
1.4
2019
Land &
buildings
£’m
2018
Land &
buildings
£’m
0.7
3.6
2.3
6.6
0.5
2.4
2.9
5.8
c) Contingencies
In September 2010, proceedings were initiated against On the Beach Limited by Ryanair alleging infringement of, inter alia, its
intellectual property rights. Proceedings remain at an early stage and there have been no material developments. Therefore the
amount of the claim by Ryanair is unquantified as at the date of this document. The Group expects that final resolution of the dispute
might take some time.
27. Related Party Transactions
No related party transactions have been entered into during the year.
Transactions with key management personnel have been disclosed in note 8(d).
137
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE Company Balance Sheet
Year ended 30 September 2019
Fixed assets
Investments
Current assets
Debtors
Cash at bank
Creditors: amounts falling due within one year
Corporation tax
Net assets
Equity
Share capital
Share premium
Capital contribution reserve
Retained earnings
Total equity
Note
2019
£’m
2018
£’m
4
5
6
7
132.6
132.6
68.0
0.2
68.2
(1.0)
(0.1)
(1.1)
199.7
1.3
2.6
0.5
195.3
199.7
73.9
-
73.9
(2.5)
-
(2.5)
204.0
1.3
2.6
0.5
199.6
204.0
The loss for the year ended 30 September 2019 dealt with in the financial statements of the parent company is £0.4m (2018: £0.4m).
The financial statements were approved by the Board of Directors and authorised for issue.
Paul Meehan
Chief Financial Officer
27 November 2019
On the Beach Group plc. Reg no 09736592
138
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019 Company Statement of Changes in Equity
Year ended 30 September 2019
Balance at 30 September 2017
Shares issued during the year
Share-based payment charges
Dividends paid during the year
Total comprehensive profit/(loss) for the year
Share
capital
£’m
1.3
-
-
-
-
Merger
reserve
£’m
Capital
contribution
£’m
-
2.6
-
-
-
0.5
-
-
-
-
Retained
earnings
£’m
201.9
-
1.2
(3.9)
0.4
Total
£’m
203.7
2.6
1.2
(3.9)
0.4
Balance at 30 September 2018
1.3
2.6
0.5
199.6
204.0
Shares issued during the year
Share-based payment charges
Dividends paid during the year
Total comprehensive profit/(loss) for the year
-
-
-
-
-
-
-
-
-
-
-
-
-
0.7
(4.6)
(0.4)
-
0.7
(4.6)
(0.4)
Balance at 30 September 2019
1.3
2.6
0.5
195.3
199.7
The notes on pages 140 and 141 form part of these financial statements.
139
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE Notes to the Company Financial Statements
1. Accounting Policies
On the Beach Group plc is a public limited company which is listed on the London Stock Exchange and is domiciled and incorporated
in the United Kingdom under the Companies Act 2006.
Basis of Preparation
These financial statements were prepared in accordance with Financial Reporting Standard 102 The Financial Reporting Standard
applicable in the UK and Republic of Ireland (“FRS 102”) as issued in August 2014. The presentation currency of these financial
statements is Sterling. All amounts in the financial statements have been rounded to the nearest £1,000,000.
The financial information presented is at and for the years ended 30 September 2019 and 30 September 2018.
As permitted by Section 408 of the Companies Act 2006, an entity profit and loss account is not included as part of the published
consolidated financial statements of On the Beach Group plc.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these
financial statements. The financial statements are prepared on the historical cost basis.
Under the provisions of FRS 102.1.12B, the company is exempt from preparing a company statement of cash flows.
The Directors have used the going concern principle on the basis that the current financial projections and facilities of the consolidated
Group will continue operating for the foreseeable future.
Related Party Transactions
Under the provisions of FRS 102.33.1A, the company is exempt from disclosing the details of related party transactions on the basis
that they are wholly owned subsidiaries.
Accounting Estimates and Judgements
Investment in Subsidiaries
Investments in subsidiaries are held at cost, less any provision for impairment. Annually, the Directors consider whether any events
or circumstances have occurred that could indicate that the carrying amount of fixed asset investments may not be recoverable, if
such circumstances do exist, a full impairment review is undertaken to establish whether the carrying amount exceeds the higher
of net realisable value or value in use. If this is the case, an impairment charge is recorded to reduce the carrying value of the related
investment. Details of the subsidiaries are listed in note 15 to the consolidated financial statements.
2. Directors’ Emoluments
The Company has no employees other than the Directors. Full detail of the Directors’ remuneration and interests are set out in the
Directors’ Remuneration Report on pages 66 to 83.
3. Share-Based Payments
The Company recognised total expenses of £0.7m (2018: £1.4m) in the year in relation to the Long Term Incentive Plan. Details of
this scheme are described in note 25 to the consolidated financial statements.
Investments
4.
The balance relates to investment in subsidiary undertakings, there has been no movement in the current year (refer to note 15).
140
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019 5. Debtors
Amounts falling due within one year:
Amounts owed by group undertakings
6. Creditors Due Within One Year
Current
Amounts owed to group undertakings
Bank overdraft
Other taxes and social security
Accruals
7. Called-Up Share Capital
Allotted, called up and fully paid
131,154,058 ordinary shares @ £0.01 each (2018:131,042,510 @ £0.01 each)
2019
£’m
68.0
68.0
2018
£’m
73.9
73.9
2019
£’m
2018
£’m
-
-
0.2
0.8
1.0
-
2.1
0.1
0.3
2.5
2019
£’m
2018
£’m
1.3
1.3
1.3
1.3
During the year, the Group issued 111,548 shares. The holders of ordinary shares are entitled to receive dividends as declared from
time to time and are entitled to one vote per share at meetings of the Group.
8. Contingent Liabilities and Guarantees
The Company is a guarantor to a borrowing facility relating to a rolling credit facility provided to the Group. The amount borrowed under
this agreement at 30 September 2019 was £nil (2018: £nil).
141
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE Glossary of Alternative Performance Measures (APMs)
APM
Definition
Reconciliation to closest GAAP measure
Adjusted OTB
EBIT
Adjusted OTB EBIT is based on OTB operating
profit before the impact of certain costs / income
that derive from events or transactions that fall
outside of the normal activities of the Group.
This also includes the non-cash cost of the
share based payment schemes. These costs /
income are excluded by virtue of their size and
in order to reflect management’s view of the
performance of the Segment.
Adjusted OTB operating profit (£m)
2019
2018
OTB Operating Profit
20.9
27.7
Exceptional costs
Share Based Payments
Amortisation of acquired intangibles
8.2
0.7
4.4
1.5
1.4
4.3
Adjusted OTB EBIT
34.2
34.9
Adjusted OTB
EBITDA
Adjusted OTB EBITDA is based on OTB
operating profit before depreciation,
amortisation and the impact of certain costs /
income that derive from events or transactions
that fall outside of the normal activities of the
Group. This also includes the non-cash cost of
the share based payment schemes. These costs
/ income are excluded by virtue of their size and
in order to reflect management’s view of the
performance of the Segment.
Adjusted OTB EBITDA (£m)
OTB Operating Profit
Exceptional costs
Share Based Payments
Depreciation and amortisation
Amortisation of acquired intangibles
2019
20.9
8.2
0.7
4.0
4.4
2018
27.7
1.5
1.4
3.0
4.3
Adjusted OTB EBITDA
38.2
37.9
International
EBITDA
International EBITDA is based on International
operating profit before depreciation and
amortisation.
Classic
EBITDA
Classic EBITDA is based on Classic operating
profit before depreciation and amortisation.
International EBITDA (£m)
2019
2018
International Operating Profit
Depreciation and amortisation
International EBITDA
(0.7)
0.1
(0.6)
(2.4)
0.2
(2.2)
Classic EBITDA (£m)
2019
2018
Classic Operating Profit
Depreciation and amortisation
Classic EBITDA
0.2
1.3
1.5
0.9
0.2
1.1
Adjusted
Classic
EBITDA
Adjusted Classic EBITDA is based on
Classic operating profit before depreciation,
amortisation and the impact of certain costs /
income that derive from events or transactions
that fall outside of the normal activities of the
Group. These costs / income are excluded
by virtue of their size and in order to reflect
management’s view of the performance of the
Segment.
Adjusted Classic EBITDA
2019
2018
Classic Operating Profit
Exceptional costs
Depreciation and amortisation
Amortisation of acquired intangibles
Adjusted Classic EBITDA
0.2
0.7
0.2
1.1
2.2
0.9
-
-
0.2
1.1
142
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019 APM
Definition
Reconciliation to closest GAAP measure
Adjusted
Profit before
Tax
Adjusted profit before tax is based on
profit before tax adjusted for amortisation
of acquired intangibles, and the impact of
certain costs / income that derive from events
or transactions that fall outside of the normal
activities of the Group. This also includes the
non-cash cost of the share based payment
schemes. These costs / income are excluded
by virtue of their size and in order to reflect
management’s view of the performance of
the Group.
Adjusted Profit before Tax (£m)
2019
2018
Profit before Tax
19.4
26.1
Amortisation of acquired intangibles
Share Based Payments
Exceptional costs
5.5
0.7
9.0
4.6
1.4
1.5
Adjusted Profit before Tax
34.6
33.6
Adjusted
Profit after
Tax
Adjusted profit after tax is based on profit
after tax adjusted for amortisation of
acquired intangibles, and the impact of
certain costs / income that derive from events
or transactions that fall outside of the normal
activities of the Group. This also includes the
non-cash cost of the share based payment
schemes. These costs / income are excluded
by virtue of their size and in order to reflect
management’s view of the performance of
the Group.
Adjusted Profit after Tax
Profit for the year
Share based payments (net of tax)
Exceptional costs (net of tax)
Amortisation of acquired intangibles
(net of tax)
2019
15.7
0.6
7.2
4.5
2018
21.5
1.2
1.2
3.8
Adjusted Profit after Tax
28.0
27.7
Adjusted EPS Adjusted EPS is calculated on the weighted
average number of Ordinary share in issue,
using the adjusted profit after tax.
Adjusted EPS
Adjusted Profit after Tax
Basic weighted average number of
Ordinary Shares (m)
2019
28.0
2018
27.7
131.1
130.5
Exceptional
costs
Exceptional costs are certain costs / income
that derive from events or transactions that
fall outside of the normal activities of the
Group. These costs / income are excluded
from various performance measures by virtue
of their size and in order to better reflect
management’s view of the performance of
the Group.
OTB
EBITDA as a
percentage
of adjusted
revenue
OTB EBITDA as a percentage of adjusted
revenue is based on the adjusted OTB
EBITDA divided by the revenue generated in
the OTB business.
Adjusted EPS (p)
21.4
21.2
Exceptional costs (£m)
2019
2018
Thomas Cook failure
Exceptional acquisition costs
Exceptional property costs
Organisational restructure
Other exceptional costs
Exceptional costs
7.7
-
0.3
0.8
0.2
9.0
-
0.6
0.5
-
0.4
1.5
OTB EBITDA as a percentage of
revenue
Adjusted Revenue
Adjusted OTB EBITDA
OTB EBITDA as a percentage of
revenue
2019
2018
90.3
38.2
42%
89.3
37.9
42%
143
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE Glossary of Alternative Performance Measures (APMs)
APM
Definition
Reconciliation to closest GAAP measure
Operating
cash
conversion
Operating cash converstion is operating
cash flows divided by operating profit.
These cash flows are excluded from
various performance measures by virtue
of their size and in order to better reflect
management’s view of the performance
of the Group.
OTB adjusted
revenue after
marketing
cost
OTB adjusted revenue after marketing
cost is adjusted revenue after “OTB”
online and offline marketing costs.
Operating
profit before
amortisation
and
exceptional
costs
Operating profit before amortisation
and exceptional costs is based on
Group operating profit, adjusting for
amortisation of acquired intangibles
and the impact of certain costs that
derive from events or transactions that
fall outside of the normal activities of
the Group.
Operating cash conversion (£m)
2019
2018
Profit before taxation
Net finance income
Share-based payments
Depreciation
Amortisation
19.4
(0.2)
0.7
1.1
8.7
26.1
0.1
1.4
0.5
7.2
EBITDA excluding share-based payment
charges
29.7
35.3
Movement in working capital
Movement in trust account
Cash generated from operating activities
Operating cash conversion %
OTB adjusted revenue after marketing cost
(£m)
OTB adjusted revenue
OTB online marketing costs
OTB offline marketing costs
Total OTB marketing
2.4
(5.6)
26.5
89%
(1.7)
(0.2)
33.4
95%
2019
2018
90.3
89.3
(29.8)
(33.2)
(5.4)
(4.1)
(35.2)
(37.3)
OTB adjusted revenue after marketing costs
55.1
52.0
Operating profit before amortisation and
exceptional costs (£m)
Operating profit
Exceptional costs
Amortisation of intangibles
2019
2018
19.2
26.2
9.0
8.7
1.5
7.2
Operating profit before amortisation and
exceptional costs (£m)
36.9
34.9
International
revenue after
marketing
costs
International revenue after marketing
costs is based on International revenue
after all marketing costs
International revenue after marketing costs
2019
2018
Revenue
Marketing costs
1.4
(1.4)
International revenue after marketing costs
-
1.6
(3.0)
(1.4)
OTB EBITDA
OTB EBITDA is based on OTB
operating profit before depreciation
and amortisation.
OTB EBITDA (£m)
OTB Operating Profit
Depreciation and amortisation
OTB EBITDA
2019
2018
20.9
8.4
29.3
27.7
7.3
35.0
144
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019 Shareholder Information
Registered Office
5 Adair Street,
Manchester
M1 2NQ
United Kingdom
Tel: c/o FTI Consulting on 020 3727 1000
Web: www.onthebeachgroupplc.com (Corporate)
Web: www.onthebeach.co.uk (UK)
Web: www.ebeach.se (Sweden)
Web: www.ebeach.no (Norway)
Web: www.ebeach.dk (Denmark)
Web: www.sunshine.co.uk (UK)
Web: www.classic-collection.co.uk (UK)
Investor relations: corporate@onthebeach.co.uk
Cautionary statement
The purpose of this Annual Report is to provide
information to the members of the Company. The
Company and its Directors accept no liability to third
parties in respect of this Annual Report save as would
arise under English law.
This Annual Report contains certain forward-looking
statements with respect to the financial condition,
results, operations and businesses of the Company.
Forward looking statements are sometimes, but not
always, identified by their use of a date in the future or
such words as ‘anticipates’, ‘aims’, ‘due’, ‘will’, ‘could’,
‘may’, ‘should’, ‘expects’, ‘believes’, ‘intends’, ‘plans’,
‘targets’, ‘goal’ or ‘estimates’. These forward-looking
statements involve risk and uncertainty because they
relate to events and depend on circumstances that
may or may not occur in the future.
There are a number of factors that could cause actual
results or developments to differ materially from
those expressed or implied by these forward-looking
statements, including factors outside the Company’s
control. The forward-looking statements reflect the
knowledge and information available at the date
of preparation of this Annual Report and will not
be updated during the year. Nothing in this Annual
Report should be construed as a profit forecast.
Company Secretary
Kirsteen Vickerstaff
5 Adair Street,
Manchester
M1 2NQ
United Kingdom
Corporate Brokers
Peel Hunt LLP
Moor House
120 London Wall
EC2Y 5ET
Numis Securities Limited
10 Paternoster Row
London
EC4M 7LT
Statutory Auditors
Ernst & Young LLP
2 St Peter’s Square
Manchester
M2 3DF
Registrar
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Corporate solicitors
Addleshaw Goddard LLP
One Peter’s Square
Manchester
M2 3DE
Corporate PR advisers
FTI Consulting
200 Aldersgate
Aldersgate Street
London
EC1A 4HD
145
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE TOTAL FINANCIAL
P R O T E C T I O N
TOTAL FINANCIAL
P R O T E C T I O N
146
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ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2019STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCE