O
n
t
h
e
B
e
a
c
h
G
r
o
u
p
p
l
c
A
N
N
U
A
L
R
E
P
O
R
T
&
A
C
C
O
U
N
T
S
F
o
r
t
h
e
y
e
a
r
e
n
d
e
d
3
0
S
e
p
t
e
m
b
e
r
2
0
2
1
On the Beach is a fast-growing,
leading online retailer of beach holidays
Aeroworks, 5 Adair St, Manchester M1 2NQ
www.onthebeachgroupplc.com (Group)
www.onthebeach.co.uk / www.sunshine.co.uk / www.classic-collection.co.uk / www.classic-package.co.uk (UK)
www.ebeach.se / www.ebeach.no / www.ebeach.dk (International)
On the Beach Group plc
Annual Report & Accounts
For the year ended 30 September 2021
TOTAL FINANCIAL
P R O T E C T I O N
2
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
In this report
Strategic Report
Governance
6 Our history timeline
7 Who we are
8 Financial highlights
10 Business model
11 Chairman’s statement
13 Strategy
16 Chief Executive’s review
20 Key performance indicators
24 Financial review
30 Risk management
41 Viability statement
44 Stakeholders and s.172 statement
53 Responsibility & sustainability
65 Non-financial information statement
67 Chairman’s introduction
68 Directors’ biographies
70 Corporate Governance statement
79 Report of the Nomination Committee
81 Report of the Audit Committee
87 Directors’ Remuneration report
113 Other statutory and regulatory disclosures
119 Statutory Auditor’s Report to the Members of
On the Beach Group plc
127 Statement of Directors’ responsibilities
Financial Statements
129 Consolidated Income Statement and Statement of
Comprehensive Income
130 Consolidated Balance Sheet
131 Consolidated Statement of Cash Flows
132 Consolidated Statement of Changes in Equity
133 Notes to the Consolidated Financial Statements
169 Company Balance Sheet
170 Company Statement of Changes in Equity
171 Notes to the Company Financial Statements
173 Glossary of Alternative Performance Measures (‘APMs’)
177 Shareholder information
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
3
STRATEGIC REPORT
4
4
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Strategic Report
I
S
T
R
A
T
E
G
C
R
E
P
O
R
T
6 Our history timeline
7 Who we are
8 Financial highlights
10 Business model
11 Chairman’s statement
13 Strategy
16 Chief Executive’s review
20 Key performance indicators
24 Financial review
30 Risk management
41 Viability statement
44 Stakeholders and s.172 statement
53 Responsibility & sustainability
65 Non-financial information statement
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
5
5
STRATEGIC REPORT
Strategic Report
Our history timeline
4
1
0
2
On the Beach grew its
direct contracting
and invested in
TV advertising
2015
Launched its first
international
platform in Sweden.
Listed on the
London stock
exchange
013
2
Inflexion acquired
a majority stake
79% of the Group’s
bookings were
made online
Livingbridge acquired
a majority stake
1
1
0
2
7
0
0
2
Established by
Simon Cooper
4
0
0
2
6
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
2
0
1
6
Achieves
outstanding profit
growth against
a challenging
market backdrop
2
0
1
7
Acquired
Sunshine.co.uk Limited
Launched in Norway
Acquired
Classic Collection.
Soft launch in Denmark
Launched Classic
Package Holidays.
Opened a new Digital HQ
in Manchester. Launched
long haul
2
0
1
8
2
0
1
9
Raised £67m as a result
of a share placing.
Redesigned customer
booking path
2020
Raised £24.9m as a
result of a share placing.
Offered free COVID-19
tests in an industry first
2021
Strategic Report
Who we are
OUR PURPOSE
To make it easy for people to find, book and enjoy
their perfect beach holidays
OUR VISION
To build Europe’s leading beach holiday retailer via
a single platform, multi-brand strategy
WHAT WE DO
We are the UK’s third largest ATOL holder. By using our innovative
technology, low-cost base and strong customer-value proposition to
provide a structural challenge to legacy tour operators, we continue our
journey to disrupt the retail of beach holidays. Our model is customer-
centric, asset-light, profitable and cash generative
OUR VALUES
We live by our core values
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
7
7
STRATEGIC REPORT Strategic Report
Financial highlights
GROUP REVENUE
£21.2m
FY20: £33.7m | FY19: £140.4m
FY18: £104.3m | FY17: £83.6m
ADJUSTED GROUP REVENUE
£30.5m
FY20: £71.2m | FY19: £147.5m
FY18: £104.3m | FY17: £83.6m
REVENUE AS AGENT
£14.7m
FY20: £16.8m | FY19: £85.4m
FY18: £90.9m | FY17: £83.6m
REVENUE AS PRINCIPAL
£6.5m
FY20: £16.9m | FY19: £55.0m
FY18: £13.4m | FY17: £0m
ADJUSTED REVENUE AS AGENT
£24.0m
FY20: £54.3m | FY19: £92.5m
FY18: £90.9m | FY17: £83.6m
ADJUSTED REVENUE AS PRINCIPAL
£6.5m
FY20: £16.9m | FY19: £55.0m
FY18: £13.4m | FY17: £0m
CASH
£56.0m
FY20: £36.5m | FY19: £54.8m
FY18: £47.3m | FY17: £33.0m
TRUST ACCOUNT
£39.0m
FY20: £25.8m | FY19: £44.0m
FY18: £38.4m | FY17: £38.6m
(LBT)/PBT
(£36.7m)
FY20: (£46.3m) | FY19: £19.3m
FY18: £26.1m | FY17: £21.1m
ADJUSTED (LBT)/PBT
(£18.4m)
FY20: £0.6m | FY19: £34.5m
FY18: £33.6m | FY17: £28.5m
8
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
8
STRATEGIC REPORT ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
9
9
STRATEGIC REPORT Strategic Report
Business model
**pic 3 – 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
Profit growth is the cumulative effect of improvements in
performance of all of the levers individually
=
PBT
10
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Strategic Report
Report from the Chairman
It has been another challenging year and
one in which strong relationships with
stakeholders were fundamental to ensuring
business resilience and I thank all stakeholders
for their continued support. The Board remains
confident in the outlook for the business and we
believe that we have the right strategy in place
to drive long-term sustainable growth.
Richard Pennycook
Chairman of the Board
I am pleased to present our annual
report and accounts for the financial
year ending 30 September 2021
(‘FY21’).
The COVID-19 pandemic continued to
cause disruption and challenges to the
travel industry throughout the financial
year and so naturally had a substantial
impact on the financial results of the
Group, as outlined in the financial
review on page 24.
In response to the continued disruption,
the Chief Executive Officer, Simon
Cooper, and his team, have focused
on taking the right decisions for the
long-term to ensure the business is
well-placed to thrive as we exit the
pandemic. The report of the Chief
Executive Officer highlights our
investment in a range of strategic
areas, including technology, people,
supply and brand.
Putting our customers first
At the start of the pandemic, the
industry backdrop was extremely
challenging. Millions of holidaymakers
had seen their holidays cancelled,
or severely disrupted due to travel
restrictions. Whilst On the Beach had
done its best to repatriate customers
stranded by last minute ‘red’ or ‘amber’
country reclassifications and to refund
monies paid for cancelled holidays,
the strain on the system was intense
and in a number of cases we let our
customers down. This was particularly
the case where airlines failed to refund
our customers for flights which had
been cancelled. Only when we had
secured our liquidity, were we able to
start refunding our customers for that
portion of their holiday even when the
airline had not in turn refunded us.
As a consequence, we – along with
the rest of the industry – incurred
reputational damage. As we entered
the new financial year, our Board
was determined to re-establish the
reputation of On the Beach as a
consumer champion – building on
the fact that we are one of the few
companies in the industry which puts
customer monies in a ring-fenced
trust account. In the face of great
uncertainty about the prospects for
travel in the year ahead, we therefore
adopted a stance of caution on behalf
of our customers. Our first marketing
message of the year, over Christmas
and the New Year (when the industry
traditionally starts to promote the
next summer holiday) was a cautious
“Ready When You Are” campaign
featuring Iggy Pop.
Our cautious message became even
stronger in the summer itself, when we
ran a campaign encouraging customers
not to book a foreign holiday in July
or August, at the precise time most in
the industry were marketing holidays.
The frequent and unpredictable
changes in government guidance over
the summer months caused further
significant chaos for many who had
chosen to travel. We believe we were
seen as a responsible company helping
customers to avoid major disruption
to their annual holidays. Alongside
that unusual marketing campaign we
called the industry to account for its
behaviour towards customers with
respect to refunds. Our white paper,
based on You Gov research, exposed
consumer damage caused by misuse of
refund credit notes and called upon the
industry, regulators and government
to take action to protect consumers.
Both campaigns were well-received
by consumers, increasing brand
awareness and building brand trust.
In September 2021, with consumer
confidence to book international travel
gradually returning, but anger at the
extraordinary costs of testing (which
could exceed £1,000 for a family of
4) On the Beach again began to sell
holidays and included free COVID tests
with bookings.
The culmination of these activities
provides a firm foundation on which to
build brand awareness, consideration
and trust and to increase market share
in FY22.
Cash and liquidity
In May 2021, the Group extended its
£25m Government-backed CLBILS
facility by a year to May 2023 and
reset its banking covenants for the
period to September 2022. In July
2021, given the extended period
of disruption to international travel,
and the ongoing challenging trading
environment, the Group raised £24.9m
(net of fees) via a 5% share placing.
The Board considered carefully before
deciding to proceed with the placing
and took independent advice from
NM Rothschild & Co. The Board
concluded it was in the best interests
of the Company and its stakeholders
to proceed as it would provide greater
resilience, flexibility and firepower, and
restoring the Group’s cash position
to a similar position to where it was
following the placing in May 2020.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
11
STRATEGIC REPORT Strategic Report
Report from the Chairman
As at 30 September 2021, the Group
had £56m in cash (excluding customer
monies held in trust), and the £75m
facility was undrawn.
Thanks to the continued support from
the Group’s shareholders and bank,
the Group enters the new financial
year well-funded to successfully and
sustainably grow market share and
create long term value for shareholders,
by investing in brand, technology and
customer proposition.
Given the focus on investment in long-
term strategy and growth, the Board
has not recommended a final dividend
for FY21.
Regulatory & market reform
The pandemic has shone a harsh light
on the travel industry, exposing a
market which does not work well for
consumers, and does not provide a
level playing field for fair competition.
We look forward to hearing the
outcome of the CAA’s consultation
on ATOL reform, and we hope that
this will lead to the ring-fencing of
customer monies in a trust account
structure. However, the ATOL review is
very narrow in scope, and we believe
wider market reform is required to
protect customer monies, with all
prepaid monies put into trust accounts
and repaid automatically if bookings
are cancelled by the provider. We
also want regulators to make clear to
airlines that if customers are happy to
appoint an authorised travel agent to
act on their behalf, the airline should
not put barriers or costs in the way of
making that booking. On the Beach
continues to liaise with regulators
and Government on these issues,
with a view to securing a fairer and
more competitive market for package
holidays.
Governance
The Group is committed to the highest
standards of corporate governance
and we are fully compliant with the
UK Corporate Governance Code.
The Board and its Committees have
adapted their activities and processes
to remote working; holding shorter
but more frequent remote meetings.
An internal Board evaluation exercise
confirmed that this has been effective,
and in FY22 we expect to move to
a new cadence of meetings, with a
mixture of remote and face-to-face
meetings.
Board composition
We were delighted to welcome The
Rt Hon Justine Greening as a Non-
Executive Director of the Board on 4
March 2021. As well as serving on the
Board, Justine is also a member of the
Audit, Remuneration and Nomination
Committees. With Justine’s successful
business career, her illustrious political
career, and her work with the Social
Mobility Pledge, Justine is already
adding huge value to the Board.
New Directors’ Remuneration Policy
In line with the usual three year cycle,
the Directors’ Remuneration Report
sets out a new Directors’ Remuneration
Policy (‘Policy’) which we will be asking
shareholders to approve at the AGM on
25 February 2022. The Remuneration
Committee believes that the construct
of the current Policy remains fit for
purpose, and therefore only proposes
to make minor amendments to ensure
full compliance with the UK Corporate
Governance Code and to allow more
flexibility in selecting performance
metrics which fully support the
business strategy as we emerge
from the COVID-19 pandemic. David
Kelly, as Chair of the Remuneration
Committee has engaged with over
50% of the shareholder base and the
proposed policy takes into account
the feedback received as part of that
process.
ESG
Sustainability and climate change
have become critically important to
our stakeholders, who are rightly
demanding that businesses operate
sustainably, minimising environmental
impact and contributing positively to
society, while reporting openly and
transparently on progress.
The Group is in the early stages of its
ESG journey, but has made important
progress. We are in the process of
performing a materiality assessment to
consider ESG risks and opportunities
and to identify those ESG priorities
which most align with the Group’s
values, strategy and culture and which
are most important to the Group’s
stakeholders, with whom we are
consulting. As part of developing our
ESG strategy, we will identify the most
appropriate metrics to track progress
and create baselines, against which we
can measure progress. On climate risk
specifically, the Group has, for the first
time, started the process to measure its
Scope 3/indirect emissions, which will
enable it to understand its full impact
and to consider what can be done to
reduce and/or offset its environmental
footprint.
There are a number of initiatives
underway which support the Group’s
ESG strategy, and more detail can be
found on page 53.
Looking ahead
FY21 has been another challenging
year and I have been truly impressed
by the resilience and adaptability of our
people and business. This resilience
will stand us in good stead as we
continue to navigate the challenges
that COVID-19 presents. At the time of
writing this report, it is too soon to tell
what impact the Omicron variant will
have on the Group and the sector more
widely but we have a business that
can adapt swiftly and think differently
and we have put in place all the right
building blocks to ensure we are ready
to take market share as consumer
demand returns.
Richard Pennycook
Non-Executive Chairman
9 December 2021
12
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Strategic Report
Strategy
Post Covid, a huge opportunity exists to
grow share of core and adjacent markets.
E S T IN TALEN
T
V
I N
Drive
Brand
Optimise
Supply
United Kingdom (UK)
To attract the widest
possible audience of
beach holidaymakers
Long Haul
Beach
Growth
+4m pax
Short Haul
Beach
Core
8m pax
Growth
+8m pax
Online/B2C
Offline/B2B
Champion
Change
+ TECHN O L O G
Y
Europe
To support the integration and
revenue expansion of beach
focused brands
Growth: International
source markets in
Northern + Central Europe
UK Core
8m pax
+
UK Growth
10m pax
=
UK Addressable
18m pax
Our vision is to build Europe’s leading beach holiday
retailer via a single platform multi brand strategy
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
13
STRATEGIC REPORT Strategic Report
Strategy
Strategy for growth
On the Beach continues to target significant medium and long-term growth in its core and adjacent markets by evolving a strategy
based on the following strategic pillars:
Invest in talent and technology
Grow our share of B2B beach
› Drive mainstream growth through
Classic Package Holidays
› Evolve Classic Collection to include
long haul, itineraries and boutique
hotels
555
markets5
Diversify into adjacent beach holiday
markets
› Grow share of long haul beach
holidaymakers
› Seek value enhancing opportunities
in new and existing international
Champion customer-centric change
› Help to shape industry regulation
that is fit for purpose
› Ensure the market works in the best
interests of the consumer
› Optimise the conditions that enable
us to attract, develop and retain a
diverse group of talent
› Enhance our platform capabilities to
attract the widest possible audience
of beach holidaymakers
› Leverage our data capabilities to
improve user level personalisation
Become a brilliant digital brand
› Develop a truly differentiated
customer proposition
› Deliver a superior customer
experience from the moment of
booking to increase repeat purchase
and brand advocacy
Optimise our direct and
differentiated supply
› Develop key partnerships through
our ability to manage relationships,
retail opaquely and pay promptly
› Build our in-house capability to
increase flight connectivity
› Grow our multi-channel capability
to offer partners the widest range of
distribution
14
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
14236
“ Kimberley Head of UX & Design
We have a phrase in
the design team ‘we’re
never done, we’re
only ready’. This for
me, encapsulates the
eagerness as a business
to try new things, learn,
adapt and continuously
improve our customer
experience.”
Favourite Beach:
Prasonisi Beach, Rhodes
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
15
STRATEGIC REPORT Strategic Report
Chief Executive’s review
We have taken a number of bold steps
this year to drive future growth. I am
enormously proud of the On the Beach
team for their commitment and hard work.
Their dedication combined with our future
opportunities and strategic objectives gives me
optimism for the future.
Simon Cooper
Chief Executive Officer
The Group 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 low-cost operating model, in
a primarily digital sector, where
consumers are seeking increased
convenience, choice, and a
personalised experience with financial
protection, positions us to emerge from
the pandemic favourably.
This has been another unique and
difficult year for the global travel
industry where the impact of the
pandemic has been deeper and longer
lasting than most would have expected.
Our performance has suffered from a
materially lower than normal level of
bookings and the reversal of revenue
generated for bookings received in
the year that have subsequently been
cancelled.
Against this challenging market
backdrop, we have continued to
strengthen our balance sheet by
successfully raising a further £24.9m
from shareholders who see the long-
term opportunity of the business,
giving us an even greater platform to
emerge from the pandemic in a position
of strength. Over the period, we have
continued to invest in our people and
technology, optimise our supply and
reinvigorate our brand.
I am confident that the activities we have
undertaken over the last 12 months
have laid strong foundations for the
Group in the year ahead as holidaying
to pre-pandemic
begins
return
to
levels, and I am incredibly proud of my
colleagues who have delivered so much
in often challenging situations.
People
Our people have continued to rise to
the widespread challenges that the
crisis has presented. Staff across all
business departments have worked
productively and professionally home.
We have continued to support
colleagues with a diverse range of
initiatives to promote mental health and
wellbeing, helping retain a connection
to our staff in other departments and
across the Group as a whole, while our
offices have remained closed.
We have not relied extensively on the
Government furlough scheme and
instead have looked to recruit more
staff across all core functions, including
technology, brand, finance and
customer service.
We are excited that a move to hybrid
working means all of our colleagues
can once again be in the same
dedicated office, Aeroworks, which
will help us collaborate better across
departments. Hybrid working will
enable us to recruit from a wider talent
pool and allow our staff to continue to
benefit from greater flexibility.
We have significantly improved our
colleague benefits and development
opportunities, and have added strength
to our senior management team
across Data, Product and Marketing,
with the appointment of a Director of
Data, a Director of Product and a Chief
Marketing Officer.
Finally, as a big thanks to our staff
who continue to respond with speed,
professionalism and resilience to the
crisis, we have raised the entry salary
across the business to £20,000,
thereby elevating the skill set of the
new talent we attract and improving
the overall quality of service to our
customers.
Market conditions
Whilst FY21 was not expected to
return to a normal year for travel, the
industry and the UK population did
not foresee an extended lockdown
and travel ban for the first six months
of calendar year 2021. In a normal
year, holiday bookings would peak in
January for travel from March through
to September. However, it became
increasingly clear before entering a
third lockdown on 4 January 2021 that
market conditions for the remainder of
the first half would be more challenging
than anticipated at the start of the
financial year.
Although the vaccine rollout in the UK
has been successful, the Government
remained cautious about reopening
borders for leisure travel. The traffic
light system, determining the different
requirements and restrictions to
be imposed by destination, led to a
significant amount of uncertainty for
consumers over the summer season,
including:
ą
ą
ą
which destinations will be in each
category, and whether they are
likely to change;
the cost of testing prior to
departure in the UK and in resort;
the ability of the local
infrastructure to cope with the
requirements and the resulting
potential delays;
16
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
ą
ą
what requirements there may be if
people test positive for COVID-19
whilst in resort and the cost of
this; and
local rules and restrictions in
resort, such as curfews and
masks.
Following the Government’s
announcement in May 2021 on the
traffic light system for leisure travel,
where most destinations were
classified ‘amber’, On the Beach made
the strategic decision to extend its off-
sale period for holidays from 30 June to
31 August 2021.
In addition to the Group’s focus on
growing its market share in the long
term, the Board's decision was based
on consumer feedback from both
research and search / sales data,
showing a market wide lack of appetite
for booking amber destinations, as well
as the likely loss of customer goodwill
for holidays that might be booked only
to be cancelled or re-arranged.
On the Beach restarted selling holidays
to travel from early September 2021,
when it became clearer that overall
confidence to book a holiday had
increased, with On the Beach research
finding 53% of Brits felt confident
about booking a holiday for the
remainder of calendar year 2021 (up
from 34% in July 2021).
For many customers seeking to go
abroad, the financial and administrative
implications of PCR tests remain a
key booking barrier, with one in three
people citing that as their main concern,
second only to concerns that the
holiday would not go ahead as planned.
On the Beach therefore announced
on 8 September 2021 the decision
to provide customers with free Covid
tests for bookings made between 8 and
30 September for holidays in 2021 to
Spain, Greece, the Spanish and Greek
Islands. Following the success of the
promotion, free Covid tests were more
recently made available for bookings
made in October and November.
Our ‘New Normal Booking Pledge’ offers
additional reassurance and transparency
to help our customers with their holiday
planning. Both initiatives, combined
with a further softening of government
restrictions stimulated bookings in the
final weeks of the year. The increased
awareness of brand and strengthening
in trading over this period sets the
business up well for 2022 as the market
starts to normalise.
Strategy
A summary of our strategy for growth
can be found on page 14. As I set
out in more detail below, throughout
the year, we have continued to focus
our investment into areas of strategic
value including technology, brand and
supply as well as a continued focus
on expanding our portfolio of beach
holidays and our addressable audience,
specifically through our expansion
areas of B2B and long haul.
Investment in our Brand
The pandemic has caused reputational
damage to all in our sector. Our decisive
action has enabled us to take steps
that better protected our reputation
versus our rivals, but we were not
immune from the issues presented
by a unique set of circumstances at
various points over the last 18 months.
This included, but was not limited to,
an unprecedented volume of customer
enquiries, difficulties in collecting
refunds from low cost carriers and a
high degree of uncertainty regarding
future travel.
Throughout the year, our marketing
focus has been on reputational repair
and reinvigorating the brand. Never
before has our unique business model
better enabled us to do the right thing
by our customers, consumers and
the industry as a whole. Our strategy
has been to act innovatively putting
consumers at the heart of our decision
making, setting us apart from our rivals
and enabling us to maintain our brand
metrics with a fraction of the spend.
In December 2020, we launched a
‘Ready when you are’ TV campaign
which aligned with consumer
sentiment in a period of low / no travel
during our usual peak booking period.
Technology developments delivered in
record time enabled us to better serve
customers needing to amend bookings,
and our finance ops team worked
tirelessly in order that we could refund
customers at scale within 14 days.
We made the decision not to offer
customers refund credit notes but to
refund in cash, and our white paper
on the topic helped hold the industry
to account as we looked to highlight
consumers’ right to refund as the
pandemic continued. For more details
see page 60.
As disruption, cancellations and
unexpected costs continued to blight
holidays booked, we took the radical
decision to stop selling holidays that we
were not confident would be delivered.
Lastly, as we look to help restore
consumer confidence and get people
back on holiday again, we created
our free Covid test offer - On the
Beach’s largest ever promotion at a
cost of over £1million - which meant
we could reduce the holiday hassle
administration as well as saving our
customers money.
Investment in Technology
We have continued to add to our
technology talent, in particular to
software engineering, design, product,
infrastructure and security.
We have continued to invest in remote
working and greater use of cloud, to
empower colleagues to self-serve,
work securely from anywhere at any
time and drive speed to market.
Our technology teams have taken the
opportunity to capitalise on periods of
lower trading to continue to focus on
enhancing the core capabilities of our
platform (flights, beds, packaging, front
end, payments and back-office).
We have re-architected our core
booking paths, enabling quicker future
development and the addition of
diverse sites from all geographies.
We have built new capabilities to
support long haul and scheduled
airlines, allowing new suppliers to be
added at pace.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
17
STRATEGIC REPORT Strategic Report
Chief Executive’s review
As part of our overall strategy, there
has been a focus on optimising our
data platform with a view to driving
increasingly sophisticated user-level
personalisation and maximising
customer lifetime value.
Investment in Supply
We continue to believe that only
by having our own relationships
with our hotel partners can we
guarantee our customers both a
good hotel experience and the best
prices. COVID-19 has presented
the opportunity to secure direct
relationships with quality inventory
in key destinations that were
previously on exclusive contracts with
competitors.
Throughout the pandemic and the
widespread disruption this caused, it
was clear without direct contracting
capability we could not possibly have
delivered the same level of service,
either when airspace closed or
when it reopened. Our direct contact
with all key partners allowed us to
better manage through the chaos.
We supported hoteliers during the
pandemic, maintained a full-strength
team and paid our partners and
suppliers on time. This has not only
welcomed us to new opportunities but
it has also given us maximum flexibility
with suppliers.
Perhaps most importantly as we turn
our focus to the future, our ring-fencing
of customer prepayments allows On
the Beach to maintain its favourable
payment terms to all partners.
Many others in the market, including
tour operators and bedbank peers,
have not been able to honour their
commitments under the financial
pressure of COVID-19. We have
cancelled and amended tens of
thousands of bookings, working in
collaboration with our suppliers to
avoid cancellation charges and to
ensure smooth operational processes.
This is only possible with strong directly
contracted relationships. The net result
is that our directly contracted share has
continued to grow and we exit HY21
with a c.90% share.
We continue to believe that our ability
to pay promptly, access preferential
package rates with hotel suppliers and
access B2C and B2B channels are
fundamental to growing levels of direct
and differentiated supply.
Expansion areas
Business-to-business (B2B)
In 2018, we expanded into a new
B2B channel via the acquisition of
Classic Collection Holidays (CCH).
This increased the size of the Group’s
addressable market by a further c.8m
holidaymakers, who book beach
packages each year through an
intermediary.
Since the acquisition, the Group has
continued to invest behind the strategic
development of both the existing CCH
brand and our new Classic Package
Holidays brand.
Both Classic brands have maintained
high service standards throughout the
pandemic, receiving recognition from
the trade for excellence, which has
enhanced their reputation and positions
both favourably as demand continues
to recover.
Classic Package Holidays (CPH)
Significant progress was made in
activating travel agents to sell CPH
holidays and increasing usage up to
February 2020. The brand, launched in
2019, already has the capability to sell
packages via its portal to over 2,500
agents.
Partly as a result of the pandemic, there
are some challenges for new entrants
and smaller independent operators but
with Thomas Cook exiting the market in
2019 and other tour operators focusing
on direct sales, there is an opportunity
to drive both number and usage of high
street and independent travel agents
that sell CPH holidays.
Classic Collection Holidays (CCH)
Pre-pandemic, the Group invested in
the product portfolio of CCH to include
longer haul beach and tailor-made
itineraries via travel agents for its end
customers. Over the last 18 months,
CCH has continued to extend and tailor
the offering.
In line with our strategy, the Classic
brands have now launched a long haul
offering and are building a dedicated
Group long haul function which will
cover B2B and B2C, value vs luxury
and standard vs bespoke.
18
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
The proportion of CCH booked holidays
that are long haul has increased from
1.4% in September 2019 to 16.4% in
September 2021.
Long Haul
There are 4 million holidaymakers in the
UK who book long haul packages each
year. Pre-pandemic, the On the Beach
site handled 10m searches per annum
for long haul destinations.
There is a significant opportunity post
pandemic to drive a growing share of
bookings to longer haul destinations
in Classic and the core On the Beach
brand, by building out our scheduled
air connectivity and portfolio of directly
contracted beach hotels.
We continue to develop new
technological capabilities to allow
airlines to be added at pace and we are
developing relationships with hotels in
destination, both East and Westbound.
Our new group long haul function in
Classic will handle more complex long
haul enquiries on behalf of the Group
when demand returns.
International expansion
The Board will continue to evaluate
international opportunities that increase
the Group’s scale and deliver further
value for shareholders.
Championing change in travel industry
regulation
What On the Beach is calling for
We believe that holistic and
comprehensive reform is required in the
regulation of the travel industry, in order
to create a competitive and thriving
travel market which works well for
consumers, creates a level playing field
for those operating within it, and which
reduces or eliminates exposure for
taxpayers against the risk of business
failure.
The Board remains confident in the
resilience and flexibility of the business
model and believes the business is
well-positioned to grow market share
over the medium term as demand for
holidays recovers.
In light of the continued market
uncertainties, the Group is maintaining
its suspension of full year guidance
until such time that the overall impact
of COVID-19 on the Group becomes
clearer.
The Board will provide a further update
on trading on the date of the AGM on
25 February 2022.
Simon Cooper
Chief Executive Officer
9 December 2021
Why this change is necessary
The failures of Monarch and Thomas
Cook in 2017 and 2019 respectively
highlighted the exposure of consumers
and taxpayers to the considerable cost
of airline failures and highlighted the
need for reform in financial protection for
airlines. The Airline Insolvency Review
that followed Monarch’s failure identified
a number of reforms required and while
this was included in the 2019 Queen’s
Speech, progress was derailed by the
pandemic and Brexit, and it is not clear
when this is likely to be addressed.
During the pandemic, as travel operators
scrambled to preserve cash, consumers
were mistreated by having refunds
refused or significantly delayed, and
many were forced to accept vouchers
or refund credit notes, when they
were entitled to a cash refund in a
timely manner, thus creating consumer
detriment and reduced competition.
Although consumer sentiment has
recently improved, consumer confidence
for international leisure travel remains
fragile and there continues to be some
uncertainty regarding the shape and
timing of the recovery. This recovery is
dependent on the industry regaining
the trust of consumers that they will be
treated fairly.
For most consumers in the UK who are
booking their annual beach package
holiday, this will likely be the biggest
investment they will make in a year,
unless they are moving house or
changing their car. It is therefore critical
that competition in the market is healthy
to ensure they get the best value, choice,
flexibility and consumer protection.
However, a number of market dynamics,
most notably the market power of the
few airlines operating popular leisure
routes from the UK, and how that power
manifests itself to the detriment of
consumers, pose a serious threat to fair
competition and choice for consumers.
ATOL reform
The CAA is consulting on reform of the
ATOL scheme including the assessment
of funding arrangements and the
protection of consumer money. The
consultation process is still ongoing
and we expect to hear initial feedback
from the CAA in December 2021,
with a further consultation process in
2022. Proposals include mandatory
ring-fencing of consumer funds, which
would mean a fundamental change
for the travel industry for those not
already operating trust accounts. On the
Beach is supportive of trust accounts, to
protect the interests of customers and
taxpayers, and if this is the direction the
CAA decides to pursue, On the Beach is
well-placed for the relevant reforms.
What next?
On the Beach will continue to engage
with Government, Parliament and
regulators on the changes it believes
are required to secure a healthy and
competitive market that protects the
interests of consumers.
Regulatory focus thus far has been
focused on package organisers and
not on airlines. Given the failures and
significant delays by airlines to refund
cancelled flights, and given the misuse
of market power. On the Beach will be
championing the need for this to be
reviewed and addressed.
Current trading and outlook
Booking volumes have been and will
continue to be significantly influenced
by the evolution of the COVID-19
pandemic and responses from UK and
European Government policy. As I
write this review, it is too early to say
what impact the Omicron variant will
have on restrictions and demand but
we have well-rehearsed plans in place
to deal with any ensuing disruption.
The Group exits 2021 with strong
liquidity, high brand awareness and is
ready for 2022.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
19
STRATEGIC REPORT Strategic Report
Key performance indicators
Financial KPI’s
OTB revenue
OTB revenue after online marketing costs
£89.3
£90.3
£81.9
£70.2
£62.5
£60.5
£56.2
£48.4
£45.6
£37.5
£30.9
£50.4
£38.9
£32.1
£22.1
£16.7
£18.8
£22.5
£36.2
£16.6
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
OTB online marketing spend % revenue
OTB EBITDA % revenue
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
51%
49%
50%
46%
45%
41%
37%
33%
28%
25%
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
s
n
o
i
l
l
i
M
£45.0
£40.0
£35.0
£30.0
£25.0
£20.0
£15.0
£10.0
£5.0
-
(£5.0)
(£10.0)
33%
32%
31% 32%
41%
36%
42%
43%
50%
40%
21%
30%
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
20%
10%
0%
Online marketing spend (£m)
Online spend as % of adjusted revenue
EBITDA
EBITDA % revenue
OTB EBITDA
£45.0
£40.0
£35.0
£30.0
£25.0
£20.0
£15.0
£10.0
£5.0
-
s
n
o
i
l
l
i
M
(£5.0)
(£10.0)
£38.8
£37.9
£33.2
£25.1
£20.0
£14.1
£12.3
£9.9
£10.6
FY12 FY13 FY14 FY15 FY16 FY17 FY18
FY19 FY20 FY21
(£6.1)
20
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
(28%)
(10%)
(20%)
(30%)
(40%)
Strategic Report
Key performance indicators
Non-financial KPI’s
Directly contracted hotel supply
Net promoter score
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
FY15
FY16
FY17
FY18
FY19
FY20
FY21
Description: Tracking % of total hotel buying via direct
contracting (as opposed to through third party sourced
product).
Performance: We have continued to increase our proportion of
directly contracted product this year by c.5%. Benefits of direct
contracting include increased access to exclusive rates, ring-
fenced capacity and OTA exclusivity. It also supports improved
customer satisfaction scores as complaint ratios on directly
contracted product are significantly lower than third party
sourced products.
Link to strategy
1
2
3
4
5
Voluntary employee turnover
35%
30%
25%
20%
15%
10%
5%
0%
FY18
FY19
FY20
FY21
Description: Voluntary turnover tracks the number of employees
who have left of their own volition and provides a measure of
our ability to retain employees.
Performance: Voluntary turnover increased this year to
20% (FY20: 19%). Some parts of our business have higher
turnover than others, particularly the contact centre. This is not
something unique to the Company, with staff turnover in the
call centre industry being higher than the national average. To
help prevent overall employee turnover, we increased our entry
level salary to £20,000 and we continue to focus on improving
communication with employees, investing in employee
development and diversity and inclusion, and providing market
competitive wages and benefits. (see page 54 for more
information).
Link to strategy
1
59
58
57
56
55
54
53
FY17
FY18
FY19
Description: Index that measures willingness of customers
to recommend Company’s services to others. It gauges a
customer’s overall satisfaction and provides us with insight into
our customers’ views.
Performance: Following the outbreak of COVID-19, we
stopped sending out questionnaires to customers given very
few customers were travelling due to the closure of airspace.
This affected FY20 and FY21 and as a result, we do not have
an accurate NPS for FY20 and FY21. As restrictions relax and
consumer confidence starts to return, we will recommence
sending out the questionnaires in FY22 and NPS for FY22
will be included in next year’s report. We are committed to
improving customer satisfaction and continue to find new ways
to give our customers the very best On the Beach experience.
NPS will be a metric used for the Executive bonus scheme in
FY22.
Link to strategy:
1
2
3
4
5
6
Brand traffic share %
90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
-
+5%
47.4
61%
+6%
48.4
61%
+10%
56.0
+3%
67%
+0%
39.7
54%
35.4
54%
33.5
35.2
30.1
31.2
28.1
72%
40.5
15.8
+7%
77%
17.8
5.3
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
FY15
FY16
FY17
FY18
FY19
FY20
FY21
Non-Brand Sessions
Brand Sessions
Brand Share
Description: Data shows the percentage share of sessions that
have come from Brand and Non-Brand channels.
Performance: As expected, website visits have been lower this
year. Despite this, we have continued to increase our share of
Brand & Free traffic, thanks to previous investment into brand
activity and above the line advertising.
Link to strategy
1
2
4
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
21
STRATEGIC REPORT Key performance indicators
Non-financial KPI’s
Employee engagement
Prompted brand awareness
6
6.2
6.4
6.6
6.8
7
7.2
7.4
FY20
FY19
FY18
FY17
45.0
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
39.8
41.8
27.6
23.9
31.9
FY17
FY18
FY19
FY20
FY21
Description: Overall employee engagement score from the
employee engagement survey (administered by a third party).
Description: Data based on a survey that asks participants to
select all travel brands they have heard of from a list.
Performance: FY21 has continued to be a year of disruption
and change. As of writing this report, we are in the process of
adapting to hybrid ways of working.
Following our decision to close our Park Square office, there
will be further adjustment for many of our colleagues as they
will be working from a new office for the first time. As such, the
decision has been made to carry out the annual engagement
survey a little later this year in December 2021. By this point,
colleagues will have had 1-2 months of getting used to the new
office and trialling the new ways of working and we feel that
carrying out the survey at that point will give a more realistic
and meaningful insight into how employees feel about the
hybrid working arrangements and engagement generally.
Whilst we are deferring the annual survey, we have
conducted various pulse surveys throughout the year and
we are committed to engaging with our workforce (for more
Information see page 54). We will report on the results of the
survey undertaken in December 2021 in next year’s report.
Employee engagement score will be a metric used for the
Executive bonus scheme in FY22.
Link to strategy
1
2
3
4
5
6
Performance: This year we saw a 5% increase against 2020.
It’s testament to the work carried out by the business and
Marketing function that we have continued to improve our
awareness score this year and have in fact increased our score
by 31% since 2019.
Link to strategy
1
2
3
4
5
6
Prompted brand consideration
8.1
7.5
6.8
5.7
6.1
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
FY17
FY18
FY19
FY20
FY21
Description: Data based on a survey that asks participants
to select all travel brands they would consider for their next
holiday from a list.
Performance: This year we saw an 8% decrease against
2020. This is due to the fact that FY20 included 6 months of
non-pandemic trading. Notwithstanding that decrease, we
have managed to maintain a high consideration score since
the pandemic began and have improved on our 2019 score by
10%.
Prompted brand consideration will be a metric used for the
Executive bonus scheme in FY22.
Link to strategy
1
2
3
4
5
6
22
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
“ Steve Bratt Head of Colleague Technology and Facilities
Our technology is at the foundation of
everything that we do, this enables us to
react quickly to challenges such as the
pandemic. We continue to enable colleagues
to work securely and collaboratively from
any location so that they can focus to
serving and supporting our customers.”
Favourite Beach: Unawatuna – Sri Lanka
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
23
STRATEGIC REPORT Strategic Report
Financial review
Since the onset of the
pandemic, we have focused on
strengthening our balance sheet and
thanks to the continued support from
the Group’s shareholders and bank,
the Group enters the new financial
year well-funded to successfully and
sustainably grow market share.
Shaun Morton
Chief Financial Officer
Group overview
Group revenue
Revenue as Agent(1)
Revenue as Principal(2)
Group gross profit
Gross profit as Agent
Gross profit as Principal
Group (loss)/profit before tax(3)
Basic (loss)/earnings per share(4)
2021
2020
Adjusted
GAAP
Adjusted
GAAP
£30.5m
£21.2m
£71.2m
£33.7m
£24.0m
£14.7m
£54.3m
£16.8m
£6.5m
£6.5m
£16.9m
£16.9m
£23.3m
£14.4m
£53.4m
£16.0m
£22.7m
£13.8m
£50.8m
£13.5m
£0.6m
£0.6m
£2.6m
£2.6m
(£18.4m)
(£36.7m)
£0.6m
(£46.3m)
(9.7p)
(19.0p)
(0.5p)
(27.6p)
(1) As an agent, revenue is accounted on a “booked” rather than “travelled” basis (unlike tour operators and airlines) and the Group is reporting bookings taken between 1
October 2020 and 30 September 2021. Adjusted revenue is revenue before exceptional items of £9.3m (2020: £37.5m).
(2) As a principal, revenue is accounted on a "travelled" basis and reported on a gross basis and the Group is reporting bookings which departed between 1 October 2020
and 30 September 2021.
(3) Group adjusted profit / loss before tax is profit / loss before tax, amortisation of acquired intangibles of £5.5m (2020: £5.5m), share based payments cost of £2.8m
(2020: credit of £0.6m) and exceptional items of £10.0m (2020: £42.0m). A full explanation of the adjustments is included in the glossary.
(4) Adjusted earnings per share is Group adjusted profit after tax divided by the average number of shares in issue during the period. Earnings per share is Group profit
after tax divided by the average number of shares in issue during the period.
24
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
COVID-19 pandemic impact
Certain items, including the ongoing exceptional impact of the COVID-19 pandemic, have been excluded from performance
measures in this statement as the Board considers this necessary to provide a fair, 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 glossary. Whilst the underlying result has still been significantly impacted by the COVID-19 pandemic, the Board believe that
adjusting for the items shown in the table below provides a clearer reflection of the Group’s performance in the period. The Group
organised package holidays for customers which have since been cancelled, or are likely to be cancelled, due to continued airspace
closures and government restrictions on leisure travel.
The Group has not estimated the financial impact of, or made an adjustment for, the significant reduction in booking volumes as
a result of the COVID-19 pandemic. A summary of the adjustments between Adjusted and GAAP measures, split between the
COVID-19 impact and other costs, is shown below.
2021
2020
Adjusted
£m
COVID-19
£m
Other
£m
GAAP
£m
Adjusted
£m
COVID-19
£m
Other
£m
(9.3)
(9.3)
-
0.4
(1.1)
-
-
-
-
-
21.2
14.7
6.5
(6.8)
(8.3)
(51.1)
(2.8)
(2.8)
(5.5)
(5.5)
(1.1)
-
(1.1)
71.2
54.3
16.9
(17.8)
(52.8)
-
-
-
GAAP
£m
33.7
16.8
16.9
(17.7)
-
-
-
-
(5.2)
(62.3)
0.6
0.6
(5.5)
(5.5)
(37.5)
(37.5)
-
0.1
(4.3)
-
-
(4.3)
(0.3)
(4.6)
(18.4)
(10.0)
(8.3)
(36.7)
0.6
(41.7)
(5.2)
(46.3)
Group revenue(1)
Revenue as Agent
Revenue as Principal
Cost of sales(2)
30.5
24.0
6.5
(7.2)
Group overheads
(41.7)
Share Based
Payments
Acquired Intangibles
Amortisation
Other exceptional
operating costs(3)
Group (loss)/profit
before tax
-
-
-
A full explanation of all adjusted performance measures is included in the Glossary.
Overview of the year
ą
Revenue of £21.2m was down 37% vs FY20 due to:
ą
ą
ą
Booking volumes remained low throughout the complete UK lockdown 4 Jan 2021 to 17 May 2021.
Dampened consumer confidence through the calendar year due to complex and inconsistent rules coupled with
prohibitively expensive testing costs.
The decision made by the Group to suspend new bookings for holidays departing before 1 September 2021.
ą
ą
The Group continues to adjust for COVID-19 related cancellations, expected cancellations and amendments. After making an
adjustment to add back the impact of cancellations, adjusted revenue was £30.5m (FY20: £71.2m).
Total exceptional items in the period of £10.0m (FY20: £42.0m) represents the estimated impact of COVID-19. This is primarily
the result of COVID-19 related cancellations, expected cancellations and associated administrative expenses.
Continued and evolving response to the pandemic
As the country started to emerge from the pandemic, the Group took a customer-led approach. This has included:
ą
ą
ą
ą
Taking the bold decision to remove July and August departures from sale while rules and restrictions remained changeable and
complex.
Free COVID tests on selected holiday bookings made from September 2021 in an industry first initiative.
Introducing a ‘New Normal’ booking pledge to give consumers the confidence to book. This included free pre-trip cancellation
cover on all package holidays, waiving our amendment fees where destinations are impacted by COVID-19, and a guarantee
that we will always refund in cash rather than vouchers or credit notes.
This has enabled the Group to sustain high levels of brand awareness through times of weak consumer demand and to continue
to build consumer trust both in travel and the brand.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
25
STRATEGIC REPORT
Strategic Report
Financial Review
Cash and liquidity
ą
Given the extended disruption to international travel from the UK throughout 2021 and the ongoing trading environment across
the sector, in July 2021, Group raised £24.9m, net of fees (the ‘Placing’), to:
ą
ą
ą
provide the Group with greater resilience, flexibility and firepower through the current downturn by restoring the Group’s
cash position to a similar position to where it was following the placing in May 2020;
ensure that, ahead of an expected recovery of the international travel market in calendar year 2022, the Group will have
sufficient funding available to increase marketing spend; and to support the necessary short-term investment in working
capital to capitalise upon that demand; and
ensure that, even in more pessimistic scenarios where international travel continues to be significantly impacted due to the
pandemic, the Group is able to protect its strong market position and position itself to gain market share when there is an
eventual recovery.
ą
ą
ą
ą
The headroom from the Placing allows the Group to simultaneously increase investment in its digital platforms; continue to drive
brand through investment in online and offline marketing activity and improve conversion with attractive low deposit schemes.
A disciplined approach to investment will be maintained, in line with the Group's track record.
In addition, the Group extended the £25m CLBILS facility to May 2023 and reset covenants for the period up to September
2022.
The Group has access to a £75m Revolving Credit Facility (‘RCF’) which has not been drawn since 22 May 2020.
Cash at 30 September 2021 was £56m excluding customer monies held in a ring-fenced trust account of £39m. The Group
continues to refund customers in advance of receiving refunds from airlines for cancelled flights and it does not issue refund
credit notes.
Details of the current facility limits and maturity dates are as follows:
Facilities
Original RCF
New CLBILS facility
Total facility
£m
£50m
£25m
£75m
Issued
Expiry
Drawn at 30 September 2021
Apr 2020
Dec 2023
May 2020
May 2023
£nil
£nil
£nil
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), CCH (Classic Collection Holidays) and CPH (Classic Package Holidays).
OTB performance
Revenue
Online Marketing costs
Offline Marketing costs
Revenue after marketing costs
Overheads
Depreciation and amortisation
Exceptional operating costs
Share based payments
Amortisation of acquired intangibles
Operating (loss)/profit
EBITDA
See glossary for reconciliation to nearest GAAP measure.
26
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
2021
Adjusted
£m
2021
GAAP
£m
2020
Adjusted
£m
22.1
(5.5)
(6.1)
10.5
13.0
(5.5)
(6.1)
1.4
50.4
(14.2)
(8.7)
27.5
2020
GAAP
£m
15.9
(14.2)
(8.7)
(7.0)
(16.6)
(16.6)
(16.9)
(16.9)
(5.9)
-
-
-
(12.0)
(6.1)
(5.9)
(0.7)
(2.8)
(4.4)
(29.0)
(18.7)
(5.5)
-
-
-
5.1
10.6
(5.5)
(4.5)
0.6
(4.4)
(37.7)
(27.8)
Revenue decreased by 18% to £13.0m (FY20: £15.9m). The reduction in revenue is due to a lack of opportunity and demand for
travel during the year.
The summer holiday booking peak, which traditionally occurs in January, did not take place this year due to tightening restrictions
over the Christmas period followed by a complete and indefinite lockdown announced on 4 January 2021. In addition, the Group’s
decision in May 2021 to withdraw from sale holidays departing prior to 1 September 2021 impacted booking volumes, but also
reduced the opportunity for significant business disruption, holiday cancellations and customer dissatisfaction through summer.
As a result, adjusted revenue, which is grossed up for revenue on bookings taken during the period but subsequently cancelled,
decreased by (56%) to £22.1m (FY20: £50.4m).
Offline marketing spend of £6.1m, relates to three distinct campaigns through the year:
ą
ą
ą
The ‘Everything’s Better on the Beach’, and ‘We’re Ready When You Are’ brand campaign, which went live on Christmas Day;
‘Summer off Sale’, where we put consumers before cash. This was possible due to the Group’s unique business model, which is
not reliant on generating customer cash as working capital;
‘Free COVID tests’ in an industry first to start to build back consumer confidence in an industry that had been dented by a
significant period of complexity, costly testing and disruption.
As a result of these campaigns, even during a period of exceptionally low demand, brand awareness in September 2021 was
ahead of September 2019.
Online marketing spend, which flexes with holiday search demand, was 42% (FY20: 89%) of revenue. This reduction is due to a
lower proportion of bookings made being subsequently cancelled. Adjusting for these cancellations online marketing cost efficiency
was similar to the previous year at 25% (FY20: 28%).
Overheads as a % of revenue
2021
Adjusted
75%
2021
GAAP
127%
2020
Adjusted
34%
2020
GAAP
106%
The severe market conditions and resulting cancellations have resulted in increased operating leverage in the year. Overheads as a
percentage of adjusted revenue have increased to 75% (FY20: 34%).
Fixed costs have also increased due to ongoing investments in people and technology as well as continued regulatory cost
pressures such as insurance and other costs related to being a UK Plc.
As a result of the market dynamics explained above operating losses have decreased to £29.0m (FY20: £37.7m).
Classic Collection Holidays segment performance
Revenue
Gross profit
Gross Profit after marketing costs
Overheads
Depreciation and amortisation
Amortisation of acquired intangibles
Exceptional operating costs
Operating loss
EBITDA
2021
Adjusted
£m
2021
GAAP
£m
2020
Adjusted
£m
2020
GAAP
£m
6.5
0.6
0.2
(3.3)
(0.2)
-
-
(3.3)
(3.1)
6.5
0.6
0.2
(3.3)
(0.2)
(1.1)
(0.4)
(4.8)
(3.5)
16.9
16.9
2.6
1.6
(3.5)
(0.1)
-
-
(2.0)
(1.9)
2.6
1.6
(3.5)
(0.1)
(1.1)
(0.1)
(3.2)
(2.0)
See glossary for reconciliation to nearest GAAP measure.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
27
STRATEGIC REPORT
Strategic Report
Financial review
As a principal (rather than an agent) Classic accounts for revenue on a "travelled" basis and reports revenue on a gross basis. As
very few customers were able to travel during the year, results have been impacted significantly.
Revenue decreased by 62% to £6.5m (FY20: £16.9m) and operating losses increased to £4.8m (FY20: £3.2m). However the
forward order book is healthy.
The management team continues to develop the overall proposition and has launched new boutique, tailor-made and long haul
programmes during the year.
Throughout the pandemic, Classic has been recognised for delivering excellent customer service and has this year launched the
‘acclaimed’ programme which is designed to foster even stronger relationships with travel agents.
Classic Package Holidays segment performance
Revenue
Cost of sales
Gross profit
Gross Profit after marketing costs
Overheads
Depreciation and amortisation
Operating (loss)
EBITDA
See glossary for reconciliation to nearest GAAP measure
2021
Adjusted
£m
2021
GAAP
£m
2020
Adjusted
£m
2020
GAAP
£m
1.8
(1.3)
0.5
0.1
(1.8)
(0.2)
(1.9)
(1.7)
1.7
(0.9)
0.8
0.4
(1.8)
(0.2)
(1.6)
(1.4)
3.6
(3.5)
0.1
(0.1)
(1.4)
(0.2)
(1.7)
(1.5)
0.8
(3.3)
(2.5)
(2.8)
(1.4)
(0.2)
(4.4)
(4.2)
CPH provides an online B2B platform that enables high street travel agents to sell dynamically packaged holidays to their
customers. Revenue for the period was £1.7m (FY20: £0.8m), and the operating loss was £1.6m (FY20: £4.4m). The CPH trading
result has been significantly impacted by COVID-19 due to a drop in demand and temporary closure of high street shops for much
of the year.
The brand was created in 2019, and despite the pandemic, has continued to make significant strategic progress. CPH product is
now available in 2,500 high street travel agents and c3,500 hotels are now available across both short and long haul destinations.
At the year end, forward orders were more than double what they were as at 30 September 2019 and represented holidays with a
total sales value of £9.5m.
Share based payments
The Group has an LTIP scheme in place which vests based on performance criteria. In accordance with IFRS 2, the Group has
recognised a non-cash charge of £2.8m (FY20: credit £0.6m). The FY20 credit related to the reversal of benefits accrued for the
2018 incentive scheme which, as a result of COVID-19, did not vest in full.
On 22 December 2020 the Remuneration Committee approved the introduction of an underpin/minimum award for the nil cost
awards originally granted on 9 July 2019. This removal of a non-market based condition has resulted in a catch up charge to the
FY21 income statement of £2.0m that reflects the scheme progress to date. These awards vested on 30 September 2021.
Taxation
The Group tax credit of £6.5m represents an effective rate of 18% (FY20: 19%) which is lower than the standard UK rate of 19%
(FY20: 19%).
During the period, a Corporation Tax rebate of £4.2m was received and no payments on account have been made due to the loss
making position of the Group.
28
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Cash flow
Loss before tax
2021
£’m
2020
£’m
(36.7)
(46.3)
Depreciation and amortisation
11.9
Net finance costs / (income)
Share based payments
Net loss / (gain) on disposal of
property, plant and equipment
Movement in working capital
Corporation tax
0.9
2.8
0.1
18.0
4.2
11.4
0.4
(0.6)
-
(39.7)
(0.2)
Cash generated / (used in) from
operating activities
1.2
(75.0)
Other Cash Flows
Capitalised development expenditure
(4.6)
Capital expenditure net of proceeds
Net finance (costs) / income
Payment of lease liabilities
(0.5)
(0.9)
(0.6)
(4.0)
(1.0)
(0.4)
(0.4)
Cash flows excl share proceeds and
dividends paid
(5.4)
(80.8)
Proceeds from issue of share capital
24.9
Dividends paid
Total net cash flows
Opening cash balance
Closing cash at bank
Closing trust balance
-
19.5
36.5
56.0
39.0
65.1
(2.6)
(18.3)
54.8
36.5
25.8
The cash flow profile of the Group is seasonal with
approximately 50% of customers travelling in the period
June to August and therefore in a normal year the cash flows
(excluding any cash held in the trust account) experience a
trough prior to June and a peak following this.
Net cash outflows excluding share proceeds and dividends
were £5.4m which is £75.4m lower than last year (outflow of
£80.8m). This is due to reduced losses and a partial unwind
of the working capital position at 30 September 2020 and
in particular amounts due from airlines which have been
substantially recovered in the period.
Not included in the Group’s cash position is £39m (FY20:
£25.8m) of customer prepayments held in a trust account to
be released once the customer has travelled.
As a result of the share placings in FY20 and FY21, and the
extension of banking facilities to December 2023, the Group
has sufficient cash reserves to continue to invest ahead of
an expected recovery of the international travel market in
calendar year 2022.
Dividend
As announced on 15 June 2021, no interim dividend was
declared during FY21. In view of the performance in light
of the pandemic and the planned investment in technology,
people, brand and customer proposition in FY22, the Board is
not recommending a final dividend in respect of FY21.
Shaun Morton
Chief Financial Officer
9 December 2021
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
29
STRATEGIC REPORT Strategic Report
Risk management
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.
Our risk management process
The Board has overall responsibility for risk oversight and
maintaining a robust risk management and internal control
system. The Board determines the extent of risk the Company
is willing to take in order to achieve its strategic objectives
and which risks pose the greatest threats and opportunities,
having regard to the internal and external environments
in which we operate. The Board is supported by the Audit
Committee, which has responsibility for reviewing the
effectiveness of risk management and the internal control
processes.
The Group continuously identifies and reviews business
risks. This includes the monitoring of key risks, identification
of emerging risks, determination of treatment in taking into
account risk appetite, and evaluation and reporting on how
those risks may affect the achievement of business objectives.
The Company’s approach to risk is one of continuous progress
and improvement and during the year, work commenced
on developing a new risk management framework that will
enhance our current approach to enterprise risk management.
The new framework will ensure compliance with the new
Listing Rule requirement for premium listed companies to
report in line with the recommendations of the Task Force
on Climate-related Financial Disclosures (TCFD), which will
apply to the Company from FY22. The Audit Committee
is overseeing the project and the new framework will be
embedded into the business during FY22.
Risk identification and assessment
On a day-to-day basis, each business area is responsible for
identifying, analysing, evaluating, managing and monitoring
the risks and emerging risks in their respective areas. Risks
are identified at an early stage and mitigated and/or escalated
as appropriate. The Executive Team meet on a weekly basis
and should there be any significant new risks or change
in status to existing significant risks, then this is discussed
and action taken as appropriate. As well as this on-going
monitoring and managing of risk, the Executive Team formally
review risk on a regular basis, usually bi-annually. This review
includes a detailed assessment of new and existing identified
risks, emerging risks, the likelihood of each risk occurring and
the potential impact, together with controls and mitigating
procedures in place. This information is combined to form
the Group risk register. The risk register and report is then
reviewed with the Audit Committee and presented to the
Board on an annual basis.
The Board assess the output of this work, confirming whether
all principal risks have been captured and addressed as well
as considering any areas and behaviours which could bring
about new risks, and different combinations of risk with other
potentially larger impacts. Through these processes, we
identify our main business, strategic, financial, and operational
and compliance risks and create action plans and controls to
mitigate them to the extent appropriate to our risk appetite.
The Audit Committee monitors the effectiveness of the risk
management system through regular updates from the
Executive Team and reviews the timeliness and effectiveness
of corrective action taken by management. The Audit
Committee also considers the findings and recommendations
of the external auditor throughout the year in relation to
the implementation and effectiveness of risk management
processes and internal controls (please see the Audit
Committee Report on page 81 for more details).
Principal risks and uncertainties
The Directors have carried out a robust assessment of
the principal risks and uncertainties facing the Company,
including any emerging risks, and those which could threaten
its business model, growth, future performance, solvency or
liquidity. The principal risks and uncertainties identified are
detailed below. This is not exhaustive, and additional risks
and uncertainties may prove to have a material effect on the
Group.
In terms of movement of existing risks, flight supply is the
main risk that has increased this year. As an online travel
agent (‘OTA’), it is critical that we can book flights for our
customers. There has been an escalation since the start of
the pandemic in Ryanair's aggression towards OTAs and as a
result, the Group has commenced legal action against Ryanair
in the UK to prevent Ryanair from blocking bookings and
degrading the customer experience.
In last year’s report, we detailed how COVID-19 had
impacted virtually every principal risk. Whilst the vaccination
programme is now well advanced and travel restrictions have
started to ease, the pandemic continues to have a significant
impact on many of the Group's principal risks, for example we
expect consumer demand to continue to be impacted in the
short term and for further package organiser liability to arise
in respect of refunds for cancelled holidays as a result of the
disruption. As such, we continue to report on how COVID-19
impacts the various principal risks rather than as a standalone
risk. We have taken the same approach with regards to risks
arising out of Brexit and climate/ESG risks.
Emerging risks
As noted above, we also look at emerging risks as part of
our risk management review process. We class emerging
risks as newly developing or changing risks where the extent
and implications are not fully understood but they may have
a material impact on the Group. Emerging risks and horizon
scanning are integrated as part of our regular risk discussions
and we will continue to embed this further as we roll out
our new risk management framework in FY22. Emerging
risks considered during FY21 included climate and other
ESG considerations and we considered how those matters
impacted our principal risks. We recognise the importance of
providing visibility on how we are identifying and managing
ESG risks, including compliance with legislative and reporting
requirements and this will be an area of focus in FY22 as we
implement both the new risk management programme and
ESG strategy.
30
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Link with Strategy
For each risk highlighted, we have specified the strategic pillars (as outlined in Strategy section of this report) that these risks
impact.
These are:
1 Invest in talent and technology.
1
2 Become a brilliant digital brand.
2
3 Optimise our direct and differentiated supply.
3
4 Grow our share of B2B beach.
4
5 Diversify into adjacent beach holiday markets.
5
6 Champion customer-centric change.
6
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 reduce
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’).
COVID-19 has caused consumer behaviour to shift with many people choosing not to book a holiday or delaying booking. It
has had a huge impact on the economy and has led to reduced job security. Health concerns and anxiety in relation to the virus
could lead to a continued reduction in consumer demand for holidays which could be exacerbated if there are new variants and /
or further travel restrictions.
Emerging risks / change in the year
Whilst COVID-19 has continued to impact the travel industry, the roll-out of the vaccine programme and the easing of travel
restrictions has boosted customer confidence and inclination to travel.
Ryanair has sought to degrade the customer experience for customers of OTAs, including blocking online check-in or
introducing onerous additional requirements. This could reduce customer demand for the Group’s holidays.
Environmental and sustainability concerns are increasingly becoming a factor in consumer choices and demand could be
impacted by consumers choosing to travel less frequently. Also extreme weather events and physical impacts of climate change
such as flooding and forest fires could impact the desirability of certain holiday destinations.
Key mitigations
The Group’s flexible payment arrangements enable customers to spread the cost of their holiday. The Group’s ATOL bonding
and other financial protections, together with its consumer trust account arrangements (where customer monies, other than
those paid to airlines, are held safely in a trust until they travel) and its consumer champion focus, provide compelling reasons
for customers to have confidence 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. The Group anticipates that COVID-19 will present opportunities for
the Group to increase its market share and help strengthen consumer confidence in the Group.
As part of developing our ESG strategy, we will be looking at ways in which we can support customers to make choices that are
better for the environment and helping them reduce their carbon footprint as well as looking at what commitments the Group
can make in terms of reducing its own carbon footprint.
On the Beach has commenced legal action against Ryanair to prevent it from blocking the Group’s bookings and from degrading
its customers’ experience.
Strategic pillars impacted
Direction of travel
1
2
3
4
5
6
No change
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
31
STRATEGIC REPORT
Strategic Report
Risk management
Flight supply
Impact
As is the case with all online travel agents, 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 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 OTAs against which Ryanair has brought litigation in Ireland in connection with Ryanair’s efforts
to prevent OTAs from booking and selling its flights. The legal process, although it began in 2010, is ongoing but remains at an
early stage. The case lay dormant for over 3 years with no material developments in that period, and as a result the Group is
seeking to strike out the claim on the basis of inordinate and inexcusable delay. 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
Ryanair’s aggression towards OTAs like On the Beach has escalated since the start of the pandemic, for example Ryanair has
sought to block bookings and degrade the customer experience for customers of OTAs.
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 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.
We have expert external legal advisers for any potential disputes with airlines which seek to prevent the Group booking seats
for its customers.
On the Beach has commenced legal action against Ryanair in the UK to prevent it from, amongst other things, blocking the
Group’s bookings and degrading the experience for its customers.
Strategic pillars impacted
Direction of travel
1
2
3
4
5
6
Up
32
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
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
Most major airlines have sought additional liquidity to strengthen their balance sheet.
Climate considerations particularly impact the aviation industry and if airlines do not take sufficient action to address those risks,
this could increase the chance of their failure.
Key mitigations
The Group has detailed and well-rehearsed plans in place to deal with a major airline failure, having dealt with a number of
airline failures, including Monarch and Thomas Cook failures.
The Group has a working capital facility in place to ensure it has sufficient funds to refund/replace customer bookings. The
Group pays for most flights using credit/debit cards which include chargeback rights, which enable the Group to recover the
cost.
In these challenging market conditions, we have made preparations in the event bedbanks and other partners fail. We are
closely monitoring the financial health of suppliers and taking steps to mitigate risk, such as only agreeing prepayment deals
with well-established hotels.
The challenging market conditions will inevitably mean some travel organisers and suppliers will collapse but such failures could
create opportunities for the Group to gain market share.
Strategic pillars impacted
Direction of travel
1
3
4
6
No change
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
33
STRATEGIC REPORT
Strategic Report
Risk management
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.
COVID-19 has seen the rise of refund credit notes in lieu of cash refunds (see page 60 for more information on this issue). This
could increase the competition risk for the Group as it creates captive consumers for those organisers issuing the credit notes,
thereby potentially reducing the demand for the Group's offering.
In order to provide the most competitive range of holiday options, and in view of the dominance by certain airlines on certain
flight routes, the Group must have the ability to book the widest range of airlines available. If flight supply risk increases, so
would competition risk.
Emerging risks / change in the year
Our customers care about climate and ESG issues and if our competitors are perceived to be doing more to meet consumer
needs in this area, we could be less attractive to consumers.
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.
By implementing and embedding our new ESG strategy we will have a more compelling sustainability proposition which will
help differentiate our brand.
Flight supply issues apply to all OTAs and travel agents, not just On the Beach. The Group has engaged with Government and
regulators to bring to their attention the risks to consumers in terms of consumer choice and market competition because of the
unhealthy market dynamics.
Strategic pillars impacted
Direction of travel
1
2
3
4
5
6
Up
34
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Package organiser liability
Impact
Holiday bookings made after 1 July 2018 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, On the Beach 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 seek to argue that
these were packages in any event.
Emerging risks / change in the year
In the current climate, less people are going on holiday which reduces personal injury claims. We do however anticipate claims
in respect of refunds for cancelled holidays as a result of the disruption (although less than last year) and as travel picks up, we
may see an increase in COVID-19 related claims e.g. customers claiming they caught COVID-19 whilst on holiday.
Conditions in the insurance markets continue to be extremely difficult due to COVID-19 pressures, and travel is one of the most
affected industries. In line with general market trends, we have seen an increase in insurance costs.
Key mitigations
For bookings made prior to 1 July 2018, On the Beach 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. We have taken additional health and safety steps in light of COVID-19
and liaised with external health and safety advisers in this respect.
Strategic pillars impacted
Direction of travel
1
2
3
4
5
6
No change
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
35
STRATEGIC REPORT
Strategic Report
Risk management
Recoverability of airline refunds
Impact
The pandemic brought about a new risk in relation to the recoverability of refunds. There were two elements in relation to this:
(i) the airline either not refunding flight costs in a timely manner; or (ii) not refunding the flight costs at all because the flight still
went ahead, despite restrictions on customers’ ability to travel.
Where a customer’s holiday is cancelled, the customer is entitled to a full cash refund within 14 days under the Package Travel
Regulations (‘PTRs’). Airlines have an obligation under Regulation (EC) No 261/2004 to refund the cost of cancelled flights
within 7 days, but during the pandemic many airlines were taking months to refund and / or putting additional obstacles in the
way of claiming these monies. As such the Group had to refund many customers in advance of getting the monies from the
airlines.
Emerging risks / change in the year
Since last year, most airlines have got quicker at refunding, albeit we are still awaiting refunds for some cancelled flights.
Key mitigations
We pay airlines on virtual card which means we have chargeback rights to recover the sums if these are not paid voluntarily, and
we have already reclaimed a significant amount of money back from airlines via this route. We have also taken an assignment of
rights from customers so that we can pursue sums from airlines where we have refunded the customer in advance of receiving
the cash ourselves.
The Group has commenced legal action against Ryanair in the UK for outstanding refunds equal to £2.3m as well as seeking a
declaration/order for future refunds. Litigation is inherently uncertain and there is no guarantee the Group will succeed.
Strategic pillars impacted
Direction of travel
1
2
3
6
Down
36
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
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
There continues to be a regulatory focus on the travel industry and its handling of the pandemic.
Regulation on climate related reporting is developing at pace and the Group will need to ensure it takes appropriate action to
ensure compliance with legal and regulatory obligations in this area.
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.
As we develop our ESG proposition, we will ensure we strengthen our sustainability governance and embed sustainability
considerations into business plans, financial plans, and business cases.
Strategic pillars impacted
Direction of travel
1
2
3
4
5
6
No change
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
37
STRATEGIC REPORT
Strategic Report
Risk management
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 (including the conduct of airlines), 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
Last year we reported how COVID-19 had impacted our reputation and during FY21, we have been focused on taking steps to
repair that damage and reinvigorate the brand (see Key Mitigations below).
Our customers are becoming increasingly concerned about ESG matters, in particular climate risks and how a brand is
contributing positively to society. If consumers feel that the Group is not taking enough action in this area, it could negatively
affect the perception of our brand. Investors may divest from companies who are not taking enough action on sustainability
issues.
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.
In relation to COVID-19, to help rebuild consumer trust, we have taken a customer-led approach including always refunding in
cash, never using vouchers or credit notes, offering free COVID tests as an industry first and introducing a ‘new normal’ booking
pledge to give consumers the confidence to book.
By implementing and embedding our new ESG strategy we will have a more compelling sustainability proposition which will
help differentiate our brand.
Strategic pillars impacted
Direction of travel
1
2
3
4
5
6
No change
38
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
IT systems and data security
Impact
The Group is exposed to security threats and the associated risk of breach whereby a third party could illegally gain access
to our customers’ or employees’ personal data, resulting in damage to brand, material fines and litigation. This would impact
traffic, revenue and profit as legislation (e.g. UK GDPR) significantly increased the fines that could be levied in the event of a
data breach and the Group could receive civil claims.
The Group’s growth strategy is to build Europe’s leading 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.
Emerging risks / change in the year
As M&A remains part of our future strategy, the need for a scalable, robust platform is even more critical.
Key mitigations
Security policies, processes and technology are well defined and robust with regular testing/audits undertaken with all findings
actioned as priority. A new dedicated secure and PCI-DSS complaint card holder environment has been implemented to
protect customer payments and to maintain best practices; this is backed by 24/7 Managed Security Service provided by our
Information Security partner.
Investment in cyber security has significantly increased during the year and a new three year cyber security strategy is in the
process of being implemented.
The scalability and performance of our platform is a priority for our ‘Tech & Product’ teams and we continue to invest heavily in
talent and technology in this area.
Strategic pillars impacted
Direction of travel
1
2
3
4
5
6
No change
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
39
STRATEGIC REPORT
Strategic Report
Risk management
Business interruption
Impact
The risk that a pandemic, terrorism-related event or other business interruption causes significant business interruption to the
Group and/or its suppliers’ 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
Extreme weather events and physical impacts of climate change such as flooding and forest fires could increase the risk of a
significant business interruption.
Key mitigations
The Group’s business continuity & disaster recovery plan was successfully implemented to support the business in its response
to COVID-19. Both this plan and the supporting backup and failover facilities are regularly reviewed to ensure their continued
validity.
As part of our response to the TCFD recommendations, we will review the risks of future climate change on our business and
identify adaptation action required.
Strategic pillars impacted
Direction of travel
1
2
3
5
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 HQ is located, is an area where there is a high degree of competition for 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
Competition for talent has increased during the year. Unemployment levels are at historic lows and there are more job vacancies
than pre-pandemic. Extended periods of disruption and restrictions due to COVID-19 could result in: (1) an erosion of resilience/
morale; (ii) incentive schemes failing to pay out; and/or (iii) talent seeking to exit the travel industry.
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.
We have continually communicated with our employees throughout the pandemic and taking steps to safeguard their wellbeing
and have adopted flexible working arrangements going forward to retain and attract talent. For more information see page 54.
Strategic pillars impacted
Direction of travel
1
2
3
4
5
6
Up
40
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Strategic Report
Viability Statement
The objective of the viability statement is for the Directors
to report on their assessment of the prospects of the Group
meeting its liabilities over the assessment period, taking into
account the Group’s available financing facilities, business
model, strategy, regulatory environment, principal risks and
uncertainties, recent financial performance, outlook, and
current financial position.
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 prospects
The Board has determined that a period of three years to 30
September 2024 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
10) and its strategy (as outlined on page 14) are central to
assessing its future prospects. As such, key factors likely to
affect the future development, performance and position of
the Group are:
ą
ą
ą
ą
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:
ą
ą
ą
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.
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 30 to 40.
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 was thoroughly tested in FY19
whilst dealing with the Thomas Cook 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.
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.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
41
STRATEGIC REPORT Strategic Report
Viability statement
Scenario 3: Extended closure of airspace / restrictions on travel
due to COVID-19 / severe reduction in consumer demand
caused by macroeconomic factors or changing attitudes to
flying due to environmental concerns.
Link to risk – Customer demand, supplier failure, flight supply,
recoverability of airline refunds
There is a risk that there will be a prolonged period of
restriction on overseas travel due to COVID-19. This would
inhibit the Group’s ability to generate revenue and cash in this
regard, as described below.
There is also a risk that as we emerge from the COVID-19
pandemic there is a prolonged impact to consumer demand.
This could be caused by a number of factors including:
affordability, ongoing COVID-19 related anxiety, and changing
attitudes to flying due to environmental concerns.
The Group has considered the impact to cash and revenues of
operating in an environment where bookings are 30% lower
than historic levels for the next three years. Whilst profitability
would be impacted, the Group would continue to generate
both profits and cash throughout this period.
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,
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.
In addition, the Directors have modelled a zero revenue
environment throughout the viability period. The Group
consider this to be an implausible scenario given the level
of bookings taken in recent months, industry predictions,
discussions with airlines and the success of the vaccine
roll out. In this remote scenario, the cash reserves would
sustain the Group’s fixed operating costs to September 2023.
Mitigating actions, such as significantly reducing headcount
costs, would, however, be taken to enable the Group to
continue for the duration of the viability period without using
the £25m CLBILS loan (which expires in May 2023) or the
£50m Revolving Credit Facility (which has a renewal date
of December 2023). The Directors do, however, have an
expectation that these facilities will be renewed.
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 2024.
Going Concern
The Group covers its daily working capital requirements by
means of cash and a £50m Revolving Credit Facility (‘RCF’)
expiring December 2023. In addition, the Group has a CLBILS
facility of £25m.
As at 30 September 2021, cash (cash, excluding cash held
in trust which is ringfenced and not factored into the going
concern assessment) was £56.0m (30 September 2020: cash
of £36.5m).
Given the extended disruption to international travel from the
UK throughout 2021 and the ongoing trading environment
across the sector, the Group took a number of actions to
improve overall liquidity, including on 7 July 2021 raising
£24.9m net of fees through issuing new shares, to ensure that
it is well placed to operate and to trade once travel restrictions
are eased.
On 25 May 2021, the Group took further action to ensure
that the facility was fit for purpose. This included exercising
a one year extension of the £25m CLBILs element of the
facility, now expiring in May 2023, and resetting covenants
until September 2022 to ensure the facility can be accessed
through this period. This incremental liquidity has provided
the Group with greater resilience and flexibility through the
extended downturn in the market, and will enable the Group
to exit the pandemic period in a strong position.
Where holidays are cancelled as a result of the COVID-19
pandemic the Group is committed to refunding customers
in cash rather than vouchers. These cash refunds are fully
funded from the trust account (where refunds are for hotel and
transfer payments) or are a pass-through from airlines.
Cash received from customers for bookings that have not
yet travelled is held in a ring fenced trust account and is not
withdrawn until the customer returns from their holiday. Cash
held in trust at 30 September 2021 was £39.0m. The trust
account is described in note 16 of the financial statements.
The Directors have assessed a going concern period through
to March 2023 and have modelled a number of scenarios
considering factors such as airline and hotelier resilience,
employee absence and customer behaviour / demand. The
Directors have also considered the impact of climate risk in
these scenarios concluding that it is not expected to have a
significant impact over the going concern period.
Further detail of the Group’s assessment of the impact
of climate risk is provided within the ‘Principal risks and
Uncertainties’ section of this report. The Directors modelled
what they consider to be a remote downside scenario of
no travel or bookings until March 2023. In this scenario the
Directors have assumed that variable marketing spend,
which is within their control, is significantly reduced. Even
in this scenario, the Group would have positive cash and no
requirement to draw down on its current facilities both during
the going concern review period, and in the subsequent period
prior to expiry of facilities.
Given the assumptions above, the mitigating actions available
and within the Group’s control and that in no scenario is there
any requirement to access the RCF or CLBILs facility, the
Directors remain confident in their response to the pandemic
and will continue to operate in an agile way adapting to any
applicable government guidance. Therefore, it is considered
appropriate to continue to adopt the going concern basis in
preparing these financial statements.
42
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
“ Andrea Head of PR & Strategic Campaigns
We’ve taken an industry-
leading stance throughout the
pandemic when it comes to
championing consumers - from
taking holidays off sale when
travel uncertainty and disruption
was rife, to campaigning against
Refund Credit Notes and helping
keep holidays accessible for all
by being the first travel company
to provide free Covid-19 tests.
We’re proud to be putting
customers first.”
Favourite Beach: Lopes Mendes, Brazil
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
43
STRATEGIC REPORT Strategic Report
Section 172 statement and stakeholder engagement
Section 172(1) statement
The Directors believe they have acted at all times to promote the success of the Company for the benefit of its members as a
whole. In doing so, the Board has considered the interests of a range of stakeholders impacted by the business, as well as having
regard for the matters set out in s.172(1) of the Companies Act 2006, namely:
ą
ą
ą
ą
ą
ą
the likely consequences of any decisions in the long term;
the interests of the Company’s employees;
the need to foster the Company’s business relationships with suppliers, customers and others;
the impact of the Company’s operations on the community and the environment;
the desirability of the Company maintaining a reputation for high standards of business conduct; and
the need to act fairly as between members of the Company.
More information about our key stakeholders, how we engage with them and how Directors have regard for stakeholder matters
when making decisions is set out in the tables below.
Examples of how the Directors have had regard to s.172(1) in carrying out their duties in making key decisions during the year
are set out on pages 51 and 52. Further details on how the Directors’ duties are discharged and the oversight of these duties are
included in the Governance section on pages 67 to 78.
Other broader factors considered by the Board, including the impact of the Company’s operations on the community and
environment, desirability to carry out business responsibly and ethically and acting in the interests of employees are covered in the
Responsibility and sustainability section on pages 53 to 64.
Stakeholders
We seek to achieve our strategic objectives by taking into account the needs of our stakeholders and the impact our business may
have on them. The Board is aware that its decisions may impact on one or more groups of stakeholders and that their needs may
differ in some circumstances. Effective engagement ensures that stakeholder interests are considered in Board discussions and
decisions.
44
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
CUSTOMERS
Why they to matter us
Customers are at the heart of our business and we are
always striving to exceed their expectations. It’s vital that
we engage with our customers in order to know what they
are feeling so that we can improve their experience and
satisfaction. Customer satisfaction is critical to the long term
satisfaction of the Group in driving bookings growth.
What matters to them
ą
ą
ą
ą
ą
ą
ą
Value for money.
A choice of a diverse range of travel products.
Payment options including low deposits.
Customer journey experience by making it easier
for customers to find and buy their preferred
holiday.
Customer service and support.
Financial protection and the protection and
reassurance of booking a package holiday.
Refund policy in light of COVID-19.
How we engage
ą We regularly conduct surveys, focus groups,
usability and in depth interviews with current and
potential customers.
Investment in our social media presence to provide
both proactive and reactive communications to
customers.
Feedback from third party travel agents.
Provision of clear and transparent information
on our website (e.g. FAQ and travel information
pages) and in our direct written and spoken
communications with customers.
Our dedicated customer service team and 24/7
in-resort line.
ą
ą
ą
ą
Outcomes / highlights for 2021
ą
ą
ą
Having measured consumer sentiment, we took
the decision to stop taking new holiday bookings
for Summer 2021.
Our research informed us that a third of people
cited the cost and inconvenience of PCR tests as
one of the main reasons for not booking a holiday
so we made the decision to offer free COVID-19
tests on certain package bookings.
Introduced a ‘new normal’ booking pledge to
give consumers the confidence to book www.
onthebeach.co.uk/our-new-normal-booking-pledge
ą We have always refunded in cash, never in
vouchers or credit notes.
ą We are proud to have the second highest Trust
Pilot score amongst our competitors, reflecting
our commitment to customer experience and
satisfaction.
How the Board engages and considers the interests of our
stakeholders.
ą
ą
ą
ą
Reviews strategy and monitors performance
during the year with the aim of meeting customers’
needs more effectively.
The Board receives regular updates on matters
relating to customers, including the results of
customer surveys, and information and trends
relating to customer satisfaction and feedback.
This feeds into strategic decisions, such as the
£1.4m fund dedicated to helping rebuild consumer
confidence in the travel industry, funding free
COVID tests.
The Board monitors and reviews developments
concerning changes to our IT platforms which
allow us to continually improve service delivery to
our customers.
Executive bonus linked to Net Promoter Score.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
45
STRATEGIC REPORT Strategic Report
Section 172 statement and stakeholder engagement
SHAREHOLDERS
Why they to matter us
Our shareholders are investors in and owners of our
business, providing the capital we need to invest in and grow
the business.
What matters to them
ą
ą
ą
ą
ą
ą
ą
Long-term growth delivered through successful
implementation of strategy.
Operational and financial performance.
Risk management.
Talent & succession planning.
Liquidity and dividend policy.
ESG matters.
Our response to COVID-19.
How we engage
ą
ą
ą
ą
Roadshows.
Annual Report, websites and statements.
Ongoing dialogue and individual engagement with
shareholders.
AGM.
Outcomes / highlights for 2021
ą
ą
ą
Meetings with major shareholders in relation to the
equity raise.
Consulted with over 50% of our shareholder basis
in relation to the new remuneration policy to be put
to shareholders at the 2022 AGM.
Votes from shareholders representing 86% of
share capital at 2021 AGM.
How the Board engages and considers the interests of our
stakeholders
ą
Directors meet and speak with investors on
a regular basis, principally through investor
roadshows and the AGM.
Regular updates by the Chief Executive.
Meetings and calls with large investors in relation
to specific issues arising.
Engagement on remuneration matters via the
Remuneration Committee Chair.
The Non-Executive Directors are available to meet
with shareholders at the AGM and will engage with
investors on topic-specific matters, as required.
Investor feedback is collated after each roadshow
and shared with Board.
ą
ą
ą
ą
ą
46
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
OUR PEOPLE
Why they to matter us
Our people are integral to achieving our strategic objectives.
We know that when colleagues are engaged they are
happier, more motivated and invested in helping us achieve
our goals and in turn grow the business. We continue to
value and regularly seek feedback from colleagues, helping
us to understand how we can increase engagement across
all areas of the business.
What matters to them
Successful and rewarding careers.
Development and progression.
Remuneration and benefits programme.
Recognition.
ą
ą
ą
ą
ą Ways of working and culture.
ą
Diversity and inclusion.
ą
Knowing concerns are being listened to.
ą Working for a company that gives back.
How we engage
ą
‘Beach Life’ – our weekly company-wide virtual
call, where colleagues are able to ask the Executive
Team questions, hear key updates and celebrate
each other’s successes.
ą Weekly communication emails to help showcase
our culture and keep colleagues updated.
Hive survey – our annual engagement survey.
We also conduct pulse surveys and polls to check
how colleagues are feeling as well as helping us
measure progress against our engagement scores.
Employees are encouraged to take part in various
steering groups such as the Diversity and Inclusion
Action Group where employees can actively
participate to make a difference.
Colleague conversations – performance and
feedback sessions.
Colleague recognition and rewards.
ą
ą
ą
ą
Outcomes / highlights for FY21
ą
ą
ą We enhanced the Company sick-pay policy and
introduced an additional days’ leave for birthdays.
Increased minimum base salary to £20,000 p.a.
ą
ą We ran an all employee survey on future ways of
working to ask colleagues how they would like to
work going forward which has helped to shape our
hybrid model of working.
New reward and benefits strategy implemented
during the year giving more colleagues access to
discretionary share schemes.
Employee wellbeing has continued to be a
real focus and we have launched a number of
competitions and initiatives to support the mental
and physical health of our employees, including
launching a Mental Health Ambassadors scheme
(see page 56).
Launched our software engineering apprenticeship
programme created exclusively for Group
employees, whatever their education background,
career history or coding experience.
By listening to our people we have been able
to make improvements in areas which have
been acknowledged in our Hive surveys such as
investing in learning and development (see page
55)
ą
ą
How the Board engages and considers the interests of our
stakeholders
ą
ą
ą
The People function regularly reports to the Board
and the Board reviews and approves the People
strategy.
The Executive Directors attend the weekly
company-wide communication forums and the
more informal Fika sessions. They report back to
the Board on employee sentiment and employee
issues and concerns arising out of these sessions
and the various Hive surveys which feed into
strategy and decision-marking.
David Kelly is the designated Non-Executive
Director for employee engagement. This
facilitates on-going engagement at a Board
level and ensures employee views and concerns
are taken into account in the Board-decision
making process. Such engagement is also
relevant for the Remuneration Committee when
considering remuneration arrangements for senior
management and the Group generally.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
47
STRATEGIC REPORT Strategic Report
Section 172 statement and stakeholder engagement
SUPPLIERS AND PARTNERS
Why they to matter us
Building strong working relationships with our suppliers and
partners is vital to the operational success of our business.
Effective engagement is critical for ensuring that we can
offer a diverse and quality range of travel products and for
obtaining value for money. We rely on our suppliers to help
meet our customers’ needs and to ensure the reliability
of our services. Regular engagement with suppliers also
helps mitigate risk (including ESG risks), ensuring we are
partnering with ethical suppliers who take appropriate
health and safety measures and provide high standards of
customer care.
What matters to them
ą
ą
ą
ą
ą
Fair payment terms, particularly in light of the
COVID-19 pandemic.
A partner that can deliver tour operator scale
volumes.
Collaboration.
Being treated fairly.
Business continuity.
How we engage
ą
ą
ą
ą
Through supplier relationship management -
regular review meetings and ongoing feedback
to maintain openness and to improve value from
supplier relationships.
COVID-19 has enabled us to increase regulator
contact with key suppliers as the uptake in video
conferencing has been embraced by suppliers.
Through responsible contracting, trust and ethics.
We conduct regular audits (either on-site and / or
via self-assessment) primarily focused on health &
safety and issues such as modern slavery. We also
have policies on Bribery and Corruption.
Through industry conferences and events.
ą
ą
ą
48
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Outcomes / highlights for FY21
ą
ą
ą
ą
COVID-19 has continued to cause disruption and
place financial pressures on many of our suppliers.
We have supported our suppliers by ensuring
prompt payment, before and during the COVID-19
pandemic.
Building relationships with suppliers has meant
that we have delivered almost 90% of total hotel
buying through direct contracting in FY21.
On the Beach maintained its hotel contracting
resource in resort throughout the pandemic whilst
many of our competitors furloughed or cut theirs.
Our continued support and dialogue with hoteliers
has enabled us to continue to expand our direct
contracting mix and help cement our position in the
market for hoteliers.
Classic Collection Holidays and Classic Package
Holidays sell offline via agents and a key driver
this year has been supporting and engaging with
our agents. There have been various engagement
activities such as Live Kids Club from Tenerife
during half term to inspire our agent partners
and their families, interactive hotel visits and
agent panels with the senior management team.
Feedback on service to our agents during the
pandemic has been excellent with over 315
positive endorsements and testimonials.
How the Board engages and considers the interests of our
stakeholders
ą
Chief Supply Officer regularly reports to the Board
and the Board discusses supplier issues and takes
them into consideration when making decisions
and setting strategy, including opportunities post
COVID-19.
The Chief Supply Officer and Company Secretary
are both members of the Group's Health & Safety
Committee and they regular report to the Board
on health and safety issues. The Board oversees
implementation of the Group's Safety Management
System.
As part of its risk management procedures,
the Board assesses all business continuity risk
including the loss of key suppliers (see page 33).
The Board is committed to high standards of
ethical business conduct and takes a zero-
tolerance approach to bribery and corruption. It
also reviews the Company’s Modern Slavery Act
Statement annually.
Strategic Report
Section 172 statement and stakeholder engagement
COMMUNITIES AND SOCIETY
Why they to matter us
We want to look after the communities we operate in – it’s
where our employees and their families live. We have a
responsibility to ensure that we are contributing to society
and we’re committed to doing the business the right way.
What matters to them
ą
ą
ą
ą
Ethical businesses managed responsibly.
Building partnerships that support and create
positive impact and outcomes for society.
Environmental impact.
Source of future employment and opportunities.
How we engage
ą
ą
ą
Creating partnerships with local charities.
Regular dialogue, events and direct engagement
activities.
Community investment and employee nominated
charities.
ą We are engaging with various stakeholders as part
of our new ESG strategy (see page 53) to help us
prioritise those areas that more important to our
stakeholders.
Outcomes / highlights for 2021
ą
ą
ą
ą
Creating a giant ‘beach’ area and sandpit in
Manchester city centre - complete with children’s
playhouse, picnic areas and giant deckchair - we
provided a free, must-visit space for families to
enjoy throughout the summer months.
Held an event to celebrate Pride and inspire
children with stories and play centred around the
themes of diversity and inclusivity. The free event
featured a range of activities along with story times
exploring and celebrating acceptance, love and
identity.
The pandemic and social distancing measures
have meant we have not been able to host our
usual events for students to inspire the next
generation of professionals to get involved in tech
and digital however these session will resume as
restrictions relax.
Charity events such as the On the Beach Steps
challenge where a donation was made to the
winning team’s charity of choice.
How the Board engages and considers the interests of our
stakeholders
ą
ESG factors are an increasingly important area
of focus. Whilst the Board supports investments,
both time and money, in communities local to our
operations and endorses a culture of volunteering
and giving back, it acknowledges that a more
structured approach to ESG is required.
The ESG Steering Group, headed up by the CEO
Simon Cooper, will be responsible for developing
our new ESG strategy (see page 53), with
oversight from the Board.
ą
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
49
STRATEGIC REPORT Strategic Report
Section 172 statement and stakeholder engagement
Outcomes / highlights for 2021
ą Active participation in policy development, particularly
in relation to the COVID-19 pandemic where we have
been in discussion with regulatory bodies and the
Government in relation to a number of issues arising out
of the pandemic, including:
ą
engaging with the CAA on the proposed ATOL
reform;
engaging with BEIS in relation to the Government’s
review of the Package Travel Regulations;
engaging with the Department of Transport on the
Passenger COVID-19 Charter; and
engagement with the CAA and CMA on wider
travel industry reform.
ą
ą
ą
How the Board engages and considers the interests of our
stakeholders
ą
The Company Secretary is a member of ATIPAC
which is a forum in which travel trade and
consumer representatives combine to give
informed practical advice to regulatory authorities.
The Company Secretary regularly attends ATIPAC
meetings which enables the business to listen to
the views of regulators and also engage with the
wider travel community and report back to the
Board.
The Company Secretary reports to the board on
regulatory and compliance issues that may impact
the Group. The Board discusses the relevant
issues and takes them into consideration when
making decisions and setting strategy.
REGULATORS
Why they to matter us
The Civil Aviation Authority (CAA) oversees the Air Travel
Organisers' Licensing (ATOL) scheme which protects
customers in the event of a travel company failure. We
comply with the ATOL regulations and engage with the CAA
to maintain a constructive and trusted relationship.
There are other aspects of our business that have
oversight by regulators, for example the Financial Conduct
Authority in relation to travel insurance offered on our site,
the ICO (Information Commissioner’s Office) regulates
compliance with data protection laws and there are also
various consumer rights regulated by bodies such as the
Competition and Markets Authority and the Advertising
Standards Authority.
Engaging with regulators and the Government also enables
us to ensure that policy makers and regulators understand
our business and we seek to ensure that they see the impact
of their decisions on our business and where possible
to influence them to make decisions that would benefit
the market, On the Beach's customers and our other
stakeholders.
What matters to them
ą
ą
ą
Our regulators expect us to meet relevant legal
requirements and to treat our customers and
employees and other stakeholders in a fair way.
Responding in a timely and constructive manner.
Open dialogue and collaborative approach.
ą
How we engage
ą We engage with some regulators, such as
the CAA on a more regular basis. We engage
through reporting, audits and direct consultation.
Engagement has increased in frequency during the
COVID-19 pandemic.
ą We also engage with the CAA and the wider travel
community at industry meetings such as the Air
Travel Insolvency Protection Advisory Committee
(ATIPAC).
ą We have an open dialogue and engage with other
regulators such as the ICO, CMA and FCA to
ensure that we can address their priorities and any
concerns they (or we) have.
Through engagement, we are able to ensure we
continue to meet the high standards expected
by regulators and that regulators understand the
competitive landscape and the impact on On the
Beach and its customers.
ą
50
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Board decision making in practice
Below are examples of some of the significant decisions taken by the Board during the year and how the Directors took
stakeholder interests into account when discharging their duties under s.172(1) Companies Act 2006.
Equity raise
Key stakeholders affected:
s.172 factors
Shareholders
Long-term impact, acting fairly between investors
In July 2021, the Board approved the decision to raise £24.9m via a 5% equity raise in order to provide greater resilience,
flexibility and firepower through the downturn and to ensure the Group would be best placed to take advantage of
opportunities arising.
The Company engaged with major shareholders who were supportive of the proposed placing. We worked with advisors to
ensure the marketing process and the allocation policy adopted by the brokers were designed in such a way as to respect pre-
emption as far as possible. The equity raise restored the Group’s cash position to a similar position to where it was following
the placing in May 2020 and has secured the liquidity required for the Company to execute its long term strategic plans,
including investment in talent, technology and marketing and reacting to acquisition opportunities which will ultimately result
in value creation for our shareholders and will benefit our wider stakeholders.
Summer off sale campaign
Key stakeholders affected:
s.172 factors
Customers, suppliers, shareholders
Long-term impact, reputation, relationships with customers &
suppliers, business conduct
In May 2021, the Board approved the decision to stop selling holidays for June, July and August 2021. In making this decision,
the Board considered the following stakeholders:
›
›
›
Customers: Customers were at the heart of this decision. The Board reflected on consumer research in respect of low
appetites for travel as well as the likely loss of customer goodwill for holidays that might be booked only to be cancelled
or re-arranged.
Suppliers: The Board considered how this decision would not be met favourably by some suppliers, particularly after
such low passenger volumes during the pandemic. The Group is committed to maintaining strong working relationships
with suppliers and we have always ensured prompt payment both prior to and throughout the pandemic. We engaged
with our suppliers about the decision to take holidays off sale and no supplier relationships were negatively affected as
a result.
Shareholders: The Board considered how stakeholders would view the decision. The Board determined that focusing
on reputation and growing market share in the long term outweighed any potential upside from incremental bookings
over this period. Such upside would likely have been marginal in any case and would have been offset by disruption and
goodwill for holidays that would need to be cancelled or re-arranged.
The reaction from consumers and media was overwhelmingly positive and in turn had a positive impact on our brand.
51
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Strategic Report
Section 172 statement and stakeholder engagement
Closing the Park Square office
Key stakeholders affected:
s.172 factors
Employees
Long-term impact, workforce
Earlier this year, the Board approved the decision to close our Park Square office and bring all North West employees under
one roof at the Group’s headquarters.
Having conducted an all-employee survey about future ways of working, it became apparent that the vast majority of our
employees did not want to return to the office on a full time basis, with 89% of colleagues indicating they would prefer to
work from the office between 0 and 2 days per week. The Group’s headquarters had sufficient space to accommodate our
colleagues on a flexible working basis and it was agreed that working under one roof again would strengthen collaboration.
Therefore the decision was taken to exercise the break on the Park Square lease, saving c.£1.35m in costs. We have
been engaging with employees about the move with surveys, Q&As sessions at our weekly Beach Life calls, issuing FAQ
documents and through colleague conversations.
52
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Strategic Report
Responsibility & sustainability
Committed to operating our business responsibly for the long-term for the benefit of all
our stakeholders
Our ESG approach
Environmental, Social and Governance (‘ESG’) considerations have become increasingly important to our stakeholders, particularly
investors, customers and employees. We are committed to conducting our business the right way and we want to drive meaningful
change across the industry. To that extent, we need an ESG strategy aligned to our purpose, values and strategy that will help build
resilience in the business, improve behaviours in the supply chain, create long-term value and ultimately drive positive change.
We have not been able to advance our new ESG strategy as quickly as we had hoped during FY21 due to the Board’s and
management’s continuing focus on dealing with the disruption and challenges presented by pandemic. We have however put in
place a formal plan for developing our new strategy as follows:
Constitute a new ESG Steering Group with Board level representation
Conduct a materiality assessment to identify the ESG risks and opportunities that are most
important for the Group and our stakeholders and accordingly inform our ESG priorities
Baseline - Once we have determined our ESG priorities, review existing policies, metrics and
company engagement to assess current baseline
Set objectives and goals - Once we have the baseline statistics for our priority areas we can start
looking at how we can focus efforts moving forward by setting meaningful goals and targets.
Gap analysis - What potential issues are we likely to encounter when trying to achieve our new
goals? Conduct gap analysis between current stance and objectives to identify what areas we need
to focus on.
Develop ESG roadmap - Create a roadmap to aid accountability. Continue to measure performance
and report progress against that roadmap to measure whether the changes we are implementing
are having an effect.
1
2
3
4
5
6
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
53
STRATEGIC REPORT Strategic Report
Responsibility & sustainability
During the year we constituted a new ESG Steering Group
headed up by the CEO, Simon Cooper. Given the importance
of the area, the whole Executive Team are currently members
of the Steering Group. Constituents of the Group will be
reviewed once we are further along in the implementation of
the strategy.
As of writing this report, we are in the process of conducting
the materiality assessment. We have undertaken a desk-
based research exercise to create a list of ESG factors that are
relevant to the Group. In drawing up that list, we considered
various sources such as media reporting, investor feedback,
peer analysis, SASB’s materiality map, the UN’s Sustainable
Development Goals and research on wider environmental and
social trends. We are currently engaging with internal and
external stakeholders to get their views on which of those
topics matter most to them. We will then prioritise the most
material issues based on strategic importance to the business,
importance to stakeholders and the social, economic and
environmental impact of each topic in the value chain and
move to step 3 in the above plan. We look forward to sharing
the roadmap in next year’s report.
Our ESG focus areas during FY21
› Our People
› Our Customers and Communities
› Our Environment
› Our Responsible Business
Our People
Our colleagues are critical to our ambitions and success.
Through the strategic ambitions in our People strategy, we
recognise the importance of continuing to invest in attracting,
developing and retaining the very best talent and creating a
culture where everyone can do their best work.
The On the Beach strategic ambitions are enabled by our
People strategy, which is to:
ą Optimise our organisational design;
ą
Invest in diverse talent;
ą
Build an inclusive, high-performance culture; and
ą Deliver a high-quality and scalable people service.
Impact of COVID-19
As the impact of COVID-19 remains ongoing, we continue to
support our colleagues to ensure they can be as productive
and engaged at home as they would be in the office. The
People Team have been involved in the coordination of the
Coronavirus Job Retention Scheme’s ‘Flexible Furlough’ to
move colleagues who were previously on full-time furlough,
to a flexible option until it ended in September 2021 - at this
point colleagues moved back to their full/part-time roles. The
Flexible Furlough scheme enabled the majority of colleagues
to work 80% of their usual contracted hours, helping the
business to retain talent during the quieter winter months.
By the end of March 2021, just nine colleagues remained on
the scheme. To further support colleagues with the financial
impact of the pandemic, those who experienced symptoms of
the virus continued to receive a sick-pay wage and those who
tested positive for COVID-19 continued to receive full pay.
54
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
As we look to the future, we are investing in diverse talent as
we continue with the recruitment efforts across all areas of the
business.
Future ways of working
While our colleagues have been working successfully from
home for the past 20 months, in order to further strengthen
the collaborative nature of our teams, we are in the process
of implementing a hybrid-model of working as part of our
future ways of working project. This hybrid-model involves
colleagues working from both the office and at home in-line
with the business requirements. This decision was taken
in-line with the decision to close the Park Square office in
Cheadle and will strengthen the collaboration between teams.
In May we launched a survey where we asked colleagues
for their views/feedback on the future ways of working. 88%
of colleagues responded with their opinions on a variety
of questions about how remote working had affected their
work, home-life and wellbeing as well as the on-boarding
experience for new starters.
We discovered that:
ą
ą
ą
ą
89% of our colleagues felt they were more productive or
as productive working from home as they were working
from the office; with a quarter of respondents citing they
felt much more productive. This was mirrored in the
responses from our people manager survey.
When thinking about the future ways of working, 89% of
colleagues indicated they would prefer to work from the
office between 0 and 2 days per week, and for 45% of
colleagues this flexibility was seen as critical.
Colleagues that had been onboarded remotely all
indicated they had been well supported during the
onboarding and the process was well structured.
Colleagues and managers alike were keen to re-establish
face to face contact with peers to support collaboration,
moral and to enjoy the On the Beach culture we have
fostered over the years.
Since the survey was completed, we have been actively
engaging colleagues with the future ways of working
projects and what this means for them, their roles and their
teams. We have been supporting colleagues with wellbeing
communications and initiatives to help them cope with the
change as we recognise this can be challenging for some.
We also sent a separate survey on the future ways of
working to people managers which gave them the chance to
share their views on the challenges and opportunities they
experienced managing their teams remotely.
As we prepare for the return to the office, a project team has
been working hard to update the facilities and undertake a
refurbishment of the spaces in the office by installing state of
the art equipment, expanding collaboration/team zones and
creating further spaces for training activities.
Reward and recognition
Reward and recognition form an integral part of the
employment relationship. We’re committed to ensuring we
value the contribution of all our colleagues in achieving our
business goals.
We continue to ensure that our approach to reward is fair
and competitive, aligning both with industry benchmarks and
local markets. Our banding structure supports our ability to
benchmark salaries internally and understand relatives when
making decisions about Reward.
During the year, the Group reviewed and revised its reward
and benefits strategy with the aim of increasing the Group’s
ability to attract, engage and retain colleagues.
As part of our total reward package we offer a number of non-
financial benefits, 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 Programme offering confidential
specialist advice 24 hours a day, so our employees feel well
supported no matter where they are or what time it is.
During the year we also harmonised our employee terms and
conditions, introduced an enhanced sick pay policy, an extra
day’s leave for birthdays and increased our minimum base
salary to £10.26 per hour (£20,000 per annum), thereby
elevating the skill set of the new talent we attract.
Our Colleague Recognition Scheme enables managers to
recognise and celebrate the achievements of our colleagues
where behaviours and ways of working further embed our
company values. We also champion our colleagues through
the Colleagues of the Month initiative which is open to
everyone to submit a nomination in line with our Company
values. The winners are announced at the end of each month
during our regular company-wide communication forum and
they receive a £50 voucher as a reward.
We also have a number of share schemes in place, including
an HMRC-approved Share Incentive Plan in place to
encourage wide employee share ownership and thereby align
employees’ interests with shareholders. The revised reward
and benefits strategy also gives more colleagues access to
discretionary awards under the Company’s long term incentive
plan.
Learning and development
The results of our previous HIVE survey highlighted that we
could improve our learning and development (‘L&D’) offering.
As such, we have focused our efforts this year on creating
an L&D strategy that is flexible, inspiring, easy to access and
supplements our already excellent in house training.
We have created an L&D model that combines a central,
departmental and individual focus to deliver our 7 initiatives.
This is just the beginning and we will continue to build and
develop our offering as we go:
People Manager Training
Our people managers can
benefit from specific training
to help develop their
management skills.
Diversity & Inclusion
We’re passionate about
Diversity and Inclusion and one
of our objectives is to increase
the profile and awareness of D&I
through workshops with
specialist speakers.
Personal learning
Shape your own learning
and development skills
with the new platform
Learnerbly.
THE 7 LEARNING &
DEVELOPMENT INITIATIVES
AT ON THE BEACH
Departmental-specific
learning
Every department at On the
Beach will benefit from
specific training to support
the professional needs
and requirements
within their teams.
Career Development
Workshops
Identify your strengths, adopt
effective career management
skills, learn how to create a
career vision and plan for
long-term success with our
career management
workshops.
Soft Skills
Dip-in and out of a suite
of engaging materials to
help you with daily tasks
with our soft skills
programme.
Leadership
Development
We’re introducing a new
leadership development
programme to support
our current leaders and
develop our leaders of
the future.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
55
STRATEGIC REPORT As well as providing wellbeing events and initiatives for
colleagues to get involved with, we wanted to offer a new,
peer-to-peer opportunity to help support colleagues. Earlier
this year, we launched a Mental Health Ambassadors scheme
where colleagues could sign-up to become an ambassador
and undertake training with an external provider. There are
14 colleagues across the Group involved with the scheme.
The aim of the Mental Health Ambassadors scheme is to
offer peer-to-peer wellbeing support and to champion mental
health across the workforce. Colleagues who require support
have the opportunity to reach out to one of the Mental Health
Ambassadors and they can provide a safe and confidential
space to listen to any concerns and signpost the person
in need to a range of wellbeing services. This initiative is
underpinned by a Mental Health Pledge which encourages
colleagues to ‘Be Kind to your Mind’ and is based on our
company values:
ą
ą
ą
ą
Minimise the stigma: We will take a bold approach to
mental health as we look for ways to do things differently,
to break down barriers and stigmas surrounding mental
health - both now and in the future;
Include everyone: We believe everyone matters and we
are dedicated to ensure you feel supported by listening to
you and helping to signpost you to the support resources;
Never judge: We’re a friendly bunch with a purposefully
open and down to earth attitude - one free of any
judgement. We’re here to provide you with a safe space
and to listen and support you - whenever you need it.
Drive positive change: We will work together to inspire
positive and dynamic change surrounding mental health
and to create a happier workforce across the Group.
Going forward, the team of Mental Health Ambassadors will
meet often and work on initiatives to encourage colleagues to
think about and improve their wellbeing.
Strategic Report
Responsibility & sustainability
Our D&I training has been on-going throughout the year,
covering a wide range of topics from understanding what D&I
actually is to allyship, from unconscious bias training to mental
health awareness.
We launched career development workshops in October this
year. This program helps colleagues to identify their strengths,
adopt effective career management skills, learn how to create
a career vision and plan for long-term success.
Departments have been allocated budgets to support the
learning and training requirements within their own teams.
This is supported by a structured process and policy to ensure
training requests are consistently and fairly reviewed and the
best learning outcomes are achieved.
We are providing all colleagues the opportunity to shape
their own learning with the introduction of a new workplace
learning platform Learnerbly. This provides all our colleagues
the autonomy and flexibility to learn how and when they want
to learn. Learnerbly provides a host of inspiring and engaging
content and courses and we provide colleagues with their
own personal budget to access the content they need to help
them reach their goals.
Social & wellbeing
This year we have continued to invest in company-wide and
departmental social events to bring colleagues together in
a virtual environment and to build-on our company culture,
including hosting various Fikas with the Executive team and a
virtual comedy night.
In December 2020, we hosted a virtual Christmas Party which
included an overview of the year and an awards ceremony to
celebrate the achievements and efforts of colleagues. Prior
to the social event, we sent each colleague a surprise gift
and a ‘Happy Holidays’ postcard which was hand-signed
by Simon Cooper. We awarded 10 colleagues with special
awards in relation to our company values and a distinguished
award in memory of a colleague. These initiatives gave us an
opportunity to celebrate our achievements as a business and
as individuals which helped to boost morale.
Wellbeing remains a core focus for our initiatives and this
year we have strengthened the offering even further for our
colleagues. As well as running weekly yoga and HiiT classes,
we ran workshops on building resilience with an external
training provider. During the summer we launched an On the
Beach steps challenge titled ‘The Balearic Islands Tour’ which
saw 8 teams consisting of 121 colleagues, virtually walk their
way around the Spanish islands (equivalent to 1,200 miles).
The challenge was well received and helped colleagues to
prioritise their physical health.
56
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Diversity & inclusion
Diversity and Inclusion at On the Beach remains a key part of
our People strategy. We know that when teams are diverse,
they bring a range of voices, perspectives and experiences,
and in turn perform better, are more creative and as a business
we make better decisions. By recognising and encouraging
diversity, we can ensure our people feel valued, more able to
put forward different ways of thinking and create a sense of
belonging for everyone.
Raising the profile and awareness of Diversity & Inclusion
amongst colleagues – this involves continuing to create more
prominence around Diversity & Inclusion, with regular features
as part of our company-wide communication. We created
a Diversity and Inclusion hub on Slack for all colleagues to
access, with shared material that promotes understanding
and engagement, alongside continuing a program to develop
education and awareness of Diversity and Inclusion amongst
our colleagues.
This year, we continued to work with departmental
representatives across the business as we further established
the colleague-led Diversity and Inclusion Action Group. The
D&I Action Group has generated a number of ideas to support
the Diversity and Inclusion agenda, and we continue to seek
feedback and input to ensure we are held accountable for our
commitments as outlined in the pledge (see www.onthebeach.
co.uk/our-diversity-and-inclusion-pledge). The group is
sponsored and chaired by a member of the Executive Team
and is supported by the People team. Through this group, we
have committed to:
Diversity and Inclusion pledge
ą
ą
ą
ą
ą
Take a colleague-led approach in Diversity and
Inclusion
Treat our colleagues equally and fairly
Create psychological safety at the workplace
Create with inclusion in mind for our customers
Monitor and communicate our progress
Ensuring there is a clear governance framework for Diversity &
Inclusion – this includes setting out responsibilities across the
management function for delivery, establishing our Group-
wide diversity data and targets, whilst auditing our current
policies and documentation against the backdrop of Diversity
& Inclusion. As a result of this, we audited the People policies
and made sure we use gender-bias free language in all our
policies and guidance documents.
We capture our Diversity and Inclusion demographics on a
quarterly basis. Over 2021, we have kept the data consistent
and have seen a slight increase in the number of employees
from an ethnic minority background at On the Beach (1%).
We introduced an Inclusivity Index for colleagues and will
begin to benchmark levels of inclusion across the organisation
with the next Hive engagement survey. The Inclusivity
Index covers a range of categories and questions based on
Manager-relations, Diversity and Inclusion Commitment,
Fairness and Respect, Belonging, Harassment and
Discrimination.
This year for the first time, we established colleague-networks
for LGBTQ+ and Parents, Guardians and Carers to engage
with and listen to these colleagues. We received positive
feedback from the colleagues on these groups. As a result of
forming the Parents, Guardians and Carers Network we have
reviewed our parental leave policy to make it more inclusive
and gender neutral and this will come into effect in the Q1
FY22.
As part of the company-wide communications and content
plan, we covered a number of topics in FY21 including:
Pride Month, Neurodiversity, International Women’s Day,
Mental Health, and Black History Month. Based on colleague
feedback, we have decided to continue focusing on raising
awareness of Unconscious Bias, Allyship, and Power and
Privilege – plus other key topics in relation to anti-racism and
gender balance in FY22.
We launched a Diversity and Inclusion ‘Word of the Week’
feature in our weekly newsletter to increase colleague
awareness across certain topics. The words captured as part
of this feature help to generate conversation, break down
barriers and will form a glossary which will continue to help
colleagues in the future while discussing various topics.
Leveraging recruitment activity to improve the diversity of our
workforce – this involves reviewing our recruitment material
to ensure that it is inclusive and encouraging a diverse range
of potential applicants as well as working more closely with
recruitment partners who can provide access to diverse pools
of candidates.
Earlier this year, we adopted Hiring Hub’s Portal solution to
achieve visibility of gender diversity metrics throughout our
third-party recruitment process in Tech and Product. We
are working in partnership with Hiring Hub to roll out new
features to anonymously capture and monitor the diversity
of applicants across gender, age, ethnicity, nationality, sexual
orientation, religion or belief, and disability, offering clients
greater insights through each stage of their selection process.
We are launching a partnership with Manchester Digital to
inspire young people to take STEM-related subjects. The
priority for this work will be aimed at girls and young women,
but we will also ensure some sessions will be mixed to include
pupils from disadvantaged backgrounds and BAME boys too.
We recognise that there is still work to do, but we’re
committed to making a positive difference and putting a
sustained and collective effort behind our Diversity and
Inclusion goals.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
57
STRATEGIC REPORT Strategic Report
Responsibility & sustainability
Our gender diversity
Board
33.3%
6
66.7%
Female
Male
Executive Committee
22.2%
9
77.8%
Female
Male
Direct reports to the Executive Committee
51.4%
35
48.6%
Female
Male
Group
41.8%
500
58.2%
Female
Male
58
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Gender pay gap
In October 2021 we published our gender pay gap report,
which covers three years of data (6 April 2018 to 5 April
2021). While the data shows an increasing gender pay gap,
the most recent year on year data (from 19/20 and 20/21)
indicates a broadly consistent gap, which we believe is a good
foundation on which to build.
The core issues that contribute to our gender pay gap are:
ą
ą
ą
Exec & Leadership – we have a greater number of
men than women in our Executive team and in our
most senior roles.
Tech & Product – more men are attracted to careers
in technology than women and this is reflected in
the gender make-up of our Tech and Product teams
which is skewed to men. This team also comprises
more technical, highly paid roles.
Customer Support – we have more women than
men in our Customer Contact Centre, the roles
themselves are, overall, at a lower rate of pay than in
Technology.
Achieving gender balance and reducing our gender pay
gap is key to achieving our business strategy and goals, as
well as our long-term sustainability as a business. We have
accordingly developed a two-point action plan about how we
will close the gender pay gap which focuses on Outreach &
Recruitment and Retention & Progression. You can read more
about that action plan in the full report which is available at
www.onthebeachgroupplc.com/responsibility.
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.
In addition to the above, we support colleague engagement
via our designated NED, David Kelly. This approach enables
us to:
ą
ą
ą
ensure there are agreed methods in place for on-
going engagement to understand the views and
concerns of colleagues;
ensure that the views and concerns of colleagues
are represented and taken into account in the Board
decision-making process; and
ensure that the Board takes appropriate steps to
evaluate the impact of business proposals and
developments on colleagues, and considers what
steps should be taken to mitigate any adverse
impact.
Hack week
Earlier in the summer, we ran a virtual Hack Week which
gave colleagues the opportunity to put forward their dynamic
ideas and to work together with the Technology department
to make their idea a reality. This year’s Hack Week was the
first of its kind as it was run virtually. Colleagues were able to
submit an idea based on the following themes:
A post-Covid world
Green and Environmental
ą
ą
ą Wild and Wacky
In total, 37 ideas were submitted and 53 colleagues worked
across 14 teams to help make the ideas a reality, 6 awards
were given out and 2 ideas have been developed so far. The
event gave colleagues from across the business the chance to
work together and to build new applications some of which
were rolled out onto the On the Beach website.
Colleague engagement
We know that when colleagues are engaged they are happier,
more motivated and invested in helping us achieve our goals.
We continue to value and regularly seek feedback from
colleagues, helping us to understand how we can increase
engagement across all areas of the business. We run an
annual engagement survey (HIVE) which provides both a
company view as well as a departmental breakdown. These
are interspersed with pulse surveys and post-event surveys,
as well as helping us measure progress against different
engagement scores. These surveys also allow us to measure
and track the degree to which colleagues feel our day-to-day
behaviours are aligned with our company values, a critical
measure in understanding the success of our company culture.
We continue to keep colleagues updated on the latest
business news, events and internal campaigns during Beach
Life - our weekly and all-company call. During these calls,
we are working to include more recognition and focus on
colleagues to help drive engagement by featuring Meet
the Team sections, Q&As with the Executive and Senior
Management Teams and spotlights on D&I and Wellbeing,
to ensure colleagues understand our strategic priorities
and know how they can contribute to help achieve the
wider business goals. We also send regular communication
emails to colleagues which focus on internal campaigns and
engagement initiatives.
We are also investing in our internal communication and
engagement activities and work is underway to launch a new
communications platform which will enable us to bring all
central communications and engagement initiatives into one
space - making it easier for colleagues to find and interact
with information and it will be another way to strengthen our
culture – both virtually and in-person.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
59
STRATEGIC REPORT Strategic Report
Responsibility & sustainability
Our Customers and Communities
Calling for cash refunds for consumers
In June, after a year in which customer holiday refund issues
had been widely reported on, we continued our consumer
champion campaign by calling for an overhaul of refund
practices across the travel industry, commissioning and
publishing a white paper which reported on the issue of
refund credit notes during the COVID-19 pandemic.
The white paper, entitled ‘The Bank of the British
Holidaymaker: Refund Credit Notes, Consumer Rights and an
Industry in Brace Position’, looked specifically at the impact
the issue was having on holidaymakers and their confidence
in the travel industry more widely, finding that an estimated
851,000 consumers were holding refund credit notes totalling
£781.5M, with 43% of consumers having never been offered
a cash refund when their holiday was cancelled, despite this
being a legal requirement and their consumer right.
The white paper was shared with media contacts along with
the CMA, CAA and a number of MPs, and included a set of
recommendations for the industry to better serve consumers
in regards to refunds for cancelled holidays.
The campaign secured four national TV news interviews,
more than 80 pieces of national and regional radio coverage,
and over 100 print and online stories across key publications
including the Mail Online, The Mirror, The Independent, and
Evening Standard, as well as attracting the attention and
support of trusted consumer champion publication Which?.
Putting our customers first
Our focus has been firmly on our customers as we continue to
respond to the challenges of the pandemic.
Championing consumers and taking holidays off sale
In May 2021, we took the consumer-centred and industry-
leading decision to stop selling holidays for June, July and
August 2021. The move followed the introduction of a traffic
light system with a short-term and evolving set of rules
and an incomplete vaccine rollout in the UK and overseas,
which looked set to prolong travel ambiguity and bring
holidaymakers another season of travel uncertainty and
disruption.
For consumers, the ambiguity of the traffic light system
presented a high likelihood of cancellation or rescheduling,
additional cost and disappointment, in turn posing a potential
reputational risk for On the Beach should their holiday be
impacted, and damaging longer term confidence in the travel
industry as a whole.
Having measured consumer sentiment and appetite for travel
– and finding that less than a third (30%) of English people felt
comfortable travelling abroad in view of the traffic light system
– we took the decision to stop taking new holiday bookings
for the summer, announcing this to our customers and also to
consumers more widely through media outreach, press and
TV adverts.
Reaction from consumers and the media was overwhelmingly
positive, with consumers praising the approach as unexpected
realistic and honest. More than 130 pieces of media coverage
were received, including 5 national TV interviews across BBC,
Sky and ITV; a trending story on BBC News, and pieces in key
audience titles including Daily Mail, The Sun, Daily Express
and The Times.
60
60
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Investing in travel confidence with free COVID-19 travel
testing
After a summer hiatus, On the Beach returned to sale in
September with an industry-first consumer announcement,
that it would be providing free COVID-19 tests with
customers’ holiday bookings.
Though the traffic light system was beginning to stabilise,
consumers were continuing to face significant cost
implications and service issues surrounding travel testing.
Having conducted consumer research, we found that a third
of people (32%) cited the cost and inconvenience of PCR tests
as one of the main reasons they had not booked a holiday for
2021, and that holiday booking confidence was still low. A
quarter (25%) of people who were not planning holidays this
year said that free COVID-19 tests would make them more
likely to book for 2021.
We established a £1.4m fund dedicated to helping rebuild
consumer confidence in the travel industry and as part of
this, announced that we would be providing holidaymakers
with free COVID-19 tests for package bookings made in
September to some of our most popular destinations - Spain,
Greece, Cyprus and the Spanish and Greek islands. More
recently we extended the promotion to cover the 2022
summer season.
The offer was shared with customers through CRM, and
communicated more widely through PR and a TV advertising
campaign.
Media coverage for the offer spanned Sky News, Daily Mail,
The Sun, Daily Telegraph, The Times, Daily Star and more,
with broadcast coverage across GBNews, LBC Radio, and
BBC Radio 4.
Communities
Bringing the beach to Manchester
We knew that many people simply wouldn’t make it away
for their annual beach holiday this year. With children set to
miss out on the fun and opportunity for exploration, adventure
and imaginative play that the beach provides, we decided to
make up for the disrupted family time that many in our local
community were facing by bringing the beach to Manchester
for summer 2021. Creating a giant ‘beach’ area and sandpit in
Manchester city centre - complete with children’s playhouse,
picnic areas and giant deckchair - we provided a free, must-
visit space for families to enjoy throughout the summer
months. Each week from early June until September, free
beach-themed forest school sessions were held for under 5s
and their carers, run by a trained forest school play facilitator
and designed to give children the opportunity to play outdoors
with some beach-inspired fun.
In addition, a special event was held to celebrate Pride, and
inspire children with stories and play centred around the
themes of diversity and inclusivity. The free event featured
a range of activities including Pride rainbow shaker and
decoration-making craft sessions, along with story times
exploring and celebrating acceptance, love and identity.
The events have helped to build brand relations and visibility
in the city and given access to creative outdoor play to
hundreds of families.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
61
STRATEGIC REPORT Strategic Report
Responsibility & sustainability
A Part of the Digital Community and inspiring the next
generation
Prior to the pandemic, we regularly hosted events at our
Aeroworks office, which raised our profile in the region's
digital community as well as supporting our recruitment
aims. We also hosted a variety of talks for people in the tech
industry, including UX Crunch, NSManchester, NWRUG,
WebManchester, MancML, Dot Net North and Data Science
Festival. We also hosted a number of events to inspire
students to get involved in STEM-related subjects and
technology based careers.
The pandemic and social distancing measures have meant
that we have not been able to host our usual events for
students and the tech community alike, however we are
actively reigniting our relationships with schools, colleges,
universities and businesses and these session are beginning
to resume as restrictions relax. We have partnered with
“Digital Her” which is focused on providing support,
opportunities and guidance to encourage women into the tech
and digital industry. Through that partnership we will offer
visits to schools and colleges and provide work placement
opportunities.
Our Environment
We take our responsibility regarding the environment seriously
and are committed to reducing our impact wherever possible.
As part of developing our new ESG strategy, we will identify
and focus on those areas where we can really make an
impact when it comes to the environment and set ourselves
meaningful goals and targets. For the first time, we have
started looking at our scope 3 emissions so that we can better
understand our full carbon footprint and we are working with
an external adviser to assist us on our carbon journey and to
help us better assess and quantify climate-related risks and
opportunities.
As an internet-based business based in two UK office
locations, our direct environmental footprint is relatively small.
However we appreciate we very much have a role to play
in protecting our environment and have continued to make
a concerted effort to reduce our carbon footprint through
various initiatives across our business.
Waste usage and recycling - As a Group we strive to minimise
the level of waste we generate. We promote a paperless office
environment and encourage our employees, partners and
suppliers to do everything electronically, including invoicing
and contracting and virtually all bookings with customers are
managed online. We have put in place provisions to support
mandatory recycling across our offices and we re-use office
furniture and equipment or donate it to charity where possible.
At our head office, during FY21, none of our waste was sent
to landfill and 73% of all waste was recycled (FY20 71%).
Energy efficiency - During FY21 there was a continued
focus on conserving energy and other natural resources and
improving the efficacy of those resources, for example we
have installed LED lighting, put in place stop taps for water
consumption and all of our offices have controlled lighting, air
conditioning and power down options for televisions and PCs.
See also page 63 in relation to energy efficiency.
Task Force on Climate-Related Financial Disclosures
We recognise the importance of identifying the financial and
non-financial impacts of climate change on the business. We
have been making preparations for the formal Task Force
on Climate-related Financial Disclosures (‘TCFD’) reporting
requirements, which will apply to us in FY22. As we develop
both our new ESG strategy and risk management frameworks,
we will be looking in more detail at how we identify, assess
and manage climate related risks and opportunities over the
short, medium and long term and in the TCFD section of
next year’s annual report and accounts, we will report on the
governance, strategy, risk management, metrics and targets in
respect of climate-related risks.
62
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Greenhouse Gas Emissions
The Companies Act 2006 (Strategic Report and Directors’ Report) Regulation 2018 requires the Company to disclose annual UK
energy consumption and Greenhouse Gas (GHG) emissions from SECR regulated sources. Energy and GHG emissions have been
independently calculated by Envantage Limited for the 12 month period ending 30 September 2021.
Reported energy and GHG emissions data is compliant with SECR requirements and has been calculated in accordance with the
GHG Protocol and SECR guidelines. Energy and GHG emissions are reported from buildings and transport where operational
control is held – this includes electricity, gaseous fuels such as natural gas, fugitive emissions from HFCs and business travel in
company-owned vehicles and grey fleet. The table below details the global GHG emissions of the Company from the current and
previous reporting periods.
Energy (kWh)
Emissions (tCO2e)
Scope 1
Scope 1
Scope 1
Scope 2
Scope 3
Emission intensity ratio
Electricity
Natural Gas
Company cars
Grey fleet
Total energy
Natural Gas
Company Vehicles
HFCs
Electricity
Grey fleet
Total SECR emissions
FY21
FY20
% change
894,325
1,078,713
(17.1%)
748,663
641,547
16.7%
22,384
34,591
-
-
-
-
1,699,964
1,720,260
(1.2%)
137.1
118
16.2%
5.2
3.6
189.9
8.5
334.3
-
-
-
-
251
(24.3%)
-
-
369
(9.4%)
7.3
0.8
54.8%
(12.5%)
Relative emissions, (tCO2e / £m group revenue before exceptional cancellations
11.3
Relative emissions (tCO2e / employee numbers)
0.7
Table 1 – SECR emissions profile by source
Energy efficiency
We are committed to reducing our environmental impact and contribution to climate change through continuous improvement
procedures.
As part of this commitment, we have specified the most efficient equipment and operation for our Head Office. The office is fitted
throughout with LED lighting with movement sensors, air handling and conditioning units which can be controlled individually by
facilities staff and utilised standby and power down options of IT equipment to reduce energy usage in unoccupied areas.
Decreased office occupancy during COVID-19 has resulted in reduced energy consumption throughout our property portfolio.
COVID-19 has also presented a chance to utilise teleconference technologies to host online meetings more, and as a result, staff
travel and consequent travel related emissions have reduced.
We have also committed to examining the wider impact of our operations on our value chain through the quantification of our
Scope 3 GHG emissions. Through this project, we can understand the most carbon intensive areas of our business, with a desire to
reduce these impacts where possible
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
63
STRATEGIC REPORT 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.
Supply chains
We expect all suppliers to implement a zero-tolerance
approach to slavery, forced labour and human trafficking, and
to comply with all local and national laws and regulations.
All hotels are required to complete self-assessment audits
which cover various topics including compliance with law and
regulations.
Data security
We meet our legal and regulatory duties and responsibilities
for protecting the personal data we have within our care. Our
policies and procedures are built on the world-recognised
principles contained within the EU and UK General Data
Protection Regulation.
Health and safety
We are committed to maintaining and developing a culture of
safety and risk awareness throughout our organisation to the
benefit of our employees, clients, suppliers and customers. We
have a comprehensive health and safety management system
in place, which has been reviewed and approved by the
Board, who has ultimate responsibility for health and safety.
We work with suppliers to ensure that customers’ health and
safety is monitored throughout the supply chain. The Chief
Supply Officer and General Counsel are members of the
Health & Safety Committee which meets on a quarterly basis
and report to the Board on Health and Safety matters.
Focusing more on employee health and safety, we have a
health and safety policy which is supported by mandatory
health and safety online training for employees. We also
provide specialist information and briefings internally as
appropriate, for example we created working from home
guidelines to help employees continue to work safely from
home during the pandemic and have created new guidelines
as employees return to the office.
Strategic Report
Responsibility & sustainability
Methodology
Electricity and natural gas disclosures have been calculated
using metered kWh consumption taken from supplier fiscal
invoices where available. Park Square’s disclosure has
been taken from landlord invoices as they operate from a
leased site. Invoices were not available for the periods June
2021 to September 2021 for Park Square. In this instance,
electricity consumption has been estimated from the average
daily consumption of the invoiced periods of the reporting
year. GHG emissions associated with Scope 2 purchased
electricity have been reported using only the location-based
methodology.
Transport disclosures from company owned vehicles
and personal cars used for business purposes have been
calculated using a combination of fuel transaction reports and
business mileage expense claim records. Fuel volumes and
mileages have been converted into equivalent energy and
GHG emissions using emissions factors published by BEIS in
2020. Vehicle information such as vehicle engine size and fuel
type was not available for all claims. Where this information
was available, the appropriate conversion factors have been
utilised. Where this information was not held against an
individual claim, an average fuel factor and average vehicle
size has been assumed.
Fugitive emissions from HFCs have been calculated using
HFC servicing reports provided by the Company. Fugitive
emissions result from the release of refrigerants used in
refrigeration and air conditioning units. Full-service records
were available for each unit at Aeroworks and reported as
being in good condition with no further work required, it was
assumed there were no leaks detected as part of the service.
For Park Square, where full-service records were not available,
units were conversely taken from an asset register. A HFC
screening methodology has been adopted in these cases. In
this, an annual estimated leak rate, based on the size and type
of unit, to estimate the potential fugitive emissions from these
units over the reporting period
Our Responsible Business
Anti-Bribery and Corruption
We are 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 maintain an Anti-Bribery and
Corruption policy which is supported with mandatory online
training for all employees. 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.
64
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Strategic Report
Non-Financial Information Statement
The table below sets out where the information required to be disclosed under sections 414CA and 414CB Companies Act 2006
can be found in this Annual Report.
Reporting
requirement
Policies and standards
Where to read more in this report to
understand the impact on the business, and
the outcome of applying our policies
Environmental
matters
The Company does not have a specific policy on environmental issues, however, more information
on our business impact on the environment can be found in the Responsibility & sustainability report,
pages 62 to 64, which also contains the statutory carbon emission and energy data on page 63.
Employees
Social matters
Human rights
Equality and diversity policy
ą
ą Whistleblowing policy
ą
HR policies including adoption leave,
parental leave, flexible working
Health & Safety policy
Staff handbook
Health & Safety policy
Staff handbook
Modern Slavery Statement
Anti-Slavery and Human Trafficking
Policy
Data retention and destruction policy
Data handling and data quality policy
Employee data privacy policy
ą
ą
ą
ą
ą
ą
ą
ą
ą
Anti-corruption
and anti-bribery
Anti-Bribery and corruption policy
ą
ą Whistleblowing policy
ą
Staff handbook
Business model
Non-financial
KPIs
Description of
principal risks
ą
ą
ą
ą
ą
ą
ą
ą
ą
ą
ą
ą
Our People, pages 54 to 59
Stakeholder engagement and s.172
statement, pages 44 to 52
Principal risks and uncertainties, pages
30 to 40
Gender pay gap report www.
onthebeachgroupplc.com/
responsibility
Responsibility & sustainability, pages
53 to 64
Stakeholder engagement and s.172
statement, pages 44 to 52
Responsibility & sustainability, pages
53 to 64
Responsibility & sustainability, pages
53 to 64
Audit Committee report, pages 81 to
86
Business model, page 10
Non-financial key performance
indicators, pages 21 to 22
Principal risks and uncertainties, pages
30 to 40
Certain group policies are not published externally
The Company’s strategic report, set out on pages 6 to 65, was approved by the Board on 9 December 2021 and signed on its behalf
by:
Simon Cooper
Chief Executive Officer
9 December 2021
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
65
STRATEGIC REPORT Governance
67 Chairman’s introduction
68 Directors’ biographies
70 Corporate Governance statement
79 Report of the Nomination Committee
81 Report of the Audit Committee
87 Directors’ Remuneration report
113 Other statutory and regulatory disclosures
119 Statutory Auditor’s report to the Members of
On the Beach Group plc
127 Statement of Directors’ responsibilities
66
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Governance
Chairman’s introduction
I am pleased to present our corporate governance report,
which outlines our corporate governance structures and
procedures, as well as summarising the work of the Board
and its Committees to illustrate how we have discharged our
responsibilities during the year.
Strong governance is central to our successful management
of the Group and it provides the framework for the effective
delivery of our strategy, fulfilment of our purpose, the creation
of value for all our stakeholders and the ongoing development
of our sustainable business. As Chairman, I am responsible for
building and leading an effective Board and for ensuring that
we continue to operate to the highest standards of corporate
governance.
Compliance with UK Corporate Governance Code
This year, we are again reporting against the UK Corporate
Governance Code published in July 2018 (the ‘Code’). I am
satisfied with the standards of governance that the Board
continues to maintain and build upon, and the Board believes
that the Company has complied with the Code throughout
the year save for one area of non-compliance for part of the
year relating to the composition of the Audit Committee. This
however was remedied upon Justine Greening’s appointment
as a member of the Audit Committee earlier this year.
Board changes during FY21
In March we welcomed Justine Greening as a Non-Executive
Director. Justine has had both a successful business career
and illustrious political career. Passionate about social
mobility and levelling up Britain, Justine’s expertise is proving
invaluable as we continue to develop the ‘Social’ strand of
our ESG strategy and her experience, both in and out of
Westminster, will be of great benefit in driving the business
forward. Justine’s biography can be found on page 69 and
details of her selection and appointment process can be found
on page 79
Richard Pennycook
Chairman of the Board,
On the Beach Group plc
ESG
ESG considerations continue to be an increasingly important
area of focus for many of our stakeholders and the Board
is committed to strategically integrating and advancing our
sustainability efforts. During the year we have started work on
re-designing an ESG strategy that will bring about meaningful
change and create a stronger and more sustainable business.
You can read more about our ESG journey on page 53.
Conclusion
I believe that the Board remains effective and continues to
work very well. Whilst COVID-19 has of course brought
about much disruption and many challenges, it also presents
opportunities and as we emerge out of this pandemic, I
believe that our governance arrangements provide a strong
foundation from which the Group can continue to deliver
sustainable growth for the benefit of all our stakeholders.
Board effectiveness
The Board undertook a thorough and tailored internal review
of its effectiveness during the year with the Board and its
Committees continuing to function well. Details of the process
undertaken and the findings of the review can be found on
page 78.
Richard Pennycook
Chairman of the Board
On the Beach Group plc
9 December 2021
Stakeholders
FY21 has been another challenging year and a key priority for
the Board has been to ensure that our customers, employees
and other stakeholders were well supported. Our Section 172
Statement on page 44 outlines how the Board has engaged
with stakeholders throughout the year and taken their
interests into account when making decisions on behalf of the
Company.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
67
GOVERNANCE Governance
Directors’ biographies
Richard Pennycook, CBE
NON-EXECUTIVE CHAIRMAN
Simon Cooper
CHIEF EXECUTIVE OFFICER
Shaun Morton
CHIEF FINANCIAL OFFICER
Appointed to Board:
1 April 2019
Independent:
Yes
Listed Company Appointments:
Howden Joinery Group plc
(Non-Executive Chairman)
Committee Memberships:
Nomination (Chair), Remuneration
and Disclosure
Appointed to Board:
17 August 2015
Independent:
No
Listed Company Appointments:
None
Committee Memberships:
Disclosure (Chair)
Appointed to Board:
17 July 2020
Independent:
No
Listed Company Appointments:
None
Committee Memberships:
Disclosure
Experience and contribution
Richard Pennycook joined On the Beach
as Chairman of the Board and 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.
Experience and contribution
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.
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.
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 and the founder of the
business, Simon brings key expertise in
strategy development and execution to the
Company.
Simon is also a Non-Executive Director of
CurrentBody.com Limited.
Experience and contribution
Shaun is the Chief Financial Officer. He
joined On the Beach as Director of Finance
in February 2018 and was instrumental
with dealing with the Group’s response to
the failure of TCG, the acquisition of Classic
Collection and the delivery of the Group’s
share placing and CLBILS facility. Shaun
is experienced in financial planning and
strategy, including adept management of
financial risks and business development,
and he has a deep understanding of the
Group’s business, relationships and the
sectors in which it operates.
Prior to joining On the Beach, Shaun held
senior finance roles at Deloitte, Asda
and ghd hair where he was Director of
Finance for the Group. Shaun is a qualified
Chartered Accountant and trained with
Deloitte LLP.
68
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
David Kelly
SENIOR INDEPENDENT DIRECTOR
Elaine O’Donnell
INDEPENDENT NON-EXECUTIVE DIRECTOR
The Rt. Hon Justine Greening
INDEPENDENT NON-EXECUTIVE DIRECTOR
Appointed to Board:
28 August 2015
Independent:
Yes
Listed Company Appointments:
The Gym Group plc
(Chair of Audit and Risk Committee)
Reach plc
(Chair of the Remuneration Committee)
Committee Memberships:
Remuneration (Chair), Audit
Nomination,
Appointed to Board:
3 July 2018
Independent:
Yes
Listed Company Appointments:
Games Workshop Group plc
(Non-Executive Chair)
Studio Retail Group plc
(Chair of Audit Committee and
Designated Employee Engagement NED*)
Committee Memberships:
Audit (Chair), Nomination,
Remuneration
Appointed to Board:
4 March 2021
Independent:
Yes
Listed Company Appointments:
None
Committee Memberships:
Audit, Nomination, Remuneration
Experience and contribution
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.
Experience and contribution
Through her other appointments Elaine
brings to the Board extensive experience
as a Non-Executive Director and Chair
of not only Audit, Risk, Nomination and
Remuneration committees but also
previously as Chair of the Board of Alliance
Fund Managers (AFM), a wholly owned
subsidiary of MSIF. 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, where she worked with a
diverse range of businesses.
*Elaine O’Donnell stood down as a director of Studio
Retail Group plc with effect from 30 September 2021.
Experience and contribution
Justine was a Member of Parliament for
Putney, Roehampton and Southfields
from 2005 – 2019 and spent eight years
as a Minister, including six in Cabinet.
After leaving Government in 2018,
Justine founded the Social Mobility Pledge
campaign to drive grass roots change
through business and higher education.
Prior to Justine’s political career, she trained
and qualified as a Chartered Accountant
with PriceWaterhouse in the UK and
Switzerland before taking a finance role
at SmithKline Beecham followed by a
strategy role at GlaxoSmithKline.
Justine completed an MBA at the London
Business School in 2000 and joined AA/
Centrica as Head of Sales and Marketing
Finance for three years before becoming
a Member of Parliament in 2005. Justine’s
knowledge and experience is invaluable as
we seek to champion change and develop
our ESG strategy.
17%
Chairman
Executive Directors
50%
33%
Non-Executive Directors
Simon Cooper ą17
David Kelly ą 6
Elaine O’Donnell ą 3
Richard Pennycook ą 2
Shaun Morton
ą 1
Justine Greening
1
Tenure in years
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
69
GOVERNANCE Governance
Corporate Governance Statement
Compliance with the UK Corporate Governance Code
The principles set out in the 2018 UK Corporate Governance Code (‘Code’) emphasise the value of good corporate governance to
the long-term sustainable success of listed companies. These principles, and the supporting provisions cover five broad themes
and the Board is responsible for ensuring that the Company has appropriate frameworks in place to comply with the requirements
of the Code.
The Corporate Governance section of the Annual Report explains how we have applied the main principles of the Code and
complied with its relevant provisions.
A copy of the Code is publically available on the website of the Financial Reporting Council (FRC), www.frc.org.uk.
During FY21, we have complied with all provisions of the Code save that for the first half of the financial year we did not comply
with provision 24 with regards to the Chairman of the Board being a member of the Audit Committee. However this area of non-
compliance was remedied following Justine Greening’s appointment to the Board and Audit Committee in March this year, at which
point Richard Pennycook stood down as a member of the Audit Committee.
Code Section
Contents
Board Leadership and Purpose
Division of Responsibilities
Composition, Succession and Evaluation
Audit, Risk and Internal Control
Remuneration
›
›
›
›
›
›
›
›
›
›
›
›
›
›
›
›
Board of Directors
Governance structure
Board Leadership and Company purpose
Non-Executive Directors
Board and Committee meetings
Governance Structure
Division of Responsibilities
Board Composition
Appointments to the Board
Composition, Succession and Evaluation
Nomination Committee Report
Audit Committee Report
Remuneration at a glance
Annual statement of the Chair of the Remuneration
Committee
Remuneration Policy
Annual Report on Remuneration
Pages
68 to 76
71 to 77
77 to 80
81 to 86
87 to 112
70
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Governance structure
The Board has agreed an effective governance framework whose structure is set out below:
Board
Chaired by Richard Pennycook
The Board is responsible for promoting the long-term sustainable success of the
The Board is responsible for promoting the long-term sustainable success of the
Company through setting a clear purpose and strategy, which creates long-term
Company through setting a clear purpose and strategy, which creates long-term
value for shareholders, whilst having regard to the interests of wider stakeholders.
value for shareholders, whilst having regard to the interests of wider stakeholders.
The Board has overall authority for the management and conduct of the Group’s
The Board has overall authority for the management and conduct of the Group’s
business, strategy and development. The Board is also responsible for ensuring
business, strategy and development. The Board is also responsible for ensuring
the maintenance of a sound system of internal control and risk management
the maintenance of a sound system of internal control and risk management
(including financial, operational and compliance controls and for reviewing the overall
(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,
effectiveness of systems in place) and for the approval of any changes to the capital,
corporate and/or management structure of the Group. The Board has reserved certain
corporate and/or management structure of the Group. The Board has reserved certain
specific matters to itself for decision. The full schedule of matters reserved to the
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.
Board is available in the Corporate Governance section of the Company’s website.
Audit Committee
Remuneration Committee
Nomination Committee
Chaired by Elaine O’Donnell
Chaired by David Kelly
Chaired by Richard Pennycook
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.
The Audit Committee Report can
be read on pages 81 to 86.
Responsible for all elements of
the remuneration of the Executive
Directors and the Chair and other
members of senior management.
The Remuneration Committee
Report can be read on pages 87
to 112.
Reviews structure, size and
composition of the Board
and makes appropriate
recommendations to the Board.
The Nomination Committee
Report can be read on pages 79
to 80.
CEO and Executive Team
The Board delegates the day-to-day responsibility for running the Group to the CEO,
who is responsible for all commercial, operational, risk and financial elements. He is also
responsible for management and development of the strategic direction for consideration
and approval by the Board. The Executive Team assists the CEO to implement the
strategy as approved by the Board. The Board has close contact with the 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.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
71
GOVERNANCE
Governance
Corporate Governance statement
The Board has also established a Disclosure Committee who is 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.
Terms of reference
Each Committee has terms of reference which are available in the Governance section on the Company’s website (www.
onthebeachgroup.co.uk).
Board activity in FY21
Details of the main areas of focus of the Board and its Committees during the year are summarised below:
Topic
Key activity
Strategic matters
COVID-19
Business performance
Risk management and inter-
nal controls
Governance and Legal
People, culture and Board
effectiveness
›
›
›
›
›
›
›
›
Regularly reviewed performance against the Group’s strategy
Received presentations from management in relation to business strategy and
performance
In-depth reviews of M&A pipeline and specific M&A opportunities.
Approved decision to close Park Square office and have all Manchester based employees
work out of the Aeroworks digital headquarters
Regular meetings to assess the impact of the COVID-19 pandemic on consumer
behaviour and the Company’s people, performance and future plans.
Considering and approving the Company’s response to the pandemic across all areas of
the business, including decisions to take holidays off sale until 1 September and offer free
Covid tests.
Approved issue of 7.87m shares in July 2021 (representing c.5% of existing issued share
capital) raising £26m
Approved extension of £25m CLBILS facility to June 2023 and amendment of RCF
covenants for period up to September 2022
Received regular updates from Chief Executive Officer and Chief Financial Officer
Reviewed the Group’s debt, capital and funding arrangements
Approved the annual budget and business plan
Approved the full year results, half year results and the annual report
›
›
›
›
› Monitored the Group’s financial performance and financial results
›
Received updates on technology related developments
›
›
›
›
›
›
›
›
›
›
›
Reviewed principal risks and uncertainties and emerging risks such as climate related
risks
Approved decision to implement a new risk management framework
Reviewed and confirmed the Group’s viability statement and going concern status
Reviewed effectiveness of the Group’s systems of internal controls and risk management
Reviewed output of cyber security risk assessment and monitored progress made with
regards to improvement’s made to the Company’s IT systems and infrastructure.
Received and reviewed regular reports in relation to material legal matters
Received and reviewed updates on regulatory and governance developments
Reviewed and updated the terms of reference of the Board Committees.
Approved the Board’s skills matrix.
Discussed specific issues raised by shareholders and other stakeholders
Approved the Company’s insurance programme.
Discussed the results of employee wide engagement surveys
›
Received regular updates from the People Team
›
Approved a new reward and benefits strategy for the workforce
›
›
Received regular updates from the Group’s Diversity and Inclusion Steering Group
› On the recommendation of the Nomination Committee, approved the appointment of
›
›
›
Justine Greening as a new Non-Executive Director.
Received updates from David Kelly, the designated Non-Executive Director for workforce
engagement.
Considered succession planning for the Board and Executive team
Undertook an evaluation of the Board’s effectiveness, the effectiveness of each
committee and individual directors.
72
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Board Leadership and Company purpose
Role of the Board
The Board has overall responsibility for establishing the
Company’s purpose, values and strategy to deliver the long-
term sustainable success of the Company, generate value for
shareholders and to contribute to our wider society. The Board
recognises that it is accountable to stakeholders for ensuring
that the Group is appropriately managed and achieves its
objectives in a way that is supported by the right culture and
behaviours.
Our governance structure is set out on page 71 and provides
clear lines of accountability and responsibility. The Board
delegates some of its responsibilities to its committees to
assist it in carrying out its function of ensuring effective
independent oversight. Details of the significant topics
discussed and considered by the Board and its committees
during this year are summarised on page 72. Responsibility
for day-to-day operations is delegated by the Board to the
Executive Directors but the Board has reserved certain specific
matters to itself for decision. Please see the Company’s
website for the full schedule of matters reserved to the Board.
Sustainability of business model
The Group's business model is set out on pages 10. The Board
closely monitors performance and ensures its actions promote
the long term sustained success of the Company, that the
Group’s business model remains sound and that the Executive
Team is supported in assessing opportunities and risks to the
future success of the business.
The Board does this through:
ą
Reports from and discussions with the Executive
ą
ą
ą
ą
Team and other members of senior management on
issues affecting the business and industry trends and
developments.
Engagement with key stakeholders – see pages 44 to 52.
Evaluating strategic opportunities to consider how these
will support the business model.
Maintaining a sound system of risk oversight and
internal controls, including reviewing principal risks and
uncertainties, identifying key and emerging risks and
considering how they may affect the model - pages 30 to
40.
In assessing the Group's prospects and viability for the
purposes of the viability statement (see pages 41 to 42),
the Board considers key factors likely to affect the future
development, performance and position of the Group.
Our purpose, values, and culture
Purpose – why we do what we do. Our purpose is to make
it easy for people to find, book and enjoy their perfect beach
holiday. Our purpose drives every business decision we make
and ensures everyone who works with us is focused on doing
those things that make it happen.
Values – underpin who we are and what we do. We’re proud
to have the following values at the heart of the business:
We're Bold
We set our sights high and we de-
liver. That means we seek out new
adventures near and far, do things
differently and have the confidence
to make bold choices. And we like to
stand out from the crowd too.
We’re Open
We pride ourselves on being great
hosts; warm and welcoming, a bit
like your favourite beach. We're a
down to earth and friendly bunch
who work together with a shared
sense of purpose - and purposefully
open and inclusive attitude.
We’re Dynamic
Travel is part of who we are and
embedded in everything we do. We
don't sit still and are always moving
ahead, learning quickly and finding
creative ways of doing things. Fast,
flexible and full of energy; that's us.
These values are embedded in our business and guide how
we work. Nurturing a culture which supports us in achieving
our vision is essential - our company values provide the
framework around which that culture is built and thrives. For
more information see Our People section on pages 54 to 59.
Culture - how we work together. Culture determines the
way that things are done in a business; the unwritten rules
that influence individual and group behaviour and attitudes.
Ensuring the link between purpose, strategy, values and
culture is critical to achieving the Company’s vision and to
creating long-term sustainability in our working approach.
Culture is established by leadership and by example, but this
also needs to be underpinned by clear policies and codes of
conduct which ensure that the Company’s obligations to its
shareholders and other stakeholders are clearly understood
and met.
The Board uses a number of indicators to inform its regular
assessment of whether the culture continues to be appropriate
and its alignment with the Group’s purpose, values and
strategy, including:
ą
Hive surveys - Reviewing the feedback from Hive
employee surveys which capture feedback on a range of
topics, as well as gauging overall engagement levels.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
73
GOVERNANCE Governance
Corporate Governance statement
ą
Compliance - The Group has robust policies in place in
ą
Investor meetings and presentations – The Company
relation to areas such as anti-bribery and anti-corruption,
anti-slavery and human trafficking and whistleblowing.
These policies are regularly reviewed and actively
promoted through online training and checks for
successful completion of initial and updated training and
guidance. These policies and processes are overseen by
the Audit Committee as described on pages 81 to 86, and
an independent whistleblowing process monitored by the
Board as described on pages 86.
ą
Employee policies and practices – The Board receives
regular updates on HR matters. The Group has fair and
transparent employee policies and practices which ensure
that employees’ rights are respected in accordance with
applicable laws and employment contracts, together with
a number of programmes and initiatives which support
the health and wellbeing of our employees, develop talent
and promote diversity. See page 54 to 59 for more details.
ą
Risk – The Board also assesses management’s attitude
to risk. This is predominantly done through direct
engagement with management at Board meetings.
Our whistleblowing policy encourages employees to raise
any concerns about illegal or improper behaviour without
fear of victimisation, discrimination or disadvantage. We have
a whistleblowing telephone service run by an independent
organisation, allowing employees to raise concerns on an
entirely confidential basis. The Audit Committee receives
regular reports on the use of the service and concerns raised.
For more information on our culture and how we invest and
reward our workforce, see the ‘Our People’ section on pages
54 to 59.
Stakeholder engagement
The Board seeks to understand the views of our stakeholders
and engage with them in a variety of ways to ensure that
stakeholder interests can be considered during our discussions
and decision making. The section 172 report and stakeholder
engagement section of the Strategic report on pages 44 to
52 set out how the Board engages with and encourages
participation from stakeholders and the effect the engagement
has had on decisions taken by the Board during the year.
Our People section on pages 54 to 59 also sets out how we
actively engage with our workforce. You can also find out more
about our culture and our commitment to our employees in
this section.
Shareholder engagement
The Company is committed to engaging and maintaining
an active dialogue with all of its shareholders and our main
engagement methods are set out below:
ą
Shareholder consultation – During the year, we consulted
with over 50% of our shareholder base in relation to our
revised Remuneration policy. There was also additional
engagement with investors during the year outside the
usual programme in relation to important issues such as
the equity raise.
74
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
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.
ą
Annual General Meeting – The AGM provides
stakeholders an opportunity to hear from the Board
and raise any questions they may have. Whilst last
year’s AGM was held as a closed meeting due to social
distancing measures imposed due to the COVID-19
pandemic, shareholders were invited to submit in advance
any questions on either the formal business of the AGM
or any questions they would have ordinarily asked as part
of the post-meeting.
Senior Independent director – Our Senior Independent
director, David Kelly, is available to shareholders if
they have concerns where contact through the normal
channels (namely CEO, CFO or Chairman) has failed or for
which contact is inappropriate.
Reports and presentations - All shareholders can access
announcements, investor presentations and the Annual
Report on the Company’s corporate website (www.
onthebeachgroupplc.com).
ą
ą
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.
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.
Board and Committee Meetings
This year we increased the number of scheduled meetings, at which the Board considered all matters of a routine and strategic
nature, including the Group’s response to the pandemic. In addition, further Board calls were arranged during more intense periods
to discuss urgent matters and approve event-driven items such as the equity raise. The table below shows meeting attendance
for scheduled meetings during the year. Next year we will return to a more normal meeting cadence, with a mixture of remote and
face-to-face meetings.
Director
Richard Pennycook
Simon Cooper
Shaun Morton
David Kelly
Elaine O’Donnell
Justine Greening(2)
Scheduled Board
meetings
Audit Committee Remuneration Committee Nomination Committee
20/20
20/20
20/20
19/20
20/20
11/11
1/1(1)
-
-
4/4
4/4
3/3
3/3
-
-
3/3
3/3
1/1
3/3
-
-
3/3
3/3
0/0
(1) Richard Pennycook stepped down as a member of the Audit Committee on 4 March 2021
(2) Justine Greening was appointed on 4 March 2021
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 Chairman 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.
Division of responsibilities
Clear division of roles and responsibilities
The roles of Chairman and Chief Executive Officer are exercised by different individuals. The division of responsibilities between
the Chairman and the Chief Executive Officer have been defined, formalised in writing, and approved by the Board.
Chairman
Chief Executive Officer
Richard Pennycook, as Chairman is responsible for:
ą
ą
ą
ą
ą
ą
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; and
Ensuring that the performance of individual Directors, the
Board as a whole and its Committees is evaluated at least
once a year.
Simon Cooper, as CEO, is responsible for managing the
business and driving it forward, including the responsibility for:
ą
ą
ą
ą
ą
ą
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.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
75
GOVERNANCE Governance
Corporate Governance statement
Chief Financial Officer
Shaun Morton, as CFO, is responsible for:
ą
ą
ą
ą
Supporting the CEO in developing the Group’s strategy
and its implementation;
Managing all aspects of the Group’s financial affairs;
Establishing financial processes and maintaining
adequate internal controls over financial reporting; and
Representing the Group to external stakeholders.
Senior Independent Director
David Kelly as Senior Independent Director is responsible for:
ą
ą
ą
Acting as a sounding board for the Non-Executive
Chairman 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; and
Being available to shareholders in order to understand
their issues and concerns in order to relay to the Board.
Non-Executive Directors
In addition to the Chairman, the Company has three
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 Chairman
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 Chairman’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.
Designated Non-Executive Director for Employee Engagement
David Kelly, as the designated NED is expected to:
ą
ą
ą
Ensure there are agreed methods in place for on-going
engagement to understand the views and concerns of
employees;
Ensure that the views and concerns of employees are
represented and taken into account in the Board decision-
making process;
Ensure that the Board takes appropriate steps to evaluate
the impact of business proposals and developments on
employees, and considers what steps should be taken to
mitigate any adverse impact;
ą
ą
Ensure a feedback mechanism is in place to share with
employees how the Board plans to respond to their views
or concerns; and
Track and report achievements of the role in supporting
employee engagement.
The designated NED is not expected to take on responsibilities
otherwise carried out by Executive Directors or the People
function.
The designated NED’s duties in relation to colleague
engagement include:
ą
ą
ą
Quarterly review of colleague engagement survey with
People function to:
ą
ą
ą
discuss key areas of concern
identify actions and areas of focus
review previously agreed actions and impact
Quarterly review of key metrics and insights, including but
not limited to; voluntary turnover, sickness absence, leaver
surveys; and
Lead quarterly Board agenda item on colleague
engagement.
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 Executive 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.
Time commitments of Non-Executive Directors
All Directors are expected to dedicate sufficient time to
discharge their responsibilities. 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. The Board will take into consideration
the time commitment required by the Non-Executive
Director in their role as a Board Director, Committee Chair or
Committee member in giving any such permission.
The Board and Nomination Committee do not consider
that any of the Non-Executive Directors have too many
other commitments which would render them unable to
devote sufficient time to the Company’s activities. The
other directorships of the Non-Executive Directors for listed
companies are set out in their biographies on pages 68 to
69. None of the Directors hold directorships in FTSE 100
companies.
76
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Composition, Succession and Evaluation
The Nomination Committee supports the Board by leading
the process for the appointment of Board members and senior
management, ensuring that such appointments are in line with
the Company’s succession plans. Further information on the
work of the Nomination Committee can be found on pages 79
to 80.
Board composition
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 79 to 80.
As required by the Code, at least 50% of the Board, excluding
the Chairman, are independent Non-Executive Directors.
The Board is currently comprised of six members: the Non-
Executive Chairman, two Executive Directors and three Non-
Executive Directors. Details of the skills and expertise of each
member of the Board is set out in the profiles on pages 68 and
69.
The Board reviews the independence of its Non-Executive
Directors as part of the annual Board and Director evaluation
process. The Nomination Committee also considers Non-
Executive Director independence on an ongoing basis as part
of its consideration of the composition of the Board. The Board
has determined that all the Non-Executive Directors who
served during the year were independent and that, before and
upon appointment as Chairman, Richard Pennycook met the
criteria of independence as outlined in the Code.
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 Chairman
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 Justine Greening as a Non-Executive Director,
please see the report of the Nomination Committee on pages
79 to 80.
Development of Directors
The Company has an induction programme for all new
Directors joining the Board. 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 Chairman 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.
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 Chairman. Last year we
reported that we were intending to carry out an externally
facilitated Board evaluation in FY21. Whilst this is not a Code
requirement for the Company given we are outside the FTSE
350, we take our responsibility for continuous improvement
seriously and we appreciate that engaging an independent
reviewer can bring greater objectivity and fresh insights to the
evaluation process.
However, in considering this year’s annual Board evaluation,
the Directors had regard to the fact that the pandemic had
changed the cycle, frequency, format and focus of Board
and Committee meetings over the past year (which were all
virtual) such that a backwards-looking evaluation would not
be reflective of the structure, format and business at future
meetings. The Directors also considered that Justine Greening
had yet to complete her first year in office. As such, it was
considered appropriate to defer an externally facilitated
evaluation. By deferring the process, it is anticipated that
the external review will give a more robust assessment and
insight into the overall effectiveness of the Board and its
Committees.
An internal evaluation was accordingly carried out during the
year 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.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
77
GOVERNANCE Governance
Corporate Governance statement
As part of the internal 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 Chairman which was discussed at a Board meeting.
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. The Board felt that while it had adapted well to the
challenges of working remotely by way of virtual meetings, the benefits of face-to-face meetings and informal meetings such as
Board dinners could not be understated and it was agreed that these would resume as soon as possible.
Progress against the conclusions of the FY20 Board/Committee evaluation, together with actions from the FY21 Board/Committee
evaluation are set out in the table below:
Actions from FY20 Board evaluation
Area of focus
Progress
Increased
focus on
diversity
Succession
planning
We have made good progress this year with respect to gender diversity and meet the Hampton Alexander
Review target of 33% representation of women on our Board. The Board continues to oversee the excellent
work undertaken by the Diversity and Inclusion Action Group but we acknowledge there is still work to be
done to improve the Board’s (and the Group’s) ethnic diversity.
There has continued to be a focus on succession planning and during the year, a new rewards strategy and
a new learning development framework were implemented with a view to incentivising employees and
developing skills to ensure there is an adequate talent pool of potential candidates for management roles
throughout the Group. This will continue to be a focus area next year.
Increased
focus on ESG
Initiated work to redesign our ESG strategy in order to bring about meaningful change and create a stronger
and more sustainable business. We have not been able to progress our ESG strategy as quickly as anticipated
due to Board’s and management’s ongoing focus on the pandemic however we now have the foundations in
place and strengthening our ESG programme will be a key priority in FY22.
Director
training
Board have been kept up to date with regulatory and legal changes and have received presentations from
external advisors e.g. on directors duties and remuneration practices. We are working with an external provider
to provide risk appetite training to the Board. We intend however to develop a more formal, annual programme
of director training in FY22.
Actions from FY21 Board evaluation
Area of focus Actions
Stakeholders Whilst the oversight of most stakeholder views was very strong, it was felt more insight could be provided in
respect of some stakeholders, particularly less prominent stakeholders such as communities.
Culture
Consider ways to enhance Board’s monitoring of corporate culture.
Risk
management
Further consideration in relation to how the Board approaches emerging risks, risks appetite and risk
management in general, particularly how this links with ESG / climate risks.
Strategy
Improve balance of operational and strategic items considered by the Board, with an enhanced forward
looking focus.
During the year, the Senior Independent Director evaluated the performance of the Chairman, who in turn evaluated the
performance of each Director. In addition, the Non-Executive Directors met independently from the Executive Directors to discuss
with the Chairman the overall functioning of the Board and the Chairman’s contribution in making it effective.
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.
78
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Governance
Report of the Nomination
Committee
I am pleased to introduce the report of the Nomination
Committee for the year ended 30 September 2021.
Role of the Committee
The principal role of the Committee is to keep under review
the structure, size and composition of the Board, make
appropriate recommendations to the Board with respect
to any necessary changes and succession planning for the
Board and senior leadership positions, including in relation to
ensuring and encouraging diversity in leadership positions.
The Committee’s full roles and responsibilities are set out
in written terms of reference, which are available on the
Company’s website at www.onthebeachgroupplc.com/
investor-centre/corporate-governance.
Membership and meetings
The Committee meets at least twice annually and at such
other times as are necessary to discharge its duties. Only
members of the Committee have the right to attend meetings.
The Chief Executive Officer, Chief Financial Officer, as well
as external advisers and others attend for all or part of
Committee meetings by invitation when appropriate. The
Company Secretary acts as secretary to the Committee.
The Committee met 3 times during the year and member
attendance is shown below.
Member
Status
Appointment
date
Attendance
Richard
Pennycook
(Chair)
Independent
April 2019
David Kelly
Independent
August 2015
Independent
July 2018
3/3
3/3
3/3
Independent
March 2021
0/0(1)
Elaine
O’Donnell
Justine
Greening
(1) Justine Greening joined the Committee with effect from 4 March 2021.
The Committee’s composition meets the requirements of the
Code.
Appointment of new Non-Executive Director
We reported last year that we were looking to appoint a new
Non-Executive Director. As such the Nomination Committee
led the search, beginning with preparation of a description of
the role and capabilities required. The Company appointed
an external agency, Saxton Bampfylde, to assist in the search
who have no connection with the Company.
Richard Pennycook
Chairman, Nomination Committee
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 Justine Greening’s appointment as
a Non-Executive Director of the Board with effect from 4
March. Justine’s appointment is subject to approval by the
shareholders at the forthcoming AGM. You can read more
about Justine’s experience and skills on page 69.
Board composition and skills
As part of its review of Board composition, the Committee
reviewed the skills, diversity and capabilities of current Board
members. This involved self-assessment by each director
of their skills, areas of functional expertise and sectoral
experience. The exercise gave the Committee an overview
of overall skills and experience, identified where there are
opportunities to further grow the Board’s collective knowledge
and informed us of those skills we may wish to prioritise when
preparing future role briefs.
As part of the review of Board composition, the Committee
also considered:
ą
the independence of Non-Executive Directors, considering
the judgement, thinking and constructive challenge that
they demonstrate in the Board;
ą
ą
ą
ą
ą
the balance on the Board between Executive and Non-
Executive Directors,
diversity of the Board, including age, gender and ethnicity;
the business strategy and how the Board skills and
capability mix aligns with the current composition;
length and tenure;
the effectiveness review of the Board, its principal
Committees, the Chairman and individual Directors.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
79
GOVERNANCE Governance
Report of the Nomination Committee
The Company and Committee agrees with the aims
and objectives of the Hampton-Alexander Review on FTSE
women leaders and the Parker Review on ethnic diversity
of UK boards and of the Women on Boards Davies Review
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.
As such, while we do not set any particular targets, we
continue to take diversity in its wider context into account
and recommend only the most appropriate candidates for
appointment to the Board. We appreciate, however, we have
progress to make in terms of improving the diversity of the
Board and the Executive Team and we will look to address this
during future appointments.
More information on our approach to diversity and inclusion,
including details about the gender balance of the Board and
senior management can be found in the ‘Our People’ section
on pages 54 to 59.
Committee effectiveness
As part of the annual Board evaluation, all members of the
Nomination Committee participated in an evaluation of the
Committee. The evaluation concluded that the Committee
continues to perform effectively. Further details of the
evaluation can be found on page 78.
Richard Pennycook
Chair, Nomination Committee
Having carried out the review, overall the Committee is
satisfied that the Board has the necessary mix of skills
and experience to fulfil its role effectively however it was
acknowledged that the ethnic diversity of the Board could be
improved.
As noted above, the Committee considered length of service
of its Non-Executive Directors. Elaine O’Donnell was initially
appointed as a director in July 2018 for a period of three
years. David Kelly was appointed as a director in August
2015 and has now served two three year terms. After careful
consideration, the Board agreed during the calendar year
(following the Committee’s recommendation) to re-appoint
both Elaine and David for an additional three-year term.
All Directors are subject to annual re-election. Further details
about the particular skills, knowledge and experience each
Director brings to the Board can be found in the Directors’
biographies on pages 68 to 69.
Succession planning and talent pipeline
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 and taking
account of the continuing need to consider gender and ethnic
diversity. 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.
This will continue to be an areas of focus in the coming year
and the Committee will review the career and development
plans for the Executive Team to ensure there is an adequate
talent pool of potential Executive Directors and review talent
development throughout the Group to ensure there is a
sufficient and diverse pipeline of talent available to execute the
Company's current and future strategy.
Diversity
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 and challenge
and in good decision making.
As part of its review of Board composition, the Nomination
Committee has again considered the diversity of the Board,
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.
80
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Governance
Report of the Audit
Committee
I am pleased to present the Audit Committee Report for the
year ended 30 September 2021. 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.
The Committee fulfils a vital role in the Company’s governance
framework, providing valuable independent challenge
and oversight across the Company’s financial reporting
and internal control procedures. As a Committee, we are
responsible for monitoring and reviewing the integrity of
financial information and providing assurance to the Board
that the Group’s internal controls and risk management
systems are appropriate and regularly reviewed. We also
oversee the work of the external auditor, approve their
remuneration, review and evaluate their performance and
recommend their appointment. Ultimately, the Committee
ensures that shareholder interests are protected and the
Company’s long-term strategy is supported, which is an ever
more crucial task as we continue to navigate through and
move beyond the COVID-19 pandemic.
With the assistance of management and our external auditor,
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.
Elaine O’Donnell
Chair of the Audit Committee
Committee Governance
Responsibilities
Elaine O’Donnell
Chair of the Audit 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 recommended 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 and objectivity of the external auditor and ensure appropriate policies and
procedures are in place to protect such independence. The Committee is also responsible for
developing and implementing the Group’s policy on the provision of non-audit services by the
external auditor.
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 Company’s procedures for raising concerns.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
81
GOVERNANCE Governance
Report of the Audit Committee
Committee composition
The Committee currently comprises three independent Directors. During the year, we welcomed Justine Greening as a Committee
member following her appointment to the Board on 4 March 2021. Upon Justine’s appointment, Richard Pennycook stood down as
a member of the Committee.
The Committee members bring a wide range of financial and commercial expertise necessary to fulfil the Committee’s duties.
Summary biographies of each member of the Committee are included on pages 68 to 69. All members of the Committee are
considered to be independent. The Board is satisfied that the Committee’s Chair, Elaine O’Donnell, has extensive recent and
relevant financial experience and that the Committee as a whole has competence relevant to sector in which the Group operates.
Committee meetings
The Committee met 4 times during the year and member attendance is shown below.
Member
Status
Appointment date
Attendance
Elaine O’Donnell (Chair)
Independent
July 2018(1)
David Kelly
Richard Pennycook
Justine Greening
Independent
August 2015
Independent
Independent
April 2019
March 2021
4/4
4/4
1/1(2)
3/3(3)
(1) Elaine O’Donnell was appointed a member of the Committee in July 2018 and appointed Chair in September 2019.
(2) Richard Pennycook stepped down as a Committee member on 4 March 2021.
(1) Justine Greening joined the Committee with effect from 4 March 2021.
The agenda for each meeting reflects the annual reporting cycle of the Group and particular matters for the Committee’s
consideration. Only members of the Committee are entitled to attend meetings; however standing invitations are extended to the
Chief Financial Officer, Chief Executive, and the Company Secretary and external 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 external auditor without the Executive Directors
being present.
The Company Secretary is secretary to the Committee.
Effectiveness
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 with no significant concerns.
82
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
How the Committee discharged its responsibilities in FY21
Financial Reporting
Significant matters relating to the Financial Statements considered by the Committee
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 external 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
Adjustments and estimates relating to the COVID-19
pandemic
The recognition of costs and provisions relating to disruption
caused by the COVID-19 pandemic is an area of significant
judgement. These adjustments relate primarily to lost
revenue resulting from the cancellation of bookings in the
financial year and beyond. The judgement includes the
loss of revenues caused by the cancellation and refund of
bookings, off-set by extent to which related holiday costs
can be recovered.
Areas of judgement and estimation include:
ą
Cancellation provision: This is dependent on the extent
to which holidays booked in the financial year which
are travelling in future periods will be cancelled due to
COVID-19, and dependent on the ability of the Group to
mitigate costs relating to these cancellations
ą
ą
Recognition of airline receivables: At the year end, there
is a balance due from airlines for cancelled flights. Whilst
significant amounts have been received during the
year, a balance remains which has been assessed for
recoverability risk, and whether any provision is required
Supplier prepayment recovery: In the normal course of
business the Group will advance payments to certain
hotel suppliers for holidays booked. Due to the limited
amount of travel over the summer, management have
considered if these prepayments are recoverable
The Committee have reviewed the key judgements and
estimates involved in arriving at the overall adjustment and
are satisfied with the approach of management.
This review included assessing the judgements and
estimates for each material component. This review was
supported by accounting papers provided by management.
The Audit Committee is satisfied that, based on all
information available at the time of signing the accounts, the
judgements that have been made are reasonable.
The Audit Committee has also considered the presentation
of the adjustments in the Financial Statements and given
their material nature is satisfied that separate disclosure of
this adjustment supports a fair, balanced and understandable
presentation of the accounts.
Revenue recognition
Dependent on the contract with the customer and the nature
of services provided the Group will either recognise revenue
on a booked basis where it acts as an agent or a travelled
basis where it acts as principal. Where the Group operates
as an agent a provision for expected cancellations is also
recorded.
The Audit Committee has considered management’s
judgements on the appropriateness of the revenue
recognition policy and consider the approach and application
of this policy to be appropriate.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
83
GOVERNANCE Governance
Report of the Audit Committee
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.
Valuation of Goodwill, Intangibles and Investments
The estimated recoverable value of the Group’s intangible
assets is subjective due to inherent uncertainty involved in
forecasting and discounting future cash flows.
The principal uncertainty is the extent to which these
intangible assets will continue to generate cash flows for
the Group and whether this is sufficient to support the asset
value.
This year, management has considered whether the value
of these assets has been impaired by the current disrupted
market.
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.
The Committee has reviewed the accounting and is satisfied
with the approach of management. The Committee is
satisfied with the key assumptions used in the forecast,
including the use of sensitivities growth rates and discount
rates.
Engagement with regulators
During the year, the Corporate Reporting Review team of
the Financial Reporting Council (‘FRC’) informed the Chair of
the Company that they had reviewed certain aspects of our
FY20 Annual Report. Following its review, the FRC informed
the Company that its assessment rating was “Good” and that
there were no questions or queries that it wished to raise.
The letter did not require any formal response other than our
acknowledgement of receipt.
Going concern and viability statement
The Committee reviewed the appropriateness of adopting the
going concern basis of accounting in preparing the full year
financial statements and assessed whether the business was
viable in accordance with the Code. The assessment included
a review of the principal risks facing the Group, their financial
impact, how they are managed, and the availability of finance
and the Company’s choice of a three-year assessment period.
This was supported by a very thorough paper from the CFO.
The Group’s viability statement is on pages 41 and 42.
The FRC cited our disclosures around the impact of COVID-19
as an example of good practice.
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, risks and
strategy.
In arriving at its assessment the Committee has:
ą
taken into consideration that the Annual Report has
been reviewed at several levels within the Group ensuring
overall balance and consistency;
received an early draft 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;
considered the External Auditor’s review of the Annual
Report.
ą
ą
ą
The Directors’ statement on a fair, balanced and
understandable Annual Report and Accounts is set out on
page 127 of this Report.
84
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
External Audit
External Auditor effectiveness and appointment
The Committee oversees the Group’s relationship with the
external auditor and reviews and makes recommendations
regarding their reappointment. Throughout the year, the
Committee has considered the on-going effectiveness of EY,
looking at the quality of their reports to the Committee, the
performance of the EY team both in and outside Committee
meetings and how EY have interacted and challenged
management. As well as this on-going review the Committee
considered the effectiveness of EY as part of the 2021 year-
end process.
The Committee took a number of factors into account when
considering the effectiveness of the external audit including:
ą
The quality of the audit planning covering the approach,
ą
ą
scope and levels of fees for the audit;
Delivery and execution of the agreed external audit
process for FY21;
The extent of EY’s resources and technical capability to
deliver a robust and timely audit, including the experience,
industry knowledge and expertise of the EY audit
engagement team;
ą
ą
ą
ą
ą
The quality of EY’s explanation of and response to
significant risks identified;
The competence with which EY handled and
communicated the key accounting and audit judgments;
The communication and engagement between
management, EY and the Committee;
The steps taken by EY to ensure their objectivity and
independence; and
FRC’s Audit Quality Review report relating to EY.
The Committee also sought the views of key members of
the finance team, senior management and Directors on the
audit process and the quality and experience of the audit
partners engaged in the audit.
The Committee meets with the external auditor at least
once each year without management being present which
provides additional opportunity for open dialogue and
feedback. Matters typically discussed include the auditor’s
assessment of business risks, the transparency and openness
of interactions with management, confirmation that there has
been no restriction in scope placed on them by management
and how they have exercised professional scepticism.
The Committee has concluded that overall EY has carried
out its audit for FY21 effectively and efficiently and that EY
continues to provide constructive and independent challenge
to management and consistently demonstrates a realistic and
commercial view of the business.
Independence and non-audit services
The Committee takes steps to ensure that the external auditor
remains objective and independent through a combination of:
ą
assurances provided by EY on the safeguards in place to
maintain independence;
ą
oversight of the non-audit services policy and fees paid
(see below); and
oversight of policy on employing former auditors.
ą
A formal policy is in place in relation to the provision of
non-audit services by the external auditor to ensure
that there is adequate protection of their independence and
objectivity. The policy ensures that the Group benefits from
the cumulative knowledge and experience of its auditor while
ensuring at the same time that the auditor maintains the
same degree of objectivity and independence.
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 £327,000). 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 external Auditors.
The fees paid to EY in respect of non-audit services during the
year related to the review of interim Financial Statements and
the ATOL return and totalled £68,000 representing 20.8% of
the total audit fee (2020: £50,000, representing 20.7% of the
total audit fee). These non-audit services are considered to be
closely related to the work performed by EY as auditor of the
Group and therefore the auditor is the appropriate firm to carry
out the services.
The External Auditor confirms its independence at least
annually.
Tenure
EY was appointed auditor to the Group in March 2019
following a competitive audit tender process that commenced
towards the end of 2018. Subject to continuing satisfactory
performance, we anticipate the lead audit partner will rotate
after her fifth year to ensure independence.
The Committee recommended, and the Board intends to
propose, the reappointment of EY as the Company’s auditor
for FY22. It believes the independence and objectivity of the
external auditor and the effectiveness of the audit process are
safeguarded and remain strong.
While the Company is not a FTSE 350 listed company, we
continue to comply with the UK Competition and Markets
Authority’s Statutory Audit Services Order which states,
among other matters, that FTSE 350 listed companies
should put their external audit contract out to public tender
at least every ten years. The Group intends to remain in full
compliance with the requirement to carry out a formal tender
at least once every ten years.
There are no contractual obligations that restrict the
Committee’s choice of external auditor.
Internal audit
The Committee has again considered the requirement for the
setting up of an internal audit function. As part of this review,
the Committee considered:
ą
The business model under which the Company currently
operates in the context of its activities and in particular the
management model which it has put in place to manage
its business operations. There is a significant degree
of senior oversight, particularly in respect of ongoing
business performance, involving both the CEO and CFO.
The existing internal control environment. In this respect,
ą
the Committee was satisfied that procedures and
routines are well established across the business and
that management had given sufficient assurances that
other monitoring processes (including internal reviews of
the Group's operations undertaken periodically by senior
finance staff) were being applied and would be developed
using the existing expertise of the finance department to
help ensure that the Group's system of internal control
was functioning as intended.
ą
Reports from the external auditors with regard to
internal control and risk management, supplemented
by extended assurance reviews by external consultants
in key risk areas. For example this year, third party
consultants provided assurance on the Group’s processes
and controls in relation to information security and data
protection and on the Group’s claims handling process.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
85
GOVERNANCE
Governance
Report of the Audit Committee
Having undertaken the review, and in light of the nature,
scale, complexity and range of operations of the Company
and the rolling programme of risk management in place, the
Committee determined that it was not currently necessary to
establish an internal audit function.
The Committee will, as part of its remit, continue to evaluate
the effectiveness and robustness of the current system
of control. In conjunction with an external adviser, we are
currently undertaking a complete review of our overall risk
management procedures and the effectiveness of key financial
controls.
Risk management and internal Control
The Board is responsible for establishing, maintaining
and monitoring the Group’s system of risk management
and internal control and reviewing its effectiveness. The
Committee monitors the performance of management in this
area.
We have an ongoing process for identifying, evaluating and
managing the principal risks faced by the Group. The Group’s
risks are monitored by the Audit Committee on behalf of the
Board which sets aside time for an in-depth discussion of
notable or changing risks to the business. A description of the
process for managing risk together with a description of the
principal risks and strategies to manage those risks is provided
on pages 30 to 40. As noted above, the Audit Committee is
currently overseeing the development and implementation
of a new risk management framework which will enhance
the Group’s current approach to enterprise risk and will be
embedded into the business during FY22.
Internal control systems are designed to meet the particular
needs of the Group and the risks to which it is exposed. Such
systems are designed to manage rather than eliminate the
risk of not achieving business objectives and can only provide
reasonable and not absolute assurance against material
misstatement or loss. The Board seeks to manage this risk by
having established a well-defined organisational structure,
clear operating procedures, embedded lines of responsibility,
delegated authority to executive management and a
comprehensive financial reporting process.
Key features of the Group’s current system of internal control
and risk management are:
ą
Risks are highlighted through a number of different
reviews and culminate in the 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 a desired level. The risk register is
usually reviewed by senior management on a bi-annual
basis and approved by the Board annually.
ą
Monthly consolidated Group management accounts.
These 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. 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.
Annual budget and quarterly reforecast against which
management monitor the key business and financial
activities towards achieving the financial objectives each
month.
Detailed appraisal and authorisation procedures for
capital and operational expenditure.
Embedded policies and procedures to ensure the integrity
and accuracy of accounting records and to safeguard the
Group’s assets.
Defined management structure and delegation of
authority to Committees of the Board and associated
business units.
Anti-bribery, security and compliance training for all
employees.
Monitoring of any whistleblowing or fraud reports.
Recruitment standards and training to ensure the integrity
and competence of staff.
ą
ą
ą
ą
ą
ą
ą
In addition, the Audit Committee receives detailed reports
from the external auditor in relation to the financial statements.
The Chair of the Audit Committee also has regular interaction
with the external auditor and senior members of the Group
finance department in order to monitor and assess the
effectiveness of the Group’s system of internal controls.
The Board, through the Audit Committee, has reviewed the
effectiveness of the Group’s system of internal controls in
operation across the Group. This review covered the material
controls, including financial, operational and compliance, as
well as risk management arrangements. Whilst no significant
control failings or weaknesses were identified during the
period under review, the Committee felt that there would be
benefit in seeking additional assurance on certain controls.
Accordingly, there will be an externally facilitated review of the
effectiveness of key financial controls during FY22 which we
will report on in next year’s report.
Whistleblowing
The Group has a formal whistleblowing policy in place which
provides details of how employees can raise concerns in
relation to the Group’s activities or the actions of any employee
of the Group on a confidential basis. This policy is reviewed
annually by the Audit Committee. The Group provides a
whistleblowing telephone service run by an independent
organisation, allowing employees who do not wish to use
normal internal line management channels, 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.
Elaine O’Donnell
Chair, Audit Committee
9 December 2021
86
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Governance
Remuneration report
Annual statement of the Chair of the
Remuneration Committee
As Chair of the Remuneration Committee, I am pleased to
present the Company’s Remuneration Report for the year to
30 September 2021.
This report includes both our proposed Directors’
Remuneration Policy (‘Policy’) (which will be submitted for
shareholder approval at the 2022 AGM) and our Annual
Report on Remuneration, which sets out how our current
Policy was implemented during the year under review, and
how, subject to its approval, our revised Policy will be applied
for the year ahead.
Like many other businesses, we have been focused
on responding to the unique challenges presented by
COVID-19 which continues to have a profound impact on
the travel industry in particular. Against this backdrop, the
Committee has carefully considered the experiences of our
key stakeholders over the year, alongside Group performance
and the performance of the wider economy when making
remuneration decisions.
Performance and reward for FY21
FY21 has been another challenging year, with the COVID-19
pandemic continuing to cause significant disruption in the
travel industry as well as the wider economy and society.
Whilst FY21 was not expected to be a normal year for
travel, performance has been impacted by the extended
lockdown and travel ban for the first six months of calendar
year 2021, reduced consumer confidence in light of complex
travel regulations, expensive testing costs and the Group’s
decision to take summer 2021 holidays off sale. The Group
has however adapted promptly and successfully to the
challenges presented by COVID-19 and we have been able to
retain and support our workforce and maintain remuneration
arrangements broadly unchanged across the business.
The health and wellbeing of our employees has continued to
be a key focus during our response to the pandemic. We set
out in last year’s report the various measures we had taken in
relation to the workforce and we have continued to build on
those measures in FY21 including:
ą
From November 2020, we moved on to a flexible furlough
scheme which enabled the majority of colleagues to work
80% of their usual contracted hours, helping us retain
talent during the quieter winter months. The scheme
allowed colleagues to received 80% of their pay for the
days not worked and 100% of their pay for the days
worked and it meant that the majority of colleagues came
away with c.95% of their usual pay. In November 2020,
we had 138 colleagues, mainly from the contact centre,
on flexible furlough and by the end of March 2021, this
number had reduced to 9.
ą
ą
We have improved our employee terms and conditions,
including introducing an enhanced sick pay policy.
We made a decision to raise the entry salary across the
business above the National Living Wage to £20,000 p.a.
from 1 October 2021, thereby elevating the skill set of the
new talent we attract and improving the overall quality of
service to our customers.
David Kelly
Chair of the Remuneration Committee
ą
ą
Numerous social and wellbeing initiatives and
programmes have been introduced, including the launch
of our Mental Health Ambassador scheme (more details
can be found on page 56).
From a remuneration perspective, we reported last year
that the Board had voluntarily reduced their salary for
a fixed period during the onset of the pandemic, the
Executive Team did not receive a bonus in respect of
FY20, the LTIPs granted to Executive Directors in FY18
lapsed in full and no pay increase was awarded to the
Executive Directors for FY21.
The Committee recognises the exceptional performance and
efforts of the Executive Team in guiding the business through
the crisis and the actions they have taken to protect the Group
for the long term. Notwithstanding the foregoing, FY21 has
continued to be a difficult year, therefore with the agreement
of the Executive Directors, the decision was made to cancel
the annual bonus plan for Executive Directors in FY21.
The LTIP award granted to Simon Cooper in FY19 was based
on two performance metrics: EPS (70% weighting) and
absolute shareholder return (TSR) (30% weighting). The
three year performance period in relation to the EPS element
ended on 30 September 2021. The EPS target was not met
therefore 70% of Simon’s FY19 award will lapse. The three
year performance period in relation to the TSR element will
end in February 2022, at which point the Committee will
determine the extent to which the TSR targets have been met.
No discretion was (or will) be exercised to adjust the outcomes
for Executive Directors.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
87
GOVERNANCE Governance
Remuneration report
Shaun Morton was granted two LTIP awards in FY19 (prior
to his appointment to the Board). One of the LTIPs was not
subject to any performance conditions and a proportion of the
other LTIP award was similarly not subject to any performance
conditions. Those elements of the awards that were subject to
continued employment vested in full on 30 September 2021.
ą
Malus and clawback: Introduce enhanced malus and
clawback provisions within the annual bonus and the
LTIP awards to include corporate failure and reputational
damage as additional triggers to protect against payment
for failure.
The Committee believes that the proposed Policy will enable
the Company to continue to incentivise and retain Executive
Directors in a way that is directly aligned with the interests
of shareholders, both in the short-medium term while the
focus will be on recovery from the pandemic and building
market share, and in the longer term when the aim is to grow
profitable revenues and deliver strong returns to shareholders.
The Committee intends to carry out a further review of
the Policy once the travel industry and the wider economy
stabilises, which will include a review of our incentive strategy
to ensure this is fit for purpose in the post-COVID world.
FY22 Remuneration approach
Following the conclusion of our Policy consultation, key
decisions by the Remuneration Committee in respect of the
remuneration of the Executive Directors in FY22 include:
ą
CEO base salary: Simon Cooper will receive a salary
increase of 4.2% effective from 1 January 2022. This
increase aligns directly with the general increase that will
be made to our broader UK employee population and is
against a backdrop of a nil increase last year.
ą
ą
ą
CFO base salary: As set out in the FY20 Directors’
Remuneration report, Shaun Morton’s salary on
appointment to the Board was set at a lower level than
his predecessor as he was new to the role, with the
intention that this would be reviewed as he became
more established. As a Board we believe that Shaun
has clearly demonstrated his capability to perform in the
CFO role since his appointment. His salary will therefore
be adjusted from £250,000 to £275,000 with effect
from 1 January 2022. We consider this increase justified
by demonstration of his capability as a plc CFO, his
development in the role and his very strong performance.
Pension: No change. Both the CEO and CFO’s pension
contributions are already aligned with the wider
workforce (currently 3% of eligible earnings).
Annual bonus: The maximum bonus opportunity remains
unchanged at 100% of salary. The bonus, subject to
approval by shareholders at the 2022 AGM, will be based
on a scorecard of financial and non-financial metrics.
Details of the metrics underpinning the FY22 bonus are
set out later in this report. 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. The deferral of up to 50%
of any pay-out for two years remains unchanged.
Remuneration policy review
Our current Policy was approved by shareholders at the 2019
AGM, receiving support of nearly 81%. Under the normal
three-year renewal cycle we will be submitting a new Policy
for approval at the 2022 AGM. As such, the Committee has
conducted a comprehensive review of the current Policy and
is proposing a number of changes to ensure continued full
compliance with the UK Corporate Governance Code and to
allow more flexibility in selecting performance metrics which
fully support the business strategy as we emerge from the
COVID-19 pandemic.
Consumer confidence to travel has been severely damaged
by the pandemic and will take time to repair. In addition, there
is still disruption to international travel to be accounted for
and there is the ongoing threat of new variants emerging. We
are entering a period of transition into the post-COVID world
and, while no significant changes are to be brought forward
at this time, the proposed Policy has been designed with this
transition period in mind. The Company is in a strong position
to capture market share as we emerge from the pandemic,
and the updated Policy will support this by providing the
Committee with flexibility to adapt the implementation in
response to market changes and the evolving business
strategy.
We have consulted with over 50% of our shareholder base
on our proposed Policy and I would like to thank all those
shareholders who have participated in this process for their
feedback and guidance, which we have considered and taken
on board.
Full details of the proposed Policy are set out on pages 92 to
101 but the key changes are:
ą
Pension: Formalise the existing level of pension provision
in line with the wider workforce (currently 3% of eligible
earnings).
ą
Performance measures: Amendments in relation to
ą
ą
annual bonus and LTIP performance metrics to allow
more flexibility year-on-year to align these with the
evolving business strategy post-COVID and to respond
to any further government policy which significantly
adversely impacts the travel sector.
Shareholding requirement: Formalise the two year post-
cessation shareholding requirement at the lower of the
shareholding requirement (i.e. 200% of base salary) or
actual shareholding.
LTIP: An increase in the maximum award to 300% of base
salary which can be granted under the LTIP in exceptional
circumstances, such as to secure an external appointment
or in specific retention scenarios. The maximum LTIP
opportunity in a normal year will remain at 200% of base
salary.
88
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Remuneration report
This report has been prepared in accordance with The Large
and Medium-sized Companies and Groups (Accounts and
Reports) (Amendment) Regulations 2013 (as amended
in 2018 and 2019), the UKLA Listing Rules and the UK
Corporate Governance Code. The report is split into four parts:
ą
ą
ą
This Annual statement.
Remuneration at a glance.
The Directors’ Remuneration Policy which sets out the
Company’s proposed remuneration policy for directors,
the key factors which were taken into consideration
in setting the Policy and details of the changes from
the current Policy. The proposed Policy will be put to a
binding shareholder vote at the 2022 AGM and will apply
for three years from the date of approval.
ą
The Annual Report on Remuneration which sets out
payments made to the Directors and details the link
between Company performance and remuneration for the
2021 financial year. The Annual Report on Remuneration
together with this statement is subject to an advisory
shareholder vote at the 2022 AGM.
In summary, the Committee is committed to ensuring that
we are responsive to developments in best practice, as well
as taking 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
ą
LTIP: It is intended that LTIP awards will be granted during
FY22 of 100% of salary for Simon Cooper (reflecting his
material shareholding) and 200% of salary for Shaun
Morton (to support him in building his shareholding and
aligning interests with shareholders). The performance
conditions will be based on Absolute TSR, Relative TSR,
Group TTV and EBITDA growth targets measured over
a three year period. Targets will be disclosed at the time
of grant in the RNS announcement. The two year holding
period remains unchanged.
In addition, the changes to the share ownership guidelines
and tightening of malus and clawback provisions, as described
above will also come into effect for FY22.
Non-Executive Directors
We were delighted to welcome Justine Greening to the
Board this year. Justine was appointed on 4 March 2021 and
her fees were set in line with the Company policy for Non-
Executive Director fees.
Non-Executive Director fees are typically reviewed every
three years. The last review took place in September 2018,
therefore a review was scheduled to be undertaken during
FY21. However in light of the challenges presented by
COVID-19 and the continued market uncertainties, the Board
determined that the fee review would be deferred until FY22.
Key activities of the Remuneration Committee
Key activities of the Remuneration Committee during the year
included:
ą
Agreeing the performance against the targets and vesting
ą
ą
ą
ą
ą
ą
ą
ą
ą
ą
ą
ą
of the 2018 LTIP awards.
Setting the performance targets for the Executive
Directors FY21 annual bonus.
Agreeing the population, award levels and performance
targets for the FY21 LTIP awards and restricted share
awards.
Approving the Directors’ Remuneration Report for the
FY20 Annual Report.
Planning for Directors’ Remuneration Report for the FY21
Annual Report.
Agreeing the revised reward strategy for the broader
employee population.
Reviewing Group-wide pay and conditions and share
plans.
Reviewing the gender pay gap report.
Reviewing base salaries of Executive Directors and
Executive Team.
Reviewing feedback from 2021 AGM.
Reviewing existing Policy and developing new Policy.
Planning shareholder engagement exercise in relation to
new Policy.
Reviewing performance of independent advisers and fees
over the year.
Monitoring the developments in the corporate governance
environment and investor expectations.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
89
GOVERNANCE
Governance
Remuneration report
Remuneration at a glance
FY21 implementation of Policy
FY22 implementation of Policy
Salary
No salary increases in FY21 (average increase across
the wider workforce was 1%)
ą
ą
Simon Cooper (CEO): £207,060 (FY20
£207,060(1))
Shaun Morton (CFO): £250,000 (FY20
£250,000(2))
Salary increase of 4.2% (in line with average
increase across the wider workforce) for Simon
Cooper.
Salary increase of 10.0% for Shaun Morton
to reflect his development in role and strong
performance since his appointment to the Board.
ą
ą
Simon Cooper: £215,757
Shaun Morton: £275,000
Pension
Simon Cooper and Shaun Morton each received a pension
contribution of 3% of eligible earnings (in line with wider
workforce)
No changes
ą Max opportunity: 100% of salary
ą
Performance targets:
ą
ą
ą
ą
ą
Profit before Tax (50% weighting)
Net promoter score (12.5% weighting)
Employee engagement (12.5%
weighting)
Prompted brand consideration (12.5%
weighting)
Passenger number growth (12.5%
weighting)
ą
ą
ą
Simon Cooper: 100% of salary
Shaun Morton: 200% of salary
Performance conditions:
ą
ą
ą
ą
Absolute TSR (25% weighting)
Relative TSR (25% weighting)
EBITDA growth in specific expansion
areas (25% weighting)
Group total transaction value (TTV)
(25% weighting)
Bonus
Nil - the bonus scheme did not operate in FY21
LTIP
ą
FY19:
ą
ą
EPS target for the FY19 LTIP award granted to
Simon Cooper was not met therefore 70% of the
award will lapse. Remaining 30% is dependent
on annualised TSR over the three year period to
12 February 2022 - see below.
Prior to his appointment to the Board, Shaun
Morton was granted two LTIP awards in FY19
during his tenure as director of Finance. One of
the LTIPs was not subject to any performance
conditions and a proportion of the other
LTIP award was similarly not subject to any
performance conditions. Those elements of
the awards that were subject to continued
employment vested in full on 30 September
2021(3)
ą
FY21: LTIP awards were granted to Simon Cooper
(100% of salary) and Shaun Morton (200% of salary).
Performance conditions: 70% EPS, 30% absolute TSR
90
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Shareholding
requirement
Executive Directors must establish a shareholding of 200%
of base salary over a 5 year period. At the year end, Simon
Cooper met this requirement. Shaun Morton will build a
holding to the required levels.
ą
ą
No change re in-employment requirement.
Post-employment shareholding guideline
formally introduced whereby Executive
Directors will be required to hold full
incumbent shareholding requirement (or
actual shareholding on departure if lower)
for two years post-departure.
(1)
(2)
(3)
Whilst Simon Cooper’s salary was increased to £207,060 with effect from 1 January 2020, Simon voluntarily sacrificed his salary for 7 months of the year in
FY20 in light of the COVID-19 pandemic meaning his actual base salary for FY20 was £85,510.
Shaun Morton’s salary for FY20 has been annualised for the purposes of displaying the year on year change (Shaun was appointed part way through FY20
therefore his actual base salary for FY20 was £52,244).
A proportion of Shaun Morton’s management LTIP (50%) was subject to continued employment, which element vested in full on 30 September 2021. The
remainder of the award is dependent on the achievement of performance conditions over a performance period ending on 31 March 2021.
FY19 LTIP Performance
The table below sets out the performance targets, and actual performance against these, for Simon Cooper’s FY19 LTIP award.
Weighting
Threshold
(25% vests)
Maximum
(100% vests)
EPS(1)
70%
77.3p
TSR(2)
30%
8%
94.5p
15%
(1)
(2)
Cumulative EPS for financial years FY19, FY20 and FY21
Annualised TSR of the Company over the three year period to 12 February 2022
Actual
(34.7p)
Outcome
0%
To be determined in
February 2022
To be determined in
February 2022
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
91
GOVERNANCE
Governance
Remuneration Policy
Introduction
This section describes the Committee’s Policy on the remuneration of Directors. The Policy will be put to shareholders for approval
at the AGM on 25 February 2022. If approved, it will come into effect from the date of the AGM and is intended to apply for a
period of three years.
The Remuneration Committee considers that a successful remuneration policy needs to be sufficiently flexible to take account of
future changes in the Company’s business environment and in remuneration practices, while delivering appropriate remuneration
for the performance, responsibility, skills and experience of Executive Directors.
The Policy is therefore designed around the following key principles:
ą
Shareholder alignment - Ensure a strong link between reward and individual and Company performance to align the interests of
Executive Directors, senior management and employees with those of shareholders;
Competitive remuneration - Maintain a competitive package against businesses of a comparable size and nature in order to
attract, retain and motivate high-calibre talent to help ensure the Company’s continued growth and success;
Strategic alignment – Provide a package with an appropriate balance between short and longer term performance targets linked
to the delivery of the Company’s business plan;
Performance focused compensation – Encourage and support a high performance culture; and
Setting appropriate performance conditions - in line with the agreed risk profile of the business.
ą
ą
ą
ą
Changes to the remuneration policy that was approved by shareholders at the AGM in 2019
The Remuneration Committee has carried out a comprehensive review of the policy taking into account business strategy,
best practice, and the revised UK Corporate Governance Code which was published during the current policy period. The
Committee believes that the construct of the current Policy remains fit for purpose, and therefore only proposes to make some
minor amendments to ensure full compliance with the UK Corporate Governance Code and to allow more flexibility in selecting
performance metrics which fully support the business strategy as we emerge from the COVID-19 pandemic.
The Company is in a strong position to capture market share as we emerge from the pandemic, and the updated Policy supports
this by providing the Committee with flexibility to adapt the implementation in response to market changes and the evolving
business strategy. We are however entering a period of transition into the post-COVID world and, while no significant changes
are proposed at this time, the Policy has been designed with this transition period in mind. The Committee intends to carry out a
further review of the Policy once the travel industry and the wider economy stabilises.
The proposed changes to the policy are set out in the table below:
Element of
remuneration
Base salary
and benefits
Pension
Current policy
Amendment to policy
Reason for change
Salaries are reviewed annually
and any changes are normally
effective from 1 January in the
financial year.
A competitive level of benefits
is provided.
15% of base salary for
existing Executive Directors
(as at 30/09/2018). Pension
contribution will be aligned
with the wider workforce for
any future recruited Executive
Director.
No change
N/A
Pension provision for all
Executive Directors is aligned
with the wider workforce
(currently 3% of salary).
Formalises the existing level of
pension provision in line with the wider
workforce following the appointment of
Shaun Morton as CFO.
Alignment with the wider workforce
ensures full compliance with the
UK Corporate Governance Code,
shareholder expectations and market
best practice.
92
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Annual bonus Maximum opportunity of
100% of base salary, with up
to 50% of any award deferred
into shares for a period of two
years.
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.
Long term
incentive plan
Maximum opportunity of
200% of base salary.
Three year performance period
plus a two year post-vesting
holding period.
Performance based on EPS
and TSR performance.
Shareholding
requirement
200% of base salary to be built
up over a five year period and
then subsequently held.
Ensures the Remuneration Committee
can apply performance targets to the
annual bonus awards which drive the
short-term business strategy.
No change to maximum
opportunity or deferral
mechanism.
The annual bonus will be based
on a scorecard of financial and
non-financial performance
targets which are aligned to the
business strategy. At least half
of the bonus will be based on
financial performance.
No change to normal maximum
opportunity, performance period
or post-vesting holding period.
Introduction of an exceptional
maximum opportunity of 300%
of base salary.
The majority of the awards will
be based on financial metrics,
with the balance based on
strategic metrics.
From FY22, Executive Directors
will be required to retain 100%
of their shareholding requirement
(i.e. 200% of base salary) for
two years post-cessation (or full
actual holding if lower).
Ensures the Remuneration Committee
has flexibility to grant a larger LTIP
award where this is necessary in
exceptional circumstances, such as to
secure an external appointment or in
specific retention scenarios.
Ensures the Remuneration Committee
can apply performance metrics to the
LTIP awards which maximise alignment
with the long term business strategy,
while ensuring that a majority remains
focused on financial performance.
Ensures full compliance with the
UK Corporate Governance Code,
shareholder expectations, and market
best practice.
The malus and clawback provisions within the incentive plans will also be extended to include corporate failure and reputational
damage as additional triggers to protect against payment for failure.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
93
GOVERNANCE Governance
Remuneration Policy
The following table summarises each element of remuneration and how it supports the Company’s short and long term strategic
objectives.
Performance metrics used,
weighting and time period
applicable
None
Element of
remuneration
Operation
Opportunity
Base Salary
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.
Salaries are reviewed annually and
any changes are normally effective
from 1 January in the financial year.
When determining an appropriate
level of salary, the Remuneration
Committee considers:
ą
remuneration practices within the
Company;
the performance of the individual
Executive Director;
the individual Executive Director’s
experience and responsibilities;
the general performance of the
Company;
salaries within the ranges paid by
the companies in the comparator
group used for remuneration
benchmarking; and
the economic environment.
ą
ą
ą
ą
ą
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.
Individuals who are
recruited or promoted
to the Board may, on
occasion, have their
salaries set below the
targeted policy level until
they become established
in their role. In such cases
subsequent increases in
salary may be higher than
the average until the target
positioning is achieved.
The Committee recognises
that Simon Cooper’s
current base salary is
below the market level,
but when setting Simon’s
base salary has given
regard to his considerable
shareholding in the
Company, and the desire
to focus the remuneration
structure on a long term
strategy.
Benefits
Provides a
competitive level of
benefits.
The Executive Directors receive
benefits which include family private
health cover.
The maximum will be set
at the cost of providing the
benefits described.
None
The Remuneration Committee
recognises the need to maintain
suitable flexibility in the
determination of benefits that ensure
it is able to support the objective of
attracting and retaining personnel.
Accordingly, the Remuneration
Committee expects to be able to
adopt benefits such as relocation
expenses, car allowance benefit,
death in service life assurance, travel
expenses (including tax if any), tax
equalisation and support in meeting
specific costs incurred by directors.
94
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Pensions
Provides market
competitive
retirement benefits.
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.
None
Pension provision for all
Executive Directors is
aligned with the wider
workforce (currently 3% of
salary).
Annual bonuses are paid part in cash
and part in shares. Up to 50% of any
award will be deferred into shares for
two years.
The maximum bonus
opportunity is 100% of
base salary.
Malus will apply up to the date of the
bonus determination and clawback
will apply for two years from the date
of bonus determination.
Annual Bonus Plan
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.
Performance is measured over
the financial year.
The annual bonus will be based
on a scorecard of financial and
non-financial performance
targets which are aligned to the
business strategy. At least half
of the bonus will be based on
financial performance.
The Remuneration Committee
is of the opinion that given the
commercial sensitivity arising
in relation to the targets used
for the annual bonus, disclosing
precise targets for the bonus
plan 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
Remuneration 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.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
95
GOVERNANCE Governance
Remuneration Policy
Long-Term Incentive
Plan (LTIP) 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.
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:
ą the Executive Director’s
continued employment at the
date of vesting; and
ą 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 two year
period from grant to vesting with
clawback applying for the two year
period post vesting.
Maximum annual award of
200% of base salary.
In exceptional
circumstances, such as
to secure an external
appointment or in specific
retention scenarios, an
award of up to 300% of
salary may be made.
25% of the award will vest
for threshold performance.
100% of the award
will vest for maximum
performance. Straight line
vesting between these
points.
The majority of the awards will
be subject to financial metrics,
with the balance based on
strategic metrics.
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 Remuneration
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
To encourage
wide employee
share ownership
and thereby align
employees’ interests
with shareholders.
Shareholding
Requirement
To support long
term commitment
to the Company and
the alignment of
Executive Director
interests with those
of shareholders.
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).
UK scheme in line with
HMRC limits as amended
from time to time.
None
N/A
None
200% of salary for all Executive
Directors, to be reached over a five-
year period from appointment to the
Board.
Executive Directors must retain
a shareholding on cessation of
employment for two years equal to
the lower of 200% of salary and the
actual shareholding on cessation.
Shares bought by Executive Directors
and shares granted prior to this
policy coming
Adherence to these guidelines is a
condition of continued participation
in the equity incentive arrangements.
96
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
The base fees for Non-
Executive Directors are set
at a market rate.
None
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 Chairman
and Non-Executive
Directors.
Non-Executive
Director fees
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.
The Board as a whole is responsible
for setting the remuneration of the
Non-Executive Directors, other than
the Chairman 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 Company does
not receive any additional fees for
membership of committees.
Fees are typically reviewed every
three 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.
Discretion
The Remuneration Committee has discretion in several
areas of Policy as set out in this report. The Remuneration
Committee may also exercise operational and administrative
discretions under relevant plan rules approved by shareholders
as set out in those rules. In addition, the Remuneration
Committee has the discretion to amend the Policy with regard
to minor or administrative matters where it would be, in the
opinion of the Remuneration Committee, disproportionate to
seek or await shareholder approval.
Differences in policy from the wider employee population
The Group aims to provide a remuneration package for all
employees that is market competitive and operates the same
reward and performance philosophy throughout the business.
As with many companies, the Group operates variable pay
plans primarily focused on mid to senior management level.
Recruitment policy
The Company’s approach when setting the remuneration of
any newly recruited Executive Director will be assessed in line
with the same principles for the Executive Directors, as set
out in the remuneration policy table above. The Remuneration
Committee’s approach to recruitment remuneration is to
pay no more than is necessary to attract candidates of
the appropriate calibre and experience needed for the role
from the market in which the Company competes. The
Remuneration Committee will have regard to guidelines and
shareholder sentiment regarding one-off or enhanced short-
term or long-term incentive payments made on recruitment
and the appropriateness of any performance measures
associated with an award.
The remuneration package for a new Executive Director
would be set in accordance with the terms of the Company’s
approved policy. In the year of recruitment, the maximum
variable pay will be 400% of salary (other than in exceptional
circumstances where up to 500% of salary may be made if
sign-on compensation is provided).
The Remuneration Committee’s policy is not to provide sign on
compensation. However, in exceptional circumstances where
the Remuneration Committee decides to provide this type of
compensation it will endeavour to provide the compensation
in equity, subject to a holding period during which cessation
of employment will generally result in forfeiture and subject to
the satisfaction of performance targets. The maximum value of
this one off compensation will be proportionate to the overall
remuneration offered by the Company and in all circumstances
is limited to 100% of salary.
The Committee will carefully consider this matter to ensure
consistency with the principles outlined earlier, particularly in
relation to shareholder alignment, and will take appropriate
external advice before finalising a decision in this regard
and where practical will consult with the Company’s key
shareholders.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
97
GOVERNANCE The dates of appointment of the Non-Executive Directors and
their notice periods are as stated in the table below.
Non-Executive
Director
Date of
appointment
Notice period
David Kelly
28 September
2015
3 months
Elaine O’Donnell
3 July 2018
3 months
Richard Pennycook
1 April 2019
3 months
Justine Greening
4 March 2021
3 months
The terms of the Non-Executive Directors’ positions are
subject to their re-election by the Company’s shareholders
at the AGM scheduled to be held on 25 February 2022 and
to re-election at any subsequent AGM at which the Non-
Executive Directors stand for re-election.
Payment for loss of office
The Remuneration Committee will honour Executive Directors’
contractual entitlements. Service contracts do not contain
liquidated damages clauses. If a contract is to be terminated,
the Remuneration Committee will determine such mitigation
as it considers fair and reasonable in each case. There are no
contractual arrangements that would guarantee a pension
with limited or no abatement on severance or early retirement.
There is no agreement between the Company and its
Executive Directors or employees providing for compensation
for loss of office or employment that occurs because of a
takeover bid.
The Remuneration Committee reserves the right to make
additional payments where such payments are made in good
faith in discharge of an existing legal obligation (or by way
of damages for breach of such an obligation); or by way of
settlement or compromise of any claim arising in connection
with the termination of an Executive Director’s office or
employment.
Governance
Remuneration Policy
The Remuneration Committee’s policy is not to provide buy
outs as a matter of course. However, should the Remuneration
Committee determine that the individual circumstances of
recruitment justified the provision of a buyout, the equivalent
value of any incentives that will be forfeited on cessation of a
director’s previous employment will be calculated taking into
account the following:
ą
ą
ą
The proportion of the performance period completed on
the date of the director’s cessation of employment;
The performance conditions attached to the vesting of
these incentives and the likelihood of them being satisfied;
and
Any other terms and conditions having a material effect
on their value (“lapsed value”).
The Remuneration Committee may then grant up to the
same value as the lapsed value, where possible, under
the Company’s incentive plans. To the extent that it was
not possible or practical to provide the buyout within the
terms of the Company’s existing incentive plans, a bespoke
arrangement would be used.
Where an existing employee is promoted to the Board, the
policy set out above would apply from the date of promotion
but there would be no retrospective application of the policy
in relation to subsisting incentive awards or remuneration
arrangements. Accordingly, prevailing elements of the
remuneration package for an existing employee would be
honoured and form part of the ongoing remuneration of the
person concerned. These would be disclosed to shareholders
in the Remuneration Report for the relevant financial year.
The Company’s policy when setting fees for the appointment
of new Non-Executive Directors is to apply the policy which
applies to current Non-Executive Directors.
Service agreements and letters of appointment
Each of the Executive Directors’ service agreements is for
a rolling term and may be terminated by the Company
or the Executive Director by giving 6 months’ notice. The
Remuneration Committee’s policy for setting notice periods is
that a 6 month period will apply for Executive Directors. The
Remuneration Committee may in exceptional circumstances
arising on recruitment, allow a longer period of up to 12
months, which would in any event reduce to 6 months
following the first year of employment.
The Non-Executive Directors of the Company (including the
Chairman) do not have service contracts. The Non-Executive
Directors are appointed by letters of appointment which set
out the terms and conditions of their appointment.
98
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
When determining any loss of office payment for a departing individual, the Remuneration Committee will always seek to minimise
cost to the Company whilst seeking to address the circumstances at the time.
Remuneration element
Treatment on exit
Salary, benefits and
pension
Salary, benefits and pension will normally be paid over the notice period. The Company has
discretion to make a lump sum payment on termination equal to the salary, value of benefits
and value of Company pension contributions payable during the notice period. In all cases, the
Company will seek to mitigate any payments due.
Annual bonus plan
If the executive is a good leaver, the bonus will be pro-rated to time and performance for year of
cessation. Otherwise, no bonus is payable for the year of cessation.
LTIP
Good leaver reason – pro-rated to time and performance in respect of each subsisting LTIP
award.
If the executive is a good leaver, LTIP award will be pro-rated to time and performance in respect
of each subsisting LTIP award. Otherwise, any unvested LTIP awards will vest. The Remuneration
Committee has the discretion to pro-rate the maximum number of shares to the time from the
date of grant to the date of cessation. It is the Remuneration Committee’s intention to only
use this discretion in circumstances where there is an appropriate business case which will be
explained in full to shareholders.
The Remuneration Committee also has discretion to reduce the level of vesting of an award from
the formulaic level of vesting if, in the opinion of the Board, the performance of the Executive
Director or the Company justifies such a reduction.
The post-vesting holding period will continue to apply irrespective of employment status unless
the Committee, in exceptional circumstances, determines otherwise.
Post cessation
shareholding requirement
Upon departure, individuals will be required to retain 100% of their shareholding requirement (or
full actual holding if lower) for a period of two years post-cessation.
Change of control
The Remuneration Committee’s policy on the vesting of incentives on a change of control is summarised below:
Name of incentive plan
Change of control
Discretion
Annual bonus plan
Pro-rated to time and performance to the
date of the change of control.
The Remuneration Committee has discretion to
continue the operation of the Plan to the end of the
bonus year.
LTIP
The number of shares subject to subsisting
LTIP awards vesting on a change of control
will be pro-rated to time and performance
to the date of the change of control.
The Remuneration Committee retains absolute
discretion regarding the proportion vesting taking
into account time and performance.
There is a presumption that the Remuneration
Committee will pro-rate to time. The Remuneration
Committee will only waive pro-rating in exceptional
circumstances where it views the change of
control as an event which has provided a material
enhanced value to shareholders which will be
fully explained to shareholders. In all cases the
performance conditions must be satisfied.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
99
GOVERNANCE Illustrations of application of remuneration policy
The charts below illustrate how the potential future
remuneration of the Executive Directors may vary at different
levels of performance and the percentage each element may
form together with the possible total value. For the purpose of
this chart, the following assumptions have been made:
ą
ą
ą
ą
ą
ą
ą
ą
The base salary levels are those in effect as at the date of
the 2022 AGM.
Fixed elements comprise base salary, pension and other
benefits.
Benefits levels are assumed to be the same as in the
2021 financial year for each Executive Director.
Bonus opportunity and LTIP award levels are the
maximum levels set out in the Policy table above.
For target performance, assumptions of bonus payout
of 50% of maximum and LTIP vesting at 62.5% of
maximum.
For maximum performance, assumptions of bonus payout
of 100% of maximum and maximum vesting of the LTIP
at 100% of salary.
No share price increase has been assumed, save for in the
scenario which illustrates the impact of 50% share price
appreciation on the potential value of future remuneration.
Dividend equivalents have not been added to LTIP share
awards.
Governance
Remuneration Policy
Consideration of shareholder views
The Remuneration Committee considers shareholder feedback
received in relation to the AGM each year and guidance from
shareholder representative bodies more generally.
In formulating the 2021 remuneration policy the Committee
also consulted directly with a number of the Company’s
significant shareholders regarding their views on remuneration
practices and policies. The views expressed during these
consultations were taken into consideration as part of the
review of the policy.
Consideration of conditions elsewhere in the company
The Remuneration Committee considers pay and employment
conditions across the Company when reviewing the
remuneration of the Executive Directors and other senior
employees. In particular, the Remuneration Committee
considers the range of base pay increases across the Group
when reviewing base salaries for Executive Directors in
addition to a range of applicable pay ratios.
The Committee supports the Board’s initiative to ensure
employee views and concerns are taken into account in its
decision making and has a clear understanding of pay and
benefits at all team member levels in the Group. This includes
decisions relating to the remuneration arrangements for senior
management and the Executive Directors.
Our employees are critical to our success and we aim
to provide market competitive remuneration and benefit
packages in order to continue to be seen as an employer of
choice. The remuneration structure for our wider workforce
is similar to that of our Executive Directors and contains both
fixed and performance-based elements. Generally, the more
senior the individual, the greater the variable pay offer as a
proportion of overall pay due to the ability of senior managers
to impact more directly upon Company performance.
Whilst the Committee does not consult directly with
colleagues when determining the Remuneration Policy
for Executive Directors, awards under the LTIP scheme
are operated for other colleagues to ensure alignment of
objectives across the Group and pension entitlement for
the current Executive Directors is in line with the rest of
the workforce. We also have an open, collaborative and
inclusive management structure and engage regularly with
our employees on a range of issues including the Group’s
approach to remuneration. We do this through employee
surveys, our weekly company-wide Beach Life calls and
regular appraisals. Last year, we strengthened the link
between employees and the Board following David Kelly’s
appointment as the designated Non-Executive Director for
employee engagement. You can read more about how we
engage with our workforce on page 59.
100
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
CEO (£’000)
CEO
Maximum with 50% SP
appreciation
20.6%
19.8%
Maximum
25.7%
24.8%
39.7%
49.5%
872
19.8%
1,087
On-target
36%
17.9%
44.8%
602
Minimum
100%
224
£0
£200,000
£400,000
£600,000
£800,000
£1,000,000
£1,200,000
Salary, benefits and pension
Bonus
LTIP
LTIP (50% share price appreciation)
CFO (£’000)
CFO
Maximum with 50% SP
appreciation
20.6%
19.9%
Maximum
25.7%
24.8%
39.7%
49.5%
19.9%
1,385
1,110
On-target
37.2%
17.9%
44.8%
767
Minimum
100%
285
£0
£200,000
£400,000
£600,000
£800,000
£1,000,000
£1,200,000
£1,400,000
£1,600,000
Salary, benefits and pension
Bonus
LTIP
LTIP (50% share price appreciation)
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
101
GOVERNANCE Governance
Annual Report on Remuneration
The Remuneration Committee’s Annual Report on remuneration for the year ended 30 September 2021 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 on page 14. In the table below, we
summarise how the Company’s strategic priorities are aligned with the remuneration policy.
Strategic priority
1
Invest in talent and technology.
3
Optimise our direct and differentiated supply.
5
Diversify into adjacent beach holiday markets.
2
4
6
Become a brilliant digital brand.
Grow our share of B2B beach.
Champion customer-centric change.
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
2
Net Promoter Score
(NPS)
Annual bonus
1 year
Customer satisfaction will be positively impacted by the
following strategic priorities:
1
2
3
4
5
6
Prompted brand
consideration
Annual bonus
1 year
Progress towards the following strategic priorities drive our
brand consideration:
Passenger growth
Annual bonus
1 year
1
2
3
4
5
6
Passenger numbers growth will be driven by the following
strategic priorities:
1
2
3
4
5
6
EBITDA growth
LTIP scheme
3 years
Progress towards the following strategic priorities drive an
increase in earnings over the longer term
Group TTV
LTIP Scheme
3 years
Absolute and Relative
Total Shareholder
Return (TSR)
LTIP scheme
3 years
102
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
1
2
3
4
5
6
Progress towards the following strategic priorities drive an
increase in the total transaction value for bookings made by
the Group:
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
Single total figure of remuneration
Executive and Non-Executive Directors (Audited)
The tables below sets out the single total figure of remuneration and breakdown for each Executive and Non-Executive Director in
respect of the 2021 financial year. Comparative figures for the 2020 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), as amended in
2018 and 2019.
Single total figure of remuneration for Executive Directors (audited)
Simon Cooper
Shaun Morton(1)
2021
2020
2021
2020
(£’000)
(£’000)
(£’000)
(£’000)
Fixed Pay
Base Salary
207
86(2)
250
Benefits(3)
Pension(4)
Total Fixed Pay
Variable Pay
Bonus(5)
LTIP(6), (7), (8)
Total Variable Pay
2
1
210
0
0
0
2
1
89
0
0
0
Total Single Figure of Remuneration
210
89
1
1
252
0
224
224
476
52
0.5
0.5
53
0
0
0
53
(1) Shaun Morton joined the Board on 17 July 2020. The 2020 remuneration data reflects pay for the period in which he was a Director of the Company.
(2) Simon Cooper’s salary was increased to £207,060 with effect from 1 January 2020 however Simon voluntarily sacrificed his salary for 7 months of the year from
March 2020 to September 2020 in light of the COVID-19 pandemic.
(3) Taxable benefits received were family medical insurance.
(4) Pension benefits are employer contributions to the Group workplace pension scheme (3% of eligible earnings) in line with the rest of the workforce.
(5) Annual bonus payments for performance in the relevant financial year. For FY20 and FY21, no bonuses have been paid.
(6) The value of the LTIP for 2020 for Simon Cooper relates to the 2018 award, which had a three-year performance period, ending 30 September 2020. Based on
performance over this period, the Remuneration Committee determined that none of the award would vest.
(7) The proportion of Simon Cooper’s 2019 LTIP award which was subject to EPS performance (70% of the overall award) lapsed in full due to the performance
condition not being achieved. The remaining 30% of this award is subject to an ongoing Absolute TSR performance condition and will not vest until February 2022,
subject to performance against this.
(8) The value of Shaun Morton's LTIP for 2021 relates to two awards that were granted prior to his appointment to the Board. Shaun Morton's FY19 LTIP award had
a three year vesting period ending 30 September 2021 and was subject to continued employment (no performance conditions). An element of Shaun Morton's
FY19 Management LTIP was subject to continued employment, which vested on 30 September 2021, with the balance subject to performance conditions due to
vest on the later of 31 March 2022 and the date that the Remuneration Committee determines the extent to which the performance conditions have been satisfied.
To the extent that these awards have vested, there is no value attributable to share price appreciation.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
103
GOVERNANCE
Governance
Annual Report on Remuneration
Single total figure of remuneration for Non-Executive Directors (audited)
Richard Pennycook
David Kelly
Elaine O’Donnell
Justine Greening(1)
2021
2020
2021
2020
2021
2020
2021
2020
(£’000)
(£’000)
(£’000)
(£’000)
(£’000)
(£’000)
(£’000)
(£’000)
Fees(2)
Benefits
Pension
Fixed
Pay
161
145
63
57
57
51
28
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total Fixed Pay
161
145
63
57
57
51
28
Bonus
Variable
Pay
LTIP
Total Variable Pay
Total Single Figure of
Remuneration
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
161
145
63
57
57
51
28
-
-
-
-
-
-
-
-
(1) The 2021 remuneration data reflects that Justine Greening was appointed Non-Executive Director from 4 March 2021
(2)
The 2020 remuneration data reflects that all Non-Executive Directors serving at the time voluntarily agreed to a 20% reduction in their fees for 6 months of the
year from April 2020 to September 2020 in light of COVID-19.
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)
2021 annual bonus awards and performance targets
For the year ended 30 September 2021, the maximum bonus opportunity for Simon Cooper and Shaun Morton, would have been
100% of salary.
As noted in the Chairman’s statement, the performance of the Group in FY21 has continued to be significantly impacted by
COVID-19. Whilst the Committee recognises the strong contribution of the Executive Directors during FY21, and the actions
taken to mitigate the impact of the global pandemic and protect the Group for the long term, the Committee determined (with the
agreement of the CEO and CFO) that it would not be appropriate to pay a bonus to the Executive Directors for FY21. The annual
bonus plan was therefore cancelled for the year.
Long term incentives awarded in FY19 with performance period ending in 2021 and 2022
Simon Cooper was granted an LTIP award on 12 February 2019 that is due to vest in February 2022. Performance under the
award is based on EPS (70% weighting) and annualised TSR (30% weighting), as set out below. The three year performance
period in relation to the EPS element ended on 30 September 2021 and the three year performance period in relation to the TSR
element is due to end on 12 February 2022.
104
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
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
Below threshold
Less than 77.3p
Threshold
Maximum
77.3p
94.5p
Vesting
0%
25%
100%
Between threshold and maximum
Between 77.3p and 94.5p
Straight line vesting between 25% and
100%
Actual EPS: (34.7p)
0%
Based on the above performance outcome, the EPS condition was not satisfied, therefore 70% of Simon’s FY19 award will lapse.
No discretion will be applied to the final vesting outcome in relation to the EPS element.
The Absolute TSR condition applying to 30% of the award is provided in the table below:
Performance tier
Below threshold
Threshold
Maximum
Annualised TSR over the three year period to
12 February 2022
Less than 8%
8%
15% or above
Vesting
0%
25%
100%
Between threshold and
maximum
Between 8% and 15%
Straight line vesting between 25% and
100%
The extent to which the Absolute TSR condition has been satisfied will be determined following expiry of the three year
performance period ending 12 February 2022. No discretion will be applied to the final vesting outcome in relation to the TSR
element.
Long term incentives awarded in 2021 (audited)
The table below sets out the details of the Long-Term Incentive Plan awards granted in the 2021 financial year. 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
Simon
Cooper
LTIP –
nil cost
option
100% of
salary
Shaun
Morton
LTIP –
nil cost
option
200% of
salary
£207,060
84,861
Nil
25%
£500,000
204,918
Nil
25%
Performance
period end date
Performance
conditions
30 September
2023
5 February 2024
30 September
2023
EPS (70%)
Absolute TSR
(30%)
EPS (70%)
5 February 2024
Absolute TSR
(30%)
The awards were granted on 5 February 2021. The number of shares awarded is calculated using the closing share price on 30
September 2020, which was £2.44.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
105
GOVERNANCE
Governance
Annual Report on Remuneration
The EPS condition applying to 70% of the awards is provided in the table below:
Performance tier
EPS for the last financial year of the
EPS performance period (FY23)
% of EPS element capable of
vesting
Below threshold
Less than 17.27 pence
Threshold
Maximum
17.27 pence
23.37 pence or above
0%
25%
100%
Between threshold and maximum
Between 17.27 and 23.37 pence
Pro-rata between 25% - 100%
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
Less than 8%
8%
15% or above
Vesting
0%
25%
100%
Between threshold and maximum
Between 8% and 15%
Pro-rata between 25% - 100%
Absolute TSR is averaged over a one month period prior to the beginning and end of the performance period.
Payments to past directors
There were no payments made to past directors during FY21.
Statement of directors’ shareholdings and share interests (audited)
Director
Simon Cooper
Shaun Morton
Share plan awards
subject to performance
condition
Share plan awards
subject to continued
employment
Share plan interests
vested but unexercised
Shares held out-
right(1)
179,435
249,918(3)
-
30,286 (4)
50,298(2)
74,358(5)
7,849,603
3,030
Between 30 September and the date of this report (9 December 2021), Simon Cooper and Shaun Morton’s shareholdings and share
interests remained unchanged.
(1)
This information includes holdings of any connected persons.
(2) Simon Cooper’s 2016 LTIP award vested on 27 November 2018 and his 2017 award vested on 26 November 2019. Performance in relation to both awards was
based on EPS (70% weighting) and annualised TSR (30% weighting) over the three-year period to 30 September 2018 and 30 September 2019 respectively.
30% of the 2016 award vested, equivalent to 27,522 nil-cost options and 22.9% of the 2017 award vested, equivalent to 22,776 nil-cost options. Simon’s 2018
LTIP did not vest as the performance outcome was nil.
(3)
In addition to the 2021 LTIP award referred to above, which was granted to Shaun when he was a director of the Company, Shaun was also granted a
management LTIP award in FY19 during his tenure as Director of Finance over a total of 45,000 share plan awards which are subject to performance conditions.
(4) During Shaun’s tenure as Director of Finance (and therefore prior to him becoming a statutory director), Shaun was granted awards over 30,286 shares which are
subject to continued employment. These awards are due to vest between October 2021 and September 2022.
(5) During Shaun’s tenure as Director of Finance, he was granted awards over a total of 74,358 shares which have vested between September 2020 and September
2021 but have not yet been exercised.
106
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
The table below sets out details of the share options exercised by Executive Directors during the year:
Director
Simon Cooper
Shaun Morton
Share plan interests exercised during the year to 30 September 2021
Number of options exercised
Share price on date of exercise
-
-
N/A
N/A
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)
Shareholding requirement met?
Simon Cooper
200% of salary
7,906,261
14,624%
Shaun Morton(3)
200% of salary
55,461
85%
Yes
No
(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 3.83 pence as at 30 September 2021 (the last business day of the financial year ending 30 September 2021) has been taken for the purpose of
calculating the current shareholding as a percentage of salary.
(3) Shaun Morton joined the Company as CFO on 17 July 2020 and has five years from this date to build up his shareholding requirement.
Non-Executive Directors are not subject to a shareholding requirement. Details of their interests in shares are set out below:
Director
Shares held 30 September 2021
Richard Pennycook
David Kelly
Elaine O'Donnell
Justine Greening
48,267
10,258
11,447
3,636
Between 30 September and 9 December 2021, the Non-Executive Directors’ interest in shares remained unchanged.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
107
GOVERNANCE
Governance
Annual Report on Remuneration
Comparison of overall performance and pay (TSR graph)
The graph below shows the value of £100 invested in the Company’s shares since listing compared to both the FTSE 250 and
FTSE Small Cap indices. These indices were chosen as they each reflect an index to which the Group has been a constituent
since the IPO in 2015. The graph shows the Total Shareholder Return generated by both the movement in share value and the
reinvestment over the same period of dividend income. This graph has been calculated in accordance with the Regulations. It
should be noted that the Company listed on 28 September 2015 and therefore only has a listed share price for the period from 28
September 2015 to 30 September 2021.
n
r
u
t
e
r
l
r
e
d
o
h
e
r
a
h
s
l
a
t
o
T
)
O
P
I
t
a
t
n
e
m
t
s
e
v
n
i
0
0
1
£
g
n
m
u
s
s
a
(
i
300
250
200
150
100
50
0
IPO Sep
15
Dec
15
Mar
16
Jun
16
Sep
16
Dec
16
Mar
17
Jun
17
Sep
17
Dec
17
Mar
18
Jun
18
Sep
18
Dec
18
Mar
19
Jun
19
Sep
19
Dec
19
Mar
20
Jun
20
Sep
20
Dec
20
Mar
21
Jun
21
Sep
21
On the Beach
FTSE Small Cap
FTSE 250
Chief Executive Officer historical remuneration
The table below sets out the total remuneration delivered to the Chief Executive Officer since Admission:
Chief Executive Officer
Total Single Figure (£000s)
2021
2020
2019
2018
2017
2016
2015
210
89
305
316
201
239
131
Annual bonus payment level achieved (% of maximum
opportunity)
LTIP vesting level achieved (% of maximum opportunity)
-
-
-
-
-
-
-
27.8%
-
22.9% 30%
n/a
n/a
n/a
It should be noted that the Company only introduced the LTIP on admission to the London Stock Exchange, with the first grant
made in May 2016.
The employee engagement committee and other engagement initiatives continue to meet and have a tangible input into all matters
affecting the Company, including remuneration and benefits. Further details on these initiatives can be found on pages 54 to 59.
108
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Relative importance of the spend on pay
The table below sets out the relative importance of spend on pay in the 2020 and 2021 financial years compared with other
disbursements. All figures provided are taken from the relevant Company Accounts.
Profit distributed by way of dividend
Overall spend on pay including Executive
Directors
Disbursements from profit
in 2021 financial year
Disbursements from profit
in 2020 financial year
(£m)
-
23.1
(£m)
2.6
19.0
% change
(100%)
21%
CEO pay ratio reporting
In accordance with the Companies (Miscellaneous Reporting) Regulations 2018, we have set out below the ratio of CEO pay
(based on single total figure of remuneration) to that of UK employees for 2021. The calculation has been performed in line with
‘Option A’ and is based on the total single figure of remuneration methodology.
Year
Methodology
25th percentile pay ratio
Median pay ratio
75th percentile pay ratio
2020/21
Option A
11:1
8:1
4:1
We used ‘Option A’ as we believe this is the most statistically robust method and is in line with the general preference of
institutional shareholders. All figures are calculated using pay and benefits data for the financial year to 30 September 2021 for
individuals employed as at the financial year end. The pay ratio has been calculated using the actual pay and benefits received in
FY21. No elements of pay were omitted. Full-time equivalent figures were determined by up-rating relevant pay elements based
on the average proportion of full-time hours the employee worked during the year and (for joiners during the year) the proportion
of the year they were employed. Employees who left during the year were not included in the calculation. Each employee’s total
pay and benefits was calculated taking into account any reduced level of pay during the year (for example whilst furloughed under
the Coronavirus Government Job Retention Scheme).
The table below sets out the salary, and total pay and benefits, for each of the 3 quartile employees (P25, P50 and P75)
25th percentile (P25)
Median (P50)
75th percentile (P75)
Salary
Total pay and benefits
£19,000
£19,760
£26,755
£27,300
£47,275
£48,488
The Committee believes that the median ratio is consistent with the pay, reward and progression policies for the Group’s
employees. Base salaries of all employees, including our Executive Directors, are set with reference to a range of factors including
market practice, experience and performance in role. In reviewing the ratios the Committee also noted that the CEO’s remuneration
package is weighted more heavily towards variable pay (including the bonus and LTIP) than the wider workforce due to the nature
of the role, and this means the ratio is likely to fluctuate depending on the performance of the business and associated outcomes of
incentive plans in each year.
There is a higher pay ratio this year compared to last year (median pay ratio last year was 3:1) due to the fact that last year, Simon
Cooper voluntarily sacrificed his salary for 7 months of the year in light of the COVID-19 pandemic.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
109
GOVERNANCE
Governance
Annual Report on Remuneration
Change in Directors’ remuneration compared with employees
The following table sets out the percentage change in the salary/fees, benefits and bonus for each Director from 2020 to 2021
compared with the average percentage change for employees.
Executive Directors
Simon Cooper
Shaun Morton(1)
Non-Executive Directors
Richard Pennycook
David Kelly
Elaine O'Donnell
Justine Greening(2)
Wider workforce
Average employee of the Company
Average employee – Group wide(3)
Salary/fees
Benefits
Bonus
139%
0%
11%
11%
11%
-
-
2%(4)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The increases in Executive and Non-Executive Directors’ pay are due to salaries sacrificed during FY20.
(1) Shaun Morton’s salary for FY20 has been annualised for the purposes of calculating the percentage change (Shaun was appointed to the Board on 17 July 2020).
(2)
Justine Greening was appointed to the Board on 4 March 2021, therefore there is no FY20 comparison.
(3) As the only employees of the Company are its Directors, we have presented data based on average remuneration for employees across the Group.
(4) Average employee percentage change is based on earnings of full time employees that were employed throughout the current and comparison period.
Shareholder voting at annual general meeting
The Committee is committed to shareholder dialogue, seeks to ensure optimal alignment for all stakeholders and to ensure
shareholders’ views are taken into account in shaping remuneration policy and practice. The Directors’ Annual Report on
Remuneration was subject to a shareholder vote at the AGM on 5 February 2021, the results of which were as follows:
Resolution
Ordinary Resolution to approve the directors’ remuneration report for the year
ended 30 September 2020 (2021 AGM)
For
Against
Withheld
133,484,269
198,964
1,554,078
(99.85%)
(0.15%)
Implementation of remuneration policy in financial year 2022
The Remuneration Committee proposes to implement the Policy for 2022 as set out below. In implementing the Policy, the
Committee will continue to take into account factors such as remuneration packages available with comparable companies, the
Company’s overall performance, internal relativities, achievement of corporate objectives, individual performance and experience,
general market and wider economic trends.
110
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Salary
Last year, neither Simon Cooper nor Shaun Morton received an increase in salary due to the trading performance of the Group
in light of COVID-19 (notwithstanding that the average increase across the wider workforce was 1%). For this year, the
Remuneration Committee has determined that a salary increase of 4.2% will be applied for Simon Cooper, effective 1 January
2022. This is in line with the average increase awarded to the general workforce. Shaun Morton will receive a salary increase of
10.0%, effective 1 January 2022, to reflect his development in role and strong performance since his appointment to the Board in
2020.
Name
Simon Cooper
Shaun Morton
Salary (£)
Percentage Change
2022
2021
£215,757
£207,060
£275,000
£250,000
4.2%
10%
NED fees
Non-Executive Director fees are typically reviewed every three years other than in exceptional circumstances. The last review took
place in September 2018, therefore a review was scheduled to be undertaken during FY21, however in light of the challenges
presented by COVID-19 and the continued market uncertainties, the Board has agreed that the fee review will be deferred for a
year. As such no change to the fees will be made in FY22.
Position
Chairman Fee
Base Fee
Additional fees are paid for:
Senior Independent Director
Chair of Audit Committee
Chair of Remuneration Committee
Fee
£161,000
£48,000
£6,000
£9,000
£9,000
No additional fee is paid to the Chairman as the Chair of the Nomination Committee
Benefits and pension
No changes are proposed to benefits or pension.
Annual bonus plan
The maximum bonus opportunity for the Executive Directors will remain at 100% of salary.
In line with the proposed Policy, 50% of the annual bonus for FY22 will be based on Profit before Tax targets, with the remaining
50% based on performance against other financial and non-financial targets aligned with the company’s strategy. For FY22, the
remaining 50% will be weighted equally across the following metrics:
ą Net promoter score;
ą
ą
ą
Employee engagement;
Prompted brand consideration; and
Passenger number growth.
The Remuneration Committee is of the opinion that given the commercial sensitivity arising in relation to the detailed performance
targets used for the annual bonus, disclosing precise targets for the bonus plan in advance would not be in shareholder interests.
Actual targets will be published following the end of the performance period in line with established practice so shareholders can
fully assess the basis for any pay-outs under the annual bonus.
To ensure that the bonus opportunity results in shareholder alignment and provides greater retention value, up to 50% of any
bonus payment will be deferred into nominal cost share options for two years. Malus and clawback provisions will apply.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
111
GOVERNANCE Governance
Annual Report on Remuneration
LTIP award
It is intended that a grant under the LTIP will be made during FY22. The LTIP award for Simon Cooper will be 100% of salary
(below the 200% of salary limit under the Policy), consistent with FY21, to reflect his material shareholding. The LTIP award for
Shaun Morton will be 200% of salary, consistent with the previous CFO, to help build his shareholding and align with shareholder
interests. In line with the proposed Policy, the performance conditions will be based on targets for Absolute TSR, Relative TSR,
EBITDA growth and the total transaction value of bookings made by the Group (TTV). We will set the performance targets for
the award at the date of grant (expected to be February 2022 subject to approval of the new Policy by shareholders at the AGM
in February 2022). The targets will be disclosed in the RNS announcement accompanying the grant, as well as in next year’s
Directors’ Remuneration Report.
The Committee believes that these measures are transparent, easy to understand, easy to track and communicate, cost effective
to measure and fundamentally aligned to the Group’s strategic goals.
Composition and terms of reference of the Remuneration Committee
The Board has delegated to the Remuneration Committee, under agreed terms of reference, responsibility for the remuneration
policy and for determining specific packages for the Chairman, Executive Directors and such other senior employees of the Group
as the Board may determine from time to time. The terms of reference for the Remuneration Committee are in line with the Code
and are available on the Company’s website, www.onthebeachgroupplc.com.
All members of the Remuneration Committee are independent Non-Executive Directors. The Remuneration Committee receives
assistance from the CEO, CFO and Company Secretary, who attend meetings by invitation, except when issues relating to their
own remuneration are being discussed. The Remuneration Committee met 3 times during FY21 and member attendance is set out
below:
David Kelly (Chair)
Elaine O’Donnell
Richard Pennycook
Justine Greening
(1)
Justine Greening was appointed to the Board on 4 March 2021.
Member from
Meetings attended
August 2015
July 2018
April 2019
3/3
3/3
3/3
March 2021
1/1(1)
Advisers to the Remuneration Committee
During the financial year the Committee took advice from PricewaterhouseCoopers LLP (PwC) who were retained as external
independent remuneration advisors to the Committee.
During the financial year, PwC advised the Company on all aspects of remuneration policy for Executive Directors and members of
the Executive Team.
The Remuneration Committee is satisfied that the advice received was objective and independent and that all individuals who
provided remuneration advice to the Committee have no connections with the Company or its Directors that may impair their
independence. PwC is a member of the Remuneration Consultants Group and the voluntary code of conduct of that body is
designed to ensure objective and independent advice is given to remuneration committees.
PwC received fees of £41,100 for their advice during the year to 30 September 2021.
On behalf of the board
David Kelly
Chair of the Remuneration Committee
9 December 2021
112
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Governance
Other statutory and regulatory disclosures
Statutory information
Information required to be part of the Directors’ Report can be
found elsewhere in this document, as indicated in the table
below and is incorporated into this Report by reference:
Management Report
This Directors’ Report (pages 66 to 127) together with the
Strategic Report (pages 6 to 65) form the Management
Report for the purposes of DTR 4.1.8R.
Section of Report
Page reference
Employee engagement
(page 59)
Employment of disabled
persons
(page 58)
Future developments of the
business
(pages 13-19)
Stakeholder engagement and
s.172 statement
(pages 44-52)
Viability statement
(pages 41-42)
Directors’ interests
(pages 68-69, 74, 107)
Directors’ responsibilities
statement
(page 127)
Greenhouse gas emissions
(pages 63-64)
Risk management
Strategic Report (pages
30-40) and note 23 to
the consolidated financial
statements
Human rights and anti-bribery
and corruption
(page 64)
Diversity
(page 57)
Non-financial key performance
indicators
(pages 21-22)
Directors’ Report
All sections under the heading ‘Governance’ on page 66 of this
document comprise the Directors’ Report for On the Beach
Group plc (company number 09736592) (the ‘Company’) and
its subsidiaries (together the ‘Group’) for the financial year to
30 September 2021.
Strategic Report
All sections under the heading ‘Strategic Report’ on page 5 of
this document comprise the Strategic Report. The Strategic
Report sets out the development and performance of the
Group’s business during the financial year, the position of
the Group at the end of the year and a description of the
principal risks and uncertainties (including the financial risk
management position) which is set out on pages 30 to 40.
UK Corporate Governance Code
The Company’s statement with regards to its adoption of
the UK Corporate Governance Code can be found in the
Corporate Governance Statement on page 70. The Corporate
Governance Statement forms part of this Directors’ Report
and is incorporated into it by reference.
Directors
The names of the Directors who held office during the year
are set out on pages 68 and 69. Biographical details of all the
Directors serving at the date of this annual report are shown
on pages 68 and 69. Subject to law and the Company’s
Articles of Association, the Directors may exercise all of the
powers of the Company and may delegate their power and
discretion to Committees.
Appointment and replacement of Directors
The appointment and replacement of directors is governed
by the Company’s articles of association (‘Articles’), the UK
Corporate Governance Code, the Companies Act 2006 and
related legislation. The Directors may from time to time
appoint one or more directors. The Board may appoint any
person to be a director (so long as the number of directors
does not exceed the limit prescribed in the Articles). Under
the Articles, any such director shall hold office only until the
next AGM and shall then be eligible for election. The Articles
also require that at each AGM any director who held office at
the time of the two preceding AGMs and who did not retire
at either of them must retire, and any director who has been
in office, other than a director holding an executive position,
for a continuous period of nine years or more must retire
from office. However, in accordance with previous years and
in accordance with best practice, all Directors will submit
themselves for re-election at the AGM each year. Any director
who retires at an AGM may offer himself for re-appointment
by the shareholders.
Justine Greening will stand for election and all other Directors
will retire and stand for re-election at the 2022 AGM.
Amendment of Articles of Association
The Company’s Articles of Association may only be amended
by way of a special resolution at a general meeting of the
shareholders. No amendments are proposed to be made at the
forthcoming Annual General Meeting.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
113
GOVERNANCE Governance
Other statutory and regulatory disclosures
Share capital and control
The Company’s issued share capital comprises ordinary
shares of £0.01 each which are listed on the London
Stock Exchange (LSE: OTB.L). The ISIN of the shares is
GB00BYM1K758.
The issued share capital of the Company as at 30 September
2021 comprised 165,399,366 ordinary shares of £0.01
each. Further information regarding the Company’s issued
share capital can be found on page 160 of the financial
statements. Details of the movements in issued share capital
during the year are provided in note 21 to the Group’s financial
statements contained on page 160. All the information
detailed in note 21 on page 160 forms part of this Directors’
Report and is incorporated into it by reference.
At the Annual General Meeting of the Company held on 5
February 2021 the Directors were granted authority from
shareholders to allot shares in the capital of the Company
up to a maximum nominal amount of £1,049,588.24
(104,958,824 shares of £0.01 each), half of which amount
may solely be used in connection with a pre-emptive rights
issue. The Directors will seek to renew this authority at the
2022 AGM.
Allotment of equity securities for cash
During the year under review, the Company completed a non-
pre-emptive placing, pursuant to which it issued an aggregate
of 7,870,000 new ordinary shares of £0.01 each to certain
institutional and qualified professional investors at a placing
price of 330p per ordinary share. The placing price represents
a discount of approximately 5% to the closing share price
of 347.5p on 6 July 2021 (being the business day by which
the placing price was fixed). The aggregate nominal value of
ordinary shares issued pursuant to the placing was £78,700.
The aggregate gross consideration received by the Company
in respect of the placing was approximately £26m.
In accordance with the Pre-Emption Group’s Statement of
Principles, the Directors confirm the net proceeds raised
were £24.9m and the proceeds will provide the Group with
greater resilience, flexibility and firepower through the current
downturn to enable the Group to exit this extended disruptive
period in a strong position. In May 2020, the Company
completed a non-pre-emptive placing of ordinary shares
representing 19.9% of the Company’s existing issued share
capital prior to such placing. Save in respect of the FY20
placing, no other shares have been issued for cash during the
three year period preceding the FY21 placing (other than in
respect of shares issued pursuant to the Company’s employee
share schemes).
Prior to preparing for the equity raise, the Board carefully
considered various options. Taking into account the cost,
timing and complexity of the process, the Board decided it
was in the best interests of the Company to proceed with the
5% equity raise on a non-pre-emptive basis in accordance
with the authority granted at the 2021 AGM. The Company
worked with advisors to ensure the marketing process and
the allocation policy adopted by the brokers were designed in
such a way as to respect pre-emption as far as possible which
was a key area of focus. We also understood our shareholders’
views prior to launching the equity raise and whether it was
going to be something that they were going to be supportive
of as we engaged with shareholders who had been wall
crossed via our brokers beforehand.
Authority to purchase own shares
The Company was authorised by shareholders at the last
AGM to purchase, in the market, up to 15,743,824 shares
(equivalent to 10% of the Company’s ordinary share capital
as at 21 December 2020). No shares were bought back
under this authority for the year ended 30 September 2021.
This authority will expire at the conclusion of the 2022 AGM,
at which a resolution will be proposed for its renewal. The
Directors will only use this power after careful consideration,
taking into account the financial resources of the Company,
the Company’s share price and future funding opportunities.
The Directors will also take into account the effects on
earnings per share and the interests of shareholders generally.
Rights attaching to shares
All shares have the same rights (including voting and dividend
rights and rights on a return of capital) and restrictions as
set out in the Articles, described below. Except in relation
to dividends which have been declared and rights on a
liquidation of the Company, the shareholders have no rights to
share in the profits of the Company. The Company’s shares
are not redeemable. However, following any grant of authority
from shareholders, the Company may purchase or contract
to purchase any of the shares on or off market, subject to the
Companies Act 2006 and the requirements of the Listing
Rules.
No shareholder holds shares in the Company which carry
special rights with regard to control of the Company. There
are no shares relating to an employee share scheme which
have rights with regard to control of the Company that are
not exercisable directly and solely by the employees, other
than in the case of the On the Beach Share Incentive Plan
and the On the Beach Long Term Incentive Plan, where share
interests of a participant in such schemes can be exercised
by the personal representatives of a deceased participant in
accordance with the Scheme rules.
Voting rights
Each ordinary share entitles the holder to vote at general
meetings of the Company. A resolution put to the vote of
the meeting shall be decided on a poll and every member
who is present in person or by proxy shall have one vote for
every share of which they are a holder. The Articles provide
a deadline for submission of proxy forms of not than less than
48 hours before the time appointed for the holding of the
meeting or adjourned meeting. No member shall be entitled
to vote at any general meeting either in person or by proxy, in
respect of any share held by him, unless all amounts presently
payable by him in respect of that share have been paid. Save
as noted, there are no restrictions on voting rights nor any
agreement that may result in such restrictions.
114
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Restrictions on transfer of securities
The Articles do not contain any restrictions on the transfer
of ordinary shares in the Company other than the usual
restrictions applicable where any amount is unpaid on a share.
Certain restrictions are also imposed by laws and regulations
(such as insider trading and marketing requirements relating
to close periods) and requirements of the Market Abuse
Regulation and the Company’s securities dealing code
whereby all employees of the Company require approval to
deal in the Company’s securities.
Change of control
Save in respect of a provision of the Company’s share
schemes which may cause options and awards granted to
employees under such schemes to vest on takeover, there
are no agreements between the Company and its Directors
or employees providing for compensation for loss of office
or employment (whether through resignation, purported
redundancy or otherwise) because of a takeover bid.
The Revolving Credit Facility contains customary prepayment,
cancellation and default provisions including, if required by
a lender, mandatory prepayment of all utilisations provided
by that lender upon the sale of all or substantially all of the
business and assets of the Group or a change of control.
As the Group holds Air Travel Organiser’s Licences, the ATOL
Standard Terms will apply. Those terms include provisions on
change of control.
Employee share schemes
The Company has three employee share schemes in place:
1. A HMRC-approved Share Incentive Plan (“SIP”) to
encourage wide employee share ownership and thereby align
employees’ interests with shareholders;
2. A Long Term Incentive Plan (“LTIP”) under which nil cost
share options are granted to Executive Directors and senior
management linked to achievement in delivering goals which
are closely aligned with the Company’s strategy and the
creation of value for shareholders. The Company also makes
grants of nil cost share options under the LTIP plan in the
form of restricted stock awards to key employees for retention
purposes, and these are accompanied by a CSOP market value
option for tax efficiency purposes; and
3. A Save As You Earn Plan (“SAYE”) which is an all employee
savings related share option plan. Although the SAYE was
approved at the 2018 AGM, it has not yet been rolled out to
employees and there are no immediate plans to do so.
Further details are provided in the Directors’ Remuneration
Report on pages 87 to 112.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
115
GOVERNANCE Governance
Other Statutory and Regulatory Disclosures
Annual General Meeting
The Annual General Meeting for 2022 will be held at 11am on 25 February 2022 at the Company’s headquarters at Aeroworks, 5
Adair Street, Manchester, M1 2NQ.
The Notice of Meeting which sets out the resolutions to be proposed at the forthcoming AGM specifies deadlines for exercising
voting rights and appointing a proxy or proxies to vote in relation to resolutions to be passed at the AGM. All proxy votes will be
counted and the numbers for, against or withheld in relation to each resolution will be announced at the AGM and published on the
Company’s website.
Notifiable changes to substantial shareholdings
During the year the Company has been notified, in accordance with Chapter 5 of the Financial Conduct Authority’s Disclosure
Guidance and Transparency Rules (DTR5) of the following increases or decreases in significant interests in the issued ordinary
share capital of the Company. Such notifications are published as an RNS and are also available on the Company’s Website
(https://www.onthebeachgroupplc.com/investor-centre/rns).
The figures below represent the number of shares and how that translates to a percentage shareholding in the Company as at
the date on which the change was notified. The holdings may have changed since notification but any further notification is not
required until the next applicable threshold in DTR5 is crossed.
Please note there will be other shareholders with substantial shareholdings who are not listed below because their shareholdings
have not increased above or decreased below a threshold during the year. For example, as at the date of this report, Simon Cooper
and his PCAs continue to hold 7,849,603 shares (4.75% of the issued share capital).
Name of shareholder
Number of shares
Nature of holding as
per disclosure
Date of notification
Mawer Investment Management
18,896,038
12.01%
27 November 2020
Mawer Investment Management
20,714,191
13.16%
22 December 2020
Hawksford Trustees Jersey Ltd (as trustees of
the SC 2014 Settlement)
5,784,999
3.68%
22 December 2020
BlackRock Inc
AXA Investment Managers
BlackRock Inc
M&G Plc
BlackRock Inc
7,905,363
8,122,971
9,211,779
7,768,731
9,391,021
5.01%
5.16%
5.84%
4.93%
5.96%
22 March 2021
6 April 2021
14 May 2021
18 May 2021
25 May 2021
Mawer Investment Management
20,456,810
12.99%
8 June 2021
BlackRock Inc
BlackRock Inc
Baillie Gifford & Co
9,388,173
9,073,881
8,601,228
5.95%
5.48%
5.2%
29 June 2021
12 July 2021
27 August 2021
Between 30 September 2021 and the date of this report no further interests have been notified to the Company in accordance with DTR5.
A list of our substantial shareholders is available on our corporate website.
116
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Transactions with related parties
There were no related party transactions during the year. See note 26 to the consolidated financial statements.
Events post year end
There are no events post year end to report.
Indemnities and insurance
The Company maintains appropriate insurance to cover Directors’ and officers’ liability for itself and its subsidiaries. The Company
also indemnifies the Directors under a qualifying indemnity for the purposes of section 236 of the Companies Act 2006 in the
Articles. Such indemnities contain provisions that are permitted by the Director liability provisions of the Companies Act and the
Company’s Articles. Such indemnities were in force throughout the period under review and are in force as at the date of this
report.
Save for the indemnities disclosed in this report, there are no other qualifying third party indemnity provisions in force.
Research and development
Innovation, specifically in the customer proposition on the website, is a critical element of the strategy, and therefore of the future
success of the Group. Accordingly the majority of the Group’s research and development expenditure is predominantly related to
this area.
Financial instruments
Details of the financial risk management objectives and policies of the Group, including hedging policies and exposure of the entity
to price risk, credit risk, liquidity risk and cash flow risk are given on pages 161 to 166 in note 23 to the consolidated financial
statements, and forms part of this report by reference.
Political contributions
Neither the Company nor any of its subsidiaries made any political donations or incurred any political expenditure during the year.
External branches
The Group has a Swedish branch (identity number 516408-9186) to enable it to execute its strategy on international expansion.
Results and dividends
The Group’s and Company’s audited financial statements for the year are set out on pages 129 to 172.
The Group has adopted a progressive dividend policy. Whilst the Group operates a highly cash generative business model, a
significant majority of profits are reinvested in the business to support further growth.
Notwithstanding the foregoing as announced on 15 June 2021, no interim dividend was declared during FY21. In view of
performance in light of the pandemic and the planned investment in technology, brand and customer proposition in FY22, the
Board is not recommending a final dividend in respect of FY21.
Information to be disclosed under Listing Rule 9.8.4R
Disclosures required by the FCA’s Listing Rule 9.8.4R can be found on the following pages:
Information required
Subsection of LR9.8.4R
Page reference
Details of long-term incentive schemes
Allotments of equity securities for cash
(4)
(7)
page 105
page 114
Save as set out above, there is no other information to disclose in relation to the provisions of Listing Rule 9.8.4R.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
117
GOVERNANCE Governance
Other Statutory and Regulatory Disclosures
Auditor
The auditor, Ernst & Yong LLP, is willing to continue in office and a resolution for its re-appointment as auditor of the Company will
be submitted at the 2022 AGM.
Disclosure of information to the Auditor
Each of the Directors has confirmed that:
(i)
(ii)
so far as the Director is aware, there is no relevant audit information of which the Company’s auditors are unaware; and
the Director has taken all the steps that he/she ought to have taken as a Director to make him/herself aware of any
relevant audit information and to establish that the Company’s auditor is aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of Section 418 of the Companies Act 2006.
Approval of the Annual Report
The Strategic Report and Corporate Governance Report were approved by the Board on 9 December 2021.
Approved by the Board and signed on its behalf:
K Vickerstaff
Company secretary
9 December 2021
118
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Governance
Statutory Auditor’s Report to the Members of On the
Beach Group plc
Opinion
In our opinion:
› On the Beach Group plc’s group financial statements and parent company financial statements (the “financial statements”) give a
true and fair view of the state of the group’s and of the parent company’s affairs as at 30 September 2021 and of the group’s loss
for the year then ended;
the group financial statements have been properly prepared in accordance with International Accounting Standards in conformity
›
with the requirements of the Companies Act 2006 and International Financial Reporting Standards adopted pursuant to
Regulation (EC) No. 1606/2002 as it applies in the European Union;
›
Accounting Practice; and
›
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted
We have audited the financial statements of On the Beach Group Plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the
year ended 30 September 2021 which comprise:
Group
Parent company
Consolidated Income Statement and Statement of Comprehensive
Income for the year then ended
Company Balance sheet as at 30 September 2021
Consolidated Balance Sheet as at 30 September 2021
Statement of changes in equity for the year then ended
Consolidated Statement of Cash Flows for the year then ended
Related notes 1 to 8 to the financial statements including
a summary of significant accounting policies
Consolidated Statement of Changes in Equity for the year then ended
Related notes 1 to 26 to the financial statements, including a summary
of significant accounting policies
The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and
International Accounting Standards in conformity with the requirements of the Companies Act 2006 and International Financial
Reporting Standards adopted pursuant to Regulation (EC) No. 1606/2002 as it applies in the European Union. The financial reporting
framework that has been applied in the preparation of the parent company financial statements is applicable law and United Kingdom
Accounting Standards, including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (United
Kingdom Generally Accepted Accounting Practice).
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements
section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled
our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to principal risks, going concern and viability statement
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the group and parent company’s
ability to continue to adopt the going concern basis of accounting included:
› Obtaining management’s going concern assessment and understanding the process undertaken by management to evaluate the
operational and economic impacts of COVID-19 on the Group and to reflect these in the Group’s forecasts. The Group has
modelled a base scenario, downside scenario and reverse stress test scenario in the cash flow forecasts and covenant calculations
in order to incorporate unexpected changes (e.g. travel restrictions, airline disruption and customer behaviour) to the forecasted
liquidity of the Group.
› Challenging the significant assumptions underpinning the Group’s forecasts for the going concern period until March 2023. Our
challenge was particularly focused around expectations of the timing of recovery to pre pandemic levels; both revenue and profit
levels given the uncertainties arising from COVID-19 as well as the impact on the industry of potential travel restrictions, and the
impact of climate risk on the forecast cashflows. We also verified whether the Group’s forecasts in the going concern assessment
were consistent with other forecasts used by the Group in its accounting estimates, including impairment.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
119
GOVERNANCE
Governance
Statutory Auditor’s Report to the Members of On the
Beach Group plc
› Performing a reverse stress test to establish the reduction in revenue and the related impact on the cash flows that could lead
either to a loss of liquidity or a covenant breach. This included a zero-revenue scenario.
› Testing the clerical accuracy and the appropriateness of the model used to prepare the Group’s going concern assessment.
› Assessing the appropriateness of the Group’s disclosure concerning the going concern basis of preparation.
We note that management has performed a going concern assessment with a base case scenario and downside scenario and a
reverse stress test scenario, where zero revenue is modelled. The Group has access to a revolving credit facility of £75 million which
expires in May 2023. The zero revenue scenario showed continuing liquidity for Group throughout the going concern review period,
without utilising the revolving credit facility.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the group and parent company’s ability to continue as a going concern
through to March 2023.
In relation to the group and parent company’s reporting on how they have applied the UK Corporate Governance Code, we have
nothing material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the
directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of
this report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the group’s
ability to continue as a going concern.
Overview of our audit approach
Audit scope
Key audit matters
Materiality
ą We performed an audit of the complete financial information of 12 components.
ą
The components where we performed full audit procedures accounted for 100% of Loss before
tax and 100% of Normalised profit before tax adjusted for the impact of exceptional items and a
further judgemental reduction, 100% of Revenue and 100% of Total assets.
ą
ą
ą
ą
Revenue recognition - risk of management override through journals made to revenue outside of
the standard booking process.
Impact of COVID-19
Assessment of the carrying value of goodwill, intangible, tangible assets, and company
investments
Overall group materiality of £807,000 which represents 5% of Normalised profit before tax
adjusted for the impact of exceptional items and set on an average profit before tax adjusted for
exceptional items for FY20, FY19 and FY18 and a further judgemental reduction to reflect the
continuing uncertainty brought about by the pandemic.
120
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
An overview of the scope of the parent company and group audits
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope
for each company within the Group. Taken together, this enables us to form an opinion on the consolidated financial statements. We
take into account size, risk profile, the organisation of the group and effectiveness of group-wide controls, changes in the business
environment when assessing the level of work to be performed at each company.
In assessing the risk of material misstatement to the Group financial statements, and to ensure we had adequate quantitative
coverage of significant accounts in the financial statements, of the 12 reporting components of the Group, we selected all 12
components covering all entities within the UK which represent the principal business units within the Group.
Of the 12 components selected, we performed an audit of the complete financial information of 12 components (“full scope
components”) which were selected based on their size or risk characteristics.
The reporting components where we performed full scope audit procedures accounted for 100% (2020: 100%) of the Group’s Loss
before tax and 100% (2020: 100%) of the Group’s Normalised profit before tax adjusted for the impact of exceptional items and
a further judgemental reduction to reflect the continuing uncertainty brought about by the pandemic, 100% (2020: 100%) of the
Group’s Revenue and 100% (2020: 100%) of the Group’s Total assets.
All audit work performed for the purposes of the audit was undertaken by the Group audit team.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of
resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of
the financial statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.
Risk
Our response to the risk
Revenue recognition (£21.3m value of
risk, PY comparative£33.7m)
Refer to the Audit Committee Report
(page 81); Accounting policies
(page133); and Note 3 of the
Consolidated Financial Statements
(page 141)
Given the high volume, low value
nature of the revenue transactions in
the business, we have determined the
revenue recognition risk to be related to
management override through journals
made to revenue outside of the standard
booking process throughout the year.
For the On the Beach ‘OTB’, International
‘Int’l’ and Classic Package ‘CPH’
segments the revenue is reported on an
agent basis (net) and the risk is therefore
also applicable to gross costs.
For the Classic segment, revenue is
reported on a principal basis (gross) and
the risk therefore only applies to revenue
We have performed the following procedures:
Assessed the design and implementation of the key
controls over revenue recognition for all trading entities
within the Group.
Tested all material manual journal entries impacting on net
revenue which fall outside of the standard booking process
journals for evidence of management override.
Performed monthly analytical review for each trading entity
comparing actual gross margin recorded with booking
volumes, and monthly revenue and gross margin with prior
year, investigating and corroborating unusual peaks and
troughs in movements.
Adopted a data analytics approach to corroborate our
expectation of the relationship between gross revenue,
trade receivables and cash receipts (all segments) and
gross costs, trade payables and cash payments (OTB, Int’l
& CPH) in relation to the standard booking process. Any
exceptions to our expectations above our testing threshold
have been substantively tested.
We performed full scope audit procedures which covered
100% of revenue.
Key observations
communicated to the
Audit Committee
Our journal entry and
data analytics testing
procedures did not
identify any instances of
management override
in the recognition of
revenue or evidence of
material misstatements
across the Group in the
financial year.
Based on the audit
procedures performed
we did not identify
evidence of material
misstatements in the
revenue recognised in
the current year.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
121
GOVERNANCE Governance
Statutory Auditor’s Report to the Members of On the
Beach Group plc
Key observations
communicated to the
Audit Committee
Based on our
procedures performed
we are satisfied with,
the completeness
and accuracy of the
cancellations recorded
in the year and the
cancellation provision
recognised at yearend,
the recognition of the
receivable relating
to airline refunds /
chargeback claims and
the recoverability of
supplier receivables,
including airline and
hotelier receivables.
We are satisfied that
the COVID-19 related
items are disclosed
appropriately in the
financial statements
and that the use of
APMs throughout the
Annual Report and
Accounts is appropriate
Risk
Our response to the risk
Impact of COVID-19 (£10.0m
value of risk, PY comparative
£41.7m)
We have performed the following procedures:
Assessed the design and implementation of the key controls over
the appropriateness of the exceptional items.
Refer to the Audit Committee
Report (page 81); Accounting
policies (page 133); and Note
3 of the Consolidated Financial
Statements (page 141)
Cancellations recorded in year
Independently reperformed management’s calculation of the
cancellations processed in the year using a data analytics approach
to assess the completeness and accuracy of the associated lost
margin.
We have identified a significant
risk during our year-end audit
in relation to the accounting
implications following the
COVID-19 pandemic and the
impact on the year end results.
.
We consider the risk to be
focused around the following
areas:
Completeness and accuracy of
both the cancellations recorded
in the year and the cancellation
provision recognised in relation
to estimated levels of future
cancellations expected for
bookings made prior to 30
September 2021;
Appropriateness of the
recognition of the receivable
relating to airline
refunds/chargeback claims;
Recoverability of supplier
receivables including airline
receivable and hotelier
prepayments;
Cancellation provision
Critically challenged the appropriateness of the cancellation rates
adopted by management with reference to external data sources
including projected travel industry recovery, actual cancellation
rates during the financial year and the accuracy of management’s
prior year estimate.
Independently recalculated the cancellation provision by using
a data analytics approach to apply management’s cancellation
assumptions to the open bookings at 30 September 2021.
Selected a sample of bookings and agreed sales value, flight cost,
hotel cost and transfer cost to third party evidence to support the
integrity of the datasets used in our analytics techniques.
Recognition of airline receivable
Assessed whether reimbursement for cancelled flights is virtually
certain based on the contractual terms with both the airlines
and chargeback companies, and therefore whether the airline
receivable should be recognised.
Recoverability of supplier receivables
Assessed the reasonableness of the recoverability of the airline
receivable balance due back under EU 261 Regulations by
testing the history of receipts from airlines and chargeback claims
received during the year, testing a sample of bookings to post
year-end settlements as well as evaluating the completeness and
appropriateness of management’s corresponding provision where
recovery is considered at risk.
Presentation and disclosure of
these COVID-19 related balances
as exceptional items and the
use of alternative performance
measures.
Corroborated the appropriateness of the carrying value of hotelier
prepayments with reference to independent confirmations
from hoteliers of outstanding balances and utilisation periods
considering the financial viability of the hotels, and compared the
prepayment against future bookings.
Presentation and disclosure
Assessed the rationale for alternative performance measures
used, their role in reporting a fair, balanced and understandable
assessment of performance and whether appropriate
reconciliations to GAAP measures were provided.
We performed full scope audit procedures which covered 100% of
revenue.
122
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Key observations
communicated to the Audit
Committee
Based on our procedures
performed we concluded
that no impairment is
required.
The disclosures included
in the financial statements
are in conformity with the
requirements of IAS 36.
Risk
Our response to the risk
Assessment of the carrying
value of goodwill, intangible,
tangible assets and company
investments.
There is a goodwill balance
on consolidation of £40.2m
(2020:£40.2m), intangible
assets balance of £33.9m
(2020: £39.5m), tangible assets
balance of £8.3m (2020: £9.8m)
and company investments of
£132.6m (2020: £132.6m).
Refer to the Audit Committee
Report (page 81); Accounting
policies (page 133); and Note
11 of the Consolidated Financial
Statements (page 151)
An annual impairment
assessments is performed in
respect of the carrying value
of these assets and due to the
inherent uncertainty involved
in forecasting and discounting
future cash flows, heightened
by the uncertainties of the
COVID-19 pandemic, there is a
risk that the goodwill, intangible
and tangible assets may be
impaired.
We have performed the following procedures:
Obtained management’s paper and calculations and
understood the methodology and the material assumptions
applied by management in performing its impairment test for
each of the CGUs in the Group.
Compared the cancellation assumptions applied in the
projected financial information used to those used in the
calculation of the exceptional cancellation provision described
with the “Impact of COVID-19” risk.
Critically assessed the projected financial information
including the perpetuity rate used, to external data sources
including projected travel industry recovery.
Used our EY Valuation team specialists to independently
calculate a discount rate range which we then compared to
the rate used.
Obtained financial information from the subsequent period
to consider the actual results in comparison to the forecast
and assessed historic accuracy of management’s budgeting
process.
Performed independent sensitivities on the forecast cash
flows including increasing discount rates, reducing terminal
growth rates and delaying return
to recovery.
Checked impairment disclosures for compliance with the
requirements of IAS 36.
We performed full scope audit procedures which covered
100% of revenue.
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the
audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the
economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our
audit procedures.
Using professional judgement we determined materiality to be £807,000 (2020: £897,000).
In determining our benchmark for materiality, we considered a number of different metrics used by investors and other users of
the financial statements. We consider that the users of the accounts are focused on the speed at which underlying operations and
revenue are returning to normal. Setting materiality when the business has been impacted by COVID-19 requires greater auditor
judgement is appropriate given the nature of the Group’s activities, but 2021 results have been distorted as a result of the pandemic
and its impact on the Group and the sector within which it operates. For the current year, we have sought to derive a normalised basis
for setting that profit measure and our start point was to set at 5% of the average profit before tax adjusted for exceptional items
for FY20, FY19 and FY18. We applied a further judgemental reduction to reflect the continuing uncertainty brought about by the
pandemic.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
123
GOVERNANCE Governance
Statutory Auditor’s Report to the Members of On the
Beach Group plc
This is a change from prior year where materiality was based on 5% of Normalised profit before tax adjusted for the impact of
exceptional items based on an average profit before tax adjusted for exceptional items for FY20, FY19 and FY18.
We determined materiality for the Parent Company to be £807,000 (2020: £897,000), which is 2% of Equity, (on the basis of being a
non-trading holding company), capped at the materiality of the Group.
During the course of our audit, we reassessed initial materiality and noted no changes.
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level
the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgement was
that performance materiality was 75% (2020: 75%) of our planning materiality, namely £605,000 (2020: £673,000). For areas
relating to COVID-19 that we have assessed as being of greater importance to the users of the financial statements we have worked
to lower levels of performance materiality, these include the areas listed within the “Impact of COVID-19” key audit matter described
above.
Audit work at component locations for the purpose of obtaining audit coverage over significant financial statement accounts is
undertaken based on a percentage of total performance materiality. The performance materiality set for each component is based
on the relative scale and risk of the component to the Group as a whole and our assessment of the risk of misstatement at that
component. In the current year, the range of performance materiality allocated to components was £121,000 to £515,000 (2020:
£135,000 to £572,000).
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £40,000 (2020:
£45,000), which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted reporting
on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of
other relevant qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the annual report set out on pages 1 -118, other than the financial
statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual
report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in
this report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a
material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a
material misstatement of the other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
›
the information given in the strategic report and the directors’ report for the financial year for which the financial statements
are prepared is consistent with the financial statements and those reports have been prepared in accordance with applicable legal
requirements;
124
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
›
the information about internal control and risk management systems in relation to financial reporting processes and about share
capital structures, given in compliance with rules 7.2.5 and 7.2.6 in the Disclosure Rules and Transparency Rules sourcebook
made by the Financial Conduct Authority (the FCA Rules), is consistent with the financial statements and has been prepared in
›
accordance with applicable legal requirements; and
information about the company’s corporate governance statement and practices and about its administrative, management and
supervisory bodies and their committees complies with rules 7.2.2, 7.2.3 and 7.2.7 of the FCA Rules.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of
the audit, we have not identified material misstatements in:
›
›
the strategic report or the directors’ report; or
the information about internal control and risk management systems in relation to financial reporting processes and about share
capital structures, given in compliance with rules 7.2.5 and 7.2.6 of the FCA Rules
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
›
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received
from branches not visited by us; or
the parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement
›
with the accounting records and returns; or
›
certain disclosures of directors’ remuneration specified by law are not made; or
› we have not received all the information and explanations we require for our audit
›
a Corporate Governance Statement has not been prepared by the company
Corporate Governance Statement
The Listing Rules require us to review the directors’ statement in relation to going concern, longer-term viability and that part of
the Corporate Governance Statement relating to the group and company’s compliance with the provisions of the UK Corporate
Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit:
› Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material
uncertainties identified set out on page 42;
› Directors’ explanation as to its assessment of the company’s prospects, the period this assessment covers and why the period is
appropriate set out on page 41;
› Directors’ statement on fair, balanced and understandable set out on page 127;
› Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 130;
› The section of the annual report that describes the review of effectiveness of risk management and internal control systems set
out on page 86; and;
› The section describing the work of the audit committee set out on page 83.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 127, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the
directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group and parent company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless
the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do
so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
125
GOVERNANCE
Governance
Statutory Auditor’s Report to the Members of On the
Beach Group plc
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud
is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery
or intentional misrepresentations, or through collusion. The extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the
company and management.
ą
ą
ą
ą
We obtained an understanding of the legal and regulatory frameworks that are applicable to the group and determined that the
most significant are frameworks which are directly relevant to specific assertions in the financial statements are those that relate
to the reporting framework (IFRS, FRS 102, the Companies Act 2006 and UK Corporate Governance Code). In addition, we
concluded that there are certain significant laws and regulations which have an effect on the determination of the amounts and
disclosures in the financial statements being General Data Protection Regulations, Consumer Rights and specific regulations set
out by the Civil Aviation Authority.
We understood how On the Beach Group plc is complying with those frameworks by making enquiries of management, those
responsible for legal and compliance procedures and the Company Secretary. We corroborate our enquiries through our review
of board minutes, papers provided to the Audit Committee and discussions with the Audit Committee.
We assessed the susceptibility of the group’s financial statements to material misstatement, including how fraud might occur
by meeting with management and those charged with governance to understand where it considered there was a susceptibility
to fraud. We also considered performance targets and the propensity to influence efforts made by management to manage
earnings. Where the risk was considered to be higher, we performed audit procedures to address each identified fraud risk.
These procedures included testing manual journals and were designed to provide reasonable assurance that the financial
statements were free from fraud and error.
Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Our
procedures involved journal entry testing, with a focus on manual consolidation journals and journals indicating large or unusual
transactions based on our understanding of the business; enquiries of Legal Counsel, Group management and focused testing,
as referred to in the key audit matters section above. In addition, we completed procedures to conclude on the compliance of the
disclosures in the Annual Report and Accounts with the requirements of the relevant accounting standards, UK legislation and
the UK Corporate Governance Code 2016.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s
website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Other matters we are required to address
ą
Following the recommendation from the audit committee we were appointed by the company on 7 March 2019 to audit the
financial statements for the year ending 30 September 2019 and subsequent financial periods.
The period of total uninterrupted engagement including previous renewals and reappointments is 3 years, covering the years
ending 30 September 2019 to 30 September 2021.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the group or the parent company and we
remain independent of the group and the parent company in conducting the audit.
The audit opinion is consistent with the additional report to the audit committee
ą
ą
ą
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for
the opinions we have formed.
Victoria Venning
Senior Statutory Auditor
for and on behalf of Ernst & Young LLP, Statutory Auditor
Manchester
9 December 2021
126
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Governance
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable United
Kingdom law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the Directors have
elected to prepare the group and parent company financial statements in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006, and the parent company financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including
Financial Reporting Standard FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (“FRS 102”).
In preparing these financial statements the Directors are required to:
ą
select suitable accounting policies in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and
Errors, and in respect of the parent company financial statements, Section 10 of FRS 102 and then apply them consistently;
ą make judgements and accounting estimates that are reasonable and prudent;
ą
present information, including accounting policies, in a manner that provides relevant, reliable, comparable and
understandable information;
provide additional disclosures when compliance with the specific requirements in IFRSs and in respect of the parent company
financial statements, FRS 102 is insufficient to enable users to understand the impact of particular transactions, other events and
conditions on the group and company financial position and financial performance;
in respect of the group financial statements, state whether international accounting standards in conformity with the requirements
of the Companies Act 2006 (and IFRSs adopted pursuant to Regulation(EC) No 1606/2002 as it applies in the European Union)
have been followed, subject to any material departures disclosed and explained in the financial statements;
in respect of the parent company financial statements, state whether applicable UK Accounting Standards, including FRS 102,
have been followed, subject to any material departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is appropriate to presume that the company and/ or the
group will not continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s and
Group’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and
enable them to ensure that the company and the Group financial statements comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the Group and parent company and Group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a strategic report, directors’ report, directors’
remuneration report and corporate governance statement that comply with that law and those regulations. The Directors are
responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website.
Directors’ responsibility statement
The Directors confirm, to the best of their knowledge:
ą
that the consolidated financial statements, prepared in accordance with international accounting standards in conformity with
the requirements of the Companies Act 2006, give a true and fair view of the assets, liabilities, financial position and profit of the
parent company and undertakings included in the consolidation taken as a whole;
that the annual report, including the strategic report, includes a fair review of the development and performance of the business
and the position of the Company and undertakings included in the consolidation taken as a whole, together with a description of
the principal risks and uncertainties that they face; and
that they consider the annual report, taken as a whole, is fair, balanced and understandable and provides the information
necessary for shareholders to assess the company’s position, performance, business model and strategy.
ą
ą
ą
ą
ą
ą
Shaun Morton
Chief Financial Officer
9 December 2021
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
127
GOVERNANCE
Financial Statements
129 Consolidated Income Statement and
Statement of Comprehensive Income
130 Consolidated Balance Sheet
131 Consolidated Statement of Cash Flows
132 Consolidated Statement of Changes in Equity
133 Notes to the Consolidated Financial Statements
169 Company Balance Sheet
170 Company Statement of Changes in Equity
171 Notes to the Company Financial Statements
173 Glossary of Alternative Performance Measures (“APMs”)
128
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Financial Statements
Consolidated Income Statement and Statement of
Comprehensive Income
Year ended 30 September 2021
Revenue
Cost of sales
Gross profit
Administrative expenses
Group operating loss
Finance costs
Finance income
Net finance costs
Loss before taxation
Taxation
Loss for the year
Other comprehensive income:
Net (loss)/gain on cashflow hedges
Total comprehensive loss for the year
Attributable to:
Equity holders of the parent
Basic and diluted earnings per share attributable to the equity
Shareholders of the Company:
Basic loss per share
Diluted loss per share
Adjusted loss per share *
Adjusted profit measure*
Adjusted (LBT)/PBT (before amortisation of acquired intangibles,
exceptional items and share based payments) *
Note
4,5
6
8
8
9
10
10
10
6
2021
£’m
21.2
(6.8)
14.4
(50.2)
(35.8)
(1.0)
0.1
(0.9)
(36.7)
6.5
2020
£’m
33.7
(17.7)
16.0
(61.9)
(45.9)
(0.8)
0.4
(0.4)
(46.3)
7.5
(30.2)
(38.8)
(0.1)
(30.3)
0.1
(38.7)
(30.3)
(38.7)
(19.0p)
(19.0p)
(9.7p)
(27.6p)
(27.6p)
(0.5p)
(18.4)
0.6
* This is a non GAAP measure, refer to notes. The adjusted loss per share presented is both basic and diluted.
The notes on pages 133 to 168 form part of the financial statements.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
129
FINANCIAL STATEMENTS
Financial Statements
Consolidated Balance Sheet
Year ended 30 September 2021
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Investment property
Total non-current assets
Current assets
Trade and other receivables
Deferred tax
Derivative financial instruments
Corporation tax receivable
Trust account
Cash at bank
Total current assets
Total assets
Equity
Share capital
Share premium
Retained earnings
Capital contribution reserve
Merger reserve
Total equity
Non-current liabilities
Deferred tax
Trade and other payables
Total non-current liabilities
Current liabilities
Trade and other payables
Provisions
Derivative financial instruments
Total current liabilities
Total liabilities
Total equity and liabilities
Note
11
12
13
15
20
23
16
21
22
22
22
22
20
17
17
17
23
2021
£’m
74.1
8.3
-
82.4
94.9
3.6
-
0.8
39.0
56.0
194.3
276.7
1.7
89.6
187.6
0.5
(129.5)
149.9
-
2.5
2.5
119.4
4.6
0.3
124.3
126.9
276.7
2020
£’m
79.6
9.9
0.6
90.1
104.7
-
0.5
4.5
25.8
36.5
172.0
262.1
1.6
64.8
215.0
0.5
(129.5)
152.4
2.6
3.8
6.4
92.4
10.9
-
103.3
109.7
262.1
The financial statements from pages 133 to 168 were approved by the Board of Directors and authorised for issue.
Shaun Morton
Chief Financial Officer
9 December 2021
On the Beach Group plc. Reg no 09736592
130
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Financial Statements
Consolidated Statement of Cash Flows
Year ended 30 September 2021
Loss before taxation
Adjustments for:
Depreciation
Amortisation of intangible assets
Finance costs
Finance income
Share based payments
Gain on termination of lease
Loss on disposal of property, plant and equipment
Changes in working capital:
Decrease/(increase) in trade and other receivables
Increase/(decrease) in trade and other payables
(Increase)/decrease in trust account
Cash flows from operating activities
Cash used in operating activities
Tax received/(paid)
Net cash inflow/(outflow) from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from disposal of assets held for sale
Purchase of intangible assets
Interest received
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Costs related to shares issued paid
Equity dividends paid
Interest paid on borrowings
Interest paid on lease liabilities
Payment of lease liabilities
Net cash inflow from financing activities
Net increase/(decrease) in cash at bank and in hand
Cash at bank and in hand at beginning of year
Cash at bank and in hand at end of year
Note
6
6
8
8
24
12
12
15
17
12
11
8
8
8
18
2021
£’m
(36.7)
1.8
10.1
1.0
(0.1)
2.8
(0.1)
0.2
(21.0)
9.9
21.3
(13.2)
18.0
(3.0)
4.2
1.2
(0.5)
-
(4.6)
0.1
(5.0)
26.0
(1.1)
-
(0.9)
(0.1)
(0.6)
23.3
19.5
36.5
56.0
2020
£’m
(46.3)
1.9
9.5
0.8
(0.4)
(0.6)
-
-
(35.1)
(7.4)
(50.6)
18.3
(39.7)
(74.8)
(0.2)
(75.0)
(1.2)
0.2
(4.0)
0.4
(4.6)
65.1
-
(2.6)
(0.6)
(0.2)
(0.4)
61.3
(18.3)
54.8
36.5
The notes on pages 133 to 168 form part of the financial statements.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
131
FINANCIAL STATEMENTS Financial Statements
Consolidated Statement of Changes in Equity
Year ended 30 September 2021
Balance at 30 September 2019
Share based credit including tax
Shares issued during the year
Costs related to shares issued
Dividends paid during the year
Total comprehensive loss for the year
Share
capital
£’m
1.3
-
0.3
-
-
-
Share
premium
£’m
Merger
reserve
£’m
Capital
contribution
reserve
£’m
Retained
earnings
£’m
Total
£’m
-
-
67.0
(2.2)
-
-
(129.5)
0.5
256.9
129.2
-
-
-
-
-
-
-
-
-
-
(0.6)
-
-
(2.6)
(0.6)
67.3
(2.2)
(2.6)
(38.7)
(38.7)
Balance at 30 September 2020
1.6
64.8
(129.5)
0.5
215.0
152.4
Share based charge including tax
Shares issued during the year
Costs related to shares issued
Total comprehensive loss for the year
-
0.1
-
-
-
25.9
(1.1)
-
-
-
-
-
-
-
-
-
2.9
-
-
2.9
26.0
(1.1)
(30.3)
(30.3)
Balance at 30 September 2021
1.7
89.6
(129.5)
0.5
187.6
149.9
The notes on pages 133 to 168 form part of these financial statements.
132
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Financial Statements
Notes to the Consolidated Financial Statements
1. General Information
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. The address of the registered office is given on page 177.
2. Accounting Policies
a) Basis of Preparation
The consolidated financial statements presented in this document have been prepared in accordance with:
ą
ą
International Accounting Standards in conformity with the requirements of the Companies Act 2006; and
International Financial Reporting Standards (‘IFRSs’) adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the
European Union.
The Company’s financial statements have been prepared in accordance with Financial Reporting Standard 102 “The Financial Reporting
Standard applicable in the United Kingdom and the Republic of Ireland” (“FRS 102”) and as applied in accordance with the provisions of
the Companies Act 2006. The Company has taken advantage of the exemption provided under section 408 of the Companies Act 2006
not to publish its individual income statement and related notes.
These financial statements are presented in pounds sterling (£’m) because that is the currency of the primary economic environment in
which the Group operates.
b) Going concern
The Group covers its daily working capital requirements by means of cash and a £50m Revolving Credit Facility (“RCF”) expiring
December 2023. In addition, the Group has a CLBILS facility of £25m. As at 30 September 2021 cash (cash, excluding cash held in
trust which is ringfenced and not factored into the going concern assessment) was £56.0m (30 September 2020; cash of £36.5m).
Given the extended disruption to international travel from the UK throughout 2021 and the ongoing trading environment across the
sector, the Group took a number of actions to improve overall liquidity, including on 7 July 2021 raising £24.9m net of fees through
issuing new shares, to ensure that it is well placed to operate and to trade once travel restrictions are eased.
On 25 May 2021, the Group took further action to ensure that the facility was fit for purpose. This included exercising a one year
extension of the £25m CLBILs element of the facility, now expiring in May 2023, and resetting covenants until September 2022 to
ensure the facility can be accessed through this period. This incremental liquidity has provided the Group with greater resilience and
flexibility through the extended downturn in the market, and will enable the Group to exit the pandemic period in a strong position.
Where holidays are cancelled as a result of the COVID-19 pandemic the Group is committed to refunding customers in cash rather
than vouchers. These cash refunds are fully funded from the trust account (where refunds are for hotel and transfer payments) or are a
pass-through from airlines. Cash received from customers for bookings that have not yet travelled is held in a ring fenced trust account
and is not withdrawn until the customer returns from their holiday. Cash held in trust at 30 September 2021 was £39.0m. The trust
account is described in note 16.
The Directors have assessed a going concern period through to March 2023 and have modelled a number of scenarios considering
factors such as airline and hotelier resilience, employee absence and customer behaviour / demand. The Directors have also
considered the impact of climate risk in these scenarios concluding that it is not expected to have a significant impact over the going
concern period. Further detail of the Group’s assessment of the impact of climate risk is provided within the ‘Principal risks and
Uncertainties’ section of this report. The Directors modelled what they consider to be a remote downside scenario of no travel or
bookings until March 2023. In this scenario the Directors have assumed that variable marketing spend, which is within their control,
is significantly reduced. Even in this scenario, the Group would have positive cash and no requirement to draw down on its current
facilities both during the going concern review period, and in the subsequent period prior to expiry of facilities.
Given the assumptions above, the mitigating actions available and within the Group’s control and that in no scenario is there any
requirement to access the RCF or CLBILs facility, the Directors remain confident in their response to the pandemic and will continue to
operate in an agile way adapting to any applicable government guidance. Therefore, it is considered appropriate to continue to adopt
the going concern basis in preparing these financial statements.
c) New standards, amendments and interpretations
A number of new standards and amendments to standards are effective for annual periods beginning after 1 January 2020; the
following amended standards have been implemented however they have not had a significant impact on the Group’s
consolidated financial statements:
ą
ą
ą
Amendments to References to Conceptual Framework in IFRS Standards;
Definition of a Business (Amendments to IFRS 3); and
Definition of material - amendments to IAS 1 and IAS 8.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
133
FINANCIAL STATEMENTS
Financial Statements
Notes to the Consolidated Financial Statements
d) Basis of Consolidation
The Group’s consolidated financial statements consolidate the financial statements of On the Beach Group plc and all of its subsidiary
undertakings.
i.
ii.
Subsidiaries are Entities Controlled by the Company.
Control exists when the Company has power over the investee, the company is exposed, or has rights to variable returns from
its involvement with the subsidiary and the company has the ability to use its power of the investee to affect the amount of
investor’s returns.
Transactions Eliminated on Consolidation
Intragroup balances, and any gains and losses or income and expenses arising from intragroup transactions, are eliminated
in preparing the consolidated financial information. Gains arising from transactions with jointly controlled entities are eliminated
to the extent of the Group’s interest in the entity. Losses are eliminated in the same way as gains, but only to the extent that there
is no evidence of impairment.
e) Goodwill
Goodwill arising on the acquisition of subsidiary undertakings and trade and assets represents the excess of the cost of acquisition over
the fair value of the identifiable assets and liabilities at the date of acquisition. Goodwill is initially recognised as an asset at cost and is
subsequently remeasured at cost less any accumulated impairment losses. Goodwill which is recognised as an asset is reviewed for
impairment at least annually. Any impairment is recognised immediately in the income statement and is not subsequently reversed. On
disposal of a subsidiary the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
For the purposes of impairment testing, goodwill is allocated to the cash generating units expected to benefit from the combination. If the
recoverable amount is less than the carrying amount of the unit, the impairment loss is allocated to first reduce the amount of goodwill
allocated to the unit and then the other assets in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent
period.
An impairment loss recognised for goodwill is not reversed. Impairment losses recognised for other assets is reversed only if the reasons
for the impairment have ceased to apply.
f) Foreign Currency
Transactions in foreign currencies are translated to the respective functional currencies of Group entities at the foreign exchange rate ruling
at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated
to the functional currency at the foreign exchange rate ruling at that date.
Foreign exchange differences arising on translation are recognised in the income statement.
g) Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another
entity.
i.
Financial Assets
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other
comprehensive income (OCI), and fair value through profit or loss. In order for a financial asset to be classified and measured
at amortised cost, the financial asset is under a ‘hold to collect’ business model and it needs to give rise to cash flows that are
solely payments of principal and interest’ (SPPI) on the principal amount outstanding. The Group considers financial asset in
default when contractual payments are 120 days past due.
Trade and Other Receivables
Trade and other receivables are recognised initially at fair value. Subsequent to initial recognition, they are measured at amortised
cost using the effective interest method, less any impairment losses. Gains and losses are recognised in profit or loss when the
asset is derecognised, modified or impaired.
Cash at Bank
Cash at bank comprises cash balances and call deposits. Bank overdrafts that are repayable on demand and form an
integral part of the Group’s cash management are included as a component of cash at bank for the purpose only of the
cash flow statement.
134
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Trust Account
All ATOL protected customer monies are held in a trust account until after the provision of the holiday service. The trust
account is governed by a deed between the Group, the Civil Aviation Authority Air Travel Trustees and independent
trustees (Travel Trust Services Limited), which determines the inflows and outflows from the account.
All ATOL protected customer receipts are paid into the trust account in full before the holiday departure date. These
payments are held in the trust account until the service is provided—for flights on payment to the supplier and for hotels
and ancillaries on the customer’s return from holiday. The Group therefore does not use customer prepayments to fund its
business operations.
ii.
Financial Liabilities
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and
borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
Trade and Other Payables
Trade and other payables including deferred consideration are recognised initially at fair value and net of directly attributable
transaction costs. Subsequent to initial recognition they are measured at amortised cost using the effective interest method.
Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the Effective Interest
Rate (“EIR”) amortisation process.
Revolving Credit Facility
All financial liabilities are recognised initially at fair value and net of directly attributable transaction costs. After initial recognition,
interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are
recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
iii. Derivative Financial Instruments, including Hedge Accounting
The Group enters into forward foreign exchange contracts to manage exposure to foreign exchange rate risk. Further details of
these derivative financial instruments are disclosed in note 23 of these financial statements. Such derivative financial instruments
are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at
fair value.
Fair Value Hedges
All derivative financial instruments are assessed against the hedge accounting criteria set out in IFRS 9. On initial designation
of the derivative as a hedging instrument, the Group formally documents the relationship between the hedging instrument
and hedged item. This includes identification of the hedging instrument, the hedged item, the risk management objectives and
strategy in understanding the hedge transaction and the hedged risk, together with the methods that will be used to assess the
effectiveness of the hedging relationship.
The Group makes an assessment, both at the inception of the hedge relationship as well as on an ongoing basis, of whether
the hedging instruments are expected to be highly effective in offsetting the changes in the fair value of the respective hedged
items attributable to the hedged risk.
Derivatives are initially recognised at the fair value on the date a derivative contract is entered into and are subsequently
remeasured at each reporting date at their fair value. The change in the fair value of a hedging instrument is recognised in the
statement of profit or loss as other expense. The change in the fair value of the hedged item attributable to the risk hedged is
recorded as part of the carrying value of the hedged item and is also recognised in the statement of profit or loss as other
expense.
Cash Flow Hedges
For derivatives that are designated as cash flow hedges and where the hedge accounting criteria are met, the effective portion of
changes in the fair value is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is
recognised immediately in profit or loss as part of finance costs. Amounts accumulated in equity are recognised in profit or loss
when the income or expense on the hedged item is recognised in profit or loss.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
135
FINANCIAL STATEMENTS
Financial Statements
Notes to the Consolidated Financial Statements
h) Segment Reporting
IFRS 8 requires operating segments to be reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the management team, including the Chief Executive Officer and Chief Financial Officer. For
management purposes, the Group is organised into segments based on location, and information is provided to the management team on
these segments for the purposes of resource allocation and segment performance management and monitoring.
The management team considers there to be four reportable segments:
i.
ii.
iii.
iv.
“OTB” - activity via UK websites (www.onthebeach.co.uk, www.sunshine.co.uk and www.onthebeachtransfers.co.uk)
“International” - activity via Swedish, Norwegian and Danish websites (www.eBeach.se, www.eBeach.no and www.eBeach.dk)
“CCH” - activity via the Tour Operator, Classic Collection Holidays Limited and subsidiaries
“CPH” - activity via the Classic Package Holidays online business to business portal
i) Revenue Recognition
IFRS 15 Revenue from Contracts with Customers is a principle-based model of recognising revenue from customer contracts. It has a five-
step model that requires revenue to be recognised when control over goods and services are transferred to the customer. The standard
requires the Group to exercise judgement, taking into consideration all of the relevant facts and circumstances when applying each step of
the model to contracts with their customers. The following paragraphs describes the types of contracts, when performance obligations are
satisfied, and the timing of revenue recognition. Further details of the disaggregation of revenue are disclosed in note 4 of these financial
statements.
As Agent:
The Group acts as agent when it is not the primary party responsible for providing the components that make up the customers
booking and it does not control the components before they are transferred to customers. Revenue comprises the fair value of the
consideration received or receivable in the form of commission. Service fees/commissions are earned from the consumer through
purchases of travel products such as flight tickets or hotel accommodation from third party suppliers. Revenue in the form of
commission or service fees recognised when the performance obligation of arranging and facilitating the customer to enter into
individual contracts with suppliers is satisfied, usually on delivery of the booking confirmation.
Given the level of cancellations the Group has experienced, the commission is considered to represent variable consideration and the
transaction price of commission income determined using the expected value method, such that revenue is recognised only to the
extent that it is highly probable that there will not be a significant reversal of revenue recognised in future periods. The sum of the
range of probabilities of cancellations in different scenarios based on historical trends and best estimate of future expectations is used
to calculate the extent to which the variable consideration is reduced and a corresponding refund liability (presented as a cancellation
provision) recognised in provisions.
Revenue earned from sales through CPH are stated net, with the commission payable to agents recognised in the cost of sales.
As Principal:
The Group acts as principal when it is the primary party responsible for providing the components that make up the customer’s
booking and it controls the components before transferring to the customer.
Revenue represents amounts received or receivable for the sale of package holidays and other services supplied to the customers.
Revenue is recognised when the performance obligation of delivering an integrated package holiday is satisfied, usually over the
duration of the holiday.
Revenue is stated net of discounts, rebates, refunds and value added tax.
j) Override Income
The Group has agreements with suppliers whereby volume-related rebates are received in connection with the travel arrangements
made with the customer. The income received from suppliers relates to reduction in cost of sales (corresponding increase in
commission received), and as such is considered part of the Group’s net revenue. The Group has some agreements whereby receipt of
the income is conditional on the Group achieving agreed volume targets.
For agreements not linked to volume targets, override income is recognised when earned by the Group, which occurs when all
obligations conditional for earning income have been discharged, and the income can be measured reliably based on the terms of the
contract, which is usually once the booking has been confirmed with the supplier.
For agreements where volume targets are in place, income is recognised once the target has been achieved. For volume targets
which span the year end, the Group is required to make estimates in determining the amount and timing of recognition of override. In
determining the amount of volume-related allowances recognised in any period, management estimate the probability that the Group
will meet contractual target volumes, based on current and forecast performance.
Amounts due but not yet recovered relating to override income are recognised within trade and other receivables.
136
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
k) Dividend Distribution
Final dividend distribution to the Group’s shareholders is recognised as a liability in the Group’s financial statements in the period in which
the dividends are approved by the Group’s shareholders.
l) Business Combinations
All business combinations are accounted for by applying the acquisition method. Business combinations are accounted for using the
acquisition method as at the acquisition date, which is the date on which control is transferred to the Group.
For acquisitions, the Group measures goodwill at the acquisition date as:
›
›
›
›
the fair value of the consideration transferred; plus
the recognised amount of any non-controlling interests in the acquire; plus
the fair value of the existing equity interest in the acquiree; less
the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
Costs related to the acquisition, other than those associated with the issue of debt or equity securities, are expensed as incurred. Any
contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity,
it is not re-measured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent
consideration are recognised in the income statement.
m) Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of property,
plant and equipment. Land is not depreciated. The estimated useful lives are as follows:
Fixtures, fittings and equipment
Buildings freehold
3-10 years
50 years
Depreciation methods, useful lives and residual values are reviewed at each balance sheet date.
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the
carrying amount of the asset and is recognised in income.
n) Investment Property
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties
are stated at fair value, which reflects market conditions at the reporting date. Gains or losses arising from changes in the fair values of
investment properties is recognised as other income in the income statement. Properties are externally valued on the basis of fair value at
the balance sheet date.
o) Held for Sale Assets
Assets are classified as held for sale if their carrying amount is expected to be recovered or settled principally through sale rather than
through continuing use. The asset must be available for immediate sale and the sale must be highly probable within one year of the
reporting date. Held for sale assets are measured at the lower of carrying value and fair value less costs to sell.
p) Intangible Assets
Research and Development
i.
Expenditure on research activities is recognised in the income statement as an expense as incurred. Expenditure on development
activities directly attributable to the design and testing of identifiable and unique software products are capitalised if the product or
process meet the following criteria:
›
›
›
›
The completion of the development is technically and commercially feasible to complete;
Adequate technical resources are sufficiently available to complete development;
It can be demonstrated that future economic benefits are probable; and
The expenditure attributable to the development can be measured reliably.
Development activities involve a plan or design for the production of new or substantially improved products or processes. Directly
attributable costs that are capitalised as part of the software product, website or system include employee costs. Other development
expenditures that do not meet these criteria as well as ongoing maintenance are recognised as an expense as incurred.
Development costs for software, websites and systems are carried at cost less accumulated amortisation and are amortised over their
useful lives (not exceeding five years) at the point in which they come into use.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
137
FINANCIAL STATEMENTS
Financial Statements
Notes to the Consolidated Financial Statements
ii. Brand
Upon acquisition of the Group by OTB Topco, the On the Beach brand was identified as a separately identifiable asset. Acquisitions
of Sunshine.co.uk and Classic Collection Holidays Limited resulted in the brand of each being identified and recognised separately from
goodwill at fair value.
iii. Amortisation
Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets unless
such lives are indefinite. Intangible assets with an indefinite useful life and goodwill are systematically tested for impairment at each
balance sheet date. Other intangible assets are amortised from the date they are available for use. The estimated useful lives are as
follows:
Website technology
Website & development costs
Brand
Agent relationships
Customer relationships
10 years
3 years
10-15 years
15 years
5 years
iv. Customer and Agent Relationships
Upon the acquisition of Classic Collection Holidays Limited, customer relationships were identified as a separately identifiable assets.
Classic Collection’s revenue is driven by a very high volume of repeat customers due to its bespoke holiday packages and the target
market. Repeat customers are from two broad segments - independent travel agents and direct customers and individuals booking
directly. There is a defined margin and attrition profile differential between the two customer groups and as such two separate assets
were identified.
q) Impairment of Non-Financial Assets
At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there
is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset
is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are
independent from other assets, the group estimates the recoverable amount of the cash generating unit to which the asset belongs. The
recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell.
Goodwill is required to be tested for impairment annually, or more frequently where there is an indication that the goodwill may be
impaired. The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units, or
(“CGU”). Subject to an operating segment ceiling test, for the purposes of goodwill impairment testing, CGUs to which goodwill has been
allocated are aggregated so that the level at which impairment is tested reflects the lowest level at which goodwill is monitored for internal
reporting purposes. Goodwill acquired in a business combination is allocated to groups of CGUs that are expected to benefit from the
synergies of the combination.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets
that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use
that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”).
An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment
losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount
of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit (group of units) on a pro rata
basis.
r) Leases
The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the
use of an identified asset for a period of time in exchange for consideration.
Group as a Lessee
The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-
value assets. The Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the
underlying assets.
i.
Right-of-use Assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is available
for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for
any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial
direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. The
recognised right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful
lives of the assets, as follows:
Buildings
10 years
The right-of-use assets are also subject to impairment. The Group’s right-of-use assets are included as a separate category in
property, plant and equipment.
138
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
ii.
Lease Liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments
to be made over the lease term. In calculating the present value of lease payments, the Group uses the incremental borrowing
rate at the lease commencement date where the interest rate implicit in the lease is not readily determinable.
After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the
lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the
lease term, a change in the lease payments (e.g. changes to future payments resulting from a change in an index or rate used to
determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
The Group’s lease liabilities are included in trade and other payables.
s) Employee Benefits
i.
ii.
Pension Scheme
The Group operates a defined contribution pension scheme. A defined contribution scheme is a post-employment benefit plan
under which the Company pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay
further amounts. Obligations for contributions to defined contribution pension plans are recognised as an expense in the income
statement in the years during which services are rendered by employees.
Share-Based Payment Transactions
Employees (including senior executives) of the Group receive remuneration in the form of share-based payments, whereby
employees render services as consideration for equity instruments (equity-settled transactions). Employees working in the
business development group are granted share appreciation rights, which are settled in cash (cash-settled transactions).
Equity-settled Transactions
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate
valuation model, further details of which are given in Note 24.
That cost is recognised in employee benefits expense (Note 7a), together with a corresponding increase in equity (other capital
reserves), over the period in which the service and, where applicable, the performance conditions are fulfilled (the vesting period).
The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the
extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will
ultimately vest. The expense or credit in the statement of profit or loss for a period represents the movement in cumulative
expense recognised as at the beginning and end of that period.
Service and non-market performance conditions are not taken into account when determining the grant date fair value of
awards, but the likelihood of the conditions being met is assessed as part of the Group’s best estimate of the number of equity
instruments that will ultimately vest. Market performance conditions are reflected within the grant date fair value. Any other
conditions attached to an award, but without an associated service requirement, are considered to be non-vesting conditions.
Non-vesting conditions are reflected in the fair value of an award and lead to an immediate expensing of an award unless there
are also service and/or performance conditions.
No expense is recognised for awards that do not ultimately vest because non-market performance and/or service conditions
have not been met. Where awards include a market or non-vesting condition, the transactions are treated as vested irrespective
of whether the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are
satisfied.
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share
(further details are given in Note 10).
t) Financing Income and Expenses
Financing expenses comprises interest payable, finance charges on shares classified as liabilities and lease liabilities recognised in profit or
loss using the effective interest method, unwinding of the discount on provisions, and net foreign exchange losses that are recognised in
the income statement (see foreign currency accounting policy). Borrowing costs that are directly attributable to the acquisition, construction
or production of an asset that takes a substantial time to be prepared for use are capitalised as part of the cost of that asset. Financing
income comprises interest receivable on funds invested, dividend income and net foreign exchange gains.
Interest income and interest payable is recognised in profit or loss as it accrues, using the effective interest method. Dividend income is
recognised in the income statement on the date the entity’s right to receive payments is established. Foreign currency gains and losses are
reported on a net basis.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
139
FINANCIAL STATEMENTS
Financial Statements
Notes to the Consolidated Financial Statements
u) Exceptional Items
Exceptional items are material items of income and expense which, because of the nature and expected infrequency of events giving rise
to them, merit separate presentation to allow shareholders to understand better the elements of financial performance in the year, so as to
facilitate comparison with prior years and to assess better trends in financial performance.
v) Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income statement except to the extent
that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively
enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill;
the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination, and
differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of
deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using
tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the
temporary difference can be utilised.
w) Share Capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a
deduction from the proceeds.
x) Share Premium and Other Reserves
The amount subscribed for the ordinary shares in excess of the nominal value of these new shares is recorded in ‘share premium’. The
amount subscribed for the preference shares in excess of the nominal value of these new preference shares is recorded in ‘other reserves’.
Costs that directly relate to the issue of ordinary shares are deducted from share premium net of corporation tax. The merger reserve
represents the amount subscribed for the ordinary shares in excess of the nominal value of the shares issued in exchange for the
acquisition of subsidiaries.
y) Earnings Per Share
The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit
attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. For diluted EPS,
the weighted average number of ordinary shares is adjusted to assume conversion of all dilutive potential ordinary shares.
z) Capital Management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide
returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In
order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to
shareholders, issue new shares or sell assets to reduce debt.
aa) Provisions
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, that
can be reliably measured and it is probable that an outflow of economic benefits will be required to settle the obligation.
ab) Non Statutory Measures
One of the Groups KPI’s is adjusted profit before tax. When reviewing profitability, the Directors use an adjusted profit before taxation
(“PBT”) in order to give a meaningful year-on-year comparison. Whilst we recognise that the measure is an alternative
(non-Generally Accepted Accounting Principles (“non-GAAP”)) performance measure which is also not defined within IFRS, this measure
is important and should be considered alongside the IFRS measures.
Adjusted PBT is calculated by adjusting for material items of income and expenditure where because of the nature and expected
infrequency of events giving rise them, merit separate presentation to allow shareholders a better understanding of the financial
performance in the period.
140
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
3. Critical Accounting Estimates and Judgements
The Group’s accounting policies have been set by management. The application of these accounting policies to specific scenarios requires
reasonable estimates and assumptions to be made concerning the future. These are continually evaluated based on historical experience
and expectations of future events. The resulting accounting estimates will, by definition, seldom equal the related actual results. Under
IFRS estimates or judgements are considered critical where they involve a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities from period to period. This may be because the estimate or judgement involves matters which are highly
uncertain or because different estimation methods or assumptions could reasonably have been used.
Critical Accounting Judgements
Revenue from Contracts with Customers
The Group applied the following key judgements on the agent vs principal status of each segment as well as the number of performance
objections in each.
Performance Obligations
Revenue in the OTB, International and CPH segments is recognised based on there being a single performance obligation to at the point
of booking. This is to arrange and facilitate the customer entering into individual contracts with principal suppliers providing holiday related
services including flights, hotels and transfers. For the OTB, International and CPH segments, there is not a significant integration service
and responsibility for providing the services remains with the principal suppliers.
The Group has concluded that under IFRS 15 for revenue in the CCH segment, a package holiday constitutes the delivery of one distinct
performance obligation which includes flights, accommodation, transfers and other holiday-related services. In formulating this conclusion,
management has assessed that it provides a significant integration service to collate all of the elements within a customer’s specification
to produce one integrated package holiday. Management has further analysed the recognition profile and concluded that under IFRS 15,
revenue and corresponding cost of sales should be recognised over the period a customer is on holiday.
Agent vs Principal
Determining whether an entity is acting as a principal or as an agent requires judgement and has a significant effect on the timing and
amount (gross or net basis) of revenue by the Group. As an agent, revenue is recognised at the point of booking on a net basis. As a
principal, revenue is recognised on a gross basis over the duration of the holiday.
In line with IFRS 15, management have concluded that revenue in the OTB, International and CPH segments will continue to be treated
as an agent on the basis that the performance obligation is to arrange for another entity to provide the goods or services. This assessment
has given consideration that there is no inventory risk and limited discretion in establishing prices. Revenue in the CCH segment will
continue to be treated as a principal on the basis that CCH have the primary responsibility for fulfilling the package holiday for the
customer.
Capitalised Website Development Costs
Determining the amounts to be capitalised involves judgement and is dependent upon the nature of the related development; namely
whether it is capital (as relating to the enhancement of the website) or expenditure (as relating to the ongoing maintenance of the website)
in nature. In order to capitalise a project, the key judgement management have made is in determining the project’s ability to produce future
economic benefits. In the year ending 30 September 2021, the proportion of development costs that have been capitalised is lower than
pre-pandemic reporting periods due to the development team undertaking more operational tasks that have been specific to the Group’s
response to COVID-19.
Deferred Tax Asset
Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which
the losses can be utilised. Management judgement is required to determine the amount of deferred tax assets that can be recognised,
based upon the likely timing and the level of future taxable profits, together with future tax planning strategies. The Group has concluded
that the deferred assets will be recoverable using the estimated future taxable income based on the approved projections and plans for the
Group.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
141
FINANCIAL STATEMENTS Financial Statements
Notes to the Consolidated Financial Statements
Critical Accounting Estimates
COVID-19
The recognition of costs and provisions relating to disruption caused by the COVID-19 pandemic is an area of significant estimation. These
adjustments relate primarily to lost revenue resulting from the cancellation of bookings in the financial year and beyond. The estimation
includes the loss of revenues caused by the cancellation and refund of bookings, off-set by extent to which related holiday costs can be
recovered. Key areas of estimation include:
COVID Cancellation Provision
The extent to which holidays will be impacted by the pandemic, either directly due travel restrictions or indirectly due to reductions in flying
schedules. Management have estimated that up to 20% of forward bookings as at the balance sheet date will be cancelled within FY22,
giving rise to an estimated liability of £4.1m, shown in note 17. In estimating this cancellation rate management have considered:
(i) season; as historically summer cancellations are lower than the preceding winter;
(ii) flight supplier load factors; and
(iii) experience of summer FY21 during the pandemic but taking into consideration the current levels of vaccination rate.
The level of forward bookings beyond summer 2022 is not significant and any changes to this assumption would not have a material
impact. If the Group was to increase the percentage of cancellations by 5ppts then the provision required would increase by 23%.
Prepayments with Suppliers
In the normal course of business the Group will advance payments to certain hotel suppliers for holidays booked. A risk assessment is
made based on a review of each significant suppliers financial stability with varying % provisions applied to different risk levels. If the
Group was to increase its % provision applied by 5ppts across all specific risk categories not already fully provided, this would have
resulted in a decrease of £0.1m in the prepayments of £5.3m shown in Note 15.
Recoverability of Airline Debtor
In relation to flights cancelled during the financial year, the Group has considered the impact of the pandemic on the recoverability of
amounts paid to airlines in lieu of flights which have been cancelled which as at 30 September 2021 is a receivable balance of £3.3m
- see note 15.
The Group has a legal right to a refund; the airline has an obligation to refund in the event that the flight is cancelled. European
Regulations provide strict guidelines for the compensation of travellers whose flights are delayed, cancelled, or overbooked while
travelling in or to EU countries. The rules apply to any flights that originate in an EU country. Where an airline is not forthcoming
with a refund owed the Group exercises its chargeback rights are as governed by the card scheme rules. The Group has a right to
make a chargeback when:
(i) the merchant (airline) was unable or unwilling to provide the purchased services; or
(ii) the cardholder is entitled to a refund under the merchant’s cancellation policy.
Where a flight has been cancelled, the Group has recognised a net receivable for the expected recoverable amount in accordance with the
considerations above. Management have calculated the provision for airline refunds owed based on factors such as age, flight supplier and
payment method.
Impact of COVID-19
A summary of the adjustments between Adjusted and GAAP measures, split between the COVID-19 impact and other costs, is shown
below:
Group revenue
Revenue as agent
Revenue as principal
Group cost of sales
Group overheads
Group profit before tax
Adjusted
£’m
2021
COVID-19
£'m
GAAP
£’m
24.0
6.5
(7.2)
(50.0)
(26.7)
(9.3)
-
0.4
(1.1)
(10.0)
14.7
6.5
(6.8)
(51.1)
(36.7)
The total exceptional items in the year ended 30 September 2021 of £10.0m represents the estimated cost of COVID-19 to trading in
the period. This is primarily the cost of COVID-19 related cancellations or expected cancellations of £8.9m. Exceptional operating costs of
£1.1m includes legal and professional fees and supplier provisions.
142
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
The total exceptional items in the year ended 30 September 2020 of £41.7m represents the estimated cost of COVID-19 to trading in
the period. This is primarily the cost of COVID-19 related cancellations or expected cancellations of £37.4m. The adjustment also includes
a provisions against amounts due from suppliers of £2.2m, exceptional development spend of £0.7m and legal and professional fees of
£1.4m. £0.7m of redundancy costs were offset by £0.7m of contributions in relation to the Coronavirus Job Retention Scheme.
Impairment of Intangible Assets and Goodwill
Intangible assets are reviewed for impairment if events or changes in circumstances indicate that the carrying amount may not be
recoverable. Goodwill is reviewed for impairment on an annual basis. When a review for impairment is conducted, the recoverable
amount is determined based on the higher of value in use and fair value less costs to sell. The value in use method requires the Group
to determine appropriate assumptions (which are sources of estimation uncertainty) in relation to the cash flow projections based on
the latest budget, the long-term growth rate to be applied to these cash flow projections and the risk-adjusted pre-tax discount rate
used to discount the assumed cash flows to present value.
The Group has concluded that the carrying value of the intangibles and goodwill is appropriate (after considering certain sensitivities
which are set out in Note 11).
4. Revenue
In line with IFRS 15, the Group is required to disaggregate its revenue to show the main drivers of its revenue streams. Revenue is
accounted for at the point the Group has satisfied its performance obligations, details of the revenue performance obligations are set out in
note 2i of these financial statements.
Year ended 30 September 2021
Revenue before exceptional cancellations
Sales as agent
Sales as principal
Total Revenue before exceptional cancellations
Exceptional cancellations*
Total Revenue
Revenue before exceptional cancellations
Sales as agent
Sales as principal
Total Revenue before exceptional cancellations
Exceptional cancellations*
Total Revenue
OTB
£’m
22.1
-
22.1
(9.1)
13.0
Int’l
£’m
0.1
-
0.1
(0.1)
-
Year ended 30 September 2020
OTB
£’m
50.4
-
50.4
(34.5)
15.9
Int’l
£’m
0.3
-
0.3
(0.2)
0.1
CCH
£’m
-
6.5
6.5
-
6.5
CCH
£’m
-
16.9
16.9
-
16.9
CPH
£’m
1.8
-
1.8
(0.1)
1.7
CPH
£’m
3.6
-
3.6
(2.8)
0.8
Total
£’m
24.0
6.5
30.5
(9.3)
21.2
Total
£’m
54.3
16.9
71.2
(37.5)
33.7
* Exceptional cancellations in the year ended 30 September 2021 and 30 September 2020 relate to the impact of COVID-19 (see note 3).
Details of receivables arising from contracts with customers are set out in note 15.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
143
FINANCIAL STATEMENTS
Financial Statements
Notes to the Consolidated Financial Statements
5. Segmental Report
As explained in note 2h, the management team considers the reportable segments to be ‘‘OTB’’, “International”, ‘‘CCH’’ and “CPH”. All
segment revenue, operating profit assets and liabilities are attributable to the Group from its principal activities.
OTB, International and CPH recognise revenue as agent on a net basis. CCH recognises revenue as a principal on a gross basis.
2021
2020
OTB
£’m
Int’l
£’m
CCH
£’m
CPH
£’m
Total
£’m
OTB
£’m
Int’l
£’m
CCH
£’m
CPH
£’m
Total
£’m
Income
Revenue before exceptional
cancellations
22.1
0.1
6.5
1.8
30.5
50.4
0.3
16.9
3.6
71.2
Exceptional cancellations*
(9.1)
(0.1)
Total Revenue
13.0
-
-
6.5
(0.1)
1.7
(9.3)
21.2
(34.5)
(0.2)
-
15.9
0.1
16.9
(2.8)
0.8
(37.5)
33.7
Adjusted EBITDA
(6.1)
(0.2)
(3.1)
(1.7)
(11.1)
10.6
(0.3)
(1.9)
(1.5)
Share based (charge)/credit
(2.8)
-
-
-
(2.8)
0.6
-
-
-
6.9
0.6
Impact of COVID-19
(9.8)
(0.1)
(0.4)
0.3
(10.0)
(38.7)
(0.2)
(0.1)
(2.7)
(41.7)
Other exceptional items
-
-
-
-
-
(0.3)
-
-
-
(0.3)
EBITDA
(18.7)
(0.3)
(3.5)
(1.4)
(23.9)
(27.8)
(0.5)
(2.0)
(4.2)
(34.5)
Depreciation and amortisation
(10.3)
(0.1)
(1.3)
(0.2)
(11.9)
(9.9)
(0.1)
(1.2)
(0.2)
(11.4)
Group operating loss
(29.0)
(0.4)
(4.8)
(1.6)
(35.8)
(37.7)
(0.6)
(3.2)
(4.4)
(45.9)
Finance costs
Finance income
Loss before taxation
(1.0)
0.1
(36.7)
Non-current assets
Goodwill
Other intangible assets
31.6
26.0
Property, plant and equipment
5.8
Investment property
-
-
0.1
-
-
4.6
7.7
2.5
-
4.0
0.1
-
-
40.2
33.9
8.3
-
31.6
-
30.1
0.1
8.1
-
-
-
4.6
8.9
1.8
0.6
4.0
0.3
-
-
*
Exceptional cancellations in the year ended 30 September 2021 and 30 September 2020 relate to the impact of COVID-19.
(0.8)
0.4
(46.3)
40.2
39.4
9.9
0.6
144
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
6. Operating Profit
a) Operating Expenses
Expenses by nature including exceptional items and impairment charges:
Marketing
Depreciation
Staff costs (including share based payments)
IT hosting, licences & support
Office expenses
Credit/debit card charges
Insurance
Other
2021
£’m
10.9
1.8
18.5
2.5
0.8
0.5
1.6
2.4
2020
£’m
22.8
1.9
14.6
2.4
0.8
1.7
1.6
2.0
Administrative expenses before exceptional items & amortisation of intangible assets
39.0
47.8
Impact of COVID-19
Other exceptional items
Amortisation of intangible assets
Exceptional items and amortisation of intangible assets
Administrative expenses
b) Exceptional Items
1.1
-
10.1
11.2
50.2
4.3
0.3
9.5
14.1
61.9
Group revenue
Revenue as agent
Revenue as principal
Group cost of sales
Group overheads
Administrative expenses
Net finance costs
Group profit before tax
2021
Impact of
COVID-19
£'m
Adjusted
£’m
GAAP
£’m
Adjusted
£’m
2020
Impact of
COVID-19
£'m
Other
exceptional
Items
£'m
24.0
6.5
(7.2)
(49.1)
(0.9)
(26.7)
(9.3)
-
0.4
(1.1)
-
(10.0)
14.7
6.5
(6.8)
(50.2)
(0.9)
(36.7)
54.3
16.9
(17.8)
(37.5)
-
0.1
(57.3)
(4.3)
(0.4)
(4.2)
-
(41.7)
-
-
-
(0.3)
-
(0.3)
GAAP
£’m
16.8
16.9
(17.7)
(61.9)
(0.4)
(46.3)
The total exceptional items in the year ended 30 September 2021 of £10.0m represents the estimated cost of COVID-19 to trading in
the period. This is primarily the cost of COVID-19 related cancellations or expected cancellations of £8.9m. Exceptional operating costs of
£1.1m includes legal and professional fees and supplier provisions.
The exceptional items in the year ended 30 September 2020 of £41.7m represents the estimated cost of COVID-19 to trading in the
period. This is primarily the cost of COVID-19 related cancellations or expected cancellations of £37.4m. The adjustment also includes
a provisions against amounts due from suppliers of £2.2m, exceptional development spend of £0.7m and legal and professional fees of
£1.4m. Other exceptional items of £0.3m relate to legal and professional fees.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
145
FINANCIAL STATEMENTS
Financial Statements
Notes to the Consolidated Financial Statements
c) Services provided by the company auditor
During the year, the Group obtained the following services from the operating company’s auditor.
Audit of the parent company financial statements
Amounts receivable by the Company’s auditor and its associated in respect of:
›
›
›
Audit of financial statements of subsidiaries pursuant to legislation
Review of interim financial statements
Other assurance services
2021
£’m
2020
£’m
0.1
0.3
-
-
0.4
0.1
0.2
-
-
0.3
d) Adjusted (LBT)/PBT
Management measures the overall performance of the Group by reference to Adjusted (LBT)/PBT, a non-GAAP measure as it gives a
meaningful year on year comparison of the Group’s performance:
Profit before taxation
Impact of COVID-19
Other exceptional items
Total exceptional items
Amortisation of acquired intangibles*
Share based payments charge**
Adjusted (LBT)/PBT
2021
£’m
(36.7)
10.0
-
10.0
5.5
2.8
(18.4)
2020
£’m
(46.3)
41.7
0.3
42.0
5.5
(0.6)
0.6
* These charges relate to amortisation of brand, website technology and customer relationships recognised on the acquisition of subsidiaries and are added back as
they fall outside of the normal activities of the Group.
** The share based payment charge represents the expected cost of shares vesting under the Group’s Long Term Incentive Plan. These charges are added back to the
adjusted profit measure as they do not necessarily relate to the performance of the Group in the current financial year, refer to note 24.
On 22 December 2020 the remuneration committee approved the introduction of an underpin/minimum award for the nil cost awards originally granted 9 July 2019 to key
management. This removal of a non-marked based condition has resulted in a catch up charge to the income statement of £2.0m that reflects the scheme progress to date.
146
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
7. Employees and Directors
a) Payroll Costs
The aggregate payroll costs of these persons were as follows:
Wages and salaries
Defined contribution pension cost
Social security costs
Share-based payment (credit)/charges
2021
£’m
18.0
0.4
1.9
2.8
23.1
2020
£’m
17.9
0.3
1.8
(0.6)
19.4
Staff costs above include £4.6m (2020: £4.0m) employee costs capitalised as part of software development. During the year
£0.2m was claimed in relation to the Coronavirus Job Retention Scheme (2020: £0.7m). This has been netted off against other
exceptional items in relation to COVID 19.
b) Employee Numbers
Average monthly number of people (including Executive Directors) employed:
By reportable segment:
UK
Int’l
CCH
CPH
c) Directors’ Emoluments
The remuneration of Directors was as follows:
Aggregate emoluments
Defined contribution pension
Share-based payment charges
Remuneration was paid by On the Beach Limited, a subsidiary company of the Group.
The remuneration of the highest paid director was as follows:
Aggregate emoluments
Share-based payment charges
2021
No.
2020
No.
365
6
115
8
494
2021
£’m
0.5
-
0.1
0.6
2021
£’m
0.3
0.1
0.4
419
10
116
5
550
2020
£’m
0.9
-
0.1
1.0
2020
£’m
0.3
0.1
0.4
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
147
FINANCIAL STATEMENTS
Financial Statements
Notes to the Consolidated Financial Statements
d) Key Management Compensation
Key management comprised the seven members of the executive team.
Remuneration of all key management (including directors) was as follows:
Wages and salaries
Short-term non-monetary benefits
Share-based payment charges
2021
£’m
1.7
-
2.1
3.8
2020
£’m
1.6
-
0.1
1.7
e) Retirement Benefits
Included in pension contributions payable by the Group of £0.4m (2020: £0.3m) is £1,300 (2020: £42,000) of contributions that the
Group made to a personal pension scheme in relation to one Executive Director.
8. Finance Income and Finance Costs
a) Finance Costs
Rolling credit facility interest / non-utilisation fees
Interest on lease liabilities
Finance costs
b) Finance Income
Bank interest receivable
Finance income
2021
£’m
0.9
0.1
1.0
2021
£’m
0.1
0.1
2020
£’m
0.6
0.2
0.8
2020
£’m
0.4
0.4
148
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
9. Taxation
Current tax on loss for the year
Adjustments in respect of prior years
Total current tax
Deferred tax on profits for the year
Origination and reversal of temporary differences
Adjustments in respect of prior years
Total deferred tax
Total tax credit
2021
£’m
(0.4)
(0.1)
(0.5)
(6.1)
0.1
(6.0)
(6.5)
2020
£’m
(4.0)
-
(4.0)
(3.5)
-
(3.5)
(7.5)
The differences between the total taxation shown above and the amount calculated by applying the standard UK corporation taxation
rate to the profit before taxation on continuing operating are as follows.
Profit on ordinary activities before tax
Profit on ordinary activities multiplied by the effective rate of corporation tax in the UK of 19%
(2020: 19%)
Effects of:
Impact of difference in current and deferred tax rates
Adjustments in respect of prior years
Expenses not deductible
Total taxation credit
2021
£’m
(36.7)
2020
£’m
(46.3)
(7.0)
(8.8)
0.2
-
0.3
1.3
-
-
(6.5)
(7.5)
The tax charge for the year is based on the effective rate of UK corporation tax for the period of 18% (2020: 19%). An increase in the
UK corporation rate from 19% to 25% (effective 1 April 2023) was substantively enacted on 24 May 2021. The deferred tax assets and
liabilities at 30 September 2021 have been calculated based on these rates.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
149
FINANCIAL STATEMENTS
Financial Statements
Notes to the Consolidated Financial Statements
10. Earnings Per Share
Basic earnings per share are calculated by dividing the profit attributable to equity holders of On the Beach Group plc by the weighted
average number of ordinary shares issued during the year.
Diluted earnings per share is calculated by dividing the profit attributable to equity holders of On the Beach Group plc by the weighted
average number of Ordinary Shares issued during the period plus the weighted average number of Ordinary Shares that would be
issued on the conversion of all dilutive potential ordinary shares into Ordinary Shares.
Adjusted earnings per share figures are calculated by dividing adjusted earnings after tax for the year by the weighted average number
of shares.
Year ended 30 September 2021
Basic EPS
Diluted EPS*
Adjusted EPS
Year ended 30 September 2020
Basic EPS
Diluted EPS*
Adjusted EPS
Basic weighted
average number
of Ordinary Shares
(m)
Total
earnings
£’m
Pence
per share
159.3
159.3
159.3
140.2
140.2
140.2
(30.2)
(30.2)
(15.4)
(38.8)
(38.8)
(0.7)
(19.0p)
(19.0p)
(9.7p)
(27.6p)
(27.6p)
(0.5p)
* There was no difference in the weighted average number of shares used for the calculation of basic and diluted loss per share as the effect of all potentially dilutive shares
outstanding was anti-dilutive.
Adjusted earnings after tax is calculated as follows:
Profit for the year after taxation
Adjustments (Net of Tax at 19%):
Impact of exceptional COVID-19 cancellations
Other exceptional items
Amortisation of acquired intangibles
Share based payment charges*
Adjusted earnings after tax
*
The share based payment charges are in relation to options which are not yet exercisable.
2021
£’m
(30.2)
8.1
-
4.5
2.2
(15.4)
2020
£’m
(38.8)
33.8
0.3
4.5
(0.5)
(0.7)
150
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
11. Intangible Assets
Cost
At 1 October 2019
Additions
At 30 September 2020
Additions
At 30 September 2021
Accumulated amortisation
At 1 October 2019
Charge for the year
At 30 September 2020
Charge for the year
At 30 September 2021
Net book amount
At 30 September 2021
At 30 September 2020
Brand
Goodwill
Website &
development
Costs
Website
technology
Customer
relationships
£’m
£’m
£’m
£’m
£’m
35.9
40.2
-
-
35.9
40.2
-
-
35.9
40.2
12.7
2.4
15.1
2.4
17.5
-
-
-
-
-
18.4
20.8
40.2
40.2
11.6
4.0
15.6
4.6
20.2
4.7
4.0
8.7
4.6
13.3
6.9
6.9
22.8
-
22.8
-
22.8
13.6
2.4
16.0
2.4
18.4
4.4
6.8
6.5
-
6.5
-
6.5
0.9
0.7
1.6
0.7
2.3
4.2
4.9
Total
£’m
117.0
4.0
121.0
4.6
125.6
31.9
9.5
41.4
10.1
51.5
74.1
79.6
Goodwill
Goodwill acquired in a business combination is allocated on acquisition to the CGUs that are expected to benefit from that business
combination. The carrying amount of goodwill has been allocated as follows:
Reportable segment
OTB
OTB
CCH
CPH
CGU
OTB
Acquisitions
On the Beach Travel Limited
Sunshine
Sunshine.co.uk Limited
CCH
CPH
Classic Collection Limited
Classic Collection Limited
As at 30
September
2021
£’m
As at 30
September
2020
£’m
21.5
10.1
4.6
4.0
40.2
21.5
10.1
4.6
4.0
40.2
Impairment of Goodwill
On the Beach and Sunshine are considered to be one reportable segment, as they are internally reported and managed as one entity, but
for impairment review purposes they are treated as separate CGU’s as they have independent cash inflows. Goodwill acquired through
Sunshine.co.uk has been allocated to the “Sunshine” cash generating unit. Goodwill acquired through the Classic collection acquisition has
been allocated to the “CCH” and “CPH” cash generating units.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
151
FINANCIAL STATEMENTS
Financial Statements
Notes to the Consolidated Financial Statements
“OTB” CGU
The Group performed its annual impairment test as at 30 September 2021 on the “OTB” cash generating unit (“CGU”). The recoverable
amount of the CGU has been determined based on the value in use calculations using cash flow projections derived from financial budgets
and projections covering a three-year period. The initial two years are based on the latest budget, year three is extrapolated at a growth
rate of 2 percent (2020: 2 percent); the forecasts are then extrapolated in perpetuity based on an estimated growth rate of 2 percent
(2020: 2 percent), this being the Directors’ best estimate of the future prospects of the business. This is deemed appropriate because
the CGU is considered to be a long-term business. Management estimates discount rates using pre-tax rates that reflect current market
assessments of the time value of money and the risks specific to this CGU. The discount rate applied is 10 percent (2020: 11 percent).
The main assumptions on which the forecast cash flows were based include the level of sales and administrative expenses within
the business and have been set by the Directors based on their past experience of the business and its industry, together with their
expectations of the market. The level of sales depends upon the size of the markets in which the Group operates together with the
Directors’ estimations of its market share and competitive pressures, including the level of supplier overrides.
“Sunshine” CGU
The Group performed its annual impairment test as at 30 September 2021 on the “Sunshine” cash generating unit (“CGU”). The
recoverable amount of the CGU has been determined based on the value in use calculations using cash flow projections derived
from financial budgets and projections covering a three-year period. The initial two years are based on the latest budget, year three is
extrapolated at a growth rate of 2 percent (2020: 2 percent); the forecasts are then extrapolated in perpetuity based on an estimated
growth rate of 2 percent (2020: 2 percent), this being the Directors’ estimated view best estimate of the future prospects of the business.
This is deemed appropriate because the CGU is considered to be a long-term business. Management estimates discount rates using pre-
tax rates that reflect current market assessments of the time value of money and the risks specific to this CGU. The discount rate applied is
10 percent (2020: 11 percent).
The main assumptions on which the forecast cash flows were based include the level of sales and administrative expenses within
the business and have been set by the Directors based on their past experience of the business and its industry, together with their
expectations of the market. The level of sales depends upon the size of the markets in which the Group operates together with the
Directors’ estimations of its market share and competitive pressures, including the level of supplier overrides.
“CCH” CGU
The Group performed its annual impairment test as at 30 September 2021 on the “CCH” cash generating unit (“CGU”). The recoverable
amount of the CGU has been determined based on the value in use calculations using cash flow projections derived from financial budgets
and projections covering a three year period. The initial two years are based on the latest budget, year three is extrapolated at a 2 percent
growth rate (2020: 2 percent), the forecasts are then extrapolated in perpetuity based on at a 2 percent growth rate (2020: 2 percent).
This is deemed appropriate based on the Directors’ best estimate of the future prospects of the business. Management estimates discount
rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGU. The
discount rate applied is 10 percent (2020: 11 percent).
The main assumptions on which the forecast cash flows were based include the level of sales and administrative expenses within
the business and have been set by the Directors based on their past experience of the business and its industry, together with their
expectations of the market. The level of sales depends upon the size of the markets in which the Group operates together with the
Directors’ estimations of its market share and competitive pressures, including the level of supplier overrides.
“CPH” CGU
The Group performed its annual impairment test as at 30 September 2021 on the “CPH” cash generating unit (“CGU”). The recoverable
amount of the CGU has been determined based on the value in use calculations using cash flow projections derived from financial budgets
and projections covering a three-year period. The initial two years are based on the latest budget, year three is extrapolated at a growth
rate of 5 percent (2020: 2 percent), the forecasts are then extrapolated in perpetuity based on a 2 percent growth rate (2020: 2 percent).
This is deemed appropriate based on the Directors’ best estimate of the future prospects of the business. Management estimates discount
rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGU. The
discount rate applied is 10 percent (2020: 11 percent).
The main assumptions on which the forecast cash flows were based include the level of sales and administrative expenses within
the business and have been set by the Directors based on their past experience of the business and its industry, together with their
expectations of the market. The level of sales depends upon the size of the markets in which the Group operates together with the
Directors’ estimations of its market share and competitive pressures, including the level of supplier overrides.
The “international” CGU has been internally developed and as such, has no goodwill.
Administrative expenses are dependent upon the net costs to the business of purchasing services. Expenses are based on the current cost
base of the Group adjusted for variable costs.
152
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Impact of COVID-19 on impairment considerations
The Group does not consider that any CGU has been automatically impaired as a result of the pandemic. All CGUs remain viable trading
long term assets which the Group expects to continue to generate positive cashflows. Inherent in the impairment test is a period of
disruption followed by a gradual recovery. Sensitivities have been applied to both the extent / period of disruption and the Group is satisfied
that sufficient headroom exists to support the asset value.
Climate-related risks
The Group is in the process of conducting a materiality assessment of climate-related risks and will adjust the key assumptions used in
value-in-use calculations and sensitivity to changes in assumptions.
Development costs
The Group capitalises development projects where they satisfy the requirements for capitalisation in accordance with the IAS 38 and
expense projects that relate to ongoing maintenance and support. Capitalised development costs are not treated as a realised loss for the
purpose of determining the Company’s distributable profits as the costs meet the conditions requiring them to be treated as an asset in
accordance with IAS 38.
Additions in the year relate to the development of software. The amortisation period for website development costs is 3 years straight line.
Domain names are amortised over 10 years. Amortisation has been recognised within operating expenses. Research and development
costs that are not eligible for capitalisation have been recognised in administrative expenses in the period incurred, in 2021 this was £1.4m
(2020: £1.3m). £0.3m of the expensed costs in the current year were due to projects no longer viable due to the impact of COVID-19
(2020: £0.7m).
Sensitivity to Changes in Assumptions
Sensitivity analysis has been completed on key assumptions in isolation and in combination, and the headroom taken is significant. The key
assumptions are discount factor, long term growth rates and short term trading volumes/cashflows. Sensitivities have been applied on all
of these assumptions. Management considers that no reasonably possible changes in assumptions would reduce a CGU’s headroom to nil.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
153
FINANCIAL STATEMENTS
Financial Statements
Notes to the Consolidated Financial Statements
12. Property, plant and equipment
Cost
At 1 October 2019
Additions
At 1 October 2020
Additions
Transfer from investment property
Disposals
At 30 September 2021
Accumulated deprecation
At 1 October 2019
Charge for the year
At 1 October 2020
Charge for the year
Disposals
At 30 September 2021
Net book amount
At 30 September 2021
At 30 September 2020
Freehold
property
Right-of-use
asset (note 19)
Fixtures,
fittings and
equipment
£’m
1.7
-
1.7
-
0.6
-
2.3
-
-
-
0.1
-
0.1
2.2
1.7
£’m
5.3
-
5.3
-
-
(1.7)
3.6
1.1
0.5
1.6
0.5
(1.0)
1.1
2.5
3.7
£’m
5.9
1.2
7.1
0.5
-
(0.5)
7.1
1.2
1.4
2.6
1.2
(0.3)
3.5
3.6
4.5
Total
£’m
12.9
1.2
14.1
0.5
0.6
(2.2)
13.0
2.3
1.9
4.2
1.8
(1.3)
4.7
8.3
9.9
The depreciation expense of £1.8m for the year ended 30 September 2021 and the depreciation expense of £1.9m for the year ended 30
September 2020 have been recognised within administrative expenses.
On 29 April 2021, the Group exercised the termination clause on one of the leased properties, the Group performed a reassessment of the
lease liability and derecognised the right-of-use asset on this date. The reassessment of the lease resulted in a gain of £0.1m, recognised
in administrative expenses.
In the year ended 30 September 2021, the Group has transferred the investment property to owner-occupied property as the amount of
the building rented out has significantly reduced.
154
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
13. Investment Property
At 1 October 2019
Revaluation
At 1 October 2020
Transfer to property, plant and equipment
At 30 September 2021
Total
£’m
0.6
-
0.6
(0.6)
-
Investment property relates to a freehold property acquired as part of the acquisition of Classic Collection Holidays. During the year ended
30 September 2021 the proportion of the building rented out has significantly reduced, in applying materiality considerations the whole
property has been accounted for as an owner-occupied property in property, plant and equipment (note 12).
14. Investments
The parent company, On the Beach Group plc, is incorporated in the UK and directly holds a number of subsidiaries. The registered
address for each subsidiary is Aeroworks, 5 Adair Street, Manchester, M1 2NQ.
The table below shows details of the wholly owned subsidiaries of the Group.
Subsidiary
On the Beach Topco Limited
On The Beach Limited*
On The Beach Beds Limited
On The Beach Bid Co Limited
On the Beach Travel Limited
On the Beach Trustees Limited
On the Beach Holidays Limited
Sunshine.co.uk Limited
Sunshine Abroad Limited
Classic Collection Holidays Limited
Classic Collection Aviation Limited
Nature of business
Holding Company
Internet Travel Agent
In-house Bedbank
Holding Company
Holding Company
Employee Trust
Dormant
Internet Travel Agent
Dormant
Tour Operator
Transport Broker
Classic Collection Holiday, Travel & Leisure Limited
Dormant
Saxon House Properties Limited
Property Management
Classic Package Holidays Limited
Travel Agent
*
On the Beach Limited has a Swedish trading division which has a corporate identity number of 516408-9186.
Proportion of ordinary
shares held by the Group
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
There are no restrictions on the Company’s ability to access or use the assets and settle the liabilities of the Company’s subsidiaries.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
155
FINANCIAL STATEMENTS Financial Statements
Notes to the Consolidated Financial Statements
15. Trade and Other Receivables
Amounts falling due within one year:
Trade receivables – net
Other receivables and prepayments
2021
£’m
79.5
15.4
94.9
2020
£’m
58.9
45.8
104.7
For the year ended 30 September 2021, other receivables includes £3.3m receivable in respect of amounts due from airlines as a result
of exceptional COVID-19 cancellations. Other receivables and prepayments includes £5.3m of advanced payments to suppliers.
For the year ended 30 September 2020, other receivables includes £34.3m receivable in respect of amounts due from airlines as a result
of exceptional COVID-19 cancellations. Substantially all of the amount has been fully recovered in the current year with the balance
having been provided for. Other receivables and prepayments includes £2.2m of advanced payments to suppliers.
16. Trust Account
Trust accounts are restricted cash held separately and only accessible once the Trust rules are met as approved by our Trustees and the
Civil Aviation Authority, this is at the point the customer has travelled or the booking is cancelled and refunded.
17. Trade, Other Payables and Provisions
Non-current
Lease liabilities (note 18)
Current
Trade payables
Accruals and other payables
Lease liabilities (note 18)
Provision
2021
£’m
2020
£’m
2.5
3.8
104.3
14.8
0.4
4.6
80.2
11.8
0.4
10.9
126.6
107.1
Trade payables includes £0.9m (2020: £9.0m) in respect of refunds owed to customers, with the related receivable from the airlines
recognised in trade receivables. Where the refunds are not received from the airline the Group has a legally enforceable right to offset
the recognised amounts. The Group has opted to show the figures gross due to no option to settle on a net basis or realise the asset and
settle the liability simultaneously.
156
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
At 1 October 2020
Arising during the year
Utilised
Unused amounts reversed
Unwinding of discount and changes in the discount rate
At 30 September
Current
Non-current
COVID-19
cancellations
Related
provisions
£’m
(10.0)
(1.8)
7.6
0.1
-
(4.1)
(4.1)
-
£’m
(0.8)
(0.3)
0.5
0.1
-
(0.5)
(0.5)
-
Total
£’m
(10.8)
(2.1)
8.1
0.2
-
(4.6)
(4.6)
-
COVID-19 cancellations
A provision is recognised in respect of expected future cancellations in relation to bookings taken before 30 September 2021. We expect
this provision to be utilised over the next year. Assumptions used to calculate the provision for cancellations were the extent to which
holidays will be impacted by the pandemic and he level of revenue that will be reversed as a result of the cancellations, see note 3.
Other COVID-19 related provisions
A provision has been recognised for specific suppliers, we expect this provision to be utilised over the next year. Assumptions used to
calculate the other COVID-19 related provisions were the extent to which holidays will be impacted by the pandemic, see note 3.
18. Leases
The Group as a lessee
For the year ending 30 September 2020, the Group had lease contracts for two properties, both with a lease term of 10 years. On
29 April 2021, the Group exercised the termination clause on the lease of one of the properties, on this date the Group performed a
reassessment of the lease liability resulting in a £0.1m gain on termination.
With the exception of short-term leases and leases of low-value underlying assets, each lease is reflected on the balance sheet as
a right-of-use asset and a lease liability. The Group classifies its right-of-use assets in a consistent manner to its property, plant and
equipment (see note 12).
Each lease generally imposes a restriction that, unless there is a contractual right for the Group to sublet the asset to another party, the
right-of-use asset can only be used by the Group.
Amounts recognised in profit or loss
The following lease-related expenses were recognised under IFRS 16 in the profit or loss:
Depreciation expense of right-of-use assets
Interest expense on lease liabilities
Gain on termination of lease
Total amount recognised in profit or loss
2021
£’m
0.5
0.1
(0.1)
0.5
2020
£’m
0.5
0.2
-
0.7
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
157
FINANCIAL STATEMENTS
Financial Statements
Notes to the Consolidated Financial Statements
Set out below are the carrying amounts of lease liabilities (included trade and other payables) and the movements during the period:
As at 1 October
Accretion of interest
Payments
Reassessment of lease term
As at 30 September
Current (note 17)
Non-current (note 17)
2021
£’m
4.2
0.1
(0.6)
(0.8)
2.9
0.4
2.5
2020
£’m
4.5
0.2
(0.4)
-
4.2
0.4
3.8
The Group had total cash outflows for leases of £0.6m in 2021 (£0.4m in 2020). The above table satisfies the requirements of IAS 7.44A
to present a net debt reconciliation.
19. Borrowings
Bank Facility
The Group has a revolving credit facility with Lloyds Bank plc. The purpose of the facility is to meet the day to day working capital
requirements of the Group.
The total facility is £75m and has two elements as follows:
ą
ą
Core facility of £50m expiring December 2023; and
CLBILS facility of £25m expiring May 2023 (extended to May 2023 on 25 May 2021).
The interest rate payable on the core facility is equal to LIBOR plus a margin. The margin contained within the facility is dependent on net
leverage ratio and the rate per annum is 3.75% for the facility or any unpaid sum. The interest rate payable on the CLBILS facility is equal
to the base rate plus a margin. The margin contained within the facility is 2.30% per annum for the facility or any unpaid sum.
On 25 May 2021 covenant tests were amended up to and including 30 September 2022 to account for the impact of COVID-19 on the
Group’s results, tests return to normal from 1 October 2022.
The terms of the facility following 1 October 2022 include the following covenants:
(i)
(ii)
that the ratio of adjusted EBITDA to net finance charges in respect of any relevant period shall not be less than 5:1;
that the ratio of total net debt to adjusted EBITDA shall not exceed 2:1
The terms of the facility prior to 1 October 2022 include the following key financial covenants:
(iii) LTM minimum EBITDA: June 21 £11.6m loss: September 21 £18.4m loss; December 21 £20.4m loss; March 22 £1.2m loss
(iv) EBITDA/Net debt ratio; June 22 2.5:1 ; September 22 2.25:1
The RCF is available for other credit uses including currency hedging liabilities and corporate credit cards. At 30 September 2021, the
liabilities for these other credit uses was £2.1m, leaving £73m of the Lloyds facility available for use. Card facilities with other providers
remain available for use.
The amount drawn down in cash at 30 September 2021 was £nil and there has been nothing drawn down post balance sheet date.
158
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
20. Deferred tax
2021
Assets
Liabilities
Total
2020
Assets
Liabilities
Total
Intangible assets
Property, plant and
equipment
Share-based
payments
£’m
-
(6.3)
(6.3)
-
(6.2)
(6.2)
£’m
-
(0.3)
(0.3)
-
(0.1)
(0.1)
£’m
0.7
-
0.7
0.2
-
0.2
Losses and
unused tax
relief
£’m
9.5
-
9.5
3.5
-
3.5
Intangible
asset
Property, plant and
equipment
Share based
payments
Losses and
unused tax
relief
30 September 2019
Recognised in income
Recognised in equity
30 September 2020
Recognised in income
Recognised in equity
30 September 2021
£’m
(6.5)
0.3
-
(6.2)
(0.1)
-
(6.3)
£’m
0.1
-
-
(0.1)
(0.2)
-
(0.3)
£’m
0.5
(0.2)
(0.1)
0.2
(0.4)
0.1
0.7
£’m
-
3.5
-
3.5
6.0
-
9.5
Tax assets/
(liabilities)
£’m
10.2
(6.6)
3.6
3.7
(6.3)
(2.6)
Total
£’m
(6.1)
3.6
(0.1)
(2.6)
6.1
0.1
3.6
The deferred tax asset includes an amount of £9.5m (2020: £3.5m) which relates to carried forward tax losses. The Group
has concluded that the deferred assets will be recoverable using the estimated future taxable income based on the approved
projections and plans for the Group. The losses can be carried forward indefinitely and have no expiry date.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
159
FINANCIAL STATEMENTS Financial Statements
Notes to the Consolidated Financial Statements
21. Share Capital
Allotted, called up and fully paid
2021
£’m
2020
£’m
165,399,366 ordinary shares @ £0.01 each (2020: 157,362,037 @ £0.01 each)
1.7
1.6
During the year, the Group issued 7,870,000 shares via a share placing with a nominal value of £0.01 each, no discount was offered
on the value of the shares. The Group issued an additional 167,329 with a nominal value of £0.01. 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.
22. Reserves
The analysis of movements in reserves is shown in the statement of changes in equity.
Details of the amounts included in other reserves are set out below.
The merger reserve arose on the purchase of On the Beach TopCo Limited in the year ended 30 September 2015.
During the year ended 30 September 2018, the Group issued 607,747 shares with a nominal value of £0.01 each to form part of the
acquisition of Classic. The consideration value of the shares issued was £2.6m. The excess above the nominal value of the shares was
credited to the merger reserve. The capital redemption reserve arose as a result of the redemption of preference shares in the year ended
30 September 2015.
The capital redemption reserve arose as a result of the redemption of preference shares in the year ended 30 September 2015.
During the year ended 30 September 2021, the Group issued 7,870,000 shares via a share placing with a nominal value of £0.01 each,
no discount was offered on the value of the shares. The consideration value of the shares issued was £24.9m, net of fees. The excess
above the nominal value of the shares was credited to the share premium net of fees.
160
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
23. Financial Instruments
Details of significant accounting policies and methods adopted, including criteria for recognition, the basis of measurement and the basis
on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are
disclosed in the statement of accounting policies.
At the balance sheet date the Group held the following:
Financial assets
FV Level
Derivative financial assets designated as hedging instruments
Forward exchange contracts
Financial assets at amortised cost
Trust account
Cash at bank
Trade and other receivables (note 15)
Total financial assets
Financial liabilities
Derivatives designated as hedging instruments
Forward exchange contracts
Financial liabilities at amortised cost
Trade and other payables (note 17)
Total financial liabilities
2
2
2021
£’m
2020
£’m
-
0.5
39.0
56.0
89.5
184.5
25.8
36.5
102.5
165.3
(0.3)
-
(122.0)
(96.2)
(122.3)
(96.2)
Derivative Financial Instruments
The Group enters into derivative financial instruments with various financial institutions which are valued using present value calculations.
The valuation methods incorporate various inputs including the foreign exchange spot and forward rates, yield curves of the respective
currencies and currency basis spreads between the respective currencies.
Revolving Credit Facility
In order to fund seasonal working capital requirements the Group has a revolving credit facility with Lloyds Bank plc. The borrowing limits
under the facility is £75m per month, subject to covenant compliance, at year end the facility was nil (2020: nil).
For details of the revolving credit facility, see note 19.
The following table provides the fair values of the Group’s financial assets and liabilities:
Forward exchange contracts
FV level
2
2021
£’m
(0.3)
2020
£’m
0.5
There is no difference between the carrying value and fair value of cash and cash equivalents, trade and other receivables, and trade and
other payables.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
161
FINANCIAL STATEMENTS
Financial Statements
Notes to the Consolidated Financial Statements
a) Measurement of Fair Values
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as
follows:
(i) Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
(ii) Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices)
(iii) Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)
Forward contracts
As at 30 September 2021
As at 30 September 2020
Level 1
£’m
Level 2
£’m
Level 3
£’m
-
-
(0.3)
0.5
-
-
The forward contracts have been fair valued at 30 September 2021 with reference to forward exchange rates that are quoted in an
active market, with the resulting value discounted back to present value.
b) Financial Risk Management
The Group’s principal financial liabilities, other than derivatives, comprise revolving credit facility, and trade and other payables. The main
purpose of these financial liabilities is to finance the Group’s operations. The Group’s principal financial assets include trade receivables, and
cash at bank that derive directly from its operations.
In the course of its business the Group is exposed to market risk (including foreign exchange risk and interest rate risk), credit risk,
liquidity risk and technology risk. The Group’s overall risk management strategy is to minimise potential adverse effects on the financial
performance and net assets of the Group. These policies are set and reviewed by senior finance management and all significant financing
transactions are authorised by the Board of Directors.
c) Market Risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices.
The Group’s key financial market risks are in relation to foreign currency rates. Foreign currency risk results from the substantial cross-
border element of the Group’s trading and arises on sales and purchases that are denominated in a currency other than the functional
currency of the business. Group cash resources are matched with the net funding requirements sourced from three sources namely
internally generated funds, loan facilities and bank funding arrangements.
The foreign currency risk is managed at Group level by the purchase of foreign currency contracts for use as a commercial hedge. During
the course of the period there has been no changes to the market risk or manner in which the Group manages its exposure. The Group is
exposed to interest rate risk that arises principally through the Group’s revolving credit facility.
Liquidity risk, credit risk and capital risk is considered below. The executive team is responsible for implementing the risk management
strategy to ensure that appropriate risk management framework is operating effectively, embedding a risk mitigation culture throughout
the Group. The Board are provided with a consolidated view of the risk profile of the Group. All major exposures are identified and
mitigating controls identified and implemented. Regular management reporting and assessment of the effectiveness of controls provide a
balanced assessment of the key risks and the effectiveness of controls.
The Group does not speculate with derivatives or other financial instruments.
Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
interest rates. The Group’s exposure to the risk of changes in market interest rates is only through the revolving credit facility which is
subject to fluctuations in LIBOR.
Foreign Currency Risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign
exchange rates. The majority of the Group’s purchases are sourced from outside the United Kingdom and as such the Group is exposed
to the fluctuation in exchange rates (currencies are principally Sterling, US Dollar, Euro and Swedish Krona). The Group places forward
cover on the net foreign currency exposure of its purchases. The Group foreign currency requirement is reviewed twice weekly and
forward cover is purchased to cover expected usage.
162
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
The carrying amount of the Group’s foreign currency denominated monetary assets and monetary liabilities at the reporting date are as
follows:
Euro
Cash
Trade payables
Trade receivables
Forward exchange contracts
Balance sheet exposure
US Dollar
Cash
Trade payables
Trade receivables
Forward exchange contracts
Balance sheet exposure
Swedish Krona
Cash
Trade receivables
Forward exchange contracts
Balance sheet exposure
Norwegian Krona
Cash
Trade receivables
Forward exchange contracts
Balance sheet exposure
Danish Krona
Cash
Trade receivables
Balance sheet exposure
Moroccan Dirham
Cash
Trade receivables
Balance sheet exposure
2021
€’m
33.2
2020
€’m
6.5
(87.2)
(47.9)
5.2
39.6
(9.2)
2021
$ ‘m
2.7
(4.7)
0.2
(2.0)
(3.8)
2021
Kr ‘m
17.6
1.0
-
18.6
2021
Kr ‘m
0.7
(0.1)
-
0.6
2021
Kr ‘m
0.1
-
0.1
10.2
11.8
(19.4)
2020
$ ‘m
0.6
(2.7)
-
0.6
(1.5)
2020
Kr ‘m
0.3
-
-
0.3
2020
Kr ‘m
0.1
-
-
0.1
2020
Kr ‘m
-
-
-
2021
2020
MAD ‘m
MAD ‘m
0.6
(0.5)
0.1
-
-
-
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
163
FINANCIAL STATEMENTS Financial Statements
Notes to the Consolidated Financial Statements
Foreign Currency Sensitivity
The following table details the Group sensitivity to a percentage change in Pounds Sterling against these currencies with regards to
equity. The sensitivity analysis of the Group’s exposure to foreign currency risk at the reporting date has been determined based on a 10
per cent change taking place at the beginning of the financial period and held constant throughout the reporting period:
Euro
Weakening - 10%
Strengthening - 10%
US Dollar
Weakening - 10%
Strengthening - 10%
Swedish Krona
Weakening -10%
Strengthening - 10%
2021
£’m
(0.5)
0.5
-
-
0.1
(0.2)
2020
£’m
(1.7)
1.7
(0.1)
0.1
-
-
The Group uses forward exchange contracts to hedge its foreign currency risk against sterling. The forward contracts have maturities of
less than one year after the balance sheet date. Hedge ineffectiveness can arise from differences in timing of cash flows of the hedged
item and hedging instrument, the counterparties’ credit risk differently impacting the fair value movements of the hedging instrument and
hedged item.
As a matter of policy the Group does not enter into derivative contracts for speculative purposes. The details of such contracts at the
year-end, by currency were:
EUR
30 September
Less than 3 months
3 to 6 months
6 to 12 months
Total
USD
30 September
Less than 3 months
3 to 6 months
6 to 12 months
Total
2021
2020
Foreign
currency
Notional
value
Carrying
amount
Foreign
currency
Notional
value
Carrying
amount
€’m
£’m
£’m
€’m
£’m
£’m
8.6
3.9
49.4
61.9
7.6
3.4
42.6
53.6
2021
(0.1)
(0.1)
(0.1)
(0.3)
7.9
-
-
9.3
1.6
-
0.5
-
-
7.9
10.9
0.5
2020
Foreign
currency
Notional
value
Fair value
Foreign
currency
Notional
value
Fair value
$’m
£’m
£’m
$’m
£’m
£’m
1.8
2.3
1.5
5.6
1.3
1.7
1.1
4.1
-
-
-
-
0.6
0.6
-
-
-
-
0.6
0.6
-
-
-
-
164
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
The impact of the hedging instruments on the statement of financial position is, as follows:
Notional amount
£’m
Carrying amount
£’m
Line in the statement
of financial position
£’m
Change in fair value
£’m
As at 30 September 2021
Foreign exchange forward contracts
57.7
(0.3)
As at 30 September 2020
Foreign exchange forward contracts
11.5
0.5
Derivative financial
instruments
Derivative financial
instruments
(0.2)
0.2
Credit Risk
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. Credit risk
arises from cash balances and derivative financial instruments, as well as credit exposures to customers, including outstanding receivables,
financial guarantees and committed transactions. Credit risk is managed separately for treasury and operating related credit exposures.
Trade Receivables
The ageing of trade receivables at the balance sheet date was:
As at 30 September 2021
As at 30 September 2020
79.4
58.5
0.1
0.2
0.3
0.2
Not past due
£’m
Past due 0-30 days
£’m
Past due >30 days
£’m
The ageing of other receivables at the balance sheet date was:
As at 30 September 2021
As at 30 September 2020
6.9
41.6
-
-
3.2
2.1
Not past due
£’m
Past due 0-30 days
£’m
Past due >30 days
£’m
Total
£’m
79.8
58.9
Total
£’m
10.1
43.7
In line with IFRS 9, the Group applies the simplified approach for the impairment of trade and other receivables and therefore does not
track changes in credit risk, instead a loss allowance is recognised based on lifetime expected credit losses at each reporting date. The
Group uses a provision matrix to measure expected credit losses based on historical cancellation and recovery rates and considers
forward-looking factors including the impact of COVID-19.
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.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
165
FINANCIAL STATEMENTS Financial Statements
Notes to the Consolidated Financial Statements
The following are the contractual maturities of financial liabilities:
Financial liabilities at amortised cost
Carrying
amount
Contractual
cash flows
Within 1
year
1 to 5
years
> 5 years
Sep-21
Trade payables
Lease liabilities
Other payables
Sep-20
Trade payables
Lease liabilities
Other payables
£’m
104.3
2.9
14.8
122.0
80.2
4.2
11.8
96.2
£’m
104.3
3.4
14.8
122.5
80.2
4.9
11.8
96.9
£’m
104.3
0.5
14.8
119.6
80.2
0.6
11.8
92.6
£’m
-
2.1
-
2.1
-
3.0
-
3.0
£’m
-
0.8
-
0.8
-
1.3
-
1.3
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 19) and equity of the Group as disclosed in note
22. The Group is not subject to any externally imposed capital requirements.
24. 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
Exercisable
LTIP
CSOP & RSA
Total
No. of share options
(thousands)
No. of share options
(thousands)
No. of share options
(thousands)
2,066
1,428
-
(488)
(82)
2,924
601
572
335
-
(104)
(139)
664
59
2,638
1,763
-
(592)
(221)
3,588
660
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. For the 2016-2019 schemes the EPS target is measured at the end of the three-year performance period
commencing on the first day of the financial period in which they are awarded in. For the 2020 and 2021 LTIP schemes the EPS
target is measured across a three year performance period, to the end of year ending September 2022 / 2023 respectively.
During the prior 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. On 29 June 2020, an additional 30,000 shares were
granted. For these options awarded, the vesting is dependent on achieving a best quarter EBITDA between 1 January 2021 and
31 March 2022.
On 22 December 2020 the remuneration committee approved the introduction of an underpin/minimum award for the nil cost
awards originally granted 9 July 2019 to key management. This removal of a non-marked based condition has resulted in a catch
up charge to the income statement of £2.0m that reflects the scheme progress to date. The performance condition in respect of the
underpin/minimum awards was achieved on 30 September 2021 and all of those shares vested in FY21.
166
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
During the current year, the Group awarded nil-cost options to certain key employees within the business. The vesting of these
awards will be dependent on set departmental targets.
The fair value of equity settled share-based payments has been estimated as at date of grant using the Black-Scholes model.
Exercise
price
Expected
volatility
Option
Life
Risk
free
rate
Dividend
yield
Non-
vesting
conditions
Fair
value at
grant
date
(%)
(years)
(%)
(%)
(%)
(£)
No. of
options
awarded
Share
price at
grant
date
(£)
127,113
4.500
296,596
4.500
132,923
4.440
310,153
4.440
365,000
4.630
435,000
4.630
30,000
3.020
176,331
4.340
411,438
4.340
35,000
4.340
3,374
4.212
7,872
4.212
(£)
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
30%
3.0
0.54%
0.62%
-
3.0
0.54%
0.62%
43%
3.0
0.73%
0.74%
-
-
-
-
3.0
0.73%
0.74%
3.0
0.73%
0.74%
3.0
0.73%
0.74%
3.0
0.47%
0.76%
38%
3.0
0.47%
0.76%
-
3.0
0.47%
0.76%
38%
3.0
0.47%
0.76%
38%
3.0
0.47%
0.76%
-
3.0
0.47%
0.76%
15,000
4.212
Nil
38%
3.0
0.47%
0.76%
7,079
2.698
16,518
2.698
300,401
3.550
700,935
3.550
Nil
Nil
Nil
Nil
38%
3.0
0.47%
0.76%
-
-
-
3.0
0.47%
0.76%
3.0
0.03%
0.00%
3.0
0.03%
0.00%
Award date
26 May 2017 (TSR
dependent)
26 May 2017 (EPS
dependent)
31 February 2019
(TSR dependent)
31 February 2019
(EPS dependent)
9 July 2019 (EBITDA
dependant)
22 December 2021
(no conditions)
29 June 2020
(EBITDA dependent)
3 December 2019
(TSR dependent)
3 December 2019
(EPS dependent)
3 December 2019
(EBITDA dependent)
18 February 2020
(TSR dependent)
18 February 2020
(EPS dependent)
18 February 2020
(performance target
dependent)
10 March 2020 (TSR
dependent)
10 March 2020 (EPS
dependent)
5 February 2021
(TSR dependent)
5 February 2021
(EPS dependent)
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
1.880
4.420
4.341
1.810
4.520
4.520
2.992
1.900
4.240
4.240
1.900
4.115
4.115
1.900
2.632
2.05
3.54
Expected volatility is estimated by considering historic average share price volatility at the grant date.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
167
FINANCIAL STATEMENTS
Financial Statements
Notes to the Consolidated Financial Statements
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 after three years, on 27 October 2020, subject to continued employment, but with no other
performance conditions. The prior year awards will vest on 15 October 2021/12 February 2022 as applicable under the same
terms. A further award was made during the year. The awards will vest on 3 December 2022 subject to continued employment,
employee personal performance and company performance.
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.
Share
price at
grant
date
No. of
shares
Type
Exercise
price
Expected
volatility
Option
Life
Risk free
rate
Dividend
yield
Non-
vesting
conditions
Fair
value at
grant
date
(years)
(%)
(%)
(%)
(£)
(£)
(£)
2018 RSA
185,888
4.273
2018 CSOP
138,924
4.273
2019 RSA
108,110
4.265
2019 CSOP
99,239
4.265
2020 RSA
99,076
4.340
2020 CSOP
80,745
4.340
2021 RSA
20,000
3.680
2021 RSA
314,695
3.680
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
3.0
3.0
3.0
3.0
3.0
3.0
1.0
3.0
0.55%
0.73%
0.55%
0.73%
0.54%
0.74%
0.54%
0.74%
0.47%
0.76%
0.47%
0.76%
0.03%
0.00%
0.03%
0.00%
The following has been recognised in the income statement during the year:
LTIP
RSA
Total share scheme charge
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
2021
£’m
2.1
0.7
2.8
4.200
Nil
4.071
Nil
4.242
Nil
3.680
3.680
2020
£’m
(0.8)
0.2
(0.6)
25. Commitments and Contingencies
a) Capital Commitments
The Group has a lease contract that has not yet commenced as at 30 September 2021. The future lease payments for these non-
cancellable lease contracts are £0.5m within one year and £1.0m within five years.
b) Contingencies
In September 2010, proceedings were initiated against On the Beach Limited in Ireland by Ryanair alleging infringement of, inter alia,
its intellectual property rights. The legal process is ongoing but remains at an early stage. The case lay dormant for over 3 years with
no material developments in that period, and as a result the Group is seeking to strike out the claim on the basis of inordinate and
inexcusable delay. 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.
26. Related Party Transactions
No related party transactions have been entered into during the year.
Transactions with key management personnel have been disclosed in note 7(d).
168
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Financial Statements
Company Balance Sheet
Year ended 30 September 2021
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
Merger reserve
Capital contribution reserve
Retained earnings
Total equity
Note
2021
£’m
2020
£’m
4
5
6
132.6
132.6
170.0
145.5
0.4
-
170.4
145.5
(17.5)
(0.2)
(17.7)
285.3
1.7
89.6
2.6
0.5
190.9
285.3
(17.5)
-
(17.5)
260.6
1.6
64.8
2.6
0.5
191.1
260.6
The loss for the year ended 30 September 2021 dealt with in the financial statements of the parent company is £3.1m (2020: loss
£1.0m).
The financial statements were approved by the Board of Directors and authorised for issue.
Shaun Morton
Chief Financial Officer
9 December 2021
On the Beach Group plc. Reg no 09736592
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
169
FINANCIAL STATEMENTS Financial Statements
Company statement of changes in equity
Year ended 30 September 2021
Share
capital
Share
premium
Merger
reserve
Capital
contribution
Retained
earnings
Balance at 30 September 2019
Shares issued during the year
Costs related to shares issued
Share based payment credit including tax
Dividends paid during the year
Total comprehensive loss for the year
Balance at 30 September 2020
Shares issued during the year
Costs related to shares issued
Share based payment charges including tax
Total comprehensive loss for the year
£’m
1.3
0.3
-
-
-
-
1.6
0.1
-
-
-
£’m
-
67.0
(2.2)
-
-
-
64.8
25.9
(1.1)
-
-
£’m
2.6
-
-
-
-
-
£’m
0.5
-
-
-
-
-
£’m
195.3
-
-
(0.6)
(2.6)
(1.0)
Total
£’m
199.7
67.3
(2.2)
(0.6)
(2.6)
(1.0)
2.6
0.5
191.1
260.6
-
-
-
-
-
-
-
-
-
-
2.9
(3.1)
26.0
(1.1)
2.9
(3.1)
Balance at 30 September 2021
1.7
89.6
2.6
0.5
190.9
285.3
170
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Financial Statements
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 2021 and 30 September 2020.
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 loss for the year ended 30 September 2021 dealt with in the financial
statements of the parent company is £3.1m (2020: loss £1.0m).
Under the provisions of FRS 102.1.12B, the company is exempt from preparing a company statement of cash flows.
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.
The directors have used the going concern principal on the basis that the current financial projections and facilities of the consolidated
Group will continue in 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.
Net assets of the parent company exceed that of the consolidated Group primarily due to a capital reorganisation in 2015. The value
of investments held combined with the amount owed by subsidiary undertakings is supported by net assets of the subsidiaries plus
forecasted future discounted cash flows.
Details of the subsidiaries are listed in note 14 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 57 to 113.
3. Share-Based Payments
The Company recognised total charge of £2.8m (2020: credit £0.6m) in the year in relation to the Long Term Incentive Plan. Details of
this scheme is described in note 24 to the consolidated financial statements.
Investments
4.
The £132,613,000 investment in subsidiary undertakings made in 2015 relates to the capital re-organisation of the Group in 2015.
There has been no movement in the current year.
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
171
FINANCIAL STATEMENTS
Financial Statements
Notes to the Company Financial Statements
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
Other taxes and social security
Accruals
7. Called-Up Share Capital
Allotted, called up and fully paid
165,399,366 ordinary shares @ £0.01 each (2020: 157,362,037 @ £0.01 each)
2021
£’m
170.0
170.0
2021
£’m
16.1
-
1.4
17.5
2021
£’m
1.7
1.7
2020
£’m
145.5
145.5
2020
£’m
16.1
0.2
1.2
17.5
2020
£’m
1.6
1.6
During the year, the Group issued 7,870,000 shares via a share placing with a nominal value of £0.01 each, no discount was
offered on the value of the shares. The Group issued an additional 167,329 with a nominal value of £0.01. 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 2021 was £nil (2020: £nil).
172
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
Glossary of Alternative Performance Measures (APMs)
APM
Definition
Reconciliation to closest GAAP measure
Adjusted CCH
EBITDA
Adjusted CCH EBITDA is based on CCH
operating profit before depreciation,
amortisation and the impact of exceptional
items. Exceptional items consists of exceptional
cancellations as result of COVID-19 in 2021 and
2020, and other exceptional items 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 CCH EBITDA (£’m)
2021
2020
CCH operating loss
(4.8)
(3.2)
Impact of exceptional cancellations
Other exceptional items
Depreciation and amortisation
Amortisation of acquired intangibles
0.4
-
0.2
1.1
0.1
-
0.1
1.1
Adjusted CCH EBITDA
(3.1)
(1.9)
Adjusted CPH
EBITDA
Adjusted CPH EBITDA is based on CPH
operating profit before depreciation,
amortisation and the impact of exceptional
items. Exceptional items consists of exceptional
cancellations as result of COVID-19 in 2021 and
2020, and other exceptional items 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 EPS Adjusted EPS is calculated on the weighted
average number of Ordinary share in issue,
using the adjusted profit after tax.
Adjusted
International
EBITDA
Adjusted OTB
EBIT
Adjusted International EBITDA is based on
International operating loss before depreciation,
amortisation and the impact of exceptional
items. Exceptional items consists of exceptional
cancellations as result of COVID-19 in 2021 and
2020, and other exceptional items 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 OTB EBIT is based on OTB operating
loss before the impact of exceptional items,
amortisation of acquired intangibles and the
non-cash cost of the share based payment
schemes. Exceptional items consists of
exceptional cancellations as result of COVID-19
in 2021 and 2020, and other exceptional items
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 CPH EBITDA (£’m)
2021
2020
CPH operating loss
Depreciation and amortisation
Exceptional items
Adjusted CPH EBITDA
(1.6)
0.2
(0.3)
(1.7)
(4.4)
0.2
2.7
(1.5)
Adjusted EPS
Adjusted profit after tax (£’m)
Basic weighted average number of
Ordinary Shares (m)
2021
(15.4)
2020
(0.7)
159.3
140.2
Adjusted EPS (p)
(9.7)
(0.5)
International EBITDA (£’m)
2021
2020
International operating loss
(0.4)
(0.6)
Depreciation and amortisation
Exceptional items
0.1
0.1
0.1
0.2
International EBITDA
(0.2)
(0.3)
Adjusted OTB operating profit (£’m)
2021
2020
OTB operating loss
Exceptional items
Share based payments
Amortisation of acquired intangibles
Adjusted OTB EBIT
(29.0)
(37.7)
9.8
2.8
4.4
(12.0)
39.0
(0.6)
4.4
5.1
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
173
FINANCIAL STATEMENTS Glossary of Alternative Performance Measures (APMs)
APM
Definition
Reconciliation to closest GAAP measure
Adjusted OTB
EBITDA
Adjusted OTB EBITDA is based on
OTB operating loss before depreciation,
amortisation, impact of exceptional items
and the non-cash cost of the share based
payment schemes. Exceptional items
consists of exceptional cancellations as result
of COVID-19 in 2021 and 2020, and other
exceptional items 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 OTB EBITDA (£’m)
2021
2020
OTB operating loss
Exceptional items
Share Based Payments
Depreciation and amortisation
Amortisation of acquired intangibles
Adjusted OTB EBITDA
(29.0)
(37.7)
9.8
2.8
5.9
4.4
(6.1)
39.0
(0.6)
5.5
4.4
10.6
Adjusted
Profit after
Tax
Adjusted Profit after Tax is based on
Profit after Tax adjusted for the impact of
exceptional items, amortisation of acquired
intangibles and the non-cash cost of the
share based payment schemes. Exceptional
cancellations consist of cancellations as
result of COVID-19 in 2021 and 2020. 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 (£’m)
2021
2020
Profit for the year
(30.2)
(38.8)
Share based payments (net of tax)
Impact of exceptional cancellations
(net of tax)
Other exceptional items (net of tax)
Amortisation of acquired intangibles
(net of tax)
2.2
8.1
-
4.5
(0.5)
33.8
0.3
4.5
Adjusted Profit after Tax
(15.4)
(0.7)
Adjusted
Profit before
Tax
Adjusted Profit before Tax is based on
Profit before Tax adjusted for the impact of
exceptional items, amortisation of acquired
intangibles and the non-cash cost of the
share based payment schemes. Exceptional
cancellations consist of cancellations as
result of COVID-19 in 2021 and 2020. 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)
2021
2020
Profit before tax
(36.7)
(46.3)
Amortisation of acquired intangibles
Share Based Payments
5.5
2.8
Impact of exceptional cancellations
10.0
Other exceptional items
Adjusted profit before tax
-
(18.4)
5.5
(0.6)
41.7
0.3
0.6
CCH EBITDA
CCH EBITDA is based on CCH operating
profit before depreciation and amortisation.
CCH EBITDA (£’m)
CCH operating loss
Depreciation and amortisation
CCH EBITDA
2021
2020
(4.8)
1.3
(3.5)
(3.2)
1.3
(2.0)
174
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
APM
Definition
Reconciliation to closest GAAP measure
CPH EBITDA CPH EBITDA is based on CPH
CPH EBITDA (£’m)
2021
2020
operating profit before depreciation and
amortisation.
CPH operating loss
Depreciation and amortisation
CPH EBITDA
(1.6)
0.2
(1.4)
(4.4)
0.2
(4.2)
Exceptional
items
Exceptional items 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.
International
EBITDA
International EBITDA is based on
International operating loss before
depreciation and amortisation.
Exceptional items (£’m)
2021
2020
Impact of COVID-19
Other exceptional items
Exceptional items
10.0
-
10.0
41.7
0.3
42.0
International EBITDA (£’m)
2021
2020
International operating loss
Depreciation and amortisation
International EBITDA
(0.4)
0.1
(0.3)
(0.6)
0.1
(0.5)
International
revenue after
marketing
costs
International revenue after marketing
costs is based on International
revenue after all marketing costs
International revenue after marketing costs
(£’m)
2021
2020
Revenue
Marketing costs
International revenue after marketing costs
-
(0.1)
(0.1)
0.1
(0.2)
(0.1)
Operating
cash
conversion
Operating cash conversion is EBITDA
divided by cash generated from
operating activities. 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.
Operating cash conversion (£’m)
2021
2020
Loss before taxation
(36.7)
(46.3)
Depreciation
Amortisation
Net finance costs
Share based payments
Net loss on disposal of PPE
EBITDA
Movement in working capital
Movement in trust account
1.8
10.1
0.9
2.8
0.1
1.9
9.5
0.4
(0.6)
-
(21.0)
(35.1)
31.2
(13.2)
(58.0)
18.3
Cash generated from operating activities
(3.0)
(74.8)
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
175
FINANCIAL STATEMENTS Glossary of Alternative Performance Measures (APMs)
APM
Definition
Reconciliation to closest GAAP measure
Operating
(loss)/profit
before
amortisation
and
exceptional
items
Operating (loss)/profit before
amortisation and exceptional items
is based on Group loss before
taxation, adjusting for amortisation of
acquired intangibles and the impact of
exceptional items. Exceptional items
consists of exceptional cancellations as
result of COVID-19 in 2021 and 2020,
and other exceptional items that derive
from events or transactions that fall
outside of the normal activities of the
Group.
OTB adjusted
revenue after
marketing
cost
OTB adjusted revenue after
marketing cost is revenue after
"OTB" online and offline marketing
costs.
Operating (loss)/profit before amortisation and
exceptional items (£’m)
Loss before taxation
Exceptional items
Amortisation of intangibles
Operating (loss)/profit before amortisation and
exceptional items
2021
2020
(36.7)
(46.3)
10.0
10.1
(16.5)
42.0
9.5
5.2
OTB revenue after marketing cost (£’m)
2021
2020
OTB adjusted revenue
OTB online marketing costs
OTB offline marketing costs
Total OTB marketing
22.1
50.4
(5.5)
(14.2)
(6.1)
(8.7)
(11.6)
(22.9)
OTB adjusted revenue after marketing costs
10.5
27.5
OTB EBITDA
OTB EBITDA is based on OTB
operating profit before depreciation
and amortisation.
OTB EBITDA (£’m)
OTB operating loss
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 before the impact
of exceptional cancellations. Exceptional
cancellations relate to COVID-19 in 2021
and 2020.
Depreciation and amortisation
OTB EBITDA
OTB EBITDA as a percentage of adjusted
revenue
Revenue
Exceptional cancellations
Adjusted revenue
Adjusted OTB EBITDA
OTB EBITDA as a percentage of adjusted
revenue
2021
2020
(29.0)
(37.7)
10.3
9.9
(18.7)
(27.8)
2021
2020
13.0
9.1
22.1
15.9
34.5
50.4
(6.1)
10.6
(28%)
21%
176
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
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
10th Floor,
Central Square,
29 Wellington Street,
Leeds
LS1 4DL
Corporate solicitors
Addleshaw Goddard LLP
One Peter’s Square
Manchester
M2 3DE
Corporate PR advisers
FTI Consulting
200 Aldersgate
Aldersgate Street
London
EC1A 4HD
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2021
177
FINANCIAL STATEMENTS “ John Engineering Manager
We’re building the next generation of our
technology platform, and how we deliver
our new customer facing websites is
guided by insights from our customers.
We combine the needs of our customers
and the latest tech to build websites which
we’re all really passionate about. Ideas can
come from any member of the team which
gives us a sense of ownership and pride
over what we do, it’s what makes coming
to work every day worth it.”
Favourite Beach: Playa Blanca - Cahuita National Park, Costa Rica